A home mortgage lender can't sidestep the state courts' rules on how many times it can refile a foreclosure action to correct critical errors in the filings, a state appeals court has ruled, saying if it ruled in the bank's favor, it would essentially allow banks to refile foreclosure actions with no limit.
On March 27, a three-justice panel of the Illinois First District Appellate Court foreclosed on Deutsche Bank's attempted foreclosure action against a borrower, as the appeals panel said the bank had filed and dismissed the action too many times.
The bank first attempted to foreclose in 2008 against Eyal and Lee Sigler, accusing them of stopping payments on their mortgage. In its initial filing, the bank mistakenly listed the wrong plaintiff, naming itself as a trustee but failing to name the trust that actually held the mortgage. The Siglers moved to dismiss the complaint.
The bank filed a motion to correct the misnomer and the Siglers responded that the “court should deny the motion as a sanction for Deutsche Bank’s ‘fraud on the court.’” The court denied the motion to correct the misnomer and permitted Deutsche Bank to voluntarily dismiss its action against the Siglers.
The next day, the bank filed a new foreclosure complaint against the Siglers, pleading the same facts but naming the correct plaintiff. The new complaint claimed the Siglers had not paid their mortgage from March 1, 2008, through the date of the new filing, Oct. 21, 2011.
On Dec. 5, 2011, the bank voluntarily dismissed the second foreclosure complaint. It filed a third complaint the following February, this time complaining the Siglers had not made a payment since Dec. 1.
The Siglers moved to dismiss, citing the state’s so-called single-refiling rule, which prohibits actions that have been voluntarily dismissed from being refiled more than once.
The bank voluntarily dismissed the action again, filing an instant foreclosure instead. The Siglers moved to dismiss, claiming violation of the single-refiling rule. The court denied the motion, finding the first action had a different plaintiff than the subsequent complaints, and the third action had different dates, so the fourth action was the first refiling of the second complaint. The court later granted the Siglers’ motion to reconsider and dismissed the bank’s complaint with prejudice, which the bank appealed.
In its appeal, the bank argued that the Illinois Supreme Court decision that established the single-refiling rule misinterprets the plain language of the statute.
In the appellate opinion, Appellate Justice Thomas E. Hoffman replied that the appellate court does not have the authority to overturn a Supreme Court decision.
The bank also argued the actions were different because they each alleged different default dates. The bank said the fourth complaint also sought to recover a different amount of money, because it included interest that had accrued since the previous complaints were filed.
Hoffman was joined in the decision by Justices Mary K. Rochford and Mathias W. Delort in deciding that the three final complaints did arise from the same set of facts, so the fourth action violated the single-refiling rule. Once the bank accelerated the contract and filed foreclosure, the Siglers’ obligation to make monthly payments merged into a single obligation to pay the full balance.
“Allowing Deutsche Bank to circumvent the single-filing rule simply by changing the date from which it sought accrued interest would mean that Deutsche Bank’s claims would never be barred by any prior adjudication because interest kept accruing as time passed,” Hoffman wrote.
Since the bank voluntarily dismissed its own complaints, the single-filing rule prevents it from filing further actions based on the Siglers’ 2008 default on the mortgage, the appeals panel said.
Deutsche Bank is represented in the action by attorneys P. Russell Perdew and Ryan A. Sawyer, of Locke Lord LLP, of Chicago.
The Siglers were represented by attorney Rod Radjenovich, of Jeffrey Strange and Associates, of Wilmette.