Berg v. eHomeCredit Corp.

Filing 94

MEMORANDUM Opinion and Order Signed by the Honorable Sharon Johnson Coleman on 1/25/2012:Mailed notice(keg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

INGRID BERG,
Case No. 08 C 5530
Plaintiff,
Judge Sharon Johnson Coleman
v.
EHOME CREDIT CORP., and SAXON
MORTGAGE SERVICES, INC.,
Defendants.

MEMORANDUM OPINION AND ORDER
This case comes before the Court on cross motions for summary judgment. The Court heard
oral argument on the motions on January 13, 2012. The facts are not in dispute and the sole issue is
whether plaintiff Ingrid Berg’s half interest in property owned by Ingrid Berg and her husband
Stanley Berg is encumbered by the eHome mortgage. For the reasons stated herein, the Court grants
summary judgment in favor of defendant Saxon Mortgage Services Inc.
Background
Although Ingrid Berg continues to dispute Saxon’s standing, this Court ruled that Saxon had
shown sufficient evidence that it is the loan/mortgage servicer of the successor in interest of eHome
Credit Corporation. Otherwise, the basic facts are not in dispute.
Stanley and Ingrid Berg purchased property in Highland Park, Illinois at a judicial sale on
November 10, 2000. The deed was recorded on February 28, 2001. The Bergs executed a mortgage
against the property in favor of American Enterprise Bank to secure a $450,000 loan. This loan was
refinanced by Stanley Berg through a $470,000 loan from eHome Credit Corp., which was

evidenced by a note (“eHome Note”). Stanley Berg is the sole signatory on the eHome Note. The
eHome Note was secured by the eHome Mortgage, which is now at issue.
In 2005, Stanley Berg filed for bankruptcy. Ingrid Berg did not file for bankruptcy and was
not a party to Stanley Berg’s bankruptcy proceedings. Judge Schmetterer of the Bankruptcy Court
ruled following the adversary proceeding in Stanley Berg’s bankruptcy that Stanley Berg’s
bankruptcy estate held a half-interest of the property and Ingrid Berg held the other half interest.
With respect to the eHome Mortgage, Judge Schmetterer ruled that Stanley Berg’s bankruptcy
estate could avoid the lien from the eHome Mortgage because it was not recorded until after Stanley
Berg filed his bankruptcy petition. However, Judge Schmetterer did not have jurisdiction to
determine whether the eHome Mortgage encumbered Ingrid Berg’s half-interest in the property.
The property was sold under the direction of the Bankruptcy Court and $169,293.10 of the net
proceeds (Ingrid Berg’s half-interest) was deposited with the Clerk of the Court pending resolution
of the eHome Mortgage issue.
The parties provided copies of the eHome Mortgage. For purposes of the instant motions,
the first page is most important. Under the heading “MORTGAGE” there is type-written language
stating: “THIS MORTGAGE (“Security Instrument”) is given on July 16, 2004. The mortgagor is
STANLEY BERG” underneath which Ingrid Berg’s name is typed in and is not in all capital letters
as is Stanley Berg. Underneath Stanley Berg’s and Ingrid Berg’s names is a handwritten sentence
stating “Here by releasing and waiving all rights under and by virtue of the Homestead Exemption
Laws of this State,” after which is type-written (“Borrower”). Ingrid Berg’s signature also appears
at the end of the document on a line labeled “Borrower” with the same disclaimer as the
handwritten sentence on the first page, but here it is typed.
The other provisions worth noting are paragraph 12 and paragraph 23. Paragraph 12 states
the following in pertinent part: “Any Borrower who co-signs this Security Instrument but does not

execute the Note: (a) is co-signing this Security Instrument only to mortgage, grant and convey that
Borrower’s interest in the Property under the terms of this Security Instrument; (b) is not personally
obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any
other Borrower may agree to extend, modify, forbear or make any accommodations with regard to
the terms of this Security Instrument or the Note without that Borrower’s consent.” Paragraph 23
states “Borrower waives all right of homestead exemption in the Property.”
Defendant Saxon Mortgage Services Inc. moves for summary judgment asserting that Saxon
should be awarded plaintiff Ingrid Berg’s half the proceeds that were generated from the sale of the
property and that are now being held by the Clerk of the Court. At issue is the legal effect of one
document, the eHome mortgage that was used to secure the eHome Note signed by plaintiff’s
husband Stanley Berg. It is undisputed that Ingrid Berg is not a party to the eHome Note. Saxon
contends however that Ingrid Berg is obligated on the eHome mortgage because the first clause of
the eHome mortgage document constitutes the definition of “Borrower” and expressly identifies
Ingrid Berg as a Borrower within the meaning of the contract.
Plaintiff Ingrid Berg seeks summary judgment in her favor on the basis that she was not a
“Borrower” within the meaning of the eHome mortgage and merely signed the eHome mortgage to
waive her homestead rights. Ingrid Berg further argues that paragraph 23 already contains a waiver
clause for the Borrower and thus she is not a Borrower because that paragraph would be a
redundancy. Ingrid Berg points out that her name on the first page of the eHome mortgage is in
different typeface than Stanley Berg’s name. The parties disagree about whether “Borrower” is
defined in the eHome mortgage contract and the legal effect of Ingrid Berg’s signature.
Legal Standard
A party is entitled to summary judgment if all of the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue of material fact and that the

movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). When considering a
summary judgment motion, the Court construes the facts and all reasonable inferences in the light
most favorable to the non-moving party. Abdullahi v. City of Madison, 423 F. 3d 763, 773 (7th Cir.
2005). The party who bears the burden of proof on an issue may not rest on the pleadings or mere
speculation, but must affirmatively demonstrate that there is a genuine issue of material fact that
requires a trial to resolve. Celotex v. Catrett, 477 U.S. 317, 324 (1986). On cross-motions, summary
judgment is appropriate only when evidence as a whole shows there is no genuine dispute as to any
material fact, Davis v. Time Warner Cable of Southeastern Wis., L.P., 651 F.3d 664, 671 (7th Cir.
2011), regardless to which motion the evidence is attached. Las Vegas Sands, LLC v. Nehme, 632
F.3d 526, 532 (9th Cir. 2011).
Discussion
The parties agree that Illinois contract law governs this case. “The meaning of a written
contract is ordinarily a question of law and not one of fact.” Lenzi v. Morkin, 103 Ill. 2d 290, 293,
469 N.E.2d 178 (1984). In the absence of any material questions of fact, the court may
independently construe the contract. Ancraft Products Co. v. Universal Oil Products Co., 100 Ill.
App. 3d 694, 697-98, 427 N.E.2d 585 (1981); Mazanek v. Rockford Drop Forge Co., 98 Ill. App. 3d
956, 959, 424 N.E.2d 1271(1981). The Court’s objective when interpreting a contract is to give
effect to the intention of the parties, which must be ascertained by the language utilized in the
contract itself and not by construction placed upon it by the parties. Lenzi, 103 Ill. 2d at 293. A
contract’s meaning must be determined from the words or language used, and a court cannot place a
construction on the contract which is contrary to the plain and obvious meaning of the language.
Johnstowne Centre Partnership v. Chin, 99 Ill. 2d 284, 287-88, 458 N.E.2d 480 (1983). Extrinsic
evidence may be introduced to explain the meaning of an ambiguous contract provision, but the

provision is not rendered ambiguous simply because the parties do not agree on its meaning. Id. at
288; Forty-Eight Insulations, Inc. v. Acevedo, 140 Ill. App. 3d 107, 113 (1986).
Here, the plain language of the eHome mortgage appears to cover the entire property rather
than a half-interest as Ingrid Berg asserts. The eHome mortgage states “Borrower does hereby
mortgage, grant, and convey to Lender the following described property located in Lake County,
Illinois: [legal description of the property is attached to the mortgage] which has the address of
2205 Kipling LN, Highland Park, Illinois 60035.” Indeed, there is nothing in the plain language of
the eHome mortgage that even implies that the mortgage encumbered only a half-interest in the
property. It is of no import that Ingrid Berg did not sign and is not liable for the eHome note. The
parties agree that a mortgage can guaranty the debt of a third person, see e.g., State Bank of Geneva
v. Sorenson, 167 Ill. App. 3d 674, 684, 521 N.E.2d 587 (1988), and the eHome mortgage clearly
contemplates a co-signer to the mortgage that is not liable for the note in paragraph 12 referenced
above.
Even though the language of the eHome mortgage does not indicate that it is intended to
encumber only a half-interest in the property, Ingrid Berg argues that Stanley Berg could only grant
a mortgage on his interest in the property. Ingrid and Stanley Berg owned the property as tenants by
the entirety and thus could not dispose of or convey any part of the property with out the assent of
the other. See Almond v. Bonnell, 76 Ill. 536, 540 (1875). A mortgagor can grant a lien only on his
interest in property. See Klein v. Devries, 309 Ill. App. 3d 271, 273, 722 N.E. 2d 784, 787 (1999)
and In re Estate of Vogel, 291 Ill. App. 3d 1044, 1048, 684 N.E.2d 1035, 1038 (1997)(“a joint
tenant in real property may not mortgage unilaterally more than his own interest…”). Yet, there is
nothing in the record that would support such a conclusion. In her deposition testimony, Ingrid Berg
was unable to shed any light on the intention of the parties to the eHome mortgage. Despite
acknowledging that she signed the eHome mortgage, Ingrid Berg testified that she did not recall the

contents, including the handwritten sentence. She testified that she probably just signed it without
reading it. The only reasonable interpretation of the eHome mortgage appears to be that both Ingrid
and Stanley Berg signed the mortgage with the intention that it applies to the entire property.
Ingrid Berg cites two cases to support her argument that she is not a Borrower for purposes
of the eHome mortgage and signed only to allow Stanley Berg to mortgage his interest and to waive
her homestead rights: In re Payne, 450 B.R. 711, No. 09-59437 (S.D. Ohio, March 31, 2011), and
In re Wirth, 355 B.R. 60 (N.D. Ill. 2005). In the Payne bankruptcy case, the court analyzed a very
similar issue to the one presented here – whether the wife of a bankruptcy litigant’s interest in a
property was encumbered by a mortgage, specifically whether she was a “Borrower” within the
meaning of the mortgage. That court found the Mrs. Payne was not a Borrower even though she had
signed the mortgage on the last page on a line printed with the word “Borrower”. The difference
between Payne and this case is significant. In Payne, only the husband’s name appeared on the first
page of the mortgage, there was an expressed definitions section that stated “Borrower is” and then
underneath was typed “TODD S PAYNE, MARRIED” followed by “Borrower is the mortgagor
under this Security Instrument.” Here, Ingrid Berg’s name appears at in the first portion of the
document and is followed by (“Borrower”).
In Wirth, also a bankruptcy case, Wirth and his then-wife Marilyn Williams executed two
mortgages on a property which they owned each a half-interest. The first mortgage with MERS
defined “Borrower” as “MARILYN MARCIA WILLIAMS, a single person,” and stated that
“Borrower is the mortgagor under this Security Instrument.” Wirth also signed on a line designated
for a “Borrower,” but his name was neither printed on the contract nor notarized. With respect to
the second mortgage, the agreement again defined “Borrower” as “MARILYN MARCIA
WILLIAMS, A SINGLE WOMAN,” and Williams signed as “Mortgagor.” Wirth signed above a
signature line stating: “Paul Wirth Signing for the Sole Purpose of Waiving Homestead Rights.”

Wirth filed for bankruptcy. The bankruptcy court found that Williams alone qualifies as a
“Borrower” under the express terms of the mortgages. The bankruptcy court referenced a provision
for a co-signer that defined the term as “any Borrower who co-signs this Security Instrument but
does not execute the Note”, but found that Wirth was not a co-signer because he was not identified
as a Borrower in the mortgage. Judge Pallmeyer affirmed. In the same manner as Payne, Wirth is
different from the situation at hand in that here, Ingrid Berg is identified in the mortgage and not
simply a signature at the end on a line labeled “Borrower.” Furthermore, the purported homestead
waiver in Wirth specifically identifies Paul Wirth and unequivocally states that he is signing for the
“sole purpose” of waiving his homestead rights.
Saxon asserts that even though the eHome mortgage lacks a formal definitions section, one
method of defining terms in an agreement is by placing a defined term in parentheses and quotation
marks immediately following the definition of the term. Vendetti v. Compass Envtl., Inc., 2007 U.S.
Dist. LEXIS 86468 (N.D. Ill. Nov. 26, 2007); see, e.g., Am. Nat’l Fire Ins. Co. v. Nat’l Union Fire
Ins. Co., 343 Ill. App. 3d 93, 103 (2003); Alexian Bros. Health Providers Ass’n v. Humana Health
Plan, 330 F.Supp.2d 970, 975 (N.D. Ill. 2004). Here, it appears from the face of the eHome
mortgage that the parties used (“Borrower”) in such a way to create a shorthand for use of the term
Borrower elsewhere in the agreement. The term appears in parentheses and quotation marks after
Stanley Berg and Ingrid Berg’s names are listed at the very beginning of the agreement. The most
logical explanation for this placement is that the parties intended the term “Borrower” as shorthand
for Stanley Berg and Ingrid Berg. If Ingrid Berg was not intended to be a Borrower for purposes of
the agreement, then presumably the parties would have placed her name elsewhere. Thus, this Court
concludes that the parties intended Ingrid Berg to be a “Borrower” for the purposes of the mortgage.

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Ingrid Berg argues that to find that she is a “Borrower” would cause a redundancy in the
contract. Paragraph 23 of the eHome mortgage states that the “Borrower” waives his homestead
rights and thus, the handwritten homestead waiver would be unnecessary. Illinois courts construe
contract terms so as to avoid rendering other terms redundant or meaningless. Arnhold v. Ocean Atl.
Woodland Corp., 284 F.3d 693, 705 (7th Cir. 2002). However, the handwritten waiver is itself a
repetition of the homestead waiver that follows Ingrid Berg’s signature on the signature page of the
mortgage, and Ingrid Berg has presented no evidence as to why or how the handwritten homestead
waiver came to be included on the mortgage. Moreover, Ingrid Berg’s interpretation fails to explain
why her name would appear under Stanley Berg’s on the first page followed by (“Borrower”)
instead of only on the signature page with the homestead waiver as in Payne and Wirth. When
interpreting a contract, a court must consider the document as a whole. Premier Title Co. v.
Donahue, 328 Ill. App. 3d 161, 164 (2002) (explaining that it is duty of the court to determine
which of the two conflicting clauses most clearly expresses the primary objective and purpose of
the contract).
Conclusion
Based on the foregoing, this Court finds that the eHome mortgage encumbered Ingrid
Berg’s half-interest of the property and Saxon is entitled to judgment as a matter of law. Saxon’s
motion for summary judgment is granted and Ingrid Berg’s motion for summary judgment is
denied.
IT IS SO ORDERED.
Date: January 25, 2012
Entered: ____________________________
Sharon Johnson Coleman

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