The Bank of New York Mellon v. Schulze et al
Filing
59
Memorandum Opinion and Order signed by the Honorable Robert W. Gettleman on 3/2/2016: Defendants' motion 51 for summary judgment is denied. Status hearing is set for 3/165/2016, at 9:00 a.m. Mailed notice (gds)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
THE BANK OF NEW YORK MELLON, as
Trustee for the First Franklin Mortgage Loan Trust
2005-FF5 Asset-Backed Certificates, Series
2005-FF5, formerly known as Bank of New York,
the successor to JPMorgan Chase Bank, N.A.
Plaintiff,
v.
KATHLEEN J. SCHULZE, MICHAEL W.
SCHULZE, BANK OF AMERICA, N.A.,
CITIBANK, N.A., UNITED STATES OF
AMERICA, and the INTERNAL REVENUE
SERVICE,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Case No. 11 C 0762
Judge Robert W. Gettleman
MEMORANDUM OPINION AND ORDER
Plaintiff The Bank of New York Mellon (“plaintiff”), as trustee for the First Franklin
Mortgage Loan Trust 2005-FF5 Asset-Backed Certificates, Series 2005-FF5, formerly known as
Bank of New York, the successor JPMorgan Chase Bank, N.A., filed this foreclosure action
against defendants Kathleen Schulze and Michael Schulze (“defendants”). Defendants have
moved for summary judgment pursuant to Fed. R. Civ. P. 56, arguing that plaintiff is barred from
enforcing the promissory note underlying the mortgage pursuant to the Illinois 735 ILCS 5/13217, also known as the Illinois “single-refiling” rule. For the reasons discussed below,
defendants’ motion for summary judgment is denied.
BACKGROUND
On or about February 5, 2005, plaintiff loaned defendants a sum of $495,000.00. The
loan was secured by property located at 1193 Cedar Lane, Northbrook, Illinois, 60062.
Defendants agreed to make monthly payments towards the loan on the first of every month,
beginning on April 1, 2005. On March 12, 2008, plaintiff filed a complaint to foreclose mortgage
in the Circuit Court of Cook County, alleging that as of January 1, 2008, defendants were in
default for failure to pay the monthly installments due on the note. The complaint was
subsequently voluntarily dismissed by plaintiff.
On February 25, 2009, plaintiff filed a second complaint to foreclose mortgage, alleging
that as of November 1, 2008, defendants were in default for failure to pay the monthly
installments due on the note. The second complaint was also voluntarily dismissed, and
defendants entered into a modification agreement on May 4, 2009, increasing the principal
balance, lowering the interest rate, altering the monthly installment amount, and changing the
due date of the loan. Plaintiff then filed the instant action on February 2, 2011, and then its first
amended complaint to foreclose the mortgage, alleging that defendants are in default due to
failure to pay the monthly installments due on the note from August 1, 2010, to present.
Defendants moved for summary judgment pursuant to Fed. R. Civ. P 56, alleging that plaintiff is
barred from enforcing the promissory note underlying the mortgage pursuant to the Illinois
single-refiling rule, because plaintiff has previously filed and voluntarily dismissed two actions
to foreclose this mortgage.
DISCUSSION
A.
Legal Standard
A movant is entitled to summary judgment pursuant to Fed. R. Civ. P. 56 when the
moving papers and affidavits show that there is no genuine issue of material fact and the movant
2
is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a)1; Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). Once a moving party has met its burden, the nonmoving party must go
beyond the pleadings and set forth specific facts showing that there is a genuine issue for
trial. See Fed. R. Civ. P. 56(c); Becker v. Tenenbaum–Hill Assoc., Inc., 914 F.2d 107, 110 (7th
Cir.1990). The court considers the record as a whole and draws all reasonable inferences in the
light most favorable to the party opposing the motion. See Green v. Carlson, 826 F.2d 647, 651
(7th Cir.1987).
A genuine issue of material fact exists when “the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). The nonmoving party must, however, “do more than simply show that there is some
metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). “The mere existence of a scintilla of evidence in support of the
[nonmoving party's] position will be insufficient; there must be evidence on which the jury could
reasonably find for the [nonmoving party].” Anderson, 477 U.S. at 252.
B.
Analysis
This matter is before the court pursuant to the court's diversity jurisdiction. See 28 U.S.C.
§ 1332. In diversity cases, the court applies federal procedural law and state substantive
law, e.g., Santa's Best Craft, LLC v. St. Paul Fire and Marine Ins. Co., 611 F.3d 339, 345 (7th
Cir.2010), employing the choice-of-law principles utilized by the forum state, see United States
1
Plaintiff inexplicably cites Illinois procedural law in its memorandum in opposition to
defendants’ motion for summary judgment. Plaintiff references 735 ILCS 5/2-1005 as the
standard for a motion for summary judgment and argues that defendants’ affidavits fail to
comply with Illinois Supreme Court Rule 191. Counsel should know that neither are applicable
in this court.
3
Textiles, Inc. v. Anheuser–Busch Cos., Inc., 911 F.2d 1261, 1269 (7th Cir.1990). Paragraph 16
of the mortgage states that “this Security Instrument shall be governed by ... the law of the
jurisdiction in which the Property is located.” Because this provision governs and the property at
issue is located in Illinois, the court applies Illinois law. Additionally, the Illinois single-refiling
rule is “applicable to the refiling in a federal court of a suit originally filed in an Illinois state
court, because it is a rule of preclusion, like res judicata; and a federal court is required to give
‘full faith and credit’ to records of (including judgments in) state judicial proceedings.” Carr v.
Tillery, 591 F.3d 909, 914 (7th Cir. 2010).
Defendants argue that plaintiff’s complaint to foreclose mortgage is barred by the Illinois
single-refiling rule pursuant to 735 ILCS 5/13-217, which provides that after dismissing a claim,
a plaintiff “may commence a new action within one year or within the remaining period of
limitation, whichever is greater.” According to defendants, because plaintiff filed and
voluntarily dismissed its mortgage foreclosure action two separate times in the Circuit Court of
Cook County, the instant complaint is an impermissible third filing.
Defendants do not challenge plaintiff’s allegations that the parties entered into a
modification agreement on the mortgage on May 4, 2009, or that the modification agreement
increased the principal balance and changed the interest rate on their mortgage. Nor do
defendants dispute that the mortgage is in default because of their failure to pay the monthly
installments due from August 1, 2010, to present. There are no genuine issues of material fact as
to the existence of the mortgage, defendants’ noncompliance with monthly payments due, or the
fact that defendants are now in default.
4
To determine whether a suit is a refiling, Illinois state law looks to “whether, had its
predecessor been dismissed with prejudice, it would be barred by principles of res judicata.”
Carr, 591 F.3d at 915. Res judicata “allows a trial court to dismiss an action on the grounds that
it is barred by a previous judgment.” LP XXVI, LLC v. Goldstein, 349 Ill. App. 3d 237, 240
(2004). To apply the doctrine of res judicata, there must be “(1) a final judgment on the merits
rendered by a court of competent jurisdiction; (2) an identity of cause of action; and (3) an
identity of parties or their privies.” Id. Under Illinois law, the transactional test governs whether
there is an identity of cause of action. Id. Under the transactional test, “separate claims will be
considered the same cause of action for purposes of res judicata if they arise from a single group
of operative facts, regardless of whether they assert different theories of relief.” Id. (quoting
River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290, 311 (1998)).
In the instant case, defendants focus on the fact that all three of plaintiff’s complaints to
foreclose mortgage were brought under the same mortgage. Defendants cite to the Seventh
Circuit’s decision in United Central Bank v. KMWC 845, LLC, 800 F.3d 307 (2015), in which
the court, applying Illinois law, determined that the plaintiff’s mortgage foreclosure action
brought in the United States District Court of the Eastern District of Wisconsin was barred by the
Illinois single-refiling rule. Id. at 307. The court’s ruling was based on the fact that the plaintiff
had previously filed and voluntarily dismissed two suits for breach of the promissory note
securing the mortgage. Id. Thus, the plaintiff’s third filing of the same complaint was statutorily
barred. Id. It is unclear, however, whether the plaintiff’s third filing contained the same monthly
installment default date ranges that were included in the two previous filings. The district court
decision indicated that the plaintiff “asserted the same claims for breach of the notes and the
5
guarantees that it had asserted in the seven lawsuits that it had previously filed and voluntarily
dismissed.” United Cent. Bank v. Wells St. Apts., LLC, 957 F. Supp. 2d 978, 982 (E.D. Wis.
2013).
In the instant case, plaintiff argues that a new set of operative facts give rise to the
assertion of relief in the present action. Specifically, the instant filing is based on the default of
monthly installments due according to a modification agreement entered into by the parties on
May 4, 2009. Although plaintiffs did file and dismiss two prior mortgage foreclosure actions in
the Circuit Court of Cook County, the instant complaint alleges default of monthly installments
from August 1, 2010, to present -- a range of payments that were not included in either of the
previous filings. After the voluntary dismissal of the second suit, the modification agreement was
entered into by the parties, which increased the principal balance of the loan, changed the
interest rate, and altered the due date of the loan.
Plaintiff’s complaint to foreclose mortgage in the instant case is thus based upon
defendants’ default on monthly installments of principal, interest, and taxes from August 1,
2010, through the present, constituting a separate and distinct harm from any prior complaint to
foreclose the mortgage brought in plaintiff’s earlier lawsuits. Defendants’ failure to pay monthly
installments on the mortgage after the voluntary dismissal of the March 12, 2008, and February
25, 2009, mortgage foreclosure claims in the Circuit Court of Cook County are separate and
distinct from the facts underlying those prior actions and give rise to a new cause of action.
Therefore, plaintiff’s complaint would not be barred under res judicata and is not barred by the
Illinois single-refiling rule.
6
CONCLUSION
For the reasons stated herein, defendants’ motion for summary judgment is denied. This
matter is set for a report on status March 15, 2016, at 9:00 a.m.
ENTER:
March 2, 2016
__________________________________________
Robert W. Gettleman
United States District Judge
7
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?