PNC Bank, National Association v. Mejia

Filing 19

MEMORANDUM OPINION signed by the Honorable Charles P. Kocoras on 1/16/2013.Mailed notice(sct, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
PNC BANK, NATIONAL ASSOCIATION, )
successor to National City Bank,
)
successor to Mid America Bank, fsb
)
)
Plaintiff,
)
)
vs.
)
)
SOCRATES A. MEJIA,
)
)
Defendant.
)

12 C 6688

MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:
Before the Court is Plaintiff PNC Bank N.A.’s (“PNC Bank”) unopposed motion
for summary judgment pursuant to Federal Rule of Civil Procedure 56. PNC Bank
additionally seeks the entry of a shortened period of redemption, entry of personal
judgment of deficiency, entry of an order placing the mortgagee in possession or
appointment of a receiver, entry of a judgment for attorneys’ fees, costs and expenses
and the appointment of a licensed auctioneer. For the reasons set forth below, the Court
grants PNC Bank’s motion for summary judgment and grants in part and denies in part
PNC Bank’s motions for further relief.

BACKGROUND
According to Local Rule of Civil Procedure 56.1, “all material facts set forth in
the statement required of the moving party [for summary judgment] will be deemed to
be admitted unless controverted by the statement of the opposing party.” Defendant
Socrates Mejia (“Mejia”) has not opposed PNC Bank’s motion or filed a response to
PNC Bank’s statement of material facts. Therefore, all facts in PNC Bank’s statement
of material facts are deemed to be admitted for the purposes of this motion. L.R. 56.1;
Sojka v. Bovis Lend Lease, Inc., 686 F.3d 394, 398 (7th Cir. 2012) (stating “[t]he
obligation set forth in Local Rule 56.1 is not a mere formality,” and that “[i]t follows
from the obligation imposed by Fed. R. Civ. P. 56(e) on the party opposing summary
judgment to identify specific facts that establish a genuine issue for trial.”).
On or about October 16, 2007, Mid America Bank (“Mid America”) agreed to
loan Mejia $520,000. In exchange for the loan, Mejia executed and delivered to Mid
America a promissory note for the principal amount of $520,000 (“Note-1").
Additionally on October 16, 2007, Mid America extended a second loan to Mejia in the
amount of $240,000. As required, Mejia executed and delivered a second promissory
note to Mid America for the principal amount of $240,000 (“Note-2") (Note-1 and
Note-2 collectively referred to as “Notes”). As security for both Notes, Mejia executed
a mortgage to Mid America dated October 16, 2007 (the “mortgage”). The mortgage

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was issued against the property commonly known as 1210 Plainfield Road, Joliet,
Illinois (the “property”) and recorded with the Will County Recorder of Deeds on
November 19, 2007. Pursuant to the terms of Note-1 and Note-2, Mejia was to repay
the principal balance of the loan and the accrued interest in monthly installments
beginning on November 3, 2007 and continuing each month thereafter. Subsequently,
on February 9, 2008, Mid America merged with National City Bank. On November 6,
2008 National City Bank and PNC Bank merged, all assets and loans owned by
National City Bank are now serviced by PNC Bank.
As of September 2010 Mejia failed to make the required payments specified in
both Notes. As a result of Mejia’s default, on October 13, 2010, PNC Bank sent a letter
to Mejia demanding payment of all amounts due under both Notes. On August 12,
2012, PNC Bank filed a complaint with this Court initiating mortgage foreclosure
proceedings against Mejia. Mejia answered PNC Bank’s complaint and alleged four
affirmative defenses.
PNC Bank has submitted an affidavit from its Assistant Vice President, Marques
Williams (“Williams”), affirming the amounts presently outstanding on both Notes,
through October 21, 2012. Note-1 has a principal balance of $466,551.76, with interest
charges of $21,043.69 and late charges of $10,498.39, totaling $498,093.84. According
to the terms of Note-1, PNC Bank is also due $95.87 per diem interest on the principal

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balance. Note-2 has a principal balance of $116,044.05 and late charges of $9,568.12,
totaling $123,189.35. According to the terms of Note-2, PNC Bank is also due $23.84
per diem interest on the principal balance. In addition to these balances, PNC Bank
requests reimbursement of costs, expenses and attorneys’ fees incurred in the course of
enforcing the Notes, including the prosecution of this action.
LEGAL STANDARD
Summary judgment is appropriate when the pleadings, discovery, disclosures,
and affidavits establish that there is no genuine issue of material fact, such that the
movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Winsley v.
Cook Cnty., 563 F.3d 598, 602-03 (7th Cir. 2009). The moving party bears the initial
burden of showing that no genuine issue of material fact exists. Celotex Corp. v.
Catrett, 477 U.S. 317, 325 (1986). The burden then shifts to the non-moving party to
show through specific evidence that a triable issue of fact remains on issues on which
the non-movant bears the burden of proof at trial. Id. The non-movant may not rest
upon mere allegations in the pleadings or upon conclusory statements in affidavits; it
must go beyond the pleadings and support its contentions with proper documentary
evidence. Id. In considering a motion for summary judgment, a court construes all
facts and draws all reasonable inferences in favor of the non-moving party. Smith v.
Hope Sch., 560 F.3d 694, 699 (7th Cir. 2009).

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DISCUSSION
PNC Bank moves the Court for the entry of judgment of foreclosure and sale.
Additionally, PNC Bank seeks 1) entry of a shorter period of redemption; 2) entry of
a personal judgment for a deficiency; 3) entry of an order placing the mortgagee in
possession or appointing a receiver; 4) a judgment of attorneys’ fees, costs, and
expenses; and 5) the appointment of a licensed auctioneer for the purpose of selling the
real estate at a public auction. Each request will be dealt with in turn.
I. Judgment of Foreclosure and Sale
PNC Bank brought this lawsuit pursuant to Illinois Mortgage Foreclosure Law,
735 ILCS 5/15-1101 et seq. Illinois Mortgage Foreclosure Law states that a final
judgment may be granted if the defendant opposing the judgment does not submit a
verified answer denying the facts in the complaint, or if the party states that they have
“no knowledge of such allegation sufficient to form a belief.” 735 ILCS 5/15-1506(a)
(1). If this occurs then “a sworn verification of the complaint or a separate affidavit
setting forth such facts, is sufficient evidence thereof against such party and no further
evidence of such fact shall be required.” Id. In these circumstances, the court may
enter a judgment of foreclosure “upon motion supported by an affidavit stating the
amount which is due the mortgage . . . where all the allegations of fact in the complaint

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have been proved by verification of the complaint or affidavit.” 735 ILCS 5/15-1506(a)
(2).
PNC Bank asserts that they are entitled to a final judgment, pursuant to 735 ILCS
5/15-1506(a) (2). In light of Mejia’s answer to PNC Bank’s complaint, the imposition
of a final judgment hinges on whether Mejia submitted a verified answer to the
complaint. If he did, PNC Bank cannot avail itself of a final judgment pursuant to 735
ILCS 5/15-1506(a) (2).

Under Illinois Law whenever an answer is to be verified,

sworn to, or made under oath, an affirmation must be provided by the person having the
knowledge of the matters. 735 ILCS 5/1-109. This affirmation is a certification that the
statements set forth in the submission are true and correct. Id.
Mejia answered PNC Bank’s complaint on October 15, 2012. The answer did
not include a certification that the statements affirming or denying the allegations in the
complaint were true and correct. Therefore, Mejia cannot avoid the imposition of a
final judgment, due to sufficiency of his answer. 735 ILCS 5/15-1506(a).
The record indicates that Mejia executed and delivered two Notes, secured by a
single mortgage. Mejia borrowed $520,000 under Note-1 and $240,000 under Note-2,
and agreed to repay PNC Bank the principal amount, plus the accrued interest in
monthly installments. The record also shows that as of September 2010 Mejia failed
to make the required payments specified in both Notes. As a result of Mejia’s default,

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PNC Bank asserts that they are entitled to foreclosure on the property securing the
mortgage.
Mejia has not contested PNC Bank’s motion for summary judgment, nor has he
submitted a statement of material facts pursuant to Rule 56.1. Mejia’s only submission
to the Court concerning PNC Bank’s complaint was the filling of an answer on October
15, 2012. Mejia’s answer admitted most of PNC Bank’s allegations with the exception
of several allegation which denied that the mortgage was in default status. Mejia did
not supplement his denials with any supporting evidence.
Mejia’s four affirmative defenses to PNC Bank’s complaint lack merit. Mejia’s
first and forth affirmative defenses, contest the accuracy of the accrued debts provided
in the PNC Bank’s complaint. Mejia has not supported his assertion with any evidence
establishing a contrary fact. In support of their motion for summary judgment, PNC
Bank has provided the affidavit of Assistant Vice President Williams, setting forth the
outstanding debts and additional fees owed by Mejia. The statement made by Williams
conforms to the requirements of an affidavit pursuant to Federal Rule of Civil Procedure
56. Fed. Rule. Civ. P. 56(c)(4). The Court finds the monetary sums provided by PNC
Bank represent an accurate reflection of the outstanding balance and fees owed by
Mejia.

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Mejia’s second affirmative defense asserts that a proceeding in Illinois State
Court would be more convenient for the parties. “[U]nless the balance is strongly in
favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.” Gulf
Oil Corp. v. Gilbert, 330 U.S. 501, 508-09 (1947); see also Zelinski v. Columbia 300,
Inc., 335 F.3d 633, 643 (7th Cir. 2003). Mejia resides in Will County, Illinois which
is located in the Northern District of Illinois, Eastern Division. In Mejia’s answer to
PNC Bank’s complaint, he admits that venue is proper. Section 1391(a) of the United
States Code expressly allows a civil action based on diversity of citizenship to be
brought in the judicial district where a defendant resides. 28 U.S.C. § 1391(a). As
specified in PNC Bank’s complaint and further admitted in Mejia’s answer, the case
involves a claim above $75,000 and involves a controversy between citizens of two
different states, as required for diversity jurisdiction. 28 U.S.C. § 1332(a). Mejia has
not submitted any evidence contradicting the propriety of venue or elicited compelling
evidence to justify disrupting PNC Bank’s choice of forum.
Finally, Mejia’s third affirmative defense asserts that the necessity of retaining
counsel to represent his interests in the action entitles him to the recovery of reasonable
attorney fees. Under the American rule, a party must pay its own attorneys’ fees and
expenses. Fednav Intern. Ltd. v. Cont’l. Insur. Co., 624 F.3d 834, 838-39 (7th Cir.
2010). This rule is subject to several exceptions that Mejia does not elicit or allege.

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The Court does not find that the circumstances Mejia elicited warrant an award of
reasonable attorneys’ fees.
PNC Bank has demonstrated that a valid contract existed and Mejia has not
contradicted any evidence supplied by PNC Bank. PNC Bank has also demonstrated,
through its affidavit of debt, the total amount that Mejia has outstanding on the two
loans. Mejia has not put forth any evidence upon which a reasonable jury would find
for him. Summary judgment is therefore granted in favor of PNC Bank. The Court will
enter a judgment of foreclosure and the property is ordered to be sold pursuant to 735
ILCS 5/15-1507.
1) Shorter Period of Redemption
PNC Bank seeks a shortened redemption period. In Illinois, only the specified
owner of a property may exercise their right to redeem the property from foreclosure,
unless the right has been validly waived. 735 ILCS 5/15-1603(a).

PNC Bank has

provided a copy of the mortgage signed by Mejia, which contains a provision waiving
his right of redemption. Considering Mejia’s consent to the provision of the mortgage
waiving his right of redemption, the Court finds that Mejia has validly waived his right
to redeem the property. PNC Bank’s request for a shortened redemption period is
granted.

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2) Personal Judgment for a Deficiency
PNC Bank asks the Court to grants their request for a personal judgment for a
deficiency. Under Illinois Mortgage Foreclosure Law a deficiency judgment may be
entered if the sale proceeds are not sufficient to satisfy the sum due to the lender. 735
ILCS 5/15-1508(e).
Considering the current posture of the case, the imposition of a personal
judgment for a deficiency is unwarranted because a sale has not taken place. Without
first establishing a final sale price, it is impossible to determine if a deficiency judgment
is appropriate. The Court denies PNC Bank’s request for the imposition of a personal
judgment for a deficiency, without prejudice.
3) Order Placing the Mortgagee in Possession or Appointing a Receiver
PNC Bank seeks an order placing themselves in possession of the property or in
the alternative to appoint a receiver. The right of a lender to be placed in possession of
a property secured by a loan is governed by Illinois state law. 735 ILCS 5/15-1701.
Under Illinois Mortgage Foreclosure Law, a lender’s rights to take possession of real
property are determined by the type of property which is subject to the mortgage.
Different standards exist for a lender taking possession of a residential versus
commercial property. Id. In certain circumstances, when residential property is subject

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to default, the contractual provisions of a mortgage allowing a lender to take possession
of a property in default are disregarded. Id.
In this case PNC Bank has not provided sufficient information to determine
which property category the secured property falls under to establish if they are entitled
to be placed in possession of the property. The contractual provisions of the mortgage
allowing PNC Bank to take possession of the property cannot be followed in the
absence of an adequate description of the property. PNC Bank’s request to be placed
in possession of the property is denied without prejudice until PNC Bank can show that
they are entitled to possession.
In the alternative, PNC Bank asks the Court to appoint a receiver for the property.
“The appointment of a receiver in a diversity case is a procedural matter governed by
federal law and federal equitable principles.” Aviation Supply Corp. v. R.S.B.I.
Aerospace, Inc., 999 F.2d 314, 316 (8th Cir. 1993); see also Canada Life Assurance Co.
v. LaPeter, 563 F.3d 837, 843 (9th Cir. 2009). Appointment of a receiver is an
extraordinary remedy and a court should exercise its discretion to appoint a receiver
with “care and caution.” Connolly v. Gishwiller, 162 F.2d 428, 435 (7th Cir. 1947).
Factors to be considered in the decision to appoint a receiver include; 1) fraudulent
conduct on the part of the defendant; 2) whether there is imminent danger of the
property being lost, diminished in value or squandered; 3) the inadequacy of the

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available legal remedies; 4) the probability that harm to a plaintiff would be greater than
the injury to the parties opposing appointment; and 5) the plaintiff’s probable success
in the action and the possibility of irreparable injury to their interest in the property. See
Consolidated Rail Corp. v. Fore River Ry. Co., 861 F.2d 322, 326-37 (1st Cir. 1988).
Because PNC Bank has not made a showing that any of the factors are satisfied
in this case, the Court denies PNC Bank’s request for appointment of a receiver without
prejudice.
4) Judgment for Attorneys’ Fees, Costs and Expenses
PNC Bank seeks a judgment for attorneys’ fees, costs, and expenses. PNC Bank
supports its request by eliciting the contractual provision of the signed mortgage
agreement which entitles PNC Bank to recover reasonable attorneys’ fees, costs and
expenses resulting from an action to enforce the terms of the mortgage.
The instant lawsuit seeks to enforce the default provision of the mortgage.
Therefore, PNC Bank may recover reasonable attorneys’ fees, costs and expenses. In
the absence of an affidavit supporting PNC Bank’s accrued attorneys’ fees, costs, and
expenses the Court cannot assess the reasonableness of those expenses. PNC Bank is
required to submit to the Court an accounting of all attorneys’ fees, costs, and expenses.
The Court grants PNC Banks request for the recovery of attorneys’ fees, costs, and

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expenses and will reserve the imposition of a judgment until such expenses can be
reviewed by the Court.
5) Appointment of Licensed Auctioneer
PNC Bank’s complaint seeks the appointment of a licensed auctioneer for the
purposes of selling the property pursuant to 735 ILCS 5/15-1506(2)(f). Under Illinois
Mortgage Foreclosure Law, if the initial complaint seeks the appointment of an
auctioneer, the court may specify an official or specific person who shall conduct the
foreclosure sale. 735 ILCS 5/15-1506(2)(f)(3).
The Court finds that PNC Bank sufficiently set forth its request for the
appointment of an auctioneer in its original complaint and therefore grants PNC Bank’s
request for the appointment of a licensed auctioneer for the purposes of selling the
defaulted property.
CONCLUSION
For the reasons set forth above, PNC Bank’s motion for summary judgment is
granted. The Court will enter a judgment of foreclosure and sale. PNC Bank’s request
for entry of a shorter period of redemption is granted, a personal judgment for a
deficiency is denied without prejudice. PNC Bank’s request for their placement in
possession of the property or appointment of a receiver is denied without prejudice. The
Court grants PNC Bank’s request for the award of attorneys’ fees, costs, and expenses,

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however suspends judgment pending the Court’s assent to the reasonableness of those
expenses, and grants the appointment of a licensed auctioneer.

Charles P. Kocoras
United States District Judge
Dated: January 16, 2013

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