CitiMortgage, Inc. v San Juan (IL)

Summary:  A foreclosing lender cannot make a Section 2-1401 motion after the sale is confirmed to vacate the proceedings on the basis of the lender’s own mistake of fact about the value of the collateral.

CitiMortgage, Inc. v San Juan, 2012 IL App (1st) 110626 (1st Dist. 2012).

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In August 2009, CitiMortgage Inc. (Citi) began an action to foreclose a cooperative security agreement between it, Vivian San Juan, and Cameron Basden who were shareholders in the cooperative building. The principal balance outstanding was $51,649, and in October 2009, Five Thousand East End Building Corporation (Building Corp.) filed an answer asserting a prior and superior interest to that of Citi. In November 2009, Building Corp. issued Citi a certificate identifying it as the owner of the shares which were held by San Juan and Basden. On January 21, 2010, the trial court determined Citi had the superior interest and entered the judgment of foreclosure and order of sale. The judgment of foreclosure provided that Citi shall pay any real estate taxes, assessments or any other advances during the statutory period of redemption.

On November 5, 2010, Citi motioned to vacate the judicial sale, the order confirming the sale, and the judgment of foreclosure and sought entry of an order for voluntary dismissal of the case pursuant to Section 2-1401 of Civil Procedure. Citi alleged that it was unaware that the cooperative was in the process of converting into condominiums, a process that had been ongoing for two years. Upon conversion, the buyouts would range from $60,000 to $176,000 which Citi claimed would render its purchase interest “virtually worthless and imposes upon it excessive liabilities, both of which were previously unknown to it.” Citi asserted that if Building Corp. had informed it about those changes, it would not have proceeded with the foreclosure action. On January 25, 2011, the trial court denied Citi’s Section 2-1401 petition for voluntary dismissal finding no meritorious defense stated within the petition. CitiMortgage appealed.


The appellate court affirmed the denial of voluntary dismissal. The Illinois Supreme Court has set forth the elements a petitioner must support with factual allegations. The petition must show: (1) the existence of a meritorious defense or claim; (2) due diligence in presenting this defense or claim to the circuit court in the original action; and (3) due diligence in filing the Section 2-1401 petition for relief. Citi contended that, as the petitioner for dismissal of a judgment entered in its favor, it was not required to satisfy the elements. The court rejected this contention and has found no exception to the elements a petitioner must support.

A petitioner establishes a meritorious claim or defense if he or she “alleges facts that would have prevented entry of the judgment if they had been known by the trial court.” Citi failed to establish a meritorious claim because although it may not have decided to continue the foreclosure and sale if it was aware of the conversion, they do not establish that the trial court would not have entered the judgment if it was aware of those facts. The appellate court will only reverse a Section 2-1401 petition where the trial court abused its discretion, and these facts do not support a contention that the trial court abused its discretion. CitiMortgage’s lack of due diligence was the primary cause for its detriment.

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By: ATG Underwriting Department | Posted on: Wed, 12/05/2012 - 2:32pm