Mortgage Foreclosure - Bank Fails to Make Diligent Efforts To Serve Defendant - Default Judgment Reversed

CITIMORTGAGE, INC. v. Cotton, Ill: Appellate Court, 1st Dist., 2nd Div. 2012 - Google Scholar:

This is a mortgage foreclosure case in which Citimortgage was unable to serve the defendant and obtained service by publication.  On appeal, the court held that the bank failed to make diligent efforts to serve the defendant and the default judgment was reversed.

There are two standards that govern service - diligent inquiry and due inquiry.  The court explains the difference: "The plaintiff must conduct both "diligent inquiry" in ascertaining the defendant's residence and "due inquiry" in ascertaining the defendant's whereabouts before the plaintiff can properly execute an affidavit stating that the defendant cannot be found. Bell Federal Savings & Loan Ass'n v. Horton, 59 Ill. App. 3d 923, 927-28, 376 N.E.2d 1029, 1033 (1978)."

Here, the bank failed to contact Cotton's attorney or attempt to reach Cotton at his job.  Thus, the bank may have failed to make "due inquiry."

After the judgment was entered, Cotton filed a motion for reconsideration, and a supporting affidavit, arguing that the bank's efforts to find him were lacking.

The case was remanded to the circuit court so that the court could conduct a hearing on what efforts the bank made.

Comment; the lesson here is that service by publication may be challenged.  Personal service is always the best idea.

Edward X. Clinton, Jr.

www.clintonlaw.net



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Fraudulent Transfer - Appellate Court Upholds Judgment In Favor Of Creditor Against Wife Of Debtor

HARRIS NA v. Harris, Ill: Appellate Court, 1st Dist., 1st Div. 2012 - Google Scholar:

This is an appeal from a grant of summary judgment in favor of Harris Bank against Sheri Harris, the ex-wife of Stuart Levine.

The bank alleged that in 2002 Levine allegedly defaulted on a $3.3 million dollar note due to the Bank and to avoid collection had transferred assets to his wife for no consideration.  The asset transfers rendered Levine insolvent, so he was unable to pay Harris bank.

Ms. Harris argued that the bank's case was barred by a 2008 federal forfeiture judgment.  The trial court and the appellate court disagreed, holding instead that the forfeiture judgment only applied to two of Levine's assets, not the rest of the disputed property.

The court found that Ms. Harris forfeited two arguments (a) that there was adequate consideration for the transfers; and (b) that the property was marital property in which she had a 50% interest, because Ms. Harris failed to raise these issues before the trial court.  The court states: "Because neither this argument nor any evidence supporting it was presented to the circuit court, we deem the argument forfeited on appeal. See Cooney v. Magnabosco,407 Ill. App. 3d 264, 268, 943 N.E.2d 290 (2011) (stating that an appellant that fails to raise an issue in the circuit court waives that issue for purposes of appeal)."

In sum, a classic fraudulent transfer case.

Edward X. Clinton, Jr.

www.clintonlaw.net



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