The Limitations of Rule 304: Is An Order of Foreclosure Appealable?

Our preview of the September term of the Illinois Supreme Court continues with EMC Mortgage Corp. v. Kemp [pdf].

Kemp involves a tangled procedural history, but ultimately, a reasonably simple question: when can you appeal from an order for the foreclosure sale of a home?

Plaintiff filed its foreclosure complaint in the summer of 2006. The defendant responded by challenging the plaintiff's capacity to sue as the legal holder of the mortgage, first in an answer, and later in a counterclaim. In response to the counterclaim, the plaintiff filed an affidavit from an assistant vice president saying that the original lender had assigned the loan to the plaintiff on December 29, 2006.

The defendant filed a slander of title counterclaim, which the trial court dismissed. Ultimately, in June 2009, the trial court finally entered a judgment of foreclosure. But after reconsideration was denied, the defendant filed for bankruptcy. The bankruptcy court ultimately lifted the stay, and several more battles ensued. In October 2010, the defendant offered a new attack on the plaintiff's standing, pointing out that although the bankruptcy order lifting the stay on the sheriff's sale listed "EMC Mortgage Corporation/Chase Home Finance LLC" as the relevant party, none of the orders before that had said anything about Chase as the successor to EMC. The trial court denied the defendant's motion to overturn the sale entirely, but granted language under Supreme Court Rule 304, which permits the immediate appeal of final judgments involving less than all parties when there is no just reason for delay. The court noted that while there seemed to be some question of plaintiff's standing, there was also grounds for disquiet about the timing of defendant's objection. Not long after, the defendant filed a motion for reconsideration, pointing out that plaintiff appeared to have acquired the mortgage several months after filing its complaint. The trial court denied reconsideration, but once again included Rule 304 language.

Before the Appellate Court, the defendant argued that nobody can sue to foreclose a mortgage he doesn't own. The plaintiffs responded that the Appellate Court had no jurisdiction to resolve anything; Rule 304 only made orders which were otherwise final appealable, and foreclosures couldn't be appealed until the sheriff's sale has happened. The defendant replied that since she was appealing from denial of an Emergency Motion to Vacate Judgment under Section 2-1401 of the Code of Civil Procedure, 735 ILCS 5/2-1401, she didn't need the Rule 304 language in the first place -- the order was already appealable. The problem was, according to the Appellate Court, that a Section 2-1401 motion assumed an underlying final order. If the underlying order wasn't final -- and the order of foreclosure wasn't -- then defendant labeling her motion a Section 2-1401 motion didn't make it one, and the result wasn't final or appealable.

Kemp will be argued at the 9:00 am session of the Court on Tuesday, September 18, 2012. Join us back here later today for a preview of the argument in In re Marriage of Mathis.

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