In the closing days of the March term, the Illinois Supreme Court allowed a petition for leave to appeal in Wells Fargo Bank, N.A. v. McCluskey, a decision from the Second District reversing an order refusing to vacate a default judgment in a foreclosure suit. McCluskey presents the issue of whether a Section 2-1301(e) motion seeking to set aside the default can be granted after the sheriff’s sale has occurred.
After the defendant failed to make several monthly payments on her mortgage, the plaintiff filed an action of foreclosure. The defendant defaulted. On the day set for the sale, the defendant filed a motion for an emergency stay, seeking to vacate the default and halt the sheriff’s sale. The parties ultimately settled on an agreed order pursuant to which the defendant withdrew her motion, and the plaintiff agreed to postpone the sale for 75 days in order to allow the parties time to renegotiate the loan.
On the new date, the property sold to the plaintiff, who moved to confirm the sale. The defendant moved again to vacate the default, arguing that the plaintiff’s supporting affidavit was insufficient, and that plaintiff lacked standing to sue. The trial court confirmed the sale, holding that the defendant had withdrawn her earlier motion to stay in return for postponement of the sale, implicitly agreeing that the sale could go forward on the postponed date absent an agreement, and she could not now rescind her agreement. The defendant appealed the order denying the motion to vacate.
The plaintiff argued before the Appellate Court that her renewed motion was timely. She denied that she had waived the right to seek a further delay. Citing Mortgage Electronic Registration Systems, Inc. v. Barnes, the defendant responded that any motion to vacate brought after the sheriff’s sale was irreconcilable with Section 15-1508(b) of the Foreclosure Law regulating orders confirming foreclosure sales.
The Appellate Court rejected defendant’s argument and reversed the order denying plaintiff’s motion to vacate. Reaffirming its earlier decision in Merchants Bank v. Roberts, the Court held that in the "rare case" in which the defendant could present both a compelling excuse for his or her lack of diligence and a meritorious defense to the foreclosure action after the judicial sale has occurred, the trial court may vacate a default under Section 2-1301(e).
Having found that the defendant’s motion was timely made, the Court then turned to the merits. The Court held that the parties’ agreed order made no reference to the defendant giving up any right to bring a section Section 2-1301(e) motion. Nor did the Court find any basis for an implied waiver of the right to bring a second motion. Although a Section 2-1301(e) order is reviewed for abuse of discretion, the Court found that denying the motion based on waiver was a refusal to exercise discretion, and therefore by definition an abuse of discretion.
McCluskey should be decided by the Supreme Court in the winter or spring of 2013-2014.