                                    2014 IL App (3d) 130107

                                  Opinion filed January 30, 2014


                                              IN THE

                              APPELLATE COURT OF ILLINOIS

                                        THIRD DISTRICT

                                             A.D., 2014

CITIMORTGAGE, INC., Assignee of                  )   Appeal from the Circuit Court
Mortgage Electronic Registration Systems,        )   of the 12th Judicial Circuit,
Inc., as Nominee for Draper and Kramer           )   Will County, Illinois
Mortgage Corporation,                            )
                                                 )
       Plaintiff-Appellee,                       )
                                                 )
v.                                               )
                                                 )   Appeal No. 3-13-0107
SHERRIE L. SHARLOW,                              )   Circuit No. 09-CH-6246
                                                 )
       Defendant-Appellant                       )
                                                 )
(American General Financial Services of          )
Illinois, Inc., Under Mortgage Recorded as       )
Document Number R2006087225; and                 )
Marquette's Estates Homeowners                   )   Honorable
Association,                                     )   Richard J. Siegel,
                                                 )   Judge, Presiding.
       Defendants).


       JUSTICE CARTER delivered the judgment of the court, with opinion.
       Justice Holdridge concurred in the judgment and opinion.
       Justice O'Brien dissented, with opinion.


                                             OPINION

¶1     About 22 months after the judicial foreclosure sale of her property was confirmed by the

trial court, defendant, Sherrie L. Sharlow, filed a petition under section 2-1401 of the Code of
Civil Procedure (Code) (735 ILCS 5/2-1401 (West 2012)) to modify the order confirming the

sale, alleging that a surplus existed from the sale of her property and that she was entitled to that

surplus. Plaintiff, the mortgagee that had foreclosed upon the property and that had purchased

the property at the sheriff's sale, opposed the petition, claiming that no surplus existed and that

the unallocated amount, over $10,000, was attributable to accrued postjudgment interest and

additional costs and advances that plaintiff was due. Following a hearing, the trial court denied

defendant's section 2-1401 petition. Defendant appeals. We affirm the trial court's judgment.

¶2                                             FACTS

¶3     Defendant owned certain real property in Romeoville, Will County, Illinois. The

property had a mortgage on it, upon which defendant defaulted. Plaintiff received an assignment

of the mortgage and later, in December 2009, filed a complaint to foreclose upon the mortgage.

During the foreclosure proceedings, defendant was personally served, did not appear, and was

eventually defaulted. On February 25, 2010, the trial court entered a judgment of foreclosure

and order of sale of the property (collectively referred to as the judgment, the judgment of

foreclosure, or the foreclosure judgment). The judgment listed the total amount of indebtedness

as $208,189.93, which included principal of $183,786.61; accrued interest of $13,042.15; and

certain fees, costs, and advances of $11,361.17. Included in the total amount of the indebtedness

listed was plaintiff's reasonable attorney fees of $1,125. In addition, the foreclosure judgment

provided that plaintiff was entitled to collect any nonreimbursed postjudgment costs that it

incurred in connection with the sale of the property and the perfection of the certificate of sale

and was also entitled to collect postjudgment interest of 9% per year from the date of the

foreclosure judgment until the date of sale. Furthermore, the foreclosure judgment contained

language pursuant to Illinois Supreme Court Rule 304(a) (eff. Jan. 1, 2006) that there was no just

                                                  2
reason to delay enforcement or appeal of the judgment.

¶4     The redemption period expired on June 27, 2010. On August 25, 2010, the property was

sold at a sheriff's sale. Prior to the sale, a notice was mailed to defendant, although there is no

indication in the record as to whether that notice was received. Notice was also given by

publication, and a certificate of publication was filed in the trial court. Plaintiff purchased the

property at the sale with a winning bid of $219,624.17, and later assigned the certificate of sale

to the United States Department of Housing and Urban Development (HUD). The sheriff's

report from the sale indicated that the money received was to be distributed as follows: $15 to

the clerk of the court; $1,146.73 to the sheriff's office for various fees, commissions, and

expenses; $25.75 to the recorder of deeds; and the remaining balance of $218,436.69 to plaintiff,

which included attorney fees of $1,125 per the judgment of foreclosure and postjudgment

advances of $1,006.55.

¶5     Plaintiff moved to confirm the sale and provided notice by mail to defendant, although

there is no indication in the record as to whether that notice was received. On October 21, 2010,

an order was entered confirming the sale and approving the disbursement of the proceeds as

provided for in the sheriff's report. The order indicated that the trial court found that there was

no surplus or deficiency from the sale and that the proceeds of the sale were sufficient to pay the

amount due to plaintiff in full. The order also contained a Rule 304(a) finding that there was no

just reason to delay enforcement or appeal of the order. After the sale was confirmed, the sheriff

issued a deed to the subject property to HUD on January 3, 2011, and HUD later recorded the

deed on March 25, 2011.

¶6     On August 9, 2012, defendant filed a section 2-1401 petition to modify the order



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confirming the sale.1 In the petition, defendant alleged that she was initially unaware that the

property had been sold; that during the spring and summer of 2010, she had participated in loan

modification discussions with plaintiff and had obtained permission to complete a short sale of

the property; that she had contacted a real estate agent in July 2010 to list the property and was

later told by the agent that the property had been sold; that upon inquiring further, defendant was

assured by plaintiff that no sale had been conducted; that an examination of the sheriff's report

and the order confirming the sale showed that there was a surplus of over $10,000 from the sale

of the subject property; that despite that surplus, the order confirming the sale incorrectly stated

that there was no surplus or deficiency; that defendant was not notified of the surplus or aware of

the sale or the surplus; that sometime later, defendant received a federal income tax notice

relating to the sale of the subject property; and that as a result of the federal tax notice, defendant

was required to amend her tax filings and to pay income tax on a surplus from the sale, which

she never received. Defendant also alleged that because her petition was in the nature of a bill of

review to correct an obvious legal error, she was not required to establish due diligence.

Defendant attached to her petition an affidavit in which she attested to the facts set forth in the

petition. Defendant also attached a copy of the tax notice she received.

¶7     Plaintiff filed a response and opposed the petition. In its response, plaintiff alleged that

defendant had failed to show due diligence, that no surplus had been generated, and that the

unallocated discrepancy in the amount was attributable to accrued interest of $9,240.21 and

additional postjudgment fees, costs, and advances of $1,006.55 to which plaintiff was entitled.



       1
           It appears that the same section 2-1401 petition was filed again in the trial court on

October 5, 2012.

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Plaintiff attached to the response an itemized list of its fees, costs, advances.

¶8     Defendant filed a reply and asserted that she had filed the section 2-1401 petition within

a reasonable time after she had learned that a sale of the property had supposedly provided her

with taxable income; that she was not required to establish due diligence since she was only

raising errors of law and other matters appearing of record; that plaintiff was not allowed to

collect postjudgment interest under the law; that plaintiff could not explain away the surplus or

why it reported a surplus to the Internal Revenue Service; and that plaintiff's explanation

included additional prejudgment fees, costs, and advances of $1,521.50 that were not made a part

of the record until plaintiff responded to the petition and postjudgment interest of $9,240.21 that

was not permitted under the law.2

¶9     A hearing was held on the petition over two days in November 2012 and January 2013.

No evidence was presented at the hearing, other than the information from the sheriff's files in

the case, which had been requested by the trial court. After listening to the arguments of the

attorneys, the trial court found that defendant was not required to establish due diligence but

ultimately denied defendant's section 2-1401 petition. Defendant appealed.



       2
           In calculating the amount that plaintiff received from the sale, it appears that defendant

counted the amount of plaintiff's attorney fees twice. That amount was already included in the

total amount of the indebtedness listed in the foreclosure judgment. Thus, we believe that the

two amounts that plaintiff received that are in dispute in this appeal are $9,240.21 in

postjudgment interest and $1,006.55 in postjudgment costs and advances. Other than when

referencing defendant's argument on appeal, we will use those two amounts throughout this

opinion as the amounts that are in dispute.

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¶ 10                                        ANALYSIS

¶ 11   Defendant argues on appeal that the trial court erred in finding that there was no surplus

from the sheriff's sale of the property and in denying on that basis defendant's section 2-1401

petition to modify the order confirming the sale. Defendant asserts that a surplus existed and

that her petition should have been granted because the unallocated amount in the sheriff's report

at the confirmation hearing could not have been attributed to plaintiff's postjudgment interest and

costs since postjudgment interest was not allowable under the law and since plaintiff presented

no evidence as to any additional costs that it had incurred. Defendant asks, therefore, that we

reverse the trial court's order dismissing or denying her section 2-1401 petition and that we

remand this case for further proceedings, which would include the trial court issuing the surplus

amount to defendant.

¶ 12   Plaintiff argues that the trial court's ruling was proper and should be affirmed. In support

of its argument, plaintiff asserts that: (1) defendant's petition was barred as a matter of law under

section 15-1509(c) of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1509(c) (West

2012)) because title to the property had already been transferred to HUD; (2) defendant's petition

was properly dismissed or denied as a matter of law because defendant failed to establish that

she had exercised due diligence in presenting her claim in the original action or in filing her

section 2-1401 petition; (3) plaintiff was entitled to 9% postjudgment interest as provided for in

the foreclosure judgment and as allowed under the law; and (4) the evidence in the record was

sufficient to establish that the indebtedness due on the date of the sale was the exact amount that

was bid by plaintiff and that the unallocated amount was attributable to additional funds that

were due to plaintiff for postjudgment interest and costs.

¶ 13   As to the application of section 15-1509(c), defendant responds first that plaintiff has

                                                  6
forfeited that assertion by failing to raise it in the trial court. Second, and in the alternative,

defendant responds that even if plaintiff's assertion is not forfeited, defendant should still prevail

because, although section 15-1509(c) prevents a party from contesting title, it does not prevent a

party from contesting the distribution of the sale proceeds, which is what defendant is seeking to

do in the instant case. As to plaintiff's due-diligence assertion, defendant responds first that due

diligence was not required because her petition was in the nature of a bill of relief, and, second,

and in the alternative, that if due diligence was required, she presented sufficient factual

information to establish that she acted diligently upon learning that she was being assessed a tax

liability due to an alleged surplus generated from the sale. In making those responses, defendant

notes that the trial court agreed with her and found that due diligence was not required.

Defendant notes further that under the law, the due-diligence requirement may be relaxed where

justice so requires.

¶ 14    The appellate court applies a de novo standard of review in cases in which the trial court

either dismissed a section 2-1401 petition or ruled on the petition based on the pleadings alone,

without an evidentiary hearing. People v. Vincent, 226 Ill. 2d 1, 18 (2007). As the trial court's

denial of the section 2-1401 petition in the present case was made without an evidentiary

hearing, we will apply a de novo standard of review. See id. In addition, to the extent that we

are called upon to resolve questions of statutory interpretation in our resolution of this issue, we

will consider those questions under a de novo standard of review as well. See Gaffney v. Board

of Trustees of the Orland Fire Protection District, 2012 IL 110012, ¶ 50.

¶ 15    As a preliminary matter, we must first address plaintiff's assertion on appeal that

defendant's section 2-1401 petition was barred as a matter of law under section 15-1509(c) of the

Mortgage Foreclosure Law (735 ILCS 5/15-1509(c) (West 2012)) because prior to the filing of

                                                    7
the section 2-1401 petition, a deed to the property had been issued by the sheriff to HUD and had

been recorded. As defendant correctly points out, however, plaintiff has forfeited that assertion

by failing to raise it in the trial court proceedings. Norway Tree Farm, Inc. v. Baugher, 8 Ill.

App. 3d 1061, 1062 (1972) ("issues, questions, points or contentions not presented in the trial

court and properly preserved for review will not be considered on appeal"). Even if that

assertion had not been forfeited, we would have rejected it as defendant did not seek to set aside

the foreclosure judgment or the sale of the property. Defendant's only claim was as to the

proceeds from the sale, a claim that was not barred by section 15-1509(c). See First Bank &

Trust Co. of O'Fallon v. King, 311 Ill. App. 3d 1053, 1058-60 (2000) (in a mortgage foreclosure

proceeding, the appellate court pointed out that under section 15-1509(c) of the Mortgage

Foreclosure Law, the debtor could only claim an interest in the proceeds of the sale, not an

interest in the property itself). To the extent that plaintiff relies upon U.S. Bank National Ass'n v.

Prabhakaran, 2013 IL App (1st) 111224, in support of its assertion to the contrary, we believe

that plaintiff's reliance is misplaced. Unlike defendant in the present case, the mortgagor in

Prabhakaran sought to vacate the foreclosure decree and the order confirming sale and did not

limit her claim to only an interest in the proceeds from the sale. See Prabhakaran, 2013 IL App

(1st) 111224, ¶¶ 1, 16. Thus, we believe that the facts of Prabhakaran are distinguishable from

the facts of the instant case.

¶ 16    As a second preliminary matter, we must also address plaintiff's claim on appeal that

defendant's section 2-1401 petition was properly denied or dismissed as a matter of law because

defendant failed to establish due diligence. While it is true that in general, a section 2-1401

petitioner must establish due diligence in both contesting the underlying action and in bringing

the section 2-1401 petition (Paul v. Gerald Adelman & Associates, Ltd., 223 Ill. 2d 85, 94

                                                  8
(2006)), we agree with the trial court and with defendant that due diligence is not required under

the law when the section 2-1401 petition is in the nature of a bill of review (Aurora Loan

Services, LLC v. Pajor, 2012 IL App (2d) 110899, ¶ 19). In reaching that conclusion, we note,

however, that if due diligence had been required in this case, we would have found that

defendant had satisfied that requirement. The evidence established that defendant, who

apparently had no intention of contesting the foreclosure or the sale of her property, promptly

filed her section 2-1401 petition after she received a tax notice from the plaintiff relating to the

sheriff's sale and learned that there was a possible surplus from the sale and that she had a

potential tax liability from that surplus.

¶ 17    Having determined that defendant's section 2-1401 petition was not barred by section 15-

1509(c) of the Mortgage Foreclosure Law or by the due diligence requirement, we turn now to

the more substantive questions raised in the issue presented. The first of which is whether

plaintiff was legally entitled to collect postjudgment interest, which had allegedly accrued from

the date of the foreclosure judgment to the date of the sheriff's sale.3 Under the Mortgage

Foreclosure Law, there is no specific statutory section that provides for the collection of

postjudgment interest from the date of the foreclosure judgment to the date of the sheriff's sale.

Postjudgment interest is not specifically referenced, or even implied, in the statutory sections

that address the foreclosure judgment itself (735 ILCS 5/15-1506 (West 2012)), the sheriff or

judicial sale (735 ILCS 5/15-1507 (West 2012)), the report of and confirmation of that sale (735

ILCS 5/15-1508 (West 2012)), or the application of the sale proceeds (735 ILCS 5/15-1512



        3
            Defendant does not dispute the total amount of the interest or the interest rate but only

whether plaintiff was legally entitled to collect that interest in the first place.

                                                    9
(West 2012)). Postjudgment interest, however, is addressed in the statutory section on

redemption (735 ILCS 5/15-1603 (West 2012)). Under that section, a person who redeems the

property within the redemption period must pay postjudgment interest for the period from the

date of the foreclosure judgment to the date of redemption at the contract interest rate provided

for in the mortgage documents or loan agreement. 735 ILCS 5/15-1603(d)(1)(vi) (West 2012).

¶ 18   The Mortgage Foreclosure Law, however, also incorporates and includes application of

the provisions of article II of the Code to the extent that those provisions are not contrary to the

provisions of the Mortgage Foreclosure Law. See 735 ILCS 5/15-1107(a) (West 2012). Under

article II of the Code, there is a statutory section that specifically addresses postjudgment

interest. Section 2-1303 of the Code provides that "[j]udgments recovered in any court shall

draw interest at the rate of 9% per annum from the date of the judgment until satisfied." 735

ILCS 5/2-1303 (West 2012). Thus, the question in this case becomes whether the foreclosure

judgment was a judgment as referenced in section 2-1303 of the Code, upon which postjudgment

interest could be collected. The answer to that question, as framed by the parties' arguments in

this case, is controlled by whether the judgment of foreclosure is a final and appealable

judgment.

¶ 19   The general rule in Illinois is that a foreclosure judgment (and order of sale) is not a final

and appealable judgment because it does not dispose of all of the issues between the parties and

does not terminate the litigation. In re Marriage of Verdung, 126 Ill. 2d 542, 555-56 (1989);

Wells Fargo Bank, NA v. Heritage Bank of Central Illinois, 2013 IL App (3d) 110706, ¶ 11; JP

Morgan Chase Bank v. Fankhauser, 383 Ill. App. 3d 254, 260 (2008). Rather, it is the order

confirming or approving the sale that conclusively establishes the purchaser's right to the

property and gives final approval to the proposed distribution of the sale proceeds and that

                                                  10
constitutes the final and appealable order in a foreclosure case. Id. That general rule, however,

does not apply where the trial court has made a Rule 304(a) finding that there is no just reason to

delay enforcement or appeal of the foreclosure judgment. See id. Under those circumstances, a

judgment of foreclosure is a final and appealable judgment. Verdung, 126 Ill. 2d at 555-56;

Fankhauser, 383 Ill. App. 3d at 260.

¶ 20   In the present case, the foreclosure judgment contained Rule 304(a) language and was,

therefore, a final and appealable judgment. See id. Because there is no provision in the

Mortgage Foreclosure Law barring the collection of postjudgment interest and because the

Mortgage Foreclosure Law specifically incorporates article II of the Code, section 2-1303

applies and, pursuant to that section, plaintiff was entitled to collect postjudgment interest from

the date of the foreclosure judgment until the date of the sale.4 See Carson v. Rebhan, 294 Ill.

App. 180, 182-83 (1938) (in a mortgage foreclosure case, the appellate court held that interest

should have been calculated on the principal at the contract rate until the date of the foreclosure

decree and at the statutory legal rate for judgments after that date); In re Daniels, 102 B.R. 680,

683 (Bankr. N.D. Ill. 1989) (the district court recognized that under Illinois law in a mortgage



       4
           We take no position on whether plaintiff's collection of interest from the date of the

foreclosure judgment to the date of the sheriff's sale would have been proper without the addition

of a Rule 304(a) finding in the foreclosure judgment, as that issue has not been presented to this

court in this case. See Illinois State Toll Highway Authority v. Heritage Standard Bank & Trust

Co., 157 Ill. 2d 282, 295-301 (1993) (discussing prejudgment and postjudgment interest under

section 2-1303 of the Code).



                                                  11
foreclosure proceeding, interest accrues at the contract rate until the judgment of foreclosure and

at the statutory legal rate under section 2-1303 of the Code after that point).

¶ 21   In reaching the conclusion that plaintiff was legally entitled to collect the postjudgment

interest in question, we must comment upon the case of Standard Bank & Trust Co. v.

Callaghan, 215 Ill. App. 3d 76 (1991), a case which is heavily relied upon by defendant on

appeal. Although as defendant correctly points out, the appellate court in Standard Bank

rejected a mortgagee's claim for statutory postjudgment interest under section 2-1303 of the

Code, it did so based upon a prior version of the mortgage law in Illinois, which allowed for the

entering of a conditional judgment of balance due when a deficiency existed. See Standard

Bank, 215 Ill. App. 3d at 81. According to the appellate court in that case, the conditional

judgment was not considered to be a judgment for which the borrower was personally liable (a

personal judgment against the borrower) but, rather, was to be interpreted as an alternative

decree as to the amount the borrower had to pay to avoid a foreclosure sale of the property. See

id. That holding has no application in the present case where neither a conditional judgment nor

a deficiency is involved.

¶ 22   The other substantive question raised in the issue presented is whether plaintiff was

entitled to certain postjudgment costs and advances without presenting any evidence at or prior

to the time of the order confirming the sale as to what specifically those costs or advances were.

We believe that under the facts of the particular case, reimbursement of plaintiff's postjudgment

costs and advances was appropriate. Under section 15-1508 of the Mortgage Foreclosure Law,

the order confirming the sale of foreclosed property may also approve the mortgagee's

postjudgment fees and costs to the extent that they are provided for in the note and mortgage and

sought by the mortgagee in the proceedings. 735 ILCS 5/15-1508(b)(1), 15-1504 (West 2012).

                                                 12
In its complaint for foreclosure in the present case, plaintiff sought to be reimbursed for its

reasonable attorney fees, costs, and advances. Plaintiff's attorney fees and its prejudgment costs

and advances were included in the amount of the indebtedness listed in the foreclosure judgment.

In addition, pursuant to section 15-1508 and the provisions of the foreclosure judgment, plaintiff

was allowed to be reimbursed for its postjudgment costs and advances. See 735 ILCS 5/15-1508

(West 2012). The amount of the postjudgment costs and advances, although not itemized, was

specifically listed in the sheriff's report and approved by the trial court when the trial court

approved and confirmed the sale of the property and the disbursement of the proceeds. Thus, we

find that the reimbursement of plaintiff's costs and advances from the proceeds of the sheriff's

sale was proper in the present case and we reject defendant's argument to the contrary.

¶ 23                                       CONCLUSION

¶ 24   For the foregoing reasons, we affirm the judgment of the circuit court of Will County.

¶ 25   Affirmed.

¶ 26   JUSTICE O'BRIEN, dissenting.

¶ 27   I dissent from the majority because I do not believe postjudgment interest can accrue

until it is determined whether the collateral is sufficient to satisfy the debt secured by the

mortgage.

¶ 28   I agree that mortgagees are entitled to postjudgment interest under section 2-1303 of the

Code of Civil Procedure (735 ILCS 5/2-1303 (West 2010)). My disagreement with the majority

opinion stems from the point of time when postjudgment interest may begin to accrue in this

setting. Pursuant to the statute on judgment interest, interest shall be computed and charged only

on the unsatisfied portion of the judgment. 735 ILCS 5/2-1303 (West 2010).



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¶ 29    In a mortgage foreclosure case, there is no determination about whether there is an

outstanding judgment until such time as the mortgaged property is sold in accordance with the

mortgage foreclosure statute. See 735 ILCS 5/15-1508(b)(2) (West 2010) (it is the order

confirming sale that may provide for a personal judgment against any party for a deficiency).

Only after the sheriff's sale can it be determined whether the debt will be satisfied or whether

there is some portion that remains due and owing to the mortgagee to which postjudgment

interest can be applied. See Standard Bank & Trust Co. v. Callaghan, 215 Ill. App. 3d 76

(1991); see also Thatch v. Missouri Pacific R.R. Co., 69 Ill App. 3d 48 (1979) (a defendant

should not be held responsible for a judgment and its accrued interest until the extent of that

liability is settled).

¶ 30    In cases where the proceeds from the sheriff's sale of the mortgaged property do not

satisfy the debt owed to the mortgagee, it is entirely appropriate to calculate postjudgment

interest commencing with the date of the entry of the judgment of foreclosure. This is because

the sheriff's sale has determined the fair market value of the property. See Weiner v. Landry,

131 Ill. App.2d 221 (1970). If, however, the sale of the mortgaged property fully satisfies the

debt, the judgment is likewise satisfied and it is inappropriate to invoke the provisions of the

postjudgment interest act. That is what happened here.

¶ 31    Once the judgment for foreclosure was entered in this case, the mortgagee obtained the

right to the mortgaged property, subject only to the right of redemption of the defendant (which

too would have guaranteed full satisfaction of the debt to the mortgagee). Since the defendant

did not redeem, the mortgagee exercised its right to sell the mortgaged property and apply the

sale proceeds to the debt. In an unusual turn of events, the mortgaged property was sold for an

amount that exceeded the amount of the debt. As such, there was no unsatisfied judgment owed

                                                 14
by the defendant. Generally, when there is a default upon a debt secured by a mortgage, the

lender should be made whole but not better than he or she would have been had the contract been

fully performed. 55 Am. Jur. 2d Mortgages § 573 (2013). Because the mortgaged property was

of sufficient value to make the mortgagee whole, I would find the award of postjudgment

interest inappropriate. To that end, I would reverse the judgment of the trial court and remand to

the trial court for a hearing to determine the proper allocation of the proceeds from the sale of

the property.




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