                                            2016 IL App (1st) 152783
                                                 No. 1-15-2783
                                              September 30, 2016

                                                                                         SECOND DIVISION



                                                      IN THE

                                      APPELLATE COURT OF ILLINOIS

                                                FIRST DISTRICT


     CATHAY BANK, f/k/a NAB Bank,               )                  Appeal from the Circuit Court
                                                )                  Of Cook County.
            Plaintiff-Appellee,                 )
                                                )                  No. 13 CH 21936
            v.                                  )
                                                )
     HELEN R. ACCETTURO; UNITED STATES )                           The Honorable
     OF AMERICA, DEPARTMENT OF                  )                  Daniel Patrick Brennan,
     TREASURY; UNKNOWN OWNERS;                  )                  Judge Presiding.
     UNKNOWN TENANTS; and NONRECORD )
     CLAIMANTS,                                 )
                                                )
            Defendants                          )
     (Helen R. Accetturo, Defendant-Appellant). )



                     JUSTICE NEVILLE delivered the judgment of the court, with opinion.
                     Presiding Justice Hyman and Justice Pierce concurred in the judgment and
         opinion.


                                                   OPINION

¶1           On September 25, 2013, the plaintiff, Cathay Bank, formerly known as NAB Bank, 1 filed

         a mortgage foreclosure action against the defendants, Helen Accetturo; United States of


             1
             Cathay Bank informed Accetturo in a March 19, 2012 and in an August 6, 2013 letter that NAB Bank was
     now known as Cathay Bank.
     No. 1-15-2783


         America, Department of Treasury; unknown owners; unknown tenants; and nonrecord

         claimants, to obtain possession of the property located at 3624 South Paulina Street, Chicago,

         Illinois, because Accetturo failed to make payments on her note from December 1, 2011, to

         the present. On June 3, 2014, Accetturo filed an answer and affirmative defenses, which

         maintained that Cathay Bank failed to satisfy a contractual condition precedent by failing to

         submit a notice of acceleration prior to filing the foreclosure action. On March 5, 2015, the

         circuit court entered an order granting Cathay Bank’s motion for summary judgment. On

         March 5, 2015, the circuit court also entered a judgment of foreclosure and sale against

         Accetturo. On April 3, 2015, Accetturo filed a motion to reconsider. On July 17, 2015, the

         circuit court entered an order denying the motion to reconsider. On August 27, 2015, the

         circuit court entered an order approving the report of sale and distribution, confirmed the

         sale, entered an order of possession, and entered a personal deficiency judgment in the

         amount of $11,964.86 against Accetturo. The deed was subsequently conveyed to the

         purchaser on September 9, 2015. 2 On September 25, 2015, Accetturo filed her notice of

         appeal.

¶2                 We find that a notice provision with an acceleration clause in a mortgage is a

         condition precedent and prescribes servicing requirements that a lender must comply with in

         order for the lender to have a right to file an action to recover possession of a secured

         property. Kingdomware Technologies, Inc. v. United States, 579 U.S. ___, ___, 136 S. Ct.



              2
               We take judicial notice of the fact that a deed was conveyed to the purchaser and reported by the Cook
     County recorder of deeds on September 9, 2015. Swieton v. Landoch, 106 Ill. App. 3d 292, 299 (1982) (courts may
     take judicial notice of a deed filed with the recorder of deeds as such a document is a public record); see also Wells
     Fargo Bank, N.A. v. Simpson, 2015 IL App (1st)142925, ¶ 4 n.1.


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     No. 1-15-2783


        1969, 1978 (2016); People v. Pomykala, 203 Ill. 2d 198, 205-06 (2003). We also find that

        Cathay Bank failed to comply with the condition precedent in paragraph 21 of the mortgage

        and that Cathay Bank’s failure to give Accetturo the notice required by paragraph 21 divested

        the lender of its right to file this foreclosure action. Because we find that Cathay Bank had no

        right to file this foreclosure action, we hold that the circuit court erroneously granted Cathay

        Bank’s motion for summary judgment and abused its discretion when it entered the August

        27, 2015, order approving the report of sale and distribution. Accordingly, because Cathay

        Bank had no right to file this foreclosure action, we reverse the circuit court’s March 5, 2015,

        order granting Cathay Bank’s motion for summary judgment and vacate all subsequent

        orders because Cathay Bank must comply with the notice of acceleration clause in paragraph

        21 of the mortgage before filing a foreclosure action.

¶3                                            BACKGROUND

¶4         On January 17, 2003, Accetturo executed a note and mortgage in the amount of $141,000

        naming “NAB BANK, IT’S [sic] SUCCESSORS AND/OR ASSIGNS,” now Cathay Bank,

        as the lender. The mortgage contained a “Transfer of the Property or a Beneficial Interest in

        Borrower” provision in paragraph 17 which provided:

                     “If all or any part of the Property or any interest in it is sold or transferred

               (or if a beneficial interest in Borrower is sold or transferred and Borrower is

               not a natural person) without Lender’s prior written consent, Lender may, at

               its option, require immediate payment in full of all sums secured by this

               Security Instrument. However, this option shall not be exercised by Lender if

               exercise is prohibited by federal law as of the date of this Security Instrument.


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                     If Lender exercises this option, Lender shall give Borrower notice of

              acceleration. The notice shall provide a period of not less than 30 days from

              the date the notice is delivered or mailed within which Borrower must pay all

              sums secured by this Security Instrument. If Borrower fails to pay these sums

              prior to the expiration of this period, Lender may invoke any remedies

              permitted by this Security Instrument without further notice or demand on

              Borrower.”

¶5         The mortgage also contained an “Acceleration; Remedies” clause in paragraph 21 which

        provided:

                     “Lender shall give notice to Borrower prior to acceleration following

              Borrower’s breach of any covenant or agreement in this Security Instrument

              (but not prior to acceleration under paragraph 17 unless applicable law

              provides otherwise). The notice shall specify: (a) the default; (b) the action

              required to cure the default; (c) a date, not less than 30 days from the date the

              notice is given to Borrower, by which the default must be cured; and (d) that

              failure to cure the default on or before the date specified in the notice may

              result in acceleration of the sums secured by this Security Instrument,

              foreclosure by judicial proceeding and sale of the Property. The notice shall

              further inform Borrower of the right to reinstate after acceleration and the right

              to assert in the foreclosure proceeding the non-existence of a default or any

              other defense of Borrower to acceleration and foreclosure. If the default is not

              cured on or before the date specified in the notice, Lender at its option may


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     No. 1-15-2783


              require immediate payment in full of all sums secured by this Security

              Instrument without further demand and may foreclose this Security Instrument

              by judicial proceeding. Lender shall be entitled to collect all expenses incurred

              in pursuing the remedies provided in this paragraph 21, including, but not

              limited to, reasonable attorneys’ fees and costs of title evidence.”

¶6         Cathay Bank sent several letters to Accetturo:

               i.    On November 22, 2011, Cathay Bank mailed a letter informing Accetturo

                     that her loan with Cathay Bank was “seriously delinquent,” that

                     “$8,4205.29” [sic] was past due, and that Accetturo should call Cathay

                     Bank to resolve the matter;

             ii.     On January 24, 2012, Cathay Bank mailed a second letter to Accetturo

                     stating that the loan was “seriously delinquent,” stating that amount past

                     due on the loan was $8700.83, and urging Accetturo to call Cathay Bank

                     to resolve the matter;

            iii.     On March 13, 2012, Cathay Bank mailed a third letter, informing

                     Accetturo that the loan was “seriously delinquent,” and stating that the

                     amount past due on the loan was $12,183.48, which included the actual

                     loan payments plus late fees, and an estimate of collection fees and costs.

                     This notice also urged Accetturo to call Cathay Bank to resolve the matter;

            iv.      On March 19, 2012, Cathay Bank mailed a fourth letter to Accetturo

                     entitled “Notice of Intent to Foreclose.” This letter informed Accetturo

                     that “Events of Default *** as defined in the Loan Documents, have


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     No. 1-15-2783


                     occurred and are continuing as a result of [Accetturo’s] failure to pay to

                     make [sic] required monthly payments to [Cathay Bank] that were due on

                     the 1st of the month for the months of December 2011 through March

                     2012. In addition, the next payment due of April, 2012.” The letter further

                     stated “[u]nless Cathay Bank is in receipt of a cashiers [sic] check or

                     certified funds for the full amount of the balance due [$11,912.99] on or

                     before April 10, 2012, Cathay Bank may exercise its rights and remedies

                     as provided for in the Guaranty and other related loan documents;” and

            v.       On August 6, 2013, Cathay Bank mailed a fifth letter to Accetturo,

                     through counsel, entitled “Notice of Default and Acceleration.” This letter

                     informed Accetturo that “pursuant to paragraph 21 and 17 of the

                     Mortgage, the Loan is now accelerated and the entire loan is due.”

                     Accetturo was instructed to pay $78,193.65 no later than September 6,

                     2013. In the event the loan amount was not paid by the deadline, the notice

                     informed Accetturo that Cathay Bank “may pursue all its rights and

                     remedies to enforce the loan documents, including foreclosure without

                     additional notice or demand.”

¶7         On September 25, 2013, Cathay Bank filed a mortgage foreclosure action against the

        defendants, involving the property located at 3624 South Paulina Street, Chicago, Illinois,

        because Accetturo failed to make payments on her note and mortgage from December 1,

        2011, to the present. On October 2, 2013, “unknown occupants” were served personally

        through “abode service” by leaving a copy of the summons and complaint with Zayra Garcia,


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       No. 1-15-2783


          a member of the household, at 3624 S. Paulina Street, Chicago, Illinois. On October 3, 2013,

          Accetturo was personally served with summons and a copy of the complaint at 2543 S. Lowe

          Avenue #1, Chicago, Illinois. On October 7, 2013, the United States of America, Department

          of Treasury was served with corporate service on Joann Contreras, a receptionist, at 219 S.

          Dearborn Street, Chicago, Illinois.

¶8           On September 25, 2013, Cathay Bank filed an affidavit of service by publication on the

          defendants, unknown owners, unknown tenants, and nonrecord claimants. 735 ILCS 5/2-206

          (West 2012); 735 ILCS 5/15-1502(c) (West 2012). The notice was published in the Chicago

          Daily Law Bulletin on September 30, 2013; October 7, 2013; and October 14, 2013. On

          November 13, 2013, United States Attorney Zachary Fardon filed an appearance for the

          United States of America, Department of Treasury, and filed an answer to the complaint.

¶9           On February 13, 2014, Cathay Bank filed a motion for entry of an order of default against

          Accetturo and unknown owners, unknown tenants, and nonrecord claimants; requested

          summary judgment against the United States of America, Department of Treasury; and

          requested a judgment of foreclosure and sale against the defendants. Cathay Bank also filed

          the loss mitigation affidavit of its employee, Janie Yang, on February 13, 2014.

¶ 10         On May 8, 2014, the circuit court entered an order giving Accetturo until June 5, 2014, to

          file an appearance or to answer or otherwise plead to the complaint. That same day,

          Accetturo’s attorney, Thomas L. Burdelik, filed an appearance on her behalf. On June 3,

          2014, Accetturo filed a verified answer and an affirmative defense. In her affirmative

          defense, Accetturo alleged that Cathay Bank failed to satisfy a contractual condition

          precedent by failing to submit a notice of acceleration prior to filing the foreclosure action.


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       No. 1-15-2783


          Specifically, in paragraphs 6 through 9 of her affirmative defense, Accetturo alleged the

          following:

                       “6. NAB Bank [Cathay Bank], its successors or assigns and plaintiff failed

                 to provide ACCETTURO any notice that a failure to cure the alleged defaults

                 may result in ‘foreclosure by judicial proceeding and sale of the Property.’

                       7. NAB Bank [Cathay Bank] and plaintiff have failed to meet a condition

                 precedent of the mortgage when it failed to mail or deliver an adequate notice

                 of acceleration to ACCETTURO as required by Section 21 of the alleged

                 mortgage.

                       8. ACCETTURO was denied a good faith opportunity, pursuant to the

                 alleged mortgage and the obligations of BAC to avoid acceleration and

                 foreclosure.

                       9. The failure to provide a proper acceleration notice prior to filing this

                 foreclosure action would require dismissal of this action.”

          On July 16, 2014, Cathay Bank filed its response to Accetturo’s affirmative defense denying

          the allegations.

¶ 11         On September 22, 2014, Cathay Bank filed a motion for entry of an order of default

          against unknown owners, unknown tenants, and nonrecord claimants; for summary judgment

          against Accetturo and the United States of America, Department of Treasury; and for a

          judgment of foreclosure and sale against the defendants. In its motion, Cathay Bank

          maintained that (i) defendants unknown owners, unknown tenants and nonrecord claimants

          are in default pursuant to section 5/15-1506(2)(c) of the Illinois Mortgage Foreclosure Law


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       No. 1-15-2783


          (735 ILCS 5/15-1506(2)(c) (West 2012)) and a judgment of foreclosure should be entered

          against them; (ii) Accetturo is in default on the note and mortgage and has failed to establish

          that she made payment from December 1, 2011, to the present, thereby failing to raise an

          issue of fact that would prevent summary judgment; and (iii) Accetturo’s affirmative defense

          is void and does not raise a fact issue that would prevent summary judgment as Cathay Bank

          has provided evidence to establish that all proper notices were mailed to Accetturo.

¶ 12         On January 8, 2015, the circuit court entered an order allowing Accetturo’s previous

          counsel, the Burdelik Law Group, to withdraw its appearance and granted the Law Office of

          Mark A. Laws leave to file its appearance on behalf of Accetturo, instanter. That same day,

          Mark Laws filed an appearance on behalf of Accetturo. On January 8, 2015, Accetturo filed a

          motion to dismiss pursuant to section 2-619. 735 ILCS 5/2-619 (West 2012). In her motion to

          dismiss, Accetturo maintained that Cathay Bank’s failure to comply with section 15-1503(b)

          of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1503(b) (West 2012) and issue a

          copy of the notice of foreclosure to the alderman for the 11th ward or file an affidavit of

          compliance with this rule within 10 days of filing the complaint, should result in dismissal of

          the complaint without prejudice.

¶ 13         On February 5, 2015, Accetturo filed a response to Cathay Bank’s motion for summary

          judgment. In this response, Accetturo maintained that (i) Cathay Bank’s failure to comply

          with section 15-1503(b) of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1503(b)

          (West 2012) and issue a copy of the notice of foreclosure to the alderman for the 11th ward

          or file an affidavit of compliance with this rule within 10 days of filing the complaint,




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       No. 1-15-2783


          precludes summary judgment and (ii) Cathay Bank failed to properly follow the notice

          guidelines provided in paragraph 21 of the mortgage.

¶ 14          On February 19, 2015, Cathay Bank filed its reply and maintained that (i) Accetturo’s

          answer to the complaint failed to raise an issue of fact, specifically it failed to offer proof that

          payment was made on the note after December 1, 2011; (ii) section 15-1503 of the Illinois

          Mortgage Foreclosure Law (735 ILCS 5/15-1503 (West 2012)) does not apply because the

          real property at issue in this case is not “residential real estate” as defined in the statute; (iii)

          Accetturo cannot raise a new affirmative defense in her response brief that was not pled in

          her answer and her section 15-1503 defense was not pled in her answer; and (iv) Accetturo

          admits to receiving several notices from Cathay Bank which is contrary to her position in her

          answer and fails to raise a fact issue to prevent summary judgment.

¶ 15          On March 5, 2015, the circuit court entered an order denying Accetturo’s section 2-619

          motion to dismiss pursuant to section 15-1503(b) of the Illinois Mortgage Foreclosure Law.

          735 ILCS 5/15-1503(b) (West 2012). In its order, the court found that “at the time of the

          filing of the complaint, the property was not residential real estate as defined in 735 ILCS

          5/15-1219 [of the Illinois Mortgage Foreclosure Law] since the property was not

          [Accetturo’s] principal residence.”

¶ 16          However, on March 5, 2015, the circuit court granted Cathay Bank’s motion for default

          against unknown owners, unknown tenants, and nonrecord claimants and granted Cathay

          Bank’s motion for summary judgment against Accetturo and the United States of America,

          Department of Treasury. The circuit court also entered a judgment of foreclosure and sale

          against the defendants on March 5, 2015, and found that the notices provided to Accetturo


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          satisfied the mortgage requirements. The record does not contain a transcript or a bystander’s

          report of the March 5, 2015, proceedings.

¶ 17         On April 3, 2015, Accetturo filed a motion to reconsider the circuit court’s March 5,

          2015, order that granted Cathay Bank’s motion for summary judgment. In her motion to

          reconsider, Accetturo argued that Cathay Bank failed to comply with the notice requirements

          of paragraph 21 of the mortgage, and as a result, it was improper for the circuit court to grant

          summary judgment. On June 30, 2015, Cathay Bank filed a response to Accetturo’s motion

          to reconsider. In its response, Cathay Bank argued that (i) Accetturo’s motion to reconsider is

          improper because she did not make any claim as to changes in the law or newly discovered

          evidence, (ii) Accetturo’s notice argument was waived by not making the argument in her

          answer to the complaint, (iii) the notice argument is not a proper affirmative defense, and (iv)

          notice was proper under the mortgage. On July 8, 2015, Accetturo filed her reply in support

          of her motion to reconsider. In her reply, Accetturo argued that (i) her notice arguments are

          proper and valid, (ii) lack of adequate notice barred Cathay Bank from bringing suit, and (iii)

          the notice was improper under the mortgage.

¶ 18         On April 27, 2015, the Judicial Sales Corporation, the selling officer, filed a proof of

          mailing notice of sale to Accetturo’s attorney; to the United States of America, Department

          of Treasury; and to unknown owners, unknown tenants, and nonrecord claimants. A public

          notice of sale was published in the Cook County Chronicle on April 29, 2015; May 6, 2015;

          and May 13, 2015. A public notice of sale was also published in the Chicago Sun-Times on

          April 29, 2015; May 6, 2015; and May 13, 2015. On June 8, 2015, the property was sold at

          public auction for $90,000 and the report of sale and distribution, the receipt of sale, and the


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          certificate of sale were filed on June 17, 2015. On June 17, 2015, Cathay Bank filed a motion

          for order approving the report of sale and distribution and for entry of an order of possession.

¶ 19         On July 17, 2015, the circuit court entered an order denying Accetturo’s motion to

          reconsider “for the reasons stated on the record.” The circuit court also found that

          Accetturo’s notice argument was not a proper affirmative defense and that Cathay Bank’s

          letters complied with the notice requirements under the mortgage. In reaching this

          conclusion, the circuit court found that there were procedural deficiencies with the notice

          argument and further found:

                       “It could have been brought—I know a motion to dismiss was brought

                regarding the notice to the alderman, et cetera. It could have been made part of

                that or it could have been brought otherwise.

                       So I don’t think it’s a valid affirmative defense. But even putting—

                notwithstanding that, I should say, to me, I indicated last time, I believe that

                the—the letters—that the multiple letters—particularly the last one—were

                sufficient to comply with the provision of the mortgage.

                       I think unquestionably it specifically complied with really the critical

                portions of that paragraph [paragraph 21].

                       ***

                       So your motion to reconsider is denied.”

¶ 20         On August 7, 2015, Accetturo filed her response to Cathay Bank’s motion for order

          approving the report of sale and distribution and for entry of an order of possession. In her




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          response, Accetturo argued that (i) the sale violated section 15-1508 of the Illinois Mortgage

          Foreclosure Law (735 ILCS 5/15-1508(b) (West 2012)) because the below-market sale price

          was unconscionable and (ii) Cathay Bank failed to properly follow the notice guidelines

          provided in paragraph 21 of the mortgage, and therefore, confirming the sale would violate

          sections 15-1508(b)(iii) and (iv) of the Illinois Mortgage Foreclosure Law. 735 ILCS 5/15-

          1508(b)(iii), (iv) (West 2012).

¶ 21         On August 20, 2015, Cathay Bank filed a reply in support of its motion for an order

          approving the report of sale and distribution and for entry of an order of possession. In its

          reply, Cathay Bank maintained that (i) when a judicial sale is conducted in accordance with

          Illinois law, the sale price is the most accurate measure of the property’s value and Accetturo

          has failed to establish that the terms of the sale were unconscionable and (ii) Accetturo’s

          notice argument has been previously ruled upon and rejected and is outside of the scope of

          section 15-1508 of the Illinois Mortgage Foreclosure Law. 735 ILCS 5/15-1508 (West 2012).

¶ 22         On August 27, 2015, the circuit court entered an order approving the report of sale and

          distribution, confirmed the sale, entered an order of possession, and entered an order finding

          a personal deficiency in the amount of $11,964.86 against Accetturo. In reaching this

          conclusion, the court reasoned:

                       “The standard is shocking the conscience of a court of equity, and we all

                understand—it’s well-established that you’re not going to get the best price

                and, you know, importantly obviously insufficiency of the price alone is—is

                not a basis to disturb a judicial sale again unless it shocks the conscience of a

                court of equity.


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                       Here again we have—well, the only thing we have is the Zillow report,

                and again I think beyond it being potentially a questionable foundation for it, it

                was even—the accuracy of it again I don’t think it’s something that, based on

                the number that it was, it wasn’t that dramatic and with the lack of accuracy of

                a Zillow report I think commonly known. I don’t think that’s sufficient for me

                to set an evidentiary hearing, that alone, or to conduct any discovery at this

                point.

                       So the motion to approve the sale is granted. Your approving the sale is

                entered—

                       ***

                       —for deficiency.”

¶ 23         On September 25, 2015, Accetturo filed a timely notice of appeal seeking review of the

          March 5, 2015, order.

¶ 24                                            ANALYSIS

¶ 25                                         Standard of Review

¶ 26         We find that Accetturo’s notice of appeal requests that this court reverse the order

          granting summary judgment and the final order approving the report of sale and distribution.

          The standard of review for an order granting a motion for summary judgment is de novo

          (Williams v. Manchester, 228 Ill. 2d 404, 417 (2008)), and the standard of review for an

          order approving a sale and distribution is an abuse of discretion. Household Bank, FSB v.

          Lewis, 229 Ill. 2d 173, 178 (2008). Finally, we must also interpret a provision in the




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          mortgage, and the interpretation of a contract involves a question of law which we review de

          novo. Phoenix Insurance Co. v. Rosen, 242 Ill. 2d 48, 54 (2011); Carr v. Gateway, Inc., 241

          Ill. 2d 15, 20 (2011).



¶ 27                                 Order Granting Summary Judgment

¶ 28         Accetturo argues that the circuit court erred when it granted Cathay Bank’s motion for

          summary judgment because Cathay Bank failed to comply with paragraph 21 of the

          mortgage, a condition precedent, requiring Cathay Bank to give Accetturo notice, with

          specific information, prior to accelerating the mortgage. Accetturo argues that Cathay Bank’s

          first four letters make no mention of acceleration and the fifth letter informed Accetturo that

          mortgage foreclosure was forthcoming and that her note was accelerated, after acceleration

          had already taken place.

¶ 29         In response, Cathay Bank maintains that it was entitled to summary judgment because

          Accetturo failed to establish her compliance with the note and mortgage, her notice argument

          changed throughout the course of the litigation, and her notice argument was not a valid

          affirmative defense.

¶ 30         We note that Accetturo continuously raised her notice argument in pleadings during the

          litigation. In paragraphs 6 through 9 of her affirmative defense, Accetturo alleged the

          following:

                       “6. NAB Bank [Cathay Bank], its successors or assigns and plaintiff failed

                 to provide ACCETTURO any notice that a failure to cure the alleged defaults

                 may result in ‘foreclosure by judicial proceeding and sale of the Property.’


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                       7. NAB Bank [Cathay Bank] and plaintiff have failed to meet a condition

                precedent of the mortgage when it failed to mail or deliver an adequate notice

                of acceleration to ACCETTURO as required by Section 21 of the alleged

                mortgage.

                       8. ACCETTURO was denied a good faith opportunity, pursuant to the

                alleged mortgage and the obligations of BAC to avoid acceleration and

                foreclosure.

                       9. The failure to provide a proper acceleration notice prior to filing this

                foreclosure action would require dismissal of this action.”

          After reviewing the pleadings, we did not find that Accetturo changed her defense throughout

          the course of this case, nor do we find that Accetturo forfeited this issue. CitiMortgage, Inc.

          v. Hoeft, 2015 IL App (1st) 150459, ¶ 9.

¶ 31         We note that Illinois law permits a creditor to elect to sue on the note or foreclose on the

          mortgage or both. Abdul-Karim v. First Federal Savings & Loan Ass’n of Champaign, 101

          Ill. 2d 400, 407 (1984). Accetturo maintains that summary judgment was improper because

          Cathay Bank failed, prior to accelerating the note, to comply with a condition precedent

          when it did not send a notice of acceleration to Accetturo as prescribed by paragraph 21 of

          the mortgage.

¶ 32         A “condition precedent” is an act that must be performed or an event that must occur

          before a contract becomes effective or before one party to an existing contract is obligated to

          perform. Downs v. Rosenthal Collins Group, L.L.C., 2011 IL App (1st) 090970, ¶ 21;

          McCormick 101, LLC v. State Bank of Countryside, No. 14 C 8539, 2015 WL 7450760, at *3


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          (N.D. Ill. 2015). When a contract contains an express condition precedent, strict compliance

          with such a condition is required (Midwest Builder Distributing, Inc. v. Lord & Essex, Inc.,

          383 Ill. App. 3d 645, 668 (2007)), and the contract does not become enforceable or effective

          until the contract is performed or the contingency occurs. Midwest Builder Distributing, Inc.,

          383 Ill. App. 3d at 668. The failure to perform a condition precedent may be construed as a

          breach of contract. Jones v. Seiwert, 164 Ill. App. 3d 954, 958-59 (1987); Hardin, Rodriguez

          & Boivin Anesthesiologists, Ltd. v. Paradigm Insurance Co., 962 F.2d 628, 633 (1992).

          Finally, courts will enforce express conditions precedent regardless of the potential for harsh

          results for the noncomplying party. Midwest Builder Distributing, Inc., 383 Ill. App. 3d at

          668.

¶ 33         A notice of acceleration is a condition precedent to foreclosure under Illinois Mortgage

          Foreclosure Law. CitiMortgage, Inc. v. Bukowski, 2015 IL App (1st) 140780, ¶ 16 (“If

          CitiMortgage had not sent an acceleration notice, it would not be entitled to foreclose,”

          therefore not satisfying “a condition precedent to its right to bring suit.”).

¶ 34         We must determine (i) whether paragraph 21 of the mortgage contained a notice of

          acceleration; (ii) if so, whether Cathay Bank complied with the condition precedent in

          paragraph 21 of the mortgage by giving notice to Accetturo prior to acceleration of the note;

          and (iii) whether Cathay Bank had a right to file an action of foreclosure predicated on

          Accetturo’s mortgage.

¶ 35         Because paragraph 21 of the mortgage has been invoked as an affirmative defense to

          Cathay Bank’s mortgage foreclosure action, we must consider the language in paragraph 21,

          and specifically how courts have construed the words “shall” and “may” in contracts. The


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          United States Supreme Court has held that “[w]hen a statute distinguishes between ‘may’ and

          ‘shall,’ it is generally clear that ‘shall’ imposes a mandatory duty.” Kingdomware

          Technologies, Inc. v. United States, 579 U.S. ___, ___, 136 S. Ct. 1969, 1977 (2016). The

          Illinois Supreme Court has also held that, the word “shall,” in contracts and statutes, has a

          mandatory connotation unless otherwise stated. Pomykala, 203 Ill. 2d at 205-06.

¶ 36         Paragraph 21 of the mortgage repeatedly uses the words “shall,” and “may” and required

          Cathay Bank, the lender, to give Accetturo, the borrower, the following notice:

                “Lender shall give notice to Borrower prior to acceleration following

                Borrower’s breach of any covenant or agreement in this Security Instrument

                (but not prior to acceleration under paragraph 17 unless applicable law

                provides otherwise). The notice shall specify: (a) the default; (b) the action

                required to cure the default; (c) a date, not less than 30 days from the date the

                notice is given to Borrower, by which the default must be cured; and (d) that

                failure to cure the default on or before the date specified in the notice may

                result in acceleration of the sums secured by this Security Instrument,

                foreclosure by judicial proceeding and sale of the Property. The notice shall

                further inform Borrower of the right to reinstate after acceleration and the right

                to assert in the foreclosure proceeding the non-existence of a default or any

                other defense of Borrower to acceleration and foreclosure. If the default is not

                cured on or before the date specified in the notice, Lender at its option may

                require immediate payment in full of all sums secured by this Security

                Instrument without further demand and may foreclose this Security Instrument


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                by judicial proceeding. Lender shall be entitled to collect all expenses incurred

                in pursuing the remedies provided in this paragraph 21, including, but not

                limited to, reasonable attorneys’ fees and costs of title evidence.” (Emphasis

                added.)

¶ 37         Because the mortgage contained an acceleration clause that provided “[Cathay Bank]

          shall give notice to [Accetturo] prior to acceleration,” we find that paragraph 21 is a

          contractual condition precedent and that Cathay Bank had a mandatory duty to send a notice

          of acceleration to Accetturo prior to accelerating the mortgage. Kingdomware, 579 U.S. at

          ___, 136 S. Ct. at 1978; Pomykala, 203 Ill. 2d at 205-06; In re Marriage of Ackerley, 333 Ill.

          App. 3d 382, 398 (2002). Our interpretation is based on the maxim that contract language

          should be construed most strongly against the maker, Cathay Bank, because the bank chose

          the words in the mortgage. Scheduling Corp. of America v. Massello, 119 Ill. App. 3d 355,

          361 (1983); Farmers & Mechanics Bank v. Davies, 97 Ill. App. 3d 195, 201 (1981) (the

          mortgage should be construed against the maker, here, the Bank).

¶ 38         In its March 5, 2015, order granting Cathay Bank’s motion for summary judgment, the

          circuit court struck Accetturo’s affirmative defenses and found that the “notices provided to

          Defendant Accetturo satisfied the mortgage requirements.” A reviewing court cannot reverse

          a finding of fact of the circuit court unless its finding is against the manifest weight of the

          evidence. Corral v. Mervis Industries, Inc., 217 Ill. 2d 144, 154 (2005).

¶ 39         The record reveals that Cathay Bank sent five letters to Accetturo. While we note that the

          first three letters (November 22, 2011; January 24, 2012; and March 13, 2012) contained the

          words “seriously delinquent” instead of “default,” they were sufficient to put Accetturo on


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          notice that there was a problem. However, the first three letters failed to incorporate the

          specific information required by paragraph 21: (i) information about what must be done to

          cure the default, (ii) date on which to cure the default, (iii) information stating that failure to

          cure the default may result in acceleration of the sums secured by the Security Instrument

          foreclosure by judicial proceeding and sale of the Property, and (iv) information about

          Accetturo’s right to reinstate or assert defenses to the acceleration and foreclosure.

¶ 40          The fourth letter dated March 19, 2012, does not satisfy the requirements of paragraph 21

          in that it fails (i) to mention acceleration, (ii) to provide Accetturo 30 days to cure the default,

          (iii) to specifically state that the failure to cure the default may result in acceleration of the

          sums secured by the Security Instrument foreclosure by judicial proceeding and sale of the

          Property, and (iv) to inform Accetturo of her right to reinstate or assert defenses to the

          acceleration and foreclosure.

¶ 41          The fifth letter that was sent on August 6, 2013, was a “notice of default and

          acceleration” and was the first letter that mentioned “acceleration.” However, this notice was

          sent informing Accetturo that the note was already accelerated; it was not a notice prior to

          acceleration as mandated by paragraph 21 of the mortgage.

¶ 42          Here, we find the letters that Cathay Bank sent to Accetturo were not sent prior to

          acceleration. Moreover, most of the information that Cathay Bank was mandated by

          paragraph 21 to provide was missing from the five letters. Compare CitiMortgage, Inc. v.

          Hoeft, 2015 IL App (1st) 150459, ¶ 11 (the notice provided all of the information except the

          specific dollar amount to cure the default). Finally, while we note that a technical defect in

          the notice sent to a mortgagor will not automatically warrant a dismissal of a foreclosure


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          action (Bank of America, N.A. v. Luca, 2013 IL App (3d) 120601, ¶ 15), we find that Cathay

          Bank’s failure to strictly comply with paragraph 21, by providing Accetturo with specific

          information prior to accelerating the note, was more than a technical defect. Accordingly, we

          find that the circuit court’s finding that Cathay Bank’s letters complied with the condition

          precedent contained in the mortgage was against the manifest weight of the evidence. Corral,

          217 Ill. 2d at 154.

¶ 43          Cathay Bank argues that Accetturo’s notice argument fails and cites CitiMortgage, Inc. v.

          Bukowski, 2015 IL App (1st) 140780, ¶ 16 as support for its position. The Bukowski court

          found that the circuit court properly struck the defendants’ affirmative defenses. The court

          points out that we review the dismissal of affirmative defenses de novo. Bukowski, 2015 IL

          App (1st) 140780, ¶ 15. The Bukowski court also found that the defendants’ affirmative

          defenses asserting that the bank failed to send notice attacks the bank’s ability to maintain the

          action, but does not raise a new matter that defeats the claim. Bukowski, 2015 IL App (1st)

          140780, ¶ 16. Finally, the Bukowski court found that if CitiMortgage had not sent an

          acceleration notice, it would not be entitled to foreclose. Bukowski, 2015 IL App (1st)

          140780, ¶ 16.

¶ 44          We find that Cathay Bank’s reliance on Bukowski is misplaced. Compare Bankers Life

          Co. v. Denton, 120 Ill. App. 3d 576, 579 (1983). In Denton, a case where this court was

          reviewing a bank’s failure to comply with a mortgage’s servicing regulations, the court

          stated:

                        “It is evident from the language of the servicing regulations that the

                    mortgagee must comply with these provisions prior to the commencement of a


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                foreclosure proceeding. Therefore, *** we believe that the failure to comply

                with these servicing regulations which are mandatory and have the force and

                effect of law can be raised in a foreclosure proceeding as an affirmative

                defense.” Denton, 120 Ill. App. 3d at 579.

¶ 45         We also find that section 8.1 of the Restatement of Property makes it clear that the

          mortgagee is bound by language in a mortgage that requires additional notice:

                       “(a) An acceleration provision is a term in a mortgage, or in the obligation

                it secures, that empowers the mortgagee upon default by the mortgagor to

                declare the full mortgage obligation immediately due and payable. An

                acceleration becomes effective on the date specified in a written notice by the

                mortgagee to the mortgagor delivered after default.” Restatement (Third) of

                Property (Mortgages) § 8.1 (1997).

          Comment b of section 8.1 provides:

                 “However, language in the mortgage documents that requires additional notice

                 to that required by Subsection (a) is enforceable.” Restatement (Third) of

                 Property (Mortgages) § 8.1 cmt. b, at 559 (1997).

          Paragraph 21 of the mortgage prescribes additional notice requirements. Therefore,

          we find the specific requirements enumerated in paragraph 21 of Cathay Bank’s

          mortgage are enforceable. Restatement (Third) of Property (Mortgages) § 8.1 (1997).

¶ 46         In this case, we find (i) that paragraph 21 prescribed Cathay Bank’s servicing

          requirements for the mortgage; (ii) that Accetturo’s affirmative defenses contained facts

          asserting Cathay Bank’s letters failed to comply with the servicing requirements by providing


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          the information required by paragraph 21 of the mortgage; (iii) that by failing to comply with

          the servicing requirements in paragraph 21 of the mortgage, Cathay Bank was estopped from

          proceeding with the foreclosure action (735 ILCS 5/2-613 (West 2012)); and (iv) that

          Accetturo’s affirmative defenses raised new matter—whether Cathay Bank had complied

          with the condition precedent or the serving requirements in paragraph 21 of the mortgage

          prior to filing the foreclosure action—and, therefore, were properly raised in this foreclosure

          action. Denton, 120 Ill. App. 3d at 579. Accordingly, following Denton, we hold that the

          circuit court erred by striking Accetturo’s affirmative defenses.

¶ 47         Here, unlike Bukowski, Accetturo does not maintain that she did not receive notice.

          Instead, she maintains that Cathay Bank sent notice but failed to provide the information

          required by paragraph 21 of the mortgage. Therefore, Accetturo contends that Cathay Bank’s

          failure to comply with paragraph 21 of the mortgage divested Cathay Bank of its right to file

          this foreclosure action. We agree with Accetturo.

¶ 48         In Abdul-Karim v. First Federal Savings & Loan Ass’n of Champaign, 101 Ill. 2d 400,

          407 (1984), our supreme court held that a mortgage is a contract and that the provision in the

          mortgage for acceleration extends only to the right to foreclose the mortgage:

                       “ ‘It has been held by the courts of several States that a provision in a

                mortgage for an acceleration of maturity extends only to the right to foreclose

                the mortgage and subject the property pledged to the payment or reduction of

                the debt, and that the mortgage and note are separate contracts. The mortgage

                is applicable to the right to apply the security to the discharge of the debt and

                the note to the liability of the maker for the payment of that indebtedness.’ ”


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                 Abdul-Karim, 101 Ill. 2d at 407 (quoting Conerty v. Richtsteig, 379 Ill. 360,

                 366-67 (1942)).

¶ 49          In this case, we find that paragraph 21 of the mortgage (i) is a notice provision with an

          acceleration clause, (ii) contains specific notice information that the lender has a mandatory

          duty to provide to the borrower, (iii) imposes a mandatory duty on the lender to provide

          notice to the borrower prior to acceleration, and (iv) is a condition precedent which must be

          complied with for a lender to have a right to file a foreclosure action. Kingdomware, 579

          U.S. at ___, 136 S. Ct. at 1978; Pomykala, 203 Ill. 2d at 205-06; see also Midwest Builder

          Distributing, Inc., 383 Ill. App. 3d at 668.

¶ 50          We hold that Cathay Bank’s failure, prior to acceleration, to provide Accetturo with a

          notice containing the specific information mandated by paragraph 21 divested the lender of

          its right to file this foreclosure action.

¶ 51          Finally, because we find that Cathay Bank did not provide Accetturo with the notice

          mandated by paragraph 21 of the mortgage, we hold that (i) Cathay Bank had no right to file

          this foreclosure action, (ii) that Cathay Bank was not entitled to a judgment as a matter of

          law, and (iii) that the circuit court erroneously entered the order granting Cathay Bank’s

          motion for summary judgment.

¶ 52                           Order Approving Report of Sale and Distribution

¶ 53          Next, we must determine whether the circuit court erred when it entered an order

          approving the report of sale and distribution. We have already held that the circuit court erred

          when it entered the order granting Cathay Bank’s motion for summary judgment. We find

          that the order approving the report of sale and distribution relates back to the summary


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          judgment order, which was a step in the procedural progression leading to the final order

          approving the sale.

¶ 54         Section 15-1508 of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1508 (West

          2012) has been construed as conferring on the circuit courts broad discretion in approving or

          disapproving judicial sales, and consequently, a court’s decision will not be reversed unless

          there has been an abuse of discretion. Household Bank, FSB, 229 Ill. 2d at 178. Because we

          find that Cathay Bank did not provide the notice mandated by paragraph 21 of the mortgage,

          Cathay Bank had no right to file the foreclosure action against Accetturo. Because Cathay

          Bank had no right to file the foreclosure action, the circuit court erred (i) when it granted the

          motion for summary judgment and (ii) when it permitted the summary judgment order to

          form the basis for the order approving the sale and distribution. When a bank fails to comply

          with its servicing requirements and does not give notice to the borrower mandated by a

          provision in its mortgage, and the circuit court ignores the banks’ failure to comply with the

          mortgage’s servicing requirements, the circuit court abuses its discretion. Therefore, we

          reverse the circuit court’s order approving the report of sale and distribution.

¶ 55         Finally, because Cathay Bank did not comply with paragraph 21 of the mortgage, the

          circuit court’s summary judgment order is reversed and all related orders, including the final

          order approving the report of sale and distribution, are vacated.

¶ 56                                           CONCLUSION

¶ 57         Cathay Bank failed to give notice to Accetturo with the specific information required by

          paragraph 21 of the mortgage prior to accelerating the note. Therefore, we reverse the circuit

          court’s order granting summary judgment and vacate all other orders.


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¶ 58         Reversed.




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