EMC Mortgage Corp. v. Kemp

Citation: 2012 IL 113419Docket: 113419

Court: Illinois Supreme Court; February 4, 2013; Illinois; State Supreme Court

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Appellate jurisdiction does not exist to challenge nonfinal orders during a mortgage foreclosure action, resulting in the dismissal of the appeal in EMC Mortgage Corp. v. Kemp, 2012 IL 113419. The Supreme Court of Illinois affirmed the Appellate Court's judgment, which had dismissed Kemp's appeal after she sought to contest an order denying her motion to vacate a prior foreclosure judgment and her request for reconsideration. The case stemmed from a 2005 mortgage agreement by Barbara Kemp, which defaulted, leading EMC Mortgage Corporation to file for foreclosure in 2006. Kemp's subsequent counterclaims were dismissed, and a summary judgment was granted in favor of EMC in April 2009. After various motions and a bankruptcy filing that temporarily stayed the judicial sale, Kemp filed an emergency motion to vacate the foreclosure judgment on the scheduled sale date, which the circuit court denied while granting a temporary stay. The court added Rule 304(a) language to its orders, indicating they were appealable. However, the appellate court concluded that it lacked jurisdiction to hear the appeal of these nonfinal orders, leading to the Supreme Court's dismissal. Justice Karmeier dissented, providing an opposing opinion.

The Illinois Constitution grants the appellate court jurisdiction to hear appeals from final judgments of the circuit court, as stated in Article VI, Section 6. Absent a supreme court rule, the appellate court lacks jurisdiction over non-final judgments, as established in case law. Kemp's appeal challenges the circuit court's denial of her motion to vacate and her motion for reconsideration, but these motions are not based on a final, appealable order. Specifically, a foreclosure judgment is not considered final or appealable until the trial court approves the sale and directs distribution of proceeds. Kemp's appeal faces multiple issues: the relief sought under section 2-1401 is unavailable due to the absence of a final order; the judgment of foreclosure lacks Rule 304(a) language, which would typically make it appealable; and the orders she seeks to review are neither final nor appealable. Kemp's argument that the trial judge's inclusion of Rule 304(a) language grants appellate jurisdiction is flawed, as precedent dictates that such language cannot confer jurisdiction if the underlying order is non-final. Consequently, both the October 5 denial of Kemp’s motion to vacate and the November 16 denial of her reconsideration motion are not final orders.

Kemp argues that she is challenging a void order, which can be done at any time in any court, but this assertion is without merit. While a void order can indeed be contested by an affected individual at any time, this does not grant appellate jurisdiction where it does not exist. The appellate court noted that there is no supreme court rule allowing an appeal of the nonfinal orders Kemp has contested. Consequently, the appellate court affirmed the lack of jurisdiction and dismissed the appeal. Justice Karmeier dissents, believing the appellate court should have considered the Rule 304(a) appeal regarding a foreclosure judgment, advocating for a remand to review the appeal on its merits.

In the background, Kemp took out a mortgage in 2005 for a home in Naperville, with Maribella Mortgage, LLC as the lender and MERS as the mortgagee. After Kemp defaulted on payments, EMC Mortgage Corporation initiated foreclosure proceedings. Kemp initially moved to dismiss based on lack of jurisdiction, which was denied. She later filed a pro se answer disputing EMC’s claims about its legal standing and filed a counterclaim regarding her husband’s inclusion in the mortgage documents. EMC's motion to dismiss the counterclaim was granted, allowing Kemp the chance to amend her claims.

Kemp filed an amended counterclaim against EMC, which subsequently moved to dismiss the claim and sought sanctions. EMC supported its motion with an affidavit from Ashley Stephenson, an assistant vice president, stating that EMC had no involvement in the origination or funding of Kemp’s loan and only acquired the loan from Maribella on December 29, 2006, after the foreclosure action began. Despite the assignment being executed on January 12, 2007, the documentation confirmed EMC's acquisition date. Kemp countered that EMC was liable for the wrongful acts alleged because Maribella acted as EMC's agent. EMC refuted this, asserting it had no role in negotiating or executing the loan agreement. The circuit court granted EMC's motion to dismiss but allowed Kemp to replead, which she did. EMC again challenged the sufficiency of her allegations and the agency claim, leading the court to dismiss Kemp's second amended counterclaim. EMC then moved for summary judgment on its foreclosure complaint, which the court granted, resulting in a judgment for foreclosure and sale on June 2, 2009. Kemp's motion to reconsider was denied, but the sale was stayed when she filed for bankruptcy. After the dismissal of the bankruptcy proceedings, a sheriff’s sale was scheduled for May 25, 2010. Kemp was granted a continuance to pursue a short sale, which was rescheduled to June 17, 2010. She later requested another continuance, citing a pending short sale application, but the court denied her motion. Following this, Kemp filed new bankruptcy proceedings, leading to another automatic stay. EMC/Chase Home Finance, LLC, obtained permission from the bankruptcy judge to lift the stay, rescheduling the sheriff’s sale for October 5, 2010.

Kemp filed an emergency motion challenging the foreclosure judgment prior to the scheduled sale, asserting that EMC lacked standing under section 2-1401 of the Code of Civil Procedure, warranting vacating the judgment. She also argued for dismissal of EMC's complaint under section 2-619(a)(9) for the same reason, requesting a stay or cancellation of the sale until EMC's standing could be determined. Although EMC did not formally object, its attorney argued that Kemp should have raised these standing issues earlier. The court held a hearing on October 5, 2010, where it stayed the sale for 45 days but declined to vacate the foreclosure judgment or dismiss the case, issuing a finding that there was no just reason for delaying enforcement or appeal.

Kemp subsequently sought reconsideration, reiterating her argument that EMC lacked a legally cognizable interest in the mortgage at the complaint's filing. During the November 16, 2010 hearing, the court recognized the merit of Kemp's arguments but ruled against her due to the absence of Illinois case law supporting her position. The court again found no reason to delay enforcement or appeal. Kemp filed a timely appeal, which was initially stayed by the appellate court. However, EMC later moved to dismiss for lack of jurisdiction, and despite Kemp's objection, the motion was granted. After further consideration, the appellate court concluded it lacked jurisdiction and dismissed the appeal in an unpublished order. This dismissal is now under review. The question of the appellate court's jurisdiction is a legal issue reviewed de novo.

Kemp's appeal centers on the validity of the circuit court's foreclosure judgment and its denial to vacate that judgment. Under Illinois law, a foreclosure judgment does not conclude a mortgage foreclosure case. The Illinois Mortgage Foreclosure Law outlines that after a foreclosure judgment, the property is sold following the expiration of reinstatement and redemption periods, with the sale subject to court confirmation. While defendants can contest the sale's validity at a confirmation hearing, such judgments are considered interlocutory and do not resolve all issues between the parties. They remain modifiable and do not become final until the sale is conducted and approved by the court. The court's order confirming the sale, rather than the foreclosure judgment itself, is the final and appealable order. According to the Illinois Constitution, litigants generally cannot appeal interlocutory orders as a matter of right, unless permitted by specific court rules. However, an aggrieved property owner can appeal a foreclosure judgment if the circuit court issues a written finding under Supreme Court Rule 304(a) that there is no just reason to delay the appeal or enforcement.

The circuit court issued a Rule 304(a) finding twice in the foreclosure case concerning Kemp. Initially, this finding was not made at the time of the foreclosure judgment, but it was granted after Kemp's unsuccessful attempts to vacate and dismiss the judgment. The appellate court deemed the latter finding ineffective, asserting that Kemp's motion invoked sections 2-619 and 2-1401 of the Code of Civil Procedure, which have technical limitations that prevent Rule 304(a) findings from enabling review of such motions. A majority of the court supported this view, emphasizing the procedural grounds of Kemp’s challenge rather than its substantive aspects. However, it was argued that previous case law suggests evaluating the nature of pleadings based on content rather than labels. Kemp urged the court to apply this reasoning, although the majority did not address her argument. It was noted that interlocutory orders can be reviewed or modified before final judgment, which in this case had not occurred as the sale of the property was not confirmed. Kemp’s motions to vacate and dismiss were aimed at having the court reconsider its foreclosure ruling. Despite potential procedural issues, these motions were clearly intended to challenge the foreclosure judgment. Kemp's arguments regarding timeliness and due diligence in her motion were included based on her mistaken belief that the judgment was final, but did not affect the nature of her requests for reconsideration. Ultimately, both motions should be seen as attempts to reconsider the foreclosure judgment, regardless of differing grounds from her original motion.

The circuit court properly made the necessary findings under Supreme Court Rule 304(a) when it denied Kemp's motion to vacate and dismiss on October 5 and her motion to reconsider that denial on November 16. Precedent from the appellate court indicates that an appeal from a motion to reconsider containing a Rule 304(a) finding is deemed to cover the original judgment. Specifically, even if the Rule 304(a) language refers only to the postjudgment order, it can be interpreted to also apply to the underlying judgment, making it appealable. The court reaffirmed this principle in Kaufmann v. Schroeder, recognizing that a Rule 304(a) finding on a motion to reconsider allows for the review of the underlying order. Since the circuit court made the required findings for both orders and those orders effectively rejected reconsideration requests of the foreclosure judgment, the appellate court wrongly determined it lacked jurisdiction to review the case. 

The author emphasizes that recharacterization of motions should not be routine but should be based on specific circumstances, advocating for a liberal construction of pleadings to ensure substantial justice. After the mandate is issued, Kemp can file a new motion to reconsider the foreclosure judgment, and if denied, request the necessary Rule 304(a) findings again, which the circuit court is expected to grant. This would rectify the procedural issues identified by the majority and allow Kemp to return to the appellate court without further delay. The author critiques the majority's focus on procedural formality over substantive justice, expressing concern about the prolonged duration of the case and its implications for the parties involved.

Concerns regarding the immediate proceeding of Kemp's appeal without remanding to the circuit court are addressed, asserting that such concerns are unfounded and consistent with established judicial review principles. Additionally, an alternative is proposed: using supervisory authority to vacate the appellate court's unpublished Rule 23 order, thereby allowing consideration of Kemp's appeal on the merits without unnecessary formalities. The conclusion urges the reversal of the appellate court's judgment and remand for a merits review of Kemp's appeal, with a noted dissenting opinion.