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Northwest Diversified, Inc. v. Desai
Citations: 818 N.E.2d 753; 353 Ill. App. 3d 378; 288 Ill. Dec. 818; 2004 Ill. App. LEXIS 1194Docket: 1-01-1902
Court: Appellate Court of Illinois; September 30, 2004; Illinois; State Appellate Court
Northwest Diversified, Inc., as the assignee of Dearborn Wholesale Grocers, Inc., appeals judgments favoring Nikunj Desai, stemming from a prior judgment against Desai in 1995 for $17,672.79 plus attorney fees, related to a business dispute. After acquiring the judgment from Dearborn, Northwest recorded a judgment lien against Desai's residential property in Lake County and successfully bid on the property during a sheriff's sale in April 1999. However, Desai contested the validity of the assignment of the judgment, prompting the trial court to set aside the sale due to Northwest's lack of standing in the original proceedings. Although subsequent orders by Judge Jacqueline Cox initially vacated the order arresting the sale, she later determined that Northwest was not a party to the judgment during the levy sale, as the assignment to Northwest was recorded months afterward. Ultimately, Judge Cox allowed Desai to redeem the property by paying Northwest. Northwest's appeal is based on the complex procedural history and the validity of the assignment of the judgment, which was claimed to be made without clear consideration, as the written agreement lacked evidence of payment. Swiatek's affidavit reveals that Desai owned property in Lake County, Illinois, and that on September 9, 1998, Northwest, as Dearborn's assignee, obtained a memorandum of judgment against Desai in Cook County. Swiatek attempted to file this memorandum with the court clerk, but it was returned unsigned, as assignments of judgment were not filed. The assignment was eventually filed on June 3, 1999. Northwest recorded the memorandum in Lake County on September 10, 1998, and later requested the Sheriff to levy Desai's property on December 10, 1998. Desai made partial payments toward the judgment to Dearborn in January and February 1999. In a letter dated February 15, 1999, Dearborn’s general counsel, Neil Zweiban, asserted that the assignment of the judgment to Northwest was invalid because it lacked authorization and consideration. Zweiban proposed conditions to validate the assignment, stating that Dearborn would retain $5,000 of Desai's payments and remit the remaining $2,000 back to Desai or to Northwest. On April 14, 1999, Swiatek confirmed that Northwest verbally accepted these terms. Zweiban informed Desai on April 15, 1999, that negotiations for the assignment were ongoing, and on April 17, he noted he had not yet received a confirmatory letter from Northwest. On the day of the Sheriff's sale, April 19, 1999, Northwest's counsel sent a letter agreeing to the settlement terms outlined by Zweiban. Subsequently, Dearborn issued a $2,000 check to Northwest. On July 27, 1999, Dearborn reaffirmed the assignment of judgment to Northwest from August 26, 1998. Despite the reaffirmed assignment, no new memorandum of judgment was recorded in Lake County. The Sheriff's sale, initially set for March 15, 1999, was postponed to April 19, 1999, due to ongoing negotiations regarding the assignment. Ultimately, the sale proceeded on April 19, 1999. Northwest submitted the winning bid of $25,159.16 for Desai's property, which included a $7,500 payment for Desai's homestead exemption rights. Shortly after the bid, Desai attempted to satisfy a $10,000 judgment, but the Sheriff declined his request. On July 7, 2000, the Sheriff issued a deed to Northwest. Within 30 days of the sale, Desai filed a motion in Cook County to set aside the sale, arguing that the assignment of the judgment to Northwest was invalid. Judge Elliott ruled that the assignment was not properly executed and that Northwest was not a party to the original judgment, thus halting the judgment and the sale process. He also issued a rule to show cause against Northwest and Swiatek for potential criminal contempt, citing a failure to file the assignment appropriately. In response, Northwest claimed efforts to comply with Judge Elliott's order to file the assignment were initially met with resistance from court staff but were ultimately filed on June 3, 1999. However, no corresponding memorandum reflecting this assignment was recorded in Lake County. The case subsequently moved to Judge Jacqueline Cox, who dismissed the contempt rule in April 2000 and vacated Judge Elliott's order in May 2000. Desai later filed a motion to allow payment of the judgment, asserting that the statutory redemption period had been tolled during the period of Judge Elliott's order. Judge Cox granted Desai's motion, allowing him to pay the judgment and determining that Northwest was estopped from denying Desai's right to payment due to their refusal to accept payment while the assignment was contested. The order mandated that Desai pay 10% interest on the bid amount for specified periods and confirmed that the redemption period was tolled during Judge Elliott's order. On October 2, 2000, Judge Cox issued an amended order, nearly identical to the previous one from September 20, 2000, declaring that Northwest was judicially estopped from denying Desai's right to pay a bid amount of $17,659.17 during an ongoing challenge to the assignment. This amended order vacated the earlier order. Desai subsequently sought clarification on both orders regarding interest payment dates and requested a quitclaim deed from Northwest, which had recorded an interest in the property via a Sheriff's deed. Judge Cox's ruling on this clarification motion is not found in the record. On November 1, 2000, Northwest moved to reconsider the October 2 order, to which Desai responded on November 21, 2000, also submitting another request for clarification and a quitclaim deed. By November 29, 2000, Judge Cox had taken the matter under advisement. On December 22, 2000, she vacated the October 2 order, denying Desai's payment request, stating that the levy sale extinguished the judgment and the May 6, 1999 order was issued without jurisdiction. Judge Cox ruled that Desai's acceptance of a Homestead Exemption check indicated acceptance of the levy sale, precluding both the exemption and property redemption. Desai filed a motion to reconsider on January 19, 2001, arguing misinterpretation of law and fact, and sought a ruling on his pending motions. The matter remained under advisement until April 11, 2001. On May 11, 2001, Judge Cox granted Desai's motion to reconsider, ruling that Northwest was not a party to the judgment at the time of the levy sale, vacating the December 22 order. Northwest then filed a motion to reconsider this ruling on May 21, 2001, which Judge Cox denied on May 23, ordering Desai to post $26,159.66 as a redemption amount within 14 days and for Northwest to reconvey its interest in the property. Northwest appealed the orders from May 11 and May 23, 2001, raising four issues: the validity of the assignment from Dearborn to Northwest, the trial court's jurisdiction over the judgment and levy sale, the proper tolling of the redemption period, and whether Desai waived his right to redeem the property. The appeal involves a de novo review standard due to the lack of testimony and reliance on documentary evidence, leading to an independent evaluation of the facts. The court's decision is subject to de novo review as it is based solely on documentary evidence and involves the interpretation of the judgment lien statute (735 ILCS 5/12-101 et seq. (West 2000)). In Illinois, section 12-101 establishes the guidelines for creating a judgment lien against a debtor's real estate, which is formed when a certified copy or memorandum of the judgment is filed with the county recorder. For a judgment to create a valid lien, it must be final, valid, for a definite monetary amount, and capable of execution. A proper judgment is necessary for a lien to be actionable. The statute allows for the perfection of a judgment lien and enables the property to be subjected to a levy sale by the sheriff in the county where the debtor's real estate is located. At the time of the levy sale on April 19, 1999, a purchaser could obtain a deed from the sheriff after the redemption period. Strict compliance with the statute is required; any irregularities during the levy sale process, such as inadequate notice or sale price, may lead to the trial court nullifying the sale. Assignments are governed by contract law, requiring an assignable right and the same validity requisites as other contracts. An assignment occurs through the transfer of an identifiable interest from the assignor to the assignee, determined by the parties' intent, which is a factual question based on their executed instruments and surrounding circumstances. If valid, the assignee gains all of the assignor's interest in the transferred property. For a judgment to constitute a lien, it must be recorded and supported by an enforceable judgment. Northwest's memorandum of judgment, filed on September 10, 1998, was deemed invalid due to the lack of a valid assignment of Dearborn's judgment to Northwest. Consequently, there was no enforceable lien on Desai's property at that time, rendering the Sheriff's sale improper. Key facts supporting this conclusion include a February 15, 1999, letter from Zweiban to Swiatek, which indicated no awareness of a sale of Dearborn's judgment and stated that Wardell Brooks lacked authority to sell it. Additionally, Swiatek acknowledged that Northwest provided no consideration for the judgment, leading Zweiban to assert there was no sale. On March 4, 1999, Zweiban informed Desai about Northwest's actions regarding the judgment, emphasizing that Dearborn believed Northwest did not have a valid claim. The letter noted Desai had paid $7,000 to Dearborn, with no claim from Northwest on those funds. An April 6, 1999, letter outlined conditions for validating the assignment, including Dearborn paying Northwest $2,000 from Desai's funds and crediting Desai for the $7,000 already paid. Zweiban communicated on April 15, 1999, that negotiations for the assignment were ongoing, pending a confirmatory letter from Northwest's counsel. On April 19, 1999, the date of the Sheriff's sale, Northwest's counsel sent a letter accepting the settlement terms. However, Swiatek admitted that the sale was postponed that day due to ongoing negotiations regarding the assignment's validity. Ultimately, Dearborn sent a $2,000 check to Northwest on April 29, 1999, ten days post-sale. The determination of the assignment's existence relies on the parties' intent, inferred from executed instruments and surrounding circumstances, indicating that the dispute over the assignment's validity was not resolved until April 19, 1999. Northwest conducted a levy sale on Desai's property based on a memorandum of judgment filed prior to an assignment purportedly made by Brooks. Evidence shows that after the alleged assignment between Dearborn and Northwest, Dearborn accepted $7,000 from Desai, indicating the assignment was invalid since it suggests no valid transfer of rights had occurred. Additionally, Brooks lacked authority to assign the judgment as he was not an officer of Dearborn, meaning Northwest could not acquire the rights to the judgment. The February 15, 1999, letter confirms that there was no consideration for the Brooks assignment, which is essential for a valid assignment, particularly one for value. The assignment was deemed invalid because it lacked valuable consideration, contradicting the requirement that an assignment must be supported by consideration when it is for value. The case cites legal precedents affirming the necessity of consideration for valid assignments, further establishing that the Brooks assignment was not enforceable due to the absence of actual consideration exchanged. The plaintiff sought to collect rents and access the property but was denied by the defendants, leading to a lawsuit for injunctive relief. The defendants counterclaimed, asserting that assignment documents were executed solely for loan security and did not convey property ownership. During a bench trial, the court found no evidence of actual consideration exchanged for the property transfer, leading to a determination that the assignments and quitclaim deeds were ineffective. The appellate court upheld this, stating that lack of actual consideration invalidates such documents. Additionally, it was found that a memorandum of judgment filed was invalid due to inaccuracies in the judgment amount, failing to meet the requirements for a valid lien. An agreement regarding a credit of $7,000 was not reflected in this memorandum. The court referenced the necessity for a judgment to be "final, valid, and for a definite amount" to establish a lien. Furthermore, previous cases indicated that real estate sales could be annulled due to noncompliance with judgment lien statutes, even past redemption periods. A related case illustrated a judgment debtor’s successful motion to set aside a sheriff's sale based on improper notice and inadequate sale price, raising questions about compliance with notice requirements under Illinois law. The court emphasized that selling property to satisfy a debt is an extreme measure, and strict compliance with legal provisions is essential. In Illinois, if no innocent parties are affected, a judgment debtor may redeem property on equitable terms even after the redemption period has expired, provided legal requirements are unmet. The court interpreted section 12-911 to necessitate personal service, which was absent in this case, leading to an irregularity in the sale. The sale price was found to be grossly inadequate, significantly below the property's estimated value of over $15,000. Consequently, the appellate court determined sufficient grounds to set aside the sale due to lack of personal service on the judgment debtor and the inadequate sale price. Referencing prior cases, the court noted that in *Block*, the Illinois Supreme Court upheld the reversal of a sheriff's sale because the execution writ was improperly issued against only one codebtor, without notifying the other, highlighting the importance of proper notice for judgment debtors. The sale price in that case was deemed unconscionably low, warranting the debtor's right to redeem. Similarly, in *Mohr*, the court set aside a sheriff's sale of a farm due to the buyer's lack of bona fide purchaser status, as he was closely tied to the judgment creditor, further supporting the judgment debtor's right to redeem their property. Messick's attorney, who had previously represented Sibthorp, actively participated in the trial, leading the supreme court to conclude that Sibthorp, sharing the same status as the judgment creditor, was not a bona fide purchaser. The court noted significant inadequacy in the sale price, with the property's value at $21,450 compared to a bid and mortgage lien totaling $4,214, resulting in a net profit of $17,236 for the purchaser. Additionally, the court highlighted that a statute mandated the sheriff to provide Sylvia Mohr with a setoff for her inchoate dower right, which had been neglected. The court referenced Illinois policy allowing a judgment debtor to redeem their property even after the redemption period if legal provisions were not followed, confirming that the judgment creditor should not benefit improperly. Based on the identified irregularities, the court upheld the trial court's decision to nullify the sale and permit Sylvia Mohr to redeem the property. Moreover, the court asserted that the judgment lien statute was not adhered to because Northwest lacked a valid assignment of the judgment at the time of the sale, meaning it did not possess a judgment, and the filed memorandum of judgment did not create a lien on Desai's property. Consequently, the trial court's May 11, 2001 order, which declared Northwest not a party to the judgment during the levy sale, was deemed correct, as was the order allowing redemption. Northwest's arguments claiming the assignment's validity were based on post-sale developments and were raised too late, lacking legal support for the assertion that the judgment memorandum and levy sale were valid due to the assignment being recognized later. Arguments raised for the first time in a reply brief are considered waived under Supreme Court Rule 341(e)(7). This rule necessitates citation to relevant authority, and failure to do so results in waiver, as established in *McCarthy v. Denkovski*. Consequently, Northwest has waived its arguments. Furthermore, these arguments lack merit, particularly because there was no valid assignment at the time of the sale, which means Northwest did not own an enforceable judgment to proceed under section 12-101. The trial court's jurisdiction to enter the May 6, 1999 order, which arrested the judgment and levy sale, is assessed de novo. Northwest argues the judgment was "extinguished" by its payment during the levy sale and that Judge Elliott lost jurisdiction post-payment. However, the court found these claims unpersuasive, citing that the execution of the judgment was properly arrested due to the absence of a valid assignment at the time of the Sheriff's sale. The court emphasized that a levy sale can be set aside if statutory provisions are not followed, which was the case here since Northwest was not a judgment creditor at the time of the sale. Additionally, Northwest contends that levy sales are not judicial sales, suggesting Judge Elliott lacked jurisdiction to arrest the levy. While distinguishing between levy and judicial sales, the precedent in *Craddick v. Cotta Gear Co.* affirms that trial courts can set aside levy sales for statutory noncompliance. Section 12-101 mandates an enforceable judgment held by the creditor to establish a judgment lien necessary for a levy sale. Thus, Northwest's assertions regarding the validity of the assignment and the related jurisdictional issues were ultimately rejected. A writ of execution in Illinois must be based on a valid judgment and must adhere to that judgment. In this case, Northwest lacked a valid assignment from Dearborn when the memorandum of judgment was filed, resulting in no judgment lien and an improper levy sale. Consequently, Northwest was not considered a judgment creditor at the time of the levy sale, allowing the trial court to annul the sale. Northwest's argument that the trial court lost jurisdiction to issue an order on May 6, 1999, is unconvincing. The cited case of Benj. Harris. Co. v. Western Smelting. Refining Co. indicates that a sale on execution satisfies the judgment only if the proper judgment supports it. Since the sale was invalid due to the lack of a valid judgment, Northwest's claim of satisfaction or extinguishment of the judgment is incorrect. Other cases referenced by Northwest, including Wilder v. Finnegan and Ridgewood Industries, do not support its position. Ridgewood Industries asserts that a court retains jurisdiction to enforce its judgment until it is satisfied, reinforcing that the trial court retains jurisdiction over the original judgment held by Dearborn in this matter. Northwest argues that, based on United States ex rel. Riggs v. Board of Supervisors, the court lost jurisdiction over the judgment once the levy sale was conducted and the judgment satisfied. However, Riggs does not support this claim, as it did not address jurisdiction over levy sales, and the judgment in the current case was not satisfied due to its being set aside. Northwest also cites Resolution Trust Corp. v. Ruggiero to assert that a judgment creditor can levy upon discovered real estate without further court orders. This argument is contingent on Northwest's assertion that it was a valid judgment creditor, despite the assignment being invalid when the memorandum of judgment was filed. Northwest contends that a judgment cannot be arrested once extinguished and that the trial court improperly applied section 2-1204 of the Illinois Code of Civil Procedure to halt a levy on a judgment that was 3.5 years old. Section 2-1204 allows for the arrest of a judgment under certain conditions, and Northwest argues that Desai's motion to set aside the sheriff’s sale did not qualify as a post-trial motion under this section. The court rejects this argument, affirming its jurisdiction to set aside the levy sale due to noncompliance with statutory provisions. Furthermore, Northwest did not acquire rights to the original judgment until a valid assignment was executed in April 1999, validating the trial court's decision to stop the execution of judgment proceedings against Northwest. Lastly, the court examines whether Judge Cox appropriately tolled the redemption period. Despite Northwest’s claim that the redemption statute does not permit tolling, the statute is silent on this issue, and the court notes that it cannot impose limitations not expressed by the legislature. Therefore, the court concludes that the redemption statute allows for tolling under certain circumstances. The trial court correctly tolled the redemption period during the proceedings. Courts have previously allowed redemption after the expiration of the redemption period when the judgment lien statute was not followed, which applies here since the statute was not strictly complied with and the Sheriff's sale was deemed improper. Consequently, the trial court had the authority to allow Desai to redeem the property despite the expiration of the redemption period. Northwest claims that Desai waived his right to redemption by cashing a $7,500 homestead exemption check from the Sheriff related to the levy sale. Waiver requires a voluntary relinquishment of a known right, while equitable estoppel can occur without intent to relinquish rights. Six elements must be proven for equitable estoppel: 1) misrepresentation or concealment of material facts by the allegedly estopped party; 2) their knowledge of the falsehood; 3) lack of knowledge of the truth by the asserting party; 4) intention for the representations to be acted upon; 5) good faith reliance by the asserting party; and 6) prejudice if the estopped party denies the representations. Regarding waiver, it can be implied through circumstances or misleading conduct. The determination of whether waiver exists is a legal question reviewed de novo. Northwest argues that Desai's acceptance of the check indicates his acceptance of the levy sale and an implicit admission of Northwest as the judgment assignee. However, the equitable estoppel claim is rejected as Northwest failed to address the essential elements, particularly how it was prejudiced by Desai's actions. Contentions lacking argument or authority citation are not considered on appeal and are waived under Supreme Court Rule 341. Northwest's assertion of "waiver" is dismissed as Section 12-912 of the Illinois Code of Civil Procedure allows an officer to sell premises and pay the judgment debtor $7,500 from the sale proceeds. While Northwest correctly notes that property owners cannot claim their homestead value while occupying the property, it erroneously concludes that Desai acknowledged the sale by cashing the homestead check without providing supporting authority. Examination of the facts reveals Northwest did not pay Desai's homestead exemption at the time of the levy sale and intended to do so later, as indicated in a letter from Northwest's counsel. Desai cashed the check only after complying with a court order requiring him to pay interest related to the bid amount, not as an acknowledgment of the sale. The court's order also established that Northwest was judicially estopped from denying Desai the opportunity to pay the judgment. Northwest's conclusion that Desai acknowledged the sale by cashing the check is rejected, as he did so to redeem his property following a court directive. Northwest further claims that a party redeeming property must pay the full amount required by the statute, but the relevant redemption statute allows defendants to redeem within six months by paying the purchaser. A sale of premises is deemed null and void unless the total amount due, including 10% interest from the time of sale, is paid. In the case of Muir, the court determined that a circuit court officer lacked authority to issue a redemption certificate due to insufficient payment—specifically, that four individuals with undivided interests paid interest at 5% instead of the required 6%. However, Muir does not state that a smaller payment is fatal to redemption rights or constitutes a waiver of these rights. Desai made multiple attempts to satisfy a judgment, including payments of $5,000 and $2,000 in 1999, which were accepted by Dearborn. Desai’s subsequent attempts to pay a total of $10,000 were refused by the Sheriff, and Northwest rejected later attempts based on a court order. Desai sent a cashier's check for $26,159.66 in September 2000, which was not accepted. The court found no waiver of Desai's redemption right as his attempts to pay do not imply acceptance of the validity of the judgment assignment or sale. Additionally, Northwest's argument that Desai needed to file a new suit to contest the levy after the issuance of the Sheriff's deed was deemed inappropriate as it was raised too late in the proceedings, violating Supreme Court Rule 341(e)(7). Northwest's argument that the trial judge abused her discretion in allowing Desai to redeem the property by tendering the exact bid amount is unpersuasive. The applicable statute mandates that a defendant must pay the bid amount plus 10% annual interest to redeem the property (735 ILCS 5/12-122). Judge Cox's amended order specified that Desai should pay 10% interest on the bid amount of $25,169.16 for the periods from April 19 to May 6, 1999, and from May 24, 2000, to the order date. Desai ultimately paid $26,159.66, which is approximately $990 more than the bid amount, indicating that interest was indeed applied. Although the precise calculation method used by the trial court remains unclear, the payment exceeding the bid amount confirms that interest was included. The court affirms the trial court's orders from May 11 and May 23, 2001. Additionally, it notes that the redemption statute allows a defendant to redeem real estate sold at a levy sale within six months by paying the sale price plus interest. Recent legislative changes effective January 1, 2001, now require a report and court confirmation for levy sales (735 ILCS 5/12-144.5).