Page 42 - Sharp-Hundley 2012

plaintiff learned that it would have to pay $18,934.79 in past-due assessments,
charges and fees to the co-op and another $60,000 to $176,000 to purchase the unit
as part of the conversion to a condominium. Deciding it did not want those liabilities, it
petitioned to vacate confirmation of the sale in its favor. It contended the
requirements of § 2-1401 should not apply to it, because it was the plaintiff.

Rejecting that distinction, the panel found that any petitioner under § 2-1401 must set forth
specific factual allegations as to the existence of a meritorious defense or claim and as to its due
diligence in presenting that claim or defense. It equated the meritorious defense or claim element to
alleging facts that would have prevented entry of the judgment if they had been known by the trial
court.

Rejecting the argument that the past-due assessments, charges and fees
constituted newly discovered evidence justifying vacation of the sale, the panel said
plaintiff had agreed to a recognition agreement (which in essence subordinates
mortgage claims to the cooperative’s claims against the unit) and it “had the duty to
exercise due diligence to remain abreast of the amount of fees accruing throughout
the proceedings and cannot successfully assert its lack of knowledge . . . as a meritorious defense or
claim.”

As to the conversion, the court contrasted CitiMortgage’s remorse with facts which would have
prevented the court from entering the confirmation order. “CitiMortgage’s allegations all have the
common element that it potentially would not have made the decision to continue with the foreclosure
and sale proceedings had it known about the amount of assessments in arrears and the conversion,”
the panel said. “CitiMortgage, however, does not establish that the trial court would not have entered
the judgment or order confirming the sale had it known about the same information.”

Evidentiary Hearing Should Have Been Held on Publication Service

A trial court should have held an evidentiary hearing to determine whether diligent inquiry and due
inquiry were conducted in an effort to locate the defendant, an appellate panel in Chicago has held.

In a case where the defendant presented detailed affidavits impeaching the process server’s
alleged efforts and findings, the panel went on to discuss what should be found before a foreclosure
court permits the creditor to proceed by publication. CitiMortgage, Inc. v. Cotton, 2012 IL App (1st)
102438.

“(S)trict compliance with statutes governing service of process is required,” the
court said. “The plaintiff must conduct both ‘diligent inquiry’ in ascertaining the
defendant’s residence and ‘due inquiry’ in ascertaining the defendant’s
whereabouts before the plaintiff can properly execute an affidavit stating that the
defendant cannot be found.” It said the whereabouts inquiry “requires ‘an honest
and well-directed effort to ascertain the whereabouts of a defendant by an inquiry as full as
circumstances can permit.’”

--John T. Hundley, 618-242-0246, Jhundley@lotsharp.com

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