Commercial Credit Loans, Inc. v. Espinoza

12/30/97


1-96-1084

COMMERCIAL CREDIT LOANS, INC., ) APPEAL FROM THE
) CIRCUIT COURT OF
Plaintiff, ) COOK COUNTY
)
v. )
)
MARIA ESPINOZA, UNKNOWN SPOUSE )
OF MARIA ESPINOZA, ANGEL MURGIA, )
PRICILLIANA MURGIA, UNKNOWN OWNERS ) No. 95 CH 1969
AND NON-RECORD CLAIMANTS, )
CLAIMANTS, )
)
Defendants-Appellees, )
)
(PAUL B. JAVARAS and HEMA K. PRASAD, ) THE HONORABLE
) MARGARET S. MCBRIDE
Third Party Bidders-Appellants). ) JUDGE PRESIDING.

PRESIDING JUSTICE COUSINS delivered the opinion of the
court:
This is an appeal from the trial court s denial of a
petition to confirm the report of sale and distribution of
certain property to appellants Paul B. Javaras and Hema K.
Prasad, who were the high bidders of the property at a mortgage
foreclosure sale. The property had been foreclosed by
plaintiff, Commercial Credit Loans, Inc. (Commercial), after
mortgagee, Maria Espinoza, defaulted on the mortgage. On appeal,
appellants contend that: (1) the trial court erred in finding
that confirmation of the sale would be an "unjust result" based
on Espinoza's alleged attempts to redeem on the date of the sale;
(2) the trial court erred in finding that confirmation of the
sale would be "unconscionable" based on the sum bid at the sale
and the evidence presented at the confirmation hearing; (3) the
trial court erred in ordering the plaintiff to accept redemption
from Espinoza; and (4) the trial court erred in prejudging the
position of the parties and matters at issue prior to hearing all
of the evidence and argument, thereby prejudicing appellants.
BACKGROUND
On March 3, 1995, Commercial filed a complaint seeking to
foreclose a mortgage executed by defendant, Maria Espinoza,
alleging that Espinoza defaulted on her mortgage payments. On
June 5, 1995, the trial court entered a judgment of foreclosure
by default in the amount of $9,112.53. The order provided that
Espinoza s right to redeem the judgment amount would expire on
November 5, 1995. Espinoza was not personally served, and the
order of default was entered against her by way of publication
service in the Chicago Daily Law Bulletin. The mortgage
foreclosure sale was scheduled for November 7, 1995, at which
appellants were the successful bidders with a bid of $10,800.
Joined by appellants, Commercial filed a notice of sale and
a motion to confirm the report of the sale. On November 21,
1995, Espinoza filed an objection to the approval of the sale in
which she argued that she had appeared at the foreclosure sale
with a certified check in the amount of the foreclosure judgment,
but that she did not discover that she would need more than the
judgment amount because she does not speak English very well.
Espinoza also stated that she had called several people listed on
the notice of sale to try and verify the amount that she would
need to bring to the foreclosure sale.
At the hearing on the motions, an appraiser testified that
the value of the property at issue was $69,000 at the time of the
hearing. Further evidence presented at the hearing indicated
that, on two separate occasions, Espinoza called the law firm
that handled the foreclosure sale for Commercial and told a
Spanish-speaking collection manager, Sergio Magana, that she was
getting the money together to pay for the property. At the
hearing, Magana testified that, when Espinoza called him, he told
her to call back when she had the money. Espinoza called Magana
a third time on the date of the sale. Magana testified that he
put Espinoza on hold and told an attorney in the office that
Espinoza was on the phone, had the money and wanted to pay. The
attorney instructed Magana to tell Espinoza that her period of
redemption was already past due. Magana testified that when he
returned to the phone, Espinoza had already hung up. Magana also
stated that he never told Espinoza the amount that she would need
to claim her property. On cross-examination, Magana stated that
he did not tell Espinoza where and when the sale would be held.
However, in an affidavit dated February 15, 1996, Magana stated
that he had told Espinoza when and where the sale would be held.
Espinoza also testified at the hearing. A transcript of her
testimony was not included in the record on appeal. However, in
her affidavit dated January 30, 1996, Espinoza states that she
learned about the foreclosure sale when she received a notice of
sale. One week prior to the date of the sale and three days
prior to the date of the sale, Espinoza called the number listed
on the notice for in order to get information about the sale.
Espinoza further states that she spoke to a Spanish-speaking male
employee, Mr. Cortez,[fn1] and informed him that she had
$9,112.53, and wanted to know what to do with it. Cortez told
her to bring the money in cash to his office and she would be
able to save her house. Espinoza told Cortez that she would call
him back. After speaking to some of her friends, she decided to
purchase a cashier's check instead. Espinoza further states in
her affidavit that she spoke to Cortez four more times during the
week. He told her that if she wanted to pay with a cashier's
check she would have to bring it to the sale. Espinoza further
states that she brought a cashier's check of $9,112.53 to the
foreclosure sale at approximately 10 a.m. At the sale, she spoke
to a woman and showed her the certified check. However, the
woman told her that it was too late and that she should go to the
offices of Harris & Harris, which is Commercial s law firm.
Espinoza arrived at the law firm at approximately 10:30 a.m.
There she was told that Cortez was not in the office and that she
should go to Commercial s offices. Espinoza went to Commercial s
offices and was told that her house had already been sold.
The trial court denied confirmation of the sale pursuant to
section 15--1508(b) of the Illinois Mortgage Foreclosure Law (735
ILCS 5/15--1508(b) (West 1992)) and ordered that Commercial
accept redemption from Espinoza. The trial court found that the
terms of the sale were unconscionable because the value of the
property was six times more than what was bid at the sale. The
trial court further found that Espinoza told Commercial that she
had the money and asked for directions on how to get the money to
them, but she was "shrugged off because of her inability to
communicate effectively with Commercial." Thus, the trial court
concluded that justice would not otherwise be done were Espinoza
to lose her home because of what the trial court considered to be
unfair tactics. Third-party bidders Javaras and Prasad appealed.
OPINION
I
Appellants first contend that the trial court erred in
finding that confirmation of the sale would be an "unjust result"
based on defendant s alleged attempts to redeem on the date of
sale. Appellants also argue that Espinoza acted negligently and
untimely in asserting her statutory right to redeem. Appellants
further argue that the statutory right to redeem must be strictly
construed and that allowing Espinoza to redeem after she failed
to comply with the redemption statute undermines the
legislature's intent to promote the integrity of judicial sales.
Espinoza responds that the trial court properly found that she
was not negligent, that Commercial employed unfair tactics and
that confirmation of the sale would result in an injustice.
It is well settled in Illinois law that a judicial
foreclosure sale is not complete until it has been approved by
the trial court. Fleet Mortgage Corp. v. Deale, 287 Ill. App. 3d
385, 388, 678 N.E.2d 35 (1997); Grubert v. Cosmopolitan National
Bank, 269 Ill. App. 3d 408, 411, 645 N.E.2d 560 (1995). The high
bid received at a judicial sale is merely an irrevocable offer to
purchase the property, and acceptance of the offer takes place
when the trial court confirms the sale. Citicorp Savings v.
First Chicago Trust Co., 269 Ill. App. 3d 293, 645 N.E.2d 1038
(1995). Under section 15--1508(b) of the Illinois Mortgage
Foreclosure Law (735 ICLS 5/15--1508(b) (West 1992)) (Act), the
trial court shall confirm a foreclosure unless: (1) there has
been a failure to give proper notice; (2) the terms of sale were
unconscionable; (3) the sale was conducted fraudulently; or (4)
justice was otherwise not done. A court is justified in
disapproving a judicially mandated foreclosure sale if unfairness
is shown which is prejudicial to an interested party. Citicorp
269 Ill. App. 3d at 300. Trial courts have broad discretion in
approving or disapproving sales made at their direction.
Citicorp, 269 Ill. App. 3d 293, 645 N.E.2d 1038.
In the instant case, appellants contend that the trial court
protected Espinoza from her negligence in failing to comply with
the statutory redemption proceedings. We disagree. Rather, our
review of the record shows that the trial court carefully
considered the statutory factors provided in section 15-1508(b)
of the Act and, based on the evidence presented, decided that the
terms of the sale were unconscionable and that justice would not
be done if the sale were confirmed. We believe that the evidence
contained in the record on appeal supports the trial court's
conclusion.
The record on appeal does not contain a transcript of
Espinoza's testimony, and we note that Javaras and Prasad, as
appellants, were obligated to provide this court with a record
that is sufficient to sustain their claim of error. Grubert v.
Cosmopolitan National Bank, 269 Ill. App. 3d at 412. However,
Espinoza's affidavit, which was included in the appendix to
appellants' brief, indicates that Espinoza made several attempts
to contact Commercial through its attorneys and attempted to
redeem her property and attend the foreclosure sale. Espinoza
told Sergio Magana that she had the money and asked for
instructions on how to pay the debt or attend the foreclosure
sale. Magana testified that Espinoza did not say that she had
the money but only stated that she was getting the money.
However, the record reflects that the trial court did not find
his testimony to be entirely credible because parts of his
testimony conflicted with his previously sworn affidavit. Based
on these facts and the fact that the value of the property at
issue was six times more than what was bid at the sale, the trial
court concluded that justice would not otherwise be done if the
foreclosure sale was confirmed and Espinoza was not allowed to
redeem. After reviewing the record, we cannot say that the
trial's court's decision was erroneous.
II
Appellants further contend that the trial court erred in
finding that confirmation of the sale would be unconscionable.
Appellant argues that inadequate sale price alone is insufficient
cause to refuse confirmation of a foreclosure sale. Espinoza
replies that appellants' argument is irrelevant because, here,
the trial court did not base its decision solely on the
inadequate sale price. We agree with Espinoza.
Section 15--1508(b) of the Act provides that the trial court
shall confirm a foreclosure unless the terms of the sale were
unconscionable. 735 ICLS 5/15--1508(b) (West 1992). The
purchase price of a property at a foreclosure sale is one of the
"terms of sale" as that phrase is used in the statute. Berkeley
Properties, Inc. v. Balcor Pension Investors II, 227 Ill. App. 3d
992, 999, 592 N.E.2d 63 (1992). The sale price alone may not be
enough to deny confirmation of a foreclosure sale. See Lyons
Savings & Loan Ass'n. v. Gash Associates, 189 Ill. App. 3d 684,
545 N.E.2d 412 (1989); Resolution Trust Corp. v. Holtzman, 248
Ill. App. 3d 105, 618 N.E.2d 418 (1993); Cragin Federal Bank for
Savings v. American National Bank & Trust Co., 262 Ill. App. 3d
115, 633 N.E.2d 1011 (1994). However, in the instant case,
inadequate sale price was not the sole basis of the trial court's
decision. The trial court found that the value of the property at
issue was six times what was bid at the foreclosure sale and that
such a disparity in the prices was unconscionable. Moreover, the
trial court stated more than one reason for refusing to confirm
the sale. The trial court stated in pertinent part:
"I believe and I find that the terms of the sale are
unconscionable for a number of reasons. * * *
I also believe that justice would not otherwise be done
in this case were Miss Espinoza to lose her home because of
what I consider to be unfair tactics."
The trial court then proceeded to explain what it considered to
be unfair tactics based on the evidence that was presented.
The trial concluded that justice would not otherwise be done if
the sale was confirmed because Espinoza attempted to redeem but
was "shrugged off" because of her inability to speak English in
addition to the fact that the sale price was unconscionable.
II I
Defendants next argue that the trial court erred in ordering
the plaintiff to accept redemption from Espinoza. Espinoza
responds that appellants do not have standing to challenge this
court order. We agree.
Standing requires injury to a legally cognizable interest.
Almgren v. Rush-Presbyterian-St. Luke's Medical Center, 162 Ill. 2d 205, 216, 642 N.E.2d 1264 (1994). A party must assert its own
legal rights and interests, rather than base a claim for relief
upon the rights of third parties. Helmig v. John F. Kennedy
Community Consolidated School District No. 129, 241 Ill. App. 3d
653, 658, 610 N.E.2d 152 (1993).
Espinoza cites Citicorp Savings v. First Chicago Trust Co.,
269 Ill. App. 3d 293, 645 N.E.2d 1038 (1995). In our view,
Citicorp is instructive. In Citicorp, the appellate court
concluded that third-party bidders did not have standing to raise
a claim that the trial court was without authority to reinstate
the mortgagee s mortgage because the statutory reinstatement
period had expired. In reply, appellants argue that Citicorp
is distinguishable because reinstatement is different from
redemption. We note that, in Citicorp, the statutory right of
the mortgagees, the Fronteras, to redeem the property expired on
February 23, 1993. However, on February 17, 1993, Citicorp
forwarded to the Fronteras' attorney a letter indicating that
Citicorp would accept a "pay off" or a "reinstatement" payment
through March 15, 1993. Citicorp, 269 Ill. App. 3d at 295. We
are unpersuaded by appellants' argument, in effect, that a "pay
off" rather than a "reinstatement" made a difference as to the
issue of standing in Citicorp.
In our view, the statutory differences between the two
processes are irrelevant to this issue. We recognize that, as
certified high bidders in the foreclosure sale of Espinoza s
property, appellants have some interest in litigation involving
the property. Citicorp, 269 Ill. App. 3d at 301. High bidders
should be able to pursue their appeal. See Citicorp, 269 Ill.
App. 3d at 299. However, as was stated by the appellate court in
Citicorp, the high bidders interest evaporates upon the trial
court s determination that the judicial sale will not be
confirmed. Citicorp, 269 Ill. App. 3d at 301. "What the trial
court decides to do with the property after it determines the
sale will not be confirmed is a matter in which the [high
bidders] have no discernible legal interest." Citicorp, 269 Ill.
App. 3d at 301. Instead, that issue is one solely between the
mortgagee and the mortgagor.
IV
Appellants' final contention is that the trial court
prejudged the positions of the parties and matters at issue prior
to hearing all of the evidence and argument and indicated a
prejudice in favor of Espinoza and against appellants. We
believe appellants' argument is without merit.
Initially we note that, during a nonjury trial, the comments
of a trial judge are allowed greater latitude than would be
acceptable were a jury present. City of Chicago v. Westphalen,
93 Ill. App. 3d 1110, 1121, 418 N.E.2d 63 (1981). Furthermore,
not every comment or unguarded expression by a trial judge will
support a claim of prejudice; a showing of prejudicial effect is
required. Westphalen, 93 Ill. App. 3d at 1121.
In the instant case, appellants point to two instances in
which they claim the trial court indicated a prejudice against
them. Reviewing each colloquy and the context within which the
remarks were made, we fail to see any impropriety by the trial
court or any prejudice to the defendant. The first remarks cited
by the trial court were made during a pretrial hearing when the
court stated its view that the parties should attempt to settle.
However, the court clearly stated that the parties could have an
evidentiary hearing if they could not settle.
Appellants also cite to comments made by the court at a
hearing that was held on March 1, 1997. The court's comments
must be put in context. At the hearing, the parties appeared to
have argument on a motion in limine. However, Espinoza suggested
they begin an evidentiary hearing at which to present the
appraiser, who was present in court. The trial court preferred
to reschedule the evidentiary hearing because it was in the
middle of a trial on another matter. However, Espinoza expressed
concern at the expense of having to bring the appraiser back to
court at another time. At that point, the trial court stated:
"I think it's unfortunate that the costs are being
spent on this kind of case. There isn't a single case cited
that has anything factually similar to this situation here.
*** I already proposed a way to resolve this case."
Again, we see no error in the trial court's comments. The
court's comments were precipitated by Espinoza's concern over the
legal costs of the case. In our view, the remarks evidence the
court's attempt to encourage settlement and avoid costly
litigation. Moreover, appellants fail to point to any prejudice
they suffered a result of the comments.
For the reasons stated herein, the judgment of the circuit
court is affirmed.
Affirmed.
GORDON and LEAVITT, JJ., concur.
[fn1]Testimony at the hearing indicated that "Cortez" is the
alias used by Magana in his employment as a collection agent.