Aurora Loan Services, LLC v. Kmiecik , 2013 IL App (1st) 121700 ( 2013 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Aurora Loan Services, LLC v. Kmiecik, 2013 IL App (1st) 121700
Appellate Court AURORA LOAN SERVICES, LLC, Plaintiff-Appellee, v. JOZEF
Caption KMIECIK, Defendant-Appellant, (Elzbieta Kmiecik and Unknown
Owners and Nonrecord Claimants, Defendants.)
District & No. First District, Fifth Division
Docket No. 1-12-1700
Filed June 7, 2013
Held In a mortgage foreclosure proceeding, defendant waived his objection to
(Note: This syllabus the denial of his motion to quash service of process by filing his verified
constitutes no part of answer, and his contention that plaintiff was a collection agency that
the opinion of the court failed to register under the Collection Agency Act before filing suit was
but has been prepared rejected on the ground that plaintiff was a subsidiary of a bank and was
by the Reporter of exempt from the requirements of the Act.
Decisions for the
convenience of the
reader.)
Decision Under Appeal from the Circuit Court of Cook County, No. 10-CH-01068; the
Review Hon. Robert E. Senechalle, Judge, presiding.
Judgment Affirmed.
Counsel on Stephen Richek, of Chicago, for appellant.
Appeal
Harry N. Arger and Brett J. Natarelli, both of Dykema Gossett PLLC, of
Chicago, for appellee.
Panel PRESIDING JUSTICE McBRIDE delivered the judgment of the court,
with opinion.
Justices Howse and Palmer concurred in the judgment and opinion.
OPINION
¶1 Plaintiff, Aurora Loan Services, LLC (Aurora), filed a mortgage foreclosure complaint
against Jozef Kmiecik (defendant) and Elzbieta Kmiecik1 in January 2010. Defendant filed
an answer to Aurora’s complaint which was untimely and, in October 2010, the trial court
entered an order of default and judgment of foreclosure against defendant. After the court
entered an order approving the sale and distribution of the property at issue, defendant filed
a combined motion to quash and motion to vacate all orders pursuant to section 2-1301 of
the Code of Civil Procedure (Code) (735 ILCS 5/2-1301 (West 2010)). The trial court denied
both motions. On appeal, defendant contends that: (1) the trial court erred in denying the
motion to quash because the affidavit of the special process server showed the individual
served was between the ages of 26 and 30 years while defendant is 61 years old; and (2) the
trial court’s judgments are void because Aurora did not register as a collection agency with
the state as required by the Collection Agency Act (Act) (225 ILCS 425/1 et seq. (West
2010)). We affirm.
¶2 On January 8, 2010, Aurora filed its complaint to foreclose mortgage against defendant
and Elzbieta Kmiecik, pursuant to the Illinois Mortgage Foreclosure Law (Foreclosure Law)
(735 ILCS 5/15-1101 et seq. (West 2010)). The complaint alleged as follows: on March 21,
2007, defendant and Elzbieta, as mortgagors, executed a mortgage in the amount of $303,000
to Mortgage Electronic Registration Systems, Inc. (MERS), “as nominee for HLB
Mortgage,” for the property commonly known as 7537 Mansfield Avenue in Burbank,
Illinois (Property). Aurora claimed it was the agent for the holder of the mortgage and note
and that defendant and Elzbieta were in default for not making the monthly payments
beginning in September 2009 through the present. Aurora requested that a judgment of
foreclosure and sale be entered against defendant and Elzbieta.
¶3 Copies of the mortgage and note were attached to the complaint. The mortgage defined
1
Although the foreclosure complaint was filed against both Jozef and Elzbieta, Jozef is the
only named party in the notice of appeal.
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defendant and Elzbieta, “husband and wife as joint tenants,” as the borrowers, HLB
Mortgage as the lender, and MERS as the mortgagee “acting solely as a nominee for Lender
and Lender’s successors and assigns.” Section 20 of the mortgage provided that the “Note
or partial interest in the Note (together with this Security Instrument) can be sold one or more
times without prior notice to Borrower.” Each page of the mortgage was initialed by
defendant and Elzbieta, and the mortgage and note were both signed by defendant and
Elzbieta. The mortgage was notarized on March 21, 2007.
¶4 According to the affidavit of a special process server, defendant was served with a
summons and a copy of the complaint on January 12, 2010, and the approximate age of the
individual with whom a copy of the process was left was 26 to 30 years old.
¶5 On July 23, 2010, Aurora filed its first motion for default. The July motion stated that
defendant had been personally served on January 12, 2010, and that a period of 60 days had
expired since the date of service with no motion or answer on file. The motion was set for
a hearing on August 19, 2010, in courtroom 2801 of the Daley Center at 8:45 a.m.
¶6 On August 13, 2010, Aurora filed a second motion requesting an order of default against
defendant and Elzbieta, along with a motion for a judgment of foreclosure and sale, and a
motion to appoint a selling officer.
¶7 On August 19, 2010, when the motion for default was set to be heard, defendant appeared
before the trial court in courtroom 2801 and stated that he was trying to modify the loan. The
court entered a written order allowing defendant an extension of time to answer Aurora’s
complaint until September 16, 2010, and set a hearing on Aurora’s motion for default for
September 22, 2010 in courtroom 2801 at 8:45 a.m. In the order, the court also stated that
if defendant did not “file an answer by [September 16, 2010], present a valid defense, or
settle the case with the lender before the hearing date, it is very likely that the court will enter
an order of foreclosure and sale on the hearing date.”
¶8 On September 22, 2010, defendant again appeared in courtroom 2801 before the same
trial judge who granted the previous continuance. The court granted defendant another
continuance and gave him an additional 14 days to answer or otherwise plead. The answer
was then due on October 6, 2010. The case, however, was continued for further status until
October 13, 2010, in courtroom 2801 at 8:45 a.m., and the motion for default and judgment
was continued generally to October 13.
¶9 On October 13, 2010, at the 8:45 a.m. status hearing in courtroom 2801, the same judge
who had presided over the two previous court hearings entered a default judgment against
defendant after a prove-up and defendant’s failure to appear and answer the complaint. On
the same day, at 3:30 p.m., the defendant filed a pro se general appearance and a verified
answer to the complaint to foreclose mortgage in the circuit court clerk’s office, admitting
he was the mortgagor of the mortgage on the Property for $303,000. However, defendant
alleged he had insufficient information with which to admit or deny that Aurora was the
agent for the holder of the mortgage and note or that he was in default on the mortgage.
¶ 10 Approximately nine months later, a judicial sale of the Property took place on June 9,
2011, and Aurora was the highest bidder. Aurora filed a motion for an order approving the
report of sale and distribution and possession and, on July 13, 2011, the trial court entered
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an order approving the report of sale and distribution, confirming the sale, and permitting
Aurora’s possession of the Property.
¶ 11 On August 12, 2011, approximately one year after the first motion for default was filed,
defendant, represented by an attorney, filed a combined motion to quash service and motion
to vacate pursuant to section 2-1301 of the Code. In the motion, defendant argued that
service was improper because the affidavit of the special process server stated the individual
served was a male between the ages of 26 and 30 years while defendant was 61 years old.
Defendant also argued that the trial court’s judgments were void because Aurora was not a
registered debt collector as required by the Act.
¶ 12 On September 9, 2011, Aurora filed a response to the motion, arguing in pertinent part
that defendant had waived any objection he had to the court exercising personal jurisdiction
over him when he filed a verified answer without objecting to jurisdiction, that the notes of
the special process server showed the individual served was approximately 50 years old and
the information was “erroneously transcribed” onto the affidavit, that defendant’s motion to
quash was untimely pursuant to section 15-1505.6 of the Code (735 ILCS 5/15-1505.6 (West
Supp. 2011)), and that Aurora was exempt from the requirements of the Act. Attached to the
response was a field sheet from the special process server, in which the special process server
had handwritten that the individual served was approximately 50 years old.
¶ 13 On September 29, 2011, the trial court denied defendant’s motion to quash and granted
him leave to amend the motion to vacate. In his amended motion to vacate, defendant
restated his prior motion and also argued that “if the Motion to Quash is denied because
defendant filed an answer, then the Judgement should be Vacated as Plaintiff is seeking to
utilize relief based on a filing that served no purpose.” Aurora responded that although the
“answer was filed late, the waiver of jurisdictional objections still occurred when the answer
was filed, as there is no exception to the statute.”
¶ 14 On January 18, 2012, with counsel for both parties present, after hearing oral argument
and being “fully advised,” the trial court denied the amended motion to vacate.
¶ 15 On appeal, defendant first contends that the trial court erred in denying his motion to
quash service because, according to the affidavit of the special process server, the individual
served was between the ages of 26 and 30, and defendant was 61 years old. Where the trial
court’s denial of a motion to quash service is based on documentary evidence only, our
review on appeal is de novo. Central Mortgage Co. v. Kamarauli, 2012 IL App (1st) 112353,
¶ 26.
¶ 16 Aurora argues that defendant waived this argument and submitted to the personal
jurisdiction of the court when he filed his verified answer. Defendant agrees that “the filing
of an Answer submits” a party to the court’s jurisdiction; however, he claims that because
Aurora is “seeking to use the filed answer” to show defendant waived any objection to
personal jurisdiction, “the default should be vacated because a default cannot exist when an
answer is filed.”
¶ 17 A party may object to the court’s jurisdiction over his person by filing a motion to quash
service of process and arguing either that the party is not “amenable to process” of an Illinois
court or that process was insufficient. 735 ILCS 5/2-301(a) (West 2010). However:
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“If the objecting party files a responsive pleading or a motion (other than a motion for
an extension of time to answer or otherwise appear) prior to the filing of a motion in
compliance with subsection (a), that party waives all objections to the court’s jurisdiction
over the party’s person.” 735 ILCS 5/2-301(a-5) (West 2010).
¶ 18 We agree with Aurora that defendant waived his objections to the court’s personal
jurisdiction over him by filing his verified answer. The record shows that defendant received
an extension of time to file his answer until September 16, 2010, and then on September 22,
2010, received an additional 14-day extension of time to file his answer, giving him until
October 6 to file. Defendant filed his answer on October 13, 2010, which was untimely, and
nothing in defendant’s answer challenged the service of process or the court’s exercise of
personal jurisdiction over him. According to the plain language of the statute, defendant
submitted himself to the court’s jurisdiction when he filed his answer.
¶ 19 Deutsche Bank National Trust Co. v. Hall-Pilate, 2011 IL App (1st) 102632, supports
our decision in the instant case. There, Deutsche Bank filed a foreclosure action against the
defendants and, later, a motion for an order of default against them. Id. ¶¶ 2-3. The
defendants appeared pro se and requested time to consult with an attorney. Id. ¶ 3. The court
granted them 28 days to file an appearance and answer or otherwise plead to the complaint.
Id. The defendants did not file another appearance or motion, and the trial court granted
Deutsche Bank’s motion for a default judgment. Id. ¶ 4. After a judicial sale was held,
Deutsche Bank filed a motion for an order approving the report of sale and distribution. Id.
The defendants, represented by an attorney, filed an emergency motion to stay the approval
of the property sale, which the court denied. Id. ¶ 5. Subsequently, with new representation,
the defendants filed a motion to quash service. Id. ¶ 6 The trial court denied the motion to
quash and the defendants’ motion to reconsider, after which the defendants appealed. Id.
¶¶ 7, 9.
¶ 20 Upon review, we found that the defendants waived any objection to the trial court’s
jurisdiction when they participated in the case without raising such an objection and
submitted to the court’s jurisdiction. Id. ¶ 18. We held that by “filing a motion seeking relief
from the trial court and recognizing its jurisdiction, defendants waived all objections to the
trial court’s jurisdiction.” Id. ¶ 21. We also noted that after the defendants filed the
emergency motion for a stay, they “did not take any further action in the case until eight
months later” when they filed the motion to quash. Id. ¶ 17.
¶ 21 Similarly here, defendant filed a verified answer and specifically asked that the trial court
deny any relief sought from the plaintiff, effectively recognizing the court’s jurisdiction.
Defendant did not take any further action until he filed his motion to quash 10 months later.
Defendant does not deny that he filed an answer but argues that his answer should not waive
his ability to challenge personal jurisdiction because “the filed answer was of no benefit to
this pro-se litigation.” However, defendant fails to provide reasoning or citation to case law
in support of this particular argument, so we find it to be waived. See Ill. S. Ct. R. 341(h)(7)
(eff. July 1, 2008) (the argument section of appellant’s brief “shall contain the contentions
of the appellant and the reasons therefor, with citation of the authorities and the pages of the
record relied on”). In addition, the case defendant relies on to suggest “a default cannot exist
when an Answer is filed” is distinguishable from the present case. See Lusk v. Bluhm, 321
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Ill. App. 349 (1944).
¶ 22 In Lusk, the plaintiffs filed a complaint against George Meyer and others, and Meyer filed
a motion to dismiss the complaint. Id. at 350. The trial court dismissed Meyer’s motion on
April 18, 1941, and “entered a rule against the defendants to plead to the complaint within
30 days.” Id. The trial court then entered an order of default against Meyer and the other
defendants on April 28, 1941, before the 30-day period expired. Id. After a bench trial, the
trial court found Meyer and the other defendants guilty of fraud and deceit. Id. at 351. Meyer
moved to set aside the default and judgment, arguing that the default and judgment were
entered without notice to him. Id. The court granted the motion, vacated and set aside the
default and judgment, and the plaintiffs appealed. Id. at 350. The reviewing court found that
the default judgment was entered improperly, noting that “the default was taken against
[Meyer] *** long before the rule had expired, and before the defendant, George Meyer, could
be in default for not filing an answer.” Id. at 353.
¶ 23 Lusk did not involve a question of whether the defendant waived his right to challenge
personal jurisdiction, but rather involved the improper entry of a default judgment. Here,
defendant requested and was granted two extensions of time to answer Aurora’s complaint,
but failed to timely file his answer. The Lusk court’s entry of default against Meyer was
improper because it was entered before Meyer’s opportunity to respond had expired whereas
defendant here was given a full opportunity to respond. We find Lusk to be inapposite to the
present case and defendant offers no explanation of how Lusk supports him. See Ill. S. Ct.
R. 341(h)(7) (eff. July 1, 2008).
¶ 24 Finally, it must be noted that the default judgment entered in this case has no bearing on
whether defendant submitted to the court’s jurisdiction. Nor did his failure to answer timely
have any bearing on whether the court had jurisdiction over defendant. Had defendant
appeared in front of the judge at 8:45 a.m. and filed his answer and appearance, and no
default had been entered, he still would have submitted to the jurisdiction of the trial court.
That is because when defendant filed his answer, he did not comply with section 2-301(a)
of the Code, and he thereby waived all objections to the court’s jurisdiction. 735 ILCS 5/2-
301(a-5) (West 2010).
¶ 25 Defendant next contends that Aurora is a collection agency under the Act and that,
because Aurora failed to register as a collection agency before filing suit as required by the
Act, the trial court’s judgments are void. Aurora responds that it is exempt from the
requirements of the Act because it is a subsidiary of a federal savings bank and, in the
alternative, that the registration provision of the Act is preempted by the Home Owners’
Loan Act (12 U.S.C. § 1461 et seq. (2006)). In support of its claim that it is a subsidiary of
a federal savings bank, Aurora has asked that we take judicial notice of documents Aurora
appended to its response brief showing its subsidiary status. Aurora has also cited to several
cases in which the court specifically found that Aurora was an operating subsidiary of a
federal savings bank. Defendant responds that Aurora “offered no evidence whatsoever” to
prove its status as a subsidiary before the trial court and filed a motion to strike the
documents attached to Aurora’s brief, which motion we took with the case.
¶ 26 As to this issue, the parties disagree on our standard of review. Defendant argues that the
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standard of review should be de novo, while Aurora claims it should be an abuse of
discretion. In support of his argument, defendant cites People v. Vincent, 226 Ill. 2d 1 (2007).
However, Vincent involved a petition filed pursuant to section 2-1401 of the Code (735 ILCS
5/2-1401 (West 2010)), whereas here defendant filed a motion to vacate under section 2-
1301 of the Code (735 ILCS 5/2-1301 (West 2010)). We agree with Aurora that we review
a trial court’s denial of a section 2-1301 motion to vacate for an abuse of discretion.
Standard Bank & Trust Co. v. Madonia, 2011 IL App (1st) 103516, ¶ 8; Deutsche Bank
National v. Burtley, 371 Ill. App. 3d 1, 5 (2006). An abuse of discretion occurs when the trial
court “acts arbitrarily without the employment of conscientious judgment or if its decision
exceeds the bounds of reason and ignores principles of law such that substantial prejudice
has resulted.” Marren Builders, Inc. v. Lampert, 307 Ill. App. 3d 937, 941 (1999). In
addition, the reviewing court must determine whether the trial court’s decision “ ‘was a fair
and just result, which did not deny [the moving party] substantial justice.’ ” Burtley, 371 Ill.
App. 3d at 5 (quoting Mann v. Upjohn Co., 324 Ill. App. 3d 367, 377 (2001)).
¶ 27 Section 2-1301(e) provides that a trial court “may on motion filed within 30 days after
entry [of an order of default] set aside any final order or judgment upon any terms and
conditions that shall be reasonable.” 735 ILCS 5/2-1301(e) (West 2010). The moving party
has the burden of showing sufficient grounds to vacate the judgment of default. Larson v.
Pedersen, 349 Ill. App. 3d 203, 207 (2004).
¶ 28 The purpose of the Act is to “protect consumers against debt collection abuse.” 225 ILCS
425/1a (West 2010). It provides that “[n]o collection agency shall operate in this State, ***
engage in the business of collecting, solicit claims for others, *** exercise the right to
collect, or receive payment for another of any account, bill or other indebtedness, without
registering under this Act.” 225 ILCS 425/4 (West 2010). The Act defines a “collection
agency” or a “debt collector” as “any person who, in the ordinary course of business,
regularly, on behalf of himself or herself or others, engages in debt collection.” 225 ILCS
425/2 (West 2010). “Debt collection” is defined as “any act or practice in connection with
the collection of consumer debts” and “ ‘[c]onsumer debt’ *** means money, property, or
their equivalent, due or owing or alleged to be due or owing from a natural person by reason
of a consumer credit transaction.” Id. Finally, a “consumer credit transaction” is a
“transaction between a natural person and another person in which property, service, or
money is acquired on credit by that natural person from such other person primarily for
personal, family, or household purposes.” Id. The First District has held that a complaint
filed by an unregistered collection agency is a nullity and therefore any judgment based on
the complaint is void. LVNV Funding, LLC v. Trice, 2011 IL App (1st) 092773, ¶ 19.
However, the Act does exempt certain institutions from its requirements:
“This Act does not apply to persons whose collection activities are confined to and are
directly related to the operation of a business other than that of a collection agency, and
specifically does not include the following:
1. Banks, including trust departments, affiliates, and subsidiaries thereof, fiduciaries,
and financing and lending institutions (except those who own or operate collection
agencies)[.]” 225 ILCS 425/2.03 (West 2010).
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¶ 29 In support of his claim that Aurora is a collection agency, defendant primarily relies on
People ex rel. Daley v. Datacom Systems Corp., 146 Ill. 2d 1 (1991). There, the State filed
a complaint against the city of Chicago (City) and Datacom. Id. at 9-10. In it, the State
alleged that Datacom provided services to the City to collect municipal fines in exchange for
monetary compensation and received up to 42% of the monies it collected. Id. at 22. At the
same time, the Department of Registration and Education (Department) brought an
administrative action against Datacom, alleging that Datacom’s collection of parking tickets
for the City violated the Act. Id. at 10. The trial court granted the City and Datacom’s joint
motion to dismiss. Id. Datacom was also granted leave to file a third-party complaint against
the Department claiming it was not subject to the requirements of the Act and received both
a declaratory judgment against the Department and injunctive relief from the Department’s
attempt to enforce the Act. Id. The State and Department both appealed, and the case was
reversed and remanded by the appellate court, which concluded, in pertinent part, that
Datacom was subject to the Act. Id. Datacom and the City appealed. Id. at 11. The supreme
court consolidated those appeals and considered whether Datacom was a collection agency
as defined by the Act. Id. at 22. Datacom argued that it “merely provided data processing
services” to the City and it was not engaged in debt collection. Id. at 23. The supreme court
disagreed. Id. Looking to the complaint, the supreme court concluded that Datacom was
engaging in “full-scale collection actions.” Id.
¶ 30 Since the date that Datacom case was decided, the Act has been amended. Moreover,
while Datacom was engaged in the collection of parking ticket fines, the instant case involves
a mortgage foreclosure action. The parties have not cited nor have we found an Illinois case
that has considered whether foreclosing on a mortgage is “debt collection” pursuant to the
statute. However, several courts in other jurisdictions have considered whether a mortgage
foreclosure is “debt collection” for the purposes of similar statutes, including the Fair Debt
Collection Practices Act (FDCPA) (15 U.S.C. § 1692 et seq. (2006)), and California’s
Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) (Cal. Civ. Code § 1788 et seq.
(West 2010)).
¶ 31 The FDCPA aims to eliminate abusive, deceptive, unfair debt collection practices by debt
collectors. 15 U.S.C. § 1692(a), (e) (2006). The FDCPA defines “debt” as “any obligation
or alleged obligation of a consumer to pay money arising out of a transaction in which the
money, property, *** are primarily for personal, family, or household purposes” (15 U.S.C.
§ 1692a(5) (2006)). It defines a “debt collector” as:
“any person who uses any instrumentality of interstate commerce or the mails in any
business the principal purpose of which is the collection of any debts, or who regularly
collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be
owed or due another.” 15 U.S.C. § 1692a(6) (2006).
The statute exempts certain categories of persons from its definition of “debt collector,”
including:
“any person collecting or attempting to collect any debt owed or due or asserted to be
owed or due another to the extent such activity *** (ii) concerns a debt which was
originated by such person; [or] (iii) concerns a debt which was not in default at the time
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it was obtained by such person.” 15 U.S.C. § 1692a(6)(F) (2006).
¶ 32 There is a split in decisions from jurisdictions that have considered whether foreclosing
on a mortgage is “debt collection” for the purposes of the FDCPA. It appears that the
majority view is that mortgage foreclosure is not debt collection within the meaning of the
FDCPA. Glazer v. Chase Home Finance LLC, 704 F.3d 453, 460 (6th Cir. 2013). This was
the view taken by the United States District Court for the District of Oregon in Hulse v.
Ocwen Federal Bank, FSB, 195 F. Supp. 2d 1188 (D. Or. 2002). There, Ocwen Federal Bank
had loaned money to the plaintiffs to be repaid pursuant to a note, a purchase money deed
of trust, and adjustable rate rider. Id. at 1203. The Hulse court concluded that, based on the
definitions provided, a debt collector under the FDCPA was a person who was attempting
to collect a debt. Id. at 1204 (citing 15 U.S.C. § 1692a(6) (2000)). The court went on to
distinguish foreclosing on a trust deed from the collection of an obligation to pay money
because “[p]ayment of funds is not the object of the foreclosure action. Rather, the lender is
foreclosing its interest in the property.” Id. The court then held “the activity of foreclosing
on [a] property pursuant to a deed of trust is not the collection of a debt within the meaning
of the FDCPA” because foreclosure by a trustee is not an attempt to collect funds from a
debtor. Id. at 1204 (agreeing with Heinemann v. Jim Walter Homes, Inc., 47 F. Supp. 2d 716
(N.D. W. Va. 1998), aff’d, 173 F.3d 850 (4th Cir. 1999) (table) (finding that foreclosing
pursuant to a deed of trust is not collecting on a debt, and therefore does not fall within the
terms of the FDCPA)).
¶ 33 Other federal district courts have concluded similarly. See Speleos v. BAC Home Loans
Servicing, L.P., 824 F. Supp. 2d 226, 232-33 (D. Mass. 2011) (finding that because the
FDCPA distinguishes debt collection from the enforcement of security interests in its
definition of “debt collector,” a company enforcing a security interest cannot be held liable
under the FDCPA); Castro v. Executive Trustee Services, LLC, No. CV-08-2156-PHX-LOA,
2009 WL 438683 (D. Ariz. Feb. 23, 2009) (agreeing with Hulse that foreclosing on a trust
deed is different than collecting money from a debtor); Izenberg v. ETS Services, LLC, 589
F. Supp. 2d 1193, 1199 (C.D. Cal. 2008) (finding that “ ‘foreclosing on [a] property pursuant
to a deed of trust is not the collection of a debt within the meaning of the FDCPA’ ” (quoting
Ines v. Countrywide Home Loans, Inc., No. 08-CV-1267, 2008 WL 4791863 (S.D. Cal. Nov.
3, 2008) (citing Hulse, 195 F. Supp. 2d at 1204))); Rosado v. Taylor, 324 F. Supp. 2d 917,
924 (N.D. Ind. 2004) (finding that security enforcement activities are not debt collection
practices and therefore fall outside the scope of the FDCPA); Perry v. Stewart Title Co., 756
F.2d 1197, 1208 (5th Cir. 1985), modified on reh’g on other grounds, 761 F.2d 237 (5th Cir.
1985) (holding that the legislative history of the FDCPA “indicates conclusively that a debt
collector does not include the consumer’s creditors, a mortgage servicing company, or an
assignee of a debt, as long as the debt was not in default at the time it was assigned”).
¶ 34 The minority view taken is that the act of foreclosing on a mortgage is the collection of
a debt according to the FDCPA. See Glazer, 704 F.3d at 464; Kaltenbach v. Richards, 464
F.3d 524, 529 (5th Cir. 2006) (concluding that a party who falls under the general definition
of “debt collector” is a debt collector for the purposes of the FDCPA as a whole, regardless
of whether the party is enforcing a security interest); Wilson v. Draper & Goldberg, P.L.L.C.,
443 F.3d 373, 378-79 (4th Cir. 2006) (holding that the defendants’ foreclosure action was
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an attempt to collect a debt). In Glazer, the Sixth Circuit disagreed with the majority view
and noted that the FDCPA does not define “debt collection” but provides various
“guideposts.” Glazer, 704 F.3d at 460. It found that, based on the statute’s definition of
“debt” and its focus on the underlying transaction, whether an obligation was a “debt”
depended on the purpose for which the debt was incurred, and not whether the obligation was
secured. Id. at 461. The court concluded “a home loan is a ‘debt’ even if it is secured.” Id.
Ultimately, the Glazer court held that mortgage foreclosure fell under the definition of “debt
collection” under the FDCPA Id. at 464.
¶ 35 While the FDCPA’s definition of “debt collector” differs from the Act’s definition, the
Rosenthal Act’s definitions of both “debt collector” and “debt collection” are almost
identical to those of the Act.2 See Cal. Civ. Code § 1788.2 (West 2010). California courts
have held that the foreclosure of a property pursuant to a deed of trust is not debt collection
within the meaning of the Rosenthal Act. Sipe v. Countrywide Bank, 690 F. Supp. 2d 1141,
1151 (E.D. Cal. 2010); Gardner v. American Home Mortgage Servicing, Inc., 691 F. Supp.
2d 1192, 1198 (E.D. Cal. 2010); Castaneda v. Saxon Mortgage Services, Inc., 687 F. Supp.
2d 1191, 1197 (E.D. Cal. 2009) (citing Izenberg, 589 F. Supp. 2d at 1199); Rosal v. First
Federal Bank of California, 671 F. Supp. 2d 1111 (N.D. Cal. 2009); Swanson v. EMC
Mortgage Corp., No. CV F 09-1407 LJO DLB, 2009 WL 3627925, *4 (E.D. Cal. Oct. 29,
2009) (citing Hulse, 195 F. Supp. 2d at 1204).
¶ 36 In this appeal we need not decide whether a mortgage foreclosure action is debt
collection under the Act because we find Aurora is a subsidiary of a bank and exempt from
the requirements of the Act.
¶ 37 An appellate court may take judicial notice of readily verifiable facts if doing so “will
‘aid in the efficient disposition of a case,’ ” even if judicial notice was not sought in the trial
court. Department of Human Services v. Porter, 396 Ill. App. 3d 701, 725 (2009) (quoting
Muller v. Zollar, 267 Ill. App. 3d 339, 341-42 (1994)). Specifically, a reviewing court may
take judicial notice of a written decision that is part of the record of another court because
these decisions are readily verifiable facts that are capable of “ ‘instant and unquestionable
demonstration.’ ” Hermesdorf v. Wu, 372 Ill. App. 3d 842, 850 (2007) (quoting May
Department Stores Co. v. Teamsters Union Local No. 743, 64 Ill. 2d 153, 159 (1976),
quoting 9 John Henry Wigmore, Evidence § 2571, at 548 (3d ed. 1940)).
¶ 38 In its brief, Aurora cited several federal cases in which the courts took judicial notice of
documents that established Aurora is a wholly owned subsidiary of Aurora Bank, formerly
Lehman Brothers Bank, a federally chartered savings bank. See Grant v. Aurora Loan
Services, Inc., 736 F. Supp. 2d 1257, 1275 (C.D. Cal. 2010) (“Aurora is a wholly-owned
subsidiary of Lehman, a federal savings bank ***.”); Kelley v. Mortgage Electronic
Registration Systems, Inc., 642 F. Supp. 2d 1048, 1053 (N.D. Cal. 2009) (“Aurora Bank is
2
The only substantive difference between the statutes’ definitions of “debt collection” and
“debt collector” is that the Rosenthal Act specifically excludes attorneys and counselors at law from
its definition of “debt collector” and the Act does not. Compare Cal. Civ. Code § 1788.2(c) (West
2010), and 225 ILCS 425/2 (West 2010).
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a federally chartered savings bank; Aurora Loan Services, Inc., is its wholly owned
subsidiary.”); see also Wornum v. Aurora Loan Services, Inc., No. C-11-02189, 2011 WL
3516055, *2 (N.D. Cal. Aug. 11, 2011) (“Aurora Loan Services is a wholly owned operating
subsidiary of Aurora Bank, FSB *** formerly known as Lehman Brothers, FSB.”); Yau v.
Deutsche Bank National Trust Co., Americas, No. SACV 11-00006-JVS, 2011 WL 8327957,
*3 (C.D. Cal. May 9, 2011) (“Aurora [Loan Services, LLC,] is a wholly-owned subsidiary
of Aurora Bank, FSB, a federally chartered bank.”); Ibarra v. Loan City, No. 09-CV-02228-
IEG, 2010 WL 415284, *5 (S.D. Cal. Jan. 27, 2010) (finding that “Aurora has submitted
ample evidence that it is a wholly owned operating subsidiary of a federally chartered bank,
Aurora Bank, FSB, formally Lehman Brothers Bank”). We take judicial notice of these
written decisions and find that Aurora is a subsidiary of a bank and exempt from the Act.
Therefore, we find the trial court properly denied defendant’s motion to vacate and we need
not reach Aurora’s alternative argument that the registration requirement of the Act is
preempted by federal law.
¶ 39 In light of the decision above, and because we are not considering the documents Aurora
attached to its appellate brief, defendant’s motion to strike is denied.
¶ 40 For the foregoing reasons, we affirm the judgment of the trial court.
¶ 41 Affirmed.
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