Find Legal Information

FIRST DIVISION
September 30, 2004

Plaintiff-appellant, Northwest Diversified, Inc. (Northwest),appeals from judgments entered in favor of defendant-appellee,Nikunj Desai, on May 11, 2001, and May 23, 2001. On November 2,1995, Dearborn Wholesale Grocers, Inc. (Dearborn), obtained ajudgment in Cook County against Desai in the amount of $17,672.79,plus $300 in attorney fees and costs. The judgment arose out of amonetary dispute between Dearborn and Desai with regard to a foodand liquor business operated by Desai in Lake County. Ultimately,the judgment was assigned from Dearborn to Northwest, which isengaged in the business of purchasing judgments and attempting tocollect them.

At some point in the fall of 1998, Northwest discovered thatDesai owned residential property in Lake County, Illinois, and Northwest obtained a judgment lien against the property byrecording a memorandum of judgment in Lake County. Using thesheriff of Lake County (Sheriff), Northwest attempted to levy andto execute the judgment against Desai's residential property.Northwest successfully bid on the property at a sale conducted bythe Sheriff on April 19, 1999. However, Desai filed a motion toset aside the Sheriff's sale on the ground that the assignmentbetween Dearborn and Northwest was invalid.

On May 6, 1999, Judge Glynn Elliott entered an order arrestingthe judgment and the levy sale, finding, among other things, thatthere was no valid assignment of record and because Northwest wasnot a party to the original judgment proceedings, it could notcollect on the judgment against Desai.

Through a series of orders, which we detail extensively below,another judge, Jacqueline Cox, vacated the order arresting the salefinding that the levy sale extinguished the trial court'sjurisdiction. Judge Cox further held that when Desai cashed ahomestead exemption check, he accepted the levy sale and could nottake the exemption and also redeem the property. Subsequently,however, Judge Cox vacated that order and found that Northwest "wasnot a party to the judgment at the time of the levy sale in thatthe assignment of the judgment to Northwest was filed severalmonths after the levy sale". Eventually, Judge Cox entered anorder allowing Desai to pay Northwest the redemption amount inexchange for the property. Northwest appeals from those orders. We state the following background facts and before beginningpoint out that this case has a long and complicated proceduralhistory in the trial court.

As noted above, Northwest was in the business of purchasingjudgments and seeking to collect them. Kenneth Swiatek, presidentof Northwest, stated in an affidavit that he and Wardell Brooks, acredit manager at Dearborn, discussed the possibility of Northwestpurchasing judgments from Dearborn, including Dearborn's judgmentagainst Desai. Brooks informed Swiatek that Dearborn had "writtenoff" the judgment against Desai and that he had the authority tosell the judgment for "whatever he could get." According toSwiatek's affidavit, he and Brooks "reached an agreement" on August26, 1998, under which Dearborn would assign its judgment againstDesai to Northwest for $1. The purported assignment (Brooksassignment), memorialized in written form, was signed by Brooks,identified Northwest as the assignee, and was dated August 26,1998. Although the Brooks assignment recites that it was given"Upon receipt of good and valuable consideration hereinacknowledged and received ***," the document itself never stateswhat actual consideration was given or that $1 was ever paid byNorthwest to Dearborn. We also point out that the affidavit ofSwiatek never states that any consideration, specifically $1, waspaid by Northwest to Dearborn for the purported assignment datedAugust 26, 1998.

Swiatek also stated in his affidavit that he learned Desaiowned real property in the form of a residence in Lake County,Illinois. On September 9, 1998, Northwest, as the assignee ofDearborn, obtained a memorandum of judgment against Desai in CookCounty. In his affidavit, Swiatek stated that he took thememorandum of judgment and the assignment to the office of thecourt clerk in Cook County. The memorandum of judgment was enteredby Judge Spurlock on September 9, 1998, but Swiatek testified thatthe clerk's office returned the assignment to him unsigned andinformed him that assignments of judgment were not filed. Theassignment of judgment was not filed in Cook County with the courtclerk until June 3, 1999. According to Swiatek, Northwest recordedthe memorandum of judgment with the Lake County recorder of deedson September 10, 1998.

Swiatek also stated that on December 10, 1998, he delivered aletter to the Sheriff and requested that the Sheriff place a levyand execute the judgment against Desai's residential property. During the pendency of the levy, Desai paid Dearborn $5,000 onJanuary 4, 1999, and $2,000 on February 15, 1999, in an attempt topartially satisfy the judgment. Dearborn accepted these paymentsfrom Desai.

In a letter dated February 15, 1999, Neil Zweiban, generalcounsel for Dearborn, informed Northwest that the assignment of theDesai judgment from Dearborn to Northwest was invalid becauseBrooks, who was not an officer of Dearborn, "had no authority tosell such assets." The letter further indicated that there wasnever any consideration paid for the assignment and as a resultthere was no sale of the judgment from Dearborn to Northwest.

On April 6, 1999, Zweiban sent a letter to counsel forNorthwest which again indicated that the assignment at issue was"not authorized" and was not given for "adequate consideration." However, the letter proposed certain conditions in order tovalidate the assignment. These conditions expressly stated asfollows:

"[Dearborn] will keep Five Thousand Dollars($5,000.00) of the funds paid to it [by][Desai], funds paid in partial satisfaction ofthe judgment against [Desai]. [Dearborn] willremit the additional funds (Two ThousandDollars $2,000.00) back to [Desai] as yourequested, or we will remit the Two thousandDollars ($2,000.00) to [Northwest]. We willnot interfere in your clients' sheriff's saleprovided that [Desai] is given full credit forthe Five Thousand Dollar ($5,000.00) payment,or if the Two Thousand Dollars ($2,000.00) isremitted to you [Desai] will receive a SevenThousand Dollar ($7,000.00) credit. (That is,the judgment amount for [Desai] is reduced bythe amount paid)."

In his affidavit, Swiatek confirmed that on April 14, 1999,Northwest "verbally agreed" to the above terms in exchange for avalid assignment.

Zweiban also sent a letter to Desai dated April 15, 1999,which notified Desai that negotiations for the assignment of thejudgment from Dearborn to Northwest were on-going and that, in theevent a "confirmatory letter" was sent to Zweiban from Northwest'scounsel, all rights to the judgment would then "be in Northwest'shands."

Zweiban then sent another letter to Northwest's counsel, datedApril 17, 1999, stating that, as of that date, he had not receivedthe letter "confirming the settlement." On April 19, 1999, thedate of the Sheriff's sale, Northwest's counsel sent a letter toDearborn's counsel bearing the same date, which indicated thatNorthwest agreed to the settlement terms outlined in the letterwritten by Zweiban on April 6, 1999. On April 29, 1999, ten daysafter the sale, Dearborn mailed Northwest a check dated April 26,1999, in the amount of $2,000, made payable to Northwest pursuantto the terms of Zweiban's April 6, 1999, letter. On July 27, 1999,Dearborn "reaffirmed" the prior assignment of judgment to Northwestdated August 26, 1998. After the "reaffirmed assignment," there was no memorandum of judgment ever recorded in Lake County.

While the dispute over the assignment was occurring betweenDearborn and Northwest, the Sheriff set a sale for the property onMarch 15, 1999. In his affidavit, Swiatek stated that Northwestpostponed the sale to April 19, 1999, because Dearborn andNorthwest were still negotiating the validity of the assignment. Nonetheless, on April 19, 1999, the Sheriff conducted a levy salefor Desai's property. Northwest was the successful bidder in theamount of $25,159.16, which included a $7,500 payment to coverDesai's right to a homestead exemption under section 12-122 of theIllinois Code of Civil Procedure. 735 ILCS 5/12-122 (West 2000). Swiatek also stated in his affidavit that "[a]bout twenty minutesafter Northwest successfully bid for the property, Desai appearedat the sale and demanded to satisfy the judgment in full for$10,000," which the Sheriff refused. Northwest was issued a deedto Desai's property by the Sheriff on July 7, 2000.

Within 30 days of the actual Sheriff's sale and prior to theissuance of the deed, Desai filed a motion in Cook County to setaside the Sheriff's sale contending that the assignment of judgmentto Northwest was invalid. On May 6, 1999, Judge Elliott heard themotion and found, among other things, that: (1) the attorney forDearborn notified Northwest that the written assignment was invalidbecause it was not signed by an officer of the corporation; (2)there was no assignment of judgment of record on file with thecourt; and (3) Northwest was not a party of record to the originaljudgment proceedings and thus could not collect and satisfy thejudgment. Pursuant to section 2-1204 of the Illinois Code of CivilProcedure, Judge Elliott arrested the judgment and proceedings onthe levy sale. 735 ILCS 5/2-1204 (West 2000). In the order, JudgeElliott also issued a rule to show cause why Northwest and Swiatekshould not be held in criminal contempt for several reasons,including an alleged violation of the Collection Agency Act (225ILCS 425/1 et seq. (West 2000)) for failing to file the assignmentin the court file.

In Northwest's memorandum of law in support of its motion todismiss the rule to show cause, Northwest claimed that, on June 3,1999, Swiatek sought to comply with Judge Elliott's May 6, 1999,order by attempting to file the memorandum of judgment and theassignment in the court file. According to Northwest's motion todismiss the rule to show cause, a clerk supervisor initiallyrefused to accept the assignment for filing, but when Swiatek toldhim that Judge Elliott wanted the assignment filed, the clerk wentahead and filed the memorandum of judgment and assignment. Therecord shows that the assignment of judgment was filed on June 3,1999, in Cook County but as pointed out above no memorandum ofjudgment reflecting the "reaffirmed assignment" was subsequentlyfiled in Lake County.

On October 28, 1999, a status order indicated that the casewould follow Judge Elliott. During the time the parties briefedthe issues concerning the rule to show cause, the case wastransferred to Judge Jacqueline Cox. On April 12, 2000, Judge Coxdismissed the rule to show cause and on May 24, 2000, she vacatedJudge Elliott's order of May 6, 1999, which arrested the judgmentand proceedings of levy sale.

On August 18, 2000, Desai filed a motion to allow payment ofjudgment. In the motion, Desai claimed that the statutoryredemption period after the sale was tolled from May 6, 1999, whenJudge Elliott arrested the levy and judgment, to May 24, 2000, whenthe order was vacated by Judge Cox, and that interest during thatperiod should be tolled as well. In an order dated September 20,2000, Judge Cox granted Desai's motion to allow payment of thejudgment because Desai paid Dearborn $7,000 toward the $17,672.79judgment before the April 19, 1999, Sheriff's sale. In the sameorder, Judge Cox found that Northwest was judicially estopped fromdenying Desai the right to pay "the judgment when [Northwest]refused to accept payment of $17,659.17 while the assignment wasbeing challenged." The order also provided that Desai was required"to pay 10% interest on the $25,159.16 bid amount from April 19,1999[,] to May 6, 1999[,] and from May 24, 2000[,] to today'sdate." The order further indicated that the May 6, 1999, orderentered by Judge Elliott tolled the expiration of the redemptionperiod⁽¹⁾ "for the duration of that order up to and including May 24,2000[,] when [Judge Cox] vacated Judge Elliott's Order." OnOctober 2, 2000, Judge Cox entered an amended order, which wasalmost identical to the September 20, 2000, order except that theamended order stated that Northwest was judicially estopped fromdenying Desai the right to pay "the bid amount when [Northwest]refused to accept payment of $17,659.17 while the assignment wasbeing challenged." The amended order, dated October 2, 2000,vacated the September 20, 2000, order.

On October 25, 2000, Desai filed a motion to clarify theorders of September 20, 2000, and October 2, 2000, in regard to what date interest was payable and to order Northwest to issue aquit claim deed to Desai because Northwest had already recorded aninterest in the property by virtue of the Sheriff's deed issued toit. We cannot find Judge Cox's ruling on this motion in therecord.

On November 1, 2000, Northwest filed a motion to reconsiderJudge Cox's entry of the October 2, 2000, order. Desai then filed a response to Northwest's motion to reconsider on November 21,2000. On the same day, Desai also filed another motion to clarifythe court's orders of September 20, 2000, and October 2, 2000, andto require Northwest to issue him a quit claim deed for theproperty. On November 29, 2000, Judge Cox took the matter underadvisement. On December 22, 2000, Judge Cox vacated her order ofOctober 2, 2000, and denied Desai's motion to allow payment,"because the levy sale extinguished the judgment, [and] the May 6,1999[,] Order arresting the levy was entered without jurisdiction." In the same order, Judge Cox further determined that, "when Desaiaccepted and cashed the Homestead Exemption check[,] he acceptedthe levy sale, [and] he [could not] take the exemption and redeemthe property."

On January 19, 2001, Desai filed a motion to reconsider thecourt's order of December 22, 2000, contending that the courtmisinterpreted the law and the facts when it made its ruling. Inthe same motion, Desai requested that the court rule on Desai'spending motion to clarify the order and to issue a quitclaim deedto Desai. The court again took the matter under advisement in anorder dated April 11, 2001. On May 11, 2001, Judge Cox grantedDesai's motion to reconsider "because Northwest *** was not a partyto the judgment at the time of the levy sale in that the assignmentof the judgment to Northwest was filed several months after thelevy sale." Thus, Judge Cox vacated her order of December 22,2000.

On May 21, 2001, Northwest then filed a motion to reconsiderJudge Cox's ruling of May 11, 2001. On May 23, 2001, Judge Coxdenied Northwest's motion to reconsider and ordered that Desai post$26,159.66 as the redemption amount owed Northwest within 14 daysand that Northwest reconvey its interest in the property todefendant within 14 days. Northwest appeals the orders entered May11, 2001, and May 23, 2001.

We consider the following issues on appeal: (1) whether theassignment from Dearborn to Northwest was valid; (2) whether thetrial court had jurisdiction to arrest the judgment and levy sale;(3) whether the redemption period was properly tolled; and (4)whether Desai waived his right to redeem the property.

We first address whether the assignment from Dearborn toNorthwest was valid at the time of the levy sale. Northwestsuggests that we apply a de novo standard of review because theparties agreed upon the underlying facts, the trial court took notestimony, each party requested that relief be granted as a matterof law, and the proceedings below were "akin" to summary judgmentmotions. Desai does not suggest that we apply an alternativestandard of review.

In general, our standard review of a trial court's decisionto set aside a sheriff's sale is whether the trial court abused itsdiscretion. Northwest Diversified, Inc. v. Mauer, 341 Ill. App. 3d27, 33, 791 N.E.2d 1162 (2003). However, in cases where the trialcourt heard no testimony and based its decision entirely ondocumentary evidence, " 'the rationale underlying a deferentialstandard of review is inapplicable, and a reviewing court will makean independent decision on the facts. [Citations.]' " NorthwestDiversified, 341 Ill. App. 3d at 33. Because the court here basedits decision entirely on documentary evidence and we areinterpreting the judgment lien statute (735 ILCS 5/12-101 et seq.(West 2000)), a question of law, the trial court's ruling issubject to de novo review. Northwest Diversified, 341 Ill. App. 3dat 33.

Enforcing judgments against real estate in Illinois isgoverned by section 12-101 of the Illinois Code of Civil Procedure. 735 ILCS 5/12-101 et seq. (West 2000). Specific guidelines ofsection 12-101 provide for the "creation of a judgment lien againstthe real estate of a debtor." Dunn v. Thompson, 174 Ill. App. 3d 944, 947, 529 N.E.2d 297 (1988). A judgment lien is created oncea " 'certified copy or memorandum of the judgment is filed in theoffice of the recorder in the county in which the real estate islocated.' [Citation.]" Dunn, 174 Ill. App. 3d at 947. "A validjudgment, in order to create a lien, must possess twoqualifications: (1) it must be final, valid, and for a definiteamount of money; and (2) it must be such a judgment that executionmay issue thereon." Dunn, 174 Ill. App. 3d at 947. An enforceablejudgment is required in order to have a judgment lien to levy upon. R. Ostler, Enforcing Judgments Against Real Estate in Illinois: AStep-By-Step Guide, 89 Ill. B.J. 234, 234-35 (2001).

The statute establishes that a valid judgment lien can beperfected and the property can be subject to a levy sale by thesheriff in the county where the judgment debtor owns the realestate. 735 ILCS 5/12-101 et seq. (West 2000). At the time thelevy sale was conducted in this case (April 19, 1999), a successfulpurchaser at a levy sale could merely request a deed from thesheriff at the end of the redemption period.⁽²⁾ R. Ostler, EnforcingJudgments Against Real Estate in Illinois: A Step-By-Step Guide, 89Ill. B.J. 234, 238 (2001). The statute must be strictly compliedwith, and when there are irregularities in the levy sale process,such as improper notice and an inadequate sale price, the trialcourt may set aside the sale. Northwest Diversified, 341 Ill. App.3d at 39.

In general, an assignment requires an assignable right. Restatement (Second) of Contracts