IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT

DEUTSCHE BANK NATIONAL TRUST
COMPANY, as Trustee Under the Pooling and
Servicing Agreement Dated as of November 1,
2005, GSAMP Trust 2005-WMC-2,
Plaintiff and Counterdefendant-
Appellee,

v.

JAMES L. GILBERT,
Defendant and Counterplaintiff-
Appellant

(Mortgage Electronic Registration Systems,
Inc., WMC Mortgage Corp., and Unknown
Owners, Defendants).
_____________________________________________________________

EXCERPT:

¶ 6 On August 25, 2008, MERS (as nominee for WMC Mortgage) executed a document titled
“Assignment of Mortgage” (Assignment). The Assignment stated that MERS, for certain
consideration “the receipt of which is hereby acknowledged,” “assigned and transferred” to Deutsche
Bank, “as Trustee under the Pooling and Servicing Agreement dated as of November 1, 2005,
GSAMP Trust 2005-WMC2,” all interests in Gilbert’s mortgage. On September 12, 2008, Deutsche
Bank filed an amended complaint, attaching the Assignment as an exhibit. Gilbert filed an answer,
raising the affirmative defense of lack of standing on the ground that the Assignment showed that
Deutsche Bank did not own the indebtedness when it originally filed the foreclosure. Gilbert also
filed a counterclaim, in which he alleged that WMC Mortgage’s disclosures to him at the time of
closing violated TILA (15 U.S.C. § 1601 et seq. (2006)) by stating only that the initial interest rate
might be discounted, although WMC Mortgage knew for certain that the rate was discounted.
Gilbert asserted that Deutsche Bank was liable for these violations as the assignee of the mortgage.

¶ 7 In September 2009, both sides filed motions for summary judgment. Gilbert argued that he
was entitled to a dismissal of the foreclosure (on the ground that Deutsche Bank lacked standing to
bring the suit at the time the suit was filed) and judgment in his favor on his counterclaim. Deutsche
Bank contended that it did have standing at the time it filed suit, because the Assignment simply
memorialized an earlier transfer of interest. In support, it submitted an affidavit from William F.
Loch, an employee of a company that serviced loans for Deutsche Bank, in which Loch averred that,
based on his review of “the documents contained in the Gilbert loan file,” MERS assigned its interest
to Deutsche Bank on November 1, 2005. Loch did not state how he knew that this was when the
assignment occurred, and he did not attach any documentary evidence that the assignment had
occurred on this date. Deutsche Bank also argued that the counterclaim was defective on a number
of bases, including that it was untimely and that the conditions necessary for Deutsche Bank to have
assignee liability had not been met.

¶ 8 On November 23, 2009, after the motions had been fully briefed and orally argued, the trial
court issued its initial ruling. As to the standing issue, it granted Gilbert’s motion for summary
judgment and dismissed the foreclosure, finding that Deutsche Bank was not the holder of the
indebtedness at the time it filed the suit. The trial court noted Loch’s averment that Deutsche Bank
was the holder on the date of filing, but found it “to be a legal conclusion and just because he says
it does not make it so.” The trial court further noted that there was no document showing when the
assignment took place. As to the counterclaim, the trial court denied both parties’ motions for
summary judgment because it believed that there were issues of fact regarding whether the violations
of TILA could be seen on the face of the loan documents and thus whether Deutsche Bank could be
liable as an assignee.

¶ 9 Deutsche Bank filed a motion for reconsideration, arguing that the Assignment “clearly
stated” that MERS assigned its interest to Deutsche Bank on November 1, 2005. In addition,
Deutsche Bank argued, the counterclaim was time-barred, and Deutsche Bank was not subject to
assignee liability because the alleged TILA violations were not apparent on the face of the loan
documents. The motion was fully briefed, but on the hearing date, only the attorney for the bank
showed up. The trial court listened to Deutsche Bank’s arguments. It then granted reconsideration
and reversed its earlier rulings, granting summary judgment for Deutsche Bank on all claims.
Regarding the counterclaim, the trial court found that there was no assignee liability for the alleged
TILA violations because the violations were not “really clear” from the face of the documents. In
addition, it found that the counterclaim was time-barred.

¶ 10 The court entered a judgment of foreclosure, and the home was sold to Deutsche Bank,
resulting in a deficiency of approximately $250,000. (Because the deficiency judgment was in rem,
Gilbert was not personally liable for it.) In due course, the sale was approved. Gilbert filed a timely
notice of appeal.

¶ 11 ANALYSIS

¶ 12 On appeal, Gilbert contends that the trial court erred in granting the motion for
reconsideration and entering summary judgment in favor of Deutsche Bank on both the foreclosure
and the counterclaim. We begin by examining the trial court’s entry of judgment in Deutsche Bank’s
favor on the foreclosure.

¶ 13 Standing to Bring the Foreclosure

¶ 14 The validity of Deutsche Bank’s foreclosure action against Gilbert rests on one issue: whether
Deutsche Bank had standing—that is, whether it owned the mortgage—on the date that it filed the
foreclosure action. There are no disputes about the relevant facts, and the issue is thus a purely legal
one that was appropriate for disposition by summary judgment. 735 ILCS 5/2-1005(c) (West 2008).
We review the grant of summary judgment de novo. Ioerger v. Halverson Construction Co., 232
Ill. 2d 196, 201 (2008).

¶ 15 “The doctrine of standing is designed to preclude persons who have no interest in a
controversy from bringing suit.” Raintree Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248, 262
(2004). A party’s standing to sue must be determined as of the time the suit is filed. Village of
Kildeer v. Village of Lake Zurich, 167 Ill. App. 3d 783, 786 (1988). “[A] party either has standing
at the time the suit is brought or it does not.” Id. An action to foreclose upon a mortgage may be
filed by a mortgagee, i.e., the holder of an indebtedness secured by a mortgage, or by an agent or
successor of a mortgagee. See Mortgage Electronic Registration Systems, Inc. v. Barnes, 406 Ill.
App. 3d 1, 7 (2010); see also 735 ILCS 5/15-1208, 15-1504(a)(3)(N) (West 2008). Lack of standing
to bring an action is an affirmative defense, and the burden of proving the defense is on the party
asserting it. Lebron v. Gottlieb Memorial Hospital, 237 Ill. 2d 217, 252 (2010).

¶ 16 Here, Gilbert raised the affirmative defense of lack of standing both in his answer and in his
motion for summary judgment. To support his argument that on the date the foreclosure action was
filed Deutsche Bank had no standing to sue him, Gilbert pointed to the note and the mortgage
attached to the complaint, both of which identify the mortgagee as MERS—not Deutsche Bank.
Moreover, the Assignment attached to the amended complaint was dated August 25, 2008, and
Gilbert argued that this showed that MERS did not assign its interest in the mortgage until several
months after the foreclosure action was filed. We find that this evidence met Gilbert’s burden to
show that Deutsche Bank lacked standing when the suit was filed, because the note and the mortgage
identified the lender as WMC Mortgage and the holder of the mortgage as MERS. Deutsche Bank’s
name does not appear on either of these documents. Thus, so far as the documents attached to the
complaint establish, Gilbert was correct that Deutsche Bank did not own the indebtedness. As he
made out a prima facie showing that Deutsche Bank lacked standing, the burden shifted to Deutsche
Bank to refute this evidence or demonstrate a question of fact. Triple R Development, LLC v.
Golfview Apartments I, L.P., 2012 IL App (4th) 100956, ¶ 12.

¶ 17 Deutsche Bank attempted to rebut this apparent lack of standing by pointing to the
Assignment and the Loch affidavit. However, these items lack evidentiary value. Before the trial
court, Deutsche Bank argued that the language of the Assignment established that the transfer of the
mortgage had occurred years earlier, on November 1, 2005. On appeal, however, Deutsche Bank
wisely abandons that argument (which finds no support in the actual language of the Assignment),
and now concedes that the Assignment “does not establish anything about when Plaintiff [Deutsche
Bank] obtained its interest in the subject loan.” We agree with this statement. Although the
Assignment contains two dates—the date of the trust for which Deutsche Bank is a trustee, and the
date on which the Assignment was executed and notarized—it does not explicitly state when the
mortgage was assigned to Deutsche Bank. All that can be known about when the assignment took
place is that it was no later than the date on which the Assignment was executed.

¶ 18 Instead, Deutsche Bank now relies solely on the Loch affidavit to refute the lack of standing
shown by the note and the mortgage. Deutsche Bank points to Loch’s statement that the assignment
occurred on November 1, 2005, and contends that his statement must be taken as true in the absence
of contrary evidence. This legal principle applies only to admissible evidence, however. Complete
Conference Coordinators, Inc. v. Kumon North America, Inc., 394 Ill. App. 3d 105, 108 (2009) (only
admissible evidence may be considered in support of or opposition to summary judgment). Loch’s
statement about the date of the assignment was not admissible, because it was unsupported by any
foundation.

¶ 19 The use of affidavits on motions for summary judgment is governed by Illinois Supreme
Court Rule 191(a) (eff. July 1, 2002). Under that rule, affidavits must set out the facts on which the
affiant’s claims are based, and attach all documents upon which the affiant relies. Loch, however,
did not state how he knew that the assignment took place on November 1, 2005, and he failed to
attach any documents supporting his assertion. (As we noted, the Assignment itself provides no
support for Loch’s assertion.) Accordingly, Loch’s statement about the date of the assignment does
not comply with Rule 191(a) and may be disregarded. Outboard Marine Corp. v. Liberty Mutual
Insurance Co., 154 Ill. 2d 90, 132 (1992) (unsupported conclusions and opinions were insufficient
to raise an issue of fact); Madden v. Paschen/S.N. Nielson, Inc., 395 Ill. App. 3d 362, 388 (2009)
(legal conclusions and unsupported statements were properly stricken). Disregarding Loch’s
unsupported statement, the sole evidence that Deutsche Bank ever became the holder of the
indebtedness was the Assignment and, as Deutsche Bank concedes, that document does not establish
when Deutsche Bank became the holder.

¶ 20 Deutsche Bank argues that, because lack of standing is an affirmative defense, Gilbert bears
the burden of proving that it did not own the loan on the date that Deutsche Bank filed the
foreclosure. This, of course, is true. U.S. Bank National Ass’n v. Sauer, 392 Ill. App. 3d 942, 946
(2009). However, Gilbert’s documentary evidence that Deutsche Bank did not own the loan (the
mortgage and the note, and an assignment executed after the date of filing) constituted prima facie
evidence of lack of standing. “ ‘A “prima facie” defense is sufficient at law unless and until rebutted
by other evidence.’ ” Cordeck Sales, Inc. v. Construction Systems, Inc., 382 Ill. App. 3d 334, 366
(2008) (quoting Darling & Co. v. Pollution Control Board, 28 Ill. App. 3d 258, 264 (1975)).
Deutsche Bank also argues that its standing to bring the action was established by its complaint,
which alleged that it was the holder of the indebtedness and attached copies of the note and the
mortgage. See Barnes, 406 Ill. App. 3d at 6 (a plaintiff sufficiently pleads a cause of action for
foreclosure if it alleges that it holds the mortgage and attaches a copy of the note and the mortgage).
However, the attached note and mortgage did not show that Deutsche Bank owned the loan, and thus
they contradicted Deutsche Bank’s allegation that it did own the loan when it filed the suit. Burton
v. Airborne Express, Inc., 367 Ill. App. 3d 1026, 1034 (2006) (“Exhibits are a part of the complaint
to which they are attached,” and facts contained within an exhibit serve to negate inconsistent
allegations contained within the body of the complaint). Moreover, it is well established that a party
may not rely on the allegations of its pleadings to contradict evidence produced by the movant that
would entitle it to judgment. Triple R Development, 2012 IL App (4th) 100956, ¶ 12. As Deutsche
Bank produced no competent evidence rebutting Gilbert’s prima facie showing that the bank lacked
standing at the time of filing, Gilbert was entitled to summary judgment in his favor on this issue.

¶ 21 In a last-ditch effort to avoid this result, Deutsche Bank argues that section 2-407 of the Code
of Civil Procedure (Code) (735 ILCS 5/2-407 (West 2008)), which allows the joinder of necessary
parties after the commencement of a suit, protects against the dismissal of its complaint for lack of
standing. Deutsche Bank argues that its amendment of the complaint, which attached the recently
executed Assignment, acted as a “joinder” of itself in a new capacity—as the now-undisputed owner
of the loan. Not surprisingly, Deutsche Bank is unable to point to any case law supporting such a
novel application of section 2-407 to cure a plaintiff’s lack of standing. To the contrary, standing
must exist when the suit is filed. Village of Kildeer, 167 Ill. App. 3d at 786. As Deutsche Bank
lacked standing at the time of filing, the foreclosure action was defective ab initio and Deutsche
Bank could not cure this defect by “joining” the suit as a proper party at a later date.

¶ 22 In summary, Gilbert was entitled to judgment in his favor on the foreclosure, because
Deutsche Bank lacked standing to bring that foreclosure. Bayview Loan Servicing, L.L.C. v. Nelson,
382 Ill. App. 2d 1184, 1186 (2008). We note that, although there is little case law on this specific
issue in Illinois, our sister courts in New York have held repeatedly that, unless an assignment of a
mortgage is executed prior to the date on which the foreclosure action is filed, the assignee lacks
standing to bring the foreclosure and the action should be dismissed, even where the assignment was
executed only a few months after the complaint was filed. See Wells Fargo Bank, N.A. v.
Marchione, 887 N.Y.S.2d 615, 619 (N.Y. App. Div. 2009); LaSalle Bank National Ass’n v. Ahearn,
875 N.Y.S.2d 595, 597 (N.Y. App. Div. 2009). Other states have taken a similar approach. “It is
a fundamental precept of the law to expect a foreclosing party to actually be in possession of its
claimed interest in the note, and to have the proper supporting documentation on hand when filing
suit, *** so that the defendant is duly apprised of the rights of the plaintiff.” U.S. Bank National
Ass’n v. Baber, 2012 OK 55, ¶ 6, 280 P.2d 956; see also Wells Fargo Bank Minnesota, N.A. v.
Rouleau, 2012 VT 19, ¶ 16, 46 A.3d 905; Davenport v. HSBC Bank USA, 739 N.W.2d 383, 385
(Mich. Ct. App. 2007) (foreclosure must be vacated where bank “did not yet own the indebtedness
that it sought to foreclose”). We see no flaws in this reasoning. Accordingly, the order granting
Deutsche Bank’s motion for reconsideration and entering judgment in favor of Deutsche Bank must
be reversed, the judgment of foreclosure and the order confirming the sale must be vacated, and the
foreclosure must be dismissed.

[…]

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