Illinois Appellate Court holds dismissal of complaint “de-accelerates” the mortgage for purposes of the “single-refiling” rule

To the several opinions issued in the last two years on the scope and impact on mortgage foreclosure proceedings of Illinois’ “single-refiling” rule, which allows a plaintiff to dismiss and refile a suit only once, needs to be added Bank of New York Mellon as Tr. for Certificate Holders of CWALT, Inc., Alternative Loan Tr. 2007-3T1, Mortgage Pass-Through Certificates, Series 2007-3T1 v. Dubrovay, 2021 IL App (2d) 190540 (Nov. 17, 2021) where a divided panel of the Second District Appellate Court held that a subsequently filed complaint alleging a different date of default from a previously dismissed complaint is not the same case for purposes of the rule.

In Dubrovay, the first three foreclosure complaints alleged the same date of default, November 1, 2010. Each were voluntarily dismissed by the plaintiff-mortgagee. At no time did the mortgagee send the borrower a notice of “de-acceleration”. The fourth complaint alleged a default date of April 1, 2013, effectively waiving 30 months of interest. The mortgagor moved to dismiss the fourth complaint contending it nonetheless violated the “single refiling” rule. 735 ILCS 5/13-217. The trial court granted the motion on the basis that the fourth complaint was filed in violation of the rule.

On appeal, the mortgagee argued that the fourth complaint was not the same suit as the prior complaints, and thus not barred by the rule, because it alleged a different default. Applying the transactional test used in res judicata cases, the appellate court agreed. It concluded that the fourth complaint was based on the allegation that the borrower failed to make any payments after April 1, 2013, while the prior actions were based on an earlier default date. “These facts were entirely unrelated to the facts underlying the [fourth] complaint, based on the [borrower’s] default for failure to make monthly installments for April 2013”.

The court also rejected the borrower’s argument that although the default alleged in the complaints were different does not change the fact that the loan was accelerated only once, prior to the filing of the first complaint. Thus, the entire debt and all the monthly payments owed merged into a single obligation to pay the entire balance due. There was therefore only one default and all four complaints arise from the same set of operative facts, the acceleration of the loan.

Although there was no Illinois case on point, the court sided with the mortgagee that the dismissal of the prior complaints operated to “de-accelerate” the loan such that when each complaint was dismissed the entire amount of the debt was not due, just the missed payments. The court was guided by the reasoning in the recent New York Court of Appeals decision, Freedom Mortgage Corp. v. Engel, 37 N.Y.3d 1, 146 N.Y.S.3d 542, 169 N.E.3d 912 (2021) holding that when a bank effectuated an acceleration via the commencement of a foreclosure action, a voluntary discontinuance of that action—i.e., the withdrawal of the complaint—constitutes a revocation of that acceleration. “If commencement of a foreclosure action is sufficient to put the borrower on notice that the loan has been accelerated, then the bank’s voluntary dismissal is sufficient to put the borrower on notice that acceleration has been revoked or withdrawn.”

Following Engel, the court note there are three advantages of a clear rule that a voluntary dismissal results in revocation of acceleration. First, is that it makes it possible for attorneys to counsel their clients accordingly. Second, it allows borrowers to take advantage of the opportunity afforded by the deacceleration, i.e., reinstatement of the right to pay arrears and make installment payments, eliminating the obligation to immediately pay the entire outstanding principal amount in order to avoid losing their homes. Third, it prevents unjust results because, in the absence of this rule, borrowers would be rewarded for disregarding the notes and mortgages that they signed and then failed to pay on for numerous years.

The trial court’s decision was reversed and the case remanded.


  • James Noonan

    Jim is a founding partner of Noonan & Lieberman. Jim has more than 25 years of experience in civil litigation on behalf of creditors, servicers, business and real estate owners.

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