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Illinois: An Action to Enforce the Same Default on a Mortgage Can Only Be Refiled Once

Posted By USFN, Wednesday, October 7, 2015
Updated: Wednesday, November 11, 2015

October 7, 2015


by Jill Rein and Lee Perres
Pierce & Associates, P.C. – USFN Member (Illinois)

The case of United Central Bank (UCB) v. KMWC 845, LLC (KMWC), No. 14-1491 (7th Cir. Aug. 28, 2015), involved a foreclosure action commenced in federal district court that asserted three counts of mortgage foreclosure. With respect to Count I, UCB sought review of the district court’s ruling that pursuant to the Illinois “single refiling” rule (735 ILCS 5/13-217), UCB was barred from enforcing the promissory note secured by the mortgage.

In KMWC’s motion for summary judgment filed with the district court, KMWC contended that UCB was prevented from foreclosing on the mortgages because it was barred from enforcing the promissory notes that the mortgages secured. Specifically, KMWC asserted that pursuant to the Illinois single refiling rule, UCB was prohibited from enforcing the promissory notes secured by the mortgages since UCB had twice filed actions against KMWC to recover on the notes, and had voluntarily dismissed both prior actions. Summary judgment was granted in favor of KMWC for Count I; UCB filed a motion for reconsideration, which was denied by the district court.

The Seventh Circuit Court of Appeals affirmed the district court’s decision, citing to the Illinois single refiling rule that provides that a plaintiff who dismisses a lawsuit “may commence a new action within one year or within the remaining period of limitation, whichever is greater.” This language has been interpreted to mean that a plaintiff who voluntarily dismisses a lawsuit may commence only one new action within the statutorily imposed time limit. The district court found that UCB had formerly filed and voluntarily dismissed two actions in Illinois against KMWC for breach of the promissory note which the mortgage secured and determined that, pursuant to the Illinois single refiling rule, UCB was statutorily barred from enforcing the note underlying the mortgage.

UCB did not dispute the single refiling rule but maintained that the previous action, which was dismissed, was based upon the underlying note. The Court of Appeals cited longstanding precedent in Illinois, stating that the mortgage is merely an incident of the underlying debt, and when an action on an underlying debt is barred by the statute of limitations or another procedural rule, the action on the mortgage is barred as well. In other words, if the plaintiff is barred from proceeding on an action based upon the underlying note, it may not proceed on an action based upon the mortgage.

Under the Illinois single refiling rule, an action to enforce the same default on a mortgage can only be refiled once. Servicers and the firms representing servicers should make sure that they do not dismiss an Illinois action to enforce the same default on a mortgage more than once. However, a new default on the same loan is considered a new cause of action under Illinois law.

©Copyright 2015 USFN and Pierce & Associates, P.C. All rights reserved.
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