ILLINOIS COURT REVERSES | Key points

  1. The Second District (Appellate Court) of Illinois reversed the dismissal of an action finding the fourth filing of a lawsuit based on the same note and mortgage was not barred by Illinois’ single refiling rule. Wilmington Sav. Fund Soc’y, FSB as Tr. of Residential Credit Opportunities Tr. III v. Barrera, 2020 IL App (2d) 190883 (2d Dist. September 21, 2020). In Barreras the bank filed four successive lawsuits against the Barreras. The first two were based on payment defaults and sought foreclosure and a deficiency judgment. The third lawsuit was an action on the note. These suits had been dismissed prior to adjudication on the merits. The fourth lawsuit was for taxes and insurance that had not been paid.

  2. The lower court dismissed the fourth complaint based on the single refiling rule finding the allegations in the last complaint arose “from the same single group of operative facts” and sought to “adjudicate the parties’ rights under the same mortgage and note…” The Court concluded the single refiling rule barred the fourth lawsuit. On appeal the Second District disagreed carving out an exception to the single refiling rule which it coined “the new default rule.” The Court explained that “a contract requires performance over multiple years” resulting in disputes that may “lead to multiple claims for defaults.” The new default rule was created to “provide remedies for recurring types of defaults.” The Court noted a payment default was different than a default based on failure to pay taxes and insurance.

  3. The Court reversed the order of dismissal and remanded the matter for further proceedings clarifying that the single refiling rule barred claims for tax and insurance defaults which could have been sought in the bank’s first foreclosure. However, the Court explained the “tax and insurance defaults postdating the dismissal of the first complaint” and “defaults occurring after the filing of the second complaint” were not barred. The Second District’s decision in Barreras is a welcome one as it carves out an important exception to the single refiling rule. The extent of that carve out is still to be determined as the Court did not discuss the parameters for determining what may be considered a “new default” and whether the exception applies. We anticipate additional litigation on this issue so stay tuned for developments.

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