4.

Upon service of the complaint, Palladino answered and asserted numerous affirmative

defenses, including lack of standing.

5. Plaintiff subsequently moved for summary judgment and argued that standing was

established by its possession of the note and a written assignment of the mortgage and

note. In fact, Plaintiff supported its summary judgment motion with a purported

assignment of the mortgage and note from MERS, as Fremonts nominee, to Plaintiff.

6. Palladino opposed summary judgment, proffering an affidavit from forensic accountant

David P. Sweeney. Mr. Sweeney attested that under the Pooling and Servicing

Agreement Dated as of November 1, 2006, Fremont Home Loan Trust 26-D, Fremont

was the only proper party to bring a foreclosure action in the event of default. He opined

that the mortgage and note continued to be Fremonts property. Sweeney also attested

that the assignment referred to in the document upon which HSBC Bank relied had not

been recorded.

7. Oral argument was heard and upon same, the court granted HSBC Banks motion for

summary judgment and entered a judgment of foreclosure and sale.

8. Palladino timely appealed the order of summary judgment to the Appellate Court, Second

District, on the grounds that that the trial court erred in granting summary judgment to

HSBC Bank because there were genuine issues of material fact with respect to HSBC

Banks standing to bring the foreclosure complaint.

9. On April 29, 2011, the Appellate Court reversed the order of summary judgment and

remanded for further proceedings, based in part on its finding that In the present case,

there are genuine issues of material fact with respect to whether there was an assignment

of the mortgage and note from Fremont to HSBC Bank. Although HSBC Bank

4
 represents that it produced the assignment, the document on which it relies, by its very

terms, was, at worst, not an assignment and, at best, inherently inconsistent as to whether

it was an assignment. See Appellate Opinion, Page 8.

10. Since the instant case was remanded to this Court for further proceedings, Plaintiff has

failed to take any substantive action to move the case forward.

11. Indeed, 28 hearings and status conferences have been held, and the only filings by

Plaintiff have been motions or notices for withdrawal of their legal counsel(s).

12. Specifically, status conferences or hearings have been held on November 8, 2011,

January 4, 2012, February 29, 2012, June 6, 2012, November 8, 2012, March 12, 2013,

June 13, 2013, August 13, 2013, November 5, 2013, January 14, 2014, March 14, 2014,

May 16, 2014, July 25, 2014, October 24, 2014, January 15, 2015, April 15, 2015, May

21, 2015, July 17, 2015, September 17, 2015, November 19, 2015, January 25, 2016,

April 26, 2016, July 12, 2016, August 30, 2016, November 1, 2016, January 25, 2017,

March 29, 2017 and June 27, 2017.

13. Most notably, at the July 17, 2015 hearing, the Court ordered Plaintiff to provide an

Affidavit of Ownership of the Note as of the date of filing the foreclosure. To date,

Plaintiff has failed to do so.

14. On July 12, 2016, counsel for Plaintiff withdrew (Pierce & Associates).

15. On March 29, 2017, neither Plaintiff nor any of its counsel showed up in Court.

16. On June 27, 2017, the remaining 2 law firms serving as counsel for Plaintiff withdrew

(Lock Lorde and Morris Laing), leaving the Plaintiff without legal representation.

5
 17. Plaintiff has not renewed its motion for summary judgment since 2011 nor has it moved

to set the cause for trial, nor has it addressed and rectified any deficiency highlighted by

the Appellate Court ruling of April 29, 2011.

18. Notwithstanding the lack of any substantive prosecution of the instant case since 2011,

Palladino submits that for the reasons contained herein and in the accompanying

Memorandum in Support of Motion to Dismiss that Plaintiffs complaint should be

dismissed in its entirety with prejudice.

MEMORANDUM OF LAW IN SUPPORT OF PALLADINOS MOTION TO DISMISS

PLAINTIFFS COMPLAINT

2-619 Motion to Dismiss.

A section 2-619 motion to dismiss allows for an involuntary dismissal of a claim based

on certain defects or defenses. Here, Palladino brings forth his 2-619 motion to dismiss

specifically under 2-619(a)(2 and 2-619(a)(9), which provide, respectively: Defendant

mayfile a motion for dismissal of the action or for other appropriate relief upon any of the

following grounds. If the grounds do not appear on the face of the pleading attacked the motion

shall be supported by affidavit

(2) That the plaintiff does not have legal capacity to sue or that the defendant does

not have legal capacity to be sued.

(9) That the claim asserted against defendant is barred by other affirmative matter

avoiding the legal effect of or defeating the claim.

See 735 ILCS 5/2-619(a)(2) and (a)(9).

6
 The purpose of a motion to dismiss under section 2-619 of the Code of Civil Procedure

(Ill.Rev.Stat.1991, ch. 110, par. 2-619) is to afford litigants a means to dispose of issues of law

and easily proved issues of fact at the outset of a case, reserving disputed questions of fact for a

jury trial. (Ill.Ann. Stat., ch. 110, par. 2-619, Historical & Practice Notes, at 662 (Smith-Hurd

1983).)

Plaintiff has failed to proffer facts sufficient to bring a claim of residential foreclosure. It

is undisputedly clear that on the date of filing their initial complaint in November of 2008,

HSBC lacked the requisite standing to bring a claim of foreclosure. "The doctrine of standing is

designed to preclude persons who have no interest in a controversy from bringing suit," and

"assures that issues are raised only by those parties with a real interest in the outcome of the

controversy." Glisson v. City of Marion, 188 Ill.2d 211, 221, 242 Ill.Dec. 79, 720 N.E.2d 1034

(1999). "[S]tanding requires some injury in fact to a legally cognizable interest" Glisson, 188

Ill.2d at 221, 242 Ill.Dec. 79, 720 N.E.2d 1034. 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, 118 Ill.Dec. 559, 521 N.E.2d 1252 (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, 346 Ill.Dec. 118, 940 N.E.2d 118 (2010). See also 735 ILCS 5/15-1208, 15-1504(a)(3)(N)

(West 2008). Plaintiff has knowingly and willingly failed to proffer any documentary evidence

that it is the holder of an indebtedness secured by a mortgage. The Note and Mortgage attached

to Plaintiffs complaint have failed to prove to the Courts satisfaction that it is in fact a

mortgagee. See Appellate Opinion.

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 No. 2100742
Order filed April 29, 2011

NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as
precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT
______________________________________________________________________________

HSBC BANK USA, NATIONAL ) Appeal from the Circuit Court

ASSOCIATION, AS TRUSTEE UNDER THE ) of Du Page County.
POOLING AND SERVICING AGREEMENT )
DATED AS OF NOVEMBER 1, 2006, )
FREMONT HOME LOAN TRUST 2006-D, )
)
Plaintiff-Appellee, )
)
v. ) No. 08CH4548
)
MARCELLA A. PALLADINO, )
SEBASTIAN PALLADINO, ) Honorable
) Neal W. Cerne,
Defendants-Appellants. ) Judge, Presiding.
______________________________________________________________________________

JUSTICE ZENOFF delivered the judgment of the court.

Justices Schostok and Birkett concurred in the judgment.

ORDER

Held: Where there were genuine issues of material fact with respect to the plaintiffs
standing to bring the mortgage foreclosure complaint, the trial court erred in granting
summary judgment in plaintiffs favor.

Defendants, Marcella A. Palladino and Sebastian Palladino, appeal the trial courts grant of

summary judgment in favor of plaintiff, HSBC Bank USA, National Association (HSBC Bank), in

this mortgage foreclosure action. The Palladinos argue that there were genuine issues of material
Case No. 2100742

fact with respect to HSBC Banks standing to bring the mortgage foreclosure complaint, the basis

for default, and the enforceability of the mortgage and note due to lender fraud. For the following

reasons, we reverse the trial courts grant of summary judgment in HSBC Banks favor and remand

for further proceedings.

BACKGROUND

The Palladinos refinanced their Naperville, Illinois, home on August 28, 2006. They

obtained financing from Fremont Investment & Loan (Fremont). The Palladinos gave Fremont a

mortgage, and they signed a note for $313,500. The Palladinos defaulted on the loan payments.

Fremont filed a foreclosure action against the Palladinos on May 5, 2008, but voluntarily dismissed

the case on July 11, 2008. On November 17, 2008, HSBC Bank, as trustee under the pooling and

servicing agreement dated as of November 1, 2006, Fremont Home Loan Trust 2006-D, filed a

complaint to foreclose the Palladinos mortgage and requested a deficiency judgment in the event

of a deficiency from the foreclosure sale. HSBC Bank alleged that it was the legal holder, agent

or nominee of the legal holder, of the indebtedness and that it was the owner, agent or nominee

of the owner, of the Mortgage given as security. It also alleged that Mortgage Electronic

Registration Systems, Inc. (MERS), as nominee for Fremont, was the mortgagee, trustee, or grantee

in the mortgage. The Palladinos answered and filed affirmative defenses, including lack of HSBC

Banks standing.

HSBC Bank moved for summary judgment; it argued that its standing was established by its

possession of the note and a written assignment of the mortgage and note. In support, HSBC Bank

attached a copy of the note and purported assignment. The note includes an unnumbered fifth page

reflecting an undated stamp with the words, Pay to the order of [blank] without recourse, with a

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signature above the words: Fremont Investment & Loan Doug Pollock Assistant Vice President.

The purported assignment is an undated document entitled Assignment of Mortgage. The

document is notarized although the notarys certificate is undated. The document contains a stamp

which appears to reflect that it was recorded with the Du Page County Recorder on December 17,

2008. The document states that MERS, as nominee for Fremont, did hereby assign and deliver

to HSBC prior to 11/13/08 the described mortgage [t]ogether with all rights and interest in the

same and the premises therein and the note or obligation thereby secured and that [t]his assignment

is made without recourse and without representation or warranty by assignor. The document is

signed by Jill Rein as certifying officer for MERS.

In opposition to summary judgment, the Palladinos submitted an affidavit from forensic

accountant David P. Sweeney. He attested that under the Pooling and Servicing Agreement Dated

as of November 1, 2006, Fremont Home Loan Trust 26-D, Fremont was the only proper party to

bring a foreclosure action in the event of default. He opined that the mortgage and note continued

to be Fremonts property. Sweeney also attested that the assignment referred to in the document

upon which HSBC Bank relied had not been recorded.

Following oral argument, the trial court granted HSBC Banks motion for summary judgment

and entered a judgment of foreclosure and sale. On the issue of standing, the trial court reasoned:

[T]here is no dispute that there was a Mortgage; there is no dispute that a Note was

signed; and theres no dispute that theres a default. In my mind these are material facts, and

theres no dispute on those.

The dispute is whether or not there is a proper assignment. The plaintiff has tendered

a copy of thea true and accurate copy of the Note that has a blank endorsement. Pursuant

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to the UCC, the holder of a blank endorsement is the holder of that Note. Therefore, theyve

established their standing. Theres no counter evidence to suggest that they are not the

holder of that Note, and I think that is the burden of the defendant to come forward with

evidence that shows that they are not the holder of the Note.

The pooling agreement, to say that theyre [sic] agreement says that theyre the only

ones who can proceed on that, I dont accept. I dont think thats proof of that. They have

assigned the Note to HSBC, and I dont see how any pooling agreement would prevent them

from doing that. And in addition, Fremont is not here on a loan thats been in default

presumably since 2008. Its 2010. And presumably they would be here and not HSBC Bank.

So theres noin my mind, no counter evidence being brought forward by the defendant

who isits burden to bring forth that evidence that the plaintiff is not the holder in due

course of the Note pursuant to case law.

The Palladinos moved for reconsideration on grounds, inter alia, that HSBC Bank failed to

demonstrate its standing to sue on the mortgage and note because it failed to produce either the

original note or the actual assignment of the mortgage. Following oral argument, the trial court

denied the motion to reconsider, stating:

With regards to the holder, as we went through the motion for summary judgment,

the pleadings that were presented in the affidavit presented by the plaintiff conform with the

Illinois Code of Civil Procedure and the Illinois Mortgage Foreclosure Law that states that

they merely have to state that they are the holder of the note. That it is the burden of the

defendant to bring forth facts that show that or lead one to believe that perhaps they are not

the holder. And there is no attempt to do that.

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Case No. 2100742

A factual allegation that would state that Bank ABC has sent me a note requesting

payment, that would be a factual statement that would show that somebody else is seeking

payment on the note and that HSBC, the plaintiff in this case, is not the holder in due course.

But there has been no allegation, no factual allegation that any other party is seeking

enforcement of the note. And I think it is important to realize that there is no denial that the

note exists, that the note was signed by the defendants, and the defendants owe money on the

note.

And the question comes down to, well, who do they pay it to? Did they pay it to

HSBC or some other bank but no one says what other bank it could be and no one else is

seeking payment. And so without those factual allegations, I think the foreclosure law is

clear that the plaintiff prevails.

And that was, as I believe I indicated at the time of the summary judgment that, in

my mind, is a strong assessment. I think the plaintiff did provide evidence that they were the

holder of the note. All they had to do is provide evidence that they are the holder of the note

and a blank endorsement does satisfy that.

The trial court found no just reason to delay either enforcement of or appeal from its order

pursuant to Supreme Court Rule 304(a) (eff. Feb. 26, 2010). The trial court also granted the

Palladinos motion to stay the sale pending appeal. The Palladinos timely appealed.

ANALYSIS

The Palladinos maintain that the trial court erred in granting summary judgment to HSBC

Bank because there were genuine issues of material fact with respect to HSBC Banks standing to

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Case No. 2100742

bring the mortgage foreclosure complaint. Summary judgment is proper when the pleadings,

depositions, and admissions on file, together with the affidavits, demonstrate that no genuine issue

of material fact exists and that the moving party is entitled to judgment as a matter of law. 735 ILCS

5/21005(c) (2008); Williams v. Manchester, 228 Ill. 2d 404, 417 (2008). We review an order

granting summary judgment de novo. Williams, 228 Ill. 2d at 417.

The doctrine of standing is designed to ensure that only those parties with a real interest in

the outcome of the controversy bring suit. Glisson v. City of Marion, 188 Ill. 2d 211, 221 (1999).

Accordingly, a plaintiff in a mortgage foreclosure action must have a beneficial interest in the

mortgage. Winkelman v. Kiser, 27 Ill. 20, 21 (1861). In this regard, section 151208 of the Illinois

Mortgage Foreclosure Law (Foreclosure Law) (735 ILCS 5/151208 (West 2008)) defines a

mortgagee as (i) the holder of an indebtedness or obligee of a non-monetary obligation secured by

a mortgage or any person designated or authorized to act on behalf of such holder and (ii) any person

claiming through a mortgagee as successor. The Foreclosure Law further requires that [i]n all

cases the evidence of the indebtedness and the mortgage foreclosed shall be exhibited to the court

and appropriately marked, and copies thereof shall be filed with the court. 735 ILCS 5/151506(b)

(West 2008).

Initially, HSBC Bank argues that the Palladinos did not meet their burden of pleading the

affirmative defense of lack of standing. An affirmative defense is one which gives color to the

opponents claim but asserts new matter which defeats the plaintiffs apparent right to judgment.

Long v. Kemper Life Insurance Company, 196 Ill. App. 3d 216, 218 (1990). In its foreclosure

complaint, HSBC Bank alleged the capacity in which it sought foreclosure: the legal holder, agent

or nominee of the legal holder, of the indebtedness and the owner, agent or nominee of the owner,

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Case No. 2100742

of the Mortgage given as security. The Palladinos pleaded as an affirmative defense that HSBC

Bank was not an interested party duly authorized to bring the instant complaint and failed to

provide any document whatsoever evidencing [HSBC Banks] authority to file the instant

complaint.

According to HSBC Bank, the Palladinos purported affirmative defense merely amounted

to a denial of HSBC Banks allegations regarding the capacity in which it sought foreclosure and in

no way affirmatively establishes that [HSBC Bank] lacks standing. We disagree. The Palladinos

challenged HSBC Banks interest in seeking foreclosurea requirement for proper standing under

the Foreclosure Law. Consequently, the Palladinos properly pleaded the affirmative defense of

HSBC Banks lack of standing.

The question is whether there were genuine issues of material fact with respect to whether

HSBC Bank was the current holder of the indebtedness secured by the mortgage under the

Foreclosure Law. It was undisputed that Fremont was the initial mortgagee. HSBC Bank supported

its summary judgment motion with a purported assignment of the mortgage and note from MERS,

as Fremonts nominee, to HSBC Bank. The Palladinos contested the existence and validity of the

assignment through the affidavit of its forensic accountant. An assignment occurs when there is a

transfer of some identifiable interest from the assignor to the assignee. Klehm v. Grecian Chalet,

Ltd., 164 Ill. App. 3d 610, 616 (1988). No particular form of assignment is required. Klehm, 164

Ill. App. 3d at 616. Any document that evidences the intent of the assignor to vest ownership of the

subject matter of the assignment in the assignee is sufficient to effect an assignment. Klehm, 164

Ill. App. 3d at 616. A valid assignment need only assign or transfer the whole or a part of some

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Case No. 2100742

particular thing, debt, or chose in action, and it must describe the subject matter of the assignment

with particularity to render it capable of identification. Klehm, 164 Ill. App. 3d at 616-17.

The appellate courts recent decision in Bayview Loan Servicing, L.L.C. v. Nelson, 382 Ill.

App. 3d 1184 (2008), reflects the necessity of establishing a valid assignment where the plaintiff in

a foreclosure case is not the original mortgagee. There, the appellate court reversed the trial courts

grant of summary judgment to the plaintiff, a purported assignee of a mortgage and note, on grounds

that the assignment upon which the plaintiff relied reflected that the original mortgagee assigned the

mortgage and note to Bayview Financial Trading Group, L.P. (an entity related to the plaintiff).

Bayview Loan Servicing, 382 Ill. App. 3d at 1187-88. The court reasoned that there was no evidence

that the plaintiff ever obtained any legal interest in the subject property. Bayview Loan Servicing,

382 Ill. App. 3d at 1188. At most, the record reflected that the plaintiff serviced the mortgage

payments. Bayview Loan Servicing, 382 Ill. App. 3d at 1188.

In the present case, there are genuine issues of material fact with respect to whether there was

an assignment of the mortgage and note from Fremont to HSBC Bank. Although HSBC Bank

represents that it produced the assignment, the document on which it relies, by its very terms, was,

at worst, not an assignment and, at best, inherently inconsistent as to whether it was an assignment.

Indeed, the document states that MERS as nominee for Fremont did assign (past tense) the

mortgage and note to HSBC Bank prior to November 13, 2008, yet also states that the assignment

is made (present tense) without recourse and without representation or warranty.

In addition to the purported assignments inconsistent terms, the document upon which

HSBC Bank relies is vague with respect to the date of the purported assignment. The document has

a stamp which appears to reflect that it was recorded on December 17, 2008, but states that the

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Case No. 2100742

assignment was made prior to November 13, 2008. The document itself is undated, as is the

notarys certificate. The date of the assignment is material because standing to sue must exist at the

time the action is commenced. Village of Kildeer v. Village of Lake Zurich, 167 Ill. App. 3d 783,

786 (1988).

Further, with respect to Jill Reins signature on the document as certifying officer for

MERS, HSBC Bank provided no evidence regarding Reins relationship to MERS, her authority to

certify that the assignment had taken place, or the information on which she based her representation

that an assignment occurred. The record reflects that Rein was an attorney with Pierce &

Associationsthe law firm representing HSBC. We note that the document is notarized. To the

extent HSBC Bank relied on the document as an affidavit in support of its summary judgment

motion, Supreme Court Rule 191 (eff. July 1, 2002), provides that affidavits in support and in

opposition to summary judgment:

shall be made on the personal knowledge of the affiants; shall set forth with

particularity the facts upon which the claim, counterclaim, or defense is based; shall have

attached thereto sworn or certified copies of all papers upon which the affiant relies; shall not

consist of conclusions but of facts admissible in evidence; and shall affirmatively show that

the affiant, if sworn as a witness, can testify competently thereto.

The document fails to meet these basic requirements. Rein provides no explanation for the basis of

her personal knowledge and fails to attach any supporting documents.

In contrast to its representation that the document is the assignment, HSBC Bank also argues

that Illinois law does not require that assignments be in writing. Buck v. Illinois National Bank &

Trust Co., 79 Ill. App. 2d 101, 105-06 (1967). However, HSBC Bank failed to establish as a matter

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of law that any assignment, written or oral, occurred. In sum, the record is replete with genuine

issues of material fact regarding whether and when Fremont assigned the mortgage and note to

HSBC Bank.

HSBC Bank contends that it did not need to establish a valid assignment because it was in

possession of the note, which contained a blank indorsement. HSBC Bank argues that a blank

indorsement converts the note to bearer paper; therefore, the note may be transferred by possession

alone. See 810 ILCS 5/3-205(b) (West 2008) (When indorsed in blank, an instrument becomes

payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.).

However, the Palladinos challenge the authenticity of the note. They argue that the blank

indorsement was reflected on an unnumbered, undated fifth page, and that HSBC Bank refused to

produce the original note to demonstrate that the blank indorsement was in fact part of the original

note.

HSBC Bank argues that the challenge to the notes authenticity should be disregarded

because the Palladinos did not raise the argument until their reconsideration motion in the trial court.

See Woolums v. Huss, 323 Ill. App. 3d 628, 640 (2001) (Submission of new matter on a motion to

reconsider summary judgment lies in the discretion of the trial court and should not be allowed

absent a reasonable explanation of why it was not available at the time of the original hearing.).

HSBC Bank also argues that the Palladinos failed to support their challenge to the notes authenticity

with an affidavit.

However, an affidavit was not necessary because the purported assignment and note

themselves raised questions about their authenticity. Why was the note allegedly assigned to HSBC

Bank if HSBC Bank already possessed the note? And why did Fremont indorse the note, whereas

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MERS, as Fremonts nominee, purportedly assigned the mortgage and note? The record is also

unclear as to the reason Fremont initially sued to foreclose the Palladinos mortgage if HSBC Bank

in fact possessed the note. Moreover, HSBC Bank was not prejudiced because it had the opportunity

to provide the original note to the trial court but failed to do so. In light of the genuine issues of

material fact with respect to the purported assignment of the mortgage and note and challenge to the

authenticity of the note, we cannot say that the evidence of indebtedness as required by the

Foreclosure Law was established as a matter of law.

HSBC Bank argues alternatively that it was not required to produce the note because it is not

necessary for a foreclosure plaintiff to offer a note into evidence unless it is seeking a personal

deficiency. See Abdul-Karim v. First Federal Savings and Loan Association of Champaign, 101 Ill.

2d 400, 407-08 (1984) (stating that a creditor is free to elect to sue on the note or foreclose on the

mortgage or both). This argument ignores that HSBC Bank, in fact, specifically sought a deficiency

judgment in its complaint.

In light of our holding, we need not address whether there were genuine issues of material

fact regarding the basis for the Palladinos default and the enforceability of the mortgage and note.

For the foregoing reasons, we reverse the trial courts grant of summary judgment in HSBC

Banks favor and remand for further proceedings.

Reversed and remanded.

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