Questions over the validity of a mortgage has sparked the filing of multiple lawsuits with different companies pinning blame on each other.
In the latest complaint, First Clover Leaf Bank, successor to First Federal Savings and Loan of Edwardsville, filed a lawsuit Dec. 10 in Madison County Circuit Court against National Land Title Insurance Company.
The bank claims its predecessor, First Federal Savings, agreed to extend a loan to Steve and Tammy Gardiner on Nov. 21, 2003. In return, the loan was supposed to be secured by a mortgage on property at 2020 Golf Course View Dr. in Edwardsville, according to the complaint.
Just before the loan's extension, National Land agreed to issue an American Land Title Association loan title insurance policy to First Federal Savings worth $470,000, the suit states. The policy was meant to protect the bank against loss due to title defects, liens and various other matters.
So, before closing on the Gardiner's promissory note, First Federal Savings brought the Gardiners' mortgage to National Land Title to assure that it met the requirement for its recently purchased loan title insurance policy, the complaint says.
On Nov. 21, 2003, National Land Title notarized the mortgage and closed the transaction, the bank claims.
On Dec. 3, 2003, National Land Title issued the loan title insurance policy to First Federal Savings, which was supposed to protect the bank against losing the mortgage used as a guarantee on the Gardiners' loan, according to the complaint.
Again, in December 2006, Steve Gardiner executed additional financing for his corporation and secured that financing through his personal property, the suit states.
However, by May 27, 2008, the Gardiners owed the bank money for judgments against them, so First Clover Leaf Bank initiated a lawsuit in Madison County Circuit Court to declare that the bank held in trust the property used to secure the Gardiners' loans.
The Gardiners fought back and moved to dismiss the bank's complaint on Aug. 21, 2008, contending they are not beneficiaries of the land trust that held the title to the property.
On Dec. 9, 2008, First Clover Leaf Bank filed another complaint in Madison County Circuit Court to foreclose the mortgage on the property the Gardiners used to secure their loan, according to the complaint. The bank contended the note and mortgage were accelerated when the Gardiners said they had no interest in the real property.
But on Jan. 8, First Collinsville Bank filed a counter claim, asserting First Clover Leaf Bank's mortgage was inferior to First Collinsville Bank's mortgage on the property in question, the suit states.
"On April 11, 2009, Plaintiff received First Collinsville Bank's Motion for Summary Judgment clarifying the basis for its counterclaim and asserting that '[b]ecause the owner and mortgagor did not sign First Clover Leaf Bank's mortgage, First Clover Leaf Bank's mortgage is not effective against First Collinsville Bank, and accordingly, First Collinsville Bank's mortgage has first and paramount priority," the complaint says.
In accordance with its policy with National Land, First Clover Leaf Bank contends the mortgage should have been covered by the policy, even if it is invalid, and the policy should have provided defense in the lawsuit filed by First Collinsville Bank.
However, National Land failed to defend First Clover Leaf Bank and failed to provide First Clover Leaf Bank with interest payments. In addition, National Land refused to pay $97,823.92 in real estate taxes on the property, which was necessary to preserve the mortgage, according to the complaint.
National Land also failed to keep information between First Clover Leaf Bank and its counsel confidential to assure Steve Gardiner could not obtain such knowledge, the suit states.
Because of National Land's negligence, First Clover Leaf Bank says it has been forced to pay the real estate taxes, plus at least $15,000 to First Collinsville Bank for its counterclaim. In addition, First Clover Leaf Bank has been required to pay attorneys' fees and defense costs and will be required to pay the amount necessary to pay off Associated Bank's mortgage, the complaint says.
In its two-count suit, First Clover Leaf Bank seeks a judgment of more than $100,000, punitive and exemplary damages of more than $1 million and more than $100,000 in attorneys' fees, plus costs and other relief the court deems just.
In addition, it wants the court to declare it entitled to independent counsel of its choice and to issue a declaratory judgment that National Land owes First Clover Leaf Bank money necessary to redeem an outstanding certificate of sold taxes.
Thomas W. Burkart of Burkart Law Offices in Hamel will be representing it.
Madison County Circuit Court case number: 09-L-1331.