The single-refiling rule in Illinois foreclosure practice is notoriously complicated. One court may view a complaint as a “new” cause of action, while another may dismiss an almost identical complaint for violating the one-refile limit. Add to that the complexities of trusts as separate legal entities, privity questions, and the unusual structure of securitized mortgage loans, and you have a procedural gauntlet that can confound even the most seasoned practitioners.
In my current practice, I’m seeing a surge in second-lien foreclosures first filed during the housing crisis (roughly 2009–2012), then voluntarily dismissed—often in pursuit of loss mitigation or trial modification. Now, years later, lenders are refiling those cases, apparently aiming to capitalize on the increased equity in the properties.
This renewed litigation triggers complex debates about whether the lender has already exhausted its “one free refiling” under Illinois law, or whether any post-dismissal missed payments truly create a distinct cause of action.
Importantly, the single-refiling rule is distinct from the 10-year statute of limitations governing foreclosures. In this post, I will explore the unsettled legal landscape surrounding these issues and offer practical strategies for borrowers in these precarious situations.
The Statutory Basis: 735 ILCS 5/13-217
Under Illinois law, a plaintiff (such as a lender in a foreclosure) may voluntarily dismiss a lawsuit and then refile it once as of right. 735 ILCS 5/13-217 sets a strict limit, providing in part that:
“…the plaintiff may commence a new action within one year… but only one such new action may be brought…”
In other words, once a lender voluntarily dismisses a foreclosure lawsuit, it can refile the case one time. In Flesner v. Youngs Development Co., 145 Ill. 2d 252, 254 (1991), the Illinois Supreme Court confirmed this principle, stating that Illinois law allows for “one, and only one, refiling of a claim.”
If a lender tries to bring a third lawsuit—meaning it has already dismissed and then refiled once—a borrower can argue for dismissal under the single-refiling rule, provided that all three cases involve the same cause of action.
Determining Same Cause of Action: The Transactional Test
A pivotal Illinois Supreme Court decision clarifies how the single-refiling rule applies when a lender seeks a deficiency judgment in foreclosure. In First Midwest Bank v. Cobo, 2018 IL 123038, the Court examined a common foreclosure scenario: the lender files a foreclosure lawsuit (requesting a deficiency judgment), voluntarily dismisses it, later sues again for breach of the same promissory note, and may continue dismissing and refiling multiple times.
That is precisely what happened in Cobo:
- 2011 – The lender’s predecessor filed a foreclosure suit seeking a deficiency, then voluntarily dismissed it.
- 2013 – First Midwest Bank filed a second suit for breach of the same note, which it also voluntarily dismissed.
- 2015 – The lender initiated a third lawsuit, again alleging breach of the same note based on the same default.
The Illinois Supreme Court ruled that this third action constituted an impermissible second refiling of the same claim, violating the single-refiling rule.
The Illinois Supreme Court applied the transactional test—borrowed from River Park, Inc. v. City of Highland Park—to decide whether the foreclosure action and the subsequent breach-of-note lawsuits involved the same group of operative facts. Under this approach, separate claims are treated as the same cause of action if they arise from the same default, the same loan, and the same underlying obligations, regardless of the labels used in the complaints.
Importantly, the transactional test applies even if previous lawsuits were voluntarily dismissed, dismissed for want of prosecution, or dismissed by a United States District Court for lack of jurisdiction or improper venue. Unlike res judicata, there is no need for a final adjudication on the merits for the single-refiling rule to bar subsequent actions.
First Midwest argued that foreclosure (quasi in rem) and breach of note (in personam) are separate legal theories. However, the Illinois Supreme Court found that this distinction does not matter for the single-refiling rule. So long as both suits arise from the same set of operative facts—the same default under the same note—they are considered the same claim.
The Court also clarified that lenders can choose to file foreclosure and note-based claims together or one after the other. But once a deficiency judgment is sought in a foreclosure complaint, the lender has already invoked the note-based liability. The lender cannot keep refiling lawsuits on that same note and default after voluntarily dismissing earlier cases. Additionally, minor differences in the alleged default date—such as listing April 2010 in one complaint and August 2010 in another—do not create a new cause of action when the default stems from the same continuous nonpayment. U.S. Bank Trust, N.A. v. Skibbe, 2016 IL App (2d) 151143-U.
Because the 2011 foreclosure complaint explicitly requested a deficiency judgment, it had already invoked the promissory note as part of that lawsuit. The 2013 and 2015 breach-of-note lawsuits were based on the same default date (July 1, 2011) and sought to recover the same debt, making them repeated attempts to pursue the same claim. Consequently, the Court found the 2015 suit to be a second impermissible refiling in violation of Illinois’ single-refiling rule.
Chicago Foreclosure Defense Attorney Steven Grace
If you’re facing a refiled foreclosure lawsuit, it’s vital to consider all potential defenses—such as Chapter 13 bankruptcy, loan modification, or challenges related to standing and other legal or procedural issues. Attorney Steven Grace, Esq., a seasoned Chicago foreclosure lawyer, offers free 15-minute consultations to discuss your case and help determine the best strategy to protect your home and financial interests. By seeking knowledgeable guidance and staying current on Illinois foreclosure law, you’ll position yourself for the most favorable outcome possible.
