In re Stowe
| Decision Date | 28 November 2006 |
| Docket Number | Adversary No. 05 A 01319.,Bankruptcy No. 05 B 10482. |
| Citation | 355 B.R. 88 |
| Parties | In Re: Valarie STOWE, Debtor, Deborah K. Ebner, Chapter 7 Trustee, et al., Plaintiffs, v. JP Morgan Chase Bank, as Trustee, et al., Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Lloyd J. Brooks, The Brooks Law Firm, Dolton, IL, for Debtor.
This adversary proceeding is before the court on Founders Bank's motion to dismiss counts I and II of the complaint or, in the alternative, for summary judgment on them, and on the plaintiffs' cross-motion for summary judgment on counts I and II. The issues raised in the motions have been thoroughly briefed, and the motions were taken under advisement. Now being fully advised in the premises, and for the reasons that follow, the court will recommend to the District Court: (1) that two of the plaintiffs, Nicole Bowden and Claudia Brown, be dismissed for lack of subject matter jurisdiction; (2) that the motion to dismiss be granted in part; and (3) that Founders Bank's motion for summary judgment be granted and the plaintiffs' cross-motion be denied.
The original plaintiffs — Nicole Bowden, Claudia Brown, and Valarie Stowe — filed their complaint in the Circuit Court of Cook County, Illinois, asserting multiple counts against a lengthy list of defendants who may possess an interest in the parcel of real estate at the center of this dispute. Included among the defendants is Founders Bank. The fifth amended complaint is currently pending. Count I of the complaint seeks to quiet title to real estate that was once held by one of the plaintiffs, chapter 7 Debtor Valarie Stowe, and her husband, Ronald, pursuant to a land trust agreement with Chicago Title and Trust Company (Chicago Title). Count II is an ejectment action. Other counts — for injunctive relief, fraud, conspiracy, negligence, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act — are not affected by these motions.
The original plaintiffs filed their complaint in their individual capacities as well as on behalf of Chicago Title. Deborah Ebner, the chapter 7 trustee assigned to Valarie's bankruptcy case (the Trustee), was eventually made a defendant in state court. She then removed the case to the United States District Court for the Northern District of Illinois. On the Trustee's motion, over Founders Bank's objection, the District Court transferred the case to the bankruptcy court. Subsequently an order was entered granting the Trustee's request to substitute as plaintiff in place of Valarie and adopt her pleadings and her filings in response to the motion for summary judgment. Accordingly, Valarie is no longer a plaintiff herein, and the Trustee is asserting these, causes of action as assets of the bankruptcy estate, both as successor to Valarie's interest and on behalf of Chicago Title. Although Plaintiffs Bowden and Brown are alleged to be beneficial owners of the property under the land trust agreement, the filings fail to identify what connection they have to Valarie's bankruptcy case. Chicago Title has been allowed to intervene as an additional plaintiff in counts I, II, and III. The court notes that none of the defendants named in the complaint have filed an answer.1 No defendant besides Founders Bank has responded to the plaintiffs' motion for summary judgment.
Although Founders Bank's motion to dismiss fails to cite any procedural rule as its basis, the court will apply Rule 12(b) of the Federal Rules of Civil Procedure, as made applicable to adversary proceedings by Rule 7012(b) of the Federal Rules of Bankruptcy Procedure. Based on the allegations in the motion, the court concludes that Founders Bank is seeking dismissal for the plaintiffs' failure to "state a claim upon which relief can be granted." Fed. R.Civ.P. 12(b)(6). The applicable standard for considering a motion to dismiss under Rule 12(b)(6) requires the court to take all well-pleaded facts as true and construe the pleadings and all reasonable inferences drawn from the pleadings in a light most favorable to the non-moving party. Prince v. Rescorp Realty, 940 F.2d 1104 (7th Cir. 1991); Janowsky v. United States, 913 F.2d 393 (7th Cir.1990); Rogers v. United States, 902 F.2d 1268 (7th Cir.1990). If a court considers matters outside the pleadings on a motion to dismiss based on Rule 12(b)(6), "the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56 [of the Federal Rules of Civil Procedure]." Fed.R.Civ.P. 12(b)(6); Gale v. Hyde Park Bank, 384 F.3d 451, 452 (7th Cir.2004).
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, incorporated into bankruptcy proceedings by Rule 7056 of the Federal Rule of Bankruptcy Procedure, summary judgment must be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as "to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Because the purpose of summary judgment is to isolate and dispose of factually unsupported claims, a party must respond to a summary judgment motion with evidence setting forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Michael v. St. Joseph County, 259 F.3d 842, 845 (7th Cir.2001). To defeat a motion for summary judgment, the opposing party must do more than raise a "metaphysical doubt" as to the material facts, and instead must present definite, competent evidence to rebut the motion. Id. A court must grant a motion for summary judgment if there is no genuine issue as to any material fact. Fritcher v. Health Care Serv. Corp., 301 F.3d 811, 815 (7th Cir. 2002). Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Id. Factual disputes that are irrelevant or unnecessary will not be counted. Id. All the facts and all reasonable inferences therefrom are to be drawn in favor of the nonmoving party. Id. The pendency of cross motions for summary judgment does not require that one of the motions be granted. 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2720 (3d ed.1998). Each motion must be evaluated independently.
Although the standards used to measure the merits of the two pending motions differ, the parties have nonetheless meshed their various arguments in such a way that they attempt to address both motions. The most significant difference between the two motions lies in what materials the court can rely upon in making its ruling. For the sake of simplicity and clarity, the court sets forth the following facts, most of which are undisputed.
On August 25, 1989, Valarie Stowe and her husband, Ronald Stowe, purchased real property located in Cook County, Illinois, commonly known as 4348 West Monroe, Chicago, Illinois. ). A multiunit building presently occupies this tract of land. (Id.)
On July 25, 1994, Valarie and Ronald executed a Quit Claim Deed in Trust conveying title to the property to the Chicago Title as trustee under the provisions of a land trust agreement. (PI. Am. ¶ 8; Founders Am. Resp. ¶ 8; Pl.Ex. 4). The Cook County Recorder of Deeds (the Recorder) properly recorded the Quit Claim Deed in Trust on August 24, 1994. (Id.) As the beneficiaries of the land trust agreement, Valarie and Ronald's interest consisted of:
(1) the power to direct the trustee to deal with title to the property; (2) the power to manage, possess, use and control the property; and (3) the right to receive earnings, avails and proceeds from leases and other uses and from mortgages, sales and other dispositions of the property.
(Pl.Ex. 5, at ¶ 1). They were also entitled to:
have the sole possession, management and control of the selling, renting, repairing, maintaining and handling of the property and the trustee shall have no right or duty in respect to any such matters.
(Id. at ¶ 14). The agreement also provided that the trustee would not be obligated to "prosecute or defend any legal proceeding involving this trust of the property unless it shall elect to do so...." (Id. at ¶ 6).
Around December 2001, Valarie and Ronald were interested in selling the property. (Pl. Am. ¶ 9 & 10(a); Founders Am. Resp. ¶ 9 & 10(a).) Valarie contacted Defendant Benjamin Randle and told him that she was trying to sell the property. ). Defendant Randle represented to Valarie and Ronald that he had located a potential buyer for the property, Defendant Eugene Williams. (Pl.Am. ¶ 10(a); Founders Am. Resp. ¶ 10(a).) Sometime in March 2002, Defendant Williams represented at the closing that his intent was to purchase the real estate property from Valarie and Ronald for $160,000. (Pl. Am. ¶ 11; Founders Am. Resp. ¶ 11).
The main disputes between the parties center on what happened at the March 2002 closing and whether Valarie and Ronald signed a real estate contract to sell the property. ). This disagreement notwithstanding, the plaintiffs do admit that Valarie and Ronald signed a series of documents in connection with the closing. ). At no time did Valarie or Ronald authorize any defendant to execute any documents on their behalf. (Pl. Am. ¶ 13 & Founders Bank Am. ¶ 13).
Prior to March 2002, Valarie and Ronald were the only non-contingent beneficiaries of the land trust. (...
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...the owner of a beneficial interest in an Illinois land trust does not have standing to maintain a quiet title action. In In re Stowe, 355 B.R. 88 (Bankr.N.D.Ill.2006), for example, the Chapter 7 trustee removed a state court action in which the debtor, as one of the beneficial owners of a l......
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