The opinion of the court was delivered by: Judge Virginia M. Kendall
MEMORANDUM OPINION AND ORDER
Before the Court are the Proposed Findings of Fact and Conclusions of Law from the bankruptcy court with respect to this adversary proceeding. In the bankruptcy court, Defendant Founders Bank ("Founders") moved to dismiss Counts I and II of the Complaint. In the alternative, Founders moved for summary judgment on Counts I and II. Plaintiffs filed a cross-motion for summary judgment on those counts. The bankruptcy judge made the following recommendations:
1) Plaintiffs Nicole Bowden and Claudia Brown should be dismissed for lack of subject matter jurisdiction; 2) Founders' Motion to Dismiss Counts I and II of the Complaint should be granted to the extent that the bankruptcy trustee asserts claims on behalf of the bankruptcy estate; 3) Founders' Motion to Dismiss Counts I and II of the Complaint should be denied to the extent that the bankruptcy trustee asserts claims on behalf of Defendant Chicago Title Land Trust Company; 4) Founders' Motion for Summary Judgment should be granted with respect to Counts I and II; 5) the bankruptcy trustee's Cross-Motion for Summary Judgment should be denied. Founders then filed its Objections to the Proposed Findings of Fact and Conclusions of Law. For the reasons stated,the Court adopts the bankruptcy court's Proposed Findings of Fact and Conclusions of Law. Additionally, the Court overrules Founders' Objections to the Proposed Findings of Fact and Conclusions of Law.
Plaintiffs Nicole Bowden ("Bowden"), Claudia Brown ("Brown") and Valerie Stowe ("Stowe") initially filed suit in state court against a number of parties, including Founders, who may possess an interest in a parcel of real estate located at 4348 West Monroe in Chicago, Illinois ("the property"). Deborah Ebner ("Ebner"), Stowe's bankruptcy trustee, removed the case to the United States District Court for the Northern District of Illinois. The district court then transferred the matter to bankruptcy court on Ebner's motion. There, Ebner substituted as plaintiff in place of Stowe and adopted her filings on behalf of Stowe's bankruptcy estate. Bowden and Brown are alleged to be beneficial owners of the property under a land trust agreement, but their connection to Stowe's bankruptcy case is not apparent from the record.
Stowe and her husband, Ronald Stowe (collectively, "the Stowes"), purchased the property on August 25, 1989. On July 25, 1994, they executed a quit claim deed conveying the property to Defendant Chicago Title Land Trust Company ("Chicago Title") as trustee under the provisions of a land trust agreement. The Cook County Recorder of Deeds recorded the transfer on August 24, 1994. As beneficiaries of the land trust, the Stowes retained: "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; 3) the right to receive earnings, avails and proceeds from leases and other uses and from mortgages, sales and other dispositions of the property."
Additionally, the trust agreement entitled them 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." The agreement stated that the trustee would not have the obligation to "prosecute or defend any legal proceeding involving this trust of the property unless it shall elect to do so . . . ."
Eventually, the Stowes became interested in selling the property. Through a sales broker, Eugene Williams ("Williams") agreed to purchase the property for $160,000 in March 2002, but the parties dispute whether there was a contract for the sale of the property. Because the Stowes were mere beneficiaries of the land trust they created, they did not hold legal title to the property; Chicago Title did. The Stowes did not inform Williams that the property was subject to a land trust. Nevertheless, they went forward with the closing and Williams received a warranty deed that purported to transfer their interest in the property to Williams. The parties dispute whether the closing documents were forgeries. Since the closing, the Stowes have not been in possession of the property. After the closing, Williams mortgaged the property to Gateway Financial Corporation, who then assigned the note to JP Morgan Chase Bank ("Chase").
On September 23, 2002, the Stowes filed a petition for relief under chapter 7 of the bankruptcy code. On March 4, 2005, the bankruptcy court split Valerie Stowe's case from Ronald's. There is now a dispute between the parties about Ronalds' current whereabouts and whether he is alive.
At some point after he purchased the property from the Stowes, Williams defaulted and Chase initiated a foreclosure action against him. The Cook County Recorder of Deeds recorded a lis pendens to give notice of the foreclosure action on October 23, 2002, and it recorded a judicial sale deed to reflect that Chase had obtained title to the foreclosed property on May 25, 2004. Chase conveyed its interest in the property to Founders on August 19, 2004. Bowden, Brown and Stowe then filed the suit in state court that eventually gave rise to the case now before the Court. Count I of the Complaint seeks to quiet title to the property and Count II is an ejectment action.
Founders moved to dismiss Counts I and II of the Complaint, or, in the alternative for summary judgment on them. Bowden, Brown and Stowe filed a Cross-Motion for Summary Judgment. The bankruptcy court recommended that Bowden and Brown should be dismissed for lack of subject matter jurisdiction, that Founder's Motion to Dismiss be granted in part and that Founder's Motion for summary judgment should be granted. Founders then filed its Objections to the Proposed Findings of Fact and Conclusions of Law, claiming that it is entitled to summary judgment on Chicago Title's claims in Counts I and II. Additionally, Founders contends that Count III should not go forward at this time because it is dependent upon Counts I and II.
In proceedings not directly related to matters arising under the bankruptcy code, a bankruptcy judge must submit proposed findings of fact and conclusions of law to the district court. See 28 U.S.C. § 157(c)(1). The district court then conducts a de novo review of any portion of the bankruptcy judge's proposed findings of fact and conclusions of law to which a party has made a specific written objection. See id.; Fed. R. Bank. P. 9033(d). The district court may accept, reject, or modify the proposed findings of fact or ...