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FirstMerit Bank, N.A. v. Soltys

Court of Appeals of Illinois, First District, Third Division

March 11, 2015

FIRSTMERIT BANK, N.A., as Successor in Interest to George Washington Savings Bank, Plaintiff-Appellant,
v.
JANEK SOLTYS, a/k/a Jan Soltys, Solely in His Capacity as Trustee of the Wigupen Revocable Trust, the Bogebert Revocable Trust, and the Daseby Revocable Trust, Defendants-Appellees (John Does 1 Through 5, Individually and in Their Capacity as the Trustees of the Wigupen Revocable Trust, the Bogebert Revocable Trust, and the Daseby Revocable Trust, Defendants)

Page 569

[Copyrighted Material Omitted]

Page 570

Appeal from the Circuit Court of Cook County. No. 13 L 4625. The Honorable Raymond Mitchell, Judge Presiding.

FOR PLAINTIFF-APPELLANT: Jeffrey K. Paulsen, OF COUNSEL, FACTORLAW, Chicago, IL.

FOR DEFENDANTS-APPELLEES: John E. Brennock, OF COUNSEL, Law Offices of John E. Brennock, Chicago, IL.

PRESIDING JUSTICE PUCINSKI delivered the judgment of the court, with opinion. Justices Lavin and Hyman concurred in the judgment and opinion.

OPINION

Page 571

PUCINSKI, PRESIDING JUSTICE.

[¶1] In this case we address a plaintiff creditor's claim that it can attempt to satisfy a debt discharged in bankruptcy from property transferred by the debtor to land trusts under the exception for fraudulent transfers to third parties. We hold that Illinois land trusts are merely a vehicle for property ownership where the beneficiary retains control and are not " third party" entities for purposes of the " fraudulent transfer to third parties" exceptions to bankruptcy discharge.

[¶2] BACKGROUND

[¶3] On July 3, 2008, Janek Soltys entered into a $1.1 million construction loan agreement with plaintiff's predecessor, George Washington Savings Bank. In connection

Page 572

with the loan, Soltys executed a construction mortgage in favor of George Washington Savings Bank on the property located at 4838 N. Oakley, Chicago, Illinois (Oakley property), a promissory note, and an assignment of rents.

[¶4] Soltys also owned nine other parcels of real estate in Chicago, Illinois, at the time he obtained this loan: (1) 2935 N. Damen; (2) 3441 N. Seeley; (3) 1712 W. Byron; (4) 3649 N. Bosworth; (5) 1430 W. George; (6) 2124 W. Berteau; (7) 2446 W. Wilson; (8) 2431 W. Gunnison; and (9) 2017 W. Pensacola. On May 4, 2009, Soltys conveyed these nine other properties into three land trusts, the Wigupen Revocable Trust (Wigupen Trust), holding the Wilson, Gunnison, and Pensacola properties, the Bogebert Revocable Trust (Bogebert Trust), holding the Bosworth, George, and Berteau properties, and the Daseby Revocable Trust (Daseby Trust), holding the Damen, Seeley, and Byron properties. Each transfer was by quit-claim deed from Soltys to the applicable trust, and each deed was signed by Soltys on behalf of both the grantor and grantee. Copies of the individual trust documents are not in the record, but according to Soltys's motion and supporting affidavit, Soltys is both the trustee and the beneficiary of all three land trusts. Plaintiff did not file any counteraffidavit or point to any other evidence to dispute this fact. Plaintiff's complaint affirmatively alleges that Soltys " retained control of the properties after the transfers."

[¶5] The maturity date of Soltys's loan on the Oakley property was July 1, 2009. Soltys defaulted on the loan. On July 19, 2010 plaintiff, FirstMerit Bank, as successor in interest to George Washington Savings Bank, filed a foreclosure action to collect on the promissory note. A judgment of foreclosure and sale was entered on August 20, 2011 and the Oakley property was sold on October 18, 2011 for $950,000. The foreclosure court confirmed the ...


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