IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS

COUNTY DEPARTMENT – CHANCERY DIVISION

SARAH THOMAS and )

CHARLTON THOMAS, )

)

Plaintiffs, )

)

v. ) Case No. 06 CH 02618

) consolidated with

JADEJON, INC. aka JADEJON, CO. ) 2005 M1 729371

aka JADEJON, CORP.; OWEN PITTMAN; )

DENNIS L. HANSEN; UNKNOWN ) Hon. James R. Epstein

OWNERS; and NON-RECORD )

CLAIMANTS, )

)

Defendants. )

PLAINTIFFS’ REPLY TO DEFENDANT OWEN PITTMAN’S RESPONSE TO PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT, AND RESPONSE TO PITTMAN’S CROSS-MOTION FOR SUMMARY JUDGMENT

NOW COME the Plaintiffs, Sarah Thomas and Charlton Thomas (Thomases or Plaintiffs), through their attorneys, The Law Offices of Burton A. Brown, and for their Reply to Defendant, Owen Pittman’s Response to Plaintiffs’ Motion for Summary Judgment and Response to Pittman’s Cross-Motion for Summary Judgment, state as follows:

Summary

Defendant, Owen Pittman contends that Plaintiffs lack standing to bring this quiet title action because they breached the installment contract[1] entered into with the original seller, Jadejon, Inc. Thus, Pittman argues, Plaintiffs forfeited their rights under the contract and cannot be regarded as equitable owners of the property. Pittman, however, fails to explain how a forfeiture could have occurred, given that Jadejon, Inc. never commenced the required action under the Forcible Entry and Detainer Act (FEDA), 735 ILCS 5/9-101 et seq., which in Illinois is the seller’s exclusive remedy for effecting a forfeiture under a real estate installment contract.[2] Absent a judgment awarded to Jadejon pursuant to FEDA, Plaintiffs’ interests to the property could not have been lawfully forfeited.

Pittman next argues that even if no forfeiture occurred, the breach of the installment contract is “still sufficient to defeat Plaintiffs’ claim and standing as equitable owners of the property.” Resp. at 6. In support, Pittman relies solely on Hartman v. Hartman, 11 Ill. App. 3d 524, 528 (1st Dist. 1973). However, Hartman was decided before FEDA was enacted in 1982, and is therefore inapposite. See P.A. 82-280, eff. July 1, 1982.

Pittman next contends that he is a bona fide purchaser, but this is unpersuasive given his actual notice of Plaintiffs’ possession of the property; his purchase of a $140,000 property for only $40,000; and his failure to request an inspection. Although Pittman claims he would not have “knowingly purchased a lawsuit” (Resp. at 6), he testified he had purchased title insurance for that very purpose. Dep. at 43, attached as Exhibit B.

Finally, Pittman argues there is no evidence that he had knowledge of a competing interest. Resp. at 8. This claim is belied by the evidence showing his actual knowledge of possession, and by the established law in Illinois demonstrating that actual and/or constructive notice of possession defeats the claim of a subsequent purchaser.

Argument

I. There Was Never a Forfeiture of the Thomas’ Interest Because the Contract Seller Did Not Comply With the Required Statutory Procedures.

In Illinois, a contract seller must comply with FEDA in order to effect a forfeiture of a buyer’s interest due to an alleged failure to comply with the terms of a real estate installment contract. 735 ILCS 5/9-102(a)(5); see In re Brown, 249 B.R. 193, 196 (Bankr. N.D. Ill. 2000) (copy attached as Exhibit C) (seller must comply with FEDA in order to effect forfeiture of installment contract). Because Jadejon, Inc. (or any of its principals) never brought such an action, Plaintiffs’ interests in the property were never forfeited. Thus, Pittman’s argument that the Thomases have forfeited their interest under the installment contract is unavailing.

Furthermore, Jadejon never tendered the required statutory notice. Before filing a foreclosure action to forfeit an installment contract, FEDA requires contract sellers to tender a demand in writing at least 30 days in advance. 735 ILCS 5/9-104.1(a). This is to allow contract buyers an opportunity to satisfy the terms of the demand. Id. The demand must be made in writing and served upon the purchaser in writing or by certified mail, return receipt requested. 735 ILCS 5/9-104.1(c). Jadejon never complied with these notice requirements.

Instead of tendering the required demand, Jadejon’s principal, Dennis Hansen, visited Plaintiffs at their home and demanded an additional $10,000 to obtain the deed. See Verified Second Am. Compl. at p. 5. However, a mere demand for payment is insufficient to serve as the foundation of forfeiture. Monson v. Bragdon, 159 Ill. 61 (1895). Notably, no mention of back taxes was made. Thus, even if Jadejon had brought an action for foreclosure under FEDA, it could not have met the notice requirement needed to obtain a judgment. Moreover, by not providing the required notice, it deprived Plaintiffs of an opportunity to cure any demand.

Regardless, Jadejon, Inc. and its principals have been defaulted in this litigation, waiving any right of forfeiture. Fox v. Grange, 261 Ill. 116 (1913) (see order of default, attached as Exhibit D).

Pittman next argues that even if no forfeiture occurred, the breach of the Articles of Agreement is “still sufficient to defeat Plaintiffs’ claim and standing as equitable owners of the property.” Resp. at 6. Pittman relies solely on Hartman v. Hartman, 11 Ill. App. 3d 524, 528 (1st Dist. 1973). However, Hartman is unavailing because it was decided before FEDA was enacted in 1982. See P.A. 82-280, eff. July 1, 1982. As one court observed, FEDA clearly changed the law in order to address the potential harshness inherent in the nature of installment contracts:

It has been noted by our courts that the legislative purpose in enacting section 13 of the Forcible Entry and Detainer Act was to permit a contract purchaser of real estate to cure a default before permitting the seller to take possession of the real estate, avoid a loss of money previously paid and avoid a forfeiture of all rights under his contract.

Bovinett v. Rollberg, 109 Ill. App. 3d 41, 53-54 (5th Dist. 1982). This purpose would be ill-served by allowing third parties such as Pittman to claim forfeiture, when the original seller never took the steps to accomplish the same.

In sum, FEDA was enacted to protect both contract buyers and sellers from potential inequities inherent in the nature of installment contracts. See In re Brown, 249 B.R. at 195 (describing benefits of installment contracts and potential inequities of the same). Absent Jadejon’s failure to bring such an action, Plaintiffs’ interests in the property were never forfeited, and thus Plaintiffs do not come to court with “unclean hands” as Pittman claims. Resp. at 5.

II. Pittman’s Arguments that He Lacked Notice of the Thomases’ Interest and Was a Bona Fide Purchaser Are Contradicted By the Evidence and the Law.

The evidence demonstrates that (a) Pittman had notice of the Thomases’ prior interest, and (b) Pittman was not a bona fide purchaser. Although Pittman claims he would not have “knowingly purchased a lawsuit” (Resp. at 6), he admitted he had purchased title insurance for that exact possibility:

Q.  Who did you believe was going to pay [his attorneys’] fees?

A. Law Title.

Q. Why did you believe that?

A. Because I had – I believe that when you have a title insurance, that any problems you have with any property you buy, that you ensure that they’ll pay and do whatever they need to do to take care of the problem.

Dep. at 43, attached as Exhibit B. In any event, his goal was to resell the property, not live in it. Dep. at 36, attached as Exhibit B.

Pittman also claims that Lah v. Chicago Title & Trust Co., 379 Ill. App. 3d 933 (1st Dist. 2008) supports his position, rather than Plaintiffs’, because there the “purchaser also made statements implying knowledge of a competing interest.” Resp. at 8, citing Lah, 379 Ill. App. 3d at 937. However, Lah’s holding leaves no doubt about the key facts involved:

Simirica’s willingness to purchase the property without inspection of its interior and his closing of the purchaser without receiving keys strongly support the trial court’s conclusion that he had actual notice of a competing claim to the property. This conclusion is further bolstered by Waters’ testimony that Simirica told him to settle his claim with Edmond.

Id. at 938.

Thus, the “statements implying knowledge of a competing interest” referred to by Pittman in no way changed the outcome of Lah, but merely bolstered it.

Further, and more importantly, Pittman did have actual knowledge of a competing interest. Unlike Lah, where the house was vacant when the purchaser took possession (see id. at 936), Pittman admitted he had actual knowledge that the Thomases occupied the home. As he testified, he viewed the property from the outside and saw it was occupied and “well kept”:

Q.  And what did you notice about the property when you drove by it or you walked by it?

A.  It was a sound piece of property that had been well kept. It looked like a good investment..

Q. Did it appear to be occupied?

A. Yes.

Q. How could you tell that it was occupied?

A. Well, curtains. Actually—it just looked occupied. I mean, curtains and—like it was being lived in.

Dep. at 14, attached as Exhibit B.

These facts undermine Pittman’s assertion that there is “absolutely no evidence” that he had knowledge of a competing interest (Resp. at 8), because, in fact, he had both actual and constructive notice of possession. It is well established that “possession of property is equivalent to the recording of a deed as to subsequent purchasers.” Beals v. Cryer, 99 Ill. App. 3d 842, 844 (5th Dist. 1981); see also Banco Popular v. Beneficial Sys., Inc., 335 Ill. App. 3d 196, 204 (1st Dist. 2002) (same). Even if the possessor does not live on the land, “actual residence is not essential” to give notice of possession. Beals, 99 Ill. App. 3d at 844. Here, however, the Thomases actually resided on the property at all times. Thus, “if the owner is in actual possession, and there are continuous acts of ownership, there is sufficient notice to the world of his claim of title.” Id., quoting Carnes v. Whitfield, 352 Ill. 384 (1933). Pittman knew of Plaintiffs’ possession and “continuous acts of ownership” because he had walked or driven by the property and saw that it was occupied, lived in and “well kept.” Dep. at 12, 14. Such facts constitute constructive notice of Plaintiffs’ interest as well. See Beals, 99 Ill. App. 3d at 845 (“where one purchases land of another which is at the time of the purchase in the actual, open, exclusive, and visible possession of a third person, such possession is constructive notice to the purchaser of all the rights whatever of the possessor of the land at the time of the purchase”). Accordingly, Pittman’s knowledge of Plaintiffs’ possession alone suffices to establish notice of Plaintiffs’ claim and defeat Pittman’s claim to title.

As for whether he was a bona fide purchaser, such a finding is irrelevant given his notice of possession. However, as stated above, Pittman is unlikely to have been a bona fide purchaser where he paid much less than actual value—$40,000 for a $140,000 home—and yet never demanded an interior inspection. Dep. at 17, 36-37; see Lah, 379 Ill. App. 3d at 938.

Moreover, Pittman may not simply defer the notice issue by relying on his real estate agent and the title search (Resp. at 8) because such reliance is “outweighed by the evidence supporting the conclusion” that Pittman was aware of Plaintiffs’ claim. Lah, 379 Ill. App. 3d at 938; Am. Nat’l Bank & Trust Co. v. Vinson, 273 Ill. App. 3d 541, 544 (1st Dist. 1995) (a party who takes property with notice of other claims takes title subject to those claims). This is because the purchaser, “who had been placed on constructive notice by this possession, is bound to inquire of the person in possession what right or interest he holds, and takes subject to what the right or interest may be.” Banco Popular, 335 Ill. App. 3d at 211.

Conclusion

For the reasons stated above and in Plaintiffs’ Motion for Summary Judgment, Plaintiffs respectfully request that their Motion for Summary Judgment be granted, and that the Cross-Motion for Summary Judgment filed by Defendant, Owen Pittman be denied.

Respectfully Submitted,

______

One of Plaintiffs’ Attorneys

Burton A. Brown

Babak Bakhtiari

Law Offices of Burton A. Brown

205 W. Wacker Dr., Suite 922

Chicago, IL 60606

(312) 236-5582

Atty. No. 91197

1

[1] The installment contract was entitled “Articles of Agreement” and was attached to Plaintiffs’ Motion for Summary Judgment as Exhibit C and is attached hereto as Exhibit A.

[2] Section 9-102 of FEDA (735 ILCS 5/9-102(a)(5)) provides that if an installment contract’s terms exceed five years, then the seller who wishes to forfeit the buyer’s interest must bring a foreclosure action under the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1106(2), instead of the FEDA. Here, the installment contract’s terms did not exceed five years, and therefore FEDA would have applied.