LLC 1 05333303020 v. Gil

2020 IL App (1st) 191225

186 N.E.3d 904

LLC 1 05333303020, Plaintiff-Appellant,

v.Pawel GIL, Defendant-Appellee.

No. 1-19-1225

Appellate Court of Illinois, First District, SIXTH DIVISION.

Filed October 9, 2020

Rehearing denied November 4, 2020

Adam Goodman, of Goodman Tovrov Hardy & Johnson LLC, of Chicago, for appellant.

Brandon R. Freud and Jasmine D. Morton, of Chuhak & Tecson, P.C., of Chicago, for appellee.

JUSTICE CONNORS delivered the judgment of the court, with opinion.

¶ 1 Plaintiff, LLC 1 05333303020 (LLC), appeals an order of the circuit court that granted the motion for summary judgment of defendant, Pawel Gil (Gil), who had sought in part to quiet title in the subject property located at 9527 Greenwood Drive in Des Plaines. On appeal, LLC contends that title should have been quieted in its name because of a defect in previous foreclosure proceedings related to the property. We affirm.

¶ 2 I. BACKGROUND

¶ 3 This appeal involves two sets of proceedings relating to the subject property—a foreclosure action that was filed in 2010 and an eviction action that was filed in 2018.

¶ 4 A. 2010 Foreclosure Action

¶ 5 In June 2004, Leszek Pacholek bought the subject property with a mortgage granted to Bank of America, N.A. As an aside, neither Pacholek nor Bank of America is involved in the appeal, but they were the parties in the foreclosure action. On August 20, 2009, Pacholek granted LLC title to the property via a quitclaim deed, which was recorded with the Cook County Recorder of Deeds on January 28, 2010. On January 19, 2010, Bank of America initiated a foreclosure action against Pacholek and recorded a lis pendens on January 21, 2010. Thus, the lis pendens in the foreclosure action was recorded about a week before LLC recorded its quitclaim deed.

¶ 6 In the foreclosure action, an affidavit from a special process server stated that Pacholek was served by substitute service. A copy of the summons and complaint was given to Andy Pacholek, who was Pacholek's brother-in-law, on January 22, 2010, and a copy was mailed to defendant on January 26, 2010. On May 13, 2010, the court entered an order of default, stating that Pacholek was served with the summons and complaint and did not answer or otherwise plead. The court also dismissed nonrecord claimants, unknown tenants, and unknown owners, as well as entered a judgment of foreclosure and order of sale, finding that due and proper notice had been given and that Bank of America's mortgage was superior to all other defendants' liens, rights, or claims on the real estate. The foreclosure judgment also provided that after the judicial sale, the defendants and "all persons claiming under them * * * [shall] be forever barred and foreclosed of and from all rights and equity and redemption or claim of, in and to said premises or any part thereof." On March 28, 2011, the court entered an order confirming the sale of the property to Bank of America. Later, Bank of America conveyed the property to Gil via a special warranty deed, which was recorded on December 28, 2011. Gil states that he has since lived at the property.

¶ 7 On April 28, 2015, Pacholek filed a petition to quash service under section 2-1401 of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-1401 (West 2014) ). The petition stated that service was defective, which deprived the court of jurisdiction over Pacholek and required all previous orders to be vacated. In attached affidavits, Pacholek and his wife each averred that Pacholek did not have a brother-in-law named Andy Pacholek, they did not know anyone named Andy Pacholek, and no one by that name had ever lived in their home. Further, Pacholek never received a summons or complaint in the mail. On July 13, 2015, the court granted Pacholek's petition to quash, noting that Bank of America was served, but did not appear. The court vacated all of the orders in the foreclosure case, vacated the foreclosure sale, and returned possession of the property to Pacholek.

¶ 8 On August 12, 2015, Bank of America filed a motion to reconsider, asserting that neither it nor Gil, the third-party purchaser, were served notice of the section 2-1401 petition. On January 20, 2016, the court vacated its previous order. Except for the order that had granted the petition to quash, all orders entered in the foreclosure action were reinstated in their entirety, "including, but not limited to, the judgment of foreclosure and order approving sale." Pacholek's section 2-1401 petition was dismissed with prejudice pursuant to settlement and stipulation by the parties.

¶ 9 B. Eviction Action

¶ 10 On February 8, 2018, LLC filed a complaint seeking to evict Gil from the property, stating that LLC was the owner of record pursuant to a deed recorded on January 28, 2010. Gil filed a counterclaim, seeking in part to quiet title and obtain a declaratory judgment about the parties' interest in the property. The parties filed cross-motions for summary judgment.

¶ 11 In a deposition, LLC's manager, Joseph Varan, explained that LLC is a holding company. At the time of the transaction with Pacholek, the subject property was vacant and the Pacholek family was living in another property across the street. In exchange for the quitclaim deed, LLC arranged for an affiliated company to pay $5000 or $10,000 of the Pacholek family's legal fees in an unrelated matter. Pacholek would also receive a percentage of any income derived from the property. LLC paid money to Pacholek as well, but Varan did not recall the amount. Varan was not aware that there had been a delay in recording the deed. Varan further stated that the eviction complaint was not filed earlier because he had "hundreds of different properties, and a lot of different things going on. So it was just in the queue to be done, and it finally got done."

¶ 12 In Gil's motion for summary judgment, he asserted that because the lis pendens in the foreclosure action was recorded before the quitclaim deed, LLC had constructive notice of the foreclosure. LLC was bound by the proceedings as if it had been a party to them, and so any interest LLC had in the property was extinguished in the foreclosure. Gil was protected as a subsequent purchaser against the prior, unrecorded interest of LLC.

¶ 13 In LLC's motion for summary judgment, it disputed that it was bound by the orders in the foreclosure action. According to LLC, a lis pendens disappears after six months if the plaintiff fails to serve the defendant, and Pacholek was never served. LLC asserted that it was not likely that a man's brother-in-law would have the same last name as him. LLC also noted that in Pacholek's section 2-1401 petition, he disclaimed any knowledge of Andy Pacholek. LLC further stated that Bank of America explicitly dismissed nonrecord claimants and unknown owners as defendants in the foreclosure action.

¶ 14 On May 21, 2019, after a hearing, the court entered a written order that granted summary judgment in favor of Gil, stating that title was quieted, established, and confirmed in Gil, free and clear of LLC's claims. Judgment was entered in favor of Gil and against LLC on the eviction complaint. In its oral ruling, the court stated that Gil's claim to the property was stronger than LLC's claim to the property.

¶ 15 LLC timely appealed.

¶ 16 II. ANALYSIS

¶ 17 On appeal, LLC contends that title should have been quieted in its favor because the lis pendens was not perfected by proper service in the foreclosure action, and as a result, LLC's interest in the property survived the foreclosure. LLC argues that a lis pendens disappears after six months if the defendant in the case is not served, and Pacholek was not served. LLC states that the person who was allegedly served—Andy Pacholek—did not exist. LLC maintains that due to the defective service, it is not bound by the orders entered in the foreclosure action.

¶ 18 This matter is an appeal from a grant of summary judgment, which is proper when "the pleadings, depositions, 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." 735 ILCS 5/2-1005(c) (West 2016). Summary judgment is a drastic measure that should be granted only if the movant's right to judgment is clear and free from doubt. Outboard Marine Corp. v. Liberty Mutual Insurance Co. , 154 Ill. 2d 90, 102, 180 Ill.Dec. 691, 607 N.E.2d 1204 (1992). Our review of a grant of summary judgment is de novo . Colburn v. Mario Tricoci Hair Salons & Day Spas, Inc. , 2012 IL App (2d) 110624, ¶ 32, 361 Ill.Dec. 781, 972 N.E.2d 266. We may affirm the circuit court's ruling for any reason supported by the record, regardless of the grounds relied on by the circuit court. Pekin Insurance Co. v. AAA-1 Masonry & Tuckpointing, Inc. , 2017 IL App (1st) 160200, ¶ 21, 415 Ill.Dec. 116, 81 N.E.3d 1040.

¶ 19 An action to quiet title is an equitable proceeding where a party seeks to remove a cloud on his title to the property. Stahelin v. Forest Preserve District of Du Page County , 376 Ill. App. 3d 765, 779, 315 Ill.Dec. 792, 877 N.E.2d 1121 (2007). "A cloud on title is the semblance of title, either legal or equitable, appearing in some legal form but which is, in fact, unfounded or which it would be inequitable to enforce." (Internal quotation marks omitted.) Hoch v. Boehme , 2013 IL App (2d) 120664, ¶ 41, 371 Ill.Dec. 462, 990 N.E.2d 362. To prevail, a plaintiff must actually have title, though it need not be perfect. Id. Further, the plaintiff must recover on the strength of his own title and not on defects in the defendant's title. Id.

¶ 20 At issue here is the effect of the lis pendens recorded in the foreclosure action on the competing claims to the property. As noted above, Bank of America recorded a lis pendens about a week before LLC recorded its quitclaim deed. "Lis pendens " means a pending suit. Admiral Builders Corp. v. Robert Hall Village , 101 Ill. App. 3d 132,...