Pentagon Fed. Credit Union v. Poorian

1

2024 IL App (1st) 221803

PENTAGON FEDERAL CREDIT UNION, Plaintiff-Appellant, v. ALI POORIAN; CHICAGO TITLE LAND TRUST COMPANY; TIFLIS PROPERTIES, INC.; and ATATRUK PROPERTIES, INC. Defendants-Appellees.

No. 1-22-1803

Court of Appeals of Illinois, First District, Sixth Division

June 14, 2024

Appeal from the Circuit Court of Cook County No. 21 CH 03496 The Honorable Caroline Kate Moreland, Judge, presiding.

Eric J. Malnar, of Huck Bouma, PC, of Wheaton, for appellant.

Cornelius P. Brown and Amy E. Daleo, of Cohon Raizes &amp Regal LLP, of Chicago, for appellees Ali Poorian, Tiflis Properties, Inc., and Atatruk Properties, Inc. No brief filed for other appellee.

Presiding Justice Oden Johnson and Justice Hyman concurred in the judgment and opinion.

OPINION

TAILOR, JUSTICE

¶ 1 At issue is whether, in the case of fraudulently transferred real property where the creditor does not have actual notice of his debtor's transfer, the four-year statute of limitations under the Uniform Fraudulent Transfer Act (UFTA) (740 ILCS 160/1 et seq. (West 2020)) accrues when the contract of transfer is executed or when the deed is recorded. We hold the UFTA cause of action accrues when the deed is recorded. In so holding, we reject the creditor's contention that his UFTA claim did not accrue until he secured a judgment against the debtor, whether under the UFTA discovery rule or otherwise. However, for purpose of the discovery rule, a UFTA claim does not accrue until the creditor knows or should have known of the fraudulent nature of the transfer, not just the transfer.

¶ 2 The plaintiff judgment creditor, Pentagon Federal Credit Union (Pentagon), filed a three-count complaint alleging that its judgment debtor defendant, Ali Poorian (Poorian), fraudulently transferred numerous real properties he owned in order to avoid Pentagon's judgment, in violation of the UFTA. The defendants are the transferor, Poorian, and the transferees, Chicago Title Land Trust Company (Chicago Title), Tiflis Properties, Inc. (Tiflis), and Atatruk Properties, Inc. (Atatruk). Chicago Title is trustee of certain trusts that Poorian is alleged to have a beneficial interest in, and Tiflis and Atatruk are corporations in which Poorian is alleged an interest. The circuit court dismissed all of Pentagon's UFTA claims as time barred. We reverse and remand for further proceedings.

¶ 3 I. BACKGROUND

¶ 4 A. Judgment is Entered Against Poorian for Failure to Repay Loans

¶ 5 Poorian, who was in the taxicab business, owned numerous taxicab medallions issued by the City of Chicago. In April 2013, Progressive Credit Union (Progressive), the predecessor in interest to Pentagon, loaned over $15 million to Poorian in 14 separate loan transactions (April 2013 Loans), all of which were scheduled to mature in April 2016. The loans were secured by the taxicab medallions that Poorian owned. In December 2014, after Poorian requested a "troubled debt restructure," Poorian and Progressive entered into a forbearance and loan modification agreement, pursuant to which Poorian acknowledged defaulting on the April 2013 Loans by failing to make the required payments and the parties agreed to restructure Poorian's payment schedule. Under the restructured schedule, Poorian would pay only interest for the next 12 months and then repay the loans over 25 years.

¶ 6 In 2015, Poorian requested an extension of his troubled debt restructuring. In February 2016, Poorian and Progressive entered into a second forbearance and loan modification agreement, pursuant to which Poorian would pay only interest for the next 18 months and then repay the loans over 30 years. In this agreement, Poorian again acknowledged he defaulted on the April 2013 Loans.

¶ 7 On May 26, 2017, Poorian defaulted on the second loan forbearance and modification agreement by failing to make his required payments. In January 2019, Progressive merged with Pentagon, making Pentagon the successor to Progressive under the April 2013 loans and the two loan forbearance and modification agreements. On February 1, 2019, Pentagon filed a complaint against Poorian based on his May 26, 2017 default under the second loan forbearance and modification agreement. On December 10, 2020, the court entered judgment against Poorian for $16,270,642.

¶ 8 B. Poorian Transfers His Real Estate While in Financial Distress

¶ 9 In September 2016, after defaulting on his loan agreements with Progressive and approximately two and a half years before he was sued by Pentagon, Poorian transferred three properties he owned to Tiflis and Atatruk. First, on September 29, 2016, Poorian executed a quit claim deed to Tiflis, transferring real estate with the address 2032 West Jarvis Avenue, 3B, Chicago. The deed was recorded on October 6, 2016. Second, on September 29, 2016, Poorian executed quit claim deeds to Atatruk transferring real estate he owned with the addresses 6259 North Claremont Avenue, #1, Chicago, and 4635 Main Street, #2A, Skokie. The deeds for the Claremont Avenue and Main Street properties were recorded on October 6 2016, and October 7, 2016, respectively. We refer to the transfer of the Jarvis Avenue property to Tiflis and the transfer of the Claremont Avenue and Main Street properties to Atatruk collectively herein as the "Corporate Transfers."

¶ 10 On December 2, 2016, Poorian executed quit claim deeds transferring five properties he owned to Chicago Title as the trustee under a trust agreement. These deeds were recorded on various dates in July 2017. First, on July 19, 2017, deeds were recorded for the transfer to Chicago Title of real estate located in Chicago with the addresses 5100 North Marine Drive, 11A; 3102 Argyle Street, 3; and 1626 West Estes Avenue, 2E. Second, on July 20, 2017, a deed was recorded for the transfer to Chicago Title of real property with the address 7033 West Kedzie Avenue, 1704, Chicago. Finally, on July 25, 2017, a deed was recorded for the transfer to Chicago Title of real property with the address 4734 Russett Road, R-12, Skokie. We refer to the transfers of the Marine Drive, Argyle Street, Estes Avenue, Kedzie Avenue, and Russett Road properties collectively herein as the "Trust Transfers."

¶ 11 On July 16, 2021, Pentagon filed a complaint against Poorian, Chicago Title, Tiflis, and Atatruk, alleging that Poorian transferred his real estate assets in violation of the UFTA. Count I against Poorian and Chicago Title, as trustee, alleged that the Trust Transfers violated the UFTA. Count II against Poorian and Tiflis, and count III against Poorian and Atatruk, alleged that the Corporate Transfers violated the UFTA. Pentagon's complaint further alleged that "Poorian has an interest or control" over Chicago Title, Tiflis, and Atatruk and the "transfers to [Chicago Title, Tiflis, and Atatruk] *** were substantially all of Poorian's assets leaving him unable to pay his debt to [Pentagon]." With respect to the Corporate Transfers, Pentagon acknowledged the deeds were recorded in October 2016 but alleged it "only became aware that the transfer[s] to [Tiflis and Atatruk] may have been a fraudulent conveyance on or about January 2021."

¶ 12 Chicago Title, as trustee, did not appear in this action. As far as we can tell from the record, Chicago Title's interests as trustee were represented by Poorian. We also note that Poorian, Tiflis, and Atatruk were represented by the same attorney.

¶ 13 On October 7, 2021, Poorian, Tiflis, and Atatruk (Defendants) moved to dismiss on two bases under section 2-619 of the Civil Practice Law. 735 ILCS 5/2-619 (West 2020). First, with respect to the Trust Transfers, the defendants argued Pentagon's complaint was untimely under the UFTA four-year limitation period because a transfer occurs-and the statute of limitations thus accrues-when the deed is executed, not when it is recorded. Here, Pentagon filed its complaint on July 16, 2021, more than four years after the Trust Transfer deeds were executed in December 2016, but less than four years after the Trust Transfer deeds were recorded. Second, with respect to the Corporate Transfers, the defendants argued Pentagon cannot rely on the UFTA discovery rule because Pentagon did not allege any facts "as to why the transfers were discovered so late."

¶ 14 Pentagon disputed the defendants' interpretation of the UFTA statute of limitations, asserting its complaint was timely because the limitation period did not accrue until the Trust Transfer deeds were recorded. Thus, the complaint, which was filed on July 16, 2021, was within the four-year limitation period because the earliest Trust Transfer deed was recorded on July 19, 2017. With respect to the Corporate Transfers, Pentagon argued that the UFTA discovery rule applies because it did not learn of them until judgment was entered against Poorian for breach of the second loan forbearance and modification agreement in December 2020. Pentagon asserted that it could not have brought a UFTA claim prior to the December 2020 judgment against Poorian because it would have been premature or moot.

¶ 15 In a written order entered on June 6, 2022, the circuit court granted the Defendants' motion to dismiss with prejudice. The circuit court reasoned that the Trust Transfers occurred when the deeds were executed because, at that point, Poorian "released any and all rights to the [properties] and the grantee, [Chicago Title] took possession" of the properties. Therefore, "such a release and change in possession constitutes a transfer under the UFTA." The court also found that the UFTA claims relating to the Corporate Transfers were time-barred because the transfers took place when the deeds were executed and the UFTA discovery rule did not apply because Pentagon "fail[ed] to state an...