A motion for summary judgment is a pre-trial mechanism to reduce a lender’s mortgage foreclosure complaint to a judgment and decree. McEntee v. Wells Fargo Bank, 970 N.E.2d 178 (Ind. Ct. App. 2012) illustrates how such a motion can be defeated if the plaintiff lender does not, in its supporting affidavit, explain how the borrower defaulted on the promissory note.
Payment dispute. McEntee involved a borrower and a national bank. The disagreement began when the borrower submitted a check to the lender for his monthly payment that he post-dated to the due date. The lender negotiated the check before that date, and payment of the check resulted in a checking account overdraft fee to the borrower of $112.50. The borrower then deducted that amount from his next loan payment. Things escalated into a mortgage foreclosure suit and a counterclaim for emotional distress damages.
Defense. The lender filed a motion for summary judgment, and the trial court granted the motion. On appeal, the borrower argued, among other things, that the lender improperly deposited post-dated checks before the due date for each payment. The borrower designated as evidence in response to the motion for summary judgment several letters he sent to the bank regarding the payment dispute. The borrower’s theory was that the lender improperly handled his payments and that, if his mortgage was in default, such default was the result of lender’s conduct.
Basic law. McEntee provided:
if a mortgagor defaults in the performance of any condition contained in a mortgage, the mortgagee or the mortgagee’s assign may proceed in the circuit court of the county where the real estate is located to foreclose the equity of redemption contained in the mortgage. Ind. Code § 32-30-10-3(a). To establish a prima facie case that it is entitled to foreclose upon the mortgage, the mortgagee or its assign must enter into evidence the demand note and the mortgage, and must prove the mortgagor’s default. Once the mortgagee establishes its prima facie case, the burden shifts to the mortgagor to show that the note has been paid in full or to establish any other defenses to the foreclosure.
“Not enough.” With its summary judgment motion, the bank submitted an affidavit to prove, among other things, the borrower’s default. According to the Court, the affidavit stated only that “the conclusory averment . . . that ‘according to [the lender’s] records, the [borrower is] in default and that said default has not been cured.’” In Indiana “conclusory statements are generally disregarded in determining whether to grant or deny a motion for summary judgment.” The Court held that this conclusory statement was “not enough” to support the lender’s motion. The lender did not show that the borrower defaulted in his performance under the note, but instead established only that the borrower and the lender were engaged in an ongoing payment dispute. The lender’s “designated evidentiary materials [did] not establish that [borrower] failed to pay the amounts due on the note.”
Provide some detail. The cliché that “the devil is in the details” applies here. The Court in McEntee reversed the trial court’s summary judgment and never had to address the merits of the payment dispute. This is because the only evidence supporting summary judgment was the lender’s conclusory allegation that there was a default. The lesson is that there should be some detail concerning the nature of the payment default and the timing of it. At least some of the key facts, beyond parroting the default language in the promissory note, must be given so as to establish that there has been a breach under the loan document.