Plaintiff/Judgment Creditor Gets Cart Before Horse In Indiana Garnishment Effort
PHH v. Consumer Financial Protection Bureau: Opinion

An “In Rem” Judgment Limits Collection To The Mortgaged Property

Lesson.  Borrowers are not personally liable for any deficiency resulting from the entry of an in rem judgment. 

Case cite.  Elliott v. Dyck O’Neal, Inc., 46 N.E.3d 448 (Ind. Ct. App. 2015).

Legal issue.  Were defendant borrowers entitled to a refund of monthly garnishment payments they made in connection with proceedings supplemental following an in rem judgment?

Vital facts.  The Elliotts defaulted under their mortgage loan with Fifth Third Bank, which obtained a judgment and decree of foreclosure.  The proposed order Fifth Third Bank tendered to the trial court spelled out an in rem (against the property) judgment, as opposed to an in personam (against the person) judgment.  The trial court signed off on the proposed order.  This meant that the judgment was against the Elliotts’ real estate but not the Elliotts individually.  After the sheriff’s sale, there was a deficiency remaining from the judgment amount.  Fifth Third Bank later assigned its interest in the judgment to O’Neal, which initiated proceedings supplemental against the Elliotts to collect the deficiency.  The Elliotts, who were without counsel initially, agreed to pay $50/month as part of a garnishment order.  Four years later, the Elliotts, with counsel, moved for a refund of the money they paid due to the fact that the judgment was in rem only.  O’Neal responded by claiming that the in rem limitation on the original judgment was a clerical error. 

Procedural history.  The trial court denied the Elliotts’ motion for refund, and the Elliotts appealed.  

Key rules.  Mortgage foreclosure cases are “essentially equitable” actions to enforce a lien against property to satisfy a debt.  Generally, trial courts have discretion to fashion equitable remedies that are “complete and fair to all parties involved.”   

Holding.  The Indiana Court of Appeals reversed the trial court and held that the Elliotts were entitled to the equitable relief of a refund, plus interest, of the payments they made due to the lack of an in personam judgment in the original foreclosure order. 

Policy/rationale.  There was no dispute that the foreclosure order did not entitle O’Neal to collect a personal judgment from the Elliotts.  The Court was not persuaded by O’Neal’s position that the language in the judgment was a mistake.  The Court granted the Elliotts a refund “given the unique and specific facts of this case and because equity so demands.”  The money they paid was pursuant to an improper garnishment order based on an in rem judgment.  The case involved “significant equitable considerations” that included the fact that the Elliotts were unrepresented at the time.  (For more on the Court’s rationale, review the opinion, which also addressed O’Neal’s unsuccessful effort to amend the judgment.) 

Related posts. 


Part of my practice is to defend lenders and their servicers in contested foreclosures and consumer finance litigation.  If you need assistance with such matters in Indiana, please call me at 317-639-6151 or email me at [email protected].  Also, you can receive my blog posts on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.