Recent Indiana Mortgage Foreclosure Opinion, Post I of III: Liability – First Material Breach Doctrine
Indiana Court of Appeals Mortgage Foreclosure Opinion, III of III: Damages Evidence After Lenders Merge

Indiana Court of Appeals Mortgage Foreclosure Opinion, II of III: Liability – Evidence Teachings

Lesson.  In contested motions for summary judgment, lenders should not forget to point to the entire record before the court.  Often borrowers will have admitted key facts in their pleadings or offered detrimental evidence themselves while trying to defend certain elements of the case.

Case cite.  Hussain v. Salin Bank, 143 N.E.3d 322 (Ind. Ct. App. 2020)

Legal issue.  Whether the affidavit in support of the lender’s motion for summary judgment constituted inadmissible hearsay. 

Vital facts.  Please click here for my first post about Hussain that contains some background.  In addition to the “first to breach” argument discussed in that post, the borrowers defended the mortgage foreclosure action on evidentiary grounds.  The plaintiff lender had merged with the original lender.  In support of its summary judgment motion, the lender tendered an affidavit from an employee of the current lender who had also served as a records custodian of the original lender. 

Procedural history.  The trial court granted summary judgment for the lender on liability but ordered a trial on damages.  This post relates to the summary judgment ruling on liability.   

Key rules.

    General ruleIndiana Trial Rule 56(E) controls the admissibility of summary judgment affidavits and prohibits hearsay while requiring personal knowledge.  Indiana Evidence Rule 801 defines hearsay, which generally means on out-of-court statement offered for the truth of the matter asserted.    

        An exception.  The Court specifically pointed to language in T.R. 56(E) precluding exhibits “not previously self-authenticated….”  In Indiana, “once evidence has been designated to the trial court by one party, that evidence is deemed designated and the opposing party need not designate the same evidence.”

        Another exceptionInd. Evid. R. 803(6) is the business records exception to the hearsay rule.  (There are many, many exceptions to the hearsay rule.)

Holding.  The Court of Appeals affirmed the trial court’s summary judgment on liability.

Policy/rationale.  The borrowers argued that the lender’s affidavit was based upon inadmissible hearsay and that, without the affidavit, the lender failed to prove a default under the loan.  One of the legal bases of the borrowers’ argument was the Court of Appeals’ holding in the 2019 Zelman case, about which I wrote here, which reversed a trial court’s summary judgment due to a flawed affidavit.  The Court in Hussain was not persuaded by the borrowers’ argument and distinguished its holding in Zelman as follows:

Unlike [Zelman], the [affiant/witness in Hussain] was not an employee of a third party who had purchased the [borrowers’] debt.  He was an employee of [the current lender] that had merged with [the prior lender].  [The witness] was the custodian of the records for [the prior lender], and the designated evidence established that he had acquired knowledge of the [borrowers’] debt by personally examining the business records relating to their loan.  Moreover, [the witness] did not refer to unspecified business records as did the affiants did in … Zelman.  Instead, [his] affidavit specifically identified the promissory note and mortgage to which he referred.

Of equal importance to the outcome in Hussain was the fact that many of the key documents referenced in the affidavit were already of record in the case and thus had been authenticated by the borrowers themselves. 

Therefore, notwithstanding any alleged flaws in [the lender’s affidavit], the [borrowers] admitted that they executed the note and mortgage, along with their failure to pay.  And that evidence was already before the court.  The [borrowers] further admitted that they made payments on the note and they submitted their payment history as part of the designated evidence.  That history demonstrated that they had not made a payment since November 27, 2015, yet the note required payments through September 16, 2023.  That evidence was not disputed, and it established all the required elements for a mortgage foreclosure.  For all these reasons, the trial court did not err in admitting [the] affidavit into evidence.

Related posts. 

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I represent parties involved in foreclosure cases. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenlawyers.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

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