Indiana Court Finds That Large Crane And Saw For Stone Fabricating Business Were Not "Fixtures"

Lesson. In title and priority disputes surrounding alleged “fixtures,” the parties’ intention is the controlling factor.

Case cite. 11438 Highway 50 v. Luttrell, 81 N.E.3d 261 (Ind. Ct. App. 2017).

Legal issue. Whether certain pieces of equipment were fixtures subject to a lender’s mortgage.

Vital facts. This case dealt with a crane and a saw owned by a limestone sawing business. The business operated out of a building the partners constructed on the back edge of some real estate owned by a separate corporation. A lender held a mortgage on the real estate and also had on file a UCC financing statement claiming an interest in, among other things, equipment and fixtures of the corporation (but not the sawing business).

Procedural history. The lawsuit started when one of the two partners in the limestone sawing business sued the other partner for, among other things, possession of the crane and the saw. Later, the lender (mortgagee) intervened in the action, foreclosed on the real estate and asserted a first-priority security interest in the crane and the saw. The trial court awarded the equipment to the plaintiff (the partner), and the lender/mortgagee appealed.

Key rules. Indiana case law generally provides that “a fixture is a former chattel or piece of personal property that has become a part of real estate by reason of attachment thereto.”

Indiana’s three-part test for whether something “has become so identified with real property as to become a fixture” is “(1) actual or constructive annexation of the article to the realty, (2) adaptation to the use or purpose of that part of the realty with which it is connected and (3) the intention of the party making the annexation to make the article a permanent accession to the freehold.”

The intention factor is controlling and “may be determined by the nature of the article, relation and situation of the parties making the annexation, and the structure, use, and mode of annexation.” If there is doubt regarding intent, “the property should be regarded as personal.”

Holding. The Indiana Court of Appeals affirmed the trial court’s determination “that the crane and the saw should be regarded as the personal property of [the limestone sawing business] rather than a fixture subject to the lender’s mortgage lien.”

Policy/rationale. The equipment in Luttrell was annexed to the real estate and assembled in a building meant to accommodate it. However, the saw (14’x7’) could be disassembled in two days and transferred to a new place via semi-truck. The crane weighed 50 tons, but also could be moved if needed. The sawing business purchased the equipment, and the partners intended for it to remain their personal property after installation. Also, the sawing business and the borrower’s/mortgagor’s business were independent from one another, and the original plan of the partners was to save up money to buy the building.

Seemingly most fixture-related disputes are between creditors who are fighting over the debtor’s property. Here, the dispute was between a creditor and a third-party owner (not a borrower). The fact that the mortgagor/borrower did not own the equipment, and thus could not have pledged it as collateral, probably carried the day.

Related post. What Is A Fixture?
I represent creditors, as well as mortgage loan servicers, entangled in lien priority and title disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

District Court Denies Fraudulent Transfer and Alter Ego Claims

Fraudulent transfer and alter ego cases seem to almost always be factually dense and, therefore, difficult to summarize in a blog post.  Since I've written about the essential elements of Uniform Fraudulent Transfer Act and alter ego claims in the past, I've decided simply to post the Court's opinion in Wine & Canvas v. Weisser, 2017 WL 2905026 (S.D. Ind. 2017) here

United States District Judge Pratt authored a thorough, twenty-page opinion dealing with plaintiff's motion for turnover of trademarks and for funds received as royalties in connection with the pending proceedings supplemental.  The two bases of the motion were (1) fruadulent transfer under Indiana Code 32-18-2-14 and 15 and (2) alter ego.  The opinion spells out why the Court denied the plaintiff's motion on both theories.  The Court found that the plaintiff did not show that the subject transfer was fraudulent or voidable.  Further, the Court concluded that company 2 was not the alter ego of company 1. 

For more on the law and the Court's reasoning, please review the opinion, which is a good illustration of how a court will walk through all of the relevant factors toward a decision denying relief.      

Guarantor Loses Procedural Battle Over Whether He Can Be Sued In Both the United States and Brazil

Lesson. When negotiating guaranties, or litigating rights under them, know that courts will slice and dice the language within the guaranty in order to determine the parties’ intent and reach an appropriate outcome. Every word can be important.

Case cite. 1st Source Bank v. Neto, 861 F.3d 607 (7th Cir. 2017).

Legal issue. Whether language in a guaranty allowed for parallel litigation in the United States (Indiana) and Brazil.

Vital facts. 1st Source was an Indiana federal court collection action by a lender against a guarantor arising out of a $6 million loan to purchase an airplane. Defendant, who resided in Brazil, personally guaranteed the loan. The Seventh Circuit’s opinion interpreted the guaranty’s so-called choice-of-law and venue provision, which stated:

This guarantee shall be governed by and construed in accordance with the laws of the state of Indiana .… In relation to any dispute arising out of or in connection with this guarantee the guarantor [i.e., the defendant guarantor] hereby irrevocably and unconditionally agrees that all legal proceedings in connection with this guarantee shall be brought in the United States District Court for the District of Indiana located in South Bend, Indiana, or in the judicial district court of St. Joseph County, Indiana, and the guarantor waives all rights to a trial by jury provided however that the lender [i.e., the plaintiff lender] shall have the option, in its sole and exclusive discretion, in addition to the two courts mentioned above, to institute legal proceedings against the guarantor for repossession of the aircraft in any jurisdiction where the aircraft may be located from time to time, or against the guarantor for recovery of moneys due to the lender from the guarantor, in any jurisdiction where the guarantor maintains, temporarily or permanently, any asset. The parties hereby consent and agree to be subject to the jurisdiction of all of the aforesaid courts and, to the greatest extent permitted by applicable law, the parties hereby waive any right to seek to avoid the jurisdiction of the above courts on the basis of the doctrine of forum non conveniens.

The guarantor defaulted under the guaranty, and the lender sued to collect in both Indiana federal court (where the lender was located) and in a court in Brazil (where the airplane and other of the guarantor’s assets were located).

Procedural history. The guarantor, in the Indiana case, sought “antisuit injunctive relief” to prevent the lender from suing him in Brazil. The trial court denied the guarantor’s motion, and the guarantor appealed to the Seventh Circuit, which issued the opinion that is the subject of today’s post.

Key rules. Generally, in Indiana, “courts interpret a contract so as to ascertain the intent of the parties.” When courts find a contract to be clear, they will require the parties to perform “consistently with the bargain they made, unless some equitable reason justifies non-enforcement.”

International forum-selection clauses are prima facie valid. The resisting party can only call into question the agreement’s validity if enforcement is unreasonable under the circumstances, which exception has been held to apply to three circumstances: (1) if the clause was the result of fraud, undue influence or overweening bargaining power, (2) if the selected forum “is so gravely difficult and inconvenient that the complaining party will for all practical purposes be deprived of its day in court” or (3) if enforcement would contravene strong public policy of the forum in which the suit is brought, declared by statute or judicial decision.”

Holding. The Seventh Circuit Court of Appeals affirmed the District Court’s decision.

Policy/rationale. The guarantor had five contentions in support of his position, all of which the Court rejected. First, the clause did not limit venue to Indiana. Second, the clause did not limit the suit to either Brazil or Indiana. Third, the guarantor’s “judicial estoppel” argument had no merit. Fourth, the clause did not violate public policy. Finally, the Court found that the Brazil suit was not “vexatious or duplicative” of the Indiana action. In the final analysis, the Court carefully studied the words in the operative guaranty provision, and the Court’s interpretation of those words carried the day. For more detail on the Court’s analysis, or to better understand how a court might interpret your guaranty provision, please review the Court’s opinion (link above).

Related posts.

I represent both lenders and guarantors in commerical loan enforcement actions. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Indiana Court of Appeals Vacates Trial Court Order Domesticating Illinois Judgment

Lesson. Perhaps the only basis upon which a judgment debtor (defendant) can prevent the domestication in Indiana of a foreign judgment (a judgment entered in another state) is to contest the Indiana court’s jurisdiction (power) to enter the judgment in the first place.

Case cite. Sekerez v. Grund & Leavitt, 77 N.E.3d 193 (Ind. Ct. App. 2017).

Legal issue. Whether an Indiana trial court’s order to domesticate a foreign judgment should be set aside because the order was outside of the trial court’s jurisdiction.

Vital facts. Sekerez was a dispute between an Illinois law firm and an Indiana client regarding payment of attorney fees. The law firm filed an action against the client in Illinois that evolved into an arbitration of their claims in Indiana. The arbitrator awarded the law firm about $50,000 in damages, and the law firm returned to the Illinois court to issue a final judgment. The client objected on the grounds of jurisdiction, but the Illinois court entered the judgment for the law firm anyway. The client then filed an action in Lake Circuit Court (Indiana) to set aside the Illinois judgment under the Indiana Uniform Arbitration Act. While the Lake Circuit Court case was pending, the law firm initiated a separate action in Lake Superior Court (Indiana) to domesticate the Illinois judgment. The Lake Superior Court granted the law firm’s motion and entered final judgment in favor of the law firm and against the client.

Procedural history. The client appealed the Lake Superior Court’s judgment. The Indiana Court of Appeals’ opinion is the subject of today’s post.

Key rules. Indiana common law provides that two courts of concurrent jurisdiction cannot deal with the same subject matter at the same time. “Once jurisdiction over the parties and the subject matter has been secured, it is retained to the exclusion of other courts of equal competence until the case is determined.”

Similarly, Indiana Trial Rule 12(B)(8) prohibits one Indiana court from hearing “the same action pending in another state court of this state.”

Holding. The Court of Appeals reversed the Lake Superior Court with instructions to vacate its judgment.

Policy/rationale. The arbitration order was the exclusive basis for the Illinois judgment . The Court reasoned that the issue of whether the arbitration order was valid was already before the Lake Circuit Court when the Lake Superior Court domesticated the Illinois judgment. The client was litigating whether the Illinois court lacked jurisdiction to confirm the arbitration award when the law firm filed the Lake Superior Court case. The Court of Appeals concluded that the law firm’s effort to have the Lake Superior Court domesticate the Illinois judgment simply was an attempt to circumvent the Lake Circuit Court proceedings.

As a side note, the law firm did not utilize Indiana Code 34-54-11 “Enforcement of Foreign Judgments” to domesticate its judgment. Please click on the link below to learn more. Even if the law firm in Sekerez had followed the statute, however, the client still should have prevailed based upon the jurisdictional attack.

Related posts.

I frequently represent judgment creditors in contested collection actions. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Indiana Federal Court Finds De Facto Merger Giving Rise To Successor Liability for Contract Obligations

Lesson. Depending upon the facts, a newly-formed company can be liable for a separate, but related, company’s debts under Indiana’s “successor liability” doctrine.

Case cite. Continental Casualty v. Construct Solutions, 2017 U.S. Dist. LEXIS 76396 (S.D. Ind. 2017) (pdf).

Legal issue. Whether Company 2 was a successor company of Company 1 and thus responsible for Plaintiff’s contract damages because Company 2 was either a “de facto merger” or a “mere continuation” of Company 1.

Vital facts. Continental Casualty was a breach of contract action. About a year after Defendant Company 1 signed the contract, the owner incorporated Defendant Company 2. Both companies were commercial roofing operations. Company 1’s people controlled the operations of Company 2. The same individual was the president of, and owned, both companies. Both operated from the same location. Company 2 assumed the trade name of Company 1.

Procedural history. Continental Casualty was Judge Tonya Walton Pratt’s opinion on Plaintiff’s motion for summary judgment. Plaintiff asked for a judgment against Defendant Company 2 as the successor company for Defendant Company 1. In other words, Plaintiff sought to hold Company 2 liable for Plaintiff’s losses under its contract with Company 1.

Key rules.

Generally, in Indiana, a successor company may liable for the obligations of its predecessor if it’s a “de facto consolidation or merger” or where the successor is a “mere continuation of the seller.”

Indiana looks at the following factors to make such a determination:

1. Continuity of ownership,
2. Continuity of management, personnel and physical operation,
3. Cessation of ordinary business and dissolution of the predecessor as soon as practically and legally possible, and
4. Assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the predecessor.

Holding. The Court granted summary judgment in favor of Plaintiff.

Policy/rationale. The same person owned both companies. The same person was the president of both companies, which were both operated from the same location. Company 1 dissolved in early 2015, before Company 2 was formed. Plus, the companies adopted each other’s trade names and provided the same roofing services. The Court concluded that these uncontested facts were sufficient to establish that Company 2 was a de facto merger with Company 1 and, thus, was “liable as a successor company to amounts owed under the [subject contract].”

Related post. Indiana Collection Theories Of Piercing The Corporate Veil, Alter Ego, Successor Liability And Mere Continuation: Part II

Changes to Rules/Procedures for Marion County (Indianapolis) Sheriff's Sales

Rachel Winkler of the Marion County Civil Sheriff’s Office recently circulated an email to the local foreclosure community of lawyers, investors and bidders about some immediate changes to the local sheriff’s sale rules and procedures. Since the Office wants to spread the word to future participants in the mortgage foreclosure sale process, consider this a public service announcement.

Below is a verbatim copy of her email, and I’ve provided links to the various .pdf’s and the home page:

Greetings Attorneys/Investors/Bidders,

We want to include all because the adjustments we are working on and toward affect all.

Some highlights of these adjustments to our process are:

Interest will now come from Attorneys; please consider including these on the added cost sheet.

Plaintiff Bid Forms; Treasurer’s Tax Clearance Forms; Removal Letters; Assignment of Judgment/Bids and Added Costs Sheets are due no later 3:00 p.m. two business days prior to the respective sale date.

Cost checks for User Fees, Sheriff’s fees and Publication Fees (including Sheriff’s File Number on checks) are also due and requested no later 3:00 p.m. two business days prior to the respective sale date.

Cost checks will now be cashed and applied as part of the Sheriff Sale process. Please be sure to consider these costs as part of the minimum bid amount and Plaintiff’s written bid as applicable.

Attorneys are responsible for preparing all Sheriff’s Deeds, Clerk Returns and Sales Disclosure Forms for all sales including third party purchases.

All information is included in the document called Marion County Sheriff's Sale Real Estate Rules Requirements for Plaintiffs.Attorneys.Revised 05.04.2018.

Bidders, please come with document Marion County Sheriff's Sale Real Estate Sales Disclosure Information.Revised 05.4.2018 already prepared for each property you plan to purchase. If the property is sold to you, please submit the corresponding document at the completion of the oral auction.

Please visit our website:

Please direct your questions, comments and concerns to myself, 317-327-2420 and Lori, 317-327-2405.

More to follow…

Rachel Winkler
Marion County Sheriff's Office
Judicial Enforcement Division
200 E. Washington St.
Suite 1122
Indianapolis, IN 46204
Office – (317) 327-2420
Fax – (317) 327-2465

Here are the other .pdf’s that Ms. Winker attached to her email:

Indiana Lis Pendens Notice Deemed Discharged Despite Pending Appeal Of The Discharge Order

Lesson. If a trial court discharges (releases) a lis pendens notice in a final appealable order, an appeal of the underlying decision does not resurrect the notice or extend the filer’s lis pendens rights pending the outcome of the appeal.

Case cite. Knapp v. Wright, 76 N.E.3d 900 (Ind. Ct. App. 2017).

Legal issue. Whether the release of the lis pendens notice was premature because the court’s order was subject to an appeal.

Vital facts. Knapp was a dispute between the Wrights and the Knapps surrounding the enforceability of a land contract. The trial court entered a preliminary order granting the Wrights possession of the subject real estate. The Knapps responded by filing a lis pendens notice (LPN) asserting an ownership interest in a portion of the real estate based upon the land contract.

Procedural history. The Wrights filed an emergency motion to discharge the LPN because the trial court had already determined that the Knapps had no rights to the property under the land contract. The trial court wen on to hold an evidentiary hearing on the matter of damages and awarded the Wrights monetary relief. In the second order, the trial court stated that its ruling was a final, appealable judgment with respect to the real estate. The court’s order also granted the Wrights’ emergency motion to discharge the LPN and expressly authorized them to sell the real estate free and clear of the LPN. The Knapps appealed.

Key rules. The Indiana Supreme Court has described the doctrine of lis pendens as being:

fundamentally about notice. The term lis pendens itself means “pending suit,” and it refers specifically to “the jurisdiction, power, or control which a court acquires over property” involved in a pending real estate action. Any successor in interest to real estate is deemed to take notice of a pending action involving title to that real estate and is subject to its outcome. The judgment in the pending lawsuit binds all successors in interest, regardless of whether a successor was a party to the litigation. The doctrine’s purpose is to protect the finality of court judgments by discouraging purchases of contested real estate.

Ind. Code 32-30-11 is Indiana’s lis pendens statute. Section 7 states in pertinent part:

Upon the final determination of any suit brought:

(1) for the purposes described in section 2 or 3 of this chapter; and
(2) adversely to the party seeking to enforce a lien upon, right to, or interest in the real estate;

the court rendering the judgment shall order the proper clerk to enter in the lis pendens record a satisfaction of the lien, right, or interest sought to be enforced against the real estate. When the entry is made, the real estate is forever discharged from the lien, right, or interest.

Holding. The Knapps essentially claimed that the LPN should not have been removed pending the outcome of their appeal. The Indiana Court of Appeals disagreed and affirmed the trial court.

Policy/rationale. The trial court’s final appealable judgment disposed of all issues concerning title to the subject real estate. The Court of Appeals reasoned that the judgment constituted a “final determination” under the above statute that mandated the clerk to enter in the lis pendens record a satisfaction of the defendants’ interests they sought to enforce. The fact that the Knapps “intended to appeal … did not render the … final appealable judgment any less of a ‘final determination’ of their suit within the meaning of the statute.” Based upon the language in the statute and a 2003 case interpreting the operative words “final determination,” the Court concluded that the LPN was extinguished regardless of pending appellate rights. While I understand the Knapps’ position (what if the land contract ruling was reversed on appeal?), the language in the statute handcuffed the courts from extending the lis pendens in this instance.

Related posts.

I frequently represent judgment creditors and lenders, as well as their mortgage loan servicers, entangled in lien priority and title claim disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Seventh Circuit Affirms Dismissal Of Borrower’s Post-Foreclosure Federal Claims Based On Rooker-Feldman and Res Judicata

Today’s post follows-up mine from 2/26/17: Borrower’s Claims For Violations of RESPA, TILA, FDCPA, RICO And FPRAM, Together With Claims for Various Torts, Dismissed. For an introduction to the case, Mains v. Citibank, 852 F.3d 669 (7th Cir. 2017), please click on that prior article.

The borrower appealed the District Court’s ruling to the Seventh Circuit Court of Appeals. Click here for the Court's opinion, which thoroughly sets up each of the borrower’s contentions and then knocks them out. Mains provides a road map through Indiana state and federal law under circumstances in which a borrower/mortgagor, in the aftermath of a state court foreclosure, pursues fraud-based remedies in federal court against a lender, a mortgage loan servicer and their law firms.

I’ve written about the Rooker-Feldman and res judicata doctrines many times in the past. In fact, this is the second post about a Seventh Circuit Court of Appeals’ decision on the subject – click here for my first post. As to this recent opinion, here are a couple highlights:

1. Federal claims not raised in state court, or that do not expressly require review of the state court decision, may be subject to dismissal “if those claims are closely enough related to a state court judgment.” Is the federal plaintiff alleging that the state court judgment caused his injury?

2. The Seventh Circuit broadly concluded that “the foundation of the present suit is [the borrower’s] allegation that the [prior foreclosure judgment] was in error because it rested on a fraud perpetrated by the defendants…. [The borrower’s] remedies lie [solely] in the Indiana courts.” The Court reasoned that, to delve into any alleged fraud, “the only relief would be to vacate [the state court] judgment … that would amount to an exercise of de facto appellate jurisdiction, which is not permissible.”

The Court found that “in the final analysis, all of [the borrower’s] claims must be dismissed - most under Rooker-Feldman and a few for issue preclusion [res judicata].” The only thing the Court of Appeals changed was that the dismissal should be without, instead of with, prejudice. (As an aside, the borrower appealed the decision to the United States Supreme Court, which denied his request to hear the case – Mains v. Citibank, 138 S.Ct. 227 (2017)).


I frequently represent creditors and lenders, as well as their mortgage loan servicers, in contested mortgage foreclosure cases. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Quickly: Application for Charging Order Granted

Heading out with the family for Spring Break but wanted to offer a quick post about a motion decided last year in our local federal court.  The opinion is very short, and Magistrate Judge Tim Baker's report and recommendation later was adopted by Judge Pratt.  Click here for the ruling. 

The case involved a twist to a charging order on one tenant's in common half-interest in some real estate.  The interest arose out of a purchase agreement.  The Court concluded that the  tenant's "economic interest in the [real estate] should be charged against any unsatisfied part of [judgment creditor's] judgment" against him.  The Court thus granted the judgment creditor a lien against the judgment debtor's interest in the real estate. 

The debtor claimed that he had no interest in the real estate because he did not actually financially contribute to the purchase, but the purchase agreement listed him as a tenant in common.  In arriving at his decision, Magistrate Judge also addressed the law of contribution.       

Mortgage Liens Survive Chapter 7 Bankruptcy Discharge, Allowing In Rem Foreclosures

Lesson. Although a Chapter 7 bankruptcy discharge eliminates personal liability for a mortgage loan, a discharge does not erase the debt or the mortgage lien. This means that borrowers will not be on the hook for the money, but lenders still can sue to foreclose the mortgage. Discharged debtors still can lose their property.

Case cite. Mccullough v. Citimortgage, 70 N.E.3d 820 (Ind. 2017).

Legal issue. Whether a discharge in bankruptcy precludes a mortgage foreclosure action.

Vital facts. The Borrowers entered into a loan secured by a mortgage on their home. They later defaulted for a failure to make payments when due. They filed a Chapter 13 bankruptcy case that was converted to a Chapter 7. The Borrowers’ debts were discharged in the Chapter 7 case, which was then terminated.

Procedural history. Lender initiated an in rem foreclosure against the Borrowers and filed a motion for summary judgment. The trial court granted the motion and entered an in rem judgment against the mortgaged property. The Borrowers appealed all the way to the Indiana Supreme Court.

Key rules.

A Chapter 13 is a reorganization type bankruptcy in which the debtor’s assets generally are not surrendered or sold. The debtor instead “pays his creditors as much as he can afford over a three or five-year period.”

A Chapter 7 is a liquidation type bankruptcy in which the debtor generally surrenders his assets and in exchange is relieved of his debts.

A Chapter 7 discharge eliminates a homeowner’s personal liability for a mortgage loan. But a discharge has “has no bearing on the validity of the mortgage lien.” A lender’s right to foreclose on the mortgage survives.

Holding. The Indiana Supreme Court affirmed the summary judgment in favor of Lender and against the Borrowers.

Policy/rationale. The Borrowers in Mccullough asserted that the bankruptcy discharge effectively negated the debt and, as a result, Lender could no longer foreclose. However, a mortgage loan has “two different but interrelated concepts, namely: the loan due on the mortgage as evidenced by the Note, and the lien on the property as evidenced by the Mortgage.” A bankruptcy discharge “removes the ability” of a lender to collect against the borrower individually (in personam liability), but liens (in rem rights against property) remain enforceable. In Mccullough, the Supreme Court found that the Borrowers were protected from personal liability as to Lender’s debt, but the mortgage lien was enforceable as an in rem action against the Borrowers’ real estate, for which there remained an outstanding lien balance. Thus the debt survived the bankruptcy. Only the Borrowers’ personal obligation to pay it went away.

Related posts.

Indiana Follows The Lien Theory Of Mortgages

Indiana Deficiency Judgments: Separate Action Not Applicable

What Is Indiana's Definition Of A Lien?

I frequently represent creditors and lenders, as well as their mortgage loan servicers, in contested mortgage foreclosure cases. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Language In Deed Overcomes Presumption Of Tenants By The Entireties Ownership, Allowing Judgment Lien To Attach

Lesson. Indiana law presumes that spouses own real estate as “tenants by the entirety.” In limited instances, however, the presumption can be overcome based upon language in the deed reflecting an intention to establish a different form of ownership.

Case cite. Underwood v. Bunger, 70 N.E.3d 338 (Ind. 2017)

Legal issue. Whether the language in the subject deed was sufficiently clear to overcome the presumption of ownership of tenants by the entirety.

Vital facts. In 2002, the owner of the subject real estate conveyed the property to the new owners through a warranty deed that contained this clause: “[Grantor] conveys and warrants to [Underwood], of legal age, and [Kinney] and [Fulford], husband and wife, all as Tenants-in-Common.” In June 2014, a six-figure damages judgment was entered against Underwood and Kinney. In November 2014, Kinney passed away but remained married to Fulford until his death.

Procedural history. In 2015, Underwood filed an action for partition to sell the real estate and distribute the proceeds, presumably to satisfy, at least in part, the judgment. Underwood claimed that she, Kinney and Fulford owned the real estate as three tenants in common. Kinney’s Estate claimed that it did not own the property and that Kinney’s interest had instead passed to Fulford, his spouse, based upon tenants by the entirety ownership. The trial court agreed with the Estate and concluded that the Kinney/Fulford marital unit was a single tenant in common with Underwood. As such, the judgment lien did not attach to Fulford’s one-half interest because the judgment was only against Kinney (and Underwood), not Fulford. Underwood appealed all the way to the Indiana Supreme Court, which issued the opinion that is the subject of today’s post.

Key rules.

The following prior post provides context for today’s submission: Execution Upon Indiana Real Estate Owned As “Tenancy By The Entireties.”

Under Indiana common law, “conveyance of real property to spouses presumptively creates an estate by the entireties.” However, the presumption “can be overcome if the instrument of conveyance reflects an intention to create some other form of concurrent ownership.”

These rules have now been codified. The operative statute is Ind. Code 32-17-3-1. The key language related to rebutting the presumption is in subsection (d)(2):

if it appears from the tenor of a contract described in subsection (a) that the contract was intended to create a tenancy in common; the contract shall be construed to create a tenancy in common.

In interpreting subsection (d)(2), the Supreme Court in Underwood articulated the following test: “in giving a fair reading to the whole instrument, we will find the presumption is rebutted if its terms reasonably reflect the parties’ intention to establish a different form of tenancy.”

Holding. The Supreme Court reversed the trial court and the Indiana Court of Appeals, which had affirmed the trial court. The Court concluded that the language in the deed specifying that the three grantees, two of whom were married, shall take the real estate “all as Tenants-in-Common" rebutted the presumption.  


The Court felt that the phrase in the deed “all as Tenants-in-Common” showed the parties’ intent to create a tenancy in common among all three grantees. Specifically, the word “all” established that the grantor did not view “Husband and Wife” as a single entity.

    Judgment lien. The main reason I’m writing about Underwood is that the case illustrates the impact of a judgment lien in the context of real estate held by tenants by the entireties vs. tenants in common. The Court found that the interest of Kinney, one of the two judgment debtors, passed to his Estate. Thus the Estate’s one-third share of the partition sale proceeds should go to satisfy the judgment because the judgment lien attached to that third. On the other hand, Fulford, the surviving spouse, would not enjoy the tenancy by the entireties spousal exemption for half of the sale proceeds – only a third. Although the Supreme Court did not address the practical impact of the case, I’m guessing that Underwood’s goals included ensuring that two-thirds (instead of one-half) of the sale proceeds were applied to pay down (or off) the judgment and that Kinney, through his Estate, paid his pro rata share of the debt.
I frequently represent judgment creditors and lenders, as well as their mortgage loan servicers, entangled in lien priority and title claim disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Publishing Notices Of Sheriff's Sales In Indiana

We’ve got a sheriff’s sale next month, in connection with a commercial foreclosure case, in Montgomery County. There, like many counties in Indiana, the sheriff’s office contracts with a third-party company that serves as the sheriff’s agent for purposes of preparing for, and holding, sheriff’s sales. In Montgomery County, the vendor is SRI. Other counties use Lieberman Technologies. Many county sheriff’s departments, such as Marion County’s here in Indianapolis, still run all aspects of the sale internally, however.

Check county rules. Don’t forget that local rules, customs and practices control (pardon any outdated links from that 2010 post). For our sale next month, Montgomery County requires the plaintiff/lender to handle the pre-sale notice publication process. Many if not most counties will cover publication, and then invoice you for the costs. The need for us to do this particular step caused me to dust off the applicable statute to make sure we published the sale notice properly, and timely.

Publication laws. The three critical elements of publication are: (1) advertising in a newspaper circulated in the county where the real estate is located, (2) running the ad for three successive weeks and (3) initiating the first ad at least thirty days befor the sale. Here is the pertinent statutory provision, Ind. Code 32-29-7-3(d):

Before selling mortgaged property, the sheriff must advertise the sale by publication once each week for three (3) successive weeks in a daily or weekly newspaper of general circulation. The sheriff shall publish the advertisement in at least one (1) newspaper published and circulated in each county where the real estate is situated. The first publication shall be made at least thirty (30) days before the date of sale.

Notice to owner. Section 3(d) goes on to require that:

at the time of placing the first advertisement by publication, the sheriff shall also serve a copy of the written or printed notice of sale upon each owner of the real estate. Service of the written notice shall be made as provided in the Indiana Rules of Trial Procedure governing service of process upon a person.

(See, Service of Process” Fundamentals for the Plaintiff Lender.) My understanding is that, in most instances when a sheriff or its agent requires the plaintiff/lender to handle publication, the sheriff or agent still will perfect service upon the owner themselves. Normally, this is done by certified mail or hand delivery. By the way, if counsel represents the owner, I always include notice to the attorney.
I represent lenders, as well as mortgage loan servicers, in connection with foreclosure cases and sheriff’s sales. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

From Marion County (Indianapolis) Civil Sheriff's Office: Judgment Assignment and Costs Forms

This post essentially is a copy and paste of Laurie Gipson's email from last Friday.  You can download the two forms by clicking each hyperlink:


Good afternoon!

Attached, please find two forms to be included with your sale documents beginning with the February 21, 2018 Sheriff Sale and all future Sheriff Sale dates.

The first form is the Assignment of Judgment Cover Sheet that should accompany each individual sale #. The specific language and format that we have provided you in the Assignment of Judgment Cover Sheet may be incorporated within the filed Assignment of Judgment and/or may be attached as a cover sheet with a copy of the filed Assignment of Judgment for verification of the same. This format will eliminate any confusion that may exist within our interpretation, allowing us clear documentation of your intent and help us all to be firm, fair and consistent across the board.

The second form is the Added Costs Sheet which should be used for your added costs for each individual sale #.

All bids; tax clearance forms; cost checks; added costs sheets (to include bid justification); assignment of judgments; and assignment of judgment cover sheets are due in our office no later than 3:00 p.m. on the day prior to the respective Sheriff Sale date.

Deeds; Clerk Returns; Sales Disclosure Forms; recording checks; and removal checks are due in our office no later than 3:00 p.m. the Friday after the respective sale.

Please pass this information along to all it my concern.

If you have any questions, please feel free to contact us.

Thank you for your cooperation,

Laurie Gipson
Marion County Sheriff’s Office
Judicial Enforcement Division

Real Estate/Mortgage Foreclosures:  (317) 327-2450

Redemption From Tax Sale - Interest On Surplus Now 5%, Not 10%

In 2010, I posted Indiana Tax Sales, Part II: Redemption, which discussed how parties can redeem real estate from a tax sale.  Lenders who lose mortgaged property at a tax sale have the ability to redeem, and one of the issues always is amount of money needed to do so.  My prior post includes a discussion of the amounts needed to redeem.  One of the elements is interest on any surplus.  The purpose of today's post is advise that, as of July 1, 2014, the per annum interest redeemers must pay on the tax sale surplus is 5%.  Previously, the amount was 10%.  So, it's now less expensive to redeem.   

To review the entire Indiana statutory provision applicable to the amount of money required for redemption, click on Ind. Code 6-1.1-25-2

Enjoy the Patriots loss on Sunday....


I often represent lenders, as well as their servicers, entangled in loan-related litigation, including disputes arising out of tax sales. If you need assistance with such a matter, please call me at 317-639-6151 or email me at 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 to your left.


Despite Judgment Debtor's Failure To Object, IRA Exempted From Garnishment

Lesson.  Indiana law generally protects retirement accounts from post-judgment collection.

Case cite.  Dumka v. Erickson, 70 N.E.3d 828 (Ind. Ct. App. 2017).

Legal issue.  Whether a judgment debtor’s failure to assert a statutory exemption from garnishment necessarily means that the exemption is waived.

Vital facts.  Judgment creditor filed a motion for proceedings supplemental against judgment debtor and named as a garnishee-defendant the institution that held funds in an “inherited traditional individual retirement account” (IRA). The judgment debtor inherited the IRA from her deceased husband. At the hearing on the motion, the debtor appeared pro se (without an attorney) and did not contest the creditor’s efforts to liquidate the IRA.

Procedural history.  Even though the judgment debtor failed to object to the garnishment or to otherwise assert an exemption, the trial court denied the judgment creditor’s motion. The creditor appealed.

Key rules.

Ind. Code 34-55-10-2(c)(6) provides that non-spousal inherited IRAs are not exempt from garnishment but that IRAs inherited by surviving spouses are exempt.

Generally, exemptions must be asserted by the debtor. However, the Indiana Supreme Court has held that, because exemptions “exist to give life to a constitutional right [sheltering certain property and income from attachment],” there should be exceptions to this general rule “consistent with fairness and practical realities.”

Trial courts may take “judicial notice” of statutes at any stage in a proceeding. Ind. Evid. Rule 201(b-d).

Holding.  The Indiana Court of Appeals affirmed the trial court.


A key factor in the Court’s decision was that the judgment debtor was unrepresented by counsel. The undisputed facts established that “the IRA is lawfully exempt from attachment,” and the trial court properly took judicial notice of the exemption. Since the trial court’s order complied with the evidence and the law, the Court of Appeals affirmed the decision.

Related posts.


I frequently represent creditors and debtors in business-related collection actions. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.


Absence Of Legal Description Dooms Mortgage In Lien Priority Dispute

Lesson. First, if you are in the business of drafting and recording mortgages, make sure they contain legal descriptions of the subject real estate.  Common (street) addresses technically are inadequate to provide notice of a lien.

Case cite.  U.S. Bank v. Jewell, 69 N.E.3d 524 (Ind. Ct. App. 2017).

Legal issue.  Whether the omission of a legal description of the real estate rendered the mortgage insufficient to charge a competing mortgagee with notice.

Vital facts.  This case involved a mortgage lien priority dispute and dealt with Indiana’s bona fide purchaser (BFP) doctrine.  Jewell held a mortgage that it recorded but that failed to contain a legal description.  The mortgage only identified the common address a/k/a the street address.  When the owner later sold the real estate, the buyer obtained financing from a lender, which conducted a title search before ultimately making the mortgage loan.  The evidence established that the lender’s title search did not disclose Jewell’s mortgage.

Procedural history. Jewell filed suit to foreclose its mortgage and named the lender.  The lender filed a motion for summary judgment claiming that it was a bona fide purchaser and was entitled to senior lien status.  The trial court denied the motion.  The lender appealed.

Key rules.  The Jewell opinion contains an excellent summary of Indiana’s rules, exceptions and tests related to the bona fide purchaser doctrine.  The opinion also provides a really good analysis of Indiana’s summary judgment standard, and related burdens of proof, as applicable to our BFP laws. Without regurgitating all of the law from the opinion (see other posts noted below), here are some of the key rules in play in Jewell:

1. Prospective purchasers of real estate must search the grantor-grantee and the mortgagor-mortgagee indexes for the period that the mortgagor holds title.

2. On the matter of “constructive” notice, “a mortgage must be recorded [in the chain of title] in the proper county and must contain an accurate legal description of the property.”

3. In the absence of contructive notice, there is Indiana law supporting the notion that, in certain circumstances, subsequent purchasers may be charged with “inquiry” notice, sometimes called “implied or inferred” notice:

Notice is actual when notice has been directly and personally given to the person to be notified.  Additionally, actual notice may be implied or inferred from the fact that the person charged had means of obtaining knowledge which he did not use.  Whatever fairly puts a reasonable, prudent person on inquiry is sufficient notice to cause that person to be charged with actual notice, where the means of knowledge are at hand and he omits to make the inquiry from which he would have ascertained the existence of a deed or mortgage.  Thus, the means of knowledge combined with the duty to utilize that means equates with knowledge itself.  Whether knowledge of an adverse interest will be imputed in any given case is a question of fact to be determined objectively from the totality of the circumstances.

Holding. The Indiana Court of Appeals reversed the trial court and granted summary judgment for the lender.

Policy/rationale. Jewell dealt mainly with the inquiry notice matter.  Jewell contended that, had the lender searched the mortgagor-mortgagee index, it would have discovered Jewell’s mortgage.  However, the lender submitted affidavits establishing that it conducted such a search, which did not reveal the Jewell mortgage due to the omission of the legal description.  The problem was that Jewell merely argued that the common address was sufficient to defeat the summary judgment motion.  Jewell’s failure to submit evidence to prove its theory was the deciding factor.

Related posts.

Indiana Court Discusses Whether A Lender Was A “Bona Fide Mortgagee”

BFP Defense Denied, And IRS Lien Prioritized

What Does “Chain Of Title” Mean?
I frequently represent lenders, as well as their mortgage loan servicers, entangled in lien priority and title claim disputes.  If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Hyper Technical Error In Debtor’s Name Dooms Creditor’s UCC Financing Statement/Lien

Lesson.  If the debtor is an individual, use the spelling of the name as listed on his or her Indiana driver’s license when filing the UCC financing statement.    

Case citeIn re: Nay, 563 B.R. 535 (S.D. Ind. 2017) (pdf).

Legal issue.  Whether a creditor’s inadvertent omission of the letter “t” from the debtor’s middle name invalidated its UCC financing statement.

Vital facts.  In 2014, Plaintiff Mainsource held a blanket security interest in Debtor’s personal property.  In 2015, Leaf loaned money to Debtor to purchase two Dump Wagons (equipment) and filed UCC financing statements with the Indiana Secretary of State to perfect liens on the Wagons.  The UCCs identified the Debtor’s name as “Ronald Mark Nay.”  The Debtor’s name listed on his most recent Indiana driver’s license, however, was “Ronald Markt Nay.”    

Procedural history.   Nay arises out of an adversary proceeding, Mainsource Bank v. Leaf Capital, a lien priority dispute.  The U.S. Bankruptcy Court for the Southern District of Indiana ruled on a motion for judgment on the pleadings filed by Plaintiff Mainsource seeking to invalidate Leaf’s competing security interest.    

Key rules

Ind. Code 26-1-9.1-503(a), a lengthy statutory provision, outlines when a financing statement “sufficiently provides the name of the debtor.”

Ind. Code 26-1-9.1-506 deals with the effect of errors or omissions in financing statements.  The key concept is whether the mistake was “seriously misleading.” 

Much of the Nay opinion involved an analysis of Ind. Code 26-1-9.1-506(c), which is a safe harbor provision that allows creditors to overcome “seriously misleading” mistakes if the subject financing statement “was otherwise discoverable by searching under the Debtor’s correct name using the standard search logic promulgated by the Indiana Secretary of State.”      

Holding.  Judge Basil H. Lorch III granted the pending motion and found that Plaintiff Mainsource was entitled to judgment as a matter of law.  Leaf’s security interest was unperfected.  Mainsource held the first priority security interest in the Dump Wagons.


The difference between “Mark” and “Markt”, especially in a middle name, would not seem to be a “seriously misleading” error.  However, under Section 503(a), if the debtor has a driver’s license, a financing statement must provide “the name of the individual which is indicated on the driver’s license.”  By definition, therefore, Leaf’s misspelling was seriously misleading.

The Court addressed whether the financing statement was nevertheless discoverable using “standard search logic.”  Maybe it was.  But, in the end, and even after noting that the result seemed “harsh,” the Court still felt compelled to strictly adhere to the operative statutory language requiring the name of the Debtor to be the name set out on his Indiana driver’s license.    

Related posts.     

What Is A “Purchase Money Security Interest”?


I often represent parties in commercial loan enforcement cases and lien priority disputes.  If you need assistance with a similar matter, please call me at 317-639-6151 or email me at You also can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted to your left.

Indiana Federal Court Concludes That Servicer Is Not A Debt Collector and Did Not Violate The IHLPA

Lesson. Although servicers usually are not the actual owners of residential mortgage loans, they nevertheless may be the proper party to resolve the foreclosure action or to negotiate a settlement. Also, unless the debt was in arrears when the servicer obtained its role, the Fair Debt Collection Practices Act will not apply to communications by the servicer.

Case cite. Turner v. Nationstar, 2017 U.S. Dist. LEXIS (S.D. Ind. 2017) (pdf).

Legal issues. Whether the defendant loan servicer was a “debt collector” subject to the Fair Debt Collection Practices Act (“FDCPA”), specifically 15 U.S.C. 1692e(2)(A). Also, whether the defendant committed a “deceptive act” in violation of the Indiana Home Loan Practices Act (“IHLPA”), Ind. Code 24-9-1 et seq.

Vital facts. For background, click on last week’s post, which also discussed Turner. The borrower claimed that, during a mediation conference, the servicer committed a deceptive act by leading the borrower to falsely think that the servicer owned the loan “such that [borrower] believed he was bargaining with the owner of the loan when he agreed to exchange his counterclaim against [servicer] for a loan modification.” The borrower also alleged that, after the entry of the state court foreclosure judgment, the servicer wrongfully sent the borrower account statements with a debt amount different from the judgment amount.

Procedural history. The defendant servicer filed a motion for summary judgment. Judge Young’s ruling on the motion is the subject of this post.

Key rules.

The IHLPA at I.C. 24-9-2-7(1)(a) defines a deceptive act as:

(1) an act or a practice as part of a mortgage transaction . . . , in which a person at the time of the transaction knowingly or
(A) makes a material misrepresentation; or
(B) conceals material information regarding the terms or conditions of the transaction. . . .

For the FDCPA to apply, “two threshold criteria must be met:” (1) the defendant must be a “debt collector” and (2) the communication by the debt collector forming the basis of the claim “must have been made in connection with the collection of any debt.” 15 U.S.C. 1692a(6), c, e and g.

A “debt collector” is:

any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

Loan servicing agents are not “debt collectors” unless the debt was in arrears at the time the servicer obtained that role.

Holding. The Southern District of Indiana granted summary judgment for the servicer on the IHLPA and FDCPA claims brought by the borrower.


As to the IHLPA action, the Court concluded that the servicer did not conceal “material” information about its role/status because the servicer established that it was the proper party to resolve the foreclosure action. In other words, whether the servicer was or was not the owner of the loan was immaterial in the Court’s view.

Regarding the FDCPA claim, the Court found that the defendant was the agent of the original creditor and acted as the servicer “well before [the loan] was in default.” As such, the servicer did not meet the definition of a “debt collector” under the FDCPA.

Related posts.

Click on the "Fair Debt Collection Practices" category to your right

Loan Servicers As Plaintiffs In Foreclosure Cases (also the Turner dispute)


I frequently represent lenders, as well as their mortgage loan servicers, entangled in consumer finance litigation. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Another Indiana Decision Concerning RESPA: Mixed Result For Servicer

Lesson. In defending RESPA QWR cases, first examine whether the subject letter is in fact a QWR. Next, assess whether the borrower suffered any actual damages arising out of the alleged failure to respond.

Case cite. Turner v. Nationstar, 2017 U.S. Dist. LEXIS (S.D. Ind. 2017) (.pdf).

Legal issue. Whether the lender/servicer was entitled to summary judgment on the borrower’s three theories for RESPA violations.

Vital facts. The procedural history and the underlying facts of Turner are quite involved. For purposes of today’s post, which focuses on the REPSA claims, the borrower sent three letters (alleged “QWRs,” see last week’s post) to the defendant’s lawyer seeking information. Letter 1 asked for the name of the owner of the loan. The defendant (a residential mortgage loan servicer) responded to that letter by identifying both the servicer and the owner of the loan. Later, the borrower, following the entry of a state court foreclosure judgment and a denial of a loan modification request, sent Letter 2 asking for the “amount of the proposed monthly payment” under a requested loan modification that had been denied. That information was never provided. The third alleged QWR, Letter 3, surrounded an inquiry into payments the borrower made that had only been partially refunded, despite a request for a full refund. The servicer did not respond to that letter either.

Procedural history. The parties ultimately entered into a Home Affordable Modification Agreement that vacated the foreclosure judgment. Despite the settlement, the borrower filed suit against the servicer in federal court alleging, among other things, violations of the Real Estate Settlement Procedures Act (“RESPA”). The servicer filed a motion for summary judgment that led to Judge Young’s opinion, which is the subject of today’s post.

Key rules.

  1. Borrowers may recover actual damages, including emotional distress, caused by a failure to comply with a Section 2605(e) qualified written request, per Section 2605(f)(1)(A).
  2. 12 U.S.C. 2605(e)(1)(B) defines a QWR. Case law has interpreted that provision to include “any reasonably stated written request for account information.” However, the duty to respond “does not arise with respect to all inquiries or complaints from borrowers to servicers.” The focus is on the servicing of the loan, not on the origination of the loan or modifications to the loan.
  3. 12 U.S.C. 2605(e)(1) and (2) deal with the timing of certain responses to certain QWRs. For example, Section (e)(2)(C)(i) sets a thirty-day deadline for certain servicing requests related to loan mods. See also 12 C.F.R. 1024.41 regarding timing for loss mitigation requests.
  4. 12 U.S.C. 2605(k)(1)(D) requires a servicer to provide within ten business days “the identity, address, and other relevant contact information about the owner or assignee of the loan” when requested by the borrower.

Holding. The Southern District of Indiana granted in part and denied in part the servicer’s summary judgment motion. The servicer prevailed on the Section 2605(k)(1)(D) and Section 2605(e)(2) claims about Letters 1 and 2. The Court denied summary judgment on the Section 2605(e)(1) claim for Letter 3.

Policy/rationale. As to Letter 1, the Court noted that the faulty timing of the response to the QWR did not cause actual damages. The distress alleged instead arose out of other factors in the borrower’s life. Letter 2 concerning loss mitigation options did not qualify as a QWR in the first place. Information related to a failed loan mod falls outside of RESPA. However, the Court concluded that Letter 3, a letter request seeking information about the servicer’s refund of payments made to stave off foreclosure, was a viable QWR because the letter involved the servicing of the loan. Since the servicer never responded to that letter, the claim regarding Letter 3 passed the summary judgment stage, although the opinion did not address the matter of damages.

Related posts.


I frequently represent lenders, as well as their mortgage loan servicers, entangled in consumer finance litigation. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

7th Circuit Rejects Alleged RESPA Violations Based Upon Inadequate QWR

Lesson. Careful compliance by mortgage servicers should lead to a favorable summary judgment rulings in RESPA cases brought by borrowers.

Case cite. Perron v. JP Morgan Chase, 845 F.3d 852 (7th Cir. 2017).

Legal issue. Whether the lender violated the Real Estate Settlement Procedures Act (RESPA), specifically the statutory duty to respond to a “qualified written request” from the borrower.

Vital facts. The lender erroneously paid the wrong insurer for homeowner’s coverage using funds from the borrowers’ escrow account. However, the borrowers switched insurers without informing the lender. Upon learning of the error, the lender paid the new insurer and informed the borrowers that the prior insurer would be sending a refund. The lender requested that the borrowers remit the refund to the lender so the depleted escrow account could be replenished, but the borrowers failed to do so. As a result, the lender adjusted the monthly mortgage payment to make up for the shortfall, but the borrowers failed to pay the higher amount and went into default. Instead of curing, the borrowers sent a RESPA “qualified written request” to the lender and demanded reimbursement of their escrow. The lender responded to the requests but still got sued.

Procedural history. The borrowers filed an action in federal court alleging that the RESPA responses were inadequate and that they had suffered 300k in damages. The district court granted summary judgment to the lender, and the borrowers appealed to the Seventh Circuit.

Key rules. The Perron opinion provides a great summary of the QWR duties in RESPA, 12 U.S.C. 2601-2617. Here are some of the key legal principles outlined by the Court:

  1. Generally, the statute “requires mortgage servicers to correct errors and disclose account information when a borrower sends a written request for information” known as a “qualified written request” or QWR.
  2. RESPA gives borrowers a cause of action for actual damages incurred “as a result of” a failure to comply with the duties imposed on servicers of mortgage loans.
  3. If borrowers prove the servicer engaged in a “pattern or practice of noncompliance,” then statutory damages of up to 2k are available. Also, successful plaintiffs may recover attorney fees.
  4. RESPA does not impose a duty to respond to all borrower inquiries or complaints. The statute “covers only written requests alleging an account error or seeking information relating to loan servicing.”
  5. “Servicing” means “receiving … payments from a borrower pursuant to the terms of the loan … and making the payments … with respect to the amounts received from the borrower as may be required by the terms of the loan.” 12 U.S.C. 2605(i)(3). A QWR “can’t be used to collect information about, or allege an error in, the underlying mortgage loan.”
  6. Upon receipt of a valid QWR, RESPA requires the servicer to take the following action “if applicable”: (A) make appropriate corrections in the account, (B) after investigation, provide a written explanation or clarification explaining why the account is correct, (C) provide the information requested by the borrower or explain why it is unavailable and (D) provide the contact information of a servicer employee who can provide further assistance. 12 U.S.C. Sec 2605(e)(2).

Holding. The Seventh Circuit affirmed the district court’s summary judgment for the lender.

Policy/rationale. In Perron, the lender “almost perfectly” complied with its RESPA duties by providing a complete account and payment history, as well as a complete accounting of the escrow payments. The only area where the lender fell short was its failure to identify one of the insurers at issue, but the Court noted that the borrowers already had that information. The Court concluded that the borrowers were not harmed by an uncorrected account error or lack of information. “Simply put, [the borrowers] weren’t harmed by being in the dark because the lights were on the whole time.”

Related posts.

Borrower’s Claims For Violations of RESPA, TILA, FDCPA, RICO And FPRAM, Together With Claims for Various Torts, Dismissed
I frequently represent lenders, as well as their mortgage loan servicers, entangled in consumer finance litigation. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Marion County (Indianapolis) Civil Sheriff's Office Changes

Foreclosure sales for Indianapolis properties occur through the Marion County Civil Sheriff’s Office. We recently received word of a handful of changes within the department.

First, Tammy Pickens is leaving at the end of the year. Tammy was a pro, was great to deal with and will be missed.

Second, Beth Ash, Rachel Winkler and Laurie Gipson will be the contacts for sheriff’s sales going forward. Here is their contact information:

Laurie Gipson

Beth Ash

Rachel Winkler

Laurie’s email about these changes emphasized that parties should include all three contacts in any emails. Otherwise, there could be a delay of questions, concerns and/or documents being received.

Click here for the sheriff's Real Estate Sales website, with relevant links/forms.  As I’ve said before, there is no better run County agency than our civil sheriff’s office. The staff is always professional, courteous and prepared.

Happy Thanksgiving.

Indiana Trial Rule 9.2(A) Officially Amended But Uncertainty Remains

Back in May, I submitted this post: Claim “On An Account” Vs. Enforcement Of A Loan: Comments On Proposed Amendment to Indiana Trial Rule 9.2(A). One of my points was that the proposal left open the question of whether the rule applied solely to accounts, or to both loans and accounts. Indeed my post doubled as a submission to the Rules Committee recommending, among other things, language clarifying that the new rule does not (and should not) apply to loans, other than perhaps credit card debt.

New rule. On October 31st, the Indiana Supreme Court entered its official Order Amending Indiana Rules of Trial Procedure that included amendments to Rule 9.2. Here is the order signed by Chief Justice Rush. Regrettably, the amendment did not incorporate our proposed limiting language or otherwise resolve the matter of whether a plaintiff must file the new affidavit of debt in mortgage foreclosure cases. For reasons spelled out in my May 11th post, a strong argument still can be made that the affidavits only need to be filed with complaints articulating an action “on account” and that a mortgage foreclosure, or any other action to enforce a promissory note, is no such action. Admittedly, however, the situation remains clouded.

Consumer debts only. One critical change the Supreme Court made from the proposed rule was to limit the pleading requirement in Section (A)(2) to consumer debts. The rule’s requirement for the new affidavit applies only “if … the claim arises from a debt that is primarily for personal, family, or household purposes…” This is a common phrase in the law that identifies consumer claims and that excludes commercial/business debts. See my 12/18/09 and 11/16/06 posts. Thus the Supreme Court’s insertion of that language definitively means that Rule 9.2(A)(2) does not apply to commercial foreclosures or to the collection of business debts.

Effective date. It will be interesting to see how lawyers and judges interpret and apply Rule 9.2(A)(2), which is brand new. Again, and meaning no disrespect whatsoever, I think the Supreme Court left the scope of that subsection open for debate. We have time to digest this further as the amendment does not take effect for over two years - until January 1, 2020.

How Long Until The Sheriff’s Sale? Marion County (Indianapolis) Example

A common question we get from clients and out-of-state counsel is: when will the sheriff’s sale be? The answer depends upon a couple key variables: (1) the date the court enters the judgment and (2) the particular rules and customs of the local sheriff’s office.

Judgment First

Since Indiana is a judicial foreclosure state, there cannot be a foreclosure sale until after the court enters a judgment and decree. A plaintiff lender cannot praecipe for a sale until that occurs. From that point, depending upon how quickly the praecipe is filed, on average the sale will occur in 2 to 3 months.


The post-judgment delay initially arises out of basic administrative issues surrounding the handling and processing by the clerk’s and sheriff’s offices of paperwork. But the critical matter is the thirty-day statutory publishing/notice requirement. Ind. Code 32-29-7-3(d) says:

Before selling mortgaged property, the sheriff must advertise the sale by publication once each week for three (3) successive weeks in a daily or weekly newspaper of general circulation. The sheriff shall publish the advertisement in at least one (1) newspaper published and circulated in each county where the real estate is situated. The first publication shall be made at least thirty (30) days before the date of sale.

Marion County Example

The Marion County Civil Sheriff’s Office recently circulated the sale cut-off date list for 2018.  Here it is.  The noted “clerk’s cut-off” date is the deadline to praecipe for the sale in order to be slotted for the next sale date. Marion County, as with most if not all Indiana counties, have sheriff’s sales monthly, usually on a set day. For example, Marion County sales happen on the third Wednesday of the month.

Using the 2018 cut-off date list, here are a couple illustrations for the April 18, 2018 sale date. If judgment were entered on March 7th and if you were able to praecipe for sale the same day, the sale would be April 18th – 70 days. If, however, judgment were entered one day later, March 8th, then the sale would not be until May 16th – 98 days. Averaging those two figures results in 84 days. In most counties other than Marion, I would expect the post-judgment “time to sale” average to be slightly less.

2-3 Months

So, the 2-3 month rule of thumb essentially stems from the notice requirement and the time to process all the paperwork. Many counties have far few sales than Indianapolis, which holds hundreds each month. Some counties have less stringent deadlines and may be able to hold a sale within forty-five days of the judgment date.

In Indiana, A Judicial Foreclosure State, There Is No Post-Sale Right Of Redemption

From time to time, out-of-state clients and lawyers wonder whether and to what extent a borrower (mortgagor) has a right of redemption in Indiana.  As I prepare to head out with the family for Fall Break next week, I thought I'd provide links to two prior posts discussing what redemption means and when the right ends in our state:  

I hope to post new material the week of October 23rd.  


Did Indiana’s Doctrine Of Merger Apply To Infidelity Clause?

Lesson. Today’s post is not about a foreclosure case. Nevertheless, the case provides insight into why lenders should have “anti-merger” clauses in their deeds-in-lieu of foreclosure. Without anti-merger language, the lender’s prior mortgage may be extinguished by the subsequent deed, jeopardizing the lender’s lien in the real estate. For more, see the “related posts” below.

Case cite. Hemingway v. Scott, 66 N.E.3d 998 (Ind. Ct. App. 2016).

Legal issue. Whether a prior contract relating to rights in real estate merged into a subsequent deed so as to extinguish the contract.

Vital facts. Scott deeded real estate that he owned individually to himself and his girlfriend, Hemingway, as joint tenants. Immediately before the conveyance, the two signed a contract in which Hemingway agreed that, if she cheated on Scott, she would re-convey her interest in the real estate to him. The contract was not recorded with or referenced in the deed, however. Hemingway later was impregnated by someone other than Scott, gave birth to a child and moved out of the house.

Procedural history. Scott sought a court-ordered conveyance of the real estate back to him. The trial court sided with Scott, concluded that Hemingway breached the contract and ordered Hemingway to deed the real estate back to Scott. Hemingway appealed.

Key rules.

  1. The Indiana Court of Appeals in Hemingway cited to this general rule: “[w]hen two parties have made a simple contract for any purpose, and afterwards have entered into an identical engagement by deed, the simple contract is merged in the deed and becomes extinct. This extinction of a lesser in a higher security, like that extinction of a lesser in a greater interest in land, is called merger.”
  2. The so-called “doctrine of merger” says that “in the absence of fraud or mistake, all prior or contemporaneous negotiations or executory agreements, written or oral, leading to the execution of a deed are merged therein by the grantee’s acceptance of the conveyance in performance thereof.”
  3. However, rights or obligations that are “collateral or independent” survive the deed “because their performance is not necessary to the conveyance” and, as such, “there is no need to merge them.”
  4. Indiana’s test of merger is the express or implied intention of the parties. “To ascertain the parties’ intent, words and phrases of the contract cannot be read in isolation but must be read in conjunction with the other language contained in the contract.”

Holding. The Indiana Court of Appeals affirmed the trial court and concluded that the doctrine of merger did not apply. Hemingway was required to convey back to Scott all of her right, title and interest in the real estate.

Policy/rationale. The contract executed the day of the deed required the contract to be attached to the deed. Even though that didn’t happen, the language was evidence of the parties’ clear intent for the contract to survive the deed. Further, the obligation of fidelity was not one whose performance was needed for the completion of the conveyance. Instead, the obligation was “prospective in nature” and addressed conduct that would trigger a remedy, namely re-conveyance of the real estate. The contract therefore survived the deed.

Related posts.


I represent parties in commercial mortgage foreclosures and workouts. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at You also can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted to your left.

Indiana Code 32-30-10.5-8.6: Can Foreclosing Lenders Obtain Provisional Court Orders Requiring Borrowers To Make Monthly Payments?

Lesson. In Indiana residential mortgage foreclosure cases, under certain circumstances a court can require a borrower to make monthly payments during the pendency of the foreclosure action. Typically, this happens when the parties are discussing a loan modification or similar workout. Before entering such an order, however, the court must first determine the borrower’s ability to pay.

Case cite. Yeager v. Deutsche Bank, 64 N.E.3d 908 (Ind. Ct. App. 2016).

Legal issue. Whether the trial court abused its discretion by failing to hold a hearing or otherwise obtain data to determine the borrowers’ ability to make monthly payments before it issued its provisional order.

Vital facts. Yeager was a residential mortgage foreclosure case. Borrowers defaulted under a promissory note and mortgage, and lender filed suit to foreclose. During the suit, lender filed a “motion for payment of mortgage, taxes and insurance premiums” in which lender sought a “provisional order,” essentially requiring the borrowers to make their monthly mortgage payment.

Procedural history. The trial court granted lender’s motion without a hearing and before the borrowers even filed a response. The borrowers appealed.

Key rules.

Yeager involved Ind. Code § 32-30-10.5 entitled “Foreclosure Prevention Agreements for Residential Mortgages.” This statute was born in 2009 during the Great Recession and has many provisions regulating the residential foreclosure process, including loss mitigation.

The specific section at issue in Yeager was 8.6(b):

(b) During the pendency of an action to which this section applies, regardless of any stay that is issued by the court under section 8.5 of this chapter, if the debtor continues to occupy the dwelling that is the subject of the mortgage upon which the action is based, the court may issue a provisional order that requires the debtor to continue to make monthly payments with respect to the mortgage on which the action is based. The amount of the monthly payment:

    (1) shall be determined by the court, which may base its determination on the debtor's ability to pay; and
    (2) may not exceed the debtor's monthly obligation under the mortgage at the time the action is filed.

Holding. The Indiana Court of Appeals, with one Judge dissenting, reversed the trial court’s ruling and remanded the case back to the trial court for a factual determination of the borrowers’ ability to pay.


The lender contended that a hearing was not required because the provisional order “did nothing more than direct such matters as permitted by statute.” Further, neither the statute nor any procedural rules required a hearing. Finally, the lender asserted that the order did not harm the borrowers. (Subsection [c] of the statute calls for any payments to be held in trust pending a future court order for disbursement.)

The borrowers countered that the trial court entered the order “ex parte” (without the borrowers being present or heard) in violation of due process. The Court’s opinion suggested that the lack of a hearing may not have been the compelling factor. Rather, the error stemmed from the trial court’s failure to conduct, in some fashion, “any inquiry on which to base its determination of the monthly payment prior to issuing the Provisional Order” in violation of 8.6(b)(1) set out above. The record contained no evidence of the borrowers’ current financial situation.

Related posts.

Certain Summonses In Indiana Residential Mortgage Foreclosure Cases Deemed Confidential

Indiana State Courts Cannot Modify (Cram Down) A Mortgage


I have represented lenders, as well as their mortgage loan servicers, in connection with consumer finance litigation. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

8 of 9 Consumer Finance Race-Based Claims Against Servicer Dismissed In Recent Indiana Federal Court Case

Lesson. In Indiana, it is difficult to defend mortgage foreclosure actions based upon the mere assertion of consumer finance statutory violations. To avoid dismissal of the claims, courts commonly require plaintiffs to articulate specific facts.

Case cite. Sims v. New Penn Financial, 2016 U.S. Dist. LEXIS 155241 (N.D. Ind. 2016) (.pdf).

Legal issue. There were several in Sims. This case was more about procedural (pleading) requirements than anything.

Vital facts. Plaintiffs bought a home on a land contract. Plaintiffs later discovered that the land contract seller had stopped paying the mortgage loan on the home. The seller’s lender filed to foreclose. To avoid a sheriff’s sale, Plaintiffs sought to assume the seller’s loan, but the servicer of the loan refused to do so until Plaintiffs brought the loan current. In response, Plaintiffs filed suit in federal court against the loan servicer. The essential premise upon which Plaintiffs based their claim was that the servicer declined the loan assumption because Plaintiffs were African-American.

Procedural history. The defendant mortgage loan servicer filed a Rule 12(b)(6) motion to dismiss Plaintiffs’ complaint. The Sims opinion outlines Chief Judge Philip Simon’s ruling on the motion.

Key rules. Plaintiffs asserted nine consumer finance-related causes of action. I’ll address five of them here.

  1. Fair Housing Act: A claim under the FHA requires an allegation that the servicer “acted with the intent to discriminate or that its actions had a disparate impact on African Americans.” See generally, 42 U.S.C. 3604.
  2. Indiana Deceptive Consumer Sales Act: The IDCSA, Ind. Code 24-4-0.5, has the purpose of encouraging “the development of fair consumer sales practices … and provides that a “supplier may not commit an unfair, abusive, or deceptive act, omission, or practice in connection with a consumer transaction.”
  3. Fair Debt Collection Practices Act: The FDCPA generally “prohibits a debt collector from using certain enumerated collection methods in its effort to collect a ‘debt’ from a consumer.”
  4. Dodd-Frank Wall Street Reform & Consumer Protection Act: The Court noted that although “there is no doubt that Dodd-Frank creates a private cause of action for whistleblowers, courts have been reluctant to find that Dodd-Frank created any other private cause of action.”
  5. Equal Credit Opportunity Act: The ECOA generally prohibits creditors “from discriminating against ‘applicants’ on the basis of race.” 15 U.S.C. 1691(a). And, “if credit is denied or another ‘adverse action’ is taken,” the ECOA “requires creditors to set out its reasons for the action.” An “applicant” is “any person who requests … an extension of credit … including any person who is or may become contractually liable.” 12 C.F.R. 202.2(e).

Holding. The Court granted the servicer’s motion to dismiss on eight of the nine counts asserted by Plaintiffs. The sole count that survived was the ECOA claim. This did not mean that the servicer was liable under that claim – only that Plaintiffs sufficiently pleaded the action so as to notify the servicer of the allegations “and to make the right to relief under the ECOA more than speculative.”


  1. As to the FHA claim, the Court concluded that Plaintiffs alleged no “facts” to support the “vague” allegation that the servicer hindered Plaintiffs’ “efforts to assume the mortgage, because of their race and color.”
  2. Plaintiffs complained that a letter the servicer sent to Plaintiffs omitted language spelling out that the assumption approval was contingent upon Plaintiffs’ ability to reinstate the loan. The Court reasoned that “there is no plausible IDCSA claim here because the complaint pleads no facts to support the notion that [the servicer’s] omission was ‘unfair, abusive, or deceptive’ in any way.” The servicer’s failure to mention one of many requirements for approval could not “reasonably be viewed as unfair, abusive, or deceptive.”
  3. Regarding the FDCPA count, the Court’s rationale was that Plaintiffs’ complaint did not allege a false or misleading representation prohibited under the Act. Further, Plaintiffs were not “consumers” for purposes of the Act because they were never obligated to pay the contract seller’s debt but instead “could walk away from [his] debt at any point.”
  4. The Court dismissed the Dodd-Frank claim for the simple reason that a so-called “private right of action” [see post below] did not exist in this context.
  5. The ECOA cause of action passed the initial test because Plaintiffs fell under the broad definition of “applicants” requesting an extension of credit. Further, the servicer’s rejection of Plaintiffs’ assumption application theoretically “could constitute an adverse action under the ECOA.” The Court cautioned, however, that “it remains to be seen whether [Plaintiffs] can prove an ECOA violation.” 

Related posts.

I have represented lenders, as well as their mortgage loan servicers, in connection with consumer finance litigation.  If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Creditor Avoids Host Of Damages Claims By Refunding Payments Received Pursuant To A Mistaken Proof of Claim

Lesson. If, as a lender in a bankruptcy proceeding involving a borrower, you learn that your proof of claim was false, either through mistake or otherwise, quickly withdraw the claim and reimburse the trustee or the debtor for any payments made. A quick, good-faith effort to correct the problem could help you avoid any damages arising out of the mess.

Case cite. Carter v HSBC, 2016 U.S. Dist. LEXIS 128682 (S.D. Ind. 2016) (.pdf).

Legal issue. Whether a mistaken BK proof of claim, together with debtor payments based on the claim, give rise to one or more actions for damages by the debtor.

Vital facts. In Carter, a bizarre situation, the debtor/borrower paid to the creditor/lender/mortgagee over $30,000 pursuant to the debtor’s Chapter 13 bankruptcy plan. The debtor had a mortgage loan with the lender. The mortgage itself identified MERS as lender’s nominee (see post re: MERS below). About six years after the closing of the loan, for reasons not stated in the Court’s opinion, and without the debtor’s knowledge, MERS recorded a satisfaction of mortgage. The lender continued to service the mortgage loan, however, and pursued collection of the debt from the debtor following the debtor’s default, which led to the debtor filing a Chapter 13.  In the BK case, the lender filed a proof of claim alleging secured status based on the mortgage that previously had been released. The plan was confirmed, and the debtor made payments to the trustee, which in turn paid the lender. Although not detailed in the Court’s opinion, at some point the lender discovered that the mortgage had been released, so it amended its proof of claim and withdrew its right to receive any further payments. The debtor herself later discovered the satisfaction of mortgage. Ultimately, the bankruptcy court ordered the lender to repay the 30k it received through the plan.

Procedural history. The debtor filed an action against the lender seeking damages under many theories, including: (1) violation of the automatic BK stay, (2) actual and constructive fraud and (3) unjust enrichment. The lender filed a Rule 12(b)(6) motion to dismiss the debtor’s claims.

Key rules.

11 U.S.C. 362(a)(6) bars any “act to … recover a [preexisting] claim against a debtor…” during the pendency of an automatic stay, which is triggered when a debtor files for bankruptcy.

• Both actual and constructive fraud actions require, among other things, proof of a misrepresentation that caused an injury.

• In Indiana, a party may have a claim for unjust enrichment when a “measurable benefit has been conferred on the defendant under such circumstances that the defendant’s retention of the benefit without payment would be unjust.”

Holding. United States District Judge Tonya Walton Pratt granted the lender’s motion to dismiss the debtor’s case in its entirety.


The debtor claimed the lender violated the automatic stay by collecting a debt falsely labeled as being secured when the claim was unsecured. However, the Court reasoned that the payments were made by mutual mistake and that the money was collected pursuant to a confirmed BK plan. “Once the bankruptcy was filed, [lender] never attempted to recover a claim … rather [it] filed a claim and received … payments from the trustee.” Since the lender did not act outside of the BK process, there was no violation of the automatic stay.

The debtor’s fraud and unjust enrichment claims failed because the lender repaid the trustee in full for all payments received. The trustee, in turn, repaid the debtor in full. Further, the debtor was unable to show that alleged filing fees and administrative costs resulted from the false proof of claim.

Related posts.


I frequently represent lenders, as well as their mortgage loan servicers, entangled in loan-related litigation. If you need assistance with such a matter, please call me at 317-639-6151 or email me at 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 to your left.

Hybrid Tax Sale/Mortgage Foreclosure Case Goes Off The Rails For Lender

Lesson. If a mortgagee acquires title to the mortgaged property via tax deed, the mortgage lien will be extinguished. For lenders and their servicers, be careful when making deals with tax sale purchasers while also negotiating loan modifications with borrowers. Best to include everyone in a global negotiation.

Case cite. Bayview v. Golden Foods, 59 N.E.3d 1056 (Ind. Ct. App. 2016).

Legal issues. Whether the lender’s mortgage merged with a tax deed, which the lender acquired from the tax sale purchaser. Also, whether the lender committed conversion of the mortgaged property.

Vital facts. The Bayview facts and procedural history are quite involved and unique. The borrower and the lender had a commercial mortgage loan secured by the borrower’s restaurant property. The borrower became delinquent in the real estate taxes, and the property later was sold at a tax sale. The lender sought to capitalize the delinquent taxes and enter into a loan modification with the borrower. Under the terms of the deal with the borrower, the lender agreed to redeem the property from the tax sale. However, the lender failed to do so and never told the borrower. When the tax sale purchaser petitioned for the issuance for a tax deed, the lender contested the proceeding on the basis that the purchaser failed to give certain required notices. The lender and the tax sale purchaser then entered their own settlement negotiations, without involving the borrower, that ultimately resulted in an agreed order. The Bayview opinion is a little unclear as to whether the lender got the tax deed directly from the auditor or from the tax sale purchaser through a quitclaim deed. Either way, the lender settled with the purchaser and got title. The lender then filed an action to quiet title to the property, which included a count to foreclose the mortgage, alleging that its interest in and title to the property was “superior to all persons who have an interest therein.” Adding to the confusion was the fact that the borrower made a series of loan mod payments to the lender after the lender became the owner of the property. Whew.

Procedural history. The trial court held a bench trial that included the lender’s mortgage foreclosure claim and the borrower’s counterclaim for conversion. The court ruled in favor of the borrower.

Key rules.

• A mortgage involves two entities: (1) the mortgagee, which holds the mortgage that serves as a lien on the property and (2) the mortgagor, who holds title to the property with the right of redemption.

• When one of the parties to a mortgage acquires both the mortgage lien and the legal title to the property, “the two interests are said to merge.” This means that the mortgage lien is extinguished.

• The key factor in deciding whether a merger has occurred is “determining what the parties, primarily the mortgagee, intended.” For more on Indiana’s anti-merger rule, click on the posts below, which discuss the key cases in detail.

Ind. Code 35-43-4-3 states that a “person who knowingly or intentionally exerts unauthorized control over the property of another commits criminal conversion.”

Holding. The Indiana Court of Appeals held that the evidence supported the trial court’s conclusions. As such, the Court affirmed the trial court’s ruling that the mortgage had been extinguished and that the lender committed conversion.


The lender in Bayview asserted that it did not intend to merge its mortgage with the tax deed. The borrower responded that the lender “clearly intended to take title and extinguish the underlying mortgage and note when it surreptitiously acquired title.” The Court of Appeals pointed to evidence at the trial showing that the lender viewed the transaction similar to a deed in lieu of foreclosure “with no residual obligation for the borrower.”

The Bayview opinion also addressed in detail the borrower’s conversion claims against the lender. In a nutshell, the trial court found that the lender converted (stole) the subject real estate from the borrower. The court awarded the borrower treble damages for criminal conversion based on the amount of equity in the property, plus reimbursement for the loan mod payments made by the borrower.

Although not expressly spelled out in the opinion, the practical outcome of the case seemed to be that, on the one hand, the lender (holding a tax deed) remained the owner of the property while, on the other hand, the borrower’s debt was extinguished. On top of that, the lender had to pay the borrower substantial damages.

Related posts.


I frequently represent lenders, as well as their mortgage loan servicers, entangled in loan-related litigation, including disputes arising out of tax sales. If you need assistance with such a matter, please call me at 317-639-6151 or email me at 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 to your left.

Indiana Supreme Court Order Amending Rules Regarding Service Of Process And Execution Sales

On July 31st, the Indiana Supreme Court entered this Order Amending Rules of Trial Procedure.  The changes become effective 1/1/18.  

The order makes a slight amendment to Rule 4.1(B) dealing with "copy service" and now requires a follow-up mailing of both the summons and the complaint.  For more on service of process matters, including copy service, read my post “Service Of Process” Fundamentals For The Plaintiff Lender.

The order also modifies Rule 69(A) dealing with execution sales and does away with the requirement that the subject real estate must first be appraised and then sell for at least two-thirds of the appraised value.  For a little more information on execution sales, check out my post The Difference Between An Execution Sale And A Foreclosure Sale In Indiana.

Incidentally, I have not yet seen a determination by the Indiana Supreme Court on the proposed changes to Rule 9.2(A) that I discussed in my 5/11/17 post.  

Indiana’s Statute Of Limitations For “Open Account” Claims: Supplier’s Case Too Late

Lesson. The deadline for creditors to file suit on an “open account,” including a guaranty of an “open account,” is six years.

Case cite. Ganz Builders v. Pioneer Lumber, 59 N.E.3d 1025 (Ind. Ct. App. 2016)

Legal issue. Whether a creditor’s claims against a debtor and a guarantor were barred by the statute of limitations.

Vital facts. In 1996, the defendant debtor, a builder, signed an application for a line of credit with the plaintiff creditor, a supplier. The debtor also signed a credit account agreement. The debtor’s president signed a personal guaranty agreement in connection with the arrangement. The last charge against the account was February 21, 2006. In November of 2012, the creditor filed its complaint against the debtor and the guarantor for a failure to make payments under the terms of the agreements.

Procedural history. The parties filed cross-motions for summary judgment against one another related to liability under the agreements and defendants’ statute of limitations defense. The trial court granted summary judgment for the creditor.

Key rules.

  • Indiana’s statute of limitations for actions on accounts and contracts not in writing is six years pursuant to Ind. Code 34-11-2-7. I.C. 34-11-3-1 governs the accrual date: “an action brought to recover a balance due upon a mutual, open, and current account … is considered to have accrued from the date of the last item proved in the account on either side.”
  • I.C. 34-11-2-9 controls actions based upon promissory notes and other written contracts for the payment of money. Although this statute also has a six-year limitation period, the accrual date is different. See my 3/9/09 post.
  • An action upon a contract in writing, other than for the payment of money, must be commenced within ten years. I.C. 34-11-2-11.
  • Indiana case law is settled that a written credit card application and/or agreement does not constitute a written contract or a promissory note. Rather, “the contract creating the indebtedness is formed only when the customer accepts the bank’s offer of credit by using the card.” This type of arrangement is materially different than a promissory note or installment loan. As such, Indiana treats a credit card relationship as an “open account” as opposed to being governed by a written contract per se. For more, see my 9/27/10 post.
  • The Court in Ganz cited to Black’s Law Dictionary to define an open account as: “an account that is left open for ongoing debit and credit entries by two parties and that has a fluctuating balance until either party finds it convenient to settle and close, at which time there is a single liability.”

Holding. The Indiana Court of Appeals reversed the trial court’s decision and held that the creditor untimely filed its claims against both the debtor and the guarantor.

Policy/rationale. In Ganz, there were fluctuating balances resulting from a series of transactions, and the creditor kept the account open in anticipation of future purchases. The Court thus concluded that the credit arrangement was in the nature of an open account, like a credit card, as opposed to one based upon a written contract or a promissory note – both of which have different statutes of limitations and accrual triggers.

The accrual date under I.C. 34-11-3-1 – “date of the last item proved in the account on either side” – meant the last charge to, or the last payment made on, the account. In Ganz, the last activity at issue was February 21, 2006, meaning that the latest the creditor could file a claim was February 21, 2012. November of 2012 was too late.

Regarding the guarantor, the Court basically approached the two defendants the same. The separate written guaranty still fell under the open account analysis, according to the Court. Although the accrual date arguably may have been slightly different, the same six years applied, so the guarantor, too, prevailed on the defense.

Related posts.


I frequently represent creditors and debtors in business-related collection actions. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Lender Prevails In Interpretation Of Limitation Provision In Guaranty

Lesson. When negotiating a damages limitation in a payment guaranty, consider whether the limited amount guaranteed arises before or after any post-default credits, such as proceeds from the sale of mortgaged property. Then, capture the intent as clearly as possible in the langauge of the guaranty itself.

Case cite. Broadbent v. Fifth Third, 59 N.E.3d 305 (Ind. Ct. App. 2016).

Legal issue. Whether a payment guaranty was ambiguous as it related to the limitation on the amount of liability.

Vital facts. In connection with a sizable commercial mortgage loan, the defendant executed a payment guaranty, which had a limitation provision stating in relevant part: “Guarantor shall be limited to fifty percent (50%) of the outstanding balance of principal and accrued interest under the Note; provided … that any reduction … shall be applied first to that portion of the Liabilities not guaranteed by Guarantor….” Following a default, the total debt amount was about $7.5MM, and the lender pursued the guarantor as part of the loan enforcement action. In the process, the parties agreed to a receiver’s sale of the mortgaged real estate resulting in an agreed-up credit against the debt in the amount of $4.4MM. The factual dispute ultimately surrounded whether the guarantor’s 50% liability applied before or after the credit for the sale proceeds.

Procedural history. The trial court granted summary judgment for the lender and concluded that the guarantor owed 50% of the debt before the credit.

Key rules. It is well-settled in Indiana that “a guaranty is a conditional promise to answer for a debt or default of another person, such that the guarantor promises to pay only if the debtor/borrower fails to pay.”

Generally, the nature and extent of a guarantor’s liability depends upon the terms of the contract, and a guarantor cannot be made liable beyond the terms of the guaranty. Nevertheless, the terms of a guaranty should neither be so narrowly interpreted as to frustrate the obvious intent of the parties, nor so loosely interpreted as to relieve the guarantor of a liability fairly within their terms.

If a guaranty is unambiguous, extrinsic evidence (such as an affidavit) of a party’s understanding of the guaranty (i.e. intent) is not to be considered.

Holding. The Indiana Court of Appeals affirmed the trial court’s ruling.

Policy/rationale. The guarantor argued that the limitation provision in the guaranty was ambiguous because it did not state “when” the “outstanding balance” was to be determined. He submitted an affidavit stating that his intent was that any liability was to be determined after all payments on the debt had been applied. The Indiana Court of Appeals agreed with the trial court that the relevant provision was unambiguous on the key issue. The “when” was ten days after the maturity date and upon written demand. Looking at the guaranty as a whole, the Court found that the language clearly required the guarantor to pay 50% of the accelerated debt. The Court went on to discuss precisely how the damages against the guarantor were to be calculated, including when and how to apply the $4.4MM credit, which was to be applied first to the portion not guaranteed.

Related posts.

“Collection” Vs. “Payment” Guaranties: Dearth Of Indiana Law

Employee/Guarantor Of Equipment Supply Contract Pays Price For Bankrupt Employer’s Default
I frequently represent lenders and guarantors in loan enforcement actions. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Indiana Attorney Fee Liens In Commercial Cases

Can attorneys for parties to Indiana commercial foreclosure actions file liens for unpaid legal fees?  Miller v. Up In Smoke, 2011 U.S. Dist. LEXIS 80684 (N.D. Ind. 2011) (pdf) sheds light on the matter. 

Context.  In Miller, the Court ultimately appointed a receiver to oversee the management and operation of a defendant company.  Attorneys representing the defendants contested the receivership proceedings.  The attorneys did not get paid and filed notices of attorney fee liens in the case.  The attorneys then filed a motion to enforce their liens.  The receiver opposed the motion, resulting in the Miller opinion. 

Retaining lien.  Indiana law recognizes only two kinds of attorney’s liens.  The first is a “retaining” lien, which prevents a client from utilizing materials held by the attorney until the client either settles the fee dispute or posts security for payment.  The existence of a retaining lien depends upon the attorney’s possession “of money, property or papers of the client.”  Basically, attorneys can retain their clients’ stuff until they get paid.  As a practical matter, this lien acts as a leverage tool, but is unlike a more traditional lien that can be foreclosed. 

Charging lien - generally.  The second and potentially more meaningful lien is a “charging” lien for “services rendered in a particular cause of action or proceeding to secure compensation for obtaining a judgment, award or decree on the client’s behalf.”  Indiana case law says that an attorney “has a lien for his costs upon a fund recovered by his aid, paramount to that of the persons interested in the fund or those claiming as their creditors.”  This lien is based upon the idea that “the client should not be allowed to appropriate the whole of the judgment without paying for the services of the attorney who obtained it.”  The Court explained that “an attorney’s charging lien attaches to the fruits of the attorney’s skill and labor . . . [but] if the attorney’s work produces no fruit, then the attorney has no lien.” 

Charging lien - statute.  Indiana’s charging lien is statutory:  Ind. Code § 33-43-4.  The statute provides that an attorney “may hold a lien for the attorneys’ fees on a judgment rendered in favor of a person employing the attorney to obtain the judgment.”  The lien arises if the attorney files a written notice on the docket of an intention to hold a lien on the judgment, along with the amount of the claim, no later than sixty days after the date of the entry of judgment.  I.C. § 33-43-4-2.  I.C. § 33-43-4-1 expressly states that “no lien can be acquired before judgment . . ..”  Indiana law strictly enforces this “judgment” requirement.

No judgment = no charging lien.  The attorney fee claim in Miller was an alleged charging lien.  But the services of the attorneys did not produce a “fund” upon which they sought to impose the lien.  The alleged fund was the receivership estate (property of) the defendant company.  The attorneys’ efforts, however, did not secure or create the receivership estate.  If anyone deserved a lien, it would be the receiver and the receiver’s counsel, not the counsel of the defendants, who resisted the appointment of the receiver. 

Lender’s counsel.  Miller tells us that lender’s counsel can file a charging lien against a judgment that counsel secures for its client.  Miller even hints that lender’s counsel could file a lien on real estate acquired by the client at a sheriff’s sale.  The point is that plaintiff lenders can be exposed to attorney/charging liens if they don’t pay their lawyers.  Alas, lenders typically possess both the willingness and capacity to pay. 

Borrower’s counsel.  Unlike lenders, defendant borrowers and guarantors come to attorneys already in financial distress.  Getting paid can be a challenge, no question.  As stated in Miller, very rarely can defense counsel assert a charging lien.  Essentially, counsel must obtain an affirmative judgment in favor of their client, such as in a case of set-off or counterclaim.  (The Court cited to a Georgia case for the proposition that a defense attorney could obtain a lien on a client’s land if he successfully defended an adverse claim on such land.)  The bottom line is that, even assuming the defendant won the case, there still must be a judgment or fund to which a defense counsel’s charging lien could attach.  This is why, in the vast majority of cases, defense counsel at best may have a retaining lien on the client’s money, property or papers (usually, the file and attorney work product), but this lien is not particularly valuable.  Hence the need for up-front retainers.

IndyStar: Rent-to-own contracts challenged in federal court

Yesterday, The Indianapolis Star picked up the story discussed by the IBJ that was the subject of my 5/31/17 post, New Spin On Alleged Predatory Lending: Land Contracts.  Here is a link to the IndyStar piece:  6/26/17 article.  


If you are involved in a land contract dispute or wish to obtain advice about land contracts on the front-end, please email me at or call 317-639-6151. Also, don't forget to follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to my blog posts via RSS or email as noted to your left.

IBJ: "Scrappy insurer continues pursuit of $25M judgment from Symons family"

Last week, Greg Andrews of the Indianapolis Business Journal wrote about the ongoing judgment enforcement action pending in the U.S. District Court for the Southern District of Indiana.  Click here for the latest article.  Our firm is local counsel for the judgment creditor.  Our coordinating counsel, Bressler, Amery & Ross out of Florham Park, NJ, has taken the lead with the judgment collection efforts described in the news piece.     

Seventh Circuit Holds That Proof Of Claim For “Stale” Debt Does Not Violate FDCPA

Lesson. The filing of a bankruptcy proof of claim for a time-barred debt does not violate the Fair Debt Collection Practices Act (FDCPA) in the Seventh Circuit, which includes Indiana.

Case cite. Owens v. LVNV Funding, 832 F.3d 726 (7th Cir. 2016) (pdf).

Legal issue. There were two: (1) whether a “claim” includes only legally-enforceable obligations and (2) whether a creditor’s attempt to collect on a time-barred debt in bankruptcy violates the FDCPA.

Vital facts. Defendant debt collector filed a proof of claim in a Chapter 13 bankruptcy case for a time-barred (“stale”) debt. The plaintiff debtor successfully objected to the claim and then sued the debt collector alleging FDCPA violations.

Procedural history. The district court dismissed the debtor’s action. The debtor appealed to the Seventh Circuit, which issued the opinion addressed here. Please note: the debtor later appealed to the U.S. Supreme Court, which refused to hear the case.

Key rules.

  • A “claim” under the bankruptcy code is a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.” A claim is not a cause of action.

  • The FDCPA prohibits the use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. 1692e.

Holding. The Court first held that a claim on a time-barred debt “does not purport to be anything other than a claim subject to dispute in the bankruptcy case.” Thus a claim can include an unenforceable obligation. Next, the Court concluded that the defendant’s conduct was not deceptive or misleading so as to give rise to FDCPA liability.

Policy/rationale. The Court reasoned that the bankruptcy code contemplates that creditors will “file proofs of claim for unenforceable debts … and that the bankruptcy court will disallow those claims upon debtor’s objection.” The code and interpreting case law recognize that the term “claim” has a broad definition, including a right to payment, and whether the claim ultimately is enforceable is immaterial.

Moreover, the Court articulted that the information contained in the subject proof of claim was not misleading. Indeed, the information about the status of the debt was accurate. Whether the statute of limitations had run was apparent on the face of the proof of claim. Moreover, the debtor’s attorney successfully objected to the proof of claim.

Related posts.

I frequently represent lenders, as well as their mortgage loan servicers, entangled in loan-related litigation. If you need assistance with such a matter, please call me at 317-639-6151 or email me at 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 to your left.

In Wake Of Marsh Bankruptcy, Commercial Foreclosures:

The Indianapolis Business Journal reports that "Landlords across Indiana are feeling the pain from the collapse of Marsh Supermarkets...."  Here is a link to the full article: Landlord's Marsh bet leaves trail of foreclosures


I represent parties, including borrowers and guarantors, in commercial mortgage foreclosure disputes.  If you need assistance with a similar matter, please call me at 317-639-6151 or email me at  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 to your left.  

New Spin On Alleged Predatory Lending: Land Contracts

The Indianapolis Business Journal's website has a report today regarding a lawsuit recently filed here in Indiana that targets a “predatory and unlawful rent-to-own scheme.”  The lawsuit seeks class-action status on behalf of the alleged victims of the scheme and claims violations of "several fair housing, equal credit opportunity act, truth-in-lending and condition-of-premises laws." 

Here is a link to the article: Lawsuit targets local rent-to-own housing operator.  Evidently the Indiana Attorney General sued the same operator  back in 2012 for similar claims and "for allegedly running a rent-to-buy scheme meant to avoid Indiana's landlord tenant law."  See: Ind. AG Zoeller suing Rainbow Realty.

Although I have not read the complaints or reviewed the "rent-to-own" contracts, the transactions in question would seem to be land contracts.  Indiana law views these types of agreements as a kind of hybrid of a lease and a mortgage loan.  I've written about land contracts in the following posts:


If you are involved in a land contract dispute or wish to obtain advice about land contracts on the front-end, please email me at or call 317-639-6151.  Also, don't forget to follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to my blog posts via RSS or email as noted to your left.    


7th Circuit Affirms Rooker-Feldman Dismissal Of Borrower's Post-Foreclosure Federal Claims Under RESPA, TILA, FDCPA, RICO And FPRA

Today's topic is a recurring one on my blog, namely whether a borrower can pursue a federal lawsuit against a lender after the lender foreclosed in state court. The answer is almost always no, although the possibility exists under very limited circumstances.    

On February 26th, I wrote about the Mains v. Citibank case, which at the time was before the U.S. District Court for the Southern District of Indiana.  Here is that post: Borrower’s Claims For Violations of RESPA, TILA, FDCPA, RICO And FPRAM, Together With Claims for Various Torts, Dismissed.  

The borrower lost at the trial court level and appealed to the Seventh Circuit.  On March 29th, the Court of Appeals affirmed the district court's ruling.  Click here for the opinion, which, like the district court's, provides a nice summary of the legal issues that lawyers will find useful.  Chief Judge Wood summed up the Seventh Circuit's view of the case in his opening paragraph:

[Borrower] has been battling the impending foreclosure of his home for quite some time.  Most recently, he brought an action in federal court raising various state and federal law theories, related primarily to alleged fraudulent activity by the defendants [which included the lender and certain law firms].  But the state courts resolved these matters long before he turned to the federal court.  Mindful of our limited jurisdiction and the need to respect the finality of state-court judgments, we affirm the district court's dismissal of this case.  

In addition to applying the Rooker Feldman doctrine, the Court employed res judicata (claim preclusion) in affirming the dismissal of the borrower's case.


I frequently represent lenders, as well as their mortgage loan servicers, in connection with contested mortgage foreclosure actions.  If you need assistance with a similar matter, please call me at 317-639-6151 or email me at  You may also follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to my blog posts via RSS or email as noted on my home page.



Claim “On An Account” Vs. Enforcement Of A Loan: Comments On Proposed Amendment to Indiana Trial Rule 9.2(A)

Proposed rule change.  Indiana’s Committee on Rules of Practice and Procedure has before it a proposal to amend Trial Rule 9.2(A). To see the proposed change, click here.  The amendment also has changes to the form affidavit of debt found in Appendix A-2 of the rules.  Application of the added language appears to be limited to actions “on an account” and does not seem to relate to actions involving loans, such as breaches of promissory notes or security agreements like mortgages. Although the amendment does not expressly target mortgage foreclosure cases or the enforcement of UCC security interests, the proposed language arguably leaves the rule open to interpretation as to its scope.  As such, we are respectfully recommending that the Committee clarify the proposed amendment to confirm that the new subsections (A)(1) and (2) are limited to claims “on an account” and do not apply to loans.

What is an action “on an account?”  To my knowledge, and based on some very limited legal research, there is no specific Indiana statutory definition of, or statutory cause of action for, an action on an account.  Black’s Law Dictionary defines “on account,” in part, as “a sale on credit.”  Indiana Practice, Procedural Forms with Practice Commentary (Arthur), Chapter 9, discusses “Complaints-On An Account” and says: “an action on account is one upon which billings have been sent to the other party specifying the goods or services delivered and the amount due….” Section 9.1 identifies the following elements of such an action:

1. A description of the account and the nature of the dealings between the parties;
2. The goods and services were provided to defendant at his request;
3. Defendant is indebted to plaintiff for a specified sum; and
4. The account is due and unpaid.

Not a loan.  An account and a loan are two different animals. Black’s Law Dictionary defines a loan, in part, as “delivery by one party to and receipt by another party of a sum of money upon agreement, express or implied, to repay it with or without interest.” Although an account and a loan both might be considered “debts,” they arise out of dissimilar transactions.  With a loan, one party (a lender or a creditor) gives money to another party (a borrower or a debtor).  Obvious examples of this are banks funding the purchase of a car or a house.  On the other hand, an account is born out of one party (seller/vendor) giving, not money, but rather goods and/or services to the other party (buyer/vendee).  A classic example of an account is a hospital bill.

Written contracts.  Certainly a written contract could exist for an account, and the contract conceivably may result in some kind of lien, but ultimately the nature of an account does not involve the transfer of money but rather the provision of goods or services.  But frequently there is not a written agreement - only an invoice or purchase order.  In fact, there may not be any written document at all, like when I mowed lawns in high school.  As such, unlike with promissory notes or mortgages, when a debt arising out of an account is sold or assigned from the original account holder to a third party, proof of the account creditor may be unclear or perhaps non-existent.  This absence of documentation makes the collection of such debts susceptible to fraud, or at least to questions about who is owed the money.

The target.  In our view, the new Rule 9.2(A) seems to focus on a plaintiff’s obligation to establish that it has the right to enforce the debt.  We understand the amendments proposed to Rule 9.2(A) may arise, in part, out of bad actors attempting to collect debts based on an account.  These debt collectors often purchase debt at a discount and specialize in trying to collect it. We further understand that some of these debt collectors may be fraudsters that either don’t actually own the debt or try to collect the debt long after the statute of limitations has run.

Protections unnecessary.  While claims “on an account” arguably need the protections afforded by the new subsection to the rule, claims for breaches of loan documents do not.  Indeed, protections already are in place. Article 3.1 of Indiana’s UCC dealing with Negotiable Instruments (promissory notes), Article 9.1 involving secured transactions, Ind. Code 32-29 (Mortgages), Ind. Code 32-30-10 (Foreclosure Actions), well-settled case law, and a plethora of other rules, laws, and regulations, both state and federal, at present cover questions surrounding proof of standing and the right to enforce.  See, for example, my post Proving You’re The Holder Of The Note. This makes the proposed amendment unnecessary for loans and, even more, contradictory to existing law and procedure, not to mention onerous.  Indeed some of the proposed requirements may not even be possible for certain assignees to meet, such as a listing of all prior owners of the loan.  (The Indiana Supreme Court's opinion in the Barabas case from 2012 that surrounds MERS is instructive here.)       

Solution.  Without clarification that the new rule is limited to claims on an account and thus does not apply to loans, courts will be confused as to how to handle such cases, which could create more problems than the rule seeks to solve. We’ve seen one very simple yet meaningful change that could be made to the proposed amendment.  The mere insertion in Subsection (2) of “and the claim is on account” after the word “if” and before the words “the plaintiff” should be sufficient to clarify that the new rule does not apply to loans.  Even better, if at the end of the proposed amendment, the rule said something like “Subsection (2) does not apply to actions to enforce loans, including but not limited to promissory notes or credit agreements,” then the lending and finance communities should have no issue whatsoever with the amendment.

Call to action.   The Committee invites public comment on the proposed rule amendments.  Those wishing to comment should do so, in writing, not later than May 15, 2017.  That's Monday. Comments may be sent by email to or addressed to:

ATTN: Rules Committee
Hon. Mary Willis
Indiana Office of Judicial Administration
30 South Meridian Street, Suite 500
Indianapolis, IN 46204

If you work for a lender or are an Indiana lawyer who represents creditors in commercial or consumer finance, and if you agree with our position, then we invite you to submit a comment by next Monday – even if it’s just to state briefly that you generally agree with the points outlined here.  I’m planning on emailing a link to today’s post directly to the committee’s staff. If you have any questions or comments, please call me at 317-860-5375 or email me at  Thanks.  


Success Following Trial And Appeal Of Contested Foreclosure, Including Defense Of Constructive Fraud and Bad Faith Claims

In February 2016, my partner Matt Millis and I tried a contested commercial foreclosure case.  Following the four-day trial, the court entered judgment in our clients’ favor.  Click here to see the judgment.  The trial mainly was about the borrower’s counterclaims against our clients, an originator of hard-money commercial mortgage loans and the company that funds the loans, as well as the borrower’s defenses to the foreclosure.

The borrower appealed.  Yesterday, the Indiana Court of Appeals affirmed the trial court’s judgment.  Here is the opinion.  The Court’s opinion summarizes some of the key facts and, of note, addresses two of the borrower’s defenses: (1) that our clients breached a “duty to speak,” which arose out of the borrower’s allegations of constructive fraud, and (2) that our clients violated the “Hamlin Doctrine,” which dealt with the borrower’s assertion that our clients breached a duty to act in good faith.

The Court of Appeals decided that our clients did not breach any alleged duty to speak about certain loan-to-value requirements for the deal.  In other words, the Court found that the judgment was supported by the findings of fact (the evidence at trial) and was not clearly erroneous.  In addition, the Court held that the trial court’s findings of fact supported the conclusion that our clients did not act in bad faith with respect to the fulfillment of a broker’s price opinion contingency.  For more about the case, please read the trial court’s judgment and the appellate court's memorandum decision – links above.


I frequently represent lenders, as well as their mortgage loan servicers, in connection with contested mortgage foreclosure actions.  If you need assistance with a similar matter, please call me at 317-639-6151 or email me at  You may also follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to my blog posts via RSS or email as noted on my home page.

If A Sheriff’s Sale Is "Subject To" A Senior Mortgage, The Senior Lender Gets None Of The Sale Proceeds, Even If There Is A Surplus

Lesson.  In Indiana, mortgage foreclosure sale surplus proceeds generally go back to the mortgagor/owner.

Case cite.  Edler v. Regions, 60 N.E.3d 288 (Ind. Ct. App. 2016)

Legal issue.  Whether, in connection with a junior mortgagee’s foreclosure case, the trial court’s disbursement of sheriff’s sale surplus proceeds to the senior mortgagee violated Indiana’s mortgage foreclosure statutes and laws.

Vital facts.  The owner of the mortgaged real estate had a senior mortgage loan, as well as a home equity line of credit (a junior mortgage loan), with the same lender. After the owner defaulted, the lender foreclosed on the second (junior) mortgage only. The foreclosure decree ordered a sheriff’s sale of the real estate subject to the senior mortgage lien. The judgment did not award any damages associated with the senior loan or otherwise identify the senior debt amount. The judgment/decree only dealt with the home equity line of credit/junior mortgage. Following the sheriff’s sale, about $50,000 in excess proceeds remained after payment of the judgment amount.

Procedural history.  The lender moved for an order that this surplus be disbursed to the lender toward payment of the senior mortgage debt. The owner argued that the surplus should have been released to her because the sale was specifically subject to the first mortgage. The trial court awarded the mortgage foreclosure surplus proceeds to the senior lender, and the owner appealed.

Key rules. 

  • Indiana case law provides, generally, that when a sheriff’s sale purchaser buys subject to a prior mortgage, the purchaser takes the land “charged with the payment of the debt.” This does not equate to personal liability for the debt, however. “The land itself is the primary fund out of which the debt is payable.”
  • In Edler, the Indiana Court of Appeals relied upon mortgage foreclosure statutes, including Ind. Code 32-29-7-9(b), which states that if property is sold at a foreclosure sale “the sheriff shall pay the proceeds as provided in I.C. 32-30-10-14.”
  • Section 14 states, in pertinent part, that sale proceeds “must” be applied as outlined and that “in all cases in which the proceeds of sale exceed the amounts described in subdivisions (1) through (4), the surplus must be paid to the clerk of the court to be transferred, as the court directs, to the mortgage debtor….”
  • Case law also says that “lienholders whose rights have not been adjudged or foreclosed in the foreclosure action have no right to share in the proceeds of the sale.”

Holding.  The Court of Appeals reversed the trial court and ordered the surplus proceeds to be paid to the mortgagor/former owner.

Policy/rationale. The owner contended that, because the sale was expressly subject to the first mortgage, the surplus could not be used as a partial payment toward that mortgage. The Court agreed and noted that the lender chose not to foreclose its senior mortgage and “could not essentially reverse course by seeking the surplus sale proceeds” in contravention of Indiana foreclosure laws. (The Court declined to get into how else the lender might have been able to collect the outstanding debt, and the opinion seemed critical of the lender’s decision not to foreclose the senior mortgage simultaneously with the junior mortgage. The record was unclear as to why this did not occur.)

Related posts.


I represent both senior and junior lenders, as well as mortgage loan servicers, in connection with foreclosure cases and sheriff’s sales. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Computing Time Deadlines In Indiana: Tax Sale Notice Not 1 Day Late

Lesson. For tax sale notice deadlines, count backwards from the date of the sale to determine when the notice mailing is due.

Case cite. Schafer v. Borchert, 55 N.E.3d 914 (Ind. Ct. App. 2016).

Legal issue. Whether the county timely mailed its notice of tax sale to the owner.

Vital facts. The date of the tax sale was October 3rd. The county mailed the notice of tax sale on September 12th.

Procedural history. Buyer purchased the subject property at the tax sale and filed an action to quiet title following the receipt of the tax deed from the county. The former owner contested the action and sought to set aside the tax deed. The owner’s theory was that the county mailed the notice one day late – twenty days before the sale instead of twenty-one. After a bench trial, the court entered judgment for the buyer and found that, although the notice was one day late, it “substantially complied” with the statutory requirements.

Key rules.

Ind. Code 6-1.1-24-4(a) controlled the notice issue. At the time, the statute provided that the county auditor “shall send a notice of the sale by certified mail to the owner or owners of the real property … at least twenty-one (21) days before the day of the sale….” The current statute – link here – basically says the same thing.

Indiana Trial Rule 6(A) generally controls, in part, how parties determine deadlines in connection with litigation. In Schafer, the Indiana Court of Appeals applied the rule in the context of a tax sale. Rule 6(A) says:

In computing any period of time prescribed or allowed by these rules, by order of the court, or by any applicable statute, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed is to be included unless it is:
(1) a Saturday,
(2) a Sunday,
(3) a legal holiday as defined by state statute, or
(4) a day the office in which the act is to be done is closed during regular business hours.
In any event, the period runs until the end of the next day that is not a Saturday, a Sunday, a legal holiday, or a day on which the office is closed….

Holding. The Court of Appeals affirmed the trial court but on different grounds. “It was not necessary for the trial court to reach the issue of substantial compliance….” The notice was in fact timely.

Policy/rationale. Schafer is a counting lesson. The trial court (and the former owner) mistakenly concluded that the clock began to run when the county mailed the notice. However, the statute “places a requirement on the auditor concerning the timing of notice, not the timing of when the tax sale must be held after notice is provided.” In other words, as explained by the Court, the statute does not mandate the sale to be held no fewer than twenty-one days after notice is mailed. Instead, the “act or event” for Rule 6(A) is the date of the sale. As such, “the days should be counted backwards to the date notice is mailed.” Since the sale date was October 3rd, the first day to be counted for the deadline was October 2nd. (See the italics section in the rule above.) Counting backwards from the sale, instead of forwards from the mailing, twenty-one days was September 12th, which is when the county mailed the subject notice.

Related posts.

Court Rejects Property Owner’s Plea To Set Aside Tax Sale

Tax Sale Set Aside: Inadequate Notices To Property Owner

Tax Sale Bullet Strikes Property Owner

Indiana Tax Sale Notices To Mortgagees

Mortgagees Beware: Only Owners Receive Notices Of Indiana Tax Sales
I sometimes represent lenders, as well as their mortgage loan servicers, entangled in disputes arising out of tax sales. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Must Indiana Affidavits Be Signed Under The Penalties Of Perjury?

A client recently asked me whether its summary judgment affidavit needed to be signed under the penalties of perjury. Given the business records nature of the affidavit (under Evidence Rule 803(6)), the affiant had some heartburn about the nature of his execution.

Trial rule.  The affidavit was for an Indiana state court case, so Indiana state law applied.  The applicable Trial Rule is 11(B). The rule doesn’t directly answer the question, however. Here is the entire section of the rule:

Verified pleadings, motions, and affidavits as evidence. Pleadings, motions and affidavits accompanying or in support of such pleadings or motions when required to be verified or under oath shall be accepted as a representation that the signer had personal knowledge thereof or reasonable cause to believe the existence of the facts or matters stated or alleged therein; and, if otherwise competent or acceptable as evidence, may be admitted as evidence of the facts or matters stated or alleged therein when it is so provided in these rules, by statute or other law, or to the extent the writing or signature expressly purports to be made upon the signer’s personal knowledge. When such pleadings, motions and affidavits are verified or under oath they shall not require other or greater proof on the part of the adverse party than if not verified or not under oath unless expressly provided otherwise by these rules, statute or other law. Affidavits upon motions for summary judgment under Rule 56 and in denial of execution under Rule 9.2 shall be made upon personal knowledge.

The rule begs the question of what “verified or under oath” means.

Case law.  Indiana case law appears to have the answer. Although using the exact language of TR 11(B) is not required, the “chief test of the sufficiency of an affidavit is its ability to serve as a predicate for a perjury prosecution.” Jordan v. Deery, 609 N.E.2d 1104, 1110 (Ind. 1993). In Gaddie v. Manlief (In re H.R.M.), 864 N.E.2d 442 (Ind. Ct. App. 2007), the Indiana Court of Appeals provides a thorough discussion of what is required for a business records affidavit and affidavits generally. The Court determined that a business records affidavit whose affiant stated, “I, Anita Martin, being duly sworn, state as follows” was insufficient to constitute a valid verification as it was inadequate to subject Martin to prosecution for making a false affidavit, and therefore, insufficient to support the accompanying business records. A statement such as “duly sworn upon his oath, alleges and says” with a notarized signature provides a stronger intention to be bound by the penalty for perjury than “being duly sworn,” Id. (citing State ex rel. Ind. State Bd. Of Dental Examiners v. Judd, 554 N.E.2d 829 (Ind. Ct. App. 1990)). The Court did note, however, that Bentz v. Judd, 714 N.E.2d 203 (Ind. Ct. App. 1999), and an older Indiana Supreme Court case, Gossard v. Vawter, 21 N.E.2d 416 (Ind. 1939), found such a verification to still be insufficient. On the other hand, the statement “I affirm the truth of the above statements” met the requirements for verification in a summary judgment affidavit in Hoskins v. Sharp, 629 N.E.2d 1271 (Ind. Ct. App. 1994).

The answer is yes.  Although the rule and the case law may not crystal clear on the exact verbiage needed, the bottom line is that, to ensure affidavits will stand up in court, it is prudent to state, either at the beginning or immediately before the signature, that the affidavit is being given under oath and subject to the penalties of perjury. For what it’s worth, I usually start my affidavits with “Affiant, _____, having first been duly sworn upon his oath, hereby affirms as follows", and I end my affidavits with “I affirm under the penalties of perjury that the foregoing is true and correct to the best of my knowledge, information and belief.”

Here are a couple prior posts related to affidavits:

I’d like to thank our associate Erica Drew for researching this issue. Her work helped me to get this post up before being out on spring break next week.     

Mortgagee Prevails In Claim For Indiana Tax Sale Surplus

What happens if a lender’s real estate collateral is sold at a tax sale, which nets a surplus (funds remaining over and above payment of the tax lien)?  Does the money go back to the owner, or can the lender/mortgagee recover it?  Beneficial Indiana v. Joy Properties, 942 N.E.2d 889 (Ind. Ct. App. 2011) helps answer these questions.

Course of events.  In 2003, lender made a mortgage loan to borrowers.  In 2008, following the failure by the borrowers to pay real estate taxes, the county held a tax sale that resulted in a $42,000 surplus.  No party redeemed within the one-year period, so the county issued a tax deed in November of 2009.  However, the tax sale purchaser did not immediately record it.  In December of 2009, lender filed a motion in the county trial court for the auditor to hold the surplus.  At the hearing on the motion, the lender established a default under the mortgage loan and losses of approximately $100,000.  Shortly after the hearing, borrowers, who did not participate in the hearing, deeded the real estate to a third party, which recorded the deed in January of 2010.  In February of 2010, lender filed a motion to compel the auditor to turn over the surplus, and then the the tax sale purchaser recorded its tax deed.

The problem.  Who should have received the $42,000 tax sale surplus - the lender or the third party (subsequent owner)?

Statute.  I.C. § 6-1.1-24-7 is the provision within Indiana’s tax sale statutory scheme that speaks to the surplus issue, and subsection (b) authorizes a claim by the:

 (1) owner of record of the real property at the time the tax deed is issued who is divested of ownership by the issuance of a tax deed; or
 (2) tax sale purchaser or purchaser’s assignee, upon redemption of the tract or item of real property.

Since there was no redemption, subsection (b)(2) did not apply.  Beneficial Indiana focused on subsection (b)(1), which seems to suggest that the borrowers would be entitled to the funds because they were the owners of record at the time the tax deed was issued.  Since they had conveyed their interests to a third party by the time the matter came before the trial court, the third party essentially stepped into their shoes and claimed subsection (b)(1) mandated the turnover of the surplus to it.

Statutory work around.  In Indiana, persons with “an interest in the real estate, including those who did not own the real estate at the time of the tax sale or who did not purchase the real estate at the tax sale, may assert a claim for a tax sale surplus directly with the trial court.”  The lender asserted that it was entitled to the surplus because its mortgage lien attached to the surplus.  Indiana law indeed provides that, even though the lender’s lien against the real estate was extinguished by the tax sale deed, its lien “attached to the tax sale surplus, and has priority over the interest conveyed to [the third party].”

More substantial interest.  The Court’s rationale rested upon the following test:  “which claimant has the more substantial interest in the real estate?”  The Court’s ruling in favor of the lender was, in my view, fair and sensible:

It is undisputed that [lender’s] mortgage was duly recorded on April 21, 2003.  It is further undisputed that the [borrowers] not only failed to pay their property taxes but also were in default on their mortgage, owing a balance that greatly exceeded the tax sale surplus held by the auditor.  Hence, [lender] had a substantial interest in the real estate prior to the issuance of the tax sale deed.  [Third party] acquired its interest in the real estate by a quitclaim deed executed by the [borrowers] after they had failed to make mortgage payments to [lender’s] for more than a year; and they had failed to redeem the real estate during the statutory one-year period following Allen County’s tax sale of real property due to the owners’ failure to pay real estate taxes.  Thus, at the time of the conveyance to [the third party] by the [borrowers], the interest conveyed was subject to the issuance of a tax deed to [the tax sale purchaser] and to [lender’s] recorded security interest.  In other words, the interest conveyed to [the third party] by the [borrowers] is significantly less substantial than and inferior to the interest of [lender].

Favorable to lenders.  As suggested here before on November 16, 2010 and most recently on March 19, 2012, delinquent real estate taxes and resulting tax sales can be a minefield for lenders in Indiana.  In Beneficial Indiana, the lender lost its loan collateral and incurred damages of about $100,000.00.  Luckily, the somewhat unique set of circumstances opened the door for the lender’s recovery of the surplus that mitigated its losses.

Borrower’s “Mutual Mistake” Defense Fails Under Indiana Law

Lesson. To set aside a loan document based upon the defense of mutual mistake, there first must be a mistake concerning a vital fact upon which the parties based the loan. Second, the mistake must be on the part of both parties.

Case cite. Williamson v. U.S. Bank, 55 N.E.3d 906 (Ind. Ct. App. 2016).

Legal issue. Whether a loan modification agreement should have been reformed or rescinded based upon an alleged mistake of fact.

Vital facts. In 2008, borrower defaulted under a promissory note and mortgage, and in 2009 lender obtained a default judgment against him. The day before the scheduled sheriff’s sale, lender notified the sheriff that the sale should be cancelled due to ongoing settlement negotiations. Nevertheless, the sheriff inadvertently held the sale, and the lender’s pre-sale written bid prevailed. The sheriff’s processed and recorded the sheriff’s deed. About three months later, lender discovered the mistake and ultimately got a court order vacating the deed. In 2010, borrower and lender executed a loan modification agreement that amended the note and mortgage, and set up a new payment plan. For three years, borrower made the payments under the loan mod. At some point, borrower discovered information leading him to believe that he was not on the deed to the property. He also had been denied his homestead exemption multiple times. About the same time, lender notified borrower that he needed to make an additional payment into escrow to cover real estate taxes. In response, borrower told lender he would not pay anything further until lender assured borrower “his name was back on the deed….” Lender then filed an affidavit with the county assessor reaffirming that the court had vacated lender’s title to the property and that the assessor’s records should reflect that title was with borrower. Despite lender’s action, borrower made no further mortgage payments.

Procedural history. Lender initiated a foreclosure lawsuit and filed a motion for summary judgment. In response, borrower filed an affidavit stating that he did not know that his name had been taken off the deed to the property when he signed the loan mod. Borrower argued that he would not have entered into the loan mod knowing his name had been taken off the deed. He essentially asserted that the loan mod was not enforceable against him. The trial court rejected borrower’s position and granted lender summary judgment.

Key rules. A contract may be reformed on grounds of mistake upon clear and convincing evidence of both the mistake and the original intent of the parties. Stated differently, “where both parties to a contract share a common assumption about a vital fact upon which they based their bargain, and that assumption is false, the transaction may be avoided if, because of the mistake, a quite different exchange of value occurs from the exchange of values contemplated by the parties.”

Ind. Code 32-30-10-3 provides that “if a mortgagor defaults in the performance of any condition contained in a mortgage, the mortgagee … may proceed in the circuit court of the county where the real estate is located to foreclose the equity of redemption….” If a lender produces evidence of a demand note and mortgage, it establishes the prima facie evidence supporting foreclosure. That shifts the burden to the borrower to prove payment of the note or any affirmative defense to foreclosure.

Holding. The Indiana Court of Appeals affirmed the trial court’s summary judgment in favor of lender.

Policy/rationale. Borrower contended that he should not have been held to the terms of the loan mod, and thus his mortgage should not have been foreclosed, because the parties mistakenly believed his name was on the deed when they executed the loan mod. But the alleged mistake of fact did not exist upon execution of the loan mod. Borrower did in fact have a valid deed at the time. Although borrower was temporarily divested of ownership through the sheriff’s sale, the trial court later set the sale aside and vacated the deed. That happened in December of 2009. The loan mod didn’t occur until December of 2010. Since borrower’s name was on the deed upon execution of the loan mod, “there was no basis to reform or rescind the agreement.”

This seemed to be a fairly straightforward decision, but I suspect there may have been more to the story. (It’s common for appellate court opinions to distill the facts to their essence.) In any event, despite borrower’s obvious frustrations arising out of the 2009 sheriff’s sale and the resulting confusion with the county’s records, the loan mod had to be enforced.

Related posts.

I frequently represent lenders, as well as their mortgage loan servicers, in connection with contested mortgage foreclosure actions. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Settlement Agreement Between Lender And Guarantors Did Not Release The Contribution Rights Of The Guarantors

Lesson. Be mindful of language in settlement agreements with lenders. Don’t unwittingly release contribution claims among guarantors unless that’s the objective.

Case cite. New v. T3 Investments, 55 N.E.3d 870 (Ind. Ct. App. 2016).

Legal issue. Whether a mutual release within a settlement agreement between a lender, on the one hand, and a borrower and several guarantors, on the other hand, resulted in a waiver of rights of contribution among the guarantors.

Vital facts. New was a commercial mortgage foreclosure matter. The heart of the case surrounded the liability of the guarantors of the loan. At issue was a “Settlement and Mutual Release Agreement” entered into by the lender, the borrower and the guarantors. The Court’s opinion sets out the relevant portions of the agreement, including the release provision. The borrower/guarantors breached the agreement by failing to pay the lender, so the lender’s claims later were reduced to a judgment. After a sheriff’s sale, an $865,315.95 deficiency remained, and one of the guarantors – T3 – paid the deficiency in full. T3 then filed an action for contribution against the other five guarantors seeking their pro-rata share of the deficiency payment. Those guarantors asserted that the prior settlement agreement had language that operated to release them from liability. T3 contended that the settlement agreement dealt only with the bank and did not demonstrate that the guarantors bargained for any benefits and detriments with respect to each other.

Procedural history. New was an appeal to the Indiana Court of Appeals following the trial court’s summary judgment in favor of T3.

Key rules.

  • The doctrine of contribution “rests on the principle that, where parties stand in equal right, equality of burden becomes equity.” Contribution ensures “those who assume a common burden carry it in equal portions.” A party who pays a debt is entitled to receive contribution from any party having the same joint and several liability.
  • Generally, the right of contribution only can be destroyed by an agreement between the obligated parties.
  • A release is a contract and is interpreted according to contract law. Contract formation requires an offer, acceptance and consideration. Consideration generally is where there is a benefit accruing to the promisor or a detriment to the promisee. Consideration “consists of bargained-for exchange.” A release must be supported by consideration.

Holding. The Court of Appeals affirmed the trial court’s summary judgment in favor of T3. The remaining guarantors were obligated to pay T3 their pro-rata portion of the deficiency judgment.

Policy/rationale. Although the language in the “mutual release” provision in the settlement agreement was very broad and arguably cut against T3’s position, the Court found that there was no “bargained-for” exchange among the guarantors related to any release among them. The guarantors negotiated collectively with the lender. The bargained-for exchange concerned only the loan and the lawsuits filed by the lender. The settlement agreement spelled out how to resolve only those claims. The guarantors in the agreement did not settle among themselves. In short, the mutual release contained within the settlement agreement was not applicable to T3’s contribution claim.

Related posts.

I represent parties, including guarantors, in commercial mortgage foreclosure disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at 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.

Borrower’s Claims For Violations of RESPA, TILA, FDCPA, RICO And FPRAM, Together With Claims for Various Torts, Dismissed

Following his unsuccessful defense of a state court foreclosure action, a borrower filed a multi-count complaint in federal court against six defendants. Mains v. Citibank, et. al., 2016 U.S. Dist. LEXIS 43874 (S.D. Ind. 2016) (.pdf) is a 34-page opinion by Judge Barker in which she methodically explains why all the counts against all the defendants must be dismissed with prejudice based upon the Rooker-Feldman doctrine.

“At the core” of the borrower’s case, he alleged that the defendants, which included lenders and law firms, (1) wrongfully assigned the subject promissory note, (2) lacked standing to foreclose the subject mortgage and (3) committed fraud against him and the state court. The borrower asserted the following legal claims: (a) Real Estate Settlement Procedures Act [RESPA] violations, (b) Truth In Lending Act [TILA] violations, (c) Ind. Code 32-30-10.5 Indiana Foreclosure Prevention Agreements for Residential Mortgages violations, (d) negligent and intentional infliction of emotional distress, (e) fraud, (f) negligence, (g) Fair Debt Collection Practices Act [FDCPA] violations and (h) violations of the Racketeer Influenced and Corrupt Organizations Act [RICO].  In other words, the borrower threw in everything but the kitchen sink....

Even though the case ultimately was dismissed on jurisdictional grounds, Judge Barker’s court took the time and effort to analyze the substantive legal claims involving RESPA, TILA, I.C. 32-30-10.5, torts, fraud, FDCPA and RICO. If lenders or their counsel face these claims in a similar context (following a state court foreclosure case), the Mains opinion would be a good place to start one’s research.

In the end, this case is another in line of recent federal court cases I’ve discussed that dismisses a borrower’s post-foreclosure claims and defenses. For more on the Rooker-Feldman doctrine, click here for my 8/24/16 post.

UPDATE:  Seventh Circuit Affirms Dismissal Of Borrower’s Post-Foreclosure Federal Claims Based On Rooker-Feldman and Res Judicata

Does A Deed-In-Lieu Of Foreclosure Automatically Release A Borrower From Personal Liability?

A deed-in-lieu of foreclosure (DIL) is one of many alternatives to foreclosure.  For background, review my post Deeds In Lieu Of Foreclosure: Who, What, When, Where, Why And How.  Today I discuss the Indiana Court of Appeals’ opinion in GMAC Mortgage v. Dyer, 965 N.E.2d 762 (Ind. Ct. App. 2012), which explored whether a DIL in a residential mortgage foreclosure case released the defendant borrower from personal liability. 

Deficiency.  In GMAC Mortgage, the borrower sought to be released from any deficiency.  The term “deficiency” typically refers to the difference between the fair market value of the mortgaged real estate and the debt, assuming a negative equity situation.  Exposure to personal liability arises out of the potential for a “deficiency judgment,” which refers to the money still owed by the borrower following a sheriff’s sale.  The amount is the result of subtracting the price paid at the sheriff’s sale from the judgment amount.  (For more on this topic, please review my August 1, 2008, June 29, 2009 and March 9, 2012 posts.) 

DIL, explained.  GMAC Mortgage includes really good background information on the nature of a DIL, particularly in the context of residential/consumer mortgages.  According to the U.S. Department of Housing and Urban Development (HUD), a DIL “allows a mortgagor in default, who does not qualify for any other HUD Loss Mitigation option, to sign the house back over to the mortgage company.”  A letter issued by HUD in 2000 further provides:

[d]eed-in-lieu of foreclosure (DIL) is a disposition option in which a borrower voluntarily deeds collateral property to HUD in exchange for a release from all obligations under the mortgage.  Though this option results in the borrower losing the property, it is usually preferable to foreclosure because the borrower mitigates the cost and emotional trauma of foreclosure . . ..  Also, a DIL is generally less damaging than foreclosure to a borrower’s ability to obtain credit in the future.  DIL is preferred by HUD because it avoids the time and expense of a legal foreclosure action, and due to the cooperative nature of the transaction, the property is generally in better physical condition at acquisition.

Release of liability in FHA/HUD residential cases.  The borrower in GMAC Mortgage had defaulted on an FHA-insured loan.  The parties tentatively settled the case and entered into a DIL agreement providing language required by HUD that neither the lender nor HUD would pursue a deficiency judgment.  The borrower wanted a stronger resolution stating that he was released from all personal liability.  The issue in GMAC Mortgage was whether the executed DIL agreement precluded personal liability of the borrower under federal law and HUD regulations.  The Court discussed various federal protections afforded to defaulting borrowers with FHA-insured loans, including DILs.  In the final analysis, the Court held that HUD’s regulations are clear:  “A [DIL] releases the borrower from all obligations under the mortgage, and the [DIL agreement] must contain an acknowledgement that the borrower shall not be pursued for deficiency judgments.”  In short, the Court concluded that a DIL releases a borrower from personal liability as a matter of law. 

Commercial cases.  In commercial mortgage foreclosure cases, however, a lender/mortgagee may preserve the right to pursue a deficiency, because the federal rules and regulations outlined in GMAC Mortgage do not apply to business loans or commercial property.  The parties to the DIL agreement can agree to virtually any terms, including whether, or to what extent, personal liability for any deficiency is being released.  The point is that the issue of a full release (versus the right to pursue a deficiency) should be negotiated in advance and then clearly articulated in any settlement documents.  A release is not automatic. 

GMAC Mortgage is a residential, not a commercial, case.  The opinion does not provide that all DILs release a borrower from personal liability, and the precedent does not directly apply to an Indiana commercial mortgage foreclosure case. 


I represent parties in loan-related litigation.  If you need assistance with such a matter, please call me at 317-639-6151 or email me at  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.