Lt. Henry G.L. McCullough and Princess S.D. Naro-McCullough v. CitiMortgage, Inc.
70 N.E.3d 820
| Ind. | 2017Background
- In 1994 the McCulloughs borrowed $158,620 and executed a promissory note and mortgage on their Granger, Indiana home; assignments later placed the note and mortgage with CitiMortgage.
- The McCulloughs filed three Chapter 13 bankruptcies (2006, 2010, 2012); the third was converted to Chapter 7 and the debtors received a Chapter 7 discharge in 2013.
- CitiMortgage sued in May 2014 to foreclose the mortgage, alleging default beginning January 1, 2013, and sought an in rem judgment for the outstanding principal and costs.
- CitiMortgage moved for summary judgment and designated the note, mortgage, assignments, and an affidavit confirming possession of the original endorsed note and default; the McCulloughs filed numerous documents but no supporting affidavits.
- The trial court granted summary judgment to CitiMortgage and ordered a sheriff’s sale; the McCulloughs appealed pro se, initially filing defective appellate submissions which led to dismissal of their first appeal, but this Court granted transfer and considered the merits.
- The central legal dispute: whether the Chapter 7 discharge eliminated CitiMortgage’s ability to foreclose the mortgage lien, and whether summary judgment was proper given the record.
Issues
| Issue | Plaintiff's Argument (CitiMortgage) | Defendant's Argument (McCulloughs) | Held |
|---|---|---|---|
| Does a Chapter 7 discharge eliminate the mortgage lien so foreclosure is improper? | Discharge does not affect the mortgage lien; creditor may pursue in rem foreclosure. | The Chapter 7 discharge paid/terminated the debt such that the mortgage was "paid in full" and foreclosure is improper. | Held: Discharge eliminates only personal liability, not the in rem mortgage lien; foreclosure may proceed. |
| Was summary judgment proper on CitiMortgage’s foreclosure claim? | Yes — CitiMortgage met its prima facie burden with note, mortgage, assignments, and affidavits; McCulloughs produced no admissible affidavits to raise a genuine issue. | McCulloughs argued they had paid down the loan via bankruptcy plan payments and were not in default. | Held: Summary judgment proper; McCulloughs failed to present evidence (affidavits) creating a factual dispute. |
| Were the McCulloughs’ pro se procedural defects fatal on appeal? | CitiMortgage moved to dismiss for failure to cure defective briefs/appendix. | McCulloughs sought leave to file belated or nonconforming briefs. | Held: Court of Appeals acted within discretion to dismiss initial appeal for flagrant rule violations; this Court later accepted transfer and reached merits. |
| Must a foreclosing plaintiff produce original note/mortgage to proceed? | Plaintiff produced affidavits asserting possession of original note and offered copies; originals not strictly required where evidence supports holder status. | Defendants argued originals were not produced and assignments improper (attacked MERS). | Held: CitiMortgage’s designated affidavits and documents were sufficient; challenges to MERS and demand for originals were not persuasive. |
Key Cases Cited
- Miller v. Hague Ins. Agency, Inc., 871 N.E.2d 406 (Ind. Ct. App. 2007) (court may dismiss appeal for flagrant procedural rule violations)
- Reed v. Reid, 980 N.E.2d 277 (Ind. 2012) (standard of review for summary judgment)
- Gill v. Evansville Sheet Metal Works, Inc., 970 N.E.2d 633 (Ind. 2012) (movant’s prima facie burden on summary judgment and nonmoving party’s duty to present evidence)
- Kroger Co. v. Plonski, 930 N.E.2d 1 (Ind. 2010) (construe factual inferences in favor of nonmoving party)
- Johnson v. Home State Bank, 501 U.S. 78 (1991) (bankruptcy discharge removes personal liability but lien survives bankruptcy)
- McClellan v. Cantrell, 217 F.3d 890 (7th Cir. 2000) (bankruptcy discharge gives debtor a fresh start but does not necessarily remove secured creditors’ liens)
- Thacker v. Wentzel, 797 N.E.2d 342 (Ind. Ct. App. 2003) (pro se litigants are held to the same procedural rules as counsel)
- Long v. Bullard, 117 U.S. 617 (1886) (longstanding rule that liens survive bankruptcy discharge)