55 N.E.3d 906
Ind. Ct. App.2016Background
- In 2003 Williamson and his then-wife executed a $71,000 note secured by a mortgage; MERS held the documents as nominee. Default occurred in 2008; Custom Mortgage assigned the loan to U.S. Bank and U.S. Bank sued for foreclosure in 2009, obtaining a default judgment.
- A sheriff’s sale occurred September 16, 2009 by mistake; U.S. Bank’s bid prevailed, a deed issued to U.S. Bank, but the trial court vacated that sale and deed on December 11, 2009.
- On December 20, 2010 Williamson and U.S. Bank executed a loan modification (Modification Agreement) and Williamson made timely payments through October 2013.
- Williamson learned his name had been removed from the recorded deed (an earlier consequence of the erroneous sheriff’s sale) and refused further mortgage payments until assured his name was restored; U.S. Bank filed to foreclose again in May 2014 after missed payments.
- U.S. Bank moved for summary judgment (Sept. 2014). Williamson responded, arguing mistake of fact (he thought his name remained on the deed) and requesting reformation or rescission, and later argued U.S. Bank breached first. U.S. Bank filed a reply and supplemental evidence in May 2015. The trial court denied Williamson’s same-day motion to strike the late materials and granted summary judgment to U.S. Bank. Williamson appealed.
Issues
| Issue | Plaintiff's Argument (Williamson) | Defendant's Argument (U.S. Bank) | Held |
|---|---|---|---|
| Whether trial court abused discretion by denying motion to strike U.S. Bank’s reply and additional evidence | Reply and evidence were untimely and prejudicial | Williamson filed motion to strike the day of the hearing; denying it was within court’s discretion to avoid delay | No abuse of discretion; motion was untimely and denial proper |
| Whether mistake of fact entitled Williamson to reformation or rescission of Modification Agreement | Parties mistakenly believed Williamson’s name was on deed when signing; thus agreement voidable or reformable | Deed ownership was restored by court order before modification; no mutual mistake existed at signing | No mutual mistake; modification valid; reformation/rescission denied |
| Whether U.S. Bank breached first (bar recovery) by removing Williamson’s name from deed | Bank removed his name from deed without notice, constituting first material breach | Alleged removal (sheriff’s sale deed) occurred before modification and was vacated; bank could not have breached the later agreement | No prior breach of the Modification Agreement; foreclosure entitlement stands |
| Whether summary judgment was appropriate on foreclosure | Genuine issues of material fact remained over enforceability of modification | Production of note and mortgage shifts burden to Williamson, who failed to raise a triable issue | Summary judgment affirmed; no genuine issue of material fact |
Key Cases Cited
- Allstate Ins. Co. v. Hatfield, 28 N.E.3d 247 (Ind. Ct. App. 2015) (review of motion-to-strike is for abuse of discretion)
- Lunsford v. Deutsche Bank Trust Co., 996 N.E.2d 815 (Ind. Ct. App. 2013) (loan documents are contracts subject to contract principles)
- Carlson v. Sweeney, Dabagia, Donoghue, Thorne, James & Pagos, 895 N.E.2d 1191 (Ind. 2008) (reformation requires clear and convincing evidence of mistake and original intent)
- Creech v. LaPorte Prod. Credit Ass’n, 419 N.E.2d 1008 (Ind. Ct. App. 1981) (production of note and mortgage establishes prima facie case in foreclosure)
- Tracy v. Morell, 948 N.E.2d 855 (Ind. Ct. App. 2011) (mutual mistake that undermines the parties’ meeting of the minds can void a contract)
- Hughley v. State, 15 N.E.3d 1000 (Ind. 2014) (standard of review for summary judgment)
- Klepper v. Ace American Ins. Co., 999 N.E.2d 86 (Ind. Ct. App. 2013) (first material breach bars later enforcement)
- Munster Cmty. Hosp. v. Bernacke, 874 N.E.2d 611 (Ind. Ct. App. 2007) (balancing efficient court administration against deciding cases on the merits)