Citimortgage, Inc. v. BarabasCitimortgage, Inc. v. Barabas
Lead Opinion
OPINION
STATEMENT OF THE CASE
Appellant-Intervener/Cross-Claimant, Citimortgage, Inc. (Citi), appeals the trial court’s grant of amended default judgment in favor of Appellee-Plaintiff/Cross-Claim Defendant, ReCasa Financial Group, Inc. LLC (ReCasa), and Appellee/Third-Party Defendant, Rick A. Sanders (Sanders).
We affirm.
ISSUE
Citi raises one issue on appeal, which we restate as follows: Whether the trial court abused its discretion when it declined to set aside ReCasa’s amended default judgment.
FACTS AND PROCEDURAL HISTORY
On August 8, 2005, Shannon Barabas (Barabas) executed a $154,111 mortgage securing property commonly known as 8285 South Firefly Drive (the Property) in Pendleton, Madison County, Indiana. The mortgage states in pertinent part:
This Security Instrument is given to Mortgage Electronic Registration Systems, Inc. (“MERS”), (solely as nominee for Lender, as hereinafter defined, and Lender’s successors and assigns), as mortgagee. MERS is organized and existing under the laws of Delaware, and has an address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679-MERS. Irwin Mortgage Corporation.
(Appellant’s App. p. 88) (emphasis in original). The mortgage also defines the lender in the mortgage, Irwin Mortgage Corporation (Irwin Mortgage), stating that it “is organized and existing under the laws of [t]he State of Indiana, and has an address of 10500 Kincaid Drive, Fishers, IN 46038.” (Appellant’s App. p. 88). The mortgage also provides that “Borrower [Barabas] owes Lender the principal sum of [$154,111].” (Appellant’s App. p. 88). Additionally, with respect to notice, the mortgage provides that:
Any notice to Lender shall be given by first class mail to Lender’s address stated herein or any address Lender designates by notice to Borrower. Any notice provided for in this Security Instrument shаll be deemed to have been given to Borrower or Lender when given as provided in this paragraph.
(Appellant’s App. p. 93) (emphasis added). The mortgage was recorded on August 19, 2005 in the Madison County Recorder’s Office.
On February 26, 2007, Barabas financed with ReCasa two additional mortgages: a first mortgage on property in Marion County and a second mortgage on the Proрerty in Madison County in the amount of $100,000.
COMES NOW the Defendant, Irwin Mortgage Corporation, by counsel, and hereby disclaims any interest in the real*14 estate which is the subject of Plaintiffs Complaint.
WHEREFORE, the Defendant, Irwin Mortgage Corporation, prays that the Plaintiff take whatever relief it is entitled to by virtue of its Complaint and seeks all other relief proper in the premises.
(Appellant’s App. p. 51).
On September 9, 2008, the trial court entеred a default judgment in the foreclosure lawsuit. Barabas had previously been discharged of her debt in bankruptcy, so an amended default judgment reflecting that fact was entered on September 16, 2008.
A month after the Property had been sold, in April 2009, MERS assigned the MERS mortgage to Citi. That assignment was recorded on April 20, 2009, in the Madison County Recorder’s Office. On October 28, 2009, Citi filed a motion to intervene and for relief from the amended default judgment. Citi’s motion argued that as the assignee of MERS, it could assert any and all rights of MERS, and as a result, it was the holder of the first mortgage on the Property. On October 26, 2009, the trial court issued an order authorizing Citi to intervene and held that ReCasa’s amended default judgment was vacated and set aside as to “any interest held by [Citi],- as the assignee of [MERS], as nominee for Irwin Mortgage Corporation.” (Appellant’s App. p. 99). On November 19, 2009, Citi filed an amended order for reliеf from judgment, asking the trial court to set aside and vacate the sheriffs deed.
On December 8, 2009, Citi filed a cross-claim, counterclaim, and third party complaint seeking to foreclose the MERS mortgage. Citi named ReCasa and Sanders, stating that Sanders took the property ‘subject to’ the MERS mortgage and that his interest was junior to that of Citi.
On December 23, 2009, Sanders filed a motion to vacate the October 26, 2009 order allowing Citi to intervene and also filed a responsive pleading to ReCasa’s complaint. That same day, ReCasa filed a verified objection to Citi’s motion for amended order for relief from judgment. A hearing was held on February 16, 2010. Following the hearing, the trial court issued an order vacating its October 26, 2009 order. The trial court’s order stated, in relevant part:
6. The [c]ourt finds that [Citi] and the creditors of the [bankruptcy [proceeding had notice of ReCasa’s interest in the Real Estate and this proceeding pursuant to the [bankruptcy [p]roeeeding and ReCasa’s August 4, 2008 Motion for Relief from Stay and Abandon Real Estate.
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8. The [c]ourt further finds that [Citi] also filed a Motion for Relief From Automatic Stay and Abandonment with 30 Day Waiver (Relief Motiоn) on September 22, 2008, as to a “security interest” in the Real Estate as a “Mortgage Lien”, but [Citi] did not attach any documentation and evidence to the Relief Motion as to [Citi’s] interest in the Real Estate, as to the Irwin Mortgage, and as to any lien on the Real Estate.
*15 9. The [c]ourt further finds that [Citi’s] Relief Motion did not provide any notice to ReCasa and the creditors of the [bankruptcy [proceeding as to any interest of [Citi] in the Real Estate and as to Irwin Mortgage.
* * *
16. The [c]ourt further finds that [Citi’s] September 22, 2008 Relief Motion and the [b]ankruptcy [proceeding could not provide notice of any interest obtained by [Citi] pursuant to the Assignment of Mortgage since the Assignment of Mortgage was executed more than six months after the filing of the Relief Motion and after the termination and closure of the [bankruptcy [proceeding.
17. The [c]ourt further finds that no one has provided any evidence to this [c]ourt of the existence of any document providing notice of [Citi’s] interest in the Real Estate and the Irwin Mortgage prior to the filing of ReCasa’s June 18, 2008 [c]omplaint.
18. The [c]ourt further finds that no one has provided to this [e]ourt any document evidencing and providing nоtice of [Citi’s] interest in Real Estate and Irwin Mortgage other than [Citi’s] submission of an April 1, 2009 Assignment of Mortgage recorded 22 months after the filing of ReCasa’s [c]omplaint and six months after the [e]ourt’s September 9, 2008 [d]efault [j]udgment and order of foreclosure.
19. The [c]ourt further finds that pursuant to Indiana Code [§ ] 82-29-8-2 and the findings herein, [Citi] failed to have its Assignment of Mortgage properly placed on the mortgаge record, and [Citi] is bound by this [c]ourt’s September 9, 2008 [d]efault [j]udgment, September 16, 2008 Amended [d]efault [judgment, and order of foreclosure in this cause of action as if [Citi] were a party to ReCasa’s [c]omplaint.
20.The [c]ourt further finds that pursuant to Indiana Code [§ ] 32-29-8-3, ReCasa purchased the Real Estate under this [c]ourt’s September 9, 2008 [d]efault [judgment, September 16, 2008 Amended [d]efault [j]udgment, and order of foreclosure at the Judicial Sale free and discharged of any interest of [Citi] when ReCasa purchased the Real Estate on or about January 23, 2009 without actual notice of [Citi’s] April 20, 2009 recorded Assignment of Mortgage of the transfer of any notice to [Citi].
(Appellant’s App. pp. 8-10).
Citi now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
Citi argues that the trial court erred when it declined to sеt aside ReCasa’s amended default judgment. Specifically, Citi contends that ReCasa’s failure to name MERS as a party defendant rendered its foreclosure judgment ineffective as to MERS and its assignee, Citi.
The trial court held that Citi failed to redeem the Property within one year of the judicial sale, and, as a result, its claim is precluded by Indiana Code section 32-29-8-3, which provides that:
A person who purchases a mortgaged premises or any part of a mortgaged premises under the court’s judgment or decree аt a judicial sale or who claims title to the mortgaged premises under the judgment or decree, buying without actual notice of an assignment that is not of record or of the transfer of a note, the holder of which is not a party to the action, holds the premises free and discharged of the lien. However, any as-signee or transferee may redeem the premises, like аny other creditor, during the period of one (1) year after the sale.
The evidence shows that ReCasa filed a complaint to foreclose the Property on June 18, 2008. Then, ReCasa purchased the Property at a judicial sale on January 23, 2009, and sold the Property to Sanders on March 17, 2009. After the Property had already been sold, one month later, MERS assigned its interest in thе Property to Citi and Citi recorded its interest on April 20, 2009. On October 23, 2009, over a year after ReCasa first foreclosed on the Property and nearly six months after the Property was sold and recorded, Citi sought to assert its interest in the first mortgage. Based on this information, it is clear that the trial court did not abuse its discretion when it found that
However, our analysis does not end here. Citi goes on to argue that
In Landmark Nat’l Bank v. Kesler,
Thereafter, Sovereign filed an answer to the foreclosure petition, claiming a second mortgage on the property as the successor in interest to Millennia. Id. at 161-62. Sovereign also filed a motion to set aside or vacate the default judgment on the basis that MERS was a contingently neces
The trial court entered an order finding that MERS was not a real party in interest and that Landmark was therefore not required to name it as a party to the foreclosure action. Id. The trial court also found that MERS was merely an agent or representative for Millennia, and that Sovereign’s failure to register its interest precluded it from asserting any rights to the mortgage after the judgment was entered. Id.
On appеal, the Kansas supreme court discussed the nature of MERS relative to the lender for whom it served as a nominee. Id. at 166. The court took note of Black’s Law Dictionary, which defines a nominee as “ ‘[a] person designated to act in place of another, usu. in a very limited way’ and as ‘[a] party who holds bare legal title for the benefit of others or who receives and distributes funds for the benefit of others.’ ” Id. (quoting Black’s Law Dictionary 1086 (8th Ed.2004)). The court also cited various cases from other jurisdictions in which courts have interpreted the relationship of MERS and a lender as an agency relationship. Id. See In re Sheridan,
Ultimately, the Kansas supreme court found that in this case, MERS was little more than a “straw man” for Millennia (and later Sovereign). Id. at 166. The supremе court also noted that the mortgage repeatedly referenced the lender— not MERS — with respect to how notice was to be provided. Id. at 165-166. As such, the supreme court held that
[ e]ven if MERS was technically entitled to notice and service in the initial foreclosure action — an issue we do not decide at this time — we are not compelled to conclude that the trial court abused its discretion in denying the motion to vacate default judgment and require joinder of MERS and Sovereign.
Id. at 168.
We choose to follow the persuasive reasoning of the Landmark case because it is factually similar to the present case. Like Landmark, Citi seeks to have the default judgment set aside based on the fact that it received its interest from MERS, which served as the mortgagee “solely as nominee” for Irwin Mortgage. (Appellant’s App. p. 88). Thus, when Irwin Mortgage filed a petitiоn and disclaimed its interest in the foreclosure, MERS, as mere nominee and holder of nothing more than bare legal title to the mortgage, did not have an enforceable right under the mortgage sep
CONCLUSION
Based on the foregoing, we conclude that the trial court did not abuse its discretion when it declined to set aside ReCasa’s аmended default judgment.
Affirmed.
Notes
. The Marion County property is not subject to this appeal.
. On September 22, 2008, Citi filed a motion for relief from the automatic stay in the bankruptcy proceeding. In that motion, Citi claimed to have been granted a security interest in the Property before Barabas filed for bankruptcy on July 15, 2008.
. See
. A similar result was reached in Mortgage Elec. Registration System, Inc. v. Southwest Homes of Arkansas,
. We need not address Citi's argument that MERS was denied its due process rights when MERS was not provided with notice because we find that notice to Irwin Mortgage, аs lender, was sufficient.
Dissenting Opinion
dissenting.
I respectfully dissent from the majority opinion with respect to its application of
A. Application of Ind,.Code
The majority cites to
B. MERS as a Party Possessing Rights Under the Mortgage
The majority states that it chooses to follow the reasoning of Landmark Nat’l Bank v. Kesler,
Unlike in Landmark, the mortgage in this case was “given to Mortgage Electronic Registration Systems, Inc. (‘MERS’), (solely as nominee for Lender, as hereafter defined, and Lender’s successors and assigns), as mortgagee.’” Appellant’s Appendix at 88 (emрhasis added). This language is set forth on the first page of the mortgage. (App. at 88) While there may be some ambiguity by the use of both the words “nominee” and “mortgagee” in the sentence here, the mortgage nevertheless does identify MERS, not lender Irwin Mortgage, as the mortgagee. (Appellant’s Appendix at 88-94 (mortgage))
Moreover, two facts here — that MERS, not Irwin Mortgage, assigned the mоrtgage to Citi, and Irwin Mortgage’s disclaimer of interest — indicate that MERS was more than a “straw man” and that MERS had a real interest in the Property. (App. at 127 (assignment), 51 (disclaimer))
I also observe that, while the notice provision relied upon in part by the majority specifies that “[a]ny notice to Lender shall be given ... to Lender’s address,” see Appellant’s Appendix at 93 (emphasis added), the mortgage also provided an address for MERS. (Appellant’s App. at 88 (MERS address))
For the foregoing reasons, I would find that