FOR PUBLICATION FILED
Sep 11 2012, 9:34 am
CLERK
of the supreme court,
court of appeals and
tax court
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
ROBERT E. STOCHEL CARL A. GRECI
Merrillville, Indiana ANGELA K. HALL
RYAN G. MILLIGAN
South Bend, Indiana
IN THE
COURT OF APPEALS OF INDIANA
PHILLIP A. COLLINS, )
)
Appellant, )
)
vs. ) No. 45A03-1111-MF-600
)
HSBC BANK USA, National Association, as )
TRUSTEE FOR HOME EQUITY LOAN )
TRUST SERIES ACT 2004-HE3, )
)
Appellee. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable John R. Pera, Judge
Cause No. 45D10-0802-MF-95
September 11, 2012
OPINION – FOR PUBLICATION
PYLE, Judge
STATEMENT OF CASE
Phillip A. Collins (“Collins”) appeals the trial court’s grant of summary judgment
in favor of HSBC Bank USA, N.A., As Trustee for Home Equity Loan Trust Series Act
2004-HE3 (“HSBC”).
We affirm.
ISSUES
1. Whether the trial court erred in not concluding that there was a
genuine issue of material fact regarding HSBC’s status as the holder
and/or owner of the note in a mortgage foreclosure action.
2. Whether the trial court erred in denying Collins’ request to conduct
additional discovery regarding HSBC’s status as the holder and/or
owner of the note.
3. Whether the trial court erred in granting summary judgment on
counterclaims regarding the acts of HSBC’s agent.
FACTS
On or about August 27, 2004, Collins executed and delivered to WMC Mortgage
Company (“WMC”) an adjustable rate note in the original principal sum of $201,400.00,
evidencing a loan in that sum for the purchase of real estate and improvements. On the
same day, in order to secure repayment of the sums under the note, Collins executed a
mortgage, wherein Mortgage Electronic Registration Systems, Inc., (“MERS”) as
nominee for WMC, was granted a security interest in the real estate.1
1
MERS “operates a computer database designed to track servicing and ownership rights of mortgage
loans anywhere in the United States. Originators and secondary market players pay membership dues and
2
In December 2004, America’s Service Company (“ASC”) began servicing the
loan under the terms of the original loan documents. Collins remitted his payments under
the loan to ASC and communicated with ASC regarding issues related to the loan. Under
the terms of the loan, mortgage payments were due on the first of each month, with a
fifteen-day grace period after which ASC assessed a late fee. Under the terms of the
loan, if Collins missed a payment, his next payment was applied to the principal and
interest for the missed month.
In November 2006, Collins experienced financial difficulties, so he contacted ASC
to request that his loan payments be restructured. ASC agreed to enter into a temporary
forbearance agreement, dated November 1, 2006. This agreement changed the payment
due date to the 15th day of each month and allowed Collins to spread his missed October
2006 payment over equal installments through July 2007, during which time the holder of
the loan would forbear from exercising its contractual right to accelerate the total amount
of the loan. The agreement provided, however, that all of the provisions of the note and
the mortgage would remain in effect unless stated otherwise and that credit bureau
reporting would continue during the agreement’s term. With reference to credit bureau
reporting, the agreement stated that the “contractual due date of your loan will continue
per-transaction fees to MERS in exchange for the right to use and access MERS records.” Christopher L.
Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System,
78 University of Cincinnati L. Rev. 1359, 1361 (2010).
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to be reported to the credit bureaus on a monthly basis. While this Agreement is in
effect, there may be a special notation: ‘Paying under a partial payment Agreement.’”
(Collins’ App. 263).
On April 1, 2007, ASC agreed to enter into a second forbearance agreement. This
agreement changed the payment due date to the 27th day of each month. The agreement
did not alter ASC’s right to impose late fees and make credit reports.
In or around September 2007, Collins stopped making payments on the loan.
Collins was provided with a notice of default and with notice of intent to accelerate the
indebtedness pursuant to the loan. Thereafter, HSBC, as holder and/or owner of the note,
filed a foreclosure complaint.
The trial court entered summary judgment for HSBC on its foreclosure complaint
and on Collins’ counterclaims. This appeal followed.
DECISION
1. HSBC’s Status as Holder of the Note
Collins challenges the trial court’s grant of HSBC’s summary judgment motion.
The standard of review for a summary judgment motion is the same as that used in the
trial court: summary judgment is appropriate only where the evidence shows that there is
no genuine issue of material fact and that the moving party is entitled to judgment as a
matter of law. Reeder v. Harper, 788 N.E.2d 1236, 1240 (Ind. 2003) (citing Indiana Trial
Rule 56(C)). The moving party bears the burden of designating evidence showing that no
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genuine issue of material fact exists and that it is entitled to a judgment as a matter of
law. Pfenning v. Lineman, 947 N.E.2d 392, 396 (Ind. 2011). Once met, the burden shifts
to the non-movant to specifically designate facts showing that there is no genuine issue
for trial. Id. at 397. All facts and reasonable inferences drawn from those facts are
construed in favor of the non-movant. Reeder, 788 N.E.2d at 1240. Review of a
summary judgment motion is limited to those materials designated to the trial court. Id.
We must carefully review a decision on a summary judgment motion to ensure that a
party was not improperly denied its day in court. Id.
In its order granting summary judgment, the trial court found that HSBC was the
current holder of the note and mortgage and that HSBC was entitled to a judgment on the
note and to foreclose on the mortgage. Collins contends that the trial court erred in
granting HSBC’s motion for summary judgment because two affidavits filed by HSBC in
support of its motion created a material issue of fact. Specifically, Collins claims that the
affidavits “compete” because both affidavits state that the attached copy of the note is
“true and accurate,” when one of the attached copies of the note contains WMC’s
endorsement to HSBC and the other does not. Collins’ Br. at 11-12.
In the first affidavit, ASC foreclosure litigation specialist Jaime Walls avers that
HSBC is the “present owner and holder of the [note, mortgage, and assignment].”
(Collins’ App. 183). Walls also avers that the note, mortgage, and assignment of the
mortgage attached to HSBC’s complaint are “true and accurate copies of documents
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evidencing the indebtedness of Collins to HSBC and securing that indebtedness . . . .”
Id. The note attached to the complaint is not endorsed by WMC.
Because the note attached to the complaint was not endorsed, Collins requested
that the trial court deny HSBC’s motion for summary judgment, arguing that HSBC had
failed to show that it was the holder and/or owner of the WMC note. In a second,
supplemental affidavit, ASC default litigation specialist Robert Williams avers that he
“took over handling of this matter from . . . Jaime Walls.” (Collin’s App. 305). Williams
also avers that HSBC is “the present holder and owner of the Collins’ Note and
Mortgage” and that ASC, “as servicer of Collins’ Mortgage Loan, is entitled to enforce
the Note and Mortgage on HSBC’s behalf.” (Collin’s App. 305-06). Attached to
Williams’ affidavit is a copy of the original note, which includes an endorsement by
WMC to HSBC. This endorsement reads as follows: “Pay to the order of HSBC Bank
USA, National Association as Trustee, in trust for the registered holders of ACE [sic]
Securities Corp. Home Equity Loan Trust, Series 2004-HE3, [illegible] Backed Pass-
Through Certificates.” (Collins’ App. 312).
Collins maintains that the trial court had to weigh the evidence to conclude that
HSBC is the owner of the note. Our review of the summary judgment hearing discloses
that HSBC presented the original note with Collins’ inked signature and that the note
contained the endorsement from WMC to HSBC. The endorsement evidences HSBC’s
right to enforce the note. See Ind. Code § 26-1-3.1-204(c) (“For the purpose of
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determining whether the transferee of an instrument is a holder, an endorsement that
transfers a security interest in the instrument is effective as an unqualified endorsement of
the instrument); I.C. § 26-1-3.1-301(1) (defining the holder of the instrument as a
“[p]erson entitled to enforce” an instrument); I.C. § 26-1-1-201(A) (defining a “holder”
as “the person in possession of a negotiable instrument that is payable either to bearer or
to an identified person if the identified person is in possession of the instrument”). There
is only one inference to be drawn here: HSBC is the holder and owner of the note, and as
such, it is entitled to enforce the note. Accordingly, the trial court did not err in granting
summary judgment on this issue.
2. Denial of Motion to Conduct Additional Discovery
Collins contends that the trial court erred in denying its motion to conduct
additional discovery into the ownership of the note. The decision to grant a continuance
of summary judgment deadlines is committed to the sound discretion of the trial court.
Logan v. Royer, 848 N.E.2d 1157, 1160 (Ind. Ct. App. 2006) (citing Ind. Trial Rule
56(I)). An abuse of discretion occurs if the trial court’s decision is clearly against the
logic and effect of the facts and circumstances before the court. Id. Our supreme court
has stated that it is generally improper for a trial court to grant summary judgment “while
reasonable discovery requests that bear on issues material to the motion are still
pending.” Quiring v. GEICO General Ins. Co., 953 N.E.2d 119, 132-33 (Ind. Ct. App.
2011). However, in order to establish that a trial court abused its discretion in denying a
7
motion for continuance, “the appealing party must show both that good cause existed to
grant the motion and that it was prejudiced by the denial.” Id. at 133.
Here, Collins initially refers to two potential areas of additional discovery: (1) the
validity of the assignment from WMC to HSBC and (2) “the facts and circumstances
involved in HSBC acting as trustee for an entity known as ‘Home Equity Loan Trust
Series ACT 2004-HE3.’” Collins’ Br. at 15. We conclude that neither inquiry could lead
to the development of a material issue of fact. As discussed above, HSBC, as the holder
of the endorsed note, is entitled to enforce the note under Indiana Code sections 26-1-3.1-
204(c), 26-1-3.1-301(1), and 26-1-1-201(A). Also, the existence of the trust could not
have come as a surprise to Collins, as the complaint caption and first line of the
complaint specifically state that the plaintiff is “HSBC Bank USA, National Association,
As Trustee For Home Equity Loan Trust Series ACE [sic] 2004-HE3.” (Collins’ App.
22).
Collins also refers to “nationwide litigation, state and federal investigations, and
thousands of articles and conclusions reached by courts that the process and procedure of
assignment and transfer of mortgage notes is rife with fraud, disingenuous affidavits and
inappropriate conduct by mortgage companies and their loan servicers.” Collins’ Br. at
15. While Collins’ allegation may or may not be true, it does not address the designated
facts of this case. The evidence shows not only that HSBC is in possession of the
original note but also that the original note was endorsed to HSBC. There exists no
8
better evidence to establish that HSBC is the present holder of the note entitled to enforce
the note under Indiana law. Under these circumstances, we cannot conclude that Collins
showed either good cause to grant the motion for additional discovery or that he was
prejudiced by the denial. Accordingly, we conclude that the trial court’s denial of
Collins’ motion was not erroneous.
3. Counterclaims
Collins contends that the trial court erred in granting summary judgment on his
counterclaims against HSBC. In these counterclaims, Collins contends that ASC
breached its contractual duties when it continued to charge late fees and to make negative
credit reports after the parties entered into the forbearance agreements. Collins also
contends that ASC violated a provision of the Indiana Home Loan Practices Act
(“IHLPA”), Indiana Code section 24-9-2-7.2 HSBC’s liability under the counterclaims is
based on Collins’ contention that HSBC, as the principal, is liable for the wrongful
conduct of ASC as HSBC’s agent.
In granting summary judgment to HSBC on Collins’ counterclaims, the trial court
entered findings of fact and conclusions of law. The trial court recognized that under the
counterclaims, HSBC’s alleged liability is derivative of ASC’s liability, and the trial
court found the following:
2
This section of the IHLPA defines a prohibited “[d]eceptive act” as one where “an act or practice as part
of a consumer credit mortgage transaction involving real property located in Indiana in which a person at
the time of the transaction knowingly or intentionally (1) makes a material misrepresentation; or (2)
conceals material information regarding the terms or conditions of the transaction.”
9
There is no genuine issue of material fact or law with respect to Collins’
Counterclaims against HSBC, as set forth in the briefs and accompanying
designations, and also as set forth more fully in the opinions in the
companion case filed against HSBC’s servicer [ASC], Collins v. America’s
Servicing Co., Cause No. 2:08-CV-0122 RM, alleging the same claims and
same facts against ASC as against HSBC, wherein Judge Robert L. Miller,
Jr., of the United States District Court for the Northern District of Indiana,
granted summary judgment in favor of ASC and against Collins and the
Seventh Circuit recently affirmed Judge Miller’s decision in Collins v.
America’s Servicing Co., 625 F.3d 711 (7th Cir. 2011).
(Collins’ App. 18).3
On appeal and during the summary judgment proceedings below, HSBC
contended that the doctrine of collateral estoppel is applicable under the circumstances of
this case.4 Under Indiana law, collateral estoppel or “issue preclusion” bars a party from
relitigating any fact or issue that it necessarily adjudicated in a former suit. Sullivan v.
American Cas. Co. of Reading, Pa. et al., 605 N.E.2d 134, 137 (Ind. 1992). Thus,
collateral estoppel does not require previous litigation of the same claims. Rather, a
party’s adjudication of an issue will be conclusive in later actions where (a) he had a full
and fair opportunity to litigate the issue and (b) the use of collateral estoppel would not
otherwise be unfair. Id. at 138. Moreover, we recognize the use of “defensive” collateral
estoppel to promote judicial economy by foreclosing a plaintiff from asserting a claim
3
Findings are not required in the summary judgment context, and although they are not binding on this
court, they offer valuable insight into the trial court’s rationale and facilitate our review. Golitko v. Ind.
Dep’t of Corr., 712 N.E.2d 13, 15 (Ind. Ct. App. 1999), trans. denied.
4
Collins contested this contention during the summary judgment proceedings, but he has abandoned his
opposition on appeal.
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previously litigated and lost against another defendant. Hayworth v. Schilli Leasing, Inc.,
669 N.E.2d 165, 167-68 (Ind. 1996).
Here, as noted above, Collins’ counterclaims against HSBC solely derive from
HSBC’s purported liability for the alleged wrongdoing of ASC, HSBC’s agent. Our
comparison of the federal opinions granting and affirming summary judgment against
Collins and in favor of ASC on breach of contract and deceptive acts under the IHLPA to
the counterclaims raised in this suit against HSBC discloses that Collins is attempting to
relitigate its claims against ASC. Indeed, the federal opinions exactly track the
allegations made in the present case, albeit without reference to HSBC.
Under the circumstances of this case, where Collins does not contest the
application of the collateral estoppel doctrine, has not shown an absence of a full and fair
opportunity to litigate the issue in the chosen federal court system, and has not shown
how the use of estoppel is unfair, we conclude that he is estopped from asserting claims
previously lost and litigated.
Affirmed.
FRIEDLANDER, J., and BROWN, J., concur.
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