Timothy A. Williamson v. U.S. Bank National Association

FILED
Jun 10 2016, 8:54 am

CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court

ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Norman L. Reed Septtimous Taylor
Indianapolis, Indiana Owensboro, Kentucky

IN THE
COURT OF APPEALS OF INDIANA

Timothy A. Williamson, June 10, 2016
Appellant-Defendant, Court of Appeals Case No.
49A05-1506-MF-521
v. Appeal from the Marion Superior
Court
U.S. Bank National Association, The Honorable Robert R. Altice,
Appellee-Plaintiff. Jr., Judge
Trial Court Cause No.
49D05-1405-MF-15742

Pyle, Judge.

Statement of the Case
[1] Timothy A. Williamson (“Williamson”) appeals the trial court’s grant of

summary judgment in favor of U.S. Bank National Association (“U.S. Bank”)

on its mortgage foreclosure complaint. He also appeals the trial court’s denial

of his motion to strike U.S. Bank’s summary judgment reply and second

designation of evidence. He argues that the trial court abused its discretion

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 when it denied his motion to strike because U.S. Bank’s reply and second

designation of evidence were untimely. As for the trial court’s grant of

summary judgment on U.S. Bank’s mortgage foreclosure complaint,

Williamson asserts that there was a mistake of fact when he and U.S. Bank

executed the underlying loan agreement and, accordingly, the trial court should

have reformed or rescinded the agreement. Alternatively, he argues that the

trial court erred in granting summary judgment on the mortgage foreclosure

because the bank breached the mortgage agreement first and therefore could not

recover under contractual principles.

[2] Because we conclude that: (1) the trial court did not abuse its discretion in

denying Williamson’s motion to strike because it was untimely; (2) the trial

court did not err in granting summary judgment, we affirm the trial court’s

decision.

[3] We affirm.

Issues
1. Whether the trial court abused its discretion when it denied
Williamson’s motion to strike U.S. Bank’s summary judgment
reply and second designation of evidence.

2. Whether the trial court erred when it granted U.S. Bank’s
motion for summary judgment on the bank’s mortgage
foreclosure complaint.

Facts
[4] On January 13, 2003, Williamson and his then-wife, Colette Williamson

(Colette) (collectively, “the Williamsons”), executed a note in the amount of
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 $71,000.00 payable to Custom Mortgage, Inc. (“Custom Mortgage”) and

secured the note by executing a mortgage on their residential property (“the

Property”).1 They then delivered the note and mortgage to Mortgage Electronic

Registration Systems, Inc. (“MERS”), who was acting as a nominee for

Custom Mortgage.2

[5] In June 2008, the Williamsons defaulted on their payments under the note and

mortgage. On January 6, 2009, Custom Mortgage assigned its rights to the note

and mortgage to U.S. Bank, and three days later, U.S. Bank filed a mortgage

foreclosure action against the Williamsons.3 On February 27, 2009, the trial

court entered a default judgment against them and concluded that they owed

$73,364.50 under the mortgage.4 The Marion County Sheriff’s Department

(“Sheriff’s Department”) scheduled a sheriff’s sale of the Property for

1
Williamson and Colette are now divorced. The court entered an in rem default judgment against Colette on
April 29, 2015. Because she was a party below, she is listed as a party on appeal, but she did not file a
separate brief or challenge her default judgment. See Ind. Appellate Rule 17(A).
2
Our supreme court described MERS in detail in Citimortgage, Inc. v. Barabas, 975 N.E.2d 805, 809 (Ind.
2012), reh’g denied. It explained that: “In the mid-1990s, . . . a consortium of investment banks created
[MERS]. MERS maintains ‘a computer database designed to track servicing and ownership rights of
mortgage loans anywhere in the United States.’ MERS member banks list MERS as both ‘nominee’ for
Lender and as ‘mortgagee’ on their mortgage documents.” Id. (internal citations omitted).
3
The assignment that is a part of the record was dated January 27, 2014 and recorded February 10, 2014, not
January 6, 2009. However, in its 2009 mortgage foreclosure claim, U.S. Bank asserts that the assignment
occurred on January 6, 2009. Although these dates seem incongruent, they are credible within the context of
MERS’ operational structure. In Citimortgage, Inc., our supreme court explained that “MERS member banks
can [] buy and sell [a] note among themselves without recording an assignment of the mortgage. In the event
of default, MERS simply assigns the mortgage to whichever member bank currently owns the note, and that
bank forecloses on the borrower.” Citimortgage, Inc., 975 N.E.2d at 809 (internal citations omitted).
4
This amount included $66,049.03 in principal; $3,368.51 in interest accrued to February 17, 2009, and
interest at a rate of $11.54 per day thereafter; $2,946.96 in costs, expenses, and advances; and $1,000.00 in
attorney fees.

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 September 16, 2009, and U.S. Bank submitted a written bid to buy it at the sale.

However, on September 15, the day before the sale, U.S. Bank notified its

counsel that it was negotiating a plan with the Williamsons to resolve their

mortgage arrearage. Accordingly, U.S. Bank’s counsel then sent a notice to the

Sheriff’s Department requesting it to cancel the sale.

[6] In spite of U.S. Bank’s notice, the Sheriff’s Department inadvertently held the

sheriff’s sale the next day, and U.S. Bank’s previously submitted bid was the

highest bid. As a result, the Sheriff’s Department executed a deed for the

Property to U.S. Bank and recorded the deed in the Marion County Recorder’s

Office. U.S. Bank later discovered the mistake and, on December 10, 2009,

moved for the trial court to set aside the sheriff’s sale and to vacate the sheriff’s

deed. The trial court granted the motion on December 11, 2009 and ordered

the deed vacated.

[7] A year later, on December 20, 2010, the Williamsons and U.S. Bank executed a

loan modification agreement (“Modification Agreement”) amending the note

and mortgage. In the Modification Agreement, the Williamsons agreed to pay

$82,261.09 at a yearly rate of four percent, starting December 1, 2010. They

then made timely payments from December 2010 until October 2013.

However, sometime during that time period, Williamson discovered that his

name had previously been removed from the deed to the Property.

[8] In October 2013, a U.S. Bank representative contacted Williamson and

informed him that his escrow account was in arrears and that there was not

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 enough money in the account to pay the property taxes on the Property.

Williamson told the representative that he would not pay the arrearage or make

any further mortgage payments until U.S. Bank assured him that his name was

back on the deed for the home. As a result, on December 19, 2013, the bank

submitted an affidavit in aid of title to the Marion County Assessor reaffirming

that the court had vacated U.S. Bank’s title to the Property and that the title

should be restored to Williamson. Nevertheless, Williamson did not make any

further mortgage payments.

[9] On February 14, 2014, U.S. Bank notified Williamson that he was again in

default on his mortgage, but Williamson continued to miss payments.

Accordingly, U.S. Bank filed a complaint requesting to foreclose the mortgage

on May 13, 2014. It then filed a motion for summary judgment on September

10, 2014. In its motion, it argued that the trial court should grant summary

judgment because no genuine issues of material fact remained regarding

whether Williamson had breached the terms of the mortgage.

[10] On December 9, 2014, Williamson filed a response objecting to the bank’s

motion for summary judgment. Attached to his response, Williamson

designated an affidavit in which he averred that he had not known that his

name had been taken off of the deed for the Property when he signed the

Modification Agreement. He recounted his version of the events preceding his

loan default, stating that:

Shortly after I signed [the] [M]odification [A]greement, [my ex-
wife and I] did our taxes for the year and noticed that we had lost

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 our homestead exemption for our home. Therefore, I contacted
U.S. Bank in order to find out what was going on with my
homestead exemption. At that time a representative from U.S.
Bank informed me that [my and my ex-wife’s names] had been
taken off of the deed for the home and U.S. Bank’s name was
now on the deed as the owner. The representative then informed
me that I was on an eighteen (18) month probation period and
that after eighteen (18) months U.S. Bank would review the
account and would put my name back on the Home if all my
payments had been made on time.

(Appellant’s App. 72). Williamson also claimed in his affidavit that, after this

contact with U.S. Bank, he had gone to the Marion County Auditor’s Office

“on multiple occasions” to file for his homestead exemption and had been

denied each time. (Appellant’s App. 72).

[11] Based on this designated affidavit, Williamson argued in his summary

judgment response that the trial court should not grant summary judgment to

U.S. Bank because there were still genuine issues of material fact for the

factfinder to resolve, including whether: (1) Williamson would have entered

into the Modification Agreement if he had known his name had been taken off

of the deed; and (2) U.S. Bank had breached the Modification Agreement first

by taking his name off of the deed. He requested that the trial court reform or

rescind the Modification Agreement based on his/the parties’ mistaken belief(s)

that his name was on the deed at the time that they executed the Modification

Agreement.

[12] Five months later, on May 14, 2015, U.S. Bank filed a reply to Williamson’s

response (“Reply”) and designated additional evidence (“May 14, 2015
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 designated evidence”). This additional evidence included, in relevant part,

Williamson’s deposition transcript and a copy of his mortgage servicing file.

[13] Two weeks later, on May 28, 2015, the trial court held a hearing on U.S. Bank’s

summary judgment motion. The morning of the hearing, Williamson filed a

motion to strike U.S. Bank’s Reply and May 14, 2015 designated evidence,

arguing that they were untimely and prejudicial. The trial court denied the

motion to strike, concluding that it was untimely as Williamson had filed it the

same day as the hearing. The trial court then conducted the hearing and

granted summary judgment in U.S. Bank’s favor. It ordered the mortgage

foreclosed and ruled that U.S. Bank could recover, in rem:

the sum of $79,366.67 together with interest at the rate of $8.46
per day from July 11, 2014, to the date of payment, plus any and
all advances by [U.S. Bank] for real estate taxes, assessments,
insurance premiums, maintenance and costs, escrow fees, and all
other advances which [U.S. Bank] must pay to preserve the
[Property] and [U.S. Bank’s] right therein, incurred during the
pendency of this action and costs of this action, plus reasonable
attorney fees of $1,500.00, all without relief from valuation and
appraisement laws.

(Appellant’s App. 8). Williamson now appeals the trial court’s denial of his

motion to strike and grant of summary judgment in U.S. Bank’s favor.

Decision
[14] On appeal, Williamson raises two arguments: (1) that the trial court abused its

discretion when it denied his motion to strike U.S. Bank’s Reply and May 14,

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 2015 designated evidence; and (2) that the trial court erred when it granted U.S.

Bank’s motion for summary judgment. We will address each of these

arguments in turn.

1. Motion to Strike

[15] First, Williamson challenges the trial court’s denial of his motion to strike. He

does not address the trial court’s conclusion that the motion was untimely

because it was filed the day of the hearing. Instead, he focuses on the merits of

the argument he raised in his motion to strike—that U.S. Bank’s Reply and

May 14, 2015 designated evidence were untimely. We review a decision

regarding a motion to strike for an abuse of discretion. Allstate Ins. Co. v.

Hatfield, 28 N.E.3d 247, 248 (Ind. Ct. App. 2015). We will determine that a

trial court has abused its discretion when the trial court’s decision is clearly

against the logic and effect of the facts and circumstances before it. Id.

[16] Regardless of the merits of Williamson’s argument in his motion to strike, we

conclude that the trial court did not abuse its discretion in denying his motion

because it was untimely. The sequence of events in this case occurred as

follows:

September 10, 2014 – U.S. Bank filed its motion for summary
judgment and its designated evidence.

December 9, 2014 – Williamson filed his response to U.S. Bank’s
motion for summary judgment and his designated evidence.

May 14, 2015 – U.S. Bank filed its Reply and May 14, 2015
designated evidence.

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 May 28, 2015 – The trial court held a summary judgment hearing,
and Williamson moved to strike U.S. Bank’s Reply and May 14,
2015 designated evidence. The trial court denied Williamson’s
motion.

Williamson filed the motion the day of the summary judgment hearing, which

meant that—as the trial court commented at the hearing—neither U.S. Bank

nor the trial court had an opportunity to review the motion before the hearing.

The trial court also noted that it was reluctant to continue the hearing because it

had been set for a long time, and U.S. Bank’s counsel had traveled from

Kentucky to be there. We have previously noted that the trial court must

balance the need for an efficient judicial system with the judicial preference for

deciding disputes on the merits. Munster Cmty. Hosp. v. Bernacke, 874 N.E.2d

611, 613 (Ind. Ct. App. 2007). In light of these circumstances we conclude that

the trial court did not abuse its discretion in determining that Williamson’s

motion was untimely. Thus, we need not address the substantive merits of his

motion to strike.

2. Summary Judgment

[17] Next, Williamson argues that the trial court erred when it granted summary

judgment in favor of U.S. Bank on its mortgage foreclosure complaint. He

contends that a mistake of fact had existed when he and U.S. Bank executed the

Modification Agreement because he had believed that his name was on the

deed to the Property when it was not. Citing contractual remedies for when

there is a mistake of fact in executing a contract, Williamson asserts that he

would not have signed the agreement if he had known his name was not on the

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 deed and that the trial court should have reformed or rescinded the

Modification Agreement to reflect that fact. See Lunsford v. Deutsche Bank Trust

Co., 996 N.E.2d 815, 822 (Ind. Ct. App. 2013) (noting that loan documents,

including a note and mortgage “are contracts and subject to the rules of contract

construction”); Carlson v. Sweeney, Dabagia, Donoghue, Thorne, James & Pagos, 895

N.E.2d 1191, 1199 (Ind. 2008) (holding that a document may be reformed on

grounds of mistake upon clear and convincing evidence of both the mistake and

the original intent of the parties), reh’g denied; Norwood v. Erie R. Co., 53 N.E.2d

189, 190 (Ind. Ct. App. 1944) (stating that contracts induced by fraud or

mistake may be rescinded as voidable). Alternatively, Williamson argues that

the trial court should not have granted summary judgment on the mortgage

foreclosure because U.S. Bank breached the mortgage agreement first by

removing his name from the deed without notifying him.

[18] We review a grant of summary judgment de novo, applying the same standard

as the trial court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). We draw

all reasonable inferences in favor of the non-moving party, and we will find

summary judgment appropriate if the designated evidence shows there is no

genuine issue as to any material fact and the moving party is entitled to

judgment as a matter of law. Id. A fact is material if its resolution would affect

the outcome of the case, and an issue is genuine if a trier of fact is required to

resolve the parties’ differing accounts of the truth, or if the undisputed material

facts support conflicting reasonable inferences. Id.

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[19] The initial burden is on the summary judgment movant to demonstrate there is

no genuine issue of fact as to a determinative issue, at which point the burden

shifts to the non-movant to come forward with evidence showing there is an

issue for the trier of fact. Id. While the non-moving party has the burden on

appeal of persuading us a summary judgment was erroneous, we carefully

assess the trial court’s decision to ensure the non-movant was not improperly

denied his day in court. Id. Our review of a summary judgment motion is

limited to those materials designated to the trial court. Dickes v. Felger, 981

N.E.2d 559, 561 (Ind. Ct. App. 2012).

[20] Here, U.S. Bank, the moving party in this summary judgment proceeding, was

required to show through its designated evidence that it was entitled to

summary judgment on its mortgage foreclosure complaint. The Indiana Code

provides that “if a mortgagor defaults in the performance of any condition

contained in a mortgage, the mortgagee or the mortgagee’s assigns may proceed

in the circuit court of the county where the real estate is located to foreclose the

equity of redemption contained in the mortgage.” 5 I.C. § 32-30-10-3. A

“mortgage” is a “loan” or “consumer credit sale” that “is or will be used by the

debtor primarily for personal, family, or household purposes and that is secured

by a mortgage (or another equivalent consensual security interest) that

constitutes a first lien on a dwelling or on a residential real estate upon which a

5
This statute has been amended effective July 1, 2016, but we will apply the version of the statute in effect at
the time U.S. Bank filed its complaint.

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 dwelling is constructed or intended to be constructed.” I.C. § 32-30-10.5-5. A

party that produces evidence of a demand note and mortgage establishes prima

facie evidence supporting a mortgage foreclosure. See Creech v. LaPorte Prod.

Credit Ass’n, 419 N.E.2d 1008, 1012 (Ind. Ct. App. 1981). Production of this

evidence causes the burden to shift to the non-movant to prove payment of the

note or any other affirmative defense to the foreclosure. See id. (“LPCA entered

into evidence the demand note and the mortgage. At that point, LPCA had

made a prima facie case. The burden then shifted to the Creechs to show

payment of the note, [or] any other affirmative defense.”)

[21] Here, U.S. Bank designated its demand note and mortgage as evidence, so the

burden switched to Williamson to produce evidence raising a genuine issue of

material fact regarding whether he had a valid defense to the foreclosure. See id.

In his summary judgment response, Williamson did not dispute that he had not

paid as required by the Modification Agreement. Instead, he raised the issue of

whether his mortgage—the Modification Agreement—was enforceable. It is a

well-established principle that “[w]here 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 values occurs from the exchange of values

contemplated by the parties.” Tracy v. Morell, 948 N.E.2d 855, 864 (Ind. Ct.

App. 2011). “There is no contract, because the minds of the parties have in fact

never met.” Id. Williamson argues that he should not be held to the terms of

the Modification Agreement, and therefore his mortgage should not have been

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 foreclosed, because he and/or U.S. Bank mistakenly believed the vital fact that

his name was on the deed for the Property when they executed the

Modification Agreement.

[22] We are not persuaded by Williamson’s argument because we conclude that a

mistake of fact did not exist when Williamson executed the Modification

Agreement as he did have a valid deed to the Property at that time. Deeds to

property exist within a “chain of title” that includes records or encumbrances

relating to that property. See Szakaly v. Smith, 544 N.E.2d 490, 492 (Ind. 1989).

There is not one single deed to a property whose name changes according to

ownership, as Williamson implies. See id. Williamson acknowledges that his

deed to the Property was valid and recorded prior to the inadvertent sheriff’s

sale. He was then divested of ownership of the Property through the sheriff’s

sale, but the trial court later set aside the sale and vacated the deed resulting

from it. See Black’s Law Dictionary 1782 (10th ed. 2009) (defining “vacate” as

“To nullify or cancel; make void”). Accordingly, there was nothing in the

chain of title after Williamson’s properly recorded deed in the Property to divest

him of ownership. The trial court’s order setting aside the sheriff’s sale and

vacating U.S. Bank’s deed was issued December 11, 2009—over a year before

Williamson and U.S. Bank executed the Modification Agreement on December

20, 2010. Therefore, Williamson did have his name on the deed to the Property

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 when he executed the agreement, so there was no basis for the trial court to

reform or rescind the agreement.6

[23] Next, Williamson argues that the trial court should not have granted summary

judgment in U.S. Bank’s favor because U.S. Bank breached the Modification

Agreement first by removing his name from the deed for the Property. It is a

general principle that “‘[a] party first guilty of a material breach of contract may

not maintain an action against the other party or seek to enforce the contract

against the other party should that party subsequently breach the contract.’”

Klepper v. Ace American Ins. Co., 999 N.E.2d 86, 96 (Ind. Ct. App. 2013) (quoting

Illiana Surgery & Med. Ctr., LLC v. STG Funding, Inc., 824 N.E.2d 388, 403 (Ind.

Ct. App. 2005)), reh’g denied, trans. denied. However, we conclude that U.S.

Bank did not breach the Modification Agreement prior to Williamson’s non-

payment breach. As stated above, the inadvertent sheriff’s sale occurred on

September 16, 2009, over a year before Williamson and U.S. Bank executed the

Modification Agreement on December 20, 2010. U.S. Bank could not have

6
To the extent that Williamson implies that there was no evidence that the trial court’s order vacating U.S.
Bank’s deed was ever recorded, we note that recording a title (or lack of title) does not establish ownership or
have any effect on a deed’s validity. See Patterson v. Seavoy, 822 N.E.2d 206, 211 (Ind. Ct. App. 2005). As we
stated in Patterson:

It has long been recognized that the registration of a deed adds nothing to its effectiveness
as a conveyance; all that it accomplishes is to impart notice. Indeed, [t]he purpose of the
recording statute is to provide protection to subsequent purchasers, lessees, and
mortgagees. That is, when multiple parties claim adverse interests in the same land, the
date of recording provides a means to determine priority among those claims.

Id. (internal citations omitted) (internal quotations omitted) (emphasis omitted).

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 breached an agreement that did not exist at the time of the alleged breach.

Accordingly, we do not find any merit to Williamson’s argument that U.S.

Bank was guilty of the first material breach by removing his name from the

deed.

[24] Since Williamson does not otherwise dispute that he breached the Modification

Agreement or that U.S. Bank was entitled to summary judgment on its

mortgage foreclosure complaint, we conclude that the trial court did not err in

granting summary judgment. There were no genuine issues of material fact

remaining for a factfinder to resolve.

[25] Affirmed.

Baker, J., and Bradford, J., concur.

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