FILED
Dec 06 2018, 9:11 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Brad A. Council Christopher J. McElwee
Slovin & Associates Co., LPA Monday McElwee Albright
Cincinnati, Ohio Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Collins Asset Group, LLC, December 6, 2018
Appellant-Plaintiff, Court of Appeals Case No.
18A-CC-1160
v. Appeal from the Hamilton
Superior Court
Alkhemer Alialy, The Honorable Steven R. Nation,
Appellee-Defendant. Judge
The Honorable Darren J. Murphy,
Magistrate
Trial Court Cause No.
29D01-1704-CC-3957
Riley, Judge.
Court of Appeals of Indiana | Opinion 18A-CC-1160 | December 6, 2018 Page 1 of 8
STATEMENT OF THE CASE
[1] Appellant-Plaintiff, Collins Asset Group, LLC (CAG), appeals the trial court’s
dismissal of its foreclosure action against Appellee-Defendant, Alkhemer Alialy
(Alialy).
[2] We affirm.
ISSUE
[3] CAG presents us with one issue on appeal, which we restate as: Whether the
trial court erred when it granted Alialy’s motion to dismiss, and concluded that
CAG’s action was barred by the six-year statute of limitation pursuant to
Indiana Code section 34-11-2-9.
FACTS AND PROCEDURAL HISTORY
[4] On June 29, 2007, Alialy entered into a promissory note with GMAC Mortgage
LLC (GMAC), whereby Alialy promised to pay GMAC the amount of
$60,000, plus interest at the rate of 12% per annum, in monthly payments of
$631.93 beginning on September 1, 2007, and continuing through August 1,
2032. At the same time Alialy entered into a promissory note, Alialy also
entered into a mortgage with Mortgage Electronic Registration Systems, Inc.
(MERS), as the nominee of GMAC. The mortgage was incorporated into the
note as security for the loan. Pursuant to the terms of the mortgage, a junior
lien was placed on the property of Alialy.
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[5] On June 9, 2008, Wells Fargo Bank, N.A. (Wells Fargo), as priority lien holder
on the property, filed a foreclosure action on the mortgage against Alialy. On
July 28, 2008, the Hancock Superior Court entered a default judgment against
Alialy and a decree of foreclosure. Alialy made no further payments toward the
GMAC note after July 28, 2008.
[6] On June 17, 2016, Alialy was informed that the note had been transferred to
CAG on December 31, 2014, and that he should begin making payments to
CAG on the outstanding balance due on the loan starting September 1, 2016.
Alialy did not make the payment, and on October 24, 2016, CAG sent its notice
of acceleration to Alialy whereby it accelerated payments due from September
1, 2016, to the maturity date of the loan. On April 26, 2017, CAG filed its
Complaint upon the note. On June 23, 2017, Alialy filed his motion to dismiss
the Complaint, contending that CAG’s claim was barred by the six-year statute
of limitations, pursuant to Ind. Code § 34-11-2-9. On July 19, 2017, CAG filed
its motion in opposition, claiming that the Complaint was not barred as the
statute of limitations only began to run at the moment CAG accelerated the
payment on the note. On April 16, 2018, after a hearing, the trial court
summarily dismissed CAG’s Complaint for failure to state a claim upon which
relief can be granted.
[7] CAG now appeals. Additional facts will be provided as necessary.
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DISCUSSION AND DECISION
[8] CAG contends that the trial court erred in dismissing its Complaint against
Alialy pursuant to T.R. 12(B)(6). The standard of review on appeal from a trial
court’s grant of a motion to dismiss for failure to state a claim is de novo and
requires no deference to the trial court’s decision. Arflack v. Town of Chandler, 27
N.E.3d 297, 302 (Ind. Ct. App. 2015). The grant or denial of a motion to
dismiss turns on the legal sufficiency of the claim and does not require
determinations of fact. Id. Therefore, a motion to dismiss under Rule 12(B)(6)
tests the legal sufficiency of a complaint: that is, whether the allegations in the
complaint establish any set of circumstances under which a plaintiff would be
entitled to relief. Id. Thus, while we do not test the sufficiency of the facts
alleged with regard to their adequacy to provide recovery, we do test their
sufficiency with regards to whether or not they have stated some factual
scenario in which a legally actionable injury has occurred. Id. In determining
whether any facts will support the claim, we look only to the complaint and
may not resort to any other evidence in the record. Id.
[9] Here, the trial court dismissed CAG’s Complaint without a detailed written
opinion as to its reasons for dismissal. When a court grants a motion to dismiss
without reciting the grounds relied upon, it must be presumed on review that
the court granted the motion to dismiss on all the grounds in the motion. Id.
However, the proceedings during the hearing on the motion to dismiss clarify
that the trial court not only relied on the allegations of the Complaint but also
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considered the parties’ memoranda and an affidavit submitted by Alialy
together with his motion. Accordingly,
If, on a motion, asserting the defense number (6), to dismiss for
failure of the pleading to state a claim upon which relief can be
granted, matters outside the pleading are presented to and not
excluded by the court, the motion shall be treated as one for
summary judgment and disposed of as provided in Rule 56. In
such case, all parties shall be given reasonable opportunity to
present all material made pertinent to such a motion by Rule 56.
T.R. 12(B). A trial court’s failure to give explicit notice of its intended
conversion of a motion to dismiss to one for summary judgment is reversible
error only if a reasonable opportunity to respond is not afforded a party and the
party is thereby prejudiced. Doe v. Adams, 53 N.E.3d 483, 492 (Ind. Ct. App.
2016), trans. denied. Because CAG filed its own motion in opposition in
response to Alialy’s motion to dismiss and Alialy’s reliance on documents
outside the pleading was “readily apparent and unmistakable,” no reversible
error occurred. See id. at 493. Accordingly, as Alialy’s motion to dismiss must
be treated as one for summary judgment, we must determine whether there is a
genuine issue as to any material fact and whether the moving party is entitled to
judgment as a matter of law. Id. at 494.
[10] Relying on I.C. § 34-11-2-9, Alialy maintains that CAG’s cause of action
accrued, and the statute of limitations began to run, on the date of the last
payment, i.e., July 28, 2008. Thus, Alialy asserts, CAG’s Complaint, which
was filed April 26, 2017, was not timely under the six-year statute of limitations
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applicable to promissory notes. Indiana Code section 34-11-2-9 provides, in
pertinent part, that “[a]n action upon promissory notes, bills of exchange, or
other written contracts for the payment of money executed after August 31,
1982, must be commenced within six (6) years after the cause of action
accrues.”
[11] Statutes of limitation seek to provide security against stale claims, which in turn
promotes judicial efficiency and advances the peace and welfare of society.
Cooper Indus., LLC v. City of South Bend, 899 N.E.2d 1274, 1279 (Ind. 2009). The
determination of when a cause of action accrues is generally a question of law.
Imbody v. Fifth Third Bank, 12 N.E.3d 943, 945 (Ind. Ct. App. 2014). Under
Indiana’s discovery rule, a cause of action accrues, and the limitation period
begins to run, when a claimant knows or in the exercise of ordinary diligence
should have known of the injury. Cooper Indus., LLC, 899 N.E.2d at 1280. As
such, “an action to recover a debt must be commenced within six years of the
last payment.” Holt v. LVNV Funding, LLC, 147 F. Supp. 3d 756, 760 (S.D. Ind.
2015) (applying Indiana law and referencing I.C. § 34-11-29). Therefore, as
Alialy ceased payment on the note on July 28, 2008, any cause of action filed
after July 28, 2014 would be barred by the statute of limitations.
[12] However, where, as here, the installment contract contains an optional
acceleration clause, by which the creditor may declare all installments of the
loan due and payable after default, the statute of limitations to collect the debt
does not begin to run immediately upon the debtor’s default. Smither v. Asset
Acceptance, LLC, 919 N.E.2d 1153, 1160 (Ind. Ct. App. 2010). Instead, the
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statute generally begins to run only when the creditor exercises the optional
acceleration clause. Id. Nevertheless, the Smither court cautioned that,
“Waiting until after the statute of limitations has passed following default
before making demand for full and immediate payment of a debt is per se an
unreasonable amount of time to invoke an optional acceleration clause and
cannot be given effect.” Id. at 1161-62. The court also noted, “‘a party is not at
liberty to stave off operation of the statute [of limitations] inordinately by failing
to make demand.’” Id. at 1161 (quoting Curry v. United States, 679 F.Supp. 966,
970 (N.D. Cal. 1987)).
[13] In the case at bar, CAG waited to accelerate the note until October 24, 2016,
and did not filed its Complaint until April 26, 2017. Accordingly, CAG’s
acceleration option was exercised a full two years after CAG’s cause of action
was barred by the statute of limitation. As CAG’s attempt to exercise the
acceleration clause did not prevent the six-year statute of limitation from taking
effect and expiring, CAG’s acceleration clause cannot be given effect and its
Complaint is barred. 1
1
In an effort to circumvent the application of I.C. § 34-11-2-9, CAG asserts that I.C. § 26-1-3.1-118 governs
the case at bar. However, as CAG failed to raise this issue before the trial court, it waived the argument for
our review. See VanWinkle v. Nash, 761 N.E.2d 856, 859 (Ind. Ct. App. 2002) (Failure to raise an issue before
the trial court will result in waiver of that issue).
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CONCLUSION
[14] Based on the foregoing, we hold that the trial court properly dismissed CAG’s
cause of action.
[15] Affirmed.
[16] Vaidik, C. J. and Kirsch, J. concur
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