William C. Elliott and Mary Kay Elliott, Appellants/Cross-Appellees-Defendants,
Dyck O'Neal, Inc., Successor in interest to Fifth Third Mortgage Company, Appellee/Cross-Appellant-Plaintiff
from the Vanderburgh Superior Court. Lower Court Cause No.
82D03-0701-MF-185. The Honorable Robert J. Tornatta, Judge.
FOR APPELLANTS: Douglas K. Briody, Law Office of Doug Briody,
FOR APPELLEE: Eric C. Welch, E. Phillip Gregg, Jr., Welch
& Company, LLC, Muncie, Indiana.
Judge. Crone, J., concurs. Brown, J., dissents with opinion.
of the Case
This appeal stems from an in rem mortgage
foreclosure default judgment against William C. Elliott
(" William" ) and Mary Kay Elliott (" Mary
Kay" ) (collectively " the Elliotts" ) and
post-judgment proceeding supplemental--which was initiated by
Dyck O'Neal, Inc. (" Dyck O'Neal" ) as
successor in interest to Fifth Third Mortgage Company ("
Fifth Third" )--to collect on the deficiency from that
in rem foreclosure judgment. After the trial court
entered a garnishment order for the deficiency, the Elliotts,
who were not represented by counsel, agreed to pay and began
paying $50.00 per week toward the foreclosure deficiency.
More than four years later, the Elliotts, then represented by
counsel, filed a motion for a refund for the money paid
toward the deficiency, arguing that the foreclosure order
included only an in rem judgment against them.
Thereafter, Dyck O'Neal filed a motion to amend the
foreclosure order to add an in personam judgment.
The trial court denied both motions.
On appeal, the Elliotts argue that the trial court erred by
denying its motion for refund from payments made pursuant to
the garnishment order because the foreclosure order, which
did not contain an in personam judgment, provided no
basis for such payments. Dyck O'Neal cross-appeals the
trial court's denial of its motion to amend the
foreclosure judgment, arguing that the omission of an in
personam judgment in the foreclosure order was a
clerical error. Concluding that the trial court did not err
by denying Dyck O'Neal's motion to amend the
foreclosure judgment, we affirm the trial court's ruling
on that motion. However, based on the specific facts in this
case, including the lack of an in personam judgment
in the original default foreclosure order, we conclude that
the Elliotts are entitled to the equitable relief of a refund
of their payments made pursuant to the garnishment order.
Accordingly, we reverse the trial court's ruling on the
Elliotts' motion for refund and remand to the trial
We affirm in part, reverse in part, and remand.
1. Cross-Appeal Issue -- Whether the trial court erred by
denying Dyck O'Neal's motion to amend the foreclosure
2. Appeal Issue -- Whether the trial court erred by denying
the Elliotts' motion for refund.
In March 2002, the Elliotts borrowed $92,200.00 from Fifth
Third to finance the purchase of a house located at 701 South
Norman Avenue in Evansville, Indiana (" the
Property" ). To secure payment of the note, the Elliotts
executed a thirty-year mortgage with a 6.75% interest rate in
favor of Fifth Third. In their note, the Elliotts agreed to
be " fully and personally obligated to keep all of the
promises made in th[e] Note, including the promise to pay the
full amount owed." (App. 14).
Three years later, in March 2005, the Elliotts filed for
bankruptcy under Chapter 7 of the United States Bankruptcy
Code. They reaffirmed the Property in their bankruptcy
proceeding, and their bankruptcy case was discharged and
closed in June 2005.
On January 4, 2007, Fifth Third filed a " Complaint on
Note and for Foreclosure on Mortgage" against the
Elliotts. (App. 10). On January 29, 2007, Fifth Third filed
an amended complaint, adding a subsequent mortgagee bank as a
defendant. In Fifth Third's amended complaint, it sought
the following relief:
B. Enter judgment, in favor of Plaintiff and against the
Defendants, William C. Elliott and Mary Kay Elliott, in the
sum of $87,525.99, plus reasonable attorneys' fee[s], and
further interest and costs continually accumulating and all
other costs herein, and all other relief proper in the
C. Enter an Order foreclosing the Mortgage of Plaintiff on
the above-described Real Estate and foreclosing and barring
the Defendants' equity of redemption and interest in the
D. Enter an Order directing the sale of the above-described
Real Estate in order to pay the Judgment of Plaintiff, at
such sale the Plaintiff will be empowered to bid for the
subject Real Estate or any part thereof with the indebtedness
to be credited with any amount paid by Plaintiff; and if the
proceeds from such sale are not sufficient to satisfy the
Plaintiff's claim and debt herein found to be due and
owing, for a further order directing the Sheriff to
immediately levy upon the goods and chattels of the
Defendants William C. Elliott and Mary Kay Elliott, until
such Judgment is satisfied in full[.]
(App. 33-34). The Elliotts and the junior mortgagee did not
file an answer.
On March 7, 2007, Fifth Third filed an " Application and
Affidavit for Default Judgment" (" motion for
default judgment" ), an " Affidavit of Indebtedness
and Non-Military Affidavit[,]" and an " Affidavit
in Support of Attorney Fees[.]" (App. 36, 38, 41). In
its motion for default judgment, Fifth Third "
request[ed] that the Court enter judgment IN REM in its
favor[.]" (App. 37) (emphasis in original).
Along with its motion for default judgment, Fifth Third
submitted a proposed order, entitled " Default Judgment
of Foreclosure" (" foreclosure order" ),
which the trial court adopted and signed that same
day. (App. 44). In its foreclosure order,
the trial court " granted [Fifth Third] judgment IN REM
in the amount of Ninety-two Thousand Nine Hundred Eleven
Dollars and Nineteen Cents ($92,911.19) . . . with interest
thereon from February 9, 2007, until the date of the Judgment
at the per diem rate of $16.19 and with a post-judgment
statutory interest rate of 6.75% thereupon until paid . . .
." (App. 45-46). The chronological case summary ("
CCS" ) entry for March 13, 2007 contains the following
notation to show that this foreclosure order was entered into
the order book: " REM JUDGMENT FILED 3-7-07 FOR 3-7-07
RECEIVED AND ENTERED INTO ORDER BOOK THIS DATE." (App.
3). Additionally, on the front of the foreclosure order,
someone handwrote " Rem" near the title of the
order. (App. 44). Because this foreclosure order is the basis
of both parties' arguments on appeal, we include a copy
of it at the end of this opinion.
Approximately one month later, on April 4, 2007, Fifth Third
filed a " Praecipe for Sheriff's Sale[,]" and
the Vanderburgh County Sheriff began the necessary steps to
sell the Property at a sheriff's sale. (App. 56).
In the meantime, on June 26, 2007, Fifth Third assigned its
foreclosure judgment to Federal Home Loan Mortgage
Corporation (" FHLMC" ). Two days later, on June
28, 2007, the Vanderburgh County Sheriff held a sheriff's
sale for the Property, and FHLMC purchased the Property for
$76,000.00, leaving a deficiency of $16,911.19 from the
foreclosure judgment amount.
Thereafter, on May 5, 2008, FHLMC assigned its interest in
the foreclosure judgment to Dyck O'Neal. On October 27,
2008, Dyck O'Neal filed a motion to substitute itself as
plaintiff in the mortgage foreclosure proceeding. Dyck
O'Neal also filed a motion for discovery to a non-party,
the Indiana Department of Workforce Development, seeking
employment records for the Elliotts, and the trial court
granted this motion.
Despite the in rem nature of the foreclosure
judgment, on July 27 and August 5, 2009, Dyck O'Neal
filed a " Motion for Proceedings Supplemental to
Execution[,]" seeking an order for garnishment of
William's wages (collectively referred to as "
garnishment motion" ). (App. 68, 69). In its garnishment
motion, Dyck O'Neal stated that it " own[ed] a
judgment against the judgment defendant, William C[.]
Elliott, obtained in this Court on March 07, 2007, for the
sum of $93,315.94 interest and costs" and that this
" judgment was partially satisfied by virtue of a
Sheriff's Sale, leaving a balance due on the judgment in
the amount of $17,315.94, plus post judgment interest from
the date of the judgment[.]" (App. 69). Dyck O'Neal
further stated that it had " no cause to believe that
levy of execution" against William would " satisfy
said judgment[,]" and it sought an " appropriate
order to apply [William's] property towards said
[foreclosure] judgment pursuant to statute." (App. 69).
On September 22, 2009, the trial court held a hearing on Dyck
O'Neal's garnishment motion. That same day, the
Elliotts, pro se, filed a " Motion to Set Aside
Judgment[,]" in which they alleged as follows:
1. That the defendant filed for bankruptcy in March 2005.
That defendant consulted with the plaintiff, Fifth Third
Bank, prior to filing and was reassured that if defendant
reaffirmed the [P]roperty . . . that the plaintiff would work
with the defendant if the defendant could not make mortgage
payments in the future.
2. That when the defendant could not make said mortgage
payment in August 2006, that the plaintiff, Fifth Third Bank,
refused to work with the defendant. That the defendant
offered [an] interest only payment and [a] partial payment
that plaintiff refused[.] That the plaintiff deliberately
misled the defendant to keep [the P]roperty out of bankruptcy
3. That defendant listed and tried to sell [the P]roperty and
the plaintiff refused short s[ale] of [the P]roperty.
4. That the defendant offered deed in lieu of mortgage and
that the plaintiff refused.
5. That defendant has paid the plaintiff $25,273.45 in
interest and $4,472.36 in principal for a total sum of
6. That the plaintiff, Fifth Third Bank, sold the [P]roperty
at 701 S. Norman Ave. for the sum of $82,000.00 on January 4,
7. That the plaintiff has already received $111,945.81 in
compensation for the [P]roperty. That awarding plaintiff
judgment of $17,315.94 would be excessive compensation for
the original mortgage of $92,200.00.
8. That awarding plaintiff the judgment would place an undue
hardship upon defendant.
(App. 70). After the hearing, the trial court denied the
Elliotts' motion and entered a garnishment order ("
September 2009 garnishment order" ). The CCS entry for
this hearing provides as follows:
[Fifth Third] by counsel, J. Fuson. [The Elliotts] in person.
[The Elliotts] file[d] [a] motion to set aside [the]
judgment. Argument heard. [The Elliotts] have not shown
excusable neglect in answering the complaint and while [they]
may have [had] an equitable defense, they d[id] not have a
legal defense. Order of garnishment entered. Voluntary wages
agreement for $50.00 per week begin[ning on] 10/01/09.
(App. 4) (capitalization of all letters edited).
Thereafter, William began paying Dyck O'Neal $50.00 per
week by personal check. William consistently made the $50.00
weekly payments to Dyck O'Neal for the next four and
one-half years until Dyck O'Neal filed a motion alleging
that William had " defaulted" on the September 2009
garnishment order. (App. 71). Specifically, on March 24,
2014, Dyck O'Neal filed an " Affidavit of Default as
to Voluntary Wage Agreement Order of 09/22/2009[,]" in
which it alleged that the Elliotts had " defaulted on
the agreed weekly payments as they [we]re submitting payments
with the notation of 'Paid in Full' on each
payment." (App. 71). Dyck O'Neal attached copies of
three of the Elliotts' checks, one dated for March 1,
2014 and two dated for March 15, 2014, to its motion. That
same day, the trial court " approved" the
garnishment order submitted by Dyck O'Neal (" March
2014 garnishment order" ) and served it on William's
employer. (App. 4) (capitalization of all letters edited).
On April 2, 2014, the Elliotts, now represented by counsel,
filed a motion to stay the March 2014 garnishment order. ...