Bayview Loan Servicing, LLC, Appellant-Plaintiff and Counter-Defendant,
Golden Foods, Inc., and Lewis R. Coulter, Appellees-Defendants and Counterclaimants.
from the Delaware Circuit Court Trial Court Cause No.
18C05-1011-MI-39 The Honorable Thomas A. Cannon, Jr., Judge
Attorneys for Appellant Michael J. Cork Jamie B. Dameron
Bamberger, Foreman, Oswald & Hahn, LLP Indianapolis,
Attorney for Appellee Robert C. Beasley Beasley Law Office
of the Case
Bayview Loan Servicing LLC ("Bayview") appeals the
trial court's order entering judgment in favor of Golden
Foods, Inc., ("Golden Foods") and Lewis Coulter
("Coulter") on Bayview's mortgage foreclosure
claim and Golden Food's conversion counterclaim. Bayview
argues that there is insufficient evidence that it intended:
(1) for Golden Food's mortgage to merge with the tax deed
that Bayview purchased from M. Jewell, LLC
("Jewell"); and (2) to exert unauthorized control
over Golden Foods' property and monthly payments.
Concluding that Bayview's arguments are requests to
reweigh the evidence and that there is sufficient evidence
that Bayview intended both the merger and the exercise of
unauthorized control, we affirm the trial court.
1. Whether the trial court's judgment in favor of Golden
Foods on Bayview's mortgage foreclosure claim is contrary
to law; and
2. Whether the trial court's judgment in favor of Golden
Goods on its conversion counterclaim is clearly erroneous.
Coulter is the president and sole shareholder of Golden
Foods, which is an Indiana Corporation. In 1988, he executed
an adjustable rate note with Industrial Trust and Savings
Bank, ("the Note"). To secure payment for the $113,
800.00 Note, Golden Foods executed a mortgage against a
commercial property on Madison Street ("Madison Street
Property") in Muncie, which Colter operated as a
restaurant. As further security for Golden Foods'
indebtedness under the Note, Coulter and Golden Foods
executed a mortgage against Coulter's home on Oliver
Drive, ("Oliver Drive Mortgage"). Both mortgages
were assigned to Bayview in 2005.
By 2008, Golden Foods had reduced the balance of the Note to
$42, 822.77. However, Golden Foods had become delinquent in
the payment of real estate taxes on the Madison Street
Property, which had been vacant and non-income producing
since 2006. In April 2008, Golden Foods advised Bayview that
it was unable to pay the $22, 000.000 in overdue taxes on the
property. A Bayview representative recommended that Coulter:
(1) submit a letter of hardship; and (2) request that Bayview
advance him the money to pay the delinquent taxes and modify
his mortgage payment to include the advance. Coulter
explained that he did not know if he could afford a payment
modification because the only money he had available to make
his current mortgage payment was his monthly retirement
income. Coulter also advised the Bayview representative that
he was making repairs on the property in order to sell it. In
December 2008, Coulter sent Bayview a hardship letter, which
stated that Coulter's only income available to pay the
mortgage loan was from Social Security.
Three months later, Bayview decided not to advance Coulter
the funds to pay the delinquent taxes. Rather, Bayview
decided that it would attempt to work out a tax
capitalization agreement with Golden Foods. Meanwhile,
because of the delinquent taxes, the Madison Street Property
was offered at a Fall 2008 tax sale. M. Jewell, LLC
("Jewell") purchased the tax sale certificate for
the Madison Street Property for $8, 001.00. Jewell sent
notice of the sale to Golden Foods, which immediately
notified Bayview of the situation. Jewell, however, did not
send the required notice to Bayview. The redemption period
was scheduled to expire on January 6, 2009.
Following the tax sale, Bayview completed an internal
assessment to identify, value, and prioritize its options
regarding the Madison Street Property, which included loan
modification, foreclosure, or acquiring the property as real
estate owned property ("REO
property"). Bayview's internal valuation of the
Madison Street Property was $140, 000.00, and Bayview had
received a broker's price opinion that the property was
in a "hot pocket area with potential."
(BLS-412). Bayview's assessment disclosed that
the best option for Bayview was to capitalize the taxes and
enter into a loan modification agreement with Golden Foods.
The net present value of this scenario to Bayview was $84,
676.15. The second best alternative for Bayview was to
acquire the property as an REO property. The net present
value of this scenario to Bayview was $54, 504.12.
After considering the options, Bayview drafted and proposed a
Loan Adjustment Agreement (LAA) to Golden Foods. Pursuant to
the terms of the LAA, Golden Foods had to make a $1, 000.00
down payment and a $1, 218.55 monthly payment. With the
additional capitalization, Bayview agreed to redeem the
Madison Street Property from the tax sale and include
approximately $12, 900.00 to fund the new escrow account for
future taxes and insurance. Coulter signed the LAA
individually and on behalf of Golden Foods and returned it to
Bayview with the $1, 000.00 fee on December 26, 2008.
According to the LAA, which Bayview never signed, the first
payment was due February 1, 2009.
In the meantime, although Bayview knew the redemption
deadline for the Madison Street Property was January 6, 2009,
Bayview failed to redeem the property. Therefore, Jewell
immediately filed a petition for issuance of a tax deed.
Realizing that if the tax sale was not set aside, Golden
Foods would lose title, and Bayview would likely be liable
for damages, Bayview hired Indiana counsel Jason Lueking
("Lueking") to defend its interests and intervene
in the tax sale proceeding. Lueking immediately noticed that
Jewell had failed to give the required notice to Bayview.
Therefore, both Bayview and Golden Foods had the right to
object to the issuance of the tax deed and to seek to set
aside the tax sale. With these rights in mind, Lueking
entered into negotiations with Jewell.
During the course of the negotiations, Lueking structured a
deal to change Bayview's status from mortgage lienholder
of the Madison Street Property to fee simple owner.
Specifically, Lueking's settlement draft passed title of
the Madison Street Property directly from Jewell to IB
Property Holdings ("IB Property"), which is a
subsidiary of Bayview that takes title to REO Properties
acquired through either foreclosure or a deed in lieu of
foreclosure. When title is passed to IB Property, the
property is sold, and any sale proceeds are kept by the
lender. This differs from a foreclosure where any excess
funds become the property of the borrower. Lueking did not
advise Golden Foods about these negotiations with Jewell or
suggest that Golden Foods obtain counsel.
In April 2009, Bayview expressed concerns to Lueking about
taking title to the Madison Street Property in its name or in
the name of IB Property. Bayview was considering an
alternative structure, which would have given the tax title
deed directly to Jewell. Jewell would then have quitclaimed
the property to Golden Foods. This alternative would have
returned Bayview and Golden Foods to the relationship
contemplated by the LAA. Lueking revised the settlement
documents to reflect this structure for the transaction and
provided them to Lawrence Halpern, Bayview's vice
president and in-house counsel ("Halpern").
However, these documents were never presented to Jewell.
Rather, in May 2009, Lueking sent a revised settlement
agreement to Jewell. This agreement had the tax certificate
and tax title deed going directly to Bayview. In an email,
Lueking explained to Jewell's attorney that the
"transaction [was] similar to a deed in lieu of
foreclosure from [Bayview's] perspective." (Bayview
Ex. 49). Halpern was copied on Lueking's email to
Jewell's attorney. Lueking understood that a deed in lieu
of foreclosure meant that Bayview was acquiring title to and
equity in the property rather than initiating foreclosure
proceedings. Both Lueking and Bayview Vice President of
Commercial Servicing, Jo Ann Snyder ("Snyder"),
knew that a deed in lieu of foreclosure would extinguish
Golden Foods' underlying debt unless the parties
contemporaneously executed documentation to establish a
residual financial obligation on the borrower. However, no
such documentation was ever prepared or submitted to Golden
On June 4, 2009, before finalizing the agreement with Jewell,
Bayview ran another internal assessment, which revealed that
the Madison Street Property had a present value of $64,
933.74 to Bayview if Bayview took the property as an REO
property. This value was based on Bayview's $140, 000
valuation of the Madison Street Property minus Bayview's
invested funds, which included the $42, 822.77 mortgage
principal at the time of the LAA and the $32, 469.75 paid to
Jewell. Bayview Vice President Gyselle Piedra
("Piedra") authorized the settlement agreement,
which Bayview signed that day.
That same day, Bayview employee, Juan Gonzalez
("Gonzalez"), told Coulter that Bayview was going
to pay the delinquent taxes on the Madison Street Property
and that Coulter could proceed with his plans to sell it.
Four days later, Gonzalez told Coulter that the taxes had
been paid but did not mention that Bayview had taken title to
the property. Bayview also continued to send Golden Foods
monthly LAA statements.
The very next day, the agreed order directing the tax deed to
be issued was entered, and the tax deed was issued to Bayview
on July 8, 2009. In August 2009, Gonzales issued an order to
secure the unoccupied Madison Street Property, winterize the
pipes, and change the locks. Bayview still did not advise
Coulter that it had acquired title to the property. Golden
Foods began making the $1, 218.55 per month LAA payments in
November 2009. Golden Foods made ten payments on the LAA, all
of which Bayview accepted even though Bayview had never
signed the LAA.
Golden Foods did not learn that Bayview had acquired title to
the Madison Street Property until Bayview filed a complaint
to quiet title to the property in November 2010. In the
complaint, Bayview stated that in July 2009, Bayview had
obtained a tax deed to the Madison Street Property and had
recorded it. Bayview alleged that its interest and title to
this property was "superior to all persons who have an
interest therein, " and that the purpose of the action
was to "quiet title to the Real Estate as against the
world." (App. 2).
Golden Foods filed an answer wherein it alleged that Bayview
had represented to Golden Foods that Bayview had redeemed the
Madison Street Property and that Bayview had accepted Golden
Foods' $1, 218.55 monthly payments pursuant to the LAA.
Golden Foods also alleged that Bayview had covertly acquired
title to the Madison Street Property without notifying Golden
Foods. Golden Foods raised the affirmative defenses of actual
and constructive fraud, unjust enrichment, and estoppel.
Golden Foods also filed a counterclaim alleging that Bayview
breached its agreement to redeem the real estate; breached
its duties as Golden Foods' agent; committed criminal
conversion when it exerted unauthorized control over Golden
Foods' funds and rights in the Madison Street Property;
and fraudulently procured the tax deed.
In May 2012, Bayview filed a second amended complaint wherein
it added Coulter as a defendant and added mortgage
foreclosure of both Madison Street and Oliver Street
Properties and related claims. The following month, Golden
Foods responded as follows:
71. [Bayview] converted and exerted unauthorized control over
the rights of Golden Foods in the Madison Street Real Estate
by failing to redeem the Madison Street Real Estate and
acquiring title for itself.
* * *
73. The Plaintiff has further converted and exercised
unauthorized control over the monies paid to [Bayview] by
Golden Foods since December 15, 2008.
In March 2013, Bayview filed a motion for partial summary
judgment on the grounds that there were no genuine issues as
to any material fact with respect to Bayview's quiet
title action and Golden Foods' criminal conversion
action. The trial court granted Bayview's motion on the
quiet title claim but denied the motion on Golden Foods'
In March 2015, the trial court held a bench trial on the
remaining claims, which included Bayview's mortgage
foreclosure claim and Golden Foods' conversion claim.
Bayview did not call its two senior managers, Halpern and
Piedra, to testify. After a trial that included the evidence
set forth above, the trial court issued a detailed
twenty-seven-page order with 168 findings of fact and
conclusions, which provides in relevant part as follows:
Conversion of Madison Street Property
* * *
70. So to summarize the actions of Bayview in connection with
the Tax Sale Proceedings:
a. Bayview had breached its undertaking to redeem the Madison
Street Property by the redemption deadline, and was faced
with the prospect of not only losing its lien, but incurring
liability to Golden Foods;
b. Since there was a statutory defect in the tax sale
proceedings, both Bayview and Golden Foods had the right to
have it set aside;
c. Bayview told Coulter they would look into it, and waive
late charges until the matter was resolved;
d. Lueking, as Bayview's counsel, then undertook
e. Lueking knew that Golden Foods was a party, and should
have been served with documents filed in the Tax Sale
Proceeding, but he failed to do so;
f. Although Lueking felt that the interests of Golden Foods
and Bayview were initially aligned, he soon determined that
they had become adverse when Bayview began contemplating
taking title without notice to Golden Foods and Coulter;
however, Lueking never advised Coulter or Golden Foods to
engage separate counsel;
g. Once the financial terms were established for the
settlement with M. Jewell, Lueking and Bayview knew that the
settlement structure was ...