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U.S. Bank, National Association v. Jewell Investments, Inc.

Court of Appeals of Indiana

January 26, 2017

U.S. Bank, National Association, Successor to National City Bank, Appellant-Defendant,
v.
Jewell Investments, Inc., Appellee-Plaintiff

         Interlocutory Appeal from the Marion Superior Court Trial Court Cause No. 49D04-0806-MF-26954 The Honorable Cynthia J. Ayers, Judge

          Attorney for Appellant Pamela A. Paige Plunkett Cooney, P.C. Indianapolis, Indiana

          Attorney for Appellee Mario Garcia Brattain Minnix Garcia Indianapolis, Indiana

          CRONE, JUDGE.

         Case Summary

         [¶1] Jewell Investments, Inc. ("Jewell"), filed a foreclosure action naming U.S. Bank, National Association, Successor to National City Bank ("Bank") as a defendant as to a certain piece of real estate. Bank filed a summary judgment motion, asserting that it was a bona fide purchaser of the real estate and therefore its lien was entitled to priority over Jewell's. The trial court denied Bank's motion. Bank now appeals. We conclude that Bank carried its burden to show that there is no genuine issue of material fact as to whether it is a bona fide purchaser and that it is entitled to judgment as a matter of law. Accordingly, we reverse and remand with instructions to enter summary judgment in favor of Bank.

         Facts and Procedural History[1]

         [¶2] The heart of this dispute is whether Bank or Jewell has lien priority on real estate ("the Real Estate") commonly known as 602 Manhattan Avenue, Indianapolis and legally described as Lot Number 84 in Biltmore Gardens, recorded in Plat Book 18, pages 88-89, in the Marion County Recorder's Office.[2] Appellant's App. Vol. 2 at 151. On or about January 29, 2007, Diversified Investments, LLC ("Diversified"), executed a mortgage in favor of Jewell ("the Jewell Mortgage") for the Real Estate, which was recorded on February 1, 2007. The Jewell Mortgage describes the Real Estate as "[c]ommonly known as: 602 S. Manhattan, Indianapolis, IN." Id. at 152.[3] It is undisputed that the Jewell Mortgage does not contain the legal description of the Real Estate. See Appellee's Br. at 7 ("[T]he mortgage inadvertently omitted the legal description."). On February 8, 2007, Diversified recorded its ownership of the Real Estate by special warranty deed.

         [¶3] In July 2007, Francisco Rutiga Retana agreed to purchase the Real Estate from Diversified and sought financing from National City Mortgage, a division of National City Bank. In furtherance of this transaction, Fax Mobile Abstracting, Inc., performed a title examination of the Real Estate ("Fax Mobile's Property Search"). Fax Mobile's Property Search did not reveal the Jewell Mortgage. However, it revealed that Diversified had executed a mortgage for the Real Estate in favor of Newton County Loan & Savings FSB ("the Newton Mortgage"), which was recorded on February 8, 2007. The Newton Mortgage contained the legal description of the Real Estate.

         [¶4] On September 2007, the closing for Retana's purchase of the Real Estate from Diversified was held. Diversified executed and delivered a corporate warranty deed to Retana, which was recorded on December 31, 2007. Retana executed and delivered an $80, 500 note in favor of National City Mortgage. As security for the note, Retana executed and delivered an $80, 500 mortgage to National City Mortgage ("the Bank Mortgage"), which was recorded on September 28, 2007. The Bank Mortgage was subsequently assigned to Bank and recorded on September 25, 2008.

         [¶5] On June 17, 2008, Jewell filed an action to foreclose on various properties including the Real Estate, naming Bank as a party as to that property.[4] Bank was served with a copy of Jewell's complaint but did not appear or file any pleadings. On May 29, 2009, Jewell moved for entry of default judgment and decree of foreclosure. The same day, the trial court issued an agreed entry of in rem judgment and decree of foreclosure, defaulting Bank and foreclosing Jewell's asserted mortgage lien on the Real Estate. On September 10, 2009, based on the judgment and decree of foreclosure, a sheriff's deed to the Real Estate was executed in favor of Jewell.

         [¶6] On April 12, 2012, Bank filed a motion to set aside sheriff's sale and default judgment. On November 6, 2014, the trial court vacated the sheriff's deed and the judgment and decree of foreclosure. On June 25, 2015, Bank filed a motion for summary judgment against Jewell, asserting that because the Jewell Mortgage had no legal description of the Real Estate, Fax Mobile's Property Search was unable to locate it, and therefore Bank was a bona fide purchaser for value as to the Real Estate and its lien had priority over Jewell's. In support of its motion, Bank designated the affidavit of Cindy Dailey, which provided,

1. I have personal knowledge of the statements made in this affidavit and am competent to testify.
2. I am the owner of Fax Mobile Abstracting, Inc.
3. A-One Title, LLC provided closing services for the sale of real property commonly known as 602 Manhattan Avenue, Indianapolis, Indiana ("Real Estate") to Francisco Rutiga Retana.
4. Fax Mobile Abstracting, Inc. was retained to perform a title examination of the Real Estate relative to that transaction.
5. The examination revealed a $60, 000 mortgage from Diversified to Newton County Loan & Savings FSB ("Newton Mortgage"), said Newton Mortgage being filed for record on February 8, 2007 as Instrument No. 2007-0023620.
6. The Newton Mortgage correctly contained the correct legal description for the Real Estate.
7. The [Jewell] Mortgage filed for record on February 1, 2007 as Instrument No. 2007-0020665 does not contain a legal description for the Real Estate.
8. Because the [Jewell] Mortgage filed for record as Instrument No. 2007-0020665 did not contain a legal description for the Real Estate, it was not recorded in the chain of title to the Real Estate and was not located during the title examination.
9. A true and accurate copy of the Examination Notes are attached hereto as the same are maintained in the regular course of ...

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