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GO Properties, LLC v. BER Enterprises, LLC

Court of Appeals of Indiana

September 21, 2018

GO Properties, LLC, and Maxim Alliance Group, LLC, Appellants-Plaintiffs,
v.
BER Enterprises, LLC; Mortgage Electronic Registration Systems, Inc., as Nominee for Franklin American Mortgage Company; New Field, LLC; Elden Investments, LLC; and Shannon R. Fawcett and Roxanne G. Fawcett, Trustees of the Shannon R. and Roxanne G. Revocable Trust Agreement dated, Appellees-Defendants

          Appeal from the Marion Superior Court The Honorable James A. Joven, Judge Trial Court Cause No. 49D13-1504-PL-12790

          Attorneys for Appellant GO Properties, LLC Thomas M. Beeman Alex Beeman Beeman Law Anderson, Indiana

          Attorneys for Appellees BER Enterprises, LLC, and New Field, LLC Christopher E. Clark Abaigeal F. Musser Goodin Abernathy, LLP Indianapolis, Indiana

          Attorney for Appellee Mortgage Electronic Registration Systems, Inc., as Nominee for Franklin American Mortgage Company Angela Field Trapp Trapp Law, LLC Indianapolis, Indiana

          BAKER, JUDGE.

         [¶1] GO Properties, LLC (GO Properties) had two members that were, themselves, limited liability companies (LLCs). Stacy Phillips, who was the sole member of one of those LLCs, went rogue. She falsely held herself out as having the authority to act on behalf of GO Properties in an endeavor to sell real estate that belonged to the LLC. The title insurance agent relied on Phillips's representations and permitted the transaction to occur. Because Phillips had no actual or apparent authority to act on behalf of GO Properties, the deed was void. The real estate has since been sold again, but because the original deed was void, all future deeds are likewise void.

         [¶2] GO Properties appeals the trial court's order granting summary judgment in favor of BER Enterprises, LLC (BER Enterprises), and New Field, LLC (New Field) (collectively, the appellees), [1] on GO Properties' quiet title action. Finding that the trial court should have entered summary judgment in favor of GO Properties, we reverse and remand with instructions.

         Facts [2]

         [¶3] In February 2012, GO Properties was formed as an LLC in Indiana with two members: Olicorp Properties, LLC (Olicorp), and Gracie Properties, LLC (Gracie). Olicorp's sole member was Larry Oliver; Gracie's sole member was Phillips. Olicorp was the designated Member Manager of GO Properties and had the sole authority "to sign agreements and other instruments on behalf of Company without the signature and/or written consent of any other Member . . . ." Appellant's App. Vol. II p. 38-39. Neither Oliver nor Phillips was authorized, as an individual, to do any business on behalf of GO Properties.

         [¶4] On February 24, 2012, GO Properties purchased four parcels of real estate (the Properties) in Indianapolis from Maxim Alliance Group. To purchase the Properties, GO Properties executed a real estate mortgage, which was recorded on March 15, 2012.

         [¶5] On August 1, 2013, Phillips, without any authority under the GO Properties Operating Agreement and without notifying Oliver, filed a Notice of Change of Registered Officer or Registered Agent with the Indiana Secretary of State, which changed the registered agent from Olicorp to Gracie. She also filed a Notice of Change of Principal Office Address, which changed GO Properties' principal address from Olicorp's business address to Phillips's home address. Phillips handwrote her title as "Owner" of GO Properties on both documents. Appellant's App. Vol. III p. 95-96.

         [¶6] Phillips then immediately began the process of selling the Properties to Elden Investments for $60, 000. She hired Best Title Services (Best Title) to perform a title examination of the Properties. The title examination failed to reveal the existence of the real estate mortgage given to Maxim Alliance Group by GO Properties because the mortgage did not have a legal description for any of the Properties. Best Title relied on Phillips's representation that she was the owner of GO Properties as it conducted its examination and later acted as closing agent for the transaction. Specifically, Tim West, the owner of Best Title and the individual who conducted the examination and closing, attested as follows:

• "[I]t looked like to me that Stacy Phillips . . ., when she changed the address for the LLC to [her own address], and she represented herself as the owner, and the new registered agent was Gracie Properties . . . ." Id. at 111.
• It was "[c]orrect" that "the only thing in [West's] file right now to indicate that Stacy Phillips had operating authority to sell this property [was] her Secretary of State change of office address and her changing the registered agent to herself," as well as "her just telling [the title company employee] basically that she had the right to do this." Id.
• West did not rely on the Secretary of State documents; instead, he "was relying on the representations of Stacy Phillips." Id. at 112.

         [¶7] The sale of the Properties closed on August 13, 2013. At the closing, Phillips, purportedly acting on behalf of GO Properties, conveyed the Properties to Elden Investments by way of warranty deed, which was recorded on August 22, 2013. Elden Investments quickly sold the Properties after obtaining the warranty deed; all the appellees (other than Elden) derived their title claims from later deeds stemming from Elden's sales.

         [¶8] On April 16, 2015, GO Properties filed a complaint against the appellees seeking, among other things, to quiet title to the Properties. On October 14, 2016, BER Enterprises and New Field, which had each purchased one of the Properties from Elden Investments, filed a motion for summary judgment. On November 7, 2016, GO Properties filed a cross-motion for summary judgment. Following briefing and a hearing, on November 20, 2017, the trial court granted ...


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