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Kobold v. Kobold

Court of Appeals of Indiana

March 19, 2019

James Peter Kobold, Appellant-Respondent,
Cindy Ann Kobold, Appellee-Petitioner, and Wells Fargo Bank, National Association and Rieth-Riley Construction Co., Inc., Appellees-Intervenors.

          Appeal from the St. Joseph Circuit Court The Honorable John E. Broden, Judge The Honorable William L. Wilson, Magistrate Trial Court Cause No. 71C01-1404-DR-224

          ATTORNEY FOR APPELLANT James A. Masters Nemeth, Feeney, Masters & Campiti, P.C. South Bend, Indiana

          ATTORNEY FOR APPELLEE CINDY ANN KOBOLD Robert J. Palmer May Oberfell Lorber Mishawaka, Indiana

          ATTORNEYS FOR APPELLEE-INTERVENOR WELLS FARGO BANK, NATIONAL ASSOCIATION Jared C. Helge Andrew L. Palmison Rothberg Logan & Warsco LLP Fort Wayne, Indiana

          ATTORNEYS FOR APPELLEE-INTERVENOR RIETH-RILEY CONSTRUCTION CO., INC., Robert G. Devetski Mark J. Adey Barnes & Thornburg LLP South Bend, Indiana

          Kirsch, Judge.

         [¶1] To divide their marital assets, James Peter Kobold ("James") and Cindy Ann Kobold (Hiatt) ("Cindy") entered a property settlement agreement ("PSA"), agreeing that James would keep their 175-acre farm and that James would pay Cindy an equalization payment of $319, 122.04 through installment payments that would run through June of 2020. James signed a promissory note in which he agreed that Cindy could sell marital assets if he breached the PSA. After the dissolution was final, James failed to make any installment payments, and Cindy obtained the trial court's permission to sell the farm. She subsequently sold the farm to Rieth-Riley Construction Co., Inc. ("Rieth-Riley") for $1.63 million. James filed a motion to correct error, which the trial court denied in part by affirming its earlier decision to let Cindy sell the farm and by denying James's request to rescind the sale. The trial court granted James's motion in part by ruling that Cindy could keep no more of the sale proceeds than was necessary to pay the amount due to her under the promissory note at the time the sale to Rieth-Riley had closed.

         [¶2] On appeal, James raises the following issues:

I. Whether the trial court abused its discretion in denying James's motion to correct error, in part, by:
A. finding that Cindy held a judgment lien against the farm and thus it impermissibly modified the PSA; and
B. denying James's motion to rescind the sale to Rieth-Riley;
II. Whether the trial court adequately adjudicated whether Rieth-Riley had the right to possess the farm.

         On cross-appeal, Cindy raises the following issues:

I. Whether trial court erred in limiting Cindy's recovery to only the amount James owed her under the promissory note at the time the sale to Rieth-Riley had closed; and
II. Whether this court should remand the matter to the trial court for an assessment of Cindy's trial and appellate attorney fees.

         We affirm in part, reverse in part, and remand.

         Facts and Procedural History

         [¶3] James and Cindy were married in 1996. Appellant's App. Vol. 2 at 49. The marital property included several parcels of farm land that totaled 175 acres. Id. at 32, 93. Wells Fargo Bank, National Association ("Wells Fargo") held two mortgages on two parcels of the farm, secured by one mortgage recorded on August 20, 2003, and another mortgage recorded on May 15, 2013.[1] Id. at 20-21.

         [¶4] James and Cindy separated in August of 2014. Id. at 49. The PSA, filed in May of 2016, provided that James would receive the 175-acre farm. Id. at 32, 93, 95. To equalize the property division, James executed a non-negotiable promissory note to pay Cindy $319, 122.04. Id. at 52. The promissory note set out the following payment schedule:

a) $20, 000.00 upon the closing of the refinancing of [James's] farming and transportation businesses, but in no event later than 90 days
b) $40, 000 on or before January 15, 2017.
c) $40, 000 on or before May 1, 2017.
d) $2, 000 per month beginning June 1, 2017 through May 1, 2020.
e) The remaining principal balance and all accrued interest by June 1, 2020.

Id. at 59. The PSA said that if James failed to "abide by a term of repayment set forth in the Promissory Note, then [Cindy] shall have the right to sell assets to satisfy said repayment." Id. at 52. However, the promissory note also said that James had the right to dispose of marital assets: "Notwithstanding any other provision in this Agreement to the contrary, [James] shall be entitled to sell, convey or otherwise dispose of any assets." Id. at 57. In the event of a default by James, the promissory note stated that Cindy "shall be entitled to recover reasonable attorneys' fees incurred in collection." Id. at 60.

         [¶5] James and Cindy defaulted on the mortgage payments, and pursuant to Wells Fargo's request, the trial court foreclosed the mortgages on December 21, 2016. Appellee Rieth-Riley App. Vol. 2 at 38-43; Wells Fargo Br. at 5. Even so, Wells Fargo did not file a praecipe for a sheriff's sale of the farm. Appellant's App. Vol. 2 at 33.

         [¶6] James failed to make any installment payments to Cindy as required under the promissory note. Id. at 19. On November 1, 2016, nearly three months after James's first payment on the promissory note was due, Cindy filed a motion to sell marital assets, seeking permission from the trial court to sell the farm to satisfy the equalization payment. Id. at 64. Ten months later, the trial court heard the motion and granted it. Id. at 18-22. Cindy sold the farm to Rieth-Riley. At the time of the sale, the farm's appraised value was $1.56 million, but Cindy sold it for more, $1.63 million. Id. at 13, 104.

         [¶7] After Cindy sold the farm, she filed a motion for possession of real estate. On December 6, 2017, the magistrate ordered James to make the marital real estate "available to Wells Fargo, Rieth Riley or to any parties designated by those entities to review and inspect the premises. . . ." Appellant's App. Vol. 2 at 10. The order also provided that James "acknowledges that the real estate is subject to a Buy and Sell Agreement and that [he] will cooperate ...

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