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Blair v. EMC Mortgage, LLC

Court of Appeals of Indiana

June 12, 2019

Dean Blair and Paula Blair, Appellants/Cross-Appellees -Defendants/Counterclaimants,
EMC Mortgage, LLC, Appellee/Cross-Appellant-Plaintiff/Counterclaim Defendant.

          Appeal from the Vanderburgh Superior Court The Honorable Richard G. D'Amour, Judge Trial Court Cause No. 82D07-1207-MF-3333

          ATTORNEY FOR APPELLANTS Robert R. Faulkner Evansville, Indiana

          ATTORNEYS FOR APPELLEE David J. Jurkiewicz Nathan T. Danielson Christina M. Bruno Bose McKinney & Evans LLP Indianapolis, Indiana

          Kirsch, Judge.

         [¶1] Dean and Paula Blair ("the Blairs") appeal the trial court's order that foreclosed their interest in two mortgaged properties and that entered a money judgment for EMC Mortgage, LLC ("EMC"). The Blairs raise eight issues, but we reach only one: whether the trial court erred in granting only partial relief to the Blairs on their statute-of-limitations defense.[1]

         [¶2] On cross appeal, EMC raises one issue: whether the trial court erred in not entering summary judgment for EMC where the Blairs' request for more time to respond to EMC's motion for summary judgment was not timely.

         [¶3] We reverse.

         Facts and Procedural History

         [¶4] On December 21, 1992, the Blairs signed a promissory note in the principal amount of $110, 300.00 in favor of United Companies Lending Corporation ("UCLC") ("the Note"). Appellants' App. Vol. 2 at 57-60. The Note contained an optional acceleration clause, which allowed UCLC to decide whether to accelerate the loan balance following a default. Id. at 58. The Note was secured by a mortgage ("the Mortgage") on two properties, one at 916 Wortman Road, Evansville, Indiana and the other at 2237 Herbert Avenue, Evansville, Indiana. Id. at 62; Tr. Vol. II at 23-24. The Mortgage gave UCLC the option to accelerate the Mortgage upon default of the Note. Appellants' App. Vol. 2 at 64-65. On November 17, 1993, the Blairs sued UCLC and its agent, John Ash ("Ash"), alleging breach of contract and various torts, including fraud and intentional infliction of emotional distress ("the Ash lawsuit"). Appellants' App. Vol. 3 at 15-23, 95.

         [¶5] The monthly installment payment on the Note was $1, 469.36. Tr. Vol. II at 48-49. After making regular payments on the Note for approximately two-and-one-half years, the Blairs defaulted, making their last payment on June 19, 1995. Id. at 35-36. On August 27, 1997, the Blairs filed a Chapter 13 bankruptcy case ("the Blair Bankruptcy"), which automatically stayed the Ash lawsuit. Appellants' App. Vol. 3 at 24. On December 16, 1997, the bankruptcy court lifted the bankruptcy stay as to UCLC, allowing it to proceed with its foreclosure action in state court. Id. at 24-25. On October 31, 1998, the trial court in the Ash lawsuit granted UCLC leave to file its counterclaim for foreclosure against the Blairs. Id. at 96.

         [¶6] UCLC filed for Chapter 11 bankruptcy on March 1, 1999 ("the UCLC bankruptcy"). Id. at 28; 96-97. On July 20, 2000, the Note and Mortgage were assigned to EMC. Appellants' App. Vol. 2 at 67. About six weeks later, on September 23, 2000, the bankruptcy court entered an order approving an asset purchase agreement involving many of UCLC's assets, including the Note and Mortgage in this case. Id. at 106-11. When EMC bought the Note and Mortgage on September 23, 2000, the Ash lawsuit and the Blair bankruptcy were still pending. Id. at 95-99. On October 2, 2003, the Blairs obtained their bankruptcy discharge. Appellants' App. Vol. 3 at 78.

         [¶7] Meanwhile, Ash failed to appear in the Ash lawsuit to contest his liability, and on March 14, 2007, the Blairs obtained a default judgment against him for $300, 000.00. Id. at 97-98, 126. Although it had purchased the Note from UCLC in 2000, EMC was never named as a defendant in the Ash lawsuit. Id. at 95-99. On June 19, 2007, six years after the Note and Mortgage were assigned to EMC, EMC recorded the assignments. Appellants' App. Vol. 2 at 67.

         [¶8] On June 18, 2009, nearly six years after the Blairs received their bankruptcy discharge, EMC sought to reopen the Blairs' bankruptcy by filing a "Complaint for Declaratory Judgment," asking the bankruptcy court to clarify the extent, validity, and priority of EMC's lien, as well as the impact of the Blairs' partial bankruptcy discharge on EMC's ability to collect the indebtedness due under the Note and Mortgage. Appellants' App. Vol. 3 at 75.

         [¶9] On January 6, 2012, EMC and the Blairs filed a Joint Stipulation and Joint Motion to dismiss EMC's Complaint for Declaratory Judgment, stipulating the following:

a. The lien provided for by the terms of the Mortgage survives and is unaffected by the Blair Bankruptcy;
b. The Note and Mortgage at issue herein were not discharged in the [Blair] Bankruptcy;
. . .
e. There has been no determination in the Blair Bankruptcy if EMC Mortgage is the true party in interest as it relates to the enforcement of the Note and Mortgage[.]

Id. at 84-85.

         [¶10] JPMorgan Chase Bank, N.A. ("Chase") began servicing the loan for EMC on April 1, 2011, and, three days later sent the Blairs a default notice. Pl.'s Ex. 4 at 52. The notice gave the Blairs an opportunity to cure their loan defaults and informed them that the entire loan balance would be accelerated, and foreclosure proceedings would begin if the Blairs did not do so. Id. at 53.

         [¶11] On July 5, 2012, EMC filed its foreclosure lawsuit. Appellants' App. Vol. 2 at 5, 50. EMC sought a personal judgment against the Blairs for the outstanding principal balance, interest, attorney fees, expenses, and costs and a judgment declaring that EMC's Mortgage is a valid and enforceable first priority lien against the mortgaged properties. Id. at 52-53.

         [¶12] On September 27, 2012, the Blairs filed their answer to the complaint and raised affirmative defenses and counterclaims. The Blairs alleged that the assignment of the Note and Mortgage from the original lender, UCLC, to EMC was void because the assignment occurred almost two ...

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