Bastin v. First Indiana Bank, 49A02-9703-CV-146

Decision Date27 April 1998
Docket NumberNo. 49A02-9703-CV-146,49A02-9703-CV-146
Citation694 N.E.2d 740
PartiesJanet L. BASTIN, on behalf of herself and all others similarly situated, Appellant-Plaintiff, v. FIRST INDIANA BANK and John Does 1-10, Appellees-Defendants.
CourtIndiana Appellate Court
OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

Janet L. Bastin filed a complaint against First Indiana Bank ("First Indiana") which alleged, in part, that First Indiana had breached a provision of her adjustable rate mortgage loan, which was evidenced by a note. On January 8, 1996, Bastin filed motions for class certification 1 and for summary judgment. On April 8, 1996, First Indiana filed a cross-motion for summary judgment. After a hearing on First Indiana's cross-motion for summary judgment, the trial court entered summary judgment in favor of First Indiana, and Bastin now appeals. The sole issue for our review is whether the trial court erred when it granted First Indiana's cross-motion for summary judgment. 2

We affirm.

FACTS AND PROCEDURAL HISTORY

On August 16, 1984, Bastin obtained an adjustable rate mortgage loan from First Indiana in the amount of $23,750.00. Bastin's loan was evidenced by a note ("Note") and has been serviced by First Indiana since its inception. Unlike a fixed rate mortgage in which the interest rate remains the same throughout the life of the loan, Bastin's Note allows First Indiana to adjust Bastin's interest rate on September 1 and March 1 of each year. Attached to Bastin's Note is an Adjustable Rate Rider which provides in relevant part:

4. INTEREST RATE CHANGES

(A) INTEREST CHANGE DATE

The interest rate that I will pay may change on the first day of March, 1985 and on that day every 6th month thereafter. Each date on which my interest rate could change is called an "Interest Change Date."

(B) THE INDEX

Beginning with the first Interest Change Date, my interest rate will be based on an Index. The "Index" is the weekly auction average rate for United States Treasury bills with a maturity of 6 months, as made available by the Federal Reserve Board. The most recent Index figure available as of the date 45 days before each Interest Change Date is called the "Current Index."

If the index is no longer available, the Note Holder will choose a new index which is based upon comparable information. The Note Holder will give me notice of this.

(C) CALCULATION OF INTEREST

Before each Interest Change Date, the Note Holder will calculate my new interest rate by adding two and 25/100ths percentage points (2.25%) to the Current Index. The Note Holder will then round the result of this addition to the nearest one-eighth of one percentage point (0.125%). This rounded amount will be my new interest rate and will be effective on each Interest Change Date and will remain in effect until the next Interest Change Date.

The average auction rate, or Index figure, that is used to determine Bastin's interest rate may be obtained from various sources. The Federal Reserve Board issues a publication known as Statistical Release H.15 (519) that is released each Monday and contains the index figure from the previous Monday's treasury auction. 3 In addition, The Wall Street Journal publishes the index figure the day after the auction, and an electronic service known as "Telerate" provides the figure the same day that the auction occurs. Because the H.15 is released approximately one week later than the other two sources, when the interest rates are rising, the borrower benefits from a bank's use of either the Telerate or The Wall Street Journal as the source for the Index figure. Similarly, when the interest rates are falling, the borrower benefits from the use of the H.15.

From the date of inception of Bastin's Note until sometime in 1987, First Indiana relied on the index figure as published in The Wall Street Journal to adjust Bastin's interest rate. 4 Then, First Indiana began to obtain the index figure from the Federal Reserve Board's H.15 publication. First Indiana provided Bastin with notice of interest rate changes, which included the specific index values that it had used to compute Bastin's new interest rate. However, First Indiana never informed Bastin that it had switched from The Wall Street Journal to the H.15 publication as the source for the index figure.

On December 11, 1995, Bastin filed suit on behalf of herself and all other similarly situated borrowers against First Indiana alleging that First Indiana had charged excessive interest on the adjustable rate mortgage loans that it owned and serviced. In both her complaint and motion for summary judgment, Bastin maintained that First Indiana had breached the Note because the H.15 publication which it used was not the "most recent index figure available." Rather, in order for First Indiana to comply with the terms of the Note, Bastin argued that First Indiana should have continued to use the index figure from The Wall Street Journal.

After First Indiana filed its cross-motion for summary judgment, the trial court held the hearing on First Indiana's motion. However, at that hearing, Bastin presented an alternative argument that if the H.15 source is proper under the Note, then First Indiana breached the Note when previously it had used The Wall Street Journal as its source for the index figure. First Indiana objected to Bastin's argument on the grounds that Bastin's new position represented a separate and different claim than the one that Bastin had asserted in her complaint. The trial court granted First Indiana's cross-motion for summary judgment.

DISCUSSION AND DECISION
Standard of Review

The purpose of summary judgment is to terminate litigation about which there can be no factual dispute and which may be determined as a matter of law. Monon Corp. v. Townsend, 678 N.E.2d 807, 809 (Ind.Ct.App.1997), trans. denied. Summary judgment is appropriate when there is no genuine issue of any material fact and the moving party is entitled to judgment as a matter of law. Ind.Trial Rule 56(C). The movant bears the burden of establishing the propriety of summary judgment, and all facts and inferences to be drawn therefrom are viewed in the light most favorable to the non-moving party. Ramon v. Glenroy Constr. Co., 609 N.E.2d 1123, 1127 (Ind.Ct.App.1993), trans. denied.

When reviewing a decision upon a motion for summary judgment, this court is bound by the same standard as the trial court. Webb v. Jarvis, 575 N.E.2d 992, 994 (Ind.1991). We stand in the shoes of the trial court and liberally construe all designated evidentiary material in favor of the nonmoving party. Rotec, Div. of Orbitron, Inc. v. Murray Equip. Inc., 626 N.E.2d 533, 535 (Ind.Ct.App.1993). We may only consider those parts of the pleadings, depositions, answers to interrogatories, admissions, matters of judicial notice, and other matters which have been designated by the parties to the trial court for consideration. T.R. 56(C); Rosi v. Business Furniture Corp., 615 N.E.2d 431, 434 (Ind.1993). In order to prevail on appeal when a summary judgment motion has been granted in favor of an opposing party, the appealing party must establish the existence of a genuine issue of material fact from the designated materials. Thompson v. Murat Shrine Club, Inc., 639 N.E.2d 1039, 1040 (Ind.Ct.App.1994). Where the facts are not in dispute, summary judgment is inappropriate only when the factfinder may reasonably draw conflicting inferences from the undisputed facts. Nobles v. Cartwright, 659 N.E.2d 1064, 1071 (Ind.Ct.App.1995).

Bastin's Substantive Claims

Bastin asserts four arguments in support of her contention that the trial court erred when it granted First Indiana's cross-motion for summary judgment: (1) the two interest rate adjustment sources utilized by First Indiana cannot both be "the most recent Index figure available," (2) the H.15 source cannot be the "most recent Index figure" under the Note when the H.15 statistical release contains the Index from the previous week's treasury auction, (3) the Note's adjustment rate provision is ambiguous, and (4) there is a genuine issue of material fact concerning when the Federal Reserve Board "makes available" the index figure.

a. First Indiana's Use of the Two Adjustment Sources
5

As an initial matter, the parties dispute whether Bastin has attempted to adopt a different breach of contract theory than that asserted in her complaint. Specifically, First Indiana contends that one of Bastin's arguments, which was initially presented at the summary judgment hearing and focuses on First Indiana's switch in index figure sources, is a separate and distinct claim from the theory she asserted in her complaint. In response, Bastin argues that, both in her complaint and throughout the proceedings, she has consistently argued that First Indiana's switch from The Wall Street Journal to the H.15 source was improper and violated the terms of the Note. Bastin maintains that pursuant to notice pleading under Indiana Trial Rule 8(A), she was not required to delineate a specific legal theory to which she would adhere throughout trial.

Trial Rule 8 defines the general rules of pleading. It provides that a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief" and "a demand for the relief to which the pleader deems entitled." Ind.Trial Rule 8(A)(1)-(2). Under notice pleading, the issue of whether a complaint sufficiently pleads a certain claim depends on whether the opposing party has been sufficiently notified so as to be able to defend the claim. Noblesville Redevelop. Com'n. v. Noblesville Assoc. Ltd., 674 N.E.2d 558,...

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