Centex Home Equity Corp. v. Robinson, 49A02-0110-CV-644.
| Decision Date | 18 October 2002 |
| Docket Number | No. 49A02-0110-CV-644.,49A02-0110-CV-644. |
| Citation | 776 N.E.2d 935 |
| Parties | CENTEX HOME EQUITY CORPORATION f/k/a Nova Credit Mortgage Corporation, Appellant-Plaintiff, v. David S. ROBINSON, Century Cellular Network, State of Indiana, Department of Revenue, FT Mortgage Companies, d/b/a MNC Mortgage and Bank One Richmond, NA, Appellees-Defendants, and Hani Sharaya, Appellee-Movant. |
| Court | Indiana Appellate Court |
James G. Lauck, Kroger, Gardis & Regas, Indianapolis, IN, Attorney for Appellant.
George E. Palmer, Indianapolis, IN, Attorney for Appellee Hani Sharaya.
Centex Home Equity Corporation (Centex), appeals the trial court's grant of Hani Sharaya (Sharaya)'s Emergency Motion to Set Aside Judgment and Sheriff's Sale, which set aside a mortgage foreclosure judgment in favor of Centex as well as the resulting Sheriff's sale of the mortgaged property to Sharaya. We affirm.
The issues before us are whether the trial court properly set aside Centex's foreclosure judgment and the resulting sheriff's sale.
On March 15, 1996, David Robinson (Robinson) obtained a loan from FT Mortgage Company (FT Mortgage), which was secured by a mortgage on Robinson's property located at 6219 East 46th Street in Indianapolis, Indiana. FT Mortgage recorded the mortgage on April 3, 1996. Robinson borrowed additional funds from Centex on October 7, 1996. This loan was also secured by Robinson's property, and the related mortgage was recorded on October 15, 1996. Robinson apparently defaulted on his payments to FT Mortgage, and on October 2, 1997, FT Mortgage filed a foreclosure action in Marion County Superior Court 11. Among the defendants FT Mortgage named in its action was Centex. Robinson, however, filed for bankruptcy on December 3, 1997, and the trial court either dismissed or stayed FT Mortgage's foreclosure action on December 4, 1997.
Superior Court 11 reinstated FT Mortgage's action on April 7, 1999. The same day, Centex filed its own foreclosure action in Marion County Superior Court 10, alleging Robinson's default on the second mortgage. Centex named Robinson, FT Mortgage, and other creditors of record as defendants. It appears that neither Robinson nor FT Mortgage responded to Centex's complaint, and on July 9, 1999, Superior Court 10 entered its In Rem Default Judgment and Decree of Foreclosure for Centex against Robinson and FT Mortgage for $30,582.68.1 In the decree, the trial court found that FT Mortgage was in default, and declared that Centex was entitled to an in rem judgment against the defendants in the amount of its mortgage lien. The trial court specifically concluded that Centex's judgment was the "first lien upon the real estate." The trial court thus ruled Centex's mortgage lien foreclosed against all of the defendants. The decree specified that the judgment was to be satisfied through a Sheriff's sale of Robinson's property, with proceeds to be applied to satisfy the costs of the action, Centex's judgment, the claim of another creditor, and the state's tax lien. Although the decree recited that Centex was entitled to judgment against FT Mortgage, it made no mention of the survival or satisfaction of FT Mortgage's interest in the property through the sheriff's sale.2
On August 6, 1999, a Notice of Sheriff's Sale was issued, indicating that the property would be sold on September 15, 1999 to satisfy Centex's judgment. Despite the fact that FT Mortgage declined to defend its interest in the property and was defaulted, the Notice provided that the property was "[s]ubject to a mortgage in favor of FT Mortgage Companies d/b/a MNC Mortgage dated March 15, 1996 and recorded April 3, 1996 as Instrument No. 96-43735, in the original principal sum of $35,000.00." The contents of the notice were published.
At some point, FT Mortgage amended its complaint in the Superior Court 11 action to reflect the existence of Centex's July 9, 1999 judgment. On August 31, 1999, after issuing and publishing the Notice of Sheriff's Sale related to Centex's own judgment in the Superior Court 10 action, Centex answered FT Mortgage's amended complaint in the Superior Court 11 foreclosure action. Centex alleged in its answer that it held a mortgage on the property, and asked the trial court to accord Centex's lien its rightful priority, and to provide for the lien's satisfaction through proceeds of any sale resulting from the trial court's judgment.
On September 15, 1999, Sharaya bought Robinson's property for $29,000 at an auction held by the Marion County Sheriff's Department. Sharaya was not aware of FT Mortgage's lien at the time of the purchase because he had not conducted a title search prior to purchasing the real estate, and because he had learned of the sale not by reading the public notice, but by visiting the Sheriff's department and consulting the Department's list of properties to be sold at the monthly auction, which did not contain information regarding FT Mortgage's mortgage. Following the sale, Sharaya was given a Sheriff's Deed for the property, which repeated verbatim the language from the Notice of Sheriff's Sale indicating that the property was subject to a mortgage in favor of FT Mortgage. Sharaya called Centex's attorney, apparently because he was identified on the Sheriff's Deed, and asked about FT Mortgage's interest in the property. The attorney advised Sharaya to contact FT Mortgage or its attorneys to discuss the matter. Sharaya then recorded the deed, took possession of the property, and rented it to a tenant.
On December 21, 1999, FT Mortgage's attorneys wrote to Sharaya, advising that they were aware Sharaya now held title to the property, and inquiring as to Sharaya's intentions with regard to FT Mortgage's mortgage. Sharaya apparently offered to settle the matter, but received no response from FT Mortgage or its attorneys.
On May 9, 2000, the trial judge in Superior Court 11 entered an Agreed and Default Judgment Entry and Decree of Foreclosure in FT Mortgage's foreclosure action. Despite the fact that the interests of former property owner Robinson and former second mortgage holder Centex in the property were apparently extinguished by virtue of the foreclosure judgment and sale, the judgment recited that former property owner Robinson as well as second mortgage holder Centex agreed to the entry of judgment against Robinson in the amount of $41,778.82, which was to be satisfied by the sale of the property. Although Sharaya had purchased the property nearly eight months earlier, apparently leaving Robinson with no interest in the real estate, and although both FT Mortgage and Centex were aware that Sharaya had purchased the property and were in communication with Sharaya after the purchase, no one advised Sharaya about FT Mortgage's pending foreclosure action, and Sharaya was not added as a party. Further, while FT Mortgage had amended its complaint at some point in August 1999, apparently for the purpose of acknowledging the existence of Centex's July 9, 1999 judgment, it does not appear that FT Mortgage amended its complaint again to reflect the fact that the property it sought to have sold had already been purchased by a third party. Indeed, there is no indication in the record that the attorneys for FT Mortgage, Centex, or anyone else, alerted the judge in Superior Court 11 to the fact that the property had been sold and that the new property owner had been given notice of, or added as a defendant to, the action pending in Superior Court 11.
On May 15, 2000, just five days after Superior Court 11 entered the agreed judgment, the property was sold again at the Marion County Sheriff's monthly auction, this time to FT Mortgage. There is no evidence in the record suggesting that the Sheriff's Department published the requisite public notice of the sale, or that Sharaya was notified of the sale. At some point after the May 15, 2000 sale, someone, presumably FT Mortgage, attempted to evict Sharaya's tenant from the property. There is no indication in the record that Sharaya or the tenant was given prior notice of the eviction. It is unclear if the eviction was completed.
On August 8, 2000, Sharaya filed his Emergency Motion to Set Aside Judgment and Sheriff's Sale in Superior Court 11, seeking to set aside the May 9, 2000 agreed judgment in favor of FT Mortgage, and the resulting May 15, 2000 Sheriff's sale. Although the title of Sharaya's motion indicated that Sharaya was seeking to have the judgment in the Superior Court 11 action set aside, it appears that Sharaya approved of the validity of the Superior Court 11 action, but wanted the matter stayed until the Superior Court 10 action could be set aside. In particular, Sharaya argued in his motion that all questions regarding Robinson's default on his mortgages and all actions for foreclosure on the real estate should have been litigated together, and that the action should have proceeded in Superior Court 11 because FT Mortgage, the first party to seek foreclosure, had filed its action in that court. Sharaya accordingly asked the judge in Superior Court 11 to set aside the judgment and to enjoin FT Mortgage from taking possession of the property until the matter could be resolved.
Sharaya then proceeded to file another Emergency Motion to Set Aside Judgment and Sheriff's Sale on August 9, 2000 in the Superior Court 10 action. Sharaya again argued that there should never have been two separate parallel actions to foreclose on two separate mortgages related to the same real estate, but rather that both foreclosure claims should have proceeded together in Superior Court 11.3 Sharaya accordingly asked the trial court to set aside the July 9, 1999 foreclosure judgment in favor of Centex, as well as the resulting sheriff's sale through which Sharaya bought the property.
Around August 22, 2000, FT Mortgage responded to Sharaya's motion to set aside the June 9, 2000 Superior Court 11...
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