GRAYSON v. UNION Fed. Sav.
| Decision Date | 17 June 2010 |
| Docket Number | Cause No. 54C01-0312-MF-520,No. 54A04-1002-MF-114,54A04-1002-MF-114 |
| Court | Indiana Appellate Court |
| Parties | BURL E. GRAYSON and CAROLYN S. GRAYSON, Appellants,v.UNION FEDERAL SAVINGS & LOAN ASSOCIATION OF CRAWFORDSVILLE, INDIANA, a Subsidiary of Union Community Bancorp, Appellee. |
APPEAL FROM THE MONTGOMERY CIRCUIT COURT
The Honorable Thomas K. Milligan, Judge
Wernle, Ristine & Ayers Crawfordsville, Indiana
Collier Homann Siamas & Perkins, LLC Crawfordsville, Indiana
Burl and Carolyn Grayson ("the Graysons") appeal from a negative judgment upon their counterclaim against Union Federal Savings ("Union Federal") seeking damages for Union Federal's disposition of personal property as to which the Graysons were junior holders of a secured interest. We affirm.
The Graysons present five issues for review, which we consolidate and restate as a single issue: whether the trial court's judgment is contrary to law.1
In the first appeal involving these parties, a panel of this Court stated the relevant facts as follows:
The Gregorys purchased a business, real estate, equipment and inventory from the Graysons for $500,000.00. Union Federal provided purchase money and took a first mortgage in the building and a security interest in the equipment and inventory. The Graysons held a security interest in the real estate and personal property, junior in interest only to Union Federal's purchase mortgage. When the Gregorys defaulted on the mortgage, Union Federal filed a complaint on December 8, 2003, to collect the debt against the Gregorys. The Graysons also were named as defendants in that action. Count I of the complaint made reference to the real estate involved. Count II of the complaint made reference to the secured interest in the equipment and inventory on the premises of the real estate.
The Gregorys and the Graysons failed to answer or appear in the matter. On March 8, 2004, Union Federal filed a motion for default judgment and anaffidavit in support of that motion. The affidavit made reference only to the Gregorys. A default judgment was entered in the amount of $339,155.00 plus statutory interest, and an order for foreclosure addressing only the real estate was entered on March 8, 2004. There was no disposition of the personal property at that time. The Sheriffs sale took place on May 6, 2004. Union Federal was the successful buyer of the property for $250,000.00, and received a Sheriffs Deed to the real estate at issue.
On June 22, 2005, Union Federal filed a motion to correct order nunc pro tunc with the trial court. In that motion, Union Federal sought the trial court's authority to sell the personal property and to apply the proceeds to the indebtedness. On that date, the trial court entered the order as requested by Union Federal, allowing the bank to sell the inventory and equipment, and to apply the proceeds toward the judgment against the Gregorys.
On July 22, 2005, the Graysons filed their motion to correct error and to vacate order granting motion to correct order nunc pro tunc. The Graysons requested that the court vacate its June 22, 2005 order and for Union Federal to account for the personal property received at the Sheriffs sale.
Grayson v. Union Fed. Savs. & Loan Ass'n of Crawfordsville, 851 N.E.2d 1017, 1018-19 (Ind. Ct. App. 2006), trans. denied. On appeal from the deemed denial of the motion to correct error, this Court reviewed the record to find that, "[w]hile the complaint sought a default judgment regarding both the real and personal property, the original order only addressed the real property." Id. at 1021. The Court concluded that "the Graysons, as junior holders of a secured interest in the personal property, potentially could have been prejudiced" and "the trial court's nunc pro tunc order claiming to dispose of the personal property was made in error." Id. The matter was remanded to the trial court for a trial on the issue of the disposition of the personal property involved, and we observed that Union Federal could "either account for the personal property, or produce the personal property for disposition in a commercially reasonable sale." Id.
On May 27, 2009, a bench trial was conducted and evidence was heard that, within two months of the Sheriffs sale, Union Federal had sold the real estate and all its contents as a package to Ask?LLC for $275,000. The Graysons asserted that the package sale, which included the equipment and inventory for no specified additional value, was not commercially reasonable and deprived the Graysons of $128,500. Union Federal asserted that the equipment and inventory was worth at most $35,000. Union Federal further claimed that, as the holder of a senior and perfected security interest in the personal property, it was entitled to recover up to its deficiency of $95,875. 11 and the Graysons thus failed to establish damages from the disposition of the personal property.
On August 17, 2009, the trial court entered its Findings of Fact, Conclusions of Law, and Judgment, concluding that Union Federal, in a commercially reasonable sale, had disposed of personal property "worth much less" than the "deficiency of more than $95,000" and accordingly, the Graysons, as junior holders of a secured interest, were not entitled to damages. (App. 17.) Finally, the trial court found that the Graysons had not perfected their security interest and were not secondary obligors entitled to notice of disposition of proceeds pursuant to Indiana Code Section 26-1-9.1-611(b)-(c). The Graysons filed a motion to correct error, which was deemed denied. They now appeal.
Discussion and Decision I. Standard of Review When, as here, the trial court has entered findings of fact and conclusions of law pursuant to Indiana Trial Rule 52(A), we apply a two-tiered standard of review: first, wedetermine whether the evidence supports the findings and, second, whether the findings support the judgment. Briles v. Wausau Ins. Co., 858 N.E.2d 208, 212 (Ind. Ct. App. 2006). Findings of fact are clearly erroneous when the record lacks any evidence or reasonable inferences from the evidence to support them, and the trial court's judgment is clearly erroneous when it is not supported by the findings of fact and the conclusions which rely upon those findings. Id. In determining whether the findings or judgment are clearly erroneous, we consider only the evidence favorable to the judgment and all reasonable inferences flowing therefrom. Id. We do not reweigh the evidence nor do we assess witness credibility. Id. Finally, we evaluate conclusions of law de novo. Id.
We define the clearly erroneous standard based upon whether the appellant is appealing a negative judgment or an adverse judgment. Gates v. Houston, 897 N.E.2d 532, 535 (Ind. Ct. App. 2008). The Graysons had the burden of proof upon their counterclaim, and thus they appeal from a negative judgment. See id. A party appealing a negative judgment must establish that the evidence is without conflict and leads to but one conclusion, which the trial court did not reach. Truck City of Gary, Inc. v. Schneider Nat'l Leasing, 814 N.E.2d 273, 278 (Ind. Ct. App. 2004). The appellant may attack the trial court's judgment only as contrary to law. Id. On appeal, we affirm the judgment unless all evidence leads to the conclusion that the trial court's findings are clearly erroneous and against the logic and effect of the facts. Id.
II. Analysis
The Graysons contend that the judgment should be reversed because: Union Federaldid not dispose of the personal property in a commercially reasonable sale, the trial court ignored the prior opinion of this Court, the trial court treated the personal property as if it had no separate value, the trial court should have awarded the Graysons statutory damages for conversion, and the trial court erroneously found the Graysons to be estopped from asserting a claim for damages.
Commercially Reasonable Sale. The Graysons admit that the Sheriff s sale resulted in only partial satisfaction of Union Federal's judgment against the Gregorys and a deficiency remained. However, the Graysons contend that the trial court erroneously "fail[ed] to rule that the Bank had forfeited or waived any right to credit from the value of the [personal] property or to any deficiency judgment by failing to dispose of the property in a commercially reasonable manner."2 Appellant's Brief at 16.
Citing to Indiana Code Section 26-1-9.1-626, a provision of Indiana's Uniform Commercial Code relating to secured transactions, the Graysons assert that Union Federal bore the burden of proving that it disposed of the personal property in a commercially reasonable manner. The referenced statute provides in relevant part:
(1) A secured party need not prove compliance with the provisions of IC 26-1-9.1-601 through IC 26-1-9.1-628 relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party's compliance in issue.
(2) If the secured party's compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition, oracceptance was conducted in accordance with IC 26-1-9.1-601 through IC 26-1-9.1-628.
(emphasis added.) The Graysons are not debtors of Union Federal or secondary obligors; rather, their status was that of "junior holders of a secured interest in the personal property."3 Grayson, 851 N.E.2d at 1021. Accordingly, the Graysons' reliance upon 26-1-9.1-626 is misplaced, as it does not confer upon them the right to place compliance under the UCC in issue.4
Nonetheless, the trial court addressed the issue of whether the sale was commercially reasonable. To the extent that the Graysons point to claimed indications that the sale was not commercially reasonable ...
To continue reading
Request your trial