Ocwen Loan Servicing, LLC v. Chambliss
| Decision Date | 26 March 2021 |
| Docket Number | Court of Appeals Case No. 20A-PL-1050 |
| Citation | 166 N.E.3d 926 |
| Parties | OCWEN LOAN SERVICING, LLC, Appellant-Defendant, v. Dorothy CHAMBLISS, Appellee-Plaintiff. |
| Court | Indiana Appellate Court |
Attorney for Appellant: Jennifer L. Fisher, Hinshaw & Culbertson LLP, Schererville, Indiana
Attorneys for Appellee: Michael J. Jasaitis, Ryan A. Deutmeyer, Austgen Kuiper Jasaitis P.C., Crown Point, Indiana
[1] Ocwen Loan Servicing, LLC ("Ocwen") appeals the trial court's order on the parties’ cross-motions for summary judgment in this quiet title action filed by Dorothy Chambliss ("Chambliss"). Chambliss, who had been paying on her mortgage with Ocwen, filed a complaint to quiet title and asserted that the legal effect of her Chapter 13 bankruptcy discharge, which had been entered eight years earlier, had extinguished her mortgage with Ocwen as well as Ocwen's rights to enforce it or assert a future foreclosure claim. After reviewing Chambliss’ Chapter 13 bankruptcy plan and the bankruptcy trustee's final report and concluding that the bankruptcy court had intended to allow only a portion of Ocwen's bankruptcy claim on the mortgage and had discharged the remaining amount, the trial court denied Ocwen's summary judgment motion and granted Chambliss’ cross-motion for summary judgment.
[2] Here, Chambliss attempted to use a quiet title action as a means to determine the legal effect of her Chapter 13 bankruptcy discharge order in relation to her mortgage with Ocwen. Because the ultimate issue in this case was based solely on a bankruptcy matter and determination that had been under the jurisdiction of the bankruptcy court, the trial court was not the proper forum for a determination of the legal effect of bankruptcy court's discharge order. Accordingly, we vacate the trial court's judgment and remand with instructions for the trial court to dismiss Chambliss’ complaint to quiet title.
[3] We vacate the trial court's judgment and remand.
Whether the trial court erred in its summary judgment rulings.
[4] This appeal involves Chambliss’ residence located at 1023 Drackert Street in Hammond, Indiana ("the Property"). Chambliss and her husband ("Husband"), who is now deceased, purchased the Property in 1971.
[5] On July 3, 2002, Chambliss and Husband refinanced their mortgage on the Property. They executed a fifteen-year balloon note ("the Note") in the amount of $72,500.00 with Accredited Home Lenders ("Accredited"), Ocwen's predecessor-in-interest. Under the Note, Chambliss and Husband were to pay $581.83 per month beginning on September 1, 2002. The Note also provided that if Chambliss and Husband owed any amounts on August 1, 2017, then they would be required to "pay those amounts in full on that date[.]" (App. Vol. 2 at 38). That same day, Chambliss and Husband also executed a mortgage ("the Mortgage") in favor of Accredited, and they used the Property as security for repayment of the Note. The Mortgage was never recorded.
[6] On April 9, 2004, Chambliss and Husband filed a Chapter 13 bankruptcy petition in the U.S. Bankruptcy Court for the Northern District of Indiana under cause number 04-61677. We pause here to note that a Chapter 13 bankruptcy is a "reorganization" type of bankruptcy, under which "the debtor pays his [or her] creditors as much as he [or she] can afford over a three or five-year period." McCullough v. CitiMortgage, Inc. , 70 N.E.3d 820, 826 (Ind. 2017).1
[7] On May 7, 2004, Chambliss and Husband filed a Chapter 13 Plan ("Chapter 13 Plan"), in which they proposed to make sixty monthly payments of $908.86 to the trustee for disbursement to their various creditors. Paragraph 3(a) on the Chapter 13 Plan form provided as follows:
(App. Vol. 2 at 148) (emphasis and footnote added). In Paragraph 4, which explained that the trustee would make disbursements to various creditors, Chambliss listed the Mortgage—which was held by Ocwen's predecessor-in-interest PCFS Mortgage Resources ("Ocwen's Mortgage Predecessor") at that time—as being a "Secured Claim[ ]" and a "Secured Debt[ ] Which Will Extend Beyond the Length of the Plan[.]" (App. Vol. 2 at 148) (emphasis added).3 Specifically, Chambliss listed that Ocwen's Mortgage Predecessor had a secured claim of $71,689.98 plus $1,910.71 in arrears (totaling $73,600.69) and that her normal monthly payment for the secured claim was $582.83.4 In paragraph five, Chambliss "propose[d] to cure defaults" to Ocwen's Mortgage Predecessor by making monthly payments to the trustee. (App. Vol. 2 at 149). In paragraph ten, which related to "liens [that] shall be avoided[,]" Chambliss listed "NONE[.]" (App. Vol. 2 at 149).
[8] The Bankruptcy Court approved the Chapter 13 Plan on July 28, 2004 and issued a four-page order.5 On August 24, 2004, Ocwen's Mortgage Predecessor filed a proof of claim, on which Ocwen listed that it had a secured claim totaling $71.915.65, which included $1,431.33 in arrearages. However, in the exhibits attached to the proof of claim, Ocwen listed that Chambliss owed $71,689.98 in principal balance plus an arrearage of $1,431.33.
[9] Chambliss and Husband twice amended their Chapter 13 Plan, once on February 22, 2006 and again on December 1, 2006. In the December 2006 amended plan, Chambliss listed that Ocwen's Mortgage Predecessor had a secured claim of $71,689.98 plus arrears of $1,431.33 and that this secured debt would [e]xtend [b]eyond the [l]ength of the Plan[.]" (App. Vol. 2 at 83). Additionally, in paragraph ten, which related to "liens [that] shall be avoided[,]" Chambliss again listed "NONE[.]" (App. Vol. 2 at 84). In paragraph five, Chambliss "propose[d] to cure defaults" to Ocwen's Mortgage Predecessor by making monthly payments to the trustee. (App. Vol. 2 at 84). At the time of the December 2006 amended plan, Chambliss had twenty-nine remaining monthly payments of $830.79 to make to the trustee for distribution to her creditors. The Bankruptcy Court approved the December amendment to the Chapter 13 Plan on December 27, 2006.6
[10] The bankruptcy trustee filed the Trustee's Final Report and Account ("Trustee's Report") on September 23, 2009. In the Trustee's Report, the trustee indicated that Ocwen's Mortgage Predecessor7 had been paid "Secured Payments" of $36,718.29 for a "Mortgage Ongoing" and $1,431.33 for a "Mortgage Arrearage[.]" (App. Vol. 2 at 177).8 These payments were for principal only and did not include interest. The Trustee's Report contains an apparent typo because it lists that the "Claim Asserted" by Ocwen's Mortgage Predecessor for the mortgage as $"9,999,999.99[.]" (App. Vol. 2 at 177). The Trustee's Report correctly listed that the "Claim Asserted" by Ocwen's Mortgage Predecessor for the arrearage as $1,431.33. (App. Vol. 2 at 177).
[11] On October 26, 2009, the Bankruptcy Court ordered a discharge of Chambliss’ Chapter 13 bankruptcy ("Discharge Order") under section 1328(a) of title 11 of the United States Bankruptcy Code. This Discharge Order contained an "Explanation of Bankruptcy Discharge in a Chapter 13 Case" ("Chapter 13 Discharge Explanation"). (App. Vol. 2 at 87, 179) (modified from all upper case). The Chapter 13 Discharge Explanation provided, in relevant part, as follows:
(App. Vol. 2 at 87, 179) (emphasis in original).
[12] Following the Chapter 13 bankruptcy discharge, Chambliss and Husband continued to make payments on the Mortgage. Husband died on July 31, 2011. In July 2011, Ocwen became the servicer of the Mortgage.
[13] In February 2014, Chambliss and Ocwen entered into a loan modification agreement ("the Loan Modification Agreement"), which modified the Note and Mortgage. The Loan Modification Agreement listed Chambliss and the Estate of Husband as the borrowers. The Loan Modification Agreement reduced Chambliss’ principal balance to $65,737.91 and provided for forty monthly payments of $335.92 beginning on May 1, 2014. Additionally, $14,181.06 of the new principal balance was deferred and "treated as a non-interest bearing forbearance" upon which Chambliss was "not obligated to pay interest or make monthly payments on...
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