Otto v. Park Garden Associates
| Decision Date | 05 April 1993 |
| Docket Number | No. 48A04-9112-CV-434,O-S,48A04-9112-CV-434 |
| Citation | 612 N.E.2d 135 |
| Court | Indiana Appellate Court |
| Parties | Wilmer OTTO, Doris Otto, Community Square, An Illinois General Partnership, Wilmer Otto, Omer Schrock, Partners, Appellants, (Defendants and Third Party Plaintiffs Below), v. PARK GARDEN ASSOCIATES, A California Limited Partnership, (Plaintiff Below), United Presidential Life Insurance Company, Chester M. Miller, Kesco Investment Company, Delaware Telephone Answering, Myrtle B. Barnsley, First National Bank of Louisville, (Defendants Below),Village of Twin Oaks, An Illinois Partnership, (Intervenor & Third Party Plaintiff Below), and James D. Davis & Sons, A California Partnership, (Third Party Defendant Below), Appellees. |
James E. Freeman, Jr., Jonathan R. Builta, Sansberry Dickmann Freeman & Builta, Anderson, for appellants.
David W. Stone IV, Stone Law Office & Legal Research, Don W. Peck, Peck & Peck, Anderson, for appellees.
This case involves a foreclosure action brought by Park Gardens Associates against the Ottos and Community Square (collectively "the Ottos"), and a determination of the scope of the Ottos' liability under their personal guaranty securing a portion of the mortgage. On May 1, 1991, the trial court granted partial summary judgment 1 in favor of Park Gardens on their action for foreclosure. The trial court also determined that the Ottos' guaranty provided for the imposition of liability for attorneys' fees and interest in addition to the guaranty's maximum value. After the trial court converted its partial summary judgment into a final appealable order, the Ottos filed a motion to set aside the judgment under Ind.Trial Rule 60(B)(3) claiming fraud. The trial court denied this motion.
The Ottos challenge the trial court's determinations and we affirm. In addition, we remand to the trial court for a determination of Park Gardens' reasonable appellate attorneys' fees.
The undisputed facts reveal that on June 27, 1986, the Ottos entered into a purchase agreement with Park Gardens concerning a multi-family housing project in Indianapolis known as Village of Twin Oaks Apartments. As part of the purchase price, the Ottos executed a non-recourse mortgage note (the "note") for the amount of $550,000. The note gave Park Gardens a $200,000 security interest in Twin Oaks. As additional security for the note, the Ottos also signed a guaranty which provided that they would be personally liable on the non-recourse note, jointly and severally, up to a maximum amount of $250,000. Over a year later, on September 9, 1987, Community Square (an Illinois general partnership in which Mr. Otto and Omer Schrock were the general partners) executed a real estate mortgage and security agreement substituting a $200,000 security interest in Community Square Apartments of Anderson for the security interest in Twin Oaks. 2
Under the terms of the note, payments were to be made at the beginning of each month. Beginning in June, 1988, however, the Ottos were consistently late in their payments, sometimes up to thirty days. On October 11, 1988 and November 22, 1988, Park Gardens sent letter to the Ottos informing them that payments were due on the first of the month, and requested the Ottos to bring the balance current. The Ottos did not. On December 29, 1988, Park Gardens sent a letter to the Ottos declaring the note in default and notifying Ottos that it was accelerating the balance of the note. On June 15, 1989, Park Gardens sent to Ottos yet another notice of default and acceleration.
On July 24, 1989, Park Gardens filed an action for foreclosure upon the guaranty and security interest; later, on March 26, 1990, Park Gardens filed a motion for summary judgment. After numerous continuances, Ottos and Community Square, on February 13, 1991, filed their reply to Park Gardens' motion. The trial court held a Nearly a month later, on June 25, 1991, Ottos and Community Square filed motions under T.R. 59 and 60(B)(3), asking the trial court to set aside its summary judgment order. In support of these motions, the Ottos presented affidavits purportedly demonstrating that numerous materials submitted by Park Gardens in support of its summary judgment motion were perjured and fraudulent. On September 4, 1991, the trial court denied both motions.
hearing on the motion, and, on May 1, 1991, granted partial summary judgment in favor of Park Gardens. On May 31, 1991, the trial court, in compliance with T.R. 56(C), made its partial judgment into a final appealable order.
The Ottos claim the trial court erroneously granted summary judgment because: (1) a factual dispute existed as to whether the note was in default; (2) they were entitled to notice before acceleration of the note; and (3) Park Gardens breached various warranty provisions in the purchase agreement which by law precluded their action for foreclosure. When reviewing a grant of summary judgment, we apply the same standard applicable in the court below. Jackson v. Blanchard (1992), Ind.App., 601 N.E.2d 411, 414. The facts and inferences that follow must be liberally construed in favor of the non-movant. Inland Steel v. Pequignot (1993), Ind.App., 608 N.E.2d 1378. However, once the movant has carried his initial burden of going forward under T.R. 56(C), the non-movant must do more than simply sit on his pleadings; he must come forward with sufficient evidence demonstrating the existence of genuine factual issues which should be resolved at trial. T.R. 56(E). If the non-movant fails to meet this burden, then--assuming the law is with the movant--summary judgment should be granted.
In determining whether or not the Ottos were in default, and if Park Gardens was required to give notice before accelerating the note, we must first examine the pertinent agreements executed by the parties. Cf., Hazifotis v. Citizens Fed. Sav. & Loan Ass'n (1986), Ind.App., 505 N.E.2d 445, 447 ().
The promissory note of June 27, 1986 between Ottos and Park Gardens states:
If default is made in the payment of any installment or installments of interest, principal, or principal and interest, as herein provided, within ten (10) days of when due ... then, in any such events, or at any time, thereafter, the entire principal of this Note ... together with attorneys' fees incurred in collection or enforcing payment or performance thereof, with interest from the date of such default on the unpaid principal balance hereof ... shall at the election of the holder, and without relief from valuation or appraisement laws, become immediately due and payable.
* * * * * *
The undersigned and all endorsers, guarantors, sureties, accommodation parties hereof and all other persons liable or to become liable for all or any part of this indebtedness, severally waive demand, presentment for payment, notice of dishonor, protest and notice of protest, and expressly agree that the Note and any payment coming due under it may be extended or otherwise modified, from time to time without in any way affecting their liability hereunder.
R. 125-27 (emphasis added). The real estate mortgage and security agreement entered into between Park Gardens and Community Square on September 9, 1987 provides, in Art. III "REMEDIES UPON DEFAULT":
3.01 Events of Default. Any of the following events shall be deemed an event of default hereunder:
a. Default shall be made in the payment of any installment of principal or interest or any other sum secured hereby when due;
* * * * * * 3.02 Acceleration Upon Default. Notwithstanding anything to the contrary herein set forth, no default shall be deemed to have occurred hereunder, except with respect to the payments of principal and interest within ten (10) days after the same is due, unless (i) such default has not been cured within thirty (30) days after written notice thereof to Mortgagor or (ii) within such thirty (30) day period, Mortgagor has failed to commence such action as may be reasonably necessary to cure such default. In the event of any event of default Mortgagee may declare all indebtedness secured hereby to be due and payable and the same shall thereupon become due and payable without any presentment, demand, protest or notice of any kind.
R. 151-52 (emphasis added). We see no language in these documents indicating an obligation upon Park Gardens to notify the Ottos of its intent to accelerate the note. According to the clear language of these documents, the Ottos promised to pay the remaining principal balance in event of default without demand or notice of acceleration. By making these promises, the only notice the Ottos were entitled to--should they default--was Park Gardens' foreclosure action itself. See, Hazifotis, supra.
In its summary judgment motion, Park Gardens relied upon the above documents, and a list of the Ottos' consistently late payments. Based on this, Park Gardens met its burden in showing that the Ottos were in default, that no notice was required before accelerating the note, and that Park Gardens was by law entitled to foreclosure. At this point, it was up to Ottos to set forth specific facts demonstrating the existence of genuinely disputed issues which would preclude summary judgment. The Ottos did nothing of the sort. Instead, the Ottos merely asserted in their reply (without providing any evidence) that at the time they received Park Gardens' acceleration notice, the Ottos were not in default. They did not include cancelled checks or any other evidence which would have allowed the trial court to find that the issue of default should be decided at trial. It was up to the trial court to determine, based on the undisputed facts before it, the ultimate fact of default based on evidence presented by the parties...
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