Puente v. Beneficial Mortg. Co. of Ind., PNC Bank, Fid. Nat'l Title Ins. Co.,

Decision Date09 May 2014
Docket NumberNo. 45A03–1304–PL–159.,45A03–1304–PL–159.
Citation9 N.E.3d 208
PartiesGuadalupe PUENTE, Appellant, v. BENEFICIAL MORTGAGE CO. OF INDIANA, PNC Bank, Fidelity National Title Insurance Co., and Meridian Title Corp., Appellees.
CourtIndiana Appellate Court


Edward R. Hall, Merrillville, IN, Attorney for Appellant.

Brian J. Paul, Aaron D. Grant, Ice Miller, Indianapolis, Michael R. Lieber, Ice Miller, Chicago, IL, Attorneys for Appellees Beneficial Mortgage Co. of Indiana.

Brian J. Hurley, Timothy C. Krsak, Douglas Koeppen & Hurley, Valparaiso, IN, for PNC Bank N.A.

Kurt V. Laker, Doyle Legal Corporation, P.C., Indianapolis, IN, for Fidelity National Title Insurance Co.

James P. Knepp, Andrea Kurek Slagh, Hahn, Knepp and Slagh, South Bend, IN, for Meridian Title Corporation.



This litigation commenced almost twelve years ago with a 2002 quiet-title action filed by James and Rebecca Wolverton concerning the property located at 4728 Hickory Street in Hammond, Indiana (the Property). The Wolvertons are not a party to this appeal. Instead, the appellant is Guadalupe Puente, who subsequently and unsuccessfully attempted to purchase the Property. His attempt ultimately was unsuccessful because, in the process of Puente's attempt to purchase the Property, certain entities failed to discover that the Wolvertons were the titled owners as a result of having purchased it at a tax sale. The appellees consist of four companies involved in some way in Puente's failed purchase. Those companies are: Beneficial Mortgage Company of Indiana (Beneficial), PNC Bank N.A. (PNC), Fidelity National Title Insurance Company (Fidelity), and Meridian Title Company (Meridian).

What began in 2002 as a quiet-title action between the Wolvertons and Beneficial, among others, was eventually re-captioned and renumbered to its present iteration on October 1, 2010. In his complaint, Puente sued Beneficial, Fidelity, Meridian, and PNC under multiple theories of liability. He appeals grants of summary judgment in favor of each individual appellee, presenting multiple issues for review. Our resolution of one of those issues, however, obviates our need to address the remainder. We restate that issue as follows: Did the trial court err in granting summary judgment in favor of Fidelity on the issue of whether Fidelity is entitled to subrogation of Puente's claims?

We affirm.

Kenneth and Kathy Clarke owned the Property until June 7, 2000, when it was sold at a sheriff's sale pursuant to a decree of foreclosure in favor of the mortgage holder, Beneficial. On September 1, 2000, a sheriff's deed was issued in favor of Beneficial. At the time of sale, and at the time Beneficial received title, delinquent real estate taxes were owed on the Property. On September 13, 2000, the Wolvertons purchased a number of properties, including the Property at issue in the present case, at a tax sale. Two days later, Beneficial recorded the sheriff's deed with respect to the Property. On September 18, 2000, the State auditor executed a tax sale certificate to the Wolvertons, subject to a tax lien of $793.53. On April 18, 2001, the Wolvertons sent certified copies of a Notice of Sale and Redemption Period Expiration to Beneficial. The notice stated as follows:

YOU ARE HEREBY NOTIFIED that in accordance with IC 6–1.1–25–4.5 James Wolverton has purchased a tax sale certificate for the following described real estate at tax sale held on September 13, 2000, in the Lake County Government Center ...:

[Legal description of the Property]

BE IT KNOWN that James Wolverton has the legal right and will file a Petition for the Issuance of a Tax Deed on the above-mentioned real estate ... on or after September 13, 2001.

BE IT FURTHER KNOWN that State of Indiana and Beneficial Indiana, Inc. d/b/a. Beneficial Mortgage Co. of IN, as the owner, an occupant and/or a person with a substantial property interest of record is entitled to redeem the above-mentioned real estate under [sic] by paying the amount of the judgement [sic] for taxes, special assessments, penalties and other costs within one (1) year from the date of the tax sale.

The real estate has not yet been redeemed. The purchaser, James Wolverton, or the purchaser's assignees will be entitled to receive a deed to the real estate if it is not redeemed by September 13, 2001. In the event the real estate is redeemed, the purchaser or the purchaser's successors or assignees is [sic] entitled to the reimbursement for additional taxes or special assessments on the real estate that were paid by the purchaser subsequent to the tax sale and before redemption plus 10% per annum on these taxes and special assessments together with the costs of giving notice under the statute and the costs of examining and updating title and court costs IC 6–1.1–25–2.

Amended Appellant's Appendix at 72.

On April 30, 2001, Puente purportedly purchased the Property from Beneficial for $39,900. Puente secured a mortgage from National City Bank (now PNC; we will refer to this party henceforth as PNC) in the amount of $37,900 to pay the purchase price. Beneficial issued a Corporate Warranty Deed to Puente purporting to convey the Property to Puente. A Purchase Agreement executed between the two provided that Beneficial would provide Puente with a commitment for an Owner's Title Insurance policy.

Prior to the attempted sale to Puente, PNC and Beneficial contacted Meridian concerning a lender's and owner's Commitment for Title Insurance, respectively. After the closing between Beneficial and Puente, Meridian issued a standard American Land Title Association (ALTA) 10/17/92 policy to Puente and a standard ALTA 10/17/92 lender's policy of title insurance to PNC. Lawyers Title Company, a predecessor of Fidelity (hereinafter referred to as Fidelity) was the underwriter of those policies. On September 14, 2001, the Wolvertons filed a Verified Petition for an Order Directing the Auditor of Lake County, Indiana To Issue Tax Deed.” Id. at 129. The Lake County Circuit Court granted the petition and, on January 18, 2002, issued an Order For Issuance of Tax Deed directing the Lake County Auditor to issue a tax deed for the Property to James Wolverton. The Lake County Auditor complied and issued a tax deed that was recorded on March 8, 2002. On May 21, 2002, the Wolvertons filed a quiet-title action, which ultimately was transferred to Lake Superior Court on October 1, 2010.

Meanwhile, Puente and PNC did not learn of the Wolvertons' interest in the Property until a title search was conducted in conjunction with Puente's refinancing of the Property with PNC, which also financed the original purchase. On August 14, 2002, the day before closing on the refinancing, the tax sale to the Wolvertons was discovered following a title search. As a result, Josephine Dedo, an employee of PNC, assisted Puente by submitting a claim to Fidelity 1 on Puente's behalf. That claim was received by claims attorney Michael Maser, who initially thought the problem was a simple matter of failure to record Puente's deed—a problem that could be corrected with relative ease. A subsequent investigation, however, revealed that the problem was more complicated than that, and that the matter “needed to be resolved through litigation.” Id. at 33.

The Wolvertons offered to sell the Property to Puente at that point for $32,500, which was less than Puente's policy limits. This offer was not accepted. The matter was then referred to Fidelity claims counsel William Slifkin. Slifkin eventually retainedattorney James Secrest to represent Puente and PNC. In October 2002, on behalf of PNC and Puente, Secrest filed a Motion to Intervene and a Motion to Set Aside Judgment in the Wolvertons' quiet-title action. Relief was sought on grounds that neither PNC nor Puente “received actual or constructive notice of [the quiet-title] proceedings commenced on May 21, 2002 notwithstanding [they] had valid and legal interest in the real estate of record.” Id. at 147. Secrest took no action with regard to the tax-deed litigation. Subsequently, Puente hired private counsel, who represented him throughout the remainder of this litigation. His attorneys included Michael Moran, William Murakoski, and Michael Jasaitis. Secrest continued working in this litigation as counsel for Fidelity.

On January 22, 2003, after consultation with Slifkin, Secrest advised Moran that Puente could refinance his existing mortgage, and that Fidelity would “insure over” any problems created by the quiet-title case. In this context, “insure over” is a term of art meaning that “Fidelity would issue a lender's policy of title insurance to the refinancing lender without making an exception for the quiet title action, and would cover the new lender in the event the quiet title case jeopardized the priority and validity of the new mortgage.” Id. With this in mind, Puente completed his refinancing with PNC.

In November 2005, Secrest expressed doubts to Beneficial and Fidelity about the strength of their claim against the Wolvertons. In a November 10, 2005 letter to Slifkin, Secrest stated, “but if the [the Wolvertons] file[ ] a motion for summary judgment, I'm afraid it will cook our goose.” Id. at 212. On November 11, Secrest sent an email to Rick Malad, Beneficial's attorney, in which he stated, “it occurred to me that if [the Wolvertons] file a motion for summary judgment, we are dead in the water.” Id. Apparently, Secrest thereafter decided that he would force the Wolvertons to prove their case. Ultimately, the case was set for an Ind. Trial Rule 41(E) hearing due to the Wolvertons' failure to prosecute. That motion was unsuccessful.

The parties thereafter entered into mediation and on April 4, 2007, the price term of the Wolvertons' offer to sell to Puente had increased to $74,000. That offer was rejected. Thereafter, with Jasaitis's explicit or implicit consent, Secrest submitted a summary judgment motion, arguing that Puente and PNC did not...

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