Sheikh v. Hinsdale Bank & Trust Co., N.A.

• Decision Date: 31 March 2021
• Docket Number: Court of Appeals Case No. 20A-MF-1244
• Citation: 167 N.E.3d 764 (Table)
• Parties: Sean Z. SHEIKH, Appellant-Defendant, v. HINSDALE BANK & TRUST COMPANY, N.A., Appellee-Plaintiff.
• Court: Indiana Appellate Court

167 N.E.3d 764 (Table)

Sean Z. SHEIKH, Appellant-Defendant,

v.HINSDALE BANK & TRUST COMPANY, N.A., Appellee-Plaintiff.

Court of Appeals Case No. 20A-MF-1244

Court of Appeals of Indiana.

FILED March 31, 2021

Appellant Pro Se: Sean Z. Sheikh, Austin, Texas

Attorneys for Appellee: Randall L. Morgan, Snyder Morgan Federoff & Kuchmay LLP, Syracuse, Indiana, Christopher A. Pellegrini, Chuhak & Tecson, P.C., Chicago, Illinois

MEMORANDUM DECISION

Bailey, Judge.

Case Summary

[1] This appeal arises from Countryside Bank's/Hinsdale Bank's¹ ("Lender") commercial loan enforcement and mortgage foreclosure action against multiple defendants, including the principal borrowers, Central Market of Indiana, Inc. ("CMI") and 3232 Central Avenue LLC (collectively, "Borrowers") and one of the unconditional guarantors of the Borrowers’ debt, Sean Z. Sheikh ("Sheikh"). Sheikh, pro se, appeals the order granting Lender summary judgment against him.

[2] We affirm.

Issues²

[3] Sheikh raises seven issues which we consolidate and restate as the following dispositive issues:

I. Whether the trial court followed the proper procedure when it resumed jurisdiction over the case following the federal court's remand pursuant to 28 U.S.C. § 1447(c).

II. Whether Lender properly filed its Motion for Summary Judgment after the expiration of twenty days from the commencement of this action in accordance with Indiana Trial Rules 3 and 56(A).

III. Whether the trial court erred when it refused to consider Sheikh's summary judgment filings that were submitted after the time to respond to Lender's summary judgment motion had expired under Indiana Trial Rule 56(C).

IV. Whether the trial court erred when it granted Lender's motion for summary judgment.

Facts³ and Procedural History

[4] The material undisputed facts are as follows.

[5] On May 14, 2015, Borrowers entered into a Loan Agreement with Lender under which Lender agreed to loan Borrowers $1,837,000. Borrowers executed a promissory note ("Note") promising to repay the loan in monthly installments. Borrowers’ debt was secured by a Mortgage and Assignment of Rents in favor of Lender. The Mortgage gave Lender the right to elect and pursue any and all of its remedies, including the remedy of judicial foreclosure.

[6] Sheikh guaranteed Borrowers’ payment obligations under the Note by executing an Unconditional Guarantee⁴ which lists Sheikh as the Guarantor and Countryside Bank as the Lender. The Unconditional Guarantee states, in relevant part:

1. GUARANTEE:

Guarantor unconditionally guarantees payment to Lender of all amounts owing under the Note. This Guarantee remains in effect until the Note is paid in full. Guarantor must pay all amounts due under the Note when Lender makes written demand upon Guarantor. Lender is not required to seek payment from any other source before demanding payment from Guarantor.

* * *

4. LENDER'S GENERAL POWERS:

Lender may take any of the following actions at any time, without notice, without Guarantor's consent, and without making demand upon Guarantor.

* * *

B. Refrain from taking any action on the Note, the Collateral, or any guarantee;

C. Release any Borrower or any guarantor of the Note;

D. Compromise or settle with the Borrower or any guarantor of the Note;

* * *

H. Exercise any right it has, including those in the Note and other Loan Documents.

These actions will not release or reduce the obligations of Guarantor or create any rights or claims against Lender.

* * *

6. RIGHTS, NOTICES, AND DEFENSES THAT GUARANTOR WAIVES:

To the extent permitted by law,

A. Guarantor waives all rights to:

1) Require presentment, protest, or demand upon Borrower;

* * *

C. Guarantor waives defenses based upon any claim that:

* * *

12) Lender did not seek payment from the Borrower, any other guarantors, or any Collateral before demanding payment from Guarantor;

* * *

15) Borrower has avoided liability on the Note; or

16) Lender has taken an action allowed under the Note, this Guarantee, or other Loan Documents.

* * *

9. GENERAL PROVISIONS:

A. ENFORCEMENT EXPENSES. Guarantor promises to pay all expenses Lender incurs to enforce this Guarantee, including, but not limited to, attorney's fees and costs.

* * *

H. ORAL STATEMENTS NOT BINDING: Guarantor may not use an oral statement to contradict or alter the written terms of the Note or this Guarantee, or to raise a defense to this Guarantee.

* * *

11. GUARANTOR ACKNOWLEDGMENT OF TERMS.

Guarantor acknowledges that Guarantor has read and understands the significance of all terms of the Note and this Guarantee, including all waivers.

12. GUARANTOR NAME(S) AND SIGNATURE(S):

By signing below, each individual or entity becomes obligated as Guarantor under this Guarantee.

Sheikh App. v. 2 at 55-57. Sheikh signed the Unconditional Guarantee.

[7] On December 27, 2017, Lender filed its "Complaint to Foreclose Commercial Mortgage and for Other Relief" in which it alleged, among other things, that Sheikh was liable under the Unconditional Guarantee for the minimum amount of $1,831,380.28, not including interest, costs of collection, and attorney's fees. Id. at 27. Along with its complaint, Lender filed summonses—including one for Sheikh—and paid the required filing fees. The trial court served the summons on Sheikh by certified mail at his residential address in Austin, Texas, and, on January 16, 2018, the trial court received the return receipt confirming service of process on Sheikh. The return receipt was signed by Paul D. Flores, the doorman of the apartment building where Sheikh lived.

[8] On March 14, 2018, Lender filed a Motion for Summary Judgment, including a request for summary judgment against Sheikh based on his Unconditional Guarantee. In its motion, Lender noted that Sheikh had failed to appear, answer, or otherwise defend against the Complaint, that his responsive pleading to the Complaint was past due, and that he was in default. Lender served its Motion for Summary Judgment on Sheikh by regular first-class mail to the residential address in Austin, Texas.

[9] On March 16, 2018, the trial court entered summary judgment in favor of Lender and against Sheikh on his Unconditional Guarantee (the "March 2018 Judgment"). The trial court concluded that Sheikh was liable in the minimum amount of $1,904,522.26,⁵ not including interest, costs of collection, and attorney's fees. The trial court found no just reason for delay and directed the entry of final judgment.

[10] Sheikh filed a Motion for Relief from the March 2018 Judgment on June 19, 2018. Sheikh claimed he never received Lender's Complaint and Summons, and he argued that service of process signed by the doorman of the apartment building where Sheikh lived was not effective service under Trial Rule 4.1(A). Lender filed its response to the motion and, on July 26, 2018, the trial court granted Sheikh's motion on the grounds that he had not been "properly served with [the] Summons and Complaint." Sheikh App. v. 2 at 16.

[11] On September 17, 2018, Sheikh removed the case to the United States District Court for the Northern District of Indiana on the basis of diversity jurisdiction and filed an Answer to the Complaint in federal court. On September 19, 2018, Lender filed a Motion for Summary Judgment in federal court against Sheikh on the Unconditional Guarantee. Sheikh filed a response in opposition to Lender's summary judgment motion in which he designated material facts in dispute and included affidavits of Sheikh and Zafar Sheikh. However, the federal court ultimately determined that it lacked diversity jurisdiction. On February 5, 2020, the federal court entered an order remanding the case back to the trial court and noted in the federal docket that the remand order was sent to the trial court. In light of the remand, the federal court denied Lender's Motion for Summary Judgment as moot.

[12] On February 7, 2020, Countryside Bank, by its successor by merger, Hinsdale Bank, filed a Corrected Motion for Substitution of Party Plaintiff informing the trial court that Hinsdale Bank had "merged with and succeeded to all interests of Countryside Bank effective November 1, 2019, including its rights in these proceedings." Sheikh App. v. 2 at 139. Hinsdale Bank asked to be "substituted for Countryside Bank due to the transfer of such interest." Id . On February 7, the trial court entered an Order of Substitution directing that Hinsdale Bank be "substituted as Plaintiff in these proceedings." Id. at 138.

[13] On February 14, 2020, Lender⁶ filed another Motion for Summary Judgment in the trial court and served the motion on Sheikh by regular first-class mail. The Bank also emailed a courtesy copy of its motion to Robert A. Habib ("Habib")—the attorney who had represented Sheikh in federal court—although Habib had not yet filed an Appearance in the trial court.

[14] On March 27, 2020, Sheikh filed, by his counsel, a motion for leave to file his response to Lender's motion for summary judgment. Sheikh noted that Lender had filed "the same" motion for summary judgment in federal court prior to remand. Sheikh App. v. 2 at 154. Sheikh attached the response he had filed to Lender's motion in federal court and requested that the trial court grant him leave to file that response.⁷ On March 31, 2020, Lender filed an Objection to Sheikh's Motion for Leave, asserting among other things that the trial court lacked discretion to allow an untimely response to its Motion for Summary Judgment. On April 1, 2020, Sheikh filed an amended motion for leave to file a response to which he attached the summary judgment exhibits from the federal court, which he had omitted as attachments to his initial motion for leave to respond.

[15] On May 20, 2020, the trial court entered its Order granting summary judgment in favor of Lender and against Sheikh on his Unconditional Guarantee (the "May 2020 Judgment"). The trial court stated that "because [Sheikh] neither filed a response nor requested a continuance within the 30-day response period under Trial Rule 56, the Court lacks...