Singo v. Deutsche Bank Nat'l Trust Co. Ams.
| Decision Date | 15 January 2013 |
| Docket Number | No. 39A01-1202-MF-48,39A01-1202-MF-48 |
| Parties | NORMA E. SINGO, individually, and NORMA E. SINGO, as Trustee of the Revocable Trust of Norma E. Singo, Appellants-Defendants and Third-Party Plaintiffs, v. DEUTSCHE BANK NATIONAL TRUST COMPANY AMERICAS, as Trustee for holders of IMPAC Secured Assets Corp., Mortgage Pass-Through Certificates, Series, 2004-3, Appellee-Plaintiff, And FRED SHFMFESSEL, RICHARD CART, d/b/a CART'S CREATIVE DESIGNS and ENCORE CREDIT CORP., Appellees-Third Party Defendants. |
| Court | Indiana Appellate Court |
Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.
ATTORNEY FOR APPELLANTS:
R. PATRICK MAGRATH
Alcorn Goering & Sage, LLP
Madison, Indiana
ATTORNEYS FOR APPELLEES:
Attorney for Richard Cart, d/b/a
Houston and Thompson, P.C.
Scottsburg, Indiana
Company, as Trustee for holders of
IMPAC Secured Assets, Corp.
Doyle Legal Corporation, P.C.
Indianapolis, Indiana
Stites & Harbison, PLLC
Jeffersonville, Indiana
Faegre Baker Daniels LLP
Indianapolis, Indiana
APPEAL FROM THE JEFFERSON CIRCUIT COURT
The Honorable Roger L. Duvall, Special Judge
Norma E. Singo ("Singo"), individually and as Trustee of the Revocable Trust of Norma E. Singo ("the Trust"), appeals from the trial court's order granting summary judgment in favor of Deutsche Bank National Trust Company Americas, as trustee for holders of IMPAC Secured Assets Corporation, Mortgage Pass-Through Certificates, Series 2004-3 ("Deutsche Bank") and Encore Credit Corporation ("Encore"), and granting partialsummary judgment in favor of Richard Cart ("Cart"), d/b/a Cart's Creative Designs. Singo presents the following issues for our review:
We affirm.
Singo met Cart in late 1997. Cart was involved in construction work, doing business as Cart's Creative Designs, and began work for Singo on her home on Mulberry Street in Madison, Indiana in 1998. Thereafter, Singo and Cart entered into a series of oral agreements whereby Singo would obtain funds and lend those funds to Cart, who would use them to build and sell houses for profit. Although the exact amount of the profit and how it was split was unclear from the record, the agreement was that Singo would share in the profit.
To obtain the funds to lend to Cart over time, Singo borrowed money from various financial institutions. In November 1998, Singo signed a promissory note and mortgage to River Valley Financial Bank ("RVFB") for $159,000.00 for the benefit of Cart and his wife. The note was secured by Singo's house on Mulberry Street and the property upon which the Carts' house was being built. That mortgage was released by RVFB early in 2000.
Prior to the release of the mortgage, Singo deeded her residence to the Trust, with Singo as the Trustee of the Trust. Singo signed a promissory note and mortgage to RVFB for $80,000.00 in March 2000, which was again secured by her house on Mulberry Street. Those funds were obtained by Singo, and the proceeds were lent to Cart, who used them to purchase lots in the River Bluff addition. Later in 2000, Singo signed a promissory note and mortgage to RVFB for $78,000.00, which was secured by both her house and the previously purchased lots in River Bluff, with the proceeds to be used by Cart to purchase more lots in the River Bluff addition. The mortgage for the $80,000.00 note through RVFB ultimately was released on November 17, 2004.
On June 3, 2004, Singo signed a promissory note and mortgage to Encore for $180,000.00. The note was again secured by her home on Mulberry Street. This transaction is the subject of the current appeal. The current holder of the note is Deutsche Bank.
In anticipation of the closing on the mortgage, Singo transferred her property from the Trust to herself individually via quitclaim deed on May 18, 2004. On May 28, 2004, however, Singo executed a warranty deed conveying the property back to the Trust and reserved a life estate for herself. A title search performed in connection with the closing did not reveal the May 28, 2004 warranty deed nor was that transfer disclosed to Encore.
Singo met with Fred Shimfessel ("Shimfessel") for the first time on June 3, 2004 about the mortgage that is the subject of this appeal. Shimfessel was an independent mortgage broker, who was contacted to help Singo obtain a loan. Shimfessel operated as Shimfessel Incorporated d/b/a Mite Federal Mortgage. Shimfessel "shopped around" Singo'sloan application with three lenders before settling on Encore. Singo's loan was the first and only transaction Shimfessel engaged in with Encore. Singo never had contact with Encore pertaining to the note; her only contact was with Shimfessel prior to entering into the loan agreement.
Shimfessel signed a Broker Agreement with Encore the day after the closing on Singo's mortgage. The agreement was standard for the industry and Shimfessel had signed identical agreements with other lenders. By the terms of the agreement, Shimfessel was authorized to take mortgage applications on behalf of Encore, perform a prequalifying analysis for prospective borrowers, collect financial information from borrowers, and initiate verifications and appraisals. Additionally, Shimfessel was authorized to help prospective borrowers understand transactions and clear credit problems and maintain regular contact with the prospective borrowers. In signing the agreement, Shimfessel promised to present applications consistent with Encore's standards and requirements. Encore retained absolute discretion in underwriting the mortgages.
The agreement explicitly states, "The relationship between the parties is an independent contractor relationship, and Broker is not, and shall not represent to third Parties that it is acting as, an agent for or on behalf of Encore." Appellants' App. at 564. Shimfessel was required to indemnify Encore for any breach of his representations or warranties, for failing to fulfill his promises under the agreement, or for any fraud in originating any mortgage loan. Shimfessel was to be responsible for his own costs and expenses per the agreement. Both Shimfessel, in his deposition, and Encore's representative, by affidavit,stated that the relationship between Encore and Shimfessel conformed to the terms of the agreement at all times even though Shimfessel began to solicit loans for Encore before the broker agreement was signed.
Shimfessel completed Singo's loan application and she signed it. One of the figures contained in the loan application was Singo's income, a figure which she later challenged, but which was verified by Singo's employer. According to Shimfessel, however, the employment information was not necessary for Singo to obtain the loan as it was a "no-income" loan based on the value of the collateral and Singo's credit score.
Included with the loan and mortgage documents was a letter to Encore signed by Singo in which she indicated the loan proceeds would be used to construct homes. There was also a letter to Encore signed by Cart in which he indicated he would be building the homes. Shimfessel drafted the letters for the two to sign.
The loan application contained the representation that Singo would hold title to the property in the name of Singo, a single woman, in fee simple. One of the closing documents was a HUD-1 Settlement Statement indicating that $24,278.49 of the proceeds of the loan would be disbursed to Singo, with $51,082.98 disbursed to RVFB to pay off a prior mortgage, and $4,437.71 disbursed for aggregate points and closing costs. She also submitted an occupancy affidavit and financial status form in which she swore that her personal and financial status had not changed since completion of her loan application. She also completed an error correction agreement in which she promised to cooperate should there be an error at closing and assured the lender that marketable title of the Mulberry homerested in her name. Further, a truth in lending disclosure statement was included wherein Singo acknowledged having read and received a complete copy of the disclosure.
After obtaining the funds from Encore, Singo gave some of the proceeds from the Mortgage to Cart. Singo's understanding was that Cart would be responsible for making the loan payments. However, there was no documentation memorializing an agreement to that effect. Shimfessel stated during his deposition that it was his understanding that Singo would be making the loan payments, and that he would not have participated in the transaction had he known that Cart intended to make the loan payments, because he would have been violating his duties to the lender.
Cart was unable to make the loan payments and Singo defaulted on the promissory note with Encore. Mortgage Electronic Registration Systems, Inc., as nominee for Encore, had been granted a security interest in the property and that mortgage was recorded on June 14, 2004. Deutsche Bank, as the current holder of the note, sent a letter to Singo on September 10, 2010 pursuant to the error correction agreement, asking Singo to stipulate to the validity of the mortgage, in an effort to correct the error in executing the mortgage in her individual capacity. The stipulation was not executed or filed with the trial court.
Deutsche Bank filed a...
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