SPCP GROUP v. DOLSON INC.
| Decision Date | 04 October 2010 |
| Docket Number | No. 19A01-0912-CV-604.,19A01-0912-CV-604. |
| Citation | 934 N.E.2d 771 |
| Parties | SPCP GROUP, L.L.C., a Delaware Limited Liability Company, Appellant-Plaintiff, v. DOLSON, INC., an Indiana corporation, Maurice E. Doll, and individual, Shanna R. Doll, an individual, Randall L. Holland, an individual, Earlene L. Holland, and individual, Ecolab, Inc., State of Indiana Department of Revenue and State of Indiana Alcohol and Tobacco Commission, Appellees-Defendants. |
| Court | Indiana Appellate Court |
OPINION TEXT STARTS HERE
Laura S. Reed, Ted W. Nolting, Riley Bennett & Egloff, LLP, Indianapolis, IN, Attorney for Appellant.
Marilyn R. Ratliff, Evansville, IN, Attorney for Appellees.
SPCP Group, LLC, appeals the trial court's orders denying its motion for partial summary judgment and granting defendant Earlene Holland's cross-motion for summary judgment on SPCP's complaint seeking foreclosure of a mortgage on Holland's real property. 1 SPCP raises two issues, of which we find the following restated issue dispositive: whether the trial court properly determined there is no genuine issue of material fact and Holland is entitled to judgment as a matter of law. Concluding the undisputed facts establish that the mortgage SPCP seeks to foreclose inaccurately and inadequately describes the debt it purports to secure, and as a result, SPCP cannot establish an essential element of its claim, we affirm.
The following facts are undisputed. Holland is the sole owner of four contiguous lots in Jasper, Indiana, referred to as the Real Estate. On June 30, 1999, Holland executed a lease (“the Lease”) of the Real Estate to Dolson, Inc. (“Dolson”) for the purpose of operating a Garfield's restaurant and pub. The Lease was signed by Shanna R. Doll and Maurice E. Doll (“the Dolls”), acting as Dolson's president and secretary/treasurer respectively, and had a term of fifteen years. Section 14 of the Lease, relating to “Mortgage Financing,” contained the following relevant provisions:
1. Construction Mortgages. Upon the circumstances and subject to the terms contained in this Section, [Dolson] may, in conjunction with permanent financing, require [Holland] to join with [Dolson] in the execution of a mortgage or mortgages to provide permanent financing for the improvement of the already existing commercial buildings.
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4. Security. The real estate shall only secure or subordinate the mortgage up to the principle [sic] amount of Seven Hundred Thousand Dollars ($700,000.00).
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7. Refinancing. [Dolson] shall have the right to refinance the permanent mortgage from time to time provided that any new permanent mortgage must comply with the following conditions:
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(c) The new permanent mortgage ... shall not have a term longer than the term of this Lease, or any exercised renewal term of this Lease....
... If the new permanent mortgage complies with the aforesaid conditions, [Holland] and [Dolson] shall join in the execution ... and delivery of such new first mortgage ... and any such permanent mortgage shall cover and be a lien on the premises in its entirety.... Provided, however, that any such mortgage shall provide that it be paid in full before the last two years of the term of this Lease.
Appellant's Appendix at 273-74. The Dolls also signed, in their individual capacities, a guaranty of the Lease. At some point in time not clear from the record, a first mortgage on the Real Estate was executed in favor of DuBois County Bank.
On December 24, 2001, Holland and Dolson executed a new mortgage on the Real Estate (“the Mortgage”). The Mortgage was executed in favor of Terre Haute First National Bank (“the Bank”), and was for the purpose of refinancing. 3 The Mortgage purported to secure “Secured Debt” not exceeding $700,000 and defined in Paragraph 4 of the Mortgage as:
A. Debt incurred under the terms of all promissory notes(s), contract(s), guaranty(s) or other evidence of debt described below and all their extensions, renewals, modifications or substitutions. (When referencing the debts below it is suggested that you include items such as borrowers' names, note amounts, interest rates, maturity dates, etc.)
Promissory Note dated December 27, 2001 executed by Dolson, Inc. and Maurice E. Doll and Shanna R. Doll and C. Wayne Thompson and maturing December 27, 2021.
Id. at 283. In Paragraph 24 of the Mortgage, Holland and Dolson agreed that:
Lender and any party to this Security Instrument may extend, modify or make any change in the terms of this Security Instrument or any evidence of debt without Mortgagor's consent. Such a change will not release Mortgagor from the terms of this Security Instrument.
On December 27, 2001, Dolson and the Dolls executed a promissory note (the “Note”) to the Bank in the principal amount of $700,000 with a maturity date of December 27, 2021. C. Wayne Thompson 4 did not execute the Note, and Holland did not review the Note before or after she signed the Mortgage. Also on December 27, 2001, Thompson executed in favor of the Bank an unconditional guaranty (“the Guaranty”) in consideration for the credit advanced to Dolson. The Guaranty provided that Thompson “hereby guarantees the full and prompt payment, when due ... of any and all notes ... and other obligations of [Dolson]” not exceeding a principal sum of $700,000. Id. at 117.
Dolson and the Dolls failed to make timely payments on the Note, placing them in default. In September 2005, the Bank assigned the Note, the Mortgage, and the Guaranty to SPCP. On September 26, 2005, SPCP filed its complaint against Holland, Dolson, the Dolls, and Thompson, seeking, among other things, foreclosure of the Mortgage on the Real Estate. In December 2005, Dolson filed for Chapter 11 bankruptcy, resulting in a stay of all state court proceedings as to Dolson and the Dolls.
On June 6, 2007, SPCP and Thompson executed a release whereby, for consideration of $550,000, SPCP discharged all debts, claims, and causes of action against Thompson. The release was executed without Holland's knowledge or consent. On July 1, 2009, SPCP filed, and the trial court granted, a motion to dismiss SPCP's claims against Thompson. The same day, SPCP amended its complaint to add counts against Ecolab, Inc., the owner of a dishwasher leased to Dolson, and against the Indiana Alcohol and Tobacco Commission and Indiana Department of Revenue (the ) in relation to Dolson's liquor license.
On July 30, 2009, SPCP filed a motion for partial summary judgment against Holland and Dolson. 5 On August 18, 2009, Holland filed a response and cross-motion for summary judgment against SPCP. In her affidavit designated in support, Holland averred:
6. While I did not read [the] entire [Mortgage] before signing it, I did read the description of the Promissory Note it secured ... which description was consistent with my understanding of the transaction for which I was obligating my property.
7. I first learned at the time this suit was filed, or shortly before, that the Promissory Note allegedly secured by the Mortgage on my property was not as described in the Mortgage, in that C. Wayne Thompson was not a maker.
8. I would not have signed the Mortgage had the description of the Promissory Note being secured by the Mortgage not included C. Wayne Thompson as a maker of that Promissory Note.
The trial court held a hearing on the summary judgment motions and, on October 21, 2009, issued its order denying SPCP's motion and granting Holland summary judgment against SPCP. The trial court concluded Holland was entitled to judgment as a matter of law because the Mortgage was invalid and unenforceable on multiple grounds, including:
b) ... Holland is entitled to expect that the note secured by [the Mortgage] will be executed in the manner described in the mortgage. The description of the note contained in the mortgage is not correct as far as it goes. The mortgage states that “... Dolson, Inc. and Maurice E. Doll and Shanna R. Doll and C. Wayne Thompson ...” would be makers of a note to be executed three days later. C. Wayne Thompson was not a maker on any note subsequently executed. The note actually executed on December 27, 2001 was materially different than the note described in the mortgage ... Holland relied to her detriment on the inaccurate description ... [and] did not agree to pledge her property as security for the note that was actually signed.
Id. at 20. The trial court denied SPCP's motion to reconsider but granted SPCP's motion to certify its summary judgment order for interlocutory appeal. This court accepted jurisdiction.
We review the grant or denial of summary judgment de novo. Tri-Etch, Inc. v. Cincinnati Ins. Co., 909 N.E.2d 997, 1001 (Ind.2009). In so doing, we stand in the same position as the trial court, and must determine whether the designated evidence shows there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C); Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1269-70 (Ind.2009). In making this determination, we construe the evidence in a light most favorable to the non-moving party and resolve all doubts as to the existence of a genuine factual issue against the moving party. N. Ind. Pub. Serv. Co. v. Bloom, 847 N.E.2d 175, 180 (Ind.2006). The fact the parties have filed cross-motions for summary judgment does not alter our standard of review, as we “consider each motion separately to determine whether the moving party is entitled to judgment as a matter of law.” T-3 Martinsville, LLC v. U.S. Holding, LLC, 911 N.E.2d 100, 109 (Ind.Ct.App.2009) (quotation omitted), trans. denied.
Holland sought, and the trial court granted in her favor, summary judgment on the theory that SPCP cannot prove an essential element of its foreclosure...
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