The Money Store Investment Corp. v. Summers

• Decision Date: 09 February 2005
• Docket Number: No. 02A03-0404-CV-170.,02A03-0404-CV-170.
• Citation: 822 N.E.2d 223
• Parties: THE MONEY STORE INVESTMENT CORPORATION d/b/a First Union Small Business Capital, Appellant, v. Neal A. SUMMERS, et al, Appellee.
• Court: Indiana Appellate Court

822 N.E.2d 223

THE MONEY STORE INVESTMENT CORPORATION d/b/a First Union Small Business Capital, Appellant, v. Neal A. SUMMERS, et al, Appellee.

No. 02A03-0404-CV-170.

Court of Appeals of Indiana.

February 9, 2005.

Rehearing Denied April 18, 2005.

Mark R. Galliher, Craig D. Doyle, Joanne B. Friedmeyer, James L. Shoemaker, Doyle & Friedmeyer, P.C., Indianapolis, IN, Attorneys for Appellant.

G. Martin Cole, Jeremy J. Grogg, Burt, Blee, Dixon, Sutton & Bloom, LLP, Fort Wayne, IN, Attorneys for Appellee.

OPINION

DARDEN, Judge.

STATEMENT OF THE CASE

The Money Store Investment Corporation, d/b/a/ First Union Small Business Capital, ("Money Store"), appeals the trial court's order that granted summary judgment in its foreclosure action to intervenor and third-party plaintiff Paula Phillips. The order also held that Phillips had an in rem judgment against the real estate of Neal A. Summers, ordered foreclosure of various mortgages, and found the mortgages on Summers' real estate that Phillips had obtained by assignment on February 14, 2002 were superior to earlier mortgages held by Money Store.

We affirm.

ISSUES

1. Whether the trial court erred in holding that mortgages assigned to Phillips secured payment of debts that Summers owed to Phillips before the date of the assignment.

2. Whether estoppel bars the grant of judgment to Phillips.

3. Whether the trial court committed reversible error when it failed to strike portions of affidavits submitted by Phillips.

4. Whether the trial court erred in finding Summers personally liable for the debts of Mangy Moose.

5. Whether the trial court erred in granting Phillips an award of attorney's fees.

FACTS

During the years between 1992 and 1996, Neal Summers ("Summers") negotiated various loans with Fort Wayne National Bank, which is now known as National City Bank ("National City"). As security therefor, Summers executed a series of mortgages encumbering several parcels of his real estate. The mortgages were recorded. Three of the mortgages contained terms that are commonly referred to as "dragnet clauses."¹

In 1998, Phillips brought a civil action against Summers and Mangy Moose Enterprises, Inc.² The matter was dismissed after Summers and Mangy Moose entered into a written settlement agreement with Phillips on September 15, 1999. However, Summers and Mangy Moose subsequently failed to comply with the agreement.

During at least the years 1999-2000, Summers issued various checks on an open business account at Fort Wayne National, the predecessor to National City, for "Paula's Seafood and Mangy Moose Saloon." (App.133-193). By August 31, 2000, there was a $4,770.16 overdraft in the "regular business checking" account of "Mangy Moose Enterprises Inc. DBA Mangy Moose Saloon DBA Paula's Seafood." (App.288).

In August-September of 2000, Summers sought loans from Money Store. On September 11, 2000, Jeffrey Harlan, an agent of the title company acting for Money Store, sent to National City a request for confirmation that a list of ten mortgages would be released and satisfied upon satisfaction of the three loan payoff statements attached to the letter. The pay-off statements reflected various amounts due to National City as of August 24, 2000, with daily interest amounts thereon subsequent to that date. National City responded on September 14, 2000, that the mortgages would be released "upon proper payoff of the three loans." (App.268). National City received three payments on September 15, 2000, but one payment was less than the amount indicated on the payoff statement. National City did not release its mortgages.

On September 15, 2000, Summers and Mangy Moose negotiated a loan from Money Store, also executing a promissory note and a mortgage on several parcels of Summers' real estate to secure the loan. On that same day, Mangy Moose — by Summers as president and secretary — executed an additional promissory note for another loan from Money Store, which note was also secured by a mortgage on Summers' real estate.

As noted above, Summers and Mangy Moose failed to comply with their written settlement agreement with Phillips in her legal action. Specifically, they failed to pay Phillips her sign-up bonus pay, accrued wages and vacation pay and to transfer 40% of the outstanding capital stock of Mangy Moose to her. Therefore, on August 10, 2001, Phillips filed a motion to enforce the settlement agreement that the parties had entered into on September 15, 1999.

Subsequently, on September 17, 2001, Money Store initiated a complaint for foreclosure on the real estate and appointment of receiver for Mangy Moose.

In an order dated October 5, 2001, the court found Summers and Mangy Moose had committed numerous material breaches of their written settlement agreement with Phillips and ordered specific performance of its terms. On February 5, 2002, the trial court found that Summers and Mangy Moose had "failed and refused" to comply with its order of October 5, 2001 and granted Phillips a monetary judgment in the amount of $205,700. (App.128).

On February 14, 2002, National City assigned to Phillips "all of its right and interest" in eleven mortgages it held on real estate owned by Summers. (App.116). Thereafter, on March 13, 2002, Phillips filed a motion to intervene in Money Store's foreclosure action, along with her own complaint to foreclose. The trial court granted her motion to intervene.

Subsequently, both Phillips and Money Store amended their complaints for foreclosure. Although named as a party in both Phillips' and Money Stores' complaints, Summers neither appeared nor answered their complaints.³

On June 6, 2003, Phillips filed a motion for summary judgment and designated certain evidentiary materials, including affidavits from her attorney and an officer of National City. Phillips also designated and cited the dragnet clauses in some of National City's mortgages; evidence that before September of 2000, Summers and Mangy Moose had incurred additional debt to National City in the form of overdrafts and charges which remained unpaid; her monetary judgment against Summers and Mangy Moose; her assignment by National City of its interests with respect to its mortgages on Summers' property; and evidence of her attorney's fees. Phillips argued that she was "the first position lien claimant," with her claims being "superior and prior to the claims, interests, and liens of" Money Store. (App.124).

On July 30, 2003, Money Store filed its motion for summary judgment. Money Store argued⁴ that Summers' mortgages to National City "were paid in full with the proceeds" of the two notes given to Summers and Mangy Moose on September 15, 2000, and that "any interest that Phillips has in the mortgaged property is subsequent to that of the interest held by [ ] Money Store." (App.221, 222). The designated evidence in support of its "payment in full" argument was an affidavit by Jeffrey Harlan, an attorney who had represented the title company acting for Money Store, stating that "payoff funds were deposited" on September 15, 2000 with National City "as evidenced by the receipts," and that a September 14, 2000 transmission from National City had indicated that mortgages would be released "upon proper payoff of the three (3) loans as quoted." (App.267).

On December 4, 2003, the trial court entered its judgment and decree foreclosing the mortgages of both Phillips (pursuant to the assignment by National City) and Money Store to Summers' real estate. Further, the order granted to Phillips not only an in rem judgment against Summers' real estate "from the overdrafts and [National City] Mortgage securing same," but also an in rem judgment against Summers' real estate "for her judgment lien" (arising from the written settlement agreement entered into by the parties on September 15, 1999), as well as "all reasonable and necessary collection and attorney fees associated with the foreclosure of her mortgages." (App.363, 364). The order further held that Money Store's mortgage was "subject, subordinate and inferior to the lien of [ ] Phillips' Mortgage and judgment lien." (App.367).

DECISION

On appeal from summary judgment, we face the same issues that were before the trial court and analyze them the same way, although the trial court's decision is clothed with the presumption of validity. Kennedy v. Guess, Inc., 806 N.E.2d 776, 779 (Ind.2004). "Summary judgment should be granted only if the evidence authorized by Indiana Trial Rule 56(C) shows that there is no genuine issue of material fact and the moving party deserves judgment as a matter of law." Id. (citing Ind. T.R. 56(C)). Here, Money Store presses no material issues of fact, but states that the appellate review "must simply consider whether the record reveals an incorrect application of the law to the facts." Money Store's Br. at 9.

1. Phillips' Assigned Mortgage Interest

Money Store presents a series of arguments to support its claim that the trial court "erred in ruling that mortgages assigned to Phillips by National City secured payment of debts Summers owed Phillips before the assignment." Money Store's Br. at 1. We address each.⁵

Money Store first contends that Phillips' rights as assignee are limited to those of National City, to wit: the overdraft claim.⁶ Money Store argues that Phillips could not "acquire any greater rights than those enjoyed by her assignor" because "one who receives assignment of a mortgage may use that mortgage only to enforce payment of debts owed to the original mortgage holder and secured by such mortgage." Money Store's Br. at 10. Money Store cites no authority for the latter proposition. Rather, it erroneously offers this as the "clear implication" of the legal principle that "the assignee of a mortgage has no greater rights than the original mortgage holder," citing Strafford v. Lane, 124 Ind. 592, 24 N.E. 683 (1890). Money Store's Br. at 10. Strafford held that the assignees "d[id] not...