Court Opinion

ID: 2791452
Source: CourtListenerOpinion
Date Created: 2015-04-06 14:02:29.016096+00
Date Added: 2024-06-11T12:20:47.882060
License: Public Domain

Apr 06 2015, 8:36 am

      ATTORNEY FOR APPELLANT                                     ATTORNEY FOR APPELLEE
      Gary M. Selig                                              Fredric Lawrence
      Indianapolis, Indiana                                      Nelson & Frankenberger
                                                                 Indianapolis, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Demetrius L. Grant, and                                    April 6, 2015
      Vickie O. Grant                                            Court of Appeals Case No.
                                                                 49A05-1404-MF-139
      Appellant-Defendant,
                                                                 Appeal from the Madison Superior
              v.                                                 Court
                                                                 Honorable Michael D. Keele, Special
                                                                 Judge
      The Bank of New York Mellon                                Case No. 49D07-1006-MF-028352
      Trust Co.,
      Appellee-Plaintiff

      Friedlander, Judge.

[1]   Demetrius and Vickie Grant appeal the trial court’s denial of their motion to

      dismiss and grant of summary judgment in favor of The Bank of New York

      Mellon Trust Company (the Bank). The Grants present the following

      dispositive issue for review: Was dismissal of the Bank’s second foreclosure

      action against the Grants required where the first action was dismissed under

      Indiana Trial Rule 41(E)?
      Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015                  Page 1 of 9
[2]   We reverse and remand.

[3]   The Grants have lived in their Indianapolis home for over thirty years. On

      January 28, 2004, they executed a note in the principal amount of $127,500

      with Paragon Home Lending, LLC. To secure payment of the note, the Grants

      executed a mortgage. At some point, the mortgage and note were assigned to

      the Bank.

[4]   The Grants filed bankruptcy in 2007, and the bankruptcy court granted them

      discharge from the mortgage debt that same year. Thereafter, the Grants did

      not make their August 2007 mortgage payment or any subsequent payments.

[5]   On November 26, 2007, the Bank filed an In Rem Complaint on Note and to

      Foreclose Mortgage and Reformation of Mortgage and Deed (the First

      Foreclosure Action). The Bank took no action on the complaint for over a year

      and a half, so Judge S.K. Reid of the Superior Court of Marion County set the

      cause for call of the docket on July 29, 2009. Demetrius Grant appeared for the

      hearing, but the Bank did not. Accordingly, Judge Reid dismissed the cause

      pursuant to T.R. 41(E) for failure to prosecute.

[6]   Eight months later, on March 29, 2010, the Bank filed a motion to reinstate the

      First Foreclosure Action, which the court initially granted. Upon the Grants’

      motion, Judge Reid returned the case to disposed status on April 23, 2010,

      citing Natare Corp. v. Cardinal Accounts, Inc., 874 N.E.2d 1055 (Ind. Ct. App.

      2007) (reversing reinstatement where plaintiff filed an unverified motion with

      Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015   Page 2 of 9
      no supporting affidavits and presented no admissible evidence at the hearing on

      the reinstatement motion). The Bank did not appeal this ruling.

[7]   Two months after unsuccessfully attempting to reinstate the First Foreclosure

      Action, the Bank filed a new lawsuit against the Grants asserting the same

      allegations and seeking the same relief (the Second Foreclosure Action). The

      Grants subsequently filed a motion to dismiss, invoking as its basis Indiana

      Trial Rule 12(B)(6). In their pro-se motion, the Grants argued that the First

      Foreclosure Action had been dismissed for failure to prosecute and could not be

      reinstated in this separate action. In opposition, the Bank argued in part that

      despite the T.R. 41(E) dismissal, it was allowed to refile a separate action in the

      future. The Grants replied that the motion to dismiss was proper under T.R. 41

      and that “the bank [sic] attempt to refile this lawsuit is barred by the doctrine of

      res judicata”. Appellants’ Appendix at 68. Following a hearing, the trial court

      denied the Grants’ motion to dismiss. The Grants appealed the denial, but this

      court dismissed the appeal because it was not from a final appealable order and

      the Grants had not sought certification of the interlocutory order. Grant v. Bank

      of New York, Cause No. 49A02-1104-MF-485 (March 22, 2012).

[8]   After dismissal of the appeal, nothing happened in the case for several months

      and the trial court issued a call of the docket notice to the parties in November

      2012. The Bank sought leave to amend its complaint in February 2013, which

      the trial court granted after a T.R. 41(E) hearing. The amendment, filed March

      7, 2013, added the State as a party defendant and changed one date. The

      Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015     Page 3 of 9
       Grants then sought a change of judge, which was granted, and Special Judge

       Michael Keele was appointed.

[9]    On July 10, 2013, the Bank filed a motion for summary judgment. In their

       memorandum in opposition to summary judgment, the Grants noted the T.R.

       41(E) dismissal of the First Foreclosure Action and that the case was not

       reinstated pursuant to T.R. 41(F). The Grants further developed their T.R. 41

       argument in a supplemental response, which they urged should be treated as a

       belated motion to dismiss under T.R. 12(B)(8).

[10]   The trial court held a summary judgment hearing on January 23, 2014. At the

       conclusion of the hearing, the court directed the Bank to file a response to the

       Grants’ T.R. 12(B)(8) motion. In its written response, the Bank’s sole argument

       was that T.R. 41(F) does not require a party to petition the original court to

       reinstate a case following dismissal for failure to prosecute. The Bank asserted,

       without citing any authority, “[a] Plaintiff is well-within its rights to instead re-

       file the Complaint at any time of its choosing.” Appellants’ Appendix at 330.

[11]   On March 26, 2014, the trial court summarily denied the Grants’ motion to

       dismiss. The court also entered a separate order for In Rem Entry of Summary

       Judgment and Decree of Foreclosure in favor of the Bank. The Grants now

       appeal.

[12]   In support of their argument, the Grants direct us to Zavodnik v. Richards, 984
N.E.2d 699 (Ind. Ct. App. 2013), aff’d on reh’g, 988 N.E.2d 806 (Ind. Ct. App.

       2013), a case with procedural facts almost identical to those at hand. In

       Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015      Page 4 of 9
       Zavodnik, the plaintiff’s complaint was dismissed under T.R. 41(E) for failure to

       prosecute and the plaintiff unsuccessfully attempted to reinstate the original

       lawsuit pursuant to T.R. 41(F). The plaintiff then filed a new lawsuit with

       allegations nearly identical to those of the originally-dismissed complaint. The

       new court granted the defendant’s motion to dismiss.1

[13]   The defendant argued that the filing of an entirely new complaint in a different

       court contravened T.R. 41(E) and (F) and that the plaintiff should not be

       allowed to avoid the rule’s reinstatement requirement simply by filing a new

       complaint before a different judge.

[14]   Subsections (E) and (F) of T.R. 41 provide:

               (E) Failure to prosecute civil actions or comply with rules.
               Whenever there has been a failure to comply with these rules or when
               no action has been taken in a civil case for a period of sixty [60] days,
               the court, on motion of a party or on its own motion shall order a
               hearing for the purpose of dismissing such case. The court shall enter
               an order of dismissal at plaintiff’s costs if the plaintiff shall not show
               sufficient cause at or before such hearing. Dismissal may be withheld
               or reinstatement of dismissal may be made subject to the condition
               that the plaintiff comply with these rules and diligently prosecute the
               action and upon such terms that the court in its discretion determines
               to be necessary to assure such diligent prosecution.
               (F) Reinstatement following dismissal. For good cause shown and
               within a reasonable time the court may set aside a dismissal without
               prejudice. A dismissal with prejudice may be set aside by the court for
               the grounds and in accordance with the provisions of Rule 60(B).

       1
        The trial court in Zavodnik also sua sponte dismissed, on the same grounds, another complaint involving
       two other defendants.

       Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015                          Page 5 of 9
       Thus, “when a trial court has involuntarily dismissed a case without prejudice

       pursuant to Trial Rule 41(E), subsection (F) of that rule ascribes to the

       dismissing trial court the discretion to consider whether a complaint should be

       reinstated.” Zavodnik v. Richards, 984 N.E.2d at 703.

[15]   In holding that the plaintiff’s only remedy was to obtain reinstatement of his

       first complaint under its original cause number, we explained:

               We [] presume that the Indiana Supreme Court, in drafting Trial Rule
               41, did not intend to place a nullity in the rule by adding subsection
               (F)’s explicit procedure for how to go about reinstatement of a
               complaint dismissed without prejudice. Zavodnik’s position, that such
               complaints can be re-filed in a different court without following the
               reinstatement procedure, would render that provision meaningless. By
               re-filing complaints before Judge Dreyer that were substantially
               similar, if not identical, to complaints that Judge Oakes had already
               dismissed, Zavodnik was improperly attempting to circumvent Judge
               Oakes’s authority and discretion to decide whether Zavodnik had good
               cause to reinstate his original complaint(s). Judge Dreyer apparently
               recognized this and acted properly in dismissing the re-filed
               complaints, which dismissal served the interests of fairness to litigants,
               judicial comity, and judicial efficiency.
       Id. On rehearing, we reiterated, “if Zavodnik is unsuccessful in having his

       original complaints reinstated, he may not circumvent that ruling by filing

       entirely new complaints raising identical legal and factual issues as the original

       complaints.” Zavodnik v. Richards, 988 N.E.2d at 807-08.

[16]   In this appeal, the Bank makes no attempt to distinguish Zavodnik and, in fact,

       does not even cite the case. The Bank, rather, relies on two arguments in an

       attempt to avoid the clear mandate of Zavodnik: (1) the First Foreclosure Action

       Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015          Page 6 of 9
       and the Second Foreclosure Action are not the same because they seek different

       relief and (2) the Grants waived their T.R. 41 argument.

[17]   Before addressing these arguments, we observe one key difference between this

       case and Zavodnik. The latter was dismissed without prejudice, while the

       present was dismissed with prejudice.2 In Zavodnik, we reached the T.R. 41(F)

       analysis only after observing that the T.R. 41(E) dismissal without prejudice had

       no res judicata effect. The same cannot be said for a dismissal with prejudice,

       such as in the case at hand. See Afolabi v. Atl. Mortgage & Inv. Corp., 849 N.E.2d
1170, 1173 (Ind. Ct. App. 2006) (“a dismissal with prejudice is conclusive of the

       rights of the parties and is res judicata as to any questions that might have been

       litigated”).

[18]   In any case, however, we must address the Bank’s assertion that the two actions

       are not the same. Citing Afolabi, the Bank argues that the Grants’ obligations

       under the note and mortgage were ongoing and any subsequent default created

       a new and independent right to initiate foreclosure. The Bank continues, “[t]he

       Second Action seeks relief for defaults that could not have been contemplated

       by the First Action because the Second Action sought to recover amounts based

       2
         T.R. 41(B) provides in relevant part as follows: “Unless the court in its order for dismissal otherwise
       specifies, a dismissal under this subdivision or subdivision (E) of this rule…operates as an adjudication upon
       the merits.” In this case, because Judge Reid did not otherwise specify, the dismissal of the First Foreclosure
       Action was with prejudice.

       Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015                             Page 7 of 9
       on defaults that had accrued only after the dismissal of the First Action.”

       Appellant’s Brief at 13.

[19]   The Bank’s argument ignores the undisputed fact that the Grants’ personal

       liability under the note and mortgage had been discharged in bankruptcy.

       Accordingly, the relief sought in both foreclosure actions was precisely the same

       and the First Foreclosure Action fully contemplated nonpayment due to the

       bankruptcy. A review of the respective complaints, in fact, reveals that they

       were based on the same alleged default. Cf. Afolabi v. Atl. Mortgage & Inv. Corp.,
849 N.E.2d at 1175 (“the facts necessary to establish a default in the first

       foreclosure action are different from the facts necessary to establish a default in

       the second foreclosure action”); Deutsche Bank Nat’l Trust Co. v. Harris, 985
N.E.2d 804, 816 (Ind. Ct. App. 2013) (“subsequent and separate alleged

       defaults under the note create a new and independent right in the mortgagee to

       accelerate payment on the note in a subsequent foreclosure action”).

       Unsatisfied with Judge Reid’s refusal to reinstate the First Foreclosure Action

       and apparently unwilling to appeal that ruling, the Bank chose to re-institute the

       exact same claim in a new lawsuit. This was improper.

[20]   Finally, we turn to the Bank’s claim that the Grants have waived their T.R. 41

       argument. From the beginning of this cause, the Grants have insisted (on

       various grounds) that the Bank could not refile a new lawsuit to avoid dismissal

       of the First Foreclosure Action. This issue was litigated on res judicata grounds

       as a result of the Grants’ T.R. 12(b)(6) motion to dismiss filed in 2010. The

       Grants raised the issue again in 2013 in response to the Bank’s summary

       Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015    Page 8 of 9
       judgment motion, invoking T.R. 12(b)(8) and T.R. 41(F). At the summary

       judgment hearing, the issue was once again litigated and the trial court

       expressly requested that the Bank file a written response to the Grants’

       arguments. In its written opposition to the motion to dismiss, the Bank

       addressed the merits of the T.R. 41 issue and did not argue waiver. On the

       record before us, we find the Bank’s belated waiver argument disingenuous and

       without merit.3

[21]   The Bank improperly attempted to circumvent Judge Reid’s T.R. 41 ruling by

       filing an entirely new complaint raising identical legal and factual issues. This

       violated both T.R. 41 and principles of res judicata. Accordingly, the trial court

       erred when it granted summary judgment in favor of the Bank. The trial court

       is directed on remand to vacate the grant of summary judgment and dismiss the

       Bank’s complaint.

[22]   Judgment reversed and cause remanded with instructions.

       Kirsch, J., and Crone, J. concur.

       3
        In support of its waiver argument, the Bank relies on a number of cases applying Indiana Appellate Rule
       46(C), which provides that no new issues shall be raised in a reply brief. This rule applies to appellate briefs
       and, of course, has no applicability to trial court filings. We are perplexed by the Bank’s reliance on these
       cases with respect the Grants’ summary judgment filings.

       Court of Appeals of Indiana | Opinion 49A05-1404-MF-139 | April 6, 2015                               Page 9 of 9