Court Opinion

ID: 2724818
Source: CourtListenerOpinion
Date Created: 2014-09-08 20:41:45.46068+00
Date Added: 2024-06-11T12:56:38.024172
License: Public Domain

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
                                                             Jun 20 2014, 10:19 am
of establishing the defense of res
judicata, collateral estoppel, or the law
of the case.

ATTORNEY FOR APPELLANT:                              ATTORNEY FOR APPELLEE:

FREDRIC LAWRENCE                                     DAVID W. WESTLAND
Nelson & Frankenberger, P.C.                         Westland Kramer & Bennett, P.C.
Indianapolis, Indiana                                Schererville, Indiana

                              IN THE
                    COURT OF APPEALS OF INDIANA
ONEWEST BANK, FSB,                 )
                                   )
     Appellant-Plaintiff,          )
                                   )
            vs.                    )                        No. 45A05-1312-MF-615
                                   )
JASON JARVIS, NATALIE JARVIS,      )
MORTGAGE ELECTRONIC SYSTEMS, INC., )
AS NOMINEES FOR AMERICAN MORTGAGE )
NETWORK, INC., GE MONEY BANK, and  )
SADDLE CREEK ESTATES               )
HOMEOWNERS ASSOCIATION, INC.,      )
                                   )
     Appellees-Defendants.         )

                       APPEAL FROM THE LAKE SUPERIOR COURT
                           The Honorable Calvin Hawkins, Judge
                             Cause No. 45D02-1107-MF-222

                                            June 20, 2014

                MEMORANDUM DECISION – NOT FOR PUBLICATION

BARNES, Judge
                                    Case Summary

      OneWest Bank, FSB, (“OneWest”) appeals the sanction imposed by the trial court

upon finding OneWest in contempt. We reverse and remand.

                                         Issue

      OneWest raises one issue, which we restate as whether the trial court properly

sanctioned OneWest for its contempt.

                                         Facts

      In 2007, Jason and Natalie Jarvis executed a promissory note and mortgage to

purchase property in Dyer. OneWest acquired the mortgage in 2009, and the Jarvises

failed to make payments on the note. In 2010, the Jarvises accepted a loan modification

agreement offered by OneWest, but the modification was not finalized.          In 2011,

OneWest filed a complaint on the note and to foreclose on the mortgage. Apparently,

because of OneWest’s errors, it did not perform pursuant to the loan modification

agreement, and the Jarvises moved to enforce the agreement. On November 17, 2011,

the trial court ordered OneWest to allow the Jarvises to make payments pursuant to the

terms of the loan modification agreement and extended the repayment time accordingly.

      In January 2013, OneWest filed a motion to dismiss its complaint without

prejudice because the loan modification had been completed, and the trial court granted

the motion to dismiss. The Jarvises responded to the motion to dismiss and asserted that

the loan modification had not been completed because of OneWest’s continued refusal to

do so. The Jarvises requested that OneWest be held in contempt for its refusal to comply

with the November 2011 order. On March 2013, the trial court found OneWest in

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contempt and ordered OneWest to remove all interest, fees, attorney fees, and costs

imposed on the Jarvises’ account since the 2011 order and to take all necessary steps to

remove any negative credit references on the Jarvises’ credit report. The trial court also

awarded the Jarvises attorney fees and ordered them to make the January, February,

March, and April mortgage payments by April 1, 2013.

       On June 10, 2013, the loan modification was executed. On June 11, 2013, the

Jarvises filed a second motion for contempt citation. The Jarvises alleged that, since the

trial court’s March 2013 order, OneWest had attempted to collect allegedly outstanding

balances, had attempted to change their monthly payments, and had sent real estate

agents to their home encouraging them to sell the residence. The Jarvises attached letters

sent by OneWest to their motion. OneWest responded by asserting that it had paid the

court ordered attorney fees, it was in compliance with the March 2013 order, and the

letters were “unknowingly and unintentionally sent to the Defendants in error pending the

finalization of the loan modification” through its automated system. App. p. 91.

       An evidentiary hearing was held at which Jason testified about OneWest’s actions,

including OneWest’s failure to clear their credit report. At the conclusion of the hearing,

the trial court stated it was “stunned” by OneWest’s conduct and described OneWest as

having “systematically . . . thumbed its nose at the Court.” Tr. pp. 39, 37. The trial court

issued an order finding OneWest in contempt of the November 2011 and March 2013

orders. The trial court dismissed OneWest’s complaint with prejudice and ordered that

OneWest and any successor in interest “is precluded from further attempting to pursue its

legal and/or equitable claims on the real estate . . . and on the Note and Mortgage

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attached to plaintiff’s Complaint.” App. p. 105. The trial court also awarded the Jarvises

attorney fees and $500 for their preparation and attendance at the hearing.

       OneWest filed a motion to correct error requesting that the language prohibiting it

or a successor from further attempting to pursue legal or equitable claims be stricken

from the order. OneWest argued that the contempt sanction purported to prohibit future

legal action on the note and mortgage and that defaults after the entry of dismissal “were

not and could not have been decided in this cause.” Id. at 109. The Jarvises responded

by asserting, “The sanction imposed was a fair and accurate way to compensate the

Defendants in this case.” Id. at 117. After OneWest replied, the trial court denied

OneWest’s motion to correct error. OneWest now appeals.

                                         Analysis

       OneWest does not challenge the contempt finding or the dismissal of the

complaint with prejudice. It argues only that the preclusion language in the contempt

sanction was improper because OneWest and its successors are prohibited from enforcing

the note and mortgage in the event of a future default by the Jarvises. The imposition of

sanctions to compensate the other party for injuries incurred as a result of the contempt is

within the trial court’s discretion. Witt v. Jay Petroleum, Inc., 964 N.E.2d 198, 204 (Ind.

2012). Because the presumption favors the trial court, we review an award of damages

for an abuse of discretion and will reverse only when there is no evidence to support the

award. Id. A trial court may take into account the inconvenience and frustration suffered

by the aggrieved party in determining the amount of damages. Id.

                                             4
       To support its argument that it should be able to enforce the note and mortgage if

the Jarvises default in the future even though the complaint was dismissed with prejudice,

OneWest relies on Afolabi v. Atlantic Mortgage & Investment Corp., 849 N.E.2d 1170

(Ind. Ct. App. 2006).     Afolabi involved the dismissal of a foreclosure action with

prejudice for failure to prosecute and the filing of another complaint to foreclosure based

on subsequent nonpayment. We concluded that res judicata did not bar the successive

foreclosure claim because “the subsequent and separate alleged defaults under the note

created a new and independent right in the mortgagee to accelerate payment on the note

in a subsequent foreclosure action.” Afolabi, 849 N.E.2d at 1175. OneWest also argues

that, by precluding future litigation in contravention of the terms of the parties’ contract,

the trial court improperly modified the contract between OneWest and the Jarvises. See

Nationstar Mortgage, LLC v. Curatolo, 990 N.E.2d 491, 495 (Ind. Ct. App. 2013)

(observing that a trial court may not make a new contract for the parties or ignore or

eliminate provisions of the instrument).

       The Jarvises do not disagree with OneWest’s assertion that the contempt order

precludes future litigation of the loan modification agreement. They contend that Afolabi

does not limit the authority of a trial court in contempt proceedings and that the contempt

order does not alter the terms of the parties’ contract, “rather the order satisfied the loan

obligation and alleged debt.” Appellees’ Br. p. 15. The Jarvises describe the contempt

order as, in essence, awarding them “monetary damages in the amount of the debt by . . .

not allowing One West or any successors to enforce the note or the mortgage.” Id. at 14.

                                             5
       We cannot agree that precluding OneWest or its successors from pursuing future

legal claims on the property is effectively a monetary judgment in the amount of the

Jarvises’ debt because the note and mortgage are still outstanding and will remain a cloud

on the title to the property. Had the trial court intended to impose a monetary judgment

in the amount of the debt, the trial court should have specifically ordered such.

       Moreover, we cannot agree with the Jarvises that damages equivalent to the

unpaid balance of loan, which the loan modification agreement indicated was

$311,243.81 as of April 2, 2013, were appropriate. OneWest’s actions of failing to clear

the Jarvises’ credit report, sending real estate agents to their house to convince them to

sell, and incorrectly notifying them that they were in default certainly warranted the

contempt finding. The trial court was understandably angry, as are we. As frustrated,

inconvenienced, and embarrassed as the Jarvises were by OneWest’s actions, there is no

evidence that more than $300,000 in monetary damages was warranted. As such, we

must conclude that the trial court abused its discretion by precluding OneWest from

attempting to enforce the note and/or mortgage based upon a future default by the

Jarvises.

                                        Conclusion

       The trial court abused its discretion by prohibiting OneWest from attempting to

enforce the note and/or mortgage in the future. We reverse and remand with instructions

to remove that language from the September 2013 order.

       Reversed and remanded.

BAKER, J., and CRONE, J., concur.

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