Court Opinion

ID: 3158597
Source: CourtListenerOpinion
Date Created: 2015-11-30 16:03:41.474498+00
Date Added: 2024-06-11T12:01:59.319143
License: Public Domain

Nov 30 2015, 9:03 am

      ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEE
      Rudolph Wm. Savich                                         David J. Jurkiewicz
      Bloomington, Indiana                                       Nathan T. Danielson
                                                                 Bose McKinney & Evans, LLP
                                                                 Indianapolis, Indiana

                                                  IN THE
           COURT OF APPEALS OF INDIANA
      Janet C. Turner (deceased),                                November 30, 2015
      James R. Turner, and                                       Court of Appeals Cause No.
      Jan Tee, Inc.,                                             53A05-1504-MF-139
      Appellants-Defendants,                                     Appeal from the Monroe Circuit
                                                                 Court
              v.                                                 The Honorable Elizabeth Cure,
                                                                 Special Judge
      Nationstar Mortgage, LLC,                                  Trial Court Cause No.
      Appellee-Plaintiff.                                        53C04-1001-MF-13

      Barnes, Judge.

                                              Case Summary
[1]   Janet Turner, James Turner, and Jan Tee, Inc., (collectively “the Turners”)

      appeal the granting of a motion to enforce the parties’ settlement agreement and

      judgment of foreclosure filed by Nationstar Mortgage, LLC, (“Nationstar”).

      We affirm.

      Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015                 Page 1 of 17
                                                      Issues
[2]   The Turners raise two issues, which we restate as:

                       I.       whether the trial court properly denied their
                                motion to dismiss; and

                       II.      whether the trial court properly granted
                                Nationstar’s motion to enforce the parties’
                                settlement agreement.

                                                      Facts
[3]   In 2004, the Turners purchased property in Ellettsville by executing a mortgage

      and promissory note in favor of Centex Home Equity Company, LLC, which

      changed its name to Nationstar in 2006. The adjustable rate note was for

      $267,750.00. In 2008, after interest rates increased, the Turners entered into a

      loan modification with Nationstar. In 2009, the Turners stopped making

      payments on the note.

[4]   In 2010, Nationstar, in its own name, filed a complaint on the note and to

      foreclose on the mortgage. On October 9, 2012, the Turners filed an amended

      counterclaim alleging that Nationstar fraudulently prepared the loan

      application.

[5]   On October 18, 2012, the parties entered into a settlement agreement. In

      Paragraph 1 of the settlement agreement, the Turners agreed to pay Nationstar

      $5,000.00 on or before October 25, 2012, and $19,000.00 on or before February

      1, 2013. In Paragraph 2 of the agreement, the Turners agreed to execute all

      reasonable documents necessary for the parties to enter into a mortgage

      Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 2 of 17
         modification agreement with the principle amount to be financed of

         $313,000.00, amortized over 253 months at 2% APR, which amounted to

         monthly payments of $1,517.28 beginning March 2013.

[6]   The settlement agreement also called for the parties to execute an Agreed

         Judgment of Foreclosure in favor of Nationstar in the sum of $345,000.00

         minus any payments by the Turners. The agreement specified:

                 This Agreed Judgment shall be held by Plaintiff’s counsel and
                 shall be filed with the court only in the event Plaintiff [sic] fails to
                 make the cash payments described in Paragraph 1 above within
                 the timeframe set forth therein. In the event said cash payments
                 are made, the Agreed Judgment shall be null and void and of no
                 effect and shall be destroyed by Plaintiff’s counsel.

         Appellants’ App. pp. 106-07. Both parties agreed that, upon the making of cash

         payments and the execution of the mortgage modification, they would execute

         mutual releases of claims and file a joint stipulation of dismissal with prejudice.

[7]      The Turners made the initial $5,000.00 payment but, despite two extensions of

         time from Nationstar, were unable to secure financing for the $19,000.00

         payment by the end of February 2013. The Turners also failed to execute the

         Agreed Judgment of Foreclosure as required by the settlement agreement.

[8]      In April 2013, Nationstar filed a motion to enforce the settlement agreement

         alleging that the Turners’ failure to make the $19,000.00 payment constituted a

         material breach of the settlement agreement. In response, the Turners

         explained that, after entering into the settlement agreement, they had attempted

         Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015         Page 3 of 17
       to obtain the $19,000.00 through a reverse mortgage on another property they

       owned. Although two applications had been denied, a third application was

       pending and could close in June 2013. The Turners requested an extension of

       time to pay the $19,000.00.

[9]    The day before a scheduled August 2013 hearing on Nationstar’s motion to

       enforce the settlement agreement, James filed for Chapter 13 bankruptcy in an

       attempt to force Nationstar to accept the $19,000.00 payment and to modify the

       loan according to the terms described in the settlement agreement. James filed a

       plan with the bankruptcy court explaining that he would cure any default on the

       settlement agreement immediately upon confirmation of the plan.

[10]   Nationstar filed a claim in the bankruptcy proceeding. In response to

       Nationstar’s claim, James argued that the 2012 settlement agreement gave the

       Turners the right to obtain a favorable loan modification. Nationstar argued

       that the Turners did not satisfy the conditions precedent to the execution of a

       loan modification as required by the terms of the settlement agreement.

[11]   The bankruptcy court agreed with Nationstar and analyzed the settlement

       agreement as having two tracks: a foreclosure track and a loan modification

       track. The bankruptcy court explained that the Turners controlled which track

       was taken by making timely payments or not. The bankruptcy court concluded

       that the Turners’ payment obligations were conditions precedent to the entry of

       a loan modification agreement and that, because the Turners’ chose the

       foreclosure track by failing to timely make the $19,000.00 payment, Nationstar

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 4 of 17
       was excused from its obligation to modify the terms of the loan. Therefore, the

       settlement agreement was not an executory contract for purposes of the

       bankruptcy proceeding.

[12]   On May 8, 2014, James moved to dismiss the bankruptcy proceeding, which

       was granted the next day. James’s bankruptcy plan was never confirmed by the

       bankruptcy court.

[13]   From May through July 2014, the parties’ attorneys discussed whether it would

       be possible to modify the loan pursuant to the terms of the settlement

       agreement. At one point, Nationstar’s counsel indicated that Nationstar would

       be willing to reinstate the modification so long as the Turners made the

       $19,000.00 down payment and all other payments due since February 2013 by

       July 31, 2014. On July 30, 2014, Nationstar’s attorney forwarded a “payoff

       quote” and indicated it would send “reinstatement figures” upon confirmation

       by Nationstar. Id. at 180. For whatever reason, the Turners did not make the

       necessary payments by July 31, 2014, and the loan was not modified.

[14]   In September 2014, Nationstar moved to set a hearing on its motion to enforce

       the settlement agreement. The Turners made several arguments in response

       and requested that the settlement agreement be declared null and void or that

       the loan be modified pursuant to the terms of the settlement agreement. A

       hearing was held on October 16, 2014, and the parties were permitted to file

       supplemental briefs.

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 5 of 17
[15]   On November 5, 2014, in response to a request for information, a letter from

       Nationstar to the Turners indicated that JPMorgan Chase Bank as Trustee for

       CHEC 2004-C (“Chase”) was the owner of the note and that Nationstar was

       the servicer of the loan. In their December 20, 2014 post-hearing brief, the

       Turners reiterated their earlier arguments and asked that Nationstar’s complaint

       be dismissed because it was not prosecuted in Chase’s name as the real party in

       interest.

[16]   In January 2015, the trial court granted Nationstar’s motion to enforce the

       settlement agreement and issued a judgment of foreclosure. The trial court

       concluded that the settlement agreement was clear and unambiguous and that

       the Turners undisputedly failed to timely make the payments are required by

       Paragraph 1 of the settlement agreement. The trial court also rejected the

       Turners’ request to set aside the settlement agreement on equitable grounds.

[17]   On February 17, 2015, the Turners1 filed a “Motion to Dismiss, to Correct

       Errors, to Vacate Order Dated January 15, 2015 and to Vacate Judgment of

       Foreclosure entered January 23, 2105.” Id. at 243. The motion addressed the

       same issues previously raised by the Turners, and the trial court denied it after a

       hearing. The Turners now appeal.

       1
           Janet passed away on January 16, 2015.

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 6 of 17
                                                     Analysis
                                           I. Real Party in Interest

[18]   On December 20, 2014, and again after the final judgment had been issued, the

       Turners moved for dismissal of the complaint on the grounds that Nationstar

       was not the real party in interest pursuant to Indiana Trial Rule 17(A). A Trial

       Rule 12(B)(6) motion to dismiss for failure to state a claim upon which relief

       can be granted includes the “failure to name the real party in interest under

       Rule 17.” A Trial Rule 12(B)(6) motion to dismiss challenges the legal

       sufficiency of a complaint. Meyers v. Meyers, 861 N.E.2d 704, 705-06 (Ind.

       2007). “Our review of a trial court’s grant or denial of a motion to dismiss

       based on Trial Rule 12(B)(6) is de novo.” Allen v. Clarian Health Partners, Inc.,

       980 N.E.2d 306, 308 (Ind. 2012). Viewing the complaint in the light most

       favorable to the non-moving party, we must determine whether the complaint

       states any facts on which the trial court could have granted relief. Id.

[19]   Indiana Trial Rule 17(A) requires that every action be prosecuted in the name

       of the real party in interest. Trial Rule 17(A)(1) provides:

               An executor, administrator, guardian, bailee, trustee of an
               express trust, a party with whom or in whose name a contract has
               been made for the benefit of another, or a party authorized by
               statute may sue in his own name without joining with him the
               party for whose benefit the action is brought, but stating his
               relationship and the capacity in which he sues.

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 7 of 17
       The Turners acknowledge that Nationstar sued as the holder of the note but

       argue that, pursuant to Trial Rule 17(A)(1), Nationstar was required to state its

       relationship to Chase and the capacity in which it was suing. We disagree.

[20]   Indiana Code Section 26-1-3.1-301 provides:

                “Person entitled to enforce” an instrument means:

                (1) the holder of the instrument;

                (2) a nonholder in possession of the instrument who has the
                rights of a holder; or

                (3) a person not in possession of the instrument who is entitled to
                enforce the instrument under IC 26-1-3.1-309 or IC 26-1-3.1-
                418(d).

                A person may be a person entitled to enforce the instrument even
                though the person is not the owner of the instrument or is in
                wrongful possession of the instrument.

       Pursuant to this statute, although Chase owned the note, Nationstar, as the

       holder, had the right to enforce the note.2 This is consistent with the November

       5, 2014 notice from Nationstar to the Turners that explained:

       2
         Indiana Code Section 26-1-1-201(20)(a) defines a “holder” as “the person in possession of a negotiable
       instrument that is payable either to bearer or to an identified person if the identified person is in possession of
       the instrument.” And “bearer” means, in relevant part, “the person . . . in possession of a negotiable
       instrument . . . payable to bearer or endorsed in blank.” I.C. § 26-1-1-201(5)(B). Here, the original note was
       payable to Nationstar under its prior name, Centex. Upon changing its name, Centex attached an allonge to
       the note, which was endorsed in blank. The Turners do not suggest on appeal that the endorsed-in-blank

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015                              Page 8 of 17
                there are some circumstances where the owner has given
                temporary possession of the loan note to the servicer. The owner
                does this to ensure that the servicer is able to perform services
                and duties incident to the servicing of the mortgage loan, such as
                foreclosure actions, bankruptcy cases and other legal
                proceedings.

       Appellants’ App. p. 236.

[21]   Our supreme court has explained that a real party in interest “is the person who

       is the true owner of the right sought to be enforced. He or she is the person

       who is entitled to the fruits of the action.” Hammes v. Brumley, 659 N.E.2d
1021, 1029-30 (Ind. 1995) (citation omitted). Because Nationstar could enforce

       the note as the holder, Nationstar was entitled to the fruits of the action. As

       such, Nationstar was a real party in interest.

[22]   Even if Nationstar’s status as the holder of the note is not sufficient to make it a

       real party in interest, we are not persuaded that the Turners were prejudiced by

       Nationstar’s failure to identify Chase as the owner of the note in the complaint.

       According to the Turners, they would not have agreed to dismiss their

       counterclaim against Nationstar as part of the 2012 settlement agreement had

       they known Chase owned the note. They contend they might have been able to

       allonge rendered the note not payable to Nationstar. Further, at some point after Centex’s attachment of the
       allonge, Nationstar gave possession of the note to Chase, and Chase then hired Nationstar to service the note.
       But the Turners do not suggest on appeal that Nationstar was not in possession of the note for purposes
       of its service obligations, which included “payment assistance and modifications, payment posting,
       validation of the debt, foreclosure proceedings, and payment adjustments.” Appellants’ App. at 236.

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015                         Page 9 of 17
       negotiate a modification of the note directly with Chase that allowed them to

       maintain their counterclaim against Nationstar.

[23]   Notwithstanding the obvious weaknesses in the Turners’ counterclaim,3

       Nationstar was undisputedly the servicer of the loan at the time of the settlement

       agreement. As the servicer of the loan, Nationstar was responsible for

       responding to any concerns about the servicing of the loan, which included

       payment assistance and modification and foreclosure proceedings. See

       Appellants’ App. p. 236. There is nothing in the record to suggest that Chase

       would have participated in the settlement negotiations, let alone that the Turners

       would have obtained a better outcome during the negotiations had they known

       Chase owned the note. Mere speculation by the Turners is not enough

       to show that Nationstar’s failure to name Chase in the complaint affected their

       substantial rights. See T.R. 61 (“The court at every stage of the proceeding must

       disregard any error or defect in the proceeding which does not affect the

       substantial rights of the parties.”). The trial court properly denied the Turners’

       motion to dismiss.

       3
         The Turners’ counterclaim against Nationstar was based on allegations that it fraudulently prepared the
       loan application, a document that the Turners signed at the 2004 closing but apparently did not review before
       signing because of the voluminous closing documents. Even if there was merit to the allegations of fraud, the
       Turners executed a general release of all claims arising out of the loan as consideration for the 2008 loan
       modification. To avoid the effects of the general release, the Turners’ counterclaim also alleged that the
       general release should be rescinded because it was procured by fraud and duress.

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015                       Page 10 of 17
                            II. Enforceability of the Settlement Agreement

[24]   Generally, Indiana strongly favors settlement agreements. Georgos v. Jackson,

       790 N.E.2d 448, 453 (Ind. 2003). If a party agrees to settle a pending action,

       but then refuses to consummate the agreement, the opposing party may obtain

       a judgment enforcing the agreement. Id. “Settlement agreements are governed

       by the same general principles of contract law as any other agreement.” Id.

       “The construction of a contract is particularly well-suited for de novo appellate

       review, because it generally presents questions purely of law.” Holiday

       Hospitality Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 577-78 (Ind.

       2013).

                                                A. Abandonment

[25]   The Turners argue Nationstar abandoned the settlement agreement by claiming

       that the Turners owed the original loan amount, as opposed to the amount

       specified in the settlement agreement, in the bankruptcy proceeding and in

       various other communications with the Turners after the bankruptcy was

       dismissed. We have previously observed that the abandonment of a contract is

       a matter of intention to be ascertained from the facts and circumstances

       surrounding the transaction. Estate of Kappel v. Kappel, 979 N.E.2d 642, 652

       (Ind. Ct. App. 2012). “Abandonment may be inferred from the conduct of the

       parties, and a contract will be treated as abandoned when one party acts

       inconsistently with the existence of the contract, and the other party

       acquiesces.” Id. “Abandonment of a contract is a mixed question of law and

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 11 of 17
       fact; that is, what constitutes abandonment is a question of law and whether

       there has been abandonment is a question of fact.” Id.

[26]   The trial court rejected the Turners claim of abandonment, observing:

               The Turners cannot ask this Court to set aside the agreement due
               to Nationstar’s inconsistent actions given the many questionable
               actions the Turners have taken in this case. The clean-hands
               doctrine of equity prevents the Turners from complaining about
               these contradictory actions and further persuades the Court that
               Nationstar’s actions in asking for larger amounts than agreed to
               should not prevent the foreclosure from proceeding.

       Appellants’ App. p. 25.

[27]   Indeed, the record shows that the Turners repeatedly delayed Nationstar’s

       efforts to enforce the foreclosure provisions of the settlement agreement.

       Specifically, in April 2013, Nationstar moved to enforce the settlement

       agreement after the Turners failed to timely make the $19,000.00 payment

       despite two extensions from Nationstar. The day before the scheduled hearing,

       in an attempt to force Nationstar to modify the loan, James filed for

       bankruptcy. After receiving an unfavorable ruling from the bankruptcy court,

       James withdrew the bankruptcy petition. Negotiations between counsel

       followed, but the Turners again failed to make regular mortgage payments or

       the $19,000.00 payment called for by the terms of the settlement agreement. In

       September 2014, Nationstar renewed its efforts to enforce the settlement

       agreement and, as of November 2014, the Turners were approximately sixty-

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 12 of 17
       two payments behind.4 Under these facts, we cannot say that Nationstar, by

       indicating in certain letters and documents that the Turners owed the full loan

       amount, abandoned its right to pursue foreclosure pursuant to the terms of the

       settlement agreement.

                                          B. Accord and Satisfaction

[28]   Beginning in September 2013, while the bankruptcy was pending, James made

       six monthly payments to Nationstar in the amount specified by the settlement

       agreement. With the first payment, James included a letter to Nationstar

       stating that the payment was enclosed “pursuant to the terms of my proposed

       Chapter 13 plan. Please do not cash this check unless you accept the terms of

       the plan.” Id. at 172. The back of the check provided, “Endorsement

       constitutes acceptance of Chapter 13 plan.” Id. at 173. Nationstar cashed this

       check.

[29]   The Turners contend that, by cashing the check, Nationstar was bound to allow

       the Turners to cure their $19,000.00 default and to enter into a loan

       modification pursuant to the terms of the settlement agreement. “Under

       Indiana Trial Rule 8(C), accord and satisfaction is an affirmative defense which

       must be specifically pleaded and proven by the party raising it.” Mominee v.

       King, 629 N.E.2d 1280, 1282 (Ind. Ct. App. 1994). Assuming the issue of

       4
        It is not clear if this number reflects six payments made by James beginning in September 2013.
       Regardless, the Turners’ arrearage was significant.

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015                         Page 13 of 17
       accord and satisfaction was properly pled in the Turners’ October 9, 2014

       response to Nationstar’s motion to enforce the settlement agreement, the

       Turners had the burden of proving accord and satisfaction.5

[30]   “The term ‘accord’ denotes an express contract between two parties by means

       of which the parties agree to settle some dispute on terms other than those

       originally contemplated, and the term ‘satisfaction’ denotes performance of the

       contract.” Id. “As a contract, accord and satisfaction requires a meeting of the

       minds or evidence that the parties intended to agree to an accord and

       satisfaction.” Id. In Indiana, “a check tendered in satisfaction of a claim must

       be accompanied by an express condition that the acceptance is in full

       satisfaction of the claim and that the creditor takes the check subject to that

       condition.” Id. at 1283.

[31]   Here, James did not offer the September 2013 payment of $1,517.28 as

       satisfaction of the Turners’ entire outstanding debt to Nationstar. Instead,

       James attempted to bind Nationstar to the terms of his proposed bankruptcy

       plan. Although Nationstar cashed James’s check, there is no evidence that by

       doing so Nationstar was aware of, let alone intended to be bound by, the

       proposed bankruptcy plan, which had not been approved by the bankruptcy

       court. Without more, the Turners have not established that, by cashing the

       check, Nationstar intended to accept the terms of the proposed bankruptcy

       5
           The Turners claim of accord and satisfaction is based entirely on common law.

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015          Page 14 of 17
       plan. Under these facts, the Turners did not prove the affirmative defense of

       accord and satisfaction.

                                            C. Promissory Estoppel

[32]   Finally, the Turners claim that Nationstar is estopped from seeking foreclosure

       because they detrimentally relied on Nationstar’s assertions that, if the Turners

       made the $19,000.00 payment and all other past due payments, Nationstar

       would modify the loan. After the bankruptcy proceeding was dismissed,

       counsel for the Turners and Nationstar discussed the possibility of belatedly

       proceeding under the terms of the settlement agreement. And, at one point,

       Nationstar’s counsel indicated that Nationstar would be willing to reinstate the

       modification so long as the Turners made the $19,000.00 payment and all other

       payments due since February 2013 by July 31, 2014. On July 30, 2014,

       Nationstar’s attorney forwarded a “payoff quote” and indicated it would send

       “reinstatement figures” upon confirmation by Nationstar. Id. at 180. Although

       it is not clear why, the belated payments were never made to Nationstar, and

       the loan was not modified.

[33]   The Turners claim that, on July 31, 2014, based on Nationstar’s assurances that

       the loan could be modified, they agreed to dismiss a separate lawsuit against

       another lender related to the Turners’ inability to timely obtain a reverse

       mortgage. According to the Turners, on August 20, 2014 a motion to dismiss

       the other lawsuit was filed and, on August 27, 2014, the lawsuit was dismissed

       with prejudice.

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 15 of 17
[34]   Promissory estoppel encompasses the following elements: (1) a promise by the

       promissor; (2) made with the expectation that the promisee will rely thereon; (3)

       which induces reasonable reliance by the promisee; (4) of a definite and

       substantial nature; and (5) injustice can be avoided only by enforcement of the

       promise. Brown v. Branch, 758 N.E.2d 48, 52 (Ind. 2001). Here, the deadline for

       the Turners to make the belated payments to Nationstar was July 31, 2014,

       and the Turners agreed to the dismissal of their other lawsuit that same day,

       without having made the necessary payments to Nationstar. Because the

       payment deadline was looming and the Turners had not made any payments for

       whatever reason, it was not reasonable for the Turners to rely on

       Nationstar’s statements about modification as a basis for agreeing to the

       dismissal of their other lawsuit. See Little v. Progressive Ins., 783 N.E.2d 307, 315

       (Ind. Ct. App. 2003) (observing in the context of equitable estoppel that, where

       two parties stand on equal mental footing without a fiduciary relationship, “we

       will not protect a person who failed to exercise common sense and judgment.”),

       trans. denied. The Turners have not established that promissory estoppel is a

       basis for prohibiting the foreclosure according to the terms of the settlement

       agreement.

                                                  Conclusion
[35]   The Turners have not established that the trial court erroneously denied their

       motion to dismiss or that the parties’ settlement agreement should not be

       enforced as it relates to the forfeiture. We affirm.

[36]   Affirmed.
       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 16 of 17
[37]   Kirsch, J., and Najam, J., concur.

       Court of Appeals of Indiana | Opinion 53A05-1504-MF-139 | November 9, 2015   Page 17 of 17