Court Opinion

ID: 3156113
Source: CourtListenerOpinion
Date Created: 2015-11-19 17:05:15.250224+00
Date Added: 2024-06-11T12:01:34.923604
License: Public Domain

MEMORANDUM DECISION

ON REHEARING
Pursuant to Ind. Appellate Rule 65(D), this                     Nov 19 2015, 9:19 am
Memorandum Decision shall not be regarded
as precedent or cited before any court except
for the purpose of establishing the defense of
res judicata, collateral estoppel, or the law of
the case.

ATTORNEYS FOR APPELLANT                                ATTORNEY FOR APPELLEE
Kurt V. Laker                                          James M. Yannakopoulos
Mark S. Gray                                           Koransky, Bouwer, and Poracky,
Craig D. Doyle                                         P.C.
Doyle Legal Corporation, P.C.                          Dyer, Indiana
Indianapolis, Indiana

                                         IN THE
   COURT OF APPEALS OF INDIANA

Horizon Bank, N.A.,                                    November 19, 2015
Appellant-Defendant,                                   Court of Appeals Case No.
                                                       46A04-1409-MF-408
        v.
                                                       Appeal from the LaPorte
                                                       Superior Court
Centier Bank,
                                                       The Honorable Richard R.
Appellee-Plaintiff.                                    Stalbrink Jr., Judge

                                                       Trial Court Cause No. 46D02-
                                                       1212-MF-772

Brown, Judge.

Court of Appeals of Indiana | Memorandum Decision on Rehearing 46A04-1409-MF-408 | November 19, 2015
Page 1 of 5
[1]   Horizon Bank, N.A. (“Horizon”) appealed the denial of its motion for relief

      from default judgment, and in a memorandum decision this court found that

      Horizon established that its failure to timely respond to the complaint of

      Centier Bank (“Centier”) constituted excusable neglect, that it had alleged a

      meritorious defense, and thus that it was entitled to relief from the default

      judgment under Trial Rule 60(B)(1). Horizon Bank, N.A., v. Centier Bank, No.

      46A04-1409-MF-408, slip op. at 10-12 (Ind. Ct. App. August 18, 2015). We

      concluded that Horizon demonstrated excusable neglect based on the

      relatively short length of delay, the security interest of Horizon and the

      amounts at issue, the fact the complaint referenced a mortgage securing a

      previous loan which had been paid in full, the absence of evidence of prejudice

      to Centier and the substantial evidence of prejudice to Horizon, and the

      severity of the sanction of default judgment. Id. at 10. We also concluded that

      Horizon alleged a meritorious defense by claiming that Centier had entered

      into the Subordination Agreement pursuant to which it agreed to subordinate

      the Centier Mortgage to the Horizon Mortgage. Id. at 11. We reversed the

      trial court’s denial of Horizon’s motion for relief from default judgment and

      remanded for further proceedings. Id. at 11-12. Centier has petitioned for

      rehearing asserting a lack of evidence presented by Horizon in support of its

      motion. We grant its petition, not for the reason asserted, but in light of a

      recent decision by our Supreme Court.

[2]   Since our decision in this case, the Indiana Supreme Court handed down

      Huntington Nat. Bank v. Car-X Associates Corp. (filed August 21, 2015), Ind. No.
      Court of Appeals of Indiana | Memorandum Decision on Rehearing 46A04-1409-MF-408 | November 19, 2015
      Page 2 of 5
64S04-1504-MF-187, slip op. at 6-8, finding no grounds for relief under Trial

Rule 60(B)(1), but remanding for consideration under Trial Rule 60(B)(8).

Under Trial Rule 60(B)(8), a judgment may be set aside for “any reason

justifying relief from the operation of the judgment” other than those set forth

in sub-paragraphs (1) through (4). In Huntington, after discussing whether

Huntington was entitled to relief under Trial Rule 60(B)(1), the Court turned

its attention to Trial Rule 60(B)(8) “in order to resolve whether under the

circumstances the trial court abused its discretion in failing to set aside the

default judgment for equitable reasons . . . .” Huntington, slip op. at 6. The

Court observed that, in addition to claiming its prior mortgage as a

meritorious defense to Car-X’s underlying suit, Huntington listed five

considerations in support of setting aside the default judgment for equitable

reasons: (1) its substantial interest in the real estate through its mortgage; (2)

its “excusable reason” for untimely responding; (3) its quick action to set aside

the default judgment once the complaint and summons were discovered; (4)

its significant loss if the default judgment was not set aside; and (5) the

minimal prejudice to Car-X should the case be reinstated. Id. at 7. The Court

then concluded: “We think it best to remand to the trial court to reevaluate

Huntington’s motion upon consideration of these and all relevant

circumstances—especially Huntington’s meritorious defense to the underlying

suit, the substantial amount of money involved, and the lack of prejudice to

Car-X.” Id. (footnote omitted). The Court also noted that default judgment is

Court of Appeals of Indiana | Memorandum Decision on Rehearing 46A04-1409-MF-408 | November 19, 2015
Page 3 of 5
      an extreme remedy and is not a trap to be set by counsel to catch unsuspecting

      litigants and should not be used as a “gotcha” device. Id.

[3]   Although sub-paragraph (8) was not specifically identified in this case, we note

      that Horizon, similar to Huntington in Huntington, identified equitable

      considerations in support of its motion for relief from the default judgment.

      First, Horizon alleged in its Trial Rule 60(B) motion that it has a lien on the

      Property under the Horizon Mortgage which, according to the Subordination

      Agreement recorded in 2012, has priority over the Centier Mortgage, and thus

      that it has a substantial interest in the Property. Second, Horizon identified its

      “excusable reason” for untimely responding, specifically, that Centier’s

      complaint referenced Horizon’s 2008 mortgage, which had secured a loan that

      had been paid in full. Third, Horizon alleged facts that it took quick action to

      file its motion for relief from default judgment once the foreclosure action was

      discovered, and it attached an affidavit to its motion stating that it first became

      aware of the foreclosure action on November 6, 2013 when it received a copy

      of an objection in John Pouzar’s Chapter 13 bankruptcy proceedings, and it

      filed its motion for relief nine days later. Fourth, Horizon set forth facts that it

      would incur a substantial loss if the default judgment was not set aside. Fifth,

      Horizon presented facts that there would be no prejudice to Centier should the

      case be reinstated. As noted in our memorandum decision, the priority of the

      parties’ security interests in the Property can be resolved based on the 2005

      Centier Mortgage, recorded in October 2005, and the 2011 Horizon Mortgage

      and the Subordination Agreement of Mortgage recorded in January 2012, and
      Court of Appeals of Indiana | Memorandum Decision on Rehearing 46A04-1409-MF-408 | November 19, 2015
      Page 4 of 5
      the availability of those documents was not impacted by Horizon’s delay.

      Horizon’s counsel argued at the January 17, 2014 hearing that Centier knew

      that Horizon was still involved with the loan, that Centier had signed

      subordination agreements in 2007, 2008, and 2011 with respect to Horizon’s

      mortgages which specifically subordinated the 2005 Centier Mortgage, and

      thus that Centier “was well aware [it was] in a second position and that

      Horizon was actively involved with this loan.” Transcript at 6. Horizon

      made these and other equitable arguments on appeal. Finally, Horizon

      alleged a meritorious defense to the underlying suit based on the

      subordination agreements as discussed in our memorandum decision.

[4]   Based on the record and in light of Huntington, we remand to the trial court to

      evaluate whether Horizon is entitled to relief from the default judgment under

      sub-paragraph (8) upon consideration of these circumstances. See Huntington

      Nat. Bank v. Car-X Associates Corp. (filed August 21, 2015), Ind. No. 64S04-

      1504-MF-187, slip op. at 7.

[5]   We grant Centier’s petition for rehearing and remand to the trial court to

      evaluate whether equitable reasons under sub-paragraph (8) support granting

      Horizon’s motion for relief from the default judgment.

      Crone, J., and Pyle, J., concur.

      Court of Appeals of Indiana | Memorandum Decision on Rehearing 46A04-1409-MF-408 | November 19, 2015
      Page 5 of 5