Court Opinion

ID: 4019218
Source: CourtListenerOpinion
Date Created: 2016-07-27 15:04:59.872054+00
Date Added: 2024-06-11T14:45:28.517388
License: Public Domain

MEMORANDUM DECISION
                                                                           FILED
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                 Jul 27 2016, 6:26 am

regarded as precedent or cited before any                                  CLERK
                                                                       Indiana Supreme Court
court except for the purpose of establishing                              Court of Appeals
                                                                            and Tax Court
the defense of res judicata, collateral
estoppel, or the law of the case.

ATTORNEY FOR APPELLANT                                    ATTORNEY FOR APPELLEE
Keith F. Medved                                           Patrick A. Schuster
Wruck Paupore, PC                                         Patrick A. Schuster & Associates
Dyer, Indiana                                             Crown Point, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Judith Bonaventura,                                       July 27, 2016
Appellant-Defendant,                                      Court of Appeals Case No.
                                                          45A03-1601-SC-157
        v.                                                Appeal from the Lake Superior
                                                          Court
Bobby Shah,                                               The Honorable Michael N.
Appellee-Plaintiff                                        Pagano, Magistrate
                                                          Trial Court Cause No.
                                                          45D09-1205-SC-1397

Crone, Judge.

Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016            Page 1 of 13
                                              Case Summary
[1]   Judith Bonaventura appeals the trial court’s denial of her motion to dismiss the

      small claims judgment entered in favor of Bobby Shah on his action for eviction

      against Bonaventura. The sole consolidated and restated issue for our review is

      whether the small claims court had subject matter jurisdiction over this action.

      Concluding that it did, we affirm.

                                  Facts and Procedural History
[2]   A necessary review of the convoluted factual history of this case follows. In

      August 2011, Bonaventura and Shah entered into a “Secured Loan and

      Leaseback Repurchase Agreement” (“Leaseback Agreement”) regarding a

      home owned by Bonaventura located in Cedar Lake (“the Property”).

      Appellant’s App. at 137. The Leaseback Agreement provided that Shah would

      lend Bonaventura $110,000. The Leaseback Agreement further provided in

      relevant part:

              C. Said indebtedness is evidenced by a Promissory Note (“Note”)
              of Borrower payable to the order of Lender in the original
              principal amount of One Hundred Ten Thousand Dollars
              ($110,000.00).

              D. In order to save the Lender the cost and expense of
              foreclosing of the Loan, in the event of default, or breach of the
              terms, and as security for the Note, the Borrower has duly made,
              executed and delivered to the escrow certain good and sufficient
              Fee Simple conveyance for [the Property] to hold the deed in
              escrow for the purposes of this Agreement.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 2 of 13
               E. Simultaneously with the conveyance of the Property,
               Borrower is entering into a Lease Agreement with Lender.

      Id. Pursuant to the Leaseback Agreement, Bonaventura agreed to pay monthly

      rent of $1837.22 beginning in October 2011. Failure to timely pay rent, after a

      ten-day grace period, was deemed a default. Any default entitled Shah to

      possession of the Property. The agreement provided for a lease term of thirty

      years.

[3]   Section Twelve of the Leaseback Agreement entitled “Landlord Obligations

      Upon Termination of Lease by Tenant” explained,

               Upon the expiration of the term of this Lease, or upon early
               termination by [Bonaventura] as described herein, so long as
               [Bonaventura] has complied with the terms of this Lease by
               making all payments to [Shah] contemplated herein, [Shah]
               agrees to execute a warranty deed transferring fee simple title to
               the Premises to [Bonaventura] by notifying escrow agent that
               [Bonaventura] has performed [her] duties under this Agreement
               and the Deed should be transferred into [Bonaventura’s] name.

      Id. at 142.

[4]   Section Twenty-Three of the Leaseback Agreement further clarified that,

               the Premises which is the subject of this Lease is being
               contemporaneously transferred to [Shah] by [Bonaventura] for
               the sum of One Hundred Ten Thousand Dollars ($110,000.00),
               which forms the basis of the Principal sum of the lease due
               hereunder. It is the understanding and intention of the parties to
               this Lease that should [Bonaventura] repay [Shah] said principal
               sum, together with a sum equivalent to interest thereon

      Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 3 of 13
               amortized over 30 years at 19.99%, pursuant to the terms and
               conditions contained in this Lease, [Shah] will transfer the
               ownership of the Premises to [Bonaventura] by way of a deed.
               Failure to pay said sums pursuant to the terms of this Lease will
               result in [Shah] retaining the entire Premises in full satisfaction of
               the indebtedness of [Bonaventura] to [Shah].

      Id. at 147. Accordingly, on September 2, 2011, the parties executed a document

      entitled “Joint Order/Court Order Escrow Agreement” whereby Bonaventura

      executed a warranty deed for the Property which was deposited with Shah’s

      attorney to be held in escrow and “delivered by him to one or the other of the

      parties only upon the joint order of the parties, their heirs or legal

      representatives, or upon order of a court of law directing him to deliver the

      deed.” Id. at 150.

[5]   Bonaventura subsequently failed to pay her rent and, on May 16, 2012, Shah

      filed a small claims eviction proceeding in the Lake Superior Court. The case

      was set for an eviction hearing on June 13, 2012. Given the nature of the

      Leaseback Agreement, and because the trial court was concerned whether the

      eviction proceeding might be more properly characterized as a mortgage

      foreclosure over which the small claims court would lack subject matter

      jurisdiction, the court reset the matter for a hearing and requested that the

      parties brief the issue. Shah submitted a brief asserting that the case was a

      landlord-tenant eviction and not a foreclosure. Bonaventura did not submit a

      brief.

      Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 4 of 13
[6]   The parties appeared for a hearing on July 5, 2012. Shah requested possession

      of the Property. Bonaventura stated that she had no objection to this request.

      Accordingly, the trial court entered an agreed eviction order to take effect on

      August 3, 2012. The parties also agreed that the deed held in escrow would be

      immediately released to Shah.

[7]   Apparently, the parties later reached a settlement agreement outside of court

      and Shah did not enforce the July eviction order. However, in November 2012,

      Shah again filed a motion requesting a possession hearing alleging that

      Bonaventura had breached the parties’ settlement agreement. The court held a

      hearing on December 3, 2012. The parties’ respective counsel appeared on

      their behalf and entered into another agreed eviction order. Again, this order

      was never enforced because the parties later reached a settlement agreement

      outside of court.

[8]   In May 2013, Shah filed yet another motion requesting a hearing for immediate

      possession, and the trial court set the matter for a hearing on June 12, 2013. On

      that date, the parties agreed to continue the matter because they were

      attempting to reach another settlement agreement. The case was reset for

      October 2013, but the parties failed to appear and no action was taken.

[9]   Almost one year later, in April 2014, Shah filed another motion requesting a

      hearing for immediate possession. The trial court set the matter for a hearing

      on April 30, 2014. However, on that date Shah requested that the hearing be

      vacated stating that the parties had “engaged in negotiations which resulted in

      Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 5 of 13
       payment of arrearages and execution of a new lease between the parties, obviating

       the need for a hearing for immediate possession of the real estate.” Id. at 29

       (emphasis added). The trial court granted Shah’s request and vacated the

       hearing.

[10]   A few months later, in October 2014, Shah filed another motion requesting a

       possession hearing alleging that Bonaventura had breached the parties’ new

       lease agreement (“2014 Lease”). Shah attached a copy of the 2014 Lease,

       which was signed by both parties on April 30, 2014, to his motion. Unlike the

       prior Leaseback Agreement, the 2014 Lease did not consider any rent paid by

       Bonaventura as payment toward the purchase of the Property. The 2014 Lease

       contemplated that Bonaventura would obtain independent financing to

       purchase the Property from Shah for a price of $190,000 and also gave

       Bonaventura the right of first refusal should a third party make an offer to

       purchase the Property. The 2014 Lease term was for one year.

[11]   When the parties’ counsel appeared for the possession hearing on October 29,

       2014, they entered into another agreed eviction order which was stayed by

       agreement until December 1, 2014. However, on November 25, 2014,

       Bonaventura filed an application for a temporary restraining order and

       complaint for preliminary injunction. The trial court denied Bonaventura’s

       application and complaint without a hearing.

[12]   The agreed eviction order was never enforced as, once again, the parties

       reached an accord. In March 2015, Shah filed another request for a hearing

       Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 6 of 13
       regarding immediate possession. Following a hearing held on April 6, 2015,

       the trial court entered the following order:

               This matter is before the court for eviction hearing on April 6,
               2015. Plaintiff (Landlord) appeared by [counsel]; Defendant
               (Tenant), appeared by [counsel]. Tenant requested a continuance
               of the hearing in order to finalize sale of the residence in
               question. Landlord objected.

               This court had earlier granted an eviction by agreement that was
               to go into effect on December 1, 2014. However, the parties
               agreed to an extension, contingent on Tenant purchasing the
               property back from Landlord. Tenant has failed to carry through
               on this promise.

               Tenant assures the court that the sale can be completed within
               the next few weeks. In light of this, the court will grant one final
               continuance, over Landlord’s objection. The parties are
               cautioned in the strictest of terms that the court will grant no
               further continuances nor brook any further delays, barring
               extreme unforeseen circumstances. This matter is set for final
               eviction hearing on MAY 19TH, 2015 AT 9:30 A.M.

       Id. at 19-20.

[13]   Counsel for the parties appeared before the trial court on May 19, 2015, and

       requested that the court dismiss the case without prejudice because they had

       reached a settlement agreement. Bonaventura’s brother, Michael, testified that

       he would be obtaining funds for the purchase of the property from Shah within

       a matter of days. Based upon that representation, Shah agreed to the dismissal.

       Accordingly, the trial court granted the parties’ request and dismissed the case.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 7 of 13
[14]   Then on July 1, 2015, Shah filed a request for the court to reopen the case and a

       motion for contempt against Michael. The trial court set the matter for a

       hearing on August 4, 2015. Counsel appeared on that date and the court set a

       briefing schedule and a hearing date for October 2015. On August 31, 2015,

       Shah filed a request for immediate possession of the Property. During the

       October 5, 2015, hearing the parties agreed to an eviction order which was

       stayed by agreement until October 20, 2015. Michael appeared and presented a

       check to Shah’s counsel for the purchase of the Property with the understanding

       that the eviction of Bonaventura would be halted and the case dismissed as long

       as the check cleared. The issue of Michael’s contempt was held in abeyance.

[15]   The check failed to clear, the agreed eviction order was enforced, and

       Bonaventura was removed from the property on October 20, 2015. She later

       filed a motion to dismiss the eviction and stay all prior orders for lack of subject

       matter jurisdiction pursuant to Indiana Trial Rule 12(B)(1), or in the alternative

       a motion to correct error pursuant to Indiana Trial Rule 59, as well as a lis

       pendens action. Shah responded and filed a request that the lis pendens be

       stricken. Following a hearing held on December 1, 2015, the trial court entered

       findings of fact and conclusions thereon denying the motion to dismiss and

       striking the lis pendens. Bonaventura now appeals.

                                      Discussion and Decision
[16]   The entirety of Bonaventura’s appellate argument centers upon her assertion

       that the crux of this case involves the foreclosure of an equitable mortgage and,

       as such, the small claims court lacked subject matter jurisdiction over the
       Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 8 of 13
       action. Therefore, she argues that all of the small claims court’s orders are void

       and that the court should have granted her motion to dismiss. Shah responds

       that the small claims court unquestionably had subject matter jurisdiction

       because this case is an action for eviction between a landlord and tenant. We

       agree with Shah.

[17]   Our standard of review of a grant or denial of a motion to dismiss pursuant to

       Trial Rule 12(B)(1) is a function of what occurred in the trial court. GKN Co. v.

       Magness, 744 N.E.2d 397, 401 (Ind. 2001). The standard of review depends on:

       (1) whether the trial court resolved disputed facts; and (2) if it did, whether it

       conducted an evidentiary hearing or ruled on a paper record. Id. Where, as

       here, the facts before the trial court are not in dispute, then the question of

       subject matter jurisdiction is purely one of law and no deference is afforded to

       the trial court's conclusion. Id. In such case, our review is de novo. Id.

       Likewise, when reviewing a final judgment, we review all conclusions of law de

       novo. Ind. Dep't of Ins. v. Everhart, 960 N.E.2d 129, 133 (Ind. 2012).

[18]   Our supreme court has clarified that “‘[t]he question of subject matter

       jurisdiction entails a determination of whether a court has jurisdiction over the

       general class of actions to which a particular case belongs.’” K.S. v. State, 849
N.E.2d 538, 542 (Ind. 2006) (quoting Troxel v. Troxel, 737 N.E.2d 745, 749 (Ind.

       2000)). “A tribunal receives subject matter jurisdiction over a class of cases

       only from the constitution or from statutes.” Georgetown Bd. of Zoning Appeals v.

       Keele, 743 N.E.2d 301, 303 (Ind. Ct. App. 2001). “When a court lacks subject

       matter jurisdiction, its actions are void ab initio and have no effect whatsoever.”

       Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 9 of 13
       In re Adoption of L.T., 9 N.E.3d 172, 175 (Ind. Ct. App. 2014). “Subject matter

       jurisdiction cannot be waived or conferred by agreement and can be raised at

       any time.” Id.

[19]   Indiana Code Section 33-29-2-4(b)(2) provides that the small claims docket has

       jurisdiction over “[p]ossessory actions between landlord and tenant in which

       the rent due at the time the action is filed does not exceed six thousand dollars

       ($6,000).” At the time Shah filed his action for eviction against Bonaventura in

       the small claims division of the Lake Superior Court, he claimed that the rent

       due and in arrears totaled $3674.44. Although Bonaventura urges us to

       consider whether the nature of the original Leaseback Agreement between the

       parties satisfies the elements of an equitable mortgage such that this matter

       requires foreclosure proceedings outside the subject matter jurisdiction of the

       small claims court, we need not do so. 1 Regardless of the nature of the

       Leaseback Agreement, we agree with the trial court that the parties made

       numerous agreements both in and out of open court “which changed the nature

       of the parties’ business relationship from one of potential mortgagee and

       1
         Indiana courts “may find an equitable mortgage where a deed, absolute on its face, is executed
       simultaneously with an agreement under which the grantor is entitled to reconveyance upon the performance
       of conditions.” Moore v. Linville, 170 Ind. App. 429, 434, 352 N.E. 846, 849 (1976). In such cases, “the law
       gives effect to the intention of the parties rather than being controlled by the form or name of the
       instrument.” Patterson v. Grace, 661 N.E.2d 580, 584 (Ind. Ct. App. 1996). Courts look to various factors in
       ascertaining the parties’ intent to create an equitable mortgage including: (1) the existence of a debt prior to
       the transaction or one created as part of the transaction; (2) documents that provide the grantor can redeem
       the property by performing certain conditions within a certain time; (3) the grantee gave inadequate
       consideration for the conveyance of the real property; (4) the grantor paid interest to the grantee; (5) the
       grantor retained possession, control, and use of the property, particularly when no rent was paid; (6) the
       grantor made improvements that a tenant would not likely make; (7) the grantee did not exercise ownership
       or control over the property; and (8) the parties did not intend to extinguish a debt. Id.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016               Page 10 of 13
       mortgagor to one unequivocally of landlord and tenant.” Appellant’s App. at

       33.

[20]   It is undisputed that, before even a single order was issued by the trial court,

       Bonaventura wholly and voluntarily surrendered title to the Property to Shah in

       open court on July 5, 2012. She subsequently entered into a settlement

       agreement which included executing the 2014 Lease, which is clearly a lease on

       the Property and not a mortgage. Moreover, Bonaventura entered into an

       agreed possession order in open court on October 5, 2015, and executed that

       agreement by delivering actual possession of the Property to Shah. In short,

       over a period of three and a half years and during countless hearings before the

       trial court where she was represented by counsel, Bonaventura agreed

       repeatedly that she was not the owner of the property, that she was the tenant

       and Shah the landlord, that she defaulted on the terms of numerous

       agreements, that she was not entitled to possession of the property, and that she

       agreed to being evicted. Thus, even if the original Leaseback Agreement could

       be construed as a mortgage (which we do not think it can based upon the intent

       of the parties), Bonaventura has, by her own actions and subsequent

       agreements, changed the nature of this case from possible mortgagor-mortgagee

       to one unequivocally of landlord-tenant. Accordingly, the small claims court

       had subject matter jurisdiction over the eviction action.

[21]   Having concluded that the eviction action was properly before the small claims

       court, we turn to Bonaventura’s remaining assertion that the small claims court

       did not and does not “have the necessary jurisdiction” to address her alleged

       Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 11 of 13
       “substantial residual equity” in the Property because such damages would

       exceed the $6000 jurisdictional limit for small claims actions. Reply Br. at 5, 8.

       First, we note that this Court has held that “the fact that a party’s damages may

       be larger than the jurisdictional limit does not prohibit a small claims court

       from having jurisdiction to decide the case.” Hoang v. Jamestown Homes, Inc.,

       768 N.E.2d 1029, 1035 (Ind. Ct. App. 2002), trans. denied. More significantly,

       the small claims court here has not been called upon to assess any damages in

       this case. The court has been called upon simply to make a judicial

       determination as to possession of the Property and it has done so. As the trial

       court specifically observed,

               The issue of damages remains outstanding. At request of either
               party, this matter will be scheduled for a damages hearing.
               However, the court acknowledges that damages may exceed the
               small claims jurisdictional limit of $6,000.00. Moreover,
               [Bonaventura] may still attempt to claim a right to monies via
               any right to equity in the property she may have had prior to her
               surrender of the title and her execution of the 2014 Lease. In
               light of these potential issues, the court may entertain a motion to
               transfer to a court of general jurisdiction, by either party, as to the
               issue of damages.

       Appellant’s App. 38. We think that this is a logical and prudent approach by

       the trial court going forward.

[22]   In sum, we conclude that the trial court did not err in denying Bonaventura’s

       motion to dismiss for lack of subject matter jurisdiction. We affirm the

       judgment of the trial court in all respects.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 12 of 13
[23]   Affirmed.

       Najam, J., and Robb, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 45A03-1601-SC-157 | July 27, 2016   Page 13 of 13