Court Opinion

ID: 3125226
Source: CourtListenerOpinion
Date Created: 2015-10-16 15:05:37.572483+00
Date Added: 2024-06-11T11:53:21.015908
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be                                     Oct 16 2015, 6:17 am

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.

ATTORNEY FOR APPELLANTS                                  ATTORNEY FOR APPELLEES
Robert L. Nicholson                                      Matthew J. Connelly
Carson Boxberger LLP                                     Blume, Connelly, Jordan, Stucky
Fort Wayne, Indiana                                      & Lauer, LLP
                                                         Fort Wayne, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Dennis L. Floyd and Terence E.                           October 16, 2015
Bartholomew,                                             Court of Appeals Case No.
Appellants-Defendants,                                   02A03-1502-MF-70
                                                         Appeal from the Allen Circuit
        v.                                               Court
                                                         The Honorable Thomas J. Felts,
Scott Piepenbrink and Janet                              Judge
Piepenbrink,                                             Trial Court Cause No.
Appellees-Plaintiffs                                     02C01-1009-MF-778

Crone, Judge.

Court of Appeals of Indiana | Memorandum Decision 02A03-1502-MF-70 | October 16, 2015            Page 1 of 9
                                             Case Summary
[1]   Dennis L. Floyd and Terence E. Bartholomew (collectively “the Owners”)

      appeal the trial court’s denial of their motion to determine that judgments are

      satisfied in favor of Scott Piepenbrink and Janet Piepenbrink (“the

      Piepenbrinks”). The Piepenbrinks obtained two separate judgments against the

      Owners and pursued proceedings supplemental to collect those debts. Believing

      that the judgments have been satisfied, the Owners filed their motion for relief

      on that ground. Following an evidentiary hearing, the trial court denied the

      motion. Concluding that the trial court did not abuse its discretion, we affirm

      its denial of the Owners’ motion.

                                 Facts and Procedural History
[2]   The relevant and essentially undisputed facts indicate that in 2004, the Owners

      purchased a five-story, 55,000-square-foot building located in Fort Wayne (“the

      Property”). To make the purchase, the Owners executed a note and obtained a

      mortgage (“the First Mortgage”) on the property in favor of Bippus State Bank

      (“the Bank”). Several years later, in 2007, the Owners executed a promissory

      note to the Piepenbrinks in the amount of $345,000, with a balloon payment

      due on July 18, 2008. The note was secured by a second mortgage on the

      Property in favor of the Piepenbrinks (“the Second Mortgage”). The Second

      Mortgage contained the following language under the title “Protection of

      Lender’s Rights in Property”:

              9.1 If Borrower fails to perform the covenants and agreements
              contained in this Mortgage, or there is a legal proceeding that
      Court of Appeals of Indiana | Memorandum Decision 02A03-1502-MF-70 | October 16, 2015   Page 2 of 9
              may significantly affect Lender’s rights in the Property (such as a
              proceeding in bankruptcy, probate, for condemnation, or to
              enforce laws or regulations), then Lender may do and pay
              whatever is necessary to protect the value of the Property and
              Lender’s rights in the Property, including paying items which are
              Borrower’s obligations under this Mortgage or the Note.
              Lender’s actions may include paying any sums secured by a Prior
              Lien, appearing in court, paying reasonable attorneys’ fees,
              paying hazard insurance premiums, and entering on the Property
              to make repairs or replacements. Although Lender may take action
              under this section 9, Lender is not required to do so.

              9.2 Any amounts paid or disbursed by Lender under this
              section 9 shall become additional debt of Borrower secured by
              this Mortgage.

      Appellants’ App. at 13 (emphasis added).

[3]   On September 3, 2010, the Bank filed a foreclosure action against the Owners.

      The Piepenbrinks were also named as defendants in the foreclosure action due

      to their Second Mortgage on the property. The Piepenbrinks filed a cross-claim

      against the Owners based upon the Owners’ default on the promissory note.

      On March 14, 2011, the Bank obtained a judgment and foreclosure order

      against the Owners in the amount of $516,800.63. Four days later, the

      Piepenbrinks purchased the Bank’s judgment for $340,000, which included an

      assignment of the First Mortgage from the Bank to the Piepenbrinks. 1 On April

      1
       It appears from the record that the actual amount of the judgment purchased by the Piepenbrinks was
      $516,491.03, which includes the subtraction of $309.00 of costs awarded to the Owners from the original
      $516,800.63 foreclosure judgment. CCS at 7.

      Court of Appeals of Indiana | Memorandum Decision 02A03-1502-MF-70 | October 16, 2015            Page 3 of 9
      1, 2011, the trial court granted the Piepenbrinks’ motion to be substituted in

      place of the Bank as the plaintiff in the foreclosure action. Then, on May 24,

      2011, the trial court entered judgment in favor of the Piepenbrinks on their

      cross-claim on the default of the promissory note in the amount of $407,651.09

      plus interest. At no time did the Piepenbrinks take any action pursuant to

      section 9 of the Second Mortgage.

[4]   On August 9, 2011, a sheriff’s sale was conducted on the Property. The

      Piepenbrinks were the successful (and only) bidders at the sale with a credit bid

      of $500,000. Fifteen months later, after performing upgrades to the property

      and engaging in marketing and negotiations for the sale of the Property, the

      Piepenbrinks sold the Property to a third party for $740,000. After the sale, the

      Piepenbrinks pursued proceedings supplemental to collect the amounts still

      owed by the Owners under both judgments.

[5]   Then, several years later, pursuant to Indiana Trial Rules 13(M) and 60(B)(7),

      the Owners filed a motion to determine that judgments are satisfied.

      Specifically, the Owners argued that they are entitled to a credit for the discount

      between the Piepenbrinks’ credit bid of $500,000 to obtain the Property at the

      sheriff’s sale and the $340,000 paid by the Piepenbrinks to purchase the

      judgment on the First Mortgage. The Owners further argued that the

      Piepenbrinks eventually sold the Property for an amount in excess of the sums

      expended by the Piepenbrinks with regard to both judgments and therefore, no

      deficiency remains and further amounts sought by the Piepenbrinks would

      result in a windfall.

      Court of Appeals of Indiana | Memorandum Decision 02A03-1502-MF-70 | October 16, 2015   Page 4 of 9
[6]   The Piepenbrinks responded and argued that there is no legal authority

      indicating that the Owners are entitled to a credit for any discount at which the

      Piepenbrinks purchased the judgment on the First Mortgage. The Piepenbrinks

      noted that they paid more than a nominal sum for the judgment and that they

      assumed the risk of collecting that debt. The Piepenbrinks also argued that the

      judgment on the First Mortgage and the judgment on their promissory note are

      totally separate and that they are entitled to collect the full amount of both

      judgments. Thus, their $500,000 accepted credit bid for the Property at the

      sheriff’s sale extinguished only that amount of the judgment on the First

      Mortgage and had no effect regarding their ability to collect the judgment on

      their promissory note. Additionally, the Piepenbrinks asserted that their

      eventual sale of the Property to a third party is irrelevant to the amount owed

      by the Owners on either judgment.

[7]   Following a hearing, the trial court entered its order denying the Owners’

      motion to determine that judgments are satisfied. This appeal ensued. We will

      provide additional facts in our discussion as necessary.

                                     Discussion and Decision
[8]   The Owners’ motion to determine that judgments are satisfied was filed

      pursuant to Indiana Trial Rules 13(M) and 60(B)(7). Trial Rule 13(M) permits

      the trial court to order “[s]atisfaction of a judgment or credits theron … upon

      notice and motion.” Trial Rule 60(B)(7) permits a party to file a motion for

      relief from judgment on the grounds that “the judgment has been satisfied,

      released, or discharged.” To prevail on a Trial Rule 60(B)(7) motion, a party
      Court of Appeals of Indiana | Memorandum Decision 02A03-1502-MF-70 | October 16, 2015   Page 5 of 9
       must affirmatively demonstrate that relief is necessary and just. Merkor Mgmt. v.

       McCuan, 728 N.E.2d 209, 211 (Ind. Ct. App. 2000).

[9]    We review a trial court’s decision on a Trial Rule 60(B) motion for an abuse of

       discretion. Id. An abuse of discretion occurs where the trial court’s ruling is

       clearly against the logic and effect of the facts and circumstances before the

       court or if the court erred as a matter of law. Santelli v. Rahmatullah, 993
N.E.2d 167, 175 (Ind. 2013). On appeal, we will not reweigh the evidence, and

       we give the trial court’s order substantial deference. Hartig v. Stratman, 760
N.E.2d 668, 671 (Ind. Ct. App. 2002), trans. denied.

[10]   Moreover, the trial court’s order here was simply a general denial of the

       Owners’ motion in its entirety. We will affirm a general judgment on any legal

       theory consistent with the evidence. Lynn v. Windridge Co-Owners Ass’n, 830
N.E.2d 950, 954 (Ind. Ct. App. 2005). Upon review, we will presume that the

       trial court correctly followed the law. Id. This is one of the strongest

       presumptions applicable to our consideration of a case on appeal. Id. at 954-55.

           The trial court did not abuse its discretion in denying the
          Owners’ motion to determine that judgments are satisfied.
[11]   In support of their claim that the trial court abused its discretion in denying

       their motion and, in essence, concluding that the two judgments at issue have

       Court of Appeals of Indiana | Memorandum Decision 02A03-1502-MF-70 | October 16, 2015   Page 6 of 9
       not been satisfied, 2 the Owners first argue that the Piepenbrinks are not entitled

       to enforce the judgment on the First Mortgage at its face value. Specifically, the

       Owners argue that they are entitled to a credit for the difference between the

       face value of the judgment ($516,491.03) and the amount actually paid by the

       Piepenbrinks to purchase the judgment ($340,000). In other words, the Owners

       believe that they are entitled to the benefit of “the discount” obtained by the

       Piepenbrinks. Appellants’ Br. at 5. We must disagree.

[12]   The Owners cite to no relevant authority, and we are unaware of any, that

       supports the proposition that they are entitled to a credit or that the

       Piepenbrinks are not entitled to recover the full amount of the judgment

       purchased in accordance with the rights assigned to them. 3 We acknowledge

       that the Piepenbrinks had other options and remedies available to them to

       protect their investment in the Property pursuant to their Second Mortgage.

       However, the Piepenbrinks did not choose to exercise those options or pursue

       those remedies and, although they were surely entitled, they were not required

       to do so. Instead, the Piepenbrinks chose to purchase the judgment on the First

       Mortgage and obtain an assignment of the Bank’s rights. It is well settled that

       2
         We note that the Owners repeatedly attempt to intermingle the two judgments and the debt owed with
       respect to each. We decline the invitation to do the same.
       3
         The Owners argue that the judgment on the First Mortgage was satisfied when the Piepenbrinks paid the
       Bank the discounted amount of $340,000. In support of their argument the Owners direct us to TacCo Falcon
       Point, Inc. v. Atlantic Limited Partnership XII, 937 N.E.2d 1212 (Ind. Ct. App. 2010). In TacCo, we noted
       longstanding precedent that payment of a judgment by one of the judgment debtors is a satisfaction of the
       judgment, notwithstanding that an assignment of the judgment has been made to him or to someone else. Id.
       at 1220-21. The Owners concede that the Piepenbrinks were not judgment debtors here. TacCo is factually
       dissimilar and therefore irrelevant.

       Court of Appeals of Indiana | Memorandum Decision 02A03-1502-MF-70 | October 16, 2015         Page 7 of 9
       an assignee stands in the shoes of the assignor. Indianapolis-Marion Cnty. Pub.

       Library v. Charlier Clark & Linard, PC, 929 N.E.2d 838, 848 (Ind. Ct. App. 2010),

       trans. denied. As the Piepenbrinks argued to the trial court, they paid more than

       a nominal sum for this assignment of rights, and they assumed the risks

       associated with collecting the judgment. As purchasers of the judgment and

       assignees of the Bank’s rights, the Piepenbrinks are entitled to enforce the

       judgment at its face value.

[13]   The Piepenbrinks successfully submitted a credit bid of $500,000 to obtain the

       Property at the sheriff’s sale. As a general matter, the payment of a bid at a

       sheriff’s sale sufficient to satisfy the judgment extinguishes the judgment. Titan

       Loan Inv. Fund, L.P. v. Marion Hotel Partners, LLC, 891 N.E.2d 74, 76 (Ind. Ct.

       App. 2008), trans. denied. “This is true even where, as here, the judgment

       creditor ‘was the purchaser at his own sale.’” Id. (quoting Boos v. Morgan, 130
Ind. 305, 30 N.E.141, 143 (1892)). Here, the Piepenbrinks’ credit bid satisfied

       $500,000 of the $516,491.03 judgment. Thus, the judgment on the First

       Mortgage has not yet been extinguished, and a deficiency balance remains.

[14]   We note that although the law presumes that a sheriff’s sale provides a decent

       method by which value can be fixed, a sale may be set aside, or a request for a

       deficiency judgment denied, if it appears that the results of the sale are such that

       entry of a deficiency judgment would be shocking to the court’s sense of “justice

       and right.” Arnold v. Melvin R. Hall, 496 N.E.2d 63, 65 (Ind. 1986) (citation

       omitted). The burden falls upon the defaulter to demonstrate such inequity.

       Id. The Owners offered no legitimate evidence to the trial court as to the value

       Court of Appeals of Indiana | Memorandum Decision 02A03-1502-MF-70 | October 16, 2015   Page 8 of 9
       of the Property at the time of the sheriff’s sale, and a credit bid of $500,000 on a

       $516,491.03 mortgage judgment cannot be described as shocking to the

       conscience. The Owners have not met their burden to establish that the price

       paid for the Property at the sheriff’s sale was inadequate such that the request

       for a deficiency judgment should be denied.

[15]   As for the Piepenbrinks’ judgment on their promissory note, the Owners

       presented no evidence to the trial court to indicate that they have satisfied any

       portion of that debt. In sum, a deficiency balance remains on the judgment on

       the First Mortgage and the full balance remains on the judgment on the

       promissory note. Contrary to the Owners’ assertions, it is of no moment that

       the Property was eventually sold by the Piepenbrinks to a third party and that

       the Piepenbrinks have, in the Owners’ opinion, “been made whole” in a

       monetary sense. Appellants’ Br. at 9 n.1. The fact remains that the

       Piepenbrinks obtained two judgments against the Owners, and they are entitled

       to pursue proceedings supplemental until those judgments are fully satisfied.

       Accordingly, the trial court did not abuse its discretion in denying the Owners’

       motion to determine that judgments are satisfied. The trial court’s order is

       affirmed.

[16]   Affirmed.

       May, J., and Bradford, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 02A03-1502-MF-70 | October 16, 2015   Page 9 of 9