Butler Terrace Homeowners Association, Inc. v. Ranee S. Rathee (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: August 30, 2018
• Docket: 18A-MF-675
• Status: Published

Opinion

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), FILED this Memorandum Decision shall not be Aug 30 2018, 10:07 am regarded as precedent or cited before any court except for the purpose of establishing CLERK Indiana Supreme Court the defense of res judicata, collateral Court of Appeals and Tax Court estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT APPELLEE – PRO SE Margaret M. Christensen Ranee S. Rathee Mark R. Molter Indianapolis, Indiana Bingham Greenebaum Doll LLP Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

Butler Terrace Homeowners August 30, 2018 Association, Inc., Court of Appeals Case No. Appellant-Cross-claim Plaintiff, 18A-MF-675 Appeal from the Marion Superior v. Court The Honorable David J. Dreyer, Ranee S. Rathee, Judge Appellee-Cross-claim Defendant. Trial Court Cause No. 49D10-1504-MF-14333

Najam, Judge.

Statement of the Case [1] The Butler Terrace Homeowners Association, Inc. (“the HOA”) appeals the

trial court’s order in which the court granted a motion for relief from judgment

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 1 of 14 filed by Ranee S. Rathee, which modified the court’s prior entry of summary

judgment for the HOA.1 The HOA raises two issues for our review, which we

restate as follows:

1. Whether the trial court abused its discretion under Indiana Trial Rule 60(B) when it granted Rathee’s motion for relief from judgment.

2. Whether the HOA preserved for appellate review its argument that the court’s modified order, which stayed a pending sheriff’s sale on Rathee’s condominium in order to give the parties an opportunity to reach a financial settlement, violated Indiana’s horizonal property laws, Ind. Code §§ 35-25-1-1 to -9-2 (2018), or Indiana’s mortgage foreclosure statutes, I.C. §§ 32-29- 7-0.2 to -14.

[2] We affirm.

Facts and Procedural History [3] In April of 2015, JPMorgan Chase Bank, N.A. (“Chase”) filed a complaint

against Rathee to foreclose on its mortgage lien on Rathee’s condominium in

Indianapolis. The complaint named the HOA and other lienholders junior to

Chase as defendants along with Rathee. The HOA cross-claimed against

Rathee for unpaid dues. As of June 1, 2015, the HOA alleged that Rathee

owed $1,219.60 in unpaid dues, late fees, and interest. The HOA noted that,

pursuant to its rights under the bylaws to which Rathee’s condominium was

1 JPMorgan Chase Bank, the original plaintiff below, does not participate in this appeal.

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 2 of 14 subject, the HOA was also entitled to recover attorney’s fees and costs

associated with the collection of the unpaid dues; that the sums owed to the

HOA by Rathee were a lien against the condominium on which the HOA was

entitled to foreclose; and that the HOA was also entitled to a personal judgment

against Rathee for all unpaid amounts.

[4] Rathee hired bankruptcy counsel and, on three separate occasions, filed for

bankruptcy. However, the bankruptcy court eventually dismissed each of

Rathee’s three cases, never approved a final payment plan, and barred Rathee

“from filing another bankruptcy case” for 180 days following its last dismissal.

Appellant’s App. Vol. 2 at 165. The bankruptcy court also lifted its stay on the

foreclosure action in the trial court, and, on June 20, 2016, the trial court

entered judgment for Chase and directed Rathee’s condominium be sold at a

sheriff’s sale.

[5] In August, before a sheriff’s sale of the condominium had occurred, the HOA

moved for summary judgment against Rathee for her unpaid dues to the HOA.

Because Rathee’s bankruptcy counsel did not represent her in the trial court, 2

the HOA mailed its motion for summary judgment to Rathee’s home address. 3

2 There is no dispute that Rathee had notice of the complaint and cross-claim against her. 3 The HOA asserts on appeal that it mailed its motion for summary judgment to Rathee by way of certified mail, but the certified mail receipts included in the record on appeal do not demonstrate an August 2016 mailing date. See Appellant’s App. Vol. 2 at 166-68. Rather, the receipts suggest that the HOA did not send any of the summary judgment documents to Rathee by way of certified mail until July of 2017, and it is not clear from the record that the motion for summary judgment itself was sent at that time. In any event, insofar as the trial court may have based its modification order on Rathee’s purported lack of notice, we do not consider it.

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 3 of 14 In its motion, the HOA sought $12,886.13 for unpaid dues and interest. The

HOA also sought an additional sum for attorney’s fees and costs. The HOA

requested a personal judgment against Rathee along with any proceeds that

remained from the sheriff’s sale to pay it as a junior lienholder. Rathee did not

respond to the HOA’s motion for summary judgment and, on September 20,

the trial court granted the HOA’s motion.4

[6] However, in February of 2017, Chase informed the court that Rathee had paid

her outstanding debt to Chase in full. As such, Chase moved to dismiss its

complaint and the June 2016 decree of foreclosure. The court granted Chase’s

motion and ordered that the HOA’s claims “remain on the court’s active

docket” as “pending.”5 Id. at 127.

[7] In July the court set a summary judgment briefing schedule on the HOA’s

August 2016 motion for summary judgment. The record on appeal does not

reflect that the HOA objected or otherwise informed the court of the September

2016 order granting the HOA’s motion for summary judgment. Instead, the

court and the HOA proceeded as if the August motion for summary judgment

was still pending.

4 We note that the CCS does not reflect the trial court’s September 20 grant of summary judgment for the HOA. See id. at 11-12, 120. 5 The HOA did not object to the court’s February order to vacate the sheriff’s sale.

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 4 of 14 [8] Thereafter, the HOA filed a supplemental designation of evidence in which it

alleged that Rathee owed the HOA $27,349.82 as of June 13, 2017. That

amount included $9,736.50 in “legal fees and expenses” related to the

foreclosure action as well as two of Rathee’s three bankruptcy cases. Id. at 132.

The amount also included $5,760 in property manager fees, which were

described as fees “incurred . . . due to the work and efforts performed . . . in

dealing with the collection of the unpaid [d]ues . . . .”6 Id.

[9] Rathee again did not respond to the summary judgment proceedings and, on

October 2, the trial court entered summary judgment for the HOA. In

particular, the court granted the HOA a personal judgment against Rathee in

the amount of $27,349.82 as of June 13 plus any additional amounts that

accrued thereafter in accordance with the HOA bylaws; the court foreclosed the

HOA’s lien on the condominium; and the court ordered the condominium to be

sold at a sheriff’s sale. The condominium was subsequently scheduled to be

sold on January 17, 2018.

[10] On December 11, 2017, Rathee, proceeding pro se, filed a document she

captioned as an “Affidavit.” Id. at 151. In that document, she stated that she

had been represented by attorneys in the bankruptcy cases and did “not

6 Although the HOA defends its assessments of fees and costs on appeal, it does not argue that the trial court abused its discretion when it later modified the summary judgment order to reduce the sum Rathee owed to the HOA. See Appellant’s Br. at 36-40.

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 5 of 14 understand why” they were not notified7 of the summary judgment proceedings

in the trial court. Id. at 152. She then stated that, although she “agree[d] I owe

[the HOA] home owners dues, late fees, etc., I do not agree with the amount of

$27,349.82.” Id. And Rathee requested that the court “STOP the

FORECLOSURE SALE.” Id. (capitalization in original). The HOA filed a

response and characterized Rathee’s “Affidavit” as a motion for relief from

judgment under Indiana Trial Rule 60(B). See id. at 160.

[11] The court held oral argument on Rathee’s motion on January 4, 2018. During

that argument, counsel for the HOA asserted that the amount Rathee currently

owed the HOA was now in excess of $45,000. Rathee informed the court that

she “want[ed] to keep this property” and that she could immediately pay

$10,000 to the HOA. Tr. at 10. However, while she also indicated that she

would be willing and able to pay the summary judgment amount of $27,349.82,

she disputed that that amount was an accurate assessment of the amount she

owed the HOA. She further declared that the rate at which the HOA’s fees

against her were escalating was “arbitrar[y]” and “like extortion.” Id. at 12.

[12] On January 9, the court granted Rathee’s motion for relief from judgment

under Indiana Trial Rules 60(B)(1) and 60(B)(8)8 and modified the October

7 She also claimed that she was not notified, but we do not consider that assertion on appeal. 8 The court also cited Trial Rule 60(B)(4) in its order, but as Rathee had not been served by publication we agree with the HOA that that provision was plainly inapplicable to Rathee’s motion. See Ind. Trial Rule 60(B)(4). And as we decide this appeal under Trial Rule 60(B)(1), we need not consider the court’s exercise of discretion under Rule 60(B)(8).

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 6 of 14 2017 order on summary judgment. In particular, the court modified the

October 2017 order on summary judgment as follows:

6. Rathee adequately shows . . . circumstances sufficient to set aside current judgment under Trial Rule 60(B)(1) . . . and (8).

7. The record shows the following amounts are due and owing at this time:

a. Unpaid dues $7480.00

b. Special assessment [$]1098.00

c. Late fees [$]2550.00

d. Interest [$]3702.00

8. The record fails to sufficiently show basis for claiming property manager fees.

9. The records fails to sufficiently show basis for claiming attorney’s fees for as many as eight (8) attorneys in this matter, nor propriety of claiming attorney’s fees for bankruptcy matters.

10. [The HOA’s] most recent attorney’s fees affidavit . . . claims $11,126.50.

11. Under Trial Rule 60(B)(8), it is just to modify the judgment to include the amounts in Paragraph 6[] and $10,000 in attorney’s fees, equaling $24,830.00.

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 7 of 14 12. Sheriff’s sale is vacated and stayed until further order of the Court.

13. Rathee shall immediately pay $10,000 to [the HOA].

14. The matter is referred for settlement conference under the Indiana mortgage foreclosure procedure.

Appellant’s App. Vol. 2 at 16-17.

[13] Following the court’s modification of the order on summary judgment, the

HOA filed a motion to correct error. In that motion, the HOA argued for the

first time that Rathee was not entitled to her motion for relief from judgment

because she had unclean hands. The HOA further argued, again, for the first

time, that granting the relief requested by Rathee and staying the sheriff’s sale

was contrary to law. The HOA’s motion to correct error was deemed denied

thereafter, and this appeal ensued.

Discussion and Decision Issue One: Indiana Trial Rule 60(B)(1)

[14] On appeal, the HOA first asserts that the trial court abused its discretion when

it granted Rathee’s motion for relief from judgment under Indiana Trial Rule

60(B)(1). Trial Rule 60(B) provides, in relevant part, that “[o]n motion and

upon such terms as are just the court may relieve a party . . . from a

judgment . . . for the following reasons: (1) mistake, surprise, or excusable

neglect . . . .” A movant for relief from judgment under Trial Rule 60(B)(1)

“must allege a meritorious claim or defense.” Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 8 of 14 [15] As we have explained:

A Trial Rule 60(B)(1) motion does not attack the substantive, legal merits of a judgment, but rather addresses the procedural, equitable grounds justifying the relief from . . . a judgment. Moreover, a Trial Rule 60(B)(1) motion is addressed to the trial court’s equitable discretion, with the burden on the movant to affirmatively demonstrate that relief is necessary and just.

Kmart Corp. v. Englebright, 719 N.E.2d 1249, 1254 (Ind. Ct. App. 1999)

(citations omitted), trans. denied. In light of the equitable nature of a request

under Trial Rule 60(B)(1), our standard of review is deferential:

Our standard of review is limited to determining whether the trial court abused its discretion. An abuse of discretion may occur if the trial court’s decision is clearly against the logic and effect of the facts and circumstances before the court, or if the court has misinterpreted the law. . . . The trial court’s discretion is necessarily broad in this area because any determination of excusable neglect, surprise, or mistake must turn upon the unique factual background of each case. Moreover, no fixed rules or standards have been established because the circumstances of no two cases are alike. . . . Furthermore, reviewing the decision of the trial court, we will not reweigh the evidence or substitute our judgment for that of the trial court.

Id. at 1253 (citations omitted).

[16] Here, the HOA contends that Rathee failed to show mistake, surprise, or

excusable neglect, and that she further failed to show a meritorious defense.

The HOA also asserts that equity is unavailable to Rathee as she has unclean

hands. We address each argument in turn.

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 9 of 14 Mistake, Surprise, or Excusable Neglect

[17] We first consider the HOA’s argument that Rathee failed to satisfy Trial Rule

60(B)(1). Much of the HOA’s argument on this issue flows from its reading of

Rathee’s motion for relief from judgment, which the HOA reads to be premised

on a claim that she lacked notice, to which the HOA responds by arguing that it

satisfied its notice requirements under our trial rules. See Appellant’s Br. at 23-

27. The HOA further addresses a comment in Rathee’s motion in which

Rathee stated that she thought her settlement with Chase resolved all pending

proceedings, which obviously that settlement did not do.

[18] But the HOA fails to consider Rathee’s argument to the trial court that Rathee

believed her bankruptcy counsel was also representing her in the trial court

proceedings. In particular, Rathee asserted that she did not understand why her

bankruptcy counsel had not been notified of the trial court proceedings, and a

reasonable inference from that argument is that she thought that her bankruptcy

counsel was representing her in the trial court, which is why she did not

personally respond. Further, there is no dispute that the bankruptcy

proceedings and the trial court proceedings were intimately intertwined, despite

the apparently limited representation of Rathee’s bankruptcy counsel.

[19] In granting Rathee’s motion for relief from judgment under Trial Rule 60(B)(1),

the trial court broadly based its decision on Rathee having shown

“circumstances sufficient” to justify that relief. Appellant’s App. Vol. 2 at 17.

We are obliged to defer to the trial court’s exercise of its equitable discretion

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 10 of 14 under Trial Rule 60(B)(1) and are similarly obliged to construe the record on

appeal in the manner most favorable to the trial court’s judgment. See Kmart,

719 N.E.2d at 1254. In light of Rathee’s argument to the trial court, our

standard of review, and the HOA’s failure to consider this basis for the trial

court’s judgment in its brief on appeal, we cannot say that the trial court’s

decision is clearly against the logic and effect of the facts and circumstances

before the court or that the trial court abused its discretion when it concluded

that Rathee had shown mistake, surprise, or excusable neglect under Trial Rule

60(B)(1).

Meritorious Defense

[20] The HOA further asserts that, even if Rathee did demonstrate mistake, surprise,

or excusable neglect, she failed to demonstrate a meritorious defense. Trial

Rule 60(B)’s requirement that the movant demonstrate a meritorious defense is

not a requirement that the movant “prove absolutely” her defense. State v. Van

Keppel, 583 N.E.2d 161, 163 (Ind. Ct. App. 1991), trans. denied. Rather, a

meritorious defense is “one that would lead to a different result if the case were

tried on the merits.” Seleme v. JP Morgan Chase Bank, N.A., 982 N.E.2d 299, 304

(Ind. Ct. App. 2012) (quotation marks omitted), trans. denied.

[21] The HOA’s entire argument on this issue is that “Rathee not only failed to

advance a meritorious defense[] but actually conceded liability” when she

acknowledged that she owed some measure of damages to the HOA.

Appellant’s Br. at 28 (emphases removed). We conclude that the HOA’s

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 11 of 14 argument on this issue is not supported by cogent reasoning. See Ind. Appellate

Rule 46(A)(8)(a). Rathee never conceded the total sum sought by the HOA;

indeed, Rathee unambiguously asserted that she “do[es] not agree with the

amount” requested by the HOA in its motion for summary judgment, to say

nothing of the HOA’s request for more than $45,000 at the January oral

argument. Appellant’s App. Vol. 2 at 152. The HOA further does not address

the fact that the trial court, in reconsidering the HOA’s evidence designated in

support of summary judgment, reduced the amount of the judgment against

Rathee, which produced a different result than the order on summary

judgment. We conclude that the HOA failed to preserve its argument for our

review. See App. R. 46(A)(8)(a).

Unclean Hands

[22] We next turn to the HOA’s argument that equitable relief under Trial Rule

60(B) is not available to Rathee because she has unclean hands. As our

Supreme Court has said:

The doctrine of unclean hands requires that he who seeks equity come into court with clean hands and closes the door of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the [other party].

Woodruff v. Ind. Fam. & Soc. Servs. Admin., 964 N.E.2d 784, 792 n.5 (quotation

marks and ellipses omitted).

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 12 of 14 [23] But the HOA did not present this argument to the trial court in response to

Rathee’s motion for relief from judgment. See Appellant’s App. Vol. 2 at 157-

61; Tr. at 3-6, 14-16. Rather, the HOA raised this purported issue for the first

time in a motion to correct error following the trial court’s modification of the

summary judgment order. See Appellant’s App. Vol. at 212. As such, the

HOA’s argument was not timely.

[24] Indiana’s case law has long made clear that a party who fails to raise arguments

“in a timely manner” and “[i]nstead . . . waited until [it] filed [a] motion to

correct error to raise them” waives those arguments for our review. Brown v.

Lunsford, 63 N.E.3d 1057, 1061 (Ind. Ct. App. 2016) (citing Troxel v. Troxel, 737

N.E.2d 745, 752 (Ind. 2000)). Accordingly, we hold that the HOA has waived

its argument under the doctrine of unclean hands.

Issue Two: Whether The Trial Court Violated Indiana Law When It Stayed The Sheriff’s Sale

[25] We thus turn to the HOA’s argument that the trial court violated Indiana law

when it stayed the pending sheriff’s sale. According to the HOA, the trial

court’s order is contrary to Indiana’s horizontal property laws because, “[b]y

vacating the Sheriff’s sale, the trial court violated the HOA’s contractual right to

foreclose and impermissibly attempted to rewrite the parties’ contract.”

Appellant’s Br. at 32-33. The HOA further asserts that the trial court’s order “is

entirely inconsistent with the statutory scheme governing foreclosure . . . .” Id.

at 33-34.

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 13 of 14 [26] The HOA’s statutory arguments are not properly before us on appeal. The

HOA did not raise its statutory arguments to the trial court until its motion to

correct error, even though in her motion for relief from judgment Rathee

expressly asked the court to “STOP the FORECLOSURE SALE.” Appellant’s

App. Vol at 152 (capitalization in original). As such, the HOA’s statutory

arguments were untimely in the trial court and are not available for appellate

review. Troxel, 737 N.E.2d at 752.

Conclusion

[27] In sum, we affirm the trial court’s judgment.

[28] Affirmed.

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

Court of Appeals of Indiana | Memorandum Decision 18A-MF-675 | August 30, 2018 Page 14 of 14