Dennis L. Floyd and Terence E. Bartholomew v. Scott Piepenbrink and Janet Piepenbrink (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: October 16, 2015
• Docket: 02A03-1502-MF-70
• Status: Published

Opinion

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.

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