John E. Gray, Jr. and Tammera M. Gray v. Wells Fargo Bank, NA (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: April 27, 2018
• Docket: 20A03-1612-MF-2885
• Status: Published

Opinion

MEMORANDUM DECISION FILED Pursuant to Ind. Appellate Rule 65(D), Apr 27 2018, 5:27 am this Memorandum Decision shall not be 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 ATTORNEYS FOR APPELLEE Andrew J. Thompson Timothy J. Abeska Thompson Law Office, LLC Barnes & Thornburg LLP Indianapolis, Indiana South Bend, Indiana Alice J. Springer Barnes & Thornburg LLP Elkhart, Indiana

IN THE COURT OF APPEALS OF INDIANA

John E. Gray, Jr. and Tammera April 27, 2018 M. Gray, Court of Appeals Case No. Appellants-Defendants, 20A03-1612-MF-2885 Appeal from the Elkhart Superior v. Court The Honorable Stephen R. Wells Fargo Bank, NA, Bowers, Judge Appellee-Plaintiff. Trial Court Cause No. 20D02-1006-MF-257

Pyle, Judge.

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 1 of 12 Statement of the Case [1] John E. Gray, Jr., and Tammera M. Gray (collectively, “the Grays”) appeal:

(1) the trial court’s denial of their motion to amend their counterclaim in a

mortgage foreclosure proceeding; and (2) the trial court’s grant of partial

summary judgment on their original counterclaim in favor of the claimant,

Wells Fargo Bank, N.A. (“Wells Fargo”). Because we conclude that: (1) the

trial court did not abuse its discretion when it denied the Grays’ motion to

amend their counterclaim as their requested amendment was futile; and (2) the

trial court did not err in granting summary judgment because there were no

genuine issues of material fact, we affirm the trial court’s decision.

[2] We affirm.

Issues 1. Whether the trial court abused its discretion when it denied the Grays’ motion to amend their counterclaim.

2. Whether the trial court erred when it granted partial summary judgment in favor of Wells Fargo.

Facts [3] On December 3, 2002, the Grays executed a promissory note (“Note”) to Wells

Fargo Home Mortgage in the amount of $175,500.00. As collateral for the

Note, they also executed a mortgage (“Mortgage”) on their home in Elkhart,

Indiana.

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 2 of 12 [4] Several years later, on June 24, 2010, Wells Fargo filed a complaint to foreclose

the Mortgage. The Grays filed their answer and a counterclaim in which they

raised two breach of contract claims and an abuse of process claim. In their

first breach of contract claim, they alleged that they had entered into a contract

with Wells Fargo in 2009, in which Wells Fargo had agreed to forbear on their

Mortgage payments if the Grays paid $531.00. According to the Grays, they

complied with this agreement by paying $531.00, but Wells Fargo breached the

agreement when it nevertheless filed its foreclosure complaint.

[5] In their second breach of contract claim, the Grays alleged that, after they had

paid the $531.00, Wells Fargo had told them that it would consider the

mortgage payments current if they paid an additional $2,531.00. The Grays

claimed that they paid the $2,531.00, yet Well Fargo proceeded with its

mortgage foreclosure claim.

[6] These two breaches of contract were the basis for the Grays’ abuse of process

claim. Specifically, the Grays argued that Wells Fargo had wrongfully brought

its foreclosure action “for the ulterior and wrongful purpose of increasing their

[sic] profit after reaching several agreements for repayment of the mortgage,

accepting the agreed upon funds and then determining that additional profit

could be made by breaching the agreement and suing the [Grays].” (Wells

Fargo’s App. Vol. 2 at 60).

[7] During discovery, Wells Fargo served the Grays with a request for admissions.

In their response to the request for admissions, the Grays admitted that they did

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 3 of 12 not have a copy of the agreements in which Wells Fargo had allegedly agreed to

forbear on the mortgage payments if the Grays paid $531.00 and consider the

mortgage payments current if the Grays paid $2,531.00.

[8] On March 8, 2016, Wells Fargo filed a motion for partial summary judgment

seeking summary judgment on only the Grays’ counterclaims. It argued that

there were no genuine issues of material fact on the breach of contract claims

because the Grays had admitted that they did not have copies of the agreements

that Wells Fargo had allegedly violated. As for the Grays’ abuse of process

claim, Wells Fargo asserted that there were no genuine issues of material fact

because the evidence demonstrated that it had used the judicial process properly

to enforce its legal right to foreclose the mortgage.

[9] On March 9, 2016, the Grays moved for leave to amend their abuse of process

counterclaim to allege that Wells Fargo had engaged in a banned practice of

“dual tracking”—a practice “wherein the creditor is forbidden to move

mortgage litigation forward while a completed loan modification application is

pending and under consideration.” (The Grays’ App. Vol. 4 at 4-5). The Grays

also sought to add an abuse of process allegation that Wells Fargo had taken

their $2,531.00 payment but failed to return it or credit it to their account.1

1 At the hearing, the Grays later argued that Wells Fargo did return the payment four years after it was paid. However, this detail does not affect our analysis, so we will examine the Grays’ argument as it was stated in their proposed amendment.

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 4 of 12 [10] The trial court conducted a hearing on Wells Fargo’s motion for partial

summary judgment and the Grays’ motion to amend their counterclaim on

June 16, 2016. At the hearing, the Grays conceded that the trial court should

grant Wells Fargo’s motion for partial summary judgment on their breach of

contract claims. Thereafter, the court entered an order denying the Grays’

motion to amend their counterclaim, reasoning that their proposed amendment

was futile because the claims they wished to add were untimely. The trial court

also granted summary judgment in favor of Wells Fargo on all of the Grays’

original counterclaims, including the original abuse of process claim. In

support of its grant of summary judgment on the abuse of process claim, the

trial court reasoned that there was no evidence that Wells Fargo had used the

judicial process for an illegitimate purpose. The Grays now appeal.

Decision [11] On appeal, the Grays argue that the trial court: (1) abused its discretion when it

denied their motion to amend their counterclaim; and (2) erred when it granted

Wells Fargo’s motion for summary judgment on their original abuse of process

counterclaim. We will address each of these issues in turn.

1. Motion to Amend

[12] First, the Grays argue that the trial court abused its discretion when it denied

their motion to amend their abuse of process counterclaim to allege that Wells

Fargo had engaged in “dual tracking” and had wrongfully withheld their

$2,531.00 payment. Indiana Trial Rule 15 governs the amendment of pleadings

and provides, in pertinent part: Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 5 of 12 A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted, and the action has not been placed upon the trial calendar, he may so amend it at any time within thirty [30] days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be given when justice so requires.

[13] Wells Fargo filed a responsive pleading to the Grays’ counterclaim and also

declined to consent to the Grays’ proposed amendment. Accordingly, the

Grays may only amend their pleading “by leave of court.” T.R. 15. In such

circumstances, the trial court “retains broad discretion in granting or denying

amendments to pleadings, and we will reverse only upon a showing of abuse of

that discretion.” MAPCO Coal, Inc. v. Godwin, 786 N.E.2d 769, 777 (Ind. Ct.

App. 2003). “‘In determining whether an abuse has occurred, we look to a

number of factors, which include undue delay, bad faith, or dilatory motive on

the part of the movant, repeated failure to cure deficiency by amendment

previously allowed, undue prejudice to the opposing party by virtue of the

amendment, and futility of the amendment.’” Id. (quoting Nyby v. Waste Mgmt.,

Inc. 725 N.E.2d 905 (Ind. Ct. App. 2000), trans. denied) (internal quotations

omitted).

[14] Here, the trial court concluded that it was futile for the Grays to amend their

abuse of process claim because the allegations they wished to add were no

longer viable claims. The court noted that a cause of action for an abuse of

process accrues when the act complained of is committed and carries a two-year

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 6 of 12 statute of limitations. See Yoost v. Zalcberg, 925 N.E.2d 763, 771 (Ind. Ct. App.

2010), reh’g denied, trans. denied. The acts that the Grays challenged in their

proposed amendment were Wells Fargo’s act of filing a foreclosure action while

a loan modification application was pending and Wells Fargo’s alleged failure

to give credit to the Grays for the $2,531.00 payment they had made or to

return the payment. Because these actions occurred in 2010, the trial court

concluded that the statute of limitations on the Grays’ proposed abuse of

process amendment had already run by the time that they moved to amend

their counterclaim six years later in 2016. Thus, the proposed amendment was

futile.

[15] The Grays challenge this conclusion by asserting that Wells Fargo’s failure to

credit or return their $2,531.00 payment was a continuing wrong that tolled the

statute of limitations for the abuse of process counterclaim. Courts have

recognized two categories of cases in which the continuing wrong doctrine

applies:

“The first includes cases in which the original violation occurred outside the statute of limitations, but is closely related to other violations that are not time-barred. In such cases, recovery may be had for all violations, on the theory that they are part of one, continuing violation.

The second type of continuing violation is one in which an initial violation, outside of the statute of limitations, is repeated later; in this case, each violation begins the limitations period anew, and recovery may be had for at least those violations that occurred within the period of limitations.”

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 7 of 12 Yoost, 925 N.E.2d at 771 (quoting Marion Cty. v. State, 888 N.E.2d 292, 299

(Ind. Ct. App. 2008) (citations omitted)). The doctrine of continuing wrong

applies where an entire course of conduct combines to produce an injury. Id.

When the doctrine attaches, the statute of limitations begins to run at the end of

the continuing wrongful act. Id. “‘In order to apply the doctrine, the plaintiff

must demonstrate that the alleged injury-producing conduct was of a

continuous nature.’” Id. (quoting Palmer v. Gorecki, 844 N.E.2d 149, 156 (Ind.

Ct. App. 2006), trans. denied). The continuing wrong doctrine is not an

equitable doctrine but rather defines when an act took place. Id.

[16] Here, the trial court cited to our decision in Yoost, in which we addressed a

request to apply the continuing violation doctrine to an abuse of process claim.

See Yoost, 925 N.E.2d at 771. In Yoost, Zalcberg filed a mortgage foreclosure

claim against Yoost, and Yoost filed several counterclaims against Zalcberg. Id.

at 767. Zalcberg later amended his complaint to argue that Yoost’s

counterclaims were fraudulent and an abuse of process. Id. However, the trial

court granted Yoost’s summary judgment argument that the abuse of process

counterclaim was untimely. Id.

[17] On appeal, Zalcberg argued that his abuse of process claim was not untimely

because the continuing wrong doctrine applied. Id. at 771. In our decision, we

declined to apply the continuing wrong doctrine to an abuse of process claim,

noting that no Indiana appellate court had ever done so. Id. We also reasoned

that the injury of which Zalcberg complained was Yoost’s act of filing his

counterclaim. See id. We declined to find a continuing injury for that act Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 8 of 12 “[d]espite the fact that Yoost’s general maintenance of his lawsuit may arguably

continue to impact Zalcberg.” Id.

[18] In the instant case, the Grays have not directed us to any cases since Yoost in

which a court has applied the continuing wrong doctrine to an abuse of process

claim. Accordingly, as in Yoost, we decline to apply the continuing wrong

doctrine here. We also note that, as in Yoost, even if the Grays have suffered a

continuing impact related to their loss of $2,531.00, that continuing impact was

based on one injury—Wells Fargo’s alleged failure to credit their account or

return the payment when the bank received it. Such an injury does not fall into

either of the two categories of cases in which the continuing wrong doctrine

applies. See Yoost, 925 N.E.2d at 771.

[19] Because we find that the continuing wrong doctrine does not apply here, we

agree with the trial court that the abuse of process claims the Grays wished to

add were not timely, and, therefore, their requested amendment was futile.

Accordingly, we conclude that the trial court did not abuse its discretion when

it denied the Grays’ motion to amend their counterclaim. 2 See MAPCO Coal,

Inc., 786 N.E.2d at 777 (noting that futility of an amendment is a factor in

determining whether the trial court abused its discretion in denying a motion to

amend a pleading).

2 Based on this conclusion, we need not address the merits of the Grays’ dual tracking argument.

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 9 of 12 2. Abuse of Process

[20] Next, the Grays argue that the trial court erred when it granted Wells Fargo’s

motion for summary judgment on their original counterclaim in favor of Wells

Fargo. They do not challenge the trial court’s grant of summary judgment on

their two breach of contract claims, so we will only address their argument that

the trial court erred when it granted summary judgment on their abuse of

process claim.

[21] Preliminarily, we note that we review an order for summary judgment de novo,

which is the same standard of review applied by the trial court. Miller v. Town

Bd. Sellersburg, 88 N.E.3d 217, 218 (Ind. Ct. App. 2017). The moving party

must “‘affirmatively negate an opponent’s claim’ by demonstrating that the

designated evidence raises no genuine issue of material fact and that the moving

party is entitled to judgment as a matter of law.” Id. (quoting Ind. Restorative

Dentistry, P.C. v. Laven Ins. Agency, Inc., 27 N.E.3d 260, 264 (Ind. 2015), reh’g

denied). The burden then shifts to the nonmoving party to demonstrate a

genuine issue of material fact. Id. When deciding whether the trial court erred

in granting summary judgment, we consider only the evidence that the parties

specifically designated to the trial court. Id. We construe all factual inferences

in favor of the nonmoving party and resolve all doubts regarding the existence

of a material issue against the moving party. Id.

[22] A party claiming abuse of process must show a misuse or misapplication of

process for an end other than that which it was designed to accomplish.

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 10 of 12 Waterfield v. Waterfield, 61 N.E.3d 314, 328 (Ind. Ct. App. 2016), trans. denied.

The two elements of abuse of process are: (1) ulterior purpose or motive; and

(2) a willful misuse of process not proper in the regular conduct of the

proceedings. Id. “There is no basis for an abuse of process claim if legal

process is used to accomplish an outcome that the process was designed to

accomplish. The purpose for which the process is used is the only thing of

importance.” Id. “‘If a defendant’s acts are procedurally and substantively

proper under the circumstances, then his intent is irrelevant.’” Donovan v.

Hoosier Park, LLC, 84 N.E.3d 1198, 1209 (Ind. Ct. App. 2017) (quoting Watson

v. Auto Advisors, Inc., 822 N.E.2d 1017, 1029 (Ind. Ct. App. 2005) (internal

quotations omitted), trans. denied). Unlike a malicious prosecution action, an

action for abuse of process does not necessarily require proof that the action

was brought without probable cause or that the action terminated in favor of the

party alleging abuse of process. Waterfield, 61 N.E.3d at 328.

[23] The Grays argue that the trial court erred when it granted Wells Fargo’s motion

for summary judgment on their abuse of process claim because it was an abuse

of process for Wells Fargo to accept their payment of $2,531.00 yet continue its

mortgage foreclosure action. However, Wells Fargo established in its motion

for partial summary judgment that it had a contractual right to foreclose on the

Grays’ mortgage when the Grays defaulted. The Grays did not designate any

evidence that their $2,531.00 payment cured their default under the mortgage.

Accordingly, Wells Fargo was using the mortgage foreclosure process for the

outcome it was designed to accomplish—recovering the money owed under the

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 11 of 12 Note that was secured by the Mortgage. As this was a legitimate use of process,

Wells Fargo did not commit an abuse of process. See E. Point Bus. park, LLC v.

Private Real Estate Holdings, LLC, 49 N.E.3d 589, 605 (Ind. Ct. App. 2015)

(holding that the use of the mortgage foreclosure process to secure repayment of

a loan balance was a legitimate use of process, not an abuse of process). Any

ulterior motive that Wells Fargo had when it requested the $2,531.00 payment

is irrelevant. See id. (noting that any ulterior motive is irrelevant if a use of

process is legitimate). Therefore, the trial court did not err when it granted

Wells Fargo’s motion for summary judgment on the Grays’ abuse of process

claim.

[24] Affirmed.

Riley, J., and Robb, J., concur.

Court of Appeals of Indiana | Memorandum Decision 20A03-1612-MF-2885| April 27, 2018 Page 12 of 12