Michael Fancis and Carmen Jay Francis v. EMC Mortgage, LLC, successor by merger to EMC Mortgage Corporation (mem. dec.)

• Court: Indiana Court of Appeals
• Decided: April 19, 2017
• Docket: 49A02-1604-MF-830
• Status: Published

Opinion

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision shall not be regarded as FILED precedent or cited before any court except for the Apr 19 2017, 9:42 am purpose of establishing the defense of res judicata, CLERK collateral estoppel, or the law of the case. Indiana Supreme Court Court of Appeals and Tax Court

APPELLANTS PRO SE ATTORNEYS FOR APPELLEE Michael Francis David J. Jurkiewicz Carmen Jay Francis Christina M. Bruno Indianapolis, Indiana Bose McKinney & Evans LLP Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

Michael Francis and Carmen Jay April 19, 2017 Francis, Court of Appeals Case No. 49A02-1604-MF-830 Appellants-Defendants, Appeal from the Marion Superior Court v. The Honorable Timothy W. Oakes, Judge EMC Mortgage, LLC, successor by merger to EMC Mortgage Trial Court Cause No. 49D02-0706-MF-23133 Corporation, Appellee-Plaintiff.

Bradford, Judge.

Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 1 of 12 Case Summary [1] In 1994, Appellants-Defendants Michael and Carmen Jay Francis executed a

promissory note (“the Note”) and a mortgage (“the Mortgage,” collectively,

“the Loan Documents”) on their Indianapolis home (“the Property”) in favor

Accubanc Mortgage Corporation. When the Note matured in 2001, the

Francises failed to satisfy the outstanding balance. By 2007, the Loan

Documents had been assigned to EMC Mortgage Corporation, who filed suit to

foreclose on the Mortgage. Eventually, EMC Mortgage Corporation was

succeeded by merger by Appellee-Plaintiff EMC Mortgage, LLC (“EMC”). In

2016, the trial court granted EMC’s summary judgment motion, ordered the

sale of the property to satisfy the Francises’ debt, and denied the Francises’

counterclaims.

[2] The Francises argue that (1) EMC lacks standing to enforce the Loan

Documents, (2) EMC’s foreclosure action is barred by the applicable statute of

limitations, (3) the entire case was disposed by a 2012 order withdrawing the

case from the trial court in which it was originally filed, (4) the trial court

erroneously denied the Francises the opportunity to respond to an EMC motion

for partial summary judgment, and (5) the trial court erroneously failed to

conduct a hearing on EMC’s claims before entering judgment in its favor.

Because we find the Francises’ claims to lack merit, we affirm.

Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 2 of 12 Facts and Procedural History [3] On October 26, 1994, the Francises owned the Property at 4904 North Winston

Drive in Indianapolis and executed, in Accubanc’s favor, the Note (in the

amount of $113,200.00) and the Mortgage, granting Accubanc a security

interest in the Property. Pursuant to the terms of the Note, the maturity date,

on which all outstanding amounts became due and payable, was November 1,

2001. The Mortgage was recorded in the Marion County Recorder’s Office on

November 1, 1994. Accubanc later assigned the Note to Bank United of Texas,

FSB, and, on February 1, 1997, also assigned the Mortgage to Bank United.

Washington Mutual Bank, FA, successor by merger to Bank United, assigned

the Loan Documents to EMC Mortgage Corporation on December 22, 2003.

On August 13, 2013, in response to the Francises’ claims that the Mortgage had

been assigned to the Federal National Mortgage Association (“FNMA”),

FNMA quit-claim assigned any interest it may have had in the Mortgage to

EMC Mortgage Corporation (“the 2013 Assignment”). At some point, EMC

Mortgage Corporation was succeeded in merger by EMC, and the trial court

granted EMC’s motion to substitute plaintiff on September 15, 2015.

[4] Meanwhile, the Francises had failed to pay the outstanding balance on the Note

when it came due on November 1, 2001. On May 29, 2007, EMC Mortgage

Corporation filed a complaint to foreclose on the Mortgage due to the

Francises’ failure to make payments pursuant to the Note. On September 17,

2007, the Francises filed their answer, affirmative defenses, and counterclaims.

On April 9, 2012, EMC Mortgage Corporation filed a motion to strike or for

Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 3 of 12 partial summary judgment as to certain claims and a designation of evidence.

On May 7, 2012, the Francises filed a praecipe for withdrawal pursuant to

Indiana Trial Rule 53.1, and on May 25, 2012, the Indiana Supreme Court

vested jurisdiction in Marion Superior Court Judge Timothy W. Oakes. On

May 20, 2013, the trial court granted EMC Mortgage Corporation’s partial

summary judgment motion.

[5] On October 23, 2013, EMC Mortgage Corporation moved for leave to amend

its complaint, seeking to incorporate the 2013 Assignment, which motion the

trial court granted. On May 28, 2015, EMC Mortgage Corporation filed a

summary judgment motion on its complaint. On February 8, 2016, the trial

court held a hearing on what was now EMC’s summary judgment motion, at

which EMC appeared through counsel and Carmen Jay Francis appeared in

person. On February 17, 2016, the trial court granted EMC’s summary

judgment motion, entered in rem judgment against the Property in in the sum of

$248,709.74, ordered that the Property be sold to satisfy the judgment, and

entered judgment in favor of EMC on all of the Francises’ remaining

Discussion and Decision [6] The Francises appeal from the trial court’s February 17, 2016, grant of

summary judgment in favor of EMC. When reviewing the grant or denial of a

summary judgment motion, we apply the same standard as the trial court.

Merchs. Nat’l Bank v. Simrell’s Sports Bar & Grill, Inc., 741 N.E.2d 383, 386 (Ind.

Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 4 of 12 Ct. App. 2000). Summary judgment is appropriate only where the evidence

shows there is no genuine issue of material fact and the moving party is entitled

to a judgment as a matter of law. Id.; Ind. Trial Rule 56(C). All facts and

reasonable inferences drawn from those facts are construed in favor of the

nonmoving party. Merchs. Nat’l Bank, 741 N.E.2d at 386. To prevail on a

motion for summary judgment, a party must demonstrate that the undisputed

material facts negate at least one element of the other party’s claim. Id. Once

the moving party has met this burden with a prima facie showing, the burden

shifts to the nonmoving party to establish that a genuine issue does in fact exist.

Id. The party appealing the summary judgment bears the burden of persuading

us that the trial court erred. Id. The Francises seem to make the following

arguments:1 EMC’s designated evidence has failed to establish that it is entitled

to enforce the Loan Documents, EMC’s December 12, 2013, amended

complaint is barred by the applicable statute of limitations, the case was

“disposed of” by the Indiana Supreme Court’s 2012 ruling on their praecipe for

withdrawal, they were denied the opportunity to respond to the EMC motion

for partial summary judgment, and the trial court erroneously failed to conduct

a hearing on EMC’s summary judgment motion.

1 EMC also contends that all of the Francises’ claims should be rejected for failure to present cogent arguments. It is well settled that we will not consider an appellant’s assertion on appeal when he or she has not presented cogent argument supported by authority and references to the record as required by the rules. Thacker v. Wentzel, 797 N.E.2d 342, 345 (Ind. Ct. App. 2003). We will not become an advocate for a party, and we will not address arguments that are either inappropriate, too poorly developed, or improperly expressed to be understood. Id. Although not artfully presented, we believe that the Francises’ arguments are sufficiently developed to address on the merits.

Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 5 of 12 I. EMC’s Standing to Enforce the Loan Documents A. Whether EMC May Enforce the Loan Documents in General [7] Although EMC offers many reasons why it may enforce the Loan Documents,

the narrowest ground on which we might resolve this issue is its argument that

the Francises do not have standing to challenge its right to enforce based on an

allegedly faulty chain of assignment. Although the issue does not seem to have

been squarely addressed in Indiana, “[c]ourts have routinely found that a debtor

may not challenge an assignment between an assignor and assignee.” Bridge v.

Aames Capital Corp., 2010 WL 3834059, at *3 (N.D. Ohio Sept. 29, 2010); see

also, e.g., Liu v. T&H Mack, Inc., 191 F.3d 790, 797 (7th Cir. 1999) (concluding

that party to underlying contract lacks standing to “attack any problems with

the reassignment” of that contract), RICHARD A. LORD, 29 WILLISTON ON

CONTRACTS § 74:50 (4th Ed.) (“[T]he debtor has no legal defense [based on

invalidity of the assignment] … for it cannot be assumed that the assignee is

desirous of avoiding the assignment.”).

[8] As the United States Bankruptcy Court for the Eastern District of Pennsylvania

has reasoned,

[The underlying contract] is between [Debtor] and [Assignor]. [Assignor’s] assignment contract is between [Assignor] and [Assignee]. The two contracts are completely separate from one another. As a result of the assignment of the contract, [Debtor’s] rights and duties under the [underlying] contract remain the same: The only change is to whom those duties are owed…. [Debtor] was not a party to [the assignment], nor has a Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 6 of 12 cognizable interest in it. Therefore, [Debtor] has no right to step into [Assignor’s] shoes to raise [its] contract rights against [Assignee]. [Debtor] has no more right than a complete stranger to raise [Assignor’s] rights under the assignment contract. Ifert v. Miller, 138 B.R. 159, 166 n.13 (E.D. Pa. 1992).

[9] We find the above authority to be persuasive and adopt the proposition that a

borrower does not have standing to challenge an allegedly invalid assignment of

the right to collect the borrower’s debt. Regardless of any assignments of the

Note, the Francises’ rights and duties remained the same. Even assuming,

arguendo, that there is some conflict regarding who actually possesses the right

to enforce the Loan Documents, that is between the various claimants to the

that right and does not involve the Francises. The Francises do not have

standing to challenge an allegedly invalid assignment of the Loan Documents

to EMC.

B. Whether EMC May Enforce the Loan Documents in Indiana [10] The Francises also argue that EMC may not enforce its rights pursuant to the

Loan Documents because it is not authorized to conduct business in Indiana as

either a foreign business or a collection agency.

A foreign corporation may not “transact business” in Indiana until it obtains a certificate of authority from the secretary of state. Ind. Code § 23-1-49-1(a). Indiana Code § 23-1-49-2(a) further states that a foreign corporation transacting business in Indiana without a certificate of authority may not maintain a proceeding in any court in Indiana until it obtains a certificate of authority. Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 7 of 12 …. A foreign corporation’s incapacity to sue must be plead and proven as an affirmative defense under Trial Rules 9(A) and 8(C). Vanco v. Sportsmax, Inc., 448 N.E.2d 1198, 1200 (Ind. Ct. App. 1983). Lackmond Prod., Inc. v. Constr. Supply, Inc., 691 N.E.2d 494, 495-96 (Ind. Ct.

App. 1998). Indiana Code section 23-1-49-2(b), however, contains a non-

exhaustive list of activities that do not constitute “transacting business” in the

State of Indiana and includes “[s]ecuring or collecting debts or enforcing

mortgages and security interests in property securing the debts.” Ind. Code §

23-1-49-2(b)(8). Because the act of enforcing rights pursuant to the Loan

Documents does not constitute transacting business, whether EMC has secured

a certificate of authority is irrelevant. The Francises have failed to establish that

EMC cannot enforce its rights pursuant to the Loan Documents.

II. Statute of Limitations [11] The Francises also appear to argue that EMC’s amended complaint is barred by

application of the relevant statute of limitations for mortgage foreclosures,

which requires that such actions be brought within ten years of the date of the

final payment. See Ind. Code § 32-28-4-1(b) (“An action may not be brought in

the courts of Indiana to foreclose a mortgage or enforce a vendor’s lien reserved

by a person to secure the payment of an obligation secured by the mortgage or

vendor’s lien if the last installment of the debt secured by the mortgage or

vendor’s lien, as shown by the record of the mortgage or vendor’s lien, has been

due more than ten (10) years.”). Furthermore, Indiana Rule of Trial Procedure

Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 8 of 12 15(C) provides, in part, that “[w]henever the claim or defense asserted in the

amended pleading arose out of the conduct, transaction, or occurrence set forth

or attempted to be set forth in the original pleading, the amendment relates back

to the date of the original pleading.”

[12] The record indicates that the Note matured on November 1, 2001, which gave

the holder of the Loan Documents until October 31, 2011 to file a foreclosure

action. EMC’s predecessor in interest EMC Mortgage Corporation filed its

original complaint on May 29, 2007, well within the statutory period. EMC

Mortgage Corporation’s amended complaint was filed on December 12, 2013,

and, although it added exhibits that would tend to show a chain of assignment

from Accubanc to EMC Mortgage Corporation, is based on exactly the same

conduct as the original complaint, i.e., the Francises’ failure to pay off the Note

upon maturity. Because EMC Mortgage Corporation’s amended complaint

clearly relates back to its original complaint, the Francises have failed to

establish a violation of the applicable statute of limitations.

III. The Francises’ Other Arguments [13] The Francises seem to argue that the record establishes that (1) the entire

lawsuit was resolved the Indiana Supreme Court’s 2012 ruling on their praecipe

of withdrawal, (2) the trial court erroneously deprived them of the opportunity

to present an argument, and (3) the trial court erred in not holding a hearing on

EMC’s summary judgment motion.

Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 9 of 12 A. Praecipe for Withdrawal [14] The Francises argue that neither the trial court nor this court have jurisdiction

over this matter due to a May 15, 2012, notation on the chronological case

summary (“CCS”) indicating that the “case status is changed from open to

disposed.” Appellee’s App. Vol. II p. 14. It is apparent, however, that the case

was “disposed” of only in the sense that it was withdrawn from Marion Circuit

Court Judge Louis F. Rosenberg (upon the Francises’ motion) for the

appointment of a special judge. Indeed, the very next entry in the CCS reflects

an order from the Indiana Supreme Court vesting jurisdiction in Marion

Superior Court Judge Timothy W. Oakes, and an entry on July 3, 2012,

indicates that the case had been redocketed. The Francises’ claim in this regard

is without merit.

B. Deprivation of Opportunity to Present Argument [15] The Francises argue that they were denied the opportunity to present argument

opposing an EMC Mortgage Corporation motion for partial summary

judgment. This argument is based on the following two entries in the CCS:

05/20/2013 Notice Issued The court having read briefs and heard oral arguments on Plaintiff’s; April 9, 2013 Motion for Partial Summary Judgement [sic] hereby Grants said Motion. Plaintiff to provide orders. 05/22/2013 Hearing Journal Entry THE COURT HAVING READ BRIEFS AND HEARD ORAL ARGUMENTS ON PLAINTIFF; 4/9/13 MOTION FOR PARTIAL SUMMARY Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 10 of 12 JUDGMENT HEREBY GRANTS SAID MOTION. PLAINTIFF TO PROVIDE ORDERS. Judicial Officer: Oakes, Timothy Wayne Hearing Date: 05/16/2013 Appellee’s App. Vol. II p. 18. [16] The Francises argue that they were never served with an EMC Mortgage

Corporation motion for partial summary judgment allegedly filed on April 9,

2013, and were not notified to appear at any hearing held on May 16, 2013.

While this is true, that is only because the record clearly indicates that no such

motion was filed and no such hearing was held. A CCS entry also made on

May 22, 2013, corrects the typographical errors in the above two entries:

“Hearing Journal Entry/Per Jacket Entry: The Court having read Briefs and

heard oral arguments 11/29/12 on Plaintiff’s 4/9/12 Motion for Partial

Summary Judgment hereby GRANTS said Motion. Plaintiff to provide

Orders. File Stamp: 05/16/2013[.]” Appellee’s App. Vol. II p. 18. The

Francises point to nothing else in the record to support their argument, and,

therefore, have not established that they were denied the opportunity to be

heard on an EMC Mortgage Corporation motion for partial summary

judgment.

C. Whether the Trial Court Denied the Francises a Hearing [17] Finally, the Francises argue that the trial court erroneously entered default

judgment against them without holding a hearing. First, although the Francises

rely on Trial Rule 55, which addresses default judgments, EMC did not seek

and was not granted default judgment against the Francises; Trial Rule 55

Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 11 of 12 simply has no bearing on this case. Moreover, the record clearly indicates that

the trial court did hold a hearing on EMC’s summary judgment motion on

February 8, 2016, which was attended by counsel for EMC and Carmen Jay

Francis. The Francises seem to argue that the hearing was somehow invalid

without Michael’s presence, but point to no authority that supports this

proposition. The Francises have failed to establish that the trial court

erroneously denied them a hearing.

[18] We affirm the judgment of the trial court.

Najam, J., and Riley, J., concur.

Court of Appeals of Indiana | Memorandum Decision 49A02-1604-MF-830 | April 19, 2017 Page 12 of 12