FILED Oct 07 2024, 8:38 am
CLERK Indiana Supreme Court Court of Appeals and Tax Court
IN THE
Court of Appeals of Indiana Union Savings Bank, Appellant/Plaintiff/Counterclaim-Defendant
v.
Mychael T. Spencer, Appellee/Defendant/Counterclaim-Plaintiff
October 7, 2024 Court of Appeals Case No. 23A-PL-2734 Interlocutory Appeal from the Hancock Circuit Court The Honorable R. Scott Sirk, Judge Trial Court Cause No. 30C01-2204-PL-493
Opinion by Judge Bradford Judges Crone and Tavitas concur.
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 1 of 16 Bradford, Judge.
Case Summary 1
[1] In July of 2021, Union Savings Bank (“USB”) sent a loan-payoff statement to
Mychael Spencer, which Spencer paid, leading USB to release its note and
mortgage associated with Spencer’s property. The payoff statement that USB
had sent to Spencer erroneously had not included $5872.50 in payments that
had previously been deferred due to the Covid-19 pandemic. USB filed a small-
claims action seeking to recover the funds. Spencer filed a counterclaim in
which he alleged that USB had engaged in deceptive practices and requested
that the case be certified as a class action. In seeking class certification, Spencer
alleged that he was bringing the action on behalf of himself and 12,585 other
persons who had received a loan payoff statement from USB in the relevant
two-year period. The trial court granted Spencer’s request for class
certification. The trial court subsequently denied USB’s motion to reconsider
and certified the case for interlocutory appeal.
[2] USB argues on appeal that the trial court abused its discretion in denying its
motion to reconsider because the class members lacked standing to sue.
Spencer, on behalf of the class, argues that the trial court properly determined
that they did have standing to sue. Both parties rely on the Indiana Supreme
1 We held oral argument in this case on September 25, 2024, in our courtroom in the Indiana State House. We commend counsel for the high quality of their arguments to the court.
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 2 of 16 Court’s decision in Hoosier Contractors, LLC v. Gardner, 212 N.E.3d 1234 (Ind.
2023) in support of their respective positions. Because we agree with USB that
the class members lack standing, we reverse and remand with instructions for
the trial court to decertify the class.
Facts and Procedural History [3] In June of 2018, Mychael Spencer borrowed $231,800.00 from Union Savings
Bank (“USB”), secured by a mortgage on his home in McCordsville. In
November 2020, for pandemic-related reasons, USB deferred four of Spencer’s
monthly payments, totaling $5872.50.
[4] USB provided Spencer with a payoff statement in July of 2021. In the payoff
statement, USB expressly “reserve[d] the right to correct any portion of this
statement at any time.” Appellant’s App. Vol. II p. 88. Due to an inadvertent
error, the payoff statement had omitted the $5872.50 in deferred payments.
After Spencer had paid the amount listed in the payoff statement and USB had
released its note and mortgage on Spencer’s property, USB discovered the
alleged error. On January 25, 2022 and March 7, 2022, USB sent requests for
repayment of the $5872.50 to Spencer. As of May 2, 2022, Spencer had not
responded to USB’s requests.
[5] On May 2, 2022, USB filed an action in the small-claims court to recover the
$5872.50 allegedly owed by Spencer. The case was removed from the small-
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 3 of 16 claims court and assigned to the trial court after Spencer requested a jury trial.
Spencer filed a counterclaim against USB, in which he alleged that USB had
violated the Deceptive Consumer Sales Act [(“DCSA”)], particularly [Indiana Code section] 24-5-0.5-3(a), by using a deceptive form called a “Loan Payoff Statement” that purported to state a loan payoff but, because of print buried in the middle of a paragraph which stated “Union Savings Bank reserves the right to correct any portion of this statement at any time,” made the disclosure illusory and deceptive; the form invites reliance but it is deceptive because consumers do not know it is not worthy of reliance because Union Savings Bank reserves the right to change it in any way at any time.
31. Union Savings Bank engaged in a scheme to mislead Mr. Spencer by the foregoing actions to get him to refinance his mortgage loan and profit therefrom; in addition, as to the Loan Payoff Statement part of the scheme was to use the same deceptive form with many others.
Appellant’s App. Vol. II p. 75 (brackets added, emphasis in original). Spencer
also sought class-action certification for his counterclaim. In seeking class
certification, Spencer alleged that he was bringing the “action on behalf of
himself and all persons similarly situated in the State of Indiana for whom
[USB had] sent a loan payoff statement (in a form substantially similar to the
Loan Payoff Statement sent to [Spencer]) within the period of two years before
the date of the filing of” his complaint. Appellant’s App. Vol. II p. 77.
[6] In contesting class certification, USB asserted that, out of the 12,586 payoff
statements sent during the relevant period, 12,580 were correct and only six
were determined to have contained errors. Of the six persons who had received Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 4 of 16 amended payoff statements from USB, five “either paid or negotiated the
payment of the amounts that they still owed on their loans and paid them off.”
Tr. Vol. II p. 7. The only individual who had contested the corrected amount
was Spencer.
[7] On May 1, 2023, the trial court issued an order certifying the class. USB filed a
motion to reconsider on July 31, 2023. On October 16, 2023, the trial court
denied USB’s motion to reconsider and certified the case for interlocutory
appeal, and we accepted jurisdiction.
Discussion and Decision [8] “Class certification is essentially a procedural order and carries no implication
about the merits of the case.” LHO Indpls. One Lessee, LLC v. Bowman, 40
N.E.3d 1264, 1268 (Ind. Ct. App. 2015) (quotation omitted).
Thus, in making a determination regarding class certification, a trial court may not conduct a preliminary inquiry into the merits of the suit. As a certification hearing is not intended to be a trial on the merits, Trial Rule 23 does not require a potential class representative to show a likelihood of success on the merits in order to have his claim certified as a class action. Instead, assuming the merits of an action, a trial court must determine whether the plaintiff has satisfied the requirements for class certification under Trial Rule 23.
Id. (citation and quotations omitted).
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 5 of 16 [9] “The principal purpose of the class[-]action certification is promotion of
efficiency and economy of litigation.” Id. at 1269 (quotation omitted).
The plaintiff has the burden of establishing that the class certification requirements of Trial Rule 23 have been met. Failure to meet any one of the requirements results in the denial of class status. Whether these prerequisites have been met is a factual determination to be made by the trial court.
Id. (citations omitted).
[10] Trial Rule 23 provides as follows:
(A) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.
(B) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (A) are satisfied, and in addition: (1) the prosecution of separate actions by or against individual members of the class would create a risk of: (a) inconsistent or varying adjudications with respect to individual members of the class which would establish
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 6 of 16 incompatible standards of conduct for the party opposing the class, or (b) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interest of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or (2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or (3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (a) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (b) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (c) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (d) the difficulties likely to be encountered in the management of a class action.
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 7 of 16 [11] USB contends that the trial court abused its discretion in denying its motion to
reconsider its prior order certifying the class. We review a denial of a motion to
reconsider for an abuse of discretion. See Hess v. Bd. of Dirs. of Cordry-Sweetwater
Conservancy Dist., 141 N.E.3d 889, 892 (Ind. Ct. App. 2020). Furthermore,
[t]he trial court has broad discretion in determining whether an action is maintainable as a class action, and thus we review its class certification for an abuse of discretion. An abuse of discretion occurs when the trial court’s decision rests upon a clearly erroneous finding of fact, an errant conclusion of law, or an improper application of law and fact. The trial court’s certification determination will be affirmed if supported by substantial evidence. We neither reweigh the evidence nor judge the credibility of witnesses and affirm if the evidence most favorable to the judgment and all reasonable inferences drawn therefrom support the trial court’s decisions. Because Indiana Trial Rule 23 is based on Rule 23 of the Federal Rules of Civil Procedure, it is appropriate to consider federal court interpretations when applying the Indiana Rule.
Bowman, 40 N.E.3d at 1269 (citations omitted).
[12] In arguing that the trial court abused its discretion in denying its motion to
reconsider the class certification, USB asserts that the trial court erred in
determining that the class members had standing to sue.
The threshold issue of standing determines whether a litigant is entitled to have a court decide the substantive issues of a dispute. The standing requirement mandates that courts act in real cases, and eschew action when called upon to engage only in abstract speculation. Whether a party has standing is a legal question we review de novo.
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 8 of 16 Hoosier Contractors, 212 N.E.3d at 1238 (citation and quotations omitted).
[13] “Standing is a significant restraint on the ability of Indiana courts to act, as it
denies the courts any jurisdiction absent an actual injured party participating in
the case.” Id. (quotation omitted). “Indiana law is clear that standing requires
an injury, which is met if the party shows it has suffered or is in immediate
danger of suffering a direct injury as a result of the complained-of conduct.” Id.
(brackets removed, citation and quotation omitted). “Because standing under
the Indiana Constitution is jurisdictional, it must exist at all stages of
litigation.” Id. Thus, “[p]arties asserting a counterclaim must likewise comport
with these standing requirements.” Id.
[14] In his counterclaim, Spencer alleged that USB had violated the DCSA, which
provides that “[a] person relying upon an uncured or incurable deceptive act
may bring an action for the damages actually suffered as a consumer as a result
of a deceptive act[.]” Ind. Code § 24-5-0.5-4(a) (emphasis added). With regard
to class actions, Indiana Code section 24-5-0.5-4(b) provides:
Any person who is entitled to bring an action under subsection (a) on the person’s own behalf against a supplier for damages for a deceptive act may bring a class action against such supplier on behalf of any class of persons of which that person is a member and which has been damaged by such deceptive act, subject to and under the Indiana Rules of Trial Procedure governing class actions, except as herein expressly provided.
The Indiana Supreme Court has interpreted Indiana Code section 24-5-0.5-4(a)
to require both reliance on the deception and actual damages. Hoosier
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 9 of 16 Contractors, 212 N.E.3d at 1239. Thus, in order to have suffered an injury
sufficient to grant standing to sue, the claimant must have suffered actual
damages.
[15] In his counterclaim and request for class certification, Spencer alleged that he
was injured by USB’s request that he pay additional funds after his loan had
been allegedly paid off at the time he refinanced. While Spencer may have
alleged a sufficient injury to confer standing on him, he included no similar
concrete alleged injury with regard to the proposed class members.2 In seeking
class certification, Spencer merely alleged that each individual who had
received a loan-payoff statement from USB had been injured because they had
detrimentally relied on the loan-payoff statement as providing an accurate
accounting of the amount owed on their respective loans. Spencer did not
include any additional detail as to the nature of the injury allegedly suffered by
the proposed class members. Essentially, Spencer argued both below and on
appeal that each class member had standing because each “was deceived and
was the victim of an unfair and deceptive practice regardless of whether they
were later told they owed more money.” Appellee’s Br. p. 13.
[16] For its part, USB argues that none of the class members have standing to sue
because none of the class members suffered an injury-in-fact. In Hoosier
Contractors, the Indiana Supreme Court stated that the DCSA “confirms that the
2 We note that our decision regarding the class certification has no bearing on Spencer’s counterclaim against USB, as it pertains to him, which remains active regardless of whether the class certification remains.
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 10 of 16 consumer must suffer an actual injury due to his reliance on a deceptive act”
and, in class actions, “requires that every class member must suffer damages
derived from actual injuries.” 212 N.E.3d at 1240. USB therefore argues that
[a] deceptive act, without actual damages, is not enough to establish an injury-in-fact, according to Hoosier Contractors. Because the class members have no actual damages, they lack standing. With a class the size of zero, one, or at most six, numerosity and typicality are lacking, and the class must be decertified.
Appellant’s Br. pp. 11–12.
[17] The Indiana Supreme Court has held that a possible future injury is not
sufficient, without more, to demonstrate an actionable injury for standing
purposes. Solarize Ind., Inc. v. S. Ind. Gas & Elec. Co., 182 N.E.3d 212, 219–20
(Ind. 2022) (providing that a possible effect of potential projects does not
constitute a demonstrable injury). With regard to the DCSA, the Indiana
Supreme Court has held that “the [DCSA] requires consumers to rely on the
deceptive act and suffer injury as a result—known as detrimental reliance:
Reliance by one party on the acts or representations of another, causing a
worsening of the first party’s position.” Hoosier Contractors, 212 N.E.3d at 1240
(quotation omitted, emphasis added). The Indiana Supreme Court rejected the
assertion that a deceptive act, without more, is a detriment sufficient to confer
standing, noting that “[a] deceptive act that deceives no one injures no one.”
Id. at 242.
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 11 of 16 [18] The trial court’s class certification included not just the six persons who
ultimately received a corrected payoff statement, but all 12,586 persons who
received a loan-payoff statement similar to that received by Spencer. Again,
USB asserts that, out of the 12,586 payoff statements sent during the relevant
period, 12,580 were correct and only six were determined to have contained
errors. Thus, USB asserts that the vast majority, 99.95%, of persons who
received payoff statements from USB were unaffected by USB’s allegedly
deceptive statement as they suffered only a potential future harm. Specifically,
with regard to the 12,580, USB argues that “[t]hese class members will never
receive a second loan payoff statement that somehow harms them. Their
original loan payoff statements were all correct, their debts were extinguished,
and their accounts closed.” Appellant’s Br. p. 17. Thus, even if USB were
assumed to have made a deceptive statement in the payoff statements, these
borrowers have not “suffered even the slightest harm.” Appellant’s Br. p. 17.
As far as these class members are concerned, there is no allegation that they
were told to pay the wrong amount or relied to their detriment on an inaccurate
figure. Thus, USB asserts that they “lack an injury, and therefore lack
standing.” Appellant’s Br. p. 17.
[19] On behalf of the class, Spencer argues that the “real wrongdoing … is the
deception an unfairness involved in giving an illusory payoff figure.”
Appellee’s Br. p. 12. He further argues that “[t]he injury to each class member
occurred when they were tricked into relying on an illusory loan payoff figure,
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 12 of 16 which placed them in a less favorable position … than they would have been
had they not been deceived.” Appellee’s Br. p. 12. Spencer asserts that
Each class member here relied on [USB’s] deceptive conduct. We know this because each class member paid off their loan based upon the Loan Payoff Statement.… The fact that a class member paid off their loan is indisputable proof of reliance since the Loan Payoff Statement is the only way the consumer could know how much to pay. And each class member was worse off as a result. Each class member thought that [USB] had committed to a payoff amount and would be bound by that figure. But due to [USB’s] deception … that was not the case. Reliance on the deceptive Loan Payoff Statement left them worse off because [USB] had not committed to the payoff amount.
Appellee’s Br. p. 15 (emphasis in original). Thus, Spencer claims that each
class member has standing because they relied on the payoff statements to their
detriment as they were “left in a worse position than they would have been had
the Loan Payoff Statement not been deceptive.” Appellee’s Br. p. 16. Spencer
asserts that all that is required is “some worsening” of the class members’
positions, not a significant worsening. Appellee’s Br. p. 17.
[20] USB responds that an individual cannot be deceived by the truth and that “an
estimate that proves to be accurate deceives nobody.” Appellant’s Reply Br. p.
6. USB states that
99.95% of the class could not have been harmed by a completely accurate statement of their loan balance. There is nothing illusory, deceptive, incomplete, or noncommittal about a document that states plainly the correct amount owed. So there
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 13 of 16 can be no detriment for a class member that relied on such a statement.
Appellant’s Reply Br. pp. 6–7. USB further states that “[t]here is nothing
illusory about USB’s reserving the right to correct an incorrect document.”
Appellant’s Reply Br. p. 7.
[21] While USB agrees that the detriment or harm to confer standing can be
minimal, it argues that a potential or “conjectural” harm is not sufficient.
Appellant’s Reply Br. p. 9. Thus, while “a worsening of position need not be
terribly significant to constitute an injury, … [it] still needs to be an actual,
current worsening of a position, not some conjectural one that has nearly zero
chance of ever occurring.” Appellant’s Reply Br. p. 10 (emphasis in original).
USB argues that the challenged portion of the payoff statements merely
“reserve[d] the right to correct any portion of this statement at any time.”
Appellant’s App. Vol. II p. 88 (emphasis added). As such, USB argues that the
provision “does not give USB free reign to invent new obligations or collect
money that it is not owed.” Appellant’s Br. p. 21. USB asserts that “[t]he
problem[] with [Spencer’s] argument is that it hinges on the fiction that USB
might invent and then try to collect a debt that is not owed—and not on
something that is actually happening or likely to happen.” Appellant’s Reply
Br. p. 9 (emphasis in original). In sum, USB argues that in order to confer
standing, “[t]here cannot be an injury from an abstract, conjectural, and
hypothetical act that USB has never taken and has no apparent reason to ever
take with 99.95% of the class members.” Appellant’s Reply Br. p. 10.
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 14 of 16 [22] Upon review, we agree with USB on this point. While the level of injury
required to confer standing was minimal at this point in the litigation, we do
not believe that Spencer’s counterclaim or request for class certification
demonstrates any actual injury to the proposed class members. The alleged
injury is, at best, an abstract and speculative possible future injury. Again, as
the Indiana Supreme Court has held, such a possible future injury is not
sufficient, without more, to demonstrate an actionable injury for standing
purposes. Solarize, 182 N.E.3d at 219–20. As such, we conclude that the trial
court abused its discretion in denying USB’s motion to reconsider the class
certification.
[23] Furthermore, with respect to the six persons who received a corrected loan-
payoff statement, even if we were to assume that those persons have suffered
some kind of injury, class certification is not necessary, as Indiana Trial Rule
42(A) provides that “[w]hen actions involving a common question of law or
fact are pending before the court, it may order a joint hearing or trial of any or
all the matters in issue in the actions; it may order all the actions consolidated.”
Again, one of the requirements for class certification set forth in Trial Rule
23(A) is that “the class is so numerous that joinder of all members is
impractical.” We cannot say that six persons creates a class that is “so
numerous” that joinder is impractical.
[24] We reverse the judgment of the trial court and remand for further proceedings
consistent with this opinion.
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 15 of 16 Crone, J., and Tavitas, J., concur.
ATTORNEYS FOR APPELLANT Jackie M. Bennett, Jr. Taft Stettinius & Hollister LLP Indianapolis, Indiana
Russell S. Sayre Annie M. McClellan Taft Stettinius & Hollister LLP Cincinnati, Ohio
ATTORNEY FOR APPELLEE Robert E. Duff Indiana Consumer Law Group Fishers, Indiana
Court of Appeals of Indiana | Opinion 23A-PL-2734 | October 7, 2024 Page 16 of 16