John E. Gray, Jr. and Tammera M. Gray v. Wells Fargo Bank, NA (mem. dec.) ( 2018 )

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.
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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.
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[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
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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.
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[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:
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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
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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.”
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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
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“[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.
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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.
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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
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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.
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