Deidre L. Thompson, J. Larry Thompson, and Thompson Quality Foods, Inc. v. Wells Fargo Bank, National Association (mem. dec.) ( 2017 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Nov 15 2017, 8:12 am
court except for the purpose of establishing CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
Julie A. Camden Thomas B. Trent
Scott C. Quick Reanna L. Carver
Camden & Meridew, P.C. Rothberg Logan & Warsco LLP
Fishers, Indiana Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Deidre L. Thompson, J. Larry November 15, 2017
Thompson, and Thompson Court of Appeals Case No.
Quality Foods, Inc., 41A04-1704-CC-884
Appellants-Defendants, Appeal from the Johnson Superior
Court
v. The Honorable Marla K. Clark,
Judge
Wells Fargo Bank, National Trial Court Cause No.
Association, 41D04-1610-CC-968
Appellee-Plaintiff.
Mathias, Judge.
[1] Deidre L. Thompson, J. Larry Thompson, and Thompson Quality Foods, Inc.
(“Quality Foods”) (collectively “Appellants”), appeal the trial court’s grant of
Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 1 of 10
summary judgment in favor of creditor/mortgagee Wells Fargo Bank, N.A.
(“Wells Fargo”), in its collection action following Appellants’ default.1
Appellants assert that a genuine issue of material fact exists regarding whether
Wells Fargo failed to act reasonably to mitigate damages. Finding that
summary judgment was appropriate as a matter of law, we affirm.
Facts and Procedural History
[2] On October 14, 2008, Quality Foods executed a promissory note in favor of
Wells Fargo in the amount of $341,300, plus interest. In conjunction with the
promissory note, the Thompsons signed a guaranty agreement (collectively “the
Note”), personally guaranteeing repayment of the Note and offering as
collateral a first-position lien on real estate owned by Quality Foods and located
in Trafalgar, Indiana (the “Property”). Quality Foods failed to make payments
on the Note, and Wells Fargo brought an action against Appellants on the Note
under cause number 41D01-1205-MF-357 (“Cause 357”). In July 2013, the
court in Cause 357 found Appellants in default and awarded Wells Fargo a
$366,921.26 judgment.
1
Appellants also challenge the trial court’s denial of their motion to reconsider. However, Appellants have
failed to support this argument with citation to authority or recitation of the proper standard of review. As
such, they have waived this issue for consideration on appeal. See Weaver v. Niederkorn, 9 N.E.3d 220, 223
(Ind. Ct. App. 2014) (failure to present cogent argument with citation to authority results in waiver); see also
Ind. Appellate Rule 46(A)(8) (requiring that contentions in appellant’s brief be supported by cogent reasoning
and citations to relevant authority). In any event, because we affirm the trial court’s grant of summary
judgment in favor of Wells Fargo, and Appellants’ motion to reconsider was based solely on the grant of
summary judgment, we conclude that their argument does not merit separate consideration on appeal.
Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 2 of 10
[3] Quality Foods failed to pay real estate taxes on the Property. Therefore, a tax
sale was held in September 2014, and the Property was sold to Peter D.
Cleveland (“Cleveland”).
[4] During the redemption period, on January 9, 2015, Appellants entered into a
purchase agreement (“Purchase Agreement”) with Cleveland to purchase the
Property for $175,000. The Thompsons submitted the Purchase Agreement to
Wells Fargo for approval. Wells Fargo requested financial statements from the
Thompsons so that it could evaluate its position on the Purchase Agreement.2
The Thompsons did not submit financial statements, and Wells Fargo rejected
the Purchase Agreement.
[5] Due to the tax sale of the property, on January 29, 2016, the court in Cause 357
vacated its judgment without prejudice. Approximately nine months later, in
October 2016, Wells Fargo filed the present cause against Appellants for
collection of $341,300, plus interest due under the Note. Appellants filed a
general denial, and Wells Fargo filed a motion for summary judgment, with
designated materials. Appellants filed a motion in opposition to summary
judgment, which was followed by Wells Fargo’s reply. Following a hearing, the
trial court issued an order granting summary judgment in favor of Wells Fargo
2
Appellants cite as an issue of material fact whether Wells Fargo ever requested any financial information
from the Thompsons. However, designated emails from Appellants’ counsel and Cleveland to Wells Fargo’s
counsel indicate that Cleveland and the Thompsons were aware of the request. See Appellants’ App. Vol. 2 at
42–47.
Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 3 of 10
for $364,819.41. Appellants filed a motion to reconsider, which the trial court
denied.
[6] Appellants now appeal. Additional facts will be provided as necessary.
Discussion and Decision
[7] Appellants contend that the trial court erred in granting Wells Fargo’s motion
for summary judgment. We review a summary judgment de novo, applying the
same standard as the trial court and drawing all reasonable inferences in favor
of the nonmoving party. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). In
conducting our review, we consider only those matters that were designated at
the summary judgment stage. Haegert v. McMullan, 953 N.E.2d 1223, 1229 (Ind.
Ct. App. 2011). Summary judgment is appropriate if the designated evidence
shows that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law. Hughley, 15 N.E.3d at 1003;
Ind. Trial Rule 56(C).
[8] The moving party bears the initial burden of demonstrating the “absence of any
genuine issue of fact as to a determinative issue.” Williams v. Tharp, 914 N.E.2d
756, 761 (Ind. 2009). Then the burden shifts to the nonmoving party to “come
forward with contrary evidence” showing a genuine issue for the trier of fact.
Id. at 762. The nonmoving party cannot rest upon the allegations or denials in
the pleadings. Syfu v. Quinn, 826 N.E.2d 699, 703 (Ind. Ct. App. 2005). In
Hughley, our supreme court emphasized that the moving party bears an onerous
burden of affirmatively negating the opponent’s claim. 15 N.E.3d at 1003. This
Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 4 of 10
approach is based on the policy of preserving a party’s day in court, thus erring
on the side of allowing marginal cases to proceed to trial on the merits rather
than risking the short-circuiting of meritorious claims. Id. at 1003–04.
[9] In determining whether issues of material fact exist, we neither reweigh
evidence nor judge witness credibility. Peterson v. Ponda, 893 N.E.2d 1100, 1104
(Ind. Ct. App. 2008), trans. denied. Rather, we must accept as true those facts
established by the designated evidence favoring the nonmoving party. Brill v.
Regent Commc’ns, Inc., 12 N.E.3d 299, 309–10 (Ind. Ct. App. 2014), trans. denied.
A trial court’s grant of summary judgment arrives on appeal clothed with a
presumption of validity. Williams, 914 N.E.2d at 762. We may affirm a grant of
summary judgment on any legal basis supported by the designated evidence.
Harness v. Schmitt, 924 N.E.2d 162, 165 (Ind. Ct. App. 2010).
[10] This case involves interpretation of provisions in the Note and Purchase
Agreement. “Summary judgment is especially appropriate in the context of
contract interpretation because the construction of a written contract is a
question of law.” Vincennes Univ. ex rel. Bd. of Tr. of Vincennes v. Sparks, 988
N.E.2d 1160, 1165 (Ind. Ct. App. 2013) (citation omitted), trans. denied. When
interpreting an unambiguous contract, we give effect to the intentions of the
parties as expressed within the four corners of the instrument. Id. “A contract is
not ambiguous merely because the parties disagree as to its proper construction;
rather, a contract will be found to be ambiguous only if reasonable persons
would differ as to the meaning of its terms.” Id.Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 5 of 10
[11] Appellants maintain that Wells Fargo’s refusal to ratify the Purchase
Agreement between Appellants and tax-sale purchaser Cleveland amounts to an
unreasonable failure to mitigate its damages. The duty to mitigate damages is a
common-law duty requiring the nonbreaching party to make a reasonable effort
to decrease the damages caused by the breach. Fischer v. Heymann, 12 N.E.3d
867, 871 (Ind. 2014). The reasonableness of the nonbreaching party’s efforts
toward mitigation is a question of fact. Id. at 870.
[12] Before we can fully evaluate the issue of mitigation, we must consider relevant
contractual terms to determine the rights and duties of the parties. The Note,
drafted by Wells Fargo and signed by Appellants (with Quality Foods as
borrower and the Thompsons as guarantors), included the following waiver
provision:
3.5 Guarantor Waivers
Except as prohibited by applicable law, Guarantor waives any
right to require Bank to … (b) proceed against any Collateral or
any person, including Borrower, before proceeding against
Guarantor ….
Guarantor also waives any and all rights or defenses arising by
reason of … (d) any act of omission or commission by Bank
which directly or indirectly results in or contributes to the
discharge of Borrower or any other guarantor or surety, or the
Indebtedness, or the loss or release of any Collateral by operation
of law or otherwise.
…. Guarantor waives all rights and protections of any kind which
Guarantor may have for any reason which would affect or limit the
amount of any recovery by Bank from Guarantor following a nonjudicial
sale or judicial foreclosure of any real or personal property security for the
Indebtedness[.]
Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 6 of 10
Appellants’ App. Vol. 2 p. 23 (emphasis added).
[13] The Purchase Agreement between Appellants and Cleveland (with Wells Fargo
as a nonparty whose approval was required) included the following provision:
4.1 “Short Sale” of Real Estate. Seller’s obligations shall be
contingent upon execution of the Short Sale Agreement by Seller
and Wells Fargo Bank containing terms and conditions satisfactory
to Seller including but not limited to an agreement by Wells Fargo
Bank to waive any claim for enforcement and collection of the
Judgment (or any deficiency after application of the net proceeds of
Closing against the Judgment) against personal guarantors of the
loan that is the subject of the Judgment.
Appellee’s App. Vol. 2 p. 27 (emphases added).
[14] The Guarantor Waivers provision in the Note unambiguously states that the
Thompsons waive all rights and protections that would affect or limit the
amount of recovery by Wells Fargo following a sale of the Property. The Short
Sale provision in the Purchase Agreement unambiguously states that the short
sale is contingent upon execution of the agreement by the Thompsons and
Wells Fargo and includes Wells Fargo’s agreement to waive any claim for
enforcement and collection of the judgment or deficiency against the Thompsons.
[15] In support of their arguments, both parties rely on Fischer, a case involving the
seller’s mitigation of damages where the buyers breached a contract to purchase
real property. 12 N.E.3d at 867. The contract in Fischer authorized the buyers to
terminate their agreement to purchase the seller’s condo if the seller refused to
fix any “major defect” discovered during inspection but did not allow them to
Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 7 of 10
terminate if the seller refused to perform “routine maintenance” or make
“minor repairs.” Id. at 869. After the inspection, the buyers sent a demand to
the seller to fix an electrical problem or void the contract. Id. The seller did not
act immediately but, ten days later, paid an electrician $117 to fix the problem
by pushing the reset buttons on three outlets and changing a light bulb. Id. at
872. The buyers presented the seller with a tender of release. The seller refused
to sign the release and, two days before the original closing date, sued the
buyers for specific performance or damages. Id. at 869.
[16] After examining the buyers’ release demand and the seller’s duty to mitigate
damages, our supreme court addressed the buyers’ argument that the seller’s
duty to mitigate damages required that she surrender to their demand to fix the
problem or release them from the contract. Id. at 871–73. The Fischer court
disagreed, emphasizing that the seller’s duty to mitigate did not require her to
surrender to the very demand that generated the buyers’ breach. Id. at 872. The
court explained:
Just as breaching parties may not take advantage of their breach
to relieve them of their contractual duties, neither may they take
advantage of their breach to require non-breaching parties to
perform beyond their contractual duties. And just as non-
breaching parties may not place themselves in a better position
because of the breach, neither may breaching parties.
Holding otherwise would require sellers like Fischer to choose
between surrendering to the terms of a breach or forfeiting
damages whenever a buyer breaches an agreement by
Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 8 of 10
conditioning purchase on strict compliance with an unreasonable
demand.
Id. at 872–73 (citations omitted).3
[17] Here, Appellants assert that Wells Fargo’s duty to mitigate required it to
approve the Purchase Agreement between themselves and Cleveland. We
disagree. Wells Fargo was not a party to the Purchase Agreement.
Notwithstanding the fact that the duty to mitigate damages is an independent
common-law duty, the Appellants’ assertion is similar to the buyers’ assertion
in Fischer, where the breaching parties, under the banner of mitigation,
demanded release from the contract. Per the guarantor provision in the Note,
the Thompsons waived any rights/protections they might otherwise have to
limit Wells Fargo’s recovery for any deficiency following a sale of the property.
Conversely, the short sale provision in the Purchase Agreement between
Appellants and Cleveland would essentially operate as a waiver/release
provision preventing Wells Fargo from collecting any deficiency.
[18] In other words, reviewing the two provisions side-by-side, we conclude that the
Appellants improperly tried to gain an advantage from their own breach by
equating Wells Fargo’s rejection of their Purchase Agreement with a third-party
buyer to the failure of the Wells Fargo, the nonbreaching party, to mitigate
3
Appellants correctly observe that the Fischer court affirmed the trial court’s conclusion that the seller should
have mitigated her damages by accepting a lower offer received from a subsequent buyer one year after the
initial breach. 12 N.E.3d at 874.
Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 9 of 10
damages. Wells Fargo was not obligated to ratify the Purchase Agreement (and
thereby forfeit its right to a significant deficiency) as a means of mitigating its
damages. Appellants defaulted on their obligations to Wells Fargo, and Wells
Fargo is entitled to judgment as a matter of law.4 Based on the foregoing, we
conclude that the trial court did not err in granting Wells Fargo’s motion for
summary judgment. Accordingly, we affirm.
[19] Affirmed.
Vaidik, C.J., and Bailey, J., concur.
4
To the extent that Appellants attempt to create issues of material fact, i.e., whether Wells Fargo really
needed the financial information it requested from the Thompsons, or whether it was commercially
reasonable for Wells Fargo to “stonewall or otherwise scuttle the proposed Purchase Agreement over the
issue of the deficiency balance,” Appellants’ Br. at 13, we note that these assertions amount to speculation
and conjecture and that Appellants failed to designate affidavits or other evidence to support these claims. See
Brill, 12 N.E.3d at 309 (“Mere speculation cannot create questions of fact, meaning that ‘guesses, supposition
and conjecture are not sufficient to create a genuine issue of material fact to defeat summary judgment.’”)
(quoting Beatty v. LaFountaine, 896 N.E.2d 16, 20 (Ind. Ct. App. 2008)), trans. denied.
Court of Appeals of Indiana | Memorandum Decision 41A04-1704-CC-884 | November 15, 2017 Page 10 of 10