Butler Terrace Homeowners Association, Inc. v. Ranee S. Rathee (mem. dec.) ( 2018 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), FILED
this Memorandum Decision shall not be
Aug 30 2018, 10:07 am
regarded as precedent or cited before any
court except for the purpose of establishing CLERK
Indiana Supreme Court
the defense of res judicata, collateral Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT APPELLEE – PRO SE
Margaret M. Christensen Ranee S. Rathee
Mark R. Molter Indianapolis, Indiana
Bingham Greenebaum Doll LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Butler Terrace Homeowners August 30, 2018
Association, Inc., Court of Appeals Case No.
Appellant-Cross-claim Plaintiff, 18A-MF-675
Appeal from the Marion Superior
v. Court
The Honorable David J. Dreyer,
Ranee S. Rathee, Judge
Appellee-Cross-claim Defendant. Trial Court Cause No.
49D10-1504-MF-14333
Najam, Judge.
Statement of the Case
[1] The Butler Terrace Homeowners Association, Inc. (“the HOA”) appeals the
trial court’s order in which the court granted a motion for relief from judgment
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filed by Ranee S. Rathee, which modified the court’s prior entry of summary
judgment for the HOA.1 The HOA raises two issues for our review, which we
restate as follows:
1. Whether the trial court abused its discretion under Indiana
Trial Rule 60(B) when it granted Rathee’s motion for relief from
judgment.
2. Whether the HOA preserved for appellate review its
argument that the court’s modified order, which stayed a pending
sheriff’s sale on Rathee’s condominium in order to give the
parties an opportunity to reach a financial settlement, violated
Indiana’s horizonal property laws, Ind. Code §§ 35-25-1-1 to -9-2
(2018), or Indiana’s mortgage foreclosure statutes, I.C. §§ 32-29-
7-0.2 to -14.
[2] We affirm.
Facts and Procedural History
[3] In April of 2015, JPMorgan Chase Bank, N.A. (“Chase”) filed a complaint
against Rathee to foreclose on its mortgage lien on Rathee’s condominium in
Indianapolis. The complaint named the HOA and other lienholders junior to
Chase as defendants along with Rathee. The HOA cross-claimed against
Rathee for unpaid dues. As of June 1, 2015, the HOA alleged that Rathee
owed $1,219.60 in unpaid dues, late fees, and interest. The HOA noted that,
pursuant to its rights under the bylaws to which Rathee’s condominium was
1
JPMorgan Chase Bank, the original plaintiff below, does not participate in this appeal.
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subject, the HOA was also entitled to recover attorney’s fees and costs
associated with the collection of the unpaid dues; that the sums owed to the
HOA by Rathee were a lien against the condominium on which the HOA was
entitled to foreclose; and that the HOA was also entitled to a personal judgment
against Rathee for all unpaid amounts.
[4] Rathee hired bankruptcy counsel and, on three separate occasions, filed for
bankruptcy. However, the bankruptcy court eventually dismissed each of
Rathee’s three cases, never approved a final payment plan, and barred Rathee
“from filing another bankruptcy case” for 180 days following its last dismissal.
Appellant’s App. Vol. 2 at 165. The bankruptcy court also lifted its stay on the
foreclosure action in the trial court, and, on June 20, 2016, the trial court
entered judgment for Chase and directed Rathee’s condominium be sold at a
sheriff’s sale.
[5] In August, before a sheriff’s sale of the condominium had occurred, the HOA
moved for summary judgment against Rathee for her unpaid dues to the HOA.
Because Rathee’s bankruptcy counsel did not represent her in the trial court, 2
the HOA mailed its motion for summary judgment to Rathee’s home address. 3
2
There is no dispute that Rathee had notice of the complaint and cross-claim against her.
3
The HOA asserts on appeal that it mailed its motion for summary judgment to Rathee by way of certified
mail, but the certified mail receipts included in the record on appeal do not demonstrate an August 2016
mailing date. See Appellant’s App. Vol. 2 at 166-68. Rather, the receipts suggest that the HOA did not send
any of the summary judgment documents to Rathee by way of certified mail until July of 2017, and it is not
clear from the record that the motion for summary judgment itself was sent at that time. In any event, insofar
as the trial court may have based its modification order on Rathee’s purported lack of notice, we do not
consider it.
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In its motion, the HOA sought $12,886.13 for unpaid dues and interest. The
HOA also sought an additional sum for attorney’s fees and costs. The HOA
requested a personal judgment against Rathee along with any proceeds that
remained from the sheriff’s sale to pay it as a junior lienholder. Rathee did not
respond to the HOA’s motion for summary judgment and, on September 20,
the trial court granted the HOA’s motion.4
[6] However, in February of 2017, Chase informed the court that Rathee had paid
her outstanding debt to Chase in full. As such, Chase moved to dismiss its
complaint and the June 2016 decree of foreclosure. The court granted Chase’s
motion and ordered that the HOA’s claims “remain on the court’s active
docket” as “pending.”5 Id. at 127.
[7] In July the court set a summary judgment briefing schedule on the HOA’s
August 2016 motion for summary judgment. The record on appeal does not
reflect that the HOA objected or otherwise informed the court of the September
2016 order granting the HOA’s motion for summary judgment. Instead, the
court and the HOA proceeded as if the August motion for summary judgment
was still pending.
4
We note that the CCS does not reflect the trial court’s September 20 grant of summary judgment for the
HOA. See id. at 11-12, 120.
5
The HOA did not object to the court’s February order to vacate the sheriff’s sale.
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[8] Thereafter, the HOA filed a supplemental designation of evidence in which it
alleged that Rathee owed the HOA $27,349.82 as of June 13, 2017. That
amount included $9,736.50 in “legal fees and expenses” related to the
foreclosure action as well as two of Rathee’s three bankruptcy cases. Id. at 132.
The amount also included $5,760 in property manager fees, which were
described as fees “incurred . . . due to the work and efforts performed . . . in
dealing with the collection of the unpaid [d]ues . . . .”6 Id.
[9] Rathee again did not respond to the summary judgment proceedings and, on
October 2, the trial court entered summary judgment for the HOA. In
particular, the court granted the HOA a personal judgment against Rathee in
the amount of $27,349.82 as of June 13 plus any additional amounts that
accrued thereafter in accordance with the HOA bylaws; the court foreclosed the
HOA’s lien on the condominium; and the court ordered the condominium to be
sold at a sheriff’s sale. The condominium was subsequently scheduled to be
sold on January 17, 2018.
[10] On December 11, 2017, Rathee, proceeding pro se, filed a document she
captioned as an “Affidavit.” Id. at 151. In that document, she stated that she
had been represented by attorneys in the bankruptcy cases and did “not
6
Although the HOA defends its assessments of fees and costs on appeal, it does not argue that the trial court
abused its discretion when it later modified the summary judgment order to reduce the sum Rathee owed to
the HOA. See Appellant’s Br. at 36-40.
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understand why” they were not notified7 of the summary judgment proceedings
in the trial court. Id. at 152. She then stated that, although she “agree[d] I owe
[the HOA] home owners dues, late fees, etc., I do not agree with the amount of
$27,349.82.” Id. And Rathee requested that the court “STOP the
FORECLOSURE SALE.” Id. (capitalization in original). The HOA filed a
response and characterized Rathee’s “Affidavit” as a motion for relief from
judgment under Indiana Trial Rule 60(B). See id. at 160.
[11] The court held oral argument on Rathee’s motion on January 4, 2018. During
that argument, counsel for the HOA asserted that the amount Rathee currently
owed the HOA was now in excess of $45,000. Rathee informed the court that
she “want[ed] to keep this property” and that she could immediately pay
$10,000 to the HOA. Tr. at 10. However, while she also indicated that she
would be willing and able to pay the summary judgment amount of $27,349.82,
she disputed that that amount was an accurate assessment of the amount she
owed the HOA. She further declared that the rate at which the HOA’s fees
against her were escalating was “arbitrar[y]” and “like extortion.” Id. at 12.
[12] On January 9, the court granted Rathee’s motion for relief from judgment
under Indiana Trial Rules 60(B)(1) and 60(B)(8)8 and modified the October
7
She also claimed that she was not notified, but we do not consider that assertion on appeal.
8
The court also cited Trial Rule 60(B)(4) in its order, but as Rathee had not been served by publication we
agree with the HOA that that provision was plainly inapplicable to Rathee’s motion. See Ind. Trial Rule
60(B)(4). And as we decide this appeal under Trial Rule 60(B)(1), we need not consider the court’s exercise
of discretion under Rule 60(B)(8).
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2017 order on summary judgment. In particular, the court modified the
October 2017 order on summary judgment as follows:
6. Rathee adequately shows . . . circumstances sufficient to set
aside current judgment under Trial Rule 60(B)(1) . . . and (8).
7. The record shows the following amounts are due and owing at
this time:
a. Unpaid dues $7480.00
b. Special assessment [$]1098.00
c. Late fees [$]2550.00
d. Interest [$]3702.00
8. The record fails to sufficiently show basis for claiming
property manager fees.
9. The records fails to sufficiently show basis for claiming
attorney’s fees for as many as eight (8) attorneys in this matter,
nor propriety of claiming attorney’s fees for bankruptcy matters.
10. [The HOA’s] most recent attorney’s fees affidavit . . . claims
$11,126.50.
11. Under Trial Rule 60(B)(8), it is just to modify the judgment
to include the amounts in Paragraph 6[] and $10,000 in
attorney’s fees, equaling $24,830.00.
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12. Sheriff’s sale is vacated and stayed until further order of the
Court.
13. Rathee shall immediately pay $10,000 to [the HOA].
14. The matter is referred for settlement conference under the
Indiana mortgage foreclosure procedure.
Appellant’s App. Vol. 2 at 16-17.
[13] Following the court’s modification of the order on summary judgment, the
HOA filed a motion to correct error. In that motion, the HOA argued for the
first time that Rathee was not entitled to her motion for relief from judgment
because she had unclean hands. The HOA further argued, again, for the first
time, that granting the relief requested by Rathee and staying the sheriff’s sale
was contrary to law. The HOA’s motion to correct error was deemed denied
thereafter, and this appeal ensued.
Discussion and Decision
Issue One: Indiana Trial Rule 60(B)(1)
[14] On appeal, the HOA first asserts that the trial court abused its discretion when
it granted Rathee’s motion for relief from judgment under Indiana Trial Rule
60(B)(1). Trial Rule 60(B) provides, in relevant part, that “[o]n motion and
upon such terms as are just the court may relieve a party . . . from a
judgment . . . for the following reasons: (1) mistake, surprise, or excusable
neglect . . . .” A movant for relief from judgment under Trial Rule 60(B)(1)
“must allege a meritorious claim or defense.”
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[15] As we have explained:
A Trial Rule 60(B)(1) motion does not attack the substantive,
legal merits of a judgment, but rather addresses the procedural,
equitable grounds justifying the relief from . . . a judgment.
Moreover, a Trial Rule 60(B)(1) motion is addressed to the trial
court’s equitable discretion, with the burden on the movant to
affirmatively demonstrate that relief is necessary and just.
Kmart Corp. v. Englebright, 719 N.E.2d 1249, 1254 (Ind. Ct. App. 1999)
(citations omitted), trans. denied. In light of the equitable nature of a request
under Trial Rule 60(B)(1), our standard of review is deferential:
Our standard of review is limited to determining whether the trial
court abused its discretion. An abuse of discretion may occur if
the trial court’s decision is clearly against the logic and effect of
the facts and circumstances before the court, or if the court has
misinterpreted the law. . . . The trial court’s discretion is
necessarily broad in this area because any determination of
excusable neglect, surprise, or mistake must turn upon the unique
factual background of each case. Moreover, no fixed rules or
standards have been established because the circumstances of no
two cases are alike. . . . Furthermore, reviewing the decision of
the trial court, we will not reweigh the evidence or substitute our
judgment for that of the trial court.
Id. at 1253 (citations omitted).
[16] Here, the HOA contends that Rathee failed to show mistake, surprise, or
excusable neglect, and that she further failed to show a meritorious defense.
The HOA also asserts that equity is unavailable to Rathee as she has unclean
hands. We address each argument in turn.
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Mistake, Surprise, or Excusable Neglect
[17] We first consider the HOA’s argument that Rathee failed to satisfy Trial Rule
60(B)(1). Much of the HOA’s argument on this issue flows from its reading of
Rathee’s motion for relief from judgment, which the HOA reads to be premised
on a claim that she lacked notice, to which the HOA responds by arguing that it
satisfied its notice requirements under our trial rules. See Appellant’s Br. at 23-
27. The HOA further addresses a comment in Rathee’s motion in which
Rathee stated that she thought her settlement with Chase resolved all pending
proceedings, which obviously that settlement did not do.
[18] But the HOA fails to consider Rathee’s argument to the trial court that Rathee
believed her bankruptcy counsel was also representing her in the trial court
proceedings. In particular, Rathee asserted that she did not understand why her
bankruptcy counsel had not been notified of the trial court proceedings, and a
reasonable inference from that argument is that she thought that her bankruptcy
counsel was representing her in the trial court, which is why she did not
personally respond. Further, there is no dispute that the bankruptcy
proceedings and the trial court proceedings were intimately intertwined, despite
the apparently limited representation of Rathee’s bankruptcy counsel.
[19] In granting Rathee’s motion for relief from judgment under Trial Rule 60(B)(1),
the trial court broadly based its decision on Rathee having shown
“circumstances sufficient” to justify that relief. Appellant’s App. Vol. 2 at 17.
We are obliged to defer to the trial court’s exercise of its equitable discretion
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under Trial Rule 60(B)(1) and are similarly obliged to construe the record on
appeal in the manner most favorable to the trial court’s judgment. See Kmart,
719 N.E.2d at 1254. In light of Rathee’s argument to the trial court, our
standard of review, and the HOA’s failure to consider this basis for the trial
court’s judgment in its brief on appeal, we cannot say that the trial court’s
decision is clearly against the logic and effect of the facts and circumstances
before the court or that the trial court abused its discretion when it concluded
that Rathee had shown mistake, surprise, or excusable neglect under Trial Rule
60(B)(1).
Meritorious Defense
[20] The HOA further asserts that, even if Rathee did demonstrate mistake, surprise,
or excusable neglect, she failed to demonstrate a meritorious defense. Trial
Rule 60(B)’s requirement that the movant demonstrate a meritorious defense is
not a requirement that the movant “prove absolutely” her defense. State v. Van
Keppel, 583 N.E.2d 161, 163 (Ind. Ct. App. 1991), trans. denied. Rather, a
meritorious defense is “one that would lead to a different result if the case were
tried on the merits.” Seleme v. JP Morgan Chase Bank, N.A., 982 N.E.2d 299, 304
(Ind. Ct. App. 2012) (quotation marks omitted), trans. denied.
[21] The HOA’s entire argument on this issue is that “Rathee not only failed to
advance a meritorious defense[] but actually conceded liability” when she
acknowledged that she owed some measure of damages to the HOA.
Appellant’s Br. at 28 (emphases removed). We conclude that the HOA’s
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argument on this issue is not supported by cogent reasoning. See Ind. Appellate
Rule 46(A)(8)(a). Rathee never conceded the total sum sought by the HOA;
indeed, Rathee unambiguously asserted that she “do[es] not agree with the
amount” requested by the HOA in its motion for summary judgment, to say
nothing of the HOA’s request for more than $45,000 at the January oral
argument. Appellant’s App. Vol. 2 at 152. The HOA further does not address
the fact that the trial court, in reconsidering the HOA’s evidence designated in
support of summary judgment, reduced the amount of the judgment against
Rathee, which produced a different result than the order on summary
judgment. We conclude that the HOA failed to preserve its argument for our
review. See App. R. 46(A)(8)(a).
Unclean Hands
[22] We next turn to the HOA’s argument that equitable relief under Trial Rule
60(B) is not available to Rathee because she has unclean hands. As our
Supreme Court has said:
The doctrine of unclean hands requires that he who seeks equity
come into court with clean hands and closes the door of a court
of equity to one tainted with inequitableness or bad faith relative
to the matter in which he seeks relief, however improper may
have been the behavior of the [other party].
Woodruff v. Ind. Fam. & Soc. Servs. Admin., 964 N.E.2d 784, 792 n.5 (quotation
marks and ellipses omitted).
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[23] But the HOA did not present this argument to the trial court in response to
Rathee’s motion for relief from judgment. See Appellant’s App. Vol. 2 at 157-
61; Tr. at 3-6, 14-16. Rather, the HOA raised this purported issue for the first
time in a motion to correct error following the trial court’s modification of the
summary judgment order. See Appellant’s App. Vol. at 212. As such, the
HOA’s argument was not timely.
[24] Indiana’s case law has long made clear that a party who fails to raise arguments
“in a timely manner” and “[i]nstead . . . waited until [it] filed [a] motion to
correct error to raise them” waives those arguments for our review. Brown v.
Lunsford, 63 N.E.3d 1057, 1061 (Ind. Ct. App. 2016) (citing Troxel v. Troxel, 737
N.E.2d 745, 752 (Ind. 2000)). Accordingly, we hold that the HOA has waived
its argument under the doctrine of unclean hands.
Issue Two: Whether The Trial Court Violated
Indiana Law When It Stayed The Sheriff’s Sale
[25] We thus turn to the HOA’s argument that the trial court violated Indiana law
when it stayed the pending sheriff’s sale. According to the HOA, the trial
court’s order is contrary to Indiana’s horizontal property laws because, “[b]y
vacating the Sheriff’s sale, the trial court violated the HOA’s contractual right to
foreclose and impermissibly attempted to rewrite the parties’ contract.”
Appellant’s Br. at 32-33. The HOA further asserts that the trial court’s order “is
entirely inconsistent with the statutory scheme governing foreclosure . . . .” Id.
at 33-34.
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[26] The HOA’s statutory arguments are not properly before us on appeal. The
HOA did not raise its statutory arguments to the trial court until its motion to
correct error, even though in her motion for relief from judgment Rathee
expressly asked the court to “STOP the FORECLOSURE SALE.” Appellant’s
App. Vol at 152 (capitalization in original). As such, the HOA’s statutory
arguments were untimely in the trial court and are not available for appellate
review. Troxel, 737 N.E.2d at 752.
Conclusion
[27] In sum, we affirm the trial court’s judgment.
[28] Affirmed.
Crone, J., and Pyle, J., concur.
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