FOR PUBLICATION
ATTORNEY FOR APPELLANTS: ATTORNEYS FOR APPELLEE:
KENT HULL CARL A. GRECI
Indiana Legal Services, Inc. LARRY E. LaTARTE
South Bend, Indiana Faegre Baker Daniels LLP
South Bend, Indiana
IN THE
COURT OF APPEALS OF INDIANA
JEFF L. EWING and RENEE EWING, )
)
Appellants-Defendants- )
Supplemental Plaintiffs, )
Mar 10 2014, 9:59 am
)
HOUSEHOLD FINANCE CORPORATION III, )
)
Appellant-Defendant, )
)
vs. ) No. 50A03-1308-MF-327
)
U.S. BANK, N.A., AS TRUSTEE FOR THE, )
STRUCTURED ASSET SECURITIES CORP., )
SERIES 2005-GEL4, )
)
Appellee-Plaintiff- )
Supplemental Defendant )
APPEAL FROM THE MARSHALL CIRCUIT COURT
The Honorable Curtis D. Palmer, Judge
Cause No. 50C01-1103-MF-39
March 10, 2014
OPINION - FOR PUBLICATION
BRADFORD, Judge
CASE SUMMARY
Appellants-Defendants-Supplemental Plaintiffs Jeff and Renee Ewing (“the
Ewings”) appeal from the trial court’s denial of their motion to correct error, arguing that
the trial court erred in granting Appellee-Plaintiff-Supplemental Defendant U.S. Bank’s
motion for summary judgment in this foreclosure action. The Ewings claim their
designated evidence, consisting only of Jeff’s affidavit outlining the Ewings’ past attempts
to modify the mortgage loan at issue, establishes a genuine issue of material fact. Because
Jeff’s affidavit does not dispute the alleged default or otherwise support an ascertainable
defense to U.S. Bank’s foreclosure, we conclude that summary judgment was appropriate.
The Ewings also appeal from the trial court’s grant of U.S. Bank’s motion to dismiss
the Ewings’ supplemental complaint for failure to state a claim upon which relief could be
granted. In their supplemental complaint, the Ewings alleged that U.S. Bank failed to act
in good faith during the parties’ settlement discussions as allegedly required by the Indiana
Alternative Dispute Resolution Rules (“the A.D.R. Rules”). Finding that the A.D.R. Rules
did not govern the parties’ settlement discussions, we conclude that dismissal was
appropriate. The judgment of the trial court is affirmed.
FACTS AND PROCEDURAL HISTORY
U.S. Bank is the holder of a promissory note (“the Note”) executed by the Ewings
on February 7, 2005, promising to repay a loan used to finance the Ewings’ purchase of
their home (“the Property”). U.S. Bank is also the holder of a mortgage (“the Mortgage”)
executed by the Ewings that same day. The Mortgage secures the Note and encumbers the
Property.
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On March 21, 2011, U.S. Bank filed a complaint against the Ewings, seeking to
foreclose the Mortgage on the Property. The complaint alleged that the Ewings had
defaulted under the Note by failing to tender the required monthly payments. On August
30, 2011, U.S. Bank filed a motion for summary judgment on its complaint. On November
22, 2011, pursuant to Indiana Code section 32-30-10.5-9, the Ewings requested a
settlement conference, which the trial court scheduled for January 6, 2012. When the
Ewings failed to appear on January 6, 2012, the conference was rescheduled for February
17, 2012.
Following the February 17, 2012 settlement conference, the parties agreed to
continued settlement discussions but filed a settlement conference report stating, inter alia,
“The settlement conference has concluded and the requirement for a settlement conference
pursuant to IC § 32-30-10.5-1 et seq. is satisfied.” Appellee’s App. p. 87. The parties’
settlement discussions concerned the potential third party purchase of the Property.
However, the interested third party was unwilling to enter into an agreement while the
Property was encumbered by the Mortgage, and U.S. Bank was unwilling to release the
Mortgage on the Property until the Ewings satisfied the Note. As a result, the parties’
continued settlement discussions stalled.
On December 3, 2012, U.S. Bank filed a motion to proceed with its foreclosure
action, which motion the trial court granted. A hearing on U.S. Bank’s pending motion for
summary judgment was held on March 19, 2013, during which the Ewings designated an
affidavit signed by Jeff as establishing a genuine issue of material fact. Jeff’s affidavit
stated:
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5. Throughout the history of the residential mortgage loan at issue, I
assumed the party which now appears to have been the servicer was the
real party in interest and I assumed that the party which now appears to
have been the servicer owned the loan as an assignee. I did not know that
the party which now appears to have been the servicer as the agent or
servicer of the present plaintiff or any other party.
6. In dealing with the party which now appears to have been the servicer, I
made repeated requests for modification of the loan since January 2010.
The party which now appears to have been the servicer at first seemed to
agree to my proposal for modification, and then requested more
documentation. The party which now appears to have been the servicer
lost documents I sent, including income tax returns. The party which now
appears to have been the servicer claimed that it did not receive other
documents I sent in connection with my proposal to modify the loan.
Appellant’s App. p. 15.
Also at the March 19, 2013 hearing, the parties revived their discussion about a
potential third party purchase of the Property. The parties formulated a plan whereby the
interested third party would tender funds to the Clerk of the Court in the amount necessary
to pay off the Note. The Clerk would hold the funds until U.S. Bank released the Mortgage,
at which point they would be transferred to U.S. Bank. Ultimately, the trial court took U.S.
Bank’s motion for summary judgment under advisement and ordered U.S. Bank to provide
the Ewings with the exact payoff amount. U.S. Bank complied, but the Ewings disputed
the amount’s calculation. On May 1, 2013, the trial court granted summary judgment in
favor of U.S. Bank.
Prior to the entry of summary judgment, on March 15, 2013, the Ewings filed a
supplemental complaint against U.S. Bank, alleging that U.S. Bank failed to act in good
faith during the parties’ settlement discussions. The claim asserted in the supplemental
complaint relied on a duty arising under the A.D.R. Rules. On May 31, 2013, U.S. Bank
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filed a Trial Rule 12(B)(6) motion to dismiss the Ewings’ supplemental complaint. That
same day, the Ewings filed a motion to correct error with respect to the trial court’s order
granting summary judgment. A hearing on both motions was held on July 23, 2013, during
which the trial court denied the Ewings’ motion to correct error. On August 14, 2013, the
trial court granted U.S. Bank’s motion to dismiss the Ewings’ supplemental complaint.
DISCUSSION AND DECISION
I. Whether the Trial Court Erred in Granting U.S. Bank’s
Motion for Summary Judgment
The Ewings argue that the trial court erred in denying their motion to correct error,
claiming summary judgment in favor of U.S. Bank was inappropriate. Summary judgment
is appropriate only where “the designated evidentiary matter shows that there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a matter
of law.” Ind. Trial Rule 56(C). In conducting our review, “We construe all evidence in
favor of the party opposing summary judgment, and we resolve all doubts as to the
existence of a material issue against the moving party.” McEntee v. Wells Fargo Bank,
N.A., 970 N.E.2d 178, 181 (Ind. Ct. App. 2012).
In moving for summary judgment, U.S. Bank bore the initial burden of showing that
no genuine issues of material fact exist and that it is entitled to judgment as a matter of law.
See Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1270 (Ind. 2009). The
Ewings do not contest that U.S. Bank made such a showing. The burden, therefore, shifted
to the Ewings to designate evidence showing the existence of a genuine issue of material
fact. Id. Citing our decision in McEntee, the Ewings claim Jeff’s affidavit satisfied this
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burden. We disagree.
In McEntee, we held there to be a genuine issue of material fact as to a mortgagor’s
default where he “asserted as a defense to the foreclosure that [the mortgagee] improperly
handled his payments on the note, and he designated evidentiary material in support of this
position.”1 970 N.E.2d at 183. Specifically, the mortgagor in McEntee submitted letters
he sent to the mortgagee explaining how payments enclosed therein should be processed.
Id. Unlike the evidence designated in McEntee, Jeff’s affidavit does not dispute the
Ewings’ alleged failure to tender the required monthly payments. The affidavit merely
outlines the Ewings’ past attempts to modify the loan, which, without more, does not
establish a genuine issue of material fact as to their alleged default or otherwise constitute
an ascertainable defense to U.S. Bank’s foreclosure. Summary judgment in favor of U.S.
Bank was therefore appropriate.
II. Whether the Trial Court Erred in Granting U.S. Bank’s
Motion to Dismiss
The Ewings also argue that the trial court erred in granting U.S. Bank’s Trial Rule
12(B)(6) motion to dismiss the Ewings’ supplemental complaint for failure to state a claim
upon which relief can be granted. “A motion to dismiss for failure to state a claim tests the
legal sufficiency of the complaint, not the facts supporting it,” and we review a trial court’s
decision thereon de novo. Allen v. Clarian Health Partners, Inc., 980 N.E.2d 306, 308
(Ind. 2012).
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We simultaneously determined that the mortgagee failed to designate adequate evidence in
support of its motion for summary judgment. McEntee, 970 N.E.2d at 183.
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In their supplemental complaint, the Ewings alleged that U.S. Bank failed to act in
good faith during the parties’ settlement discussions. Specifically, the Ewings claimed
U.S. Bank violated A.D.R. 2.1, which provides, inter alia, that “[p]arties and their
representatives are required to mediate in good faith….”2 The parties’ settlement
discussions, however, were not a “mediation” under the A.D.R. Rules. Mediation is “a
process in which a neutral third person, called a mediator, acts to encourage and to assist
in the resolution of a dispute between two (2) or more parties.” A.D.R. 1.3(A).
Here, the trial court did not order mediation pursuant to A.D.R. 2.2. “[I]f the trial
court does not enter an order for mediation, the parties are free to shape a settlement
agreement as they wish.” In re Paternity of K.R.H., 784 N.E.2d 985, 990 (Ind. Ct. App.
2003) (holding A.D.R. Rules did not govern parties’ settlement negotiations despite their
characterization as “informal mediation”). Moreover, as the Ewings acknowledge in their
Appellant’s Brief, “The parties … did not engage a mediator.” Appellant’s Br. p. 15.
We further note that the A.D.R. Rules do not govern “settlement negotiations.”
A.D.R. 1.2 lists “(1) Mediation, (2) Arbitration, (3) Mini-Trials, (4) Summary Jury Trials,
and (5) Private Judges” as the only “[a]lternative dispute resolution methods which are
governed by these rules[.]” Cf. A.D.R. 1.1 (listing “settlement negotiations” as a
recognized method of alternative dispute resolution). Additionally, the record reveals no
evidence that the parties agreed that the A.D.R. Rules would govern their settlement
discussions. See Vernon v. Acton, 732 N.E.2d 805, 807-08 (Ind. 2000) (acknowledging
2
The Ewings mistakenly cite to A.D.R. 2.10, which authorizes certain sanctions against a party
“who fails to comply with these mediation rules….”
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parties’ agreement that A.D.R. Rules govern pre-suit mediation). Because the A.D.R.
Rules did not govern the parties’ settlement discussions, the trial court did not err in
dismissing the Ewings’ supplemental complaint for failure to state a claim.
The judgment of the trial court is affirmed.
MATHIAS, J., and PYLE, J., concur.
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