Mathis Franklin, Jr. v. Bayview Loan Servicing, LLC, and M&M Mortgage, Inc. (mem. dec.)

MEMORANDUM DECISION
FILED
Pursuant to Ind. Appellate Rule 65(D), this
Aug 30 2018, 9:09 am
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the CLERK
Indiana Supreme Court
purpose of establishing the defense of res judicata, Court of Appeals
and Tax Court
collateral estoppel, or the law of the case.
APPELLANT PRO SE ATTORNEYS FOR APPELLEE BAYVIEW
Mathis Franklin, Jr. LOAN SERVICING, LLC
Lorain, Ohio Marcel C. Duhamel
Vorys, Sater, Seymour and Pease LLP
Cleveland, Ohio
John S. (Jay) Mercer
Mercer Belanger, P.C.
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE M&M
MORTGAGE, INC.
Carly A. Brandenburg
Abigail Lambert
Eichhorn & Eichhorn, LLP
Hammond, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Mathis Franklin, Jr., August 30, 2018
Appellant-Plaintiff, Court of Appeals Case No.
17A-PL-3058
v. Appeal from the Lake Superior
Court
Bayview Loan Servicing, LLC, The Honorable John M. Sedia,
and M&M Mortgage, Inc., Judge
Appellees-Defendants. Trial Court Cause No.
45D01-1505-PL-42
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Bradford, Judge
Case Summary
[1] In 2005, Mathis Franklin, Jr., obtained a loan which was secured by real
property he owned in Gary (“the Property”). Rights to collect the loan and the
associated mortgage were eventually assigned to Bayview Loan Servicing,
LLC. Bayview had a contract with M&M Mortgage, Inc., to inspect property
and protect collateral. M&M subcontracted its obligations to Bayview to
Advanced Property Preservation, Inc. In 2012, Franklin failed to make
required loan payments, resulting in Bayview filing a foreclosure action in
December of 2013. In February and March of 2014, Advanced entered the
Property, either securing and winterizing it (according to Bayview and M&M)
or causing significant damage (according to Franklin).
[2] In May of 2005, Franklin filed suit against Bayview and eventually M&M,
making several claims all based on Advanced’s alleged vandalism of the
Property. Bayview and M&M moved for summary judgment contending, inter
alia, that unrebutted designated evidence showed that Advanced was an
independent contractor as to both of them, thereby shielding Bayview and
M&M from liability. The trial court entered summary judgment in favor of
Bayview and M&M, an entry that Franklin contends was erroneous. Because
we disagree, we affirm.
Facts and Procedural History
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[3] In 1976, Franklin purchased the Property, located at 801 East 49th Avenue in
Gary and obtained a license that allowed him to operate a retail establishment,
a restaurant, and/or a bar and sell packaged liquor on the site. On August 23,
2005, Franklin executed an adjustable rate promissory note (“the Note”) in
favor of InterBay Funding, LLC, secured by a mortgage on the Property (“the
Mortgage”). On August 28, 2006, InterBay assigned the Mortgage to Bayview,
which currently has physical possession of the Note. The Mortgage authorizes
Bayview to enter the Property and take any actions it deems necessary to
protect its interest in the Property upon an event of default, which includes
failing to make payments pursuant to the Note.
[4] Bayview entered into a service agreement dated April 1, 2011 (“the Service
Agreement”) with M&M, in which M&M agreed to inspect and take actions to
protect Bayview’s interest in collateral. Franklin defaulted on the Note by
failing to make the payment due November 1, 2012. On June 17, 2013, M&M
subcontracted its obligations under the Service Agreement to Advanced
pursuant to a vendor contract (“the Vendor Contract”). Bayview has had no
contractual relationship with Advanced at any point.
[5] On December 20, 2013, Bayview filed a foreclosure action against Franklin.
On February 10, 2014, Advanced retained an independent locksmith and
entered and inspected the Property. Advanced allegedly performed work to
winterize and preserve the Property on February 24, February 27, February 28,
March 3, March 7, March 8, and March 11, 2014. On March 28, 2014,
Franklin petitioned for Chapter 13 bankruptcy in the United States Bankruptcy
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Court for the Northern District of Indiana. Advanced did not enter the
Property after Franklin filed his bankruptcy petition.
[6] On May 5, 2015, Franklin filed suit against Bayview. On November 6, 2015,
Franklin filed an amended action adding M&M to the suit, alleging breach of
contract by Bayview and violation of the Indiana Crime Victims Relief Act,
negligence, conversion, and trespass to chattel by Bayview and M&M. All
claims are based on the damage allegedly caused by Advanced when it entered
the Property in February and March of 2014. On June 5, 2017, and July 27,
2017, respectively, M&M and Bayview moved for summary judgment.
[7] Bayview designated an affidavit from its Vice President of Litigation Jo Ann
Snyder in which she averred, inter alia, that Bayview authorized M&M to
secure the Property but exerted no control over its work and played no role in
selecting, training, or supervising any of the persons M&M chose to engage.
Bayview also designated the Service Agreement, which provides, in part, as
follows:
2. Services to Be Performed. The Service Provider shall perform
the services described in Exhibit A (the “Services”) as an
independent contractor on an exclusive basis. Unless stated
explicitly, nothing contained herein shall be deemed to create
any partnership, joint venture, or relationship of principal and
agent between the Parties hereto or any of their affiliates or
subsidiaries, or to provide either Party with any right, power
or authority, whether express or implied to create any such
duty or obligation on behalf of the other Party. Such Services
shall be rendered in a professional manner and shall meet
acceptable quality measurements, performance levels, and
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other standards as the Parties may agree to in writing from
time to time.
Bayview’s App. Vol. II pp. 81–82.
[8] M&M designated an affidavit from its Vice President of Operations Armando
Sanz in which he averred, inter alia, that it hired Advanced as an independent
contractor to perform property inspections, preservation, and winterization, and
that M&M did not exert control over Advanced’s methods and played no role
in selecting, training, supervising, inspecting, or otherwise managing the
persons Advanced chose to engage for its work. M&M also designated an
affidavit from Advanced’s co-owner Paul Strout,1 in which he averred that
Advanced was an independent contractor as to M&M and that M&M did not
exert any control over Advanced’s methods of performing its work.
[9] Finally, M&M designated the Vendor Contract, which provides, in part, as
follows:
1. INDEPENDENT CONTRACTOR. Vendor and M&M
agree that at all times Vendor is operating as an independent
contractor. Nothing in this Agreement is intended, nor shall
anything in this Agreement be construed, to create a joint
venture, partnership, agency, or employment relationship
between Vendor and M&M. Vendor shall conduct Vendor
business under Vendor’s own name as an independent
contractor, and shall not hold Vendor out as an agent,
partner, or employee of M&M. Vendor shall have no right,
power, or authority to create any contract or obligation,
1
Strout also averred that Advanced had closed its doors in October of 2016.
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whether express or implied, on behalf of, in the name of, or
binding upon us, our customer[s], their investor[s] and/or its
agents and/or assigns.
Bayview’s App. Vol. II pp. 92–93. On August 25, 2017, Franklin filed a motion
in opposition to Bayview’s and M&M’s summary judgment motions. Although
the record is not entirely clear, Franklin appears to have designated and
attached to this motion an affidavit sworn by him on August 22, 2017, which
included the following averments:
21. There is a genuine issue between the parties as to the
following facts material to this action:
A. The “Vendor Contract and Master Agreement”
executed between M&M and Advanced fails to show that
M&M lacked the authority to control the details of
Advanced’s work as said agreement is clearly redacted.
B. M&M exerted control over Advanced with respect to
the details of performing this work.
C. The Gary Property has been continually in business
and never been vacant or abandoned.
D The electric water and gas utilities to the Gary Property
have never been shut off.
E. The acts performed by Advanced caused injury to
others because precautions were not taken.
F. The acts performed by Advanced constituted criminal
mischief, violation of the automatic stay in my
bankruptcy, breach of contract, negligence, and trespass to
chattels.
G. Advanced’s actions were, at least for a time,
authorized by M&M to preserve properties, related to the
service for which it was employed in preserving properties,
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and motivated to an extent by M&M[‘s] interests, and
Bayview Loan Services’ interests.
Appellant’s App. Vol. II p. 103.
[10] On November 29, 2017, the trial court held a hearing on the summary
judgment motions and granted them the next day in an order that provides, in
part, as follows:
Bayview and M&M have filed Motions for Summary Judgment
against Franklin, arguing that any issues related to the [Property]
were brought about by Advanced, who as an independent
contractor was solely liable for any trespass, theft or damage.
….
M&M and Bayview have met the initial burden of demonstrating
the absence of a genuine issue of material fact as their designated
materials show that Advanced was, indeed, an independent
contractor, had broad discretion to control the work it performed,
and was not trained, selected nor supervised by M&M or
Bayview. A principal cannot be held liable for the negligence or,
for that matter, intentional acts of an independent contractor,
Bagley v. Insight Communications Co., L.P., 658 N.E.2d 584 (Ind.
1995); Prest-O-Lite Co. v. Skeel, 106 N.E. 365 (Ind. 1914); City of
Logansport v. Dick, 70 Ond. 65 (Ind[.] 1880); Eagle Machine Co.,
Inc. v. American District Telegraph Co., 140 N.E.2d 756 (Ind. Ct.
App. 1957).
Having come forward and demonstrated the absence of a genuine
issue of material fact that Advanced, as an independent
contractor, is solely liable for any damages that Franklin may
have suffered, Franklin must come forward with contrary
evidence showing an issue for the trier of fact.
He has come forward with argument as to applicability of the five
exceptions to the general rule set forth in Bagley, id.: (1) where
the contract requires the performance of intrinsically dangerous
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work; (2) where the principal is by law or contract charged with
performing the specific duty; (3) where the act will create a
nuisance; (4) where the act to be performed will probably cause
injury to others unless due precaution is taken; and (5) where the
act to be performed is illegal, 658 N.E.2d at 586; and speculation
over whether or not Advanced was merely deemed to be an
independent contractor by M&M but, in reality, its employees
were employees of M&M who were subject to M&M’s total
control, thereby subjecting M&M to liability for their wrongful
acts.
However, Franklin offers no designated materials that would
demonstrate that any of the Bagley exceptions apply or that
Advanced’s status as an independent contractor was a subterfuge.
Under the designated materials that have been provided, it is
uncontroverted that Advanced was an independent contractor
hired by M&M pursuant to its contract with Bayview to inspect
and winterize the [Property] during the foreclosure process. This
was not inherently dangerous work, M&M and Bayview were
not charged by law or contract with Franklin to perform
inspection and winterization, no nuisance would be created by
performing inspection and winterization, the acts of inspection
and winterization will not probably cause injury to others, and
inspection and winterization of real estate is certainly not an
illegal act.
Appellee Bayview’s App. p 2.
Discussion and Decision
Standard of Review
[11] When reviewing the grant or denial of a summary judgment motion, we apply
the same standard as the trial court. Merchs. Nat’l Bank v. Simrell’s Sports Bar &
Grill, Inc., 741 N.E.2d 383, 386 (Ind. Ct. App. 2000). Summary judgment is
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appropriate only where the evidence shows there is no genuine issue of material
fact and the moving party is entitled to a judgment as a matter of law. Id.; Ind.
Trial Rule 56(C). All facts and reasonable inferences drawn from those facts
are construed in favor of the nonmoving party. Merchs. Nat’l Bank, 741 N.E.2d
at 386. To prevail on a motion for summary judgment, a party must
demonstrate that the undisputed material facts negate at least one element of
the other party’s claim. Id. Once the moving party has met this burden with a
prima facie showing, the burden shifts to the nonmoving party to establish that a
genuine issue does in fact exist. Id. The party appealing the summary
judgment bears the burden of persuading us that the trial court erred. Id.[12] Franklin made several claims in the trial court, all of which were ultimately
based on damage allegedly caused by Advanced when it entered the Property in
February and March of 2014.2 Both Bayview and M&M contend that they are
shielded from any possible liability in this case, however, because the
designated evidence establishes that Advanced was an independent contractor
with respect to both Appellees.
The general rule is that one is not liable for the acts or negligence
of another, unless the relation of master and servants exists
between them; and that where an injury has been done by a party
2
Franklin also directly or impliedly alleges other improprieties which are not relevant to this appeal, such as
an alleged failure to properly serve him in the foreclosure action against the Property and what we can only
interpret as insinuations of insurance fraud committed by Bayview. We will not address these allegations
directly. Franklin makes other allegations of impropriety, including that Advanced illegally entered the
Property in violation of a bankruptcy stay and that designated photographic evidence shows the appellees
destroying the Property. While some of these allegations are, perhaps, marginally related to the claims raised
in this appeal, there are wholly unsupported by the record and we will not address them further.
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exercising an independent employment, the person employing
him will not be liable in damages for injury or death resulting
from the wrongful acts or omissions of such person, or of the
servants of such party.
Allison v. Huber, Hunt & Nichols, Inc., 173 Ind. App. 41, 43, 362 N.E.2d 193, 195
(1977).
However, five exceptions [to the general rule] have been
recognized for more than half a century. See, e.g., Bogard v. Mac’s
Restaurant (1988), Ind. App., 530 N.E.2d 776; Denneau v. Indiana
& Michigan Elec. Co. (1971), 150 Ind. App. 615, 277 N.E.2d 8;
Scott Constr. Co. v. Cobb (1928), 86 Ind. App. 699, 703, 159 N.E.
763. The exceptions are: (1) where the contract requires the
performance of intrinsically dangerous work; (2) where the
principal is by law or contract charged with performing the
specific duty; (3) where the act will create a nuisance; (4) where
the act to be performed will probably cause injury to others
unless due precaution is taken; and (5) where the act to be
performed is illegal. Perry v. Northern Ind. Pub. Serv. Co. (1982),
Ind. App., 433 N.E.2d 44, 47.
Bagley, 658 N.E.2d at 586.
[13] Bayview designated evidence in the form of the Snyder affidavit and the Service
Agreement that M&M was an independent contractor as to Bayview, and there
is no dispute that Bayview never had a contractual relationship with Advanced.
M&M designated the Sanz and Strout affidavits and the Vendor Contract, all of
which tend to show that Advanced was an independent contractor as to M&M.
The burden therefore shifted to Franklin to establish that a genuine issue of
material fact exists as to Advanced’s status as an independent contractor. This
Franklin has failed to do.
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[14] The only material designated by Franklin on this point is the conclusory
statement in his affidavit that there is a genuine issue of material fact regarding
whether M&M controlled Advanced’s work. This is a contention, however,
not a fact, and it is well-settled that “[a]n affidavit submitted in support of a
motion for summary judgment must contain facts that would be admissible in
evidence.” Thomsen v. Musall, 713 N.E.2d 900, 900 (Ind. Ct. App. 1999) (citing
Ind. Trial Rule 56(E)), opinion on reh’g, trans. denied. “‘Mere assertions of
conclusions of law or opinions in an affidavit will not suffice.’” Id. (quoting
Comfax Corp. v. N. Am. Van Lines, Inc., 638 N.E.2d 476, 481 (Ind. Ct. App.
1994)). Because Franklin’s statement is nothing more than an assertion of a
legal conclusion, it fails to generate a genuine issue of material fact as to
Advanced’s status as an independent contractor. See id. (concluding that
“Thomsen’s personal averments that ‘I complied with the standard of care in
representing Mr. and Mrs. Musall’ and that ‘I did not cause any harm to Mr. or
Mrs. Musall’ are mere assertions of conclusions of law or opinions [that] will
not suffice to support a motion for summary judgment”).
[15] Franklin also attacks Bayview’s designated evidence, contending that the
Service Agreement, which was redacted to some extent for designation, does
not tend to show that M&M was an independent contractor as to Bayview and
will therefore not support the entry of summary judgment on that basis. First,
the unredacted provisions of the Service Agreement clearly indicate that M&M
was an independent contractor, and Franklin can offer only speculation that
any of the redacted portions provide otherwise. Second, this argument ignores
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the Snyder affidavit, which clearly provides that M&M was an independent
contractor over whose work Bayview had no control. Finally, even if Franklin
is correct that M&M was not independent of Bayview, it would only get him
halfway to the finish line, as it is Advanced’s alleged vandalism which is at the
heart of his claims, not M&M’s.
[16] Finally, Franklin argues that illegal acts allegedly performed by Advanced,
namely vandalism and the violation of the automatic stay provisions of
bankruptcy law, qualify for the fifth exception to the general rule that the
principal is not liable for the acts of an independent contractor. Franklin
somewhat misapprehends the operation of the exception, however. The
exception only applies where the principal is attempting to isolate itself from the
consequences of illegality by engaging an independent contractor to carry out
the illegal activity on its behalf. Even if we assume, arguendo, that Advanced
committed illegal acts, there is no designated evidence whatsoever that M&M
or Bayview told Advanced to engage in any illegality. As the Bagley Court
stated, “the five exceptions represent specific, limited situations in which the
associated duties are considered non-delegable because public policy concerns
militate against permitting an employer to absolve itself of all further
responsibility by transferring its duties to an independent contractor.” 658
N.E.2d at 588. Franklin has failed to establish that an exception to general rule
of nonliability for the acts of an independent contractor applies in this case.
Because we agree with the trial court that the designated evidence establishes
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Advanced’s status as an independent contractor, we affirm its entry of summary
judgment in favor of Bayview and M&M.
[17] We affirm the judgment of the trial court.
Vaidik, C.J., and Pyle, J., concur.
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