Demetrius L. Grant, and Vickie O. Grant v. The Bank of New York Mellon Trust Co.

Apr 06 2015, 8:36 am
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Gary M. Selig Fredric Lawrence
Indianapolis, Indiana Nelson & Frankenberger
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Demetrius L. Grant, and April 6, 2015
Vickie O. Grant Court of Appeals Case No.
49A05-1404-MF-139
Appellant-Defendant,
Appeal from the Madison Superior
v. Court
Honorable Michael D. Keele, Special
Judge
The Bank of New York Mellon Case No. 49D07-1006-MF-028352
Trust Co.,
Appellee-Plaintiff
Friedlander, Judge.
[1] Demetrius and Vickie Grant appeal the trial court’s denial of their motion to
dismiss and grant of summary judgment in favor of The Bank of New York
Mellon Trust Company (the Bank). The Grants present the following
dispositive issue for review: Was dismissal of the Bank’s second foreclosure
action against the Grants required where the first action was dismissed under
Indiana Trial Rule 41(E)?
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[2] We reverse and remand.
[3] The Grants have lived in their Indianapolis home for over thirty years. On
January 28, 2004, they executed a note in the principal amount of $127,500
with Paragon Home Lending, LLC. To secure payment of the note, the Grants
executed a mortgage. At some point, the mortgage and note were assigned to
the Bank.
[4] The Grants filed bankruptcy in 2007, and the bankruptcy court granted them
discharge from the mortgage debt that same year. Thereafter, the Grants did
not make their August 2007 mortgage payment or any subsequent payments.
[5] On November 26, 2007, the Bank filed an In Rem Complaint on Note and to
Foreclose Mortgage and Reformation of Mortgage and Deed (the First
Foreclosure Action). The Bank took no action on the complaint for over a year
and a half, so Judge S.K. Reid of the Superior Court of Marion County set the
cause for call of the docket on July 29, 2009. Demetrius Grant appeared for the
hearing, but the Bank did not. Accordingly, Judge Reid dismissed the cause
pursuant to T.R. 41(E) for failure to prosecute.
[6] Eight months later, on March 29, 2010, the Bank filed a motion to reinstate the
First Foreclosure Action, which the court initially granted. Upon the Grants’
motion, Judge Reid returned the case to disposed status on April 23, 2010,
citing Natare Corp. v. Cardinal Accounts, Inc., 874 N.E.2d 1055 (Ind. Ct. App.
2007) (reversing reinstatement where plaintiff filed an unverified motion with
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no supporting affidavits and presented no admissible evidence at the hearing on
the reinstatement motion). The Bank did not appeal this ruling.
[7] Two months after unsuccessfully attempting to reinstate the First Foreclosure
Action, the Bank filed a new lawsuit against the Grants asserting the same
allegations and seeking the same relief (the Second Foreclosure Action). The
Grants subsequently filed a motion to dismiss, invoking as its basis Indiana
Trial Rule 12(B)(6). In their pro-se motion, the Grants argued that the First
Foreclosure Action had been dismissed for failure to prosecute and could not be
reinstated in this separate action. In opposition, the Bank argued in part that
despite the T.R. 41(E) dismissal, it was allowed to refile a separate action in the
future. The Grants replied that the motion to dismiss was proper under T.R. 41
and that “the bank [sic] attempt to refile this lawsuit is barred by the doctrine of
res judicata”. Appellants’ Appendix at 68. Following a hearing, the trial court
denied the Grants’ motion to dismiss. The Grants appealed the denial, but this
court dismissed the appeal because it was not from a final appealable order and
the Grants had not sought certification of the interlocutory order. Grant v. Bank
of New York, Cause No. 49A02-1104-MF-485 (March 22, 2012).
[8] After dismissal of the appeal, nothing happened in the case for several months
and the trial court issued a call of the docket notice to the parties in November
2012. The Bank sought leave to amend its complaint in February 2013, which
the trial court granted after a T.R. 41(E) hearing. The amendment, filed March
7, 2013, added the State as a party defendant and changed one date. The
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Grants then sought a change of judge, which was granted, and Special Judge
Michael Keele was appointed.
[9] On July 10, 2013, the Bank filed a motion for summary judgment. In their
memorandum in opposition to summary judgment, the Grants noted the T.R.
41(E) dismissal of the First Foreclosure Action and that the case was not
reinstated pursuant to T.R. 41(F). The Grants further developed their T.R. 41
argument in a supplemental response, which they urged should be treated as a
belated motion to dismiss under T.R. 12(B)(8).
[10] The trial court held a summary judgment hearing on January 23, 2014. At the
conclusion of the hearing, the court directed the Bank to file a response to the
Grants’ T.R. 12(B)(8) motion. In its written response, the Bank’s sole argument
was that T.R. 41(F) does not require a party to petition the original court to
reinstate a case following dismissal for failure to prosecute. The Bank asserted,
without citing any authority, “[a] Plaintiff is well-within its rights to instead re-
file the Complaint at any time of its choosing.” Appellants’ Appendix at 330.
[11] On March 26, 2014, the trial court summarily denied the Grants’ motion to
dismiss. The court also entered a separate order for In Rem Entry of Summary
Judgment and Decree of Foreclosure in favor of the Bank. The Grants now
appeal.
[12] In support of their argument, the Grants direct us to Zavodnik v. Richards, 984
N.E.2d 699 (Ind. Ct. App. 2013), aff’d on reh’g, 988 N.E.2d 806 (Ind. Ct. App.
2013), a case with procedural facts almost identical to those at hand. In
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Zavodnik, the plaintiff’s complaint was dismissed under T.R. 41(E) for failure to
prosecute and the plaintiff unsuccessfully attempted to reinstate the original
lawsuit pursuant to T.R. 41(F). The plaintiff then filed a new lawsuit with
allegations nearly identical to those of the originally-dismissed complaint. The
new court granted the defendant’s motion to dismiss.1
[13] The defendant argued that the filing of an entirely new complaint in a different
court contravened T.R. 41(E) and (F) and that the plaintiff should not be
allowed to avoid the rule’s reinstatement requirement simply by filing a new
complaint before a different judge.
[14] Subsections (E) and (F) of T.R. 41 provide:
(E) Failure to prosecute civil actions or comply with rules.
Whenever there has been a failure to comply with these rules or when
no action has been taken in a civil case for a period of sixty [60] days,
the court, on motion of a party or on its own motion shall order a
hearing for the purpose of dismissing such case. The court shall enter
an order of dismissal at plaintiff’s costs if the plaintiff shall not show
sufficient cause at or before such hearing. Dismissal may be withheld
or reinstatement of dismissal may be made subject to the condition
that the plaintiff comply with these rules and diligently prosecute the
action and upon such terms that the court in its discretion determines
to be necessary to assure such diligent prosecution.
(F) Reinstatement following dismissal. For good cause shown and
within a reasonable time the court may set aside a dismissal without
prejudice. A dismissal with prejudice may be set aside by the court for
the grounds and in accordance with the provisions of Rule 60(B).
1
The trial court in Zavodnik also sua sponte dismissed, on the same grounds, another complaint involving
two other defendants.
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Thus, “when a trial court has involuntarily dismissed a case without prejudice
pursuant to Trial Rule 41(E), subsection (F) of that rule ascribes to the
dismissing trial court the discretion to consider whether a complaint should be
reinstated.” Zavodnik v. Richards, 984 N.E.2d at 703.
[15] In holding that the plaintiff’s only remedy was to obtain reinstatement of his
first complaint under its original cause number, we explained:
We [] presume that the Indiana Supreme Court, in drafting Trial Rule
41, did not intend to place a nullity in the rule by adding subsection
(F)’s explicit procedure for how to go about reinstatement of a
complaint dismissed without prejudice. Zavodnik’s position, that such
complaints can be re-filed in a different court without following the
reinstatement procedure, would render that provision meaningless. By
re-filing complaints before Judge Dreyer that were substantially
similar, if not identical, to complaints that Judge Oakes had already
dismissed, Zavodnik was improperly attempting to circumvent Judge
Oakes’s authority and discretion to decide whether Zavodnik had good
cause to reinstate his original complaint(s). Judge Dreyer apparently
recognized this and acted properly in dismissing the re-filed
complaints, which dismissal served the interests of fairness to litigants,
judicial comity, and judicial efficiency.
Id. On rehearing, we reiterated, “if Zavodnik is unsuccessful in having his
original complaints reinstated, he may not circumvent that ruling by filing
entirely new complaints raising identical legal and factual issues as the original
complaints.” Zavodnik v. Richards, 988 N.E.2d at 807-08.
[16] In this appeal, the Bank makes no attempt to distinguish Zavodnik and, in fact,
does not even cite the case. The Bank, rather, relies on two arguments in an
attempt to avoid the clear mandate of Zavodnik: (1) the First Foreclosure Action
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and the Second Foreclosure Action are not the same because they seek different
relief and (2) the Grants waived their T.R. 41 argument.
[17] Before addressing these arguments, we observe one key difference between this
case and Zavodnik. The latter was dismissed without prejudice, while the
present was dismissed with prejudice.2 In Zavodnik, we reached the T.R. 41(F)
analysis only after observing that the T.R. 41(E) dismissal without prejudice had
no res judicata effect. The same cannot be said for a dismissal with prejudice,
such as in the case at hand. See Afolabi v. Atl. Mortgage & Inv. Corp., 849 N.E.2d
1170, 1173 (Ind. Ct. App. 2006) (“a dismissal with prejudice is conclusive of the
rights of the parties and is res judicata as to any questions that might have been
litigated”).
[18] In any case, however, we must address the Bank’s assertion that the two actions
are not the same. Citing Afolabi, the Bank argues that the Grants’ obligations
under the note and mortgage were ongoing and any subsequent default created
a new and independent right to initiate foreclosure. The Bank continues, “[t]he
Second Action seeks relief for defaults that could not have been contemplated
by the First Action because the Second Action sought to recover amounts based
2
T.R. 41(B) provides in relevant part as follows: “Unless the court in its order for dismissal otherwise
specifies, a dismissal under this subdivision or subdivision (E) of this rule…operates as an adjudication upon
the merits.” In this case, because Judge Reid did not otherwise specify, the dismissal of the First Foreclosure
Action was with prejudice.
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on defaults that had accrued only after the dismissal of the First Action.”
Appellant’s Brief at 13.
[19] The Bank’s argument ignores the undisputed fact that the Grants’ personal
liability under the note and mortgage had been discharged in bankruptcy.
Accordingly, the relief sought in both foreclosure actions was precisely the same
and the First Foreclosure Action fully contemplated nonpayment due to the
bankruptcy. A review of the respective complaints, in fact, reveals that they
were based on the same alleged default. Cf. Afolabi v. Atl. Mortgage & Inv. Corp.,
849 N.E.2d at 1175 (“the facts necessary to establish a default in the first
foreclosure action are different from the facts necessary to establish a default in
the second foreclosure action”); Deutsche Bank Nat’l Trust Co. v. Harris, 985
N.E.2d 804, 816 (Ind. Ct. App. 2013) (“subsequent and separate alleged
defaults under the note create a new and independent right in the mortgagee to
accelerate payment on the note in a subsequent foreclosure action”).
Unsatisfied with Judge Reid’s refusal to reinstate the First Foreclosure Action
and apparently unwilling to appeal that ruling, the Bank chose to re-institute the
exact same claim in a new lawsuit. This was improper.
[20] Finally, we turn to the Bank’s claim that the Grants have waived their T.R. 41
argument. From the beginning of this cause, the Grants have insisted (on
various grounds) that the Bank could not refile a new lawsuit to avoid dismissal
of the First Foreclosure Action. This issue was litigated on res judicata grounds
as a result of the Grants’ T.R. 12(b)(6) motion to dismiss filed in 2010. The
Grants raised the issue again in 2013 in response to the Bank’s summary
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judgment motion, invoking T.R. 12(b)(8) and T.R. 41(F). At the summary
judgment hearing, the issue was once again litigated and the trial court
expressly requested that the Bank file a written response to the Grants’
arguments. In its written opposition to the motion to dismiss, the Bank
addressed the merits of the T.R. 41 issue and did not argue waiver. On the
record before us, we find the Bank’s belated waiver argument disingenuous and
without merit.3
[21] The Bank improperly attempted to circumvent Judge Reid’s T.R. 41 ruling by
filing an entirely new complaint raising identical legal and factual issues. This
violated both T.R. 41 and principles of res judicata. Accordingly, the trial court
erred when it granted summary judgment in favor of the Bank. The trial court
is directed on remand to vacate the grant of summary judgment and dismiss the
Bank’s complaint.
[22] Judgment reversed and cause remanded with instructions.
Kirsch, J., and Crone, J. concur.
3
In support of its waiver argument, the Bank relies on a number of cases applying Indiana Appellate Rule
46(C), which provides that no new issues shall be raised in a reply brief. This rule applies to appellate briefs
and, of course, has no applicability to trial court filings. We are perplexed by the Bank’s reliance on these
cases with respect the Grants’ summary judgment filings.
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