Joel Stoffel v. JPMorgan Chase Bank, N.A. and Federal National Mortgage Association

FOR PUBLICATION Jan 30 2014, 7:27 am
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEES:
JOHN JOHNSTON DAVID J. JURKIEWICZ
Johnston & Johnston, PC NATHAN T. DANIELSON
Wabash, Indiana Bose McKinney & Evans LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
JOEL STOFFEL, )
)
Appellant-Defendant, )
)
vs. ) No. 27A02-1303-MF-299
)
JPMORGAN CHASE BANK, N.A. and FEDERAL )
NATIONAL MORTGAGE ASSOCIATION, )
)
Appellees-Plaintiffs. )
APPEAL FROM THE GRANT SUPERIOR COURT
The Honorable Warren Haas, Judge
Cause No. 27D03-1209-MF-142
January 30, 2014
OPINION - FOR PUBLICATION
NAJAM, Judge
STATEMENT OF THE CASE
Joel Stoffel appeals the trial court’s post-judgment order denying his motion to
compel payment of an alleged surplus following a mortgage foreclosure and sheriff’s sale.
Stoffel claims he is entitled to recover the difference between the face amount of the
judgment and the amount bid at the sheriff’s sale. Stoffel presents three issues for review,
which we consolidate and restate as:
1. Whether the trial court erred when it permitted the judgment creditor
to present evidence to show there was no surplus even though the
judgment creditor had previously filed a satisfaction of judgment.
2. Whether the trial court erred when it admitted certain evidence
proffered by the judgment creditor to determine the amount of the
judgment.
We affirm in part, reverse in part, and remand with instructions.
FACTS AND PROCEDURAL HISTORY
On June 25, 2010, JPMorgan Chase Bank, National Association (“Chase Bank”)
filed a complaint on its promissory note and to foreclose on its mortgage on real estate
owned by Stoffel. On June 6, 2012, Stoffel and Chase Bank filed an Agreed Judgment
Entry and Decree of Foreclosure (“Agreed Judgment”). The Agreed Judgment provides,
in relevant part:
[Chase Bank] is hereby granted a personal judgment against Joel Stoffel a/k/a
Joel M. Stoffel in the principal sum of $124,475.56, together with interest
from February 1, 2010, through and including July 15, 2011, in the sum of
$12,248.35, further interest from July 16, 2011, to the date of the judgment
at the rate of 6.75%, post-judgment interest at the statutory rate, filing fees
in the sum of $186.00, Sheriff’s service fee in the sum of $13.00, cost of title
evidence in the sum of $200.00, mailing expense to file the complaint in this
case pursuant to Rule 5F of the Indiana Rules of Trial Procedure in the sum
of $8.70, late charges, reimbursable advances, and costs of collection in the
2
aggregate sum of $1,805.56, less a suspense credit of $129.35, and
reasonable foreclosure attorneys’ fees in the sum of $1,100.00, for a total
judgment, with interest through and including July 15, 2011, in the sum of
$139,907.82, and any additional costs of collection, expense, and
disbursements incurred from the date of the Affidavit of Plaintiff [Chase
Bank] to the date of the Sheriff’s Sale, including, but not limited to, Sheriff’s
Sale costs, disbursements for real estate taxes, bankruptcy fees and costs,
and disbursements for hazard insurance premiums[.]
Appellant’s App. at 45-46 (emphases added). In the Agreed Judgment, Stoffel also agreed
to foreclosure on his Chase Bank mortgage.
On September 12, Chase Bank assigned the Agreed Judgment to the Federal
National Mortgage Association (“Fannie Mae”).1 The sheriff’s sale was conducted on
September 13, and Fannie Mae submitted the winning bid of $152,121.72, a “credit bid.” 2
On September 19, Fannie Mae filed its satisfaction and release of judgment (the
“Satisfaction of Judgment”) with the trial court.
On March 8, 2013, Stoffel filed a motion to compel the payment of an alleged
surplus balance based on the difference between Fannie Mae’s credit bid of $152,121.72
and the face amount of the Agreed Judgment of $139,907.82. The trial court held a hearing
on Stoffel’s motion on March 22. At that hearing, Fannie Mae introduced, over Stoffel’s
objections,3 affidavits of Chase Bank Vice President Albert Opoku and Chase Bank
1
For clarity, we refer to all actions taken by the judgment creditor following the assignment,
including the arguments to the trial court and this court, as the actions of Fannie Mae.
2
A “credit bid” is a bid made by the judgment creditor in which no money is exchanged. A “full
credit bid” is a sheriff’s sale bid for the full amount of the judgment, including costs. See Titan Loan Inv.
Fund, L.P. v. Marion Hotel Partners, LLC, 891 N.E.2d 74, 76 (Ind. Ct. App. 2008), trans. denied.
3
Where Stoffel objected to the admission of this evidence in the trial court, the transcript reads
“inaudible.” See Transcript at 14-15, 17, 19. Fannie Mae does not challenge Stoffel’s assertion that he
properly preserved his objections, and, while the record does not reflect the assertion of a specific hearsay
3
attorney Jeffrey Wilson, each of which purported to rely on documents not attached to their
affidavits to explain certain costs incurred between the date of the Agreed Judgment and
the sheriff’s sale. Fannie Mae also introduced, again, over Stoffel’s objections, an undated
and unsigned letter authored by Rose K. Kleindl. The Kleindl letter did not identify
Kleindl’s employer, her title, or to whom the letter was addressed, and it purported both to
explain how the winning credit bid had been calculated and also to identify post-judgment
costs and advances.
On March 26, the court issued its Order Denying Stoffel’s Motion to Compel
Payment with findings (“Denial Order”):
Following the presentation of evidence and legal arguments by the attorneys
the undersigned enters the following findings and orders:
1. The June 6, 2012, Agreed Judgment Entry and Decree of Foreclosure
granted to [Chase] Bank (and to its successor in interest, Fannie Mae) a
judgment against [Stoffel] with the following elements, some of which were
not known nor able to be determined until the collateral was sold to Fannie
Mae pursuant to its “credit bid” on July 9, 2012, for $152,121.72:
A. $124,475.56 principal.
B. Interest on the principal from February 1, 2010,
through July 15, 2011, in the sum of $12,248.35.
C. 6.75% [i]nterest on the $136,723.91 ($124,475.56 +
$12,248.35) from July 16, 2011, through July 9,
2012[.] The additional interest equaled $10,230.46.[4]
or self-authentication objection, those objections are apparent from the context of Stoffel’s colloquy with
the court.
4
Fannie Mae is correct that the trial court miscalculated this interest figure and did not include
interest through the date of the sheriff’s sale. The interest should have been calculated at the rate of 6.75%
from July 16, 2011, through September 13, 2012, and the correct amount is $10,745.94.
4
D. $186 for filing fees plus $13 for the Sheriff’s service
fee.
E. $200 title evidence fee plus a $25 supplemental title
evidence fee.
F. $8.70 for the certified mailing of the complaint.
G. $1,676.21 [($147.70 for property inspection + $147 for
preservation + $1,139.32 for hazard insurance +
$191.54 for property taxes = $1,805.56 minus $129.35
credit) = $1.676.21].
H. $1,100 for reasonable foreclosure attorney’s fees.
I. $129.15 for post-judgment property inspections.
J. $191.54 for additional property taxes.
K. $167.34 for additional property taxes.
L. $1,609.41 for additional hazard insurance.
M. $25 for title/tax verifications.[5]
N. $534.50 for Sheriff’s sale costs, ($318.50 publication
costs + $216 Sheriff’s fees).
The foregoing equals $152,820.22, which is $698.50 more than the “credit”
bid” of $152,121.72.
2. There is no surplus nor balance remaining to distribute to [Stoffel].
3. The undersigned rules in favor of [Chase] Bank and Fannie Mae and
dismisses the Motion.
Id. at 9-10 (some alterations in original). Stoffel now appeals.
5
According to Fannie Mae, this $25 tax/title verification fee is charged twice in the trial court’s
computation. Although Fannie Mae does not explain which entry is the counterpart, it is most likely the
“$25 supplemental title evidence fee” in section E of the Denial Order.
5
DISCUSSION AND DECISION
Standard of Review
Under Indiana Appellate Rules 2(H) and 5(A), the Denial Order is a final appealable
order6 that includes findings of fact and conclusions thereon entered sua sponte. The
findings control only as to the issues they cover, and a general judgment standard applies
to any issue upon which the trial court has made no findings. Coffman v. Olson & Co.,
906 N.E.2d 201, 206 (Ind. Ct. App. 2009), trans. denied. In reviewing the Denial Order,
we determine whether the evidence supports the findings and whether the findings, in turn,
support the conclusions and judgment. Id. We will reverse a judgment only when it is
clearly erroneous, that is, when the judgment is unsupported by the findings of fact and the
conclusions thereon, id., or when the trial court applies the wrong legal standard to properly
found facts, In re Paternity of K.I., 903 N.E.2d 453, 457 (Ind. 2009). A general judgment
may be affirmed on any theory supported by the evidence presented at trial. Coffman, 906
N.E.2d at 207.
Additionally, Stoffel appeals from a negative judgment. A judgment entered against
a party who bore the burden of proof at trial is a negative judgment. Smith v. Dermatology
Assocs. of Ft. Wayne, P.C., 977 N.E.2d 1, 4 (Ind. Ct. App. 2012). On appeal, we will not
reverse a negative judgment unless it is contrary to law. Id. To determine whether a
judgment is contrary to law, we consider the evidence in the light most favorable to the
appellee, together with all the reasonable inferences to be drawn therefrom. Id. A party
6
The Denial Order is a final order because it disposes of all claims as to all parties. See Ind.
Appellate Rule 2(H).
6
appealing from a negative judgment must show that the evidence points unerringly to a
conclusion different than that reached by the trial court. Id.Issue One: Satisfaction of Judgment
We first consider Stoffel’s argument that the Denial Order is, in effect, a
modification of the Agreed Judgment on which Fannie Mae had already filed its
Satisfaction of Judgment. At the hearing on Stoffel’s motion to compel payment, Stoffel
argued that “the real question in this case is” whether you can “enter a satisfaction of a
judgment in full and then come back and try to get more money[.]” Transcript at 24. But
the trial court rejected that characterization and concluded that the “clear question” for the
court was “how much was the judgment actually worth on September 13, 2012[,] the date
of the sale[.]” Id. at 16. We agree with the trial court.
The basis of Stoffel’s motion to compel payment is that Fannie Mae’s credit bid at
the sheriff’s sale was in excess of the Agreed Judgment. As such, Stoffel sought an order
compelling Fannie Mae to pay to him $12,213.90, the difference between the $152,121.72
credit bid and $139,907.82, the face amount of the Agreed Judgment. In other words,
according to Stoffel Fannie Mae’s Satisfaction of Judgment prohibited Fannie Mae from
presenting evidence that the Agreed Judgment was an amount other than $139,907.82.
Stoffel misunderstands the relationship between the Satisfaction of Judgment and
his motion to compel. As we have explained: “Satisfaction of a judgment is generally the
last act and end of a proceeding. Payment and satisfaction of a judgment operate to
extinguish it and to put an end to its validity for all purposes whatsoever.” RJH of Florida,
Inc. v. Summit Account & Computer Servs., Inc., 725 N.E.2d 972, 974 (Ind. Ct. App. 2000)
7
(citation omitted). Thus, had Fannie Mae sought to recover a post-sheriff’s sale deficit
from Stoffel, its filing of the Satisfaction of Judgment would have prohibited that effort.
But that is not what happened. Rather, Stoffel filed a motion to compel the payment
of an alleged surplus following the sheriff’s sale. Fannie Mae did not seek to compel the
payment of an alleged deficit, and it “does not assert that it is entitled to enforce a
deficiency against Stoffel.” Appellee’s Br. at 12 n.6. Moreover, although the trial court
found that there was a deficiency, the court did not order Stoffel to pay that deficiency but
instead simply “dismisse[d]” his motion. Appellant’s App. at 10. As such, the Satisfaction
of Judgment did not prohibit Fannie Mae from presenting evidence to rebut Stoffel’s
allegation that a surplus existed.
Accordingly, we agree with the trial court that “how much . . . the judgment [was]
actually worth” was squarely before the court on Stoffel’s motion to compel. See
Transcript at 16. The Agreed Judgment left certain costs to be determined, and Fannie
Mae’s Satisfaction of Judgment did not preclude the presentation of admissible evidence
to demonstrate the amount of those costs. Thus, we affirm the trial court’s rejection of
Stoffel’s argument on this issue.7
7
Stoffel’s reliance on Neu v. Gibson, 968 N.E.2d 262 (Ind. Ct. App. 2012), is misplaced. In Neu,
the judgment creditor sought to foreclose on two parcels, one in Michigan and one in Indiana. Both parcels
secured the same promissory note. After the judgment creditor had submitted a full credit bid at the
Michigan sheriff’s sale, he obtained a second foreclosure decree and attempted to proceed to a sheriff’s sale
on the Indiana real estate. We held that, because the debt had been extinguished by the Michigan’s sheriff’s
sale, the judgment creditor had no right to a second foreclosure sale on the Indiana real estate to recover
costs incurred both before and after the Michigan sheriff’s sale. Id. at 281. Here, however, Fannie Mae
included the post-judgment costs incurred through the date of the sheriff’s sale in its credit bid. And, again,
Stoffel stipulated to those costs in the Agreed Judgment. Thus, Fannie Mae is not seeking to recover any
costs greater than its sheriff’s sale bid or any costs that were incurred after the sheriff’s sale or after the debt
was extinguished. Neu is inapposite.
8
Issue Two: Admission of Evidence
We next consider Stoffel’s contention that the trial court erred when it admitted the
Opoku affidavit, the Wilson affidavit, and the Kleindl letter. “The standard of review for
admissibility of evidence issues is abuse of discretion.” Perry v. Gulf Stream Coach, Inc.,
871 N.E.2d 1038, 1047 (Ind. Ct. App. 2007) (citation omitted). An abuse of discretion
occurs if the trial court’s judgment is “clearly against the logic and effect of the facts and
circumstances before it” or if the trial court “err[ed] on a matter of law.” Santelli v.
Rahmatullah, 993 N.E.2d 167, 175 (Ind. 2013) (internal quotation marks and citation
omitted). As an initial matter, we note that Fannie Mae does not dispute Stoffel’s assertions
that these three documents were each inadmissible hearsay, see Ind. Evidence Rules 801(c)
(defining hearsay) & 803(6) (describing when business records are admissible hearsay),
and were not self-authenticating, see Evid. R. 902(9).
Rather than dispute their admissibility under our Rules of Evidence, Fannie Mae
instead asserts that Stoffel’s motion is similar to motions filed under Indiana Trial Rules
59(H) and 69(E) and that the documents are admissible under the trial court’s equitable
powers. Rule 59(H)(1) requires a motion to correct error that is based on evidence outside
the record to “be supported by affidavits showing the truth of the grounds set out in the
motion” and may be used to allege that newly discovered evidence requires reconsideration
of the court’s prior judgment. See Mid-States Aircraft Engines, Inc. v. Mize Co., 467
N.E.2d 1242, 1245-46 (Ind. Ct. App. 1984). Similarly, Rule 69(E) allows a judgment
creditor to enforce its judgment in proceedings supplemental with affidavits alleging
particular requirements described in the Rule. Thus, Fannie Mae contends that Stoffel’s
9
motion is akin to a motion filed under these rules and that the trial court properly used its
“full discretion to fashion an equitable post-judgment outcome relating to the distribution
of the proceeds of the sheriff’s sale.” Appellee’s Br. at 22. That is, Fannie Mae reasons
that, just as in other post-judgment proceedings, such as motions to correct error and
motions in proceedings supplemental to execution, the trial court may rely on affidavits for
information that could not have been offered in the underlying proceeding and for that
reason are not previously reflected in the record.
We cannot agree with Fannie Mae’s characterization of Stoffel’s motion as
equivalent to a motion to correct error under Trial Rule 59 or a motion in proceedings
supplemental under Rule 69. Stoffel’s motion sought to limit the Agreed Judgment to its
face amount and to recover a credit. Thus, Stoffel’s motion was proper under either Trial
Rule 13(M) or Rule 60(B)(7). See Wilson v. Wilson, 169 Ind. App. 530, 533-35, 349
N.E.2d 277, 279-80 (1976). Rule 13(M) permits the trial court to order “[s]atisfaction of a
judgment or credits thereon . . . upon notice and motion.” Likewise, Rule 60(B)(7) allows
a party to file a motion for relief from a judgment on the grounds that “the judgment has
been satisfied, released, or discharged.” Thus, Trial Rules 59 and 69 are inapposite to
Stoffel’s motion.
Further, while we agree with Fannie Mae that Stoffel’s motion was drawn into
equity, we disagree with Fannie Mae that this allowed the trial court to disregard our Rules
of Evidence. A mortgage foreclosure is a hybrid of law and equity. A complaint on the
underlying debt is an action at law, and a complaint to foreclose on the mortgage is a
proceeding in equity. See Lucas v. U.S. Bank, N.A., 953 N.E.2d 457, 466 (Ind. 2012).
10
Where, as here, the legal and equitable claims are intertwined, the action at law is drawn
into equity. See id. Thus, the court’s proceeding on Stoffel’s motion to compel was an
equitable proceeding. But while a trial court has discretion to fashion a remedy in an
equitable proceeding, Deutsche Bank Nat’l Trust Co. v. Mark Dill Plumbing, Co., 903
N.E.2d 166, 168 (Ind. Ct. App. 2009), clarified on other grounds on reh’g, 908 N.E.2d
1273 (Ind. Ct. App. 2009), the rules of evidence still apply, Kaczmarczyk v. Dolato, 191
Ind. 540, 133 N.E. 829, 831 (1922).
We acknowledge that judgment creditors routinely include post-judgment costs and
expenses in their sheriff’s sale bids and demonstrate those calculations by affidavit. In a
typical case, the judgment creditor’s post-judgment costs and expenses are easily
determined and the mortgage foreclosure proceeding ends with the issuance of a sheriff’s
deed. And where, as here, post-judgment costs and expenses are awarded in the foreclosure
judgment, there is no question that the judgment creditor is entitled to recover those costs
and expenses, which are usually readily ascertainable and undisputed.
In this case, however, after the sheriff’s sale the judgment debtor filed a motion to
compel payment, contending that the winning bid resulted in a surplus. Only the judgment
creditor has the records that would prove or disprove the allegation that there is a surplus.
When challenged, the judgment creditor must present admissible evidence to show the
costs included in the winning bid. See id. at 831. The affidavits and the unsigned, undated
bid justification letter that Fannie Mae submitted to show the post-judgment costs are
inadmissible hearsay and are not self-authenticating. The trial court erred when it admitted
and considered the affidavits and the bid justification letter. Perry, 871 N.E.2d at 1047.
11
Setting aside the inadmissible evidence, we determine the amount of the Agreed
Judgment based on the admissible evidence before the trial court. The amount of the
Agreed Judgment should be as follows: $139,907.82 (the principal); $10,745.94 (post-
judgment interest at 6.75%); $558.88 (the 2011 and 2012 real estate taxes, which Stoffel
conceded after the trial court offered to take judicial notice of these taxes); and $534.50
(the sheriff’s sale expenses from the clerk’s return). Thus, the Agreed Judgment totals
$151,747.14. Fannie Mae’s winning credit bid at the sheriff’s sale was $152,121.72, which
results in a surplus owed to Stoffel of $374.58. Accordingly, we reverse the trial court’s
calculation of the amount of the Agreed Judgment and, considering only the admissible
evidence before the trial court, we remand with instructions for the court to enter a
judgment of $374.58 for Stoffel.
CONCLUSION
In sum, we affirm the trial court’s rejection of Stoffel’s argument that Fannie Mae’s
Satisfaction of Judgment prohibited Fannie Mae from introducing evidence to show the
correct amount of the Agreed Judgment. But we reverse the trial court’s calculation of the
amount of the Agreed Judgment, which the trial court determined after considering
inadmissible evidence. Considering only the admissible evidence, we hold that the amount
of Fannie Mae’s credit bid exceeded the amount of the Agreed Judgment by $374.58. Thus,
we affirm in part, reverse in part, and remand with instructions that the trial court enter
judgment for Stoffel in the amount of $374.58.
Affirmed in part, reversed in part, and remanded with instructions.
MATHIAS, J., and BROWN, J., concur.
12