Nathan E. Mylet v. Santander Bank, N.A. (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any
Jun 09 2017, 8:15 am
court except for the purpose of establishing
the defense of res judicata, collateral CLERK
Indiana Supreme Court
estoppel, or the law of the case. Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Joe M. Duepner Kurt V. Laker
Duepner Law LLC Doyle & Foutty, P.C.
Noblesville, Indiana Indianapolis, Indiana
Christopher P. Jeter
Massillamany & Jeter LLP
Fishers, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Nathan E. Mylet, June 9, 2017
Appellant-Defendant/Counterclaimant, Court of Appeals Case No.
29A02-1608-MF-2004
v. Interlocutory Appeal from the
Hamilton Superior Court
Santander Bank, N.A., The Honorable Steven R. Nation,
Appellee-Plaintiff/Counterclaim Judge
Defendant The Honorable David K. Najjar,
Magistrate
Trial Court Cause No.
29D01-1411-MF-10776
Crone, Judge.
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Case Summary
[1] Nathan E. Mylet asked his mortgage lender, Santander Bank, N.A., about
refinancing his mortgage loan. Mylet was told that he did not qualify for
refinancing but could obtain a loan modification if he missed three mortgage
payments. Mylet missed three payments, and Santander subsequently filed a
mortgage foreclosure action against him. Mylet filed seven counterclaims
against Santander. Santander filed a motion to dismiss for failure to state a
claim, and the trial court dismissed all but one of Mylet’s counterclaims. On
appeal, Mylet argues that the trial court erred in dismissing his negligence-
related counterclaims. We disagree and therefore affirm.
Facts and Procedural History
[2] In November 2010, Mylet signed a promissory note to Santander for a loan to
purchase a home in Sheridan. The loan was secured by a mortgage on the
home. In April 2014, Mylet contacted Santander to ask about refinancing the
loan to obtain a lower interest rate. Santander employee George Feliciano told
Mylet that he did not qualify for refinancing because of his credit score but
“that if he missed three months of mortgage payments he could obtain a loan
modification which would include a lower interest rate.” Appellant’s App. Vol.
3 at 39. Based on Feliciano’s advice, Mylet intentionally missed three
payments. In July 2014, Santander sent Mylet a notice of default and intention
to foreclose mortgage, and it later denied his request for a loan modification.
Santander encouraged Mylet to go through the same process three more times,
and each time his request for a loan modification was denied.
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[3] In November 2014, Santander filed a complaint on note and for foreclosure of
mortgage. In October 2015, Mylet filed an amended answer and seven
counterclaims, including fraud, negligent misrepresentation, and negligence.
Santander filed a motion to dismiss for failure to state a claim pursuant to
Indiana Trial Rule 12(B)(6). After a hearing, the trial court dismissed all
counterclaims except fraud. This interlocutory appeal ensued.
Discussion and Decision
[4] Mylet contends that the trial court erred in dismissing his negligence-related
counterclaims. “A motion to dismiss for failure to state a claim tests the legal
sufficiency of a claim, not the facts supporting it.” Holleman v. Ind. Dep’t of
Corr., 27 N.E.3d 293, 295 (Ind. Ct. App. 2015). We review de novo a trial
court’s ruling on such a motion, and we must determine whether the allegations
on the face of the counterclaims establish any set of circumstances under which
Mylet would be entitled to relief. See id. (referring to complaint). We must
review the counterclaims in the light most favorable to Mylet as the nonmoving
party, with every inference in his favor. See id. (same). We will affirm a
successful Trial Rule 12(B)(6) motion when a counterclaim states a set of facts
that, even if true, would not support the requested relief. See Hammons v.
Jenkins-Griffith, 764 N.E.2d 303, 305 (Ind. Ct. App. 2002) (same).
[5] “[U]nder longstanding Indiana law, a defendant is not liable under a tort theory
for any purely economic loss caused by its negligence ….” U.S. Bank, N.A. v.
Integrity Land Title Corp., 929 N.E.2d 742, 745 (Ind. 2010) (citation and
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quotation marks omitted). “This rule precluding tort liability for purely
economic loss—that is, pecuniary loss unaccompanied by any property damage
or personal injury (other than damage to the product or service itself)—has
become known as the ‘economic loss rule’ ….” Indianapolis-Marion Cty. Pub.
Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722, 727 (Ind. 2010). Mylet
insists that the rule is inapplicable, arguing that he “seeks to be placed back in
the position he was prior to Santander’s negligence, with his original mortgage,
under its original terms, and with its original interest rate. He also seeks to
have his credit repaired.” Appellant’s Reply Br. at 7. It appears that Mylet is
conflating the nature of his losses, which are purely economic, with the
remedies available to compensate him for those losses. The economic loss rule
has certain exceptions, U.S. Bank, 929 N.E.2d at 745, but Mylet does not argue
that any of them apply. Therefore, we affirm the trial court’s dismissal of his
negligence-related counterclaims.
[6] Affirmed.
Altice, J., concurs.
Riley, J., concurs in result with opinion.
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IN THE
COURT OF APPEALS OF INDIANA
Nathan E. Mylet, Court of Appeals Case No.
29A02-1608-MF-2004
Appellant-Defendant/Counterclaim-
Plaintiff,
v.
Santander Bank, N.A.,
Appellee-Plaintiff/Counterclaim-
Defendant.
Riley, Judge, concurring in result
[7] I concur in the result reached by the majority, but I write separately to express
my view that this issue should be solved by using contract principles only. By
relying on the tort theory of economic loss, I believe the majority opinion
imparts an impression that Mylet has some basis to bring a claim sounding in
negligence.
[8] In his counterclaim, Mylet argued negligent misrepresentation, asserting that
“Santander supplied false information to Mylet in the course of a relationship
and/or transaction in which he had a pecuniary interest, namely, advising
Mylet that he should miss mortgage payments and would be approved on
multiple occasions for a loan modification and then subsequently denying him
each and every time.” (Appellant’s App. Vol. III, p. 43). In addition, Mylet
asserted negligence because “Santander by and through its agents breached [its]
duty to advise Mylet to attempt a loan modification when he was not currently
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in default and then failed to advise Mylet of the risks associated with a loan
modification[.]” (Appellant’s App. Vol. III, p. 44).
[9] To the extent Mylet’s claim is sounding purely in ordinary negligence based on
Santander’s conduct, I note that the relationship between the parties is based on
contract. Our supreme court has held that, “[w]hen the parties have, by
contract, arranged their respective risks of loss, . . . the tort law should not
interfere.” Greg Allen Const. Co. v. Estelle, 798 N.E.2d 171, 175 (Ind. 2003); see
also Jaffri v. JPMorgan Chase Bank, N.A., 26 N.E.3d 635, 638 (Ind. Ct. App.
2015). In other words, “[t]he rule of law is that a party to a contract or its agent
may be liable in tort to the other party for damages from negligence that would
be actionable if there were no contract, but not otherwise.” Greg Allen Const.
Co., 798 N.E.2d at 175. Unless there is evidence of an independent tort that
would have existed if there was no contract between the parties, they “should
not be permitted to expand that breach of contract into tort claims against either
the principal or its agents by claiming negligence as the basis of that breach.”
Id. In essence, this is what Mylet is attempting here: claiming that Santander
negligently breached the contract. But for the loan made to Mylet in 2006,
secured by the mortgage now held by Santander, there would be no relationship
between these two parties and there would have been no communication
between Mylet and Santander’s employees about refinancing the mortgage and
skipping mortgage payments. Accordingly, I conclude that Mylet has no
actionable claim.
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