Citi Capital Fin. LLC v. Huntington Nat'l Bank

CITI CAPITAL FINANCIAL LLC, Appellant-Defendant, v. HUNTINGTON NATIONAL BANK, Appellee-Plaintiff.

No. 29A02-1307-PL-643

COURT OF APPEALS OF INDIANA

August 20, 2014

Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT:

BRENT WELKE

Indianapolis, Indiana

ATTORNEY FOR APPELLEE:

JEFFREY C. GERISH

Plunkett Cooney

Bloomfield Hills, Michigan

APPEAL FROM THE HAMILTON SUPERIOR COURT

The Honorable William J. Hughes, Judge

The Honorable William P. Greenaway, Magistrate

Cause No. 29D03-0808-PL-1062

MEMORANDUM DECISION - NOT FOR PUBLICATION

BARTEAU, Senior Judge

STATEMENT OF THE CASE

Citi Capital Financial, LLC, appeals from the trial court's order granting partial summary judgment in favor of Huntington National Bank in a lien priority dispute between the two entities, contending that the trial court erred by giving effect to Huntington's mortgage notwithstanding the mistaken legal description contained in the mortgage document, and despite the fact that Mortgage Electronic Registration Systems, Inc. ("MERS") was named in the mortgage document as the nominee and mortgagee before assigning its interest. We affirm.

FACTS AND PROCEDURAL HISTORY

On August 30, 2007, Crown Residential Group, LLC f/k/a Crown Custom Homes, Charles Brown, Adolph L. Buckner, Aaron Coffer, and Kendrick L. Coleman (collectively "Crown") obtained a warranty deed on property purchased from The Marina Limited Partnership. The legal description of the property was as follows:

Lot Number Ninety-six (96) in Canal Place, Section Two, a subdivision in Hamilton County, Indiana, as per plat thereof, recorded as Instrument NO. 200400012292 in Plat Cabinet 3 Slide 355, in the Office of the Recorder of Hamilton County, Indiana.

Appellant's App. at 315. In connection with that purchase Crown executed a promissory note in the amount of $825,000.00 in favor of Huntington. HBI Title Services, Inc., Huntington's full-service title company, was the closing agent for this loan. As such, HBI provided loan closing, title clearing, and title insurance services, and a HBI escrow agent was present at the closing. The Huntington Note was secured by a mortgage granted byCrown to MERS¹ as nominee for Huntington on real property commonly known as 10881 Harbor Bay Drive, Fortville, Indiana, 46060-9012. The Huntington Mortgage, however, contained the following incorrect legal description:

Lot No. 36 in Section Three of Cardinal Woods, as per plat thereof recorded on May 1, 1985 as instrument no. 85-1765 in the office of the Recorder of Hancock County, Indiana.

Appellee's App. at 26. The Huntington Mortgage contained the correct common address of the real property the parties had agreed would be subject to the mortgage. When the Huntington Mortgage was recorded on September 6, 2007, as instrument number 2007050747 in the Office of the Recorder of Hamilton County, Indiana, the word "Hancock" was stricken and the word "Hamilton" was typed below the space where the word "Hancock" had appeared. Id. The parties do not dispute that the legal description contained in the Huntington Mortgage is incorrect.

Jennifer J. Hayden, the Hamilton County Recorder at the time, averred in her affidavit that although the Huntington Mortgage was recorded in Hamilton County, it was not indexed against any lot in Hamilton County because the legal description could not be matched with any parcel of real estate there. Appellant's App. at 148.

Crown executed a balloon promissory note in the amount of $350,000.00 in favorof Citi Capital. The Citi Capital Note referred to the correct legal and common description of the property. The Citi Capital Note was secured by an open line of credit mortgage on the property and also contained the correct legal and common description of the property to be encumbered. The Citi Capital Mortgage was recorded on February 20, 2009 as instrument number 2009008665 in the Hamilton County Recorder's Office.

Citi Capital's managing member and authorized signer was Steven M. Rosenbaum. Rosenbaum was also a realtor and acted as an originator or broker regarding financing for houses. Rosenbaum and Brown, who was the general manager of Crown, had been business associates for a number of years. Rosenbaum had presented the purchase of the property to Brown and was present at the closing of the construction loan Crown executed with Huntington.

On October 6, 2008, Crown granted a mortgage on the property to Greenfield Banking Company in the amount of $72,000.00, which partially secured a promissory note executed on that date by Crown in the principal amount of $491,881.69. The Greenfield Mortgage was recorded on October 20, 2008 as instrument number 2008052814 in the Hamilton County Recorder's Office.

MERS assigned the Huntington Mortgage to Huntington in a document dated May 28, 2009. The assignment was recorded in Hamilton County on June 16, 2009 as instrument number 2009036245.

In his deposition, Rosenbaum stated that after Huntington had advanced approximately $670,000.00 toward construction costs, a question arose about the social security number Brown had supplied to Huntington. Thereafter, Huntington ceased toallow Crown to draw for construction costs. Without that funding, Crown did not pay several contractors. Five of those contractors filed mechanic's liens against the property in the Hamilton County Recorder's Office. The trial court ultimately granted the mechanic's lienholders' motions for summary judgment in their foreclosure actions, finding that the liens were superior to other liens because they had been validly entered on the correct legal description prior to other liens, and that the lienholders should share on a pari passu basis. The judgments on those mechanic's liens were assigned to Lawyers Title Insurance Corporation. Fidelity National Title Insurance Company is the successor by merger with Lawyers.

Huntington did not defend in the action involving the mechanic's liens, but filed an action against all other parties, except for Citi Capital, on June 5, 2009. Huntington's action was consolidated with the prior action involving the mechanic's liens. Citi Capital filed motions to intervene in both actions, and sought relief from judgment contending that while its mortgage was inferior to the mechanic's liens, its mortgage was superior to the Huntington (MERS) Mortgage. Citi Capital was allowed to intervene, and an order was entered on August 5, 2009, for a sheriff's sale of the property. On September 24, 2009, two of the mechanic's lienholders filed a motion to strike Huntington's complaint² alleging that Huntington did not have a lien on the actual premises. The trial court struck the complaint by order entered on October 20, 2009.

Huntington filed an amended complaint to foreclose on the property naming additional parties on October 6, 2009. Attached to the complaint was the mortgage with MERS listed as nominee for Huntington and with the county name "Hancock" stricken and the word "Hamilton" typed underneath. Despite the change to attempt to reflect the correct county, the legal description remained incorrect in all other respects in that mortgage. Also in the amended complaint, was the valid legal description of the property intended to be encumbered by the Huntington Mortgage and a request for reformation of the mortgage to correct the "scrivener's error." Appellant's App. at 98, 103.

On December 3, 2009, a joint motion for summary judgment was filed against Huntington, alleging that the actual property could not be located with certainty based on the legal description provided in the Huntington Mortgage. The trial court entered a judgment finding that the interests of the mechanic's lienholders was superior to those of the remaining parties, Citi Capital, Huntington, and Greenfield, but without determining the validity and priority of those other mortgages.

Huntington and Citi Capital filed cross motions for summary judgment to resolve the issue of lien priority. In June of 2010, Greenfield filed a stipulation of lien priority in which Greenfield and Huntington agreed that Huntington's mortgage took priority over Greenfield's mortgage. In an order from a hearing held on November 15, 2011, the trial court concluded that Huntington's mortgage created a valid security interest in the property that had lien priority over the mortgage held by Citi Capital. The trial court later entered an order on June 28, 2013, declaring its prior order to be a final appealable order. Citi Capital now appeals.

DISCUSSION AND DECISION

This appeal is from an order on cross-motions for summary judgment. Our analysis proceeds from the premise that "[s]ummary judgment is a lethal weapon and courts must be ever mindful of its aims and targets and beware of overkill in its use." Schrum v. Moskaluk, 655 N.E.2d 561, 564 (Ind. Ct. App. 1995) (citing Place v. Sagamore Ctr, Inc., 604 N.E.2d 671, 673 (Ind. Ct. App. 1992), trans. denied). Summary judgment is appropriate only if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Ind. T.R. 56(C); Brown v. Banta, 682 N.E.2d 582, 584 (Ind. Ct. App. 1997).

In the instant case, the trial court entered specific findings of fact and conclusions of law thereon. Although such findings aid appellate review, they are not binding on this court. Reid v. Ragsdale, 702 N.E.2d 367, 369 (Ind. Ct. App. 1998) (citing Althaus v. Evansville Courier Co., 615 N.E.2d 441, 444 (Ind. Ct. App. 1993)). Instead, when reviewing an entry of summary judgment, we stand in the shoes of the trial court. Simms v. Schweikher, 651 N.E.2d 348, 349 (Ind. Ct. App. 1995), trans. denied. We do not weigh the evidence but will consider the designated facts in the light most favorable to the nonmoving party. Id. (citing Reed v. Luzny, 627 N.E.2d 1362,...