Foreclosure notice by newspaper not good enough for COA

A bank’s failure to give proper notification of a foreclosure has kept a lienholder’s judgment alive and created uncertainty as to who holds the title to a property.

Deutsche Bank National Trust Co. filed a foreclosure action on a Talbott Street property in Marion County. Calvin Hair had a lien on the property as a result of a bankruptcy proceeding, but he was never notified of the foreclosure because the bank provided service only by  publication.

Subsequently, the trial court entered judgment by default for $161,079.21 against Hair and others who had not responded to the bank’s complaint. Deutsche Bank then bought the property at a sheriff’s sale and conveyed to a third party.

After his motion to set aside the default judgment was denied by the trial court, Hair appealed. He asserted service by publication was not warranted and the judgment was rendered without personal jurisdiction to him.

The Indiana Court of Appeals agreed, reversing the denial of Hair’s motion in Calvin Hair v. Deutsche Bank National Trust Company, as Trustee for Ameriquest Mortgage Securities, Inc., Asset-Backed Pass-Through Certificates, Series 2003-1, 49A04-1404-MF-188.    

The Court of Appeals determined that Hair was easily locatable and the bank did not do enough searching, instead opting to move too quickly to service by publication.

Once the Court of Appeals ruled the foreclosure judgment against Hair was void, the bank argued against providing any relief to Hair, saying his motion to set aside would be inequitable since a third party now had possession of the property.

“Deutsche Bank’s arguments disregard the importance of personal jurisdiction to a valid judgment, as well as approximately 150 years of Indiana precedent,” Judgment Michael Barnes wrote. “We emphasize that a judgment entered without personal jurisdiction is void, not merely voidable.”

The Court of Appeals ruled Hair’s judgment lien against the property was not extinguished by the foreclosure. It also remanded the case for further proceedings to determine how to address Hair’s lien against the property that is now owned by someone else.