COA reverses denial of summary judgment to bank

The Indiana Court of Appeals has ruled that U.S. Bank is a bona fide purchaser of an Indianapolis property and was entitled to summary judgment after finding that the mortgage an investment company held on the property could not be found by an adequate title examination.

In January 2007, Diversified Investments, LLC executed a mortgage in favor of Jewell Investments, Inc., for real estate on Manhattan Avenue in Indianapolis. However, the mortgage did not include the legal description of the real estate.

A few months later, Francisco Rutiga Retana agreed to purchase the property from Diversified and sought financing from National City Mortgage, a division of National City Bank. However, a title search of the property did not reveal the Jewell mortgage. During closing, Retana  executed an $80,500 mortgage to National City Bank, which was assigned to U.S. Bank, National Association, successor to National City.

Then in 2008, Jewell moved to foreclose on the Manhattan Avenue real estate and named U.S. Bank as a party to the property, but the bank did not appear or file any pleadings. The Marion Superior Court entered in rem judgment and decree of foreclosure, defaulting the bank and foreclosing Jewell’s asserted mortgage lien on the property. Based on that judgment, a sheriff’s deed to the real estate was executed in favor of Jewell in 2009.

Three years later, U.S. Bank moved to set aside sheriff’s sale and default judgment, and the trial court vacated the deed and judgment and decree of foreclosure in 2014. Then in 2015, the bank moved for summary judgment against Jewell, asserting that because Jewell Mortgage had no legal description of the real estate, the title search was unable to locate it, making U.S. Bank a bona fide purchaser for value to the property, giving its lien priority over Jewell’s.

To support its case, the bank designated the affidavit of Cindy Dailey, the owner of the company that performed the title search, who testified that the Jewell mortgage was not found in the chain of title to the real estate and was not located because it didn’t contain the legal description.

Dailey further testified that Marion County requires title searchers to use the grantor/grantee index and the mortgagor/mortgagee index to search for titles. Following those protocols, Dailey said her office was unable to find the mortgage.

The Marion Superior Court denied summary judgment, prompting U.S. Bank’s appeal, and the Indiana Court of Appeals agreed with the bank’s argument in a Thursday opinion.

Specifically, Judge Terry Crone wrote that Dailey’s testimony served to prove that the title search was performed according to state standards, and it did not yield the discovery of the Jewell mortgage because the legal description was omitted.

“Based on the designated evidence, we conclude that Bank established that it was a bona fide purchaser for value as against Jewell,” Crone wrote. “Accordingly, the trial court erred in denying Bank’s motion for summary judgment.”

The case of U.S. Bank , National Association, Successor to National City Bank v. Jewell Investments, Inc., 49A05-1607-MF-1578, was remanded with instructions to enter summary judgment in favor of U.S. Bank.