COA affirms ruling in mortgage foreclosure case

The Court of Appeals allowed a rehearing in the case of R. Kinsey Brooks, Susan K. Brooks v. Bank of Geneva, 01A05-1709-MF-2174 , but affirmed its original decision after the bank contended the defendant made no argument of “claim for abuse of process.”

In August 2015, Matthew and Ginger Summersett executed a $398,000 promissory note with the Bank of Geneva, while Ginger’s parents, R. Kinsey and Susan Brooks, executed a mortgage on their farmland to partially secure the Summersetts’ debt. The Summersetts also mortgaged four parcels of their property to secure the debt, and the Brookses’ mortgage specified that they would not be personally liable for the debt. The bank then issued four additional loans to the Summersetts without the Brookses’ knowledge and modified the terms of the $398,000 note to provide for semiannual, rather than monthly, payments, without their knowledge.

In May 2016, the bank filed a foreclosure complaint against the Brookses’ mortgage, alleging a balance of more than $407,000 was due on the $398,000 promissory note. The Adams Circuit Court ultimately ruled in favor of the bank, ordering sale of the Brookses’ property if the $462,772.89 judgment was not paid. However, the Court of Appeals reversed the grant of summary judgment to the bank in March,  ordering the bank to release the Brookses from that mortgage.

On its petition for rehearing, the bank argued the Court of Appeals should not have included, “The Brookses’ claim for abuse of process remains pending,” in the last sentence of their opinion. Upon re-review, however, the court found the bank’s motion for partial summary judgment only sought a judgment of foreclosure and in rem damages against the Brookses, but said nothing about the defendant’s counterclaim for abuse of process.

“When summary judgment is only partially granted, ‘The court shall designate the issues or claims upon which it finds no genuine issue as to any material facts,’” Judge Michael Barnes wrote in the Friday opinion.  “It is not clear to us that the trial court’s summary judgment order fulfilled this requirement.”

“Given the relief actually requested in the Bank’s motion for partial summary judgment and the language in the trial court’s partial summary judgment order, some of which was incorrect, we adhere to the statement in our original opinion that the abuse of process counterclaim is still pending,” Barnes continued.

The court also addressed the Bank’s contention of a material question of fact regarding the release of the Summersetts’ mortgage, noting a dispute existed as to whether the Summersetts actually paid off the loan that mortgage secured.

“For purposes of the Brookses’ status as sureties, whether the loan was paid off is irrelevant. It was the undisputed fact of releasing the Summersetts’ mortgage that caused the release of the Brookses’ mortgage, not whether the underlying loan was actually paid off,” Barnes concluded. “The release exposed the Brookses and their property to much greater potential liability than they signed up for when they agreed to mortgage their land with the understanding that the Summersetts were mortgaging their land as well.”

Finally, the court upheld its decision on the bank’s rehearing  argument regarding the change in payment terms of the Summersett note from monthly to semi-annually.