CitiMortgage, Inc. v. Barabas (IN)

Summary: Mortgage priority cannot be adjudicated unless the court acquired personal jurisdiction over the primary lender through proper service of process.

CitiMortgage, Inc. v. Barabas, 975 N.E.2d 805 (Ind. 2012).


Shannon Barabas took out a mortgage in 2005 from Irwin Mortgage Corporation which designated Mortgage Electronic Registration Systems, Inc., (“MERS”) as the “nominee” and “mortgagee.”  In 2007, Barabas took out a second mortgage from ReCasa Financial Group, Inc.  In April of 2008 Irwin’s interest was assigned to CitiMortgage by MERS and recorded.  In June of 2008 ReCasa filed suit against Barabas and Irwin requesting foreclosure of the mortgage and a sheriff’s sale of the property.  Barabas did not respond and Irwin filed a Disclaimer of Interest.  In September of 2008 the court issued a default judgment in favor of ReCasa.  The property was foreclosed, bought by ReCasa, and sold to a third party.  This final sale was recorded in March of 2009.  In October of 2009 CitiMortgage filed a motion to intervene in the foreclosure, arguing that the default judgment was void for lack of personal jurisdiction and requesting that the trial court modify its judgment to make it subject to the mortgage held by CitiMortgage.  The trial court denied the motion stating that CitiMortgage’s assignment was not properly recorded and that its filing was untimely.  CitiMortgage appealed and the appeals court affirmed.  CitiMortgage further appealed to the Supreme Court of Indiana.


Reversed and Remanded.  The court held that the trial court’s denial of the motion was a misinterpretation of the law and therefore an abuse of discretion.  The parties did not dispute the validity of the assignment from MERS to CitiMortgage.  Therefore, the court held that CitiMortgage was entitled to notice of the proceedings.  Without this notice, the trial court did not have personal jurisdiction over it and therefore the default judgment was void as to its interest in the property.  The court, however, declined to extend the entitlement to “named defendant status (and thus notice)” under statute to MERS.  Although the contract designated MERS as both “nominee” and “mortgagee,” the court determined that this language was ambiguous, and MERS cannot be both agent and principal in a transaction.  Relying on its interpretation of the intent of the parties the court determined that MERS is a nominee, not a mortgagee, and therefore not entitled to named defendant status.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Tue, 01/08/2013 - 2:58pm