Elliott v. Dyck O'Neil, Inc. (IN)

Summary: Trial court properly refused nunc pro tunc entry to correct in rem foreclosure judgment to be in personam as well. Thus, homeowners were entitled to the equitable relief of a refund of their payments made pursuant to the garnishment order

Elliott v. Dyck O'Neal, Inc., 46 N.E.3d 448 (Ind. App. 2015).

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Facts:  The Elliotts borrowed from Fifth Third to finance the purchase of a house. To secure payment of the note, the Elliotts executed a thirty-year mortgage. In their note, the Elliotts agreed to be “fully and personally obligated to keep all of the promises made in th[e] Note, including the promise to pay the full amount owed.”

Three years later, the Elliotts filed for bankruptcy. Fifth Third filed a “Complaint on Note and for Foreclosure on Mortgage” against the Elliotts. Fifth Third later filed a motion for default judgment, requesting that the trial court enter judgment IN REM in its favor. Along with its motion for default judgment, Fifth Third submitted a proposed order, entitled “Default Judgment of Foreclosure” which the trial court adopted and signed. In its foreclosure order, the trial court granted Fifth Third a judgment IN REM. Additionally, on the front of the foreclosure order, someone handwrote “Rem” near the title of the order.

Fifth Third assigned its foreclosure judgment to Federal Home Loan Mortgage Corporation (“FHLMC”). Two days later, the County Sheriff held a sheriff's sale for the Property, and FHLMC purchased the Property, leaving a deficiency from the foreclosure judgment amount.

Thereafter, FHLMC assigned its interest in the foreclosure judgment to Dyck O'Neal, Inc. Dyck O'Neal filed a motion to substitute itself as plaintiff in the mortgage foreclosure proceeding. Dyck O'Neal also filed a motion for discovery to a non-party, the Indiana Department of Workforce Development, seeking employment records for the Elliotts, and the trial court granted this motion.

Despite the in rem nature of the foreclosure judgment, Dyck O'Neal filed a “Motion for Proceedings Supplemental to Execution,” seeking an order for garnishment of Elliotts' wages. After the trial court entered a garnishment order for the deficiency, the Elliotts, who were not represented by counsel, agreed to pay and began paying $50.00 per week toward the foreclosure deficiency. More than four years later, the Elliotts, then represented by counsel, filed a motion for a refund for the money paid toward the deficiency, arguing that the foreclosure order included only an in rem judgment against them. Thereafter, Dyck O'Neal filed a motion to amend the foreclosure order to add an in personam judgment. The trial court denied both motions.


Holding: Affirmed in part; Reversed in part and Remanded.  On appeal, the court first addressed Dyck O'Neal's cross-appeal issue. Dyck O'Neal argued that the trial court abused its discretion by denying its motion to amend the foreclosure judgment nunc pro tunc under Trial Rule 60(A). The court found that Trial Rule 60(A) merely provided a remedy to correct by nunc pro tunc entry clerical errors in judgments, orders, etc., or errors arising from oversight or omission, but the rule did not constitute a license to make judicial changes in the actual law or ruling of a case. The “error” that Dyck O'Neal sought to have corrected was the addition of an in personam judgment to the foreclosure order. That error—which Dyck O'Neal admitted resulted from Fifth Third's counsel—was one of substance and not proper under Indiana Trial Rule 60(A). Further, there was nothing to show that, at the time the trial court entered the in rem judgment in its foreclosure order, it also entered an in personam judgment. Therefore, the court affirmed the trial court's denial of Dyck O'Neal's motion to amend the foreclosure order.

The court then addressed the Elliotts' challenge to the trial court's denial of their motion for refund and subsequent motion to correct error. Dyck O'Neal contended that the Elliotts had provided no legal basis for their motion for refund. In their reply brief, the Elliotts responded that their motion for refund was an equitable remedy. The Elliotts argued that the lack of an in personam judgment entitled them to a refund of the money they paid to Dyck O'Neal pursuant to the trial court's entry of the garnishment order. The court found that, in the foreclosure proceeding against the Elliotts, the trial court entered a default judgment and entered only an in rem judgment. After the property was sold at a sheriff's sale, Dyck O'Neal improperly initiated proceedings supplemental from the in rem judgment and sought an order for garnishment of wages. The trial court then improperly entered a garnishment order, which essentially allowed Dyck O'Neal to recover a deficiency from that in rem judgment and required the Elliotts, who were not represented by counsel at that time, to pay $50.00 per week. Given the specific facts of the case, the court concluded that equity demanded that the Elliotts be entitled to a refund and that the trial court erred by failing to grant that equitable remedy.

Dissent: Judge Brown dissented with the reversal of the trial court’s denial of the Elliots’ motion for refund and subsequent motion to correct error. Judge Brown argued that the Elliotts did not file a notice of appeal of the garnishment order, and their appeal essentially amounted to a collateral attack on a previously issued final judgment. Furthermore, even if the court were to consider the Elliotts' motion for refund as a motion for relief from the garnishment order pursuant to Trial Rule 60(B), it would still be untimely. A Rule 60(B) motion must be filed “not more than one year after the judgment” if based on reasons (1), (2), (3), or (4), or it must be filed “within a reasonable time” if based on reasons (5), (6), (7), or (8). T.R. 60(B). Here, the Elliott's motion for refund was not filed within one year nor a reasonable time after the entry of that judgment. The Elliotts waited over four and a half years to seek relief from the September 2009 garnishment order, and such period of time is not reasonable. Therefore, Judge Brown found that the Elliotts’ motion had been properly denied.

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By: ATG Underwriting Department | Posted on: Wed, 11/16/2016 - 2:37pm