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Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case. ATTORNEYS FOR APPELLANT: JOHN O. WORTH Worth Law Office Rushville, Indiana ATTORNEYS FOR APPELLEE: JOHN E. BATOR Bator Law, LLC Greenfield, Indiana PAUL D. LUDWIG Redman & Ludwig, P.C. Indianapolis, Indiana

FILED
Jan 21 2009, 8:58 am
of the supreme court, court of appeals and tax court

CLERK

IN THE COURT OF APPEALS OF INDIANA
ELMER J. WILLHITE AND SHARON J. WILLHITE, Appellants-Plaintiffs, vs. MAINSOURCE BANK, successor in Interest to Peoples Trust Company, Appellee-Defendant. ) ) ) ) ) ) ) ) ) ) )

No. 29A05-0806-CV-322

APPEAL FROM THE HAMILTON SUPERIOR COURT The Honorable Daniel J. Pfleging, Judge Cause No. 29D02-0309-MF-681

January 21, 2009

MEMORANDUM DECISION - NOT FOR PUBLICATION

ROBB, Judge

Case Summary and Issues Elmer and Sharon Willhite appeal the trial courts grant of summary judgment in favor of MainSource Bank ("MainSource") in this action for mortgage foreclosure. On appeal, the Willhites raise three issues, which we consolidate and restate as: 1) whether the trial court applied the proper standard of review; and 2) whether the trial court erred when it determined that no genuine issues of material fact exist with respect to the Willhites fraud claims. Concluding that the trial court applied the proper standard, no genuine issues of material fact exist, and MainSource is entitled to judgment as a matter of law, we affirm. Facts and Procedural History The Willhites owned a large tract of farm land. Over time, they divided the farm land into smaller plots, selling them individually. The Willhites also acquired two residential properties1 located at 23050 Mulebarn Road and 807 West Second Street in Sheridan, Indiana. Seeking investment properties, the Willhites purchased a six-unit apartment building located at Harmony Drive in Connersville, Indiana, in the spring of 1998. Mike Morgan, a real estate agent, assisted the Willhites with the purchase of the Harmony apartments. The Willhites obtained financing to purchase the Harmony apartments through Peoples Trust Company.2 The Willhites engaged in several other real estate transactions including purchases, sales, charitable transfers, and Section 1031 exchanges.3 On occasion,

For the sake of clarity and brevity, the various properties at issue in this appeal will be referred to by the name of the street on which they are located. The actual lending institution involved in the events in this appeal was Peoples Trust Company. MainSource Bank, the party to this appeal, is the successor-in-interest to Peoples Trust Company.
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A section 1031 exchange is an exchange of certain types of investment or business property intended

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the Willhites had previously utilized accounting and legal professionals to assist them with real estate transactions and Peoples Trust to assist them with financing. Later in 1998, Morgan approached the Willhites about purchasing three additional sixunit apartment buildings located at 3357, 3385, and 3417 Serenity Parkway in Connersville, Indiana. On January 26, 1999, the Willhites executed a purchase agreement to purchase the Serenity apartments for $625,000. The Willhites then contacted Dennis King at Peoples Trust to arrange financing for a total of $627,000. On March 15, 1999, Morgan sent a letter to King that included cash flow projections for the Serenity apartments. The letter estimated an annual cash flow of $32,977 after accounting for mortgage loan payments assuming a vacancy factor of 2.5%. The Serenity apartments were appraised at a value of $585,000.4 Because of this, Peoples Trust required additional collateral from the Willhites to secure the loan of $627,000. Prior to authorizing the loan, King determined the potential profitability of the Serenity apartments based on the cash flow projections submitted by Morgan. King did not review any profit/loss statements for the Serenity apartments. The loan committee at Peoples Trust approved the loan, and, on May 7, 1999, the Willhites executed a promissory note and security agreement to Peoples Trust in the amount of $627,000 secured by mortgages on the Harmony apartments, the Serenity apartments, the Mulebarn residence, and the Second Street residence. Contemporaneously, the Willhites executed two mortgages, one mortgaging the Mulebarn and Second Street residences and one

to avoid a capital gain or loss. See 26 U.S.C.

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