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ATTORNEY FOR APPELLANTS Christine M. Jackson Indianapolis, Indiana

ATTORNEYS FOR APPELLEES Craig D. Doyle Mark R. Galliher Amanda J. Maxwell Indianapolis, Indiana Theodore J. Nowacki Curtis T. Jones Katherine Welch Rarick Indianapolis, Indiana

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Indiana Supreme Court
_________________________________ No. 28S01-1102-CV-78 MARY BETH LUCAS AND PERRY LUCAS,

In the

FILED
Sep 15 2011, 11:15 am
of the supreme court, court of appeals and tax court

CLERK

Appellants (Defendants below), v. U.S. BANK, N.A. AS TRUSTEE FOR THE C-BASS MORTGAGE LOAN ASSETBACKED CERTIFICATES, SERIES 2006-MH-1, Appellee (Plaintiff below), LITTON LOAN SERVICING, LP, Appellee (Third-Party Defendant). _________________________________ Appeal from the Greene Superior Court, No. 28D01-0901-MF-27 The Honorable Dena Benham Martin, Judge _________________________________ On Petition to Transfer from the Indiana Court of Appeals, No. 28A01-0910-CV-482 _________________________________ September 15, 2011

David, Justice. In this case, a mortgage holder filed a foreclosure action against the loan borrowers. In response, the borrowers asserted numerous legal defenses and claims against the mortgage holder and loan servicer. The borrowers asked for a jury trial on these defenses and claims, but the trial court denied the request. We affirm and hold that the borrowers` claims and defenses shall be tried in equity because the core legal questions presented b y the borrowers` defenses and claims are significantly intertwined with the subject matter of the foreclosure action. Facts and Procedural History In April 2005, Mary Beth and Perry Lucas entered into a residential mortgage loan transaction with Argent Mortgage Company (Argent). An escrow account was established from which the hazard insurance and property taxes were to be paid. In August 2005, a few months after the Lucases closed on the loan, disagreements arose between the Lucases and AMC Mortgage Services (AMC), the original loan servicer. At issue was the escrow account: specifically, AMC and the Lucases disputed whether the Lucases provided sufficient evidence of homeowner`s insurance and paid the correct amounts of property taxes. In May 2006, Litton Loan Servicing took over as the loan servicer. Litton charged the Lucases late fees for the months of February, March, and April 2006. The Lucases claim that Litton charged these fees erroneously because the Lucases had sent timely payments for those months to AMC. In November 2006, the Lucases filed for bankruptcy and indicated on their bankruptcy application that they wanted to reaffirm their mortgage loan. The following month, more disagreements arose, and the Lucases requested that Litton discontinue their escrow account. In February 2007, the bankruptcy was discharged. The Lucases continued to incur late fees, and in October 2007, Litton sent the Lucases a notice of default and intent to accelerate on the loan.

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Several unsuccessful attempts to resolve the matter followed. In January 2008, the Lucases sent Litton a letter, requesting specific information about their loan, but Litton`s response was not satisfactory to them. In January 2009, the current mortgage holder, U.S. Bank National Association, as Trustee for the C-Bass Mortgage Loan Asset-Backed Certificates, Series 2006-MH-1, filed a complaint against the Lucases, seeking to foreclose on the mortgaged property. U.S. Bank alleged that the Lucases failed to pay monthly mortgage payments and fees according to the terms of the mortgage loan documents. In response, the Lucases filed an answer, affirmative defenses, counterclaims, a thirdparty complaint, and a demand for a jury trial on all issues deemed so triable. The Lucases alleged that U.S. Bank and Litton violated numerous statutes and the common law and that the Lucases were thus entitled to various forms of relief, including money damages. U.S. Bank then filed a motion to strike the Lucases` jury request and also categorically denied the Lucases` allegations. After a hearing, the trial court granted U.S Bank`s motion to strike the Lucases` request for a jury trial. It reasoned that U.S. Bank is seeking foreclosure, an essentially equitable cause of action. Accordingly, the trial court concluded that the Lucases` related legal claims and counterclaims were drawn into equity. On discretionary interlocutory appeal, the Court of Appeals reversed the trial court`s o rder with instructions to grant the Lucases` request for a jury trial on their legal claims. Relying on this Court`s decision in Songer v. Civitas Bank, 771 N.E.2d 61 (Ind. 2002), the Court of Appeals could not conclude that the essential features of this case were equitable. Lucas v. U.S. Bank, N.A., 932 N.E.2d 239, 245 (Ind. Ct. App. 2010). We granted transfer. Standard of Review Whether certain claims are entitled to a trial by jury presents a pure question of law. Therefore, we review the issue de novo. See Cunningham v. State, 835 N.E.2d 1075, 1076 (Ind. Ct. App. 2005), trans. denied.

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The Right to Trial by Jury in Civil Cases This Court is confronted with the following issue: once a foreclosure action invokes the equity jurisdiction of a trial court, when are the borrowers` legal defenses and claims subsumed into equity? A. A Brief Background The Indiana Constitution states, In all civil cases, the right of trial by jury shall remain inviolate. Ind. Const. art. 1,

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