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ATTORNEYS FOR APPELLANTS Craig D. Doyle Mark R. Galliher Kurt V. Laker Indianapolis, Indiana

ATTORNEY FOR APPELLEE Sean M. Clapp Fishers, Indiana

In the

Indiana Supreme Court
No. 49S02-0910-CV-442 THOMAS A. NEU, ELIZABETH A. NEU, AND WELLS FARGO BANK, N.A.,

FILED
Jun 01 2010, 1:40 pm
of the supreme court, court of appeals and tax court

CLERK

Appellants (Defendants and Crossclaimants below), v. BRETT GIBSON, Appellee (Plaintiff below).

Appeal from the Marion Superior Court, No. 49D10-0506-MF-21457 The Honorable David Dreyer, Judge On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-0811-CV-1031

June 1, 2010 Shepard, Chief Justice.

Brett Gibson sold his business to John Nowak. Nowak financed his purchase in part with a note secured by a second mortgage on Nowaks residence. Nowak subsequently sold his residence to Thomas and Elizabeth Neu, who did not know of Gibsons mortgage. When Nowak defaulted, Gibson foreclosed. During an earlier appeal, the Court of Appeals determined that the

Neus and their lender were entitled to priority ahead of Gibson, the same position held by Nowaks first mortgagee.

Now, the Neus claim this entitles them to interest, attorney fees, and costs. They also assert that they may foreclose on their own home under terms of the Nowak mortgage or, in the alternative, that they have a right to force a sheriffs sale of the property based on Gibsons foreclosure. The trial court found they were not entitled to any of these. Because we conclude that the trial court reached the equitable resolution of the case and that the applicable statute does not require the court to grant the Neus a sale, we affirm.

Facts and Procedural History

Brett Gibson sold his company, Cellular Telephone Centers, T.H., Inc., to John Nowak. To finance the purchase, Nowak executed a promissory note to Gibson for $350,000 secured by a mortgage on Nowaks home. The pertinent documents provided for a 6.5% interest rate, for foreclosure in case of default, and for attorney fees and costs in case Gibson needed to sue to enforce his rights. Gibson also agreed to release the mortgage when Nowak sold the house "provided that [Nowak] has not defaulted in his obligations to the mortgagor and is current in his payments." (App. at 41.)

At the time Nowak purchased the business, Irwin Mortgage Corporation held a prior mortgage on his home securing a loan of $506,900. The Irwin mortgage provided for a 6.25% interest rate. It also stated that Irwin would be "entitled to collect all expenses incurred in pursuing [acceleration], including, but not limited to, reasonable attorneys fees and costs of title evidence." (App. at 235.) It defined default as follows: Borrower shall be in default if any action or proceeding, whether civil or criminal, is begun that, in Lenders judgment,

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could result in forfeiture of the Property or other material impairment of Lenders interest in the Property or rights under this Security Instrument. . . . The proceeds of any award or claim for damages that are attributable to the impairment of Lenders interest in the Property are hereby assigned and shall be paid to Lender. (App. at 231

Download Thomas A. Neu, Elizabeth A. Neu, and Wells Fargo Bank, N.A. v. Brett Gibson.pdf

Indiana Law