OneWest Bank, FSB v. Jason Jarvis, Natalie Jarvis, Mortgage Electronic Systems, Inc., as Nominees for American Mortgage Network, Inc., GE Money Bank ( 2014 )

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
Jun 20 2014, 10:19 am
of establishing the defense of res
judicata, collateral estoppel, or the law
of the case.
ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
FREDRIC LAWRENCE DAVID W. WESTLAND
Nelson & Frankenberger, P.C. Westland Kramer & Bennett, P.C.
Indianapolis, Indiana Schererville, Indiana
IN THE
COURT OF APPEALS OF INDIANA
ONEWEST BANK, FSB, )
)
Appellant-Plaintiff, )
)
vs. ) No. 45A05-1312-MF-615
)
JASON JARVIS, NATALIE JARVIS, )
MORTGAGE ELECTRONIC SYSTEMS, INC., )
AS NOMINEES FOR AMERICAN MORTGAGE )
NETWORK, INC., GE MONEY BANK, and )
SADDLE CREEK ESTATES )
HOMEOWNERS ASSOCIATION, INC., )
)
Appellees-Defendants. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable Calvin Hawkins, Judge
Cause No. 45D02-1107-MF-222
June 20, 2014
MEMORANDUM DECISION – NOT FOR PUBLICATION
BARNES, Judge
Case Summary
OneWest Bank, FSB, (“OneWest”) appeals the sanction imposed by the trial court
upon finding OneWest in contempt. We reverse and remand.
Issue
OneWest raises one issue, which we restate as whether the trial court properly
sanctioned OneWest for its contempt.
Facts
In 2007, Jason and Natalie Jarvis executed a promissory note and mortgage to
purchase property in Dyer. OneWest acquired the mortgage in 2009, and the Jarvises
failed to make payments on the note. In 2010, the Jarvises accepted a loan modification
agreement offered by OneWest, but the modification was not finalized. In 2011,
OneWest filed a complaint on the note and to foreclose on the mortgage. Apparently,
because of OneWest’s errors, it did not perform pursuant to the loan modification
agreement, and the Jarvises moved to enforce the agreement. On November 17, 2011,
the trial court ordered OneWest to allow the Jarvises to make payments pursuant to the
terms of the loan modification agreement and extended the repayment time accordingly.
In January 2013, OneWest filed a motion to dismiss its complaint without
prejudice because the loan modification had been completed, and the trial court granted
the motion to dismiss. The Jarvises responded to the motion to dismiss and asserted that
the loan modification had not been completed because of OneWest’s continued refusal to
do so. The Jarvises requested that OneWest be held in contempt for its refusal to comply
with the November 2011 order. On March 2013, the trial court found OneWest in
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contempt and ordered OneWest to remove all interest, fees, attorney fees, and costs
imposed on the Jarvises’ account since the 2011 order and to take all necessary steps to
remove any negative credit references on the Jarvises’ credit report. The trial court also
awarded the Jarvises attorney fees and ordered them to make the January, February,
March, and April mortgage payments by April 1, 2013.
On June 10, 2013, the loan modification was executed. On June 11, 2013, the
Jarvises filed a second motion for contempt citation. The Jarvises alleged that, since the
trial court’s March 2013 order, OneWest had attempted to collect allegedly outstanding
balances, had attempted to change their monthly payments, and had sent real estate
agents to their home encouraging them to sell the residence. The Jarvises attached letters
sent by OneWest to their motion. OneWest responded by asserting that it had paid the
court ordered attorney fees, it was in compliance with the March 2013 order, and the
letters were “unknowingly and unintentionally sent to the Defendants in error pending the
finalization of the loan modification” through its automated system. App. p. 91.
An evidentiary hearing was held at which Jason testified about OneWest’s actions,
including OneWest’s failure to clear their credit report. At the conclusion of the hearing,
the trial court stated it was “stunned” by OneWest’s conduct and described OneWest as
having “systematically . . . thumbed its nose at the Court.” Tr. pp. 39, 37. The trial court
issued an order finding OneWest in contempt of the November 2011 and March 2013
orders. The trial court dismissed OneWest’s complaint with prejudice and ordered that
OneWest and any successor in interest “is precluded from further attempting to pursue its
legal and/or equitable claims on the real estate . . . and on the Note and Mortgage
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attached to plaintiff’s Complaint.” App. p. 105. The trial court also awarded the Jarvises
attorney fees and $500 for their preparation and attendance at the hearing.
OneWest filed a motion to correct error requesting that the language prohibiting it
or a successor from further attempting to pursue legal or equitable claims be stricken
from the order. OneWest argued that the contempt sanction purported to prohibit future
legal action on the note and mortgage and that defaults after the entry of dismissal “were
not and could not have been decided in this cause.” Id. at 109. The Jarvises responded
by asserting, “The sanction imposed was a fair and accurate way to compensate the
Defendants in this case.” Id. at 117. After OneWest replied, the trial court denied
OneWest’s motion to correct error. OneWest now appeals.
Analysis
OneWest does not challenge the contempt finding or the dismissal of the
complaint with prejudice. It argues only that the preclusion language in the contempt
sanction was improper because OneWest and its successors are prohibited from enforcing
the note and mortgage in the event of a future default by the Jarvises. The imposition of
sanctions to compensate the other party for injuries incurred as a result of the contempt is
within the trial court’s discretion. Witt v. Jay Petroleum, Inc., 964 N.E.2d 198, 204 (Ind.
2012). Because the presumption favors the trial court, we review an award of damages
for an abuse of discretion and will reverse only when there is no evidence to support the
award. Id. A trial court may take into account the inconvenience and frustration suffered
by the aggrieved party in determining the amount of damages. Id.
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To support its argument that it should be able to enforce the note and mortgage if
the Jarvises default in the future even though the complaint was dismissed with prejudice,
OneWest relies on Afolabi v. Atlantic Mortgage & Investment Corp., 849 N.E.2d 1170
(Ind. Ct. App. 2006). Afolabi involved the dismissal of a foreclosure action with
prejudice for failure to prosecute and the filing of another complaint to foreclosure based
on subsequent nonpayment. We concluded that res judicata did not bar the successive
foreclosure claim because “the subsequent and separate alleged defaults under the note
created a new and independent right in the mortgagee to accelerate payment on the note
in a subsequent foreclosure action.” Afolabi, 849 N.E.2d at 1175. OneWest also argues
that, by precluding future litigation in contravention of the terms of the parties’ contract,
the trial court improperly modified the contract between OneWest and the Jarvises. See
Nationstar Mortgage, LLC v. Curatolo, 990 N.E.2d 491, 495 (Ind. Ct. App. 2013)
(observing that a trial court may not make a new contract for the parties or ignore or
eliminate provisions of the instrument).
The Jarvises do not disagree with OneWest’s assertion that the contempt order
precludes future litigation of the loan modification agreement. They contend that Afolabi
does not limit the authority of a trial court in contempt proceedings and that the contempt
order does not alter the terms of the parties’ contract, “rather the order satisfied the loan
obligation and alleged debt.” Appellees’ Br. p. 15. The Jarvises describe the contempt
order as, in essence, awarding them “monetary damages in the amount of the debt by . . .
not allowing One West or any successors to enforce the note or the mortgage.” Id. at 14.
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We cannot agree that precluding OneWest or its successors from pursuing future
legal claims on the property is effectively a monetary judgment in the amount of the
Jarvises’ debt because the note and mortgage are still outstanding and will remain a cloud
on the title to the property. Had the trial court intended to impose a monetary judgment
in the amount of the debt, the trial court should have specifically ordered such.
Moreover, we cannot agree with the Jarvises that damages equivalent to the
unpaid balance of loan, which the loan modification agreement indicated was
$311,243.81 as of April 2, 2013, were appropriate. OneWest’s actions of failing to clear
the Jarvises’ credit report, sending real estate agents to their house to convince them to
sell, and incorrectly notifying them that they were in default certainly warranted the
contempt finding. The trial court was understandably angry, as are we. As frustrated,
inconvenienced, and embarrassed as the Jarvises were by OneWest’s actions, there is no
evidence that more than $300,000 in monetary damages was warranted. As such, we
must conclude that the trial court abused its discretion by precluding OneWest from
attempting to enforce the note and/or mortgage based upon a future default by the
Jarvises.
Conclusion
The trial court abused its discretion by prohibiting OneWest from attempting to
enforce the note and/or mortgage in the future. We reverse and remand with instructions
to remove that language from the September 2013 order.
Reversed and remanded.
BAKER, J., and CRONE, J., concur.
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