Chapel Ridge Investments, LLC v. U.S. Bank National Association, As Trustee for the Registered Holders of ML-CFC Commerical Mortgage Trust 2006-4 (mem. dec.) ( 2017 )

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D), FILED
this Memorandum Decision shall not be Aug 16 2017, 8:34 am
regarded as precedent or cited before any
CLERK
court except for the purpose of establishing Indiana Supreme Court
Court of Appeals
the defense of res judicata, collateral and Tax Court
estoppel, or the law of the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Eric E. Snouffer Michael J. Lewinski
Fort Wayne, Indiana Ice Miller LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Chapel Ridge Investments, LLC, August 16, 2017
Appellant-Defendant, Court of Appeals Case No.
02A05-1702-MF-261
v. Appeal from the Allen Superior
Court
U.S. Bank National Association, The Honorable Nancy E. Boyer,
As Trustee for the Registered Judge
Holders of ML-CFC Trial Court Cause No.
Commercial Mortgage Trust 02D01-1608-MF-512
2006-4, Commercial Mortgage
Pass-Through Certificates, Series
2006-4,
Appellee-Plaintiff.
Bailey, Judge.
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Case Summary
[1] Chapel Ridge Investments, LLC (“Chapel Ridge”) appeals from the grant of
summary judgment in favor of U.S. Bank National Association, as Trustee for
the Registered Holders of ML-CFC Commercial Mortgage Trust 2006-4,
Commercial Mortgage Pass-Through Certificates, Series 2006-4
(“Noteholder”).
[2] We affirm in part, reverse in part, and remand.
Issues
[3] Chapel Ridge presents the following consolidated and restated issues:
I. Whether the trial court abused its discretion when it
altered a time limit under Trial Rule 56, giving Chapel
Ridge additional time to respond but not the full sixty days
that Chapel Ridge had sought; and
II. Whether the trial court abused its discretion in denying
Chapel Ridge’s motion to strike, and thereby
improvidently granted summary judgment.
Facts and Procedural History
[4] On August 9, 2016, Noteholder filed a complaint against Chapel Ridge,
alleging that Chapel Ridge had failed to pay a matured loan obligation secured
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by a mortgage upon commercial property in Fort Wayne.1 A series of loan
documents (“Loan Documents”) were attached to the complaint as exhibits,
including a description of the real estate, a loan agreement, a promissory note, a
mortgage agreement, and several assignment documents. Another attached
exhibit was an affidavit from Jeff Coupe (“Coupe”) (the “First Coupe
Affidavit”). Coupe averred that he was an asset manager at C-III Asset
Management LLC (“C-III”), which was a special servicer of the loan on behalf
of Noteholder. Coupe further averred that he had “personal knowledge of the
types of records that C-III acquires and maintains in the ordinary course of
business and of documents regarding C-III’s authority to act on behalf of
Noteholder.” Appellant’s App. Vol. II at 116. Coupe also averred that each of
the Loan Documents was a “true, correct, and authentic copy.” Id. at 116-17.
[5] Chapel Ridge filed its answer on September 29, 2016, and Noteholder filed a
motion for summary judgment on November 7, 2016. Attached to the motion
was a second affidavit from Coupe (the “Second Coupe Affidavit”), as was an
affidavit concerning attorney fees (the “Attorney Fee Affidavit”). These
affidavits were designated in support of the motion. Noteholder also designated
the First Coupe Affidavit and the Loan Documents, among other documents.
A hearing on the motion was set for January 5, 2017.
1
Noteholder also sought appointment of a receiver, and a receiver was subsequently appointed.
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[6] On December 12, 2016, Chapel Ridge filed a motion seeking a sixty-day
enlargement of time to respond to Noteholder’s motion for summary judgment.
Chapel Ridge sought the additional time—through February 10, 2017—because
Chapel Ridge had “not had sufficient opportunity to conduct discovery.” Id. at
164. Noteholder opposed the motion, stating that it did not object to a shorter
extension—up to January 3, 2017—that would preserve the January 5 hearing
date. The trial court gave Chapel Ridge an extension to Noteholder’s suggested
date of January 3, 2017.
[7] On January 3, 2017, Chapel Ridge filed a motion to strike, raising challenges to
the First Coupe Affidavit, the Second Coupe Affidavit, and the Attorney Fee
Affidavit. Along with the motion to strike, Chapel Ridge filed a response to
Noteholder’s motion for summary judgment, arguing that without the
challenged averments, Noteholder was not entitled to summary judgment.
[8] Following a hearing on January 5, 2017, the trial court denied Chapel Ridge’s
motion to strike and granted summary judgment in favor of Noteholder.
[9] This appeal ensued.
Discussion and Decision
Alteration of Time to Respond
[10] Trial Rule 56 governs summary judgment proceedings. Pursuant to the rule, a
party has thirty days “after service of the motion to serve a response and any
opposing affidavits.” Ind. Trial Rule 56(C). However, “for cause found” and
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“upon motion made within the applicable time limit,” the trial court “may alter
any time limit set forth” in Trial Rule 56. T.R. 56(I). We review a decision to
alter a Trial Rule 56 time limit for an abuse of discretion, Logan v. Royer, 848
N.E.2d 1157, 1160 (Ind. Ct. App. 2006), which occurs when the decision is
against the logic and effect of the facts and circumstances before the trial court.
Mitchell v. 10th & The Bypass, LLC, 3 N.E.3d 967, 970 (Ind. 2014).
[11] Chapel Ridge contends that the trial court erred by granting some, but not all,
of the additional time it requested for discovery purposes. Although Chapel
Ridge focuses its argument on whether a longer extension would have
prejudiced Noteholder, Chapel Ridge has not identified any prejudice that it
suffered because it needed additional time. Indeed, Noteholder points out—
and Chapel Ridge does not dispute—that Chapel Ridge made no discovery
requests before seeking an extension and made no discovery requests after
obtaining an extension. Thus, even assuming arguendo that Chapel Ridge has
identified error, reversal would not be warranted. See T.R. 61 (“The court at
every stage of the proceeding must disregard any error or defect in the
proceeding which does not affect the substantial rights of the parties.”).
Evidentiary Basis for Summary Judgment
[12] Chapel Ridge argues that the trial court improvidently granted summary
judgment by relying on averments that it should have stricken. We review the
denial of a motion to strike for an abuse of discretion. H.M. v. State, 65 N.E.3d
1054, 1057 (Ind. Ct. App. 2016), trans. denied. With respect to summary
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judgment, we review the decision “de novo, applying the same standard as the
trial court: summary judgment is appropriate only where ‘the designated
evidentiary matter shows that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.’” Young
v. Hood’s Gardens, Inc., 24 N.E.3d 421, 423-24 (Ind. 2015) (quoting T.R. 56(C)).
The initial burden is on the movant to demonstrate the absence of any genuine
issue of material fact. Schoettmer v. Wright, 992 N.E.2d 702, 705-06 (Ind. 2013).
Once that showing is made, the burden shifts to the non-movant to come
forward with contrary evidence showing the existence of an issue for the trier of
fact. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). In determining
whether the moving party is entitled to summary judgment, “[w]e consider only
those materials properly designated pursuant to Trial Rule 56 and construe all
factual inferences and resolve all doubts . . . in favor of the non-moving party.”
Young, 24 N.E.3d at 424.
Coupe Affidavits
[13] Chapel Ridge contends that the Coupe Affidavits fail to comply with Trial Rule
56(E). Pursuant to this rule, “[s]upporting and opposing affidavits shall be
made on personal knowledge, shall set forth such facts as would be admissible
in evidence, and shall show affirmatively that the affiant is competent to testify
to the matters stated therein.” T.R. 56(E). To comply with Trial Rule 56(E),
“affidavits . . . must present admissible evidence that should follow substantially
the same form as though the affiant were giving testimony in court.” Guzik v.
Town of St. John, 875 N.E.2d 258, 265 (Ind. Ct. App. 2007), trans. denied. “The
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requirements of Trial Rule 56(E) are mandatory” and “a court considering a
motion for summary judgment should disregard inadmissible information
contained in supporting or opposing affidavits.” Id.Personal Knowledge
[14] Chapel Ridge first contends that the trial court should have stricken the Coupe
Affidavits because “neither affidavit was based on personal knowledge.”
Appellant’s Br. at 11. Chapel Ridge directs us to the following passage
contained in each affidavit:
I am an Asset Manager at C-III Asset Management LLC, a
Delaware limited liability company, in its capacity as special
servicer pursuant to that certain Pooling and Servicing
Agreement dated December 1, 2006 (“C-III”). C-III is servicing
the loan on behalf of Noteholder. I have personal knowledge of
the type of records that C-III acquires and maintains in the
ordinary course of business and of documents regarding C-III’s
authority to act on behalf of Noteholder.
Appellant’s App. Vol. II at 115-16, 148-49. Chapel Ridge argues that the
“personal knowledge” requirement was not met because Coupe does not
“establish that he has any knowledge specifically regarding the Chapel Ridge
transaction [or] that he reviewed documents involved in the Chapel Ridge
transaction.” Appellant’s Br. at 12. In other words, Chapel Ridge contends
that “Coupe’s knowledge is limited only to the types of documents maintained
by C-III” and “only regarding its authority to act on behalf of Noteholder.” Id.Court of Appeals of Indiana | Memorandum Decision 02A05-1702-MF-261 | August 16, 2017 Page 7 of 13
[15] “‘An affidavit need not contain an explicit recital of personal knowledge when
it can be reasonably inferred from its contents that the material parts thereof are
within the affiant’s personal knowledge.’” DeLage Landen Fin. Servs., Inc. v.
Cmty. Mental Health Ctr., Inc., 965 N.E.2d 693, 701 (Ind. Ct. App. 2012)
(quoting Decker v. Zengler, 883 N.E.2d 839, 844 (Ind. Ct. App. 2008), trans.
denied), trans. denied; see Ind. Evidence Rule 602 (“Evidence to prove personal
knowledge may consist of the witness’s own testimony.”). Moreover, “a
witness’s personal knowledge of a situation can be inferred from his or her
position or relationship to the fact set forth in his or her testimony or affidavit.”
Riviera Plaza Investments, LLC v. Wells Fargo Bank, N.A., 10 N.E.3d 541, 550 (Ind.
Ct. App. 2014). Further, we have previously recognized that the personal
knowledge of an asset manager can be “inferable from his position and from his
possession of [loan documents].” Am. Mgmt., Inc. v. MIF Realty, L.P., 666
N.E.2d 424, 429 n.2 (Ind. Ct. App. 1996).
[16] Here, Coupe did not expressly state that he had personally reviewed the Loan
Documents. However, in the First Coupe Affidavit, Coupe drew information
from each of the Loan Documents—including applicable dates, party names,
and instrument numbers—as Coupe narrated the background of the loan and
verified the authenticity of each document. Moreover, in the Second Coupe
Affidavit, Coupe itemized amounts allegedly owed to Noteholder. Ultimately,
given Coupe’s position as an asset manager at the entity servicing the loan,
Coupe’s possession of the Loan Documents, and the content of Coupe’s
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affidavits, it is reasonable to infer that Coupe had the requisite personal
knowledge to testify concerning the loan.
Failure to Attach Documents
[17] Chapel Ridge next argues that the trial court should have stricken paragraph
three of the Second Coupe Affidavit because Coupe’s averments referred to
documents that were not attached to the affidavit, contrary to Trial Rule 56(E).
[18] In addition to requiring personal knowledge, Trial Rule 56(E) provides that
“[s]worn or certified copies not previously self-authenticated of all papers or
parts thereof referred to in an affidavit shall be attached thereto or served
therewith.” Here, the challenged paragraph states that “[a]ccording to the
books and records of C-III, Chapel Ridge is indebted to the Noteholder in at
least the following amounts,” and Coupe then provides a table of amounts.
Appellant’s App. Vol. II at 149. We agree with Chapel Ridge that the affidavit
refers to documents, triggering additional obligations under Trial Rule 56(E).
Thus, because the Second Coupe Affidavit does not include sworn or certified
copies of the referenced documents, and the documents were not previously
self-authenticated, the affidavit does not comply with the rule. See Seth v.
Midland Funding, LLC, 997 N.E.2d 1139, 1143 (Ind. Ct. App. 2013) (“Because
Degel explicitly states that her affidavit is based upon her personal knowledge
of facts obtained from business records maintained by Midland, she was
required to attach to her affidavit sworn, certified, or self-authenticated copies
of any of the business records she relied upon.”). The trial court therefore erred
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when it failed to strike paragraph three from the Second Coupe Affidavit, and
we accordingly disregard the averments therein in conducting our review.
Legal Conclusions
[19] Chapel Ridge next directs our attention to several paragraphs of the First Coupe
Affidavit, contending that the paragraphs contain inadmissible legal
conclusions that should have been stricken. See Evid. R. 704 (“Witnesses may
not testify to . . . legal conclusions.”). With respect to paragraphs 15, 17, 18,
and 20, the allegations therein are independently established by the Loan
Documents. Moreover, paragraph 22 relates to the appointment of a receiver, a
matter that was resolved with Chapel Ridge’s consent and that is otherwise not
relevant to the appeal. The remaining challenges are to paragraphs 13 and 14.
[20] Paragraph 13 states: “Chapel Ridge has defaulted on its obligations under the
Loan Documents by, among other things, failure to meet its payment
obligations under the Loan Documents.” Appellant’s App. Vol. II at 118.
Paragraph 14 states: “Despite notice and demand for payment, Chapel Ridge
has failed to cure its defaults.” Id. Although Chapel Ridge characterizes these
allegations as inadmissible legal conclusions, we disagree. Rather, these are
admissible factual allegations drawn from the personal knowledge of the asset
manager, and the trial court did not err in failing to strike these paragraphs.
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Attorney Fee Affidavit
[21] Finally, Chapel Ridge challenges the trial court’s refusal to strike the Attorney
Fee Affidavit. Chapel Ridge contends that the affidavit does not comply with
Local Rule LR02-TR00-16, which provides:
No order granting a request for attorney fees shall be made unless
fees are allowable under applicable law and there has been
evidence furnished by testimony or affidavit of the attorney. The
testimony or affidavit shall describe the services rendered in order
to establish to the Court’s satisfaction the amount of time
expended (or to be expended in the matter), the fact that the
services and time were or are reasonably necessary considering
the nature and complexity of the matter, the experience or
expertise of the attorney seeking an attorney fee award, the usual
and customary charges, and the reasonableness of the requested
fees. Judicial notice of reasonable fees shall not be taken. In any
event, the award of attorney fees shall be within the sound
discretion of the Court.
[22] In the Attorney Fee Affidavit, counsel averred that Noteholder incurred
$16,000 in attorney fees, representing approximately thirty-six hours of work at
an average rate of $450 per hour. Counsel further averred that the
representation “include[d], but [wa]s not limited to: contact and
correspondence with the client; preparation of the Complaint; arrangements for
the appointment of a Receiver; and preparation of the motion for summary
judgment, supporting brief, and affidavits.” Appellant’s App. Vol. II at 152.
Counsel also averred that Noteholder incurred $1,652.12 in expenses, which
included “the filing fee, photocopies, and process of service expenses.” Id.Although Chapel Ridge contends that the Attorney Fee Affidavit lacked
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sufficient “detail to ascertain the reasonableness of the request,” Appellant’s Br.
at 15, we conclude that the information in the affidavit was sufficient to
establish “to the Court’s satisfaction” that the request was reasonable. Thus,
the trial court did not abuse its discretion in declining to strike the affidavit.
[23] Having resolved Chapel Ridge’s arguments concerning its motion to strike, we
now turn to Noteholder’s motion for summary judgment. Noteholder has
established that Chapel Ridge has defaulted on its obligations to pay
Noteholder under the loan. However, because we must disregard the improper
averments in the Second Coupe Affidavit, we conclude that Noteholder has not
demonstrated that it is entitled to summary judgment on the issue of damages
due to Chapel Ridge’s non-payment of the loan. We therefore reverse that
portion of the summary judgment order pertaining to those alleged damages.
Consequently, there is no final foreclosure judgment, and so we reverse the
order for a Sheriff’s sale. See Ind. Code § 32-29-7-7 (providing a right of
redemption by “payment . . . of the amount of the judgment, interest, and costs
for the payment or satisfaction of which the sale was ordered.”). Chapel Ridge
has otherwise not demonstrated that the trial court erred in granting summary
judgment. We therefore affirm the grant of summary judgment as to all other
issues—including Noteholder’s entitlement to the fee award—and we remand
for further proceedings.
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Conclusion
[24] Chapel Ridge has not demonstrated that it was prejudiced by the Trial Rule
56(I) alteration of time, which we affirm. The trial court should have stricken a
portion of the Second Coupe Affidavit, which was contrary to Trial Rule 56(E),
but the trial court did not otherwise abuse its discretion in denying Chapel
Ridge’s motion to strike. Disregarding the averments as to the amounts owed
in the Second Coupe Affidavit, we reverse the grant of summary judgment with
respect to damages due to non-payment of the loan. Because our reversal
means there is no final foreclosure judgment, we reverse the order for a Sheriff’s
sale. We affirm the grant of summary judgment in all other respects, and
remand for further proceedings.
[25] Affirmed in part, reversed in part, and remanded.
Vaidik, C.J., and Robb, J., concur.
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