Riviera Plaza Investments, LLC and Haresh Shah v. Wells Fargo Bank, N.A. , 10 N.E.3d 541 ( 2014 )

FOR PUBLICATION
May 15 2014, 8:53 am
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
AARON J. BUTLER MARK D. GERTH
Fort Wayne, Indiana PETER A. VELDE
Kightlinger & Gray, LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
RIVIERA PLAZA INVESTMENTS, LLC )
and HARESH SHAH, )
)
Appellants-Defendants, )
)
vs. ) No. 02A03-1308-MF-323
)
WELLS FARGO BANK, N.A., )
)
Appellee-Plaintiff. )
APPEAL FROM THE ALLEN SUPERIOR COURT
The Honorable David J. Avery, Judge
Cause No. 02D01-1008-MF-720
May 15, 2014
OPINION - FOR PUBLICATION
BRADFORD, Judge
CASE SUMMARY
On July 7, 2006, Appellant-Defendant Riviera Plaza Investments, LLC executed a
fixed rate promissory note (“Note”) by which it promised to pay Citibank N.A., a national
banking association, successor, by merger, to Citibank, FSB, a federal savings bank
(“Citibank”) the sum of $2,925,000.00 plus interest. On that same date and in connection to
the Note, Riviera also executed a mortgage on certain real estate owned by Riviera, and any
improvements located thereon (“Mortgage”), and Appellant-Defendant Haresh Shah
executed a loan guaranty (“Guaranty”). Riviera subsequently defaulted on the loan.
The Note, Mortgage, and Guaranty (collectively the “Loan Documents”) were
eventually assigned to Appellee-Plaintiff Wells Fargo Bank, N.A. (“Wells Fargo”), which
then became involved in ongoing collection and foreclosure proceedings against Riviera and
Shah (collectively, “Appellants”). On May 13, 2013, the trial court issued its order of
judgment. With regard to Riviera, the trial court granted Wells Fargo’s motion for summary
judgment. With regard to Shah, the trial court entered judgment in favor of Wells Fargo and
against Shah.
On appeal, Appellants contend that the trial court erred in finding in favor of Wells
Fargo. Specifically, Appellants claim that the record does not support the trial court’s
determination that (1) the Loan Documents were properly assigned to Wells Fargo, (2) Wells
Fargo was entitled to recover from Appellants, (3) the assignment of the right, title, and
interest of the Loan Documents did not amount to a material alteration of the Loan
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Documents which would release Shah from his obligation under the Guaranty, and (4) Wells
Fargo was entitled to an award of interest. Finding no error by the trial court, we affirm.
FACTS AND PROCEDURAL HISTORY1
On July 7, 2006, Riviera, by Shah, for value received, executed and delivered a Note
by which it promised to pay Citibank the sum of $2,925,000.00 in monthly installment
payments of principal plus interest in the sum of $19,166.33 per month at an annual rate of
6.85 percent. On the same date, Riviera, again by Shah, executed a Mortgage in order to
secure the payment of the Note. Also on that date, Shah executed a Guaranty2 in favor of
Citibank. Pursuant to the terms of the Guaranty, Shah guaranteed the prompt, complete, and
full payment and performance of Riviera’s obligations in accordance with the terms of the
Note.
Riviera failed to make the scheduled monthly payments on the Note. As a result of
Riviera’s failure to make the scheduled monthly payments on the Note, Citibank informed
Riviera that it was in default and, on August 27, 2010, initiated foreclosure proceedings
against Riviera. On October 28, 2010, Riviera filed a motion for judgment on the
pleadings/objection to prosecution of case by a plaintiff who is not a real party in interest,
claiming that Citibank had sold the loan at issue to a third party and was no longer the real
1
We note that Appellants made a request for oral argument on the cover of their Appellants’ Brief.
We remind Appellants and Appellants’ counsel that proper procedure for requesting oral argument is to file a
separate request with the court. See generally Ind. Appellate Rule 52. Nevertheless, because we determine
that oral argument is not necessary for the resolution of the instant appeal, we deny Appellants’ request for oral
argument in an order handed down on the same date as this memorandum decision.
2
“A guaranty is defined as a promise to answer for the debt, default, or miscarriage of another
person.” Grabill Cabinet Co. v. Sullivan, 919 N.E.2d 1162, 1165 (Ind. Ct. App. 2010) (internal quotation and
citation omitted). “It is an agreement collateral to the debt itself and represents a conditional promise whereby
3
party in interest. The trial court scheduled a hearing on Riviera’s motion for November 23,
2010.
On November 17, 2010, LSREF2 Nova Investments, LLC (“Nova”) filed an
appearance and a request to be substituted as the plaintiff due to an assignment by Citibank to
Nova of Citibank’s right, title, and interest in the Loan Documents. The trial court scheduled
a hearing on Nova’s motion for the same time as the hearing that was previously scheduled
for Riviera’s motion for judgment on the pleadings. On November 22, 2010, Riviera
informed the trial court that it did not object to Nova’s motion to substitute. The trial court
thereafter granted Nova’s motion and vacated the hearings scheduled for November 23,
2010.
On December 14, 2010, Nova filed a motion for leave to amend its complaint to add
Shah as an additional defendant based upon his execution of the Guaranty. The trial court
issued an order stating that Nova’s motion would be granted unless either Riviera or Shah
objected within ten days. Neither Riviera nor Shah objected, and, on January 4, 2011, the
trial court granted Nova’s motion to amend its complaint to include Shah as an additional
defendant.
On February 3, 2011, Appellants filed their answer to the amended complaint.
Appellants did not deny or challenge the validity of Citibank’s assignment of the Loan
Documents to Nova in this pleading.
On February 9, 2011, Wells Fargo filed a request to be substituted as the plaintiff due
to an assignment by Nova to Wells Fargo of Nova’s right, title, and interest in the Loan
the guarantor promises to pay only if the principle debtor fails to pay.” Id. (internal quotations omitted).
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Documents. Neither Riviera nor Shah objected to Wells Fargo’s motion, and, on February
16, 2011, the trial court granted Wells Fargo’s motion. Neither Riviera nor Shah took any
subsequent steps to set aside the trial court’s order or seek reconsideration of the order. In
addition, neither Riviera nor Shah filed any subsequent pleadings in which they denied that
Wells Fargo was the real party in interest or challenged the authenticity of the assignment.
Wells Fargo subsequently filed a motion for summary judgment which was denied by
the trial court on November 21, 2011. On May 2, 2012, Riviera filed a bankruptcy petition.
With respect to Riviera, the trial court stayed the case pending the conclusion of the
bankruptcy proceedings. With respect to Shah, the trial court conducted an evidentiary
hearing on June 19, 2012. Following the conclusion of the presentation of evidence, the trial
court took the matter under advisement.
In October of 2012, Wells Fargo notified the trial court of the dismissal of Riviera’s
bankruptcy proceedings and filed a renewed motion for summary judgment. On November
12, 2012, the trial court conducted a hearing on Wells Fargo’s motion for summary judgment.
On May 13, 2013, the trial court issued its order of judgment. With regard to Riviera, the
trial court granted Wells Fargo’s motion for summary judgment. With regard to Shah, the
trial court entered judgment in favor of Wells Fargo and against Shah. On July 15, 2013, the
trial court entered a decree of foreclosure. This appeal follows.
DISCUSSION AND DECISION
I. Standard of Review
A. Summary Judgment Against Riviera
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With respect to Riviera, the trial court granted Wells Fargo’s motion for summary
judgment.
Pursuant to Rule 56(C) of the Indiana Rules of Trial Procedure,
summary judgment is appropriate when there are no genuine issues of material
fact and when the moving party is entitled to judgment as a matter of law.
When reviewing a decision to grant summary judgment, this court applies the
same standard as the trial court. Best Homes, Inc. v. Rainwater, 714 N.E.2d
702, 705 (Ind. Ct. App. 1999). We must determine whether there is a genuine
issue of material fact requiring trial, and whether the moving party is entitled
to judgment as a matter of law. Id. Neither the trial court nor the reviewing
court may look beyond the evidence specifically designated to the trial court.
Id.A party seeking summary judgment bears the burden to make a prima
facie showing that there are no genuine issues of material fact and that the
party is entitled to judgment as a matter of law. American Management, Inc. v.
MIF Realty, L.P., 666 N.E.2d 424, 428 (Ind. Ct. App. 1996). Once the moving
party satisfies this burden through evidence designated to the trial court
pursuant to Trial Rule 56, the non-moving party may not rest on its pleadings,
but must designate specific facts demonstrating the existence of a genuine
issue for trial. Id. A trial court’s grant of summary judgment is “clothed with
a presumption of validity,” and the appellant bears the burden of demonstrating
that the trial court erred. Best Homes, Inc., 714 N.E.2d at 706 (quoting Barnes
v. Antich, 700 N.E.2d 262, 264-65 (Ind. Ct. App. 1998)).
Heritage Dev. of Ind., Inc. v. Opportunity Options, Inc., 773 N.E.2d 881, 887-88 (Ind. Ct.
App. 2002).
B. Judgment Against Shah Following Evidentiary Hearing
With respect to Shah, the trial court made findings of facts and conclusions thereon
following an evidentiary hearing. Where a trial court has entered findings of fact and
conclusions thereon, we engage in the following two-tiered standard of review:
“We must first determine whether the evidence supports the findings of fact
and then whether the findings support the judgment. We will not reverse the
trial court’s findings and judgment unless they are clearly erroneous. Findings
of fact are clearly erroneous when the record lacks any facts or reasonable
6
inferences from the evidence to support them. The judgment is clearly
erroneous when it is unsupported by the findings of fact and conclusions
entered on the findings. In making these determinations, we will neither
reweigh the evidence nor judge witness credibility, considering only the
evidence favorable to the judgment and all reasonable inferences therefrom.
While we defer substantially to findings of fact, we do not do so for
conclusions of law. We apply a de novo standard of review to conclusions of
law and owe no deference to the trial court’s determination of such questions.”
Gates v. Houston, 897 N.E.2d 532, 534-35 (Ind. Ct. App. 2008) (quoting Mueller v. Karns,
873 N.E.2d 652, 657 (Ind. Ct. App. 2007)).
II. Whether the Trial Court Erred in Ruling in Favor of Wells Fargo
On appeal, Appellants contend that the trial court erred in ruling in favor of Wells
Fargo. Specifically, Appellants claim that the trial court erred in ruling in favor of Wells
Fargo because Wells Fargo failed to prove (1) a valid assignment of the Loan Documents, (2)
that it was entitled to recover from Appellants, (3) that the assignment of the Loan
Documents did not constitute a material alteration which would release Shah from his
obligation under the Guaranty, and (4) that it was entitled to an award of interest.
A. Proof of Assignment of Loan Documents to Wells Fargo
Initially, we note that in claiming that the trial court erred in ruling in favor of Wells
Fargo, neither Riviera nor Shah contest the execution of the Loan Documents. Rather, they
argue that the trial court erred in ruling in favor of Wells Fargo because the record does not
prove that the Loan Documents were assigned to Wells Fargo.
1. Riviera
Riviera claims that issues of material fact remains as to whether there had been a valid
assignment of the Note and Mortgage to Wells Fargo. Specifically, Riviera argues that proof
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of the assignment was not included in the designated evidence and, alternatively, that Wells
Fargo failed to prove a proper chain of title with respect to ownership of the right, title, and
interest in the Note and Mortgage. Wells Fargo, for its part, claims that no issues of material
fact remain that would preclude summary judgment with regard to the assignment of the Note
and Mortgage. We agree with Wells Fargo.
i. Assignment of Note and Mortgage
The designated evidence demonstrates that Citibank assigned its right, title, and
interest in the Note and Mortgage to Nova. The pleadings further demonstrate that Nova
subsequently assigned its right, title, and interest in the Note and Mortgage to Wells Fargo.
We have previously recognized that a trial court may take judicial notice of a fact that is not
subject to reasonable dispute, including judicial notice of the pleadings and exhibits attached
thereto in the very case that is before the court. See Brown v. Jones, 804 N.E.2d 1197, 1201-
02 (Ind. Ct. App. 2004), trans. denied. Riviera does not point to any authority suggesting
that the general rule allowing the trial court to take judicial notice of the pleadings and
exhibits attached thereto does not apply in the context of a request for summary judgment.
Further, we have held that a party has the discretion to designate the material either in
the summary judgment motion itself, in a separate filing, or in a brief in support of or in
opposition to the motion for summary judgment, and that the party acts within its discretion
as long as it informs the trial court of the specific material upon which it relies in support of
its motion for summary judgment. Am. Mgmt., Inc., 666 N.E.2d at 429. Here, Wells Fargo
referred to the exhibit evidencing the assignments in the brief and reply brief that it filed in
8
support of its motion for summary judgment. As such, we conclude that the trial court
properly considered the exhibit that was attached to the pleadings, and that said exhibit,
coupled with the designated evidence, demonstrates that the Note and Mortgage were
assigned from Citibank to Nova and then from Nova to Wells Fargo.
ii. Chain of Title
As to Riviera’s alternative claim, the designated evidence demonstrates a proper chain
of title as the Note and Mortgage were transferred from Citibank to Nova and from Nova to
Wells Fargo. In making this alternative claim, Riviera argues that the designated evidence
contains a reference to an assignment of the Note and Mortgage to a third party, Lone Star
Funds, which Riviera argues creates an issue of material fact as to whether the assignment of
the Note and Mortgage from Nova to Wells Fargo is valid. However, despite Riviera’s claim
that there was an assignment to an unrelated third party, our review of the designated
evidence reveals that the so-called reference to an unrelated third party in the designated
evidence is in actuality a reference to Nova.
The full legal name of Nova included on all legal documents and pleadings that were
filed in the trial court is LSREF2 Nova Investments, LLC. LSREF2 is an abbreviation for
“Lone Star Real Estate Funds 2.” The designated evidence demonstrates that although Lone
Star Funds and Nova are technically separate entities, with respect to the Note and Mortgage,
the reference to “Lone Star Funds” was a shorthand reference to Nova. Accordingly, we
conclude that the designated evidence does not create an issue of material fact as to the chain
of title from Citibank to Nova and Nova to Wells Fargo. Because we conclude that no issues
9
of material fact remain as to whether there was a valid assignment of the Note and Mortgage
from Citibank to Nova and then Nova to Wells Fargo, we conclude that the trial court did not
err in granting Wells Fargo’s request for summary judgment in this regard.
2. Shah
Shah claims that the record is devoid of evidence demonstrating that there had been a
valid assignment of the Guaranty to Wells Fargo. Again, we have previously recognized that
a trial court may take judicial notice of a fact not subject to reasonable dispute, including
judicial notice of the pleadings and exhibits attached thereto in the very case that is before the
court. See Brown, 804 N.E.2d at 1201-02. Further, Indiana Rule of Trial Procedure 9.2(B)
provides that “[w]hen a pleading is founded on a written instrument and the instrument or a
copy thereof is included in or filed with the pleading, execution of such instrument,
indorsement, or assignment shall be deemed to be established and the instrument, if
otherwise admissible, shall be deemed admitted into evidence in the action without proving
its execution unless execution be denied under oath in the responsive pleadings or by an
affidavit filed therewith.” (Emphasis added).
In the instant matter, copies of the Note and Mortgage were attached to the complaint
filed by Citibank. Nova attached a copy of the assignment, allonge, and bill of sale of the
Loan Documents from Citibank to Nova to its motion to substitute itself as the proper
plaintiff on the previously filed complaint. Nova subsequently filed a motion to amend the
complaint to add Shah as a defendant due to his execution of the Guaranty. Nova attached a
copy of the Guaranty to its amended complaint. The bill of sale specifically mentions “all
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guaranties … executed and/or delivered to Seller in connection with the Loan.” Appellants’
App. p. 172.
In addition, Wells Fargo attached a copy of the assignment of the Loan Documents
from Nova to Wells Fargo in its motion to substitute itself as the proper plaintiff on the
previously filed amended complaint. The assignment specifically referenced the Note,
Mortgage, and all “claims secured thereby.” Appellants’ App. p. 176. Furthermore, with
respect to assignments, the Guaranty provides as follows:
This Guaranty shall inure to the benefit of the successors and assigns of
Lender. Lender may transfer or assign all or any part of this Guaranty or any
interest therein without liability or notice to or consent of Guarantor; and this
Guaranty shall inure to the benefit of such transferee or assignee to the extent
so assigned and Lender may further, without liability or notice to or consent of
Guarantor, disclose to any prospective transferee or assignee any and all
information, financial or otherwise, which Lender may have about Guarantor,
Borrower, the Loan, the Property, this Guaranty, or the performance or non-
performance of any obligations of Borrower or guarantor. This Guaranty shall
follow the Note and Security Instrument and, in the event that the Note and the
Security Instrument are sold, transferred, assigned or conveyed by Lender, this
Guaranty may be likewise sold, transferred, assigned or conveyed by Lender to
the holder of the Note and the Security Instrument, and, in such event, the
holder of his Guaranty may enforce this Guaranty just as if said holder had
been originally named as Lender hereunder. The terms of this Guaranty shall
bind the heirs, legal representatives, successors and assigns of Guarantor,
provided, however, that Guarantor may not assign this Guaranty, or assign or
delegate any of its rights or obligations under this Guaranty, without the prior
written consent of Lender in each instance, which may be given or withheld in
the sole and absolute discretion of Lender.
Appellee’s App. pp. 7-8 (emphasis added). Furthermore still, the record indicates that Shah
did not object to the substitution of Wells Fargo as the real party in interest and plaintiff on
the amended complaint. In light of the language in the assignment referring to all “claims
secured thereby,” Appellants’ App. p. 176, the language of the Guaranty indicating that the
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Guaranty “shall follow the Note and Security Instrument,” Appellee’s App. p. 7, and Shah’s
failure to object to the substitution of Wells Fargo as the real party in interest and plaintiff on
the amended complaint, we conclude that the trial court did not err in determining that Wells
Fargo held a valid assignment of the Guaranty. As such, we further conclude that the trial
court did not err in finding in favor of Wells Fargo in this regard.
B. Proof that Wells Fargo Was Entitled to Recover from Appellants
In claiming that the trial court erred in ruling in favor of Wells Fargo, Appellants also
argue that Wells Fargo failed to prove that it was entitled to recover from Appellants.
Specifically, Appellants argue that Wells Fargo failed to prove that Riviera defaulted on the
Note. Appellants also argue that Wells Fargo failed to prove the amount due as a result of
Riviera’s alleged default.
1. Riviera
Initially, we note that the Appellants’ argument on appeal does not raise any allegation
that the designate evidence failed to establish that Riviera defaulted on the Note or the
amount due and owing under the terms of the Note. Appellants’ arguments relate only to the
evidence presented during the evidentiary hearing that was conducted by the trial court on
June 19, 2012. As such, these arguments will be discussed only with regard to Shah.
However, notwithstanding Appellants’ failure to raise an argument pertaining to the
trial court’s award of summary judgment against Riviera, we observe that the designated
evidence demonstrates that Riviera defaulted on the Note by failing to make the scheduled
loan payments and that Riviera was aware of this default on or before March 10, 2010.
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Riviera was given an opportunity to cure its default but did not do so. The designated
evidence also demonstrates that as of September 1, 2012, Riviera owed the sum of
$4,012,199.99 on the Note and Mortgage, broken down as follows:
a. Principal in the amount of $2,832,626.81;
b. Accrued interest from July 1, 2009 to September 1, 2012 in the amount
of $614,443.97;
c. Accrued interest at the default rate from August 1, 2009 to September
1, 2012 in the amount of $443,384.78;
d. Accrued late changes in the amount of $41,399.28; and
e. Advances for the payment of real estate taxes in the amount of
$80,345.15.
Appellants’ App. pp. 361-62. Riviera did not designated any evidence that would create an
issue of material fact as to whether it was in default of the Note or whether the stated sums
owed by Riviera on the specified dates were inaccurate. As such, the trial court did not err in
awarding summary judgment in favor of Wells Fargo in this regard.
2. Shah
i. Default
With respect to Shah, Appellants argue that Wells Fargo failed to establish that
Riviera defaulted on the Note. However, contrary to Shah’s claim, the record contains
evidence that Riviera did in fact default on the Note. The record demonstrates that Riviera
failed to make the scheduled monthly payments beginning in August of 2009. Riviera and
Shah were notified that Riviera was in default and given the opportunity to cure said default
but failed to do so. Shah testified that he sent two additional payments after August of 2009
but failed to provide any documentation supporting this claim and conceded that the alleged
payments were never cashed. The trial court, acting as the trier-of-fact, was free to believe or
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disbelieve Shah’s testimony regarded these claimed additional payments and to weigh said
testimony accordingly. See Thompson v. State, 804 N.E.2d 1146, 1149 (Ind. 2004);
McClendon v. State, 671 N.E.2d 486, 488 (Ind. Ct. App. 1996); Moore v. State, 637 N.E.2d
816, 822 (Ind. Ct. App. 1994), trans. denied.
ii. Competency of Witnesses
The trial court also heard the testimony of numerous witnesses who serviced the loan
on behalf of Citibank, Nova, and Wells Fargo. These witnesses each testified regarding
Riviera’s default of the Note. Specifically, these witnesses testified that Riviera failed to
make the loan payments scheduled for the loan after August of 2009 and during the time each
witness serviced the loan. On appeal, Shah relies on case law from Florida3 and Wisconsin4
to challenge whether these witnesses were competent to testify, claiming that the witnesses
lacked the requisite personal knowledge about the Loan Documents, and therefore should not
have been allowed to testify about such. The Florida and Wisconsin cases cited by Shah,
however, are unavailing because in the instant matter, unlike the cases cited by Shah, the
record demonstrates that each of the challenged witnesses did have the requisite personal
knowledge and was, as a result, competent to testify.
Indiana authority indicates that 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
3
Glarum v. LaSalle Bank Nat’l Assn., 83 So.3d 780, 782 (Fl. Ct. App. 2011) (providing that witness
who did not know who, how, or when certain data entries were made did not have personal knowledge to
testify as to whether the entries were made in the regular course of business).
4
Bank of N.Y. v. Cano, 2011 WI App 27, ¶ 16, 331 Wis. 2d 731, 661 N.W.2d 72 (unpublished
disposition providing that affidavit provided by an attorney for the bank lacks proof that the attorney’s
averments regarding the defendants’ failure to make scheduled mortgage payments lacked an indication that
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affidavit. Miller v. NBD Bank, N.A., 701 N.E.2d 282, 286 (Ind. Ct. App. 1998); see also
Skaggs v. Merchs. Retail Credit Ass’n, Inc., 519 N.E.2d 202, 203 (Ind. Ct. App. 1988)
(providing that an affiant’s competence to testify regarding payments and credits made on
phone bills could be inferred from the affiant’s position in the plaintiff’s billing and
collections office). We have concluded that personal knowledge could be inferred from an
affiant’s position as a recovery specialist for a loan servicer. See DeLanden Fin. Servs., Inc.
v. Cmty. Mental Health Ctr., Inc., 965 N.E.2d 693, 701 (Ind. Ct. App. 2012). Moreover,
specifically relevant to the instant matter, we have noted that personal knowledge relating to
a debt and payment of said debt by an asset manager of an authorized representative of a
creditor and his possession of files relating to the debut justifies admission of the asset
manager’s affidavit or testimony concerning a defendant’s default and the amounts owned on
a debt. See Am. Mgmt., Inc., 666 N.E.2d at 429 n.2.
Here, each of the challenged witnesses testified that Riviera failed to make scheduled
loan payments during the time in which each serviced the loan pursuant to their positions in
loan recovery for the appropriate loan services. Each of the challenged witnesses further
testified to the amount owed and indicated that they had personal knowledge of the loan and
serviced the loan in a manner consistent with the policies employed in the loan servicers’
normal courses of business. As such, we conclude that the trial court did not err in
determining that each of the challenged witnesses held the requisite personal knowledge to
testify about Riviera’s default of the loan.
iii. Amount Due and Owing Under Note
the attorney’s averments as to the defendants’ payment history is based on personal knowledge).
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Appellants also argue that Wells Fargo failed to properly establish the amount that
was due and owing under the Note. However, despite Appellants’ claim to the contrary, the
record demonstrates that the evidence admitted during the June 19, 2012 evidentiary hearing
indicated that, as of June 19, 2012, the balance due and owing was as follows:
Principal Outstanding: $ 2,832,626.81
Interest from 7/1/2009 TO: 4/4/2011 at 6.850% $ 341,178.11
Default Interest 8/1/2009 TO: 4/2/2011 at 5.000% $ 240,379.86
Tax Advantage $ 80,280.15
Late Charges $ 21,849.62
Prepayment Premium $ 28,326.27
Processing Fee/Document Preparation Fee $ 500.00
========================================================
TOTAL DUE $ 3,545,140.82
Tr. p. 67, Deposition of Sanjay Patel, Ex. E. The evidence also demonstrated that the interest
and default interest increased at a combined per diem rate of $932.41. The above-stated
evidence is sufficient to prove the amount due and owning on the loan as of the date of the
June 19, 2012 evidentiary hearing. Accordingly, we conclude that the trial court did not err
in finding in favor of Wells Fargo in this regard.
C. Assignment of Loan Documents Does Not Constitute a Material
Alteration that Would Release Shah from His Obligation Under the Guaranty
Appellant’s also claim that the assignment of the Loan Documents constituted a
material alteration of the Loan Documents that would release Shah of his obligation under
the Guaranty. Under Indiana common-law principles, when parties cause a material
alteration of an underlying obligation without the consent of the guarantor, the guarantor is
discharged from further liability whether the change is to his or her injury or benefit. S-Mart,
Inc. v. Sweetwater Coffee Co., Ltd., 744 N.E.2d 580, 586 (Ind. Ct. App. 2001) (citing Goeke
16
v. Merchs. Nat. Bank & Trust Co. of Indpls., 467 N.E.2d 760, 765 (Ind. Ct. App. 1984)). “A
material alteration which will effect a discharge of the guarantor must be a change which
alters the legal identity of the principal’s contract, substantially increases the risk of loss to
the guarantor, or places the guarantor in a different position.” Id. (citing Cunningham v. Mid
State Bank, 544 N.E.2d 530, 534 (Ind. Ct. App. 1989), trans. denied). “The change must be
binding.” Id. (citing Houin v. Bremen State Bank, 495 N.E.2d 753, 759 (Ind. Ct. App.
1986)).
In support of their claim that the assignment of the Loan Documents amounted to a
material alteration which would release Shah from his obligation under the Guaranty,
Appellants cite to this court’s opinion in Keesling v. T.E.K. Partners, LLC, 861 N.E.2d 1246(Ind. Ct. App. 2007). Keesling, however, is easily distinguishable from the instant matter. In
Keesling, the parties executed a second note which significantly expanded the guarantors’
potential liability. 861 N.E.2d at 1253-54. The guarantors did not sign the second note. Id.
at 1254. Thus, with respect to the guarantors, the second note constituted a material
alteration of their original obligation, and, accordingly, the guarantors were released from
their obligation under the guaranty. Id at 1254-55.
While it is true that guarantors are exonerated if the creditor alters the obligation of
the principal without the guarantor’s consent, id. at 1251, in the instant matter, the
assignment of the Loan Documents did not alter Riviera’s obligation under the terms of the
Note. In the instant matter, the plain language of the Guaranty suggests that an assignment of
the Guaranty does not constitute a material alteration that would excuse Shah from his
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obligation. Again, the Guaranty specifically states that the lender
may transfer or assign all or any part of this Guaranty or any interest therein
without liability or notice to or consent of Guarantor; and this Guaranty shall
inure to the benefit of such transferee or assignee to the extent so assigned and
Lender may further, without liability or notice to or consent of Guarantor,
disclose to any prospective transferee or assignee any and all information,
financial or otherwise, which Lender may have about Guarantor, Borrower, the
Loan, the Property, this Guaranty, or the performance or non-performance of
any obligations of Borrower or Guarantor. This Guaranty shall follow the Note
and Security Instrument and, in the event that the Note and the Security
Instrument are sold, transferred, assigned or conveyed by Lender, this
Guaranty may be likewise sold, transferred, assigned or conveyed by Lender to
the holder of the Note and the Security Instrument, and, in such event, the
holder of his Guaranty may enforce this Guaranty just as if said holder had
been originally named as Lender hereunder.
Appellee’s App. p. 7. As such, in light of the language contained in the Guaranty expressly
providing that the Loan Documents could be assigned to another lender with or without
notice to Shah and that the Guaranty shall follow the Note and Mortgage in the event the
Note and Mortgage were assigned by Citibank, we conclude that the assignment of the Loan
Documents did not constitute a material alteration which would release Shah from his
obligation under the Guaranty and preclude recovery by Wells Fargo. Thus, the trial court
did not err in ruling in favor of Wells Fargo in this regard.
D. Award of Interest
Appellants last claim that Wells Fargo should be precluded from making a claim for
interest because Citibank allegedly charged interest in a manner that was not consistent with
the terms of the Note. Appellants, however, cite to no authority in support of this claim.
Moreover, the record demonstrates that the trial court heard evidence that Citibank and the
subsequent assignees of the Loan Documents charged interest consistent with the terms of
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the Note. Again, the trial court acting as the trier-of-fact was free to believe or disbelieve
witnesses and evidence as it sees fit. See Thompson, 804 N.E.2d at 1149; McClendon, 671
N.E.2d at 488; Moore, 637 N.E.2d at 822. As such, we conclude that the trial court did not
err in finding in favor of Wells Fargo in this regard.
CONCLUSION
In sum, we conclude that the trial court properly granted Wells Fargo’s motion for
summary judgment against Riviera.5 In addition, the trial court’s determination that Shah
was liable under the terms of the Guaranty is not clearly erroneous. As such, we affirm the
judgment of the trial court.
The judgment of the trial court is affirmed.
RILEY, J., and ROBB, J., concur.
5
Wells Fargo also asserts that the award of summary judgment against Riviera was proper because
judgment against Shah collaterally estopped Riviera from disputing liability and damages. However, we need
not consider the merits of this assertion because the designated evidence does not create any issue of material
fact which would preclude an award of summary judgment in favor of Wells Fargo. The designated evidence
demonstrates that Wells Fargo holds title to the Note, Riviera defaulted on the Note, and Riviera was liable for
the amounts claimed by Wells Fargo.
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