JPMorgan Chase Bank v. Claybridge Homeowners Association (IN)

Summary: A lis pendens notice can provide constructive notice for the successor mortgagee of a foreclosure on an enforceable, unrecorded judgment lien.

JPMorgan Chase Bank, N.A. v. Claybridge Homeowners Association, 39 N.E.3d 666 (Ind. 2015).

Facts: In 2004, Claybridge Homeowner’s Association, Inc. (“Claybridge”) obtained a personal judgement against Deborah Walton for interfering with a survey monument. It resulted in a monetary award, attorney’s fees and costs. In January 2007, the trial court certified the order as a final judgment. The county clerk, however, failed to enter the 2004 order or 2007 final judgment on the judgment docket.

On October 30, 2007, Claybridge filed to foreclose its judgment lien on the Carmel home owned by Deborah Walton and her mother Margaret Walton. On the same day, Claybridge also filed a lis pendens notice, giving notice of the judgment lien and pending foreclosure action. On May 19, 2010, the trial court granted Claybridge’s motion for summary judgment, awarding an in rem judgment along with statutory interest and taxes and other costs. The trial court also foreclosed the judgment lien on the Carmel home, and the foreclosure order was recorded on May 27, 2010. The judgment was appealed and affirmed. The sheriff sale of the Carmel home was field on August 13, 2013.

During this ongoing litigation, the Waltons began refinancing their home on November 13, 2007 with Washington Mutual Bank (“WMB”). They used the proceeds of their new mortgage with WMB to pay off their old mortgage with Fifth Third Mortgage. WMB received a title commitment on September 12, 2007, which was six weeks before Claybridge filed its suit. Thus, the title commitment did not reveal either the foreclosure or the lis pendens notice. WMB recorded its new mortgage on November 27, 2007, and it was later assigned to JPMorgan.

On December 19, 2013, JPMorgan Chase Bank, N.A. (“Chase”) filed a motion to intervene on a foreclosure action to protect its interest of the mortgage on the Carmel home. Chase claimed that they had no knowledge of the foreclosure when it assumed the WMB mortgage. The trial court denied this motion as untimely, stating that JPMorgan did have notice of the foreclosure action by virtue of the properly filed and valid Lis Pendens Notice.

JPMorgan appealed and the Court of Appeals reversed in favor JPMorgan.

Holding: Reversed. The Indiana Supreme Court explained that intervention shall be granted only upon a timely motion. The language of the Indiana Code goes a step further and states that after final judgement, intervention may be allowed by the trial court, not shall. JPMorgan bears the burden of showing that the trial court abused its discretion in not finding extraordinary and unusual circumstances to justify its attempt to intervene three years after the foreclosure order and six years after the filing of the suit.

JPMorgan argued that they lacked notice while Claybridge argued that they had constructive notice by way of a valid lis pendens notice. The Indian Supreme Court determined that JP Morgan had constructive knowledge of foreclosure by way of lis pendens. One, Claybridge had an unrecorded judgment lien. Two, Claybridge sought to enforce an in rem real estate interest.

The court further stated that the purpose of lis pendens is to give notice to any pending real estate action. Any successor in interest to real estate is deemed to take notice of a pending action involving title to the real estate. The court went on and said that based on Indiana Code, the lis pendens statute allows plaintiffs to give constructive notice of foreclosing an unrecorded real estate lien by filing a lis pendens notice. Claybridge fully complied with Indiana’s lis pendens statute. Also, Claybridge had an enforceable, unrecorded judgment lien which makes it applicable to the lis pendens statute.

The court also addressed the issue of whether the action brought on by Claybridge was a personal claim or an in rem real estate claim. JPMorgan contended that it was a personal claim and not subject to the lis pendens statute. The court determined that it was an in rem real estate claim, because it dealt with a real estate action. Therefore, the Claybridge action fit within the lis pendens statute.


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By: ATG Underwriting Department | Posted on: Mon, 01/18/2016 - 4:39pm