Lunsford v. Deutsche Bank Trust (IN)

Summary: Mortgage liens recorded before land contracts are superior between the two.


Lunsford v. Deutsche Bank Trust Co. Americas as Tr., 996 N.E.2d 815 (Ind. Ct. App. 2013).


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Facts: Walter E. Lunsford entered into a land contract with Elizabeth Cottler in 2000 to purchase property. However, the land contract was not recorded until 2006.

In 2005 Cottler, as owner of the real estate, executed a promissory note to Homecomings Financial Network, Inc., with Homecomings endorsing the note to Deutsche Bank, as Trustee. The promissory note was secured by a mortgage executed by Cottler the same day, and granted a security interest in the real estate, nominating Homecomings.  The mortgage was recorded in 2005, where the property was located.

In 2008, Cottler began defaulting on her promissory note and mortgage. In 2009, Deutche Bank, as trustee, initiated foreclosure proceedings seeking a sheriff’s sale of the property, and included Lunsford as a defendant with Cottler. In his answer, Lunsford asserted his land contract interest in the real estate, claiming the bank lacked proper standing to enforce the promissory note. In 2012, Deutsche Bank moved for summary judgment against Cottler and Lunsford, which the court eventually granted. Lunsford appealed.


Holding: Affirmed On appeal, Lunsford argued that the trial court erred in granting summary judgment in favor of Deutsche Bank. The court reviewed the issue de novo.

First, the court addressed Deutsche Bank’s contention that Lunsford was barred from asserting several of his claims, because he failed to make the arguments before the trial court. The appellate court summarily held that, “[i]t is well-established that the [f]ailure to raise an issue before the trial court waives that issue on appeal.” Therefore several of Lunsford’s affirmative defenses were waived, including his failure to argue to the trial court that Deutsche Bank refused payment from him regarding payment for the delinquent mortgage.

Second, the court addressed Lunsford’s argument that Deutsche Bank, in its capacity as trustee, failed to join an indispensable party by failing to name the trust as a party. The court summarily dismissed this argument, holding that it was not necessary for Deutsche Bank to name the Trust as a party in the foreclosure action, and thus the bank had the authority as trustee to seek to enforce the loan documents.

Third, the court addressed Deutsche Bank as holder of the loan documents. The court held that, under Ind.Code § 26–1-3.1-301, Deutsche Bank validly received the note and mortgage assignment from the Residential Funding Corporation and Mortgage Electronic Registration System (MERS), respectively. Therefore, Deutsche Bank was the holder of the mortgage and note, and properly produced the original loan documents for inspection at the summary judgment hearing. Further, Deutsche Bank, as trustee, was entitled to enforce the loan documents against Cottler’s default, including seeking foreclosure of the mortgage against the real estate.

Finally, the court concluded by addressing whether Lunsford’s land contract was superior to Deutsche Bank’s mortgage lien. The court held that, because (1) the mortgage and note were recorded before the land contract, and (2) the fact that Lunsford was joined as a defendant and given the opportunity to assert his interests, the mortgage lien was superior.


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By: ATG Underwriting Department | Posted on: Tue, 09/23/2014 - 3:06pm