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COA rules against bank in lien dispute

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Wells Fargo Bank could not convince the Indiana Court of Appeals to reverse default judgment entered against it in favor of two companies trying to foreclose on mechanic’s liens. The court also had a warning for litigants when filing amended complaints.

John E. Smith Builders Inc. and Isley’s Plumbing Inc. performed work on the home of Heather Stone after it sustained damage in a fire. Her home was mortgaged through Washington Mutual. The mortgage was later acquired by JP Morgan Chase Bank in 2008.

Smith Builders filed a complaint to foreclose on its mechanic’s lien on the homeowner’s property; Isley filed a cross-claim seeking to foreclose on its claimed mechanic’s lien. Smith Builders later entered bankruptcy and Edward Echert was substituted as a party in interest.

The trial court granted default judgments in October 2012 in favor of Dechert and Isley and against Washington Mutual and determined Isley’s mechanic’s lien held priority over Dechert’s. In April 2013, the mortgage was transferred to Wells Fargo, which sought to have the judgment set aside under Trial Rule 60(B)(4).

In Wells Fargo Bank, N.A. v. Edward P. Dechert, Trustee of the Bankruptcy Estate of John E. Smith and Isley's Plumbing, Inc., 34A02-1311-PL-980, the Court of Appeals affirmed the judgment, rejecting the bank’s claim that Dechert’s decision to file a second amended complaint and Isley’s response to that complaint resulted in the automatic vacation of the default judgments entered against the bank. None of the amended pleadings undermined any basis upon which the default judgments against the bank were issued.

The judges also rejected Wells Fargo’s claims that certain pleadings were not properly served upon the bank and that default judgments should be set aside because Indiana courts disfavor default judgments and windfalls.
 
“However, we note that Dechert’s decision to file the first amended complaint was inappropriate,’’ Judge L. Mark Bailey wrote. “Here, where service had been accomplished, the appropriate procedure for Dechert to follow was to establish that service of process (in whatever form) had been completed upon Washington Mutual, and then to move for default judgment under Trial Rule 55—without filing a complaint alleging additional facts not necessary to proof of the merits of the case. Because the allegations in the first amended complaint do not differ on the elements of the causes of action, there was fair notice of Dechert’s claims upon which the trial court could enter a default judgment, and there was a nine-month delay between that judgment and Wells Fargo’s appearance in the case.

“Parties who pursue a similar procedure may not find themselves in a similar position, however, particularly with respect to changes in substantive allegations entitling a party to relief. Litigants are, therefore, warned accordingly.”
 

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  1. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  2. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

  3. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  4. This article proved very enlightening. Right ahead of sitting the LSAT for the first time, I felt a sense of relief that a score of 141 was admitted to an Indiana Law School and did well under unique circumstances. While my GPA is currently 3.91 I fear standardized testing and hope that I too will get a good enough grade for acceptance here at home. Thanks so much for this informative post.

  5. No, Ron Drake is not running against incumbent Larry Bucshon. That’s totally wrong; and destructively misleading to say anything like that. All political candidates, including me in the 8th district, are facing voters, not incumbents. You should not firewall away any of voters’ options. We need them all now more than ever. Right? Y’all have for decades given the Ds and Rs free 24/7/365 coverage of taxpayer-supported promotion at the expense of all alternatives. That’s plenty of head-start, money-in-the-pocket advantage for parties and people that don’t need any more free immunities, powers, privileges and money denied all others. Now it’s time to play fair and let voters know that there are, in fact, options. Much, much better, and not-corrupt options. Liberty or Bust! Andy Horning Libertarian for IN08 USA House of Representatives Freedom, Indiana

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