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Court rules on post-merger bank foreclosure rights

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The Indiana Court of Appeals ruled that a federal statute provides the authority for a bank that survives after a merger to enforce the promissory note and mortgage established by a predecessor bank.

In CFS, LLC and Charles Blackwelder v. Bank of America, Successor in Interest to LaSalle Bank Midwest National Association, No. 29A02-1105-MF-436, the Indiana Court of Appeals affirmed a ruling by Hamilton Circuit Judge Paul Felix that granted summary judgment in favor of Bank of America.

The case involves a promissory note and construction mortgage that CFS obtained in June 2007 in exchange for a $982,500 loan from LaSalle Bank Midwest National Association. Christopher Blackwelder executed a personal guaranty of the debt, but in August 2004 Bank of America – which had merged with and was a successor-in-interest to LaSalle – filed a mortgage foreclosure complaint alleging the loan was in default. CFS admitted to the debt but asserted it didn’t have any knowledge of the merger or Bank of America’s role as successor and right to collect the balance.

Bank of America moved for summary judgment on grounds that it had merged and had the authority to collect the debt or foreclose, and after a December 2010 hearing the trial judge took the matter under advisement. He initially declined summary judgment after the bank couldn’t provide any caselaw authority proving a successor-in-interest is sufficient to prove ownership, but he later granted summary judgment when Bank of America filed a motion to correct error that cited a federal statute providing that authority.

The bank cited 12 U.S.C. § 215a(e) that outlines the corporate existence of each merging bank and how all rights, franchises and interests of the individual merging banks are transferred to the successor merged bank without any deed or other transfer being needed.

Although the bank referenced a copy of the merger certificate and no factual dispute existed that a merger had occurred, Bank of America didn’t include a copy of that merger certificate. The trial court granted its judgment of foreclosure and decree of sale in the bank’s favor in April 2011. Appealing, CFS alleged the trial court granted summary judgment only after improperly considering “new evidence” about that federal statute.

The Court of Appeals ruled that Bank of America didn’t have to attach a copy of the merger when there was no factual dispute it had happened, and that the federal statute wasn’t “new evidence” presented to the trial court. The appellate panel found that no genuine issue of material fact existed about the merger and that summary judgment was properly granted to Bank of America.

 

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  1. He TIL team,please zap this comment too since it was merely marking a scammer and not reflecting on the story. Thanks, happy Monday, keep up the fine work.

  2. You just need my social security number sent to your Gmail account to process then loan, right? Beware scammers indeed.

  3. The appellate court just said doctors can be sued for reporting child abuse. The most dangerous form of child abuse with the highest mortality rate of any form of child abuse (between 6% and 9% according to the below listed studies). Now doctors will be far less likely to report this form of dangerous child abuse in Indiana. If you want to know what this is, google the names Lacey Spears, Julie Conley (and look at what happened when uninformed judges returned that child against medical advice), Hope Ybarra, and Dixie Blanchard. Here is some really good reporting on what this allegation was: http://media.star-telegram.com/Munchausenmoms/ Here are the two research papers: http://www.sciencedirect.com/science/article/pii/0145213487900810 http://www.sciencedirect.com/science/article/pii/S0145213403000309 25% of sibling are dead in that second study. 25%!!! Unbelievable ruling. Chilling. Wrong.

  4. Mr. Levin says that the BMV engaged in misconduct--that the BMV (or, rather, someone in the BMV) knew Indiana motorists were being overcharged fees but did nothing to correct the situation. Such misconduct, whether engaged in by one individual or by a group, is called theft (defined as knowingly or intentionally exerting unauthorized control over the property of another person with the intent to deprive the other person of the property's value or use). Theft is a crime in Indiana (as it still is in most of the civilized world). One wonders, then, why there have been no criminal prosecutions of BMV officials for this theft? Government misconduct doesn't occur in a vacuum. An individual who works for or oversees a government agency is responsible for the misconduct. In this instance, somebody (or somebodies) with the BMV, at some time, knew Indiana motorists were being overcharged. What's more, this person (or these people), even after having the error of their ways pointed out to them, did nothing to fix the problem. Instead, the overcharges continued. Thus, the taxpayers of Indiana are also on the hook for the millions of dollars in attorneys fees (for both sides; the BMV didn't see fit to avail itself of the services of a lawyer employed by the state government) that had to be spent in order to finally convince the BMV that stealing money from Indiana motorists was a bad thing. Given that the BMV official(s) responsible for this crime continued their misconduct, covered it up, and never did anything until the agency reached an agreeable settlement, it seems the statute of limitations for prosecuting these folks has not yet run. I hope our Attorney General is paying attention to this fiasco and is seriously considering prosecution. Indiana, the state that works . . . for thieves.

  5. I'm glad that attorney Carl Hayes, who represented the BMV in this case, is able to say that his client "is pleased to have resolved the issue". Everyone makes mistakes, even bureaucratic behemoths like Indiana's BMV. So to some extent we need to be forgiving of such mistakes. But when those mistakes are going to cost Indiana taxpayers millions of dollars to rectify (because neither plaintiff's counsel nor Mr. Hayes gave freely of their services, and the BMV, being a state-funded agency, relies on taxpayer dollars to pay these attorneys their fees), the agency doesn't have a right to feel "pleased to have resolved the issue". One is left wondering why the BMV feels so pleased with this resolution? The magnitude of the agency's overcharges might suggest to some that, perhaps, these errors were more than mere oversight. Could this be why the agency is so "pleased" with this resolution? Will Indiana motorists ever be assured that the culture of incompetence (if not worse) that the BMV seems to have fostered is no longer the status quo? Or will even more "overcharges" and lawsuits result? It's fairly obvious who is really "pleased to have resolved the issue", and it's not Indiana's taxpayers who are on the hook for the legal fees generated in these cases.

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