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Judges: Grant bank’s request for receiver

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Because PNC Bank was able to show that the requisite provisions of Indiana Code 32-30-5-1 have been satisfied and it did not relinquish its right to the appointment of a receiver, the trial court order denying PNC’s request for appointment of a receiver was an error, the Indiana Court of Appeals concluded.

In June 2004, the bank and LA Development entered into a loan agreement, with obligations due to the bank secured by two mortgages. In the fall of 2008, LA Development needed more money to complete a housing development; INTA LLC agreed to advance $705,000 to LA Development. A three-party closing occurred between LA Development, INTA and PNC Bank, which included a subordination agreement that made all liens, mortgages, encumbrances, security interests and assignments of every kind granted to the bank subordinated and made secondary to those of INTA.

Two years later, PNC filed a complaint for damages to foreclose on the mortgages and for appointment of receiver against LA Development, INTA, and two individuals who guaranteed the loans. At issue on interlocutory appeal is the denial by the trial court to appoint a receiver.

PNC argued that it satisfied the requirements of I.C. 32-30-5-1(4)(B) and (C), which required the trial court to appoint a receiver. INTA maintained that the bank relinquished its right to the mandatory appointment of a receiver in the subordination agreement.

The Court of Appeals found the subordination agreement is ambiguous, so the judges looked to the parties’ intent when construing the agreement and the other closing documents. The argument that the bank subordinated all of its default rights and remedies in the mortgages by signing the subordination agreement, as INTA argued, can’t be reconciled with the language in the forbearance agreement signed on the same date and at the same closing, wrote Senior Judge Carr Darden.

Also, the extrinsic evidence shows that the parties didn’t intend to subordinate all rights and remedies. The bank foreclosed on the housing development, which INTA concedes is authorized.

“If the Bank waived all of its enforcement rights and remedies under the mortgages by executing the Subordination Agreement, then the right to foreclose on Harrison Crossing would be included. Either the Bank subordinated all of its enforcement rights and remedies in the mortgages or it did not. INTA cannot pick and choose which rights and remedies the Bank subordinated to support its argument,” Darden wrote.

The judges ordered the trial court grant PNC’s request for the appointment of a receiver.

 

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  1. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  2. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  3. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

  4. I totally agree with John Smith.

  5. An idea that would harm the public good which is protected by licensing. Might as well abolish doctor and health care professions licensing too. Ridiculous. Unrealistic. Would open the floodgates of mischief and abuse. Even veteranarians are licensed. How has deregulation served the public good in banking, for example? Enough ideology already!

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