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7th Circuit rules against homeowners on quiet title action

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A Hamilton County couple who went into default on their home mortgage loan had the dismissal of their action to quiet title and claims of negligence and unconscionability upheld Friday by the 7th Circuit Court of Appeals.

Phillip and Deborah Jackson received a $282,500 home mortgage refinancing loan with a 30-year fixed interest rate of 5.875 percent from Countrywide Home Loans. They used a mortgage broker to apply for the loan. They made payments on the loan for several years until the loan went into default in March 2010. Foreclosure proceedings were not initiated, but the Jacksons initiated a quiet title on their property in state court. They also alleged the mortgage defendants negligently evaluated their ability to repay the loan and that the loan contract was substantively and procedurally unconscionable.

The action was moved to federal court, where Judge William T. Lawrence dismissed the Jacksons’ claims.

In Phillip Jackson and Deborah Jackson v. Bank of America Corp., et al., 12-3338, the 7th Circuit held that the Jacksons can’t move forward on their negligence claims because they can’t show that the financial institutions actually owed them a duty. Without a duty, there is no cognizable negligence claim, Judge Michael Kanne wrote.

The couple was also unable to allege facts that would support that the loan contract was substantively unconscionable or procedural unconscionable, the judges ruled.

“There is nothing in the record to indicate that the Jacksons did not understand the terms of their loan, or that the mortgage process itself was somehow irregular. The contention that the Jacksons did not understand the potential consequences of defaulting on their loan is similarly unsupported,” Kanne wrote.

And although the Jacksons’ arguments regarding the action to quiet title were novel, the judges were unconvinced that they constitute a valid quiet title action under Indiana law.

“Although there is no pending foreclosure, the Jacksons attempt to construct a quiet title action out of two legal theories that have been used with limited success in other jurisdictions to forestall immediate foreclosure (but have not yet been raised, so far as we can tell, in Indiana under these precise circumstances): (1) that the bifurcation of the mortgage and the note (in order to package the latter into larger securities) prevents any party from claiming strong enough title to foreclose, and (2) that no party could produce the original note, which should be required to properly foreclose,” he continued.

“To the extent that these theories have legs (a question very much in dispute), they might protect a debtor from foreclosure by a particular party at a particular time. … They do not, however, ‘prove that [the plaintiff] was the owner of the land in controversy.’ As such, these theories are not sufficient to support a quiet title action in Indiana.”

 

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  1. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  2. 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

  3. 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

  4. 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.

  5. I totally agree with John Smith.

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