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COA: Bank should be allowed to intervene in foreclosure matter

October 22, 2014

The Indiana Court of Appeals reversed the denial of JPMorgan Chase Bank’s motion to intervene in a homeowners association’s attempt to foreclose on a home to fulfill a judgment. The COA found that the bank did not have actual notice of a pending action against the homeowner in 2007, as the association argued.

Claybridge Homeowners Association obtained a judgment in 2004 against Deborah Walton, who lived in the subdivision, for $64,600 in attorney fees and $248 in damages related to the removal of a survey monument. In January 2007, the trial court entered an order vacating a hearing on additional attorney fees and certified it as final judgment. But this order was not entered in the trial court’s judgment docket.

In October 2007, Claybridge filed a complaint to foreclose judicial lien, claiming to have a valid lien against the real estate. It also filed a lis pendens notice stating it had filed a foreclosure complaint, which may result in the sale of the real estate. Two weeks later, Walton and her mother Margaret, who was a joint tenant based on a quitclaim deed, obtained a new mortgage from Washington Mutual Bank, which was later assigned to JPMorgan.

In December 2013, JPMorgan filed its motion to intervene in order to protect its interest in the real estate. The trial court denied its motion, ruling that JPMorgan had notice of the foreclosure action by virtue of the properly filed and valid lis pendens notice.

Claybridge claimed the lis pendens notice was effective to provide notice of the foreclosure action to JPMorgan. JPMorgan claimed that the January 2007 order was not properly recorded, that order was a valid personal judgment against Walton but not an in rem interest in the real estate, and thus that the January 2007 order and the lis pendens notice were ineffective at providing constructive notice.

In JPMorgan Chase Bank, N.A,. v. Claybridge Homeowners Association, Inc., v. Deborah M. Walton, et al., 29A02-1402-MF-65, the COA agreed with the bank.

“In short …. The lis pendens statute is intended to apply to in rem interests in real estate, and any interest Claybridge may have had by virtue of the January 2007 order did not constitute such an interest,” Judge Elaine Brown wrote. “JPMorgan did not have actual notice of the January 2007 Order as it was not entered into the Hamilton County judgment docket, and the Lis Pendens Notice in this case was ineffective for the purpose of providing notice to JPMorgan that its security interest in the Real Estate under the JPMorgan Mortgage may have been subject to or impaired by the January 2007 Order.”

The COA remanded for further proceedings.
 

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