Because there are genuine issues of material fact as to the fair market value of a property at the time of sale and the true amount of indebtedness on a promissory note, a trial court erred in granting summary judgment in favor a bank on its foreclosure action, the Indiana Court of Appeals ruled Friday.
In R.P. Leasing, LLC, Robert C. Waite, and Ilene A. Waite v. Chemical Bank, 89A01-1412-MF-549, R.P. Leasing appealed summary judgment in favor of Chemical Bank on its foreclosure action involving Michigan and Indiana properties owned by R.P. Leasing. The company borrowed $700,000 from Chemical Bank to buy the properties. In 2009, the Michigan property was appraised at $1.2 million; in 2013, an appraisal valued the property at $500,000. By 2013, R.P. Leasing had defaulted on the loan, causing the Michigan property to go to a sheriff’s sale. The bank bought the property back through a credit bid for $500,000. It then sought to foreclose on the Indiana property, alleging that the amount the bank was owed was more than $716,000. The bank did not mention the sale of the Michigan property.
The trial court ruled in favor of the bank, ordering foreclosure of the Indiana property. The court denied R.P. Leasing’s motion to correct error.
“The fair market value of the Michigan property at the time of sale is a material issue in this case because, under Michigan law, it is a defense to a deficiency claim (such as the one the Bank brought in the instant case) that the property sold and applied against the Note was sold for less than fair market value,” Judge Edward Najam wrote. Thus, if R.P. Leasing could show that the fair market value of the Michigan property was more than the $500,000 credit bid, then, as a matter of Michigan law, the set-off applied to the Note would be the fair market value rather than the lesser amount of $500,000.”
The bank submitted evidence designating the fair market value to be $500,000; R.P. Leasing submitted the 2009 appraisal showing the property valued as high as $1.2 million. There is also conflicting designated evidence on the material issue of the true amount of indebtedness owing on the note. As such, summary judgment is precluded, the COA held.
Also, the judges affirmed the denial of R.P. Leasing’s motion for attorney fees because it failed to raise that issue until its motion to correct error.