COA upholds 12(B)(6) dismissal of complaint against bank

December 21, 2017

A bank that removed a home from a sheriff’s sale list did not breach its contract with the property owners through an in rem decree of foreclosure because the decree included language allowing the bank to remove the home from the sale list, the Indiana Court of Appeals has ruled.

In February 2008, the Bank of New York Trust Company initiated foreclosure proceedings against Kenneth and Mary Roberts’ Indianapolis real estate. After the couple appealed the entry of foreclosure against them, the parties entered into a settlement agreement that would allow the bank to receive an in rem decree of foreclosure, eliminating the possibility of a deficiency judgment against the Robertses.

The agreement initially called for the property to be put up for sheriff’s sale, but the bank later removed it from the sale list and instead assigned the mortgage to RWLS III, LLC. Meanwhile, multiple entities, including the city of Indianapolis, sought to assess fines and citations against the couple related to the upkeep and demolition of the property.

Then in December 2016, the Robertses filed a third party complaint and cross claim against the bank and RWLS, alleging the bank was liable to them if they were liable to entities such as the city, and that the bank had breached its contract and was negligent by removing the property from the tax sale list. They sought declaratory judgment holding the bank and RWLS liable for the upkeep of the property.

The bank filed a 12(B)(6) motion to dismiss, which the Marion Superior Court granted, prompting the appeal in Kenneth Robert and Mary Roberts v. The Bank of New York Mellon Trust Company, N.A. d/b/a Bank of New York Trust Company, N.A. and RWLS III, LLC, 49A02-1706-OV-1377. On appeal, the Robertses argued the trial court erred in dismissing their breach of contract claim, but the Indiana Court of Appeals upheld the dismissal on Thursday.

In the Thursday opinion, Judge Patricia Riley pointed to language in the in rem decree of foreclosure that allowed the bank to “order the Sheriff…to accept notice of cancellation…prior to the time of the scheduled sale without further order of court.” Thus, the bank acted in accordance with the decree and did not breach it, Riley said.

The appellate court also upheld the dismissal of the complaint’s indemnity claim, finding that because the bank did not breach its contract, the indemnity claim must also be dismissed. Similarly, the panel determined there were no circumstances in the complaint that would entitle the Robertses to declaratory judgment.


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