COA splits in upholding motion to set aside summary judgment

IL file photo

A split Court of Appeals of Indiana has upheld the grant of a motion to set aside summary judgment in a dispute involving a financial company and a woman whose ex-husband admitted to using her identity to fraudulently obtain a loan.

Appellee-defendant Meng Liu and her ex-husband, Ning Ao, divorced in 2020.

In September of that year, Automotive Finance Corporation sued various parties including Liu, Ao and Ao’s company, Monmars Automotive Group. The complaint alleged that the Monmars had breached a promissory note and security agreement, and that the defendants were liable for the debt associated with the note based on an unconditional and continuing guaranty that they had each allegedly signed before a notary public. The lawsuit also alleged the defendants were liable for fraud and conversion.

Shortly after AFC filed its complaint, Liu disputed her liability under the guaranty. She filed a pro se letter with the Marion Superior Court, as did Ao, who claimed that Liu and Xiaoqiao Yang, another defendant, were “not involved in any business with Monmars […], nor ha[d] they signed with the AFC.”

In March 2022, AFC moved for partial summary judgment for breach of the note and guaranty.

In response, Liu filed another pro se letter disputing her liability under the guaranty because of Ao’s “confession letter[,]” in which he stated that he had used Liu’s Social Security number “to apply for the loan of AFC[,]” had not clearly explained to her what AFC is, and had helped her sign the note and guaranty.

Neither the “confession letter” nor Liu’s pro se filing had been signed under oath. Also, neither Liu nor her co-defendants designated evidence opposing AFC’s summary judgment motion or filed responses in compliance with Trial Rule 56(C).

Following a hearing, the trial court awarded AFC partial summary judgment in the amount of $163,097 plus costs against Monmars, Liu, Ao and Yang.

Liu then appealed but failed to file her appellant’s brief by the deadline, so the appellate court dismissed the appeal with prejudice.

While Liu’s first appeal was pending, she challenged AFC’s right to garnish certain deposit accounts held in her name.

In November 2022, the trial court ordered the release of some of the deposit accounts, with the exception of $20,000 in one account, which the trial court stated was “to be held for her creditor, AFC.” But the trial court never issued a final garnishment order.

Regarding the remaining $20,000 being held for AFC, Liu filed an additional pro se request asking that the funds be refunded to her.

For its part, AFC requested a hearing for a final garnishment order. At that hearing, the trial court ordered Liu to file a motion for an exemption hearing.

Then, at the exemption hearing, the trial court did not limit evidence to determining which, if any, exemptions applied to Liu’s $20,000 deposit account. Despite AFC’s objection — and the fact that Liu’s appeal had been dismissed and that she had not yet filed a Trial Rule 60(B) motion — the trial court allowed Liu to present evidence of Ao’s alleged fraud to challenge the underlying partial summary judgment award.

In response to questioning from the trial court, Ao testified that he had used Liu’s name and information to apply for the loan for AFC, that the loan had funded Monmar’s account, and that Ao had found “two foreign students from China and have (sic) them sign on behalf of Xiaoqiao Yang and Meng Liu” using Yang’s and Ming’s identification cards.

In May 2023, Liu moved for relief from the entry of partial summary judgment in favor of AFC based on Ao’s testimony at the exemption hearing.

A month later, the trial court granted Liu relief from summary judgment, finding that Ao had “admitted under oath that the signatures on the loan application […] were forged” and had further acknowledged that Liu “received no benefits” from the loan. Based on the testimony, the trial court concluded that Liu had met her burden of showing that she had a meritorious defense under Trial Rule 60(B).

On appeal, AFC argued that the trial court applied the wrong standard to Liu’s motion for relief from summary judgment. The appellate majority disagreed.

“Liu produced sufficient evidence to sustain the trial court’s finding that fraud had occurred which had prevented her from presenting her case,” Judge Cale Bradford wrote. “Additionally, we cannot say that the trial court abused its discretion in concluding that Liu had established a meritorious defense.”

AFC also argued that the trial court abused its discretion in holding that the dismissal of the first appeal had not precluded her filing of a Trial Rule 60(B) motion.

But “(b)ecause it was based on newly-discovered evidence, Liu’s motion for relief was neither a substitute for a direct appeal nor an attempt to revive an expired appeal,” Bradford wrote. “Motions for relief from judgment are intended to address ‘the procedural, equitable grounds justifying relief from the legal finality of a final judgment’ and, given the trial court’s wide latitude, we cannot say it abused its discretion in concluding that Liu has shown that she is entitled to equitable relief from AFC’s summary judgment award.”

Judge Nancy Vaidik concurred, but Judge Elaine Brown dissented with a separate opinion.

Citing Outback Steakhouse of Fla., Inc., v. Markley, 856 N.E.2d 65 (Ind. 2006), Brown wrote that Liu “did not allege fraud which prevented her from filing a timely response to AFC’s summary judgment motion. She made no claim that the alleged fraud ‘prevented [her] from fully and fairly presenting [her] case.’

“Further, to the extent that she could have presented her claim in the previous appeal and did not file an appellant’s brief raising the claim, she could not subsequently revive the claim by filing a motion under Trial Rule 60(B),” Brown concluded, citing S.E. v. State, 744 N.E.2d 536, 539 (Ind. Ct. App. 2001).

Thus, Brown would have reversed.

The case is Automotive Finance Corporation d/b/a AFC v. Meng Liu, 23A-CC-1468.