BROWN, Judge.
JPMorgan Chase Bank, N.A., ("JPMorgan") appeals the trial court's order of January 16, 2014, denying its December 19, 2013 "Combined Motion to Intervene, to Stay January 9, 2014 Sheriff Sale, to Vacate Order of Sale, to Vacate the May 27, 2010 Summary Judgment and Decree of Foreclosure, and Request for Expedited Hearing on Motion." Appellant's Appendix at 1. JPMorgan raises three issues, which we consolidate and restate as whether the court erred in denying its motion. We reverse and remand.
In October 2001, Claybridge Homeowners Association, Inc., ("Claybridge") filed a complaint against Deborah Walton, who lived in a house located on certain real property (the "Real Estate") in the Claybridge subdivision in Hamilton County. Walton v. Claybridge Homeowners Ass'n, Inc., No. 29A05-1006-MF-399, slip op. at 1, 2011 WL 240179 (Ind.Ct.App. Jan. 20, 2011) (the "2011 Opinion"), trans. denied. Deborah later filed a counterclaim against Claybridge. Id. In 2002, Claybridge obtained an injunction against Deborah to prevent her from interfering with Claybridge's performance of duties under the subdivision's covenants.
On July 15, 2004, the trial court entered an order awarding damages to Claybridge in the amount of $248 for damages, $64,600 for attorney fees, and the cost of suit in the action against Deborah.
Appellee's Appendix at 70-71. This Order was not entered in the trial court's judgment docket. 2011 Opinion at 3. At the time, the recorded deed reflecting the owner of the Real Estate was a quitclaim deed (the "2001 Quitclaim Deed") dated June 27, 2001, and recorded with the Hamilton County Recorder on July 10, 2001, conveying the Real Estate to Deborah. A quitclaim deed (the "2007 Quitclaim Deed") dated June 28, 2001, was recorded with the Hamilton County Recorder on April 12, 2007. Deborah conveyed the Real Estate by the 2007 Quitclaim Deed to herself and her mother Margaret as joint tenants with rights of survivorship.
On October 30, 2007, Claybridge filed a Complaint to Foreclose Judicial Lien (the "Foreclosure Complaint") alleging that the court's July 15, 2004 order was a valid lien against the Real Estate and that it was entitled to enforce its terms. Id. The Foreclosure Complaint named a number of defendants, including Margaret, Fifth Third Mortgage Company ("Fifth Third"), which had recorded a mortgage on the Real Estate on April 11, 2006 (the "Fifth Third Mortgage"), and First Indiana Bank, N.A. ("First Indiana"), which had recorded a mortgage on the Real Estate on June 16, 2006 (the "First Indiana Mortgage").
Appellee's Appendix at 2-3. Claybridge requested that its judgment be declared a valid lien against the Real Estate, a judgment of foreclosure of the lien, and an order directing the sale of the Real Estate.
Also on October 30, 2007, Claybridge filed a Lis Pendens Notice stating that it had filed a Foreclosure Complaint for foreclosure of a judicial lien in its favor which may result in a sale of the Real Estate. The Lis Pendens Notice, dated and file-stamped October 30, 2007, in the record includes a handwritten notation on the second page stating "Lp 10 pg 84." Appellant's Appendix at 79. The chronological case summary (the "CCS") indicates Deborah and Margaret were each personally served with the Foreclosure Complaint and a summons on November 7, 2007.
On November 13, 2007, Deborah and Margaret executed a promissory note in the amount of $473,000 in favor of Washington Mutual Bank, and the note was secured by a mortgage on the Real Estate, executed by Deborah and Margaret and recorded on November 27, 2007 (the "JPMorgan Mortgage").
Deborah and Margaret, by counsel, filed an Answer on May 8, 2009, in which they admitted that, on or about July 15, 2004, Deborah was the owner of the Real Estate, that on that date the court entered a judgment in favor of Claybridge and against Deborah, that the judgment was a valid lien against the Real Estate, and that Claybridge was the holder of the judgment.
On May 19, 2010, the court signed an order, which was file-stamped on May 27, 2010, titled Summary Judgment Entry and Decree of Foreclosure in Favor of Claybridge (the "Foreclosure Decree"). The court entered summary judgment in favor of Claybridge and against Deborah, Margaret, and First Indiana, ordered a foreclosure sale of the Real Estate, and gave priority to Claybridge's judgment lien over
Appellee's Appendix at 84-85.
Deborah appealed from the Foreclosure Decree and argued that there was no final judgment upon which a lien could have been based, that the January 2007 Order did not give rise to a lien that Claybridge was entitled to act upon, and that the trial court erred in ordering foreclosure of the lien, and this court affirmed. See 2011 Opinion at 2-6. Specifically, in our 2011 Opinion, we determined that "the trial court's final judgment of January 16, 2007 [the January 2007 Order], which ... unmistakably incorporated the previous monetary award against [Deborah], clearly was sufficient to permit the establishment of a judgment lien against [her] interest in any real property in Hamilton County that could be foreclosed as to [her], or any other party who had actual notice of the judgment against her." Id. at 4. In August 2013, Claybridge requested a sale of the Real Estate, and it was scheduled to be sold by the Hamilton County Sheriff on January 9, 2014.
On December 19, 2013, JPMorgan filed a "Combined Motion to Intervene, to Stay January 9, 2014 Sheriff Sale, to Vacate Order of Sale, to Vacate the May 27, 2010 Summary Judgment and Decree of Foreclosure, and Request for Expedited Hearing on Motion." Appellant's Appendix at 1. JPMorgan argued it was entitled to intervene in the action in order to protect its interest in the Real Estate, that it received an interest in the Real Estate via the JPMorgan Mortgage which was assigned to it by Washington Mutual Bank, that Claybridge failed to name JPMorgan or Washington Mutual Bank as a defendant, and that JPMorgan was at risk of having its interest in the Real Estate impaired because of the Foreclosure Decree and the fact the Real Estate was scheduled to be sold at a sheriff's sale. JPMorgan further argued that no other party adequately represented its interest and that its motion to intervene was timely because any delay in the filing of the motion was attributable to Claybridge's failure to name it in the action. JPMorgan asserted that the January 2007 Order never became a lien against the Real Estate because Claybridge failed to index the judgment on the Hamilton County judgment
On December 27, 2013, Claybridge filed a response to JPMorgan's motion to intervene. Claybridge argued that, according to the 2011 Opinion, although the January 2007 Order was never indexed in the Hamilton County judgment docket, it constituted a judgment lien on the Real Estate that could be foreclosed as to Deborah and any other party who had notice of the January 2007 Order. Claybridge asserted that JPMorgan was not entitled to intervene in the action because it had notice of the January 2007 Order and the foreclosure action and its motion was not timely. Specifically, Claybridge argued that it filed the Lis Pendens Notice on October 30, 2007, that the Lis Pendens Notice took effect two weeks before the JPMorgan Mortgage came into existence, and that therefore JPMorgan and its predecessors in interest took the JPMorgan Mortgage with notice of the January 2007 Order and the foreclosure action and were thus bound by the Foreclosure Decree. Claybridge also claimed the January 2007 Order applied to the entirety of the Real Estate. JPMorgan filed a reply on January 2, 2014. On January 8, 2014, the court stayed the scheduled sheriff's sale.
On January 10, 2014, the court held a hearing on JPMorgan's motion to intervene at which counsel for JPMorgan and Claybridge presented arguments.
On January 16, 2014, the court entered an order denying JPMorgan's December 19, 2013 motion to intervene. The court found that on October 30, 2007, Claybridge filed a Lis Pendens Notice with the Hamilton County Clerk providing notice of the January 2007 Order and pending foreclosure action, that on November 13, 2007, Deborah and Margaret refinanced the Fifth Third Mortgage on the Real Estate and executed a new mortgage to Washington Mutual Bank, and that JPMorgan is the holder of that mortgage. The court found that "JPMorgan had notice of this foreclosure action by virtue of the properly filed and valid Lis Pendens Notice." Appellant's Appendix at 96. The court found that JPMorgan's request to intervene six years after the filing of the Lis Pendens Notice was not timely. The court denied JPMorgan's request to intervene, ordered that JPMorgan took its interest in the Real Estate subject to the first lien of Claybridge, denied JPMorgan's request to vacate the Foreclosure Decree, and found that Claybridge had a judgment lien on the entirety of the Real Estate. JPMorgan filed a notice of appeal from the court's January 16, 2014 order denying its December 19, 2013 motion to intervene.
The issue is whether the trial court erred in denying JPMorgan's December 19, 2013 to intervene. In its motion, JPMorgan argued it was entitled to intervene in the action under Ind. Trial
Because the concept of timeliness is flexible and its application depends upon the facts of each case, its determination must rest within the sound discretion of the trial court. Herdrich Petroleum Corp. v. Radford, 773 N.E.2d 319, 325 (Ind.Ct. App.2002) (citing Bryant v. Lake Cnty. Trust Co., 166 Ind.App. 92, 101, 334 N.E.2d 730, 735 (1975)), reh'g denied, trans. denied. However, the requirement of timeliness should not be employed as a tool to sanction would-be intervenors who are tardy in making their application. Id. Rather, it is intended to insure that the original parties should not be prejudiced by an intervenor's failure to apply sooner, and that the orderly processes of the court are preserved. Id.
JPMorgan contends the court erred in denying its motion to intervene and argues that it has an interest in the Real Estate, that the foreclosure action may impair its interest, and that no other party is adequately representing its interest. It asserts that its motion was timely and that the January 2007 Order was not properly recorded on the judgment docket and therefore did not provide it with notice of Claybridge's interest. JPMorgan states that it "did not have actual notice of the foreclosure action until late 2013 when the [Real Estate] was listed for sale." Appellant's Brief at 13. With respect to the October 30, 2007 Lis Pendens Notice, JPMorgan contends that the notice was defective and that "[t]here is no known case law to support the use of a lis pendens notice as a substitute for complying with statutory requisites to create a judgment lien." Id. at 12. It also argues that "not only did Claybridge not have a valid lien against the [Real Estate] at the time the lis pendens was filed, the lis pendens notice itself was incorrect" because it "indicates that it is attempting to foreclose a judicial lien, but there was no judicial lien to foreclose at the time the lis pendens was filed" and that a third party checking the public records "would not discover a judicial lien in favor of Claybridge." Id. at 12-13. JPMorgan further argues the court erred in determining Claybridge had a lien on the entirety of the Real Estate.
Claybridge contends JPMorgan's interest was adequately protected as Deborah attempted to use JPMorgan's interest as a means of attacking Claybridge's right to enforce the January 2007 Order, that Fifth Third had an interest in the Real Estate and adequately represented JPMorgan's interest, and that the fact Fifth Third did not defend the action does not change the analysis. Claybridge further posits that the court properly found that JPMorgan's motion to intervene was untimely. Claybridge argues there is nothing in the record to support JPMorgan's assertion that it did not have actual notice of the foreclosure action until it was listed for sale, and that Claybridge has a valid judgment lien on the Real Estate, pointing to the 2011 Opinion, and arguing the 2011 Opinion is the law of the case.
In addition, Claybridge contends that the Lis Pendens Notice was properly filed
In its reply brief, JPMorgan notes that it is undisputed that Claybridge obtained "a valid personal judgment against Deborah" but that "due to the personal judgment not having been indexed, Claybridge did not obtain a valid lien or interest in the Real Estate as against third parties without actual notice, such as JPMorgan." Appellant's Reply Brief at 4. It argues that "Claybridge equates having a personal judgment against Deborah [] with having an in rem interest in the real estate...." Id. And, it maintains that "the lis pendens doctrine allows a person with an in rem interest in property that is not otherwise recorded to give notice to third parties." Id. (citing Nat'l City Bank Ind. v. Shortridge, 689 N.E.2d 1248, 1252 (Ind.1997), supplemented sub nom., 691 N.E.2d 1210 (Ind.1998)). JPMorgan further argues that, "[i]n order to gain an in rem interest in the [R]eal [E]state, Claybridge was required to ensure that the personal judgment was properly indexed on the judgment docket." Id. at 5.
We note that, with respect to the requirements of Ind. Trial Rule 24(A), JPMorgan has a security interest in the Real Estate under the JPMorgan Mortgage which may be impaired by the foreclosure action and any sale of the Real Estate. In addition, no existing party to the action adequately represents the interest of JPMorgan as Fifth Third is not a party to the action
We now turn to whether JPMorgan's motion to intervene was timely. The trial court found that JPMorgan did not timely intervene, that it had notice of the foreclosure action "by virtue of the properly filed and valid Lis Pendens Notice," and that JPMorgan "took its interest in the Real Estate subject to the first lien of Claybridge." Appellant's Appendix at 96-97.
Indiana adheres to the doctrine of lis pendens, which literally means "pending suit." Mid-W. Fed. Sav. Bank v. Kerlin, 672 N.E.2d 82, 86 (Ind.Ct.App.1996) (citing 19 I.L.E. Lis Pendens § 1 (1959)), reh'g denied, trans. denied. At common law, the doctrine of lis pendens provided that a person who acquired an interest in land during the pendency of an action concerning the title thereof took the property subject to any judgment later rendered in the action. Clarkson v. Neff, 878 N.E.2d 240, 243 (Ind.Ct.App.2007) (citing Kerlin, 672 N.E.2d at 86), trans. denied. Commencement of the action itself was deemed to provide notice to the purchaser of the land. Id. "In the latter part of the nineteenth century, the legislature enacted lis pendens statutes that modified the common law rule." Id. "Briefly stated, the statutes require that a separate written notice of a pending suit be filed with the clerk of the circuit court of the county where the land is located in order for the action to affect the interests of any persons acquiring an interest in the land while the action was pending." Id.
Id. (quoting Curry v. Orwig, 429 N.E.2d 268, 272-273 (Ind.Ct.App.1981) (citation omitted), reh'g denied).
If a lis pendens notice is properly filed on the public records, a subsequent purchaser will take the property subject to a judgment in the pending claim. Id. at 244 (citing MDM Inv. v. City of Carmel, 740 N.E.2d 929, 934 n. 3 (Ind.Ct.App. 2000)). To protect an interest in the property, the subsequent purchaser may either ensure that the grantor does not harm his rights or intervene in the action. Id.
Ind.Code § 32-30-11-3 provides in part:
Claybridge claims the Lis Pendens Notice was effective to provide notice of the foreclosure action to JPMorgan. JPMorgan claims that the January 2007 Order was not properly recorded, the January 2007 Order was a valid personal judgment against Deborah 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 Curry v. Orwig, this court addressed the question of what constitutes "an interest in real estate" under the lis pendens statute.
Id. at 272-273.
The court in Curry found that the case before it did not merely involve personal rights because, by conveying easement rights to purchasers of lots, the Currys would actually be conveying interests in the original easement that would conflict with those rights previously granted to Orwigs. See Trotter v. Ind. Waste Sys., Inc., 632 N.E.2d 1159, 1163 (Ind.Ct.App. 1994) (discussing Curry), reh'g denied. The Curry court stated that the only way in which prospective purchasers could be put on notice of the Orwigs' rights was by the filing of a lis pendens notice. See id.
In Trotter, this court again addressed when a party had a sufficient interest in real estate pursuant to the lis pendens statute that would justify the filing of a notice under that statute. See id. at 1162-1163. After discussing and reviewing the examples discussed in Curry, the court held:
Id. at 1163.
"The doctrine of lis pendens may not be predicated on an action or suit seeking merely to recover a personal or money judgment unless and until a valid judgment has been secured and made a lien against the property." Shortridge, 689 N.E.2d at 1252 (citing 54 C.J.S. Lis Pendens § 11, at 399 (1987) (footnotes omitted)). "Even cases involving a contract for services on the realty in question have been found to be personal and improper for lis pendens notice, until a judgment lien is entered." Id. at 1252-1553 (citing Curry, 429 N.E.2d at 273 (citing Rehnberg, 52 N.W.2d 454)).
In this case, we acknowledge that the Lis Pendens Notice was filed on October 30, 2007, prior to the JPMorgan Mortgage, which was dated November 13, 2007, and recorded November 27, 2007. In our 2011 Opinion, we held:
2011 Opinion at 3-4 (emphasis added). Thus, while the January 2007 Order was sufficient to permit the establishment of a judgment lien against Deborah which could be foreclosed as to her interest in the Real Estate, we noted the January 2007 Order was not entered in the judgment docket, and as such it was insufficient to permit the establishment of a judgment lien which could be foreclosed as to a party who did not have actual notice of the January 2007 Order. Id. at 4 (noting
Claybridge's claim and judgment against Deborah for attorney fees and damages related to the removal of a survey monument.
In short, as noted in Curry and Trotter, 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. JPMorgan did not have actual notice of the January 2007 Order as it was not entered in 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.
Based upon the record and under the circumstances, and keeping in mind that the timeliness requirement should not be employed as a tool to sanction prospective intervenors but to insure the original parties are not prejudiced by an intervenor's failure to apply sooner, we conclude that the JPMorgan as the prospective intervenor met its burden under Trial Rule 24(A) and that its motion was not untimely. Accordingly, we reverse the trial court's denial of JPMorgan's motion to intervene and remand for further proceedings consistent with this opinion.
For the foregoing reasons, we reverse the trial court's January 16, 2014 order denying JPMorgan's motion to intervene and remand for further proceedings consistent with this opinion.
Reversed and remanded.
BARNES, J., and BRADFORD, J., concur.
JPMorgan's motion also attached a title commitment dated September 12, 2007, identifying Washington Mutual Bank as the proposed insured, and the commitment does not specifically list as an exception any judgment lien by Claybridge against the Real Estate.
Appellant's Appendix at 42-43.
Curry, 429 N.E.2d at 271.