                                                                           FILED
                                                                       Dec 06 2018, 9:11 am

                                                                           CLERK
                                                                       Indiana Supreme Court
                                                                          Court of Appeals
                                                                            and Tax Court




ATTORNEY FOR APPELLANT                                    ATTORNEY FOR APPELLEE
Brad A. Council                                           Christopher J. McElwee
Slovin & Associates Co., LPA                              Monday McElwee Albright
Cincinnati, Ohio                                          Indianapolis, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

Collins Asset Group, LLC,                                 December 6, 2018
Appellant-Plaintiff,                                      Court of Appeals Case No.
                                                          18A-CC-1160
        v.                                                Appeal from the Hamilton
                                                          Superior Court
Alkhemer Alialy,                                          The Honorable Steven R. Nation,
Appellee-Defendant.                                       Judge
                                                          The Honorable Darren J. Murphy,
                                                          Magistrate
                                                          Trial Court Cause No.
                                                          29D01-1704-CC-3957



Riley, Judge.




Court of Appeals of Indiana | Opinion 18A-CC-1160 | December 6, 2018                           Page 1 of 8
                                STATEMENT OF THE CASE
[1]   Appellant-Plaintiff, Collins Asset Group, LLC (CAG), appeals the trial court’s

      dismissal of its foreclosure action against Appellee-Defendant, Alkhemer Alialy

      (Alialy).


[2]   We affirm.


                                                     ISSUE
[3]   CAG presents us with one issue on appeal, which we restate as: Whether the

      trial court erred when it granted Alialy’s motion to dismiss, and concluded that

      CAG’s action was barred by the six-year statute of limitation pursuant to

      Indiana Code section 34-11-2-9.


                      FACTS AND PROCEDURAL HISTORY
[4]   On June 29, 2007, Alialy entered into a promissory note with GMAC Mortgage

      LLC (GMAC), whereby Alialy promised to pay GMAC the amount of

      $60,000, plus interest at the rate of 12% per annum, in monthly payments of

      $631.93 beginning on September 1, 2007, and continuing through August 1,

      2032. At the same time Alialy entered into a promissory note, Alialy also

      entered into a mortgage with Mortgage Electronic Registration Systems, Inc.

      (MERS), as the nominee of GMAC. The mortgage was incorporated into the

      note as security for the loan. Pursuant to the terms of the mortgage, a junior

      lien was placed on the property of Alialy.




      Court of Appeals of Indiana | Opinion 18A-CC-1160 | December 6, 2018     Page 2 of 8
[5]   On June 9, 2008, Wells Fargo Bank, N.A. (Wells Fargo), as priority lien holder

      on the property, filed a foreclosure action on the mortgage against Alialy. On

      July 28, 2008, the Hancock Superior Court entered a default judgment against

      Alialy and a decree of foreclosure. Alialy made no further payments toward the

      GMAC note after July 28, 2008.


[6]   On June 17, 2016, Alialy was informed that the note had been transferred to

      CAG on December 31, 2014, and that he should begin making payments to

      CAG on the outstanding balance due on the loan starting September 1, 2016.

      Alialy did not make the payment, and on October 24, 2016, CAG sent its notice

      of acceleration to Alialy whereby it accelerated payments due from September

      1, 2016, to the maturity date of the loan. On April 26, 2017, CAG filed its

      Complaint upon the note. On June 23, 2017, Alialy filed his motion to dismiss

      the Complaint, contending that CAG’s claim was barred by the six-year statute

      of limitations, pursuant to Ind. Code § 34-11-2-9. On July 19, 2017, CAG filed

      its motion in opposition, claiming that the Complaint was not barred as the

      statute of limitations only began to run at the moment CAG accelerated the

      payment on the note. On April 16, 2018, after a hearing, the trial court

      summarily dismissed CAG’s Complaint for failure to state a claim upon which

      relief can be granted.


[7]   CAG now appeals. Additional facts will be provided as necessary.




      Court of Appeals of Indiana | Opinion 18A-CC-1160 | December 6, 2018       Page 3 of 8
                              DISCUSSION AND DECISION
[8]   CAG contends that the trial court erred in dismissing its Complaint against

      Alialy pursuant to T.R. 12(B)(6). The standard of review on appeal from a trial

      court’s grant of a motion to dismiss for failure to state a claim is de novo and

      requires no deference to the trial court’s decision. Arflack v. Town of Chandler, 27

      N.E.3d 297, 302 (Ind. Ct. App. 2015). The grant or denial of a motion to

      dismiss turns on the legal sufficiency of the claim and does not require

      determinations of fact. Id. Therefore, a motion to dismiss under Rule 12(B)(6)

      tests the legal sufficiency of a complaint: that is, whether the allegations in the

      complaint establish any set of circumstances under which a plaintiff would be

      entitled to relief. Id. Thus, while we do not test the sufficiency of the facts

      alleged with regard to their adequacy to provide recovery, we do test their

      sufficiency with regards to whether or not they have stated some factual

      scenario in which a legally actionable injury has occurred. Id. In determining

      whether any facts will support the claim, we look only to the complaint and

      may not resort to any other evidence in the record. Id.


[9]   Here, the trial court dismissed CAG’s Complaint without a detailed written

      opinion as to its reasons for dismissal. When a court grants a motion to dismiss

      without reciting the grounds relied upon, it must be presumed on review that

      the court granted the motion to dismiss on all the grounds in the motion. Id.

      However, the proceedings during the hearing on the motion to dismiss clarify

      that the trial court not only relied on the allegations of the Complaint but also



      Court of Appeals of Indiana | Opinion 18A-CC-1160 | December 6, 2018        Page 4 of 8
       considered the parties’ memoranda and an affidavit submitted by Alialy

       together with his motion. Accordingly,


               If, on a motion, asserting the defense number (6), to dismiss for
               failure of the pleading to state a claim upon which relief can be
               granted, matters outside the pleading are presented to and not
               excluded by the court, the motion shall be treated as one for
               summary judgment and disposed of as provided in Rule 56. In
               such case, all parties shall be given reasonable opportunity to
               present all material made pertinent to such a motion by Rule 56.


       T.R. 12(B). A trial court’s failure to give explicit notice of its intended

       conversion of a motion to dismiss to one for summary judgment is reversible

       error only if a reasonable opportunity to respond is not afforded a party and the

       party is thereby prejudiced. Doe v. Adams, 53 N.E.3d 483, 492 (Ind. Ct. App.

       2016), trans. denied. Because CAG filed its own motion in opposition in

       response to Alialy’s motion to dismiss and Alialy’s reliance on documents

       outside the pleading was “readily apparent and unmistakable,” no reversible

       error occurred. See id. at 493. Accordingly, as Alialy’s motion to dismiss must

       be treated as one for summary judgment, we must determine whether there is a

       genuine issue as to any material fact and whether the moving party is entitled to

       judgment as a matter of law. Id. at 494.


[10]   Relying on I.C. § 34-11-2-9, Alialy maintains that CAG’s cause of action

       accrued, and the statute of limitations began to run, on the date of the last

       payment, i.e., July 28, 2008. Thus, Alialy asserts, CAG’s Complaint, which

       was filed April 26, 2017, was not timely under the six-year statute of limitations


       Court of Appeals of Indiana | Opinion 18A-CC-1160 | December 6, 2018          Page 5 of 8
       applicable to promissory notes. Indiana Code section 34-11-2-9 provides, in

       pertinent part, that “[a]n action upon promissory notes, bills of exchange, or

       other written contracts for the payment of money executed after August 31,

       1982, must be commenced within six (6) years after the cause of action

       accrues.”


[11]   Statutes of limitation seek to provide security against stale claims, which in turn

       promotes judicial efficiency and advances the peace and welfare of society.

       Cooper Indus., LLC v. City of South Bend, 899 N.E.2d 1274, 1279 (Ind. 2009). The

       determination of when a cause of action accrues is generally a question of law.

       Imbody v. Fifth Third Bank, 12 N.E.3d 943, 945 (Ind. Ct. App. 2014). Under

       Indiana’s discovery rule, a cause of action accrues, and the limitation period

       begins to run, when a claimant knows or in the exercise of ordinary diligence

       should have known of the injury. Cooper Indus., LLC, 899 N.E.2d at 1280. As

       such, “an action to recover a debt must be commenced within six years of the

       last payment.” Holt v. LVNV Funding, LLC, 147 F. Supp. 3d 756, 760 (S.D. Ind.

       2015) (applying Indiana law and referencing I.C. § 34-11-29). Therefore, as

       Alialy ceased payment on the note on July 28, 2008, any cause of action filed

       after July 28, 2014 would be barred by the statute of limitations.


[12]   However, where, as here, the installment contract contains an optional

       acceleration clause, by which the creditor may declare all installments of the

       loan due and payable after default, the statute of limitations to collect the debt

       does not begin to run immediately upon the debtor’s default. Smither v. Asset

       Acceptance, LLC, 919 N.E.2d 1153, 1160 (Ind. Ct. App. 2010). Instead, the

       Court of Appeals of Indiana | Opinion 18A-CC-1160 | December 6, 2018       Page 6 of 8
       statute generally begins to run only when the creditor exercises the optional

       acceleration clause. Id. Nevertheless, the Smither court cautioned that,

       “Waiting until after the statute of limitations has passed following default

       before making demand for full and immediate payment of a debt is per se an

       unreasonable amount of time to invoke an optional acceleration clause and

       cannot be given effect.” Id. at 1161-62. The court also noted, “‘a party is not at

       liberty to stave off operation of the statute [of limitations] inordinately by failing

       to make demand.’” Id. at 1161 (quoting Curry v. United States, 679 F.Supp. 966,

       970 (N.D. Cal. 1987)).


[13]   In the case at bar, CAG waited to accelerate the note until October 24, 2016,

       and did not filed its Complaint until April 26, 2017. Accordingly, CAG’s

       acceleration option was exercised a full two years after CAG’s cause of action

       was barred by the statute of limitation. As CAG’s attempt to exercise the

       acceleration clause did not prevent the six-year statute of limitation from taking

       effect and expiring, CAG’s acceleration clause cannot be given effect and its

       Complaint is barred. 1




       1
         In an effort to circumvent the application of I.C. § 34-11-2-9, CAG asserts that I.C. § 26-1-3.1-118 governs
       the case at bar. However, as CAG failed to raise this issue before the trial court, it waived the argument for
       our review. See VanWinkle v. Nash, 761 N.E.2d 856, 859 (Ind. Ct. App. 2002) (Failure to raise an issue before
       the trial court will result in waiver of that issue).

       Court of Appeals of Indiana | Opinion 18A-CC-1160 | December 6, 2018                               Page 7 of 8
                                              CONCLUSION
[14]   Based on the foregoing, we hold that the trial court properly dismissed CAG’s

       cause of action.


[15]   Affirmed.


[16]   Vaidik, C. J. and Kirsch, J. concur




       Court of Appeals of Indiana | Opinion 18A-CC-1160 | December 6, 2018   Page 8 of 8
