                                                                     FILED
                                                                 Jan 26 2017, 6:50 am

                                                                     CLERK
                                                                 Indiana Supreme Court
                                                                    Court of Appeals
                                                                      and Tax Court




      ATTORNEY FOR APPELLANT                                    ATTORNEY FOR APPELLEE
      Pamela A. Paige                                           Mario Garcia
      Plunkett Cooney, P.C.                                     Brattain Minnix Garcia
      Indianapolis, Indiana                                     Indianapolis, Indiana


                                                 IN THE
          COURT OF APPEALS OF INDIANA

      U.S. Bank, National                                       January 26, 2017
      Association, Successor to                                 Court of Appeals Case No.
      National City Bank,                                       49A05-1607-MF-1578
      Appellant-Defendant,                                      Interlocutory Appeal from the
                                                                Marion Superior Court
              v.                                                The Honorable Cynthia J. Ayers,
                                                                Judge
      Jewell Investments, Inc.,                                 Trial Court Cause No.
      Appellee-Plaintiff                                        49D04-0806-MF-26954




      Crone, Judge.


                                              Case Summary
[1]   Jewell Investments, Inc. (“Jewell”), filed a foreclosure action naming U.S.

      Bank, National Association, Successor to National City Bank (“Bank”) as a

      defendant as to a certain piece of real estate. Bank filed a summary judgment

      motion, asserting that it was a bona fide purchaser of the real estate and

      therefore its lien was entitled to priority over Jewell’s. The trial court denied
      Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017            Page 1 of 14
      Bank’s motion. Bank now appeals. We conclude that Bank carried its burden

      to show that there is no genuine issue of material fact as to whether it is a bona

      fide purchaser and that it is entitled to judgment as a matter of law.

      Accordingly, we reverse and remand with instructions to enter summary

      judgment in favor of Bank.


                                    Facts and Procedural History 1
[2]   The heart of this dispute is whether Bank or Jewell has lien priority on real

      estate (“the Real Estate”) commonly known as 602 Manhattan Avenue,

      Indianapolis and legally described as Lot Number 84 in Biltmore Gardens,

      recorded in Plat Book 18, pages 88-89, in the Marion County Recorder’s

      Office. 2 Appellant’s App. Vol. 2 at 151. On or about January 29, 2007,

      Diversified Investments, LLC (“Diversified”), executed a mortgage in favor of

      Jewell (“the Jewell Mortgage”) for the Real Estate, which was recorded on

      February 1, 2007. The Jewell Mortgage describes the Real Estate as

      “[c]ommonly known as: 602 S. Manhattan, Indianapolis, IN.” Id. at 152. 3 It

      is undisputed that the Jewell Mortgage does not contain the legal description of

      the Real Estate. See Appellee’s Br. at 7 (“[T]he mortgage inadvertently omitted



      1
        Both Bank’s and Jewell’s briefs fail to comply with our rules because their citations to the record are in
      footnotes rather than in the text of the document. See Ind. Appellate Rule 22 (requiring adherence to
      Bluebook rules); THE BLUEBOOK: A UNIFORM SYSTEM OF CITATION R. B1, at 3-4 (Columbia Law
      Review Ass’n et al. eds., 20th ed. 2016) (“In non-academic legal documents, such as briefs and opinions,
      citations generally appear within the text of the document directly after the propositions they support.”).
      2
          All instruments relevant to this appeal are recorded in the Marion County Recorder’s Office.
      3
       Although the Jewell Mortgage states that the address is 602 S. Manhattan Avenue, Jewell states that the
      Real Estate is commonly known as 602 Manhattan Avenue. Appellee’s Br. at 4, 7.

      Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017                         Page 2 of 14
      the legal description.”). On February 8, 2007, Diversified recorded its

      ownership of the Real Estate by special warranty deed.


[3]   In July 2007, Francisco Rutiga Retana agreed to purchase the Real Estate from

      Diversified and sought financing from National City Mortgage, a division of

      National City Bank. In furtherance of this transaction, Fax Mobile Abstracting,

      Inc., performed a title examination of the Real Estate (“Fax Mobile’s Property

      Search”). Fax Mobile’s Property Search did not reveal the Jewell Mortgage.

      However, it revealed that Diversified had executed a mortgage for the Real

      Estate in favor of Newton County Loan & Savings FSB (“the Newton

      Mortgage”), which was recorded on February 8, 2007. The Newton Mortgage

      contained the legal description of the Real Estate.


[4]   On September 2007, the closing for Retana’s purchase of the Real Estate from

      Diversified was held. Diversified executed and delivered a corporate warranty

      deed to Retana, which was recorded on December 31, 2007. Retana executed

      and delivered an $80,500 note in favor of National City Mortgage. As security

      for the note, Retana executed and delivered an $80,500 mortgage to National

      City Mortgage (“the Bank Mortgage”), which was recorded on September 28,

      2007. The Bank Mortgage was subsequently assigned to Bank and recorded on

      September 25, 2008.




      Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 3 of 14
[5]   On June 17, 2008, Jewell filed an action to foreclose on various properties

      including the Real Estate, naming Bank as a party as to that property. 4 Bank

      was served with a copy of Jewell’s complaint but did not appear or file any

      pleadings. On May 29, 2009, Jewell moved for entry of default judgment and

      decree of foreclosure. The same day, the trial court issued an agreed entry of in

      rem judgment and decree of foreclosure, defaulting Bank and foreclosing

      Jewell’s asserted mortgage lien on the Real Estate. On September 10, 2009,

      based on the judgment and decree of foreclosure, a sheriff’s deed to the Real

      Estate was executed in favor of Jewell.


[6]   On April 12, 2012, Bank filed a motion to set aside sheriff’s sale and default

      judgment. On November 6, 2014, the trial court vacated the sheriff’s deed and

      the judgment and decree of foreclosure. On June 25, 2015, Bank filed a motion

      for summary judgment against Jewell, asserting that because the Jewell

      Mortgage had no legal description of the Real Estate, Fax Mobile’s Property

      Search was unable to locate it, and therefore Bank was a bona fide purchaser

      for value as to the Real Estate and its lien had priority over Jewell’s. In support

      of its motion, Bank designated the affidavit of Cindy Dailey, which provided,


              1. I have personal knowledge of the statements made in this
              affidavit and am competent to testify.


              2. I am the owner of Fax Mobile Abstracting, Inc.



      4
       Initially, Jewell’s complaint named National City Bank as a party, but because the Bank Mortgage was
      shortly thereafter assigned to Bank, we refer to Bank for simplicity.

      Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017                    Page 4 of 14
              3. A-One Title, LLC provided closing services for the sale of real
              property commonly known as 602 Manhattan Avenue,
              Indianapolis, Indiana (“Real Estate”) to Francisco Rutiga
              Retana.


              4. Fax Mobile Abstracting, Inc. was retained to perform a title
              examination of the Real Estate relative to that transaction.


              5. The examination revealed a $60,000 mortgage from
              Diversified to Newton County Loan & Savings FSB (“Newton
              Mortgage”), said Newton Mortgage being filed for record on
              February 8, 2007 as Instrument No. 2007-0023620.


              6. The Newton Mortgage correctly contained the correct legal
              description for the Real Estate.


              7. The [Jewell] Mortgage filed for record on February 1, 2007 as
              Instrument No. 2007-0020665 does not contain a legal
              description for the Real Estate.


              8. Because the [Jewell] Mortgage filed for record as Instrument
              No. 2007-0020665 did not contain a legal description for the Real
              Estate, it was not recorded in the chain of title to the Real Estate
              and was not located during the title examination.


              9. A true and accurate copy of the Examination Notes are
              attached hereto as the same are maintained in the regular course
              of business of Fax Mobile Abstracting, Inc.


      Appellant’s App. Vol. 2 at 171-72.


[7]   Jewell filed an objection to Bank’s motion and in support thereof designated an

      unauthenticated title search purportedly prepared by Legacy Title & Escrow

      Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 5 of 14
      Services and dated July 28, 2009 (“the Legacy Property Search”), which

      revealed the Jewell Mortgage and the Bank Mortgage. Id. at 244.


[8]   Bank filed a reply brief in support of its summary judgment motion and

      designated a second affidavit from Cindy Dailey, which provided,


              3. I am familiar with the title search standards followed by title
              searchers in Marion County, Indiana.


              4. In Marion County, when performing a title search as to
              deeds/mortgages, the title searcher is to use the grantor/grantee
              index, the mortgagor/mortgagee index and then use the tract
              index to narrow the search results to the particular lot at issue.


              5. There is no method in Marion County, Indiana to search title
              via a common address.


              ….


              7. The Mortgage from Diversified Investments, LLC to Jewell
              Investments, Inc. dated January 29, 2007 and recorded on
              February 1, 2007 as Instrument No. 2007-0020665 does not
              appear when searching the grantor/grantee index in Marion
              County and narrowing the search results as to Lot No. 84 of
              Biltmore Gardens.


              8. Because the Mortgage from Diversified Investments, LLC to
              Jewell Investments, Inc. dated January 29, 2007 and recorded on
              February 1, 2007 as Instrument No. 2007-0020665 does not
              appear when searching the grantor/grantee index in Marion
              County and narrowing the search results as to Lot No. 84 of
              Biltmore Gardens, the Mortgage is not in the chain of title as to
              said Lot.

      Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 6 of 14
        9. When Fax Mobile Abstracting, Inc. performed its title search
        of Lot No. 84 of Biltmore Gardens, Fax Mobile Abstracting, Inc.
        followed the title search standards in Marion County, Indiana.


        10. Fax Mobile Abstracting, Inc. searched the grantor/grantee index
        and the mortgagor/mortgagee index and then used the tract index to
        narrow the search results to the particular lot at issue (Lot No. 84
        of Biltmore Gardens).


        11. The title search performed by Fax Mobile Abstracting, Inc.
        did not locate the Mortgage from Diversified Investments, LLC
        to Jewell Investments, Inc. dated January 29, 2007 and recorded
        on February 1, 2007 as Instrument No. 2007-0020665 because
        said Mortgage did not include a legal description for Lot No. 84
        of Biltmore Gardens and, therefore, is not in the chain of title
        thereto.


        12. I have seen the [Legacy] Property Search that was attached
        to Plaintiff’s Designation of Material Relied Upon as Exhibit 4.


        13. The fact that the [Legacy] Property Search shows the
        Mortgage from Diversified Investments, LLC to Jewell
        Investments, Inc. dated January 29, 2007 and recorded on
        February 1, 2007 as Instrument No. 2007-0020665 does not
        mean that the Mortgage was in the chain of title to Lot No. 84 of
        Biltmore Gardens.


        14. The [Legacy] Property Search does not say what information
        was provided to the searcher to search the chain of title to Lot
        No. 84 of Biltmore Gardens (i.e. was the searcher told about the
        Mortgage from Diversified Investments, LLC to Jewell
        Investments, Inc.).




Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 7 of 14
               15. Without being provided additional information (i.e. that the
               Mortgage from Diversified Investments, LLC to Jewell
               Investments, Inc. was supposed to attach to Lot No. 84 of
               Biltmore Gardens), a title searcher would not locate the
               Mortgage using the grantor/grantee index and the
               mortgagor/mortgagee index and the corresponding tract index as
               shown by Exhibit 1 attached hereto.


       Appellant’s App. Vol. 3 at 7-9 (emphasis added).


[9]    The trial court denied Bank’s summary judgment motion. This appeal ensued.


                                      Discussion and Decision
[10]   Our standard of review for summary judgment is well settled:

               Indiana Trial Rule 56(C) provides that summary judgment is
               appropriate when the designated evidentiary matter shows that
               there is no genuine issue as to any material fact and that the
               moving party is entitled to judgment as a matter of law. The
               party moving for summary judgment bears the initial burden of
               showing that there is no genuine issue of material fact and that
               judgment as a matter of law is appropriate. If the moving party
               meets these two requirements, the burden shifts to the
               nonmovant to specifically designate facts showing that there is a
               genuine issue for trial. When reviewing summary judgment, we
               apply the same standard as the trial court and construe all facts
               and reasonable inferences to be drawn from those facts in favor
               of the non-moving party. Where material facts conflict, or
               undisputed facts lead to conflicting material inferences, entry of
               summary judgment is inappropriate. We carefully scrutinize a
               trial court’s grant of summary judgment to assure that the losing
               party is not improperly prevented from having its day in court.




       Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 8 of 14
       Crown Coin Meter Co. v. Park P, LLC, 934 N.E.2d 142, 146 (Ind. Ct. App. 2010)

       (citations omitted).


[11]   Bank moved for summary judgment on the issue of lien priority. Indiana Code

       Section 32-21-4-1(a) provides that a mortgage of land “must be recorded in the

       recorder’s office of the county where the land is situated[.]” A mortgage “takes

       priority according to the time of its filing.” Ind. Code § 32-21-4-1(b). Thus,

       “when multiple parties claim adverse interests in the same land, the date of

       recording provides a means to determine priority among those claims.”

       Patterson v. Seavoy, 822 N.E.2d 206, 211 (Ind. Ct. App. 2005).


[12]   The Jewell Mortgage was recorded prior to Bank’s. However, Bank asserts that

       it is a bona fide purchaser for value of the Real Estate and is therefore entitled

       to lien priority as to Jewell. “The theory behind the bona fide purchaser

       defense is that every reasonable effort should be made to protect a purchaser of

       legal title for a valuable consideration without notice of a legal defect.” S & S

       Enter. v. Marathon Ashland Petroleum, LLC, 799 N.E.2d 18, 23 (Ind. Ct. App.

       2003). “In order to qualify as a bona fide purchaser, one must purchase in good

       faith, for valuable consideration, and without notice of the outstanding rights of

       others.” Bank of N.Y. v. Nally, 820 N.E.2d 644, 648 (Ind. 2005) (emphasis

       added).


[13]   Here, the parties dispute the element of notice. Bank argues that the Jewell

       Mortgage’s omission of the legal description of the Real Estate rendered it




       Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 9 of 14
       insufficient to charge Bank with notice. Jewell counters that the Jewell

       Mortgage was sufficiently discoverable so as to place Bank on notice.


[14]   Our supreme court has explained,

               The law recognizes both constructive and actual notice. A
               purchaser of real estate is presumed to have examined the records
               of such deeds as constitute the chain of title thereto under which
               he claims, and is charged with notice, actual or constructive, of
               all facts recited in such records showing encumbrances, or the
               non-payment of purchase-money. A mortgage provides
               constructive notice to subsequent purchasers when it is properly
               acknowledged and recorded.


               ….


               The purpose of recording a mortgage is to give notice to persons
               subsequently dealing with the property of the existence of the
               mortgage and to charge them with notice of what the records
               disclose. To charge subsequent purchasers with notice, a mortgage must
               be recorded in the proper county and must contain an accurate legal
               description of the property.


       Id. at 648-50 (emphasis added) (citations and quotation marks omitted). Lastly,

       to provide notice “‘a recorded mortgage must be in the ‘chain of title.’” Id. at

       650 (quoting Szakaly v. Smith, 544 N.E.2d 490, 492 (Ind. 1989)).


[15]   Here, Jewell concedes that the Jewell Mortgage does not contain the legal

       description of the Real Estate. Accordingly, Bank cannot be charged with

       constructive notice of Jewell’s interest. Nevertheless, Jewell argues that its

       “description of the Real Estate on the mortgage provided U.S. Bank with

       Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 10 of 14
       sufficient notice of Jewell’s superior interest.” Appellee’s Br. at 10. In essence,

       Jewell’s argument is that Bank may be charged with implied or inferred actual

       notice.

               Notice is actual when notice has been directly and personally
               given to the person to be notified. Additionally, actual notice
               may be implied or inferred from the fact that the person charged
               had means of obtaining knowledge which he did not use. []
               Whatever fairly puts a reasonable, prudent person on inquiry is
               sufficient notice to cause that person to be charged with actual
               notice, where the means of knowledge are at hand and he omits
               to make the inquiry from which he would have ascertained the
               existence of a deed or mortgage. Thus, the means of knowledge
               combined with the duty to utilize that means equates with
               knowledge itself. Whether knowledge of an adverse interest will
               be imputed in any given case is a question of fact to be
               determined objectively from the totality of the circumstances.


       Weathersby v. JPMorgan Chase Bank, N.A., 906 N.E.2d 904, 911 (Ind. Ct. App.

       2009) (citations and quotation marks omitted).


[16]   Jewell correctly observes that prospective purchasers of real estate must search

       both the grantor-grantee index and the mortgagor-mortgage index for the period

       that the mortgagor holds title to the real estate. Nally, 820 N.E.2d at 649.

       Indiana Code Section 36-2-11-12 provides,


               (a) The recorder shall index each volume of instruments the
               recorder records by:


               (1) the name of each grantor, promisor, or covenantor, in
               alphabetical order and cross-referenced to the proper grantee,
               promisee, or covenantee; and

       Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 11 of 14
               (2) the name of each grantee, promisee, or covenantee, in
               alphabetical order and cross-referenced to the proper grantor,
               promisor, or covenantor.


               (b) The recorder shall accurately maintain separate indexes of all
               the records of:


               (1) deeds for real estate; and


               (2) mortgages on real estate;


               in the recorder’s office. The recorder shall index each deed or
               mortgage alphabetically, by the name of each grantor and grantee
               or mortgagor and mortgagee, and shall include in each index
               entry a concise description of the real property, the date of the
               deed or mortgage, and the number or letter of the book and the
               page at which each deed or mortgage is recorded.


[17]   Jewell takes the position that Bank did not perform a search of the mortgagor-

       mortgagee index, claiming that if Bank had performed a mortgagor-mortgagee

       title search, “it would have certainly discovered Jewell’s prior Mortgage and

       Jewell’s superior interest in the Real Estate.” Appellee’s Br. at 13. Jewell also

       argues,

               The failure by U.S. Bank to put forth any evidence regarding
               which index or indexes were searched by it or its abstractor, how
               the search was conducted, or offer any explanation as to why
               [Jewell’s] lien was not discovered during its title search when it
               was discoverable in [the Legacy Property Search] collectively
               demonstrates that there remains unanswered genuine questions
               of material fact.



       Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 12 of 14
       Id at 15.


[18]   Bank contends that Dailey’s affidavits establish that both the grantor-grantee

       and mortgagor-mortgagee indexes were searched, how they had been searched,

       that the mortgagor-mortgagee title search did not reveal the Jewell Mortgage,

       and that it was not discovered because it did not contain the legal description of

       the Real Estate. We agree. Dailey attested that Fax Mobile searched the

       grantor/grantee index and the mortgagor/mortgagee index according to

       Marion County title search standards; that Marion County does not provide a

       method to search title using a common address; and that the Jewell Mortgage

       was not discovered because it did not include a legal description for the Real

       Estate. Appellant’s App. Vol. 3 at 7-9. Bank’s designated evidence was

       sufficient to carry its initial burden to show that it cannot be charged with

       notice of Jewell’s interest and is therefore a bona fide purchaser for value.

       Jewell’s argument ignores Bank’s designated evidence. Although Jewell asserts

       that the street address on the Jewell Mortgage was sufficient to provide Bank

       with notice, Jewell did not designate any evidence regarding how the street

       address would operate to alert Bank to Jewell’s interest and its unauthenticated

       title search is inadequate to show that there is a genuine issue of material fact.

       Based on the designated evidence, we conclude that Bank established that it

       was a bona fide purchaser for value as against Jewell. Accordingly, the trial

       court erred in denying Bank’s motion for summary judgment. We reverse and

       remand for entry of summary judgment in favor of Bank.




       Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 13 of 14
[19]   Reversed and remanded.


       Riley, J., and Altice, J., concur.




       Court of Appeals of Indiana |Opinion 49A05-1607-MF-1578 | January 26, 2017   Page 14 of 14
