 Pursuant to Ind. Appellate Rule 65(D), this


                                                                FILED
 Memorandum Decision shall not be
 regarded as precedent or cited before any
 court except for the purpose of establishing
 the defense of res judicata, collateral                      Sep 11 2012, 9:18 am
 estoppel, or the law of the case.
                                                                     CLERK
                                                                   of the supreme court,
                                                                   court of appeals and
                                                                          tax court



ATTORNEYS FOR APPELLANTS:                          ATTORNEYS FOR APPELLEE:

PETER CAMPBELL KING                                THEODORE J. NOWACKI
Cline, King & King, P.C.                           BRIAN S. JONES
Columbus, Indiana                                  Bose McKinney & Evans LLP
                                                   Indianapolis, Indiana
J. THOMAS HURLEY
Muncie, Indiana




                               IN THE
                     COURT OF APPEALS OF INDIANA

WILLIAM ADAMS and PATRICIA ADAMS,                  )
                                                   )
       Appellants-Defendants/Counterplaintiffs,    )
                                                   )
               vs.                                 )        No. 18A02-1202-MF-96
                                                   )
CHASE HOME FINANCE, LLC,                           )
                                                   )
       Appellee-Plaintiff/Counterdefendant.        )


                     APPEAL FROM THE DELAWARE CIRCUIT COURT
                            The Honorable John M. Feick, Judge
                              Cause No. 18C04-1009-MF-101


                                       September 11, 2012


                MEMORANDUM DECISION - NOT FOR PUBLICATION


CRONE, Judge
                                          Case Summary

       William Adams and Patricia Adams (“the Adamses”) appeal the trial court’s entry of

summary judgment in favor of Chase Home Finance, LLC (“Chase”).1 Chase filed a

complaint to foreclose on a mortgage and promissory note secured by certain real property

located in Delaware County against Danny Slusher, the mortgagor and promisor. Chase also

named the Adamses, among others, as defendants due to the possibility that the Adamses

would claim an interest in the mortgaged property. The Adamses responded with affirmative

defenses and a counterclaim against Chase alleging that Chase breached the standard of care

for a reasonable and responsible mortgage lender when issuing a mortgage to Slusher.

Specifically, the Adamses claimed that Slusher was not the true owner of the property, and

therefore Chase negligently issued the mortgage. Chase moved for summary judgment as to

the Adamses’ counterclaim arguing that, as a matter of law, it cannot be liable to a third

party, such as the Adamses, for negligent lending. Following a hearing, the trial court

entered summary judgment in favor of Chase on the Adamses’ counterclaim. Concluding

that no genuine issue of material fact remains regarding the Adamses’ counterclaim, and that

judgment as a matter of law is appropriate, we affirm summary judgment in favor of Chase.

                                  Facts and Procedural History

           The following is a recitation of both material and nonmaterial facts for purposes of

background and context. On August 30, 2001, the Hamilton Superior Court entered



       1
           JPMorgan Chase Bank, N.A., is successor by merger to Chase Home Finance, LLC.



                                                  2
judgment in favor of the Adamses and against William E. Smith, Joanne Smith, Danny J.

Smith, Steve Smith, Westbrook Management Group, Inc., and United Group (collectively

“the Smiths”) for three counts of corrupt business influence and one count each of fraud,

deception, theft, common law fraud, constructive fraud, and breach of contract for a total of

$9,635,967.04 in damages. Appellants’ App. at 307-10. Since obtaining judgment, the

Adamses have attempted to collect from the Smiths by instituting two proceedings

supplemental in Hamilton County to enforce their judgment. 2

        In January 2004, Slusher and an individual named Ronald Gross purchased real

property located at 8989 North Shaffer Road in Muncie (“the Property”) for a purchase price

of $855,000.3 The Property was conveyed to Slusher and Gross by CitiMortgage, Inc.,

pursuant to a corporate warranty deed. To finance the transaction, Slusher and Gross

obtained a mortgage from HLB Mortgage in the amount of $798, 500.4 Because Slusher and

Gross were not in Indiana at the time of the closing, William Smith and Jeffrey Smith

executed the closing documents on their behalf through powers of attorney. Then, in April

2005, Slusher and Gross refinanced the existing loan and obtained a $1.5 million mortgage

on the Property from Custom Mortgage Solutions. Slusher and Gross signed the closing


        2
          Judgment creditors in Indiana have long relied on proceedings supplemental to execution to help
enforce judgments. Rose v. Mercantile Nat’l Bank of Hammond, 868 N.E.2d 772, 775 (Ind. 2007).
        3
         Chase provides this purchase amount in its appellee’s brief and directs us to an exhibit in the record
for support. Appellee’s Br. at 2. The exhibit, however, does not contain this number, and we are unaware
what evidence Chase is relying upon for this figure. Nevertheless, we provide the unverified amount as part of
the nonmaterial factual background.
        4
          Again, this amount is not supported by the cited exhibit and cannot be verified. Indeed, the cited
exhibit indicates that the initial mortgage indebtedness was, in fact, $200,000. Appellants’ App. at 136.


                                                      3
documents themselves. The day of closing, Custom Mortgage Solutions assigned the

mortgage loan to Chase.

        On May 10, 2006, Slusher refinanced the $1.5 million loan at a lower interest rate.

Again, William Smith signed the mortgage documents on Slusher’s behalf pursuant to a

power of attorney. Two days later, Gross transferred his interest in the property to Slusher by

a gift deed. That transfer was signed for Gross by William Smith, under a power of attorney.

Thereafter, on January 8, 2007, Gross transferred his interest in the property to Slusher by

means of a quitclaim deed, which was recorded on January 11, 2007.

        In August 2009, the Adamses filed a fraud complaint against the Smiths and Slusher

in the Delaware Circuit Court, under cause number 18C04-0908-MI-51 (“Cause 51”),

alleging that the Smiths owned the Property and that Slusher was just a “straw man” trying to

hide the true ownership of the Property from the valid collection efforts of the Adamses as

judgment creditors of the Smiths. Id. at 304. That cause is still pending.5

        At all relevant times, the Smiths have lived on the Property rent free. Although

Slusher does not live on the Property, he made the required mortgage payments over the

years. The last payment received by Chase was for the payment due January 1, 2010.




        5
         The Delaware Circuit Court dismissed the Adamses’ fraud complaint on collateral estoppel grounds
in January of 2010. On appeal, this Court reversed the dismissal and remanded for further proceedings in an
unpublished memorandum decision in Adams v. Smith, No. 18A04-1002-MI-65 (Ind. Ct. App. Aug. 24, 2010).


                                                    4
        On September 14, 2010, Chase filed a complaint on note and to foreclose mortgage on

real estate in the Delaware Circuit Court.6 In addition to Slusher, Chase joined several

defendants, including the Adamses, due to the interest “which they may claim in the

mortgaged property.” Id. at 17. The Adamses answered the complaint with affirmative

defenses and a counterclaim.            Specifically, the Adamses’ affirmative defenses and

counterclaim against Chase alleged that the Smiths were the true owners of the Property and

therefore Chase breached the standard of care for a reasonable and responsible mortgage

lender when it issued a mortgage on the Property to Slusher.

        Chase filed a motion for summary judgment and designation of evidence in support

arguing that summary judgment was appropriate as to the Adamses’ affirmative defenses and

counterclaim for negligence against Chase. The Adamses responded with their own

designation of evidence in opposition to summary judgment. A hearing was held on January

5, 2012. Thereafter, on January 12, 2012, the trial court granted summary judgment in favor

of Chase on the Adamses’ counterclaim. In addition, finding no just reason for delay, the

court entered a final appealable judgment. This appeal ensued.

                                      Discussion and Decision

        Our standard of review for a trial court’s order granting a motion for summary

judgment is well settled. We apply the same standard as the trial court and determine

whether there is a genuine issue of material fact and whether the moving party is entitled to



        6
         Although the cases involve different parties and different attorneys, upon the Adamses' motion, the
Delaware Circuit Court consolidated the instant case and Cause 51 for the purpose of discovery only.
Appellant’s App. at 5, 271.

                                                     5
judgment as a matter of law. Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968,

973 (Ind. 2005); Ind. Trial Rule 56(C). “An appellate court reviewing a trial court summary

judgment ruling likewise construes all facts and reasonable inferences in favor of the non-

moving party and determines whether the moving party has shown from the designated

evidentiary matter that there is no genuine issue as to any material fact and that it is entitled

to judgment as a matter of law.” Dugan v. Mittal Steel USA Inc., 929 N.E.2d 184, 186 (Ind.

2010). A factual issue is material for purposes of Trial Rule 56(C) if it bears on the ultimate

resolution of a relevant issue. Bushong v. Williamson, 790 N.E.2d 467, 474 (Ind. 2003).

Thus, despite conflicting facts and inferences on some elements of a claim, summary

judgment may be proper where there is no dispute or conflict regarding a fact that is

dispositive of the claim. Id. Factual disputes that are irrelevant or unnecessary will not be

considered. Jarvis Drilling, Inc. v. Midwest Oil Producing Co., 626 N.E.2d 821, 825 (Ind.

Ct. App. 1993), trans. denied (1994).

       A trial court’s order on summary judgment is cloaked with a presumption of validity;

the party appealing from the grant of summary judgment must bear the burden of persuading

this Court that the decision was erroneous. Breining v. Harkness, 872 N.E.2d 155, 158 (Ind.

Ct. App. 2007), trans. denied (2008). “We may affirm the grant of summary judgment upon

any basis argued by the parties and supported by the record.” Id.

       In the instant case, Chase moved for summary judgment regarding the Adamses’

counterclaim against Chase for negligence. We begin by noting that the Adamses are neither

parties to the mortgage in question nor are they judgment creditors of Slusher, the mortgagor


                                               6
and record title holder to the Property. Instead, the Adamses are third-party judgment

creditors of the Smiths, individuals who lived on the Property but did not legally own or have

title to the Property. In their counterclaim, the Adamses claimed that Chase “unreasonably”

granted a mortgage to Slusher by failing to reasonably conduct “due diligence in the

mortgage process involving this transaction” and “to grant a mortgage to the true owner in

fact of the real estate.” Appellants’ App. at 54-55. They claimed that Chase “breached the

standard of care for a reasonable and responsible mortgage lender when issuing a mortgage”

to Slusher, thereby proximately causing damage to the Adamses by “impairing the ability” of

the Adamses to lawfully execute and collect on their judgment against the Smiths. Id.

       In its motion for summary judgment, Chase argued that Indiana does not recognize a

cause of action for “negligent lending,” and therefore Chase is entitled to judgment as a

matter of law on the Adamses’ counterclaim. Id. at 107. Accordingly, the narrow question

before the trial court, and now this Court, is whether the Adamses can challenge the validity

of Chase’s mortgage with Slusher through a claim of negligence. To recover on a theory of

negligence, a plaintiff must establish three elements: (1) a duty on the part of the defendant

to conform his conduct to a standard of care arising from his relationship with the plaintiff,

(2) a failure of the defendant to conform his conduct to the requisite standard of care required

by the relationship, and (3) an injury to the plaintiff proximately caused by the breach. Webb

v. Jarvis, 575 N.E.2d 992, 995 (Ind. 1991).

       Summary judgment is particularly appropriate when the court determines that no duty

exists because, absent a duty, there can be no breach and, therefore, no negligence. Reed v.


                                               7
Beachy Constr. Corp., 781 N.E.2d 1145, 1148 (Ind. Ct. App. 2002), trans. denied (2003).

The Adamses have asserted no facts to support a finding of a duty in negligence arising from

any relationship between themselves and Chase.7 As stated, the Adamses are strangers to the

mortgage. Indeed, the Adamses concede that Indiana has never recognized a claim which

would allow a borrower, much less a third-party stranger to a mortgage, to assert a claim of

negligence against a mortgage lender for negligent lending.

        Nevertheless, the Adamses ask that we construe their counterclaim under Indiana Trial

Rule 8(F), “so … as to do substantial justice, lead to disposition on the merits, and avoid

litigation of procedural points.”            Accordingly, on appeal, the Adamses attempt to

recharacterize their counterclaim as a claim of fraud or an action to set aside a fraudulent

conveyance as opposed to a claim of negligence. However, this attempt to wholly

recharacterize their claim on appeal is spurious at best. Upon our review of the counterclaim

itself, as well as the transcript of the summary judgment hearing, there is no question that the

Adamses' claim against Chase sounded in negligence and negligence alone. Their counsel

conceded as much during the summary judgment hearing. See Tr. at 13, 18 (“[Cause 51] is

all about fraud. Not the case here.”) We will not entertain the Adamses’ novel equitable

claim on appeal to “set aside a fraudulent conveyance.” Appellants’ Reply Br. at 12. This

was not a theory presented to the trial court. When challenging an adverse grant of summary


        7
          The Adamses suggest that we recognize a very broad duty for Chase by arguing that “the law should
as a matter of public policy protect judgment creditors from bank foreclosure actions involving outright fraud
clams and title manipulation….” Appellants’ App. at 289. However, as noted earlier, the Adamses are not
judgment creditors of Slusher, the mortgagor. We are not persuaded that the Adamses are in the class of
persons to whom such broad protection, if it did exist, would extend.


                                                      8
judgment, a party cannot rely upon a theory that was not properly before the trial court. Otto

v. Park Garden Assoc., 612 N.E.2d.135, 139 (Ind. Ct. App. 1993), trans. denied. As stated,

the Adamses’ claim against Chase sounded in negligence. The trial court properly concluded

that the Adamses’ negligence claim against Chase fails as a matter of law.

       The Adamses maintain that a material question of fact remains as to whether the

Smiths had any ownership interest in the Property. However, this assertion is essentially

nonresponsive to the current summary judgment proceeding regarding their counterclaim for

negligence. It bears repeating, however, that the Adamses are third-party strangers to the

mortgage and are now attempting to assert a right to the property that, if the right did exist,

would belong to the Smiths. As noted by Chase, the Adamses were joined as defendants in

this foreclosure “out of an abundance of caution” in the event that they would claim an

interest in the Property. Appellants’ App. at 114. The Adamses’ standing at that point can be

described as follows:

       [a] proceeding to foreclose a mortgage is essentially a proceeding in rem; and,
       in actions of this character, which seek to establish a right or interest in the
       thing which is the subject-matter of the litigation, all who are made parties
       defendant thereto, and challenged by the plaintiff therein to assert their rights,
       are bound to assert every then existing fact which would defeat the plaintiff’s
       action, and are forever concluded by a finding and judgment in favor of the
       plaintiff as to all such facts, and this has been the law in this state, since the
       case of Fischli v. Fischli, 1 Blackf. 360, 12 Am. Dec. 251.

Centex Home Equity Corp. v. Robinson, 776 N.E.2d 935, 946-47 (Ind. Ct. App. 2002)

(quoting Pilliod v. Angola Ry. & Power Co., 46 Ind. App. 719, 91 N.E. 829, 832 (1910)),

trans. denied. Once joined as defendants to the foreclosure, the Adamses were challenged to



                                               9
assert their rights to the Property. Instead, the Adamses responded with a negligence claim

against Chase, which we have determined fails as a matter of law.

        By continually citing the convoluted procedural history and nonmaterial facts of this

case and Cause 51, the Adamses attempt to create an issue of fact where none exists. We

acknowledge the Adamses’ frustration as judgment creditors of the Smiths. Nevertheless,

that does not change their standing, or lack thereof, in the current mortgage foreclosure

action. They are merely third-party judgment creditors of individuals who are neither the

mortgagors nor the owners of record and who have not claimed any interest in the mortgaged

property. The Adamses have not met their burden to persuade this Court that the trial court’s

entry of summary judgment on their counterclaim for negligence was erroneous.8 Therefore,

we affirm the judgment of the trial court.

        Affirmed.

RILEY, J., and BAILEY, J., concur.




        8
           We note that, in the still pending fraud case against Slusher and the Smiths, Cause 51, the trial court
granted the Adamses a “writ of attachment” on the Property which was recorded lis pendens on January 31,
2011. “The purpose of lis pendens or notice of lis pendens is to give effective notice to third persons of
pendency of litigation affecting property…” UFG, LLC v. Sw. Corp., 784 N.E.2d 536, 545 (Ind. Ct. App.
2003) (citations omitted), trans. denied. However, the notice of lis pendens was filed five months after Chase
filed its complaint to foreclose and nearly five years after Chase and Slusher executed the mortgage upon
which the foreclosure is based.

                                                       10
