      MEMORANDUM DECISION
                                                                     May 13 2015, 9:37 am
      Pursuant to Ind. Appellate Rule 65(D), this
      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 estoppel, or the law of the case.



      ATTORNEYS FOR APPELLANTS                                 ATTORNEY FOR APPELLEE
      Eric C. Bohnet                                           Jason A. Lopp
      Indianapolis, Indiana                                    Wyatt, Tarrant & Combs, LLP
                                                               New Albany, Indiana
      Ninamary Buba Maginnis
      Maginnis Law Office
      Louisville, Kentucky



                                                   IN THE
          COURT OF APPEALS OF INDIANA

      Robert R. Setree, II, and Beverly                        May 13, 2015
      L. Setree,                                               Court of Appeals Case No. 10A04-
                                                               1409-MF-450
      Appellants-Defendants,
                                                               Appeal from the Clark Circuit Court
              v.                                               The Honorable Jerry Jacobi, Judge
                                                               The Honorable Kenneth R. Abbott,
      River City Bank,                                         Magistrate
      Appellee-Plaintiff                                       Case No. 10C02-1201-MF-68




      Crone, Judge.


                                               Case Summary
[1]   Robert R. Setree, II, and Beverly L. Setree (“the Setrees”) executed three

      promissory notes secured by various mortgages to River City Bank (“Bank”).


      Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015    Page 1 of 14
      Two of the mortgaged properties were in Indiana and two were in Kentucky.

      The Setrees breached the terms of one of the Indiana mortgages by failing to

      pay property taxes on the mortgaged property. Bank filed actions to foreclose

      on the Kentucky mortgages in Kentucky and was awarded the right to foreclose

      on both properties. Bank also filed an action in Indiana to foreclose on the

      property that the Setrees had failed to pay property taxes on. Setree v. River City

      Bank, 10 N.E.3d 30 (Ind. Ct. App. 2014), trans. denied (2015) (“Setree I”). In

      Setree I, another panel of this Court held that the issues raised in the Setrees’

      challenge to Bank’s foreclosure had already been addressed in the Kentucky

      cases and therefore were barred by res judicata. Id. at 37. Finally, Bank sought

      foreclosure of the Setrees’ property on Holly Drive in Jeffersonville, Indiana

      (“the Holly Drive Property”), the property in issue here. The trial court entered

      a summary judgment order granting Bank the right to foreclose on the Holly

      Drive Property. The Setrees appeal, arguing that Bank does not have the right

      to foreclose on this property. Bank contends that the Kentucky foreclosure

      cases already decided the issues involved in the Setrees’ default in Bank’s favor,

      and therefore the Setrees’ challenge is barred by the doctrine of res judicata.

      We agree with Bank. We are also unpersuaded by the Setrees’ argument that

      foreclosure of the Holly Drive Property is an unconscionable remedy.

      Accordingly, we affirm the summary judgment order.


                                 Facts and Procedural History
[2]   At all times relevant to this appeal, the Setrees owned the Holly Drive Property.

      In 2005, the Setrees executed a promissory note (“2005 Note”) in favor of Bank

      Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 2 of 14
      for $45,667 plus interest, which they secured with a mortgage in favor of Bank

      on the Holly Drive Property. In 2006, the Setrees executed a second

      promissory note (“2006 Note”) in favor of Bank for $15,484.19 plus interest,

      secured by a second mortgage on the Holly Drive Property (we refer to the first

      and second mortgages collectively as “the Holly Drive Mortgages”). In 2007,

      the Setrees executed a third promissory note (“2007 Note”) in favor of Bank for

      $91,380.50 plus interest and secured it with a mortgage in favor of Bank on

      property on Cardinal Lane, Jeffersonville (“the Cardinal Lane Mortgage”). The

      provisions regarding events of default and right to cure in the Holly Drive

      Mortgages are identical to the corresponding provisions in the Cardinal Lane

      Mortgage.


[3]   Subsequently, the Setrees executed two additional mortgages in favor of Bank

      on their Louisville, Kentucky properties, one on Virginia Avenue and one on

      Roederer Drive (“the Virginia Avenue Mortgage” and “the Roederer Drive

      Mortgage”). These two mortgages provided further security for the 2005 and

      2006 Notes. The Roederer Drive Mortgage provided further security for the

      2007 Note. In sum, the 2005 and 2006 Notes were secured by mortgages on the

      Holly Drive, Virginia Avenue, and Roederer Drive Properties, and the 2007

      Note was secured by mortgages on the Cardinal Lane and Roederer Drive

      Properties.


[4]   Relevant to this appeal, all three Notes contain the same provisions. Each Note

      contains a cross-default clause, which provides that the “[f]ailure to make any

      payment when due under this Note or any Note payable to [Bank]” constitutes

      Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 3 of 14
      a default. Appellants’ App. at 18, 29; Appellee’s App. at 106. Each Note

      provides that the “[v]iolation of any covenant of this note or any note payable

      to [Bank]” constitutes an event of default. Appellants’ App. at 18, 29;

      Appellee’s App. at 106. All three Notes also contain an acceleration clause,

      which provides, “Upon occurrence of any event of default under the

      Agreement, all of the indebtedness shall immediately become due and payable

      without any notice or demand by [Bank].” Appellants’ App. at 18, 29;

      Appellee’s App. at 106.


[5]   In 2009 and 2010, the Setrees failed to pay Indiana real estate taxes on the

      Cardinal Lane Property. This constituted a default under the 2007 Note.

      Pursuant to the cross-default clauses in the Notes, the default under the 2007

      Note constituted a default of the 2005 and 2006 Notes and activated Bank’s

      right to accelerate all debts due and owing under all three Notes and to

      foreclose on all of the mortgages it held on the Setrees’ properties. Appellee’s

      App. at 106; Setree I, 10 N.E.3d at 32. In the fall of 2010, the Cardinal Lane

      Property was sold at a tax sale due to the Setrees’ failure to pay taxes. The

      Setrees and Bank attempted to resolve this problem. However, by the end of

      September 2011, the Setrees had not paid the delinquent taxes. On September

      29, 2011, Bank paid $9455.73 to redeem the Cardinal Lane Property from the

      tax sale buyer and an additional $3116.55 in taxes to bring the delinquent real

      estate taxes current. The tax redemption amount and all other outstanding

      taxes had to be paid by October 3, 2011, or Bank would have lost its mortgage

      lien against the Cardinal Lane Property. See Ind. Code § 6-1.1-25-4 (providing


      Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 4 of 14
      that redemption period for real property sold for delinquent taxes is one year

      after date of sale).


[6]   In October 2011, the Setrees wrote a letter to Bank stating as follows:

              We know these taxes are our responsibility. We notified River City
              Bank more than a year ago to let you know we didn’t have the means
              to pay them because they had increased so much. We asked if you
              could pay them.

      Appellants’ App. at 38.


[7]   Bank initiated foreclosure actions on its four mortgages. The Kentucky cases

      proceeded first. In September 2012, the Jefferson Circuit Court entered a final

      judgment and order of sale in favor of Bank on the Roederer Drive property,

      which had secured the 2007 Note. In January 2013, it issued a similar order in

      favor of Bank on the Virginia Avenue property, which had secured the 2005

      and 2006 Notes. The January 2013 order concluded that the Setrees failed to

      pay property tax on the Cardinal Lane Property, that their failure to pay

      property taxes constituted a default on the 2007 Note, and that pursuant to the

      cross-default clauses, default under the 2007 Note constituted a default on all

      notes payable to Bank. Appellants’ App. at 60-61; Setree I, 10 N.E.3d at 33. In

      addition, the January 2013 order rejected the Setrees’ contention that they were

      not provided notice or an opportunity to cure. The January 2013 order

      concluded that the Setrees admitted in their October 2011 letter that they were

      given more than one year to cure the default, and therefore they had notice and




      Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 5 of 14
       an opportunity to cure the default but failed to do so. Appellants’ App. at 60-

       61; Setree I, 10 N.E.3d at 33.


[8]    The Indiana cases followed. In October 2013, the Clark Circuit Court issued

       summary judgment in favor of Bank granting it the right to foreclose on the

       Cardinal Lane Property. The Setrees appealed. In May 2014, another panel of

       this Court affirmed summary judgment in favor of Bank, holding that (1) we

       were required to afford full faith and credit to the Kentucky foreclosure

       judgments and (2) because those judgments considered the same issues as those

       the Setrees raised to challenge Bank’s right to foreclose on the Cardinal Lane

       Property, res judicata prevented relitigation of the Setrees’ default. Setree I, 10

       N.E.3d at 36, 37.


[9]    As for the Holly Drive Property, in September 2014, the trial court granted

       summary judgment in favor of Bank and ordered foreclosure and sale of the

       property. The Setrees appeal.


                                      Discussion and Decision

                                          Standard of Review
[10]           When reviewing a grant of summary judgment, our standard of review
               is the same as that of the trial court. Considering only those facts that
               the parties designated to the trial court, we must determine whether
               there is a “genuine issue as to any material fact” and whether “the
               moving party is entitled to a judgment as a matter of law.” Ind. Trial
               Rule 56(C). In answering these questions, the reviewing court
               construes all factual inferences in the non-moving party’s favor and
               resolves all doubts as to the existence of a material issue against the
               moving party. The moving party bears the burden of making a prima
               facie showing that there are no genuine issues of material fact and that
       Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 6 of 14
               the movant is entitled to judgment as a matter of law; and once the
               movant satisfies the burden, the burden then shifts to the non-moving
               party to designate and produce evidence of facts showing the existence
               of a genuine issue of material fact.

       Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1270 (Ind. 2009)

       (citations omitted).


       Section 1 - The Setrees’ challenge to Bank’s foreclosure of the
               Holly Drive Property is barred by res judicata.
[11]   The Setrees argue that the trial court erred in granting summary judgment in

       favor of Bank because (1) a breach of the Cardinal Lane Mortgage is not a

       breach of the Holly Drive Mortgages and (2) even if they are in default under

       the Holly Drive Mortgages, the Holly Drive Mortgages require Bank to provide

       notice and an opportunity to cure and it has not done so. Bank contends that

       the Kentucky foreclosure cases already decided issues relating to the Setrees’

       default in Bank’s favor, and therefore the Setrees’ arguments are barred by the

       doctrine of res judicata. We agree with Bank.


[12]   In Setree I, another panel of this Court considered whether the Setrees’ challenge

       to Bank’s right to foreclose on the Cardinal Lane Property was barred by res

       judicata. We noted that “[t]he effect Indiana must accord the Kentucky

       judgments depends on the treatment that judgment would receive in

       Kentucky.” 10 N.E.3d at 36. We explained,

               Pursuant to Kentucky precedents, res judicata prevents the relitigation
               of the same issues in a subsequent appeal. Miller v. Administrative Office
               of Courts, 361 S.W.3d 867, 871 (Ky. 2011), reh’g denied. Three elements


       Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 7 of 14
               must be met for res judicata, or claim preclusion, to apply: (1) there
               must be an identity of the parties between the two actions; (2) there
               must be an identity of the two causes of action; and (3) the prior action
               must have been decided on the merits. Id. at 872. A close cousin to
               the doctrine of res judicata is the theory of collateral estoppel, or issue
               preclusion. Id. In order for issue preclusion to operate as a bar to
               further litigation, certain elements must be established: (1) at least one
               party to be bound in the second case must have been a party in the first
               case; (2) the issue in the second case must be the same as the issue in
               the first case; (3) the issue must have been actually litigated; (4) the
               issue was actually decided in that action; and (5) the decision on the
               issue in the prior action must have been necessary to the court’s
               judgment and adverse to the party to be bound. Id. Res judicata,
               being the older term, is thought of as an umbrella doctrine that
               contains within it both claim and issue preclusion. Id. at 871. A
               pending appeal does not affect the finality of a judgment for preclusion
               purposes. See Stemler v. City of Florence, 126 F.3d 856, 871 (6th Cir.
               1997); Roberts v. Wilcox, 805 S.W.2d 152, 153 (Ky. Ct. App. 1991).

       Id.


[13]   The Setree I court concluded that the Setrees’ challenge to Bank’s right to

       foreclose on the Cardinal Lane Property was barred by res judicata, specifically

       issue preclusion. Id. at 37. We reasoned as follows:

               The same issues–the Setrees’ failure to pay Indiana property tax
               pursuant to their 2007 Note and their right to cure–between the same
               parties–the Setrees and [Bank]–governed the Kentucky cases and this
               appeal. [Bank’s] right to foreclose on all three notes was triggered as a result of
               the Setrees’ failure to pay their Indiana taxes on the Cardinal Lane Property.
               Because of cross-default provisions in the three notes executed between
               the Setrees and [Bank], the Setrees’ default under the 2007 Note
               constituted a default under the previously executed two notes as well.
               Therefore, the Kentucky courts’ decisions to grant [Bank] the right to
               foreclose on the Setrees’ Kentucky properties necessarily included a
               determination of default under the 2007 Note–the issue before the trial
               court. Moreover, the order issued by the Jefferson Circuit Court on

       Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015       Page 8 of 14
               January 15, 2013, analyzed the Setrees’ right to cure under the note, an
               identical claim made by the Setrees in the current case, as being
               without merit. Accordingly, although the Kentucky cases concerned
               different mortgages and different property than the instant cause, they
               litigated the same issues between the same parties: the Setrees’ failure
               to pay the Indiana taxes on the Cardinal Lane Property and the
               Setrees’ right to cure its failure under the 2007 Note.

       Id. (emphasis added).


[14]   The Setrees contend that although Setree I concluded that the Kentucky cases

       decided the issues relevant to the breach of the Cardinal Lane Mortgage and the

       2007 Note, the breach of the Cardinal Lane Mortgage has no relationship to the

       Holly Drive Mortgages, and thus the Kentucky cases did not address issues

       related to the Holly Drive Mortgages. Although the Holly Drive Mortgages

       were not directly involved in the Kentucky cases, we nevertheless conclude that

       the Setrees’ challenge to Bank’s right to foreclose on the Holly Drive Property is

       barred by issue preclusion. We do so for two reasons.


[15]   First, we are unpersuaded by the Setrees’ argument that the breach of the

       Cardinal Lane Mortgage has no relationship to the Holly Drive Mortgages.

       They emphasize that the Cardinal Lane Mortgage secured only the 2007 Note,

       while the Holly Drive Mortgages secured the 2005 and 2006 Notes. This

       distinction is immaterial. As the Setree I court observed, the Kentucky cases

       concluded that based on the cross-default provisions in the 2005, 2006, and

       2007 Notes, the Setrees’ default under the 2007 Note constituted a default

       under the 2005 and 2006 Notes. Significantly, the Setrees do not dispute that

       they are in default of the 2005 and 2006 Notes. Further, the Setrees

       Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 9 of 14
       conveniently ignore that one of the Kentucky foreclosure cases was based on

       the Virginia Property Mortgage, which, like the Holly Drive Mortgages,

       secured the 2005 and 2006 Notes and not the 2007 Note.


[16]   The Setrees’ argument also disregards relevant language in the Holly Drive

       Mortgages. Before examining this language, we observe,

               Interpretation and construction of contracts are questions of law. In
               reviewing questions of contract interpretation and construction upon
               appeal, we read the contract as a whole when trying to ascertain the
               parties’ intent, and we will make all attempts to construe the language
               in a contract so as not to render any words, phrases, or terms
               ineffective or meaningless. Further, we must accept an interpretation
               of the contract that harmonizes its provisions, as opposed to one that
               causes the provisions to conflict.

       Fischer v. Heymann, 943 N.E.2d 896, 900-01 (Ind. Ct. App. 2011) (citations and

       quotation marks omitted).


[17]   Under the section labeled “Events of Default” The Holly Drive Mortgages

       provide that, at Bank’s option, an event of default includes the following:

               Other Defaults. [The Setrees fail] to comply with or to perform any
               other term, obligation, covenant, or condition contained in the
               Mortgage or in any of the Related Documents or to comply with or to
               perform any term, obligation, covenant or condition contained in any
               other agreement between [Bank] and [the Setrees].
               ….
               Breach of Other Agreement. Any breach by [the Setrees] under the
               terms of any other agreement between [the Setrees] and [Bank] that is not
               remedied within any grace period provided therein, including without
               limitation any agreement concerning any indebtedness or other
               obligation of [the Setrees] to [Bank], whether existing now or later.


       Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 10 of 14
               ….
               Right to Cure. If such failure is curable and if [the Setrees have] not
               given a notice of a breach of the same provision of this Mortgage
               within the preceding twelve (12) months, it may be cured (and no
               Event of Default will have occurred) if [the Setrees], after [Bank] sends
               written notice demanding cure of such failure: (a) cures the failure
               within twenty (20) days; or (b) if the cure requires more than twenty
               (20) days, immediately initiates steps sufficient to cure the failure and
               thereafter continues and completes all reasonable and necessary steps
               sufficient to produce compliance as soon as reasonably practical.

       Appellants’ App. at 22-23, 32-33; Appellee’s App. at 110-11 (emphases added).


[18]   The Setrees argue that the cross-default clause in the Holly Drive Mortgages

       does not include unrelated agreements and that the Cardinal Lane Mortgage is

       unrelated to the Holly Drive Mortgages. They assert that the phrase “any other

       agreement” as used in the “Other Defaults” clause cannot apply to mortgages

       which were executed later or otherwise have no connection to the Holly Drive

       Property. However, the Setrees focus only on the latter part of that sentence.

       They completely ignore the first part, which refers to the failure “to comply

       with or to perform any term … in the Mortgage or in any of the Related

       Documents.” Id. If the failure to comply with the mortgage itself and any

       related documents is an event of default, then “any other agreement” must refer

       to agreements between the parties that are unrelated, including the Cardinal

       Lane Mortgage. Therefore, we conclude that the Kentucky court’s

       determination that a breach of the Cardinal Lane Mortgage constituted a

       default of all three notes and gave Bank right to foreclosure on all its mortgages

       includes the Holly Drive Mortgages.


       Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 11 of 14
[19]   Second, the Kentucky cases have decided the issue of notice and opportunity to

       cure. By its own terms, the Holly Drive Mortgages do not provide the Setrees

       with an additional layer for notice and an opportunity to cure above that

       provided in the Cardinal Lane Mortgage. In the “Breach of Other Agreement”

       clause, the Holly Drive Mortgages state, “Any breach by [the Setrees] under the

       terms of any other agreement between [the Setrees] and [Bank] that is not

       remedied within any grace period provided therein, including without limitation

       any agreement concerning any indebtedness or other obligation of [the Setrees]

       to [Bank], whether existing now or later” constitutes, at Bank’s option, an event

       of default. Id. at 23, 33 (emphases added). Thus, in the event of the Setrees’

       breach of another agreement, the Holly Drive Mortgages provide the Setrees

       with the opportunity to remedy that breach as provided for in the agreement

       that they breached. Here, the Setrees breached the Cardinal Lane Mortgage by

       failing to pay property taxes on it. They knew that the failure to pay the taxes

       was a breach and were given nearly a year to remedy the breach. No additional

       notice and opportunity to cure are provided under the Holly Drive Mortgages.

       As a practical matter, we fail to see how the Setrees could have cured this

       particular default under the Holly Drive Mortgages when they failed to pay the

       delinquent taxes and cure their default under the Cardinal Lane Mortgage. The

       Setree I court concluded that the issue of notice and opportunity to cure under

       the Cardinal Lane Mortgage had already been decided by the Kentucky cases.

       There is no other issue to explore here. We conclude that the Setrees’ challenge

       to the foreclosure of the Holly Drive Property is barred by issue preclusion.


       Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 12 of 14
        Section 2 – Foreclosure of the Holly Drive Property is not an
                          unconscionable remedy.
[20]   The Setrees also argue that foreclosure is an unconscionable remedy. We

       observe,

               When a party can show that the contract, which is sought to be
               enforced, was in fact an unconscionable one, due to a prodigious
               amount of bargaining power on behalf of the stronger party, which is
               used to the stronger party’s advantage and is unknown to the lesser
               party, causing a great hardship and risk on the lesser party, the
               contract provision, or the contract as a whole, if the provision is not
               separable, should not be enforceable on the grounds that the provision
               is contrary to public policy.

       Weaver v. Am. Oil Co., 257 Ind. 458, 464, 276 N.E.2d 144, 148 (1971).


[21]   The Setrees argue that the judgments Bank received on the Cardinal Lane,

       Roederer Drive, and Virginia Avenue Properties far exceed their delinquent

       taxes of $3116.55, which provided the basis for the foreclosures. Such a

       comparison is misplaced and inconsequential. The amount recovered by Bank

       is relevant to the amount of the Setrees’ indebtedness. More importantly, the

       Setrees have made no showing that Bank used a prodigious amount of

       bargaining power to impose a contractual provision that was unknown to them

       and placed great hardship and risk upon them. We are unpersuaded by the

       Setrees’ argument that foreclosure of the Holly Drive Property is

       unconscionable.


[22]   Based on the foregoing, we affirm the summary judgment order granting

       foreclosure and sale of the Holly Drive Property.

       Court of Appeals of Indiana | Memorandum Decision 10A04-1409-MF-450 | May 13, 2015   Page 13 of 14
[23]   Affirmed.


       Brown, J., and Pyle, J., concur.




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