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DIY: Not Always the Best Plan
There are many things that I could pay to have someone do that I do myself. Many people pay to have yard work done, but I rather enjoy it, plus being a healthy person who loves the outdoors I cannot justify paying someone to do the work I am perfectly capable of doing myself.
Other things, however, are things I gladly pay someone to do because I know that because of their years of professional training they will be able to do the job effectively and correctly and I do not have to worry about it. Plumbing and changing my car oil are two examples for me personally. While I might be able to learn how to do the particular job myself, in certain areas even if I had taught myself I would feel better having a knowledgeable professional handle it and be able to deal with the intricacies and any unforeseen situations that could arise.
Why am I sharing this in the legal blog? Because a recent case from the Indiana Supreme Court illustrates the potential pitfalls of trying to go it alone in the sometimes complicated world of litigation. In McCullough v. CitiMortgage, two homeowners unsuccessfully challenged the foreclosure of their home. While that does not make for a particularly interesting fact pattern, what is interesting is the opinion from the Supreme Court and “reading between the lines” the Court seems to imply that the homeowners may have had some legitimate arguments to make and potentially even win the appeal.
The main problem was that these homeowners decided to proceed pro se, which means without a lawyer. Most parties do have that right (corporations do not), but people who do that are held to the same rules as lawyers. In this case, the homeowners did not properly designate materials to the courts, filed “woefully defective” briefs with the courts, and ultimately lost the appeal because, among other things, that had not placed any evidence into the court record.
While the homeowners did submit with their briefs various materials, they did not follow the rules of procedure. Therefore, the Court could not consider those materials. Just because you give something to the Court does not mean it is “in evidence”, and if it is not “in evidence” then the Court will not consider it. For example, in this case the homeowners claimed that they had paid off the loan owing to CitiMortgage through payments made under various Chapter 13 bankruptcy plans. However, the homeowners did not put those plans into the evidence before the Court. This would have been a relatively easy thing to do, and whether or not it would have been helpful ultimately is unknown. However, the homeowners clearly did not give themselves their best opportunity to succeed by not getting evidence before the Court.
I find it interesting that the Supreme Court accepted this case and then spent 10+ pages discussing the case history. I read it as an admonition that there are certain instances where it makes more sense to have someone else help you, and also a hint that this Court felt like the homeowners may have had some legitimate arguments, but did not do things correctly. Again, the ultimate result may have been the same; we simply do not have all of the facts available to determine that.
While lawyers (and plumbers and car repairs) can be expensive, trying to do it yourself can be costly as well.
No Cheating Clause
As anyone who has read this blog before knows, we have often written about the fact that Indiana courts will enforce contracts between parties when those contracts were freely negotiated. One of the most recent decisions from the Indiana Court of Appeals affirmed this longstanding and well settled principle, but the facts of this case were just too good to pass up.
Rather than rehash all of those facts, I will leave those to the readers, but it is safe to say that not every day in legal opinions do we have to read what the legal term for “cheating” is in the context of a relationship or a court’s rather poignant statements that in this contract which included a “no cheating” clause, the woman “wasted little time in breaching the contract.”
There is no doubt that the Court likely was also swayed by the fact that the real estate at issue formerly was owned by the man’s parents. In any event, this case shows that not all the things that lawyers have to read are that boring and the lengths people will go to fight after a relationship falls apart.
After You Agree to a Judgment, That Is It.
We have talked often in this blog about Indiana courts enforcing agreements that have been negotiated between parties, and not interfering with those agreements absent the agreements being illegal or there being some fraud involved in reaching that agreement. The Indiana Court of Appeals recently reaffirmed this principle, albeit in a context that is somewhat different than what business people may be accustomed.
In situations where one party owes another party money, and a lawsuit has been filed to collect that money, it is not unusual for those parties to enter into an agreement whereby there will be an “agreed judgment” filed with the court, which the court then consents to and enters as a matter of record. Those agreed judgments often will involve a payment plan for the amounts that are owed.
In the recent case, the parties had done just that. The agreed judgment called for the defendant to pay to the plaintiff $400.55 plus an additional $450 in attorneys’ fees. Four years after the agreed judgment was entered, and presumably because the defendant had not paid what she had agreed to pay, the plaintiff filed motions with the court seeking to garnish the defendant’s wages to satisfy the agreed judgment. At that time, the defendant then appealed the entry of the agreed judgment. Through some procedural maneuverings, and even though by this time the underlying debt had already been paid, a new trial was ordered and a judgment was entered against the plaintiff after the plaintiff did not appear for the new trial.
That judgment was then appealed, and the Indiana Court of Appeals ultimately ruled that because the parties had originally entered into an “agreed judgment”, that was not appealable. Rather, the court saw the agreed judgment as an agreement, or contract, between the parties, to which the trial court consented. As such, that sort of judgment is not appealable.
In this case, the Indiana Court of Appeals was not going to let someone go back on her agreement entered into four (4) years earlier. In other words, once again Indiana courts have proven that they will enforce agreements negotiated between parties even if those agreements take the form of a judgment or otherwise.
BLISSFULLY IGNORANT? NOT GOOD ENOUGH IN A REAL ESTATE DEAL
We have often discussed in this blog how the Indiana courts will look at contracts and typically enforce the exact terms that were agreed to by the parties. The courts will also look at those contracts and hold the parties to the terms that were negotiated. However, in a recent case, the Court of Appeals went even further, most likely to get to what was in the court’s opinion the best result.
The two parties to the dispute had entered into a “property contract” whereby the seller was offering to sell certain real estate “property” to the buyer. However, the seller did not actually own the property, but in fact had rights under a lease, and another person actually owned the real estate. Therefore, the contract was not with the actual owner of the property; it was between the buyer and the person who was leasing the property from another person who actually was leasing from the owner.
After the buyer defaulted on the contract due to not paying the monthly payments, the seller filed a lawsuit to evict the buyer and to collect the amounts that had not been paid. At that point, the buyer, for the first time, conducted a title search and realized that the seller did not own the property, but rather only had been leasing it.
The buyer then filed a counterclaim against the seller because the buyer claimed to have been defrauded by the seller given that the seller did not own the property and therefore could not sell it to the buyer.
The Court of Appeals rejected that argument. The seller had in fact recorded a copy of the lease and its assignment of the lease with the appropriate county recorder. The Court of Appeals found that the buyer knew, or should have known, that it was buying an assignment of the lease and was not buying the actual real estate. The Court of Appeals noted that when a lease is recorded as required, that recording is constructive notice of its existence, and anyone seeking an interest in the real estate after that is on constructive notice of the lease’s existence and is “charged with notice of all that is shown by the record, including any terms contained in the lease that is recorded.”
The Court of Appeals went on to say that actual notice may be inferred from the fact that a person who had a duty to search the records had the means of knowledge that 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 and knowledge are at hands 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.
In summary, the court was not going to allow the buyer, who easily had the ability to find out the real status of what it was buying, to get out of the contract (or after the fact rationalize why it quit paying on the contract) because it chose not to do some due diligence prior to entering the contract. In this case, the court went past the actual terms of the contract and looked at some other issues raised by the transaction, including the means by which the parties could have ascertained what was really going on. In this way the court was trying to fashion a just result under the circumstances, and was not going to allow the buyer to get out of its contract by simply remaining blissfully ignorant.