Indiana’s Equitable Clean-Up Doctrine Blocks Jury Trial
Lesson. Counterclaims for money damages arising out of alleged wrongful foreclosure actions likely will not be tried to a jury but rather the court.
Case cite. Colvin v. Taylor, 233 N.E.3d 497 (Ind. Ct. App. 2024)
Legal issue. Whether counterclaims filed in a foreclosure action were “sufficiently related to the foreclosure” such that the foreclosure subsumed the legal claims.
Vital facts. Land contract Seller filed a foreclosure action against land contract Purchaser, who filed counterclaims for abuse of process and conversion of property. The counterclaims stemmed from alleged wrongdoing by agents of Seller following a court order for Purchaser to vacate the property. Purchaser claimed money damages from Seller’s improper removal of Purchaser’s property from the premises.
Procedural history. Purchaser demanded a jury trial. The trial court denied the request.
Key rules.
The Colvin opinion noted that the: “Indiana Constitution guarantees that ‘[i]n all civil cases, the right of trial by jury shall remain inviolate.’ Ind. Const. art. 1, § 20. However, this provision preserves the right to a jury trial only as it existed at common law, and a party is not entitled to such a trial on equitable claims.”
“[W]hen both equitable and legal causes of action or defenses are joined in a single case, the equitable causes of action or defenses are to be tried by the court while the legal causes of action or defenses are to be tried by a jury…. [W]here a case includes ‘plainly equitable causes of action and sufficiently distinct, severable, and purely legal causes of action, then the legal claims require a trial by jury.”
However, equity “subsumes an entire case where the ‘essential features of a suit’ demonstrate that the lawsuit as a whole is equitable and the legal causes of action are not ‘distinct or severable[.]'”
Foreclosure actions are equitable, and “being essentially equitable, the whole of the claim is drawn into equity, including related legal claims and counterclaims.”
Holding. The Indiana Court of Appeals affirmed the trial court and, in doing so, relied on the Indiana Supreme Court’s opinion in Lucas v. U.S. Bank, 953 N.E.2d 457 (Ind. 2011), about which I discussed in my post: Are Borrowers Entitled To Jury Trials On Their Counterclaims?
Policy/rationale. Colvin concluded that the dispute, “as a whole, [was] equitable in nature….” The counterclaims were related to the foreclosure claim “such that the foreclosure action pull[ed] the legal claims into equity.” But for Seller’s alleged unlawful actions in seeking possession of the property, Purchaser would not have suffered money damages. Thus, the “core legal issues” overlapped “to a considerable degree.” Because the essential features of the suit were equitable, the “equitable clean-up doctrine” applied.
Note: Apparently the land contract did not have a jury trial waiver provision, as the Court’s opinion did not mention one or otherwise factor any contract language into its holding.
Related post. Contractual Waiver Of Right To Jury Trial
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Part of my practice involves representing parties in contested mortgage foreclosure cases. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@dinsmore.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.