WBL SPO II, LLC v. G & I Realty, LLC

FILED Mar 06 2025, 8:38 am

CLERK Indiana Supreme Court Court of Appeals and Tax Court

IN THE

Court of Appeals of Indiana WBL SPO II, LLC, Appellant-Plaintiff

v.

G&I Realty, LLC, Alpha Mechanical Service, Inc., Dubois County Treasurer, Unknown Occupant of 1208 Jackson Street, Unknown Occupant of 1280 3rd Avenue, Unknown Occupant of 1409 Vine Street, Unknown Occupant of 420 East 14th Street, Appellees-Defendants

March 6, 2025 Court of Appeals Case No. 24A-MF-2353 Appeal from the Dubois Superior Court The Honorable Anthony D. Quinn, Judge Trial Court Cause No. 19D01-2107-MF-361

Court of Appeals of Indiana | Opinion 24A-MF-2353 | March 6, 2025 Page 1 of 7

Opinion by Judge Mathias Judges Foley and Felix concur.

Mathias, Judge. [1] WBL SPO II, LLC (“WBL”) holds a note of indebtedness as well as a mortgage

that secures the debt underlying that note. The mortgage is on real properties

owned by G&I Realty, LLC (“G&I”), although G&I is not the debtor. 1 The

mortgage’s plain terms state that it exists to guarantee the payment in full of the

debt underlying the note. [2] The debtor eventually obtained a discharge of its obligation to pay the debt in

bankruptcy proceedings. Meanwhile, WBL attempted to obtain in state court

an in rem judgment and foreclosure on the real properties secured by the

mortgage. The trial court entered summary judgment for G&I on that

complaint under the theory that the discharge of the debtor by the bankruptcy

court left the mortgage without a debt to secure. [3] The bankruptcy court’s discharge of the debtor from its obligation to pay the

debt is not applicable to G&I, a guarantor of that same debt and a nonparty to

the bankruptcy proceedings. Further, although the bankruptcy court discharged

the debtor’s obligation to repay the debt, there is no evidence in this record that

1 No other named parties participate in this appeal.

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WBL has received full satisfaction of the indebtedness, which is what the

mortgage secures. [4] Accordingly, the trial court erred when it entered summary judgment for G&I

and when it denied WBL’s motion for summary judgment. We therefore

reverse the trial court’s judgment and remand for further proceedings consistent

with this opinion.

Facts and Procedural History [5] In December 2019, Gudorf Supply Company, Inc. (“Debtor”), an Indiana

corporation, executed a promissory note and associated documents (the

“Note”) with Axos Bank, a Nevada business, in which the Bank agreed to lend

$273,000 to Debtor in exchange for Debtor’s promise to repay that indebtedness

with interest. In order to help Debtor obtain that loan, G&I, an Indiana limited

liability company, agreed to provide the Bank with a mortgage on four parcels

of real property owned by G&I in Dubois County (the “Mortgage”). [6] The terms of the Mortgage expressly state that it exists to “guarantee[ Debtor’s]

payment” on the Note. 2 Appellant’s App. Vol. 2, p. 40. The Mortgage likewise

expressly states that, “upon the indefeasible satisfaction in full of the Debt

provided in the [Note] in a timely manner, these presents and the estate hereby

2 G&I repeatedly asserts on appeal that it is not a guarantor of the Note. See, e.g., Appellee’s Br. at 12. G&I’s assertions are not supported by the text of the Mortgage or cogent reasoning, and we do not consider them. See Ind. Appellate Rule 46(A)(8)(a). G&I also asserts that WBL seeks to use the bankruptcy code to create an obligation against G&I without G&I’s consent. That assertion is also not cogent. WBL seeks to enforce the Mortgage voluntarily executed by G&I.

Court of Appeals of Indiana | Opinion 24A-MF-2353 | March 6, 2025 Page 3 of 7

granted shall cease, terminate[,] and be void.” Id. at 42 (emphasis added). All

documents were properly recorded, and, through various assignments, WBL

became the holder of both the Note and Mortgage. [7] In July 2020, Debtor defaulted on the Note. WBL notified Debtor of the default

and demanded an acceleration of the entire unpaid balance of Debtor’s

obligations. WBL likewise notified G&I of its obligation to secure the debt.

Debtor did not remedy the default and instead sought relief under the United

States Bankruptcy Code. WBL, meanwhile, filed its complaint in state court

against G&I for an in rem judgment and foreclosure on the real properties

secured by the Mortgage, although, when WBL learned of Debtor’s bankruptcy

proceedings, WBL moved to stay the state court proceedings. G&I was not a

party to the bankruptcy proceedings. [8] Debtor eventually obtained a judgment from the bankruptcy court that

discharged Debtor from its obligation to pay the debt underlying the Note,

among other things. WBL responded by moving to dismiss Debtor from the

state court proceedings, which the trial court granted. G&I and WBL then filed

competing motions for summary judgment. The trial court denied WBL’s

motion without a hearing and, after a hearing, granted G&I’s motion. WBL

filed a motion to correct error, which the trial court also denied. [9] This appeal ensued.

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Discussion and Decision [10] WBL appeals the trial court’s grant of summary judgment to G&I and the

court’s denial of its motion for summary judgment. Our standard of review is

well settled:

When this Court reviews a grant or denial of a motion for summary judgment, we “stand in the shoes of the trial court.” Summary judgment is appropriate “if 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.” We will draw all reasonable inferences in favor of the non- moving party. We review summary judgment de novo.

Arrendale v. Am. Imaging & MRI, LLC, 183 N.E.3d 1064, 1067-68 (Ind. 2022)

(citations omitted). Questions of law, such as those here, present legal questions

that are particularly apt for summary judgment. See, e.g., Erie Indem. Co. v. Estate

of Harris, 99 N.E.3d 625, 629 (Ind. 2018). Further, that the parties have filed

cross-motions for summary judgment neither alters our standard of review nor

changes our analysis—we consider each motion separately to determine

whether the moving party is entitled to judgment as a matter of law. Id. [11] The trial court erred in entering summary judgment for G&I, which the court

did on the theory that the bankruptcy court’s discharge of Debtor from its

obligation to pay the debt underlying the Note left the Mortgage with no debt to

secure. As the Supreme Court of the United States recently made clear, “the

bankruptcy code does not authorize a release . . . that . . . discharge[s] claims

against a nondebtor without the consent of affected claimants.” Harrington v.

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Purdue Pharma L.P., 603 U.S. 204, 227 (2024). That is, a bankruptcy court’s

order confirming a debtor’s reorganization plan “discharges the debtor from any

debt that arose before the date of such confirmation,” but that discharge

“operates only for the benefit of the debtor against its creditors and does not

affect the liability of any other entity.” Id. at 214-15 (emphasis added; quotation

marks omitted); see also McCullough v. CitiMortgage, Inc., 70 N.E.3d 820, 827

(Ind. 2017) (“discharge of debt has no bearing on the validity of [a] mortgage

lien”). [12] G&I was not the debtor in the bankruptcy proceedings and was not even a

party to those proceedings. The bankruptcy court’s discharge of Debtor from its

obligation to pay the debt underlying the Note “operates only for the benefit” of

Debtor and “does not affect the liability” of G&I that may exist under the

Mortgage. Harrington, 603 U.S. at 214-15. The trial court therefore erred in

entering summary judgment for G&I. [13] We thus consider WBL’s motion for summary judgment. In support of its

motion, WBL designated the Mortgage, which demonstrates on its face that it

secured the full debt underlying the Note. WBL’s designated evidence also

demonstrated that Debtor defaulted on its obligations under the Note and that

WBL sought to accelerate all of Debtor’s obligations under the Note due to that

default. It is also not disputed that neither Debtor nor G&I has cured the

default. And G&I’s arguments and designations against WBL’s motion for

summary judgment do not establish a genuine issue of material fact.

Court of Appeals of Indiana | Opinion 24A-MF-2353 | March 6, 2025 Page 6 of 7 [14] Accordingly, WBL is entitled to summary judgment on its complaint for an in

rem judgment and foreclosure against G&I. We reverse the trial court’s denial of

WBL’s motion for summary judgment, and we remand for further proceedings

consistent with this opinion. [15] Reversed and remanded.

Foley, J., and Felix, J., concur.

ATTORNEYS FOR APPELLANT Aaron Rodgers Aaron Cole Reisenfeld & Associates, LLC Cincinnati, Ohio

ATTORNEYS FOR APPELLEE G&I REALTY, LLC Michael L. Einterz Michael L. Einterz, Jr. Einterz & Einterz Zionsville, Indiana

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