Mercer Belanger Professional Corporation v. Edward Gaeta
Ind. Ct. App.
Opinion
FILED
Aug 16 2024, 8:49 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
IN THE
Court of Appeals of Indiana
Mercer Belanger Professional Corporation,
Appellant-Defendant
v.
Edward Gaeta,
Appellee-Plaintiff
August 16, 2024
Court of Appeals Case No.
23A-CT-1351
Appeal from the Tippecanoe Circuit Court
The Honorable Sean M. Persin, Judge
Trial Court Cause No.
79C01-1607-CT-110
Opinion by Judge Crone
Judges Bailey and Pyle concur.
Crone, Judge.
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Case Summary
[1] Edward Gaeta filed a complaint against Mercer Belanger Professional
Corporation (Mercer), alleging that it violated the Fair Debt Collection
Practices Act (FDCPA), 15 U.S.C. Section 1692. Both parties moved for
summary judgment. The trial court granted the motions in part and denied
them in part. A jury assessed actual and statutory damages for Gaeta.
Thereafter, the trial court awarded additional fees and expenses. Mercer
appeals. We affirm.
Facts and Procedural History
[2] In order to address Mercer’s appeal of Gaeta’s FDCPA claim, we must first
summarize related litigation. In September 2008, Gaeta executed a promissory
note payable to The Huntington National Bank (Huntington) in the principal
amount of $78,859. 1 The loan was secured via a mortgage against his Lafayette
residence. The loan was insured by the Federal Housing Administration (FHA),
thereby subjecting the note and mortgage to federal Department of Housing and
Urban Development (HUD) regulations.
[3] Gaeta failed to make a timely payment and instead made sporadic payments for
the next few months. By June 2009, Gaeta was three months behind in his
payments, which triggered federal regulations that required Huntington to
1
Additional background may be found in Gaeta v. Huntington National Bank, 164 N.E.3d 782, 784-86 (Ind. Ct.
App. 2021) (Gaeta II), and Gaeta v. Huntington National Bank, No. 18A-MF-408, 2019 WL 2571993, at *1-5
(Ind. Ct. App. June 24, 2019) (Gaeta I).
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engage in certain steps. See 24 C.F.R. § 203.604(b) (requiring lender to seek a
face-to-face meeting with mortgagor “before three full monthly installments due
on the mortgage are unpaid” on an FHA loan). Huntington did not attempt a
face-to-face meeting but instead spoke with Gaeta about a repayment plan.
Gaeta made one payment, enlisted in the United States Marines Corps in
August 2009, rented out the property, made sporadic payments thereafter, but
never paid enough to bring the loan current. While Gaeta was in the Marines,
Huntington took no steps to accelerate the loan or foreclose on the mortgage.
[4] In September 2014, after his active service in the Marines ended, Gaeta began
living at the residence again but did not make consistent payments. In August
2015, Huntington mailed Gaeta a Notice of Intention to Accelerate and
Foreclose, informing Gaeta of his default and giving him an opportunity to cure
but not offering a face-to-face meeting. See Gaeta I, 2019 WL 2571993 at *3. In
October 2015, on behalf of Huntington, Mercer, a debt collector per the
FDCPA, mailed a “Fair Debt dunning letter” to Gaeta. Appellant’s App. Vol. 2
at 55. In November 2015, Mercer filed a complaint on note and to foreclose
mortgage in Tippecanoe Circuit Court under cause number 79C01-1511-MF-
228 (first foreclosure action). Appellant’s App. Vol. 3 at 85. Paragraph 12 of the
complaint stated: “Plaintiff is entitled to Decree of Foreclosure pursuant to I.C.
Section 32-30-10-3.” Id. at 87.
[5] In February 2016, Gaeta filed a motion to dismiss, citing 24 C.F.R. Section
203.604 and notifying Mercer of Huntington’s failed obligations to provide a
face-to-face meeting. That same month, more than six years after Gaeta first fell
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more than three months behind in his mortgage payments, Huntington sent a
letter to him offering the opportunity for a face-to-face meeting. Three times,
Huntington employees attempted to visit Gaeta to meet face to face, but he was
not at home. Huntington filed, and the trial court granted, a motion to dismiss
the first foreclosure action without prejudice. Id. at 48.
[6] In March 2016, Gaeta telephoned Huntington and requested a face-to-face
meeting. A Huntington employee told Gaeta how to contact a local branch to
schedule a meeting to complete a loss-mitigation packet. Gaeta neither
requested a loan-mitigation packet nor visited a Huntington branch. In April
2016, again on behalf of Huntington, Mercer filed in Tippecanoe County Court
a second complaint on the note and to foreclose the mortgage under cause
number 79C01-1604-MF-97 (second foreclosure action). The second foreclosure
action stated that Huntington “is entitled to a Decree of Foreclosure” pursuant
to statute and the terms of the mortgage. Id. at 115.
[7] In July 2016, Gaeta filed an answer asserting eighteen affirmative defenses,
including the failure to comply with the face-to-face requirement of 24 C.F.R.
Section 203.604. Thereafter, Huntington filed a summary judgment motion,
and in late 2017, a bench trial was held. In its December 2017 findings of fact
and conclusions thereon, the trial court found that Gaeta was in default and
concluded that the evidence sufficiently established that “the 24 CFR § 203.604
face-to-face interview was not required, and that Huntington complied with its
requirements. Further, even if the face-to-face interview was otherwise required,
Huntington offered one and Gaeta, by his actions, refused.” Gaeta I, 2019 WL
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2571993 at *5. The trial court’s order included a money judgment in favor of
Huntington, a decree foreclosing the mortgage, and an order to sell the
residence. Gaeta appealed. In our 2019 decision, we concluded “that the
evidence clearly shows that Huntington did not comply with the federal
regulations, which are a condition precedent to it seeking foreclosure on the
mortgage at issue[.]” Id. at *1. Therefore, we reversed “the judgment of the trial
court to the extent that it granted Huntington’s request to foreclose on the
mortgage” yet affirmed the “trial court’s money judgment in favor of
Huntington on the unpaid balance of the Loan.” Id. at *11.
[8] In an order on remand in December 2019, the trial court set aside the
foreclosure judgment and retained the money judgment against Gaeta. Gaeta
appealed the trial court’s new order, arguing that the trial court abused its
discretion by failing to remove attorney fees and expenses, which had been
included in the original money judgment. In our February 2021 opinion, we
recounted Gaeta I’s holding that affirmed the money judgment in favor of
Huntington based on Gaeta’s failure to pay, applied the law of the case,
concluded that Huntington was “entitled to the entirety of the money
judgment,” and affirmed. Gaeta II, 164 N.E.3d at 787. Thereafter, Mercer filed
a praecipe for writ of execution to collect Huntington’s money judgment.
Appellant’s App. Vol. 2 at 18. By April 2021, Gaeta’s residence was sold by
sheriff’s sale for $133,051.28. Tr. Vol. 3 at 14. The trial court ordered a
distribution of proceeds to Huntington in August, and Huntington filed a
satisfaction of judgment in November 2021.
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[9] With that background in mind, we circle back to July 2016, when Gaeta filed in
Tippecanoe Circuit Court the present action against Mercer under cause
number 79C01-1607-CT-110 (the present FDCPA action). Gaeta’s complaint
alleged that Mercer pursued foreclosure despite knowing that its client,
Huntington, had refused to comply with applicable federal requirements.
Specifically, Gaeta alleged violations of 15 U.S.C. Sections 1692f (unfair or
unconscionable attempt to collect a debt), 1692e (false and misleading
representations in connection with debt collection), 1692c (improper
communications with party represented by counsel), and 1692g (improper
disclosures in Mercer’s initial communication). In August 2016, Mercer
removed the case to the United States District Court for the Northern District of
Indiana, where it was assigned cause number 4:16-cv-58-JEM (the federal
FDCPA action).
[10] In February 2019, Gaeta filed a motion to stay the federal FDCPA action while
the second foreclosure action wound its way through the state appellate process.
The district court granted the stay and then, in March 2021, lifted it. In May
2021, Mercer filed a motion for summary judgment, and Gaeta filed a motion
for partial summary judgment. The parties filed responses and reply briefs.
[11] In August 2021, the district court entered an order granting summary judgment
as to the 1692f and 1692e claims, taking under advisement Mercer’s motion
with respect to the other claims, taking under advisement Gaeta’s partial
summary judgment motion, granting oral argument, and setting the matter for a
hearing “on the issue of standing with respect to” the 1692c and 1692g claims.
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Appellant’s App. Vol. 2 at 42-43, 226-27. Thereafter, the district court ordered
additional briefing. Gaeta moved the district court to reconsider its order on the
motion for summary judgment and requested that he be relieved from briefing
standing or jurisdiction, that the case be remanded to state court, and that
Mercer be ordered to pay Gaeta’s attorney fees. Responses and replies were
filed. An October 2021 district court order provided:
[T]he Court hereby ORDERS that this case is REMANDED to
Tippecanoe County Circuit Court under cause number 79C01-
1607-CT-110 [the present FDCPA action]. The Court DENIES
as moot Plaintiff’s Motion for Reconsideration of the Court’s
Summary Judgment Opinion [110]-[110-1][DE 112], Plaintiff’s
Motion for Reconsideration of the Court’s Order for Plaintiff to
Brief Standing [111] [DE 114] because this Court does not have
jurisdiction over these claims, and DENIES Plaintiff’s request for
attorney fees and the Request for Hearing [DE 122] to address
fees.
Id. at 40 (italicized emphasis added). Accordingly, the present FDCPA action
returned to the Tippecanoe Circuit Court.
[12] In March 2022, in the trial court, Mercer moved for summary judgment,
challenging Gaeta’s standing, asserting that the district court found that Gaeta
suffered no injury, and contending that the district court’s prior ruling was “res
judicata” and “binding as law of the case.” Appellant’s Br. at 14; Appellant’s
App. Vol. 3 at 11. Gaeta filed a response and a cross-motion for summary
judgment. Gaeta’s designated evidence included Gaeta I (outlining Gaeta’s
payment history and Huntington’s failure to comply with the FHA face-to-face
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condition precedent), email communications between Huntington and Mercer
wherein Huntington indicated its noncompliance and request to dismiss,
Mercer’s deposition testimony that it had no procedures in place to avoid
attempting to foreclose on debtors when a client had not complied with FHA
conditions precedent, and Gaeta’s affidavit explaining his actions and
summarizing how Mercer’s actions negatively affected him. Appellant’s App.
Vol. 3 at 181-85, 172, 189-90.
[13] Following a hearing, the trial court issued a six-page order in August 2022. The
order included the following conclusions:
28. … [T]he U.S. District Court did not have jurisdiction over
Gaeta’s claims and the Amended Opinion and Order entered on
August 10, 2021 is not binding on this court. The U.S. District
Court could have simply denied Gaeta’s Motion to Reconsider,
but instead denied it “as moot” because the court lacked
jurisdiction. (bold text added by the U.S. District Court) The
U.S. District Court even explained that it “did not have
jurisdiction to address the arguments in the motion for
reconsideration.” Res judicata cannot apply where there is no
final order. Conversely, the order denying an award of attorney’s
fees and costs incurred as a result of removal to federal court is
binding. This court does not disrupt the U.S. District Court’s
conclusion that Mercer had an objectively reasonable basis for
removal.
29. The constraints of Article III do not apply to state courts, and
standing analysis under federal law is not same as the analysis
under Indiana law. In Indiana, standing can be conferred by
statute. Under the FDCPA, an individual may seek statutory
damages up to $1,000.00 and attorney’s fees in addition to any
actual damages sustained for violations under Section 1692k. In
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other words, Gaeta does not have to allege or prove actual
damages in order to move forward. Regardless, Gaeta alleges
that each of the alleged FDCPA violations caused him to incur
unnecessary attorney’s fees.
30. Summary judgment may be rendered as to all or some of the
issues or claims before the Court when “the designated
evidentiary matter shows that there is no genuine [dispute] as to
any material fact and that the moving party is entitled to
judgment as a matter of law. Ind. Trial Rule 56(C). Here, there
are few issues of fact. Instead, the parties dispute whether Mercer
violated various provisions of the FDCPA, and if so, whether
damages should be awarded as a result.
31. Mercer did not impermissibly fail to cease all collection
efforts during the thirty-day dispute period by filing the second
foreclosure suit under Section l692[g 2]. Creditors have the right to
initiate suit during the validation period, which is not a grace
period. Zemeckis v. Glob. Credit Collection Corp, 679 F.3d 632, 636
(7th Cir. 2012); see also Durkin v. Equifax Check Servs., Inc., 406
F.3d 410, 416 (7th Cir. 2005). The Court grants Mercer’s Motion
for Summary Judgment in this regard.
32. Mercer’s dunning letter was not misleading for failing to
mention that Mercer might file a new lawsuit during the thirty-
day dispute period under Section 1692[g]. See Zemeckis, supra, at
p. 636-7 (even if the dunning letter had gone so far as to mention
the creditor had the right to initiate a lawsuit during the
validation period, this information would not have risen to a
2
The order references Section 1692f(1) here, but Mercer notes that this “appears to be a scrivener’s error
because § 1692g of the FDCPA addresses the 30-day validation window.” Appellant’s Br. at 15 n.3.
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violation of Section 1692g(b)). The Court grants Mercer’s Motion
for Summary Judgment in this regard.
33. Mercer’s dunning letter was not an unfair or unconscionable
attempt to collect a debt it was not expressly authorized to collect
under Section 1692f. The Court of Appeals clarified that the bank
was permitted to seek a money judgment on the loan, even
though it could not obtain foreclosure. Gaeta v. Huntington Nat’l
Bank, 129 N.E.3d 825 *25 (Ind. Ct. App. 2019). The letter does
not mention foreclosure. Instead, Mercer informs Gaeta that the
bank accellerated [sic] the loan and demanded payment of
$83,437.56. The Court grants Mercer’s Motion for Summary
Judgment in this regard.
34. Mercer’s dunning letter was not an unlawful attempt to
communicate with a consumer they knew was represented by
counsel under Section 1692c. Mercer affirmatively reached out to
Attorney Keller and asked whether he would accept service if a
new referral was made, and it is undisputed that he told them he
would not accept service. Mercer had no choice but to send the
letter to Gaeta. Granted, the better practice would have been to
also send a courtesy copy to Attorney Keller, but the failure to do
so is not unlawful or unethical under the circumstances[.] Gaeta
promptly delivered the letter to Attorney Keller, who responded
within the dispute period, and all future communications were
made with Attorney Keller. The Court grants Mercer’s Motion
for Summary Judgment in this regard.
35. Mercer did not unlawfully collect attorney’s fees under
Section 1692f. The award of attorney’s fees has now been
affirmed by the Indiana Court of Appeals, twice. Gaeta simply
cannot prevail on his argument that it was unlawful for Mercer to
try to collect these fees, as this issue has been decided. The Court
grants Mercer’s Motion for Summary Judgment in this regard.
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36. Mercer unlawfully pursued foreclosure against Gaeta for
years, knowing full well that the bank had not complied with the
requirements of 24 C.F.R. § 203.604, which violates Section
1692e(2)(A) (falsely representing that foreclosure was permitted
by law), Section 1692e(5) (threatening to foreclose when
foreclosure was not permitted by law), and Section l692f
(attempting to foreclosure [sic] when not permitted by law).
Lawsuits attempting to take action that is not permitted by law is
both unfair and misleading. Kaiser v. Cascade Capital, LLC, 989
F.3d. 1127, 1133 (9th Cir. 2021). As the Indiana Court of
Appeals explained, it was “undisputed” and “abundantly clear”
that Huntington did not attempt a face-to-face meeting with
Gaeta before he was three full monthly installments behind in
payments. Gaeta v. Huntington Nat’l Bank, 129 N.E.3d 825 *15, 18
(Ind. Ct. App. 2019). An[d] yet somehow, Mercer waives [sic]
around the appellate decision as a win. Certainly, it allowed
them to collect on the loan, but it also clarified that Mercer’s
action to foreclose was not permitted by law.
There is no evidence of a bona fide error. The Court grants
Gaeta’s Motion for Summary Judgment in this regard.
All other motions for summary judgment not addressed above
are hereby denied.
Aug. 3, 2022 Order at 4-6.
[14] Toward the end of 2022, a three-day trial was held to determine what amount
of damages resulted from Mercer’s violations of the FDCPA. The jury heard
testimony about Gaeta’s hardworking nature, family circumstances,
employment, and service history. They also heard how the foreclosure
proceedings began, the steps taken to alert Mercer of Huntington’s failed
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obligations, Gaeta’s mitigation efforts, and the repercussions of the foreclosure
proceedings on Gaeta’s work, relationships, mental health, and finances. A jury
assessed $331,000 damages for Gaeta against Mercer, delineating $330,000 in
actual damages and $1,000 for statutory damages. Thereafter, the trial court
permitted post-trial briefing and a bench trial regarding various additional fees
and expenses. In May 2023, the trial court issued its final judgment in favor of
Gaeta and against Mercer in the amount of $463,130.81, including the original
$331,000 plus $132,130.81 for attorney fees,3 paralegal fees, expenses, and
foreclosure defense attorney fees. Mercer appeals.
Discussion and Decision
Section 1 – The trial court did not err in granting partial
summary judgment as to liability in favor of Gaeta.
[15] Mercer challenges the trial court’s granting of partial summary judgment for
Gaeta and requests a remand for entry of summary judgment in its favor. Our
summary judgment standard of review is well established:
We review a summary judgment ruling de novo, applying the
same standard as the trial court. The moving party bears the
initial burden of making a prima facie showing that there are no
genuine issues of material fact and that it is entitled to judgment
as a matter of law. Summary judgment is improper if the moving
party fails to carry its burden, but if it succeeds, then the
3
The trial court denied Gaeta’s counsel’s motion for prejudgment interest, denied his motion for a fee
enhancement, and determined a reasonable hourly rate was $350 rather than $400. See May 16, 2023 Order at
2.
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nonmoving party must come forward with evidence establishing
the existence of a genuine issue of material fact. We construe all
factual inferences in favor of the nonmoving party and resolve all
doubts as to the existence of a material issue against the moving
party. Our review is limited to those facts designated to the trial
court.
Hopkins v. Indpls. Pub. Schs., 183 N.E.3d 308, 312 (Ind. Ct. App. 2022) (quoting
Ind. Univ. v. Thomas, 167 N.E.3d 724, 731 (Ind. Ct. App. 2021) (alterations,
citations, and quotation marks omitted)), trans. denied.
[16] The purpose of the FDCPA is to “eliminate abusive debt collection practices by
debt collectors, to insure that those debt collectors who refrain from using
abusive debt collection practices are not competitively disadvantaged, and to
promote consistent State action to protect consumers against debt collection
abuses.” 15 U.S.C. § 1692(e). As this Court has observed, “The FDCPA is a
broad statute that was designed to protect consumers from a host of unfair,
harassing, and deceptive debt collection practices without imposing
unnecessary restrictions on ethical debt collectors.” Rhines v. Norlarco Credit
Union, 847 N.E.2d 233, 236(Ind. Ct. App. 2006) (quoting Spears v. Brennan,745 N.E.2d 862, 870
(Ind. Ct. App. 2001)), trans. denied, cert. denied (2007).
[17] A debt collector who “fails to comply with any [FDCPA] provision ... with
respect to any person is liable to such person” for “actual damage[s,]” costs, “a
reasonable attorney’s fee as determined by the court[,]” and statutory
“additional damages[.]” 15 U.S.C. § 1692k(a) (emphases added). It is a “well-
settled principle that the FDCPA is a strict liability statute and that a consumer
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need not show intentional conduct by the debt collector to be entitled to
damages.” Spears, 745 N.E.2d at 877(citing Russell v. Equifax A.R.S.,74 F.3d 30, 33
(2nd Cir.1996), and Bentley v. Great Lakes Collection Bureau,6 F.3d 60, 63
(2nd
Cir.1993)). However, the FDCPA provides a safe haven for debt collectors:
A debt collector may not be held liable in any action brought
under this subchapter if the debt collector shows by a
preponderance of evidence that the violation was not intentional
and resulted from a bona fide error notwithstanding the
maintenance of procedures reasonably adapted to avoid any such
error.
15 U.S.C. § 1692k(c). Accordingly, “[u]nder the bona-fide-error defense, a debt
collector is not liable for violating the FDCPA if it shows by a preponderance of
the evidence that (1) the violation was not intentional, (2) the violation resulted
from a bona fide error, and (3) it maintained procedures reasonably adapted to
avoid the error.” Ewing v. MED-1 Sols., LLC, 24 F.4th 1146, 1154 (7th Cir. 2022) (citing Abdollahzadeh v. Mandarich L. Grp.,922 F.3d 810, 815
(7th Cir. 2019)). “[A] defendant can invoke the bona fide error defense only if it claims it made an error of fact, not an error of law.” Evans v. Portfolio Recovery Assocs.,889 F.3d 337, 349
(7th Cir. 2018), abrogation on other grounds recognized by Ewing, 24 F.4th at 1152. Indeed, “the bona fide error defense in § 1692k(c) does not apply to a violation of the FDCPA resulting from a debt collector’s incorrect interpretation of the requirements of that statute.” Id. at 349-50 (quoting Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA,559 U.S. 573, 604-05
(2010)).
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Stated otherwise, Section 1692k(c) does not shield violations emanating from a
misinterpretation of the FDCPA. Jerman, 559 U.S. at 587.
[18] In its August 2022 order, the trial court granted summary judgment for Gaeta
on only three of the numerous FDCPA violations that he alleged. Specifically,
on page six of the order, the trial court determined that Mercer “unlawfully
pursued foreclosure against Gaeta for years, knowing full well that the bank had
not complied with the requirements of 24 C.F.R. § 203.604, which violate[d]”
the following FDCPA sections:
A debt collector may not use any false, deceptive, or misleading
representation or means in connection with the collection of any
debt. Without limiting the general application of the foregoing,
the following conduct is a violation of this section: …
(2) The false representation of –
(A) the character, amount, or legal status of any debt[.]…
(5) The threat to take any action that cannot legally be taken or that is
not intended to be taken.
15 U.S.C. § 1692e (emphasis added).
A debt collector may not use unfair or unconscionable means to
collect or attempt to collect any debt.
15 U.S.C. § 1692f.
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[19] In disputing the trial court’s August 2022 partial grant of summary judgment,
Mercer focuses on its successful pursuit of what it terms a “non-frivolous” claim
for a money judgment on a note. Mercer maintains that its request for relief
may not be deemed violative of the FDCPA just because this Court eventually
reversed the trial court’s decision to permit Mercer and Huntington to execute
the judgment through foreclosure of Gaeta’s mortgage. Mercer asserts that it
did not violate Section 1692e because its statements were not false or
misleading and that it did not violate Section 1692f because its conduct during
litigation was not unfair or unconscionable. See Appellant’s Br. at 18. In
addition, Mercer contends that the trial court abused its discretion under the
law of the case doctrine by revisiting issues decided by the district court.
[20] But Mercer does not dispute Section 1692e(5), which we find critical. Section
1692e(5) states that a “threat to take any action that cannot legally be taken” is
a violation of the FDCPA. Here, it was “undisputed that Huntington did not
attempt a face-to-face meeting with Gaeta before he was three full monthly
installments behind in his payments.” Gaeta I, 2019 WL 2571993 at *7. In 2010,
we held that HUD servicing requirements are “binding conditions precedent
that must be complied with before a mortgagee has the right to foreclose on a
HUD property.” Lacy-McKinney v. Taylor Bean & Whitaker Mortg. Corp., 937
N.E.2d 853, 863 (Ind. Ct. App. 2010). Because the face-to-face requirement is a
condition precedent to the foreclosure process, and Huntington “clearly did not
comply with the explicit requirements of 24 C.F.R. § 203.604[,]” foreclosure
was an action that could not legally be taken. Gaeta I, 2019 WL 2571993 at *9.
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Mercer did not merely threaten foreclosure, an action which could not be
legally taken, but pursued foreclosure against Gaeta beginning in 2015 and
continuing for years. Mercer did so after email communications with
Huntington (designated by Gaeta) wherein Huntington indicated its
noncompliance and its request to dismiss. In addition to the email exchange,
Gaeta designated Mercer’s deposition testimony revealing that it had no
procedures in place to avoid attempting to foreclose on debtors when a client
had not complied with FHA conditions precedent. Gaeta also designated his
affidavit explaining his actions and summarizing how Mercer’s actions
negatively affected him.
[21] Given the above, we disagree with Mercer that Gaeta somehow did not make a
prima facie showing that there are no genuine issues of material fact and that he
was entitled to judgment as a matter of law in his FDCPA matter. To the
contrary, Gaeta met his burden, and at that point, Mercer had to present
evidence establishing the existence of a material fact. Mercer did not. Mercer
also did not and does not raise a bona fide error argument. As such, Mercer has
not convinced us that the trial court erred in granting partial summary judgment
in Gaeta’s favor. 4
4
Because Mercer’s threat to take action that could not legally be taken was so clear, we only briefly touch
upon Mercer’s argument as to false statements. Unlike in Gomez v. Cavalry Portfolio Services, LLC, 962 F.3d
963 (7th Cir. 2020), the false statement in the present case was not a disagreement as to how to calculate the
debt. Rather, the false statement concerned Huntington’s entitlement to foreclosure. Again, according to
designated email communications, Mercer included the statement of entitlement to foreclosure despite
Mercer’s knowledge at that time that Huntington had not complied with federal regulations that are a
condition precedent to foreclosure entitlement. Gomez is not analogous. Similarly, Miljkovic v. Shafritz &
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[22] We next examine whether the trial court improperly re-examined the district
court’s decision in violation of the law of the case doctrine. “The law of the case
doctrine provides that an appellate court’s determination of a legal issue binds
both the trial court and the appellate court in any subsequent appeal involving
the same case and substantially the same facts.” Think Tank Software Dev. Corp.
v. Chester, Inc., 30 N.E.3d 738, 744 (Ind. Ct. App. 2015), trans. denied. The
purpose of the doctrine is to minimize unnecessary repeated litigation of legal
issues once they have been resolved by an appellate court. Dutchmen Mfg., Inc. v.
Reynolds, 891 N.E.2d 1074, 1082 (Ind. Ct. App. 2008), trans. denied. This
doctrine is based upon the sound policy that once an issue is litigated and
decided, that should be the end of the matter. Godby v. Whitehead, 837 N.E.2d
146, 152 (Ind. Ct. App. 2005), trans. denied (2006). However,
the law of the case doctrine is a discretionary rule of practice.
This doctrine expresses the practice of courts generally to refuse
to reopen what has been previously decided. A court has the
power to revisit prior decisions of its own or of a coordinate court
Dinkin, P.A., 791 F.3d 1291 (11th Cir. 2015), does not apply. In Miljkovic, a debt collector disputed the
debtor’s right to exemption, but after additional discovery, moved to dissolve its writ. Here, Mercer initially
moved to dismiss the action but then refiled despite the fact that Huntington still had not complied with the
face-to-face requirement within the appropriate timeframe. We are equally unpersuaded by Juarez v. Portfolio
Recovery Associates, LLC, No. 1:14-cv-5928, 2015 WL 4764226, at *3 (N.D. Ill. 2015), which Mercer relies on
for the proposition that a “debt collector that files suit expecting in good faith to prove its claim, even if he
does not ultimately prevail, will not be liable under the FDCPA.” The Juarez court also stated: “A debt
collector may make a claim in bad faith, even where a debt is indisputably owed by a debtor and owned by a
debt collector, where the debt collector has falsely represented its legal right to collect a debt.” Id. at *4.
Further, “FDCPA liability may even extend to a debt collector that unintentionally makes a false
representation in an attempt to collect a debt.” Id. As for Section 1692f, we find Kaiser v. Cascade Capital, LLC,
989 F.3d 1127, 1133 (9th Cir. 2021), instructive when it held that lawsuits attempting to take action not
permitted by law are unfair. Pursuing an illegal foreclosure would seem to fall squarely within that category.
Court of Appeals of Indiana | Opinion 23A-CT-1351 | August 16, 2024 Page 18 of 27
in any circumstance, although as a rule courts should be loathe to
do so in the absence of extraordinary circumstances.
Am. Fam. Mut. Ins. Co. v. Federated Mut. Ins. Co., 800 N.E.2d 1015, 1019 (Ind.
Ct. App. 2004) (quoting Landowners v. City of Fort Wayne, 622 N.E.2d 548, 549
(Ind. Ct. App. 1993) (citations omitted), trans. denied (1994)).
[23] Because no appeal of the district court’s order was taken, the applicability of the
law of the case doctrine is questionable. See Riggs v. Burell, 619 N.E.2d 562, 564
(Ind. 1993) (“Questions not conclusively decided in a prior appeal do not
become the law of the case.”). Even assuming that the doctrine might apply, it
is discretionary, and decisions may be revisited particularly where extraordinary
circumstances present themselves. Here, the district court remanded this case to
the trial court and denied “as moot” Gaeta’s motion for reconsideration of the
district court’s summary judgment opinion and Gaeta’s motion for
reconsideration of the district court’s order for Gaeta to brief standing “because
[the district court] does not have jurisdiction over these claims.” Appellant’s
App. Vol. 2 at 40. Where a subsequent court explicitly determines that it lacks
jurisdiction, remands a case to the court in which it was originally filed, and
thereby denies as moot motions for reconsideration of its prior orders, we have
little difficulty concluding that the original court was not bound by the
subsequent court’s decision. Therefore, the trial court did not abuse its
discretion in addressing the issues presented upon remand.
Court of Appeals of Indiana | Opinion 23A-CT-1351 | August 16, 2024 Page 19 of 27
Section 2 – The trial court did not err when it found that
Gaeta had standing.
[24] Mercer disputes the trial court’s conclusion that Gaeta had standing. Mercer
also asserts that Gaeta should be equitably estopped from arguing that he was
injured by any FDCPA violations because in the district court he “agreed” that
there was no injury. As such, Mercer claims that Gaeta should not have been
permitted to introduce evidence of injuries. Alternatively, Mercer argues that
Gaeta cannot prove that he detrimentally relied upon Mercer’s foreclosure
representations.
[25] Our supreme court recently explained and refined Indiana standing analysis as
follows:
“The threshold issue of standing determines whether a litigant is
entitled to have a court decide the substantive issues of a
dispute.” Solarize Ind., Inc. v. S. Ind. Gas & Elec. Co., 182 N.E.3d
212, 216 (Ind. 2022). The standing requirement “mandates that
courts act in real cases, and eschew action when called upon to
engage only in abstract speculation.” Pence v. State, 652 N.E.2d
486, 488 (Ind. 1995). Whether a party has standing is a legal
question we review de novo. City of Gary v. Nicholson, 190 N.E.3d
349, 351 (Ind. 2022) (citing Holcomb v. Bray,187 N.E.3d 1268
,
1275 (Ind. 2022)).
Indiana’s constitution imposes structural limits on the exercise of
judicial power. Although our constitution lacks the “case or
controversy” requirement found in Article III of the United
States Constitution, our separation-of-powers clause, Ind. Const.
art. 3, § 1, “fulfills a similar function.” Pence, 652 N.E.2d at 488
(citing Ind. Dep’t of Env’t Mgmt. v. Chemical Waste Mgmt., Inc., 643
N.E.2d 331, 336–37 (Ind. 1994)). Standing is a “significant
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restraint on the ability of Indiana courts to act, as it denies the
courts any jurisdiction absent an actual injured party
participating in the case.” Ibid. Indiana law is clear that standing
requires an injury, Nicholson, 190 N.E.3d at 351, which is met if
the party shows it “ha[s] suffered or [is] in immediate danger of
suffering a direct injury as a result of the complained-of
conduct.” Solarize, 182 N.E.3d at 217 (quoting Bd. of Comm’rs of
Union Cnty. v. McGuinness, 80 N.E.3d 164, 168 (Ind. 2017)).
Hoosier Contractors, LLC v. Gardner, 212 N.E.3d 1234, 1238 (Ind. 2023). Because
standing under the Indiana Constitution is jurisdictional, it must exist at all
stages of litigation, including at the summary-judgment stage. Id. at 1238-39.
[26] In its August 2022 order, issued prior to our supreme court’s Hoosier Contractors
guidance regarding standing, the trial court stated, “Gaeta does not have to
allege or prove actual damages in order to move forward.” Aug. 3, 2022 Order
at 4 (paragraph 29). However, that statement is of no moment in this particular
case because in the very next sentence of that same paragraph, the trial court
stated: “Regardless, Gaeta alleges that each of the alleged FDCPA violations
caused him to incur unnecessary attorney’s fees.” Id. Indeed, in his summary
judgment motion with citations to designated materials, Gaeta explicitly alleged
injury in the form of having to pay “thousands of dollars in attorney fees
defending himself against Mercer’s illegal foreclosure efforts.” Appellant’s App.
Vol. 3 at 240. In addition, Gaeta noted that the illegal foreclosure filing
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damaged his reputation 5 and precluded him from obtaining new credit. Id. at
242. Moreover, the foreclosure action led to family arguments and disputes,
embarrassment, loss of sleep, and “other matters.” Id. at 243. We find no
reversible error in the conclusion that Gaeta met the requirements for standing
at the summary judgment stage.
[27] Likewise, we are unmoved by Mercer’s related contention that Gaeta failed to
designate specific evidence of “detrimental reliance,” as Mercer claims Hoosier
Contractors requires. Appellant’s Br. at 45. Hoosier Contractors dealt with the
Indiana Deceptive Consumer Sales Act, specifically, Indiana Code Section 24-
5-0.5-4(a), which states: “A person relying upon an uncured or incurable
deceptive act may bring an action for the damages actually suffered as a
consumer as a result of the deceptive act or five hundred dollars ($500),
whichever is greater.” Our supreme court reiterated that a “prerequisite for
obtaining damages [under this statute] is that the claimant relied on the
deception.” 212 N.E.3d at 1239 (quoting Rainbow Realty Grp., Inc. v. Carter, 131
N.E.3d 168, 178 (Ind. 2019)) (emphasis in Hoosier Contractors). The FDCPA
does not contain the same explicit reliance language that exists in the Indiana
Deceptive Consumer Sales Act. Nonetheless, unlike the appellee in Hoosier
Contractors, whose designated documents did not show that the appellant’s
deceptive acts harmed him “at all,” id. at 1241, Gaeta’s designated materials
5
Reputational harm is hardly a novel concept but a “real-world injury” with “real-world consequences.” See
Ewing, 24 F.4th at 1154 (“The Consumers suffered an intangible, reputational injury that is sufficiently
concrete for purposes of Article III standing.”).
Court of Appeals of Indiana | Opinion 23A-CT-1351 | August 16, 2024 Page 22 of 27
showed that Mercer’s threat of foreclosure caused Gaeta to spend thousands of
dollars on legal fees, damaged his reputation, and affected his credit and his
family, his health, and his well-being. In contrast, our supreme court held that
the appellant’s deceptive acts in Hoosier Contractors did not put the appellee in
harm’s way “or leave him worse off than he would have been had [appellant]
not violated the Act.” Id. at 1242. Further, at trial, extensive evidence was
introduced detailing the injuries suffered by Gaeta as a result of the illegal
foreclosure proceedings. See Tr. Vol. 3 at 170-73 (foreclosure led to Gaeta being
confused, scared, shut off, defeated, negative, anxious), 183 (foreclosure placed
strain on Gaeta’s relationships and family), 184 (Gaeta had sleep disturbances,
memory issues, and was acting out of character), 237 (Gaeta was a “nervous
wreck”), 243 (Gaeta incurred more than $52,000 in legal fees in defense of the
foreclosure), 245 (Gaeta had to move in with his fiancée and commute long
distances to his multiple jobs); id. at 31, 247 (Gaeta resorted to breaking into his
former house to clean, paint, and fix items before its sale); Tr. Vol. 4 at 32
(pending foreclosure weighed on Gaeta and affected his mental capacity and
attention, including at work).
[28] Having concluded that Gaeta met the requirements for standing at summary
judgment, we address Mercer’s estoppel contention. Our supreme court recently
describe judicial estoppel as follows:
Judicial estoppel is a judicially crafted doctrine deriving from
courts’ inherent authority to protect the judiciary’s integrity by
prohibiting litigants from playing “fast and loose” with the
judicial process. The doctrine does that by preventing litigants
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from prevailing on contradictory positions in the same or
subsequent proceedings. The rule is: “Where a party assumes a
certain position in a legal proceeding, and succeeds in
maintaining that position, he may not thereafter, simply because
his interests have changed, assume a contrary position, especially
if it be to the prejudice of the party who has acquiesced in the
position formerly taken by him.” Because this is an equitable
doctrine to prevent “improper use of judicial machinery,” there is
no “exhaustive formula,” and there are no “inflexible
prerequisites.” But courts tend to focus on three considerations.
Red Lobster Rests. LLC v. Fricke, 234 N.E.3d 159, 169-70 (Ind. 2024) (citations
omitted). Those three considerations are: whether a litigant’s argument is
clearly inconsistent with its earlier argument, whether the litigant successfully
persuaded a court to accept its earlier argument, and whether the litigant’s
actions would result in an unfair advantage or unfair detriment on the
opposition absent estoppel. Id. at 170. “[W]e apply judicial estoppel to protect
the integrity of our own state court proceedings, not as a sanction or deterrent
for bad behavior in other courts that have declined their own opportunity to
impose sanctions.” Id. at 172.
[29] Within its October 2021 order, the district court stated that the “parties agree
that the Court does not have jurisdiction over the claims alleged in [Gaeta’s]
Complaint” and “therefore does not have jurisdiction to address the arguments
in the motion for reconsideration and will remand the action to state court.”
Appellant’s App. Vol. 2 at 39. Mercer seems to contend that because Gaeta
chose not to argue for standing in the district court, he should have been
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“equitably foreclosed from arguing that he sustained an injury as a result of
Mercer’s conduct.” Appellant’s Br. at 38. We disagree.
[30] “When a plaintiff files suit in state court but could have invoked the original
jurisdiction of the federal courts, the defendant may remove the action to
federal court.” Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 758 (7th Cir.
2009) (citing 28 U.S.C. § 1441(a)). “The party seeking removal has the burden
of establishing federal jurisdiction, and federal courts should interpret the
removal statute narrowly, resolving any doubt in favor of the plaintiff’s choice
of forum in state court.” Id.(citing Doe v. Allied-Signal, Inc.,985 F.2d 908, 911
(7th Cir. 1993)). Gaeta filed his FDCPA action in our state court system. It was
Mercer that removed the action to the district court. Oddly, it was also Mercer
that, five years after removal, argued that Gaeta had no standing in federal
court, which then put federal jurisdiction into question. Mercer did not
demonstrate Gaeta’s standing. Gaeta objected to having to show standing and
explained his rationale as follows:
[W]e were going to prove article 3 standing but it’s not our
burden. And you know what, some of these things pursuant to
Federal Case Law in Federal court we would not have standing
for certain claims not the (inaudible). We would have been fine
then. So, for that reason I said you know what? Why not go to
state court for everything so we elected to say you know what
judge it’s not our burden. It’s theirs so put it on them. There after
[sic], the judge said ok, why are you remanding back to state
court? Because they didn’t want to argue for article 3 jurisdiction
and neither did[] we.
Court of Appeals of Indiana | Opinion 23A-CT-1351 | August 16, 2024 Page 25 of 27
Tr. Vol. 2 at 11-12.
[31] Gaeta’s counsel did not agree that the district court had no jurisdiction or that
Gaeta had no injury. Gaeta’s counsel simply acquiesced to Mercer’s choice not
to demonstrate standing and to the district court’s resulting conclusion that it
lacked jurisdiction, which resulted in the case returning to the court in which it
was first filed. Gaeta was not making clearly inconsistent arguments and was
not persuading the district court of anything. Gaeta was not playing “fast and
loose” with the judicial process or acknowledging that he had no standing, as
Mercer seems to imply. Rather, this was a pragmatic decision with the goals of
preventing a bifurcation of claims between state and federal courts, avoiding
further delays, and tamping down on associated fees and costs. See Appellee’s
App. Vol. 2 at 148-49. As such, estoppel does not apply.
[32] To summarize, Mercer does not contest the amount of damages found by the
jury or the trial court. Mercer has not convinced us that the trial court erred in
granting partial summary judgment in Gaeta’s favor. The trial court was not
bound by the district court’s decision. Gaeta met the requirements for standing
at summary judgment, and Gaeta did nothing at the district court that would
have judicially estopped him from vigorously arguing standing at the trial court.
Accordingly, we affirm.
[33] Affirmed.
Bailey, J., and Pyle, J., concur.
Court of Appeals of Indiana | Opinion 23A-CT-1351 | August 16, 2024 Page 26 of 27
ATTORNEY FOR APPELLANT
Nicholas W. Levi
Kightlinger & Gray, LLP
Indianapolis, Indiana
ATTORNEY FOR APPELLEE
Duran L. Keller
Keller Law
Lafayette, Indiana
Court of Appeals of Indiana | Opinion 23A-CT-1351 | August 16, 2024 Page 27 of 27