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Defenses to Foreclosure Will Be Tried Without a Jury, Indiana Supreme Court Rules - Lucas v. U.S. Bank

October 3, 2011

Our Fontana foreclosure defense lawyers were interested to see a case out of Indiana that tested not the validity of a foreclosure, but how it should be tried. In Lucas v. U.S. Bank, Mary Beth and Perry Lucas challenged the validity of their foreclosure by U.S. Bank. The Lucases had disagreed with a previous loan servicer about whether their property tax payment and homeowners' insurance were adequate, and the disagreement was never resolved. This eventually caused U.S. Bank to foreclose their loan in 2009. The Lucases raised many defenses to foreclosure and asked for a jury trial, which the trial court denied but the Indiana Court of Appeals allowed. In this case, the Indiana Supreme Court found that the claims were best heard as part of the foreclosure, which has no jury, because they are "significantly intertwined" with the foreclosure.

The Lucases bought their home in 2005 and created an escrow account from which property tax and insurance was paid. Only a few months later, the Lucases disagreed with their original loan servicer over whether they had paid enough property tax and had sufficient evidence of homeowners' insurance. When Litton Loan Servicing, a third-party appellee in this case, took over the servicing, it started charging the Lucases late fees the couple said were erroneous. In November 2006, they filed for Chapter 7 bankruptcy and reaffirmed their mortgage debt. The bankruptcy was discharged in February of 2007, but they continued to accrue late fees afterward, and in October, Litton sent a notice of default. After several more unsuccessful attempts to resolve the matter, U.S. Bank filed a foreclosure. Unlike most homeowners, the Lucases filed a detailed answer with defenses, counterclaims and a cross-complaint against Litton, as well as a request for a jury trial. This was denied by the trial court, but the Indiana Court of Appeals reversed.

The case was reversed again in the Indiana Supreme Court, which found that the Lucases were not entitled to a jury trial. The case turned on whether and when the foreclosure case, a case tried in equity with no jury, should be changed to a case in law, which requires a jury, by the Lucases' allegations. The Court of Appeals had relied on Songer v. Citivas Bank, a 2002 case that directed courts to allow jury trials on the legal claims in a case that mixes law and equity claims, as long as the legal claims are distinct and severable. Relying on this case was right, the Supreme Court said, but the appeals court had wrongly concluded that the essential features of the case were not equitable. Many of the individual claims they made, which relied on common-law claims as well as consumer protection statutes like the Truth in Lending Act, are questions of law, it said. But the questions underlying those claims overlap with the foreclosure, a case of equity. Thus, the essential features of the case are equitable and there should be no jury trial, the high court said. Dissenting Justice Dickson, with Justice Rucker concurring, preferred to sever the legal claims as Songer requires.

As Chino Hills foreclosure defense attorneys, we generally prefer trial by jury in cases like this. That's partly because it's longstanding American legal tradition; we all have the right to trial by jury on claims in law. However, a jury trial may also be more advantageous for plaintiffs like the Lucases, who are essentially arguing that they were pushed into foreclosure for no reason by big lenders' incompetence. Many of the ordinary people who make up juries understand that large organizations can be bureaucratic. Of those jurors who are homeowners, it would be unsurprising to learn that some had even been pushed around by their lenders or servicers. That's why our Whittier foreclosure defense lawyers like the idea of a trial by jury, even though a trial by a careful judge is likely to be fair.

Howard Law, P.C., represents borrowers who need help negotiating for a loan modification or fighting a foreclosure they believe can be prevented. If you'd like to tell us your story and learn how we can help, call us today for a free consultation at 1-800-872-5925 or send us a message online.

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