Sherri Nelson, Appellant-Third-Party Plaintiff v. Sara Stein Appellee-Counter-Defendant (2025)

MEMORANDUM DECISION

Case Summary

[1] Following years of disputes over a piece of real property, Affordable Housing of Indy, LLC (Affordable Housing) filed a complaint against S. Nelson Enterprises, LLC and Jonathan (Jon) and Sherri Nelson (collectively, Nelson), to quiet title. After the responsive pleadings had been filed but before discovery had initiated, Affordable Housing moved for partial summary judgment, which the trial court granted. Nelson now appeals, raising a number of issues, one of which we find dispositive: whether the trial court abused its discretion in denying Nelson's request for additional time to respond to the summary judgment motion. Finding the court abused its discretion, we reverse and remand with instructions.

Facts and Procedural History

[2] This dispute arises over real property in Hamilton County. Sara Stein is the sole owner and manager of Affordable Housing. On July 31, 2019, Affordable Housing and Jon Nelson signed an Option and Lease Agreement, in which Jon was to rent the property from Affordable Housing with an option to purchase. In anticipation that Affordable Housing would need a loan for the property, the Agreement provided that Jon would pay a monthly rental payment to Affordable Housing that covered the principal and interest obligations for that loan.

[3] On September 9, 2019, Affordable Housing signed a Note with Mel Harder as the lender. As part of the Note, Affordable Housing mortgaged the property as collateral in exchange for $150,000.00. The Note contained the following key provisions: (1) Affordable Housing will make a monthly interest payment of $1,232.87; (2) Affordable Housing will pay entire principal loan balance, as well as a “balloon payment” of $10,000.00, within ninety days (maturation date of December 9, 2019); (3) if Affordable Housing did not pay within the ninety days, the terms were to extend an additional ninety days (maturation date of March 8, 2020), and Affordable Housing's monthly payment would increase to $1,667.00. Appellants’ App. Vol. II p. 62.

[4] From October to December 2019, Affordable Housing paid Harder the $1,232.87 monthly payments. On December 9, 2019, the $10,000.00 balloon payment was made, but Affordable Housing did not pay the remaining principal. Per its terms, the Note was extended an additional ninety days and Affordable Housing's monthly payment increased to $1,667.00, which it paid timely from January to March 2020. On the new maturation date—March 8, 2020—Affordable Housing again failed to pay the full loan amount. Nonetheless, from April to November 2020, Affordable Housing continued to pay Harder $1,667.00 a month, and Harder accepted each payment. Harder never asserted that Affordable Housing was in default, and Stein believed the Note had been “amended by ․ their conduct.” Id. at 147.

[5] Meanwhile, at some point in early 2020, Jon stopped paying Affordable Housing the monthly rental payments under the Option and Lease Agreement, although Affordable Housing continued its monthly payments to Harder under the Note. On August 18, 2020, Affordable Housing filed a complaint against Jon, seeking possession of the property and damages. See Cause No. 29D03-2008-CC-005667 (the Eviction Case). On October 28, the court ordered Jon to allow Affordable Housing access to the property. Thereafter, Jon filed for bankruptcy, which forced an automatic stay of the Eviction Case.¹

[6] On October 29, while the Eviction Case was proceeding, Jon and his wife Sherri formed S. Nelson Enterprises, LLC. On November 1, Nelson and Mel Harder signed a Purchase Agreement in which Harder assigned the Mortgage and possibly the Note to Nelson.² See Appellants’ App. Vol. II pp. 73-74. On November 23, Nelson sent Affordable Housing a “Notice of Default of Promissory Note and Mortgage,” contending it owed not only the unpaid principle, but also various late fees and extension payments, amounting to $230,692.36. Appellants’ App. Vol. II p. 43.

[7] Meanwhile, Affordable Housing, seeking to pay off the Note, refinanced with United Wholesale Mortgage. As a condition of the refinancing, United Wholesale Mortgage required Affordable Housing “to transfer title of the [property] to [Stein]” as an individual. Id. Stein thereafter purchased the property from Affordable Housing, with a closing date of November 30. On that day, Stein paid off the Note at an insured closing conducted by Eagle Land Title, LLC, who had been hired to handle the refinance transaction. Eagle Land Title “mistakenly” identified Harder as the mortgage loan payee, and sent him a check for $150,328.00, the amount Stein indicated was owed under the Note. Id. at 152. Harder returned the check. On December 8, Eagle Land Title sent a new check, also for $150,328.00 to Nelson, which was cashed by Sherri Nelson. However, Nelson still refused to release the Mortgage, contending Affordable Housing incurred various extension and late fees and thus the $150,328.00 was not the full amount owed under the Note.

[8] In November 2023, Affordable Housing filed a complaint in Hamilton County against Nelson Enterprises and Sherri Nelson seeking to quiet title and requesting damages.³ Affordable Housing later amended the complaint to add Jon Nelson. On February 5, 2024, Nelson responded by filing a counterclaim for breach of contract against Affordable Housing and a third-party claim for foreclosure against Stein. On March 21, Stein and Affordable Housing (hereinafter, collectively AHI) filed a belated Answer.

[9] On April 8, AHI filed a motion for partial summary judgment, requesting the trial court interpret the Note's terms and find the correct amount had been paid in December 2020. In support of the motion, AHI designated a variety of evidence, including an affidavit by Stein. On April 23, Nelson filed several subpoenas requesting discovery from non-parties, including Mel Harder. On May 8, Nelson filed a response to AHI's request for partial summary judgment, (1) requesting leave pursuant to Indiana Trial Rule 56(F) to conduct discovery before issuing a substantive response or (2) additional time, pursuant to Indiana Trial Rule 56(I), to prepare a substantive response. Specifically, Nelson identified various pieces of AHI's designated evidence that required discovery in order for them to respond, including a contention in Stein's affidavit that the Note had been amended by Harder and AHI's conduct. Nelson designated an affidavit by Jon supporting its contention that it needed to conduct discovery. Nelson also filed a motion to strike various portions of AHI's designated evidence in support of summary judgment. The court did not rule on Nelson's request for additional time but set an August 9 hearing date for the partial summary judgment motion and Nelson's motion to strike. On August 8, one day prior to the hearing, AHI filed its own motion to strike certain portions of Jon's affidavit.

[10] A hearing on all pending motions was held on August 9, 2024. Thereafter, the trial court issued an order on the motions to strike, striking various portions of both parties’ designated evidence. The court then issued a separate order, denying Nelson's request for additional time to respond to the motion and granting AHI's motion for partial summary judgment. Specifically, the court found the “Note is deemed paid in full and the Mortgage is deemed released.” Id. at 54. Nelson now appeals.

Discussion and Decision

[11] Nelson argues the trial court erred in denying its request for additional time to respond to AHI's partial summary judgment motion. After a party moves for summary judgment, the non-moving party must respond within thirty days by either: (1) filing a response under Trial Rule 56(C); (2) requesting a continuance under Trial Rule 56(I); or (3) filing an affidavit under Trial Rule 56(F). Matter of Estate of Kreiger, 165 N.E.3d 623, 629 (Ind. Ct. App. 2021), trans. denied. Trial Rule 56(I) provides, “For cause found, the Court may alter any time limit set forth in this rule upon motion made within the applicable time limit.” Trial Rule 56(F) provides,

Should it appear from the affidavits of a party opposing the motion that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.

“Thus, read together, the trial court may, in its discretion, order a continuance pursuant to Indiana Trial Rule 56(F) and alter any time limits set forth in the rules pursuant to Indiana Trial Rule 56(I).” Erwin v. Roe, 928 N.E.2d 609, 614 (Ind. Ct. App. 2010).

[12] Nelson requested a continuance under Trial Rules 56(I) and (F), which the court denied. We review a trial court's ruling on a Trial Rule 56 motion for additional time for abuse of discretion. Id. To establish the trial court abused its discretion in denying a Trial Rule 56 motion for additional time, the appealing party must show good cause existed to grant the motion and the trial court's denial prejudiced the party. Id. “[S]ummary judgment proceedings are not substitutes for trials on the merits and motions for summary judgment should only be granted where the parties have adequate time to complete discovery.” Boyd v. WHTIV, Inc., 997 N.E.2d 1108, 1113 (Ind. Ct. App. 2013), reh'g denied; see also Boggs v. Tri-State Radiology, Inc., 730 N.E.2d 692, 699 (Ind. 2000) (“It is generally improper for a court to grant summary judgment while reasonable discovery requests that bear on issues material to the motion are still pending.”).

[13] The trial court denied Nelson an extension, citing that Nelson was “previously [ ] granted an extension of summary judgment deadlines to conduct discovery” and had “sufficient time to acquire affidavits or take depositions[.]” Appellants’ App. Vol. II p. 25. This court has previously held this to be an appropriate reason to deny a Rule 56 continuance. See Schon v. Frantz, 156 N.E.3d 692 (Ind. Ct. App. 2020) (no abuse of discretion where non-movants had received two previous extensions of time). But here the record indicates—and AHI does not dispute—that this is inaccurate. Nelson had not previously been given an extension of the summary judgment deadline. Nor had there been much time for discovery: AHI filed its belated responses to Nelson's counterclaims and third-party claims on March 21 and filed for partial summary judgment on April 8. Nelson initiated the discovery process by filing subpoenas on April 23 and filed its response to the partial summary judgment motion on May 9. Under these circumstances, we conclude that Nelson showed “good cause” for the trial court to grant the motion. See Kreiger, 165 N.E.3d at 629.

[14] We then move to whether Nelson was prejudiced by the denial—that is, whether Nelson's ability to designate evidence in response to AHI's motion for summary judgment was “hindered.” See id. We conclude that it was. AHI's motion for summary judgment requested the trial court determine whether AHI had complied with the terms of the Note such that Nelson was required to release the mortgage. In support, AHI designated not only the Note itself, but also an affidavit from Stein in which she stated that the Note's terms were subsequently amended by the parties’ (then Harder and Affordable Housing) conduct. See Appellants’ App. Vol IV p. 7. In Nelson's response to summary judgment, it specifically asked for time for discovery related to the “facts and circumstances surrounding the repayment of the Note and Mortgage by Affordable Housing, in particular any defaults, extensions, or other modifications of the Note and Mortgage.” Id. at 135.

[15] Given these circumstances, Nelson's ability to respond was hindered. As the trial court found, discovery is generally not needed prior to summary judgment where the dispute involves the interpretation of a written contract. See Will v. Meridian Ins. Group, Inc., 776 N.E.2d 1233, 1235 (Ind. Ct. App. 2002), trans. denied. However, this is true “when the contract's meaning can be ascertained without reference to extrinsic evidence.” Id. In asking the trial court to interpret the Note's terms, AHI specifically referenced a subsequent modification. Without an opportunity to investigate such, Nelson cannot sufficiently respond. See Kreiger, 165 N.E.3d at 629 (non-movant's ability to designate evidence in response to summary judgment motion was hindered where he was unable to conduct “essential” discovery).

[16] Nelson has demonstrated both that good cause existed to grant the motion and that it was prejudiced by the denial. Accordingly, the trial court abused its discretion in failing to grant Nelson's motion pursuant to Trial Rule 56(F). We reverse and remand with instructions that the trial court should either “refuse the application for judgment or ․ order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or ․ make such other order as is just” pursuant to Trial Rule 56(F).

[17] Reversed and remanded with instructions.⁴

FOOTNOTES

1.   In January 2023, the court in the Eviction Case issued an Order of Ejectment, and in November 2023 issued a final judgment awarding Affordable Housing damages.

2.   The parties now dispute whether both the Note and the Mortgage were transferred to Nelson. Specifically, Affordable Housing & Stein assert that only the Mortgage was transferred. Appellees’ Br. pp. 34-35. This is of particular importance given without an assignment of the Note, Nelson would not be able to enforce it through a foreclosure action on the Mortgage. See Good v. Wells Fargo Bank, NA, 18 N.E.3d 618 (Ind. Ct. App. 2014). However, Affordable Housing and Stein never raised this issue to the trial court, and in fact admitted in their pleadings that both the Note and Mortgage were transferred. See Appellants’ App. Vol. II p. 149. While Eagle Land Title, LLC challenged this at the summary judgment hearing, that was after the designation of evidence. See Tr. Vol. II p. 22. Given both parties to the summary judgment motion asserted in their pleadings that the transfer of both the Note and Mortgage occurred, we decline to delve into this issue at this time; further proceedings in the trial court will presumably resolve this issue.

3.   Affordable Housing also named Eagle Land Title as a defendant, contending its conduct constituted breach of contract.

4.   Nelson also argues the trial court abused its discretion in ruling on the motions to strike and erred by granting AHI's motion for summary judgment. Furthermore, AHI filed a cross-appeal, arguing there was a mathematic error in the calculations of the loan amount and requesting sanctions against Nelson. Given our disposition of Nelson's argument regarding the Rule 56(F) motion, we need not address these other issues.

Scheele, Judge.

Judges Foley and Kenworthy concur. Foley, J., and Kenworthy, J., concur.