TILA, Fraud, And Tort Claims Raised In Defense To A Foreclosure Do Not Entitle The Borrower To A Jury Trial In Indiana

The mortgagee in Lucas v. U.S. Bank, N.A., 28S01-1102-CV-78, (Ind. Sept. 15, 2011) brought an action to foreclose a mortgage to which the borrower responded by filing affirmative defenses and counterclaims for fraud, breach of fiduciary duty and violations of the Truth in Lending Act. He requested jury trial on those claims and defenses. The mortgagee moved to strike the jury request and the trial court agreed reasoning that the foreclosure was essentially an equitable cause of action which meant that under Indiana law the borrower’s were not entitled to a trial by jury on any of the claims and defenses. On discretionary interlocutory appeal, the Court of Appeals reversed the trial court’s order with instructions to grant the mortgagor’s request for a jury trial on their legal claims. The supreme court reversed. In doing so it clarified Indiana law that, although the Indiana constitution entitles a party to a trial by jury on legal claims, that there is no right to a jury trial if the lawsuit as a whole is equitable and the legal causes of action are not distinct or severable. To make this determination a trial court must engage in a multi-pronged inquiry to assess whether a suit is essentially equitable. It must look at the suit’s substance and character, the rights and interests involved, and the relief requested. After that examination, the trial court must decide whether core questions presented in any of the joined legal claims significantly overlap with the subject matter that invokes the equitable jurisdiction of the court. If so, equity subsumes those particular legal claims to obtain more final and effectual relief for the parties despite the presence of peripheral questions of a legal nature. With regards to a mortgage foreclosure proceeding, despite the inclusion of some legal claims and requests for legal remedies, the core legal issues overlap with the foreclosure issues to a significant degree.

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