The Indiana Court of Appeals recently held that a borrower is entitled to have claims based on consumer protection statutes and common law causes of action tried to a jury, even when those claims are asserted as counterclaims to a mortgage foreclosure action. Lucas v. U.S. Bank, N.A., 932 N.E.2d 239 (Ind. Ct. App. 2010). In that case, the mortgage holder filed a complaint to foreclose on a mortgage executed by Mary Beth and Perry Lucas. In response, the Lucases filed an answer and counterclaims, alleging that the mortgage holder violated the Truth in Lending Act, the Real Estate Settlement and Procedures Act, and committed conversion and deception. The Lucases also filed a third-party complaint against the loan servicer alleging that it breached its contract with the Lucases, committed conversion, and violated Fair Debt Collection Practices Act and the Real Estate Settlement and Procedures Act.

The Lucases asked for a jury trial, but the trial court denied their request. On interlocutory appeal, the Court of Appeals reversed this decision, concluding that the Lucases had asserted legal causes of action distinct and severable from the equitable mortgage foreclosure action. The court began its analysis with Article I, Section 20 of the Indiana Constitution and Indiana Trial Rule 38, which preserve “the right to a jury trial . . . as it existed at common law.” Id. at 243. The court then applied the test set forth by the Indiana Supreme Court in Songer v. Civitas Bank, 771 N.E.2d 61 (Ind. 2002). Under that test, as explained by Lucas, “to determine whether a party has the right to a jury trial in a civil case, we must first consider whether the essential features of the suit are equitable.” Lucas, 932 N.E.2d at 244. If the case involves only claims that are essentially equitable, and “there are no distinct and severable legal causes of action,” then a party has no right to a jury trial. Id. But “if there are distinct and severable legal causes of action . . . Rule 38(A) requires a jury trial on those claims.” Id.

The court then concluded that while foreclosure actions are essentially equitable, the Lucases were nonetheless entitled to a jury trial because the claims “grounded in federal and state statutory law and state common law . . . are legal causes of action.” Id. Further, the majority of the relief the Lucases sought consisted of damages, a legal remedy. Id.