## Facts

- Carson Partners owned the Carson Square Shopping Center in Indianapolis subject to a mortgage held by Bank One (then American Fletcher National Bank and Trust Co.).
- In June 1990, Carson Partners leased Como, Inc. a 20,000 square-foot space for a five-year term to operate a catering/banquet business; the lease was amended to add two consecutive five-year renewal options.
- In February 1991, Carson Partners defaulted on the mortgage.
- Bank One initiated a foreclosure action but did not name Como as a party and did not notify Como of the proceeding.
- A foreclosure judgment was entered in February 1993.
- On August 3, 1993, Bank One assigned the mortgage and foreclosure judgment to Carson Square, Inc., which purchased the shopping center at a sheriff’s sale the next day.
- A dispute followed over whether the foreclosure terminated Como’s leasehold interest.

## Issues

1. Whether a foreclosure judgment and sheriff’s sale can extinguish a tenant’s leasehold interest when the tenant was neither joined as a party nor given notice of the foreclosure proceeding.
2. Whether excluding a tenant from a foreclosure proceeding that purports to terminate the leasehold violates due process.

## Decision

- The trial court granted summary judgment for Carson Square, declaring Como’s lease foreclosed and barring Como’s rights, ordering immediate possession to Carson Square, and requiring Como to pay fair market rent from Carson Square’s acquisition date.
- The Indiana Court of Appeals reversed, holding that Como was denied due process by its exclusion from the foreclosure action and that the foreclosure did not terminate Como’s leasehold.
- The Indiana Supreme Court granted transfer but was evenly divided (2–2).
- Under the governing appellate rule, transfer was deemed denied by operation of law, and the Court of Appeals’ decision remained final.

## Legal Principles

- When the Indiana Supreme Court is evenly divided after granting transfer, transfer is deemed denied and the Court of Appeals’ decision is final.
- A commercial leasehold is a protectable property interest for due process purposes.
- A foreclosure proceeding that seeks to terminate a tenant’s leasehold generally requires constitutionally adequate notice and an opportunity to be heard for the tenant; failure to join or notify the tenant prevents the foreclosure from extinguishing the leasehold as to that tenant.

## Conclusion

Because the Indiana Supreme Court divided evenly, it issued no merits holding and, by rule, left the Court of Appeals’ judgment in place: excluding Como from the foreclosure proceeding violated due process, so the foreclosure did not extinguish Como’s leasehold rights.


Como, Inc. v. Carson Square, Inc., 689 N.E.2d 725 (Ind. 1997)