Certification on Indiana’s “One Action” Statute: Applicability to Mortgage Guaranties and Enforceability of Waiver

1. Introduction

Merchants Bank of Indiana v. David Craik (7th Cir. Aug. 19, 2026) arises from a familiar commercial lending structure: mortgage loans secured by real property and backed by personal guaranties. Merchants Bank of Indiana (“Merchants”) sought to (1) collect money judgments against the guarantors (David Craik, Jason Craik, and Stephen Suske) in federal court while (2) pursuing foreclosure actions against the mortgaged properties in separate state-court proceedings in Arkansas and Tennessee.

The central legal dispute is whether Indiana’s “One Action” statute, Ind. Code § 32-30-10-10, bars a lender from simultaneously foreclosing and separately suing on guaranties that secure the same loan—and, if it does, whether sophisticated guarantors may contractually waive that statutory protection.

The district court entered summary judgment sua sponte for the guarantors, holding that the statute applied to guaranty collections and that contractual waivers were unenforceable as against Indiana public policy. On appeal, the Seventh Circuit did not decide the merits; instead, it certified two dispositive questions to the Indiana Supreme Court.

2. Summary of the Opinion

The Seventh Circuit held that Indiana law provides insufficiently clear guidance on two outcome-determinative issues:

  1. Whether Ind. Code § 32-30-10-10 prohibits a mortgage lender from foreclosing while simultaneously, in a separate proceeding, suing on guaranties securing the mortgage; and
  2. If it does, whether guarantors may waive the statute’s protection.

Finding the statute ambiguous as applied to guaranties and Indiana public policy uncertain on waiver, the court invoked certification under Circuit Rule 52 and Indiana Appellate Rule 64. The Seventh Circuit certified both questions and stayed the federal appeal pending the Indiana Supreme Court’s answers.

3. Analysis

A. Precedents Cited

  • Cutchin v. Robertson, 986 F.3d 1012 (7th Cir. 2021): Provided the Seventh Circuit’s certification framework—certification is appropriate when questions are outcome determinative, important to the public, lack clear state-court guidance, and are likely to recur. The court used this as the initial screen for whether to certify rather than decide Indiana law itself.
  • Hensicker v. Lamborn, 13 Ind. 468 (1859): Cited for the common-law baseline that a creditor could foreclose on a mortgage and collect on the underlying note “simultaneously or separately.” This sets the backdrop for understanding § 32-30-10-10 as a legislative limitation on otherwise-available cumulative remedies.
  • Cross v. Burns, 17 Ind. 441 (1861): The most significant Indiana authority discussed. It construed the predecessor one-action language as intended “to prevent suits in the nature of actions at law, and in chancery, from being prosecuted at the same time, and as distinct proceedings,” while permitting the claims to be brought in a single proceeding. The Seventh Circuit treated Cross as providing only a general purpose (avoid multiple simultaneous proceedings), not a definitive answer about guaranties.
  • Loudermilk v. Casey, 441 N.E.2d 1379 (Ind. Ct. App. 1982): Used to support the guarantors’ theory that documents executed together and cross-referencing one another (guaranties, notes, mortgage-related documents) can be construed as a “single contract.” This bolstered the argument that guaranties are part of the “same debt or matter” as the mortgage-secured obligation.
  • TBS Enters., Inc. v. Grobe, 494 N.Y.S.2d 716 (N.Y. App. Div. 1985) and Machock v. Fink, 137 P.3d 779 (Utah 2006): Cited as competing out-of-state approaches to similar one-action regimes—New York applying its one-action law to guaranties, Utah declining to apply its one-action law to guarantors. The Seventh Circuit found no consensus and therefore no persuasive shortcut to predicting Indiana law.
  • Cont'l Basketball Ass'n, Inc. v. Ellenstein Enters., Inc., 669 N.E.2d 134 (Ind. 1996) and Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126 (Ind. 1995): These cases supply Indiana’s doctrine for when contracts (including waivers) are void on public-policy grounds. They also introduce two distinct analyses: (1) voidness for contravening a statute requires “clear and unambiguous” legislative intent to bar enforcement, and (2) alleged public-policy contravention triggers a five-factor balancing test.
  • Wright v. City of Gary, 963 N.E.2d 637 (Ind. Ct. App. 2012): Reinforced the “clear and unambiguous language” requirement for declaring contracts void for statutory contravention, even where a statute lacks an express remedial provision.
  • Shoaff v. First Merchs. Bank, 201 N.E.3d 646 (Ind. Ct. App. 2022): Cited to support the general enforceability of guaranty agreements under Indiana law—relevant to the public-policy balancing factors that favor enforcing negotiated commercial guaranties.
  • Daniels v. FanDuel, Inc., 884 F.3d 672 (7th Cir. 2018): Invoked for the proposition that lack of state case law does not compel certification if state law is “easy to parse.” The Seventh Circuit distinguished this case, emphasizing that the statutory ambiguity here makes prediction difficult.
  • Circle Block Partners, LLC v. Fireman's Fund Ins. Co., 44 F.4th 1014 (7th Cir. 2022): Provided the ultimate certification touchstone: whether the federal court is “genuinely uncertain” about the correct state-law answers. That genuine uncertainty drove certification.

B. Legal Reasoning

1) Statutory scope: does § 32-30-10-10 reach guaranties?

The statute bars a plaintiff from foreclosing “while ... prosecuting any other action for the same debt or matter that is secured by the mortgage,” and conversely bars prosecuting “any other action for the same matter” while foreclosing. The district court treated the guaranty suit as an “other action” for the “same debt” as the note and mortgage.

The Seventh Circuit found both sides’ readings plausible:

  • Merchants’ narrower reading: guarantors are not borrowers; guaranties are distinct obligations with distinct defenses; and a statute placed in a “Mortgage Foreclosure Actions” chapter plausibly targets borrower-focused remedies rather than separate guaranty enforcement.
  • Guarantors’ broader reading: the text (“any other action for the same debt or matter”) is broad enough to capture suits on guaranties that are coextensive with the loan obligations, particularly where documents are executed contemporaneously and interrelated (citing Loudermilk v. Casey).

With no Indiana decisions defining “same debt or matter” in this context—and no consistent external consensus—the Seventh Circuit declined to predict how Indiana would resolve the scope question.

2) Waiver: even if the statute applies, can guarantors waive it?

The guaranties contained broad “Waiver of Suretyship Defenses” language, including waivers of “all rights ... under any anti-deficiency statute or other similar protections” and “[a]ny defense based upon an election of remedies.” The district court treated these as waivers of § 32-30-10-10’s protection but held them void as a matter of public policy.

The Seventh Circuit separated two Indiana public-policy pathways from Cont'l Basketball Ass'n, Inc. v. Ellenstein Enters., Inc. and Fresh Cut, Inc. v. Fazli:

  • Contravention of statute: Indiana’s strong pro-contract principle means courts will not deem a contract provision void for statutory contravention without “clear and unambiguous” evidence the legislature intended courts to refuse enforcement. The panel noted that § 32-30-10-10 does not say waivers (or contracts) are “void” or “voidable,” and contrasted statutes that explicitly void waivers (e.g., Ind. Code § 32-31-8-4). This cut against automatic invalidation.
  • General public policy balancing: Even absent express statutory anti-waiver language, Indiana may refuse to enforce waivers that offend public policy after balancing the five factors set out in Fresh Cut, Inc. v. Fazli and applied in Cont'l Basketball Ass'n, Inc. v. Ellenstein Enters., Inc.. The panel indicated mixed signals: sophisticated parties and routine enforcement of guaranties favor enforcement (with Shoaff v. First Merchs. Bank), while the perceived “self-inflicted” nature of Merchants’ predicament (choosing simultaneous proceedings) favors the guarantors on the forfeiture factor.

Because the statute’s purpose and strength of policy as applied to guaranties are themselves uncertain, the court concluded it could not confidently apply Indiana’s balancing test in a way that would reliably predict the Indiana Supreme Court’s answer.

C. Impact

Although the decision does not resolve the merits, it meaningfully frames the forthcoming Indiana-law rule in two ways:

  • Doctrinal clarification is imminent: The Indiana Supreme Court’s answers will likely define whether guaranty enforcement is treated as part of the “same debt or matter” as the mortgage foreclosure for purposes of § 32-30-10-10. That will shape lender strategy in Indiana-governed loan documents and litigation sequencing.
  • Waiver drafting and enforceability stakes: If waiver is permitted, commercial lenders may rely more heavily on explicit, statute-referencing waivers and “proceed directly against guarantor” clauses. If waiver is not permitted (or is limited), lenders may be forced to consolidate proceedings or finish foreclosure before pursuing guarantors, affecting timing, leverage, and recovery dynamics.
  • Litigation management and forum coordination: The case highlights practical friction when a lender uses multiple fora (federal guaranty actions; state foreclosure actions in different states) while applying a single state’s one-action limitation. A definitive Indiana rule will affect multi-state enforcement playbooks whenever Indiana law governs the guaranty or note.

4. Complex Concepts Simplified

  • “One Action” statute: A rule limiting a creditor to one procedural track at a time to collect a mortgage-related debt—preventing simultaneous, separate lawsuits that pursue overlapping recovery for the same obligation.
  • Guaranty: A separate contract where a guarantor promises to pay if the borrower does not. It is often “coextensive” with the borrower’s obligations but legally distinct from the note.
  • Suretyship defenses / impairment of collateral: Defenses available to guarantors when the creditor’s conduct (e.g., mishandling collateral) increases the guarantor’s risk. Commercial guaranties often include broad waivers of these defenses.
  • Anti-deficiency protections: Rules that limit a lender’s ability to collect a remaining balance (a “deficiency”) after collateral is liquidated. Parties sometimes dispute whether a one-action statute functions like an anti-deficiency protection.
  • Election of remedies: A doctrine limiting pursuit of inconsistent remedies. One-action statutes are sometimes understood as legislatively enforcing a form of “election” (choose a path, don’t run parallel paths).
  • Summary judgment sua sponte: Summary judgment entered by the court on its own initiative (not requested by the winning party), typically after giving notice and a chance to respond—here, used by the district court to rule for the guarantors.
  • Certification: A procedure allowing a federal court to ask a state supreme court to answer unsettled state-law questions that control the case, promoting accuracy and respect for state authority over state law.

5. Conclusion

The Seventh Circuit’s opinion does not decide whether Merchants may sue guarantors while foreclosing; it decides that Indiana should. By certifying two questions—(1) whether Ind. Code § 32-30-10-10 reaches guaranty suits pursued alongside foreclosure, and (2) whether any such protection may be waived—the court identified a significant gap in Indiana mortgage-remedy doctrine with major consequences for lenders, guarantors, and litigation sequencing. The ultimate legal principle will be supplied by the Indiana Supreme Court’s answers, which will likely determine how “one action” constraints and freedom-of-contract values are balanced in Indiana’s commercial mortgage market.