2013 Ohio 2526
Ohio Ct. App.2013Background
- In 2011 American Enterprise Bank sued Garfield Heights Property, L.L.C. (GHP) to foreclose a $2.7 million note, alleging GHP defaulted; the mortgage granted the bank an assignment of rents and included a receivership clause.
- The mortgage’s paragraph 19 provided that upon filing a foreclosure complaint the lender could petition for a receiver, without notice and without regard to mortgagor solvency or property value.
- GHP answered, counterclaimed, and opposed the bank’s motion for a receiver, arguing the bank had not shown default and that appointment would destroy GHP’s only source of income.
- The bank filed a reply with two affidavits from a bank vice president authenticating the loan documents and showing payment history and advances.
- At a hearing with no live evidence, the trial court found the bank made a prima facie case and appointed a receiver with a $1,000 bond. GHP appealed, challenging (1) appointment without evidentiary hearing or clear and convincing evidence and (2) inadequacy of the bond.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether receiver appointment was authorized and supported | Bank: mortgage consented to receiver upon filing; assignment of rents + R.C. 2735.01(F) permit appointment without additional showing | GHP: no authenticated mortgage or affidavit; no evidentiary showing of necessity; bank defaulted | Court: Appointment authorized by mortgage clause and R.C. 2735.01(F); bank’s affidavits authenticated documents; no evidentiary hearing required; no abuse of discretion |
| Whether receiver bond ($1,000) was adequate | Bank: bond amount within court discretion given receiver’s reputation | GHP: bond inadequate given >$2.7M loan and property value >$1.1M | Court: amount is within trial court’s discretion; GHP offered no evidence bond was inadequate; no abuse of discretion |
Key Cases Cited
- Malloy v. Malloy Color Lab, Inc., 63 Ohio App.3d 434 (establishes receivership as extraordinary remedy and need for clear and convincing proof)
- Cross v. Ledford, 161 Ohio St. 469 (defines the clear-and-convincing evidence standard)