Bank of Am., N.A. v. Stewart
2014 Ohio 723
Ohio Ct. App.2014Background
- In 2006 Douglas and Caroline Stewart executed a note and mortgage; payments ceased after February 2010.
- On August 26, 2010 BAC Home Loans Servicing, LP (a Bank of America subsidiary) sent a notice of default stating a specific "total due" ($11,163.76) and describing rights to reinstate and assert defenses.
- BAC Home Loans Servicing, LP merged into Bank of America, N.A. on July 1, 2011; the absorbed entity ceased as a separate business.
- A foreclosure complaint was filed December 13, 2011 captioned in the name of the absorbed company (BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP); substitution to “Bank of America, N.A. as successor by merger…” was later granted.
- The trial court granted summary judgment for Bank of America; Stewart appealed, arguing (1) the default notice failed to meet contractual requirements and (2) the complaint was a nullity because it was filed by a non-entity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the notice of default complied with note ¶6(C) and mortgage ¶22 (amount due) | Notice stated the exact amount then due; bank need not predict future accruals | Notice was insufficient because it required borrower to calculate amounts that might accrue before the cure deadline | Held: Notice was sufficient; providing the amount due as of mailing satisfied the contract |
| Whether the notice adequately informed borrower of right to reinstate after acceleration | Language referring to reinstatement and loan documents (using "may") adequately explained conditional right under mortgage ¶19 | Use of "may" rendered notice vague and failed to inform of unconditional rights | Held: "May" was permissible because reinstatement is conditional under mortgage ¶19; notice complied |
| Whether the notice properly informed borrower of right to assert defenses in foreclosure | Notice specifically referenced right to assert non-existence of default or other defenses and need not instruct procedural posture | Language suggested borrower must file a separate suit to assert defenses | Held: Notice sufficiently informed of right to assert defenses in the foreclosure; phrasing did not violate contractual requirement |
| Whether filing the complaint in the name of an entity that had been merged out of existence rendered the complaint a nullity (standing/capacity) | Bank: Merger meant the absorbed entity’s interests passed to Bank of America; naming was a curable capacity/pleading defect and was corrected by substitution | Stewart: Filing by a non-existent entity deprived the court of jurisdiction; substitution could not cure lack of standing per Schwartzwald | Held: Distinguishing standing from capacity, the court treated the naming as a nonjurisdictional capacity/legal-existence issue that can be waived/cured; substitution was proper and issue was waived when not timely raised |
Key Cases Cited
- Federal Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13 (Ohio 2012) (lack of standing at commencement cannot be cured post-filing and implicates jurisdiction)
- Acordia of Ohio, L.L.C. v. Fishel, 133 Ohio St.3d 356 (Ohio 2012) (merged/absorbed company’s rights and obligations may be treated as continuing in the surviving entity)
- Beaver Excavating v. Testa, 134 Ohio St.3d 565 (Ohio 2012) (distinguishing jurisdictional standing from nonjurisdictional capacity and waiver principles)
- Whitley v. River’s Bend Health Care, 183 Ohio App.3d 145 (Ohio Ct. App. 2009) (action filed by a guardian after ward’s death is a nullity; used by defendant to argue nonexistence of a plaintiff)