Bank of Am., N.A. v. Pasqualone
2013 Ohio 5795
Ohio Ct. App.2013Background
- Bank of America filed foreclosure on appellant’s property, alleging default on a note/mortgage and transferral of enforcement rights to Bank of America via an assignment of mortgage.
- Mortgage identified MERS as nominee for lender; assignment of mortgage to appellee occurred March 6, 2012, before filing the foreclosure complaint.
- Complaint filed April 24, 2012; plaintiff sought judgment for unpaid balance and foreclosure; service by ordinary mail occurred after failed certified mail service.
- Default judgment entered August 10, 2012; sheriff’s sale conducted December 7, 2012 with appellee submitting highest bid; appellant appeared the same day seeking Civ.R. 60(B) relief from judgment.
- Trial court denied Civ.R. 60(B) relief and stay; on appeal, issues focused on standing and whether appellee was the person entitled to enforce the note under UCC Article 3 (R.C. Chapter 1303).
- Appellee’s sheriff’s sale was confirmed January 9, 2013; appellant sought further stays, bond issues, and challenged standing; ultimately, the court denied relief and affirmed the foreclosure judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Role and authority of MERS in the mortgage | MERS acted as nominee for lender; mortgage assignment to appellee valid under the mortgage documents. | MERS's involvement and authority invalidate the assignment and standing to sue. | Not dispositive; court rejected these arguments for standing and held assignment equitable; MERS role analyzed but not fatal to standing. |
| Whether appellee had standing to foreclose and enforce the note | Appellee possessed the note via indorsements and is holder and person entitled to enforce under UCC 1303. | Standing requires ownership of both note and mortgage; MERS assignment may not prove enforceability. | Appellee was the holder and person entitled to enforce the note; standing satisfied under R.C. 1303.31(A)(1). |
| Whether note and mortgage were improperly separated or severed | Note and mortgage are tied; equitable assignment occurs upon negotiation of the note; mortgage follows. | Separation of note and mortgage undermines enforceability of the mortgage. | Note and mortgage not severed; equitable assignment via indorsement to appellee suffices to transfer mortgage rights as to enforceability. |
| Whether the sheriff’s sale could be confirmed before ruling on Civ.R. 60(B) motion | 60(B) denial does not stay sale; sale should proceed and can be ratified. | Sale should have been stayed pending 60(B) ruling. | moot to the extent of subsequent rulings; court affirmed foreclosure and denied stay as moot. |
| Whether trial court abused itself by not granting extended stay for supersedeas bond | Bond proceedings complied; bond amount set; stay requested but conditions not met by appellant. | Additional time should have been granted to post bond and stay eviction. | moot; court declined to find abuse of discretion given failure to post bond and eviction timing. |
Key Cases Cited
- Schwartzwald v. Bank, 134 Ohio St.3d 13 (2012) (standing to foreclose; lack of standing requires dismissal if argued at filing)
- Veal, In re, 450 B.R. 897 (9th Cir. 2011) (holder vs owner; person entitled to enforce; payment to holder discharges obligation)
- Gray, U.S. Bank Natl. Assn. v., 2013-Ohio-3340 (10th Dist.) (note secured by mortgage negotiable; equitable assignment when note is transferred)
- Dobbs, Bank of New York, 2009-Ohio-4742 (5th Dist.) (assignment of mortgage and note alignment; notes and mortgages linked)
- Vascik, Mtge. Electronic Registration Sys., Inc. v., 2010-Ohio-4707 (6th Dist.) (MERS as nominee; relationship between mortgage and note; assignment intent)
- Mitchell, U.S. Bank Natl. Assn. v., 2012-Ohio-3732 (6th Dist.) (owner vs entitled to enforce; pleading need not assert ownership of note)