2014 Ohio 3091
Ohio Ct. App.2014Background
- In Sept. 2008 Steven Wise, James Lyons and Judy Lyons signed a promissory note to United Wholesale Mortgage; the note was indorsed in blank and Bank of America (BofA) possessed it when suit was filed.
- Ricki Wise, James Lyons and Judy Lyons executed the mortgage in favor of MERS; MERS assigned the mortgage to BofA in Aug. 2011.
- BofA filed a foreclosure complaint Aug. 30, 2010, after defendants defaulted; Ricki Wise was previously dismissed as to her dower interest after summary judgment.
- BofA moved for summary judgment against the remaining defendants, submitting the indorsed-in-blank note, the mortgage, the assignment and an affidavit of possession and outstanding balance.
- Defendants opposed, raising (for the first time on appeal) that BofA was not a holder in due course, and also argued defective notice/acceleration and that BofA assumed risk by acquiring an already-defaulted loan.
- The trial court granted summary judgment for BofA; the appellate court affirmed, holding defendants failed to raise certain defenses properly and that BofA was entitled to judgment as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing/Right to enforce the note | BofA is holder of the note (note indorsed in blank) and assignee of the mortgage; thus entitled to enforce | BofA was not a holder in due course and lacked enforceable rights | Held for BofA: note indorsed in blank made it bearer paper and BofA, in possession, was a person entitled to enforce the instrument |
| Conditions precedent / notice of acceleration | Complaint averred all conditions precedent were satisfied; shift burden to defendants | Defendants argued BofA failed to properly accelerate/notify before foreclosure | Held for BofA: defendants failed to specifically deny performance under Civ.R. 9(C), so compliance was deemed admitted |
| Assumption-of-risk defense | N/A (BofA relied on documentary proof of debt and possession) | Defendants argued BofA assumed risk by acquiring a defaulted loan | Held for BofA: assumption-of-risk is not a recognized defense in foreclosure actions and defendants cited no authority |
| Summary judgment standard | BofA submitted evidentiary materials showing no genuine issue of material fact and entitlement to judgment | Defendants claimed genuine issues existed that precluded summary judgment | Held for BofA: appellate de novo review found no genuine issue of material fact; summary judgment affirmed |
Key Cases Cited
- Smiddy v. The Wedding Party, Inc., 30 Ohio St.3d 35 (standard of appellate de novo review of summary judgment)
- Murphy v. Reynoldsburg, 65 Ohio St.3d 356 (cautionary principle on awarding summary judgment)
- Vahila v. Hall, 77 Ohio St.3d 421 (movant's burden and Dresher framework for summary judgment)
- Dresher v. Burt, 75 Ohio St.3d 280 (party opposing summary judgment must set forth specific facts showing genuine issues)