Bank of N.Y. Mellon v. Broyles
128 N.E.3d 719
Oh. Ct. App. 7th Dist. Mahonin...2018Background
- In 2005 the Broyles purchased 164 Griswold Dr., Youngstown, and executed a $142,500 promissory note to Countrywide secured by a mortgage recorded in Mahoning County.
- The note was indorsed in blank and the loan changed servicers/holders over time (Countrywide → BOA → Green Tree → Ditech; Bank of New York Mellon ultimately possessed the note; Ditech serviced the loan).
- Bank of New York Mellon sued the Broyles for foreclosure and for collection on the promissory note after alleged payment defaults; the matter proceeded to a bench trial.
- Ditech’s foreclosure-mediation specialist testified that Ditech possessed the original note and that the mortgage was assigned to plaintiff; Broyles testified concerning loan-modification communications and introduced documents about trusts and DOJ/consent decrees.
- The trial court entered judgment for plaintiff for principal, interest, and costs and denied Broyles’ motion to compel discovery for trust/PSA materials; the Broyles appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of servicer business records (Evid.R. 803(6)) | Records and testimony from Ditech are business records kept in regular course and sufficiently trustworthy | Records originating from BOA/Green Tree are untrustworthy due to class actions/consent decrees | Court admitted records; no abuse of discretion — trustworthiness challenge failed |
| Standing/ability to enforce note | Plaintiff is bearer of note (note indorsed in blank) and thus can enforce it | Plaintiff only proved possession, not holder status or full rights | Court held possession of a blank-indorsed note makes plaintiff the bearer with enforcement rights; judgment stands |
| Fraud defense re: internal loan modifications and HAMP | Broyles: internal mods were obtained by fraud because they were wrongfully denied HAMP; damages should exclude amounts from those mods | Plaintiff: borrower lacks standing to enforce HAMP-based claims absent contract incorporation | Court held Broyles lacked standing to assert HAMP-based defense; fraud claim failed |
| Discovery re: trust, pooling & servicing agreement, REMIC elections | Broyles sought PSA, prospectus, and related documents to show transfer violations and voiding of plaintiff’s possession | Plaintiff resisted as irrelevant to borrower’s obligations; transfers to trusts don’t change borrower’s note/mortgage obligations | Court denied motion to compel; borrowers lack standing to challenge transfer compliance and denial was not an abuse of discretion |
Key Cases Cited
- State ex rel. Sartini v. Yost, 96 Ohio St.3d 37 (2002) (abuse-of-discretion standard for evidentiary rulings)
- State v. Herring, 94 Ohio St.3d 246 (2002) (definition of abuse of discretion)
- C.E. Morris Co. v. Foley Constr. Co., 54 Ohio St.2d 279 (1978) (bench-trial factual findings supported if there is competent, credible evidence)
- Seasons Coal Co. v. Cleveland, 10 Ohio St.3d 77 (1984) (standard for appellate review of bench-trial findings)
- Burr v. Board of County Com'rs of Stark County, 23 Ohio St.3d 69 (1986) (elements of common-law fraud)