2019 Ohio 3042
Ohio Ct. App.2019Background
- Karlean Magby purchased a home in November 2006, made payments for ~6 months, then defaulted and made no further payments.
- The original lender was Countrywide Home Loans, doing business as (d.b.a.) America’s Wholesale Lender; Magby executed the note and mortgage in that name.
- Countrywide (d.b.a. America’s Wholesale Lender) assigned the note and mortgage to Bank of New York Mellon (Mellon), which filed this foreclosure action in June 2017; Mellon sought foreclosure but not a money judgment.
- Magby conceded indebtedness but argued the loan documents were unenforceable because America’s Wholesale Lender was a fictitious entity without capacity to lend.
- Magby also sought leave to amend to add a cross-claim against nonanswering defendants to disclaim their interest; the trial court denied leave and granted summary judgment and a decree of foreclosure for Mellon.
- On appeal, the court affirmed: Mellon had possession and standing; using a fictitious name did not invalidate the loan or assignment under the presented authorities; denial to amend was not an abuse of discretion; the court declined to address Magby’s statutory retroactivity argument further.
Issues
| Issue | Plaintiff's Argument (Mellon) | Defendant's Argument (Magby) | Held |
|---|---|---|---|
| Validity of note/mortgage because lender used a fictitious name | The d.b.a. use did not invalidate the note or mortgage; assignment to Mellon was valid | America’s Wholesale Lender was a fictitious entity and lacked capacity; documents unenforceable | Court: d.b.a. registration does not invalidate instruments; Magby failed to show Ohio law invalidates such use; foreclosure affirmed |
| Standing to foreclose via assignment/possession of note | Mellon had the note and mortgage and thus standing to foreclose | Assignment invalid if underlying lender lacked capacity to contract | Court: Mellon was in possession and assignment from Countrywide (d.b.a.) conferred standing; Magby’s challenge failed |
| Denial of leave to amend to add cross-claim against defaulting/nonanswering defendants | Leave to amend unnecessary because default resolved their interests; proposed cross-claim was duplicative | Magby sought to force appearances or disclaimers from those defendants | Court: Trial court did not abuse discretion; cross-claim would be duplicative given defaults |
| Retroactive application of R.C. 5301.07 to 2006 instruments | Mellon relied on statute as part of procedural posture | Magby argued statute could not be applied retroactively to invalidate defenses | Court: Declined to address the retroactivity issue because Magby failed to develop the argument on appeal |
Key Cases Cited
- Comer v. Risko, 106 Ohio St.3d 185 (Ohio 2005) (summary judgment standard under Civ.R. 56)
- Marusa v. Erie Ins. Co., 136 Ohio St.3d 118 (Ohio 2013) (summary judgment review and standard)
- Bank of Am., N.A. v. Nash, 200 So.3d 131 (Fla. 5th DCA 2016) (use of fictitious name does not invalidate note or mortgage)
- Bank of New York Mellon v. Henry, 198 A.3d 443 (Pa. Super. Ct. 2018) (same conclusion regarding capacity/assignment)