Bank of New York Melon Corp. v. Erickson
2017 Ohio 599
| Ohio Ct. App. | 2017Background
- In 2005 Erickson executed an adjustable-rate note for $225,000 and a mortgage recorded with MERS; the note was endorsed in blank.
- Erickson defaulted by missing payments beginning May 1, 2008 and later obtained a Chapter 7 discharge in 2010 (bankruptcy did not prevent foreclosure on the property).
- The original note could not be located; a prior Bank of New York iteration had acquired possession of the note before November 16, 2009.
- The loan servicer sent Erickson a written notice of default on April 16, 2014 requiring payment by May 21, 2014; Erickson did not cure and Bank of New York accelerated the loan.
- Bank of New York filed a foreclosure complaint January 28, 2015 and attached an Affidavit of Lost Note; Erickson moved for summary judgment arguing the statute of limitations and inadequacy of the lost-note affidavit.
- Trial court granted plaintiff’s summary judgment; Erickson appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether R.C. 1303.16(A) six-year limitations period barred the foreclosure action | Limitations did not start until Bank provided written acceleration/notice in April 2014, so action was timely | Statute began to run at borrower’s initial default (2008), so action filed in 2015 was time-barred | Court held limitations began on acceleration, not initial missed payment; here acceleration occurred in 2014, so suit was timely |
| Whether the Affidavit of Lost Note satisfied R.C. 1303.38 to permit enforcement without the original note | Affidavit and supporting business records show prior possession, lost note procedures followed, and reasonable diligence to locate the note — sufficient to enforce | Affidavit failed to prove Bank was in possession and entitled to enforce when loss occurred, so enforcement improper | Court held affidavit and attached records sufficiently established entitlement to enforce the lost note; burden then shifted to defendant, who produced no contrary Civ.R. 56 evidence |
Key Cases Cited
- Vahila v. Hall, 77 Ohio St.3d 421 (1997) (summary judgment inappropriate where genuine dispute of material fact exists)
- Dresher v. Burt, 75 Ohio St.3d 280 (1996) (party moving for summary judgment bears initial burden to show absence of genuine issue)
- Mitseff v. Wheeler, 38 Ohio St.3d 112 (1988) (nonmoving party must set forth specific facts showing triable issue)
- Bank of New York Mellon v. DePizzo, 42 N.E.3d 1218 (Ohio Ct. App.) (discussing R.C. 1303.16 and enforcement of notes)