Blue Durham Properties, L.L.C. v. Krantz
2017 Ohio 8230
| Ohio Ct. App. | 2017Background
- In 2007 Marc and Stacey Krantz executed two cognovit notes for $100,000 each in favor of Blue Durham; each note contained a warrant of attorney to confess judgment.
- Blue Durham confessed judgment after default and obtained a $284,208 judgment; the Krantzes paid in full in March 2009 and the case was dismissed.
- In 2012 the Krantzes (via attorney Stephen Hanudel) filed a Civ.R. 60(B) motion asserting the judgments were void because the notes were consumer loans; the trial court denied relief and this court affirmed.
- In 2016 the Krantzes filed a second Civ.R. 60(B) motion claiming Blue Durham never produced the original warrants of attorney when confessing judgment, so the judgments lacked subject-matter jurisdiction.
- Blue Durham warned Hanudel the claim was factually and legally baseless and sought sanctions; Hanudel nevertheless demanded payment to withdraw and did not investigate whether originals had been produced at the ex parte confession.
- The trial court summarily denied relief, found the second motion frivolous under Civ.R. 11 and R.C. 2323.51, and awarded sanctions of $6,743.76 jointly and severally against the Krantzes and Hanudel. This appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred in denying the second Civ.R. 60(B) motion asserting the judgments were void for lack of subject-matter jurisdiction because originals of the warrants of attorney were not filed | Blue Durham: R.C. 2323.13 does not require filing originals; producing the originals at the time of confession suffices, so judgment was valid | Krantz: Absence of originals in the court file (digital copy) shows originals were never produced, so judgments are void and subject to collateral attack | Court: Affirmed — no evidence originals were not produced at confession; R.C. 2323.13 requires production to the court at confession but not filing originals; appellants failed to prove lack of jurisdiction |
| Whether sanctions under Civ.R. 11 and R.C. 2323.51 were improper because appellants had a good-faith basis | Blue Durham: Motion was frivolous; Hanudel failed to investigate and persisted after notice; sanctions appropriate to compensate and deter | Krantz/Hanudel: Good-faith basis based on record copies showing only copies; unfamiliarity with local court processing | Court: Affirmed — counsel failed to investigate law/facts; claims were not warranted under existing law and lacked evidentiary support; sanctions not an abuse of discretion |
Key Cases Cited
- GTE Automatic Elec., Inc. v. ARC Indus., 351 N.E.2d 113 (Ohio 1976) (establishes three-part Civ.R. 60(B) test and abuse-of-discretion review)
- Rose Chevrolet, Inc. v. Adams, 520 N.E.2d 564 (Ohio 1988) (requiring all three GTE elements conjunctively)
- Lathrem v. Foreman, 151 N.E.2d 905 (Ohio 1958) (judgment by confession void if original warrant of attorney is lost and cannot be produced)
- Lingo v. State, 7 N.E.3d 1188 (Ohio 2014) (judgments rendered without jurisdiction are void and open to collateral attack)
- Bank of Am., N.A. v. Kuchta, 21 N.E.3d 1040 (Ohio 2014) (void judgments not barred by res judicata)
- Brown v. Akron Beacon Journal Publ'g Co., 610 N.E.2d 507 (Ohio Ct. App. 1991) (attorneys must know local rules and procedures)