CitiMortgage, Inc. v. Elrod
2017 Ohio 8442
Ohio Ct. App.2017Background
- CitiMortgage filed a foreclosure complaint alleging it was holder of the promissory note and mortgage securing a loan to Douglas and Kimberly Elrod and that the Elrods defaulted, owing $111,397.47 plus interest.
- CitiMortgage admitted it had been unable to obtain a formal assignment of the mortgage from the original lender, Integrity Mortgage Corporation, but asserted Integrity intended to assign its interests and CitiMortgage possessed the original endorsed note (by merger/endorsement chain).
- At bench trial CitiMortgage introduced: the original note with endorsements, the recorded mortgage, a loan modification, a borrower notice of servicing transfer, an August 5, 2013 default/acceleration notice mailed to the Elrods, and a payment history showing last payment June 4, 2013 and the balance claimed.
- The magistrate found CitiMortgage was the current holder of the note and mortgage, that required notice was sent, and that $111,397.47 plus interest was due; the trial court adopted the magistrate’s decision and entered foreclosure.
- Elrod appealed, arguing CitiMortgage lacked standing because no mortgage assignment was shown, that mandatory notice was not proved, and that CitiMortgage failed to substantiate the balance due and amounts sought.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose where note holder lacks a recorded mortgage assignment | CitiMortgage is the holder of the original endorsed note (possession) and so is a person entitled to enforce the note; negotiation of the note equitably assigns the mortgage | Elrod: no competent evidence of an actual assignment of the mortgage from Integrity to CitiMortgage, so CitiMortgage lacks standing to foreclose | Court: Holder of the note had standing; negotiation of the note operates as equitable assignment of the mortgage, so CitiMortgage could enforce the mortgage |
| Compliance with required pre-acceleration/foreclosure notice | CitiMortgage produced an August 5, 2013 first-class mailed notice meeting note and mortgage notice requirements (30 days) | Elrod: CitiMortgage failed to properly establish that the required notice was provided | Court: Notice letter and evidence of mailing satisfied the contractual notice requirements |
| Proof of amount due and payment history | CitiMortgage introduced its business records (payment history), authenticated by a qualified employee, showing last payment and the balance owed | Elrod: Witness lacked competence; records were not proper foundation | Court: Trial court did not abuse discretion admitting records under Evid. R. 803(6); records established balance by preponderance |
| Admissibility of business records foundation | Schneider, CitiMortgage analyst, testified about how records are created and maintained and that she accessed them in the ordinary course | Elrod: Schneider was not a true analyst and could not lay foundation | Court: Witness was sufficiently familiar; business-records exception applied and admission was proper |
Key Cases Cited
- Merrick v. Ditzler, 110 N.E. 493 (Ohio 1915) (preponderance standard in ordinary civil cases)
- Thompkins v. Ohio, 678 N.E.2d 541 (Ohio 1997) (definition of weight of the evidence)
- Eastley v. Volkman, 972 N.E.2d 517 (Ohio 2012) (manifest-weight review and presumption in favor of factfinder)
- U.S. Bank Natl. Assn. v. Marcino, 908 N.E.2d 1032 (Ohio App. 2009) (negotiation of note operates as equitable assignment of mortgage)
- Deutsche Bank Natl. Trust Co. v. Holden, 60 N.E.3d 1243 (Ohio 2016) (holder of mortgage may foreclose even if bankruptcy discharge affected note-maker)
- Peters v. Ohio State Lottery Comm., 587 N.E.2d 290 (Ohio 1992) (admissibility of business records under Evid. R. 803(6) rests in trial court discretion)