Federal Home Loan Mortgage Corp. v. Schwartzwald
134 Ohio St. 3d 13
| Ohio | 2012Background
- Schwartzwalds bought a home in Xenia (2006) with a Legacy Mortgage loan; Federal Home Loan Mortgage Corporation sued for foreclosure in 2009 before obtaining an assignment of the note/mortgage.
- Complaint attached mortgage but not the note; initial note copy later provided with a blank Wells Fargo endorsement.
- Wells Fargo assigned the note and mortgage to Federal Home Loan in May 2009; a subsequent mortgage assignment from Legacy to Wells Fargo (2006) was filed later.
- Trial court granted summary judgment; appellate court held Federal Home Loan’s later assignment cured lack of standing before judgment.
- Ohio Supreme Court reversed, holding standing must exist at filing to invoke jurisdiction and Civ.R. 17(A) cannot cure lack of standing after filing; action must be dismissed without prejudice.
- Result: judgment reversed and cause dismissed for lack of standing at commencement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lack of standing at filing can be cured by later assignment before judgment | Schwartzwalds: standing determined at filing; post-filing assignment cannot cure | Federal Home Loan: Civ.R. 17(A) allows cure via assignment | No; standing fixed at filing, cannot be cured by post-filing assignment. |
| Whether Civ.R. 17(A) permits substitution to cure lack of standing in foreclosure actions | § Civ.R. 17(A) should allow substitution to cure lack of standing | Rule does not remedy lack of standing at outset | Civ.R. 17(A) cannot cure standing defects; substitution not allowed to create standing. |
Key Cases Cited
- Kincaid v. Erie Ins. Co., 128 Ohio St.3d 322 (2010-Ohio-6036) (standing determined at filing; injury must exist then)
- Shealy v. Campbell, 20 Ohio St.3d 23 (1985) (real party in interest rule; Civ.R. 17(A) aids joinder, not standing)
- Lincoln Property Co. v. Roche, 546 U.S. 81 (2005) (real-party-in-interest concerns only proper joinder; not standing)
- State ex rel. Jones v. Suster, 84 Ohio St.3d 70 (1998) (real-party-in-interest rule; Civ.R. 17-A not a standing remedy)