Governors Place Condominium Owners Assn., Inc. v. Unknown Heirs of Polson
2017 Ohio 885
| Ohio Ct. App. | 2017Background
- Barbara J. Polson owned a Mentor, Ohio condominium; title allegedly vested in her daughters via a transfer-on-death deed before foreclosure proceedings.
- Governors Place Condominium Owners Association sued to foreclose a recorded condominium lien (second only to taxes/prior liens) on October 18, 2013.
- A foreclosure decree (Oct. 17, 2014) found Governors Place and the county treasurer had valid liens, entered default against other defendants, and set priority; no appeal was taken from that decree.
- The property sold at sheriff’s sale for $103,000 (Apr. 13, 2015); certain costs, taxes, and fees were distributed and remaining proceeds were held by the sheriff pending further order.
- Party substitutions occurred: MERS→U.S. Bank→Nationstar→U.S. Bank; after substitutions U.S. Bank obtained leave to answer but never filed a Civ.R. 60(B) motion or cross-claim; the clerk had released U.S. Bank’s mortgage pursuant to the foreclosure/confirmation orders.
- Trial court (June 3, 2016) ordered remaining sale proceeds paid to U.S. Bank based on an affidavit of indebtedness; the court of appeals reversed and remanded, concluding the order improperly modified the earlier final foreclosure decree and restitution is available.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court could distribute remaining sale proceeds to U.S. Bank after the confirmed sale when the foreclosure decree had not awarded U.S. Bank any interest | Governors Place: proceeds distribution should follow order of priority established; U.S. Bank had subordinated or no superior interest | U.S. Bank: it was the first lienholder and entitled to $76,313.61; affidavit establishes debt | Court: trial court erred — the June 3, 2016 order modified a final, appealable foreclosure decree without an appeal or Civ.R. 60(B) relief, so it could not distribute proceeds to U.S. Bank |
| Whether remedy remains available after sale and distribution (mootness/restitution) | Governors Place: distribution pursuant to decree confirmed; matter final | U.S. Bank: sought funds despite prior release of mortgage; argued entitlement to proceeds | Court: appeal not moot; satisfaction was involuntary and restitution is a viable remedy, so case remanded to return parties to status quo before the June 3, 2016 order |
Key Cases Cited
- CitiMortgage, Inc. v. Roznowski, 139 Ohio St.3d 299 (2014) (foreclosure decree fixes parties’ rights; confirmation sets damage amount and distributes funds)
- Conneaut Bldg. & Loan Co. v. Felch, 100 Ohio App. 52 (Ohio Ct. App. 1955) (a trial court has no discretion in distributing proceeds because they take the place of the sold property)
- Fed. Natl. Mtge. Assn. v. Day, 158 Ohio App.3d 349 (2004) (Civ.R. 60(B) is the exclusive means to vacate a final judgment)
- LaSalle Bank Natl. Assn. v. Murray, 179 Ohio App.3d 432 (2008) (R.C. 2329.45 can preserve restitution remedies after sheriff’s sale)
- Armstrong v. Marathon Oil Co., 32 Ohio St.3d 397 (1987) (on remand the trial court must proceed from the point where the error occurred)