HSBC Bank USA, Natl. Assn. v. Surrarrer
2013 Ohio 5594
Ohio Ct. App.2013Background
- Surrarrers purchased their home in 2002 with a mortgage from Delta Funding Corp. applied to two adjacent lots.
- Mortgage assignments occurred from Delta Funding to Key Bank (recorded 2003) and later to the Trust for HSBC as Trustee (2006), with Wells Fargo serving as loan servicer.
- Wells Fargo advanced funds for forced-placed insurance and past due real estate taxes and set up an escrow balance.
- In 2009, the Surrarrers executed a modification with Wells Fargo; later, Wells Fargo transferred servicing to HSBC.
- HSBC filed a foreclosure action in 2011 after a 2010 default; the Surrarrers counterclaimed for breach of contract, fraud, promissory estoppel, and standing, which the trial court partially dismissed before summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose based on assignment and note | HSBC has recorded assignments showing its interest and is the real party in interest. | No power of attorney or trust documents were recorded to validate the assignments; challenges to validity should be allowed. | HSBC has standing to foreclose; challenged assignments do not defeat standing. |
| Enforceability of the note by HSBC as nonholder in possession | HSBC is entitled to enforce the note as holder or through rights arising from the assignments. | There is no endorsement of the note; HSBC cannot enforce as a holder or nonholder with rights of a holder without clear evidence. | Material facts exist as to enforceability; summary judgment on enforcement rights was improper. |
| Summary judgment on breach of contract claims | HSBC complied with loan terms and misapplications of payments are inaccurate; breach proven. | Surrarrers allege misapplied payments and penalties; genuine issues of fact exist. | Court upheld summary judgment in favor of HSBC on breach of contract claims. |
Key Cases Cited
- Deutsche Bank Natl. Trust Co. v. Rudolph, 2012-Ohio-6141 (8th Dist. Cuyahoga No. 98383) (standing; mortgage assignments; real party in interest)
- Dresher v. Burt, 75 Ohio St.3d 280 (1996) (summary judgment standard; Dresher rule)
- Wells Fargo Bank, N.A. v. Stovall, 2010-Ohio-236 (8th Dist. Cuyahoga No. 91802) (standing to foreclose; chain of title)
- CitiMortgage, Inc. v. Patterson, 2012-Ohio-5894 (8th Dist. Cuyahoga No. 98360) (holder vs. identified payee; enforcement)
- Bank of New York Mellon Trust Co. v. Unger, 2012-Ohio-1950 (8th Dist. Cuyahoga No. 97315) (standing; assignment validity)
- Freed v. Wells Fargo, 2012-Ohio-5941 (3d Dist. Hancock No. 5-12-01) (nonholder in possession with rights of a holder)
- Deutsche Bank Trust Co. v. Newble, 2013-Ohio-5019 (8th Dist. Cuyahoga No. 99372) (standing to enforce; assignment challenges)