Huntington Natl. Bank v. Prospect Park, L.L.C.
2011 Ohio 5391
Ohio Ct. App.2011Background
- Prospect Park LLC faced foreclosure on 4614 Prospect Ave., Cleveland, after Huntington and others held notes secured by mortgage.
- Prospect Park executed a cognovit promissory note for $1,700,000 and a cognovit guaranty by Snider and Cannata.
- The mortgage contract allowed the lender, after default, to appoint a receiver without notice to mortgagor.
- Huntington moved for appointment of a receiver; SCPM proposed as receiver, citing management familiarity and financial reporting.
- Trial court granted the receiver appointment on November 23, 2010, prompting Prospect Park to appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appointment of a receiver required clear and convincing evidence | Huntington—clear and convincing evidence supports appointment | Prospect Park—evidence insufficient or improper | Appointment supported by clear and convincing evidence |
| Whether an evidentiary hearing was required | Huntington contends no hearing required given consent/consent to appointment | Prospect Park requested hearing to challenge necessity | No mandatory evidentiary hearing required |
| Whether the mortgage waiver of notice affected the decision | Huntington—waiver valid, permits appointment without notice | Prospect Park—waiver should not bypass due process | Waiver valid; appointment permissible under mortgage terms |
| Whether appointment was necessary to preserve plaintiffs' rights | Huntington—receivership needed to preserve collateral | Prospect Park—no preservation risk shown | Appointment appropriate to preserve rights |
| Whether due process concerns invalidated the appointment | Huntington—no due process violation given notice defenses waived | Prospect Park—due process rights implicated by non-notice | No due process violation found |
Key Cases Cited
- Malloy v. Malloy Color Lab, Inc., 63 Ohio App.3d 434 (1989) (recognizes an extraordinary remedy; clear and convincing standard applies to appointment of a receiver)
- Metro. Life Ins. Co. v. Triskett Illinois, Inc., 97 Ohio App.3d 228 (1994) (waiver of statutory notice by mortgage provision possible)
- Mfrs. Life Ins. Co. v. Patterson, 51 Ohio App.3d 99 (1988) (discussion of statutory requirements and waivers in mortgage context)
- Harajli Mgt. & Invest., Inc. v. A&M Invest. Strategies, Inc., 855 N.E.2d 1262 (2006) (waivers and receivership concepts in mortgage context (Ohio))