JP Morgan Chase Bank, NA v. Ackerman
2013 Ohio 5010
Ohio Ct. App.2013Background
- In 2001 Frederic and Jill Ackerman executed a Home Equity Line of Credit note and open-end mortgage in favor of Bank One, N.A.; mortgage was recorded in September 2001.
- Bank One merged into JP Morgan Chase Bank, N.A. in 2004; Chase claims it acquired Bank One’s loan files by merger and retained the original note and mortgage.
- Chase (as successor) filed a foreclosure complaint on February 23, 2011; defendants answered and a bench trial occurred in October 2012.
- Chase produced the original note and mortgage at trial and presented testimony that the documents had been in Chase’s possession since the 2004 merger.
- Defendants testified that branch personnel told them to stop payments (end of 2009/early 2010) to pursue a modification; they ceased regular payments in 2010 and stopped paying entirely after July 2010.
- Trial court entered a foreclosure decree on January 23, 2013; defendants appealed raising (1) lack of standing and (2) inducement to default.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chase had standing to file foreclosure (holder of note at time of filing). | Chase argued it became holder/real party in interest by virtue of the 2004 merger and possessed the original note and mortgage when suit was filed. | Ackerman argued Chase did not establish it was the holder at the time the complaint was filed and thus lacked standing. | Court held Chase had standing: merger evidence and witness testimony showed Chase held the original note and mortgage when suit was filed. |
| Whether Chase induced defendants to default to obtain a loan modification (defense to foreclosure). | Chase argued it only explained modification requirements and sent default/acceleration letters; there was no evidence of inducement and defendants did not apply for loss mitigation. | Ackerman argued branch employees told them to stop payments so a modification could be obtained, effectively inducing default. | Court held there was no evidence Chase induced default; statements at branch, even if made, did not establish inducement and defendants did not pursue mitigation. |
Key Cases Cited
- Federal Home Loan Mortgage Corp. v. Schwartzwald, 979 N.E.2d 1214 (Ohio 2012) (a plaintiff must have standing at the time the foreclosure complaint is filed; subsequent assignment does not cure lack of standing)
- Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (1998) (standing is an essential element of subject-matter jurisdiction)