Merchants Bank & Trust Co. v. Five Star Financial Corp.
195 Ohio App. 3d 42
| Ohio Ct. App. | 2011Background
- Five Star executed a $2,000,000 credit line note secured by a guaranty; the note and guaranty contain Ohio choice-of-law and warrant-of-attorney provisions.
- Merchants Bank filed suit for default; based on warrants of attorney, Five Star and Winter confessed judgment for $1,458,279.95 plus interest, costs, late charges, and fees.
- The cognovit judgment was entered by the trial court in 2008; post-judgment motions to vacate were filed by Five Star and Winter through 2009.
- Five Star and Winter argued the cognovit judgment was facially invalid because ledgers and records determining the amount were not submitted before entry; they also challenged personal jurisdiction and sought relief under Civ.R. 60(B).
- The trial court denied the motions; the Court of Appeals upheld, affirming the cognovit judgment and rejection of the challenges.
- Key issue on appeal: whether the amount owed could be determined from the note and guaranty (not facially insufficient), whether personal jurisdiction and forum provisions were satisfied, and whether 60(B) relief was properly denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the cognovit note is facially insufficient. | Five Star/Winter: amount due relies on extrinsic ledgers/records. | Merchants Bank: warrant of attorney and note suffice to show amount due. | Not facially insufficient; amount due validly shown by note and guaranty. |
| Whether ledgers/records needed to be submitted before judgment. | Ledgers must be produced to support the amount due. | Warrants and the note itself establish the amount; extrinsic records not required pre-judgment. | Ledgers not required pre-judgment; amount then due shown by instrument. |
| Whether the trial court had personal jurisdiction over Five Star and Winter. | Forum-selection/venue clause governs; personal jurisdiction is contested. | Waivers and consent to jurisdiction, plus Ohio-law governs; waiver of service allowed confession. | Personal jurisdiction properly exercised; waivers and Ohio-law controls. |
| Whether Civ.R. 60(B) relief from the cognovit judgment was properly denied. | Meritorious defenses exist; relief should be granted timely. | No meritorious defense proven; timely motion filed; court did not abuse discretion. | No abuse of discretion; relief denied. |
Key Cases Cited
- Onda, LaBuhn, Rankin & Boggs Co., L.P.A. v. Johnson, 184 Ohio App.3d 296 (2009-Ohio-4726) (cognovit judgment context—extrinsic documents may determine amount due)
- Bank One, N.A. v. DeVillers, 2002-Ohio-5079 (10th Dist.) (pre-judgment submission of amount evidencing affidavit)
- BJ Bldg. Co., L.L.C. v. LBJ Linden Co., L.L.C., 2005-Ohio-6825 (2d Dist.) (cognovit note and confession informed court of indebtedness)
- Collins v. Collins, 2006-Ohio-181 (5th Dist.) (consent to jurisdiction by appearance or waiver)
- Overmyer Co. v. Frick Co., 405 U.S. 174 (Supreme Court) (foundational understanding of cognovit/confession of judgment)