Morgan Stanley Credit Corp. v. Fillinger
2012 Ohio 4295
Ohio Ct. App.2012Background
- Fillinger purchased a home in 2003 and signed a promissory note to Greenpoint; MERS was listed as Greenpoint’s nominee and held the note’s title and lender rights.
- In 2008, an endorsement from MERS transferred the note from Greenpoint to Morgan Stanley, after Fillinger had already defaulted.
- Morgan Stanley accelerated the loan and sought to foreclose in 2010, asserting it held the note and that Fillinger’s discharge in bankruptcy precluded personal liability.
- Fillinger asserted several defenses: Morgan Stanley was not the holder of the note, improper notice of default, improper signature on the assignment, and fraud claims against multiple third parties (MERS, Greenpoint, Lender Processing Services, Redwood Trust, Mitchell, Loots).
- During discovery, Loots’ deposition was quashed by the trial court in 2011; Greenpoint and MERS moved to dismiss fraud claims and several other parties were dismissed or not brought to trial.
- In January 2012 the magistrate granted summary judgment for Morgan Stanley and MERS on foreclosure and fraud claims; the trial court adopted the magistrate’s decision in March 2012, leading to an appeal focused on timely objections and assigned errors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the foreclosure summary judgment was proper | Fillinger argues genuine issues of material fact exist | Morgan Stanley/MERS contend no triable issues remain | Foreclosure summary judgment affirmed |
| Whether Fillinger waived objections by not timely appealing | Fillinger contends timely objections were made | Appellees assert waiver except for plain error | Waiver; plain-error review only; no plain error found |
| Whether fraud claims against Greenpoint and Mitchell were properly dismissed | Fraud elements alleged; justifiable reliance by Fillinger exists | Lack of reliance by Fillinger; failure to plead elements | Dismissals upheld |
| Whether Redwood Trust’s third-party claim was properly dismissed as marshalling of liens | Redwood claim should be considered in foreclosure | Marshalling claim cannot stand independently without foreclosure | Dismissal affirmed |
| Whether Loots’ deposition notice was properly quashed | Loots should be deposed as a needed witness | Loots was not a party; deposition must be by subpoena | Quash affirmed |
Key Cases Cited
- Third Wing Inc. v. Columbia Cas. Co., 8th Dist. No. 96450, 2011-Ohio-4827 (2011) (magistrate order not final where not ministerial task; need total finality)
- Greeley v. Miami Valley Maintenance Contrs. Inc., 49 Ohio St.3d 228, 551 N.E.2d 981 (1990) (Civ.R. 12(B)(6) standard; de novo review; accept facts as pleaded)
- NorthPoint Props. v. Petticord, 179 Ohio App.3d 342, 2008-Ohio-5996, 901 N.E.2d 869 (8th Dist. 2008) (de novo review for failure to state a claim)
- Byrd v. Faber, 57 Ohio St.3d 56, 565 N.E.2d 584 (1991) (de novo standard for reviewing motions to dismiss)
- Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 462 N.E.2d 407 (1984) (elements of fraud required for action)
- Westfield Ins. Co. v. HULS Am., Inc., 128 Ohio App.3d 270, 714 N.E.2d 934 (10th Dist.1998) (fraud requires justifiable reliance and causation)
- Urbank v. All State Mortgage Co., 178 Ohio App.3d 493, 898 N.E.2d 1015 (8th Dist.2008) (reliance element in fraud claim; privity not required)
- Zukerman, Daiker & Lear Co., L.P.A. v. Julie Luft Signer, 186 Ohio App.3d 686, 930 N.E.2d 336 (8th Dist.2009) (marshalling of liens in foreclosure context)