Nationstar Mtge, L.L.C. v. Young
2015 Ohio 3868
Ohio Ct. App.2015Background
- Aurora Loan Services held the senior mortgage on 2625 Topflite Dr.; Charles and Gertraud Young held a recorded second mortgage (Jan 2007).
- Aurora initiated foreclosure (Feb 2007); owner Stephanie Young filed bankruptcy which stayed the foreclosure; Aurora later obtained relief and the property was sold by master commissioner without the Youngs being named as defendants.
- Aurora (as purchaser) assigned its winning bid to Nationstar Mortgage, LLC, which then filed an action to quiet title seeking to extinguish the Youngs’ second mortgage.
- Both parties moved for summary judgment; the trial court granted the Youngs’ motion, concluding res judicata barred Nationstar’s challenge to the Youngs’ lien, and denied Nationstar’s motion.
- Nationstar appealed, arguing the Youngs waived the affirmative defense of res judicata by failing to plead it; the appellate court reversed and remanded so the trial court can resolve whether res judicata was properly raised.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether res judicata is waived if not pleaded | Nationstar: Youngs waived res judicata by not pleading it in their answer | Youngs: res judicata may be raised in a motion for summary judgment or was effectively pleaded | Appellate court: Trial court did not address waiver question; remanded so trial court must apply Jim's Steak House and Freeman to the facts |
| Whether res judicata precludes Nationstar from disputing Youngs’ mortgage lien | Nationstar: bankruptcy/foreclosure proceedings do not have res judicata effect to extinguish Youngs’ lien | Youngs: prior proceedings bar Nationstar from relitigating validity of their lien | Not decided on appeal; court declined to reach because first issue unresolved |
Key Cases Cited
- Jim’s Steak House, Inc. v. Cleveland, 81 Ohio St.3d 18 (1998) (plurality: affirmative defenses other than Civ.R. 12(B) are waived if not raised in pleadings)
- State ex rel. Freeman v. Morris, 62 Ohio St.3d 107 (1991) (res judicata may be raised in a motion for summary judgment in appropriate procedural posture)