2019 Ohio 5301
Ohio Ct. App.2019Background
- PHH filed a third in-rem foreclosure against Denise and Robert Barker in 2015 (prior foreclosures in 2007 and 2011); the Barkers answered and asserted counterclaims for breach of contract, declaratory relief, and wrongful foreclosure.
- PHH moved for summary judgment; the trial court granted PHH summary judgment dismissing the Barkers’ counterclaims (Dec. 31, 2018) and entered a foreclosure decree (Jan. 29, 2019). The Barkers appealed seven assignments of error.
- Key factual points: the Barkers stopped tendering mortgage payments after February 2008; PHH sent a July 7, 2011 notice of intent to foreclose stating a reinstatement amount of $16,079.27 and requiring certified funds; the Barkers pursued HAMP and other modification attempts that failed.
- The Barkers contended PHH refused to provide an accurate reinstatement quote or an address to remit payments, included improper fees in the reinstatement amount, failed to mitigate damages, violated RESPA, and thus acted in bad faith (supporting wrongful foreclosure/declaratory relief and equitable defenses).
- The trial court rejected those claims, concluding PHH complied with the mortgage terms, the Barkers failed to tender payments or show PHH prevented performance, RESPA claims were waived/time-barred, Ohio does not recognize an independent wrongful-foreclosure tort, and equitable defenses failed.
Issues
| Issue | Plaintiff's Argument (PHH) | Defendant's Argument (Barkers) | Held |
|---|---|---|---|
| Whether PHH breached the mortgage/good-faith duty by refusing an address or accurate reinstatement quote | PHH complied with mortgage terms and provided required notice; no obligation to provide ongoing addresses beyond notice | PHH’s refusal to provide an address/accurate reinstatement quote prevented performance and breached contract/good faith | Court: Barkers failed to tender payments after 2008 and gave no evidence PHH prevented payment; mortgage terms govern reinstatement; no breach by PHH |
| Validity/accuracy of reinstatement amount (late fees, inspection fees) | PHH may include late charges and inspection fees consistent with mortgage and facts | Fees were improper or inflated and should be excluded from reinstatement amount | Court: PHH was entitled to include those sums; Barkers knew the lump-sum demand |
| Whether Barkers’ July 15, 2011 letter created a RESPA QWR and PHH’s duty to respond | PHH: RESPA claim was not pled timely and was waived; statute of limitations bars suit | Barkers: letter was a QWR under RESPA, entitling them to a statutory response | Court: RESPA argument waived and time-barred; no genuine issue created |
| Duty to mitigate damages | PHH took reasonable steps (written notices, loss-mitigation attempts) | PHH failed to mitigate by not providing payment address/quote and delaying action | Court: Barkers did not show PHH failed to use reasonable care; Barkers made no payment attempts and lived rent-free; mitigation defense fails |
| Wrongful foreclosure / declaratory relief for bad faith | PHH: no independent wrongful-foreclosure tort; conduct did not show bad faith | Barkers: PHH’s conduct nullifies note/mortgage and warrants declaratory relief | Court: Ohio does not recognize independent wrongful-foreclosure tort; no bad faith shown for declaratory relief |
| Equitable defenses (clean hands) and post-sale collection claims | PHH: foreclosure equitable given Barkers’ nonpayment and conduct | Barkers: PHH’s inequitable conduct (refusal to provide reinstatement info) bars foreclosure or later collection | Court: Barkers’ own inequitable/nonpayment conduct defeats clean-hands defense; confirmation-of-sale claims are not ripe |
Key Cases Cited
- Doe v. Shaffer, 90 Ohio St.3d 388 (2000) (summary-judgment appellate review is de novo)
- Lucarell v. Nationwide Mut. Ins. Co., 152 Ohio St.3d 453 (2018) (prevention-of-performance doctrine — a party that prevents performance cannot claim breach)
- Wilborn v. Bank One Corp., 121 Ohio St.3d 546 (2009) (no statutory right to reinstatement; contract terms control)
- Farmers State Bank v. Sponaugle, 157 Ohio St.3d 151 (2019) (foreclosure is two-stage: decree of foreclosure and confirmation of sale; distinct appeals)
- Blakemore v. Blakemore, 5 Ohio St.3d 217 (1983) (abuse-of-discretion standard for appellate review of equitable rulings)
- Mid-Am. Fire & Cas. Co. v. Heasley, 113 Ohio St.3d 133 (2007) (scope, purpose, and limits of declaratory-judgment relief)