Smith v. Bank of Am.
2013 Ohio 4321
Ohio Ct. App.2013Background
- Appellants sought to refinance their home in 2004 to extract equity; ended up in a subprime adjustable-rate loan.
- Motion Financial (agent for Encore) prepared a loan application showing a 27% DTI with base and bonus income listed separately.
- Appraisals by Statewide Appraisal first valued home at $570,000, then $630,000 enabling cash-out; closing occurred March 2004.
- Appellants allege a bait-and-switch, misrepresentations, and predatory terms leading to a predatory ARM with a two-year fixed rate and adjustments every six months.
- Encore assigned the note and mortgage to LaSalle; appellants defaulted in 2005; foreclosure followed in 2007; appellate affirmance occurred in 2012.
- Appellants filed a federal suit in 2008; then filed this state action in 2009, amended in 2010, naming Bank of America, Chase, Encore.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdictional priority and relief claims live in same court | Jarvis controls; no bar to relief claims | Priority rule applies; relief claims barred | Error in applying rule; harmless due to other grounds |
| Res judicata bars claims arising from the loan/foreclosure | Claims not compulsory counterclaims; not barred | Claims arise from same transaction; must be raised in foreclosure | Claims barred by res judicata; dismissal affirmed |
Key Cases Cited
- Jarvis v. Wells Fargo Bank, 2010-Ohio-3283 (7th Dist. 2010) (jurisdiction not required where two complaints filed in same court; compulsory relation)
- State ex rel. Edwards v. Toledo City Sch. Dist. Bd. of Edn., 1995-Ohio-? (Ohio Supreme Court 1995) (sua sponte dismissal for failure to state a claim permissible)
- Grava v. Parkman Twp., 73 Ohio St.3d 379 (Ohio 1995) (res judicata bars subsequent actions arising from same transaction)
- Rettig Enter. v. Koehler, 68 Ohio St.3d 274 (Ohio 1994) (all claims arising from same transaction must be litigated in single suit)
- Forney v. Climbing Higher Ents., Inc., 158 Ohio App.3d 338 (Ohio App.3d 2004) (compulsory counterclaims under Civ.R. 13(A) bar later suits)
- Quintus v. McClure, 41 Ohio App.3d 402 (Ohio App.3d 1987) (failure to assert compulsory counterclaims is barred later)