2014 Ohio 3234
Ohio Ct. App.2014Background
- Third Federal loaned a $113,000 bridge loan to Formaniks secured by their Middleburg Heights home with a September 1, 2008 maturity and a remaining $65,000 balance at maturity.
- Lender continued sending interest-only statements after maturity and did not demand principal; appellants paid interest-only until February 2010 when Third Federal began rejecting payments.
- The bridge loan was reported as delinquent on Formanik’s credit report, hindering refinancing efforts.
- Formaniks were offered an extension or alternatives (conversion to a home equity loan or deed in lieu); lender finally offered a 90-day extension but did not remove the negative credit reporting.
- Foreclosure was filed on October 8, 2010; appellants answered and asserted counterclaims for breach of implied contract, bad faith/breach of good faith and fair dealing, mortgage flipping, and wrongful foreclosure; appellants later sold the property for $160,000 and used the proceeds to pay the loan; Third Federal dismissed foreclosure in January 2011, but counterclaims remained.
- Magistrate issued a September 28, 2012 decision adverse to appellants on the counterclaims, and in 2013 the trial court adopted the magistrate’s decision and entered judgment for Third Federal on the counterclaims; appellants sought relief from judgment under Civ.R. 60(B) alleging excusable neglect in filing supplemental objections and seeking to preserve appellate review; the trial court denied the Civ.R. 60(B) motion; the matter was appealed and remanded for consideration of the Civ.R. 60(B) motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Civ.R. 60(B) relief was proper for excusable neglect | Formaniks demonstrate excusable neglect | Third Federal argues no excusable neglect | Abuse of discretion; Civ.R. 60(B) relief granted |
| Whether counsel’s withdrawal prejudiced Formaniks’ right to object | Withdrawal did not prejudice due to 30-day extension for objections | Withdrawal could prejudice due process | No abuse; assignment overruled |
| Whether the subpoena for Third Federal’s collection department manual was properly quashed | Manual relevant to bad-faith/wrongful foreclosure | Subpoena overly vague and proprietary | No abuse; subpoena quash affirmed |
Key Cases Cited
- Kay v. Marc Glassman, Inc., 76 Ohio St.3d 18 (Ohio Supreme Court 1996) (excusable neglect standard for relief from judgment)
- Westgate Ford Truck Sales, Inc. v. Ford Motor Co., 2012-Ohio-1942 (Ohio App. 8th Dist. 2012) (modification of contract through course of dealing; oral modification possible despite writing when intent is mutual)
- FirstMerit Bank, N.A. v. Inks, 138 Ohio St.3d 384 (Ohio Supreme Court 2014) (modification of written agreement through course of performance)