U.S. Bank, N.A. v. Schubert
2017 Ohio 7444
| Ohio Ct. App. | 2017Background
- In 2000 Dennis and Sue Schubert obtained a mortgage; they later defaulted after financial hardship and multiple bankruptcies. Ocwen began servicing the loan in 2004 and U.S. Bank became trustee for the mortgage-backed pool.
- A 2007 forbearance agreement was executed amid accounting disputes; a foreclosure by the previous trustee was filed and later dismissed based on the forbearance. The Schuberts thereafter sought a loan modification.
- In 2008 Ocwen and the Schuberts executed a loan modification reducing monthly payments and establishing a modified principal; the Schuberts paid under the modification until June 2010, then ceased payments.
- U.S. Bank filed a foreclosure in December 2010; the Schuberts counterclaimed for breach of contract, FDCPA and other torts, alleging accounting errors, breaches of forbearance/modification, and servicing misconduct.
- After a bench trial the trial court found the Schuberts in default on the modified note, awarded foreclosure to U.S. Bank, and denied the Schuberts’ counterclaims. Both sides appealed; this Court affirmed.
Issues
| Issue | Plaintiff's Argument (Schuberts) | Defendant's Argument (U.S. Bank/Ocwen) | Held |
|---|---|---|---|
| Amount due calculation | Trial court should account for alleged pre‑2008 accounting errors; U.S. Bank failed to prove correct balance | Amount due is measured from the agreed modified principal and post‑modification accounting; Schuberts offered no contrary evidence | Court: No manifest weight error; owed amount based on modification ($202,845.90) affirmed |
| Effect of forbearance waivers / judicial estoppel | Forbearance and waivers unenforceable; may challenge pre‑modification accounting and prior agreement | Schuberts previously relied on the forbearance to obtain dismissal; judicial estoppel bars inconsistent position; no proof of breach or damages | Court: Judicial estoppel applies; Schuberts failed to prove breach or damages; waivers enforceable |
| Mutual mistake / consideration defenses to modification | Mutual mistake (accounting errors) or prior breach excuses performance; thus modification unenforceable | Parties knowingly entered modification to reduce payments; consideration existed; accounting issues were known before signing | Court: Mutual mistake not proven by clear and convincing evidence; consideration adequate; defenses fail |
| Agency (Ocwen as agent of U.S. Bank) | Ocwen admitted to being attorney‑in‑fact/agent; U.S. Bank should be liable for Ocwen’s conduct | Even if agency existed, Schuberts suffered no damages from Ocwen’s conduct | Court: Did not reach merits because any error was harmless — Schuberts proved no damages |
| FDCPA applicability and claims | Foreclosure filing and servicing practices violate FDCPA; waivers do not bar FDCPA claims; U.S. Bank/Ocwen are debt collectors | FDCPA claims are time‑barred and complaint/inspections were proper; parties not subject to FDCPA as alleged | Court: FDCPA claims largely untimely; as to the 2010 complaint, no false or deceptive practices shown; claims denied |
| Statute of limitations for breach of contract | U.S. Bank/Ocwen argued 3‑year UCC limitations applies to breach of negotiable instrument | Schuberts argued 15‑year R.C. §2305.06 applies | Court: Issue raised by U.S. Bank/Ocwen was moot on appeal; declined to rule; assignment overruled |
Key Cases Cited
- Eastley v. Volkman, 132 Ohio St.3d 328 (2012) (standard for manifest‑weight review in civil cases)
- Reilley v. Richards, 69 Ohio St.3d 352 (1994) (doctrine of mutual mistake and rescission requirements)
- State ex rel. Motor Carrier Serv., Inc. v. Rankin, 135 Ohio St.3d 395 (2013) (doctrine of judicial estoppel defined)
- General Tire, Inc. v. Mehlfeldt, 118 Ohio App.3d 109 (1997) (burden and standard for proving mutual mistake)