2023 Ohio 1940
Ohio Ct. App.2023Background
- 2004: Ronald and Nancy Smith executed a mortgage and the note was assigned to the Bear Stearns Asset Backed Securities I Trust 2004-HE5 with LaSalle Bank, N.A. named as trustee.
- 2005–2007: Trust sued in foreclosure; trial court entered a foreclosure decree in January 2007 in favor of LaSalle as trustee (Smiths did not appeal the foreclosure decree).
- Post-2007 transfers and corporate changes: LaSalle merged into Bank of America in 2007; U.S. Bank later became successor trustee to Bank of America (U.S. Bank appeared as trustee in 2016).
- 2020: Sheriff’s sale and a Confirmation/Distribution order issued April 29, 2020 distributing sale proceeds to the trust by way of U.S. Bank (successor trustee).
- Smiths filed an initial Civ.R. 60(B) motion after the confirmation order (denied; affirmed on appeal). They then filed a second Civ.R. 60(B) motion in 2022 asserting fraud and that U.S. Bank was not the trustee named in the foreclosure decree; the trial court summarily overruled it and Smiths appealed.
Issues
| Issue | Plaintiff's Argument (U.S. Bank/Trust) | Defendant's Argument (Smiths) | Held |
|---|---|---|---|
| Whether the Smiths’ second Civ.R. 60(B) motion is procedurally barred by res judicata | The second 60(B) raises arguments that could have been advanced in the first 60(B); successive motion is barred | The Governors-type argument is new and arises from a misstatement in earlier appellate disposition and the trial court denied adequate time for response | Second 60(B) is procedurally barred by res judicata because Smiths could have raised the issue earlier |
| Whether the trial court erred by distributing proceeds to U.S. Bank when the foreclosure decree named LaSalle as trustee | The trust (as owner of the note/mortgage) remained the real party in interest and U.S. Bank as successor trustee can receive proceeds without a separate 60(B) to amend the foreclosure decree | U.S. Bank was not the trustee named in the foreclosure decree; under Governors, a non-party must move under 60(B) to establish interest before receiving proceeds | Court distinguished Governors and held distribution to the trust via U.S. Bank was proper because the trust’s ownership remained unchanged and U.S. Bank acted as successor trustee |
| Timeliness / tolling of Civ.R. 60(B) claim | Motion was untimely and could have been raised earlier after confirmation order | Tolling (due to prior litigation/bankruptcy, and denial of time to respond) makes the motion timely | Court found the argument could have been raised in the earlier 60(B) and was therefore untimely/successive; tolling did not salvage the successive motion |
| Fraud and other merits under Civ.R. 60(B)(3)/(5) | No fraud by U.S. Bank; prior appellate rulings already resolved standing/role of trustee issues | U.S. Bank and its counsel committed fraud by presenting U.S. Bank as plaintiff/trustee to receive proceeds | Court rejected fraud claim on the merits and relied on prior determinations that the trust is the owner and U.S. Bank was successor trustee |
Key Cases Cited
- CitiMortgage, Inc. v. Roznowski, 138 Ohio St.3d 299 (Ohio 2014) (foreclosure proceedings split into two final, appealable stages: decree of foreclosure and confirmation of sale)
- Harris v. Anderson, 109 Ohio St.3d 101 (Ohio 2006) (successive Civ.R. 60(B) motions are barred when based on grounds that could have been raised earlier)
- Fed. Natl. Mtge. Assn. v. Day, 158 Ohio App.3d 349 (Ohio Ct. App. 2004) (Civ.R. 60(B) is the exclusive means to seek relief from a final foreclosure decree when appropriate criteria are met)