AMERICAN ENTERPRISE BANK v. GARFIELD HTS. PROPERTY, L.L.C., ET AL.
No. 98646
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
June 20, 2013
2013-Ohio-2526
Jones, P.J., Keough, J., and Kilbane, J.
Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV-771454
RELEASED AND JOURNALIZED: June 20, 2013
Michael R. Stavnicky
T. Christopher O’Connell
Matthew E. Parkins
Singerman, Mills, Desberg & Kauntz
3333 Richmond Road
Suite 370
Beachwood, Ohio 44122
ATTORNEYS FOR APPELLEE
For American Enterprise Bank
Curtis L. Tuggle
James J. Henderson
Thompson Hine L.L.P.
3900 Key Center
Cleveland, Ohio 44114
Lawrence T. Burick
Jonathan S. Hawkins
Thompson Hine L.L.P.
Austin Landing I
10050 Innovation Drive
Suite 400
Dayton, Ohio 45342
For Champion Personnel System, Inc.
Christopher M. Ernst
Bricker & Eckler L.L.P.
1001 Lakeside Avenue East
Suite 1350
Cleveland, Ohio 44114
Timothy J. McGinty
Cuyahoga County Prosecutor
BY: Michael A. Kenny, Jr.
Assistant County Prosecutor
The Justice Center, 9th Floor
1200 Ontario Street
Cleveland, Ohio 44113
For Ohio Dept. of Transportation
Mike DeWine
Ohio Attorney General
BY: Fedele DeSantis
Assistant Attorney General
State Office Bldg., 12th Floor
615 West Superior Avenue
Cleveland, Ohio 44113
For University Hospitals Mgt. Services
Raymond Krncevic
3605 Warrensville Center Road
Cleveland, Ohio 44122
For Mark S. Abood, Receiver
Mark S. Abood, Pro se
2787 Francena Court
Brunswick, Ohio 44212
{¶1} Defendant-appellant, Garfield Heights Property, L.L.C. (“GHP”), appeals the trial court’s decision to appoint a receiver. Finding no merit to the appeal, we affirm.
I. Pertinent Facts and Procedural History
{¶2} In 2011, plaintiff-appellee, American Enterprise Bank, filed a foreclosure complaint against GHP, alleging that GHP had defaulted on a $2.7 million note.1 The bank’s complaint further alleged the following. In May 2008, GHP executed and delivered to the bank a note in the amount of $2.7 million. Pursuant to the terms of the note, GHP agreed to repay the bank the principal amount plus 6.25% annual interest, unless GHP defaulted, in which case the bank had the right to raise the interest rate to 11.25%. The complaint alleged that GHP breached its obligations under the note by failing to make installment payments on the note. The bank accelerated the note and declared the entire balance of principal, interest, and other charges due and immediately payable.
{¶3} The bank alleged in its complaint that the note was secured by an open-end mortgage, granting the bank a mortgage interest in real property located in Garfield Heights. The mortgage was filed in the official records of Cuyahoga County in May 2008.
{¶4} The bank further alleged in the complaint that under the terms of the
{¶5} The bank stated in the complaint that some of the tenants of the property had or may claim an interest in the property through lease agreements and that any sale of the property would be subject to the tenants’ lease interests.
{¶6} GHP filed an answer and counterclaim. In February 2012, the bank filed a motion seeking the appointment of a receiver. In the motion, the bank alleged that the mortgage included a provision whereby GHP consented to the appointment of a receiver upon the filing of a complaint for foreclosure.
{¶7} GHP opposed the motion, arguing that the bank had failed to demonstrate that the appointment of a receiver was necessary. GHP claimed that there had not been a showing that it had defaulted under the loan agreement and alleged that it was the bank that had actually defaulted. According to GHP, the rents from the property “are the sole form of income for GHP, without the rents, Defendant is out of business.” Thus, according to GHP, an order granting a receiver would deny GHP the ability to protect its rights and prosecute its claims “caused by the bank’s breach and fraud.”
{¶8} The bank filed a reply brief and submitted two sworn affidavits from Charles Kantro, a vice president at the bank.2 Kantro averred that he had personal knowledge of
{¶9} In June 2012, the trial court held a hearing on the motion, but neither side presented evidence. After argument by counsel for both sides, the trial court ruled that the bank had made its prima facie case for a receiver and subsequently appointed a receiver. The trial court set the receiver’s bond at $1,000.
{¶10} It is from this order that GHP now appeals, raising the following assignments of error for our review:
- The trial court erred when it appointed a receiver without any evidence, let alone clear and convincing evidence, and without conducting an evidentiary hearing.
- The trial court erred when it established an inadequate and unreasonably low receiver’s bond.
II. Law and Analysis
{¶11} The appointment of a receiver is an extraordinary remedy. Malloy v. Malloy Color Lab, Inc., 63 Ohio App.3d 434, 437, 579 N.E.2d 248 (10th Dist.1989). Therefore, normally the party requesting the receivership must show by clear and convincing evidence that the appointment is necessary for the preservation of the complainant’s rights.
{¶12}
(B) [i]n an action by a mortgagee, for the foreclosure of his mortgage and sale of the mortgaged property, when it appears that the mortgaged property is in danger of being lost, removed, or materially injured, or that the condition of the mortgage has not been performed, and the property is probably insufficient to discharge the mortgage debt.
* * *
(F) In all other cases in which receivers have been appointed by the usages of equity.
{¶13} In its first assignment of error, GHP contends that the trial court abused its discretion in granting the bank’s motion to appoint a receiver because there was no evidence to support the appointment.
{¶14} The trial court found that the mortgage, together with the provisions of
{¶15} GHP argues that there was no properly authenticated mortgage before the court, no affidavit supporting such an appointment, and no evidence showing that the appointment was necessary to preserve and protect the subject property.
{¶16} The mortgage in this case included the following provision:
19. Appointment of Receiver. Upon or at any time after the filing of a complaint to foreclose this Mortgage, the court in which such complaint is filed shall, upon petition by the Lender, appoint a receiver for the Premises in accordance with the Act. Such appointment may be made either before or after sale, without notice, without regard to the solvency or insolvency of the Mortgagor at the time of application for such receiver and without regard to the value of the Premises.
{¶17} In essence, GHP is arguing that the requirements of
{¶18} In this case, it was not necessary for the court to make its additional findings that a receiver was necessary to preserve and protect the property and the bank’s rights. In accordance with section 19 of the mortgage, the event that triggered the court’s duty to appoint a receiver were the filings of a foreclosure complaint and the bank’s motion. Thus, the court was within its authority to appoint a receiver pursuant to
{¶19} GHP argues that there was no evidence before the court allowing it to appoint a receiver because the mortgage attached to the complaint was unauthenticated. We disagree.
{¶20} Documents must be authenticated or identified prior to their admission into evidence.
{¶21} A copy of the mortgage in this case was attached as an exhibit to the complaint and contained a page with an acknowledgment by a notary.
[e]xtrinsic evidence of authenticity as a condition precedent to admissibility is not required with respect to the following: * * * Acknowledged documents[:] Documents accompanied by a certificate of acknowledgment executed in the manner provided by law by a notary public or other officer authorized by law * * * .
{¶22} Kantro averred that the note, mortgage, and assignment of rents attached to
{¶23} We further note that GHP presented no evidence that the mortgage attached to the complaint was not authentic.
{¶24} GHP also claims that the bank’s reply brief was not accepted by the court until after the receiver had been appointed; therefore, the trial court made its ruling on the motion without having any evidence before it. We disagree; it is clear from the transcript of the hearing that the trial court considered the bank’s reply brief and Kantro’s affidavits.
{¶25} Finally, GHP claims the trial court erred in granting the motion without any evidentiary hearing, but this court has previously recognized that a trial court is not statutorily obligated to conduct an evidentiary hearing. Prospect Park at ¶ 13, citing Poindexter v. Grantham, 8th Dist. No. 95413, 2011-Ohio-2915, ¶ 14.
{¶26} Based on the above facts, the trial court did not abuse its discretion in appointing a receiver.
{¶27} The first assignment of error is overruled.
{¶28} In the second assignment of error, GHP claims that the bond set for the
{¶29}
{¶30} GHP argues that the amount of the bond is grossly inadequate because the principal balance of the loan is in excess of $2.7 million and the property has a market value greater than $1.1 million. To support its position GHP cites Hummer v. Hummer, 8th Dist. No. 96132, 2011-Ohio-3767, a case that this court dismissed for lack of a final, appealable order. In Hummer, this court stated, in dicta, that “[a]lthough the court has broad discretion in determining the amount of the bond, an adequate bond should be consistent with the value of the properties and assets that the receiver may possess during the expected period of the receivership.” Id. at ¶ 21.
{¶31} But in Fifth Third Bank v. Q.W.V. Properties, LLC, 12th Dist. No. CA2010-09-245, 2011-Ohio-4341, the court determined that it was within the trial court’s discretion to set the receiver’s bond at $0 on property worth over a million dollars. In Rentz v. Bannister, 2d Dist. No. 15019, 1995 Ohio App. LEXIS 2267 (May 31, 1995), the appellate court decided that a $100 bond for a receiver in charge of $35,000 worth of assets was not an abuse of discretion because the amount is to be directed by the court and there was no evidence in the record to indicate that the amount was inadequate or otherwise improper. Id. at *10.
{¶33} The second assignment of error is overruled.
{¶34} Accordingly, judgment is affirmed.
It is ordered that appellee recover of appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the Cuyahoga County Court of Common Pleas to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
LARRY A. JONES, SR., PRESIDING JUDGE
KATHLEEN ANN KEOUGH, J., and
MARY EILEEN KILBANE, J., CONCUR