BAC HOME LOANS SERVICING, L.P., fka COUNTRYWIDE HOME LOANS SERVICING, L.P. v. JENNIFER HAAS, ET AL.
CASE NO. 9-13-40
IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT MARION COUNTY
February 10, 2014
2014-Ohio-438
SHAW, J.
Appeal from Marion County Common Pleas Court, Trial Court No. 10CV0795. Judgment Affirmed.
Daniel L. McGookey and Kathryn M. Eyster for Appellants
Eric T. Deighton for Appellee
{1} Defendants-appellants, Jennifer and Paul Haas (collectively referred to as the “Haases“), appeal the July 24, 2013 judgments of the Marion County Court of Common Pleas overruling their
{2} On October 10, 2008, Jennifer Haas executed a promissory note in favor of Taylor, Bean & Whitaker Mortgage Corp. in the principal amount of $88,519.00, with interest of seven percent per annum. The note called for monthly payments for a period of 30 years. Jennifer and Paul executed a mortgage that secured the note and encumbered the property located at 150 S. Main Street in Prospect, Ohio.
{3} On September 23, 2010, the mortgage was assigned to BAC by Mortgage Electronic Registration Systems, Inc. (“MERS“), acting as nominee for Taylor, Bean & Whitaker Mortgage Corp.
{4} On September 28, 2010, BAC filed a complaint in foreclosure against the Haases. In its complaint, BAC alleged it was the holder of the note secured by the mortgage on the Main Street property and that the note had been defaulted on in the amount of $87,300.72 together with interest and late fees from March 1,
{5} The Haases did not file an answer. However, on December 6, 2010, the Haases filed a “Request for Mediation,” asking the trial court to allow them the opportunity to mediate with BAC, which the trial court approved.
{6} Between February 2011 and July 2011, the parties met numerous times to mediate the dispute. The record indicates that the mediation was continued several times due to the fact that the Haases failed to submit the appropriate financial documentation to BAC. (Doc. Nos. 18 and 19).
{7} On July 27, 2011, a “Memorandum of Understanding” was filed with the trial court indicating that a proposed resolution had been reached between the parties. This document reflected that a loan modification was discussed by the parties and that a “dismissal entry [would] be filed by 30 days from receipt of executed Loan Modification documents.” (Doc. No. 20).
{8} No further documents were filed as part of the trial court‘s record until February 1, 2012 when BAC filed a motion for summary judgment. In its motion, BAC argued that it was the holder of the note and the mortgage, that the Haases remained in default of payment on the note, and that the note had been accelerated.
{9} On February 17, 2012, the trial court issued an “Order to Respond,” informing the parties that any responses to BAC‘s motion for summary judgment were to be filed within fourteen days of the trial court‘s order.
{10} On April 16, 2012, the trial court granted BAC‘s motion for summary judgment and noted that the Haases failed to file any response despite having ample opportunity to do so.
{11} On June 6, 2012, the trial court issued a judgment entry in foreclosure on the property and on June 19, 2012, the trial court issued a notice of a final appealable order. The trial court ordered the sale of the property to take place on August 17, 2012.
{12} On August 22, 2012, counsel for the Haases filed a “Notice of Filing Under the Bankruptcy Code and Suggestion of Stay,” informing the trial court that the Haases had filed a petition for Chapter 7 Bankruptcy on August 16, 2012. The trial court subsequently cancelled the order of sale and stayed the court proceedings pursuant to the automatic bankruptcy stay.
{13} On October 22, 2012, BAC was granted relief from the automatic stay by the bankruptcy court and the Chapter 7 Trustee was authorized and directed to “abandon” the Main Street property subject to this foreclosure proceeding. (Doc. No. 36, Ex. A).
{14} On December 21, 2012, BAC filed a notice of relief from the automatic bankruptcy stay.
{15} On January 14, 2013, the trial court issued an order of sale of the property to take place on March 6, 2013.
{16} On March 1, 2013, counsel for the Haases filed a motion to stay the sale and a
{18} On March 18, 2013, the Haases filed a motion to enforce the settlement agreement, requesting the trial court to enforce the 2011 mediation agreement reached by the parties to enter into a loan modification.
{19} In the interim, the trial court granted the Haases’ motion to stay the Sheriff‘s sale.
{20} On July 24, 2013, the trial court issued two judgment entries, one overruling the Haases’ motion for relief from judgment and another overruling their motion to enforce the settlement agreement.
{21} The Haases now appeal, asserting the following assignment of error.
ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED IN DENYING DEFENDANT‘S MOTION FOR RELIEF FROM JUDGMENT, ERRED WHEN IT FAILED TO HOLD AN EVIDENTIARY HEARING, AND ERRED IN DENYING DEFENDANT‘S MOTION TO ENFORCE SETTLEMENT.
{22} In their sole assignment of error, the Haases argue that the trial court erred: (1) when it overruled their
{23} At the outset, we note that in the judgment entries overruling both of the motions at issue, the trial court determined that the Haases’ discharge in bankruptcy rendered any proposed agreement to modify the terms of the original note unenforceable. Specifically, the trial court stated the following with regard to the note.
11 U.S.C. 524(c) deals with the effect of a discharge in bankruptcy.11 U.S.C. 524(c) gives very limited circumstances in which a debt that is dischargeable in bankruptcy remains enforceable. Among the conditions involved would be a reaffirmation agreement between the Defendants Haas and the Plaintiff in this Case.3 Defendants Haas have brought no evidence that any such reaffirmation agreement has been rendered. As a result, regardless of whether [there] had been a settlement agreement between the Plaintiff and Defendants Haas prior to the bankruptcy, any such agreement would now be unenforceable due to the discharge in bankruptcy of Defendants Haas.The Court finds no grounds for relief may be granted on the basis of any claimed settlement agreement, absent any reaffirmation that had been approved by the bankruptcy court. Once the property has been released from the bankruptcy estate, either through granting a motion for relief from stay to a
creditor, or through abandoning the property to the debtor during the pendency of the case or by a general order at the close of the case, 11 U.S.C. Section 554 , a creditor is free to foreclose on any security interest in any property owned by the debtor that is subject to the security interest. First Federal Savings and Loan Assoc. v. McLoughlin, 2d Dist. Clark No. 2889, *2 (July 15, 1992).
(Doc. No. 55 at 3-4). We concur with the reasoning of the trial court that any claims the Haases may have had regarding an agreement to enter into a loan modification were rendered moot once the Haases’ personal liability on the note was discharged in bankruptcy without a reaffirmation agreement in place. Accordingly, we conclude that the trial court did not err in determining that the parties’ agreement reached during mediation regarding a proposed loan modification was not enforceable after the Haases’ received a discharge in bankruptcy and therefore we also find no error with the trial court‘s decision to overrule the Haases’ motion to enforce the settlement agreement.
{24} Next, we turn to address the remaining grounds asserted by the Haases’ as the basis for their
{25} In the instant case, the Haases argue that they have meritorious claims to present if relief from judgment is granted. Specifically, the Haases claim that: (1) BAC failed to demonstrate that they are the real party in interest entitled to bring a foreclosure action on the note and mortgage; (2) BAC was not entitled to summary judgment because its affidavit filed in support of its motion was insufficient and BAC failed to meet certain conditions precedent entitling them to a judgment in foreclosure; and (3) granting BAC a judgment in foreclosure is not equitable under the circumstances of this case. We will address each of the Haases’ claims in turn.
{26} First, the Haases argue that BAC did not have standing to bring this foreclosure action because it was not the holder of the note and the mortgage at the time this action was filed. In order to have standing, BAC was required to be either the holder of the note or to have been assigned the mortgage prior to the complaint being filed. CitiMortgage v. Loncar, 7th Dist. No. 11 MA174, 2013-Ohio-2959 (being the holder of the note only at the time the complaint was filed is sufficient to have standing); CitiMortgage, Inc. v. Patterson, 8th Dist. No. 98360, 2012-Ohio-5894 (assignment of the mortgage prior to the filing of the complaint was sufficient to establish standing). See also Fed. Home Loan Mortgage Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017.
{27} The record reflects that BAC pled in its complaint that it was the holder in possession of the note and also attached to the complaint a copy of the note, which on its face was indorsed in blank. In addition, BAC included the affidavit of Lisa K. Townsend-Brown in support of its motion for summary judgment averring that BAC was in possession of the note. When an instrument is indorsed in blank, the instrument becomes payable to the bearer and may be negotiated by transfer of possession alone until specially indorsed.
{28} The record also reflects that BAC attached a copy of the mortgage to its complaint which stated that MERS is designated as the nominee and mortgagee under the security instrument. BAC also attached a copy of the mortgage assignment to its complaint which stated that MERS, acting as the nominee for Taylor, Bean & Whitaker, assigned the mortgage to BAC on September 23, 2010. The record demonstrates that this foreclosure action was subsequently filed on September 28, 2010. On appeal, the Haases contend that the assignment of the mortgage was invalid because MERS did not have the authority to assign the mortgage. However, Ohio courts, including this one, have consistently held that MERS has authority to assign a mortgage when it is designated as both a nominee and mortgagee. BAC Home Loans Servicing, L.P. v. Hall, 12th Dist. Warren No. CA2009-10-135, 2010-Ohio-3472, ¶¶ 5-25; Countrywide Home Loans Servicing, L.P. v. Shifflet, 3d Dist. Marion No. 9-09-31, 2010-Ohio-1266, ¶¶ 9-17; Deutsche Bank Natl. Trust Co. v. Ingle, 8th Dist. Cuyahoga No. 92487, 2009-Ohio-3886, ¶¶ 4-18.
{30} The Haases next argue that BAC was not entitled to summary judgment because: (1) the affidavit filed with its motion for summary judgment was insufficient to support a grant of summary judgment; and (2) BAC failed to meet certain conditions precedent prior to filing this action.4 Initially, we note that the Haases fail to assert any operative facts in support of these arguments on appeal. We further note that the trial court determined that the Haases were precluded from raising these arguments in their
{31} “It is well settled that a motion for relief from judgment cannot be used as a substitute for appeal, even when the
{32} Third, the Haases assert that the trial court‘s decision to grant a judgment in foreclosure is not equitable in this case. The Haases rely on PHH Mtge. Corp. v. Barker, 190 Ohio App.3d 71, 2010-Ohio-5061, (3rd Dist.), in which this Court upheld the trial court‘s decision to reinstate the homeowner‘s mortgage with the lender based on equitable grounds. Id. at ¶ 20. However, we find the facts and circumstances in Barker to be distinguishable from the ones in the case at hand and we do not find the Haases arguments based on Barker to be persuasive.5
{34} We also conclude that, based on the aforementioned facts and circumstances of this case, the trial court did not abuse its discretion in concluding that the Haases failed to demonstrate that they are entitled to relief on the grounds enumerated in
{35} Finally, we note that the Haases allege that the trial court erred in failing to hold an evidentiary hearing before ruling on their
{36} For all these reasons, the assignment of error is overruled and the judgments of the Marion County Court of Common Pleas are affirmed.
Judgments Affirmed
WILLAMOWSKI, P.J., concurs.
ROGERS, J., concurs in Judgment Only.
/jlr