BANK OF AMERICA, N.A. v. DENISE L. ADAMS, ET AL.
No. 101056
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
February 26, 2015
2015-Ohio-675
BEFORE: E.T. Gallagher, J., S. Gallagher, P.J., and Stewart, J.
Marc L. Stolarsky
P.O. Box 24221
Lyndhurst, Ohio 44124
ATTORNEYS FOR APPELLEES
For Bank of America, N.A. and MRF Ohio One, L.L.C.
Benjamin D. Carnahan
Hunter G. Cavell
Morris Laing Evans Brock & Kennedy, Chtd.
25700 Science Park Drive, Suite 250
Cleveland, Ohio 44122
For John Doe
John Doe, pro se
3843 Covington Road
South Euclid, Ohio 44121
For Karl Kimbrough
Karl Kimbrough, pro se
3843 Covington Road
South Euclid, Ohio 44121
For Recasa Financial Group, L.L.C.
Lisa A. Thomas Banal
Means Bichimer Burkholder & Baker
1650 Lakeshore Drive, Suite 285
Columbus, Ohio 43204
{¶1} Defendant-appellant, Denise L. Adams (“Adams”), appeals the trial court’s order granting summary judgment in favor of plaintiff-appellee, MRF Ohio One, L.L.C. (“MRF”) on its foreclosure claim. She raises three assignments of error for our review:
- The court erred in finding there was no issue of material fact as to the ownership of the promissory note and mortgage thus denying Ms. Adams due process.
- The court erred in finding there was no issue of material fact and denied Ms. Adams due process when it failed to inquire upon plaintiff as to the validity of signatures of supporting documents.
- The court erred when it determined there was no issue of material fact and denied Ms. Adams due process by not requiring plaintiff to submit history of payments.
We find no merit to the appeal and affirm the trial court’s judgment.
I. Facts and Procedural History
{¶2} In August 2008, Adams purchased a home in South Euclid, Ohio. To finance the purchase, Adams executed a promissory note payable to United Wholesale Mortgage (“United Wholesale”) in the amount of $109,998. As security for the note, Adams executed a mortgage on the property located at 3843 Covington Road, South Euclid, Ohio. In October 2012, Bank of America, N.A. (“BANA”), filed a complaint in foreclosure against Adams, alleging she defaulted on the note by failing to make regular monthly payments. BANA attached copies of both the note and mortgage to the complaint.
{¶3} After BANA filed the complaint in foreclosure, MRF became the holder of the note and was substituted as the party plaintiff. Adams filed two pro se motions to dismiss that were denied. MRF filed a motion for summary judgment on the foreclosure claim. The trial court
II. Law and Analysis
A. Standard of Review
{¶4} We review an appeal from summary judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). The party moving for summary judgment bears the burden of demonstrating the absence of any genuine issue of material fact as to the essential elements of the case with evidence of the type listed in
{¶5} To prevail on a motion for summary judgment in a foreclosure action, the plaintiff must prove:
(1) that the plaintiff is the holder of the note and mortgage, or is a party entitled to enforce the instrument; (2) if the plaintiff is not the original mortgagee, the chain of assignments and transfers; (3) that the mortgagor is in default; (4) that all conditions precedent have been met; and (5) the amount of principal and interest due.
Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657, ¶ 17; Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214, ¶ 20.
B. Standing
{¶7} A party commencing litigation must have standing to sue in order to invoke the jurisdiction of the common pleas court. Schwartzwald at ¶ 20. To have standing, a plaintiff must have a personal stake in the outcome of the controversy and have suffered some concrete injury that is capable of resolution by the court. Tate v. Garfield Hts., 8th Dist. Cuyahoga No. 99099, 2013-Ohio-2204, ¶ 12; Middletown v. Ferguson, 25 Ohio St.3d 71, 75, 495 N.E.2d 380 (1986). Thus, lack of standing at the commencement of the lawsuit cannot be cured through an assignment prior to judgment; “[t]he lack of standing at the commencement of a foreclosure action requires dismissal of the complaint.” Schwartzwald at ¶ 37-40.
{¶8} Prior to Schwartzwald, 134 Ohio St.3d 13, 979 N.E.2d 1214, this court held that in order to have standing in a foreclosure action, the plaintiff must establish that “it owned the note and the mortgage when the complaint was filed.” (Emphasis added.) Wells Fargo Bank v. Jordan, 8th Dist. Cuyahoga No. 91675, 2009-Ohio-1092, ¶ 23. In Schwartzwald, the court concluded that the lender did not have standing to invoke the jurisdiction of the common pleas court because “it failed to establish an interest in the note or mortgage at the time it filed suit.” (Emphasis added.) Schwartzwald at ¶ 28. This statement implies that having an interest in either the note or the mortgage at the time the complaint is filed is sufficient to establish standing. However, the court did not expressly state that a plaintiff seeking foreclosure can establish standing by proving an interest in one or the other; it simply found that the lender in
{¶9} The ambiguity inherent in the Schwartzwald court’s conclusion has caused a conflict among Ohio appellate districts.1 Pursuant to Schwartzwald, the Tenth Appellate District held that, in order to have standing to commence a foreclosure action, the plaintiff must prove it was both the holder of the note and had an interest in the mortgage on the date it filed the complaint. FV-I, Inc. v. Lackey, 10th Dist. Franklin No. 13AP-983, 2014-Ohio-4944.
{¶10} In CitiMortgage, Inc. v. Patterson, 8th Dist. Cuyahoga No. 98360, 2012-Ohio-5894, 984 N.E.2d 392, we relied on Schwartzwald and held that a plaintiff seeking foreclosure “may establish its interest in the suit, and therefore have standing to invoke the jurisdiction of the court when, at the time it files its complaint of foreclosure, it either (1) has had a mortgage assigned or (2) is the holder of the note.” (Emphasis sic.) Id. at ¶ 21. Therefore, until the Ohio Supreme Court resolves this conflict, we are bound by this court’s precedent and hold that BANA had standing to commence this foreclosure action against Adams if it was either the holder of the note or had an interest in the mortgage at the time it filed the complaint. Id. See also U.S. Bank Natl. Assn. v. Perry, 8th Dist. Cuyahoga No. 99608, 2013-Ohio-3914, ¶ 9 (following Patterson.)
{¶11} In any event, in most cases the mortgage follows the note. Section 5.4(b) of Restatement of Law 3d, Property and Mortgages (1997) 380, states that the assignment of a mortgage, in conjunction with interlocking references in the mortgage and the note, transfers the note as well as well as the mortgage. See also Bank of N.Y. v. Dobbs, 5th Dist Knox No. 2009-CA-002, 2009-Ohio-4742, ¶ 17-41, appeal not allowed, 124 Ohio St.3d 1444, 2010-Ohio-188, 920 N.E.2d 374 (holding that the assignment of the mortgage, without the express transfer of the note, is sufficient to transfer both the note and mortgage if the record indicates that the parties intended to transfer both the note and mortgage).
{¶12} Adams contends the chain of assignments from the original holder of the promissory note and mortgage is unclear, and that therefore BANA cannot establish that it was the holder of either the note or the mortgage when it filed suit. MRF, on the other hand, contends it had standing and is entitled to enforce the note because BANA was the holder of the note at the time it filed the complaint.2 MRF also contends BANA had an interest in the mortgage at the time the complaint was filed.
{¶13} Pursuant to
{¶14} The note in this case indicates the original lender, United Wholesale Mortgage, extended a loan to Adams for the purchase of the South Euclid property on August 27, 2008. The mortgage indicates that, at the time Adams executed the note, she simultaneously executed a
{¶15} The final judicial report, also filed with the court, shows that on September 26, 2012, another assignment of mortgage was filed in the Cuyahoga County Recorder’s Officer under Instrument Number AFN 201210050705. The record shows that this second assignment was actually a “corrective assignment” filed to correct “missing nominee language on the assignment recorded on 10/11/11 Instr.# 201110110387.” Both the original and corrective assignments indicate that MERS, as nominee for United Wholesale Mortgage, assigned the mortgage on Adams’s home to BANA in October 2011.
{¶16} Further, BANA’s loan servicer also provided an affidavit in which she attested that she had personal knowledge of Adams’s loan based on her personal review of Adams’s loan records, and that Adams defaulted on the loan by failing to make payments due for September 1, 2010. The affiant further averred that BANA had possession of the promissory note at the time it filed the complaint.
{¶17} As previously stated, BANA filed the complaint in this case, and MRF was later substituted as the party plaintiff after BANA transferred and assigned the note and mortgage to MRF. Therefore, the record clearly shows the chain of assignments from the original lender, United Wholesale Mortgage, to BANA, who commenced this foreclosure action. Moreover, both the original assignment, which was recorded in October 2011, and the corrective assignment, which was recorded in September 2012, were recorded before BANA filed its
{¶18} The first assignment of error is overruled.
Validity of Signatures
{¶19} In the second assignment of error, Adams argues she was denied due process of law because the court based the judgment in foreclosure on unverified signatures. She contends that because the signatures on the note and mortgage assignments were not verified, there was insufficient evidence upon which the court could render judgment.
{¶20} However,
{¶21} Moreover, as previously explained, the judicial reports confirm that valid assignments of the mortgage were made and duly recorded. Therefore, verification of the signatures on those documents was unnecessary.
{¶22} The second assignment of error is overruled.
C. History of Payments
{¶24} Due process requires both notice and an opportunity to be heard. In re Thompkins, 115 Ohio St.3d 409, 2007-Ohio-5238, 875 N.E.2d 582, ¶ 13. “‘An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.’” Id., quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950).
{¶25} Adams contends her right to due process was violated because the judgment in foreclosure was entered without evidence of her payment history. The court granted the judgment in foreclosure on MRF’s motion for summary judgment. The record shows that Adams received notice of the motion for summary judgment and had an opportunity to respond to the motion. Moreover, MRF submitted an affidavit in support of its motion for summary judgment in which the affiant verified an attachment titled “Account Information Statement.” This “Account Information Statement” shows the amount Adams owed on the note from the date of default on September 1, 2010. The statement also showed the total amount of unpaid principal, the interest accrued, and the amount of payments missed since the date of default, as well as the escrow payments for property taxes, filing fees, and court costs. The record clearly establishes that Adams had notice of the foreclosure claim against her and had an opportunity to defend against that claim. Therefore, we find no due process violation.
{¶27} A foreign corporation is “‘transacting business” within the state when it is “‘engaged in carrying on and transacting * * * some substantial part of its ordinary or customary business, usually continuous in the sense that it may be distinguished from merely casual, sporadic, or occasional transactions and isolated acts.’” Bosl at ¶ 18, quoting State ex rel. Physicians Commt. for Responsible Medicine v. Ohio State Univ. Bd. of Trustees, 108 Ohio St.3d 288, 2006-Ohio-903, 843 N.E.2d 174, ¶ 21.
{¶28} However,
{¶29} Additionally, the Supremacy Clause of the U.S. Constitution provides that the “Laws of the United States * * * shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any thing in the Constitution or Laws of any State to the Contrary
{¶30}
{¶31} The third assignment of error is overruled.
III. Conclusion
{¶32} The trial court properly awarded a judgment in foreclosure against Adams where the evidence showed that BANA was the assignee of the mortgage when it filed its complaint. In the absence of a denial, the trial court could presume the validity of Adams’s signatures on the note and mortgage. And since MRF submitted evidence of Adams’s payment history, including her default, and federal law permits banks to sue mortgagors to collect debts on mortgages, the judgment in foreclosure did not violate Adams’s constitutional right to due process.
{¶33} Judgment affirmed.
It is ordered that appellant recover from appellee costs herein taxed.
The court finds there were reasonable grounds for this appeal.
A certified copy of this entry shall constitute the mandate pursuant to
EILEEN T. GALLAGHER, JUDGE
SEAN C. GALLAGHER, P.J., and MELODY J. STEWART, J., CONCUR