BANK OF AMERICA, N.A. v. KATHERINE L. MICHKO, ET AL.
No. 101513
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
August 6, 2015
[Cite as Bank of Am., N.A. v. Michko, 2015-Ohio-3137.]
BEFORE: E.A. Gallagher, P.J., S. Gallagher, J., and Laster Mays, J.
JOURNAL ENTRY AND OPINION; Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. 12-CV-784769; RELEASED AND JOURNALIZED: August 6, 2015; JUDGMENT: AFFIRMED
Marc E. Dann
William C. Behrens
Paul B. Bellamy
Grace M. Doberdruk
James R. Douglass
Daniel M. Solar
The Dann Law Firm
P.O. Box 6031040
Cleveland, Ohio 44103
ATTORNEYS FOR APPELLEE
Edward G. Bohnert
Rachel M. Kuhn
Mike L. Wiery
Reimer, Arnovitz, Chernek & Jeffrey Co., L.P.A.
30455 Solon Road
Solon, Ohio 44139
{1} In this foreclosure action, defendant-appellant Katherine Michko appeals from the decision of the trial court granting summary judgment in favor of substitute plaintiff-appellee Bank of America, N.A. Finding no merit to the appeal, we affirm the trial court‘s judgment.
Factual and Procedural Background
{2} On December 2, 2009, Michko executed a note payable to Primary Capital Advisors LC (“Primary Capital Advisors“) and its successors and assigns for the principal amount of $73,641. To secure payment of the note, Michko executed a mortgage on real property located at 7456 Columbia Road in Olmsted Falls, Ohio in favor of Mortgage Electronic Registration Systems, Inc. (“MERS“) as nominee for Primary Capital Advisors.1 The mortgage was recorded on December 4, 2009.
{3} Primary Capital Advisors endorsed the note to Bank of America, N.A., and Bank of America, N.A. thereafter endorsed the note in blank. On March 1, 2012, MERS assigned the mortgage “together with the note(s) and obligations therein described” to “Bank of America, N.A. successor by merger to BAC Home Loans Servicing, LP.” The assignment was recorded on March 8, 2012. Because the assignment of mortgage was executed by MERS in its own name, rather than in its capacity as nominee for Primary Capital Advisors, a corrective assignment of mortgage was executed by which MERS, as
{4} Michko failed to make payments due on the note, and on June 12, 2012, Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP, filed a complaint for foreclosure and declaratory judgment to recover the unpaid balance due on the note (count one), to foreclose on the mortgaged property (count two) and to obtain a declaration that a warranty deed in the chain of title for the property was valid despite a defective notary acknowledgment clause (count three). As to the first two counts, the complaint alleged that Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP, was the holder of the note and mortgage, that it had accelerated the amount due because of a default in payment, that it had complied with all conditions precedent set forth in the note and mortgage and that a principal balance of $71,779.58 plus interest at the rate of 5.5% per annum from October 1, 2011 was due and owing on the note. With respect to the third count, the complaint alleged that although Denise Walker, the grantor‘s wife, had signed the warranty deed, “as a result of the mutual mistake of the parties,” her name had been omitted from the deed‘s notary acknowledgment clause. Copies of the note (with the endorsement from Primary Capital Advisors to Bank of America, N.A. and the endorsement in blank by Bank of America, N.A.), the mortgage, the assignment of mortgage, the corrective assignment of mortgage and a prior warranty deed for the property from Mark Walker to Richard Gardner were attached to the
{5} The case was referred to mediation. When the parties were unable to resolve the matter, it was returned to the active docket.
{6} In October 2013, Bank of America, N.A., successor by merger to BAC Home Loans Servicing, LP, thereafter filed a motion pursuant to
{7} In November 2013, Michko was granted leave to file an answer. In her answer, Michko denied the material allegations of the first two counts of the amended complaint relating to the claims of default and foreclosure but admitted that Bank of America was entitled to the declaration sought in count three of the amended complaint,
{8} On February 13, 2014, Bank of America filed a motion for summary judgment on counts one and two of the amended complaint and a motion for judgment on the pleadings as to the third count of the amended complaint. In its motion for summary judgment, Bank of America asserted that it was entitled to judgment on the note and a decree of foreclosure as a matter of law because there were no genuine issues of fact that (1) by virtue of the assignment of the mortgage from MERS (as nominee for Primary Capital Advisors), the endorsement of the note from Primary Capital Advisors and Bank of America‘s possession of the original note endorsed in blank, Bank of America was the current holder of the note and mortgage, (2) Michko‘s loan was in default, (3) Bank of America had exercised its option to accelerate the balance due on the note and (4) a principal balance of $71,779.58 plus interest at the rate of 5.5% per annum from October 1, 2011 was due on the note. Bank of America supported its motion with an affidavit from Jenifer Frances Kotchey, assistant vice president of Bank of America, along with copies of the note, the mortgage, the assignment of mortgage, the corrective assignment of mortgage and an account information statement for Michko‘s account — which Kotchey attested in her affidavit to be “true and exact copies” or “true and correct copies” of the originals. Kotchey averred, based on her review of Michko‘s loan documents and
{9} Bank of America filed a separate motion for judgment on the pleadings based on Michko‘s admission in her answer that it was entitled to a declaration that the warranty deed was valid notwithstanding the omission of Denise Walker‘s name from the notary acknowledgment clause. Michko did not oppose either motion. On April 23, 2014, the magistrate issued a decision granting both motions and entering judgment on the note and a decree of foreclosure in favor of Bank of America. Michko filed objections to the magistrate‘s decision.3 The trial court overruled Michko‘s objections and, on May 21,
{10} Michko appealed the trial court‘s judgment, raising the following three assignments of error for review:
FIRST ASSIGNMENT OF ERROR:
The trial court erred when it granted appellee Bank of America‘s motion for summary judgment when appellee did not comply with all conditions precedent to foreclosure of an FHA note and mortgage.SECOND ASSIGNMENT OF ERROR:
The trial court erred by granting appellee‘s motion for summary judgment when the affidavit of Jenifer Frances Kotchey was deficient to authenticate Civil Rule 56 evidence.THIRD ASSIGNMENT OF ERROR:
The [trial] court erred by adopting the magistrate‘s decision that found that there was a mutual mistake in the acknowledgment clause.
Motion for Summary Judgment Standard of Review
{11} We review summary judgment rulings de novo, applying the same standard as the trial court. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). We accord no deference to the trial court‘s decision and independently review the record to determine whether summary judgment is appropriate.
{12} Under
{13} On a motion for summary judgment, the moving party carries an initial burden of identifying specific facts in the record that demonstrate its entitlement to summary judgment. Dresher v. Burt, 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264 (1996). If the moving party fails to meet this burden, summary judgment is not appropriate; if the moving party meets this burden, the nonmoving party has the reciprocal burden to point to evidence of specific facts in the record demonstrating the existence of a genuine issue of material fact for trial. Id. at 293. Summary judgment is appropriate if the nonmoving party fails to meet this burden. Id.
{14} In her first assignment of error, Michko argues that the trial court erred in granting summary judgment to Bank of America on the first two counts of the complaint because Bank of America failed to present evidence establishing that it complied with HUD loss mitigation requirements and the face-to-face meeting requirement set forth in
{15} Paragraph 6(B) of the note provides:
Default
If Borrower defaults by failing to pay in full any monthly payment, then Lender may, except as limited by regulations of the Secretary in the case of payment defaults, require immediate payment in full of the principal balance remaining due and all accrued interest. Lender may choose not to exercise this option without waiving its rights in the event of any subsequent default. In many circumstances, regulations issued by the Secretary will limit Lender‘s rights to require immediate payment in full inthe case of payment defaults. This Note does not authorize acceleration when not permitted by HUD regulations. As used in this Note, “Secretary” means the Secretary of the Housing and Urban Development or his or her designee.
{16} Paragraph 9(d) of the mortgage similarly provides:
Regulations of HUD Secretary. In many circumstances regulations issued by the Secretary will limit Lender‘s rights, in the case of payment defaults, to require immediate payment in full and foreclose if not paid. This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary.
{17} Bank of America does not dispute that the HUD regulations referenced by Michko applied to the note and mortgage at issue. Rather, Bank of America contends that because Michko did not specifically raise Bank of America‘s alleged failure to comply with HUD regulations in her answer, its compliance with HUD regulations was not “at issue in this case” and, therefore, it was not required to submit evidence establishing the absence of a genuine issue of material fact regarding its compliance with HUD regulations to meet its burden on summary judgment. We agree.
{18} This court has previously held that when federal regulations relating to default and acceleration of loans are incorporated into the terms of a note and mortgage, compliance with those regulations are conditions precedent to foreclosure. Secy. of Veterans Affairs v. Anderson, 8th Dist. Cuyahoga No. 99957, 2014-Ohio-3493, ¶ 15 (where federal regulations regarding default and acceleration of loans guaranteed by the Department of Veterans’ Affairs were incorporated into note and mortgage, compliance with those regulations was a condition precedent to foreclosure). As such, they are subject to the special pleading requirements of Civ.R. 9(C). Id. at ¶ 15-16.
{19}
{20} The first paragraph of the complaint states that plaintiff “has complied with all conditions precedent as set forth in the note and mortgage.” This was sufficient under
{21} In her answer, Michko generally denied all the allegations of counts one and two of the complaint (except to admit that she and/or other defendants have or claim to have an interest in the property) but made no specific reference to Bank of America‘s alleged noncompliance with any HUD regulations or any other requirements relating to the default, acceleration or foreclosure of FHA loans. Thus, Michko did not comply with
{22} Accordingly, the trial court did not err in granting summary judgment on this basis, and Michko‘s first assignment of error is overruled.
Evidence in Support of Motion for Summary Judgment
{23} Michko‘s second assignment of error challenges the sufficiency of the affidavit and related documentation that Bank of America submitted in support of its motion for summary judgment.
Personal Knowledge Requirement under Civ.R. 56(E)
{24} Michko first argues that Kotchey‘s affidavit was not based on personal knowledge as required under
{25} Michko further argues that the affidavit “did not comply with what was required to demonstrate personal knowledge” as to whether Bank of America had possession of the original note because (1) none of the documents attached to the affidavit
{26} Michko, however, did not oppose Bank of America‘s motion for summary judgment and thus did not challenge Kotchey‘s affidavit (or any of the other documents Bank of America submitted in support of its motion for summary judgment) at that time. Failure of a party to move to strike or otherwise object to documentary evidence submitted by an opposing party in support of, or in opposition to, a motion for summary judgment waives any error in considering that evidence under
{27} Given the absence of any timely objection by Michko, Michko waived such objections, and the trial court could properly consider Kotchey‘s affidavit in ruling on Bank of America‘s motion for summary judgment.
{28} Likewise, with the exception of her argument that Kotchey failed to indicate in her affidavit that she viewed the original note as opposed to an electronic scan of the note, Michko did not raise any of the issues she now raises with respect to Kotchey‘s affidavit in her objections to the magistrate‘s decision. It is well established that a party cannot raise arguments and issues for the first time on appeal that he or she failed to raise before the trial court. See, e.g., Mosley v. Cuyahoga Cty. Bd. of Mental Retardation, 8th Dist. Cuyahoga No. 96070, 2011-Ohio-3072, ¶ 55, citing Dolan v. Dolan, 11th Dist. Trumbull Nos. 2000-T-0154 and 2001-T-0003, 2002-Ohio-2440, ¶ 7, citing Co. v. Cleveland” cite=“41 Ohio St.2d 41” court=“Ohio” date=“1975“>Stores Realty Co. v. Cleveland, 41 Ohio St.2d 41, 322 N.E.2d 629 (1975); Papadelis, 2006-Ohio-5453 at ¶ 32. This rule applies with equal force in appeals of summary judgment proceedings in foreclosure actions. See, e.g., Wells Fargo Bank, N.A. v. Geiser, 12th Dist. Butler No. CA2013-06-103, 2014-Ohio-3379, ¶ 10, fn. 3 (“It is axiomatic that a party cannot raise new issues or legal theories for the first time on appeal and failure to raise an issue before the trial court results in waiver of that issue for appellate purposes.“), quoting Dudley v. Dudley, 12th Dist. Butler No. CA2008-07-165, 2009-Ohio-1166, ¶ 18. Therefore, she has waived them.
{29} Even if, however, we were to consider the merits of Michko‘s arguments related to Kotchey‘s affidavit, we would find that Kotchey‘s affidavit was sufficient to comply with
{30}
Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated in the affidavit. Sworn or certified copies of all papers or parts of papers referred to in an affidavit shall be attached to or served with the affidavit. * * *
{32} Kotchey averred that her affidavit was based upon “information * * * taken from [Bank of America‘s] business records,” her review of Bank of America‘s business records, including those relating to the loan at issue, her “personal knowledge” of Bank of America‘s “procedures for creating [the records for the subject loan]” and her “personal knowledge of how [Bank of America‘s business] records are created and maintained.” Kotchey further averred that the records were made at or near the time of the occurrence of the matters recorded by persons with personal knowledge or from information transmitted by persons with personal knowledge, that the records were kept in the course
{33} In our view, the facts stated in Kotchey‘s affidavit, combined with the position she holds at Bank of America and her assertions regarding her job duties there, create a reasonable inference that she has personal knowledge of the facts contained in her affidavit. Because they were not controverted by other evidence, her statements were enough to satisfy
{34} With respect to Michko‘s argument that Kotchey‘s affidavit was deficient because Kotchey did not state that she personally viewed the original note (as opposed to an electronic scan of the note) and compared the original to the copy of the note attached to her affidavit before testifying that the copy was a “true and correct copy” of the original, this court previously rejected such an argument in Hammond as follows:
As for the decision of the Fifth District Court of Appeals in [Wachovia Bank of Delaware, N.A. v. Jackson, 5th Dist. Stark No. 2010-CA-000291, 2011-Ohio-3203 ¶ 46, 49], which provides that summary judgment affidavits based on documents must include an averment that the affiant compared copies of the documents attached to the affidavit with the originals, this court has not adopted this as a requirement under
Civ.R. 56(E) , nor do we intend to do so because the Ohio Supreme Court has not made this a requirement ofCiv.R. 56(E) . See HSBC Mtge. Servs. v. Williams, 12th Dist. Butler No. CA2013-09-174, 2014-Ohio-3778.
* * * [W]e find appellant‘s reliance on [HSBC Mtge. Servs. Inc. v. Edmon, 6th Dist. Erie No. E-11-046, 2012-Ohio-4990], to be misplaced. In Edmon, the Sixth District held that the trial court erred in granting summary judgment to the bank where the borrower demonstrated a triable issue of fact as to the authenticity of the promissory note by offering testimony showing that the loan servicing officer did not review the original promissory note prior to swearing in her affidavit that the copy of the note attached to complaint was a true and accurate copy of the original. In Edmon, the servicing officer admitted at her deposition that she never viewed the original note. In the case at hand, however, appellant has provided this court with no evidence to suggest that [the affiant] reviewed only imaged copies of the documents he claimed to authenticate in his affidavit. Thus, there is no triable issue relating to [the affiant‘s] personal knowledge in this matter.
Hammond at ¶ 37-38. In this case, Kotchey‘s affidavit included statements from which it could be inferred that she compared the original note (and the originals of the other documents referenced in her affidavit) to the copies so she could attest that the copies attached to her affidavit were true and exact. See U.S. Bank N.A. v. Bobo, 4th Dist. Athens No. 13CA45, 2014-Ohio-4975, ¶ 30. Michko produced no evidence to suggest that Kotchey reviewed only an imaged copy of the note she claims to authenticate in her affidavit. Therefore, there is no triable issue of fact relating to Kotchey‘s authentication of the note or personal knowledge as set forth in her affidavit.
Documents Evidencing Merger Between BAC Home Loans Servicing, LP and Bank of America
{35} Michko also contends that the trial court erred in entering summary judgment because there was “no Civil Rule 56 evidence before the trial court” proving that BAC Home Loans Servicing, LP had merged into Bank of America. In moving for summary judgment, Bank of America submitted evidence that it was the holder of the
Motion for Judgment on the Pleadings
{36} Michko‘s third assignment of error relates to the third count of the amended complaint. Michko argues that the trial court erred in granting Bank of America‘s motion for judgment on the pleadings as to the third count of the amended complaint because Bank of America failed to point to any evidence in the record
{37} Motions for judgment on the pleadings are governed by
{38} In the third count of the amended complaint, Bank of America sought a declaration that a prior warranty deed in the chain of title of the property — a warranty deed from Mark Walker (grantor) to Richard Gardner (grantee) recorded on November 5,
8. Plaintiff says that as a result of the mutual mistake of the parties to the Warranty Deed * * * a copy of which is attached hereto * * * the acknowledgment is faulty as it failed to contain the name of the grantor, Denise Walker.
9. Plaintiff further says that the parties to the Warranty Deed * * * intended to have the grantor acknowledged, so that Plaintiff is entitled to a declaration by the Court that despite the defective acknowledgment by the parties thereto, the Warranty Deed * * * is valid and that Defendant, Katherine L. Michko, is the owner in fee simple of the real property described therein.
{39} In her answer, Michko “admits the allegations contained in paragraph 9.” Because Michko (who was not a party to the warranty deed at issue) admitted in her answer that Bank of America was entitled to a declaration that the warranty deed was valid and all of the other persons who were parties to the warranty deed defaulted, Bank of America was not required to offer any evidence of mutual mistake in order to establish its entitlement to a declaration that the warranty deed was valid. Accordingly, the trial court did not err in entering judgment on the pleadings on the third count of the amended complaint. Michko‘s third assignment of error is overruled.
It is ordered that appellee recover from appellant the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
EILEEN A. GALLAGHER, PRESIDING JUDGE
SEAN C. GALLAGHER, J., and
ANITA LASTER MAYS, J., CONCUR