BANK OF AMERICA, N.A. v. PAUL CALLOWAY, ET AL.
No. 103622
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
December 1, 2016
2016-Ohio-7959
Blackmon, J., Kilbane, P.J., and Stewart, J.
Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV-11-764310. JUDGMENT: AFFIRMED.
Grace Mary Doberdruk
3401 Enterprise Parkway, Suite 340
Beachwood, Ohio 44122
ATTORNEYS FOR APPELLEES
For Paul Calloway
Patricia Kay Block
Lori N. Wight
Lerner, Sampson & Rothfuss
P.O. Box 5480
Cincinnati, Ohio 45201
Rick D. Deblasis
Adam R. Fogelman
Lerner, Sampson & Rothfuss
120 East Fourth Street, 8th Floor
Cincinnati, Ohio 45202
Romi T. Fox
Lerner, Sampson & Rothfuss
P.O. Box 5480
Cincinnati, Ohio 45201
Melissa A. Laubenthal
Kathleen A. Nitschke
Laren C. Tompkins
Giffen & Kaminski, L.L.C.
1300 East Ninth Street
Suite 1600
Cleveland, Ohio 44114
Also Listed:
715 Broadway Avenue
Lorain, Ohio 44052
Landmark Nation
1268 North River Road
Suite 1
Warren, Ohio 44483
PATRICIA ANN BLACKMON, J.:
{¶2} Having reviewed the record and pertinent law, we affirm the trial court‘s judgment. The apposite facts follow.
{¶3} In March 2005, Paul Calloway executed a promissory note for $138,000 secured by a mortgage for the purchase of property located in Euclid, Ohio. While the note was only executed by Paul, the mortgage was in the name of Paul and Terri. As a result, BOA did not seek a personal money judgment against Terri.
{¶4} The note, which was indorsed in blank, was executed in favor of Countrywide Home Loans, Inc., d.b.a., America‘s Wholesale Lender. The mortgage securing the note was in favor of Mortgage Electronic Registration Systems, Inc. (“MERS“). Paul Calloway executed a name affidavit in conjunction with the note and mortgage execution attesting that he is known as “Paul Calloway” and “Paul J. Callaway.” The Calloways made 38 payments on the note and mortgage from March 2005 to July 2008 before they stopped payment entirely. In 2014, Paul Calloway purchased a home in San Antonio, Texas where the Calloways now live.
{¶6} BOA filed a motion for summary judgment that was denied by the trial court. The matter was referred to mediation. The parties were unable to settle; therefore, the matter proceeded to a bench trial before a foreclosure magistrate. The magistrate issued a 24-page decision in which it found that Paul Calloway defaulted on payment of the note; that BOA was the current holder of the note and mortgage; and, that BOA had complied with all the conditions precedent contained in the mortgage prior to filing the complaint for foreclosure. The magistrate found that BOA was entitled to foreclose on the property and awarded BOA $132,752, plus interest at a the rate of 6.5% per annum from June 1, 2008, for the default payment on the note. The Calloways filed objections to the magistrate‘s decision. The trial court overruled the objections and adopted the magistrate‘s decision.
{¶7} We will address the Calloways’ first and fourth assigned errors together because they both argue that BOA failed to prove that it had standing to bring the foreclosure suit because the trial court erred by allowing the testimony of BOA representative, Sirdonia Davis (“Davis“). The Calloways argue that Davis was not competent to testify because she did not have personal knowledge of the Calloways’ records. They also argued that the trial court erred by allowing their loan documents to be admitted because Davis lacked personal knowledge to authenticate the documents.
{¶8} The admission of evidence lies within the broad discretion of the trial court. Beard v. Meridia Huron Hosp., 106 Ohio St.3d 237, 2005-Ohio-4787, 834 N.E.2d 323, ¶ 20. A reviewing court will uphold an evidentiary decision absent an abuse of discretion that has affected the substantial rights of the adverse party or is inconsistent with substantial justice. Beard at ¶ 20. The trial court did not abuse its discretion by allowing Davis to testify or allowing the documents to be admitted.
{¶9}
{¶10} Notably, the cases cited by the Calloways are cases where affidavits in support of summary judgment were at issue, and the affidavits were found to be inadequate.3 In the instant case, Davis throughly testified as to her qualifications and knowledge as to the documents and record-keeping practices of BOA. Defense counsel also extensively cross-examined Davis as to her knowledge. Davis testified that she was the assistant vice president in BOA‘s mortgage resolution department. In this position, she was responsible for managing the portfolios of cases in litigation. As a result, she was familiar with BOA‘s record keeping practices for residential mortgage loans and had access to the Calloways’ files with which she was familiar. She testified that she also reviewed the documents of the prior servicer and that she had no reason to question the accuracy of the records, which were maintained in the same manner as BOA. Additionally, Davis established the chain of title of the mortgage. Under these circumstances, Calloway had sufficient personal knowledge to be found competent to testify as to matters related to the subject loan.
“[E]xhibits can be admitted as business records of an entity, even when that entity was not the maker of those records, provided that the other requirements of [Evid.R.] 803(6) are met and the circumstances indicate that the records are trustworthy.” [Great Seneca Fin. v. Felty, 170 Ohio App.3d 737, 2006-Ohio-6618, 869 N.E.2d 30], ¶ 14.
The question before us is whether Alves had “personal knowledge” of the documents she reviewed, as contemplated by
Civ.R. 56(E) . While we acknowledge that Alves did not create the Zigdon documents, we hold that her affidavit is admissible to support a summary judgment motion under the business record exception to the rule against hearsay._Alves is a Legal Specialist and Consumer Counselor for RBS. The documents she reviewed relating to the Zigdons were business records created by Charter One. On September 1, 2007, RBS and Charter One merged, with RBS taking over Charter One‘s accounts. As part of Alves’ job duties, she is the custodian of Charter One documents pertaining to the Zigdons’ line of credit._
Accordingly, the court did not abuse its discretion when it denied the Zigdons’ motion to strike Alves’ affidavit.
Id. at ¶ 15-17.
{¶12} Davis testified that she was not the custodian of the records. However,
For a document to be admitted as a business record, it must first be properly identified and authenticated “by evidence sufficient to support a finding that the matter in question is what its proponent claims.”
Evid.R. 901(A) . “This low threshold standard does not require conclusive proof of authenticity, but only sufficient foundational evidence for the trier of fact to conclude that the document is what its proponent claims it to be.” State v. Easter, 75 Ohio App.3d 22, 25, 598 N.E.2d 845 (4th Dist.1991).
Id. at ¶ 30. Davis‘s knowledge along with the production of the originals of the loan and note at trial were sufficient to prove the documents were in fact what Davis testified they were.
{¶13} Because Davis was competent to testify and authenticate the documents related to the Calloways’ loan, the trial court did not err by concluding that BOA had standing to bring the foreclosure action. A party has standing in a foreclosure suit, 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. CitiMortgage, Inc. v. Patterson, 8th Dist. Cuyahoga No. 98360, 2012-Ohio-5894, ¶ 21, citing Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214.
{¶14} Although the Calloways make much of the fact that there was no evidence that Countrywide Home Loans, Inc. assigned the note to BOA, such evidence was unnecessary because BOA had possession of the note, which was indorsed in blank. Pursuant to
{¶15} The Calloways also argued that BOA was not the owner of the loan, only the servicer. According to the Calloways, the loan is owned by Federal National Mortgage Association (“Fannie Mae“) and that without Fannie Mae‘s authorization, BOA did not have the authority to foreclose.4 Who owns the loan is irrelevant to the enforcement of a promissory note and mortgage. As this court in Citimortgage Inc. v. Evans, 8th Dist. Cuyahoga No. 101882, 2015-Ohio-1384, explained:
In a foreclosure action, the current holder of the note and mortgage is the real party in interest. Wells Fargo Bank v. Stovall, 8th Dist. Cuyahoga No. 91802, 2010-Ohio-236. Under
R.C. 1303.31 , a “holder” is entitled to enforce an instrument. Notably, a person may be a “person entitled to enforce” an instrument even though the person is not the “owner” of the instrument. U.S. Bank, N.A. v. Coffey, 6th Dist. Erie No. E-11-026, 2012-Ohio-721, ¶ 20.
Id. at ¶ 16.
{¶16} Also, the evidence presented at trial showed that the mortgage was assigned to BOA. The documents testified to and admitted into evidence showed that the mortgage originated with MERS, as nominee for America‘s Wholesale Lender. On February 9, 2009, MERS, as nominee for America‘s Wholesale Lender, assigned the mortgage to Countrywide Home Loans Servicing, L.P. Subsequently, on April 21, 2009, Countrywide Home Loans Servicing L.P. amended its Certificate of Limited Partnership
Conditions Precedent
{¶17} In their second assigned error, the Calloways argue that the trial court erred by concluding that BOA complied with the conditions precedent to foreclosure as set forth in the mortgage because BOA‘s Davis lacked personal knowledge to authentic the letter that was allegedly sent to the Calloways advising them of the default and the acceleration of payment of the note.
{¶18} As stated above, Davis was qualified to authenticate the business records contained in the Calloways’ file. She testified that a Notice of Acceleration and Default Letter were sent on August 18, 2008, to the Calloways at the Euclid, Ohio address by first class mail. At that time Countrywide Home Loans L.P. was servicing the loan. However, this court in Nationstar Mtge., L.L.C. v. Wagener, 8th Dist. Cuyahoga No. 101280, 2015-Ohio-1289, ¶ 56, held that the current servicer can authenticate the notice of acceleration provided by a prior servicer.
{¶20} In the instant case, BOA asserted in its complaint that all conditions precedent had been preformed. In their answer, the Calloways generally denied all the allegations. Thus, BOA had no duty to prove that the conditions precedent had been satisfied. Accordingly, the Calloways’ second assigned error is overruled.
Invalid Signatures on Mortgage and Note
{¶21} In their third assigned error, the Calloways argue that the trial court erred by granting a judgment in foreclosure because (1) Paul Calloway denied signing the note and mortgage claiming he was told that the representative would take care of the paper work; (2) his name is misspelled on the note and mortgage; (3) Terri Calloway did not recall that a notary was present at the closing of the loan; and (4) the Calloways disputed the handwriting expert‘s analysis.
{¶22} The trial court found that “Paul Calloway failed to specifically deny the genuineness of his signature in his amended answer and did, as a matter of law, admit his
“Generally, the holder of a negotiable instrument * * * establishes a prima facie case for payment on a note where the note is placed in evidence and the makers’ signature(s) is (are) admitted.” Dryden v. Dryden, 86 Ohio App.3d 707, 711, 621 N.E.2d 1216 (4th Dist.1993), citing
R.C. 1303.36(B) . However, no person is liable on an instrument unless his or her signature appears thereon. Id., citingR.C. 1303.37(A) .R.C. 1303.36(A) provides that, “[u]nless specifically denied in the pleadings, in an action with respect to an instrument, the authenticity of, and authority to make, each signature on an instrument is admitted.” Consequently, it is initially presumed that all signatures are valid unless the defendant in his or her pleadings “specifically denies the validity” of the signature. Dryden at 711._A “specific denial” has been defined as “a statement that denies a particular fact and then states what actually occurred.” Id. at 712. An answer which denies “each and every allegation” of a plaintiff‘s complaint, without more, is not a specific denial of the genuineness of the defendant‘s signature and is, therefore, an admission for the purposes of
R.C. 1303.36 . Id., citing Bentz v. Mullins, 24 Ohio App.2d 137, 265 N.E.2d 317 (1st Dist.1970).
Green Tree Servicing, LLC v. Roberts, 12th Dist. Butler No. CA2013-03-039, 2013-Ohio-5362, ¶ 20-21.
{¶23} Here, the Calloways’ amended answer contains six general denials of the allegations contained in BOA‘s complaint. The Calloways never “specifically denied” that Paul‘s signatures appearing on the promissory note and mortgage were forgeries.
{¶24} Even if we addressed the merits of their argument, there is no grounds for reversal. In Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179, 972 N.E.2d 517, the Supreme Court of Ohio clarified the standard of review used to determine whether judgments in civil cases are against the manifest weight of the evidence. The court held
{¶25} Here, after reviewing the evidence, we find no basis to conclude that the trial court created a manifest miscarriage of justice in resolving the conflicts in evidence. Although Paul denies that he uses the surname “Calloway,” a Name Affidavit was admitted into evidence showing Calloway is known also as “Callaway.” Moreover, a handwriting expert testified extensively regarding comparisons made of the signatures on the note and mortgage with the known signature of Calloway on affidavits he submitted and a pro se answer he signed. The expert concluded that the signatures were all by the same individual. The Calloways’ counsel cross-examined the expert extensively on the fact that Calloway suffered from vision deficiencies and that there were discrepancies in the signatures. However, the expert stated that the signatures showed no indication that vision influenced the signatures. The expert also stated that it is impossible to have identical signatures as all signatures have discrepancies. The key to analyzing the handwriting is to determine if the discrepancies are found in other writings and whether
{¶26} The fact that Terri Calloway could not remember whether a notary was present when she signed the mortgage is irrelevant. We agree with the trial court that because Terri admitted to signing the mortgage, evidence that a notary was present was not necessary because Terri is not disputing that she signed the mortgage or claiming that she did so under duress. Accordingly, the Calloways’ third assigned error is overruled.
Assignment of Mortgage
{¶27} For ease of discussion, we will address the sixth error before the fifth error. The Calloways argue that the trial court erred by not allowing them to challenge the assignment of the mortgage. They contend that the assignment by MERS to BOA was not a valid assignment because it was executed by a BOA employee.
{¶28} In Bank of New York Mellon Trust Co. v. Unger, 8th Dist. Cuyahoga No. 97315, 2012-Ohio-1950, we held that a borrower does not have standing to challenge the validity of an assignment of the mortgage because the borrower is not a party to the assignment. Id. at ¶ 35. The reason for this conclusion is that the assignment does not alter [the borrower‘s] obligations under the note or mortgage. Id. See also Nationstar Mtge. LLC v. Dimasi, 8th Dist. Cuyahoga No. 102985, 2016-Ohio-3057, ¶ 16; Macintosh Farms Community Assn. v. Baker, 8th Dist. Cuyahoga No. 102820, 2015-Ohio-5263.
Amendment of Complaint
{¶30} In their fifth assigned error, the Calloways argue that the trial court erred by permitting BOA to amend the complaint to add an unjust enrichment claim after the trial had commenced.
{¶31} We conclude that this assigned error is moot. Although the magistrate permitted BOA to amend the complaint pursuant to
{¶33} Judgment affirmed.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the Cuyahoga County Common Pleas Court 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.
PATRICIA ANN BLACKMON, JUDGE
MARY EILEEN KILBANE, P.J., and MELODY J. STEWART, J., CONCUR
Assignments of Error
- The trial court erred when it granted a judgment of foreclosure to plaintiff appellee Bank of America.
- The trial court erred by granting a judgment of foreclosure when appellee did not demonstrate compliance with all conditions precedent to foreclosure.
- The court erred by granting a judgment of foreclosure when the mortgage did not have the proper spelling of appellants’ names, appellant Paul Calloway testified that he never signed the note or mortgage, appellant Terri Calloway testified that no notary was present, and the mortgage did not encumber the property.
- The court erred by admitting exhibits of records of the prior servicers when appellee Bank of America‘s Custodian of records did not testify.
- The court erred by permitting appellee to amend the complaint to add an unjust enrichment claim after the trial had begun and erred by granting a judgment and decree in foreclosure based on the unjust enrichment claim.
- The trial court erred by finding that appellants could not challenge the assignment of mortgage.