THE BANK OF NEW YORK MELLON v. DAVID M. MORGAN, et al.
C.A. CASE NO. 25664
IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO
October 4, 2013
[Cite as Bank of New York Mellon v. Morgan, 2013-Ohio-4393.]
T.C. NO. 11CV5243, 11CV6630; (Civil appeal from Common Pleas Court)
JONATHAN F. HUNG, Atty. Reg. No. 0082434 and JARED A. WAGNER, Atty. Reg. No. 0076674, 800 Performance Place, 109 N. Main Street, Dayton, Ohio 45402 Attorneys for Defendants-Appellants
OPINION
FROELICH, J.
{¶ 1} David M. Morgan and Karen R. Kaylor appeal from a judgment of the Montgomery County Court of Common Pleas in favor of Bank of New York Mellon in its foreclosure action and in Morgan and Kaylor‘s quiet title action. For the following reasons,
I. Factual and Procedural History
{¶ 2} In 2006, Morgan and Kaylor borrowed $511,200 from Kemper Mortgage, Inc., to purchase the property located at 9321 Ash Hollow Lane. Morgan and Kaylor signed an adjustable rate interest-only note for that amount, and the note was secured by a mortgage on the property.
{¶ 3} In July 2011, Bank of New York Mellon (“BNYM“) filed a complaint for foreclosure, alleging that the note was in default, the entire balance was properly declared due, and it was entitled to judgment and a decree of foreclosure. Bank of New York Mellon v. Morgan, Montgomery C.P. No. 2011 CV 5243. BNYM attached a copy of the note and mortgage to its complaint. The note contained an endorsement from Kemper Mortgage to Decision One Mortgage Company and a blank endorsement by Decision One Mortgage. BNYM also attached assignments of mortgage from Kemper to Mortgage Electronic Registration System, Inc. (MERS), and from MERS to BNYM.
{¶ 4} Morgan and Kaylor were timely served with the complaint. Representing themselves in the action, the homeowners filed an answer denying the allegations. Morgan and Kaylor also included a counterclaim against BNYM, which raised violations of various consumer and real estate statutes and asked the court to suspend the foreclosure and quiet title in their favor. On September 15, 2011, Morgan and Kaylor filed a separate quiet title action against Bank of America, N.A., MERS, and BNYM. Morgan v. Bank America, N.A., Montgomery C.P. No. 2011 CV 6630. Upon BNYM‘s motion, the trial court consolidated the two cases.1
{¶ 6} On July 23, 2012, BNYM moved for summary judgment on Morgan and Kaylor‘s quiet title claim. The bank argued that the homeowners could not establish a prima facie case for a quiet title action under
{¶ 7} Within days of the filing of BNYM‘s motions for summary judgment, Morgan and Kaylor‘s newly-retained counsel filed a notice of appearance, and the homeowners moved for leave to amend their answer. Morgan and Kaylor indicated that they wished to amend their answer to “more specifically state their affirmative defenses and plead more consistently with their discovery responses,” to restate and clarify their claims regarding BNYM‘s standing to enforce the note and mortgage, and to include a third-party complaint against Kemper Mortgage.
{¶ 8} On August 1, 2013, Morgan and Kaylor filed a motion to delay or deny summary judgment on BNYM‘s claims against them, pursuant
{¶ 9} While noting that their motions to amend their pleading and to delay ruling on summary judgment were still pending, Morgan and Kaylor responded to BNYM‘s motions for summary judgment. Morgan and Kaylor argued that the affidavit provided by BNYM in support of its summary judgment motion in the foreclosure action was inadmissible, and they asserted that genuine issues of material fact existed as to whether BNYM was the holder of the note and was properly assigned the mortgage. The trial court subsequently denied the homeowners’ motion for leave to amend their pleading.
{¶ 10} On September 19, 2012, Morgan and Kaylor filed a second motion to compel discovery from BNYM. They argued that many of BNYM‘s discovery responses were incomplete and the bank had not been cooperative in resolving the dispute about their answers. All of the disputed interrogatories and requests for production of documents concerned BNYM‘s evidence of their ownership of the note and mortgage. Morgan and Kaylor also complained that BNYM had not contacted them to arrange a time for them to inspect the original note.
{¶ 11} On October 9, 2012, the trial court ordered BNYM to answer whether a particular individual was an employee of MERS, but otherwise overruled the motion to compel. With respect to the original note, the court noted that BNYM had responded, “Plaintiff will make the original note available for inspection and copying at a time and place that is convenient to Defendants David Morgan and Karen Kaylor. Once counsel for
{¶ 12} On October 24, 2012, the trial court overruled Morgan and Kaylor‘s
{¶ 13} Morgan and Kaylor appeal from the trial court‘s judgment. They raise three assignments of error, which we will address in reverse order.
II. Denial of Motion to Amend Pleadings
{¶ 14} Morgan and Kaylor‘s third assignment of error states, “The trial court erred when it overruled Appellants’ motion for leave to amend their pleadings.”
{¶ 15}
{¶ 16} As stated above, after obtaining counsel, Morgan and Kaylor filed a motion to amend their answer for the purpose of clarifying their affirmative defenses and allegations so that they were consistent with their discovery answers. They also sought to add a third-party complaint against Kemper to raise claims of breach of fiduciary duty and slander of title. The trial court denied Morgan and Kaylor‘s motion without explanation.
{¶ 17} To the extent that Morgan and Kaylor sought simply to clarify their allegations and defenses, the trial court did not abuse its discretion in denying the motion to amend. Although the amended answer and counterclaim may have been more artfully written than those that were filed pro se, the claims asserted in the amended answer and counterclaim were already before the court. While the trial court could have reasonably permitted the answer and counterclaim to be amended, it was not reversible error for the trial court to deny the motion.
{¶ 18} Morgan and Kaylor sought to add Kemper Mortgage, the original mortgagee, to the litigation through a third-party complaint. The homeowners’ proposed claim for breach of fiduciary duty alleged that Kemper breached its duty to them by erroneously determining that the note was within their financial means. The homeowners also alleged that Kemper had a duty to record a corporate assignment of mortgage to Decision One.
{¶ 19} Under
{¶ 20} BNYM brought suit against Morgan and Kaylor due to the homeowners’ alleged default on the note and mortgage in connection with the Ash Hollow property. Morgan and Kaylor‘s claims against Kemper, although related to their purchase of the Ash Hollow property, do not assert that Kemper may be liable to them for all or part of BNYM‘s claims against them. Morgan and Kaylor seek a monetary judgment against Kemper for its own actions related to the lending of money to the homeowners and the recording of the assignment of mortgage to MERS. Morgan and Kaylor‘s claims against Kemper do not fall within the scope of
{¶ 21} The third assignment of error is overruled.
III. Denial of Civ.R. 56(F) Motion
{¶ 22} Morgan and Kaylor‘s second assignment of error states, “The trial court
{¶ 23} In their second assignment of error, Morgan and Kaylor claim that the trial court should have deferred ruling on BNYM‘s motion for summary judgment and allowed them additional time to conduct discovery under
{¶ 24}
Should it appear from the affidavits of a party opposing the motion for summary judgment that the party cannot for sufficient reasons stated present by affidavit facts essential to justify the party‘s opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or discovery to be had or may make such other order as is just.
“The trial court‘s determination of a
{¶ 25} We discussed the requirements of
Pursuant to
Civ.R. 7([B]) , the grounds for aCiv.R. 56(F) motion for a continuance must be stated with particularity. In addition,Civ.R. 56(F) requires the motion to be supported by an affidavit containing “sufficient reasons why (the nonmoving party) cannot present by affidavit facts sufficient to justify its opposition” to the summary judgment motion. “Mereallegations requesting a continuance or deferral of action for the purpose of discovery are not sufficient reasons why a party cannot present affidavits in opposition to the motion for summary judgment.” “There must be a factual basis stated and reasons given within an affidavit why a party cannot present facts essential to its opposition to the motion.” A party who seeks a continuance for further discovery is not required to specify what facts he hopes to discover, especially where the facts are in the control of the party moving for summary judgment. However, the court must be convinced that there is a likelihood of discovering some such facts. Further, a claim that the party has not completed discovery is more likely to be rejected by the court where the party has not shown some diligence in attempting discovery.
Doriott at ¶ 40-41; see also Bank of Am. v. McGlothin, 2d Dist. Clark No. 2012 CA 96, 2013-Ohio-2755, ¶ 12-15.
{¶ 26} Morgan and Kaylor originally served BNYM with interrogatories and requests for production of documents in January 2012. After Morgan and Kaylor filed a motion to compel discovery, BNYM provided answers on April 6, 2012.
{¶ 27} In their
{¶ 28} Approximately six weeks after filing their
{¶ 29} Upon review of the record, the trial court did not abuse its discretion in overruling Morgan and Kaylor‘s
{¶ 30} In addition, Morgan and Kaylor sought evidence that BNYM had possession of the original note. They wanted to know who delivered the note to BNYM and to inspect the note. BNYM‘s responses referred the homeowners to Vela, who could have
{¶ 31} The second assignment of error is overruled.
IV. Motion for Summary Judgment
{¶ 32} Morgan and Kaylor‘s first assignment of error states, “The trial court erred when it granted Appellee‘s motion for summary judgment.”
{¶ 33} Pursuant to
{¶ 34} Once the moving party satisfies its burden, the nonmoving party may not rest upon the mere allegations or denials of the party‘s pleadings. Dresher at 293;
{¶ 35} At the outset, it is undisputed that Morgan and Kaylor borrowed $511,200 from Kemper Mortgage to purchase the Ash Hollow property and signed a mortgage securing the loan. The homeowners also do not dispute that they have defaulted on their payments; they admitted in BNYM‘s request for admissions that their last payment was made on January 20, 2011, and that they are obligated to repay the money that they borrowed, plus interest. Morgan and Kaylor also acknowledged that they received a notice of default.
{¶ 36} In support of their motions for summary judgment, BNYM submitted an affidavit by Veronica Vela of Bank of America, N.A. (“BANA“), which services the homeowners’ loan for BNYM. Vela stated that BANA maintains the loan records for BNYM, that she had personal knowledge of “BANA‘s procedures for creating these records,” that, as part of her job, she is familiar with the types of records maintained by BANA in connection with Morgan and Kaylor‘s loan, and that the information contained in her affidavit was taken from BANA‘s business records. Vela stated that she “personally reviewed the attached records, and I make this affidavit from a review of those business records and from my personal knowledge of how said records are created and maintained.”
{¶ 37} According to Vela‘s affidavit, BNYM “holds the Note and is the person entitled to enforce a certain promissory note,” which was secured by a mortgage. Copies of
{¶ 38} Also attached to Vela‘s affidavit were “true and accurate” copies of Morgan and Kaylor‘s payment history and a notice of default. The payment history showed that Morgan and Kaylor‘s last payment was made on January 28, 2011, and that the payment was applied to the amount due in November 2010. Vela stated that Morgan and Kaylor defaulted on the terms of the note when they failed to make the monthly payment due on December 1, 2010. BANA notified them of the default, the default was never cured, the loan was never reinstated or paid off, and the note and mortgage remain in default. The entire balance has been accelerated and is due.
{¶ 39} BNYM also submitted an affidavit by Edward Cahill, legal assistant to Kelly Spengler, who was an attorney for BNYM. Cahill stated that he requested certified copies from the Montgomery County Recorder‘s Office of the mortgage in favor of Kemper, the assignment of mortgage from Kemper to MERS, and the assignment of mortgage from MERS to BNYM. Cahill stated that the Montgomery County Recorder‘s Office returned the three certified copies attached to his affidavit.
{¶ 40} In opposing BNYM‘s summary judgment motion, Morgan and Kaylor asserted that genuine issues of material fact existed regarding whether BNYM had actual possession of and was entitled to enforce the note. The homeowners claimed that BNYM
{¶ 41} According to Morgan‘s second affidavit, on March 15, 2006, he attended the closing for the loan on the Ash Hollow property. At the closing, Kemper provided documents giving notice of its assignment of its rights and interests in the promissory note and mortgage executed by Morgan and Kaylor. Morgan attached unsigned copies of a “Notice of Assignment, Sale or Transfer of Servicing Rights” from Kemper to Decision One, a “Corporate Assignment of Mortgage” from Kemper to Decision One, and a “Request for Change to Insurance Policy” so that Decision One, rather than Kemper, was listed as mortgagee. Morgan further stated in his affidavit that BNYM had not produced the original promissory note or mortgage to him or Kaylor.
{¶ 42} The trial court granted summary judgment to BNYM for both the quiet title action and its foreclosure action. After reviewing the evidence submitted by the parties, the court concluded in its quiet title decision:
Based on the evidence before the Court, it appears that Morgan and Kaylor were fully aware of what they were doing and intended to execute the mortgage and note at issue. There is no dispute of fact that Defendants fully intended to execute a mortgage in favor of Kemper Mortgage, Inc. to secure the promissory note at issue. The documents attached to Defendant
Morgan‘s Second Affidavit do not call into question the validity of the assignment of the mortgage to MERS or BNY. The note is endorsed in blank and is bearer paper. BNY has filed evidence showing that it is the holder of the note. Defendants have failed to show that a dispute of fact exists as to their claim(s) for quiet title. The Court finds that BNY is entitled to summary judgment on Morgan and Kaylor‘s claims for quiet title against BNY.
{¶ 43} In granting summary judgment to BNYM on its own claims, the trial court rejected Morgan and Kaylor‘s contention that Vela‘s affidavit was hearsay and did not contain the proper basis of knowledge to support a finding that she had personal knowledge of the matters to which she testified. It further stated that BNYM was not required to produce the original documents, as the documents produced by BNYM were sworn or certified copies and the assignments of mortgage were exempt from the hearsay rule. The court found that no genuine issues of material fact existed and that the evidence indicated that BNYM was the holder of the note and assignee of the mortgage.
{¶ 44} On appeal, Morgan and Kaylor raise the same arguments that they presented to the trial court. Upon review, we find no fault with the trial court‘s grant of summary judgment.
{¶ 45} First, Vela‘s affidavit sufficiently alleged that she had knowledge of the facts included in her affidavit. As we recently stated in Fifth Third Mtge. Co. v. Campbell, 2d Dist. Montgomery No. 25458, 2013-Ohio-3032:
Civ.R. 56(E) provides that a supporting affidavit must “be made on personalknowledge,” must “set forth such facts as would be admissible in evidence,” and must “show affirmatively that the affiant is competent to testify to the matters stated in the affidavit.” “A flat statement by the affiant that he had personal knowledge is adequate to satisfy Civ.R. 56(E) .” (Citation omitted.) Bank One, N.A. v. Swartz, 9th Dist. Lorain No. 03CA008308, 2004-Ohio-1986, ¶ 14 (saying also that “a specific averment that an affidavit pertaining to business is made upon personal knowledge of the affiant satisfies theCiv.R. 56(E) requirement that affidavits both in support or in opposition to motions for summary judgment show that the affiant is competent to testify to the matters stated“).
Campbell at ¶ 6. Vela‘s affidavit stated that she had personal knowledge of how BANA‘s records are created and maintained, that BANA maintained the loan records for BNYM, and that the facts contained in her affidavit were based on that knowledge and her personal review of the records attached to the affidavit. The trial court did not err in considering Vela‘s affidavit.
{¶ 46} In addition, the trial court did not err in considering the documents attached to Vela‘s and Cahill‘s affidavits. The note, mortgage, and assignments of mortgage were attached to the affidavits, they were authenticated and verified, and they fall under the business-records hearsay exception in
{¶ 47} Upon review of the parties’ evidence, we find no genuine issue of material fact as to whether BNYM was the holder of the note. The note was executed by Morgan
{¶ 48} Morgan and Kaylor argue that genuine issues of material fact exist as to BNYM‘s actual possession of the note because BNYM refused to provide them an opportunity to inspect the original copy of the note. They rely on Bank of New York Mellon Trust Co Natl. v. Mihalca, 9th Dist. Summit No. 25747, 2012-Ohio-567, for the proposition that a trial court errs in granting summary judgment to a plaintiff-bank when the bank fails to produce the original copy of a note upon timely request by the defendant-payors for inspection.
{¶ 49} In Mihalca, the Ninth District specifically stated that “[n]othing in this opinion should be read to suggest a requirement that foreclosure complaints may only be filed with original notes and mortgage documents.” Id. at ¶ 19. Rather, the appellate court concluded that “the affidavit [before the trial court] was insufficient to overcome the doubt that the Bank lacked current possession of the note for purposes of summary judgment.” Id. at ¶ 18. The differences in the affidavit and the distinct discovery and pre-trial rulings distinguish Mihalca from this case.
{¶ 50} Moreover, we have previously held that a foreclosing bank was not required to present the original documents to the trial court and that a trial court could rely on copies
{¶ 51} Morgan and Kaylor further claim that BNYM did not establish that it had standing to bring the foreclosure action, because they produced evidence that Kemper assigned the mortgage to Decision One prior to Kemper‘s purported assignment to MERS. Morgan and Kaylor did not present any evidence of any signed assignment of mortgage from Kemper to Decision One. And even assuming, arguendo, that there were irregularities in assignment of the mortgage, Ohio courts have recognized that in such cases the mortgage automatically follows the note it secures. See, e.g., Bank of New York Mellon v. Loudermilk, 5th Dist. Fairfield No. 2012-CA-30, 2013-Ohio-2296, ¶ 43 (citing cases);
{¶ 52} Accordingly, the trial court did not err in granting summary judgment to BNYM on its claims against Morgan and Kaylor and on the homeowners’ claims against it. The first assignment of error is overruled.
V. Conclusion
{¶ 53} The trial court‘s judgment will be affirmed.
HALL, J. and WELBAUM, J., concur.
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