CITIMORTGAGE, INC. v. DAVID L. PATTERSON, ET AL.
No. 98360
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
December 13, 2012
2012-Ohio-5894
FRANK D. CELEBREZZE, JR., J.
Civil Appeal from the Cuyahoga County Court of Common Pleas, Case No. CV-601901. REVERSED AND REMANDED.
John C. Greiner
Harry W. Cappel
Graydon Head & Ritchey, L.L.P.
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202-3157
ATTORNEYS FOR APPELLEES
For David L. Patterson, et al.
Grace Doberdruk
Dann, Doberdruk & Wellen, L.L.C.
4600 Prospect Avenue
Cleveland, Ohio 44103
For Allstate Insurance Company
Allstate Insurance Co., pro se
280 Executive Parkway West
Hudson, Ohio 44236
{¶1} Plaintiff-appellant, CitiMortgage, Inc. (“CitiMortgage“), appeals the judgment of the Cuyahoga County Court of Common Pleas granting a motion to vacate a foreclosure judgment and sheriff‘s sale brought pursuant to
{¶2} This is an action in foreclosure stemming from а promissory note and mortgage on which the Pattersons defaulted. On September 20, 2006, CitiMortgage filed a complaint in foreclosure against the Pattersons. Attached to the complaint was a copy of the note and mortgage naming First National Bank of Arizona as the lender. The attached note also included an allonge of note bearing a blank indorsement. On February 28, 2007, CitiMortgage filed a notice of filing note and allonge of note evidencing the assignment of the mortgage to CitiMortgage. The assignment of the mortgage to CitiMortgage was executed on September 29, 2006, and filed with the Cuyahoga County Rеcorder on October 13, 2006.
{¶3} On April 10, 2007, the trial court entered a stay pursuant to the Pattersons’ Chapter 7 bankruptcy proceedings. The stay was lifted on April 14, 2008, and the case was reactivated. On June 25, 2008, CitiMortgage moved for default judgment.
{¶4} On November 24, 2008, the property was sold at sheriff‘s sale, and the sale was confirmed on December 4, 2008. On December 12, 2008, CitiMortgage filed a motion to vacatе the sale, and the trial court granted the motion on December 23, 2008. Subsequently, the property was sold at sheriff‘s sale on June 28, 2010.
{¶5} On June 28, 2010, the Pattersons filed a motion to stay the confirmation of sale. In response, CitiMortgage filed a motion to vacate the June 28, 2010 sale, which the trial court granted on September 27, 2010. On June 16, 2011, CitiMortgage filed a notice of sale with the trial court and scheduled a new sheriff‘s sale for July 11, 2011. On July 8, 2011, the Pattersons filed an emergency motion to stay the sheriff‘s sale and a
{¶6} On March 5, 2012, the trial court held a hearing on the Pattersons’ motion to vacate the default judgment. On April 19, 2012, the trial court granted the motion to vacate, stating in relevant part:
Upon review of the file, the motion for relief from judgment, and Plaintiff‘s brief in opposition thereto, and pursuant to precedent 2009-Ohio-1092,[2] the motion for relief from judgment of Mr. and Mrs. Patterson is granted. Plaintiff filed the instant action on 09/20/2006, and attached copies of the Note and Mortgage upon which the case was based. Unfortunately for plaintiff, however, the evidence provided indicates that the mortgage was not assigned to Plaintiff CitiMortgage, Inc., until 10/13/2006, after the case was filed. Plaintiff, therefore, has not provided sufficient evidence of standing as required by Wells Fargo v. Jordan. As a consequence, the sheriff‘s sale held 10/03/2011 is hereby vacated; the judgment rendered 09/11/2008 is also vacated; and the case is dismissed; without prejudice; final.
{¶7} CitiMortgagе now brings this timely appeal, raising three assignments of error for review:
I. The trial court erred as a matter of law by granting the Pattersons’ motion to vacate the judgment pursuant to
Ohio Civ.R. 60(B) .II. The trial court abused its discretion in granting the Pattersons‘s motion to vacate the judgment under
Ohio Civ.R. 60(B) .III. The trial court erred as a matter of law by ruling that it lacked standing to prosecute the foreclosure action.
Law and Analysis
{¶8} For the purposes of this appeal, we review CitiMortgage‘s assignments of error out of order because its third assignment of error is dispositive. CitiMortgage argues here that the trial court erred as a matter of law by ruling that CitiMortgage lacked standing to prosecute the case.
{¶9} Initially, CitiMortgage contends that if there were defects in its standing at the time it filed the foreclosure action on September 20, 2006, those purported defects were cured prior to the judgment of foreclosure pursuant to
{¶10} In Ohio,
Every action shall be prosecuted in the name of the real party in interest. * * * No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest. Such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.
{¶11} The real party in interest requirement “enable[s] the defendant to avail himself of evidence and defenses that the defendant has against the real party in interest, and to assure him finality of the judgment, and that he will be protected against another suit brought by the real party at interest on the same matter.” Shealy v. Campbell, 20 Ohio St.3d 23, 24-25, 485 N.E.2d 701 (1985), quoting In re Highland Holiday Subdivision, 27 Ohio App.2d 237, 273 N.E.2d 903 (4th Dist.1971). “The current hоlder of the note and mortgage is the real party in interest in a foreclosure action.” Wells Fargo Bank, N.A. v. Stovall, 8th Dist. No. 91802, 2010-Ohio-236, ¶ 15, citing Chase Manhattan Mtge. Corp. v. Smith, 1st Dist. No. C-061069, 2007-Ohio-5874.
{¶12} As stated, the trial court concluded that CitiMortgage did not have standing to prosecute the foreclosure action in this matter because it was not assigned the mortgage until approximately nine days after it filed the complaint for foreclosure against the
”
Civ.R. 17(A) is not applicable unless the plaintiff had standing to invoke the jurisdiction of the court in the first place, either in an individual or representative capacity, with some real interest in the subject matter.Civ.R. 17 only applies if the action is commenced by one who is sui juris or the proper party to bring the action.”
Id. at ¶ 21, citing Travelers Indemn. Co. v. R. L. Smith Co., 11th Dist. No. 2000-L-014, 2001 Ohio App. LEXIS 1750 (Apr. 13, 2001). We concluded that “in a foreclosure action, a bank that was not the mortgagee when suit was filed cannot cure its lack of standing by subsequently obtaining an interest in the mortgage.” Id. at ¶ 24; see also Deutsche Bank Natl. Trust Co. v. Triplett, 8th Dist. No. 94924, 2011-Ohio-478, ¶ 12; Wells Fargo Bank N.A. v. Byrd, 178 Ohio App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722 (1st Dist.).3
{¶14} In discussing the requirement of standing, the Ohio Supreme Court stated, “[i]t is an elementary concept of law that a party lacks standing to invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the subject matter of the action.” Id. at ¶ 22, citing State ex rel. Dallman v. Franklin Cty. Court of Common Pleas, 35 Ohio St.2d 176, 179, 298 N.E.2d 515 (1973). The court explained, “[b]ecause standing to sue is required to invoke the jurisdiction of the common pleas court, ‘standing is to be determined as of the commencement of suit.‘” Id. at ¶ 24, citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 570-571, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), fn. 5. “Thus, ‘post-filing events that supply standing that did not exist on filing may be disregarded, denying standing despite a showing of sufficient present injury caused by the challenged acts and capable of judicial redress.‘” Id. at ¶ 26, citing 13A Wright, Miller & Cooper, Federal Practice and Procedure 9, Section 3531 (2008).4
Here, Federal Home Loan concedes that there is no evidence that it had suffered any injury at the time it commenced this foreclosure action. Thus, because it failed to establish an interest in the note or mortgage at the time it filed suit, it had no stаnding to invoke the jurisdiction of the common pleas court.
{¶16} Next, the Ohio Supreme Court discussed the application of
Stаnding is required to invoke the jurisdiction of the common pleas court. Pursuant to
Civ.R. 82 , the Rules of Civil Procedure do not extend the jurisdiction of the courts of this state, and a common pleas court cannot substitute a real party in interest for another party if no party with standing has invoked its jurisdiction in the first instance.* * *
The lаck of standing at the commencement of a foreclosure action requires dismissal of the complaint, however, that dismissal is not an adjudication on the merits and is therefore without prejudice.
{¶17} Significantly, the court declined to follow its previous plurality opinion in State ex rel. Jones v. Suster, 84 Ohio St.3d 70, 1998-Ohio-275, 701 N.E.2d 1002, which suggested that “[t]he lack of standing may be cured by substituting the proper party so that a court otherwise having subject matter jurisdiction may proceed to adjudicate the
{¶18} In dismissing Federal Home Loan‘s foreclosure action against the Schwartzwalds without prejudice, the court concluded:
It is fundamental that a party commencing litigation must have standing to sue in order to present а justiciable controversy and invoke the jurisdiction of the common pleas court.
Civ.R. 17(A) does not change this principle, and a lack of standing at the outset of litigation cannot be cured by receipt of an assignment of the claim or by substitution of the real party in interest.
{¶19} Thus, in light of the Ohio Supreme Court‘s deсision in Schwartzwald, we find no merit to CitiMortgage‘s arguments regarding
II.
{¶20} Alternatively, CitiMortgage argues that, despite the trial court‘s holding to the contrary, it did have standing to prosecute the foreclosure action against the Pattersons, as evidenced by its possession of the promissory note indorsed in blаnk at the time the complaint was filed on September 20, 2006. We find the language utilized in Schwartzwald to be vital to our review of whether the trial court properly relied on Jordan in determining that CitiMortgage did not have standing in this matter.
{¶21} As discussed, the Ohio Supreme Court concluded in Schwartzwald that Federal Home Loans did not have standing to invoke the jurisdiction of the common pleas court bеcause “it failed to establish an interest in the note or mortgage at the time it filed suit.” (Emphasis added.) Id. at ¶ 28. Significant to the court‘s holding is its deliberate decision to use the disjunctive word “or” as opposed to the conjunctive word “and”
{¶22} Based on our interpretation of Schwartzwald, the fact that CitiMortgage was not assigned the mortgage until September 29, 2006, and did not record the assignment with the Cuyahoga County Recorder until October 13, 2006, does not preclude a finding of standing. Here, the record reflects that, unlike the plaintiffs in Schwartzwald and Jordan, CitiMortgage was the holder of the note at the time it filed the foreclosure action on September 20, 2006, based on CitiMortgage‘s possession of the bearer paper that secured the defendants’ mortgage.5 As a holder, CitiMortgage was entitled to enforce the note, and thereby had a real interest in the subject matter of the instant foreclosure action. See
{¶23} Based on the foregoing, we find that the trial court erred in granting the Pattersons’ motion to vacate the foreclosure judgment and sheriff‘s sale. CitiMortgage‘s third assignment of error is sustained. Based on this finding, the remaining assignments of error are moot.
{¶24} This cause is reversed and remanded to the Cuyahoga County Court of Common Pleas so that it may reinstate the foreclosure judgment and sheriff‘s sale.
It is ordered that appellant and appellees share the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the 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.
FRANK D. CELEBREZZE, JR., JUDGE
MELODY J. STEWART, P.J., and
JAMES J. SWEENEY, J., CONCUR