City Natl. Bank v. WBP Invests., L.L.C.City Natl. Bank v. WBP Invests., L.L.C.
Rendered on November 29, 2011
Barren & Merry Co., L.P.A., Thomas R. Merry, Beth M. Miller, and Jeanine Loehr Bielby, for appellee.
McCarthy, Lebit, Crystal & Liffman Co., L.P.A., Daniel M. Singerman, Robert R. Kracht, and Charles Nemer; Wesp/Barwell, LLC, Lloyd Pierre-Louis, and Gregory P. Barwell, for appellants WBP Investments, LLC, and WBP Group, LLC.
APPEAL from the Franklin County Court of Common Pleas.
DORRIAN, J.
{¶1} Defendants-appellants, WBP Investments, LLC, and WBP Group, LLC (“appellants“), appeal from a judgment of the Franklin County Court of Common Pleas denying appellants’ motion to vacate, dissolve, and/or modify order appointing receiver and from a judgment entering an amended order appointing receiver. For the reasons that follow, we affirm.
{¶3} On September 23, 2010, appellee filed a complaint seeking monetary recovery on the promissory note and foreclosure on the mortgage. As part of the proceedings, on November 3, 2010, appellee moved for appointment of a receiver. The trial court granted the motion, entering an order appointing a receiver (“the Order“). Appellants filed a motion to vacate, dissolve, and/or modify the Order, and the trial court denied this motion. Appellee filed a motion to amend the Order; the trial court granted this motion and entered an amended order appointing a receiver (“the Amended Order“).
{¶4} Appellants appeal from the trial court‘s judgments denying their motion to vacate, dissolve, and/or modify the order appointing the receiver and granting the motion to amend the order appointing the receiver, assigning four errors for this court‘s review:
- The Appellee failed to show by clear and convincing evidence that it was entitled to the appointment of a receiver or that it would be irreparably harmed if a receiver were not appointed;
- The Amended Order Appointing Receiver contravenes Ohio law by granting the Receiver the power to sell the Property before the conclusion of the foreclosure proceedings before recovering a judgment entitling Appellee to foreclose on its mortgage in derogation of Appellants’ rights of redemption and Due Process;
The Amended Order Appointing Receiver contravenes Ohio law by granting the Receiver the power to sell the Property without following the safeguards contained in Ohio‘s foreclosure statute; and - The Amended Order Appointing Receiver contravenes Ohio law by granting the Receiver the power of pre-judgment attachment without allowing a hearing and without requiring a bond.
{¶5} “It is well settled that a trial court is vested with the sound discretion to appoint a receiver.” Bur. of Workers’ Comp. v. Am. Professional Emp., Inc., 184 Ohio App.3d 156, 2009-Ohio-2991, ¶7, citing State ex rel. Celebrezze v. Gibbs (1991), 60 Ohio St.3d 69, 73. An order appointing a receiver will not be reversed on appeal absent a clear abuse of discretion. An abuse of discretion occurs when a decision is unreasonable, arbitrary, or unconscionable. Am. Professional at ¶7.
{¶6} In appellants’ first assignment of error, they claim that appellee failed to show by clear and convincing evidence that it was entitled to appointment of a receiver or that it would be irreparably harmed if a receiver was not appointed. The trial court appointed the receiver pursuant to
In an action by a mortgagee, for the foreclosure of his mortgage and sale of the mortgaged property, when it appears that the mortgaged property is in danger of being lost, removed, or materially injured, or that the condition of the mortgage has not been performed, and the property is probably insufficient to discharge the mortgage debt[.]
{¶8} This court has “conclude[d] that satisfaction of one or more of the statutory criteria does not automatically or necessarily entitle the movant to appointment of a receiver.” Am. Professional at ¶13. “[A] party requesting a receivership ‘must show by clear and convincing evidence that the appointment of a receiver is necessary for the preservation of the complainant‘s rights.’ ” Id. at ¶11, quoting Malloy v. Malloy Color Lab, Inc. (1989), 63 Ohio App.3d 434, 437. In reviewing a trial court order appointing a receiver, we must “determine ‘whether there is evidence tending to prove the facts essential to sustain the order,’ and [we] may not review the weight of the evidence.” Am. Professional at ¶11, quoting Parker v. Elsass, 10th Dist. No. 01AP-1306, 2002-Ohio-3340, ¶63.
{¶9} In addition to finding that the statutory criteria were met, the trial court concluded that the appointment of a receiver was necessary to avoid irreparable injury to appellee. The trial court did not recite the evidence on which it relied in reaching this conclusion, but a review of the parties’ filings indicates that appellee presented evidence that would sustain the trial court‘s conclusion. Appellee presented an affidavit asserting that several units at the property were vacant and abandoned and that certain tenants of
{¶10} Appellant argues that, under the Am. Professional standard, appellee was not entitled to the appointment of a receiver. While appellant is correct that this court reversed an order appointing a receiver in Am. Professional, we find that case to be factually distinguishable from the present appeal. In Am. Professional, we found that the record contained “no evidence, let alone clear and convincing evidence” that a receiver was needed. Am. Professional at ¶18. See also Huntington Natl. Bank v. HPM Div., Taylor‘s Indus. Servs., 10th Dist. No. 10AP-200, 2010-Ohio-6176, ¶24 (finding that there was no evidence to support appointment of a receiver for a particular business). By contrast, in this case, there was evidence of damage to the property and the risk of further damage due to the withdrawal of the management company. Under these circumstances, the trial court did not abuse its discretion by appointing a receiver.
{¶11} The trial court also found that appellee was entitled to appointment of a receiver under the terms of the mortgage agreement and associated loan documents. The mortgage agreement contained multiple clauses providing that appellants consented
{¶12} Appellants argue that, despite the presence of these clauses in the mortgage, as a matter of law, they could not consent to the appointment of a receiver. We reject this contention in accordance with this court‘s prior decisions and those of other appellate courts in Ohio. In Bank One, Columbus, NA v. O‘Brien (Dec. 31, 1991), 10th Dist. No. 91AP-166, we noted that “a receivership can be awarded upon the terms of a contractual agreement.”1 Similarly, in Whipps v. Ryan, 10th Dist. No. 08AP-838, 2009-Ohio-2228, we upheld a trial court‘s appointment of a receiver, finding that the appointment was authorized by statute and that the borrower had consented to the appointment of a receiver under a mortgage agreement. Id. at ¶21, 24. This is consistent with decisions from other appellate courts in Ohio, which have concluded that the requirements of
{¶13} Accordingly, because the trial court did not abuse its discretion in appointing a receiver and because appellants consented to the appointment of a receiver under the mortgage agreement, we overrule appellants’ first assignment of error.
{¶14} Appellants’ claim in their second assignment of error that the Amended Order violates their right of redemption and right to due process by allowing the receiver to sell the property before the conclusion of the foreclosure proceedings. Similarly, appellants assert in their third assignment of error that the Amended Order violates Ohio law by permitting the receiver to sell the property without following the safeguards contained in the foreclosure statute. Because our analysis of these two assignments of error is similar, we will address them together.
{¶15} The Amended Order provides that the receiver is authorized “to advertise and list the Property for sale and at City National‘s subsequent election and upon the Court‘s approval, to sell the Property free and clear of all liens.” (Emphasis sic.) (Amended Order at 2.) Thus, any sale of the property would be contingent on approval by the trial court. Therefore, we must consider whether appellants’ claims regarding the receiver‘s power to sell the property are ripe for our review.
{¶17} In their fourth assignment of error, appellants claim that the Amended Order authorizes the receiver to take control of appellants’ property without judgment being
{¶18} The Metro. Life case arose from a foreclosure action involving a commercial office park. Id. at 232. The foreclosing party (“Metlife“) sought, among other remedies, the appointment of a receiver, and the trial court granted the request for a receiver. Id. at 233. The mortgagor (“Triskett“) claimed that the appointment of a receiver effectuated a prejudgment attachment of its property without following the notice and hearing requirements under the attachment statute. Id. at 236. The First District Court of Appeals rejected this argument, concluding that “[t]he appointment of a receiver * * * did not, as Triskett asserts, constitute a prejudgment attachment subject to the strictures of
{¶19} In this case, the Order and the Amended Order clearly indicate that the trial court appointed the receiver pursuant to
{¶20} For the foregoing reasons, appellants’ first and fourth assignments of error are overruled, and the second and third assignments of error are not ripe for review. The judgments of the Franklin County Court of Common Pleas are hereby affirmed.
Judgments affirmed.
BROWN and KLATT, JJ., concur.
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