Deutsche Bank National Trust Co., as Trustee, in trust for registered Holders of Long Beach Mortgage Loan Trust 2005-WL1, Asset-Backed Certificates v. Susan Thomas
No. 14AP-809 (C.P.C. No. 13 CV 003635)
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
September 30, 2015
[Cite as Deutsche Bank Natl. Trust Co. v. Thomas, 2015-Ohio-4037.]
DORRIAN, J.
(REGULAR CALENDAR)
D E C I S I O N
Rendered on September 30, 2015
Kendo, Alexander, Cooper & Engel LLP, and Andrew Engel; Mills, Mills, Fiely & Lucas LLC, and Brian D. Flick, for appellant.
APPEAL from the Franklin County Court of Common Pleas
DORRIAN, J.
{¶ 1} Defendant-appellant, Susan Thomas (“appellant“), appeals from a judgment of the Franklin County Court of Common Pleas denying her motion to strike an affidavit filed by plaintiff-appellee, Deutsche Bank National Trust Co., as Trustee, in trust for registered Holders of Long Beach Mortgage Loan Trust 2005-WL1, Asset-Backed Certificates (“appellee“), and granting summary judgment in favor of appellee. Because we conclude that appellee failed to demonstrate there was no genuine issue of material fact as to whether it was entitled to enforce the note, we reverse.
{¶ 2} On March 10, 2005, appellant executed a promissory note in favor of Long Beach Mortgage Company (“Long Beach“) in the amount of $451,250 in return for a loan made by Long Beach in the same amount. On that same date, appellant executed a mortgage on real property located at 4359 Hanna Hills Drive, Dublin, Ohio. The mortgage described appellant as the mortgagor and borrower and identified Long Beach as the lender.
{¶ 3} On April 1, 2013, Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Loan Trust 2005-WL1 (“Deutsche Bank“) filed a complaint in foreclosure, asserting that it was “in possession of and entitled to enforce” the note executed by appellant. (Complaint, ¶ 1.) The complaint named appellant and John Thomas as defendants, along with the Franklin County Treasurer, the State of Ohio Department of Taxation, and several banks. Deutsche Bank also asserted that it had been assigned the mortgage
{¶ 4} Deutsche Bank subsequently moved to substitute appellee as the party plaintiff under
{¶ 5} Appellee filed a motion for summary judgment asserting, in part, that it had presented evidence demonstrating that it had possession of the note, which was payable to bearer due to a blank indorsement by Long Beach. In support of its motion for summary judgment, appellee provided an affidavit from Karter Nelson (“the Nelson affidavit“). Appellant filed a motion to strike the Nelson affidavit, asserting that Nelson lacked personal knowledge of the facts asserted in the affidavit. Appellant argued that Nelson failed to properly authenticate the documents attached to the affidavit and that the affidavit was ineffective to demonstrate possession of the note. Appellant also filed a response in opposition to appellee‘s motion for summary judgment, claiming that the Nelson affidavit was insufficient and, therefore, appellee failed to demonstrate that it was entitled to judgment as a matter of law. The court granted appellee‘s motion for summary judgment.
{¶ 6} Appellant appeals from the trial court‘s judgment, assigning two errors for this court‘s review:
[1.] The trial court erred in overruling Thomas‘s Motion to Strike Affidavit.
[2.] The trial court erred in granting Deutsche Bank‘s Motion for Summary Judgment.
{¶ 7} We begin our analysis with appellant‘s second assignment of error, in which she asserts that the trial court erred by granting summary judgment in favor of appellee.
{¶ 8} An order granting summary judgment is subject to de novo review. Capella III, L.L.C. v. Wilcox, 190 Ohio App.3d 133, 2010-Ohio-4746, ¶ 16 (10th Dist.), citing Andersen v. Highland House Co., 93 Ohio St.3d 547, 548 (2001). “De novo appellate review means that the court of appeals independently reviews the record and affords no deference to the trial court‘s decision.” (Internal citations omitted.) Holt v. State, 10th Dist. No. 10AP-214, 2010-Ohio-6529, ¶ 9. Summary judgment is appropriate where “(1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds can come to but one conclusion, and that
{¶ 9} A plaintiff seeking summary judgment on a foreclosure claim must demonstrate that it was entitled to enforce the note and had an interest in the mortgage on the date the foreclosure complaint was filed. FV-I, Inc. v. Lackey, 10th Dist. No. 13AP-983, 2014-Ohio-4944, ¶ 15. See JPMorgan Chase Bank, N.A. v. Allton, 10th Dist. No. 14AP-228, 2014-Ohio-3742, ¶ 12 (“Summary judgment in a foreclosure action is not appropriate unless the party seeking foreclosure demonstrates that it is entitled to enforce the note and had an interest in the mortgage on the date it filed the complaint.“). Generally, Ohio courts have held that a promissory note secured by a mortgage is a negotiable instrument. Bank of Am., N.A. v. Pasqualone, 10th Dist. No. 13AP-87, 2013-Ohio-5795, ¶ 29. Pursuant to
{¶ 10} Deutsche Bank attached a copy of the note to the complaint. The note named Long Beach as the lender and appellant as the borrower. The copy of the note attached to the complaint also appeared to include an allonge bearing a blank indorsement signed by a vice president of Long Beach.1 A blank indorsement makes a negotiable instrument payable to bearer.
{¶ 11} Appellant argues that appellee failed to prove that it was entitled to enforce the note because it failed to provide any competent evidence that it has possession of the note. Appellant claims that the Nelson affidavit failed to address whether Deutsche Bank
had possession of the note when the complaint was filed. Thus, appellant argues that appellee failed to establish that it was entitled to enforce the note as the holder of it.
{¶ 13} On appeal from the denial of their motion for relief from judgment, the homeowners argued that Bank of America lacked standing to enforce the note and mortgage. In analyzing Bank of America‘s standing with respect to the note, the court observed that the note had been specially indorsed from the original lender to Bank of America. It had also been indorsed in blank by Bank of America, which made the note payable to bearer. Id. at ¶ 33. In addition to presenting a copy of the note, Bank of America presented an affidavit averring that it had possession of the note. Therefore, the court concluded, Bank of America established that it was the holder of the note and was a person entitled to enforce the note under
{¶ 14} Other courts have reached similar conclusions when determining whether plaintiffs have established standing by showing possession of a note. In Cent. Mtge. Co. v. Elia, 9th Dist. No. 25505, 2011-Ohio-3188, the defendant homeowners argued that the plaintiff lacked standing to seek foreclosure because it was not the current holder and owner of their mortgage. Id. at ¶ 4. The plaintiff moved for summary judgment and filed an affidavit in support from its vice president. In the affidavit, the vice president asserted that she was the custodian of certain business records and had personal knowledge of the contents of those records. She also attested that the plaintiff had possession of the defendants’ promissory note. Id. at ¶ 9. The affidavit also incorporated by reference copies of the promissory note, containing a blank indorsement, the mortgage, and an assignment of the mortgage from the original lender to the plaintiff. Id. at ¶ 11. The Ninth District Court of Appeals affirmed summary judgment in favor of the plaintiff, concluding, in part, that the plaintiff established it had standing to seek foreclosure. In reaching its conclusion, the court specifically pointed to the assertion in the vice president‘s affidavit that the plaintiff
{¶ 15} Similarly, in Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. No. 98502, 2013-Ohio-1657, the Eighth District Court of Appeals held that the plaintiff, which was not the original lender named in the note and mortgage, established that it had standing as the holder of the note. In support of its motion for summary judgment, the plaintiff attached a copy of the note, which had been specially indorsed from the original lender to a second entity and then indorsed in blank by the second entity, and an affidavit from the vice president of its mortgage loan servicer authenticating the copy of the blank-indorsed note and attesting that the plaintiff had possession of the note. Id. at ¶ 58. See Bank of Am., N.A. v. Duran, 6th Dist. No. L-14-1031, 2015-Ohio-630, ¶ 40 (“Here, the note is endorsed in blank. Fazio testified in her affidavit that appellee has possession of the note. Thus, appellee has demonstrated that it is the holder and party entitled to enforce the note.“); U.S. Bank, Natl. Assn. v. Adams, 6th Dist. No. E-11-070, 2012-Ohio-6253, ¶ 18 (“U.S. Bank‘s possession of the note was demonstrated by the attachment of a copy of the note to the complaint and the affidavit, coupled with Rowles’ statements concerning U.S. Bank‘s possession of the note and mortgage in her affidavit.“).
{¶ 16} By contrast, in Bank of New York Mellon Trust Co. Natl. v. Mihalca, 9th Dist. No. 25747, 2012-Ohio-567, the Ninth District Court of Appeals held that Bank of New York was not entitled to summary judgment because there was a genuine issue of material fact as to whether it was in possession of the original note. Bank of New York filed for foreclosure, attaching purported copies of the defendants’ note and mortgage to its complaint. The note named Equifirst Corp. as the payee; attached to the note was a copy of an indorsement by Equifirst Corp. to Barclays Bank and a copy of an allonge indorsed by Barclays Bank making the note payable to Bank of New York. Id. at ¶ 2. The complaint also included a certificate from Bank of New York‘s counsel attesting that, to the best of her knowledge, the original note and mortgage were in possession of Bank of New York. Id. The defendants demanded to inspect the note, but Bank of New York failed to produce it. Id. at ¶ 3. Bank of New York filed for summary judgment, supporting its motion with an affidavit from an assistant secretary for another entity, asserting that she was attorney in fact for Bank of New York and that Bank of New York was the holder and payee of the note and mortgage. Id.
{¶ 17} On appeal of an award of summary judgment in favor of Bank of New York, the Ninth District concluded that doubt arose as to Bank of New York‘s possession of the note because the defendants questioned whether it had possession and the record did not indicate that it had produced the note. Id. at ¶ 14. The defendants also challenged the affidavit asserting that Bank of New York was the holder of the note, asserting that the affiant lacked personal knowledge. Id. at ¶ 15. The Ninth District held that the affidavit was insufficient to overcome the doubt regarding the issue of possession because the affiant failed to state how her position at another entity made her familiar with the defendants’ account records and because her broad averment that Bank of New York was “the holder” of the note suggested it was unlikely that she had personal knowledge of Bank of New York‘s possession of the note. Id. at ¶ 17. Construing all doubts in favor of the defendants as the non-moving party, the court
{¶ 18} In this case, Deutsche Bank, the predecessor plaintiff to appellee, asserted in the complaint that it was in possession of and entitled to enforce the note, and attached a copy of the note bearing the blank indorsement from Long Beach. Appellant‘s answer denied that Deutsche Bank had possession of the note. Appellee, as the party moving for summary judgment, bore the burden of demonstrating that there was no genuine issue of material fact regarding its possession of the note, which was an essential element of its claim. See Capella III at ¶ 16. Appellee sought to satisfy this burden by presenting the Nelson affidavit. In the affidavit, Nelson attested that he was a document control officer for Select Portfolio Servicing, Inc., the servicer for appellee. He asserted that he had access to the loan records relevant to appellant‘s loan and was personally familiar with the loan. Nelson averred that appellee was “the holder and owner of a bond/note and mortgage executed by Susan Thomas in the sum of $451,250.00 dated March 10, 2005.” (Nelson affidavit, ¶ 3.) Nelson also averred that the documents attached as exhibits to the affidavit were true copies of the note and mortgage. The attachments to the affidavit were copies of the note and mortgage as filed with the complaint, demonstrated by the fact that they bore the trial court‘s file stamp across the top of the documents.
{¶ 19} Under these circumstances, construing the evidence in favor of appellant as the non-moving party, we conclude that the Nelson affidavit was insufficient to establish that appellee had possession of the note and was entitled to enforce the note as the holder. Unlike the affiants in cases such as Pasqualone, Elia, and Najar, Nelson did not state in his affidavit that appellee had possession of the note. Although Nelson asserted that appellee was the holder of the note, an entity‘s status as a holder is a legal conclusion, and Nelson failed to provide facts to support the conclusion—i.e., that appellee had possession of the blank-indorsed note. Affidavits that merely set forth legal conclusions without stating supporting facts are insufficient under
{¶ 20} Accordingly, we sustain appellant‘s second assignment of error.
{¶ 21} Having sustained appellant‘s second assignment of error, her first assignment of error, which asserts that the trial court erred by denying her motion to strike the Nelson affidavit, is rendered moot.
{¶ 22} For the foregoing reasons, appellant‘s second assignment of error is sustained, and her first assignment of error is moot. We reverse the judgment of the Franklin County Court of Common Pleas and remand this matter to that court for further proceedings in accordance with law and consistent with this decision.
Judgment reversed; cause remanded.
BRUNNER and HORTON, JJ., concur.