Henry Cty. Bank v. DudleyHenry Cty. Bank v. Dudley
Erik G. Chappell and Julie A. Douglas, for appellants.
DECISION AND JUDGMENT
PIETRYKOWSKI, J.
{¶ 1} Appellants, Joyce A. Honeck Dudley and Daniel F. Dudley, appeal from a judgment entered by the Lucas County Court of Common Pleas denying their motion for relief from judgment under
{¶ 2} On June 17, 2019, appellee, The Henry County Bank (HCB), filed a complaint for foreclosure against appellants in the Lucas County Court of Common Pleas seeking to foreclose upon a mortgage that was granted by appellants in conjunction with a loan that was made to an entity known as Toledo Radio. On November 7, 2019, HCB filed a motion for summary judgment. Appellants counsel did not file a response to the motion for summary judgment, and a judgment and decree of foreclosure was entered on January 31, 2020.
{¶ 3} An order of sale was issued by the court for the sale of appellants property, on or about May 18, 2020. However, on or about March 2, 2021, an order of sale return was filed with the court stating that all pending sheriff s sales of occupied property were cancelled and postponed due to orders issued by the Lucas County Common Pleas Court temporarily staying foreclosure matters in response to the COVID-19 public health crisis until after June 30, 2021. The sale has not yet been rescheduled.
{¶ 4} On or about July 14, 2021, appellants, through new counsel, filed a motion for relief from judgment pursuant to
{¶ 5} The 2021 case centers upon Toledo Radio s ownership and operation of a radio broadcast station known as WPFX (FM), in Luckey, Ohio. Toledo Radio was a borrower under cognovit promissory notes totaling over $1,400,000. HCB issued these notes, and appellants were guarantors on each. Assets of Toledo Radio that were pledged as security for the notes included, but were not limited to, Toledo Radio s leasehold interest in a Tower Site Agreement to erect a tower and construct a building to house transmitting equipment on a parcel of land containing approximately 5.5 acres, together with Toledo Radio s accounts and other rights to payment, inventory, instruments and chattel paper, general intangibles, government payments and programs, and deposit accounts. Ultimately, Toledo Radio defaulted in its payment obligations and HCB obtained judgments against Toledo Radio and the guarantors, including appellants.
{¶ 6} In both the current and 2021 cases, including in the subject motion for relief from judgment, appellants allege that HCB wrongfully elected to pursue only the
{¶ 7} On September 17, 2021, HCB and Wendt filed a motion to dismiss the amended complaint in the 2021 case for failure to state a claim against them. On November 17, 2021, the trial court issued an opinion and journal entry granting the motion. Appellants appealed that decision to this court, but the appeal was ultimately dismissed, on January 3, 2022, for lack of a final, appealable order.
{¶ 8} On October 7, 2021, the trial court entered an order in the 2019 case denying appellants motion for relief from judgment pursuant to
Assignments of Error
{¶ 9} Appellant asserts the following assignments of error on appeal:
- The Trial Court abused its discretion by denying Appellants Motion for Relief from Judgment pursuant to
Civ.R. 60(B) . - The Trial Court abused its discretion by denying Appellants Motion for Stay of Proceedings to Enforce Judgment pursuant to
Civ.R. 62(A) .
Analysis
{¶ 10} Appellants argue in their first assignment of error that the trial court abused its discretion in denying their motion for relief from judgment pursuant to
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order or proceeding for the following reasons: (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence which by due diligence could not have been
discovered in time to move for a new trial under Rule 59(B); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation or other misconduct of an adverse party; * * * or (5) any other reason justifying relief from the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than one year after the judgment, order or proceeding was entered or taken. * * *
{¶ 11} To prevail on a motion for relief from judgment under any part of
(1) The party has a meritorious defense or claim to present if relief is granted; (2) the party is entitled to relief under one of the grounds stated in
Civ.R. 60(B)(1) through (5); and (3) the motion is made within a reasonable time, and, where the grounds of relief areCiv.R. 60(B)(1) , (2) or (3), not more than one year after the judgment, order or proceeding was entered or taken.
GTE Automatic Electric v. ARC Industries, 47 Ohio St.2d 146, 351 N.E.2d 113 (1976), paragraph two of the syllabus.
{¶ 12} Appellants in the instant case base their claim for relief from judgment under
{¶ 13} A party seeking relief under
{¶ 14} An appeal from a
{¶ 15} In the instant case, the trial court stated in its October 7, 2021 order denying the motion:
Movants invoke this catch-all provision of the Rule, despite the clear application of subsection (3), which allows a judgment to be vacated due to fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation or other misconduct of an adverse party. Movants premise their argument upon their complaint filed in case number CI-21-2304, filed June 17, 2021 and assigned to this court s commercial docket
and the averments contained therein. The complaint alleges that Plaintiff herein, The Henry County Bank, conspired with others to defraud Movants.
The trial court went on to list the claims brought by appellants in the 2021 case against HCB and the other defendants, and ultimately concluded as follows:
Civ.R. 60(B) states that a motion for relief from judgment premised upon fraud, misrepresentation or misconduct of an adverse party shall be made not more than one year after the judgment, order or proceeding was entered or taken. The judgment in this case was entered January 31, 2020. The instant motion [filed on July 14, 2021] is untimely. It is therefore DENIED.
{¶ 16} Appellant argues that the trial court, in denying appellants motion, erred in failing to take into consideration the extended temporary stay of foreclosure matters that was issued in response to the COVID-19 public health crisis and was effective during the time period in question. See Toledo Legal News, Jan. 4, 2020, Extended Temporary Stay of Foreclosure Matters, https://www.toledolegalnews.com/articles/index/id/23621 (staying motion practice in all open, pending foreclosure cases until December 31, 2020); Toledo Legal News, Jan. 1, 2021, Extended Temporary Stay of Foreclosure, https://www.toledolegalnews.com/articles/index/id/24048 (extending the previous temporary order, including motion practice in all open, pending foreclosure cases). Pursuant to the temporary stay, [m]otion practice in all open, pending foreclosure cases is hereby stayed until June 30, 2021. The law is clear, however, that where a final
{¶ 17} Even, assuming arguendo, that the stay did apply in this case, it would still be unavailing to appellants, because appellants filed their motion for relief from the January 31, 2020 judgment more than a year after the judgment was issued and two weeks after the stay was lifted, on July 14, 2021.
{¶ 18} Under the circumstances of this case, we find that the trial court did not abuse its discretion in ruling that appellants motion -- filed approximately a year and a half after the judgment and decree of foreclosure was issued in this case -- was untimely under
{¶ 19} The question then becomes whether the trial court properly construed appellants motion, which was filed as a
The Complaint reveals fraudulent activity by the current members of Toledo Radio (who were non-parties to this case) which has been acquiesced in by HCB to support a stockholder of HCB. To allow the [foreclosure] Judgment to stand without any consideration of the meritorious claims being made by Defendants in Case No. CI-02021023404 (Which Defendants have requested be consolidated with this case) would be a grave miscarriage of justice and would cause irreparable damage to Defendants.
Although appellants now claim, on appeal, that HCB failed to mitigate its damages, failed to join all claims arising out of the same transaction or occurrence, and failed to join all persons that were necessary to adjudicate the action, the claims that they alleged in their motion for relief from judgment asserted only that the judgment should be vacated due to fraud, misrepresentation or other misconduct of an adverse party. Such allegations clearly invoke the application of
{¶ 20} For all of the foregoing reasons, appellant s first assignment of error is found not well-taken. The judgment of the Lucas County common pleas court denying appellants
Judgment affirmed.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. See also 6th Dist.Loc.App.R. 4.
Mark L. Pietrykowski, J. JUDGE
Christine E. Mayle, J. CONCURS AND WRITES SEPARATELY. JUDGE
Gene A. Zmuda, J. DISSENTS AND WRITES SEPARATELY.
{¶ 21} I concur in judgment. I write separately to clarify that I agree with the detailed tolling analysis of the dissenting judge. That is, given the tolling that occurred between March 9, 2020, and July 30, 2020, due to the COVID-19 Tolling Order, appellants motion was due on or about June 24, 2021 (one year after judgment, plus 144 days of tolling). And, although a local administrative order stayed motion practice in all open, pending foreclosure cases for the period ending June 30, 2021, this matter was no longer open and pending at that time. Accordingly, the only pertinent issue is whether the trial court correctly determined the motion was properly addressed under
{¶ 22} On that issue, however, I agree with the lead opinion. Appellants motion was properly considered under
{¶ 23} In their motion, appellants claimed that the bank conspired with certain non-parties to facilitate a sham sale of Toledo Radio that was designed to protect the non-parties financial interests and defraud appellants, who would be left holding the bag for Toledo Radio s debts. Essentially, appellants alleged that but for the bank s fraud, misrepresentation, and other misconduct, the bank could not have foreclosed upon their house because other assets would have been available to satisfy the debt that Toledo Radio owed to the bank. Presumably, if the bank s alleged misconduct had been
{¶ 24} Moreover, I think it is important to emphasize that fraud on the court - which can provide an other reason justifying relief from the judgment under
{¶ 25} Here, appellants merely allege injury to themselves, and do not allege that the court, itself, was defrauded in any way. Rather, they allege that the adverse party - the bank - engaged in fraud and other misconduct to obtain judgment against appellants in this proceeding. For this reason, their motion for relief from judgment was time barred under
{¶ 26} I write separately to address the conflation of tolling and stay and the majority s judicial notice of proceedings beyond the record of this case, and to distinguish between de novo review and review for an abuse of discretion. Because I find these considerations are dispositive of the issues on appeal, I dissent from the majority s conclusions regarding the issues, and would reverse and remand the matter for consideration under
Background and Procedural History
{¶ 27} The issues on appeal, in an apparently simple foreclosure matter, are more complex considering the facts and history of this litigation. Accordingly, the facts and the history warrant some discussion.
1025 Lake Park Dr. Birmingham, Michigan;
29605 Gleneagles Road Perrysburg, Ohio;
153.729 more/less acres farm ground in Richfield and Monroe Township Henry County, Ohio; and
41.620 more/less acres farm ground in Monroe Township Henry County, Ohio.
The note contained a cognovit provision, confessing judgment, and the signatures of Daniel P. Dudley, Member/Personal; James E. McRitchie, Member/Personal; Joyce A. Honeck-Dudley, Personal; and Sally A. McRitchie, Personal.
{¶ 29} In addition to the real property listed as security, Addendum A to the note provided the following:
The Following Security Interests are included in The Henry County Bank Note # 10017045
1. Entire Membership Interests of Daniel F. Dudley and James E. McRitchie in Toledo Radio, LLC an Ohio Limited Liability Company.
2. Leasehold interest of Toledo Radio, LLC in a Tower Site Agreement to erect a tower and construct a building to house transmitting equipment (together with ingress and egress) on a parcel of land containing approximately 5.50 acres, more or less, owned by Daniel J. Eckel and Donna Jean Eckel, and located in the North half (1/2) of the West half (1/2) of the Northwest quarter (1/4) of Center Township, Wood County, Ohio, and being part of Parcel #CI1-511040000008000
{¶ 30} On June 2, 2017, the Dudleys executed a new mortgage, pledging 8557 Stone Oak Drive Holland, Ohio as additional security for the 2009 note.
{¶ 31} On June 17, 2019, the Bank filed its complaint for foreclosure on the commercial docket, alleging default on the note and an amount of $259,314.87 due and owing on the promissory note as of April 15, 2019. Additionally, the Bank claimed judgment liens recorded against the subject property as LN0201813014 in the amount of $50,136.49 and LN0201904904 in the amount of $41,943.37. The Bank sought foreclosure and sale of the Stone Oak property to collect on the judgment and the liens, but did not seek judgment on the note within its complaint. The Bank included a copy of the note and mortgage as exhibits to the complaint, as well as a judicial report that listed liens against the subject property, with those liens including a mortgage in the amount of $22,000.00 from the Dudleys to First Federal Savings and Loan Association of Lakewood, dated June 5, 2017 and recorded June 7, 2017 and a mortgage in the amount
{¶ 32} On October 7, 2019, the Dudleys filed an answer, denying the amount claimed as due and owing. The Dudleys also raised the failure to join necessary parties, the other obligors on the promissory note, as an affirmative defense, despite the fact they were the only record owners of the real property at issue in a foreclosure to execute against that property after allegedly obtaining money judgments.
{¶ 33} On November 7, 2019, the Bank filed a motion for summary judgment, arguing the 2009 note was previously reduced to judgment in Henry County, with no appeal taken, and the balance of the mortgage alleged in the complaint is an accurate balance. These allegations were not included in the complaint. The Bank further argued that the note provides for independent obligations, to wit:
I understand that I must pay this note even if someone else has also agreed to pay it (by, for example, signing this form or a separate guarantee or endorsement). You may sue me alone, or anyone else who is obligated on this note, or any number of us together, to collect this note
While acknowledging the Dudleys potential claims for contribution against other parties, the Bank argued it was entitled to the equitable remedy of foreclosure, and sale of the property, as a remedy under the note.
{¶ 34} In support of its motion, the Bank provided the affidavit of William Morey, a loan officer for the Bank with knowledge of the loan to Toledo Radio, LLC. Morey
{¶ 35} The Dudleys filed no response in opposition to the motion, and on January 31, 2020, the trial court granted the motion for summary judgment and entered judgment in foreclosure in favor of the Bank and against the Dudleys ordering the property to be sold. The judgment entry noted that First Federal Savings and Loan Association of Lakewood held the first mortgage on the premises, without referencing the amount of the obligation owed to that entity. The entry also referenced the two judgment liens ($50,136.49 plus interest from June 13, 2018 and costs and $41,943.37 plus interest from February 5, 2019 and costs), as well as the Bank s mortgage, but did not otherwise enter or note judgment on the Bank s note prior to entering judgment upon said mortgage in the amount of $259,314.87 together with interest from April 15, 2019.1
{¶ 36} The Dudleys filed no appeal of the judgment, and about a month later, the matter was swept up by the worldwide COVID-19 pandemic.
{¶ 37} Effective March 9, 2020, the Ohio Supreme Court tolled time requirements imposed by its rules, due to the state of emergency declared in response to the COVID-19 pandemic. 03/27/2020 Administrative Actions, 2020-Ohio-1166; 05/15/2020 Administrative Actions, 2020-Ohio-2975. This tolling froze time from the date the tolling
{¶ 38} The trial court adopted local rules to supplement this order, addressing courthouse operations by minimizing in-person proceedings through continuances and the use of teleconferencing, with many civil matters continued until after May 4, 2020 and criminal costs and restitution stayed until May 4, 2020. On April 16, 2020, the trial court extended its temporary administrative orders until May 18, 2020.
{¶ 39} Specific to foreclosure proceedings, the trial court entered several administrative orders, staying post-judgment proceedings for sale of occupied property.
{¶ 40} On May 18, 2020, at the expiration of the first stay, an order of sale issued for the Dudleys property, almost 5 months after the entry of judgment. The Dudleys took no action upon notice of an order of sale.
{¶ 41} On February 24, 2021, the trial court entered a new administrative order regarding foreclosure proceedings, ordering the following:
Motion practice in all open, pending foreclosure cases is hereby stayed until June 30, 2021. Plaintiffs counsel may file a motion in individual cases to exempt matters concerning vacant and abandoned property from the stay, or for other good cause.
All pending sheriff s sales of OCCUPIED PROPERTY are cancelled and postponed until after June 30, 2021.
All sheriff s sales of VACANT OR ABANDONED PROPERTY, or other property otherwise exempted from the stay, MAY GO FORWARD as scheduled * * * Plaintiffs wishing to cancel any currently scheduled post-judgment sheriff s sale due to directives from the mortgage servicer shall direct an appropriate motion to the Foreclosure Magistrate s office.
* * *
No writs of possession shall be issued or executed upon until after June 30, 2021.
Any foreclosure matter pending in mediation may proceed towards resolution through mediation, solely through telephone or email updates.
Pursuant to this notice, the sale of the property was returned on March 2, 2021, with the following notation:
CANCELLED PER ADMINISTRATIVE ORDER STAMPED ON FEBRUARY 24, 2021, ANY PENDING PRAECIPES FOR ORDER OF SALE UNDER THE PREVIOUS IN-PERSON LUCAS COUNTY SHERIFF SALE SYSTEM SHALL BE RETUREND AS UNSOLD AND AN ALIAS PRAECIPE FOR ORDER OF SALE SHALL BE FILED AT TERMINATION OF STAY
{¶ 42} On June 18, 2021, new counsel entered an appearance on behalf of the Dudleys, and the Dudleys requested a stay of further proceedings, based on their suit
{¶ 43} On July 13, 2021, the trial court transferred the matter to the docket of the judge presiding over case No. CI 202102304, as a companion case, without ruling on the motion for stay. The receiving judge also signed the order to join the two cases. The next day, on July 14, 2021, the Dudleys filed their motion for relief from judgment pursuant to
{¶ 44} On July 15, 2021, the newly assigned judge entered an order noting the consolidation of a “closed case with an open and pending one.” Despite previously ordering the two cases joined as companion/related cases, the new trial court denied the motion for consolidation while also retaining the matter for briefing on the motion seeking relief from judgment. The court, furthermore, ordered a stay of execution of the judgment in foreclosure until ruling on the
Appeal and Stay
{¶ 46} The Dudleys filed a timely appeal of the judgment, along with a motion for stay of execution of the judgment in the trial court. While the Dudleys’ requested waiver of any requirement to post a supersedeas bond, the trial court granted the motion and required a supersedeas bond in the amount of $253,000.00. The Dudleys then sought an order of this court staying execution of the foreclosure judgment and waiving the bond requirement. On January 11, 2022, we granted the Dudleys’ motion for stay of execution pursuant to
{¶ 47} In their appeal, the Dudleys raise the following as error:
No. 1: The Trial Court abused its discretion by denying Appellants’ Motion for Relief from Judgment pursuant to
Civ.R. 60(B) .
No. 2: The Trial Court abused its discretion by denying Appellants’ Motion for Stay of Proceedings to Enforce Judgment pursuant to
Civ.R. 62(A) .
{¶ 48} While the majority addresses only the first assignment of error, based on my disagreement with the conclusion, I find both assigned errors must be considered.
Relief from Judgment
{¶ 49} In their first assignment of error, the Dudleys challenge the trial court‘s ruling on the motion for relief from judgment, arguing their
{¶ 50} Pursuant to
(1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under
Rule 59(B) ; (3) fraud(whether heretofore denominated intrinsic or extrinsic), misrepresentation or other misconduct of an adverse party; (4) the judgment has been satisfied, released or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (5) any other reason justifying relief from the judgment. Civ.R. 60(B)
{¶ 51} To prevail on a motion under
{¶ 52} In arguing the trial court abused its discretion in denying their motion as an untimely
{¶ 53} In responding to these facts and argument, the Bank acknowledged that the issues raised “do not speak to any matter that might have been raised in defense of the foreclosure actions” but instead concerned matters arising after entry of judgment by the trial court. In reply, the Dudleys argue that the COVID-19 Tolling Order, in conjunction with the trial court‘s administrative orders, stayed and tolled all deadlines and motion practice in their case, and as a result, their motion for relief from judgment was timely even if considered pursuant to
{¶ 54} Addressing the stay and tolling claimed by the Dudleys, it is important to note that these terms are not synonymous. Black‘s Law Dictionary defines “stay” as “postponement or halting of a proceeding, judgment, or the like” and “[a]n order to suspend all or part of a judicial proceeding or a judgment resulting from that proceeding.” Black‘s Law Dictionary, 1548 (9th Ed.2009). In contrast, “toll” is defined as “[t]o stop the running of; to abate <toll the limitations period>.” Black‘s Law Dictionary, 1625 (9th Ed.2009). Based on these definitions, a stay halts the action while tolling stops the time. Considering the record, the only tolling of time that pertained to the Dudleys’ case occurred between March 9, 2020 and July 30, 2020, based on the order of the Ohio Supreme Court. The local administrative order merely stayed motion practice “ín all open, pending foreclosure cases” for the period ending June 30, 2021. While the sale of
{¶ 55} Because the only tolling in the case stopped the calculation of time for about five months, and because the Dudleys filed their motion pursuant to
{¶ 56} The trial court addressed the motion under
{¶ 57} The majority and concurring decisions, under an abuse of discretion standard, would affirm the trial court‘s decision, but only after conducting an independent analysis of the substance of the claims and the different requirements under
{¶ 58} Considering the sparse analysis, it appears the trial court noted the claim for fraud and concluded
{¶ 59} In recognizing the distinction, the Ohio Supreme Court noted:
“Fraud upon the court” is an elusive concept. “The distinction between ‘fraud’ on the one hand and ‘fraud on the court’ on the other is by no means clear, and most attempts to state it seem to us to be merely compilations of words that do not clarify.”
* * *
It is generally agreed that ” * * * [a]ny fraud connected with the presentation of a case to a court is a fraud upon the court, in a broad sense.” * * * Thus, in the usual case, a party must resort to a motion under
Civ.R. 60(B)(3) . Where an officer of the court, e.g., an attorney, however, actively participates in defrauding the court, then the court may entertain aCiv.R. 60(B)(5) motion for relief from judgment.
Coulson at 15, citing Toscano v. Commr. of Internal Revenue, 441 F.2d 930, 933 (9th Cir.1971) (additional citations omitted).
{¶ 60} As noted by the Bank, the judgment in the present case predated the filing of the allegations in the separate complaint. Therefore, the Dudleys do not argue a fraud
{¶ 61} As an additional matter, I disagree with the parties’ and the majority‘s reliance on the facts in the separate case, as the only part of that case of record in the present matter is the complaint filed by the Dudleys. To the extent that the trial court and the parties rely on those separate proceedings in arguing or analyzing matters in the present case, such consideration of matters beyond the record is improper. Simply put, no court may take judicial notice of proceedings in another case, not part of the record, even if those proceedings include a court‘s own judgment entries in another case. See In re C.Y., 6th Dist. Lucas No. L-13-1184, 2014-Ohio-1144, ¶ 16 (other proceedings are not part of the record on appeal, preventing review of the propriety of such proceedings).
{¶ 63} Accordingly, I would sustain the Dudleys’ first assignment of error, and remand the matter to the trial court for consideration of the motion under
Stay of Execution of Judgment
{¶ 64} In their second assignment of error, the Dudleys argue the trial court abused its discretion in denying a stay of execution of judgment, premised on lack of authority once it had denied the
{¶ 65} In this case, the trial court denied the motion for stay, filed pursuant to
{¶ 66} Now on appeal, the Dudleys argue that the trial court abused its discretion in denying a stay, because the trial court erroneously denied their
{¶ 67} Based on the foregoing, I would find no error regarding the decision to stay execution of the judgment. As to the trial court‘s disposition of the Dudleys’ motion for relief from judgment under
This decision is subject to further editing by the Supreme Court of Ohio‘s Reporter of Decisions. Parties interested in viewing the final reported version are advised to visit the Ohio Supreme Court‘s web site at: http://www.supremecourt.ohio.gov/ROD/docs/.