HillStreet Fund III, L.P. v. BloomHillStreet Fund III, L.P. v. Bloom
Rendered on the 21st day of May, 2010.
ROBERT G. SANKER, Atty. Reg. No. 0039040 and SEAN S. SUDER, Atty. Reg. No. 0078535, One East Fourth Street, Suite 1400, Cincinnati, Ohio 45202
Attorney for Plaintiff-Appellee
RICHARD HEMPFLING, Atty. Reg. No. 0029986, 15 West Fourth Street, Suite 100, Dayton, Ohio 45402
Attorney for Defendants-Appellants
FROELICH, J.
{¶ 1} Donald and Brenda Bloom appeal from a judgment of the Montgomery County Court of Common Pleas, which granted summary judgment to HillStreet Fund III, L.P., and entered a decree in foreclosure on two properties owned by Brenda Bloom. The Blooms claim that the trial сourt erred in granting summary judgment. For the following
I
{¶ 2} Donald Bloom was the former president of Petro Acquisitions, Inc., which, through subsidiaries and affiliates, owned and operated several gas stations/convenience stores under the name “Ameristop.” On September 22, 2006, several of Donald Bloom’s companies executed and delivered to HillStreet a promisory note with a principal amount of $2.5 million (“the September promissory note“).1 Donald Bloom signed the September promissory note as president of each of the borrowing companies.
{¶ 3} On the same date, Donald Bloom executed an Unlimited Guaranty of the obligations under the September promissory note. Under this guaranty, Donald Bloom unconditionally guaranteed to pay HillStreet all principal, interest, late charges, loan fees, loan charges, collection costs and expenses related to the September promissory note. Brenda Bloom also executed a Limited Recourse Guaranty, in which she unconditionally guaranteed to pay HillStreet all principal, interest, late charges, loan fees, loan charges, collection costs and expenses related to the September promissory note. HillStreet’s recourse against Brenda Bloom was limited to her interest in five parcels of real estate: (1) 1316 and 1320 Wyoming Street in Dayton, Ohio;2 (2) 426 Diamond Street in Mansfield,
{¶ 4} On November 17, 2006, several of Donald Bloom’s other companies executed and delivered a promissory note to HillStreet with a principal amount of $3 million.3 Donald Bloom again signed the note as president of each of these companies. As with the September promissory note, Donald Bloom signed an Unlimited Guaranty of the November loan, and Brenda Bloom signed a Limited Recourse Guaranty. Brenda Bloom’s guaranty was limited to her interest in two other properties – a property located in Sрringdale, Ohio, and another in Fairfield, Ohio.
{¶ 5} The Blooms acknowledge that the aggregate principal balance of the HillStreet loans was $5.5 million, and that the two loans fell into default. In September 2007, HillStreet brought suit against the Blooms, based on their guaranties, in the Hamilton County Court of Common Pleas. HillStreet Fund III, L.P. v. Bloom, Hamilton C.P. No. A0708532. HillStreet obtained a cognivit judgment against the Blooms in an aggregate amount of $5.5 million, plus interest; the judgment limited HillStreet’s recourse against Brenda Bloom to her interest in the mortgaged property, as described in the two Limited Recourse Guaranties. The court also awarded attorney fees and reasonable expenses to HillStreet. A certificate of judgment was filed with the Montgomery County Clerk of
{¶ 6} On February 14, 2008, HillStreet filed a Complaint in Foreclosure in the Montgomery County Court of Common Pleas against the Blooms and others who might have an interest in Brenda Blooms’ properties located at 1316 and 1320 Wyoming Street.4 HillStreet claimed that the Blooms had defaulted on their obligations under the two guaranties for $2.5 million and $3 million, respectively, and that it had received a judgment against the Blooms in the amount of $5.5 million, plus attorney fees and expenses, on September 21, 2007, based on those guaranties. HillStreet alleged that the judgment was in full force and effect, remained wholly unpaid, and was a valid lien against property belonging to the Blooms. HillStreet sought foreclosure of Brenda Bloom’s properties located at 1316 and 1320 Wyoming Street in Dayton.
{¶ 7} The Blooms, the Montgomery County Treasurer, and JP Morgan Chase Bank, N.A., as successor in interest to Bank One, Cincinnati, N.A. (“JP Morgan Chase“), filed Answers. JP Morgan Chase claimed to hold a first mortgage lien on the property; the Montgomery County Treasurer claimed it held a lien for real estate taxes and assessmеnts. In their Answer, the Blooms admitted that they had executed the guaranties, that they had defaulted on their obligations under the guaranties, and that HillStreet had obtained a judgment against them. They denied, however, “that said judgment is in full force and effect and wholly unpaid ***.” The matter was referred to a magistrate.
{¶ 9} The Blooms requested an extension of time to respond to HillStreet’s motion, pursuant to
{¶ 10} “3. Upon information аnd belief, Affiant states that the following described stores/assets were administered and sold in the case of In Re Petro Acquisitions, Inc., Case No. 07-15723 in the United States Bankruptcy Court, Southern District of Ohio, Western Division and other bankruptcy cases of the Ameristop entities which were jointly administered (collectively the ‘Bankruptcy Case‘); and
{¶ 11} “4. Upon information and belief, Affiant states that the proceeds from the sale of collateral that was held by Hillstreet for the September 2006 Loan is as follows:
{¶ 12} “AFM 29128 $70,000
{¶ 13} “AFM 29801 $750,000
{¶ 14} “AFM 29131 $610,000
{¶ 15} “AFM 29130 $310,000
{¶ 17} “Dealer contracts $150,000
{¶ 18} “Lash Zebra Note $175,000
{¶ 19} “AFM 29141 Note $87,735
{¶ 20} “Chella Food Note $50,000
{¶ 21} “Store 135 $35,000
{¶ 22} “Subtotal $2,357,735; and
{¶ 23} “***
{¶ 24} “9. Upon information and belief, the Ameristop assets that were pledged as collateral for the November 2006 Loan have been sold as follows:
{¶ 25} “AFM Stores 29803, 29804, 29811, and 29817 were sold to Road Ranger, LLC – $9,900,000.00.
{¶ 26} “802 $900,000
{¶ 27} “808 $1,600,000
{¶ 28} “809 $2,700,000
{¶ 29} “813 $900,000
{¶ 30} “Subtotal $16,000,000; and
{¶ 31} “***
{¶ 32} “12. Upon information and belief, as of this date, Affiant believes that the Plaintiff has been paid the sum of approximately $7,972,735.”
{¶ 33} Donald Bloom further averred that he had attempted, unsuccessfully, to communicate with the bankruptcy trustee and Ameristop’s corporate counsel to determine
{¶ 34} The Blooms filed an opposition memorandum on November 25, 2008, primarily arguing that HillStreet had been paid $7,199,675 out of various bankruptcy cases and, thus, there was a material issue of fact as to whether the loans had been paid in full. The Blooms attached a second affidavit by Donald Bloom (“Bloom Aff. II“) and incorporated by reference his first affidavit filed in support of their
{¶ 35} “7. Most of the Ameristop assets and other assets held as collateral for the Hillstreet Loan have been administered and/or sоld; and
{¶ 36} “8. Affiant states that he has reviewed certain records and filings in the Ameristop Bankruptcy Cases which reflect payments/credits to Hillstreet; and
{¶ 37} “9. Affidant states that Affiant has met with Tom [Perazzo], the accountant and duly authorized representative of the Hillstreet Fund; and
{¶ 38} “10. Based on his review of the Ameristop records in the Bankruptcy Cases and the statеments/admissions made to Affiant by Tom [Perazzo], the accountant and duly
{¶ 39} Donald Bloom’s second affidavit did not include any supporting documentation.
{¶ 40} In December 2008, the magistrate granted HillStreet’s motion for summary judgment, finding no genuine issues of material fact as to the validity of the Hamilton County judgment or the certificate of judgment filed in Montgomery County. The magistrate further found that there were “no genuine issues of material fact that Hillstreet is entitled to foreclose on the property owned by Defendant Brenda Bloom on Wyoming Street in Dayton, Ohio.”
{¶ 41} The Blooms objected to the magistrate’s decision, raising, among other arguments, that Donald Bloom’s affidavits created a material issue of fact as to whether the judgment rendered by the Hamilton County court and the Montgomery County judgment filed thereon had been paid in full. HillStreet filed a memorandum in support of the magistrate’s decision.
{¶ 42} In responding to the Blooms’ assertion that the judgment had been satisfied, HillStreet offered an affidavit by Thomas Perazzo, a certified public accountant who served as an advisor to HillStreet. In his affidavit, Perazzo stated that he had “the responsibility of calculating the outstanding balаnce of the loans that HillStreet made to certain corporations owned or controlled by Donald R. Bloom” and that he was present at the auction where
{¶ 43} On March 27, 2009, the trial court overruled the Blooms’ objections and adopted the magistrate’s decision. The trial court found that paragraph ten of Donald Bloom’s secоnd affidavit was hearsay and declined to consider it. As for paragraph eight where Bloom stated that he had reviewed certain bankruptcy records that reflected payments/credits to HillStreet, the trial court stated that it was “not persuaded by this averment, because Plaintiff‘s [sic] conceded they received payments from the Bankruptcy cases.” The trial court further found Perazzo’s affidavit to be “highly persuasive as to the issue of the amount due and owing.” In a footnote, the court indicated that it was considering Perazzo’s affidavit pursuant to
{¶ 44} The Blooms appeal from the trial court’s March 27, 2009, decision and thе subsequent decree in foreclosure.
II
{¶ 45} In their sole assignment of error, the Blooms claim that the trial court erred in granting HillStreet’s motion for summary judgment. First, they assert that the trial court should not have considered the affidavit of Thomas Perazzo. Second, they claim that the trial court erred in disregarding as hearsay a statement in Donald Bloom’s second affidavit that, based on a conversation that he (Bloom) had with Perazzo, HillStreet had been paid or
{¶ 46}
{¶ 47} In this case, the trial court referred the matter to a magistrate, who issued a decision on HillStreet’s summary judgment motion. When timely objections to the magistrate’s decision are filed, as occurred in this case, the trial court is required to rule on those objections.
{¶ 48} The Blooms claim that it was “fundamentally unfair” for the trial court to
{¶ 49}
{¶ 50} Second, the Blooms claim that the trial court erred in disregarding statements in Donald Bloom’s affidavits concerning statements made to him by Perazzo regarding payments received by HillStreet on the loans. We disagree.
{¶ 51} The statements in Bloom’s first affidavit were made “upon information and belief.” As we stated in Hillstreet Fund III, L.P. v. Bloom, Miami App. No. 09 CA 12, 2009-Ohio-6581, a foreclosure case by HillStreet against the Blooms to foreclose upon оther properties: “Bloom’s representations ‘on information and belief’ are not assertions based
{¶ 52} As for the second affidavit, Donald Bloom’s averment that HillStreet had been paid $7,199,675.00 was based upon his review of bankruptcy court records and a conversation he had with Perazzo. Bloom asserts that Perazzo’s statements to him constituted statements оf a party-opponent, which are admissible under
{¶ 53}
{¶ 54} Bloom did not provide Perazzo’s actual statements in his second affidavit. Rather, “Bloom’s statement is a mere conclusion by him based on the alleged representations of [Perazzo], which derive from [Perazzo‘s] personal knowledge, not Bloom’s.” Bloom at ¶13. Accordingly, the trial court properly disregarded Bloom’s
{¶ 55} Upon review of the evidence submitted by the parties, the trial court did not err in concluding that no genuine issues of material fact exist and in granting summary judgment to HillStreet on its foreclosure claim.
{¶ 56} The assignment of error is overruled.
III
{¶ 57} The judgment of the trial court will be affirmed.
BROGAN, J. and GRADY, J., concur.
Copies mailed to:
Robert G. Sanker
Sean S. Suder
Richard Hempfling
Hon. Dennis J. Langer