HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE FOR HOME EQUITY LOAN TRUST SERIES ACE2004-HE3 v. BARBARA BAILEY, et al., VICTORIA GUNTHER
CASE NO. 2012-T-0086
IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT TRUMBULL COUNTY, OHIO
2014-Ohio-246
[Cite as HSBC Bank USA, Natl. Assn. v. Bailey, 2014-Ohio-246.]
DIANE V. GRENDELL, J.
Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 2007 CV 00905. Judgment: Affirmed.
Grace M. Doberdruk and Daniel M. Solar, Doberdruk & Harshman Law Office, 4600 Prospect Avenue, Cleveland, OH 44103 (For Defendant-Appellant, Victoria Gunther).
DIANE V. GRENDELL, J.
{2} On April 5, 2007, plaintiff-appellee, HSBC Bank USA, National Association, filed a Complaint in Foreclosure against Barbara Bailey (mortgagor), Victoria Gunther (titleholder of the subject property), the Trumbull County Treasurer, and various John Doe defendants.
{3} According to an affidavit submitted by Gunther, Barbara Bailey died on July 20, 2009.
{4} On July 28, 2009, an Agreed Entry Granting Judgment and Decree in Foreclosure was issued by the trial court.
{5} On November 19, 2009, Gunther filed a Motion to Vacate Foreclosure Sale.
{6} On July 27, 2010, the trial court denied Gunther‘s Motion.
{7} On January 20, 2011, Gunther filed a 60(B) Motion for Relief from Judgment.
{8} On February 7, 2011, Gunther filed a Supplemental Motion to Vacate or Alternative Judgment.
{10} On October 18, 2012, Gunther filed a Notice of Appeal. On appeal, Gunther raises the following assignment of error:
{11} “[1.] The trial court erred by denying appellant‘s motion to vacate when appellee lacked standing to obtain judgment.”
{12} “To prevail on a motion brought under
{13} Gunther argues that she “has a meritorious defense to foreclosure because Appellee HSBC did not have an interest in the note or her mortgage at the time of filing the complaint and had no legal right to foreclose.” Appellant‘s brief at 5.
{14} Gunther‘s argument is barred by the doctrine of res judicata. Under the doctrine of res judicata, “[a] valid, final judgment rendered upon the merits bars all subsequent actions based upon any claim arising out of the transaction or occurrence that was the subject matter of the previous action.” Grava v. Parkman Twp., 73 Ohio St.3d 379, 653 N.E.2d 226 (1995), syllabus. “It has long been the law of Ohio that ‘an existing final judgment or decree between the parties to litigation is conclusive as to all
{15} In the present case, HSBC Bank pled in its complaint that it was “the holder and owner of a note,” and the “holder of a mortgage.” In her Answer, Gunther disputed whether HSBC Bank was “the true and lawful owner/holder of the Promissory Note * * * and Mortgage Deed,” raising the claim that it “lack[ed] standing to maintain this action in foreclosure.” In response, HSBC Bank submitted evidence that it was assigned the mortgage and promissory note on July 2, 2007, and that the assignment was recorded with the Trumbull County Recorder on July 9, 2007.
{16} In the subsequent Agreed Entry Granting Foreclosure, the trial court found that HSBC Bank was the holder of the note secured by the mortgage and ordered Gunther‘s equity of redemption foreclosed and the subject property sold at sheriff‘s sale. The July 28, 2009 Agreed Entry constituted a valid, final judgment on the merits of the foreclosure. Gunther did not appeal this Entry. Under the doctrine of res judicata, she is barred from raising the issue of HSBC Bank‘s standing, as that claim has been raised and settled. A
{17} We note that the Ohio Supreme Court has certified a conflict on the following question: “When a defendant fails to appeal from a trial court‘s judgment in a foreclosure action, can a lack of standing be raised as part of a motion for relief from judgment?” Bank of Am., N.A. v. Kuchta, 135 Ohio St.3d 1430, 2013-Ohio-1857, 986 N.E.2d 1020. Oral argument in Kuchta occurred on January 8, 2014.
{18} Assuming, arguendo, the Ohio Supreme Court were to answer the certified question in the affirmative, the denial of Gunther‘s Motion for Relief must still be affirmed.
{19} As noted above, a
{20} Gunther counters that HSBC Bank‘s lack of standing at the time the Complaint was filed renders the Agreed Entry void ab initio, and, therefore, “this court has inherent authority to vacate the judgment regardless of whether the requirements under
{21} Contrary to Gunther‘s position, a party‘s lack of standing at the time a complaint is filed does not equate with the trial court‘s lack of subject matter jurisdiction.
{22} The Ohio Supreme Court has recognized “a distinction between a court that lacks subject-matter jurisdiction over a case and a court that improperly exercises that subject-matter jurisdiction once conferred upon it.” Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, 806 N.E.2d 992, ¶ 10.
{23} “Jurisdiction” means “the courts’ statutory or constitutional power to adjudicate the case.” (Emphasis omitted.) Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998); Morrison v. Steiner (1972), 32 Ohio St.2d 86, 87, 61 O.O.2d 335, 290 N.E.2d 841, paragraph one of the syllabus. The term encompasses jurisdiction over the subject matter and over the person. State v. Parker, 95 Ohio St.3d 524, 2002-Ohio-2833, 769 N.E.2d 846, ¶ 22 (Cook, J., dissenting). Because subject-matter jurisdiction goes to the power of the court to adjudicate the merits of a case, it can never be waived and may be challenged at any time. United States v. Cotton (2002), 535 U.S. 625, 630, 122 S.Ct. 1781, 152 L.Ed.2d 860; State ex rel. Tubbs Jones v. Suster (1998), 84 Ohio St.3d 70, 75, 701 N.E.2d 1002. * * *
{24} The term “jurisdiction” is also used when referring to a court‘s exercise of its jurisdiction over a particular case. See State v. Parker, 95 Ohio St.3d 524, 2002-Ohio-2833, 769 N.E.2d 846, ¶ 20 (Cook, J., dissenting); State v. Swiger (1998), 125 Ohio App.3d 456, 462, 708 N.E.2d 1033. ” ‘The third category of jurisdiction [i.e., jurisdiction over the particular case] encompasses the trial court‘s authority to determine a specific case within that class of cases that is within its subject matter jurisdiction. It is only when the trial court lacks subject matter jurisdiction that its judgment is void; lack of jurisdiction over the particular case merely renders the judgment voidable.’ ” Parker at ¶ 22 (Cook, J., dissenting), quoting Swiger, 125 Ohio App.3d at 462, 708 N.E.2d 1033. ” ‘Once a tribunal has jurisdiction over both the subject matter of an action and the parties to it, * * * the right to hear and determine is perfect; and the decision of every question thereafter arising is but the exercise of the jurisdiction thus conferred * * *.’ ” State ex rel. Pizza v. Rayford (1992), 62 Ohio St.3d 382, 384, 582 N.E.2d 992, quoting Sheldon‘s Lessee v. Newton (1854), 3 Ohio St. 494, 499. * * * Id. at ¶ 11-12.
{25} In Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214, the Ohio Supreme Court held that “standing to sue is required to invoke the jurisdiction of the common pleas court,” id. at ¶ 24, but it did not state that the common pleas court lacked subject-matter jurisdiction where a party lacked standing to sue. The fact that HSBC Bank improperly invoked that jurisdiction by lacking the requisite standing to initiate the foreclosure action, i.e., it was not assigned
{26} The Tenth District Court of Appeals has explained the distinction by analyzing a party‘s lack of standing to initiate a lawsuit in the context of a case‘s justiciability:
{27} [A] court may have jurisdiction over the subject-matter of a case and yet not be empowered to adjudicate it to final judgment for reasons particular to that case, including the lack of standing of the plaintiff. Where an action is brought by a plaintiff who lacks standing, the action is not justiciable because it fails to present a case or controversy between the parties before it. * * * But the court‘s lack of “jurisdiction,” i.e., its ability to properly resolve a particular action due to the lack of a real case or controversy between the parties, does not mean that the court lacked subject-matter jurisdiction over the case.
Deutsche Bank Natl. Trust Co. v. Finney, 10th Dist. Franklin Nos. 13AP-198 and 13AP-373, 2013-Ohio-4884, ¶ 24.
{29} Gunther cites to this court‘s decision in Fed. Home Loan Mtge. Corp. v. Rufo, 11th Dist. Ashtabula No. 2012-A-0011, 2012-Ohio-5930, 983 N.E.2d 406, in support of her position. This court, however, subsequently overruled Rufo with respect to the jurisdictional issue. CitiMortgage, Inc. v. Oates, 11th Dist. Trumbull No. 2013-T-0011, 2013-Ohio-5077, ¶ 19 (“it was incorrect to equate standing with subject matter jurisdiction“). This court now acknowledges that “the sole similarity of standing and subject matter jurisdiction is that the initial challenge to each requirement can be made at any time while the underlying case is pending.” Id.
{30} In the present matter, the underlying case is no longer pending. In order to challenge the final judgment, it was necessary for Gunther to satisfy the timeliness requirements of
{31} The sole assignment of error is without merit.
TIMOTHY P. CANNON, P.J., concurs,
COLLEEN MARY O‘TOOLE, J., dissents with a Dissenting Opinion.
COLLEEN MARY O‘TOOLE, J., dissents with a Dissenting Opinion.
{33} Because I believe the trial court‘s judgment should be reversed and remanded, I respectfully dissent.
{34} In her sole assignment of error, appellant argues that the trial court erred in denying her motion because HSBC lacked standing to obtain judgment.
{35} HSBC asserts that the trial court did not err because appellant‘s supplemental motion is barred by res judicata, was an improper substitute for an appeal, was untimely, and there was no “newly discovered evidence” to support a
{37} For the reasons that follow, this court should follow the Ohio Supreme Court‘s decision in Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, involving a mortgage foreclosure action, and I agree with appellant that HSBC lacked standing to obtain judgment.
{38} I agree with this court‘s position in Fed. Home Loan Mtge. Corp. v. Rufo, 11th Dist. Ashtabula No. 2012-A-0011, 2012-Ohio-5930, ¶ 15-21, holding:
{39} ” ‘Subject matter jurisdiction is a court‘s power to hear and decide a case on the merits.’ Morrison v. Steiner, 32 Ohio St.2d 86 (1972), paragraph one of the syllabus. ‘Because subject-matter jurisdiction goes to the power of the court to adjudicate the merits of a case, it can never be waived and may be challenged at any time.’ Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, ¶ 11 * * *. When the trial court lacks subject matter jurisdiction, its final judgment is void. Id. at ¶ 12.
{40} “In Ohio, courts of common pleas have subject matter jurisdiction over justiciable matters.
{41} “* * *
{42} “In the context of a mortgage foreclosure action, the mortgage holder must establish an interest in the mortgage or promissory note in order to have standing to invoke the jurisdiction of the common pleas court. * * * Schwartzwald, [supra], [¶ 28] * * *.”
{44} “Standing is similar to the requirement in
{45} “In contrast to standing, which is jurisdictional,
{46} In this case, the issue before us is whether HSBC was required to have standing at the time it filed this action or whether its lack of standing was cured pursuant to
{47} As stated, the Ohio Supreme Court addressed the identical issue before us in Schwartzwald, supra. In that case, the Court held that standing is required to present a justiciable controversy and is a jurisdictional requirement. Id. at ¶ 21-22. The Court held that since standing is required to invoke the trial court‘s jurisdiction, standing is determined as of the filing of the complaint. Id. at ¶ 24. The Court also held that a mortgage holder cannot rely on events occurring after the complaint is filed to establish
{48} Therefore, pursuant to Schwartzwald, standing is jurisdictional. As a result, HSBC was required to have an interest in the note or mortgage when it filed this action in order to have standing to invoke the trial court‘s jurisdiction. Because HSBC failed to establish that it held the note or mortgage before filing the complaint, it did not have standing to bring this foreclosure action. Accordingly, the trial court erred in denying appellant‘s “Supplemental Motion to Vacate or Alternative Judgment,” as a motion to vacate a void judgment need not comply with the requirements of
{49} For the foregoing reasons, I believe appellant‘s sole assignment of error is well-taken. Thus, I would reverse the trial court‘s judgment and remand the matter for further proceedings. I dissent.
DIANE V. GRENDELL
JUDGE