HSBC MORTGAGE SERVICES, INC. v. PAMELA J. WATSON, ET AL., -AND- TREASURER OF PAULDING COUNTY
CASE NO. 11-14-03
IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT PAULDING COUNTY
January 26, 2015
[Cite as HSBC Mtge. Servs., Inc. v. Watson, 2015-Ohio-221.]
PRESTON, J.
Appeal from Paulding County Common Pleas Court Trial Court No. CI 12178 Judgment Reversed and Cause Remanded
George C. Rogers for Appellants
Rachel M. Kuhn for Appellee
{¶1} Defendants-appellants, Pamela J. Watson (“Watson“), now known as Pamela Lambert, and William L. Lambert (“Lambert“), appeal the April 18, 2014 judgment entry of the Paulding County Court of Common Pleas granting foreclosure in favor of plaintiff-appellee, HSBC Mortgage Services, Inc. (“HSBC“). For the reasons that follow, we reverse.
{¶2} On August 22, 2012, HSBC filed a complaint for foreclosure against Watson, Lambert, and the Paulding County Treasurer. (Doc. No. 1). In it, HSBC averred that it was “the holder of a certain promissory note” executed by Watson and “the holder of a certain mortgage deed, securing the payment of said promissory note” and that Watson was in default. (Id.). HSBC attached copies of the note and the mortgage to its complaint. (Id.).
{¶3} Watson and Lambert filed their answer on December 13, 2012. (Doc. No. 23).
{¶4} On April 29, 2013, HSBC filed a motion for summary judgment. (Doc. No. 27). Attached to HSBC‘s motion was an “affidavit of amount due,” executed by Heather Burgos (“Burgos“), in which Burgos stated, among other things, that HSBC “is in possession of the original promissory note,” which is secured by a mortgage, that HSBC mailed a “notice of right to cure default” to
{¶5} On May 8, 2013, the trial court filed a journal entry, which established a discovery cutoff date of June 21, 2013 and ordered that the defendants respond to HSBC‘s motion for summary judgment by July 5, 2013 and that HSBC reply to the defendants’ responses by July 15, 2013. (Doc. No. 28).
{¶6} On May 24, 2013, Watson served discovery requests on HSBC, including requests for admissions. (See Doc. No. 31, Ex. A).
{¶7} On June 28, 2013, the trial court granted HSBC‘s motion for additional time to respond to Watson‘s discovery requests, ordering that HSBC respond to the discovery requests by July 23, 2013. (Doc. No. 30).
{¶8} On July 1, 2013, Watson moved “to extend the date for Watson to respond to the summary judgment motion until seven days following HSBC‘s response to [her] discovery request.” (Doc. No. 31).
{¶9} HSBC failed to respond to Watson‘s discovery requests by July 23, 2013. (See Doc. Nos. 32, 37).
{¶10} On August 2, 2013, Watson filed a memorandum in opposition to HSBC‘s motion for summary judgment combined with her own motion for
{¶11} On August 9, 2013, HSBC filed a “notice of service of [HSBC‘s] responses to [Watson‘s] discovery requests,” stating that it served responses to Watson‘s discovery requests on August 8, 2013. (Doc. No. 34). Also that day, HSBC filed a motion for additional time, until August 30, 2013, to respond to Watson‘s August 2, 2013 combined filing. (Doc. No. 33). The trial court granted HSBC‘s motion for additional time on August 12, 2013. (Doc. No. 35). On August 16, 2013, the trial court ordered that HSBC respond by August 30, 2013 and that “[d]efendants” reply to HSBC‘s response by September 13, 2013. (Doc. No. 36).
{¶13} On September 12, 2013, Watson filed her “memorandum contra motion to be reviewed [sic] from admissions, and reply memorandum re: summary judgment.” (Doc. No. 38). Watson argued, among other things, that unexplained “inadvertent error” is not a permissible ground to allow the withdrawal of admissions and that “the Watsons” would be prejudiced if the trial court allowed HSBC to withdraw its admissions because the discovery cutoff date had passed by the time HSBC responded to Watson‘s discovery requests, foreclosing the possibility of depositions of HSBC officers. (Id.).
{¶14} On February 12, 2014, the trial court issued an “order granting [HSBC‘s] motion for summary judgment and motion to withdraw requests for admissions deemed admitted and denying [Watson‘s] motion for summary
{¶15} On April 18, 2014, the trial court issued its judgment entry ordering the property foreclosed and sold. (Doc. No. 40).
{¶16} On May 16, 2014, Watson and Lambert filed a notice of appeal.2 (Doc. No. 43). They raise three assignments of error for our review. Because it is dispositive, we address Watson and Lambert‘s first assignment of error.
Assignment of Error No. I
The trial court erred in granting Plaintiff‘s
{¶17} In their first assignment of error, which they combine with their second assignment of error in their brief, Watson and Lambert argue that they were prejudiced by the trial court‘s decision to grant HSBC‘s
{¶18}
(A) * * * A party may serve upon any other party a written request for the admission, for purposes of the pending action only, of the truth of any matters within the scope of
Civ.R. 26(B) set forth in the request, that relate to statements or opinions of fact or of the application of law to fact, including the genuineness of any documents described in the request. * * *(1) * * * The matter is admitted unless, within a period designated in the request, not less than twenty-eight days after service of the request or within such shorter or longer time as the court may allow, the party to whom the request is directed serves upon the party
requesting the admission a written answer or objection addressed to the matter, signed by the party or by the party‘s attorney. * * *
(B) Effect of admission. Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission. Subject to the provisions of
Civ. R. 16 governing modification of a pretrial order, the court may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice the party in maintaining his action or defense on the merits.
{¶20} “‘A trial court may permit withdrawal of an admission if it will aid in presenting the merits of the case and the party who obtained the admission fails to demonstrate that withdrawal will prejudice him in maintaining his action.‘” Davila at ¶ 24, citing Willis at 67. “If these two prerequisites are satisfied, then, and only then, the trial court may permit the modification or withdrawal of the deemed admissions * * *.” (Emphasis sic.) Crespo at ¶ 29 (Fain, J., concurring). See also id. at ¶ 10 (“There is a two-prong test for determining whether a trial court may allow a withdrawal or an amendment to a previous admission.“); S.K. Constr. Co., Inc. v. L & K Indus. Painting Contrs., Inc., 2d Dist. Greene No. 98 CA 11, 1998 WL 770255, *3 (Nov. 6, 1998) (noting that “both of the two criteria in
{¶21} “A trial court‘s decision on a motion to withdraw admissions will not be disturbed on appeal absent an abuse of discretion.” Id., citing Brown v. Weidner, 3d Dist. Seneca No. 13-06-08, 2006-Ohio-6852, ¶ 28. “‘Abuse of discretion’ implies that the trial court was arbitrary, unreasonable, or unconscionable.” Id., citing Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983).
{¶22} In this case, because Watson demonstrated that, without the opportunity to conduct additional discovery, withdrawal of HSBC‘s admissions would prejudice her in maintaining her defense on the merits, the trial court abused its discretion when it granted HSBC‘s motion to withdraw its admissions without allowing Watson to conduct additional discovery. We begin our analysis by examining the summary-judgment standard and the substantive law governing HSBC‘s foreclosure action to determine whether any of the matters conclusively
{¶23} Summary judgment is proper where there is no genuine issue of material fact, the moving party is entitled to judgment as a matter of law, and reasonable minds can reach but one conclusion when viewing the evidence in favor of the non-moving party, and the conclusion is adverse to the non-moving party.
{¶24} “To properly support a motion for summary judgment in a foreclosure action, a plaintiff must present evidentiary-quality materials showing: (1) the movant is the holder of the note and mortgage, or is a party entitled to enforce the instrument; (2) if the movant is not the original mortgagee, the chain of assignments and transfers; (3) the mortgagor is in default; (4) all conditions
{¶25} “Ohio‘s version of the Uniform Commercial Code governs who may enforce a note[,] * * * including promissory notes secured by mortgages on real estate.” HSBC Mtge. Servs., Inc. v. Edmon, 6th Dist. Erie No. E-11-046, 2012-Ohio-4990, ¶ 26. An allonge attached to the note in this case contains the following blank indorsement:
PAY TO THE ORDER OF:
____________________________________
WITHOUT RECOURSE
/s/ Hope N. Gausmann
Hope N Gausmann
Assistant Secretary
Accredited Home Lenders, Inc., A California Corporation
(Burgos Aff., ¶ 3, Ex. B, Doc. No. 27, attached). A “blank indorsement” is “an indorsement that is made by the holder of the instrument and that is not a special indorsement.”3
{¶26} In this case, Burgos stated in her affidavit, “The Plaintiff is in possession of the original promissory note and/or loan agreement (“Note“) for this Loan, bearing the date of 11/24/2004, in which the Defendant(s) PAMELA J WATSON promised to pay the sum of $79,500.00.” (Burgos Aff., ¶ 3, Doc. No. 27, attached). However, by failing to respond to Watson‘s requests for admissions, HSBC admitted that “HSBC does not have possession of the original note, Exhibit A to the Complaint.” (Doc. No. 32, Ex. A). Demonstrating possession of the note—or alternatively, entitlement to enforce the note—is a prerequisite to obtaining summary judgment in a foreclosure action, and a plaintiff‘s inability to demonstrate possession of the note or entitlement to enforce
{¶27} We also agree with Watson that HSBC‘s admission that “Burgos did not personally observe the original note prior to executing the April 10, 2013 affidavit attached to the summary judgment motion in this case” precluded summary judgment in HSBC‘s favor. (Doc. No. 32, Ex. A). In another case to which HSBC was a party, the Sixth District Court of Appeals concluded that a genuine issue of fact remained as to whether the affiant—who testified in her deposition that she did not compare a copy of the note with the original—was a “witness with knowledge” under
{¶28} HSBC argues that “[m]any” of its admissions “were irrelevant or contrary to admissible evidence already presented by HSBC in establishing that it was entitled to summary judgment.” (Appellee HSBC‘s Brief at 5). First, HSBC cites no rule or case supporting the proposition that a party may not request an admission that contradicts an affidavit already offered by an opposing party, and we have found no such rule or case. Second, HSBC‘s argument ignores that any matter admitted under
{¶29} For the reasons above, Watson demonstrated that the matters conclusively established by at least two of HSBC‘s admissions precluded summary judgment in HSBC‘s favor. (See Doc. No. 38). Watson also demonstrated that because the discovery cutoff date had passed, she would be prejudiced if the trial court granted HSBC‘s motion to withdraw its admissions without allowing additional discovery. (See id.). Therefore, we hold that by
{¶30} Based on our conclusion that the trial court abused its discretion in granting HSBC‘s
{¶31} However, one additional point bears mentioning. In its brief, HSBC suggests that its failure to timely respond to Watson‘s requests for admissions “was due to inadvertent error” and somehow Watson‘s counsel‘s fault, arguing, “Counsel for Appellants did not reach out to counsel for HSBC to discuss the pending discovery or follow up on its status prior to having the Requests for Admissions deemed admitted.” (Appellee HSBC‘s Brief at 5). HSBC also argues that to decide this appeal in Watson and Lambert‘s favor would allow the “case to be decided on a procedural technicality.” (Id. at v).
{¶32} We find HSBC‘s arguments egregious, especially considering HSBC received additional time to respond to Watson‘s requests for admissions. Under
{¶33} Watson and Lambert‘s first assignment of error is sustained.
Assignment of Error No. II
The trial court erred in granting judgment to Plaintiff summarily without reopening discovery in light of Defendants’ prior outstanding motion for discovery time to respond if Plaintiff would timely respond to discovery requests.
Assignment of Error No. III
The trial court erred in failing to grant Defendant‘s motion for summary judgment based upon the facts of record and admissions of Plaintiff.
{¶34} In their second assignment of error, Watson and Lambert make the same arguments that they make under their first assignment of error, including that the trial court erred by concurrently allowing HSBC to withdraw its admissions
{¶35} We held above that the trial court abused its discretion by granting HSBC‘s motion to withdraw its admissions without allowing Watson to conduct additional discovery. The trial court‘s rulings on the parties’ motions for summary judgment were based on its erroneous discovery order granting HSBC‘s motion to withdraw its admissions without allowing Watson to conduct additional discovery. In light of the erroneous discovery order, ruling on either party‘s motion for summary judgment was premature. Therefore, Watson and Lambert‘s second and third assignments of error have been rendered moot, and we decline to address them.
{¶37} On remand for further proceedings consistent with this opinion, the trial court may proceed in any number of ways, including, for example, reopening discovery, allowing additional motions concerning discovery, and allowing the resubmission of motions for summary judgment. See Nester v. Lima Mem. Hosp., 139 Ohio App.3d 883, 889 (3d Dist.2000) (“It is well established that the management of discovery lies within the broad discretion of the trial courts.“), citing State ex rel. Daggett v. Gessaman, 34 Ohio St.2d 55, 57 (1973); Cooper v. Valvoline Instant Oil Change, 10th Dist. Franklin No. 07AP-392, 2007-Ohio-5930, ¶ 7 (“[I]t is within the trial court‘s discretion to grant leave to file a motion for summary judgment even when the action has been set for trial.“), citing Detray v. Mt. Carmel Health, 10th Dist. Franklin No. 96APE08-1010, 1997 WL 189333 (Apr. 17, 1997).
Judgment Reversed and Cause Remanded
WILLAMOWSKI, J., concurs.
/jlr
ROGERS, P.J., concurs separately.
{¶39} While I concur with the analysis of the majority in which they find that the trial court abused its discretion in granting HSBC‘s
{¶40} Under
If the culpability of the negligent party is great, perhaps because the party has demonstrated a pattern of indifference to discovery and to orders of the court, and the inconvenience to the trial court and to the adverse parties is great * * * then the sound exercise of discretion would lead a reasonable trial court to overrule a motion to modify or withdraw deemed admissions.
Crespo v. Harvey, 2d Dist. Montgomery No. 25861, 2014-Ohio-1755, ¶ 31. Therefore, while
{¶42} I agree with the majority‘s statement that HSBC‘s actions in this case are “egregious.” (Majority Opin., ¶ 32). On May 24, 2013, Watson served her request for admissions on HSBC. Instead of timely answering the request for admissions, HSBC failed to answer by the deadline. Instead of asking the court to modify or withdraw its admissions, it incorrectly asked the court for an extension of time. The trial court and Watson graciously allowed HSBC additional time to respond to Watson‘s simple discovery requests, but HSBC once again failed to respond to the admissions. Even on appeal, HSBC does not accept
{¶43} In conclusion, I can only think what the result would be if the roles were reversed. What if it were Watson who missed her deadline to respond to a discovery request, and offered no explanation as to her negligence. Would the