THE HUNTINGTON NATIONAL BANK v. LORIE FILIPPI
CASE NO. 14-15-03
IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT UNION COUNTY
August 3, 2015
2015-Ohio-3096
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
UNION COUNTY
THE HUNTINGTON NATIONAL BANK,
PLAINTIFF-APPELLEE,
v.
CASE NO. 14-15-03
LORIE FILIPPI,
DEFENDANT-APPELLANT,
-and-
O P I N I O N
TREASURER OF UNION COUNTY, ET AL.,
DEFENDANTS-APPELLEES.
Appeal from Union County Common Pleas Court
Trial Court No. 2013-CV-0073
Judgment Affirmed
Date of Decision: August 3, 2015
APPEARANCES:
Thomas M. Tyack for Appellant
Darryl E. Gormley and Rachel M. Kuhn for Appellee
{¶1} Defendant-Appellant, Lorie Filippi (“Lorie”), appeals the judgment of the Court of Common Pleas of Union County, which granted Plaintiff-Appellee’s, the Huntington National Bank’s (“Huntington”), motion for summary judgment. On appeal, Lorie argues that the trial court erred: (1) in finding that the failure of Huntington to comply with federal regulations promulgated by the Department of Housing and Urban Development (“HUD”) was an affirmative defense as opposed to a condition precedent; and (2) by granting Huntington’s motion for summary judgment. For the reasons that follow, we affirm the trial court’s judgment.
{¶2} On June 16, 2005, Lorie and Joseph Filippi (“Joseph”) (collectively “the Filippis”) executed a promissory note (“the Note”) with Dominion Homes Financial Services (“Dominion Homes”) for a loan in the amount of $237,200. The last page of the Note bears an endorsement from Dominion Homes to Huntington, reading “pay to the order of the Huntington National Bank without recourse.” (Docket No. 1, Exhibit A, p. 2). The Note was secured by a mortgage (“Mortgage”) encumbering property located at 614 Kentucky Circle, Marysville, Ohio (“Property”).
{¶3} On March 15, 2013, Huntington filed a complaint for foreclosure. In its complaint, Huntington alleged that it was the holder of the Note; that it was the holder of the Mortgage; that the Filippis were in default of payment of the Note
{¶4} On March 28, 2013, Lorie filed her answer.1 She generally denied the allegations in the complaint and also asserted two defenses. She first claimed that Huntington failed to state a claim upon which relief may be granted. Lorie then alleged that Huntington “failed to comply with the regulations pronounced by the Secretary of Housing and Urban Development as to actions which must be taken prior to initiating any foreclosure action. By reason thereof, this action may not proceed.” (Docket No. 44, p. 2).
{¶5} Huntington filed a motion for summary judgment on January 6, 2014, arguing that there were no genuine issues of material fact and that it was entitled to judgment as a matter of law. In support of its motion for summary judgment, Huntington attached a copy of the Note, Mortgage, and mortgage assignment. In addition to the foregoing documents, Huntington filed an affidavit of one of its employees, Michael Mantilla. In his affidavit, Mantilla, a litigation specialist, attested that Huntington holds the Note, that the copies of the Note and Mortgage
{¶6} On April 24, 2014, Lorie filed a memorandum in opposition to Huntington’s motion for summary judgment. Lorie argued that the trial court should deny Huntington’s motion as it failed to comply with HUD regulations. Specifically, Lorie alleged that Huntington was obligated to have a “face to face meeting [with Lorie] before filing for foreclosure.” (Docket No. 94, p. 2). Lorie further asserted that Huntington never met with her before it filed its complaint. In support of her memorandum, Lorie attached her affidavit where she attested that at no time was she provided with a face to face meeting with Huntington before the filing of the foreclosure complaint. (Docket No. 95).
{¶7} On May 21, 2014, Huntington filed a reply to Lorie’s memorandum in opposition. Huntington argued that Lorie failed to plead with specificity or particularity the denial of a condition precedent or affirmative defense as required by Civ.R. 9(C). By failing to plead the condition precedent with specificity and particularity, Huntington argued that it was deemed admitted.
{¶8} Huntington filed a request for ruling on October 17, 2014. The trial court filed its judgment entry granting summary judgment in favor of Huntington on December 31, 2014.
{¶9} It is from this judgment that Lorie appeals, presenting the following assignments of error for our review.
THE TRIAL COURT ERRED IN RULING THAT THE FAILURE OF THE FINANCIAL INSTITUTION TO COMPLY WITH HUD REGULATION FOUND IN C.F.R. § 203.64 WAS [AN] AFFIRMATIVE DEFENSE AS OPPOSED TO A CONDITION PRECEDENT TO MAINTAINING A FORECLOSURE ACTION.
Assignment of Error No. II
THE TRIAL COURT ERRED GRANTING [SIC] SUMMARY JUDGMENT TO PLAINTIFF, WHEN DEFENDANT ESTABLISHED EVIDENCE, [SIC] PLAINTIFF FAILED TO COMPLY WITH THE HUD REGULATION AS TO GRANTING FACE-TO-FACE MEETING WITH HER AS AN OBLIGOR ON THE NOTE AS MANDATED BY THE HUD REGULATIONS.
Assignment of Error No. I
{¶10} In her first assignment of error, Lorie argues that the trial court erred in finding that HUD regulations are an affirmative defense rather than a condition precedent. We agree.
Condition Precedent or Affirmative Defense
{¶11} Both parties agree that Lorie’s loan and mortgage were subject to HUD regulations. On appeal, Lorie argues that Huntington did not comply with
(b) The mortgagee must have a face-to-face interview with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid. If default occurs in a repayment plan arranged other than during a personal interview, the mortgagee must have a face-to-face meeting with the mortgagor, or make a reasonable attempt to arrange
(c) A face-to-face meeting is not required if:
(1) The mortgagor does not reside in the mortgaged property,
(2) The mortgaged property is not within 200 miles of the mortgagee, its servicer, or a branch office of either,
(3) The mortgagor has clearly indicated that he will not cooperate in the interview,
(4) A repayment plan consistent with the mortgagor‘s circumstances is entered into to bring the mortgagor‘s account current thus making a meeting unnecessary, and payments thereunder are current, or
(5) A reasonable effort to arrange a meeting is unsuccessful.
(d) A reasonable effort to arrange a face-to-face meeting with the mortgagor shall consist at a minimum of one letter sent to the mortgagor certified by the Postal Service as having been dispatched. Such a reasonable effort to arrange a face-to-face meeting shall also include at least one trip to see the mortgagor at the mortgaged property, unless the mortgaged property is more than 200 miles from the mortgagee, its servicer, or a branch office of either, or it is known that the mortgagor is not residing in the mortgaged property.
Lorie argues that the HUD regulations create a condition precedent, whereas Huntington contends that the failure to comply with the HUD regulations is an affirmative defense. Such a difference is important as “an affirmative defense is separate from the merits of the plaintiff’s cause of action and bars recovery even
{¶12} If compliance with the HUD regulations is a condition precedent, then “the bank must generally aver in its complaint that it has complied with all conditions precedent, the borrower then has a reciprocal burden to allege with specificity and particularity how the bank failed to comply.” Id., citing
{¶14} In Goebel, the Second District Court of Appeals found that noncompliance with HUD regulations is an affirmative defense, in part, because the law disfavors conditions precedent. Id. at ¶ 24. The court recognized that “courts will avoid construing a provision as a condition precedent unless the intent to create such a condition is obvious.” Id., citing Rudd v. Online Resources, Inc., 2d Dist. Montgomery No. 17500, 1999 WL 397351, *7 (June 18, 1999). However, we find that there is a clear intent to make the face-to-face meeting requirement of
[T]he overall regulatory scheme enacted by HUD must be considered. Importantly,
24 C.F.R. 203.500 states: “It is the intent of the Department [of Housing and Urban Development] that no mortgagee shall commence foreclosure * * * until the requirements of this subpart have been followed.” As to specific regulatory language pertinent to this appeal * * *24 C.F.R. 203.604(b) * * * provides: “The mortgagee must have a face-to-face interview with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid. * * *.” Subsection (c) goes on to provide several exceptions to the face-to-face meeting requirement. * * *These regulations evince HUD‘s clear intent that banks must comply with the face-to-face interview * * * before commencing foreclosure actions. In other words, a bank‘s foreclosure action is contingent upon satisfaction of these regulations and is therefore a condition precedent.
(Emphasis added.) Garland, 2014-Ohio-1173, ¶ 26-27.
{¶15} Also of importance, many Ohio courts have held that “ ‘[w]here prior notice of default and/or acceleration is required by a provision in a note or mortgage instrument, the provision of notice is a condition precedent,’ and subject to the requirements of
{¶17} Accordingly, we sustain Lorie’s first assignment of error.
Assignment of Error No. II
{¶18} In her second assignment of error, Lorie contends that the trial court erred in granting summary judgment in favor of Huntington. Lorie argues that there is a genuine issue of material fact as to whether Huntington complied with the applicable HUD regulations. Specifically, Lorie avers that she was never afforded a face-to-face meeting with Huntington before the foreclosure complaint was filed, and thus, the foreclosure cannot proceed. We disagree.
Standard of Review
{¶19} An appellate court reviews a summary judgment order de novo. Hillyer v. State Farm Mut. Auto. Ins. Co., 131 Ohio App.3d 172, 175 (8th Dist.1999). Accordingly, a reviewing court will not reverse an otherwise correct judgment merely because the lower court utilized different or erroneous reasons as the basis for its determination. Diamond Wine & Spirits, Inc. v. Dayton Heidelberg Distrib. Co., Inc., 148 Ohio App.3d 596, 2002-Ohio-3932, ¶ 25 (3d Dist.), citing State ex rel. Cassels v. Dayton City School Dist. Bd. of Edn., 69 Ohio St.3d 217, 222 (1994). Summary judgment is appropriate when, looking at the evidence as a whole: (1) there is no genuine issue as to any material fact, and (2)
{¶20} The party moving for summary judgment has the initial burden of producing some evidence which demonstrates the lack of a genuine issue of material fact. Dresher, 75 Ohio St.3d at 292. In doing so, the moving party is not required to produce any affirmative evidence, but must identify those portions of the record which affirmatively support his argument. Id. at 292. The nonmoving party must then rebut with specific facts showing the existence of a genuine triable issue; he may not rest on the mere allegations or denials of his pleadings. Id.;
Waiver
{¶21} Although we found that compliance with HUD regulations is a condition precedent, Huntington argues that Lorie has waived this argument by failing to plead it with particularity in her answer. Under
{¶22} Here, Huntington’s complaint generally alleged compliance with all conditions precedent. See (Docket No. 2, p. 4). This was sufficient under
THIRD DEFENSE
Defendant avers that Plaintiff has failed to comply with the regulations pronounced by the Secretary of Housing and Urban Development as to actions which must be taken prior to initiating any foreclosure action. By reason thereof, this action may not proceed.
(Docket No. 44, p. 2).
{¶23} We find that Lorie failed to state, with the specificity required by
{¶24} “[T]he effect of the failure to deny conditions precedent in the manner provided by in
{¶25} Accordingly, we overrule Lorie’s second assignment of error.
{¶26} In conclusion, we find that compliance with HUD regulations is a condition precedent to initiating a foreclosure action. In holding otherwise, the trial court erred. However, we find that the trial court correctly granted Huntington’s motion for summary judgment since Lorie waived the argument by failing to comply with
{¶27} Having found no error prejudicial to Lorie in the particulars assigned and argued, we affirm the trial court’s decision.
Judgment Affirmed
SHAW and WILLAMOWSKI, J.J., concur.
/hlo