THE HUNTINGTON NATIONAL BANK, ET AL. v. PROSPECT PARK, LLC, ET AL.
No. 96218
Court of Appeals of Ohio, EIGHTH APPELLATE DISTRICT, COUNTY OF CUYAHOGA
October 20, 2011
[Cite as Huntington Natl. Bank v. Prospect Park, L.L.C., 2011-Ohio-5391.]
JOURNAL ENTRY AND OPINION
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-720895
BEFORE: S. Gallagher, J., Stewart, P.J., and Cooney, J.
RELEASED AND JOURNALIZED: October 20, 2011
Gerald W. Phillips
Phillips & Co., LPA
P.O. Box 269
Avon Lake, OH 44012
ATTORNEYS FOR APPELLEES
E. Mark Young
David R. Mayo
Benesch, Friedlander, Coplan & Aronoff, LLP
200 Public Square
Suite 2300
Cleveland, OH 44114
For Park View Federal Savings Bank
Sarah Blackburn
Cavitch, Familo & Durkin Co., LPA
1300 East 9th Street, 20th Floor
Cleveland, OH 44114
For Receiver
Bernard H. Niehaus
Frantz Ward LLP
127 Public Square
Suite 2500
Cleveland, OH 44114
For Treasurer of Cuyahoga County
William D. Mason
Cuyahoga County Prosecutor
9th Floor Justice Center
1200 Ontario Street
Cleveland, OH 44113
{¶ 1} Defendant-appellant, Prospect Park LLC, appeals the decision of the Cuyahoga County Court of Common Pleas that granted the motion for appointment of receiver filed by plaintiffs-appellees, The Huntington National Bank, successor by merger to Sky Bank and Metropolitan Bank and Trust Company, et al.1 For the reasons stated herein, we affirm the decision of the trial court.
{¶ 2} Plaintiffs filed a verified complaint on March 10, 2010, seeking to foreclose on property owned by Prospect Park at 4614 Prospect Avenue in Cleveland (“the property“). Plaintiffs each possess an ownership interest in the loan documents that are the subject of this action. Plaintiffs aver in their complaint that Prospect Park executed a cognovit promissory note in the principal amount of $1,700,000. A cognovit guaranty was executed by David B. Snider and Sam P. Cannata. In order to secure payment of the note, Prospect Park executed an open-end mortgage and security agreement on the property. Following a default under the note and guaranty, plaintiffs obtained a cognovit judgment in excess of $1 million in Cuyahoga County Common Pleas Court Case No. CV-715934. They then commenced this foreclosure action.
“At any time following an Event of Default, Lender shall be entitled as a matter of right, without notice to Mortgagor * * * to the appointment of a receiver for the benefit of Lender, with power to take immediate possession of the Mortgaged Property, manage, rent and collect the rents, issues and profits thereof. * * *”
{¶ 4} On June 23, 2010, Prospect Park filed a response to the motion to appoint a receiver. Prospect Park requested that the current property manager, Snider-Cannata Property Management LLC (hereafter “SCPM“), be appointed as receiver. Prospect Park asserted that SCPM had been managing the property, was experienced and familiar with the property, and would provide proper accounting services and reports. It claimed that the financial problems with the property stemmed from market conditions and that the termination of the current property manager‘s services would be detrimental to the property.
{¶ 5} On November 23, 2010, the trial court granted the motion and appointed Jack Cornachio of Midwest Realty Advisors as the receiver. The trial court found as follows: “[T]he court finds that [Prospect Park] has not met obligations as they come due and that a Receiver should be appointed to take charge of, collect rents, income and
{¶ 6} Prospect Park timely filed this appeal, raising seven assignments of error. As all the assignments of error challenge the appointment of the receiver, we shall address them together. Prospect Park argues that the trial court abused its discretion in appointing a receiver because the trial court (1) failed to apply the clear and convincing evidence standard; (2) failed to conduct an evidentiary hearing; (3) appointed a receiver when plaintiffs failed in their burden of persuasion and proof; (4) appointed a receiver based solely upon the satisfaction of a statutory condition; (5) appointed a receiver without proof that a receivership is necessary for preservation of the complainants’ rights; (6) appointed a receiver without proof and establishment of irreparable harm and injury; and (7) violated the constitutional due process rights of appellant.
{¶ 7}
{¶ 8} It is well recognized that the appointment of a receiver is an extraordinary remedy. Malloy v. Malloy Color Lab, Inc. (1989), 63 Ohio App.3d 434, 437, 579 N.E.2d 248. As such, the party requesting the receivership must show by clear and convincing evidence that the appointment is necessary for the preservation of the complainant‘s rights. Id. “Clear and convincing evidence” is defined as “that degree of proof which will provide in the mind of the trier of fact a firm belief or conviction as to the facts sought to be established.” (Citations omitted.) Barkley v. Barkley (1997), 119 Ohio App.3d 155, 168-169, 694 N.E.2d 989.
{¶ 9} The decision to appoint a receiver is vested in the sound discretion of the trial court. State ex rel. Celebrezze v. Gibbs (1991), 60 Ohio St.3d 69, 73, 573 N.E.2d 62. When determining whether to appoint a receiver, a trial court “‘must take into account all the circumstances and facts of the case, the presence of conditions and grounds justifying the relief, the ends of justice, the rights of the parties interested in the controversy and subject matter, and the adequacy and effectiveness of other remedies.‘” Id., quoting 65 American Jurisprudence 2d (1972) 873, 874, Receivers, Sections 19, 20.
{¶ 10} In this case, the trial court appointed a receiver upon the motion of plaintiffs that was filed with the verified complaint. The verified complaint, which was sworn to, contained competent evidence showing that Prospect Park had defaulted under the note and guaranty, a substantial cognovit money judgment was obtained, and the mortgage
{¶ 11} We recognize that the mortgage contained a provision for the appointment of a receiver without notice. Such provisions have been held to effectively waive the requirement that notice be given prior to the appointment of a receiver. See Metro. Life Ins. Co. v. Triskett Illinois, Inc. (1994), 97 Ohio App.3d 228, 236, 646 N.E.2d 528; Mfrs. Life Ins. Co. v. Patterson (1988), 51 Ohio App.3d 99, 101, 554 N.E.2d 134.2 Likewise, it has been stated that “[t]he specific requirements set forth in
{¶ 12} We also note that in its response, Prospect Park did not object to the appointment of a receiver, but instead requested that the current property manager be retained as the receiver. However, “A ‘receiver’ has been defined in relevant part as
{¶ 13} While Prospect Park claims the trial court erred in granting the motion without any evidentiary hearing on the need for a receivership, this court has previously recognized that a trial court is not statutorily obligated to conduct an evidentiary hearing. Poindexter v. Grantham, Cuyahoga App. No. 95413, 2011-Ohio-2915, ¶ 14. Here, plaintiffs presented evidence that Prospect Park had consented to the appointment of a receiver upon the incidence of default. Under such circumstances, a trial court does not abuse its discretion in appointing a receiver. See Harajli Mgt. & Invest., Inc., 167 Ohio App.3d 546; Whipps v. Ryan, Franklin App. Nos. 08AP-838 and 08AP-839, 2009-Ohio-2228, ¶ 21; Bank One, Columbus, NA v. O‘Brien (Mar. 24, 1992), Franklin App. Nos. 91AP-166 and 91AP-441.
{¶ 14} Our review reflects that the appointment of the receiver was made in accordance with
Judgment affirmed.
It is ordered that appellees recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
SEAN C. GALLAGHER, JUDGE
MELODY J. STEWART, P.J., and
COLLEEN CONWAY COONEY, J., CONCUR