Case Information
*1
[Cite as
Mohammad v. Awadallah
,
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION No. 97590
AMIN MOHAMMAD PLAINTIFF-APPELLANT vs.
SALEH AWADALLAH
DEFENDANT-APPELLEE JUDGMENT:
AFFIRMED Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-743053
BEFORE: Jones, J., Sweeney, P.J., and Kilbane, J.
RELEASED AND JOURNALIZED: August 2, 2012 *2 ATTORNEYS FOR APPELLANT
Robert R. Kracht
Daniel M. Singerman
McCarthy, Lebit, Crystal & Liffman Co.
101 West Prospect Avenue
Suite 1800
Cleveland, Ohio 44115
FOR APPELLEE
Saleh Awadallah, Pro se
17602 Hilliard Road
Lakewood, Ohio 44107
LARRY A. JONES, SR., J.:
{¶1} Plaintiff-appellant, Amin Mohammad, appeals the trial court’s dismissal of his complaint against defendant-appellee, Saleh Awadallah. We affirm.
{¶2} In May 2003, Awadallah, in his individual capacity and as sole member of Saife Properties, LLC, executed a purchase money note (“Note”) with Mohammad in which Mohammad loaned Saife Properties $200,000. The $200,000 was secured by a mortgage on property located at 13939 Lorain Avenue in Cleveland. According to the Note, the $200,000 was due and payable by September 15, 2003. Awadallah was unable to make the payments by the deadline and requested a
two-year extension. Mohammad orally agreed to the extension and Awadallah made seven payments toward the balance of the Note. In May 2005, Awadallah requested an extension to December 31, 2005, and Mohammad agreed. Mohammad alleged that Awadallah did not pay off the balance of the Note. In 2007, the property went into foreclosure and both Saife Properties and
Mohammad, as holder of the Note, were named defendants in the action. The property was foreclosed upon in 2009 and Mohammad bought the property at sheriff’s sale. On December 7, 2010, Mohammad filed a cognovit complaint against Awadallah alleging that Awadallah had failed to pay on the judgment Mohammad had obtained against Saife Properties in Plymouth Park Tax Servs., LLC v. Saife Properties, LLC, Cuyahoga C.P. No. CV-643144. An answer confessing judgment was filed on behalf of Awadallah pursuant to a warrant of attorney contained in the Note. The trial *4 court entered a judgment entry and certificate of judgment against Awadallah in the amount of $593,990.82. On December 30, 2010, Awadallah filed a motion for relief from judgment,
pursuant to Civ.R. 60(B) and 62(A). At first Mohammad opposed the motion, but in March 2011, Mohammad filed a motion to vacate the judgment and asked the case to be reinstated to the court’s active docket. The trial court granted the motion. In April 2011, Mohammad filed an “amended complaint on promissory note”
alleging that Awadallah made partial interest payments on the Note but failed to pay the amount due on the Note. Awadallah moved to dismiss the complaint pursuant to Civ.R. 12(B)(6), alleging that the statute of limitations had expired. The trial court agreed and granted the motion to dismiss. It is from this order that Mohammad now appeals, raising the following assignments of error for our review, which will be discussed together:
I. The trial court erred by holding that the partial payment rule does not apply to renew the running of the statute of limitations for claims made on a negotiable instrument.
II. The trial court erred by holding that the promissory note at issue was a negotiable instrument subject to a six-year statute of limitations.
III. The trial court erred by holding that the statute of limitations was not tolled by an oral modification which altered the due date of the promissory note at issue.
Standard of Review
In order for a trial court to dismiss a complaint under Civ.R. 12(B)(6) for
failure to state a claim upon which relief may be granted, it must appear beyond doubt that
the plaintiff can prove no set of facts in support of his or her claim that would entitle the
*5
plaintiff to relief.
Doe v. Archdiocese of Cincinnati
, 109 Ohio St.3d 491,
{¶9}
In resolving a Civ.R. 12(B)(6) motion, a court’s factual review is confined to
the four corners of the complaint; the court may not consider outside evidentiary materials.
Greeley v. Miami Valley Maintenance Contrs. Inc.
,
provides, in part that “[a] copy of any written instrument attached to a pleading is a part of
the pleading for all purposes.”
Seaman v. Fannie Mae
, 8th Dist. No. 92751,
novo standard of review.
Perrysburg Twp. v. Rossford
, 103 Ohio St.3d 79,
Law and Argument
Thus, we must determine, de novo, whether Mohammad’s claim was barred by the statute of limitations. In his assignments of error, Mohammad argues: (1) that the mortgage was
not a negotiable instrument, therefore, the 15-year statute of limitations applied; (2) even if the mortgage was a negotiable instrument and governed by a six-year statute of limitations, the complaint was timely filed because (a) Awadallah’s partial payments extended the statute of limitations, and/or (b) the parties’ oral modifications to the contract extended the statute of limitations.
Statute of Limitations - Negotiable Instruments
Article 3 of the Uniformed Commercial Code (“U.C.C.”) governs the
creation, transfer and enforceability of negotiable instruments, including promissory notes
secured by mortgages on real estate.
See Fed. Land Bank of Louisville v. Taggart
, 31
Ohio St.3d 8, 10, 508 N.E.2d 152 (1987);
Bank One, N.A. v. Demmler
, 5th Dist. No.
08CAE100057,
{¶16}
R.C. 1303.03(A) defines a negotiable instrument, in part, as an unconditional
promise to pay a fixed amount of money that (1) is payable to bearer, (2) is payable on
demand or at a definite time, and (3) may contain the power to give, maintain, or protect
collateral to secure payment. R.C. 1303.05(B) provides that “[a] promise or order is not
made conditional by a reference to another writing for a statement of rights with respect to
collateral.” A note, such as the one in this case, is the primary evidence of the debt and
the mortgage on the note is merely the security for payment of the note.
Midland Title
Sec., Inc. v. Carlson
,
instrument as defined by R.C. 1303.03. The Note provided for a fixed amount of money to be paid, $200,000, plus 6.5% interest, to the order of Amin Mohammad, payable at a definite time, September 15, 2003. Simply put, the Note was a promise to pay Mohammad the fixed amount of $200,000 on or before September 15, 2003. The security agreement does not govern the terms of the Note so as to render
it a contract as opposed to a promissory note secured by a mortgage. Moreover, even if
the Note could be considered a contract in addition to a negotiable instrument, Ohio courts
have found that the more specific statute of limitations in R.C. 1303.16 controls over R.C.
*8
2305.06.
Brisk v. Draf Industries
,
Inc.
, 10th Dist. No. 11AP-233,
Awadallah made partial payments on the Note until May 2005; therefore, he had until May
2011 to file his complaint. To support his claim that partial payment on the Note
extended the statute of limitations, Mohammad cites
Gattozzi v. Blakemore
, 9th Dist. No.
9241,
actual payment on the loan, it may have tolled the six-year statute of limitations, we are unpersuaded by Mohammad’s argument that we should follow the suggestion. We decline to ferret out the implication in Hart to conclude that the partial payment rule changes the law in Ohio and applies to the case at bar. Next, Mohammad claims that the “partial payment rule” found in contract
law, see R.C. 2305.08, should be applicable to negotiable instruments. Mohammad concedes that no court in Ohio has yet done this, and we decline to be the first to do so. See Brisk , supra at ¶ 24-25 (declining to find that statute of limitations was tolled pursuant to tolling provisions in contract law); see also Metz v. Unizan Bank , 6th Cir. Nos. 09-3751, 09-3879, 09-4363, 2011 U.S. App. LEXIS 17227 (Aug. 19, 2011) (declining to apply a discovery rule to the statute of limitations in R.C. 1303.16(G)).
{¶24} Finally, Mohammad claims that the oral modifications to the contract should toll the statute of limitations. But any alleged oral modification is subject to the statute of frauds, codified in Ohio by R.C. 1335.05, which provides, in pertinent part, that “[n]o action shall be brought whereby to charge * * * a person upon an agreement * * * that is not to be performed within one year from the making thereof; unless the agreement * * * is in writing and signed by the party to be charged therewith.” Ohio courts have long recognized that a signed written contract constitutes a
party’s final expression of its agreement.
Olympic Holding Co., L.L.C. v. ACE Ltd.
, 122
Ohio St.3d 89,
{¶26} In this case, the alleged oral modifications to the Note extended the contract by more than two years, making it subject to the statute of frauds. As such, it had to be reduced to writing and signed. Mohammad has not alleged that it was; moreover, in his complaint, he admits that the loan modifications were oral agreements. Therefore, finding that Mohammad’s complaint was barred by a six-year
statute of limitations, the trial court did not err in granting Awadallah’s motion to dismiss.
{¶28} The assignments of error are overruled. Judgment affirmed.
It is ordered that appellee recover of appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the Cuyahoga County Court of Common Pleas to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
LARRY A. JONES, SR., JUDGE
JAMES J. SWEENEY, P.J., and
MARY EILEEN KILBANE, J., CONCUR