NATIONSTAR MORTGAGE LLC v. DAWN HAYHURST, et al.
CASE NO. 2014-T-0102
IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT TRUMBULL COUNTY, OHIO
June 22, 2015
2015-Ohio-2900
CYNTHIA WESTCOTT RICE, J.
Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 2012 CV 00055. Judgment: Affirmed.
Bruce M. Broyles, 5815 Market Street, Suite 2, Youngstown, OH 44512 (For Defendants-Appellants).
O P I N I O N
CYNTHIA WESTCOTT RICE, J.
{¶1} Appellants, Dawn Roberts (fna Dawn Hayhurst) and Harold Roberts, appeal the summary judgment entered by the Trumbull County Court of Common Pleas in favor of appellee, Nationstar Mortgage LLC, on its complaint for foreclosure. We are asked to consider whether any genuine issue of material fact existed, precluding summary judgment in favor of Nationstar. For the reasons that follow, we affirm.
{¶3} Subsequently, Hickman endorsed the note to Flagstar Bank, FSB. Thereafter, but prior to the filing of the complaint in this action, the note was transferred to Nationstar and the note remains in its possession.
{¶4} Also on April 18, 2007, in order to secure the note, Ms. Roberts signed a mortgage in favor of Mortgage Electronic Registration Systems, Inc. (“MERS“), acting as nominee for the lender, Hickman.
{¶5} On December 21, 2011, prior to the filing of the complaint, MERS, as nominee for Hickman, assigned the mortgage to Nationstar by written assignment.
{¶6} Ms. Roberts defaulted on the mortgage loan by failing to make the payment due for May 1, 2011, or any subsequent installments. The amount due under the loan as of that date was $112,063, plus interest. There is no dispute as to Ms. Roberts’ default or the balance due.
{¶7} Following Ms. Roberts’ default, Nationstar sent her a letter, dated September 21, 2011, notifying her that her loan was in default and that unless she brought her account current by October 26, 2011, Nationstar would accelerate the full amount owed and foreclose the mortgage. Ms. Roberts did not make the payment necessary to bring her account current, and Nationstar accelerated the entire balance owed.
{¶9} Appellants filed an answer, denying the material allegations of the complaint and asserting a counterclaim.
{¶10} On May 31, 2012, Nationstar served on appellants its First Set of Requests for Admissions. Request No. 8 asked appellants to admit that the exhibits attached to the complaint, i.e., the note, the mortgage, and the assignment of the mortgage, were true and correct copies of the originals. Appellants did not answer Nationstar‘s Requests for Admissions. On August 29, 2012, Nationwide filed a copy of its Requests for Admissions with the trial court and notified the court that appellants had failed to answer its Requests and that they are now deemed admitted. Pursuant to
{¶11} Subsequently, Nationstar moved for summary judgment on its complaint and on appellants’ counterclaim. In support, Nationstar attached the affidavit of Daniel Robinson, an Assistant Secretary of Nationstar. Mr. Robinson testified by affidavit that, based on his review of Nationstar‘s business records for this account, on April 18, 2007,
{¶12} The assignment of the mortgage attached to the complaint provides that on December 21, 2011, prior to the filing of the complaint, MERS, as nominee for Hickman, assigned the mortgage to Nationstar.
{¶13} Mr. Robinson said in his affidavit that the account is due for the May 1, 2011 payment; that Ms. Roberts has not made any subsequent payments or cured her default; and that Nationstar accelerated the account, making the balance due in the amount of $112,063, plus interest.
{¶14} Appellants filed a brief in opposition to summary judgment, but they did not file any evidentiary materials in support. The trial court entered summary judgment in favor of Nationstar (on its complaint and on appellants’ counterclaim) and a foreclosure decree. Appellants appeal the trial court‘s judgment, asserting the following for their sole assignment of error:
{¶15} “The trial court erred in granting summary judgment to Appellee when there were genuine issues of material fact still in dispute.”
{¶16} Summary judgment is proper when: (1) there is no genuine issue of material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to the nonmoving party, that party being entitled to have the evidence construed most
{¶17} The party seeking summary judgment on the ground that the nonmoving party cannot prove his case bears the initial burden of informing the trial court of the basis for the motion and of identifying those portions of the record that demonstrate the absence of a genuine issue of material fact on the essential elements of the nonmoving party‘s case. Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996). The moving party must point to some evidence of the type listed in
{¶18} If this initial burden is not met, the motion for summary judgment must be denied. Id. However, if the moving party meets his initial burden, the nonmoving party must then produce competent evidence showing there is a genuine issue for trial.
{¶19} Since a trial court‘s ruling on a motion for summary judgment involves only questions of law, we conduct a de novo review of the judgment. DiSanto v. Safeco Ins. of Am., 168 Ohio App.3d 649, 2006-Ohio-4940, ¶41 (11th Dist.).
{¶20} In a mortgage foreclosure action, the mortgage lender must establish an interest in the promissory note or in the mortgage in order to have standing to invoke the jurisdiction of the common pleas court. Fed. Home Loan Mortg. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, ¶28. “The requirement of an ‘interest’ can be met by showing an assignment of either the note or mortgage.” (Emphasis added.) Fed. Home Loan Mtge. Corp. v. Koch, 11th Dist. Geauga No. 2012-
{¶21} The Supreme Court of Ohio recently held in Wells Fargo Bank, N.A. v. Horn, __ Ohio St.3d __, 2015-Ohio-1484: “Although the plaintiff in a foreclosure action must have standing at the time suit is commended, proof of standing may be submitted subsequent to the filing of the complaint. Id. at syllabus.
{¶22} Whether standing exists is a matter of law that we review de novo. Bank of Am., NA v. Barber, 11th Dist. Lake No. 2013-L-014, 2013-Ohio-4103, ¶19.
{¶23} Appellants do not appeal the trial court‘s summary judgment in favor of Nationstar on their counterclaim. Instead, their appeal is limited to the court‘s grant of summary judgment in favor of Nationstar on its complaint. Appellants assert that genuine issues of material fact remain so that Nationstar is not entitled to summary judgment. Appellants raise the following issues: (1) whether the affidavit of Daniel Robinson, Nationstar‘s Assistant Secretary, was made on his personal knowledge; (2) whether Nationstar demonstrated it was in possession of the original note and whether Nationstar authenticated the mortgage assignment; and (3) whether Nationstar had standing to file this action.
{¶24} For their first issue, appellants argue that Mr. Robinson‘s affidavit was insufficient to support summary judgment because, they argue, his affidavit was not made on personal knowledge.
{¶25}
{¶26} The “mere assertion of personal knowledge satisfies the personal knowledge requirement of
{¶27} It has been held that an officer of the lender could authenticate copies of the loan documents in her affidavit in support of summary judgment based on her review of the lender‘s loan documents. Bank of New York v. Dobbs, 5th Dist. Knox No. 2009-CA-000002, 2009-Ohio-4742, ¶40.
{¶28} Moreover, an affiant providing the foundation for a recorded business activity is not required to have firsthand knowledge of the transaction at issue. Merlo, supra, at ¶27. However, it must be shown that the witness is sufficiently familiar with the operation of the business and with the circumstances of the record‘s preparation and maintenance so that he can testify the record is what it purports to be and was made in the ordinary course of business. Id.
{¶29} Mr. Robinson stated in his affidavit that as Assistant Secretary for Nationstar, he is authorized to execute his affidavit on behalf of Nationstar. He said that as a regular part of his job, he is familiar with business records maintained by Nationstar for the purpose of servicing mortgage loans. He said that, based on his knowledge of Nationstar‘s practices, these business records were made at the time of the occurrence
{¶30} As a result, Mr. Robinson‘s affidavit shifted the burden to appellants to present evidentiary materials demonstrating that Mr. Robinson‘s affidavit was not based on personal knowledge. In Bank of Am., N.A. v. Jones, 11th Dist. Geauga No. 2014-G-3197, 2014-Ohio-4985, ¶33, this court observed:
{¶31} The Ohio Supreme Court has stated that “[t]he specific allegation in [an] affidavit that it was made upon personal knowledge is sufficient to meet this requirement of
{¶32} Because appellants disputed Mr. Robinson‘s contention that his affidavit is based on personal knowledge, they were required to submit countervailing evidentiary materials. Having failed to do so, they did not create a genuine issue of material fact with respect to whether Mr. Robinson‘s affidavit was made on personal knowledge.
{¶33} With respect to their second issue, appellants argue that Nationstar failed to show it has possession of the original note. However, Mr. Robinson‘s affidavit testimony that Nationstar was in possession of the subject note was sufficient to raise an inference that Nationstar was in possession of the original note itself. This court addressed essentially the same issue in Merlo, supra, in which this court stated:
{¶34} Ms. Pordash [the mortgage lender‘s affiant] stated in her affidavit that BAC “has possession of the note.” Since she did not qualify her testimony by saying the bank has possession of a copy of the note, she was referring to the actual note itself, i.e., the original, rather than a copy. “An ‘original’ of a writing * * * is the writing * * * itself,” as opposed to a ‘duplicate,’ which “reproduce[s] the original.”
{¶35} Moreover, Mr. Robinson‘s statement in his affidavit that the copy of the note attached to his affidavit is an exact copy of an electronically-stored duplicate of the original implies that he compared the copy attached to his affidavit to both the electronically-stored duplicate and the original note and that both are in Nationstar‘s possession.
{¶37} As part of their second issue, appellants also argue that Nationstar did not authenticate the assignment of the mortgage. However, appellants did not raise this argument in the trial court. It is therefore waived on appeal. A reviewing court will generally not consider an error that could have been, but was not, called to the trial court‘s attention at a time when the trial court could have avoided or corrected such error. Mortgage Elec. Registration Sys. v. Petry, 11th Dist. Portage No. 2008-P-0016, 2008-Ohio-5323, ¶21.
{¶38} In any event, because the copy of the mortgage assignment attached to the complaint shows it was notarized, it is self-authenticating. Where an instrument, such as a mortgage assignment, bears a notarial seal, the seal makes it self-authenticating.
{¶39} Moreover, as noted above, Nationstar‘s Request for Admission Number 8 propounded to appellants asked them to admit the copies of the note, mortgage, and mortgage assignment attached to the complaint were accurate copies of the originals. However, appellants failed to answer Nationstar‘s Requests for Admissions.
{¶40} A party may serve upon any other party a written request for the admission * * * of the truth of any matters within the scope of
{¶41} (1) The matter is admitted unless, within * * * twenty-eight days after service of the request * * *, 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. (Emphasis added.)
{¶42} This court stated in JPMorgan Chase & Co. v. Indus. Power Generation, Ltd., 11th Dist. Trumbull No. 2007-T-0026, 2007-Ohio-6008, ¶27:
{¶43} Construing [
{¶44} By failing to answer Nationstar‘s Requests for Admissions, appellants are deemed to have admitted the matters contained in each, including, with respect to Request No. 8, that the copy of the mortgage assignment attached to the complaint is an exact copy of the original.
{¶45} For their third issue, appellants argue that Nationstar failed to demonstrate it had standing to file this action. Appellants point out that Nationstar incorrectly argued below that it was the “holder” of the note because the note was endorsed in blank and it had possession of the note. Appellants correctly argue that the note was not endorsed in blank, but rather, was endorsed to a nonparty, Flagstar Bank, and, thus, Nationstar was not entitled to enforce the note as its holder.
{¶47} Nationstar cites the axiom that an appellate court will not reverse the trial court‘s judgment when it is properly entered, albeit for the wrong reason. Nationstar thus implies the trial court based its award of summary judgment on Nationstar‘s incorrect argument that it was the holder of the note. However, this principle does not apply here because the trial court generally granted summary judgment without specifying the grounds on which Nationstar had standing and the record reveals Nationstar was entitled to enforce the note as a nonholder in possession.
{¶48}
{¶49} A “holder” is a person in possession of a note that is payable either to bearer or to an identified person.
{¶50} “Negotiation” is a particular type of transfer. “Negotiation” means “a * * * transfer of possession of an instrument * * * to a person who by the transfer becomes the holder of the instrument.”
{¶51} “An instrument is transferred when it is delivered by a person other than its [maker] for the purpose of giving the person receiving delivery the right to enforce the instrument.”
{¶52} “A ‘nonholder’ is one in possession of the instrument who acquired it by some method of transfer other than negotiation.” Id. at ¶37, citing Official Comment 2 to
{¶53} The Second District in LaSalle Bank Natl. Assn. v. Brown, 2d Dist. Montgomery No. 25822, 2014-Ohio-3261, stated, “a person need not be a ‘holder’ of the instrument in order to be entitled to enforce it. Instead, a person can be a non-holder in possession of the instrument who has the rights of a holder. This status can be bestowed in various ways.” Id. at ¶36. By way of explanation, the Second District in Brown quoted In re Veal, 450 B.R. 897 (Bankr.9th Dist.Ariz.2011), as follows:
{¶54} [A] person becomes a nonholder in possession if the physical delivery of the note to that person constitutes a “transfer” but not a
{¶55} To further explain the point, the Second District in Brown quoted Fifth Third Mtge. Co. v. Bell, 12th Dist. Madison No. CA2013-02-003, 2013-Ohio-3678, a case strikingly similar to the one before us, as follows:
{¶56} [Fifth Third‘s] allegations that it was in possession of a note and entitled to enforce it, combined with the copy of the unendorsed note, at the very minimum, demonstrated that [Fifth Third] was entitled to enforce as a nonholder in possession. See
{¶57} Ohio Appellate Districts have repeatedly held that a note can be transferred by assignment of a contemporaneous mortgage. In Dobbs, supra, the Fifth District held that the assignment of a mortgage, without an express transfer of the note, is sufficient to transfer both the mortgage and the note, if the record indicates that the parties intended to transfer both. Id. at ¶31. This court found the Fifth District‘s reasoning in Dobbs to be persuasive and followed it in several cases, including Self Help, supra, at ¶39. The intent to keep the instruments together is demonstrated where the note and mortgage cross-reference each other. Dobbs at ¶36.
{¶58} Here, the note attached to the complaint was payable to Hickman, which then endorsed the note to Flagstar, a non-party. Thus, Flagstar, not Nationstar, was a holder of the note. However, Mr. Robinson stated in his affidavit that at the time of the filing of the complaint, and continuously since, Nationstar has been in possession of the promissory note. Mr. Robinson‘s testimony that Nationstar has been in possession of the note since the complaint was filed along with the assignment of the mortgage to Nationstar indicated that Flagstar or some other entity transferred the note to Nationstar with the intent that Nationstar be entitled to enforce the note. Moreover, the note and mortgage cross-reference each other, indicating the parties to the original transaction intended to keep the mortgage and note together. Thus, Nationstar had an interest in the note as a nonholder in possession.
{¶59} We therefore hold that, even though Nationstar did not have an interest in the note as a holder, Nationstar‘s continuous possession of the note since the complaint
{¶60} Alternatively, even if Nationstar did not have an interest in the note when the complaint was filed, MERS’ assignment of the mortgage to Nationstar was sufficient to give it standing. Schwartzwald, supra. Thus, Nationstar also had standing to file this action based on its interest in the mortgage.
{¶61} In summary, Nationstar established it had standing to file this action based on its status as a nonholder of the note in possession and/or as the assignee of the mortgage, and appellants failed to present any countervailing evidence. We therefore hold the trial court did not err in entering summary judgment in favor of Nationstar.
{¶62} For the reasons stated in the opinion of this court, the assignment of error is overruled. It is the judgment and order of this court that the judgment of the Trumbull County Court of Common Pleas is affirmed.
THOMAS R. WRIGHT, J., concurs,
COLLEEN MARY O‘TOOLE, J., concurs in judgment only.