Secy. of Veterans Affairs v. ShafferSecy. of Veterans Affairs v. Shaffer
For Plaintiff-Appellant
MATTHEW J. RICHARDSON
MANLEY DEAS KOCHALSKI
Post Office Box 165028
Columbus, Ohio 43216-5028
For Defendant-Appellee
WILLIAM C. FITHIAN, III
111 North Main Street
Mansfield, Ohio 44902
{¶1} Appellant Secretary of Veterans Affairs appeals from the decision of the Court of Common Pleas, Richland County, denying a money judgment on its foreclosure complaint and denying it a decree in foreclosure.
STATEMENT OF THE FACTS AND CASE
{¶2} This case arises from a residential foreclosure aсtion filed in Richland County, Ohio. The relevant facts are as follows:
{¶3} On March 30, 1979, Ronald and Sharon Pence (the “Pences“) gave a mortgage to Hartzler Mortgage in the amount of $35,000 on the property. The mortgage expressly states that its covenants “shall bind ... the respective heirs, executors, administrators, successors and assigns of the parties hereto.” One of the covenants of the mortgage is that the “Grantor” of the mortgage “will promptly pay the principal and interest on the indebtedness evidenced by the said note, at the times and in the manner therein provided.” Further, under the mortgage, the term “Grantee” “shall include any payee of the indebtedness hereby secured or any transferee thereof whether by operation of law or otherwise.”
{¶4} On March 29, 1982, the Pences sold the property to Mark Campbell (“Campbell“). The deed from the Pences to Campbell indicаted that Campbell had assumed the indebtedness on the property as his own.
{¶5} On October 30, 1986, Campbell sold the property to Shaffer and her then-husband Richard Shaffer (the “Shaffers“). As with the deed from the Pences to Campbell, the deed from Campbell to the Shaffers indicated that the Shaffers had
{¶6} On June 5, 1979, Hartzler assigned its mortgage to the State Teachers Retirement Board of Ohio.
{¶7} On July 12, 1998, the State Teachers Retirement Board of Ohio assigned the mortgage to Lasalle Bank.
{¶8} On December 7, 1999, Lasalle Bank assigned the mortgage to Chase Mortgage Company.
{¶9} On April 18, 2001, Chase Mortgage Company assigned the mortgage to the Secretary, and the Secretary continues to hold the mortgage.
{¶10} On August 29, 2012, the Secretary filed a foreclosure complaint against Shaffer and other parties who held an interest in the property. The Secretary sought judgment against Shaffer in the amount of $32,110.00 at the rate of 9.5% from December 1, 2000. Attached to the complaint were copies of the mortgage and all assignments of the mortgage. The Sеcretary did not attach a copy of the relevant promissory note but pleaded that “[a] copy of the note cannot be located at this time.”
{¶11} On October 3, 2012, Shaffer filed an answer to the complaint and counterclaim. Shaffer denied all allegations in the Secretary‘s complaint and alleged, in support of her counterclaim, that the Secretary had failed to respond to a qualified written request Shaffer hаd allegedly sent to the Secretary under the federal Real Estate Settlement Procedures Act (“RESPA“) at
{¶12} Shaffer filed a motion for judgment on the pleadings against the Secretary, arguing that the Secretary lacked standing to file suit. Shaffer also argued that Chase Mortgage Company, which had filed a prior foreclosure action against Shaffer that was subsequently dismissed without prejudice in October 2000, had “waived” its right to foreclose on Shaffer and further that the alleged waiver bound the Secretary. Finally, Shaffer argued that the complaint was barred by the statute of limitations on grounds that the default had occurred in 1986, not 2000 as alleged by the Secretary.
{¶13} The Secretary filed a brief in opposition to Shaffer‘s motion for judgmеnt on the pleadings.
{¶14} On February 28, 2013, the trial court denied Shaffer‘s motion.
{¶15} The parties then engaged in discovery, including the Secretary‘s deposition of Shaffer.
{¶16} Both the Secretary and Shaffer filed motions for summary judgment. The Secretary sought summary judgment on its complaint and Shaffer‘s counterclaim, and Shaffer sought summary judgment on the Secretary‘s complaint.
{¶18} Shaffer conceded that the Secretary was entitled to summary judgment on her counterclaim, and the trial court granted summary judgment to the Secretary on Shaffer‘s counterclaims.
{¶19} However, the trial court denied both parties their respective summary judgment motions on the Secretary‘s complaint. In its opinion denying both summary judgment motions, the trial court found that Shaffer had indeed assumed the indebtedness as consideration for purchasing the property, denying her summary judgment motion, but went on to find that the Secretary had not produced a payment history in order to establish the amount due and owing on the mortgage loan.
{¶20} On August 30, 2013, the trial court conducted a trial. Shaffer did not appear for the trial, nor did she produce any witnesses or evidence at the trial. Residential Credit Solutions, Inc. (“Residential“), the current servicer for the Shaffer‘s loan, appeared on behalf of the Secretary. Residential produced an employee to testify as to the status and details of the loan. Additionally, the Secretary produced certified copies of recorded documents, such as the relevant deed transfers, mortgage, and assignments of mortgage, all of which were admitted into evidence. Additionаlly, because she did not appear at trial, the Secretary read into the trial court record Shaffer‘s testimony from her deposition.
{¶21} At deposition, Shaffer had testified that when she purchased the property with her then husband, he and she “took over or did something with the loan that was
{¶22} At trial, the Secretary also called Justin Laubscher (“Laubscher“) of Residential, who testified extensively on direct, cross, re-direct and re-cross. (T. at 22-62). Laubscher testified that he was a law clerk at Residential whose job duties included reviewing loan documents to testify in foreclosure proceedings. (T. at 23). He testified as to the status of the loan and relevant business records that were held in Residential‘s recordkeeping system. (T. at 24-30). He testified that Residential had been transferred the servicing rights to Shaffer‘s mortgage loan in August, 2012 from Bank of America. (T at 23). Laubscher further testified that when the servicing rights to Shaffer‘s loan were transferred to Residential, Residential had performed an audit regarding the accuracy of the records regarding Shaffer‘s loan. (T. at 45).
{¶23} Laubscher аuthenticated business records to indicate that the principal balance on the loan was $32,110.00 and that no payments had been made between January 1, 2001, and August 30, 2013, including a payoff statement indicating that the total amount due and owing on the loan was $72,974.08, including principal
{¶24} All records reflecting the deed transfers, the mortgage and assignments thereof, and Residential‘s loan records, were admitted into evidence.
{¶25} Shaffer produced no evidence.
{¶26} On April 28, 2014, the trial court ordered a post-trial hearing on the issue of the unpaid principal balance and set same for May 28, 2014.
{¶27} On May 21, 2014, prior to the hearing, Shaffer filed a brief regarding the issue of the unpaid principal balance. In her brief, Shaffer arguеd that the lack of payment history in the Secretary‘s case in chief denied the Secretary the right to foreclose Shaffer‘s equity right of redemption. More specifically, Shaffer admitted that she did not know “how much her ex-husband paid of his 9-year obligation“. Shaffer further claimed that the exact amount due and owing had not been established. Finally, Shaffer claimed that the Secretary had not proved damages by a preponderance of the evidence.
{¶28} The Secretary filed its response on May 28, 2014, wherein it argued in its brief that it had satisfied its burden to produce evidence as to the amount of damages Laubscher‘s testimony and the exhibits admitted into evidence. The Secretary cited the trial court to the case of Allied Erecting & Dismantling Co., Inc. v. Youngstown, 151 Ohio App.3d 16, 2002-Ohio-5179, describing its applicable burden. The Secretary further disagreed with Shaffer that the Secretary was required to produce a payment
{¶29} On May 28, 2014, the trial court held a hearing on the issuе of whether the Secretary had established its damages. Counsel for the Secretary made arguments consistent with those in the Secretary‘s brief. Counsel for Shaffer stated that he had issued a subpoena to Bank of America and moved to introduce new documents into evidence. The documents that counsel for Shaffer had acquired, like the Secretary‘s evidence at trial, indicated that the principal balance of Shaffer‘s lоan was $32,110.00. Unlike the trial in this matter, Shaffer appeared at the post-judgment hearing and moved to introduce new evidence that she had “just found ... in the last three weeks” regarding the amount due and owing on her mortgage loan. The trial court refused to admit these documents into evidence.
{¶30} Subsequently, the trial court magistrate issued a decision granting judgment to Shaffer. The magistrate‘s decision included findings of fact and conclusions of law. The magistrate fоund facts consistent with those the Secretary introduced as to the deeds, the mortgage, and assignments of mortgage. The magistrate acknowledged the principal balance stated in the deeds transferring the property first from the Pences to Campbell ($34,306.80) and second from Campbell to
{¶31} Regarding conclusions of law, the magistrate found that the Secretary could not enforce the indebtedness Shaffer had assumed on grounds that the Secretary could not produce the original promissory note. The magistrate further found that the Secretary had not met its burden to establish its damages on grounds that the Secretary had not produced a payment history for the mortgage loan. The magistrate did not cite authority for the applicable evidentiary burden but stated that it “should be” no lower than that for an action on account under
{¶32} The Secretary objected to the magistrate‘s decision arguing that the magistrate had committed errors of law. The Secretary made three arguments. First, the Secretary argued that Shaffer‘s assumption of the indebtedness as consideration
{¶33} The trial court affirmed the magistrate‘s decision, deciding that the Secretary had not established its damages with a payment history. In contrast to its original holding in its opinion denying the summary judgment motions of the parties, the trial cоurt changed its position and expressed skepticism that Shaffer had assumed the mortgage loan indebtedness at all, specifically on grounds that she had not signed the deed from Campbell to her and her ex-husband.
{¶34} Appellant now appeals, assigning the following errors for review:
ASSIGNMENTS OF ERROR
{¶35} “I. THE TRIAL COURT ERRED IN DENYING THE SECRETARY A MONEY JUDGMENT ON ITS FORECLOSURE COMPLAINT WHEN THE BORROWER ASSUMED EXISTING MORTGAGE LOAN INDEBTEDNESS AT THE TIME SHE PURCHASED THE MORTGAGED PROPERTY AND THEN FAILED TO REPAY IT.
I., II.
{¶37} In its two Assignments of Error, Appellant argues that the trial court erred in denying it any relief on its foreclosure complaint. We agree.
{¶38} The trial court in the case sub judice, held that Appellant failed to prove “by a preponderance of the evidence that it was the person entitled to enforce the note pursuant to
{¶39} In contrast to determinations of fact which are accorded considerable deference, questions of law are examined by this Court de novo. Consumers’ Counsel v. Pub. Util. Comm. (1979), 58 Ohio St.2d 108, 110, 12 O.O.3d 115, 116, 388 N.E.2d 1370, 1372–1373. The determination of whether Appellant is entitled to enforce the mortgage is a question of law. We therefore review the trial court‘s judgment de novo. See Bank of Am., N.A. v. Pasqualone, 10th Dist. Franklin No. 13AP–87, 2013-Ohio-5795 (determining whether a plaintiff is the person entitled to enforce a note is a legal determination). A de novo review requires an independent review of the lower court‘s decision, without deference to that court‘s conclusions of law. Brown v. Scioto Cty. Bd. of Commrs. (1993), 87 Ohio App.3d 704, 711, 622 N.E.2d 1153.
{¶40} Here, the trial court found that Appellant could not enforce the mortgage loan debt because no evidence was offered “about whether the note was lost or any
{¶41} “A party may establish its interest in the suit, and therefore have standing to invoke the jurisdiction of the court when, at the time it files its complaint of foreclosure, it either (1) has had a mortgage assigned or (2) is the holder of the note.” CitiMortgage, Inc. v. Patterson, 8th Dist. Cuyahoga No. 98360, 2012–Ohio–5894, ¶ 21, citing Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012–Ohio–5017, 979 N.E.2d 1214. (Emphasis added).
{¶42} In this case, Appellant is claiming an interest in the mortgage dеbt through assumptions contained in the terms of the deed transfers and is seeking to recover judgment on the mortgage it obtained through assignment, not the original promissory note.
{¶43} Upon review, we find that Appellant demonstrated that it is the current mortgagee of record and that it is the real party in interest in the foreclosure action.
{¶44} Appellant produced a copy of the deed from the Pences (the original mortgagee) to Campbell and a copy of the deed from Campbell to the Shaffers. Each of these deeds states that the property is being transferred from the grantor(s) to the grantee(s) subject to a mortgage, “which the Grantee(s) hereby jointly and severally assume and agree to pay as part of the consideration.” The deeds also specifically state the monetary value of the unpaid principal balance of the mortgage bеing assumed by the grantee. The unpaid balance amount of the mortgage listed on the deed from Campbell to the Shaffers was $32,746.20.
{¶46} When a purchaser assumes a mortgage, under thе most common view, the mortgagee is a third-party beneficiary of the contract between mortgagor and purchaser. Grant S. Nelson & Dale A. Whitman, Real Estate Finance Law 319 (3d ed. 1993); 4 Corbin on Contracts § 796 at 146 (1951); John D. Calamari & Joseph M. Perillo, The Law of Contracts 703 (3d ed. 1987). A mortgagee may recover, as a third-party beneficiary of the assumption agreement, from a purchaser who assumed the mortgage. Cleveland Trust Co. v. Elbrecht, 137 Ohio St. 358, 30 N.E.2d 433, 435-36 (1940); Restatement (Second) of Contracts, § 304 & illus. 2 (1981); 2 Williston on Contracts § 382 at 1024 (3d ed. 1959).
{¶47} Here, as the assignee of the mortgage, the Secretary of Veterans Affairs is in the shoes of the previous mortgagees. EMC Mtge. Corp. v. Jenkins, 164 Ohio App.3d 240, 2005-Ohio-5799, 841 N.E.2d 855, at ¶ 20; Cleveland Trust Co. v. Elbrecht (1940), 137 Ohio St. 358, 360, 30 N.E.2d 433.
{¶48} As the agreement to pay the debt in this case was contained in the deed, the note was not relevant to the instant litigation, and Appellant was not required to produce it or provide an explanation as to why it could not produce same. We therefore find the trial court erred in holding that Appellant was required to produce evidence concerning the promissory note in this matter.
{¶50} The trial court in this case made findings that “no payments were made from January 1, 2001 to August 30, 2013.” Appellant therefore established that the mortgage loan was in default.
{¶51} At trial, Appellant produced evidence as to the total principal balancе due and owing, as well as a breakdown of the principal, interest, and fees for escrow and property inspections. The deeds also stated the principal loan amounts at the time the mortgages were assumed the respective buyers of the property.
{¶52} There is no requirement that a plaintiff provide a complete “payment history” in order to establish its entitlement to summary judgment in a foreclosure action. Deutsche Bank Natl. Trust Co. v. Najar, Eighth Dist. Cuyahoga App. 98502, 2013–Ohio-1657. See also, Bank of New York Mellon v. Putman, Twelfth Dist. Butler App. CA2012-12-267, 2014-Ohio-1796.
{¶53} Damagеs in breach of contract cases must be proven with “reasonable certainty.” Textron Fin. Corp., 115 Ohio App.3d at 144, 684 N.E.2d 1261. However, damages are not uncertain merely because they cannot be calculated with absolute exactness; it is sufficient if the evidence affords a reasonable basis for computing damages, even if the result is only an approximation. TJX Cos., Inc. v. Hall, 183 Ohio App.3d 236, 916 N.E.2d 862, 2009–Ohio–3372, ¶ 32 (8th Dist.). It is uncertainty as to the existence of damages rather than uncertainty as to thеir amount which precludes
{¶54} Finally, we find the trial court erred in concluding that it would be inequitable to grant Appellant a decree in foreclosure in this case.
{¶55} Under foreclosure law, mortgagors have an equitable right of redemption, which allows the mortgagor to pay the balance due and redeem the property. A homeowner‘s equity of redemption is foreclosed when a decree of foreclosure is issued, although сourts typically provide a three-day grace period following the decree to exercise the equity of redemption. Hausman v. Dayton, 73 Ohio St.3d 671, 676, 653 N.E.2d 1190, 1995–Ohio–277.
{¶56} In Bank of New York v. Dobbs, 5th Dist. Knox App. 2009-CA-00002, 2009-Ohio-4742, this Court found a lender and borrower both have equitable rights in a foreclosure action, and a trial court‘s task in weighing the equities is to determine whether a borrower should be given more time in which to redeem the property. Id. at 50. In Dobbs, this Court noted, “weighing the equities should not involve rewriting the mortgage contract for the parties.” Id. This Court explained, although trial courts have occasionally considered other aspects of equity in deciding a foreclosure action, Appellants had not come forward with evidence legally sufficient to create a genuine issue of material fact as to whether there were equitable considerations which would affect the trial court‘s decision on the foreclosure action. Id. at 52. See also, First Knox Nat‘l Bank v. Peterson, 5th Dist. Knox App. 08CA28, 2009-Ohio-5096.
{¶57} We find the rationale set forth in Dobbs is applicable herein. Prior to the filing of the foreclosure action and during the subsequent proceedings, Appellee
{¶58} Appellant‘s Assignments of Error are overruled.
{¶59} For the forgoing reasons, the judgment of the Richland County Court of Common Pleas is reversed and this matter is remanded for further proceedings consistent with the law and this opinion.
By: Wise, J.
Gwin, P. J., and
Baldwin, J., concur.
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