U.S. Bank National Association, as Trustee, Successor in Interest to Wachovia Bank, National Association as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 2003-D v. Douglas K. George et al.
No. 14AP-817
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
December 3, 2015
2015-Ohio-4957
BRUNNER, J.
(REGULAR CALENDAR), (C.P.C. No. 12CV-13226)
NUNC PRO TUNC
Rendered on December 3, 2015
Thompson Hine LLP, Scott A. King and Terry W. Posey, Jr., for appellee.
McGookey Law Offices, LLC, Daniel L. McGookey and Kathryn M. Eyster, for appellants.
APPEAL from the Franklin County Court of Common Pleas
BRUNNER, J.
{1} On October 19, 2012, plaintiff-appellee, U.S. Bank, National Association (“U.S. Bank“), as trustee, successor in interest to Wachovia Bank, National Association (“Wachovia“), as trustee for the Wells Fargo Asset Securities Corporation, mortgage pass-through certificates, series 2003-D (the “trust“), filed this action against defendants-appellants Douglas K. and Robin A. George, for the balance due on a promissory note, and
The trial court erred in granting U.S. Bank‘s Motion for Summary Judgment.
I. Facts and Procedural History
{2} On August 8, 2002, appellants executed the note and mortgage in favor of M/I Financial Corp (“M/I Financial“). Douglas George lost a well-compensated position of employment, and foreclosure proceedings were filed but terminated upon a loan modification agreement. Appellants again suffered financial difficulties, and the current action was filed.
{3} Attached to the complaint were copies of a note, a mortgage and three assignments of the mortgage. The note in favor of M/I Financial contained two indorsements and an allonge. The first indorsement was to Wells Fargo Home Mortgage, Inc., and the second to Wachovia, “AS Trustee under the pooling and servicing agreement dated * * * February 26, 2003.” (Complaint, exhibit A, 5.) The allonge endorsed the nоte to U.S. Bank as “successor in interest to Wachovia Bank * * * as trustee, by Wells Fargo Bank, N.A. its attorney in fact.” (Emphasis deleted.) (Complaint, exhibit A, 6.) Appellants assert that appellee failed to establish that Wells Fargo Bank, N.A. was entitled to execute the allonge, and disputes U.S. Bank as the holder of the note.
{4} The mortgage copy attached to the complaint was given to M/I Financial. Two separate documents purported to assign the mortgage from M/I Financial to Wells Fargo Home Mortgage, Inc., on August 8, 2002. The third assignment was made to U.S. Bank on September 17, 2009 by “Wells Fargo Bank, N.A. successor by merger to Wells Fargo Home Mortgage, Inc.” (Complaint, exhibit E.) Appellants argue that there was no proof that Wells Fargo Bank had authority to assign the mortgage on behalf of Wells Fargo Home Mortgage, Inc., six years after the trust‘s closing date.
{5} On April 12, 2013, appellee filed an amended complaint also attaching the lоan modification agreement, and on September 25, 2013 filed its motion for summary judgment. U.S. Bank submitted the September 12, 2013 affidavit of Megan A. Jones, Wells Fargo Bank, N.A. vice president loan documentation, in which Jones stated: “At the time of the filing of the complaint * * * and to date,” U.S. Bank “directly or through an
{6} With Jones’ affidavit, appellee included a copy of the purported note that is not identical to the note attached to the complaint and the amended complaint, along with copies of the mortgage and three assignments, an October 23, 2011 letter from the Wells Fargo Home Mortgage Default Management Department expounding appellants’ default, and account data. In her affidavit, Jones attested to this documentation by stating: “Attached as exhibits hereto are copies of the Note with any applicable indorsements and the Mortgage with any applicable Assignments, a payment history and the demand letter, redacted solely to protect any private, personal, financial information.” (Jones Affidavit, ¶ 9.)
{7} The copy of the note attached to Jones’ affidavit contained the first indorsement by M/I Financial to Wells Fargo Home Mortgage, Inc., but omitted the further indorsement to Wachovia and the allonge bearing the indorsement to U.S. Bank. Attempting to correct the discrepancy, on October 21, 2013, appellee filed a “motion to incorporate” in which its counsel averred that “through inadvertence1 a full copy of the Promissory Note, which was attached to the Complaint, was not attached to Plaintiff‘s Motion for Summary Judgment.” Appellee requested an order incorporating the full copy. While counsel has stated that the full copy was attached to the motion, we have not
II. Standard of Review
{8} To be entitled to summary judgment the moving party must demonstrate: “(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 when viewing the evidence most strongly in favor of the non-moving party and that conclusion is adverse to the non-moving party.” UAP-Columbus JV326132 v. Young, 10th Dist. No. 14AP-422, 2014-Ohio-4590, ¶ 11, citing Hudson v. Petrosurance, Inc., 127 Ohio St.3d 54, 2010-Ohio-4505, ¶ 29, and Sinnott v. Aqua-Chem, Inc., 116 Ohio St.3d 158, 2007-Ohio-5584, ¶ 29. Our review of the trial court‘s ruling on the motion for summary judgment is de novo. Hudson at ¶ 29. The appellate court conducts an independent review, without deference to the trial court‘s determination. Young at ¶ 11, citing Zurz v. 770 W. Broad AGA, L.L.C., 192 Ohio App.3d 521, 2011-Ohio-832, ¶ 5 (10th Dist.), and White v. Westfall, 183 Ohio App.3d 807, 2009-Ohio-4490, ¶ 6 (10th Dist.).
III. Appellee‘s Standing to Enforce the Note/Sufficiency of Affidavit on Motion for Summary Judgment
{9} The parties do not dispute the note at issue being negotiable under
- The holder of the instrument;
- A nonholder in possession of the instrument who has the rights of a holder;
- A person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 1303.38 or division (D) of section 1303.58 of the Revised Code.
A. Distinguishing between Appellee‘s Claims on the Note and the Mortgage
{10} Because the trial court granted summary judgment on both the note and the mortgage, it is worthwhile to examine the differences between the available remedies arising from each to the person entitled to enforce them. Appellee claims to be both a holder of the note on which a default occurred and the person entitled to enforce the note, in addition to having an interest in the mortgage on the date it filed its claims under the note and for foreclosure.3 Fannie Mae v. Hicks, 8th Dist. No. 102079, 2015-Ohio-1955, ¶ 32-33, is instructive:
A foreclosure proceeding is the enforcement of a debt obligation. Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306, 906 N.E.2d 396. As a result, foreclosure in Ohio is a two-step process. First Knox Natl. Bank v. Peterson, 5th Dist. Knox No. 08CA28, 2009-Ohio-5096, 2009 WL 3086583, ¶ 18. Only after the court determines liability on the underlying obligation can it proceed to the foreclosure analysis under the mortgage. Id. Thus, a determination of liability under the note is a prerequisite to
In other words, “[a] mortgage may be enforced only by * * * a person who is entitled to enforce the obligation the mortgage secures.” Restatement (Third) of Property: Mortgages, § 5.4(C) (1997). See also In Re Dorsey, 13, 8036 (B.A.P. 6th Cir. 2014). To find otherwise would promote the separation of the note and mortgage and potentially subject the defaulting party to claims from multiple parties.
{11} Applying these principles to appellee‘s motion for summary judgment, the distinction should be made that, the first part of appellee‘s action, concerning the note, is brought according to law and is based in contract, while the second, concerning the mortgage, is in equity:
Once it has been determined as a matter of law that a default on the obligation secured by the mortgage has occurred, the court must then consider the equities to determine if foreclosure is the appropriate remedy. See First Knox Natl. Bank v. Peterson, 5th Dist. No. 08CA28, 2009-Ohio-5096, 2009 WL 3086583, ¶ 18, citing Rosselot v. Heimbrock (1988), 54 Ohio App.3d 103, 105-106, 561 N.E.2d 555. Moreover, because foreclosure is equitable relief, “the simple assertion of the elements of foreclosure does not require, as a matter of law, the remedy of foreclosure.” See First Natl. Bank of Am. v. Pendergrass, 6th Dist. No. E-08-048, 2009-Ohio-3208, 2009 WL 1865127, ¶ 22.
PHH Mtge. Corp. v. Barker, 190 Ohio App.3d 71, 2010-Ohio-5061, ¶ 35 (3d Dist.)
{12} Consistent with the legal differences between the note and mortgage, this court has explicitly recognized that foreclosure is “a civil action in equity.” WesBanco Bank, Inc. v. Ettayem, 10th Dist. No. 14AP-452, 2015-Ohio-1230, ¶ 28. In BAC Home Loans Servicing, LP v. Mowery Properties, Ltd., 10th Dist. No. 10AP-396, 2011-Ohio-1596, we further explained the difference between enforcing a note and enforcing a mortgage in a probate context: “the right of action of a ‘mortgagee or legal holder of a note is independent of the remedy given him by filing his claim in the probate court’ because a foreclosure proceeding ‘is not one against an estate, nor is it one in personam,’ but,
{13} Even though foreclosure has been codified in
[T]he statute codified the remedy [of foreclosure] recognized in equity * * *.
[F]oreclosure procedures are now based on statute and equity. For example, the equitable right of redemption exists concurrently with and independent of the statutory right of redemption. However, we find no authority—in Supreme Court precedent or statute—that would permit a trial court to employ a foreclosure procedure that excludes a judicial sale from its order.
Wells Fargo Bank, N.A. v. Young, 2d Dist. No. 2009 CA 12, 2011-Ohio-122, ¶ 45-46. The nature of foreclosure as an equitable remedy is not extinguished with the enactment of a codifying statute that governs its procedures.
It is well-recognized that actions in foreclosure arise in equity. See Kerr [v. Lydecker, 51 Ohio St. 240, 248 (1894)]; [Union Trust Co. v.] Lessovitz [122 Ohio St. 406 (1930)], (concluding that the right of subrogation and priority of liens were chancery issues for purposes of Section 6, Article IV, of the Ohio Constitution of 1912). Moreover, civil actions that were recognized as equitable actions before the adoption of the Code of Civil Procedure remained equitable in nature after the General Assembly enacted statutes providing an equitable remedy. See Wagner v. Armstrong (1916), 93 Ohio St. 443, 113 N.E. 397 (holding that statutory claim for partition was appealable as chancery case).
Of critical importance is whether the Ohio legislature, in enacting statutes governing foreclosure, intended the statutes to provide an exclusive procedure for foreclosure or, instead, meant the statutes to be merely cumulative of common law equitable remedies.
” ‘Whether a particular statutory remedy is exclusive or merely cumulative, is a question of construction and interpretation,
” ‘In some cases, a remedy prescribed by statu[t]e is regarded as exclusive. Indeed, in particular cases, it may appear, either expressly or by necessary implication, that the remedy provided therein is intended to be exclusive. This is true where a new remedy or mode of procedure is authorized by a new statute, and the new procedure is inconsistent with the former one. In such cases, the person injured must confine himself to the statutory remedy. However, an existing remеdy is not necessarily taken away by a statute which simply provides an additional remedy. It may appear that the remedy afforded by a particular statute is not intended to be exclusive, but cumulative with respect to other remedies of the party. Indeed, an existing remedy, particularly one which is long established, is not regarded as taken away by statute, except by direct or express enactment, or necessary implication from language showing, in a clear manner, that the statutory remedy was intended to be exclusive. Hence, where a new remedy is provided by statute for an existing right, and it neither denies an existing remedy nor is incompatible with its continued existence, the new remedy is regarded as cumulative, and the person seeking redress may adopt and pursue either remedy at his option.’ 50 American Jurisprudence, page 590, Section 595.” Wachendorf v. Shaver (1948), 149 Ohio St. 231, 242-43, 78 N.E.2d 370.
Young, 2011-Ohio-122, at ¶ 40-43.
{14} Here, appellee claims to be the holder and person еntitled to enforce both the note and the mortgage executed by appellants upon the purchase of their home. As such, appellee must prove both of its claims whether in a single action or in a series of actions. If appellee achieves satisfaction of its claim under the note, that is, in law, a court may proceed in equity as against the property that secures that repayment of the note. Barker. In the matter under review, the trial court granted summary judgment in both law and equity, ostensibly permitting foreclosure to occur by denying appellants’ challenge to appellee‘s legal standing to enforce the note.
B. Review of Summary Judgment on Appellee‘s Attempts to Establish Its Claims on the Note
{15} We have previously taken judicial notice that “during the past two decades it has become a common practice of the mortgage lending and banking industries to
{16} In the trial court, in response to appellee‘s motion for summary judgment, appellants asserted that appellee did not prove standing to enforce the note because the evidence presented on its motion for summary judgment did not establish that appellee had bought and had possession of the note. Appellants argue that different copies of the note—the first attached to the complaint and amended complaint, and the second attached to the motion for summary judgment—present genuine issues of material fact to preclude summary judgment. We find this point to be well-taken, and we depart from the conclusion of the trial court.
{17} Appellee maintains that, while Jones’ affidavit did not include the allonges with the indorsement from M/I Financial to Wells Fargo, there was nothing to rebut appellee‘s claim that this was a mere clerical error. The trial court held that appellee‘s motion to incorporate into the Jones affidavit the note as attached to the pleadings corrected the error. The trial court further relied on appellee‘s production of what was represented as the original note at the
- that the plaintiff is the holder of the note and mortgage, or is a party entitled to enforce the instrument;
- if the plaintiff
is not the original mortgagee, the chain of assignments and transfers; - that the mortgagor is in default;
- that all conditions precedent have been met; and
- the amount of principal and interest due.
Regions Bank v. Seimer, 10th Dist. No. 13AP-542, 2014-Ohio-95, ¶ 19, quoting Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. No. 98502, 2013-Ohio-1657, ¶ 17.
{18} Appellee concedes that the documents attachеd to Jones’ affidavit would not qualify it as a holder insofar as they did not include the indorsements from Wells Fargo Home Mortgage, Inc. to Wachovia and from Wachovia to U.S. Bank, and, thus, leaving the note still payable to Wells Fargo Home Mortgage, Inc. Appellee‘s “motion to incorporate” did not include a further affidavit explaining the inconsistencies between the note attached to the complaint and the alleged incomplete documentation submitted with appellee‘s motion. In Najar, the foreclosing bank was able to explain by affidavit the inconsistencies between the note produced in the complaint and the note attached to its motion for summary judgment. Likewise, it was incumbent on appellee here to support its motion with facts adduced from evidentiary-quality materials, beyond mere argument that, as in Najar, the bank mistakenly attached the wrong copy of the note.
{19} We distinguished Najar in FV-I, Inc. v. Lackey, where the plaintiff provided two versions of the note, each bearing different indorsеments. The version attached to the original complaint included an allonge bearing an undated indorsement from PNC Bank, N.A., as successor by merger to First Franklin, the original lender, to the plaintiff. The second version, filed with the trial court as an amended exhibit to the original complaint and as an exhibit to the amended complaint, did not have an allonge but had two undated indorsements stamped directly on the note below the signature area on the last page.
{20} In Lackey, unlike Najar, the plaintiff did not offer any explanation of the different versions of the note. The affidavit in support of the motion for summary judgment contained the attestation that the plaintiff had possession of the note and mortgage prior to the filing of the complaint and addressed the assignment history of the mortgage, but it failed to address the two versions of the note, which contained different indorsements. We held: “Absent any explanation for the discrepancy betweеn the two versions of the Note, and construing the evidence in favor of appellant as the party opposing summary judgment, it appears that there is a genuine issue of material fact as to
{21} In U.S. Bank Natl. Assn. v. Lavelle, 8th Dist. No. 101729, 2015-Ohio-1307, the Eighth District also distinguished Najar on this very point. Attached to the bank‘s second amended complaint was a copy of the note which contained one indorsement which had been executed by a person who was not the same аs the one appearing on the corresponding indorsement which was attached to the original complaint and to the bank‘s motion for summary judgment. While the bank contended that the variances were immaterial, for purposes of summary judgment, an evidentiary-quality explanation for the inconsistent versions of the note remained wanting. Id. at ¶ 21.
{22} Because it is the note that creates the debt, and not the mortgage, unless and until the right to enforce the original note has been established, there is no basis for foreclosure. “Under Ohio common law, where a promissory note is secured by a mortgage, the note is evidence of the debt and the mortgage is a mere incident of the debt.” U.S. Bank Natl. Assn. v. Gray, 10th Dist. No. 12AP-953, 2013-Ohio-3340, ¶ 32, citing Edgar v. Haines, 109 Ohio St. 159, 164 (1923), and Kernohan v. Manss, 53 Ohio St. 118, 133 (1895); Pasqualone at ¶ 38.
{23} The copy of the note attached to Jones’ affidavit did not establish appellee as the holder. Notwithstanding appellee‘s “motion to incorporate” a copy of the note attached to its pleadings that it clаimed comports with the original note alleged to have been produced at McCray‘s deposition, there was no properly supported motion for summary judgment that complied with
{24} Because we have reversed the trial court‘s summary judgment on issues concerning the note and appellants’ challenge to appellee‘s standing to enforce the note, we necessarily overrule our prior holding in LSF6 Mercury REO Invests. Trust Series 2008-1 v. Locke, 10th Dist. No. 11AP-757, 2012-Ohio-4499. In Locke, we held that the makers of notes and mortgages are without standing to challenge the validity of transfers or assignments to which they were not parties. Shortly after its release, we limited Locke‘s application by way of our decision in Pasqualone to the extent that “in cases where
{25} We believe that at least one of the underlying cases relied on by the court in Locke has been clarified to the point that its premise as we surmised it no longer supports what we previously held in Locke denying standing to non-privity challengers of note and mortgage transfers and assignments. We thus extend our holding in Pasqualone to clarify that standing broadly exists for persons to challenge the validity of the transfer of a note4 or assignment of the mortgage, whether or not in privity with the person entitled to enforce the note or mortgage, regardless of whether or not the note has been negotiated and transferred under
{26} ” ‘Where the party does not rely on any specific statute authorizing invocation of the judicial process, the question of standing depends on whether the party has alleged * * * a “personal stake in the outcome of the controversy.” ’ ” Schwartzwald at ¶ 21, quoting Cleveland v. Shaker Hts., 30 Ohio St.3d 49, 51 (1987), quoting
{27} Locke‘s holding is based in part on a line of federal court decisions5 that, even since we decided Pasqualone, has been modified by the Sixth Circuit Court of Appeals. In Slorp v. Lerner, Sampson & Rothfuss, 587 Fed.Appx. 249, 254-56 (6th Cir. 2014), the United States Sixth Circuit Court of Appeals held:
[Slorp] attributes his injuries to the improper foreclosure litigation. According to the complaint, [defendant] Bank of America (through LSR) filed a foreclosure action against Slorp despite its lack of interest in the mortgage; the defendаnts misled the trial court by fraudulently misrepresenting Bank of America‘s interest in the suit; and Slorp incurred damages when he was compelled to defend his interests. If Bank of America had no right to file the foreclosure action, it makes no difference whether Slorp previously had defaulted on his mortgage. * * * [T]he district court erred when it held otherwise.
* * *
Much of the district court‘s analysis was taken from Livonia Properties Holdings, LLC v. 12840-12976 Farmington Road Holdings, LLC, [717 F.Supp.2d 724 (E.D.Mich.2010), aff‘d, 399 Fed.Appx. 97 (6th Cir.2010)] where we held that a homeowner did not have standing to challenge the validity of a home-loan assignment in an action contesting a foreclosure. 399 Fed.Appx. 97, 102 (6th Cir.2010).
We analyze the district court‘s holding in more detail than might ordinarily be necessary because our Livonia Properties opinion has confounded some courts and litigants, see, e.g., Etts v. Deutsche Bank Nat‘l Trust Co., No. 13-11588, 2014 WL 645358, at *4 (E.D.Mich. Feb. 19, 2014) * * *.
The district court held, and the defendants now maintain, that Slorp lacked standing to assert his claims because an individual who is not a party to an assignment may not attack the assignment‘s validity. We differ with this interpretation of Livonia Properties. The sweeping rule that the district court extrapolated from Livonia Properties dwarfs our actual holding in that case.
(Footnote deleted.) On summary judgment or otherwise, it is the movant‘s burden to establish the chain of transfers and assignments, if it is not the original mortgagee, and this is well-established in the law. Seimer at ¶ 19. That the mortgagor may not be a party or in privity to a party to an assignment contract should not operate to diminish in any way that burden. See Slorp at 255 (“a non-party homeowner may challenge the validity of an assignment to establish the assignee‘s lack of title, among other defects“). Thus, we clarify governing case law and overrule our previous holding in Locke, fully restoring the burden placed on the person asserting entitlement to enforce the note or mortgage. Accordingly, the maker of the note or mortgage has standing to challenge their enforcement against the maker, even if not a party in privity to the particular transfer or assignment challenged.
{28} Whether or not appellants had an opportunity to object to the “motion to incorporate” the assertedly “full copy” of the note into its motion papers, appellee did not meet its burden to demonstrate an absence of a dispute regarding its status as holder of the note and mortgages, and therefore its standing to bring the action on the note and the foreclosure action on the mortgage. See U.S. Bank, N.A. v. Richards, 189 Ohio App.3d 276, 2010-Ohio-3981, ¶ 17 (9th Dist.) (“the copy of the promissory note attached to U.S. Bank‘s renewed motion for summary judgment was not incorporated into an affidavit, and thus it was not appropriately considered as evidence under
{30} Additionally, at his deposition, McCray could not explain why the copy of the note attached to Jones’ affidavit differed from the copy attached to appellee‘s amended complaint, and he could not answer as to when the later indorsement and allonge missing from the Jones affidavit were made. He could not identify where the original note was kept since its inception, and he thought that Wells Fargo, rather than U.S. Bank, was holder of the note. These facts give us even less confidence in the trial court‘s finding of a lack of dispute as to facts material to judgment.
{31} Because we have found that Jones’ affidavit did not establish that she had personal knowledge of the documents and transactions in question, any attempt to incorporate by reference in a subsequent, unverified motion an allegedly complete and correct note left genuine issues of material fact requiring denial of summary judgment. See Bank of Am., N.A. v. Loya, 9th Dist. No. 26973, 2014-Ohio-2750, ¶ 12; Bank of New York Mellon v. Villalba, 9th Dist. No. 26709, 2014-Ohio-4351, ¶ 16.
{32} We agree with the Eighth District‘s pronouncement in Lavelle that to disregard the contradicting copies of the note without proper authentication of current documentation and explanation of the discrepancies, “would be unjust and would ask this court to [ignore] the actions of financial institutions who have an obligation to conform with acceptable business practices and establish an unbroken chain of assignments prior
{33} Finally, the defects in Jones’ affidavit also forestall consideration of appellee‘s argument that it should have standing to enforce the note as a non-holder in possession. Appellee‘s claim to be in possession of the note and entitled to enforce it is supported in Jones’ affidavit only by the averment that appellee “is either the original payee of the Promissory Note or the Promissory Note has been duly indorsed.” (Jones Affidavit, ¶ 5.) Appellee is not the original payee, and the affidavit and its attachments fall far short of showing that the note has been duly endorsed and transferred to appellee.
{34} The unexplained discrepancies between the copy of the note appended to appellee‘s pleadings and that attached to the affidavit in support of summary judgment leave a genuine issue of material fact requiring denial of summary judgment, even on the assertion of appellee being the person entitled to enforce the note as a non-holder in possession. See Richards at ¶ 20; Everhome Mtge. Co. v. Rowland, 10th Dist. No. 07AP-615, 2008-Ohio-1282, ¶ 12; First Union Natl. Bank v. Hufford, 146 Ohio App.3d 673, 679-80 (3d Dist.2001). Without duly attested documents or other competent evidence, we cannot infer the transfers of the note and assignments of the mortgage as matters of fact and therefore cannot affirm summary judgment or any separate but related judgment in foreclosure. Because of these findings, other issues argued by the parties are deemed moot, and we decline to address them.
IV. Conclusion
{35} We sustain appellants’ sole assignment of error for the reasons stated in this decision and reverse the judgment of the Franklin County Court of Common Pleas, thereby denying appellee‘s motion for summary judgment and remand this case to the trial court with instructions to proceed in accordance with this decision.
Judgment reversed and cause remanded with instructions.
HORTON, J., concurs.
DORRIAN, J., concurs in judgment only.
DORRIAN, J., concurring in judgment only.
{37} First, I must distinguish between the elements a plaintiff must prove to prevail on a foreclosure action and the requirements for establishing standing to file a foreclosure action. To prove entitlement to foreclosure, a plaintiff must prove both that it is the person entitled to enforce the note and a holder of the mortgage (along with other elements).6 Deutsche Bank Natl. Trust Co. v. Thomas, 10th Dist. No. 14AP-809, 2015-Ohio-4037, ¶ 9, 19; Seimer at ¶ 19; Bank of New York Mellon v. Rankin, 10th Dist. No. 12AP-808, 2013-Ohio-2774, ¶ 23. On the other hand, to prove standing to assert a foreclosure action, a plaintiff must show an interest in the note or mortgage. This “or” rule emerged from Schwartzwald. There, the Supreme Court of Ohio concluded that the plaintiff did not have standing because “it failed to establish an interest in the note or mortgage at the time it filed suit.” (Emphasis added.) Id. at ¶ 28. Our court has construed this language to mean that an interest in either the note or mortgage is sufficient to establish standing. See Wells Fargo Bank, N.A. v. Parrish, 10th Dist. No. 15AP-243, 2015-Ohio-4045, ¶ 14; Young, 2014-Ohio-4590, ¶ 26; Bank of New York Mellon v. Williams, 10th Dist. No. 13AP-499, 2014-Ohio-3737, ¶ 13; Byers, 2014-Ohio-3303, ¶ 12; Gray, 2013-Ohio-3340, ¶ 27; but see JPMorgan Chase Bank v. Allton, 10th Dist. No. 14AP-228, 2014-Ohio-3742, ¶ 12; Wells Fargo Bank, N.A. v. Odita, 10th Dist. No. 13AP-663, 2014-Ohio-2540, ¶ 9; Fifth Third Mtge. Co. v. Salahuddin, 10th Dist. No. 13AP-945, 2014-
{38} Second, I also question the majority opinion‘s suggestion that
{39} Turning to the review in this case, I agree with the majority opinion‘s conclusion that a question of fact exists regarding whether U.S. Bank is the person entitled to enforce the Georges’ note. Under Ohio law, a bаnk cannot prevail in a foreclosure action unless it first establishes itself as the person entitled to enforce the note that accompanies the mortgage. Thomas at ¶ 9, 19; Seimer at ¶ 19; Rankin at ¶ 23. U.S. Bank argues that it is the person entitled to enforce because it is the holder of the note. U.S. Bank contends that it established its status as the holder by proving that it possesses the Georges’ note, which contains a chain of special endorsements that ends with a special endorsement to it.
{40} To prove its contention, U.S. Bank appended to its motion for summary judgment the affidavit of Megan A. Jones, vice president of loan documentation for Wells Fargo Bank, N.A. (the servicing agent for the Georges’ loan). Jones authenticated the note attached to her affidavit as the Georges’ note “with any applicable indorsements.” (Jones affidavit, ¶ 9.) That note, however, includes only one special indorsement—the
{41} Approximately one month after filing for summary judgment, U.S. Bank moved the trial court for an order “incorporating a full copy of the Promissory Note to the Motion for Summary Judgment.” (Oct. 21, 2013 Motion.) The trial court granted that motion. The incorporated note contains a string of special indorsements that ends with U.S. Bank.8
{42} On appeal, U.S. Bank argues that it can rely on the incorporated note to establish that it is the person entitled to enforce the note. I disagree. By granting the motion to incorporate, the trial court, at best, effectuated the attachment of a note to the motion for summary judgment. That note, however, is not authenticated by affidavit testimony. Consequently, the trial court could not consider it in determining whether to grant summary judgment. See Adams, Babner & Gitlitz, L.L.C. v. Tartan Dev. Co. (West), L.L.C., 10th Dist. No. 12AP-729, 2013-Ohio-1573, ¶ 15 (holding that documents that are not sworn, certified, or authenticated by way of affidavit have no evidentiary value and, generally, should not be considered by a court in ruling on a motion for summary judgment).
{43} U.S. Bank also depends on the deposition testimony of John McCray, a loan verification analyst IV for Wells Fargo Bank, to prove its status as a person entitled to enforce the note. McCray identified the version of the note incorporated into the motion for summary judgment as the Georges’ note. However, McCray‘s testimony contravenes Jones’ testimony. Each witness identifies a different note as the Georges’ note, and neither McCray nor Jones explains the discrepancy between their testimonies. Consequently, a genuine question of material fact remains regarding which note is actually the Georges’ note. Until that question is resolved, a court cannot determine whether U.S. Bank is the person entitled to enforce the note.9 The trial court, therefore, erred in granting U.S. Bank summary judgment.
{45} I believe that to resolve this case the majority opinion did not need to overrule LSF6 Mercury REO Invests. Trust Series 2008-1 v. Locke, in its entirety. In a trio of cases that included Locke, we held that a debtor lacks standing to challenge the assignment of its note and mortgage because the debtor is not a party to that assignment. JPMorgan Chase Bank, N.A. v. Romine, 10th Dist. No. 13AP-58, 2013-Ohio-4212, ¶ 16-18; Deutsche Bank Natl. Trust Co. v. Whiteman, 10th Dist. No. 12AP-536, 2013-Ohio-1636, ¶ 16-19; Locke at ¶ 28-29. We later limited those holdings so that, in cases where
{46} To the extent that the majority opinion‘s wholesale overruling of Locke is motivated by a concern that debtors could be held liable twice for the same debt, I understand and share that concern. However, pursuant to
{47} Furthermore, I am hesitant to accept the majority opinion‘s conclusion that the Sixth Circuit‘s opinion in Slorp, justifies a change in this district‘s law. It appears that Slorp does not stand for the unrestricted proposition that, in all instances, homeowners may challenge mortgage assignments to which they are not parties. As the Sixth Circuit subsequently recognized, Slorp left in place the requirement that, before a homeowner may challenge an assignment, thе homeowner must demonstrate “that [he or she] may be on the hook for double payment” because of the supposed invalidity of the assignment. DAGS II, LLC v. Huntington Natl. Bank, 616 Fed.Appx. 830 (6th Cir. 2015).
{48} The majority opinion concludes that, because the bank bears the burden of establishing the chain of mortgage assignments, it should be vulnerable to whatever challenge the homeowner may assert regarding the validity of the assignments. However, as many Ohio (and other) courts have recognized, some challenges—particularly those alleging that an assignment violates a pooling and servicing agreement—are impermissible due to a lack of standing. See In re McHugh, Bankr.N.D.Ohio No. 14-31071 (June 1, 2015) (“Courts, including the Sixth Circuit Court of Appeals, have consistently found that borrowers lack standing to challenge compliance with the provisions of a [pooling and servicing agreement].“); In re Walker, 466 B.R. 271, 285 (Bankr.E.D.Pa. 2012) (“[I]t appears that a judicial consensus has developed holding that a borrower lacks standing to * * * request a judicial determinatiоn that a loan assignment is invalid due to
{49} I also believe it unnecessary for the resolution of this case to address two further issues. First, contrary to the majority opinion‘s contention, the Georges’ equitable argument is irrelevant to a determination of whether a genuine issue of material fact exists, thus precluding summary judgment. Second, the majority opinion‘s heightening of the personal knowledge standard for affiants is not essential to the outcome of the decision and does not appear to be consistent with Supreme Court of Ohio precedent. That precedent holds that, unless controverted by other evidence, a “specific allegation in the affidavit that it was made upon personal knowledge is sufficient to meet [the] requirement of
{50} In sum, I agree that this court should sustain the Georges’ assignment of error and reverse this matter, but for the reasons set forth above, I disagree with the portions of the majority opinion that I consider to be dicta. Therefore, I respectfully concur in judgment only.