*1 al., Appellees, et BANK COMPANY UNION v. EXPRESS, L.L.C., al., Appellants. et CAROLINA FURNITURE
NORTH
Servicing, L.P., Appellant,
BAC Home Loans
al., Appellees.
et
Smith
Express,
v. North Carolina Furniture
as Union Bank Co.
[Cite
L.L.C.,
John F. for appellee Auglaize County Treasurer. Jerry M. Johnson and Christine M. for Bollinger, appellee Union Bank Company. Katterheinrich,
Thomas J. for Bank. appellee Minster Whitacre, A. Laura Kathryn Jason C. Infante and M. Eyster, appellant *3 L.P., BAC Home Loans f.k.a. Servicing, Countrywide Home Servicing, Loans L.P. Judge.
Preston, Appellant-defendant, L.P., BAC Home Servicing, Loans f.k.a. Country- {¶ 1} (“BAC”), wide Home Loans Servicing, L.P. appeals Auglaize County the Court Common Pleas judgments, which vacated BAC’s foreclosure action and denied motions to consolidate and party-defendant. substitute BAC as a For the follow, reasons that we affirm. This case involves two separate foreclosure actions in Auglaize filed
{¶ 2} County Court of Common sought Pleas that on judgments certain notes and mortgages encumbering estate, the same parcel commonly real known (“the Street, Bremen, South Franklin New property”). The facts of this 13, case are not in largely dispute. 2002, On November Jeffrey Smith and Kandi Smith, who were members of North Express, L.L.C., Carolina Furniture execut- aed note in favor of Mortgage SIB a Corp., Jersey corporation, New and (“MERS”) in mortgage favor of Mortgage Registration Systems, Electronic Inc. solely $141,000. as nominee for SIB Mortgage Corp., for The mortgage was subsequently Auglaize County recorded Recorder’s Office on November 2002. later, years 19, 2007, Several January on the Smiths executed another mortgage $30,000.
note and in favor of appellee Minster Bank for This was recorded in the Auglaize County Recorder’s Office on January 2007. Then, 5, 2007, on March the Smiths executed three separate mortgages notes and appеllee $100,000,$25,000, favor of Bank Company $24,500, Union for and Office on County Recorder’s subsequently Auglaize which were recorded March 2007.1 23, 2008, Bank for foreclosure Union filed July On foreclosure”). (“the 2008 case No. 2008 CY 0267
property, designated which was L.L.C., Express, Bank North Carolina Furniture complaint, In the Union listed Treasurer, and Smiths, Bank, SIB, County the Auglaize Minster Administration, an interest possibly having Inc. as defendants Entrust to the According All were served with notice. named defendants 30, 2008, on November record, July on and SIB was servеd MERS was served to the timely complaint. Bank and the filed answers 2008. Minster Smiths defendants judgment against Bank filed a motion for default Union MERS, SIB, Administration, Inc., The motion Entrust on March and matter, including was sent to all named defendants judgment on judgment The trial court Union Bank a default granted MERS and SIB. 10, 2009, had “been served specifically stating legally March the defendants and appearance and that Defendants are default for answer with summons equity redemption to said and the premises therefore no intеrest and ha[ve] in Plaintiffs shall be Complaint of said Defendants the real estate described 11, 2009, off, barred, March Bank filed a forever cut and foreclosed.” On Bank, Smiths, motion for Minster summary judgment against summary motion for Auglaize County Similarly, copy Treasurer. matter, including was sent to all named defendants summary granted SIB. On March the trial court the motion for providing priority and issued a of foreclosure the lien Treasurer, Bank, Auglaize County was as follows: the Minster *4 Bank. then Union 2009, thereafter, 12, shortly May filed for on bankruptcy Smiths
{¶ 6} 9, 2009, a causing stayed. bankruptcy the matter to be On June court issued Bank, stay relief from and abandonment for Union which allowed the 2008 continue, 31, 2009, July property foreclosure matter to effective on and the was 1, However, a scheduled for sheriffs sale on October 2009. due to notice sale defendants, received or served on all the sale was cancelled and being party 4, for rescheduled December 2009. on During right bankruptcy, this time and after the Smiths hаd filed for
{¶ 7} SIB) 1, 2009, a (acting solely assigned appellant June MERS as nominee for BAC sign Only respect mortgages Bank did the Smiths 1. with to their notes and in favor of Union L.L.C., individually. Express, With as both members for North Carolina Furniture executed, respect mortgages signed only in their individual to the other notes and the Smiths capacity. 28, 2009, BAC filed a property. Consequently, August on County Court of Auglaize for foreclosure complaint (“the Pleas, 2009 foreclo- designated which was case No. CY Common sure”). preliminary judiciаl report BAC filed a Along complaint, a and all interests in the representation what believed be showing Smiths, Bank, Bank, In its BAC named the Minster Union property.2 complaint, Auglaize County having possible and the Treasurer as defendants a Only Minster Bank and Union Bank filed answers to the com- property. Thereafter, 7, 2009, plaint.3 judgment on October BAC filed a motion for default nonanswering parties, day, and that same the trial court issued a judgment entry granting and decree foreclosure BAC’s motion for default listing priority following the lien on the order: Treasurer, BAC, Bank, Auglaize County Minster and then Union Bank. result, 9, 2009, As a Bank a October Union filed motion contra to motion for a and motion to dismiss BAC’s the 2009 action based on the existence of the 2008 foreclosure action. 16, 2009, Additionally, joint on October Union Bank and Minster Bank a filed action, motion to vacate the of default in the judgment entry 2009 foreclosure they because had not been to respond afforded sufficient time to BAC’s motion before the judgment entry granted. foreclosure had been 21, In response to the existence of the 2008 foreclosure on October (1) motions, BAC filed several a which included motion to substitute (2) defendant defendant motion to set aside the default- (3) entered the 2008 foreclosure stay motion to judgment entry pending 2008 foreclosure default resolution of the motion to set aside the judgment entry, motion to consolidate cases 2008 alternative, 0267 and 2009 or in CV CV a motion for leave to file answer to the 2008 complaint and cross-claim.4 Union Bank a response filed all motions in opposing BAC’s the 2008 foreclosure case. actions, In both the foreclosure the trial court set all the motions for a Thereafter, which
hearing, was held on November 2009. on December parties hearing preliminary 2. As noted at the final on November neither the judicial report supplemental judicial report nor the showed the 2008 foreclosure action as pending аgainst answer, stated, "FURTHERMORE, Defendant, specifically In its Bank The Union Company premises by Complaint Bank admits it has an interest in the described *5 virtue of a pending Auglaize Foreclosure Count Common Pleas Court Case No.: 2008 CV 0267 Company July file The Union Bank on 2008.” proceedings, 4. BAC filed its motions in the 2008 foreclosure while Union Bank and Minster proceedings. Bank filed their the motions in 2009 foreclosure 2008 and the issues in both the judgment entry addressing trial court issued a cases, consolidating that it stating but was specifically 2009 foreclosure 3, 2009 than at the November any purposes presented cases for other the issues part trial court vacated judgment entry, in its hearing. Consequently, action had been action, portion foreclosure of the citing 2009 foreclosure 60(A). Nevertheless, the trial court found error” within Civ.R. “clerical Smiths, thus, the 2009 it allowed against there had been no error as In stand, individually. action to but the Smiths again only addition, on the basis of the trial court dismissed the 2009 foreclosure motion consolidate and motion to substitute judicata res and denied the to defendant BAC as a the 2008 foreclosure party-defendant of the doctrine of acquired property by operation BAC had not pendens. lis of our appeals assignments BAC now and raises four of error. For ease
discussion, assignments together. we also elect to address all of BAC’s of error
Assignment of Error No. I The trial court expressly abused its discretion when failed to rule appellant’s aрply proper motion to set aside default and failed to ruling standard for on such a motion. of Error No. II
Assignment The trial court abused its discretion when it vacated the October 60(A). to judgment entry pursuant case Number 2009 CV 0312 CIV.R. of Error No. Ill Assignment reprioritized The trial court abused its discretion when it the liens property subject to case Numbers 2008 CV 0267 and 2009 CV 0312. Assignment of Error No. IV trial court discretion when it found that BAC did erred abused its assignment by not obtain an interest when it its obtained of the Lis Pendens doctrine. operation trial court’s Essentially, argues following that the decisions (1) on the motion to judgment entry ruling
December were erroneous: its (2) substitute, failing rule on its motion set aside the 60(B), vacating to Civ.R. of the 2009 foreclosure pursuant part in the 2008 foreclosure action. reprioritization the liens *6 544 above, motion to substitute the trial court first denied the As stated 13}
{¶
any
a
because it did not obtain
party-defendant
BAC as
result,
a
trial court vacated
it
its
from MERS. As
assignment
when
obtained
banks) and failed to
(only
of thе 2009 foreclosure
part
60(B).
to Civ.R.
judgment pursuant
address BAC’s motion to set aside the default
law,
that the trial court
applicable
the record and the
we believe
reviewing
After
3,
judgment entry.
in
its December
2009
rendering
did not abuse its discretion
First,
a party-
we will address the motion to substitute BAC as
governs
foreclosure action. Civ.R. 25
defendant for MERS
the 2008
25(C)
“In
of
Specifically,
provides,
of
Civ.R.
cases
parties.
substitution
interest,
or
may
by
original party,
transfer of
the action
be continued
to whom the interest
is
upon
person
unless the court
motion directs the
joined
with the
original party.”
transferred to be substituted
the action or
trial
parties
discretionary
decision of whether to allow a substitution of
is
a
may
only
court and
a
transfer of interest. Ahlrichs
granted
upon
be
(1987),
result,
Corp.
App.3d
v. Tri-Tex
41 Ohio
{¶ 16}
judgment.
not
the
Automatic standard to its motion for relief from
apply
GTE
Industries,
(1976),
146,
Elec.,
47
Automatic
Inc. v. ARC
Inc.
Ohio St.2d
See GTE
150,
86,
In
that the trial court
particular,
1
default
or claim to
if
the
is
present
granted;
party
meritorious defense
relief is
60(B)(1)
(5);
through
entitled to
under one of the
stated in Civ.R.
grounds
relief
* *
added.)
(Emphasis
the motion is made within a reasonable time
*.”
Elec., Inc.,
150,
86,
47 Ohio
at
1 O.O.3d
action
in further detail
to an interest
in the
As we will discuss
pertained
had an
below,
brought
they
who were
because
dismissing
parties
after
(i.e.,
Bank),
only aspect
Bank and Minster
property
interest in the
the default
the 2009 foreclosure action that remained was
Nevertheless,
part
trial court’s decision to vacate
we find
Smiths.
an
of discretion.
the 2009 foreclosure action was not
abuse
all,
already
had
been
First of
since MERS’s interest
to the
of the 2009 foreclosure
BAC did
obtain
prior
filing
foreclosed
assigned
when it was
from MERS.
Moreover,
Thus,
brought
could not have
a foreclosure action at all.
for
typically
parties
grounds
foreclosure action between the same
is
pending
Loan,
Avco Fin.
Inc.
assignee’s complaint.
abatement or dismissal of
Servs.
(1987),
1378; High
520 N.E.2d
Point Assn. v.
App.3d
Hale
(Nоv.
*3;
30, 1995),
at
Pochatek
8th Dist. Nos. 68000 and
1995 WL
Invests., L.L.C.,
523,
motion to substitute and its decision to vacate the 2009 foreclosure action as it property, related to the the trial court did add BAC as a lien entry holder in the December 2009 and a judgment stated BAC had lien the claims that fourth-priority against property. BAC this decision was also an abuse of discretion. BAC claims that the trial court Specifically, because that it recognized against had a lien the when it added BAC to the list, clearly 2008-foreclosure lien holder the triаl court abused its discretion when holder, it as fourth recognized being only priority despite the lien the fact lien, that it had been it assigned given MERS’s which would have the first- Overall, lien holder to priority the BAC claims that the trial court recognized could not have that it had an interest in the property without that it was also the lien first-priority acknowledge holder. While we the trial court obviously recognized property, disagree BAC had the we argument with BAC’s that this interest had to come from first-priority- MERS’s lien-holder status to pursuant mortgage. fact that trial court Despite vacated most of the 2009
foreclosure
the trial court found that
judgment
BAC’s
decree
only
foreclosure were valid but
as
the Smiths:
between BAC and
“[A]s
Smith,
Note,
recovery
Promissory
Defendants
BAC should obtain
of its
“
right
cause of action. The
judgment
‘The
to
on the note is one
assigned.”
right
legal
action.
is
other is
mortgage
to foreclose a
is another cause of
One
—the
”
A is a form of secured debt where the evidenced mortgage note, by by property, accomplished is secured the transfer of an interest mortgage of a breach of condition of the delivery mortgage Upon deed. It at sue in agreement, mortgagee may, option, has concurrent remedies. foreclose, note; or, at an action equity directly bring sue law (1937), 1, 2[, ejectment, & v. Mercurio 24 Ohio Law Abs. Equity Savings Loan Thus, 7 O.O. suit on the note was not foreclosed of the disposition 540]. * * previous action *. (Dec. 30, 1982), L. Broadview S. & Co. v. Crow 8th Dist. Nos.
45002, 1982 2658, at WL *3. above, explained As we BAC did not obtain an interest in the property it
because the
had obtained from
had
foreclosed.
already
been
Nevertheless,
judgment
the default
entered
in the 2009
Smiths
note,
gave
foreclosure action
BAC a
lien on the
so
had a
judgment
right
BAC still
collect its unsecured
lien out of the
from the
real
proceeds
sale
However,
estate.
BAC’s judgment
superior
lien was not
to those of Minster or
Bank
because BAC’s
on the note had not been issued until after
Therefore,
the Smiths had executed mortgages to Minster and Union Bank.
trial court did not abuse its discretion when it
lien
recognized
BAC’s
the 2008 foreclosure action
only recognized
as the
holder,
fourth lien
because
lien was
promissory
the rеsult
note
*9
SIB,
assigned from
and not a
mortgage assigned by
result of the
MERS.
Overall, while we
not
all
may
necessarily agree with
the doctrines
{¶ 23}
decision,
and rules that the trial court used in
its
reaching
we nonetheless have
“
correct,
held that
judgment by the trial court which is
but for a different
‘[a]
”
reason,
appeal
will be affirmed on
as there is no
to the
prejudice
appellant.’
(Citations omitted.)
(CV-I2)
Assn.,
Wedemeyer F.D.R.
U.S.S.
Reunion
3d
¶
1-09-57,
{¶ fore, overruled. in appellant no error to the herein Having prejudicial found
{¶ 25} of trial court. argued, judgments and we affirm the pаrticulars assigned Judgments affirmed. P.J., judgment only. concurs in Willamowski, J., in part. concurs in and dissents part
Rogers, in in Judge, concurring part dissenting part. and Rogers, I from the of the respectfully part part concur and dissent decision {¶ 26} majority. I, fully majority’s to of error No. I concur with the assignment As
{¶ 27} it denying that the trial court did not err BAC’s motion to substitute I agree majority’s finding for MERS. that when the party-defendant judgment entry against foreclosing trial court issued a MERS’s on its interest on that it longer any March MERS no had viable interest Therefore, to I lack assign agree given could BAC on June BAC’s in the the trial court was reasonable in property, denying interest motion substitute. I Additionally, emphasize mortgage designated wish to that the MERS
“solely my as nominee for SIB As dissent in Mortgage Corp.” expressed 9-09-31, Shifflet, L.P. v. 3d Dist. No. 2010- Countrywide Servicing, Home Loans Ohio-1266, 1175235, 18-21, I language solely 2010 WL believe this served designate agent purposes servicing MERS as note any repayment and did transfer to MERS the real estate Therefore, it moneys party loаned. was never real interest. I Additionally, majority’s finding assignment believe of error I, concur, which I is inconsistent with the of the majority
No. with remainder opinion. II, In analysis assignment majority its of error No. finds court did not abuse its discretion when vacated the second foreclosure (filed BAC) because BAC never obtained when to it the assigned mortgage, Smiths’ may grounds assignee’s foreclosure action be for dismissal of an pending Nevertheless, where action is between the same the trial pаrties. *10 of the second foreclosure portion
court did not vacate the
II,
Further,
of error No.
analysis
assignment
in its
individually.
Smiths
in
as
listing
trial court did not
its discretion
BAC
majority holds that the
abuse
had a
to collect
right
lien holder because
BAC
fourth-priority
foreclosed
and
upon,
lien from the sale of the real estate
unsecured
Bank’s interests.
lien was subordinate to Minster’s and Union
majority’s
I
conclusion that the trial court did
agree
While
action,
trial
I believe that the
err in
of the second foreclosure
vacating portions
I find
tо vacate the entire second foreclosure action.
failing
court erred
that
interest MERS had
majority’s finding
any
inconsistent the
11, 2009, and, thus, that it
no viable interest to
extinguished
passed
was
on March
BAC,
trial court’s
majority’s subsequent
and the
validation of the
and decree of foreclosure were valid
the Smiths.
BAC’s default
reason,
trial
I
validation of the
majority’s
For the same
find inconsistent
entry.
in its December 2009
court’s
of BAC as the fourth hen holder
prioritizing
judgment extinguished
legal
I
that the March
2009 default
bоth
believe
BAC,
consequently,
property.
interests that
and
had
equitable
would, therefore,
that it should have
judgment, finding
I
reverse the
court’s
action and that it abused its discretion
vacated the entire second foreclosure
to which it was
recognizing BAC as a lien holder
the first foreclosure
Hopkins,
also
Third Bank v.
party.
never
See
Fifth
(“[I]f
(Carr, P.J.,
doctrine,
which it used to
its conclusion that BAC had never obtained
support
I
that this is an
use of lis
appropriate
do not believe
had,
consequently
but rather that
interest MERS
pendens,
obtained,
extinguished
operation
judgment.
could have
was
as
if
from a real
Finally,
assignment
party
even BAC had had
valid
interest,
judicata filing
I would find that BAC’s foreclosure
was barred
res
“Motion in
to Plaintiffs Motion for Default
argued
Union Bank’s
Contra
Complaint.”
Supreme
and Motion to Dismiss Plaintiffs
Court
Judgment
*11
judicata
of res
the two related
encompasses
Ohio has held
doctrine
“[t]he
* * *
known as
estoppel by judgment,
of claim
also
concepts
preclusion,
collateral
v. Parkman
estoppel.”
Twp.
issue
also known as
Grava
preclusion,
(1995),
This court
previously
73 Ohio St.3d
WASINSKI, Appellee,
II, INC., Appellee;
PECO
(Two cases.)
Ryan, Admr., Appellant.
II, Inc.,
[Cite as Wasinski v. PECO
