Wells Fargo Bank, N.A., Plaintiff-Appellee, v. Karin Hazel, et al., Defendants-Appellants.
No. 15AP-93 (C.P.C. No. 10CV-9874)
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
January 28, 2016
2016-Ohio-305
HORTON, J.
(REGULAR CALENDAR)
Rendered on January 28, 2016
Thompson Hine, LLP, Scott A. King and Terry W. Posey, for appellee.
Karin Hazel, pro se.
APPEAL from the Franklin County Court of Common Pleas
HORTON, J.
{¶ 1} Defendants-appellants, Karin Hazel, et al. (“Hazel“), pro se appeals from a judgment of the Franklin County Court of Common Pleas sustaining plaintiff-appellee‘s, Wells Fargo Bank N.A. (“Wells Fargo“), objections to the magistrate‘s decision and denying Hazel‘s
{¶ 2} The procedural history and the facts of this action were sufficiently stated in our prior case, Wells Fargo Bank N.A. v. Hazel, 10th Dist. No. 11AP-1061, 2012-Ohio-5770 (“Hazel”). In Hazel, we reversed the judgment of the trial court in adopting the magistrate‘s decision in favor of Hazel and remanded the case for the trial court “to
{¶ 3}
In pleading the performance or occurrence of conditions precedent, it is sufficient to aver generally that all conditions precedent have been performed or have occurred. A denial of performance or occurrence shall be made specifically and with particularity.
{¶ 4} The trial court followed our instructions and found that because Hazel‘s:
[G]eneral denial did not specifically controvert the plaintiffs claim that it had complied with all the conditions precedent to foreclosure it was insufficient to satisfy the
Civ.R. 9(C) ‘s requirement that denial of a condition precedent be raised specifically and with particularity. * * * The effect of Hazel‘s failure to deny conditions precedent in the manner provided byCiv.R. 9(C) is that they are deemed admitted. * * * Since Hazel‘s answer was insufficient to put the plaintiffs compliance with the HUD regulations at issue in the case, the Court finds that she has not established that she has a meritorious defense to present if relief is granted. Accordingly, her motion for relief from judgment is not well-taken.
(Decision 4-5.)
I. ASSIGNMENTS OF ERROR
{¶ 5} Hazel appeals, assigning the following errors:
[I.] Where a defendant fails to meet all conditions precedent can it be deemed as a matter of law where the court lacks jurisdiction to entertain the complaint.
[II.] The affirmative defense of failure to meet HUD regulations as presented by Motion pursuant to
Civ.R. 12(B) is not waived.
II. FIRST AND SECOND ASSIGNMENTS OF ERROR—THE LAW OF THE CASE DOCTRINE—NO ABUSE OF DISCRETION
{¶ 7} Under normal circumstances, Hazel would be law of the case. As we recently stated in State v. Monroe, 10th Dist. No. 13AP-598, 2015-Ohio-844, ¶ 29:
The law of the case is a longstanding doctrine in Ohio jurisprudence. “[T]he doctrine provides that the decision of a reviewing court in a case remains the law of that case on the legal questions involved for all subsequent proceedings in the case at both the trial and reviewing levels.” Nolan v. Nolan, 11 Ohio St.3d 1, 3 (1984). “The doctrine is necessary to ensure consistency of results in a case, to avoid endless litigation by settling the issues, and to preserve the structure of superior and inferior courts as designed by the Ohio Constitution.” State ex rel. Potain v. Mathews, 59 Ohio St.2d 29, 32 (1979).
In the present case, the court finds the dissent‘s arguments persuasive. However, in order to ensure consistency of results, and to avoid endless litigation, the court is inclined to follow the law of the case doctrine.
{¶ 8} Therefore, our review shows that the trial court, in light of our rationale in Hazel, followed our instructions on remand. We find that the trial court did not abuse its discretion in finding that Hazel did not comply with
III. DISPOSITION
{¶ 9} Having overruled Hazel‘s two assignments of error, we affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
KLATT, J., concurs.
BRUNNER, J., dissents.
Wells Fargo Bank, N.A., Plaintiff-Appellee, v. Karin Hazel, et al., Defendants-Appellants.
No. 15AP-93
COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
{¶ 10} I would reverse the decision of the trial court sustaining plaintiff-appellee Wells Fargo Bank N.A.‘s (“Wells Fargo“) objections to the magistrate‘s decision and denying defendant-appellant Karin Hazel‘s, pro se,
I. FACTS AND PROCEDURAL HISTORY
{¶ 11} The procedural history and the facts of this action are stated in Hazel. However, I believe it is important to reiterate the facts that are relevant to this opinion. Wells Fargo filed this foreclosure action on July 6, 2010. The only documents Wells Fargo attached to the complaint were copies of the note and mortgage. Wells Fargo‘s complaint for foreclosure included a pleading that:
The mortgage was filed for record on March 23, 2009, in instrument No. 200903230040172, of the county recorder‘s records. The conditions of defeasance contained therein have been broken; plaintiff has complied with all conditions precedent; and plaintiff is entitled to have said mortgage foreclosed.
(Emphasis added.) (Complaint, ¶ 3.) Hazel answered this (like every other allegation) with, “Defendant is without information sufficient to form a belief as to the truth or accuracy of the allegations as set forth in Paragraph 3 of Plaintiff‘s complaint, and therefore denies same.” (Answer, ¶ 3.) Though Hazel set forth affirmative defenses, none of them specifically asserted that Wells Fargo had failed to comply with any conditions precedent to foreclosure.
{¶ 12} On September 20, 2010, the trial court entered summary judgment in favor of Wells Fargo finding there were no genuine issues of material fact and that Wells Fargo was entitled to judgment as a matter of law. On October 13, 2010, Hazel filed a motion to vacate judgment pursuant to
{¶ 13} The magistrate, on July 11, 2011, entered a decision and entry granting Hazel‘s motion to set aside the judgment. The magistrate found that the motion was timely and that Hazel established excusable neglect for failing to respond to Wells Fargo‘s summary judgment motion. The magistrate also found that Hazel had established “a plausible meritorious defense claiming that [Wells Fargo] did not comply with” HUD regulations pursuant to
{¶ 14} In this case, the contract document (the note) and the mortgage document subject the holder‘s rights upon default to applicable HUD regulations. The note provides under “Borrower‘s Failure to Pay,” section “(B) Default,” in relevant part, that:
If Borrower defaults by failing to pay in full any monthly payment, then Lender may, except as limited by regulations of the Secretary in the case of payment defaults, require immediate payment in full of the principal balance remaining due and all accrued interest * * * In many circumstances regulations issued by the Secretary will limit Lender‘s rights to require immediate payment in full in the case of payment defaults. This Note does not authorize acceleration when not permitted by HUD regulations. As used in this Note, “Secretary” means the Secretary of Housing and Urban Development or his or her designee.
(Complaint, exhibit A.)
{¶ 15} The mortgage contains similar language. Under section nine, captioned “Grounds for Acceleration of Debt,” the mortgage provides that, “Lender may, except as limited by regulations issued by the Secretary in the case of payment defaults, require
In many circumstances regulations issued by the Secretary will limit Lender‘s rights, in the case of payment defaults, to require immediate payment in full and foreclose if not paid. This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary.
(Complaint, exhibit B, 5.)
{¶ 16} Nothing in the complaint, or its attachments, i.e., the note or mortgage, specifically states what conditions precedent Wells Fargo was required to satisfy prior to foreclosure. Likewise, nothing in these attachments specifically alerts the reasonable homeowner to the conditions precedent required by HUD regulations and where such conditions precedent are to be found. The homeowner was not even notified that the HUD regulations contain conditions precedent that the lender must comply with prior to filing the foreclosure action.
{¶ 17} In Hazel, we reversed the judgment of the trial court in adopting the magistrate‘s decision in favor of Hazel and remanded the case for the trial court “to consider [Wells Fargo‘s] objections and to determine whether [Hazel] complied with
[G]eneral denial did not specifically controvert the plaintiff‘s claim that it had complied with all the conditions precedent to foreclose it was insufficient to satisfy the
Civ.R. 9(C) ‘s requirement that denial of a condition precedent be raised specifically and with particularity. The effect of Hazel‘s failure to deny conditions precedent in the manner provided byCiv.R. 9(C) is that they are deemed admitted. Since Hazel‘s answer was insufficient to put the plaintiff‘s compliance with the HUD regulations at issue in the case, the Court finds that she has not established that she has a meritorious defense to present if relief is granted. Accordingly, her motion for relief from judgment is not well-taken.
(Citations omitted.) (Jan. 14, 2015 Decision 4-5.)
{¶ 18} In other words, having failed to specifically deny the satisfaction of conditions precedent with particularity as set forth in
II. ASSIGNMENTS OF ERROR
{¶ 19} Hazel‘s assignments of error from the trial court‘s decision are:
[I.] Where a defendant fails to meet all conditions precedent can it be deemed as a matter of law where the court lacks jurisdiction to entertain the complaint.
[II.] The affirmative defense of failure to meet HUD regulations as presented by Motion pursuant to
Civ.R. 12(B) is not waived.
III. DISCUSSION
{¶ 20} I would address Hazel‘s second assignment of error first.
A. Second Assignment of Error – Whether Hazel Waived the Argument that Wells Fargo Failed to Satisfy Conditions Precedent
{¶ 21} Hazel‘s arguments do not expressly address whether or not the trial court properly considered and decided the issue of compliance with
1. The Trial Court‘s Decision as a Result of Hazel
{¶ 22}
In pleading the performance or occurrence of conditions precedent, it is sufficient to aver generally that all conditions precedent have been performed or have occurred. A denial of performance or occurrence shall be made specifically and with particularity.
{¶ 24} Hazel answered allegations of the complaint concerning this and other allegations with, “Defendant is without information sufficient to form a belief as to the truth or accuracy of the allegations as set forth in Paragraph 3 of Plaintiff‘s complaint, and therefore denies same.” (Answer, ¶ 3.) Because Hazel‘s affirmative defenses did not deny the satisfaction of specific conditions with particularity pursuant to
2. History of Civ.R. 9(C)
{¶ 26} The predecessor to
In pleading the performance of conditions precedent in a contract it is sufficient to state that the party performed all the conditions on his part. If such allegation is controverted, the party pleading must establish, on the trial, the facts showing such performance.
(Emphasis added.)
{¶ 27} One notable aspect all the predecessor sections to modern
Rule 9(C) abolishes the old common law technicalities concerning the allegation of conditions precedent and in that sense the rule is very similar to § 2309.37, R.C.
Moreover, the civil rules first became effective on July 1, 1970.
It is sufficient to plead generally that all conditions precedent have been performed or have occurred. This rule is similar to the Federal Rule and to an Ohio statute. The rule makes clear the fact that denial of performance of a particular condition precedent must be made specifically and with particularity. The reason is that sometimes there are many conditions precedent, particularly in insurance contracts, and usually most of the conditions precedent are not in issue. If the defendant seeks to challenge the performance of one or more
conditions precedent, he should do so specifically and with particularity. Frequently, plaintiff may be uncertain as to whether he can prevail on the grounds that the condition precedent was performed or because it was waived. Since both waiver and performance of conditions precedent can be alleged generally and alternative pleading is permitted, plaintiff may allege that all conditions precedent have been performed, have occurred or have been waived. The burden will then be on defendant to challenge any particular condition precedent.
(Emphasis added.) McCormac, Ohio Civil Rules Practice, Section 5.11 (1st Ed.1970).
{¶ 28} The present version of
3. Whether, Notwithstanding Civ.R. 9(C) ‘s Permission to Plead “Generally,” Allegations that Fail to Put the Defendant on Notice of What is Alleged in Violation of Civ.R. 8(A) Can be Deemed Admitted
{¶ 29} The corpus Ohio Civil Rules is “not a compendium of isolated rules; rather it is an integrated whole involving an interrelated series of procedural steps from commencement of the action through the entering of judgment.” McCormac, Ohio Civil Rules Practice (1st Ed.1970) (Foreword by Professor Stanley Harper, Staff Director, Rules Advisory Committee). Accordingly, the Supreme Court of Ohio reads the civil rules in pari materia with each other. See, e.g., Parrish v. Jones, 138 Ohio St.3d 23, 2013-Ohio-5224, ¶ 21; Thomas v. Freeman, 79 Ohio St.3d 221, 225 (1997). Thus,
{¶ 30} Ohio has long been a notice-pleading state. As this court stated in Leichliter v. Natl. City Bank, 134 Ohio App.3d 26, 31 (10th Dist.1999):
Civ.R. 8(A) sets forth the necessities for pleading a claim for relief and provides in relevant part: “A pleading that sets forth a claim for relief * * * shall contain (1) a short and plain statement of the claim showing that the party is entitled to relief, and (2) a demand for judgment for the relief to which the party claims to be entitled.” The purpose ofCiv.R. 8(A) is to give the defendant fair notice of the claim and an opportunity to respond. Fancher v. Fancher (1982), 8 Ohio App. 3d 79, 83, 455 N.E.2d 1344.
Accordingly, “an appellate court will not consider conclusions that are not supported by factual allegations in the pleading because such conclusions cannot be deemed admitted and are insufficient to withstand a motion to dismiss.” Arms Trucking Co. v. Fannie Mae, 11th Dist. No. 2014-G-3186, 2014-Ohio-5077, ¶ 22, citing State ex rel. Hickman v. Capots, 45 Ohio St.3d 324 (1989); Silverman v. Roetzel & Andress, L.P.A., 168 Ohio App.3d 715, 2006-Ohio-4785, ¶ 6 (10th Dist.); see also Hickman at 324 (“Unsupported conclusions of a complaint are not considered admitted.“). In short, the purpose of pleading is to put the other party on notice of the substance of the claims and give them an opportunity to respond. Wells Fargo Bank, N.A. v. Horn, 142 Ohio St.3d 416, 2015-Ohio-1484, ¶ 13. If the allegations are not factual, but merely hollow legal conclusions, the other party is not on notice, and a party cannot be deemed to have admitted an allegation that failed to put the party on notice as to what it was admitting. See, e.g., Hickman at 324.
{¶ 31}
{¶ 32} In U.S. Bank Natl. Assn. v. George, 10th Dist. No. 14AP-817, 2015-Ohio-4957, we noted the differences between a note and a mortgage and stated that “[i]t is well recognized that actions in foreclosure arise in equity.” (Citations omitted.) Id. at ¶ 13. In foreclosure we have recognized that “a determination of liability under the note is a prerequisite to enforcement of the mortgage itself because a mortgage is but an incident to the debt it secures.” (Citation omitted.) Id. at ¶ 10. The relevant HUD requirements relate first and foremost to the note, as part of the contract, but they are not specifically stated in either the note or the mortgage. Thus, in the foreclosure context, unlike the typical contract scenario, the defendant, who is often pro se, is frequently not placed on notice of the conditions precedent by a general and conclusory allegation such as occurred in the complaint here, and the defendant is therefore not adequately situated to specifically and particularly deny such conditions. Under the principle of notice pleading, the defendant cannot be deemed to have admitted a fact of which the defendant had no notice.
{¶ 33} This view of
{¶ 34} Wells Fargo did not plead any facts whatsoever in order to support the legal conclusion that “plaintiff has complied with all conditions precedent.” There is no indication that prior to discovery Hazel had any idea what the conditions precedent to foreclosure were, including the HUD compliance issues she eventually raised, since they are not plainly disclosed by the note contract document and mortgage appended to the complaint. I would find that Hazel cannot fairly be deemed to have admitted Wells Fargo‘s unsupported conclusion of law, even though Hazel failed to specifically and particularly deny conditions precedent in her answer. Simply put, Hazel could not have been deemed to have admitted an allegation that failed to put her on notice of what she was admitting when she denied it generally and not with particularity.
4. Civil Rule 10(D)(1)
{¶ 35}
When any claim or defense is founded on an account or other written instrument, a copy of the account or written instrument must be attached to the pleading. If the account or written instrument is not attached, the reason for the omission must be stated in the pleading.
” ‘The purpose of the requirement to attach an account [or other written instrument] imposed by
{¶ 36} In this case, Wells Fargo‘s claim in contract on the note and for enforcement in foreclosure is founded on written instruments, that is, the note and mortgage which, pursuant to
5. Analogous Case Law of this and Other Districts
{¶ 37} I recognize that other cases outside the Tenth District Court of Appeals have considered
{¶ 39} Finally, despite the fact that I would sustain the second assignment of error which refers to the failure of conditions precedent as an affirmative defense, I would expressly reject the notion that non-compliance with conditions precedent is an affirmative defense. See, e.g., Goebel at ¶ 17; Gray. First, this district has, since releasing the unpublished decision in Gray, released Richards, which expressly states that conditions precedent are directly tied to the merits of the plaintiff‘s cause of action; not an affirmative defense to be raised by the defendant. Richards at ¶ 20. Second, the federal regulations at issue place the burden of satisfying the regulatory conditions prior to foreclosure on the mortgagee, not the homeowner.
{¶ 40} In Hazel, this court required the trial court “to consider [Wells Fargo‘s] objections and to determine whether [Hazel] complied with
{¶ 41} With due respect to the prior panel and to the majority, Hazel creates an untenable scenario: the continued application of this court‘s earlier decision will allow entities seeking foreclosure to aver generally under
{¶ 42} While I would agree that the trial court was compelled to follow this court‘s instructions in Hazel to determine “whether Hazel complied with
{¶ 43} I would sustain Hazel‘s second assignment of error—she has not waived the opportunity to argue that Wells Fargo failed to comply with conditions precedent.
B. First Assignment of Error—Whether the Trial Court Lacks Jurisdiction in a Foreclosure Action when Conditions Precedent Have Not Been Satisfied
{¶ 44} Because I would sustain Hazel‘s second assignment of error and reverse and remand, I would hold that consideration of Hazel‘s first assignment of error is moot.
IV. CONCLUSION
{¶ 45} In short, I would overrule this court‘s prior decision in Hazel, sustain Hazel‘s second assignment of error for the reasons stated above and thereby render