Whipps v. Ryan, 08ap-838 (5-12-2009)Whipps v. Ryan, 08ap-838 (5-12-2009)
I. Procedural History
{¶ 2} Defendants' appeals involve several parcels of land, known as 185 through 205 E. Main Street in Columbus ("the property"). In November 1990, Ryan and Michael F. Colley executed a promissory note in favor of The Ohio Bank, Sky Bank's predecessor-in-interest, in the face amount of $130,000 ("Note 1"). Ryan and Colley also executed a promissory note in the face amount of $570,000 in favor of The Ohio Bank on that date. In the same month, Ryan, Colley and Fred H. Pitz ("Pitz") signed an Open End Mortgage, Assignments of Rents and Security Agreement. By its express terms, the document granted a mortgage upon the property to secure the $700,000 obligation under both promissory notes. On July 26, 2001, Ryan and Colley executed a promissory note in favor of Sky Bank, with a face amount of $400,000 ("Note 2"). The parties by agreement changed the terms of the loans several times.{¶ 3} On August 16, 2005, Colley apparently quitclaimed all of his interest in the property to Edward F. Whipps in trust; Colley's wife, Nancy, apparently quitclaimed to Whipps her dower interest in the property. Although the record contains no evidence of the transfers, the parties agree the property was transferred. *3
{¶ 4} Whipps, as Trustee, filed a partition action on October 21, 2005 against Ryan and Ryan, as Trustee. In it, he claimed to be the owner of an undivided one-sixth interest in the property. Ryan filed his answer asserting the affirmative defense of failure to join Colley as an indispensable party. Ryan also asserted a counterclaim against Whipps, claiming he made improvements and payments respecting the property that benefited Whipps. Whipps answered the counterclaim, denying the allegations and asserting the affirmative defenses of estoppel, waiver, laches and accord and satisfaction.
{¶ 5} On January 27, 2006, Sky Bank filed an action for money damages against Ryan and Colley, alleging they defaulted on Note 1. Ryan filed an answer generally denying the allegations and asserting the affirmative defense of failure to join Pitz as an indispensable party. Colley filed an answer and cross-claim against Ryan, alleging Ryan breached his agreement to manage the property, collect rent and pay expenses. Ryan answered the cross-claim, admitting to the agreement but denying any breach. He filed a cross-claim against Colley in quantum meruit for management services.
{¶ 6} On February 7, 2006, Sky Bank filed a motion to intervene in the partition action, stating Colley and Ryan were in default on Note 1 and on their agreements, the obligations of which were secured by a mortgage on the property subject to the partition action. Sky Bank later amended its motion to further allege Ryan and Colley also were in default on Note 2, to add various lienholders as defendants in the partition actions, and to add Ryan's wife, Carolyn, as a party-defendant. The trial court granted Sky Bank's motion to intervene and to add additional parties. *4
{¶ 7} On May 9, 2006, Sky Bank answered Whipps' partition complaint and, based upon Ryan and Colley's default on Note 2, filed a counterclaim against Whipps and a cross-claim for foreclosure on the property against Ryan, Ryan, as Trustee, Carolyn, and the other lienholders. Sky Bank alleged it was owed $335,666.89, plus interest on Note 2. All but one of the lienholders that Sky Bank added filed answers stating they had no interest in the property and seeking to be dismissed as parties.
{¶ 8} Ryan, Ryan, as Trustee, and Carolyn, answered the cross-claim for foreclosure asserting the affirmative defense of failure to join Colley, an obligor on the notes, as an indispensable party. They also filed a third-party complaint against Colley, alleging that Colley was jointly liable as a joint maker of the notes. Colley generally denied the substantive allegations of the third-party complaint.
{¶ 9} On August 3, 2006, Sky Bank moved to consolidate the partition/foreclosure action with its action for damages against Ryan and Colley premised on their default on Note 1. The trial court granted the consolidation motion. After consolidation, Sky Bank filed a motion for summary judgment on both its counterclaim and cross-claim for foreclosure, as well as its complaint for money damages on Note 1.
{¶ 10} The trial court granted Sky Bank's motion for summary judgment. Ryan and Ryan, as Trustee, filed a notice of appeal to this court. The trial court then journalized a decree of foreclosure and order of sale in which it granted judgment in the amount of $72,023.25, plus interest, against Ryan and Colley on Sky Bank's claim for money damages on Note 1. The trial court further ordered a judicial sale of the property *5 and found the amount of $335,666.89, plus interest, and any sums advanced, due and owing on Note 2 and ordered they be paid out of the proceeds of the sale.
{¶ 11} On appeal, this court affirmed the judgment of the trial court. See Whipps v. Ryan, 10th Dist. No. 07AP-231,
{¶ 12} Ryan then filed a
{¶ 13} After Sky Bank merged with the Huntington National Bank ("the Huntington"), DB Midwest purchased the loans from Sky Bank and received an assignment of the mortgage securing the loans. Sky Bank filed a motion to substitute DB Midwest for Sky Bank, nka Huntington. Ryan and Ryan, as Trustee, objected to the motion for substitution of party.
{¶ 14} While the motion for substitution of party was pending, Sky Bank filed a motion for appointment of a receiver. After a second sheriff's sale was scheduled and no bids were received, Sky Bank proceeded with its request to have a receiver appointed. Ryan, Ryan, as Trustee, and Carolyn, opposed the motion. On August 27, *6 2008, the trial court granted Sky Bank's motion for appointment of receiver; Ryan, and Ryan, as Trustee, filed a notice of appeal from the entry. On the same day, the trial court granted Sky Bank's motion for substitution of party; Ryan, and Ryan, as Trustee, filed a notice of appeal. The two appeals were consolidated.
{¶ 15} In the two consolidated appeals, defendants assign the following errors:
Assignment of Error #1
*7THE TRIAL COURT ERRED IN ITS DECISION AND ENTRY APPOINTING RECEIVER DATED AUGUST 27, 2008, IN WHICH IT FOUND THAT AN APPEAL BY APPELLANTS STAYED THE SALE OF 185 THROUGH 205 E. MAIN STREET, COLUMBUS, OHIO.
Assignment of Error #2
THE TRIAL COURT ERRED BY SUA SPONTE VACATING AND MODIFYING ITS FINAL ORDER OF DECREE OF FORECLOSURE AND ORDER OF SALE AND BY APPOINTING A RECEIVER TO SELL THE PROPERTY AT 185 THROUGH 205 E. MAIN STREET, COLUMBUS, OHIO THEREBY DENYING APPELLANTS THEIR RIGHT TO DUE PROCESS AND TO A COMMERCIALLY REASONABLE SALE.
Assignment of Error #3
THE TRIAL COURT ERRED IN FAILING TO COMPLY WITH CIVIL RULE 58(B) BY FAILING TO NOTIFY THE PARTIES OF A FINAL APPEALABLE ORDER IN ITS DECISIONS OF JULY 15, 2008 AND AUGUST 27, 2008.
Assignment of Error #4
THE TRIAL COURT ERRED BY ITS FINDINGS THAT THE MORTGAGE DOCUMENTS COVERING 185 THROUGH 205 E. MAIN STREET CLEARLY STATE THAT A RECEIVER MAY BE APPOINTED "TO SELL THE PROPERTY COVERED BY THE MORTGAGE."
Assignment of Error #5
THE TRIAL COURT ERRED IN FAILING TO GRANT APPELLANTS' CIVIL RULE 60 MOTION TO VACATE ITS DECREE OF FORECLOSURE AND ORDER OF SALE AS APPELLANTS DEMONSTRATED THAT IT PRESENTED A MERITORIOUS DEFENSE AND CLAIM, RELIEF IS APPROPRIATE UNDER THE GROUNDS STATED IN CIVIL RULE 60(B)(1) THROUGH (5) AND THE MOTION WAS MADE TIMELY.
Assignment of Error #6
THE TRIAL COURT ERRED IN ITS DECISION AND ENTRY DENYING RYAN'S MOTION TO VACATE JUDGEMENT [sic] BY ITS FINDING THAT CIVIL RULE 60(B)(3) THROUGH (5) DO NOT APPLY TO THE CIRCUMSTANCES IN THE CASE.
II. First Assignment of Error
{¶ 16} In their first assignment of error, defendants contend the trial court erred when, in its decision appointing a receiver, it stated defendants' appeal stayed the sale of the property. In its decision on August 27, 2008, the trial court stated: "Defendant James Ryan and Cross Claimants, James Ryan, Carolyn P. Ryan, and James M. Ryan Trustee, appealed the decision, thus staying the sale." (Decision, 1-2.) Defendants argue that "as a result of this finding by the trial court, the court did not have any jurisdiction of consolidated cases 05 CVH 11685 and 06 CVH 1244 during the pendency of Appeals cases 07 APE 231 and 07 APE 232, which were filed on March 22, 2007."{¶ 17} The appeals defendants reference were filed on March 22, 2007; the decision affirming them was rendered on March 18, 2008; and the decision appointing a receiver was not rendered until August 27, 2008. While the trial court's decision may *8 wrongly state a stay was in place, both appeals were concluded by the time the decision was rendered and any error occurred. Defendants thus suffered no prejudice from the statement. The first assignment of error is overruled.
III. Second Assignment of Error
{¶ 18} Defendants' second assignment of error contends the trial court erred by sua sponte (1) vacating and modifying its final decree of foreclosure and order of sale, and (2) appointing a receiver. Defendants contend the trial court's actions denied them their right to due process and to a commercially reasonable sale.{¶ 19} Defendants' argument regarding the decree of foreclosure and order of sale is premised on an assumption that they appealed from the October 1, 2008 entry so ordering, but they did not. Defendants filed their notices of appeal from the August 27, 2008 entries. Accordingly, their argument regarding that order is not before us.
{¶ 20} Defendants also contend the trial court had no authority to appoint a receiver and set forth the receiver's duties. Initially, we note that plaintiff filed a motion for appointment of receiver, and defendants filed a memorandum contra, so the appointment was not sua sponte.
{¶ 21} Secondly, section 25 of the mortgage documents authorizes the appointment of a receiver. It provides for the appointment if defendants' "breach of any covenant or agreement of Borrower in this Instrument." In those circumstances the documents allow the lender or "a court-appointed receiver, regardless of the adequacy of Lender's security," to "enter upon and take and maintain full control of the Property in order to perform all acts necessary and appropriate for the operation and maintenance" *9 of the property, "including, but not limited to, the execution, cancellation and modification of leases," collecting "all rents and revenues of the Property," making "repairs to the Property," and executing or terminating "contracts providing for the management of the Property, all on such terms as are deemed best to protect the security of this Instrument." Were any doubt to exist about defendants' agreement to a receiver, section 25 specifically provides that if the lender elects to seek such an appointment under the terms of the agreement, "Borrower hereby expressly consents to the appointment of such receiver. Lender or the receiver shall be entitled to receive a reasonable fee for so managing the Property."
{¶ 22} Finally, defendants argue they are not responsible for paying the receiver's fees and expenses. They assert that since they neither moved for a stay of the sheriff's sale on September 14, 2007, nor had an opportunity to object when the trial court withdrew the sheriff's sale, the trial court acted beyond its authority and jurisdiction in vacating its decree of foreclosure and order of sale and in appointing a receiver. Contrary to defendants' assertions, the trial court did not vacate its decree of foreclosure and order of sale. Instead, pursuant to the mortgage documents to which defendants agreed, the court appointed the receiver to which defendants consented. The mortgage documents further set forth defendants' consent to reasonable receiver fees.
{¶ 23} Further supporting the trial court's actions, R.C.
{¶ 24} In the end, the trial court did not err in sua sponte vacating and modifying its final order of decree of foreclosure and order of sale, since it did not do so. Nor did it err in appointing a receiver to sell the property, since it was permitted to do so by the mortgage documents and R.C.
IV. Third Assignment of Error
{¶ 25} In their third assignment of error, defendants contend the clerk of courts erred in failing to comply with {¶ 26}
{¶ 27} Defendants filed a timely notice of appeal from the August 27, 2008 judgment appointing a receiver, so, to the extent they contend that entry was not served in compliance with
{¶ 28} Nonetheless, the record contains nothing to suggest the clerk of courts served the notice in compliance with
{¶ 29} Because defendants attached the July 15, 2008 judgment to their notice of appeal, and their fourth, fifth, and sixth assignments of error raise issues regarding the July 15, 2008 denial of their
V. Fourth Assignment of Error
{¶ 30} Defendants' fourth assignment of error contends the trial court erred when it determined the mortgage documents state that a receiver may be appointed "to sell the property covered by the mortgage." Defendants did not raise this argument in the trial court. Issues not raised in the trial court may not be raised for the first time on appeal because such issues are deemed waived. State v. Burge (1993), {¶ 31} Apart from issues of waiver, defendants' contentions lack merit. As noted, section 25 of the mortgage documents, with defendants' consent, gives broad powers to the receiver. Moreover, R.C.
VI. Fifth and Sixth Assignments of Error
{¶ 32} The fifth and sixth assignments of error are related and shall be addressed together. In them, defendants contend the trial court erred in denying their {¶ 33} In order to prevail on a motion for relief from judgment under
{¶ 34} The decision to grant or deny a
{¶ 35} In their fifth assignment of error, defendants contend the trial court erred in failing to grant their
{¶ 36} Defendants initially assert they presented the defense that Sky Bank (1) failed to provide defendants with the required 30-day notice of default and right to cure *14
prior to filing suit, and (2) failed to include in its complaint and pleadings the Commitment Letter and Loan Agreement as
{¶ 37} We need not resolve whether defendants' arguments regarding the 30-day notice are affirmative defenses that needed to be asserted in an answer, as the defenses are not meritorious in this case. The 30-day notice to cure provision was implicated if the Huntington exercised the cognovit provisions of notes; they were not exercised in this case. Because the 30-day notice provision does not apply here, it need not be attached. Moreover, defendants' contentions regarding the attachments to the complaint fail under the provisions of
{¶ 38} Defendants initially contend the trial court's conclusions demonstrate excusable neglect in their attorney's failure to attach the Commitment Letter and Loan Agreement to their pleadings. See
{¶ 39} The documents are also not newly-discovered evidence pursuant to
{¶ 40} Defendants also argue that the trial court erred in not giving their new counsel adequate time to respond to Sky Bank's motion for summary judgment. Their argument is unpersuasive. Initially, the motion for leave to file the motion for summary judgment was filed on October 12, 2006; the motion was not ruled on until March 16, 2007. We cannot find that the trial court abused its discretion in ruling on the motion after five months. Moreover, defendants had the opportunity to have the issues regarding the motion for summary judgment addressed through the appeal process and did not pursue it.
{¶ 41} The trial court thus did not err in overruling defendants'
{¶ 42} For the foregoing reasons, defendants' first, second, fourth, fifth, and sixth assignments of error are overruled, the third assignment of error is sustained to the extent indicated, allowing us to address the fourth, fifth, and sixth assignments of error *16 which are either overruled or moot. The judgments of the Franklin County Court of Common Pleas are affirmed.
Judgments affirmed.
KLATT and CONNOR, JJ., concur. *1