Wiltshire Capital Partners v. Reflections II, Inc. et al.
No. 19AP-415 (C.P.C. No. 18CV-6108)
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
June 25, 2020
2020-Ohio-3468
(REGULAR CALENDAR)
DECISION
Rendered on June 25, 2020
On brief: James E.L. Watson, for appellant. Argued: James E.L. Watson.
On brief: Haynes Kessler Myers & Pоstalakis, Inc., and Christopher T. Cline, for appellee Ohio Wholesale Auto Sales, LLC. Argued: Christopher T. Cline.
APPEAL from the Franklin County Court of Common Pleas
{1} Plaintiff-appellant, Wiltshire Capital Partners, appeals a judgment of the Franklin County Court of Common Pleas that granted summary judgment to defendant-appellee, Ohio Wholesale Auto Sales, LLC, and denied summary judgment to Wiltshire. For the following reasons, we affirm in part and reverse in part, and we remand this matter to thе trial court.
{2} On July 18, 2018, Wiltshire filed an action seeking to foreclose on a 0.450-acre parcel of property located on East Hudson Street, which Ohio Wholesale owned. In the complaint, Wiltshire claimed to be the holder of a note that was secured by a mortgage
{3} In the complaint, Wiltshire further alleged that it was the holder of a mortgage on the East Hudson Street property. Wiltshire appended to its complaint copies of the original mortgage and two subsequent assignments. According to those documents, in July 1995, Reflections II, Inc., grаnted the original mortgage on the East Hudson Street property to Golden & Meizlish Co., LPA. Three years later, in July 1998, Golden & Meizlish assigned the mortgage to Florence C. Odita. In November 2015, Odita assigned the mortgage to Wiltshire. Both the original mortgage and the assignments were recorded with the Franklin County recorder.
{4} Four months after filing its complaint, Wiltshire moved for default judgment. In its motion, Wiltshire asserted that it had perfected service on all defendants but nonе had filed answers. The trial court granted Wiltshire‘s motion. However, the same day the trial court granted Wiltshire default judgment, Ohio Wholesale filed a motion to move or plead. The trial court granted Ohio Wholesale‘s motion, thus allowing the matter to proceed against Ohio Wholesale only.
{5} After answering, Ohio Wholesale moved for summary judgment. Ohio Wholesale sought summary judgment on the basis that Wiltshire‘s mortgagе did not encumber the East Hudson Street property because a 1998 auditor‘s sale of the property vacated all liens and encumbrances, including the mortgage at issue. In its motion, Ohio Wholesale explained the circumstances that led to the auditor‘s sale. Reflections II, the entity that granted the mortgage in 1995, failed to pay its property taxes on the East Hudson Street property, so the Franklin County prosecuting attorney instituted foreclosure proceedings by action in rem under
{6} According to Ohio Wholesale,
{7} Wiltshire opposed Ohio Wholesale‘s motion for summary judgment. Wiltshire maintained that the auditor‘s conveyance of the East Hudson Street property to Crockett in 1998 did not strip the mortgage from the property. Wiltshire attached to its memorandum contra advertisements of the forfeited land sale that included the East Hudson Street property. The advertisements stated that the sale was pursuаnt to an “IN REM ACTION; ORC 5721.18C” and warned that:
THE FOLLOWING FORFEITED TRACTS, LOTS AND PARTS OF LOTS THAT ARE OFFERED FOR SALE PURSUANT TO THIS NOTICE WILL BE SOLD SUBJECT TO ALL LIENS AND ENCUMBRANCES WITH RESPECT TO THOSE TRACTS, LOTS, AND PARTS OF LOTS, OTHER THAN THE LIENS FOR LAND TAXES, ASSESSMENTS, CHARGES, PENALTIES, AND INTEREST FOR WHICH THE LIEN WAS FORECLOSED AND IN SATISFACTION OF WHICH THE PROPERTY IS SOLD.
(Pl.‘s Ex. D & E, Pl.‘s Memo Contra to Def.‘s Mot. for Summ. Jgmt.)
{8} In addition to opposing Ohio Wholesale‘s motion for summary judgment, Wiltshire filed its own motion for summary judgment. When moving for summary judgment, Wiltshire introduced the note into the record for the first time by attaching a copy of it to the motion. In the note, Reflections I, Inc., Reflections II, Drycreek Mortgage, Inc., and Tonya A. Miller promised to pay Golden & Meizlish $7,009.16 upon demand. In its motion, Wiltshire claimed to be the holder of the note and mortgage. Wiltshire also contended that Reflections I and Reflections II had defaulted on the note, and they owed
{9} In response to Wiltshire‘s motion, Ohio Wholesale pointed out that Wiltshire had not established itself as the holder of the note. The note was payable to Golden & Meizlish—not Wiltshire—and contained no indorsements. Because the evidence attached to the summary judgment motion did not prove Wiltshire‘s status as holder of the note, Ohio Wholesale argued that the trial court could not grant Wiltshire summary judgment.
{10} In a judgment dated May 29, 2019, the trial court granted Ohio Wholesale summary judgment and denied Wiltshire summary judgment. The trial court concluded that the 1998 auditor‘s sale extinguished the mortgage Wiltshire claimed on the East Hudson Street property.
{11} Wiltshire now appeals the May 29, 2019 judgment, and it assigns the following errors:
- I. During the summary judgment determination, the trial court abused its discretion to plaintiff-appellant‘s substantial prejudice by relying upon evidentiary material not listed in Rule 56(C) to reach the conclusion that no genuine issue of material fact existed in the case before the court and, thus, erred as а matter of law in granting summary judgment in favor of the defendant-appellee and against the plaintiff-appellant.
- II. The trial court erred in determining that the defendant-appellee was entitled to judgment as a matter of law based upon a statute that is inapplicable and presumed prospective but given retroactive effect.
- III. The trial court erred in denying the appellаnt‘s motion for summary judgment.
{12} A trial court must grant summary judgment under
{13} The party moving for summary judgment bears the initial burden of informing the trial court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). The moving party does not discharge this initial burden under
{14} We will begin our analysis with Wiltshire‘s second assignment of error. By that assignment of error, Wiltshire argues that the trial court erred in its interpretation of
{15} Here, whether Wiltshire‘s mortgage continues to encumber the East Hudson Street property turns upon events that occurred in 1997 and 1998. During that period, the Franklin County prosecutor pursued an in rem foreclosure action against the East Hudson Street property pursuant to
{16} The events of 1997 and 1998 occurred in accordance with statute. A county prosecuting attorney may commence an in rem foreclosure action pursuant to
{17} This case turns on
(B) Except as otherwise provided in division (C) of this section, when a tract of land has been duly forfeited to the state and sold under this chapter, the conveyance of the real estate by the auditor shall extinguish all previous title and invest the purchaser with а new and perfect title that is free from all liens and encumbrances, except taxes and installments of special assessments and reassessments not due at the time of the sale, federal tax liens other than federal tax liens that are discharged in accordance with [the federal Internal Revenue Code], and any easements and covenants running with the land that were created prior to the time the taxes or assessments, for the nonpayment of which the land was forfeited, became due and payable and except that, if there is a federal tax lien on the tract of land at the time of the sale, the United States is entitled to redeem the tract of land at any time within one hundred twenty days after the sale pursuant to [the federal Internal Revenue Code].
(C) When а tract of forfeited land that was foreclosed upon as a result of proceedings for foreclosure instituted under division (C) of section 5721.18 of the Revised Code is sold under this chapter, the conveyance of the real estate by the auditor shall extinguish all previous title and invest the purchaser with new title free from the lien for land taxes, assessments, charges, penalties, and interest for whiсh the lien was foreclosed, the property was forfeited to the state, and in satisfaction of which the property was sold under this chapter, but subject to all other liens and encumbrances with respect to the tract.1
{18} In the case at bar, the trial court determined that
{19} Second, the trial court erred by excising from
{20} Reading
{21} Under
{22} In addition to arguing that the trial court misinterpreted
{23} On appeal, Ohio Wholesale raises multiple alternative arguments to support the award of summary judgment in its favor. It contends: (1) Wiltshire has not shown itself to be the holder of the note, (2) either the statute of limitations in
{24} When moving for summary judgment, a party must specifically delineate the basis on which it seeks summary judgment in order to allow the opposing party a meaningful opportunity to respond. Mitseff v. Wheeler, 38 Ohio St.3d 112 (1988), syllabus. Consequently, a party cannot on appeal expand the basis for seeking summary judgment. Id. at 116. Although appellate courts review summary judgment decisions under a de novo standard, a de novo review does not afford appellants a second chance to raise arguments
{25} Ohio Wholesale moved for summary judgment solely on the basis that the 1998 auditor‘s sale extinguished Wiltshire‘s mortgage. Ohio Wholesale cannot now put forth different grоunds to support an award of summary judgment in its favor. Thus, we will not consider the grounds for summary judgment that Ohio Wholesale waited until the appeal to raise.
{26} Ohio Wholesale has also urged this court to immediately dismiss this entire action for lack of jurisdiction because Wiltshire‘s failure to establish itself as a holder of the note means that it did not have standing to commence a foreclosure action. The term “jurisdiction” encompasses several distinct concepts, including subject-matter jurisdiction and jurisdiction over a particular case. Bank of Am., NA v. Kuchta, 141 Ohio St.3d 75, 2014-Ohio-4275, ¶ 18. A party may initiate a challenge based on the lack of subject-matter jurisdiction at any time, including on appeal, because it goes to a court‘s ability to hear a case. Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, ¶ 11. Standing, however, does not affect subject-matter jurisdiction, but rathеr, jurisdiction over a particular case. Kuchta at ¶ 22. Ohio Wholesale, therefore, must raise lack of standing, like the other arguments identified above, before the trial court first.
{27} In sum, we conclude that the auditor‘s 1998 conveyance of the East Hudson Street property did not extinguish the mortgage at issue in this case. The trial court, therefore, erred in granting Ohio Wholesale summary judgment. Accordingly, we sustain the second assignment of error to the extent that it contends the trial court erred in applying
{28} By its first assignment of error, Wiltshire asserts an alternative basis for reversing the trial court‘s grant of summary judgment to Ohio Wholesale. As we have already found reversal appropriate for the reasons stated in our analysis of the second assignment of error, we conclude that the first assignment of error is moot.
{29} By its third assignment of error, Wiltshire argues that the trial court erred in denying it summary judgment. We disagree.
{30} To obtain summary judgment in a foreclosure action, a plaintiff must demonstrate: (1) it is the holder of the note, or it otherwise qualifies as a person entitled to
{31} In the case at bar, Wiltshire stumbles on the first element: proving that it is the holder of the note. The statutory definition of “holder” varies depending on whether the negotiable instrument at issue is made payable to a particular person or not. Nationstar Mtge. LLC v. Payne, 10th Dist. No. 16AP-185, 2017-Ohio-513, ¶ 27. If the negotiable instrument is payable to bearer, the holder is the person in possession of that instrument.
{32} A person can become a holder of a negotiable instrument when (1) the instrument is issued to that person or (2) a holder transfers the instrument to that person through negotiation. Uniform Commercial Code Official Comment (1990), Sectiоn 3-201, Comment 1. With one exception, “if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder.”
{33} To identify the hоlder of a particular note, courts examine the face of the note, as well as any indorsements. Bank of Am., NA v. Pasqualone, 10th Dist. No. 13AP-87, 2013-Ohio-5795, ¶ 32. Here, the note is payable Golden & Meizlish, and it contains no indorsements. Because the note is payable to an identified person who is not Wiltshire, Wiltshire has not established itself as the holder of the note. Although Wiltshire claims, nevertheless, to be the holder of the note, Wiltshire provides no explanation or evidence tо
{34} For the foregoing reasons, we sustain Wiltshire‘s second assignment of error (to the extent set forth above), which moots the first assignment of error, and we overrule Wiltshire‘s third assignment of error. We affirm in part and reverse in part the judgment of the Franklin County Court of Common Pleas, and we remand this matter to that court for further proceedings consistent with law and this decision.
Judgment affirmed in part and reversed in part; cause remanded.
BEATTY BLUNT and NELSON, JJ., concur.