Federal Home Loan Mortgage Corp. v. Schwartzwald , 134 Ohio St. 3d 13 ( 2012 )

[Cite as Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017.]
FEDERAL HOME LOAN MORTGAGE CORPORATION, APPELLEE, v.
SCHWARTZWALD ET AL., APPELLANTS.
[Cite as Fed. Home Loan Mtge. Corp. v. Schwartzwald,
134 Ohio St.3d 13, 2012-Ohio-5017.]
Foreclosure—Jurisdictional aspects of standing—Civ.R. 17(A)—Jurisdiction
determined as of time of filing suit.
(Nos. 2011-1201 and 2011-1362—Submitted April 4, 2012—Decided
October 31, 2012.)
APPEAL from and CERTIFIED by the Court of Appeals for Greene County,
No. 2010 CA 41, 194 Ohio App.3d 644, 2011-Ohio-2681.
__________________
O’DONNELL, J.
{¶ 1} Duane and Julie Schwartzwald appeal from a judgment of the
Second District Court of Appeals affirming a decree of foreclosure entered in
favor of the Federal Home Loan Mortgage Corporation. In addition, the appellate
court certified that its decision in this case conflicts with decisions of the First and
Eighth Districts on the following issue: “In a mortgage foreclosure action, the
lack of standing or a real party in interest defect can be cured by the assignment of
the mortgage prior to judgment.”
{¶ 2} Federal Home Loan commenced this foreclosure action before it
obtained an assignment of the promissory note and mortgage securing the
Schwartzwalds’ loan. The Schwartzwalds maintained that Federal Home Loan
lacked standing to sue. The trial court granted summary judgment in favor of
Federal Home Loan and entered a decree of foreclosure. The appellate court
affirmed, holding that Federal Home Loan had remedied its lack of standing when
it obtained an assignment from the real party in interest.
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{¶ 3} However, standing is required to invoke the jurisdiction of the
common pleas court, and therefore it is determined as of the filing of the
complaint. Thus, receiving an assignment of a promissory note and mortgage
from the real party in interest subsequent to the filing of an action but prior to the
entry of judgment does not cure a lack of standing to file a foreclosure action.
{¶ 4} Accordingly, the judgment of the court of appeals is reversed, and
the cause is dismissed.
Facts and Procedural History
{¶ 5} In November 2006, Duane and Julie Schwartzwald purchased a
home in Xenia, Ohio, and received a mortgage loan from Legacy Mortgage in the
amount of $251,250. They executed a promissory note and a mortgage granting
Legacy Mortgage a security interest in the property. Legacy Mortgage then
endorsed the promissory note as payable to Wells Fargo Bank, N.A., and assigned
it the mortgage.
{¶ 6} In September 2008, Duane Schwartzwald lost his job at Barco,
Inc., and the Schwartzwalds moved to Indiana so he could accept a new position.
They continued making mortgage payments as they tried to sell the house in
Xenia, but they went into default on January 1, 2009. In March 2009, Wells
Fargo agreed to list the property for a short sale, and on April 8, 2009, the
Schwartzwalds entered into a contract to sell it for $259,900, with closing set for
June 8, 2009.
{¶ 7} However, on April 15, 2009, Federal Home Loan Mortgage
Corporation commenced this foreclosure action, alleging that the Schwartzwalds
had defaulted on their loan and owed $245,085.18 plus interest, costs, and
advances. It attached a copy of the mortgage identifying the Schwartzwalds as
borrowers and Legacy Mortgage as lender, but did not attach a copy of the note,
claiming that “a copy of [the note] is currently unavailable.”
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{¶ 8} Julie Schwartzwald then contacted Wells Fargo about the
foreclosure complaint. She testified, “I was told that it was ‘standard procedure’
and ‘don’t worry about it’ because we were doing a short sale.” The
Schwartzwalds did not answer the complaint.
{¶ 9} On April 24, 2009, Federal Home Loan filed with the court a copy
of the note signed by the Schwartzwalds in favor of Legacy Mortgage. The final
page carries a blank endorsement by Wells Fargo placed above the endorsement
by Legacy Mortgage payable to Wells Fargo.
{¶ 10} On May 15, 2009, Wells Fargo assigned the note and mortgage to
Federal Home Loan, and Federal Home Loan filed with the court a copy of the
assignment on June 17, 2009. It then moved for a default judgment and a
summary judgment, but the trial court discovered that Federal Home Loan had
failed to establish a chain of title because no assignment of the mortgage from
Legacy Mortgage to Wells Fargo appeared in the record.
{¶ 11} During this time, even though it had assigned its interest in the
note and mortgage to Federal Home Loan, Wells Fargo continued discussing a
short sale of the property with the Schwartzwalds, but delays in this process
eventually caused the Schwartzwalds’ buyer to rescind the offer. On December
14, 2009, the trial court granted the Schwartzwalds leave to file an answer. That
same day, Federal Home Loan filed with the court a copy of the assignment of the
mortgage from Legacy Mortgage to Wells Fargo dated November 27, 2006.
{¶ 12} Federal Home Loan again moved for summary judgment,
supporting the motion with the affidavit of Herman John Kennerty, vice president
of loan documentation for Wells Fargo as servicing agent for Federal Home Loan,
who averred that the Schwartzwalds were in default and who authenticated the
note and mortgage as well as the assignment of the note and mortgage from Wells
Fargo. Subsequently, Federal Home Loan filed copies of the notarized
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assignments from Legacy Mortgage to Wells Fargo and from Wells Fargo to
Federal Home Loan.
{¶ 13} The Schwartzwalds also moved for summary judgment, asserting
that Federal Home Loan lacked standing to foreclose on their property.
{¶ 14} The trial court entered summary judgment for Federal Home Loan,
finding that the Schwartzwalds had defaulted on the note, and it ordered the
equity of redemption foreclosed and the property sold. Federal Home Loan
purchased the property at a sheriff’s sale.
{¶ 15} On appeal, the Second District Court of Appeals affirmed and held
that Federal Home Loan had established its right to enforce the promissory note
as a nonholder in possession, because assignment of the mortgage effected a
transfer of the note it secured. The court further explained that standing is not a
jurisdictional prerequisite and that a lack of standing may be cured by substituting
the real party in interest for an original party pursuant to Civ.R. 17(A). Thus, the
court concluded that although Federal Home Loan lacked standing at the time it
commenced the foreclosure action, it cured that defect by the assignment of the
mortgage and transfer of the note prior to entry of judgment.
{¶ 16} The court of appeals certified that its decision conflicted with
Wells Fargo Bank, N.A. v. Byrd, 178 Ohio App.3d 285, 2008-Ohio-4603, 897
N.E.2d 722, ¶ 15-16 (1st Dist.); Bank of New York v. Gindele, 1st Dist. No. C-
090251, 2010-Ohio-542, ¶ 3-4; and Wells Fargo Bank, N.A. v. Jordan, 8th Dist.
No. 91675, 2009-Ohio-1092, ¶ 21, cases that held that a lack of standing cannot
be cured by substituting the real party in interest for an original party pursuant to
Civ.R. 17(A). We accepted the conflict and the Schwartzwalds’ discretionary
appeal on the same issue.
Arguments on Appeal
{¶ 17} The Schwartzwalds explain that the essential aspect of standing is
injury to a legally protected right and claim that Federal Home Loan had not been
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injured by their default at the time it commenced this foreclosure action, because
it had not obtained the note and mortgage until after it filed the complaint.
Relying on federal case law, they maintain that standing is determined as of the
time the action is brought, so that subsequent events do not cure a lack of
standing. They further urge that although the requirement of a real party in
interest can be waived, that requirement cannot be equated with the requirement
of standing.
{¶ 18} Federal Home Loan asserts that pursuant to R.C. 1303.31, it is a
“person entitled to enforce the note” because it is “[a] nonholder in possession of
the instrument who has the rights of a holder” by virtue of the negotiation of the
note from Legacy to Wells Fargo and the assignment from Wells Fargo. Further,
it maintains that R.C. 1303.31 defines only which party is entitled to enforce a
note and that the failure to be a real party in interest at the commencement of suit
can be cured pursuant to Civ.R. 17(A) by the assignment of the mortgage and
note. It also contends that the jurisdictional requirement of justiciability is
satisfied if the allegations of the complaint establish that the plaintiff has standing
to present a justiciable controversy and that even if it is determined that those
allegations were in fact false, the matter remains justiciable so long as the plaintiff
subsequently obtains the right to foreclose prior to judgment. On this basis, it
argues that because “the Ohio Constitution bestows general (and not limited)
jurisdiction on common pleas courts, common pleas courts have ‘jurisdiction’ to
hear disputes, even if the named plaintiff was not the correct person to invoke it.”
Thus, it concedes that the record in this case does not establish that it was a
person entitled to enforce the note as of the date the complaint was filed, but it
maintains that it “proved that it was such a person prior to judgment.”
{¶ 19} Accordingly, the question presented is whether a lack of standing
at the commencement of a foreclosure action filed in a common pleas court may
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be cured by obtaining an assignment of a note and mortgage sufficient to establish
standing prior to the entry of judgment.
Law and Analysis
Standing to Sue
{¶ 20} The Ohio Constitution provides in Article IV, Section 4(B): “The
courts of common pleas and divisions thereof shall have such original jurisdiction
over all justiciable matters and such powers of review of proceedings of
administrative officers and agencies as may be provided by law.” (Emphasis
added.)
{¶ 21} In Cleveland v. Shaker Hts., 30 Ohio St.3d 49, 51, 507 N.E.2d 323(1987), we stated:
“ ‘Whether a party has a sufficient stake in an otherwise
justiciable controversy to obtain judicial resolution of that
controversy is what has traditionally been referred to as the
question of standing to sue. 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.” ’ ”
Id., quoting Middletown v. Ferguson, 25 Ohio St.3d 71, 75, 495 N.E.2d 380(1986), quoting Sierra Club v. Morton, 405 U.S. 727, 731-732, 92 S.Ct. 1361, 31
L.Ed.2d 636 (1972), quoting Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7
L.Ed.2d 663 (1962). Similarly, the United States Supreme Court observed in
Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 102, 118 S.Ct. 1003,
140 L.Ed.2d 210 (1998), that “[s]tanding to sue is part of the common
understanding of what it takes to make a justiciable case.”
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{¶ 22} We recognized that standing is a “jurisdictional requirement” in
State ex rel. Dallman v. Franklin Cty. Court of Common Pleas, 35 Ohio St.2d
176, 179, 298 N.E.2d 515 (1973), and we stated: “It is an elementary concept of
law that a party lacks standing to invoke the jurisdiction of the court unless he has,
in an individual or representative capacity, some real interest in the subject matter
of the action.” (Emphasis added.) See also New Boston Coke Corp. v. Tyler, 32
Ohio St.3d 216, 218, 513 N.E.2d 302 (1987) (“the issue of standing, inasmuch as
it is jurisdictional in nature, may be raised at any time during the pendency of the
proceedings”); Steinglass & Scarselli, The Ohio State Constitution: A Reference
Guide 180 (2004) (noting that the jurisdiction of the common pleas court is
limited to justiciable matters).
{¶ 23} And recently, in Kincaid v. Erie Ins. Co., 128 Ohio St.3d 322,
2010-Ohio-6036, 944 N.E.2d 207, we affirmed the dismissal of a complaint for
lack of standing when it had been filed before the claimant had suffered any
injury. There, Kincaid asserted claims that his insurer had breached the insurance
contract by failing to pay expenses covered by the policy; however, he had never
presented a claim for reimbursement to the insurer. We concluded that Kincaid
lacked standing to assert the cause of action, explaining, “Until Erie refuses to pay
a claim for a loss, Kincaid has suffered no actual damages for breach of contract,
the parties do not have adverse legal interests, and there is no justiciable
controversy.” Id. at ¶ 13.
{¶ 24} Because standing to sue is required to invoke the jurisdiction of the
common pleas court, “standing is to be determined as of the commencement of
suit.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 570-571, 112 S.Ct. 2130, 119
L.Ed.2d 351 (1992), fn. 5; see also Friends of the Earth, Inc. v. Laidlaw
Environmental Servs. (TOC), 528 U.S. 167, 180, 120 S.Ct. 693, 145 L.Ed.2d 610(2000); Nova Health Sys. v. Gandy, 416 F.3d 1149, 1154-1155 (10th Cir.2005);
Focus on the Family v. Pinellas Suncoast Transit Auth., 344 F.3d 1263, 1275
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(11th Cir.2003); Perry v. Arlington Hts., 186 F.3d 826, 830 (7th Cir.1999); Carr
v. Alta Verde Industries, Inc., 931 F.2d 1055, 1061 (5th Cir.1991).
{¶ 25} Further, invoking the jurisdiction of the court “depends on the state
of things at the time of the action brought,” Mullan v. Torrance, 22 U.S. 537, 539,
9 Wheat. 537, 6 L.Ed. 154 (1824), and the Supreme Court has observed that “[t]he
state of things and the originally alleged state of things are not synonymous;
demonstration that the original allegations were false will defeat jurisdiction.”
Rockwell Internatl. Corp. v. United States, 549 U.S. 457, 473, 127 S.Ct. 1397,
167 L.Ed.2d 190 (2007).
{¶ 26} Thus, “[p]ost-filing events that supply standing that did not exist
on filing may be disregarded, denying standing despite a showing of sufficient
present injury caused by the challenged acts and capable of judicial redress.” 13A
Wright, Miller & Cooper, Federal Practice and Procedure 9, Section 3531
(2008); see Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 575, 124
S.Ct. 1920, 158 L.Ed.2d 866 (2004), quoting Caterpillar, Inc. v. Lewis, 519 U.S.
61, 75, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996) (rejecting argument that “ ‘finality,
efficiency, and judicial economy’ ” can justify suspension of the time-of-filing
rule); Utah Assn. of Counties v. Bush, 455 F.3d 1094, 1101, and fn. 6 (10th
Cir.2006) (a plaintiff cannot rely on injuries occurring after the filing of the
complaint to establish standing).
{¶ 27} This principle accords with decisions from other states holding that
standing is determined as of the filing of the complaint. See, e.g., Deutsche Bank
Natl. Trust v. Brumbaugh, 2012 OK 3, 270 P.3d 151, ¶ 11 (“If Deutsche Bank
became a person entitled to enforce the note as either a holder or nonholder in
possession who has the rights of a holder after the foreclosure action was filed,
then the case may be dismissed without prejudice * * *” [emphasis added]); U.S.
Bank Natl. Assn. v. Kimball, 190 Vt. 210, 2011 VT 81, 27 A.3d 1087, ¶ 14 (“U.S.
Bank was required to show that at the time the complaint was filed it possessed
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the original note either made payable to bearer with a blank endorsement or made
payable to order with an endorsement specifically to U.S. Bank” [emphasis
added]); Mtge. Electronic Registration Sys., Inc. v. Saunders, 2010 ME 79, 2 A.3d
289, ¶ 15 (“Without possession of or any interest in the note, MERS lacked
standing to institute foreclosure proceedings and could not invoke the jurisdiction
of our trial courts” [emphasis added]); RMS Residential Properties, L.L.C. v.
Miller, 303 Conn. 224, 229, 232, 32 A.3d 307 (2011), quoting Hiland v. Ives, 28
Conn.Supp. 243, 245, 257 A.2d 822 (1966) (explaining that “ ‘[s]tanding is the
legal right to set judicial machinery in motion’ ” and holding that the plaintiff had
standing because it proved ownership of the note and mortgage at the time it
commenced foreclosure action); McLean v. JP Morgan Chase Bank Natl. Assn.,
79 So.3d 170, 173 (Fla.App.2012) (“the plaintiff must prove that it had standing
to foreclose when the complaint was filed”); see also Burley v. Douglas, 26 So.3d
1013, 1019 (Miss.2009), quoting Lujan v. Defenders of Wildlife, 504 U.S. 555,
571, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), fn. 5 (“ ‘standing is to be
determined as of the commencement of suit’ ”); In re 2007 Administration of
Appropriations of Waters of the Niobrara, 278 Neb. 137, 145, 768 N.W.2d 420(2009) (“only a party that has standing may invoke the jurisdiction of a court or
tribunal. And the junior appropriators did not lose standing if they possessed it
under the facts existing when they commenced the litigation” [footnote omitted]).
{¶ 28} Here, Federal Home Loan concedes that there is no evidence that it
had suffered any injury at the time it commenced this foreclosure action. Thus,
because it failed to establish an interest in the note or mortgage at the time it filed
suit, it had no standing to invoke the jurisdiction of the common pleas court.
The Real-Party-in-Interest Rule
{¶ 29} The court of appeals and Federal Home Loan relied on the
plurality opinion in State ex rel. Jones v. Suster, 84 Ohio St.3d 70, 77, 701 N.E.2d
1002 (1998), which suggested that “[t]he lack of standing may be cured by
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substituting the proper party so that a court otherwise having subject matter
jurisdiction may proceed to adjudicate the matter. Civ.R. 17.” However, four
justices declined to join that portion of the opinion, and therefore it is not a
holding of this court. See Ohio Constitution, Article IV, Section 2(A) (“A
majority of the supreme court shall be necessary to constitute a quorum or to
render a judgment”).
{¶ 30} At common law, all actions had to be brought in the name of the
person holding legal title to the right asserted, and individuals possessing only
equitable or beneficial interests could not sue in their own right. See generally
Clark & Hutchins, The Real Party in Interest, 34 Yale L.J. 259 (1925); 6A
Wright, Miller & Kane, Federal Practice and Procedure, Section 1541 (2010).
However, the practice in equity relaxed this requirement, and states later
abrogated the common-law rules and adopted “rules that permitted any ‘real party
in interest’ to bring suit.” Sprint Communications Co., L.P. v. APCC Servs., Inc.,
554 U.S. 269, 279, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008).
{¶ 31} In Ohio, Civ.R. 17(A) governs the procedural requirement that a
complaint be brought in the name of the real party in interest and provides:
Every action shall be prosecuted in the name of the real
party in interest. An executor, administrator, guardian, bailee,
trustee of an express trust, a party with whom or in whose name a
contract has been made for the benefit of another, or a party
authorized by statute may sue in his name as such representative
without joining with him the party for whose benefit the action is
brought. When a statute of this state so provides, an action for the
use or benefit of another shall be brought in the name of this state.
No action shall be dismissed on the ground that it is not prosecuted
in the name of the real party in interest until a reasonable time has
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been allowed after objection for ratification of commencement of
the action by, or joinder or substitution of, the real party in interest.
Such ratification, joinder, or substitution shall have the same effect
as if the action had been commenced in the name of the real party
in interest.
{¶ 32} Considering Civ.R. 17(A) in Shealy v. Campbell, 20 Ohio St.3d 23,
24-25, 485 N.E.2d 701 (1985), we observed:
The purpose behind the real party in interest rule is “ ‘* * *
to enable the defendant to avail himself of evidence and defenses
that the defendant has against the real party in interest, and to
assure him finality of the judgment, and that he will be protected
against another suit brought by the real party at interest on the
same matter.’ Celanese Corp. of America v. John Clark Industries
(5 Cir.1954), 214 F.2d 551, 556.” [In re Highland Holiday
Subdivision (1971), 27 Ohio App.2d 237] 240 [273 N.E.2d 903].
{¶ 33} As the Supreme Court explained in Lincoln Property Co. v. Roche,
546 U.S. 81, 90, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005), the real-party-in-interest
rule concerns only proper party joinder. Civ.R. 17(A) does not address standing;
rather, the point of the rule is that “suits by representative plaintiffs on behalf of
the real parties in interest are the exception rather than the rule and should only be
allowed when the real parties in interest are identifiable and the res judicata scope
of the judgment can be effectively determined.” Consumer Fedn. of Am. v.
Upjohn Co., 346 A.2d 725, 729 (D.C.1975) (construing analogous District of
Columbia rule).
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{¶ 34} Thus, the Third and the Ninth Circuits have rejected the notion that
Fed.R.Civ.P. 17(a), on which Civ.R. 17(A) is based, allows a party with no
personal stake in a controversy to file a claim on behalf of a third party, obtain the
cause of action by assignment, and then have the assignment relate back to
commencement of the action, stating:
“Rule 17(a) does not apply to a situation where a party with
no cause of action files a lawsuit to toll the statute of limitations
and later obtains a cause of action through assignment. Rule 17(a)
is the codification of the salutary principle that an action should
not be forfeited because of an honest mistake; it is not a provision
to be distorted by parties to circumvent the limitations period.”
Gardner v. State Farm Fire & Cas. Co., 544 F.3d 553, 563 (3d Cir.2008), quoting
United States ex rel. Wulff v. CMA, Inc., 890 F.2d 1070, 1075 (9th Cir.1989).
{¶ 35} The Sixth Circuit Court of Appeals’ decision in Zurich Ins. Co. v.
Logitrans, Inc., 297 F.3d 528 (6th Cir.2002), illustrates this point. In that case, a
fire at a warehouse destroyed property insured by American Guarantee, which
paid out a claim for damages. However, another insurance company, Zurich
Switzerland, filed a complaint claiming to be the insured’s subrogee,
notwithstanding the fact that Zurich Switzerland had neither issued an insurance
policy nor paid out any money to the insured. The defendants moved to dismiss
for lack of standing, and Zurich Switzerland sought to substitute American
Guarantee as the real party in interest pursuant to Fed.R.Civ.P. 17(a). The district
court dismissed the action.
{¶ 36} The Sixth Circuit Court of Appeals acknowledged that the statute
of limitations would bar American Guarantee’s claim unless Fed.R.Civ.P. 17(a)
allowed it to be substituted for Zurich Switzerland. However, the court
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distinguished between the requirement of standing and the objection that the
plaintiff is not the real party in interest, and it held that because “Zurich American
admittedly has not suffered injury in fact by the defendants, it had no standing to
bring this action and no standing to make a motion to substitute the real party in
interest.” Id.{¶ 37} Other courts have also determined that a plaintiff cannot rely on
procedural rules similar to Civ.R. 17(A) to cure a lack of standing at the
commencement of litigation. Davis v. Yageo Corp., 481 F.3d 661, 678 (9th
Cir.2007) (“whether or not Dux was the real-party-in-interest, it does not have
standing, and it cannot cure its standing problem through an invocation of
Fed.R.Civ.P. 17(a)”); Clark v. Trailiner Corp., 242 F.3d 388 (10th Cir.2000)
(table), opinion reported at 2000 WL 1694299 (noting that the plaintiff cannot
“retroactively become the real-party-in-interest” in order to cure a lack of
standing at the filing of the complaint [emphasis sic]); accord State v. Property at
2018 Rainbow Drive, 740 So.2d 1025, 1027-1028 (Ala.1999) (rejecting the
argument that a lack of standing can be cured after the filing of the complaint);
Consumer Fedn. of Am. v. Upjohn Co., 346 A.2d 725, 729 (D.C.App.1975)
(explaining that dismissal for lack of standing is consistent with
D.C.Super.Ct.Civ.R. 17(a)); see also McLean v. JP Morgan Chase Bank Natl.
Assn., 79 So.3d 170, 173 (Fla.App.2012) (“a party is not permitted to establish
the right to maintain an action retroactively by acquiring standing to file a lawsuit
after the fact”).
{¶ 38} We agree with the reasoning and analysis presented in these cases.
Standing is required to invoke the jurisdiction of the common pleas court.
Pursuant to Civ.R. 82, the Rules of Civil Procedure do not extend the jurisdiction
of the courts of this state, and a common pleas court cannot substitute a real party
in interest for another party if no party with standing has invoked its jurisdiction
in the first instance.
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{¶ 39} Accordingly, a litigant cannot pursuant to Civ.R. 17(A) cure the
lack of standing after commencement of the action by obtaining an interest in the
subject of the litigation and substituting itself as the real party in interest.
Effect of Lack of Standing on Foreclosure Actions
{¶ 40} The lack of standing at the commencement of a foreclosure action
requires dismissal of the complaint; however, that dismissal is not an adjudication
on the merits and is therefore without prejudice. See State ex rel. Coles v.
Granville, 116 Ohio St.3d 231, 2007-Ohio-6057, 877 N.E.2d 968, ¶ 51. Because
there has been no adjudication on the underlying indebtedness, our dismissal has
no effect on the underlying duties, rights, or obligations of the parties.
Conclusion
{¶ 41} It is fundamental that a party commencing litigation must have
standing to sue in order to present a justiciable controversy and invoke the
jurisdiction of the common pleas court. Civ.R. 17(A) does not change this
principle, and a lack of standing at the outset of litigation cannot be cured by
receipt of an assignment of the claim or by substitution of the real party in
interest.
{¶ 42} Here, it is undisputed that Federal Home Loan did not have
standing at the time it commenced this foreclosure action, and therefore it failed
to invoke the jurisdiction of the court of common pleas. Accordingly, the
judgment of the court of appeals is reversed, and the cause is dismissed.
Judgment reversed
and cause dismissed.
O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, LANZINGER, CUPP,
and MCGEE BROWN, JJ., concur.
__________________
Thompson Hine, L.L.P., Scott A. King, and Terry W. Posey Jr., for
appellee.
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Andrew M. Engel, for appellants.
Bruce M. Broyles, urging reversal for amici curiae Homeowners of the
State of Ohio and Ohiofraudclosure.blogspot.com.
Advocates for Basic Legal Equality, Inc., and Andrew D. Neuhauser;
Legal Aid Society of Cleveland and Julie K. Robie; Legal Aid Society of
Southwest Ohio, L.L.C., and Noel M. Morgan; Community Legal Aid Services,
Inc., Christina M. Janice, and Paul E. Zindle; and Ohio Poverty Law Center and
Linda Cook, urging reversal for amici curiae Advocates for Basic Legal Equality,
Inc., Legal Aid Society of Cleveland, Legal Aid Society of Southwest Ohio,
L.L.C., Community Legal Aid Services, Inc., Ohio Poverty Law Center, Legal
Aid Society of Columbus, Southeastern Ohio Legal Services, Legal Aid of
Western Ohio, and Pro Seniors, Inc.
______________________
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