Galt Alloys, Inc. v. KeyBank National Ass'n , 85 Ohio St. 3d 353 ( 1999 )

Moyer, C.J.

The court of appeals has framed the issue in conflict as being “[whether] actual notice of the date, time, and location of a sheriffs sale [must] be afforded to a defaulting defendant in a foreclosure action.” Similarly, KeyBank proffers as its proposition of law that “[a]ctual notice of the date, time, and location of a sheriffs sale must be afforded to every party to a foreclosure sale and to each party having an interest therein, including a defaulting defendant in a foreclosure action.”

In determining the issue certified to us, we turn to the landmark case of Mullane v. Cent. Hanover Bank & Trust Co. (1950), 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865. Mullane recognized that “[a]n elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” (Emphasis added.) Mullane, 339 U.S. at 314, 70 S.Ct. at 657, 94 L.Ed. at 873.

In a subsequent United States Supreme Court case, Mennonite Bd. of Missions v. Adams (1983), 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180, the court addressed the question of the adequacy of notice to a mortgagee of the impending tax sale of property. The court there again held that notice of “a proceeding * * * adversely affect[ing] the * * * property interests of any party” is constitutionally required to be attempted. (Emphasis added.) Mennonite at 798-800, 103 S.Ct. at 2711-2712, 77 L.Ed.2d at 187-188.

Notably, in Mennonite, the mortgagee had not been joined as a party to the tax sale proceedings, and, in fact, knew nothing of the institution of those proceedings until over two years had passed from the date of the sale. When its opinion is carefully read, it is apparent that the court in Mennonite imposed a notice requirement as to the pendency of a potential tax sale and not necessarily to the date, time, and place of the tax sale itself.

We therefore hold, in accord with Mullane and Mennonite, that due process requires that persons whose property interests are jeopardized by the filing of legal proceedings be given notice reasonably calculated, under all the circumstances, to apprise those persons of the pendency of the action and afford them an opportunity to present their objections.

In Weigner v. City of New York (C.A.2, 1988), 852 F.2d 646, the owner of property against whom tax foreclosure proceedings had been instituted claimed that she had been denied due process because she had never been informed of entry of a judgment of foreclosure or of the imminent lapse of her remedies of mandatory and discretionary release.

The court concluded, in accord with Mullane, that due process required notice only of the pendency of the action so as to afford the property owner an opportunity to respond. The court held that the city was obligated to provide notice that was reasonably calculated to inform interested parties that the foreclosure action had been initiated and to apprise them of the availability of the redemption and release remedies. However, “[o]nce the City sent this notice, it was not required to send additional notices as each step in the foreclosure proceeding was completed or when each of the available remedies was about to lapse.” Id. at 652.

Similarly, in United States v. Williams (N.D.Ohio 1998), 82 A.F.T.R.2d (RIA) 6970, the federal district court refused to set aside a marshal sale of real property that had been ordered pursuant to foreclosure of federal tax liens. The defendants, the former owners, claimed that they had been denied due process because they had not been provided notice of the date and time of the sale of the property. They had, however, received personal notice of the filing of a motion for summary judgment requesting an order of foreclosure, as well as personal notice of the government’s motion for order of sale. The court noted that the defendants clearly had had an opportunity to oppose these motions. In addition, the defendants had received a copy of the court’s order of sale, containing notice of the fact that the property would be advertised for sale for four weeks in a local newspaper. The defendants had thus been afforded due process.

In the case at bar, KeyBank had ample opportunity to participate and be heard in order to protect its interests, as had the parties in Weigner and Williams. Upon being named a defendant and properly served with process, KeyBank failed to answer the complaint in a timely manner, or otherwise appear. Despite the receipt of notices, by direct mail, of the progress of the foreclosure action, KeyBank took no action to protect its own interests until months after title to the property had vested in a new owner, who acquired title by virtue of the sheriffs sale.

In ordering that the sheriffs sale in the case at bar be vacated, the court of appeals relied on Cent. Trust Co., N.A. v. Jensen (1993), 67 Ohio St.3d 140, 616 N.E.2d 873. We follow Jensen and hold that due process requires that notice of foreclosure proceedings be given to all persons whose interests are jeopardized by those proceedings, and notice by publication only is insufficient to satisfy due process when the address of that party or interested person is known or easily ascertainable.

The case before us is, however, distinguishable from Jensen. In that case, Jerry Maxwell, a successful bidder at a sheriffs sale, placed ten percent of the purchase price, or $19,200, with the sheriff as a deposit, but failed to produce the remaining purchase price within the allotted time. The property was ordered resold. The subsequent sheriffs sale was advertised by publication, but Maxwell did not personally receive notice of the date, time, or place of the sale. Unlike KeyBank, Maxwell had never been served with process or joined as a party to the underlying foreclosure action.

We held that Maxwell’s property interest was created by his deposit of a $19,200 down payment. We recognized that his property interest triggered a due process requirement that he be provided constitutionally adequate notice of the later sale because his property interest stood in jeopardy were the property to be sold at a lower price than Maxwell had originally agreed to pay. Under the facts of that case, we held that notice by publication was insufficient.

In this case, unlike in Jensen, KeyBank does not assert that, had it known of the date, time, and place of the sheriffs sale, it would have appeared or taken . steps to assure that the property was sold at a higher price than was in fact obtained. Indeed, KeyBank had little economic incentive to do so, as its mortgage lien had priority over the judicial liens held by appellants and other judgment creditors. KeyBank’s interest could have been fully satisfied from the proceeds of the sale had KeyBank merely appeared and claimed its interest in the time granted it by the court.

In the case at bar, it was not the sale, but the foreclosure action itself, and more specifically, the potential that the court might enter an order of distribution omitting KeyBank’s interest, that jeopardized KeyBank’s interest. KeyBank received full and repeated notice of the proceedings and had ample opportunity to appear and be heard in opposition to such an order, and yet it did not appear.

It is true that the trial court in this case set forth a deadline of fourteen days from the date of the sheriffs sale for KeyBank to appear and establish the amount of its interest. It is also true that, prior to the expiration of the fourteen-day period, the court ordered that KeyBank receive none of the proceeds of the sale. Despite these facts, we reject the argument that KeyBank was prejudiced by not having first received specific notice of the time, date, and place of the sheriffs sale.

The court acknowledged in its February 12 entry that KeyBank “has fourteen days within which to establish * * * the amount, if any” of its interest. (Emphasis added.) Moreover, the record demonstrates that the trial court subsequently entered two nunc pro tunc orders, on February 27 and March 7, adjusting the distribution amounts.

In view of the use of the present tense in the judgment decree and the court’s entry of two nunc pro tunc orders adjusting the distribution amounts, it is reasonable to assume that, had KeyBank appeared within the fourteen-day period and asserted its interest, the court would have considered that interest. Key-Bank has not asserted that it did not receive actual notice of the sale of the property prior to expiration of the fourteen-day period ordered by the court. KeyBank, however, remained silent. Under the facts of this case, we find no prejudice to KeyBank.

We therefore reject KeyBank’s proposition of law insofar as it implies that actual notice to every party of the date, time, and location of a sheriffs sale is, in every foreclosure case, a constitutionally required element of due process, and resolve the certified issue with a qualified negative. Actual notice of the date, time, and location of a sheriffs sale need not necessarily be given to every defaulting defendant in a foreclosure sale. Instead, we hold that where a party to a foreclosure proceeding has been served with process in compliance with the Civil Rules and has thereby been provided an opportunity to answer and appear to protect his or her interests in connection with a foreclosure sale, but has neither answered nor appeared, due process does not require that the party be given additional specific notice of the date, time, and place of the sheriffs sale.

We find no deprivation of due process in this case. For the foregoing reasons, the judgment of the court of appeals is reversed, and the judgment of the trial court is reinstated.

Judgment reversed.

Douglas, J.D. Sweeney, Pfeifer, Cook and Lundberg Stratton, JJ., concur. F.E. Sweeney, J., dissents and would affirm the judgment of the court of appeals. James D. Sweeney, J., of the Eighth Appellate District, sitting for Resnick, J.