U.S. Bank Natl. Assn. v. Stallman , 2016 Ohio 22 ( 2016 )


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  • [Cite as U.S. Bank Natl. Assn. v. Stallman, 2016-Ohio-22.]
    Court of Appeals of Ohio
    EIGHTH APPELLATE DISTRICT
    COUNTY OF CUYAHOGA
    JOURNAL ENTRY AND OPINION
    No. 102732
    U.S. BANK NATIONAL ASSOCIATION
    PLAINTIFF-APPELLEE
    vs.
    JAMES J. STALLMAN, ET AL.
    DEFENDANTS-APPELLANTS
    JUDGMENT:
    AFFIRMED
    Civil Appeal from the
    Cuyahoga County Court of Common Pleas
    Case No. CV-13-812128
    BEFORE: Kilbane, P.J., McCormack, J., and E.T. Gallagher, J.
    RELEASED AND JOURNALIZED: January 7, 2016
    ATTORNEY FOR APPELLANT
    Sam Thomas, III
    1510 East 191 Street
    Euclid, Ohio 44117
    ATTORNEYS FOR APPELLEE
    Matthew J. Richardson
    David B. Bokor
    John E. Codrea
    Justin M. Ritch
    Matthew P. Curry
    Manley, Deas & Kochalski L.L.C.
    P.O. Box165028
    Columbus, Ohio 43216
    MARY EILEEN KILBANE, J.:
    {¶1} Defendant-appellant, James J. Stallman (“Stallman”), appeals from the trial
    court’s judgment adopting the magistrate’s decision granting summary judgment in the
    foreclosure action brought by U.S. Bank National Association, as Trustee for JP Morgan
    Mortgage Acquisition Trust 2006-CW2 (“U.S. Bank”). For the reasons set forth below,
    we affirm.
    {¶2} In August 2013, U.S. Bank filed a foreclosure action against Stallman and
    his wife, alleging that they are in default on a mortgage and note for their home in North
    Olmsted, Ohio. U.S. Bank alleges that the Stallmans owe $165,473.43, plus interest and
    late charges from June 1, 2008. U.S. Bank further alleges that it is entitled to enforce the
    note pursuant to R.C. 1303.31.
    {¶3} U.S. Bank attached a copy of the note and mortgage to its complaint. The
    note was made in favor of Countrywide Home Loans, Inc. (“Countrywide”). On the
    signature page of the note, there is a stamp that reads “pay to the order of
    _________________ without recourse,” which is signed by David Spector of
    Countrywide. U.S. Bank attached an allonge, in which Countrywide indorsed the note to
    U.S Bank in May 2006. Also attached was a copy of a mortgage assignment from
    Mortgage Electronic Registration System (“MERS”) as nominee for Countrywide to U.S.
    Bank in 2010. In response to the complaint, the Stallmans filed an answer, asserting that
    U.S. Bank lacks standing to bring the lawsuit and is not the real party in interest, and U.S.
    Bank failed to satisfy all conditions precedent, including the notice and acceleration
    provisions.
    {¶4} In November 2013, U.S. Bank moved for summary judgment. In support
    of its motion, U.S. Bank attached an affidavit from Leanna Johnstun (“Johnstun”)
    alleging default.   Johnstun is the document control officer of U.S. Bank’s servicer,
    Select Portfolio Servicing, Inc. (“Select”).   Also attached were copies of letters to the
    Stallmans notifying them that they were in default, the promissory note and mortgage, the
    assignment of mortgage from MERS to U.S. Bank, a power of attorney in favor of Bank
    of America, N.A. relating to U.S. Bank, and a power of attorney in favor of Select from
    Bank of America, N.A.
    {¶5} The Stallmans opposed U.S. Bank’s motion, challenging the validity of the
    documents attached to U.S. Bank’s motion for summary judgment. They argued that
    Johnstun’s affidavit did not state “with any clarity who the actual holder of the ‘original
    Note’ is nor the location of the ‘original Note.’”     The Stallmans further argued that
    Johnstun’s affidavit was “robo-signed” and the mortgage assignment from Countrywide
    to U.S. Bank was “notarized by someone likely to be an employee of Lerner, Sampson &
    Rothfuss in Columbus, Ohio” whereas MERS’s office is in Florida.
    {¶6} After summary judgment was fully briefed, the trial court stayed the matter
    in January 2014, so the parties could mediate their dispute. On October 2, 20l4, the trial
    court concluded that mediation was unsuccessful and lifted the stay.       Thereafter, the
    magistrate granted U.S. Bank’s summary judgment motion. The Stallmans objected to
    the magistrates decision, raising arguments similar to those made in their brief in
    opposition to U.S. Bank’s summary judgment motion. The Stallmans also argued that
    MERS lacked the legal authority to transfer interests in the note and mortgage, and
    Johnstun testified on the basis of hearsay and did not authenticate the documents attached
    to the summary judgment motion. The trial court overruled the Stallmans’ objections
    and adopted the magistrate’s decision in December 2014.
    {¶7} On January 7, 2015, the magistrate issued another decision on the matter in
    favor of U.S. Bank. The Stallmans filed objections to this decision, which the trial court
    overruled.     The trial court adopted the magistrate’s decision and issued a decree in
    foreclosure.
    {¶8} Stallman now appeals, assigning the following three assignments of error
    for review, which shall be discussed together.
    Assignment of Error One
    Reviewing [U.S. Bank’s] motion for summary judgment de novo, the record
    is clear and convincing that the trial court erred to the prejudice of
    [Stallman] by granting [U.S. Bank’s] motion for summary judgment in
    favor of [U.S. Bank].
    Assignment of Error Two
    The trial court erred to the prejudice of [Stallman] by granting [U.S.
    Bank’s] motion for summary judgment based upon the presence of genuine
    issues of material fact regarding [U.S. Bank’s] failure to establish
    satisfaction of all conditions precedent to institute the foreclosure action.
    Assignment of Error Three
    The trial court erred to the prejudice of [Stallman] by granting [U.S.
    Bank’s] motion for summary judgment based upon the presence of genuine
    issues of material fact regarding [U.S. Bank’s] failure to provide sufficient
    evidence of entitlement to foreclosure and/or damages.
    {¶9} Within these assigned errors, Stallman challenges the trial court’s grant of
    summary judgment in U.S. Bank’s favor. We review an appeal from summary judgment
    under a de novo standard of review. Grafton v. Ohio Edison Co., 
    77 Ohio St. 3d 102
    ,
    105, 1996-Ohio-336, 
    671 N.E.2d 241
    ; Zemcik v. LaPine Truck Sales & Equip. Co., 
    124 Ohio App. 3d 581
    , 585, 
    706 N.E.2d 860
    (8th Dist.1997). In Zivich v. Mentor Soccer
    Club, 
    82 Ohio St. 3d 367
    , 369-370, 1998-Ohio-389, 
    696 N.E.2d 201
    , the Ohio Supreme
    Court set forth the appropriate test as follows:
    Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is
    no genuine issue of material fact, (2) the moving party is entitled to
    judgment as a matter of law, and (3) reasonable minds can come to but one
    conclusion and that conclusion is adverse to the nonmoving party, said party
    being entitled to have the evidence construed most strongly in his favor.
    Horton v. Harwick Chem. Corp., 
    73 Ohio St. 3d 679
    , 1995-Ohio-286, 
    653 N.E.2d 1196
    , paragraph three of the syllabus. The party moving for
    summary judgment bears the burden of showing that there is no genuine
    issue of material fact and that it is entitled to judgment as a matter of law.
    Dresher v. Burt, 
    75 Ohio St. 3d 280
    , 292-293, 1996-Ohio-107, 
    662 N.E.2d 264
    .
    {¶10} Once the moving party satisfies its burden, the nonmoving party “may not
    rest upon the mere allegations or denials of the party’s pleadings, but the party’s response,
    by affidavit or as otherwise provided in this rule, must set forth specific facts showing
    that there is a genuine issue for trial.” Civ.R. 56(E); Mootispaw v. Eckstein, 76 Ohio
    St.3d 383, 385, 1996-Ohio-389, 
    667 N.E.2d 1197
    . Doubts must be resolved in favor of
    the nonmoving party.        Murphy v. Reynoldsburg, 
    65 Ohio St. 3d 356
    , 358-359,
    1992-Ohio-95, 
    604 N.E.2d 138
    .
    {¶11} To prevail on a motion for summary judgment claim in a foreclosure action,
    the plaintiff must prove
    (1) that the plaintiff is the holder of the note and mortgage, or is a party
    entitled to enforce the instrument; (2) if the plaintiff is not the original
    mortgagee, the chain of assignments and transfers; (3) that the mortgagor is
    in default; (4) that all conditions precedent have been met; and (5) the
    amount of principal and interest due.
    Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657,
    ¶ 17.
    {¶12} Stallman argues that U.S. Bank’s motion for summary judgment fails
    because: (1) Johnstun’s affidavit failed to establish she had “personal knowledge of the
    matter;” (2) U.S. Bank did not demonstrate that it has standing and is the real party in
    interest; (3) U.S. Bank did not demonstrate that it gave Stallman prior notice of default
    and acceleration as required by the mortgage; and (4) U.S. Bank did not submit “a
    competent, credible ‘payment history.’”
    Johnstun Affidavit
    {¶13} In the instant case, U.S. Bank supported its summary judgment motion with
    an affidavit from Johnstun, a document control officer of Select, its servicer.           The
    affidavit begins with a statement by Johnstun indicating that she, “being first duly sworn
    according to law, deposes and says on the basis of personal knowledge[.]”                As a
    document control officer, she is authorized to make the certification on U.S. Bank’s
    behalf.     Johnstun averred to her familiarity with Select’s record keeping system and the
    Stallmans’ specific loan records.     She stated the statements she made in the affidavit are
    based upon her personal knowledge of the Stallmans’ records and how those records are
    maintained.   Johnstun authenticated the note, mortgage, and default notice letter.     She
    further averred that U.S. Bank was the holder of the mortgage and note, the loan was in
    default, the Stallmans had been provided notice of the default by letter sent to them, and
    the Stallmans owe $165,473.43, plus interest and late charges from June 1, 2008.
    {¶14} Civ.R. 56(E) sets forth the requirements for affidavits submitted with
    motions for summary judgment. It provides in relevant part:
    Supporting and opposing affidavits shall be made on personal knowledge,
    shall set forth such facts as would be admissible in evidence, and shall show
    affirmatively that the affiant is competent to testify to the matters stated in
    the affidavit. Sworn or certified copies of all papers or parts of papers
    referred to in an affidavit shall be attached to or served with the affidavit.
    {¶15} Under Civ.R. 56(E ), a summary judgment affiant in a foreclosure action
    testifies on the basis of personal knowledge with a “specific averment” that the affidavit
    is made on the basis of personal knowledge and pertains to business. Nationstar Mtg.,
    L.L.C. v. Wagener, 8th Dist. Cuyahoga No. 101280, 2015-Ohio-1289, ¶26, citing Najar,
    8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657. In Najar, we stated:
    “Unless controverted by other evidence, a specific averment that an
    affidavit pertaining to business is made upon personal knowledge of the
    affiant satisfies the Civ.R. 56(E) requirement that affidavits both in support
    or in opposition to motions for summary judgment show that the affiant is
    competent to testify to the matters stated.” Bank One, N.A. v. Swartz, 9th
    Dist. No. 03CA008308, 2004-Ohio-1986, ¶ 14, citing State ex rel. Corrigan
    v. Seminatore, 
    66 Ohio St. 2d 459
    , 
    423 N.E.2d 105
    (1981), paragraph two of
    the syllabus. Where an affiant avers that he or she has personal knowledge
    of a transaction “this fact cannot be disputed absent evidence to the
    contrary.” Household Realty Corp. v. Henes, 8th Dist. No. 89516,
    2007-Ohio-5846, ¶ 12, citing Papadelis v. First Am. Sav. Bank, 112 Ohio
    App.3d 576, 579, 
    679 N.E.2d 356
    (8th Dist.1996). Similarly, verification
    of documents attached to an affidavit supporting or opposing a motion for
    summary judgment is generally satisfied by an appropriate averment in the
    affidavit itself, for example, that “such copies are true copies and
    reproductions.” Seminatore at paragraph three of the syllabus.
    
    Id. at ¶
    20.
    {¶16} Here, Johnstun’s affidavit demonstrates her personal knowledge to testify.
    Her affidavit specifically states that her averments were on the basis of personal
    knowledge, her direct familiarity with the record keeping system utilized by Select, and
    her direct familiarity with the records in that system related to the Stallmans’ loan.
    Stallman did not attempt to refute this by producing any admissible evidence.
    Accordingly, Johnstun’s affidavit was based on personal knowledge and complied with
    Civ.R. 56(E).
    Standing
    {¶17} In order to commence an action, a party must have standing, which requires
    “‘some real interest in the subject matter of the action.’” HSBC Bank USA, N.A. v.
    Surrarrer, 8th Dist. Cuyahoga No. 100039, 2013-Ohio-5594, ¶ 8, quoting State ex rel.
    Dallman v. Franklin Cty. Court of Common Pleas, 
    35 Ohio St. 2d 176
    , 
    298 N.E.2d 515
    (1973). Civ.R. 17(A) provides that a complaint must be brought in the name of the real
    party in interest.   Whether standing has affirmatively been established is a question of
    law subject to de novo review.    
    Id., citing Deutsche
    Bank Natl. Trust Co. v. Rudolph, 8th
    Dist. Cuyahoga No. 98383, 2012-Ohio-6141.
    {¶18} A party establishes its interest in the suit and has standing when, at the time
    it files its foreclosure complaint, it either (1) has had a mortgage assigned or (2) is the
    holder of the note. CitiMortgage, Inc. v. Patterson, 8th Dist. Cuyahoga No. 98360,
    2012-Ohio-5894, 
    984 N.E.2d 392
    , ¶ 21, citing Fed. Home Loan Mtge. Corp. v.
    Schwartzwald, 
    134 Ohio St. 3d 13
    , 2012-Ohio-5017, 
    979 N.E.2d 1214
    .
    {¶19} A party can become the holder of a negotiable instrument by specific
    endorsement to an identified payee or by holding the negotiable instrument while it is
    indorsed in blank.    R.C. 1303.25(A)-(B).    When the note is indorsed in blank, the
    instrument becomes payable to the bearer and may be negotiated by transfer and
    possession alone. R.C. 1303.25(B); Bank of Am., N.A. v. Farris, 8th Dist. Cuyahoga No.
    102256, 2015-Ohio-4980, ¶ 21, citing Third Fed. S & L Assn. of Cleveland v. Reids, 8th
    Dist. Cuyahoga No. 99650, 2013-Ohio-4602.
    {¶20} A review of the record in the instant case reveals that U.S. Bank had an
    interest in the note and mortgage.    U.S. Bank had been assigned the mortgage three
    years before the complaint was filed. Additionally, Countrywide had indorsed the note
    both in blank and specifically to U.S. Bank before the complaint was filed.     Therefore,
    U.S. Bank has standing to bring the foreclosure action against the Stallmans.
    Conditions Precedent
    {¶21} “This court has held that a term in a mortgage such as one requiring prior
    notice of default or acceleration to the mortgagor is a condition precedent subject to the
    requirements of Civ.R. 9(C).”    Secy. of Veterans Affairs v. Anderson, 2014-Ohio-3493,
    
    17 N.E.3d 1202
    , ¶ 15 (8th Dist.), citing Bank of Am., N.A. v. Pate, 8th Dist. Cuyahoga No.
    100157, 2014-Ohio-1078; Puzzitiello v. Metro. Savs. Bank, 8th Dist. Cuyahoga No.
    71814, 1997 Ohio App. LEXIS 5105 (Nov. 13, 1997).
    {¶22} Here, Johnstun stated in her affidavit that the Stallmans were in default and
    that all conditions precedent had been met. U.S. Bank attached two letters notifying the
    Stallmans of the default, the amount necessary to cure the default, the possible
    acceleration of the loan if the default was not cured, and provided them with the
    opportunity to cure the default. U.S. Bank produced one letter from the Stallmans’ prior
    servicer, Countrywide, and from the current servicer, Select.           In opposition, the
    Stallmans averred that they did not receive notice of the deficiency.       This court has
    stated that when the bank produces evidence that a notice was “sent” and the mortgage
    does not require the bank to show receipt of notice, the borrower’s affidavit stating he did
    not receive the notice does not create a genuine issue for trial. N.Y. Life Ins. & Annuity
    v. Vengal, 2014-Ohio-4798, 
    23 N.E.3d 180
    , ¶ 16-17 (8th Dist.). Thus based on the
    foregoing, we find no issue of fact existed as to whether conditions precedent were
    satisfied.
    Payment History
    {¶23} We recognize that “[t]here is no requirement that a plaintiff provide a
    complete ‘payment history’ in order to establish its entitlement to summary judgment in a
    foreclosure action.” Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657, at ¶ 40,
    citing Cent. Mtge. Co. v. Elia, 9th Dist. No. 25505, 2011-Ohio-3188, ¶ 7 (“‘An affidavit
    stating [a] loan is in default, is sufficient for purposes of Civ.R. 56, in the absence of
    evidence controverting those averments.’”), quoting Bank One, N.A. v. Swartz, 9th Dist.
    Lorain No. 03CA008308, 2004-Ohio-1986, ¶ 14.
    {¶24} In the instant case, Johnstun averred to all of the facts necessary to establish
    U.S. Bank’s right to the amount due — the principal balance due, the applicable interest
    rate, and date from which interest was due. Stallman did not present any evidence
    controverting these averments.       Accordingly, Johnstun’s affidavit and supporting
    documents were sufficient to meet U.S. Bank’s burden.
    {¶25} In light of the foregoing, we find the trial court properly adopted the
    magistrate’s decision granting summary judgment in U.S. Bank’s favor.
    {¶26} Accordingly, the first, second, and third assignments of error are overruled.
    {¶27} Judgment affirmed.
    It is ordered that appellee recover of appellant costs herein taxed.
    The court finds there were reasonable grounds for this appeal.
    It is ordered that a special mandate issue out of this court directing the common
    pleas court to carry this judgment into execution.
    A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
    the Rules of Appellate Procedure.
    MARY EILEEN KILBANE, PRESIDING JUDGE
    TIM McCORMACK, J., and
    EILEEN T. GALLAGHER, J., CONCUR