Village At Gender Condominium Assn. v. JHM Rental Mgt., L.L.C. , 2021 Ohio 3216 ( 2021 )

[Cite as Village At Gender Condominium Assn. v. JHM Rental Mgt., L.L.C., 2021-Ohio-3216.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Village At Gender Condominium :
Association,
:
Plaintiff-Appellee,
: No. 19AP-834
v. (C.P.C. No. 16CV-9522)
:
JHM Rental Management LLC et al., (REGULAR CALENDAR)
:
Defendants-Appellees,
:
(Hassan Ghetas,
:
Intervenor-Appellant).
:
D E C I S I O N
Rendered on September 16, 2021
On brief: Kaman & Cusimano. LLC, Michelle L. Polly-
Murphy and Darcy Mehling Good, for plaintiff-appellee
Village At Gender Condominium Association.
On brief: McGlinchy Stafford, Melany K. Fontanazza, for
defendant-appellee Nationstar Mortgage LLC dba Mr. Cooper.
On brief: Zach Klein, City Attorney, and Andria C. Noble, for
defendant-appellee City of Columbus.
On brief: Omar Tarazi, for intervenor-appellant Hassan
Ghetas.
APPEAL from the Franklin County Court of Common Pleas
No. 19AP-834 2
SADLER, J.
{¶ 1} Intervenor-appellant, Hassan Ghetas ("Ghetas"), appeals from a judgment of
the Franklin County Court of Common Pleas denying his motion for relief from judgment
and to vacate the sheriff's sale of certain property located at 5167 Mantua Drive, Canal
Winchester, Ohio, 43110 ("the Property"). We conclude the trial court did not abuse its
discretion because Ghetas failed to demonstrate he was entitled to relief from the judgment;
therefore, we affirm.
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} Plaintiff-appellee, Village At Gender Condominium Association ("the
Association"), filed a complaint on October 5, 2016, for foreclosure of the Property, which
was owned by JHM Rental Management, LLC ("JHM Rental"). The Association asserted
JHM Rental failed to pay condominium assessments and other charges as required under
the declaration and bylaws governing the Association. The Association had previously filed
a lien against the Property for the unpaid assessments and charges. The Association sought
judgment against JHM Rental for the unpaid assessments and charges and an order that
the Property be sold and the proceeds of the sale be applied to satisfy the judgment.
{¶ 3} Defendant Federal National Mortgage Association ("Fannie Mae"), the
predecessor-in-interest to defendant-appellee Nationstar Mortgage, LLC, dba Mr. Cooper
("Nationstar"),1 filed an answer to the foreclosure complaint asserting it had an interest in
the Property, in the form of a first recorded mortgage ("the Fannie Mae/Nationstar
Mortgage"), given to secure a promissory note executed by Jirom H. Micael on
April 26, 2013. Fannie Mae requested it be found to have a good and valid first mortgage
and that any sheriff's sale of the Property be subject to the Fannie Mae/Nationstar
Mortgage. Defendant-appellee City of Columbus filed an answer asserting it was the holder
and owner of three valid judgments against JHM Rental and requested the trial court
recognize and protect its liens, and that the liens be satisfied in order of priority from the
proceeds of sale.
{¶ 4} The Association moved for default judgment against JHM Rental and for a
decree of foreclosure on November 13, 2017, based on JHM Rental's failure to answer or
1On June 13, 2019, Fannie Mae moved to substitute Nationstar as a defendant because Fannie Mae had
assigned the mortgage to Nationstar. The trial court granted the motion on July 1, 2019.
No. 19AP-834 3
otherwise defend the complaint. The trial court granted the motion for default judgment
and ordered the Property to be sold subject to the Fannie Mae/Nationstar Mortgage. The
Property was sold through an online sheriff's sale on December 28, 2018; Ghetas was the
winning bidder. On March 18, 2019, the trial court issued a judgment confirming the
sheriff's sale and ordering distribution of the sale proceeds.
{¶ 5} On June 7, 2019, Ghetas filed a motion for relief from judgment under
Civ.R. 60(B) and to vacate the sale of the Property. Ghetas asserted he did not know the
Property was being sold subject to the Fannie Mae/Nationstar Mortgage when he placed
the winning bid, and that he was entitled to relief from the judgment confirming the sale
because the sheriff's auction website did not advise him of the encumbrance. Ghetas
claimed he first learned of the Fannie Mae/Nationstar Mortgage when he was served as a
defendant in a foreclosure action filed by Nationstar. See Nationstar Mtge., LLC v. Micael,
Franklin C.P. No. 19CV-3946. The Association moved to strike Ghetas's motion, asserting
he was not a party to the case and had not been granted permission to intervene.
Alternatively, the Association argued Ghetas failed to show he was entitled to relief from
the judgment. Ghetas subsequently moved to intervene as a party to the case.
{¶ 6} The trial court granted Ghetas's motion to intervene and denied the
Association's motion to strike Ghetas's motion for relief from judgment, concluding Ghetas
had standing to intervene as the purchaser of the Property at the foreclosure sale. The court
denied Ghetas's motion to vacate the sheriff's sale, holding Ghetas's claim that he did not
know the Property was subject to the Fannie Mae/Nationstar Mortgage when he purchased
it did not entitle him to relief from the judgment. Ghetas timely appealed the trial court's
denial of his motion for relief from judgment.
II. ASSIGNMENT OF ERROR
{¶ 7} Ghetas assigns the following as error:
The Trial Court erred as a matter of law and abused its
discretion in denying Appellant's 60(B) motion.
III. STANDARD OF REVIEW
{¶ 8} "A motion for relief from judgment under Civ.R. 60(B) is addressed to the
sound discretion of the trial court, and that court's ruling will not be disturbed on appeal
absent a showing of abuse of discretion." Griffey v. Rajan, 33 Ohio St.3d 75, 77 (1987). An
No. 19AP-834 4
abuse of discretion " 'connotes more than an error of law or judgment; it implies that the
court's attitude is unreasonable, arbitrary or unconscionable.' " Blakemore v. Blakemore,
5 Ohio St.3d 217, 219 (1983), quoting State v. Adams, 62 Ohio St.2d 151, 157 (1980). When
applying the abuse of discretion standard, an appellate court may not substitute its
judgment for that of the trial court. Star Merchandise, LLC v. Haehn, 10th Dist. No. 16AP-
39, 2016-Ohio-8018, ¶ 11.
IV. LEGAL ANALYSIS
{¶ 9} Ghetas argued he was entitled to relief from the judgment because when he
purchased the Property at auction, he was not aware it was subject to the Fannie
Mae/Nationstar Mortgage. Ghetas claimed he had not previously participated in a sheriff's
auction before buying the Property and that the bidding screen of the auction website did
not indicate the Property was subject to a lien. He asserted he spent his family's life savings
to purchase the Property and borrowed additional money to renovate it. Ghetas argued it
was unjust for him to lose his family's savings and the money he borrowed when the auction
website failed to warn him of the lien on the Property.
{¶ 10} Under Civ.R. 60(B), a trial court may relieve a party from a final judgment,
order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise or excusable neglect; (2)
newly discovered evidence which by due diligence could not
have been discovered in time to move for a new trial under Rule
59(B); (3) fraud (whether heretofore denominated intrinsic or
extrinsic), misrepresentation or other misconduct of an
adverse party; (4) the judgment has been satisfied, released or
discharged, or a prior judgment upon which it is based has been
reversed or otherwise vacated, or it is no longer equitable that
the judgment should have prospective application; or (5) any
other reason justifying relief from the judgment.
A party seeking relief under Civ.R. 60(B) must show (1) he has a meritorious defense or
claim to present if relief is granted, (2) he is entitled to relief under one of the grounds stated
in Civ.R. 60(B)(1) through (5), and (3) the motion was made within a reasonable time. GTE
Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St.2d 146 (1976), paragraph two of
the syllabus. The elements of the GTE Automatic test are conjunctive, and a movant must
establish all three to obtain relief. Haehn at ¶ 28, citing State ex rel. Richard v. Seidner, 76
Ohio St.3d 149, 151 (1996).
No. 19AP-834 5
A. Second prong of the GTE Automatic test: whether Ghetas was
entitled to relief under Civ.R. 60(B)(1) though (5)
{¶ 11} The trial court's analysis focused on the second element of the GTE
Automatic test—i.e., whether Ghetas established he was entitled to relief based on one of
the grounds set forth in Civ.R. 60(B)(1) through (5). The court construed Ghetas's claim
that he did not know the Property was subject to the Fannie Mae/Nationstar Mortgage to
be a claim for relief based on a unilateral mistake. Applying the general principles
governing recission of a contract based on a unilateral mistake, the trial court concluded
Ghetas was not entitled to relief from the judgment confirming the sale because he failed to
demonstrate that any of the other parties knew or should have known of his mistake. The
court further found Ghetas failed to allege excusable neglect or any other grounds for relief
under Civ.R. 60(B).
1. Relief under Civ.R. 60(B)(1) for a unilateral mistake
{¶ 12} On appeal, Ghetas claims very few properties sold at sheriff's auction are
subject to liens and argues the sheriff's auction website should provide a specific warning
when a property is being sold subject to a known lien. He alleges it was standard procedure
during in-person sheriff's auctions to announce several times that a property was being sold
subject to a lien, and asserts the online auctions should incorporate similar practices "to try
to protect people from making mistakes." (Appellant's Brief at 9.) Because Ghetas admits
he bid on the Property believing it was not subject to any encumbrances, his claim appears
to be based on a unilateral mistake under Civ.R. 60(B)(1).
{¶ 13} This court has noted that "[g]enerally, ' "relief for a unilateral mistake of fact
will be denied where such mistake is the result of the negligence of the party seeking
relief." ' " First Third Bank v. Banks, 10th Dist. No. 2005-Ohio-4972, ¶ 23, quoting
Nationsbanc Mtge. Corp. v. Jones, 7th Dist. No. 99 C.A. 236 (Mar. 30, 2001), quoting
Citizens Fed. Bank v. Moncarz, 1st Dist. No. C-940300 (May 31, 1995). In Banks, Fifth
Third Bank obtained a default judgment of foreclosure on a property on which it held a
second mortgage. Id. at ¶ 2-3. The Massachusetts Company had been named as a
defendant to the foreclosure complaint because a title search indicated the first mortgage
on the property, which originally had been held by National City Bank, had been assigned
to The Massachusetts Company. Id. at ¶ 2. One day before the scheduled sheriff's sale,
National City Bank moved to intervene and for relief from judgment, asserting the
No. 19AP-834 6
assignment of the mortgage had been erroneously recorded and claiming it had
continuously held the first mortgage on the property. Id. at ¶ 3-5. The trial court granted
the motion for relief from judgment, finding National City Bank was entitled to relief under
Civ.R. 60(B)(1) because the erroneous filing of the assignment was a unilateral mistake. Id.
at ¶ 10.
{¶ 14} On appeal, this court reversed, concluding the "sole cause" of National City
Bank's mortgage interest going unrecognized was its "unilateral negligence in managing its
business papers and concomitant failure to comply with the recording statutes." Id. at ¶ 33.
We noted that "all of the records necessary to avoid the mistake, or to timely correct it, were
at all times in the possession and control" of National City Bank. Id. at ¶ 26. Thus, National
City Bank's mistake was "clearly unilateral, and was the result of negligence." Id. Under
those circumstances, "[s]uch conduct cannot serve as the basis for granting relief pursuant
to Civ.R. 60(B)(1)." Id. at ¶ 33.
{¶ 15} Like Banks, Ghetas's mistake in this case was unilateral and resulted from his
own negligence. The records necessary to determine whether the Property was subject to a
lien were readily accessible to Ghetas before bidding on it. The sheriff's website contains a
general notice that all real property sold at public auction may be subject to liens that may
not be extinguished by the sale. The description of the Property on the sheriff's auction
website included the associated foreclosure case number. The default judgment and
foreclosure order, which was publicly accessible by searching the Clerk of Courts' website
using the foreclosure case number, explicitly stated the foreclosure sale as "SUBJECT TO
the mortgage of Defendant Federal National Mortgage Association." (Decree of Judgment
& Foreclosure at 3.) The notice of sale for the Property published in The Daily Reporter
also stated the Property was to be sold subject to the Fannie Mae/Nationstar Mortgage.
Moreover, the auction website bidding screen for the Property included a link to the full
listing, which contained a note indicating the Property was being sold subject to the Fannie
Mae/Nationstar Mortgage.
{¶ 16} Ghetas effectively admitted in his brief on appeal that he could have
discovered the Fannie Mae/Nationstar Mortgage before placing his bid, stating "[a] user
would need to actually click on the property and do detailed investigation to discover
[whether a property was being sold subject to a lien]." (Appellant's Brief at 6.) Far from
No. 19AP-834 7
being a "detailed investigation," all that was required was for Ghetas to click a link and read
the full property description before bidding tens of thousands of dollars for the Property.
His failure to do so resulted in a mistaken belief about whether the Property was
encumbered by a lien; such a mistake "cannot serve as the basis for granting relief pursuant
to Civ.R. 60(B)(1)." Banks at ¶ 33.
2. Relief under Civ.R. 60(B)(1) for excusable neglect
{¶ 17} For the same reasons, Ghetas's failure to determine the conditions of the sale
does not constitute "excusable neglect" warranting relief from the judgment under
Civ.R. 60(B)(1). " '[E]xcusable neglect is not present if the party seeking relief could have
prevented the circumstances from occurring.' " Porter, Wright, Morris & Arthur, LLP v.
Frutta Del Mondo, Ltd., 10th Dist. No. 08AP-69, 2008-Ohio-3567, ¶ 22, quoting Stuller v.
Price, 10th Dist. No. 02AP-29, 2003-Ohio-583, ¶ 52. See also FV-I, Inc. v. Knecht, 10th
Dist. No. 17AP-865, 2019-Ohio-5197, ¶ 51 ("[W]ithout special circumstances justifying it,
excusable neglect typically will not exist where a party or its counsel has brought on itself a
consequence that it ought to have prevented."). As explained above, Ghetas had access to
all the information necessary to discover the Property was being sold subject to the Fannie
Mae/Nationstar Mortgage. He could have learned all the conditions of the auction before
submitting his bid and his failure to do so is not excusable neglect.
3. Relief under Civ.R. 60(B)(5) 'catch-all' provision
{¶ 18} Ghetas also is not entitled to relief under the 'catch-all' provision of
Civ.R. 60(B)(5), which "applies only when a more specific provision does not." Natl. City
Bank v. Calvey, 10th Dist. No. 05AP-1229, 2006-Ohio-3101, ¶ 13. Civ.R. 60(B)(5) "
'reflect[s] the inherent power of a court to relieve a person from the unjust operation of a
judgment, but it is not to be used as a substitute for any of the other more specific provisions
of Civ.R. 60(B).' " Wireless Resource, LLC v. Garner, 10th Dist. No. 11AP-1038, 2012-Ohio-
2080, ¶ 16, quoting Caruso-Ciresi, Inc. v. Lohman, 5 Ohio St.3d 64 (1983), paragraph one
of the syllabus. In this case, Ghetas does not provide any reason why he is entitled to relief
other than his unilateral mistake; because the more specific provision of Civ.R. 60(B)(1)
applies to Ghetas's claim, he cannot rely on Civ.R. 60(B)(5). Calvey at ¶ 13.
No. 19AP-834 8
B. First and third prongs of the GTE Automatic test: whether Ghetas
has a meritorious defense or claim and whether the motion was
timely filed
{¶ 19} The elements of the GTE Automatic test are conjunctive; because Ghetas
failed to satisfy the second prong, he was not entitled to relief from the judgment under
Civ.R. 60(B) and we need not determine whether he satisfied the first and third prongs.
However, we note that, regarding the first prong, the trial court found Ghetas "[did] not
identify a valid defense and fail[ed] to allege any operative facts that would give rise to one."
(Decision & Entry at 5.) Likewise, in his brief on appeal, Ghetas failed to identify any
meritorious claim or defense to be presented if he was granted relief. Regarding the third
prong, Ghetas filed his motion for relief from judgment within three months of the
judgment entry confirming the sale. We reach no conclusion as to whether that constitutes
"a reasonable time" for purposes of the GTE Automatic test.
{¶ 20} Because Ghetas failed to demonstrate he was entitled for relief under one of
the grounds set forth in Civ.R. 60(B)(1) through (5), the trial court did not abuse its
discretion by denying Ghetas's motion for relief from judgment.
C. Consideration of principles governing recission of a contract
{¶ 21} The Ninth District Court of Appeals reached the same result in a similar case
by applying substantive contract law rather than the standard for relief under Civ.R. 60(B).
Brandywine Preserve Cluster Assn. v. Carter, 9th Dist. No. 27584, 2015-Ohio-4163. In
Carter, a homeowners' association obtained foreclosure on a property based on unpaid
expenses and assessments. Id. at ¶ 2. An order of sale was issued indicating the property
would be sold subject to an existing mortgage. Id. at ¶ 2-3. The individual who placed the
winning bid at auction later moved to set aside the sale after learning the property was
encumbered by a mortgage. The trial court allowed the winning bidder to intervene in the
foreclosure case but denied his motion to set aside the sale. Id. at ¶ 3.
{¶ 22} On appeal, the winning bidder argued, in relevant part, that the sale should
have been set aside because he mistakenly believed the property was not encumbered. Id.
at ¶ 5. The Ninth District affirmed the trial court's denial of the motion to set aside the sale.
Applying contract law principles, the court noted that a contract may be rescinded due to a
unilateral mistake when the party seeking rescission shows (1) it made a mistake at the time
the contract was entered into, (2) the mistake had an adverse material effect on the
No. 19AP-834 9
mistaken party, and (3) the other party knew or should have known of the mistake. Id. at
¶ 8. The court further stated a unilateral mistake renders a contract voidable by a party " 'if
he does not bear the risk of the mistake,' " and " '[a] party bears the risk of a mistake when
* * * the risk is allocated to him by the court on the ground that it is reasonable in the
circumstances to do so.' '' Id., first quoting Restatement of the Law 2d, Contracts,
Section 153 (1981), and then quoting Restatement of the Law 2d, Contracts, Section 154(c)
(1981). The court found "[t]he mistake occurred because [the bidder] did not understand
the import of the [foreclosure sale] advertisement, which clearly indicated that the
mortgage on the property exceeded the value of the property." Id. at ¶ 9. There was no
indication any other party spoke with the winning bidder before the auction and, therefore,
no reason any other party knew or should have known of his mistaken belief. Id. Moreover,
because no party to the foreclosure action gave the winning bidder incorrect information,
the court concluded it was reasonable to allocate the risk of the mistake to the winning
bidder. Id.
{¶ 23} In this case, as in Carter, there is no indication any other party to the
foreclosure knew or should have known about Ghetas's mistaken belief that the Property
was unencumbered. Likewise, under these circumstances, it is reasonable to allocate the
risk of such a mistake to Ghetas, who had access to all the information necessary to learn
that the Property was being sold subject to the Fannie Mae/Nationstar Mortgage.
V. CONCLUSION
{¶ 24} For the foregoing reasons, we overrule Ghetas's sole assignment of error and
affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
BROWN and KLATT, JJ., concur.
_____________