Farm Credit Servs. of Mid-Am. v. Pertuset ( 2014 )

[Cite as Farm Credit Servs. of Mid-Am. v. Pertuset, 2014-Ohio-1289.]
IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
SCIOTO COUNTY
FARM CREDIT SERVICES OF :
MID-AMERICA PCA, :
:
Plaintiff-Appellee, : Case No. 13CA3563
:
vs. :
: DECISION AND JUDGMENT
CARL PERTUSET, et al., : ENTRY
:
Defendants-Appellants. : Released: 03/27/14
_____________________________________________________________
APPEARANCES:
Bruce M. Broyles, The Law Office of Bruce M. Broyles, Boardman, Ohio,
for Appellants.
Jeffrey B. Sams, Pickerington, Ohio, and Joshua D. Howard, Portsmouth,
Ohio, for Appellee, American Savings Bank.1
_____________________________________________________________
McFarland, J.
{¶1} This is an appeal from a Scioto County Common Pleas Court
summary judgment in favor of American Savings Bank, fsb (American),
defendant/cross-claimant below and Appellee herein, on its claim against
Carl E. Pertuset and Vera M. Pertuset, defendants below and Appellants
herein. On appeal, Appellants contend that the trial court erred in granting
Appellee’s renewed motion for summary judgment, which was granted after
1
Farm Credit Services of Mid-America PCA has not filed a brief and is not participating on appeal.
Scioto App. No. 13CA3563 2
the trial court vacated its original grant of summary judgment, which this
Court had previously affirmed on appeal, without a remand. In light of our
determination that the trial court lacked jurisdiction to vacate its original
summary judgment grant and decree in foreclosure in favor of American, we
find that it exceeded its authority in doing so. We must, therefore, reverse
the trial court’s decision vacating those prior orders as well as trial court’s
order granting American’s renewed motion for summary judgment. As
such, we find, in accordance with our prior decision rendered in Farm Credit
Services of Mid America PCA v. Carl E. Pertuset, et al., 4th Dist. Scioto No.
11CA3443, 2013-Ohio-567, that the original grant of summary judgment
and decree in foreclosure stands valid as the law of the case, as affirmed
once already by this Court. Accordingly, the referenced decisions of the
trial court are reversed.
FACTS
{¶2} We initially set forth the facts, as already stated in our prior
decision regarding this matter.
“On June 5, 2009, Farm Credit Services of Mid-America,
PCA commenced the instant action and alleged that appellants
were in default of several promissory notes and sought
foreclosure of mortgage and security interests given to secure
Scioto App. No. 13CA3563 3
those notes. American, also named as a defendant because it
might also claim an interest in the mortgaged premises, filed an
answer and cross-claim and asserted that appellants were in
default of a promissory note previously executed in its favor.
Furthermore, American claims that appellants gave them a
mortgage on their property to secure payment of that note and
the mortgage is the first and best lien on the premises.
Despite asking for leave to obtain ‘competent counsel’
before responding, appellants filed a pro se answer that spans
twenty-one pages and is, at best, difficult to understand. The
trial court took the answer as a denial of all allegations. The
case was stayed for a period of time when appellants filed for
bankruptcy, but that case was dismissed the following year.
American requested a summary judgment and argued that
no genuine issues of material fact exist and that it was entitled
to judgment in its favor as a matter of law. The motion included
a supporting affidavit from Jack A. Stephenson, the Vice–
President of American, who attested to the authenticity of the
note and mortgage (attached as evidentiary exhibits to the
motion) that appellants executed and delivered to American on
Scioto App. No. 13CA3563 4
December 7, 2005. The affiant further attested that appellants
owed ‘the sum of $160,001.52 as of June 15, 2009, together
with interest thereon at the rate of $28.97 per day from June 15,
2009, until paid.’
Appellants filed several memoranda in opposition to that
motion. Their first memorandum did not discuss the merits of
American's motion, but rather the bankruptcy court
proceedings. Their second memoranda appears to allege, inter
alia, that American did not possess the promissory note and is
not the real party in interest.
The trial court concluded that no genuine issue of
material fact exists and that American is entitled to judgment as
a matter of law and later filed a judgment of foreclosure. This
appeal followed.” Farm Credit Services of Mid America PCA
v. Carl E. Pertuset, et al. at ¶¶ 2-5 (internal footnotes omitted).
{¶3} Appellant’s initial appeal of this matter alleged that the trial
court had erred in granting summary judgment in favor of American because
American failed to conclusively establish they were the proper party in
interest and that they failed to establish privity with Appellants. They also
argued the trial court erred in granting summary judgment in favor of
Scioto App. No. 13CA3563 5
American, claiming that American had failed to conclusively establish the
amount of their damages. While this matter was initially pending on appeal,
the property sold to third party buyers at a sheriff’s sale held on November
14, 2012. This Court issued a decision on the merits affirming the trial
court’s grant of summary judgment and decree in foreclosure on February 5,
2013.
{¶4} Subsequently, on February 28, 2013, American filed a motion to
vacate the trial court’s February 18, 2011, summary judgment grant as well
as its August 9, 2011, decree in foreclosure, based upon its concern
regarding a potential procedural issue regarding the filing of the final
judicial report being filed after the final judgment entry, rather than before,
as required by R.C. 2329.191. Appellant did not oppose this motion,
however, the third party buyers entered an appearance through counsel,
objecting to the motion to vacate and requesting that the sale be confirmed.
The trial court filed a judgment entry on March 4, 2013, vacating its own
original grant of summary judgment and decree in foreclosure, after this
Court had already affirmed both of the those decisions on direct appeal.
{¶5} After the trial court vacated these decisions, American filed a
renewed motion for summary judgment, and Appellants followed with
additional discovery requests, motions for extensions of time to conduct
Scioto App. No. 13CA3563 6
discovery and a motion to compel discovery. Finally, on June 19, 2013,
over the objection of Appellants, the trial court once again granted summary
judgment and a decree in foreclosure in favor of American. The matter is
now before us for a second time, with Appellants once again claiming that
the trial court erred in granting summary judgment.
ASSIGNMENT OF ERROR
“I. THE TRIAL COURT ERRED IN GRANTING SUMMARY
JUDGMENT.”
LEGAL ANALYSIS
{¶6} In their sole assignment of error, and much like in their first
appeal of this matter, Appellants contend that the trial court erred in granting
summary judgment in favor of American. In raising this assignment of
error, Appellants argue that American failed to satisfy the conditions
precedent to filing suit by failing to provide them notice of default and
notice of acceleration. Appellants also argue that American failed to comply
with discovery and as such, the trial court should not have granted summary
judgment. However, before we reach the merits of Appellants’ argument,
we must address a threshold procedural matter.
{¶7} As set forth above, the question of whether the trial court
properly granted summary judgment and a decree in foreclosure in favor of
American has already been before this Court on direct appeal. Further, as
Scioto App. No. 13CA3563 7
we have noted, this Court has previously affirmed the trial court’s February
28, 2011, grant of summary judgment and August 9, 2011, decree in
foreclosure. Farm Credit Services of Mid America PCA v. Carl E. Pertuset,
et al., supra. Despite our affirmance on appeal without remand, the trial
court, at the request of the parties and over the objection of the third party
buyer of the property at issue, vacated its summary judgment grant and
decree in foreclosure. Based upon the following, we conclude that the trial
court exceeded its authority in doing so and, as such, its actions were
contrary to the law of the case, as established in this Court’s prior decision
regarding this matter.
{¶8} In Nolan v. Nolan, 11 Ohio St. 3d 1, 462 N.E.2d 410 (1984), the
Supreme Court of Ohio discussed the doctrine of the law of the case in
relation to a trial court’s failure to execute a remand mandate given by a
reviewing court. Specifically, Nolan involved a trial court’s complete
restructuring of a real estate settlement on remand, rather than limiting its
action on remand to making findings regarding the right of occupancy of the
marital home, as instructed by the reviewing court. Nolan at 2. In response,
the Supreme Court of Ohio held that “[a]bsent extraordinary circumstances,
such as an intervening decision by the Supreme Court, an inferior court has
no discretion to disregard the mandate of a superior court in a prior appeal in
Scioto App. No. 13CA3563 8
the same case.” Nolan at syllabus (internal citations omitted). In reaching
its decision, the Nolan court discussed the law of the case doctrine as
follows:
“* * * the doctrine provides that the decision of a reviewing
court in a case remains the law of that case on the legal
questions involved for all subsequent proceedings in the case at
both the trial and reviewing levels.” Nolan at 3 (internal
citations omitted).
The Nolan court further noted that while the rule will not be applied to
achieve unjust results, the application of the rule is necessary “to ensure
consistency of results in a case” as well as “to avoid endless litigation by
settling the issues, and to preserve the structure of superior and inferior
courts as designed by the Ohio Constitution.” Id.; citing Gohman v. St.
Bernard, 111 Ohio St. 726, 730-731, 146 N.E. 291 (1924) (reversed on other
grounds) and State, ex rel. Potain v. Mathews, 59 Ohio St. 2d 29, 32, 391
N.E.2d 343 (1979).
{¶9} We find the reasoning set forth in Nolan with respect to the
doctrine of the law of the case to be applicable to the matter presently before
us, where the trial court vacated two orders previously affirmed by this
Court on appeal. In fact, we find this doctrine even more compelling
Scioto App. No. 13CA3563 9
considering the trial court vacated these orders absent a remand from this
Court. Simply put, absent a remand from this Court after a decision on the
merits, the trial court lacked jurisdiction to vacate its own orders.
{¶10} In reaching this result, we rely on the reasoning set forth not
only in Nolan v. Nolan, supra, but also our prior reasoning in State of Ohio,
ex rel. Jim Petro v. Marshall, 4th Dist. Scioto No. 05CA3004, 2006-Ohio-
5357. In that case, the trial court granted a Civ.R. 60(B) motion to vacate a
judgment filed by Adrian Rawlins and then granted Rawlins judicial release
from prison, despite the fact that this Court had previously affirmed
Rawlins’ conviction and sentence on appeal, without a remand. Id. at ¶ 4.
As a result of the trial court’s actions, the Attorney General filed a complaint
for a writ of prohibition, alleging that the trial court lacked jurisdiction to
vacate Rawlins’ conviction. Id. at ¶ 1. This Court granted the writ,
reasoning that “Judge Marshall patently and unambiguously lacked
jurisdiction to entertain the motion after this court had expressly ruled on the
same issues the motion presented.” Id. In reaching our decision, we
reasoned as follows:
“Civ.R. 60(B) clearly gives the trial court jurisdiction to grant
relief from a final judgment. However, once a party undertakes
an appeal and absent a remand, the trial court is divested of
Scioto App. No. 13CA3563 10
jurisdiction to take any action that is inconsistent with the
appellate court's exercise of jurisdiction. Post v. Post (1990), 66
Ohio App. 3d 765, 769, 586 N.E.2d 185; State ex rel. Special
Prosecutors, supra, at 97, 378 N.E.2d 162.” Id. at ¶ 27.
{¶11} As we discussed in State, ex rel. Petro v. Marshall, the Special
Prosecutors case involved a trial court’s subsequent grant of a motion to
withdraw a guilty plea when the defendant “lost the appeal of a conviction
based upon the guilty plea.” Id. at ¶ 28. We noted that in Special
Prosecutors, the Supreme Court reasoned that
“allowing the trial court to consider a Crim.R. 32.1 motion to
withdraw a guilty plea subsequent to an appeal and affirmance
by the appellate court ‘would affect the decision of the
reviewing court, which is not within the power of the trial court
to do.’ ” Id. at ¶ 29; citing Special Prosecutors at 97-98.
{¶12} Although both State, ex rel. Petro v. Marshall and Special
Prosecutors both involved underlying criminal matters, we noted in State, ex
rel. Petro v. Marshall at ¶ 30 that the Supreme Court of Ohio has made a
similar rule concerning Civ.R. 60(B) motions. Specifically, we noted as
follows:
Scioto App. No. 13CA3563 11
“* * * absent a remand from the appellate court, ‘an appeal
divests trial courts of jurisdiction to consider Civ.R. 60(B)
motions for relief from judgment.’ See Howard v. Catholic
Social Servs. of Cuyahoga Cty., Inc., 70 Ohio St. 3d 141, 147,
637 N.E.2d 890, 1994-Ohio-219, 637 N.E.3d 890, citing State,
ex rel. East Mfg. Corp. v. Ohio Civ. Rights Comm. (1992), 63
Ohio St. 3d 179, 181, 586 N.E.2d 105. See, also, Post, supra, at
770, 586 N.E.2d 185. Once a case has been appealed, ‘the trial
court is divested of jurisdiction except “over issues not
inconsistent with that of the appellate court to review, affirm,
modify or reverse the appealed judgment, such as the collateral
issue like contempt * * *.” ’ State ex rel. State Fire Marshall v.
Curl, 87 Ohio St. 3d 568, 570, 2000-Ohio-248, [722] N.E.2d 73,
quoting Special Prosecutors at 97, 378 N.E.2d 162. Where an
appellate court has already ruled on an issue in a direct appeal,
a trial court's ‘reconsideration’ of that same issue is inconsistent
with the appellate court's exercise of jurisdiction and the
doctrine of the law of the case. See, Hopkins v. Dyer, 104 Ohio
St.3d 461, 2004-Ohio-6769, 820 N.E.2d 329, at ¶ 15.” Id.
Scioto App. No. 13CA3563 12
{¶13} Here, Appellants brought an initial direct appeal of the trial
court’s original grant of summary judgment and decree in foreclosure in
favor of American. We affirmed the trial court’s original grant of summary
judgment and decree in foreclosure without remand. Subsequent to the
issuance of our decision, the trial court vacated its own summary judgment
and foreclosure decisions, based upon a claim by one of the parties that there
was a potential procedural issue related to a late filing of the final judicial
report. We note at this juncture that this potential procedural issue should
have been apparent to the parties at the time of the original appeal and yet no
error was raised related to it.
{¶14} As noted in State v. Fischer, 128 Ohio St. 3d 92, 2010-Ohio-
6238, 942 N.E.2d 332, ¶35, “[t]he law-of-the-case doctrine is rooted in
principles of res judicata and issue preclusion * * *.” Further, the Fischer
court noted that prior decisions have held that the law of the case doctrine “ ‘
precludes a litigant from attempting to rely on arguments at a retrial which
were fully pursued, or available to be pursued, in a first appeal.’ ” Id. at ¶
34; quoting Hubbard ex rel. Creed v. Sauline, 74 Ohio St. 3d 402, 404-405,
659 N.E.2d 781 (1996). Thus, because any issue related to the late filing of
the final judicial report should have been apparent to the parties and
therefore was available to be pursued by the parties in the original, direct
Scioto App. No. 13CA3563 13
appeal, but was not, any argument based thereon should have been barred,
we believe, at any additional proceedings at the trial court level.
{¶15} Recently, several Ohio courts have been confronted with
questions in the area of foreclosure law with respect to when a trial court
may vacate a prior judgment that was either not appealed, or was appealed
and resulted in an affirmance by the reviewing court. These questions seem
to stem from the recent holding of the Supreme Court of Ohio in the case of
Federal Home Loan Mortgage Corporation v. Schwartzwald, et al, 134
Ohio St. 3d 13, 2012-Ohio-5017, 979 N.E.2d 1214. Schwartzwald did not
involve the grant or denial of a Civ.R. 60(B) motion for relief from
judgment. Rather, in Schwartzwald, it was argued by the homeowners that
the bank lacked standing to sue because it commenced the foreclosure action
before it obtained an assignment of the promissory note and mortgage
securing the Schwartzwald’s loan. Id. at ¶ 2. The trial court granted
summary judgment in favor of the bank and the appellate court affirmed.
The Supreme Court of Ohio, however, reversed, holding that the bank, under
the facts, had no standing to invoke the jurisdiction of the common pleas
court. Id. at paragraph one of the syllabus. In reaching its decision, the
Court noted that “ ‘the issue of standing, inasmuch as it is jurisdictional in
nature, may be raised at any time during the pendency of the proceedings.’ ”
Scioto App. No. 13CA3563 14
Id. at ¶ 22; quoting New Boston Coke Corp. v. Tyler, 32 Ohio St. 3d 216,
218, 513 N.E.2d 302 (1987).
{¶16} A subsequent case, Waterfall Victoria Master Fund Limited v.
Yeager, et al., 11th Dist. Lake No. 2012-L-071, 2013-Ohio-3206, illustrates
how the Schwartzwald holding has been carried forward. In Yeager, a
complaint in foreclosure was filed and default judgment was granted in favor
of the bank. Id. at ¶ 2-4. Yeager filed a direct appeal, but the appellate court
affirmed the judgment in favor of the bank. Id. at ¶ 4. After Yeager’s home
sold at a sheriff’s sale, Yeager filed a Civ.R. 60(B) motion seeking relief
from the default judgment. Id. at ¶ 5. In support of the motion, Yeager
argued that the bank did not have any interest in the property at the time it
foreclosed. Id. The trial court denied the motion for relief from judgment
and Yeager appealed again. Id.
{¶17} On appeal, the trial court analyzed the issues raised under a
Civ.R. 60(B) framework but then went into a law of the case/res judicata
analysis, noting the intervening Schwartzwald decision that was released
after the briefs had been filed. Id. at ¶ 8-13. The court construed Yeager’s
arguments on appeal as challenging the banks’ standing. Id. at ¶ 16. As
such, the court held neither res judicata nor the law of the case doctrine
barred consideration of the argument on appeal. Id. Nonetheless, however,
Scioto App. No. 13CA3563 15
the court overruled Yeager’s argument on the merits, holding the bank had
established standing to sue at the trial court level. Id. at ¶ 17-19. The court
further held that Yeager’s additional argument, “inasmuch as [it did not]
affect Appellee’s standing to bring suit and invoke the jurisdiction of the
trial court,” was barred by res judicata because it was “an argument that
should have been and could have been previously raised.” Id. at ¶ 20.
{¶18} Similar but not identical issues were addressed in Chemical
Bank, N.A. v. Krawczyk, et al., 8th Dist. Cuyahoga No. 98263, 2013-Ohio-
3614. In Krawczyk, summary judgment in favor of the bank was granted
and Krawczyk did not file an appeal. Id. at ¶ 5. Two months later,
Krawczyk filed a Civ.R. 60(B) motion for relief from judgment, arguing the
bank lacked standing. Id. at ¶ 6. The motion was denied by the trial court
and Krawczyk filed an appeal from the denial of the motion, again arguing
the bank lacked standing. Id. at ¶ 9. The appellate court, however, found no
merit in Krawczyk’s argument, affirming the trial court’s decision finding
the bank demonstrated standing below, and noting that Krawczyk was
attempting to use “a motion for relief from judgment as a substitute for a
timely filed appeal.” Id. at ¶ 10.
{¶19} Noting Krawczyk had failed to initially appeal, the court noted
“a defendant’s relief from final judgment is to timely file an appeal.” Id. at ¶
Scioto App. No. 13CA3563 16
17. As the issue of standing was directly litigated in the trial court and
Krawczyk failed to appeal that decision, the court held Krawczyk’s
arguments were barred by res judicata. Id. at ¶ 22. In reaching its decision,
the court distinguished the situation from the facts in Schwartzwald. Id. at ¶
23. Specifically, the court commented that, even with respect to the issue of
standing, saying the issue of standing can be raised at any time does not
equate to “the issue of standing can be raised many times.” Id. at ¶ 29.
Finally, the Krawczyk court noted as follows regarding the holding in
Yeager:
“The lead opinion in Yeager affirms the decision based on a
Civ.R. 60(B) analysis, the concurring-in-judgment-only opinion
affirms based on res judicata, and the dissent would reverse the
trial court’s decision and allow the appellants the opportunity to
challenge the assignment of the note and/or mortgage.”
Krawczyk at ¶ 30, FN. 4.
Clearly, Yeager was a divided decision. However, the division of the court
in that case illustrates the varied bases for the decisions issued in response to
these types of issues, and the number of legal grounds that are implicated
when a case comes before a court with such a procedural history.
Scioto App. No. 13CA3563 17
{¶20} Based upon the foregoing, we conclude that the trial court’s
actions in vacating its prior decisions were inconsistent with this Court’s
appellate jurisdiction in affirming those decisions previously on appeal.
Further, as this Court did not remand the case to the trial court after our
affirmance on appeal, and the reasons advanced in support of the motion to
vacate did not raise the issue of standing or otherwise invoke the jurisdiction
of the trial court, the trial court was divested of jurisdiction to consider the
parties’ motions to vacate and/or for relief from judgment .2 As the trial
court lacked jurisdiction to vacate its prior orders, it exceeded its jurisdiction
in doing so.
{¶21} Accordingly, the decision of the trial court vacating American’s
original grant of summary judgment and decree in foreclosure, as well the
decision granting American’s renewed motion for summary judgment is
reversed. Further, we find, in accordance with our prior decision rendered in
Farm Credit Services of Mid America PCA v. Carl E. Pertuset, et al., 4th
Dist. Scioto No. 11CA3443, 2013-Ohio-567, that the original grant of
summary judgment and decree in foreclosure stands valid as the law of the
case, as affirmed once already by this Court.
JUDGMENT REVERSED.
2
Although Appellee’s motion below was not expressly titled as a Civ.R. 60(B) motion below, it was for all
intents and purposes a Civ.R. 60(B) motion and we treat it as such.
Scioto App. No. 13CA3563 18
JUDGMENT ENTRY
It is ordered that the JUDGMENT BE REVERSED and Appellants
recover costs from Appellee.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing
the Scioto County Common Pleas Court to carry this judgment into
execution.
Any stay previously granted by this Court is hereby terminated as of
the date of this entry.
A certified copy of this entry shall constitute the mandate pursuant to
Rule 27 of the Rules of Appellate Procedure.
Abele, P.J. & Hoover, J.: Concur in Judgment and Opinion.
For the Court,
BY: ___________________________________
Matthew W. McFarland, Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final
judgment entry and the time period for further appeal commences from
the date of filing with the clerk.