First Natl. Bank of Pennsylvania v. Jones ( 2014 )

[Cite as First Natl. Bank of Pennsylvania v. Jones, 2014-Ohio-746.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
TRUMBULL COUNTY, OHIO
FIRST NATIONAL BANK : OPINION
OF PENNSYLVANIA,
:
Plaintiff-Appellee, CASE NO. 2013-T-0083
:
- vs -
:
MARY ANN JONES, et al.,
:
Defendant-Appellant.
:
Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 11 CV 1323.
Judgment: Reversed and remanded.
Thomas J. Lipka and David A. Detec, Manchester, Bennett, Powers & Ullman, L.P.A.,
The Commerce Building, Atrium Level Two, 201 East Commerce Street, Youngstown,
OH 44503 (For Plaintiff-Appellee).
John H. Chaney, III, Daniel Daniluk, L.L.C., 1129 Niles-Cortland Road, S.E., Warren,
OH 44484 (For Defendant-Appellant).
DIANE V. GRENDELL, J.
{¶1} Defendant-appellant, Mary Ann Jones, appeals from the Judgment Entry
of the Trumbull County Court of Common Pleas, granting summary judgment in favor of
plaintiff-appellee, First National Bank of Pennsylvania (First National) and ordering the
foreclosure of her real property. The issue to be decided in this case is whether the
statutory amount of an individual’s interest in her real property for the purposes of
applying the “homestead exemption” under R.C. 2329.66(A)(1)(b) is determined as of
the date of a judgment lien or at a later date. For the following reasons, we reverse and
remand the decision of the lower court.
{¶2} On June 20, 2011, First National filed a Complaint for Foreclosure in the
Trumbull County Court of Common Pleas. In the Complaint, First National asserted that
on November 8, 2000, Jones executed an unconditional Guaranty, guaranteeing
payment of a loan made by First National to Penn-Ohio Property Management. The
Complaint asserted that Jones defaulted on her obligation and a judgment was entered
against her, in the state of Pennsylvania, and was transferred to Trumbull County in
2004. Pursuant to the attached judicial report, a Judgment Lien was filed against Jones
in the amount of $165,913.52 in 2009. First National asserted that, pursuant to this lien,
it was entitled to foreclose upon real property owned by Jones, located at 9010 Cain
Drive, Warren, Ohio.
{¶3} On September 21, 2011, Jones filed a Notice of Stay, notifying the court of
an automatic stay as a result of her filing of a Petition in the United States Bankruptcy
Court for the Northern District of Ohio, Eastern Division. First National subsequently
filed a Motion to Reinstate Case to Active Docket, based upon the dismissal of Jones’
bankruptcy case.
{¶4} On October 24, 2012, Jones filed an Answer, in which she asserted that
her property was exempt from, inter alia, sale or foreclosure, pursuant to R.C.
2329.66(A)(1)(b). In her Amended Answer, filed on March 21, 2013, she raised the
same argument. 1
1. The Answer and Amended Answer were initially filed under the wrong case number, but were
subsequently deemed timely filed by the trial court.
2
{¶5} A second Notice of Stay was filed by Jones on February 19, 2013, based
on the filing of another Petition in the Bankruptcy Court. First National filed a Motion to
Reinstate Case to Active Docket on March 11, 2013.
{¶6} First National filed a Motion for Summary Judgment on May 8, 2013,
asserting that there was no genuine issue of material fact, since it held a properly filed
judgment lien on Jones’ property and was entitled to foreclose.
{¶7} On May 21, 2013, Jones filed her Motion for Summary Judgment. She
asserted that the “homestead exemption” contained in R.C. 2329.66(A)(1)(b) applied
and that the lien “impairs [her] homestead exemption and cannot be enforced through
foreclosure.”
{¶8} On June 18, 2013, First National filed a Memorandum in Opposition to
Defendant’s Motion for Summary Judgment. It argued that the prior statutory amount of
the homestead exemption should apply, which was in effect at the time the lien attached
to Jones’ property. Under this amount, which was only $20,200, Jones’ property would
not qualify for the exemption, since her interest in the property exceeded that amount.
{¶9} On July 10, 2013, the trial court issued a Judgment Entry of Summary
Judgment on Foreclosure. It ruled that the “appropriate exemption amount is the
amount in effect at the time a judgment lien accrues.” It further held that “[s]ince
Plaintiff’s judgment lien accrued in 2004 any exemption amount available to the
Defendant would be the statutory amount at that time.” The court then granted First
National’s request for foreclosure.
{¶10} Jones timely appeals and raises the following assignment of error:
3
{¶11} “The trial court erred to the prejudice of Appellant by determining, contrary
to Ohio Revised Code § 2329.66, that the appropriate exemption amount due to
Appellant is the amount in effect at the time the judgment lien accrues.”
{¶12} Pursuant to Civil Rule 56(C), summary judgment is proper when (1) the
evidence shows “that there is no genuine issue as to any material fact” to be litigated,
(2) “the moving party is entitled to judgment as a matter of law,” and (3) “it appears from
the evidence * * * that reasonable minds can come to but one conclusion and that
conclusion is adverse to the party against whom the motion for summary judgment is
made, that party being entitled to have the evidence * * * construed most strongly in the
party’s favor.” A trial court’s decision to grant summary judgment is reviewed by an
appellate court under a de novo standard of review. Grafton v. Ohio Edison Co., 77
Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). “A de novo review requires the appellate
court to conduct an independent review of the evidence before the trial court without
deference to the trial court’s decision.” (Citation omitted.) Peer v. Sayers, 11th Dist.
Trumbull No. 2011-T-0014, 2011-Ohio-5439, ¶ 27.
{¶13} Pursuant to R.C. 2329.66(A)(1)(b): “Every person who is domiciled in this
state may hold property exempt from execution, garnishment, attachment, or sale to
satisfy a judgment or order, as follows: * * * In the case of all other judgments and
orders [not relating to money owed for health care services or supplies], the person’s
interest, not to exceed one hundred twenty-five thousand dollars, in one parcel or item
of real or personal property that the person or a dependent of the person uses as a
residence.” This is often referred to as the “homestead exemption.” Although the
majority of cases applying the homestead exemption take place in the bankruptcy
4
courts, the homestead exemption of R.C. 2329.66(A)(1)(b) “is generally applicable in
executions against real property in state court.” Johnson v. Cromaz, 11th Dist. Geauga
No. 98-G-2151, 1999 Ohio App. LEXIS 6240, 8 (Dec. 23, 1999).
{¶14} It has been emphasized that “[e]xemption statutes should be liberally
construed in favor of a debtor claiming homestead rights.” Adkins v. Massie, 4th Dist.
Lawrence No. 99CA18, 2001 Ohio App. LEXIS 3154, 6 (Mar. 12, 2001); Dennis v.
Smith, 125 Ohio St. 120, 125, 180 N.E. 638 (1932) (“[l]aws exempting property of a
debtor from execution are to be construed liberally in his favor”) (citation omitted).
{¶15} In the present case, the issue is not whether the homestead exemption is
applicable, but, instead, the statutory amount of Jones’ interest in the real property to
which the exemption applies. Prior to March 27, 2013, the exemption applied when the
party’s interest did not exceed $22,200. Beginning on that date, however, Jones’
interest must not exceed $125,000 for the exemption to apply. Jones argues that the
latter is applicable, since her interest becomes effective upon execution or sale of her
real estate to satisfy the judgment lien.
{¶16} First National appears to concede that the exemption would apply if this
court determined the $125,000 amount was applicable. However, it asserts that the
applicable amount is that contained in the statute at the time the judgment lien was
entered against her several years ago, i.e., $22,200.
{¶17} A review of this state’s appellate cases reveals no pertinent law on this
specific issue, nor do the parties cite any such law. Upon considering the statutory
language, we determine that the applicable property interest amount is that contained in
5
the statute in effect at the time of the lower court’s ruling in this case, in the amount of
$125,000.
{¶18} As is stated in the statute, the property owner’s “‘interest’ shall be
determined,” in “cases other than bankruptcy proceedings, as of the date of an
appraisal, if necessary under section 2329.68 of the Revised Code, or the issuance of a
writ of execution.” R.C. 2329.66(D)(2). In the present case, there is no indication that
an appraisal was involved, under R.C. 2329.68, for the purposes of determining the
value for the exemption, so the interest in the property was to be determined as of the
date of the issuance of a “writ of execution.” A writ of execution has been described as
a direction to the sheriff “commanding him to seize or take possession of property and
to sell it in the manner provided by law for the satisfaction of judgments.” Lash v. Mann,
141 Ohio St. 577, 49 N.E.2d 689 (1943), paragraph two of the syllabus; Columbus Fin.,
Inc. v. Howard, 42 Ohio St.2d 178, 182, fn., 327 N.E.2d 654 (1975) (“an execution is a
remedy afforded by law for the enforcement of a judgment” whose “object is to obtain
satisfaction of the judgment on which the writ is issued”) (citation omitted). See also
Huntington Natl. Bank v. Motel 4 BAPS, Inc., 191 Ohio App.3d 90, 2010-Ohio-5792, 944
N.E.2d 1210, ¶ 9 (8th Dist.), citing R.C. 2327.01 and R.C. 2327.02 (“a writ of execution
is ‘a process of a court, issued by its clerk, and directed to the sheriff of the county * * *
against the property of the judgment debtor, including orders of sale’”).
{¶19} A logical reading of the statute leads to the conclusion that the amount of
the exemption should be determined as of the date Jones’ interest in the exemption
arises, since the amount of the exemption is directly tied to the determination of the
debtor’s interest. This occurs on the issuance of a writ of execution, not on the date of a
6
judgment or a lien. Although First National argues that the exemption amount should be
determined as of the date of the judgment lien, this does not follow from the statutory
language. The judgment lien applied to property owned by Jones, but has no relation to
the value of her property for the purposes of determining whether her interest in the
property should be exempt from being foreclosed upon and sold.
{¶20} In this case, there was no assertion that a writ of execution existed prior to
the court’s issuance of the present Judgment Entry granting summary judgment, and
the order within that Entry to sell the property pursuant to the foreclosure. Thus, there
would be no basis for finding that the prior exemption amount would apply on this
ground. This is consistent with case law relating to the time for the assertion of a
debtor’s exemption claim. “A homestead exemption is not effective until there is an
involuntary execution that subjects the property to judicial sale.” Adkins, 2001 Ohio
App. LEXIS 3154, at 7; Gale v. Ficke, 148 Ohio App.3d 657, 2002-Ohio-4030, 775
N.E.2d 548, ¶ 7, fn. 2 (8th Dist.); Gledhill v. Walker, 143 Ohio St. 381, 385-386, 55
N.E.2d 647 (1944) (“[t]he proper time for the assertion of the debtor’s claim, under the
statutes to have such homestead exempted from sale, is when the sheriff or other
officer is about to execute the writ of execution or order of sale”) (citation omitted).
{¶21} First National argues that this conclusion is contrary to the language of
H.B. 479, which enacted the March 27, 2013 version of R.C. 2329.66. Pursuant to
Section 3 of the Act, the amendments made to “sections 2329.66 and 2329.661 of the
Revised Code shall apply to claims accruing on or after the effective date of this act.”
One problem with this language is that it is unclear what is meant by “claims accruing.”
It may be referring to the accrual of the debtor’s exemption claim, given that the statute
7
repeatedly refers to the debtor’s homestead exemption as a “claim.” In In re Depascale,
496 B.R. 860 (Bankr.N.D.Ohio 2013), the bankruptcy court interpreted the same
language and reached a similar conclusion, questioning the meaning of Section 3 of
H.B. 479, finding that “[t]he inherent contradictions within Section 3 make it totally
unworkable as a statement of legislative intent,” and further explaining that it is unclear
from that language whether it involves “claims of exemption by the debtor or claims
asserted by a creditor.” Id. at 871-872.
{¶22} In the absence of a clearer statement of intent, we find no reason to
determine that this language should counteract the existing language in the statute,
which determines the debtor’s interest as of the date of the writ of execution.
Statements included in legislation but not placed in the code are “uncodified law.” See
Maynard v. Eaton Corp., 119 Ohio St.3d 443, 2008-Ohio-4542, 895 N.E.2d 145, ¶ 7.
While uncodified law is “part of the law of Ohio,” it should not be used to displace
statutory language where the meaning of the statute is clear. Id.; Washington
Environmental Servs., LLC v. Morrow Cty. Dist. Bd. of Health, 10th Dist. Franklin No.
09AP-920, 2010-Ohio-2322, ¶ 21. Based on the language contained in the statute
itself, we cannot find that the language in Section 3 of the Act provides a basis for
adopting First National’s interpretation in this case. Moreover, if the legislature intended
the increase in the exemption amount to apply only to judgments or liens filed after the
effective date of H.B. 479, it could have expressly made this statement in the statute.
No mention of judgments, such as a lien, are contained in the statutory language as a
basis for determining the exemption applicability.
8
{¶23} Further, while First National had a lien on the property prior to the
enactment of the legislation changing the homestead exemption, it had “an obligation to
assert and enforce such right promptly under the existing statutory framework,” given
that “it was known that the homestead exemption laws are periodically updated and
changed.” Depascale at 874. Therefore, First National was not deprived of any rights
under this application of the law.
{¶24} Finally, Jones cites In re Depascale in support of her claim, which First
National notes is distinguishable because it occurred in a bankruptcy case. In
Depascale, the court was required to apply the statute as it related to bankruptcy
proceedings. The court specifically noted this, holding that the language of the statute
“makes clear that a debtor’s interest in the exempted property is determined as of the
petition date, and the Court need look no further.” Id. at 870. While its ultimate holding
is distinguishable on these grounds, it is unnecessary to rely on Depascale to reach our
holding, for the reasons outlined above. This does not, however, change the fact that
its analysis is persuasive on certain points that are consistent in both bankruptcy and
state law cases, as discussed above. In fact, Depascale provides a helpful comparison,
in that it uses the date the debtor’s interest is determined as the date for the applicable
exemption amount, which is the same analysis adopted by this court, albeit under R.C.
2329.66(D)(2), involving non-bankruptcy cases, rather than under (D)(1).
{¶25} Based on the foregoing, we find that the trial court erred in holding that the
homestead exemption should not apply, based on its finding that the “appropriate
exemption amount is the amount in effect at the time a judgment lien accrues.”
{¶26} The sole assignment of error is with merit.
9
{¶27} For the foregoing reasons, the Judgment Entry of the Trumbull County
Court of Common Pleas, granting summary judgment in favor of First National Bank of
Pennsylvania and ordering the foreclosure of Jones’ real property is reversed and
remanded for further proceedings consistent with this opinion. Costs to be taxed
against appellee.
CYNTHIA WESTCOTT RICE, J.,
COLLEEN MARY O’TOOLE, J.,
concur.
10