Strickler v. First Ohio Banc & Lending, Inc. , 2016 Ohio 5876 ( 2016 )

[Cite as Strickler v. First Ohio Banc & Lending, Inc., 2016-Ohio-5876.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN )
LYNN A. STRICKLER, et al. C.A. No. 15CA010893
Appellee
v. APPEAL FROM JUDGMENT
ENTERED IN THE
FIRST OHIO BANC & LENDING, INC., et COURT OF COMMON PLEAS
al. COUNTY OF LORAIN, OHIO
CASE No. 07-CV-151964
Appellant
DECISION AND JOURNAL ENTRY
Dated: September 19, 2016
CARR, Presiding Judge.
{¶1} Appellant, First Ohio Banc & Lending, Inc., appeals the judgment of the Lorain
County Court of Common Pleas. This Court dismisses the appeal for lack of a final, appealable
order.
I.
{¶2} On July 27, 2007, Lynn Strickler and Keith Krese (“Borrowers”) filed a complaint
against First Ohio Banc & Lending, Inc., as well as its employees, James Priebe and Jacob
Harmon (“First Ohio Banc”). First Ohio Banc provided home mortgage financing to Borrowers.
Borrowers alleged both class action and individual claims. The complaint included claims for
breach of fiduciary duty, failure to provide a mortgage loan origination disclosure statement,
violation of the Ohio Mortgage Broker Act, violation of the Ohio Consumer Sales Practices Act,
and fraudulent inducement.
2
{¶3} Shortly after the complaint was filed, First Ohio Banc filed a motion to stay
proceedings pending arbitration. The trial court issued a journal entry denying the motion. First
Ohio Banc appealed, arguing that the trial court erred in concluding that the arbitration
agreement did not apply to class actions. On March 30, 2009, this Court issued a decision
affirming the trial court’s judgment. Strickler v. First Ohio Banc & Lending, Inc., 9th Dist. Nos.
08CA009416, 08CA009460, 2009-Ohio-1422. First Ohio Banc appealed our decision to the
Supreme Court of Ohio, but the Supreme Court declined jurisdiction. Strickler v. First Ohio
Banc & Lending, Inc., 122 Ohio St. 3d 1503, 2009-Ohio-4233.
{¶4} Prior to addressing the class certification issue, the parties jointly requested that
the trial court address two substantive issues. The parties subsequently filed competing motions
for summary judgment. The trial court ultimately granted the Borrowers’ partial motion for
summary judgment, concluding that (1) First Ohio Banc’s disclosure statements violated R.C.
1322.11; and (2) First Ohio Banc was liable for the violations under R.C. 1322.11. In its journal
entry, the trial court reasoned that any violation of R.C. 1322.11 necessarily gives rise to an
award of damages under R.C. 1322.11 because “Some amount of damages must be assumed in
order to effectuate the purpose of the statute to provide disclosure of necessary information to the
consumer.”
{¶5} The Borrowers subsequently filed a motion for class certification.1 On January
13, 2012, after extensive briefing by the parties, the trial court issued a journal entry granting the
motion certifying the class action pursuant to Civ.R. 23. The class was certified as “all persons
who purchased services from First Ohio related to a mortgage loan on Ohio realty during the
1
We note that Borrowers filed multiple amended complaints in this matter. Prior to filing the
motion for class certification, Borrowers filed a second amended complaint on January 6, 2011.
First Ohio Banc filed a timely answer.
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period of May 2, 2002 to the present.” First Ohio Banc appealed the trial court’s judgment
granting the class certification. On March 29, 2013, this Court issued a decision affirming the
trial court’s judgment. Strickler v. First Ohio Banc & Lending, Inc., 9th Dist. Lorain No.
12CA010178, 2013-Ohio-1221. First Ohio Banc appealed and the Supreme Court declined
jurisdiction. Strickler v. First Ohio Banc & Lending, Inc., 137 Ohio St. 3d 1410, 2013-Ohio-
5096.
{¶6} On September 24, 2015, First Ohio Banc filed a motion to decertify the class in
the trial court. In support of its motion, First Ohio Banc argued that decertification was
necessary in light of the Supreme Court of Ohio’s decisions in Stammco, L.L.C. v. United Tel.
Co. of Ohio, 136 Ohio St. 3d 231, 2013-Ohio-3019, and Felix v. Ganley Chevrolet, Inc., 145 Ohio
St.3d 329, 2015-Ohio-3430. The Borrowers filed a memorandum in opposition to the motion.
On November 19, 2015, the trial court issued a journal entry denying the motion.
{¶7} On appeal, First Ohio Banc raises one assignment of error.
II.
ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED IN FAILING TO DECERTIFY THE CLASS
BASED ON THE PLAINTIFFS’ FAILURE TO ESTABLISH THE EXISTENCE
OF AN “INJURY CAUSED BY A VIOLATION” AS MANDATED UNDER
R.C. 1322.11.
{¶8} In its sole assignment of error, First Ohio Banc contends that the trial court erred
when it denied its motion for decertification.
{¶9} This Court is obligated to raise sua sponte questions related to our jurisdiction.
Whitaker-Merrell Co. v. Geupel Constr. Co., Inc., 29 Ohio St. 2d 184, 186 (1972). This Court
has jurisdiction to hear appeals only from final judgments. Article IV, Section 3(B)(2), Ohio
Constitution; R.C. 2501.02. “For a judgment to be final and appealable, the requirements of R.C.
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2505.02 and Civ.R. 54(B), if applicable, must be satisfied.” LEH Properties, Inc. v. Pheasant
Run Assn., 9th Dist. Lorain No. 07CA009275, 2008-Ohio-4500, ¶ 10, citing Chef Italiano Corp.
v. Kent State Univ., 44 Ohio St. 3d 86, 88 (1989). R.C. 2505.02(B), states, in a pertinent part:
(B) An order is a final order that may be reviewed, affirmed, modified, or
reversed, with or without retrial, when it is one of the following:
***
(5) An order that determines that an action may or may not be maintained as a
class action[.]
{¶10} On January 27, 2016, this Court issued a magistrate’s order indicating that it was
unclear if the order denying First Ohio Banc’s motion to decertify was final and appealable
under R.C. 2505.02(B)(5). At this Court’s request, the parties filed memoranda addressing the
issue. On February 29, 2016, this Court issued a magistrate’s order provisionally determining
the issue in favor of jurisdiction and noting that we may revisit the issue during the final
disposition of the appeal. The Borrowers subsequently filed a motion to set aside the
magistrate’s order and asking this Court to dismiss the appeal. First Ohio Banc responded with a
brief in opposition to the motion. This Court issued a journal entry denying the motion to set
aside the magistrate’s order. In denying the motion, this Court informed the parties that it would
address the Borrowers’ jurisdictional argument in the context of the record, the parties’ briefs,
and any oral argument presented.
{¶11} First Ohio Banc’s central argument in support of jurisdiction is that new
circumstances have arisen, by way of the Supreme Court’s decisions in Stammco and Felix, since
the time when the initial certification order was entered. First Ohio Banc points to the Sixth
District’s decisions in Ralston v. Chrysler Credit Corp., 6th Dist. Lucas No. L-98-1312, 1999
WL 769564 (Sept. 30, 1999), and Williams v. Countrywide Home Loans, Inc., 6th Dist. Lucas
No. L-06-1120, 2007-Ohio-5353, in support of the proposition that an appellate court may revisit
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a class certification in an interlocutory appeal when “new circumstances” arise which did not
originally exist when the class was certified. The Borrowers maintain that the motion to
decertify was akin to a motion for reconsideration of the initial certification order. The
Borrowers argue that because the order denying the motion did not actually determine the class
certification issue, the order was not a final, appealable order as contemplated by R.C.
2505.02(B)(5).
{¶12} As an initial matter, we note that the circumstances of this case are fundamentally
different than the circumstances confronted by the Sixth District in Ralston and Williams. In
Ralston, the defendant was denied an opportunity to appeal the initial class certification, and the
basis for permitting an appeal from an order denying a motion to decertify the class was that new
factual circumstances had arisen where the interests of the named class representative had
become antagonistic to the other class members. Ralston at *3. In Williams, a case that involved
a challenge to the Ohio Fair Housing Act, the trial court conditionally certified a class until
discovery could be completed. Williams at ¶ 8. While the conditional certification was upheld
on appeal, subsequent discovery revealed that the defendant had not preserved unfunded loan
files for the first two and a half years of the certified class period. Williams at ¶ 9. The Sixth
District subsequently entertained a second interlocutory appeal after the plaintiffs sought to
locate additional class members through alternative measures and the defendants unsuccessfully
moved the trial court to decertify the class.2 While First Ohio Banc likens the emergence of new
case law here to the “new circumstances” that arose in Ralston and Williams, we find Ralston
and Williams clearly distinguishable in that those cases involved circumstances where there was
2
While the Sixth District’s decision in Ralston contained an extensive discussion on the
jurisdictional issue, the court’s decision in Williams did not include an analysis of the
jurisdictional issue. Ralston, supra; Williams, supra.
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a dramatic shift in the underlying factual posture of the case subsequent to the initial class
certification.
{¶13} Moreover this Court has already reviewed the trial court’s January 13, 2012 order
in this case that “determine[d] [whether the] action may or may not be maintained as a class
action[.]” R.C. 2505.02(B)(5). There is no dispute that the enactment of R.C. 2505.02(B)(5)
made it possible for a party to appeal the initial determination regarding whether an action may
be maintained as a class action. We recognize a clear distinction, however, between the trial
court’s order ruling on a motion to certify a class and circumstances such as this where First
Ohio Banc essentially asked the trial court to reconsider the matter three years later in light of
new case law. Judicial economy is a pertinent concern in class action cases, particularly when
the litigation has been ongoing for several years. State ex rel. Caszatt v. Gibson, 11th Dist. Lake
No. 2012-L-107, 2013-Ohio-213, ¶ 38. While appellate review of the initial order certifying a
class action pursuant to R.C. 2505.02(B)(5) promotes the interests of efficiency and judicial
economy, allowing appellate review of unsuccessful challenges to the class certification
thereafter would lead to an endless string of interlocutory appeals. As the Seventh District has
recognized, “Once [the certification] decision is made, further interlocutory decisions in the case
do not become final because the case is a class action.” Lucio v. Safe Auto Ins. Co., 188 Ohio
App.3d. 190, 2010-Ohio-2528, ¶ 36 (7th Dist.). The court reasoned, “[t]he plain language of
R.C. 2505.02(B)(5) is that only the order that determines that the action can be maintained as a
class action can be appealed, not subsequent orders that apply to the class after certification.” Id.
at ¶ 36. The Eleventh District similarly concluded that once an appellate court has reviewed
whether a lawsuit can be maintained as a class action, “R.C. 2505.02(B)(5) does not grant [an
appellate court] jurisdiction to review the issue regarding the exact makeup of the class
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members” during a subsequent interlocutory appeal. Asset Acceptance L.L.C. v. Caszatt, 11th
Dist. Lake No. 2011-L-080, 2012-Ohio-1886, ¶ 27. This Court previously affirmed the trial
court’s order which determined that this matter may be maintained as a class action. Strickler,
2013-Ohio-1221, at ¶ 22. As the November 19, 2015 order denying First Ohio Banc’s motion to
decertify the class was not the order certifying the class for the purposes of R.C. 2505.02(B)(5),
the order is not a final, appealable order, and the instant appeal therefrom must be dismissed.
III.
{¶14} For the foregoing reasons, the trial court’s order does not constitute a final,
appealable order. Accordingly, the appeal is dismissed.
Appeal dismissed.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellant.
DONNA J. CARR
FOR THE COURT
WHITMORE, J.
SCHAFER, J.
CONCUR.
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APPEARANCES:
CLIFFORD C. MASCH, BRIAN D. SULLIVAN, and ANTHONY CATANZARITE, Attorneys
at Law, for Appellant.
THOMAS R. THEADO, Attorney at Law, for Appellee.
JACK MALICKI, Attorney at Law, for Appellee.