Houtz v. Houtz , 111 N.E.3d 888 ( 2018 )

[Cite as Houtz v. Houtz, 2018-Ohio-1738.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
HURON COUNTY
Christine M. Houtz, Administratrix of Court of Appeals No. H-17-007
the Estate of Susan Marie Clowtis
Trial Court No. LS 2016 00003
Appellee
v.
Christine M. Houtz, et al.
Defendant
[PHH Mortgage Corporation—Appellant]
and
Mathew T. Crane, Administrator of Court of Appeals No. H-17-008
the Estate of Leon Anthony Clowtis
Trial Court No. LS 2016 00005
Appellee
v.
Christine M. Houtz, et al.
Defendant DECISION AND JUDGMENT
[PHH Mortgage Corporation—Appellant] Decided: May 4, 2018
*****
Jeffrey S. Ream and Sheree L. Studer, for appellee Christine M. Houtz,
Administratrix of the Estate of Susan Marie Clowtis.
Paul D. Dolce, for appellee Mathew T. Crane, Administrator of the
Estate of Leon Anthony Clowtis.
Adam J. Turer, for appellant.
*****
SINGER, J.
{¶ 1} Appellant, PHH Mortgage Corporation, appeals the June 12 and July 18,
2017 judgments of the Huron County Court of Common Pleas, Probate Division, denying
its motions to intervene. For the reasons that follow, we affirm.
Assignments of Error
{¶ 2} Appellant sets forth the following assignment of error:
1. Appellant argues that the trial court erred when it found
Appellant PHH Mortgage Corporation was not entitled to post-judgment
intervention under Civ.R 24(A).
Background
{¶ 3} Susan and Leon Clowtis died in December 2015, leaving behind real
property (“the property”) located at 1518 Settlement Rd., Norwalk, Ohio 44857.
{¶ 4} At that time, the property was encumbered by two mortgages. The first
mortgage instrument was recorded in October 2012, and listed as lender was KeyBank
National Association, with an address of 1 Mortgage Way, Mount Laurel, New Jersey
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08054. Also listed in this first mortgage instrument was Mortgage Electronic
Registration Systems, Inc. (“MERS”), as mortgagee.
{¶ 5} The second mortgage instrument was recorded in June 2015. This mortgage
instrument was not made part of the record. However, a “judicial report,” issued based
on an examination of the record title by First American Title Insurance Company, reveals
that the second mortgage was issued to KeyBank National Association, 4910 Tiedeman
Rd., Suite C, Brooklyn, Ohio 44144.
{¶ 6} On June 22, 2016, a complaint to sell real estate was filed in case No.
LS 16 00003, by Christine Houtz, the administrator of the estate of Susan Clowtis. On
July 5, 2016, virtually the same complaint was filed in case No. LS 16 00005, by Mathew
Crane, the administrator for the estate of Leon Clowtis. These complaints sought
authorization to sell the property, as both Susan and Leon had a half-interest in the
property.
{¶ 7} Additionally, both complaints had instructions for the clerk to serve
KeyBank at its Mount Laurel, New Jersey and Brooklyn, Ohio addresses. The deputy
clerk certified and provided proof the complaints were served at both KeyBank locations.
MERS was not served with the complaints.
{¶ 8} On September 1, 2016, Christine Houtz as administrator in case No.
LS 16 00003 filed for default judgment against KeyBank. The court granted default
judgment against KeyBank on September 2, 2016.
3.
{¶ 9} Mathew Crane, as administrator in case No. LS 16 00005, also filed for
default judgment against KeyBank on September 16, 2016. The court granted the default
judgment on September 26, 2016.
{¶ 10} KeyBank answered both complaints on September 6, 2016. Although the
trial court had already granted default judgment in case No. LS 16 00003, KeyBank and
Houtz submitted a joint motion to withdraw the default judgment as to the second
mortgage on October 3, 2016. The court granted the motion and withdrew the default
judgment as to the second mortgage only on October 4, 2016.
{¶ 11} KeyBank assigned its interest in the first mortgage to appellant, PHH
Mortgage Corporation, on October 13, 2016.
{¶ 12} Appellant filed for foreclosure on the first mortgage in the Huron County
Court of Common Pleas, General Division, on December 1, 2016, but voluntarily
dismissed the action on December 30, 2016. Appellant claims it dismissed the action
because it “discovered that the property was within the jurisdiction of the probate
court[.]”
{¶ 13} Appellant then filed motions to intervene and answers to both complaints in
the probate court. More specifically, appellant filed its answer in case No. LS 16 00003
on March 7, 2017, and in case No. LS 16 00005 on June 1, 2017.
{¶ 14} In its motions to intervene and answers, appellant claimed it had an interest
in the first mortgage. Attached to the motions were the mortgage and assignment.
4.
{¶ 15} Hearings on the motions were held, and the court denied appellant’s
intervention in both cases. Although the judgment entry denying intervention from case
No. LS 16 00003 was journalized a month prior to that of case No. LS 16 00005, both
entries reflect the same ruling and rationale. Specifically, the entries both state as
follows:
The Court finds that when KeyBank assigned its interest in the First
Mortgage to PHH Mortgage, that interest had already been disposed of by
the default judgment entered against KeyBank. Even if KeyBank
effectively assigned to PHH an interest in filing a motion to vacate the
default judgment, PHH’s delay in filing its Motion to Intervene in this case
was also inexcusable. The Court therefore finds that PHH is not entitled to
intervention under either Civ.R. 24(A) or Civ.R. 24(B).
{¶ 16} The entry of case No. LS 16 00003 was journalized on June 12, 2017, and
that of No. LS 16 00005 was journalized on July 18, 2017. Appellant timely appealed
both cases, and the appeal was consolidated for purposes of addressing the assigned error.
Standard of Review
{¶ 17} A ruling on a motion to intervene under Civ.R. 24(A) is reviewed under an
abuse of discretion standard. State ex rel. Merrill v. Ohio Dept. of Natural Resources,
130 Ohio St.3d 30, 2011-Ohio-4612, 955 N.E.2d 935, ¶ 41. An abuse of discretion is
found only when it is determined that a trial court’s attitude in reaching its judgment was
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unreasonable, arbitrary or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217,
219, 450 N.E.2d 1140 (1983).
Legal Analysis
{¶ 18} In its assigned error, appellant claims the trial court acted inconsistent with
Civ.R. 24(A)(2) in denying its motions to intervene. Appellee claims appellant failed to
meet the elements of Civ.R. 24(A)(2), and thus that the court properly denied the
intervention.
{¶ 19} Civ.R. 24(A) provides:
(A) Intervention of right. Upon timely application anyone shall be
permitted to intervene in an action: (1) when a statute of this state confers
an unconditional right to intervene; or (2) when the applicant claims an
interest relating to the property or transaction that is the subject of the
action and the applicant is so situated that the disposition of the action may
as a practical matter impair or impede the applicant’s ability to protect that
interest, unless the applicant’s interest is adequately represented by existing
parties.
See, e.g., Velocity Dev., LLC v. Perrysburg Twp. Bd. of Trustees, 6th Dist. Wood No.
WD-11-037, 2011-Ohio-6192, ¶ 12-15.
{¶ 20} In order to intervene under Civ.R. 24(A)(2) the motion must be (1) timely,
and the following factors must be shown: (2) the intervenor’s interest relates to the
subject of the action, (3) the disposition of the action will, as a practical matter, impair or
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impede the intervenor’s ability to protect its interest, and (4) the intervenor must
demonstrate that its interest is not adequately represented by the existing parties.
Fairview Gen. Hosp. v. Fletcher, 69 Ohio App.3d 827, 830-831, 591 N.E.2d 1312 (10th
Dist.1990).
{¶ 21} “Failure of the party seeking to intervene to satisfy each of the
requirements will result in a denial of the motion.” Velocity Dev., LLC at ¶ 15, citing
Fletcher at 831.
{¶ 22} Here, we find the trial court did not err in denying appellant’s intervention
because appellant failed to meet the necessary elements for purposes of Civ.R. 24(A).
(1) Timeliness
{¶ 23} We first consider the following factors in determining timeliness: the point
to which the suit progressed; the purpose of the intervention; the length of time preceding
the application during which the proposed intervenor knew or reasonably should have
known of his interest in the case; the prejudice to the original parties due to the proposed
intervenor’s failure to apply promptly for intervention; and, the existence of unusual
circumstances militating against or in favor of intervention. First Natl. Bank of Bellevue
v. NE Port Invests., LLC, 6th Dist. Ottawa No. OT-13-024, 2014-Ohio-1760, ¶ 10, citing
Triax Co. v. TRW, Inc., 724 F.2d 1224 (6th Cir.1984).
{¶ 24} In this case, the trial court stated appellant’s delays in filing its motions to
intervene were “inexcusable.” We cannot say the trial court abused its discretion where
appellant acquired its interest in the subject property in October 2016, which was more
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than six months before it filed for intervention in March and June 2017. Appellant
concedes in its appellate brief that it had actual knowledge of the case as early as
December 2016. Even assuming appellant moved for intervention within three months of
being apprised of the case, we cannot say the trial court abused its discretion in denying
appellant’s motion.
{¶ 25} Although this alone is ground to affirm the trial court judgments, we
proceed and address the remaining elements of Civ.R. 24(A)(2).
(2) Intervenor’s Interest
{¶ 26} Default judgment rendered by the probate court against a party may
extinguish the party’s interest in the subject property. See, e.g., Kormanik v. Haley, 10th
Dist. Franklin No. 12AP-18, 2012-Ohio-5975, ¶ 42. Consequently, the party would no
longer be “in the proper position to assert a claim or seek judicial enforcement of a duty
or right.” Id. at ¶ 41. “The burden is on [the party] to establish it has a present interest
in the subject matter of the litigation and that [it] has been prejudiced.” (Inner quotations
omitted.) Id.
{¶ 27} Here, the trial court found appellant did not have standing to intervene
because the October 13, 2016 assignment of the first mortgage was null and void. More
specifically, the trial court stated that appellant’s interest “had already been disposed of
by the default judgment entered against KeyBank.” Thus the rationale was that KeyBank
no longer had an interest to convey when appellant was assigned the first mortgage. We
cannot say the trial court abused its discretion.
8.
(3) Ability to Protect Interest and (4) Whether Adequately Represented
{¶ 28} R.C. 2127.12 provides that the following “shall be made parties defendant”
in “an action by an executor or administrator to obtain authority to sell real property[:]”
(A) The surviving spouse;
(B) The heirs, devisees, or persons entitled to the next estate of
inheritance from the decedent in the real property and having an interest in
it, but their spouses need not be made parties defendant;
(C) All mortgagees and other lienholders whose claims affect the
real property or any part of it;
(D) If the interest subject to sale is equitable, all persons holding
legal title to the interest or any part of it, and those who are entitled to the
purchase money for it, other than creditors;
(E) If a fraudulent transfer is sought to be set aside, all persons
holding or claiming under the transfer;
(F) All other persons having an interest in the real property.
See R.C. 2127.12 (A)-(F).
{¶ 29} Here, appellant argues it was not able to protect its interest before default
judgment was granted in September 2016, as it was not a party to the probate proceedings
and did not acquire its interest in the first mortgage until October 2016.
{¶ 30} Although we, like the trial court, find appellant did not have a valid
interest, we nevertheless address the arguments as if appellant maintained a valid interest.
9.
{¶ 31} Appellant concedes KeyBank held the interest and was properly served as a
party in the proceedings. Accordingly, because KeyBank was properly served, had
ample opportunity to protect the first mortgage, and was holder of that interest before
default judgment was granted, we find that any interest appellant would have, albeit
through its predecessor, was adequately represented in the proceedings.
{¶ 32} Appellant further argues MERS was a necessary party and was not served
and, as a result, appellant was deprived of the opportunity to protect its interest. We,
nevertheless, find MERS was not a holder of an interest that would affect the real
property or any part of it. MERS was nominated and appointed by KeyBank, and the
record reflects KeyBank received notice and filed answers to the complaints in an effort
to protect its interest. Consequently, we cannot say MERS not being served with the
complaints rendered appellant unable to protect its interest.
{¶ 33} In sum, we find the trial court did not abuse its discretion, and appellant’s
assignment of error is not well-taken.
Conclusion
{¶ 34} The June 12 and July 18, 2017 judgments of the Huron County Court of
Common Pleas, Probate Division are affirmed. Appellant is ordered to pay the costs of
this appeal pursuant to App.R. 24.
Judgments affirmed.
10.
Houtz, Admr. v. Houtz
C.A. Nos. H-17-007
H-17-008
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Mark L. Pietrykowski, J. _______________________________
JUDGE
Arlene Singer, J.
_______________________________
Thomas J. Osowik, J. JUDGE
CONCUR.
_______________________________
JUDGE
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.supremecourt.ohio.gov/ROD/docs/.
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