Wells Fargo Bank NA v. Arlington , 2013 Ohio 4659 ( 2013 )

[Cite as Wells Fargo Bank NA v. Arlington, 2013-Ohio-4659.]
COURT OF APPEALS
DELAWARE COUNTY, OHIO
FIFTH APPELLATE DISTRICT
WELLS FARGO BANK NA : JUDGES:
:
: Hon. William B. Hoffman, P.J.
Plaintiff-Appellee : Hon. Sheila G. Farmer, J.
: Hon. Patricia A. Delaney, J.
-vs- :
: Case No. 13CAE030016
:
DEAN ARLINGTON, ET AL. :
:
:
Defendant-Appellant : OPINION
CHARACTER OF PROCEEDING: Appeal from the Delaware County Court
of Common Pleas, Case No. 2008 CVE
01 0048
JUDGMENT: AFFIRMED
DATE OF JUDGMENT ENTRY: October 16, 2013
APPEARANCES:
For Plaintiff-Appellee: For Defendant-Appellant:
SCOTT A. KING BRUCE M. BROYLES
JASON P. BICHSEL 5815 Market St., Suite 2
Austin Landing I Boardman, OH 44512
10050 Innovation Drive, Suite 400
Miamisburg, OH 45342
Delaware County, Case No. 13CAE030016 2
Delaney, J.
{¶1} Defendant-Appellant Dean Arlington appeals the March 7, 2013 judgment
entry of the Delaware County Court of Common Pleas.
FACTS AND PROCEDURAL HISTORY
{¶2} On March 3, 2006, Defendant-Appellant Dean Arlington executed a Note
in favor of Taylor, Bean & Whitaker Mortgage Corp (“TBW”). To secure repayment on
the Note, Arlington executed a Mortgage in favor of Mortgage Electronic Registration
Systems, Inc. (“MERS”), as nominee for TBW and its successors and assigns. On
March 20, 2007, MERS assigned the Mortgage to Plaintiff-Appellee Wells Fargo Bank,
N.A. The Assignment of Mortgage stated, “Mortgage Electronic Registration Systems,
Inc. * * * does hereby sell, assign, transfer and set over unto Wells Fargo Bank, N.A. * *
* a certain mortgage from Dean E. Arlington * * *.” The Assignment of Mortgage was
recorded on March 26, 2007.
{¶3} On January 11, 2008, Plaintiff-Appellee Wells Fargo Bank, N.A. filed a
complaint in foreclosure against Arlington seeking to recover the balance due on the
Note and to foreclose on the Mortgage. The complaint alleged Wells Fargo was the
holder of the Note. Attached to the complaint was a copy of the Note signed by
Arlington. The Note contained two indorsements: (1) a special indorsement from TBW
to Wells Fargo and (2) a blank indorsement from Wells Fargo. Also attached to the
complaint were copies of the original Mortgage and the Assignment of Mortgage.
{¶4} Arlington filed an answer on August 29, 2008.
{¶5} Wells Fargo filed a motion for summary judgment, which the trial court
denied on October 14, 2008. The trial court found there existed a genuine issue of
Delaware County, Case No. 13CAE030016 3
material fact whether Arlington received notice from Wells Fargo of the default on the
Mortgage.
{¶6} The case was stayed due to bankruptcy notice.
{¶7} On July 20, 2010, Wells Fargo executed a corrective Assignment of
Mortgage, which was recorded on July 30, 2010. The correction changed the name of
the assignor: “Mortgage Electronic Registration Systems, Inc., as nominee for Taylor,
Bean & Whitaker Mortgage Corp., its successors and assigns.” Wells Fargo did not
supplement the trial court record with the corrective Assignment of Mortgage.
{¶8} After the bankruptcy stay was lifted, Wells Fargo filed a second motion for
summary judgment on March 24, 2011. The supporting affidavit and exhibits referred to
the original Assignment of Mortgage. Arlington responded to the motion for summary
judgment. In his response, Arlington did not raise the issue of Wells Fargo’s standing to
bring the foreclosure action.
{¶9} The trial court granted the motion for summary judgment on June 10,
2011. The trial court entered the decree of foreclosure on June 21, 2011.
{¶10} Arlington filed a notice of appeal of the June 21, 2011 judgment. Arlington
voluntarily dismissed his appeal on November 3, 2011.
{¶11} On October 3, 2011, Arlington filed an Emergency Motion for Relief from
Judgment pursuant to Civ.R. 60(B). In the motion, Arlington argued the trial court
should vacate the decree in foreclosure because Wells Fargo did not have standing to
bring the foreclosure action. Arlington referenced the original Assignment of Mortgage
and corrective Assignment of Mortgage in his motion.
Delaware County, Case No. 13CAE030016 4
{¶12} The trial court denied the motion on October 4, 2011. Arlington did not
appeal the judgment.
{¶13} The Ohio Supreme Court issued Fed. Home Loan Mortg. Corp. v.
Schwartzwald, 134 Ohio St.3d 13, 2013-Ohio-5017, 979 N.E.2d 1214, on October 31,
2012.
{¶14} On January 29, 2013, Arlington filed a Motion to Vacate the June 10, 2011
Judgment Entry. Arlington cited to Schwartzwald to argue Wells Fargo did not have
standing when it filed the complaint in foreclosure.
{¶15} The trial court denied the motion to vacate on March 7, 2013. It is from
this judgment Arlington now appeals.
ASSIGNMENTS OF ERROR
{¶16} Arlington raises two Assignments of Error:
{¶17} “I. THE TRIAL COURT ABUSED ITS DISCRETION IN DENYING THE
MOTION TO VACATE.
{¶18} “II. A MOTION TO VACATE A VOID JUDGMENT PRESENTS A
QUESTION OF LAW WHICH SHOULD BE DETERMINED PURSUANT TO A DE
NOVO REVIEW. IN THE ALTERNATIVE, WHILE THE TRIAL COURT MAY NOT
HAVE “ABUSED ITS DISCRETION” IN DENYING THE MOTION TO VACATE, THE
ISSUE OF WHETHER A JUDGMENT IS VOID FOR LACK OF JURISDICTION CAN BE
RAISED AT ANY TIME AND THIS COURT SHOULD DETERMINE WHETHER THE
JUDGMENT IS VOID DE NOVO.”
Delaware County, Case No. 13CAE030016 5
ANALYSIS
I. and II.
{¶19} We consider the first and second Assignments of Error together to fully
analyze the issues presented. Arlington argues in his first Assignment of Error the trial
court abused its discretion in denying his motion to vacate. He argues in his second
Assignment of Error this court should use a de novo standard of review because issues
of law are presented. Under either standard of review, we overrule Arlington’s
Assignments of Error.
{¶20} Arlington stylized his January 29, 2013 motion as a common law motion to
vacate. In the motion, Arlington argued the trial court’s decree in foreclosure was a void
judgment because Wells Fargo lacked standing at the time it filed the foreclosure
complaint, as evidenced by the original Assignment of Mortgage and corrective
Assignment of Mortgage. A common law motion to vacate, instead of Civ.R. 60(B), is
utilized to vacate a void judgment. “A party should not file a Civ.R. 60(B) motion for
relief from judgment in order to have the void judgment vacated or set aside, since
Civ.R. 60(B) motions apply only to judgments that are voidable rather than void.” State
ex rel. DeWine v. 9150 Group, L.P., 2012-Ohio-3339, 977 N.E.2d 112, ¶ 7 (9th Dist.)
quoting Beachler v. Beachler, 10th Dist. Franklin No. CA2006–03–007, 2007-Ohio-
1220, ¶ 18. This is because “[t]he power to vacate a void judgment does not arise from
Civ.R. 60(B), but rather, from an inherent power possessed by the courts in this state.”
Thomas v. Fick, 9th Dist. Summit No. 19595, 2000 WL 727531, *2 (June 7, 2000),
quoting Patton v. Diemer, 35 Ohio St.3d 68, 518 N.E.2d 941 (1988), paragraph four of
the syllabus.
Delaware County, Case No. 13CAE030016 6
{¶21} A trial court's decision to deny a motion to vacate judgment is reviewed on
appeal for an abuse of discretion whether that motion is made pursuant to Civ.R. 60(B)
or to the court's inherent power at common law to vacate a void judgment. Spotsylvania
Mall Co. v. Nobahar, 7th Dist. Mahoning No. 11 MA 82, 2013-Ohio-1280, ¶ 14 citing
GTE Automatic Elec., Inc., v. ARC Industries, Inc., 47 Ohio St.2d 146, 150, 351 N.E.2d
113 (1976). Determining whether a trial court has subject matter jurisdiction is reviewed
de novo. Wells Fargo Bank, National Assoc. v. Elliot, 5th Dist. No. 13 CAE 03 0012,
2013-Ohio-3690Standing and Subject Matter Jurisdiction
{¶22} Arlington states that because Wells Fargo lacked standing to bring the
complaint, the lack of standing rendered the trial court without subject matter jurisdiction
to hear the complaint. His motion to vacate is based on the trial court’s allegedly void
judgment granting foreclosure. Because his argument is jurisdictional, Arlington argues
he may raise it at any time. This court recently addressed the issue of standing and
subject matter jurisdiction in Wells Fargo Bank, National Assoc. v. Elliot, 5th Dist. No. 13
CAE 03 0012, 2013-Ohio-3690.
{¶23} In Elliot, the defendant filed a motion to dismiss a complaint in foreclosure
pursuant to Civ.R. 12(B)(1). The defendant argued in the motion to dismiss the trial
court lacked subject matter jurisdiction to hear the complaint in foreclosure because the
plaintiff bank did not have standing at the time it filed the complaint. We explained the
nuances of standing and subject matter jurisdiction:
Jurisdiction is the trial court's “statutory or constitutional power to
adjudicate the case.” Steel Co. v. Citizens for a Better Environment, 523
Delaware County, Case No. 13CAE030016 7
U.S. 83, 89, 118 S.Ct. 1003 (1998); Morrison v. Steiner, 32 Ohio St.2d 86,
87, 290 N.E.2d 841 (1972). The term jurisdiction “encompasses
jurisdiction over the subject matter and over the person.” State v. Parker,
95 Ohio St.3d 524, 769 N.E.2d 846 (2002). Subject matter jurisdiction is
defined as a court's power to hear and decide cases. Pratts v. Hurley,
102 Ohio St.3d 81, 806 N.E.2d 992 (2004). Because subject matter
jurisdiction goes to the power of the court to adjudicate the merits of a
case, it can never be waived and may be challenged at any time. U.S. v.
Cotton, 535 U.S. 625, 630, 122 S.Ct. 1781 (2002); State ex rel. Tubbs
Jones v. Suster, 84 Ohio St.3d 70, 75, 701 N.E.2d 1002 (1998).
Separate from the requirement of subject matter jurisdiction in a
case is the requirement of standing. Standing is defined as “[a] party's
right to make a legal claim or seek judicial enforcement of a duty or right.”
Ohio Pyro, Inc. v. Ohio Dept. of Commerce, 115 Ohio St.3d 375, 875
N.E.2d 550 (2007), quoting Black's Law Dictionary (8th Ed.2004).
Standing depends on “whether the party has alleged such a personal
stake in the outcome of the controversy* * * as to ensure that the dispute
sought to be adjudicated will be presented in an adversary context and in
a form historically viewed as capable of judicial resolution.” Id., quoting
State ex rel. Dallman v. Franklin Cty. Court of Common Pleas, 35 Ohio
St.2d 176, 178–179, 298 N.E.2d 515 (1973). In order to establish
standing, a plaintiff must show they suffered “(1) an injury that is (2) fairly
traceable to the defendant's allegedly unlawful conduct, and (3) likely to
Delaware County, Case No. 13CAE030016 8
be redressed by the requested relief.” Lujan v. Defenders of Wildlife, 504
U.S. 555, 560–561, 119 L.Ed.3d 351 (1992). “These three factors—injury,
causation, and redressability—constitute the irreducible constitutional
minimum of standing.” Id.There is a clear distinction between the requirements of subject
matter jurisdiction and standing. Standing focuses on injury, causation,
and redressability between a plaintiff and defendant in a case, while
subject matter jurisdiction focuses on the court's power and ability to hear
and decide a case. A lack of standing argument challenges the capacity
of a party to bring an action, not the court's statutory or constitutional
power to adjudicate the case and thus is distinguishable from a lack of
subject matter jurisdiction argument. PNC Bank, N.A. v. Botts, 10th Dist.
No. 12AP256, 2012–Ohio–5383 (stating standing and capacity to sue do
not challenge the subject matter jurisdiction of a court); See also Country
Club Townhouses–North Condominium Unit Assn v. Slates, 9th Dist. No.
17299, 1996 WL 28003 (stating lack of standing challenges the capacity
of a party to bring an action, not the subject matter jurisdiction of the
court); Wells Fargo Bank, N.A. v. Brandle, 2d Dist. No.2012–CA–0002,
2012–Ohio–3492 (finding lack of standing does not deprive a court of
subject matter jurisdiction).
Id. at ¶ 9-11.
Delaware County, Case No. 13CAE030016 9
{¶24} We held Civ.R. 12(B)(1) permits the dismissal of a complaint for lack of
subject matter jurisdiction, but the rule of procedure did not provide for dismissal based
on lack of standing or capacity to sue. Elliot at ¶ 12.
{¶25} In Fed. Home Loan Mort. Corp. v. Schwartzwald, 134 Ohio St.3d 13,
2012-Ohio-5017, 979 N.E.2d 1214, the Ohio Supreme Court addressed the issue of
standing in a foreclosure action. The Supreme Court determined that a plaintiff in a
foreclosure action must have standing at the time the complaint is filed in order to
invoke the jurisdiction of the common pleas court. Id. at ¶ 24–25. “It is an elementary
concept of law that a party lacks standing to invoke the jurisdiction of the court unless
he has, in an individual or representative capacity, some real interest in the subject
matter of the action.” (Emphasis sic.) Id. at ¶ 22. The Court in Schwartzwald also
found that a lack of standing cannot be cured by “post-filing events” that supply
standing. Id. at ¶ 26. Moreover, a lack of standing “cannot be cured by receipt of an
assignment of the claim or by substitution of the real party in interest.” Id. at ¶ 41.
Standing of Wells Fargo
{¶26} Standing in a foreclosure case requires the lender to establish “an interest
in the note or mortgage at the time it filed the suit.” Elliot at ¶ 18 quoting Schwartzwald,
134 Ohio St.3d 13, ¶ 28. The current holder of the note and mortgage is the real party
in interest in a foreclosure action. Elliot at ¶ 18 citing U.S. Bank Natl. Assoc. v. Marcino,
181 Ohio App.3d 328, 2009-Ohio-1178, 908 N.E.2d 1032 (7th Dist.).
{¶27} In the present case, Wells Fargo attached a copy of the Note signed by
Arlington to the complaint in foreclosure. The Note contained two indorsements: (1) a
special indorsement from TBW to Wells Fargo and (2) a blank indorsement from Wells
Delaware County, Case No. 13CAE030016 10
Fargo. R.C. 1303.25(B) reads, “‘Blank indorsement’ means an indorsement that is
made by the holder of the instrument and that is not a special indorsement. When an
instrument is indorsed in blank, the instrument becomes payable to bearer and may be
negotiated by transfer of possession alone until specially indorsed.” Because the note
is payable to the bearer, negotiation of the note is accomplished by transfer of
possession alone. R.C. 1303.21(B). Arlington does not dispute Wells Fargo was the
holder of the Note when it filed the complaint in foreclosure.
{¶28} Arlington argued in his motion to vacate Wells Fargo was not the holder of
the Mortgage at the time the complaint was filed due to the differences in the original
Assignment of Mortgage filed with the complaint and the corrective Assignment of
Mortgage recorded on July 30, 2010, after the commencement of the suit.
{¶29} This Court has previously addressed the matter of standing in a
foreclosure action when the holder of the note is not the holder of the mortgage in Cent.
Mtge. Co. v. Webster, 2012-Ohio-4478, 978 N.E.2d 962 (5th Dist.). In Central
Mortgage, we reiterated the holding of Kuck v. Sommers, 59 Ohio Law Abs. 400, 100
N.E.2d 68, 75 (3rd Dist.1950), that states:
[w]here a note secured by a mortgage is transferred so as to vest the legal
title to the note in the transferee, such transfer operates as an equitable
assignment of the mortgage, even though the mortgage is not assigned or
delivered.
{¶30} This Court has consistently relied on Kuck v. Sommers to find the holder
of the note is the real party in interest entitled to pursue its rights under the note and
mortgage. See Bank of New York v. Dobbs, 5th Dist. No. 2009–CA–000002, 2009-
Delaware County, Case No. 13CAE030016 11
Ohio-4742, 2009 WL 2894601; Duetsche Bank Natl. Trust Co. v. Hansen, 5th Dist. No.
2010 CA 00001, 2011-Ohio-1223, 2011 WL 899625; 2010–1 CRE Venture, LLC v.
Costanzo, 5th Dist. No. 11 CAE 01 003, 2011-Ohio-3530, 2011 WL 2767592.
{¶31} The Lender in this case was Taylor, Bean & Whitaker Mortgage Corp.
The Mortgage states, “[t]his Security Instrument is given to Mortgage Electronic
Registration Systems, Inc. (‘MERS’) (solely as nominee for Lender, as hereinafter
defined, and Lender’s successors and assigns), as beneficiary.” The Mortgage further
states, “[t]his debt is evidenced by Borrower’s note dated the same date as this Security
Instrument (‘Note’) * * *.” Both Note and Mortgage are dated March 3, 2006.
{¶32} On March 20, 2007, MERS assigned the Mortgage to Wells Fargo. The
original Assignment of Mortgage stated, “Mortgage Electronic Registration Systems,
Inc. * * * does hereby sell, assign, transfer and set over unto Wells Fargo Bank, N.A. * *
* a certain mortgage from Dean E. Arlington * * *.” The Assignment of Mortgage was
recorded on March 26, 2007. On July 20, 2010, Wells Fargo executed a corrective
Assignment of Mortgage, which was recorded on July 30, 2010. The correction
changed the name of the assignor to: “Mortgage Electronic Registration Systems, Inc.,
as nominee for Taylor, Bean & Whitaker Mortgage Corp., its successors and assigns.”
{¶33} Arlington argues Bank of New York Mellon v. Roarty, 7th Dist. Mahoning
No. 10-MA-42, 2012-Ohio-1471 abrogates our holding in Central Mortgage. In Roarty,
the appellee bank was the holder of the note indorsed in blank. At the time the appellee
bank filed the complaint in foreclosure, the mortgage securing the note had not been
assigned to appellee bank. The mortgage was assigned after the complaint in
foreclosure was filed. The court of appeals found there was a genuine issue of material
Delaware County, Case No. 13CAE030016 12
fact whether the appellee bank was the real party in interest because there could be no
presumption the mortgage followed the note.
{¶34} We find the facts of the present case are inapposite to Roarty. A reading
of the Mortgage and the Assignment of Mortgage shows that MERS, as nominee for
TBW, assigned the Mortgage to Wells Fargo prior to the filing of the complaint in
foreclosure.
{¶35} Upon review of the motion to vacate, the trial court concluded
Schwartzwald did not apply to the facts of the case. We agree. Wells Fargo, as holder
of the Note and Mortgage, had standing to invoke the jurisdiction of the trial court when
it filed the complaint in foreclosure.
Res Judicata
{¶36} The trial court concluded and Wells Fargo argues on appeal Arlington’s
claims as to standing are barred by res judicata. The trial court granted Wells Fargo’s
motion for summary judgment on June 10, 2011. The trial court entered the decree of
foreclosure on June 21, 2011. Arlington appealed the final judgment, but voluntarily
dismissed his appeal.
{¶37} On October 3, 2011, Arlington filed an Emergency Motion for Relief from
Judgment pursuant to Civ.R. 60(B). In the motion, Arlington argued the trial court
should vacate the decree in foreclosure because Wells Fargo did not have standing to
bring the foreclosure action. Arlington referenced the original Assignment of Mortgage
and corrective Assignment of Mortgage in his motion.
{¶38} The trial court denied the motion on October 4, 2011. Arlington did not
appeal the judgment.
Delaware County, Case No. 13CAE030016 13
{¶39} Arlington argues that, regardless of his failure to appeal, he may raise the
issue at any time because the issue presented raises the question of the trial court’s
jurisdiction.
{¶40} Schwartzwald referred to the timing of the question of standing. The Court
stated: “the issue of standing, inasmuch as it is jurisdictional in nature, may be raised at
any time during the pendency of the proceedings.” 132 Ohio St.3d 13, 2012-Ohio-5017,
979 N.E.2d 1214, at ¶ 22 (citation omitted). (Emphasis added.) In Elliot, we noted the
Ohio Supreme Court held subsequent to the issuance of Schwartzwald that, after a
judgment entry grants a decree of foreclosure and order of sale, the matter is no longer
pending. Elliot at ¶ 14 citing Countrywide Home Loans Servicing v. Nichpor, 136 Ohio
St.3d 55, 2013-Ohio-2083 990 N.E.2d 565, at syllabus.
{¶41} Pursuant to Elliot and this Court’s interpretation of Schwartzwald, we find
Arlington’s time to appeal the issue of standing was through direct appeal of the decree
in foreclosure or an appeal of the denial of Arlington’s original Civ.R. 60(B) motion. As
such, Arlington’s claims raised in the subsequent motion to vacate are barred by res
judicata.1
1
The Ohio Supreme Court has certified a conflict between the Ninth and Tenth Districts on the
following question: “When a defendant fails to appeal from a trial court's judgment in a foreclosure action,
can a lack of standing be raised as part of a motion for relief from judgment?” See Bank of Am. v.
Kuchta, 135 Ohio St.3d 1430, 986 N.E.2d 1020, 2013–Ohio–1857.
Delaware County, Case No. 13CAE030016 14
CONCLUSION
{¶42} Pursuant to the above analysis, we overrule the two Assignments of Error
of Defendant-Appellant Dean Arlington.
{¶43} The judgment of the Delaware County Court of Common Pleas is affirmed.
By: Delaney, J.,
Hoffman, P.J. and
Farmer, J., concur.
HON. PATRICIA A. DELANEY
HON. WILLIAM B. HOFFMAN
HON. SHEILA G. FARMER