CitiMortgage v. Foster , 2012 Ohio 6274 ( 2012 )

[Cite as CitiMortgage v. Foster, 2012-Ohio-6274.]
STATE OF OHIO, MAHONING COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
CITIMORTGAGE, INC. ) CASE NO. 11 MA 115
)
PLAINTIFF-APPELLEE )
)
VS. ) OPINION
)
BERCHINDLE J. FOSTER, ET AL. )
)
DEFENDANTS-APPELLANTS )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Mahoning County, Ohio
Case No. 10 CV 3468
JUDGMENT: Affirmed.
APPEARANCES:
For Plaintiff-Appellee: Atty. Mia L. Conner
Lerner, Sampson & Rothfuss
120 East Fourth Street, Suite 800
Cincinnati, Ohio 45202
Atty. Harry J. Finke, IV
Atty. Harry W. Cappel
Graydon, Head & Ritchey LLP
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202-3157
For Defendants-Appellants: Atty. Dale E. Bricker
100 DeBartolo Place, Suite #160
P.O. Box 3232
Youngstown, Ohio 44513
JUDGES:
Hon. Cheryl L. Waite
Hon. Gene Donofrio
Hon. Joseph J. Vukovich
Dated: December 18, 2012
[Cite as CitiMortgage v. Foster, 2012-Ohio-6274.]
WAITE, P.J.
{¶1} Appellants Berchindle and Katrina Foster (“Appellants”) appeal the trial
court's decision to grant summary judgment in favor of Appellee, CitiMortgage, Inc.
(“Appellee”), in a foreclosure action. Appellants assign as error the court's finding
that CitiMortgage, Inc., is licensed to do business in Ohio. Appellants contend that a
foreign corporation such as Citimortgage, Inc., cannot maintain a civil action in Ohio
unless it is properly licensed and registered with the Ohio Secretary of State pursuant
to R.C. 1703.03, et seq., and submit that, without proper corporate registration,
Citimortgage, Inc., lacked standing to initiate and prosecute a foreclosure action.
Appellants rely on a letter from the Ohio Secretary of State purportedly denying that
Appellee is registered as a foreign corporation, but the letter does not correctly refer
to Appellee and does not support their argument. As there is no other evidence in
the record questioning the corporate registration of Appellee, the judgment of the trial
court is affirmed.
Statement of Facts
{¶2} On March 4, 2005, Berchindle J. and Katrina P. Foster financed the
purchase of a house located at 3357 Quentin Drive, Youngstown, Ohio 44511
through First Place Bank. At that time they signed a promissory note in the amount
of $72,856.00. The promissory note was transferred from First Place Bank to
CitiMortgage, Inc., on March 7, 2005, as evidenced by the special indorsement on
page two of the promissory note. The loan was secured by the mortgage granted by
Appellants to First Place Bank and recorded in the office of the Mahoning County
Recorder on March 7, 2005. The mortgage was assigned from First Place Bank to
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CitiMortgage, Inc., as evidenced by the assignment executed March 4, 2005, and
recorded in the office of the Mahoning Country Recorder on March 7, 2005.
Appellants failed to make their monthly mortgage payments and Appellee declared
default and accelerated the loan.
Procedural History
{¶3} On September 10, 2010, Citimortgage, Inc., filed its mortgage
foreclosure action in the Mahoning County Common Pleas Court. Appellants were
served with the summons and complaint on October 18, 2010, and filed their answer
on November 10, 2010. Appellants did not assert any affirmative defenses to the
action. Appellee then moved for summary judgment.
{¶4} On April 27, 2010, Appellants filed their brief in opposition to the motion
for summary judgment. One of the reasons they opposed summary judgment was an
allegation that Citimortgage, Inc., was not registered in the Ohio Secretary of State’s
office to do business in Ohio as a foreign corporation. Appellants claimed that
without proper corporate registration, Appellee had no standing to litigate a
foreclosure action in Ohio. Attached to Appellants' brief was a certification from the
Ohio Secretary of State's office that there was no registration record of an Ohio or
foreign business entity named “Citimortgage.” On May 19, 2011, Appellee replied in
support of its motion for summary judgment. Appellee attached a copy of its
corporate registration to its reply. On May 24, 2011, the magistrate entered his
decision granting Appellee’s motion for summary judgment, finding that Citimortgage,
Inc., is licensed to do business in Ohio. Appellants filed objections, again raising the
issue of Appellee's corporate registration. On June 30, 2011, the trial court overruled
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the objections and adopted the magistrate's decision. On July 15, 2011, the trial
court entered a decree in foreclosure. Appellants filed this timely appeal. The trial
court issued a stay of execution of judgment on August 5, 2011.
Standard of Review
{¶5} We review a trial court’s entry of summary judgment de novo under the
standards set forth in Civ.R. 56. Comer v. Risko, 106 Ohio St.3d 185, 2005-Ohio-
4539, 833 N.E.2d 712. The moving party carries an initial burden of setting forth
specific facts that demonstrate his or her entitlement to summary judgment. Dresher
v. Burt, 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264 (1996). If the movant fails to
meet this burden, summary judgment is not appropriate; if the movant does meet this
burden, summary judgment will be appropriate only if the non-movant fails to
establish the existence of a genuine issue of material fact. Id. at 293. “A motion for
summary judgment forces the nonmoving party to produce evidence on any issue for
which that party bears the burden of production at trial.” Wing v. Anchor Media, Ltd.
of Texas, 59 Ohio St.3d 108, 570 N.E.2d 1095 (1991), paragraph three of the
syllabus, citing Celotex v.Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986). Furthermore, the burden of establishing that there is a genuine issue of
material fact regarding a defense lies with the defendant. Todd Dev. Co., Inc. v.
Morgan, 116 Ohio St.3d 461, 2008-Ohio-87, 880 N.E.2d 88, ¶23-24.
ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED IN ADOPTNG THE MAGISTRATE’S
DECISION WHICH HELD IN PART THAT PLAINTIFF IS LICENSED
TO DO BUSINESS IN OHIO. THE TRIAL COURT IN GRANTING
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SUMMARY JUDGMENT IN FAVOR OF PLAINTIFF FAILED TO
CONSIDER DEFENDANTS [SIC] AFFIDAVIT WHICH INCLUDED A
CERTIFICATE BY THE OHIO SECRETARY OF STATE STATING
THAT AS OF APRIL 1, 2011, THE SECRETARY OF STATE’S OFFICE
HAD NO RECORD OF CITIMORTGAGE BEING REGISTERED
EITHER AS A DOMESTIC OR FOREIGN CORPORATION.
{¶6} Appellants challenge the decision to grant summary judgment to
Citimortgage, Inc., on the basis that Citimortgage, Inc., has no standing or capacity to
sue in Ohio due to its alleged failure to properly register with the Ohio Secretary of
State. R.C. 1703.03 states that “[n]o foreign corporation not excepted from sections
1703.01 to 1703.31 of the Revised Code, shall transact business in this state unless
it holds an unexpired and uncanceled license to do so issued by the secretary of
state.” There is no dispute among the parties that Appellee is a foreign corporation
and that it transacts business in Ohio. Although national banks that have a main
office that is located outside of Ohio are exempt from the registration requirements of
R.C. 1703.03, the record does not establish that Appellee is or is associated with a
national bank. Citibank v. Eckmeyer, 11th Dist. No. 2008-P-0069, 2009-Ohio-2435.
{¶7} R.C. 1703.29(A) states: “* * * no foreign corporation which should have
obtained such license shall maintain any action in any court until it has obtained such
license.” Appellants contend that Appellee did not establish that it was properly
registered with the Ohio Secretary of State as a foreign corporation, and that the trial
court should not have granted summary judgment to Appellee due to lack of standing
to maintain a foreclosure action.
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{¶8} Appellants are correct that the failure of a foreign corporation doing
business in Ohio to have a current Ohio corporate license registered with the
secretary of state is a defense to any action maintained by that corporation, and may
form the basis of dismissal of the action if timely raised and properly proven. P.K.
Springfield, Inc. v. Hogan, 86 Ohio App.3d 764, 770, 621 N.E.2d 1253 (2d Dist.1993).
{¶9} The evidentiary basis of Appellants' argument is a certificate it acquired
from the Ohio Secretary State stating that it had no record of any business entity
named “Citimortgage” licensed in Ohio. This certificate was properly referenced in an
affidavit attached to Appellants' brief in opposition to summary judgment. Appellee
responded by producing a copy of its corporate registration obtained from the
secretary of state's internet website. This copy reflects that “Citimortgage, Inc.” was
currently registered as a foreign corporation in Ohio.
{¶10} Although Appellee attached the copy of its corporate certification to its
reply in support of summary judgment, it failed to refer to the document in a properly
submitted affidavit. Civ.R. 56(C) only allows for specific types of documents and
evidence to be used in support of summary judgment: “Summary judgment shall be
rendered forthwith if the pleadings, depositions, answers to interrogatories, written
admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any,
timely filed in the action, show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law. No evidence or
stipulation may be considered except as stated in this rule.”
{¶11} “The proper method for introducing evidentiary materials not specifically
authorized by Civ.R. 56(C) is to incorporate them by reference into a properly framed
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affidavit.” Citibank v. McGee, 7th Dist. No. 11 MA 158, 2012-Ohio-5364, ¶14, citing
Martin v. Central Ohio Transit Auth., 70 Ohio App.3d 83, 89, 590 N.E.2d 411 (10th
Dist.1990); see also, Civ.R. 56(E). Because Appellee did not reference its corporate
registration in an affidavit, it was not properly before the trial court and is not
evidence to support summary judgment.
{¶12} Despite Appellee's evidentiary problem, we are still left with the
question as to why the Ohio Secretary of State would apparently certify that Appellee
was not licensed as a foreign corporation in Ohio. This question is answered when
we look more closely at the certification attached to Appellants' brief in opposition to
summary judgment. The document states that the secretary of state's records “show
NO RECORD of any * * * foreign corporation * * * known as CITIMORTGAGE, filed in
this office as of the date of this certificate.” (Emphasis sic.) Appellee's corporate
name, though, is not “Citimortgage.” Appellee's correct name is “Citimortgage, Inc.”
A corporate name is a very precise term, and minor variations in the spelling and
punctuation of a corporate name may result in an incorrect search being conducted
by the secretary of state. For example, R.C. 1701.05(A)(1) requires that Ohio
corporate names “end with or include the word or abbreviation ‘company,’ ‘co.,’
‘corporation,’ ‘corp.,’ ‘incorporated,’ or ‘inc.’ ” Presumably, a similar requirement
exists in most other states. The certification requested by Appellants did not include
the abbreviation “Inc.” Thus, the search apparently resulted in a certification that has
no relevance in this case. There is no entity named “Citimortgage” involved in this
case. Appellee's corporate name is “Citimortgage, Inc.” Appellants have not
provided any evidence casting doubt on Appellee's corporate registration under its
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correct corporate name. As stated earlier, the challenge to a corporate plaintiff's
standing based on an alleged failure to register the corporation with the secretary of
state is a defense, and Appellants had the burden of establishing a genuine issue of
material fact regarding that defense. Appellants failed to meet that burden, and the
trial court correctly ruled in Appellee's favor.
{¶13} In conclusion, Appellants did not provide relevant evidence to establish
a genuine issue of material fact about whether Appellee was a registered foreign
corporation in Ohio. The burden of proof was on Appellants to establish this defense
to the foreclosure action. Appellants’ argument on appeal is that Appellee had no
standing to litigate a foreclosure action because it was not a registered corporation,
but without any evidence to support such an assertion, summary judgment in favor of
Appellee was appropriate. Appellants' sole assignment of error is overruled and the
judgment of the trial court affirmed.
Donofrio, J., concurs.
Vukovich, J., concurs.