Huntington Bank, L.L.C. v. Prospect Park, L.L.C. , 2012 Ohio 3261 ( 2012 )

[Cite as Huntington Bank, L.L.C. v. Prospect Park, L.L.C., 2012-Ohio-3261.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 97720
THE HUNTINGTON BANK LLC, ET AL.
PLAINTIFFS-APPELLEES
vs.
PROSPECT PARK LLC, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-720895
BEFORE: Rocco, J., Celebrezze, P.J., and E. Gallagher, J.
RELEASED AND JOURNALIZED: July 19, 2012
ATTORNEY FOR APPELLANT
Gerald W. Phillips
Phillips & Co., LPA
P.O. Box 269
Avon Lake, OH 44012
ATTORNEYS FOR APPELLEES
For The Huntington National Bank
E. Mark Young
David R. Mayo
Benesch, Friedlander, Coplan & Aronoff
200 Public Square
Suite 2300
Cleveland, OH 44114
For Cuyahoga County Treasurer
Fiscal Office
1st Floor
1219 Ontario Street
Cleveland, OH 44113
For Midwest Realty Advisors LLC
Bernard H. Niehaus
Frantz Ward LLP
127 Public Square
Suite 2500
Cleveland, OH 44114
For Parkview Federal Savings Bank
Sarah Blackburn
Cavitch, Familo & Durkin, LPA
1300 East 9th Street, 20th floor
Cleveland, OH 44114
KENNETH A. ROCCO, J.:
{¶1} In this receivership action, defendant-appellant Prospect Park, LLC
(“Prospect Park”) appeals from the trial court’s judgment approving the completion of
sale for the property located at 4614 Prospect Avenue, Cleveland, Ohio 44114 (“the
property”) for the sum of $1,050,000. Because Prospect Park failed to object to the
proposed sale at the trial court level, it has waived its right to raise these arguments on
appeal. Further, even if Prospect Park had not waived, the trial court did not abuse its
discretion in approving the completion of sale. Prospect Park’s position is based on the
flawed premise that R.C. Chapter 2329 applies to receiverships. Well-settled authority
makes clear that R.C. Chapter 2329 does not apply to receivership cases. Prospect Park
fails to adequately address this well-settled authority while adamantly averring that R.C.
Chapter 2329 does apply. For these reasons, we affirm the trial court’s judgment.
{¶2} This is the second time this matter is before this court. In Huntington Natl.
Bank v. Prospect Park, LLC, 8th Dist. No. 96218, 2011-Ohio-5391 (“Huntington I”),
Prospect Park appealed the trial court’s decision to appoint a receiver. We affirmed the
trial court’s judgment. In order to provide background, the relevant portions of
Huntington I are set forth as follows:
Plaintiffs filed a verified complaint on March 10, 2010, seeking to foreclose
on property owned by Prospect Park at 4614 Prospect Avenue in Cleveland
(“the property”). Plaintiffs each possess an ownership interest in the loan
documents that are the subject of this action. Plaintiffs aver in their
complaint that Prospect Park executed a cognovit promissory note in the
principal amount of $1,700,000. A cognovit guaranty was executed by
David B. Snider and Sam P. Cannata. In order to secure payment of the
note, Prospect Park executed an open-end mortgage and security agreement
on the property. Following a default under the note and guaranty,
plaintiffs obtained a cognovit judgment in excess of $1 million in Cuyahoga
County Common Pleas Court Case No. CV–715934. They then
commenced this foreclosure action.
In conjunction with the complaint, plaintiffs filed a motion for the
appointment of a receiver without notice. They sought the appointment of
a receiver pursuant to R.C. 2735.01 et seq. and the terms of the mortgage. *
**
***
On November 23, 2010, the trial court granted the motion and appointed
Jack Cornachio of Midwest Realty Advisors as the receiver. The trial
court found as follows: “[T]he court finds that [Prospect Park] has not met
obligations as they come due and that a Receiver should be appointed to
take charge of, collect rents, income and profits and to otherwise manage
and preserve the real and personal property of Defendant Prospect Park
located at 4614 Prospect Avenue, Cleveland, Ohio 44103 and described in
further detail in the Mortgage * * *. The Court finds that a Receiver
should be appointed * * *. The Court further finds that the facts in this
matter support a finding that the requirements of Ohio Revised Code §
2735.01 have been met and that the appointment of a Receiver is an
appropriate remedy.”
{¶3} Huntington I, ¶ 2-3, 5. Following our decision in Huntington I, on November
1, 2011, the receiver filed with the trial court a Request for Instructions requesting that
the court approve the sale of the property. The Request for Instructions set forth that an
offer had been made on the property in the amount of $1,050,000; that no other offers had
been received; and that the receiver believed that the price offered was fair and
represented the market value for the property. Prospect Park did not file any objections
to the Request for Instructions, and the trial court did not hold a hearing on the matter.
On November 17, 2011, the trial court approved the request to complete the sale of the
property. This appeal follows.
{¶4} Prospect Park presents five assignments of error:
“I. The trial court erred when it granted the receiver’s request for the sale of
the foreclosure property without any appraisal for the foreclosure property.
“II. The trial court erred when it granted the receiver’s request for the sale
of the foreclosure property without any evidence of the valuation for the foreclosure
property.
“III. The trial court erred when it granted the receiver’s request for the sale
of the foreclosure property without any evidentiary hearing for its sale.
“IV. The trial court erred when it granted the receiver’s request for the sale
of the foreclosure property in violation of the constitutional due process rights of
interested parties in the foreclosure property.
“V. The trial court erred when it granted the receiver’s request for the sale
of the foreclosure property in violation of the requirements of R.C. 2329.”
{¶5} We apply the abuse-of-discretion standard to the trial court’s decision to
approve the sale of the property. See Huntington Natl. Bank v. Motel 4 BAPS, Inc., 191
Ohio App.3d 90, 2010-Ohio-5792, 944 N.E.2d 1210, ¶ 8 (8th Dist.).
{¶6} Because Prospect Park failed to raise any objection to the trial court with
regard to the receiver’s request to sell the property, it has waived its right to raise those
objections to this court on appeal. Goldfuss v. Davidson, 79 Ohio St.3d 116, 121, 679
N.E.2d 1099 (1997) (“[F]ailure to timely advise a trial court of possible error, by
objection or otherwise, results in a waiver of the issue for purposes of appeal.”). We
“need not address arguments that were not raised in the trial court.” Hummer v.
Hummer, 8th Dist. No. 96132, 2011-Ohio-3767, ¶ 7.
{¶7} In this case, on November 1, 2011, the receiver filed with the trial court a
Request for Instructions requesting that the court approve the sale of the property.
Prospect Park’s arguments are all centered on the position that the trial court should not
have approved the sale. The record indicates that Prospect Park had actual knowledge
that the receiver had filed the Request for Instructions, but Prospect Park filed no
objection with the trial court. Because Prospect Park failed to raise these objections to
the trial court below, it has waived these issues on appeal.
{¶8} We are troubled by Prospect Park’s briefing to this court, because it fails to
raise well-settled authority that stands in direct contravention to the position it advocates
to this court on appeal. Prospect Park’s assignments of error are based on the position
that, before it could approve the sale, the trial court was required to adhere to specific
requirements set forth in R.C. Chapter 2329.
{¶9} But R.C. Chapter 2329 applies to sales by writs of execution, not
receiverships. In Huntington Natl. Bank v. Motel 4 BAPS, Inc., 191 Ohio App.3d 90,
2010-Ohio-5792, 944 N.E.2d 1210 (8th Dist.), this court differentiated between
receiverships and writs of execution. Because Motel 4 BAPS so clearly addresses the
issue in the instant case, because Motel 4 BAPS is well-settled authority, and because
Prospect Park completely fails to address this case in its opening brief, we find it germane
to quote the case at length:
A receiver sale is an alternative remedy to a sheriff’s sale for enforcing and
satisfying a judgment. A receiver “is appointed for the benefit of all the
creditors of the property subject to receivership,” Castlebrook Ltd. v.
Dayton Properties Ltd. Partnership (1992), 78 Ohio App.3d 340, 350, 604
N.E.2d 808, and as “an officer of the court [is] at all times subject to its
order and direction,” Park Natl. Bank v. Cattani, 187 Ohio App.3d 186,
2010-Ohio-1291, 931 N.E.2d 623, ¶ 10, “deems appropriate.” Celebrezze
v. Gibbs (1991), 60 Ohio St.3d 69, 74, 573 N.E.2d 62. As such, a
reviewing court will not disturb the trial court’s judgment absent an abuse
of discretion. Unlike writs of execution that follow strict procedural
requirements, receiverships have been called equitable executions because
the court’s authority for appointing receivers is derived from the court’s
equitable power. Doyle v. Yoho Hooker Youngstown Co. (1936), 130 Ohio
St. 400, 403–404, 4 O.O. 566, 200 N.E. 123. The Ohio Supreme Court
has interpreted R.C. 2735.04 as “enabling the trial court to exercise its
sound judicial discretion to limit or expand a receiver’s powers as it deems
appropriate.” Celebrezze v. Gibbs (1991), 60 Ohio St.3d 69,74, 573 N.E.2d
62.* * *
In contrast, a writ of execution is “a process of a court, issued by its clerk,
and directed to the sheriff of the county,” R.C. 2327.01, against the
property, including orders of sale, of a judgment debtor, R.C. 2327.02.
Writs of execution must follow the requirements for notice set forth in
R.C. 2329.26 * * *
This statute’s language indicates that it applies only to writs of
execution and not receiverships. * * *
R.C. 2735.04, which governs receiverships, does not provide such strict
regulations. * * *
***
Ohio courts have held that “R.C. Chapter 2735, ‘does not contain any
restrictions on what the court may authorize when it issues orders regarding
receivership property,’ [and] * * * this includes the power to authorize a
receiver, under certain circumstances, to sell property at a private sale free
and clear of all liens and encumbrances.” Park Natl. Bank v. Cattani, 187
Ohio App.3d 186, 2010-Ohio-1291, 931 N.E.2d 623, ¶ 13, quoting Quill v.
Troutman Ents., Inc., Montgomery App. No. 20536, 2005-Ohio-2020, 2005
WL 994676, ¶ 34. See also Ohio Director of Transp. v. Eastlake Land
Dev. Co., 177 Ohio App.3d 379, 2008-Ohio-3013, 894 N.E.2d 1255, ¶
49–51 (Gallagher, P.J., dissenting).
Thus, the legislature has clearly defined writs of execution and
receiverships as separate and distinct options for enforcing and
satisfying debts. Nevertheless, in support of its claim that the notice
procedures set forth in R.C. 2329.26 apply to all receivers, Motel 4
relies almost exclusively on Eastlake Land Dev. The issue in Eastlake
was whether a judicial lienholder, as an indispensable party, was given
proper notice as required for due process. This court declined to decide
whether R.C. 2329.26 applied to receiverships because the court found that
due process was clearly violated by the complete absence of any notice
whatsoever. The receiver in that case never sent the judicial lienholder the
summons and complaint notifying it that he sought to extinguish its interests
through the sale of the property. Id.Here, Motel 4 is the debtor and the property owner, not a lienholder.
Further, Motel 4 was actively involved in the suit and negotiated a
60–day stay of the sale to have the opportunity to refinance the property or
arrange a friendly purchase. Motel 4 had actual notice of the sale
because it knew that once the 60–day stay expired, the receiver would sell
the property. Also, Motel 4 filed a motion for stay of the receiver’s
auction, claiming defective notice. Thus, Eastlake is inapplicable to the
case at bar. Having found that R.C. 2329.26 relates only to writs of
execution and not receivership sales, which are governed by another
chapter of the Ohio Revised Code, we cannot say that the trial court
abused its discretion in allowing the receiver to sell the property
without following the notice requirements set forth in R.C. 2329.26.
(Footnotes omitted.) (Emphasis added.)
Motel 4 BAPS at ¶ 8-15. Our decision in Motel 4 BAPS makes clear that R.C. Chapter
2329 is inapplicable to receiverships and that Eastlake Land Dev. does not apply to a
debtor, particularly one who has actual notice of a sale.
{¶10} In the instant case, the sale is by receivership, Prospect Park was a debtor,
and Prospect Park had actual notice of the proposal to sell the property. Nonetheless, in
its brief, each of Prospect Park’s assignments of error is based on the premise that R.C.
Chapter 2329 does apply to receiverships and that Eastlake Land Dev. does govern this
case. Even were we to assume that its failure to mention Motel 4 BAPS was an oversight
on the part of Prospect Park, its reply brief exacerbates the problem. After appellees
highlighted Motel 4 BAPS in their response brief to this court, Prospect Park continued
to argue in its reply brief that both R.C. Chapter 2329 and Eastlake Land Dev. applied.
Prospect Park briefly mentions Motel 4 BAPS in its reply brief stating:
the facts * * * are readily distinguishable, an evidentiary hearing was held,
and the party had notice of the proposed sale and had an opportunity to be
heard. The court rejected the first assignment of error that the court
appointed receiver was bound by the strict notice requirements set forth in
R.C. 2329.26 since an evidentiary hearing was held, and the party had
notice of the proposed sale and had an opportunity to be heard.
Reply Br. at 7. Simply put, Prospect Park mischaracterizes our decision in Motel 4
BAPS. Our holding in Motel 4 BAPS states that “R.C. 2329.26 relates only to writs of
execution and not receivership sales, which are governed by another chapter of the Ohio
Revised Code [R.C. 2735.04].” Motel 4 BAPS, ¶ 10. Prospect Park is disingenous
when it argues that Motel 4 BAPS does not stand for the proposition that R.C. Chapter
2329 is inapplicable to receiverships. Motel 4 BAPS is settled authority.
{¶11} Because Prospect Park failed to object to the proposed sale at the trial court
level, it has waived its right to raise these objections on appeal. Even if Prospect Park
had not waived that right, we conclude that the trial court did not abuse its discretion in
approving the completion of sale.
{¶12} The trial court’s orders are affirmed.
It is ordered that appellees recover from appellant costs herein taxed.
It is ordered that a special mandate be sent to said court to carry this judgment into
execution.
A certified copy of this entry shall constitute the mandate pursuant to
Rule 27 of the Rules of Appellate Procedure.
________________________________________
KENNETH A. ROCCO, JUDGE
FRANK D. CELEBREZZE, JR., P.J., and
EILEEN A. GALLAGHER, J., CONCUR