Everbank v. Katz , 2014 Ohio 4080 ( 2014 )

[Cite as Everbank v. Katz, 2014-Ohio-4080.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 100603
EVERBANK
PLAINTIFF-APPELLEE
vs.
HERBERT R. KATZ, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-12-773366
BEFORE: Stewart, J., Blackmon, P.J., and McCormack, J.
RELEASED AND JOURNALIZED: September 18, 2014
ATTORNEY FOR APPELLANTS
J. Gary Seewald
1419 W. 9th Street, 3d Floor
Cleveland, OH 44113
ATTORNEY FOR APPELLEE
Gregory A. Stout
3962 Red Bank Road
Cincinnati, OH 45227
MELODY J. STEWART, J.:
{¶1} Plaintiff-appellee Everbank (“bank”), the holder of a promissory note issued
by defendant-appellant Herbert Katz, brought this action for breach of contract on the
note and foreclosure on the accompanying mortgage. A magistrate granted summary
judgment to the bank, and the court approved that decision over Katz’s objections. The
three assigned errors on appeal collectively contest the bank’s chain of title to the
promissory note.
{¶2} The bank alleged that it was the holder of a promissory note in the amount of
$200,000 executed in June 2006 by Katz; that Katz defaulted on the note; that the note
was accelerated pursuant to its terms; and that Katz owed the sum of $187,489.04, plus
interest. The original note was issued to AmericaHomeKey, Inc., and a mortgage was
recorded by the Cuyahoga County Recorder. There are two allonges to the note: the
first allonge shows that AmericaHomeKey, Inc. endorsed the note to Ohio Savings Bank;
and the second allonge shows that the Federal Deposit Insurance Corporation (“FDIC”),
as the receiver of AmTrust Bank (formerly known as Ohio Savings Bank), endorsed the
note to Everbank.
{¶3} Katz argues that the affidavit the bank submitted in support of its motion for
summary judgment with respect to a default on the note could not have been made with
personal knowledge of the manner in which the bank obtained the note from the FDIC.
{¶4} When an affidavit is offered in support of a motion for summary judgment,
Civ.R. 56(E) requires it to be made on “personal knowledge, shall set forth such facts as
would be admissible in evidence, and shall show affirmatively that the affiant is
competent to testify to the matters stated in the affidavit.” The assistant vice president
stated that she had personal knowledge of the facts stated in the affidavit, that she was
familiar with the business records maintained by the bank, and that she had personally
examined and independently verified those records. These statements were not
controverted by other evidence, so they were enough to satisfy Civ.R. 56(E). See
Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657,
¶ 20.
{¶5} We also find that the bank business records used by the assistant vice
president to determine that Katz had defaulted were excepted from the hearsay rule.
Evid.R. 803(6) excludes records of regularly conducted activity from the hearsay rule if
those records were made at or near the time by a person with knowledge, if kept in the
course of a regularly conducted business activity, and if it was the regular practice of that
business activity to make the memorandum, report, record, or data compilation. The
assistant vice president’s affidavit verified all of the prerequisites of Evid.R. 803(6), so
the statement contained in her affidavit was not subject to exclusion on the grounds of
being hearsay.
{¶6} The bank had to prove a chain of title to show that it validly obtained the
note. It did so through the allonges. The allonges show a chain of title from
AmericaHomeKey, Inc. to Ohio Savings Bank/AmTrust to the FDIC to Everbank. Katz
complains that there is no evidence to show how the FDIC obtained the note from
AmTrust, but the second allonge makes that point clear — the FDIC obtained the note as
“receiver of AmTrust Bank fka Ohio Savings Bank.” Katz concedes in his appellate
brief that “Ohio Savings aka AmTrust Bank eventually joined Lehman Brothers in
bankruptcy court.” Appellant’s Brief at 6. The FDIC was named receiver of AmTrust
assets. See https://www.fdic.gov/bank/individual/failed/amtrust.html (accessed Aug. 11,
2014). In that capacity, it had the authority to endorse the note to the bank under the
powers granted to it by the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989, 12 U.S.C. 1821(d)(2)(A)(i) (the FDIC “shall, as * * * receiver, and by operation
of law, succeed to * * * all rights, titles, powers, and privileges of the insured depository
institution, and of any stockholder, member, account holder, depositor, officer, or director
of such institution with respect to the institution and the assets of the institution”). Chain
of title was established.
{¶7} It is of no consequence that the allonge was undated. The Uniform
Commerical Code does not require endorsements on negotiable instruments to be dated.
Wells Fargo Bank, N.A. v. Roehrenbeck, 5th Dist. Licking No. 13 CA 29,
2013-Ohio-5498, ¶ 15. In any event, the chain of endorsements is sequential, thus
belying any argument that the chain of title for the note was broken.
{¶8} Katz also disputes the chain of title for the mortgage, arguing that the bank
failed to prove how the Mortgage Electronic Registration Systems (“MERS”), as nominee
from AmericaHomeKey, obtained the mortgage. We have stated that “[i]t is settled in
this appellate district that a mortgagor lacks standing to challenge the assignment of his
mortgage directly if the mortgagor is neither a party to, nor a third-party beneficiary of,
the assignment contract.” Bank of New York Mellon v. Froimson, 8th Dist. Cuyahoga
No. 99443, 2013-Ohio-5574, ¶ 17, citing Bank of New York Mellon Trust Co. v. Unger,
8th Dist. Cuyahoga No. 97315, 2012-Ohio-1950, ¶ 35. In any event, even if Katz had
standing to challenge the assignment, “MERS has authority to assign a mortgage when it
is designated as both a nominee and mortgagee.” Bank of New York Mellon v. Putman,
12th Dist. Butler No. CA2012-12-267, 2014-Ohio-1796, ¶ 24, citing BAC Home Loans
Servicing, L.P. v. Haas, 3d Dist. Marion No. 9-13-40, 2014-Ohio-438, ¶ 28. The
mortgage provided both that MERS was nominee and mortgagee, so MERS had the
authority to assign the mortgage.
{¶9} The assignments of error are overruled.
{¶10} Judgment affirmed.
It is ordered that appellee recover of appellants its costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the Cuyahoga
County Court of Common Pleas 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.
________________________________________
MELODY J. STEWART, JUDGE
PATRICIA ANN BLACKMON, P.J., and
TIM McCORMACK, J., CONCUR