Multibank 2009-1 CML-ADC VENTURE, L.L.C. v. S. Bass Island Resort, Ltd. , 2014 Ohio 4513 ( 2014 )

[Cite as Multibank 2009-1 CML-ADC VENTURE, L.L.C. v. S. Bass Island Resort, Ltd., 2014-Ohio-4513.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
OTTAWA COUNTY
Multibank 2009-1 CML-ADC Court of Appeals No. OT-13-004
VENTURE, LLC
Trial Court No. 2008CV0479
Appellee
v.
South Bass Island Resort, Ltd., et al. DECISION AND JUDGMENT
Appellants Decided: October 10, 2014
*****
Martha S. Sullivan, Stephanie E. Niehaus and F. Maximilian
Czernin, for appellee.
D. Jeffery Rengel and Thomas R. Lucas, for appellants.
*****
PIETRYKOWSKI, J.
{¶ 1} South Bass Island Resort, Ltd. (“SBIR”), Cecil Weatherspoon, Terry L.
Ross, and John C. Tomberlin, appellants, appeal December 18, 2012, January 22, 2013,
and April 9, 2013 judgments of the Ottawa County Court of Common Pleas in a dispute
arising out of a June 14, 2006 loan by Columbian Bank to SBIR. Multibank 2009-1
CML-ADC VENTURE, LLC (“Multibank”) is the successor in interest to Columbian
Bank with respect to the transaction and is the appellee. For ease of reference, we will
refer to Columbian Bank and Multibank collectively in this decision and judgment as
“the Bank.”
{¶ 2} Under the June 14, 2006 loan agreement, the Bank agreed to loan SBIR up
to $8,600,000 and SBIR executed a cognovit promissory note (“the Note”) and an open-
end mortgage, assignment of rents, and security agreement (“the Mortgage”). As
additional security for the loan, appellants Weatherspoon and Tomberlin together with
250 Centre Ltd. each executed separate cognovit unconditional guarantees of the loan.
Weatherspoon also executed, as collateral, an assignment of an insurance policy.
{¶ 3} The loan mortgage relates to parcels of real property located in Erie and
Ottawa counties. On August 15, 2008, the Bank filed separate lawsuits in both counties.
The Bank filed this action in the Ottawa County Court of Common Pleas. The Bank filed
the other in the Erie County Court of Common Pleas in a case entitled Multibank 2009-1
CML-ADC Venture, LLC v. South Bass Island Resort, Ltd., case No. 2008-CV-0749 (Erie
Cty. C.P. Ct.).
{¶ 4} The Bank filed a motion for summary judgment in this case. In the
December 18, 2012 judgment, the trial court found that the defendants were in default on
the terms of the loan agreement and mortgage and granted the Bank summary judgment
2.
on Counts 1, 2, 3, 5 and 8 of the complaint. The Bank had acknowledged that the other
counts of the complaint were moot.
{¶ 5} In the January 22, 2013 judgment, the trial court granted relief. Under
Count 1 of the complaint, the court awarded the Bank judgment against SBIR and the
guarantors (identified as Weatherspoon, Tomberlin, and 250 Centre Ltd.), jointly and
severally for principal owing under the note of $7,849,093.30 together with interest,
taxes, attorney’s fees, demolition and repair charges levied by the Put in Bay Township
Board of Trustees and other amounts which were undetermined at that time.
{¶ 6} Under Counts 2 and 3 of the complaint, the court determined that the
Mortgage secured indebtedness under the Note and that the Mortgage was a valid, first
and best lien on the property (excluding any lien for real estate taxes). The court found
that because of a scrivener’s error the Mortgage contained an incorrect legal description
and ordered the legal descriptions of Parcels 7 and 8 of the property set forth in the
Mortgage reformed to conform to descriptions of those parcels as set forth in Count 3 of
the complaint. The court ordered foreclosure against the real property subject to the
mortgage.
{¶ 7} Under Count 5 of the complaint, the trial court granted the Bank judgment
under the security agreement entered into by SBIR with the Bank and granted the Bank
relief against personal property described in the security agreement and UCC financing
statements filed by the Bank.
3.
{¶ 8} Under Count 8 of the complaint, the court determined that the assignment of
a term life insurance by appellant Cecil Weatherspoon was authentic and binding against
him. The court determined that as a result of breach of the loan agreement, the Bank may
exercise any and all rights under the assignment available to the Bank, including but not
limited to surrender of the insurance policy.
{¶ 9} Appellants filed a Civ.R. 60(B) motion for relief from both the December
18, 2012 and January 22, 2013 judgments and filed a notice of appeal from those
judgments while the Civ.R. 60(B) motion was pending. Upon motion of appellants, we
remanded the case to the trial court to permit ruling on the Civ.R. 60(B) motion. The trial
court overruled the motion in a judgment filed on April 9, 2013.
{¶ 10} We granted appellants leave to amend their notice of appeal to include the
trial court’s judgment denying Civ.R. 60(B) relief on July 29, 2013. Appellants assert
three assignments of error on appeal:
Assignments of Error
1. The trial court erred when it granted summary judgment in a
foreclosure action where the underlying note was not a part of the action
and had not been reduced to judgment.
2. The trial court erred when it denied appellants’ 60(B) motion to
vacate without providing appellants a hearing on that motion.
4.
3. The trial court erred when it granted summary judgment to
appellee after once previously denying the motion and where appellee
never requested or was granted leave to file a second motion.
{¶ 11} We consider the assignments of error out of turn, and consider assignment
of error No. 3 first.
{¶ 12} The Bank filed two motions for summary judgment. It filed the first
motion on December 16, 2011. On December 20, 2011, the trial court denied the motion
“for failure to comply with Local Rule 25.01.” The local rule is procedural. It requires
that dispositive motions be accompanied by notice of a non-oral hearing date.
{¶ 13} The Bank filed a second motion for summary judgment on January 13,
2012, together with the required notice of a non-oral hearing date. The trial court granted
the second motion for summary judgment in its judgment of December 18, 2012.
{¶ 14} Under assignment of error No. 3, appellants argue that the motion for
summary judgment should have been denied as out of rule because Civ.R. 56(A) requires
leave of court to file a motion for summary judgment where the case has been set for
pretrial or trial. Appellants argue that the Bank did not seek leave of court to file the
second motion and the trial court did not grant leave to file when it granted the motion for
summary judgment on December 18, 2012.
{¶ 15} Appellants raised this argument in its brief opposing the motion for
summary judgment in the trial court. The trial court did not address the issue in its
5.
judgment granting summary judgment. The trial court proceeded as if leave had been
granted and ruled on the merits.
{¶ 16} In our view, the trial court impliedly granted the Bank leave to file the
second motion for summary judgment when it considered and ruled on the motion. See
St. Paul Fire & Marine Ins. Co. v. Corwin, 6th Dist. Wood No. WD-00-058, 2001 WL
536877, *2 (May 18, 2001); Capital One Bank (USA) N.A. v. Ryan, 10th Dist. Franklin
No 14AP-102, 2014-Ohio-3932, ¶ 31.
{¶ 17} We find assignment of error No. 3 not well-taken.
{¶ 18} Under assignment of error No. 1, appellants argue that the trial court erred
when it granted the motion for summary judgment.
{¶ 19} Appellate review of trial court judgments granting motions for summary
judgment is de novo; that is, an appellate court applies the same standard in determining
whether summary judgment should be granted as the trial court. Grafton v. Ohio Edison
Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). To prevail on a motion for
summary judgment the moving party must demonstrate:
(1) that there is no genuine issue as to any material fact; (2) that the
moving party is entitled to judgment as a matter of law; and (3) that
reasonable minds can come to but one conclusion, and that conclusion is
adverse to the party against whom the motion for summary judgment is
made, who is entitled to have the evidence construed most strongly in his
6.
favor. Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 66, 375
N.E.2d 46 (1978).
{¶ 20} The grant of summary judgment is limited to circumstances where there is
no dispute of material fact. Civ.R. 56(C) provides:
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.
{¶ 21} Under assignment of error No. 1, appellants argue that the trial court erred
in granting the Bank’s motion for summary judgment. Appellants contend first that the
Bank did not request judgment on the loan note in this action. Rather, appellants contend
that the Bank brought this action to foreclose against property in Ottawa County alone
and relied upon a November 16, 2011 judgment in Erie County to establish whether the
note was breached and the damages caused by any breach. Second, appellants contend
that the Erie County judgment on the note was not a final judgment to which res judicata
applies and that the trial court erred in granting summary judgment in reliance on the
preclusive effect of liability determinations in the Erie County judgment.
{¶ 22} Appellee argues that the trial court did not err in granting summary
judgment based upon two alternative grounds. First, the Bank contends that the parties
are bound by a November 16, 2011 judgment by the Erie County Court of Common Pleas
7.
in Multibank 2009-1 CML-ADC Venture, LLC v. South Bass Island Resort, Ltd., case No.
2008-CV-0749 (Erie Cty. C.P. Ct.) and the judgment is to be given preclusive effect on
matters determined in the judgment. Second, the Bank contends that the grant of
summary judgment was fully supported by evidence submitted by it in support of the
motion.
{¶ 23} The Bank acknowledges that the Erie County judgment did not resolve all
claims against all parties in that case. The issue of whether the guaranty executed by
appellant John Tomberlin is valid and enforceable was not resolved in the November 16,
2011 judgment and had been set for trial. The record demonstrates that the
November 16, 2011 judgment contains no express determination by the Erie County
Court of Common Pleas of “no just reason for delay” under Civ.R. 54(B).
Scope of Relief Sought in Ottawa County Proceedings
{¶ 24} A review of the complaint filed in this action demonstrates that appellants’
contention that the case seeks no determination of liability arising from claimed breach of
the loan note is incorrect. A copy of the executed loan agreement and cognovit
promissory note were attached as exhibit A to the complaint. Complaint, ¶ 8. Appellee
alleged that the loan note was “in default because payments required to be made under
the terms of the Note and Mortgage have not been made. The default has not been
cured.” Complaint, ¶ 10.
8.
{¶ 25} In Count 1 of the complaint, the Bank alleged that it was
due upon the Note principal in the amount of $7,849,093.30, plus
interest on the outstanding principal balance at the rate of 11% per annum
from November 14, 2007, plus late charges, plus advances made for the
payment of taxes, assessments, insurance premiums, or costs incurred for
the protection of the mortgaged premises under Section 5301.233 of the
Ohio Revised Code. Complaint, ¶ 15.
[Appellee prayed for] [j]udgment in Counts 1 and 2 against the
interests of South Bass Island Resort, Ltd. In (sic) the subject real estate in
the amount of $7,849.093, plus interest on the outstanding principal balance
at the rate of 11% per annum from November 14, 2007, plus late charges,
plus advances made for the payment of taxes, assessments, insurance
premiums, or costs incurred for the protection of the mortgaged premises
under Section 5301.233 of the Ohio Revised Code, plus reasonable attorney
fees and court costs, and supplemented by any additional amounts found to
be due and owing under the additional mortgage reference in this
Complaint.” Complaint, ¶ 40.
{¶ 26} Whether there had been a breach of obligations under the loan note and the
amount of any damages caused by any breach were issues properly before the trial court
for determination under the allegations of the complaint.
9.
{¶ 27} In its motion for summary judgment, the Bank sought a monetary
judgment, foreclosure against real property and other relief against personal property.
The Bank sought monetary relief against SBIR, 250 Centre Ltd., and Cecil
Weatherspoon, jointly and severally, for $16,441,050.50,
comprised of principal in the amount of $7,849.093.30, together with
accrued but unpaid interest calculated at the default Note rate of 25% from
December 15, 2007 (totaling $7,892,699.37), taxes totaling $125,752.94,
title costs of $4,244.50, late charges and fees in the amount of $392,454.67,
plus interest accruing at the default rate of 24% from December 2, 2011
($5,450.76 per diem), attorney’s fees and court costs related to this and the
Erie County case (totaling $171,354.96) as of November 29, 2011), and any
additional amounts found to be due and owing. Appellants’ second motion
for summary judgment, p. 3.
{¶ 28} Appellants’ contention that appellee did not seek judgment on the note in
this action is without merit.
Issue Preclusion Under Erie County Judgment
{¶ 29} The doctrine of issue preclusion “holds that a fact or a point that was
actually and directly at issue in a previous action, and was passed upon and determined
by a court of competent jurisdiction, may not be drawn into question in a subsequent
action between the same parties or their privies.” Glidden Co. v. Lumbermens Mut. Cas.
Co., 112 Ohio St.3d 470, 2006-Ohio-6553, 861 N.E.2d 109, ¶ 44. The doctrine applies
10.
only to final judgments. Glidden at ¶ 45; Restatement of the Law 2d, Judgments, Section
27.
{¶ 30} Appellants argue that the November 16, 2011 Erie County judgment in the
related case is not a final judgment and that, therefore, the appellants were not prevented
from relitigating issues determined in the Erie County judgment. We agree. The Erie
County judgment adjudicated the rights and liabilities of fewer than all the parties.
Liability of appellant Tomberlin under his guaranty remained to be adjudicated. The
judgment did not include a Civ.R. 54(B) determination of no just reason for delay.
{¶ 31} Civ.R. 54(B) specifically provides that such a judgment remains subject to
revision by the trial court in the case:
[I]n the absence of a determination that there is no just reason for
delay, any order or other form of decision, however designated, which
adjudicates fewer than all the claims or the rights and liabilities of fewer
than all the parties * * * is subject to revision at any time before the entry
of judgment adjudicating all the claims and the rights and liabilities of all
the parties.
{¶ 32} Absent the express determination of no just reason for delay, where the
judgment “adjudicates fewer than all claim or the rights and liabilities of fewer than all
the parties” a court is free to simply reconsider and revise prior rulings on summary
judgments in a case pending before it. Watson v. Ford Motor Co., 6th Dist. Erie No.
11.
E-06-074, 2007-Ohio-6374, ¶ 44; Hundsrucker v. Perlman, 6th Dist. Lucas No.
L-03-1293, 2004-Ohio-4851, ¶ 25.
{¶ 33} We conclude that the November 16, 2011 Erie County judgment is not a
final judgment entitled to preclusive effect. See Cruse v. Finley, 4th Dist. Lawrence No.
12CA2, 2012-Ohio-5465, ¶ 19-20. Accordingly, whether summary judgment was
properly granted in this case must be determined from consideration of the evidence
submitted for court consideration on the motion under Civ.R. 56(C) alone.
Summary Judgment
{¶ 34} The only evidentiary material submitted by the Bank in support of its
motion for summary judgment is the affidavit of Michael Yaffe and a series of documents
attached as exhibits to the affidavit. Yaffe states in his affidavit that Multibank holds the
loan at issue in this litigation by assignment from the FDIC, as receiver of the Columbian
Bank, and that he is the asset manager of the loan at issue and familiar with it. He states
that he is familiar with the maintenance of the records as kept in the ordinary course of
business with respect to the loan.
{¶ 35} Yaffe identified exhibit A, attached to his affidavit, as a true and accurate
copy of the loan agreement reflecting a loan from Columbian Bank to SBIR with the
cognovit promissory note by SBIR attached. Yaffe identified as exhibit B, attached to his
affidavit, as a true and accurate copy of the open-end mortgage to Columbian Bank
executed in consideration for the loan agreement.
12.
{¶ 36} In the affidavit, Yaffe stated that both Cecil Weatherspoon and 250 Centre,
Ltd. each executed a cognovit unconditional guarantee to guarantee full and prompt
payment under the loan agreement to Columbian Bank and that true copies of the
cognovit guarantees were attached as exhibits C and D to his affidavit.
{¶ 37} Yaffe stated in his affidavit that John Tomberlin also executed a guarantee
in favor of Columbian Bank, but made no statement concerning the guarantee other than
to state that liability of Tomberlin under the guarantee would be established at trial in
2012. The Bank did not seek judgment against Tomberlin in its motion for summary
judgment. Although a document marked exhibit E is attached to the Yaffe affidavit and
purports by its terms to be a guarantee by Tomberlin, the document was not authenticated
by Yaffe in his affidavit.
{¶ 38} Yaffe stated in the affidavit that SBIR executed a security agreement
granting Columbian Bank a secured interest in all of SBIR’s personal property as listed in
the SBIR personal property security agreement as additional collateral for the loan
agreement. Yaffe stated that exhibit E, attached to his affidavit, is a true and accurate
copy of the SBIR personal property security agreement.
{¶ 39} Yaffe also stated in the affidavit that Cecil Weatherspoon executed a
security agreement granting Columbian Bank a secured interest in his membership
interest in SBIR, as listed in the security agreement as additional collateral for the loan
agreement. Yaffe stated that exhibit F, attached to his affidavit, is a true and accurate
copy of the Weatherspoon security agreement.
13.
{¶ 40} According to the affidavit Columbian recorded its secured interests in real
and personal property of SBIR and Cecil Weatherspoon through various financing
statements filed through the UCC filing system and the Ottawa County Recorder’s office.
Yaffe stated in the affidavit that true and accurate copies of the UCC filings were
attached as exhibit G to his affidavit.
{¶ 41} Yaffe also stated in the affidavit that Cecil Weatherspoon executed an
assignment of life insurance policy as further collateral for the loan agreement and that
the assignment gave Columbian Bank rights under a term life insurance policy held by
Weatherspoon through First Colony Life Insurance Company. Yaffe identified exhibit H,
attached to the affidavit, as a true and accurate copy of the assignment of life insurance
policy.
{¶ 42} At paragraph 11 of his affidavit, Michael Yaffe stated that the current
amount due and owing under the loan agreement and note as of December 2, 2011,
totaled the sum of $16,441,050.50 and that the amount was
comprised of principal in the amount of $7,849,093.30, together with
accrued but unpaid interest at the default note rate of 25% from
December 15, 2007 totaling $7,892,699.37, taxes totaling $125,752.94, title
costs of $4,244.50, late charges and fees in the amount of $392,454.67, plus
$5,450.76 per diem interest accruing at the default rate of 25% from
December 2, 2011, attorney fees and court costs related to this litigation
14.
and the Erie County litigation totaling $171,354.96 as of November 29,
2011, and any additional amounts found to be due and owing.
{¶ 43} Appellants did not file any affidavit or other evidentiary material for court
consideration in opposition to the motion for summary judgment.
{¶ 44} The elements of proof necessary for a successful motion for summary
judgment in a foreclosure action are established:
In order to properly support a motion for summary judgment in a
foreclosure action, a plaintiff must present evidentiary-quality materials
showing:
1.) The movant is the holder of the note and mortgage, or is a party
entitled to enforce the instrument;
2.) if the movant is not the original mortgagee, the chain of
assignments and transfers;
3.) all conditions precedent have been met;
4.) the mortgagor is in default; and
5.) the amount of principal and interest due. Wachovia Bank of
Delaware, N.A. v. Jackson, 5th Dist. Stark No. 2010-CA-00291, 2011-
Ohio-3202, ¶ 40-45; JPMorgan Chase Bank, Natl. Assn. v. Salazar, 6th
Dist. Lucas No. L-13-1038, 2014-Ohio-1002, ¶ 11; U.S. Bank, N.A. v.
Coffey, 6th Dist. Erie No. E-11-026, 2012-Ohio-721, ¶ 26.
15.
{¶ 45} The Yaffe affidavit and exhibits to the affidavit constitute the only
evidence submitted by the Bank in support of its motion for summary judgment. The
affidavit, however, did not state that SBIR was in default or that the Bank had complied
with all conditions precedent for foreclosure. Accordingly, we conclude appellee failed
to discharge its initial summary judgment burden and appellee’s motion for summary
judgment should have been denied on that basis.
{¶ 46} As we have determined that the November 16, 2011 Erie County judgment
was not a final judgment and has no preclusive effect and that the grant of summary
judgment is not otherwise supported by evidence submitted for court consideration on the
motion, we conclude that the trial court erred in granting the Bank’s motion for summary
judgment.
{¶ 47} We conclude that assignment of error No. 1 is well-taken.
{¶ 48} We find assignment of error No. 2 with respect to claimed trial court error
in the denial of appellants’ Civ.R. 60(B) motion for relief from judgment moot.
{¶ 49} Justice not having been afforded the parties complaining, we reverse the
December 18, 2012 and January 22, 2013 judgments of the Ottawa County Court of
Common Pleas and remand this cause to that court for further proceedings. We order
appellee to pay the costs of this appeal pursuant to App.R. 24.
Judgments reversed.
16.
Multibank 2009-1 CML-ADC
VENTURE, LLC v. South Bass
Island Resort, Ltd.
C.A. No. OT-13-004
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.
_______________________________
James D. Jensen, 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.sconet.state.oh.us/rod/newpdf/?source=6.
17.