Equity Trust Co. v. Nickolich , 2022 Ohio 2256 ( 2022 )

[Cite as Equity Trust Co. v. Nickolich, 2022-Ohio-2256.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
EQUITY TRUST COMPANY C.A. No. 29933
CUSTODIAN FBO ACCOUNT
#200357328 IRA
Appellee APPEAL FROM JUDGMENT
ENTERED IN THE
v. COURT OF COMMON PLEAS
COUNTY OF SUMMIT, OHIO
JEFF NICKOLICH, et al. CASE No. CV-2019-02-0807
Appellant
DECISION AND JOURNAL ENTRY
Dated: June 30, 2022
TEODOSIO, Judge.
{¶1} Jeffrey Nickolich appeals the judgment of the Summit County Court of Common
Pleas granting summary judgment in favor of Equity Trust Company Custodian FBO Account
#200357328 IRA (“Equity Trust”). We reverse and remand.
I.
{¶2} In August 2011, Mr. Nickolich entered into a land contract with Harbour Portfolio
VII, LP, for property located in Akron, Ohio. A purchase money note was executed and secured
by an agreement for deed on the subject property. The land contract and deed were subsequently
transferred from Harbour Portfolio VII, LP, to Park Street Group, LLC. Further transfers were
made from Park Street Group, LLC, to Kirkland Financial LLC, and finally to Equity Trust.
{¶3} In 2019, Equity Trust filed its complaint of foreclosure against Mr. Nickolich,
alleging that he had defaulted under the terms of the contract. Equity Trust filed a motion for
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summary judgment, which was opposed by Mr. Nickolich who raised arguments questioning
Equity Trust’s ownership interest in the subject property. In February 2021, the trial court granted
summary judgment in favor of Equity Trust. Mr. Nickolich now appeals, raising three assignments
of error.
II.
ASSIGNMENT OF ERROR ONE
THE TRIAL COURT ERRED IN FINDING THAT THE PLAINTIFF HAD MET
ITS BURDEN FOR SUMMARY JUDGMENT BY CLEAR AND CONVINCING
EVIDENCE, IN VIOLATION OF THE DEFENDANT/APPELLANT’S RIGHT
TO DUE PROCESS.
{¶4} In his first assignment of error, Mr. Nickolich argues the trial court erred in granting
summary judgment because it failed to require the plaintiff to present proof of compliance with
R.C. 1337.04, and that consequently, the transfer of the quit claim deed from Harbour Portfolio
VII, LP, to Park Street Group, LLC, was invalid because power of attorney to convey the property
was never recorded.
{¶5} Appellate review of an award of summary judgment is de novo. Grafton v. Ohio
Edison Co., 77 Ohio St.3d 102, 105 (1996). Summary judgment is appropriate under Civ.R. 56
when: (1) no genuine issue as to any material fact remains to be litigated; (2) the moving party is
entitled to judgment as a matter of law; and (3) viewing the evidence most strongly in favor of the
nonmoving party, reasonable minds can come to but one conclusion and that conclusion is adverse
to the nonmoving party. Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327 (1977), citing Civ.R.
56(C). A court must view the facts in the light most favorable to the non-moving party and must
resolve any doubt in favor of the non-moving party. Murphy v. Reynoldsburg, 65 Ohio St.3d 356,
358–359 (1992). A trial court does not have the liberty to choose among reasonable inferences in
the context of summary judgment, and all competing inferences and questions of credibility must
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be resolved in the nonmoving party’s favor. Perez v. Scripps–Howard Broadcasting Co., 35 Ohio
St.3d 215, 218 (1988).
{¶6} The Supreme Court of Ohio has set forth the nature of this burden-shifting
paradigm:
[A] party seeking summary judgment, on the ground that the nonmoving party
cannot prove its case, bears the initial burden of informing the trial court of the
basis for the motion, and identifying those portions of the record that demonstrate
the absence of a genuine issue of material fact on the essential element(s) of the
nonmoving party’s claims. The moving party cannot discharge its initial burden
under Civ.R. 56 simply by making a conclusory assertion that the nonmoving party
has no evidence to prove its case. Rather, the moving party must be able to
specifically point to some evidence of the type listed in Civ.R. 56(C) which
affirmatively demonstrates that the nonmoving party has no evidence to support the
nonmoving party’s claims. If the moving party fails to satisfy its initial burden, the
motion for summary judgment must be denied. However, if the moving party has
satisfied its initial burden, the nonmoving party then has a reciprocal burden
outlined in Civ.R. 56(E) to set forth specific facts showing that there is a genuine
issue for trial and, if the nonmovant does not so respond, summary judgment, if
appropriate, shall be entered against the nonmoving party.
Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996).
{¶7} In response to Equity Trust’s motion for summary judgment, Mr. Nickolich argued
that Equity Trust had no valid ownership in the subject property and land contract because an
invalid transfer of title occurred between Harbour Portfolio VII, LP and Park Street Group,
predecessors in interest. Relying upon Bayview Loan Servicing, L.L.C. v. Big Blue Capital
Partners, L.L.C., 9th Dist. Summit No. 27790, 2016-Ohio-3433, the trial court concluded that Mr.
Nickolich was not a party to the assignment of the land contract or quit claim deed, and therefore,
he had no standing to contest the validity of the assignment or deed transfer.
{¶8} This Court has previously held that the defendant in a foreclosure case, who was a
nonparty to the mortgage assignments, lacked standing to challenge the mortgage assignments.
U.S. Bank N.A. v. Harper, 9th Dist. Lorain No. 21CA011771, 2022-Ohio-1080, ¶ 8, citing Bayview
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Loan Servicing, L.L.C. v. Big Blue Capital Partners, L.L.C., 9th Dist. Summit No. 27790, 2016-
Ohio-3433, ¶ 13, citing Deutsche Bank Natl. Trust Co. v. Whiteman, 10th Dist. Franklin No. 12AP–
536, 2013–Ohio–1636, ¶ 16, 19, citing Trust Series 2008–1 c/o Vericrest Fin., Inc. v. Locke, 10th
Dist. Franklin No. 11AP–757, 2012–Ohio–4499, ¶ 28-29.
{¶9} In the case sub judice, there is no mortgage assignment at issue, rather it is the
transfer of the property deed that is being questioned. A land contract is fundamentally different
from a mortgage because the vendor of a land contract retains title as security for the vendee’s
obligation, R.C. 5313.01(A), while under a mortgage, title remains with the mortgagor-borrower
until the mortgagee forecloses and a sale is completed or the mortgagee otherwise extinguishes the
right of the mortgagor to redeem. Hausman v. Dayton, 73 Ohio St.3d 671, 676 (1995), citing Levin
v. Carney, 161 Ohio St. 513 (1954), paragraph three of the syllabus. [F]orfeiture of the interest of
a vendee in default under a land installment contract shall be initiated by the vendor or by his
successor in interest * * *.” R.C. 5313.06.
{¶10} We have been presented with no argument or caselaw that would persuade us that
we should paint these two distinct situations with the same broad stroke or expand Bayview’s
holding to encompass deed transfers. We therefore conclude that because Bayview did not concern
the issue of a deed transfer, the trial court erred in determining that Mr. Nickolich did not have
standing to challenge whether Equity Trust had title to the subject property and was a successor in
interest to the land contract with standing to initiate the action.
{¶11} Mr. Nickolich’s first assignment of error is therefore sustained.
ASSIGNMENT OF ERROR TWO
THE TRIAL COURT ERRED IN GRANTING JUDGMENT FOR THE
PLAINTIFF BECAUSE THERE IS NO EVIDENCE THAT ANY POWER OF
ATTORNEY WAS RECORDED IN SUMMIT COUNTY PRIOR TO THE
EXECUTION AND RECORDING OF THAT DOCUMENT PRIOR TO
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RECORDING THE DEED AND ASSIGNMENT OF LAND CONTRACT, AS
REQUIRED BY R.C. 1337.04.
{¶12} In his second assignment of error, Mr. Nickolich argues the trial court erred by
effectively abrogating the plain language of R.C. 1337.04 in granting summary judgment. Mr.
Nickolich contends that the plain language of R.C. 1337.04 requires that power of attorney must
be recorded prior to the recording of a deed, mortgage, or lease by virtue of such power of attorney,
and that the absence of the recording of the power of attorney renders the subsequent transfer
invalid. Equity Trust did not provide evidence of the recording of power of attorney for Chris
Cobb, the attorney-in-fact for Harbour Portfolio VII, LP, who recorded the assignment of the
contract and deed from Harbour Portfolio VII, LP, to Park Street Group, LLC.
{¶13} R.C. 1337.04 provides: “A power of attorney for the conveyance, mortgage, or
lease of an interest in real property must be recorded in the office of the county recorder of the
county in which such property is situated, previous to the recording of a deed, mortgage, or lease
by virtue of such power of attorney.”
{¶14} In its judgment entry, the trial court determined that even if Mr. Nickolich had
standing to raise an argument as to the validity of the assignment, he had presented no evidence
that Chris Cobb lacked authority to act on behalf of Harbour and the fact that the power of attorney
was not filed in accordance with R.C. 1337.04 did not automatically render the transfer invalid.
The trial court quoted at length from the Eighth District Court of Appeals in Wells Fargo Bank,
N.A. v. Todt, 8th Dist. Cuyahoga No. 95558, 2011-Ohio-1376, which in turn relied upon Henry v.
BancOhio Natl. Bank of Columbus, 74 Ohio App.3d 209 (10th Dist.1991), from the Tenth District
Court of Appeals:
The only modern Ohio state case that offers guidance is Henry v. BancOhio Natl.
Bank of Columbus (1991), 74 Ohio App.3d 209, 212, 598 N.E.2d 766. In this case,
the Tenth District held that “[t]here is no question that the statute would be
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mandatory as it would obtain to third parties not privy to the proceedings since the
primary purpose of the recording statute is to provide notice to third parties of the
utilization of a power of attorney in the execution of a lien on the premises.
Obviously, the need for notice is not required when the party seeking to invoke the
sanctions implied from R.C. 1337.04 is the sole beneficiary of the protections
afforded by that statute. Although R.C. 1337.04 previously cited and found to be
mandatory by the trial court is relied upon by the plaintiff, there is no question that
the mortgage in this case was for the sole benefit of the plaintiff. As between the
parties, the mortgage is valid and enforceable. The recording statute, R.C. 1337.04,
was not enacted for the benefit of mortgagors, but for the protection of third persons
who might acquire legal interests in the property. (Emphasis sic.) Fosdick v. Barr
(1854), 3 Ohio St. 471; Van Thorniley v. Peters (1875), 26 Ohio St. 471.”
Wells Fargo, 2011-Ohio-1376, at ¶ 9.
{¶15} We find Henry to be inherently distinguishable from the case sub judice, and
particularly in light of our discussion above regarding standing, we do not find it applicable to the
facts of the current case. In Henry, the plaintiff’s predecessor-in-interest, David W. Henry,
obtained a mortgage loan from BancOhio. Henry at 211. It was undisputed that it was the plaintiff
who actually signed the note and mortgage deed pursuant to a valid power of attorney. Id. The
power of attorney was not recorded, however. Id. Plaintiff subsequently married Mr. Henry and
became sole owner of the real estate upon his death. In response to a motion for summary
judgment by BancOhio, the plaintiff sought to have the mortgage declared invalid because the
power of attorney was not recorded as required by R.C. 1337.04. Id. The trial court concluded
that the language of R.C. 1337.04 was mandatory and granted summary judgment in favor of the
plaintiff. Id.{¶16} Upon review, the Tenth District reversed, concluding that although the power of
attorney had not been recorded, the mortgage was executed pursuant to a valid power of attorney.
Id. at 212. Moreover, it was under the plaintiff’s power of attorney that the mortgage was executed,
and she sought to invalidate the mortgage because of the failure to record the power of attorney
that she herself held. Id.
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{¶17} Unlike Henry, the case now before us for review does not concern the power of
attorney to execute a mortgage, but rather, the power of attorney for the transfer of title. In Henry,
it was significant that the plaintiff was a party to the mortgage execution that she herself was
challenging for being improperly recorded. As repeatedly noted in the arguments as to standing
under the first assignment of error, Mr. Nickolich was not a party to the assignment of the land
contract. We find this distinguishing fact to be crucial, because unlike the plaintiff in Henry, who
was privy to the transaction in question (i.e., the execution of the mortgage), Mr. Nickolich was
not privy to the transaction in question (i.e., the assignment of the land contract).
{¶18} We conclude that Todt and Henry are distinguishable from the case sub judice, and
were not dispositive of the issues before the trial court on the motion for summary judgment. Mr.
Nickolich, as the nonmoving party, met his reciprocal burden by showing that there was a genuine
issue for trial regarding whether Equity Trust was the holder of title to the subject property and
successor in interest to the land contract.
{¶19} Mr. Nickolich’s second assignment of error is sustained.
ASSIGNMENT OF ERROR THREE
THE TRIAL COURT ERRED IN GRANTING JUDGMENT ON THE NOTE.
{¶20} In his third assignment of error, Mr. Nickolich argues the trial court failed to
consider his argument that the promissory note was a nullity because it failed for lack of
consideration. Because of our resolution of the first two assignments of error, this argument is
itself a nullity, and we therefore decline to consider the third assignment of error. Moreover, at
oral argument Mr. Nickolich stated that this argument was moot because of Equity Trust’s
statement in its brief to this Court that it was not pursuing a money judgment against Mr. Nickolich.
III.
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{¶21} Mr. Nickolich’s first and second assignments of error are sustained. We decline to
consider the third assignment of error. The judgment of the Summit County Court of Common
Pleas is reversed and remanded for proceedings consistent with this opinion.
Judgment reversed
and remanded.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the period
for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is instructed to
mail a notice of entry of this judgment to the parties and to make a notation of the mailing in the
docket, pursuant to App.R. 30.
Costs taxed to Appellee.
THOMAS A. TEODOSIO
FOR THE COURT
CALLAHAN, J.
CONCURS.
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CARR, P. J.
DISSENTING.
{¶22} I respectfully dissent from the judgment of the majority. Even if I were to agree
that Mr. Nickolich possessed standing to challenge the assignment, I disagree that any failure to
comply with R.C. 1337.04 would render the transfer invalid. “The recording statute, R.C. 1337.04,
was not enacted for the benefit of mortgagors, but for the protection of third persons who might
acquire legal interests in the property.” Bank of New York Mellon v. Workman, 11th Dist. Lake
No. 2019-L-134, 2020-Ohio-3330, ¶ 41.
APPEARANCES:
WILLIAM C. BEHRENS and MARC E. DANN, Attorneys at Law, for Appellant.
ETHAN HILL, SUSAN B. KLINEMAN, and D. ANTHONY SOTTILE, Attorneys at Law, for
Appellee.