Bank of New York Mellon v. Workman ( 2020 )

[Cite as Bank of New York Mellon v. Workman, 2020-Ohio-3330.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
LAKE COUNTY, OHIO
THE BANK OF NEW YORK MELLON : OPINION
f.k.a. THE BANK OF NEW YORK, AS
TRUSTEE FOR ALTERNATIVE LOAN :
TRUST 2004-28CB, MORTGAGE PASS- CASE NO. 2019-L-134
THROUGH CERTIFICATES, SERIES :
2004-28CB,
:
Plaintiff-Appellee,
:
- vs -
:
SUSAN D. WORKMAN, et al.,
:
Defendant-Appellant.
:
Civil Appeal from the Lake County Court of Common Pleas, Case No. 2014 CF 001548.
Judgment: Affirmed.
Nathan B. Blaske and Shannon O’Connell Egan, Dinsmore & Shohl LLP, 255 East Fifth
Street, Suite 1900, Cincinnati, OH 45202; and Jeffrey J. Hanneken and Kellie A. Kulka,
Graydon, Head, & Ritchey, LLP, 312 Walnut Street, Suite 1800, Cincinnati, OH 45202
(For Plaintiff-Appellee).
Marc E. Dann and William C. Behrens, Dann Law, P.O. Box 6031040, Cleveland, OH
44103 (For Defendant-Appellant).
CYNTHIA WESTCOTT RICE, J.
{¶1} Appellant, Susan Workman, appeals the September 30, 2019 Judgment
Entry of the Lake County Court of Common Pleas adopting the Magistrate’s Decision and
foreclosing on certain property. For the reasons discussed herein, we affirm.
{¶2} Ms. Workman owns a certain parcel of land in Lake County, Ohio, Parcel
No. 28A-045F-00-029-0 (the “Property”). On October 28, 2004, Ms. Workman entered
into a mortgage loan (the “Mortgage Loan”) with Countrywide Home Loans, Inc. in the
amount of $99,680.00, as evidenced by a certain note (the “Note”), and secured by the
Property, as evidenced in a mortgage (the “Mortgage”). Subsequently, the Note was
endorsed in blank; the Mortgage was assigned to appellee, Bank of New York Mellon fka
The Bank of New York, as Trustee for Alternative Loan Trust 2004-28CB, Mortgage Pass-
Through Certificates Series 2004-23CB (“BONYM”).
{¶3} The Bank of America has been the master servicer of the Mortgage Loan
throughout the entirety of the life of the Mortgage Loan, though various entities have acted
as sub-servicers. Of particular relevance to this appeal, effective August 2015 and
throughout trial, NewRez dba Shellpoint Mortgage Servicing (“Shellpoint”) was the sub-
servicer, replacing the prior sub-servicer, Ocwen Loan Servicing, LLC (“Ocwen”).
{¶4} In 2005, Ms. Workman defaulted on the Mortgage Loan, resulting in the
Lake County Court of Common Pleas entering judgment in foreclosure against her in
March 2007 (the “2007 Judgment”). Shortly thereafter, she filed for bankruptcy and
avoided the sale of her home. She was discharged from bankruptcy in December 2011.
The 2007 Judgment was not vacated by the Lake County Court of Common Pleas until
April 17, 2013.
{¶5} In 2012, Ms. Workman again defaulted on the Mortgage Loan. Ocwen sent
a notice of default on October 16, 2012, and in August 2014, BONYM initiated the
underlying action in foreclosure. As Ms. Workman had obtained a discharge of her
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obligations under the United States Bankruptcy Code, the foreclosure action was brought
in rem, and sought no personal or money judgment.
{¶6} The parties proceeded to a bench trial before the magistrate on September
4, 2019. In his September 30, 2019 decision, the Magistrate specifically found that
BONYM had established by clear and convincing evidence that it was the holder of the
Note and Mortgage, and was prior to the filing of the complaint; BONYM was entitled to
enforce the Mortgage Loan; Ms. Workman was in default; BONYM complied with all
conditions precedent; the amount due and owing to BONYM is $87,166.20, plus interest,
taxes, and fees; and BONYM was entitled to have the equity of redemption of Ms.
Workman foreclosed. The trial court adopted the Magistrate’s decision the same day.
{¶7} Ms. Workman timely filed objections to the Magistrate’s findings and
subsequently supplemented them upon receipt of the trial transcript. Before the court
ruled on those objections, Ms. Workman filed a notice of appeal in this court to preserve
her right to appeal. This court remanded the case to the trial court to rule on the
objections, which it overruled on December 20, 2019. It is from this decision that Ms.
Workman now appeals, assigning five errors for our review. The first states:
{¶8} The trial court erred by improperly considering hearsay evidence in
Plaintiff’s trial exhibits E and F.
{¶9} “This court has previously held that a de novo standard of review applies to
determine whether evidence was inadmissible hearsay.” State v. Doak, 11th Dist.
Portage No. 2018-P-0022, 2020-Ohio-66, ¶67, citing Jack F. Neff Sand & Gravel, Inc. v.
Great Lakes Crushing, Ltd., 11th Dist. Lake No. 2012-L-145, 2014-Ohio-2875, ¶23.
{¶10} There is no dispute that Shellpoint began servicing the Mortgage Loan in
August 2015. At trial, BONYM entered into evidence, inter alia, Plaintiff’s Exhibit E, the
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loan history summary, and Plaintiff’s Exhibit F, the notice of default letter dated October
16, 2012. Exhibit E contains a summary of the loan history both before and after
Shellpoint began servicing the loan on August 15, 2015. Exhibit F, the notice of default,
was created and sent by Ocwen, the servicer at the time of default. At trial, BONYM
called Ms. Jean Knowles, a paralegal at Shellpoint, to testify as to these records.
Because on cross-examination Ms. Knowles admitted she had no knowledge of Ocwen’s
business-records practices or the circumstance surrounding Ocwen’s creation of these
records, Ms. Workman argues that Ms. Knowles’ testimony was insufficient to lay a
foundation for the admission of these two exhibits under the “business records” hearsay
exception found in Evid.R 803(6), and thus, the trial court should have excluded these
exhibits as hearsay.
{¶11} “‘Hearsay’ is a statement, other than one made by the declarant while
testifying at the trial or hearing, offered in evidence to prove the truth of the matter
asserted.” Evid.R. 801(C). Hearsay is generally inadmissible unless it falls within an
exception in Evid.R. 803. Evid.R. 802. Evid.R. 803(6) provides an exception for:
{¶12} [a] memorandum, report, record, or data compilation, in any form, of
acts, events, or conditions, made at or near the time by, or from
information transmitted 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, all as shown by the testimony of
the custodian or other qualified witness or as provided by Rule
901(B)(10), unless the source of information or the method or
circumstances of preparation indicate lack of trustworthiness. * * *
{¶13} “In other words, Evid.R. 803(6) excepts from the hearsay rule records kept
in the course of a regularly conducted business activity if it was the regular practice of
that business to make such records, and those records were made by or from information
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transmitted by a person with knowledge.” Ohio Receivables, L.L.C. v. Purola, 11th Dist.
Lake No. 2012-L-092, 2013-Ohio-5806, ¶23, citing Evid.R. 803(6).
{¶14} BONYM argues that Ms. Knowles’ testimony was sufficient to lay the
foundation for Exhibits E and F as admissible under the adoptive business records
doctrine, which this court implicitly applied in Purola. In Purola, the creditor sought the
admission, under the business records hearsay exception, of certain documents and a
related affidavit to establish the transfer of the account to the lender. The borrower argued
that because the lender did not create the records it sought to admit, and the affidavit did
not identify the source of the information or how it created the documents, the lender did
not lay the proper foundation for the documents to fall within the business-records
exception to the hearsay rule. This court disagreed.
{¶15} This court noted that Evid.R. 803(6) is substantially similar to Fed.R.Evid.
803(6) and found federal circuit courts case law to be instructive on this matter. “‘A
number of circuit courts have held that exhibits can be admitted as business records of
an entity, even when that entity was not the maker of those records; provided that the
other requirements of Rule 803(6) are met, and the circumstances indicate that the
records are trustworthy.’” Purola, supra, at ¶24, quoting Great Seneca Financial v. Felty,
170 Ohio App. 3d 737, 2006–Ohio–6618, ¶14 (1st Dist.). “Furthermore, ‘[r]ecords need
not be actually prepared by the business offering them if they are received, maintained,
and relied upon in the ordinary course of business. If the document is originally created
by another entity, the creator need not testify if the document is incorporated into the
business records of the testifying entity.’” Purola, supra, at ¶25, quoting Shawnee
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Associates, LP v. Village of Shawnee Hills, 5th Dist. Delaware No. 09-CAE-05 0051,
2010-Ohio-1183, ¶50.
{¶16} This court ultimately found the affidavit was sufficient to lay the foundation
as business records because “although Ohio Receivables did not actually prepare the
records being offered, they were ‘received, maintained, and relied upon in the ordinary
course of business.’” Purola, supra, at ¶26 quoting Shawnee, supra, at ¶50. Further, the
affidavit attested that the “testimony of the affiant is based on ‘information and records
submitted and provided as a result of the purchase of [Purola’s] debt and warranted and
represented to be true and accurate’ * * * [and] describes in detail how Ohio Receivables
received the documents, incorporated them into its business records, and relied on them
in conducting its business.” Purola, supra.
{¶17} Ms. Workman likens this case to Estie Invest. Co. v. Braff, 11th Dist. Lake
No. 2017-L-172, 2018-Ohio-4378. In Estie, a landlord brought suit against a former
tenant for failing to care for the premises. The landlord did not enter into evidence an
itemized list of the repairs necessary as required to support his claim, but only generalized
the expenses. When questioned on direct examination, the landlord estimated a $2,500
cost to repair the carpet, based upon what a carpet repairperson had previously charged
him for installations in other apartments. On appeal, this court found that estimate to be
inadmissible hearsay because “the person providing the estimate would have to be called
as a witness so the opposing party could cross-examine him.” No argument was made
that the landlord incorporated the prior quote into his records or relied on it in making
business decisions. Accordingly, Estie is distinguishable from the case at bar. The same
distinction exists in State v. Phillips, 11th Dist. Lake No. 2016-L-029, 2017-Ohio-1204 and
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Mentor Economic Assistance Corp. v. Eichels, 11th Dist. No. 2015-L-097, 2016-Ohio-
1162.
{¶18} Ms. Workman also cites State v. Struble, 11th Dist. Lake No. 2016-L-108,
2017-Ohio-9326, in support of her argument. However, in Struble, this court did not
address this issue. There, the state conceded that the testimony of these witnesses was
insufficient to lay an adequate foundation for admissibility and this court rejected the
state’s harmless error argument.
{¶19} Here, BONYM sought to admit a loan history summary, part of which was
created by a prior sub-servicer, and the notice of default, wholly created by a prior sub-
servicer. BONYM called Ms. Knowles, an employee of the current sub-servicer,
Shellpoint, with personal knowledge of the subject Mortgage Loan. Contrary to Ms.
Workman’s apparent argument that there was no evidence the exhibits were trustworthy,
Ms. Knowles also testified as to the records transfer process between the prior sub-
servicer and Shellpoint, in which the information is “scrubbed” and audited for accuracy
in a three-step boarding process; if any discrepancies are found, they are either corrected
or the accounts are repurchased by Bank of America. The records that pass auditing are
incorporated into Shellpoint’s systems. Furthermore, Ms. Knowles specifically testified
that Shellpoint bases its business decisions on these records generated by prior servicers
and relies on them in the case of every loan because Shellpoint does not originate loans.
{¶20} Following the precedent set by this court in Purola, we find that under the
circumstances of the case at hand, Ms. Knowles’ testimony was sufficient to establish a
foundation for the admission of those exhibits under the business records exception.
{¶21} Accordingly, Ms. Workman’s first assignment of error is without merit.
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{¶22} Ms. Workman’s second assignment of error states:
{¶23} The trial court erred by finding that the Plaintiff/Appellee complied
with the Notice of Acceleration condition precedent to foreclosure by
notice in October of 2012, where the debt had been reduced to
judgment which was not vacated until April of 2013.
{¶24} Under this assignment of error, Ms. Workman argues, briefly and without
citing any authority, that BONYM was required to first vacate the 2007 Judgment before
serving a new notice of default. BONYM argues that the bankruptcy court’s discharge
order effectively nullified the 2007 Judgment as the amount due was no longer reflected
accurately in that judgment; the loan was considered “current” and BONYM could not
execute upon the 2007 Judgment. Thus, it argues, the trial court’s 2013 order to vacate
the 2007 Judgment only acknowledged what the bankruptcy court had already
determined.
{¶25} In support of her argument, Ms. Workman’s points to the fact that Shellpoint
sent another notice of acceleration in September 2015 as evidence that BONYM did not
truly believe the October 16, 2012 letter was sufficient. However, this argument is not
persuasive as Ms. Knowles testified that it was Shellpoint’s standard practice upon the
transfer of a loan in default to them from a prior sub-servicer to send out a new notice of
acceleration in cases of default.
{¶26} Additionally, Ms. Workman argues that until the 2007 Judgment was
vacated “there was no debt to accelerate.” However, this argument ignores the
proceedings in Bankruptcy Court and contradicts Ms. Workman’s Voluntary Petition for
bankruptcy. In her Voluntary Petition Schedule A she lists the Property and notes that,
at the time of filing, there was a secured claim against the Property in the amount of
$132,200.00, and in Schedule D she lists “Bank of New York c/o Countrywide Home
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Loans” as one of the creditors. Notably, she did not mark the box to indicate this debt
was “disputed.” Moreover, the Bankruptcy Court found that Ms. Workman owed the Bank
of New York an arrearage on the Mortgage Loan, and set up a repayment plan, which
Ms. Workman complied with. Ms. Workman cannot now argue that there was no debt
until the 2007 Judgment was vacated. See Trumbull Twp. Bd. of Trustees v. Rickard,
11th Dist. Ashtabula No. 2017-A-0048, 2019-Ohio-2502, ¶25, quoting Lynch v. Lakewood
City School Dist. Bd. of Edn., 116 Ohio St. 361 (1927), paragraph three of the syllabus
(““If a ‘judgment is voluntarily paid and satisfied, such payment puts an end to the
controversy, and takes away * * * the right to appeal or prosecute error or even to move
for vacation of judgment.’”).
{¶27} While there appears to be no case law in Ohio discussing this particular
question, the Bankruptcy Code provides that “a default with respect to, or that gave rise
to, a lien on the debtor’s principal residence may be cured * * * until such residence is
sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy
law.” 11 U.S.C. §1322(c)(1). This provision, “makes it clear that cure and deceleration
are permissible until an actual foreclosure sale.” In re Boylan, 255 B.R. 311, 313 (Bankr.
S.D. Ohio 2000).
{¶28} Here, the Property was not sold following the 2007 Judgment as Ms.
Workman’s order of sale was cancelled pending her bankruptcy proceedings. After the
Bankruptcy Court entered its Order of Discharge on December 15, 2011 and its Final
Decree closing the case on May 10, 2012, Ms. Workman was considered “current” on her
Mortgage Loan. As Ms. Workman had cured the Mortgage Loan arrearages, the
Mortgage Loan was decelerated, and Ms. Workman was returned to pre-default status
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considered current. Ms. Workman, however, was required to continue payments in
accordance with the Mortgage Loan after being discharged from bankruptcy. Indeed, the
Bankruptcy Court specifically stated, in reference to the Mortgage Loan, that the “Debtor
shall pay all post-petition mortgage payments and real estate taxes as those payments
ordinarily come due beginning with the first payment due after the filing of the case.”
{¶29} Further, upon Ms. Workman’s discharge in bankruptcy, BONYM could no
longer execute upon the 2007 Judgment as the amount owing was no longer correctly
reflected in the order. Thus, we agree that the Bankruptcy Court’s judgments effectively
nullified the 2007 Judgment. As such, prior to bringing an action in foreclosure, BONYM
was required to, and did, issue a new notice of default. Whether or not the 2007 Judgment
was vacated at the time the notice of default was sent, it nevertheless served to inform
Ms. Workman that she was again in default and that failure to bring her account current
may result in acceleration of the note and foreclosure. Thus, the notice of default sent in
2012 was sufficient to satisfy this condition precedent to foreclosure.
{¶30} Accordingly, we find the Bankruptcy Court’s discharge order effectively
nullified the 2007 Judgment, such that BONYM was not required to seek vacation of that
order prior to sending a new notice of default.
{¶31} Ms. Workman’s second assignment of error is without merit.
{¶32} Ms. Workman’s third assignment of error states:
{¶33} The trial court erred by finding that the Plaintiff/Appellee was a valid
Assignee of the Mortgage.
{¶34} Under this assignment of error, Ms. Workman first argues that the
assignment bears the same defect present in the notice of default; to wit, it was ineffective
because it was assigned before the 2007 Judgment was vacated. As we have discussed
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this matter under the second assignment of error, we will not reiterate it again here and
find this argument to be without merit.
{¶35} Ms. Workman also argues that BONYM presented no evidence that a power
of attorney was ever recorded in Lake County prior to the execution and recording of the
assignment, as required by R.C. 1338.04 and R.C. 5301.231(A). Accordingly, she
argues, the assignment of mortgage must be deemed invalid, rendering BONYM without
standing to bring this action.
{¶36} BONYM argues that Ms. Workman has no standing to challenge the
assignment of mortgage to BONYM, and that even if she did have standing, a lack of a
power of attorney does not render the assignment invalid or provide a basis for reversal.
Moreover, BONYM argues, it has standing because the negotiation of the note to BONYM
operates as an equitable assignment of mortgage as a matter of law. Ms. Workman
counters that she has standing as she is the third party the statute is intended to protect.
{¶37} Here, the assignment of mortgage entered into evidence purports to assign
the mortgage from “Bank of New York Mellon as Trustee for the Certificateholders of
Cwalt 2004-28CB” (the “Assignor”) to BONYM. The Assignor executed the document:
“Bank of New York Mellon as Trustee for the Certificateholders of CWalt 2004-28CB by
it’s [sic] attorney-in-fact Ocwen Loan Servicing, LLC.” However, Ms. Workman correctly
notes there is no evidence in the record to show that a power of attorney was recorded
as required by R.C. 1338.04, which states:
{¶38} 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.
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{¶39} “In a mortgage foreclosure action, the mortgage lender must establish an
interest in the promissory note or in the mortgage in order to have standing to invoke the
jurisdiction of the common pleas court.” Wells Fargo Bank v. Watson, 11th Dist.
Ashtabula No. 2014-A-0062, 2015-Ohio-2599, ¶24 citing Fed. Home Loan Mortg. Corp.
v. Schwartzwald, 134 Ohio St. 3d 13, 2012-Ohio-5017, ¶28. “The requirement of an
‘interest’ can be met by showing an assignment of either the note or mortgage.” Fed.
Home Loan Mtge. Corp. v. Koch, 11th Dist. Geauga No. 2012-G-3084, 2013-Ohio-4423,
¶24. Whether standing exists is a matter of law that we review de novo. Watson, supra,
at ¶25, citing Bank of Am., NA v. Barber, 11th Dist. Lake No. 2013-L-014, 2013-Ohio-
4103, ¶19.
{¶40} “[I]t is well settled in Ohio that mortgage debtors do not have standing to
challenge mortgage assignments.” Watson, supra, at ¶52. “[W]hen a mortgagor/debtor
* * * is not a party to the mortgage assignment, and his contractual obligations under the
mortgage are not affected in any way by the assignment, the debtor lacks standing to
challenge the validity of the assignment.” Id., citing Waterfall Victoria Master Fund v.
Yeager, 11th Dist. Lake No. 2012-L-071, 2013-Ohio-3206, ¶21. See also Bank of New
York Mellon v. Antes, 11th Dist. Trumbull No. 2014-T-0028, 2014-Ohio-5474, ¶36;
PennyMac Corp. v. Nardi, 11th Dist. Portage No. 2014-P-0014, 2014-Ohio-5710, ¶17.
{¶41} Here, as there is no evidence that Ms. Workman’s obligations under the
mortgage were in any way affected by the assignment, she does not have standing to
challenge the mortgage assignment at issue here. And further, contrary to Ms.
Workman’s argument that she is the third-party R.C. 1337.04 is intended to protect, “[t]he
recording statute, R.C. 1337.04, was not enacted for the benefit of mortgagors, but for
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the protection of third persons who might acquire legal interests in the property.” Henry
v. BancOhio Natl. Bank of Columbus, 74 Ohio App. 3d 209, 212, (10th Dist.1991), citing
Fosdick v. Barr, 3 Ohio St. 471 (1854); Van Thorniley v. Peters, 26 Ohio St. 471 (1875).
See also Wells Fargo Bank, N.A. v. Todt, 8th Dist. Cuyahoga No. 95558, 2011-Ohio-
1376, ¶9.
{¶42} Accordingly, Ms. Workman’s third assignment of error is without merit.
{¶43} Ms. Workman’s fourth assignment of error states:
{¶44} The trial court erred by finding that Plaintiff/Appellee had any right to
enforce the Note on the day the Complaint was filed, and thus any
standing to file this action.
{¶45} Under this assignment of error, Ms. Workman argues BONYM did not have
standing to enforce the Note as it was not the holder of the Note at the time of filing the
complaint. The original Note produced at trial is endorsed in blank and Ms. Knowles
testified that, though Ocwen determined the original Note to be lost at the time of the filing
of the complaint, she retrieved the original Note from the Bank of America subsequent to
the filing of the complaint. Accordingly, Ms. Workman argues, as Bank of America was
in possession of the original Note endorsed in blank at the time of the filing of the
complaint, it was the one entitled to enforce the Mortgage Loan, not BONYM. She also
argues that “Bank of America itself claims to be the investor, not just the servicer, until
well after the complaint was filed.” BONYM asserts that Bank of America, the master
servicer of the Mortgage Loan, held the Note as BONYM’s agent, and that BONYM had
constructive possession of the original Note at the time of filing the complaint and
throughout trial.
{¶46} The lender must establish it was the holder of the note or a party entitled to
enforce the note at the time the complaint was filed. Schwartzwald, supra, at ¶3. There
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is no standing to proceed with the foreclosure if the interest did not exist at the time the
foreclosure complaint was filed. Id. at ¶27. “Although the plaintiff in a foreclosure action
must have standing at the time suit is commenced, proof of standing may be submitted
subsequent to the filing of the complaint.” Wells Fargo Bank, N.A. v. Horn, 142 Ohio
St.3d 416, 2015-Ohio-1484, ¶17. As noted under the third assignment of error, appellate
courts review issues of standing de novo. Watson, supra.
{¶47} “To be a ‘holder,’ a party must be in possession of the instrument that is
either payable to the party in possession (specifically endorsed) or payable to bearer
(blank endorsement).” (Citations omitted.) Deutsche Bank National Trust Company, As
Trustee For American Home Mortgage Assets Trust 2007-2, Mortgage-Backed Pass-
Through Certificates Series 2007-2, v. Julie A. Ayers, et al., 11th Dist. Portage No. 2019-
P-0094, 2020-Ohio-1332, ¶73. Further, this court has recently held that “[a] person is a
holder of a negotiable instrument, and entitled to enforce the instrument, when the
instrument is in the physical possession of his or her agent.” (Emphasis added.) Id.,
citing U.S. Bank Natl. Assn. v. Gray, 10th Dist. Franklin No. 12AP-953, 2013-Ohio-3340,
¶25. Accordingly, “[a] plaintiff does not lose constructive and legal possession of bearer
paper merely because it was held by an agent on behalf of the plaintiff.” U.S. Bank Natl.
Assn. v. Crow, 7th Dist. Mahoning No. 15 MA 0113, 2016-Ohio-5391, ¶33, citing Gray,
supra.
{¶48} “The doctrine of constructive possession is consistent with UCC principles
governing transfer of negotiable instruments. As recognized in the official comment to the
UCC’s definition of negotiation, ‘[n]egotiation always requires a change in possession of
the instrument because nobody can be a holder without possessing the instrument, either
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directly or through an agent.’ (Emphasis added.)” Gray, supra, quoting UCC Official
Comment, Section 3–201, Comment 1 (1990). See also, Freedom Mtge. Corp. v. Vitale,
5th Dist. Tuscarawas No. 2013 AP 08 0037, 2014-Ohio-1549, ¶16.
{¶49} Furthermore, “[i]n situations where the holder’s agent is in physical
possession of the note, the holder may still enforce the note based upon constructive
possession of the note. However, a note indorsed in blank does not, on its face, establish
who is in possession of the note and when that possession transpired. Thus, a supporting
affidavit must attest to how and when the entity became the holder of the note and
generally the affiant must produce supporting business records, other than the note, to
establish possession.” (Citations omitted.) Fed. Natl. Mtge. Assn. v. McFerren, 9th Dist.
Summit No. 28814, 2018-Ohio-5319, ¶21.
{¶50} Here, it is not disputed the Bank of America was in possession of the original
Note at the time of the filing of the complaint. Ms. Knowles testified that Bank of America
was the master servicer of the Mortgage Loan; that Bank of America had been in
possession of the original Note since 2004, as evidenced by the routing history she
reviewed; and that it was the historical practice of Bank of America, as master servicer,
to hold the notes for the life of the loan. Under these circumstances, this was sufficient
to show that BONYM had constructive possession of the Note at the time of filing the
complaint. Thus, the trial court did not err in drawing this conclusion.
{¶51} Furthermore, we note that Ms. Workman’s argument that Bank of America
itself claimed to be the owner of the Mortgage Loan is without merit. In support, she
points to Defendant’s Exhibits 2 through 6 entered into evidence, which she suggests
supports her argument.
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{¶52} Defendant’s Exhibit 2, an August 15, 2015 letter from Shellpoint, informs
Ms. Workman “that the servicing of your loan has been transferred from Bank of America,
N.A. to Shellpoint Mortgage Servicing.” This does not support Ms. Workman’s argument
as the letter states, apparently incorrectly, that Bank of America was the prior servicer,
not owner.
{¶53} Defendant’s Exhibit 5, an October 26, 2015 letter from Shellpoint to Ms.
Workman states: “The Bank of New York Mellon FKA the Bank of New York, as Trustee
for the certificate holders of CWALT, Inc., Alternative Loan Trust 2004-28cb, Mortgage
Pass-Through Certificates, Series 2004-28cb (“BONY”) is currently the owner of the
above referenced loan.” This exhibit also does not support Ms. Workman’s argument, as
this letter states BONYM is the owner of the loan.
{¶54} Defendant’s Exhibit 3, an August 24, 2015 Validation of Debt Notice from
Shellpoint to Ms. Workman, states: “The creditor to whom the debt is owed is Bank of
America, N.A.. [sic] Shellpoint Mortgage Servicing (“Shellpoint”) is collecting the debt on
behalf of Bank of America, N.A.” And Defendant’s Exhibit 4 and Defendant’s Exhibit 6,
are both letters, dated October 8, 2015 and October 14, 2016, respectively, to Ms.
Workman in response to an inquiry. Both letters state her “account [is] serviced by
[Shellpoint] on behalf of Bank of America, N.A., the owner of your loan. Their contact
information is: Address: 101 Barclay St., 8W, New York, NY 10286.” However, Ms.
Knowles testified that this is BONYM’s address.
{¶55} None of these exhibits, nor anything in the record, support Ms. Workman’s
argument that Bank of America itself made the assertion that it was the owner of the
Mortgage Loan. The five documents that Ms. Workman cites are letters from Shellpoint,
16
not Bank of America. Further, the documents from Shellpoint which stated that Bank of
America is the owner of the Mortgage Loan appear to be a typographical error, corrected
in other documents by Shellpoint and clarified by Ms. Knowles’ testimony at trial.
{¶56} Accordingly, Ms. Workman’s fourth assignment of error is without merit.
{¶57} Ms. Workman’s fifth assignment of error states:
{¶58} The trial court erred by dismissing the Appellant’s counterclaims.
{¶59} Ms. Workman’s counterclaim asserts that BONYM violated the Fair Debt
Collection Practices Act, 15 U.S.C. 1692, and that BONYM is a debt collector attempting
to collect a debt not owned by BONYM. However, as we have established above,
BONYM owned the Mortgage Loan and was entitled to bring this action in foreclosure.
Accordingly, the trial court did not err in dismissing Ms. Workman’s counterclaim.
{¶60} Ms. Workman’s fifth assignment of error is without merit.
{¶61} In light of the foregoing, the judgment of the Lake County Court of Common
Pleas is affirmed.
THOMAS R. WRIGHT, J.,
MARY JANE TRAPP, J.,
concur.
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