Fin. Freedom Acquisition, L.L.C. v. Heirs of Thomas , 2012 Ohio 3845 ( 2012 )

[Cite as Fin. Freedom Acquisition, L.L.C. v. Heirs of Thomas, 2012-Ohio-3845.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
FINANCIAL FREEDOM ACQUISITION :
LLC : Appellate Case No. 25047
:
Plaintiff-Appellee : Trial Court Case No. 2010-CV-7941
:
v. :
:
THE UNKNOWN HEIRS OF : (Civil Appeal from
THELMA V. THOMAS, et al. : (Common Pleas Court)
:
Defendant-Appellant :
:
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OPINION
Rendered on the 24th day of August, 2012.
...........
BILL L. PURTELL, Atty. Reg. #0075250, Lerner, Sampson & Rothfuss, 120 East Fourth
Street, Suite 800, Cincinnati, Ohio 45202
Attorney for Plaintiff-Appellee, Financial Freedom Acquisition LLC
RONALD D. KEENER, Atty. Reg. #0002145, 125 West Main Street, New Lebanon, Ohio
45345
Attorney for Defendant-Appellant, Leslie Thomas
MATHIAS H. HECK, JR., by GEORGE PATRICOFF, Atty. Reg. #0024506, Montgomery
County Prosecutor’s Office, Appellate Division, Montgomery County Courts Building, P.O.
Box 972, 301 West Third Street, Dayton, Ohio 45422
Attorney for Defendant-Appellee, Montgomery County Treasurer
.............
2
WILLAMOWSKI, J. (Sitting by Assignment)
{¶ 1} Appellant Leslie R. Thomas (“Thomas”) brings this appeal from the
judgment of the Court of Common Pleas of Montgomery County. For the reasons set forth
below, the judgment is reversed.
{¶ 2} On December 8, 2006, Thelma V. Thomas (“Thelma”) obtained a home
equity conversion loan from Financial Freedom Senior Funding Corporation. This loan was
later assigned to Appellee Financial Freedom Acquisition LLC (“FFA”). At the time of the
mortgage, the real estate was owned solely by Thelma. However, the documents were signed
on her behalf by her power of attorney, Thomas. The power of attorney and the mortgage
were recorded on December 18, 2006, in the Montgomery County Recorder’s Office.
{¶ 3} On December 9, 2009, Thelma passed away. No probate estate was opened
at that time, but was subsequently commenced on August 23, 2011. Thomas was appointed
executor of the estate.
{¶ 4} On October 5, 2010, FFA filed a complaint in foreclosure and for
reformation of the mortgage. FFA named “The Unknown Heirs, Devisees, Legatees,
Executors, Administrators, Spouses and Assigns and the Unknown Guardians of Minor and/or
Incompetent Heirs of Thelma V. Thomas” as one of the defendants. The address was listed as
unknown. Thus, FFA sought service via publication. On January 18, 2011, FFA filed a
motion for default judgment. This motion was granted by the trial court on January 27, 2011.
An order of sale was filed and issued to the sheriff on February 24, 2011, and the sale was
scheduled for May 20, 2011.
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{¶ 5} On May 9, 2011, Thomas filed a Civil Rule 60(B) motion to set aside the verdict.
Thomas filed an affidavit stating that he was an heir of Thelma and that his identity had been
known at the time the complaint was filed by FFA. In support of this claim, Thomas alleged that
he had made repeated contact with FFA through its various agents and that FFA was aware of his
current address. Thus, Thomas claimed that he was not properly served. On that same day
Thomas also filed a motion to set aside the upcoming sheriff’s sale. FFA filed its response to
both motions on May 13, 2011. On May 19, 2011, the trial court granted the motion and
cancelled the sale. However, the sheriff’s sale went forward on May 20, 2011, and the real
property was purchased by FFA, even though FFA knew that the sale had been cancelled by the
court. On January 3, 2012, the trial court filed a confirmation of sale. The writ of restitution
was filed on January 31, 2012. On February 22, 2012, Thomas filed his notice of appeal and
raises the following assignments of error.
First Assignment of Error
THE COURT BELOW INCORRECTLY ENTERED THE JUDGMENT ENTRY
AND FORECLOSURE DECREE ON JANUARY 27, 2011.
Second Assignment of Error
THE COURT BELOW ERRED IN NOT RULING UPON AND NOT
ADDRESSING THE TIMELY FILED RULE 60(B) MOTION FILED BY
[THOMAS] ON MAY 9, 2011.
Third Assignment of Error
THE COURT BELOW ERRED IN FILING THE ORDER CONFIRMING SALE
ORDERING DEED AND DISTRIBUTION WITHOUT HAVING FIRST
RULED UPON THE RULE 60(B) MOTION AND WITHOUT HAVING FIRST
4
ORDER[ED] THAT THE SALE OF THE PROPERTY BE RESCHEDULED
AND RE-ADVERTISED.
Fourth Assignment of Error
THE COURT BELOW ERRED IN NOT SETTING ASIDE THE ORDER
CONFIRMING SALE AND ORDERING DEED AND DISTRIBUTION SINCE
SAID ORDER HAD BEEN FILED WITHOUT NOTICE TO [THOMAS’]
COUNSEL; WITHOUT MOTION; AND WITHOUT HAVING PREVIOUSLY
RULED ON PENDING ISSUES BEFORE THE COURT.
Fifth Assignment of Error
THE ORDER GRANTING JUDGMENT AND DECREE OF FORECLOSURE
IS DEFECTIVE, THERE NOT BEING PROPER SERVICE UPON [THOMAS]
AS REQUIRED BY THE OHIO RULES OF CIVIL PROCEDURE; WHICH
FACTS WERE SET FORTH TO THE COURT IN THE RULE 60(B) MOTION
FILED MAY 9, 2011.
In the interests of clarity, the assignments of error will be addressed out of order.
{¶ 6} In the fifth assignment of error, Thomas claims that the trial court erred by
granting the motion for default judgment when he was not properly served. The question of
service is governed by Ohio Civil Rules 3 and 15.
(A) Commencement. A civil action is commenced by filing a complaint with
the court, if service is obtained within one year from such filing upon a named
defendant, or upon an incorrectly named defendant whose name is later corrected
pursuant to Civ.R. 15(C), or upon a defendant identified by a fictitious name
whose name is later corrected pursuant to Civ.R. 15(D).
5
Civ.R. 3(A).
(D) Amendments where name of party unknown. When the plaintiff does not
know the name of a defendant, that defendant may be designated in a pleading or
proceeding by any name and description. When the name is discovered, the
pleading or proceeding must be amended accordingly. The plaintiff, in such case,
must aver in the complaint the fact that he could not discover the name. The
summons must contain the words “name unknown,” and a copy thereof must be
served personally upon the defendant.
Civ.R. 15(D). The Ohio Supreme Court has addressed how these rules are to be applied.
According to its unambiguous language, Civ.R. 15(D) provides that a plaintiff
may designate a defendant in a complaint by any name and description when the
plaintiff does not know the name of that party. Thus Civ.R. 15(D) does not
permit a plaintiff to designate a defendant by a fictitious name when the plaintiff
actually knows the name of that defendant. Further, when a plaintiff designates a
defendant by a fictitious name, Civ.R. 15(D) requires that the plaintiff provide a
description of the defendant in the pleadings and aver in the complaint the fact
that the plaintiff could not discover the name. The rule also directs that the
summons contain the words “name unknown” and be personally served on the
defendant.
Erwin v. Bryan, 125 Ohio St.3d 519, 2010-Ohio-2202, 929 N.E.2d 1019, ¶23.
{¶ 7} In Erwin, the Ohio Supreme Court held that when a plaintiff either knows or
should know the identity of the opposing party, the plaintiff may not list the defendant as
unknown. Id. at ¶40.
6
{¶ 8} Here, FFA filed its complaint alleging that it did not know the identities of any of
the heirs of Thelma. However, the affidavit filed by Thomas in support of his motion affirmed
that he had resided at the real estate in question since 1986. The affidavit stated that FFA had
sent correspondence to Thelma’s estate at that address and that he had responded to the
correspondence by sending paperwork back to its agent in Texas. In addition, the appraiser for
FFA had been to the property and spoken with Thomas. At that time, Thomas personally
advised the appraiser that he was the heir of Thelma and provided the appraiser with his name
and address. A general principle of agency is that a “ ‘principal is chargeable with and bound by
the knowledge of or notice to his agent received by the agent in due course of his employment,
with reference to matters to which his authority extends * * *.' ” State, ex rel. Nicodemus v.
Industrial Commission, 5 Ohio St.3d 58, 60, 448 N.E.2d 1360 (1983) (citation omitted). The
knowledge or notice to the agent is imputed to the principal regardless of whether the agent has,
in fact, communicated his knowledge to his principal. First National Bank v. Burns, 88 Ohio St.
434, 103 N.E. 93 (1913). This evidence is not disputed by FFA. There is no question that FFA
either knew or should have known the identity of Thomas. Thus, Thomas was not an unknown
heir, was not listed on the complaint, and did not receive any service.
{¶ 9} The next question is what the effect is when service is not perfected. The
Supreme Court of Ohio addressed this issue in LaNeve v. Atlas Recycling, Inc., 119 Ohio St.3d
324, 2008-Ohio-3921, 894 N.E.2d 25.
[T]he issue presented in this case is one of a failure to perfect service, which
ultimately affects whether a court has personal jurisdiction over a defendant. The
obligation to perfect service of process is placed only on the plaintiff, and the lack
of jurisdiction arising from want of, or defects in, process or in the service thereof
7
is ground for reversal. Gliozzo v. Univ. Urologists of Cleveland, Inc., 114 Ohio
St.3d 141, 2007-Ohio-3762 * * * (discussing the plaintiff’s obligation to perfect
service); Ohio Elec. Ry. Co. v. United States Express Co. (1922), 105 Ohio St. 331* * * (discussing the effect of the failure to obtain service). Similarly, it is an
established principle that actual knowledge of a lawsuit’s filing and lack of
prejudice resulting from the use of a legally insufficient method of service do not
excuse a plaintiff’s failure to comply with the Civil Rules. Maryhew v. Yova
(1984), 11 Ohio St.3d 154 * * *; Haley v. Hanna (1915), 93 Ohio St. 49 * * *.
LaNeve, supra at ¶22.
{¶ 10} The result of failing to perfect service is that the action is not commenced. Id. at
¶24. Like the plaintiff in LaNeve, FFA claims that its mistake is nonprejudicial because Thomas
should have known and does not have the money to resolve the issue anyway. These arguments
are irrelevant because the Supreme Court of Ohio has made it very clear that the plaintiff has the
sole burden of perfecting service. If service is not perfected, the trial court lacks personal
jurisdiction over the defendant and the action is not commenced. Thomas’ Civ.R. 60(B) motion
alleged that service was not perfected on him. At the conclusion of the case, the trial court had
not ruled on this motion. When a trial court has not ruled on a motion prior to the conclusion of
the case, the motion is deemed overruled. Thornton v. Conrad, 194 Ohio App.3d 34,
2011-Ohio-3590, 954 N.E.2d 666 (8th Dist.). Since the motion was not ruled upon, the trial
court is deemed to have overruled it. Thus, this court has the jurisdiction to review that
judgment. A review of the record shows that FFA did not perfect service on Thomas because he
was not an unknown heir, but was a known heir. The result is that the action was not
8
commenced. Therefore, the judgment of the trial court granting default judgment and all
judgments stemming from that judgment are void.
{¶ 11} This court also notes that FFA is the only party injured by this ruling. FFA is the
one that erred in drafting the complaint. FFA is the party that purchased the real estate knowing
that the sale had been cancelled by the court. If it has suffered additional injury, it has only itself
to blame. The fifth assignment of error is sustained.
{¶ 12} Having found that the trial court lacked jurisdiction to grant the order of
foreclosure, the remaining assignments of error are moot. Thus, they will not be addressed.
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FAIN and FROELICH, JJ., concur.
(Hon. John R. Willamowski, Third District Court of Appeals, sitting by assignment of the Chief
Justice of the Supreme Court of Ohio).
Copies mailed to:
Bill L. Purtell
Ronald D. Keener
Mathias H. Heck / George Patricoff
Hon. Dennis J. Adkins
Case Name: Financial Freedom Acquisition LLC v. The Unknown Heirs of
Thelma V. Thomas, et al.
Case No: Montgomery App. No. 25047
Panel: Fain, Froelich, Willamowski
Author: John R. Willamowski
Summary: