James B. Nutter & Co. v. Estate of Neifer , 2016 Ohio 7641 ( 2016 )

[Cite as James B. Nutter & Co. v. Estate of Neifer, 2016-Ohio-7641.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
HANCOCK COUNTY
JAMES B. NUTTER AND COMPANY,
CASE NO. 5-16-20
PLAINTIFF-APPELLEE,
v.
THE ESTATE OF WILLIAM
NEIFER, ET AL.,
DEFENDANTS-APPELLEES,
-and- OPINION
LAGINA M. PETERSON, ET AL.,
DEFENDANTS-APPELLANTS.
Appeal from Hancock County Common Pleas Court
Trial Court No. 2015 F 00451
Judgment Affirmed
Date of Decision: November 7, 2016
APPEARANCES:
Albert L. Potter, II for Appellants
Ashley E. Mueller for Appellee James B. Nutter and Company
Case No. 5-16-20
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WILLAMOWKSI, J.
{¶1} Defendants-appellants Lagina M. Peterson and Ricky D. Peterson
appeal the decision of the Court of Common Pleas of Hancock County to grant the
plaintiff-appellee’s motion for summary judgment. For the reasons set forth below,
the judgment of the lower court is affirmed.
{¶2} On November 9, 2012, William Neifer (“Neifer”) signed a promissory
note and borrowed $121,107.00 from James B. Nutter and Company (“Nutter and
Company”). Doc. 1. To secure this loan, Neifer executed a mortgage on real estate
located in Findlay, Ohio. Id. The mortgage was then properly recorded on
December 2012, in Hancock County. Id. Neifer made monthly payments on this
loan until his death on May 29, 2015, at which point the payments ceased. Doc. 52.
An interest in this property transferred on his death to Lagina M. Peterson. Doc. 13.
After the payments stopped, Nutter and Company sent a notice of default to Neifer’s
estate on August 4, 2015. Id. This notice gave the estate sixty days to cure the
default or seek some form of loan modification. Id.{¶3} When no action was taken by the estate, Nutter and Company issued a
complaint in foreclosure on October 30, 2015, and sent notices to all interested
parties. Doc. 15. Lagina M. Peterson and her husband, Ricky D. Peterson, (“the
Petersons”) filed separate but identical answers to Nutter and Company’s complaint
on November 30, 2015. Doc. 36. In their answer, the Petersons denied all of the
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facts alleged therein.1 Doc. 36. Nutter and Company then filed a motion for
summary judgment on March 11, 2016. Doc. 52. The Petersons objected to this
motion on the grounds that neither of the Petersons executed the note. Doc. 66.
{¶4} The trial court granted Nutter and Company’s motion for summary
judgment, finding that plaintiffs served all necessary parties with notice of this
action and that this case did not present a genuine issue of material fact. Doc. 70.
On appeal, the Petersons raise one assignment of error.
The trial court erred when it granted plantiff’s motion for
summary judgment against defendants Lagina M. Peterson and
Ricky D. Peterson.
Specifically, the Petersons assert that Nutter and Company did not meet their
“‘initial burden’ of informing the trial court that Appellants were liable on the
Promissory Note or Open End Mortgage executed by William Neifer.” Appellants’
Brief 6. Their brief admits, however, that Neifer did execute the note and mortgage.
Id. 5.
{¶5} After a trial court has granted a motion for summary judgment,
appellate courts assess this decision under a de novo standard of review. Esber
Beverage Co. v. Labatt USA Operating Co., L.L.C., 138 Ohio St.3d 71, 2013-Ohio-
4544, 3 N.E.3d 1173, ¶ 9, citing Bonacorsi v. Wheeling & Lake Erie Ry. Co., 95
1
Interestingly, one of the allegations that the Petersons denied stated that the Petersons “have or claim to
have an interest” in the mortgaged real estate at issue. Doc. 1.
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Ohio St.3d 314, 2002-Ohio-2220, 767 N.E.2d 707. Under Ohio Rule of Civil
Procedure 56,
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
of material fact and that the moving party is entitled to judgment
as a matter of law. . . A summary judgment shall not be rendered
unless it appears from the evidence or stipulation, and only from
the evidence or stipulation, 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, that party
being entitled to have the evidence or stipulation construed most
strongly in the party’s favor.
Civ.R. 56(C). The moving party “has the initial burden ‘to inform the trial court of
the basis for the motion, identifying the portions of the record, including the
pleadings and discovery, which demonstrate the absence of a genuine issue of
material fact.’” Middleton v. Holbrook, 2016-Ohio-3387, ¶ 8 (3d Dist.), quoting
Reinbolt v. Gloor, 146 Ohio App.3d 661, 664, 767 N.E.2d 1197 (3d Dist.2001).
{¶6} If the moving party meets their burden, the nonmoving party then
assumes the responsibility of demonstrating that there is a genuine issue of material
fact for trial. Vahila v. Hall, 77 Ohio St.3d 421, 429, 674 N.E.2d 1164 (1997),
quoting Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d 264, 273 (1996). To
overcome summary judgment, the nonmoving party
may not rest upon the mere allegations or denials of the party’s
pleadings, but the party’s response, by affidavit or as otherwise
provided in this rule, must set forth specific facts showing that
there is a genuine issue for trial. If the party does not so respond,
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summary judgment, if appropriate, shall be entered against the
party.
Civ.R. 56(E). See Miller v. Potash Corp. of Saskatchewan, Inc., 3d Dist. Allen No.
1-09-58, 2010-Ohio-4291, ¶ 13-14.
{¶7} When transferring mortgaged real estate, the transferee can assume the
mortgage or take the property subject to the mortgage. If a transferee assumes the
mortgage, he or she accepts liability for the debt obligation of the original debtor.
Kocsorak v. Cleveland Trust Co., 151 Ohio St. 212, 219, 85 N.E.2d 96 (1949),
quoting Walser v. Farmers’ Trust Co. of Indianapolis, Ind., 126 Ohio St. 367, 185
N.E. 535 (1933), paragraph five of the syllabus. In the event of a default, the
mortgagee can foreclose on the mortgaged property and can pursue a personal
judgment against the transferee. Walser at 376.
{¶8} However, if the property is taken subject to the mortgage, the original
debtor alone remains personally liable for the original debt obligation. In Matter of
Estate of Patten, 3d Dist. Allen No. 1-80-34, 1981 WL 6764, 4 (Jan. 16, 1981).
Since the transferee does not assume the mortgage obligation, the transferee “does
not become personally liable for the original debt,” though the mortgaged property
still remains subject to the lien. Id. The mortgagee can, therefore, foreclose on the
mortgaged property if the original debtor defaults on the underlying obligation, but
the mortgagee cannot enforce the debt obligation on the transferee personally. Id.-6-
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{¶9} The death of the original debtor does not extinguish a mortgage lien on
real property. When real estate is transferred on death, the transferee takes the real
estate as would a devisee or heir: subject to any existing mortgage liens on that
property. See R.C. 2113.52. The elements a foreclosing plaintiff must show are
that
(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)
the mortgagor is in default; (4) all conditions precedent have been
met; and (5) the amount of principal and interest due.
Hancock Fed. Credit Union v. Coppus, 2015-Ohio-5312, 54 N.E.3d 806, ¶ 17,
quoting HSBC Mtge. Servs., Inc. v. Watson, 3d Dist. Paulding No. 11-14-03, 2015-
Ohio-221, ¶ 24.
{¶10} In the present case, the Petersons did not execute either the promissory
note or the mortgage. Doc. 1. Their interest in the property passed to them on
Neifer’s death subject to the mortgage lien on the property. Doc. 13. The record
does not present any evidence that the Petersons assumed the mortgage. Thus, only
Neifer is personally liable under the promissory note, and the Petersons are not
bound by contractual obligations that they did not assume. The Petersons received,
by virtue of Neifer’s death, what Neifer had: a piece of real estate encumbered by a
mortgage lien. Thus, Nutter and Company retained a conditional interest in this
property through the mortgage even as the real estate passed to the Petersons. First
Merit Bank, N.A. v. Inks, 138 Ohio St.3d 384, 2014-Ohio-789, 7 N.E.3d 1150, ¶ 23.
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{¶11} Upon Neifer’s default, Nutter and Company was entitled to initiate a
foreclosure action based upon this property interest. Deutsch Bank Natl. Trust Co.
v. Holden, 147 Ohio St.3d 85, 2016-Ohio-4603, ___N.E.3d___, ¶ 24. While Nutter
and Company filed a complaint in foreclosure to enforce their property interest in
the mortgaged real estate, they did not file an action in contract to enforce the
promissory note against the Petersons personally. Doc. 1. See Id. at ¶ 25 (holding
these two types of actions as distinct since foreclosure seeks an equitable remedy to
enforce a property interest whereas a suit on the promissory note seeks a remedy at
law to enforce a contractual obligation).
{¶12} Subsequently, Nutter and Company filed a motion for summary
judgment that was supported by an affidavit incorporating several key documents.
Doc. 52. The affidavit and attached copies of the promissory note and mortgage
agreement establish that Nutter and Company is entitled to enforce the mortgage
and is the original mortgagee. Id. The attached payment record shows that the
original mortgagor, Neifer, is in default. The attached copy of a notice sent to
Neifer’s estate demonstrates that Nutter and Company complied with the mortgage
agreement in notifying the mortgagor of default and in accelerating the unpaid
balance on the loan. Id. Finally, the affidavit states the amount due, which is $115,
347.84 with accrued annual interest of 3.5% from the date of May 1, 2015. Id. By
clearly establishing the five elements of foreclosure, Nutter and Company has met
their initial burden of demonstrating the absence of a genuine issue of material fact.
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{¶13} Consequently, the Petersons must meet the reciprocal burden of
showing a material fact exists for trial if they are to defeat summary judgment.
Civ.R. 56(E). In their response, the Petersons do not contest the validity of any of
the documents submitted by Nutter and Company. Further, the Petersons do not
dispute any of the other material facts presented in the motion for summary
judgment and readily concede on appeal that Neifer executed the note and mortgage.
Doc. 58, 60. Their only challenge to summary judgment is pointing to the fact that
neither of the Petersons are liable on the promissory note signed by Neifer. Id.
{¶14} The Petersons’ assertion does not show that a genuine issue of material
fact is in dispute for three reasons. First, this fact—that the Petersons are not liable
on the note—is not disputed; Nutter and Company never claimed that the Petersons
were liable on the note and expressly stated that they are not seeking a personal
judgment against the Petersons. Doc. 62. Second, this fact has no relevance to a
genuine issue for trial as Nutter and Company does not have to establish that the
Petersons signed the note in this foreclosure suit. The Petersons’ assertion is a
defense for a cause of action which was never pled. Third, since this fact is not
related to a genuine issue for trial, it is also not material. “‘[M]aterial facts’ are those
‘that might affect the outcome of the suit.’” Chase Home Fin., L.L.C. v. Heft, 3d
Dist. Logan Nos. 8-10-14, 8-11-16, 2012-Ohio-876, ¶ 24, quoting Turner v. Turner,
67 Ohio St.3d 337, 340, 617 N.E.2d 1123 (1993). Whether the Petersons signed the
note has no effect on the outcome of this suit as Nutter and Company needs to prove
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that Neifer—not the Petersons—executed the note and mortgage. Thus, this
argument cannot carry the reciprocal burden imposed on the nonmoving party by
Civil Rule 56(E).
{¶15} In short, the Petersons admitted the material facts that Nutter and
Company must establish for this cause of action while faulting the appellees for not
proving the elements of a cause of action which was not pled. Id. There is no
monetary judgment against either Lagina M. Peterson or against Ricky D. Peterson
in this case, nor was any such monetary judgment against either of them ever sought
by Nutter and Company. Thus, when viewing the evidence in the light most
favorable to the Petersons, reasonable minds can come to only one conclusion:
Nutter and Company is entitled to judgment as a matter of law. Miller at ¶ 14. The
decision of the trial court is affirmed.
Judgment Affirmed
SHAW, P.J. and PRESTON, J., concur.
/hls
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