Hardesty v. Waugh Real Estate Holdings, L.L.C. , 2022 Ohio 4270 ( 2022 )

[Cite as Hardesty v. Waugh Real Estate Holdings, L.L.C., 2022-Ohio-4270.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
LAWRENCE E. HARDESTY, et al. C.A. No. 30184
Appellants
v. APPEAL FROM JUDGMENT
ENTERED IN THE
WAUGH REAL ESTATE HOLDINGS, COURT OF COMMON PLEAS
LLC, et al. COUNTY OF SUMMIT, OHIO
CASE No. CV-2021-01-0132
Appellee
DECISION AND JOURNAL ENTRY
Dated: November 30, 2022
CARR, Judge.
{¶1} Appellants, Lawrence and Anna Hardesty, appeal the judgment of the Summit
County Court of Common Pleas dismissing their complaint. This Court affirms.
I.
{¶2} The Hardestys filed a complaint against Prime Asset Fund V, LLC (“Prime”)
seeking a declaratory judgment and to quiet title on a property located in Barberton, Ohio. When
Prime did not file an answer, the Hardestys filed a motion for default judgment. After several
months, the trial court issued a journal entry dismissing the complaint on the basis that the
Hardestys had failed to state a claim upon which relief can be granted pursuant to Civ.R. 12(B)(6).
{¶3} The Hardestys filed a timely notice of appeal. Waugh Real Estate Holdings, LLC,
successfully moved to be substituted as the Appellee in this matter on the basis that it became the
current holder of the mortgage after the appeal commenced. Now before this Court, the Hardestys
raise one assignment of error.
2
II.
ASSIGNMENT OF ERROR
THE TRIAL COURT ERRED IN DISMISSING [APPELLANTS’] COMPLAINT
SUA SPONTE WITHOUT NOTICE AND AN OPPORTUNITY TO BE HEARD
OR AN OPPORTUNITY TO AMEND THEIR COMPLAINT.
{¶4} In their sole assignment of error, the Hardestys maintain that the trial court erred
by dismissing their complaint without first giving them prior notice or providing them with an
opportunity to amend their complaint. This Court disagrees.
Background
{¶5} The Hardestys’ complaint contained the following allegations. The Hardestys own
a property in Barberton, Ohio. In 2005, the Hardestys took out a loan from GMAC Mortgage
Corporation that was secured by a mortgage on the property. In 2011, the mortgage was assigned
to Prime. Prime subsequently filed a foreclosure action against the Hardestys. Prime failed to
prosecute the lawsuit and the case was dismissed in 2013. Prime has not sought collection since
the lawsuit was dismissed. The Hardestys claimed that Prime had forfeited its interest in the
mortgage but had refused to release the mortgage. The Hardestys sought to have Prime’s interest
in the property declared “extinguished, forfeited, and void.”
{¶6} As noted above, Prime was served with a copy of the complaint via certified mail
but did not file an answer. The Hardestys filed a motion for default judgment.
{¶7} The trial court subsequently issued an order dismissing the complaint on the
authority of Civ.R. 12(B)(6). The trial court observed that “[p]ursuant to the terms of the note and
mortgage, [the Hardestys] are obligated to repay the principal of $85,000.00 in monthly
installments, with interest, with the remaining balance due and payable on March 1, 2030. When
all sums secured by the mortgage are paid, the lender shall discharge the mortgage.” The trial
3
court stressed that, even accepting all of the factual allegations in the complaint as true, the
Hardestys had not alleged that the note had been paid in full, which would necessitate a release of
the mortgage. The trial court further observed that “[t]here is no requirement that [Prime] enforce
its rights under the note and mortgage prior to the maturity date of March 1, 2030 or it forfeits its
rights under the mortgage. No mortgage releasing event has occurred.” Accordingly, the trial
court dismissed the complaint on the basis that the Hardestys had not alleged facts that entitled
them to relief.
Discussion
{¶8} On appeal, the Hardestys cite both Ohio caselaw interpreting Civ.R. 12(B)(6) and
federal caselaw interpreting Fed.R.Civ.P. 12(B)(6) in support of their position that the trial court
erred in dismissing the complaint because the Hardestys were not given notice of the trial court’s
intent to dismiss and an opportunity to either respond or amend their complaint. Although the
Hardestys acknowledge that it is not reversible error for the trial court dismiss a complaint when
it is obvious that a plaintiff cannot prevail on the facts alleged, the Hardestys maintain that their
complaint clearly stated a valid claim that Prime had forfeited its interest in the mortgage. The
Hardestys further assert that Prime/Waugh is now barred from filing another foreclosure action
under the statute of limitations set forth in R.C. 1303.16(A).
{¶9} This Court reviews an order dismissing a complaint pursuant to Civ.R. 12(B)(6)
under a de novo standard of review. City Mgt. Sys. v. Blakeley, 9th Dist. Summit No. 21162, 2003-
Ohio-524, ¶ 10.
{¶10} “A Civ.R. 12(B)(6) motion tests the sufficiency of the complaint, and dismissal is
appropriate where the complaint ‘fail[s] to state a claim upon which relief can be granted.’”
Molnar v. Green, 9th Dist. Summit No. 29072, 2019-Ohio-3083, ¶ 7, quoting Civ.R. 12(B)(6).
4
When analyzing whether a complaint states a claim upon which relief can be granted, all factual
allegations must be presumed to be true and all reasonable inferences must be made in favor of the
nonmoving party. Perez v. Cleveland, 66 Ohio St.3d 397, 399 (1993).
{¶11} “The Rules of Civil Procedure neither expressly permit nor forbid courts to sua
sponte dismiss complaints. Generally, a court may dismiss a complaint on its own motion pursuant
to Civ.R. 12(B)(6), failure to state a claim upon which relief may be granted, only after the parties
are given notice of the court’s intention to dismiss and an opportunity to respond.” (Emphasis
omitted.) State ex rel. Edwards v. Toledo City School Dist. Bd. of Edn., 72 Ohio St.3d 106, 108
(1995). “The only instances [] when a sua sponte dismissal of complaint without notice is
appropriate is when the complaint is frivolous or the plaintiff cannot succeed on the facts stated in
the complaint.” Dunn v. Marthers, 9th Dist. Lorain No. 05CA008838, 2006-Ohio-4923, ¶ 11.
{¶12} “[A] trial court properly dismisses a declaratory judgment action pursuant to Civ.R.
12(B)(6) where there is not a justiciable issue before the court.” Hudson v. Akron, 9th Dist.
Summit No. 28011, 2017-Ohio-7590, ¶ 10. “Thus, ‘[i]n an action for declaratory judgment, the
trial court must declare the rights of the parties or dismiss the complaint because either (1) no real
controversy or justiciable issue exists between the parties or (2) the declaratory judgment will not
terminate the uncertainty or controversy.’” Id.{¶13} A review of the record here reveals that the trial court did not err in dismissing the
Hardestys’ complaint. The trial court properly considered the allegations in the complaint prior to
ruling on the Hardestys’ motion for default judgment. See Michael D. Tully Co., L.P.A. v. Dollney,
42 Ohio App.3d 138, 141 (9th Dist.1987) (“A default judgment on a complaint which fails to state
a claim should not be upheld.”). Here, although the Hardestys attached a copy of the mortgage to
their complaint, the allegations in their complaint made no mention of the mortgage terms. Instead,
5
the Hardestys claimed that they were entitled to a declaration that Prime had forfeited its interest
in the mortgage because Prime failed to prosecute a foreclosure action in 2013 and had not sought
collection since that time. The Hardestys did not allege that they had paid off the loan amount of
$85,000 or that the terms of the mortgage had otherwise been satisfied. Because the Hardestys
could not prevail on the facts stated in their complaint, the trial court did not err in dismissing the
complaint without first providing notice. Furthermore, given that the Hardestys did not allege that
the terms of the mortgage had been satisfied and the maturity date of the mortgage is not until
March 1, 2030, the trial court did not err in dismissing the complaint given that there was not a
justiciable controversy before the court.
{¶14} To the extent the Hardestys argue on appeal that Prime/Waugh is now outside its
window to timely file a second foreclosure action under R.C. 1303.16(A), we note that the
Hardestys made no mention of R.C. 1303.16 in their complaint. This Court is also mindful that
the running of a statute of limitations does not discharge a debt but instead limits the remedies
available. U.S. Bank Natl. Assn. v. Robinson, 8th Dist. Cuyahoga No. 105067, 2017-Ohio-5585,
¶ 10. It follows that there is no basis to conclude that the Hardestys alleged a set of facts that
would have allowed them to prevail on their complaint in light of R.C. 1303.16(A).
{¶15} The Hardestys’ assignment of error is overruled.
6
III.
{¶16} The assignment of error is overruled. The judgment of the Summit County Court
of Common Pleas is affirmed.
Judgment affirmed.
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 Appellants.
DONNA J. CARR
FOR THE COURT
HENSAL, P. J.
CALLAHAN, J.
CONCUR.
APPEARANCES:
JEFFREY T. WITSCHEY and KARAN A. MOSS, Attorneys at Law, for Appellants.
GREGORY A. STOUT, Attorney at Law, for Appellee.