Countrywide Home Loans Servicing, L.P. v. Shifflet , 2010 Ohio 1266 ( 2010 )

[Cite as Countrywide Home Loans Servicing, L.P. v. Shifflet, 2010-Ohio-1266.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
MARION COUNTY
COUNTRYWIDE HOME LOANS
SERVICING, L.P.,
PLAINTIFF-APPELLEE, CASE NO. 9-09-31
v.
DORITTA A M SHIFFLET,
aka DORITTA M. SHIFFLET, ET AL.,
DEFENDANTS-APPELLEES,
-and- OPINION
TIMOTHY W. SHIFFLET,
DEFENDANT-APPELLANT.
Appeal from Marion County Common Pleas Court
Trial Court No. 2009 DV 0235
Judgment Affirmed
Date of Decision: March 29, 2010
APPEARANCES:
John G. Neal for Appellant
C. Scott Casterline for Appellee, Countrywide Home Loans Servicing
Case No. 9-09-31
SHAW, J.
{¶1} Defendant-appellant, Timothy Shifflet, appeals the July 30, 2009
judgment of the Common Pleas Court of Marion County, Ohio, granting summary
judgment in favor of the plaintiff-appellee, Countrywide Home Loans Servicing,
L.P.
{¶2} The facts relevant to this appeal are as follows. In late November of
2006, Shifflet and his then-wife, Doritta Shifflet, borrowed $82,500.00 from
Countrywide Home Loans, Inc. As security for the loan, Doritta executed a
promissory note and a mortgage deed on the real property commonly known as
3158 Schell Drive, Marion County, Ohio. Timothy also signed the mortgage, but
he did not sign the promissory note.
{¶3} Both Doritta and Timothy are identified as the borrowers/mortgagors
on the mortgage. Countrywide Home Loans, Inc., is the identified lender on the
promissory note and mortgage. Mortgage Electronic Registrations Systems, Inc.
(“MERS”), as the nominee for Countrywide Home Loans, Inc., is the identified
mortgagee on the mortgage.
{¶4} The mortgage states: “MERS is a separate corporation that is acting
solely as a nominee for Lender and Lender’s successors and assigns.” The
mortgage also provides:
This Security Instrument secures to Lender: (i) the repayment of
the Loan, and all renewals, extensions and modifications of the
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Note, and (ii) the performance of Borrower’s covenants and
agreements under this Security Instrument and the Note. For
this purpose, Borrower does hereby mortgage, grant and convey
to MERS (solely as nominee for Lender and Lender’s successors
and assigns) and to the successors and assigns of MERS the
following described property * * *
The property that is then described is the Schell Drive property. The mortgage
further states:
Borrower understands and agrees that MERS holds only legal
title to the interests granted by Borrower in this Security
Instrument, but, if necessary to comply with law or custom,
MERS (as nominee for Lender and Lender’s successors and
assigns) has the right to exercise any or all of those interests,
including, but not limited to, the right to foreclose and sell the
Property, and to take any action required of Lender including,
but not limited to, releasing and canceling this Security
Instrument.
As of October 1, 2008, the promissory note was in default.
{¶5} On March 20, 2009, Countrywide Home Loans Servicing, L.P.
(“CHLS”), filed a complaint in foreclosure on the Schell Drive property, asserting
ownership of the mortgage and note. Timothy filed an answer on May 15, 2009,
in which he maintained that CHLS was not the real party in interest.1 CHLS
amended its complaint on May 19, 2009, once again asserting ownership of the
mortgage and note.2
1
Doritta did not file an answer and never appeared to contest the foreclosure.
2
The complaint was amended to include another bank as a party defendant. This bank claimed an interest
in the property based upon a judgment it received against Timothy in a different matter.
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{¶6} CHLS filed a motion for summary judgment on June 2, 2009,
together with an affidavit of Keri Selman, the assistant vice president of CHLS,
and copies of the note and mortgage. Timothy filed a response to this motion on
June 30, 2009, asserting that he did not execute the promissory note and that
MERS, rather than CHLS, was the holder of the mortgage, rendering it the real
party in interest not CHLS. Timothy did not dispute the merits of the foreclosure
itself.
{¶7} On July 16, 2009, CHLS filed its reply to Timothy’s response.
CHLS admitted that Timothy did not sign the promissory note and conceded that
no money judgment could be taken against him. However, CHLS asserted that
MERS executed an assignment of the mortgage in favor of CHLS on February 23,
2009, and that this assignment was filed with the Marion County Recorder’s
Office on March 23, 2009. CHLS attached a copy of this assignment to its reply.
{¶8} The trial court granted summary judgment in favor of CHLS on July
30, 2009, finding that the mortgage was duly assigned to CHLS. This appeal
followed, and Timothy now asserts two assignments of error.
THE TRIAL COURT ERRED IN CONCLUDING THAT
THERE WAS NO MATERIAL DISPUTE OF FACTS
PURSUANT TO CIVIL RULE 56(C).
THE TRIAL COURT ERRED IN CONCLUDING THAT THE
PLAINTIFF-APPELLEE WAS ENTITLED TO JUDGMENT
AS A MATTER OF LAW PURSUANT TO CIVIL RULE 56(C).
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As these assignments of error are related, we elect to address them together.
{¶9} In his two assignments of error, Timothy asserts that the trial court
erred in granting summary judgment to CHLS because CHLS failed to establish
that it was the real party in interest by demonstrating that the mortgage was
assigned to it as required by Civ.R. 17. More specifically, in his response to
CHLS’ motion for summary judgment, Timothy maintained that MERS remains
the mortgagee, and as such, is the proper party to bring this action, not CHLS.
Thus, Timothy contends that summary judgment was improperly granted to
CHLS.
{¶10} The standard for review of a grant of summary judgment is one of de
novo review. Lorain Natl. Bank v. Saratoga Apts. (1989), 61 Ohio App.3d 127,
129, 572 N.E.2d 198. Thus, a grant of summary judgment will be affirmed only
when there is no genuine issue as to any material fact and the moving party is
entitled to judgment as a matter of law. Civ.R. 56(C). In addition, “summary
judgment shall not be rendered unless it appears * * * 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, such party being entitled to
have the evidence construed most strongly in his favor.” Id.{¶11} The moving party may make his motion for summary judgment in
his favor “with or without supporting affidavits.” Civ.R. 56(B). However, “[a]
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party seeking summary judgment must specifically delineate the basis upon which
summary judgment is sought in order to allow the opposing party a meaningful
opportunity to respond.” Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 526
N.E.2d 798, syllabus. Summary judgment should be granted with caution, with a
court construing all evidence and deciding any doubt in favor of the nonmovant.
Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 360, 604 N.E.2d 138, 1992-Ohio-95.
Once the moving party demonstrates that he is entitled to summary judgment, the
burden then shifts to the nonmoving party to show why summary judgment in
favor of the moving party should not be rendered. See Civ.R. 56(E). In fact, “[i]f
he does not so respond, summary judgment, if appropriate, shall be entered against
him.” Id.{¶12} This Court has previously discussed the issue of real parties in
interest in a foreclosure action. See First Union Nat’l Bank v. Hufford, 146 Ohio
App.3d 673, 767 N.E.2d 1206, 2001-Ohio-2271. In Hufford, we stated that Civ.R.
17(A) requires that every action “be prosecuted in the name of the real party in
interest.” Id. at ¶ 13, quoting Civ.R. 17(A). A “real party in interest” is “one who
has a real interest in the subject matter of the litigation, and not merely an interest
in the action itself, i.e., one who is directly benefited or injured by the outcome of
the case.” Shealy v. Campbell (1985), 20 Ohio St.3d 23, 24, 485 N.E.2d 701. “A
party who has failed to establish itself as a real party in interest lacks standing to
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invoke the jurisdiction of the court and is not entitled to judgment as a matter of
law.” Hufford, 2001-Ohio-2271, at ¶ 13 (citations omitted.).
{¶13} In Hufford, the defendant-homeowner asserted that the plaintiff-bank
was not the holder of the promissory note and mortgage and informed the court
that another entity, not a party to the action, was sending notices to her that it had
a superior interest in the property and had informed her attorney that it purchased
the mortgage from First Union National Bank. Id. at ¶¶ 19, 22. The plaintiff-
bank, First Union National Bank of Delaware, failed to present documentation
evidencing that it had been assigned the note and mortgage from the original
payee on the note and lender on the mortgage, First Union Home Equity Bank,
N.A., Charlotte, North Carolina. Id. at ¶ 20. The only evidence the plaintiff-bank
produced was a notification from the Controller of Currency, Administrator of
National Banks in Washington, D.C., indicating that First Union Bank of
Delaware and First Union Home Equity, N.A., had merged to become First Union
National Bank of Delaware, and the affidavit of the assistant vice president of First
Union National Bank, which simply provided that the underlying note and
mortgage were part of an account under her supervision that the defendant
defaulted on. Id. at ¶¶ 20-21. Thus, we held that the trial court erred in granting
summary judgment to the plaintiff-bank because the plaintiff-bank failed to
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establish that it was the real party in interest and entitled to judgment as a matter
of law. Id. at ¶ 24.
{¶14} The case sub judice is factually distinguishable from Hufford.
Unlike the affidavit in Hufford, the affidavit of Keri Selman states that CHLS is
the holder of the mortgage deed and note in this case. This fact was undisputed by
Timothy. The Revised Code specifically states that the holder of an instrument is
the person entitled to enforce the instrument, including in some circumstances one
who is in wrongful possession of the instrument. R.C. 1303.31(A)(1), (B).
{¶15} Further, unlike the facts in Hufford, CHLS attached a copy of an
assignment from MERS to CHLS to its reply to Timothy’s response that CHLS
was not the real party in interest. This assignment reveals that as of February 23,
2009, MERS “does hereby sell, transfer, and assign to [CHLS], its successors and
assigns, all its right, title and interest in and to that certain mortgage * * * together
with the note and indebtedness therein mentioned[.]” This assignment identifies
the Shifflets as the parties who executed the mortgage and identifies the subject
property as the Schell Drive property at issue in this case. The document was
executed on March 17, 2009, and recorded in Book 1084, Page 921 in the Marion
County Recorder’s Office on March 23, 2009.
{¶16} Although the dissent maintains that CHLS is not the real party in
interest because MERS, itself, was never the real party in interest due to the
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reservation in the mortgage deed regarding MERS as nominee only, it overlooks
three important points. First, Timothy never raised this as an issue, either at the
trial court level or to this court, choosing instead to assert that CHLS was not
assigned MERS’ interest. In fact, Timothy has steadfastly contended that MERS
is the proper party to bring suit. However, as noted, MERS properly assigned its
interest in the property to CHLS. Second, the mortgage specifically states that the
Borrower (which is previously defined in the instrument to include Timothy)
understands and agrees that MERS holds legal title and has the right to foreclose
and sell the property. Thus, MERS, and now by assignment CHLS, has a real
interest in the subject matter of the litigation rather than simply an interest in the
action. Third, the affidavit of Selman states that CHLS is the holder of the note
and the mortgage. As holder of both these instruments, CHLS is entitled by law
to enforce them and is directly benefited or injured by the outcome of the case.
{¶17} Given the affidavit of Selman and, more importantly, the
documentary evidence of the assignment of the mortgage and note to CHLS, the
trial court did not err in granting summary judgment to CHLS. Accordingly, the
two assignments of error are overruled, and the judgment of the Common Pleas
Court of Marion County, Ohio, is affirmed.
Judgment Affirmed
WILLAMOWSKI, P.J., concurs.
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/jlr
ROGERS, J., dissents.
{¶16} I respectfully dissent from the conclusions of the majority. The
alleged assignment is based on the mortgage which designated MERS as an agent
for the purpose of servicing the note and mortgage. Nothing in that document
purported to transfer to MERS any interest in the real estate or the repayment of
moneys loaned, except as the servicing agent for the lender. Specifically, the
mortgage states that it:
[S]ecures to Lender [Countrywide Home Loans, Inc.]: (i) the
repayment of the Loan, and all renewals, extensions and
modifications of the Note, and (ii) the performance of
Borrower’s covenants and agreements under this Security
Instrument and the Note. For this purpose, Borrower does
hereby mortgage, grant and convey to MERS (solely as nominee
for Lender and Lender’s successors and assigns) and to the
successors and assigns of MERS the following described
property * * *.
{¶17} While the quoted language indicates that the borrower “does hereby
mortgage, grant and convey to MERS * * * the following described property”, that
language is limited by the words immediately following it, to wit: “solely as
nominee for Lender and Lender’s successors and assigns.”
{¶18} This language clearly indicates that the “assignment” from
Countrywide to MERS was limited in scope in that MERS was merely a “nominee
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for Lender and Lender’s successors and assigns.” This language transfers no real
interest in the real property or the loan. Accordingly, an assignment from MERS
could only convey that to which MERS actually had an interest.
{¶19} I would find that the documents presented to the trial court were
insufficient to sustain a finding that Countrywide Home Loans Servicing, L.P. was
the real party in interest and would reverse the judgment of the trial court.
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