Logansport Savs. Bank, FSB v. Shope , 2016 Ohio 278 ( 2016 )

[Cite as Logansport Savs. Bank, FSB v. Shope, 2016-Ohio-278.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Logansport Savings Bank, FSB, :
Plaintiff-Appellee, :
v. : No. 15AP-148
(C.P.C. No. 13CV-13067)
Jeffrey R. Shope et al., :
(REGULAR CALENDAR)
Defendants-Appellants, :
Kitsmiller's Crossing Association et al., :
Defendants-Appellees. :
D E C I S I O N
Rendered on January 26, 2016
Graydon Head & Ritchey LLP, Harry J. Finke IV, Harry W.
Cappel, and Brittany L. Griggs, for Logansport Savings
Bank, FSB.
Mills, Mills, Fiely & Lucas, LLC, and Brian D. Flick, for
appellants.
APPEAL from the Franklin County Court of Common Pleas
LUPER SCHUSTER, J.
{¶ 1} Defendants-appellants, Jeffrey R. and Shannon S. Shope (collectively "the
Shopes"), appeal from a decision and entry of the Franklin County Court of Common
Pleas denying the Shopes' motion to strike and granting the motion for summary
judgment of plaintiff-appellee, Logansport Savings Bank, FSB ("Logansport"). For the
following reasons, we affirm.
No. 15AP-148 2
I. Facts and Procedural History
{¶ 2} This case involves the judgment on a promissory note ("the note") and
foreclosure of a mortgage to secure the note for the property located at 7292 Kemperwood
Court in Blacklick, OH ("the property"). Logansport, successor in interest to the original
lender on the property, commenced the action by filing a complaint in foreclosure on
December 4, 2013. The complaint alleges Jeffrey Shope is the obligor on the note secured
by a mortgage on the property, that the note is in default, that Logansport is entitled to
judgment in the amount of $552,664.98, plus interest, from May 1, 2013, and that
Logansport is entitled to foreclose the property and force a sale of the property.
{¶ 3} In response to the complaint, the Shopes filed a Civ.R. 12(B)(1) motion to
dismiss for lack of subject-matter jurisdiction. The Shopes asserted in their motion that
Jeffrey Shope executed the note on December 14, 2006 in favor of ABN AMRO Mortgage
Group, Inc. ("ABN") and that the note does not contain an indorsement making payable
to either a specific party or to the bearer. The "Allonge to Note" contains a blank
indorsement purporting to render the note payable to whomever holds it. Logansport
also attached to the complaint an "Assignment of Mortgage" which states "CitiMortgage,
Inc., successor by merger to [ABN]" and purports to assign the mortgage from
CitiMortgage to Logansport. However, the "Assignment of Mortgage" does not purport to
assign or otherwise transfer the note or any rights in the note from CitiMortgage to
Logansport. According to the Shopes' motion to dismiss, the trial court lacked subject-
matter jurisdiction to entertain Logansport's complaint because Logansport did not
provide, contemporaneous to its filing of the complaint, any evidence that CitiMortgage
was the successor by merger to ABN. Thus, the Shopes argued that, absent any evidence
of merger, the trial court could not infer that CitiMortgage is the successor by merger to
ABN and Logansport therefore lacked standing to file its complaint. Logansport filed a
response to the Shopes' motion to dismiss on March 3, 2014, and the Shopes filed a reply
on March 10, 2014.
{¶ 4} In a March 13, 2014 decision and entry, the trial court denied the Shopes'
motion to dismiss, finding Logansport did not need to definitively prove standing in its
complaint. Instead, the trial court determined that in order to survive a motion to
dismiss, "the complaint need only contain sufficient allegations of standing." (Decision
No. 15AP-148 3
and Entry, 6.) Finding Logansport sufficiently alleged it is the holder of both the note and
mortgage, the trial court concluded the complaint sufficiently demonstrated Logansport's
standing so as to survive a motion to dismiss. The Shopes then filed their answer to the
complaint on August 29, 2014, specifically denying that Logansport had any right to
enforce the note.
{¶ 5} On December 29, 2014, Logansport filed a motion for summary judgment.
In support of its motion, Logansport provided the affidavit of Pamela McLaughlin, Vice
President – Document Control of CitiMortgage. McLaughlin averred that Jeffrey Shope
executed the note in the original amount of $560,000 in 2006, and the Shopes then
executed a mortgage to secure the note. Further, McLaughlin averred that CitiMortgage
is the servicer of the loan and is authorized to act on behalf of Logansport, the holder of
the note. According to McLaughlin's affidavit, the Shopes made payments up to and
including the May 1, 2013 installment but have failed to make any payments due June 1,
2013 and after; thus, Logansport elected to call the entire balance of the account.
{¶ 6} The Shopes responded to the motion for summary judgment in a January 2,
2015 reply. Though the Shopes did not file any affidavits or other Civ.R. 56 evidence, they
did file a motion to strike the McLaughlin affidavit, asserting various deficiencies related
to McLaughlin's personal knowledge, the contents of McLaughlin's affidavit, and the
documentary evidence attached in support of McLaughlin's affidavit. On February 3,
2015, Logansport filed a combined response to the Shopes' motion to strike and reply in
support of their motion for summary judgment, including the supplemental affidavit of
Porsha Thompson, another Vice President – Document Control of CitiMortgage.
{¶ 7} Two days after Logansport filed its combined response, the trial court
denied the Shopes' motion to strike and granted Logansport's motion for summary
judgment. The trial court determined the affidavits and payment history established that
Logansport is the servicing agent and holder of the note and mortgage, and the trial court
noted the Shopes' failure to offer any affidavits or Civ.R. 56 evidence disputing any
material facts. Finding Logansport met its burden of proving the note is in default and
that Logansport has fulfilled its contractual obligations, the trial court granted
Logansport's motion for summary judgment, noting the Shopes "have made no payments
since 2013, and they are not entitled to remain in the home for free." (Decision and Entry,
No. 15AP-148 4
2.) The trial court journalized its decision in a February 5, 2015 decision and entry. That
same day, the trial court issued a judgment entry sustaining Logansport's motions for
summary judgment, default judgment,1 and decree for foreclosure. The Shopes timely
appeal.
II. Assignment of Error
{¶ 8} The Shopes assign the following error for our review:
Whether the trial court erred in granting [Logansport's]
motion for summary judgment and denying [the Shopes']
motion to strike the affidavit of Pamela McLaughlin.
III. Standard of Review and Applicable Law
{¶ 9} An appellate court reviews summary judgment under a de novo standard.
Coventry Twp. v. Ecker, 101 Ohio App. 3d 38, 41 (9th Dist.1995); Koos v. Cent. Ohio
Cellular, Inc., 94 Ohio App. 3d 579, 588 (8th Dist.1994). Summary judgment is
appropriate only when the moving party demonstrates (1) no genuine issue of material
fact exists, (2) the moving party is entitled to judgment as a matter of law, and
(3) reasonable minds could 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 most strongly construed in its favor. Civ.R. 56(C); State ex
rel. Grady v. State Emp. Relations Bd., 78 Ohio St. 3d 181, 183 (1997).
{¶ 10} Pursuant to Civ.R. 56(C), the moving party bears the initial burden of
informing the trial court of the basis for the motion and identifying those portions of the
record demonstrating the absence of a material fact. Dresher v. Burt, 75 Ohio St. 3d 280,
293 (1996). However, the moving party cannot discharge its initial burden under this rule
with a conclusory assertion that the nonmoving party has no evidence to prove its case;
the moving party must specifically point to evidence of the type listed in Civ.R. 56(C)
affirmatively demonstrating that the nonmoving party has no evidence to support the
nonmoving party's claims. Id.; Vahila v. Hall, 77 Ohio St. 3d 421, 429 (1997). Once the
moving party discharges its initial burden, summary judgment is appropriate if the
nonmoving party does not respond, by affidavit or as otherwise provided in Civ.R. 56,
1The default judgment was with respect to defendant-appellee Kitsmiller's Crossing Association, and it
did not file a brief in this appeal.
No. 15AP-148 5
with specific facts showing that a genuine issue exists for trial. Dresher at 293; Vahila at
430; Civ.R. 56(E).
IV. Discussion
{¶ 11} In their sole assignment of error, the Shopes argue the trial court erred in
granting Logansport's motion for summary judgment. More specifically, the Shopes
assert Logansport did not satisfy their evidentiary burden to obtain summary judgment in
a foreclosure action. Additionally, the Shopes assert the McLaughlin affidavit contained
inadmissible hearsay.
A. Evidentiary Burden
{¶ 12} The Shopes first argue the trial court improperly granted Logansport's
motion for summary judgment because Logansport did not satisfy the evidentiary burden
necessary to successfully obtain summary judgment in a foreclosure action.
{¶ 13} "A party seeking to foreclose on a mortgage must establish execution and
delivery of the note and mortgage; valid recording of the mortgage; it is the current holder
of the note and mortgage; default; and the amount owed." Perpetual Fed. Sav. Bank v.
TDS2 Property Mgt., LLC, 10th Dist. No. 09AP-285, 2009-Ohio-6774, ¶ 19, citing
Neighborhood Housing Servs. of Toledo, Inc. v. Brown, 6th Dist. No. L-08-1217, 2008-
Ohio-6399, ¶ 16. Additionally, in a mortgage foreclosure case, " '[a]n affidavit stating the
loan is in default, is sufficient for purposes of Civ.R. 56, in the absence of evidence
controverting those averments.' " Id. at ¶ 20, quoting Bank One, N.A. v. Swartz, 9th Dist.
No. 03CA008308, 2004-Ohio-1986, ¶ 14; Deutsche Bank Natl. Trust Co. v. Ingle, 8th
Dist. No. 92487, 2009-Ohio-3886, ¶ 33 (uncontroverted affidavit stating note in default
sufficient for summary judgment); JPMorgan Chase Bank, N.A. v. Brown, 2d Dist. No.
21853, 2008-Ohio-200, ¶ 54 (uncontroverted affidavit stating loan in default sufficient to
support summary judgment).
{¶ 14} In support of its motion for summary judgment, Logansport attached an
affidavit from McLaughlin. McLaughlin states that Logansport is the holder of a note and
corresponding mortgage secured by the property; CitiMortgage is the servicer of the loan.
McLaughlin further avers that the Shopes executed and delivered the note and mortgage
and included a copy of the mortgage recorded in the office of the Franklin County
Recorder. McLaughlin states the Shopes failed to make regular monthly payments as
No. 15AP-148 6
required by the note and mortgage, and, therefore, the Shopes are in default.
Additionally, McLaughlin states the Shopes owe Logansport the sum of $552,664.98 plus
interest.
{¶ 15} The Shopes did not respond to Logansport's motion for summary judgment
with any additional Civ.R. 56(C) evidence to contradict the evidence Logansport
presented. Instead, the Shopes filed a motion to strike McLaughlin's affidavit, which the
trial court ultimately denied. On appeal, the Shopes point to five separate grounds on
which Logansport allegedly failed to carry its evidentiary burden: (1) Logansport's failure
to make a pooling and servicing agreement part of the record when McLaughlin
references such an agreement in her affidavit; (2) Logansport's failure to provide
documentation of any payment history to substantiate the amount it seeks to collect from
the Shopes; (3) Logansport's failure to provide evidence of merger to validate the
assignment of the mortgage from CitiMortgage to Logansport; (4) Logansport's failure to
properly authenticate documents purporting to be the note, mortgage, and assignments;
and (5) Logansport's failure to present any evidence demonstrating Logansport actually
sent the notice of intent to accelerate. We address each of these arguments in turn.
1. Pooling and Servicing Agreement
{¶ 16} The Shopes first argue McLaughlin did not demonstrate her competency to
testify to all matters in the affidavit because she referred to a pooling and servicing
agreement in her affidavit but Logansport did not provide a copy of that agreement in
support of its motion for summary judgment. See generally Cincinnati Bar Assn. v.
Newman, 124 Ohio St. 3d 505, 2010-Ohio-928, ¶ 7 (noting a party satisfies the Civ.R.
56(E) requirement that sworn or certified copies of all papers referred to in the affidavit
be attached when the party attaches the papers to the affidavit coupled with a statement
in the affidavit that the copies are true copies and reproductions).
{¶ 17} As the Eleventh District Court of Appeals has noted, "any violation of the
pooling and services agreement is irrelevant in light of [mortgagee's] standing based on its
possession of the promissory note." Bank of New York Mellon v. Antes, 11th Dist. No.
2014-T-0028, 2014-Ohio-5474, ¶ 40. Similarly, the Eighth District has noted "[w]hether
* * * the parties to the [pooling and servicing agreement] failed to comply with the terms
of [that agreement] is irrelevant to [the bank's] standing as the holder of the note. By
No. 15AP-148 7
virtue of its possession of the note endorsed in blank, [the bank] was the holder of the
note and entitled to enforce the note under Ohio law." Deutsche Bank Natl. Trust Co. v.
Najar, 8th Dist. No. 98502, 2013-Ohio-1657, ¶ 62, citing R.C. 1301.01(T)(1) and
1303.31(A)(1).
{¶ 18} Here, as in Antes, "because the note was endorsed in blank, the note was a
bearer instrument payable to anyone holding it." Id. at ¶ 42, citing Bank of New York
Mellon v. Froimson, 8th Dist. No. 99443, 2013-Ohio-5574, ¶ 23. Thus, to the extent the
Shopes argue Logansport did not demonstrate it was a valid holder of the note due to any
alleged compliance with or violation of a pooling and servicing agreement that Logansport
failed to attach in support of its motion for summary judgment, that argument fails.
{¶ 19} Moreover, to the extent the Shopes argue more generally that McLaughlin
needed to support her affidavit with extrinsic documentation demonstrating her
competency to testify, we disagree with that argument. "A flat statement by the affiant
that [he or she] had personal knowledge is adequate to satisfy Civ.R. 56(E)." Swartz at
¶ 14. Here, McLaughlin averred she was competent to testify and had personal knowledge
of the matter and documents on which she relied. We therefore do not agree with the
Shopes that the McLaughlin affidavit fails at the outset for failure to extrinsically prove
her personal knowledge.
2. Payment History
{¶ 20} The Shopes next argue Logansport's failure to provide any documentation
showing the Shopes' payment history leaves a genuine issue of material fact as to the
amount the Shopes actually owe.
{¶ 21} The Shopes' argument ignores Logansport's supplemental affidavit filed
along with its reply brief in support of its motion for summary judgment. Logansport
submitted the Thompson affidavit which included as an exhibit a properly authenticated
payment history. The fact that Logansport provided the payment history along with a
supplemental affidavit submitted with a reply brief does not lessen its evidentiary value.
"There is no general prohibition against affidavits being timely submitted with reply
briefs, but instead, is a practice that has been utilized in other cases." Cashlink, LLC v.
Mosin, Inc., 10th Dist. No. 12AP-395, 2012-Ohio-5906, ¶ 11 (finding no abuse of
discretion in trial court's denial of appellant's motion to strike affidavit attached to
No. 15AP-148 8
appellee's reply brief). Thus, because Logansport did provide the trial court with
documentation of the Shopes' payment history, we find the Shopes' argument related to
payment history unpersuasive.
3. Evidence of Merger
{¶ 22} The Shopes further argue the trial court improperly granted summary
judgment because Logansport did not provide any evidence of the merger between
CitiMortgage and ABN. Though the Shopes concede "there is no factual dispute that
CitiMortgage merged with ABN," the Shopes nonetheless argue it was Logansport's
burden to demonstrate standing and Logansport could only do so by providing evidence
of merger between CitiMortgage and ABN. (Shopes' Brief, 7.)
{¶ 23} In her affidavit, McLaughlin stated CitiMortgage "is the servicer of the loan
and is authorized to act on behalf of" Logansport, the holder of the note. (McLaughlin
Affidavit, ¶ 7.) The Shopes seem to suggest, without citation to authority, that Logansport
needed to provide documentary proof to corroborate the averment contained in
McLaughlin's affidavit that CitiMortgage merged with ABN. As we noted above, the
affiant's flat statement of personal knowledge is sufficient in the absence of any Civ.R. 56
evidence to the contrary. Swartz at ¶ 14. Because the Shopes failed to present any
evidence to the contrary, we find there is no genuine issue of material fact with respect to
the merger between CitiMortgage and ABN.
4. Authentication of Documents
{¶ 24} Next, the Shopes argue Logansport did not properly authenticate the
documents submitted in support of its motion for summary judgment. More specifically,
the Shopes assert the note, mortgage, and assignment of mortgage are business records
and that McLaughlin, an employee of CitiMortgage, did not sufficiently establish her
personal knowledge with respect to Logansport's procedures in adopting records.
{¶ 25} Again, the Shopes ignore the statement in McLaughlin's affidavit that she is
familiar with CitiMortgage's record keeping system and she has reviewed CitiMortgage's
business records. Additionally, McLaughlin averred CitiMortgage is authorized to act on
behalf of Logansport. Fannie Mae v. Bilyk, 10th Dist. No. 15AP-11, 2015-Ohio-5544, ¶ 17
(stating "[t]he affidavit of the bank's loan servicing agent provides a sufficient foundation
for the admissibility of the relevant loan documents as business records under Evid.R.
No. 15AP-148 9
803(6)"). To the extent the Shopes argue McLaughlin needed to do more in order to
authenticate the documents, the Shopes do so without citation to authority. Additionally,
the Shopes ignore altogether the Thompson affidavit, which properly authenticates the
documents. Because we find Logansport submitted Civ.R. 56 evidence properly
authenticating the note, mortgage, and assignment of mortgage, and the Shopes did not
offer any evidence to the contrary, we find no genuine issue of material fact as to the
authentication of those documents.
5. Notice to Accelerate and Notice of Default
{¶ 26} Finally, the Shopes argue Logansport failed to submit any evidence that it
provided the Shopes with an acceleration notice or notice of default. However, the Shopes
continue to ignore the Thompson affidavit that Logansport submitted with its reply brief
in support of its motion for summary judgment. The Thompson affidavit included
properly authenticated copies of both the acceleration notice and the notice of default.
Thus, there was no genuine issue of material fact with respect to whether Logansport
properly notified the Shopes of its intention to accelerate the debt or that the Shopes had
defaulted on the loan.
B. Motion to Strike the McLaughlin Affidavit
{¶ 27} The Shopes additionally argue that the trial court abused its discretion when
it denied their motion to strike the McLaughlin affidavit.
{¶ 28} The decision to admit or exclude evidence, including affidavit testimony, is
left to the discretion of the trial court, and we will not disturb that decision on appeal
absent a showing that the trial court abused its discretion in a manner that materially
prejudices a party. Cashlink at ¶ 9, citing Boggs v. The Scotts Co., 10th Dist. No. 04AP-
425, 2005-Ohio-1264, ¶ 35 . An abuse of discretion connotes more than a decision that is
unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio St. 3d 217,
219 (1983).
{¶ 29} The Shopes' argument in this regard rehashes the arguments they have
made throughout this case, categorizing McLaughlin's statements as inadmissible
hearsay. However, as we have already determined, the McLaughlin affidavit contained
the requisite averments of personal knowledge and competency to testify. McLaughlin
properly authenticated the documents attached to her affidavit. The Shopes do not
No. 15AP-148 10
demonstrate that the trial court abused its discretion in admitting McLaughlin's affidavit
as evidence in support of Logansport's motion for summary judgment.
{¶ 30} In sum, we find Logansport satisfied its evidentiary burden in showing its
entitlement to summary judgment. Having concluded the trial court did not abuse its
discretion in admitting McLaughlin's affidavit, the Shopes were required to respond with
their own Civ.R. 56 evidence creating a genuine issue of material fact. Because the Shopes
failed to do so, we find there are no genuine issues of material fact with respect to
Logansport's entitlement to a judgment of foreclosure. Accordingly, we overrule the
Shopes' sole assignment of error.
V. Disposition
{¶ 31} Based on the foregoing reasons, the trial court did not err in granting
Logansport's motion for summary judgment. Having overruled the Shopes' sole
assignment of error, we affirm the judgment of the Franklin County Court of Common
Pleas.
Judgment affirmed.
SADLER and HORTON, JJ., concur.