Fifth Third Mtge. Co. v. Brown

[Cite as Fifth Third Mtge. Co. v. Brown, 2012-Ohio-2205.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 97450
FIFTH THIRD MORTGAGE COMPANY
PLAINTIFF-APPELLANT
vs.
MARGARET BROWN, ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
AFFIRMED IN PART,
REVERSED IN PART, AND REMANDED
Civil Appeal from the
Cuyahoga County Common Pleas Court
Case No. CV-692190
BEFORE: S. Gallagher, J., Sweeney, P.J., and Keough, J.
RELEASED AND JOURNALIZED: May 17, 2012
ATTORNEYS FOR APPELLANT
David M. Gauntner
Antonio J. Scarlato
Felty & Lembright Co., L.P.A.
1500 West Third Street, Suite 400
Cleveland, OH 44113
ATTORNEY FOR APPELLEE
James P. Cullen
55 Public Square
Suite 1550
Cleveland, OH 44113
Also listed:
For Akarui Enterprises, LLC
Akarui Enterprises, LLC
P.O. Box 28012
Cleveland, OH 44128
For Huntington National Bank
Huntington Bank
2361 Morse Road, NC2W42
Columbus, OH 43229
For Keybank NA
Keybank NA
4910 Tiedeman Road
Brooklyn, OH 44144
For Tomi Enterprises, LLC
Tomi Enterprises
3290 E. 140th Street
Cleveland, OH 44120
SEAN C. GALLAGHER, J.:
{¶1} Plaintiff-appellant, Fifth Third Mortgage Company (“Fifth Third”), appeals
the decision of the Cuyahoga County Court of Common Pleas that found in favor of the
defendant-appellee, Margaret Brown, on its claims for reformation and foreclosure. For
the reasons stated herein, we affirm in part and reverse in part and remand the matter to
the trial court.
{¶2} On May 7, 2009, Fifth Third filed a “complaint for foreclosure, monetary
judgment in reformation and relief” against Brown.1 Fifth Third alleged that it was the
holder of a promissory note and mortgage securing the note on which Brown had
defaulted. Fifth Third sought a monetary judgment on the promissory note in the sum of
$65,713.20 plus interest at the rate of 7.125 percent per annum from November 1, 2008.
Fifth Third also sought foreclosure of the mortgage, which refers to the real property with
parcel ID 130-11-110 located at 3290 East 140th Street, Cleveland, Ohio 44120.
Additionally, Fifth Third requested a reformation of the quit-claim deed and mortgage
deed, which were alleged to contain an incorrect legal description of the property. After
filing its complaint, Fifth Third filed a preliminary judicial report that also noted the legal
description of the property contained errors.
1
Several other defendants, who are not parties to the appeal, were named in the action.
The trial court entered default judgment against the non-answering defendants.
{¶3} A review of the legal descriptions provided shows that they refer to the same
address, parcel number, and sublot. However, the description referred to by the
mortgage does not contain the volume number of the recorded plat map.
{¶4} Brown filed an answer that generally denied the allegations in the complaint.
Brown never contested the validity of the mortgage on the subject property.
{¶5} Fifth Third filed a motion for summary judgment in which it requested
judgment on the note and a decree of foreclosure. It did not pursue its reformation claim.
Brown opposed the motion, claiming she was not in default and that Fifth Third had
made improper escrow calculations. The trial court denied the motion, and the case
proceeded to trial before a court magistrate.
{¶6} The magistrate found that Fifth Third established Brown was in default of her
monthly payment obligation, Brown had breached the terms of the note and mortgage,
and the note was not paid in full after being properly accelerated. The magistrate found
in favor of Fifth Third on Count 1 of the complaint and awarded a monetary judgment.
However, the magistrate found in Brown’s favor on the reformation and foreclosure
claims. The magistrate found that Fifth Third did not pursue the reformation claim at
trial and failed to offer evidence on the claim. The magistrate concluded that Fifth Third
had conceded the legal description was insufficient by pleading a claim for reformation in
the complaint. The magistrate also found that the volume of the plat map was an
essential term that was missing from the legal description and that the preliminary judicial
report had indicated there were errors in the legal description. Additionally, the
magistrate found that Fifth Third was not entitled to the foreclosure of the mortgage
because it had failed to demonstrate a present interest in the property.
{¶7} Fifth Third filed objections to the magistrate’s decision that were overruled
by the trial court. The court adopted the magistrate’s decision and found that Fifth
Third’s failure to address its reformation count at trial was fatal to its claim. The court
proceeded to find against Fifth Third on its reformation and foreclosure claims. Fifth
Third only prevailed on its monetary judgment claim.
{¶8} Fifth Third filed this appeal, raising four assignments of error for our review.
Within its assigned errors, Fifth Third argues the trial court abused its discretion by
overruling its objections to the magistrate’s decision and denying judgment on Counts 2
and 3 of the complaint because (1) the mortgage sufficiently describes the property
encumbered by the mortgage pursuant to Ohio law, (2) Fifth Third never alleged that its
mortgage was insufficient, (3) reformation was not required to foreclose on its mortgage,
and (4) sufficient evidence was offered of the parties’ intent for the mortgage to
encumber the subject property. We note that appellee did not file a responsive brief on
appeal.
{¶9} We review a trial court’s adoption of a magistrate’s decision for an abuse of
discretion. Wade v. Wade, 113 Ohio App.3d 414, 419, 680 N.E.2d 1305 (11th
Dist.1996). An abuse of discretion exists when a court’s decision is unreasonable,
arbitrary, or unconscionable. State ex rel. Schaengold v. Ohio Pub. Emps. Retirement
Sys., 114 Ohio St.3d 147, 2007-Ohio-3760, 870 N.E.2d 719, ¶ 8.
{¶10} We begin by addressing the reformation claim. Reformation is available
where it is shown that a written instrument does not express the true agreement entered
into between the contracting parties by reason of a mutual mistake. Wagner v. Natl. Fire
Ins. Co., 132 Ohio St. 405, 412, 8 N.E.2d 144 (1937). In such a case, the equitable
remedy of reformation is available in order to make the writing conform to the real
intention of the parties. Id. In Delfino v. Paul Davies Chevrolet, Inc., 2 Ohio St.2d 282,
286, 209 N.E.2d 194 (1965), the Ohio Supreme Court stated the following:
The purpose of reformation is to cause an instrument to express the intent of
the parties as to the contents thereof, i.e., to establish the actual agreement
of the parties. 47 Ohio Jurisprudence 2d 120, Reformation of Instruments,
Section 2. * * * A reformation presupposes the existence of a valid
instrument which fails to express the actual intent of the parties. An action
for reformation is not to create an obligation but to establish the content of
the instrument as intended by the parties.
Reformation of a written instrument will not be granted absent clear and convincing
evidence that a mistake of fact was made and that such mistake was mutual. See Bellish
v. C.I.T. Corp., 142 Ohio St. 36, 43-44, 50 N.E.2d 147 (1943).
{¶11} In its complaint, Fifth Third included a cause of action for reformation. It
alleged that the quit-claim deed and mortgage deed contained an incorrect legal
description of the property. However, Fifth Third did not pursue this claim on summary
judgment or at trial. Because Fifth Third did not establish its claim by clear and
convincing evidence, the trial court did not abuse its discretion in denying reformation.
{¶12} However, we do not agree with the trial court’s determination that Fifth
Third was not entitled to a decree in foreclosure because of the reformation claim.
Although the complaint contained allegations that there was an incorrect legal description
of the property, it was never shown that the legal description was insufficient to encumber
the property and Brown never disputed that Fifth Third had a present interest therein.
Further, although the legal description provided in the mortgage did not contain the
volume of the plat map, we do not find this was fatal to the establishment of a valid and
enforceable instrument between the parties.
{¶13} Ohio mortgage law does not set forth a precise legal description that must be
included on a mortgage. See In re Bunn, 578 F.3d 487, 490 (6th Cir.2009). R.C.
5302.12 provides that a properly executed mortgage is valid when “in substance” it
follows the form set forth thereunder. The form requires a “[d]escription of land or
interest in land and encumbrances, reservations, and exceptions, if any.” Id. The
description of the property does not require a formal “metes and bounds” description. As
such, a mortgage providing a correct parcel number and street address has been deemed a
sufficient legal description of property subject to a mortgage. ABN AMRO Mtge. Group,
Inc. v. Jackson, 159 Ohio App.3d 551, 558-559, 2005-Ohio-297, 824 N.E.2d 600 (2d
Dist.); see also In re Bunn, 578 F.3d at 490 (determining that under Ohio law, a recorded
mortgage that only provided a street address of residential property and not a legal
description gave sufficient notice to third parties of the existence of the mortgage). A
description of legal property “‘is sufficient if it is such as to indicate the land intended to
be conveyed, so as to enable a person to locate it.’” Roebuck v. Columbia Gas Transm.
Corp., 57 Ohio App.2d 217, 220, 386 N.E.2d 1363 (2d Dist.1977), quoting 17 Ohio
Jurisprudence 2d 227, Deeds, Section 97.
{¶14} We find nothing in Ohio law to support the trial court’s conclusion that the
volume of the plat map was an essential term missing from the legal description. “The
purpose of the recording statutes is to put other lien holders on notice and to prioritize the
liens.” GMAC Mtge. Corp. v. McElroy, 5th Dist. No. 2004-CA-00380, 2005-Ohio-2837,
¶ 16; see also Bloom v. Noggle, 4 Ohio St. 45, 53-56 (1854). Likewise, section 3.2 of the
Ohio Title Standards supports the view that reforming to include reference to the volume
of the plat map would be superfluous where the subdivision is referred to by an exclusive
descriptive name. Here the legal description references “Sublot No. 82 in the Behm
Homestead Allotment.” Further, comment B in section 3.2 provides in pertinent part:
Errors, irregularities and deficiencies in property descriptions in the chain
of title do not impair marketability unless * * * a substantial uncertainty
exists as to the land which was conveyed * * *, or the description falls
beneath the minimal requirement of sufficiency and definiteness which is
essential to an effective conveyance.
{¶15} In this case, it was not disputed that the mortgage was properly executed in
compliance with R.C. 5301.01 and that the legal description provided in the mortgage
contains the proper street address and parcel number for the property subject to the
mortgage. Further, although the legal description in the mortgage did not contain the
volume of the plat map, there is nothing that would suggest the legal descriptions
provided did not embrace the same property or that uncertainty was created as to the
property at issue.
{¶16} Because Fifth Third established a valid and enforceable mortgage that
encumbered the subject property, we find the trial court abused its discretion in finding
Fifth Third failed to establish an interest in the subject property and by denying a decree
of foreclosure.
{¶17} For these reasons, we sustain the assigned errors as to Count 2 of the
complaint only. We affirm the decision of the trial court to deny reformation and reverse
the decision on the foreclosure.
{¶18} Judgment affirmed in part, reversed in part, and case remanded.
It is ordered that appellant and appellee share costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
SEAN C. GALLAGHER, JUDGE
JAMES J. SWEENEY, P.J., and
KATHLEEN ANN KEOUGH, J., CONCUR