MTGLQ Investors L.P. v. Faulkner

[Cite as MTGLQ Investors L.P. v. Faulkner, 2018-Ohio-2885.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
WARREN COUNTY
MTGLQ INVESTORS L.P., :
Plaintiff-Appellee, : CASE NO. CA2017-07-117
: OPINION
- vs - 7/23/2018
:
JEFF A. FAULKNER, TRUSTEE OF THE :
FAULKNER FAMILY TRUST DATED
MARCH 22, 1995, et al., :
Defendants-Appellants. :
APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
Case No. 16 CV 88467
Reimer Law Co., Michael L. Wiery, P.O. Box 96696, 30455 Solon Road, Solon, Ohio 44139,
for plaintiff-appellee
Joseph R. Matejkovic, 9078 Union Centre Blvd., Suite 350, West Chester, Ohio 45069, for
defendant-appellant, Jeff A. Faulkner, Trustee
David P. Fornshell, Warren County Prosecuting Attorney, Christopher A. Watkins, 520
Justice Drive, Lebanon, Ohio 45036, for defendant, Warren County Treasurer
HENDRICKSON, J.
{¶ 1} Defendant-appellant, Jeff A. Faulkner, Trustee of the Jeff A. Faulkner Family
Trust Dated March 22, 1995, appeals from a decision of the Warren County Court of
Common Pleas granting summary judgment in favor of substitute plaintiff-appellee, MTGLQ
Warren CA2017-07-117
Investors L.P. (hereafter, "MTGLQ"), in a foreclosure action. For the reasons set forth below,
we affirm the trial court's decision.
{¶ 2} On February 24, 2006, appellant executed a promissory note in favor of
America's Wholesale Lender ("America's Wholesale") in the amount of $68,000 for the
purchase of real property located at 729 South Main Street in Franklin, Ohio. The promissory
note called for monthly payments for a period of 30 years, with interest accumulating on the
principal amount at a yearly rate of 7 percent. The promissory note was secured by a
mortgage that designated appellant as the borrower, America's Wholesale as the lender, and
Mortgage Electronic Registration Systems, Inc. ("MERS") as the mortgagee, acting as the
nominee for America's Wholesale. The mortgage was recorded on March 17, 2006.
{¶ 3} The promissory note was endorsed in blank by America's Wholesale. On
August 16, 2010, MERS executed an Assignment of Real Estate Mortgage, assigning all
interest under the mortgage to BAC Home Loans Servicing, L.P. f.k.a. Countrywide Home
Loans Servicing, L.P. Thereafter, on June 18, 2013, Bank of America, N.A., successor by
merger to BAC Home Loans Servicing, L.P., assigned its interest in the mortgage to Green
Tree Servicing, LLC. On August 31, 2015, Green Tree Servicing, LLC merged with two other
companies, and the mortgage was subsequently held by Ditech Financial LLC ("Ditech"), the
successor by merger to Green Tree Servicing, LLC.
{¶ 4} At some point in 2011, the terms of the promissory note were renegotiated, a
fact that was conceded by both appellee and appellant in their respective appellate briefs.1
1. Appellant contends in his appellate brief that in June 2011, "the Faulkner Family Trust was the debtor in a
Chapter 11 reorganization case pending in the U.S. Bankruptcy Court for the Southern District of Ohio (Dayton).
In 06/2011, Faulkner and BAC executed a reaffirmation of the debt, reducing the balance from $68,852.25 to
$45,000.00 with interest at the rate of 5.25% per year * * *." The record on appeal contains no mention of
bankruptcy proceedings or a reaffirmation agreement. Nonetheless, appellee conceded in its appellate brief that
"there was a bankruptcy and * * * [a]ppellant's debt owed was modified." Appellee notes that its complaint
sought "$44,925.90 at 5.25%. This prayer for amount owed was in fact based on the modified amount as shown
by * * * the reduced unpaid principal balance ($68,000.00 compared to $45,000.00), as well as the matching
interest rate to the modified debt (7.000% original in the Note compared to 5.25% requested in the Complaint)."
-2-
Warren CA2017-07-117
On March 30, 2016, Ditech filed a complaint in foreclosure alleging that appellant defaulted in
payment on the promissory note in July 2011, that it had declared the debt due, it had
complied with all conditions precedent as set forth in the note and mortgage, and that the
sum of $44,925.90 plus interest at the rate of 5.25 percent per annum was owed. Ditech
attached to its complaint the endorsed-in-blank promissory note, the mortgage, and the
various assignments of the mortgage.
{¶ 5} Appellant filed an answer in which he admitted there was a mortgage on the
property securing the note. However, appellant denied the amount of the outstanding
balance claimed by appellant and further denied he was in default. Appellant then set forth
the following affirmative defenses, asserting that (1) he was not "properly name[d]" in the
action, (2) the action was not brought by a real-party-in-interest, (3) the complaint failed to
state a claim upon which relief could be granted, (4) the complaint did not meet the statutory
requirements for relief under the law, (5) the complaint was barred by the applicable statutes
of limitations and the doctrine of laches, (6), the complaint was barred by the doctrine of
waiver and the doctrine of accord and satisfaction, (7) the complaint was barred due to a lack
of consideration, and (8) the plaintiff failed to mitigate its damages.
{¶ 6} After the initiation of discovery, Ditech moved to substitute the plaintiff in the
action, as the note and mortgage was assigned to appellee, MTGLQ, on September 22,
2016. No party opposed the motion and the motion was granted on May 1, 2017.
Thereafter, on May 22, 2017, MTGLQ moved for summary judgment. In support of its
motion, MTGLQ attached the affidavit of Teresa H. Hubner, an employee of New Penn
Financial, LLC d.b.a. Shellpoint Mortgage Servicing (hereafter, "Shellpoint Mortgage
Servicing"), the mortgage servicer for MTGLQ. Hubner attested that she was familiar with
the business records maintained by Shellpoint Mortgage Servicing, she had reviewed the
business records related to appellant's loan, appellant had defaulted on the terms of the note
-3-
Warren CA2017-07-117
and mortgage by failing to pay the July 1, 2011 payment, the default had not been cured, the
debt had been accelerated in accordance with the terms of the note, and the entire balance
of $44,925.90, plus interest at 5.25 percent from June 1, 2011, was due and owed.
Attached to Hubner's affidavit were copies of the promissory note, mortgage, and
assignments of the mortgage, including the September 22, 2016 assignment of the mortgage
from Ditech to MTGLQ.
{¶ 7} Appellant did not file a response in opposition to MTGLQ's motion. On June
20, 2017, the trial court granted MTGLQ's motion for summary judgment.
{¶ 8} Appellant timely appealed, raising the following as his sole assignment of error:
{¶ 9} THE TRIAL COURT ERRED TO THE PREJUDICE OF
DEFENDANT/APPELLANT BY GRANTING PLAINTIFF/APPELLEE'S MOTION FOR
SUMMARY JUDGMENT.
{¶ 10} Appellate review of a trial court's decision granting summary judgment is de
novo. M&T Bank v. Johns, 12th Dist. Clermont No. CA2013-04-032, 2014-Ohio-1886, ¶ 7.
Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is no genuine issue
of any material fact, (2) the moving party is entitled to judgment as a matter of law, and (3)
the evidence submitted can only lead reasonable minds to one conclusion and that
conclusion is adverse to the nonmoving party, who is entitled to have the evidence construed
most strongly in his favor. Bank of New York Mellon v. Putman, 12th Dist. Butler No.
CA2012-12-267, 2014-Ohio-1796, ¶ 18. "The party moving for summary judgment bears the
initial burden of demonstrating that no genuine issue of material fact exists." Fifth Third Bank
v. Bolera, 12th Dist. Butler No. CA2017-03-039, 2017-Ohio-9091, ¶ 25, citing Touhey v. Ed's
Tree & Turf, L.L.C., 194 Ohio App. 3d 800, 2011-Ohio-3432, ¶ 7 (12th Dist.). Once this initial
burden is met, the nonmoving party "must then rebut the moving party's evidence with
specific facts showing the existence of a genuine triable issue; it may not rest on the mere
-4-
Warren CA2017-07-117
allegations or denials in its pleadings." Deutsche Bank Natl. Trust Co. v. Sexton, 12th Dist.
Butler No. CA2009-11-288, 2010-Ohio-4802, ¶ 7, citing Civ.R. 56(E).
{¶ 11} Appellant contends that the trial court erred in granting summary judgment to
MTGLQ as MTGLQ and its predecessors did not act equitably when they "breach[ed] the
loan contract," committed civil fraud by making "blatant misstatements about [his] payment
obligation," acted in violation of bankruptcy law by trying to collect a debt discharged in
bankruptcy, violated the Truth In Lending Act ("TILA") and the Real Estate Settlement
Procedures Act ("RESPA"), and failed to offer him a "waterfall of remedies" required by the
Federal Housing Finance Agency's nonperforming loan program. These issues, however,
were never raised by appellant during the trial court proceedings. "It is well settled law that a
party cannot raise new issues or legal theories for the first time on appeal." Nix v. Williams
Family Partnership, Ltd., 12th Dist. Butler No. CA2013-05-076, 2013-Ohio-5208, ¶ 25; Bank
of Am., N.A. v. Vaught, 12th Dist. Clermont No. CA2013-11-085, 2014-Ohio-3383, ¶ 9.
Therefore, as these issues and claims were not presented below in defense of MTGLQ's
claim for foreclosure, they are not properly before us and we decline to address them for the
first time on appeal. See id. at ¶ 9.
{¶ 12} The only issue properly before this court is whether MTGLQ met its burden
under Civ.R. 56 of establishing its foreclosure claim. "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." Johns, 2014-Ohio-1886, ¶ 8; Citimortgage, Inc. v. Davis, 12th Dist. Warren CA2013-
09-088, 2014-Ohio-3292, ¶ 30.
{¶ 13} Having reviewed MTGLQ's motion for summary judgment and the affidavit and
exhibits attached thereto, we find that the trial court properly granted summary judgment in
favor of MTGLQ. MTGLQ presented uncontested evidence that MTGLQ is the holder of the
-5-
Warren CA2017-07-117
note and recorded mortgage, that appellant had defaulted on his payment obligation, that the
debt owed had been properly accelerated, and that MTGLQ was entitled to $44,925.90, plus
interest at 5.25 percent per annum from June 1, 2011.2 Therefore, as the evidence
submitted by MTGLQ demonstrated that no genuine issue of material fact existed and that it
was entitled to judgment as a matter of law, we find no error in the trial court's decision to
grant summary judgment in favor of MTGLQ.
{¶ 14} Appellant's sole assignment of error is overruled.
{¶ 15} Judgment affirmed.
S. POWELL, P.J., and RINGLAND, J., concur.
2. We note that the amount awarded in judgment coincides with the modified and reduced principal and interest
rate that MTGLQ sought in its complaint.
-6-