SunTrust Bank v. Wagshul

[Cite as SunTrust Bank v. Wagshul, 2013-Ohio-3931.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
SUNTRUST BANK : Appellate Case No. 25567
:
Plaintiff-Appellee : Trial Court Case No. 2012-CV-3387
:
v. : (Civil Appeal from
: Common Pleas Court
SHELLEY WAGSHUL :
:
Defendant-Appellant :
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OPINION
Rendered on the 13th day of September, 2013.
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RANDY SLOVIN, Atty. Reg. #0037536, and BRAD A. COUNCIL, Atty. Reg. #0081342,
Slovin & Associates Co., L.P.A., 8150 Corporate Park Drive, Suite 350, Cincinnati, Ohio
45242
Attorneys for Plaintiff-Appellee
MICHAEL G. WELLER, Atty Reg.# 0037409, 2121 Miamisburg-Centerville, Centerville,
Ohio 45459
Attorney for Defendant-Appellant
[Cite as SunTrust Bank v. Wagshul, 2013-Ohio-3931.]
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CELEBREZZE, JR., J. (By Assignment):
{¶1} Appellant, Shelley Wagshul, brings this appeal from the trial court’s grant of
summary judgment in favor of appellee, SunTrust Bank (“STB”), in its suit for breach of an
equity line of credit agreement. Wagshul argues that STB can no longer assert such claims
due to an earlier South Carolina foreclosure case filed by a related corporation, SunTrust
Mortgage, Inc. (“STM”). She argues that STB’s claims are barred by res judicata or laches.
After a thorough review of the record and law, we affirm the grant of summary judgment in
favor of STB.
I. Factual and Procedural History
{¶2} In January 2005, Wagshul, through her attorney-in-fact, executed a loan and
mortgage in the amount of $200,000 to STM, secured by real property located in South
Carolina. In March 2005, Wagshul, again through her attorney-in-fact, executed a $50,000
home equity line of credit and second mortgage with STB, secured by the same property.
Wagshul became delinquent on both loans and, on July 30, 2009, STM filed a foreclosure
action in Beaufort County, South Carolina. STM named as defendants all those with a
potential interest in the real estate, including STB. STB never answered in the foreclosure
action, and STM was granted a default judgment against STB, forever terminating any
interest STB had in the property. STM was also granted foreclosure in November 2009,
and the property was sold, but for less than the amount owed to STM. However, as part of
the action, STM waived any right to a deficiency judgment against Wagshul.
{¶3} On June 18, 2012, STB filed suit against Wagshul in the Montgomery County
Common Pleas Court for breach of the equity line of credit and for unjust enrichment.
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Wagshul answered on June 25, 2012, asserting several affirmative defenses, which did not
include res judicata.
{¶4} On October 17, 2012, Wagshul moved for summary judgment, arguing that the
South Carolina foreclosure action barred STB’s suit. Wagshul also argued that STB was
barred by laches from pursuing its claims. She attached to her motion her own affidavit and
several pleadings and journal entries from the South Carolina action. STB also filed for
summary judgment on October 30, 2012, and attached documents and evidence that
established that Wagshul was in breach of the equity line of credit agreement and
demonstrated the amount owed under that contract. STB also filed an opposition motion to
Wagshul’s summary judgment motion. Wagshul responded to STB’s motion with a motion
in opposition and in support of her own summary judgment motion.
{¶5} The trial court ruled on December 16, 2012, that res judicata did not bar suit
and that Wagshul had not shown that laches barred suit. The court further found Wagshul
to be in breach of the equity agreement and granted summary judgment in STB’s favor.
{¶6} Wagshul appeals from this decision, listing two errors in the appellate brief but
separately arguing three issues. Because the third issue — whether STB and STM are the
same entity for purposes of this suit — is subsumed in the first assignment of error, they will
be addressed together.
I. The trial court erred in overruling the Defendant’s Motion for Summary
Judgment.
II. The trial court erred in granting the Plaintiff’s Motion for Summary
Judgment.
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II. Law and Analysis
{¶7} Both of Wagshul’s assignments of error take issue with the trial court’s ruling
on summary judgment. This court reviews the grant of summary judgment de novo, or
without deference to the trial court’s determination of the legal issues involved. Summary
judgment, pursuant to Civ.R. 56, is appropriate when a trial court correctly finds
(1) that there is no genuine issue as to any material fact; (2) that the moving
party is entitled to judgment as a matter of law; and (3) 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, who is entitled to
have the evidence construed most strongly in his favor.
Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 66, 375 N.E.2d 46 (1978).
A party who moves for summary judgment bears the initial burden of
informing the trial court of the basis of its motion and “identifying those
portions of the record that demonstrate the genuine absence of a genuine issue
of material fact on the essential element(s) of the nonmoving party’s claims *
* * [If] the moving party has satisfied its initial burden, the nonmoving party
then has a reciprocal burden outlined in Civ.R. 56(E) to set forth specific
facts showing that there is a genuine issue for trial and, if the nonmovant does
not so respond, summary judgment, if appropriate, shall be entered against
the nonmoving party.” Dresher v. Burt (1996), 75 Ohio St.3d 280, 293,
1996-Ohio-107, 662 N.E.2d 264.
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Doriott v. MVHE, Inc., 2d Dist. Montgomery No. 20040, 2004-Ohio-867, ¶ 37.
A. Res Judicata
{¶8} Wagshul first argues that the trial court erred in finding that res judicata did not
bar STB’s suit.
“Res judicata is a doctrine of judicial preclusion. There are two
theories on which it operates, claim preclusion (estoppel by judgment) and
issue preclusion (collateral estoppel).” State v. Harris, 2d Dist. Montgomery
No. 24739, 2012-Ohio-1853, ¶ 14, citing Grava v. Parkman Twp., 73 Ohio
St.3d 379, 1995-Ohio-331, 653 N.E.2d 226 (1995). “‘Both theories of res
judicata are used to prevent relitigation of issues already decided by a court,
or matters that should have been brought as part of a previous action.’” Id.,quoting Chagrin Falls v. Geauga Cty. Bd. of Commrs., 11th Dist. Geauga No.
2003-G-2530, 2004-Ohio-5310, ¶ 28. (Other citation omitted.) “When a final
judgment is rendered by a court of competent jurisdiction, claim preclusion
‘bars all claims that were litigated in a prior action as well as all claims which
might have been litigated in that action.’” Harris at ¶ 14, citing Deaton v.
Burney, 107 Ohio App.3d 407, 410, 669 N.E.2d 1 (2d Dist.1995). (Other
citation omitted.) “In other words, ‘the doctrine of res judicata requires [a
party] to present every ground for relief in the first action, or be forever
barred from asserting it.’” Id., citing Grava at 229. (Other citation omitted.)
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Cincinnati Ins. Co. v. Jacob, 2d Dist. Montgomery No. 25407, 2013-Ohio-2573, ¶ 30.
Simply stated, “res judicata precludes a party from relitigating issues already decided by a
court or raising matters that the party should have brought in a prior action.” Am. Tax
Funding, L.L.C. v. Whitlow, 2d Dist. Montgomery No. 24599, 2012-Ohio-3839, ¶ 9.
“Proper application of the doctrine of res judicata requires that the identical cause of action
shall have been previously adjudicated in a proceeding with the same parties, in which the
party against whom the doctrine is sought to be imposed shall have had a full and fair
opportunity to litigate the claim.” Brown v. Vaniman, 2d Dist. Montgomery No. 17503,
1999 WL 957721 (Aug. 20, 1999), *4.
{¶9} Civ.R. 13 is instructive when determining whether a party was required to assert
a claim in a prior action. STB and Wagshul were codefendants in STM’s foreclosure
action. Therefore, STB could only have asserted a cross-claim against Wagshul.
Counterclaims arising out of the same transaction or series of events are compulsory, and the
failure to bring such a claim at the appropriate time will bar further litigation. “[W]hile
counterclaims are ‘compulsory,’ such is not the case with respect to a ‘cross-claim against
co-party’ under Civ.R. 13 (G).” Earley v. Joseph, 5th Dist. Guernsey No. 03 CA 27,
2004-Ohio-1563, ¶ 11, quoting Yoder v. Yoder, 5th Dist. Holmes No. CA-335, 1982 Ohio
App. LEXIS 13789 (June 29, 1982).
{¶10} The Ninth District has addressed this issue in the same context as the present
case. Fifth Third Bank v. Hopkins, 177 Ohio App.3d 114, 2008-Ohio-2959, 894 N.E.2d 65(9th Dist.). There, homeowners obtained a mortgage and home equity line of credit from
Fifth Third Bank. The first mortgage was sold by the bank to a third party, who later filed a
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foreclosure action against the homeowners. Fifth Third Bank was named as a codefendant
by virtue of its retained second mortgage interest in the property relating to the home equity
line of credit. Fifth Third Bank did not file an answer or cross-claim in the foreclosure
action, and a default judgment was granted against it. Later, Fifth Third Bank filed suit
against the homeowners for money due on the equity line of credit. The homeowners
answered claiming the suit was barred by res judicata. The trial court rejected the res
judicata argument and granted summary judgment in favor of Fifth Third Bank. On appeal,
the Ninth District found that
[i]n the prior case, Mr. and Mrs. Hopkins and Fifth Third Bank were not
adverse parties; rather they were co-parties. See Huntington Natl. Bank v.
Ross (1998), 130 Ohio App. 3d 687, 694, 720 N.E.2d 1000 [(10th Dist.)].
Accordingly, while Fifth Third Bank could have brought a cross-claim
against Andrew and Donielle Hopkins in that case, Civ.R. 13(G) provides
that cross-claims are permissive rather than compulsory. McCleese v.
Bierman (July 5, 1989), 9th Dist. No. 88CA004455, 1989 Ohio App. LEXIS
2687. Any related claims of Fifth Third Bank were necessarily permissive
cross-claims. Ross, 130 Ohio App.3d at 694. Therefore, Fifth Third Bank
was not required to file a cross-claim against Mr. and Mrs. Hopkins in the
earlier foreclosure action * * *.
Id. at ¶ 12.
{¶11} Fifth Third is precisely on point with the present situation with the exception
of Wagshul’s argument that STB and STM should be considered the same party. STB is a
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separate corporate entity. The only evidence Wagshul provided that STB and STM are one
and the same is a printout from an unidentified website detailing a company profile for a
separate entity, SunTrust Banks, Inc. This entity is a separate parent holding company
whose company profile indicates it is the parent corporation to STB. However, the
company profile does not mention STM. Even if it did, this evidence is insufficient to
disregard the fact that the two are separate corporate entities who may share a common
parent company. Wagshul argues that the separate corporate forms of these entities should
be disregarded. This proposition is unsupported by any law or compelling argument. As
the trial court found, “[t]hey are distinct corporate entities, with separate corporate filings,
officers and directors, and articles of incorporation. [Wagshul] has failed to provide any
evidence or case law, other than the mere fact that one is a subsidiary of the other, that the
two corporations should be treated as one in [sic] the same.” Wagshul’s unsupported
arguments that STM and STB should be considered the same entity are insufficient to
demonstrate that STB was a plaintiff in the foreclosure action. Therefore, the doctrine of
res judicata is no more applicable here than it was in Hopkins.
{¶12} It must be noted that STB now asserts that Wagshul waived the affirmative
defense of res judicata by failing to include it in her answer to STB’s complaint. This
argument was not advanced in STB’s motion for summary judgment or in its opposition to
Wagshul’s motion. This court reviews the lower court’s decision de novo, but generally it
will not entertain arguments not presented to the trial court. “‘It is well established that a
party cannot raise any new issues or legal theories for the first time on appeal.’” Pflum v.
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Waggoner, 2d Dist. Montgomery No. 24907, 2012-Ohio-3391, ¶ 12, quoting Dolan v.
Dolan, 11th Dist. Trumbull Nos. 2000-T-0154 and 2001-T-0003, 2002-Ohio-2440, ¶ 7.
{¶13} Regardless, the trial court properly concluded that res judicata did not apply to
the present suit.
B. Laches
{¶14} Wagshul also argues that STB’s suit is barred by laches.
{¶15} Laches is an affirmative defense that bars an action if it was prosecuted with
an unexcused prejudicial delay. “‘The elements of laches are: (1) an unreasonable delay or
lapse of time in asserting a right, (2) absence of an excuse for the delay, (3) knowledge,
actual or constructive, of the injury involved, and (4) prejudice to the other party.’” Atwater
v. King, 2d Dist. Greene No. 02CA45, 2003-Ohio-53, ¶ 19, quoting State ex rel. Meyers v.
Columbus, 71 Ohio St.3d 603, 646 N.E.2d 173 (1995). Further, the party asserting the
defense must demonstrate that the prejudice is material to the claim and “may not be inferred
from a mere lapse of time.” Id., citing Wright v. Oliver, 35 Ohio St.3d 10, 517 N.E.2d 883(1998).
{¶16} In the present case, Wagshul has alleged a delay exceeding two years from
the conclusion of the foreclosure action in South Carolina to the time STB filed its
complaint. However, Wagshul presents nothing to show prejudice. Her affidavit attached
to her motion for summary judgment states, “[t]he filing of this suit two years later
prejudices me and should be barred by res judicata and laches.” Her motion for summary
judgment specifically asks the court to assume prejudice: “The court can easily surmise that
the delay in bringing suit against Defendant does prejudice her, as all funds from the
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foreclosure sale were disbursed over two years ago. This suit * * * would prejudice her
financially more so than if the suit was brought against her in a timely manner.” Wagshul
offers nothing in support of this bald conclusion. The foreclosure sale did not realize
sufficient funds to pay off the first mortgage held by STM. It makes no difference then
whether STB’s suit was brought immediately after the conclusion of the South Carolina
foreclosure action or sometime later. Therefore, the trial court did not err in determining
that laches did not bar STB’s suit.
III. Conclusion
{¶17} STB’s suit for money due is not barred by res judicata because the foreclosure
action did not preclude a subsequent action by a codefendant in the prior action and STB
was not in privity with STM. Wagshul also failed to offer any evidence that she was
prejudiced from a two-year delay in the filing of the present suit. Therefore the trial court
did not err in granting judgment in favor of STB and denying Wagshul’s motion for
summary judgment.
Judgment affirmed.
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DONOVAN and HALL, JJ., concur.
(Hon. Frank D. Celebrezze, Jr., Eighth District Court of Appeals, sitting by assignment of
the Chief Justice of the Supreme Court of Ohio).
Copies mailed to:
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Randy Slovin
Brad A. Council
Michael G. Weller
Hon. Gregory F. Singer