Nationstar Mtge., L.L.C. v. Parish

[Cite as Nationstar Mtge., L.L.C. v. Parish, 2016-Ohio-6975.]
STATE OF OHIO, MAHONING COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
NATIONSTAR MORTGAGE, LLC ) CASE NO. 14 MA 0176
)
PLAINTIFF-APPELLEE )
)
VS. ) OPINION
)
CAROL PARISH, et al. )
)
DEFENDANTS-APPELLANTS )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Mahoning County, Ohio
Case No. 2013 CV 2475
JUDGMENT: Affirmed.
APPEARANCES:
For Plaintiff-Appellee: Atty. Atty. Matthew J. Richardson
Atty. Ann Johnson
Manley Deas Kochalski LLC
P.O. Box 165028
Columbus, Ohio 43216-5028
For Defendant-Appellant: Atty. Bruce M. Broyles
5815 Market Street, Suite 2
Boardman, Ohio 44512
JUDGES:
Hon. Cheryl L. Waite
Hon. Gene Donofrio
Hon. Carol Ann Robb
Dated: September 22, 2016
[Cite as Nationstar Mtge., L.L.C. v. Parish, 2016-Ohio-6975.]
WAITE, J.
{¶1} In this foreclosure action, Appellant Carol Parish appeals a December
24, 2014 Mahoning County Common Pleas Court decision granting summary
judgment in favor of Appellee Nationstar Mortgage LLC dba Champion Mortgage of
Ohio. Originally, additional defendants were named in the complaint; however, these
defendants have either been dismissed from the action or are irrelevant to this
appeal. Parish argues that Appellee failed to demonstrate that it had possession of
the original promissory note, thus did not establish standing. Additionally, Parish
argues that the trial court erroneously determined that Appellee satisfied all
conditions precedent before filing its foreclosure complaint. For the reasons
provided, Parish’s arguments are without merit and the judgment of the trial court is
affirmed.
Factual and Procedural History
{¶2} On May 25, 2007, Parish executed a note and mortgage with Pacific
Reverse Mortgage, Inc. dba Financial Heritage. The loan is a reverse mortgage
where the balance increased as Parish drew from the account and had a maximum
principal amount of $700,500. The mortgage and note are subject to the regulations
of the U.S. Department of Housing and Urban Development (“HUD”). Pacific later
assigned the mortgage to Appellee.
{¶3} On September 4, 2013, Appellee filed a foreclosure complaint alleging
that the mortgage was in default and a principal of $31,791.94 plus interest and costs
incurred during enforcement was due and owing. The complaint listed Parish, Lucy
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Manack, the unknown spouse of Lucy Manack, Mahoning County Treasurer, and
HUD as defendants.
{¶4} Parish initially failed to file an answer and Appellee moved for default
judgment. Parish then filed an answer instanter, which was accepted by the trial
court. Parish raised two affirmative defenses in her answer: Appellee lacked
standing and Appellee failed to notify and seek permission from HUD Secretary
(“Secretary”) before accelerating the loan, thus failed to satisfy all conditions
precedent. On October 29, 2013, HUD filed an answer and denied an interest in the
property.
{¶5} On July 30, 2014, Appellee filed a motion for summary judgment, which
the trial court granted. On the same date, Appellee dismissed Lucy Manack and her
unknown spouse from the action after determining that they did not have an interest
in the property. As Mahoning County Treasurer has no interest on appeal, the sole
remaining party appellant is Parish. The trial court granted Parish’s motion for a stay
and this timely appeal followed. She filed one assignment of error but raised four
“issues presented for review.”
Assignment of Error
The trial court erred in granting summary judgment to Appellee when
there were genuine issues of material fact still in dispute.
Issue Presented for Review No. 1
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The trial court erred in granting summary judgment as the supporting
affidavit was insufficient to establish the absence of a genuine issue of
material fact.
Issue Presented for Review No. 2
The trial court erred in granting summary judgment based upon
Nationstar Mortgage LLC's demonstration of “standing” or that it is a
“real party in interest”.
{¶6} “Generally speaking, standing is ‘[a] party’s right to make a legal claim
or seek judicial enforcement of a duty or right.” Wells Fargo Bank, N.A. v. Horn, 142
Ohio St. 3d 416, 2015-Ohio-1484, 31 N.E.3d 637, ¶8, citing Black’s Law Dictionary
1625 (10th Ed.2014.) A party “must assert a personal stake in the outcome of the
action in order to establish standing.” (Emphasis deleted.) Bank of Am., N.A. v.
Kuchta, 141 Ohio St. 3d 75, 2014-Ohio-4275, 21 N.E.3d 1040, ¶ 23, citing Ohio Pyro,
Inc. v. Ohio Dept. of Commerce, 115 Ohio St. 3d 375, 2007-Ohio-5024, 875 N.E.2d
550, ¶ 27. In a foreclosure proceeding, the plaintiff must establish that it is the
“holder of the note or [has] been assigned the mortgage prior to the complaint being
filed.” U.S. Bank Natl. Assn. v. Kamal, 7th Dist. No. 12 MA 189, 2013-Ohio-5380, ¶
16, citing CitiMortgage v. Loncar, 7th Dist. No. 11 MA174, 2013-Ohio-2959.
{¶7} Standing is determined as of the filing of the suit because it is required
to invoke the jurisdiction of the common pleas court. Kuchta at ¶ 24, citing Lujan v.
Defenders of Wildlife, 504 U.S. 555, 570–571, 112 S. Ct. 2130, 119 L. Ed. 2d 351
(1992), fn. 5. However, “[p]roof of standing may be submitted subsequent to filing the
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complaint.” (Emphasis deleted.) (Internal citations omitted.) Horn at ¶ 12. This
means that while the respective parties must have standing at the time the complaint
is filed, they need not prove standing at that time.
{¶8} In Parish’s first and second issues presented she contends that
Appellee lacked standing. First, she argues that Appellee failed to prove that it was
in possession of the original promissory note. While Appellee filed an affidavit stating
it had possession, Parish argues that the affidavit does not meet the requirements set
forth in Wachovia Bank of Delaware, N.A. v. Jackson, 5th Dist. No. 2010-CA-00291,
2011-Ohio-3203. Second, Parish questions the affiant’s ability to assert that
Appellee had possession of the original promissory note based solely on a review of
a digital file.
{¶9} Appellee responds by arguing that Wachovia, supra, is not controlling.
Rather, this Court’s decision in Bank of America v. Saadey, 7th Dist. No. 12 MA 16,
2014-Ohio-3569 applies. Pursuant to Saadey, Appellee argues that only three
elements must be satisfied in order to establish ownership of a note and mortgage:
(1) the movant is the holder of the note and mortgage, (2) the loan is in default, and
(3) the amount of the principal and interest due and owing must be stated. Appellee
urges that each of these elements were established through an affidavit from its
employee, Justin Smetters.
{¶10} Appellee disputes Parish’s claim that Smetters relied on a digital image
to establish their possession of the note. Appellee contends that a copy of the
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original note, which was specifically indorsed to Appellee, and a complete and
unbroken chain of mortgage assignments were attached to the complaint.
{¶11} Appellee attached the following documents to its foreclosure complaint:
a copy of the note, the mortgage, and the chain of assignment from the originator to
Appellee. In its motion for summary judgment, Appellee additionally attached an
affidavit from Justin Smetters, an assistant secretary at Appellee’s office. Smetters
asserts: “[a]t the time of filing the Complaint, and to date, Plaintiff, directly or through
an agent, has possession of and is the person entitled to enforce the Note.” (5/24/14
Smetters Aff., p. 3, ¶ 7.)
{¶12} Preliminarily, Parish contends that, pursuant to Wachovia, supra,
Smetters’ affidavit is insufficient. She cites to a lengthy list of factors in Wachovia
that sets forth requirements for summary judgment in a foreclosure case. This Court
has not adopted the Wachovia factors, however, and have consistently applied the
law found in Saadey. According to Saadey, a foreclosure plaintiff must satisfy three
elements: (1) plaintiff is the holder of the mortgage and note, (2) the mortgage is in
default, and (3) the amount of the principal and interest due and owing is specifically
set forth. Only the first element is at dispute in this matter.
{¶13} Parish argues that Smetters did not provide a business record
demonstrating that Appellee had possession of the note. However, this is contrary to
the record, as Smetters attached a copy of the note to his affidavit. “Ohio case law
and rules provide that copies of a note, mortgage, or an assignment of a mortgage
are ample evidence to establish holder status and grant a bank summary judgment in
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foreclosure.” Wells Fargo Bank, N.A. v. Murphy, 7th Dist. No. 13 MA 35, 2014-Ohio-
2937, ¶ 23.
{¶14} Next, Parish argues that Smetters’ affidavit states that he relied on a
digital file rather than the original note to establish ownership of the mortgage and
note. However, this argument is also contrary to the record. In relevant part,
Smetters averred:
Based on my knowledge of Nationstar Mortgage LLC d/b/a Champion
Mortgage of Ohio’s business practices, the entries in these records
(which include data compilations, electronic image documents, and
others) are made at the time of the events and conditions they describe,
either by people with firsthand knowledge of those events and
conditions or from information provided by people with such firsthand
knowledge. (Emphasis added.)
(5/24/14 Smetters Aff., p. 2, ¶ 2.) It is clear from his affidavit that Smetters did not
limit the records he reviewed to electronic documents. Regardless, true copies of
electronically stored duplicates of an original note are sufficient to shift the burden to
Parish to submit evidentiary materials showing that Appellee was not in possession
of the original note. See PNC Bank N.A. v. Price, 5th Dist. No. 15AP0015, 2016-
Ohio-2887; Nationstar Mtge. v. Hayhurst, 11th Dist. No. 2014–T–0102, 2015-Ohio-
2900; U.S. Bank, N.A. v. LaVette, 8th Dist. No. 101348, 2015-Ohio-765.
{¶15} The record reveals that Appellee met its initial burden of demonstrating
possession of the note, shifting the burden to Parish to prove otherwise. She
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presented no such evidence. Thus, Parish’s arguments are without merit and are
overruled.
Issue Presented for Review No. 3
The trial court erred in granting summary judgment based upon Carol
Parish's failure to support her memorandum in opposition with an
affidavit.
Issue Presented for Review No. 4
The trial court erred in granting summary judgment when Nationstar
Mortgage LLC failed to present any evidence that it fulfilled all
conditions precedent to the acceleration of the debt and the filing of the
foreclosure action.
{¶16} A trial court’s decision to grant summary judgment is reviewed de novo
using the same standard as the trial court as set forth in Civ.R. 56(C). Grafton v.
Ohio Edison Co., 77 Ohio St. 3d 102, 105, 671 N.E.2d 241 (1996). Pursuant to Civ.R.
56(C), the movant must demonstrate that: (1) no genuine issue as to any material
fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of
law; and (3) it appears from the evidence that reasonable minds can come to but one
conclusion, and viewing the evidence most favorably in favor of the party against
whom the motion for summary judgment is made, the conclusion is adverse to that
party. If this burden is met, the non-movant has a reciprocal burden and must set
forth specific facts demonstrating that there is a genuine issue of material fact.
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{¶17} A court must consider the evidence and all reasonable inferences to be
drawn in a light most favorable to the non-movant. Dennison Bridge, Inc. v.
Resource Energy, L.L.C., 7th Dist. No. 14 HA 21, 2015-Ohio-4736, ¶ 17-18, citing
Jackson v. Columbus, 117 Ohio St. 3d 328, 2008-Ohio-1041, 883 N.E.2d 1060, ¶ 11.
The court must resolve any doubts in the non-movant’s favor and “may not weigh the
proof or choose among reasonable inferences.” Dennison at ¶ 18, citing Dupler v.
Mansfield Journal Co., 64 Ohio St. 2d 116, 121, 413 N.E.2d 1187 (1980).
{¶18} Parish argues that Appellee failed to notify the HUD Secretary and
receive permission to foreclose, and so failed to satisfy a condition precedent to
acceleration and foreclosure. She cites to paragraph 9 of the “Adjustable Rate
Open-End Home Equity Conversion Mortgage,” which requires Appellee to notify the
Secretary that the note is due and payable prior to accelerating the loan. As there is
no evidence within the record to show that such notice was given, Parish argues that
the trial court improperly granted summary judgment in Appellee’s favor.
{¶19} In response, Appellee contends that there is no legal requirement to
notify and seek permission from the Secretary prior to accelerating a loan. Even so,
Appellee argues that Parish lacks standing on this issue, as the notification
agreement involves only HUD and Appellee. Further, Parish was aware that HUD
was joined as a party and raised no objections as to notification or permission.
{¶20} The record demonstrates that the note and mortgage are subject to
HUD regulations. The parties do not dispute this fact. The question is whether a
HUD regulation that requires a bank to notify and seek permission from the Secretary
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is a condition precedent to the acceleration of a loan. We have held that “[w]here
prior notice of default and/or acceleration is required by a provision in a note or
mortgage instrument, the provision of notice is a condition precedent.” U.S. Bank,
N.A. v. Martin, 7th Dist. No. 13 MA 107, 2014-Ohio-3874, ¶ 14, quoting First
Financial Bank v. Doellman, 12th Dist. No. CA2006-02-09, 2007-Ohio-222, ¶ 20.
{¶21} Here, provisions regarding acceleration of the debt are found within
paragraph 9 of the mortgage and paragraph 7 of the note. According to paragraph
9(a) of the mortgage, the loan may be accelerated if certain conditions are met.
Paragraph 9(b), which is subtitled “Due and Payable with Secretary Approval,” states
these conditions:
(i) The property ceases to be the principal residence of a Borrower for
reasons other than death and the Property is not the principal residence
of at least one other Borrower; or
(ii) For a period of longer than twelve (12) consecutive months, a
Borrower fails to occupy the Property because of physical or mental
illness and the Property is not the principal residence of at least one
other Borrower or;
(iii) An obligation of the Borrower under this Security Instrument is not
performed.
According to paragraph 9(d), which is subtitled “Notice to Secretary and Borrower,”
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Lender shall notify the Secretary and Borrower whenever the loan
becomes due and payable under Paragraphs 9 (a) (ii) or (b). Lender
shall not have the right to commence foreclosure until Borrower has
had thirty (30) days after notice to either:
(i) Correct the matter which resulted in the Security Instrument coming
due and payable; or
(ii) Pay the balance in full; or
(iii) Sell the Property for the lesser of the balance or 95% of the
appraised value and apply the net proceeds of the sale toward the
balance; or
(iv) Provide the Lender with a deed in lieu of foreclosure.
{¶22} Paragraph 7(B) of the note provides that:
Lender may require immediate payment in full of all outstanding
principal and accrued interest, upon approval by an authorized
representative of the Secretary if:
(i) The Property ceases to be the principal residence of a Borrower for
reasons other than death and the Property is not the principal residence
of at least one other Borrower;
(ii) For a period of longer than 12 consecutive months, a Borrower fails
to physically occupy the Property because of physical or mental illness
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and the Property is not the principal residence of at least one other
Borrower; or
(iii) An obligation of the Borrower under the Security Instrument is not
performed.
{¶23} As both the note and mortgage contain a provision requiring notice of
default and acceleration, such notice is a condition precedent to acceleration and
foreclosure. However, this case presents a unique factual circumstance. On
October 29, 2013, HUD filed an answer to the foreclosure complaint and disclaimed
an interest in Parish’s property. Based on this fact, it is difficult to see how Appellee’s
failure to notify and seek permission from the Secretary affected Parish’s substantial
rights. Based solely on the record, here, Appellee’s failure to notify and seek
permission from the Secretary had no affect on any right Parish may have and so,
was unnecessary in light of HUD’s disclaimer. Accordingly, Parish’s arguments are
without merit and are overruled.
Conclusion
{¶24} Parish argues that Appellee lacked standing to file the foreclosure
complaint as it failed to demonstrate possession of the original note. This record
demonstrates that Appellee did prove possession of the note, as a copy was
attached to the foreclosure complaint. Parish next argues that Appellee failed to
notify and seek approval from the Secretary prior to accelerating the loan. Although
ordinarily a notice provision with a loan document is a condition precedent to
acceleration of a loan and foreclosure, HUD filed an answer in this matter disclaiming
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an interest in the property. Thus, any failure to notify and seek approval from the
Secretary has no affect on Parish’s rights or on the outcome of this case.
Accordingly, the judgment of the trial court is affirmed.
Donofrio, P.J., concurs.
Robb, J., concurs.