Deutsche Bank Natl. Trust Co. v. Najar

[Cite as Deutsche Bank Natl. Trust Co. v. Najar, 2013-Ohio-1657.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 98502
DEUTSCHE BANK NATIONAL TRUST CO.
PLAINTIFF-APPELLEE
vs.
MOHAMMED NAJAR, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-723607
BEFORE: Rocco, J., S. Gallagher, P.J., and McCormack, J.
RELEASED AND JOURNALIZED: April 25, 2013
ATTORNEY FOR APPELLANTS
Darryl E. Pittman
Pittman, Alexander Attorneys Co., L.P.A.
2490 Lee Blvd., Suite 115
Cleveland Heights, Ohio 44118-1255
ATTORNEYS FOR APPELLEE DEUTSCHE BANK NATIONAL TRUST
COMPANY, AS TRUSTEE FOR ARGENT SECURITIES INC., ASSET-BACKED
PASS-THROUGH CERTIFICATES SERIES 2003-W3
Kimberly Y. Smith Rivera
James W. Sandy
James S. Wertheim
McGlinchey Stafford P.L.L.C.
25550 Chagrin Blvd., Suite 406
Cleveland, Ohio 44122-4640
ATTORNEYS FOR APPELLEE MANLEY DEAS KOCHALSKI L.L.C.
David B. Bokor
Matthew P. Curry
Edward M. Kochalski
Matthew J. Richardson
Justin M. Ritch
Manley Deas Kochalski L.L.C.
P.O. Box 165028
Columbus, Ohio 43216-5028
KENNETH A. ROCCO, J.:
{¶1} In this foreclosure action, defendants-appellants Mohammed Najar, Ahmad
Zoqash, and Rehab Zoqash appeal from the decision of the trial court granting summary
judgment in favor of plaintiff-appellee Deutsche Bank National Trust Company, as
Trustee for Argent Securities Inc., Asset-Backed Pass-Through Certificates, Series
2003-W3, under the pooling and servicing agreement dated September 1, 2003
(“Deutsche Bank”), on its complaint and appellants’ counterclaims for alleged violations
of the Ohio Consumer Sales Practices Act (“CSPA”) and Ohio’s falsification statute.
Appellants also appeal the trial court’s entry of summary judgment in favor of cross-claim
defendant-appellee Manley Deas Kochalski L.L.C. (“MDK”) on appellants’ cross-claims
for alleged violations of CSPA and the Fair Debt Collection Practices Act (“FDCPA”).
{¶2} Raising five assignments of error, appellants argue that the trial court erred in
granting Deutsche Bank’s and MDK’s motions for summary judgment because the
affidavits and other evidentiary materials submitted by Deutsche Bank and MDK in
support of their motions “do not carry their summary judgment burden.” Appellants
further contend that the note at issue was nonnegotiable and that the trial court erred in
entering summary judgment on Deutsche Bank’s complaint because Deutsche Bank failed
to establish its right to enforce the note and mortgage under the provisions of the Ohio
Uniform Commercial Code (“UCC”) applicable to nonnegotiable instruments.
Appellants also argue that Deutsche Bank lacked standing to enforce the note and
mortgage because: (1) Deutsche Bank failed to establish that it was the “owner” or holder
of the note when the foreclosure complaint was filed; (2) Deutsche Bank could not
establish its ownership of the note and mortgage due to its alleged noncompliance with a
pooling and servicing agreement applicable to appellants’ loan; and (3) the assignment of
the mortgage to Deutsche Bank was “robo-signed.” For the following reasons, we affirm
the trial court’s judgment.
{¶3} On July 8, 2003, Najar and Ahmad Zoqash (the “borrowers”) executed an
adjustable rate note, payable to Argent Mortgage Company, L.L.C. (“Argent”), in the
amount of $171,950. To secure payment of the note, Najar, Ahmad Zoqash, and
Ahmad’s wife, Rehab Zoqash, executed a mortgage on real property located at 6593
Sutton Drive, North Olmsted, Ohio, in favor of Argent. The mortgage was recorded on
July 16, 2003.1
{¶4} Appellants’ loan was thereafter securitized with other loans into a trust,
pursuant to a pooling and servicing agreement (“PSA”).2 Deutsche Bank is the trustee
The note and mortgage at issue are hereinafter collectively referred to as
1
“appellants’ loan.”
2
A pooling and servicing agreement is “an agreement creating a trust that defines the terms
under which promissory notes and their related mortgages are placed into the trust, describes how the
notes and mortgages and related loan documents are transferred by and between the parties to the
trust, and sets forth the various responsibilities of the parties to the trust. The promissory notes,
mortgages or deeds of trust, and related loan documents are the trust res. Through the securitization
process, the beneficial or ownership interests in the trust are held by investors.” In re Smoak, 461
B.R. 510, 515 (Bankr.S.D.Ohio 2011). The PSA “represents contractual obligations” among the
parties to the agreement, i.e., in this case, Argent Securities Inc. as depositor, Ameriquest Mortgage
Company as master servicer, and Deutsche Bank as trustee. Id. at 516.
for the trust that includes appellants’ loan.
{¶5} After the borrowers executed the note, Argent transferred the note to
Ameriquest Mortgage Company (“Ameriquest”), using a special endorsement.
Ameriquest thereafter endorsed the note in blank, and the note was transferred to
Deutsche Bank. There is no information in the record as to precisely when these
endorsements were made; however, Deutsche Bank claims to have been in possession of
the note endorsed in blank since September 2003.
{¶6} On January 20, 2009, Citi Residential Lending Inc., as attorney-in-fact for
Argent, assigned the mortgage “together with the certain note(s) described therein” to
Deutsche Bank. The assignment of mortgage was recorded on February 18, 2009.
{¶7} The borrowers failed to make payments due on the note, and on
April 8, 2010, Deutsche Bank filed a foreclosure action against appellants, seeking
to recover the unpaid balance on the note and to foreclose on the mortgaged
property. In its complaint, Deutsche Bank alleged that it was the holder of the
note and mortgage, that the note was in default, and that the default had not been
cured. Copies of the unendorsed note and mortgage, which the borrowers had
executed in favor of Argent, were attached to the complaint. Also attached to the
complaint was a copy of the assignment of mortgage from
Argent to Deutsche Bank. A copy of the note endorsed in blank was not attached
to the complaint.
{¶8} Appellants failed to timely respond to the complaint, and a default
judgment was originally entered against them. However, that judgment was
subsequently vacated under Civ.R. 60(B).
{¶9} On February 15, 2011, appellants filed an “Amended Answer, Affirmative
Defenses Counterclaims and Third Party Complaint,” in which they denied the material
allegations of the complaint, raised various affirmative defenses, and asserted
counterclaims against Deutsche Bank and cross-claims against MDK, the law firm that
had filed the foreclosure action on behalf of Deutsche Bank. With respect to their claims
against Deutsche Bank and MDK, appellants alleged that the foreclosure action had been
filed using false documentation. Specifically, appellants alleged that Deutsche Bank did
not “own” the note and mortgage, that the assignment of mortgage from Argent to
Deutsche Bank was fraudulent, having been “signed by notorious robo-signers,”3 and that
Deutsche Bank and MDK had filed a copy of the fraudulent assignment with the county
recorder. Appellants further alleged that by attaching a copy of the assignment to the
complaint, MDK “swore to [the] authenticity” of the assignment, thereby “perpetrating a
fraud on the Court.” Based on these allegations, appellants asserted claims against MDK
for alleged violations of the FDCPA, 15 U.S.C. 1692 et seq., and against Deutsche Bank
and MDK for alleged violations of CSPA, R.C. 1345.01 et seq., and Ohio’s falsification
statute, R.C. 2921.13. On May 19, 2011, the trial court granted MDK’s motion to
3
“Robo-signing” occurs “when bank employees sign large numbers of affidavits and legal
documents asserting the bank’s right to foreclose without confirming their accuracy.” Bank of N.Y.
Mellon Trust Co., N.A. v. Unger, 8th Dist. No. 97315, 2012-Ohio-1950, ¶ 25, fn. 4, citing Ohio v.
GMAC Mtge., L.L.C., 760 F.Supp.2d 741, 743 (N.D.Ohio 2011).
dismiss appellants’ claim against MDK for alleged violations of Ohio’s falsification
statute.
{¶10} Deutsche Bank thereafter filed two motions for summary judgment — one
as to its complaint and one as to appellants’ counterclaims. In its motion for summary
judgment on its complaint, Deutsche Bank argued that appellants were in default and that
based on its possession of the note endorsed in blank and the assignment of the mortgage
from Argent to Deutsche Bank, it was entitled to judgment on the note and to foreclose on
the mortgage. In its motion for summary judgment on appellants’ counterclaims,
Deutsche Bank argued that because it was a national bank organized and existing
pursuant to the National Bank Act, it was not a “supplier” under CSPA, and that,
therefore, there was no “consumer transaction” within the meaning of the statute.
Deutsche Bank also argued that appellants’ falsification claim failed because there is no
independent civil action for falsification under Ohio law absent criminal proceedings.
{¶11} MDK filed a motion for summary judgment on appellants’ cross-claims in
which it argued that appellants lacked standing to challenge the assignment of mortgage
and could not establish essential elements of their FDCPA and CSPA claims against
MDK, including that MDK committed any prohibited acts with the meaning of the
statutes or that appellants had detrimentally relied upon, or were injured by, the alleged
fraudulent assignment. Appellants opposed Deutsche Bank’s and MDK’s motions for
summary judgment.
{¶12} Determining that there were no genuine issues of material fact and that
Deutsche Bank was entitled to judgment as a matter of law, the trial court granted
summary judgment in favor of Deutsche Bank on its complaint, entering judgment against
Najar and Ahmad Zoqash in the amount of $218,879.27, and ordering foreclosure of the
mortgaged property. The trial court also granted Deutsche Bank’s and MDK’s motions
for summary judgment on appellants’ counterclaims and cross-claims. Appellants
appeal from the trial court’s order granting Deutsche Bank’s and MDK’s motions for
summary judgment. {¶13} Appellants present five assignments of error for our
review:
ASSIGNMENT OF ERROR NO. 1:
The trial court erred when it granted summary judgment to plaintiff where
there were unresolved conflicts in the evidence regarding whether plaintiff
was a holder of the note entitled to enforce it through foreclosure * * *.
ASSIGNMENT OF ERROR NO. 2:
The trial court erred by finding that plaintiff could enforce defendants’
mortgage because the note is nonnegotiable and the evidentiary standards
under Revised Code § 1309.01 et [seq.] (UCC Article 9) as opposed to
those set forth in Revised Code § 1303.01 et seq., were not met inasmuch as
plaintiff failed to comply with the UCC Article 9 provisions that govern the
transfer of nonnegotiable instruments and the enforceability of mortgages
securing those instruments.
ASSIGNMENT OF ERROR NO. 3:
The court erred when it found defendant MDK did not violate the Fair
Debt Collection Practices Act by filing fraudulent documents with their
foreclosure filings and making false and misleading representations in the
attempt to collect this debt; and supported its motion for summary judgment
with evidence cognizable under Civ.R. 56(E).
ASSIGNMENT OF ERROR NO. 4:
The court erred when it found that MDK was not liable under the Ohio
Consumer Sales Practices Act because it committed unfair, unconscionable
and deceptive Acts in connection with this consumer transaction.
ASSIGNMENT OF ERROR NO. 5:
The court erred when it found that plaintiff established that it is a national
bank exempt under the Consumer Sales Practices Act; and erred when it
found that plaintiff as a matter of law was not a supplier under the
Consumer Sales Practices Act.
{¶14} We review summary judgment rulings de novo, applying the same standard
as the trial court. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241(1996). We accord no deference to the trial court’s decision and independently review
the record to determine whether summary judgment is appropriate.
{¶15} Under Civ.R. 56, summary judgment is appropriate when (1) no genuine
issue as to any material fact exists, (2) the party moving for summary judgment is entitled
to judgment as a matter of law, and (3) viewing the evidence most strongly in favor of the
nonmoving party, reasonable minds can reach only one conclusion that is adverse to the
nonmoving party.
{¶16} On a motion for summary judgment, the moving party carries an initial
burden of setting forth specific facts that demonstrate its entitlement to summary
judgment. Dresher v. Burt, 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264 (1996). If the
moving party fails to meet this burden, summary judgment is not appropriate; if the
moving party meets this burden, summary judgment is appropriate only if the nonmoving
party fails to establish the existence of a genuine issue of material fact. Id. at 293.
{¶17} To properly support a motion for summary judgment in a foreclosure action,
a plaintiff must present “evidentiary quality materials” establishing: (1) that the plaintiff
is the holder of the note and mortgage, or is a party entitled to enforce the instrument; (2)
if the plaintiff is not the original mortgagee, the chain of assignments and transfers; (3)
that the mortgagor is in default; (4) that all conditions precedent have been met; and (5)
the amount of principal and interest due. See, e.g., United States Bank, N.A. v. Adams,
6th Dist. No. E-11-070, 2012-Ohio-6253, ¶ 10, citing Wachovia Bank v. Jackson, 5th
Dist. No. 2010 CA 00291, 2011-Ohio-3203, ¶ 40-45.
Deutsche Bank’s Motion for Summary Judgment on Its Complaint
Evidentiary Materials Submitted by Deutsche Bank in Support of Its Motion
for Summary Judgment
{¶18} In their first assignment of error, appellants argue that the trial court erred in
granting Deutsche Bank’s motion for summary judgment on its complaint because
Deutsche Bank failed to present sufficient evidence establishing its right to enforce the
note and mortgage at issue. Specifically, appellants contend that the affidavit Deutsche
Bank relied upon in support of its motion for summary judgment was “based on hearsay,
unsupported legal conclusions, and records for which no proper foundation for admission
was established,” did not constitute competent summary judgment evidence under Civ.R.
56(E), and was “insufficient to carry [Deutsche Bank’s] summary judgment burden.”4
As part of the argument in their first assignment of error, appellants also
4
challenge MDK’s use of the affidavit of David Merrill to support its motion for
summary judgment on appellants’ cross-claims. Although Deutsche Bank
submitted the Merrill affidavit in support of its motion for summary judgment on
{¶19} Civ.R. 56(E) sets forth the requirements for affidavits submitted on
summary judgment. It provides, in relevant part:
Supporting and opposing affidavits shall be made on personal knowledge,
shall set forth such facts as would be admissible in evidence, and shall show
affirmatively that the affiant is competent to testify to the matters stated in
the affidavit. Sworn or certified copies of all papers or parts of papers
referred to in an affidavit shall be attached to or served with the affidavit.
The court may permit affidavits to be supplemented or opposed by
depositions or by further affidavits.
{¶20} “Unless controverted by other evidence, a specific averment that an affidavit
pertaining to business is made upon personal knowledge of the affiant satisfies the Civ.R.
56(E) requirement that affidavits both in support or in opposition to motions for summary
judgment show that the affiant is competent to testify to the matters stated.” Bank One,
N.A. v. Swartz, 9th Dist. No. 03CA008308, 2004-Ohio-1986, ¶ 14, citing State ex rel.
Corrigan v. Seminatore, 66 Ohio St.2d 459, 423 N.E.2d 105 (1981), paragraph two of the
syllabus. Where an affiant avers that he or she has personal knowledge of a transaction
“this fact cannot be disputed absent evidence to the contrary.” Household Realty Corp.
v. Henes, 8th Dist. No. 89516, 2007-Ohio-5846, ¶ 12, citing Papdelis v. First Am. Sav.
Bank, 112 Ohio App.3d 576, 579, 679 N.E.2d 356 (8th Dist.1996). Similarly,
appellants’ counterclaims, in this appeal, appellants challenge the Merrill affidavit
only to the extent MDK used the Merrill affidavit “to carry its summary judgment
burden.” Because appellants’ arguments with respect to the Merrill affidavit
involve the evidentiary basis for MDK’s motion for summary judgment, we believe
it is more appropriate to address those arguments in connection with appellants’
third and fourth assignments of error (which involve MDK’s motion for summary
judgment), rather than appellants’ first assignment of error (which involves
Deutsche Bank’s motion for summary judgment on its complaint).
verification of documents attached to an affidavit supporting or opposing a motion for
summary judgment is generally satisfied by an appropriate averment in the affidavit itself,
for example, that “such copies are true copies and reproductions.” Seminatore at
paragraph three of the syllabus.
{¶21} In support of its motion for summary judgment on its complaint, Deutsche
Bank submitted the affidavit of Roger Kistler, vice president of American Home
Mortgage Servicing Incorporated (“AHMSI”), Deutsche Bank’s mortgage loan servicer
since February 2009. Deutsche Bank also submitted copies of the unendorsed note, the
note endorsed in blank, the mortgage, the assignment of mortgage from Argent to
Deutsche Bank, selected pages from the PSA, a payoff statement for appellants’ loan, and
various notices of acceleration and default for the loan, all of which were attached to
Kistler’s affidavit.
{¶22} In his affidavit, Kistler attested that he has been employed by AHMSI for
six years, that his job duties include personally reviewing AHMSI’s business records,
including the records relating to the loan at issue, and that his affidavit is based on his
personal knowledge and his review of AHMSI’s records relating to appellants’ loan. In
addition, he attested that Deutsche Bank obtained possession of the note endorsed in
blank on September 1, 2003, that “[s]ince the date of the transfer, Deutsche Bank has
been, and still is, the holder of the Note,” and that an assignment of mortgage from
Argent to Deutsche Bank was recorded on February 18, 2009. His affidavit further
states that the borrowers failed to make required payments due on the note and have
defaulted on the loan, that a notice of default was provided to appellants, that the default
has not been cured, that the balance due on the note was accelerated, and that
$218,879.27 is the balance due on the loan. Kistler also stated that the copies of the
documents attached to his affidavit are “true and correct copies” of the originals.
{¶23} Ohio’s version of the UCC governs who may enforce a negotiable note.
Article 3 of the UCC governs the creation, transfer, and enforceability of negotiable
instruments, including promissory notes secured by mortgages on real estate.
Mohammad v. Awadallah, 8th Dist. No. 97590, 2012-Ohio-3455,
¶ 15, citing Fed. Land Bank of Louisville v. Taggart, 31 Ohio St.3d 8, 10, 508 N.E.2d 152(1987).
{¶24} Under R.C. 1303.31(A), the “holder” of a negotiable instrument is a
“[p]erson entitled to enforce” the instrument. A “holder” includes a person who is in
possession of an instrument payable to bearer. R.C. 1301.01(T)(1)(a). 5 When an
instrument is endorsed in blank, the instrument becomes payable to bearer and may be
negotiated by transfer of possession alone until specially endorsed. R.C. 1303.25(B). By
virtue of its possession of the note endorsed in blank and the assignment of mortgage
from Argent, Deutsche Bank argued that it was the holder of the note and mortgage,
entitled to enforce the note and mortgage, due to the borrowers’ default.
{¶25} The evidentiary materials submitted by Deutsche Bank established: that
R.C. 1301.01 was repealed by 2011 Am.H.B. No. 9 and renumbered R.C.
5
1301.201. Because R.C. 1301.201 only applies to transactions entered on or after
June 29, 2011, we apply former R.C. 1301.01 to this appeal.
Deutsche Bank was the current holder of the note and mortgage, the chain of assignments
and transfers of the note and mortgage, the borrowers’ default, that the conditions
precedent to foreclosure set forth in the note and mortgage had been satisfied, and the
balance owed on the loan. Kistler’s affidavit and accompanying documents were,
therefore, sufficient to meet Deutsche Bank’s initial burden under Civ.R. 56(C) of
establishing the absence of any genuine issues of material fact and Deutsche Bank’s
entitlement to judgment as matter of law on the claims asserted in its complaint. See,
e.g., United States Bank Natl. Assn. v. Mitchell, 6th Dist. No. S-10-043, 2012-Ohio-3732.
{¶26} Once a plaintiff has met its burden of establishing that there is no genuine
issue of material fact for trial, a defendant may not rest upon mere allegations or denials
in the pleadings but must present evidence of specific facts demonstrating a genuine issue
of material fact for trial. Accordingly, the burden then shifted to appellants to
demonstrate a triable issue of fact.
{¶27} Appellants argue that Kistler’s affidavit was insufficient to meet Deutsche
Bank’s burden on summary judgment because he is an employee of AHMSI, Deutsche
Bank’s mortgage servicer, rather than an employee of Deutsche Bank. However, this
court and many others have upheld judgments in foreclosure actions based on testimony
from mortgage servicers. See, e.g., United States Bank Natl. Assn. v. Turner, 8th Dist.
No. 97935, 2012-Ohio-4592 ¶ 5, 13-14; Deutsche Bank Natl. Trust Co. v. Gardner, 8th
Dist. No. 92916, 2010-Ohio-663, ¶ 10 (servicer of borrower’s loan competent to testify
regarding the content of documents in borrower’s loan file with which he was personally
familiar); Deutsche Bank Natl. Trust Co. v. Ingle, 8th Dist. No. 92487, 2009-Ohio-3886,
¶ 9, 18 (affidavit of bank’s loan servicing agent, along with other supporting documents,
sufficient to show bank was the real party in interest); New York v. Dobbs, 5th Dist. No.
2009-CA-000002, 2009-Ohio-4742, ¶ 40 (“even though * * * not employed by” appellee,
affidavit of loan servicing agent was sufficient to authenticate documents).
{¶28} Appellants also claim that Kistler’s affidavit should be disregarded because
Kistler did not attach a copy of the power of attorney to his affidavit establishing that
AHMSI was Deutsche Bank’s attorney-in-fact “as is required by Rule 56(E).” However,
there is no requirement that a mortgage servicer produce a power of attorney in order for
an affidavit of its representative to be properly considered on summary judgment where,
as here, appellants have not come forward with any evidence challenging that fact.
Further, even if production of a power of attorney were required, an authenticated copy of
the power of attorney is in the record. After obtaining leave of court, Deutsche Bank
submitted a copy of the limited power of attorney granting AHMSI the power to act on
behalf of Deutsche Bank with its reply in support of its motion for summary judgment on
appellants’ counterclaims.
{¶29} Appellants also take issue with Kistler’s statements in his affidavit regarding
his review of “AHMSI’s business records,” claiming that he “fails to acknowledge in his
affidavit that he has not reviewed the actual record but imaged copies of those records,”
and that his affidavit failed to establish “an adequate foundation” for the admissibility of
appellants’ loan documents as business records. As such, appellants argue, his affidavit
contains “inadmissible hearsay” and “does not satisfy the business records exception.”
{¶30} For a document to be admitted as a business record, it must first be properly
identified and authenticated “by evidence sufficient to support a finding that the matter in
question is what its proponent claims.” Evid.R. 901(A). “This low threshold standard
does not require conclusive proof of authenticity, but only sufficient foundational
evidence for the trier of fact to conclude that the document is what its proponent claims it
to be.” State v. Easter, 75 Ohio App.3d 22, 25, 598 N.E.2d 845 (4th Dist.1991). In
addition, to be admissible as a business record:
(1) the record must be one regularly recorded in regularly conducted
activity; (2) it must have been entered by a person with knowledge of the
act, event or condition; (3) it must have been recorded at or near the time
the transaction; and (4) a foundation must be laid by the custodian of record
or some other qualified witness. Jackson, 2011-Ohio-3203 at ¶ 35.
{¶31} If as appellants contend, Kistler had viewed only imaged copies of the
documents he claimed to authenticate in his affidavit, there could be an issue of fact as to
whether the documents were authentic. See, e.g., HSBC Mtge. Servs., Inc. v. Edmon,
6th Dist. No. E-11-046, 2012-Ohio-4990, ¶ 19, 23-24 (trial court erred in granting
summary judgment to bank in foreclosure action where borrower demonstrated triable
issue of fact as to authenticity of promissory note by offering testimony showing that loan
servicing officer did not review original promissory note prior to swearing in her affidavit
that copy of note attached to complaint was a true and accurate copy of original and that
she was unfamiliar with the processes of the office where the original documents were
maintained). Such contentions must, however, be supported by proper summary
judgment evidence.
{¶32} In support of their claims that Kistler viewed only imaged copies of the
documents at issue, appellants refer generally to Kistler’s “deposition testimony.”
Appellants contend that “[Kistler] testified in his deposition that the image system is a big
black box and he has no personal knowledge of who prepared the records that were
imaged, who verified the accuracy of those records or how they were handled when they
were imaged.” Appellants, however, do not identify where in his deposition this
testimony allegedly appears. “[I]t is not the duty of an appellate court to search the
record for evidence to support an appellant’s argument as to any alleged error.”
Rodriguez v. Rodriguez, 8th Dist. No. 91412, 2009-Ohio-3456, ¶ 7.
{¶33} With their opposition to Deutsche Bank’s motion for summary judgment on
its complaint, appellants submitted three disks, containing copies of what is described as
Kistler’s “video testimony.” The video files contained on the disk are difficult to access.
An additional program, not included on the disks, is required to view the “video
testimony.” There are interruptions in the testimony from one video file to the next, and
it is virtually impossible to tell from the disks alone whether the interruptions in the
testimony are due to breaks that were taken during the deposition or the result of
difficulties in accessing the video files, raising questions regarding the accuracy and
completeness of the testimony as it is reviewed on the disks. No written transcript of
Kistler’s deposition was filed, and no certified copy of the video deposition appears in the
record.
{¶34} Civ.R. 56(C) places strict limitations upon the type of documentary evidence
that a party may use in supporting or opposing a motion for summary judgment. Under
Civ.R. 56(C), the materials that may be considered on a motion for summary judgment
include depositions, answers to interrogatories, written admissions, affidavits, transcripts
of evidence in the pending case, and written stipulations of fact. Other types of
documents may be introduced as evidentiary material only through incorporation by
reference in a properly framed affidavit. Dzambasow v. Abakumov, 8th Dist. No. 80621,
2005-Ohio-6719, ¶ 26, citing Lance Acceptance Corp. v. Claudio, 9th Dist. No.
02CA008201, 2003-Ohio-3503. “‘Documents submitted in opposition to a motion for
summary judgment which are not sworn, certified, or authenticated by affidavit have no
evidentiary value and may not be considered by the court in deciding whether a genuine
issue of material fact remains for trial.’” Unger, 2012-Ohio-1950 at ¶ 44, quoting
Lotarski v. Szczepanski, 8th Dist. No. 68088, 1995 Ohio App. LEXIS 5591, *9-10 (Dec.
20, 1995); Green v. B.F. Goodrich Co., 85 Ohio App.3d 223, 228, 619 N.E.2d 497 (9th
Dist.1993).
{¶35} Civ.R. 56(C) specifically authorizes the use of depositions in supporting or
opposing a motion for summary judgment. However, before a deposition can be
considered as “legally acceptable evidence for summary judgment purposes”: (1) the
deposition must be filed with the court or otherwise authenticated; (2) the deponent must
sign the deposition or waive signature; and (3) there must be a certification by the officer
before whom the deposition is taken. Unger, 2012-Ohio-1950 at ¶ 43. These
requirements apply equally to deposition transcripts and videotaped deposition testimony.
Civ.R. 30; see also Sup.R. 13(A)(8) (setting forth certification requirements for
videotaped depositions).
{¶36} These requirements were not met in this case. Accordingly, Kistler’s video
deposition testimony was not in the form required for consideration on summary
judgment.
{¶37} However, since Deutsche Bank did not object to the improperly introduced
video testimony, it could be considered in ruling on Deutsche Bank’s motion for summary
judgment within the court’s discretion. See, e.g., Dzambasow, 2005-Ohio-6719 at ¶ 27
(“‘[I]f the opposing party fails to object to improperly introduced evidentiary materials,
the trial court may, in its sound discretion, consider those materials in ruling on the
summary judgment motion.’”), quoting Christe v. GMS Mgt. Co., Inc., 124 Ohio App.3d
84, 90, 705 N.E.2d 691 (9th Dist.1997); Papdelis, 112 Ohio App.3d at 579, 679 N.E.2d
356 (“‘When ruling on a motion for summary judgment, a trial court may consider
documents other than those specified in Civ.R. 56(C) in support of the motion when no
objection is raised by the party against whom the motion is directed.’”), quoting Rodger
v. McDonald’s Restaurants of Ohio, Inc., 8 Ohio App.3d 256, 456 N.E.2d 1262 (8th
Dist.1982), paragraph one of the syllabus. Due to appellants’ failure to identify
specifically where in the video deposition the particular testimony on which they rely
appears and due to our concerns regarding the accuracy and completeness of the video
testimony based on the lack of certification and the difficulties in accessing and reviewing
the video files, we decline to do so in this case.6
{¶38} Accordingly, we find that Kistler’s affidavit sufficiently authenticated the
loan documents submitted in support of Deutsche Bank’s motion for summary judgment.
{¶39} We, likewise, find that Kistler’s affidavit provided a sufficient foundation
for the admissibility of the relevant loan documents as business records under Evid.R.
803(6). Kistler testified in his affidavit that his duties included accessing and reviewing
the records relating to appellants’ loan, that the records were made at or near the time by,
6
Even if we were to consider the video testimony offered by appellants, we do
not believe, based on the portions of the video testimony we have been able to
review, that Kistler’s deposition testimony creates a genuine issue of material fact
as to whether Deutsche Bank was entitled to summary judgment on its complaint.
Although Kistler testified in his deposition that he had viewed imaged copies of the
documents referenced in his affidavit, he also testified that the original collateral
file had been ordered and provided to Deutsche Bank’s counsel and that he had
personally reviewed a “wet copy” of the endorsed note. Further, unlike the affiant
in Edmon, supra, Kistler was not unfamiliar with the processes and procedures by
which original documents were scanned, and thereafter forwarded to, maintained
by, and retrieved from the record custodian, Deutsche Bank. He testified regarding
his knowledge of these processes and procedures during his deposition. Cf.
Deutsche Bank Natl. Trust Co. v. Hansen, 5th Dist. No. 2010 CA 00001,
2011-Ohio-1223 (affidavit in support of summary judgment in a foreclosure case
satisfied Civ.R. 56(E) where affiant’s later deposition testimony demonstrated that,
based on the affiant’s knowledge of the business practices of the organization,
affiant had personal knowledge that the copy affiant received was a true and
accurate copy regardless of the fact that affiant did not personally see the original
promissory note, make the copy, or watch the copy being made).
or from information transmitted by, a person with knowledge, that the records were made
and kept in the ordinary course of AHMSI’s regularly conducted business activity, and
that he had personally reviewed them. This satisfies Evid.R. 803(6). “‘A witness
providing the foundation [for a recorded business activity] need not have firsthand
knowledge of the transaction.’” U.S. Bank N.A. v. Wilkens, 8th Dist. No. 96617,
2012-Ohio-1038, ¶ 46, quoting Moore v. Vandemark Co., Inc., 12th Dist. No.
CA2003-07-063, 2004-Ohio-4313, ¶ 18. Appellants have not presented any evidence of
specific facts challenging Kistler’s testimony regarding this issue.
{¶40} Appellants also contend that Kistler’s affidavit fails to adequately establish
the amount due on the loan and that Deutsche Bank’s motion for summary judgment
should have been denied based on Deutsche Bank’s failure to provide a “payment
history.” In his affidavit, Kistler testified as to the amount due on the note, based upon
his review of the relevant business records relating to appellants’ loan. He attached a
copy of one of those documents, a payoff statement for the loan, to his affidavit. There
is no requirement that a plaintiff provide a complete “payment history” in order to
establish its entitlement to summary judgment in a foreclosure action. Kistler’s affidavit
and supporting documents were sufficient to meet Deutsche Bank’s burden of
establishing the amount due on the note. See, e.g., Cent. Mtge. Co. v. Elia, 9th Dist. No.
25505, 2011-Ohio-3188, ¶ 7 (“‘An affidavit stating [a] loan is in default, is sufficient for
purposes of Civ.R. 56, in the absence of evidence controverting those averments.’”),
quoting Swartz, 2004-Ohio-1986 at ¶14.
The Affidavit of Rehab Zoqash
{¶41} The only evidence appellants offered to contradict the balance due on the
note was the conclusory affidavit of Rehab Zoqash. In her affidavit, Rehab Zoqash
asserted that the payoff statement attached to Kistler’s affidavit is “not a record of my
payment history” and does not “accurately reflect the amount I owe on this account.”
She also disputed Kistler’s assertion in his affidavit that the last payment on the loan was
made in October 2009 and claimed to have “remitted at least 4 payments to AHMSI after
October of 2009” for which she has receipts. She further stated that she does “not recall
having received the notices of acceleration and default attached to the Kistler affidavit.”
Rehab Zoqash did not, however, dispute that the borrowers were in default under the
note.
{¶42} An affidavit submitted on summary judgment must contain more than
denials and conclusory assertions to create a genuine issue of material fact:
“Generally, a party’s unsupported and self-serving assertions, offered by
way of affidavit, standing alone and without corroborating materials under
Civ.R. 56, will not be sufficient to demonstrate material issues of fact.
Otherwise, a party could avoid summary judgment under all circumstances
solely by simply submitting such a self-serving affidavit containing nothing
more than bare contradictions of the evidence offered by the moving party.”
Davis v. Cleveland, 8th Dist. No. 83665, 2004-Ohio-6621, ¶ 23, quoting
Bell v. Beightler, 10th Dist. No. 02AP-569, 2003-Ohio-88, ¶ 33.
{¶43} Rehab Zoqash was not one of the borrowers and, therefore, was not
personally liable on the note. Accordingly, her contention that Kistler’s affidavit does
not “accurately reflect the amount I owe on the account” is of little relevance. Further,
although Rehab Zoqash claimed, in her affidavit, to have receipts documenting additional
payments, those receipts do not appear in the record. Nor did she identify what
additional payments she contends were made, when they were made, in what amounts, or
what amount appellants contend is actually due on the loan. Her conclusory statement
that the balance Deutsche Bank claimed was due was incorrect was unsupported by any
facts or evidence. Zoqash’s affidavit, therefore, does not demonstrate the existence of a
genuine issue of fact as to the amount due on the note. Accordingly, appellants’ first
assignment of error is overruled.
Negotiability of the Note and Deutsche Bank’s Standing to Enforce the Note and
Mortgage
{¶44} In their second assignment of error, appellants contend that the trial court
erred in granting Deutsche Bank’s motion for summary judgment on its complaint
because (1) Deutsche Bank failed to establish that the note was negotiable and did not
comply with UCC provisions governing “the transfer of nonnegotiable instruments and
the enforceability of mortgages securing those instruments” and (2) Deutsche Bank
otherwise lacked standing to enforce the note and mortgage. We disagree.
Negotiability of the Note
{¶45} R.C. 1303.03 sets forth the requirements for a “negotiable instrument.”
R.C. 1303.03(A) provides in relevant part:
“negotiable instrument” means an unconditional promise or order to pay a
fixed amount of money, with or without interest or other charges described
in the promise or order, if it meets all of the following requirements:
(1) It is payable to bearer or to order at the time it is issued or first comes
into possession of a holder.
(2) It is payable on demand or at a definite time.
(3) It does not state any other undertaking or instruction by the person
promising or ordering payment to do any act in addition to the payment of
money, but the promise or order may contain any of the following:
(a) An undertaking or power to give, maintain, or protect collateral to
secure payment;
(b) An authorization or power to the holder to confess judgment or realize
on or dispose of collateral;
(c) A waiver of the benefit of any law intended for the advantage or
protection of an obligor. * * *
{¶46} Appellants argue that section 5(C) of the note, which requires a payor to
provide written notice if the payor wishes to prepay the loan, and uniform covenant 2 of
the mortgage, which identifies the order of priority in which the lender shall apply
payments, constitute “other undertakings” under R.C. 1303.03(A), which render the note
nonnegotiable. As a number of courts have held, however, the right of a payor under a
note to prepay part of the principal does not constitute an additional “undertaking or
instruction” that renders the note nonnegotiable. See, e.g., HSBC Bank USA, NA v.
Gouda, N.J. Super. No. F-20201-07, 2010 N.J. Super. Unpub. LEXIS 3029, *7-8 (Dec.
17, 2010); In re Walker, 466 B.R. 271, 283-284 (Bankr.E.D.Pa. 2012); Kain v. Bank of
New York Mellon (In re Kain), Bankr.D.S.C. Nos. 08-08404-HB, 10-80047-HB, 2012
Bankr. LEXIS 1406, *19-20 (Mar. 30, 2012).
{¶47} Nor does uniform covenant 2 of the mortgage constitute an “other
undertaking or instruction” within the meaning of R.C. 1303.03(A). The provision at
issue states:
[A]ll payments accepted and applied by Lender shall be applied in the
following order of priority: (a) interest due under the Note; (b) principal due
under the Note; (c) amounts due under Section 3 [funds for escrow items].
Such payments shall be applied to each Periodic Payment in the order in
which it became due. Any remaining amounts shall be applied first to late
charges, second to any other amounts due under this Security Instrument,
and then to reduce the principal balance of the Note.
{¶48} Appellants contend that this clause in the mortgage “provides that to the
extent payments are misapplied[,] the borrower is entitled to a proper credit on the
outstanding principal balance owed” and that, as such, it constitutes an “other
undertaking.” However, that is not what the provision states. Further, the negotiability
of the note is determined from the note, not the mortgage. Mohammad, 2012-Ohio-3455at ¶ 16 (“The question of whether a document is a negotiable instrument is determined
from the language used on the face of the document by its maker or drawer.”).
Accordingly, this provision does not adversely impact the negotiability of the note.
{¶49} Appellants also argue that the note is nonnegotiable because the promise to
pay is conditional. Specifically, appellants contend that section 6 of the note and
uniform covenant 14 of the mortgage contain “express conditions to payment” that
“create[] a bar to negotiability” under R.C. 1303.05(A).
{¶50} R.C. 1303.05 provides, in relevant part:
(A) * * * for the purposes of division (A) of section 1303.03 of the Revised
Code, a promise or order is unconditional unless it states any of the
following:
(1) An express condition to payment;
(2) That the promise or order is subject to or governed by another writing;
(3) That rights or obligations with respect to the promise or order are stated
in another writing. A reference to another writing does not of itself make
the promise or order conditional.
(B) A promise or order is not made conditional by a reference to another
writing for a statement of rights with respect to collateral, prepayment, or
acceleration or because payment is limited to resort to a particular fund or
source.
{¶51} Section 6 of the note and uniform covenant 14 of the mortgage provide that,
to the extent interest or other loan charges collected on the loan exceed the amounts
permitted by law, the excess will be refunded to the borrowers, and then specify the
manner in which that will occur. Appellants argue that “by expressly justifying the
borrower in withholding a portion of the stated principal amount of the note” and by
“condition[ing] the maker’s obligation to repay the stated principal and interest on the
lawfulness of the negotiated payment terms,” these provisions create an express condition
to payment that “deprives the note of negotiability.” However, contrary to appellants’
argument, nothing in these provisions gives the borrowers the right to withhold payment
or relieves the borrowers of their obligation to repay the amounts due under the note.
Accordingly, appellants’ argument is without merit.
{¶52} Appellants further contend that the note is nonnegotiable because “[t]he first
full paragraph of Section 11 of the note clearly makes the note subject to the provisions of
the mortgage” and therefore “violates Article 3 rules regarding unconditional promises.”
{¶53} Section 11 states:
This Note is a uniform instrument with limited variations in some
jurisdictions. In addition, to the protections given to the Note Holder under
this Note, A Mortgage, Deed of Trust or Security Deed (the “Security
Instrument”), dated the same as this Note, protects the Note Holder from
possible losses which might result if I do not keep the promises that I make
in this Note. That the Security Instrument describes how and under what
conditions I may be required to make immediate payment in full of all
amounts I owe under this Note. Some of those conditions are described as
follows: * * *
{¶54} Appellants’ argument ignores R.C. 1303.05(B). R.C. 1303.05(B)
expressly states that “[a] promise or order is not made conditional by
a reference to another writing for a statement of rights with respect
to collateral, prepayment, or acceleration * * * .” See also Official
Comment to UCC 3-106, comment 1 (“In some cases it may be
convenient not to include a statement concerning collateral,
prepayment, or acceleration in the note, but rather to refer to an
accompanying loan agreement, security agreement, or mortgage for
that statement. Subsection (b)(i) [R.C. 1303.05(B)] allows a
reference to the appropriate writing for a statement of these rights.”)
Accordingly, the reference to the mortgage, in Section 11 of the note,
with respect to rights of acceleration does not render the note
nonnegotiable. See Mesina v. Citibank, NA, Bankr.D.N.J. No.
10-2304 RTL, 2012 Bankr. LEXIS 2958, *3-6 (June 27, 2012).
Deutsche Bank’s Status as Holder of Note and Mortgage at Time Foreclosure
Complaint Filed
{¶55} Appellants also contend that Deutsche Bank lacked standing to enforce the
note and mortgage because it failed to establish that it was the “owner” or holder of the
note when the foreclosure complaint was filed. Appellants further argue that because
“[t]here were multiple versions of the promissory note in the record[,] * * * there were
unresolved conflicts as to which version was authentic” and that a genuine issue of
material fact existed as to whether Deutsche Bank possessed the note endorsed in blank at
the time it filed its complaint, which should have precluded summary judgment.
{¶56} The current holder of the note and mortgage is the real party in interest in a
foreclosure action. Turner, 2012-Ohio-4592 at ¶ 16. An entity must prove that it was
the holder of the note and mortgage on the date that the foreclosure complaint was filed;
otherwise, summary judgment is inappropriate. Wells Fargo Bank, N.A. v. Jordan, 8th
Dist. No. 91675, 2009-Ohio-1092, ¶ 23. Lack of standing cannot be “cured” after the
complaint is filed. Deutsche Bank Natl. Trust Co. v. Rudolph, 8th Dist. No. 98383,
2012-Ohio-6141, ¶ 17; Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d
13, 2012-Ohio-5017,
979 N.E.2d 1241, ¶ 27-28.
{¶57} Although a plaintiff must establish that it was the holder of the note and
mortgage at the time the foreclosure action was filed, it need not present its proof “on the
exact date that the complaint in foreclosure is filed.” Bank of N.Y. Mellon v. Watkins,
10th Dist. No. 11AP-539, 2012-Ohio-4410, ¶ 18, citing Countrywide Home Loans v.
Montgomery, 6th Dist. No. L-09-1169, 2010-Ohio-693, ¶ 13. Rather, a plaintiff can offer
additional proof after the filing of the foreclosure action, including with its motion for
summary judgment, establishing that it became the holder of the note and mortgage prior
to or at the time of the filing of the foreclosure action. See, e.g., Wells Fargo Bank,
N.A. v. Stovall, 8th Dist. No. 91802, 2010-Ohio-236, ¶ 16-17 (assignment of mortgage
to bank, dated prior to the filing of the complaint, that was attached to bank’s motion for
summary judgment demonstrated that bank was the real party in interest at the time
foreclosure action was filed); U.S. Bank Natl. Assn. v. Kafantaris, 11th Dist. No.
2011-T-0002, 2011-Ohio-5601, ¶ 29 (bank’s failure to attach “the complete documents
evidencing its status as the holder of the note and mortgage” at the time the complaint
was filed was a “curable defect”).
{¶58} In this case, although the documents attached to the foreclosure complaint
do not establish Deutsche Bank as the current holder of the note at the time the complaint
was filed, i.e., the copy of the note attached to complaint was a copy of the unendorsed
note the borrowers executed in favor of Argent, the documents Deutsche Bank submitted
with its motion for summary judgment — a copy of the note endorsed in blank, along
with Kistler’s affidavit authenticating the endorsed note and establishing that Deutsche
Bank had been possession of the endorsed note since September 2003 — demonstrate that
it was the holder of the note at the time the complaint was filed. Accordingly, Deutsche
Bank established that it was the holder of the note at the time it filed its foreclosure
complaint. It was not additionally required to prove that it was the “owner” of the note
and mortgage. Adams, 2012-Ohio-6253 at ¶ 13-14, citing U.S. Bank, N.A. v. Coffey, 6th
Dist. No. E-11-0-26, 2012-Ohio-721, ¶ 18; R.C. 1303.31(B) (“A person may be a ‘person
entitled to enforce’ the instrument even though the person is not the owner of the
instrument * * * .” ); see also Mitchell, 2012-Ohio-3732 at ¶ 16 (“An assertion of
ownership rights does not indicate entitlement to enforce an instrument, nor does a lack of
ownership necessarily prevent a person from being entitled to enforce an instrument. * * *
‘[B]ecause a promissory note is transferred through the process of negotiation, ownership
is not a requirement for enforcement of the note.’”), quoting Coffey at ¶ 20.7
{¶59} The mere fact that there were two different copies of the note in the record
— one with endorsements and one without — does not mandate a finding that one of the
notes was “unauthentic” or otherwise preclude summary judgment. Adams,
2012-Ohio-6253 at ¶ 19-20. In his affidavit, Kistler explained the existence of the two
versions of the notes as follows:
The copy of the Note attached to the Complaint lacked the endorsements
because it was a copy from the mortgage loan closing file. The closing file
7
Appellants contend that it is of “critical importance” that Deutsche Bank
never amended its complaint or supplemented its discovery responses to include a
copy of the endorsed note. However, Deutsche Bank was not required to amend its
complaint to substitute a copy of the endorsed note for the unendorsed note
attached to the complaint. See Wells Fargo Bank v. McConnell, 5th Dist. No.
12CAE070040, 2012-Ohio-5159, ¶ 14-15. Further, the record reflects that a copy
of the endorsed note was produced to appellants during discovery.
contains copies of documents as they were on the day the Defendants closed
the loan, which is why no endorsements were contained on that copy of the
Note. A true and accurate copy of that Note from the closing file is
attached hereto as Exhibit B. The copy attached hereto as Exhibit A-1 that
includes the endorsements is from the collateral file, which contains the
original Note as subsequently endorsed. This is not uncommon. In fact,
in my experience the note attached to the complaint is usually a copy from
the closing file.
{¶60} Kistler’s explanation is credible and supported by other facts and documents
in the record. Appellants offer no facts or evidence contradicting the explanation
provided. Accordingly, the existence of both the endorsed note and the unendorsed note
in the record did not create a triable issue of fact.
Noncompliance with the PSA
{¶61} Alternatively, appellants contend that Deutsche Bank lacked standing to
enforce the note because the transfer of appellants’ loan to Deutsche Bank was not in
compliance with the PSA. Appellants assert that because the PSA “provides the only
avenue by which assets become part of the [trust]” and appellants’ loan was not properly
transferred to the trust under the PSA, Deutsche Bank, could not “own” the note and
mortgage. Appellants further argue that because the PSA states that it is to governed by
New York law, Deutsche Bank’s standing to enforce the note must be determined under
New York law and the PSA, rather than Ohio law. We disagree.
{¶62} Appellants are not parties to the PSA. Whether or not the parties to the
PSA failed to comply with the terms of the PSA is irrelevant to Deutsche Bank’s standing
as the holder of the note. By virtue of its possession of the note endorsed in blank,
Deutsche Bank was the holder of the note and entitled to enforce the note under Ohio law.
See R.C. 1301.01(T)(1) and 1303.31(A)(1); see also Smoak, 461 B.R. at 519 (citing
cases rejecting argument that “noncompliance with the PSA vitiates the standing of
lenders to enforce notes and mortgages”). Accordingly, any alleged noncompliance with
the PSA does not create a genuine issue of material with respect to Deutsche Bank’s
standing to enforce the note and mortgage.
Appellants’ Challenges to the Assignment of Mortgage
{¶63} Finally, appellants argue that the trial court erred in entering summary
judgment in favor of Deutsche Bank on its complaint because the assignment of mortgage
from Argent to Deutsche Bank was “robo-signed.” In support of their “robo-signing”
claim, appellants offered a deposition transcript from a non-party witness in an unrelated
case, involving an unrelated loan. The transcript does not bear the witness’s signature or
waiver of signature, or any court reporter certification. Accordingly, it is not properly
considered on summary judgment. Unger, 2012-Ohio-1950 at ¶ 43. Appellants have
produced no evidence that the assignment of mortgage in this case was robo-signed.
{¶64} Further, as this court previously explained in Unger, given that there is no
dispute that appellants executed the mortgage to secure the obligations owed on the note,
appellants lack standing to challenge the subsequent assignment of the mortgage:
The mortgage assignments did not alter the Ungers’ obligations under the
note or mortgage. Mellon filed the foreclosure complaint based on the
Unger’ default under the note and mortgage, not because of the mortgage
assignments. The Unger’ default exposed them to foreclosure regardless of
the party who actually proceeds with foreclosure. The Ungers, therefore,
failed to show they suffered or will suffer any injury, the injury is traceable
to the mortgage assignments, and it is likely a favorable decision will
remedy the injury. The trial court properly granted Mellon’s motion for
summary judgment because the Ungers lacked standing to challenge the
mortgage assignments. (Citations omitted.) Unger, 2012-Ohio-1950 at ¶
35; see also Bridge v. Aames Capital Corp., N.D. Ohio No. 1:09 CV 2947,
2010 U.S. Dist. LEXIS 103154, *10-16 (Sept. 28, 2010); Smoak, 461 B.R.
at 519 (makers of note could not challenge mortgage securing the note
based on a defect in its assignment, where holder provided evidence that the
makers granted the mortgage to secure the obligations owed on the note).
{¶65} Even if the assignment of mortgage from Argent to Deutsche Bank was
invalid, Deutsche Bank would still be entitled to enforce the mortgage because under
Ohio law, the mortgage “follows the note” it secures. U.S. Bank N.A. v. Marino, 181
Ohio App.3d 328, 2009-Ohio-1178, 908 N.E.2d 1032, ¶ 52 (7th Dist.) (“For nearly a
century, Ohio courts have held that whenever a promissory note is secured by a mortgage,
the note constitutes the evidence of the debt, and the mortgage is a mere incident to the
obligation. Therefore, the negotiation of a note operates as an equitable assignment of
the mortgage, even though the mortgage is not assigned or delivered.”) (Citations
omitted.) The physical transfer of the note endorsed in blank, which the mortgage
secures, constitutes an equitable assignment of the mortgage, regardless of whether the
mortgage is actually (or validly) assigned or delivered. See, e.g., Dobbs,
2009-Ohio-4742 at ¶ 30. Accordingly, appellants’ second assignment of error is
overruled.
MDK’s Motion for Summary Judgment on Appellants’ Cross-
Claims
{¶66} In their third and fourth assignments of error, appellants contend that the
trial court erred in entering summary judgment in favor of MDK on appellants’ FDCPA
and CSPA claims based on MDK’s purported “failure to submit any materials cognizable
under Rule 56(E) in support of its motion for summary judgment.”
{¶67} Appellants’ arguments with respect to its third and fourth assignments of
error relate exclusively to MDK’s reliance on the affidavit of David Merrill to support its
motion for summary judgment. For the reasons that follow, appellants’ arguments are
meritless.
{¶68} Appellants first argue that MDK’s motion for summary judgment should
have been denied because MDK did not submit any of its own evidentiary materials with
its motion for summary judgment and instead “relied solely on the affidavit of David
Merrill,” which Deutsche Bank submitted in support of its motion for summary judgment
on appellants’ counterclaims. MDK, however, was not required to submit its own
“materials cognizable under Rule 56(E)” in order to prevail on summary judgment.
{¶69} Civ.R. 56(C) states in relevant part:
Summary judgment shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, written admissions, affidavits,
transcripts of evidence, and written stipulations of fact, if any, timely filed
in the action, show that there is no genuine issue as to any material fact and
that the moving party is entitled to judgment as a matter of law.
{¶70} It is not the burden of the moving party on summary judgment to place
evidence in the record, but merely point to evidence that exists in the record that
establishes the absence of a genuine issue of material fact for trial. Dresher, 75 Ohio
St.3d at 293, 662 N.E.2d 264 (observing that “the movant is not necessarily obligated to
place any of these [Rule 56(C)] evidentiary materials in the record” but that “the evidence
must be in the record or the motion cannot succeed”). MDK properly met its initial
burden on summary judgment by pointing to evidence in the record, i.e., the pleadings,
Merrill’s affidavit, and the assignment of mortgage, indicating that appellants could not
succeed on their FDCPA and CSPA claims against MDK.
{¶71} Appellants also contend that MDK failed to meet its “summary judgment
burden” because the Merrill affidavit “contains hearsay, is not made on personal
knowledge, and does not address the issues raised by Defendants against MDK in their
cross-complaint.”
{¶72} Appellants contend the Merrill affidavit is “flawed” because: (1) Merrill is
not an employee of Deutsche Bank or MDK, but rather, works for AHMSI; (2) he failed
to attach a copy of the power of attorney or other documentation establishing AHMSI as
Deutsche Bank’s attorney-in-fact; (3) his affidavit references “Deutsche Bank” rather
than the trust; (4) Merrill lacks personal knowledge of the facts to which he attests in the
affidavit; and (5) Merrill makes “no attestation whatsoever regarding the false assignment
MDK attached to the complaint.”
{¶73} We addressed appellants’ first two arguments in our discussion of the
Kistler affidavit. For the same reasons we rejected appellants’ arguments with respect to
the Kistler affidavit, we reject them here.
{¶74} With respect to appellants’ third argument, the term “Deutsche Bank,” as
used in the affidavit, is defined as the trust. As to appellants’ claim that Merrill lacked
personal knowledge of the facts stated in his affidavit, the assertion in his affidavit that
the affidavit was based upon his personal knowledge was sufficient to satisfy the
requirements of Civ.R. 56(E) “absent evidence to the contrary.” Papdelis, 112 Ohio
App.3d at 579, 679 N.E.2d 356. Moreover, an affiant need not explain the basis for his
personal knowledge where, as here, his personal knowledge can be reasonably inferred
based on the affiant’s position and other facts contained in the affidavit. See, e.g.,
Stovall, 2010-Ohio-236 at ¶ 25; Swartz, 2004-Ohio-1986 at ¶ 14-15; Bush v. Dictaphone
Corp., 10th Dist. No. 00AP-1117, 2003-Ohio-883, ¶ 74-75. Appellants did not present
any evidence contradicting Merrill’s claims of personal knowledge. Finally, Merrill’s
affidavit was not the only evidence MDK relied on in support of its motion for summary
judgment. Accordingly, the fact that Merrill did not specifically address appellants’
allegations of fraud in his affidavit, did not preclude summary judgment in MDK’s favor.
{¶75} Upon our review of the record, we find that MDK satisfied its initial burden
under Civ.R. 56(C), showing that appellants could not establish a triable issue of fact on
essential elements of their FDCPA and CSPA claims against MDK. We likewise find
that appellants failed to satisfy their reciprocal burden under Civ.R. 56(E) to produce
summary judgment evidence establishing a triable issue of fact. Accordingly, the trial
court did not err in entering summary judgment in favor of MDK on appellants’ FDCPA
and CSPA claims. Appellants’ third and fourth assignments of error are overruled.
Deutsche Bank’s Motion for Summary Judgment on Appellants’
Counterclaim
{¶76} In their fifth assignment of error, appellants contend that the trial court erred
in entering summary judgment in favor of Deutsche Bank on their CSPA claim.
However, appellants’ brief contains no argument in support of its fifth assignment of
error. Under App.R. 16(A)(7), an appellant must set forth in his or her brief “[a]n
argument containing the contentions of the appellant with respect to each assignment of
error presented for review and the reasons in support of the contentions, with citations to
the authorities, statutes, and parts of the record on which appellant relies.” Where a party
raising an assignment of error “fails to identify in the record” the error on which a
particular assignment of error is based or “fails to argue the assignment separately in the
brief, as required under App.R. 16(A),” the court may disregard an assignment of error
presented for review. App.R. 12(A)(2). Accordingly, appellants’ fifth assignment of
error is overruled. Fine v. Fine, 8th Dist. Nos. 96433 and 96434, 2012-Ohio-105, ¶
17-20; State v. Durham, 8th Dist. No. 94747, 2011-Ohio-2256,
¶ 42-45.
{¶77} Judgment affirmed.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said 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.
____________________________________
KENNETH A. ROCCO, JUDGE
SEAN C. GALLAGHER, P.J., and
TIM McCORMACK, J., CONCUR