Fed. Natl. Mtge. Assn. v. Ford

[Cite as Fed. Natl. Mtge. Assn. v. Ford, 2016-Ohio-919.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 102395
FEDERAL NATIONAL MORTGAGE
ASSOCIATION
PLAINTIFF-APPELLEE
vs.
STANLEY FORD, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
REVERSED AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-11-760032
BEFORE: Kilbane, J., Jones, A.J., and Stewart, J.
RELEASED AND JOURNALIZED: March 10, 2016
ATTORNEYS FOR APPELLANT
Marc E. Dann
William C. Behrens
Grace M. Doberdruk
Paul Bellamy
The Dann Law Firm Co., L.P.A.
P.O. Box 6031040
Cleveland, Ohio 44103
ATTORNEYS FOR APPELLEE
For Federal National Mortgage Association
Eric T. Deighton
Richard J. Feuerman
Carlisle McNellie Rini Kramer & Ulrich, Co., L.P.A.
24755 Chargin Boulevard, Suite 200
Cleveland, Ohio 44122
Also Listed
For State of Ohio Department of Taxation
Kenneth Boukis
Hohmann Boukis & Curtis Co., L.P.A.
The Rockefeller Building
614 W. Superior Avenue, Suite 601
Cleveland, Ohio 44113
Joseph T. Chapman
Collections Enforcement
150 East Gay Street, 21st Floor
Columbus, Ohio 43215
Continued on page -ii-
For The United States of America
Marlon A. Primes
Assistant United States Attorney
U.S. Courthouse, Suite 400
801 West Superior Avenue
Cleveland, Ohio 44113
MARY EILEEN KILBANE, J.:
{¶1} Defendant-appellant, Stanley Ford (“Ford”), appeals from the trial court’s
judgment adopting the magistrate’s decision granting summary judgment in the
foreclosure action brought by Federal National Mortgage Association (“Federal”). For
the reasons set forth below, we reverse and remand the matter for further proceedings
consistent with this opinion.
{¶2} In July 2011, Federal filed a foreclosure action against Ford, alleging that he
is in default on a mortgage and note for his home in Bedford Heights, Ohio. Federal
alleged that “it has performed all of the conditions precedent required to be performed by
it.” Federal further alleged that Ford owes it $57,634.57, plus interest and late charges
from April 25, 2009. In support of its complaint, Federal attached, as exhibits, a copy of
the promissory note, mortgage, preliminary judicial report, and notice of tax lien.
Federal also attached to its complaint a copy of the notice of debt as required under the
Fair Debt Collection Practices Act, but did not attach a copy of the notice of acceleration.
{¶3} In response to the complaint, Ford, pro se, filed a motion to dismiss for
failure to state a claim. Ford alleges that Federal did not comply with the terms of the
agreement by failing to give him 30 days notice of its intention to accelerate the payments
on the mortgage prior to commencing the foreclosure action. The trial court denied
Ford’s motion to dismiss, finding that Federal’s complaint adequately stated a cause of
action. Ford then filed his answer and counterclaim.
{¶4} The parties proceeded with discovery. In November 2012, Federal filed its
motion for summary judgment. In support of its motion, Federal attached an affidavit
and Ford’s responses to Federal’s first set of request for admissions, interrogatories, and
request for production of documents. The affidavit is from a foreclosure specialist for
Federal’s loan servicing contractor. This affiant averred that Federal examined the loan
and associated documents. Federal accelerated the loan after it performed all of the
prerequisites required under the note and mortgage necessary to accelerate the balance
due. Having examined Ford’s loan history, the affiant averred that Ford was in default
because no payments had been made on the loan since May 2009. The affiant stated that
Ford owes “the principal balance of $57,634.47, plus interest at the rate of 7.25% per
annum from April 25, 2009 until paid, plus late charges and, pursuant to the mortgage, all
sums advanced for the payment of real estate taxes and assessments, insurance premiums
and property protection.” Ford opposed Federal’s motion and filed an objection, seeking
to strike the exhibits attached to Federal’s summary judgment. According to Ford,
Federal failed to attach any documents supporting the affidavit.
{¶5} In February 2014, the magistrate issued a decision granting Federal’s motion
for summary judgment. Ford objected to the magistrate’s decision, arguing Federal
lacked jurisdiction, Federal is not the holder in due course, and Federal lacks standing to
file the foreclosure action. In December 2014, the trial court overruled Ford’s objections
and adopted the magistrate’s decision.1 It is from this order that Ford appeals, assigning
the following two assignments of error for review, which shall be discussed together.
Assignment of Error One
It was error for the trial court to grant summary judgment in favor of
[Federal] where the note and mortgage contract contained explicit condition
precedent requirements for [Federal] to issue a notice of default to [Ford];
the failure to provide such notice was raised by [Ford] in both his motion to
dismiss the complaint and in his answer; and the putative notice of default
itself was not attached to the motion for summary judgment, nor produced
at any other stage of the proceedings below.
Assignment of Error Two
It was error for the trial court to sustain a motion for summary judgment
where: [Federal] failed to demonstrate that [Ford] was in default and failed
to prove the amount of principal and interest due on the note and mortgage.
{¶6} Within these assigned errors, Ford challenges the trial court’s grant of
summary judgment in Federal’s favor. We review an appeal from summary judgment
under a de novo standard of review. Grafton v. Ohio Edison Co., 77 Ohio St. 3d 102,
105, 1996-Ohio-336, 671 N.E.2d 241; Zemcik v. LaPine Truck Sales & Equip. Co., 124
Ohio App. 3d 581, 585, 706 N.E.2d 860 (8th Dist.1998). In Zivich v. Mentor Soccer
Club, 82 Ohio St. 3d 367, 369-370, 1998-Ohio-389, 696 N.E.2d 201, the Ohio Supreme
Court set forth the appropriate test as follows:
Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is
no genuine issue of material fact, (2) the moving party is entitled to
1On January 23, 2015, the trial court granted Ford’s motion to stay the
sheriff’s sale and waiver of supersedeas bond.
judgment as a matter of law, and (3) reasonable minds can come to but one
conclusion and that conclusion is adverse to the nonmoving party, said party
being entitled to have the evidence construed most strongly in his favor.
Horton v. Harwick Chem. Corp., 73 Ohio St. 3d 679, 1995-Ohio-286, 653
N.E.2d 1196, paragraph three of the syllabus. The party moving for
summary judgment bears the burden of showing that there is no genuine
issue of material fact and that it is entitled to judgment as a matter of law.
Dresher v. Burt, 75 Ohio St. 3d 280, 292-293, 1996-Ohio-107, 662 N.E.2d
264.
{¶7} Once the moving party satisfies its burden, the nonmoving party “may not
rest upon the mere allegations or denials of the party’s pleadings, but the party’s response,
by affidavit or as otherwise provided in this rule, must set forth specific facts showing
that there is a genuine issue for trial.” Civ.R. 56(E); Mootispaw v. Eckstein, 76 Ohio
St.3d 383, 385, 1996-Ohio-389, 667 N.E.2d 1197. Doubts must be resolved in favor of
the nonmoving party. Murphy v. Reynoldsburg, 65 Ohio St. 3d 356, 358-359,
1992-Ohio-95, 604 N.E.2d 138.
{¶8} To prevail on a motion for summary judgment claim in a foreclosure action,
the plaintiff must prove:
(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.
Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657,
¶ 17.
{¶9} In the instant case, Ford did not include in his objections to the magistrate
decision that Federal failed to comply with condition precedent requirements to issue a
notice of default and also failed to demonstrate the amount he was in default. We note
that Civ.R. 53 imposes an affirmative duty on parties to submit timely, specific, written
objections to the trial court, identifying any error of fact or law in the magistrate’s
decision. Hameed v. Rhoades, 8th Dist. Cuyahoga No. 94267, 2010-Ohio-4894, ¶ 14.
Civ.R. 53(D)(3)(b)(iv) provides:
Except for a claim of plain error, a party shall not assign as error on appeal
the court’s adoption of any factual finding or legal conclusion, whether or
not specifically designated as a finding of fact or conclusion of law under
Civ.R. 53(D)(3)(a)(ii), unless the party has objected to that finding or
conclusion as required by Civ.R. 53(D)(3)(b).
{¶10} As a result, Ford has waived all but plain error. Huntington Natl. Bank v.
Blount, 8th Dist. Cuyahoga No. 98514, 2013-Ohio-3128, ¶ 10, citing Morgan Stanley
Credit Corp. v. Fillinger, 2012-Ohio-4295, 979 N.E.2d 362 (8th Dist.2012); Fannie Mae
v. Hicks, 8th Dist. Cuyahoga No. 102079, 2015-Ohio-1955.
{¶11} When applying the plain error doctrine in the civil context, the Ohio
Supreme Court has stated that reviewing courts “must proceed with the utmost caution.”
Goldfuss v. Davidson, 79 Ohio St. 3d 116, 121, 1997-Ohio-401, 679 N.E.2d 1099. The
doctrine is limited to those “extremely rare cases” in which “exceptional circumstances
require its application to prevent a manifest miscarriage of justice, and where the error
complained of, if left uncorrected, would have a materially adverse effect on the character
of, and public confidence in, judicial proceedings.” Id. Therefore, we consider the trial
court’s judgment applying the plain error standard of review.
{¶12} Ford contends that summary judgment is improper because Federal failed to
attach a copy of the dated notice of default and payment history to its motion in violation
of Civ.R. 56(E). Civ.R. 56(E) sets forth the requirements for affidavits submitted with
motions for 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.
* * * When a motion for summary judgment is made and supported as
provided in this rule, an adverse party may not rest upon the mere
allegations or denials of the party’s pleadings, but the party’s response, by
affidavit or as otherwise provided in this rule, must set forth specific facts
showing that there is a genuine issue for trial. If the party does not so
respond, summary judgment, if appropriate, shall be entered against the
party.
(Emphasis added.)
{¶13} We find the instant case analogous to Third Fed. S&L Assn. of Cleveland v.
Farno, 12th Dist. Warren No. CA 2012-04-028, 2012-Ohio-5245. In Farno, the lender
attached an affidavit from one of its legal analysts to its motion for summary judgment.
The affiant averred that it reviewed the loan documents, the homeowner was in default,
and the lender had performed all of the prerequisites required under the note and
mortgage necessary to accelerate the balance due. Id. at ¶ 9. The homeowner moved to
strike the lender’s affidavit. Id. at ¶ 4. On appeal, the homeowner argued that three
paragraphs in the lender’s affidavit should have been stricken from the record because of
the lack of supporting documentation, and the trial court’s grant of summary judgment
was improper. The Farno court agreed with the homeowner, finding that the lender
failed to satisfy its initial burden for summary judgment when the last three paragraphs of
the lender’s affidavit were stricken and none of the pertinent material was provided in the
record to the trial court. Id. at ¶ 13.
{¶14} The Farno court noted that the lender “indicated it reviewed documents
pertaining to the loan history and evidence of payment default, but no documents or
portions of documents relative to those matters were attached or served with the affidavit,
or for that matter, found anywhere in the record.” Id. at ¶ 9. The court found that
paragraphs five, six, and seven of [the lender’s] affidavit should have been
stricken because its summary judgment motion was not supported as
provided in Civ.R. 56(E), when no documentation referenced in those
portions of the affidavit were attached to or served with the affidavit to
show default of payment and payment history. See Civ.R. 56; see
Cincinnati Bar Assn. v. Newman, 124 Ohio St. 3d 505, 2010-Ohio-928, ¶ 7,
924 N.E.2d 359 (requirement of Civ.R. 56[E] that sworn or certified copies
of all papers referred to in the affidavit be attached is satisfied by attaching
the papers to the affidavit, coupled with a statement therein that such copies
are true copies and reproductions); see State ex rel. Varnau v. Wenninger,
12th Dist. [Brown] No. CA2009-02-010, 2011-Ohio-3904, ¶ 10 (striking
portions of affidavit where documents were reviewed and relied upon in
drafting affidavit, but not attached to affidavit or served therewith).
Farno at ¶ 10.
{¶15} The court acknowledged that its holding
does not suggest that [the lender] was required to attach every document in
its file on [the homeowner’s] note, but [the lender] needed to attach or serve
with its affidavit some document or documents material to the issues in this
case, to wit, the default in payment and applicable portions of the payment
history.
Id. at ¶ 11, citing Countrywide Home Loans, Inc. v. Rodriguez, 9th Dist. Lorain Nos.
03CA008345, 03CA008417, 2004-Ohio-4723 (affiant attested to true record of payments
on homeowner’s account and attached to affidavit document chronicling the payment
history on the account).
{¶16} Likewise, in the instant case, none of the documents referenced in Federal’s
affidavit were attached to its summary judgment motion. The only document Federal
attached was Ford’s responses to Federal’s first set of request for admissions,
interrogatories, and request for production of documents. Federal did not attach the note
or mortgage (although the affiant references those documents as attached to the
complaint); there are no documents to support the contention that all of the prerequisites
required under the note and mortgage necessary to accelerate the balance due on the note
have been performed; there is no loan history or relevant portions of loan histories
attached to the motion evidencing the sums allegedly owed by Ford; and there is no
documentary evidence to support the claim concerning late fees or advances on the loan.
See Nationstar Mtge., L.LC. v. Wagener, 8th Dist. Cuyahoga No. 101280,
2015-Ohio-1289 (summary judgment was proper when the bank attached to its summary
judgment motion copies of the note, the mortgage, the assignments, the notice of intent to
accelerate the loan, two notices advising homeowners that the servicing of their mortgage
loan was being transferred, and the payment history for the loan by reference into his
affidavit); RBS Citizens, N.A. v. Krasnov, 8th Dist. Cuyahoga No. 100992,
2014-Ohio-4217 (summary judgment was proper when the bank attached to its summary
judgment motion copies of the original note and mortgage, and affidavit of its foreclosure
specialist); Deutsche Bank Natl. Trust Co., 8th Dist. Cuyahoga No. 98502,
2013-Ohio-1657 (summary judgment was proper when the bank attached to its summary
judgment motion the affidavit of the bank’s representative, copies of the unendorsed note,
the note endorsed in blank, the mortgage, the assignment of mortgage, selected pages
from the payoff statement for the homeowner’s loan, and various notices of acceleration
and default for the loan.)
{¶17} The dissent, relying on Chase Bank USA, NA v. Lopez, 8th Dist, Cuyahoga
No. 91480, 2008-Ohio-6000, maintains that Ford has waived any error with respect to
Federal’s affidavit in support of its motion for summary judgment. Chase, however, is
distinguishable from the matter before us.
{¶18} In Chase, Chase sued Lopez for money he owed on a credit card account.
In support of its motion for summary judgment, Chase attached the card member
agreement, the affidavit of Chase’s custodian of records, and 11 monthly statements
addressed to Lopez, reflecting a $14,388.97 balance. Id. at ¶ 5. On appeal, Lopez
argued for the first time, that the affidavit Chase attached to its motion for summary
judgment did not meet the requirements of Civ.R. 56(E). Id. at ¶ 16. This court found
that Lopez could not raise this argument for the first time on appeal because this issue
was not raised in the trial court. Id., citing Republic Steel Corp. v. Bd. of Revision, 175
Ohio St.179, 192 N.E.2d 47 (1963), syllabus.
{¶19} Unlike in Chase, in the instant case, Federal did not attach any of the
documents referenced in its affidavit to its summary judgment motion. Furthermore, the
procedural posture in Chase involved a motion for summary judgment in a credit account
action proceeding solely before the trial court. Whereas, the instant case involves a
foreclosure action that proceeded before a magistrate and was subject to a magistrate’s
decision and objections prior to proceeding before the trial court. Therefore, Chase does
not control the outcome of this matter.
{¶20} Based on the record before us, it was plain error for the trial court to award
summary judgment to Federal without Federal providing the documents necessary to
substantiate: (1) that the required prerequisites under the note and mortgage were
performed in order to accelerate the balance due on the note; (2) the relevant loan history;
and (3) the evidence to support the late fees. Therefore, summary judgment was not
appropriate.
{¶21} Accordingly, the first and second assignments of error are sustained.
{¶22} Judgment reversed and remanded.
It is ordered that appellant recover of appellee costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
MARY EILEEN KILBANE, JUDGE
LARRY A. JONES, SR., A.J., CONCURS IN JUDGMENT ONLY;
MELODY J. STEWART, J., DISSENTS (SEE SEPARATE OPINION)
MELODY J. STEWART, J., DISSENTING:
{¶23} As the majority concedes, Ford did not object to the magistrate’s decision to
grant summary judgment on grounds that Federal failed to include in its motion proof that
it complied with its contractual obligation to provide Ford with notice of his default.
Ford’s failure to object to Federal’s affidavit filed in support of its motion for summary
judgment waived any error. In Chase Bank USA, NA v. Lopez, 8th Dist. Cuyahoga No.
91480, 2008-Ohio-6000, we addressed this same issue and stated:
Chase notes that Lopez, in his appellate briefs, raises for the first time the
issue that the affidavit of John Wells, attached to its motion for summary
judgment, did not meet the requirements of Civ.R. 56(E). We agree that
because this issue was not raised in the trial court, Lopez cannot raise it for
the first time on appeal. Republic Steel Corp. v. Bd. of Revision, 175 Ohio
St. 179, 192 N.E.2d 47 (1963), at syllabus. Furthermore[,] “[f]ailure to
move to strike or otherwise object to documentary evidence submitted by a
party in support of, or in opposition to, a motion for summary judgment
waives any error in considering that evidence under Civ.R. 56(C).” Darner
v. Richard E. Jacobs Group, Inc., 8th Dist. Cuyahoga No. 89611,
2008-Ohio-959, at ¶ 15.
Id. at ¶ 16.
{¶24} Even though the Ohio Supreme Court has made it clear in the context of a
plain error analysis that the “failure to follow procedural rules can result in forfeiture of
rights,” Goldfuss, 79 Ohio St. 3d 116, 122, 679 N.E.2d 1099 (1997), the majority
nonetheless finds it was plain error for the court to grant summary judgment in the
absence of evidentiary material showing that Federal gave notice of its intent to accelerate
the debt in the wake of Ford’s default.
{¶25} The majority fails to acknowledge that Federal’s complaint contained a copy
of the notice of default and acceleration of the note it provided to Ford. Civ.R. 56(C)
states that summary judgment can be rendered if “the pleadings” 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. Ford offered no evidence to contradict the notice of default. When Ford
answered the complaint, he raised the affirmative defense of “failure to comply with
notice provisions,” but he offered nothing to prove that affirmative defense in opposition
to the motion for summary judgment. Todd Dev. Co. v. Morgan, 116 Ohio St. 3d 461,
2008-Ohio-87, 880 N.E.2d 88, syllabus (“A plaintiff or counterclaimant moving for
summary judgment does not bear the initial burden of addressing the nonmoving party’s
affirmative defenses.”).
{¶26} Because of waiver and a failure of proof, Ford has failed to show the
existence of any error in this case. And to the extent that the majority finds plain error, it
says nothing about why this is the “exceptional” case in which ignoring the error would
result in a “manifest miscarriage of justice” and undermine the judicial process.
Goldfuss, 79 Ohio St. 3d at 121. Apart from failing to prove his affirmative defense of
the failure to comply with notice provisions, Ford has never offered evidence to dispute
the amount that Federal claims he owes under the note. I would affirm the decision of
the trial court.