HSBC Bank USA, Natl. Assn. v. Rao

[Cite as HSBC Bank USA, Natl. Assn. v. Rao, 2021-Ohio-3745.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
HSBC Bank USA, National Association :
as Trustee for Wells Fargo Home Equity
Asset-Backed Securities 2005-1 Trust, :
Home Equity Asset-Backed Certificates,
Series 2005-1, :
No. 20AP-448
Plaintiff-Appellee, : (C.P.C. No. 15CV-7168)
v. : (REGULAR CALENDAR)
Gita Rao et al., :
Defendants-Appellees, :
(Ganesh Rao, :
Defendant-Appellant). :
D E C I S I O N
Rendered on October 21, 2021
On brief: Lerner, Sampson & Rothfuss, and Rick D.
DeBlasis, for plaintiff-appellee. Argued: Rick D. DeBlasis.
On brief: Gloria L. Smith, Attorney & Counselor at
Law LLC, and Gloria L. Smith, for appellant. Argued:
Gloria L. Smith.
APPEAL from the Franklin County Court of Common Pleas
LUPER SCHUSTER, J.
{¶ 1} Defendant-appellant, Ganesh Rao, appeals from a decision and entry of the
Franklin County Court of Common Pleas denying his motion to set aside the sheriff's sale
and a decision and entry denying his motion to vacate the judgment entry and decree of
foreclosure. For the following reasons, we affirm.
No. 20AP-448 2
I. Facts and Procedural History
{¶ 2} On August 17, 2015, plaintiff-appellee, HSBC Bank USA, National
Association, as Trustee for Wells Fargo Home Equity Asset-Backed Securities 2005-1 Trust,
Home Equity Asset-Backed Certificates, Series 2005-1 ("HSBC"), filed a complaint in
foreclosure related to payment default on a mortgage loan with a principal balance of
$282,019.72. Along with the complaint, HSBC filed copies of the indorsed note and
mortgage signed by Rao and his wife, an assignment of mortgage to HSBC, and federal tax
liens against the property in the amount of approximately $300,000. The mortgage
encumbers the real property located at 7337 Clover Park Way, Dublin, Ohio ("the
property"). Acknowledging that both Rao and his wife had previously received a discharge
of their debts in United States Bankruptcy Court, HSBC sought in rem relief only.
Additionally, HSBC named several other defendants in the complaint alleging that, in
addition to the federal tax liens, the property had numerous other mortgages, judgment
liens, and state tax liens filed against it.
{¶ 3} Rao, who proceeded pro se throughout the trial court proceedings, did not
file an answer to the complaint. However, the trial court ordered the proceedings stayed
after Rao filed a Chapter 13 bankruptcy petition with the United States Bankruptcy Court
on March 23, 2016. After the trial court reinstated the case on February 22, 2017, Rao again
sought to stay the proceedings by motion filed July 26, 2017. Subsequently, HSBC filed a
motion for default judgment on August 17, 2017 and a motion for summary judgment on
August 24, 2017 arguing it was entitled to in rem judgment and decree in foreclosure as a
matter of law. The trial court then issued a September 26, 2017 decision and entry denying
Rao's motion to stay but granting him 30 days to secure counsel and respond to HSBC's
pending motion for default and/or summary judgment against him.
{¶ 4} On October 29, 2017, Rao filed another pro se motion to stay the proceedings.
The trial court denied the motion to stay in an October 30, 2017 decision and entry. That
same day, the trial court issued a decision and entry denying as moot HSBC's motion for
default judgment and granting HSBC's motion for summary judgment, finding HSBC is
entitled to in rem judgment and decree of foreclosure as a matter of law. Subsequently, on
November 2, 2017, the trial court issued a finding and decree in foreclosure.
No. 20AP-448 3
{¶ 5} Rao then filed a motion on November 18, 2017 seeking to stay the
proceedings and to set aside the judgment of foreclosure pursuant to Civ.R. 60(B). Rao also
filed a notice of appeal from the decree of foreclosure. Based on Rao's notice of appeal, the
trial court held Rao's Civ.R. 60(B) motion in abeyance. Several weeks later, Rao filed a
motion to stay the sheriff's sale pending appeal. HSBC responded seeking a supersedeas
bond. This court then issued a January 16, 2018 order staying enforcement of the trial
court's foreclosure decree subject to Rao posting a supersedeas bond in the amount of
$25,000 no later than January 18, 2018.
{¶ 6} Rao failed to post a supersedeas bond. Thus, HSBC caused the property to
be sold at sheriff's sale on July 6, 2018. The trial court confirmed the sheriff's sale on
August 15, 2018. In the interim, this court dismissed Rao's appeal from the decree of
foreclosure for failure to file an appellate brief.
{¶ 7} On March 4, 2019, the trial court issued a decision and entry vacating,
pursuant to HSBC's motion, the confirmation entry and the sale, noting the purchaser at
the July 6, 2018 sheriff's sale failed to complete its bid. HSBC subsequently sought a new
order of the sale of the property. Rao once again filed a motion to stay and a Civ.R. 60(B)
motion for relief from judgment, and the trial court overruled both motions in an April 17,
2019 decision and entry.
{¶ 8} A second sale of the property occurred November 15, 2019 where the property
was once again sold to a third party. The purchaser information form completed following
the sale indicates the purchaser's address as the same as the purchaser from the first
sheriff's sale of the property. The form also listed Rao as the contact person for the purchase
of the property. The trial court confirmed the second sale in a January 21, 2020 entry,
listing Rao as the purchaser. After the purchaser amended its purchaser information form,
the trial court issued a March 6, 2020 nunc pro tunc entry confirming the sale, updating
the entry to reflect the purchaser's name to be Innovation Hospitality Group, LLC.
{¶ 9} On April 17, 2020, Rao filed a motion to set aside the sheriff's sale. Attached
to his motion, Rao included a letter from his loan servicer, dated March 11, 2020, advising
Rao that servicing of his loan had been transferred and that Rao should direct future
payments and correspondence to a new loan servicer. Rao also filed documents indicating
he made a payment to his loan servicer on March 17, 2020. Based on these documents, Rao
No. 20AP-448 4
argued he was engaged in loss mitigation with the new loan servicer. He also noted
Franklin County had stayed foreclosures due to the COVID-19 pandemic. HSBC filed a
memorandum in opposition on June 19, 2020. The trial court denied Rao's motion in an
August 25, 2020 decision and entry, finding the sheriff's sale had been completed and
confirmed prior to the loan servicing transfer and COVID-19 foreclosure hold, and noting
Rao presented no legal basis to set aside the sale.
{¶ 10} While his motion to set aside the sheriff's sale was still pending, Rao also filed,
on June 20, 2020, a third motion to vacate the judgment of foreclosure pursuant to Civ.R.
60(B). Rao relied on the same arguments he advanced in support of his motion to set aside
the sheriff's sale, and he additionally included several news articles detailing various
allegations against his first loan servicer. HSBC opposed the motion. In an August 25,
2020 decision and entry, the trial court denied Rao's motion to vacate the judgment of
foreclosure, finding Rao's allegations to be unsupported, untimely, and lacking any
reference to the grounds for relief set forth in Civ.R. 60(B). Rao timely appeals from both
of the trial court's August 25, 2020 entries.
II. Assignments of Error
{¶ 11} Rao assigns the following errors for our review:
[1.] The trial court abused its discretion when it denied the
motion to set aside Sheriff's sale filed April 17, 2020.
[2.] The trial court abused its discretion when it denied the
motion to vacate judgment and foreclosure filed June 20,
2020.
III. Standard of Review and Applicable Law
{¶ 12} To prevail on a Civ.R. 60(B) motion for relief from judgment, the movant
must satisfy a three-prong test. The movant must demonstrate (1) it has a meritorious
defense or claim to present if relief is granted; (2) it is entitled to relief under one of the
grounds stated in Civ.R. 60(B)(1) through (5); and (3) the motion is made within a
reasonable time and, when relying on a ground set forth in Civ.R. 60(B)(1), (2), or (3), it
filed the motion not more than one year after the judgment, order, or proceeding was
entered or taken. GTE Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St.2d 146(1976), paragraph two of the syllabus. There will be no relief if the movant fails to satisfy
No. 20AP-448 5
any one of the prongs of the GTE test. Strack v. Pelton, 70 Ohio St.3d 172, 174 (1994). An
appellate court reviews a trial court's denial of a Civ.R. 60(B) motion for an abuse of
discretion. Harris v. Anderson, 109 Ohio St.3d 101, 2006-Ohio-1934, ¶ 7; Oberkonz v.
Gosha, 10th Dist. No. 02AP-237, 2002-Ohio-5572, ¶ 12. An abuse of discretion connotes a
decision that is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5
Ohio St.3d 217, 219 (1983).
{¶ 13} A party filing a motion for relief from judgment pursuant to Civ.R. 60(B) is
not automatically entitled to a hearing on the motion. Canel v. Holland, 10th Dist. No.
19AP-570, 2020-Ohio-4797, ¶ 13, citing Davis v. Davis, 10th Dist. No. 15AP-1078, 2016-
Ohio-7790, ¶ 13. As this court has stated, "if the Civ.R. 60(B) motion contains allegations
of operative facts that would warrant relief from judgment, the trial court should grant a
hearing to take evidence to verify those facts before it rules on the motion." Mattingly v.
Deveaux, 10th Dist. No. 03AP-793, 2004-Ohio-2506, ¶ 7. "Conversely, '[i]f the material
submitted by the movant in support of a motion for relief from judgment under [Civ.R.
60(B)] contains no operative facts or meager and limited facts and conclusions of law, it
will not be an abuse of discretion for the trial court to overrule the motion and refuse to
grant a hearing.' " U.S. Bank Natl. Assn. v. Lewis, 10th Dist. No. 18AP-550, 2019-Ohio-
3014, ¶ 28, quoting Adomeit v. Baltimore, 39 Ohio App.2d 97 (8th Dist.1974), paragraph
four of the syllabus.
IV. First Assignment of Error – Motion to Set Aside Sheriff's Sale
{¶ 14} In his first assignment of error, Rao argues the trial court abused its
discretion in denying his April 17, 2020 motion to set aside the sheriff's sale. The trial court
construed Rao's motion as a motion for relief from judgment, and we will similarly construe
Rao's motion as one filed pursuant to Civ.R. 60(B). See, e.g., State v. Schlee, 117 Ohio St.3d
153, 2008-Ohio-545, ¶ 12 (noting "[c]ourts may recast irregular motions into whatever
category necessary to identify and establish the criteria by which the motion should be
judged"); Gill v. Grafton Corr. Inst., 10th Dist. No. 04AP-1353, 2005-Ohio-3097, ¶ 21 (trial
court has discretion to consider motions as written or to recast motions into the necessary
category); Fredebaugh Well Drilling, Inc. v. Brower Contracting, 11th Dist. No. 2004-A-
0061, 2005-Ohio-6084, ¶ 14 ("a trial court may, in its discretion, construe an improperly
captioned post-judgment motion as though it were a proper vehicle if it otherwise satisfies
No. 20AP-448 6
the necessary requirements of the vehicle," and, therefore, considering the motion as a
properly cast Civ.R. 60(B) motion). Here, Rao asserts the trial court abused its discretion
in denying his motion without first holding a hearing.
{¶ 15} Though Rao argues on appeal that he was still living in the property and
making payments on the mortgage, Rao did not allege in his motion to vacate the sheriff's
sale that he was still living in the property. Indeed, his motion to vacate the sheriff's sale
does not contain any operative facts that would warrant a hearing on his Civ.R. 60(B)
motion. Instead, his April 17, 2020 motion identifies a letter from his new loan servicer
dated four months after the property had been sold at sheriff's sale and two months after
the trial court confirmed the sale. Rao also included documentation that he had made a
single payment to the new loan servicer, again after the judgment of foreclosure, sale of the
property, and subsequent court confirmation of the sale. Additionally, Rao stated in his
motion that his new loan servicer informed him that any potential foreclosure or sale would
be on hold due to the COVID-19 pandemic.
{¶ 16} Despite these allegations, Rao does not identify in his motion how any of
these circumstances apply to the already completed sale of the property such that he would
be entitled to relief from judgment under Civ.R. 60(B). The foreclosure sale of the property
had already been finalized by the time Rao received the letter from his new loan servicer
and submitted any payment, and Rao does not explain how either the federal or local
COVID-19 stays on foreclosure sales, both issued after the finalization of the sale of the
property here, would apply to a foreclosure sale that had already been completed. Rao
makes no allegation that the sale of the property, itself, suffered from any deficiencies that
would entitle him to a hearing on his Civ.R. 60(B) motion.1 For these reasons, the trial
1 More than a month after this court heard oral arguments in this matter, Rao, without seeking leave and
without explanation, filed two documents with this court. One document, filed September 22, 2021, bears
the caption "Notice Notifying the Courts on the Class Action Filings and Settlement Impacted the Home
Owners on Foreclosure by Wells Fargo Bank on Mortgage Modification and Practices Denial of Trial
Modifications, Case No 1:19-CV-638, Similarly Impacted the Case 15CV007168." The second document,
filed September 23, 2021, is captioned "Plaintiffs' Unopposed Motion for Preliminary Approval of Class
Action Settlement" and is from case No. 1:19-CV-638 in the United States District Court of Southern District
of Ohio Western Division. To the extent Rao intended to rely on these documents in support of his
arguments related to his Civ.R. 60(B) motions filed in the trial court, we are mindful that these documents
were not part of the record before the trial court and, therefore, we will not consider the documents in our
disposition of his appeal. Gallick v. Franklin Cty. Bd. of Revision, 10th Dist. No. 17AP-811, 2019-Ohio-485,
No. 20AP-448 7
court did not abuse its discretion in denying Rao's motion to vacate the sheriff's sale without
a hearing. We overrule Rao's first assignment of error.
V. Second Assignment of Error – Motion to Vacate Judgment
{¶ 17} In his second assignment of error, Rao argues the trial court abused its
discretion in denying his Civ.R. 60(B) motion to vacate the judgment of foreclosure without
first holding a hearing.
{¶ 18} Rao filed his motion to vacate the judgment of foreclosure on June 20, 2020.
Though he did not specify what grounds under Civ.R. 60(B)(1) through (5) would entitle
him to relief, he stated in his motion that he wanted to "bring to [the trial court's] attention"
several events that occurred after the confirmation of sale of the property. (June 20, 2020
Mot. to Vacate at 1.) First, Rao noted that he received correspondence from a new loan
servicer indicating that, beginning April 1, 2020, the subject mortgage had been transferred
and that Wells Fargo no longer had any interest in the mortgage. He alleged he remitted
payment to his new loan servicer for the April 1, 2020 payment and that he also remitted
payment for May and June 2020. Based on this information, Rao alleged that Wells Fargo
could not foreclose the property because it no longer had any interest in the property.
Additionally, Rao stated that the new loan servicer notified him that any foreclosure or sale
of the property would be on hold for 90 days, with the possibility of further extensions, due
to federal and state regulations related to foreclosures during the COVID-19 pandemic. He
stated the new loan servicer asked him to submit a loan modification pursuant to the federal
legislation. In support of his motion, Rao filed two news articles related to Wells Fargo's
involvement in separate lawsuits.
{¶ 19} The trial court determined Rao's Civ.R. 60(B) motion to vacate the judgment
of foreclosure failed based on Rao's failure to allege he had a meritorious defense to the
foreclosure action. We agree. The trial court issued the foreclosure decree on November 2,
2017. As detailed above, the property was subsequently sold at sheriff's sale on
November 15, 2019, the trial court confirmed the sale on January 21, 2020, and the trial
court issued the amended confirmation of the sale on March 6, 2020. Although Rao alleges
¶ 9, citing Morgan v. Eads, 104 Ohio St.3d 142, 2004-Ohio-6110, ¶ 13 ("a bedrock principle of appellate
practice in Ohio is that an appeals court is limited to the record of the proceedings at trial").
No. 20AP-448 8
in his motion that he received correspondence from a new mortgage servicer on March 11,
2020, Rao makes no allegation that he made any payments before the trial court finalized
either the decree of foreclosure or the confirmation of sale. Indeed, the January 21, 2020
confirmation entry ordered the clerk to release a certified copy of the confirmation entry to
discharge the mortgage to Wells Fargo Bank, N.A. and ordered the balance of the proceeds
be paid to HSBC.
{¶ 20} Further, though Rao alleged in his motion that the new loan servicer asked
him to submit a loan modification plan, Rao made no additional allegation that he actually
submitted the loan modification or that either the new loan servicer or HSBC approved or
accepted the plan. Additionally, given the trial court's January 21, 2020 order to release
the mortgage to Wells Fargo Bank, N.A., Rao provides no explanation for how his alleged
payments to his new loan servicer or the request of the new loan servicer for him to submit
a loan modification have any impact on the already released mortgage and the foreclosed
property.
{¶ 21} Finally, Rao's references to the foreclosure moratorium through the Federal
Housing Administration ("FHA") do not provide him with a meritorious defense to the
foreclosure action. Here, the loan was not insured by the FHA. Additionally, Rao does not
explain how either the federal or state foreclosure moratoriums would apply to a decree of
foreclosure and confirmation of sale entered prior to the enactment of these policies.
{¶ 22} During the more than four years that elapsed from HSBC's filing of the
foreclosure complaint to the trial court's issuance of the amended confirmation entry, Rao
was in default on his mortgage and made no payments. He does not explain how any of the
activity he alleges occurred after the court's finalization of both the foreclosure decree and
confirmation of sale provide him with a meritorious defense to the foreclosure action.
Given his failure to set forth, in his Civ.R. 60(B) motion, allegations of operative fact that
would provide him with a meritorious defense to the foreclosure action, the trial court did
not abuse its discretion in denying Rao's motion without a hearing. We overrule Rao's
second and final assignment of error.
VI. Disposition
{¶ 23} Based on the foregoing reasons, the trial court did not abuse its discretion in
denying Rao's two Civ.R. 60(B) motions seeking to vacate both the sheriff's sale and the
No. 20AP-448 9
foreclosure decree. Having overruled Rao's two assignments of error, we affirm the
judgments of the Franklin County Court of Common Pleas.
Judgments affirmed.
KLATT and JAMISON, JJ., concur.