Bank of Am. v. Williams

[Cite as Bank of Am. v. Williams, 2017-Ohio-7166.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 104886
BANK OF AMERICA, N.A.
PLAINTIFF-APPELLEE
vs.
TERRENCE WILLIAMS, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-12-794768
BEFORE: Laster Mays, J., McCormack, P.J., and Jones, J.
RELEASED AND JOURNALIZED: August 10, 2017
-i-
FOR APPELLANT
Terrence Williams, pro se
1675 Warrensville Center Road
South Euclid, Ohio 44121
ATTORNEY FOR APPELLEE
Brooke D. Turner-Bautista
25550 Chagrin Boulevard, Suite 406
Cleveland, Ohio 44122
Also Listed:
For Consumer Financial Protection Bureau
Consumer Financial Protection Bureau
1700 G Street NW
Washington, D.C. 20552
For Federal Trade Commission
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580
For Ohio Bar Association
Ohio Bar Association
1700 Lake Shore Drive
Columbus, Ohio 43204
ANITA LASTER MAYS, J.:
{¶1} Defendant-appellant, Terrence Williams (“Williams”), proceeding pro se,
appeals the trial court’s confirmation of the sheriff’s sale, following a foreclosure
judgment against Williams’s residential property. We affirm the trial court’s decision.
I. Background and Facts
{¶2} On November 1, 2012, plaintiff-appellee Bank of America, N.A. (“BOA”),
successor by merger to BAC Home Loans Servicing L.P., formerly known as
Countrywide Home Loans Servicing, L.P., filed a complaint for foreclosure of a mortgage
and promissory note secured by residential property located at 23551 South Woodland
Avenue, Shaker Heights, Ohio (“Property”). The complaint named defendants Williams,
sole owner and mortgagor, unknown spouse Jane Doe, Cuyahoga County Clerk of Courts,
and several lienholders. Williams did not file an answer.
{¶3} On July 23, 2013, Williams filed a petition for bankruptcy under Chapter 7
(“Chapter 7”) of the United States Bankruptcy Code (Title 11, United States Code
(“Code”)).1 Proceedings were halted by the automatic stay provision of the Code.2 The
1
Case No. 13-14002.
2
11 U.S.C. 362.
case was returned to the active docket on November 19, 2013, upon BOA’s provision of
evidence of relief from the stay.
{¶4} BOA filed an amended complaint on March 31, 2014. Williams failed to
answer, and on June 25, 2014, BOA filed for a default judgment. Williams failed to
appear at the July 31, 2014 default hearing. The August 1, 2014 magistrate’s decision
granted judgment for BOA and noted that Williams’s personal liability on the underlying
debt had been discharged by the bankruptcy court. The decision was adopted by the trial
court on September 2, 2014.
{¶5} Williams filed a second bankruptcy petition under Chapter 13 (“Chapter 13”)
of the Code in 20143 resulting in a second stay of proceedings. The bankruptcy court
dismissed the case on January 8, 2015, for failure to meet the Chapter 13 requirements,
and on March 12, 2015, Williams moved the bankruptcy court for leave to refile. On
October 15, 2015, the bankruptcy court denied the motion, and issued an order imposing a
two-year ban on refilings until October 15, 2017, unless Williams obtained leave to file
from the court.
{¶6} An order of sale was returned on May 16, 2016. Also on May 16, 2016, a
third notice of bankruptcy filing was submitted to the trial court. The petition was filed
by Geri Upton (“Upton”), Williams’s mother, who was not a party to the action.
Case No. 14-17081.
3
{¶7} On June 9, 2016, Williams filed a “notice of bankruptcy stay and motion to
withdraw sheriff[‘s] sale on May 16, 2016.”4 On July 20, 2016, Williams filed a second
motion seeking to vacate the sheriff’s sale.
{¶8} BOA timely responded to the trial court’s order to show cause why the sale
should not be vacated due to the Upton filing on August 4, 2017. BOA explained in its
response to the show cause order that on November 2, 2015, Williams executed and
recorded a deed transferring a 50 percent interest in the Property to Upton. The Property
transfer and bankruptcy filing appeared to be an attempt to circumvent the bankruptcy
court’s two-year ban on filings by Williams and prevent the sale.
{¶9} Upton’s bankruptcy petition indicated that she had no ownership interest in
any real property. The petition was dismissed by the bankruptcy court on July 12, 2016,
due to Upton’s failure to meet the requisite credit counseling requirements as required by
law. On August 5, 2016, the trial court denied the pending motions to vacate the sale
and directed that the sheriff issue a deed and writ of possession to the Property.
{¶10} Williams filed the instant appeal on August 29, 2016, presenting three
assignments of error. Each is sequentially addressed below.
It appears from the motion that Williams is advocating in support of Upton’s filing because
4
the motion requests that the court “look to the substance of her pleadings * * * [and] notify her” of
any remedies or rights “she may overlook[ed].”
II. Law and Analysis
A. First Assignment of Error: Whether the Trial Court Erred in
Disregarding Bank of America’s Willful Violation of the
Automatic Stay
{¶11} The trial court properly determined that the automatic stay did not apply to
Upton’s bankruptcy filing. First of all, the claim is subject to the doctrine of lis pendens.
The foreclosure action was filed on November 1, 2012. The trial court’s entry adopting
the magistrate’s decision granting the default judgment for foreclosure was issued on
September 2, 2014.5 Under the doctrine of lis pendens, “‘[w]hen a complaint is filed, the
action is pending so as to charge a third persons with notice of its pendency.’”
CitiMortgage, Inc. v. Brown, 8th Dist. Cuyahoga No. 104702, 2017-Ohio-1551, ¶ 9,
quoting R.C. 2703.26.
{¶12} “While pending, no interest can be acquired by third persons in the subject
of the action, as against the plaintiffs’ title.” Id. Upton acquired her ownership interest
in the Property on November 2, 2015, more than a year after the trial court entered the
judgment of foreclosure and three years after the case was initiated.
{¶13} Secondly, not only did Upton’s bankruptcy filing state that she had no
ownership interest in real estate, the case was dismissed by the bankruptcy court on July
12, 2016, prior to the decree of confirmation of sale entered on August 17, 2016. Thus,
even if the stay was applicable in this case, the automatic stay was no longer in effect at
The Property was sold via sheriff’s sale held at 9:00 a.m. on May 16, 2016.
5
Upton filed her bankruptcy petition at 10:17 a.m. on the same date.
the time the sale was confirmed. The bankruptcy court’s dismissal “automatically
terminated the bankruptcy stay.” Bank of Am., N.A. v. Thompson, 2d Dist. Montgomery
No. 25952, 2014-Ohio-2300, ¶ 27, citing 11 U.S.C. 362(c)(2)(B); Callison v. DuPuy, 2d
Dist. Miami No. 2002 CA 52, 2003-Ohio-3032, ¶ 18. See also Jelm v. Malzeke, 8th Dist.
Cuyahoga No. 61765, 1993 Ohio App. LEXIS 618, *5 (Feb. 4, 1993).
{¶14} Finally, though not determinative here, we observe that the facts of this
case would warrant “application of an equitable exception to an automatic bankruptcy
stay.” JDI Murray Hill, L.L.C. v. Flynn Properties, L.L.C., 8th Dist. Cuyahoga No.
94259, 2011-Ohio-301, ¶ 24. The exception applies in limited circumstances where
required by justice. Id. at ¶ 20, citing Lowenborg v. Oglebay Norton Co., 8th Dist.
Cuyahoga Nos. 88396 and 88397, 2007-Ohio-3408, ¶ 32.
In the limited case where an equitable exception is found to apply, the
automatic stay provision is inapplicable and a trial court retains jurisdiction
to proceed in the matter. See Coles v. Daniels, 8th Dist. Cuyahoga No.
85573, 2005-Ohio-4701, ¶ 9. In such circumstances, there is no violation
of the automatic stay; the trial court’s judgment is neither void nor voidable.
Id. at ¶ 21.
{¶15} The repetitive bankruptcy filings by Williams, both directly and through
the Property transfer, and filing by Upton, were attempts to use the “‘[automatic] stay
unfairly as a shield to avoid an unfavorable result.’” Id. at ¶ 22, quoting Easley v.
Pettibone Michigan Corp., 990 F.2d 905, 911, 1993 U.S. App. LEXIS 7289 (6th
Cir.1993).
{¶16} These facts constitute the extreme circumstance contemplated by law that
would allow an equitable exception to the automatic stay. “‘To hold otherwise and
permit the automatic stay provision to be used as a trump card played after an unfavorable
result was reached in state court, would be inconsistent with the underlying purpose of the
automatic stay[.]’” Id. at ¶ 24, quoting In re Calder, 903 F.2d 953, 1990 U.S. App.
LEXIS 10971 (10th Cir.1990).
{¶17} The first assignment of error is overruled.
B. Second Assignment of Error: Whether the Trial Court Erred
in not Granting Appellant’s Motion to Return Order of Sale
without Execution Due to Bank of America’s Silence and
Nonresponse
{¶18} Here Williams argues that the trial court erred in failing to vacate the order
of sale due to BOA’s failure to respond to the magistrate’s June 10, 2016 order requesting
that BOA address what interest, if any, Upton may have in the case. The court’s order
explained that “[t]he court is unclear how this bankruptcy case stays the sheriff ‘s sale or
confirmation of sheriff’s sale.” BOA did not respond, and on July 27, 2016, the
magistrate issued an order to show cause why the sale should not be vacated due to
Upton’s filing, to which BOA timely responded.
{¶19} A trial court has complete discretion as to how it manages dockets, and
we will not disturb its decision unless there is an abuse of discretion. Bayview Loan
Servicing, L.L.C. v. St. Cyr, 8th Dist. Cuyahoga No. 104655, 2017-Ohio-2758, ¶ 26,
citing 6750 BMS, L.L.C. v. Drentlau, 2016-Ohio-1385, 62 N.E.3d 928, ¶ 18 (8th Dist.),
citing State ex rel. V Cos. v. Marshall Cty. Aud., 81 Ohio St. 3d 467, 469, 692 N.E.2d 198
(1998). “An abuse of discretion implies the trial court was arbitrary, unreasonable, or
unconscionable.” Id. at ¶ 20.
{¶20} We do not find that the trial court abused its discretion by issuing the show
cause order seeking clarification of the issues to allow the court to make a fully informed,
fair, and equitable adjudication. The second assigned error is without merit.
C. Third Assignment of Error: Whether the Trial Court Erred in
Ignoring that Bank of America Violated Dual Tracking Law by
Foreclosing on Appellant’s Family Home while Negotiating a
Loan Modification
{¶21} This assigned error attacks the judgment of foreclosure. There are two
appealable judgments in foreclosure actions: the foreclosure judgment and the
confirmation of sale:
“The order of foreclosure determines the extent of each lienholder’s
interest, sets forth the priority of the liens, and determines the other rights
and responsibilities of each party in the action. On appeal from the order of
foreclosure, the parties may challenge the court’s decision to grant the
decree of foreclosure. Once the order of foreclosure is final and the appeals
process has been completed, all rights and responsibilities of the parties
have been determined and can no longer be challenged.
The confirmation process is an ancillary one in which the issues present are
limited to whether the sale proceedings conformed to law. Because of this
limited nature of the confirmation proceedings, the parties have a limited
right to appeal the confirmation. For example, on appeal of the order
confirming the sale, the parties may challenge the confirmation of the sale
itself, including computation of the final total owed by the mortgagor,
accrued interest, and actual amounts advanced by the mortgagee for
inspections, appraisals, property protection, and maintenance. The issues
appealed from confirmation are wholly distinct from the issues appealed
from the order of foreclosure. In other words, if the parties appeal the
confirmation proceedings, they do not get a second bite of the apple, but a
first bite of a different fruit.
(Emphasis added.) US Bank N.A. v. Alex, 8th Dist. Cuyahoga No. 101276,
2015-Ohio-871, ¶ 7, quoting CitiMortgage, Inc. v. Roznowski, 139 Ohio St. 3d 299,
2014-Ohio-1984, 11 N.E.3d 1140, ¶ 39-40.
{¶22} The judgment of foreclosure was entered on September 2, 2014, and was
not appealed. As a result, this alleged error is outside of the scope of the current appeal
and is barred by the doctrine of res judicata. Alex at ¶ 18-19.
III. Conclusion
{¶23} Judgment affirmed.
It is ordered that appellee recover of appellant 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 Cuyahoga
County 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.
__________________________________________
ANITA LASTER MAYS, JUDGE
TIM McCORMACK, P.J., and
LARRY A. JONES, SR., J., CONCUR