Bank of New York Mellon v. Fisher

[Cite as Bank of New York Mellon v. Fisher, 2020-Ohio-4742.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
BANK OF NEW YORK MELLON, :
Plaintiff-Appellee, :
No. 108855
v. :
JOHNSON L. FISHER, ET AL., :
Defendants-Appellants. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED
RELEASED AND JOURNALIZED: October 1, 2020
Civil Appeal from the Cuyahoga County Court of Common Pleas
Case No. CV-18-891635
Appearances:
Carpenter Lipps & Leland, L.L.P., David A. Wallace, and
Tyler K. Ibom, for appellee.
Law Office of Grace M. Doberdruk and Grace M.
Doberdruk, for appellants.
RAYMOND C. HEADEN, J.:
Defendants-appellants Johnson L. and Maviese Fisher (“the Fishers”)
appeal the trial court’s ruling that granted plaintiff-appellee The Bank of New York
Mellon as Trustee for CWABS, Inc. Asset-Backed Certificates, Series 2005-4’s
(“BONYM”) motion for summary judgment, and entered a decree of foreclosure.
For the reasons that follow, we affirm.
I. Factual and Procedural History
On May 25, 2005, the Fishers borrowed $842,316 from Countrywide
Home Loans, Inc. (“Countrywide”) and executed an adjustable rate note (“note”) in
which the Fishers agreed to repay the loan. To secure payment of the note, the
Fishers executed a mortgage on real property located in Solon, Ohio (“the property”)
in favor of Mortgage Electronic Registration Systems, Inc. (“MERS”), acting as a
nominee for the lender, Countrywide. The mortgage was recorded in the Cuyahoga
County Recorder’s Office on June 9, 2005.
On April 30, 2010, Countrywide executed an assignment of the
Fishers’ note and mortgage to sell, assign, and transfer the loan documents to
BONYM. The assignment was recorded with the Cuyahoga County Recorder’s Office
on May 6, 2010.
On May 19, 2010, BONYM filed a motion for relief from a stay in the
Fishers’ bankruptcy case. Attached to the motion was a copy of the note with an
undated allonge that transferred the note from Countrywide to BONYM. No blank
indorsement was stamped on the note.
The Fishers executed a loan modification agreement on April 18,
2015, whereby they agreed to new payment terms effective May 1, 2015. The loan
modification agreement — that identified Green Tree Servicing L.L.C. (“Green
Tree”) as the lender and the Fishers as the borrowers — amended and supplemented
the mortgage and note (“the loan documents”) previously executed in 2005. The
terms of the loan modification agreement stated it was signed by the same parties
who executed the loan documents or their authorized representatives. The loan
modification agreement did not replace or supersede the loan documents except for
the new payment terms; the terms of the loan documents were reaffirmed by the
loan modification agreement and remained in full force and effect.
Due to the Fishers’ failure to submit timely payments per their note,
BONYM’s loan servicer, Select Portfolio Servicing, Inc. (“SPS”), forwarded the
Fishers a notice of default — right to cure letter (“notice of default”) on September
18, 2017. The letter identified the amounts due from the Fishers and stated the
balance due could be accelerated and foreclosure proceedings initiated absent
payment to cure the debt. Following receipt of the notice of default, the Fishers did
not remit payment.
At an unknown date, BONYM requested a supplementary
preliminary judicial report from Chicago Title Insurance Company (“Chicago Title”)
to be used in judicial proceedings. Chicago Title’s report labeled Countrywide’s April
30, 2010 assignment of the Fishers’ note and mortgage to BONYM — which was
recorded with the Cuyahoga County Recorder’s Office on May 6, 2010 — as invalid.
On December 19, 2017, MERS, as nominee for Countrywide,
completed a second corporate assignment of mortgage to BONYM. SPS requested
a recording of the assignment, and the assignment was recorded with the Cuyahoga
County Fiscal Office on January 3, 2018. BONYM contends the second assignment
was necessitated following the preliminary judicial report that described the May 6,
2010 assignment as invalid.
The Fishers failed to make payments due under the note and BONYM
filed a complaint in foreclosure on January 16, 2018.1 The foreclosure complaint
alleged as follows: the note and mortgage were in default; BONYM satisfied the
conditions precedent; the entire balance was due and payable; and BONYM was
entitled to enforce the note and mortgage. Attached to the foreclosure complaint
were copies of the note indorsed in blank by Countrywide, the mortgage, the
December 19, 2017 assignment of the mortgage, the loan modification agreement,
and the supplementary preliminary judicial report issued by Chicago Title. The
Fishers filed an answer and counterclaims on February 21, 2018. BONYM filed a
motion to dismiss the Fishers’ counterclaim on March 21, 2018, and the trial court
denied that motion. On September 14, 2018, BONYM filed a motion for summary
judgment that the Fishers opposed on October 15, 2018. BONYM filed a reply brief
on October 25, 2018.
A magistrate’s decision rendered on March 21, 2019, found BONYM
had standing to bring the foreclosure action and that BONYM was entitled to
summary judgment. Both parties filed objections to the magistrate’s decision. On
1 The foreclosure complaint also named Countrywide Home Loans Inc., Chagrin
River Highlands Homeowner’s Association, Inc., and David B. Gallup as defendants.
Those parties and the allegations raised against them or by them are not relevant to the
instant appeal and are not addressed herein.
July 16, 2019, the trial court entered an order that overruled the parties’ objections
and adopted the magistrate’s decision in full.
The Fishers filed a timely notice of appeal on July 29, 2019, and
present the following assignments of error, verbatim, for our review:
First Assignment of Error: The trial court erred by not finding that
appellee Bank of New York Mellon lacked standing when the
modification had the lender Green Tree Servicing L.L.C.
Second Assignment of Error: Appellee was not entitled to judgment as
a matter of law because a material issue of fact remained for trial
regarding whether appellee had possession of appellants’ original note
when the complaint was filed and whether the note was altered since
there were multiple versions of appellants’ original note.
Third Assignment of Error: The trial court erred by granting appellee’s
motion for summary judgment when affiant Maria Soberon lacked
personal knowledge and material issues of fact existed for trial.
Fourth Assignment of Error: The trial court erred finding that all
conditions precedent to foreclosure were complied with.
Fifth Assignment of Error: The trial court erred by granting judgment
to appellee on the counterclaims.
II. Law and Analysis
A. Standard of Review
Before a trial court grants a motion for summary judgment, pursuant
to Civ.R. 56(C), the court must determine that:
(1) No genuine issue as to any material fact remains to be litigated; (2)
the moving party is entitled to judgment as a matter of law; and (3) it
appears from the evidence that reasonable minds can come to but one
conclusion, and viewing such evidence most strongly in favor of the
party against whom the motion for summary judgment is made, that
conclusion is adverse to that party.
Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).
On a motion for summary judgment, the moving party’s initial
burden is to identify specific facts in the record 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 does not satisfy this burden, summary judgment is not
appropriate. If the moving party meets the burden, the nonmoving party has a
reciprocal burden to point to evidence of specific facts in the record that
demonstrate the existence of a genuine issue of material fact for trial. Id. at 293.
Where the nonmoving party fails to meet this burden, summary judgment is
appropriate. Id.
In a foreclosure action, a plaintiff must prove the following to prevail
on a motion for summary judgment:
(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.
An appellate court applies a de novo standard when reviewing a trial
court’s decision that granted summary judgment. Bayview Loan Servicing, L.L.C.
v. St. Cyr, 2017-Ohio-2758, 90 N.E.3d 321, ¶ 11 (8th Dist.).
B. Soberon’s Supplemental Affidavit
Initially, we will address the trial court’s consideration of Maria
Soberon’s (“Soberon”) supplemental affidavit that BONYM attached to its reply brief
in response to the Fishers’ brief in opposition.
Parties are not permitted to raise new arguments or evidence in a
reply brief because the nonmoving party does not have an adequate opportunity to
respond under the Civil Rules of Ohio. Foradis v. Marc Glassman, Inc., 8th Dist.
Cuyahoga No. 103454, 2016-Ohio-5235, ¶ 8. Specifically, “Civ.R. 56(C) does not
provide for the right to a surreply, leaving a party ambushed by new arguments in a
reply brief with no opportunity to respond.” Id. at ¶ 8. However, courts permit the
filing of a reply brief containing a supplemental affidavit where the reply rebuts
arguments set forth in the brief opposing the motion for summary judgment and the
supplemental affidavit clarifies previously raised issues. Deutsche Bank Natl. Trust
Co. v. Ayers, 11th Dist. Portage No. 2019-P-0094, 2020-Ohio-1332, ¶ 47-48.
Here, BONYM filed a motion for summary judgment and attached the
original affidavit of Soberon, an employee of BONYM’s loan servicer, SPS. SPS had
serviced BONYM’s loans since July 16, 2017. Following the Fishers’ filing of a brief
in opposition, BONYM filed a reply brief and attached Soberon’s supplemental
affidavit. The reply brief addressed arguments discussed in the Fishers’ opposition
brief and the supplemental affidavit sought to clarify issues previously raised,
including whether the note contained a blank indorsement; possession of the note;
the existence of multiple versions of the note; the history of loan servicers for the
Fishers’ loan; and the identity of the individual who verified BONYM’s responses to
the Fishers’ interrogatories. These were not new issues raised to ambush the
Fishers, but were proffered to clarify pending items.
Further, the Fishers neither filed a motion to strike the reply brief nor
a leave to file a surreply brief. Absent an objection, the trial court was free to
consider the supplemental affidavit attached to the reply brief. Lewis Potts, Ltd. v.
Zordich, 11th Dist. Trumbull No. 2018-T-0028, 2018-Ohio-5341, ¶ 41. See Brown
v. Ohio Cas. Ins. Co., 63 Ohio App.2d 87, 90-91, 409 N.E.2d 253 (8th Dist.1978) (the
trial court did not err when it considered unverified documents to support a
summary judgment motion where neither party objected to the other’s use of those
materials).
The trial court properly considered Soberon’s supplemental affidavit
in support of BONYM’s motion for summary judgment.
C. First Assignment of Error — Loan Modification Agreement
The Fishers contend in their first assignment of error that BONYM
was not entitled to enforce the note and, therefore, lacked standing. Specifically, the
Fishers argue that even if BONYM had possession of the original note, BONYM
lacked standing because execution of the loan modification agreement transferred
the note to Green Tree and, therefore, only Green Tree could enforce the note.
R.C. Chapter 1303 governs commercial paper. An instrument, such
as the Fishers’ note, is negotiated through “a voluntary or involuntary transfer of
possession of an instrument by a person other than the issuer to a person who by
the transfer becomes the holder of the instrument.” R.C. 1303.21(A). Where the
instrument “is payable to an identified person, negotiation requires transfer of
possession of the instrument and its indorsement by the holder. If an instrument is
payable to bearer, it may be negotiated by transfer of possession alone.”
R.C. 1303.21(B).
R.C. 1303.24 describes indorsement as “a signature, other than that
of a signer as maker, drawer, or acceptor, that alone or accompanied by other words”
negotiates the instrument. R.C. 1303.24(A)(1). Special and blank indorsements
have been detailed as follows:
An indorsement that identifies the person or entity “to whom it makes
the instrument payable” is a special indorsement. R.C. 1303.25(A). “An
instrument, when specially indorsed, becomes payable to the identified
person and may be negotiated only by the indorsement of that person.”
R.C. 1303.25(A). A special indorsement exists in opposition to a blank
indorsement, which does not identify a payee, and instead makes the
instrument “payable to bearer” and negotiable “by transfer of
possession alone until specially indorsed.” R.C. 1303.25(B).
BAC Home Loans Servicing, L.P. v. Blythe, 7th Dist. Columbiana No. 12 CO 12,
2013-Ohio-5775, ¶ 12.
Here, under the loan modification agreement executed on April 18,
2015, the Fishers agreed to new payment terms effective May 1, 2015. The loan
modification agreement amended and supplemented the loan documents — the
note and mortgage — previously executed in 2005. The loan modification
agreement did not replace or supersede the loan documents except for the new
payment terms; the terms of the loan documents were reaffirmed within the loan
modification agreement and remained in full force and effect. Only the new
payment terms presented in the loan modification agreement superseded contrary
provisions in the original note and mortgage.
The terms of the loan modification agreement stated the document
was signed by the same parties to the loan documents or their authorized
representatives:
4. Additional Agreement. I agree to the following:
A. That all persons who signed the Loan Documents or their authorized
representative(s) have signed this Agreement * * *.
(Loan Modification Agreement at paragraph 4(A).) Hence, Green Tree could
execute the agreement on BONYM’s behalf, but BONYM was still the party in
interest to the note and loan modification agreement.
In support of their claim that the loan modification agreement
transferred the note to Green Tree, the Fishers point to the first page of the loan
modification agreement that references Green Tree as the lender. Additionally,
signature lines were provided on the last page for Green Tree, MERS, and the
Fishers. The word “lender” was printed directly under Green Tree’s signature line
and these sentences were written underneath MERS’ signature line:
The servicer may execute the Agreement on behalf of MERS and, if
applicable, submit it for recordation. This communication is from a
debt collector. It is an attempt to collect a debt, and any information
obtained will be used for that purpose.
(Loan modification agreement.) MERS, acting as nominee, executed the loan
modification on April 21, 2015; the signature line for Green Tree was left blank.
It is not unusual for a loan servicer to complete a loan modification
agreement on behalf of the note holder. (Soberon supplemental affidavit.) Green
Tree was a prior loan servicer of the Fishers’ loan, and it appears they were employed
in that capacity in May 2015, when the parties executed the loan modification
agreement. (Soberon supplemental affidavit.) While the loan modification
agreement referenced Green Tree as the lender, the agreement’s terms clarified
Green Tree was acting in its capacity as a servicer, the authorized representative of
the actual lender. A thorough reading of the loan modification agreement reveals
the agreement did not transfer any rights in the note or mortgage; the parties
intended to maintain the original terms and parties to the loan documents,
excepting the newly agreed upon payment terms.
The Fishers contend that the loan modification agreement was
comparable to a special indorsement that resulted in (1) the note being payable only
to Green Tree, and (2) an equitable assignment of the mortgage to Green Tree. The
Fishers rely on Blythe, 7th Dist. Columbiana No. 12 CO 12, 2013-Ohio-5775, where
the court found a nonholder in possession of specially indorsed commercial paper
could not indorse the note without first demonstrating its acquisition of the paper
or transfer. Blythe at ¶ 17. The Fishers also reference Fannie Mae v. Hicks, 2015-
Ohio-1955, 35 N.E.3d 37 (8th Dist.), where Fannie Mae was not entitled to a
judgment under the mortgage because it lacked the right to enforce the note under
the lost-note exception. Yet, BONYM was not a nonholder in possession of specially
indorsed commercial paper nor a holder attempting to enforce the note under a lost-
note exception. And while we do not dispute the holdings in Blythe and Hicks, we
do not find the facts analogous to the case sub judice.
The Fishers have provided no case law that demonstrates the
execution of a loan modification agreement serves as a special indorsement of
commercial paper nor have we found any such precedent. Moreover, the language
of the loan modification agreement demonstrated that the original note was neither
modified nor negotiated so as to transfer interest to Green Tree, the loan servicer,
pursuant to the transaction. The loan modification agreement did not negotiate the
Fishers’ note and the facts of Blythe and Hicks are inapplicable to the case herein.
The Fishers did not introduce any evidence that demonstrated the
note was negotiated through execution of the loan modification agreement. Thus,
the Fishers’ first assignment of error lacks merit and is overruled.
D. Second Assignment of Error — Possession of the Original Note
and Different Versions of the Note
In their second assignment of error, the Fishers argue that genuine
issues of material fact existed (1) with regard to whether BONYM possessed the
original note when the complaint was filed and was entitled to enforce the note, and
(2) whether the note was altered because a different version was affixed to the
bankruptcy motion to stay execution in comparison to the foreclosure complaint.
1. Right to Enforce the Note
To pursue a foreclosure action, a party must demonstrate it has the
right to enforce the note. HSBC Bank USA, N.A. v. Surrarrer, 8th Dist. Cuyahoga
No. 100039, 2013-Ohio-5594, ¶ 17. The holder of a note is entitled to enforce the
note. U.S. Bank, N.A. v. Matthews, 8th Dist. Cuyahoga No. 105011, 2017-Ohio-
4075, ¶ 30, citing R.C. 1303.31(A)(1). After negotiation or transfer of the note, an
entity is considered the holder, as defined in Article Three of the Uniform
Commercial Code adopted in Ohio, ““‘[i]f the instrument is payable to an identified
person [and] the identified person [is] in possession of the instrument[,]’” or, if it is
payable to the bearer, anyone in possession.” Surrarrer at ¶ 17, quoting Wells Fargo
Bank N.A. v. Freed, 3d Dist. Hancock No. 5-12-01, 2012-Ohio-5941, ¶ 22, quoting
R.C. 1301.01(T)(1)(b), repealed in Am.H.B. No. 9, 2011 Ohio Laws. “Pursuant to R.C.
1303.25(B), when an instrument is indorsed in blank, the instrument becomes
payable to bearer and may be negotiated by transfer of possession alone.”
CitiMortgage, Inc. v. Evans, 8th Dist. Cuyahoga No. 101882, 2015-Ohio-1384, ¶ 16.
Further, “[t]he law in Ohio is that the physical transfer of a note indorsed 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.’”
Bank of Am. N.A. v. Farris, 2015-Ohio-4980, 50 N.E.3d 1043, ¶ 17 (8th Dist.),
quoting Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657, at ¶ 65.
A party must show it was the holder of the note and the mortgage on
the date of filing the foreclosure complaint or else summary judgment is
inappropriate. Najar at ¶ 56, citing Wells Fargo Bank, N.A. v. Jordan, 8th Dist.
Cuyahoga No. 91675, 2009-Ohio-1092, ¶ 23. A party’s proof that it was the holder
of the note and mortgage at the time the foreclosure complaint was filed need not be
provided when the complaint is filed, but may be included with its motion for
summary judgment. Najar at ¶ 57.
Here, BONYM was not the identified person on the note. In order to
be the holder, or one entitled to enforce the note, the note had to be signed over to
BONYM or indorsed in blank. The note affixed to the foreclosure complaint includes
a blank indorsement from Countrywide. Based upon BONYM’s interrogatory
responses, the record demonstrates BONYM, through its custodian, was in
possession of the original note at the time it filed the foreclosure complaint.
(Response to interrogatory No. 9.)2 Further, Soberon attested to her review of the
original note indorsed in blank, a true and accurate copy of which was attached to
her supplemental affidavit. A comparison of that note with the one attached to the
foreclosure complaint reveals they are identical. The record shows BONYM
established it was the holder of the note and entitled to enforce it when BONYM filed
the foreclosure complaint.
BONYM also held the mortgage. The mortgage was equitably
assigned to BONYM when the note indorsed in blank was transferred to BONYM.
Najar at ¶ 65. Additionally, the December 19, 2017 assignment of the mortgage
2 The Fishers’ argument that the answers to interrogatories were inadmissible
because the signature on the verification page was illegible is unfounded. Answers to
interrogatories, which are signed, sworn to, and served upon the party submitting them,
may be submitted in support of a motion for summary judgment. Civ.R. 33(A) and 56(C);
See Allstate Ins. Co. v. Rule, 64 Ohio St.2d 67, 70, 413 N.E.2d 796 (1980) (court erred
when it accepted a document purporting to be answers to interrogatories but the answers
were not signed, sworn, or served upon the party submitting them.). BONYM’s
interrogatory answers were signed, sworn to, and served upon the Fishers.
documents the assignment of the mortgage to BONYM prior to the filing of the
foreclosure complaint. The Fishers’ argument that the December 19, 2017
assignment was void because it was drafted by an individual who was not a licensed
attorney is unfounded and unsupported by case law. Ayers, 11th Dist. Portage
No. 2019-P-0094, 2020-Ohio-1332, at ¶ 82.
The Fishers assert a genuine issue of material fact existed as to the
authenticity of the note and, thus, admission of the original note was required.
Civ.R. 56(E) does not require a party to produce the original note before it is entitled
to summary judgment. Bank of Am., N.A. v. Merlo, 11th Dist. Trumbull No. 2012-
T-0103, 2013-Ohio-5266, ¶ 21. Civ.R. 56(E) requires sworn or certified copies
referenced in an affidavit to be attached or served with the affidavit. This
requirement is satisfied by attaching the papers to the affidavit, coupled with a
statement therein that such copies are true copies and reproductions. Ayers at ¶ 63,
citing State ex rel. Corrigan v. Seminatore, 66 Ohio St.2d 459, 467, 423 N.E.2d 105(1981).
Evid.R. 901 addresses authentication or identification of evidence
and states that “‘[t]he requirement of authentication or identification as a condition
precedent to admissibility is satisfied by evidence sufficient to support a finding that
the matter in question is what its proponent claims.’” Ayers at ¶ 64, quoting
Evid.R. 901(A).
Further,
Evid.R. 1003 provides that “[a] duplicate is admissible to the same
extent as an original unless (1) a genuine question is raised as to the
authenticity of the original or (2) in the circumstances it would be
unfair to admit the duplicate in lieu of the original.” The party opposing
the introduction of the duplicate has the burden of proving that there
is a genuine question as to the authenticity of the original or that it
would be unfair to admit the duplicate. Natl. City Bank v. Fleming, 2
Ohio App.3d 50, 57, 440 N.E.2d 590 (8th Dist.1981). The objection
must be something more than a frivolous objection. Id. The decision
to admit a duplicate is left to the trial court’s sound discretion, and,
unless it is apparent from the record that the trial court’s decision is
arbitrary or unreasonable, the determination will not be disturbed on
appeal. Id.Merlo at ¶ 19. The Fishers contend it was unfair to admit the duplicate note in lieu
of the original “because the note exhibit to the foreclosure complaint contradicted
the note exhibit to the motion for relief from stay in [a]ppellants’ bankruptcy case.”
(Appellants’ brief at 10.)
The notes attached to the bankruptcy filing and foreclosure complaint
are not contradictory. The note attached to the bankruptcy filing had a second page
with an undated allonge that transferred the note from Countrywide to BONYM.
The foreclosure complaint contained a note that did not contain the undated allonge
but included a blank indorsement from Countrywide. Both versions of the note
indicate Countrywide transferred the note to BONYM. The Fishers have presented
no evidence to show it was unfair to admit copies of the note attached to the
foreclosure complaint. Soberon’s original affidavit states true and accurate copies
of these relevant documents were attached as exhibits: the Fishers’ note with a blank
indorsement, the mortgage, the April 30, 2010 assignment, and the December 19,
2017 assignment. Soberon’s supplemental affidavit states she reviewed the original
blue-ink note with an in blank indorsement and a true and accurate copy was
attached as an exhibit. The original blue-ink note also contained a second page that
included an allonge with a specific indorsement from Countrywide to BONYM. The
note attached to Soberon’s original affidavit; the copy of the blue-ink note attached
to Soberon’s supplemental affidavit; and the copy affixed to the foreclosure
complaint are identical except for the allonge included with the blue-ink note.
Soberon also averred in her supplemental affidavit that she verified BONYM’s
responses to the Fishers’ first set of interrogatories and attached a copy of those
responses as an exhibit. The sworn interrogatory responses demonstrate BONYM
was in possession of the original note when the foreclosure complaint was filed.
Soberon’s affidavits comply with Civ.R. 56(E) and Evid.R. 901(A) for purposes of
authentication. The trial court did not err when it accepted a copy of the note —
rather than the original — to support BONYM’s summary judgment motion.
2. Different Versions of the Note
On May 19, 2010, BONYM filed a motion for relief from a stay of
execution in the Fishers’ bankruptcy case. Attached to that motion, BONYM
attached a copy of the note. No blank indorsement was reflected on the note but an
undated allonge was attached that indicated Countrywide transferred the note to
BONYM. BONYM subsequently filed a foreclosure complaint against the Fishers on
January 16, 2018. Attached to the foreclosure complaint was the note, absent the
allonge, but with a blank indorsement signed by David A. Spector (“Spector”),
Managing Director of Countrywide.
The Fishers question the validity of the blank indorsement based
upon the two different copies of the note and the multiple assignments. Here is a
full summary of the assignments of the Fishers’ note and mortgage and the provided
copies of the note. The Fishers and Countrywide executed the original note on
May 25, 2005. On April 30, 2010, Countrywide assigned the note and mortgage to
BONYM and recorded the assignment with the county recorder’s office. On May 19,
2010, BONYM filed a motion with the bankruptcy court and affixed a copy of the
note with an undated allonge transferring the note from Countrywide to BONYM. A
supplementary preliminary judicial report from Chicago Title put BONYM on notice
that the April 30, 2010 assignment was invalid. Thus, MERS, as nominee for
Countrywide, completed a second corporate assignment of the mortgage to BONYM
on December 19, 2017. When BONYM filed its foreclosure complaint against the
Fishers, the attached note contained an in blank indorsement from Countrywide
that was signed by Spector. Thus, two assignments occurred and two versions of the
note existed — one with an undated allonge transferring the note from Countrywide
to BONYM, and one with an in blank indorsement from Countrywide without an
allonge.
The Fishers presented a press release — an exhibit to Johnson
Fisher’s affidavit that was provided with the Fishers’ brief in opposition — that
stated Spector’s employment with Countrywide terminated in 2006. The Fishers
argue that a legitimate in blank indorsement by Spector would have had to have
been affixed prior to 2006 — the year Spector’s employment with Countrywide
ended. However, the Fishers argue that if the blank indorsement was executed
between 2005 and 2010, there would have been no reason for Countrywide to
subsequently assign the note in 2010. Countrywide did assign the Fishers’ note and
mortgage to BONYM on April 30, 2010, with the assignment being recorded on
May 6, 2010. Further, the Fishers claim the bankruptcy filing of the motion for relief
from stay that included an allonge but no blank indorsement “was an admission by
[BONYM] that [the Fishers’] original note was not indorsed by David Spector in
2010.” (Appellants’ brief at 9.) Since there was no need for the blank indorsement
after the May 2010 assignment, the Fishers argue there is a genuine issue whether
the blank indorsement by Spector was valid.
The Fishers also maintain a document contained in SPS’s records
dated February 7, 2014, and titled “NOTE-INDORSED CLOSING FILED
RESOLUTION” created a factual issue whether the note was altered. The document
— a fax coversheet that indicated three additional pages were attached to it — related
to the Fishers’ loan. The bottom of the document reads: “Qualifier Code -083-
INDORSED.” The attachments to the fax coversheet were not provided.
The record reflects two indorsements, a blank indorsement and an
undated allonge, both transferred the note from Countrywide to BONYM. Both
indorsements were not necessary. Likewise, the 2010 assignment was not necessary
with either or both indorsements in place. The fact that two different versions of the
note existed — one with an undated allonge and one without an allonge but
containing an in blank indorsement to BONYM — as well as an unnecessary
assignment is curious but does not refute BONYM’s status as holder of the note.
Evans, 8th Dist. Cuyahoga No. 101882, 2015-Ohio-1384, at ¶ 26; Bank of Am., N.A.
v. Sweeney, 8th Dist. Cuyahoga No. 100154, 2014-Ohio-1241, ¶ 22.3 Further, the
February 7, 2014 fax cover sheet contained in SPS’s records does not invalidate the
transfers or create a factual issue.
The Fishers incorrectly compare the different versions of the note to
the facts in U.S. Bank, N.A. v. Lavelle, 8th Dist. Cuyahoga No. 101729, 2015-Ohio-
1307, where inconsistencies between two notes resulted in genuine issues of
material fact that precluded resolution of the case by summary judgment. In
Lavelle, notes affixed to two separate complaints were both purported to be the
original note yet significant, obvious differences exited between them — the notes
differed in page length and the indorsements on the notes were signed by different
parties. Id. at ¶ 18-19. Here, the notes both transferred interest from Countrywide
to BONYM although one transfer was by allonge and the other by a blank
indorsement. The presence of a note with an allonge and no indorsement, and a
copy with a blank indorsement did not create a genuine issue of material fact.
Based upon the evidence reviewed in conjunction with BONYM’s
summary judgment, BONYM was in possession of the original note when it filed the
3 Further, defendants in a foreclosure case, who were a nonparty to the
indorsements and assignments of the note and mortgage, lack standing to challenge the
validity of those transfers. Bayview Loan Servicing, L.L.C. v. Big Blue Capital Partners,
L.L.C., 9th Dist. Summit No. 27790, 2016-Ohio-3433, ¶ 13; Bank of New York Mellon
Trust Co., N.A. v. Unger, 8th Dist. Cuyahoga No. 97315, 2012-Ohio-1950, ¶ 35 (nonparties
to a mortgage assignment lacked standing to question those assignments.). The Fishers
were not a party to the assignments and were not entitled to challenge their validity.
foreclosure complaint and was entitled to enforce the note. The two different
versions of the note attached to the bankruptcy and foreclosure filings did not create
a genuine issue of material fact. Thus, the Fishers’ second assignment of error lacks
merit and is overruled.
E. Third Assignment of Error — Affiant Maria Soberon Lacked
Personal Knowledge
The Fishers argue that the trial court erred when it determined the
Soberon affidavits were based on personal knowledge and were proper Civ.R. 56
evidence provided in support of BONYM’s summary judgment. Specifically, the
Fishers contend that (1) Soberon’s affidavit was insufficient because it did not
establish that she viewed the original note; the affidavit was not based upon personal
knowledge; and the affidavit did not attach a document indicating the bank had
possession of the original note, (2) Soberon could not authenticate the Fishers’
payment history on the loan, and (3) the trial court erred when it considered new
and speculative information contained in Soberon’s supplemental affidavit and
thereby weighed the credibility of the affiant with information contained in Johnson
Fisher’s affidavit.
1. Insufficient Affidavit
The Fishers argue that BONYM’s documents were unauthenticated
because Soberon did not have personal knowledge of the records. Specifically, the
Fishers contend Soberon did not view the original note; she lacked personal
knowledge and could not authenticate the records; she did not show BONYM had
possession of the original note; and no document was provided that authorized SPS
to act on BONYM’s behalf.
BONYM established possession of the original note when the
foreclosure complaint was filed. Soberon attested to the fact that she reviewed the
original blue-ink note and a copy was attached to her supplemental affidavit. The
note indorsed in blank that was attached to the foreclosure complaint is identical to
the copy attached to Soberon’s supplemental affidavit, except for the allonge. The
allonge attached to the original blue-ink note — and that was missing from the copy
attached to the foreclosure complaint — was superfluous. BONYM’s interrogatory
responses stated BONYM had possession of the original note, through its custodian,
at the time it filed the foreclosure action. This evidence demonstrated BONYM was
in possession of the note indorsed in blank before it filed the foreclosure action.
MorEquity, Inc. v. Gombita, 2018-Ohio-4860, 125 N.E.3d 300, ¶ 36 (8th Dist.).
The Fishers’ reliance on Deutsche Bank Natl. Trust Co. v. Dvorak,
9th Dist. Summit No. 27120, 2014-Ohio-4652, and Bank of New York Mellon v.
Villalba, 9th Dist. Summit No. 26709, 2014-Ohio-4351, to negate BONYM’s
possession of the original note at the time the complaint was filed is misplaced. The
Dvorak court found the granting of a motion for summary judgment inappropriate
because Deutsche Bank failed to demonstrate it was in possession of the note when
the complaint was filed. However, the facts set forth in Dvorak do not state that the
note was attached to the foreclosure complaint. In Villalba, there was a discrepancy
between the dates of the assignment of the mortgage and the affiant’s claimed date
of ownership. The Dvorak and Villalba courts required additional documentation,
such as supporting business records, to prove possession of the note when the
complaint was filed. Additional documentation was not required here because the
complaint and its attached exhibits, coupled with Soberon’s affidavits and BONYM’s
answers to interrogatories show that BONYM was in possession of the original note
on the date the foreclosure complaint was filed.
Prior to admission of a business record, the business record must first
be properly identified or authenticated “by sufficient evidence to support a finding
that the matter in question is what its proponent claims.” Evid.R. 901(A).
Authentication may be satisfied by “testimony of [a] witness with knowledge.”
Evid.R. 901(B)(1). Moreover, “[a] witness authenticating records need not have
personal knowledge of the creation of the document.” Bank of New York Mellon v.
Roulston, 8th Dist. Cuyahoga No. 104908, 2017-Ohio-8400, ¶ 16. “More precisely
as it relates to foreclosure cases, this court has held that the affidavit of a loan
servicing agent may be sufficient to authorize loan documents.” Id. at ¶ 16.
The Fishers appear to argue that Soberon did not authenticate the
note indorsed in blank. Soberon’s affidavits state she has personal knowledge of
lending and loan servicing procedures based upon her employment with SPS as a
Document Control Officer and her experience in the industry. Soberon has personal
knowledge of how the relevant loan documents were created and maintained.
Soberon attested that she personally reviewed and attached a true and accurate copy
of the original blue-ink note to her supplemental affidavit. The blue-ink note is
identical to the copy attached to the foreclosure complaint — and Soberon’s original
affidavit — except for the addition of the allonge. The information contained within
Soberon’s affidavits authenticated the note. See Ayers, 11th Dist. Portage No. 2019-
P-0094, 2020-Ohio-1332, at ¶ 67.
Additionally, within her supplemental affidavit, Soberon referenced
and attached a power of attorney that authorized SPS to act on BONYM’s behalf. We
find the power of attorney granted SPS authority to assist with foreclosure
proceedings, including the execution of affidavits. There is no merit to the Fishers’
contention that SPS was not authorized to prepare an affidavit to be used in the
foreclosure proceedings.
2. Payment History
Parties in a foreclosure action are not required to provide a complete
payment history in order to prevail on summary judgment. Matthews, 8th Dist.
Cuyahoga No. 105011, 2017-Ohio-4075, at ¶ 33; Fannie Mae v. Herren, 2017-Ohio-
8401, 99 N.E.3d 1071, ¶ 41 (8th Dist.). The Fishers reference Roulston, 8th Dist.
Cuyahoga No. 104908, 2017-Ohio-8400, to support their position that Soberon
could not authenticate the payment history of the note because Soberon attached to
her affidavit payment history documentation from both the previous servicer, Bank
of America N.A., and her employer, SPS. The Fishers argue Soberon could not
authenticate the documents of the former loan servicer. Yet,
the holding in Roulston was narrowed in [Deutsche Bank Trust Co. v.]
Jones, 2018-Ohio-587, 107 N.E.3d 117 [8th Dist.]; see also Bank of New
York Mellon v. Kohn, 7th Dist. Mahoning No. 17 MA 0164, 2018-Ohio-
3728, ¶ 14-17.
In Jones, the note and mortgage at issue were initially executed,
respectively, in favor of First Magnus and MERS, acting as nominee for
First Magnus. An undated allonge was attached to the note negotiating
the document to Deutsche Bank as Trustee for Residential Accredit
Loans, Inc. (“Deutsche Bank Trustee”). The homeowners’ last payment
was received in May 2012; the mortgage was assigned to Deutsche
Bank Trust in August 2012 and Deutsche Bank in 2016. The loan
servicing officer, who provided an affidavit supporting Deutsche Bank’s
motion for summary judgment, sufficiently demonstrated his personal
knowledge of the default:
He averred that in the regular performance of his job functions, he
reviews business records related to the servicing of the mortgage loan
at issue, and that these records are maintained in the regular course of
business. [He] authenticated the note, mortgage, and assignments,
attesting that they are true and accurate. He also authenticated
attached payment records detailing all payments and demonstrating
that the Joneses’ last payment was applied to the May 2012 installment
of the mortgage. [He] averred that the Joneses were advised in August
2012 that the loan was in default, accelerating the unpaid balance of
$142,475.
Jones at ¶ 20. Although Deutsche Bank held the note and mortgage
subsequent to the Joneses’ last mortgage payment, the loan servicing
officer’s affidavit provided sufficient information to authenticate the
default.
United States Bank Natl. Assn. v. O’Malley, 8th Dist. Cuyahoga No. 108191, 2019-
Ohio-5340, ¶ 57-58.
Just as the loan servicing officer in Jones had sufficient knowledge to
authenticate the default, so too did Soberon. Soberon’s affidavit demonstrated her
personal knowledge of the referenced business records that related to the servicing
of the Fishers’ loan. The records she reviewed were maintained in the regular course
of business. Soberon authenticated the note, mortgage, loan modification
agreement and assignments and attested the attached copies were true and accurate.
Soberon also authenticated the attached notice of default letter, payment history,
contact history, and financial breakdown summary; attached copies of the
referenced documents; and verified a balance of $845,483.11 was owing to BONYM.
Compare Fannie Mae v. Ford, 2016-Ohio-919, 61 N.E.3d 524 (8th Dist.) (a ruling
to grant motion for summary judgment was plain error where Federal National
Mortgage Association, the party that filed a foreclosure action, failed to attach any
documents referenced in its affidavit to its summary judgment motion.); Third Fed.
S. & L. Assn. of Cleveland v. Farno, 12th Dist. Warren No. CA2012-04-028, 2012-
Ohio-5245, ¶ 10 (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).
While the Fishers argue that Wells Fargo Bank, NA v. Russell, 9th
Dist. Summit No. 29005, 2019-Ohio-776, supports their position, the case is not
controlling and we find the facts distinguishable from this case. In Russell, the
notice of default letters attached to the loan servicer’s affidavit in support of motion
for summary judgment on a foreclosure complaint were not produced by the loan
servicer and were sent years prior to the servicer acquiring the loan. Id. at ¶ 26.
Further, the payment history report and loan balance did not differentiate between
payment histories from the prior loan servicer and the current servicer. Id. Here,
SPS drafted and issued the default letters after SPS was retained to service the
Fishers’ loan. SPS provided separate payment histories from Bank of America N.A.
and SPS. (Soberon original affidavit.) We find Soberon’s affidavits demonstrate she
had the requisite knowledge to testify as to the default letter, payment history,
contact history, and financial breakdown summary.
3. Weighing the Evidence
The Fishers claim Soberon’s supplemental affidavit was inadmissible
because it presented new or speculative evidence and the trial court improperly
weighed the credibility of witness testimony when it granted BONYM’s summary
judgment.
As previously stated, the Soberon supplemental affidavit did not raise
new or speculative issues but clarified arguments addressed in the Fishers’
opposition brief. The Soberon affidavits were admissible for summary judgment
purposes.
Johnson Fisher’s affidavit, affixed to the Fishers’ opposition brief,
discussed a press release that was introduced to show Spector left his Countrywide
employment in 2006. The press release constituted hearsay and would have been
excluded from the trial court’s consideration. Residential Funding Co., L.L.C. v.
Thorne, 2012-Ohio-2552, 973 N.E.2d 294, ¶ 33 (6th Dist.). Absent the introduction
of Johnson Fisher’s affidavit, there is no basis to the Fishers’ allegation that the
affidavit presented conflicting evidence that should have been weighed by the trier
of fact.
For the foregoing reasons, the Fishers’ third assignment of error lacks
merit and is overruled.
F. Fourth Assignment of Error — Conditions Precedent
The Fishers argue in their fourth assignment of error that BONYM
failed to send a proper notice of acceleration prior to filing its foreclosure action and,
therefore, failed to satisfy the conditions precedent.
Where the terms of a mortgage require prior notice of default or
acceleration, compliance with that requirement acts as a condition precedent to
foreclosure. Nationstar Mtge., L.L.C. v. Wagener, 8th Dist. Cuyahoga No. 101280,
2015-Ohio-1289, ¶ 53. A party seeking to foreclose on a mortgage must establish
that such notice has been provided.
BONYM sent a notice of default to the Fishers on September 18, 2017.
The Fishers contend that the notice of default letter did not contain the identical
language contained in the mortgage and, therefore, was deficient.
Paragraph 22 of the mortgage reads:
22. Acceleration; Remedies. Lender shall give notice to Borrower
prior to acceleration following Borrower’s breach of any covenant or
agreement in this Security Instrument (but not prior to acceleration
under Section 18 unless Applicable Law provides otherwise). The
notice shall specify: (a) the default; (b) the action required to cure the
default; (c) a date, not less than 30 days from the date the notice is given
to Borrower, by which the default must be cured; and (d) that failure to
cure the default on or before the date specified in the notice may result
in acceleration of the sums secured by this Security Instrument,
foreclosure by judicial proceeding and sale of the Property. The notice
shall further inform Borrower of the right to reinstate after acceleration
and the right to assert in the foreclosure proceeding the non-existence
of a default or any other defense of Borrower to acceleration and
foreclosure. If the default is not cured on or before the date specified
in the notice, Lender at its option may require immediate payment in
full of all sums secured by this Security Instrument without further
demand and may foreclose this Security Instrument by judicial
proceeding. * * *
(Emphasis added.)
The default notice, sent by SPS to the Fishers, reads, in relevant part:
You have the right to cure after acceleration of your loan and
commencement of foreclosure proceedings. If you meet the conditions
to reinstate, as provided in the Security Instrument, you may reinstate
even after foreclosure has been initiated but prior to sale. This means
that once you have met the conditions, the enforcement of the Security
Instrument will be stopped and your Note and Security Instrument will
remain, as if demand for payment in full had not been made. You will
have this right at any time before the earliest of: (a) five days before
sale of the property under any power of sale granted by the Security
Instrument; (b) another period as applicable law might specify for the
termination of your right to have enforcement of the loan stopped; or
(c) a judgment has been entered enforcing your Security Instrument.
(Emphasis added.)
The Fishers argue that BONYM misinformed them by stating the
Fishers “may have the right to reinstate, instead of that they have the right to
reinstate.” (Appellants’ brief at 33.) Because the mortgage provides a contractual
right to reinstate after acceleration, the Fishers claim the default notice letter was
required to state they have the right to reinstate.
The Fishers rely on Fed. Natl. Mtge. Assn. v. Marroquin, 477 Mass.
82, 74 N.E.3d 592 (2017), for their proposition that an acceleration letter that does
not exactly mirror the language contained in the mortgage results in a failure to
comply with a condition precedent to foreclosure. The strict adherence language
followed by the Massachusetts Supreme Court may be associated with the state’s
adoption of nonjudicial foreclosures whereas Ohio is a judicial foreclosure state.
Pinti v. Emigrant Mtge. Co., 472 Mass. 226, 237, 33 N.E. 3d 1213 (2015). Based
upon the differing foreclosure laws and the fact that Marroquin is not controlling,
we do not find this case applicable to the current matter.
Further, a careful review of the language within the mortgage and the
default letter indicates BONYM — through the notice of default issued by SPS —
clearly explained the Fishers’ rights of reinstatement and referenced the rights of
reinstatement detailed in the Fishers’ mortgage. Paragraph 19 of the mortgage
provides the Fishers’ rights to reinstate after acceleration and states they “shall
have” such a right if certain specified conditions are met. “Thus, the notice [of
default] accurately informed [the Fishers] that [they] ‘may’ have a right to reinstate,
because obtaining the right required [their] performance of several conditions.”
Ayers, 11th Dist. Portage No. 2019-P-0094, 2020-Ohio-1332, at ¶ 88. Additionally,
the exact language used in the mortgage was not required in the default letter.
Wagener, 8th Dist. Cuyahoga No. 101280, 2015-Ohio-1289, at ¶ 61; Bank of Am.,
N.A. v. Stewart, 7th Dist. Mahoning No. 13 MA 48, 2014-Ohio-723, ¶ 19-21.
Thus, the Fishers’ fourth assignment of error lacks merit and is
overruled.
G. Fifth Assignment of Error — Counterclaims
In their fifth assignment of error, the Fishers claim the trial court
erred when it granted summary judgment on their counterclaims that presented a
violation of the Fair Debt Collection Practices Act (“FDCPA”) and an invasion of
privacy.
The Fishers premise their FDCPA counterclaim on the fact that Green
Tree, through the loan modification agreement, was the note holder and, therefore,
Green Tree — not BONYM — was the creditor entitled to enforce the note. Similarly,
the Fishers argue that because Green Tree was the correct party to pursue a
foreclosure action against the Fishers, BONYM’s filing of the foreclosure action
served as an invasion of the Fishers’ privacy.
Based upon our review of the Fishers’ first assignment of error and
our determination that BONYM, not Green Tree, is the holder of the note with the
right to enforce the note, the Fishers’ counterclaims and any related arguments lack
merit. Thus, we overrule the Fishers’ fifth assignment of error.
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.
_____
RAYMOND C. HEADEN, JUDGE
EILEEN T. GALLAGHER, A.J., and
MARY J. BOYLE, J., CONCUR