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:-!!{EEar.a" i i i- i Ear L_, E.#.REO PROPERTIES CORP.,

Plaintiff,

vs.

THOMAS E. JEFFERS, et al,

IN THE COURT OF COMMON PLEASCUYAHOGA COLINTY, OHIO))))

/tarr ^E*i ;il !'.1 A l0,ULt: , . i. tr1: .., .:CASE NO. 66663 7 r\i:,, uo^i :i:l,._, i,4iiui:A C[ili; I l.r.ruDGE EILEEN T. GALLAGHERMAGISTRATE STEPHEN M. BUCHA III

MAGISTRATE'S DECISION))))Defendants. )

This cause came on for trial before the Magistrate on August 26,2011.Considering the evidence and testimony introduced at the trial, the parties' stipulationsand the parties' post-trial briefs, the magistrate makes the following flndings of fact andconclusions of 1aw.

I. Findings of Fact

1. Defendant Thomas Jeffers owns a parcel of property located at 6310 Big CreekParkway, Parma Hts., Ohio and known as P.P.N. 473-12-006 ("the property").2. On June 8,2006, Thomas Jeffers executed a note in the sum of $204,736,00 in

favor of New Century Mortgage Corporation ("the note"). This note is endorsedin blank by New Century Mortgage Corporation.

3. To secure the payment of this note, also on June 8, 2006, Thomas Jeffers executeda mortgage in favor of New Century Mortgage Corporation ("the mortgage").Thomas Jeffers's spouse, Stephanie Jeffers, also executed this mortgage to subjecther dower rights in the property to the mortgage. The mortgage was filed for

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record on June 15,2006, and recorded at AFN 200606150977 ofthe CounffRecords.New Century Mortgage Corporation assigned the mortgage to plaintiffREOProperties Corp. ("REO") on April 2,2007 ("the mortgage assignment"). Thisassignment was filed for record on February 8, 2008, and recorded at AFN200802080521 of the County Records. The mortgage assignment also purportsto assign the note. Strangely, recorded along with the rnortgage assignment is anallonge that also purports to assign the note to REO. The original note wasproduced at the trial of this matter. The original note does not contain thisallongel.Late in 2006, the Jeffers began experiencing financial difficulties. Thomas Jefferscontacted New Century Mortgage Corporation to request a loan modification tolor,ver the monthly payment on the note and mortgage. Thomas Jeffers claims hewas told that unless he defaulted on the loan, no loan modification was possible.Eariy in 2407, the Jeffers stopped making payments on the note and mortgage.Prior to April i5, 2008, Ocwen serviced the note and mortgage. As the servicerOcwen collected the monthly payrnents and communicated rvith defendantsJeffers concerning the status of the note and mortgage.On July 23,2007,Ocwen sent a letter to Thomas Jeffers concerning his default.Notr.vithstanding the mortgage assignment to REO dated April 2,2007, this letter

' The purpose of an allonge is to add endorsements to a negotiable instrument. HSBC Bank LISA, N.A. v.Thompson, (September 3,2010), Montgomery App. No. 23761, unreported. An allonge that is not affixedto the negotiable instrument does not serve to transfer the negotiable instrument. See Id.; In re Weisband,(Bkr. D. Ariz.2010),427 B.R. 13, 19. Since the allonge to REO that was recorded with the mortgageassigrunent is not affixed to the original note it is of no effect and ivill not be corisidered irr ihe magistrate'sanalysis of standing. See Id.

4.

5.

6.

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identifies the "creditor" regarding the note and mortgage as "DB StructuredProducts, Inc."

8. The servicer of the note and mortgage changed to Green Tree Servicing LLC("Green Tree") on April 1 5, 2008. At the trial of this matter, Josh Degneau,Director of Specialty Services for Green Tree ("Degneau") testified on behalf ofREO. Regarding the above letter, Degneau stated that he had not seen anyrecords indicating that DB Structured Products, Inc. was the owner of the loan.He fuither testified that DB Structured Products, Inc. and REO were different butrelated entities, and that the identification of DB Structured Products, Inc. as"creditor" in the above letter "could have been a mistake."

9. REO introduced several limited powers of attomey it claims gives Green Treeauthority to service the note and mortgage. The powers of attorney in effect fromMay 6,2008, to February 20,2009, and from February 21,2009, to October 1,2009, are executed by REO and contain no reference to DB Stmctured Products,Inc. The polvers of attorney in effect from October 1,2009, to April 1,2010,from April 1,2010, to December 3 1, 2010, and from January 1, 201 1 , toDecember 31,2011, are also executed by REO. These three po'"vers of attorney,hor,vever, include a cover sheet not present on the earlier two powers of attorney.These cover sheets all provide:

LIMITED POWER OF ATTORNEYTO GREEN TREE SERVICING LLCFROM RBO Pronerties CornorationDATED 3n7t10DEAL DB Structured Product,Inc. (DBSP)

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No testimony was provided as to the meaning of the term "deal" in thesecoversheets.

10. On November 18,2009, Green Tree sent Thomas Jeffers a letter informing him ofa change in ownership of this loan. This letter provides:Dear Valued Customer:RE: DB Structured Products, Inc. Mortgage Loan Account Number: 890048945On September 29,2009, the creditor that is the owner of your above-referencedmortgage loan changed from DB Structured Products, Inc. to Green TreeSerVertis Acquisition LLC. and then immediately changed to U.S. Bank NationalAssociation ('U.S. Bank'), not in its individual capacity, but solely as trustee forSerVertis REO Pass-Through Trust I ('the Creditor)[sic]. U.S. Bank may bereached at 1-800-03 4-6802, or write them at U. S. Bank Corporate Trust Services,60 Livingston Avenue, EP-MN-WS3D. St. Paul, Minnesota, 551A7-2292.The transfer of the ownership of your loan will be tormally recorded in the realproperty records of the count,v in rvhich your mortgage was originally recorded.A copy of the agreement pursuant to which the loan was transferred to the newowner is maintained at Green Tree Servicing LLC ('Green Tree'), 300 LandmarkTowers, 345 St. Peter Street, St. Paul, MN 55102-1637.This notice does not change the address where you send your mortgage loanpayments.Sincerely,Green Tree

11. Regarding the above letter, Degneau testified on cross-examination:a. . . [H]ave you ever seen these three entities [DB Structured Products,Inc., Green Tree SerVertis Acquisition LLC and U.S. Bank NationalAssociation, not in its individual capacity, but solely as trustee forSerVertis REO Pass-Through Trust I] Iisted as owners [of the note and

mortgage] or having been owners in a succession?A. Not listed as owners . . . Green Tree services the loan for a group that'sidentified as SerVertis so its kind of an internal . . . classification.Q. SerVertis is a trust is it not?

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A. It's not necessarily a trust. It's sort of an investment group. . . .Q. So that investment group owns the notes and mortgages in [a] pool [ofloans]?A. In the pool yes. . . . But as far as in this case actually being the owner ofrecord [given] the status of the account at the time of conversion it was abusiness decision not to change the owner of record at the time becausethe action has already been started.Q. IBV the magistrate] Is this loan nor,v owned by SerVertis?A. The owner of record is REO Properties Co.p.Q. I understand the owner of record . . . I want to know rvho owns it now. . .?A. Green Tree services the loan for SerVertis who in a pool of loanspurchased [the subject loan] . . . and Green'Iree services for them now.REO Properties is still the record owner.Q. I understand that. I want to know who is the actual owner and accordingto this [letter of November 18, 2009], it's SerVertis Trust, is that accurate?A. Well based on this I don't think I can say yes to that because based on thisit says 'the transfer of the ownership of your loan will be formallyrecorded in the real property records of the county in which your morlgagewas originally recorded'. It was not recorded as SerVertis Pass-ThroughTrust.

On redirect examination Degneau testified lurther:Q. Can you tell the Court why ownership was not changed from REOProperties to any other entity? . . .A. There's a legal action in place and the decision rvas made to . . . not

change the owner of record until . . the situationwas resolved. It's myassumption that after the action . . . there will be a new recording.Q. At the present time there has been no internal assignment or anything that

has been done to transfer ownership?A. No, there has been no other internal transfers at all.

12. No other entities other than Ocwen, Green Tree and REO have attempted tocollect this debt from the Jeffers.

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I 3. After falling delinquent, the Jeffers made numerous attempts to secure a loanmodification, f,rrst from New Century Mortgage Corporation, then from Ocwen.Just as the servicing of the note and mortgage was about to change from Ocwen toGreen Tree, Ocwen sent a proposed loan modification to the Jeffers ("themodification"). The modification appears to have capitalized the Jeffers' missedpayments, increasing the principal balance of the loan to $232,132.00, andlowered the interest rate of the note from 9.85% per annuln, variable, to 6.00 Yoper affrum, fixed. The modification called for a three-month trial period.During this trial period, the Jeffers were required to rnake one payment of$4,519.00 on or before March 18, 2008, and two payments of $1,389.00, on May1,2008, and June 1,2008" If these payments were made, the Jeffers wererequired to make ongoing monthly payments of $1,389.00 until the loan was paid.The modification also provides:BY EXECUTING THIS MODIFICATION, YOU FOREVER IRREVOCABLYWAIVE AND RELINQUISH ANY CLAIMS, ACTIONS OR CAUSES OFACTION, STATUTE OF LIMITATIONS OR OTHER DEFENSES,COLINTERCLAIMS OR SETOFFS OF ANY KIND V/HICH EXIST AS OFTHE DATE OF THIS MODIFICATION, WHETHER KNOWN ORUNKNOWN, WHICH YOU MAY NOW OR HEREAFTER ASSERT INCONNECTION WITH THE MAKING, CLOSING, ADMINISTRATION,COLLECTION OR THE ENFORCEMENT BY OCWEN OF THE LOANDOCUMENTS, THIS MODIFICATION OR ANY OTHER RELATEDAGREEMENTS.BY EXECUTING THIS MODIFICATION, YOU IRREVOCABLY WAIVEALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING ORCOU{TERCLAIM ARISING OUT OF OR RELATING TO THISN4ODIFICATION ANY RELATED AGREEMENTS OR DOCUMENTS ORTRANSACTIONS CONTEMPLATED IN THIS MODIFICATION.

14. Thomas Jeffers executed this modification on April 14, 2008, and sent in the firstpayment of $4,519.00 to Ocrven.

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15. By the time Ocwen received the payment, servicing of the note and mortgage hadtransferred to Green Tree. The payment was forward to Green Tree. Even thoughthe modification calls for the first payment to be tnade on or before March 18,2008, Green Tree accepted and applied the payment.

16. The modification has a signature line for Ocwen. No representative of Ocwen orGreen Tree executed the modification.

17. Because Thomas Jeffers never received a copy of the loan modification executedby Ocwen or Green Tree and, as a result of the servicing change, he was confusedabout where to send further payments, Jeffers did not send the additional trialperiod payments.

18. Thomas Jeffers contacted Green Tree to address these trvo issues and claims hewas told not to make any payments until the status of the loan modification wasclarified.

19. Before Thomas Jeflers received any clarification concerning the loanmodification, on July 31,2008, REO filed the present case seeking to foreclosethe note and mortgage.

20.Inresponse, the Jeffers filed numerous counterclaims. At the trial of this matter,the Jeffers dismissed all counterclaims save the Jeffers' claim ofunconscionability. The unconscionability claim is based upon Thomas Jeffers'sallegations that New Century and REO, through its servicing agents, instructedhim to cease making payments on the note and mortgage on various occasionsand then later filed this foreclosure case.

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II. OpinionA. Standing

All cases must be prosecuted in the name of the real party in interest. Civ.R.17(A). The real party in interest in a foreclosure case is one who holds both the debt andthe security, i.e. both the note and the mortgage. Deutsche Bank Nationql Trust Co. v.Triplett, (February 3,2011), Cuyahoga App. No. 94924, unreported see also HSBC BankUSA v. Thompson, (September 3,2010), Montgomery App. No. 2376t,unreported(Where assignee of mortgage and assignee of note are two different entities, the assigneeof mortgage is not the real party in interest to assert claim for foreclosure of themortgage); Curry & Durham, Ohio Real Property Law & Practice (5th Ed. 1996) Section17-5(a) (To have the rights of the original mortgagee, an assignee must receive the debtas well as the security). The plaintiff must be the "owner" of the note and mortgagewhen the case is filed to have standing to file the case. Wells Fargo Bank N.A. v. Jordan,(March 12,2009), Cuyahoga App. No. 91675,unreported. A lender seeking foreciosurehas the burden of proving it has standing and all other essential elements of its case bythe preponderance of the evidence. See Montgomery v. Mosley, (August 24,1990),pikeApp. No. 448, unreported.

The term "owner" for the purposes of standing has not been expressly defined bythe Cuyahoga County Court of Appeals.

1. "Owner" Based Upon Post-lordun Practice"Owner" for the purposes of standing does not necessarily mean assignee of

record. If the plaintiff is able to provide evidence that the loan in question wastransferred to the plaintiff at some point prior to the filing of the case, standing is present.

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See Bank One, N.A. v. Dillon, (April 27,2005), Lorain App. No. 04CA008571,unreported (Failure to record mortgage assignment has no effect on its validity betweenthe parties to the assignment or the authority of the assignee to enforce the mortgage viafbreclosure). The Cuyahoga County Court of Common Pleas has routinely determinedstanding and "ownership" of a note and mortgage based upon documents outside of thecounty records such as pooling and servicing agreements. This broad concept ofownership may be best summ arizedby Black's Law Dictionary's definition of "owner" -- "One rvho has the right to possess, use, and convey something." Black's LawDictionary, (7th ed. 1999) i 130.

To prove standing, REO has submitted the recorded assignment of the mortgageto REO, which also purports to assign the note. This assignment was executed before thecase was filed. No subsequent assignments were recorded. No specific endorsementsappear on the note transfening it to an entity other than REO. In the absence of otherevidence, this would be sufhcient to establish standing.

Evidence exists, however, that an entity other than REO owned the note andrnortgage at the time the case was filed. The letter from Ocwen to Thomas Jeffers datedafter the mortgage assignment but before the case was filed identifies the "creditor" asDB Structured Products, Inc., not REO. A creditor is defined as, "One to whom a debt isowed; . . . A person or entity with a definite clam against another, esp. a claim that iscapable of adjustment and liquidation." Black's Law Dictionary, (7th ed. 1999) 375. Aletter sent to Thomas Jeffers from Green Tree on November 18,2009, after the case wasfiled, states, "On September 29,2009, the creditor that is the owner of your above-referenced mortgage loan changed from DB Structured Products, Inc. to Green Tree

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SerVertis Acquisition LLC. and then immediately changed to U.S. Bank NationalAssociation ('U.S. Bank'), not in its individual capacify, but solely as trustee forSerVertis REO Pass-Through Trust I ('the Creditor)."

From these letters, one can conclude that the servicers ofthe subject loan use theterm "owner" and "creditor" interchangeably. Moreover, one can conclude that thevarious parties described in the letter of November 18, 2009, were owners of the loanbecause these parties freely conveyed their interests in the loan. See Black's LawDictionary, (7th ed. 1999) 1130. Moreover, these letters and the powers of attorneysubmitted by REO indicate that DB Structured Products Inc. had or has some interest inthis loan.

REO points to the fact that record ownership of the mortgage is in REO as a basisfor standing. Its clear from Degneau's testirnony that record ownership of the mortgagewas not determinative of the true owner of the loan. He testified that the true ownershipof loan at this time is not in REO, but rather, an entity he identified as the SerVertisinvestment trust and that "a business decision" was made not to transfer the mortgage ofrecord because of this pending litigation. Thus, the fact that record ownership is in REOdoes not foreclose the possibility that some other entity such as DB Structured Products,Inc. actually owned the note and mortgage rvhen the case was filed.

REO also points to the Jeffers testimony that no other entity other than REO,Ocwen and Green Tree attempted to enforce the note and mortgage as evidence that noother entity ou,ns the note and morlgage. Based upon the letter from Green Tree toThomas Jeffers dated November 18, 2009, despite the ownership changes detailedtherein, Green Tree remained the servicer of the loan. As long as Green Tree remained

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the servicer, all efforts to enforce the note and mortgage would likely be made by GreenTree, regardless of the owner. Thus, the fact that only Green Tree and REO attemptedto enforce the note and mortgage is not necessarily indicative of REO's ownership of thenote and mortgage.

REO cites Pinney v. Merchqnts' National Bank of Defiance, (1904),71 Ohio St.173 and Wagner v. Bank One, Athens, (December 20, 1995), Gallia App. No. 95CA7,unreported, in support of its arguments related to standing. Each of these cases involvedan assignee of a mortgage who failed to record the mortgage assignment. As aconsequence, the assignee's predecessor, not the assignee, wasjoined in the foreclosurecase and failed to answer the foreclosure complaint. The assignee's mortgage wasextinguished by the sheriff s sale of the property. In each case, it was held that if theassignee does not record the assignment and thus is not named as a party to theforeclosure case, he is bound by the decree of foreclosure to the same extent as the namedparty assign or , Pinney v. Merchants ' National Bank of Defiance, 7 I Ohio St. at 1 84;Wagner v. Bank One, Athens, (December 20,1995), Gallia App. No. 95CAl, unreported.

It is unclear how these cases support REO's claimed standing. At issue is REO'sright to assert the note and mortgage. The rights of an assignee who failed to record hisassignment are not at issue. Thus, Pinney and Wagner are not relevant to the issue ofstanding in this case.

Considering all of the evidence submitted by the parties concerning standing, it ismore likely than not that the "owner" of the note and mortgage was DB StructuredProducts Inc. from some time before the Ocwen letter of July 23,2007, to September 29,2009. Thus, despite the recorded assignment to REO, REO has failed to prove that it was

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the owner of the note and mortgage at the time the case was filed on July 31, 2008, andhas failed to meet its burden of proof concerning standing. See Montgomery v. Mosley,(August 24,1990), Pike App. No. 448, unreported; Wells Fargo Bank N.A. v. Jordan,(March 12,2009), Cuyahoga App. No. 91675,unreported.

2. ttOwner" Based Upon UCCPrior to the decisionin Jordan, this court looked to Ohio's version of the Uniform

Commercial Code ("UCC"), R.C. Sec. 1303.01 et seq., to determine whether the partyseeking foreclosure was entitled to enforce the subject promissory note. It is unclearwhether the Court of Appeals concept of "owner" as set forth in Jordan encompasses onewho is entitled to enforce the negotiable instrument under the UCC. Neither party in thiscase addressed REO's ability to enforce the subject promissory note under the UCC.Nevertheless, even if the concept of "owner" under Jordan encompasses one with theability to enforce the note under the UCC, REO has failed to prove that it is entitled toenforce the note.

R.C. 1303.31 states:(A) "Person entitled to enforce" an instrument means any of the followingpersons:

(1) The holder of the instrument;(2) A nonholder in possession of the instrument who has the rights of aholder;(3) A person not in possession of the instrument who is entitled to enforcethe instrument pursuant to Section 1303.38 or division (D) of section1303.58 of the Revised Code.

a. Holder

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One cannot become a holder of a negotiable instrument without the instrumenthaving been negotiated to him. Vitols v. Citizens Banking Co., (6th Cir. 1993), 10 F.3d1227,1235 (applying Ohio law).

R.C. Sec. 1303.21 provides:(A) "Negotiation" means a voluntary or involuntary transfer of possessionof an instrument by a person other than the issuer to a person who by thetransfer becomes the holder of the instrument.(B) . . . if an instrument is payable to an identified person, negotiationrequires transfer of possession of the instrument and its indorsement2 bythe holder. If an instrument is payable to bearer, it may be negotiated bytransfer of possession alone.

In this case, the note in question is endorsed in blank. Thus, REO would havebeen the holder of the note and entitled to enforce the note at the time the case was filedonly if it possessed the note when the case was filed. See R.C. Sec. 1 3 03 .2 1 (B) ; Vitols v.Citizens Banking Co., 10 F .3d at 1235.

The original note was produced at trial. Off the record, REO's counsel indicatedthat the note came from "the vault". The location or the owner of the vault was notdisclosed. There is no direct testimony regarding who was in actual possession of thenote either at the time of filing of the case or at the time of trial. Degneau, an employeeof Green Tree, testified that he was familiar with the note and was able to identify it.Based on this testimony, it is likely that Green Tree possessed the note as servicing agenton behalf of the parly for whom it was servicing. As detailed above, it is more likely thannot that Green Tree was servicing this loan for DB Structured Products, Inc., not REO,when this case was filed. Therefore, at that time, Green Tree possessed the note as agent'Ohio's version of the UCC, like the originai, uses the spelling of "indorsement" with an "i" rather thanthe more commonly seen "e" or "endorsement". The magistrate will use the common spelling in thisopinion and spell indorsement rvith an "e", unless quoting the statr_lte.

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of DB Structured Products, Inc. REO was not in possession of the note when the casewas filed. Consequently, REO has filed to prove it was the "holder" of the note when thecase was filed and was not aparty who is entitled to enforce the note as a holder. See Id.;R.C. Sec.1303.31.

b. Nonholder in Possession Who Has the Rights of a HolderPat (A)(2) of R.C. Sec. 1 3 03.3 1 states that a nonholder with the rights of a holder

in possession of the negotiable instrument may enforce it. A "nonholder in possession"includes a person that acquired the rights of a holder by subrogation or who is the legalsuccessor entity to the holder. See Uniform Commercial Code, Official Comments, Sec.3-301. In may be, by virtue of the mortgage assignment that also purported to assign thenote to REO, that REO is a nonholder with the rights of a holder. In order to be entitledto enforce a note pursuant to R.C. Sec. 1303.31(AX2), the nonholder must not only havethe rights of a holder but must also possess the note. As detailed above, Green Treepossessed the note as agent of DB Structured Products, Inc. when the case was filed andREO has failed to prove it rvas in possession of the note at that time. Accordingly, REOhas failed to prove it was a nonholder with rights of a holder in possession of the notewhen the case was filed and was not a party who is entitled to enforce the note as anonholder in possession under R.C. 1303.31(AX2).

c. A Person Not in Possession Who is Entitled to Enforce the InstrumentR.C. Sec.1303.31(AX3) applies in situations where the negotiable instrument is

lost or where payment was made or accepted by mistake. See R.C. Sec.1303.38; R.C.Sec.1303.58. Neither situation is applicable to this case. Accordingly, REO is notentitled to enforce the note under this section.

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B. Consequences of Lack of StandingSince REO has not proved that it is entitled to enforce the note under R.C. Sec.

1 3 03 .3 1 , if the concept of owner as set forth in Jordan encompasses one who is entitledto enforce the note pursuant to Ohio's version of the UCC, REO has failed to prove it hasstanding under this section.

In this county, standing is considered to be jurisdiction al. See MortgageElectronic Registration systems, Inc. v. Mosley, (June 24,2010), Cuyahoga App. No.93170, unreported; see also see Freedom Mortgage corp. v. Perry, (June 23, 20lr),Cuyahoga App. No. 95834, unreported. If the plaintiff is not the owner of the note andmortgage at the time the case is filed, it cannot invoke the jurisdiction of the Court3. Id.Thus, the appropriate action by the Court where a party fails to prove standing is not adecision on the merits, but rather, a dismissal without prejudice. See Freedom MortgageCorp. v. Perry, (June 23, 2011), cuyahoga App. no. 95834, unreported. Accordingly,REO's complaint is dismissed without prejudice. See Id.

C. The Jeffers's Counterclaiml. Jurisdiction

The Jeffers have asserted a counterclaim under R.c. Sec. 1345.01 et seq.alleging that New Century and REo through its servicing agents committed anunconscionable act by instructing Thomas Jeffers to not make payments on the note andmoftgage on various occasions. Given that plaintiff has failed to properly invoke the

3 In most other counties, standing in foreclosure cases is not considered jurisdiction al. See JpMorganChase Bank Trustee v. Murphy, (October 29,2010), Montgomery App. No. 23927, unreported (The issueof lack of standing "challenges the capacity of a party to bring an action, not the subject matter jurisdictionof the court"); See also Federal Home Loan Mortgage Corp. v. Schwartzwald, (June 3,2010),Greene App.No. 2010 CA 41, rinreported.

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jurisdiction of the court, it is necessary to determine the Court's jurisdiction to considerthe Jeffers's counterclaim before addressing the merits of said claim.

A trial court has jurisdiction over a counterclaim filed in a foreclosure case whereplaintiff failed to demonstrate standing if the counterclaim can be adjudicatedindependently from the complai*. See Citimortgage v. Slack, (February 10,2011),Cuyahoga App. No. 94899, unreported. In Slack, the defendants filed a counterclaimalleging breach of contract, fraud, and misrepresentation arising from a forbearanceagreement entered in relation to an earlier foreclosure case. Plaintiff s complaint wasdismissed for lack of standing. The trial court also dismissed the counterclaim because"the jurisdiction of the court was never invoked and any judgment rendered in [the] case,including any judgments on counterclaims, would be a nullity." The Court of Appealsheld that the counterclaim could be adjudicated independently from the complaint. 1dThus, the Court had jurisdiction to consider the counterclaim despite the dismissal of thecomplaint for lack of standing and committed reversible error by dismissing thecounterclaim. Id.

Likewise, in this case, the Jeffers's claim for unconscionability can be adjudicatedindependently from the complaint. Thus, the Court has jurisdiction to consider thisclaim despite the dismissal of the complaint for lack of standing. See Id.

2. UnconscionabilityR.C. Sec. 1345.031 provides in relevant part:

(A) No supplier shall commit an unconscionable act or practiceconcerning a consumer transaction in connection with a residentialmortgage. Such an unconscionable act or practice by a supplier violatesthis section whether it occurs before, during, or after the transaction.

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(B) For purposes of division (A) of this section, the following acts orpractices of a supplier in connection with such a transaction areunconscionable:(6) Recommending or encouraging a consumer to default on a mortgage orany consumer transaction or revolving credit loan agreement; . . .

R.C. Sec. 1345.01 defines a "supplier" as a person engaged "in the business ofeffecting or soliciting consumer transactions." Further, in relation to R.C. Sec. 1345.031"supplier" includes the assignee of a supplier if the act complained of was committed bythe assignee or if the assignee is affiliated by common control with the seller of the loanat the time of such assignment.

R.C. Sec. 1345.09 provides:For a violation of Chapter 1345. of the Revised Code, a consumer has acause of action and is entitled to relief as follows:(A) Where the violation was anactprohibited by section. . . 1345.031 ofthe Revised Code, the consumer may, in an individual action, rescind thetransaction or recover the consumer's actual economic damages plus anamount not exceeding five thousand dollars in noneconomic damages.(B) where the violation was an act or practice declared to be deceptive orunconscionable by rule adopted under division (BX2) of section 1345.05of the Revised code before the consumer transaction on which the actionis based, or an act or practice determined by a court of this state to violatesection 1345.02,1345.03, or 1345.031 of the Revised Code andcommitted after the decision containing the determination has been madeavailable for public inspection under division (AX3) of section 1345.05 ofthe Revised Code, the consumer may rescind the transaction or recover,but not in a class action, three times the amount of the consumer's actualeconomic damages or two hundred dollars, whichever is greater, plus anamount not exceeding five thousand dollars in noneconomic damages orrecover damages or other appropriate relief in a class action under CivilRule 23, as amended.

(F) The court may award to the prevailing party areasonable attorney's feelimited to the work reasonably performed, if either of the following apply:

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(1) The consumer complaining of the act or practice that violated thischapter has brought or maintained an action that is groundless, and theconsumer filed or maintained the action in bad faith;(2) The supplier has knowingly committed an act or practice that violatesthis chapter.(G) As used in this section,"acttJal economic damages" means damagesfor direct, incidental, or consequential pecuniary losses resulting from aviolation of Chapter 1345. of the Revised Code and does not includedamages for noneconomic loss as defined in section 2315.18 of theRevised Code.

a. Damages Pursuant to R.C. Sec. 1345.09(4)The Jeffers produced no testimony concerning damages, economic or otherwise,

suffered as the result of REO's alleged unconscionable acts. In their post trial brief, theJeffers claim that the amount claimed by REO on the note and mortgage is the measure ofhis damages. This sum is the measure of Thomas Jeffers's obligation to the owner of thisloan, not a measure of damages. The Jeffers also claim their "non-economic damagesare a minimum of $5,000.00." How the Jeffers arrive at this figure is unclear. There isno evidence in the record of non-economic damages. The Jeffers also claim they haveincurred attorney's fees as the result of REO's unconscionable acts. While the Jeffershave certainly incurred attorney's fees in this case, they neither produced evidence ofthese fees nor expert testimony in support of any claimed fees. Thus, the Jeffers havefailed to prove that they are entitled to damages under R.C. Sec. 1345.09(A) foreconomic or non-economic loss as the result of REO's alleged unconscionable acts.

b. Damages Pursuant to R.C. Sec. 1345.09(8)Moreover, the Jeffers have not submitted any evidence that demonstrates REO

has committed an act or practice declared to be deceptive or unconscionable by rule

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adopted under R.C. Sec. 1345.05(8) or by a court of this state. Thus, the Jeffers havefailed to show that they are entitled to statutory damages pursuant to R.C. Sec.1345.09(B). see Lewis v. ACB Business services, ftc., (S.D. ohio 1996), 911 F.Supp.290,295 (Applying R.C. 1345.01 et seq.).

Consequently, assuming that REO is a supplier under R.C. 1345.01 et seq. andthat the acts complained of by the Jeffers were unconscionable, the Jeffers have failed toprove any damages resulting therefrom and have failed to meet their burden of proof. SeeId. at 295-296. Therefore, judgment must be rendered in favor of REO on this claim.See Id.

c. Attorney's Fees Pursuant to R.C. Sec. 1345.09(F)R.C. Sec.1345.09(F) allows the recovery of attorney's fees by "the prevailing

party" under limited circumstances. The Jeffers have not prevailed on this claim and arenot entitled to attorney's fees under this section.

D. Motion In LimineIn conjunction with their post-trial brief, the Jeffers have moved to exclude the

testimony of Donald McFadden, one of REO's witnesses, because REO's witness list wasfiled a day late and was not served on the Jeffers' counsel until the day before the triala.

A motion in limine is rendered moot by the dismissal of the claims to which thechallenged testimony relates. Brodnax v. Green Credit Service, (1997),1 18 Ohio App.3d881, 894. Since plaintiffs claims have been dismissed and Donald McFadden'stestimony was offered in support of these claims, the Jeffers's renewed motion in limineis moot. See Id.

a This mcrtion was made o|rll; d,.iring the trial and wes denied because th^ raff.." ---:..-r:^^r r^-.the delay in identising this wihress. LrrL Jlrrvrr lleru lrut PrsJurrtusu uy

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III. RulingIT IS THEREFORE ORDERED, ADJUDGED AND DECREED that the

complaint of plaintiff REO Properties Corporation is dismissed without prejudice.IT IS FURTHER ORDERED, ADJUDGED AND DECREED that judgment is

rendered in favor of plaintiff REO Properties Corporation against Thomas Jeffers andStephanie Jeffers on the Jeffers's counterclaim.

IT IS SO ORDERED

S#. n E-tL::STEPHEN M. BUCHA III, MAGISTRATEA party shall not assign as effor on appeal the Court's adoption of any finding of fact orconclusion of law unless the party timely and specifically objects to that finding orconclusion as required by Civ.R. 53(DX3).

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CERTIFICATE OF SER\'ICE

Mr. David DemersAttorney atLatyThree North High StreetP. O. Box 714New'Albany, Ohio 43054Mr. Benjamin D. CamahanAttorney at Law5910 Landerbrook DriveSuite 200Cleveland, Ohio 44124

Mr. Harry J. DepietroAttorney at Law7 West Liberty StreetGirard, Ohio 44420State of Ohio Bureauof Worker's Compensation30 West Spring StreetColumbus, Ohio 43215Mr. Kenneth A. BlechAttorney atLaw10850 Pearl Road, Suite D-3Strongsville, Ohio 44136

Copies of the foregoing has been sent by ordinary U. S. Mail by the Clerk of Court tothe fbllowing parties or their counsel of record: Copies mailed by the Clerk of Courls on