PR James W. Sandy, Esq. (0084246) (COUNSEL OF ......IN THE SUPREME COURT OF OHIO Katina...
Transcript of PR James W. Sandy, Esq. (0084246) (COUNSEL OF ......IN THE SUPREME COURT OF OHIO Katina...
IN THE SUPREME COURT OF OHIO
Katina Duran,
-v-
Appell an:t,
Bank of America, N.A., Successor byMerger to BAC Home Loan Servicing,L.P., fka Countrywide Home LoansServicing, L.P.
Appellee.
On Appeal from the Lucas County Courtof Appeals, Sixth Appellate District
Court of Appeals No.: CL-2014-1031
,,
f VP v^. ^
MEMORANDUM IN SUPPORT OF JUIZISDICTION OF APPELLANT KATINA I)URAN
George R. Smith, Jr. (0009712) (COUNSEL OF RECORD)1122 Craig Rd.Maumee, OH 43537PH: (41.9) 704-8404FAX: (866) 663-03322.s mit111961 ly,att,net
CO^TSEL FOR APPELLANT KATINA DURAN
James W. Sandy, Esq. (0084246) (COUNSEL OF RECORD)James S. Wertheim, Esq. (0029464)McGlinchey Stafford25550 Chagrin Blvd., Suite 406Cleveland, OH 44122-4640PH: (216) 378-9905FAX: (216) 378-9910sandy;a;mcglinchev.com
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Eric T. Deighton (0071456)24755 Chagrin Blvd., Suite 200Cleveland, OH 44122-5690PH: (216) 360-7200 x. 116edei<^hto^^.(^z carlisle®1.w.cum
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COLTIeTSEL FOR APPELLEE BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TOBAC HOME LOAN SERVICING, L.P., F/K/A C:OIJ'IUTRYWIDE HOME LOANS
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TABLE OF CONTENTS
Page
EXPLANATION OF WHY TFIIS CASE IS OF PUBLIC OR GREAT GENERAL,II^TTEREST AND INV®LVES A SUBSTANTIAL CONSTITUTIONAL QUESTION 1
STATEMENT OF THE CASE AND FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARGUMENTS IN SUPPORT CF PROPOSITIONS OF LAW . . . . . . . . . . . . . . . . . . I I
Proposition of Law No. 1: A borrower may challenge the validity of a mortgageassignanent and transfer of the note and thus plaintifFs sta:nding to prosecute aforeclosure action cin the basis that the assignment was not effective to pass legaltitle or confer the right to sue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Proposition ® f Law No. 2: A principal in bankruptcy has no power to transfer theright to enforce the note to a third party and transfer of possession of the note withoutthe approval of the banlcruptcy trustee does not confer on the transferee the right ofenforcement ...................................................... .... 12
Proposition oji'Lrz,v No. 3: In order to establish standing to foreclose, a plaintiff mustdeanonstrate the date, manner and person from whom possession of the note wasacquired ............................................................. 12
Proposition of'Law No. 4: Where pro se party files discovery requests and a motionto compel discovery of facts and documents relevant to defense of the action andseeks a continuance to complete discovery, trial court has a duty to order the partymovirig for surrunary judgment to file its responses in order to decide the merits ofthe discovery dispute and permit discovery of relevant information prior to rulingon summary judgment .................................................. 13
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
CERTIFICATE OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
APPENDIX:
Decision and Judgment of the Sixth District Court of Appeals, Lucas County, Ohio
il
EXPLANATION OF WHY THIS CASE IS OF GREAT PUBLIC OR GENERAI,INTEREST AND INVOLVES A SUI3STANTIAI. C;ONS'I'ITIT'I'IONAL QUESTION
This case presents the basic question of the evidentiary standards a plaintiff ("Bank")
must meet in order to establish entitlement to a judgment of foreclosure. Because Ohio is a
judicial foreclosure state, there are two underlying considerations that rightfully impact a court's
decisions in pursuit of justice. The first, and most conspicuous, is the constantly-voiced argument
by Banks at the trial court level and appeal that borrowers have defaulted on their obligation,
have been living on the property rent free and are being unjustly enriched by each day that passes
before the foreclosure sale of their home. This consideration is not articulated by the courts in
their written opinions, but its presence can be seen in the development of case law and the
interpretation of precedent restricting borrower's right to mount defenses in this rapidly
expanding area of the law. e.g. Livonia Property Holdings, LLC v. 12840-12976 Farmington
Roac1 Holding,s, LLC, 399 Fed. App'x 97, 102 (61h Cir. 2010)
The second, and often-times not directly articulated consideration, is that Banks, in
contrast to most borrowers, are economically powerful, have access to the best lawyers in the
country, and have the ability to follow the procedures their lawyers establish to ensure
compliance with the law and obtain judicial approval of their decision to deprive a person of
shelter. lf a foreclosure is contested-and the lion's share are not'-Banks engage large law
firms that specialize in litigation of foreclosure cases to help them overcome any obstacles they
may encounter in prosecuting the action, many of which appear to be the result of the Bank's
failure to follow the pre-foreclosure advice and guidance of counsel and the most fundamental
principles of law. Widespread use of robo-signed summary judgment affidavits and mortgage
' Judgment by default accounted for 26,196 or 37% of the 71,728 foreclosure cases terminated in2013. The Supreme Court of Ohio, Ohio Courts Statistical Report 2013 at p. 45,
assignments are the most notable example of this. See: United States of AmeNica, et al, v. Bank (?f
America Corp., et al. Case No. 1:12 CV-00361, Consent Judgment, April 11, 2012 ("The
National Mortgage Settlement"-Ex. A-setting servicing standards (including standards for
documents used in foreclosure proceedings, documentation of note, holder status and chain of
assignment) and requiring consumer relief)
The record in this case provides this court with an opportunity to address these
fundamental equitable considerations and provide authoritative guidance in the adjudication of
foreclosure cases. The explosion of subprime lending and the rapidly expanding securitization of
mortgage loans and sale of loans in the secondary market gave rise to a number of innovations
by the mortgage banking industry that are also implicated in this case.
In order to accommodate the expanding secondary market for subprime loans and to
lower costs, the banking industry created an entire system for tracking beneficial interest in loans
(MERS). Atypical of prior practices, the MERS system physically separated the note and
mortgage of record, effectively replacing county recorders nationwide, in order to avoid paying
mortgage recording fees each time a loan (note) was transferred among its member Banks and
has spawned a great deal of litigation in its own right. CpT Asset Backed Securities, Series
2004-EC-1 v. Cin Kham, 278 P.3d 586, 589 (Okla. 2012), Bank of New York v. Romero, 320
P.3d 1, ^135 (N.M. 2014) MERS is designed to simply track the transfer of the note among its
members. Mortgage assignments are only recorded in anticipation of litigation.
The relaxation of lending standards and the explosion of high risk subprime mortgage
loans is a fairly recent phenomenon that has had devastating effects on the national economy and
the economy of this state and has spaw-ned unprecedented litigation by both state and federal
agencies in response to the foreclosure crisis. See: Bianco, K. M. (2008) The Subprime Lending
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Crisis: Causes and Effects of the A3lortgage Meltdown, Chicago: Wolters Kluwer Law &
Business; See also: United States ofAmerica, et al., supra ("The National. Mortgage
Settlement"); Consumer Financial Protection 13ua^eau, et al. v. Ociven Financial Corporation, et
al. U.S. Dist. D.C., Case No. 13-cv-2025(Consent Judgment, Feb. 26, 2014)--setting servicing
standards and requiring consumer relief)
It is standard practice for assignees of the mortgage to establish standing to prosecatite
foreclosure actions by non-fact speciji"c af^clavits generally attesting to possession of the note
prior to the filing of the action. The oniy documents voluntarily made part of the record typically
include a copy of the note and mortgage and an assignment of mortgage (most often from
MERS) to establish chain of ownership or holder status.
As aptly shown by the instant case, judicial deference to a bank's self-inflicted wounds in
prosecuting a foreclosure action against a borrower in default gives banks a wide latitude to
rnanipulate,judicial proceedings and conceal evidence. This has led to development of bad law
that will most certainly be applied in other contexts. 'I'he treatment accorded Banks in the courts
of this state unduly tips the scales of equity in their favor as it effectively allows foreclosure on
"trust me" affidavits that shield banks from producing documents that would test the validity of
their sworn declarations (possession of the note and right of enforcement prior to filing
foreclosure)
The failure of courts to require production of specific facts and documents evidencing the
purported transfer of possession of the note (with right of enforcement) and the validity of the
mortgage assignment on the ®hio system of justice is underscored by the fact that the Banks are
in exclusive possession of documents that are directly relevant to a deterrnination of standing and
entitlement to enforce the note. Banks, however, refuse to produce them. Ohio courts have
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generally upheld this refusal to disclose relying upon the holding of the Sixth Circuit in Livonia
Proper°ty Holdings, LLC v. 12840-12976 Farmington Road Holdings, LLC, 399 Fed. App'x 97,
102 (6`h Cir, 2010) (holding that a borrower may not challenge the validity of an assignment of
mortgage because he is not a party to the assignment) to cut-off discovery of documents. The
Livonia Properties case has been broadly interpreted by many Ohio courts to preclude all
borrowers from challenging the validity of an assignment of mortgage. Bank of.Vew York Mellon
v. Huth, 6tli Dist. Lucas Nos. L-12-1241 and L-12-1283, 2014-®hio-4860 at 11 ,¶25, 61, Decision
and.Judgment at T,43. Ohio courts have typically held the only fact relevant to a Bank's standing
is whether it was in possession of the note at the time it filed the action. Id.
However, the Sixth Circuit in Slorp v. Lepner.Sanrpson & Rothfuss, 6th Cir. No. 13-3402,
2014 U.S. App. LEXIS 18816 at ¶11 (Sept. 29, 2014), recognized the unintended results of its
holding in Livonia Properties observing it had "confounded some courts and litigants" and that
"the sweeping rule the district court extrapolated from L ivonia Properties dwarfs our actual
holding in that case." It limited the broad holding in Livonia Properties and held a non-party
homeowner may challenge the Bank's allegations that it held the note and mortgage on the basis
that the parties who purported to assign the mortgage lacked the authority to do so at the time
they claim the assignment was made Slorp, supra at 12,13. Ohio courts have not limited Livonia
Properties but have instead extrapolated, like the district court in Slorp, a sweeping prohibition
denying borrowers "standing" to challenge assignment of their loan (note and mortgage)
regardless of the nature of the challenge. Decision and Judgment at ^,43 citing E.g. Bank of New
York Mellon v. Huth, 6th Dist. Nos. L-12-1241 and L-12-12$3, 2014-Ohio-4860 at ¶25.
In affirming the trial court's decision, the Sixth District relied on cases that adopted the
holding in Livonia Properties. Decision and Judgment at ¶43 citing L'.g Huth, supra. '1'he
^
Lij%oraia Properties case is at the genesis of development of Ohio case law broadly de.nying
borroN^.°cr°s "standing" to challenge the assignment of a mortgage and not:c.
In addition to implicating strong public policy considerations (illustrated by state and
federal agency litigation against banks), the sheer number of foreclosure cases arising in the
aftermath of the subprime lending crisis invokes great public or general interest. As of January 1
2013, there were more foreclosure cases pending in the general division of the Courts of
Common Pleas in this state (33,919) than any other category, including criminal. The Supreme
Court of Ohio, Ohio Covrts Statistical Report 2013 at p. 17. Foreclosure cases pending as of
January 1, 2013 constituted a full third of the pending cases of the Courts of Common Pleas-
General Division. There were 53,163 new filings in 2013. Ia'. Foreclosure cases during the year
totaled 97,859. Id. The total number of foreclosure cases comprised 30% of the docket of the
Couats of Common Pleas- General Division in 2013.
This case also involves a substantial constitutional question. The entry of summary
.judgment without requiring plaintiff to establish facts relevant to a determination of its standing
to enforce the note by admissible Rule 56 evidence and depriving Duran of the opportunity to
discover relevant evidence implicates due process of law as guaranteed by the Ohio and United
States Constitutions.
STATEMENT OF THE CASE AND FACTS
T'his foreclosure action was filed on June 6, 2012. On commencement of the action,
BANA filed a Real Party in Interest Affidavit attested to by its counsel stating it held the
mortgage and was in possession of and held the note. It attached a copy of the note, mortgage
and mortgage assignment from MERS to BAC Home Loans Servicing, L.P., BANA's purported
successor in interest, to its complaint.
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The note was indorsed in blank by the original lender, Taylor, Bean & Whitaker Mortgage Corp.
[TBW] and MERS was listed as the nlortgagee on the mortgage. The m.ortgage assignment
provided that 1VIERS, acting solely as nominee for TBW its successors and assigns, assigned the
mortgage together with the promissory note to BAC. Other than the language in this assignment,
BANA produced no evidence of the manner in which it acquired possession of, and the right to
enforce, the note.
Duran, acting pro se, responded to the foreclosure complaint by filing a separate
complaint in Lucas County Common Pleas Court against BANA and others that was removed to
federal court. While the federal case was pending, on July 3, 2012, Duran filed a pro se Answer
to the Complaint generally denying BANA's allegations and this case was stayed pending
disposition of the federal case.
On August 17, 2012, BANA filed a motion for summary judgment with supporting
affidavit of Shelly Rae Fazio who identified herself as an officer of BAi`dA. In her affidavit,
Fazio testified BANA has possession of the note. Although Duran argued on appeal that this
present tense language was insufficient to establish possession of the note at the time the action
was filed-a requirement of standing-the Sixth District rejected this argument hoiding
attachment of a copy of the note to the complaint was sufficient evidence that BANIA possessed
the original at the time the action was filed. Decision and Judgment at ¶40 The Fazio affidavit
failed to allege that Duran was provided a notice of default. She only alleged the note had been
accelerated and did not identify by whom or when this occurred. No notice of default was
attached and only an incomplete account history (corresponding to the period BANA began
servicing the loan) accompanied the affidavit despite a discovery demand by Duran for a
complete account history of her mortgage loan. Decision and Judgment at ^j 50
6
Duran responded to BANA's Motion for Summary Judgment by filing a "pleading"
challenging the assignment of the mortgage from MERS to BANA during the bankruptcy of
TBW. She alleged commission of a fraud in the prosecution of the foreclosure and the lack, and
sufficiency, of affidavits of "legal grounds for a foreclosure" aiid "legality of any evidence *"*
filed."
After the federal cour¢ action was dismissed, on Apri130, 2013, Duran filed a pleading
titled "Demand for Discovery to a Fair Defense and Hold Off Ariswering a Non-Evidence
Summary Judgment" (Discovery Request). She requested, among other things, documents
relating to the traizsfer, sale or assignment of her loan servicing agreement (including
endorsements and transfer of servicing rights from the bankruptcy court), original loan
documents, mortgage payment history from December 24, 2007, Fazios knowledge of the
specific record-keeping systems for her loan, and chain of title to her loan. She claimed a lack of
evidence of BANA's right to foreclose, challenged Fazio's personal knowledge of the record-
keeping systems and the accuracy of the accounting stateinent and requested 28 days to evaluate
actual evidence provided by BANA.
On June 25, 2013, the same day BANA filed Notice of Service of Discovery Responses,
Duran filed a Motion to Compel Discovery complaining BANA never produced a complete
payment history on her loan and did not provide any information she had requested. The Motion
to Compel did not make any reference to efforts to resolve the discovery dispute with opposing
counsel nor did Duran file BANA's discovery response With the court.
On July 10, 2013, BANA responded to Duran's Motion to Conipel asserting that it
responded to her requests and was not provided reasonable notice prior to Duran's filing the
motion to compel.
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On July 15, 2013, Duran responded to BANA's opposition to Motion to Compel
identifying the documents and information she had requested, addressing the reasons she
believed them to be relevant (standing, no evidence of merger, Fazio's lack of personal
knowledge regarding matters attested to in her summary judgment affidavit, transfer of loan to
BANA during bankruptcy without evidence transfer approved by trustee, and asserting that she
had not received any documents from BANA. She challenged BANA's right to enforce the note
and the triple-pledging of collateral by TBW.
On August 19, 2013, Duran filed a Supplemental Memorandum in support of her motion
to compel citing her receipt of a. MERS Milestone Report from TB!V's Trustee in response to her
request for discovery in the federal bankruptcy and asserting that Freddie Mac and Ginnie Mae
both claimed ownership of the loan. Duran included in her Supplemental Memorandum a request
for specific doeuments and information, including an explanation of Fazio's relationship with,
and duties at, BANA as same relates to her capacity to have personal knowledge to swear to the
matters set forth in her affidavit. She also cited the failure of EANA to submit merger
documents. Attached to her Suppiemental Memorandum was the MERS Milestone report
reflecting the funding and transfer of the loan and servicing rights.
On February 18, 2014 Duran, now represented by counsel, filed a Motion to Vacate for
Lack of Subject Matter Jurisdiction and Motion for Reconsideration challenging l3ANA's
standing, the sufficiency of the affidavits and its failure to prove compliance with conditions
precedent, including compliance with f1UI7 regulations and the National Mortgage Settlement.
United.States v. Bank © f An2erica, supra .
On February 20, 2014, Duran timely filed a Notice of Appeal and Motion to Stay
Execution of Judgment Pending Appeal. On March 13, 2014, Duran filed a Motion for Limited
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Remand to give the trial court an opportunity to rule on her Motion to Vacate and Motion for
Reconsideration. On March 21, 2014, the Sixth District Court of Appeals granted Duran's
Motion to Remand and ordered the case remanded to the trial court for ruling on Duran's post-
judgment motions.
On May 30, 2014, the trial court denied Duran's post judgmeait motions and on June 11,
2014, Duran filed a Motion for leave to amend her notice of appeal. On 3une 19, 2014, her
motion was granted and the Amended Notice of Appeal was filed in the trial court.
On July 22, 2014, Duran filed a Motion to Supplement the Record with pleadings filed
subsequent to transmission of the original record on appeal. This motion was also granted by the
Sixth District Court of Appeals.
On appeal, Duran raised four assignments of error: (1) BANA failed to submit
evidentiary quality materials establishing its standing; (2) the trial court abused its discretion in
granting summary judgment without giving Duran an opportunity to complete discovery; (3)
MERS lacked the capacity to transfer either the note or the mortgage during the pendency of its
principal's (TBVV's) bankruptcy9 and, (4) the trial court abused its discretion in denying Duran's
motion to vacate. Decision and Judgment at ¶27
In rejecting Duran's standing argument on appeal, the court held there was sufficient
evidence that the note was transferred to BANA prior to the filing of the instant foreclosure
action and therefore BANA had the right to enforce the note. Decision and Judgment at ¶40.
Although the court found that the evidence submitted by BANA was insufficient to establish
assignment of the mortgage to it, because the note was transferred, the right to enforce the
mortgage was equitably assigned as well. Id. at ¶¶ 41 - 42. The court rejected Duran's argument
that TBW had no power to transfer the note while the bankruptcy was pending without approval
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of the bankruptcy trustee holding Duran lacked standing to challenge assignment of the mortgage
citing E.g. Bank o.fllrew YorkMellon v. Huth, 6th Dist. Nos, L-12-1241 and I,-12-1283, 2014
Ohio 4860, ^,25. 7d. at ^1,43 Implicitly, the court held Duran also had no standing to challenge
assignment of the note.
Because Hizth relied on LS'F61FIercuNay REO Invests. Trust .S'eries 2008 1 c% Veriquest
Fin. Inc. v. Locke, 10th Dist. Franklin 1lAP-757, 2012-Ohio-4499. ¶28 in support of a blanket
ruling that, borrowers lacked standing to challenge assignments of their loan (note and mortgage),
a holding subsequently limited by the "1'enth District in Bank of 4merica, N.A. v. Pasqualone,
10th Dist. Franklin No. 13AF-87, 2013-Ohio-5795, ¶35, Duran filed a Motion to Certify Conflict
on March 2, 2015. On April 1, 2015, that motion was denied.
Although the MERS Milestone report contradicted BA^1A's evidence that it was holder
of the note, the court, on appeal, dismissed the report as hearsay finding it was not proper Rule
56 evidence and, even if it were considered, it would not create a genuine issue of fact since
BANA established transfer of the note and thus equitable assignment of the mortgage. Decision
and Judgment at ¶T44 - 47 BANA did not object to the admissibility of the MERS Milestone
report in the trial court or on appeal.2
The Court of Appeals upheld the trial court's entry of summary judgment without
providing Duran an opportunity to complete discovery on the basis that she failed to submit an
affidavit in compliance with Rule 56(F). Id. at ¶31
The Court of Appeals rejected Duran's argument that the failure of BANA to submit a
Notice of Default in support of summary judgment amounted to a failure of proof that it satisfied
2 On appeal BANA generally argued Duran had not submitted admissible evidence butdid not raise any specific objections to the MERS Milestone Report.
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all conditions precedent finding that, because Duran failed to deny performance of conditions
precedent with specificity, they were deemed admitted. Id. at ¶¶ 48 - 49
The court also rejected Duran's argument that BAI`IA had failed to establish the amount
due on her loan by failing to include a complete account history in its evidentiary subrnission.
The failure to include a complete account history indicates that BANA did not have possession
of loan records prior to its seivicing of the loan (which would have included the Notice of
Default.) However, the court found Fazio's statement that she was familiar with the account
history and her attestation to the total amount due sufficient in the absence of Duran's production
of evidence that she owed a different atnount citing Natl. Ciiy Bank v. TAB Holdings, Ltd., 6th
Dist. Erie No. E-10-060, 2011-®hio-3715, ¶12. Decision ond Judgment at ¶50.
ARGUMENTS IN SUPPORT OF PROPOSITIONS OF LAW
Proposition qf Law No. 1: A borrower may challenge the validity of a mortgageassignment and transfer of the note and thus plaintiff's standing to prosecute aforeclosure action on the basis that the assignment was not effective to pass legaltitle or confer the right to sue.
The court of appeals failed to separately address Duran's challenge to transfer of the note
citing Bank of New YorklVellon v. Huth, 6th Dist. Nos. L-12-1241 and I,-12-1283, 2014 Ohio
4860, ¶25. ld: at ¶43. lt is clear the Sixth District along with other Ohio courts has adopted the
sweeping rule set out in Livonia Property Holdings, LLC v. 12840-12976 Farmington Road
HoZdings, LLC, 399 Fed. App'x 97, 102 (6th Cir. 2010) (holding that a borrower may not
challenge the validity of an assignment of mortgage because he is not a party to the assignment)
by denying borrower's standing to challenge transfer and assignment of their note under any
eircumstances. This holding goes too far. Slorp v. Lerner Sampson & Rothfuss, 6th Cir. No. 13-
3402, 2014 U.S. App. LEXIS 18816 at ¶11 (Sept. 29, 2014);13ank of America, N.A. v.
Pasqualone, 10th Dist. Franklin IVo. 13AP-87, 2013-Ohio-5795, ¶35. A foreclosing plaintiff
lI
bears the burden of affirmatively proving its standing to prosecute the action. Everhome lVlortg.
Co. v. Rowland, 10th Dist. No. 07-AP-615, 2008-Ohio-1282, T112. It is not asking too much to
require it to produce evidence as to the date, manner and person from whom it acquired the right
to enforce the note especially where, as here, the alleged transferor lacks the legal capacity to
enforce the note under the bankruptcy law.
Proposition qf Law No. 2: A principal in'baiikruptey has no power to transfer theright to enforce the note to a third party and transfer of possession of the note withoutthe approval of the bankruptcy trustee does not confer on the transferee the right ofenforcement.
The transferee of an instrument only acquires such rights to enforce it as were possessed
by the transferor at the time of transfer. R.C. § 1303.22(B) Because TBW had no right to transfer
or negotiate the note during the pendency of its bankruptcy, its agent 1VIERS did not. BANA
could not acquire the right to enforce the note from TBW or through its agent, MERS. 11 U.S.C.
§363 (requirements for transfer and sale of property) In this circumstance, possession of the note
alone is insufficient to establish a right to enforcement.
Proposition ®f Law No. 3: In order to establish standing to foreclose, a plaintiff mustdemonstrate the date, manner and person from whom possession of the note was acquired.
It is incumbent upon a foreclosing plaintiff to affirmatively show it not only possessed
the note but also had the right to enforce it. Allowing a plaintiff to establish entitlement to
enforce the note through "immaculate possession" without producing documents relevant to this
deteri-nination is inconsistent with the requirements of statute and violates due process. R.C.
§ 1303.22(B). Producing a copy of the note along with a post-filing affidavit attesting only to
present possession of the note is not sufficient to establish standing. A fortior°i is this the case
where defendant has challenged plaintiff's standing and sought discovery of documents relevant
to the credibility of its sworn declaration. The original note must be in plaintiff s possession at
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the time the action is filed.. 1-ed. Home Loan Mr)rtg f'orp. v, ASchwczr°t^ ^^^^,ald, 134 Ohio St. ."4d 13,
20I2-Ohio-50174 979 . v.i`;,2d i2i4w ^28 and the burden is on plaintiff to establish this fact..
Proposition of Law No. 4: Where pro se party riles discovery requests and a motionto compel discovery of facts and documents relevant to defense of the action andseeks a continuance to complete discovery, trial court has a duty to order the partymoving for summary judgment to file its responses in order to decide the merits ofthe discovery dispute and permit discovery of relevant information prior to rulingon summary judgment.
A trial court has the power to require a party opposing a motion to compei to file its
discovery responses with the court. Civ. R. 5(D) NVhere a party is proceeding pro se and has
identified documents and facts material to her defense in a motion to compel but has not
followed proper procedure in establishing a record on which the court may rule upon the motion,
the interests of justice would be furthered by requiring the opposing party to file its discovery
response so the motion may be determined on its merits. It is an abuse of discretion for the court
to deny the motion to compel for failure of a pro se party to follow the procedure prescribed by
rule for obtaining a ruling on the merits of the motion and simultaneously enter summary
judgment to the party withholding discovery.
CONCLUSION
For the foregoing reasons, this case involves matters of public and great general interest
and a substantial constitutional question. The appellant requests that this court accept jurisdiction
in this case so that the important issues presented will be reviewed on the merits.
SIJ131VIITTED,
George R. Smith, Jr:Attorney for Ap W,
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CERTIFICATE OF SERVICE
I certify that a copy of this Mernorandum. in Support of Jurisdiction was served byelectronic mail transmission pursuant to S.Ct.Prac.R. 3.11(B)(3) on cozinsel for appellee, Bank ofAmerica, N.A., successor by merger, this 3rd day of April, 2015:
James W. Sandy, Esq. (0084246) (CC3UNSEL, OF RECflRD)James S. Wertheim, Esq. (0029464)McGlinchey Stafford25550 Chagrin Blvd., Suite 406Cleveland, OH 44122-4640PH: (216) 378-9905FAX: (216) 378-9910^j.nd^^;r^^hev.corn
^ ^^'e3"theln3^Ld^3Tl e gh^ ^ne'^^_eC2^Il
Eric 4'. Deighton (0071456)24755 Chagrin Blvd., Suite 200Cleveland, OH 44122-5690PH: (2 16) 3 60-7200 x. 116edei g9^tt>n^ &carl i sle-law. coni
14
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I015FCS 20 A
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13 of America, N.A., Sucedssor Court of Appeals No. L-14®1 031,gp
by Merger to BAC FImme 1<.a^aus ^ervicing>L.P., fka Countrywide Home Loans Trial Court No. C10201203667
IN THE COURT OF APPEALS QF OHIO. .S X -1 APPELLATE 13ISTRICT"
L1.JCAS COt 1N"1 Y
Servicing, L.P.
Appellee
V,
Katina. L. Duran, et a,l.
Appellants
DECISION D Ji3DGMEN`.F
Decided:
FEB 2 0 2015
Eric T. Deighton, for appellee.
George R. Smith, Jr., for appellant.
YARBROUGH, P.J.
I. Introduction
tlq 1I This is appe,^tl from two jud ents of the Lucas County Court of
Common Pleas, one granting sununary judgment to appellee, Bmik of America, N.A.,
LiZt ?02fh5
C-
g
by Merger to BAC ;^ome Loans Servicing, i,.F;;nlka Coun ide Fiom. e
Servicing, L.F., on its cc^tr^plairat in..€oreeicasure, atgthe athet denying 4ppellant's,
D ,motinns for reconsideration afid to vacate jiid ent. For the following
we ainn.
A. Fiets and Procedural Backgronnd
{lq 2) The present cause was initiated on June 6, 2012, when oppellee filed its
against appellant. The eompla.int..^lleged that appellee w.as in possession of,
was the holder of, a note issued by appellant, that appellant was; in default for failing
meet the payment terni.s of the note, that appellee has.depiazed the debt due, and that
appellant owes $174,435.26 plu.s interest and late charges. :'The eonlplaint also alleged
appellee was the holder o€the mortgage securing the note, that Appeilant has broken
conditions of the mortgage by her default in payment, andt.that appellee has
all conditions precedent required to be pe€forined by the mortgage. Attached
to the complaint are a copy of the note, mortgage, and assr ent of, ma:tgage. °T°he note,
which was executed on Deeembe . r:24, 2007, is indorsedin blink by asx. 6xeeutive vice
president of the original lender, Taylor, Beafi and WhitakeM r^rtga.ge ^c^rp, ^s`'€a.ylor
Bean"). The mcsrtga.gg lists Njortgage Electronic Regist.raapn Systems, Inc. (" RS") as
the mortgagee. The assi ent of mortgage provides that ' . , acting as nominee for
Taylor Bean, assaped the note to
BAC Home Loans_ Servieing, LP tka Coim ,^ id^ Home Loans
Servicing, L.P. lts, supeessors and assigns, a e `n mortgage deed,
2.
executed and delivei6d`.to [ ftS] a.c#ng solely as aao-aninee for [Taylor
Bean], from [appellant]* k * togethei with the Fromasscary Note secured.
thereby and referred to therein; and all sums of money due and to become
due thereon.
The assi sent was signed by Serena Harrnan as an assistant vice president of NERS,
and was recorded in Lucas County on March 31, 2010.
3) Also filed with the complaint was an affidavitfirorra Nicholas Cardinal, an
attomey at the law firm representiaag, appeiiee. Cardinal averred that he has personal
knowledge of the physical ea.se files and computer databases associated with this case.
Further, he stated that as material is received or generated il is added to the case file
contemporaneously by a persen with knowledge and in the,: 9rdinary course of business.
Finally, Cardinal stated that, ixi lais presfessioiial opinion, app^ ellee is the holder of the
mortgage and is entitled to enforce.the note pursuant to R.C. 1-303.31.
4) Appeilsnt, pro so; filed her answer on July 3, 2012, in which she denied the
allegations in the complaint, and set forth that the eompiaiqt.fails to state a claim upon
which relief can be granted. The answer aIso indicated thAt the property is the subject of
a federal lawsuit eoneeming mortgage fraud in the Middle"F pistriet of Florida United. ' ^
States B ptey Couft and tha.t appellant had initiateii e'q; aiqtic^n in the Lue^ County
Court of Common Pleas against appellee atid Cardinal for ^i3i^g a frivolous lawsuit.
(¶ 5) On Augu§t 17, 2012, appellee moved for s ary judgment. In support of
its rnotion, appellee submitted. the affidavit df Shelley Rae Fazio, one of its officers.
3.
Fazio stated thtin her posltlo^ she has perso^aal knowledge of the procedures for.
creating appellee's Io^ rec®ids. The procediires are that the recortis ^made at or near
the time of occurrence by persons,with persp I nal lcnowledge'"di the 'm'fortnatlou in the
rec^srd, the records are kept iai^the course of appellee's regialariy conducted business
activities, and it is the re lar practice of appellee to make such records. Fazio then
arverred, based on her personal review of therecords, that,'appellee has possession of the
note. Further, she stated that the attached "account 4nforrnatimn statement" evidences
appellant's default and the am"'ount owed.
(16) On Au t 20, 2012, appellaut 'fiied a document ca,ptioned "Relief
Demand/Judgment for Defendant." In the document, she claimed that appellee and
others have committed various instances of fraud. Several themes are present in this, and
subsequent filings, including that the mortgage trausfer documents were robosigned, that
the transfer ol°the mortgage was fraudulent because it occ dwhile the original lender,
Taylor Bean, was in bankruptcy, and that her pa.ymerats_were not applied or were stolen
by Taylor Bean. In addition to her claims of fraud, appellant demanded discovery from
appellee, at times requesting her original loan :documertts, her servicing agreement, and
her en ' payro.ent history. Finally, appella:tat requested a punitive d ages award Qf
$1,000,000.
{¶ 'i) On October 18, 2012, the trial court stayed the present matter pendi.ng
disposition of appellant's action against appellee and Ca rdanal, which appellant referred
4.
in her answer. '^h^. sep^ati action had b^en removed (dAfederal pourt. The stay was
on May 2, 2013, when fhe federal court dismissed appellant's action.
(If 8) On. April 30, 2013, appellant fil6d a dcseuzraent-.eaptionqd "DEMAND FOR
WE^Y To a Fair Defense and Hold off AnswerngA No videnee S , ary
In this filing, appellant requested:numerous doeuments, including anything
ing to the transfer of her mortgage or 1oan servicing agceerraer^t, her ^ortg.age
history, the Wp9^s of^^H an and Fazio and ether proof that they are not
giq. for the Home Affordableall doc ents pertaining to her workout packa
; Progr : (" 1'),. and proof that appellee is the owner and holder of her
Appellant intimated that the reqt^sted znforrnation is related to her arguments
the mortgage instrments are defective, that the,martgage was fraudulently
transferred, and that appellee and its attcameys fraudulen.tly,,had affidavits notarized and
: -.filed. She requested 28 days after receipt of,ihe diseoyeryto re-evaluate the evidence and
make a defense to appellee's rrdoti®n for su 'ary jud :-- ent.
(¶ 9) Appellee moved for, and was granted, an exte I iisioa^ of Yiars.e until June 25,
2013, to respond to appellant's demand for diseovery. On June 25, 2013, appellee filed a
notice of service of diseovery responses. Also on that dayytiappellant filed a motion to
compel discovery, stating thatshe had not received. a^+°V-9 or other t`orrn proving
Harman's employment, a deposition regarding Fazio's lcnbwledge of the documents in
appellant's file, her or.igine.l lnan documents, a paymprat history fro€p ineeption, any
5.
0
regarding the twigfer of her Mtsr^gage$ l^er, €^ ;J'^ ^^^ , records, and any proof or
of title that appllee is the owner and holder of the mortgage>
{¶ 10) On July t19 2013, appeilee filed its opposltii^j to appellarrt's motion to
mpel. In its. opposition, appellee argued that it clid, re.spo^d to appellant's requests, and
appellant is dissatisfied with appellee's iesponses,.appelign't must identify why those
are inappropriate.
ff 11} On 3uly 15, 2013, appellant filed her " .SP(3NSE To Pl a" tiff s Counsel
To Compel F'ar Dzsedv,erp;And Other Relief So T'; ^, ble." In her resporase,
stated that appellee has not dlselos^d her gequestO ma.terial. In addition,
again conveyed thetaemes that Taylor Bean cor^ m^tted fraud, that appellee's
to be the holder o#'the note and mortgage is fraudulent, and that Serena Harman is -a
She conclaaded by reqqesting tladt the tdal coui t dismiss the lawsuit, that,
appellee be eompelled to produce the documents she requested, and that the trial court
order appeilee to remove the Adverse entry on her creditreo ,prt.
(¶ 121 Attached to appOlant's July 15, 2013 filir^g, among other things, was a
notarized affidavit from appellant, in which she stated that_she tried to work with appellee
to modify the loan, but was denied. Further, she asser'ied,that she has been the victim of
fraud throughout the proeeedlngs, and that appellee has;no"xights to enforce the loan.
Also attached to the filing Was,a letter from lierself to a repi:esentative of appellee, dated
February 5, 20 10, in which she stated that appellee approved her for a mortgage work
out, cashed her first check, and then denied her when she tried to make the next month's
6.
payment. With the letter was a cancelled chc"ck for $716.93 made out to Bank of
Aiierica. In addition, appellant attached an:apparent coaqcopy ofa "Certificate of
Assistant Secretary of Bank of America," that listed Ser,ex$4 H'arman as an sssistant vice
president of appellee.
{1131 On ,A.ugzst 19, 2013, appellant filed "A SIp^atemental Memorandum in
Support of my Motion For Discovery Evidersce." In the supplemental memoraraauru,
appellant propounded 33 inquiries to which she would like:4ppoilee to respond. The
inquiries focused on the s e„themes of t'rauOulent ,sfei.cf the m€srtgage, the transfer
as it relates to Taylor Besn" s bankruptcy case, the Iegitims.cy of Hannan and Fazio, and a
request for all documents associated with her loan, inc.lpdiug docurneuts pertai^pinp to her
attempt to modify the luan.
(¶ 141 Appellant attached two documents to the supp)emental memoran,dum. The
^'irst was a MERS Milestones Report, which showed that the beneficial rights to the loan
were tr . f . . frcam, Taylor Bean to Ginnie Mae ori F#br#aa ►ry 4, 2408. It also showed
that Ginnie Mae becatne the servicer on August 18, 20. idt Bank of erica became
the subservicer on October 23., 2009, and that the servicing;ofthe loan was transferred to
a non- RS member on October 27, 2011.
ۦ 151 The second document... was an affidavit 1`rqn^cappeil nt in which she
described the history qfthe loan and her attea'apts to laave it modifiecl. She stated that
when she closed on the loan iti, 2007, she was told that she Would be charged an extrs.
3oiht in interest, but that in one year she could re ce to a lower rate. She contacted
t
ler Bean in Nevember2048 to refinanee, and was told°t,hat she had to be behind-on
payments and had to havb;a hardship to rgualify for. ilie M k' g^ome Affdrdable
i. She also mentioned that her escrow account vvas`:incorrect, which caused her to
to have the escrow aeoount rernoved so that shepoiildpay her insurance and taxes
Taylor Bean denied this request. After several a$te^apts at sending in herx
`1 infertnation, she demanded her statement. She averred a,t her statement was
and did not ^cfleet payments she mide. She;stated,
When I did get my statement it was irflcoareet;, ahd my escrow
account was in the negative. I may have falien b^ehiiad tlzree - four months,
but I was told I was in a forbearance and it wouldn't,.effeet my credit, and
wait a little while longer, I was told tl^at the stimul*money was coraing.
Again, I phoried in and was on hold times for haurs finally I demanded to
know why my payments didn't show on the statement and why my escrow
was negative, and was told they put my paymerkts taward my negative
escrow account.
161 Appellant finther stated that Taylor Bean e^^a.sh^at ds^^. in ^.t^gcast 2009.?"- ,
Around that time, appellant received a call from Balboa Irasuranee Company, which
represented itself as a subsidiary of appellee. Balboa.offered that it would help appellant
refmanee tY ,rough the Save the I3rean program. Appellant stated that, after another
round of sending in frt-aneia.l documents, she did nothqarfrom appellee until she called
on October 15, 2009. At that thzae, one of appellee's representatives told appellant that
8.
her trial application ^;d beeri `Approved, but t^at appetl^.t ^aa d`failed to makeffie initial
payment. Appellant pleaded with the represqntative, ar u`;g that she never received
anything in the mail, 4nd the representative r-elented and a:l. towezi appellant to make an
estimated payment of $700.00. After a fdvv 'weeks, appellant eated back to make another
payment. This time, appellant was told that she should not have been offered a trial plan
and the ban3.c would not vvork.anythin.g out for her. .Appellpint stated that she ultimately
was suecessful in gettangher $700.00 back.
17) On October 15, 20.1 3, appellee served its resppnses to the di.senvery
requests made in appellant's suppleme-iital memors.ndum.
{If 181 On October 22,-2013,. appellant filed a"Request For Time To Amend My
Answer, Take Depositions, and Continue I7iscovery Where Good Cause E-xists for
Admissions." In this filing, appellant asked for a.dditiona.l time to complete ber
discovery, to depose Harrnan and Fazio, and to aanend her answer based on the uncovered
faets. Appellant stated that appellee sent several papers, including a notice of intent to
accelerate and a payment history from Taylor Bean with no loan number or account
numbers. She contended that the payment history "clearly does not match the records of
my payment history from my discovery requests from the US B ptey- Court over
Taylor Bean and Whitaker Mortgage Corporation." Further, she stated that ber complete
disclosn.res were missing and were rsot sent to berr. Appellant then included
approxirna$ely 40 requests for admission relative to appellee's respqnses to appellant's 33
inquiries that were eont a' ed in her a4u g t 19, 2013 supplemental meznorandum. In
9.
additibu, appellaut made n^^a^us requests f^sr all of the p^^ier^rorl^ associated with the
transfer of her loan, includink:the R.S Mlestone Report, verification of changc in
servicers notifications, and a.lti custodial agreements related to the note or mortgage.
Finally, appellant requesteddocumentation regarding all of.the escrow analyses
conducted relative to the loan, her cvmplctc.loau file, inclu^i'ng all disclosures,
correspondence, and emails, and the contact information of every entity that ^as
associated with her loan.
19) Appellant attached a nauryber of document.s tq,,the October 22, 2013 request
for time, one ofwhach was a letter explaining why appellant- received $2,000 as a result
of an agreement between fcderal banlc.ing regulators and appellee in connection with an
enforcement action related to deficient rnorkiage servicing;41nd foreclosure prmesses
("National Mortgage Settlement").
IT, 201 On November 6, 2013, appellep respcanded t!^ appellant's request for time.
It argued that it complied with the civil rules in resp6nding,to appellant's discovery
requests, and that appellant had failed to designate any errors in the objections it made in
its responses. Further, appellee noted that appellant failed to comply with Civ.R. 56(F)
when applying for additional time to respond to the motiorE forsu min ary judgment.
Appellee, therefore, requested that the trial c6urt deliy appellant's request for time and
motion to a^end her answer, and rule on the pending motion for summary jud eut.
(¶ 21) Appellant replied on November 14, 2013, asking the court to "accept my
Affidavit in Rule 56 (f) and amend my answer since discovery is not complete.'>
10.
stated that she is havig^g an attcsmey review the case, and that proceeding pro se
difficult as she is also involved in the b^ ptey case in Fl'orida. Appellant again
that appellee had not answered her requests ahd.hid not provided "very
documents," one of which she specifiea(ly stated was the "Servicing Disclosure
from her loan.
1122) At the same time, on November 14, 2013, appellant also filed a motion for
idicial nntiee. In her motion, appellant agaT* raised the same arguments that H an is
rnbasiper who has signed on behalf of Taylor Bean,. .ERJappellee, that the
of the mortgage to appellee was frauduient beeanse it occurred during Taylor
kn's bankruptcy and without approval by-ihe bankruptcy court, and that apppllee has
proven that it is the haide.r of the note and mortgage. The only pew dcacmnent
to ti!e motion for judicial notice was an a.f-f'idavit.from Barbara Box ann, who
the attorney for BAC Home Loans Servicing, L.P. fka Countrywide Home L® a
LP, stating that BAC Home Loans Servicing is the holder of the note and
and is the real party in interest. The Borgn?ann affidavit was filed in the initial
case against appellant that was eventually dismissed and refiled as the current
action with appellee as the pla.antiff.
€if 23) January 23, 2014, the trial court entered its ,jud ent granting summary
in favor of appellee, and denying all of appeliant's,pend'apg motions. First, the
court addressed appeliant's discovery demands, and determined that appellee
properly complied with the civil rules by serving its responses on appellant, and that
11.
appellant was not entitled to a''motioas to eompel because she failed 'to comply with Civ.R,
37(E). Next, the trial court deterrn.ined that appellant was not entitled to a delay of
judgment for the purpose of obtaining more discovery because she did not submit a
proper Civ.R. 56(F) affidavit. `1 he.eourt theh held that appellee had presented evidentiary
quality material supporting all of the elements required to establish a party's entitlement
to foreclosure, and that appellant had failed to provide any evidentiary quality material
that would create a genuine issue of material fact as to any of those elements.
Accordingly, the trial court held that appelle^ -was entitled to jud pt as a matter of law.
{¶ 24} On February I8,..2014, appellant, now represented by counsel, filed a
motion to vacate the trial eour°t's,}udgmerat and for reeonsideration. In her motion,
appellant argued that the tria.l ecaurt.laelsed,jui^isdietion over the action because appellee
had not proven that it had standing. In particular, appellant contended that the
as,si ent of the mortgage is void because MERS independently had no interest in the
note or mortgage, and Taylor Bean had no authority to transfer the rixc+rt ewhile it was
in bankruptcy. Further, appellant contended that appellee had submitted no evidence
showing that appellee was the successor by merger to BAC Home Loans Servicing.
'I'hus, the fact that the mortgage was assigned to BAC Home Loans Servicing does not11
automatically imbue appellee with standing. Finally, appellant argued that appellee did
not submit any evidence showing that it complied with the conditions precedent before
filing for foreelosure. Specifically, appellant pointed out that appellee did not show that
12.
complied with the HUD regizlations or with.the requirements from the "National
Settlement" entered into betvveen.appellee, the United States Attomey General,
the Ohio .Attorney General.
(¶ 25) Appell tappealed the trial court's entry granting s.ary jud. ent. We
remanded the case for the trial court to consider appellant's motion to vacate the
On May 30, 2014, the trial court 6ntered its jud , ent denying appellant's
)n to vacate. The court reasoned that appellant's motion for reconsideration must be
d because the court had no authority to reconsider its..January 23, 2014 judgment,
i was a final judgment. The court fu eT reasoned that. appellant's motion to vacate
be denied because the cozart had subject matter ji€risdiction to consider the action,
because appetlee demonstrated that it had standing to pursue the action. In reaching
conclusion, the trial court deteranined that appellee provided evidence that it possessed
note, which was indorsed in blank, that appellee established it had standing by
ing a copy of the note, mortgage, and assi ent of mortgage to the complaint, and
appellant failed to present any operative facts challenging those documents. In
addition, the trial court noted that appellant had no standing to challenge the assignment
of the mortgage. Finally, although appellant did not seek relief under Civ.R. 60(B), the
trial court reasoned that appellant was not entitled to such relief because she had not
satisfied the "meritorious defense" element in that she did not dispute that she was in
default of the tertns of the note and mortgage.
13.
Ilf 261 '1`herea.i^er, appcllant moved to amend her notice of appeal to include the
court's May 30, 2014 judgrncnt, which we granted.
B. AssignmIents of Error
f'¶ 27) Appellant presents four a.ssi g. .erits of errur,fur our review:
1. The trial court erred in gran#ng summary judgment to Bank of
America, N.A. ("BANX") on its foreclosure cpmpl4in( as B ANA failed to
prove it had sta^.ding to br%4g the action and failed to submit admissible
Rule 56 evidence establishing perforrriance of conditions prepedent.
2. The trial cnuo abused its diseretion in grpting summary
jucigrnent without first giving Duran an opport-u^ity to complete discovery.
3. The trial court erred in fzndibg MERS, had the capacity to transfer
either the note or the mortgage during the pende^cy:'.rsf its principal's
bankruptcy absent proof that the transfer was authnrized by the bankruptcy
tee.
4. The trial court erred in denying defendant's motiun to vacate as
plaintiff failed to a.ff tively establish its standing to.enforee the note and
I mortgage which rendered the judgrneqt of the triai court void for lack of
subjeet matter jurisdiction.
ILL alysis
{I 28} For ease of discussion, we will address appellant's assi ents of error out
order, beginning with her second a.ssi ent of error.
14.
.. , :.,A. Disc®vel'ry Requests
(¶ 29} As her secaand as§ig, ent of eiror, appellant states that the trial court
its discretion when it granted s^ ary judgment without affording appellant
time to complete di'scovery. However, in support of her assi ent of crror,
presents the separate argument that the trial court should have required s.ppellee
file its discovery responses with the court, pursuant to Civ.R. 5(D), thereby allowing
court to rule on the merits of the discovery dispute. In particular, appellant asserts the
trial court should have required appellee to produce a complete accoaxnt history, merger
documents, documents referencing the transfer of the n0te, HAW application records,
and a notice of default and right to reinstate. In the interests of justice, we will address
arguments.
(¶ 30) In general, "[i]n discovery practices, the trial court has a discretionary
power not a ministerial duty." Mauzy v. Kelly Servs., Inc., 75 Ohio St.3d 578, 592, 664
.E.2d 1272 (1996), quOting State ex r°el Daggett v. Gessaman, 34 Ohio St.2d 55, 57,
295 N.E.2d 659 (1973). "Thus, the standard ofrevievv cfa trial court's decision in a
discovery matter is whether the court abused its discretion." Id. Specifically, as it relates
to a motion to continue for the purpose of completing discovery, we have stated, "A
court's decision regarding a Civ.R. 56(F) motion for a continuance is reviewed under an
abuse of discretion s dsrd." Joharansen v. Ward, 6th Dpst. Huron No. H-09-028, 201£1-
Ohio-42€l3, T 70.
15.
{¶ 311 R.egar4g appellant's argurnent as statediqher a.ssi ent of error, we
that Civ,R. 56(F) provides,
Should it appearfrom the affidavits of a party opposing the motion
for summary judgment that the p.cannot for sufficient reasons stated
present by affidavit facts essential to jiastify the party's opposition, the court
may refuse the application for judgng^nt or may order a continuance to
permit affidavits to be obtained or discovery to be had or may make such
other order as is just.
Appellee correctly points out that under Civ.R. 56(F), the party must submit an affidavit
stating the reasons justifying the request for an exterasion. "A court may not grant an
extension under Civ.R. Sb(i~') when no affidavit is presented in support of the motion."
US. Bank, Natl, Assn. v. Zokle, 6th Dist. Erie No, i3-13-033, 2014®t}hiod636, 1 13, citing
Cook v. Toledo Hosp., 169 Ohio A,pp.3d 180,1 2006-Ohio-52:78, 862 N.E.2d 18 1, T 42 (6th
Dist.). Here, appellant did not submit an affidavit in support of her motion for a
continuance to complete discovery. Therefore, we hold that the trial court did not abuse
its discretion in denying the motion.
32} Likewise, We hold that the trial court did not abuse its discretion when it
did not sua sponte order appellee to file its discovery responses. Civ.R. 5(D) provides,
All documents, after the original complaint, required to be served
upon a party shall be filed with the court within . edays after service, but
depositions upon oral ex ° ationq interrogatories, requests for documents,
16.
requests for adinission,,aaad answers and resporases theieto shall not be filed
tu-iless on orcier of the court or for use as evidenpe or.for consideration of a
motion in the proceeding.
this case, appellant filed her discovery reqpests with the, ^-ourt, but not on order of the
or for use as evidence or for consideration of a moiion. We decline to hold that
s lack of adherence tio the civil rules obligates, ihe ftial court to require appellee
file its responses, such tliat.the court's failure to do so constitutes an abuse of
33} Accordingly, figding nornerit to appellant'g:^r we find appellant's
assignment of error not well-taken.
B. Summary Judgment
it 34) Appellant's .farst and third assignments of error are both directed to
e's entitlement to summary jud ento Thus, we will address them together.
(¶ 35) We review summary judgment decisions-de n®vo, applying the sarne
as the trial court. Lorain 1Vaat1. Bank v. Saratoga Apts., 61 Ohio p.3d 127,
129, 572 N.E.2d 198 (9th Dist.1989). Applying Civ.R. 56(C), s ary jtzdgrnent is
iate where (1) tbere.isnogenuizse issue as to any material fact, (2) the moving
is entitled to judginent as a matter of law, and (3) reasonable minds can come to but
one conclusion, and viewing the evidence in the light most favorable to the non-moving
, that conclusion is adverse to the non-moving p .Hrrrless v; Willis Day
Warehousing Co., 54 Ohio St.2d 64, 66, 375 N.E.2d 46 (1978). " When a motion for
17.
ju"d ent is madc and supported as provided fln tf^s rule, an adverse party may
rest upon the mere a,iiegatiisns or denials 'pf the party'g p1'eadings, but the party's
se, by affidavit or as 6tfi^ise provi&d in this rute^:rnust set forth specific facts
^ that there is a genuine issue for trial:" Civ.R. 56(E).
1136) In order to propgrly support a rraotion for s^" mary judgment in a
sure action, a plaintiff rgaust present evidentiary-quality materials demorastratingr
1) that it is the holder of the Aate, which is seeured by a m.mrigage, or that it is otherwise
ed to enforce the ins gnt; (2) that the mortgagor is in default; (3) that all
itions precedent have been met; and (4) the amount cifthe principal and interest due.
Nati. Mtge. Assn. v. Brunner; 2013-Ohip-128, 98^,^„N.E.2d 565, T, 10 (6th Dist.); US
N.A. v. Coffey, 6th Dilst. Erie No. Ea I 1-026, 24 12-0hio-721, 126.
ent of error, appellant eonterads that summary jud ent{T, 371 In her fint a.ssignm
irnproper because appellee lacked standing to foreclose, failed to prove that it
all of the conditions precedent to foreclasure, and failed to prove the amount
1. Standing
(¶ 38) We will address the standing argument first. In support of her argument,
as r that Card` 's affidavit is insufficient to prove standing because it
simply gives his "professional opinion" that appellee was the holder of the mortgage.
Appellant also ar es that Fazio°s affidavit is inadmissible heeause it is not based on
personal knowledge since she did not state that she was f iliar with the practices of
18.
.^.,,AC Home Loans Servicing or Taylor Bean. In addit^o ln appellant contends that Fazio's
that appellO* "has" pcsssession df i^ie note is not's,^x#fitiebt to prove that
"h..a.d"' possession whenit:filed the cpmplaint. Finally9 appellant submits that
lacks standing, or that a genuine issue of material:.fs.et exists as to standing,
^ RS, acting as`nomi.nee for Taylor Bean, assigned the note to appellee while
Bean was in bankruptcy and without , ihe b pteyv. r tee's authorization.
also contends that the RS Milestones repQrt contradicts appellee's claim to
the holder because it showsa transfer of Appellant's loan to a aon- ERS member on
27, 2011. These two xssues involving the trans&r fto^ RS are also tbe. sole
ects of appeDlant"s third a.ssignranent of err®r.
39) In order to hawe, standia.g to suie, appellee, must establish that it is the person
entitled to enforce the note and mortgage. Coffey at ¶ I3 ; Fed. Home Loan iWtge. Corp.
Sehwartzwcaid, 134 Ohio St.3d 13, 2012-Ohio-51317, 979 N.E.2d 1214, ¶ 28(plaintiff
"establish an interest in the note or mor^gage'")... tJrhder.R,C. 13€13.31 (A), a LGholder"
a person entitled to enforce an instrument.- Notably, "[a] persoa may be a`persora
to enforce' the instrument even though the person is not the owner of the
or is in wrongfi.d possession of the ins ent.'" . R.C. 1303.31(B). R.C.
1301.20 1 (B)(21 ) provides that includes "the person in possession of a
instrument that is payable either to bearer or to identified person that is the
in possession." "Bearer," in turn, means "a person in possession of a negotiable
l3.
negotiable t gilsl^; document ef,tatle, or certified security that is payable to
or indorsed in bl. " R.C. 1301.201(.B)(5),
{If 44) Here, the note as. nd®xsed in bl .Fazi® testified in her affidavit that
has possession o£ the note. Tbus, appellee has demonstrated that it is the holder
a#d party entitled to enforce the note. In reaching this conclusion, we are not moved by
s argument that Fazio's use of the word "has" is insufficient to demonstrate that
"had" possession at the time it filed the eemplaint.in light of the fact that a copy
note was attaehed to tlie.,eomplaint.
{^ ^^) Tuming to the m'ortgage, we note that it was assigned by NERS, as
for Taylor Bean, to BAC Home Loans Servicing. We fmd somewhat troubling
fact that, although appellee claims to be the successor in interest to BAC Home Loans
through merger, appellee has submitted no aadavit or other documentation to
this merger. Thus, on the basis of the assignment of mortgage alone, we cannot
that appellee is the party entitled tc, enforce the mortgage. Furthermore, we
with appellant that Cardinal's affidavit is insufficient to prove that appellee is the
of the mortgage as it merely contains a legal conclusion.
{lq 42) Nevertheless, we have held that "a trawfer of a note secured by a mortgage
acts as an equitable assi ent of the mortgage." Coffey at 131. The issue then
whether the note was transferred. "An instrument is transferred when it is
by a person other than its issuer for the purpose of giving to the person
delivery the right to enf®ree the instrument." R.C. 1303.22(A). Further,
"fflransfer of an iristnianent, wlwtaer or not the transfer 'i's a negotiation, vests in the
any right of the ir- sferrsr to enforce the iristrtiment." R.C. 1303.22(B). 1-Iere,
transfer of the note was a negotiation, whach is "a voluntary or iavo1t^^tmy transfer of
possession of an instrument by a person other than the issuer to a person who by the
trmsfer becomes the holder of the ins erst." R.C. 1303:21(A)a "If an instrument is
payable to bearer, it may be negotiated by transfer of possession alone." R.C.
1303.21(B). In this case, the note was indorsed in blank by Taylor Bean, and possession
of the note was transferred to appellee. Therefore, we hold that the note was transferred,
thereby equitably assigning to. appellee the right to also enforce the mortgage.
{if 43} Appellant next argues that even if the note and mortgage were transferred
to appellee, such transfer was improper because it occurred whi1e T4ylor Bean was in
litigation and without the approval of the b ptcy tristee. However, we have
repeatedly held that a mortgagor is not a party to the assi ent of mortgage, and thus
lacks standing to challenge the assi ent. E.g., Bahk gf^ew York Mellon v. Huth, 6th
Dist. Lucas Nos. i,-12-I24 1, f.-12-1283g 2014-Ohio-4860, ¶ 25. Consequently, we. need
not address appellant's argument that the loan was improperly assigned to appellee.
^ (,% 44) Lastly, appellant asserts that a genuine issue of material fact exists relative
to appellee's claim of standing because the MERSI .1estone Report shows that the
beneficial rights in the loan were transferred from Taylor Bean to Ginnie Mae on
February 4, 2008, prior to Taylor Bean assigning the mortgage to appellee on March 31,
21.
10. Further, the MERS Milestone Report shows that th,e servicing of the loan was
from Ginnie Mae, for whorra appellee was a,sug-serFricer, to a Non-MERS
However, we reject 4ppellsnt's ar ' ents that ^"e based on the NERS
Report because that report does not comply with the standards of Civ.R. 56.
(145) Civ.R. 56(C) provides, in part,
S ary judgrnent shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, written admissions, affidavits,
transcripts of evidence, and written stipulations_^^ fact, if any, timely filed
in the action, show that there is no genuine issue as to any materifact and
that the moving party is entitled to judgment as a matter of law. No
evidence or stipulation may be considered except as stated in this rule.
the M Mlestone Report does not fall i-nto any of the Civ.R. 56(C) categories.
the copy of a document falls outside [Civ.R. 56(C)], the ccrrectmethod for
ing it is to incorporate them by reference into a properly . ed affids:vit."
v. Davisson, 104 Ohio App.3d 636, 646-647, 662 N.E.2d 1112 (6th Dist.1995),
Afartin v. Cent. Ohio Transit Auth., 70 Ohio App.3d 83, 89, 5.94 N.E.2d 411 (lOth
1990), In this case, the MERS Milestone R^port was attachecl to appellant's
Memorandum in Support of my Motion for Discovery Evidence." Even if
assume that appellant's supplemental memorandum constituted affidavit, and that
22.
properly anc'or,porateti, the NERS Ie%Ii$estone Report, which she did not:, ^
mt's assertion based dn,the MERS Miiestone.Report would stifll not meet the
id required by Cav.R. 56.
M 461 Under Civ.R. 56(E), "Supporti^g and oppcsaog affidavits shall be made on
ELl knowledge, shall set:fortb such facts as would be=admissible in evidence, and
show af1"irrnativeiy that the affisrit is competent to testi#'y to tbe matters stated in the
"`Perso^al knowledge' is defined as 'knowled,ge of the truth in regard to a
fact or allegation, which is origanal, and does ^zr^^: depe^ad on information or
CarIton at 646, quct^g Br^tnc^rt v. Rinzler, 77 ,Ohgo ,App.3d 749, 756, 603^.
.E.2d 1049 (2d Dist.199 1). Here, appellant has.not deariorastrated any personal
regarding the transfer of her mortgage betvveen. banks, but rather is relying on
hearsay info tion con ° ed in tb.e MERS Milestoo.e Report. Therefore, the R.S
Report is not a proper subject of consideration._.on appellee's motion for
judgment.
I¶ 47} FurLherrnore, even if we did consider the MERS Milestone Report, we do
fmd that it creates a genuine issue of material fact pe 'ing to appellee's entitlement
^"T'be requirement of Civ.R. 56(E) that swom or certified copies of all papers referred toin the affidavit be attached is satisfied by attaching g the papers to the affidavit, coiipledwith a statement therein that such copies are true copies and reproductions." State ex re1.Corrigan v. Seminatore, 66 Ohio St.2d 459, 467, 423 N.E.2d 105 (1981). Here, appellantmade no such statement that the MERS Milestone Report was a true and accurate copy.
23.
enforce ih.e mortgage, as v'v'(ehiive held tthat the transfet €a^^e notb constitute's an7^1
assignment.. 'of the mortgage. Therdfore, we fndAdt appellee has standing to.. y
the note and mortgage.
2. Conditions Preceden^,
{,148} Having disposed of appeIlant's ar ents related to standing, w . e now tum
her ar gwnent that appellee failed to satisfy all of the conditions precedent prior to
Specifycilly, appeliant asserts on appeal that appeilee failed to prove that it
ied with all of the Dep. crat of Housing and t.Trban DeveioOrxaent ("HUD")
tions, failed to provide proof that it served a notice of default upon appelis.nt, and
to prove that it complied with the "National Mortgage Settlement" requirernents.
(¶ 49) Notably, in its complaint, appellee stated tbat "it has perforrned all of the
precedent requircd to be perforned by it." We.bave b.e1d that a general
that 0 conditions p^pcedent have been perf®^ned 'is s€afflcient. Co,^'e,^, 6th
Erie No. E-11 w026, 2012-.(?hio-721 at 137. However; "[a^n contrast to the liberal
standard for a party al1e ` the satisfaction of c 'o t^ditions precedent, a party
perfoxinata.ce or occurrence of a condition precedent must do so spccif caIIy and
particularity." Id., quoting Lewis v. Wal-Mart, Inc. 4 i 0tb 13rst. Franklin No. 93AP-
21, 1993 310411, *3 (Aug. 12, 1993); see also Civ.R. 9(.Q ("In pleading the
or occurrence of conditions precedent, it is sufficient to aver generally that
conditions precedent have been per-forined or have ®^^urred. A denia1 of performance
occurrence shall be made specifically and with particuflsr€ty.;'). "'I'he effect of the
to deny eonditibns precFdent in the mlanner provided by Civ>R. 9(C) is ,that they
are deemed a itted." Id. Here, in her answer, appellant`generaiiy denied appellee's
averment that it satisfied the c^qnditions precedent. Thus, because she failed to deny the
with speeifieity oi particularity, the satisfaction ofthe conditions precedent
is deemed admitted, and no gqrauine issue of material fact exists on this subject.
3. Amount Owed
{TI 50) As a fmal argument as to why summary judgment was improper, appellant
contends that appellee failed to prove the amaunt daze. She notes that the account. .. . . . . ...... .:'y,v ... . .. . .. .. .... ^: . ... . .
statement attached to Fazio's affidavit does aiat show a.histiory of her payments since the
inception of the loan. Notwithstanding appellant's argument, we recognize that Ohio
eourtg "have consistently held that an aver^6 nt of outstanding indebtedness made in the
affidavit of a h' loan officer with personal knowledge of the deist®r's account is
sufficient to establish the amount due and owing on the note, unless the debtor refutes the
averred indebtedness with evidence that a different ouwc is owed.=' Natl. Cit,y Bank v.
?°^ 4B Holdings, Ltd., 6th Dist. Erie No. E-10-050, 2411-Ohia-3715, t 12. In Fazio's
affidavit she states that she has personally reviewed appellant's account, and that the
amount owed is as stated on the a hed account statement. The attached account
statement identifies that there is an outstanding unpaid principal balance of $174,435.26>
Appellant, although she loosely states that Taylor Bean misapplied or failed to apply
some payments, has failed to provide any evidence that she owes a different ainoust.
25.
we find that appefllee. has siuffciently demonstrated ih.e amount owed on the loan,
no genuine issue 6xists as .o this ount.
4. Sum'Mary
{¶ 51) Therefore,.having found that no genuine issue of material fact exists
whether appellee is the holder of the note, whether appellant is in default, the
satisfaction of the conditions precedent, or the amount due,.we hold that s ary
jud ent in favor of appelace was, apprQpriaie.
(152) Accordingly, appellant's first assd third assignments of ertor are not well-
taken.
C. Motion to Vacate
1153) As her fe ,azid final, assignment of error, appellant argues that the trial
court erred when it denied her motion to vacate the January 23, 2014 Jud ent.
M 54} First, appellant contends that the trial court lacked subject matter
isdiction over the case because appellee did not have standing to enforce the note and
mortgage. Thus, she concludes that the judgment should have been vacated. The Ohio
Supreme Court has recently addressed this issue and held that "court of common
pleas that has subjeetamatter jurisdiction over an action does not lose that j urisdiction
merely because a party to the action lacks standing." Bank of.4meraca, NIA v. Kuchta,
141 Ohio St.3d 75, 2014-Ohio-4275, 21 N.E.3d 1040, ¶ 17. Applying that rule here, any
;,Ilegged lack of standing on the part appellee would not cause the trial court to lose its
'ubjeet-thatter jurisdiction over the foreclosure action. ASee id. at ¶23 (`<Bank of
tb.
's alleged lack of stariding to initiate a foreelosure. action against the Kuehtas
have no effect on the subject-matter ji'irisdietion:.of:the Mediris. County Court of
Pleas over the foreclosure a.etion."). 'i'hereftare, appellant's argument that the
udginent should be vacated for this reason is without merit.
It 551 Altematively, appellant challenges the trial court's det inatidn that she
not provide any operative facts demonstrating her entitlement to relief under Civ.R.
B).2 Appellant contends that in reaching i.ts determination the court wrongly assumed
appellant had a burden to affirmatively 4emonstrate that appellee lacked standing,
wrongly zpored the kS Milestone Rbport^, the conflicting affidavits in the two
actions against appellant, and the documents pertaining to Taylor Bean's
of the mortgage during its b ptey.
flq 56}We review the denial of a Civ.R. 60(B) motion for an abuse of discretion.
v. Rajan,,33 Ohio St3d 75, 77, 514 N.E.2d 1122 (1987). An abuse of discretion
that the trial court's attitude was unreasonable, arbitcary, or unconscionable.
v. Blakemore, SOhio St.3d 21?, 219, 4543 N.E.2d 1140 (1983). .in order to
on aCiv.R. 60(B) motion, the movant must demonstrate that:
(1) the party has ameritarious defense or el ° to present if relief is
gran.ted, (2) the party is entitled to relief under one of the grounds stated in
Civ.R. 60(B)(1) through (5); and (3) the motion is made within a reasonable
Notably, in her reply in support of her motion to vacate, appellant speeifiea.lly states thater motion `6did not seek relief from judgment under Rule 60(B) but has directly attackedYe jud ent as void for lack of subject matter jurisdietion.g'
time, and, where the,groui.ds ofreliefare Civ.R. 64(B)(1), (2) or (3), not
more one year ^P^^r the judgment, order or prdceeding ^vas entered or
taken. G^".^.Awomatgc Elec., dnc. v, ARC Industries, Inc., 47 Ohio St.2d
146, 150-151, 351 NX.2d 113 (1976).
any of these three requirements is not met, the motion shoiald be overruled." Rose
Inc. v. Adams, 36 Ohio'St.3d 17, 20, 520 N.E;2d 564 (1988).
(¶ 57) Setting aside the fact that appellant has made no attempt to show that she is
to relief under one ofthe grounds stated in Civ.k: 60(B)(1) through (5), we fmd
appellant's stated ar ents do not demonstrate a meritorious defense. We have
deterrnined that appellee satisfied its burden to demonstrate its standing to initiate
foreclosure proceeding, and that the MERS Milestone.Report did not create a genuine
of material fact in that r^gard. Similarly, we have determined that appellant lacks
to challenge the assignment of mortgage from:Taylor Bean to appellee.
s remaining argument is that the Borgmann affidavit submitted on behalf of
Home Loans Servicing in the initial foreclosure action somehow conflicts with
azio's affidavit filed in this aetion. Appellant does not explain the conflict, and we fail
see it. On March 19, 2010, Bor ann stated that BAC Home Loans Servicing is "the
and holder of the note and mortgage." On August 27, 2012, Fazio stated that
the successor by merger to BAC Home Loans Servicing, has possession of the
Because both affidavits can be simultaneously true, we cannot say that the
are in eonfliot. Thus, this issue fails to create a meritorious defense. Therefore,
appellant has failed to denraonsftute a rn.eaitorious defense to the foreclosure
we hold that the trial court did n.ot abOse its discretion when. it denied ker rnotiors
vacate.
I¶ 58) Accordingly, appellant's fourth assi ent <®f error is not weil- en.
Ul. Conclusion
IJT 59} For the foregoing reasons, the jaxdgrment bf the Lucas County Couri of
Pleas is affmned. Appellan is ordered to pay tii^ costs of this appeal pursuant
App.R. 24.
Judgment aff°a^nzed.
A certified copy of this 'entry shall constitute the mandate purs t to App.R. 27.also 6th I3ist.Lde.App.R.. 4.
'fhis decisi®n ps subject to further 6diting by the Supreme ^ourt ofOhia's Reporter of Decisions. Parties interested in view"mg the final reported
version are advised to visit the Ohio Supreme Co 's" web site a.t:bttpmddwww.seonet.state.oh.uslrod/ne fl?soured=b.