IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
SANDUSKY COUNTY
U.S. Bank, N.A., as Trustee
Appellee
v.
Ronald W. McGinn, et al.
Appellants
Decided: January 4, 2013
* * * * *
David A. Wallace and Joel E. Sechler, for appellee.
Daniel L. McGookey, Kathryn M. Eyster and Lauren McGookey,
for appellants.
* * * * *
YARBROUGH, J.
I. Introduction
{¶ 1} This is an appeal from the judgment of the Sandusky County Court of
Common Pleas, granting summary judgment in favor of appellee, U.S. Bank, N.A. (“U.S.
Bank”). Because appellants demonstrated the existence of a genuine issue of material
fact, we reverse.
A. Facts and Procedural Background
{¶ 2} On June 22, 2005, appellants, Ronald and Tina McGinn, purchased a home
in Clyde, Ohio. In order to do so, appellants received a loan from Intervale Mortgage
Corporation. The note evidencing the loan was executed solely by Ronald, but the
mortgage securing the debt was executed by both Ronald and Tina.
{¶ 3} In March 2007, Tina lost her job. Consequently, appellants were unable to
make the required monthly payments in April, May, and June 2007. Instead, appellants
attempted to secure a loan modification through Homecoming Financial, the servicer of
the loan. In addition, Ronald applied for, and was awarded, a loan through his retirement
plan in the amount of $5,251.02, which he paid to Homecoming Financial on July 2,
2007. Assuming the payment would bring the loan current through September,
appellants did not make another monthly payment until October 2007.
{¶ 4} In December 2007, appellants began a trial loan modification. The trial loan
modification required appellants to make monthly payments of $1,063.10 on December
20, 2007, January 20, 2008, and February 20, 2008. Although appellants ultimately made
the required payments, they were late in making those payments each month.
{¶ 5} Despite the payments made pursuant to the trial loan modification,
appellants received a notice of foreclosure sometime in March or April 2008. In addition,
appellants were notified that their loan modification was denied.
{¶ 6} U.S. Bank filed its complaint in foreclosure on May 30, 2008. In its
complaint, U.S. Bank alleges that it is the holder and owner of the note and mortgage.
Copies of the note and mortgage are attached to the complaint. The copy of the note that
is attached to the complaint contains two endorsements. The first endorsement is from
Intervale to Decision One Mortgage Company. The second endorsement is a blank
endorsement from Decision One.
{¶ 7} The copy of the mortgage that is attached to the complaint names Intervale
as the mortgagee. U.S. Bank did not attach an assignment of the mortgage to the
complaint.
{¶ 8} On December 6, 2011, U.S. Bank filed its motion for summary judgment.
U.S. Bank attached a copy of the note to the motion, in which the blank endorsement was
signed over to Residential Funding Corporation, who then executed a third endorsement,
endorsing the note over to U.S. Bank. In addition, U.S. Bank attached an assignment of
the mortgage to its motion for summary judgment. The attached assignment was
executed on June 12, 2008, twelve days after the complaint was filed.
{¶ 9} On January 5, 2012, the trial court granted U.S. Bank’s motion for summary
judgment, concluding that U.S. Bank’s evidence in the form of affidavits, deposition
testimony, and exhibits, demonstrated that no genuine issues of material fact existed. It is
from this judgment that appellants timely appeal.
B. Assignment of Error
{¶ 10} Appellants assign the following error for our review:
The trial court erred in granting U.S. Bank’s Motion for Summary
Judgment and in holding U.S. Bank has standing and is entitled to enforce
the Note and Mortgage.
II. Standard of Review
{¶ 11} We review summary judgment rulings de novo, applying the same standard
as the trial court. Lorain Natl. Bank v. Saratoga Apts., 61 Ohio App.3d 127, 129, 572
N.E.2d 198 (9th Dist.1989); Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671
N.E.2d 241 (1996). Under Civ.R. 56(C), summary judgment is appropriate where (1) no
genuine issue as to any material fact exists; (2) the moving party is entitled to judgment
as a matter of law; and (3) reasonable minds can come to but one conclusion, and
viewing the evidence most strongly in favor of the nonmoving party, that conclusion is
adverse to the nonmoving party. Harless v. Willis Day Warehousing Co., 54 Ohio St.2d
64, 66, 375 N.E.2d 46 (1978).
{¶ 12} On a motion for summary judgment, the moving party has the burden of
demonstrating that no genuine issue of material fact exists. Dresher v. Burt, 75 Ohio
St.3d 280, 292, 662 N.E.2d 264 (1996). The moving party must point to some evidence
in the record of the type listed in Civ.R. 56(C). Id. at 292-293. Pursuant to Civ.R. 56(C),
the evidence to be considered is limited to the “pleadings, depositions, answers to
interrogatories, written admissions, affidavits, transcripts of evidence, and written
stipulations of fact, if any, timely filed in the action * * *.” Nevertheless, the trial court
may consider a type of document not expressly mentioned in Civ.R. 56(C) if such
document is accompanied by a personal certification that it is genuine or is incorporated
by reference in a properly framed affidavit pursuant to Civ.R. 56(E). See Bowmer v.
Dettelbach, 109 Ohio App.3d 680, 684, 672 N.E.2d 1081 (6th Dist.1996). The burden
then shifts to the nonmoving party to provide evidence showing that a genuine issue of
material fact does exist. Dresher at 293; Civ.R. 56(E).
{¶ 13} To properly support a motion for summary judgment in a foreclosure
action, a plaintiff must present evidentiary-quality materials showing: (1) The movant is
the holder of the note and mortgage, or is a party entitled to enforce the instrument; (2) if
the mover is not the original mortgagee, the chain of assignments and transfers; (3) the
mortgager is in default; (4) all conditions precedent have been met; and (5) the amount of
principal and interest due. Wachovia Bank v. Jackson, 5th Dist. No. 2010-CA-00291,
2011-Ohio-3202, ¶ 40-45.
III. Analysis
{¶ 14} In their sole assignment of error, appellants argue that the trial court erred
in granting summary judgment since U.S. Bank lacked standing. Specifically, appellants
argue that U.S. Bank “was not and is not the owner of the Note and Mortgage and did not
establish that it was entitled to act on behalf of the owner.” Further, appellants assert that
U.S. Bank failed to demonstrate that it was the holder of the note at the time the
complaint was filed.
{¶ 15} Ohio’s version of the Uniform Commercial Code (“U.C.C.”) governs who
may enforce a note. R.C. 1301.01 et seq. Article 3 of the U.C.C. governs the creation,
transfer and enforceability of negotiable instruments, including promissory notes secured
by mortgages on real estate. Fed. Land Bank of Louisville v. Taggart, 31 Ohio St.3d 8,
10, 508 N.E.2d 152 (1987).
{¶ 16} The threshold requirement of standing depends upon whether the plaintiff
has a real interest in the subject matter of the action. State ex rel. Dallman v. Court of
Common Pleas, Franklin Cty., 35 Ohio St.2d 176, 298 N.E.2d 515 (1973), syllabus. In a
foreclosure action, the holder of the note and mortgage is the real party in interest.
Deutsche Bank Natl. Trust Co. v. Greene, 6th Dist. No. E-10-006, 2011-Ohio-1976, ¶ 13.
See also R.C. 1303.31 (the holder of an instrument is a “person entitled to enforce” the
instrument).
{¶ 17} A holder of the note and mortgage “[is] not additionally required to plead
that it [is] the ‘owner’ of the note and mortgage in its complaint.” U.S. Bank, N.A. v.
Coffey, 6th Dist. No. E-11-026, 2012-Ohio-721, ¶ 18. Therefore, the standing issue
centers on whether the plaintiff was the holder of the note and mortgage on the date the
complaint was filed.
{¶ 18} R.C. 1301.201(a) defines a holder of a negotiable instrument as “[t]he
person in possession of a negotiable instrument that is payable either to bearer or to an
identified person that is the person in possession.”
{¶ 19} In U.S. Bank’s memorandum in support of its motion for summary
judgment, U.S. Bank stated that it was the holder of the note and mortgage on the date the
complaint was filed. To support this statement, U.S. Bank attached an affidavit of Peter
Knapp, a senior litigation analyst for GMAC Mortgage, LLC, the servicer of appellants’
loan. In his affidavit, Knapp stated that he had reviewed the note and the mortgage.
Further, he stated that the note and mortgage attached to the motion for summary
judgment are true and accurate copies of the original note and mortgage. In addition,
Knapp stated that “[t]he original Note and Mortgage * * * were in the possession of U.S.
Bank * * * at the time the foreclosure complaint in this case was filed.”
{¶ 20} Nonetheless, appellants argue that a genuine issue of material fact exists
regarding U.S. Bank’s standing. First, appellants argue that “[t]he assignment of the
mortgage does not support U.S. Bank’s contention that it is the holder.” Pursuant to the
Ohio Supreme Court’s recent holding in Fed. Home Loan Mtge. Corp. v. Schwartzwald,
— N.E.2d —-, 2012-Ohio-5017, whether a party has standing is a question that must be
resolved by looking at the circumstances as of the date the complaint was filed. Id. at
¶ 24-25. Obtaining an interest in the note and mortgage after the commencement of the
action cannot cure a lack of standing. Id. at ¶ 26. Here, the assignment of the mortgage
was not executed until after the complaint was filed. Accordingly, it cannot form the
basis for U.S. Bank’s standing.
{¶ 21} While it is true that the assignment of the mortgage lends no support to
U.S. Bank’s standing argument, the fact that the mortgage was assigned after the filing of
the complaint is not necessarily fatal to U.S. Bank’s foreclosure action. In Aurora Loan
Services, LLC v. Louis, 6th Dist. No. L-10-1289, 2012-Ohio-384, we stated that “a
transfer of an obligation secured by a mortgage also acts as an equitable assignment of
the mortgage.” Id. at ¶ 34, citing Kuck v. Sommers, 59 Ohio Law Abs. 400, 100 N.E.2d
68, 75 (3d Dist.1950). Therefore, U.S. Bank need not prove that the mortgage was
assigned prior to its filing of the complaint. Rather, U.S. Bank can establish its standing
by demonstrating that the note was transferred prior to the date the complaint was filed.
{¶ 22} In the alternative, appellants make another argument, which draws our
attention to the inconsistency between the copy of the note that was attached to the
complaint and the copy of the note that was attached to U.S. Bank’s motion for summary
judgment. Appellants argued in the trial court, as they do here, that the inconsistency
creates a genuine issue of material fact. Specifically, appellants contend that the
additional special endorsement on the second copy of the note calls into question whether
U.S. Bank was in possession of the note at the time the complaint was filed, since the
copy it attached to the complaint did not include the additional special endorsement.
{¶ 23} In response, U.S. Bank points to a second affidavit made by Knapp, which
U.S. Bank attached to its reply brief. In Knapp’s second affidavit, he explains the reason
for the difference between the two copies of the note, and states:
Based on the circumstances of this case and my personal knowledge of how
foreclosure counsel obtain copies of notes, earlier versions of the notes, not
identical to the actual original Note held in the custodial vault, are in
GMACM’s computer system and are sometime[s] printed out and
inadvertently attached to foreclosure complaints. I believe that is what
happened with the copy of the Note which was attached to the Complaint in
this case, and is the reason the Note attached to the Complaint was not a
copy of the actual original Note.
{¶ 24} U.S. Bank argues that Knapp’s second affidavit resolves any issue
concerning the difference in the original note and the copy that was attached to the
complaint. However, the language of that affidavit is indecisive. Rather than providing a
definitive explanation for the additional endorsements on the original note, Knapp states
that he believes that the wrong copy of the complaint was inadvertently attached to the
foreclosure complaint. However, Civ.R. 56(E) requires personal knowledge. Indeed,
believing something to be true is different that knowing something is true.
{¶ 25} While it may be true that U.S. Bank met its initial burden of demonstrating
that no genuine issue of material fact existed, appellants responded by showing that a
genuine issue of material fact did exist by pointing to the inconsistency in the two notes.
The difference in the two notes calls into question whether U.S. Bank actually possessed
the original note prior to filing the complaint. If U.S. Bank did not, it was not a holder
and, thus, lacked standing to bring the foreclosure action in the first place. Construing
the evidence in a light most favorable to appellants, we conclude that the trial court erred
when it granted U.S. Bank’s motion for summary judgment. Accordingly, appellants’
assignment of error is well-taken.
IV. Conclusion
{¶ 26} Having found appellants’ assignment of error well-taken, we hereby
reverse the judgment of the Sandusky County Court of Common Pleas, and remand this
matter for further proceedings consistent with this decision. Costs are assessed to U.S.
Bank in accordance with App.R. 24.
Judgment reversed.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. See
also 6th Dist.Loc.App.R. 4.
Mark L. Pietrykowski, J.
JUDGE
Arlene Singer, P.J.
Stephen A. Yarbrough, J. JUDGE
CONCUR.
