STATE OF OHIO
IN THE COURT OF APPEALS
NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN
WELLS FARGO BANK NA
Appellee
v.
BRIAN HORN, et al.
Appellants
C.A. No. 12CA010230
APPEAL FROM JUDGMENT
ENTERED IN THE
COURT OF COMMON PLEAS
COUNTY OF LORAIN, OHIO
CASE No. 10CV167220
DECISION AND JOURNAL ENTRY
Dated: June 10, 2013
CARR, Judge.
{¶1} Appellant, Brian Horn, appeals the judgment of the Lorain County Court of
Common Pleas. This Court reverses and remands this matter to the trial court for the complaint
to be dismissed.
I.
{¶2} On November 21, 1993, Brian and Carol Horn executed a note for $49,323 in
favor of Norwest Mortgage, Inc., for the property located at 9800 Root Road in Columbia
Township, Ohio. The note was secured by an open-end mortgage.
{¶3} Wells Fargo filed the instant foreclosure action on April 19, 2010. The named
defendants in the complaint were Brian Horn, Carol Horn, Jane Doe, the unknown spouse of
Brian Horn, the Lorain County Treasurer, Huntington National Bank, and First Merit Bank. On
June 2, 2010, Brian Horn, acting pro se, filed a handwritten “Response to Complaint.” On July
21, 2010, Wells Fargo filed a motion for summary judgment. On September 2, 2010, Mr. Horn
filed a motion for leave to file an answer instanter in because he had retained counsel. On
September 16, 2010, a magistrate granted the motion for leave, and Mr. Horn filed his formal
answer to the complaint. In his answer, Mr. Horn claimed that Wells Fargo “may not be the real
party in interest and lacks standing to bring said claim against Defendant.” Subsequently, on
May 12, 2011, Wells Fargo filed an amended motion for summary judgment. On June 2, 2011,
Mr. Horn filed a brief in opposition to the amended motion for summary judgment.
{¶4} On June 24, 2011, the magistrate issued findings of fact and conclusions of law,
and determined that Wells Fargo was entitled to summary judgment on the note and mortgage.
On the same day, the trial court issued a journal entry adopting the magistrate’s findings and
granting summary judgment in favor of Wells Fargo.
{¶5} Mr. Horn filed a notice of appeal from the June 24, 2011 journal entry. On
August 11, 2011, the Court issued a journal entry dismissing the appeal on the basis that the trial
court had yet to issue a judgment of foreclosure.
{¶6} On August 26, 2011, Mr. Horn filed a motion in the trial court requesting that the
summary judgment order be vacated pursuant to Civ.R. 60(B). Wells Fargo filed a
memorandum in opposition to the motion on April 6, 2012. On April 27, 2012, the trial court
issued a journal entry denying Horn’s motion on the basis that he had not presented a meritorious
defense. The trial court also granted the decree of foreclosure, setting forth the priority of the
liens on the property.
{¶7} Mr. Horn filed a timely notice of appeal. On appeal, Mr. Horn raises four
assignments of error.
II.
ASSIGNMENT OF ERROR I
THE TRIAL COURT ERRED IN ALLOW[ING] MANIPULATED
DOCUMENTS SUBMITTED AS EVIDENCE.
ASSIGNMENT OF ERROR II
THE TRIAL COURT ERRED IN FINDING WELLS FARGO BANK MADE
REASONABLE EFFORTS TO ARRANGE A FACE-TO-FACE INTERVIEW
(CFR 203.604).
ASSIGNMENT OF ERROR III
THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT IN
WHICH JUDGMENT WAS NOT FINAL AND APPEALABLE.
ASSIGNMENT OF ERROR IV
WAS BRIAN HORN’S ATTORNEY, MR. MARK DANN, ACTING IN
CLIENT’S BEST INTEREST?
{¶8} Mr. Horn raises four assignments of error in which he argues that the trial court
erred in granting summary judgment in favor of Wells Fargo. We agree.
{¶9} “We note that [a] foreclosure requires a two[-]step process.” (Internal quotations
and citations omitted.) Natl. City Bank. v. Skipper, 9th Dist. No. 24772, 2009-Ohio-5940, ¶ 25.
“The prerequisites for a party seeking to foreclose a mortgage are execution and delivery of the
note and mortgage; valid recording of the mortgage; default; and establishing an amount due.”
(Internal quotations and citations omitted.) CitiMortgage, Inc. v. Firestone, 9th Dist. No. 25959,
2012–Ohio–2044, ¶ 11. “Once a court has determined that a default on an obligation secured by
a mortgage has occurred, it must then consider the equities of the situation in order to decide if
foreclosure is appropriate.” (Internal quotations and citations omitted.) Skipper at ¶ 25. As the
Ohio Supreme Court recently decided, before a court can consider this, the plaintiff must
establish that it has standing to proceed. See Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134
Ohio St.3d 13, 2012-Ohio-5017, ¶ 40. “It is well established that before an Ohio court can
consider the merits of a legal claim, the [party] seeking relief must establish standing to sue.”
State ex rel. Ohio Academy of Trial Lawyers v. Sheward, 86 Ohio St.3d 451, 469 (1999), citing
Ohio Contractors Assn. v. Bicking, 71 Ohio St.3d 318, 320 (1994).
{¶10} Civ. R. 17(A) states, in a pertinent part:
Every action shall be prosecuted in the name of the real party in interest. An
executor, administrator, guardian, bailee, trustee of an express trust, a party with
whom or in whose name a contract has been made for the benefit of another, or a
party authorized by statute may sue in his name as such representative without
joining with him the party for whose benefit the action is brought.
“‘In foreclosure actions, the real party in interest is the current holder of the note and mortgage.’”
U.S. Bank, N.A. v. Richards, 189 Ohio App.3d 276, 2010-Ohio-3981, ¶ 13 (9th Dist.), quoting
Everhome Mtge. Co. v. Rowland, 10th Dist. No. 07AP-615, 2008-Ohio-1282, ¶ 12. Civ.R. 17(A)
is not applicable “unless the plaintiff ha[s] standing to invoke the jurisdiction of the court in the
first place * * *.” Wells Fargo Bank, N.A. v. Jordan, 8th Dist. No. 91675, 2009-Ohio-1092, ¶
21, quoting Northland Ins. Co. v. Illuminating Co., 11th Dist. Nos. 2002-A-0058, 2002-A-0066,
2004-Ohio-1529, ¶ 17.
{¶11} The trial court decided that Wells Fargo had standing when it granted summary
judgment. In Schwartzwald, however, the Supreme Court held that because standing is required
to invoke the jurisdiction of the common pleas court, “standing is to be determined as of the
commencement of suit.” Schwartzwald at ¶ 24, quoting Lujan v. Defenders of Wildlife, 504 U.S.
555, 570-571 (1992). A party may not later rely on the Rules of Civil Procedure to cure a lack of
standing when it has failed to demonstrate that it had standing at the time the complaint was
filed. Schwartzwald at ¶ 37-38. The high court concluded that “[t]he lack of standing at the
commencement of a foreclosure action requires dismissal of the complaint[.]” Id. at ¶ 40.
{¶12} In this case, Wells Fargo filed its complaint on April 19, 2010. A review of the
complaint does not demonstrate that it had standing at the time it filed its foreclosure complaint.
In the caption, Wells Fargo identified itself as the “successor by merger to Wells Fargo Home
Mortgage, Inc. fka Norwest Mortgage, Inc.” However, while Wells Fargo attached several
documents to the complaint, including the note and mortgage, no documents evidencing a
merger or a name change were attached. The note and mortgage each identify the Horns as the
borrowers and Norwest Mortgage, Inc. as the lender.
{¶13} It follows that Wells Fargo lacked standing to bring the foreclosure action against
the Horns. While Wells Fargo later tried to demonstrate that a merger and name change had
occurred in the exhibits attached to its motion for summary judgment, it was required to
demonstrate that it had standing to invoke the jurisdiction at the time the complaint was filed,
and it failed to do so in the complaint and the documents attached thereto. Wells Fargo v.
Burrows, 9th Dist. No. 26326, 2012-Ohio-5995, ¶ 15. Therefore, the trial court erred in
concluding that Wells Fargo was entitled to judgment as a matter of law. Pursuant to the Ohio
Supreme Court’s decision in Schwartzwald, we are required to sustain Mr. Horn’s assignments
of error, reverse summary judgment, and order the trial court to dismiss the complaint without
prejudice.
III.
{¶14} Mr. Horn’s assignments of error are sustained. The judgment of the Lorain
County Court of Common Pleas is reversed and the cause remanded for further proceedings
consistent with this decision.
Judgment reversed,
and cause remanded.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Lorain, State of Ohio, to carry this judgment into execution. A certified copy of
this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellee.
DONNA J. CARR
FOR THE COURT
MOORE, P. J.
WHITMORE, J.
CONCUR.
APPEARANCES:
BRIAN HORN, pro se, Appellant.
SCOTT A. KING and NICHOLAS W. MYLES, Attorneys at Law, for Appellee
You all remember the “got ya” sign my rights away in cases of rape employment contract?
I still can’t believe how some in Congress chose signature over depth and breadth.
What a great job of legal reasoning done by this magistrate…
This should have taken the airwaves by storm instead of the signature…
When parties enter into a contract, they are “presumed or deemed to have contracted with reference to” applicable existing laws. 11 WILLISTON ON CONTRACTS § 30:19 (4th ed.). See also Resolution Trust Corp. v. Diamond, 45 F.3d 665, 673 (2d Cir.1995) (“When parties enter into a contract, they are presumed to accept all the rights and obligations imposed on their relationship by state (or federal) law.”); Bloomfield v. Bloomfield, 97 N.Y.2d 188, 193, 738 N.Y.S.2d 650, 764 N.E.2d 950 (2001) (“When evidence is lacking that both parties intended to violate the law, a contract . . . should be construed in favor of its legality.”); Rodgers v. Coler, 166 N.Y. 1, 9, 59 N.E. 716 (1901) (“If the law is valid, it governs the contract and the rights of the parties, whether actually incorporated into the writing or not, since all contracts are assumed to be made with a view to existing laws on the subject.”), quoted in Fata, 289 N.Y. at 406, 46 N.E.2d 339. “Under th[e] presumption of incorporation, valid applicable laws existing at the time of the making of the contract enter into and form a part of the contract as fully as if expressly incorporated in the contract” and become “implied terms of the contract, regardless of whether the agreement refers to the governing law.” WILLISTON § 30:19. See also Farmers’ & Merchants’ Bank of Monroe v. Fed. Reserve Bank of Richmond, 262 U.S. 649, 660, 43 S.Ct. 651, 67 L.Ed. 1157 (1923) (“Laws which subsist at the time and place of the making of a contract, and where it is to be performed, enter into and form a part of it, as fully as if they had been expressly referred to or incorporated in its terms.”); 2 Tudor City Place Assocs. v. 2 Tudor City Tenants Corp., 924 F.2d 1247, 1254 (2d Cir.1991) (“Laws and statutes in existence at a time a contract is executed are considered a part of the contract, as though they were expressly incorporated therein.”); Ronnen v. Ajax Elec. Motor Corp., 88 N.Y.2d 582, 588, 648 N.Y.S.2d 422, 671 N.E.2d 534 (1996) (“We have held that the law in force at the time [an] agreement is entered becomes as much a part of the agreement as though it were expressed or referred to therein, for it is presumed that the parties had such law in contemplation when the contract was made and the contract will be construed in the light of such law.”)