Bank of NY Mellon Trust Co. v. Shaffer | Ohio Appeals Court - BONY failed to establish it held either the note or mortgage as of the date it filed the complaint, it lacked standing...Assignment recorded 2-Weeks after complaint

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Bank of NY Mellon Trust Co. v. Shaffer | Ohio Appeals Court – BONY failed to establish it held either the note or mortgage as of the date it filed the complaint, it lacked standing…Assignment recorded 2-Weeks after complaint

Bank of NY Mellon Trust Co. v. Shaffer | Ohio Appeals Court – BONY failed to establish it held either the note or mortgage as of the date it filed the complaint, it lacked standing…Assignment recorded 2-Weeks after complaint

IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
GEAUGA COUNTY, OHIO

THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A. f.k.a. THE BANK
OF NEW YORK TRUST COMPANY, N.A.,
AS SUCCESSOR IN INTEREST TO
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, f.k.a. JPMORGAN
CHASE BANK, AS TRUSTEE-SURF-BC2,
Plaintiff-Appellee,

– vs –

THERESA A. SHAFFER a.k.a.
THERESA MCFAUL, et al.,
Defendant-Appellant,

GEAUGA COUNTY TREASURER, et al.,
Defendants-Appellees.

Civil Appeal from the Geauga County Court of Common Pleas, Case No. 09F000648.

Judgment: Reversed and remanded.

CYNTHIA WESTCOTT RICE, J.,

{¶1} Appellant, Theresa A. Shaffer, appeals the default judgment of foreclosure
entered in favor of Appellee, The Bank of New York Mellon Trust Company, N.A. (“New
York Mellon”), by the Geauga County Court of Common Pleas. At issue is whether New
York Mellon’s lack of standing when it filed this action could be cured by the assignment
of the mortgage prior to the entry of final judgment. For the reasons that follow, the trial
court’s judgment is reversed, and this matter is remanded for the trial court to dismiss
the complaint without prejudice.

{¶2} On June 8, 2009, New York Mellon filed a complaint in foreclosure in the
Geauga County Court of Common Pleas against appellant.

{¶3} New York Mellon alleged it was “the holder of a note, a copy of which is
unavailable at this time.” New York Mellon further alleged that the note and the
mortgage securing the note were in default. The mortgage attached to the complaint
identifies “Wilmington Finance” as the lender. That mortgage was recorded on January
21, 2004.

{¶4} On September 11, 2009, New York Mellon filed an affidavit in which it
stated that the principal balance owed by appellant was $178,505.91; “[t]he Creditor
does hold the Debtor[’]s note by assignment;” and “[a]n assignment of mortgage was
recorded with [the] Geauga County Recorder on June 22, 2009.” As noted above, New
York Mellon filed its complaint two weeks earlier on June 8, 2009.

{¶5} Also, on September 11, 2009, New York Mellon filed a motion for default
judgment against appellant.

{¶6} On December 9, 2009, appellant filed a motion for leave to plead, which
the trial court granted until January 4, 2010.

{¶7} On January 5, 2010, appellant filed a motion for extension of time to
respond to the complaint, which the trial court granted until February 8, 2010.

{¶8} On February 8, 2010, appellant filed another motion for extension of time
to respond to the complaint, which the trial court denied.

{¶9} On February 25, 2010, the trial court entered a default judgment in
foreclosure. The court found appellant was “in default of * * * Answer;” “that the
allegations contained in the Complaint are true;” and “that the conditions of [the]
Mortgage have been broken and plaintiff is entitled to have the equity of redemption of
the defendant-titleholders foreclosed.”

{¶10} Later that same date, appellant, appearing pro se, filed her answer.

{¶11} On March 2, 2010, appellant filed a “motion to vacate order for sale and
withdraw property from sale” in which she requested mediation “to prevent foreclosure
sale.”

{¶12} On March 19, 2010, the trial court ordered the case stayed and the parties
to attend mediation.

{¶13} On July 9, 2010, appellant filed a motion to dismiss on the grounds that
New York Mellon did not have standing to file the action. She also asked that the
mediation scheduled for that day (July 9) be cancelled.

{¶14} On July 15, 2010, the trial court denied the motion to dismiss.

{¶15} On September 2, 2010, appellant filed a motion for summary judgment.
She argued she was entitled to judgment because New York Mellon “has no legal title to
the mortgage and failed to prove ownership of the mortgage.”

{¶16} On September 13, 2010, the trial court entered an order vacating the
mediation stay, noting that such efforts were unsuccessful.

{¶17} On October 28, 2010, the trial court denied appellant’s motion for
summary judgment.

{¶18} On November 22, 2010, appellant filed another motion to dismiss based
on New York Mellon’s alleged lack of standing.

{¶19} On December 7, 2010, the trial court denied appellant’s November 22,
2010 motion to dismiss.

{¶20} On September 26, 2011, appellant, now represented by counsel, filed a
motion for relief from judgment, seeking to have the default judgment in foreclosure
vacated. Again, appellant argued that New York Mellon lacked standing to invoke the
trial court’s jurisdiction. New York Mellon did not attach or reference any evidence
showing it had standing when it filed this action. Instead, New York Mellon argued that
standing is not necessary to invoke the trial court’s subject-matter jurisdiction and that
appellant waived any challenge to standing by not raising it within the time limits
specified in Civ.R. 60(B).

{¶21} On November 29, 2011, the trial court entered judgment denying
appellant’s motion for relief from judgment. The court found that the motion was filed
over 18 months after the default judgment was entered and that appellant “has offered
no reason why the motion was filed so long after the entry of judgment.” The court
continued: “Even had Ms. Shaffer filed her Motion for Relief from Judgment within a
reasonable time, she has not demonstrated entitlement to such relief. Her motion offers
no explanation as to why she failed to file an answer or responsive pleading within the
time provided by the Rules of Civil Procedure and the extensions granted by the Court.”

{¶22} Appellant appealed the trial court’s default judgment to this court.
Appellant argued that New York Mellon lacked standing and failed to vest the trial court
with subject-matter jurisdiction to enter its default judgment. Further, appellant argued
that the trial court erred in denying her motion for relief from judgment. In Bank of New
York Mellon Trust Co., N.A. v. Shaffer, 11th Dist. Geauga No. 2011-G-3051, 2012-Ohio-
3638, this court affirmed the trial court’s judgment, holding that there was no defect in
New York Mellon’s standing and that appellant failed to show entitlement to relief from
judgment under Civ.R. 60(B).

{¶23} Appellant appealed this court’s decision to the Supreme Court of Ohio. In
Bank of New York Mellon Trust Co., N.A. v. Shaffer, 134 Ohio St.3d 1435, 2013-Ohio-
161, the Supreme Court of Ohio accepted jurisdiction of this case and remanded the
matter to this court for application of the Supreme Court’s recent decision in Fed. Home
Loan Mortg. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017.

{¶24} In Schwartzwald, the Supreme Court held that standing is required to
present a justiciable controversy and is a jurisdictional requirement. Id. at ¶21-22. The
Court held that, because standing is required to invoke the trial court’s jurisdiction,
standing is determined as of the filing of the complaint. Id. at ¶24. Further, the Court
held that a mortgage holder cannot rely on events occurring after the complaint is filed
to establish standing. Id. at ¶26. Thus, the plaintiff cannot cure its lack of standing by
obtaining an interest in the subject of the litigation after the action is filed. Id. at ¶36.
Further, because standing is jurisdictional, it can never be waived and may be
challenged at any time. See Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, ¶11.
Finally, the Court in Schwartzwald held that when the evidence demonstrates the
mortgage lender lacked standing when the foreclosure action was filed, the action must
be dismissed without prejudice. Id. at ¶40. This court followed the Supreme Court’s
holding in Schwartzwald in Fed. Home Loan Mortg. Corp. v. Rufo, 11th Dist. Ashtabula
No. 2012-A-0011, 2012-Ohio-5930.

{¶25} This court in Rufo held that, pursuant to Schwartzwald, courts of common
pleas have subject-matter jurisdiction over justiciable matters and that standing to sue is
required to make a justiciable case. Rufo at ¶28. Thus, without standing, a case is not
justiciable and the court lacks subject-matter jurisdiction. Id. When the trial court lacks
subject-matter jurisdiction, its final judgment is void. Id. at ¶15.

{¶26} Applying the foregoing jurisprudence to this case, while New York Mellon
filed its complaint on June 8, 2009, the record does not demonstrate that as of that date
it held the note or mortgage. The mortgage attached to the complaint shows that
Wilmington Finance, not New York Mellon, was the holder of the mortgage. Further, the
affidavit filed by New York Mellon demonstrates that the assignment of the mortgage
was recorded on June 22, 2009, two weeks after the complaint was filed. Thus, there is
no evidence that New York Mellon held the mortgage on the date the complaint was
filed.

{¶27} Further, while the complaint alleges that New York Mellon is “the holder of
a note,” New York Mellon did not attach a copy of the note to the complaint, as required
by Civ.R. 10. Instead, it alleged a copy of the note was “unavailable at this time” without
offering any reason for its unavailability. Thereafter, New York Mellon never filed a copy
of the note. New York Mellon’s allegation in the complaint that it holds a note is
conclusory without any detail concerning when New York Mellon obtained the note.
Likewise, while New York Mellon stated in its affidavit that it holds the note by
assignment, it did not state when or by whom the note was assigned to it. Thus, there
is no evidence in the record that New York Mellon held the note on the date it filed the
complaint.

{¶28} Because New York Mellon failed to establish it held either the note or
mortgage as of the date it filed the complaint, it lacked standing. As a result, this case
is not justiciable; the trial court lacked subject-matter jurisdiction to enter its judgment of
foreclosure; its judgment was void; and the court’s lack of subject-matter jurisdiction
was subject to challenge at any time.

{¶29} Further, the fact that Shaffer was in default of an answer does not mean
she admitted New York Mellon held the note on the date it filed the complaint, thus
conferring subject-matter jurisdiction on the court. As noted above, the allegation in the
complaint that New York Mellon holds a note is merely conclusory, and does not include
any detail as to when or how it obtained the note. In any event, it is well settled that
“[p]arties may not, by stipulation or agreement, confer subject-matter jurisdiction on a
court, where subject-matter jurisdiction is otherwise lacking.” Fox v. Eaton Corp., 48
Ohio St.2d 236, 238 (1976), overruled on other grounds by Manning v. Ohio State
Library Bd., 62 Ohio St.3d 24, 29 (1991). Further, this court has held that the lack of
subject-matter jurisdiction can be raised at any stage of the proceedings and can be
raised for the first time on appeal. Smith v. Dietelbach, 11th Dist. Trumbull No. 2011-T-
0007, 2011-Ohio-4308, ¶14.

{¶30} While this court in Self Help Ventures Fund v. Jones, 11th Dist. Ashtabula
No. 2012-A-0014, 2013-Ohio-868, held that the assignment of a mortgage is sufficient
to transfer a contemporaneous note, id. at ¶39, this court in Jones held that for standing
to exist, the mortgage or note must have been assigned to the mortgagee-plaintiff prior
to the filing of the complaint. Id. at ¶26. Because the only evidence offered by New
York Mellon in its affidavit regarding the mortgage assignment was that it was recorded
two weeks after the complaint was filed, the mortgage assignment was insufficient to
confer standing on New York Mellon or to vest the trial court with subject-matter
jurisdiction.

{¶31} Further, since the trial court lacked subject-matter jurisdiction and its
default judgment was therefore void, Shaffer was not required to comply with the time
requirements of Civ.R. 60(B) in order to be entitled to an order vacating the judgment.
A court’s authority to vacate a void judgment is not derived from the Rules of Civil
Procedure, but rather is an inherent power possessed by courts. Hoffman v. New Life
Fitness Centers, Inc. 116 Ohio App.3d 737, 739 (3d Dist.1996), appeal not allowed by
Supreme Court of Ohio at 78 Ohio St.3d 1464 (1997). Further, a judgment rendered by
a court lacking subject matter jurisdiction is void ab initio, and may be vacated by virtue
of the court’s inherent power independent of the grounds for vacation of judgments set
forth in Civ.R. 60(B). Falk v. Wachs, 116 Ohio App.3d 716, 721 (9th Dist.1996). Thus,
a motion to vacate a void judgment need not comply with the requirements of Civ.R.
60(B). Id.

{¶32} We note that, prior to appellant’s motion for relief from judgment, she
repeatedly brought to the trial court’s attention New York Mellon’s lack of standing. She
asserted the issue in her answer, filed February 25, 2010; in her motion to dismiss, filed
July 9, 2010; in her second motion to dismiss, filed November 22, 2010; and in her
motion for summary judgment, filed September 2, 2010. While Shaffer’s answer was
out of rule by 13 days, thereafter, she diligently attempted to bring the issue of New
York Mellon’s lack of standing to the trial court’s attention.

{¶33} Whether a trial court has subject-matter jurisdiction is a question of law
that we review de novo. Dietelbach, supra. Since the trial court lacked subject-matter
jurisdiction in entering default judgment, the court erred in denying appellant’s motion to
vacate the judgment. Further, since appellant was not required to comply with Civ.R. 60
in her efforts to vacate the court’s void judgment, the court erred in finding that, because
she did not comply with the time requirement of Civ.R. 60(B), she was not entitled to
relief from judgment.

{¶34} For the reasons stated in this opinion, it is the judgment and order of this
court that the judgment of the Geauga County Court of Common Pleas is reversed, and
this matter is remanded for the trial court to dismiss this action without prejudice.

[…]

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