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Ohio Appeal CT Reversal “AFFIDAVIT FAIL” CitiMortgage v. ELIA

Ohio Appeal CT Reversal “AFFIDAVIT FAIL” CitiMortgage v. ELIA


CITIMORTGAGE, INC.

v.

ZIAD F. ELIA, et al.

Excerpt:

{¶8} In support of its motion for summary judgment, CitiMortgage relied on the affidavit of Aaron Menne, who identified himself as its vice president. Menne averred that he had custody of and familiarity with the “records of the payments on the account of Ziad F. Elia.” Menne further averred that the September 1, 2008 payment was the last one received on the account and, due to a default thereafter, “[CitiMortgage] *** elected to call the entire balance of
said account due and payable, in accordance with the terms of the note and mortgage.” The affidavit then noted the amount due and owing on the loan and the applicable interest rate. CitiMortgage did not attach any documents to Menne’s affidavit or incorporate any documents by reference through his affidavit. The affidavit was the only item appended to CitiMortgage’s motion. The copies of the note and mortgage upon which CitiMortgage brought suit were filed with the complaint.

[…]

Personal Knowledge

{¶11} The Elias argue that CitiMortgage’s affiant, Menne, could not have personal knowledge of the truth of the statements set forth in his affidavit because: (1) CitiMortgage was not even assigned the mortgage until after the alleged default occurred; and (2) Menne’s affiliation with CitiMortgage was in question, as he claimed to be a vice president of both CitiMortgage and MERS “at virtually the same time.

[ipaper docId=56435974 access_key=key-2hawra9rxvn0j7j2qn1v height=600 width=600 /]

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In RE SHAW | Ohio BK Court Grants Debtor Summary Judgment, Awards $71,539.46 Against Green Tree

In RE SHAW | Ohio BK Court Grants Debtor Summary Judgment, Awards $71,539.46 Against Green Tree


In re: Richard E. and Mary Shaw, Chapter 7, Debtor(s).
Eric W. Goering, Trustee, Plaintiff,
v.
Green Tree Financial Services Corp. et al., Defendants.

Case No. 09-10277, Adv No. 10-1020.

United States Bankruptcy Court, S.D. Ohio, Western Division.


May 2, 2011.

John A. Schuh, Esq., Adam M. Schwartz, Esq., David Demers, Esq., David H. Yunghans, Esq., for Debtors.

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT

BURTON PERLMAN, Bankruptcy Judge

In this adversary proceeding, arising in a chapter 7 bankruptcy case, Plaintiff Trustee seeks to avoid a first mortgage lien held by Green Tree Financial Services Corp. (“Green Tree”.)

Now before the Court is a Motion for Summary Judgment brought by Plaintiff, and a Cross Motion by Defendant Green Tree. Plaintiff’s Motion is supported by the Stipulation of Facts (Doc. 35), Plaintiff’s affidavit, and the claims register contained in Appendix No. 4. Green Tree’s cross motion also looks to the Stipulation of Facts and the Entry Confirming Sale and Ordering Deed and Distribution, entered by the Brown County Court of Common Pleas of Ohio with attachments, including a copy of the subject mortgage. The issues before the Court are 1) whether a certificate of acknowledgment which fails to recite the grantor’s name renders the mortgage avoidable; 2) whether the establishment of lis pendens within the 90-day preference period provides constructive notice of the mortgage to the Trustee; and 3) the effect of the sale of the property via the foreclosure process to Green Tree and Green Tree’s subsequent sale of the property to a third party.

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and the general order of reference entered in this district. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(K), (F) and (O).

Motions for summary judgment are governed by F.R.Civ.P. 56 which is incorporated into bankruptcy practice by F.R.B.P. 7056. That rule provides in part that a motion for summary judgment is to be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The moving party bears the initial burden of showing that there is no issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-324 (1986). The nonmoving party, however, bears the ultimate burden of showing that a genuine issue of material fact exists. In doing so, the nonmoving party cannot rest on its pleadings, but must, in response, offer some evidence which demonstrates a genuine issue of material fact for trial. Id.

FACTS

The material facts are not in dispute. On January 13, 1999, Debtor Richard E. Shaw granted a mortgage on the subject property, 1719 Kress Road, Mt. Orab, Ohio, in favor of Green Tree. The certificate of acknowledgment on the mortgage is blank as to the grantor’s name. On December 9, 2008, Green Tree initiated a foreclosure action in state court on the property.

On January 21, 2009, the Debtor filed his bankruptcy petition. Green Tree then filed its Motion for Relief From Stay. On February 27, 2009, the clerk entered a default order granting Green Tree’s Motion for Relief From Stay. Green Tree did not seek an abandonment from the Trustee and the Trustee did not abandon the property[1] The Trustee was never added as a party to the state court foreclosure action.

On April 17, 2009, a judgment entry and decree in foreclosure was entered in the state court action. The property was appraised by the sheriff for $85,000.00. At the July 13, 2009 sheriff’s sale, Green Tree was the highest bidder, with a credit bid of $56,667.00. The foreclosure sale was confirmed on August 25, 2009. Soon thereafter, Green Tree sold the property to Jared Smith for $79,900.00. Green Tree received net proceeds of $71,539.46 from the subsequent sale of the property.

DISCUSSION

A. Mortgage Validity.

Included in the record before the Court is a copy of the mortgage document. The mortgage concludes with a signature by Debtor Richard E. Shaw and the names of two witnesses. Following this is an Acknowledgment, the printed form stating: “This instrument was acknowledged before me this”, followed by the date. The second line contains the word “by” followed by a blank. In the blank, the notary has stamped his name. The Acknowledgment concludes with the signature of the notary. Nowhere in the Acknowledgment does the name of either debtor appear.

The law is well-settled in this district that the failure to identify the grantor as an acknowledging party in the acknowledgment clause renders the mortgage defective and, therefore, avoidable under 11 U.S.C. § 544(a)(3). In re Nolan, 383 B.R. 391 (B.A.P. 6th Cir. 2008); Countrywide Home Loans, Inc. v. Spaeth, Case No. 3-10-CV-120 (S.D. Ohio entered July 8, 2010)(Rose, J.)(affirming In re Highland, Adv. No. 09-3006)(Bankr. S.D. Ohio entered January 27, 2010)(Walter, J.)); In re Burns, 2010 WL 3081338 (Bankr. S.D. Ohio 2010)(Humphrey, J.); In re Sauer, 417 B.R. 523 (Bankr. S.D. Ohio 2009)(Hoffman, J.). Therefore, the mortgage here in question is fatally defective, and is avoidable under 11 U.S.C. § 544(a)(3).

B. Lis Pendens.

Normally, the establishment of lis pendens prior to the petition filing date imparts constructive knowledge of a defective mortgage to the Trustee, therefore protecting a mortgage from avoidance under 11 U.S.C. § 544(a)(3). In re Periandri, 266 B.R. 651 (B.A.P. 6th Cir. 2001). However, if the establishment of lis pendens occurs within the 90-day preference period, then the mortgage may be avoided as a preferential transfer, provided the Trustee satisfies his burden of proof as to all elements of 11 U.S.C. § 547(b). In re Gruseck & Son, Inc., 385 B.R. 799 at *9 (B.A.P. 6th Cir. 2008). In the present case, the Plaintiff has established all six elements of a preferential transfer under § 547(b). Green Tree does not contest this position. Therefore, lis pendens is avoided and the defense fails.

C. Damages.

Pursuant to 11 U.S.C. § 550, to the extent that a transfer is avoided under either § 544 or § 547, the trustee may recover, for the benefit of the estate, either the property transferred or the value of the property from the initial transferee. In the present case, because the property was subsequently conveyed by the initial transferee, Green Tree, to a third party, Plaintiff is seeking to recover the value of the transferred property from Green Tree rather than the property itself. Plaintiff contends that the best measure of the value of the property is the sale price of the property from Green Tree to the third party purchaser. We agree. That value here is $71,539.46.

D. Remaining Defenses.

Green Tree contends that it no longer has any interest in the subject property. This may be true, but it is not a defense to an avoidance action. See 11 U.S.C. § 550 (trustee may recover the property or the value of the property). Citing In re Spaude, 112 B.R. 304 (Bankr. D. Minn. 1990), Green Tree contends that as a part of the state court foreclosure process, the state court “ordered” Green Tree to release its mortgage, and therefore, that there is no mortgage for Plaintiff to avoid. In re Spaude is distinguishable. In Spaude, the debtor wished to strip down a wholly unsecured second mortgage. The court held that because the property had been purchased by the second mortgage holder at the sheriff’s sale and the second mortgage holder was now the owner of the property, the debtor had lost his right to strip the mortgage under 11 U.S.C. § 506(d). In contrast to the instant action, Spaude did not involve an avoidance action by Trustee.

Green Tree also contends that the estate has no interest in the property. Specifically, Green Tree contends that since there were no proceeds to be distributed from the foreclosure sale, the property was effectively abandoned by the Plaintiff. Green Tree cites numerous cases for the proposition that if a foreclosure sale results in excess proceeds, the excess proceeds normally belong to the estate. While Green Tree has correctly cited the law, the cases cited do not support Green Tree’s position that a lack of proceeds from a foreclosure sale equates to an abandonment. Green Tree also asserts that because it obtained relief from the automatic stay, it was free to exercise its rights in the property free from any restrictions under 11 U.S.C. § 362(g). Again, Green Tree has correctly cited the law, but the cases cited do not support its position. The lifting of the stay under 11 U.S.C. § 362 does not equate to an abandonment of the property by Plaintiff under 11 U.S.C. § 544.

Lastly, Green Tree contends that its mortgage is insulated from avoidance because a defective mortgage is valid and enforceable between the bank and its borrower, absent fraud. That proposition may be valid in actions by a debtor, as demonstrated by the cases relied upon by Green Tree. The proposition does not hold true, however, where it is a trustee who raises the question in a § 547 action.

* * *

Accordingly, Plaintiff’s Motion for Summary Judgment is GRANTED. Green Tree’s Cross Motion for Summary Judgment is denied. Plaintiff is awarded a money judgment in the amount of $71, 539.46 against Green Tree.

IT IS SO ORDERED.

[1] This district has a streamlined procedure for obtaining an abandonment from a trustee. See Local Bankruptcy Rule 6007-1.

[ipaper docId=55407802 access_key=key-183fikxt7fs7dlxtgiz8 height=600 width=600 /]

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QUIET TITLE | Ohio Appeals Court Precludes US BANK From Pursuing Any Further Action on the Note, Finds Unenforceable

QUIET TITLE | Ohio Appeals Court Precludes US BANK From Pursuing Any Further Action on the Note, Finds Unenforceable


COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT

~

U.S. BANK, N.A., AS TRUSTEE

Plaintiff-Appellee
-vs-

GIUSEPPE GULLOTTA, ET AL.

Defendant-Appellant

EXCERPT:

{¶24} Based on the foregoing, we find the two-dismissal rule of Civ.R. 41(A) applies and res judicata barred U.S. Bank’s complaint in this case. We find the practical effect of the same precludes U.S. Bank from pursuing any further action on the note. Because the mortgage draws its essence from the note, we find it unenforceable. We find the trial court erred in not granting Appellant’s motion for summary judgment to quiet title.2

{¶25} Appellant’s two assignments of error are sustained.

{¶26} The judgment of the Stark County Court of Common Pleas is reversed.

Continue below…

[ipaper docId=55153519 access_key=key-2obzgx79r0dnpjk3s2kp height=600 width=600 /]

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MUST READ | Ohio Supreme Court Reviews Order Certifying Conflict Exists “Owner AND Holder”

MUST READ | Ohio Supreme Court Reviews Order Certifying Conflict Exists “Owner AND Holder”


Read this below first to understand the Supreme Court:

[CLICK LINK] to OHIO APPEALS COURT AFFIRMS “NO STANDING TO FORECLOSE” U.S. BANK v. DUVALL

U.S. Bank National Assoc.
v.
Antoine Duvall et al.

This cause is pending before the Court on the certification of a conflict by the Court of Appeals for Cuyahoga County. On review of the order certifying a conflict, it is determined that a conflict exists. The parties are to brief the issue stated in the court of appeals’ Judgment Entry filed January 31, 2011, as follows:

“To have standing as a plaintiff in a mortgage foreclosure action, must a party show that it owned the note and the mortgage when the complaint was filed?”

It is ordered by the Court that the Clerk shall issue an order for the transmittal of the record from the Court of Appeals for Cuyahoga County.

(Cuyahoga County Court of Appeals; No. 94174)

Maureen O’Connor
Chief Justice

Case Announcements:

The conflict cases are U.S. Bank, N.A. v. Bayless, Delaware App. No. 09
CAE 01 004, 2009-Ohio-6115, U.S. Bank, N.A. v. Marcino, 181 Ohio App.3d 328,
2009-Ohio-1178, Bank of New York v. Stuart, Lorain App. No. 06CA008953,
2007-Ohio-1483, and Countrywide Home Loan Servicing, L.P. v. Thomas, Franklin
App. No. 09AP-819, 2010-Ohio-3018.

[ipaper docId=54183196 access_key=key-kd5q57ekt9vnojcm3yd height=600 width=600 /]

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Magistrate Bucha Removed From Foreclosure Cases By Judge O’Donnell After Fraud Investigation By Prosecutor Mason

Magistrate Bucha Removed From Foreclosure Cases By Judge O’Donnell After Fraud Investigation By Prosecutor Mason


The Kathy Wray Coleman Online News Blog-

To perpetuate the alleged fraud lawyers for Chase Mortgage Company, namely Bricker and Eckler and Lerner, Sampson and Rothfuss, are falsifying notices of foreclosure sale to Bucha, O’Donnell and Reid and leaving off the name of Chase Mortgage Company because they know it no longer exist, and this is after the mortgage company lawyers file a second suit before Cuyahoga Judge Carolyn Friedland who goes along with it but dismissed the second suit in a particular case after grassroots activists complained, and after Cuyahoga County Clerk of Courts Gerald Fuerst allegedly harassed the homeowner with numerous summons of the illegal second suit, and deputy sheriffs sent to harass her at her home to deliver them.

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Another OH Appeals Court Dismissal For Lack of Final Appealable Order NATIONSTAR v. FISHER

Another OH Appeals Court Dismissal For Lack of Final Appealable Order NATIONSTAR v. FISHER


Are we seeing a pattern here?

Excerpt:

This case before the court sua sponte. It has come to the court’s attention that the order from which this appeal is taken is not final and appealable, On March 10, 2011, the Erie County Court of Common Pleas dismissed plaintiff’s complaint without prejudice for failure to allege it was both the owner and holder of the subject note.

Continue reading…

[ipaper docId=53662974 access_key=key-1w3nxnejox2d3s4ap8n8 height=600 width=600 /]

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OHIO Appeals Court Dismisses For Lack of Final Appealable Order US BANK v. HARPER

OHIO Appeals Court Dismisses For Lack of Final Appealable Order US BANK v. HARPER


Excerpt:

This case before the court sua sponte. It has come to the court’s attention that the order from which this appeal is taken is not final and appealable, On March 7, 2011, the Erie County Court of Common Pleas dismissed plaintiff’s complaint without prejudice for failure to allege it was both the owner and holder of the subject note.

Continue below…

[ipaper docId=53662659 access_key=key-2nkohf3ddpoql02ky9xu height=600 width=600 /]

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Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011

Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011


U.S. Sen. Sherrod Brown (D-OH) introduced landmark legislation to prevent future servicer fraud and errors, improve foreclosure counseling and prevention, and reform oversight of mortgage-based investing. Brown, who chairs the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, introduced the Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011 which would expand access to foreclosure prevention services, while increasing protections for homeowners and investors in mortgage-backed securities. Companion legislation was introduced in the U.S. House of Representatives by Rep. Brad Miller (D-NC).

The Foreclosure Fraud and Homeowner Abuse Prevention Act of 2011 would:

  • Protect homeowners from servicer errors, miscommunications, and abusive fees.
  • End the rush to foreclosure and require servicers to work with homeowners to find sustainable mortgages.
  • Improve standards for staffing and casework by mortgage servicers.
  • Protect the interests of investors who buy securities backed by residential mortgages.
  • Reform oversight of pools of securitized mortgages.

[ipaper docId=53051383 access_key=key-19zh6fcxbi9x1h6zdo1s height=600 width=600 /]

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Ohio Justices Uphold Foreclosure Rule

Ohio Justices Uphold Foreclosure Rule


via: Dispatch Politics

The Ohio Supreme Court has dismissed a complaint against three Franklin County judges who are requiring lawyers to verify the authenticity of the documents they file in home foreclosures.

Six lawyers challenged the action in December, asking the Supreme Court to prohibit the judges from ordering them to sign “certifications” on behalf of their clients.

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OH Appeals Court Affirms Trial Court Decision For Not Complying With HUD Regulations WELLS FARGO v. PHILLABAUM

OH Appeals Court Affirms Trial Court Decision For Not Complying With HUD Regulations WELLS FARGO v. PHILLABAUM


IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
HIGHLAND COUNTY

WELLS FARGO,
vs.
DANA PHILLABAUM

Excerpt:

{¶ 10} The acceleration clause of the note that the appellee executed states, inter alia, as follows:

“If [b]orrower defaults by failing to pay in full any monthly payment, then
[l]ender may, except as limited by regulations of the Secretary in the case of
payment defaults, require immediate payment in full of the principal balance
remaining due and all accrued interest.” (Emphasis added.)2

{¶ 11} Both parties agree that the pertinent federal regulation at issue is set out in Section
203.604(b), Title 24, C.F.R., and requires a “face-to-face” interview between a mortgagor and
mortgagee before three full monthly installments on the mortgage are unpaid. Here, there is no
dispute that the Bank did not conduct such a meeting. Instead, the Bank argues that it falls
under an exception to that requirement because the “mortgaged property is not within 200 miles
of the mortgagee, its servicer, or a branch office of either[.]” (Emphasis added.) Id at (c).
However, appellee’s affidavit in support of his cross-motion for summary judgment states that
“Wells Fargo has at least one branch office within 200 miles of my home” and goes on to explain
that he visited that office on at least one prior occasion. This is sufficient for appellee to carry
his initial Civ.R. 56(C) burden and, thus, the burden shifted to the Bank to provide rebuttal
materials.

continue below…

[ipaper docId=51272954 access_key=key-1p5edmhe9oxf30habdqk height=600 width=600 /]

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OHIO Appeals Court Reverses Judgment ‘Clerical Errors, Misstatement, Trial Court Entry Nullity’ LaSALLE BANK v. SCOLARO

OHIO Appeals Court Reverses Judgment ‘Clerical Errors, Misstatement, Trial Court Entry Nullity’ LaSALLE BANK v. SCOLARO


LASALLE BANK NATIONAL ASSOCIATION AS TRUSTEE FOR FIRST FRANKLIN MORTGAGE LOAN TRUST 2007-1, MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2007-1, Appellee,

v.

JOSEPH M. SCOLARO, et al., Appellants.

C.A. No. 25084.

Court of Appeals of Ohio, Ninth District, Summit County.

March 16, 2011.

CARR, Judge.

{¶ 1} Appellant, Joseph Scolaro, appeals the judgment of the Summit County Court of Common Pleas. This Court reverses.

I.

{¶ 2} On July 18, 2008, LaSalle Bank National Association (hereinafter referred to as “LaSalle”), the original plaintiff, brought this action against Scolaro seeking money judgment against Scolaro based on a January 10, 2007 promissory note in the amount of $225,250.00 plus interest at a rate of 9.60 percent per year from February 1, 2008, plus court costs, advances, and other charges allowed by law. LaSalle also sought to foreclose upon Scolaro’s property based on the mortgage dated January 10, 2007. LaSalle also sued Judy E. Scolaro and the unknown spouse of Joseph Scolaro.

{¶ 3} The parties subsequently participated in resolution and settlement conferences. On April 16, 2009, Joseph Scolaro filed an answer in which he asserted multiple affirmative defenses. The affirmative defenses alleged LaSalle was not the proper party plaintiff, that LaSalle lacked standing, and that LaSalle failed to give proper and requisite notice to Scolaro prior to initiating foreclosure. On April 29, 2009, LaSalle filed a motion to substitute Bank of America, National Association (hereinafter referred to as “Bank of America”) as the plaintiff. This motion was granted by the trial court on April 30, 2009. On June 22, 2009, Bank of America filed a motion for summary judgment, along with an affidavit in support. On August 20, 2009, after being granted an extension of time, Joseph Scolaro filed a brief in opposition with supporting affidavit, as well as his own motion for summary judgment. On September 30, 2009, Bank of America filed a reply in support of its motion for summary judgment and a response to Joseph Scolaro’s motion for summary judgment. On that same day, Bank of America filed a motion for default judgment against Judy E. Scolaro and the unknown spouse of Joseph Scolaro.

{¶ 4} On October 9, 2009, the trial court entered a default judgment against Judy E. Scolaro and the unknown spouse. Also on October 9, 2009, the trial court granted summary judgment against Joseph Scolaro, finding that the substituted plaintiff, Bank of America, had filed a motion for summary judgment and Joseph Scolaro had filed no opposition to the motion. On November 6, 2009, Scolaro filed a notice of appeal.

{¶ 5} On January 28, 2010, Bank of America moved to stay the appeal and remand the matter to the trial court to correct what it described as a “clerical error” in the judgment entry from which the appeal was taken. Bank of America also requested leave to file a motion with the trial court to correct the omission of the motion for summary judgment from the record. On February 8, 2010, Scolaro responded in opposition, asking this Court to deny the portion of Bank of America’s motion requesting a remand to correct a clerical error in the judgment entry. Scolaro argued that the trial court’s finding that he had not filed a response to the motion for summary judgment was not a clerical error and, thus, could not be cured upon the filing of a Civ.R. 60(A) motion. On February 19, 2010, this Court granted the motion to stay the appellate proceedings and ordered the matter “remanded to the trial court for 30 days to rule on Bank of America’s anticipated Civ.R. 60(A) motion.” This Court’s journal entry specifically noted that the “stay and remand [would] automatically expire 30 days from the journalization of [the] order” and required that Bank of America move this Court to continue the stay if the trial court needed additional time to rule on the motion.

{¶ 6} On February 26, 2010, Bank of America filed with the trial court a “motion for an amended and restated judgment nunc pro tunc and revised transcript to correct clerical errors.” In its motion, Bank of America invoked Civ.R. 60(A) and requested that the trial court correct its statement in the October 9, 2009 journal entry that Scolaro had not filed an opposition in response to Bank of America’s motion for summary judgment. Bank of America also requested that the trial court correct the record which failed to reflect that Bank of America had filed a motion for summary judgment on June 22, 2009. Also filed on February 26, 2010, was the affidavit of Attorney April Brown, co-counsel for Bank of America. In the affidavit, Attorney Brown acknowledged that she had prepared a draft of the order granting summary judgment for the convenience of the trial court. Attorney Brown averred that in preparing this entry, she worked from a Summit County form she had previously used. Attorney Brown averred that she accidentally failed to delete the erroneous sentence from the foundational form which stated, “There has been no opposition filed in response to the *** Motion for Summary Judgment.” Attorney Brown averred that “[t]he inclusion of this sentence was accidental, and it did not reflect the procedural history of the case now before this Court.” On March 15, 2010, Joseph Scolaro filed a brief in opposition to Bank of America’s motion. In his brief, Scolaro argued that the aforementioned error in the judgment entry was not mistake or omission which was mechanical in nature and could not be corrected pursuant to Civ.R. 60(A). Scolaro also requested in his motion that the trial court vacate the order for sale of his property which has been issued on October 23, 2009.

{¶ 7} On March 19, 2010, Bank of America filed a motion to continue the stay with this Court. On March 22, 2010, the trial court issued an entry captioned “nunc pro tunc amended and restated judgment and decree in foreclosure and reformation of mortgage and deed.” In the nunc pro tunc entry, the trial court noted that Scolaro had filed an answer to the complaint as well as a memorandum and affidavit in opposition to Bank of America’s motion for summary judgment. The entry stated that “[a]fter due consideration of the submissions of the parties, the Court further finds that there is no genuine issue of material fact and that Bank of America is entitled to summary judgment as a matter of law.”

{¶ 8} On March 29, 2010, Bank of America filed with this Court a notice of correction of record and motion to lift stay. On April 6, 2010, this Court issued a journal entry granting Bank of America’s motion and allowing twenty days for Scolaro to either file a new merit brief or a notice of reliance upon his prior brief. On April 26, 2010, Scolaro filed a notice that he intended to rely on his prior brief.

{¶ 9} On appeal, Scolaro raises two assignments of error.

II.

ASSIGNMENT OF ERROR I

“THE TRIAL COURT ERRED WHEN IT GRANTED SUMMARY JUDGMENT TO THE SUBSTITUTED PLAINTIFF BANK OF AMERICA, NATIONAL ASSOCIATION AS IT FAILED TO CONSIDER JOSEPH SCOLARO’S RESPONSE IN OPPOSITION TO THE SUBSTITUTED PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND INCORRECTLY FOUND THAT NO RESPONSE HAD BEEN FILED EVEN THOUGH A TIMELY RESPONSE AND AFFIDAVIT HAD BEEN FILED.”

{¶ 10} In his first assignment of error, Scolaro argues the trial court erred in granting summary judgment in favor of Bank of America because it failed to consider Scolaro’s response to the motion and found that no response had been filed. This Court agrees.

{¶ 11} This Court reviews an award of summary judgment de novo. Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105. This Court applies the same standard as the trial court, viewing the facts in the case in the light most favorable to the non-moving party and resolving any doubt in favor of the non-moving party. Viock v. Stowe-Woodward Co. (1983), 13 Ohio App.3d 7, 12.

{¶ 12} Pursuant to Civ.R. 56(C), summary judgment is proper if:
“(1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.” Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327.

{¶ 13} To prevail on a motion for summary judgment, the party moving for summary judgment must be able to point to evidentiary materials that show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Dresher v. Burt (1996), 75 Ohio St.3d 280, 293. Once a moving party satisfies its burden of supporting its motion for summary judgment with sufficient and acceptable evidence pursuant to Civ.R. 56(C), Civ.R. 56(E) provides that the non-moving party may not rest upon the mere allegations or denials of the moving party’s pleadings. Rather, the non-moving party has a reciprocal burden of responding by setting forth specific facts, demonstrating that a “genuine triable issue” exists to be litigated for trial. State ex rel. Zimmerman v. Tompkins (1996), 75 Ohio St.3d 447, 449.

{¶ 14} It is axiomatic that the non-moving party’s reciprocal burden does not arise until after the moving party has met its initial evidentiary burden. To do so, the moving party must set forth evidence of the limited types enumerated in Civ.R. 56(C), specifically, “the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact[.]” Civ.R. 56(C) further provides that “[n]o evidence or stipulation may be considered except as stated in this rule.”

{¶ 15} On February 26, 2011, Bank of America filed a motion for an amended judgment pursuant to Civ.R. 60(A). In its motion, Bank of America noted the trial court’s original judgment entry incorrectly stated that Scolaro had not filed a brief in opposition to Bank of America’s motion for summary judgment. Bank of America characterized this error as a “misstatement” and argued that the “[t]he Judgment and Decree was not entered until several weeks after Bank of America filed its Reply to Scolaro’s Memorandum in Opposition to Bank of America’s Motion for Summary Judgment, thus affording this Court ample time to review and evaluate the parties’ arguments.” In an affidavit which was filed simultaneously to the Civ.R. 60(A) motion, counsel for Bank of America, April Brown, averred that she had prepared a draft of the judgment entry, but failed to delete the erroneous sentence.

{¶ 16} Civ.R. 60(A) states:
“Clerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission may be corrected by the court at any time on its own initiative or on the motion of any party and after such notice, if any, as the court orders. During the pendency of an appeal, such mistakes may be so corrected before the appeal is docketed in the appellate court, and thereafter while the appeal is pending may be so corrected with leave of the appellate court.”

Within the context of Civ.R. 60(A), a “clerical mistake” is “a type of mistake or omission mechanical in nature which is apparent on the record and which does not involve a legal decision or judgment by an attorney.” Paris v. Georgetown Homes, Inc. (1996), 113 Ohio App.3d 501, 503, quoting Dentsply Internatl., Inc. v. Kostas (1985), 26 Ohio App.3d 116, 118. The Tenth District has stated, “The decision whether a submitted entry accurately reflects a decision rendered by the court involves the exercise of discretion by the court, and therefore is not subject to correction under Civ.R. 60(A).” Dokari Invests., LLC v. DFG2, LLC, 10th Dist. No. 08AP-664, 2009-Ohio-1048, at ¶ 16.

{¶ 17} In this case, the trial court’s actions on remand went beyond the scope of merely correcting a clerical mistake in its original judgment entry. As noted above, once a moving party satisfies its burden of supporting its motion for summary judgment with sufficient and acceptable evidence, the non-moving party has a reciprocal burden of responding by setting forth specific facts to demonstrate that a “genuine triable issue” exists to be litigated for trial. Tompkins, 75 Ohio St.3d at 449. Under this standard, the trial court’s erroneous finding in its October 9, 2009 judgment entry that Scolaro had not filed a response to Bank of America’s motion for summary judgment was not merely a mechanical error. Rather, it was a significant finding that was relevant in resolving the legal issue before the court. “A trial court may or may not sign prepared entries at its discretion.” State v. Sapp, 5th Dist. No. 07CA11, 2008-Ohio-5083, at ¶ 27. In exercising its discretion to sign the October 9, 2009 judgment entry, the trial court confirmed that the content of the entry accurately reflected the basis for its ruling. It follows that the erroneous finding that Scolaro had not filed a response to the motion for summary judgment was not subject to correction under Civ.R. 60(A). See Dokari at ¶ 16. By requesting that the trial court issue “an amended and restated judgment nunc pro tunc,” Bank of America was, in effect, asking the trial court to reconsider a final order. It is well-settled that “motions for reconsideration of a final judgment in the trial court are a nullity.” Price v. Carter Lumber Co., 9th Dist. No. 24991, 2010-Ohio-4328, at ¶ 11, quoting Pitts v. Ohio Dept. of Transp. (1981), 67 Ohio St.2d 378, paragraph one of the syllabus. This Court has stated that “any order granting such a motion is likewise a nullity.” State v. Keith, 9th Dist. No. 08CA009362, 2009-Ohio-76, at ¶ 8. Therefore, as the trial court’s judgment entry issued on March 22, 2010 was a nullity, this Court must look to the trial court’s October 9, 2009 judgment entry in reviewing Scolaro’s first assignment of error.

{¶ 18} Turning to the merits of Scolaro’s assignment of error, this Court concludes that the trial court’s judgment must be reversed. As discussed above, the trial court found that Bank of America’s motion for summary judgment was unopposed. The record indicates that Scolaro filed a brief in opposition to the motion for summary judgment, along with an affidavit in support, as well as a cross-motion for summary judgment, on August 20, 2009. Subsequently, on September 30, 2009, Bank of America filed a reply in support of its motion for summary judgment and a response to Joseph Scolaro’s motion for summary judgment. On remand, the trial court must make substantive determinations on the competing motions for summary judgment giving consideration to all relevant submissions by the parties.

{¶ 19} Scolaro’s first assignment of error is sustained.

ASSIGNMENT OF ERROR II

“THE TRIAL COURT ERRED WHEN IT GRANTED SUMMARY JUDGMENT TO THE SUBSTITUTED PLAINTIFF BANK OF AMERICA, NATIONAL ASSOCIATION AS THERE WERE GENUINE ISSUES OF MATERIAL FACT AND THE SUBSTITUTED PLAINTIFF WAS NOT ENTITLED TO SUMMARY JUDGMENT AS A MATTER OF LAW.”

{¶ 20} In his second assignment of error, Scolaro argues the trial court erred in granting summary judgment to Bank of America because there were genuine issues of material fact. Because our resolution of the first assignment of error is dispositive of this appeal, this Court declines to address the Scolaro’s second assignment of error as it is rendered moot. See App.R. 12(A)(1)(c).

III.

{¶ 21} Scolaro’s first assignment of error is sustained. Scolaro’s second assignment of error is rendered moot. The judgment of the Summit 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 Summit, 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(E). 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.

DICKINSON, P. J., MOORE, J., CONCUR.

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Posted in STOP FORECLOSURE FRAUDComments (1)

OH Judge Denies MTD “FDCPA, Ohio Consumer Sales Practices Act” TURNER v. Ohio Consumer Sales Practices Act

OH Judge Denies MTD “FDCPA, Ohio Consumer Sales Practices Act” TURNER v. Ohio Consumer Sales Practices Act


TAMARA TURNER, et al., Plaintiffs,
v.
LERNER, SAMPSON & ROTHFUSS, Defendant.

Case No. 1:11-CV-00056.United States District Court, N.D. Ohio.

March 4, 2011.

OPINION & ORDER

[Resolving Doc. No. 8]

JAMES S. GWIN, District Judge.

The Defendant, Lerner, Sampson & Rothfuss (“Lerner”), moves the Court to dismiss this action under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. [Doc. 8.] The Plaintiffs oppose the motion. [Doc. 14.] The Defendant replied. [Doc. 19.]

For the following reasons, the Court GRANTS IN PART and DENIES IN PART the Defendant’s motion to dismiss.

I. Background

In this putative class action, Plaintiffs Tamara Turner, Phillip Turner, Mary Sweeney, James Unger, and Kelly Unger file suit alleging violations of state and federal consumer protection statutes. [Doc. 1-1.] The Plaintiffs bring claims under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692, as well as a variety of Ohio state law claims, including the Ohio Consumer Sales Protection Act, O.R.C. Chapter 1345. [Doc. 1-1.]

This action stems from a number of mortgage foreclosure suits that Defendant Lerner initiated in Ohio state court. [Id.] Defendant Lerner is a law firm that prosecutes mortgage foreclosure actions. The Plaintiffs allege that Defendant Lerner engages in the widespread practice of filing and prosecuting mortgage foreclosure actions, notwithstanding the fact that many of Lerner’s clients lack proper standing to sue. [Id. at 2.] According to the Plaintiffs, the Defendant also employs individuals who regularly execute assignments of mortgages on behalf of the Mortgage Electronic Registration System (“MERS”) to their clients without proper legal authority to do so. [Id at 2.] The Plaintiffs further allege that Defendant Lerner has the practice of filing false and misleading affidavits in an effort to mislead courts into ruling that Lerner’s clients possess proper standing to prosecute foreclosure actions. [Id. at 2.] The Plaintiffs say that this practice has caused hundreds — and possibly thousands — of individuals in Ohio to defend frivolous foreclosure actions in which the Defendant’s clients lacked basic standing to sue. [Id.]

The Plaintiffs also set forth a number of allegations specific to the named Plaintiffs. First, the Plaintiffs say that Tamara and Phillip Turner resided in a home at 20526 Byron Road, Shaker Heights, Ohio, until Defendant Lerner filed a foreclosure action on behalf of Provident Funding Associates L.P. on October 16, 2009. [Id. at 5.] Tamara and Phillip Turner allege that they mistakenly believed that they only had twenty-eight days to vacate their home, and as a result, moved in with Phillip Turner’s mother. [Id. at 5.] On July 26, 2010, Defendant Lerner filed an affidavit with the Cuyahoga County Court of Common Pleas that falsely set forth the Provident Funding was the real party in interest in the foreclosure action. [Id. at 5.] However, on November 9, 2010, the Ohio state court action against the Turners was dismissed for lacking of standing, because Defendant Lerner was unable to prove that Provident had standing as holder of the relevant mortgage note to file the foreclosure action. [Id. at 5.] Apparently, Provident Funding took no appeal from that dismissal.

Second, the Plaintiffs say that Mary Sweeney owns a home located at 315 Overlook Park, Cleveland. [Id. at 6.] On January 5, 2010, Defendant Lerner filed a foreclosure action on behalf of Bank of America, claiming that Bank of America owned a promissory note which gave it standing to institute a foreclosure proceeding against her. [Id. at 6.] The Plaintiffs say that Defendant Lerner caused one of their employees — Shellie Hill — to fraudulently execute an assignment of the relevant mortgage note from MERS to Bank of America. [Id. at 6.] The Plaintiffs allege this assignment was not valid because Shellie Hill did not have any authority from MERS to execute the assignment to Bank of America. [Id. at 6.] However, on August 24, 2010, the Ohio state court action against Sweeney was dismissed for lacking of standing, because Defendant Lerner was unable to prove that Bank of America had standing as holder of the relevant mortgage note to file the foreclosure action. [Id. at 6-7.] Apparently, Bank of America took no appeal from that dismissal.

Third, and finally, Plaintiffs say that James and Kelly Unger own a home at 3158 Morley Road, Shaker Heights, Ohio. [Id. at 7.] On May 29, 2007, Defendant Lerner served the Ungers with a foreclosure complaint by on behalf of Bank of New York. [Id. at 7.] The Plaintiffs claim that Lerner’s employee, Shellie Hill, fraudulently assigned the mortgage note on behalf of MERS to Bank of New York. [Id. at 7-8.] The Plaintiffs say this assignment was not valid because Shellie Hill did not have any authority from MERS to execute the assignment to Bank of New York. [Id. at 7-8.] On July 14, 2009, the Cuyahoga County Court of Common Pleas dismissed the foreclosure action because the Defendant failed to prove that the Bank of New York had standing to sue. [Id. at 8.] The Ungers were again served with a foreclosure complaint in an action filed by the Bank of New York Mellon Trust Company on November 30, 2009. [Id. at 8.] This second action was dismissed on July 13, 2010; there is no allegation that Defendant Lerner directly participated in this second lawsuit. [Id. at 8.]

On January 4, 2011, Plaintiffs filed a complaint in the Cuyahoga County Court of Common Pleas. [Id.] The Plaintiffs bring six causes of action of behalf of a putative class of all Ohio homeowners who were defendants in foreclosure actions brought by Defendant Lerner since January 5, 2006. [Id.] Specifically, the Plaintiffs bring causes of action: (1) under the FDCPA, 15 U.S.C. §1692, saying the Defendant used false, deceptive, and misleading practices to prosecute foreclosure actions (Count 1); (2) under the FDCPA, saying that the Defendant’s behavior constitutes slander of credit (Count 2); (3) for abuse of process under Ohio state law (Count 3); (4) for malicious prosecution under Ohio state law (Count 4); (5) under the Ohio Consumer Sales Protection Act, O.R.C. Chapter 1345, saying the Defendant’s filing of frivolous lawsuits constitutes an “unfair, deceptive and unconscionable sales practice” (Count 5); and (6) for filing of frivolous lawsuits under Ohio Revised Code § 2323.51 (Count 6). [Doc. 1-1.]

On January 7, 2011, the Defendant removed the action to federal court. [Doc. 1.] The Court has proper subject matter jurisdiction over the claims brought under the FDCPA and supplemental jurisdiction over the claims brought under Ohio state law. 28 U.S.C. § 1331; 15 U.S.C. § 1692k(d); 28 U.S.C. § 1367(a). The Defendant now moves to dismiss this action for failing to state a claim. [Doc. 8.]

II. Legal Standard

A court may grant a motion to dismiss only when “it appears beyond doubt” that the plaintiff fails to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6); Conley v. Gibson, 355 U.S. 41, 45 (1957). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim for relief that is plausible on its face.'” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)). The plausibility requirement is not a “probability requirement,” but requires “more than a sheer possibility that the defendant has acted unlawfully.” Id.

Federal Rule of Civil Procedure 8 provides the general standard of pleading and only requires that a complaint “contain . . . a short plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Iqbal, 129 S. Ct. at 1949Iqbal, 129 S. Ct. at 1949-51. (citations removed). In deciding a motion to dismiss under Rule 12(b)(6), “a court should assume the[] veracity” of “well-pleaded factual allegations,” but need not accept a plaintiff’s conclusory allegations as true.

III. Analysis

III.A Fair Debt Collection Practices Act (Count 1)

Congress enacted the FDCPA in order to eliminate “the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15 U.S.C. § 1692(a). The statute is very broad, and was intended to remedy “what it considered to be a widespread problem.” Frey v. Gangwish, 970 F.2d 1516, 1521 (6th Cir.1992). “When interpreting the FDCPA, [courts should] begin with the language of the statute itself . . .” Schroyer v. Frankel, 197 F.3d 1170, 1174 (6th Cir.1999). With the purpose of the FDCPA in mind, the Court will proceed to the substance of the Plaintiffs’ claims.

i. Equitable Tolling

Claims brought under the FDCPA are subject to a one-year statute of limitations. 15 U.S.C. § 1692k(d). The claims brought by Plaintiffs James and Kelly Unger are not timely, since the last action alleged to be taken by the Defendant occurred in July, 2009. Therefore, unless equitable tolling applies to their claim, it must be dismissed as untimely.

The Sixth Circuit has not ruled on whether equitable tolling applies to claims under the FDCPA. Whittiker v. Deutsche Bank Nat. Trust Co., 605 F.Supp.2d 914, 917 (N.D. Ohio 2009). Nonetheless, since the Sixth Circuit has held that equitable tolling applies to claims brought under the Truth in Lending Act, district courts in this Circuit generally also apply equitable tolling principles to claims brought under the FDCPA. See, e.g., Zigdon v. LVNV Funding, LLC, 2010 WL 1838637 at *6-12 (N.D. Ohio, Apr. 23, 2010); Whittiker, 605 F. Supp.2d at 917; Foster, et al. v. D.B.S. Collection Agency, 463 F.Supp.2d 783, 799 (S.D. Ohio 2006).

To benefit from equitable tolling, a plaintiff must show that she has been pursuing her rights diligently and that some extraordinary circumstance stood in her way. Lawrence v. Florida, 549 U.S. 327, 335 (2007). Equitable tolling is “available only in compelling circumstances which justify a departure from established procedures.” Puckett v. Tennessee Eastman Co., 889 F.2d 1481, 1488 (6th Cir. 1989). Sixth Circuit case law has consistently held that the circumstances which will lead to equitable tolling are rare. Souter v. Jones, 95 F.3d 577, 590 (6th Cir. 2005). Moreover, the plaintiff has the burden of persuading the court that she is entitled to equitable tolling. Allen v Yukins, 366 F.3d 396, 401 (6th Cir. 2004). The following factors are generally considered when the issue of equitable tolling arises: (1) lack of notice of the filing requirement, (2) lack of constructive knowledge of the filing requirement, (3) diligence in pursuing one’s rights, (4) absence of prejudice to the defendant, and (5) the plaintiff’s reasonableness in remaining ignorant of the particular legal requirement. Chavez v. Carranza, 559 F.3d 486, 492 (6th Cir. 2009).

The Plaintiffs say that the claims of James and Kelly Unger should be subject to equitable tolling since another law firm attempted to foreclose on the Ungers’ home in 2010 on behalf of the Bank of New York Mellon Trust Company. The Plaintiffs allege that the firm which brought the second suit attempted to use the assignment of mortgage previously executed by one of Defendant Lerner’s employee as evidence of standing. [Doc. 14 at 9.] This second foreclosure action was ultimately dismissed on July 13, 2010, also for want of standing to sue. [Id.] There is no allegation that Defendant Lerner participated in this second action or otherwise was connected to it.

The Court does not find this sufficient reason to justify equitable tolling of the statute of limitations. The Ungers do not allege any circumstances that would have prevented them from filing this action within the one-year statute of limitations. The Ungers do not allege or proffer any evidence showing that they have been diligently pursuing their legal rights or that Defendant Lerner concealed their alleged wrongdoing or tricked them into not exercising rights. SeeMezo v. Holder, 615 F.3d 616, 620 (6th Cir. 2010); Barry v. Mukasey, 524 F.3d 721, 724 (6th Cir. 2008). Indeed, the Ungers were free to bring all claims related to the first lawsuit prior to or during the pendency of the second lawsuit. If anything, the Ungers are alleging an ongoing violation that did not end until July, 2010. However, this argument also fails, because there is no allegation that Defendant Lerner filed or otherwise participated in the second foreclosure action that was filed against the Ungers.

Accordingly, the Court GRANTS the Defendant’s motion to dismiss all claims brought by Plaintiffs James and Kelly Unger under the FDCPA.

ii. Violation of FDCPA

The Court will now proceed to the claims brought by Plaintiffs Tamara Turner, Phillip Turner, and Mary Sweeney, all of which are brought within the one-year statute of limitations.[1]

Section 1692e of the FDCPA generally prohibits a debt collector from using false, deceptive or misleading representation or means in connection with the collection of a debt. 15 U.S.C. § 1692e.[2] Section 1692f prohibits debt collectors from using “unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f.[3] In the Sixth Circuit, a false statement that is not deceptive under the objective “least sophisticated consumer” test is not a violation of the FDCPA. See Lewis v. ACB Business Services, Inc., 135 F.3d 389, 401-02 (6th Cir. 1998). In Count 1, the Plaintiffs allege Defendant Lerner violated the FDCPA in the underlying foreclosure actions by misrepresenting who owned Plaintiffs’ mortgage notes at the time the underlying foreclosure actions were filed, thus concealing the fact that its clients lacked capacity to bring the suits. [Doc. 14 at 5.]

Simple inability to prove present debt ownership at the time a collection action is filed does not constitute a FDCPA violation. Harvey v. Great Seneca Financial Corporation, 453 F.3d 324, 331-33 (6th Cir.2006). Courts in the Sixth Circuit applying the FDCPA to lawsuits brought to collect a debt have generally found, however, that where a plaintiff alleges that the plaintiff in an underlying debt collection action says that it was the owner of a debt, “all the while knowing that they did not have means of proving the debt,” that a FDCPA complaint will survive a motion to dismiss for failure to state a claim. See, e.g., Delawder v. Platinum Financial Services, 443 F. Supp.2d 942, 945 (S.D. Ohio 2005)[4] (false affidavit attached to complaint “all the while knowing that they did not have means of proving the debt”).

Here, not only do the Plaintiffs allege that the Defendant filed the foreclosure actions knowing that it did not have the means of proving the ownership of the debt; they also allege that the Defendant knowingly executed misleading affidavits and unauthorized assignments of the notes to their clients. [Doc. 1-1.] The Court finds that this conduct, if proven true, would be actionable under the FDCPA under both Sections 1692e and 1692f. See Hartman v. Asset Acceptance Corp., 467 F. Supp.2d 769, 779 (S.D. Ohio 2004) (holding that a representation that defendant was a “holder in due course” of a debt is actionable as a representation concerning the “legal status” of the debt, if the representation is false and if the defendant does not satisfy the bona fide error defense); Kline, 2010 WL 1133452, at *8; Lee v. Javitch, Block & Rathbone, LLP, 484 F. Supp.2d 816, 820 (S.D. Ohio 2007) (“Section 1692f of the FDCPA . . . has been described as a `backstop’ in the statute, intended to cover actionable debt collection practices that may not be expressly addressed in Sections 1692d and 1692e”).[5]

Accordingly, the Court DENIES the Defendant’s motion to dismiss Count 1 of the complaint as to Plaintiffs Tamara Turner, Phillip Turner, and Mary Sweeney.

III.B Slander of Credit (Count 2)

The Plaintiffs next bring a cause of action for “slander of credit” under the FDCPA, saying that instituting a legal action based upon manufactured or false evidence constitutes slander of credit. [Doc. 1-1.] The Plaintiffs fail to explain the basis for this claim, other than saying they are bringing the claim under the FDCPA. The Court finds, given this paucity of explanation, that the Plaintiffs fail to allege a valid cause of action for slander of credit. A claim will not survive a motion to dismiss where a plaintiff simply lists causes of action, but neglects to make any plausible factual allegations related to them.

There are several theories under which “slander of credit” could be actionable. However, the Plaintiffs do not allege factual circumstances that would constitute possible violations. For example, the Plaintiffs fail to allege that the Defendant made a negative report to a credit reporting agency or that the Defendant threatened to report the Plaintiffs to a credit agency related to the mortgages in question. See 15 U.S.C. § 1681h; 15 U.S.C. § 1692e(8). The Court does not have the duty to imagine or devise theories of recovery, and accordingly, the Court GRANTS the Defendant’s motion to dismiss Count 2 of the complaint.[6]

III.C Abuse of Process (Count 3)

The Plaintiffs also bring a claim for abuse of process under Ohio state law. Under Ohio law, the elements of a claim for abuse of process are that: “(1) that a legal proceeding has been set in motion in proper form and with probable cause; (2) the proceeding has been perverted to attempt to accomplish an ulterior purpose for which it was not designed; and (3) direct damage has resulted from the wrongful use of process.” Voyticky v. Village of Timberlake, Ohio, 412 F.3d 669, 676 (6th Cir. 2005) (quoting Yaklevich v. Kemp, Schaeffer, & Rowe Co. et. al., 626 N.E.2d 115, 116 (Ohio 1994)). “The tort action termed `abuse of process’ has developed for `cases in which legal procedure has been set in motion in proper form, with probable cause, and even with ultimate success, but nevertheless has been perverted to accomplish an ulterior purpose for which it was not designed.'” Yaklevich, 626 N.E.2d at 118 (quoting Prosser & Keeton, The Law of Torts (5th ed.1984) 897, Section 121). Thus, “there is no liability [for abuse of process] where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.” Id. at 118 n. 2 (citing Prosser & Keeton, supra, at 898). Rather, in an abuse of process case, “[t]he improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money, by the use of the process as a threat or a club.” Robb v. Chagrin Lagoons Yacht Club, Inc., 662 N.E.2d 9, 14 (Ohio 1996).

Here, even accepting the Plaintiff’s allegations as true, their claim for abuse of process fails. In support of their claim, Plaintiffs say that “the very act of attempting to force people out of their homes when their client does not have the proper paperwork to prove ownership constitutes malice.” [Doc. 14 at 16.] However, the Plaintiffs own allegations negate several of the elements of this cause of action.

On the first element — a legal proceeding initiated in proper form and with probable cause — the Plaintiffs allege that the Defendants did not have the proper standing or evidence needed to initiate their foreclosure actions. In claiming that the Defendant’s clients did not have probable cause to sue, the Plaintiffs seek to prove the exact opposite of this element of the abuse of process claim. Similarly, on the second element of the abuse of process claim — the proceeding has been perverted to attempt to accomplish an ulterior purpose for which it was not designed — the Plaintiffs own allegations again negate this element. The Plaintiffs claim that the Defendants initiated foreclosure actions without standing in the hope that it could nonetheless force the residents out of their homes. [Doc. 1-1 at 2-3; Doc. 14 at 16.] However, the proper purpose of a foreclosure action is to force people out of their homes; the Plaintiffs are alleging not that the Defendant used a foreclosure action for an improper purpose, but that the Defendants instituted foreclosure actions without reasonable hope of success.

Indeed, “`abuse of process differs from malicious prosecution in that the former connotes the use of process properly initiated for improper purposes, while the latter relates to the malicious initiation of a lawsuit which one has no reasonable chance of winning.'” Clermont Environmental Reclamation Co. v. Hancock, 474 N.E.2d 357, 362 (Ohio Ct. App. 1984); see also Avco Delta Corp. v. Walker, 258 N.E.2d 254, 257 (Ohio Ct. App. 1969) (“the malicious abuse of process is the employment of a process in a manner not contemplated by law, or to obtain an object which such a process is not intended by law to effect”). Here, rather than using the lawsuit to obtain a collateral advantage, the Plaintiffs allege that the Defendant filed the appropriate type of action for their ultimate goal — foreclosure of a home — but filed that action without proper probable cause. See Havens-Tobias v. Eagle, 2003 WL 1601461, at *5 (Ohio Ct. App., Mar. 28, 2003).

Accordingly, since the Plaintiffs’ allegations do not make out a claim for abuse of process, the Court GRANTS the Defendant’s motion to dismiss on this claim.

III.D Malicious Prosecution (Count 4)

The Plaintiffs also assert a claim of malicious civil prosecution. [Doc. 1-1 at 10.] To assert a claim for malicious prosecution under Ohio law, a plaintiff must prove: “(1) malicious institution of prior proceedings against the plaintiff by defendant . . . (2) lack of probable cause for the filing of the prior lawsuit, . . . (3) termination of the prior proceedings in plaintiff’s favor, . . . and (4) seizure of plaintiff’s person or property during the course of the prior proceedings.” Robb, 662 N.E.2d at 13 (citing Crawford v. Euclid Nat’l Bank, 483 N.E.2d 1168, 1171 (Ohio 1985)).

Under the first element, malicious institution of prior proceeding, the Court finds that the Plaintiffs’ allegation satisfy this element. The Plaintiff alleges that the Defendant filed the foreclosure actions with malice since the Defendant knew that its clients did not have proper standing to sue. [Doc. 1-1 at 2.] This allegation, if proven true, would sufficiently satisfy the malice element of a claim of malicious prosecution. See Eberhart v. Paintiff, 2005 WL 1962993 at *6 (Ohio Ct. App., Aug. 17, 2005) (“malice may be inferred from the absence of probable cause”);

On the second element, the Plaintiffs also adequately allege that the Defendant lacked probable cause for the filing of this lawsuit. In the complaint, the Plaintiffs say that the Defendant’s clients lacked basic standing to bring the lawsuit since their clients were not the proper holders of the mortgage notes and that Defendant knew of this lack of standing. [Doc. 1-1 at 2.] Therefore, this element is satisfied for purposes of a motion to dismiss.

As to the third element — termination of the prior proceeding in favor of the plaintiff — the Plaintiffs allege that all of the underlying foreclosures were terminated in their favor due to a lack of standing. This allegation, if proven true, would satisfy the third element. See Vitrano v. CWP Lmtd. Partnership, 1999 WL 1261151, at *4 (Ohio Ct. App., Dec. 22, 1999).

The Plaintiffs here, though, fail to adequately allege the fourth element — seizure of plaintiff’s person or property during the course of the prior proceedings. None of the Plaintiffs allege that their property was seized due to the actions of the Defendant, which is fatal to their claim of malicious prosecution. Ohio courts have emphasized that the seizure element is a necessary component of a claim for malicious civil prosecution and that the claim cannot survive without a seizure of property. See Robb, 662 N.E.2d at 14.

Indeed, a claim for malicious civil prosecution does not lie simply because a previously filed claim is meritless, but rather, only in cases “where there is a prejudgment seizure of property, i.e., where there essentially has been a judgment against, and a concomitant injury suffered by, a defendant before he has had a chance to defend himself.” Id.See, e.g., Aames Capital Corp. v. Wells, 2002 WL 500320 at *6 (Ohio Ct. App. Apr. 3, 2002) (“damage to a person’s credit, however, does not constitute seizure of property with regard to a malicious prosecution claim”); Clauder v. Holbrook, 2000 WL 98218 at *2 (Ohio Ct. App., Jan. 28, 2000) (holding that rendering a title to land unmarketable during pendency of a lawsuit is not a seizure for purposes of malicious prosecution); Ahlbeck v. Joelson, 1997 WL 458460, at *3 (Ohio Ct. App., Aug. 8, 1997) (freezing of assets during bankruptcy proceedings caused by suit does not satisfy seizure element). Thus, because none of the Plaintiffs allege that their property was seized during the course of the foreclosure proceedings instituted against them, the Court finds that they do not adequately plead this cause of action. at 14. This element of the cause of action has been strictly interpreted to apply only to seizures of actual real or personal property.

Accordingly, the Court GRANTS the Defendant’s motion to dismiss this claim.

III.E Ohio Consumer Sales Protection Act, Chapter 1345 (Count 5)

Next, the Plaintiffs allege a violation of the Ohio Consumer Sales Protection Act, Chapter 1345. Specifically, the Plaintiffs say that the conduct of the Defendant “commenc[ed] foreclosure proceedings when their clients lack standing [which] are unfair, deceptive and unconscionable sales practices under O.R.C. §§ 1345.02 and 1345.03.

Ohio Revised Code section 1345 makes it unlawful for a supplier to engage in an unfair, deceptive, or unconscionable act or practice in regard to a consumer transaction. O.R.C. § 1345.02. The OCSPA defines a “supplier” as a “person engaged in the business of effecting or soliciting consumer transactions, whether or not he deals directly with the consumer.” O.R.C. § 1345.01(B). The statute has been generally interpreted as applying to the collection of debts associated with consumer transactions by attorneys. See Celebrezze v. United Research, Inc., 482 N.E.2d 1260, 1262 (Ohio 1984); see also Schroyer v. Frankel, 197 F.3d 1170, 1177 (6th Cir. 1999). Thus, the Court concludes that the debt collection activities of Defendant Lerner fall within the purview of the statute. The Ohio Consumer Protection Statute provides generally that “[n]o supplier shall commit an unfair or deceptive act or practice in connection with a consumer transaction.” O.R.C. § 1345.02(A). Although a somewhat unresolved issue, other courts have held that a law firm collecting a debt on behalf of a mortgagee may be amenable to suit under this Act. See Delawder, 443 F. Supp.2d at 953; Havens-Tobias v. Eagle, 2003 WL 1601461, at *4-5 (Ohio Ct. App. March 28, 2003). Indeed, “[g]iven the [Ohio Consumer Protection Act’s] purpose to protect consumers from deceptive acts and practices, and Ohio courts’ recognition that debt collection falls within [its] ambit, the Court believes Ohio courts would recognize a cause of action under Section 1345.02(B)(10) for all deceptive debt collection practices, including a supplier’s deceptive lawsuit to collect a debt.” Delawder, 443 F.2d at 953. This Court now finds the rationale of the court in DelawderSee, e.g., Becker v. Montgomery, Lynch, 2003 WL 23335929, at *2 (N.D. Ohio, Feb. 26, 2003) (holding that conduct which violates the FDCPA also violates the Ohio Consumer Protection Staute); Lee, 484 F. Supp.2d at 821 (holding that Ohio Consumer Protection Act applies to debt collection practices of law firms). persuasive, and also finds that the filing of deceptive lawsuits violates the Ohio Consumer Protection Act.

Accordingly, the Court finds that the Plaintiffs’ allegations, if proven true, would be actionable under the Ohio Consumer Protection Act. The Plaintiffs here allege that the Defendant knowingly brought deceptive lawsuits and also made fraudulent assignments of mortgage notes to support standing to sue. The Court, therefore, DENIES the Defendant’s motion to dismiss this Count.[7]

III.F Frivolous Lawsuits — Ohio Revised Code Section 2323.51

Finally, the Plaintiffs bring a claim under Ohio Revised Code Section 2323.51, saying that they are entitled to “sanctions, including attorney fees,” since they argue that the Defendant filed frivolous lawsuits against them. [Doc. 1-1 at 11; Doc. 14 at 18.] The Defendant says this claim must be dismissed as untimely. [Doc. 9 at 18-19.]

Under Section 2323.51, a litigant may receive an award of attorney’s fees where their opponent has been found to have engaged in “frivolous conduct,” which is defined, inter alia, as conduct that is meant “merely to harass or maliciously injure” or “is not warranted under existing law [or] cannot be supported by a good faith argument,” as making “allegations or other factual contentions that have no evidentiary support,” or as denials “or factual contentions that are not warranted by the evidence.” O.R.C. § 2323.51(A)(2)(a)(i)-(iv).

Although the alleged conduct of the Defendant would seem fall within the purview of the statute, the Plaintiffs claim under the this statute fails for several reasons. First, the proper forum for a motion brought under O.R.C. Section 2323.51 would be the original state court foreclosure actions that the Defendant filed against the Plaintiffs. Indeed, the “[r]elief under R.C. 2323.51 is obtained by filing a motion in a pending case,” and not in a later separate civil action. Gevedon v. Gevedon,855 N.E.2d 548, 553 (Ohio Ct. App. 2006); see also Roo v. Sain, 2005 WL 1177940, at *5 (Ohio Ct. App. 2005). In that regard, Section 2323.51 is quite similar to Federal Rule of Civil Procedure 11, which itself does not create a separate cause of action, but rather, creates a means of punishing misconduct in a pending action. SeeSawyer v. Sinkey, 610 N.E.2d 1219, 1223 (Ohio Ct. App. 1992). Thus, the Plaintiffs attempt to improperly use that statute in this suit and any claims brought under that Section in this Court must be dismissed.

Second, even if that claim could be brought in this Court, the statute of limitations on the claim has run. Under the plain language of O.R.C. § 2323.51, any claim for attorney’s fees brought under that statute must be filed “not more than thirty days after the entry of final judgment in a civil action or appeal.” O.R.C. § 2323.51. Since more than thirty days have passed since the final judgment in each of the underlying state court foreclosure actions, the claims brought under that Section are not timely and must be dismissed. The Court, therefore, GRANTS the Defendant’s motion to dismiss this claim.

IV. Conclusion

For the foregoing reasons, the Court GRANTS the Defendant’s motion to dismiss Counts 2, 3, 4, and 6 of the complaint against all Plaintiffs and Count 1 of the complaint as to Plaintiffs James and Kelly Unger; the Court DENIES the Defendant’s motion to dismiss Count 1 of the complaint as to Plaintiffs Tamara Turner, Phillip Turner, and Mary Sweeney and Count 5 of the complaint as to all Plaintiffs.

IT IS SO ORDERED.

[1] As a preliminary matter, the Court finds that the Defendant is a “debt collector” under FDCPA. The Supreme Court has held that the FDCPA “applies to attorneys who `regularly’ engage in consumer-debt-collection activity, even when that activity consists of litigation.” Heintz v. Jenkins, 514 U.S. 291, 299 (1995). Under the FDCPA, a “debt collector” is “any person who uses any instrum entality of interstate commerce or the mails in any business the principle purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or assessed to be owed or due to another.” 15 U.S.C. § 1692a(6) (emphasis added).

[2] The sections of 15 U.S.C. § 1692e at issue provide in relevant part:

§ 1692e. False or misleading representations

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(2) The false representation of — (A) the character, am ount, or legal status of any debt; or . . .

(5) The threat to take any action that cannot legally be taken or that is not intended to be taken . . .

(10) The use of any false representations or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

[3] The relevant sections of 15 U.S.C. § 1692f provide:

§ 1692f. Unfair practices

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

[4] See also Whittiker, 650 F. Supp.2d at 931 (holding that filing of foreclosure action while knowing that one lacks ability to prove ownership of debt is actionable under the FDCPA); Kline v. Mortgage Electronic Sec. Systems, 2010 WL 1133452, at *8 (S.D. Ohio, Mar. 22, 2010) (holding that an inability to prove a debt at the time of filing a collection lawsuit does not violate the FDCPA, but stating suing in court with false attachments in an attempt to prove debt would violate the FDCPA.); Williams v. Javitch, Block & Rathbone, LLP, 480 F. Supp.2d 1016 (S.D. Ohio 2007) (knowledge that information in affidavit is false as to specifics of debt violates FDCPA).

[5] The Court also notes that it concurs with the thoughtful analysis set forth in Hartman v. Asset Acceptance Corp., in which that court found that the common law immunity for statements and pleadings made in court is abrogated by the FDCPA. 467 F. Supp.2d 769 (S.D. Ohio 2004).

[6] As this case will proceed, this Court has authority to consider a motion to amend the complaint to reassert this claim if plaintiffs can more specifically allege a cause of action. Rule 54(b) provides:

“When an action presents more than one claim for relief []the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.

[7] The Court need not yet consider whether a class action under Chapter 1345 may be validly brought. This issue may more appropriately be resolved in a motion for class certification.

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OHIO Judge Dismisses Cases For Failure To Allege Plaintiff Is Owner AND Holder Of Note

OHIO Judge Dismisses Cases For Failure To Allege Plaintiff Is Owner AND Holder Of Note


Excerpt:

This matter comes before the Court on Defendant’s Motion to Dismiss based on Plaintiff’s failure to allege in it’s complaint that is is the owner and holder of the subject note…

Continue below…

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Testimony of Ohio AG Mike Dewine “I urge the Committee and Congress to bring it to an end”

Testimony of Ohio AG Mike Dewine “I urge the Committee and Congress to bring it to an end”


FULL TESTIMONY
OHIO ATTORNEY GENERAL MIKE DEWINE
“An Analysis of the Post-Conservatorship Legal Expenses of
Fannie Mae and Freddie Mac”
HOUSE SUBCOMMITTEE HEARING ON
OVERSIGHT AND INVESTIGATIONS
WASHINGTON, DC
FEBRUARY 15, 2011

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OHIO APPEALS COURT REVERSAL “Breach of Contract, Fraud, and Misrepresentation Arising From a Forbearance Agreement” CitiMortgage, Inc. v. Slack

OHIO APPEALS COURT REVERSAL “Breach of Contract, Fraud, and Misrepresentation Arising From a Forbearance Agreement” CitiMortgage, Inc. v. Slack


CITIMORTGAGE, INC.

vs.

WILLIAM J. SLACK, ET AL.

JUDGMENT:
REVERSED AND REMANDED

Civil Appeal from the
Cuyahoga County Court of Common Pleas

Case No. CV-661863

BEFORE: Gallagher, J., Celebrezze, P.J., and Cooney, J.
RELEASED AND JOURNALIZED: February 10, 2011

excerpts:

{¶ 2} Defendant-appellee CitiMortgage, Inc., filed a foreclosure action
on June 10, 2008, alleging appellants were in default on a note and mortgage,
which was secured by appellants’ home. Appellants filed a counterclaim
raising claims for breach of contract, fraud in the inducement, and intentional
or negligent misrepresentation. The counterclaim arose from a forbearance
agreement entered between the parties in May 2007.

{¶ 3} CitiMortgage was ordered to file evidence that it had standing to
file the case in accordance with the ruling in Wells Fargo Bank, N.A. v.
Jordan, Cuyahoga App. No. 91675, 2009-Ohio-1092. In Jordan, this court
held that a party lacks standing to bring a foreclosure action if the party
cannot prove that it owned the note and mortgage on the date the complaint
was filed. Id.

{¶ 4} CitiMortgage opted to voluntarily dismiss its claims without
prejudice pursuant to Civ.R. 41(A). Thereafter, the trial court ordered
appellants to file a notice of intent to proceed on their counterclaim and to
demonstrate their standing to pursue their claims. Appellants eventually
indicated their intent to proceed, asserted standing to pursue their
counterclaim, and stated that their counterclaim was based solely upon facts
and circumstances arising from the parties’ forbearance agreement.

<SNIP>

{¶ 12} In this case, appellants’ counterclaim did not arise from the note
or mortgage. Rather, appellants asserted claims of breach of contract, fraud,
and misrepresentation arising from a forbearance agreement they entered
with CitiMortgage in an earlier foreclosure action, CitiMortgage, Inc. v. Slack,
Cuyahoga County Common Pleas Court Case No. CV-606916. The
forbearance agreement was entered in May 2007. The record does not reflect
any basis for concluding the trial court could not adjudicate appellants’
counterclaim independently from the complaint. Upon our review, we find
that the trial court had jurisdiction of the parties and of the controversy and
erred by dismissing the counterclaim.4

{¶ 13} Appellants’ sole assignment of error is sustained.
Judgment reversed; case remanded.

Continue to opinion below…

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OHIO APPEALS COURT REVERSED “AFFIDAVIT = NO PROOF YOU OWN NOTE” DEUTSCHE BANK v. TRIPLETT

OHIO APPEALS COURT REVERSED “AFFIDAVIT = NO PROOF YOU OWN NOTE” DEUTSCHE BANK v. TRIPLETT


Deutsche Bank National Trust Co. Plaintiff-Appellee,
v.
Chanel Triplett, et al., Defendants-Appellants.

No. 94924.

Court of Appeals of Ohio, Eighth District, Cuyahoga County. RELEASED AND JOURNALIZED: February 3, 2011.

Appellant
Chanel Triplett, Pro Se, 2982 East 59th Street, Cleveland, Ohio 44127
Attorneys for Appellees
Mathew P. Curry, Manley DEAS Kochalski, LLC, P. O. Box 165028, Columbus, Ohio 43216-5028, Ted A. Humbert, Jason A. Whitacre, Kathryn M. Eyster, The Law Offices of John D. Clunk, Co., L.P.A., 4500 Courthouse Blvd., Suite 400, Stow, Ohio 44224, Nova Star Mortgage, Inc., 6200 Oak Tree Blvd., Third Floor, Independence, Ohio 44131, Stewart Lender Services, 9700 Bissonet Suite 1500, Mail Stop 27, Houston, Texas 77036,
——
Before: Blackmon, P.J., Sweeney, J., and Gallagher, J.
excerpt:

{¶ 7} Deutsche Bank also attached an affidavit from Renee Hertzler, an officer of Countrywide Home Loans, its loan servicing agent. Hertzler averred that Triplett’s loan account was under her supervision and that there was a principal balance due in the amount of $80,504.77 with interest thereon at 9.1% per year from August 1, 2007. Hertzler also averred that Triplett’s loan remained in default.
<SNIP>

{¶ 17} In U.S. Bank Natl. Assn. v. Duvall, Cuyahoga App. No. 94714, 2010-Ohio-6478, this Court’s recent decision affirming the trial court’s dismissal of a foreclosure complaint involving facts substantially similar to the present case, we rejected an affidavit that stated the plaintiff acquired the note and mortgage prior to the filing of the complaint. Likewise, Deutsche Bank’s affidavit of ownership, sworn out more than a year after the foreclosure complaint was filed, is insufficient to vest the bank with standing to file and maintain the action. Thus, if Deutsche Bank had offered no evidence that it owned the note and mortgage when the complaint was filed, it would not be entitled to judgment as a matter of law. Jordan, ¶¶ 22-23. Accordingly, we reverse the trial court’s decision because Deutsche Bank lacks standing.

Judgment reversed.

Continue to order below…

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OHIO WELLS FARGO QUIET TITLE FAIL | GROVE COURT CONDOMINIUM UNIT OWNERS’ASSN. v. Hartman

OHIO WELLS FARGO QUIET TITLE FAIL | GROVE COURT CONDOMINIUM UNIT OWNERS’ASSN. v. Hartman


2011 Ohio 218
Grove Court Condominium Unit Owners’ Association, Plaintiff-Appellee,
v.
Dorothy M. Hartman, et al., Defendants-Appellees,
[Appeal by Appellant Wells Fargo Bank, N.A.]

No. 94910.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

RELEASED AND JOURNALIZED: January 20, 2011.

Deanna C. Stoutenborough, Romi T. Fox, M. Elizabeth Hils, Lerner, Sampson & Rothfuss, 120 E. Fourth Street, 8th Floor, Cincinnati, OH 45202, For Wells Fargo Bank, N.A. Scott A. King, Terry W. Posey, Jr., Thompson Hine LLP, P.O. Box 8801, 2000 Courthouse Plaza, N.E., Dayton, OH 45401-8801, Dale S. Smith, Thompson Hine LLP, 3900 Key Center, 127 Public Square, Cleveland, OH 44114, Attorneys for Appellant.

James C. Wrentmore, Singerman, Mills, Desberg & Kauntz Co., LPA, 3401 Enterprise Parkway, Suite 200, Beachwood, OH 44122, For Grove Court Condominium Unit Owners’ Association, Kevin M. Fields, Darcy Mehling Good, Robert E. Kmiecik, Kimberly L. Strauss, Kaman & Cusimano, LLC, 50 Public Square, Suite 2000, Cleveland, OH 44113, Elizabeth A. Meers, 1370 Ontario Street, Suite 2000, Cleveland, OH 44113-1726, For Dorothy M. Hartman, et al., Jason P. Hager, Douglass & Associates Co., LPA, 4725 Grayton Road, Cleveland, OH 44135, For Plymouth Park Tax Services, Alexander E. Goetsch, Megan R. Miller, Cavitch, Familo & Durkin Co., LPA, 1300 East Ninth Street, 20th Floor, Cleveland, OH 44114, For Dino Selvaggio, Third Federal Savings & Loan Association, Legal Department, 7007 Broadway Avenue, Cleveland, OH 44105, For Third Federal Savings & Loan Association, Attorneys for Appellees.

Before: Gallagher, P.J., Kilbane, A.J., and Celebrezze, J.

JOURNAL ENTRY AND OPINION

SEAN C. GALLAGHER, P.J.

{¶ 1} Appellant Wells Fargo Bank, N.A. (“Wells Fargo”) appeals the judgment of the Cuyahoga County Court of Common Pleas that denied its emergency motion to intervene. For the reasons stated herein, we affirm.

{¶ 2} This is a foreclosure action that was instituted by plaintiff Grove Court Condominium Owners’ Association, Inc. (“Grove Court”), on December 28, 2006. At the time the action was filed, defendants Dorothy and Richard Hartman (“the Hartmans”) owned two condominiums, units 307 and 405, in the Grove Court condominium development, located at 1900 Grove Court in Cleveland. They acquired ownership to the units in 1986 through separate and distinct instruments. Unit 405 is the subject property in this matter.

{¶ 3} After purchasing the units, the Hartmans added an internal stairway to connect the units in accordance with Grove Court’s declaration and Ohio law. They did not combine the units into a single unit for legal and tax purposes. Rather, the units retained their separate addresses and parcel numbers.

{¶ 4} In 2005, the Hartmans obtained refinancing from Wells Fargo. The legal description on the mortgage and title commitment only included unit 307. There was no recorded interest on unit 405.

{¶ 5} On December 28, 2006, Grove Court filed this foreclosure action against the Hartmans. Grove Court sought to foreclose on a certificate of lien recorded against unit 405, for unpaid maintenance fees and condominium assessments. The parties named in the action were consistent with the preliminary judicial report, which did not show any mortgages of record on unit 405.

{¶ 6} On August 7, 2007, Grove Court filed an unopposed motion for summary judgment against the Hartmans. On October 22, 2007, the trial court adopted a magistrate’s decision, granted Grove Court judgment against the Hartmans, and issued a decree of foreclosure.

{¶ 7} In the meantime, Wells Fargo had initiated foreclosure proceedings on unit 307 on June 8, 2007. After discovering this action, Wells Fargo filed an emergency motion to intervene, motion for relief from judgment and to vacate sale, and motion to quiet title. The motion was filed two months after judgment had been granted to Grove Court, four days prior to the scheduled foreclosure sale, and almost a year after the case had commenced. Wells Fargo did not attach any pleading to the motion to intervene.

{¶ 8} In its motion, Wells Fargo asserted that it had issued a refinance loan to the Hartmans in October 2005, that the parties intended the loan to be secured by both units 307 and 405, and that as a result of a scrivener’s error, only unit 307 was identified in the legal description on the mortgage. Wells Fargo sought an order recognizing that it had a superior lien interest in unit 405.

{¶ 9} Before the motion was ruled upon, unit 405 was sold at a sheriff’s sale to Dino Selvaggio for $76,667. Thereafter, a court magistrate issued an order denying Wells Fargo’s motion to intervene. The trial court confirmed the sale on June 6, 2008.

{¶ 10} Various distributions were made from the proceeds of the sale, including $10,256.49 to Grove Court in satisfaction of its judgment. A portion of the funds remain pending with the clerk of court.

{¶ 11} Wells Fargo filed objections to the magistrate’s decision. On February 26, 2010, the trial court overruled the objections, adopted the magistrate’s decision, and denied Wells Fargo’s motion to intervene. The trial court, through the adopted decision, found that Wells Fargo’s motion failed to attach a pleading detailing its claim as required by Civ.R. 24(C). The court further found the motion raised a number of new liability issues that would operate to severely prejudice the ability of Grove Court to satisfy its judgment, that Wells Fargo did not maintain an interest in the subject property, and that the motion was untimely.

{¶ 12} Wells Fargo has appealed the trial court’s decision. In its sole assignment of error, Wells Fargo claims “[t]he trial court erred in denying the motion to intervene.”

{¶ 13} Wells Fargo asserts that it had a right to intervene in this action pursuant to Civ.R. 24(A)(2), which provides for intervention of right in civil cases. The rule provides as follows: “Upon timely application anyone shall be permitted to intervene in an action: * * * (2) when the applicant claims an interest relating to the property or transaction that is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant’s ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.” Civ.R. 24(A)(2).[1]

{¶ 14} The rule is to be liberally construed in favor of intervention. State ex rel. Watkins v. Eighth Dist. Court of Appeals, 82 Ohio St.3d 532, 534, 1998-Ohio-190, 696 N.E.2d 1079. Nevertheless, the putative intervenor still bears the burden of establishing the right to intervene.

{¶ 15} In this case, Wells Fargo claims that it has an interest in the subject property. Although its alleged interest was not recorded and does not appear of record, Wells Fargo asserts that this was the result of a scrivener’s error and that it has a legal or equitable lien on the property that is superior to other interests.

{¶ 16} In interpreting analogous Fed.R.Civ.P. 24(a)(2), federal courts have stated that intervention of right requires the interest to be “direct, substantial, and legally protectable.” U.S. v. Vasi (Mar. 6, 1991), N.D. Ohio Nos. 5:90 CV 1167 and 5:90 CV 1168; Grubbs v. Norris (C.A. 6, 1989), 870 F.2d 343, 346. Ohio courts have found the same requirements implicit in Civ.R. 24(A)(2). Duryee v. PIE Mut. Ins. Co. (Dec. 1, 1998), Franklin App. No. 98AP-535; Fairview Gen. Hosp. v. Fletcher (1990), 69 Ohio App.3d 827, 591 N.E.2d 1312. Further, the Ohio Supreme Court specifically has stated that the claimed interest under Civ.R. 24(A)(2) must be one that is “legally protectable.” State ex rel. Dispatch Printing Co. v. Columbus, 90 Ohio St.3d 39, 2000-Ohio-8, 734 N.E.2d 797; In re Schmidt (1986), 25 Ohio St.3d 331, 336, 496 N.E.2d 952.

{¶ 17} In this case, the trial court determined that the documentation provided by Wells Fargo only demonstrates that its mortgage encumbers a wholly different parcel than the parcel at issue in this matter. The court found that without the exercise of the court’s equitable power of reformation, Wells Fargo has no interest in the subject property.

{¶ 18} We recognize that Wells Fargo does not have a present interest in the property and that its claimed interest is contingent on a determination of the merits of the issues it seeks to raise in the action.[2] However, even assuming that Wells Fargo’s claimed interest is a direct, substantial and legally protectable interest, we still find that the trial court did not error in denying the motion to intervene on the grounds that a required pleading was not attached to the motion and the motion was untimely.

{¶ 19} Civ.R. 24(C) mandates that the motion to intervene “shall be accompanied by a pleading, as defined in Civ.R. 7(A) setting forth the claim or defense for which intervention is sought.” Civ.R. 7(A) defines a pleading as a complaint, an answer, a reply to a counterclaim, an answer to a cross-claim, a third-party complaint, or a third-party answer. No such pleading accompanied the motion to intervene filed by Wells Fargo.

{¶ 20} The Ohio Supreme Court has repeatedly held that a motion to intervene is properly denied when the “motion is not accompanied by a pleading setting forth the claim or defense for which intervention is sought” as mandated by Civ.R. 24(C). State ex rel. Sawicki v. Court of Common Pleas of Lucas Cty., 121 Ohio St.3d 507, 2009-Ohio-1523, 905 N.E.2d 1192, ¶ 21; State ex rel. Polo v. Cuyahoga Cty. Bd. of Elections, 74 Ohio St.3d 143, 144, 1995-Ohio-269, 656 N.E.2d 1277.[3] Thus, we do not find that the trial court erred in denying the motion on this ground.

{¶ 21} “The timeliness of a motion to intervene pursuant to Civ.R. 24(A) is a matter within the sound discretion of the trial judge.” Univ. Hosps. of Cleveland, Inc. v. Lynch, 96 Ohio St.3d 118, 2002-Ohio-3748, 772 N.E.2d 105, ¶ 47. When determining the timeliness of the motion, the court should consider the following factors: “(1) the point to which the suit has progressed, (2) the purpose for which intervention is sought, (3) the length of time preceding the application during which the proposed intervenor knew or reasonably should have known of his interest in the case, (4) the prejudice to the original parties due to the proposed intervenor’s failure after he or she knew or reasonably should have known of his or her interest in the case to apply promptly for intervention, and (5) the existence of unusual circumstances militating against or in favor of intervention.” Id., quoting Triax Co. v. TRW, Inc. (C.A.6, 1984), 724 F.2d 1224, 1228.

{¶ 22} “Intervention after final judgment has been entered is unusual and ordinarily will not be granted.” Meagher, 82 Ohio St.3d at 504, 1998-Ohio-192, 696 N.E.2d 1058. However, intervention after final judgment may be allowed when the intervenor has no other alternative remedy and intervention is the only way to protect the intervenor’s rights. See Owens v. Wright (Feb. 18, 1993), Cuyahoga App. No. 64031; Likover v. Cleveland (1978), 60 Ohio App.2d 154, 159, 396 N.E.2d 491. Ultimately, the determination of whether a Civ.R. 24 motion to intervene is timely depends on the facts and circumstances of the case. Meagher, 82 Ohio St.3d at 503, 1998-Ohio-192, 696 N.E.2d 1058.

{¶ 23} In this case, Wells Fargo did not observe the alleged scrivener’s error at the time it received the title commitment or when the mortgage was recorded. It did not seek to intervene in this action until nearly a year after the case was filed, two months after final judgment was granted to Grove Court, and only four days before a scheduled sheriff’s sale of the subject property. Also, the motion was filed six months after Wells Fargo had filed its own foreclosure action against only unit 307. Wells Fargo sought to vacate the judgment, to interject newly contested issues into the matter, and to claim a potential superior interest in the subject property that would require the court to exercise its equitable powers to reform Wells Fargo’s mortgage. As a judgment had already been imposed, with priority interests established, allowing intervention would operate to prejudice the original parties. Further, the subject property was sold to Mr. Selvaggio.

{¶ 24} Considering the facts and circumstances of this case, we find the trial court did not abuse its discretion in denying Wells Fargo’s motion to intervene after judgment.[4] Accordingly, Wells Fargo’s sole assignment of error is overruled.

Judgment affirmed.

It is ordered that appellees recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the common pleas court to carry this judgment into execution. Case remanded to the trial court for execution of sentence.

Mary Eileen Kilbane, A.J., and Frank D. Celebrezze, Jr., J., concur.

[1] The Ohio Supreme Court has recognized that “Ohio courts have applied an abuse of discretion standard for all of the Civ.R. 24(A)(2) intervention of right requirements.” State ex rel. First New Shiloh Baptist Church v. Meagher, 82 Ohio St.3d 501, 503 fn. 1, 1998-Ohio-192, 696 N.E.2d 1058. However, we observe that there is in fact some split in authority as to whether the review for intervention of right is de novo.

[2] We note that “equity will allow reformation of a written instrument for the erroneous omission of a material provision so that the instrument will evince the actual intention of the parties.” Berardi v. Ohio Turnpike Comm. (1965), 1 Ohio App.2d 365, 368, 205 N.E.2d 23.

[3] Insofar as this court found that the failure to attach a pleading was not fatal to intervention in Crittenden Court Apt. Assoc. v. Jacobson/Reliance, Cuyahoga App. Nos. 85395 and 85452, 2005-Ohio-1993, that case is distinguishable. In that case, the purpose for intervention “did not include the addition of any new liability or damages issues to the litigation,” and the proposed intervenor explained in its motion its reason for not attaching an intervening complaint as follows: “`Because [proposed intervenor] has no separate and independent claims to assert in this litigation, it is neither necessary or appropriate that it submit a pleading in conjunction with this motion as described in [Civ.R. 24(C)].'” Id. at ¶ 6. These are not the circumstances presented herein.

[4] The facts and circumstances in Rokakis v. Martin, 180 Ohio App.3d 696, 2009-Ohio-369, 906 N.E.2d 1200, a case relied on by Wells Fargo, were different from this matter. In Martin, the intervenor was a valid lienholder with a junior interest in the property to those already named in the action, its interest could be paid out of the excess sale proceeds remaining on deposit with the court, and its intervention would not operate to prejudice the original parties to the foreclosure action.

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Ohio Judge Follows JPMorgan Chase’s Advice, Ends up in Foreclosure

Ohio Judge Follows JPMorgan Chase’s Advice, Ends up in Foreclosure


Via: Mandelman Matters

I have to tell you… I’ve been waiting for this to happen.

Ohio Judge Peter Sikora was looking to take advantage of the lowest mortgage interest rates in decades and refinance his eight-bedroom, lakefront Cleveland home, so he contacted his bank, JPMorgan Chase.  With property values in decline in Cleveland, Chase said no to refinancing but told the judge to apply for a loan modification instead.  The judge followed JPMorgan Chase’s advice to the letter and as a result has fallen a year behind on his nearly $1 million mortgage… hasn’t paid his property taxes… and now has ended up in foreclosure.

So, all I can think of to say is… don’t you just hate these irresponsible sub-prime borrowers who should never have been allowed to buy their homes in the first place and now think they’re entitled to loan modifications?  I know I sure do.  Maybe if the judge had called a scammer and paid an up front fee… he would have gotten his loan modified… no, wait… that’s not right… maybe if he had called a lawyer he would have… wait, no… he is a lawyer, right.  Well, maybe if he… oh wait, I know… MAYBE IF HE HAD NOT BELIEVED THE LIES TOLD BY JPMORGAN CHASE… yeah, that’s sure as shootin’ where he went wrong.

According to a story in the Cleveland Plain Dealer, that I’m betting mysteriously isn’t going to get a lot of national attention…

“The bank advised me that the only way they would consider a loan modification would be if I fell behind on my payments,” said Sikora, 59, a judge since 1989. “I took their advice and put the money aside.”


© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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FULL DEPOSITION TRANSCRIPT OF “SHELLIE HILL” OF LERNER, SAMPSON & ROTHFUSS LS&R

FULL DEPOSITION TRANSCRIPT OF “SHELLIE HILL” OF LERNER, SAMPSON & ROTHFUSS LS&R


THE BANK OF NEW YORK, etc.,
Plaintiff, :

vs.

JAMES M. UNGER, et al.,
Defendants

Deposition of Shellie Hill Vol. I by DinSFLA

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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OHIO CLASS ACTION: FMR AG Files Class Action Against Law Firm TURNER v. Lerner, Sampson & Rothfuss (“LS&R”)

OHIO CLASS ACTION: FMR AG Files Class Action Against Law Firm TURNER v. Lerner, Sampson & Rothfuss (“LS&R”)


CLASS ACTION COMPLAINT
PURSUANT TO RULE 23 OF THE
OHIO RULES OF CIVIL
PROCEDURE, FAIR DEBT
COLLECTION PRACTICES ACT,
SLANDER OF CREDIT, ABUSE OF
PROCESS AND MALICIOUS
PROSECUTION

continue to complaint…

[ipaper docId=46328230 access_key=key-1fd5zsqadjyv4681toq height=600 width=600 /]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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[VIDEO] Dylan Ratigan Speaks To OH AG Richard Cordray On Settlement, Fraudulent Affidavits

[VIDEO] Dylan Ratigan Speaks To OH AG Richard Cordray On Settlement, Fraudulent Affidavits


Sign the petition!

StopServicerScams.com

Visit msnbc.com for breaking news, world news, and news about the economy

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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OHIO APPEALS COURT AFFIRMS “NO STANDING TO FORECLOSE” U.S. BANK v. DUVALL

OHIO APPEALS COURT AFFIRMS “NO STANDING TO FORECLOSE” U.S. BANK v. DUVALL


Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION

No. 94714

U.S. BANK NATIONAL ASSN.
PLAINTIFF-APPELLANT
vs.
ANTOINE DUVALL, ET AL.
DEFENDANTS-APPELLEES

Civil Appeal from the
Cuyahoga County Court of Common Pleas

Case No. CV-638676

BEFORE: Sweeney, J., Gallagher, A.J. and DeGenaro, J.*

RELEASED AND JOURNALIZED: December 30, 2010

{¶ 15} Accordingly, we conclude that plaintiff had no standing to file a
foreclosure action against defendants on October 15, 2007, because, at that time,
Wells Fargo owned the mortgage. Plaintiff failed in its burden of demonstrating
that it was the real party in interest at the time the complaint was filed. Plaintiff’s
sole assignment of error is overruled.

Judgment affirmed.

It is ordered that appellee recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said court to carry this
judgment into execution.

A certified copy of this entry shall constitute the mandate pursuant to
Rule 27 of the Rules of Appellate Procedure.

JAMES J. SWEENEY, JUDGE

SEAN C. GALLAGHER, A.J., and
*MARY DEGENARO, J., CONCUR
*(Sitting by Assignment: Judge Mary DeGenaro of the Seventh District Court
of Appeals.)

Continue reading below…

[ipaper docId=46322950 access_key=key-13hppqwg6hbo7pmbsq2c height=600 width=600 /]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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