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PHH MTGE. CORP. v. Ramsey | OH Appeals Court “affidavits and exhibits submitted in connection with plaintiff’s SJ motion reveal genuine issues of material fact”

PHH MTGE. CORP. v. Ramsey | OH Appeals Court “affidavits and exhibits submitted in connection with plaintiff’s SJ motion reveal genuine issues of material fact”


2012 Ohio 672

PHH Mortgage Corporation fka Cendent Mortgage Corporation dba Coldwell Banker Mortgage, Plaintiff-Appellee,
v.
Andrew Ramsey et al., Defendants-Appellants.

 

No. 11AP-559.
Court of Appeals of Ohio, Tenth District, Franklin County. 

Rendered on February 21, 2012.
Lerner, Sampson & Rothfuss, and Patricia K. Block, for appellee.Goldman & Rosenthal, and Lee S. Rosenthal, for appellants.

DECISION

BRYANT, J.

{¶ 1} Defendants-appellants, Andrew Ramsey and Precision Real Estate Group, LLC, appeal from a judgment of the Franklin County Court of Common Pleas that granted the summary judgment motion of plaintiff-appellee, PHH Mortgage Corporation fka Cendent Mortgage Corporation dba Coldwell Banker Mortgage, entered judgment for plaintiff in the principal balance of $53,956.13 plus interest, determined plaintiff to be the first lien on the property subject of the mortgage, and ordered foreclosure on the subject premises. Defendants assign a single error:

The Trial Court committed error when it granted Summary Judgment to Appellee because Appellants presented evidence of genuine issues of material fact to be litigated.

Because genuine issues of material fact preclude granting summary judgment to plaintiff, we reverse.

I. Facts and Procedural History

{¶ 2} Plaintiff filed a complaint on November 10, 2009 against, among others, defendant Andrew Ramsey. Count One of the complaint alleged defendant owed plaintiff $53,956.13, together with interest at the rate of 7.00500 percent per year from July 1, 2009 as a result of his default on a note of which plaintiff was the holder. Count Two sought to reform the mortgage securing the note to correct a scrivener’s error, and Count Three asked the court not only to declare plaintiff to be the first lien on the property but to foreclose on the mortgage.

{¶ 3} After Precision Real Estate Group, LLC was added as a defendant, both defendants filed a joint answer to plaintiff’s complaint on April 27, 2010. Plaintiff responded to their answer with a motion for summary judgment filed on July 16, 2010; on the same date, plaintiff sought default judgment against those parties who had not filed an answer to the complaint. Before responding to plaintiff’s motion for summary judgment, defendants sought and were granted leave to file a counterclaim against plaintiff. They followed the counterclaim with a memorandum opposing plaintiff’s motion for summary judgment.

{¶ 4} On November 18, 2010, the trial court referred the case to mediation and vacated the scheduled trial date pending the outcome of mediation. When mediation proved unsuccessful, the court rescheduled the matter for trial. With leave of court, plaintiff filed a renewed motion for summary judgment on its complaint and defendants’ counterclaim.

{¶ 5} After the parties briefed the motion, the trial court filed an entry on May 27, 2011, determining no genuine issue of material fact existed and plaintiff was entitled to judgment and foreclosure as a matter of law. Accordingly, the trial court granted plaintiff summary judgment, entered a decree in foreclosure, reformed plaintiff’s mortgage and deed, and dismissed with prejudice defendants’ counterclaim.

II. Summary Judgment—Genuine Issues of Material Fact

{¶ 6} Defendants’ single assignment of error asserts the trial court wrongly granted plaintiff summary judgment because genuine issues of material fact exist to be resolved at trial.

A. Applicable Law

{¶ 7} An appellate court’s review of summary judgment is conducted under a de novo standard. Coventry Twp. v. Ecker, 101 Ohio App.3d 38, 41 (9th Dist.1995); Koos v. Cent. Ohio Cellular, Inc., 94 Ohio App.3d 579, 588 (8th Dist.1994). Summary judgment is proper only when the parties moving for summary judgment demonstrate: (1) no genuine issue of material fact exists, (2) the moving parties are entitled to judgment as a matter of law, and (3) reasonable minds could come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidence most strongly construed in its favor. Civ.R. 56; State ex rel. Grady v. State Emp. Relations Bd., 78 Ohio St.3d 181 (1997).

B. Affidavit

{¶ 8} In responding to plaintiff’s summary judgment motion, Ramsey admitted to being the obligor on the note and mortgage attached to plaintiff’s complaint but stated payments were current through July 2009 under the terms of the note and mortgage. According to the affidavit, he “always made [his] payments online.” (Affidavit, ¶ 3.)

{¶ 9} As Ramsey’s affidavit explained, he attempted to make his August payment electronically, or online, on August 3, 2009 but received an online response that plaintiff was not able to process his payment at that time. He again attempted to pay online on August 6 and 10 but again received the response that plaintiff was unable to process the payment. Ramsey attached to his affidavit the responses received online.

{¶ 10} On August 13, he again attempted an online payment, and the payment appeared to be successful. At the end of the transaction, however, he did not receive a confirmation number. He called the help desk and was given a confirmation number for his August payment. The person at the help desk further told Ramsey “that the payment would be pushed through the system and `not to worry.'” (Affidavit, ¶ 5.) After receiving a late payment notice from plaintiff on August 16, 2009, Ramsey again called the help line on August 21, 2009. The person Ramsey spoke to informed him “that Plaintiff was having some system issues but that [his] payment would be processed as he could see it `stuck’ in the system.” (Affidavit, ¶ 6.)

{¶ 11} On September 3, 2009, Ramsey attempted to complete his September payment online, but it could not be processed. At that time, Ramsey became aware that the August 2009 payment was never processed as promised, because a late fee was charged to his account. When he checked his bank account, he learned his August payment was never debited from his account.

{¶ 12} Ramsey again called the help desk, and the person he spoke to said she would process his payment. Ramsey expressed his concern about the payment being considered late, and the help desk person acknowledged the late payment would be placed on his credit report. Ramsey asked that it be removed because the delay was not his fault, but he was told nothing could be done about it. Ramsey asked to speak with someone else; he “was told there was no one else to speak with.” (Affidavit, ¶ 7.) Ramsey requested to speak with the legal department, but the help desk person refused to transfer him and hung up the telephone.

{¶ 13} After being unable to make an online payment on September 3, Ramsey contacted the Coldwell Banker/King Thompson real estate agent who sold him the property to see if he could suggest any avenue to clear up the matter. Someone from the local office called Ramsey, said they would check on the situation and get back to him, but did not. As a result, on September 9, 2009, Ramsey physically went to the Coldwell Banker/King Thompson office on Polaris Parkway, explained the situation to the receptionist, and asked if he could speak with someone at that location. He was informed no one at the location had authority in the matter, he attempted payment, and his payment was refused.

{¶ 14} The next day, Ramsey forwarded a letter to Coldwell Banker/King Thompson, together with a check in the amount of $1,600 for the August and September 2009 payments on the note. The letter explained the situation, but the check was never cashed or returned to Ramsey. On October 5, 2009, Ramsey sent another check in the amount of $1,600 as payment for October and November, accompanied by another letter of explanation. Again, the check was neither cashed nor returned.

C. Plaintiff’s Arguments

{¶ 15} Aware of defendants’ factual contentions from their response to plaintiff’s first summary judgment motion, plaintiff’s renewed motion for summary judgment alleged plaintiff was entitled to judgment because (1) Ramsey did not attempt to make payment and has no contractual right to pay online, and (2) plaintiff was not required to accept partial payment in the event of default. Plaintiff argues similarly on appeal.

1. Online payments

{¶ 16} Plaintiff points to the terms of the note and mortgage to support its contention that Ramsey had no contractual right to pay electronically, as the mortgage specifies that payments shall be made in U.S. currency. Whether the provision addresses the issue at hand is questionable at best, as it appears to preclude payment in foreign currency. Moreover, nothing in the note or mortgage precludes electronic payment. To the contrary, the document contemplates electronic funds transfer as an acceptable mode of payment, specifying that if any check or other instrument the lender receives as payment is returned unpaid, the lender may require “any and all subsequent payments due under the Note and this Security Instrument be made in one or more of the following forms, as selected by the Lender: * * * Electronic Funds Transfer.” (Mortgage, ¶ 1.)

{¶ 17} In addition, Ramsey’s affidavit states he always made payments electronically. As a result, a genuine issue of material fact exists as to whether plaintiff waived any provision of the agreement that possibly required other than electronic payment. See EAC Properties, L.L.C. v. Brightwell, 10th Dist. No. 10AP-853, 2011-Ohio-2373, ¶ 23, appeal not allowed, 129 Ohio St.3d 1506, 2011-Ohio-5358 (noting that whether a party’s inconsistent conduct amounts to waiver involves a factual determination within the province of the trier of fact).

{¶ 18} Plaintiff next suggests that even if online payments are acceptable, payments are not deemed received until the lender receives them at the location designated in the note or such other location as the lender may designate. Plaintiff argues that because Ramsey was aware his attempted online payments were ineffective but nonetheless failed to send them to the designated location, he failed to make payment according to the note and mortgage. Ramsey’s affidavit explains his efforts to make the regular payments beginning with his August payment. The affidavit states he called on August 13, 2009 concerning the August payment and received confirmation for it. Although plaintiff contends its records do not reflect a payment in August, the dispute over the August payment is in itself an issue for a trier of fact to resolve after hearing all the evidence, resolution of which may affect Ramsey’s subsequent payments, at least one of which was forwarded in advance of the due date.

2. Timeliness and partial payment

{¶ 19} Plaintiff also asserts Ramsey’s attempt to make his August payment was untimely, noting payments were to be made on the first of the month but Ramsey did not attempt payment until, at the earliest, August 3, 2009. Plaintiff’s argument presents at least two issues. Initially, the pertinent documents specify a late fee, suggesting failure to make payment on the first of each month is not necessarily a default on the note, even though it may cause Ramsey to incur late fees. Secondly, the exhibits attached to plaintiff’s affidavit indicate Ramsey on many occasions made payments after the first of the month, and plaintiff accepted them, thus raising an issue of plaintiff’s possible waiver of the provisions requiring payment on the first of the month.

{¶ 20} Pertinent to the waiver issue, both the note and mortgage contain anti-waiver provisions. The note states that “[e]ven if, at a time when [the borrower is] in default, the Note Holder does not require [the borrower] to pay immediately in full as described above, the Note Holder will still have the right to do so if [the borrower is] in default at a later time.” (Note, ¶ 6(D).) To the extent the provision applies under these circumstances, the record evidence does not appear to address whether plaintiff invoked its rights. The mortgage states that “Lender may accept any payment or partial payment insufficient to bring the Loan current, without waiver of any rights hereunder or prejudice to its right to refuse such payments or partial payments in the future.” (Mortgage, ¶ 1.) To the extent the provision applies, the evidence again is unclear that plaintiff ever invoked the provision, as its September 9, 2009 letter to Ramsey not only does not declare him in default, but demands payment for the months of August and September.

{¶ 21} In the end, Ramsey’s version of the payment history between the parties creates genuine issues concerning the due date for payments and the applicability of the anti-waiver provisions. Cf. Fairfield Natl. Bank v. Lininger, 5th Dist. No. 02-CA-25, 2002-Ohio-4875, ¶ 31 (noting “[i]t is well settled that if one accepts late payments and subsequently wishes to insist on a specific due date as a `time of the essence’ requirement, prior notification thereof is required”) and First Natl. Bank of Am. v. Pendergrass, 6th Dist. No. E-08-048, 2009-Ohio-3208, ¶ 25 (noting “it has repeatedly been held that a mortgagee’s previous acceptance of late loan payments does not constitute a waiver of the mortgagee’s right to accelerate and foreclose on a loan following a subsequent default where, as here, the relevant loan documents contain `anti-waiver’ provisions”). The trial court did not address those issues. In the absence of the trial court’s addressing the meaning and applicability of the note and mortgage anti-waiver provisions to the facts provided in the parties’ affidavits and exhibits, we decline to do so in the first instance.

{¶ 22} Lastly, plaintiff’s motion for summary judgment asserts that because Ramsey was in default on his payment, the entire amount of the note became due, leaving plaintiff free to reject Ramsey’s attempt to partially pay by tendering the September and October payments to plaintiff. Because a genuine issue of material fact exists as to whether Ramsey defaulted on the note, plaintiff’s argument premised on a default is premature.

{¶ 23} In the final analysis, the affidavits and exhibits submitted in connection with plaintiff’s summary judgment motion reveal genuine issues of material fact regarding whether Ramsey defaulted in his payment on the note, making summary judgment inappropriate. Defendants’ single assignment of error is sustained, the judgment of the trial court is reversed, and this matter is remanded for further proceedings consistent with this decision.

Judgment reversed and cause remanded.

SADLER and CONNOR, JJ., concur.

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FREEDOM MTG v. PERRY | OH Appeals Court Affirms Trial Ct “Note Endorsement 2006, MERS Assigned Mortgage 2008, Affidavit Fail”

FREEDOM MTG v. PERRY | OH Appeals Court Affirms Trial Ct “Note Endorsement 2006, MERS Assigned Mortgage 2008, Affidavit Fail”


NOTE: The last name Perry & Petty in this case. Not sure which is correct?

Court of Appeals of Ohio

EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA


FREEDOM MORTGAGE CORPORATION

vs.

JUANITA PERRY, ET AL.

EXCERPT:

{¶ 26} According to the note, Consumers endorsed it to Freedom on October 23, 2006. According to the assignment, MERS was Consumers’ “nominee,” and MERS had assigned the mortgage to Freedom in November 2008. Nothing indicates the latter was recorded. However, a “final judicial report” appears in the record that states the assignment had been recorded on December 19, 2008.1

[…]

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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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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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KENTUCKY APPEALS COURT VACATES SJ “DEUTSCHE BANK DID NOT HAVE STANDING” AUGENSTEIN v. DEUTSCHE BANK

KENTUCKY APPEALS COURT VACATES SJ “DEUTSCHE BANK DID NOT HAVE STANDING” AUGENSTEIN v. DEUTSCHE BANK


Commonwealth of Kentucky
Court of Appeals

NO. 2009-CA-000058-MR

GLENN D. AUGENSTEIN

v.

DEUTSCHE BANK NATIONAL
TRUST COMPANY
, AS TRUSTEE
FOR THE CERTIFICATEHOLDERS
OF SOUNDVIEW HOME LOAN TRUST
2005-OPT4, ASSET BACKED
CERTIFICATES, SERIES 2005-OPT4;
PAMELA FOREE; AND
DONALD T. PRATHER

OPINION
VACATING AND REMANDING

** ** ** ** **
BEFORE: DIXON AND MOORE, JUDGES; ISAAC,1 SENIOR JUDGE.

excerpt:

In light of our analysis, we vacate the entry of summary judgment because Deutsche Bank did not have standing to commence this action when it did.

This matter is therefore remanded to the circuit court for the purpose of entering an order consistent with this opinion removing this case from its docket.

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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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© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (1)

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

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (2)

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 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (1)

OHIO WOMAN SUES BANK OF AMERICA, ROBO SIGNER, FANNIE MAE, AG CORDRAY

OHIO WOMAN SUES BANK OF AMERICA, ROBO SIGNER, FANNIE MAE, AG CORDRAY


This may be the first lawsuit from an individual homeowner seeking to undo a completed foreclosure.

I am sure these are lining up as I type…

Keep your eye on Harmon Law Offices, P.C. in Newton Highlands, MA 02461 aka Mark P. Harmon who serves as a director of Law offices of David J. Stern’s “DJSP Enterprises Inc.”

Enjoy!

[ipaper docId=40005374 access_key=key-ar2tlhnlp15p7ysmrmr height=600 width=600 /]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUDComments (5)


GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
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