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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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FL APPEALS 5th DCA REVERSAL “Race-Notice, Unrecorded Instrument” ARGENT v. WACHOVIA

FL APPEALS 5th DCA REVERSAL “Race-Notice, Unrecorded Instrument” ARGENT v. WACHOVIA


ARGENT MORTGAGE COMPANY, LLC, Appellant,
v.
WACHOVIA BANK N.A., ETC., Appellee.

Case No. 5D09-4014.

District Court of Appeal of Florida, Fifth District.

Opinion filed December 30, 2010.

Jeffrey R. Dollinger, of Scruggs & Carmichael, P.A., Gainesville, for Appellant.
W. David Vaughn, of W. David Vaughn, P.A., Jacksonville, for Appellee.

GRIFFIN, J.
Argent Mortgage Company, LLC [“Argent”] appeals the trial court’s entry of judgment in favor of Wachovia Bank National Association, as Trustee Under Pooling and Servicing Agreement Dated as of November 1, 2004, Asset Backed Pass-Through Certificates Series 2004-WWF1 [“Wachovia”]. Argent argues that the trial court erred by finding that the mortgage now owned by Wachovia has priority over Argent’s mortgage. We reverse.
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NY JUDGE SPINNER DENIES Deutsche & MERS for NOT Recording Mortgage, Make up Affidavit and Assignment!

NY JUDGE SPINNER DENIES Deutsche & MERS for NOT Recording Mortgage, Make up Affidavit and Assignment!


MERS ‘QUIET TITLE’ FAIL

NY SUPREME COURT: SUFFOLK COUNTY

INDEX NO. 09-3 1067

Excerpts:

MERS alleges that the mortgage was never recorded, and upon information and belief, has been lost or inadvertantly destroyed. MERS commenced this action on August 1 1, 2009, with the filing of the summons, verified complaint, and notice of pendency.

Also, in support of its cross motion, MERS submits, inter alia, copies of the alleged note and mortgage, and the affidavit of John Burnett ( “Burnett”), a Vice President of Deutsche Bank National Trust Company as Trustee for the MLMI Trust Series 2007-MLNI (“Deutsche Bank”) who alleges that Deutsche Bank is the current owner and holder of the mortgage that is the subject of this action. Burnett claims that MERS’ mortgage has been assigned to Deutsche Bank by an unrecorded assignment of the mortgage acknowledged on September 4,2009, a copy of which has been submitted to the court. Burnett states that the assignment will be recorded once the mortgage has been established of record. Further, Burnett alleges that out of the loan proceeds that were secured by the mortgage, $641,441.54 was paid to Downey Savings and Loan to satisfy a prior mortgage Torr had given on the property, and the amount of $34,833.22 was paid directly to Torr. Burnett submits a copy of the alleged HUD- 1 A Settlement Statement from Torr’s closing.

Additionally, Burnett asserts that it has been discovered that the original mortgage was never recorded, cannot be located, and is presumed to be lost or inadvertantly destroyed. He claims that the original mortgage is not in Deutsche Bank’s files, and only a copy has been located. Burnett states that Interactive Abstract (“Interactive”) a title abstract company, presided over the November 17, 2006 closing of the mortgage and took the executed original for the purpose of recording it in the Suffolk County Clerk’s Office. He states that, upon information and belief, the mortgage was lost, misplace or destroyed while in Interactive‘s possession or after it had been submitted to the Clerk’s Office for recording. Burnett alleges that he has been advised that Interactive has ceased operating as a title abstract company and is out of business.

MERS alleges that by submitting the affidavit of Burnett, and copies of the affidavits of service, together with the relevant documentary evidence, it has satisfied the proof required by CPLR 321 5 setting forth the facts constituting the claim against Torr and establishing his default. Moreover, MERS alleges that the relief sought herein, a declaratory judgment, is necessary to enable it to realize the security interest in the property that was bargained for when MLN made its $695,000.00 loan to Torr and Torr gave the mortgage to secure the loan. MERS requests that the court render a judgment declaring that the plaintiff is the holder of a mortgage encumbering the premises under the terms and conditions set forth in the unrecorded plaintiffs mortgage, and directing the Suffolk County Clerk’s Office to record such a declaratory judgment, together with a copy of the plaintiffs mortgage.

As to Torr’s motion to dismiss the complaint for failure to state a cause of action, MERS has established that such motion is untimely. Torr was served by two different methods of service. One of the affidavits of service submitted indicates that Torr was served pursuant to CPLR 308(2) on September 2, 2009, by leaving the summons and verified complaint with a person of suitable age and discretion; mailing them to Torr’s residence on September 8,2009; and then filing proof of service with the Suffolk County Clerk’s Office on September 18, 2009. Therefore, under this method of service, Torr would have had to have served an answer or a notice of appearance by October 28,2009 (see CPLR 308[2]; CPLR 320; and CPLR 3012). The other affidavit of service submitted indicates that Torr was served pursuant to CPLR 308( 1) on September 2,2009, by personal delivery of the summons and verified complaint, and then fiIing proof of service with the Suffolk County Clerk’s Office on September 10, 2009. Thus, under this method of service, Torr would have had to have served an answer or a notice of appearance by September 22, 2009 (see CPLR 320 and CPLR 30 12). Furthermore, this motion to dismiss the complaint was made by Torr on December 2 1,2009, the date upon which it was served (see CPLR 221 1). Inasmuch as this motion was not interposed within the time required for service of responsive pleadings (see CPLR 32 1 1 [e]), no matter which of the two afl’ldavits of service submitted herein is used, the motion is untimely. Therefore, Torr’s motion to dismiss is denied.

As to MERS’ cross motion, it is well settledl that when applying for a default judgment, a plaintiff must submit evidence sufficient to demonstrate a prima facie case (see CPLR 32 lS[fl; Silberstein v Presbyterinn Hosp. in the City of New York, 96 AD2d 1096,463 NYS2d 254 [1983]). Thus, if a court finds that the allegations in a complaint or affidavit of facts fail to establish a prima facie case, a movant is not entitled to the requested relief; even on default (Dyno v Rose, 260 AD2d 694,687 NYS2d 497 [1999]; Green v Dolplzy Construction Co., Inc., 187 AD2d 635, 590 NYS2d 238 [1992]). Consistent with the foregoing, and upon review of t.he papers submitted, the court finds MERS’ application for a default judgment to be deficient.

An action to compel the determination of a claim to real property may be maintained where a plaintiff claims an estate or interest in real property (RPAPL § 150 I [ 11). Although the interest had by a mortgagee of real property or its successor in interest is an “interest in real property”(RPAPL tj 150 1 [ 5 ] ) , here MERS has failed to meet its burden by demonstrating that it has standing to maintain this action to quiet title (see Soscin v Soscin, 35 AD3d 841, 829 NYS2d 543 [2006]). MERS has failed to make a prima facie showing that it was the owner or holder of the note and the mortgage at the time this action was commenced (cc Mortgnge Elec. Registration Sys., Inc. v Conkley, 41 AD3d 674, 838 NYS2d 622 [2007]). In addition, the purported mortgage describes MERS as the nominee of MLN, and that for purposes of recording the mortgage, MERS is the mortgagee of record. Thus, MERS as nominee, is the agent of MLN, for limited purposes, “and has only those powers which are conferred to it and authorized by” MLN (Bank of New York v Aldernzi, 201 0 NE’ Slip Op. 20 167,900 NYS2d 82 1, 823 [Sup Ct, Kings County, 20101). There is no evidence that MLN, who is not a party herein, authorized MERS to bring this action’.

Moreover, the effectiveness of the assignment dated September 4, 2009, is unclear as there is no evidence that MLN ever directly assigned the note to MERS or expressly gave MERS the authority to act as MLN’s authorized agent to assign the subject note to Deutsche Bank (see In re Stralern, 303 AD2d 120, 758 NYS2d 345 [2003]; Teitz v Goettler, 191 AD 924, 181 NYS 956 [1920]).Without an effective transfer of MLN’s interest in the note to MERS or express authorization from MLN for MERS to assign the note on its behalf, the assignment of the mortgage is a nullity (see Kluge v Fugazy, 145 AD2d 537, 536 NYS2d 92 [1988]). Thus, it is also iinclear whether Deutche Bank’s Vice President had the authority to act in terms of satisfying the proof of facts constituting this claim (see CPLR 3215[fl; Wells Fargo Barzk, NA v Davilmar, 16 Misc3d 1 13 3A, 847 NYS2d 906 [2007]).

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