[Cite as Armstrong v. U.S. Bank Natl. Assn., 2023-Ohio-1203.]
IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO
KENNETH ARMSTRONG, : APPEAL NO. C-220384 TRIAL NO. A-1904882 Plaintiff-Appellee, :
: O P I N I O N. vs. :
U.S. BANK NATIONAL ASSOCIATION, : AS TRUSTEE FOR THE STRUCTURED ASSET SECURITIES CORPORATION : MORTGAGE LOAN TRUST 2006-BC1, : and : U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE STRUCTURED : ASSET INVESTMENT LOAN TRUST, 2006-3, :
Defendants-Appellants. :
Civil Appeal From: Hamilton County Court of Common Pleas
Judgment Appealed From Is: Affirmed
Date of Judgment Entry on Appeal: April 12, 2023
Hilton Parker LLC and Jonathan L. Hilton for Plaintiff-Appellee,
Stites & Harbison PLLC and Andrew J. Poltorak for Defendants-Appellants. OHIO FIRST DISTRICT COURT OF APPEALS
CROUSE, Presiding Judge.
{¶1} U.S. Bank, N.A., as trustee for the Structured Asset Securities
Corporation Mortgage Loan Trust 2006-BC1 and the Structured Asset Investment
Loan Trust, 2006-3 (collectively, “U.S. Bank”), appeals from the decision of the trial
court denying its motion to set aside a default judgment entered in favor of plaintiff-
appellee Kenneth Armstrong, a Florida homeowner. Armstrong brought a declaratory-
judgment action against U.S. Bank, seeking to have the promissory note (the “note”)
underlying his home mortgage declared unenforceable. Because U.S. Bank was validly
served and did not appear before the trial court, the court granted a default judgment
to Armstrong and found the note to be unenforceable. More than a year later, after
Armstrong brought a quiet-title action in Florida to extinguish the mortgage, U.S.
Bank sought relief from the judgment under Civ.R. 60(B). The trial court denied U.S.
Bank’s motion. We affirm the judgment of the trial court.
I. Factual and Procedural History
{¶2} In March 2006, Armstrong obtained a loan from BNC Mortgage, Inc.,
(“BNC”) for $140,000. In exchange, Armstrong executed a promissory note and
granted BNC a mortgage on his home in Sarasota, Florida. Following some trading on
the secondary mortgage market, the note came to be held, in trust, by U.S. Bank. In
2007, 2010, and 2014, U.S. Bank initiated foreclosure proceedings in Florida state
court against Armstrong for failure to pay. U.S. Bank voluntarily dismissed the 2007
and 2010 actions.
{¶3} In 2013, during the pendency of the 2010 foreclosure action, Armstrong
executed a loan-modification agreement with U.S. Bank in settlement of the default.
The 2013 loan-modification agreement reaffirmed Armstrong’s obligations under the
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note.
{¶4} The 2014 action proceeded to a bench trial in 2019. Armstrong prevailed
because the court found that U.S. Bank failed to prove that the correct entity had
brought suit against Armstrong.
{¶5} Following the 2019 judgment in Armstrong’s favor, which resolved the
2014 foreclosure action, Armstrong filed a declaratory-judgment action in the
Hamilton County Court of Common Pleas seeking a declaration that the note was no
longer enforceable. Armstrong filed in Hamilton County because, he alleges, the note
was payable to U.S. Bank at its Cincinnati address. Armstrong’s argument centered
around U.S. Bank’s acceleration of the note in the 2010 foreclosure action and the
subsequent running of Ohio’s statute of limitations on collection of a debt.
{¶6} U.S. Bank did not answer Armstrong’s complaint. Eventually,
Armstrong filed a motion for a default judgment, which the court granted in August
2020. In November 2021, Armstrong filed an action for quiet title in the United States
District Court for the Middle District of Florida, in the case numbered 8:21-cv-02648.
In that action, Armstrong presented his Hamilton County judgment declaring the note
to be unenforceable and sought to extinguish the mortgage securing the note.
{¶7} After U.S. Bank received notice of the Florida quiet-title action, it filed
a motion in the Hamilton County declaratory-judgment case seeking to set aside the
judgment under Civ.R. 60(B). Following briefing and a hearing, the court denied U.S.
Bank’s motion. This appeal timely followed.
II. First Assignment of Error
{¶8} In its first assignment of error, U.S. Bank argues that the trial court
erred in determining that it was not entitled to relief under Civ.R. 60(B). U.S. Bank
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presents three issues under this assignment of error: First, the trial court erred by not
addressing the existence of a meritorious defense; second, the trial court erred in its
application of Civ.R. 60(B)(4) to find that there was not a change in circumstances that
made the default judgment inequitable; and third, the trial court erred in finding that
there was not a fraud upon the court, under Civ.R. 60(B)(5).
{¶9} This court reviews a denial of a motion for relief from judgment under
Civ.R. 60(B) for an abuse of discretion. See Engelhart v. Bluett, 1st Dist. Hamilton No.
C-160189, 2016-Ohio-7237, ¶ 16, citing Rose Chevrolet, Inc. v. Adams, 36 Ohio St.3d
17, 20, 520 N.E.2d 564 (1988) (“The decision whether to grant relief from judgment
lies within the trial court’s discretion.”).
{¶10} To be entitled to relief under Civ.R. 60(B), the movant must show: “(1)
the party has a meritorious defense or claim to present if relief is granted; (2) the party
is entitled to relief under one of the grounds stated in Civ. R. 60(B)(1) through (5); and
(3) the motion is made within a reasonable time, and, where the grounds of relief are
Civ. R. 60(B)(1), (2) or (3), not more than one year after the judgment, order or
proceeding was entered or taken.” GTE Automatic Elec., Inc. v. ARC Industries, Inc.,
47 Ohio St.2d 146, 351 N.E.2d 113 (1976), paragraph two of the syllabus.
{¶11} Because U.S. Bank did not file its motion until more than a year after
the court’s entry of the default judgment, it cannot claim relief under Civ.R. 60(B)(1),
(2), or (3) and is limited to the grounds specified in Civ.R. 60(B)(4) or (5). See Kell v.
Verderber, 1st Dist. Hamilton No. C-120665, 2013-Ohio-4223, ¶ 43 (holding that
there is no “discovery rule” that permits a later-filed motion for relief based on delayed
discovery of a basis for relief).
{¶12} A motion for relief under Civ.R. 60(B)(4) or (5) must still be made
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within a “reasonable time.” The trial court found that the motion was filed within a
reasonable time, and that finding is not in dispute.
Meritorious Defense
{¶13} The trial court did not address whether U.S. Bank had proffered a
meritorious defense. Rather, the trial court found that neither Civ.R. 60(B)(4) nor (5)
applied to the facts of this case. U.S. Bank complains that the trial court’s failure to
address the meritorious-defense prong is reversible error.
{¶14} Even if U.S. Bank had a meritorious defense, the trial court need not
discuss it if either of the other requirements for relief under Civ.R. 60(B) cannot be
satisfied. The requirements for relief “are independent and in the conjunctive, not the
disjunctive.” GTE, 47 Ohio St.2d at 151, 351 N.E.2d 113. “[T]he movant must
demonstrate that he is entitled to relief under one of the grounds stated in Civ.
60(B)(1) through (5).” Id. It was not error to focus on U.S. Bank’s failure to satisfy any
of the requirements of Civ.R. 60(B)(1) through (5) without addressing the merits of
U.S. Bank’s defense.
{¶15} Because we hold that U.S. Bank has not shown entitlement to relief
under Civ.R. 60(B)(4) or (5), we likewise decline to address the merits of U.S. Bank’s
proffered defense.
Civ.R. 60(B)(4): No Longer Equitable
{¶16} U.S. Bank argues that the trial court erred by finding that it had not
satisfied the requirement of Civ.R. 60(B)(4) that “it is no longer equitable that the
judgment should have prospective application.”
{¶17} “The ‘* * * it is no longer equitable * * *’ clause of Civ. R. 60(B)(4) was
designed to provide relief to those who have been prospectively subjected to
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circumstances which they had no opportunity to foresee or control.” Knapp v. Knapp,
24 Ohio St.3d 141, 493 N.E.2d 1353 (1986), paragraph one of the syllabus. “ ‘[T]he rule
is not to be read without emphasis on the important words “no longer” * * * it refers
to some change in conditions that makes continued enforcement inequitable.’ ”
(Emphasis added.) Wurzelbacher v. Kroeger, 40 Ohio St.2d 90, 92, 320 N.E.2d 666
(1974), quoting Schildhaus v. Moe, 335 F.2d 529, 530 (2d Cir.1964).
{¶18} Wurzelbacher is the foundational case interpreting this provision. In
that case, Kroeger’s heirs-at-law, next-of-kin, and beneficiaries were parties to a will
contest in the court of common pleas. Id. at syllabus. After trial on the validity of the
will had begun, the parties reached a settlement agreement. Id. As a result of the
settlement, the judge directed a verdict finding the will to be valid. Id. Subsequently,
the probate court found that the settlement agreement was invalid because, in part,
the minor beneficiaries under the will had not been represented by a guardian ad
litem. Id. The court held that the probate court’s invalidation of the settlement
agreement rendered it “no longer equitable” to enforce the court of common pleas’
judgment of the will’s validity. Id. at 93.
{¶19} More recently, the Twelfth District Court of Appeals interpreted this
provision in a foreclosure case, LNV Corp. v. Edgar, 12th Dist. Butler No. CA2011-10-
190, 2012-Ohio-1899. The day before trial, the bank and homeowner reached a
settlement agreement to avoid foreclosure. Id. at ¶ 3. The homeowner was to execute
a deed in lieu of foreclosure, and the bank would release the homeowner from personal
liability on the note. Id. The trial court dismissed the foreclosure action with prejudice.
Id. After more than a year passed without the homeowner’s consummation of the
agreed settlement, the bank moved for relief from the settlement entry to modify the
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dismissal to one without prejudice. Id. at ¶ 4. The court of appeals affirmed the trial
court’s grant of relief to the bank, holding that the homeowner’s refusal to follow
through on the settlement agreement was the sort of subsequent, unforeseeable event
that made application of the court’s judgment no longer equitable. Id. at ¶ 21.
{¶20} U.S. Bank’s argument is that the quiet-title action to extinguish the
mortgage on the Florida property is a subsequent event that makes it no longer
equitable to enforce the judgment. However, the use of the judgment to extinguish the
mortgage lien that secured payment of the debt under the note, where the judgment
invalidated the note, is not an unforeseeable “change in circumstances,” such as the
failure of a settlement agreement to be put into effect. It is the natural next step for
Armstrong once the debt secured by the mortgage was found to be unenforceable.
{¶21} U.S. Bank claims that allowing the court’s judgment to be used to
extinguish the mortgage on Armstrong’s property would result in Armstrong’s unjust
enrichment, and that it is “no longer equitable” that the judgment should apply. We
disagree. Armstrong’s relief from his obligation to make payments on the note, which
is the source of his “enrichment,” is contemporaneous with the judgment itself. See
Natl. City Home Loan Servs. v. Gillette, 4th Dist. Scioto No. 05CA3027,
2006-Ohio-2881, ¶ 22 (finding that the debtor’s enrichment occurred prior to or
contemporaneously with the judgment relieving her from the responsibility to repay
the loan).
{¶22} Because there has been no change in conditions here, U.S. Bank cannot
obtain relief under Civ.R. 60(B)(4).
Civ.R. 60(B)(5): Fraud upon the Court
{¶23} U.S. Bank argues that it is entitled to relief under Civ.R. 60(B)(5) on the
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grounds that Armstrong’s attorney made material misrepresentations to the court in
filing for a default judgment, which amounted to fraud upon the court. U.S. Bank
contends that Armstrong’s filings with the court did not specifically point out the
existence of the 2013 loan-modification agreement. U.S. Bank claims that the 2013
loan-modification agreement revived the statute of limitations for the loan, and thus
the limitations period had not yet run until after the court granted judgment to
Armstrong.
{¶24} Civ.R. 60(B)(5) provides that the court may grant relief for “any other
reason justifying relief from the judgment.” “[T]his ‘catch-all’ provision only applies
when a more specific provision under such rule does not; it is not to be used as a
substitute for any of the other, more specific, provisions of the rule.” 63 Ohio
Jurisprudence 3d, Judgments, Section 516, at 402-403 (2021); State v. Burner, 1st
Dist. Hamilton No. C-180516, 2020-Ohio-2930, ¶ 13, citing Caruso-Ciresi, Inc. v.
Lohman, 5 Ohio St.3d 64, 448 N.E.2d 1365 (1983), paragraph one of the syllabus.
Generally, fraud and misrepresentations are covered under Civ.R. 60(B)(3), which
permits relief in the case of “fraud (whether heretofore denominated intrinsic or
extrinsic), misrepresentation or other misconduct of an adverse party.” However,
Civ.R. 60(B)(5) may be used to seek relief when the fraud in question amounts to fraud
upon the court, which is distinguished from ordinary fraud. See, e.g., Coulson v.
Coulson, 5 Ohio St.3d 12, 448 N.E.2d 809 (1983), paragraph one of the syllabus.
{¶25} “Fraud upon the court differs from Rule 60(B)(3), fraud or
misrepresentation by an adverse party. Fraud upon the court might include, for
example, the bribing of a juror, not by the adverse party, but by some third person.”
Civ.R. 60, Staff Notes. “ ‘ “Examples of fraud on the court justifying relief from
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judgment would include such ‘egregious misconduct’ as bribery of a judge or jury, or
fabrication of evidence by counsel * * * or the prevention of an opposing party from
fairly presenting his case.” ’ ” Vukovic-Burkhardt v. Dayton Bd. of Edn., 2d Dist.
Montgomery No. 29539, 2022-Ohio-4183, ¶ 25, quoting Barton v. Barton, 2d Dist.
Greene No. 2015-CA-53, 2016-Ohio-5264, ¶ 19, quoting Hartford v. Hartford, 53
Ohio App.2d 79, 84, 371 N.E.2d 591 (8th Dist.1977).
{¶26} “Fraud on the court granting the default judgment must be proved by
clear and convincing evidence * * *.” First Natl. Bank of Clermont Cty. v. Blanchard,
1st Dist. Clermont No. 636, 1977 Ohio App. LEXIS 8482, 4 (June 8, 1977), citing Boaz
v. Hazlett, 1st Dist. Hamilton No. C-76086, 1977 Ohio App. LEXIS 8709, 4 (Mar. 16,
1977). The party alleging fraud bears the burden of proof. Kell, 1st Dist. Hamilton No.
C-120665, 2013-Ohio-4223, at ¶ 44. Accord Natl. Collegiate Student Loan Trust-1 v.
Payne, 10th Dist. Franklin No. 21AP-628, 2022-Ohio-2636, ¶ 18.
{¶27} “ ‘ “[T]he trial court is best able to determine whether a fraud has been
perpetrated upon it. Consequently, the trial court’s determination of the issue is
entitled to great weight * * *.” ’ ” Coulson, 5 Ohio St.3d at 16, 448 N.E.2d 809, quoting
Coulson v. Coulson, 8th Dist. Cuyahoga No. 43996, 1982 Ohio App. LEXIS 12144, 4
(Feb. 11, 1982), quoting Hartford at 85.
{¶28} Here, U.S. Bank argues that Armstrong’s failure to bring the 2013 loan-
modification agreement to the court’s attention amounted to fraud upon the court.
Armstrong based his argument for a default judgment on the claim that the loan was
accelerated on December 6, 2010, and had been accelerated since that time. Under
R.C. 1303.16(A) (UCC 3-118), the limitations period on a note is six years after the
accelerated due date. U.S. Bank alleges that this time was reset when Armstrong
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agreed to the loan modification, and therefore, the limitations period does not begin
until the maturity date set forth in the modification agreement (April 1, 2040) or on
any earlier date of acceleration. U.S. Bank argues that the earliest date that the statute
of limitations could have run is August 8, 2020, six years after it filed its 2014
foreclosure action. Therefore, according to U.S. Bank, the limitations period could not
possibly have expired before Armstrong filed suit on October 14, 2019.
{¶29} In response, Armstrong contends that the loan modification was not
concealed from the trial court because it was referenced in an exhibit attached to his
affidavit in support of a default judgment. That exhibit was U.S. Bank’s 2014 complaint
for foreclosure, which recited in paragraph 4: “KENNETH ARMSTRONG and [his
wife] executed and delivered a Home Affordable Modification Agreement
(“Agreement”). This Agreement was recorded in Official Instrument Number
2014010277 [of the Public Records of SARASOTA County, Florida.]” Armstrong also
argues that his trial counsel had an adequate legal basis to conclude that the loan-
modification agreement was not legally relevant, and thus not making an affirmative
disclosure of its existence was a matter of the attorney’s legal analysis, rather than a
misrepresentation. See U.S. Bank, N.A. v. Kapitula, 12th Dist. Clermont No. CA2012-
08-058, 2013-Ohio-2638, ¶ 12 (holding that an erroneous legal argument by plaintiff
bank did not amount to “fraud on the court” for purposes of Civ.R. 60(B)(5) where the
argument was used to procure a default judgment).
{¶30} Mindful of the “great weight” we are to afford the trial court’s
determination as to whether fraud has been perpetrated upon it, we cannot say that
the trial court abused its discretion in finding that there was not clear and convincing
evidence of fraud upon the court. The trial court did not err in determining that U.S.
10 OHIO FIRST DISTRICT COURT OF APPEALS
Bank was not entitled to relief under Civ.R. 60(B)(5). We overrule U.S. Bank’s first
assignment of error.
III. Second Assignment of Error
{¶31} In its second assignment of error, U.S. Bank argues that the trial court
erred by adopting as its decision the findings of fact and conclusions of law submitted
by Armstrong. U.S. Bank contends that the proposed order, as adopted by the trial
court, contains several erroneous findings of fact and conclusions of law.
{¶32} “Civ.R. 52 does not prohibit a trial court from adopting verbatim a
party’s proposed findings of fact and conclusions of law, as long as the court ‘has
thoroughly read the document to ensure that it is completely accurate in fact and
law.’ ” Watts v. Fledderman, 1st Dist. Hamilton No. C-170255, 2018-Ohio-2732, ¶ 22,
quoting Hinkston v. Fin. Co., 1st Dist. Hamilton No. C-980972, 2000 Ohio App. LEXIS
2010, 6-7 (May 12, 2000). “[T]he trial court’s adoption of [a party’s] findings of fact
and conclusions of law is not error unless [the opposing party] can demonstrate that
the findings of fact are not supported by competent, credible evidence, or that the
conclusions of law are not supported by legally sufficient evidence.” Fernwalt v. Our
Lady of Kilgore, 2017-Ohio-1260, 88 N.E.3d 499, ¶ 26 (7th Dist.).
Effect on Subsequent-Event Analysis
{¶33} U.S. Bank argues that the trial court’s order misrepresented its
argument regarding its claim for relief under Civ.R. 60(B)(4). In its order, the trial
court stated:
U.S. Bank’s argument that the ongoing quiet title action is a
“subsequent” event would essentially rewrite Rule 60(B)(4) to include
nearly every judgment, as every judgment has some prospective res
11 OHIO FIRST DISTRICT COURT OF APPEALS
judicata or collateral estoppel effects and could be introduced into other
actions.
{¶34} U.S. Bank complains that it did not make the argument “that any
judgment that could be used collaterally should fall into Civ.R. 60(B)(4)’s purview.”
{¶35} However, that is not the purpose of the trial court’s statement. The
excerpt cited by U.S. Bank does not summarize the bank’s argument. Rather, it states
a legal conclusion that if the court accepted U.S. Bank’s argument, then the result
would be that any judgment subsequently used in a collateral matter would be subject
to relief under the rule.
{¶36} This is a proper concern for the trial court to raise, and it accurately
reflects the history of Civ.R. 60(B)(4) and its federal equivalent. See In re J.W., 9th
Dist. Summit No. 26874, 2013-Ohio-4368, ¶ 26, quoting Maraziti v. Thorpe, 52 F.3d
252, 254 (9th Cir.1995), quoting Twelve John Does v. District of Columbia, 841 F.2d
1133, 1138 (1988) (“ ‘ “Virtually every court order causes at least some reverberations
into the future, and has, in that literal sense, some prospective effect[.] That a court’s
action has continuing consequences, however, does not necessarily mean that it has
prospective application for the purposes of [Federal] Rule 60(b)(5).” ’ ”).
Forfeiture of the Fraud-Upon-the-Court Argument
{¶37} The trial court determined that U.S. Bank had forfeited its fraud-upon-
the-court argument under Civ.R. 60(B)(5) by raising it in its reply memorandum,
rather than including it in its memorandum in support of its motion.
{¶38} Even if this conclusion is legally erroneous, U.S. Bank has not shown
prejudice from the error. The trial court analyzed the merits of U.S. Bank’s fraud-
upon-the-court argument as an alternative basis for denying its motion, and it
12 OHIO FIRST DISTRICT COURT OF APPEALS
determined that Armstrong had not committed fraud upon the court.
Misrepresentation Under Civ.R. 60(B)(3)
{¶39} U.S. Bank next claims that it was erroneous for the trial court to
conclude that its argument about the misrepresentation, which it argued as fraud upon
the court under Civ.R. 60(B)(5), “is more properly characterized under Rule 60(B)(3)
and therefore cannot be considered past the one-year time limit.”
{¶40} Because the trial court concluded that the alleged misrepresentation did
not constitute fraud upon the court, it was correct that, to the extent that Armstrong
made some misrepresentation, such a misrepresentation could be considered only
under Civ.R. 60(B)(3), including the one-year time limit applicable to that provision.
Reason for Omitting the Loan-Modification Agreement
{¶41} Finally, U.S. Bank argues that there is no evidence in the record to
support the trial court’s factual finding that Armstrong’s trial counsel omitted the 2013
loan-modification agreement only because counsel believed it to be legally irrelevant.
{¶42} First, the trial court did not actually enter a factual finding that
Armstrong’s counsel failed to inform the court about the loan-modification agreement
because counsel believed it was not legally relevant. The court merely recited that
Armstrong had presented that argument. (“Plaintiff argued that * * *.”; “Plaintiff
explained that * * *.”; “Plaintiff emphasized that * * *.”) The court’s factual finding
was: “After considering the record and the arguments of the parties, the Court finds
that Plaintiff’s former attorney did not engage in ‘fraud on the Court’ under these
circumstances.”
{¶43} Second, to the extent that the court found such facts without an
evidentiary basis, the error is harmless. Armstrong did not have the burden to prove
13 OHIO FIRST DISTRICT COURT OF APPEALS
the lack of fraud. Rather, U.S. Bank had the burden to prove fraud by clear and
convincing evidence. U.S. Bank has not done so, and thus the lack of evidence adduced
by Armstrong on this point is immaterial to the outcome.
{¶44} Because we find no errors in the trial court’s findings of fact and
conclusions of law that are prejudicial to U.S. Bank, we overrule its second assignment
of error.
IV. Conclusion
{¶45} For the foregoing reasons, we overrule both of U.S. Bank’s assignments
of error and affirm the judgment of the trial court.
Judgment affirmed.
BERGERON and BOCK, JJ., concur.
Please note:
The court has recorded its entry on the date of the release of this opinion.