BAC Home Loans Servicing, L.P. v. Tabac

2013 Ohio 5582

• Court: Ohio Court of Appeals
• Decided: December 19, 2013
• Docket: 99724
• Status: Published

Opinion

[Cite as BAC Home Loans Servicing, L.P. v. Tabac, 2013-Ohio-5582.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 99724

BAC HOME LOANS SERVICING, L.P., ETC. PLAINTIFF-APPELLEE

vs.

WILLIAM L. TABAC, ET AL. DEFENDANTS-APPELLANTS

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-714070

BEFORE: E.A. Gallagher, P.J., McCormack, J., and E.T. Gallagher, J.

RELEASED AND JOURNALIZED: December 19, 2013 ATTORNEYS FOR APPELLANT

William L. Tabac P.O. Box 780 Parkman, OH 44080

Daniel Thiel 75 Public Square Suite 650 Cleveland, OH 44113

ATTORNEYS FOR APPELLEES

Melany K. Fontanazza Barbara Friedman Yaksic 25550 Chagrin Blvd. Suite 406 Cleveland, OH 44122 EILEEN A. GALLAGHER, P.J.:

{¶1} William Tabac appeals the decision of the trial court dismissing his

counterclaim against BAC Home Loans Servicing (“BAC”). Tabac argues that the trial

court erred when it found no genuine issue of material fact regarding appellees’ lending

practices in the city of Cleveland Heights, his ability to suspend performance of his

contract and lastly, in limiting discovery of appellees’ lending practices. Finding no

merit to the instant appeal, we affirm the decision of the trial court.

{¶2} In 2002, Tabac entered into a loan with KeyBank National Association for

$191,200 for the purchase of a home located at 2241 Delaware Avenue in Cleveland

Heights, Ohio. Subsequent to the purchase, KeyBank conveyed the note and mortgage

to BAC, formerly known as Countrywide Home Loans.

{¶3} In July 2009, Tabac stopped making the required monthly payments

notwithstanding his own admission that he could afford those payments. According to

Tabac, he stopped paying his mortgage because the value of his property had decreased.

After Tabac failed to cure the default, BAC filed a complaint against Tabac for breach of

contract and to foreclose on the property. Tabac counterclaimed, arguing that BAC and

Countrywide Home Loan, not Tabac, breached the contract. Specifically, Tabac

asserted two claims under the Ohio Consumer Sales Practices Act (“CSPA”): first, that

through its lending practices in Cleveland Heights, Countrywide’s loans to other

borrowers adversely impacted the value of his property and second, that through its lending practices, Countrywide breached the duty of good faith and fair dealing and

failed to preserve the value of his property. Tabac also asserted a claim under the Fair

Debt Collection Practices Act, although this claim is not raised on appeal.

{¶4} The discovery process between the two sides was contentious. Tabac

sought documents and deposition testimony concerning BAC’s subprime and pay-option

products in Cleveland Heights from 2002 through 2008. BAC opposed Tabac’s

requests claiming that Tabac’s requests were overly broad, irrelevant, vague and

otherwise improper. After briefing filed by both parties, the trial court ruled that a

corporate representative should be produced to testify regarding the years 2002 through

2004 with respect to the following: the number of prime and subprime residential

mortgages initiated by Countrywide in Cleveland Heights; the underwriting criteria used

to qualify borrowers for each type of loan; the number and kind of loan that became

delinquent and/or defaulted; the number and kind of loan that led to the filing of a

foreclosure complaint and the number and kind of loans that were modified in Cleveland

Heights.

{¶5} BAC produced Bruce Duclos as the deponent in response to the order.

Although Tabac found issue with Duclos’ knowledge of prime and subprime mortgages

in Cleveland Heights, the trial court found that Duclos “showed himself to be

knowledgeable and well versed in the various mortgage products offered by

Countrywide. While he did not work in the subprime lending area, he was still able to give insight to those lending practices as well.”

{¶6} The parties continued to engage in contentious discovery practices up until

BAC filed it’s motion for summary judgment on May 10, 2012. The trial court granted

BAC’s motion as to their complaint in foreclosure and against Tabac as to all counts of

his counterclaim. In particular, the trial court concluded as follows:

Pursuant to Civil Rule 56, a party may not rest upon allegations or denials, but must set forth specific facts showing a genuine issue for trial. Defendant was allowed considerable discretion throughout the discovery process to investigate a number of sub-prime loans initiated by Countrywide in the Cleveland Heights area. However, there is still no evidence that brings forth the systematic deficiency of those loans and how they specifically, or how they alone, resulted in the decrease in defendant’s property value. As such, defendant’s argument must fail. Defendant’s breach of contract claim, FSCPA, CSPA, as well as issues of standing also fail as a matter of law. No genuine [issue] of material fact remain[s].

{¶7} Tabac appeals, raising the following three assigned errors:1

The trial court erred when it concluded as a matter of law on the evidence in the record that appellant was not entitled to suspend his performance of the lending contract because of its breach by appellees.

The trial court erred when it concluded as a matter of law on the evidence in the record that appellees’ lending practices in the city of Cleveland Heights, Ohio, did not result in a decrease of the value of Appellant’s Cleveland Heights home.

The trial court erred when it limited, to appellant’s prejudice, his discovery of appellees’ lending practices in Cleveland Heights.

1 Tabac’s fourth and fifth assignments of error were stricken by this court. Additionally, Tabac appeals only the dismissal of his counterclaims against BAC. As such, this court will not address the trial court’s grant of foreclosure on the property. {¶8} Tabac’s first two assigned errors addressing his claims of breach of

contract and the CSPA involve the same standard of review and similar facts thus, this

court shall address them contemporaneously.

{¶9} We review an appeal from summary judgment under a de novo standard.

Baiko v. Mays, 140 Ohio App.3d 1, 10, 746 N.E.2d 618 (8th Dist.2000). Accordingly,

we afford no deference to the trial court’s decision and independently review the record

to determine whether summary judgment is appropriate. N.E. Ohio Apt. Assn. v.

Cuyahoga Cty. Bd. of Commrs., 121 Ohio App.3d 188, 192, 699 N.E.2d 534 (8th

Dist.1997).

{¶10} Civ.R. 56(C) provides that, before summary judgment may be granted, a

court must determine that (1) no genuine issue as to any material fact remains to be

litigated, (2) the moving party is entitled to judgment as a matter of law and (3) it

appears from the evidence that reasonable minds can come to but one conclusion and

viewing the evidence most strongly in favor of the nonmoving party, that conclusion is

adverse to the nonmoving party. State ex rel. Duganitz v. Ohio Adult Parole Auth., 77

Ohio St.3d 190, 191, 1996-Ohio-326, 672 N.E.2d 654.

{¶11} The moving party carries an initial burden of setting forth specific facts that

demonstrate his or her entitlement to summary judgment. Dresher v. Burt, 75 Ohio

St.3d 280, 292-293, 1996-Ohio-107, 662 N.E.2d 264. If the movant fails to meet this

burden, summary judgment is not appropriate, but if the movant does meet this burden, summary judgment will be appropriate only if the nonmovant fails to establish the

existence of a genuine issue of material fact. Id. at 293.

{¶12} Here, we find the trial court properly granted BAC’s motion for summary

judgment on each of Tabac’s counterclaims. As noted by the trial court, Tabac failed to

establish a causal link between his purported harm and BAC’s alleged conduct in issuing

loans in Cleveland Heights. Specifically, Tabac failed to establish the requisite

causation between BAC’s conduct that he described as “Countrywide’s lending practices

that contributed to the housing collapse in the City of Cleveland Heights, Ohio” and his

alleged harm: the destruction of his property’s value.

{¶13} As stated by the Sixth Circuit Court of Appeals, there must be “some direct

relation between the injury asserted and the injurious conduct alleged.” Cleveland v.

Ameriquest Mtge. Secs., Inc., 615 F.3d 496 (6th Cir.2010). In Ameriquest, the city of

Cleveland sued numerous banks and lenders arguing that defendants’ lending practices

caused foreclosures and decreased home values. In determining that there was no

proximate cause between the harm complained of and the alleged wrongful act, the court

noted the following:

[T]he injuries that Cleveland alleges could have been caused by many other factors unconnected to the Defendants’ conduct. Companies that sold mortgages to home buyers decided which loans should be made and on what conditions. Although the complaint alleges that the Defendants sometimes dictated which types of loans to make, these companies ultimately made the decisions regarding where they would seek financing, which types of loans they would market and sell, and, once the mortgagee, whether to keep the mortgage or sell it to another buyer, such as one of the Defendants. Moreover, home buyers chose to enter into a sub prime mortgage and to default on their loans. And, once the mortgagor defaulted, the mortgagee or his assigns chose to begin the foreclosure process. These voluntary choices were made for a variety of reasons unrelated to the Defendants.

The alleged damages that subsequently occurred — eyesores, fires, drug deals, and looting — were also not directly caused by the Defendants. Homeowners, whether the initial buyers or mortgagees that later took possession of a home, were responsible for maintaining their properties. Fires were likely started by negligent or malicious individuals or occurred because a home was poorly built. Drug dealers and looters made independent decisions to engage in that criminal conduct. Additionally, other companies not listed in the complaint financed sub prime loans and properties not subject to a sub prime loan nevertheless entered into foreclosure. Similar to Holmes and Anza, Cleveland has not stated a viable claim when these actions could have occurred for “any number of reasons unconnected to the asserted pattern of [misconduct].” Id. at 458.

{¶14} The court determined that Cleveland failed to state a viable claim when the

actions complained of could have occurred for “any number of reasons unconnected to

the asserted pattern of [misconduct].” Id.

{¶15} Additionally, in Cleveland v. JP Morgan Chase Bank, N.A., 8th Dist.

Cuyahoga No. 98656, 2013-Ohio-1035, the city of Cleveland alleged that Chase

encouraged mortgage originators to issue subprime loans in order to securitize those

loans for profit. In determining that the City failed to establish proximate cause, the

court held that “there are several intervening factors necessary for the harm suffered by

the City to materialize. This leads to the conclusion that the City’s complaint alleges an

injury too remote to assert a justiciable claim.”

{¶16} The arguments raised by the city of Cleveland in Ameriquest and Cleveland, are substantially similar to the argument raised by Tabac. Tabac argues that

BAC’s lending practices, which he alleges contributed to the housing collapse in

Cleveland Heights, destroyed the value of his property. Thus, he argues, BAC breached

their alleged duty to preserve his property and violated the CSPA. However, in putting

forth these arguments, Tabac failed to establish any causal link between the alleged

actions of BAC and Tabac’s diminished property value. Even taking Tabac’s property

valuation evidence on face value, we find no evidence of direct causation between

BAC’s actions in Cleveland Heights and his diminished home value.

{¶17} There are countless factors that affect a property’s value. Cleveland;

Ameriquest. The existence of these myriad independent and intervening factors

preclude a causal connection between a particular lender’s conduct and the value of a

specific property. Cleveland; Ameriquest. Accordingly, we find no error with the trial

court’s grant of summary judgment on Tabac’s counterclaims against BAC.

{¶18} Tabac’s first and second assigned errors are overruled.

{¶19} In his third and final assigned error, Tabac argues the trial court erred when

it limited Tabac’s discovery requests of BAC’s lending practices in Cleveland Heights to

the years 2002-2004. Specifically, Tabac argues that the housing collapse did not begin

until 2008 and he required evidence of BAC’s lending practices for not only the years the

trial court authorized, but for each year leading up to the housing collapse. Tabac

claims the trial court’s limit to his discovery request constituted an abuse of discretion. We disagree.

{¶20} “[T]he standard of review of a trial court’s decision in a discovery matter is

whether the court abused its discretion.” Entingh v. Old Man’s Cave Chalets, Inc., 4th

Dist. Hocking No. 08CA14, 2009-Ohio-2242. Therefore, our standard of review is

whether the trial court abused its discretion in limiting Tabac’s discovery to BAC’s

lending practices during 2002-2004. An abuse of discretion “implies that the court

acted in an unreasonable, arbitrary, or unconscionable manner.” Entingh.

{¶21} Pursuant to Civ.R. 26(B)(1), the scope of discovery includes “any matter,

not privileged, which is relevant to the subject matter involved in the pending action,

whether it relates to the claim or defense of the party seeking discovery or to the claim or

defense of any other party.” Notwithstanding the liberal discovery provisions contained

in the rules, rulings regarding pretrial discovery lie solely within the discretion of the

trial court. Orbit Elecs., Inc. v. Helm Instrument Co., 167 Ohio App.3d 307,

2006-Ohio-2317, 855 N.E.2d 91 (8th Dist.). Absent an abuse of discretion that

prejudicially affects a substantial right of the moving party, an appellate court must

affirm a trial court’s disposition of discovery issues. Orbit Elecs.; State ex rel. The V

Cos. v. Marshall, 81 Ohio St.3d 467, 469, 1998-Ohio-329, 692 N.E.2d 198.

{¶22} In the present case, Tabac’s discovery issue is rendered moot by our

analysis of his first two assigned errors. The discovery that Tabac did not receive does

not and would not affect the outcome of his claims because, as discussed above, there are countless factors that affect a property’s values. Ameriquest; Cleveland.

{¶23} Accordingly, we find no error with the trial court’s limit of discovery

because it would not have affected the outcome of Tabac’s case.

{¶24} Tabac’s third assignment of error is overruled.

{¶25} The judgment of the trial court is affirmed.

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

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to said lower court to carry this

judgment into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.

EILEEN A. GALLAGHER, PRESIDING JUDGE

TIM McCORMACK, J., and EILEEN T. GALLAGHER, J., CONCUR