BAC Home Loans Serving, L.P. v. Vanjo

2015 Ohio 4317

• Court: Ohio Court of Appeals
• Decided: October 19, 2015
• Docket: 2013-L-106
• Status: Published

Opinion

[Cite as BAC Home Loans Serving, L.P. v. Vanjo, 2015-Ohio-4317.]

IN THE COURT OF APPEALS

ELEVENTH APPELLATE DISTRICT

LAKE COUNTY, OHIO

BAC HOME LOANS SERVICING, L.P., : OPINION fka COUNTRYWIDE HOME LOAN SERVICING, L.P., : CASE NO. 2013-L-106 Plaintiff-Appellee, :

- vs - :

RYAN T. VANJO, et al., :

Defendants-Appellants. :

Civil Appeal from the Lake County Court of Common Pleas, Case No. 11 CF 001455.

Judgment: Affirmed.

Eric T. Deighton, Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 24755 Chagrin Boulevard, Suite 200, Cleveland, OH 44122-5690 (For Plaintiff-Appellee).

James R. Douglass, 4600 Prospect Avenue, Cleveland, OH 44103 (For Defendants- Appellants).

CYNTHIA WESTCOTT RICE, J.

{¶1} Appellants, Ryan T. Vanjo and Holly N. Vanjo, appeal the summary

judgment entered by the Lake County Court of Common Pleas in favor of appellee, BAC

Home Loans Servicing, L.P., fka Countrywide Home Loan Servicing, L.P. (“BAC”), on

BAC’s complaint for foreclosure. At issue is whether BAC had standing to file this

action. For the reasons that follow, we affirm. {¶2} On or about November 21, 2006, appellants obtained a mortgage loan

from Countrywide Home Loans, Inc. to purchase real property in Mentor, Ohio. In

exchange for the loan, appellants signed a promissory note in favor of Countrywide in

the amount of $203,000. The note was endorsed in blank. On the same date, in order

to secure the note, appellants signed a mortgage in favor of Mortgage Electronic

Registration Systems, Inc. (“MERS”), acting as nominee for the lender Countrywide.

Subsequently, appellants signed a loan modification agreement, which was to be

effective on October 1, 2007.

{¶3} Appellants defaulted on the note by failing to make the payment due on

June 1, 2011, or any subsequent installments. The amount due under the loan as of

June 1, 2011 was $195,048.

{¶4} On June 13, 2011, BAC filed its complaint in foreclosure. BAC alleged

that it was in possession of and the holder of the note; that said note was modified

pursuant to a loan modification agreement; that MERS had assigned the mortgage to it

one month before the complaint was filed; that appellants were in default; and that BAC

had accelerated the debt and declared it to be due. Attached to the complaint were

copies of the promissory note, the mortgage, the loan modification agreement, and the

assignment of the mortgage to BAC.

{¶5} Appellants filed an answer, denying some allegations of the complaint and

admitting others, and asserting various affirmative defenses, including BAC’s alleged

lack of standing. The trial court referred the matter to mediation, which lasted nearly

two years, but was ultimately unsuccessful in resolving this action.

2 {¶6} Thereafter, BAC moved for summary judgment. In support, it attached the

affidavit of Kevin R. Drakeford, Jr., an officer of Bank of America, N.A., Successor by

Merger to BAC. Mr. Drakeford testified via affidavit that he was authorized to sign the

affidavit on behalf of BAC. He said that the subject promissory note was endorsed in

blank; that BAC “has possession of the promissory note;” that BAC “held the note at the

time of filing the foreclosure complaint;” and that BAC is the assignee of the mortgage

for the referenced loan. Mr. Drakeford said that appellants defaulted on the note by

failing to make the payment due for June 1, 2011, or any subsequent installments; that

appellants’ indebtedness had been accelerated; and that the principal balance due on

the loan is $195,048 plus interest at 7.125 % per annum from May 1, 2011.

{¶7} Appellants filed a brief in opposition to summary judgment, but did not

attach any evidentiary materials or affidavits disputing Mr. Drakeford’s affidavit. The

trial court granted BAC’s motion for summary judgment. Appellants appeal the

judgment, asserting two assignments of error. Because they are related, they are

considered together. They allege:

{¶8} “[1.] The trial court erred when it awarded summary judgment to plaintiff-

appellee when there is no evidence in the record that the plaintiff-appellee is or was the

holder of either the note or mortgage.

{¶9} “[2.] The trial court erred when it held that the plaintiff acquired the legal

authority to enforce the subject note by virtue of the assignment of the mortgage deed.”

{¶10} Summary judgment is proper when: (1) there is no genuine issue of

material fact; (2) the moving party is entitled to judgment as a matter of law; and (3)

reasonable minds can come to but one conclusion, and that conclusion is adverse to

3 the nonmoving party, that party being entitled to have the evidence construed most

strongly in his favor. Civ.R. 56(C); Leibreich v. A.J. Refrigeration, Inc., 67 Ohio St.3d

266, 268 (1993).

{¶11} The party seeking summary judgment on the ground that the nonmoving

party cannot prove his case bears the initial burden of informing the trial court of the

basis for the motion and of identifying those portions of the record that demonstrate the

absence of a genuine issue of material fact on the essential elements of the nonmoving

party’s case. Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996). The moving party must

point to some evidence of the type listed in Civ.R. 56(C) that affirmatively demonstrates

the nonmoving party has no evidence to support his case. Dresher, supra, at 293.

{¶12} If this initial burden is not met, the motion for summary judgment must be

denied. Id. However, if the moving party meets his initial burden, the nonmoving party

must then produce competent evidence showing there is a genuine issue for trial. Civ.R.

56(E). If the adverse party does not so respond, summary judgment, if appropriate,

shall be entered against him. Dresher, supra.

{¶13} Since a trial court’s ruling on a motion for summary judgment involves only

questions of law, we conduct a de novo review of the judgment. DiSanto v. Safeco Ins.

of Am., 168 Ohio App.3d 649, 2006-Ohio-4940, ¶41 (11th Dist.).

{¶14} In Ohio, courts of common pleas have jurisdiction over justiciable matters.

Ohio Constitution, Article IV, Section 4(B). “Standing to sue is part of the common

understanding of what it takes to make a justiciable case.” Steel Co. v. Citizens for a

Better Environment, 523 U.S. 83, 102 (1998). Standing involves a determination of

whether a party has alleged a personal stake in the outcome of the controversy to

4 ensure the dispute will be presented in an adversarial context. Mortgage Elec.

Registration Sys., Inc. v. Petry, 11th Dist. Portage No. 2008-P-0016, 2008-Ohio-5323,

¶18.

{¶15} In a mortgage foreclosure action, the mortgage lender must establish an

interest in the promissory note or in the mortgage in order to have standing to invoke

the jurisdiction of the common pleas court. Fed. Home Loan Mortg. Corp. v.

Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, ¶28. “The requirement of an

‘interest’ can be met by showing an assignment of either the note or mortgage.”

(Emphasis added.) Fed. Home Loan Mtge. Corp. v. Koch, 11th Dist. Geauga No. 2012-

G-3084, 2013-Ohio-4423, ¶24. Further, because standing is required to invoke the trial

court’s jurisdiction, standing is determined as of the filing of the complaint.

Schwartzwald, supra, at ¶24.

{¶16} Whether standing exists is a matter of law that we review de novo. Bank of

Am., NA v. Barber, 11th Dist. Lake No. 2013-L-014, 2013-Ohio-4103, ¶19.

{¶17} Appellants argue that Mr. Drakeford’s affidavit was insufficient to support

summary judgment because he did not state he has personal knowledge of the facts

contained therein and it is thus mere hearsay. We disagree.

{¶18} Civ.R. 56(E) provides in pertinent part: “Supporting and opposing affidavits

shall be made on personal knowledge, shall set forth such facts as would be admissible

in evidence, and shall show affirmatively that the affiant is competent to testify to the

matters stated in the affidavit.”

{¶19} “[The] mere assertion of personal knowledge satisfies the personal

knowledge requirement of Civ.R. 56(E) if the nature of the facts in the affidavit

5 combined with the identity of the affiant creates a reasonable inference that the affiant

has personal knowledge of the facts in the affidavit.” Bank One, N.A. v. Lytle, 9th Dist.

Lorain No. 04CA008643, 2004-Ohio-6547, ¶13.

{¶20} Further, it is well settled that personal knowledge may be inferred from the

contents of an affidavit. Bush v. Dictaphone Corp., 10th Dist. Franklin No. 00AP-1117,

2003-Ohio-883, ¶73.

{¶21} Mr. Drakeford stated in his affidavit that he is an Assistant Vice-President

of Bank of America, N.A., Successor by Merger to BAC, and that, as such, he is

authorized to execute his affidavit on behalf of BAC. He said that as part of his job, he is

familiar with the type of records maintained by Bank of America in connection with the

instant loan. He said he has personal knowledge of Bank of America’s procedures for

creating these records. He said he made his affidavit based on his review of Bank of

America’s business records for the subject loan (which included the note, the mortgage,

the loan modification agreement, the mortgage assignment, and appellants’ account

information statement) and his personal knowledge as to how said records are created

and maintained. He said the information in his affidavit is based on these business

records, which were made at or near the time of the occurrence of events referenced

therein by persons with personal knowledge of the information in the records; that they

are kept in the course of Bank of America’s regularly-conducted business; and that it is

the regular practice of Bank of America to make such records.

{¶22} Thus, contrary to appellants’ argument, Mr. Drakeford presented sufficient

information in his affidavit to demonstrate his personal knowledge of the matters

contained therein. Lytle, supra; Bush, supra.

6 {¶23} Next, appellants argue the trial court erred in granting summary judgment

to BAC because Mr. Drakeford did not authenticate the note attached to the complaint.

Again, we do not agree.

{¶24} In order to be entitled to summary judgment, copies of documents

submitted on summary judgment must be either certified or authenticated by affidavit.

Civ.R. 56(E). However, “[i]t is elementary in the law of pleading that an admission in a

pleading dispenses with proof and is equivalent to proof of the fact.” Rhoden v. Akron,

61 Ohio App.3d 725, 727 (9th Dist.1988). “Thus, an admission made in the pleadings

dispenses with the need to prove the truth of the matter admitted.” Id. This court cited

Rhoden with approval in Stanwade Metal Prods. v. Heintzelman, 158 Ohio App.3d 228,

2004-Ohio-4196 (11th Dist.), in which this court stated: “It is axiomatic that the

responses in Heintzelman's answer constitute admissions which he cannot later

contradict or challenge via deposition or other testimony * * *.” Id. at ¶21. Further, this

court in Stanwade stated: “In a summary judgment exercise, the court may look to any

admission in the answer of a defendant as evidence in support of a motion for summary

judgment.” Id. at ¶16.

{¶25} As noted above, BAC alleged in its complaint that the note was modified

pursuant to the loan modification agreement attached to the complaint. That agreement

provided, in pertinent part:

{¶26} This modification of the Note * * *, to be effective on October 1,

2007, is entered into by and among [appellants] (“Borrower”) * * *

Countrywide Home Loans, Inc., [BAC’s predecessor] (“Lender”),

and [MERS] (“Mortgagee”), and amends and supplements that

7 certain promissory note, dated November 21, 2006, in the original

principal amount of $203,000 (“Note”), secured by that certain

Mortgage * * * of the same date, granted * * * to [MERS], as

mortgagee of record (solely as nominee for [Countrywide]) * * *.

Borrower [appellants] agrees: * * * [t]he terms of the Note and the

[Mortgage] are amended and modified as follows: commencing on

November 1, 2007, my regular monthly principal and interest

payment under the Note shall be $1,367.65 [and] the new Maturity

Date is: October 1, 2037. * * * Nothing in this Modification will

invalidate, impair or release any term or condition in the Note or the

[Mortgage]. The Note and the [Mortgage] will continue in full force

and effect. * * * Borrower ratifies and confirms the terms and

conditions of the Note and the [Mortgage], and covenants and

agrees to perform and comply with the terms and conditions, as

modified in this Modification.

{¶27} In their answer, appellants admitted that a copy of the subject note was

attached to the complaint. They also “admit[ted] that the promissory note was modified

pursuant to the [loan modification agreement] attached to Plaintiffs’ Complaint * * *.”

Thus, appellants admitted the authenticity of the loan modification agreement in their

answer. As a result, BAC was not required to authenticate the loan modification

agreement because appellants admitted the accuracy of the modification agreement

attached to the complaint. Stanwade, supra.

8 {¶28} Moreover, since the loan modification agreement referenced the note and

amended its terms, and appellants in that agreement ratified and confirmed its terms, as

amended, the loan modification agreement incorporated the note by reference and

amended it. Thus, by admitting the authenticity of the loan modification agreement in

their answer, appellants in effect admitted the authenticity of the note, and BAC was not

required to authenticate the note.

{¶29} Further, as noted above, Mr. Drakeford stated in his affidavit that the

promissory note referenced in the complaint was endorsed in blank; that BAC currently

has possession of the note; and that BAC held the note at the time the complaint was

filed. Appellants presented no evidence or affidavits disputing this evidence. “It is well

established that * * * if the non-moving party fails to respond with evidentiary materials,

the affidavit of the moving party is accepted as true.” SGP Ltd. v. Miracle Makers, Inc.,

8th Dist. Cuyahoga No. 75391, 2000 Ohio App. LEXIS 4045, *10 (Sep. 7, 2000). Since

appellants failed to present any evidentiary materials disputing Mr. Drakeford’s affidavit,

the foregoing statements in his affidavit are conclusively established.

{¶30} Appellants’ admission regarding the authenticity of the loan modification

agreement and the note coupled with Mr. Drakeford’s undisputed testimony that BAC

held the note when the complaint was filed demonstrate that BAC had an interest in the

note and thus had standing to file this action.

{¶31} Further, for the same reasons the loan modification agreement

incorporated the note by reference, that agreement also incorporated the mortgage by

reference and amended it. And, since appellants admitted the authenticity of the

9 modification agreement in their answer, they effectively admitted the authenticity of the

mortgage, and BAC was not required to authenticate the mortgage.

{¶32} In addition, BAC also had an interest in the mortgage when it filed the

complaint. As noted above, it is undisputed that the note was negotiated to BAC by

endorsement before the complaint was filed. In Fed. Home Loan Mortg. Corp. v. Rufo,

11th Dist. Ashtabula No. 2012-A-0011, 2012-Ohio-5930, this court stated:

{¶33} “In Ohio it has been held that transfer of the note implies transfer of

the mortgage. * * * ‘Where a note secured by a mortgage is

transferred so as to vest the legal title to the note in the transferee,

such transfer operates as an equitable assignment of the mortgage,

even though the mortgage is not assigned or delivered.’” Id. at ¶41,

quoting Bank of New York v. Dobbs, 5th Dist. Knox No. 2009-CA-

000002, 2009-Ohio-4742, ¶29-30, quoting LaSalle Bank N.A. v.

Street, 5th Dist. Licking No. 08CA60, 2009-Ohio-1855, ¶28.

{¶34} Thus, the negotiation of the promissory note to BAC operated as an

equitable assignment of the mortgage to it, giving BAC an interest in the mortgage prior

to the filing of the complaint. For this additional reason, BAC had standing.

{¶35} In summary, by admitting the authenticity of the loan modification

agreement, appellants effectively admitted the authenticity of the note and mortgage,

and BAC was not required to authenticate any of these instruments. Further, BAC

established it had an interest in both the note and mortgage before it filed the complaint.

We therefore hold the trial court did not err in granting summary judgment in favor of

BAC.

10 {¶36} For the reasons stated in the opinion of this court, appellants’ assignments

of error are overruled. It is the judgment and order of this court that the judgment of the

Lake County Court of Common Pleas is affirmed.

THOMAS R. WRIGHT, J., concurs,

COLLEEN MARY O’TOOLE, J., dissents with a Dissenting Opinion.

_____________________

COLLEEN MARY O’TOOLE, J., dissents with a Dissenting Opinion.

{¶37} I agree with appellants that BAC failed to authenticate properly the note in

this case, and would reverse and remand on that basis.

{¶38} The majority reasons that appellants admitted in their answer a copy of

the note was attached to the complaint; that the note was modified by the modification

agreement also attached to the complaint; and, that since the modification referenced

the note, the note also was properly before the trial court on summary judgment in this

fashion. The majority correctly cites Stanwade Metal Prods., supra, for the proposition

that admissions in an answer are binding in summary judgment proceedings.

{¶39} In their answer, appellants stated, at paragraph one:

{¶40} “Defendants deny for want of knowledge that Plaintiff is in possession and

the holder of a certain promissory note, a copy of which is attached to Plaintiff’s

Complaint as Exhibit A. Defendants admit that the promissory note was modified

pursuant to the loan modification agreement attached to Plaintiff’s Complaint as Exhibit

B and specifically denies the balance of the allegations contained within Paragraph 1 of

Plaintiff’s Complaint.”

11 {¶41} Thus, appellants never directly admitted the authenticity of the note

attached to the complaint in their answer. Nor did they admit the authenticity of the

modification agreement: they simply admitted what is evident on the face of that

agreement – that it modifies the note. They do not specifically admit the authenticity of

the note. Consequently, BAC could not “bootstrap” the authenticity of the note through

the alleged admission of the modification agreement’s authenticity. Rather, BAC was

required, in summary judgment proceedings, to authenticate these documents through

the affidavit of Mr. Drakeford. Civ.R. 56(E); see also HSBC Mtge. Services, Inc. v.

Edmon, 6th Dist. Erie No. E-11-046, 2012-Ohio-4990, ¶14-24. Mr. Drakeford’s affidavit

is insufficient to do this.

{¶42} I respectfully dissent.