[Cite as Bank of Am., N.A. v. Vaught, 2014-Ohio-3383.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
CLERMONT COUNTY
BANK OF AMERICA, N.A., : CASE NO. CA2013-11-085 Plaintiff-Appellee, : OPINION : 8/4/2014 - vs - :
SABRINA VAUGHT, et al., :
Defendants-Appellants. :
CIVIL APPEAL FROM CLERMONT COUNTY COURT OF COMMON PLEAS Case No. 2012 CVE 01895
Reed Smith LLP, K. Issac deVyver, Reed Smith Centre, 225 Fifth Avenue, Pittsburg, Pennsylvania 15222, for plaintiff-appellee
McGlinchey Stafford PLLC, Bryan T. Kostura, 25550 Chagrin Boulevard, Suite 406, Cleveland, Ohio 44122-4640, for plaintiff-appellee
Duncan Law Group, LLC, Brian K. Duncan and Bryan Thomas, 600 High Street, Suite 100, Columbus, Ohio 43215, for defendants-appellants
M. POWELL, J.
{¶ 1} Defendants-appellants, Sabrina Vaught and Bruce Edward Vaught, II
(collectively, the Vaughts), appeal from a decision of the Clermont County Court of Common
Pleas granting summary judgment in favor of plaintiff-appellee, Bank of America N.A.
(BANA), in a foreclosure action. Clermont CA2013-11-085
{¶ 2} On July 18, 2005, the Vaughts executed a promissory note (the Note) in favor
of ComUnity Lending, Incorporated (ComUnity) in the amount of $212,000 for the purchase
of real property located at 4973 Monterey Maple Grove Road in Batavia, Ohio. The Note was
secured by a mortgage (the Mortgage) that designated the Vaughts as the borrowers,
ComUnity as the lender, and Mortgage Electronic Registration Systems, Inc. (MERS) as the
mortgagee, acting as the nominee for ComUnity. The Mortgage was recorded on July 27,
2005. ComUnity subsequently endorsed the Note to Countrywide Document Custody
Services, which endorsed the Note to Countrywide Home Loans, Inc., which eventually
endorsed it in blank.
{¶ 3} The Vaughts stopped making payments on the note in January 2012. In June
2012, MERS assigned the Mortgage to BANA. In September 2012, BANA filed a complaint
to foreclose, and attached copies of both the Note and the Mortgage. The complaint alleged
that BANA was a holder of the Note and the Mortgage, which were both in default. The
complaint also alleged that BANA notified the Vaughts of the default, but that they failed to
meet the deadline for payment of the overdue amount.
{¶ 4} In February 2013, BANA filed a motion for summary judgment. Attached to the
motion were, among other things, the affidavit of Denise Swipe, an officer of BANA, and an
"Account Information Statement" that reflected the Vaughts had accrued nearly $15,000 in
missed payments since January 1, 2012. In response, the Vaughts filed a "Brief in
Opposition" in which they requested additional time for discovery. A continuance was
granted through an agreed entry, but the Vaughts failed to file any additional pleadings. In
April 2013, BANA filed a brief in support of its motion for summary judgment and, despite
several further continuances, the Vaughts failed to respond. In October 2013, the trial court
granted BANA's motion for summary judgment.
{¶ 5} The Vaughts now appeal, raising one assignment of error: -2- Clermont CA2013-11-085
{¶ 6} THE TRIAL COURT ABUSED ITS DISCRETION BY GRANTING PLAINTIFF'S
MOTION FOR SUMMARY JUDGMENT BECAUSE THERE WERE GENUINE ISSUES OF
FACT AND PLAINTIFF WAS NOT ENTITLED TO JUDGMENT AS A MATTER OF LAW.
{¶ 7} Appellate review of a trial court's decision granting summary judgment is de
novo, which means the appellate court is required to "us[e] the same standard that the trial
court should have used, and * * * examine the evidence to determine whether as a matter of
law no genuine issues exist for trial." Bank of New York Mellon v. Putman, 12th Dist. Butler
No. CA2012-12-267, 2014-Ohio-1796, ¶ 17. Pursuant to Civ.R. 56, a trial court may grant
summary judgment only when (1) there is no genuine issue of any material fact, (2) the
moving party is entitled to judgment as a matter of law, and (3) the evidence submitted can
only lead reasonable minds to one conclusion, that conclusion being adverse to the
nonmoving party. Id. at ¶ 18.
{¶ 8} The Vaughts assert that the trial court erred in granting summary judgment
because BANA failed to satisfy the preconditions for summary judgment. Specifically, the
Vaughts argue that, at the time the motion was granted, there remained at least three
genuine issues of material fact: (1) whether BANA is a holder in due course of the Note; (2)
whether BANA assumed the risk of the alleged delinquency by accepting assignment of the
mortgage; and (3) whether BANA complied with the provision in the Mortgage requiring it to
give notice to the Vaughts prior to acceleration of the debt.
{¶ 9} Based upon the record before this court, it does not appear that the Vaughts
raised any of the foregoing issues with the trial court. "It is well settled that a party cannot
raise new issues or legal theories for the first time on appeal." Nix v. Williams Family
Partnership, Ltd., 12th Dist. Butler No. CA2013-05-076, 2013-Ohio-5208, ¶ 25. Therefore,
we decline to consider the Vaughts' arguments that there are genuine issues of material fact
-3- Clermont CA2013-11-085
as to whether BANA assumed the risk of the alleged delinquency, and whether BANA
complied with the Mortgage's acceleration clause.
{¶ 10} However, we will consider whether BANA is a holder in due course of the Note,
because this issue bears some relation to BANA's standing to foreclose. As a jurisdictional
requirement, standing may be raised by a party to the action at any time. Bank of New York
Mellon v. Blouse, 12th Dist. Fayette No. CA2013-02-002, 2013-Ohio-4537, ¶ 7, citing Fed.
Home Loan Mortg. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, ¶ 22.
{¶ 11} "It is an elementary concept of law that a party lacks standing to invoke the
jurisdiction of the court unless he has, in an individual or representative capacity, some real
interest in the subject matter of the action." (Emphasis deleted.) Schwartzwald at ¶ 22,
citing State ex rel. Dallman v. Franklin Cty. Court of Common Pleas, 35 Ohio St.2d 176, 179
(1973). Put another way, in order to establish standing, the plaintiff must show it has
suffered injury "caused by the defendant that has some remedy in law or equity." Blouse at ¶
6, citing U.S. Bank Natl. Assn. v. Gray, 10th Dist. Franklin No. 12AP-953, 2013-Ohio-3340, ¶
18. This requirement is satisfied in a foreclosure action if the plaintiff can demonstrate he
has an interest in the note or mortgage at the time the complaint is filed. Schwartzwald at ¶
28.
{¶ 12} The Vaughts assert that BANA failed to demonstrate an interest in the Note.
They claim that because BANA has not satisfied R.C. 1303.32(A)(2)(C), it is not a holder in
due course of the Note, and therefore has no right to foreclose. The Vaughts also claim that
because BANA failed to produce originals of the Note or Mortgage for their inspection,
BANA's ownership of the debt remains a genuine issue of material fact.
{¶ 13} BANA need not be a holder in due course in order to demonstrate an interest in
the Note sufficient to foreclose. As this court has previously observed, the "holder" of an
instrument such as the Note here in question is a "person entitled to enforce" the instrument. -4- Clermont CA2013-11-085
Fifth Third Mtge. Co. v. Bell, 12th Dist. Madison No.
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[Cite as Bank of Am., N.A. v. Vaught, 2014-Ohio-3383.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
CLERMONT COUNTY
BANK OF AMERICA, N.A., : CASE NO. CA2013-11-085 Plaintiff-Appellee, : OPINION : 8/4/2014 - vs - :
SABRINA VAUGHT, et al., :
Defendants-Appellants. :
CIVIL APPEAL FROM CLERMONT COUNTY COURT OF COMMON PLEAS Case No. 2012 CVE 01895
Reed Smith LLP, K. Issac deVyver, Reed Smith Centre, 225 Fifth Avenue, Pittsburg, Pennsylvania 15222, for plaintiff-appellee
McGlinchey Stafford PLLC, Bryan T. Kostura, 25550 Chagrin Boulevard, Suite 406, Cleveland, Ohio 44122-4640, for plaintiff-appellee
Duncan Law Group, LLC, Brian K. Duncan and Bryan Thomas, 600 High Street, Suite 100, Columbus, Ohio 43215, for defendants-appellants
M. POWELL, J.
{¶ 1} Defendants-appellants, Sabrina Vaught and Bruce Edward Vaught, II
(collectively, the Vaughts), appeal from a decision of the Clermont County Court of Common
Pleas granting summary judgment in favor of plaintiff-appellee, Bank of America N.A.
(BANA), in a foreclosure action. Clermont CA2013-11-085
{¶ 2} On July 18, 2005, the Vaughts executed a promissory note (the Note) in favor
of ComUnity Lending, Incorporated (ComUnity) in the amount of $212,000 for the purchase
of real property located at 4973 Monterey Maple Grove Road in Batavia, Ohio. The Note was
secured by a mortgage (the Mortgage) that designated the Vaughts as the borrowers,
ComUnity as the lender, and Mortgage Electronic Registration Systems, Inc. (MERS) as the
mortgagee, acting as the nominee for ComUnity. The Mortgage was recorded on July 27,
2005. ComUnity subsequently endorsed the Note to Countrywide Document Custody
Services, which endorsed the Note to Countrywide Home Loans, Inc., which eventually
endorsed it in blank.
{¶ 3} The Vaughts stopped making payments on the note in January 2012. In June
2012, MERS assigned the Mortgage to BANA. In September 2012, BANA filed a complaint
to foreclose, and attached copies of both the Note and the Mortgage. The complaint alleged
that BANA was a holder of the Note and the Mortgage, which were both in default. The
complaint also alleged that BANA notified the Vaughts of the default, but that they failed to
meet the deadline for payment of the overdue amount.
{¶ 4} In February 2013, BANA filed a motion for summary judgment. Attached to the
motion were, among other things, the affidavit of Denise Swipe, an officer of BANA, and an
"Account Information Statement" that reflected the Vaughts had accrued nearly $15,000 in
missed payments since January 1, 2012. In response, the Vaughts filed a "Brief in
Opposition" in which they requested additional time for discovery. A continuance was
granted through an agreed entry, but the Vaughts failed to file any additional pleadings. In
April 2013, BANA filed a brief in support of its motion for summary judgment and, despite
several further continuances, the Vaughts failed to respond. In October 2013, the trial court
granted BANA's motion for summary judgment.
{¶ 5} The Vaughts now appeal, raising one assignment of error: -2- Clermont CA2013-11-085
{¶ 6} THE TRIAL COURT ABUSED ITS DISCRETION BY GRANTING PLAINTIFF'S
MOTION FOR SUMMARY JUDGMENT BECAUSE THERE WERE GENUINE ISSUES OF
FACT AND PLAINTIFF WAS NOT ENTITLED TO JUDGMENT AS A MATTER OF LAW.
{¶ 7} Appellate review of a trial court's decision granting summary judgment is de
novo, which means the appellate court is required to "us[e] the same standard that the trial
court should have used, and * * * examine the evidence to determine whether as a matter of
law no genuine issues exist for trial." Bank of New York Mellon v. Putman, 12th Dist. Butler
No. CA2012-12-267, 2014-Ohio-1796, ¶ 17. Pursuant to Civ.R. 56, a trial court may grant
summary judgment only when (1) there is no genuine issue of any material fact, (2) the
moving party is entitled to judgment as a matter of law, and (3) the evidence submitted can
only lead reasonable minds to one conclusion, that conclusion being adverse to the
nonmoving party. Id. at ¶ 18.
{¶ 8} The Vaughts assert that the trial court erred in granting summary judgment
because BANA failed to satisfy the preconditions for summary judgment. Specifically, the
Vaughts argue that, at the time the motion was granted, there remained at least three
genuine issues of material fact: (1) whether BANA is a holder in due course of the Note; (2)
whether BANA assumed the risk of the alleged delinquency by accepting assignment of the
mortgage; and (3) whether BANA complied with the provision in the Mortgage requiring it to
give notice to the Vaughts prior to acceleration of the debt.
{¶ 9} Based upon the record before this court, it does not appear that the Vaughts
raised any of the foregoing issues with the trial court. "It is well settled that a party cannot
raise new issues or legal theories for the first time on appeal." Nix v. Williams Family
Partnership, Ltd., 12th Dist. Butler No. CA2013-05-076, 2013-Ohio-5208, ¶ 25. Therefore,
we decline to consider the Vaughts' arguments that there are genuine issues of material fact
-3- Clermont CA2013-11-085
as to whether BANA assumed the risk of the alleged delinquency, and whether BANA
complied with the Mortgage's acceleration clause.
{¶ 10} However, we will consider whether BANA is a holder in due course of the Note,
because this issue bears some relation to BANA's standing to foreclose. As a jurisdictional
requirement, standing may be raised by a party to the action at any time. Bank of New York
Mellon v. Blouse, 12th Dist. Fayette No. CA2013-02-002, 2013-Ohio-4537, ¶ 7, citing Fed.
Home Loan Mortg. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, ¶ 22.
{¶ 11} "It is an elementary concept of law that a party lacks standing to invoke the
jurisdiction of the court unless he has, in an individual or representative capacity, some real
interest in the subject matter of the action." (Emphasis deleted.) Schwartzwald at ¶ 22,
citing State ex rel. Dallman v. Franklin Cty. Court of Common Pleas, 35 Ohio St.2d 176, 179
(1973). Put another way, in order to establish standing, the plaintiff must show it has
suffered injury "caused by the defendant that has some remedy in law or equity." Blouse at ¶
6, citing U.S. Bank Natl. Assn. v. Gray, 10th Dist. Franklin No. 12AP-953, 2013-Ohio-3340, ¶
18. This requirement is satisfied in a foreclosure action if the plaintiff can demonstrate he
has an interest in the note or mortgage at the time the complaint is filed. Schwartzwald at ¶
28.
{¶ 12} The Vaughts assert that BANA failed to demonstrate an interest in the Note.
They claim that because BANA has not satisfied R.C. 1303.32(A)(2)(C), it is not a holder in
due course of the Note, and therefore has no right to foreclose. The Vaughts also claim that
because BANA failed to produce originals of the Note or Mortgage for their inspection,
BANA's ownership of the debt remains a genuine issue of material fact.
{¶ 13} BANA need not be a holder in due course in order to demonstrate an interest in
the Note sufficient to foreclose. As this court has previously observed, the "holder" of an
instrument such as the Note here in question is a "person entitled to enforce" the instrument. -4- Clermont CA2013-11-085
Fifth Third Mtge. Co. v. Bell, 12th Dist. Madison No. CA2013-02-003, 2013-Ohio-3678, ¶ 20,
citing R.C. 1303.31(A)(1). Although the concept of "holder" is distinct from that of a "holder in
due course," both concepts refer to persons entitled to enforce the instrument. R.C. 1303.31.
A "holder" includes a person who is in possession of an instrument payable to bearer. R.C.
1301.01(T)(1)(a).1 "When an instrument is indorsed in blank, the instrument becomes
payable to bearer * * *." Bell at ¶ 20, quoting R.C. 1303.25(B). A "holder in due course," on
the other hand, is a holder who took for value, in good faith, and without notice of one of
three specific problems with the instrument, including that the instrument is overdue. R.C.
1303.32(A)(2).
{¶ 14} In the present case, BANA, with a copy of the Note and the affidavit of Ms.
Snipe, demonstrated to the trial court both that it is in possession of the Note, and that the
Note is endorsed in blank. In other words, BANA has established it is a holder. As a holder,
BANA is a person entitled to enforce the Note. Blouse, 2013-Ohio-4537 at ¶ 11. Therefore,
the argument by the Vaughts that BANA has failed to prove it is a holder in due course is
irrelevant.
{¶ 15} Similarly without merit is the Vaughts' claim that BANA's failure to produce the
originals of the Note and Mortgage raises a genuine issue of material fact as to ownership of
the debt. To begin with, the Vaughts never moved the trial court to compel production of the
originals. Moreover, "Evid.R. 1003 permits a copy of a document to be admitted into
evidence to the same extent as an original unless a genuine question is raised as to the
authenticity of the original or it would be unfair to admit the duplicate in lieu of the original."
Bank of America, N.A. v. Jackson, 12th Dist. Warren No. CA2014-01-018, 2014-Ohio-2480, ¶
1. R.C. 1301.01 was repealed by Am.H.B. No. 9, 2011 Ohio Laws File 9, effective June 29, 2011. That act amended and renumbered the provisions of Chapter 1301 of the Ohio Revised Code so that the definitions section of the Uniform Commercial Code now appear at R.C. 1301.201. Because R.C. 1301.201 only applies to transactions entered on or after June 29, 2011, we apply R.C. 1301.01 to this appeal. -5- Clermont CA2013-11-085
23. Despite several continuances granted by the trial court to allow the Vaughts time to
conduct discovery prior to a ruling on BANA's motion for summary judgment, the Vaughts
failed to raise any question as to the authenticity of the copies of the Note and Mortgage, or
challenge the fairness of admitting the duplicates.
{¶ 16} The Vaughts' sole assignment of error is overruled.
{¶ 17} Judgment affirmed.
RINGLAND, P.J., and S. POWELL, J., concur.
-6-