[Cite as Bank of New York Mellon Trust Co, N.A. v. Loudermilk, 2013-Ohio-2296.]
COURT OF APPEALS FAIRFIELD COUNTY, OHIO FIFTH APPELLATE DISTRICT
JUDGES: THE BANK OF NEW YORK MELLON : TRUST CO, N.A. : Hon. W. Scott Gwin, P.J. : Hon. William B. Hoffman, J. Plaintiff-Appellee : Hon. Sheila G. Farmer, J. : -vs- : : Case No. 2012-CA-30 CHARLES D. LOUDERMILK, : DECEASED, ET AL. : : OPINION Defendants-Appellants :
CHARACTER OF PROCEEDING: Civil appeal from the Fairfield County Court of Common Pleas, Case No. 2010CV00106
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: June 3, 2013
APPEARANCES:
For Plaintiff-Appellee For Defendants-Appellants
AMELIA BOWER THOMAS CORBIN 300 East Broad Street, Suite 590 842 North Columbus Street Columbus, Ohio 43251 Lancaster, Ohio 43130 [Cite as Bank of New York Mellon Trust Co, N.A. v. Loudermilk, 2013-Ohio-2296.]
Gwin, P.J.
{¶1} Appellants appeal the May 15, 2012 judgment entry and decree of
foreclosure of the Fairfield County Common Pleas Court.
Facts & Procedural History
{¶2} Charles Loudermilk (“Loudermilk”) owned the real property known as 4105
Lancaster-Chillicothe Road S.W., Lancaster, Ohio since 1968. When he purchased the
property, it consisted of 184 total acres. In 1999, Loudermilk sold 80.5 acres to third
parties and in 2001 he conveyed another 14.3 acres to a third party. In October of
2001, Loudermilk mortgaged the remaining 89 acres to Washtenaw Mortgage. He
refinanced one year later with a mortgage to CIT Consumer Finance covering the 89
acres and, in that refinance, he paid off the 2001 mortgage. In December of 2004,
Loudermilk had a survey performed to split off ten acres of the 89 acre parcel. The
survey split out a ten acre parcel which included Loudermilk’s three bedroom house. In
January of 2005, Loudermilk refinanced with First Magnus Financial, securing the ten
acre parcel surveyed in December of 2004. Funds from the First Magnus mortgage
went to pay the prior mortgage, taxes, credit card bills, and the costs of surveying the
property. The description of the ten acre tract was prepared by a surveyor hired by
Vantage Land Title, the title agency closing both the 2005 and 2006 transactions.
{¶3} In May of 2006, Loudermilk again refinanced. On May 25, 2006, he
executed a note in favor of LoanCity in the amount of $171,000. Loudermilk secured
the note with a mortgage to Mortgage Electronic Registration Systems (“MERS”) as
nominee for LoanCity. LoanCity subsequently endorsed the note in blank and
transferred it to Residential Funding Corporation. Residential Funding Corporation then Fairfield County, Case No. 2012-CA-30 3
endorsed the note in blank and transferred it to JPMorgan Chase Bank, N.A. as Trustee
for RAMP 2006RS5. Attached to the note is an allonge endorsing the note from
JPMorgan Chase Bank, N.A. as Trustee for RAMP 2006RS5 to appellee The Bank of
New York Mellon Trust Company, National Association fka The Bank of New York Trust
Company, N.A. as successor to JPMorgan Chase Bank N.A. as Trustee for RAMP
2006RS5. At the time of the refinance, the lender appraised the ten acre parcel.
Loudermilk used the funds from the refinancing to pay off the 2005 mortgage and
unsecured debt. The mortgage contained no legal description, but included the 4105
Lancaster-Chillicothe Road S.W., Lancaster, Ohio street address and the auditor’s
permanent parcel number. The mortgage was not recorded. At the closing, Loudermilk
executed a quit-claim deed to split the ten acre portion that included the house from the
remainder of 89 acre parcel. While the lot split was approved by the Fairfield County
Engineer, the split was not concluded because the deed process was not finished.
{¶4} Subsequent to the execution of the 2006 mortgage, Loudermilk conveyed
22 acres to a third party, leaving a balance of approximately 67 acres. Loudermilk died
intestate on December 22, 2008. On February 13, 2009, Dale Loudermilk was
appointed administrator of Charles Loudermilk’s estate. Dale Loudermilk previously
lived in a mobile home on the property that was not located on the ten acres involved in
the land split or the 2005 and 2006 mortgage. In 2009 after his father’s death, Dale
Loudermilk moved into the house located on the ten acres mortgaged in 2005. Dale
Loudermilk testified he has not paid the mortgage, real estate taxes, rent, or insurance
on the property since moving into the house in 2009. Fairfield County, Case No. 2012-CA-30 4
{¶5} Loudermilk defaulted under the terms of the note and mortgage and
appellee accelerated the debt. On January 27, 2010, appellee filed a Complaint for
Foreclosure against Loudermilk and appellants Unknown Spouse of Charles H.
Loudermilk, Thomas Corbin, Dale Loudermilk as heir of the estate of Charles
Loudermilk, Pamela Rupp as heir of the estate of Charles Loudermilk, and Dale
Loudermilk as Administrator of the estate of Charles Loudermilk. Copies of the note,
allonge to note, and mortgage were attached as exhibits to the complaint.
{¶6} Appellee filed a motion for summary judgment seeking foreclosure of the
ten-acre parcel based on default in payment. Appellants filed a response and their own
motion for summary judgment. On May 15, 2012, the trial court entered an order
granting appellee’s motion for summary judgment and ordering appellee to submit a
foreclosure decree. Appellant filed an appeal of the trial court’s May 15, 2012 judgment
entry granting summary judgment to appellee and raises the following assignments of
error on appeal:
{¶7} “I. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT
TO PLAINTIFF/APPELLEE, WHEN GENUINE ISSUES OF MATERIAL FACT EXISTED
AND THE MOVANT IS NOT ENTITLED TO JUDGMENT AS A MATTER OF LAW.
{¶8} “II. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT
TO PLAINTIFF/APPELLEE WHEN ITS CLAIM WAS BASED ENTIRELY UPON
EQUITABLE PRINCIPLES, AND THE EQUITIES DO NOT FAVOR THE CLAIMANT.
{¶9} “III. THE TRIAL COURT ERRED IN FINDING THAT THE
PLAINTIFF/APPELLEE WAS THE REAL PARTY IN INTEREST. Fairfield County, Case No. 2012-CA-30 5
{¶10} “IV. THE TRIAL COURT ERRED IN FAILING TO APPLY THE DOCTRINE
OF LACHES.
{¶11} “V. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT
TO PLAINTIFF/APPELLEE WHEN ITS CLAIM WAS BARRED BY ORC 2105.06.
{¶12} “VI. THE TRIAL COURT ERRED BY DENYING TO
DEFENDANT/APPELLANT LEAVE TO AMEND ITS PLEADINGS.”
Summary Judgment
{¶13} Civ. R. 56 states in pertinent part:
{¶14} “Summary judgment shall be rendered forthwith if the pleadings,
depositions, answers to interrogatories, written admissions, affidavits, transcripts of
evidence, and written stipulations of fact, if any, timely filed in the action, show that
there is no genuine issue of material fact and that the moving party is entitled to
judgment as a matter of law. No evidence or stipulation may be considered except as
stated in this rule. A summary judgment shall not be rendered unless it appears from
the evidence or stipulation, and only from the evidence or stipulation, that reasonable
minds can come to but one conclusion and that conclusion is adverse to the party
against whom the motion for summary judgment is made, that party being entitled to
have the evidence or stipulation construed mostly strongly in the party’s favor. A
summary judgment, interlocutory in character, may be rendered on the issue of liability
alone although there is a genuine issue as to the amount of damages.”
{¶15} A trial court should not enter a summary judgment if it appears a material
fact is genuinely disputed, nor if, construing the allegations most favorably towards the
non-moving party, reasonable minds could draw different conclusions from the Fairfield County, Case No. 2012-CA-30 6
undisputed facts. Hounshell v. Am. States Ins. Co., 67 Ohio St.2d 427, 424 N.E.2d 311
(1981). The court may not resolve any ambiguities in the evidence presented. Inland
Refuse Transfer Co. v. Browning-Ferris Inds. of Ohio, Inc., 15 Ohio St.3d 321, 474
N.E.2d 271 (1984). A fact is material if it affects the outcome of the case under the
applicable substantive law. Russell v. Interim Personnel, Inc., 135 Ohio App.3d 301,
733 N.E.2d 1186 (6th Dist. 1999).
{¶16} When reviewing a trial court’s decision to grant summary judgment, an
appellate court applies the same standard used by the trial court. Smiddy v. The
Wedding Party, Inc., 30 Ohio St.3d 35, 506 N.E.2d 212 (1987). This means we review
the matter de novo. Doe v. Shaffer, 90 Ohio St.3d 388, 2000-Ohio-186, 738 N.E.2d
1243.
{¶17} The party moving for summary judgment bears the initial burden of
informing the trial court of the basis of the motion and identifying the portions of the
record which demonstrate the absence of a genuine issue of fact on a material element
of the non-moving party’s claim. Drescher v. Burt, 75 Ohio St.3d 280, 662 N.E.2d 264
(1996). Once the moving party meets its initial burden, the burden shifts to the non-
moving party to set forth specific facts demonstrating a genuine issue of material fact
does exist. Id. The non-moving party may not rest upon the allegations and denials in
the pleadings, but instead must submit some evidentiary materials showing a genuine
dispute over material facts. Henkle v. Henkle, 75 Ohio App.3d 732, 600 N.E.2d 791
(12th Dist. 1991). Fairfield County, Case No. 2012-CA-30 7
I. Genuine Issues of Material Facts
{¶18} Appellants first argue the trial court erred in granting summary judgment
because there are genuine issues of material fact concerning whether: a deed was
presented to Dale Loudermilk in order to complete the lot split of the property; the
mortgage instrument was properly notarized; the foreclosure could be effectuated with
no legal description attached to the mortgage; Loudermilk intended to mortgage the ten
acres referenced in the prior mortgage; and Loudermilk had the opportunity to review
the closing documents.
{¶19} Appellants question whether the mortgage was properly notarized and
whether Loudermilk had the opportunity to review and understand the closing
documents. Appellants present an affidavit from Dale Loudermilk stating he did not find
a copy of the mortgage in his father’s house and the property was to pass to him upon
his father’s death. However, Dale Loudermilk’s lack of knowledge about the mortgage
and his father’s assertions about the property do not create material issues of fact. Dale
Loudermilk testified he never discussed finances with his father and never discussed or
had any knowledge of any of the mortgages on the property dating back to 2001. Dale
Loudermilk further stated his father did not consult him prior to selling off pieces of the
land and did not know how much any of the land was sold for. Loudermilk sold and
mortgaged his property frequently from 1999 to 2006. Though Dale Loudermilk states a
copy of the mortgage was not found in his father’s house, Dale did find in his father’s
checkbook a record of his father’s monthly payment of the mortgage. Loudermilk was
able to fully benefit from the 2006 refinance. The affidavit from Ginger Krznarich, Vice
President of Operations for Vantage Land Title, demonstrates Loudermilk was able to Fairfield County, Case No. 2012-CA-30 8
pay off a prior mortgage, pay down unsecured debts, and retain $381.35 in proceeds
from the funds of the 2006 refinance. The affidavit of Ms. Krznarich provides that, at the
closing, Loudermilk executed and delivered a $171,000 Note to LoanCity and $171,000
mortgage to LoanCity/MERS. There is no evidence that Loudermilk did not understand
the closing documents or the mortgage was not properly notarized. Loudermilk had
been paying on the mortgage monthly from 2006 until his death in 2008.
{¶20} Appellants further argue the deeds involved the lot split were not
presented to Dale Loudermilk. An affidavit signed by Dale Loudermilk states he was
never asked to sign the deeds. While the evidence suggests there was a plan in place
for transfers to strawmen to conclude the ten acre split, both parties agree the lot split
was not completed and the deeds questioned by Dale Loudermilk were never filed.
Accordingly, the existence of these uncompleted and unsigned deeds does not create a
genuine issue of material fact with regards to the foreclosure case.
{¶21} Appellants argue there are genuine issues of material fact regarding the
property to be mortgaged because the mortgage lacked a legal description. We
disagree. “Ohio mortgage law does not set forth a precise legal description that must
be included on a mortgage.” Fifth Third Mtge. Co. v. Brown, 970 N.E.2d 1183, 2012-
Ohio-2205 (8th Dist.). R.C. 5302.12 provides a properly executed mortgage is valid
when “in substance” it follows the form: a description of land or interest in land and
encumbrances, reservations, and exceptions, if any. A description of the property does
not require a formal “metes and bounds” description. Brown, 970 N.E.2d at 1183. A
mortgage providing a correct parcel number and street address has been deemed a
sufficient legal description of property subject to a mortgage. ABN AMRO Mtge. Group, Fairfield County, Case No. 2012-CA-30 9
Inc. v. Jackson, 159 Ohio App.3d 551, 558-59, 2005-Ohio-297, 824 N.E.2d 600 (2d
Dist); In re Bunn, 578 F.3d 487, 490 (6th Cir. 2009) (determining under Ohio law, a
mortgage that only provided a street address of residential property and not a legal
description gave sufficient notice to third parties of the existence of the mortgage if it is
clear from the chain of title what the borrower was mortgaging).
{¶22} Here, the correct street mailing address and auditor’s permanent parcel
number were both included in the 2006 mortgage. Further, the 2005 mortgage
contained the ten acre description that should have been attached to the 2006
refinance. It is thus clear from the chain of title that Loudermilk was mortgaging the ten
acre parcel covered by the prior mortgage with his 2006 refinance.
{¶23} Appellants finally argue genuine issues of material fact exist because
there are questions as to whether Loudermilk intended to mortgage the ten acres
referenced by the prior mortgage. Appellants posit perhaps Loudermilk intended to
mortgage a different ten acres of the eighty-nine acre property.
{¶24} In this case, the testimony and documentary evidence demonstrates
Loudermilk intended to mortgage the ten acres referenced by the prior mortgage and
covering the house. The surveyor prepared a survey and legal description for the ten
acres and Ginger Krznarich testified Vantage Land Title sent a letter on April 27, 2006
to the Fairfield County Audior / Engineer with the survey and legal description attached
stating the “owner of the property wants to refinance property just using the 10.0 acres.”
Krznarich testified the title commitment given to Loudermilk at the closing was for the
ten acres covered by the previous mortgage and the prior incorrect title commitment
was changed to reflect the land to be mortgaged. Exhibit 5 of an affidavit by Nancy Fairfield County, Case No. 2012-CA-30 10
Dilworth, duly authorized signer of GMAC Mortgage, LLC, the loan servicing agent for
the Bank of New York Mellon Trust Company, states the commitment for title insurance
would have been presented to Loudermilk at the closing and the title commitment
reflected the ten acre parcel covered by the previous mortgage. Further, the 2005
mortgage contained the legal description of the ten acres at issue. Appellee’s appraisal
conducted at the time of the 2006 refinance, which appellants do not challenge, was
based upon the value of the ten acres containing the house, as indicated by the
Dilworth affidavit.
{¶25} The evidence demonstrates that going back to 2004, Loudermilk sought to
segregate the ten acres containing his house to mortgage, but not the remainder of his
land. The ten acres referenced in the prior mortgage are the only ten acres contained in
the documents and testimony. In Dilworth’s affidavit, she states the only ten acre tract
referenced in any of the records relating to Loudermilk’s mortgage is the ten acres with
the home. Dale Loudermilk testified he did not know what his father did financially and
was unaware of any of the various mortgages his father had placed on the property.
There is no evidence Loudermilk had another ten acre parcel in mind when he
refinanced the mortgage in 2006. Accordingly, we find no genuine issue of material fact
exists as to the ten acres being mortgaged.
{¶26} Appellants’ first assignment of error is overruled.
II. Equity
{¶27} Appellants argue appellee is not entitled to a judgment based on equitable
principles. Appellants first argue the title agency hired by appellant to complete the title
work for the 2006 mortgage was reckless in failing to include a legal description on the Fairfield County, Case No. 2012-CA-30 11
mortgage. As discussed more fully above, the correct street mailing address and
auditor’s permanent parcel number are included on the mortgage and it is clear from the
chain of title of the property the ten acres to be mortgaged. The failure to include the
legal description under the facts in this case is thus not a failure to act in good faith.
{¶28} Appellants further argue they have a defense to judgment based upon
appellee’s failure to record its mortgage. R.C. 5301.23 provides, “All properly executed
mortgages shall be recorded in the office of the county recorder of the county in which
the mortgaged premises are situated and shall take effect at the time they are delivered
to the recorder for record.” R.C. 5301.23(A).
{¶29} In Ohio, the “failure or success of recording an instrument has no effect on
its validity as between the parties to that instrument.” Bank One, N.A. v. Dillon, 9th Dist.
No. 04CA008571, 2005-Ohio-1950, ¶ 9. “The purpose of the recording statutes is to put
other lien holders on notice and to prioritize the liens.” GMAC Mtge. Corp. v. McElroy,
5th Dist. No. 2004-CA-00380, 2005-Ohio-2837, ¶ 16 (internal citation omitted).
{¶30} In this case, the lack of recording does not provide a defense for
appellants and the failure to record is not a failure to act in good faith. The recording
statutes protect purchasers for value, not parties to a transaction. The Wayne Bldg. and
Loan Co. of Wooster v. Yarborough, 11 Ohio St.2d 195, 213 (1967). Here, appellants
are not bona fide purchasers for value, but are heirs of an estate.
{¶31} Appellants also argue appellee is not entitled to be subrogated to the 2005
prior mortgage that was paid off with the proceeds of the 2006 refinance because of
appellee’s negligence in not recording the mortgage and failing to include a legal
description. In their complaint, appellee alternatively pled they were entitled to an Fairfield County, Case No. 2012-CA-30 12
equitable lien for the amount of the mortgage if the mortgage was facially invalid and
argued equitable subrogation only applied to the extent necessary to show Loudermilk
could not receive the benefit of having his debts paid without having a mortgage attach
to the ten acre parcel.
{¶32} In this case, we found the correct street mailing address and auditor’s
permanent parcel number are included on the mortgage and it is clear from the chain of
title of the property the ten acres to be mortgaged. Further, that appellants are not bona
fide purchasers for value and there are no competing lenders for first lien position.
Thus, the doctrine of equitable subrogation need not be applied in this case.
{¶33} Appellants finally argue appellees are not entitled to the equitable remedy
of reformation of the mortgage. Reformation is “available where it is shown that a
written instrument does not express the true agreement entered into between the
contracting parties by reason of a mutual mistake. Wagner v. Nat’l. Fire Ins. Co., 132
Ohio St. 405, 412, 8 N.E.2d 144 (1937). In such a case, the equitable remedy of
reformation is available in order to make the writing conform to the real intention of the
parties. Id. We find reformation is not necessary in this case based upon our findings
regarding the legal description, recording, and the lack of a bona fide purchaser.
{¶34} Appellants’ second assignment of error is overruled.
III. Real Party in Interest
{¶35} Appellants argue the trial court erred in finding appellee was the real party
in interest.
{¶36} Civil Rule 17(A) provides that “every action shall be prosecuted in the
name of the real party in interest.” A real party in interest “has been defined as ‘ * * * Fairfield County, Case No. 2012-CA-30 13
one who has real interest in the subject matter of the litigation, and not merely an
interest in the action itself, i.e., one who is directly benefited or injured by the outcome
of the case.’ “(Citations omitted.) Shealy v. Campbell, 20 Ohio St.3d 23, 24, 485 N.E.2d
701 (1985). “The purpose behind the real party in interest rule is “ * * * to enable the
defendant to avail himself of evidence and defenses that the defendant has against the
real party in interest, and to assure him finality of the judgment, and that he will be
protected against another suit brought by the real party at interest on the same matter.”
Id. at 24–25, 485 N.E.2d 701 quoting In re Highland Holiday Subdivision, 27 Ohio
App.2d 237, 240, 273 N.E.2d 903 (4th Dist.1971).
{¶37} The current holder of the note and mortgage is the real party in interest in
foreclosure actions. U.S. Bank Natl. Assoc. v. Marcino, 181 Ohio App.3d 328, 908
N.E.2d 1032, 2009–Ohio–1178 (7th Dist.), ¶ 32 citing Chase Manhattan Mtge. Corp. v.
Smith, 1st Dist. No. C061069, 2007–Ohio–5874, ¶ 18. R.C. 1303.31 provides:
{¶38} (A) “Person entitled to enforce” an instrument means any of the following
persons:
(1) The holder of the instrument;
(2) A nonholder in possession of the instrument who has the rights of a
holder;
(3) A person not in possession of the instrument who is entitled to enforce
the instrument pursuant to Section 1303.38 or division (D) of section
1303.58 of the Revised Code. Fairfield County, Case No. 2012-CA-30 14
(B) A person may be a “person entitled to enforce” the instrument even
though the person is not the owner of the instrument or is in wrongful
possession of the instrument.
{¶39} To properly support a motion for summary judgment in a foreclosure
action, a plaintiff must show:
“(1) the movant is the holder of the note and mortgage, or is a party
entitled to enforce the instrument;
(2) if the movant is not the original mortgagee, the chain of assignments
and transfers;
(3) all conditions precedent have been met;
(4) the mortgage is in default; and
(5) the amount of principal and interest due.”
Wachovia Bank of Delaware, N.A. v. Jackson, 5th Dist. No. 2010-CA-00291, 2011-
Ohio-3202.
{¶40} Appellants first argue the note shows no assignments on its face and no
assignments are attached. However, the affidavit of Nancy Dilworth, attached to
appellee’s motion for summary judgment, states otherwise. Dilworth states she has
“personal knowledge of the facts contained” in her affidavit. She states “Attached
hereto as Exhibit 1 is a true and accurate copy of a promissory note with indorsements
and an allonge to note, executed and delivered by Borrower.” Further, “as evidenced by
Exhibit 1, the interest in the Note transferred from Loan City to Residential Funding
Corporaiton in May, 2006. Residential Funding Corporation then transferred the interest
in the Note to JPMorgan Chase Bank, as Trustee, who then transferred the interest in Fairfield County, Case No. 2012-CA-30 15
the Note to Plaintiff.” Finally, Dilworth states appellee “maintains possession of the
original Note and has maintained possession at all times material to this action.” While
Attorney Corbin submitted an affidavit challenging Ms. Dilworth’s affidavit, he did not
conduct a deposition of Ms. Dilworth or point to any specific evidence appellants
introduced to contradict any of the information contained in her affidavit.
{¶41} The Note, attached as an exhibit to the complaint, appellee’s motion for
summary judgment, and the Dilworth affidavit, demonstrates that on May 25, 2006,
Loudermilk executed a note in favor of LoanCity in the amount of $171,000. LoanCity
subsequently endorsed the note in blank and transferred it to Residential Funding
Corporation. Residential Funding Corporation then endorsed the note in blank and
transferred it to JPMorgan Chase Bank, N.A. as Trustee for RAMP 2006RS5. R.C.
1303.25(B) provides “when an instrument is indorsed in blank, the instrument becomes
payable to bearer and may be negotiated by transfer of possession alone until specially
indorsed.” Attached to the note is an allonge endorsing the note from JPMorgan Chase
Bank, N.A. as Trustee for RAMP 2006RS5 to appellee The Bank of New York Mellon
Trust Company, National Association fka The Bank of New York Trust Company, N.A.
as successor to JPMorgan Chase Bank N.A. as Trustee for RAMP 2006RS5.
Accordingly, we find appellee is the holder of the note and appellee has shown the
chain of assignments and transfers of the note.
{¶42} Appellants argue there is doubt as to whether appellee was in possession
of the mortgage when the suit was filed and that appellee has not shown the
assignment of the mortgage. Ms. Krznarich testified she thinks the original mortgage
document is currently with the title company underwriter or counsel for the title agency Fairfield County, Case No. 2012-CA-30 16
or appellee. However, she testified she sent a certified copy of the executed mortgage
to LoanCity in 2006 and a certified copy of the executed mortgage is attached to the
complaint. In appellee’s motion for summary judgment, counsel for appellee indicates
he has the original, executed 2006 mortgage in his possession. Further, the affidavits
of Ms. Dilworth and Ms. Krznarich state the mortgage was delivered. However, as
appellants correctly argue, there is no valid assignment of the mortgage contained in
the documents provided by appellee. The assignment provided by appellee was
completed in February of 2012, after appellee filed their foreclosure complaint.
{¶43} We find this case is analogous to Central Mtge Co. v. Webster, 5th
Dist. No. 2011CA00242, 2012-Ohio-4478, in which Central Mortgage was the current
holder of the note, but could not establish it was the holder of the mortgage through the
assignment of mortgage. However, because the mortgage follows the note it secures,
we found Central Mortgage to be a real party in interest. Id. As noted in the Central
Mtge. Co. case, Kuck v. Sommers, 59 Ohio Law Abs. 400, 100 N.E.2d 68, 75 (3rd Dist.
1950) holds: “[w]here 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.”
This Court has consistently relied on Kuck v. Sommers to find the holder of the note is
the real party in interest entitled to pursue its rights under the note and mortgage. See
Central Mtge. Co., LaSalle Bank Nat’l. Assn. v. Street, 5th Dist. No. 08CA60, 2009-
Ohio-1855, Bank of New York v. Dobbs, 5th Dist. No. 2009-CA-000002, 2009-Ohio-
4742, Duetsche Bank Nat’l. Trust Co. v. Hansen, 5th Dist. No. 2010 CA 00001, 2011-
Ohio-1223, 2010-1 CRE Ventures, LLC v. Costanzo, 5th Dist. No. 11 CAE 01 003, Fairfield County, Case No. 2012-CA-30 17
2011-Ohio-3530. Other appellate courts and the Sixth District Court of Appeals have
utilized Kuck v. Sommers to find the holder of the note, in the absence of evidence of
the assignment of mortgage, is the real party in interest. U.S. Bank Nat’l. Assn. v.
Marcino, 181 Ohio App.3d 328, 2009-Ohio-1178, 908 N.E.2d 1032 (7th Dist.) (stating
Ohio courts have “held that whenever a promissory note is secured by a mortgage, the
note constitutes the evidence of the debt and the mortgage is a mere incident to the
obligation” and negotiation of a note operates as an equitable assignment of the
mortgage, even though the mortgage is not assigned or delivered, and finding the
Uniform Commercial Code, as adopted in Ohio, supports the conclusion that the owner
of a promissory note should be recognized as the owner of the related mortgage); U.S.
Bank v. Coffey, 6th Dist. No. E-11-026, 2012-Ohio-721 (alleged assignee of the
mortgage which could not provide evidence of the assignment of mortgage but could
demonstrate possession of the promissory note was the real party in interest).
{¶44} Ms. Dilworth’s affidavit establishes the conditions precedents have been
met, the mortgage is in default, and states the amount of the principal and interest due.
{¶45} Pursuant to the precedent of this court, we conclude there is sufficient
evidence in the record to establish appellee is the real party in interest and appellants’
third assignment of error is overruled.
IV. Laches
{¶46} Appellants argue the trial court erred in failing to apply the doctrine of
laches, stating Loudermilk’s estate is prejudiced by the fact appellee did not sooner
address the issues before the court. We disagree. Fairfield County, Case No. 2012-CA-30 18
{¶47} Laches has been defined by the Ohio Supreme Court as “an omission to
assert a right for an unreasonable and unexplained length of time, under circumstances
prejudicial to the adverse party.” Connin v. Bailey, 15 Ohio St.3d 34, 35, 472 N.E.2d
328 (1984), quoting Smith v. Smith, 168 Ohio St. 447, 156 N.E.2d 113 (1959). A delay
in asserting a right does not of itself constitute laches. Id. Laches is “predominantly a
question of fact to be resolved according to the circumstances of each individual case.”
Bitonte v. Tiffin Sav. Bank, 65 Ohio App.3d 734, 739, 585 N.E.2d 460 (3rd Dist. 1989).
{¶48} Based on the procedural history of this case, the trial court did not err in
failing to apply the doctrine of laches. Laches involves two elements: (1) “an omission
to assert a right for an unreasonable and unexplained length of time,” (2) “under the
circumstances prejudicial to the adverse party.” Connin, 15 Ohio St.3d at 35-36. Under
the second element “it must be shown that the person for whose benefit the doctrine will
operate has been materially prejudiced by the delay of the person asserting his claim.”
Id. First, appellants did not prove there was an unreasonable delay on appellee’s part.
The mortgage did not default until December 1, 2008 and the foreclosure was filed on
January 27, 2010. Further, even if the delay was unreasonable, there is no evidence
appellants were materially prejudiced by the delay. The evidence demonstrates
appellant Dale Loudermilk actually benefited from the delay. Dale Loudermilk testified
since his father’s death, he and his family have been living in the house for free, not
paying the mortgage, real estate taxes, rent, or insurance. Accordingly, appellants’
fourth assignment of error is overruled. Fairfield County, Case No. 2012-CA-30 19
V. Probate Statutes
{¶49} Appellants argue the trial court erred in granting summary judgment
because appellee’s claim was barred by R.C. 2105.06. Appellants later state in their
reply brief that R.C. 2117.06 and R.C. 2117.10 are the correct statutes that bar
appellee’s claim. Appellants argue these statutes apply to bar appellee’s claim because
a mortgage did not exist when Charles Loudermilk died and appellee’s lone remedy was
to file a claim with his estate. Further, that because appellee did not record the
mortgage prior to Charles Loudermilk’s death, appellee cannot take advantage of R.C.
2117.10’s exception. We disagree.
{¶50} R.C. 2117.06 provides that all creditors having a claim against an estate
shall present their claims within six months after the death of decedent or else the claim
is barred. R.C. 2117.10 states the “failure of the holder of a valid lien upon any of the
assets of an estate to present the lienholder’s claim upon the indebtedness secured by
the lien . . . shall not affect the lien if the same is evidenced by a document admitted to
public record . . .”
{¶51} R.C. 5301.01(A) states that a “mortgage . . . shall be signed by the
grantor, mortgagor . . . The signing shall be acknowledged by the grantor, mortgagor. . .
before a . . . notary public . . . who shall certify the acknowledgment and subscribe the
official’s name to the certificate of the acknowledgment.” “The validity of the mortgage
is not affected by whether or not the mortgage is recorded, and foreclosure is a remedy
independent of those provided for in the probate court.” Weaver v. Bank of New York
Mellon, 10th Dist. No. 11AP-1065, 2012-Ohio-4373; Beneficial Mtge. Co. of Ohio v.
Currie, 5th Dist. No. 2003CA00238, 2004-Ohio-5190 (holding mortgage liens do not fall Fairfield County, Case No. 2012-CA-30 20
under the requirements of R.C. 2117.06); GMAC Mtge. Corp. v. McElroy, 5th Dist. No.
2004-CA-00380, 2005-Ohio-2837 (finding the property was subject to the mortgage lien
and the heirs take the property subject to the lien and the purpose of recording statutes
is to put other lien holders on notice and to prioritize liens); BAC Home Loans Serv., LP
v. Mowery Properties, Ltd., 10th Dist. No. 10AP-396, 2011-Ohio-1596 (holding the
mortgage liens run with the property and remain against the title holder, not with the
estate). A foreclosure claim “is not characterized as a claim against an estate, but
rather as a claim in the nature of an in rem proceeding to reach the mortgaged property
to satisfy a debt.” Weaver, 10 Dist. No. 11AP-1065 at ¶ 22.
{¶52} In this case, there is no dispute Loudermilk executed a note and mortgage
agreement in favor of appellee for the principal amount of $171,000 and Loudermilk
defaulted on the note and mortgage. The validity of this mortgage and note is not
affected by the fact that the mortgage was not recorded. The purpose of appellee’s
action was not to seek a personal judgment against Loudermilk or the estate, but
instead was in the nature of an in rem proceeding to reach the mortgaged property,
subject it to sale, and have the proceeds applied as payment for debt. Appellee
specifically states it is not seeking a personal judgment against Loudermilk or the
estate. Thus, the foreclosure action on the mortgage lien does not constitute a “claim
against the estate” under R.C. 2117.06 and R.C. 2117.06 does not preclude appellee’s
right to bring an action in foreclosure. Appellants’ assignment of error V is overruled. Fairfield County, Case No. 2012-CA-30 21
VI. Motion for Leave to Amend Pleadings
{¶53} Appellants argue the trial court erred by denying appellants leave to
amend their pleadings. We disagree. Civil Rule 15(A) states “a party may amend his
pleading only by leave of court or by written consent of the adverse party. Leave of
court shall be freely given when justice so requires.” The decision whether to permit a
party leave to amend his pleadings is within the trial court’s sound discretion. Nat’l
Bank of Fulton Co. v. Haupricht Bros., 55 Ohio App.3d 249, 564 N.E.2d 101 (6th Dist.
1988). In order to find an abuse of discretion, we must determine the trial court’s
decision was unreasonable, arbitrary, or unconscionable and not merely an error of law
or judgment. Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140 (1983).
{¶54} Appellees filed their complaint on January 27, 2010. Appellants filed their
answer on February 25, 2010. After cross-dispositive motions had been filed and
briefed by both parties, appellants filed a motion to amend their answer to assert
counterclaims of negligence, slander of title, misrepresentation, constructive fraud, and
equity. The trial court denied appellants’ motion because of the “late date” of the motion
and because the cross-dispositive motions had been fully briefed. Because the
dispositive motions had been fully briefed ready for the trial court to rule on and the
claims appellants sought to bring were tort claims rather than compulsory
counterclaims, we do not find the trial court acted unreasonably, arbitrarily, or
unconscionably in denying appellants’ motion for leave to amend. Assignment of Error
IV is overruled.
{¶55} Based on the foregoing, we find the trial court did not err in granting
summary judgment to appellee. Fairfield County, Case No. 2012-CA-30 22
{¶56} Appellants’ Assignments of Error I, II, III, IV, V, and VI are therefore
overruled.
{¶57} The judgment of the Fairfield County Common Pleas Court is affirmed.
By Gwin, P.J.,
Hoffman, J., and
Farmer, J., concur
_________________________________ HON. W. SCOTT GWIIN
_________________________________ HON. WILLIAM B. HOFFMAN
_________________________________ HON. SHEILA G. FARMER
WSG:clw 0522 [Cite as Bank of New York Mellon Trust Co, N.A. v. Loudermilk, 2013-Ohio-2296.]
IN THE COURT OF APPEALS FOR FAIRFIELD COUNTY, OHIO
FIFTH APPELLATE DISTRICT
THE BANK OF NEW YORK MELLON : TRUST CO., N.A. : : Plaintiff-Appellee : : : -vs- : JUDGMENT ENTRY : CHARLES D. LOUDERMILK, : DECEASED, ET AL. : : : Defendants-Appellants : CASE NO. 2012-CA-30
For the reasons stated in our accompanying Memorandum-Opinion, the judgment of
the Fairfield County Common Pleas Court is affirmed. Costs to appellant.