Bank of New York Mellon v. Casey

2013 Ohio 4686

• Court: Ohio Court of Appeals
• Decided: October 21, 2013
• Docket: 13-CA-26
• Status: Published

Opinion

[Cite as Bank of New York Mellon v. Casey, 2013-Ohio-4686.]

COURT OF APPEALS FAIRFIELD COUNTY, OHIO FIFTH APPELLATE DISTRICT

THE BANK OF NEW YORK : JUDGES: MELLON FKA THE BANK OF : Hon. William B. Hoffman, P.J. NEW YORK, AS TRUSTEE FOR THE : Hon. Sheila G. Farmer, J. CERTIFICATEHOLDERS OF THE : Hon. Patricia A. Delaney, J. CWABS INC., BACKED : CERTIFICATES, SERIES 2006-24 : : Plaintiff-Appellee : : -vs- : : WILLIAM J. CASEY AKA : Case No. 13-CA-26 WILLIAM JOSEPH CASEY, ET AL. : : Defendants-Appellees : : RICHARD L. WOLFE AND : HELEN E. WOLFE : : Defendants-Appellants : OPINION

CHARACTER OF PROCEEDING: Appeal from the Court of Common Pleas, Case No. 2012 CV 00723

JUDGMENT: Affirmed

DATE OF JUDGMENT: October 21, 2013

APPEARANCES:

For Plaintiff-Appellee For Defendants-Appellants

EDWARD H. CAHILL RICHARD L. WOLFE P.O. Box 165028 HELEN E. WOLFE Columbus, OH 43216-5028 955 Rock Mill Road, NW Lancaster, OH 43130 Fairfield County, Case No. 13-CA-26 2

Farmer, J.

{¶1} On July 20, 2010, appellee, The Bank of New York Mellon fka The Bank of

New York, as Trustee for the Certificateholders of the Cwabs Inc., Asset-Backed

Certificates, Series 2006-24, filed a declaratory judgment action against William Joseph

Casey, the Starkey Family Revocable Living Trust, and appellants, Richard and Helen

Wolfe, seeking the rights and obligations of the parties regarding real estate located at

955 Rock Mill Road in Lancaster, Ohio (Case No. 10 CV 877). On December 21, 2010,

the trial court declared that title to the property was vested with Mr. Casey and appellee

was the assignee of the unrecorded MERS/Countrywide mortgage and was entitled to

enforce the mortgage. The trial court also declared appellants did not have a legal or

equitable interest in the property.

{¶2} On March 7, 2011, Mr. Casey executed a Quit Claim Deed to appellants

which was recorded on March 17, 2011. On March 30, 2011, appellants filed a Civ.R.

60(B) motion for relief from judgment since they now held title to the property. By order

filed May 23, 2011, the trial court denied the motion. This court affirmed the trial court's

decision. The Bank of New York Mellon v. William Joseph Carey, et al., 5th Dist.

Fairfield No. 2011 CA 31, 2011-Ohio-6887.

{¶3} On July 5, 2012, appellee filed a complaint in foreclosure against

appellants and others for failure to pay on a note secured by a mortgage (Case No.

2012 CV 00723). On December 11, 2012, appellee filed a motion for summary

judgment. By memorandum of decision filed January 30, 2013, the trial court granted

the motion. A judgment entry and decree in foreclosure was filed on February 7, 2013. Fairfield County, Case No. 13-CA-26 3

{¶4} Appellants filed an appeal and this matter is now before this court for

consideration. Appellants set forth three issues for review which we will accept as

assignments of error:

I

{¶5} "WHETHER THE TRIAL COURT ERRED OR ABUSED ITS DISCRETION

IN RULING THAT THE WOLFES WERE NOT BON FIDE PURCHASERS GIVEN THE

RECORD AND ATTESTATIONS OF APPELLEE."

II

{¶6} "WHETHER THE COURT ERRED OR ABUSED ITS DISCRETION IN

GRANTING SUMMARY JUDGMENT TO APPELLEE AS AGAINST APPELLANTS

CLAIM BASED ON THE VALIDITY OF AN UNRECORDED DOCUMENT

PURPORTING TO BE A MORTGAGE THAT FAILS TO MEET THE REQUIREMENTS

OF A MORTGAGE PURSUANT TO COMMON LAW AND OHIO PRECEDENTS."

III

{¶7} "WHETHER THE COURT OF COMMON PLEAS ERRED OR ABUSED

DISCRETION IN FINDING THAT THE APPELLEE HAD STANDING TO BRING THIS

ACTION BECAUSE THE MERS MORTGAGE WAS NOT PROPERLY RECORDED."

{¶8} Appellants challenge the trial court's granting of summary judgment to

appellee. Summary Judgment motions are to be resolved in light of the dictates of

Civ.R. 56. Said rule was reaffirmed by the Supreme Court of Ohio in State ex rel.

Zimmerman v. Tompkins, 75 Ohio St.3d 447, 448, 1996-Ohio-211:

Civ.R. 56(C) provides that before summary judgment may be

granted, it must be determined that (1) no genuine issue as to any Fairfield County, Case No. 13-CA-26 4

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 such

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

adverse to the party against whom the motion for summary judgment is

made. State ex. rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511,

628 N.E.2d 1377, 1379, citing Temple v. Wean United, Inc. (1977), 50

Ohio St.2d 317, 327, 4 O.O3d 466, 472, 364 N.E.2d 267, 274.

{¶9} As an appellate court reviewing summary judgment motions, we must

stand in the shoes of the trial court and review summary judgments on the same

standard and evidence as the trial court. Smiddy v. The Wedding Party, Inc., 30 Ohio

St.3d 35 (1987).

{¶10} Appellants claim they are bona fide purchasers in good faith, as they paid

consideration for the property and therefore took the land free from unrecorded liens.

We disagree.

{¶11} On March 7, 2011, William Joseph Casey executed a Quit Claim Deed of

the subject property to appellants which was recorded on March 17, 2011. See,

Exhibits 16 and 17 attached to Appellant's Amendment to Wolfe's Summon's Answer

filed August 7, 2012. Also attached to this pleading as Exhibit 13 is a General Warranty

Deed of the property from Dan E. Starkey and Toni D. Starkey, Trustees of the Starkey

Family Revocable Living Trust to Best Choice Homes, Inc. dated April 21, 2005 and

recorded on April 26, 2005. Fairfield County, Case No. 13-CA-26 5

{¶12} Appellants were parties to the 2010 declaratory judgment action related to

appellee's unrecorded mortgage. Appellants appeared and defended by filing an

answer on August 12, 2010. On December 21, 2010, the trial court declared that title to

the property was vested with Mr. Casey and appellee was the assignee of the

unrecorded MERS/Countrywide mortgage and was entitled to enforce the mortgage.

The trial court also declared appellants did not have a legal or equitable interest in the

property. This judgment was final and never appealed. In lieu of an appeal, appellants

filed a Civ.R. 60(B) motion for relief from judgment requesting equitable relief. The

motion was denied and this court affirmed the decision in The Bank of New York Mellon

v. William Joseph Casey, et al., 5th Dist. Fairfield No. 2011 CA 31, 2011-Ohio-6887, ¶

54-56, specifically addressing the validity of appellants' title to the property as follows:

Appellants further attempt to argue that their acquisition of a quit-

claim deed from William Joseph Casey subsequent to the final decision in

this case somehow creates a meritorious defense under Civ.R. 60(B). We

disagree. In Ohio, the doctrine of lis pendens is codified under R.C.

2703.26, which provides:

"When a complaint is filed, the action is pending so as to charge

third persons with notice of its pendency. While pending, no interest can

be acquired by third persons in the subject of the action, as against the

plaintiff's title."

Here, as stated by the trial court, Appellants acquired their interest

in the subject property from William Casey after Appellee's interest had

been determined by the Judgment Entry filed on December 21, 2010 but Fairfield County, Case No. 13-CA-26 6

before the Sheriff's Sale of the property took place. Thus, Appellants took

only the interest that William Casey had in the property. Further, the quit-

claim deed acquired by Appellants from William Casey gave them Casey's

interest in the property which was subject to the Judgment Entry filed on

December 21, 2010.

{¶13} Because appellants' claim of title is based on the March 7, 2011 Quit

Claim Deed from Mr. Casey, appellants were not bona fide purchasers as they took title

during the pendency of the declaratory judgment action to which they were a party.

This court's opinion explained the doctrine of lis pendens and the bar to pursuing the

bona fide purchaser claim.

{¶14} Assignment of Error I is denied.

II, III

{¶15} Appellants argue the unrecorded mortgage failed to meet statutory

requirements and appellee lacked standing to pursue the foreclosure action. All of

appellants' arguments center around the claim that the mortgage was unrecorded. As

we noted in Assignment of Error I, the validity of the mortgage was fully litigated

between the parties in the 2010 declaratory judgment action. Appellants sought to

invalidate the declaratory judgment action via a Civ.R. 60(B) motion for relief from

judgment which was denied by final judgment entry filed December 21, 2010, attached

to appellee's brief as Exhibit A:

This Court further finds that the Bank of New York Mellon fka the

Bank of New York, as Trustee for the Certificate Holders CWABS, Inc., Fairfield County, Case No. 13-CA-26 7

Asset Backed Certificates, Series 2006-24, is the assignee of the

MERS/Countrywide mortgage and is the owner of and entitled to enforce

said mortgage.

IT IS THEREFORE, ORDERED, ADJUDGED AND DECREED that

Bank of New York Mellon has an equitable lien by virtue of a mortgage

dated October 26, 2006 from William Joseph Casey to

MERS/Countrywide Home Loans, Inc. in the principal amount of

$186,400, on the property described above.

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that

Defendants Richard L. Wolfe and Helen E. Wolfe have no legal or

equitable interest in the property described above.

{¶16} Res judicata is defined as "[a] valid, final judgment rendered upon the

merits bars all subsequent actions based upon any claim arising out of the transaction

or occurrence that was the subject matter of the previous action." Grava v. Parkman

Twp., 73 Ohio St.3d 379, 1995-Ohio-331, syllabus. "The doctrine of res judicata

involves both claim preclusion (historically called estoppel by judgment in Ohio) and

issue preclusion (traditionally known as collateral estoppel)." Id. at 381. Claim

preclusion "prevents a party from litigating a cause of action after a prior court has

rendered a final judgment on the merits of that cause as to that party." Krahn v. Kinney,

43 Ohio St.3d 103, 107 (1989), citing Norwood v. McDonald, 142 Ohio St. 299 (1943),

paragraph one of the syllabus. Issue preclusion "precludes the relitigation of an issue

that has been 'actually and necessarily litigated and determined in a prior action.' " Fairfield County, Case No. 13-CA-26 8

Krahn, at 107, quoting Goodson v. McDonough Power Equipment, Inc., 2 Ohio St.3d

193, 195 (1983).

{¶17} Appellants' present attack on the mortgage attempts to set themselves out

as bona fide purchasers. However, under the doctrine of lis pendens, they are not.

{¶18} Appellants also argue appellee lacked standing to bring the foreclosure

action because appellee purchased the mortgage from MERS. Appellee is the current

holder of the note and mortgage as declared in the 2010 declaratory judgment action

and its physical possession of the documents.

{¶19} R.C. 1303.32 governs holder in due course. Subsection (A) states the

following:

(A) Subject to division (C) of this section and division (D) of section

1303.05 of the Revised Code, "holder in due course" means the holder of

an instrument if both of the following apply:

(1) The instrument when issued or negotiated to the holder does

not bear evidence of forgery or alteration that is so apparent, or is not

otherwise so irregular or incomplete as to call into question its authenticity;

(2) The holder took the instrument under all of the following

circumstances:

(a) For value;

(b) In good faith;

(c) Without notice that the instrument is overdue or has been

dishonored or that there is an uncured default with respect to payment of

another instrument issued as part of the same series; Fairfield County, Case No. 13-CA-26 9

(d) Without notice that the instrument contains an unauthorized

signature or has been altered;

(e) Without notice of any claim to the instrument as described in

section 1303.36 of the Revised Code;

(f) Without notice that any party has a defense or claim in

recoupment described in division (A) of section 1303.35 of the Revised

Code.

{¶20} Upon review, we find appellee had standing to pursue the foreclosure

action and appellants are not bona fide purchasers as against the equitable mortgage of

appellee.

{¶21} Assignment of Errors II and III are denied.

{¶22} The judgment of the Court of Common Pleas of Fairfield County, Ohio is

hereby affirmed.

By Farmer, J.

Hoffman, P.J. and

Delaney, J. concur.

_______________________________ Hon. Sheila G. Farmer

_______________________________ Hon. William B. Hoffman

_______________________________ Hon. Patricia A. Delaney SGF/sg 103 [Cite as Bank of New York Mellon v. Casey, 2013-Ohio-4686.]

IN THE COURT OF APPEALS FOR FAIRFIELD COUNTY, OHIO

FIFTH APPELLATE DISTRICT

THE BANK OF NEW YORK MELLON : FKA THE BANK OF NEW YORK, AS : TRUSTEE FOR THE CERTIFICATE- : HOLDERS OF THE CWABS INC., : BACKED CERTIFICATES, : SERIES 2006-24 : : Plaintiff-Appellee : -vs- : : WILLIAM J. CASEY AKA : WILLIAM JOSEPH CASEY, ET AL. : JUDGMENT ENTRY : Defendants-Appellees : : RICHARD L. WOLFE AND : HELEN E. WOLFE : : Defendants-Appellants : CASE NO. 13-CA-26

For the reasons stated in our accompanying Memorandum-Opinion, the

judgment of the Court of Common Pleas of Fairfield County, Ohio is affirmed. Costs to

appellants.

_______________________________ Hon. Patricia A. Delaney