[Cite as Bank of New York Mellon v. Primes, 2018-Ohio-1833.]
Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION No. 105678
BANK OF NEW YORK MELLON PLAINTIFF-APPELLEE
vs.
MARVIN D. PRIMES, ET AL. DEFENDANTS-APPELLANTS
JUDGMENT: AFFIRMED
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-838851
BEFORE: Stewart, P.J., Blackmon, J., and Jones, J.
RELEASED AND JOURNALIZED: May 10, 2018 ATTORNEYS FOR APPELLANTS
Marc E. Dann William C. Behrens The Dann Law Firm, Co., L.P.A. P.O. Box 6031040 Cleveland, OH 44103
ATTORNEYS FOR APPELLEE
Brooke D. Turner-Bautista Stefanie Deka McGlinchey Stafford, P.L.L.C 25550 Chagrin Boulevard, Suite 406 Cleveland, OH 44122
Justin M. Ritch Manley, Deas & Kochalski, L.L.C. P.O. Box 165028 Columbus, OH 43216
Also Listed:
Keybank National Association 127 Public Square Cleveland, OH 44114 MELODY J. STEWART, P.J.:
{¶1} The Bank of New York Mellon brought this action on a promissory note
along with a demand to foreclose on real property owned by defendants-appellants
Marvin and Vicky Primes. The court approved a magistrate’s decision granting
summary judgment on the note and foreclosure, overruling the Primeses’ objections that
(1) an affidavit offered by the bank to prove its standing to enforce the note had not been
made on personal knowledge, and (2) that the magistrate erred by finding that the
Primeses lacked standing to challenge the transfer of the mortgage from the original
mortgagee to the bank. The Primeses raise these same issues on appeal.
I. Personal Knowledge
{¶2} The bank supported its motion for summary judgment by appending the
affidavit of a loan analyst for the company that serviced the Primeses’ loan. The
affidavit stated that a copy of the note appended to the motion was a true and accurate
copy of the note. Despite the loan analyst stating that he “personally reviewed”
documents, including the promissory note, the Primeses maintain that the analyst could
not have personal knowledge of the note because he worked for the parent company of
the loan servicing company.
{¶3} An affidavit submitted in support of a motion for summary judgment must be
made on “personal knowledge.” “Personal knowledge” in this context means
“knowledge gained through firsthand observation or experience, as distinguished from a belief based upon what someone else has said.” Bonacorsi v. Wheeling & Lake Erie Ry.
Co., 95 Ohio St.3d 314, 2002-Ohio-2220, 767 N.E.2d 707.
Where an affiant indicates that he or she is an employee of the bank, his or her job duties include the supervision of the loan, he or she has personal knowledge of the loan, and he or she is the records custodian of the records relating to the mortgage and line of credit at issue, the affidavit complies with Civ.R. 56(E).
Bayview Loan Servicing, L.L.C. v. St. Cyr, 8th Dist. Cuyahoga No. 104655,
2017-Ohio-2758, ¶ 32.
{¶4} The affiant stated that he is employed as a loan analyst for Ocwen Financial
Corporation, whose “indirect subsidiary is Ocwen Loan Servicing, L.L.C.” He stated
that Ocwen Loan Servicing is the “servicer and attorney-in-fact” for the bank and
maintains the records of the Primeses’ loan that he examined when preparing the
affidavit. The Primeses argue that a question of fact exists as to whether the loan
analyst, as an employee of Ocwen Financial, had personal knowledge of the records of
Ocwen Loan Servicing.
{¶5} No question of fact exists. The loan analyst stated both that he was a loan
analyst at Ocwen Financial and that he was “a Loan Analyst for Ocwen Loan.” As the
nonmoving party, the Primeses were required to offer evidence to rebut the loan analyst’s
assertions, not just mere denials. See Civ.R. 56(E) (“When a motion for summary
judgment is made and supported as provided in this rule, an adverse party may not rest
upon the mere allegations or denials of the party’s pleadings, but the party’s response, by
affidavit or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.”). The Primeses offer no evidence in rebuttal, but argue
that the loan analyst’s statements about working for both Ocwen Financial and Ocwen
Loan Servicing were “self-rebutting.”
{¶6} There is nothing so inherently contradictory about the loan analyst’s
statements that they create a question of fact. It is possible that the corporate structure of
the two entities was such that the loan analyst worked for both Ocwen Financial and
Ocwen Loan Servicing. And even if the loan analyst did not actually work for Ocwen
Loan Servicing, the nature of the subsidiary relationship between Ocwen Loan Servicing
and Ocwen Financial could be close enough that the loan analyst could truthfully state
that he has “personal knowledge of Ocwen Loan’s procedures for creating and
maintaining these records[,]” and that he “personally reviewed” the loan records,
including the promissory note. The Primeses could not merely assert a denial — they
had the duty to offer evidence in rebuttal. Their failure to do so means that the court did
not err by accepting the loan analyst’s affidavit as proof that the bank was in possession
of the note.
II. Standing
{¶7} The Primeses filed a counterclaim alleging that the bank was attempting to
collect on a debt that it did not own and that it was not a valid assignee of the mortgage.
The court relied on our decision in Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist.
Cuyahoga No. 98502, 2013-Ohio-1657, to hold that the Primeses lacked standing to
challenge the assignment of the mortgage because the transfer of the note created an equitable transfer of the mortgage and the bank is the holder of a note indorsed in blank
with the right to enforce it.
{¶8} The Primeses argue that our cases finding that issuers of promissory notes
lack standing to challenge alleged defects in the transfer or assignment of a mortgage
erroneously follow Livonia Properties Holdings, L.L.C. v. 12840-12976 Farmington Rd.
Holdings, L.L.C., 399 Fed.Appx. 97 (6th Cir.2010), in which the Sixth Circuit held that
an individual “who is not a party to an assignment lacks standing to challenge that
assignment.” They contend that the Sixth Circuit has limited this holding and that the
Ohio Supreme Court decision in Deutsche Bank Natl. Trust Co. v. Holden, 147 Ohio
St.3d 85, 2016-Ohio-4603, 60 N.E.3d 1243, holding that a foreclosure plaintiff must
prove that it is a party entitled to enforce the note and is a valid assignee of the mortgage,
means that defendants must have standing to challenge that proof.
{¶9} Neither decision affects this case. As commonly used, the word “mortgage”
encompasses two separate instruments: a promissory note and a security instrument. The
security instrument makes the real property the collateral securing performance on the
note. A creditor can enforce a note as an unsecured debt without the security interest.
But apart from very peculiar circumstances, 1 the security interest has little meaning
without the note — the current holder of the promissory note is entitled to enforce the
A peculiar circumstance existed in Holden: the debtor had a note discharged in bankruptcy, 1
but the bankruptcy did not extinguish the mortgage lien on the secured property.
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[Cite as Bank of New York Mellon v. Primes, 2018-Ohio-1833.]
Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION No. 105678
BANK OF NEW YORK MELLON PLAINTIFF-APPELLEE
vs.
MARVIN D. PRIMES, ET AL. DEFENDANTS-APPELLANTS
JUDGMENT: AFFIRMED
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-838851
BEFORE: Stewart, P.J., Blackmon, J., and Jones, J.
RELEASED AND JOURNALIZED: May 10, 2018 ATTORNEYS FOR APPELLANTS
Marc E. Dann William C. Behrens The Dann Law Firm, Co., L.P.A. P.O. Box 6031040 Cleveland, OH 44103
ATTORNEYS FOR APPELLEE
Brooke D. Turner-Bautista Stefanie Deka McGlinchey Stafford, P.L.L.C 25550 Chagrin Boulevard, Suite 406 Cleveland, OH 44122
Justin M. Ritch Manley, Deas & Kochalski, L.L.C. P.O. Box 165028 Columbus, OH 43216
Also Listed:
Keybank National Association 127 Public Square Cleveland, OH 44114 MELODY J. STEWART, P.J.:
{¶1} The Bank of New York Mellon brought this action on a promissory note
along with a demand to foreclose on real property owned by defendants-appellants
Marvin and Vicky Primes. The court approved a magistrate’s decision granting
summary judgment on the note and foreclosure, overruling the Primeses’ objections that
(1) an affidavit offered by the bank to prove its standing to enforce the note had not been
made on personal knowledge, and (2) that the magistrate erred by finding that the
Primeses lacked standing to challenge the transfer of the mortgage from the original
mortgagee to the bank. The Primeses raise these same issues on appeal.
I. Personal Knowledge
{¶2} The bank supported its motion for summary judgment by appending the
affidavit of a loan analyst for the company that serviced the Primeses’ loan. The
affidavit stated that a copy of the note appended to the motion was a true and accurate
copy of the note. Despite the loan analyst stating that he “personally reviewed”
documents, including the promissory note, the Primeses maintain that the analyst could
not have personal knowledge of the note because he worked for the parent company of
the loan servicing company.
{¶3} An affidavit submitted in support of a motion for summary judgment must be
made on “personal knowledge.” “Personal knowledge” in this context means
“knowledge gained through firsthand observation or experience, as distinguished from a belief based upon what someone else has said.” Bonacorsi v. Wheeling & Lake Erie Ry.
Co., 95 Ohio St.3d 314, 2002-Ohio-2220, 767 N.E.2d 707.
Where an affiant indicates that he or she is an employee of the bank, his or her job duties include the supervision of the loan, he or she has personal knowledge of the loan, and he or she is the records custodian of the records relating to the mortgage and line of credit at issue, the affidavit complies with Civ.R. 56(E).
Bayview Loan Servicing, L.L.C. v. St. Cyr, 8th Dist. Cuyahoga No. 104655,
2017-Ohio-2758, ¶ 32.
{¶4} The affiant stated that he is employed as a loan analyst for Ocwen Financial
Corporation, whose “indirect subsidiary is Ocwen Loan Servicing, L.L.C.” He stated
that Ocwen Loan Servicing is the “servicer and attorney-in-fact” for the bank and
maintains the records of the Primeses’ loan that he examined when preparing the
affidavit. The Primeses argue that a question of fact exists as to whether the loan
analyst, as an employee of Ocwen Financial, had personal knowledge of the records of
Ocwen Loan Servicing.
{¶5} No question of fact exists. The loan analyst stated both that he was a loan
analyst at Ocwen Financial and that he was “a Loan Analyst for Ocwen Loan.” As the
nonmoving party, the Primeses were required to offer evidence to rebut the loan analyst’s
assertions, not just mere denials. See Civ.R. 56(E) (“When a motion for summary
judgment is made and supported as provided in this rule, an adverse party may not rest
upon the mere allegations or denials of the party’s pleadings, but the party’s response, by
affidavit or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.”). The Primeses offer no evidence in rebuttal, but argue
that the loan analyst’s statements about working for both Ocwen Financial and Ocwen
Loan Servicing were “self-rebutting.”
{¶6} There is nothing so inherently contradictory about the loan analyst’s
statements that they create a question of fact. It is possible that the corporate structure of
the two entities was such that the loan analyst worked for both Ocwen Financial and
Ocwen Loan Servicing. And even if the loan analyst did not actually work for Ocwen
Loan Servicing, the nature of the subsidiary relationship between Ocwen Loan Servicing
and Ocwen Financial could be close enough that the loan analyst could truthfully state
that he has “personal knowledge of Ocwen Loan’s procedures for creating and
maintaining these records[,]” and that he “personally reviewed” the loan records,
including the promissory note. The Primeses could not merely assert a denial — they
had the duty to offer evidence in rebuttal. Their failure to do so means that the court did
not err by accepting the loan analyst’s affidavit as proof that the bank was in possession
of the note.
II. Standing
{¶7} The Primeses filed a counterclaim alleging that the bank was attempting to
collect on a debt that it did not own and that it was not a valid assignee of the mortgage.
The court relied on our decision in Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist.
Cuyahoga No. 98502, 2013-Ohio-1657, to hold that the Primeses lacked standing to
challenge the assignment of the mortgage because the transfer of the note created an equitable transfer of the mortgage and the bank is the holder of a note indorsed in blank
with the right to enforce it.
{¶8} The Primeses argue that our cases finding that issuers of promissory notes
lack standing to challenge alleged defects in the transfer or assignment of a mortgage
erroneously follow Livonia Properties Holdings, L.L.C. v. 12840-12976 Farmington Rd.
Holdings, L.L.C., 399 Fed.Appx. 97 (6th Cir.2010), in which the Sixth Circuit held that
an individual “who is not a party to an assignment lacks standing to challenge that
assignment.” They contend that the Sixth Circuit has limited this holding and that the
Ohio Supreme Court decision in Deutsche Bank Natl. Trust Co. v. Holden, 147 Ohio
St.3d 85, 2016-Ohio-4603, 60 N.E.3d 1243, holding that a foreclosure plaintiff must
prove that it is a party entitled to enforce the note and is a valid assignee of the mortgage,
means that defendants must have standing to challenge that proof.
{¶9} Neither decision affects this case. As commonly used, the word “mortgage”
encompasses two separate instruments: a promissory note and a security instrument. The
security instrument makes the real property the collateral securing performance on the
note. A creditor can enforce a note as an unsecured debt without the security interest.
But apart from very peculiar circumstances, 1 the security interest has little meaning
without the note — the current holder of the promissory note is entitled to enforce the
A peculiar circumstance existed in Holden: the debtor had a note discharged in bankruptcy, 1
but the bankruptcy did not extinguish the mortgage lien on the secured property. The mortgage lien holder at the time the action commenced “had standing to foreclose on the property and the right to collect the deficiency on the note from the proceeds of the foreclosure sale.” Holden at ¶ 3. The Supreme Court characterized the case as both an “outlier” and “unique.” Id. at ¶ 6. mortgage lien. This rule incorporates the common law maxim that “the security follows
the debt,” a rule now codified in the Uniform Commercial Code. See R.C. 1309.203(G)
(“The attachment of a security interest in a right to payment or performance secured by a
security interest or other lien on personal or real property is also attachment of a security
interest in the security interest, mortgage, or other lien.”).
{¶10} In Bank of New York Mellon v. Froimson, 8th Dist. Cuyahoga No. 99443,
2013-Ohio-5574, we stated:
When a person signs a promissory note, that person incurs the obligation contained in R.C. 1303.52(B) that the instrument will be paid to a person entitled to enforce the note. A “person entitled to enforce” an instrument is, among other things, a “holder” of an instrument. See R.C. 1303.31(A)(1). A “holder” of a note is any person in possession of a negotiable instrument that is payable to a bearer. See R.C. 1301.201(B)(21)(a).
Id. at ¶ 13.
{¶11} If the note is indorsed in blank, it becomes bearer paper, meaning that
anyone who possesses the note is a “holder” of the note. A person in possession of a
note indorsed in blank is automatically a person entitled to enforce the note, irrespective
of how the person came into possession of the note. See R.C. 1303.25(B); Froimson at ¶
14.
{¶12} The undisputed facts show that the promissory note issued by the Primeses
was indorsed in blank and that the bank was in physical possession of the note by way of
foreclosure counsel for litigation purposes. The Primeses offered no evidence to dispute
possession. As the holder of a note indorsed in blank, the bank satisfied all the requirements to be considered a person entitled to enforce the note. Because Ohio
follows the rule that the security follows the debt, “the physical transfer of the note
indorsed in blank, which the mortgage secures, constitutes an equitable assignment of the
mortgage, regardless of whether the mortgage is actually (or validly) assigned or
delivered.” Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657, at ¶ 65; JP Morgan
Chase Bank v. Stevens, 8th Dist. Cuyahoga No. 104835, 2017-Ohio-7165, ¶ 42. This
equitable assignment of the mortgage makes immaterial the Primeses’ standing arguments
about the actual assignment of the mortgage. Deutsche Bank Natl. Trust Co. v. Baxter,
8th Dist. Cuyahoga No. 104585, 2017-Ohio-1364, ¶ 23 (question whether mortgage was
properly assigned is “immaterial” because “the physical transfer of a note indorsed in
blank constitutes an equitable assignment of the mortgage.”). The bank had standing to
foreclose on the note irrespective of any assignment of the mortgage.
{¶13} Judgment affirmed.
It is ordered that appellee recover of appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas 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.
______________________________________________ MELODY J. STEWART, PRESIDING JUDGE PATRICIA ANN BLACKMON, J., and LARRY A. JONES, SR., J., CONCUR :