CitiMortgage v. Foster

2012 Ohio 6274

• Court: Ohio Court of Appeals
• Decided: December 18, 2012
• Docket: 11 MA 115
• Status: Published

Opinion

[Cite as CitiMortgage v. Foster, 2012-Ohio-6274.] STATE OF OHIO, MAHONING COUNTY

IN THE COURT OF APPEALS

SEVENTH DISTRICT

CITIMORTGAGE, INC. ) CASE NO. 11 MA 115 ) PLAINTIFF-APPELLEE ) ) VS. ) OPINION ) BERCHINDLE J. FOSTER, ET AL. ) ) DEFENDANTS-APPELLANTS )

CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common Pleas of Mahoning County, Ohio Case No. 10 CV 3468

JUDGMENT: Affirmed.

APPEARANCES: For Plaintiff-Appellee: Atty. Mia L. Conner Lerner, Sampson & Rothfuss 120 East Fourth Street, Suite 800 Cincinnati, Ohio 45202

Atty. Harry J. Finke, IV Atty. Harry W. Cappel Graydon, Head & Ritchey LLP 1900 Fifth Third Center 511 Walnut Street Cincinnati, Ohio 45202-3157

For Defendants-Appellants: Atty. Dale E. Bricker 100 DeBartolo Place, Suite #160 P.O. Box 3232 Youngstown, Ohio 44513

JUDGES: Hon. Cheryl L. Waite Hon. Gene Donofrio Hon. Joseph J. Vukovich Dated: December 18, 2012 [Cite as CitiMortgage v. Foster, 2012-Ohio-6274.] WAITE, P.J.

{¶1} Appellants Berchindle and Katrina Foster (“Appellants”) appeal the trial

court's decision to grant summary judgment in favor of Appellee, CitiMortgage, Inc.

(“Appellee”), in a foreclosure action. Appellants assign as error the court's finding

that CitiMortgage, Inc., is licensed to do business in Ohio. Appellants contend that a

foreign corporation such as Citimortgage, Inc., cannot maintain a civil action in Ohio

unless it is properly licensed and registered with the Ohio Secretary of State pursuant

to R.C. 1703.03, et seq., and submit that, without proper corporate registration,

Citimortgage, Inc., lacked standing to initiate and prosecute a foreclosure action.

Appellants rely on a letter from the Ohio Secretary of State purportedly denying that

Appellee is registered as a foreign corporation, but the letter does not correctly refer

to Appellee and does not support their argument. As there is no other evidence in

the record questioning the corporate registration of Appellee, the judgment of the trial

court is affirmed.

Statement of Facts

{¶2} On March 4, 2005, Berchindle J. and Katrina P. Foster financed the

purchase of a house located at 3357 Quentin Drive, Youngstown, Ohio 44511

through First Place Bank. At that time they signed a promissory note in the amount

of $72,856.00. The promissory note was transferred from First Place Bank to

CitiMortgage, Inc., on March 7, 2005, as evidenced by the special indorsement on

page two of the promissory note. The loan was secured by the mortgage granted by

Appellants to First Place Bank and recorded in the office of the Mahoning County

Recorder on March 7, 2005. The mortgage was assigned from First Place Bank to -2-

CitiMortgage, Inc., as evidenced by the assignment executed March 4, 2005, and

recorded in the office of the Mahoning Country Recorder on March 7, 2005.

Appellants failed to make their monthly mortgage payments and Appellee declared

default and accelerated the loan.

Procedural History

{¶3} On September 10, 2010, Citimortgage, Inc., filed its mortgage

foreclosure action in the Mahoning County Common Pleas Court. Appellants were

served with the summons and complaint on October 18, 2010, and filed their answer

on November 10, 2010. Appellants did not assert any affirmative defenses to the

action. Appellee then moved for summary judgment.

{¶4} On April 27, 2010, Appellants filed their brief in opposition to the motion

for summary judgment. One of the reasons they opposed summary judgment was an

allegation that Citimortgage, Inc., was not registered in the Ohio Secretary of State’s

office to do business in Ohio as a foreign corporation. Appellants claimed that

without proper corporate registration, Appellee had no standing to litigate a

foreclosure action in Ohio. Attached to Appellants' brief was a certification from the

Ohio Secretary of State's office that there was no registration record of an Ohio or

foreign business entity named “Citimortgage.” On May 19, 2011, Appellee replied in

support of its motion for summary judgment. Appellee attached a copy of its

corporate registration to its reply. On May 24, 2011, the magistrate entered his

decision granting Appellee’s motion for summary judgment, finding that Citimortgage,

Inc., is licensed to do business in Ohio. Appellants filed objections, again raising the

issue of Appellee's corporate registration. On June 30, 2011, the trial court overruled -3-

the objections and adopted the magistrate's decision. On July 15, 2011, the trial

court entered a decree in foreclosure. Appellants filed this timely appeal. The trial

court issued a stay of execution of judgment on August 5, 2011.

Standard of Review

{¶5} We review a trial court’s entry of summary judgment de novo under the

standards set forth in Civ.R. 56. Comer v. Risko, 106 Ohio St.3d 185, 2005-Ohio-

4539, 833 N.E.2d 712. The moving party carries an initial burden of setting forth

specific facts that demonstrate his or her entitlement to summary judgment. Dresher

v. Burt, 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264 (1996). If the movant fails to

meet this burden, summary judgment is not appropriate; if the movant does meet this

burden, summary judgment will be appropriate only if the non-movant fails to

establish the existence of a genuine issue of material fact. Id. at 293. “A motion for

summary judgment forces the nonmoving party to produce evidence on any issue for

which that party bears the burden of production at trial.” Wing v. Anchor Media, Ltd.

of Texas, 59 Ohio St.3d 108, 570 N.E.2d 1095 (1991), paragraph three of the

syllabus, citing Celotex v.Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265

(1986). Furthermore, the burden of establishing that there is a genuine issue of

material fact regarding a defense lies with the defendant. Todd Dev. Co., Inc. v.

Morgan, 116 Ohio St.3d 461, 2008-Ohio-87, 880 N.E.2d 88, ¶23-24.

ASSIGNMENT OF ERROR

THE TRIAL COURT ERRED IN ADOPTNG THE MAGISTRATE’S

DECISION WHICH HELD IN PART THAT PLAINTIFF IS LICENSED

TO DO BUSINESS IN OHIO. THE TRIAL COURT IN GRANTING -4-

SUMMARY JUDGMENT IN FAVOR OF PLAINTIFF FAILED TO

CONSIDER DEFENDANTS [SIC] AFFIDAVIT WHICH INCLUDED A

CERTIFICATE BY THE OHIO SECRETARY OF STATE STATING

THAT AS OF APRIL 1, 2011, THE SECRETARY OF STATE’S OFFICE

HAD NO RECORD OF CITIMORTGAGE BEING REGISTERED

EITHER AS A DOMESTIC OR FOREIGN CORPORATION.

{¶6} Appellants challenge the decision to grant summary judgment to

Citimortgage, Inc., on the basis that Citimortgage, Inc., has no standing or capacity to

sue in Ohio due to its alleged failure to properly register with the Ohio Secretary of

State. R.C. 1703.03 states that “[n]o foreign corporation not excepted from sections

1703.01 to 1703.31 of the Revised Code, shall transact business in this state unless

it holds an unexpired and uncanceled license to do so issued by the secretary of

state.” There is no dispute among the parties that Appellee is a foreign corporation

and that it transacts business in Ohio. Although national banks that have a main

office that is located outside of Ohio are exempt from the registration requirements of

R.C. 1703.03, the record does not establish that Appellee is or is associated with a

national bank. Citibank v. Eckmeyer, 11th Dist. No. 2008-P-0069, 2009-Ohio-2435.

{¶7} R.C. 1703.29(A) states: “* * * no foreign corporation which should have

obtained such license shall maintain any action in any court until it has obtained such

license.” Appellants contend that Appellee did not establish that it was properly

registered with the Ohio Secretary of State as a foreign corporation, and that the trial

court should not have granted summary judgment to Appellee due to lack of standing

to maintain a foreclosure action. -5-

{¶8} Appellants are correct that the failure of a foreign corporation doing

business in Ohio to have a current Ohio corporate license registered with the

secretary of state is a defense to any action maintained by that corporation, and may

form the basis of dismissal of the action if timely raised and properly proven. P.K.

Springfield, Inc. v. Hogan, 86 Ohio App.3d 764, 770, 621 N.E.2d 1253 (2d Dist.1993).

{¶9} The evidentiary basis of Appellants' argument is a certificate it acquired

from the Ohio Secretary State stating that it had no record of any business entity

named “Citimortgage” licensed in Ohio. This certificate was properly referenced in an

affidavit attached to Appellants' brief in opposition to summary judgment. Appellee

responded by producing a copy of its corporate registration obtained from the

secretary of state's internet website. This copy reflects that “Citimortgage, Inc.” was

currently registered as a foreign corporation in Ohio.

{¶10} Although Appellee attached the copy of its corporate certification to its

reply in support of summary judgment, it failed to refer to the document in a properly

submitted affidavit. Civ.R. 56(C) only allows for specific types of documents and

evidence to be used in support of summary judgment: “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 as to any 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.”

{¶11} “The proper method for introducing evidentiary materials not specifically

authorized by Civ.R. 56(C) is to incorporate them by reference into a properly framed -6-

affidavit.” Citibank v. McGee, 7th Dist. No. 11 MA 158, 2012-Ohio-5364, ¶14, citing

Martin v. Central Ohio Transit Auth., 70 Ohio App.3d 83, 89, 590 N.E.2d 411 (10th

Dist.1990); see also, Civ.R. 56(E). Because Appellee did not reference its corporate

registration in an affidavit, it was not properly before the trial court and is not

evidence to support summary judgment.

{¶12} Despite Appellee's evidentiary problem, we are still left with the

question as to why the Ohio Secretary of State would apparently certify that Appellee

was not licensed as a foreign corporation in Ohio. This question is answered when

we look more closely at the certification attached to Appellants' brief in opposition to

summary judgment. The document states that the secretary of state's records “show

NO RECORD of any * * * foreign corporation * * * known as CITIMORTGAGE, filed in

this office as of the date of this certificate.” (Emphasis sic.) Appellee's corporate

name, though, is not “Citimortgage.” Appellee's correct name is “Citimortgage, Inc.”

A corporate name is a very precise term, and minor variations in the spelling and

punctuation of a corporate name may result in an incorrect search being conducted

by the secretary of state. For example, R.C. 1701.05(A)(1) requires that Ohio

corporate names “end with or include the word or abbreviation ‘company,’ ‘co.,’

‘corporation,’ ‘corp.,’ ‘incorporated,’ or ‘inc.’ ” Presumably, a similar requirement

exists in most other states. The certification requested by Appellants did not include

the abbreviation “Inc.” Thus, the search apparently resulted in a certification that has

no relevance in this case. There is no entity named “Citimortgage” involved in this

case. Appellee's corporate name is “Citimortgage, Inc.” Appellants have not

provided any evidence casting doubt on Appellee's corporate registration under its -7-

correct corporate name. As stated earlier, the challenge to a corporate plaintiff's

standing based on an alleged failure to register the corporation with the secretary of

state is a defense, and Appellants had the burden of establishing a genuine issue of

material fact regarding that defense. Appellants failed to meet that burden, and the

trial court correctly ruled in Appellee's favor.

{¶13} In conclusion, Appellants did not provide relevant evidence to establish

a genuine issue of material fact about whether Appellee was a registered foreign

corporation in Ohio. The burden of proof was on Appellants to establish this defense

to the foreclosure action. Appellants’ argument on appeal is that Appellee had no

standing to litigate a foreclosure action because it was not a registered corporation,

but without any evidence to support such an assertion, summary judgment in favor of

Appellee was appropriate. Appellants' sole assignment of error is overruled and the

judgment of the trial court affirmed.

Donofrio, J., concurs.

Vukovich, J., concurs.