First Rehab Funding, L.L.C. v. Milton

2025 Ohio 2677

• Court: Ohio Court of Appeals
• Decided: July 31, 2025
• Docket: 114370
• Status: Published

Opinion

[Cite as First Rehab Funding, L.L.C. v. Milton, 2025-Ohio-2677.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

FIRST REHAB FUNDING, LLC, :

Plaintiff-Appellee, : No. 114370 v. :

ERICA MILTON, :

Defendant-Appellant. :

JOURNAL ENTRY AND OPINION

JUDGMENT: AFFIRMED RELEASED AND JOURNALIZED: July 31, 2025

Civil Appeal from the Garfield Heights Municipal Court Case No. CVG2315729

Appearances:

Powers Friedman Linn, PLL, Rachel E. Cohen, and Thomas P. Owen, for appellee.

The Legal Aid Society of Cleveland, Maria A. Smith, and Elizabeth A. Zak, for appellant.

MICHELLE J. SHEEHAN, P.J.:

This is a breach-of-contract action. After a bench trial, the court

awarded plaintiff-appellee First Rehab Funding, LLC (“First Rehab”) monetary damages for breach of a lease. On appeal, the tenant, defendant-appellant Erica

Milton (“Milton”) claims that First Rehab is not the proper party to the lease and

that she was not properly served with the complaint.

However, the record reflects Milton failed to raise with the trial court

the issue of whether First Rehab is the real party in interest to the lease and has

therefore waived any alleged error. Milton also accepted service of the complaint.

Accordingly, we affirm the trial court’s judgment.

Procedural History and Relevant Facts

A. Complaint

On March 14, 2023, First Rehab filed a two-count complaint for

forcible entry and detainer and monetary damages for breach of contract against

Milton in the Garfield Heights Municipal Court.

On March 16, 2023, a summons was issued for Milton by certified

mail and residence service by bailiff. The summons provided that a trial on the first

cause of action for eviction was to be held on April 14, 2023 via Zoom. Residence

service was made by bailiff upon Milton’s residence on March 20, 2023. The bailiff

return of service provides: “RESIDENCE SERVICE (For Forcible Entry and

Detainer/Eviction Cases Only).” The summons issued by certified mail on

March 16, 2023, was ultimately returned as “unclaimed.”1 On April 7, 2023, First

1 On July 27, 2023, the trial court filed a notice of failure of service with respect to the

March 16, 2023 certified mailing. Rehab requested the trial court serve Milton with the complaint again via certified

mail.

On April 13, 2023, an attorney filed a notice of appearance of counsel

on behalf of Milton. The notice also requested the trial court send all hearing notices

to the attorney at the address provided. Milton did not file an answer to First

Rehab’s complaint.

B. First Cause of Action Resolved

On April 14, 2023, the parties were present in court with respect to

the first cause of action for forcible entry and detainer. The magistrate’s order notes

that Milton acknowledged receipt of the complaint. The magistrate’s order states:

The Defendant(s) did acknowledge receipt of service of the Complaint and Summons for both the first cause of action for possession of the premises and the second cause of action for damages, if any[.]

Milton never disputed the magistrate’s order on this point.

The magistrate’s order further stated that the first cause of action had

been resolved by the parties. The parties agreed that Milton would make four

payments to First Rehab in the amount of $700 on the following dates: April 15,

2023; May 1, 2023; May 15, 2023; and June 1, 2023. Milton also agreed to move out

voluntarily on July 2, 2023. Pursuant to this agreement, if Milton failed to make

payments, First Rehab was required to notify the court so that a writ could be

executed. The magistrate’s order provided that unless a writ was issued, the first

cause of action would be dismissed on July 3, 2023. C. The Trial Court’s Dismissal of the Case

On September 19, 2023, the trial court issued a judgment entry

dismissing the case in total. The entry provides: “The parties having reached a

settlement herein, this matter is dismissed at Plaintiff’s costs.” The court issued this

dismissal, notwithstanding the magistrate’s order indicating that the settlement

agreement pertained solely to the first cause of action.

On December 18, 2023, First Rehab filed instructions for service with

the trial court, again asking the court to issue service upon Milton by certified mail.

A magistrate’s order issued January 4, 2024, denied First Rehab’s request because

of the case having been dismissed.

D. The Trial Court’s Reinstatement of the Second Cause of Action

On January 16, 2024, First Rehab filed a motion requesting the court

to vacate its September 19, 2023 entry dismissing the case. First Rehab explained

that pursuant to the magistrate’s April 14, 2023 order, only the first cause of action

should have been dismissed. On January 18, 2024, for good cause shown, the trial

court reinstated the second cause of action. Milton did not oppose the trial court’s

order reinstating the second cause of action.

The magistrate issued orders scheduling a trial via Zoom on the

second cause of action. Copy of the orders were emailed to counsel for each party.

E. Magistrate’s Trial on the Second Cause of Action

On April 2, 2024, the magistrate held a trial on First Rehab’s second

cause of action. In its decision in favor of First Rehab, the magistrate noted that First Rehab was present, but Milton was not. On the same day of trial, Milton’s

attorney notified the court that she no longer represented Milton. Approximately

ten days later, another attorney filed a notice of substitution of counsel for Milton.

On April 12, 2024, Milton filed objections to the magistrate’s decision

and a motion for relief from judgment, stating among other things, that she had not

received notice of the April 2, 2024 trial because the notice had been sent to Milton’s

first attorney. First Rehab filed a brief in opposition. On May 13, 2024, the trial

court granted Milton’s objections and did not adopt the magistrate’s decision.

The trial court subsequently scheduled a new trial on First Rehab’s

second cause of action for June 17, 2024, via Zoom. The order was emailed to

counsel for each party.

F. Trial on the Second Cause of Action

A bench trial on the second cause of action took place as scheduled.

Prior to trial, First Rehab requested Milton be precluded from introducing

testimony challenging the condition of the premises because Milton had not filed an

answer to First Rehab’s complaint. Milton’s counsel responded that First Rehab was

aware of the defenses she intended to raise because they were set forth in her

objections to the magistrate’s April 2, 2024 decision. The trial court precluded

Milton from introducing testimony relating to the condition of the property but

allowed her to proffer the testimony following the trial.

First Rehab called one witness, Mack Danzey, to testify. Danzey

testified that he manages the premises located on Gardenview Drive, Maple Heights, Ohio (“the premises”). He testified that Milton occupied the premises pursuant to a

written lease agreement that began on May 1, 2021, with a monthly rent of $925.

The lease also provided that Milton was responsible for all utilities. Danzey stated

that the lease was executed by him in his individual capacity, but was later assigned

via a property management agreement to First Rehab. Under the agreement,

Danzey testified that First Rehab was authorized to collect all rents due on the

premises.

Milton testified that she had signed a lease for the premises, but she

was unaware that she was responsible for the water and sewer utility bills. 2

At the conclusion of First Rehab’s case in chief, Milton moved to

dismiss the case. Counsel for Milton argued that the lease commenced May 1, 2021,

but First Rehab’s management agreement did not start until March 9, 2022. Milton

therefore contended that she did not owe First Rehab any rent or utilities prior to

March 9, 2022. Specifically, Milton argued:

I’m assuming that at this point, your Honor, I would like to move for dismissal of [First Rehab’s] case because the management agreement does not begin at the same time as the rental agreement. And the management agreement does not reference any obligation or entitlement to any retroactive payments under the agreement.

So I would move that the proper party in this case, First Rehab Funding is not entitled to damages that the Plaintiff is seeking at this point your Honor.

2 After the trial concluded, Milton proffered her testimony and the testimony of two other

witnesses concerning the condition of the premises. First Rehab responded by stating that Danzey testified that the property

management agreement authorized First Rehab to collect all rents and charges

related to the property. First Rehab also stated that “all or most” of the charges

sought were for the time period after the management contract was executed.3 The

trial court denied Milton’s motion to dismiss. Counsel for Milton responded to the

court’s denial: “I think the law does not allow First Rehab to collect. It would be a

vertical privity of contract, and so I would ask this court to reconsider the dismissal.”

At the close of Milton’s case, counsel for Milton renewed her motion. Again, she

argued: “moving that First Rehab does not have the right to recover for the periods

that were not covered by the management agreement, your Honor.”

On June 20, 2024, the trial court issued a judgment entry on the

second cause of action, finding in favor of First Rehab in the “amount of $2,975.28

with interest at the rate of 8% per year from 06/20/2024 and costs incurred herein.”

On July 17, 2024, Milton filed a motion for new trial challenging the

amount awarded and arguing that First Rehab was not entitled to damages because

it was not a party to the lease. The trial court denied Milton’s motion for new trial.

G. Notice of Appeal

On August 29, 2024, Milton filed a notice of appeal regarding the trial

court’s judgment entries awarding First Rehab judgment and denying Milton’s

3 First Rehab’s property management agreement submitted as Plaintiff’s exhibit No. 2 at

trial was executed March 9, 2022, but provides that the “effective date” is January 1, 2021. At oral argument, Milton conceded that the effective date of the property management agreement is January 1, 2021, which precedes the effective date of the lease agreement. motion for new trial. On appeal Milton raises the following assignments of error for

review:

1. The trial court committed reversible error by finding Appellee-Plaintiff was entitled to damages, where Appellee-Plaintiff could not prove its breach of contract claim using either the lease or property management agreement.

2. When Appellee-Plaintiff did not perfect service of its breach of contract claim within six months, as required by Civ.R. 4(E), the trial court properly dismissed Appellee-Plaintiff’s complaint; but then the trial court committed reversible error in granting Appellee-Plaintiff’s motion to vacate the dismissal, proceeding to trial without Ms. Milton having been served, granting judgment against Ms. Milton after she still had not been served, and denying Ms. Milton’s motion for new trial.

Law and Argument

A. First Assignment of Error

In her first assigned error for review, Milton argues that First Rehab

is not a party to the lease agreement and that the property management agreement

between Danzey and First Rehab does not entitle First Rehab to damages from her.

Milton did not raise the claim of whether First Rehab is the real party in interest at

trial. As such, we will not address this issue for the first time on appeal.

It is well-established that appellate courts “will not consider a

question not presented, considered or decided by a lower court[.]” Kalish v. Trans

World Airlines, Inc., 50 Ohio St.2d 73, 79 (1977). “[I]ssues not raised in the trial

court may not be raised for the first time on appeal.” Spy v. Arbor Park Phase One

Assoc., 2020-Ohio-2944, ¶ 16 (8th Dist.), citing Crenshaw v. Cleveland Law Dept.,

2020-Ohio-921, ¶ 42, fn. 6 (8th Dist.). The “failure to raise an issue before the trial court waives that issue for appellate purposes.” Wells Fargo Bank, N.A. v. Lundeen,

2020-Ohio-28, ¶ 14 (8th Dist.), citing Miller v. Cardinal Care Mgmt., 2019-Ohio-

2826, ¶ 23 (8th Dist.).

At the close of First Rehab’s case in chief, Milton moved to dismiss

the case, arguing that First Rehab was not entitled to any damages that had occurred

prior to the execution of the property management agreement. When the trial court

denied Milton’s motion to dismiss, Milton’s counsel stated, “It would be a vertical

privity of contract and so I would ask this court to reconsider the dismissal.” At the

close of Milton’s case, counsel renewed her motion, again claiming “First Rehab

does not have the right to recover for the periods that were not covered by the

management agreement, your Honor.”

Milton has abandoned her position at trial that First Rehab was only

entitled to damages after the date the management agreement was signed and now

argues, for the first time on appeal, that First Rehab is not the proper party and not

entitled to any monetary damages. Rather, Milton claims on appeal that because

there is not a direct contract between herself and First Rehab, she is not in privity

with First Rehab. She also argues, again for the first time on appeal, that even if

First Rehab were the proper party, First Rehab is not entitled to any damages

following the expiration of the property management agreement.

In support of her privity argument, she cites to Curl v. Volkwagen of

Am., Inc., 2007-Ohio-3609, for the proposition that Ohio does not recognize vertical

privity and requires a direct contract between individuals. Curl is inapplicable to the case at bar. Curl did not address privity with respect to tenants and landlords

who assign their rights under a lease to third parties. In fact, Milton fails to cite any

case law recognizing a vertical privity requirement in a landlord–tenant context.

Rather, Curl held that a party that purchased a vehicle was only in privity with the

person from whom the party purchased the vehicle and did not extend to the vehicle

manufacturer. See id. at ¶ 32. As such, Milton’s reliance on Curl is without merit.

Milton argues that First Rehab did not suffer an injury because it is

not a party to the lease, and is, in essence, not a real party in interest. Civ.R. 17

governs real party in interest and provides that “[e]very action shall be prosecuted

in the name of the real party in interest.” “A real party in interest is ‘one who has a

real interest in the subject-matter of the litigation, and not merely an interest in the

action itself, i.e., one who is directly benefitted or injured by the outcome of the

case.’” State ex rel. Browning v. Browning, 2012-Ohio-2158, ¶ 38 (5th Dist.) “[T]he

requirement that suits be brought by the real party in interest is a procedural

requirement, not a jurisdictional requirement.” Hang-Fu v. Halle Homes, Inc.,

2000 Ohio App. LEXIS 3625, *21 (8th Dist. Aug. 10, 2000). “Because compliance

with Civ.R. 17 is not necessary to invoke the jurisdiction of the court, the failure to

name the real party in interest is an objection or defense to a claim that is waived if

not timely asserted.” Browning at ¶ 39. See also Hang-Fu at *21 (“[T]he defense

that the plaintiff is not the real party in interest is an affirmative defense and,

therefore, must be specifically pled or it is waived.”). In its complaint, First Rehab alleged that it is the landlord of the

premises and Milton is the tenant. First Rehab alleged that Milton had a written

lease agreement for the premises and that she breached the agreement by failing to

pay rent and other contractual charges. First Rehab further alleged that Milton

owed it damages as a result of the breach. Notably, Milton did not file an answer to

the complaint, nor did she deny at trial (1) the existence of a lease; (2) that she

breached the terms of the lease; (3) that First Rehab was the landlord of the

premises; or (4) that she owed First Rehab damages as a result. Furthermore,

Milton did not claim at trial that First Rehab was not the real party in interest with

respect to its rights under the property management agreement. Nor did she claim

that First Rehab was not entitled to damages after the expiration of the property

management agreement. Milton only asserted at trial that First Rehab was not

entitled to retroactive rent payments prior to March 9, 2022, the date the

management agreement was executed.

As a result, Milton waived these issues and we will not address them

for the first time on appeal.

Accordingly, Milton’s first assignment of error is overruled.

B. Second Assignment of Error

In her second assigned error for review, Milton argues that she was

never properly served with the complaint with respect to the second cause of action

and that the trial court erred in reinstating the second cause of action. Milton did

not raise either of these challenges to the trial court. As such, for the reasons set forth above, we will not consider for the first time on appeal Milton’s challenges to

the service of the complaint or the trial court’s reinstatement of the second cause of

action.

Even if we were to consider Milton’s arguments, we would find they

have no merit because Milton waived the issue of service. Civ.R. 12(H)(1) provides

that “[a] defense of . . . insufficiency of process, or insufficiency of service of process

is waived . . . if it is neither made by motion under this rule nor included in a

responsive pleading or an amendment thereof permitted by Rule 15(A) to be made

as a matter of course.” Milton never filed an answer to the complaint nor did she

ever file a motion challenging sufficiency of service. Therefore, pursuant to Civ.R.

12(H), she has waived that defense.

Additionally, the magistrate’s order filed on April 14, 2023, noted that

“Defendant(s) did acknowledge receipt of service of the Complaint and Summons

for both the first cause of action for possession of the premises and the second cause

of action for damages, if any[.]” As such, Milton voluntarily submitted to the court’s

jurisdiction and waived the defense of insufficiency of service of process. See Wells

Fargo Bank, N.A., 2020-Ohio-28, at ¶ 16 (8th Dist.).

Accordingly, Milton’s second assignment of error is overruled.

Conclusion

Milton did not file an answer to First Rehab’s complaint nor did she

raise an issue at trial alleging that First Rehab was not the proper party to seek

damages pursuant to the lease or challenging the sufficiency of service of the complaint. We will not address claims for the first time on appeal. Accordingly,

Milton’s assigned errors for review are overruled.

Judgment affirmed.

It is ordered that appellee recover of appellant 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

Garfield Heights Municipal 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.

_________________________________ MICHELLE J. SHEEHAN, PRESIDING JUDGE

SEAN C. GALLAGHER, J., and ANITA LASTER MAYS, J., CONCUR