Firstmerit Mtge. Co. v. Beers, 2007-Ca-00027 (8-13-2007)

2007 Ohio 4253
CourtOhio Court of Appeals
DecidedAugust 13, 2007
DocketNo. 2007-CA-00027.
StatusPublished

This text of 2007 Ohio 4253 (Firstmerit Mtge. Co. v. Beers, 2007-Ca-00027 (8-13-2007)) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Firstmerit Mtge. Co. v. Beers, 2007-Ca-00027 (8-13-2007), 2007 Ohio 4253 (Ohio Ct. App. 2007).

Opinion

OPINION *Page 2
{¶ 1} Appellant State of Ohio ex rel. Marc Dann, Attorney General of the State of Ohio appeals the January 3, 2007 decision of the Stark County Court of Common Pleas that granted appellee Chase Bank USA, N.A.'s motion for summary judgment and overruled the State's objection to the proposed distribution of the Sheriff sale proceeds.

STATEMENT OF THE FACTS AND CASE
{¶ 2} This is a foreclosure action filed by FirstMerit Mortgage Co. against Daniel and Theodora Beers, seeking to foreclose on their delinquent mortgage against the property located at 5539 Erie Avenue, N.W., Canal Fulton, Ohio (the "Property"). Defendant-Appellee Chase Bank USA, N.A., is the holder of a mortgage against the Property junior to FirstMerit's mortgage.

{¶ 3} On June 20, 2005, Chase filed a Motion for Default Judgment in this case because the Beers were in default of filing an Answer. On July 15, 2005, the trial court filed an Entry granting Chase's Motion for Default Judgment and ordered that the Property be sold at Sheriff's Sale.

{¶ 4} On July 18, 2005, the Attorney General filed a Motion to Intervene in this case, alleging that the Beers "acquired the Property as a result of wrongful conduct." (See the State's Motion to Intervene at 4.) On August 16, 2005, the trial court filed an Entry granting the State's Motion to Intervene.

{¶ 5} On October 17, 2005, the Attorney General filed his Answer and Cross-claim. In the State's Cross-claim, the Attorney General alleged that the proceeds associated with the sale of the Property should be returned "free and clear of all liens *Page 3 and other encumbrances" because of the alleged breach of fiduciary duty of Daniel J. Beers, Ronald S. Beers, and Bruce Hawthorn. (See the State's Cross-claim.).

{¶ 6} On January 5, 2006, the trial court issued an Order of Sale to the Stark County Sheriff, and a Sheriff's Sale of the Property was scheduled to occur on May 8, 2006.

{¶ 7} On May 8, 2006, Chase purchased the Property at the Sheriff's Sale for two hundred ten thousand dollars ($210,000.00). On May 17, 2006, Chase submitted a proposed journal entry confirming the sale and ordering the distribution of proceeds. Under the proposed distribution, proceeds would be distributed first to the Clerk of Courts ($6,552.07), second to the Sheriff ($50), third to FirstMerit ($196,052.46), and finally to Chase ($7,34548). The proceeds of the Sheriffs sale were sufficient to satisfy all administrative costs and FirstMerit's entire mortgage. Chase would recover a fraction of its mortgage. All other parties with interest in the Property would be unsatisfied.

{¶ 8} On June 13, 2006, the State filed its Objection to Proposed Distribution ("the State's Objection"). The Attorney General argued that it possessed a constructive trust over the proceeds which has priority over FirstMerit's and Chase's mortgage liens, and therefore the Attorney General is entitled to distribution of all the proceeds after payment to the Clerk of Courts and the Sheriff.

{¶ 9} The Attorney General states that Daniel Beers acquired the Property indirectly from the Barberton Rescue Mission ("Mission") and/or improved the Property with assets of the Mission and/or assets of the Mission that had been wrongfully diverted by Daniel Beers in concert with other principals and/or employees of the Mission. Because the Mission is a charitable organization, and because Daniel Beers *Page 4 acquired and/or improved the Property as a result of his wrongful conduct, the Attorney General claims that the Property is impressed with a charitable and/or constructive trust for the benefit of the beneficiaries of the Mission.

{¶ 10} The Attorney General and the Mission brought an ultimately successful suit in Summit County against Daniel Beers for his improper activities. The jury found Mr. Beers liable to the Attorney General and the Mission for compensatory and punitive damages in an amount in excess of $3 million. The jury found Mr. Beers liable for breach of fiduciary duties, fraud, solicitation fraud, conversion, and unjust enrichment. See, Barberton Rescue Mission dba Christian Brotherhood Newsletter, etal. v. Bruce Hawthorn, et al. Summit County Court of Common Pleas, Case No. CV-2000-12-5496.

{¶ 11} Thus, the Attorney General claims that the constructive trust has priority over the mortgage liens recorded by FirstMerit and Chase.

{¶ 12} A Status Conference was held in this case, at which the trial court established a briefing schedule on the issue of distribution of the Net Sale Proceeds, which the parties agreed was the only issue that remained in the case.

{¶ 13} Thereafter: (1) Chase filed its Motion for Summary Judgment on the Issue of Distribution of Net Sale Proceeds ("Chase's Motion for Summary Judgment"); (2) FirstMerit filed its Memorandum Contra to the State's Objection to Proposed Distribution; and (3) the State filed its Memorandum and Brief on the Issue of Priority of Distribution of Proceeds.

{¶ 14} On January 3, 2007, the trial court filed its Judgment Entry ("the Judgment Entry") granting Chase's Motion for Summary Judgment and overruling the Attorney General's objection to the proposed distribution. Specifically, the trial court held that: (1) *Page 5 Chase and FirstMerit are bona fide mortgagees; and (2) the State did not offer any evidence to refute that Chase and FirstMerit are bona fide mortgagees.

{¶ 15} It is from the trial court's January 3, 2007 Judgment Entry that the Attorney General has timely appealed, raising the following three assignments of error:

{¶ 16} "I. THE TRIAL COURT ERRED WHEN IT COMPLETED DEFENDANT BEERS' FRAUD BY TREATING THE BANKS AS BONA FIDE PURCHASERS AND AWARDING PRIORITY TO THE BANKS' MORTGAGES, WHEN DEFENDANT BEERS HELD THE PROPERTY UNDER A CHARITABLE, CONSTRUCTIVE TRUST FOR THE BENEFIT OF THOUSANDS OF DEFRAUDED BENEFICIARIES OF THE MISSION AND ITS NEWSLETTER DIVISION.

{¶ 17} "II. THE TRIAL COURT ERRED WHEN IT ASSIGNED THE BURDEN OF PROOF TO THE ATTORNEY GENERAL WHEN DETERMINING DEFENDANT CHASE'S MOTION FOR SUMMARY JUDGMENT.

{¶ 18} "III. THE JUDGMENT ENTRY APPEALED FROM MAY NOT BE A FINAL APPEALABLE ORDER, BECAUSE IT NEVER DETERMINED THE ATTORNEY GENERAL'S CROSS-CLAIM."

Summary Judgment Standard
{¶ 19} Summary judgment proceedings present the appellate court with the unique opportunity of reviewing the evidence in the same manner as the trial court. Smiddy v. The Wedding Party, Inc. (1987),30 Ohio St. 3d 35, 36, 506 N.E. 2d 212. As such, we must refer to Civ.R. 56 which provides, in pertinent part:

{¶ 20} "Summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of *Page 6 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.

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Bluebook (online)
2007 Ohio 4253, Counsel Stack Legal Research, https://law.counselstack.com/opinion/firstmerit-mtge-co-v-beers-2007-ca-00027-8-13-2007-ohioctapp-2007.