Gen. Elec. Credit Union v. Sosna

2024 Ohio 2920

• Court: Ohio Court of Appeals
• Decided: August 2, 2024
• Docket: C-230389
• Status: Published

Opinion

[Cite as Gen. Elec. Credit Union v. Sosna, 2024-Ohio-2920.]

IN THE COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

GENERAL ELECTRIC CREDIT : APPEAL NO. C-230389 UNION, TRIAL NO. A-2002231 : Plaintiff, : O P I N I O N. vs. : HAROLD SOSNA, : and : FAYE SOSNA, : Defendants-Appellants, : and : FIFTH THIRD BANK, NATIONAL ASSOCIATION, :

Defendant-Appellee/Cross- Claimant. :

Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: August 2, 2024

Statman Harris LLC, Alan J. Statman and William B. Fecher, for Defendants- Appellants,

Dinsmore & Shohl LLP, Shannon O’Connell Egan and Harry W. Cappel, for Defendant-Appellee/Cross-Claimant. OHIO FIRST DISTRICT COURT OF APPEALS

BERGERON, Judge.

{¶1} Defendants-appellants Harold and Faye Sosna (“the Sosnas”) want to

stay in their home, but they did not make the payments required to keep up with their

mortgage obligations. The mortgagee, defendant-appellee Fifth Third Bank, National

Association, (“Fifth Third”) accordingly obtained a decree of foreclosure and grant of

summary judgment from the trial court that included the principal and interest

amounts owed by the Sosnas. Because the order identified other categories of costs

due but did not specify those amounts, the Sosnas appealed, insisting that they could

not exercise their equitable right to redeem the property without more information

and that the trial court effectively eliminated the right in its entirety. But the Sosnas

mischaracterize what happened below. Based on Supreme Court of Ohio precedent,

the function of the equity of redemption, and the Sosnas’ failure to pursue it, we see

no infirmity in the trial court’s decision, and thus we affirm its judgment.

I.

{¶2} The Sosnas obtained a $4,200,000 mortgage loan from Fifth Third in

January 2014, evidenced by a promissory note and a mortgage and secured by the

Sosnas’ property in Cincinnati. Plaintiff-appellee General Electric Credit Union filed

for foreclosure on the property in June 2020, naming Fifth Third as a potential

interested party due to its mortgage on the property. Fifth Third then filed a

crossclaim against Prime Alliance Bank because of its potential interest in the

property, and that bank failed to answer or respond.

{¶3} In July 2022, Fifth Third provided the Sosnas a payoff quote for the loan

in response to a discovery request. It quoted the Sosnas a total of $4,329,468.44,

which included itemized amounts for the principal, interest, escrow advance, a late

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charge, and the costs of recording, inspection, title, foreclosure, and “property value

costs.” The quote also included a $458.88 daily interest accrual rate, indicating that

it remained good through July 29, 2022, and noted that the Sosnas could contact Fifth

Third for an updated quote beyond that date.

{¶4} Upon Fifth Third’s motion for summary judgment, a magistrate issued

a decision in October 2022 granting its motion and declaring Fifth Third’s right to

foreclose the Sosnas’ equity of redemption, sometimes described as equitable right of

redemption. In that order, the magistrate notified the Sosnas that they had the ability

to redeem the property by paying the sums due to Fifth Third at any time up through

three days after the trial court adopts her decision. It specified that the Sosnas owed

Fifth Third $3,722,010.70 in principal plus interest at the rate of 4.25 percent per

annum from May 1, 2020, and added that the Sosnas also owed:

all late charges imposed under the Note, all advances made for the

payment of real estate taxes and assessments, property preservation,

and insurance premiums, and all costs and expenses incurred for the

enforcement of the Note and Mortgage, to be proven via the

confirmation of sale, including costs associated with the title work on its

Cross-Claim, except to the extent the payment of one or more specific

such items is prohibited by Ohio law.

The Sosnas now acknowledge that they were “first judicially informed of their right to

equitably redeem their property” when the magistrate issued her decision in October.

{¶5} Over half a year later, the trial court followed suit in July 2023, entering

summary judgment for Fifth Third against the Sosnas, finding that they were in default

for failure to make payments due under the note and mortgage. It also held that Fifth

3 OHIO FIRST DISTRICT COURT OF APPEALS

Third’s interest in the property was superior and senior in priority to that of General

Electric Credit Union and that Fifth Third was entitled to a default judgment on its

crossclaim against Prime Alliance Bank for its failure to answer or respond. It restated

the same sums and categories of costs due to Fifth Third as detailed in the magistrate’s

decision, reiterating the Sosnas’ equitable right to redeem the property within three

days of the final order. The Sosnas now appeal.

II.

{¶6} The Sosnas argue that the trial court’s foreclosure and summary

judgment order is not final and appealable and that the cause should be remanded

because the court did not itemize all of the amounts due for the various categories of

costs it listed, thereby depriving them of their equitable right of redemption. They

raise a single assignment of error regarding the finality of the order and do not appeal

the trial court’s grant of summary judgment to Fifth Third. Although General Electric

Credit Union was named as an appellee, it did not file a brief, it is not a party to this

appeal, and its interests seem largely unaffected by this appeal.

{¶7} A challenge to a judgment entry and decree of foreclosure on the ground

that it inadequately defines the mortgagor’s responsibilities and thus prejudices the

mortgagor’s ability to exercise their right of redemption is typically reviewed through

the lens of finality. See CitiMortgage, Inc. v. Roznowski, 139 Ohio St.3d 299, 2014-

Ohio-1984, 11 N.E.3d 1140, ¶ 10-12. The ultimate test, then, is whether the judgment

order constitutes a final appealable order under the relevant statute, R.C. 2505.02.

See id. R.C. 2505.02(B)(1) provides, in relevant part, that “[a]n order is a final order

that may be reviewed, affirmed, modified, or reversed, with or without retrial, when it

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is * * *: (1) An order that affects a substantial right in an action that in effect determines

the action and prevents a judgment.”

{¶8} In CitiMortgage, the Supreme Court of Ohio held “that a judgment

decree in foreclosure that includes as part of the recoverable damages amounts

advanced by the mortgagee for inspections, appraisals, property protection, and

maintenance but does not include specific itemization of those amounts in the

judgment is a final, appealable order pursuant to R.C. 2505.02(B)(1).” CitiMortgage

at ¶ 19. The order must also “address the rights of all lienholders and the

responsibilities of the mortgagor.” Id. at ¶ 20. In CitiMortgage, the order in question

met these criteria, and thus it constituted a final and appealable order because “all that

remained was for the trial court to perform the ministerial task of calculating the final

amounts that would arise during confirmation proceedings.” Id.

{¶9} Fifth Third argues that CitiMortgage effectively forecloses the Sosnas’

appeal, but the Sosnas correctly observe that the CitiMortgage court only considered

an argument that the unspecified amounts affected the defendant’s statutory right of

redemption, which is distinct from the equitable right of redemption that they feature

in this appeal. See id. at ¶ 26-30. However, as we explain further in this opinion, the

Sosnas fail to show how the finality determination differs between the statutory and

equitable rights, at least on the state of the present record.

{¶10} We first must explicate the distinction between the equitable right and

the statutory right. “In Ohio, a mortgagor’s right to redeem is ‘absolute and may be

validly exercised at any time prior to the confirmation of sale.’ ” Hausman v. City of

Dayton, 73 Ohio St.3d 671, 676, 653 N.E.2d 1190 (1995), quoting Women’s Fed. Savs.

Bank v. Pappadakes, 38 Ohio St.3d 143, 146, 527 N.E.2d 792 (1988). The right to

5 OHIO FIRST DISTRICT COURT OF APPEALS

redeem arises both from equity and by statute. The equity of redemption “is a right,

retained by the mortgagor, to perform the mortgage obligation after default and to

thereby ‘redeem’ his title from the mortgage conveyance.” Hembree v. Mid-America

Fed. S. & L. Assn., 64 Ohio App.3d 144, 156, 580 N.E.2d 1103 (2d Dist.1989). It arises

upon the mortgagor’s default, and the right “is typically cut off once a mortgagee seeks

and is granted a decree of foreclosure.” Hausman at 676. Courts typically “grant[] the

mortgagor a three-day grace period to exercise the ‘equity of redemption,’ which

consists of paying the debt, interest and court costs, to prevent the sale of the

property.” Id., citing Hausser & Van Aken, Ohio Real Estate Law and Practice,

Section 53.01(D), 744 (1993). “The term ‘foreclosure’ itself refers to a lender’s or

lienholder’s right to foreclose an obligor’s equitable right of redemption.” Yeager v.

Davis, 7th Dist. Carroll No. 09 CA 859, 2010-Ohio-4866, ¶ 25, citing Bank of New

York v. Dobbs, 5th Dist. Knox No. 2009-CA-000002, 2009-Ohio-4742, ¶ 47.

{¶11} By contrast, the statutory right of redemption emanates from R.C.

2329.33, which provides:

In sales of real estate on execution or order of sale, at any time before

the confirmation thereof, the debtor may redeem it from sale by

depositing in the hands of the clerk of the court of common pleas to

which such execution or order is returnable, the amount of the

judgment or decree upon which such lands were sold, with all costs * *

*. The court of common pleas thereupon shall make an order setting

aside such sale[.]

{¶12} In sum, the common law equitable right of redemption arises upon

default and continues through the trial court’s final decree of foreclosure, typically

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with a three-day grace period, while Ohio’s statutory right of redemption continues

past the decree of foreclosure and allows for redemption “at any time before the

confirmation” of sale. R.C. 2329.33.

{¶13} The defendants in CitiMortgage maintained that holding the order and

decree of foreclosure final and appealable even though it did not specify all amounts

due would extinguish the statutory right of redemption because the order left

defendants “wholly dependent upon the mortgagee bank to determine the redemption

amount.” CitiMortgage, 139 Ohio St.3d 299, 2014-Ohio-1984, 11 N.E.3d 1140, at ¶ 28.

The court soundly rejected that argument, observing that “there is no evidence before

us that unscrupulous mortgagees will willfully withhold” information mortgagors may

need regarding final amounts owed. Id. at ¶ 29. It further instructed that “any

concerns about a mortgagee’s failure to cooperate with providing accounts of costs

necessary to determine the redemption amount may be brought before the trial court.”

Id.

{¶14} The court’s holding and logic map neatly onto the appeal before us. Like

the final order in CitiMortgage, the trial court’s order here included all the necessary

elements for finality: it established that Fifth Third’s mortgage was senior and superior

to the interests of the other stakeholders, and it included the principal amount, the

interest rate, the date from which to calculate interest, and the other cost categories

owed to Fifth Third. See id. at ¶ 22 (holding that the trial court’s judgment is final and

appealable where it “forecloses on the mortgage, sets forth the principal sum and

interest accrued on the note, and lists the categories for future expenses for which the

[defendants] will be liable”); see also Parkview Fed. Savs. Bank v. Grimm, 8th Dist.

Cuyahoga No. 93899, 2010-Ohio-5005, ¶ 60 (“[A] judgment entry [is] clearly

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ascertainable and not vague when it state[s] the principal amount due, the applicable

interest rate, and the exact date from which the interest [is] to be calculated. * * * Trial

courts are not required to state the exact amount due because that amount is

constantly changing as interest accrues.”).

{¶15} Furthermore, the Sosnas cite no case law where courts have treated the

equitable right of redemption separately from the statutory right in terms of what

information is needed in a judgment entry and decree of foreclosure for finality

purposes, and we see no reason to create a novel distinction between the two. The

equitable right and the statutory right work in tandem and, to some extent, overlap. If

the Sosnas wished to exercise their right of redemption prior to the final decree of

foreclosure or within the three-day grace period, they simply should have taken some

action to do so. But rather than making a payment, contacting Fifth Third for an

updated payoff quote, or seeking clarification from the trial court about any of their

obligations, the Sosnas ran out the clock (and overtime) on the equitable right and

cried foul. They raised no assignment of error regarding the trial court’s management

of discovery proceedings through which they could have (and apparently did) obtain

necessary information from Fifth Third. See CitiMortgage at ¶ 29. In fact, they

concede they were aware of their right to redeem as of the magistrate’s October 2022

order, and that order itself explained that they could redeem up through three days

after the trial court’s final order, which came nine months later.

{¶16} Even with the extra opportunity to redeem that the statutory right

afforded them, nothing in the record shows that the Sosnas ever took any action to

exercise it. And their argument that they declined to pursue the statutory right

because it would have resulted in higher accumulated costs and interest falls flat

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considering their lack of effort to redeem up through the foreclosure of their equitable

right. Regardless, the CitiMortgage court unambiguously held that waiting to

calculate the final cost amounts beyond the principal and interest for the purpose of

exercising the statutory right “during confirmation proceedings” had no ill effects on

that right. CitiMortgage, 139 Ohio St.3d 299, 2014-Ohio-1984, 11 N.E.3d 1140, at ¶

20. And we cannot see how adhering to the holding in CitiMortgage in the context of

the equitable right prejudices the Sosnas in any conceivable way, especially given their

inaction in pursuing it and the lack of any error assigned to the discovery proceedings.

If the Sosnas wanted to exercise the right, the proper course was to contact Fifth Third

for an updated payoff quote and to bring “before the trial court” “any concerns about

[Fifth Third]’s failure to cooperate” or any dispute about the quoted amounts. See id.

at ¶ 29. Without any effort shown to do so, we fail to see how the trial court’s order

improperly deprived them of their equity of redemption.

{¶17} Ultimately, because the court’s order conforms to the requirements of

R.C. 2505.02(B)(1) as described in CitiMortgage, we conclude that it was final and

appealable, and we overrule the Sosnas’ sole assignment of error.

* * *

{¶18} In sum, we conclude that the trial court’s final decree of foreclosure and

grant of summary judgment to Fifth Third was final and appealable and appropriately

foreclosed the Sosnas’ equitable right of redemption. We further conclude that the

Sosnas faced no prejudice from the order’s lack of itemization beyond the principal

and interest amounts owed. We thus overrule the Sosnas’ sole assignment of error

and affirm the judgment of the trial court.

Judgment affirmed.

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ZAYAS, P.J., and WINKLER, J., concur.

Please note:

The court has recorded its entry on the date of the release of this opinion.