[Cite as KeyBank Natl. Assn. v. Midtown Inspirion, L.L.C., 2025-Ohio-1737.]
COURT OF APPEALS OF OHIO
EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA
KEYBANK NATIONAL ASSOCIATION, :
Plaintiff-Appellee, : No. 114393 v. :
MIDTOWN INSPIRION, LLC, ET AL., :
Defendants-Appellants. :
JOURNAL ENTRY AND OPINION
JUDGMENT: AFFIRMED RELEASED AND JOURNALIZED: May 15, 2025
Civil Appeal from the Cuyahoga County Court of Common Pleas Case Nos. CV-24-101078, CV-24-101079, CV-24-101081, CV-24-101085, CV-24-101090, CV-24-101153, CV-24-101154, CV-24-101156, CV-24-101158, CV-24-101160, and CV-24-101173
Appearances:
Wong Fleming, P.C., and Daniel C. Fleming; Calfee, Halter & Griswold LLP and Colleen M. O’Neil, for appellee.
Mark S. O’Brien & Associates, LLC, and Mark S. O’Brien, for appellants.
MICHELLE J. SHEEHAN, P.J.:
This case came to be heard upon the accelerated calendar pursuant to
App.R. 11.1 and Loc.App.R. 11.1. This appeal involves 11 cases that were consolidated in the trial court.1
In each of these cases, the trial court issued cognovit judgments in favor of plaintiff-
appellee KeyBank National Association (“KeyBank”) and against defendant Lemma
Getachew (“Getachew”) and the 11 companies that are the appellants in this case,
defendants-appellants Midtown Inspirion, L.L.C.; 1490 Livingston Associates,
L.L.C.; Central Property, L.L.C.; Euclid Emerald Apartments, L.L.C.; CRP
Pharmacy, L.L.C.; Teriyaki 7050, L.L.C.; Teriyaki 3226, L.L.C.; Teriyaki 4614,
L.L.C.; Teriyaki 710, L.L.C.; Central Investment Group, L.L.C.; and Shoregate
Inspirion, L.L.C. (collectively, “companies”).2 The companies appeal the trial court’s
judgments denying their motions for relief from judgment, raising two assignments
of error for our review:
1. The trial court committed reversible error when it denied the relief requested in Appellants’ motion[s] for relief from judgment because the motions were timely made and included the assertion of a meritorious defense.
2. The trial court committed reversible error when it failed to hold an evidentiary hearing on Appellants’ motions for relief from judgment.
After review, we conclude that although the companies timely filed
their Civ.R. 60(B) motions, they failed to allege operative facts with sufficient
specificity to warrant relief from judgment. We further determine that because the
1Cuyahoga C.P. Nos. CV-24-101078, CV-24-101079, CV-24-101081, CV-24-101085, CV-24-101090, CV-24-101153, CV-24-101154, CV-24-101156, CV-24-101158, CV-24-101160, and CV-24-101173.
2 Getachew is not a party to this appeal. companies did not allege operative facts that would warrant relief, the trial court did
not have to hold an evidentiary hearing. We therefore overrule the companies’ first
and second assignments of error and affirm the judgment of the trial court.
I. Procedural History and Factual Background
A. Complaints and Cognovit Judgments
In each of KeyBank’s complaints filed in July 2024, it alleged that it
loaned the companies money in 2019. According to the complaints, the individual
companies executed a promissory note for the amount of the loan, which Getachew
signed as a “member” of the company, and Getachew unconditionally guaranteed
the entire indebtedness under the note in a separate commercial guaranty. Both the
note and the commercial guaranty contained warrants of attorney authorizing an
attorney, including one hired by KeyBank, to appear in court after the note became
due and confess judgment.
The promissory notes and the commercial guaranties further
contained the warning required in R.C. 2323.13(D), which was located just before
the signature line where Getachew signed as the borrower (as a member of the
company) on the note and the guarantor on the commercial guaranty:
WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. According to KeyBank, the companies made payments on the loans
for over four years until they stopped paying. KeyBank stated that it demanded
payment from Getachew and the companies for the unpaid balance that was due
under the loans, but they did not pay. KeyBank also set forth in the complaints what
each company owed under the notes, plus interest at the rate of 11.94% per annum
from the date when each company stopped paying. KeyBank included an affidavit
with each complaint from one of its employees familiar with the cognovit note at
issue averring that the amount owed as set forth in each complaint was correct.
Additionally, an attorney “by virtue of the Warrant of Attorney to
Confess Judgment set forth in the Cognovit Note . . . and Commercial Guaranty”
filed an answer and confession of judgment in each case. The attorney stated that
she reviewed the documents on which the complaint, answer, and confession of
judgment were based and was satisfied that Getachew and the companies did not
have any defenses to the complaints. She also reviewed all records of payment and
found the amount sought to be accurate.
The same day that KeyBank filed its complaints, it obtained cognovit
judgments against Getachew and the companies in the amount owed from each
company pursuant to the warrants of attorney contained in the notes and the
commercial guaranties, for a total of $470,386.37, plus interest and costs. The trial
court subsequently sent notice of the cognovit judgments to Getachew and the
companies. B. Motions to Vacate
Approximately one month after the trial court entered cognovit
judgments, Getachew and the companies filed motions for relief from judgment
pursuant to Civ.R. 60(B). They argued that they have a meritorious defense to the
judgments entered against them because Getachew was “either fraudulently
induced into opening the account[s] or that [they were] opened without his
knowledge and consent.” They further argued that a KeyBank employee, Kristi
Zaccaro, was convicted of identity fraud, aggravated theft, and forgery in a matter
“unrelated to the pending matter.” Getachew and the companies claimed that
“[u]pon information and belief, Zaccaro has engaged in such conduct relative to
other customers of KeyBank with whom she maintained business relationships.”
Getachew and the companies included an affidavit from Getachew in
support of their motions. Getachew stated that he “possess[es] a beneficial
ownership interest in each of the [companies] named as defendants . . . . ” Getachew
averred that Zaccaro was a branch manager for KeyBank in 2019 when the cognovit
notes were “alleged[ly]” made. According to Getachew, Zaccaro pleaded guilty in
2023 to identity fraud, forgery, and aggravated theft.
Getachew averred that he conducted “the majority of [his] in-person
banking” with Zaccaro and that, in 2019, she “persuaded [him] to open individual
accounts for several of [his] businesses.” Getachew stated that although he recalled
opening some of the accounts, he did “not believe that [he] opened eleven separate
accounts” because he “had no reason to do so.” Getachew also “believe[d]” that “Zaccaro engaged in unauthorized
transactions[,] including opening accounts using [his] name and the names of
various LLCs in which [he] has an interest, as well as transferring and/or
withdrawing funds from these accounts without [his] approval.” Getachew further
averred that “Zaccaro used these accounts for her own personal gain and engaged in
fraudulent conduct without [his] knowledge or consent.” Getachew disputed the
“validity of each of the cognovit judgments entered against” him.
C. Opposition Briefs
KeyBank opposed Getachew’s and the companies’ motions to vacate
the cognovit judgments. They argued that defendants did not raise a meritorious
defense because Getachew did not aver that he was fraudulently induced into
signing the cognovit notes and did not deny that he executed them. KeyBank further
claimed that Getachew’s “belief” that some kind of fraud happened to him because
Zaccaro was convicted in an unrelated matter was insufficient to create a
meritorious defense.
KeyBank alternatively claimed in its opposition brief to Getachew’s
and the companies’ motions to vacate that the companies’ allegations did not
contain sufficient operative facts with enough specificity for the trial court to
determine if a meritorious defense exists. KeyBank argued that defendants offered
hearsay that “a former KeyBank employee was convicted of identity theft crimes but
admit that those convictions are unrelated to the pending matter.” KeyBank also argued that defendants used only “conjecture to assert that Ms. Zaccaro’s
convictions had to do with committing fraud against KeyBank customers.”
KeyBank further asserted in its opposition brief that although
Getachew claimed that he did not know anything about the cognovit notes, he signed
each of them and “repaid each of those loans for an approximately four (4) year
period.”
KeyBank informed the court in its opposition brief that despite
Getachew’s allegations that Zaccaro has engaged in criminal conduct with KeyBank
customers, she was convicted of crimes that she committed against victims who
were not KeyBank customers.
KeyBank supported its opposition brief with two affidavits. Daniel
Fleming, an attorney for KeyBank, averred that copies of Zaccaro’s indictment and
restitution order attached to his affidavit were true copies of Zaccaro’s criminal case.
Zaccaro had been indicted on eight counts, all alleged to have occurred in April and
May 2023. Zaccaro was indicted on one count of theft, two counts of forgery, and
one count of identity fraud against one victim who was elderly or disabled (she
allegedly held herself out to be the victim, forged a withdrawal slip at Ohio Savings
Bank without the authority of the victim, and deprived the victim of $150,000 or
more). Zaccaro was also indicted on two counts of identity fraud involving a second
elderly or disabled victim (she allegedly obtained personal information from the
victim without the victim’s consent with the intent to hold herself out to be the
victim). And she was indicted on three counts of identity fraud involving a third elderly or disabled victim (she allegedly obtained personal information from the
victim without the victim’s consent with the intent to hold herself out to be the
victim).
According to Zaccaro’s sentencing entry, she pleaded guilty to one
count each of aggravated theft, forgery, and identity fraud, all involving the first
victim. She was sentenced four to six years in prison and ordered to pay total
restitution in the amount of $108,828.32: $100,733.72 to New York Community
Bank (which owns Ohio Savings Bank) and $8,094.60 to the Mayfield Heights
Police Department.
KeyBank also attached an affidavit of Charles Benjamin, a Loan
Workout Officer at KeyBank, who stated that he has personal knowledge of and
access to KeyBank’s business records, including records related to Getachew and the
defendant companies. Benjamin averred that Getachew’s loans were assigned to
him because Getachew and his companies had fallen behind in their payments.
Benjamin wrote a letter to Getachew in early January 2024, asking him to
voluntarily resolve the past-due indebtedness. Benjamin also spoke to Getachew
and his lawyer who both informed Benjamin that Zaccaro had defrauded Getachew.
Benjamin stated that he asked Getachew’s attorney why Getachew made loan
payments on the loans for approximately four years if Getachew never consented or
authorized the loans, and Getachew’s attorney had no response.
Benjamin also attached to his affidavit the repayment history for each
of the loans at issue. According to Benjamin, while Getachew and his companies were repaying the loans over a four-year period, “no record exists anywhere at
KeyBank that Mr. Getachew and/or his companies ever communicated to KeyBank
that Kristi Zaccaro had opened a loan account in his name without his consent and
authorization.”
Benjamin further averred that he conducted an internal search at
KeyBank to determine if any of the victims listed in Zaccaro’s indictment and
restitution order were ever customers at KeyBank and they were not. Finally,
Benjamin stated that no KeyBank customers besides Getachew had ever asserted
that they were defrauded by Zaccaro.
D. Denial of Motions to Vacate
The trial court denied Getachew’s and the companies’ motions to
vacate. It is from these judgments that the companies now appeal.
II. Law and Analysis
A. Cognovit Notes, Civ.R. 60(B), and Standard of Review
“A cognovit promissory note is a special type of commercial paper by
which a debtor authorizes a creditor, in the event of the debtor’s default on his
payment obligation, to obtain an immediate judgment against him without prior
notice or an opportunity to be heard.” Sutton Bank v. Progressive Polymers, L.L.C.,
2020-Ohio-5101, ¶ 12, citing D.H. Overmyer Co., Inc. v. Frick Co., 405 U.S. 174, 176
(1972). “The purpose of a cognovit note is to allow the holder of the note to quickly
obtain judgment, without the possibility of a trial.” Buzby v. Chamoun, 2014-
Ohio-4676, ¶ 5 (8th Dist.), citing Fogg v. Friesner, 55 Ohio App.3d 139, 140 (6th Dist. 1988). Thus, when a debtor signs a cognovit note, the debtor relinquishes the
possibility of notice, hearing, or appearance at an action to collect in the event of
nonpayment on the note. Id., citing Medina Supply Co., Inc. v. Corrado, 116 Ohio
App.3d 847, 851 (8th Dist. 1996).
If a debtor wants to challenge a judgment obtained by cognovit note,
the debtor may file a Civ.R. 60(B) motion for relief from judgment. Id. at ¶ 6, citing
Masters Tuxedo Charleston, Inc. v. Krainock, 2002-Ohio-5235, ¶ 7 (7th Dist.). And
because cognovit judgments are obtained without prior notice, “collateral attacks on
cognovit judgments are liberally permitted, and the burden on the party moving for
relief is ‘somewhat lessened.’” Second Natl. Bank of Warren v. Web Producers, Inc.,
2004-Ohio-5786, ¶ 14 (7th Dist.), quoting Soc. Natl. Bank v. Val Halla Athletic Club
& Recreation Ctr., Inc., 63 Ohio App.3d 413, 418 (9th Dist. 1989).
Generally, parties who move to vacate a judgment must demonstrate
that (1) they have a meritorious defense to present if relief is granted, (2) they are
entitled to relief on one of the five grounds listed in Civ.R. 60(B), and (3) the motion
is made within a reasonable time. GTE Automatic Elec., Inc. v. ARC Industries, Inc.,
47 Ohio St.2d 146 (1976), paragraph two of the syllabus. But where the movant seeks
to vacate a cognovit judgment, a less stringent standard applies because the movant
did not have an opportunity to be heard before the judgment was entered. Baker
Motors, Inc. v. Baker Motors Towing, Inc., 2009-Ohio-3294, ¶ 9 (8th Dist.).
Therefore, “a movant who files for relief from a judgment taken upon a cognovit note need only establish (1) a meritorious defense and (2) that the motion was timely
made.” Medina Supply at 850-851, citing Soc. Natl. Bank at 418.
“Under Civ.R. 60(B), a movant’s burden is only to allege a meritorious
defense, not to prove that he will prevail on that defense.” Rose Chevrolet, Inc. v.
Adams, 36 Ohio St.3d 17, 20 (1998), citing Moore v. Emmanuel Family Training
Ctr., 18 Ohio St.3d 64, 67 (1985). However, the moving party still needs to allege
operative facts with enough specificity to allow the trial court to decide whether a
meritorious defense exists. Diamond v. Arabica Coffee One Corp., 2010-Ohio-
3090, ¶ 10 (8th Dist.), citing Syphard v. Vrable, 141 Ohio App.3d 460, 463 (7th Dist.
2001); First Merit Bank, N.A. v. NEBS Fin. Servs., Inc., 2006-Ohio-5260, ¶ 18 (8th
Dist.), citing Syphard.
Additionally, a movant must provide evidentiary material supporting
his or her Civ.R. 60(B) motion. Spaulding-Buescher v. Skaggs Masonry, Inc.,
2008-Ohio-6272, ¶ 14 (4th Dist.), quoting Powells v. S.C.I.T., 1989 Ohio App. LEXIS
2356, *5 (8th Dist. Jun. 15, 1989) (“‘A movant must demonstrate the satisfaction of
these requirements by asserting operative facts in evidentiary materials of the
nature contemplated by Civ.R. 56(C).’”); Angel v. Angel, 1993 Ohio App. LEXIS
1138, *7 (4th Dist. Feb. 18, 1993) (operative facts must be supported by evidence
similar in quality to “affidavits, depositions, answers to interrogatories, written
admissions or written stipulations”). And “[t]he evidentiary materials must present
operative facts and not mere general allegations to justify relief.” Soc. Natl. Bank, 63 Ohio App.3d at 418 (9th Dist.), citing Hornyak v. Brooks, 16 Ohio App.3d 105,
106 (8th Dist. 1984).
In Baker Motors, Inc., this court explained:
The defenses available to the maker of a cognovit note are extremely limited. The “defense of non-default” is certainly one. “Other asserted defenses found meritorious include improper conduct in obtaining the debtor’s signature on the note; deviation from proper procedures in confessing judgment on the note; and miscalculation of the amount remaining due on the note at the time of confession of judgment. * * * Thus, a meritorious defense is one that goes to the integrity and validity of the creation of the debt or note, the state of the underlying debt at the time of confession of judgment, or the procedure utilized in the confession of judgment on the note.”
2009-Ohio-3294 (8th Dist.), at ¶ 12, quoting First Natl. Bank of Pandora v. Freed,
2004-Ohio-3554, ¶ 9-10 (3d Dist.).
A reviewing court will not disturb a trial court’s decision regarding a
Civ.R. 60(B) motion unless there is an abuse of discretion. State ex rel. Russo v.
Deters, 80 Ohio St.3d 152, 153 (1997). A trial court abuses its discretion when it
overrules a timely motion to vacate a cognovit judgment entered without prior
notice if the movant presented a meritorious defense. Meyers v. McGuire, 80 Ohio
App.3d 644, 647 (9th Dist. 1992).
B. Meritorious Defenses
In their first assignment of error, the companies contend that the trial
court erred when it denied their motions to vacate the cognovit judgments. There is
no question in this case that the companies’ motions to vacate the cognovit
judgments were timely. We must therefore review the companies’ evidentiary materials to determine whether they alleged operative facts with sufficient
specificity for the trial court to determine if they presented a meritorious defense in
their Civ.R. 60(B) motions.
Getachew first stated in his affidavit that “Zaccaro persuaded [him]
to open individual accounts for several of [his] businesses.” Getachew appears to be
alleging that Zaccaro fraudulently induced him into opening the accounts. This
factual statement, however, does not amount to fraud in the inducement.
Persuading someone to open an account is not illegal. Good bankers persuade
people to open accounts. Notably, Getachew does not allege any facts that, if true,
would establish fraudulent inducement. He does not assert that Zaccaro made a
false representation of fact with the intent of misleading him to rely upon the
representation to get him to sign the promissory note or guaranty. See Mtge.
Electronic Registration Sys., Inc. v. Mosley, 2010-Ohio-2886, ¶ 31 (8th Dist.)
(setting forth the elements of fraud in the inducement).
Getachew further stated in his affidavit that he “recall[ed] opening
accounts for some of [the] LLC’s, but [he did] not believe that [he] opened eleven
separate accounts” because he “had no reason to do so.” The fact that Getachew
does not remember opening eleven separate accounts five years earlier does not
mean he did not do so. Therefore, this statement does not amount to a defense.
Getachew further averred that he “believed” Zaccaro “engaged in
unauthorized transactions[,] including opening accounts using [his] name and the
names of various LLCs in which [he had] an interest . . . .” Getachew appears to be alleging that he believed Zaccaro committed forgery and/or identity theft against
him. However, Getachew’s allegation does not state that he did not sign the
promissory notes or that Zaccaro did these acts with respect to the accounts at issue
in these cases. He simply alleges that Zaccaro opened accounts using his name and
the names of his companies without including any operative facts that connect those
alleged acts to the loans in this case.
Moreover, a “belief” is not an “operative fact.” Kemp v. Markovitch,
1983 Ohio App. LEXIS 12858, *7 (8th Dist. Nov. 3, 1983). To set forth a meritorious
defense, more than a “belief” is required. But even if Getachew had averred that
Zaccaro opened accounts using his name rather than stating that he believed that
she did so, the allegation still does not contain sufficient specificity for a court to
determine that a meritorious defense exists. Indeed, Getachew does not allege any
specific facts. To establish a meritorious defense, a movant must include operative
facts rather than mere general allegations or conclusory statements. See Soc. Natl.
Bank, 63 Ohio App.3d at 418 (9th Dist.), citing Hornyak, 16 Ohio App.3d at 106;
Feldman v. Frydman, 1986 Ohio App. LEXIS 7350, *6 (7th Dist. Jun. 25, 1986),
citing Bates & Springer, Inc., v. Stallworth, 56 Ohio App.2d 223 (8th Dist. 1978).
Getachew’s averment that he “believed” Zaccaro “engaged in
unauthorized transactions[,] including opening accounts using [his] name and the
names of various LLCs in which [he had] an interest” is not based on his personal
knowledge. “‘Personal knowledge’ is ‘knowledge gained through firsthand
observation or experience . . . .’” Bonacorsi v. Wheeling & Lake Erie Ry. Co., 2002- Ohio-2220, ¶ 26, quoting Black’s Law Dictionary (7th Ed. 1999). And if Getachew
has personal knowledge that Zaccaro opened accounts in his name or in the names
of his companies, he should have included those operative facts in his affidavit.
Because he did not do so, this statement is nothing more than a bare allegation.
Getachew further stated in his affidavit that he believed Zaccaro
transferred or withdrew funds from these accounts without his approval and that
she “used these accounts for her own personal gain . . . without my knowledge or
consent.” Again, we point out that a “belief” is not a fact. But also, these allegations,
if true, would amount to theft. Any theft that occurred would have had to have
occurred after the accounts were opened and, thus, was not a meritorious defense
to cognovit judgments because it does not go to the validity or creation of the notes.
After review, we conclude that the companies did not allege operative
facts that impugn the integrity and validity of the creation of the cognovit notes.
Accordingly, the trial court did not abuse its discretion when it denied the
companies’ Civ.R. 60(B) motions.
We therefore overrule the companies’ first assignment of error.
C. Evidentiary Hearing
In their second assignment of error, the companies argue that the trial
court erred when it denied their Civ.R. 60(B) motions without holding an
evidentiary hearing. We disagree.
“[A] party moving for relief from judgment under Civ.R. 60(B) is not
automatically entitled to an evidentiary hearing.” PNC Bank, N.A. v. DePalma, 2012-Ohio-2774, ¶ 12 (8th Dist.), citing Gaines & Stern Co., L.P.A. v. Schwarzwald,
Robiner, Wolf & Rock Co., L.P.A., 70 Ohio App.3d 643, 646 (8th Dist. 1990). A trial
court possesses discretion when determining whether to hold a hearing regarding a
Civ.R. 60(B) motion. Kay v. Marc Glassman, Inc., 76 Ohio St.3d 18, 19 (1996).
If, however, the material submitted by the movant contains
allegations of operative facts demonstrating that relief is warranted, the trial court
should grant the movant a hearing to take evidence and either verify or discredit the
asserted facts. Id.; see also Coulson v. Coulson, 5 Ohio St.3d 12, 16 (1983), quoting
Adomeit v. Baltimore, 39 Ohio App.2d 97, 105 (8th Dist. 1974) (“‘If the movant files
a motion for relief from judgment and it contains allegations of operative facts which
would warrant relief under Civil Rule 60(B), the trial court should grant a hearing
to take evidence and verify these facts before it rules on the motion.’”).
Because we have determined that the companies did not allege
operative facts demonstrating that relief was warranted, we cannot say that the trial
court abused its discretion when it failed to hold an evidentiary hearing.
The companies’ second assignment of error is overruled.
Judgments affirmed.
It is ordered that appellee recover from appellants the 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.
_________________________________ MICHELLE J. SHEEHAN, PRESIDING JUDGE
EILEEN T. GALLAGHER, J., and MICHAEL JOHN RYAN, J., CONCUR