MTGLQ Investors L.P. v. Faulkner

2018 Ohio 2885

• Court: Ohio Court of Appeals
• Decided: July 23, 2018
• Docket: CA2017-07-117
• Status: Published

Opinion

[Cite as MTGLQ Investors L.P. v. Faulkner, 2018-Ohio-2885.]

IN THE COURT OF APPEALS

TWELFTH APPELLATE DISTRICT OF OHIO

WARREN COUNTY

MTGLQ INVESTORS L.P., :

Plaintiff-Appellee, : CASE NO. CA2017-07-117

: OPINION - vs - 7/23/2018 :

JEFF A. FAULKNER, TRUSTEE OF THE : FAULKNER FAMILY TRUST DATED MARCH 22, 1995, et al., :

Defendants-Appellants. :

APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS Case No. 16 CV 88467

Reimer Law Co., Michael L. Wiery, P.O. Box 96696, 30455 Solon Road, Solon, Ohio 44139, for plaintiff-appellee

Joseph R. Matejkovic, 9078 Union Centre Blvd., Suite 350, West Chester, Ohio 45069, for defendant-appellant, Jeff A. Faulkner, Trustee

David P. Fornshell, Warren County Prosecuting Attorney, Christopher A. Watkins, 520 Justice Drive, Lebanon, Ohio 45036, for defendant, Warren County Treasurer

HENDRICKSON, J.

{¶ 1} Defendant-appellant, Jeff A. Faulkner, Trustee of the Jeff A. Faulkner Family

Trust Dated March 22, 1995, appeals from a decision of the Warren County Court of

Common Pleas granting summary judgment in favor of substitute plaintiff-appellee, MTGLQ Warren CA2017-07-117

Investors L.P. (hereafter, "MTGLQ"), in a foreclosure action. For the reasons set forth below,

we affirm the trial court's decision.

{¶ 2} On February 24, 2006, appellant executed a promissory note in favor of

America's Wholesale Lender ("America's Wholesale") in the amount of $68,000 for the

purchase of real property located at 729 South Main Street in Franklin, Ohio. The promissory

note called for monthly payments for a period of 30 years, with interest accumulating on the

principal amount at a yearly rate of 7 percent. The promissory note was secured by a

mortgage that designated appellant as the borrower, America's Wholesale as the lender, and

Mortgage Electronic Registration Systems, Inc. ("MERS") as the mortgagee, acting as the

nominee for America's Wholesale. The mortgage was recorded on March 17, 2006.

{¶ 3} The promissory note was endorsed in blank by America's Wholesale. On

August 16, 2010, MERS executed an Assignment of Real Estate Mortgage, assigning all

interest under the mortgage to BAC Home Loans Servicing, L.P. f.k.a. Countrywide Home

Loans Servicing, L.P. Thereafter, on June 18, 2013, Bank of America, N.A., successor by

merger to BAC Home Loans Servicing, L.P., assigned its interest in the mortgage to Green

Tree Servicing, LLC. On August 31, 2015, Green Tree Servicing, LLC merged with two other

companies, and the mortgage was subsequently held by Ditech Financial LLC ("Ditech"), the

successor by merger to Green Tree Servicing, LLC.

{¶ 4} At some point in 2011, the terms of the promissory note were renegotiated, a

fact that was conceded by both appellee and appellant in their respective appellate briefs.1

1. Appellant contends in his appellate brief that in June 2011, "the Faulkner Family Trust was the debtor in a Chapter 11 reorganization case pending in the U.S. Bankruptcy Court for the Southern District of Ohio (Dayton). In 06/2011, Faulkner and BAC executed a reaffirmation of the debt, reducing the balance from $68,852.25 to $45,000.00 with interest at the rate of 5.25% per year * * *." The record on appeal contains no mention of bankruptcy proceedings or a reaffirmation agreement. Nonetheless, appellee conceded in its appellate brief that "there was a bankruptcy and * * * [a]ppellant's debt owed was modified." Appellee notes that its complaint sought "$44,925.90 at 5.25%. This prayer for amount owed was in fact based on the modified amount as shown by * * * the reduced unpaid principal balance ($68,000.00 compared to $45,000.00), as well as the matching interest rate to the modified debt (7.000% original in the Note compared to 5.25% requested in the Complaint)." -2- Warren CA2017-07-117

On March 30, 2016, Ditech filed a complaint in foreclosure alleging that appellant defaulted in

payment on the promissory note in July 2011, that it had declared the debt due, it had

complied with all conditions precedent as set forth in the note and mortgage, and that the

sum of $44,925.90 plus interest at the rate of 5.25 percent per annum was owed. Ditech

attached to its complaint the endorsed-in-blank promissory note, the mortgage, and the

various assignments of the mortgage.

{¶ 5} Appellant filed an answer in which he admitted there was a mortgage on the

property securing the note. However, appellant denied the amount of the outstanding

balance claimed by appellant and further denied he was in default. Appellant then set forth

the following affirmative defenses, asserting that (1) he was not "properly name[d]" in the

action, (2) the action was not brought by a real-party-in-interest, (3) the complaint failed to

state a claim upon which relief could be granted, (4) the complaint did not meet the statutory

requirements for relief under the law, (5) the complaint was barred by the applicable statutes

of limitations and the doctrine of laches, (6), the complaint was barred by the doctrine of

waiver and the doctrine of accord and satisfaction, (7) the complaint was barred due to a lack

of consideration, and (8) the plaintiff failed to mitigate its damages.

{¶ 6} After the initiation of discovery, Ditech moved to substitute the plaintiff in the

action, as the note and mortgage was assigned to appellee, MTGLQ, on September 22,

2016. No party opposed the motion and the motion was granted on May 1, 2017.

Thereafter, on May 22, 2017, MTGLQ moved for summary judgment. In support of its

motion, MTGLQ attached the affidavit of Teresa H. Hubner, an employee of New Penn

Financial, LLC d.b.a. Shellpoint Mortgage Servicing (hereafter, "Shellpoint Mortgage

Servicing"), the mortgage servicer for MTGLQ. Hubner attested that she was familiar with

the business records maintained by Shellpoint Mortgage Servicing, she had reviewed the

business records related to appellant's loan, appellant had defaulted on the terms of the note

-3- Warren CA2017-07-117

and mortgage by failing to pay the July 1, 2011 payment, the default had not been cured, the

debt had been accelerated in accordance with the terms of the note, and the entire balance

of $44,925.90, plus interest at 5.25 percent from June 1, 2011, was due and owed.

Attached to Hubner's affidavit were copies of the promissory note, mortgage, and

assignments of the mortgage, including the September 22, 2016 assignment of the mortgage

from Ditech to MTGLQ.

{¶ 7} Appellant did not file a response in opposition to MTGLQ's motion. On June

20, 2017, the trial court granted MTGLQ's motion for summary judgment.

{¶ 8} Appellant timely appealed, raising the following as his sole assignment of error:

{¶ 9} THE TRIAL COURT ERRED TO THE PREJUDICE OF

DEFENDANT/APPELLANT BY GRANTING PLAINTIFF/APPELLEE'S MOTION FOR

SUMMARY JUDGMENT.

{¶ 10} Appellate review of a trial court's decision granting summary judgment is de

novo. M&T Bank v. Johns, 12th Dist. Clermont No. CA2013-04-032, 2014-Ohio-1886, ¶ 7.

Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is no genuine issue

of any material fact, (2) the moving party is entitled to judgment as a matter of law, and (3)

the evidence submitted can only lead reasonable minds to one conclusion and that

conclusion is adverse to the nonmoving party, who is entitled to have the evidence construed

most strongly in his favor. Bank of New York Mellon v. Putman, 12th Dist. Butler No.

CA2012-12-267, 2014-Ohio-1796, ¶ 18. "The party moving for summary judgment bears the

initial burden of demonstrating that no genuine issue of material fact exists." Fifth Third Bank

v. Bolera, 12th Dist. Butler No. CA2017-03-039, 2017-Ohio-9091, ¶ 25, citing Touhey v. Ed's

Tree & Turf, L.L.C., 194 Ohio App.3d 800, 2011-Ohio-3432, ¶ 7 (12th Dist.). Once this initial

burden is met, the nonmoving party "must then rebut the moving party's evidence with

specific facts showing the existence of a genuine triable issue; it may not rest on the mere -4- Warren CA2017-07-117

allegations or denials in its pleadings." Deutsche Bank Natl. Trust Co. v. Sexton, 12th Dist.

Butler No. CA2009-11-288, 2010-Ohio-4802, ¶ 7, citing Civ.R. 56(E).

{¶ 11} Appellant contends that the trial court erred in granting summary judgment to

MTGLQ as MTGLQ and its predecessors did not act equitably when they "breach[ed] the

loan contract," committed civil fraud by making "blatant misstatements about [his] payment

obligation," acted in violation of bankruptcy law by trying to collect a debt discharged in

bankruptcy, violated the Truth In Lending Act ("TILA") and the Real Estate Settlement

Procedures Act ("RESPA"), and failed to offer him a "waterfall of remedies" required by the

Federal Housing Finance Agency's nonperforming loan program. These issues, however,

were never raised by appellant during the trial court proceedings. "It is well settled law that a

party cannot raise new issues or legal theories for the first time on appeal." Nix v. Williams

Family Partnership, Ltd., 12th Dist. Butler No. CA2013-05-076, 2013-Ohio-5208, ¶ 25; Bank

of Am., N.A. v. Vaught, 12th Dist. Clermont No. CA2013-11-085, 2014-Ohio-3383, ¶ 9.

Therefore, as these issues and claims were not presented below in defense of MTGLQ's

claim for foreclosure, they are not properly before us and we decline to address them for the

first time on appeal. See id. at ¶ 9.

{¶ 12} The only issue properly before this court is whether MTGLQ met its burden

under Civ.R. 56 of establishing its foreclosure claim. "A party seeking to foreclose on a

mortgage must establish execution and delivery of the note and mortgage; valid recording of

the mortgage; it is the current holder of the note and mortgage; default; and the amount

owed." Johns, 2014-Ohio-1886, ¶ 8; Citimortgage, Inc. v. Davis, 12th Dist. Warren CA2013-

09-088, 2014-Ohio-3292, ¶ 30.

{¶ 13} Having reviewed MTGLQ's motion for summary judgment and the affidavit and

exhibits attached thereto, we find that the trial court properly granted summary judgment in

favor of MTGLQ. MTGLQ presented uncontested evidence that MTGLQ is the holder of the -5- Warren CA2017-07-117

note and recorded mortgage, that appellant had defaulted on his payment obligation, that the

debt owed had been properly accelerated, and that MTGLQ was entitled to $44,925.90, plus

interest at 5.25 percent per annum from June 1, 2011.2 Therefore, as the evidence

submitted by MTGLQ demonstrated that no genuine issue of material fact existed and that it

was entitled to judgment as a matter of law, we find no error in the trial court's decision to

grant summary judgment in favor of MTGLQ.

{¶ 14} Appellant's sole assignment of error is overruled.

{¶ 15} Judgment affirmed.

S. POWELL, P.J., and RINGLAND, J., concur.

2. We note that the amount awarded in judgment coincides with the modified and reduced principal and interest rate that MTGLQ sought in its complaint. -6-