[Cite as Nationside Mtge.., L.L.C. v. Young, 2016-Ohio-8287.]
STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )
NATIONSTAR MORTGAGE LLC C.A. No. 28134
Appellant
v. APPEAL FROM JUDGMENT ENTERED IN THE CHARLES YOUNG, et al. COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO Appellees CASE No. CV 2013 07 3563
DECISION AND JOURNAL ENTRY
Dated: December 21, 2016
WHITMORE, Judge.
{¶1} Plaintiff-Appellant, Nationstar Mortgage, LLC (“Nationstar”), appeals from the
judgment of the Summit County Court of Common Pleas, granting summary judgment in favor
of Defendant-Appellees, Charles and Gertraud Young (“the Youngs”). This Court reverses.
I
{¶2} In early 2003, Stephanie Young received the deed to certain real property on
Topflite Drive in Akron (“the Property”). She executed a note and mortgage in favor of Lehman
Brothers Bank, FSB (“Lehman Brothers”) the following year and subsequently defaulted on the
note. Lehman Brothers then assigned her note to Aurora Loan Services, LLC (“Aurora”), and
Aurora filed a foreclosure action against Young in federal court.
{¶3} Twelve days before Aurora filed its foreclosure action against her, Young
executed a $57,000 mortgage in favor of her parents, the Youngs. The mortgage was secured by
the Property and indicated that it would be paid upon the sale of the Property. Nevertheless, 2
Aurora never included the Youngs as parties in the foreclosure action. On April 30, 2007, the
federal court entered a judgment and decree of foreclosure in favor of Aurora for the Property
and ordered the property sold by a Master Commissioner.
{¶4} Within ten days of the court’s judgment of foreclosure, Young filed a petition for
Chapter 13 bankruptcy such that an automatic stay of the proceedings occurred. In her
bankruptcy petition, Young included her parents and the $57,000 mortgage in their favor on her
schedule of creditors holding secured claims against her. Her petition resulted in the court
confirming a Chapter 13 plan that required her to make monthly payments, but she ultimately
failed to make the required payments.
{¶5} On November 8, 2011, Aurora moved for relief from the bankruptcy stay due to
Young’s default on her scheduled payments. In its motion for relief, Aurora specifically noted
that it believed the Youngs had an interest in the Property; specifically, “a lien in the
approximate amount of $57,000.00 as set forth in [Young’s] Schedule D.” Nevertheless, after
the trial court lifted the stay, Aurora did not seek to join the Youngs in the foreclosure action.
Instead, it purchased the Property at public auction and then assigned its successful bid to
Nationstar. The federal court confirmed the sale and, on January 23, 2013, a Master
Commissioner’s Deed to the Property was recorded in favor of Nationstar.
{¶6} Several months after it acquired its deed, Nationstar filed the current action
against the Youngs to quiet title to the Property and establish its fee simple ownership.
Nationstar indicated that Aurora had “inadvertently failed” to include the Youngs in the
foreclosure action because their mortgage lien “was not detected at the outset of the foreclosure
action.” The Youngs responded to the complaint by filing a pro se answer, but later secured 3
counsel and filed an amended answer. Both parties then moved for summary judgment and filed
briefs in opposition to their competing motions.
{¶7} It was the Youngs’ position that res judicata barred Nationstar from contesting the
validity of their mortgage because their mortgage was recognized as a secured claim in their
daughter’s bankruptcy case and Aurora never challenged it. Meanwhile, Nationstar argued that
the Youngs’ mortgage was invalid, that res judicata was an affirmative defense that could not be
raised for the first time in a motion for summary judgment, and that, in any event, their res
judicata argument failed on its merits.
{¶8} The trial court determined that the Youngs had a valid mortgage, as established in
the bankruptcy proceedings, and that res judicata barred Nationstar from contesting the validity
of their mortgage. Accordingly, it entered summary judgment in favor of the Youngs.
Nationstar then appealed from the court’s judgment. On appeal, Nationstar argued that the trial
court erred by ruling in favor of the Youngs on the basis of res judicata because they had failed
to properly assert res judicata as an affirmative defense in their answer. See Nationstar Mtg.,
L.L.C. v. Young, 9th Dist. Summit No. 27499, 2015-Ohio-3868, ¶ 4-8. This Court determined,
however, that it was unclear from the trial court’s entry “whether it decided that the Youngs
could assert the affirmative defense of res judicata because they had properly pled it in their
answer * * * or because it could be raised for the first time in a motion for summary judgment *
* *.” Id. at ¶ 6, citing Jim’s Steak House, Inc. v. Cleveland, 81 Ohio St.3d 18 (1998) and State ex
rel. Freeman v. Morris, 62 Ohio St.3d 107 (1991). Because that portion of the court’s decision
was critical to our review, we reversed its judgment and remanded the matter for further
consideration. Young at ¶ 6-7. 4
{¶9} On remand, the trial court declined to decide whether or not the Youngs had
properly pled res judicata in their answer. Instead, it determined that they could raise the
affirmative defense of res judicata for the first time in their motion for summary judgment. The
court once again entered summary judgment in favor of the Youngs on the basis of res judicata.
{¶10} Nationstar now appeals from the trial court’s judgment and raises two
assignments of error for our review.
II
Assignment of Error Number One
THE TRIAL COURT ERRED WHEN IT GRANTED SUMMARY JUDGMENT TO THE YOUNGS BASED UPON AN AFFIRMATIVE DEFENSE (RES JUDICATA) THAT THE YOUNGS DID NOT PLEAD OR MOVE TO PLEAD.
{¶11} In its first assignment of error, Nationstar argues that the court erred by awarding
the Youngs summary judgment on the basis of res judicata because res judicata cannot be raised
for the first time in a motion for summary judgment. Under the particular facts and
circumstances of this case, we agree.
{¶12} As this Court noted in the earlier appeal in this matter, “[r]es judicata is an
affirmative defense,” and the Civil Rules require it “to be pleaded in an answer.” Young, 2015-
Ohio-3868, at ¶ 5, citing Civ.R. 8(C). In State ex rel. Freeman v. Morris, the Ohio Supreme
Court considered whether a respondent in a mandamus proceeding could raise res judicata in a
motion to dismiss rather than a responsive pleading. 62 Ohio St.3d at 108-109. There, the
respondent filed a motion to dismiss on the basis of res judicata and attached to his motion
various court filings, allegedly evidencing that the matter had been previously litigated. The
Supreme Court noted that Civ.R. 12 did not include res judicata as a defense that may, at the
option of the pleader, be asserted in a motion rather than in a responsive pleading. Id. at 109. It 5
further noted that, under Civ.R. 12, courts may not consider materials outside the pleadings
without converting a motion to dismiss to a motion for summary judgment. Id. Accordingly, the
Court held that “the defense of res judicata may not be raised by motion to dismiss under Civ.R.
12(B).” Id. In doing so, it favorably cited a Third District case for the proposition that res
judicata “could be raised by motion for summary judgment.” Id. This Court later relied upon
that statement to conclude that a defendant may raise res judicata in a motion for summary
judgment and, therefore, does not waive the defense by failing to assert it in a responsive
pleading. Francis v. Diewald, 9th Dist. Lorain No. 95CA006264, 1996 WL 255885, *2 (May
15, 1996), citing State ex rel. Freeman at 109.
{¶13} Several years after the issuance of State ex rel. Freeman and Francis, the
Supreme Court decided Jim’s Steak House, Inc. v. Cleveland. The Jim’s Steak House case began
when a business brought suit against Cleveland for damages the business allegedly sustained
after an extended bridge closure. Jim’s Steak House, Inc., 81 Ohio St.3d at 19. The business’
first suit resulted in a dismissal for failure to state a claim, but it later filed another complaint
against Cleveland based on the bridge closure. Cleveland unsuccessfully moved to dismiss the
complaint before filing an answer in which it asserted res judicata. Id. Subsequently, the
business filed an amended complaint, and Cleveland responded by filing two more motions to
dismiss, in the second of which it argued res judicata. Cleveland never filed an answer to the
amended complaint, and the trial court ultimately denied its motions to dismiss. After a jury
found against Cleveland, the matter was appealed until it reached the Supreme Court. Id. at 20.
{¶14} In a plurality decision, the Supreme Court held that Cleveland had waived the
affirmative defense of res judicata. Id. at 20-21. The plurality determined that “[a]ffirmative
defenses other tha[n] those listed in Civ.R. 12(B) are waived if not raised in the pleadings or in 6
an amendment to the pleadings.” Id. at 20. It further noted, citing State ex rel. Freeman, that
“the defense of res judicata may not be raised by a motion to dismiss under Civ.R. 12(B).” Id. at
21, citing State ex rel. Freeman at 109. Because Cleveland had failed to raise res judicata as an
affirmative defense in an answer to the amended complaint, the plurality concluded that
Cleveland had waived its res judicata argument. Jim’s Steak House, Inc. at 20-21.
{¶15} Since the issuance of Jim’s Steak House, a majority of the Supreme Court has
cited the case on two occasions for the proposition that affirmative defenses are waived if not
properly asserted in a responsive pleading. See State ex rel. Adkins v. Shanahan, 132 Ohio St.3d
519, 2012-Ohio-3833, ¶ 2; State ex rel. Deiter v. McGuire, 119 Ohio St.3d 384, 2008-Ohio-
4536, ¶ 28. Meanwhile, the Supreme Court has repeatedly cited State ex rel. Freeman for two
propositions: (1) that res judicata is not the proper subject of a motion to dismiss, and (2) that
courts may not rely upon evidence outside a complaint when granting a motion to dismiss. See,
e.g., Jefferson v. Bunting, 140 Ohio St.3d 62, 2014-Ohio-3074, ¶ 10; State ex rel. The V Cos. v.
Marshall, 81 Ohio St.3d 467, 473-474 (1998); State ex rel. Boggs v. Springfield Local Sch. Dist.
Bd. of Edn., 72 Ohio St.3d 94, 97 (1995).
{¶16} The Youngs filed two answers in this matter, but neither expressly included res
judicata as an affirmative defense.1 Instead, the Youngs set forth res judicata as an argument in
support of their motion for summary judgment. Even after Nationstar argued that the Youngs
had waived the affirmative defense of res judicata by failing to assert it in a responsive pleading,
the Youngs never filed a motion for leave to amend their answer. On appeal, they maintain that
1 The Youngs set forth waiver and estoppel as affirmative defenses in their amended answer. 7
State ex rel. Freeman controls in this matter, and that a defendant may raise res judicata in a
motion for summary judgment without having raised it in a responsive pleading.
{¶17} Since the Supreme Court decided Jim’s Steak House, several of our sister districts
have addressed the issue of whether a defendant may raise the affirmative defense of res judicata
for the first time in a motion for summary judgment. Certain districts have concluded that it is
permissible to do so and that Jim’s Steak House never addressed that specific issue. E.g.,
Hillman v. Edwards, 10th Dist. Franklin No. 10AP-950, 2011-Ohio-2677, ¶ 12-19; E.B.P., Inc. v.
623 W. St. Clair Ave., L.L.C., 8th Dist. Cuyahoga No. 93587, 2010-Ohio-4005, ¶ 22-35;
Internatl. EPDM Rubber Roofing Sys., Inc. v. GRE Ins. Group, 6th Dist. Lucas No. L-00-1293,
2001 WL 477251, *3-5 (May 4, 2001). Others, relying on Jim’s Steak House, have reached the
opposite conclusion. E.g., Deutsche Bank v. Smith, 1st Dist. Hamilton No. C-140514, 2015-
Ohio-2961, ¶ 15. See also Brown v. Vaniman, 2d Dist. Montgomery No. 17503, 1999 WL
957721, *4 (Aug. 20, 1999) (“[R]es judicata is not grounds for dismissal pursuant to Civ.R.
12(B)(6). * * * Instead, the more appropriate method for raising the defense of res judicata is by
way of a motion for summary judgment after an answer is filed.”). With regard to the former
category, the Sixth, Eighth, and Tenth Districts have all found support for their positions in State
ex rel. Freeman, wherein the Supreme Court favorably cited the Third District case of Johnson v.
Linder. Hillman at ¶ 15-17; E.B.P., Inc. at ¶ 25-29; Internatl. EPDM Rubber Roofing Sys., Inc.
at *4. For several reasons, we depart from the reasoning of the Sixth, Eighth, and Tenth
Districts.
{¶18} First, the specific issue addressed in State ex rel. Freeman was whether the
affirmative defense of res judicata is the proper subject of a motion to dismiss under Civ.R.
12(B). State ex rel. Freeman, 62 Ohio St.3d at 108-109. In answering no to that question, the 8
Supreme Court emphasized that the rule only allows certain defenses to be made by motion
rather than by responsive pleading. Id. at 109, citing Civ.R. 12(B). The Court cited Johnson v.
Linder, 14 Ohio App.3d 412 (3d Dist.1984), for the proposition that “the defense of res judicata
may not be raised by motion to dismiss under Civ.R. 12(B).” Id. at 109. It then noted that it
concurred with the Third District’s conclusion that “res judicata could be raised by motion for
summary judgment.” Id. It did not indicate, however, that res judicata could be raised by a
motion for summary judgment without (1) first raising it in a responsive pleading, or (2)
amending a previously filed responsive pleading to include it as an affirmative defense. The
Court merely agreed that a motion for summary judgment, rather than a motion to dismiss, is the
more appropriate vehicle to argue res judicata. Its agreement with that proposition is
unsurprising, given that a trial court may not consider evidentiary materials outside a complaint
in ruling on a motion to dismiss. We are not convinced, however, that the Court intended its
citation to Johnson v. Linder to resolve the issue of whether affirmative defenses are preserved if
raised for the first time in a motion for summary judgment.
{¶19} Second, while Jim’s Steak House favorably cited State ex rel. Freeman, it went
beyond the holding in that case and did not include any citation to Johnson v. Linder. Much like
the defendant in State ex rel. Freeman, the defendant in Jim’s Steak House raised res judicata in
a motion to dismiss rather than a responsive pleading and/or motion for summary judgment. See
Jim’s Steak House, Inc., 81 Ohio St.3d at 19-20. The plurality, however, did not dispose of the
case simply by citing the holding in State ex rel. Freeman. Instead, the plurality held that the
defendant had waived res judicata as an affirmative defense because “[a]ffirmative defenses
other tha[n] those listed in Civ.R. 12(B) are waived if not raised in the pleadings or in an
amendment to the pleadings.” (Emphasis added.) Id. at 20, citing Civ.R. 8 and Civ.R. 15. The 9
plurality then cited State ex rel. Freeman to note that the defendant could not have properly
raised res judicata in a motion to dismiss under Civ.R. 12(B). Id. at 21. Jim’s Steak House is
devoid of any discussion regarding summary judgment motions as proper vehicles for the
assertion of res judicata or other affirmative defenses. Moreover, while Jim’s Steak House was a
plurality decision, a majority of the Supreme Court has since relied upon it for the proposition
that affirmative defenses are waived if not properly asserted in a responsive pleading. See State
ex rel. Adkins, 132 Ohio St.3d 519, 2012-Ohio-3833, at ¶ 2; State ex rel. Deiter, 119 Ohio St.3d
384, 2008-Ohio-4536, at ¶ 28.
{¶20} Third, in Johnson v. Linder, the Third District only offered limited support for its
decision to assume for purposes of its analysis that res judicata could be raised by a motion for
summary judgment. It wrote that it was engaging in that assumption because
in 4 Anderson’s Ohio Civil Practice 417, 419, Answer and Reply, Section 153.09, it is stated: “* * * [I]n Ohio prior to the Civil Rules, the courts permitted the disposition of actions involving * * * res judicata by summary judgment * * *.” (Footnote omitted.)
Johnson, 14 Ohio App.3d at 414. Yet, the 2010 edition of Anderson’s Ohio Civil Rules Practice
reads as follows:
The better practice is for the affirmative defense of res judicata to be raised by answer and then by summary judgment motion, rather than by a motion to dismiss for failure to state a claim upon which relief can be granted.
Defendant waived under Civil Rule 12(H) its opportunity to raise res judicata as an affirmative defense when it failed to file an answer to plaintiff’s amended complaint. Affirmative defenses other than those listed in Civil Rule 12(B) are waived if not raised in the pleadings or in an amendment to the pleadings or in an amendment to the pleadings. Filing a motion is not appropriate.
(Footnotes omitted.) McCormac and Solimine, Anderson’s Ohio Civil Rules Practice, Answers
and Replies, Section 7.34, at 7-19 (2010). For the foregoing proposition, Anderson’s cites to
Jim’s Steak House. Id. at fn. 89. 10
{¶21} Fourth, numerous districts, including the Eighth and Tenth Districts, have held
that affirmative defenses other than res judicata cannot be raised for the first time in a motion for
summary judgment. See, e.g., Shury v. Greenaway, 8th Dist. Cuyahoga No. 100344, 2014-Ohio-
1629, ¶ 18-23; Wemer v. Walker, 5th Dist. Knox No. 12CA17, 2013-Ohio-2005, ¶ 8-9; Amare v.
Chellena Food Express, Inc., 10th Dist. Franklin No. 08AP-678, 2009-Ohio-147, ¶ 18-19;
Johnson v. Waterloo Coal Co., 184 Ohio App.3d 607, 2009-Ohio-5318, ¶ 8-10 (4th Dist.);
Eulrich v. Weaver Bros., Inc., 165 Ohio App.3d 313, 2005-Ohio-5891, ¶ 12-14 (3d Dist.). We
see no reason to apply a different rule when the affirmative defense at issue is res judicata.
Civ.R. 8(C) applies with equal force to all of the affirmative defenses listed therein. If other
affirmative defenses cannot be raised for the first time in a motion for summary judgment, it
likewise follows that the affirmative defense of res judicata cannot be raised in that manner.
{¶22} In responding to the Youngs’ motion for summary judgment, Nationstar
specifically argued that the Youngs had waived the affirmative defense of res judicata. Compare
Business Data Sys., Inc. v. Gourmet Cafe Corp., 9th Dist. Summit No. 23808, 2008-Ohio-409, ¶
14-15 (plaintiff, by responding to defendant’s res judicata argument on its merits, impliedly
consented to defendant’s improper assertion of the defense and forfeited its opportunity to argue
waiver). Nevertheless, the Youngs did not file a motion for leave to amend their answer so as to
include res judicata as an affirmative defense. Compare Radio Parts Co. v. Invacare Corp., 178
Ohio App.3d 198, 2008-Ohio-4777, ¶ 12-14 (9th Dist.) (defendant did not waive affirmative
defense by asserting it for the first time in a motion for summary judgment where, following the
motion, the defendant obtained leave to amend its answer to properly assert the defense).
Moreover, the trial court never indicated that it was allowing the Youngs to amend their answer. 11
The court concluded that the Youngs had preserved their res judicata defense by asserting it in
their summary judgment motion.
{¶23} We acknowledge that, in Francis v. Diewald, we held that a defendant could
assert the affirmative defense of res judicata through a motion for summary judgment. See
Francis, 1996 WL 255885, at *2. Francis, however, predated Jim’s Steak House, and this Court
has not yet had cause to reexamine its position in light of the Supreme Court’s ruling in that case.
For the reasons outlined above, we must depart from our decision in Francis. It is our
conclusion that a party waives the affirmative defense of res judicata when he or she: (1) raises
the defense in a motion for summary judgment, and (2) fails to assert the defense in a responsive
pleading, either at the outset of the proceedings or by amendment with leave of court. See Jim’s
Steak House, Inc., 81 Ohio St.3d at 19-20; Deutsche Bank, 2015-Ohio-2961, at ¶ 15. Because
the Youngs never asserted res judicata in a responsive pleading, instead asserting it for the first
time in a motion for summary judgment, they waived their affirmative defense. Thus, the trial
court erred when it allowed them to assert the defense and awarded them summary judgment.
Nationstar’s first assignment of error is sustained.
Assignment of Error Number Two
THE TRIAL COURT ERRED WHEN IT DECIDED THAT THAT (sic) RES JUDICATA PRECLUDES NATIONSTAR FROM DISPUTING THE YOUNGS’ MORTGAGE LIEN.
{¶24} In its second assignment of error, Nationstar argues that the trial court erred when
it entered summary judgment in favor of the Youngs on the basis of res judicata. Based on our
resolution of Nationstar’s first assignment of error, its second assignment of error is moot, and
we decline to address it. See App.R. 12(A)(1)(c). 12
III
{¶25} Nationstar’s first assignment of error is sustained. Its second assignment of error
is moot. The judgment of the Summit County Court of Common Pleas is reversed, and the cause
is remanded for further proceedings consistent with the foregoing opinion.
Judgment reversed, and cause remanded.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellees.
BETH WHITMORE FOR THE COURT
MOORE, P. J. SCHAFER, J. CONCUR. 13
APPEARANCES:
ROBERT M. STEFANCIN, Attorney at Law, for Appellant.
JOHN B. KOPF and BRAD W. STOLL, Attorneys at Law, for Appellees.