[Cite as Nationstar Mtge., L.L.C. v. Grund, 2014-Ohio-5612.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
ASHTABULA COUNTY, OHIO
NATIONSTAR MORTGAGE, LLC, : OPINION
Plaintiff-Appellee, : CASE NO. 2014-A-0024 - vs - :
LOUIS F. GRUND, JR., et al., :
Defendant-Appellant. :
Civil Appeal from the Ashtabula County Court of Common Pleas, Case No. 2012 CV 00270.
Judgment: Affirmed.
Robert R. Hoose, The Law Offices of John D. Clunk Co., L.P.A., 4500 Courthouse Boulevard, Suite 400, Stow, OH 44224, and John B. Kopf, Thompson Hine LLP, 41 South High Street, 17th Floor, Columbus, OH 43215 (For Plaintiff-Appellee).
Dennis M. Callahan, 7665 Mentor Avenue, PMB #203, Mentor, OH 44060 (For Defendant-Appellant).
CYNTHIA WESTCOTT RICE, J.
{¶1} Appellant, Louis F. Grund, Jr., appeals the summary judgment and
foreclosure decree of the Ashtabula County Court of Common Pleas in favor of
appellee, Nationstar Mortgage, LLC. At issue is whether the original plaintiff in this
case, Aurora Bank, had standing and whether the substituted plaintiff, Nationstar, was a
real party in interest. For the reasons that follow, we affirm. {¶2} Statement of Facts and Procedural History
{¶3} On September 13, 2006, appellant obtained a mortgage loan from
Lehman Brothers Bank to purchase real property in Ashtabula County. On that date,
appellant signed a promissory note in favor of Lehman Brothers Bank in the amount of
$78,000. Subsequently, Lehman Brothers Bank endorsed the note to Lehman Brothers
Holdings. Thereafter, Lehman Brothers Holdings endorsed the note in blank.
{¶4} On the same date appellant obtained said mortgage loan, September 13,
2006, appellant signed a mortgage in favor of Mortgage Electronic Registration
Systems, Inc. (“MERS”), acting as nominee of the lender, Lehman Brothers Bank, in
order to secure the note.
{¶5} Appellant defaulted by failing to make any of the monthly payments due
on the note and mortgage on and after October 1, 2011. The amount due under the
loan as of October 1, 2011 in the amount of $74,349.77 was accelerated.
{¶6} On February 23, 2012, MERS assigned the mortgage to Aurora Bank by
written mortgage assignment, which was duly recorded with the Ashtabula County
Recorder.
{¶7} On April 5, 2012, Aurora Bank filed the complaint. Aurora Bank alleged
that it was the holder of the note and that MERS had assigned the mortgage to it.
{¶8} On June 29, 2012, two months after the complaint was filed, Aurora Bank
assigned the mortgage to appellee, Nationstar Mortgage, LLC. Shortly thereafter,
Aurora Bank moved to substitute Nationstar as the plaintiff in this case, arguing that the
note and mortgage had been assigned to Nationstar. Appellant did not object or file a
2 brief in opposition to this motion. The court granted the motion to substitute, and the
case proceeded with Nationstar as the plaintiff.
{¶9} Appellant filed an answer denying the material allegations of the complaint
and asserting lack of standing as an affirmative defense.
{¶10} Thereafter, Nationstar moved for summary judgment with the affidavit of
Alyssa Quintanilla, Nationstar’s agent, in support. Appellant filed a brief in opposition.
Subsequently, the trial court entered summary judgment and a foreclosure decree in
favor of Nationstar.
{¶11} Appellant appeals the trial court’s judgment, asserting two assignments of
error. For his first assigned error, he alleges:
{¶12} “The trial court committed prejudicial error in granting Plaintiff-Appellee
Nationstar Mortgage LLC’s motion for summary judgment where appellee’s attorneys
admitted that neither Aurora Bank FSB nor Nationstar Mortgage LLC ever owned the
note, and where appellee’s attorneys presented no facts or legal argument connecting
either the first or subsequent plaintiff as a so-called holder with rights to enforce a
promissory note.”
{¶13} Summary Judgment Principles
{¶14} Summary judgment is proper when: (1) there is no genuine issue of
material fact; (2) the moving party is entitled to judgment as a matter of law; and (3)
reasonable minds can come to but one conclusion, and that conclusion is adverse to
the nonmoving party, that party being entitled to have the evidence construed most
strongly in his favor. Civ.R. 56(C); Leibreich v. A.J. Refrigeration, Inc., 67 Ohio St.3d
266, 268 (1993).
3 {¶15} The party seeking summary judgment on the ground that the nonmoving
party cannot prove his case bears the initial burden of informing the trial court of the
basis for the motion and of identifying those portions of the record that demonstrate the
absence of a genuine issue of material fact on the essential elements of the nonmoving
party’s case. Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996).
{¶16} The moving party must point to some evidence of the type listed in Civ.R.
56(C) that affirmatively demonstrates the nonmoving party has no evidence to support
his case. Dresher, supra, at 293.
{¶17} If this initial burden is not met, the motion for summary judgment must be
denied. Id. However, if the moving party meets his initial burden, the nonmoving party
must then produce competent evidence showing there is a genuine issue for trial.
Civ.R. 56(E). When a motion for summary judgment is made and supported as
provided in Civ.R. 56, the adverse party may not rest upon the mere allegations or
denials of his pleadings. The adverse party’s response must set forth specific facts by
affidavit or as otherwise provided by Civ.R. 56, showing that there is a genuine issue for
trial. Id. If the adverse party does not so respond, summary judgment, if appropriate,
shall be entered against him. Id.
{¶18} Since a trial court’s ruling on a motion for summary judgment involves only
questions of law, we conduct a de novo review of the judgment. DiSanto v. Safeco Ins.
of Am., 168 Ohio App.3d 649, 2006-Ohio-4940, ¶41 (11th Dist.).
{¶19} The Requirements of Standing in a Mortgage Foreclosure Action
{¶20} In Ohio, courts of common pleas have jurisdiction over justiciable matters.
Ohio Constitution, Article IV, Section 4(B). “Standing to sue is part of the common
understanding of what it takes to make a justiciable case.” Steel Co. v. Citizens for a
4 Better Environment, 523 U.S. 83, 102 (1998). Standing involves a determination of
whether a party has alleged a personal stake in the outcome of the controversy to
ensure the dispute will be presented in an adversarial context. Mortgage Elec.
Registration Sys., Inc. v. Petry, 11th Dist. Portage No. 2008-P-0016, 2008-Ohio-5323,
¶18.
{¶21} In a mortgage foreclosure action, the mortgage lender must establish an
interest in the promissory note or in the mortgage in order to have standing to invoke
the jurisdiction of the common pleas court. Fed. Home Loan Mortg. Corp. v.
Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, ¶28. Further, because standing is
required to invoke the trial court’s jurisdiction, standing is determined as of the filing of
the complaint. Id. at ¶24. This court followed Schwartzwald in Fed. Home Loan Mortg.
Corp. v. Rufo, 11th Dist. Ashtabula No. 2012-A-0011, 2012-Ohio-5930, ¶18. “The
requirement of an ‘interest’ can be met by showing an assignment of either the note or
mortgage.” (Emphasis added.) Fed. Home Loan Mtge. Corp. v. Koch, 11th Dist.
Geauga No. 2012-G-3084, 2013-Ohio-4423, ¶24.
{¶22} The Supreme Court of Ohio recently clarified its holding in Schwartzwald
in Bank of Am., N.A. v. Kuchta, __Ohio St.3d __, 2014-Ohio-4275. In Kuchta, the Court
held that standing is a jurisdictional requirement in that a party’s lack of standing will
prevent him from invoking the court’s jurisdiction over his action. Id. at ¶22. However, a
party’s ability to invoke the court’s jurisdiction involves the court’s jurisdiction over a
particular case, not subject-matter jurisdiction. Id.
{¶23} Whether standing exists is a matter of law that we review de novo. Bank
of Am., NA v. Barber, 11th Dist. Lake No. 2013-L-014, 2013-Ohio-4103, ¶19.
{¶24} Aurora Bank’s Standing Under the Uniform Commercial Code
5 {¶25} Appellant argues there is no evidence that Aurora Bank or Nationstar ever
owned the note; had any interest in the note; or had any right to enforce it. Thus,
appellant argues that Aurora Bank lacked standing and Nationstar was not a real party
in interest. We do not agree. R.C. 1303.31 provides in pertinent part:
{¶26} (A) “Person entitled to enforce” an instrument means any of the
following persons:
{¶27} (1) The holder of the instrument; [or]
{¶28} (2) A nonholder in possession of the instrument who has the rights
of a holder * * *.”
{¶29} Further, R.C. 1303.22(A) provides: “An instrument is transferred when it is
delivered by a person other than its [maker] for the purpose of giving to the person
receiving delivery the right to enforce the instrument.” Moreover, “[t]ransfer of an
instrument, whether or not the transfer is a negotiation, vests in the transferee any right
of the transferor to enforce the instrument * * *.” R.C. 1303.22(B).
{¶30} The Second District in LaSalle Bank Natl. Assn. v. Brown, 2d Dist.
Montgomery No. 25822, 2014-Ohio-3261, stated, “a person need not be a ‘holder’ of the
instrument in order to be entitled to enforce it. Instead, a person can be a non-holder in
possession of the instrument who has the rights of a holder. This status can be
bestowed in various ways.” Id. at ¶36. By way of explanation, the Second District in
Brown quoted In re Veal, 450 B.R. 897 (Bankr.9th Dist.Ariz. 2011), as follows:
{¶31} Non-UCC law can bestow this type of status; such law may, for
example, recognize various classes of successors in interest such
as subrogees or administrators of decedent’s estates. See
Comment to UCC § 3-301. * * * Under the UCC, a “transfer” of a
6 negotiable instrument “vests in the transferee any right of the
transferor to enforce the instrument.” UCC § 3-203(b). LaSalle at
¶36, quoting Veal at 911.
{¶32} As more fully discussed below, as a result of the assignment of the
mortgage from MERS to Aurora Bank on February 23, 2012, the subject note was also
transferred to Aurora Bank on that date. Thus, the note was transferred to Aurora Bank
before the complaint was filed. Pursuant to R.C. 1303.22(B), MERS’ transfer of the
note vested in Aurora Bank MERS’ right to enforce it. Aurora Bank thus had standing to
file this action.
{¶33} Appellant attempts to avoid this result by arguing that Citibank owned the
note when the complaint was filed. In support, appellant stated in his affidavit that on
July 15, 2012, Nationstar sent three letters to him, each advising him that “the debt is
owed” to Citibank, but that, effective July 1, 2012, Nationstar would be the servicing
agent for the loan. While it appears that Citibank owned the note as of July 1, 2012,
appellant failed to present any Civ.R. 56(C) evidence showing that Citibank owned the
note prior to that date. The unauthenticated copies of documents (obtained from the
internet) on which appellant relied below to show that Citibank owned the note when the
complaint was filed do not satisfy the requirements of Civ.R. 56(C). Thus, they could
not be considered on summary judgment. Boop v. Moyer, 9th Dist. Wayne No.
97CA0060, 1998 Ohio App. LEXIS 2989, *12 (June 30, 1998). As a result, there is no
Civ.R. 56 evidence before us that Citibank owned the note when Aurora Bank filed the
complaint.
{¶34} In any event, even if Citibank owned the note when the complaint was
filed, Aurora Bank would still have had the right to enforce the note because the note
7 was transferred to Aurora Bank before the complaint was filed. Ohio’s version of the
Uniform Commercial Code expressly provides: “[a] person may be a ‘person entitled to
enforce’ the instrument even though the person is not the owner of the instrument * * *.”
R.C. 1303.31(B). (Emphasis added.)
{¶35} Ohio Appellate Districts have recognized that, “‘because a promissory
note is transferred through the process of negotiation, ownership is not a requirement
for enforcement of the note.’” Bank of Am., N.A. v. Merlo, 11th Dist. Trumbull No. 2012-
T-0103, 2013-Ohio-5266, ¶15, quoting U.S. Bank, N.A. v. Coffey, 6th Dist. Erie No. E-
11-026, 2012-Ohio-721, ¶20. As a result, this court has held that “the holder of a note is
not additionally required to plead that it is the owner of the note in its complaint.” Merlo,
supra, citing Nat’l City Real Estate Services, LLC v. Shields, 11th Dist. Trumbull No.
2012-T-0076, 2013-Ohio-2839, ¶21. Thus, even if Citibank owned the note when Aurora
Bank filed this action, Aurora Bank, as transferee of the note, was entitled to enforce it
by way of the instant action.
{¶36} Appellant’s argument that Citibank’s ownership of the note means that
Aurora Bank was not entitled to enforce the note demonstrates a lack of understanding
of the separate concepts of ownership of the note and the right to enforce it. Merlo,
supra. Contrary to appellant’s argument, Aurora Bank in its complaint did not allege
that it was the owner of the note. Rather, Aurora Bank alleged that it was the holder of
the note with the right to enforce it.
{¶37} Because Lehman Brothers Holdings endorsed the note in blank and
MERS transferred the note to Aurora Bank before the complaint was filed, Aurora Bank
had standing to file this action under the U.C.C. Further, because Aurora Bank
8 transferred the note to Nationstar while this action was pending, Nationstar was a real
party in interest. Civ.R. 17(A); Staff Notes to Civ.R. 17.
{¶38} Aurora Bank’s Standing as the Mortgage Holder
{¶39} In any event, MERS’ assignment of the mortgage to Aurora Bank on
February 23, 2012, prior to the filing of the complaint, was sufficient to transfer both the
mortgage and the note to Aurora Bank. Bank of New York v. Dobbs, 5th Dist. No. 2009-
CA-000002, 2009-Ohio-4742, ¶28. In Dobbs, the Fifth District stated:
{¶40} The Restatement [III, Property (Mortgages)] asserts as its essential
premise * * * that it is nearly always sensible to keep the mortgage
and the [note] it secures in the hands of the same party. This is
because in a practical sense separating the mortgage from the
[note] destroys the efficacy of the mortgage, and the note becomes
unsecured. The Restatement concedes on rare occasions a
mortgagee will disassociate the [note] from the mortgage, but
courts should reach this result only upon evidence that the parties
to the transfer agreed. Far more commonly, the intent is to keep
the rights combined * * *. Thus, the Restatement [provides] that
transfer of the [note] also transfers the mortgage and vice versa.
Section 5.4(b) [provides:] “* * * a transfer of a mortgage also
transfers the [note] the mortgage secures unless the parties to the
transfer agree otherwise.” Thus, [the note] follows the mortgage if
the record indicates the parties so intended. (Emphasis added.)
Dobbs, supra, at ¶28. (Emphasis added.)
9 {¶41} The Fifth District in Dobbs held that the assignment of a mortgage, without
an express transfer of the note, is sufficient to transfer both the mortgage and the note,
if the record indicates that the parties intended to transfer both. Id. at ¶31.
{¶42} In addressing the provisions in the note and mortgage at issue in Dobbs,
supra, which are virtually identical to those at issue here, the Fifth District held:
“Because the note refers to the mortgage and the mortgage, in turn, refers to the note,
we find a clear intent by the parties to keep the note and mortgage together, rather than
transferring the mortgage alone.” Id. at ¶36.
{¶43} This court followed the Fifth District’s holding in Dobbs in Fed. Home Loan
Mortg. Corp. v. Rufo, 11th Dist. Ashtabula No. 2012-A-0011, 2012-Ohio-5930, ¶44 (“the
assignment of the mortgage, without an express transfer of the note, [is] sufficient to
transfer both the mortgage and the note”).
{¶44} Here, the mortgage provides that it secures to the Lender, Lehman
Brothers Bank, the performance of appellant’s agreements under the promissory note.
Further, the note provides that the mortgage, dated the same date as the note, protects
the holder of the note from loss that might result if appellant does not keep the promises
made in the note. As a result, the instant note and mortgage evidenced the parties’
intent to keep the instruments together, and the assignment of the mortgage to Aurora
Bank on February 23, 2012, even without an express transfer of the note, was sufficient
to transfer both the mortgage and the note to Aurora Bank. Moreover, appellant did not
satisfy his reciprocal burden under Civ.R. 56 to present competent evidence that the
parties intended to sever the note from the mortgage. Thus, as a matter of law, Aurora
Bank had an interest in the note and mortgage before filing the complaint. Dobbs,
supra. For this additional reason, Aurora Bank had standing to file this action. Further,
10 because Aurora Bank transferred the mortgage and note to Nationstar while this action
was pending, Nationstar was a real party in interest.
{¶45} We therefore hold that the trial court did not err in granting summary
judgment in favor of Nationstar.
{¶46} For his second assignment of error, appellant contends:
{¶47} “The trial court committed prejudicial error in granting Plaintiff-Appellee
Nationstar Mortgage LLC’s motion for summary judgment where direct and inferential
evidence, including correspondence from Nationstar Mortgage LLC stating it was only
the loan servicer and the debt was owed to Citibank N.A., Trustee, LSX Series 2006-17,
showed a genuine dispute as to material facts claimed by appellee.”
{¶48} Appellant argues that because Nationstar was the servicing agent of the
loan and not the owner of the note, this means Nationstar had no right to enforce the
note and therefore was not a real party in interest. However, as discussed above, a
party need not own the note in order to enforce it. Merlo, supra. Moreover, this court
has held that a servicing agent for a loan is entitled to enforce the note, although it is not
the owner of the note. Id. Thus, Nationstar, as servicing agent of the loan, was entitled
to enforce the note. In addition, the assignment of the mortgage from Aurora Bank to
Nationstar while this action was pending resulted in the transfer of the mortgage and
note to Nationstar. As a result, Nationstar was a real party in interest. The fact that
Citibank owns the note is irrelevant to Nationstar’s right to enforce it and does not
create a genuine issue of material fact. Merlo, supra.
{¶49} Next, while appellant concedes that MERS assigned the mortgage to
Aurora Bank and that Aurora Bank later assigned the mortgage to Nationstar, appellant
attempts to avoid summary judgment by challenging the validity of these mortgage
11 assignments. However, this court rejected such challenge in Waterfall Victoria Master
Fund v. Yeager, 11th Dist. Lake No. 2012-L-071, 2013-Ohio-3206, ¶21. In Waterfall, a
case decided post-Schwartzwald, this court held that when a mortgagor, such as
appellant, is not a party to the mortgage assignment, and his contractual obligations
under the mortgage are not affected in any way by the assignment, the mortgagor lacks
standing to challenge the validity of the assignment. Id., citing Deutsche Bank Natl.
Trust Co. v. Rudolph, 8th Dist. Cuyahoga No. 98383, 2012-Ohio-6141, ¶24. In
Waterfall, this court stated that its holding was based on the recognition that “an
assignment does not alter the mortgagor/debtor’s obligations under the note or
mortgage and that the foreclosure complaint is based on the mortgagor’s default under
the note and mortgage—not because of the mortgage assignment.” Id. at ¶25.
{¶50} Appellant asserts various challenges to the mortgage assignment to
Aurora Bank and the later mortgage assignment to Nationstar, arguing that, as a result,
neither of these entities received a valid assignment of the mortgage. However, Aurora
Bank filed the foreclosure complaint (and Nationstar has maintained it) based on
appellant’s default under the note and mortgage, not because of the mortgage
assignments. Waterfall, supra, at ¶23. Appellant therefore does not have standing to
challenge the mortgage assignments at issue here.
{¶51} In any event, even if appellant had standing to challenge the mortgage
assignments, his arguments would still lack merit.
{¶52} First, appellant argues that Aurora Bank and Nationstar never held the
note and mortgage based on information allegedly contained in certain documents
appellant attached to his brief in opposition to Nationstar’s motion for summary
judgment. Appellant obtained these documents, marked as Exhibits D through P to his
12 brief in opposition to summary judgment, from various web blogs, internet websites,
Wikipedia, and on-line newspaper articles. However, none of these documents are
authenticated as required by Civ.R. 56(C). Nationstar timely objected to these
documents on this basis in its reply brief. As such, they could not be considered on
summary judgment and are ineffective to create a genuine issue of material fact. See
Lytle v. Columbus, 70 Ohio App.3d 99, 104 (10th Dist.1990).
{¶53} Next, appellant argues that, “as indicated by the internet,” Regina Lashley,
who signed the mortgage assignment from MERS to Aurora Bank, has signed
thousands of assignments as a MERS vice-president. Again, because this information
is not authenticated as required by Civ.R. 56(C), it could not be considered on summary
judgment. But even if it could, since signing these documents is apparently one of Ms.
Lashley’s duties, her experience in signing such documents would support, rather than
diminish, her authority to sign the mortgage assignment to Aurora Bank.
{¶54} Appellant appears to be suggesting that Ms. Lashley is a “robo-signer,”
meaning she had no personal knowledge of the information in the mortgage assignment
to which she attested and thus lacked authority to sign it. Barber, supra, at ¶22.
However, appellant failed to produce any evidence that Ms. Lashley lacked authority to
sign the assignment or that she was a robo-signer. Thus, appellant failed to create a
genuine issue of material fact regarding her authority to sign the assignment. Id.
{¶55} Next, appellant argues that because the mortgage assignment from
MERS to Aurora Bank states that an individual in Nebraska prepared the instrument,
“[t]his provides cover to appellee’s former attorneys.” Further, appellant argues the
name and address of appellee’s former attorneys were included on the mortgage
assignment in order “to mislead the County Recorder’s Office into believing the
13 instrument complies with the Ohio Revised Code.” Whatever appellant is attempting to
suggest by these arguments, which is far from clear, the arguments are not supported
by any evidence and are thus merely speculative and ineffective to avoid summary
judgment. Moreover, appellant does not reference any case law authority holding that
including these items in a mortgage assignment would affect its validity.
{¶56} Next, appellant suggests the mortgage assignment from Aurora Bank to
Nationstar was also signed by a robo-signer and is thus invalid. However, because
appellant failed to present any evidence that the signer of this instrument was a robo-
signer or that she lacked authority to sign it, appellant failed to create a genuine issue of
material fact regarding her authority to sign it.
{¶57} Thus, even if appellant had standing to assert these challenges to the
mortgage assignments at issue here, because none is supported by any evidence and
each is merely conclusory and speculative, they are ineffective to challenge the validity
of the assignments.
{¶58} Further, appellant argues that because Aurora Bank named MERS as a
defendant, this proves that Ms. Lashley, the officer of MERS who signed the mortgage
assignment on MERS’ behalf, did not have authority to do so. Once again, because this
argument challenges the validity of a mortgage assignment, appellant lacks standing to
make it. In any event, the argument makes no sense. The judicial report filed in this
case shows that MERS had an interest in the property as a mortgage holder. Thus,
Aurora Bank had legitimate grounds to name MERS as a defendant. Further, the mere
fact that MERS was named as a defendant in this action does not prove that Ms.
Lashley lacked authority to sign the mortgage assignment to Aurora Bank.
14 {¶59} Finally, appellant has not presented any evidence supporting his argument
that Aurora Bank’s former attorneys have “misrepresented” that Aurora Bank and
Nationstar were prior holders of the mortgage and note. In fact, by virtue of the
assignment of the mortgage to Aurora Bank and later to Nationstar, these two entities
have in fact held both the note and the mortgage. Further, contrary to appellant’s
argument, there is no evidence that Aurora Bank’s attorneys filed “two false
assignments of mortgages as part of the misrepresentation.” In fact, the evidence
shows that both assignments were properly executed by authorized representatives of
MERS and Aurora Bank.
{¶60} For the reasons stated in this opinion, the assignments of error lack merit
and are overruled. It is the order and judgment of this court that the judgment of the
Ashtabula County Court of Common Pleas is affirmed.
TIMOTHY P. CANNON, P.J.,
THOMAS R. WRIGHT, J.,
concur.