[Cite as Stidham v. Wallace, 2013-Ohio-2640.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
MADISON COUNTY
WILLIAM M. STIDHAM, Treasurer, : Madison County, Ohio, : CASE NO. CA2012-10-022 Plaintiff-Appellee, : OPINION 6/24/2013 - vs - :
: WILLIAM P. WALLACE, et al., : Defendants-Appellants. :
CIVIL APPEAL FROM MADISON COUNTY COURT OF COMMON PLEAS Case No. CVE 20110076
Stephen J. Pronai, Madison County Prosecuting Attorney, Kirsten J. Gross, 59 North Main Street, London, Ohio 43140, for plaintiff-appellee
William P. Wallace and Lori A. Wallace, 185 Thorn Locust Lane, London, Ohio 43140, defendants-appellants, pro se
Harry J. Finke IV, 1900 Fifth Third Center, 511 Walnut Street, P.O. Box 6464, Cincinnati, Ohio 45201-6464, for defendant-appellee, Citibank, N.A.
RINGLAND, P.J.
{¶ 1} Defendants-appellants, William P. Wallace and Lori A. Wallace, appeal from an
entry in the Madison County Court of Common Pleas ordering the distribution of proceeds in
a foreclosure action to defendant-appellee, Citibank, N.A. For the reasons outlined below, Madison CA2012-10-022
we reverse the decision of the trial court and remand for further proceedings consistent with
this opinion.
{¶ 2} The treasurer of Madison County, William M. Stidham, initiated a foreclosure
action against the Wallaces following their failure to pay a sewage assessment on their
residential property. In his complaint, the treasurer alleged that Citbank had an interest in the
Wallaces' property by virtue of a mortgage. However, Citibank never answered or otherwise
responded to the complaint.
{¶ 3} Following an award of summary judgment to the county treasurer, the Wallaces'
property was sold at a sheriff's sale. On October 25, 2011, the trial court entered a judgment
entry confirming the sale and ordering the distribution of certain proceeds. The trial court
ordered that "[t]he remaining proceeds [were] to be held by the Clerk pending further order of
the Court." The Wallaces appealed the foreclosure action, which this court ultimately upheld.
Stidham v. Wallace, 12th Dist. No. CA2011-10-012, 2012-Ohio-3538. A release of Citibank's
mortgage was filed on December 21, 2011.
{¶ 4} Citibank made its first appearance in this action on March 15, 2012, when it
filed a "Motion for Distribution of Proceeds." Because the action was currently before this
court at the time of its initial motion, Citibank renewed its motion on September 25, 2012.
The trial court granted Citibank's motion without a hearing, and initially ordered $52,301.66 to
be distributed to Citibank. Because the amount ordered to be distributed was actually more
than the amount on deposit at the Clerk of Courts, the trial court filed an amended entry
ordering $49,423.26 to be distributed to Citibank. The Wallaces now appeal, and assert a
single assignment of error for review.
{¶ 5} Assignment of Error No. 1:
{¶ 6} THE TRIAL COURT ERRED TO THE PREJUDICE OF APPELLANTS BY
GRANTING DEFENDANT-APPELLEE-IN-DEFAULT CITIBANK, N.A. PAYMENT OF -2- Madison CA2012-10-022
RESIDUAL TAX FORECLOSURE SALE MONEYS, WHEN SUCH PARTY IS NOT
ENTITLED TO SAME AS A MATTER OF LAW NOR EQUITY.
{¶ 7} The Wallaces assert three arguments within their assignment of error, which we
will address in turn. First, the Wallaces argue a court acts outside of its jurisdiction by
granting a motion for release of residual tax sale moneys to a properly served defendant
when that defendant failed to answer. While we disagree with the Wallaces' contention that
the trial court did not have jurisdiction to rule on the motion, we find that the trial court abused
its discretion in awarding Citibank the remainder of the proceeds when the amount remaining
on Citibank's mortgage was never established on the record.
{¶ 8} An action for foreclosure is in equity. Farmers Savings & Loan Co. v. Robison,
7th Dist. No. 75 C.A. 39, 1976 WL 188521, *4 (Feb. 11, 1976). The standard of review
applicable to claims for equitable relief is abuse of discretion. Sandusky Properties v. Aveni,
15 Ohio St.3d 273, 274-275 (1984). An abuse of discretion connotes more than an error of
law or judgment; rather, it implies that the court has acted either unreasonably,
unconscionably, or arbitrarily. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983). "A
decision is unreasonable if there is no sound reasoning process that would support that
decision." AAAA Enterprises, Inc. v. River Place Community Urban Redevelopment Corp.,
50 Ohio St.3d 157, 161 (1990).
{¶ 9} "Foreclosure is an equitable proceeding and equitable action is required to
undo the damage." Sharp v. Kuhn, 2d Dist. No. 78 CA 10, 1978 WL 216347, *4 (Oct. 4,
1978). "One of the chief characteristics of a court of equity is adequate power to afford full
relief to all parties before it." Robison at *4, citing Brinkerhoff v. Smith, 57 Ohio St. 610. "[I]t
is a well-settled rule of practice that in foreclosure actions claims may be brought in or filed
up to the time of distribution, and may share in the proceeds according to priority." Robison
at *4. -3- Madison CA2012-10-022
{¶ 10} When faced with a similar situation, the First District Court of Appeals found
that a lienholder had an equitable right to have its lien satisfied. In Mueller v. Petri, 1st Dist.
No. C-74692, 1975 WL 182122 (Nov. 3, 1975), a plaintiff initiated an action against
defendant homeowners in order to satisfy a judgment. Cincinnati Savings Association (CSA)
had previously recorded a mortgage on the property and was also named a defendant. Id. at
*1. CSA, however, failed to answer or otherwise respond, and the trial court entered a
default judgment against CSA. Id. at *1. Subsequent to the property being sold at a sheriff's
sale, CSA filed a "Motion to Set Aside Proceedings and Extend Time." Id. at *1. The trial
court granted CSA's motion in the interest of equity. Id. at *1. On appeal, the First District
affirmed the trial court, stating that CSA had an equitable right to have its lien satisfied out of
the sale of the property, even though CSA had failed to file a timely answer. Id. at *2.
{¶ 11} In the case at bar, Citibank was served with the initial summons and complaint
and failed to answer or otherwise respond. The property was later sold at a sheriff's sale,
and the trial court ordered the distribution of a portion of the proceeds. Remaining proceeds,
however, were still within the custody of the court. Despite the mortgage being released, a
default judgment was never entered against Citibank. In the interest of equity, Citibank is
entitled to the amount remaining on its recorded mortgage from the proceeds of the sheriff's
sale and the trial court retains jurisdiction to release funds. Nevertheless, Citibank failed to
establish the amount remaining on its mortgage in the record. Consequently, we find the trial
court abused its discretion in awarding the remaining proceeds to Citibank without first
establishing the amount left on Citibank's mortgage. The Wallaces' first argument is
sustained.
{¶ 12} In the Wallaces' second argument they assert that they are entitled to residual
funds from the sale of their residence under R.C. 5721.20. We disagree. R.C. 5721.20
provides that "any residue of moneys from the sale or foreclosure of lands remaining to the -4- Madison CA2012-10-022
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[Cite as Stidham v. Wallace, 2013-Ohio-2640.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
MADISON COUNTY
WILLIAM M. STIDHAM, Treasurer, : Madison County, Ohio, : CASE NO. CA2012-10-022 Plaintiff-Appellee, : OPINION 6/24/2013 - vs - :
: WILLIAM P. WALLACE, et al., : Defendants-Appellants. :
CIVIL APPEAL FROM MADISON COUNTY COURT OF COMMON PLEAS Case No. CVE 20110076
Stephen J. Pronai, Madison County Prosecuting Attorney, Kirsten J. Gross, 59 North Main Street, London, Ohio 43140, for plaintiff-appellee
William P. Wallace and Lori A. Wallace, 185 Thorn Locust Lane, London, Ohio 43140, defendants-appellants, pro se
Harry J. Finke IV, 1900 Fifth Third Center, 511 Walnut Street, P.O. Box 6464, Cincinnati, Ohio 45201-6464, for defendant-appellee, Citibank, N.A.
RINGLAND, P.J.
{¶ 1} Defendants-appellants, William P. Wallace and Lori A. Wallace, appeal from an
entry in the Madison County Court of Common Pleas ordering the distribution of proceeds in
a foreclosure action to defendant-appellee, Citibank, N.A. For the reasons outlined below, Madison CA2012-10-022
we reverse the decision of the trial court and remand for further proceedings consistent with
this opinion.
{¶ 2} The treasurer of Madison County, William M. Stidham, initiated a foreclosure
action against the Wallaces following their failure to pay a sewage assessment on their
residential property. In his complaint, the treasurer alleged that Citbank had an interest in the
Wallaces' property by virtue of a mortgage. However, Citibank never answered or otherwise
responded to the complaint.
{¶ 3} Following an award of summary judgment to the county treasurer, the Wallaces'
property was sold at a sheriff's sale. On October 25, 2011, the trial court entered a judgment
entry confirming the sale and ordering the distribution of certain proceeds. The trial court
ordered that "[t]he remaining proceeds [were] to be held by the Clerk pending further order of
the Court." The Wallaces appealed the foreclosure action, which this court ultimately upheld.
Stidham v. Wallace, 12th Dist. No. CA2011-10-012, 2012-Ohio-3538. A release of Citibank's
mortgage was filed on December 21, 2011.
{¶ 4} Citibank made its first appearance in this action on March 15, 2012, when it
filed a "Motion for Distribution of Proceeds." Because the action was currently before this
court at the time of its initial motion, Citibank renewed its motion on September 25, 2012.
The trial court granted Citibank's motion without a hearing, and initially ordered $52,301.66 to
be distributed to Citibank. Because the amount ordered to be distributed was actually more
than the amount on deposit at the Clerk of Courts, the trial court filed an amended entry
ordering $49,423.26 to be distributed to Citibank. The Wallaces now appeal, and assert a
single assignment of error for review.
{¶ 5} Assignment of Error No. 1:
{¶ 6} THE TRIAL COURT ERRED TO THE PREJUDICE OF APPELLANTS BY
GRANTING DEFENDANT-APPELLEE-IN-DEFAULT CITIBANK, N.A. PAYMENT OF -2- Madison CA2012-10-022
RESIDUAL TAX FORECLOSURE SALE MONEYS, WHEN SUCH PARTY IS NOT
ENTITLED TO SAME AS A MATTER OF LAW NOR EQUITY.
{¶ 7} The Wallaces assert three arguments within their assignment of error, which we
will address in turn. First, the Wallaces argue a court acts outside of its jurisdiction by
granting a motion for release of residual tax sale moneys to a properly served defendant
when that defendant failed to answer. While we disagree with the Wallaces' contention that
the trial court did not have jurisdiction to rule on the motion, we find that the trial court abused
its discretion in awarding Citibank the remainder of the proceeds when the amount remaining
on Citibank's mortgage was never established on the record.
{¶ 8} An action for foreclosure is in equity. Farmers Savings & Loan Co. v. Robison,
7th Dist. No. 75 C.A. 39, 1976 WL 188521, *4 (Feb. 11, 1976). The standard of review
applicable to claims for equitable relief is abuse of discretion. Sandusky Properties v. Aveni,
15 Ohio St.3d 273, 274-275 (1984). An abuse of discretion connotes more than an error of
law or judgment; rather, it implies that the court has acted either unreasonably,
unconscionably, or arbitrarily. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983). "A
decision is unreasonable if there is no sound reasoning process that would support that
decision." AAAA Enterprises, Inc. v. River Place Community Urban Redevelopment Corp.,
50 Ohio St.3d 157, 161 (1990).
{¶ 9} "Foreclosure is an equitable proceeding and equitable action is required to
undo the damage." Sharp v. Kuhn, 2d Dist. No. 78 CA 10, 1978 WL 216347, *4 (Oct. 4,
1978). "One of the chief characteristics of a court of equity is adequate power to afford full
relief to all parties before it." Robison at *4, citing Brinkerhoff v. Smith, 57 Ohio St. 610. "[I]t
is a well-settled rule of practice that in foreclosure actions claims may be brought in or filed
up to the time of distribution, and may share in the proceeds according to priority." Robison
at *4. -3- Madison CA2012-10-022
{¶ 10} When faced with a similar situation, the First District Court of Appeals found
that a lienholder had an equitable right to have its lien satisfied. In Mueller v. Petri, 1st Dist.
No. C-74692, 1975 WL 182122 (Nov. 3, 1975), a plaintiff initiated an action against
defendant homeowners in order to satisfy a judgment. Cincinnati Savings Association (CSA)
had previously recorded a mortgage on the property and was also named a defendant. Id. at
*1. CSA, however, failed to answer or otherwise respond, and the trial court entered a
default judgment against CSA. Id. at *1. Subsequent to the property being sold at a sheriff's
sale, CSA filed a "Motion to Set Aside Proceedings and Extend Time." Id. at *1. The trial
court granted CSA's motion in the interest of equity. Id. at *1. On appeal, the First District
affirmed the trial court, stating that CSA had an equitable right to have its lien satisfied out of
the sale of the property, even though CSA had failed to file a timely answer. Id. at *2.
{¶ 11} In the case at bar, Citibank was served with the initial summons and complaint
and failed to answer or otherwise respond. The property was later sold at a sheriff's sale,
and the trial court ordered the distribution of a portion of the proceeds. Remaining proceeds,
however, were still within the custody of the court. Despite the mortgage being released, a
default judgment was never entered against Citibank. In the interest of equity, Citibank is
entitled to the amount remaining on its recorded mortgage from the proceeds of the sheriff's
sale and the trial court retains jurisdiction to release funds. Nevertheless, Citibank failed to
establish the amount remaining on its mortgage in the record. Consequently, we find the trial
court abused its discretion in awarding the remaining proceeds to Citibank without first
establishing the amount left on Citibank's mortgage. The Wallaces' first argument is
sustained.
{¶ 12} In the Wallaces' second argument they assert that they are entitled to residual
funds from the sale of their residence under R.C. 5721.20. We disagree. R.C. 5721.20
provides that "any residue of moneys from the sale or foreclosure of lands remaining to the -4- Madison CA2012-10-022
owner on the order of distribution, and unclaimed by such owner within sixty days from its
receipt, shall be paid to the county treasury * * *." In this case, there are currently no
residuary funds to be collected by the Wallaces. The trial court ordered in a judgment entry
confirming the sale that "[t]he remaining proceeds [were] to be held by the Clerk pending
further order of the Court," and later granted Citibank's motion to participate in the distribution
of funds.1 The Wallaces' second argument is overruled.
{¶ 13} In their third and final argument, the Wallaces essentially contend that
Citibank's "Motion for Distribution of Proceeds" was a motion for relief from judgment under
Civ.R. 60(B), which the trial court erroneously granted. Civ.R. 60(B) provides that "[o]n
motion and upon such terms as are just, the court may relieve a party or his legal
representative from a final judgment" for certain reasons. Citibank points out that no motion
was made under Civ.R. 60(B). Even if we were to construe Citibank's "Motion for Distribution
of Proceeds" as a Civ.R. 60(B) motion, the Wallaces' argument still fails because the trial
court did not grant Citibank relief from a final judgment. As noted above, the final judgment
provided that "[t]he remaining proceeds [were] to be held by the Clerk pending further order
of the Court." The final judgment did not prohibit the trial court from disbursing remaining
funds to Citibank. Furthermore, "in foreclosure actions claims may be brought in or filed up
to the time of distribution." Robison at *4. As a result, the trial court did not provide Citibank
relief from final judgment by allowing Citibank to participate in distribution. The Wallaces'
third argument is overruled.
{¶ 14} The Wallaces' sole assignment of error is sustained. This case is reversed and
cause remanded for the trial court to first establish the amount remaining on Citibank's
mortgage before ordering a distribution of the proceeds to Citibank.
1. However, in the event there are remaining funds following the establishment of the amount of Citibank's mortgage, the Wallaces may be entitled to remaining funds under R.C. 5721.20. -5- Madison CA2012-10-022
{¶ 15} Judgment reversed and cause remanded.
M. POWELL, J., concurs.
PIPER, J., concurs in part and dissents in part.
PIPER, J., concurring in part and dissenting in part.
{¶ 16} I concur with the judgment of my colleagues in that Citibank is entitled to the
remaining proceeds in order to satisfy their lien which was previously secured by a mortgage.
{¶ 17} However, I would dissent from the opinion of my colleagues because the
amount due Citibank is more than the amount remaining on hand and available to satisfy
Citibank's lien. Therefore, I would find no fault with the proceedings below and would affirm
on all of the assignments of error.
-6-