[Cite as The Bank of New York Mellon v. Lewis, 2014-Ohio-5599.]
IN THE COURT OF APPEALS OF OHIO SIXTH APPELLATE DISTRICT ERIE COUNTY
The Bank of New York Mellon, etc. Court of Appeals No. E-13-051
Appellee Trial Court No. 2011 CV 0678
v.
Tonya Lewis, et al. DECISION AND JUDGMENT
Appellant Decided: December 19, 2014
*****
Melany K. Fontanazza and James S. Wertheim, for appellee.
Daniel L. McGookey, Kathryn M. Eyster and Lauren McGookey, for appellant.
PIETRYKOWSKI, J.
{¶ 1} Tonya Lewis appeals a September 11, 2013 judgment of the Erie County
Court of Common Pleas entered against her in a foreclosure action brought by The Bank
of New York Mellon fka the Bank of New York as Trustee for the Certificateholders of
CWABS 2004-01 (“BONY” or “Bank”). The judgment granted BONY’s motion for summary judgment in the action for foreclosure and issued a decree in foreclosure and an
order of sale. The judgment also granted the Bank summary judgment on appellant’s
counterclaim.
{¶ 2} It is undisputed that appellant entered into a mortgage loan agreement with
Full Spectrum Lending, Inc. (“Full Spectrum”) to refinance her home on October 27,
2003. Under the agreement, appellant executed an adjustable rate note in the principal
amount of $116,875 to refinance the purchase of property located at 6602 Alspaugh
Drive, Castalia, Ohio. On the same date, appellant executed a mortgage to secure the
note.
{¶ 3} On September 26, 2011, BONY filed a complaint for foreclosure against
appellant in the Erie County Court of Common Pleas, alleging that it is the holder of the
note and that the note and mortgage were in default. BONY alleged that it had satisfied
all conditions precedent and had declared the entire balance of the note due and payable.
BONY claimed that principal in the amount of $136,612.64, plus interest at the rate of
9.5 percent per annum from November 1, 2009, was due upon the note, plus late charges
and advances. BONY alleged that by reason of the default, it was entitled to a decree
foreclosing on the mortgage.
{¶ 4} Appellant filed an answer and counterclaim on December 19, 2011. On
July 22, 2013, BONY filed a motion for summary judgment on its action for foreclosure
and on the counterclaim asserted by appellant against it. It is from the trial court’s
2. judgment of September 11, 2013, granting BONY’s motion for summary judgment in
both respects that appellant has brought this appeal.
{¶ 5} Appellant asserts one assignment of error on appeal:
Assignment of Error
The trial court erred in granting BONY’s Motion for Summary
Judgment.
{¶ 6} Appellate review of trial court judgments granting motions for summary
judgment is de novo; that is, an appellate court applies the same standard in determining
whether summary judgment should be granted as the trial court. Grafton v. Ohio Edison
Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). To prevail on a motion for
summary judgment the moving party must demonstrate:
(1) that there is no genuine issue as to any material fact; (2) that the moving
party is entitled to judgment as a matter of law; and (3) that reasonable
minds can come to but one conclusion, and that conclusion is adverse to the
party against whom the motion for summary judgment is made, who is
entitled to have the evidence construed most strongly in his favor. Harless
v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 66, 375 N.E.2d 46
(1978).
{¶ 7} Where a properly supported motion for summary judgment is made, an
adverse party must respond with specific facts to establish the existence of a material
issue of fact for trial. Riley v. Montgomery, 11 Ohio St.3d 75, 79, 463 N.E.2d 1246
3. (1984); Suder-Benore Co., Ltd. v. Motorists Mut. Ins. Co., 2013-Ohio-3959, 995 N.E.2d
1279, ¶ 12 (6th Dist.). Civ.R. 56(E) provides that “[i]f the party does not so respond,
summary judgment, if appropriate, shall be entered against the party.”
Standing
{¶ 8} Appellant contends that the trial court erred in granting summary judgment
for foreclosure because BONY failed to demonstrate by evidentiary-quality materials that
it is the holder of both appellant’s note and mortgage. Appellant contends, instead, that
the facts demonstrate that BONY is not the real party in interest in the foreclosure action
and lacks standing to assert the claim.
{¶ 9} The current holder of the note and mortgage has been recognized as the real
party in interest in foreclosure actions. Countrywide Home Loans, Inc. v. Montgomery,
6th Dist. Lucas No. L-09-1169, 2010-Ohio-693, ¶ 12; Bank of America v. Lynch, 8th
Dist. Cuyahoga No. 100457, 2014-Ohio-3586, ¶ 32. After the Ohio Supreme Court’s
decision in Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-
Ohio-5017, 979 N.E.2d 1214, however, a conflict has arisen between Ohio courts of
appeals on whether a foreclosure plaintiff must show an interest in both the note and
mortgage at the time of filing suit to have standing to assert a foreclosure action or
whether proof of an interest in either the note or mortgage is sufficient. The issue has
been certified to the Ohio Supreme Court for resolution. SRMOF 2009-1 Trust v. Lewis,
138 Ohio St.3d 1492, 2014-Ohio-2021, 8 N.E.3d 962.
4. {¶ 10} This court has ruled that standing exists under Schwartzwald where the
foreclosure plaintiff demonstrates it held an interest in either the note or mortgage at the
time it filed suit. Bank of New York Mellon v. Matthews, 6th Dist. Fulton No. F-12-008,
2013-Ohio-1707, ¶ 11. As we conclude that BONY is entitled to judgment on the basis
that it is the current holder of both the note and mortgage and was the holder of both
when it filed suit, resolution of the dispute between appellate courts on whether standing
exists where the foreclosure plaintiff is not the holder of both the note and mortgage is
not necessary for disposition of this appeal.
{¶ 11} To be successful on a motion for summary judgment in a foreclosure
action, a moving plaintiff must file “evidentiary-quality” materials showing:
1.) The movant is the holder of the note and mortgage, or is a party
entitled to enforce the instrument; 2.) if the movant is not the original
mortgagee, the chain of assignments and transfers; 3.) the mortgagor is in
default; 4.) all conditions precedent have been met; and 5.) the amount of
principal and interest due. [Wachovia Bank of Delaware, N.A. v.] Jackson,
5th Dist. Stark No. 2010-CA-00291, 2011-Ohio-3202 at ¶ 40-45. U.S.
Bank, N.A. v. Coffey, 6th Dist. Erie No. E-11-026, 2012-Ohio-721, ¶ 26.
We consider these five elements in turn.
Affidavits Submitted on Summary Judgment
{¶ 12} BONY submitted in support of its motion for summary judgment the
affidavits of Matthew R. Stahlhub of Bank of America, N.A. (“BANA”) and of Deborah
5. Schroeder of Select Portfolio Servicing, Inc. (“Select Portfolio”) with exhibits attached.
BONY employed the affidavits to authenticate loan records of appellant’s mortgage loan
and to place them in evidence as business records under Evid.R. 803(6). Appellant
contends that the affiants lacked personal knowledge to authenticate and secure
admission of the records in evidence.
{¶ 13} Civ.R. 56(E) requires on motions for summary judgment that “supporting
and opposing affidavits shall be made on personal knowledge, shall set forth such facts as
would be admissible in evidence, and shall show affirmatively that the affiant is
competent to testify to the matters stated in the affidavit.”
{¶ 14} The Ohio Supreme Court has identified the requirements to establish
admissibility of records under Evid.R. 803(6), the business record exception to the
hearsay rule:
“To qualify for admission under Rule 803(6), a business record must
manifest four essential elements: (i) the record must be one regularly
recorded in a regularly conducted activity; (ii) it must have been entered by
a person with knowledge of the act, event or condition; (iii) it must have
been recorded at or near the time of the transaction; and (iv) a foundation
must be laid by the ‘custodian’ of the record or by some ‘other qualified
witness.’” Weissenberger, Ohio Evidence Treatise (2007) 600, Section
803.73. Even after these elements are established, however, a business
record may be excluded from evidence if “the source of information or the
6. method or circumstances of preparation indicate lack of trustworthiness.”
Evid.R. 803(6). State v. Davis, 116 Ohio St.3d 404, 2008-Ohio-2, 880
N.E.2d 31, ¶ 171.
{¶ 15} Evid.R. 803(6) requires that the affiant “possess a working knowledge of the
specific record-keeping system that produced the document.” State v. Davis, 62 Ohio St.3d
326, 342, 581 N.E.2d 1362 (1991). “While the witness need not have personal knowledge
of the creation of the particular record in question, and need not have been in the employ of
the company at the time the record was made, United States v. Evans, 572 F.2d 455, 490
(5th Cir.1978), he must be able to vouch from personal knowledge of the record-keeping
system that such records were kept in the regular course of business.” Id., quoting Dell
Publishing Co., Inc. v. Whedon, 577 F. Supp. 1459, 1464, fn. 5 (S.D.NY.1984).
Stahlhub Affidavit
{¶ 16} In his affidavit Matthew R. Stahlhub identifies himself as an AVP
Operations Team Manager of BANA and states that BANA was a former servicer for The
Bank of New York Mellon fka the Bank of New York as Trustee for the
Certificateholders of CWABS 2004-01, plaintiff. Stahlhub states that his duties “include
having access to and reviewing BANA’s business records, reports and data compilations
of acts and events made at or near the time by, or from information transmitted by, a
person with knowledge, and kept in the ordinary course of BANA’s regularly conducted
business activity, including those records that relate to the loan made to Defendant by
Full Spectrum Lending, Inc. on October 27, 2003.”
7. {¶ 17} As to his personal knowledge, Stahlhub further stated:
I am able to testify to the statements contained in this affidavit
because I have personal knowledge of BANA’s procedures for creating and
maintaining these records. As part of my job responsibilities for BANA, I
am familiar with the type of records maintained by BANA in connection
with the loan.
{¶ 18} Stahlhub states that he has reviewed records maintained by BANA
including records concerning the servicing of appellant’s loan. He states in his affidavit:
“As of November 1, 2003, the Loan was serviced by Countrywide
Home Loans, Servicing L.P. In April, 2009, Countrywide Home Loans
Servicing, L.P. was renamed BAC Home Loans Servicing L.P.
Subsequently, on or about July 1, 2011, BAC Home Loans Servicing, L.P.
merged with and into BANA. As such, BANA was the servicer of the Loan
since November 1, 2003 until November 16, 2012, when the servicing of
the loan was transferred to Select Portfolio Servicing, Inc.”
{¶ 19} Stahlhub testified that true and accurate copies of the following business
records and documents relating to appellant’s loan are attached to his affidavit:
Exhibit Document
Exhibit 1 The note.
Exhibit 2 The mortgage.
Exhibit 3 An Assignment of Mortgage
8. Exhibit 4 A Loan Modification Agreement
Exhibit 5 A Notice of Intent to Accelerate
Exhibit 6 A BANA payment history of the Loan
Exhibit 7 A screen shot of BANA’s servicing records recording
when it took physical possession of the note.
{¶ 20} With respect to possession of the original note, Stahlhub stated in his
affidavit that he “reviewed records maintained by BANA that document the physical
location of the original Note. As outlined in the screen shot attached as Exhibit 7, BANA
had physical possession of the indorsed original Note, a copy of which is attached as
Exhibit 1, since July 29, 2011.”
{¶ 21} With respect to the mortgage, Stahlhub testified that business records
demonstrate that Mortgage Electronic Registration Systems, Inc., as nominee for Full
Spectrum Lending, Inc., executed on July 24, 2006, an assignment of the mortgage to
appellee and that the assignment was recorded with the Erie County Recorder’s Office on
August 8, 2006.
Schroeder Affidavit
{¶ 22} An affidavit of Deborah Schroeder, a consumer ombudsman analyst of
Select Portfolio (referred to as “SPS” in the affidavit) was also submitted by BONY in
support of its motion for summary judgment. Schroeder states in her affidavit that Select
Portfolio is the current servicer for The Bank of New York Mellon fka the Bank of New
York as Trustee for the Certificateholders of CWABS 2004-01, plaintiff, on the loan.
9. {¶ 23} With respect to business records, the Schroeder affidavit states:
SPS maintains records for the Loan at issue in this case in its
capacity as current servicer for Plaintiff, the holder of the Note. My duties
include having access to and reviewing SPS’s business records, reports and
data compilations of acts and events made at or near the time by, or from
information transmitted by, a person with knowledge, and kept in the
ordinary course of SPS’s regularly conducted business activity, including
those records that relate to the loan made to Defendant by Full Spectrum
Lending, Inc. on October 27, 2003 in the principal amount of $116,875.00
(“Loan”), which was secured by a Mortgage on real property commonly
known as 6602 Alspaugh Drive, Castalia, OH 44824.
{¶ 24} In the affidavit, Schroeder also stated her personal knowledge to testify:
I am able to testify to the statements contained in this Affidavit
because I have personal knowledge of SPS’s procedures for creating and
maintaining these records. As part of my job responsibilities for SPS, I am
familiar with the type of records maintained by SPS in connection with the
Loan.
{¶ 25} Schroeder states in the affidavit that Select Portfolio maintains “records for
the Loan at issue in this case in its capacity as current servicer for Plaintiff, the holder of
the note.” According to the affidavit, her
10. duties include having access to and reviewing Select Portfolio’s business
records, reports and data compilations of acts and events made at or near
the time by, or from information transmitted by, a person with knowledge,
and kept in the ordinary course of Select Portfolio’s regularly conducted
business activity, including those records that relate to the loan made to the
Defendant by Full Spectrum Lending, Inc. on October 27, 2003.
{¶ 26} Attached as exhibits to the affidavit are copies of the loan note, a loan
modification agreement, payment history with respect to the loan, and payoff statement.
{¶ 27} Schroeder states in the affidavit that the last payment made on the loan was
the payment due on November 1, 2009, and that the loan was in default under the terms
of the note and mortgage. Further, on January 4, 2010, a notice of default and
acceleration was sent to appellant by BANA.
{¶ 28} Schroeder stated in the affidavit that the default had not been cured and that
the balance due on the loan had been accelerated, pursuant to the terms and conditions of
the note and mortgage. Schroeder stated the amount of the principal balance due and
owing on the note was $136,612.64, subject to interest at an adjustable rate of interest (set
forth in the note and loan modification agreement from November 1, 2009) plus late
charges and advances.
{¶ 29} Schroeder also states that servicing of the loan was transferred by BANA to
Select Portfolio on November 16, 2012.
11. {¶ 30} Stahlhub claims in his affidavit that he has personal knowledge of BANA’s
procedures for creating and maintaining records pertaining to appellant’s loan. The
affidavit also identified Stahlhub’s connection to the documents. Stahlhub stated that as
part of his job responsibilities for BANA, he was familiar with the type of records
maintained by BANA in connection to the loan. Stahlhub stated he was an AVP
Operations Manager of BANA.
{¶ 31} The Schroeder affidavit also attested to personal knowledge of Schroeder
as to Select Portfolio’s procedures for creating and maintaining the loan records attached
as exhibits to the affidavit. Schroeder also stated that as part of her job responsibilities
for Select Portfolio she was familiar with the documents. Schroeder identified herself as
a consumer ombudsman analyst of Select Portfolio.
{¶ 32} In our view, absent evidence to the contrary, the affidavits demonstrated
that Stahlhub and Schroeder were competent to lay the foundation for admissibility of the
loan records as business records under Evid.R. 803(6) and that copies of the loan
documents were true and accurate copies. See U.S. Bank, Natl. Assn. v. Zokle, 6th Dist.
Erie No. E-13-033, 2014-Ohio-636, ¶ 21-22; Lynch, 8th Dist. Cuyahoga No. 100457,
2014-Ohio-3586 at ¶ 22-24.
{¶ 33} Appellant contends that two matters raise into question the reliability of the
Stahlhub and Schroeder affidavits in authenticating loan records—(1) the deposition
testimony of Christina Kuo and (2) the fact that the copy of the note attached to the
complaint differs from the copy of the note provided as an exhibit to the affidavits.
12. Civ.R. 30(B)(5) provides a procedure of obtaining discovery of private
corporations through a notice procedure under which the corporation designates one or
more employees, officers, agents, or other authorized persons to testify on its behalf.
State ex rel. Verhovec v. Northwood, 6th Dist. Wood No. WD-13-002, 2013-Ohio-5074,
¶ 12; Civ.R. 30(B)(5). BONY designated Christina Kuo to testify as its representative
under a Civ.R. 30(B)(5) notice of deposition filed by appellant. The deposition
proceeded on April 24, 2013.
{¶ 34} Kuo testified that she did not begin to work for BANA until March 2011,
and that her testimony was based upon her review of electronic copies of BANA’s
business records. Kuo also testified, however, that she had not seen the original note and
lacked knowledge as to BANA’s recordkeeping policies and procedures with respect the
preparation and maintenance of business records of promissory notes. Under her
deposition testimony, Kuo clearly lacked the personal knowledge necessary to qualify
business records under Evid.R. 803(6).
{¶ 35} Where a Civ.R. 30(B)(5) representative “fails to answer a question or gives
an incomplete or evasive answer,” the party seeking discovery may file a motion to
compel discovery pursuant to Civ. R. 37(A). State ex rel. Rhodes v. Chillicothe, 4th Dist.
Ross No. 12CA3333, 2013-Ohio-1858, ¶ 19. Appellant did not file a motion to compel
BONY to select a new representative with knowledge of BANA’s recordkeeping
practices to testify. Nor did appellant claim surprise and seek an extension of time under
13. Civ.R. 56(F) to complete discovery of recordkeeping practices of BANA in order to
submit evidence in opposition to BONY’s motion for summary judgment.
{¶ 36} In our view, Kuo’s testimony of her lack of knowledge as to BANA’s
recordkeeping practices did not conflict with the testimony by Stahlhub and Schroeder,
by affidavit, of their competency to testify on the subject.
{¶ 37} The copy of appellant’s note that was attached to the foreclosure complaint
was not indorsed. The copy of the note, marked as exhibit No. 1 to both the Stahlhub and
Schroeder affidavits contains two indorsements. The note bears an indorsement by the
originating lender (Full Spectrum Lending, Inc.) to Countrywide Home Loans. It also
shows indorsement by Countrywide Home Loans in blank. Both versions were signed
and initialed by appellant.
{¶ 38} Appellant argues that the fact that there were two different versions of the
note in evidence, one with and one without the indorsements, raises questions on whether
the copy of the notes bearing the indorsements is a true copy of appellant’s note. The
Twelfth District and the Eighth District Courts of Appeals have both considered and
rejected this argument. Bank of New York Mellon v. Putman, 12th Dist. Butler No.
CA2012-12-267, 2014-Ohio-1796, ¶ 19 (indorsement of the note did not change the
terms of the note and both versions were signed and initialed by borrower); Deutsche
Bank Natl. Trust Co. v. Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657, ¶ 59
(“The mere fact that there were two different copies of the note in the record-one with
14. endorsements and one without-does not mandate a finding that one of the notes was
‘unauthentic’ or otherwise preclude summary judgment.”). We find the reasoning of the
Twelfth and Eighth District persuasive and adopt it.
{¶ 39} Accordingly, we conclude that appellant failed to submit for court
consideration in opposition to BONY’s motion evidence conflicting with Stahlhub’s and
Schroeder’s claims of personal knowledge to lay a foundation for admissibility of loan
documents, including the note and mortgage, into evidence as business records.
Accordingly, we conclude that the loan documents submitted for court consideration
under the Stahlhub and Schroeder affidavits were admissible as business records kept in
the ordinary course of business under Evid.R. 803(6) and are to be treated as true and
accurate copies of the originals.
Negotiation of the Note
{¶ 40} Ohio’s version of the Uniform Commercial Code governs the negotiation
and enforcement of promissory notes.1 R.C. 1301.01(T)(1) defines the term holder:
(1). “Holder” with respect to a negotiable instrument means either of
the following:
(a) If the instrument is payable to bearer, a person who is in
possession of the instrument;
1 R.C. 1301.01 through 1301.21 was repealed in 2011 and renumbered. Because the 2011 enactment applies only to transactions entered into on or after June 29, 2011, we will refer to prior code sections in this judgment.
15. (b) If the instrument is payable to an identified person, the identified
person when in possession of the instrument.
{¶ 41} “‘Negotiation’ means a voluntary or involuntary transfer of possession of
an instrument by a person other than the issuer to a person who by the transfer becomes
the holder of the instrument.” R.C. 1303.21(A). Except in circumstances not applicable
here, where “the instrument is payable to an identified person, negotiation requires
transfer of possession of the instrument and its indorsement by the holder. If an
instrument is payable to bearer, it may be negotiated by transfer of possession alone.”
R.C. 1303.21(B).
Three categories of persons may enforce negotiable instruments:
(A) “Person entitled to enforce” an instrument means any of the
following persons:
(1) The holder of the instrument;
(2) A nonholder in possession of the instrument who has the rights
of a holder;
(3) A person not in possession of the instrument who is entitled to
enforce the instrument pursuant to Section 1303.38 or division (D) of
section 1303.58 of the Revised Code.
(B) A person may be a “person entitled to enforce” the instrument
even though the person is not the owner of the instrument or is in wrongful
possession of the instrument. R.C. 1303.31.
16. {¶ 42} A review of the copy of appellant’s promissory note in evidence shows that
the note was issued payable to an identified person, the originating lender (Full Spectrum
Lending). Full Spectrum indorsed the note to Countrywide Home Loans. Countrywide
Home Loans indorsed the note in blank. The business records of BANA also
demonstrate that the note was received by BANA on July 29, 2011, and that BANA has
had physical possession of the note since that date.
{¶ 43} An instrument payable to bearer “may be negotiated by transfer of
possession alone.” R.C. 1303.21(B). Consequently, a person in possession of a bearer
instrument is a holder of the instrument (R.C. 1301.01(T)(1)(a)) and entitled to enforce it
(R.C. 1303.31(A)(1)). The evidence in the record demonstrates that BONY has been the
holder of the loan note, indorsed in blank, since obtaining physical possession of it on
July 29, 2011. This is because BANA has had physical possession of the note since
July 29, 2011, and Ohio courts have recognized that possession of a negotiable
instrument by a bank’s loan servicing agency acting on behalf of the bank is sufficient
possession to establish the bank as holder of the instrument. Zokle, 6th Dist. Erie No.
E-13-033, 2014-Ohio-636 at ¶ 24.
{¶ 44} Based on this analysis, the evidence in the record demonstrates that BONY
is the current holder of the note and was the holder at the time it filed suit.
{¶ 45} Appellant, without legal authority, contends that BONY must establish that
Countrywide was entitled to indorse the note to itself on behalf of Full Spectrum to
establish negotiation of the note. Appellant’s note, however, is a negotiable instrument
17. and governed by Ohio’s version of the U.C.C. As the holder in possession of an
instrument indorsed in blank, BONY was entitled to enforce the note. R.C.
1303.31(A)(1); 1301.01(T)(1)(a); See Matthews, 6th Dist. Fulton No. F-12-008, 2013-
Ohio-1707 at ¶ 24.
Mortgage Assignment
{¶ 46} A file stamped copy of an assignment of the original mortgage to Bank of
New York as Trustee for the Certificateholders of CWABS 2004-01, executed on
July 24, 2006, and filed with the office of the Erie County Ohio Recorder on August 8,
2006, is in evidence. As previously discussed, the mortgage assignment is admissible in
evidence under the Evid.R. 803(6) business records exception to the hearsay rule.
{¶ 47} Appellant challenges BONY’s claim that it is the holder of the mortgage on
additional grounds. Appellant argues that evidence in the record is lacking to identify
BONY as the mortgage assignee. Bank of New York as Trustee for the
Certificateholders of CWABS 2004-01 is the named assignee in the July 24, 2006
mortgage assignment.
{¶ 48} In its foreclosure complaint, BONY is the plaintiff and identified itself as
“The Bank of New York Mellon FKA the Bank of New York as Trustee for the
Certificateholders of CWABS 2004-01.” BONY argues that any confusion as to its
identity was resolved in the trial court by evidence it submitted of the merger of Bank of
New York with the Bank of New York Mellon in 2007 and the resulting name change.
18. {¶ 49} BONY attached unauthenticated copies of Form 10-Ks (filed with the
Securities and Exchange Commission for fiscal years 2007 and 2008) that recount the
merger to its reply brief, filed in support of the motion for summary judgment. Appellant
contends that the unauthenticated documents attached to the brief are not competent
evidence in this case.
{¶ 50} The Stahlhub and Schroeder affidavits, however, both identify appellee as
“The Bank of New York Mellon fka the Bank of New York as Trustee for the
Certificateholders of CWABS 2004-01.” Furthermore, the record demonstrates that
appellee is not a stranger to the debt to which the mortgage relates. It is the holder of the
loan promissory note.
{¶ 51} Under the circumstances, we conclude the affidavits are sufficient to clarify
BONY’s status as assignee of the mortgage and to place the burden on appellant to
present evidence setting forth specific facts demonstrating a genuine issue of fact for trial
on whether BONY was the assignee. See BAC Home Loans Servicing, LP v. Taylor, 9th
Dist. Summit No. 26423, 2013-Ohio-355, ¶ 8. Appellant submitted no evidence in the
trial court to dispute BONY’s claim that it is “The Bank of New York Mellon fka the
Bank of New York as Trustee for the Certificateholders of CWABS 2004-01” and the
entity identified in the assignment as the assignee of the mortgage note.
{¶ 52} Appellant also contends that the assignment of the mortgage was invalid
because, contrary to the trust prospectus, the assignment occurred after the trust closing
date. In response, BONY argues appellant lacks standing to object to the assignment.
19. We agree that appellant lacks standing to challenge the mortgage assignment. This court
has recognized that where the debtor is neither a party to nor a third-party beneficiary of a
mortgage assignment, the debtor lacks standing to challenge the validity of an assignment
of a mortgage. Bank of New York Mellon v. Huth, 6th Dist. Lucas Nos. L-12-1241 and
L-12-1283, 2014-Ohio-4860, ¶ 25-26.
{¶ 53} We conclude that BONY met its burden of demonstrating that there is no
genuine issue of material fact that it is the current holder of both appellant’s promissory
note and mortgage and was the holder of both at the time it filed the foreclosure
complaint. We also conclude that appellant failed to present evidence setting forth
specific facts showing the existence of a genuine issue of fact for trial on these matters.
Accordingly, we also conclude that BONY has standing to bring this foreclosure action.
{¶ 54} BONY is not the original mortgagee, but has established the chain of
assignments and transfers of the mortgage. Evidence in the record demonstrates that on
October 27, 2003 appellant executed and delivered to MERS (Mortgage Electronic
Registration Systems, Inc.), as nominee for Full Spectrum Lending, Inc., a mortgage on
appellant’s Alspaugh Drive property. MERS assigned the mortgage to BONY by an
assignment executed on July 24, 2006, and filed with the Erie County Recorder on
{¶ 55} Under the terms of the note and mortgage, appellant agreed, among other
things, to make regular monthly mortgage payments. Appellant testified that she stopped
making mortgage payments altogether on the mortgage loan in November 2009. As set
20. forth in the affidavits submitted in support of the motion for summary judgment, the note
was accelerated as a result of the default. On January 4, 2010, a notice of default and
acceleration was sent to appellant by BANA. The default has not been cured.
{¶ 56} We conclude that the evidence in the record demonstrates that conditions
precedent under the loan have been met and the mortgage is in default.
Amount of Principal and Interest Due
{¶ 57} BONY has presented by affidavit appellant’s payment history on the loan
and calculated the amount of principal and interest due. By affidavit, the current servicer
of the loan calculates that the unpaid principal balance due and owing on the note is
$136,612.64 plus interest at the adjustable interest rate set forth in the note and loan
modification agreement from November 1, 2009, plus late charges and advances. The
loan servicer calculated a loan payoff as of July 12, 2013, of $194,410.44. In its
judgment, the trial court awarded BONY judgment in the amount of $136,612.64 plus
interest at the adjustable interest rate set forth in the note and loan modification
agreement from November 1, 2009, plus late charges and advances.
{¶ 58} In its motion for summary judgment, appellant sought judgment under the
October 27, 2003 note and a loan modification agreement dated July 9, 2009 (exhibit
No. 4 to the Stahlhub affidavit and exhibit No. 2 to the Schroeder affidavit). Appellant
testified at deposition (submitted in evidence by appellant) that she had executed a series
of loan modification agreements including the July 9, 2009 loan modification agreement
(exhibit No. 9 to appellant’s deposition).
21. {¶ 59} Appellant contends that the amount due on the loan is disputed and the trial
court erred as to its award. In her appellate brief, appellant contends that the loan
servicer “did not follow the terms of the executed Loan Modifications” of appellant’s
loan. Appellant, however, did not state in her brief which loan modifications were not
followed and in what respect. Appellant made the same broad contention in the trial
court, without asserting any specific failure with regard to any specific loan modification.
Appellant did not submit any evidence in the trial court responding to contentions in the
Schroeder affidavit as to the amount due on the loan.
{¶ 60} Appellant also argues that the loan modification agreement attached to
BONY’s complaint provided for a different rate of interest than used by the trial court in
awarding BONY summary judgment. However, BONY’s motion for summary judgment
was not based upon the loan modification agreement attached to the complaint. The loan
modification agreement attached to the complaint is a loan modification agreement dated
February 18, 2009, and BONY sought summary judgment on the November 2009 default
under the terms of the original note and July 9, 2009 loan modification agreement.
{¶ 61} In our view the Schroeder affidavit setting forth the principal balance and
interest due on the loan was sufficient to meet its burden on motion for summary
judgment to establish the amount of principal and interest due and owing on the note,
absent a response by appellant setting forth specific facts showing the existence of a
genuine issue of fact for trial:
22. In determining the propriety of summary judgment in foreclosure
actions, courts have consistently held that an averment of outstanding
indebtedness made in the affidavit of a bank loan officer with personal
knowledge of the debtor’s account is sufficient to establish the amount due
and owing on the note, unless the debtor refutes the averred indebtedness
with evidence that a different amount is owed. Natl. City Bank v. TAB
Holdings, Ltd., 6th Dist. No. E-10-060, 2011-Ohio-3715, ¶ 12. Genoa
Banking Co. v. Bergman, 6th Dist. Ottawa No. OT-12-038, 2013-Ohio-
3054, ¶ 16.
{¶ 62} Appellant failed to meet her reciprocal burden in responding to BONY’s
motion for summary judgment of presenting specific facts evidencing a genuine issue of
fact for trial on the issue of the amount of principal and interest owed on the mortgage
loan. Accordingly, we conclude that appellant’s claim of trial court error with respect to
the amount of principal and interest awarded in its judgment is without merit.
{¶ 63} We conclude that BONY established through evidentiary quality materials
that (1) it is the holder of the note and mortgage; (2) the chain of assignments and
transfers of the mortgage, (3) appellant is in default, (4) that all conditions precedent have
been met; (5) and the amount of principal and interest due on the mortgage loan.
Appellant argues, as a defense to foreclosure, that BONY acted inequitably and that the
trial court erred on equitable grounds in granting BONY foreclosure.
23. {¶ 64} It is undisputed that appellant has failed to make any payment on the
mortgage loan since November 2009. Appellant did not present any evidence to the trial
court to support her equity defense. Appellant did not present evidence that BONY
waived its right to act upon appellant’s default or that BONY made any sort of material
misrepresentation that would warrant disrupting the terms of the contract between the
parties. Under such circumstances we find no abuse of discretion in the trial court’s
denial of appellant’s equitable argument. See PNC Bank, N.A. v. Bhandari, 6th Dist.
Lucas No. L-12-1335, 2013-Ohio-2477, ¶ 13.
{¶ 65} Accordingly, we find appellant’s assignment of error with respect to
claimed trial court error in granting BONY’s summary judgment on its claim for
foreclosure not well-taken.
{¶ 66} Appellant also contends that the trial court erred in granting BONY
summary judgment on appellant’s counterclaim.
Declaratory Judgment
{¶ 67} Count 1 of appellant’s counterclaim is a declaratory judgment action
seeking court declaration that BONY failed to prove it is the holder of appellant’s
“mortgage loan obligation.” As the record demonstrates that BONY was the current
holder of both appellant’s note and mortgage, the trial court did not err in granting BONY
summary judgment on the counterclaim for declaratory judgment.
24. Fair Debt Collection Practice Act
{¶ 68} Count 2 of the counterclaim asserts a claim against BONY under the Fair
Debt Collection Practice Act, 15 U.S.C. 1692, et seq. (“FDCPA”). Appellant argues that
she is entitled to relief under the FDCPA because BONY filed this action knowing that it
could not prove it is entitled to enforce appellant’s note. Appellant contends the trial
court erred in granting summary judgment to BONY on the FDCPA claim because
BONY has not met its burden of demonstrating there is no genuine issue of material fact
that it is the holder of appellant’s note and mortgage.
{¶ 69} BONY argues that the trial court properly granted it summary judgment of
the FDCPA counterclaim. BONY argues that it established on motion for summary
judgment that there was no dispute of material fact that it is the current holder of both the
note and mortgage and entitled to judgment in foreclosure as a matter of law. As set forth
earlier in this decision, we agree. Accordingly, we conclude that the trial court did not
err in granting summary judgment to BONY on the FDCPA claim.
Ohio Consumer Sales Practices Act
{¶ 70} Count 3 of the counterclaim alleges a claim against BONY for violation of
the Ohio Consumer Sales Practices Act. Appellant argues that BONY is liable as a
“supplier” under the CSPA, and contends that BONY engaged in a pattern and practice of
unfair, deceptive, and unconscionable acts in violation of R.C. 1345.02, 1345.03, and
1345.031 by “authorizing, directing, and filing false affidavits, assignments and other
documents related to this Foreclosure Action despite knowing that it was not legally
25. entitled to do so.” Appellant asserts the trial court erred in granting BONY summary
judgment on the claim.
{¶ 71} BONY argues that it is a national bank and that transactions between
financial institutions, including national banks, and their customers are exempt from
consumer transactions subject to the CSPA, citing the Ohio Supreme Court’s decision in
Reagans v. Mountainhigh Coachworks, Inc., 117 Ohio St.3d 22, 2008-Ohio-271, 881
N.E.2d 271, ¶ 33. The Ohio Supreme Court decision in Reagans recognized that
generally “transactions between financial institutions and their customers are exempted
from the definitions of a ‘consumer transaction’ subject to the Consumer Sales Practices
Act.” Id., citing R.C. 1345.01(A).
{¶ 72} In a footnote, however, the court noted that the statute was amended by
Am.Sub.S.B. No 185, effective January 1, 2007, to include “certain residential mortgage
transactions” that were not before the Reagans court for consideration in the case. Id. at
fn. 2. The statutory change also specified circumstances where mortgage loan purchasers
or assignees may be subject to claims as “suppliers” under the CSPA. R.C. 1345.01(C);
1345.091. Neither party addressed whether the 2007 amendments apply or otherwise
create a CSPA claim based upon appellant’s allegations that BONY knowingly filed false
affidavits, assignments and other documents in this foreclosure action.
{¶ 73} We need not resolve the scope of CSPA claims with respect to mortgage
loans to determine whether the trial court erred in granting summary judgment on the
CSPA claim. In our view, even were the alleged use of fabricated evidence by a
26. subsequent purchaser and assignee of a residential mortgage loan sufficient to state a
claim under the CSPA, the facts do not support such a claim.
{¶ 74} The merits of BONY’s foreclosure claim were placed in issue between the
parties in BONY’s motion for summary judgment. We have determined that the
evidence in the record demonstrates the absence of a dispute of material fact and that
BONY is entitled to judgment for foreclosure against appellant as a matter of law. The
disposition of the foreclosure action precludes any claim that the foreclosure action was
based on fabricated evidence.
{¶ 75} We conclude that the trial court did not err in granting BONY summary
judgment on appellant’s CSPA counterclaim.
Civil Conspiracy
{¶ 76} Appellant contends that the trial court erred in granting BONY summary
judgment on her civil conspiracy counterclaim. Appellant contends that BONY
conspired and acted with others to convert her property by wrongfully asserting dominion
or control over it under a claim inconsistent with her rights.
{¶ 77} BONY argues that appellant failed to present evidence on summary
judgment to support a civil conspiracy claim. BONY also argues that Ohio does not
recognize a claim for conversion of real property. We agree. See Beavers v. PNC Bank,
Natl. Assn., 8th Dist. Cuyahoga No. 99773, 2013-Ohio-5318 ¶ 30. Even liberally
construing the complaint to assert a civil conspiracy involving claimed wrongful conduct
impairing appellant’s real property interests, however, the claim also fails.
27. {¶ 78} In Pierce v. Szymanski, 6th Dist. Lucas No. L-11-1298, 2013-Ohio-205,
¶ 21, we identified the elements of a civil conspiracy claim:
The elements of a civil conspiracy claim are: “(1) a malicious
combination, (2) involving two or more persons, (3) causing injury to
person or property, and (4) the existence of an unlawful act independent
from the conspiracy itself.” State ex rel. Fatur v. Eastlake, 11th Dist. No.
2009-L-037, 2010-Ohio-1448, ¶ 45, quoting Gibson v. City Yellow Cab
Co., 9th Dist. No. 20167, 2001 WL 123467 (Feb. 14, 2001). “An
underlying unlawful act is required before a civil conspiracy claim can
succeed.” Williams v. Aetna Fin. Co., 83 Ohio St.3d 464, 700 N.E.2d 859
(1998).
{¶ 79} The evidence on summary judgment demonstrates that appellant retained
possession of the property despite making no monthly mortgage payments since 2009.
Appellant failed to demonstrate that BONY committed any unlawful action or tort against
appellant’s interests in the property. Accordingly, we conclude that summary judgment
was properly granted on the civil conspiracy claim.
Breach of Contract
{¶ 80} The trial court also granted BONY summary judgment on appellant’s
counterclaim for breach of contract. Appellant contends that the trial court erred in
granting summary judgment on the breach of contract claim. Appellant contends that
28. BONY breached its contract by refusing to accept payment and filing for foreclosure
when it had a loan modification in place and by unilaterally modifying the interest rate
and payment amounts.
{¶ 81} In order to establish a claim for breach of contract, a party must prove:
(1) a contract existed, (2) one party fulfilled his obligations, (3) the
other party failed to fulfill his obligations, and (4) damages resulted from
that failure. Spano Bros. Constr. Co., Inc. v. Adolph Johnson & Son Co.,
9th Dist. No. 23405, 2007-Ohio-1427, 2007 WL 912229, ¶ 12, citing
Lawrence v. Lorain Cty. Community College (1998), 127 Ohio App.3d 546,
548–549, 713 N.E.2d 478. In cases where the facts are undisputed, and the
only question to be resolved is whether a breach of contract occurred, a
question of law exists for the court to decide. Farmers Market Drive-In
Shopping Ctrs., Inc. v. Magana, 10th Dist. No. 06AP–532, 2007-Ohio-
2653, 2007 WL 1560276, ¶ 32. However, when there is a dispute as to
whether the parties’ respective actions are sufficient to satisfy the terms of
the contract, a question of fact is presented for the trier of fact to decide.
Id.; Butler Cty. Bd. of Commrs. v. Hamilton (2001), 145 Ohio App.3d 454,
478, 763 N.E.2d 618. Blake Homes, Ltd. v. FirstEnergy Corp., 173 Ohio
App.3d 230, 2007-Ohio-4606, 877 N.E.2d 1041, ¶ 77 (6th Dist.).
{¶ 82} The record demonstrates that appellant was in breach of contract, having
failed to make required monthly mortgage payments under the loan agreement and loan
29. modification agreements beginning in November 2009. The breach was the basis of the
judgment for foreclosure. Appellant failed to present evidence to create a dispute of
material fact in proceedings on summary judgment on the amount of principal and
interest due under the loan agreement as modified by loan modification agreements.
Appellant also offered no evidence to demonstrate that BONY breached its obligations
under the original contract or under the terms of any modification agreement.
Accordingly, we conclude that the trial court did not err in granting BONY summary
judgment on the breach of contract counterclaim.
Fraud
{¶ 83} Appellant demanded relief on the basis of claimed fraud in Count 6 of its
counterclaim. Appellant contends that the trial court erred in granting BONY summary
{¶ 84} Appellant alleged in the counterclaim that it falsely alleged that The Bank
of New York Mellon fka the Bank of New York as Trustee for the Certificateholders of
CWABS 2004-01, is the holder of both the note and mortgage and that the statements
were knowingly false. Appellant alleged that the statements were made with the intent to
mislead the court and defendant.
{¶ 85} Proceedings on BONY’s motion for summary judgment in this case
established that there is no dispute of material fact and that BONY is entitled to foreclose
on the mortgage loan as a matter of law, as the current holder of both the note and
30. mortgage and as the holder of both at the time it filed suit. We conclude that the trial
court properly sustained the motion for summary judgment on appellant’s counterclaim
for alleged fraud.
Duress
{¶ 86} In Count 8 of the counterclaim, appellant claimed “[p]laintiff has used
threats or coercion to induce Defendant to act in a manner they [sic] otherwise would
not.” On appeal, appellant contends that the various lenders in this case continued to give
appellant loan modification agreements that changed unilaterally (adjustable rate
agreements) and that the lenders forced appellant to accept the loan modifications.
{¶ 87} The Ohio Supreme Court considered the issue of duress in avoidance of
contract in the decision of Blodgett v. Blodgett, 49 Ohio St.3d 243, 551 N.E.2d 1249
(1990):
To avoid a contract on the basis of duress, a party must prove
coercion by the other party to the contract. It is not enough to show that
one assented merely because of difficult circumstances that are not the fault
of the other party. Id. at syllabus.
{¶ 88} The Blodgett court also outlined common elements of duress:
(1) that one side involuntarily accepted the terms of another; (2) that
circumstances permitted no other alternative; and (3) that said
circumstances were the result of coercive acts of the opposite party. * * *
The assertion of duress must be proven to have been the result of the
31. defendant’s conduct and not by the plaintiff’s necessities. * * *” (Emphasis
added.) (Citations omitted.) Id. at 246.
{¶ 89} BONY argues that the court properly granted it summary judgment despite
appellant’s claim of duress because the evidence in the record does not demonstrate
coercive acts by BONY against appellant but, instead, shows appellant chose to enter
loan modification agreements due to her own difficult circumstances.
{¶ 90} We conclude that the trial court properly granted summary judgment on
Count 8 of the counterclaim and in granting BONY summary judgment for foreclosure
on the mortgage loan despite appellant’s claim of duress. Appellant failed to present
evidence in opposing summary judgment on the basis that appellant accepted the terms of
any loan agreement with BONY based upon coercive acts by BONY, as opposed to
appellant’s own circumstances.
{¶ 91} We conclude that the trial court did not err in granting summary judgment
on appellant’s claims of duress in her counterclaim.
Punitive Damages
{¶ 92} Appellant asserts as Count 9 of her counterclaim that she is entitled to an
award of punitive damages against BONY. Appellant argues that the trial court erred in
granting summary judgment to BONY on the issue of punitive damages. BONY argues
that Ohio does not recognize an independent cause of action for punitive damages. We
agree:
32. “No civil cause of action in this state may be maintained simply for
punitive damages.” Bishop v. Grdina (1985), 20 Ohio St.3d 26, 28, 20
OBR 213, 485 N.E.2d 704, superseded by rule on other grounds. See also
Moskovitz v. Mt. Sinai Med. Ctr. (1994), 69 Ohio St.3d 638, 650, 635
N.E.2d 331 (“punitive damages are awarded as a mere incident of the cause
of action in which they are sought. * * *”). Niskanen v. Giant Eagle, Inc.,
122 Ohio St.3d 486, 2009-Ohio-3626, 912 N.E.2d 595, ¶ 13.
{¶ 93} Accordingly, we conclude that the trial court did not err in granting BONY
summary judgment on appellant’s claim for punitive damages asserted in its
counterclaim. Appellant’s sole assignment of error is found not well-taken.
{¶ 94} Justice having been afforded the party appealing, we affirm the judgment
of the Erie County Court of Common Pleas and order appellant to pay the costs of this
appeal pursuant to App.R. 24.
Judgment affirmed.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. See also 6th Dist.Loc.App.R. 4.
33. The Bank of New York Mellon v. Lewis C.A. No. E-13-051
Mark L. Pietrykowski, J. _______________________________ JUDGE Arlene Singer, J. _______________________________ Stephen A. Yarbrough, P.J. JUDGE CONCUR. _______________________________ JUDGE
This decision is subject to further editing by the Supreme Court of Ohio’s Reporter of Decisions. Parties interested in viewing the final reported version are advised to visit the Ohio Supreme Court’s web site at: http://www.sconet.state.oh.us/rod/newpdf/?source=6.
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