[Cite as U.S. Bank, N.A. v. Lawson, 2014-Ohio-463.]
COURT OF APPEALS DELAWARE COUNTY, OHIO FIFTH APPELLATE DISTRICT
U.S. BANK, N.A. JUDGES: Hon. William B. Hoffman, P.J. Plaintiff-Appellee Hon. Sheila G. Farmer, J. Hon. Patricia A. Delaney, J. -vs- Case No. 13CAE030021 SEAN AND KATHY LAWSON
Defendants-Appellants OPINION
CHARACTER OF PROCEEDING: Appeal from the Delaware County Court of Common Pleas, Case No. 11CVE080991
JUDGMENT: AFFIRMED, IN PART; REVERSED & REMANDED, IN PART
DATE OF JUDGMENT ENTRY: February 4, 2014
APPEARANCES:
For Plaintiff-Appellee For Defendants-Appellants
MIKE L. WIERY GREGORY A. WETZEL RACHEL M. KUHN TROY J. DOUCET Reimer, Arnovitz, Chernek Doucet & Associates, Inc. & Jeffrey Co., L.P.A. 4200 Regent Street, Suite 200 30455 Solon Rd. Columbus, Ohio 43219 Solon, Ohio 44139
MICHAEL E. CARLETON CRAIG SPADAFORE DAVID F. HANSON P.O. Box 165028 Columbus, OH 43216-5028 Delaware County, Case No. 13CAE030021 2
Delaney, J.
{¶1} Defendants-Appellants Sean and Kathy Lawson appeal the judgment
entered by the Delaware County Court of Common Pleas in favor of Plaintiff-Appellee
U.S. Bank, N.A.
FACTS AND PROCEDURAL HISTORY
{¶2} Plaintiff-Appellee U.S. Bank, N.A. filed a complaint in foreclosure against
Defendants-Appellants Sean and Kathy Lawson on August 15, 2011. In the complaint,
U.S. Bank sought foreclosure of the real properly located in Radnor, Ohio based on the
default of the terms of the note and mortgage encumbering the property. U.S. Bank
was not seeking a personal money judgment because the Lawsons’ debt was
discharged in bankruptcy.
{¶3} The matter was heard at a bench trial before a magistrate. At trial,
Christopher Delbene, the Default Case Manager for Homeward Residential, Inc.,
testified on behalf of U.S. Bank. He testified a Limited Power of Attorney authorized
Homeward to appear at trial on U.S. Bank’s behalf. The following facts were adduced
at trial.
{¶4} On July 26, 2005, the Lawsons executed an Adjustable Rate Note in favor
of American Home Mortgage Acceptance, Inc. in the amount of $188,000.00. The
same day, as security for the note, the Lawsons executed a Mortgage, granting
Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for American
Home Mortgage Acceptance, Inc., first and best lien on the real property located at
3326 Gallant Road, Radnor, Ohio. The Lawsons do not dispute the execution of the
note and mortgage. Delaware County, Case No. 13CAE030021 3
{¶5} The note in this case was endorsed in blank. At trial, U.S. Bank was in
possession of the original note and mortgage. (T. 10). U.S. Bank asserted the
mortgage was assigned to U.S. Bank from MERS as evidenced by an Assignment of
Mortgage recorded on March 9, 2011. The mortgage assignment was signed by
Joseph Kaminski, an Assistant Secretary of MERS. The Lawsons introduced
Defendants’ Exhibit B, which was a MERS Corporate Resolution appointing MERS
certifying officers, dated March 29, 2008. (T. 30). As of March 29, 2008, Joseph
Kaminski was not on the list of certifying officers. (T. 30). On re-direct examination,
Delbene testified it was possible MERS could update the letter appointing or certifying
officers. (T. 70). Delbene testified he had reviewed updated MERS documents and
Joseph Kaminski was a certifying officer based on updated MERS documents. (T. 70).
{¶6} The Lawsons defaulted under the terms of the note on October 1, 2010.
{¶7} Homeward Residential, Inc. services the mortgage loan at issue on behalf
of U.S. Bank. (T. 5). Homeward Residential has a mortgage platform or monitoring
system to determine when a mortgage is in default. (T. 16). When a mortgage is in
default, Homeward Residential sends a task to its third-party vendor to generate a
Notice of Default letter that the third-party vendor mails to the borrower. (T. 16). In
2011, Homeward Residential contracted with G. Moss and Associates as the third-party
vendor for some of the northeastern states to generate the notice of default letter. (T.
16). U.S. Bank alleged that on May 3, 2011, G. Moss and Associates sent the Lawsons
a notice of default letter by ordinary and certified mail. (T. 16). U.S. Bank introduced a
copy of the notice of default letter sent to the Lawsons as Plaintiff’s Exhibit 5. The loan
number on the default letter matched the loan number for the Lawsons’ mortgage loan. Delaware County, Case No. 13CAE030021 4
(T. 15). The default letter listed the property address listed on both the mortgage and
the note. (T. 16). The letter was to be sent by first-class mail and certified mail. (T.
16). Delbene testified Homeward Residential did not mail the default letter; G. Moss
mailed the default letter. (T. 55). Delbene stated he could not say whether G. Moss
actually mailed the default letter by first class or certified mail. (T. 55). There was no
evidence presented by the Lawsons to dispute whether they had received the notice of
default letter.
{¶8} On September 18, 2012, by Magistrate's Decision, the magistrate found
the Power of Attorney established Homeward Residential was the servicing agent for
U.S. Bank, and as an employee of Homeward, Delbene, had the authority to appear
and testify at trial. As default case manager, Delbene also had personal knowledge of
the matter, as required by Evidence Rule 602. The trial court concluded the Lawsons
did not have standing to challenge the validity of the assignment of mortgage between
MERS and U.S. Bank. Therefore, the MERS Corporate Resolution offered into
evidence was inadmissible. Thereafter, the parties submitted proposed findings of fact
and conclusions of law.
{¶9} On November 15, 2013 the magistrate issued a decision granting
foreclosure in favor of U.S. Bank as holder of the note and mortgage herein. The
Lawsons objected to the Magistrate's Decision.
{¶10} By Judgment Entry filed February 25, 2013, the trial court overruled the
objections to the Magistrate’s Decision, and granted judgment in favor of U.S. Bank. Delaware County, Case No. 13CAE030021 5
ASSIGNMENTS OF ERROR
{¶11} The Lawsons now appeal, assigning as error:
{¶12} “I. THE TRIAL COURT ERRED WHEN IT ADMITTED INTO EVIDENCE
PLAINTIFF’S EXHIBIT 5, THE MAY 3RD BREACH LETTER.
{¶13} “II. THE TRIAL COURT ERRED WHEN IT FOUND G. MOSS HAD
MAILED THE BREACH LETTER TO THE LAWSONS.
{¶14} “III. THE TRIAL COURT ERRED WHEN IT EXCLUDED THE LAWSONS’
EXHIBIT B. FROM EVIDENCE AS IRRELEVANT.
{¶15} “IV. THE TRIAL COURT ERRED WHEN IT FOUND DELBENE WAS
COMPETENT TO TESTIFY AND HAD AUTHORITY TO TESTIFY ON PLAINTIFF’S
BEHALF.
{¶16} “V. THE TRIAL COURT ERRED WHEN IT FOUND THE LAWSONS IN
DEFAULT OF AN ANSWER.”
I.
{¶17} The Lawsons argue in their first Assignment of Error that the trial court
abused its discretion when it admitted Plaintiff’s Exhibit 5, the May 3, 2011 notice of
default letter. We disagree.
{¶18} The admission or exclusion of relevant evidence lies within the sound
discretion of the trial court. State v. Sage, 31 Ohio St.3d 173, 510 N.E.2d 343 (1987).
In order to find an abuse of discretion, we must find that the trial court's decision was
arbitrary, unconscionable, or unreasonable. Blakemore v. Blakemore, 5 Ohio St.3d
217, 219, 450 N.E.2d 1140 (1983). Delaware County, Case No. 13CAE030021 6
{¶19} The evidence at issue is Plaintiff’s Exhibit 5, the May 3, 2011 notice of
default letter. At trial, Christopher Delbene, a default case manager with Homeward
Residential, testified as to the notice of default letter. Homeward Residential serviced
the Lawsons’ mortgage loan on behalf of U.S. Bank. Homeward Residential contracted
with a third-party vendor, G. Moss and Associates, to generate and send notice of
default letters to borrowers whose loans were serviced by Homeward Residential. In
this case, G. Moss and Associates generated the May 3, 2011 notice of default letter
based on information it received from Homeward Residential. The Lawsons objected to
the introduction of the notice of default letter and Delbene’s testimony as to the notice of
default letter based on hearsay. The Lawsons argued Delbene could not testify to the
notice of default letter because it was drafted and mailed by G. Moss and Associates,
not Homeward Residential.
{¶20} The trial court has discretion to admit or exclude relevant evidence, but it
has no discretion to admit hearsay. Evid.R. 802 requires the exclusion of hearsay
unless an exception applies. John Soliday Fin. Grp., LLC v. Pittenger, 190 Ohio App.3d
145, 2010-Ohio-4861, 940 N.E.2d 1035, ¶ 28 (5th Dist.). One such exception to the
hearsay rule is the “records of regular conducted activity,” more commonly known as
the business records exception. Evid.R. 803(6). The rule states:
(6) Records of regularly conducted activity. A memorandum, report,
record, or data compilation, in any form, of acts, events, or conditions,
made at or near the time by, or from information transmitted by, a person
with knowledge, if kept in the course of a regularly conducted business
activity, and if it was the regular practice of that business activity to make Delaware County, Case No. 13CAE030021 7
the memorandum, report, record, or data compilation, all as shown by the
testimony of the custodian or other qualified witness or as provided by
Rule 901(B)(10), unless the source of information or the method or
circumstances of preparation indicate lack of trustworthiness. The term
“business” as used in this paragraph includes business, institution,
association, profession, occupation, and calling of every kind, whether or
not conducted for profit.
The rationale behind Evid.R. 803(6) is that if information is sufficiently trustworthy that a
business is willing to rely on it in making business decisions, the courts should be willing
to rely on that information as well. See staff note to Evid.R. 803(6).
{¶21} “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.’” John Soliday Fin. Grp., LLC, 2010-Ohio-4861, ¶ 31
quoting State v. Davis, 116 Ohio St.3d 404, 2008-Ohio-2, 880 N.E.2d 31, ¶ 171, quoting
Weissenberger, Ohio Evidence Treatise (2007) 600, Section 803.73.
{¶22} In the John Soliday Fin. Grp., LLC v. Pittenger case, we reviewed the term
“other qualified witness”:
The phrase “other qualified witness” should be broadly interpreted. See
State v. Patton (Mar. 5, 1992), Allen App. No. 1–91–12, 1992 WL 42806,
citing 1 Weissenberger's Ohio Evidence (1985) 75, Section 803.79. Delaware County, Case No. 13CAE030021 8
Further, it is not necessary that the witness have firsthand knowledge of
the transaction giving rise to the record. State v. Vrona (1988), 47 Ohio
App.3d 145, 547 N.E.2d 1189, paragraph two of the syllabus. “Rather, it
must be demonstrated that the witness is sufficiently familiar with the
operation of the business and with the circumstances of the record's
preparation, maintenance and retrieval, that he can reasonably testify on
the basis of this knowledge that the record is what it purports to be, and
that it was made in the ordinary course of business consistent with the
elements of Rule 803(6).” Patton at *2, quoting Weissenberger at 76.
John Soliday Fin. Grp., L.L.C. v. Pittenger, 190 Ohio App.3d 145, 2010-Ohio-4861, 940
N.E.2d 1035, ¶ 32 (5th Dist.).
{¶23} The magistrate’s considered the Lawsons’ objection to the introduction of
the notice of default letter in her September 18, 2012 magistrate’s decision. The
magistrate found the notice of default letter was admissible as a business record under
Evid.R. 803(6). The magistrate based her decision upon Eastern Savings Bank v.
Bucci, 7th Dist. Mahoning No. 08 MA 28, 2008-Ohio-6363. In that case, during the
testimony of Eastern Savings Bank’s general counsel, Eastern Savings Bank introduced
a broker’s price opinion as to the fair market value of a piece of property. The broker’s
price opinion was prepared by a realtor who did not testify at trial. The realtor was not
an employee of Eastern Savings Bank but was contracted by Eastern Savings Bank to
prepare the broker’s price opinion. The broker’s price opinion was reviewed by an in-
house appraiser who agreed with the realtor’s assessment. Id. at ¶ 98. Delaware County, Case No. 13CAE030021 9
{¶24} The defendants objected to the realtor’s determination of value as
hearsay. The trial court found the broker’s price opinion was a business record
prepared at Eastern Savings Bank’s instructions. On appeal, the defendants argued the
business records exception required the record to be made and kept by Eastern
Savings Bank. Id. at ¶ 100. The Seventh District affirmed the trial court’s determination
as to the evidence. It held:
Here, the BPO [broker’s price opinion] is a memorandum, report,
record or data compilation, in any form. The BPO is about conditions of
the house and neighborhood and was made at or near the time that those
conditions were observed. The BPO was made by a person with
knowledge, and ESB's handwriting thereon was made by a person with
knowledge and from information transmitted by a person with knowledge.
It was in the regular practice of the business activity to make the
document as shown by a witness who is not disputed to be unqualified.
The source of information and the method or circumstances of preparation
do not indicate a lack of trustworthiness as it was generated as a regular
business activity in preparation for a sheriff's sale regarding a debtor; it
was not generated to prepare for the fraudulent conveyance lawsuit
against the debtor's transferees. This foundation was not contested at trial.
See Commercial Natl. Bank v. Zeis (Oct. 13, 1987), 3d Dist. No. 13-86-3
(where in-house appraisals were admitted over objection based merely on
lack of ability to cross-examine, not on foundational requirements). Delaware County, Case No. 13CAE030021 10
The question presented is whether the language “it was the regular
practice of that business activity to make the [document]” means that the
business itself had to internally make the document. See Evid.R. 803(6)
(emphasis added). Since person with knowledge is not modified by
employee and since someone can make the document from information
transmitted by such person with knowledge, the language of the rule
(practice of the regularly conducted business activity to make) does not
prohibit introduction of company documents merely because the business
hired an independent contractor or outside agent to make the document
for them.
Admittedly, the Staff Note to this exception states that the
trustworthiness of the document is derived from the fact that employees,
who are under an obligation to make the document, will be accurate since
a business cannot as a matter of course function without adequate
records. However, an agent is also under such an obligation once they
agree to accept a business contract to make a document for their
principal.
In addressing this rule, the Supreme Court has stated the
document must be made by those with a self-interest to be served through
accurate entry with knowledge the entry will be relied upon by the
business. Weiss v. Weiss (1947), 147 Ohio St. 416, 425-426, 72 N.E.2d
245. This does not require the maker to be an actual employee. A hired
agent or independent contractor would have a self-interest in accuracy Delaware County, Case No. 13CAE030021 11
with knowledge its document will be relied upon by the business. Cf.
Mastran v. Uhrichich (1988), 37 Ohio St.3d 44, 48-49, 523 N.E.2d 509
(patient's self-serving statement in medical record unrelated to medical
treatment describing how accident occurred not admissible).
Even the cases cited by appellants do not require the entry to be
made by an employee. The main case appellants rely upon uses the
following telling language: “such as an employee” and the “exception does
not extend to information provided by outside sources who were under no
business duty to be accurate when preparing the records.” State v.
Barron (June 8, 2000), 10th Dist No. 99AP-59 (emphasis added) (dealing
with patient's alleged writing on sign-in sheet). See, also, Babb v. Ford
Motor Co. (1987), 41 Ohio App.3d 174, 177, 535 N.E.2d 676 (reports from
outside sources such as consumer letters to manufacturer not admissible
as no interest in accuracy to benefit business recipient). Thus, Barron
actually stands for the proposition that an employee is only one type of
permissible author and that an outside source is permissible if they are
under a business duty to the recipient to be accurate and the document is
kept in the regular course of the business recipient. See id.
We have held similarly in the recent past. As an alternative to our
resort to the public records exceptions, this court stated that an autopsy
report can be admitted as a business record of the coroner's office, even
when no employee of that coroner's office made the report. State v.
Mitchell, 7th Dist. No. 05CO63, 2008-Ohio1525, ¶ 110 (Columbiana Delaware County, Case No. 13CAE030021 12
County Coroner's Office contracted Cuyahoga County Coroner's Office to
perform certain forensic autopsies). First, we pointed out that it has been
held that one entity can rely on the records of another entity to arrive at
figures for its own records. Id., citing Great Seneca Fin. v. Felty, 170 Ohio
App.3d 737, 869 N.E.2d 30, 2006-Ohio-6618 (assignee of creditor can
introduce documents received from original creditor as business records).
We also concluded that since the autopsy record was prepared by the
contractual agent of the coroner for the use and maintenance of said
coroner, it can be considered to have in fact been prepared by the coroner
itself. Id.
As such, the admission of such a record is a discretionary decision
wherein the trial court determines if the person making the document
sufficiently satisfies the trustworthiness foundational element of having a
self-interest served through accurate entry on behalf of the business
recipient. An individual or agency retained by the business to generate a
document to be kept in the regular course of the business and for the
purpose of a regularly conducted business activity is a very different
scenario from a business's receipt of unsolicited letters from outsiders. It
is not unreasonable to find trustworthiness in a case such as the one
before us.
Eastern Savings Bank v. Bucci, 7th Dist. Mahoning No. 08 MA 28, 2008-Ohio-6363, ¶
104-110. See also State Farm Mut. Auto. Ins. Co. v. Anders, 197 Ohio App.3d 22,
2012-Ohio-824, 965 N.E.2d 1056, ¶ 25 (10th Dist.). Delaware County, Case No. 13CAE030021 13
{¶25} In this case, Homeward Residential contracted with G. Moss and
Associates to prepare notice of default letters to be sent by G. Moss and Associates to
borrowers defaulting on their mortgage loans. Based on information sent to G. Moss
and Associates from Homeward Residential’s monitoring system, G. Moss and
Associates prepared the notice of default letter. Plaintiff’s Exhibit 5 contained the
property address and mortgage loan file number as maintained by Homeward
Residential. As in Eastern Savings Bank v. Bucci, the document was generated by an
agency retained by the business to be kept in the regular course of the business and for
the purpose of a regularly conducted business activity. As opposed to the cases cited
by the Lawsons in their appellate brief to demonstrate hearsay, the notice of default
letter was created for Homeward Residential based on information provided by
Homeward Residential.
{¶26} We find the factual scenario to be on point with that in Eastern Savings
Bank v. Bucci. The trial court did not abuse its discretion when it admitted Plaintiff’s
Exhibit 5 under the business record exception.
{¶27} The Lawsons’ first Assignment of Error is overruled.
II.
{¶28} The Lawsons argue in their second Assignment of Error that the trial court
erred when it found the evidence demonstrated G. Moss and Associates mailed the
notice of breach letter to the Lawsons. We disagree.
{¶29} As an appellate court, we are not fact finders; we neither weigh the
evidence nor judge the credibility of witnesses. Our role is to determine whether there
is relevant, competent, and credible evidence upon which the fact finder could base his Delaware County, Case No. 13CAE030021 14
or her judgment. Markel v. Wright, 5th Dist. Coshocton No. 2013CA0004, 2013-Ohio-
5274, ¶ 23 citing Peterson v. Peterson, 5th Dist. Muskingum No. CT2003–0049, 2004–
Ohio–4714, ¶ 10, citing Cross Truck v. Jeffries, 5th Dist. Stark No. CA–5758, 1982 WL
2911 (Feb. 10, 1982).
{¶30} In Eastley v. Volkman, 132 Ohio St.3d 328, 2012–Ohio–2179, 972 N.E.2d
517, the Ohio Supreme Court clarified the standard of review appellate courts should
apply when assessing the manifest weight of the evidence in a civil case. SST Bearing
Corp. v. Twin City Fan Companies, Ltd., 1st Dist. Hamilton No. C110611, 2012–Ohio–
2490, ¶ 16. The Ohio Supreme Court held the standard of review for manifest weight of
the evidence for criminal cases stated in State v. Thompkins, 78 Ohio St.3d 380, 678
N.E.2d 541 (1997), is also applicable in civil cases. Eastley, at ¶ 17–19. A reviewing
court is to examine the entire record, weigh the evidence and all reasonable inferences,
consider the credibility of witnesses, and determine “whether in resolving conflicts in the
evidence, the finder of fact clearly lost its way and created such a manifest miscarriage
of justice that the judgment must be reversed and a new trial ordered.” Eastley, at ¶ 20
quoting Twearson v. Simon, 141 Ohio App.3d 103, 115, 750 N.E.2d 176 (9th Dist.2001);
See also Sheet Metal Workers Local Union No. 33 v. Sutton, 5th Dist Stark No. 2011
CA00262, 2012–Ohio–3549 citing State v. Martin, 20 Ohio App.3d 172, 175, 485 N.E.2d
717 (1st Dist.1983). “In a civil case, in which the burden of persuasion is only by a
preponderance of the evidence, rather than beyond a reasonable doubt, evidence must
still exist on each element (sufficiency) and the evidence on each element must satisfy
the burden of persuasion (weight).” Eastley, at ¶ 19. Delaware County, Case No. 13CAE030021 15
{¶31} It has been held that a term in a mortgage such as one requiring prior
notice of a default or acceleration to the mortgagor is not an affirmative defense but
rather a condition precedent. U.S. Bank, N.A. v. Detweiler, 191 Ohio App.3d 464, 2010-
Ohio-6408, 946 N.E.2d 777, ¶ 52 (5th Dist.) citing LaSalle Bank v. Kelly, 9th Dist.
Medina. No. 09CA0067–M, 2010-Ohio-2668, ¶ 13. To prevail in a foreclosure action,
the plaintiff must establish that it complied with conditions precedent under the note and
mortgage. Wachovia Bank of Delaware, N.A. v. Jackson, 5th Dist. Stark No. 2010-CA-
00291, 2011-Ohio-3202, ¶ 43. In the present case, Paragraph 22 of the mortgage
provides that the lender shall give borrowers notice prior to acceleration following
borrower’s breach of any covenant or agreement in the security agreement. (T. 48-49).
{¶32} The Lawsons argue U.S. Bank failed to establish it mailed the notice of
default letter. Delbene testified as to the notice of default letter. He stated the notice of
default letter was prepared by G. Moss and Associates on behalf of Homeward
Residential. (T. 16). The letter contained the Lawsons’ correct address. (T. 16). The
notice of default letter contained a barcode at the top and bottom of the letter that
showed the letter was sent by ordinary and certified mail. (T. 55). The letter was
mailed by G. Moss and Associates. (T. 55). Delbene could not testify whether G. Moss
and Associates mailed the notice of default letter. (T. 55). The Lawsons did not testify
to state whether they received the notice of default letter.
{¶33} Under the “mailbox rule,” there is a rebuttable presumption that a letter
mailed to the correct address is presumed to be received in due course. Cantrell v.
Celotex Corp., 105 Ohio App.3d 90, 94, 663 N.E.2d 708 (1st Dist.1995). In the present
case, the correct address was used on the notice of default letter. The notice of default Delaware County, Case No. 13CAE030021 16
letter contained information to show it was mailed by ordinary and certified mail. No
evidence was presented to rebut the presumption the letter was mailed.
{¶34} The trial court made a determination of the credibility of the evidence that
the notice of default letter was mailed. Applying the pertinent standard of review for the
Lawsons' challenge, we cannot say the finder of fact clearly lost its way and created
such a manifest miscarriage of justice that the judgment must be reversed and a new
trial ordered.
{¶35} The Lawsons’ second Assignment of Error is overruled.
III.
{¶36} In their third Assignment of Error, the Lawsons argue the trial court
abused its discretion when it did not allow the Lawsons to introduce Defendants’ Exhibit
B, the MERS Corporate Resolution appointing MERS certifying officers, dated March
29, 2008. Joseph Kaminski signed the mortgage assignment from MERS to U.S. Bank
as an Assistant Secretary of MERS. The Lawsons provided a corporate resolution of
MERS, dated March 29, 2008, demonstrating Kaminski was not one of the certifying
officers listed on the resolution purported with authority to sign the mortgage
assignment on MERS’s behalf. On re-direct examination, Delbene testified it was
possible MERS could update the letter appointing or certifying officers. (T. 70).
Delbene testified he had reviewed updated MERS documents and Joseph Kaminski
was a certifying officer based on updated MERS documents. (T. 70).
{¶37} The trial court excluded the evidence as irrelevant because the Lawsons
lacked standing to challenge the assignment of the mortgage. The admission or
exclusion of relevant evidence lies within the sound discretion of the trial court. State v. Delaware County, Case No. 13CAE030021 17
Sage, 31 Ohio St.3d 173, 510 N.E.2d 343 (1987). In order to find an abuse of
discretion, we must find that the trial court's decision was arbitrary, unconscionable, or
unreasonable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140
(1983).
{¶38} The Lawsons argued that because the originating lender and assignor
MERS improperly executed an assignment of their mortgage, the assignee U.S. Bank
could not foreclose on their property. There is no dispute between MERS and U.S.
Bank as to whether the mortgage was properly assigned. There is also no dispute the
Lawsons defaulted on their mortgage loan.
{¶39} In Deutsche Bank Natl. Trust Co. v. Whiteman, 10th Dist. Franklin No.
12AP-536, 2013-Ohio-1636, ¶ 16, the Tenth District Court of Appeals relied upon LSF6
Mercury REO Invs. Trust Series 2008-1 v. Locke, 10th Dist. Franklin No. 11AP-757,
2012-Ohio-44991 to hold: “because a debtor is not a party to the assignment of a note
and mortgage, the debtor lacks standing to challenge their validity.” In Whiteman, there
was no dispute between the original mortgagee and the entity subsequently named as
an assignee of the note and mortgage as to the identity of the holder of the note and
mortgage. Rather, only the borrower challenged the assignment’s validity, and there
was no dispute that the borrower had defaulted on his loan and was subject to
foreclosure. Id. at ¶ 16. See also JPMorgan Chase Bank, N.A. v. Romine, 10th Dist.
Franklin No. 13AP-58, 2013-Ohio-4212; HSBC Bank USA, National Assn. v. Surrarrer,
8th Dist. Cuyahoga No. 100039, 2013-Ohio-5594.
1 We note the Ohio Supreme Court on February 20, 2013, Case No. 2012-1926, declined to accept jurisdiction of the appeal in Locke which specifically raised this issue. Delaware County, Case No. 13CAE030021 18
{¶40} The Lawsons refer this Court to Fed. Home Loan Mtge. Corp. v.
Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214, for the
proposition that homeowners may challenge the assignment to the mortgage. In
Schwartzwald, the court determined that a plaintiff receiving an assignment of a note
and mortgage from the real party in interest subsequent to the filing of the complaint,
but prior to the entry of judgment, does not cure a lack of standing to file a foreclosure
action. In the present case, the Lawsons challenge the validity of the assignment
between MERS and U.S. Bank. This is distinguishable from the issue presented in
Schwartzwald.
{¶41} Accordingly, we find the trial court did not abuse its discretion when it did
not admit Defendant’s Exhibit B.
{¶42} The Lawsons’ third Assignment of Error is overruled.
IV.
{¶43} The Lawsons’ fourth Assignment of Error contends the trial court erred
when it found Delbene was competent to testify and had authority to testify on U.S.
Bank’s behalf. We disagree.
{¶44} Christopher Delbene is a default case manager with Homeward
Residential. U.S. Bank contracted with Homeward Residential to service the mortgage
loan at issue in the present case. The Lawsons argue Delbene was not competent to
testify because he did not have personal knowledge of the matter pursuant to Evid.R.
602. A review of Delbene’s testimony shows he had firsthand knowledge of the
functions of his employer as the mortgage servicer, such as the internal record-keeping Delaware County, Case No. 13CAE030021 19
procedures. He reviewed the Lawsons’ loan file and possessed the original note and
mortgage.
{¶45} At trial, the Lawsons introduced Defendants’ Exhibit A, a Limited Power
of Attorney. The Limited Power of Attorney appointed Homeward Residential as U.S.
Bank’s mortgage servicer. Delbene testified the authority of Homeward Residential to
appear on the behalf of U.S. Bank at trial came from the Limited Power of Attorney:
And Task Number 1, demand, sue for, recover, collect, and receive each
and every sum of money, debt, account, and interest which now is or
herein after shall become due and payable belonging to or claimed by
U.S. Bank National Association as trustee and to use or take any lawful
means for recovery by legal process or otherwise.
(T. 25-26).
{¶46} We find no abuse of discretion for the trial court to find Christopher
Delbene was competent and authorized to testify at trial on behalf of U.S. Bank.
{¶47} The Lawson’s fourth Assignment of Error is overruled.
V.
{¶48} In their fifth Assignment of Error, the Lawsons argue the trial court erred in
the March 13, 2013 judgment entry when it found the Lawsons were in default of
answer.
{¶49} U.S. Bank concedes the Lawsons filed an answer to the complaint in
foreclosure. The statement in the March 13, 2013 judgment entry regarding the
Lawsons’ default of answer was a clerical error. Delaware County, Case No. 13CAE030021 20
{¶50} The trial court can correct the clerical error pursuant to Civ.R. 60(A).
{¶51} The fifth Assignment of Error is sustained.
CONCLUSION
{¶52} The judgment of the Delaware County Court of Common Pleas is affirmed
in part and reversed in part. This cause is remanded to the trial court for further
proceedings consistent with this Opinion and the law.
By: Delaney, J. and
Farmer, J. concur.
Hoffman, P.J. dissents. Delaware County, Case No. 13CAE030021 21
Hoffman, P.J., concurring in part and dissenting in part
{¶53} I concur in the majority’s analysis and disposition of Appellants’ fourth and
fifth assignments of error. But I respectfully dissent from the majority’s disposition of
Appellants’ first, second, and third assignments of error.
{¶54} Appellants’ first and second assignments of error involve the admissibility
of the May 3, 2011 notice of default letter generated by G. Moss and Associates. While
Homeward Residential’s default case manager Delbene was a custodian of its business
records, he was not the custodian of G. Moss and Associates’ business records.
Homeward Residential did not prepare and send the letter of default notice as a matter
of its regular business practice; rather, Homeward Residential outsourced that business
activity to someone else [G. Moss and Associates].2 I find to allow G. Moss and
Associates’ default notice letter into evidence without a proper foundation being laid by
its own record custodian or other qualified person of G. Moss and Associates
eviscerates the rule. This extension of the business records exception endorsed by the
majority could hypothetically extend beyond G. Moss and Associates, if G. Moss and
Associates, in-turn, outsourced the administerial task of sending the notice to another
service provider.
{¶55} I find placing the burden on Appellee to establish proof of proper mailing of
the default notice via affidavit of the actual creator of the notice or of the records
custodian or other qualified witness of G. Moss and Associates is not so cumbersome
as to justify what I find to be an unwarranted application and extension of the business
2 I find Delbene did not demonstrate he was sufficiently familiar with the operation of G. Moss and Associates’ business operations, nor the circumstances surrounding sending the letter of default notice, its maintenance or retrieval. See Tr. p.14-16; 55. Delaware County, Case No. 13CAE030021 22
records exception to the hearsay rule.3 I would sustain Appellants’ first and second
assignments of error.
{¶56} I also respectfully dissent from the majority’s analysis and disposition of
Appellants’ third assignment of error. While I recognize Appellants were not a party to
the assignment of the mortgage, and there may not presently be a dispute between
MERS and U.S. Bank as to whether the mortgage was properly assigned, I find the
validity of the assignment determines who is the proper party to initiate the foreclosure
action. I find the validity of the assignment is clearly relevant to the issue of standing.
While Schwartzwald may have presented a different procedural posture than the case
sub judice, the Supreme Court recognized standing was necessary to commence the
action. Accordingly, because an invalid assignment could directly impact standing, I
find it is a proper subject for challenge by the debtor. Because Defendants’ Exhibit B
was relevant to the validity of the assignment, I find the trial court erred in excluding it.
3 As such, I respectfully disagree with the position taken by the Tenth District Court of Appeals. Delaware County, Case No. 13CAE030021 23