[Cite as Wilmington Savings Fund Society v. West, 2019-Ohio-1249.]
COURT OF APPEALS FAIRFIELD COUNTY, OHIO FIFTH APPELLATE DISTRICT
JUDGES: WILMINGTON SAVINGS FUND : Hon. W. Scott Gwin, P.J. SOCIETY, FSB AS TRUSTEE : Hon. Craig R. Baldwin, J. : Hon. Earle E. Wise, J. Substitute : Plaintiff-Appellant : : Case No. 18CA20 -vs- : : SHEILA R. WEST, ET AL : OPINION
Defendants-Appellees
CHARACTER OF PROCEEDING: Civil appeal from the Fairfield County Court of Common Pleas, Case No. 14CV718
JUDGMENT: Affirmed in part; Reversed in part
DATE OF JUDGMENT ENTRY: April 3, 2019
APPEARANCES:
For Substitute Plaintiff-Appellant For Defendant-Appellee
RICK D. DEBLASIS BRUCE M. BROYLES WILLIAM P. LEAAN 2670 North Columbus Street, Suite L Lerner, Sampson & Rothfuss Lancaster, OH 43130 120 East Fourth St. Suite 800 Cincinnati, OH 45202 Fairfield County, Case No. 18CA20 2
Baldwin, J.,
{¶1} Wilmington Savings Fund Society appeals the denial of its motion for
summary judgment and the trial court’s verdict in favor of appellees, dismissing
appellant’s complaint for foreclosure. Appellees are Sheila and David West.
STATEMENT OF FACTS AND THE CASE
{¶2} Appellant holds the note and mortgage on a parcel of property appellees
currently possess. Appellees do not dispute that they filed for bankruptcy protection,
executed an Intent to Surrender the property as part of the bankruptcy proceedings and
have not made payments due under the terms of the mortgage and note. Appellant filed
an action to foreclose the mortgage and appellees responded. The trial court dismissed
appellant’s motion for summary judgment and, after a bench trial, dismissed the
complaint, concluding that appellant had failed to establish that it had complied with the
notice provisions of 24 C.F.R. 203.604. Appellant argues it fulfilled the requirements of
the Regulation and that appellees were estopped from objecting to the foreclosure after
executing an intent to surrender the property in bankruptcy court and that, therefore, the
court’s ruling on the motion for summary judgment and dismissal of the complaint were
erroneous.
{¶3} Appellant’s predecessor in interest loaned appellees $200,740.00 toward the
re-finance of a parcel of property and, in exchange, appellees executed a note promising
repayment and signed a mortgage securing their promise with the purchased property.
Appellees experienced financial problems and filed for bankruptcy protection. During the
bankruptcy proceeding appellees executed and filed a Notice of Intent to Surrender the Fairfield County, Case No. 18CA20 3
property that was the subject of the mortgage and the Bankruptcy Trustee abandoned the
property. The appellees’ debts were discharged.
{¶4} The loan to appellees was insured by HUD so it was subject to various
federal regulations, including the notice requirements of 24 C.F.R. 203.604. Pursuant to
the Regulation, appellant sent a letter to appellees via certified mail offering a face to face
meeting regarding the delinquent mortgage and sent a representative to the property to
arrange such a meeting. Appellees did not respond to the letter and though the agent
who visited the premises taped a notice to the door requesting contact from the appellees,
they did not contact appellant.
{¶5} Appellant filed a complaint for foreclosure in October 2014 and appellees
filed an answer and counterclaim. Appellant filed a motion for summary judgment and
appellees responded, arguing that appellant failed to comply with 24 C.F.R. 203.604
because the attempt to arrange a face to face meeting did not occur before three full
monthly installments due on the mortgage were unpaid. Appellees contended timing was
mandatory and a condition precedent to filing the complaint and that appellant’s failure to
fulfill this obligation within the time frame described in the Regulations was fatal to its
case.
{¶6} The trial court arrived at a similar conclusion to deny the motion for summary
judgment, focusing on the date the note was accelerated. The trial court held that:
There is no dispute by the parties that certain conditions must be satisfied before
a loan can be accelerated pursuant to HUD regulations, to wit, there must be a
face-to-face meeting—or if such a meeting is not held, a reasonable effort must be Fairfield County, Case No. 18CA20 4
made—and efforts at loss mitigation. Therefore, the Court must consider when the
loan was accelerated.
Entry Denying Motion for Summary Judgment, Nov. 23, 2015, p.4-5, Docket #
{¶7} The trial court found that the affidavit offered by appellant did not clearly
identify the date the appellant “accelerated the default” and that the affiant “used language
that could support Defendants' assertion that the default was accelerated prior to Plaintiff
complying with all conditions precedent.” Id. The trial court held that: “[b]ecause
reasonable minds cannot come to but one conclusion and genuine issues of material fact
remain as to when the loan was accelerated, the Court hereby OVERRULES(sic)
Plaintiff’s Motion for Summary Judgment.” Id.
{¶8} A bench trial was conducted during which appellant provided testimony
regarding the execution of the note, delivery of notices pursuant to 24 C.F.R. 203.604
and lack of response from appellees. Appellant further provided testimony regarding the
assignment of the note, confirmed possession of the note and details regarding the
delinquency. Appellees provided no evidence, but did argue that the requirements of 24
C.F.R. 203.604 remained unfulfilled.
{¶9} The trial court issued an entry, holding that:
Upon review of the evidence, testimony, and the arguments of the parties
the Court finds Plaintiff has carried its burden with respect to demonstrating
its standing to pursue foreclosure as the holder of the Note and Mortgage
in question. Further, the Court finds that the loan is past due and in default
from the November 2011 installment to present, with an interest rate of Fairfield County, Case No. 18CA20 5
6.25% plus other fees and advances, from October 1, 2011, on a loan
balance of $182,472.88.
Trial Court Verdict, Apr. 27, 2015, p.4, Docket # 52
{¶10} After finding for appellant on several issues, the trial court dismissed the
complaint, finding that that appellant “did not make reasonable efforts to contact
[appellees] to arrange a face-to-face meeting or visit [appellees] at the Property before
three full monthly installments due on the mortgage went unpaid” and that, therefor,
appellant did not fulfill a condition precedent to accelerating the balance of the loan and
initiating foreclosure proceedings. Id, at 6-7
{¶11} The trial court also held that the appellees’ compliance with the Notice of
Intent to Surrender that they had filed was an issue for the U.S. Bankruptcy Court. The
trial court declined to address that matter.
{¶12} The appellant had also requested in its complaint a reformation of the
property’s legal description due to what it described as a scrivener’s error. The trial court
held that appellant waived its claim because no testimony or evidence was presented on
this issue at trial.
{¶13} Appellant filed a timely notice of appeal and submitted three assignments of
error:
I. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS DECISION
DENYING CITIMORTGAGE'S(SIC)1 MOTION FOR SUMMARY JUDGMENT.
1 CitiMortgage, the original plaintiff, assigned the note to Wilmington Savings Fund Society, FSB and requested that Wilmington Savings Fund Society be substituted as the plaintiff while this matter was pending in the trial court. The trial court granted that request in its order of August 9, 2017, Docket # 33. Fairfield County, Case No. 18CA20 6
II. THE TRIAL COURT ERRED AS A MATTER OF LAW BY ENTERING
JUDGMENT FOR APPELLEES ON APPELLANT'S FORECLOSURE AND
REFORMATION CLAIMS.
III. THE TRIAL COURT ERRED AS A MATTER OF LAW BY ENTERING
JUDGMENT FOR APPELLEES WITH PREJUDICE; ANY DISMISSAL OF
APPELLANT'S FORECLOSURE CLAIM SHOULD HAVE BEEN WITHOUT PREJUDICE.
SUMMARY JUDGMENT
{¶14} Summary judgment proceedings present the appellate court with the unique
opportunity of reviewing the evidence in the same manner as the trial court. Smiddy v.
Wedding Party, Inc., 30 Ohio St.3d 35, 36, 506 N.E.2d 212 (1987).
{¶15} Civ.R. 56 provides summary judgment may be granted only after the trial
court determines:
1) no genuine issues as to any material fact remain to be litigated; 2) the moving
party is entitled to judgment as a matter of law; and 3) it appears *770 from the
evidence that reasonable minds can come to but one conclusion and viewing such
evidence most strongly in favor of the party against whom the motion for summary
judgment is made, that conclusion is adverse to that party.
Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).
{¶16} It is well established the party seeking summary judgment bears the burden
of demonstrating that no issues of material fact exist for trial. Celotex Corp. v. Catrett, 477
U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A dispute of fact is “material” if it
affects the outcome of the litigation, and is “genuine” if demonstrated by substantial
evidence going beyond the allegations of the complaint. Burkes v. Stidham, 107 Ohio Fairfield County, Case No. 18CA20 7
App.3d 363, 371, 668 N.E.2d 982 (8th Dist.1995), Myers v. Jamar Enterprises, 12th Dist.
Clermont No. CA2001-06-056, 2001 WL 1567352, *2 (Dec. 10, 2001).
{¶17} The record on summary judgment must be viewed in the light most favorable
to the opposing party. Williams v. First United Church of Christ, 37 Ohio St.2d 150, 151-
152, 309 N.E.2d 924 (1974).
ANALYSIS
{¶18} The interpretation of 24 C.F.R. 203.604 and its application to the facts are
the central issues in this case. The relevant facts are not in dispute, but the proper
interpretation of the Regulation with the focus upon the time limit contained therein
remains a point of contention. The Regulation directs appellants to send a notice and
complete a visit to the subject premises before three full monthly payments are
delinquent, but neither that section nor any other related section describes the
consequence of missing that deadline. The trial court has interpreted the timing to
comprise a mandatory condition precedent which remained unfulfilled when the
foreclosure complaint was filed. Because this issue is critical to the resolution of the
parties’ arguments we will complete our analysis of 24 C.F.R. 203.604 before we consider
the assignments of error.
{¶19} Appellees asserted in their answer that appellant failed to comply with HUD
regulations before initiating foreclosure proceedings on the property. The mortgage loan
that is the subject of this cause of action is federally insured and is subject to HUD
regulations. The regulations applicable to federally insured mortgages are found in Part
203, Title 24, C.F.R. for Single-Family Mortgage Insurance. Fairfield County, Case No. 18CA20 8
{¶20} Pursuant to the Regulations, if the account in is default, the mortgagee is
required to give notice to the mortgagor:
“The mortgagee shall give notice to each mortgagor in default on a form
supplied by the Secretary or, if the mortgagee wishes to use its own form,
on a form approved by the Secretary, no later than the end of the second
month of any delinquency in payments under the mortgage. If an account
is reinstated and again becomes delinquent, the delinquency notice shall
be sent to the mortgagor again, except that the mortgagee is not required
to send a second delinquency notice to the same mortgagor more often
than once each six months. The mortgagee may issue additional or more
frequent notices of delinquency at its option.”
24 C.F.R. 203.602
{¶21} If the account is delinquent after the end of the second month, 24 C.F.R.
203.604(b) requires the following:
(b) The mortgagee must have a face-to-face interview with the mortgagor,
or make a reasonable effort to arrange such a meeting, before three full
monthly installments due on the mortgage are unpaid. If default occurs in a
repayment plan arranged other than during a personal interview, the
mortgagee must have a face-to-face meeting with the mortgagor, or make
a reasonable attempt to arrange such a meeting within 30 days after such
default and at least 30 days before foreclosure is commenced, or at least
30 days before assignment is requested if the mortgage is insured on
Hawaiian home land pursuant to section 247 or Indian land pursuant to Fairfield County, Case No. 18CA20 9
section 248 or if assignment is requested under § 203.350(d) for mortgages
authorized by section 203(q) of the National Housing Act.
(c) A face-to-face meeting is not required if:
***
(5) A reasonable effort to arrange a meeting is unsuccessful.
(d) A reasonable effort to arrange a face-to-face meeting with the
mortgagor shall consist at a minimum of one letter sent to the mortgagor
certified by the Postal Service as having been dispatched. Such a
reasonable effort to arrange a face-to-face meeting shall also include at
least one trip to see the mortgagor at the mortgaged property, unless the
mortgaged property is more than 200 miles from the mortgagee, its servicer,
or a branch office of either, or it is known that the mortgagor is not residing
in the mortgaged property.
{¶22} We have had an opportunity to address a similar situation, and we have held
that appellant “must also establish that it sufficiently complied with Section 203.604, Title
24, C.F.R. as a condition precedent to foreclosure. See Washington Mut. Bank v.
Mahaffey, 154 Ohio App.3d 44, 2003-Ohio-4422, 796 N.E.2d 39 (Second District Court
of Appeals found that mortgagee was not entitled to summary judgment when it failed to
establish that it sufficiently complied with Section 203.604, Title 24, C.F.R.).” U.S. Bank,
N.A. v. Detweiler, 191 Ohio App.3d 464, 2010-Ohio-6408, 946 N.E.2d 777, ¶ 56 (5th Dist.)
(emphasis added).
{¶23} In the case at bar there is uncontroverted evidence that, prior to filing the
foreclosure complaint, the appellant sent a letter to appellees via certified mail and sent Fairfield County, Case No. 18CA20 10
a representative to the premises, both with the expressed intent to arrange a face to face
meeting in compliance with the obligations imposed by the Code of Federal Regulations.
Appellant did not send the letter and did not complete the visit to the premises before
three full payments were delinquent. In Detweiler we found “that it [was] clear that
appellee made no attempt to establish that it complied with the regulation that it have a
face-to-face interview with the mortgagor, or made a reasonable effort to arrange the
interview, before bringing the foreclosure action, Detweiler, supra, ¶ 56, but we did not
address the consequences of complying with the requirements after three full monthly
installments due on the mortgage were unpaid. The courts that have had the opportunity
to address this issue have determined that the obligation to conduct a face to face
meeting, or a reasonable attempt to do so is mandatory, but the requirement that the
meeting or the attempt occur before three full monthly payments are due is aspirational.
{¶24} The Seventh District Court of Appeals described the mandatory/aspirational
dichotomy of 24 C.F.R. 203.604:
Under our reading of the regulations, the specific time deadlines referenced
by the court are aspirational, whereas the obligation to perform those
conditions (i.e., the requirement to actually have a face-to-face meeting,
absent one of the stated exceptions), is mandatory. For example, if a bank
commences a foreclosure action at the earliest possible time, the day after
the third payment is missed, the bank's failure to have the face-to-face
meeting within the first three months of default, would, absent one of the
exceptions, bar the bank from filing the foreclosure action. On the other
hand, if the bank waited until the borrower missed six payments, for Fairfield County, Case No. 18CA20 11
example, the bank's failure to have the face-to-face meeting within the first
three months of default, would not bar the foreclosure action, as long as the
bank held the meeting sometime before filing the action; e.g. in the fourth
or fifth month.
PNC Mtge. v. Garland, 7th Dist. Mahoning No. 12 MA 222, 2014-Ohio-1173, ¶ 30.
{¶25} That court recently confirmed its holding that the meeting or attempt to meet
must occur before the filing of foreclosure, but otherwise the timing of the meeting is not
a condition precedent. RBS Citizens NA v. Sharp, 7th Dist. Mahoning No. 17 MA 0059,
2018-Ohio-2480, ¶ 17, appeal not allowed, 153 Ohio St.3d 1504, 2018-Ohio-4285, 109
N.E.3d 1260, ¶ 17. See Also Bank of Am. v. Bobovyik, 7th Dist. Columbiana No. 13 CO
54, 2014-Ohio-5499, ¶¶ 38-39.
{¶26} The Ninth District came to the same conclusion in Huntington Natl. Bank v.
Anderson, 9th Dist. Lorain No. 17CA011223, 2018-Ohio-3936, ¶¶ 30-31, when it reversed
the trial court’s decision that Huntington “failed to have a face-to-face interview with the
mortgagor, or make a reasonable effort to arrange such a meeting, before three full
monthly installments due on the mortgage went unpaid.” Id. at ¶ 12. The court relied upon
the Seventh District as well as a holding from the Second District.
{¶27} The Second District examined the application of this Regulation and
concluded:
A commonsense construction of the regulation is that it requires, subject to
the exceptions contained in division (c)(2), that a lender either have a face-
to-face interview or make a reasonable effort to arrange the interview before
bringing a foreclosure action, and that the mortgagee is urged, by the Fairfield County, Case No. 18CA20 12
regulation, to have the interview, or to make a reasonable effort to arrange
the interview, within the three-month default period.
Washington Mut. Bank v. Mahaffey, 154 Ohio App.3d 44, 2003-Ohio-4422, 796 N.E.2d
39, ¶ 22.
{¶28} The Second District later confirmed the requirement that the lender act
before three full monthly payments on the mortgage were unpaid was aspirational as a
strict reading would be unduly hard and inequitable. Wells Fargo Bank, N.A. v. Goebel,
2nd Dist. No. 25745, 2014-Ohio-472, 6 N.E.3d 1220, fn 4.
{¶29} The Tenth District has examined this issue as well. In Wells Fargo Bank, NA
v. Burd, 10th Dist. Franklin No. 15AP-1044, 2016-Ohio-7706 the court considered other
holdings finding the three payment deadline aspirational, but found those cases
distinguishable because “[t]his is not a case where, as theorized in Garland, a bank holds
a face-to-face meeting a few months after a third payment is missed but prior to filing
foreclosure. Rather, in this case, Wells Fargo and Burd participated in a court-sponsored
mediation session after a foreclosure proceeding had been initiated. Outside of that court-
sponsored mediation, Wells Fargo made no other attempt to comply with the
requirements of 24 C.F.R. 203.604(b).” Id at ¶24.
{¶30} The Tenth District more directly considered the timing in U.S. Bank Natl.
Assn. v. Cavanaugh, 10th Dist. Franklin No. 18AP-358, 2018-Ohio-5365, when the
appellants “contended that U.S. Bank could not foreclose because it had not satisfied the
requirement in 24 C.F.R. 203.604(b) that a lender have a face-to-face meeting with the
borrower, or attempt to arrange such a meeting, before three full monthly installments
due on the mortgage are unpaid.” Id, at ¶ 7. After noting that the appellant failed to raise Fairfield County, Case No. 18CA20 13
this as an affirmative defense in the court below, the appellate court noted that the issue
of whether the timing was an affirmative defense or a condition precedent would not
impact the outcome because the timing was aspirational.
Significantly, Burd did not hold that a lender is barred from seeking foreclosure if it
fails to appropriately act within the time period specified in 24 C.F.R. 203.604(b).
Thus, contrary to the Cavanaughs' assertion, Burd does not dictate the result in
this case. We, instead, follow the other Ohio courts that have addressed this issue
and conclude that a lender complies with 24 C.F.R. 203.604(b) if it conducts a
face-to-face meeting, or it makes reasonable efforts to arrange a face-to-face
meeting, prior to filing for foreclosure. Here, U.S. Bank made the mandated efforts
to arrange a face-to-face meeting before it commenced its action against the
Cavanaughs for foreclosure. We, therefore, conclude that no genuine issue of
material fact regarding U.S. Bank's compliance with 24 C.F.R. 203.604(b) remains
for resolution.”
Id at ¶ 32.
{¶31} The purpose of the part of the Code of Federal Regulations and related
sections is to provide support for borrower housing counseling and an alternative to
foreclosure to qualified mortgagors. 12 U.S.C.A. 1715u; Bagley v. Wells Fargo Bank,
N.A., E.D. Virginia, Civil Action No. 3:12–CV–617, 2013 WL 350527, *5 (Jan. 29, 2013);
Ferrell v. Pierce, 785 F.2d 1372 (7th Cir. 1986). With that purpose in mind and
considering the analysis of our colleagues, we hold that the appellant was obligated to
send a letter via certified mail and visit the property to arrange a face to face meeting prior
to the filing foreclosure action. The time-frame described in CFR 203.604 is aspirational, Fairfield County, Case No. 18CA20 14
not mandatory. The fact that the certified letter and the visit to the property occurred after
the third full monthly payment was unpaid will not serve to bar the foreclosure actions.
We agree that “[i]t seems inconceivable that the HUD regulations, promulgated in respect
to the federal agency's role as an insurer of mortgages, were intended to create a
permanent and impenetrable barrier to foreclosing on the property of a borrower who has
not made a mortgage payment for more than eight years. US Bank Nat. Ass'n v. McMullin,
55 Misc.3d 1053, 1062–63, 47 N.Y.S.3d 882, 889–90 (N.Y. Sup. Ct.2017).
{¶32} With that conclusion in mind, we move to consideration of appellant’s
assignments of error.
{¶33} In its first assignment of error, appellant contends that the trial court erred as
a matter of law by denying its motion for summary judgment. As noted above, our
standard of review for summary judgment is de novo.
{¶34} Appellant sought summary judgment to foreclose the mortgage and
reformation of the deed to correct an error in the description of the property. In support
of its motion, appellant offered the affidavit of Erica Bardua, employed by CitiMortgage as
Vice President-Document Control.
{¶35} Ms. Bardua established her competency by identifying herself as employed
by CitiMortgage as Vice President, Document Control, and confirmed her statements in
the affidavit were based upon her personal knowledge. The nature of the facts in the
affidavit combined with the identity of the affiant creates a reasonable inference that Ms.
Bardua has personal knowledge of the facts in the affidavit. PNC Bank, N.A. v. Price, 5th
Dist. Morgan No. 15AP0015, 2016-Ohio-2887, 64 N.E.3d 402. Fairfield County, Case No. 18CA20 15
{¶36} Ms. Bardua stated that CitiMortgage was in possession of the original
promissory note. She confirmed that a true and accurate copy of the Note with any
applicable endorsements, the Mortgage with any applicable Assignments, Collection
Notes, Acceleration Letter, Face to Face invite, Face to Face Attempt Field Notes, Face
to Face Letter and Payment History as they appear in CitiMortgage, Inc.'s business
records are attached to the affidavit. The affidavit is properly notarized.
{¶37} Ms. Bardua described the records attached to her affidavit as business
records kept in the regular course of business, stated that she is familiar with and has
access to the records, and that the records were made or maintained in the regular and
usual course of business. She also confirmed the records were made at or near the time
by, or from information from, a person with knowledge of the transactions. Ms. Bardua
also provided sufficient evidence to demonstrate that the appellees were in default, that
all conditions precedent had been satisfied and she stated the amount of principal and
interest due. Consequently, the affidavit and the attached documents are adequate to
satisfy the requirements for issuing a summary judgment in the context of a foreclosure
action, Wachovia Bank of Delaware, N.A. v. Jackson, 5th Dist. Stark No. 2010-CA-00291,
2011-Ohio-3203, and the burden shifts to appellees to demonstrate a material fact
remains for trial. Appellees “may not rest upon the mere allegations or denials of his
pleadings, but [their] response, by affidavit or as otherwise provided in this rule, must set
forth specific facts showing that there is a genuine issue for trial.” Dresher, supra.
{¶38} Appellees responded by attacking Ms. Bardua’s affidavit and contending
there was insufficient evidence that the appellant fulfilled the conditions precedent to
acceleration of the note and foreclosure. Appellees did not submit any evidence, but Fairfield County, Case No. 18CA20 16
relied upon their argument that appellant’s evidence fell short of fulfilling the requirements
for granting summary judgment.
{¶39} We disagree with appellees’ argument that Ms. Bardua was unable to
determine who possesses the original note, that her affidavit suffers from an internal
inconsistency and that she failed to “attach the business records upon which she relied
in order to state that CitiMortgage, Inc. possesses the original note. She stated that
“CitiMortgage, Inc., or its authorized agent, is in possession of the original Note endorsed
in blank, and is the current mortgagee under the Mortgage.” We conclude possession by
the appellant or its agent would satisfy the requirement of Wachovia, supra that the
appellant is the holder of the note and our ruling in Wachovia contains no requirement
that affiant attach documentation in support of a conclusion that appellant is the holder of
the note.
{¶40} Appellees further contend that Ms. Bardua’s affidavit is similar to the
affidavits in Bank of Am., N.A. v. Loya, 9th Dist. Summit No. 26973, 2014-Ohio-2750 and
Wachovia, supra, but we find distinct differences. In Loya the affidavits were “based on
their review of the business records attached to those affidavits. The only item attached
to Ms. Bradley's affidavit was an account information statement.” Loya, at ¶ 13. The items
attached to the affidavit did not provide any information regarding possession of the note.
Ms. Bardua’s affidavit was based upon “[her] review of those records relating to the
Borrower's loan and from [her] own personal knowledge of how they are kept and
maintained” and was not limited to the documents attached to the affidavit.
{¶41} The affidavit in Wachovia was rife with defects that are not present in Ms.
Bardua’s affidavit. Wachovia, supra ¶ 28. Ms. Bardua’s affidavit identifies much more Fairfield County, Case No. 18CA20 17
than the mortgage and the note as accurate copies of the originals, and includes
documents that support her conclusions. She does identify the account as a business
record, kept in the regular course of business, and states the records were compiled at
or near the occurrence of each event by persons with knowledge of said events, unlike
the affidavit in Wachovia. She identifies herself as vice-president of document control at
CitiMortgage and asserts she has personal knowledge of all the facts contained in her
affidavit, and not merely an assistant secretary with questionable access to records.
{¶42} We hold that Ms. Bardua’s affidavit satisfied the requirements of Wachovia
and that appellees’ criticisms of the format and the content are not well taken.
{¶43} Appellees next challenge the legal sufficiency of the information provided by
the affidavit, arguing that appellant failed to demonstrate fulfillment of the requirements
of 24 C.F.R. 203.604, focusing on the timing requirement that we previously addressed.
{¶44} Appellees begin their argument by asserting that the loan was accelerated
on January 25, 2013 based upon the language in Exhibit F attached to the Bardua
affidavit. That document contains a reference to acceleration, but does not support the
conclusion that the appellant had accelerated the payment due date of the loan. The
document warns that “[f]ailure to cure the default by 01/25/13 may result in the
acceleration of all sums due under the Security Instrument”(emphasis added) but it does
not state with certainty that the entire unpaid balance will become due on that date. The
balance of appellees’ argument is based upon this misinterpretation of Exhibit F and we
therefor find it unpersuasive.
{¶45} Based upon the materials in the record, the acceleration of all sums due
under the note did not occur until the complaint was filed on October 14, 2014. Nixon v. Fairfield County, Case No. 18CA20 18
Buckeye Bldg. & Loan Co., 18 Ohio Law Abs. 261, 263 (2nd Dist.1934); See Also In re
Land, 14 B.R. 132, 133 (Bankr. N.D. Ohio 1981). We found above that the timing
described in 24 C.F.R. 203.604 was aspirational and that this Regulation is satisfied when
the notice is sent and the premises visit is completed prior to the filing of the complaint.
Consequently, appellees’ contention that appellant failed to fulfill the requirements of the
Regulation regarding the face to face meeting must fail as both the letter and the visit to
the premises occurred prior to the acceleration of the note and the filing of the foreclosure.
Exhibit G, the certified mail letter to appellees asking for a face-to-face meeting was sent
on June 30, 2014 and the visit to the premises to arrange a face to face meeting occurred
on July 2, 2014 per Exhibits I and J. Both tasks were completed prior to the filing of the
complaint in October 2014.
{¶46} Appellees’ argument opposing summary judgment next cites to Wells Fargo
Bank, N.A. v. Aey, 7th Dist. Mahoning No. 12 MA 178, 2013-Ohio-5381 contending that
appellant was obligated to consider appellees for loss mitigation prior to filing foreclosure.
We find that case distinguishable as the borrowers therein filed opposing affidavits in
which they “stated that they were in the loan modification process at the time the
complaint was filed, they provided the bank with all documents requested, but the bank
said the documents were missing, had been lost, or had become outdated.” Id at p. 8.
The appellees in the case at bar provided no affidavit or any admissible evidence to
establish that they were likewise in the midst of the loan modification process. They have
not contended that they responded to any of the correspondence they received from the
appellant, that they requested further consideration from the appellant or that they
attempted to contact the appellant. The appellees’ also provide no explanation regarding Fairfield County, Case No. 18CA20 19
how appellant would complete a loss mitigation evaluation of appellees when they failed
to contact appellant either on their own volition or in response to appellant’s
correspondence. We disagree with appellees contention that appellant’s completion of a
loss mitigation evaluation is a condition precedent to acceleration and foreclosure in this
{¶47} Appellees did not oppose or otherwise respond to that part of appellant’s
motion for summary judgment seeking a reformation of the property description.
{¶48} The trial court reviewed the facts and concluded there was a question of
material fact left for trial because Ms. Bardua’s affidavit did not state when the appellant
had accelerated the date the amount under the note was due. Because that fact remained
unknown, the trial court concluded that it was unable to determine if the required notice
under 24 C.F.R. 203.604 had been timely issued and, therefore, summary judgment was
inappropriate. The trial court did not address that portion of the motion for summary
judgment requesting reformation of the deed.
{¶49} With regard to the issue of foreclosure, we hold that the trial court erred by
failing to grant appellant’s motion for summary judgment. We have concluded above that
the affidavit and attachments submitted by Ms. Bardua fulfills the requirements we
outlined in Wachovia. The trial courts holding that Ms. Bardua’s affidavit contains no
information regarding the acceleration of the affidavit overlooks the fact that the due date
of the note was accelerated by the filing of the complaint on October 14, 2014 and the
record contains no other evidence to suggest the debt was accelerated at an earlier time.
Nothing within the note or mortgage contains a requirement of prior notice of acceleration
and no party has cited to any legal authority that would require such notice. The relevant Fairfield County, Case No. 18CA20 20
precedent regarding the 24 C.F.R. 203.604 requirements that the appellant conduct a
face to face meeting requires the sending of a letter and a personal visit prior to filing
foreclosure. In this case, the requirements were satisfied prior to acceleration and the
filing of the foreclosure as they occurred simultaneously upon the filing of the complaint.
We conclude that the holding that the date of acceleration was unknown and thus a
question of material fact preventing summary judgment was erroneous.
{¶50} The appellant contends that its request for summary judgment on the issue
of reformation was also wrongly denied. “Reformation is an equitable remedy that allows
a court to change the language in a contract where the parties' true intentions have not
been expressed due to a ‘mutual mistake’—meaning a common mistake by all the parties
to the contract. * * * The party wishing to reform the [agreement] must demonstrate the
‘mutual mistake’ by clear and convincing evidence. Clear and convincing evidence is the
degree of proof necessary ‘to produce in the mind of the trier of facts a firm belief or
conviction as to the facts sought to be established.’ ” (Citations omitted.) Huber v. Knock,
1st Dist. Hamilton No. C–080071, 2008-Ohio-5900 ¶ 6 as quoted in Huntington Natl. Bank
v. Betteley, 11th Dist. Lake No. 2015-L-057, 2015-Ohio-5067 ¶ 24.
{¶51} In the case at bar appellant asserts that “as a result of scrivener’s error and
mutual mistake of fact between the parties thereto, the mortgage executed by the
[appellees] and delivered by them to the [appellant] contained an incorrect legal
description. (Complaint, paragraph 10.) Appellant concludes in the complaint that
because the mistakes were the result of scrivener’s error and a mutual mistake of fact
between the parties, they are entitled to have the above described mortgage reformed so
as to have the appropriate legal description rewritten. In paragraph 5 of the complaint Fairfield County, Case No. 18CA20 21
appellants referred to Exhibit C as containing the correct legal description. Appellees
denied the allegations in paragraphs 5, 10 and 11, putting the facts regarding the alleged
error at issue.
{¶52} “[S]ummary judgment is not proper on the pleadings alone where the
nonmoving party's answer denies material allegations of fact raised in the complaint.”
Pacific Finance Loans v. Goodwin, 41 Ohio App.2d 141, 142, 324 N.E.2d 578 (8th
Dist.1974). Appellees’ answer denies material factual allegations of the complaint
regarding the nature and existence of the error in the property description in the mortgage,
obligating appellant to produce evidence regarding the same in support of its motion.
Help Children, Bay View Fire Fighters Ass'n v. Dept. of Liquor Control, 10th Dist. Franklin
No. 95APE06-802, 1996 WL 11280, *2–3. (Jan. 11, 1996). Appellant argued the law
regarding reformation and referred to its allegation that the property description in the
mortgage is incorrect due to mutual mistake, but it does not identify the mistake and does
not include any evidence admissible under Civ.R. 56 in support of the error. No affidavit
identifies Exhibit C as the correct property description. Neither that exhibit nor any other
document that corroborates the error is identified by appellant in its motion for summary
judgment.
{¶53} Under the circumstances we find that summary judgment on the issue of
reformation of the mortgage would not be appropriate as we cannot find there was clear
and convincing evidence of an error or the correct information and we find that a genuine
issue of fact remained to be decided.
{¶54} The appellant’s first assignment of error is granted regarding the issue of
default and foreclosure, but denied with regard to the reformation of the deed. Fairfield County, Case No. 18CA20 22
{¶55} In its second assignment of error, appellant argues that the trial court erred
as a matter of law by entering judgment for appellees on appellant's foreclosure and
reformation claims. Because we have held granted appellant’s first assignment of error
with regard to its foreclosure claims, the portion of the assignment regarding foreclosure
is now moot and will not be considered.
{¶56} The trial court concluded that appellant had waived its claim for reformation
as it presented no evidence at trial supporting its contention of a mutual mistake, the
nature of the error or the necessary correction. While our standard of review regarding
interpretation of law is de novo, “insofar as factual issues must be determined by the trial
court as a predicate to resolving [legal questions], such factual determinations should be
accorded deference.” Aljaberi v. Neurocare Ctr., Inc., 5th Dist. No. 2017 CA 00176, 2018-
Ohio-1800, ¶ 18. Consequently, we must first consider the trial court’s factual findings.
{¶57} Appellant insists, in conclusory terms, that it is entitled to reformation based
upon Exhibit C to the complaint and the Preliminary Judicial Report. Appellant does not
cite any portion of the record where these exhibits were submitted as evidence or where
the appellant offered any testimony or other evidence in support of its argument. We
have reviewed the trial transcript and though it contains several exhibits, appellant offered
no testimony or exhibit in support of reformation. No party mentioned reformation during
trial and reformation was not argued by appellant in its post-trial brief. Under the
circumstances we cannot conclude that the trial court abused its discretion by dismissing
the appellant’s claim for reformation. Fairfield County, Case No. 18CA20 23
{¶58} The appellant’s second assignment of error is denied to the extent it
addresses the claim of reformation. The balance of the argument in that assignment was
rendered moot by our decision in the first assignment.
{¶59} In its third assignment of error, appellant contends that the trial court erred
as a matter of law by entering judgment for appellees with prejudice and that any
dismissal of appellant's foreclosure claim should have been without prejudice. As this
assignment of error is limited to the judgment regarding foreclosure, we find that it is
rendered moot by our decision in the first assignment of error.
{¶60} The decision of the Fairfield County Court of Common Pleas is affirmed in
part and reversed in part. That part of assignments of error one and two addressing the
claim for reformation of the deed is affirmed as summary judgment was not warranted
and the trial court did not abuse its discretion by finding against appellant for lack of
evidence. That part of the first assignment of error addressing default and foreclosure is
granted and the judgment of the trial court in that regard as well as its verdict regarding
default and foreclosure is vacated and the trial court ordered to grant summary judgment
on those issues in favor of appellant. The third assignment of error is moot. Fairfield County, Case No. 18CA20 24
{¶61} This matter is remanded to the trial court for further proceedings consistent
with this opinion and judgment.
By: Baldwin, J.,
Gwin, P.J., and
Wise, Earle, J., concur