Wilmington Savs. Fund Soc. v. Woods

2020 Ohio 4599

• Court: Ohio Court of Appeals
• Decided: September 25, 2020
• Docket: 28730
• Status: Published

Opinion

[Cite as Wilmington Savs. Fund Soc. v. Woods, 2020-Ohio-4599.]

IN THE COURT OF APPEALS OF OHIO SECOND APPELLATE DISTRICT MONTGOMERY COUNTY

WILMINGTON SAVINGS FUND : SOCIETY FSB AS TRUST : : Appellate Case No. 28730 Plaintiff-Appellant : : Trial Court Case No. 2019-CV-2591 v. : : (Civil Appeal from KATHLEEN ANN WOODS, et al. : Common Pleas Court) : Defendants-Appellees :

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OPINION

Rendered on the 25th day of September, 2020.

PHILLIP BARRAGATE, Atty. Reg. No. 0063017, 4805 Montgomery Road, Suite 320, Norwood, Ohio 45212 Attorney for Plaintiff-Appellant

CYNTHIA P. MCNAMEE, Atty. Reg. No. 0056217 and ALEXANDER W. CLOONAN, Atty. Reg. No. 0095690, 2625 Commons Boulevard, Beavercreek, Ohio 45431 Attorneys for Defendants-Appellees

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TUCKER, P.J. -2-

{¶ 1} Plaintiff-appellant, Wilmington Savings Fund Society, FSB, as Trustee of

Stanwich Mortgage Loan Trust A, appeals from the trial court’s judgment of February 7,

2020, in which the court entered summary judgment in favor of Defendants-appellees,

Floyd Oliver Woods, Jr.; Diane Marie Woods; Charles May; Rebecca J. Woods; and

Dennis Gifford.1 Appellant argues that the trial court erred by holding that an equitable

mortgage is not enforceable against the heirs of a deceased mortgagor.

{¶ 2} On review, we find Appellant’s argument to be well taken. The trial court’s

judgment of February 7, 2020, is accordingly reversed, and the case is remanded to the

trial court for further proceedings consistent with this opinion.

I. Facts and Procedural History

{¶ 3} Appellant initiated an action in rem on June 5, 2019, seeking to foreclose on

residential real property in Riverside that formerly was owned by the late Joanna B.

Woods.2 Complaint ¶ 1-6 and Ex. A; Appellees’ Brief 5. In its complaint, Appellant

alleged that Ms. Woods executed a note in the amount of $102,697.31 on or about

February 3, 2000, along with a mortgage to secure repayment of the note. Complaint

¶ 6 and 20-22. The mortgage was never recorded, allegedly “as a result of an error

made at the closing of the loan,” and although a copy of the note was attached to the

complaint, Appellant averred that it was “not able to locate” a copy of the mortgage

“despite diligent efforts.” Id. at ¶ 22-23. Appellant therefore claimed that it had an

1Appellees indicate that Kathleen Ann Woods died on February 10, 2019. Appellees’ Brief 4. 2 Joanna B. Woods died on January 22, 2014. Appellees’ Brief 4; see Appellant’s Brief 3. -3-

equitable mortgage. Id. at ¶ 24.

{¶ 4} On December 2, 2019, Appellees filed a motion for summary judgment,

arguing in relevant part that they were entitled to judgment on the complaint because an

equitable mortgage is enforceable only against the mortgagor and the mortgagee, to the

exclusion of third parties. See Defendants’ Reply to Plaintiff’s Response to Defendants’

Motion for Summary Judgment 3, Jan. 23, 2020. The trial court concurred with

Appellees’ argument and, on that basis, entered judgment in their favor on February 7,

2020. Appellant timely filed its notice of appeal on March 2, 2020.

II. Analysis

{¶ 5} Appellant nominally presents two assignments of error, but because the two

assignments relate to a single question of law, we address them together. For its first

assignment of error, Appellant contends that:

THE TRIAL COURT IMPROPERLY GRANTED THE MOTION FOR

SUMMARY JUDGMENT FILED BY [THE LATE] KATHLEEN ANN

WOODS, ET AL.

And for its second assignment of error, Appellant contends that:

THE TRIAL COURT IMPROPERLY HELD AN EQUITABLE

MORTGAGE IS NOT ENFORCEABLE AGAINST A DECEASED

MORTGAGOR’S HEIRS.

{¶ 6} Appellant argues that Appellees, being the heirs of Joanna B. Woods, are

not third parties with respect to the mortgage that Ms. Woods allegedly executed.

Appellant’s Brief 8-11. As a result, Appellant maintains that Appellees were not entitled

to judgment as a matter of law. See id. -4-

{¶ 7} Under Civ.R. 56, summary judgment is proper only where: (1) a case

presents no genuine dispute as to any material fact; (2) the moving party is entitled to

judgment as a matter of law; and (3) construing the evidence most strongly in favor of the

non-moving party, reasonable minds can reach only one conclusion, which is adverse to

the non-moving party. Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 66, 375

N.E.2d 46 (1978); Dalzell v. Rudy Mosketti, L.L.C., 2d Dist. Clark No. 2015-CA-93, 2016-

Ohio-3197, ¶ 5, citing Zivich v. Mentor Soccer Club, Inc., 82 Ohio St.3d 367, 369-370,

696 N.E.2d 201 (1998). The substantive law of the claim or claims being litigated

determines whether a fact is “material.” Herres v. Millwood Homeowners Assn., Inc., 2d

Dist. Montgomery No. 23552, 2010-Ohio-3533, ¶ 21, citing Hoyt, Inc. v. Gordon &

Assocs., Inc., 104 Ohio App.3d 598, 603, 662 N.E.2d 1088 (8th Dist.1995).

{¶ 8} Initially, the movant bears the burden of establishing the absence of any

genuine dispute of material fact. Mitseff v. Wheeler, 38 Ohio St.3d 112, 115, 526 N.E.2d

798 (1988). The movant may rely only on evidence of the kinds listed in Civ.R. 56(C) for

this purpose. Dalzell at ¶ 5, citing Dresher v. Burt, 75 Ohio St.3d 280, 292-293, 662

N.E.2d 264 (1996). If the movant meets its burden, then the non-moving party bears a

reciprocal burden to establish, as set forth in Civ.R. 56(E), that the case presents one or

more genuine issues of fact to be tried. Id. at ¶ 6. The non-moving party, in satisfying

this requirement, may not rely merely upon the allegations or denials offered in the

pleadings, but like the movant, “must be able to point to evidentiary materials of the type[s]

listed in Civ.R. 56(C).” Dresher at 293, quoting Civ.R. 56(E); Dalzell at ¶ 6. On appeal,

a trial court’s ruling on a motion for summary judgment is reviewed de novo. Dalzell at

¶ 6, citing Schroeder v. Henness, 2d Dist. Miami No. 2012-CA-18, 2013-Ohio-2767, ¶ 42. -5-

{¶ 9} The narrow question presented by this appeal is whether an equitable

mortgage may be enforced against the heirs of a deceased mortgagor. An “equitable

lien may arise from either (1) a written agreement that evidences the intent to make a

particular property a security for a debt or obligation, or (2) through implication by a court

of equity after consideration of right and justice as applied to the relationships of the

parties and the surrounding circumstances.” (Citations omitted.) CitiMortgage, Inc. v.

Brown, 2015-Ohio-5347, 45 N.E.3d 258, ¶ 30 (1st Dist.). Thus, a “defectively executed”

or unrecorded “conveyance of an interest in land is valid as between the parties in the

absence of fraud.” Citizens Nat. Bank in Zanesville v. Denison, 165 Ohio St. 89, 95, 133

N.E.2d 329 (1956); HSBC Bank USA, N.A. v. Ward, 2017-Ohio-7315, 96 N.E.3d 984,

¶ 16 (8th Dist.). Because a mortgage becomes effective against third parties only when

it has been recorded, an unrecorded but properly executed mortgage is “ ‘limited in

application to the parties involved in the transaction.’ ” R.C. 5301.25; Ward at ¶ 16,

quoting In re Gibson, 395 B.R. 49, 57 (Bankr.S.D.Ohio 2008).

{¶ 10} Here, the trial court held that Appellant’s claim to “an equitable mortgage

interest must fail because such interest is [enforceable only against] the parties” to the

underlying conveyance. Decision, Order, and Entry Sustaining Defendants’ Motion for

Summary Judgment 5, Feb. 7, 2020. Although Appellees were not parties to the

mortgage allegedly executed by Joanna Woods, the heirs to an estate “only stand in [the

decedent’s] shoes” and do not inherit “a greater interest in the estate[’s] property than

[the interest that] the decedent possessed during her lifetime.” Gill v. Pinney’s Admr., 12

Ohio St. 38, 46, 1861 WL 3 (1861); Wead v. Lutz, 161 Ohio App.3d 580, 2005-Ohio-2921,

831 N.E.2d 482, ¶ 26 (12th Dist.). Consequently, assuming strictly for sake of analysis -6-

that Ms. Woods did execute a mortgage on her real property in Riverside, Appellees’

interest in the property would have been subject to the same encumbrance, irrespective

of the fact that the alleged mortgage was not recorded.

{¶ 11} Appellees argue to the contrary that “even if Appellant held an equitable

mortgage [that was enforceable] against Ms. Woods, [the] mortgage [was never recorded

and] would not be effective against [them] as heirs of [her] estate.” See Appellees’ Brief

11-12. The “recording of a mortgage,” however, “is no part of its execution, and

[recordation] is, therefore, not necessary to give [a mortgage] validity as against the

mortgagor, or as against [the mortgagor’s] heirs or devisees.” (Emphasis added.) Gill

at 47.

{¶ 12} Appellees also argue that Appellant has failed to prove that Ms. Woods did,

in fact, execute a mortgage, and that Appellant cannot, as a result, “identify any of the

terms which would have been included in the mortgage.” Appellees’ Brief 10. Absent

“a copy of the mortgage,” Appellees insist that “it is impossible for Appellant to enforce

anything.” Id. This argument lacks merit because the trial court did not make any

findings of fact regarding the execution of the alleged mortgage or its terms, but instead,

held essentially that Appellant had failed to state a claim upon which relief could be

granted because Appellees were third parties with respect to the mortgage, if it existed.

See Decision, Order, and Entry Sustaining Defendants’ Motion for Summary Judgment

4-5.

{¶ 13} Whether Appellant can prove that Ms. Woods executed a mortgage, or

establish its material terms, without producing a copy of the document itself is an open

question. We hold only that the trial court erred by determining, as a matter of law, that -7-

Appellant could not enforce an equitable mortgage against Appellees.

{¶ 14} Additionally, Appellant and Appellees offer arguments regarding Appellant’s

failure to present a claim against Ms. Woods’s estate, and Appellees’ invocation of the

doctrine of laches as a defense to Appellant’s complaint. 3 Appellant’s Brief 11-14;

Appellees’ Brief 12-15. These issues, however, are not properly before us because they

are beyond the scope of the judgment on appeal. Appellant’s assignments of error are

sustained.

III. Conclusion

{¶ 15} The trial court erred by ruling that Appellant could not, as a matter of law,

enforce an equitable mortgage against Appellees’ interest in real property in Riverside

formerly owned by the late Joanna B. Woods. Therefore, the trial court’s judgment of

February 7, 2020, is reversed, and the case is remanded to the trial court for further

proceedings consistent with this opinion.

FROELICH, J. and WELBAUM, J., concur.

3 According to Appellees’ recitation of the facts, Joanna Woods’s “probate estate was opened * * * on or around May 8, 2014,” and the probate court transferred her real property to them in a certificate of transfer issued on December 29, 2014. Appellees’ Brief 6. The probate court’s docket indicates that the estate, Case No. 2014 EST 00830, was closed on July 7, 2015. -8-

Copies sent to:

Phillip Barragate Cynthia P. McNamee Alexander W. Cloonan Ohio Department of Medicaid Ohio Department of Taxation United States of America Kathleen Ann Woods Hon. Dennis J. Adkins