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Quantum Servicing Corp. v. Haugabrook

Court of Appeals of Ohio, Ninth District

August 14, 2013

QUANTUM SERVICING CORP., Appellee
v.
RUSSELL T. HAUGABROOK, JR., et al., Appellant

APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO CASE No. CV 09-01-0521.

EDWARD F. HERMAN, Attorney at Law, for Appellant.

KIMBERLEE S. ROHR, Attorney at Law, for Appellee.

DECISION AND JOURNAL ENTRY

JENNIFER HENSAL, J.

(¶1} Appellant, Russell T. Haugabrook, Jr., appeals from the judgment of the Summit County Court of Common Pleas. This Court reverses and remands this matter to the trial court for the complaint to be dismissed.

I.

(¶2} On September 28, 2006, Haugabrook executed a promissory note for $328, 500.00 in favor of Novastar Mortgage, Inc. for the property located at 480 Preserve Lane in Macedonia, Ohio. The note was secured by a mortgage on the property in favor of Mortgage Electronic Registration Systems, Inc. ("MERS") as a nominee for Novastar.

(¶3} Quantum Servicing Corp. filed a complaint for foreclosure on January 21, 2009. The complaint named as defendants Haugabrook, Jane Doe, the unknown spouse of Haugabrook, and Roberto M. Gaines, who held a mortgage on the subject property in the amount of $18, 250.00. On March 3, 2009, Quantum filed a motion to substitute Real Estate Mortgage Network, Inc. ("REMN") as the party plaintiff. Quantum attached an assignment to the motion that demonstrated Quantum transferred the note and mortgage to REMN on February 10, 2009. On March 4, 2009, the trial court granted Quantum's motion to substitute. REMN subsequently moved for default judgment against all the defendants after none of them filed a responsive pleading to the complaint or otherwise appeared in the action. The trial court granted the motion for default judgment and entered a decree of foreclosure on March 20, 2009. The property was scheduled for sheriffs sale several times, but stayed each time due to bankruptcy filings by Haugabrook.

(¶4} On May 26, 2011, Haugabrook filed a motion to vacate the default judgment and decree of foreclosure. Thereafter, on June 21, 2011, the case was again stayed due to Haugabrook filing bankruptcy. On August 9, 2011, REMN assigned the note and mortgage to Silar Distressed Real Estate Fund-I, LP. Silar obtained an order from the bankruptcy court granting it relief from the automatic stay. On February 15, 2012, REMN filed a motion to substitute Silar as the party plaintiff in the foreclosure action. The trial court granted REMN's motion on February 24, 2012. The trial court issued a judgment entry on June 12, 2012, that denied Haugabrook's motion to vacate.

(¶5} Haugabrook filed a timely notice of appeal, and sets forth one assignment of error for this Court's review.

II.

ASSIGNMENT OF ERROR I
THE TRIAL COURT ABUSED ITS DISCRETION IN NOT GRANTING HOMEOWNER'S MOTION TO VACATE VOID JUDGMENT WHEN FORECLOSING LENDER HAD NO STATUTORY RIGHT TO ENFORCE A PROMISSORY NOTE AND THEREFORE BROUGHT A NON-JUSTICIABLE CLAIM WHICH FAILED TO INVOKE THE COURT'S SUBJECT MATTER JURISDICTION.

(¶6} Haugabrook argues that the trial court erred in denying his motion to vacate as neither Quantum nor Silar proved it was the legal holder of the promissory note. Because neither entity could establish that it was either a holder or a non-holder in possession of the note, according to Haugabrook, the trial court did not have subject ...


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