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Chemical Bank, N.A. v. Krawczyk

Court of Appeals of Ohio, Eighth District

August 22, 2013

CHEMICAL BANK, N.A., PLAINTIFF-APPELLEE
v.
FRANK A. KRAWCZYK, ET AL., DEFENDANTS-APPELLANTS

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-700783.

ATTORNEYS FOR APPELLANT Daniel L. McGookey Lauren McGookey Kathryn M. Eyster McGookey Law Offices, L.L.C.

ATTORNEYS FOR APPELLEE CHEMICAL BANK, N.A. Chris E. Manolis Phillip C. Barragate Ashlyn Heider Shapiro, Van Ess, Phillips & Barragate, L.L.P.

FOR APPELLEE CITIBANK, N.A. Citibank, N.A.

ATTORNEYS FOR APPELLEE UNITED STATES OF AMERICA Steven M. Dertelbach United States Attorney Northern District of Ohio BY: Kent W. Penhallurick Assistant United States Attorney

ATTORNEYS FOR APPELLEE STATE OF OHIO, DEPARTMENT OF TAXATION Mike DeWine Ohio Attorney General BY: Nicole R. Randall Assistant Attorney General.

BEFORE: Stewart, A.J., Boyle, J., and Kilbane, J.

JOURNAL ENTRY AND OPINION

MELODY J. STEWART, A.J.

(¶ 1} Frank Krawczyk appeals from the denial of his motion to vacate a decree of foreclosure entered in favor of Chemical Bank. We affirm the decision of the trial court.

(¶2} On December 14, 1999, Frank Krawczyk purchased a home in North Royalton, Ohio, and entered into a mortgage agreement with Republic Bank, secured by mortgages on a parcel located on West 130th Street in North Royalton, and a parcel located on Bunts Road in Lakewood. Krawczyk also signed an adjustable rate note in the amount of $202, 500 payable to the order of Republic Bank. In April 2007, Chemical Bank bought Republic Bank.

(¶ 3} On August 5, 2009, Chemical Bank filed a complaint in foreclosure, alleging that it was the owner and holder of the promissory note following the July 29, 2009 assignment and transfer of the note from Republic Bank, that Krawczyk was in default of his payment obligations under the note, and that the entire principal of $180, 444.90 plus interest was due. A copy of the July 29, 2009 assignment, which transferred both the mortgage and the promissory note to Chemical Bank, was appended as an exhibit to Chemical Bank's complaint. A copy of the Republic Bank note, with no endorsement, and a copy of the mortgage agreement were also appended to the complaint.

(¶ 4} On December 10, 2009, Chemical Bank filed a motion for summary judgment in which it presented evidence that Krawczyk was in default of paying the loan and that the entire principal was therefore due. Chemical Bank attached copies of the unendorsed note and the July 29, 2009 assignment of the note that was filed with the county prior to the filing of the complaint. Chemical Bank also submitted an affidavit from an officer of its mortgage servicing agent, PHH Mortgage Corporation.

(¶5} On February 25, 2010, the foreclosure magistrate determined that Chemical Bank's motion for summary judgment was properly supported and recommended that the court grant the motion. The trial court adopted this decision on March 25, 2010.

(¶ 6} On May 25, 2010, Krawczyk filed a motion for relief from judgment under Civ.R. 60(B)(5), arguing that Chemical Bank lacked standing because the Republic Bank note was not endorsed, Chemical Bank did not establish that it is the holder of the note and mortgage, and did not establish that it is entitled to enforce the note. Chemical Bank opposed the motion, and the trial court scheduled a hearing for May 4, 2011.[1] At the hearing, Krawczyk argued, in relevant part, that the evidence filed by Chemical Bank was insufficient to establish its standing to file the foreclosure action, and therefore, it was not entitled to summary judgment.

(¶7} On January 4, 2012, the magistrate issued a decision denying the motion for relief from judgment. The magistrate noted:

In this case, the record contains an assignment instrument that was dated and filed to the public record prior to the filing date of the complaint. The terms of the assignment purport to transfer both the note and the mortgage to plaintiff. These are the same facts that were presented in [Deutsche Bank Natl. Trust Co. v.] Gardner [8th Dist. Cuyahoga No. 92916, 2010-Ohio-663]. Further, as in the Gardner case, there is other evidence in the record to support this court's judgment, notably the affidavit submitted with plaintiffs summary judgment motion, which states that plaintiff held the note and mortgage.

(¶ 8} Krawczyk now appeals and assigns as error for our review: The trial court erred in denying Mr. Krawczyk's motion for relief from judgment.

(¶ 9} Krawczyk insists that he is entitled to relief from judgment under Civ.R. 60(B)(5) because Chemical Bank is not the owner of the promissory note and mortgage, is not the holder of the promissory note and mortgage, is not entitled to act on behalf of the owner, and is not the real party in interest. However, Krawczyk's appeal fails for the reasons that follow.

(¶ 10} First, it is clear that Krawczyk is attempting to use a motion for relief from judgment as a substitute for a timely appeal. Furthermore, the trial court was presented with sufficient evidence to demonstrate that Chemical Bank is the real party in interest with standing to foreclose.

(¶ 11} More background on the procedural history of the case helps to highlight the first point. When Chemical Bank filed its complaint against Krawczyk, the bank sued him in his personal capacity and in the capacity of managing trustee of a trust estate. The complaint also named as defendants the state of Ohio Department of Taxation, the United States of America, and Citibank N.A., Trustee. The docket indicates that all defendants were successfully served approximately two weeks later; that the state of Ohio and the United States timely filed answers to the complaint; and that Citibank N.A. and Krawczyk, in either capacity, did not file answers.

(¶ 12} On December 1, 2009, Chemical Bank moved for default judgment on all nonanswering parties: Citibank N.A. and Krawczyk in both capacities. Krawczyk, in his individual capacity filed two separate pleadings on December 7, 2009: a motion to dismiss, and an objection to Chemical Bank's motion for default judgment. The motion to dismiss challenged, among other things, Chemical Bank's standing as the real party in interest in addition to its status as the holder of Krawczyk's promissory note. Krawczyk's objection to the motion for default argued that he submitted a payment that was refused and again challenged Chemical Bank's status as a holder of the note. Krawczyk also stated that he filed an answer to the complaint on September 14, 2009, and that a copy was given to the trial judge.[2] When Chemical Bank moved for summary judgment against Krawczyk on December 10, 2009, the motion was unopposed.

(¶ 13} When the court scheduled a hearing on the motion for default judgment, it held in abeyance the other motions pending before it. After the hearing, the magistrate issued three separate decisions on February 25, 2010. The first decision denied Krawczyk's motion to dismiss, the second granted the bank's motion for summary judgment, and the third granted default against the nonanswering parties (Citibank N.A. and Krawczyk in his capacity as estate trustee). The default did not include Krawczyk individually because the magistrate specifically stated, "DEFAULT HEARING HELD. * * * DEFENDANTS FRANK A. KRAWCZYK, U.S.A., AND STATE OF OHIO DEPT. OF TAXATION FILED ANSWERS. REMAINING DEFENDANTS FAILED TO FILE A RESPONSIVE PLEADING OR APPEAR FOR HEARING."

(¶ 14} On March 1, 2010, Krawczyk moved the court to set aside the default judgment. This motion was denied on March 4, 2010, because default judgment was not entered against Krawczyk. The court adopted the magistrate's decisions by separate order on March 25, 2010, and included Civ.R. 54(B) language that there was "no just cause for delay."

(¶ 15} Krawczyk did not appeal the trial court's March 25 order. Instead, on April 12, 2010, he filed an untimely objection to the magistrate's decision on the bank's motion for summary judgment. The bank filed a reply to Krawczyk's objection, however, the court never addressed the matter because a final order had been entered.

(¶ 16} On May 25, 2010, a notice of appearance of counsel was filed on behalf of Krawczyk in both of his capacities, along with the motion that is the subject of this appeal. As previously noted, the motion challenged the evidence presented by the bank that demonstrated it was entitled to bring this action against Krawczyk and thus challenged the trial court's jurisdiction to decide the matter. These challenges, however, needed to be made by appealing the trial court's March 25, 2010 decision. That decision was a final, appealable order. Having missed the deadline for filing a direct appeal, Krawczyk is attempting to bootstrap the issues raised below via the motion for relief from judgment.

(¶ 17} It is well-established that Civ.R. 60(B) cannot be used as a substitute for an appeal. See Doe v. Trumbull Cty. Children & Family Servs. Bd., 28 Ohio St.3d 128, 502 N.E.2d 605 (1986), paragraph two of the syllabus. Once the trial court rendered summary judgment in favor of Chemical Bank, Krawczyk's recourse was to challenge the trial court's judgment by way of appeal. On this basis alone, the court properly refused to grant relief from judgment. And at the May 4, 2011 hearing on the motion, the magistrate alluded to the same, stating that:

[F]inal judgment was entered on March 25, 2010, by the Court which adopted the magistrate's decision. That adoption order is a final order.
Then we have — the next thing we have of significance on the docket is on April 12, 2010, defendant, Frank Krawczyk, filed an objection to the magistrate's decision to grant summary judgment; and nothing was done with that because a final order had already been put on on February — on March 25, 2010, a couple weeks earlier. So an objection to the magistrate's decision at that point would be meaningless because the Court had already entered a final judgment and defendant's relief from a final judgment is to timely file and appeal. That's the primary form of relief anyway.

(Emphasis added.)

(ΒΆ 18} In spite of the fact that Krawczyk missed the opportunity to appeal the trial court's March 25, 2010 final order, he nonetheless argues that Chemical Bank lacked standing to foreclose against him because the bank did not own the note and the mortgage and was therefore ...


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