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Bridge v. Ocwen Federal Bank, FSB

United States District Court, Sixth Circuit

September 6, 2013

LISA BRIDGE, et. al, Plaintiffs,
v.
OCWEN FEDERAL BANK, FSB, et. al., Defendants.

MEMORANDUM OPINION AND ORDER RE MOTION TO STRIKE

DAVID D. DOWD, Jr., District Judge.

Before the Court is plaintiffs' Motion to Strike Paragraphs 4, 7, 8, 9, 14, 20 and 22 of the Affidavit of Crystal Kearse (ECF 213-1). (ECF 220). Deutsche Bank responded to motion. (ECF 222). In its Reply Brief to Deutsche's Motion for Summary Judgment, plaintiffs again argued that evidence introduced by a servicer's affidavit is insufficient (ECF 223), so the Court will respond to that argument in this memorandum opinion.

For the reasons set forth below, the Court DENIES the Motion to Strike as to paragraphs 4, 7, 8, 9, 20 and 22 of the Affidavit of Crystal Kearse, and does not rule on plaintiffs' motion as to paragraph 14.

A. The Affidavit of a Servicer is Competent Evidence to Support Foreclosure by a Noteholder

In their motion to strike, plaintiffs argued that since Ocwen has no claim to payment in its own right, an affidavit by an Ocwen employee could not provide the requisite foundation for Deutsche's foreclosure-that only Deutsche Bank or its agent could do so.[1] Plaintiffs cite as authority for the proposition that an affidavit by a servicer cannot establish a party is a holder a dissent filed Judge Mary Jane Trapp in Bank of New York Mellon v. Shaffer, 2012 Ohio 3638, 2012 WL 3264197 (Ohio App. Dist. 11 August 13, 2012).[2] However, plaintiffs' reliance on Judge Trapp's dissent to support their motion to strike is misplaced and inapposite.

In Shaffer, the court was considering an application for default judgment on plaintiff bank's foreclosure action based on a complaint that averred that the bank was the holder of the note, but failed to attach a copy of the note, explaining it was "unavailable at this time." Indeed, throughout the entire proceeding, the bank did not produce the note. The Creditor's Affidavit, submitted by an affiant whose personal knowledge and authority, extended only to "negotiate and agree to a settlement of Creditor's claims, " declared Bank of New York Mellon held the note by an assignment that had been recorded with the Geauga County-but did not identify the assignee or the volume and page number of the recording. Bank of New York Mellon v. Shaffer, 2012 Ohio 3638, ¶ 55, Judge Trapp, dissenting. The copy of the mortgage attached the complaint showed Wilmington Finance, not New York Mellon, as the holder of the mortgage, and Creditor's Affidavit averred the mortgage was recorded two weeks after the complaint was filed.

On remand from the Ohio Supreme Court, the 11th District found there was insufficient evidence that New York Mellon held the mortgage on the date complaint was filed, and thus the court lacked subject-matter jurisdiction at the time of the entry of the default.

This case is entirely distinguishable from Shaffer on the facts. Unlike the New York Mellon Bank in Shaffer, Deutsche Bank has produced the original and copies of the endorsed note multiple times. It is also undisputed in this case that three years before filing the foreclosure complaint, Deutsche Bank produced the original endorsed note at a status conference in Bridges II, where it was available for inspection by Mr. Bridge, Plaintiffs' counsel and a Magistrate Judge. The mortgage in this case was validly recorded long before commencement of this action. The key facts that were missing in Shaffer have been established here-and not by averment in an affidavit, but by the production of the actual documents.

Further, there is an abundance of state law authority in Ohio that affidavits by servicers constitute competent evidence to support foreclosure by note holders. See, e.g., Deutsche Bank v. Najar, 2013 Ohio 1657 (Ohio App. 8th Dist. April 25, 2013); U.S. Bank v. Gray, 2013 Ohio 3340 (Ohio App.10th Dist. July 30, 2013); Bank Natl. Assn. v. Turner, 2012 Ohio 4592 at ¶¶ 5, 13-14 (Ohio App. 8th Dist. October 4, 2012); Deutsche Bank Natl. Trust Co. v. Ingle, 2009 Ohio 3886 (Ohio App. 8th Dist. August 6, 2009).

B. Personal Knowledge Based Upon Record Review is Proper in a Business Records Affidavit

Federal Rule of Evidence 803(6) speaks to the required conditions for admissibility of business records and provides that such conditions may be shown by the testimony of the custodian of the records. Crystal Kearse's affidavit establishes that, as part of her job, she serves as business records custodian for Ocwen's documents and loan records for individual borrowers (ECF 213-1 at ¶ 5); that she makes the affidavit based on personal knowledge obtained from reviewing Ocwen's records ( Id. at ¶ 4); and that such records are maintained as business records consistent with the requirements of Fed.R.Evid. 803 (6) ( Id. at ¶ 6). Kearse specifically recites that she reviewed the loan origination documents pertaining to the subject loan and the transaction history of Plaintiffs Lisa and William Bridge.

The Court therefore concludes that Ms. Kearse provides an adequate foundation for the evidence in her affidavit set forth in paragraph 4, 7, 8, 9, 20 and 22, and plaintiffs' motion to strike is denied as to those paragraphs.

C. The Court Need Not Reach the Issue of the Adequacy of the Foundation of Paragraph 14

Plaintiffs also seek to strike paragraph 14 of the Kearse Affidavit, which reads:"Deutsche Bank took possession of the note for value and in good faith, and with no knowledge of the claims now being asserted." This paragraph was included in the affidavit to establish that Deutsche is a "holder in due course, " and therefore has heightened protection against certain defenses to enforcement. However, the Court did not, and need not, conclude that Deutsche Bank is a "holder in due course" in order to conclude that ...


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