Court of Appeals of Ohio, Third District, Paulding
from Paulding County Common Pleas Court Trial Court No.
C. Rogers for Appellants
Jessica M. Wilson for Appellee
Defendants-appellants Pamela J. Watson
("Watson"), also known as Pamela J. Lambert, and
William L. Lambert ("Lambert") jointly appeal the
judgment of the Paulding County Court of Common Pleas for
denying Watson's motion for the imposition of sanctions
against opposing counsel and for allowing the
plaintiff-appellee, U.S. Bank Trust, N.A., ("U.S.
Bank") to be substituted as party plaintiff in place of
HSBC Mortgage Services, Inc. ("HSBC"). For the
reasons set forth below, the judgment of the trial court is
On November 24, 2004, Watson signed a promissory note under
which she promised to pay HSBC $79, 500.00 plus interest in
monthly payments. Doc. 1. This note was secured by a mortgage
on real property. Id. Watson stopped making payments
on the note in April of 2011. Doc. 27. On August 22, 2012,
the original plaintiff in this action, HSBC, filed a
complaint in foreclosure against Watson and Lambert. Doc. 1.
On April 29, 2013, HSBC submitted a motion for summary
judgment with a copy of the mortgage agreement. Doc. 27.
Watson then served HSBC with requests for admissions on May
24, 2013. Doc. 31. The trial court set July 23, 2013, as the
final cutoff date for discovery. Doc. 30.
HSBC, however, did not reply to the discovery requests by the
deadline established by the court. Doc. 37. Consequently,
Watson's requests for admission were deemed admitted.
Doc. 37. One of these admissions states that "HSBC does
not have possession of the original note." Doc. 31.
Another states that "neither Melissa D. Clearly [the
person allegedly authorized to assign the mortgage] nor
Mortgage Electronic Registration Systems, Inc. sought or
received permission from the Bankruptcy Trustee for
Accredited Home Lenders, Inc. to execute the assignment of
[Watson's] mortgage [to HSBC]." Doc. 31. On August
2, 2013, Watson used these admissions to oppose HSBC's
earlier motion for summary judgment and submitted her own
motion for summary judgment. Doc. 32. HSBC responded by
filing a motion to withdraw the requests for admissions
deemed admitted. Doc. 37. On February 12, 2014, the trial
court granted HSBC's motion to withdraw admissions deemed
admitted on the same day that it granted HSBC's motion
for summary judgment. Doc. 39. The trial court then denied
Watson's motion for summary judgment. Id.
Watson and Lambert then filed an appeal with this court.
Id. On January 26, 2015, we reversed the trial
court. HSBC Mtge. Servs., Inc. v. Watson, 3d Dist.
Paulding No. 11-14-03, 2015-Ohio-221, ¶ 6. A trial court
has the discretion to "permit withdrawal of an admission
if it will aid in presenting the merits of the case and the
party who obtained the admission fails to demonstrate that
withdrawal would prejudice him in maintaining his
action." Id. at ¶ 18, quoting State ex
rel. Davila v. Bucyrus, 194 Ohio App.3d 325, 956 N.E.2d
332, 2011-Ohio-1731, ¶ 22 (3d Dist). Since the time for
discovery had closed at the time HSBC's motion to
withdraw was submitted, Watson was able to demonstrate to the
trial court that she would have been prejudiced if the
admissions were withdrawn and discovery was not reopened.
Id. at ¶ 29. Because the trial court did not
reopen discovery, we determined that the trial court erred
when it permitted HSBC to withdraw their admissions.
Id. When considered, the content of HSBC's
admissions was sufficient to defeat HSBC's motion for
summary judgment. Id. at ¶ 27. Thus, the trial
court's rulings on both HSBC's and Watson's
motions for summary judgment needed to be reconsidered.
Id. . at ¶ 35. We then remanded the case for
further proceedings. Id. at ¶ 30, 37.
Following the remand, on March 13, 2015, HSBC submitted a
motion for substitution of plaintiff, alleging that U.S. Bank
had been assigned Watson's mortgage on January 6, 2015,
and was now the real party in interest. Doc. 51. Attached to
the motion was a copy of the mortgage assignment, which
included a limited power of attorney that purportedly
authorized the transfer of Watson's mortgage to U.S.
Bank. Id. HSBC, however, included the wrong power of
attorney document. Doc. 58. The limited power of attorney
HSBC submitted was incorrect and had expired. Id.
On April 23, 2015, Watson responded with a motion opposing
HSBC's motion to substitute plaintiff. Doc. 55. Relying
upon HSBC's admission that they did not possess the
original note, Watson argued that neither HSBC nor U.S. Bank
could be real parties in interest as HSBC had nothing to
transfer to U.S. Bank that would justify a substitution of
plaintiff in this case. Id. Further, Watson pointed
to the incorrect limited power of attorney and also asserted
this document could not establish U.S. Bank as a real party
in interest since the expired document did not reference
Watson's mortgage and could not, therefore, assign the
mortgage from HSBC to U.S. Bank. Id. Watson's
motion to oppose HSBC's motion to substitute plaintiff
was accompanied by a motion to impose sanctions for frivolous
conduct under R.C. 2323.51. Id. In response, HSBC
admitted that they had "inadvertently attached" the
incorrect power of attorney but contested the appropriateness
of sanctions in this situation. Doc. 58. HSBC also included a
copy of the correct limited power of attorney document in
this filing. Id.
On February 29, 2016, Watson filed a motion for summary
judgment. Doc. 65. On May 27, 2016, the trial court issued an
order that granted HSBC's motion to substitute plaintiff.
Doc. 67. The court determined that the defendants did not
have standing to challenge the validity of the assignment as
Watson was "not a party to the assignment between HSBC
and U.S. Bank." Id. On June 13, 2016, Watson
and Lambert submitted a motion to reconsider the court's
decision to allow U.S. Bank to be substituted for HSBC as
plaintiff Doc. 69. The court then set June 24, 2016, as the
date for the parties to have a hearing on frivolous conduct
sanctions. Id. At the hearing, HSBC argued that
Watson's motion for summary judgment should be denied so
that discovery could be reopened. Doc. 75. The court declined
to reopen discovery, deemed the admissions of HSBC admitted,
and granted Watson's motion for summary judgment.
In the final judgment, the court also addressed the
defendants' motion to reconsider the May 27, 2016 journal
entry granting HSBC's motion to substitute plaintiff and
Watson's motion for R.C. 2323.51 sanctions. Doc. 55, 75.
The court declined to reverse the order granting HSBC's
motion to substitute plaintiff. Doc. 75. Since the alleged
frivolous conduct arose from HSBC's motion to substitute
plaintiff, the court overruled Watson's motion for
sanctions because such a decision would be inconsistent with
the court's order granting HSBC's motion to
substitute plaintiff. Doc. 75. On appeal, appellants raise
two assignments of error.