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Farmer v. PNC Bank, N.A.

Court of Appeals of Ohio, Second District, Montgomery

June 9, 2017

DEVIN A. FARMER Plaintiff-Appellee
PNC BANK, N.A., et al. Defendants-Appellees and JOSEPH KISTNER Defendant-Appellant

         Civil Appeal from Common Pleas Court Trial Court Case No. 2015-CV-1877

          ANDREW M. ENGEL, Attorneys for Defendant/Cross-Claimant/Appellant-Joseph Kistner

          H. TOBY SCHISLER, Attorney for Defendant/Cross-Claimant/Appellee - PNC Bank, N.A.


          WELBAUM, J.

         {¶ 1} Defendant/Cross-Claimant/Appellant, Joseph Kistner, appeals from a trial court judgment granting a motion for sanctions and judgment filed by Defendant/Cross-Claimant/Appellee, PNC Bank, N.A. ("PNC"). Kistner contends that the trial court erred in granting judgment against him, in assessing damages against him, and in dismissing his cross-claims against PNC.

         {¶ 2} We conclude that the trial court erred in failing to provide Kistner with a reasonable opportunity to be heard regarding the motion for sanctions, which resulted in a default judgment against Kistner, an award of damages against Kistner, and dismissal of Kistner's cross-claims against PNC. As a result, the judgment of the trial court will be reversed, and this cause will be remanded for further proceedings.

         I. Facts and Course of Proceedings

         {¶ 3} In April 2015, Devin Farmer filed a complaint against Joseph Kistner, PNC, Samuel Whitaker, and Martha Kline. The complaint was based on Famer's purchase of a property located on Olson Drive in Kettering, Ohio. Kistner had previously owned the property and had granted a mortgage in 2005 to National City Bank, a division of National City Mortgage of Indiana. The complaint alleged that PNC was the successor by assignment to National City Mortgage and a stakeholder.

         {¶ 4} According to the complaint, National City had assigned the mortgage to Mortgage Electronic Registration System ("MERS") in 2006, and MERS had then assigned Kistner's mortgage to Watermark Financial Partners ("Watermark") in August 2011. In late September 2011, PNC filed a foreclosure action against Kistner in Montgomery County Common Pleas Court (Case No. 2011-CV-07060), but the case was dismissed for lack of standing in August 2012. Shortly after the dismissal, Samuel Whitaker signed a release of the mortgage, as nominee for Watermark, and the release was filed in Montgomery County, Ohio, property records on August 15, 2012.

         {¶ 5} The complaint further alleged that Watermark was not doing business in August 2012, that Whitaker was not affiliated with Watermark, and that Kistner had fraudulently obtained the release. Kline was the individual who had notarized Whitaker's signature on the release.

         {¶ 6} According to the complaint, Kistner then executed and delivered a general warranty deed to Farmer for the Olson Drive property on December 31, 2012. Kistner received more than $70, 000 for the sale of the property, but did not remit any money to PNC or anyone else, to satisfy the mortgage. Farmer's general warranty deed for the property was filed on January 1, 2013.

         {¶ 7} In the complaint, Farmer asked for a declaration of her rights in the property and a determination of her rights as a bona fide purchaser. She also asked for damages from Kistner for breach of the warranty covenants, and for damages from Kistner, Whitaker, and Kline for fraudulent conduct in connection with the release.

         {¶ 8} In May 2015, PNC filed an answer in which it stated that it was a successor by assignment from National City Mortgage. PNC denied that it had authorized any release, and denied that Farmer's alleged status as a bona fide purchaser should have an effect on its mortgage. In addition, PNC filed cross-claims for contribution and indemnity against Kistner, Whitaker, and Kline, to the extent that any liability were found against PNC, or if any determination of rights negatively affected PNC's mortgage.

         {¶ 9} Kistner filed a pro se answer to the complaint, as well as a cross-claim against PNC. The cross-claim alleged fraud and concealment in connection with the 2011 foreclosure action PNC had filed; fraud, unclean hands, and concealment regarding the various assignments of the mortgage since 2005; violation of public policy by MERS (which was not a party); and estoppel and laches with respect to assignments of the mortgage, including a "Corrective Assignment" executed by a nominee for PNC and filed in the Montgomery County, Ohio, property records on February 15, 2013. PNC filed an answer to the cross-claim in June 2015, and asserted various affirmative defenses.

         {¶ 10} Between June and September 2015, Kistner, Kline, and Whitaker engaged in various actions that hindered discovery. In early June 2015, the trial court set a telephone scheduling conference for June 24, 2015. After Kistner's co-defendant, Kline, moved for summary judgment based on the fact that she had never met Kistner and had simply notarized Whitaker's signature, Kistner filed a motion to continue the scheduling conference until the trial court ruled on the summary judgment motion, even though the motion had nothing to do with the claims against him.

         {¶ 11} Both Farmer and PNC then filed motions under Civ.R. 56(F), asserting that discovery was needed before they could reply to the pending motions. [1] On July 10, 2015, the trial court granted the Civ.R. 56(F) motions, stressing that discovery was needed, and that an "uncorroborated, self-serving affidavit" was "deemed insufficient to establish the absence of any genuine issue of material fact where the opposing parties have not yet been afforded an opportunity to explore the underlying facts through discovery." (Emphasis sic.) Docket Summary, Case No. 26911, Doc. #47, p. 6.[2] On the same day, the court also denied Whitaker's motion for an extension of time to respond to discovery until after the court had ruled on all pending motions. The court again stressed that the defendants were required to submit to discovery before Farmer and PNC had to respond to summary judgment motions. In addition, this entry mentioned potential sanctions for failure to provide discovery. Id. at Doc. #46, p. 7.

         {¶ 12} In the meantime, Farmer had filed notices to take depositions of Kistner, Kline, and Whitaker. The notices were filed on June 24, 2015, and the depositions were set for July 22, 2015. Thus, Kistner had nearly a month's notice of his deposition.

         {¶ 13} On July 13, 2015, Kistner filed a motion for partial summary judgment based only on general assertions that he did not do anything wrong and lacked fraudulent intent. The following day, Farmer filed a Civ.R. 56(F) motion, which was granted by the court on July 30, 2015. Kistner also had filed a motion for a protective order on July 17, 2015, asking the court to stay discovery until it had ruled on all pending motions. Farmer responded on July 20, 2017, noting that counsel had received a letter from Kistner on July 17, 2015, which asked that the July 22 deposition be moved from Columbus to Dayton. Notably, Kistner did not object to having his deposition taken. Counsel then accommodated Kistner by moving the deposition to Dayton. In addition, Farmer noted that the court had previously rejected the position that Kistner was taking about discovery being delayed until after the court had ruled on pending motions.

         {¶ 14} On July 22, 2015, Farmer filed a supplemental response, informing the court that Kistner had agreed to be deposed on August 6, 2015, in Dayton. Farmer again asked the court to deny Kistner's motion for a protective order. The court denied Kistner's motion for a protective order on July 27, 2015, and stressed again that discovery must proceed. As was noted, on July 30, 2015, the court granted Farmer's Civ.R. 56(F) motion for an extension of time to reply to Kistner's motion for summary judgment. In this decision, the court emphasized that any delays in discovery were attributable to the defendants other than PNC, and reiterated its prior remark about uncorroborated, self-serving affidavits. Docket Summary, Case No. 26911, Doc. #67, p. 6.

         {¶ 15} Farmer then filed a motion to compel discovery from Kistner on August 13, 2015. In the motion, Farmer stated that Kistner had appeared on August 6 for his deposition, but after being questioned for two hours, Kistner asked for counsel and stopped responding to questions. The deposition was adjourned and was to be reconvened after Kistner obtained counsel. However, despite efforts by Farmer to resolve the issue, Kistner had not provided Farmer with information about counsel. On August 21, 2015, Farmer filed a supplement to the motion to compel, noting that Kistner had not retained counsel. In fact, Kistner had sent a fax indicating that he had decided to continue with discovery and would likely retain counsel for trial.

         {¶ 16} Farmer stressed that this "change of heart" did not justify Kistner's refusal to answer questions at his deposition. In addition, Farmer commented that the parties would incur additional time and travel expenses when the deposition was reconvened. As a result, Farmer asked for fees and costs, and also asked the court to grant the motion to compel to prevent this type of delay from occurring again.

         {¶ 17} On August 25, 2015, Farmer filed a third notice of deposition, requiring Kistner to appear for a deposition on September 3, 2015, in Dayton, Ohio. Kistner then filed a notice that he would not be available on that date, and asked for another protective order. In a response filed on September 1, 2015, counsel for Farmer indicated that Kistner had not called to request a different date, and was, therefore, not entitled to relief under Civ.R. 26(C). Nonetheless, counsel stated that the deposition would be rescheduled because Kistner would not likely appear.

         {¶ 18} On September 1, 2015, the trial court referred the matter to a magistrate for purposes of discovery. The court also granted Farmer's motion to compel discovery and denied Kistner's motion for protective order. At this point, the court ordered Kistner to appear for deposition at a time to be determined by the magistrate at a scheduling conference to be held on September 10, 2015. In its decision, the court stated that given the contentious history surrounding Kistner's deposition, the deposition should go forward under the court's strict supervision. The court further stated that the magistrate would oversee the remainder of the continued deposition. Kistner was also ordered to pay Farmer reasonable costs, including attorney fees, for obtaining the order.

         {¶ 19} Finally, the court stated that:

Defendant Kistner is further cautioned that failure to timely and completely comply with all terms of this Order WILL result in the imposition of additional sanctions in accordance with Civ.R. 37(B), which may include but are not limited to the issuance of an Order holding that the facts alleged in Plaintiffs complaint as against Defendant Kistner shall be taken as established for the purposes of this action, refusing to allow Defendant Kistner to oppose Plaintiffs claims or to support his own defenses to those claims, prohibiting Defendant Kistner from introducing certain evidence, striking out Defendant Kistner's answer or parts thereof, and/or rendering a judgment by default against Defendant Kistner, as well as being held in contempt of this Court and required to pay Plaintiffs additional reasonable expenses, including attorney fees.

(Emphasis sic.) Docket Summary, Case No. 26911, Doc. #80, pp. 13-14.

         {¶ 20} Subsequently, on September 18, 2015, Kistner filed a motion to continue the deposition scheduled for September 21, 2015 before the magistrate, because he had not been able to obtain counsel. Farmer then filed a motion for sanctions on September 24, 2015. In the motion, Farmer indicated that Kistner's motion was filed very late in the day on the Friday before the Monday that the deposition was scheduled. The motion alleged that all parties, including Kistner, appeared on Monday, September 21, 2015, before the magistrate, who heard the motion for continuance.[3] According to Farmer, Kistner repeatedly told the magistrate that he was unsure how to proceed, and the magistrate advised Kistner that he could answer questions or risk sanctions for failing to do so. Kistner refused to answer when the magistrate asked if he were refusing to proceed. After about 30 minutes, the magistrate stated that he would consider Kistner's position as a refusal to answer deposition questions, and asked for oral motions. At that point, Farmer and PNC orally moved for judgment and for an order dismissing all claims or defenses that Kistner had interposed. The hearing was then adjourned. Again, the recounting of these matters is based on allegations only, since the transcript is not in the record.

         {¶ 21} PNC filed a response to Farmer's motion for sanctions, agreeing with the motion, but clarifying that to the extent any relief was ordered that would impair PNC's status as the first and best lienholder, that issue would have to be resolved. On October 5, 2015, PNC also filed its own motion for sanctions and judgment against Kistner, and incorporated the statement of facts in Farmer's motion. PNC further stated that during the deposition on August 6, 2015, Kistner admitted that he had no permission from PNC, or anyone related to the mortgage, to record the purported release of the mortgage. In addition, Kistner admitted that he still owed money on the mortgage and that he did not pay PNC any of the sale proceeds that he had received.

         {¶ 22} On October 5, 2015, the trial court granted Farmer's motion for sanctions, struck Kistner's pro se answer and cross-claim, and entered judgment in favor of Farmer against Kistner. The court directed Farmer to file a proposed final judgment entry, which was filed and signed by the court on October 13, 2015. The court also granted PNC's motion for sanctions on October 8, 2015. At that time, the court entered judgment in PNC's favor on its cross-claim against Kistner and on the cross-claim that Kistner had filed against PNC. The court directed PNC to file a proposed judgment entry, which was filed and signed by the court, apparently on the same day, on October 15, 2015.

         {¶ 23} On October 15, 2015, Farmer dismissed her claims against Whitaker under Civ.R. 41(A), without prejudice.[4] Kistner then filed a notice of appeal from the October 13 and 15, 2015 judgments on November 13, 2015. This appeal was docketed as Case No. 26911 in our court. As noted previously, we dismissed the appeal in its entirety on March 31, 2016. Farmer I, 2d Dist. Montgomery No. 26911 (Mar. 31, 2016).

         {¶ 24} We concluded that the notice of appeal was untimely with respect to the October 13, 2015 judgment, which contained a Civ.R. 54(B) certification and was a final appealable order on that date. Id. at pp. 8-9. However, we also concluded that the judgment of October 15 was not a final appealable order because it lacked a Civ.R. 54(B) certification, and ...

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