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U.S. Bank, N.A. v. Courthouse Crossing, Acquisitions, LLC

Court of Appeals of Ohio, Second District, Montgomery

December 22, 2017

U.S. BANK, N.A. Plaintiff-Appellee
v.
COURTHOUSE CROSSING, ACQUISITIONS, LLC, et al. Defendants-Appellants

         Civil Appeal from Common Pleas Court Trial Court Case No. 16-CV-5346

          JAMES P. BOTTI, and JARED M. KLAUS, TAMI H. KIRBY, Attorneys for Plaintiff-Appellee

          CHARLES PAWLUKIEWICZ, ROBERT KRACHT, NICHOLAS OLESKI, Attorneys for Defendants-Appellants

          OPINION

          HALL, P.J.

         {¶ 1} Courthouse Crossing Acquisitions, LLC and Schon C.C. Holding, LLC appeal from an order of the trial court appointing a receiver in this multi-tenant commercial property foreclosure action. Finding no error, we affirm.

         I. Background

         {¶ 2} In 2006, Courthouse and Schon (which we will refer to collectively as Courthouse, unless otherwise noted) borrowed $12.7 million from Deutsche Bank Mortgage Capital, LLC. The promissory note matured on March 1, 2016, at which time it became due and payable in full. Securing the promissory note is an open-ended mortgage and an assignment of leases and rents on the office and retail building at 10 North Ludlow Street in downtown Dayton. After a string of assignments, U.S. Bank came to own and hold the note, mortgage, and assignment of leases and rents.

         {¶ 3} The maturation date came, and Courthouse failed to pay the roughly $11 million due on the promissory note. In October 2016, U.S. Bank filed a foreclosure action against Courthouse, seeking foreclosure of the mortgage and to collect rents and other income. At the same time, U.S. Bank moved for the appointment of a receiver, supporting its motion with an affidavit from a manager at the loan's special servicer. A hearing on the matter of a receiver was scheduled for November 4.

         {¶ 4} The day before the hearing, Courthouse filed a motion to dismiss under Civ.R. 12(B)(1), (4), and (5). Courthouse argued that U.S. Bank was not the holder of the note and mortgage when it filed the complaint, so it lacks standing to bring this action. Courthouse also argued that U.S. Bank did not have the capacity to sue in Ohio because it failed to register as a business trust with the Ohio Secretary of State. Courthouse also argued that U.S. Bank had failed to serve Schon and quibbled with the method that it used to serve Courthouse. Lastly, Courthouse argued generally that service had not been perfected on Courthouse or Schon.

         {¶ 5} The hearing was held on the scheduled date. Although neither Courthouse nor Schon had been formally served with process, both parties were represented at the hearing by counsel. Only arguments were presented at the hearing-no additional evidence. The trial court sustained U.S. Bank's motion for the appointment of a receiver and appointed the receiver requested by the bank.

         {¶ 6} On November 8, 2016, Courthouse appealed from the order appointing the receiver.

         {¶ 7} On January 9, 2017, the trial court overruled Courthouse's motion to dismiss.

         II. Analysis

         {¶ 8} Courthouse assigns four errors to ...


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