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U.S. Bank National Association v. Franko

Court of Appeals of Ohio, Eighth District, Cuyahoga

February 22, 2018


         Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-12-796581

          ATTORNEYS FOR APPELLANTS William C. Behrens Marc E. Dann The Dann Law Firm Co., L.P.A. Thomas J. Kraus

          ATTORNEYS FOR APPELLEE Justin M. Ritch Matthew J. Richardson Manley, Deas & Kochalski, L.L.C. Tyler K. Ibom David A. Wallace Carpenter, Lipps & Leland, L.L.P.

          BEFORE: S. Gallagher, J., McCormack, P.J., and Boyle, J.


          SEAN C. GALLAGHER, J.

         {¶1} Mary Claire Franko and Charles Stimac, Jr. ("mortgagors") appeal the decree of foreclosure on the property at 33400 Pinetree Road, Pepper Pike, Ohio. We affirm.

         {¶2} Franko executed a promissory note for $300, 000, secured by a mortgage signed by both Franko and Stimac in 2005. The complete mortgage instrument named RBC Mortgage Company as the lender and Mortgage Electronic Registration Systems, Inc. ("MERS") as the mortgagee and as nominee for RBC Mortgage Company and its successor and assigns. The loan was immediately securitized [1] and placed into trust, the Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2005-4 Trust ("trust"). LaSalle Bank National Association was the initial trustee, and Washington Mutual Bank was the servicer on the loan. Washington Mutual Bank began collecting the monthly payments.

         {¶3} Washington Mutual Bank went into federal receivership during the financial crisis of the early 2000s. JPMorgan Chase purchased and otherwise assumed some assets of Washington Mutual Bank through the receivership, which at the time made JPMorgan Chase the new servicer of the mortgage. MERS assigned the mortgage to Washington Mutual Bank in 2007. That assignment was duly recorded.

         {¶4} Washington Mutual Bank, through the receiver, then assigned the mortgage to Bank of America, National Association in 2009, which was the successor trustee to LaSalle Bank through merger. Approximately three years later, the receiver of Washington Mutual Bank issued a corrective assignment, assigning the mortgage to U.S. Bank.[2] The corrective assignment was recorded and replaced the 2009 assignment. U.S. Bank was the successor trustee to Bank of America by sale. Although the mortgage was assigned several times and there were multiple servicers of the debt, the trust remained as the holder of the note.

         {¶5} The mortgagors originally defaulted sometime in 2007. By the time U.S. Bank filed the foreclosure action in 2012, there had been three earlier actions on behalf of the trust seeking foreclosure - Washington Mutual Bank in 2007 and Bank of America in 2009 and 2010.

         {¶6} In the latest action, U.S. Bank indicated that the trust was in possession of the promissory note, but the note could not be located. U.S. Bank proceeded to enforce the note under R.C. 1303.38, which provides that a person not in possession of an instrument is entitled to enforce the instrument if (1) that person possessed the instrument at the time the loss of possession occurred, or if ownership of the instrument was acquired from the person who was entitled to enforce the instrument when the loss of possession occurred; (2) the loss of possession was not the result of a transfer or lawful seizure; and (3) the person seeking enforcement cannot reasonably obtain possession of the instrument.

         {¶7} The trial court granted summary judgment in May 2016 and indicated the court's magistrate would issue a decision "making specific findings as to the rights and liabilities of the parties." Thus, the only issue before the magistrate was limited: the magistrate was not resolving the motion for summary judgment in its entirety. The magistrate concluded, in pertinent part, (1) that U.S. Bank was the real party in interest when the complaint was filed and maintained standing throughout the proceedings; (2) that $292, 312.31 plus interest at 6 percent from April 1, 2007, was due as a secured sum and owed by Franko; and (3) that the mortgagors jointly guaranteed the outstanding debt with the property located at 33400 Pinetree Road, Pepper Pike, Ohio.

         {¶8} The mortgagors objected to the magistrate's decision, asserting the following errors: (1) the magistrate failed to consider the defendants' submissions or pending defenses; (2) the magistrate erred in finding that U.S. Bank had standing to seek foreclosure based on the note and mortgage; (3) the magistrate erroneously applied R.C. 1303.38, dealing with actions upon lost notes; (4) that U.S. Bank failed to prove a defect-free chain of title on the note and mortgage; and (5) the magistrate's decision relied on inadmissible evidence. The trial court overruled the objections, and upon the decision of the magistrate, the evidence admitted at the hearing, and the motions and pleadings, summary judgment was granted in favor of U.S. Bank upon the trial court's conclusion that reasonable minds could come to one conclusion based on the undisputed evidence.

         {¶9} In the first assignment of error, the mortgagors claim that the trial court's decision was devoid of "sufficiently detailed reasoning to ...

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