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U.S. Bank, N.A. v. Smith

Court of Appeals of Ohio, Seventh District, Mahoning

June 21, 2018

RONALD J. SMITH, et al., Defendants-Appellants.

          Civil Appeal from the Court of Common Pleas of Mahoning County, Ohio Case No. 05 CV 3869.

          Atty. David A. Wallace and Atty. Karen M. Cadieux, Carpenter, Lipps & Leland LLP, Atty. Matthew J. Richardson, Manley, Deas, Kochalski LLC, for Plaintiff-Appellee

          Ronald J. and Nancy L. Smith, Pro se Appellants

          BEFORE: Cheryl L. Waite, Gene Donofrio, Carol Ann Robb, Judges.


          WAITE, J.

         {¶1} Pro se Defendants-Appellants, Ronald and Nancy Smith, appeal two judgment entries of the Mahoning County Court of Common Pleas, the first overruling their motion to vacate summary judgment and the resulting decree in foreclosure entered January 12, 2007 and the second seeking to vacate a "dormant" judgment also entered January 12, 2007. Appellants contend that Plaintiff-Appellee, U.S. Bank National Association as Trustee for Certificate Holders of Bear Stearns ("U.S. Bank") and their counsel committed a fraud on the court by seeking an order of sale because U.S. Bank was not the owner of the note and mortgage at the time U.S. Bank's complaint was filed. Appellants further contend that the initial order of foreclosure entered January 12, 2007 became dormant when five years passed between orders of sale. For the following reasons, Appellants' issues on appeal are not well-taken and the judgment of the trial court is affirmed.

         Facts and Procedural History

         {¶2} Appellants executed an adjustable rate note in favor of Encore Credit Corporation on March 5, 2004 in the original amount of $528, 500.00, which was secured by a mortgage on real property located at 1625 Gully Top Lane, Canfield, Ohio. The note and mortgage were transferred through assignment to LaSalle Bank National Association, as Trustee for Certificate Holders of Bear Stearns Asset Backed Securities I LLC Asset Back Certificates, Series 2004-HE5 ("LaSalle") on March 22, 2004.

         {¶3} Within three months of the execution of the note and mortgage, Appellants stopped making monthly payments on the note. In October of 2004, with five payments in arrears, they executed a forbearance agreement, however, they defaulted on that agreement. In April of 2005, with seven payments in arrears, they executed a second forbearance agreement and again defaulted. In October of 2005, they executed their third and final forbearance agreement, but made only one payment under that plan.

         {¶4} As trustee for Bear Stearns, LaSalle initiated foreclosure proceedings against Appellants on October 13, 2005. On January 12, 2007, the trial court granted summary judgment in favor of LaSalle, ordering foreclosure and the sale of the property ("foreclosure order). No direct appeal of the foreclosure order was ever taken.

         {¶5} In the eleven and a half years that have followed, no less than seven proposed sales of the property have been avoided, largely based on unsuccessful legal actions undertaken by Appellants. The property was first scheduled for sheriffs sale on August 3, 2007 (proposed sale #1). On that day, Appellants filed a Chapter 13 petition in bankruptcy court, which automatically stayed the sale of the property. Consequently, the order of sale was withdrawn. The bankruptcy stay was lifted on October 15, 2007 after the bankruptcy case was dismissed. In October of 2007, Bank of America Corporation acquired ABN Amro North America Holding Company, the parent company of LaSalle. (3/15/17 Mot. To Vacate, Def. Exh. A.)

         {¶6} The property was ordered to sheriffs sale a second time and a notice of sale was issued on May 16, 2008 (proposed sale #2). Prior to the sale, Appellants were granted a second stay based on a Truth in Lending Act complaint they had filed against LaSalle in federal court. On October 10, 2009, the stay was lifted after this federal case was dismissed.

         {¶7} Thereafter, a praecipe for an order of sale was filed (proposed sale #3), but Appellants filed yet another motion to stay the sheriffs sale based on a case they had initiated against LaSalle in the common pleas court. In this case Appellants asserted claims similar to those advanced in their earlier federal complaint. In March of 2010, prior to the court ruling on the motion to stay, Appellants asked the trial court to reconsider its October 10, 2009 order lifting the stay. While the magistrate stayed the sheriffs sale until September 1, 2010, in February of 2011 the trial court vacated the magistrate's order.

         {¶8} A praecipe for order of sale was filed on March 8, 2011 (proposed sale #4). On March 16, 2011, Appellants filed a motion for reconsideration of the original foreclosure order. That same day they also filed a Civ.R. 60(B) motion for relief from judgment. An order of sale was issued to the sheriff on April 12, 2011.

         {¶9} In both 2011 motions Appellants argued that LaSalle was not the real party in interest. Therefore, they alleged LaSalle had committed fraud on the court. They also claimed that LaSalle violated the Pooling and Servicing Agreement ("PSA") that governed the manner in which the mortgage was to be placed in the Bear Stearns Trust. On May 4, 2011, the trial court overruled the motions. This decision prompted Appellants' first appeal.

         {¶10} During the pendency of the appeal, Appellants sought a stay of the foreclosure order. The trial court denied the stay, but we granted a stay conditioned on a bond being posted in the amount of $750, 000.00. Although Appellants did not file the required bond, LaSalle moved to withdraw the pending order of sale because the parties were engaging in ongoing settlement negotiations. On July 7, 2011, the trial court granted the motion to stay and the order of sale was withdrawn.

         {¶11} On August 27, 2012, we held that the judgment entry of foreclosure was a final order. Consequently, Appellants' motion for reconsideration was a nullity. We also held that the Civ.R. 60(B)(5) motion, filed four years and three months after the foreclosure order was issued, was untimely. LaSalle Bank Natl. Assoc. v. Smith, 7th Dist. No. 11 MA 85, 2012-Ohio-4040 ("Smith I ").

         {¶12} On April 15, 2013, Appellants filed another motion in the trial court seeking to vacate the foreclosure order, as well as a motion to stay any sale of the property pending resolution of the motion to vacate. Appellants' common law motion was based on their theory that LaSalle lacked standing to bring the foreclosure action. Appellants argued that LaSalle did not possess the promissory note or an interest in the mortgage at the time the complaint in foreclosure was filed because the note was obtained in a manner which violated the PSA. They also claimed that the trial court did not have subject matter jurisdiction in the foreclosure action because LaSalle lacked standing and, hence, the judgment in foreclosure was void.

         {¶13} The motion to vacate the foreclosure order was overruled by the trial court on July 30, 2013, and Appellants' motion to stay was overruled as moot. Appellants' second appeal followed.

         {¶14} After Appellants' notice of appeal was filed, the Supreme Court of Ohio resolved a conflict between appellate districts regarding the issue of standing and subject matter jurisdiction as they relate to foreclosure actions. In Bank of America, N.A. v. Kuchta,141 Ohio St.3d 75, 2014-Ohio-4275, 21 N.E.3d 1040, the Court held an allegation that a plaintiff fraudulently claimed to have standing may not be asserted as a basis to vacate the judgment in foreclosure pursuant to Civ.R. 60(B)(3). As lack of standing is an issue cognizable on appeal, it cannot be used to collaterally attack a judgment in foreclosure. The Court also held that, although standing is required in order ...

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