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Farmers State Bank v. Sponaugle

Supreme Court of Ohio

June 27, 2019

Farmers State Bank, Appellant,
v.
Sponaugle et al., Appellees.

          Submitted January 30, 2019

          Appeal from the Court of Appeals for Darke County, No. 16CA00004, 2017-Ohio-4322 and 2017-Ohio-7744.

          Thompson Hine, L.L.P., and Terry W. Posey Jr., for appellant.

          Andrew M. Engel Co., L.P.A., and Andrew M. Engel; and DannLaw, Brian D. Flick, Marc E. Dann, and William C. Behrens, for appellees.

          Porter, Wright, Morris & Arthur, L.L.P., H. Grant Stephenson, and L. Bradfield Hughes, urging reversal for amici curiae Independent Community Bankers of America and Community Bankers Association of Ohio.

          Marchal & Marchal Ltd. and John Marchal Jr., urging reversal for amicus curiae Greenville National Bank.

          Law Offices of Stephen D. Miles and Stephen D. Miles, urging reversal for amicus curiae Farmers and Merchants Bank.

          Porter, Wright, Morris & Arthur, L.L.P., and H. Grant Stephenson, urging reversal for amicus curiae Osgood State Bank.

          Porter, Wright, Morris & Arthur, L.L.P., and Tami Hart Kirby, urging reversal for amicus curiae Twin Valley Bank.

          FRENCH, J.

         {¶ 1} This appeal requires us to address once again what constitutes a final, appealable foreclosure decree. Before reaching us, the long, winding path of this foreclosure action included two intermediate-court appeals initiated by appellees, Steven and Karen Sponaugle.

         {¶ 2} The Sponaugles' first appeal challenged the trial court's entry of a foreclosure decree in favor of appellant, Farmers State Bank ("Farmers"). The Second District Court of Appeals dismissed that appeal for lack of a final, appealable order because the foreclosure decree did not state the amounts owed to two other lienholders. During the first appeal, the Sponaugles' property sold at a sheriffs sale.

         {¶ 3} The Sponaugles' second appeal challenged the trial court's order confirming the sale of the property. The Second District concluded that the law-of-the-case doctrine required adherence to its earlier decision that the foreclosure decree was not a final, appealable order. In the absence of a final, appealable order, the court of appeals held that the trial court had no authority to confirm the sale.

         {¶ 4} Farmers now appeals the Second District's reversal of the trial court's confirmation of sale. We reverse the judgment of the court of appeals, conclude that the foreclosure decree against the Sponaugles was a final, appealable order, and reinstate the trial court's confirmation of sale.

         FACTS AND PROCEDURAL BACKGROUND

         {¶ 5} In October 2013, Farmers initiated a foreclosure action against the Sponaugles seeking judgment on three promissory notes secured by three mortgages on the Sponaugles' property in Darke County, Ohio. Farmers also named as defendants other lienholders with a potential interest in the property.

         {¶ 6} By way of an agreed entry in May 2014, the trial court entered judgment against the Sponaugles in the amount of $236, 378.89, plus interest. The entry also stated that Farmers would dismiss the action if the Sponaugles paid $120, 000 on or before August 23, 2014. If they failed to pay, then Farmers would be entitled to foreclose on the mortgages free and clear of all further claims of the Sponaugles. The Sponaugles did not make any payments to Farmers and instead filed a bankruptcy petition. After dismissal of the bankruptcy case, the trial court reactivated the foreclosure case and granted summary judgment in December 2015 in favor of Farmers against the Sponaugles.

         The foreclosure decree

         {¶ 7} On January 12, 2016, the trial court entered a foreclosure decree against the Sponaugles. The foreclosure decree granted judgment for Farmers and found the Sponaugles liable for the total amount of principal on the three loans, plus interest. The decree also stated that Farmers' three mortgage liens constituted the first, second, and third best liens on the property.

         {¶ 8} The court found that all the defendants had been duly served and entered judgment against four nonanswering defendants: Chase Bank, GT Daubenspeck D.C., Inc., Midland Funding, L.L.C., and the Ohio Department of Taxation.

         {¶ 9} The foreclosure decree also stated that the Darke County Treasurer had a tax lien on the property and that American Budget Company had a lien interest by virtue of a certificate of judgment. The decree did not state the amounts due on those two liens. The decree ordered the sale of the property and payment of proceeds in accordance with the following order of priority: the Darke County Treasurer's tax lien, Farmers' three mortgage liens, and then the judgment lien of American Budget Company.

         Sheriffs sale and appeal of the foreclosure decree

         {¶ 10} The Sponaugles appealed the foreclosure decree to the Second District. The trial court granted the Sponaugles' motion to stay the court's foreclosure judgment, but the court of appeals denied their request to waive the bond requirement. Because the Sponaugles did not post the required bond, a sheriffs sale took place on February 26, 2016.

         {¶ 11} In March 2016, after the sheriffs sale but before the confirmation of sale, the Second District issued a show-cause order questioning whether the trial court's foreclosure entry was a final, appealable order. The court of appeals then dismissed the Sponaugles' appeal for lack of a final, appealable order because the foreclosure decree did not state the amounts due on the liens held by the Darke County Treasurer and American Budget Company. 2d Dist. Darke No. 16CA000002 (Apr. 18, 2016) ("Sponaugle I ").

         Order confirming the sale of the property

         {¶ 12} On April 21, 2016, the trial court granted Farmers' motion to confirm the sale of the property and ordered the distribution of proceeds from the sale and the execution and delivery of the property to Farmers by deed. Farmers purchased the property. After the payment of court costs, real-estate taxes to Darke County, and miscellaneous ...


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