Michelakis v. Big Little Farms, Inc.

         Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 2007 CV 109.

          Robert K. McIntyre, Dinn, Hochman & Potter, LLC, (For Defendant-Appellant).

          Thomas H. Sanborn, Thomas H. Sanborn, LLC, (For Defendant-Appellee).

          OPINION

          MATT LYNCH, J.

         {¶1} Defendant-appellant, Beverly W. Ross, appeals from the Judgment Entry of the Trumbull County Court of Common Pleas, denying her Motion to Vacate the court's judgment confirming the sale of real property following foreclosure proceedings. The issue to be determined by this court is whether there are grounds to find the existence of fraud for the purposes of Civ.R. 60(B) when the appellant argues that the opposing party should have been aware that a mortgage deed presented to the court and parties as valid was actually void. For the following reasons, we affirm the judgment of the lower court.

         {¶2} On January 12, 2007, Christ Michelakis, the Trumbull County Treasurer, filed a foreclosure action on real property owned by Big Little Farms (BLF), due to BLF's delinquency in the payment of property taxes. BLF operated a horse farm on the subject property. In addition to BLF, the complaint named Dale (the owner of BLF), his ex-wife Audrey Ross, Dale's brother, Gene Ross, and Gene's wife, Beverly Ross, ^[1] as defendants having an interest in the property.

         {¶3} Beverly filed a Cross-Claim on March 27, 2007, subsequently amended, in which she raised claims arising from BLF/Dale's failure to make payments on a promissory note in the amount of $103, 385, which had been executed by Dale as president of BLF in December 2003. Beverly requested a judgment for the amount owed under the promissory note and that the mortgage securing the loan be foreclosed.

         {¶4} On April 6, 2007, the Treasurer filed a voluntary dismissal of the foreclosure action since BLF satisfied the delinquent tax obligation.

         {¶5} Audrey Ross filed an Answer and Cross-Claim on May 3, 2007, in which she asserted that BLF had executed and delivered to her a mortgage deed in the sum of $9, 253 to secure a judgment awarded against Dale in their divorce proceedings. Pursuant to the March 20, 1986 Judgment Entry - Decree of Divorce of the Trumbull County Court of Common Pleas, Domestic Relations Division, Dale was ordered to cause a mortgage to be filed as a lien in favor of Audrey on the BLF property. Attached to Audrey's Answer was a copy of the mortgage deed, recorded on March 19, 1986, which stated it "is being filed to grant Audrey R. Ross a lien on the aforedescribed premises," the BLF property. On behalf of BLF, the mortgage was signed by Audrey Ross, described as its "secretary."

         {¶6} On October 14, 2009, BLF, Dale, Beverly, and Audrey, through their counsel, filed written stipulations. In pertinent part, they stipulated that "Big Little Farms, Inc. executed and delivered to Audrey R. Ross a Mortgage Deed in the principal sum of $9, 253.00 to secure the judgment awarded to her" in the domestic relations case, the mortgage deed was recorded, no payments satisfying the debt were made, and Audrey was owed $35, 414.88 in principal and interest. The parties also stipulated that Audrey's mortgage "is the first and best lien against the premises" following tax obligations.

         {¶7} Following summary judgment proceedings, on February 25, 2015, an Agreed Judgment Entry of Settlement and Dismissal was filed, in which the parties agreed and it was ordered that Audrey's mortgage was the first and best lien (after taxes and costs) and payment in the amount of $41, 974.49 was due. Judgment was also rendered in favor of Beverly Ross against BLF. The parties agreed they would enter a consent foreclosure decree.

         {¶8} The court issued a November 6, 2017 Judgment Entry Decree of Foreclosure, which was signed by counsel for Beverly, the estates of Dale and Audrey, and the Trumbull County Treasurer. It ordered the sale of the property and included Audrey's lien. The court subsequently issued a June 7, 2018 Judgment Entry confirming the sale of the property for $200, 000 and distributing the proceeds.

         {¶9} On June 11, 2018, Beverly filed a "Motion to Enter Order," in which she contended that her counsel discovered Audrey's 1986 mortgage was fraudulent because Audrey had executed the mortgage on behalf of BLF although Dale was its sole officer. She alleged that counsel and Audrey falsely represented the mortgage as being lawfully executed and led opposing parties to presume it was executed by Dale.

         {¶10} The court characterized this as a Civ.R. 60(B) motion and ruled, on June 21, 2018, that "it cannot be said that the issue of the potential invalidity of the mortgage was timely brought to the attention of the Court," since the mortgage was ...