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U.S. Bank N.A. v. O'Malley

Court of Appeals of Ohio, Eighth District, Cuyahoga

December 26, 2019

U.S. BANK NATIONAL ASSOCIATION, Plaintiff-Appellee,
v.
PATRICK J. O'MALLEY, ET AL., Defendants-Appellants.

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-855042

         JUDGMENT: AFFIRMED

          Dinsmore & Shohl L.L.P., H. Toby Schisler, and Alicia Bond-Lewis, for appellee.

          The Law Office of Grace M. Doberdruk, and Grace M. Doberdruk, for appellants.

          JOURNAL ENTRY AND OPINION

          RAYMOND C. HEADEN, JUDGE

         {¶ 1} Defendants-appellants Patrick and Madeleine O'Malley ("the O'Malleys") appeal the trial court's ruling granting plaintiff-appellee U.S. Bank National Association's ("U.S. Bank") motion for summary judgment, in part, and granting an in rem foreclosure. For the reasons that follow, we affirm.

         I. Factual and Procedural History

         {¶ 2} On November 16, 2004, the O'Malleys executed a note payable to Finance America, L.L.C., in the principal amount of $297, 600. To secure payment of the note, the O'Malleys executed a mortgage on real property located in Westlake, Ohio ("the property") in favor of Mortgage Electronic Registration Systems, Inc. ("MERS"), acting as a nominee for Finance America, L.L.C. The mortgage was recorded in the Cuyahoga County Recorder's Office on November 19, 2004.

         {¶ 3} The note contains two undated allonges.[1] The first allonge attached to the note endorses the note from Finance America, L.L.C. to Bank of America, National Association as successor by merger to LaSalle Bank National Association, as Trustee for Structured Asset Investment Loan Trust, Mortgage Pass Through Certificates, Series 2005-2 ("Bank of America"). The second allonge contains an endorsement from Bank of America to U.S. Bank.

         {¶ 4} On June 25, 2009, MERS assigned the note and mortgage to Bank of America. The assignment was recorded with the Cuyahoga County Recorder's Office on May 3, 2010. A second assignment of the mortgage dated September 29, 2015, reflects an assignment and transfer from Bank of America to U.S. Bank. The second assignment was recorded on October 30, 2015.

         {¶ 5} The O'Malleys failed to make the payments due under the note and, on December 1, 2015, U.S. Bank filed a complaint in foreclosure.[2] The complaint alleged as follows: the note and mortgage were in default; U.S. Bank satisfied the conditions precedent; the entire balance was due and payable; and U.S. Bank was entitled to enforce the note and mortgage. The following documentation was attached to the complaint: the note, two allonges, the mortgage, and the assignments of the mortgage. The O'Malleys filed an answer and counterclaim on January 29, 2016. The counterclaim was dismissed on September 12, 2016, pursuant to U.S. Bank's motion for dismissal. On April 28, 2017, both U.S. Bank and the O'Malleys filed competing motions for summary judgment. After the parties fully briefed the motions, a magistrate rendered a decision on July 14, 2017.

         {¶ 6} The magistrate's decision found R.C. 1303.16(A)'s six-year statute of limitations barred U.S. Bank's claim on the note seeking a personal money judgment. However, U.S. Bank's foreclosure action on the mortgage was not barred by the applicable statute of limitations.

         {¶ 7} U.S. Bank filed objections to the magistrate's decision on July 24, 2017. Before the deadline passed for the O'Malleys to file their objections, the trial court entered an order adopting the magistrate's decision. The O'Malleys subsequently filed their objections on July 28, 2017, as well as a motion to vacate on August 24, 2017. On August 24, 2017, and August 30, 2017, U.S. Bank and the O'Malleys, respectively, filed notices of appeal that were dismissed on August 31, 2017, due to a lack of a final appealable order. On September 21, 2017, the trial court denied the O'Malleys' motion to vacate the trial court's adoption of the magistrate's order.

         {¶ 8} On September 25, 2017, the trial court overruled the parties' objections and adopted the magistrate's decision. The O'Malleys filed a notice of appeal on October 17, 2017, and U.S. Bank filed a cross-appeal on October 26, 2017. Those appeals were dismissed on November 1, 2018, for lack of a final, appealable order.

         {¶ 9} The trial court's amended judgment entry adopting the magistrate's decision and overruling all objections was filed on January 8, 2019. On February 6, 2019, the O'Malleys filed a timely notice of appeal, presenting the following assignments of error for our review:

First Assignment of Error: The trial court erred by not finding that appellee U.S. Bank's claim for foreclosure was barred by the statute of limitations and by not granting appellants Patrick and Madeleine O'Malley's motion for summary judgment.
Second Assignment of Error: Appellee was not entitled to judgment as a matter of law because the affidavit of Mark Syphus never stated that appellee U.S. Bank had possession of the original note when the complaint was filed.
Third Assignment of Error: The trial court erred by granting a judgment of foreclosure because a material issue of fact existed for trial regarding whether the allonges [we]re affixed to the original note.
Fourth Assignment of Error: The trial court erred by granting appellee's motion for summary judgment when the affidavit of Mark Syphus was not made upon personal knowledge and material issues of fact existed for trial.

         II. Law and Analysis

         A. Standard of Review

         {¶ 10} Before a trial court grants a motion for summary judgment, pursuant to Civ.R. 56(C), the court must determine that:

(1) No genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.

Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).

         {¶ 11} On a motion for summary judgment, the moving party's initial burden is to identify specific facts in the record that demonstrate its entitlement to summary judgment. Dresher v. Burt, 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264 (1996). If the moving party does not satisfy this burden, summary judgment is not appropriate. If the moving party meets the burden, the nonmoving party has a reciprocal burden to point to evidence of specific facts in the record that demonstrate the existence of a genuine issue of material fact for trial. Id. at 293. Where the nonmoving party fails to meet this burden, summary judgment is appropriate. Id.

         {¶ 12} In a foreclosure action, a plaintiff must prove the following to prevail on a motion for summary judgment:

(1) that the plaintiff is the holder of the note and mortgage, or is a party entitled to enforce the instrument; (2) if the plaintiff is not the original mortgagee, the chain of assignments and transfers; (3) that the mortgagor is in default; (4) that all conditions precedent have been met; and (5) the amount of principal and interest due.

Deutsche Bank Natl Trust Co. v. Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio- 1657, ¶ 17.

         {¶ 13} An appellate court applies a de novo standard when reviewing a trial court's decision that granted summary judgment. Bayview Loan Servicing, L.L.C. v. St. Cyr, 2017-Ohio-2758, 90 N.E.3d 321, ¶ 11 (8th Dist.).

         B. Statute of Limitations

         {¶ 14} The note at issue was accelerated in May 2009. The O'Malleys made no payments following the acceleration date, and U.S. Bank filed a complaint on December 1, 2015 ("2015 complaint"). The complaint sought a personal judgment on the note and foreclosure based upon the mortgage. In their motion for summary judgment, the O'Malleys argued U.S. Bank's complaint - both the action on the note and the action on the mortgage - was barred by R.C. 1303.16(A)'s six-year statute of limitations. The trial court found U.S. Bank's action on the note was barred when it was filed outside R.C. 1303.16(A)'s statute of limitation, but U.S. Bank could proceed on its foreclosure action because it was subject to a longer statute of limitations.

         {¶ 15} The O'Malleys contend the foreclosure action was subject to R.C. 1303.16(A) and because this action was filed outside R.C. 1303.16(A)'s six-year statute of limitations, the action was barred and the O'Malleys' motion for summary judgment should have been granted. U.S. Bank argues that (1) the foreclosure action is governed by either R.C. 2305.04, which provides a 21-year statute of limitations or R.C. 2305.06, which applies an 8-year statute of limitations and, (2) because the foreclosure action was filed within either the 21-year or 8-year statute of limitations, the trial court did not err when it granted U.S. Bank's motion for summary judgment.

         {¶ 16} Upon a mortgagor's default, the mortgagee bank has three separate and independent remedies that it may pursue in an attempt to collect the debt secured by the mortgage: a personal judgment against the mortgagor to obtain the amount owing on the promissory note; an action in ejectment based on the mortgage; and an action in foreclosure based upon the mortgage. D ...


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