BANK v. MAPLE LEAF EXPANSION INC.

• Decision Date: 31 March 2010
• Docket Number: No. 09 MA 112.,09 MA 112.
• Citation: 188 Ohio App.3d 27,934 N.E.2d 366,2010 Ohio 1537
• Parties: FIFTH THIRD BANK, N.A., Appellee, v. MAPLE LEAF EXPANSION, INC., Appellant.
• Court: Ohio Court of Appeals

188 Ohio App.3d 27

934 N.E.2d 366

2010 Ohio 1537

FIFTH THIRD BANK, N.A., Appellee,

v.MAPLE LEAF EXPANSION, INC., Appellant.

No. 09 MA 112.

Court of Appeals of Ohio,Seventh District, Mahoning County.

Decided March 31, 2010.

Harrington, Hoppe & Mitchell, Ltd. and Frederick S. Coombs IIII, Youngstown; and Berstein Law Firm, PC, and Nicholas D. Krawec, Pittsburgh, PA, for appellee.

Frederic Lombardi, Patrick Keating, Akron, Michael Matasich, Cleveland, and David J. Betras, Canfield, for appellant.

DeGENARO, Judge.

DeGenaro, Judge.

{¶ 1} This timely appeal comes for consideration upon the record in the trial court, the parties' briefs, and their oral arguments before this court. Appellant, Maple Leaf Expansion, Inc. appeals the June 10, 2009 decision of the Mahoning County Court of Common Pleas that denied Maple Leaf's motion to vacate a foreign judgment regarding two cognovit notes. The foreign judgment on warrant of attorney, in favor of appellee Fifth Third Bank, N.A., had been entered by the Court of Common Pleas of Butler County, Pennsylvania.

{¶ 2} Maple Leaf argues that the trial court's decision not to vacate the foreign judgment was erroneous, as the Pennsylvania court did not have subject-matter jurisdiction to enter judgment. Maple Leaf presents multiple arguments, relying on Ohio statutory law and Pennsylvania common law, to support its contention that subject-matter jurisdiction was lacking. Upon review, Maple Leaf's sole assignment of error is meritless.

{¶ 3} Although Maple Leaf's arguments speak to issues such as the application of choice-of-law contractual provisions and the states' substantive laws regarding cognovit notes, they do not support the contention that the Pennsylvania court lacked the power to review the action brought before it and to determine the rights of the parties. Because the Pennsylvania court had jurisdiction over the subject matter of the action before it, the Ohio trial court was bound to give full faith and credit to the Pennsylvania judgment. Accordingly, the decision of the trial court is affirmed.

Facts and Procedural History

{¶ 4} On October 17, 2006, Maple Leaf signed two mortgage notes with Fifth Third for properties in Trumbull and Mahoning Counties. The notes identify Maple Leaf as an Ohio corporation, and indicate that payments on the note are to be made to Fifth Third in Pennsylvania. The notes include clauses indicating that the notes are to be governed by Ohio law and warrants of attorney to confess judgment in the event that Maple Leaf defaults on the notes.

{¶ 5} On April 22, 2008, Fifth Third sent a notice of default and notice of acceleration to Maple Leaf on both notes. On or about September 26, 2008, a complaint in confession of judgment was filed on behalf of Fifth Third in the Court of Common Pleas of Butler County, Pennsylvania. On October 1, 2008, the Prothonotary of the Pennsylvania court entered judgment on the confession.

{¶ 6} On February 17, 2009, Fifth Third filed the October 1, 2008 foreign judgment of the Pennsylvania court with the Mahoning County Court of Common Pleas. Fifth Third filed a certified complete record of the Pennsylvania case, an affidavit averring the validity of the foreign judgment, and a request to issue notice of the foreign judgment to Maple Leaf. On March 13, 2009, Maple Leaf filed a Civ.R. 60(B) motion to vacate the foreign judgment, arguing that the notes contained invalid confession of judgment clauses and that the Pennsylvania court did not have jurisdiction to enter judgment. On March 19, 2009, Maple Leaf filed a motion to stay execution of the foreign judgment, which the trial court granted. On June 10, 2009, the trial court overruled Maple Leaf's motion to vacate.

{¶ 7} After Maple Leaf's notice of appeal, and on its motion, the trial court stayed the proceedings and execution of the foreign judgment pending the present appeal.

Subject-Matter Jurisdiction

{¶ 8} In its sole assignment of error, Maple Leaf asserts:

{¶ 9} “The Trial Court erred by overruling Maple Leaf Expansion, Inc.'s Motion to Vacate Foreign Judgment because the Pennsylvania Court lacked subject matter jurisdiction to issue the Foreign Judgment rendering it void.”

{¶ 10} Maple Leaf contends that the Pennsylvania court did not have subject-matter jurisdiction over the cognovit notes and thus that the Pennsylvania judgment should not be enforced in Ohio. Although an Ohio court does not have the authority to vacate a foreign judgment entered in a sister state, a Civ.R. 60(B) motion in a foreign-judgment context functions to raise “the issue of whether the Ohio court should refuse to enforce such judgment because of lack of jurisdiction.” Dollar Bank v. Bernstein Group, Inc. (1991), 71 Ohio App.3d 530, 532, 594 N.E.2d 1074, at fn. 1. See also Stauber v. McGrath, 5th Dist. Nos. 2006-CA-71 and 2006-CA-72, 2007-Ohio-6296, 2007 WL 4180010, at ¶ 41. A motion challenging a court's subject-matter jurisdiction inherently raises a question of law, which is reviewed independently without deference to a trial court's determination. In re Campbell, 7th Dist. No. 05 MA 10, 2006-Ohio-1764, 2006 WL 890999, at ¶ 7, citing Burns v. Daily (1996), 114 Ohio App.3d 693, 701, 683 N.E.2d 1164. We therefore proceed to review Maple Leaf's argument under a de novo standard of review.

{¶ 11} Ohio courts are required to honor judgments from foreign states pursuant to the Full Faith and Credit Clause, Section 1, Article IV, United States Constitution. Ohio's Uniform Enforcement of Foreign Judgment Act, R.C. 2329.021 et seq., sets forth Ohio's obligations under the Full Faith and Credit Clause and its federal statutory codification in Section 1738, Title 28, U.S.Code. “The doctrine of full faith and credit requires that the state of Ohio give to * * * judicial proceedings of another state the same faith and credit as they have by law or usage in the courts of the state from which they are taken.” Holzemer v. Urbanski (1999), 86 Ohio St.3d 129, 712 N.E.2d 713, syllabus.

{¶ 12} The United States Supreme Court has explained, “The concept of full faith and credit is central to our system of jurisprudence. Ours is a union of States, each having its own judicial system capable of adjudicating the rights and responsibilities of the parties brought before it. Given this structure, there is always a risk that two or more States will exercise their power over the same case or controversy, with the uncertainty, confusion, and delay that necessarily accompany relitigation of the same issue.” Underwriters Natl. Assur. Co. v. North Carolina Life & Acc. & Health Ins. Guar. Assn. (1982), 455 U.S. 691, 703-704, 102 S.Ct. 1357, 71 L.Ed.2d 558. Thus, in order to protect the finality of judgments and prevent conflict or confusion, we are generally bound to honor judgments from foreign states. A Pennsylvania judgment therefore must be given the same credit and res judicata effect in Ohio as it would hold in Pennsylvania. Durfee v. Duke (1963), 375 U.S. 106, 109, 84 S.Ct. 242, 11 L.Ed.2d 186.

{¶ 13} However, the question of subject-matter jurisdiction is one that is always open to inquiry and provides an exception to the general concept of full faith and credit. Thompson v. Whitman (1873), 85 U.S. 457, 21 L.Ed. 897. If a court lacks subject-matter jurisdiction to render judgment on an action, then that court's proceedings are void ab initio and the Full Faith and Credit Clause would not apply. Underwriters, 455 U.S. at 705, 102 S.Ct. 1357, 71 L.Ed.2d 558. Thus, although parties are generally barred from collaterally attacking a foreign judgment in a different state, they may do so if the foreign court lacked subject-matter jurisdiction. Durfee, 375 U.S. at 110, 84 S.Ct. 242, 11 L.Ed.2d 186; Wyatt v. Wyatt (1992), 65 Ohio St.3d 268, 270, 602 N.E.2d 1166.

{¶ 14} If the Court of Common Pleas of Butler County, Pennsylvania truly lacked the requisite subject-matter jurisdiction to provide a ruling on a confession of judgment, then the Ohio trial court would not be bound to afford full faith and credit to the judgment and the denial of Maple Leaf's Civ.R. 60(B) motion would be in error. However, the term “jurisdiction” tends to be quite liberally applied, and as a result the term “subject-matter jurisdiction” can often be misconstrued. Cheap Escape Co., Inc. v. Haddox, L.L.C., 120 Ohio St.3d 493, 2008-Ohio-6323, 900 N.E.2d 601, at ¶ 5; Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, 806 N.E.2d 992, at ¶ 12. Thus, a review of the term's meaning will shed light on the question of whether subject-matter jurisdiction was lacking in this case.

{¶ 15} Subject-matter jurisdiction is defined as a court's power to hear and decide cases. Pratts at ¶ 11; State ex rel. Tubbs Jones v. Suster (1998), 84 Ohio St.3d 70, 73, 701 N.E.2d 1002; Morrison v. Steiner (1972), 32 Ohio St.2d 86, 61 O.O.2d 335, 290 N.E.2d 841. Subject-matter jurisdiction relates to the proper forum for an entire class of cases, not the particular facts of an individual case.

In re Ohio Bur. of Support, 7th Dist. No. 00AP0742, citing State v. Swiger (1998), 125 Ohio App.3d 456, 462, 708 N.E.2d 1033. In the civil context, subject-matter jurisdiction is present if the action brought before a court alleges “any cause of action cognizable by the forum.” Id.

{¶ 16} Though the term “jurisdiction” is often used in reference to a court's subject-matter jurisdiction, it is also used in reference to a court's jurisdiction over a particular case. Pratts, 102 Ohio St.3d 81, 2004-Ohio-1980, 806 N.E.2d 992, at ¶ 12. “There is a distinction between a court that lacks subject-matter jurisdiction over a case and a court that improperly exercises that subject-matter jurisdiction once conferred upon it.” Id . at ¶ 10. The term “jurisdiction” is commonly used when a court makes an unauthorized ruling in a case that is otherwise within that court's subject-matter jurisdiction. Id. at ¶ 19-21. This latter use of “jurisdiction” does not relate...