Berman v. Arlington Bank

• Decision Date: 22 February 2013
• Docket Number: CASE NO. 4:12 CV 2888
• Parties: M.A. BERMAN, Plaintiff, v. ARLINGTON BANK, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

M.A. BERMAN, Plaintiff,

v.ARLINGTON BANK, et al., Defendants.

CASE NO. 4:12 CV 2888

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

Dated: February 22, 2013

JUDGE SARA LIOI

MEMORANDUM OF OPINIONAND ORDER

Pro se plaintiff Mark A. Berman¹ filed this action under 42 U.S.C. §§ 1983 and 1985, the Home Ownership Equity Protection Act ("HOEPA") and the Truth in Lending Act ("TILA") 15 U.S.C. § 1640, the Racketeer Influenced Corrupt Organizations Act ("RICO") 18 U.S.C. § 1961, and criminal statutes 18 U.S.C. § 1341 (mail fraud), § 1343 (wire fraud), and § 1344 (bank fraud) against Arlington Bank, Arlington Bank Vice President Matt Hohl, Attorney Jack D'Aurora, Attorney John MacKinnon, the Behal Law Offices, LLC, Attorney John Sherrod, Attorney W.M. Jump, and the Jump Legal Group. In addition, plaintiff asserts numerous state law causes of action. He raises numerous objections to a foreclosure action in the Franklin County Court of Common Pleas. He seeks monetary damages, reversal of the foreclosure judgment, an order setting aside the sheriff's sale and voiding the deed of transfer, and a judgment quieting title to the property in his favor.

Plaintiff also filed a motion to proceed in forma pauperis. (ECF No. 2). That motion is granted.

On January 7, 2013, defendants Arlington Bank, Behal Law Offices LLC, Jack D'Aurora, Matt Hohl, and John J. MacKinnon filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(3), combined with a motion for sanctions. (ECF No. 4.) Defendants contend the United States District Court for the Northern District of Ohio is not the proper venue to hear this case.

Thereafter, plaintiff filed motions seeking default judgment against all of the defendants. He states the defendants were served with notice and waiver forms and copies of the complaint, and failed to filed responsive pleadings.

Defendants W.M. Jump, and the Jump Legal Group filed a memorandum in opposition to the motion for default judgment on February 14, 2013. (ECF No. 26). John Sherrod filed a nearly identical memorandum in opposition on February 15, 2013. (ECF No. 28). They contend they have not yet been properly served with the complaint. They also claim venue is improper in the Northern District of Ohio.

For the reasons stated below, the motion to dismiss is granted, the motion for sanctions is denied without prejudice, the motions for default judgment are all denied, and this action is dismissed.

Background

Plaintiff alleges he purchased a condominium located at 2815 Avati Dr., Columbus, Ohio in September 2001. He obtained financing for the purchase through an adjustable rate mortgage in the amount of $44,500.00 through Arlington Bank in Columbus,Ohio. He claims he could not attend the closing and therefore was required by Arlington Bank to create a corporate "straw man" titleholder for the purpose of signing the mortgage. He contends he created BEE, Inc., as the non-operating shell corporation to purchase the property. The mortgage and the note were signed twice by Larry Berman using a Power of Attorney for Mark Berman. The first signature indicates Larry Berman signed for Mark Berman individually and the second signature indicates he signed for Mark Berman as "president" of BEE, Inc. (ECF No. 4-3 at 5.) Plaintiff indicates Arlington Bank was aware the condominium was to be used as Plaintiff's personal residence. Nevertheless, Larry Berman also executed a "Non-Owner Occupancy Rider" for Mark Berman as an individual and as president of BEE, Inc., stating: "In modification of and notwithstanding the provision of Section 6 of the Security Instrument, Borrower represents that (s)he does not intend to occupy the property described in the Security Instrument as a principal residence." (ECF No. 4-3 at 13.)

Plaintiff executed a Home Equity Line of Credit and Open Ended Mortgage with Arlington Bank in December 2001 in the amount of $15,000.00. This note, signed by Mark Berman on behalf of himself individually and as president of BEE, Inc., contains a warning that "[b]y signing this paper you give up your right to notice and court trial." (ECF No. 4-3 at 14.) It further advises Mr. Berman that "if you do not pay on time a court judgment may be taken against you without your prior knowledge and the powers of a court can be used to collect from you regardless of any claims you may have against the creditor whether for returned goods, faulty goods, failure on his part to comply with the agreement or any other cause." (ECF No. 4-3 at 14.)

It appears yet another adjustable rate mortgage was taken out by Mark Berman on behalf of himself and BEE, Inc. through Arlington Bank in March 2005 in the amount of $58,703.00. The note, signed by Mr. Berman as president of BEE, Inc., specifically states in a section titled "Statement Concerning Nature of Loan Transaction" that "[e]ach of the undersigned hereby warrants and represents to the holder hereof that the proceeds of this loan will be used by the undersigned for business or commercial purposes and will not be used for personal, family, education or household purposes." (ECF No. 4-3 at 26.) This note replaced the previous note and the Home Equity Line of Credit.

Plaintiff alleges he entered into negotiations with Arlington Bank to refinance the mortgage in January 2009. He claims that, as a condition of the refinancing, the bank demanded that the property be transferred out of the name of BEE, Inc. and solely into his name as an individual. He claims he complied with the request and transferred the property to Mark Berman, Trustee. He does not indicate the name of the trust or the beneficiary of the trust for whom the property was held. He states that "Matt Hohl, Arlington's senior officer, was notified of the transfer and the Bank had no objection." Plaintiff claims that when the proposed refinancing documents were sent to him, he noted that the payments and interest rates were higher than those previously represented to him. He contends the Bank offered to extend the term of the loan to lower the monthly payments, but he refused. It does not appear he signed these loan documents.

Arlington Bank, represented by Columbus Ohio attorney Jack D'Aurora of the Columbus, Ohio law firm, the Behal Law Group, LLC, filed a foreclosure action in the Franklin County Court of Common Pleas on May 22, 2009 against BEE, Inc., and MarkBerman. The action, which was assigned to Franklin County Common Pleas Court Judge Beatty, was divided into two causes of action, one for breach of contract and the other for foreclosure. The Bank alleged BEE, Inc. and Mr. Berman failed to make payments on the note beginning in January 2009. The foreclosure complaint further indicated that the note executed by Mr. Berman was a cognovit promissory note and, pursuant to Ohio Rev. Code § 2323.13, any Ohio attorney could enter an appearance on behalf of the Bank and confess judgment against Berman and BEE, Inc. when default occurred. Columbus, Ohio Attorney Jack MacKinnon, also with the Behal Law Group, LLC, apparently acting as the confessor of judgment, filed an answer to the complaint on behalf of BEE, Inc. and Mark Berman admitting all of the allegations. That answer was filed along with the complaint on May 22, 2009. On June 24, 2009, plaintiff responded to the complaint with a pro se motion to dismiss pursuant to Ohio R. Civ. P. 12(b)(6), claiming Arlington Bank had not properly established that it was a real party in interest.

The common pleas court transferred the action to its commercial docket on July 10, 2009. This action not only changed the classification of the case, but also moved the case from Judge Beatty's docket, to the docket of Judge Frye. Berman objected to the transfer and asked Judge Beatty to reconsider her decision. On October 16, 2009, Judge Frye addressed both Berman's motion to dismiss and his motion to reverse the transfer to the commercial docket. Based on the "Non-Owner Occupancy Rider" submitted with the original mortgage, and the statement of business purpose attested to by Berman as president of BEE, Inc. in the March 25, 2005 mortgage, the court determined that the case was not an individual real estate foreclosure as Berman contended and was properly on the commercial docket.Judge Frye denied the motion to reverse the transfer. He also denied the motion to dismiss, indicating that the mortgages all named Arlington Bank as the holder of the loan, thereby making it clearly a party in interest. Finally, the court found the cognovit judgment was proper, noting that the cognovit warning language was clearly underlined, bolded, capitalized in a larger font and boxed just above the signature blocks. Judge Frye granted judgment in favor of Arlington Bank on the first count of the complaint for breach of contract.

Arlington Bank then filed a motion for default judgment against BEE, Inc. and Berman on the second cause of action for foreclosure. Neither BEE, Inc. nor Berman responded to the motion and, on December 18, 2009, the court entered a default judgment against both of them.

Plaintiff appealed these judgments to the Ohio Tenth District Court of Appeals on January 15, 2010. He also filed a mandamus action against Judge Frye and Judge Beatty on March 8, 2010. The following day, he filed a motion to stay the execution of the judgment in the trial court and asked the court to vacate the default judgment. That motion was denied. He filed a motion in the Ohio court of appeals to stay the execution of the judgment. That motion was granted on the condition that plaintiff post a supersedeas bond. Plaintiff did not post a bond, but instead filed a document he created titled "Bonded Promissory Note" which claimed to be a "set off treasury" via "a pass-through account of Sylvester G. Foster." It purported to be backed by the United States Treasury, and relied on the Uniform Commercial Code, the Hague Convention and "Laws of Necessity," as support for its validity. The court of appeals...