Cairns v. Ohio Sav. Bank
Decision Date | 04 March 1996 |
Docket Number | No. 68528,68528 |
Parties | CAIRNS et al., Appellants, v. OHIO SAVINGS BANK, Appellee. |
Court | Ohio Court of Appeals |
John T. Murray, Sandusky, OH; Charles S. Zimmerman and Barry G. Reed, Minneapolis, MN; Peter M. Racher and M. Scott Barrett, Indianapolis, IN; and Henry J. Price, Indianapolis, IN, for appellants.
Marc W. Freimuth and Roy E. Lachman, Cleveland, OH; David J. Butler and Tacie H. Yoon, Washington, DC, for appellee.
Plaintiffs Dennis and Madonna Cairns (collectively, "appellants") appeal from the judgment of the Cuyahoga County Court of Common Pleas dismissing their putative class action complaint against Ohio Savings Bank for failure to state a claim upon which relief can be granted. For the reasons which follow, we affirm in part and reverse in part the judgment of the trial court.
The facts alleged in the complaint of the appellants are as follows: The appellants are residents of Cuyahoga County, Ohio. Ohio Savings Bank holds and services a mortgage on the appellants' home. Pursuant to the mortgage agreement between the parties, Ohio Savings maintains an escrow account on behalf of the appellants, funded by monthly payments and used to pay property taxes and insurance premiums as they become due. The appellants allege that Ohio Savings keeps a so-called "cushion," or overage, in the escrow account that is in excess of the amount allowable by the mortgage's contractual provisions and the provisions of Section 10 of the Real Estate Settlement Procedures Act (the "RESPA"), Section 2609, Title 12, U.S.Code, which limits the amount of money that a borrower can be required to deposit into an escrow account in connection with a federally related mortgage loan. The miscalculation is alleged by the appellants to apply to thousands of similarly situated mortgagees throughout the United States whose mortgages are held or serviced by Ohio Savings, with an average surplus in each escrow account of several hundred dollars. The appellants' complaint asserts claims for breach of contract, fraud and/or negligent misrepresentation and breach of fiduciary duty.
With respect to relief, the appellants' complaint seeks, inter alia, a permanent injunction enjoining Ohio Savings "from requiring any mortgagor to establish or maintain in an escrow account an actual cushion in excess of the cushion authorized by the underlying mortgage agreement." It further requests that the court direct Ohio Savings "to recalculate for each mortgage held or serviced by them [sic] in the amount of each mortgagor's escrow balance, and to make such adjustments as are necessary to ensure that the balance in the escrow account does not exceed the amount authorized by the underlying mortgage contract, and to pay to the mortgagor a refund of any excess balances plus interest."
In response to the complaint, Ohio Savings Bank filed a motion to dismiss each of the appellants' claims. Ohio Savings argued that the breach of contract claim should be dismissed because the appellants did not allege when the breaches occurred or what contractual provisions of the mortgage agreement were breached. Ohio Savings argued that the fraud and/or negligent misrepresentation claims should be dismissed because Ohio does not recognize a cause of action for tortious breach of contract and, further, because the allegations made fail to satisfy the requirement under Civ.R. 9(B) that averments of fraud be stated with particularity. Finally, Ohio Savings argued that the appellants' claim for breach of fiduciary duty should be dismissed because, under Ohio law, the relationship between a mortgagor and a mortgage servicer is not fiduciary.
The trial court granted Ohio Savings's motion to dismiss in its entirety. The journal entry did not specify whether the dismissal was with or without prejudice. It is from this judgment that the appellants now appeal.
On appeal, the appellants argue that the trial court erred in dismissing their complaint, which, they maintain, demonstrated a breach of the mortgage agreement, pleaded fraud with specificity and demonstrated that Ohio Savings Bank had deliberately misled them while acting as a fiduciary.
Under the rules of notice pleading, Civ.R. 8(A)(1) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." When construing a complaint for failure to state a claim under Civ.R. 12(B)(6), a court must accept as true all factual allegations in the complaint. Greeley v. Miami Valley Maintenance Contrs., Inc. (1990), 49 Ohio St.3d 228, 551 N.E.2d 981. For a court to grant a motion to dismiss, it must appear beyond a doubt from the complaint that the plaintiff can prove no set of facts, consistent with the complaint, which would entitle the plaintiff to relief. O'Brien v. Univ. Community Tenants Union, Inc. (1975), 42 Ohio St.2d 242, 71 O.O.2d 223, 327 N.E.2d 753.
With regard to the appellants' breach of contract claim, such a claim is generally pleaded by stating the terms of the contract, the performance by the plaintiff of his obligation, the breach by the defendant, consideration and damages. Harper v. Miller (1957), 109 Ohio App. 269, 11 O.O.2d 17, 164 N.E.2d 754.
In their complaint, the appellants alleged the following:
These allegations in the appellants' complaint support an allegation of breach of contract. It was not necessary, as Ohio Savings Bank argues, that the contractual obligations breached be pleaded with greater specificity. It was also not necessary that the complaint state when the breaches occurred. Time is not a necessary material allegation in this breach of contract claim. Civ.R. 9(F) and 8(A). Accordingly, the trial court erred when it granted Ohio Savings Bank's motion to dismiss this claim.
With regard to the appellants' claim for breach of fiduciary duty, Ohio Savings Bank argues that this claim was appropriately dismissed by the trial court because the relationship between a mortgage servicing agent and a mortgagor is not, as a matter of law, fiduciary in nature. They further argue that the appellants failed to allege facts giving rise to a de facto fiduciary relationship. The appellants, on the other hand, argue that Ohio Savings Bank's role as a mortgage servicing agent is distinguishable from its role as a creditor or money lender, which they concede is nonfiduciary. Specifically, the appellants contend that it is Ohio Savings Bank's management and control over their...
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