CitiMortgage, Inc. v. Roznowski

• Decision Date: 15 May 2014
• Docket Number: No. 2012–2110.,2012–2110.
• Citation: 139 Ohio St.3d 299,11 N.E.3d 1140
• Parties: CITIMORTGAGE, INC., Appellant, v. ROZNOWSKI et al., Appellees.
• Court: Ohio Supreme Court

139 Ohio St.3d 299

11 N.E.3d 1140

CITIMORTGAGE, INC., Appellant,

v.ROZNOWSKI et al., Appellees.

No. 2012–2110.

Supreme Court of Ohio.

Submitted Nov. 5, 2013.

Decided May 15, 2014.

Syllabus of the Court

1. A judgment decree in foreclosure that allows as part of recoverable damages unspecified amounts advanced by the mortgagee for inspections, appraisals, property protection, and maintenance is a final, appealable order pursuant to R.C. 2505.02(B)(1).

2. A mortgagor may contest amounts expended by a mortgagee for inspections, appraisals, property protection, and maintenance during proceedings to confirm the foreclosure sale and may appeal the order of confirmation of sale.

Carpenter, Lipps & Leland, L.L.P., David A. Wallace, and Karen M. Cadieux, Columbus; and Laurito & Laurito, L.L.C., Erin M. Laurito, and Colette S. Carr, Springboro, for appellant.

Traska Law Firm, L.L.C., and Peter D. Traska, for appellees.

Andrew M. Engel Co., L.P.A., and Andrew M. Engel, urging affirmance for amicus curiae, Terry Smith.

LANZINGER, J.

{¶ 1} This case raises two issues related to judgments in mortgage-foreclosure cases: first, whether a judgment decree in foreclosure is a final, appealable order when it includes unspecified amounts advanced by the mortgagee for inspections, appraisals, property protection, and maintenance and, second, whether a mortgagor may challenge those amounts as part of the proceedings to confirm the foreclosure sale and appeal the order of confirmation. We answer both questions in the affirmative.

I. Case Background

{¶ 2} On February 19, 2008, appellant, CitiMortgage, Inc., filed a complaint seeking to foreclose on property owned by appellees, James A. Roznowski and Steffanie M. Roznowski. In the complaint, CitiMortgage specified that it sought judgment against the Roznowskis for the principal sum

plus interest from August 1, 2007 to October 1, 2007 in the amount of $1,479.90 and interest on said principal at the rate of 7.125% per annum from October 1, 2007, until paid, plus late charges, taxes, assessments and insurance premiums that may be advanced by Plaintiff, and for all costs herein expended; and any and all advancements which have been paid or will be paid for the benefit, preservation and protection of said real property herein.

The complaint further requested that the

mortgage may be decreed a valid first and best lien upon said real property, with the exception of taxes and assessments; that its mortgage deed upon the described real property be foreclosed and said real property sold according to the statutes and procedures in effect, free of all claims, liens and interests of all the Defendants, that all named Defendants set forth their claim or interest in said real property or be forever barred from asserting same.

{¶ 3} The Roznowskis filed an answer, counterclaim, and third-party complaint alleging that CitiMortgage and CitiMortgage's predecessor, ABN AMRO Mortgage Group, Inc., had violated the Consumer Sales Practices Act and that Quest Title Agency, Inc., had engaged in the unauthorized practice of law when it allegedly provided incorrect legal advice to them about documents it had drafted.

{¶ 4} The trial court granted CitiMortgage's and Quest's motions for summary judgment. The entry stated:

It is hereby

ORDERED, ADJUDGED and DECREED that Plaintiff's Motion for Summary Judgment and Third–Party Defendant's Motion for Summary Judgment are GRANTED; and it is further

ORDERED that Counsel for Plaintiff is to prepare a judgment entry consistent with this Entry, the pleadings and record within two weeks from the date of this entry. This is a final appealable order and there is no just cause for delay.

{¶ 5} The Roznowskis filed an appeal, arguing in their first assignment of error that the trial court had entered final judgment without any entry setting forth the amount owed. The Fifth District Court of Appeals dismissed the appeal, holding that the order was not final and appealable, because it did not set forth the dollar amount of the balance due on the mortgage and did not refer to any documents in the record that did. 5th Dist. Stark No. 2011–CA–124, 2012-Ohio-74, 2012 WL 75950, at ¶ 26.

{¶ 6} On remand, the trial court issued a judgment entry sustaining CitiMortgage's motion for summary judgment and issuing a decree for foreclosure. In the entry, the court stated that there was due to CitiMortgage the principal sum of $126,849.04 on the promissory note, along with interest at specified rates and costs of the action. The court also added to the amounts that were to be recovered

those sums advanced by Plaintiff for costs of evidence of title required to bring this action, for payment of taxes, insurance premiums and expenses incurred for property inspections, appraisal, preservation and maintenance for which amount judgment is awarded in favor of Plaintiff and against Defendant[s].

The court further found that the mortgage to CitiMortgage was “a good and valid lien and the first and best lien on the real estate * * * prior to all other liens against same, with the exception of real estate taxes.” The trial court accordingly ordered the property to be sold by sheriff's sale.

{¶ 7} On appeal, the Fifth District dismissed the appeal for lack of jurisdiction after holding that the trial court had again failed to issue a final, appealable order. 5th Dist. Stark No. 2012–CA–93, 2012-Ohio-4901, 2012 WL 5209362. The court of appeals reasoned that “expenses incurred in property inspections, appraisal, preservation and maintenance” as set forth in the trial court's order are not easily ascertainable and thus must be set forth specifically before the order is final and appealable. Id. at ¶ 9. It noted that the matter had been pending nearly five years and nothing in the record gave the Roznowskis notice of the total amount required for them to exercise their statutory right of redemption. Id. The court also stated that the proper time to challenge these amounts is in the foreclosure action, not upon confirmation of a judicial sale. Id.

{¶ 8} The Fifth District certified that its holding was in conflict with the holding of the Seventh District in LaSalle Bank Natl. Assn. v. Smith, 7th Dist. Mahoning No. 11 MA 85, 2012-Ohio-4040, 2012 WL 3834894. We determined that a conflict exists on the following issues:

1. Whether a judgment decree in foreclosure is a final appealable order if it includes as part of the recoverable damages amounts advanced by the mortgagee for inspections, appraisals, property protection and maintenance, but does not include specific itemization of those amounts in the judgment.

2. Whether a mortgagor that contests amounts expended by a mortgagee for inspections, appraisals, property protection and maintenance can challenge those amounts as part of the proceedings to confirm the foreclosure sale, and appeal any adverse ruling in an appeal of the order of confirmation.

134 Ohio St.3d 1447, 2013-Ohio-347, 982 N.E.2d 726.

II. Legal Analysis

{¶ 9} The issues are interrelated. The first concerns the form of the judgment decree in foreclosure, and the second, the timing of appeal by the mortgagor of any final damages amounts awarded.

A. Specificity of Foreclosure Order

{¶ 10} Article IV, Section 3(B)(2) of the Ohio Constitution grants jurisdiction to courts of appeals “to review and affirm, modify, or reverse judgments or final orders of the courts of record inferior to the court of appeals within the district.” Consequently, “[i]f an order is not final, then an appellate court has no jurisdiction.” Gen. Acc. Ins. Co. v. Ins. Co. of N. Am., 44 Ohio St.3d 17, 20, 540 N.E.2d 266 (1989). “An order of a court is a final appealable order only if the requirements of both R.C. 2505.02 and, if applicable, Civ.R. 54(B), are met.” State ex rel. Scruggs v. Sadler, 97 Ohio St.3d 78, 2002-Ohio-5315, 776 N.E.2d 101, ¶ 5.

{¶ 11} The threshold requirement in our analysis, then, is whether the judgment decree in foreclosure that fails to itemize amounts expended for inspections, appraisals, property protection, and maintenance satisfies R.C. 2505.02. R.C. 2505.02 provides:

(B) An order is a final order that may be reviewed, affirmed, modified, or reversed, with or without retrial, when it is one of the following:

(1) An order that affects a substantial right in an action that in effect determines the action and prevents a judgment.

{¶ 12} We must accordingly determine whether a decree of foreclosure like the one issued by the trial court in this case meets the requirements set forth in R.C. 2505.02(B)(1). The Fifth District and Seventh District have come to different conclusions on this issue.

Fifth and Seventh District views

{¶ 13} In considering whether the trial court's judgment was final, the Fifth District noted that generally an order that determines liability but not damages is not a final, appealable order. 2012-Ohio-4901, 2012 WL 5209362, ¶ 8, citing Walburn v. Dunlap, 121 Ohio St.3d 373, 2009-Ohio-1221, 904 N.E.2d 863, ¶ 31. But it also recognized that an exception to this rule occurs “ ‘where the computation of damages is mechanical and unlikely to produce a second appeal because only a ministerial task similar to assessing costs remains.’ ” Id., quoting State ex rel. White v. Cuyahoga Metro. Hous. Auth., 79 Ohio St.3d 543, 546, 684 N.E.2d 72 (1997). In its decision, the Fifth District reasoned that the expenses incurred for property inspections, appraisal, preservation, and maintenance “are not easily ascertainable,” ¶ 9, and accordingly that a judgment that did not specify these damages was not a final, appealable order.

{¶ 14} The Seventh District reached the opposite conclusion in the conflict case, LaSalle Bank Natl. Assn. v. Smith, 7th Dist. Mahoning No. 11 MA 85, 2012-Ohio-4040, 2012 WL 3834894. In LaSalle, the trial court had granted summary judgment in favor of the mortgagee bank and ordered foreclosure and sale of the property. The mortgagors failed to appeal the...