Citizens Nat'l Bank of Sw. Ohio v. Harrison, 14CV3027.

• Decision Date: 29 April 2016
• Docket Number: No. 14CV3027.,14CV3027.
• Citation: 64 N.E.3d 315
• Parties: The CITIZENS NATIONAL BANK OF SOUTHWESTERN OHIO, Plaintiff–Appellant v. John C. HARRISON, et al., Defendants–Appellees.
• Court: Ohio Court of Appeals

64 N.E.3d 315

The CITIZENS NATIONAL BANK OF SOUTHWESTERN OHIO, Plaintiff–Appellant

v.John C. HARRISON, et al., Defendants–Appellees.

No. 14CV3027.

Court of Appeals of Ohio, Second District, Montgomery County.

April 29, 2016.

Gary W. Gottschlich, and Martina M. Dillon, Dayton, OH, Attorneys for Plaintiff–Appellant, Civista Bank fka The Citizens National Bank of Southwestern Ohio.

Elizabeth Carullo, and Jeffrey R. Helms, and Kimberlee S. Rohr, Cincinnati, OH, Attorneys for Defendant–Appellee, Fifth Third Mortgage Company fka CitFed Mortgage Corporation of America.

OPINION

FROELICH, J.

{¶ 1} Mortgagee The Citizens National Bank of Southwestern Ohio, nka Civista Bank ("Citizens"), appeals from the trial court's May 29, 2015 judgment, granting a judgment and decree of foreclosure against Mortgagors John and Katherine Harrison, in favor of another mortgagee, Fifth Third Mortgage Company, fka CitFed Mortgage Corporation of America. For the following reasons, the trial court's judgment will be affirmed.

I. Factual and Procedural History

{¶ 2} The record reveals the following facts:

{¶ 3} On March 31, 1989, John Harrison borrowed $81,600 from CitFed Mortgage. Harrison executed an adjustable rate note for that amount, and the note was secured by a 30–year mortgage on the real property located at 2222 Powers Lane in Kettering, Ohio. In 1998, CitFed Mortgage amended its articles of incorporation. As part of those amendments, its name changed to Fifth Third Mortgage.

{¶ 4} In January 2002, Harrison and his wife, Katherine, executed an Open–End Mortgage in favor of Citizens, which granted Citizens a mortgage on the property located at 2222 Powers Lane, in addition to seven other properties. The mortgage indicated that the maximum amount of loan indebtedness secured by the mortgage was $311,000. The document stated that "Grantor and Lender intend that, in addition to any other indebtedness or obligations secured hereby, this Mortgage shall secure indebtedness arising from loan advances made by Lender after this Mortgage is delivered to the recorder for record."

{¶ 5} On April 18, 2011, the Harrisons borrowed $164,721.29 from Citizens and executed a cognovit note for the loan.

{¶ 6} On May 22, 2014, Citizens filed a complaint in foreclosure against the Harrisons, claiming that the Harrisons were in default of their cognovit note and that they owed a principal amount of $140,036.56, plus interest, fees, and expenses. Citizens sought judgment on the note and foreclosure of the property located at 2222 Powers Lane. Citizens acknowledged that CitFed Mortgage (Fifth Third) and the Montgomery County Treasurer might have an interest in the property, and those parties were also named as defendants.

{¶ 7} The Montgomery County Treasurer was served by certified mail on May 28, Fifth Third was served by certified mail on May 29, Katherine Harrison was served by regular mail on June 20, and John Harrison was served by regular mail on June 24, 2014. The Montgomery County Treasurer filed a timely answer to Citizens' complaint, but the Harrisons and Fifth Third did not. On August 6, 2014, Citizens filed a motion for a default judgment against the Harrisons and Fifth Third.

{¶ 8} On September 16, 2014, Fifth Third filed a motion for leave to file an answer, counterclaim and cross-claim instanter, pursuant to Civ.R. 6(B).¹ Fifth Third stated that counsel had just been retained, that no prejudice would result to any of the parties, as judgment had not yet been entered, that the motion was not meant for delay or as a disregard for the Civil Rules, and that Fifth Third claimed an interest in the property at issue. Fifth Third further indicated that it "recently processed the summons & complaint for this case and immediately retained counsel to file an answer to protect its interest in the property." A copy of Fifth Third's proposed answer, with cross-claims and a counterclaim, was attached to the motion.

{¶ 9} Citizens opposed Fifth Third's motion for leave to file its pleading. According to the affidavit of Citizens' counsel, Gary Gottschlich, on June 10, 2014, Gottschlich returned a telephone call from Chelsea Oerwinger, who had called him on behalf of Fifth Third. Oerwinger had indicated that she could not locate Fifth Third's mortgage, and Gottschlich provided her with the mortgage information. Oerwinger had not requested an extension of time to file an answer. Citizens argued in its memorandum that Fifth Third's conduct in waiting until September 16 to seek to answer the complaint did not constitute excusable neglect under Civ.R. 6(B).

{¶ 10} Fifth Third filed a reply memorandum, emphasizing that the trial court had discretion to permit the late filing and that "granting Plaintiff's default judgment against [Fifth Third] would result in inequities and give Plaintiff a windfall for which it has not bargained." Fifth Third stated that its late response was "not intended to delay or confuse the proceedings and the failure to answer within the proscribed deadline was merely an innocent oversight." It further noted that the motion for leave was made prior to the entry of judgment and that Citizens would not be prejudiced by the late filing. It stated that permitting Fifth Third to assert its interest would not delay Citizens' case, but would merely properly identify the priorities of the secured parties.

{¶ 11} On October 24, 2014, the trial court granted a default judgment to Citizens against the Harrisons, but denied Citizens' motion for a default judgment against Fifth Third. The trial court granted Fifth Third's motion to file its answer, cross-claim, and counterclaim instanter, and it directed Fifth Third to file its pleading within seven days. Fifth Third did not comply with the trial court's directive.

{¶ 12} On November 4, 2014, Citizens renewed its motion for a default judgment against Fifth Third. The same day, Fifth Third filed its answer, cross-claims, and counterclaim. Fifth Third's answer included cross-claims against the Harrisons for defaulting on their note; it alleged that the Harrisons owed a principal amount of $25,168.08, plus interest, advances and other charges. Fifth Third sought a monetary judgment and a decree of foreclosure for 2222 Powers Lane. Fifth Third also brought a counterclaim against Citizens, asking that its mortgage be adjudged a valid first lien on the property.

{¶ 13} Two days later (November 6), Citizens moved to strike Fifth Third's pleading. Citizens argued that the answer was filed out of time and that Fifth Third had failed to seek leave to file it. Fifth Third responded that it had not been served with the trial court's October 24 entry, and that counsel for Fifth Third became aware of that entry through a routine check of the online case docket on November 4. Counsel for Fifth Third stated that she immediately submitted the pleading through the trial court's electronic filing system. She stated that neither Fifth Third nor its counsel intentionally disregarded the trial court's October 24 entry or its seven-day time frame for filing the pleading. Counsel for Fifth Third supported the response with an affidavit, including a printout of her notifications from the court's eFiling system. The list of notifications did not include a notification for the trial court's October 24 decision.

{¶ 14} On December 11, 2014, the trial court overruled Citizens' renewed motion for default judgment against Fifth Third. Ultimately, on May 29, 2015, the trial court granted a judgment and decree of foreclosure against the Harrisons in favor of Fifth Third. (The trial court had previously granted a judgment and decree of foreclosure against the Harrisons in favor of Citizens.² ) The court prioritized the liens and determined the amounts due thereon. It found that Fifth Third had the valid first lien and that Citizens' lien was junior to Fifth Third's, but both liens were junior to the claim of the Montgomery County Treasurer. The trial court granted monetary judgments to Fifth Third and Citizens, foreclosed the mortgages, and ordered the property to be sold.

{¶ 15} Citizens appeals the trial court's May 29 judgment, raising two assignments of error. We will address them together.

II. Permission to File Untimely Answer

{¶ 16} Citizens' assignments of error state:

1. The Trial Court erred in finding "excusable neglect" and permitting Appellee Fifth Third Mortgage Company f/k/a Citfed Mortgage Corporation of America to file its Answer, Cross-claim, and Counterclaim out of time when the record is devoid of any evidence demonstrating "excusable neglect" as required by Ohio Rule of Civil Procedure 6(B)(2).

2. The Trial court erred in permitting Appellee Fifth Third Mortgage Company f/k/a Citfed Mortgage Corporation of America to file its Answer, Cross-claim, and Counterclaim out of time when said pleadings were filed after a court-established deadline for filing same and without first seeking leave of court and showing "excusable neglect."

{¶ 17} " Civ.R. 12(A)(1) provides that a defendant shall serve his answer within twenty-eight days after service of the complaint. Pursuant to Civ.R. 6(B), upon motion made after the expiration of the specified period, the trial court may permit a defendant to file an answer if his failure to do so was the result of excusable neglect. Although Civ.R. 6(B) grants broad discretion to the trial court, its discretion is not unlimited. Miller v. Lint (1980), 62 Ohio St.2d 209, 214, 404 N.E.2d 752. Generally, some showing of excusable neglect is a necessary prelude to the filing of an untimely answer." Alldred v. Alldred, 2d Dist. Montgomery No. 17043, 1998 WL 769814, *2 (Nov. 6, 1998), quoted by Stumpff v. Harris, 2d Dist. Montgomery No. 23354, 2010-Ohio-1241, 2010 WL 1138972, *3 (Mar. 26, 2010) and Ihenacho v. Ohio Inst. Of Photography & Technology, 2d Dist. Montgomery No. 24191, 2011-Ohio-3730, 2011 WL 3245119, ¶ 18–19. "[T]he test for excusable neglect under Civ.R. 6(B)(2) is less stringent than that applied...