Deutsche Bank Nat'l Trust Co. v. Thomas
| Decision Date | 30 September 2015 |
| Docket Number | No. 14AP–809.,14AP–809. |
| Citation | 42 N.E.3d 1254 |
| Parties | DEUTSCHE BANK NATIONAL TRUST CO., as Trustee, in trust for registered Holders of Long Beach Mortgage Loan Trust 2005–WL1, Asset–Backed Certificates, Plaintiff–Appellee, v. Susan THOMAS, Defendant–Appellant. |
| Court | Ohio Court of Appeals |
Jason A. Whitacre, Stow, and Stefanie L. Deka, for appellee.
Kendo, Alexander, Cooper & Engel LLP, and Andrew Engel; Mills, Mills, Fiely & Lucas LLC, and Brian D. Flick, Canton, for appellant.
{¶ 1} Defendant-appellant, Susan Thomas (“appellant”), appeals from a judgment of the Franklin County Court of Common Pleas denying her motion to strike an affidavit filed by plaintiff-appellee, Deutsche Bank National Trust Co., as Trustee, in trust for registered Holders of Long Beach Mortgage Loan Trust 2005–WL1, Asset–Backed Certificates (“appellee”), and granting summary judgment in favor of appellee. Because we conclude that appellee failed to demonstrate there was no genuine issue of material fact as to whether it was entitled to enforce the note, we reverse.
{¶ 2} On March 10, 2005, appellant executed a promissory note in favor of Long Beach Mortgage Company (“Long Beach”) in the amount of $451,250 in return for a loan made by Long Beach in the same amount. On that same date, appellant executed a mortgage on real property located at 4359 Hanna Hills Drive, Dublin, Ohio. The mortgage described appellant as the mortgagor and borrower and identified Long Beach as the lender.
{¶ 3} On April 1, 2013, Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Loan Trust 2005–WL1 (“Deutsche Bank”) filed a complaint in foreclosure, asserting that it was “in possession of and entitled to enforce” the note executed by appellant. (Complaint, ¶ 1.) The complaint named appellant and John Thomas as defendants, along with the Franklin County Treasurer, the State of Ohio Department of Taxation, and several banks. Deutsche Bank also asserted that it had been assigned the mortgage executed by appellant. As exhibits to its complaint, Deutsche Bank filed copies of the note and mortgage executed by appellant, and an assignment of mortgage from “Washington Mutual Bank siit Long Beach Mortgage Company” to Deutsche Bank. Deutsche Bank sought judgment against appellant in the amount of the sum it alleged was unpaid on the note, reformation of the mortgage to state that it was granted by appellant and her husband, John Thomas, and an order foreclosing the mortgage and ordering sale of the premises to satisfy the amounts due it. Appellant and John Thomas filed an answer asserting, among other defenses, that Deutsche Bank lacked standing and was not the real party in interest. Appellant and John Thomas also claimed that Deutsche Bank was not the holder or holder in due course of the note, was not entitled to enforce the note, and did not hold the note at the time the complaint was filed.
{¶ 4} Deutsche Bank subsequently moved to substitute appellee as the party plaintiff under Civ.R. 25(C), asserting that appellee was the current holder of the note and mortgage. Deutsche Bank supported its motion to substitute with corporate assignment of mortgage document reflecting that the mortgage had been assigned from Deutsche Bank to appellee. The trial court granted the motion to substitute, finding that appellee had been assigned the note and mortgage.
{¶ 5} Appellee filed a motion for summary judgment asserting, in part, that it had presented evidence demonstrating that it had possession of the note, which was payable to bearer due to a blank indorsement by Long Beach. In support of its motion for summary judgment, appellee provided an affidavit from Karter Nelson (“the Nelson affidavit”). Appellant filed a motion to strike the Nelson affidavit, asserting that Nelson lacked personal knowledge of the facts asserted in the affidavit. Appellant argued that Nelson failed to properly authenticate the documents attached to the affidavit and that the affidavit was ineffective to demonstrate possession of the note. Appellant also filed a response in opposition to appellee's motion for summary judgment, claiming that the Nelson affidavit was insufficient and, therefore, appellee failed to demonstrate that it was entitled to judgment as a matter of law. The court granted appellee's motion for summary judgment.
{¶ 6} Appellant appeals from the trial court's judgment, assigning two errors for this court's review:
{¶ 7} We begin our analysis with appellant's second assignment of error, in which she asserts that the trial court erred by granting summary judgment in favor of appellee.
{¶ 8} An order granting summary judgment is subject to de novo review. Capella III, L.L.C. v. Wilcox, 190 Ohio App.3d 133, 2010-Ohio-4746, 940 N.E.2d 1026, ¶ 16 (10th Dist.), citing Andersen v. Highland House Co., 93 Ohio St.3d 547, 548, 757 N.E.2d 329 (2001). “De novo appellate review means that the court of appeals independently reviews the record and affords no deference to the trial court's decision.” (Internal citations omitted.) Holt v. State, 10th Dist. No. 10AP–214, 2010-Ohio-6529, 2010 WL 5550693, ¶ 9. Summary judgment is appropriate where “the moving party demonstrates that (1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made.” Capella III at ¶ 16, citing Gilbert v. Summit Cty., 104 Ohio St.3d 660, 2004-Ohio-7108, 821 N.E.2d 564, ¶ 6. In ruling on a motion for summary judgment, the court must resolve all doubts and construe the evidence in favor of the nonmoving party. Pilz v. Ohio Dept. of Rehab. & Corr., 10th Dist. No. 04AP–240, 2004-Ohio-4040, 2004 WL 1728609, ¶ 8. See also Hannah v. Dayton Power & Light Co., 82 Ohio St.3d 482, 485, 696 N.E.2d 1044 (1998) (). Therefore, we undertake an independent review to determine whether appellee was entitled to judgment as a matter of law.
{¶ 9} A plaintiff seeking summary judgment on a foreclosure claim must demonstrate that it was entitled to enforce the note and had an interest in the mortgage on the date the foreclosure complaint was filed. FV–I, Inc. v. Lackey, 10th Dist. No. 13AP–983, 2014-Ohio-4944, 2014 WL 5768578, ¶ 15. See JPMorgan Chase Bank, N.A. v. Allton, 10th Dist. No. 14AP–228, 2014-Ohio-3742, 2014 WL 4245962, ¶ 12 (). Generally, Ohio courts have held that a promissory note secured by a mortgage is a negotiable instrument. Bank of Am., N.A. v. Pasqualone, 10th Dist. No. 13AP–87, 2013-Ohio-5795, 2013 WL 6869954, ¶ 29. Pursuant to R.C. 1303.31(A)(1), a “person entitled to enforce” a negotiable instrument includes the holder of the instrument. “Holder” is defined, in relevant part, as “[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” R.C. 1301.201(B)(21)(a).
{¶ 10} Deutsche Bank attached a copy of the note to the complaint. The note named Long Beach as the lender and appellant as the borrower. The copy of the note attached to the complaint also appeared to include an allonge bearing a blank indorsement signed by a vice president of Long Beach.1 A blank indorsement makes a negotiable instrument payable to bearer. R.C. 1303.25(B). Therefore, to establish that it was entitled to enforce the note as the holder, appellee was required to demonstrate that it had possession of the note.
{¶ 11} Appellant argues that appellee failed to prove that it was entitled to enforce the note because it failed to provide any competent evidence that it has possession of the note. Appellant claims that the Nelson affidavit failed to address whether Deutsche Bank had possession of the note when the complaint was filed. Thus, appellant argues that appellee failed to establish that it was entitled to enforce the note as the holder of it.
{¶ 12} In Pasqualone, this court considered whether the plaintiff, Bank of America, had standing to file a foreclosure action despite the fact that it was not the original lender named in the promissory note. Bank of America alleged in the foreclosure complaint that it qualified as a “person entitled to enforce” the note under R.C. 1303.31. Id. at ¶ 4. The complaint included a copy of the note, which bore an indorsement from the original lender to Bank of America and a blank indorsement signed by an assistant vice president of Bank of America. Id. After the homeowners did not timely file an answer, Bank of America moved for default judgment. In support of its motion for default judgment, Bank of America filed an affidavit from its vice president attesting, in part, that Bank of America had possession of the note. Id. at ¶ 6. The trial court granted default judgment in favor of Bank of America; the homeowners subsequently filed a motion for relief from judgment. Id. at ¶ 6–7.
{¶ 13} On appeal from the denial of their motion for relief from judgment, the homeowners argued that Bank of America lacked standing to enforce the note and mortgage. In analyzing Bank of America's standing with respect to the note, the court observed that the note had been specially indorsed from the original lender to Bank of America. It had also been indorsed in blank by Bank of America, which made the note payable...
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