Metropolitan Life Ins. Co. v. Triskett Illinois, Inc.

• Court: Ohio Court of Appeals
• Writing for the Court: PER CURIAM
• Citation: Metropolitan Life Ins. Co. v. Triskett Illinois, Inc., 97 Ohio App.3d 228, 646 N.E.2d 528 (Ohio App. 1994)
• Decision Date: 21 September 1994
• Docket Number: No. C-930521,C-930521
• Parties: METROPOLITAN LIFE INSURANCE COMPANY, Appellee, v. TRISKETT ILLINOIS, INC., Appellant, et al.

Page 228

97 Ohio App.3d 228

646 N.E.2d 528

METROPOLITAN LIFE INSURANCE COMPANY, Appellee, v. TRISKETT ILLINOIS, INC., Appellant, et al.

No. C-930521.

Court of Appeals of Ohio, First District, Hamilton County.

Decided Sept. 21, 1994.

Cors & Bassett and Joseph H. Vahlsing, Cincinnati, for appellee.

McIntyre, Kahn & Kruse Co., L.P.A., and Robert R. Kracht, Cleveland, for appellant.

PER CURIAM.

This cause came on to be heard upon the appeal, the transcript of the docket, journal entries and original papers from the Hamilton County Court of Common Pleas, the transcript of the proceedings, and the briefs and the arguments of counsel.

Defendant-appellant, Triskett Illinois, Inc. ("Triskett"), advances on appeal a single assignment of error in which it challenges the entry of judgment for plaintiff-appellee, Metropolitan Life Insurance Company ("Metlife"), on Metlife's complaint seeking payment of the indebtedness evidenced by a promissory note and foreclosure on the mortgage securing the indebtedness and the entry of summary judgment on the counter-claims advanced by Triskett in response to Metlife's complaint. We find no merit to any aspect of this challenge.

The record discloses that in April 1988, Metlife and Triskett entered into a loan agreement, pursuant to which Metlife agreed to lend Triskett $5,400,000 to fund Triskett's purchase of a commercial office park. The loan agreement required Triskett to execute and deliver a promissory note, a mortgage, an assignment of rents and leases, and a security agreement granting Metlife a security interest in certain personal property and fixtures. The note created what is known as a "nonrecourse" obligation, exempting Triskett from personal liability on the note and limiting Metlife's "recourse in any suit for damages or any money judgment * * * to the property * * *." Both the note and the mortgage included an acceleration clause, which provided that the unpaid balance of the note would become due and payable upon an event of default. The note required payment on the first day of each month, and the mortgage and the note, by its incorporation of the mortgage, defined an event of default to include the failure to pay any installment within five days after the payment was due.

Triskett executed and delivered the loan documents in May 1988 and, from June 1988 through May 1990, made the interest-only payments required under the note. Thereafter, the note required monthly installment payments of principal and interest in the amount of $45,038. However, by August 1990, the office park's tenant base had so eroded that cash flow from the property proved insufficient to cover the payments due under the note, and Triskett failed to make its August 1990 payment.

Triskett apprised Metlife's loan servicing agent, Metmor Financial ("Metmor"), of the situation by letter dated August 21, 1990, and therein proposed a modification of the loan terms by which Metlife would agree to accept payments based only on the cash flow generated by the office park until its tenant base was restored. By letter dated August 27, 1990, Metmor informed Triskett that its proposal was "unacceptable" and that any request for a "workout" must be detailed and in writing. Metmor also reminded Triskett that the loan was delinquent and admonished Triskett that it must bring the loan current before Metmor would consider any proposal to modify the terms of the loan and that its failure to bring the loan current by August 31, 1990, could result in legal action.

From August of 1990 through February of 1991, in furtherance of its workout efforts and upon, first, Metmor's and, then, Metlife's request, Triskett provided Metmor with financial and operational information, yet it failed to make payments in accordance with the terms of the note. By letter dated September 18, 1990, Metmor notified Triskett of its default on its August and September 1990 payments and threatened legal action if the loan was not brought current. On December 7, 1990, Triskett tendered a check in the amount of $19,617.58, which represented the cash flow proceeds for August through November 1990. Metlife declined to accept partial payment on the note and subsequently returned the check to Triskett. On December 18, 1990, Metmor notified Triskett of its recommendation to Metlife that it pursue all available legal remedies against Triskett to protect its interest in the property. Triskett countered on January 11, 1991, with a six-item workout proposal, the second item of which proposed that the office park be "listed with an exclusive broker to sell for approximately $6,000,000," provided that Metlife "agree[d] to a payoff without prepayment penalty if such sale [was] consummated." By letter dated February 7, 1991, Metlife informed Triskett of its "conclu[sion] that it [would] be unable to approve [Triskett's] proposed forebearance request," but indicated that it might, "pursuant to item # 2 in [Triskett's] letter, * * * consider [Triskett's] proposal to pay off the balance of the note along with any accrued interest and late charges, if applicable." Finally, by letter dated February 26, 1991, Metlife "advised" Triskett that, "due to [Triskett's] default on the loan, Metlife [was] pursuing legal remedies to protect its interest." Triskett responded by submitting to Metlife a check in the amount of $45,038, dated February 28, 1991. Metlife received the check on March 12, 1991, and credited the amount to the August 1990 payment. Then on March 11 and 12, 1991, Metlife sent Triskett written notice of its election to exercise its right to accelerate the entire indebtedness due on the loan on the basis of Triskett's default.

On March 14, 1991, Metlife filed a complaint in the Hamilton County Common Pleas Court against Triskett, other lien holders of record, and each of Triskett's twenty-five tenants, seeking foreclosure on the mortgage, judgment against Triskett in the amount of $5,800,000, and the appointment of a receiver. This action was ultimately dismissed without prejudice. Then on October 30, 1992, Metlife instituted the action underlying the instant appeal, seeking acceleration and full payment of the indebtedness secured by the mortgage and evidenced by the note, seeking to exercise its rights under the assignment and the security agreement, and seeking the ex parte appointment of a receiver. Triskett responded with an answer and an array of "counterclaims" in support of its prayer for rescission of its agreements with Metlife, dissolution of the receivership, and compensatory and punitive damages. On June 3, 1993, the trial court entered summary judgment for Metlife on Triskett's counterclaims and judgment of foreclosure in favor of Metlife and imposed upon Triskett an "indebted[ness]" in excess of $6,000,000, "without personal recourse against [Triskett]."

The standard governing the disposition of Metlife's motion for summary judgment is set forth in Civ.R. 56. Pursuant thereto, a party against whom a claim is asserted may move, with or without supporting affidavits, for summary judgment in his favor on all or any part of the claim. Civ.R. 56(A). A motion for summary judgment may be granted if the court, upon viewing the inferences to be drawn from the underlying facts set forth in the pleadings, depositions, answers to interrogatories, written admissions, and affidavits in a light most favorable to the party opposing the motion, determines (1) that no genuine issue of material fact remains to be litigated, (2) that the moving party is entitled to judgment as a matter of law, and (3) that the evidence demonstrates that reasonable minds can come to but one conclusion, and that conclusion is adverse to the party opposing the motion. Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 4 O.O.3d 466, 364 N.E.2d 267; Civ.R. 56(C).

The right to judgment on a note evidencing the debt secured by a mortgage and the right to foreclose on the mortgage constitute two separate causes of action, one legal and one equitable. Carr v. Cleveland Trust Co. (App.1947), 48 Ohio Law Abs. 179, 74 N.E.2d 124. Thus, an action praying for judgment on a note and foreclosure on a mortgage raises two issues. The first issue presents the legal question of whether the mortgagor has defaulted on the note. The second issue entails an inquiry into whether the mortgagor's equity of redemption should be foreclosed. City Loan & Savings Co. v. Howard (1984), 16 Ohio App.3d 185, 16 OBR 195, 475 N.E.2d 154; accord Rosselot v. Heimbrock (1988), 54 Ohio App.3d 103, 561 N.E.2d 555; Wheatstone Ceramics Corp. v. Turner (1986), 32 Ohio App.3d 21, 513 N.E.2d 348.

It is beyond cavil that Triskett was in default on the note. The note required payments on the first day of each month and, by its incorporation of the mortgage, defined an event of default to include the failure to pay any installment within five days after payment was due. When Metlife first instituted foreclosure proceedings against Triskett, Triskett was delinquent in its payments for the months of August 1990 through March 1991. Even if, as Triskett contends, Metlife's acceptance of Triskett's February 28, 1991 payment could be construed to constitute a waiver of Triskett's August 1990 default, it cannot be construed to constitute a waiver of Triskett's September 1990 through March 1991 defaults when the mortgage expressly provided that a "waiver * * * of any * * * default * * * shall [not] be deemed or construed to be a * * * waiver * * * of any other * * * default in the performance of the * * * obligations of" Triskett under the mortgage. See Gaul v. Olympia Fitness Ctr., Inc. (1993), 88 Ohio App.3d 310 623 N.E.2d 1281 (holding that a mortgagee's past acceptance of late loan payments does not waive its right to accelerate and foreclose following a subsequent default when the loan documents contain "anti-waiver" provisions). Thus, we answer the initial question of whether Triskett has defaulted...