Parker Financial v. Kay A. Matthews

• Decision Date: 03 February 1999
• Docket Number: 97CA652,99-LW-0426
• Parties: PARKER FINANCIAL, Plaintiff-Appellee v. KAY A. MATTHEWS, ET AL., Defendants-Appellants Case
• Court: Ohio Court of Appeals

PARKER FINANCIAL, Plaintiff-Appellee v. KAY A. MATTHEWS, ET AL Defendants-Appellants

No. 97CA652.

99-LW-0426 (4th)

Court of Appeals of Ohio, Fourth District Adams

February 3, 1999

Southeastern Ohio Legal Services, Mark J. Cardosi, Portsmouth, Ohio, for Appellant, Kay A. Matthews.

Young &amp Caldwell, Arthur M. Richard III, West Union, Ohio, for Appellant, William C. Games, d/b/a Games Insurance Agency.

Robert H. Young, Cleveland, Ohio, for Appellee.

DECISION

Stephenson P.J.

This is an appeal from a judgment entered by the Common Pleas Court of Adams County, Ohio, confirming a Sheriff's sale and ordering distribution of proceeds following foreclosure of a mortgage on real property owned by Kay A. Matthews (hereinafter referred to as "Ms. Matthews") defendant below and appellant herein. Ms. Matthews assigns the following errors for our review:

I. "A previous bankruptcy action did not bar Kay Matthews from asserting counterclaims defensively in a state foreclosure action. "

II. Appellee was not entitled to summary judgment for foreclosure because as a matter of law its lien was a nullity.

III. The trial court erred in granting summary judgment to appellee because Kay Matthews' counterclaims concerning violations of the Retail Installment Sales Act and the Consumer Sales Practices Act and breach of contract were never adjudicated.

Another lien holder, William C. Games, d/b/a Games Insurance Agency (hereinafter erred to as "Games ins."), defendant below and appellant herein posits additional assignments of error as follows:

I. "The trial court erred in granting Appellee Parker Financial's claim with having priority over Appellant Games' claim when a question of material fact was raised. "

II. The trial court abused its discretion by failing to conduct an evidentiary hearing to resolve a question of material fact[.]"

The record reveals the following facts pertinent to this appeal. On January 9, 1988, Ms. Matthews entered into a contract with Quality Builders, Inc. (hereinafter referred to as "Quality Builders") for the installation of vinyl siding on her home in Peebles, Adams County, Ohio. She executed a promissory note in the principal amount of $26,731.80 to finance this project and conveyed a mortgage interest in the premises to Quality Builders as security thereon.^[1] This note and mortgage were, subsequently, assigned to various parties and were eventually acquired by appellee. It would appear that Ms. Matthews was dissatisfied with the work that was performed by Quality Builders as she has described their workmanship as "shoddy" and the materials used by them as "inadequate."

In any event, on September 11, 1995, appellee commenced the action below alleging that she was in default of payment and demanding foreclosure of its security interest. Several lien holders in the premises were also joined as parties to the action and appellee requested that their interests be marshalled and their priority determined for purposes of distributing proceeds from any Sheriffs sale of the property. One of those lien holders, Games Ins., filed an answer asserting a judgment lien against Ms. Matthews in the amount of $6,634.00 and, further, asserting that this interest was "superior to all lienholders except the real estate taxes and assessments."

Ms. Matthews failed to make an initial appearance in this matter and so, on December 22, 1995, a default judgment was entered against her foreclosing the mortgage and ordering the property sold at public auction. Five (5) days before the scheduled Sheriffs sale, however, she filed a Civ.R. 60(B) motion for relief from judgment. In an accompanying affidavit, Ms. Matthews attested that she "did not ever receive the court mailings that should have informed [her] of this litigation" and only learned of these proceedings after a friend mentioned reading the Sheriff's sale advertisement in the newspaper. She also asserted that she was "terminally ill," with various ailments including "farmer's disease" and "chronic depression," and was taking several different medications. The lower court granted Ms. Matthews relief from judgment thereby cancelling the impending Sheriff s sale of her property. On April 23, 1996, she filed an answer denying any liability to appellee on the note and mortgage asserting (as an affirmative defense) that she had been discharged from the indebtedness during a prior bankruptcy. She also counterclaimed alleging that there had been a breach in the original home improvement contract and that Quality Builders had violated both the Consumer Sales Practices Act (hereinafter referred to as "CSPA") and the Retail Installment Sales Act (hereinafter referred to as "RISA") in the manner by which they had solicited, and later consummated, the transaction. Ms. Matthews requested, inter alia, that the contract and promissory note be cancelled, that the mortgage be declared unenforceable, that she be awarded restitution of all previous payments she had made thereon and that she be awarded $21,000 in damages which award should then be trebled pursuant to statute. Appellee filed an answer denying her allegations and asserting, among other things, that her claims were barred by the statute of limitations as well as the doctrine of laches.

On December 9, 1996, Ms. Matthews filed a motion for partial summary judgment arguing that there was no genuine issue of material fact with respect to her affirmative defense (discharge in bankruptcy) and her second counterclaim (violation of RISA) and that she was entitled to judgment in her favor on these points as a matter of law. Copies of various documents were attached as supporting exhibits to this motion and, among them, was a petition in bankruptcy, listing appellee as a creditor, and an entry dated July 13, 1993, discharging her from all dischargeable debts. This discharge, she asserted, relieved her of the underlying debt she incurred for installation of the siding thereby leaving appellee (the assignee of that debt) to foreclosure of its security as the only avenue of recourse for collection. She continued, however, that the security interest itself was invalid because it purported to give a mortgage interest in real property to secure payment on the sale of goods (i.e. the siding) which is not permitted under RISA. Thus, Ms. Matthews concluded, the mortgage was also invalid and summary judgment should be granted in her favor. Appellee countered, in a memorandum contra, that while RISA may not ordinarily allow for a security interest to be taken in real property to secure payment for the sale of goods, such a mortgage is permissible under R.C. 1317.071 when the goods are "installed" or "annexed" to the property so mortgaged. It was argued that vinyl siding, by its very nature, is "installed" on the property and, thus, appellee concluded that its security interest was valid.

The lower court initially overruled Ms. Matthew's motion in its entirety but, later, entered a second judgment sustaining her request for summary judgment insofar as the affirmative defense of discharge in bankruptcy. It was therefore determined that she was "not obligated to pay the note held by the [appellee]." As to the validity of the security interest, however, the lower court reiterated its position that her motion was overruled.

On March 21, 1997, appellee filed its own motion for summary judgment arguing that there was no genuine issue of material fact and that it was entitled to foreclosure of its mortgage as a matter of law. An affidavit of one of its employees was attached as an exhibit in support of the motion and set forth that the loan was in default and that no payments had been received since the account was acquired several years earlier. Appellee also raised the same argument it had made in its memorandum contra Ms. Matthews motion for summary judgment and asserted that the mortgage was a valid security interest under RISA. Given that validity, as well as the default in payment, appellee concluded that it was entitled to have the mortgage foreclosed and the property sold at Sheriff's sale. Games Ins. also filed a motion for summary judgment arguing that it was entitled to foreclosure of its judgment lien on the premises. Further, it was asserted that such lien was superior in priority to the mortgage interest held by appellee. The basis for this argument was that the mortgage originally given to Quality Builders did not specify the marital status of the mortgagor (Ms. Matthews) or provide for a signature from her spouse. Thus, it was concluded, that the mortgage "[wa]s defective, it loses its priority status ... and the lien of [Games Ins.] acquires priority" over the mortgage.

Ms. Matthews never opposed the request for summary judgment by her judgment lien creditor (Games Ins.) but did file a memorandum contra to appellee's motion wherein she repeated her argument that the mortgage was invalid under RISA. Challenge was also made to the arrearages asserted by appellee. Ms. Matthews cited back to her affidavit the year before (supporting her motion for relief from judgment) in which she described the work of Quality Builders as "shoddy." Because of such workmanship, she reasoned, there was no debt to either Quality Builders or to appellee as its assignee.

A decision was rendered by the trial court on April 16, 1997 granting summary judgment in favor of Games Ins. The court noted that Ms. Matthews had never disputed this claim either as to the amount of the debt or in the sense that it was a valid lien against the property. It was noted that the underlying judgment against her had never been paid and the lower court determined that the lien creditor was entitled to have its lien foreclosed and the property sold at Sheriffs sale. Having so ruled...