U.S. Bank Nat'l Ass'n v. George

• Decision Date: 17 November 2016
• Docket Number: No. 14AP–817.,14AP–817.
• Citation: U.S. Bank Nat'l Ass'n v. George, 66 N.E.3d 788 (Ohio App. 2016)
• Parties: U.S. BANK NATIONAL ASSOCIATION, as Trustee, Successor in Interest to Wachovia Bank, National Association as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Pass–Through Certificates, Series 2003–D, Plaintiff–Appellee, v. Douglas K. GEORGE et al., Defendants–Appellants, Westbury Homeowners' Association, Inc. et al., Defendants–Appellees.
• Court: Ohio Court of Appeals

66 N.E.3d 788

U.S. BANK NATIONAL ASSOCIATION, as Trustee, Successor in Interest to Wachovia Bank, National Association as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Pass–Through Certificates, Series 2003–D, Plaintiff–Appellee,

v.Douglas K. GEORGE et al., Defendants–Appellants,Westbury Homeowners' Association, Inc. et al., Defendants–Appellees.

No. 14AP–817.

Court of Appeals of Ohio, Tenth District, Franklin County.

Nov. 17, 2016.

On brief: Thompson Hine LLP, Scott A. King, and Terry W. Posey, Jr., for appellee U.S. Bank National Association.

On brief: McGookey Law Offices, LLC, Daniel L. McGookey, Kathryn M. Eyster, and Lauren E. McGookey, for appellants.

BRUNNER, J.

{¶ 1} Plaintiff-appellee, U.S. Bank National Association ("U.S. Bank"), as trustee, successor in interest to Wachovia Bank, National Association ("Wachovia"), as trustee for the Wells Fargo Asset Securities Corporation, mortgage pass-through certificates, series 2003–D (the "trust"), requests that we reconsider our decision issued December 3, 2015, reversing summary judgment by the Franklin County Court of Common Pleas in an action filed against defendants-appellants, Douglas K. and Robin A. George, for the balance due on a promissory note and to foreclose a mortgage against real property located at 7511 Windsor Drive, Dublin, Ohio 43016, which secured repayment of the note. For the reasons stated in this decision, we overrule the motion for reconsideration.

I. FACTS AND PROCEDURAL HISTORY

{¶ 2} The crux of the motion for reconsideration is U.S. Bank's assertion that the "[o]pinion did not address the evidence that U.S. Bank was a non-holder in possession with the rights of a holder " and that because it did not do so, our decision contained error. (Emphasis added.) (Dec. 14, 2015 Mot. for Recons. at 2.) We note from the record that U.S. Bank argued the point in its brief but, on summary judgment before the trial court, it argued standing generally and stated, "[p]laintiff contends that the right to enforce the note * * * provides it with standing in the foreclosure case. A promissory note is a negotiable instrument." (Mar. 18, 2014 Pl.'s Reply to Defs.' Memo. in Opp. to Mot. for Summ. Jgmt. at 10.) It was more so the Georges in their memorandum contra summary judgment who addressed U.S. Bank's late-emphasized contentions that they held standing as a nonholder in possession with rights of a holder. In opposing summary judgment before the trial court, the Georges cited and quoted from U.S. Bank, N.A. v. Coffey, 6th Dist. No. E–11–026, 2012-Ohio-721, 2012 WL 601472, positing that U.S. Bank had to be either a holder of the note or a nonholder with right of possession, and as such, they argued that U.S. Bank was not a person entitled to enforce the note. (Mar. 7, 2014 Defs.' Memo. in Opp. to Pl.'s Mot. for Summ. Jgmt. at 19.) We could question whether U.S. Bank's arguments in its brief on its asserted standing as a nonholder in possession with rights of a holder can be the subject of a motion for reconsideration. But, on a review of the record, we find that the issue was tangentially argued before the trial court and we address the issue in this decision on reconsideration.

{¶ 3} We have set forth the overall background facts of this case in detail in our prior decision and refer to the details of that decision for a complete factual recitation. U.S. Bank, N.A. v. George, 10th Dist, 2015-Ohio-4957, 50 N.E.3d 1049, ¶ 1–7 ("George I "). For clarity of discussion on our decision on U.S. Bank's motion for reconsideration, we point to the facts salient to U.S. Bank's motion as they exist in paragraphs six and seven of George I . The evidence documenting U.S. Bank's interest in the note for the Georges' debt that is secured by the mortgage on their property "is not identical to the note attached to the complaint and the amended complaint * * *. In her affidavit, Jones attested to this documentation by stating: ‘Attached as exhibits hereto are copies of the Note with any applicable indorsements and the Mortgage with any applicable Assignments, a payment history and the demand letter, redacted solely to protect any private, personal, financial information.’ (Jones Affidavit, ¶ 9.)" Id. at ¶ 6.

{¶ 4} The copy of the note attached to Jones' affidavit contained the first indorsement by M/I Financial Corp. ("M/I Financial") to Wells Fargo Home Mortgage, Inc. ("WFHMI") but omitted the further indorsement to Wachovia and the allonge bearing the indorsement to U.S. Bank. Attempting to correct the discrepancy, on October 21, 2013, U.S. Bank filed a motion to incorporate in which its counsel stated that "through inadvertence a full copy of the Promissory Note, which was attached to the Complaint, was not attached to [U.S. Bank]'s Motion for Summary Judgment." According to George I , U.S. Bank moved for an order "incorporating" the full copy. Id. at ¶ 7. The motion to incorporate was granted by the trial court the same day it was filed. However, while counsel stated that the full copy was attached to the motion to incorporate, the supposed attachment is not in the record, and thus, nothing appears to have been incorporated. Over the Georges' opposition, the trial court granted U.S. Bank's motion for summary judgment.

{¶ 5} On appeal, the Georges asserted a single assignment of error:

The trial court erred in granting U.S. Bank's Motion for Summary Judgment.

Id. at ¶ 1. We sustained this assignment for the reasons set forth in George I . The Franklin County Clerk of Courts dispatched a notice regarding the entry of judgment associated with the decision on December 3, 2015.

{¶ 6} On December 14, 2015, U.S. Bank filed a motion for reconsideration arguing that we should reconsider certain aspects of George I .

II. MOTION FOR RECONSIDERATION

{¶ 7} A motion for reconsideration of a state court appellate decision is reviewed for "whether the motion calls to the attention of the court an obvious error in its decision or raises an issue for consideration that was either not considered at all or was not fully considered by the court when it should have been." Matthews v. Matthews, 5 Ohio App.3d 140, 450 N.E.2d 278 (10th Dist.1981), paragraph two of the syllabus (construing App.R. 26 ).

{¶ 8} U.S. Bank argues that we did not address evidence that it was a nonholder in possession with rights of a holder in George I . And specifically, U.S. Bank asserts that the following evidence is undisputed: (1) on August 8, 2002, the Georges executed the note and mortgage in favor of M/I Financial, citing the amended complaint and the affidavit of Megan A. Jones at paragraph 3–4, attached to U.S. Bank's motion for summary judgment, (2) on August 8, 2002, M/I Financial executed an assignment of mortgage to WFHMI assigning the mortgage "together with the notes and indebtedness thereby secured," citing exhibit D to the amended complaint, (3) on September 17, 2009, Wells Fargo Bank, N.A., successor by merger with WFHMI, executed an assignment of the mortgage to U.S. Bank, assigning the mortgage, "together with the Promissory Note secured thereby and referred to therein, and all sums of money due," citing exhibit F to the amended complaint, (4) at the time of filing the complaint through the dates of Jones' affidavit, U.S. Bank alleges that, "directly or through an agent," it "had and has been in possession of the Note," citing paragraph 5 of the Jones affidavit, and (5) the original note was produced at a deposition of U.S. Bank's corporate representative, citing exhibit T to the motion for summary judgment, the deposition of John McCray, at paragraph 32–33.

{¶ 9} U.S. Bank argues the Court's holding in George I that the evidence was insufficient to show that U.S. Bank was a nonholder in possession and thereby was not entitled to enforce its alleged interest in the note and mortgage, "ignored both the record evidence and is legally incorrect." (Dec. 14, 2015 Memo. in Support of Mot. For Recons. at 5.) U.S. Bank went on to state in its motion that:

Under R.C. 1303.31(A)(2), a "nonholder in possession of the instrument who has the rights of a holder" can enforce the instrument. Like holders, nonholders must have possession. However, unlike holders (who need to only have possession), nonholders must also have independent evidence of transfer of the instrument by someone who had the right to transfer it. R.C. 1303.22.

(Emphasis sic.) Id. at 5–6.

{¶ 10} We agree with this statement of law, but, in applying it to the record, we reject U.S. Bank's arguments that there was no material issue of fact that U.S. Bank was a party entitled to enforce the note on the basis that it was a "non-holder in possession with the rights of a holder."Id. at 10. U.S. Bank requests that we adopt decisions from the Eighth, Fifth, Twelfth and Second District Courts of Appeals that have "applied R.C. 1303.31(A)(2), finding that possession of the promissory note when combined with evidence of a ‘transfer’ is sufficient to establish a party's status as a ‘party entitled to enforce,’ under R.C. 1303.31." (Memo. in Support of Mot. for Recons. at 6.) Thereafter, U.S. Bank cites R.C. 1303.22(B) containing language that, " ‘[t]ransfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument.’ " Id. at 6–7. In reviewing U.S. Bank's arguments, we find no basis to reverse our prior decision.

A. The Record

{¶ 11} U.S. Bank filed its complaint in the trial court as "U.S. Bank, National Association, as Trustee, Successor in Interest to Wachovia Bank, National Association as Trustee for the Wells Fargo Asset Securities Corporation, Mortgage Pass–Through Certificates, Series 2003–D." (Oct. 19, 2012 Compl. at 1.) The original holder of the note was M/I Financial who, on the date of its making (at the closing for the Georges' real estate purchase of their home), indorsed the note to WFHMI. Thereafter, the note was indorsed to Wachovia "[a]s Trustee under...