Wilmington Sav. Fund Soc'y, FSB v. West
| Citation | 2019 Ohio 1249,134 N.E.3d 762 |
| Decision Date | 03 April 2019 |
| Docket Number | No. 18CA20,18CA20 |
| Parties | WILMINGTON SAVINGS FUND SOCIETY, FSB as Trustee, Substitute Plaintiff-Appellant v. Sheila R. WEST, et al., Defendants-Appellees |
| Court | Ohio Court of Appeals |
RICK D. DEBLASIS, WILLIAM P. LEAAN, Lerner, Sampson & Rothfuss, 120 East Fourth St. Suite 800, Cincinnati, OH 45202, For Substitute Plaintiff-Appellant
BRUCE M. BROYLES, 2670 North Columbus Street, Suite L, Lancaster, OH 43130, For Defendant-Appellee
JUDGES: Hon. W. Scott Gwin, P.J., Hon. Craig R. Baldwin, J., Hon. Earle E. Wise, J.
{¶1} Wilmington Savings Fund Society appeals the denial of its motion for summary judgment and the trial court's verdict in favor of appellees, dismissing appellant's complaint for foreclosure. Appellees are Sheila and David West.
{¶2} Appellant holds the note and mortgage on a parcel of property appellees currently possess. Appellees do not dispute that they filed for bankruptcy protection, executed an Intent to Surrender the property as part of the bankruptcy proceedings and have not made payments due under the terms of the mortgage and note. Appellant filed an action to foreclose the mortgage and appellees responded. The trial court dismissed appellant's motion for summary judgment and, after a bench trial, dismissed the complaint, concluding that appellant had failed to establish that it had complied with the notice provisions of 24 C.F.R. 203.604. Appellant argues it fulfilled the requirements of the Regulation and that appellees were estopped from objecting to the foreclosure after executing an intent to surrender the property in bankruptcy court and that, therefore, the court's ruling on the motion for summary judgment and dismissal of the complaint were erroneous.
{¶3} Appellant's predecessor in interest loaned appellees $ 200,740.00 toward the re-finance of a parcel of property and, in exchange, appellees executed a note promising repayment and signed a mortgage securing their promise with the purchased property. Appellees experienced financial problems and filed for bankruptcy protection. During the bankruptcy proceeding appellees executed and filed a Notice of Intent to Surrender the property that was the subject of the mortgage and the Bankruptcy Trustee abandoned the property. The appellees' debts were discharged.
{¶4} The loan to appellees was insured by HUD so it was subject to various federal regulations, including the notice requirements of 24 C.F.R. 203.604. Pursuant to the Regulation, appellant sent a letter to appellees via certified mail offering a face to face meeting regarding the delinquent mortgage and sent a representative to the property to arrange such a meeting. Appellees did not respond to the letter and though the agent who visited the premises taped a notice to the door requesting contact from the appellees, they did not contact appellant.
{¶5} Appellant filed a complaint for foreclosure in October 2014 and appellees filed an answer and counterclaim. Appellant filed a motion for summary judgment and appellees responded, arguing that appellant failed to comply with 24 C.F.R. 203.604 because the attempt to arrange a face to face meeting did not occur before three full monthly installments due on the mortgage were unpaid. Appellees contended timing was mandatory and a condition precedent to filing the complaint and that appellant's failure to fulfill this obligation within the time frame described in the Regulations was fatal to its case.
{¶6} The trial court arrived at a similar conclusion to deny the motion for summary judgment, focusing on the date the note was accelerated. The trial court held that:
There is no dispute by the parties that certain conditions must be satisfied before a loan can be accelerated pursuant to HUD regulations, to wit, there must be a face-to-face meeting—or if such a meeting is not held, a reasonable effort must be made—and efforts at loss mitigation. Therefore, the Court must consider when the loan was accelerated.
Entry Denying Motion for Summary Judgment, Nov. 23, 2015, p.4-5, Docket # 28
{¶7} The trial court found that the affidavit offered by appellant did not clearly identify the date the appellant "accelerated the default" and that the affiant "used language that could support Defendants' assertion that the default was accelerated prior to Plaintiff complying with all conditions precedent." Id. The trial court held that: "[b]ecause reasonable minds cannot come to but one conclusion and genuine issues of material fact remain as to when the loan was accelerated, the Court hereby OVERRULES(sic) Plaintiff's Motion for Summary Judgment." Id.
{¶8} A bench trial was conducted during which appellant provided testimony regarding the execution of the note, delivery of notices pursuant to 24 C.F.R. 203.604 and lack of response from appellees. Appellant further provided testimony regarding the assignment of the note, confirmed possession of the note and details regarding the delinquency. Appellees provided no evidence, but did argue that the requirements of 24 C.F.R. 203.604 remained unfulfilled.
{¶9} The trial court issued an entry, holding that:
Upon review of the evidence, testimony, and the arguments of the parties the Court finds Plaintiff has carried its burden with respect to demonstrating its standing to pursue foreclosure as the holder of the Note and Mortgage in question. Further, the Court finds that the loan is past due and in default from the November 2011 installment to present, with an interest rate of 6.25% plus other fees and advances, from October 1, 2011, on a loan balance of $ 182,472.88.
Trial Court Verdict, Apr. 27, 2015, p.4, Docket # 52
{¶10} After finding for appellant on several issues, the trial court dismissed the complaint, finding that that appellant "did not make reasonable efforts to contact [appellees] to arrange a face-to-face meeting or visit [appellees] at the Property before three full monthly installments due on the mortgage went unpaid" and that, therefor, appellant did not fulfill a condition precedent to accelerating the balance of the loan and initiating foreclosure proceedings. Id, at 6-7
{¶11} The trial court also held that the appellees' compliance with the Notice of Intent to Surrender that they had filed was an issue for the U.S. Bankruptcy Court. The trial court declined to address that matter.
{¶12} The appellant had also requested in its complaint a reformation of the property's legal description due to what it described as a scrivener's error. The trial court held that appellant waived its claim because no testimony or evidence was presented on this issue at trial.
{¶13} Appellant filed a timely notice of appeal and submitted three assignments of error:
I. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS DECISION DENYING CITIMORTGAGE'S(SIC)1 MOTION FOR SUMMARY JUDGMENT.
II. THE TRIAL COURT ERRED AS A MATTER OF LAW BY ENTERING JUDGMENT FOR APPELLEES ON APPELLANT'S FORECLOSURE AND REFORMATION CLAIMS.
III. THE TRIAL COURT ERRED AS A MATTER OF LAW BY ENTERING JUDGMENT FOR APPELLEES WITH PREJUDICE; ANY DISMISSAL OF APPELLANT'S FORECLOSURE CLAIM SHOULD HAVE BEEN WITHOUT PREJUDICE.
{¶14} Summary judgment proceedings present the appellate court with the unique opportunity of reviewing the evidence in the same manner as the trial court. Smiddy v. Wedding Party, Inc. , 30 Ohio St.3d 35, 36, 506 N.E.2d 212 (1987).
{¶15} Civ.R. 56 provides summary judgment may be granted only after the trial court determines:
1) no genuine issues as to any material fact remain to be litigated; 2) the moving party is entitled to judgment as a matter of law; and 3) it appears *770 from the evidence that reasonable minds can come to but one conclusion and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.
Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).
{¶16} It is well established the party seeking summary judgment bears the burden of demonstrating that no issues of material fact exist for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A dispute of fact is "material" if it affects the outcome of the litigation, and is "genuine" if demonstrated by substantial evidence going beyond the allegations of the complaint. Burkes v. Stidham , 107 Ohio App.3d 363, 371, 668 N.E.2d 982 (8th Dist.1995), Myers v. Jamar Enterprises , 12th Dist. Clermont No. CA2001-06-056, 2001 WL 1567352, *2 (Dec. 10, 2001).
{¶17} The record on summary judgment must be viewed in the light most favorable to the opposing party. Williams v. First United Church of Christ , 37 Ohio St.2d 150, 151-152, 309 N.E.2d 924 (1974).
{¶18} The interpretation of 24 C.F.R. 203.604 and its application to the facts are the central issues in this case. The relevant facts are not in dispute, but the proper interpretation of the Regulation with the focus upon the time limit contained therein remains a point of contention. The Regulation directs appellants to send a notice and complete a visit to the subject premises before three full monthly payments are delinquent, but neither that section nor any other related section describes the consequence of missing that deadline. The trial court has interpreted the timing to comprise a mandatory condition precedent which remained unfulfilled when the foreclosure complaint was filed. Because this issue is critical to the resolution of the parties' arguments we will complete our analysis of 24 C.F.R. 203.604 before we consider the assignments of error.
{¶19} Appellees asserted in their answer that appellant failed to comply with HUD regulations before initiating foreclosure proceedings on the property. The mortgage loan that is the subject of this cause of action is federally insured and is subject to HUD regulations. The regulations...
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