Capital One Bank (USA), NA v. Reese , 2015 Ohio 4023 ( 2015 )

[Cite as Capital One Bank (USA), NA v. Reese, 2015-Ohio-4023.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
PORTAGE COUNTY, OHIO
CAPITAL ONE BANK (USA), NA, : OPINION
Plaintiff-Appellee, :
CASE NO. 2014-P-0034
- vs - :
KAREN L. REESE, :
Defendant-Third Party :
Plaintiff-Appellant.
:
- vs -
:
MORGAN & POTTINGER, P.S.C., et al.,
:
Third Party Defendants-
Appellees. :
Civil Appeal from the Portage County Court of Common Pleas, Case No. 2010 CV
00449.
Judgment: Affirmed.
Rik S. Tozzi, Burr & Forman, LLP, 420 North 20th Street, Suite 3400, Birmingham, AL
35203 (For Plaintiff-Appellee).
Anand N. Misra, The Misra Law Firm, L.L.C., 3659 Green Road, #100, Beachwood,
OH 44122; Robert S. Belovich, 9100 South Hills Boulevard, Suite 320, Broadview
Heights, OH 44147 (For Defendant-Third Party Plaintiff-Appellant).
Lori E. Brown and Holly Olarczuk-Smith, Gallagher Sharp, Sixth Floor, Bulkley
Building, 1501 Euclid Avenue, Cleveland, OH 44115 (For Third Party Defendants-
Appellees).
COLLEEN MARY O’TOOLE, J.
{¶1} Karen Henry, f/n/a Reese, appeals from the summary judgment granted
by the Portage County Court of Common Pleas to Capital One Bank (USA) N.A.
(“Capital One”) on its claim for debt owed on a credit card, as well as the summary
judgments granted Capital One and Morgan & Pottinger, P.S.C. and Michael J. Linden
(“M & P”) on her counterclaims for violations of the federal Fair Debt Collection
Practices Act, 15 U.S.C. § 1692 et seq., the Ohio Consumer Sales Practices Act, R.C.
1345.01 et seq., fraud, abuse of process, defamation, and civil conspiracy. Finding no
error, we affirm.
{¶2} In 2002, Ms. Henry applied for and received a credit card from Capital
One. She submitted a signed application, and received a customer agreement
governing the account’s terms. She ceased making payments on her account in June
2005. Capital One introduced evidence that $1,908.51 remained due on the account.
{¶3} In December 2002, Capital One designated the receivables arising from
Ms. Henry’s account for securitization through the Capital One Compass Master Note
Trust. The Compass Trust was dissolved in July 2006, and the securitized receivables
transferred back, eventually, to Capital One.
{¶4} December 3, 2007, Capital One, through its counsel M & P, filed an action
against Ms. Henry in the Portage County Municipal Court regarding her credit account.
After the magistrate had issued a decision in that case, but before that decision was
adopted by the municipal court, Capital One voluntarily dismissed the action December
11, 2008. Thereafter, July 6, 2009 Capital One filed the present action in the municipal
court. Ms. Henry answered December 21, 2009, denying all allegations. She later filed
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an amended answer, with class action counterclaims, against Capital One, with M & P
as a third party defendant. The case was transferred to the Portage County Court of
Common Pleas.
{¶5} July 15, 2010, Ms. Henry filed her first amended counterclaim, containing
the various causes of action described above. Discovery was had, and the parties
entered an agreed protective order. M & P also moved for a protective order regarding
Ms. Henry’s class action discovery, which the trial court granted, until it ruled on
dispositive motions.
{¶6} October 27, 2011, Capital One and M & P filed motions for summary
judgment on Ms. Henry’s counterclaims. Ms. Henry moved pursuant to Civ.R. 56(F) for
additional discovery to respond. December 23, 2011, the trial court granted Ms. Henry
an additional 90 days to complete discovery and file her oppositions to the summary
judgment motions. Eventually, her deadline was extended to June 4, 2012. Ms. Henry
filed her opposition brief that date, and further filed a supplemental Civ.R. 56(F)
memorandum, alleging incomplete answers to various requests for discovery, and by
certain defense deponents. Capital One denied these allegations, and pointed out Ms.
Henry had never moved to compel discovery.
{¶7} Capital One and M & P filed their reply briefs in support of summary
judgment in July 2012. July 24, 2012, the trial court ordered that all parties would have
an additional 21 days to supplement their memoranda and supporting affidavits.
{¶8} August 14, 2012, Ms. Henry filed her supplemental brief in opposition to
summary judgment, and moved to strike certain evidence and arguments submitted by
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Capital One in reply to her brief in opposition. September 21, 2012, the trial court
denied the motion to strike.
{¶9} October 31, 2012, the trial court granted the motions for summary
judgment. December 3, 2012, it issued a nunc pro tunc entry, clarifying that Capital
One’s complaint against Ms. Henry remained pending.
{¶10} November 29, 2012, Ms. Henry had appealed the trial court’s October 31,
2012 judgment entry. March 26, 2013, this court dismissed the appeal for lack of a final
appealable order, since the original complaint remained pending. Capital One Bank
(USA), NA v. Reese, 11th Dist. Portage No. 2012-P-0155, 2013-Ohio-1101, ¶12.
{¶11} January 22, 2014, Capital One moved for summary judgment on its
complaint. Ms. Henry opposed February 21, 2014. June 2, 2014, the trial court granted
the motion for summary judgment.
{¶12} Ms. Henry timely noticed this appeal, assigning 15 errors.
{¶13} “Summary judgment is a procedural tool that terminates litigation and thus
should be entered with circumspection. Davis v. Loopco Industries, Inc., 66 Ohio St. 3d
64, 66, * * * (1993). Summary judgment is proper where (1) there is no genuine issue of
material fact remaining to be litigated; (2) the movant is entitled to judgment as a matter
of law; and (3) it appears from the evidence that reasonable minds can come to but one
conclusion, and, viewing the evidence in the non-moving party’s favor, that conclusion
favors the movant. See e.g. Civ.R. 56(C).
{¶14} “When considering a motion for summary judgment, the trial court may not
weigh the evidence or select among reasonable inferences. Dupler v. Mansfield
Journal Co., 64 Ohio St. 2d 116, 121, * * * (1980). Rather, all doubts and questions
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must be resolved in the non-moving party’s favor. Murphy v. Reynoldsburg, 65 Ohio
St.3d 356, 359, * * * (1992). Hence, a trial court is required to overrule a motion for
summary judgment where conflicting evidence exists and alternative reasonable
inferences can be drawn. Pierson v. Norfork Southern Corp., 11th Dist. No. 2002-A-
0061, 2003-Ohio-6682, ¶36. In short, the central issue on summary judgment is,
‘whether the evidence presents sufficient disagreement to require submission to a jury
or whether it is so one-sided that one party must prevail as a matter of law?’ Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 251-252, * * * (1986). On appeal, we review a trial
court's entry of summary judgment de novo. Grafton v. Ohio Edison Co., 77 Ohio St. 3d
102, 105, * * * (1996).” (Parallel citations omitted.) Meloy v. Circle K Store, 11th Dist.
Portage No. 2012-P-0158, 2013-Ohio-2837, ¶5-6.
{¶15} For her first assignment of error, Ms. Henry states: “The trial court
committed prejudicial error by employing the incorrect standard for determination of
summary judgment under Civ.R. 56.” Ms. Henry alleges the trial court required her to
prove the facts of her counterclaim, rather than construing the evidence in her favor. In
support, she points to the following statements by the trial court in its October 31, 2012
judgment entry: (1) “There is no genuine issue of material fact, and Defendant Reese
cannot prove the essential elements of her claims”; (2) “Counterclaim Plaintiff has failed
to support her allegations in the First Amended Counterclaim”; and (3) “The defamation
claim is not proved, and summary judgment is the appropriate remedy.”
{¶16} We respectfully decline to find that these statements by the trial court
indicate it applied an inappropriate standard in granting the summary judgment motions
at issue. The first sentence complained of is simply the trial court’s initial statement,
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having set forth the facts and procedural history, of its ultimate conclusion that Ms.
Henry could, under no circumstances, prove the essential elements of her claims. The
same applies to the second sentence. And while the phrasing of the third sentence may
be unfortunate, it is perfectly appropriate if the trial court concluded Ms. Henry
presented no evidence of defamation.
{¶17} The first assignment of error lacks merit.
{¶18} For her second assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in failing to address evidence of the Payment Protection
Plan and granting summary judgment to plaintiff-appellee on its complaint.” Ms. Henry
had a payment protection plan with Capital One, covering her account. At a certain
point, she became unemployed, and alleged she informed Capital One of this fact. She
asserts the payment protection plan absolved her of any duty to make further payments
on the debt.
{¶19} As Capital One points out, payment is an affirmative defense, which is
waived if not pleaded. See, e.g., Civ.R. 8(C); Stanwade Metal Products, Inc. v.
Heintzelman, 158 Ohio App. 3d 228, 2004-Ohio-4196, ¶22 (11th Dist.) (An affirmative
defense may not be raised initially in summary judgment proceedings). In this case,
Ms. Henry did not assert the payment protection plan until she opposed Capital One’s
summary judgment motion. Capital One further notes Ms. Henry never introduced a
copy of the protection payment plan into evidence.
{¶20} Ms. Henry counters she requested copies of any insurance agreement
covering her account in her initial request for production of documents, and that she
preserved her right to amend her answer based on discovery. Capital One, in its
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response to Ms. Henry’s request for production, alleged it was overly broad, unduly
burdensome, and not calculated to lead to the discovery of admissible evidence.
Further, Ms. Henry did submit certain statements indicating she was being charged for
the payment protection plan.
{¶21} We note Capital One’s failure to respond to the request for production at
issue. While Ms. Henry may have had an obligation to preserve all her copies of
agreements regarding the credit account, her request was neither overly broad, nor
unduly burdensome – and it was certainly designed to elicit highly relevant, admissible
evidence. If she was covered at the time of her default, the debt may have been
covered by the payment protection plan.
{¶22} Nevertheless, we do not find error. First, Capital One eventually did enter
into evidence card statements showing Ms. Henry had been dropped from the payment
protection plan some months before her default. Second, Ms. Henry never moved the
trial court under Civ.R. 37 for an order to compel production. The trial court was
remarkably generous in granting all the parties discovery and opportunity to supplement
their evidence and briefs. If the payment protection plan formed a centerpiece of Ms.
Henry’s case, and given the fact Capital One had not responded to her reasonable
request for production of the plan, the trial court may well have compelled Capital One
to respond. But Ms. Henry never made the motion.
{¶23} The second assignment of error lacks merit.
{¶24} For her third assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding that the collection case filed against Ms. Henry
was not time-barred.” Her fourth assignment of error is: “The trial court committed
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prejudicial error in finding that the current collection case was a permissible re-filing of
an earlier case, when the two cases alleged two different accounts.” Ms. Henry’s
arguments under these assignments of error are intertwined, encompassing a single
course of reasoning. Consequently, we analyze them together, and in reverse order.
{¶25} Initially, Ms. Henry suggests that the action herein is time barred by
application of R.C. 1109.69. That statute requires banks to maintain certain records for
either one or six years. R.C. 1109.69(A) and (B). R.C. 1109.69(A)(1)(h) states that
banks must retain “records relating to closed consumer credit loans and discounts [for
one year], after date of closing[.]” Ms. Henry’s account was closed in September or
October 2005. R.C. 1109.69(F) provides: “Any action by or against a bank based on, or
the determination of which would depend on, the contents of records for which a period
of retention or preservation is set forth in divisions (A) and (B) of this section shall be
brought within the time for which the record must be retained or preserved.” (Emphasis
added.) The initial filing of this matter occurred in December 2007 – well beyond the
one year set forth in R.C. 1109.69.
{¶26} We respectfully decline to apply R.C. 1109.69 in the fashion suggested by
Ms. Henry. First, she does not point to any case construing R.C. 1109.69(A)(1)(h) as
applying to credit card actions. Second, as Capital One points out, it is a national bank.
“‘Business activities of national banks are controlled by the National Bank Act (NBA or
Act), 12 U.S.C. § 1 et seq., and regulations promulgated thereunder by the Office of the
Comptroller of the Currency (OCC).’ Watters v. Wachovia Bank, N.A. (2007), 550 U.S.
1, 6, * * *.” (Parallel citations omitted.) Citibank (South Dakota), NA v. Eckmeyer, 11th
8
Dist. Portage No. 2008-P-0069, 2009-Ohio-2435, ¶28. Absent authority, we hesitate to
apply the statute in this case.
{¶27} More significantly, Ms. Henry argues the present case was not a re-filing
of the first collection action brought against her, December 3, 2007. She relies on the
fact the account number set forth in the initial action was different than that in this case,
and that the plaintiff in the initial action was “Capital One Bank,” rather than “Capital
One Bank (USA) N.A.” Capital One points out the sums claimed were exactly the
same, and that the trial court found the difference in the account numbers was a
typographical error. It further notes the change in name occurred due to its own change
from a Virginia bank to a national bank. We find Ms. Henry’s arguments unconvincing.
{¶28} Ms. Henry also argues any re-filing was barred by res judicata, since the
initial complaint was dismissed by the municipal court’s magistrate for want of
prosecution, and Capital One did not file its voluntary dismissal of the case until the time
for filing objections to the magistrate’s opinion had passed. Capital One replies that she
never raised this argument to the trial court, and thus, it was waived. We agree. Grand
Key Condominium Unit Owners Assn., Inc. v. Hounshell, 11th Dist. Lake No. 2013-L-
023, 2014-Ohio-1355, ¶11. Capital One also points out the municipal court had not yet
adopted its magistrate’s decision at the time of the voluntary dismissal, so no judgment
had been entered, rendering the voluntary dismissal effective. See, e.g., Tallmadge v.
Barker, 9th Dist. Summit No. 24414, 2009-Ohio-1334.
{¶29} The question of whether this was a validly re-filed action is significant,
since it controls the outcome of Ms. Henry’s third assignment of error – i.e., that the
collection action against her was time barred.
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{¶30} First, Ms. Henry argues that her cause of action accrued in Capital One’s
home state, Virginia, thus requiring the trial court to apply Ohio’s borrowing statute, R.C.
2305.03(B), mandating, essentially, that the courts of Ohio apply the shortest limitations
period to actions accruing outside this state – that of Ohio, or that of the foreign
jurisdiction. Virginia has significantly shorter limitations periods than Ohio regarding
contracts: five years on written contracts; three years for oral contracts. Va. Code Ann.
§ 8.01-246(2) and (4). For her contention that Virginia law controls, Ms. Henry cites to
the decision in Jarvis v. First Resolution Invest. Corp., 9th Dist. Summit No. 26042,
2012-Ohio-5653. In that case, the Ninth District, applying the “most significant
relationship test,” determined the three year Delaware statute of limitations applied in a
credit card case wherein the debtor resided in Ohio, since Delaware had the most
significant relationship to the contract. Id. at ¶22-29. The basis for this determination
included the fact the debtor’s credit card application became a contract when it was
mailed to, and accepted in, Delaware, and that the performance required of debtor was
that the creditor receive timely payments in Delaware. Id. at ¶27.1
{¶31} Capital One is headquartered in Virginia.
{¶32} Ms. Henry then directs our attention to the decision in Mohammed v.
Capital One Bank, Fla. Cir. Ct. 11th Jud. Dist. App. Div., Nos. 08-016 AP, 08-031 AP,
and 08-434 AP (April 29, 2009). In that case, the court reversed the decision of the trial
court, applying the five year Virginia statute of limitations for written contracts to three
credit card actions. Id. at 2, 6. The circuit court concluded the contracts were oral
1. The Ninth District’s decision was accepted for discretionary review by the Supreme Court of Ohio in
Jarvis v. First Resolution Invest. Corp., 135 Ohio St. 3d 1412, 2013-Ohio-1622. The propositions of law
under review by that court include one dealing with where a credit card action accrues for limitations
purposes. The matter was submitted, following argument, in November 2013, and remains pending.
10
contracts under Virginia law, on the basis that the terms of the contract were not fully
set forth in the signed writings. Id. at 4-6. Under the authority of Mohammed, Ms.
Henry asserts her contract with Capital One was subject to Virginia’s three year statute
of limitations for oral contracts.
{¶33} Ms. Henry ceased payments in June 2005. Her account was considered
closed, or in default, in September or October 2005. The instant action was not filed
until July 6, 2009 – outside the three year limitations period for oral contracts under
Virginia law. On that basis she argues it was time barred. We have already indicated
the July 6, 2009 complaint was a proper re-filing of the original December 3, 2007
complaint, which was timely under Virginia law. 2
{¶34} However, Ms. Henry further contends the Ohio savings statute, R.C.
2305.19(A), which mandates that an action may be re-filed within one year, does not
apply. She argues the Virginia savings statute, which only allows for a six month period
to re-file, is applicable. Va. Code Ann. § 8.01-229(E)(3). As the action was re-filed
almost seven months after its dismissal December 11, 2008, it would be time-barred if
the Virginia savings statute applied.
{¶35} Ms. Henry cites no authority for the proposition that the Virginia savings
statute applies, and we are not required to consider it. App.R. 12(A)(2) and 16(A)(7).
More significant, application of the shorter Virginia savings period would violate Ohio
public policy. The Ohio savings statute is remedial, and “should be given a liberal
construction to permit the decision of cases upon their merits rather than upon mere
2. As Capital One notes, Ms. Henry’s reliance on the decision in Mohammed, supra, is likely incorrect.
After its publication, the Virginia Attorney General opined that credit card agreements are subject to the
five year statute of limitations for written contracts. 2011 Virginia Atty.Gen. Ops. No. 10-128.
11
technicalities of procedure.” Cero Realty Corp. v. Am. Mfr. Mut. Ins. Co., 171 Ohio St.
82, 85 (1960).
{¶36} This action was timely re-filed. And even applying the law most favorable
to Ms. Henry’s position, and construing the facts in her favor, it was not time barred.
The third and fourth assignments of error lack merit.
{¶37} For her fifth assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding that the identity of the real party in interest, for the
claim asserted against Ms. Henry, was not concealed or misrepresented by appellees.”
Ms. Henry notes that, under the FDCPA, a clearly false representation of the creditor’s
name may be a violation. Wallace v. Washington Mut. Bank, 683 F.3d 323, 327 (6th
Cir.2012). She alleges that, apart from Capital One, the evidence indicates the creditor
may have been one of three other entities: “Capital One Services”; “NCO Financial
Systems, Inc.”; or, a “securitization trust.” She contends this presents a jury question as
to whether Capital One tried to misrepresent the identity and name of the real party in
interest.
{¶38} “Pursuant to Civ.R. 17, a civil action must be prosecuted by the real party
in interest. State ex rel. Dallman v. Franklin Cty. Court of Common Pleas (1973), 35
Ohio St. 2d 176, 178, * * *. The ‘real party in interest is generally considered to be the
person who can discharge the claim on which the suit is brought (* * *) (or) is the party
who, by substantive law, possesses the right to be enforced.’ In re Highland Holiday
Subdivision (1971), 27 Ohio App. 2d 237, 240, * * *. Unless the party has some real
interest in the subject matter of the action, that party will lack standing to invoke the
jurisdiction of the court. Id. In a breach of contract claim, only a party to the contract or
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an intended third-party beneficiary of the contract may bring an action on a contract in
Ohio. Grant Thornton v. Windsor House, Inc. (1991), 57 Ohio St. 3d 158, 161, * * *.”
(Parallel citations omitted.) Discover Bank v. Brockmeier, 12th Dist. Warren No.
CA2006-07-078, 2007-Ohio-1552, ¶7.
{¶39} Further, Civ.R. 19 provides, in pertinent part:
{¶40} “(A) Persons to be joined if feasible.
{¶41} “A person who is subject to service of process shall be joined as a party in
the action if (1) in his absence complete relief cannot be accorded among those already
parties, or (2) he claims an interest relating to the subject of the action and is so situated
that the disposition of the action in his absence may (a) as a practical matter impair or
impede his ability to protect that interest or (b) leave any of the persons already parties
subject to a substantial risk of incurring double, multiple, or otherwise inconsistent
obligations by reason of his claimed interest, or (3) he has an interest relating to the
subject of the action as an assignor, assignee, subrogor, or subrogee. * * *[.]
{¶42} “* * *
{¶43} “(C) Pleading reasons for nonjoinder.
{¶44} “A pleading asserting a claim for relief shall state the names, if known to
the pleader, of any persons as described in subdivision (A)(1), (2), or (3) hereof who are
not joined, and the reasons why they are not joined.”
{¶45} Ms. Henry argues that, in its complaint, Capital One was required to join
the three entities named, or explain the reason for nonjoinder, and did not.
{¶46} We respectfully disagree that any of the entities named by Ms. Henry
could be considered a real party in interest in this case, or that joinder was required. As
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Capital One points out, Capital One Services is merely its agent, and Ms. Henry was
aware of this through correspondence. As Capital One further notes, other courts of
this state have found that credit card statements referencing Capital One Services did
not create a genuine issue of fact regarding whether Capital One was the real owner of
the credit card account. Capital One Bank (USA) N.A. v. Ryan, 10th Dist. Franklin No.
14AP-102, 2014-Ohio-3932, ¶44.
{¶47} NCO Financial Systems, Inc. is identified in internal records of M & P as
the creditor or client in this case. NCO is the agent used by Capital One to forward
accounts to M & P for collection. None of this raises a genuine issue of material fact
whether NCO was a party in interest, or that Capital One or M & P misled Ms. Henry as
to the identity of the creditor.
{¶48} Finally, Ms. Henry’s contention that the real party in interest might have
been the securitization trust – i.e., the Compass Trust – into which the receivables for
her account were placed in December 2002, is also belied by the evidence. Amy
Amsler was deposed as a corporate representative of Capital One, and her affidavit
entered into evidence. Her deposition and affidavit establish that Ms. Henry’s
receivables were designated for transfer to the Compass Trust in December 2002. The
receivables were initially transferred to Capital One Compass Funding, LLC, a wholly
owned subsidiary of Capital One, which then transferred them to the Compass Trust.
When the Compass Trust dissolved in July 2006, all receivables in it were transferred
back to Capital One Compass Funding. That entity then sold all receivables pertaining
to the Compass Trust back to Capital One – before Capital One filed its initial action in
2007.
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{¶49} At oral argument, counsel for Ms. Henry asserted Capital One had not
responded to certain vital requests for production, particularly in relation to the
securitization process. We have reviewed all of the discovery in this matter. The scope
and detail of the discovery requests by Ms. Henry are fairly remarkable. In her
deposition, Ms. Amsler testified that certain of the documents requested by Ms. Henry
simply do not exist, and never have. She testified the matters at issue are largely done
automatically, through computer programs under certain written agreements. Attached
to her affidavit is the “Amended and Restated Transfer and Servicing Agreement,”
governing relations between Capital One, Capital One Compass Funding, and the
Compass Trust. Also attached are the documents terminating the Compass Trust; its
certificate of cancellation; the reassignment of receivables from the Compass Trust to
Capital One Compass Trust Funding; and the sales agreement transferring the
Compass One receivables from Capital One Compass Trust Funding. Capital One also
introduced the affidavits of Benjamin Keefer and Michael Jackson, members of the
Capital One Services, LLC Financial Data Management Team, who actually recovered
certain of the information regarding the securitization of Ms. Henry’s receivables from
their computer system, and who explain the systems and procedures used.
{¶50} We respectfully conclude the evidence does not indicate Capital One
withheld any pertinent documentation from Ms. Henry. We also point out, again, that
Ms. Henry never moved to compel production of any alleged securitization documents.
{¶51} The fifth assignment of error lacks merit.
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{¶52} For her sixth assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding that the plaintiff-appellee had standing to bring the
collection action against Ms. Henry.”
{¶53} Under this assignment of error, Ms. Henry emphasizes her account had
been closed, and postulates this meant Capital One could not collect on it. She cites no
authority for this theory, and we decline to consider it. App.R. 12(A)(2) and 16(A)(7).
{¶54} Ms. Henry also argues the securitization of the receivables from her
account from 2002 until 2006 meant that Capital One had no right to collect on the
account. This is not the law.
{¶55} “[N]umerous courts have held that simply because a debt is securitized,
that does not mean that the original beneficiary or owner of the credit account * * * can
no longer enforce its right to collect upon that debt. See, e.g., Lane v. Vitek Real Estate
Indus. Grp., 713 F. Supp. 2d 1092, 1099 (E.D. Cal. 2010) (‘The argument that parties
lose their interest in a loan when it is assigned to a trust pool has also been rejected by
many district courts.’); Tostado v. Citibank (S. Dakota), N.A., CIV.A. SA-09-CV549XR,
2010 U.S. Dist. LEXIS 228, * * * (W.D. Tex. Jan. 4, 2010) (recognizing that the ‘real
party in interest, Citibank would hold the right to enforce its interests on those accounts
and loans’ where Citibank continued to own the revolving credit account, even though
Citibank sold its interest in the receivables through securitization).” (Parallel citation
omitted.) Sepehry-Fard v. Dept. Stores Natl. Bank, N.D. Cal. No. 13-cv-03131-WHO,
2013 U.S. Dist. LEXIS 175320, *13-14 (Dec. 13, 2013).
{¶56} The sixth assignment of error lacks merit.
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{¶57} For her seventh assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding that the plaintiff-appellee was not subject to the
FDCPA as a debt collector.”
{¶58} For purposes of the FDCPA, a debt collector is defined as: “any person
who uses any instrumentality of interstate commerce or the mails in any business the
principal purpose of which is the collection of any debts, or who regularly collects or
attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or
due another.” 15 U.S.C. 1692a(6).
{¶59} As a matter of law, since Capital One was the originator of the debt in
question, it cannot be held liable under the FDCPA. Capital One Bank (USA), N.A. v.
Rhoades, 8th Dist. Cuyahoga No. 93968, 2010-Ohio-5127, *7-8.
{¶60} The seventh assignment of error lacks merit.
{¶61} For her eighth assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding insufficiency of facts to support FDCPA and CSPA
violations by appellees.” Ms. Henry correctly notes that collection actions which are
time barred or misidentify the creditor may trigger liability under the FDCPA, and that
the OCSPA is largely construed in harmony with the federal statute. However, as we
have already determined that the creditor in this case was not misidentified, and that the
collection action was not time barred, this assignment of error must fail as well.
{¶62} The eighth assignment of error lacks merit.
{¶63} For her ninth assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding that facts in evidence cannot support the fraud
elements of justifiable reliance and injury.” Ms. Henry notes that in her affidavit, she
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testified she experienced emotional distress, and was required to locate counsel and
pay a retainer to defend the credit card action.
{¶64} “‘The elements which constitute the basis for a claim of fraudulent
misrepresentation are: “(1) a representation, or where there is a duty to disclose,
concealment of a fact, (2) which is material to the transaction at hand, (3) made falsely,
with knowledge of its falsity, or with such utter disregard and recklessness as to whether
it is true or false that knowledge may be inferred, (4) with the intent of misleading
another into relying on it, (5) justifiable reliance upon the representation or concealment,
and (6) a resulting injury proximately caused by the reliance.”’ Kimball v. Duy,[11th Dist.
Lake No. 2002-L-046] 2002-Ohio-7279, at ¶23, quoting Cardi v. Gump (1997), 121 Ohio
App.3d 16, 22, * * *.” (Parallel citation omitted.) Goddard v. Stabile, 185 Ohio App. 3d
485, 2009-Ohio-6375, ¶30 (11th Dist.)
{¶65} In Glazer v. Chase Home Fin. L.L.C., 8th Dist. Cuyahoga Nos. 99875 and
99736, 2013-Ohio-5589, a debt collection case premised originally on foreclosure,
appellant alleged fraud, but contested the foreclosing entity’s standing and the validity of
the debt. Id. at ¶81-85. The Eighth District stated: “we fail to see how [appellant]
justifiably relied on alleged misrepresentations when he vigorously contested those
representations in the foreclosure case.” Id. at ¶85. A similar analysis applies here.
Ms. Henry cannot show justifiable reliance on any alleged misrepresentation by Capital
One or M & P: she has fought them vigorously.
{¶66} The ninth assignment of error lacks merit.
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{¶67} For her tenth assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding that facts in evidence cannot support the abuse of
process element of injury.”
{¶68} “To succeed on an abuse of process claim, a plaintiff must establish: (1) a
legal proceeding has been set in motion in proper form with probable cause; (2) the
proceeding has been perverted to attempt to accomplish an ulterior purpose for which it
was not designed; and (3) that direct damage has resulted from the wrongful use of
process. Yaklevich v. Kemp, Schaeffer & Rowe Co., L.P.A., 68 Ohio St. 3d 294, 298, * *
* (1994). ‘Abuse of process occurs where someone attempts to achieve through use of
the court that which the court is itself powerless to order.’ Robb v. Chagrin Lagoons
Yacht Club, Inc., 75 Ohio St. 3d 264, 271, * * * (1996).” (Parallel citations omitted.)
Hrivnak v. NCO Portfolio Mgt., 994 F. Supp. 2d 889, 902 (N.D.Ohio 2014).
{¶69} Ms. Henry claims the perversion of process herein was filing of the action
on July 6, 2009, in order to coerce quick payment, as evidenced by a letter sent to her
dated July 18, 2009. Her claimed damage is being required to hire counsel to defend
the action.
{¶70} This court has the power to affirm a grant of summary judgment on a
different basis than that used by the trial court. See, e.g., Bucholtz v. Childers, 6th Dist.
Ottawa No. OT-06-016, 2007-Ohio-870, ¶1. The court in Hrivnak, supra, held:
{¶71} “Further, the complaint lacks any allegations that Defendants sought to
achieve something that the court was powerless to order. The only alleged ‘ulterior
purpose’ could be that Defendants sought to collect money; however, the court had the
power to assess an award. Havens-Tobias v. Eagle, 2003-Ohio-1561 ¶24, * * * (2d Dist.
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2003). Plaintiff’s abuse of process claim is without basis.” (Parallel citations omitted.)
Id. at 902.
{¶72} Similarly, in this case, the ultimate motive of Capital One was to get
money, which the trial court had the power to grant (and did grant.)
{¶73} The tenth assignment of error lacks merit.
{¶74} For her eleventh assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding that facts in evidence cannot support the claim of
defamation.” Ms. Henry notes the filing of this action negatively impacts her credit.
{¶75} In Havens-Tobias, supra, appellants Christi Havens-Tobias and her
husband, David Tobias, brought assorted causes of action against Thomas Eagle and
Schwan’s Sales Enterprises, Inc. Id. at ¶1, 12. The trial court granted defendants
summary judgment, and the Tobiases appealed. Id. at ¶1. One of the causes of action
had been defamation. The Second District held, at ¶30-31:
{¶76} “Defamation is defined as ‘a false publication that injures a person’s
reputation, exposes him to public hatred, contempt, ridicule, shame or disgrace, or
affects him adversely in his trade or business.’ Sweitzer v. Outlet Communications, Inc.
(1999), 133 Ohio App. 3d 102, 108, * * *. In order to state a cause of action for
defamation, the following elements must be established: ‘(1) that a false statement of
fact was made, (2) that the statement was defamatory, (3) that the statement was
published, (4) that the plaintiff suffered injury as a proximate result of the publication,
and (5) that the defendant acted with the required degree of fault in publishing the
statement.’ Hale v. City of Dayton, Montgomery App. No. 18800, 2002-Ohio-542,
quoting Stanley v. City of Miamisburg (Jan. 28, 2000), Montgomery App. No. 17912,
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2000 Ohio App. LEXIS 205. A written statement falsely charging a party with
commission of a crime is defamation per se, and harm to the individual is presumed.
See Akron-Canton Waste Oil, Inc. v. Safety-Kleen Oil Serv., Inc. (1992), 81 Ohio
App.3d 591, 601, * * *.
{¶77} “The Tobiases argue that the following actions by Eagle constituted
defamation: demanding payment to M&M in a letter to the Tobiases’ attorney, filing a
lawsuit to collect the debt and damages from the Tobiases, and filing a memorandum in
opposition to the Tobiases’ motion to dismiss the lawsuit against them. Eagle argues
that these statements were privileged against a defamation action because they were
made to the Tobiases’ attorney and in the context of a judicial proceeding. We agree
with Eagle. ‘A statement made in a judicial proceeding enjoys an absolute privilege
against a defamation action as long as the allegedly defamatory statement is
reasonably related to the proceeding in which it appears.’ Hecht v. Levin, 66 Ohio St. 3d
458, 460, * * *.” (Parallel citations omitted.)
{¶78} All of Capital One’s allegedly defamatory statements or publications
concerning Ms. Henry have been in the context of judicial proceedings. They are
privileged.
{¶79} The eleventh assignment of error lacks merit.
{¶80} For her twelfth assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding that facts in evidence cannot support the claim of
civil conspiracy.”
{¶81} “The tort of civil conspiracy is ‘“a malicious combination of two or more
persons to injure another in person or property, in a way not competent for one alone,
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resulting in actual damages.”’ Kenty v. Transamerica Premium Ins. Co. (1995), 72 Ohio
St. 3d 415, 419, * * *, quoting LeFort v. Century 21-Maitland Realty Co. (1987), 32 Ohio
St. 3d 121, 126, * * *; Gosden v. Louis (1996), 116 Ohio App. 3d 195, 219, * * *; Minarik
v. Nagy (1963), 8 Ohio App. 2d 194, 196, * * *. See 16 American Jurisprudence 2d
(1998), Conspiracy, Sections 50-73. * * *[.]”
{¶82} “An underlying unlawful act is required before a civil conspiracy claim can
succeed. Gosden, 116 Ohio App. 3d at 219, * * *; Minarik, 8 Ohio App. 2d at 195, * * *.”
(Parallel citations omitted.) Williams v. Aetna Fin. Co., 83 Ohio St. 3d 464, 475 (1998).
{¶83} In this case, Ms. Henry appears to argue that the filing of the allegedly
time-barred action, and her FDCPA and OCSPA claims, constitute the “underlying
unlawful act(s)” necessary to support the civil conspiracy claim. As neither we nor the
trial court have found merit in those claims, it follows that the claim for civil conspiracy
also fails.
{¶84} The twelfth assignment of error lacks merit.
{¶85} For her thirteenth assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in finding that ‘Capital One is Morgan & Pottinger’s client,
and Morgan & Pottinger has not engaged nor has it assisted in any unauthorized
practice of law.’”
{¶86} In support of this assignment of error, Ms. Henry notes that M & P’s own
internal documents list “NCO Financial Systems, Inc.” as its client. NCO is the
collection agency used by Capital One to forward the overdue account to M & P for
legal action.
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{¶87} “In Ohio, a collection agency engages in the unauthorized practice of law
when it prosecutes claims in a court of justice on behalf of creditors. Med Controls, Inc.
v. Hopkins, 61 Ohio App. 3d 497, * * * (Ohio Ct. App. 8th Dist. 1989). In explaining this
concept, the Hopkins court stated:
{¶88} “‘The collection agency practiced law by interposing itself as an
intermediary between a licensed attorney and a client. In effect, the collection agency
becomes the client of the attorney when it is not. This creates an absence of the
attorney-client relationship that diverts the interest of the attorney from the entity whose
real interests are at stake in the proceedings, thereby giving rise to a possible conflict of
interest.’
{¶89} “Id. A collection agency may file suit in its own name only when it has
become the legal and equitable owner of the debt through an assignment that satisfies
all of the requirements set forth in Ohio Revised Code § 1319.12. See OHIO REV.
CODE § 1319.12(C). The collection agency need not adhere to the assignment
requirements in § 1319.12(C) if it restricts its collections methods to exclude legal
action. See OHIO REV. CODE § 1319.12(B).
{¶90} “When a collection agency engages in the unauthorized practice of law, it
constitutes an ‘action that cannot legally be taken’ within the meaning of the FDCPA.
See, e.g., Poirier v. Alco Collections, Inc., 107 F.3d 347 (5th Cir. 1997) (holding that
collections agency violated § 1692e(5) when it engaged in the unauthorized practice of
law by instituting a lawsuit against a debtor since the debt had not been properly
assigned); Marchant v. U.S. Collections West, Inc., 12 F. Supp. 2d 1001, 1004-06 (D.
Ariz. 1998); Martinez v. Alburquerque Collection Services, Inc., 867 F. Supp. 1495,
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1503 (D. N.M. 1994).” (Parallel citation omitted.) Foster v. D.B.S. Collection Ageny,
463 F.Supp 2d 783, 804 (S.D.Ohio 2006).
{¶91} We respectfully find this law inapplicable to this case. M & P is a law firm.
M & P explained why its records systems shows the forwarding agency as the client or
customer. Most significantly, NCO did not file this action itself, nor did M & P file this
action on behalf of NCO. It was filed on behalf of Capital One by M & P.
{¶92} The thirteenth assignment of error lacks merit.
{¶93} For her fourteenth assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in admitting COB Summary Judgment Exhibits A and F, and
evidence submitted with COB’s Reply brief, without permitting Ms. Henry a fair
opportunity to obtain and present evidence in opposition to the summary judgment
motions.”
{¶94} Ms. Henry objects that two exhibits submitted by Capital One in support of
its summary judgment motion were insufficiently authenticated. She further objects that
Capital One submitted further affidavits in conjunction with its reply brief, and that she
was not given the opportunity to cross-examine the affiants.
{¶95} “The decision to admit or exclude evidence, including affidavit testimony,
is subject to review under an abuse of discretion standard, and absent a clear showing
that the court abused its discretion in a manner that materially prejudices a party, we will
not disturb the trial court’s ruling. Boggs v. The Scotts Co., 10th Dist. No. 04AP-425,
2005-Ohio-1264, ¶35, citing Sidenstricker v. Miller Pavement Maintenance, Inc., 158
Ohio App. 3d 356, 2004-Ohio-4653, ¶23, * * * (10th Dist.), and Krischbaum v. Dillon, 58
24
Ohio St. 3d 58, 65, * * * (1991).” (Parallel citations omitted.) Cashlink, LLC v. Mosin,
Inc., 10th Dist. Franklin No. 12AP-395, 2012-Ohio-5906, ¶9.
{¶96} The term “abuse of discretion” is one of art, connoting judgment exercised
by a court which neither comports with reason, nor the record. State v. Ferranto, 112
Ohio St. 667, 676-678 (1925). An abuse of discretion may be found when the trial court
“applies the wrong legal standard, misapplies the correct legal standard, or relies on
clearly erroneous findings of fact.” Thomas v. Cleveland, 176 Ohio App. 3d 401, 2008-
Ohio-1720, ¶15 (8th Dist.)
{¶97} One of the affidavits submitted by Capital One in conjunction with its reply
brief was a supplemental affidavit from Richard A. Napolitano, intended to correct
deficiencies objected to by Ms. Henry regarding his affidavit in support of Capital One’s
summary judgment motion, and the exhibits attached thereto. The balance of the other
new evidence submitted by Capital One related to the effect of the securitization of the
receivables from Ms. Henry’s account – an issue she first raised in her brief in
opposition to summary judgment.
{¶98} Affidavits which do not raise new issues, or which simply respond to
issues raised by the opposing party, may be attached to a reply brief and considered by
a trial court. Cashlink, LLC, supra, at ¶11. Further, Capital One filed its reply brief July
19, 2012. By its order filed July 24, 2012, the trial court gave all the parties an
additional 21 days to submit supplements to their briefs and additional affidavits. Ms.
Henry had already deposed Mr. Napolitano. She had time to, at least, gather further
affidavits of her own. Under the circumstance, we do not see how the trial court abused
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its discretion in not further extending the already generous discovery schedule in this
case.
{¶99} The fourteenth assignment of error lacks merit.
{¶100} For her fifteenth assignment of error, Ms. Henry states: “The trial court
committed prejudicial error in denying Ms. Henry the opportunity to obtain discovery
pertinent to class certification and as a result file a motion for class certification.”
{¶101} The trial court granted a protective order, staying discovery on Ms.
Henry’s request for class action certification, pending resolution of the summary
judgment motions. Citing Civ.R. 23(C)(1), Ms. Henry contends the trial court thereby
abused its discretion, since the rule mandates that trial courts determine whether a
class action may be maintained “[a]s soon as practicable after the commencement of
an action brought as a class action * * *[.]”
{¶102} “A trial court’s decision to grant a stay of discovery pending the resolution
of a dispositive motion is reviewed for an abuse of discretion.” B.J. Alan Co. v.
Andrews, 7th Dist. Mahoning No. 13 MA 55, 2014-Ohio-2938, ¶20. Further, “questions
concerning matters of discovery relating to the presence or absence of class action
requirements of Civ.R. 23(A) and (B) rest in the sound discretion of the trial court.”
Burrell v. Sol Bergman Estate Jewelers, Inc., 77 Ohio App. 3d 766, 770 (8th Dist.1991).
In this case, the trial court found the discovery sought was “voluminous,” and would
have constituted an undue burden on Capital One and M & P prior to resolution of the
dispositive motion portion of the case. The decision of the trial court to stay any class
action discovery was reasonable, and no abuse of discretion.
{¶103} The fifteenth assignment of error lacks merit.
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{¶104} The judgment of the Portage County Court of Common Pleas is affirmed.
All pending motions are hereby overruled.
THOMAS R. WRIGHT, J. concurs in judgment only,
TIMOTHY P. CANNON, P.J., concurs in judgment only with a Concurring Opinion.
____________________
TIMOTHY P. CANNON, P.J., concurring in judgment only.
{¶105} I respectfully concur in judgment only.
{¶106} Among other issues, I would specifically hold that R.C. 1109.69 does not
apply to the enforcement of written and signed credit card agreements. There is no
subsection in either the one- or six-year retention limit periods that specifically refers to
credit card agreements and accounts.
{¶107} Also, with regard to Ms. Henry’s argument that res judicata should have
barred the re-filed complaint, the majority notes that the municipal court had not yet
adopted the magistrate’s recommendation of dismissal at the time Capital One filed its
notice and cites to a case that has no apparent application. However, the timing of filing
the notice of dismissal actually supports Ms. Henry’s claim because it appears it was
filed after the trial to the magistrate commenced. Pursuant to Civ.R. 41(A)(1)(a), a
notice of dismissal may only be filed “before commencement of trial.” I would not apply
res judicata to this case simply because it is an affirmative defense and was never
raised in the trial court; therefore, it was waived.
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