Bank of New York v. Martin , 2015 Ohio 3685 ( 2015 )

[Cite as Bank of New York v. Martin, 2015-Ohio-3685.]
STATE OF OHIO, MAHONING COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
BANK OF NEW YORK, ) CASE NO. 14 MA 112
)
PLAINTIFF-APPELLEE, )
)
VS. ) OPINION
)
JEFFREY MARTIN, et al., )
)
DEFENDANTS-APPELLANTS. )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Mahoning County, Ohio
Case No. 12CV1019
JUDGMENT: Affirmed.
APPEARANCES:
For Plaintiff-Appellee: Atty. Matthew Richardson
Atty. John E. Codrea
Manley, Deas, Kochalski, LLC
P.O. Box 165028
Columbus, Ohio 43216
For Defendant-Appellant: Atty. Bruce M. Broyles
Law Office of Bruce M. Broyles
5815 Market Street, Suite 2
Boardman, Ohio 44512
JUDGES:
Hon. Carol Ann Robb
Hon. Gene Donofrio
Hon. Mary DeGenaro
Dated: September 2, 2015
[Cite as Bank of New York v. Martin, 2015-Ohio-3685.]
ROBB, J.
{¶1} Defendants-Appellants Jeffrey and Cecilia Martin appeal the decision of
the Mahoning County Common Pleas Court denying their motion for relief from
judgment. The issue in this appeal is whether the trial court abused its discretion in
denying the Civ.R. 60 (B)(4) and (5) motion. For the reasons expressed below, the
trial court’s decision is hereby affirmed.
Statement of Case
{¶2} On April 5, 2012, Plaintiff-Appellee The Bank of New York Mellon filed a
complaint for foreclosure against Appellants. Attached to the complaint was a copy
of the note and mortgage issued for 1622 Weston Avenue, Youngstown, Ohio. The
note was executed on July 20, 2006 by Jeffery Martin and America’s Wholesale
Lender. A stamp on the last page of the note indicated the note was negotiated to
Countrywide Home Loans, Inc. who then became the holder of the note. The
mortgage was recorded in Mahoning County by Countrywide Home Loans, Inc. on
July 21, 2006. The language in the mortgage included a statement that Mortgage
Electronic Registration Systems, Inc. (“MERS”) acts as a nominee for Lender and
Lender’s successors and assigns. Also attached to the note is a document titled
“Assignment of Mortgage.” This document indicated that on November 10, 2011,
MERS was the holder of the note and on that date the mortgage was assigned to
Appellee.
{¶3} Appellants did not file an answer to the complaint. As a result of their
inaction, Appellee moved for default. 5/24/12 Motion for Default Judgment. On July
12, 2012, the trial court granted default judgment and issued a decree of foreclosure.
On January 10, 2013, an order of sale was issued to the Mahoning County Sheriff.
The sale was scheduled for May 14, 2013. Approximately 5 weeks prior to the sale
date, Appellants moved to vacate the order of sale and withdraw the property from
sale. 4/8/13 Motion.
{¶4} The magistrate considered Appellant’s motion and issued an order
stating the court would withdraw the sale if Appellants showed the foreclosure action
was settled, or was in the process of being resolved. 4/30/13 Magistrate’s Decision.
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Appellant was instructed to supplement its request with documentation demonstrating
a settlement or acceptance of a modification of the mortgage. 4/30/13 Magistrate’s
Decision.
{¶5} Appellants failed to supplement and the property was sold at sheriff’s
auction on May 14, 2013. 5/20/13 Sheriff’s Return.
{¶6} A month after the sale, Appellants filed a motion to vacate the July 2012
judgment entry and decree in foreclosure, and to stay the confirmation of the May
2013 sheriff’s sale. 6/13/13 Motion. The basis for the motion was that Appellee
lacked standing to seek foreclosure. Appellants admitted the mortgage indicates that
MERS is a nominee for lender and its assigns, but contended that when MERS
assigned the mortgage to Appellee it was not doing so in “any ‘nominee’ capacity.”
Appellants asserted that the assignment of the mortgage failed to transfer any
interest in the mortgage to Appellee. This created, according to Appellants, a void
judgment and, pursuant to the Ohio Supreme Court’s decision in Schwartzwald, the
“jurisdictional requirement” of standing was not met.
{¶7} In July 2013, Appellee filed a motion in opposition asserting that it was
a real party in interest. Thereafter, on February 3, 2014, Appellee filed a motion for
entry of confirmation of sale. The following day the trial court granted the motion.
2/4/14 Confirmation Entry.
{¶8} Appellants did not file a notice of appeal from the February 4, 2014
Confirmation Order. Instead, Appellants filed a memorandum in opposition to the
motion for confirmation of sheriff’s sale. 2/18/14 Memorandum in Opposition. It
appears that the basis for the motion was that the trial court had not ruled on the
motion to vacate the foreclosure decree and to stay the confirmation of the sale, and
in moving for confirmation Appellee did not remind the court of the pending motions.
{¶9} Appellee replied to that opposition memorandum and argued that the
trial court’s confirmation of the sale effectually overruled the motions to vacate and to
stay. 3/27/14 Reply.
{¶10} On July 3, 2014, Appellants filed a Civ.R. 60(B) motion for relief from
the July 2012 decree of foreclosure. This motion was based on Civ.R. 60(B)(4) and
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(5). Appellants once again asserted Appellee lacked standing to seek foreclosure for
the same reasons espoused in the June 2013 motion to vacate. That same day,
Appellants filed a motion to stay execution to prevent Appellee from removing them
from the premises located at 1622 Weston Avenue, Youngstown, Ohio. 7/3/14
Motion.
{¶11} The trial court overruled those motions on July 18, 2014.
{¶12} Appellants filed a timely appeal from that decision.
Assignment of Error
“The trial court abused its discretion in denying the motion for relief from
judgment.”
{¶13} Appellants are appealing the trial court’s decision to deny their Civ.R.
60(B) motion for relief from judgment.
{¶14} We review the denial of a Civ.R. 60(B) motion for an abuse of
discretion. Griffey v. Rajan, 33 Ohio St. 3d 75, 77, 514 N.E.2d 1122 (1987). An abuse
of discretion connotes that the trial court's attitude was unreasonable, arbitrary, or
unconscionable. Blakemore v. Blakemore, 5 Ohio St. 3d 217, 219, 450 N.E.2d 1140
(1983).
{¶15} In order to prevail on a Civ.R. 60(B) motion, the movant must
demonstrate that:
(1) the party has a meritorious defense or claim to present if relief is
granted; (2) the party is entitled to relief under one of the grounds
stated in Civ.R. 60(B)(1) through (5); and (3) the motion is made
within a reasonable time, and, where the grounds of relief are Civ.R.
60(B)(1), (2) or (3), not more than one year after the judgment, order
or proceeding was entered or taken.
GTE Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St. 2d 146, 150–151, 351
N.E.2d 113 (1976).
{¶16} If any of these three requirements are not met, the motion must be
denied. Rose Chevrolet, Inc. v. Adams, 36 Ohio St. 3d 17, 20, 520 N.E.2d 564 (1988).
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{¶17} Civ.R. 60(B)(1) through (5) allows for the trial court to relieve parties
from a final judgment for the following reasons:
(1) mistake, inadvertence, surprise or excusable neglect; (2) newly
discovered evidence which by due diligence could not have been
discovered in time to move for a new trial under Rule 59(B); (3)
fraud (whether heretofore denominated intrinsic or extrinsic),
misrepresentation or other misconduct of an adverse party; (4) the
judgment has been satisfied, released or discharged, or a prior
judgment upon which it is based has been reversed or otherwise
vacated, or it is no longer equitable that the judgment should have
prospective application; or (5) any other reason justifying relief from
the judgment.
Civ.R.60(B).
{¶18} However, the Supreme Court of Ohio has held, that “Civ.R. 60(B) may
not be used as a substitute for appeal.” Doe v. Trumbull Cty. Children Servs. Bd., 28
Ohio St. 3d 128, 131, 502 N.E.2d 605 (1986).
{¶19} In this case, the trial court’s decision is affirmed on two bases. First,
the motion for relief from judgment was used as a substitute for appeal. Second,
alternatively, the motion was untimely as it was not made within a reasonable amount
of time.
1. Substitute for Appeal
{¶20} Recently, the Ohio Supreme Court has reiterated that a Civ.R. 60(B)
motion cannot be used as a substitute for an appeal and that the doctrine of res
judicata applies to such a motion. Bank of Am., N.A. v. Kuchta, 141 Ohio St. 3d 75,
2014-Ohio-4275, 21 N.E.3d 1040, ¶ 16. The Court additionally explained that “lack of
standing is an issue that is cognizable on appeal, and therefore it cannot be used to
collaterally attack a judgment.” Id. at ¶ 25.
{¶21} In Kuchta, the ground for vacating was based on Civ.R. 60(B)(3), which
is fraud, misrepresentation, or other misconduct committed by a party to obtain
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judgment. Id. at ¶ 10-13. Specifically, as to fraud, Kuchta held, “[a]n allegation that a
plaintiff fraudulently claimed to have standing may not be asserted as a ground for
vacating the judgment under Civ.R. 60(B)(3).” Id. at paragraph 1 of the syllabus and
¶ 25. The allegation of lack of standing was raised in the answer to the foreclosure
complaint in Kutcha as an affirmative defense.
{¶22} These factors procedurally distinguish our case from Kuchta.
Appellants’ grounds for vacating the confirmation of the sale were Civ.R. 60(B)(4)
and (5), not Civ.R. 60(B)(3). Additionally, Appellants did not answer the complaint
and a default judgment was issued against them. Hence, the alleged lack of
standing was not raised as an affirmative defense; it was first raised in the motion to
vacate.
{¶23} Since Kuchta did not involve Civ.R. 60(B)(4) and (5) or default
judgments, the Kuchta holding that lack of standing cannot be asserted as a ground
for vacating a judgment under Civ.R. 60(B)(3) does not extend to the situation before
us.
{¶24} That said, we acknowledged that our sister districts have applied the
Kuchta holding and reasoning to Civ.R. 60(B)(4) and (5) to default judgments. The
Eleventh Appellate District has twice applied the Kuchta holding to cases that are
procedurally similar to the one before us, and have concluded that res judicata bars
the Civ.R. 60(B) motion because it was used as a substitute for appeal. GMAC
Mtge., L.L.C. v. Blazetic, 11th Dist. No. 2014-L-066, 2014-Ohio-5617, ¶ 26-29 (Civ.R.
60(B) motion was based on (4) and (5). Appellate court found appellant utilized a
non-cognizable means, motion for relief from judgment based on an alleged lack of
standing, to challenge the default judgment in foreclosure.); Chase Home Fin. v.
Mentschukoff, 11th Dist. No. 2014-G-3205, 2014-Ohio-5469, ¶ 26-28 (also relying on
the timeliness of Civ.R. 60(B)(4) and (5) motion to find that the trial court did not
abuse its discretion in denying the motion to vacate). Specifically in Mentschukoff, the
court reasoned:
It is well established that “[a] party may not use a Civ.R. 60(B) motion
as a substitute for a timely appeal” from a final judgment. Doe v.
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Trumbull Cty. Children Servs. Bd., 28 Ohio St. 3d 128, 502 N.E.2d 605
(1986), paragraph two of the syllabus. In its recent decision in Kuchta,
the Supreme Court held that “lack of standing is an issue that is
cognizable on appeal, and therefore it cannot be used to collaterally
attack a judgment,” and noted that “the doctrine of res judicata applies
to bar a party from asserting lack of standing in a motion for relief from
judgment.” Id. at paragraph two of the syllabus, ¶ 1 and 8 (“a Civ.R.
60(B) motion cannot be used as a substitute for a timely appeal from
the judgment in foreclosure on the issue of standing”).
Id. at ¶ 26.
{¶25} Similarly, the Ninth Appellate District has also applied Kuchta in a case
procedurally and factually akin to the one before us. Wells Fargo Bank, N.A. v.
Clucas, 9th Dist. No. 27264, 2015-Ohio-88, ¶ 15 (Civ.R. 60(B)(4) and (5) cannot be
used as means to attack alleged lack of standing; issue is not cognizable in collateral
attack.) See generally JP Morgan Grantor Trustee v. Sponseller, 9th Dist. No.
27244, 2014-Ohio-5533, ¶ 10 (general proposition that Civ.R. 60(B)(4) and (5) cannot
be used a means to attack alleged lack of standing in foreclosure action, however,
the case was not a default judgment case).
{¶26} We do not need to extend Kuchta, as our sister districts have. It is
apparent to this court that the procedural aspects of the case before us demonstrate
the July 2014 Civ.R. 60(B) motion was used as a substitute for appeal. Kuchta
restated the general law that a Civ.R. 60(B) motion cannot be used as a substitute for
an appeal. Kuchta, 2014-Ohio-4275 at ¶ 25.
{¶27} The default judgment and decree of foreclosure were issued July 12,
2012. Appellants did not appeal. The property sold in May 2013. In June 2013,
Appellants filed a motion to vacate the July 2012 default judgment and decree of
foreclosure, and stay confirmation of the sale on the basis that Appellee allegedly did
not have standing to seek foreclosure. In February 2014, the trial court confirmed the
sale. Appellants did not appeal from order. Instead, in July 2014 they filed a Civ.R.
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60(B)(4) and (5) motion for relief from judgment, and once again argued that
Appellee lacked standing to foreclose.
{¶28} The Ohio Supreme Court has indicated two judgments are appealable
in foreclosure actions: the order of foreclosure and sale, and the order of confirmation
of sale. CitiMortgage, Inc. v. Roznowski, 139 Ohio St. 3d 299, 2014-Ohio-1984, 11
N.E.3d 1140, ¶ 35, citing LaSalle Bank Natl. Assn v. Smith, 7th Dist. No. 11MA85,
2012-Ohio-4040. Therefore, motions to vacate could have been filed from either the
July 2012 foreclosure decree or the February 2014 confirmation order. In this
instance, motions to vacate were filed from both orders. However, what makes the
July 2014 Civ.R. 60(B) motion to vacate a substitute for appeal is the fact that
Appellant did not appeal from the denial of the June 2013 motion to vacate. The
basis to vacate in the July 2014 and June 2013 motions are exactly the same, i.e.
alleged lack of standing. Denial of the June 2013 motion to vacate occurred in the
February 2014 confirmation judgment entry. While the confirmation judgment entry
did not specifically state that it was overruling the June 2013 motions to vacate and
stay, the act of confirming the sale was effectually a denial of the motions to vacate
and stay the confirmation. See State v. Hamilton, 5th Dist. No. 13CA93, 2014-Ohio-
3171, ¶ 52 (when trial court does not specifically rule on motion but proceeds to final
order it is presumed that the trial court denied the motion); State v. Hoang, 9th Dist.
No. 11CA0013-M, 2012-Ohio-3741, ¶ 30 (no ruling on record appellate court
presumed trial court denied the motion); Adams v. Ward, 7th Dist. No. 09 MA 25,
2010-Ohio-4851, ¶ 70 (any motion not ruled upon by a trial court is deemed denied).
Appellants could have and should have filed an appeal from the February 2014
confirmation judgment entry. Then was the time for Appellants to argue that the trial
court incorrectly determined Appellee did have standing and abused its discretion in
denying Appellants motion to vacate on that basis. Instead, five months after the
confirmation judgment entry and denial of the first motion to vacate, Appellants filed
the second motion to vacate the foreclosure decree. That second motion to vacate
presents an example of using Civ.R. 60(B) as a substitute for appeal.
2. Timeliness of Civ.R. 60(B) Motion
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{¶29} Furthermore, in order to prevail on a Civ.R. 60(B) motion, the movant
must demonstrate that:
(1) the party has a meritorious defense or claim to present if relief is
granted; (2) the party is entitled to relief under one of the grounds
stated in Civ.R. 60(B)(1) through (5); and (3) the motion is made
within a reasonable time, and, where the grounds of relief are Civ.R.
60(B)(1), (2) or (3), not more than one year after the judgment, order
or proceeding was entered or taken.
GTE, 47 Ohio St. 2d at 150–151. If any of the three requirements are not met, the
motion must be denied. Rose Chevrolet, Inc., 36 Ohio St. 3d at 20.
{¶30} The third requirement will be discussed due to recent decisions from
this court and from our sister districts; that requirement is timeliness. Since the
Civ.R. 60(B) motion was based on the grounds enumerated in sections (4) and (5),
the motion had to be filed within a reasonable time.
{¶31} The default judgment entry was issued July 12, 2012. The Civ.R.
60(B)(4) and (5) motion was filed July 3, 2014. This is a lapse of two years.
{¶32} We have recently stated that it is within the trial court’s discretion to find
a 3.75 year delay unreasonable. U.S. Bank, N.A. v. Metzger, 7th Dist. No. 14 MA 63,
2015-Ohio-839, ¶ 43. Another case out of our district held that a motion to vacate
filed 18 months after the entry of default judgment was unreasonable. CitiMortgage,
Inc. v. Fishel, 7th Dist. No. 11MA97, 2012–Ohio–4117, ¶ 14 (debtor alleged lack of
standing).
{¶33} The Ninth Appellate District has also found a nine month delay is
unreasonable where there was no dispute that appellant was aware of the
foreclosure proceedings, received a copy of the complaint, and made no attempt to
explain why he waited a little over nine months to file the motion to vacate. Clucas,
2015-Ohio-88 at ¶14.
{¶34} Appellants assert that the delay of two years was the result of working
with the “Save the Dream” program in an attempt to reinstate their loan. We have
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repeatedly indicated that “tactical maneuvers to stop the foreclosure action * * * do
not prevent a party from filing a motion to vacate.” LaSalle Bank Natl. Assn. v. Smith,
7th Dist. No. 11 MA 85, 2012-Ohio-4040, ¶ 39; Metzger, 2015-Ohio-839 at ¶ 40.
Participating in the “Save the Dream” program does not render the 2 year delay in
filing the Civ.R. 60(B) reasonable.
{¶35} Therefore, this court does not need to address the other two elements
of Civ.R. 60(B) because the motion was not timely.
Conclusion
{¶36} In conclusion, the sole assignment of error is meritless. The trial court
did not abuse its discretion in overruling the Civ.R. 60(B) motion for relief from
judgment. We hold that the July 2014 Civ.R. 60(B) motion was used as a substitute
for appeal because Appellants did not appeal the denial of the earlier motion to
vacate the default judgment entry. Alternatively, we hold that the July 2014 Civ.R.
60(B) motion was not filed within a reasonable time and thus, the trial court did not
abuse its discretion in denying the motion. The judgment entry and decree of
foreclosure and confirmation of sale entry are hereby affirmed.
Donofrio, P.J.,concurs.
DeGenaro, J., concurs.