Century Natl. Bank v. Hines , 2014 Ohio 3901 ( 2014 )

[Cite as Century Natl. Bank v. Hines, 2014-Ohio-3901.]
IN THE COURT OF APPEALS OF OHIO
FOURTH APPELLATE DISTRICT
ATHENS COUNTY
CENTURY NATIONAL BANK,
:
Plaintiff-Appellee, Case No. 13CA35
:
vs.
:
PAMELA A. HINES AKA PAM HINES DECISION AND JUDGMENT ENTRY
AKA PAMELA HINES, ET AL., :
Defendants-Appellants. :
_________________________________________________________________
APPEARANCES:
COUNSEL FOR APPELLANT Jeffrey D. Swick, P.O. Box 2578,
PAMELA A. HINES: Westerville, Ohio 43086
COUNSEL FOR APPELLEE: Scott D. Eickelberger and Ryan H. Linn, Kincaid, Taylor &
Geyer, 50 North Fourth Street, P.O. Box 1030, Zanesville,
Ohio 43702
CIVIL APPEAL FROM COMMON PLEAS COURT
DATE JOURNALIZED: 9-5-14
PER CURIAM.
{¶ 1} This is an appeal from an Athens County Common Pleas Court order that
appointed a receiver of property in the foreclosure action brought by Century National Bank,
plaintiff below and appellee herein, against Pamela A. Hines, defendant below and appellant
herein. Appellant assigns the following errors for review:
FIRST ASSIGNMENT OF ERROR:
“THE GRANT OF AUTHORITY TO THE RECEIVER TO SELL
DEFENDANT/APPELLANT’S REAL PROPERTY AT A
PRIVATE SALE IS VOID AS A MATTER OF LAW.”
SECOND ASSIGNMENT OF ERROR:
“THE ENTRY OF THE TRIAL COURT APPOINTING A
RECEIVER WAS GRANTED AGAINST THE MANIFEST
WEIGHT OF THE EVIDENCE.”
THIRD ASSIGNMENT OF ERROR:
“THE ORDER APPOINTING RECEIVER IS VOID BECAUSE
COUNSEL FOR THE PLAINTIFF/APPELLEE AND TRIAL
COURT FAILED TO COMPLY WITH ATHENS COUNTY
COURT OF COMMON PLEASE LOCAL RULE 11.”
{¶ 2} Appellee commenced the instant action on August 5, 2011 by filing a complaint
that alleged that appellant was in default on five “cognovit promissory notes.” Appellee
demanded judgment for the amounts due under those notes, as well as foreclosure of the five
mortgages.
{¶ 3} On August 25, 2011, pursuant to the notes' cognovit provision, D. Scott Rankin
answered for appellant, waived service of process and confessed judgment in appellee's favor.
The trial court entered judgment for appellee on September 7, 2011, found appellant in default of
the notes, awarded damages for amounts due and ordered foreclosure of five mortgages and the
sale of the properties pledged as security.
{¶ 4} Appellant made a limited appearance on October 5, 2011 to file a notice of appeal
from the foreclosure order. This Court partially affirmed that judgment as to one mortgage, but
reversed as to the other four mortgages and remanded the case for further proceedings. Century
Natl. Bank v. Hines, 4th Dist. Athens App. No. 11CA28, 2012-Ohio-4041, at ¶10 (Hines I). The
Ohio Supreme Court rejected any further appeal. Century Natl. Bank v. Hines, 982 N.E.2d 728,
2013-Ohio-347 (Hines IA).
ATHENS, 13CA35 3
{¶ 5} On July 3, 2013, appellee file a motion for appointment of a receiver for the
properties and appellant filed her memorandum in opposition. On July 29, 2013, the trial court
granted the motion and appointed Peter M. Lahni, Jr., as receiver. This appeal followed.
I
{¶ 6} Before we address the assignments of error on their merits, we first pause to
consider a potential jurisdictional problem. Ohio’s Constitution grants appellate jurisdiction
only where there exists a final, appealable, order. Davison v. Reni, 115 Ohio App.3d 688, 692,
686 N.E.2d 278 (4th Dist.1996); Prod. Credit Assn. v. Hedges, 87 Ohio Ap.3d 207, 210, 87 Ohio
App.3d 207, 621 N.E.2d 1360 (4th Dist.1993); Kouns v. Pemberton, 84 Ohio App.3d 499, 501,
617 N.E.2d 701 (4th Dist. 1992). If there is no final appealable order, we have no jurisdiction to
review the matter and the case must be dismissed. Washington Cty. Bd. of Dev. Disabilities v.
United Re AG, 4th Dist. Washington App. No. No. 11CA23, 2012-Ohio-3338, at ¶13; Ray v.
Wal-Mart Stores, Inc., 4th Dist. Washington App. No. 10CA27, 2011-Ohio-5142, at ¶16.
{¶ 7} The order being appealed in the case sub judice (appointing a receiver for the
properties) clearly contemplates further action during the course of these proceedings.
Nevertheless, Ohio case law is clear that the appointment of a receiver constitutes a final order
pursuant to R.C. 2505.02(B)(4) because it grants a provisional remedy. See e.g. U.S. Bank, N.A.
v. Gotham King Fee Owner, L.L.C., 8th Dist. Cuyahoga No. No. 98618, 2013-Ohio-1983, at ¶7,
fn. 1; JPMCC 2004-CIBC10 7th St. Office, L.L.C. v. URS Tower, L.L.C., 1st Dist. Hamilton No.
No. C–120294, 987 N.E.2d 348, 2013-Ohio-796, at ¶10. Thus, we have jurisdiction to review
this matter and we now turn our attention to the merits of appellant’s assignments of error.
II
ATHENS, 13CA35 4
{¶ 8} We first consider, out of order, appellant's second assignment of error that asserts
the trial court erred by appointing a receiver. She argues that such an appointment is
{¶ 9} “against the manifest weight of the evidence.” We disagree.
{¶ 10} First, the appointment of a receiver is a matter left to the trial court's sound
discretion and its decision will not be reversed on appeal absent an abuse of that discretion.
Lockard v. Lockard, 175 Ohio App.3d 245, 2008- Ohio-1577, 886 N.E.2d 276, at ¶7 (4th
Dist.2008); Walsh v. Smith, 2nd Dist. Montgomery No. 25879, 2014-Ohio-1451, at ¶7. In short,
we believe that appellant sets forth an improper standard of review for the assignment of error.
{¶ 11} Second, we need not reach the question of whether the trial court abused its
discretion by appointing a receiver under these circumstances. A close reading of the
instruments in this case reveals that the trial court’s actions were appropriate in light of the
express language of the instruments. Indeed, all five of the subject mortgages in this case, under
the subheading of “miscellaneous provisions,” and under the subpart regarding “amendments,”
specify “[t]he [m]ortgage[s], . . . constitutes the entire understanding and agreement of the parties
as to the matters set forth in” the mortgage. (Emphasis added.) Although the word “agreement”
is not defined within that instrument, it is generally taken to be synonymous with the word
“contract” See e.g. Neely v. United States, 613 F.2d 802, 806-807, (Ct.Cl.1980); Rachal v. Reitz,
403 S.W.3d 840, 845 (Tex.2013). Moreover, a pivotal point of our prior holding in Hines I is
that a mortgage is a contract. See 2012-Ohio-4041, at ¶8. In other words, all the mortgages at
issue herein must be treated under regular contract law.
{¶ 12} Absent some legal defense to the existence of a contract, and none is asserted
here, Ohio courts are required to enforce the terms of contracts as they are written. Nationwide
ATHENS, 13CA35 5
Mut. Ins. Co v Pinnacle Baking Co., Inc., 10th Dist. Franklin No. 13AP–485, 2014-Ohio-1257, at
¶14; Slater v. Altman Co., 2nd Dist. Champaign No. 2013–CA–4, 2013-Ohio-4405, at ¶14. To
that end, we note that all of the mortgages in this case contain the following language under
provisions that spell out the rights of the lender in the event of a default on the note and/or the
mortgage:
“Appoint Receiver. Lender shall have the right to have a receiver appointed to
possession of ar any part of the Property, with the power to protect and preserve
the Property, to operate the Property preceding foreclosure and sale . . .”1
{¶ 13} In short, appellant agreed to the appointment of a receiver in the event of default
on the mortgages. Appellant does not dispute on appeal that she agreed to such a provision, but
she contends that no evidence was adduced to show her in default of the notes. We disagree
with this point.
{¶ 14} As this Court noted in Hines I, pursuant to the cognovit provisions in the
promissory notes appellant signed, “D. Scott Rankin answered for [her], waived service of
process and [then] confessed judgment in favor of appellee.” 2012-Ohio-4041 at ¶4. Thus, by
virtue of the confession of judgment provision of the cognovit notes, appellant admitted that she
was in default of payment of the five promissory notes. In light of the fact that the mortgages
also provided that in the event of default appellee had the right to seek a receiver for the
mortgaged properties, the trial court committed no error in applying the terms of the mortgages
as written.
{¶ 15} Accordingly, we hereby overrule appellant’s second assignment of error.
1
Similar provision is also made under the “Assignment of Rents” that accompanied each mortgage.
ATHENS, 13CA35 6
III
{¶ 16} We now turn to appellant’s first assignment of error wherein she asserts that, even
if appointment of a receiver is proper, the trial court nevertheless erred by granting the receiver
power to sell the mortgaged properties. Again, we disagree.
{¶ 17} The delegation of powers to a receiver lies in a trial court's sound discretion and
that delegation will not be disturbed absent an abuse of that discretion. See Crawford v. Hawes,
5th Dist. Nos. 25178 & 25180, 2013-Ohio-3173, at ¶12; U.S. Bank, N.A. v. Gotham King Fee
Owner, L.L.C., 8th Dist. Cuyahoga No. 98618, 2013-Ohio-1983, at ¶8; Avondale Community
Council v. Galarza, 1st Dist. Hamilton No. C–110221, 2012-Ohio-186, at ¶17. The abuse of
discretion standard requires a showing of something more than a trial court’s order arguably
being against the manifest weight of the evidence. Kolleda v. Kolleda, 11th Dist. Lake No.
2013–L–069, 2014-Ohi0-2013, at ¶18. Indeed, an abuse of discretion is more than an error of
law or even of judgment; rather, it implies that the trial court's attitude is unreasonable, arbitrary
or unconscionable. See State v. Clark, 71 Ohio St.3d 466, 470, 644 N.E.2d 331 (1994); State v.
Moreland, 50 Ohio St.3d 58, 61, 552 N.E.2d 894 (1990). Under this standard, a reviewing court
must not substitute its judgment for that of the trial court. State ex rel. Duncan v. Chippewa Twp.
Trustees, 73 Ohio St.3d 728, 732, 654 N.E.2d 1254 (1995); In re Jane Doe 1, 57 Ohio St.3d 135,
137–138, 566 N.E.2d 1181 (1991). Appellant does not actually argue the trial court abused its
discretion but, rather, contends that the trial court's grant of power to the receiver to sell the
mortgaged property is “void as a matter of law.” We find no merit to this argument.
{¶ 18} We believe that the flaw in appellant’s argument is that she relies on R.C. Chapter
2329 that concerns a foreclosure sale in general. A receiver’s sale, conducted under R.C.
ATHENS, 13CA35 7
2735.04, is an alternative remedy. See Huntington Natl. Bank v. Motel 4 BAPS, Inc., 191 Ohio
App.3d 90, 2010-Ohio- 5792, 944 N.E.2d 1210, at ¶8.
{¶ 19} R.C. 2735.04 states, in pertinent part, “a receiver may bring and defend actions in
his own name as receiver, take and keep possession of property, receive rents, collect, compound
for, and compromise demands, make transfers, and generally do such acts respecting the property
as the court [so] authorizes.” (Emphasis added) The word “transfer” is generally taken to mean,
among other things, “[t]he sale and every other method, direct or indirect, of disposing of or
parting with property . . .” Black’s Law Dictionary 1342 (5th Ed.1979).
{¶ 20} Various Ohio courts have held that R.C. 2735.04 places virtually no limitation on
the power that can be extended in a foreclosure case to restrict the receiver and the manner in
which the receiver may sell a property. See e.g. Park Natl. Bank v. Cattani, 187 Ohio App.3d
186, 931 N.E.2d 623, 2010-Ohio-1291 at ¶13; Huntington Bank, LLC. v. Prospect Park, LLC.,
8th Dist. Cuyahoga App. No. 97720, 2012-Ohio-3261, at ¶9; Whipps v. Ryan, 10th Dist. Franklin
Nos. 08AP-838 & 08AP-839, 2009-Ohio-2228, at ¶31.
{¶ 21} Whatever constraints appellant may rely upon from R.C. Chapter 2329 to contest
the trial court's actions, we do not find them applicable to receiver actions authorized under R.C.
2735.01.
{¶ 22} Accordingly, for these reasons, we hereby overrule appellant's first assignment of
error.2
2
We note that under the confession of judgment to the cognovit notes, appellant defaulted on payment over 2½
years ago. Thus, it is not unreasonable to think that appellee would be concerned about the safety and integrity of its
security. It is equally reasonable, given contractual provisions in the mortgages, that the trial court would approve a receiver
to preserve the rights of the lender (appellee). This is particularly true when, as in this case, appellant offers nothing to rebut
ATHENS, 13CA35 8
II
{¶ 23} In her third assignment of error, appellant argues that the trial court’s appointment
of a receiver is “void.” Here, she bases her argument on the trial court’s failure to comply with
Athens County “Local Rule 11.” We find no merit to this argument.
{¶ 24} Athens County L. R. 11 provides:
confession that she is in default of the notes that her mortgages secure.
ATHENS, 13CA35 9
“Unless the court otherwise directs, counsel for the party in whose favor an order,
decree, or judgment is rendered, shall within five days thereafter prepare the proper
journal entry and include instructions to the Clerk for service. Said counsel shall
submit the entry to counsel for the adverse party, who shall approve or reject the
same within three days after the receipt thereof and return to the submitting attorney
or the assignment commissioner for the judge’s signature. Upon failure of the
adverse party to act upon the entry in the specified time, its preparer shall submit it
to the court for approval with a notation as to when it was presented to the adverse
party. If counsel are unable to agree upon the entry, their respective entries shall
be submitted to the judge who will direct what entry shall be made.”3
{¶ 25} Even if we assume that the appellee and the trial court did not strictly comply with
this rule, we note that trial courts have wide latitude when it comes to following local rules of
court because such rules are generally procedural in nature and do not involve substantive
principles of law. See Parra v. Continental Tire, 8th Dist. Cuyahoga No. 98753, 2013-Ohio-1041,
at ¶29; Parra v. Continental Tire, 9th Dist. Summit App. No. 26315, 2012-Ohio- 4138, at ¶7.
However, if a trial court’s failure to follow its local rules implicates any due process concerns,
then a problem may exist. Wallner v. Thorne, 189 Ohio App.3d 161, 937 N.E.2d 1047,
2010-Ohio-2146, at ¶21; BAC Home Loans Servicing, LP v. Mowery, 5th Dist. Holmes App. Nos.
2010-CA-05 & 2010-CA-07, 2010-Ohio-5570, at ¶8.
{¶ 26} Appellant argues that she was “prejudiced by her counsel’s inability to review and
object to a proposed entry” that appointed the receiver. Both our state and federal Constitutional
due process rights provide for notice and the opportunity to be heard. See Fifth Third Mtge., Co.
v. Rankin, 4th Dist. No. 11CA8, 2012-Ohio-2806, at ¶14; Columbia Gas Transm., L.L.C. v. Ogle,
4th Dist. Hocking App. No. 10CA11, 2012-Ohio- 1483, at ¶12. Even if the trial court’s order
was journalized without compliance with Athens L.R. 11, appellant was provided the opportunity
3
www.co.athensoh.org/uploads/LocalRules.doc (accessed May 19, 2014).
ATHENS, 13CA35 10
to both (1) be heard, and (2) oppose the motion.
{¶ 27} The record on appeal reveals that the motion to appoint a receiver was filed July
3, 2013. Appellant filed her memorandum in opposition on July 17, 2013. The trial court’s
order that appointed a receiver was filed July 29, 2013 – almost a week and a half later. In other
words, before the court entered judgment appellant was provided the opportunity to be heard
and to contest appellee’s motion for the appointment of a receiver. Furthermore, we cannot find
in this case that any arguable failure to obey the Athens County local rules of court amounted to a
denial of due process. Thus, we hereby overrule appellant’s third assignment of error.
{¶ 28} Having considered all of appellant's errors both assigned and argued, we hereby
affirm the trial court's judgment.
JUDGMENT AFFIRMED.
[Cite as Century Natl. Bank v. Hines, 2014-Ohio-3901.]
JUDGMENT ENTRY
It is ordered that the judgment be affirmed and appellee recover of appellant costs herein
taxed.
The Court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this Court directing the Athens County
Common Pleas Court to carry this judgment into execution.
A certified copy of this entry shall constitute that mandate pursuant to Rule 27 of the
Rules of Appellate Procedure.
Abele, P.J., McFarland, J. & Hoover, J.: Concur in Judgment & Opinion
For the Court
BY:
Peter B. Abele
Presiding Judge
BY:
Matthew W. McFarland, Judge
BY:
Marie Hoover, Judge
NOTICE TO COUNSEL
Pursuant to Local Rule No. 14, this document constitutes a final judgment entry and the
time period for further appeal commences from the date of filing with the clerk.