VFC Partners 18, L.L.C. v. Snider , 2014 Ohio 4129 ( 2014 )

[Cite as VFC Partners 18, L.L.C. v. Snider, 2014-Ohio-4129.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
LAKE COUNTY, OHIO
VFC PARTNERS 18 LLC, SUCCESSOR : OPINION
BY ITS ASSIGNMENT FROM
RBS CITIZENS, NA, SUCCESSOR BY :
ITS MERGER WITH CHARTER ONE CASE NO. 2014-L-024
BANK, NA, :
Plaintiff-Appellee, :
- vs - :
LOUIS S. SNIDER, et al., :
Defendant-Appellant. :
Civil Appeal from the Lake County Court of Common Pleas, Case No. 2012 CF 002543.
Judgment: Affirmed.
Michael J. Palumbo and Anthony J. Gingo, Gingo Palumbo Law Group, LLC, 6100 Oak
Tree Boulevard, Suite 200, Park Center Plaza I, Independence, OH 44131 (For
Plaintiff-Appellee).
Ron M. Graham, 6988 Spinach Drive, Mentor, OH 44060 (For Defendant-Appellant).
TIMOTHY P. CANNON, P.J.
{¶1} Appellant, Louis S. Snider1, appeals the judgment of the Lake County
Court of Common Pleas granting summary judgment and a decree of foreclosure in
favor of appellee, VFC Partners 18 LLC (“VFC Partners”), successor by its assignment
from RBS Citizens, NA (“RBS Citizens”), successor by its merger with Charter One
1. Louis S. Snider is the only name on this court’s notice of appeal.
Bank, NA (“Charter One”). For the reasons that follow, we affirm the decision of the trial
court.
{¶2} Appellant took title to property located at 7856 Euclid-Chardon Road,
Kirtland, Ohio. Appellant signed a promissory note in favor of Charter One. The note
was transferred to RBS Citizens by virtue of its merger with Charter One. RBS Citizens
transferred the note to appellee, evidenced by an allonge attached to the note. The
allonge referenced the $215,000 term note dated April 9, 2003, and assigned the note
payable to appellee; it was executed prior to the filing of the instant complaint. Appellee
also had possession of the original note at the time of filing the foreclosure complaint.
{¶3} Appellant also granted a mortgage on the property to Charter One and
executed an assignment of rents in favor of Charter One. On February 12, 2012, RBS
Citizens assigned the mortgage and assignment of rents to appellee.
{¶4} Appellant failed to make any of the required monthly payments and was
sent notice of default advising appellant of the conditions to cure default. Appellant
failed to cure default, and on September 19, 2012, appellee initiated the instant
foreclosure action.
{¶5} The complaint alleged that appellee was the holder in due course of the
note and assignee of the mortgage and assignment of rents; appellant was in default; all
conditions precedent were met; and the balance due under the note had been
accelerated.
{¶6} Appellant filed an answer admitting that he issued the note and mortgage
in favor of Charter One. Appellant also asserted four affirmative defenses: lack of
authority, unclean hands, incorrect charges added to balance, and waiver.
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{¶7} In December 2012, appellee moved for summary judgment. In response,
appellant filed a brief in opposition or, in the alternative, leave of court to conduct
discovery. Following the withdrawal of appellant’s counsel, appellant filed a second
answer. In June 2013, the court entered a journal entry in which it provided appellant
until June 24, 2013, to file a memorandum in opposition to appellee’s motion for
summary judgment. Appellant filed such memorandum but failed to provide support
with an affidavit or any other evidentiary material. Appellant, however, maintained that
appellee was required to address the various affirmative defenses in its motion for
summary judgment.
{¶8} In August 2013, appellee filed a first amended complaint to join certain
parties. Appellant filed an answer, again asserting affirmative defenses. Appellee filed
a renewed motion for summary judgment. Appellant filed a “motion to dismiss renewed
summary judgment.” The entire motion consisted of the following:
The plaintiff in this case has filed a motion for summary judgment
and was responded to by defendants citing many factual disputes
between the parties. The court has taken the matter under
advisement. The additional motion is unnecessary and should be
dismissed. There is no basis for a renewed motion to be filed.
The trial court granted appellee’s motion for summary judgment. The trial court entered
a decree of foreclosure and order of sale.
{¶9} Appellant filed a notice of appeal and assigns the following assignment of
error:
{¶10} “The trial court erred in granting appellee[’s] motion for summary
judgment.”
{¶11} On appeal, appellant argues granting a motion for summary judgment is
improper when the moving plaintiff did not address the non-moving defendant’s
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affirmative defenses set forth in the answer. Before we address appellant’s argument
on appeal, we first discuss the summary judgment exercise.
{¶12} We review a trial court’s decision on a motion for summary judgment de
novo. Fed. Home Loan Mtge. Corp. v. Zuga, 11th Dist. Trumbull No. 2012-T-0038,
2013-Ohio-2838, ¶13. Under Civil Rule 56(C), summary judgment is proper if:
‘(1) No genuine issue as to any material fact remains to be litigated;
(2) the moving party 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 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.’
Id. at ¶10-11, quoting Temple v. Wean United, Inc., 50 Ohio St. 2d 317, 327 (1977).
{¶13} The moving party bears the initial burden to demonstrate from the
pleadings, depositions, answers to interrogatories, written admissions, affidavits,
transcripts of evidence, and written stipulations of fact, if any, that there is no genuine
issue of material fact to be resolved in the case. Zuga at ¶12. “If this initial burden is
met, the nonmoving party then bears the reciprocal burden to set forth specific facts
which prove there remains a genuine issue to be litigated, pursuant to Civ.R. 56(E).” Id.
at ¶12.
{¶14} To support his argument on appeal, appellant cites to the Second
Appellate District’s opinion in ABN AMRO Mtge. Group v. Meyers, 159 Ohio App. 3d
608, 2005-Ohio-602, (2d Dist.), where the court considered the following question:
“when a plaintiff moves for summary judgment, which party has the initial burden of
informing the trial court as to the existence of a genuine issue of material fact with
respect to affirmative defenses?” ABN AMRO Mtge. Group, Inc. v. Arnold, 2d Dist.
Montgomery Case No. 20530, 2005-Ohio-925, ¶13, citing Meyers at ¶5.
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{¶15} The Meyers Court stated, at ¶7:
In such a case, a moving plaintiff bears the initial burden to
demonstrate the absence of a genuine issue of material fact on its
claim and on a non-moving defendant’s affirmative defenses. If the
moving plaintiff fails to meet its burden as to the affirmative
defenses, then the defendant bears no burden on that issue. If the
plaintiff does satisfy its initial burden as to the affirmative defenses,
however, then the defendant has a reciprocal burden to establish a
genuine issue of material fact on them.
{¶16} In Meyers, the court found the trial court erred in finding that the mortgage
company, the moving plaintiff, was entitled to foreclosure and in entering final judgment.
Id. at ¶14. The court reasoned that although the non-moving defendant did not have a
claim for relief, he did assert two affirmative defenses in his answer. Id. at ¶13. As
such, in order to demonstrate the absence of any genuine issue of material fact and to
obtain a complete summary judgment, the moving plaintiff bore the initial burden to
address the affirmative defenses in its motion for summary judgment. Id. The court
stated the moving plaintiff did, in fact, file a properly-supported motion for summary
judgment on the issue of default under the terms of the promissory note, as the non-
moving defendant failed to demonstrate a genuine issue of material fact as to whether
he was in default under the agreement. Id. Consequently, the moving plaintiff was
entitled to only a partial summary judgment on the default issue—not an entry of final
judgment in its favor. The non-moving defendant’s affirmative defenses remained
pending. Id.
{¶17} Here, appellant claims that because appellee did not address his
affirmative defenses in the motion for summary judgment, the trial court erred in its
granting of appellant’s summary judgment motion. We disagree.
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{¶18} After the decision in Meyers, the Ohio Supreme Court was asked to
resolve the following question: “Does a plaintiff or counterclaimant moving for summary
judgment granting affirmative relief on its own claims bear the initial burden of
addressing the non-moving party’s affirmative defenses in its motion?” Todd Dev. Co.,
Inc. v. Morgan, 116 Ohio St. 3d 461, 2008-Ohio-87, ¶1. The Court answered the
question in the negative. Id.
{¶19} The Morgan Court stated, “[t]he language of Civ.R. 56 and our case law
do not support the proposition that a party moving for summary judgment has the
burden to prove its case and disprove the opposing party’s case as well.” Id. at ¶13
(emphasis sic.).
To the contrary, Civ.R. 56(E) states that a party opposing summary
judgment may not rest upon its pleadings, but must set forth
specific facts showing there is a genuine issue for trial. If a moving
party meets the standard for summary judgment required by Civ.R.
56, and a nonmoving party fails to respond with evidence of a
genuine issue of material fact, a court does not err in granting
summary judgment in favor of the moving party.
***
We decline the opportunity to alter the summary judgment
procedure in Ohio to require a moving party to bear the initial
burden of addressing and negating the nonmoving party’s
affirmative defenses. Our holding today encourages the just and
timely disposition of civil actions by requiring a nonmoving party to
respond to a motion for summary judgment with evidence creating
a genuine issue of material fact.
A plaintiff or counterclaimant moving for summary judgment does
not bear the initial burden of addressing the nonmoving party’s
affirmative defenses.
Id. at ¶14, 23-24.
{¶20} Finding no merit in appellant’s argument that appellee, as the moving
plaintiff, was required to address the nonmoving party’s affirmative defenses in its
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motion for summary judgment, we must determine whether appellee filed a properly-
supported Civ.R. 56(C) motion for summary judgment. To properly support a motion for
summary judgment in a foreclosure action, a plaintiff must present evidentiary-quality
materials showing: (1) the movant is the holder of the note and mortgage, or is a party
entitled to enforce it; (2) if the movant is not the original mortgagee, the chain of
assignments and transfers; (3) the mortgager is in default; (4) all conditions precedent
have been met; and (5) the amount of principal and interest due. Wachovia Bank v.
Jackson, 5th Dist. Stark No. 2010-CA-00291, 2011-Ohio-3203, ¶40-45.
{¶21} With regard to the first requirement, the movant must establish it was the
holder or entitled to enforce the note as of the time the complaint was filed. Fed. Home
Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St. 3d 13, 2012-Ohio-5017, ¶3. “[S]tanding
is a jurisdictional requirement which must be met before a common pleas court can
proceed.” Fed. Home Loan Mtge. Corp. v. Koch, 11th Dist. Geauga No. 2012-G-3084,
2013-Ohio-4423, ¶24, citing Schwartzwald at ¶22. The mortgage lender must
demonstrate an interest in either the mortgage or promissory note to establish standing;
this interest must exist at the time the foreclosure complaint was filed in the trial court.
Koch at ¶24, citing Schwartzwald at ¶25-27. The holder of an instrument is a “person
entitled to enforce” the instrument under R.C. 1303.31(A)(1). R.C. 1301.201(B)(21)(a)
defines a holder of a negotiable instrument as “[t]he person in possession of a
negotiable instrument that is payable either to bearer or to an identified person that is
the person in possession.” Appellee presented the note and mortgage depicting the
assignments, the allonge, the assignment and assumption of security instruments from
RBS Citizens to appellee. These assignments occurred prior to the filing of the
complaint. See R.C. 5301.32. The evidence also established that appellee was in
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possession of the note and entitled to enforce it at the time the complaint was filed. See
Citimortage, Inc. v. Patterson, 8th Dist. Cuyahoga No. 98360, 2012-Ohio-5894, ¶21
(holder of note has standing to foreclose).
{¶22} Further, appellee’s complaint made a general allegation that it had
complied with all conditions precedent for foreclosure. “Where prior notice of default
and/or acceleration is required by a provision in a note or mortgage instrument, the
provision of notice is a condition precedent subject to Civ.R. 9(C).” First. Fin. Bank v.
Doellman, 12th Dist. Butler No. CA2006-02-029, 2007-Ohio-222, ¶20. By stating
generally that it had complied with all conditions precedent, appellee met the
requirements of Civ.R. 9(C). In the answer, appellant failed to allege he did not receive
notice of default or that the notice was not properly sent prior to the acceleration of the
loan. See Civ.R. 9(C) (“A denial of performance or occurrence shall be made
specifically and with particularity.”).
{¶23} The record also contains evidence of the amount of principal and interest
due. The record contains the Payoff Statement, sent to appellant, documenting the
current balance, the unpaid interest, and other associated fees.
{¶24} The mere fact that appellant asserted various affirmative defenses in his
answer does not preclude summary judgment. As discussed above, appellee provided
evidentiary material necessary to satisfy the foregoing criteria. At this point, the burden
shifted to appellant to set forth specific facts demonstrating that a genuine issue of
material fact remained to be litigated. Appellant, however, failed to meet its reciprocal
burden by submitting evidence that would create a genuine issue of material fact for
trial. Therefore, we conclude the trial court did not err in ruling that appellee was
entitled to summary judgment as a matter of law.
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{¶25} Appellant’s sole assignment of error on appeal is without merit.
{¶26} The judgment of the Lake County Court of Common Pleas is hereby
affirmed.
DIANE V. GRENDELL, J.,
COLLEEN MARY O’TOOLE, J.,
concur.
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