White Stag Aircraft Leasing U.S. v. JP Morgan Chase Bank, N.A. , 2021 Ohio 1245 ( 2021 )

[Cite as White Stag Aircraft Leasing U.S. v. JP Morgan Chase Bank, N.A., 2021-Ohio-1245.]
IN THE COURT OF APPEALS OF OHIO
SEVENTH APPELLATE DISTRICT
MAHONING COUNTY
WHITE STAG AIRCRAFT LEASING
U.S. LLC,
Plaintiff-Appellant,
v.
JP MORGAN CHASE BANK, N.A.,
Defendant-Appellee.
OPINION AND JUDGMENT ENTRY
Case No. 20 MA 0018
Civil Appeal from the
Court of Common Pleas of Mahoning County, Ohio
Case No. 2016 CV 319
BEFORE:
Carol Ann Robb, Cheryl L.Waite, Judges and Thomas R. Wright,
Judge of the Eleventh District Court of Appeals, Sitting by Assignment.
JUDGMENT:
Affirmed.
Atty. Brian Kopp, Atty. Justin Markota, Betras Kopp & Harshman, LLC, 6630 Seville Drive,
Canfield, Ohio 44406 for Plaintiff-Appellant and
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Atty. William Falin, The Hanna Building, 1422 Euclid Avenue, Suite 630, Cleveland, Ohio
44115 for Defendant-Appellee.
Dated: March 31, 2021
Robb, J.
{¶1} Plaintiff-Appellant White Stag Aircraft Leasing U.S. LLC appeals the
decision of the Mahoning County Common Pleas Court granting the Civ.R. 60(B) motion
for relief from default judgment filed by Defendant-Appellee JP Morgan Chase Bank, N.A.
Appellant alleges the trial court arbitrarily granted the bank’s motion where a prior judge
denied the same motion. This court dismissed the appeal from the prior judge’s denial
order as it was not final since damages were pending; we noted the bank’s motion seeking
relief from judgment was actually a motion for reconsideration of an interlocutory order.
After the decision on damages was issued, the bank refiled its motion for relief from
judgment, which the new trial judge granted.
{¶2} Appellant initially argues the grant of relief from default judgment violated
the law of the case doctrine. Alternatively, Appellant contends the bank’s failure to answer
the complaint was not excusable neglect under Civ.R. 60(B)(1). For the following
reasons, the trial court’s judgment is affirmed.
STATEMENT OF THE CASE
{¶3} In 2014, Appellant leased a plane to Zagrosjet Company Ltd. The bank
provided a letter of credit to Appellant for $150,000 to secure the lease in case the lessee
defaulted. Appellant claims the bank was notified of the lessee’s default prior to the
August 29, 2014 expiration of the letter of credit.
{¶4} On January 29, 2016, Appellant filed a complaint against the bank due to
its failure to pay the amount secured by the letter of credit. The summons on the
complaint was sent to the bank on February 9, 2016 via certified mail with successful
service returned a week later.
{¶5} On April 26, 2016, Appellant filed a motion for default judgment against the
bank as no answer had been filed. On June 6, 2016, the court granted default judgment
against the bank and set the case for a damages hearing. The clerk sent notice of default
judgment to the bank by ordinary mail on June 9, 2016.
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{¶6} On June 28, 2016, the bank filed a motion for relief from judgment under
Civ.R. 60(B)(1) and sought leave to file an answer instanter. The bank noted the
timeliness of the motion and alleged it had several meritorious defenses. The bank
pointed to the one-year statute of limitations for a letter of credit in R.C. 1305.14 and the
requirement in R.C. 1305.07(A) that an issuer shall dishonor the presentation of a letter
of credit which does not appear on its face to strictly comply with the terms and conditions
of the letter of credit. The bank compared the terms of the letter of credit to the demand
letter attached to the complaint and concluded the demand letter did not strictly comply
with the terms of the letter of credit. There was also an allegation the demand letter was
not received or it was not received before the deadline and was not accompanied by the
original letter of credit.
{¶7} On the topic of excusable neglect, the bank presented the affidavit of a
document review specialist from the bank’s Legal Papers Served Department. He
reviewed the corporate procedure for ensuring a complaint would be answered after
service on the bank’s statutory agent. He then provided the following explanation as to
how the procedure failed as a result of his mistake.
{¶8} The document reviewer received the complaint from the statutory agent and
read it to determine which section of the bank’s Office of General Counsel would be
responsible for assigning outside counsel to file an answer. On February 22, 2016, the
document reviewer sent the complaint to an attorney with the Business Banking section,
where it would be reviewed to ensure the appropriateness of the assigned section. The
next day, that attorney followed established procedure to reject the assignment with
instructions for the document reviewer to redirect the case to an attorney in the Corporate
and Investment Banking section of the Office of General Counsel.
{¶9} On March 7, 2016, an employee in the Litigation Business Management
Department (which monitors the assignment system to ensure successful assignment by
the Legal Papers Served Department) noticed the case was still reported as “open” in the
system and called the attorney originally assigned. The originally assigned attorney
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reported the case was being sent to the Corporate and Investment Banking section by
the document reviewer.1
{¶10} The document reviewer made an entry in the system marking the
assignment status of the case as “closed” in the case assignment system (rather than
forwarding it to the other section of the Office of General Counsel). He attested that he
mistakenly thought the original attorney accepted the case. The affiant said that upon the
subsequent receipt of the default judgment, the case was immediately assigned to the
outside attorney, who filed the motion for leave to file an answer instanter and for relief
from judgment.
{¶11} The bank’s motion to vacate the default judgment concluded that the
affidavit of its document reviewer demonstrated a mistake in the execution of the
corporate assignment of legal papers that constituted excusable neglect. Appellant
obtained an extension of time to respond to the bank’s motion for relief from judgment.
As a result, the damages hearing set for August 2, 2016 was continued.
{¶12} Appellant’s response did not contest the timeliness of the bank’s motion or
the bank’s presentation of operative facts indicating a meritorious defense if relief was
granted; instead, Appellant argued the bank’s neglect was not excusable. Appellant said
the employee who noticed the case was still reported to be open in the assignment system
on March 7, 2016 should have remedied the lack of assignment instead of sending the
matter back to the document reviewer. The bank filed a reply on September 8, 2016
(requesting leave to file instanter because the court canceled the oral argument
scheduled on the bank’s motion).
{¶13} On September 9, 2016, the trial court overruled the bank’s motion and
denied relief from judgment, finding the bank failed to show excusable neglect. The bank
appealed.
{¶14} However, this court granted a motion to dismiss the bank’s appeal for lack
of a final appealable order. White Stag Aircraft Leasing U.S. LLC v. JP Morgan Chase
1 A footnote in Appellant’s brief on appeal says the attorney’s statement to the Litigation Business
Management employee (that the case was being reassigned) should not be considered because he did not
submit his own affidavit. Appellant did not argue this to the trial court. And, there is no argument that would
affect the portion the document reviewer’s affidavit explaining the corporate procedure, his own actions, the
instructions he received, or his mistakes.
Case No. 20 MA 0018
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Bank, N.A, 7th Dist. Mahoning No. 16 MA 0154 (1/25/17 J.E.). We concluded: the case
remained in an interlocutory stage with damages still to be determined; the entry of default
judgment with a damages hearing pending was not a final judgment; a Civ.R. 60(B)
motion may only be directed to final judgments; and the motion was actually a motion to
reconsider an interlocutory order which is not appealable. Id.{¶15} After the appeal was dismissed, the case was set for hearing by a
magistrate but was continued multiple times. In the meantime, a new trial judge took the
bench in that courtroom.
{¶16} On December 17, 2019, the trial court held the damages hearing and issued
judgment on damages in the amount of $150,000.
{¶17} On December 30, 2019, the bank filed a motion for relief from judgment
(and requested leave to file an answer instanter). The motion contained a joint notice
signed by counsel for both parties which stated the parties were re-submitting and
attaching their memoranda previously filed on the bank’s June 28, 2016 motion.
{¶18} On January 9, 2020, the trial court granted the bank’s motion for relief from
judgment under Civ.R. 60(B)(1), thereby vacating the default judgment. The court also
granted leave to file the answer instanter.
{¶19} In granting relief from judgment, the court first indicated the motion was
timely filed within a reasonable time and not more than one year from the final judgment
as required by the rule. Next, the court said the bank set forth a potential meritorious
defense as the bank claimed the presentation of the letter of credit for payment before its
expiration did not strictly comply with the terms on the face of the letter of credit. The
court also said the bank wished to prove it did not receive the demand letter at all or by
the deadline and the original letter of credit was not attached to the demand.
{¶20} Lastly, the trial court found excusable neglect under Civ.R. 60(B)(1). The
court pointed to the affidavit detailing the corporate procedure and the affiant’s statement
that the procedure was initially followed until he inadvertently closed the assignment file.
The court concluded the internal corporate error was excusable neglect as there was a
set procedure within the corporate structure for dealing with legal process and the
procedure was inadvertently not followed until default judgment was entered against the
corporation at which point the bank immediately retained outside counsel.
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{¶21} Appellant filed the within timely appeal. Appellant presents two issues
under a sole assignment of error.
ISSUE 1: LAW OF THE CASE
{¶22} Appellant’s assignment of error and the first issue presented for review state
as follows:
“The Trial Court Erred in Granting JP Morgan’s Civ.R. 60(B) Motion For Relief from
Judgment After the Matter was Remanded as a Result of JP Morgan’s Premature
Appeal.”
“The Trial Court Acted Arbitrarily When It Reversed its Previous Ruling Which
Denied JP Morgan's Civ.R. 60(B) Motion for Relief from Default Judgment As It Failed to
Adhere to the Clearly Established Law of the Case.”
{¶23} Appellant relies on the original trial judge’s September 9, 2016 judgment
denying the bank’s first motion where the bank sought relief from judgment. This judge
purported to deny Civ.R. 60(B)(1) relief by finding the bank failed to show excusable
neglect and was not “unavoidably delayed or hindered in some way from responding as
required by the civil rules. Rather, it appears that this is a matter of simple neglect on
Defendant’s part, without excuse.” (9/9/16 J.E.) Appellant argues this ruling is the law of
the case and the new trial judge was therefore prohibited from altering this decision after
the premature appeal was dismissed.
{¶24} Under the law of the case doctrine, a trial court is without authority to extend
or vary the mandate issued by a reviewing court, and if a trial court at a rehearing after
remand is faced with substantially the same facts and issues as were involved in the prior
appeal, then the court is bound to adhere to the reviewing court's determination of the
applicable law. Giancola v. Azem, 153 Ohio St.3d 594, 2018-Ohio-1694, 109 N.E.3d
1194, ¶ 14, 16. The doctrine ensures consistency of results in a case, avoids endless
litigation by settling the issues, and preserves the constitutional hierarchy of courts. Id.
at ¶ 14.
{¶25} Here, the bank filed a motion seeking to vacate a default judgment, which
was denied by the trial court. However, when the bank attempted to appeal, this court
ruled the default judgment was not final because the damages hearing was still pending.
White Stag Aircraft Leasing, 7th Dist. No. 2016 MA 0154. “As a general rule, even where
Case No. 20 MA 0018
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the issue of liability has been determined, but a factual adjudication of relief is unresolved,
the finding of liability is not a final appealable order even if Rule 54(B) language was
employed.” Noble v. Colwell, 44 Ohio St.3d 92, 96, 540 N.E.2d 1381 (1989).
Consequently, this court said the bank’s motion was actually a motion for reconsideration
of an interlocutory order because a Civ.R. 60(B) motion may only be directed to final
judgments. White Stag Aircraft Leasing, 7th Dist. No. 2016 MA 0154.
{¶26} “[A] motion for reconsideration would be the proper procedural vehicle for
obtaining relief after interlocutory orders.” Pitts v. Ohio Dept. of Transp., 67 Ohio St.2d
378, 423 N.E.2d 1105 (1981), fn. 1. “Civ.R. 54(B) allows for a reconsideration or
rehearing of interlocutory orders” that are not yet subject to appeal as it states that such
orders are “subject to revision at any time before the entry of judgment adjudicating all
the claims and the rights and liabilities of all the parties.” Id., quoting Civ.R. 54(B). The
denial of a motion to reconsider an interlocutory order is not appealable as it is
interlocutory as well. See State ex rel. Boddie v. Franklin Cty. 911 Admr., 135 Ohio St.3d
248, 2013-Ohio-401, 985 N.E.2d 1263, ¶ 2, citing Brewer v. Hope Timber Pallet &
Recycling, 5th Dist. Licking No. 10-CA-76, 2011-Ohio-533, (order denying motion to
reconsider interlocutory order denying summary judgment is not final and appealable).
{¶27} Although an interlocutory order is subject to a motion for reconsideration, a
final order is not. Pitts, 67 Ohio St.2d 378 at fn. 1. To obtain relief from a final order, the
rules provide a motion to vacate a judgment under Civ.R. 60(B). Id. at 380 (and a motion
for new trial or JNOV where applicable). Civ.R. 60(B) specifically refers to the trial court’s
ability to grant relief “from a final judgment.”
{¶28} As this court declared the trial court’s September 9, 2016 order was not
final, we said the bank’s pre-damages motion for relief from judgment was not actually a
Civ.R. 60(B) motion. White Stag Aircraft Leasing, 7th Dist. No. 2016 MA 0154.
{¶29} In citing the law of the case doctrine, Appellant emphasizes the fact that the
bank appealed a decision of the trial court, and the case then proceeded in the trial court
after our judgment on appeal. Nevertheless, the law of the case set forth by this court in
the bank’s appeal essentially labeled the bank’s Civ.R. 60(B) motion premature. The
denial of the bank’s first motion could not be appealed as it was actually the denial of a
motion to reconsider an interlocutory order.
Case No. 20 MA 0018
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{¶30} Our holding did not prohibit the bank from filing a Civ.R. 60(B) motion after
the trial court rendered a final order on the default judgment. And, we did not issue a
ruling on the propriety of the trial court’s refusal to vacate the default judgment. In
accordance, the trial court’s January 9, 2020 decision granting the bank’s Civ.R. 60(B)
motion filed after the final judgment in the case was not restricted by our judgment
dismissing the prior appeal, and the decision did not deviate from our judgment. (As the
September 9, 2016 order was an interlocutory decision denying reconsideration of a
default judgment, the trial court could have reconsidered it prior to entering final judgment
on damages.)
{¶31} Appellant suggests that once the final judgment was rendered by entering
a damage award, the trial court was prohibited from ruling on the same motion. Appellant
claims a trial court must adhere to its own rulings in the case and acts arbitrarily by
changing a ruling where there was no error (but merely a change of mind or a difference
of opinion in two different judges acting on the same case). Appellant emphasizes the
bank’s reliance on the same evidence and allegations as the parties merely resubmitted
the prior motion, affidavit, response, and reply.
{¶32} Appellant relies heavily on the statement: “The [law of the case] doctrine
has been extended to encompass a lower court's adherence to its own prior rulings or to
the rulings of another judge or court in the same case.” Poluse v. Youngstown, 135 Ohio
App.3d 720, 725, 735 N.E.2d 505 (7th Dist.1999) (but finding no issue with the trial court’s
reconsideration and stating there are circumstances allowing a trial court to reconsider a
prior ruling), citing Clymer v. Clymer, 10th Dist. Franklin No. 95APF02–239 (Sept. 26,
1995). The Poluse case also involved one judge’s reconsideration of a prior judge’s
interlocutory order; however, the case dealt with the denial and then the grant of summary
judgment.
{¶33} The Poluse court: “Regarding a summary judgment motion, an order
overruling such a motion is subject to revision by the trial court at any time prior to entry
of final judgment, and the court may correct an error upon a motion for reconsideration
predicated upon the same law and facts.” (Emphasis added.) Poluse, 135 Ohio App.3d
at 725. Appellant disregards the initial emphasized qualifier and believes this quote
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means the trial court could not change the September 9, 2016 judgment unless the bank
pointed to an error by the trial court (as the bank did not cite new facts or law).
{¶34} Poluse is distinguishable from the case at hand because it specifically dealt
with a summary judgment motion, which can only be granted as a matter of law (as there
is only one correct ruling). In such a case, the legal issue is reviewed de novo on appeal,
regardless of whether the trial court’s final order was the court’s first ruling on a motion or
the court’s reconsideration of a prior interlocutory order denying summary judgment.
Distinguishably, the bank’s motions here involved the trial court’s exercise of discretion.
{¶35} It has been observed that even if a trial court should employ the law of the
case doctrine and follow its own prior decisions, the doctrine and the trial court’s decision
would not bind the reviewing court. See Lehrner v. Safeco Ins. Am. States Ins. Co., 171
Ohio App.3d 570, 2007-Ohio-795, 872 N.E.2d 295, ¶ 109 (2d Dist.), citing Enterprises
Inc. v. Kentucky Fried Chicken Corp., 47 Ohio St.2d 154, 162, 351 N.E.2d 121 (1976).
{¶36} In addressing the Clymer holding (cited in Poluse), the Ohio Supreme Court
said the principle would not preclude a common pleas court from reconsidering an
interlocutory order entered in the same case by a different common pleas court judge.
State ex rel. Dannaher v. Crawford, 78 Ohio St.3d 391, 678 N.E.2d 549 (1997), quoting
18 Wright, Miller & Cooper, Federal Practice & Procedure, Section 4478, 794 (1981) (“A
wide degree of freedom is often appropriate when the same question is presented to
different judges of a single district court. * * * Substantial freedom is desirable * * *,
particularly since continued proceedings may often provide a much improved foundation
for deciding the same issue.”).
{¶37} As this court later observed: “one can seek reconsideration of an
interlocutory order. However, the denial of reconsideration need not be addressed on
appeal as we are only concerned with reviewing the propriety of final judgments.”
(Citations omitted.) Jefferson Cty. CSEA v. Pickett, 7th Dist. Jefferson No. 99 JE 5 (Sep.
21, 2000). Moreover: “trial courts normally only give preclusive effect to their prior rulings
if those rulings could have been appealed and were not.” Creaturo v. Duko, 7th Dist.
Columbiana No. 04 CO 1, 2005-Ohio-1342, ¶ 25.
{¶38} Here, the bank attempted to appeal the prior ruling on the first motion, but
the appeal was dismissed by this court in an entry suggesting the Civ.R. 60(B) motion
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should be filed from the future final judgment. A Civ.R. 60(B) motion for relief from
judgment specifically anticipates a court changing a final judgment if the movant satisfies
elements for granting relief (discussed in the next issue).
{¶39} We also note the law of the case doctrine is a rule of practice rather than a
binding rule of substantive law and will not be applied in a manner that produces unjust
results. Hawley v. Ritley, 35 Ohio St.3d 157, 160, 519 N.E.2d 390 (1988). See also
Giancola, 153 Ohio St.3d 594 at ¶ 15 (but the appellate mandate part of the doctrine
cannot be violated). When dismissing the bank’s prior appeal, this court’s January 25,
2017 judgment effectively encouraged the bank to file a Civ.R. 60(B) motion after final
judgment in the case. See White Stag Aircraft Leasing, 7th Dist. No. 2016 MA 0154.
{¶40} In any event, a Civ.R. 60(B) motion cannot be filed from an interlocutory
order, and the default judgment was ruled by this court to be an interlocutory order at the
time of the bank’s first motion. The trial court’s September 9, 2016 ruling on the bank’s
first motion was not truly a ruling on a Civ.R. 60(B) motion, even though the trial court
purported to rule on a Civ.R. 60(B) motion in its September 9, 2016 order. See, e.g.,
Genhart v. David, 7th Dist. Mahoning No. 10 MA 144, 2011-Ohio-6732, ¶ 12 (“Nor can a
trial court consider a Civ.R. 60(B) motion for relief from judgment unless the party is
seeking relief from a final appealable order”), citing Pickett, 7th Dist. No. 99 JE 5. In these
circumstances, a ruling on a premature Civ.R. 60(B) motion is actually a ruling on a motion
for reconsideration. See White Stag Aircraft Leasing, 7th Dist. No. 2016 MA 0154
(construing the bank’s first motion as a motion to reconsider the interlocutory default
judgment).
{¶41} Accordingly, the September 9, 2016 trial court order (refusing to reconsider
an interlocutory default judgment) was not the law of the case on a Civ.R. 60(B) motion
filed after final judgment. New or additional evidence or even a showing of error was not
required in order for the bank to re-file the same motion which this court previously ruled
was premature. The bank’s December 30, 2019 motion for relief from judgment, which
is the only motion filed after final judgment, is considered the bank’s first Civ.R. 60(B)
motion. Accordingly, Appellant’s law of the case argument lacks merit.
ISSUE 2: EXCUSABLE NEGLECT
{¶42} The second issue presented for review contends:
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“The Trial Court Arbitrarily Determined That JP Morgan Demonstrated Excusable
Neglect as Required by Civ.R. 60(B)(1) When it Reversed its Previous Ruling Without
New or Additional Evidence.”
{¶43} Pursuant to Civ.R. 55(B), “If a judgment by default has been entered, the
court may set it aside in accordance with Rule 60(B).” To prevail on a Civ.R. 60(B) motion,
the movant must demonstrate each of the following three elements: (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 listed in the five subdivisions of the rule; and (3) the motion is
made within a reasonable time (which is not more than one year after the judgment if the
motion is based on one of the first three subdivisions). GTE Automatic Elec. Inc. v. ARC
Industries Inc., 47 Ohio St.2d 146, 150-151, 351 N.E.2d 113 (1976). See also Rose
Chevrolet Inc. v. Adams, 36 Ohio St.3d 17, 20, 520 N.E.2d 564 (1988) (but need not
prove the meritorious defense will prevail).
{¶44} The bank’s motion was timely filed less than two weeks after the final
judgment was entered. The bank alleged various meritorious defenses (as set forth in
our Statement of the Case above). Among other items, the bank pointed to the one-year
statute of limitations for a letter of credit in R.C. 1305.14 and the provision in R.C.
1305.07(A) requiring the issuer to dishonor the presentation of a letter of credit that does
not appear on its face to strictly comply with the terms and conditions of the letter of credit.
Appellant did not contest the timeliness or meritorious defense elements below and does
not contest the trial court’s finding of these elements to this court on appeal.
{¶45} The only dispute is whether the trial court properly exercised its discretion
in finding the bank was entitled to relief from judgment under a ground listed in the rule.
The bank’s motion was filed under Civ.R. 60(B)(1), which provides: “On motion and upon
such terms as are just, the court may relieve a party or his legal representative from a
final judgment, order or proceeding for the following reasons: (1) mistake, inadvertence,
surprise or excusable neglect * * *.”
{¶46} Excusable neglect has been defined in the negative: excusable neglect
does not exist if the defendant’s inaction indicates a complete disregard for the judicial
system. Kay v. Marc Glassman Inc., 76 Ohio St.3d 18, 20, 665 N.E.2d 1102 (1996). The
determination of whether neglect is excusable or inexcusable must take into consideration
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all surrounding facts and circumstances. Id. “Where timely relief is sought from a default
judgment and the movant has a meritorious defense, doubt, if any, should be resolved in
favor of the motion to set aside the judgment so that cases may be decided on their
merits.” GTE, 47 Ohio St.2d 146 at paragraph three of the syllabus.
{¶47} We review the denial of a Civ.R. 60(B) motion under an abuse of discretion
standard of review. State ex rel. Russo v. Deters, 80 Ohio St.3d 152, 1997-Ohio-351,
684 N.E.2d 1237 (1997). An abuse of discretion exists where the trial court's attitude was
unreasonable, arbitrary, or unconscionable. Id., citing Blakemore v. Blakemore, 5 Ohio
St.3d 217, 219, 450 N.E.2d 1140 (1983).
{¶48} In Kay, the defendant submitted affidavits demonstrating counsel prepared
an answer but the attorney’s secretary inadvertently put it in a file drawer rather than in
the mail for filing. It was explained that this mistake was prompted by the reorganization
of the attorney’s system and was an isolated incident. The Supreme Court reversed the
denial of the defendant’s Civ.R. 60(B)(1) motion upon concluding the trial court abused
its discretion in failing to find the inadvertence of the attorney’s secretary was excusable
neglect. Kay, 76 Ohio St.3d at 20-21.
{¶49} Here, the trial court pointed to the affidavit of a corporate employee attesting
to the corporate procedure for ensuring the successful assignment of complaints. He
said this procedure was initially followed until he inadvertently closed his file on the matter
instead of forwarding the case. The trial court concluded the internal corporate error was
excusable neglect as there was a set procedure within the corporate structure for dealing
with legal process and the procedure was inadvertently not followed until default judgment
was entered against the corporation, at which point the bank received notice of default
and immediately retained outside counsel who filed for relief from judgment.
{¶50} Appellant argues the bank’s failure to answer was a complete disregard for
the judicial system. Appellant states the corporate protocol was not followed when the
document reviewer failure to follow the attorney’s instructions to forward the complaint to
a different section and the employee at the reviewing department should have taken over
after she discovered the case was still open (instead of letting the document reviewer
continue to handle the matter). Appellant says this was simple neglect (as the first trial
judge opined when addressing the bank’s motion to reconsider an interlocutory order).
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{¶51} In granting relief from the final default judgment, the trial court applied a
Tenth District case setting forth a two-part test for evaluating whether an internal
corporate error should be excused: “To meet the test, a party must present circumstances
sufficient to show the following: (1) there is a set procedure, within the corporate
structure, for dealing with legal process, and (2) the procedure was, inadvertently, not
followed until a default judgment had been entered against the corporate defendant.” See
Ohio FAIR Plan Underwriting Assn. v. Hitchman Ins. Agency Inc., 10th Dist. Franklin No.
12AP-642, 2012-Ohio-6170, ¶ 9, citing Perry v. General Motors Corp., 113 Ohio App.3d
318, 324, 680 N.E.2d 1069 (10th Dist.1996) (affirming the vacation of default judgment
on the basis of excusable neglect where a corporate employee failed to properly forward
the complaint) and Hopkins v. Quality Chevrolet Inc., 79 Ohio App.3d 578, 583, 607
N.E.2d 914 (4th Dist.1992) (setting forth this two-part test and upholding the trial court's
finding of excusable neglect where a corporate employee failed to forward the complaint
to the appropriate person).
{¶52} We have followed this line of reasoning. WFMJ Television Inc. v. AT&T
Fed. Systems CSC, 7th Dist. Mahoning No. 01 CA 69, 2002-Ohio-3013, ¶ 19-20 (“This
court prefers to follow the majority opinions of the above-cited districts” on this topic),
citing Perry, 113 Ohio App.3d 318, Hopkins, 79 Ohio App.3d 578, and Sycamore
Messenger Inc. v. Cattle Barons Inc., 31 Ohio App.3d 196, 509 N.E.2d 977 (1st Dist.1986)
(upholding the finding of excusable neglect where a corporate officer's affidavit said a
bookkeeper failed to forward the complaint to the appropriate person). Even where a
case “teeters on the verge of inexcusable neglect unreasonably accepted by the trial court
due to what appears to be cumulative neglect,” this court defers to the trial court as the
test is not whether this court would have ruled in the opposite manner. See WFMJ, 7th
Dist. No. 01 CA 69 at ¶ 22.
{¶53} To review, the bank submitted the affidavit of its document reviewer who
worked in a department specifically set up to ensure newly-served complaints reached
an attorney in time to file a timely answer. The affiant explained the existence of the set
procedure in the corporate structure and the way the procedure was implemented in this
case. Following corporate procedure, this employee received the complaint from the
statutory agent, reviewed its contents, and assigned it to an attorney in a certain section
Case No. 20 MA 0018
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of the office of general counsel at the bank (who would review the case and obtain outside
counsel or direct reassignment). This attorney, also following corporate procedure,
returned the case to the document reviewer with instructions to assign it to an attorney in
a different, more appropriate section of the office of general counsel at the bank.
{¶54} Before the answer date passed, an employee in a separate line of defense
against untimely answers noticed the case was still open on the assignment system,
spoke to the attorney, learned of the reassignment instructions, and left the matter to the
document reviewer. However, the document reviewer mistakenly thought the attorney
accepted the case, and he therefore marked the case as closed in the assignment
system, instead of following the attorney’s instructions on reassignment. After the bank
received notice of default judgment, the bank took immediate action to assign the case
and obtain outside counsel.
{¶55} The trial court did not act unreasonably, arbitrarily, or unconscionably in
finding the bank had a set procedure within the corporate structure for dealing with legal
process and the procedure was inadvertently not followed through the date the default
judgment was entered against the corporate defendant. As the motion was timely and
the bank presented a meritorious defense, the trial court could resolve any doubts in favor
of the bank and find the case should be decided on the merits. We should not substitute
our judgment for that of the trial court as the bank’s inaction did not indicate a complete
disregard for the judicial system under the totality of the facts and circumstances of this
case.
{¶56} Contrary to Appellant’s suggestion, the fact that a different judge (in an
interlocutory ruling on a premature motion) believed the mistake was inexcusable neglect
does not indicate the second trial judge acted “arbitrarily” in granting the same motion
when it was subsequently filed at the appropriate time. Arbitrary is defined as “without
adequate determining principle; * * * not governed by any fixed rules or standard.” Cedar
Bay Constr. Inc. v. City of Fremont, 50 Ohio St.3d 19, 22, 552 N.E.2d 202 (1990) (defining
the parts of the abuse of discretion standard of review). As can be seen by the entry
granting Civ.R. 60(B) relief, the trial court employed the appropriate principles in
determining the motion, and as set forth in the prior section, the prior judge’s denial of a
Case No. 20 MA 0018
– 15 –
motion to reconsider an interlocutory was not a governing fixed standard or the law of the
case. Appellant’s arguments are without merit.
{¶57} For the foregoing reasons, Appellant’s assignment of error is overruled, and
the trial court’s judgment is affirmed.
Waite, J., concurs.
Wright, J., concurs.
Case No. 20 MA 0018
[Cite as White Stag Aircraft Leasing U.S. v. JP Morgan Chase Bank, N.A., 2021-Ohio-1245.]
For the reasons stated in the Opinion rendered herein, the assignment of error is
overruled and it is the final judgment and order of this Court that the judgment of the Court
of Common Pleas of Mahoning County, Ohio, is affirmed. Costs to be taxed against the
Appellant.
A certified copy of this opinion and judgment entry shall constitute the mandate in
this case pursuant to Rule 27 of the Rules of Appellate Procedure. It is ordered that a
certified copy be sent by the clerk to the trial court to carry this judgment into execution.
NOTICE TO COUNSEL
This document constitutes a final judgment entry.