LaSalle Bank Natl. Assn. v. Smith , 2012 Ohio 4040 ( 2012 )

[Cite as LaSalle Bank Natl. Assn. v. Smith, 2012-Ohio-4040.]
STATE OF OHIO ) IN THE COURT OF APPEALS OF OHIO
)
MAHONING COUNTY ) SS: SEVENTH DISTRICT
LaSALLE BANK NATIONAL )
ASSOCIATION, TRUSTEE, ) CASE NO. 11 MA 85
)
PLAINTIFF-APPELLEE )
)
VS. ) JUDGMENT ENTRY
)
RONALD SMITH, et al., )
)
DEFENDANTS-APPELLANTS. )
For the reasons stated in the Opinion rendered herein, the assignments of
error are without merit and are overruled. It is the final judgment and order of this
Court that the judgment of the Common Pleas Court, Mahoning County, Ohio, is
affirmed. Costs taxed against appellants.
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JUDGES.
[Cite as LaSalle Bank Natl. Assn. v. Smith, 2012-Ohio-4040.]
STATE OF OHIO, MAHONING COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
LaSALLE BANK NATIONAL )
ASSOCIATION, TRUSTEE, ) CASE NO. 11 MA 85
)
PLAINTIFF-APPELLEE )
)
VS. ) OPINION
)
RONALD SMITH, et al., )
)
DEFENDANTS-APPELLANTS. )
CHARACTER OF PROCEEDINGS: Civil Appeal from Common Pleas Court,
Case No. 05CV3869.
JUDGMENT: Affirmed.
APPEARANCES:
For Plaintiff-Appellee: Attorney Anne Sferra
Attorney Nelson Reid
Attorney Justin Ristau
100 South Third Street
Columbus, Ohio 43215-4291
For Defendant-Appellant: Attorney Bruce Broyles
5815 Market Street, Suite 2
Boardman, Ohio 44512
JUDGES:
Hon. Joseph J. Vukovich
Hon. Cheryl L. Waite
Hon. Mary DeGenaro
Dated: August 27, 2012
[Cite as LaSalle Bank Natl. Assn. v. Smith, 2012-Ohio-4040.]
VUKOVICH, J.
{¶1} Defendants-appellants Ronald and Nancy Smith appeal the decisions
of the Mahoning County Common Pleas Court that denied their motion for
reconsideration and their Civ.R. 60(B) motion for relief from judgment. The Smiths
contend that the January 12, 2007 judgment ordering foreclosure and sale of the real
property and residence located at 1625 Gully Top Lane, Canfield Ohio, in Mahoning
County was not a final order, and thus, the trial court could reconsider its order of
foreclosure. In the alternative, they contend that even if the January 12, 2007 order
was a final appealable order, the trial court erred when it denied their Civ.R. 60(B)
motion. They assert that plaintiff-appellee LaSalle Bank National Association, As
Trustee for Certificate Holders of Bear Stearns Asset-Backed Securities LLC Asset
Back Certificates, Series 2004-HE5 (LaSalle) committed fraud on the court when it
asserted in its complaint that it was a real party in interest, despite the fact that
according to the Smiths, LaSalle is not the holder of the mortgage. The Smiths
assert that this is a meritorious defense and that the motion was brought within a
reasonable amount of time.
{¶2} For the reasons expressed more fully below, the decision of the trial
court is hereby affirmed. The January 12, 2007 order is a final order of foreclosure.
As such, the motion for reconsideration is a nullity and the trial court did not abuse its
discretion in denying the motion. As to the Civ.R. 60(B) motion, the action was not
timely.
STATEMENT OF THE CASE
{¶3} LaSalle filed a complaint and an amended complaint in foreclosure
against the Smiths asserting that the Smiths defaulted on their mortgage for the real
property and residence located at 1625 Gully Top Lane in Canfield, Ohio, and that
LaSalle has the first lien on the property. 10/13/05 and 10/25/05 Complaints.
LaSalle asserted that $525,023.67 plus interest was owed on the note.
{¶4} From the record it appears that in October 2004, when the Smiths were
five payments behind in their mortgage, they executed a forbearance agreement.
The Smiths defaulted on that agreement and in April 2005, when they were seven
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payments behind, and they executed a second forbearance agreement. They
defaulted on this agreement too and in October 2005, they executed their third and
final forbearance agreement. They only made one payment under that plan. On May
1, 2006, LaSalle accelerated the loan, called it due and initiated foreclosure
proceedings.
{¶5} After the Smiths answered the complaint, LaSalle moved for summary
judgment. 01/27/06 Motion. The Smiths filed motions in opposition to summary
judgment approximately six months later. 07/19/06 Motions. LaSalle filed a
response to the opposition motions in August 2006. Thereafter, in December 2006,
LaSalle filed a detailed account of mortgage.
{¶6} In January 2007, the trial court granted summary judgment in favor of
LaSalle ordering foreclosure and the sale of the property. No appeal was filed from
this order.
{¶7} In July 2007, the property was set for sale. However, in August 2007,
the case was stayed due to the Smiths filing bankruptcy. Thus, the order of sale was
withdrawn. The bankruptcy stay was lifted in October 2007 after the bankruptcy case
was dismissed.
{¶8} The property was ordered to sale and a notice of sale was issued in
May 2008. However, prior to the sale, the Smiths requested another stay because of
an action they had pending in Federal District Court against LaSalle. In that case,
the Smiths asserted that LaSalle violated the Truth in Lending Act. The trial court
granted the stay request. 06/20/08 J.E.
{¶9} In October 2009, the stay was lifted after the federal case had been
dismissed. 10/19/09 J.E. One week later, the Smiths requested another stay. This
request was based on a pending case in the Mahoning County Common Pleas Court
that made claims against LaSalle that were similar in nature to the claims that were
already asserted and dismissed by the federal court. 10/28/09 Motion. In March
2010, prior to the court ruling on the request, the Smiths asked the trial court to
reconsider its October 2009 order lifting the stay. The magistrate stayed the case.
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06/23/10 J.E. However, in February 2011 the trial court vacated the magistrate’s
stay.
{¶10} On March 16, 2011, approximately 51 months after the initial
foreclosure order, the Smiths filed a motion for reconsideration of the trial court’s
January 12, 2007 order. That same day they also filed a Civ.R. 60(B) motion for relief
from judgment. Both motions asserted that LaSalle is not the real party in interest,
committed fraud on the court and violated the Pooling and Servicing Agreement
(PSA) that governed how the mortgage was to be placed in the Bear Stearns Trust.
LaSalle filed motions in opposition to both of the Smiths’ motions. 04/15/11 and
04/26/11 Motions. On May 4, 2011, the trial court overruled the motions. It is from
that order that the Smiths appeal.
{¶11} During the pendency of the appeal, the Smith sought a stay of the
January 12, 2007 order. The trial court denied the stay. We granted the stay and
ordered a bond in the amount of $750,000. 06/29/11 J.E. Even though the Smiths
did not file the required bond to stay the proceedings, on July 7, 2011, LaSalle
moved to withdraw the order of sale. The trial court granted the motion and the order
of sale was withdrawn. 07/07/11 J.E.
JANUARY 12, 2007 JUDGMENT ENTRY
{¶12} The arguments presented in the assignments of error are alternatives to
each other. The first assignment of error is premised on the position that the January
12, 2007 order is not a final order since a trial court can only reconsider nonfinal
orders. The second assignment of error is premised on the position that the January
12, 2007 order is a final order since Civ.R. 60(B) only applies to final orders. Thus,
before addressing the assignments of error, the initial question this court must decide
is whether the January 12, 2007 Judgment Entry that ordered foreclosure and sale of
the property was a final appealable order.
{¶13} Our court has previously looked at the issue of what is needed in a
foreclosure judgment to render that judgment final. Second Nat. Bank of Warren v.
Walling, 7th Dist. No. 01CA62, 2002-Ohio-3852. We have stated that:
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[A] judgment entry ordering a foreclosure sale is not final and
appealable unless it resolves all of the issues involved in the
foreclosure, including the following: whether an order of sale is to be
issued; what other liens must be marshaled before distribution is
ordered; the priority of any such liens; and the amounts that are due the
various claimants.
(Emphasis sic.) Id. ¶ 18.
{¶14} Within the past year we have favorably cited our decision in Walling.
PHH Mtge. Corp. v. Albus, 7th Dist. No. 09MO9, 2011-Ohio-3370, ¶ 18. In PHH we
found that the judgment was not final even though the judgment entry did state the
exact amount due on the promissory note, it included a demand to marshal liens and
it did provide that there was a right to redemption. Id. This was because the
judgment entry stated that the final decree of foreclosure is “to be submitted” at some
point in the future. Id. Furthermore, the entry did not include the description and
amount of other liens, the priority of the liens, and how the funds should be
distributed to the various claimants. Id., citing Walling, ¶ 18.
{¶15} In the case at hand, the January 12, 2007 judgment entry that granted
summary judgment in favor of LaSalle acknowledged that defendants McHutchinson
LLC and Sky Bank Successor to Citizens Banking Company “disclaimed any right,
title claim or interest in the premises described herein.” The judgment then stated:
The Court finds that there is due the Treasurer of Mahoning
County, taxes, accrued taxes, assessments and penalties on the
premises described herein, as shown on the County Treasurer’s tax
duplicate, the exact amount being unascertainable at the present time,
but which amount will be ascertainable at the time of sale; which are a
valid and subsisting first lien thereon for that amount so owing on the
day of the timely transfer of deed.
***
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The Court finds on the evidence adduced that there is due
Plaintiff on the promissory note set forth in the First Count of the
Complaint, the sum of $525,023.67, plus interest thereon at the rate of
8.25% per annum from February 1, 2005, plus all late charges due
under the Note and Mortgage, all advances made for the payment of
real estates taxes and assessments and insurance premiums, and all
costs and expenses incurred for the enforcement of the Note and
Mortgage, except to the extent the payment of one or more specific
such items is prohibited by Ohio law, for which sum judgment is hereby
rendered in favor of Plaintiff against the Defendants, Ronald J. Smith.
***
The Court finds that Plaintiff has and will from time to time
advance sums for taxes, insurance and property protection. Plaintiff
has the first and best lien for these amounts in addition to the amount
set forth above. The Court makes no finding as to the amounts of the
advances and continues same until the confirmation of sale.
***
It is therefore ORDERED, ADJUDGED AND DECREED that
unless the sums found due herein, together with the costs of this action
be fully paid within three (3) days from the date of the entry of this
decree, the equity of redemption and dower of all defendants in and to
said premises shall be foreclosed and that an order of sale may be
issued to the Mahoning County Sheriff, directing him to appraise,
advertise in a paper of general circulation within the County and sell
said premises as upon execution and according to law free and clear of
the interest of all parties to this action.
1/12/07 J.E.
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{¶16} The above clearly shows that any other lien holders have disclaimed
their rights. Thus, here, we do not have the issue that we had in Walling where the
number, priority and value of other outstanding liens was not determined. Likewise,
the ability to redeem the property is also set forth.
{¶17} The Smiths’ assertion that this judgment is not final is based on the fact
that the judgment does not, in their opinion, determine the amounts due and leaves
that determination for a later date.
{¶18} The judgment entry clearly indicates that certain fees are not
ascertainable at the time of the judgment entry. For instance, the accrued taxes that
will be owing to the Mahoning County Treasurer at the time of the sale is not
ascertainable at the order of foreclosure because it is unclear how long it will take to
sell the property. Likewise, if LaSalle advances sums for taxes, insurance and
property protection, that is also not ascertainable at the point that foreclosure is
ordered. The court cannot compute those figures because their final amount is
dependent on how quickly the property sells. However, what is clear from the
judgment is that any money that is expended by LaSalle for those items constitutes a
lien on the property. While the trial court did state that it is not making any “finding as
to the amount of the advances and continues the same until the confirmation of the
sale” that statement should not render the judgment nonfinal.
{¶19} Our decision in PHH that the foreclosure order was not final was
partially based on the statement in the trial court’s judgment of foreclosure that a final
decree of foreclosure is “to be submitted” at some point in the future. PHH Mtge.
Corp. v. Albus, 7th Dist. No. 09MO9, 2011-Ohio-3370, ¶ 18. The statement that the
amount of the advances will be determined in the confirmation of the sale judgment is
not the equivalent to the statement that a final decree of foreclosure is “to be
submitted” at some point in the future. Thus, our case is distinguishable from PHH.
{¶20} At this point, it is important to recognize that there are two judgments
that are appealable in foreclosure actions. Emerson Tool, L.L.C. v. Emerson Family
Ltd. P'ship, 9th Dist. No. 24673, 2009-Ohio-6617, ¶ 13, citing Citifinancial, Inc. v.
Haller-Lynch, 9th Dist. No. 06CA008893, 2006-Ohio-6908, ¶ 5-6. See, also, Bankers
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Trust Co. of California, N.A. v. Tutin, 9th Dist. No. 24329, 2009-Ohio-1333, ¶ 14;
Triple F. Invests., Inc. v. Pacific Fin. Servs., Inc., 11th Dist. No. 2000-P-0090, 2001
WL 589343 (June 2, 2001). The first is the order of foreclosure and sale. The
second is the confirmation of the sale.
{¶21} Thus, if the advances made for taxes, insurance and property
protection are determined at the time of the confirmation of the sale, any amount in
dispute is subject to an appeal of the confirmation of the sale order. The order of
foreclosure clearly indicates that those advances are the first and best lien for those
amounts in addition to the amounts set forth above. This is especially the case when
the advances are future costs that have not occurred and potentially may not occur.
To find that the judgment entry is nonfinal because it is does not compute future
costs would mean that no judgment of foreclosure and sale would ever be final.
{¶22} Consequently, after considering the entire January 12, 2007 judgment
entry we find that it is a final appealable order.
FIRST ASSIGNMENT OF ERROR
{¶23} “THE TRIAL COURT ERRED IN DENYING THE MOTION FOR
RECONSIDERATION.”
{¶24} It has been explained multiple times that motions for reconsideration of
a final judgment in the trial court are a nullity. Pitts v. Ohio Dept. of Transp., 67 Ohio
St.2d 378, 379, 423 N.E.2d 1105 (1981). As explained above, the January 12, 2007
order of foreclosure is a final appealable order. Thus, considering Pitts and our
holding regarding the finality of the January 12, 2007 order, this assignment of error
lacks merit.
SECOND ASSIGNMENT OF ERROR
{¶25} “THE TRIAL COURT ABUSED ITS DISCRETION IN DENYING THE
MOTION FOR RELIEF FROM JUDGMENT.”
{¶26} Civ.R. 60(B) states that “[o]n 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” when certain factors are met. Civ.R. 60(B) only applies to final orders.
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Therefore, since we have found that the January 12, 2007 order is a final order,
Civ.R. 60(B) can be used as means to have that order vacated.
{¶27} The standard of review used to evaluate the trial court’s decision to
grant or deny a Civ.R. 60(B) motion is an abuse of discretion. State ex rel. Russo v.
Deters, 80 Ohio St.3d 152, 153, 684 N.E.2d 1237 (1997). An abuse of discretion
connotes conduct which is unreasonable, arbitrary, or unconscionable. State ex rel.
Edwards v. Toledo City School Dist. Bd. of Edn., 72 Ohio St.3d 106, 107, 647 N.E.2d
799 (1995).
{¶28} We have continuously explained that Civ.R. 60(B) cannot be used as a
substitute for appeal. John Soliday Fin. Group, L.L.C. v. Moncreace, 7th Dist. No. 09
JE 11, 2011-Ohio-1471, ¶ 11, quoting Doe v. Trumbull Cty. Children Servs. Bd., 28
Ohio St.3d 128, 502 N.E.2d 605 (1986). The movant's arguments cannot merely
reiterate merit arguments that could have been raised on appeal. Manigault v. Ford
Motor Co., 134 Ohio App.3d 402, 412, 731 N.E.2d 236 (8th Dist. 1999).
{¶29} In order to prevail on a motion brought under Civ.R. 60(B), the movant
must show that:
{¶30} “(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, 549 N.E.2d 505 (1976), paragraph two
of the syllabus.
{¶31} The grounds for relief under the second GTE element are:
(1) [M]istake, 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
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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).
{¶32} Our analysis will begin with the second and third GTE factors, grounds
for relief and timeliness of the Civ.R. 60(B) motion. The Smiths contend that the
catchall provision in Civ.R. 60(B)(5) applies, i.e. any other reason justifying relief from
the judgment. Specifically, they contend that when counsel for LaSalle filed the
complaint asserting LaSalle was the holder of the note and mortgage, counsel was
committing a fraud on the court because counsel knew LaSalle was not the holder of
the note. Therefore, according to the Smiths Civ.R. 60(B)(5) is applicable and since
the motion for vacation was filed within a reasonable time, it complied with the
timeliness requirement.
{¶33} LaSalle disagrees and asserts that the allegation that LaSalle knew it
was not the holder of the note is more akin to (B)(3), “fraud (whether heretofore
denominated intrinsic or extrinsic), misrepresentation or other misconduct of an
adverse party.” Thus, according to LaSalle, Civ.R. 60(B)’s one year filing requirement
is applicable. Since the motion was filed approximately 4 years and 3 months after
the foreclosure judgment, it was untimely.
{¶34} As can be seen by the arguments, the determination of whether the
vacation motion is timely is partially dependent upon what ground for relief is being
claimed. The comments to Civ.R. 60(B) clearly indicate that fraud upon the court
differs from Rule 60(B)(3), fraud or misrepresentation by an adverse party. Civ.R.
60(B) (staff notes). “Fraud upon the court might include, for example, the bribing of a
juror, not by the adverse party, but by some third person.” Id.{¶35} The Ohio Supreme Court has explained that “fraud on the court” occurs
when an officer of the court (i.e. an attorney) actively participates in defrauding the
court. Coulson v. Coulson, 5 Ohio St. 3d 12, 15, 448 N.E.2d 809 (1983). This type of
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fraud does not fall under Civ.R. 60(B)(3), but rather constitutes a ground for relief
under Civ.R. 60(B)(5). Id.{¶36} That said, our sister district has stated that the mere allegation that the
party seeking foreclosure is not the holder of the note is not enough for it to constitute
fraud on the court, rather in that case it merely falls under general fraud. U.S. Bank
Natl. Assn. v. Spicer, 3d Dist. No. 9-11-01, 2011-Ohio-3128, ¶39, 41-42. However, in
that case, there was not a clear allegation that counsel for the bank was involved in
the fraud. Here, the Smiths take the allegation one step farther than Spicer did; the
Smiths contend that the counsel for LaSalle was involved in the fraud and thus, it
became fraud on the court.
{¶37} Here, the Smiths’ allegation involves an officer of the court and thus, by
mere definition the ground for relief is fraud on the court. Whether the Smiths can
prove such allegation is a whole separate issue. However, it falls under Civ.R.
60(B)(5) and thus, in order to meet the timeliness requirement, the motion was
required to be filed within a reasonable time.
{¶38} Thus, the issue before this court is whether the four year and three
month delay was reasonable. It has been explained that the determination for Civ.R.
60(B) as to what is a reasonable length of time is fact specific. Frantz v. Martin, 8th
Dist. No. 92211, 2009-Ohio-2377, ¶14 (stating, “from a review of case law regarding
timeliness of Civ.R. 60(B) motions, it is clear that each case must be decided upon its
own facts as a delay of four years has been held to be reasonable, and a delay of
four months has been held to be unreasonable”).
{¶39} Given the facts of this case, we do not find that the length of the delay
was reasonable. Admittedly, the Smiths have pursued multiple tactical maneuvers to
stop the foreclosure, which included constant litigation that stayed the foreclosure
action. However, stays do not prevent a party from filing a motion to vacate. While
the trial court could not rule on the motion during the stays, the motion still could have
been filed.
{¶40} Likewise, it also acknowledged that the Smiths had to obtain the
voluminous Pooling and Servicing Agreement (PSA) and its supplement, the
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Prospectus Supplement, from the Securities and Exchange Commission to determine
whether LaSalle complied with those requirements in those documents. The PSA
and Prospectus Supplement were obtainable at the time the complaint was filed; the
Prospectus Supplement is dated 2004. Thus, the alleged failure to follow the
requirements could have been discovered shortly after filing of the 2005 complaint.
{¶41} The Smiths assert that it was not until the November 2010 Federal
Congressional Oversight Panel Report came out that they could fully comprehend the
legal consequences of LaSalle’s failure to comply with the terms of the PSA. We
disagree with the position that the failure to comply with the terms of the PSA could
not be discovered until the congressional report was issued. The Federal Committee
Report is merely a report, it is not law. Therefore, it does not indicate the legal
consequences of the failure to comply with the terms of the PSA. Only through
litigation can the consequences of failing to comply with the terms of the PSA be
realized. The Smiths did not need the committee report to realize legal
consequences, but rather needed to pursue the issue through the courts.
{¶42} Furthermore, the congressional report does not indicate that there is a
clear issue in the case at hand. The report indicates that mortgages may not have
been properly conveyed to the trust that claims to own the note if the required
documentation to transfer the note and mortgage to the trust was incomplete. Thus,
the trust may not have the ability to enforce the lien through foreclosure because it
may not be the owner of the note and mortgage. The report shows that for
securitization of the mortgage there are multiple transfers. It shows the mortgage
starting with the originator, who in this case would be Encore, then being transferred
to a Securitization Sponsor and then to a Depositor and then to the Securitization
Trust, which in this case would be LaSalle. In this case the middlemen were jumped
and the mortgage was placed directly into the trust. Encore, the original lender
assigned the note and mortgage to “LaSalle Bank National Association, as Trustee
for certificateholders of Bear Stearns Asset Stacked Securities I LLC Asset Backed
Certificates, Series 2004-HE5”. The report does not suggest whether such an action
was right or wrong.
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{¶43} Consequently, considering all the above the motion for relief from
judgment was not filed within a reasonable time. Thus, as the third GTE requirement
was not met, the trial court did not abuse its discretion in denying the Civ.R. 60
motion. Rose Chevrolet, Inc., 36 Ohio St.3d at 20, 520 N.E.2d 564 (1988) (stating
that the trial court should overrule a Civ.R. 60(B) motion if the movant fails to meet
any one of the foregoing three requirements). Therefore, this assignment of error
lacks merit.
CONCLUSION
{¶44} The trial court’s January 12, 2007 order of foreclosure is a final
appealable order. The first assignment of error lacks merit because reconsideration
of a final trial court order is a nullity. The second assignment of error also lacks merit
because the Civ.R. 60(B) motion was not made within a reasonable time. Therefore,
the trial court’s decisions to deny the motion for reconsideration and Civ.R. 60(B)
motion to vacate are hereby affirmed.
Waite, P.J., concurs.
DeGenaro, J., concurs.
APPROVED:
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JOSEPH J. VUKOVICH, JUDGE