JPMorgan Chase Bank, N.A. v. Romine , 2013 Ohio 4212 ( 2013 )

[Cite as JPMorgan Chase Bank, N.A. v. Romine, 2013-Ohio-4212.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
JPMorgan Chase Bank, N.A., :
Successor by merger to Chase Home
Finance LLC, Successor by Merger to :
Chase Manhattan Mortgage Corporation,
:
Plaintiff-Appellee,
: No. 13AP-58
v. (C.P.C. No. 11CV-06-6894)
:
Raymond E. Romine, (REGULAR CALENDAR)
:
Defendant-Appellee,
:
Brian K. Urbanski, as Trustee of the 424
Stonecrop Court Trust, :
Defendant-Appellant. :
D E C I S I O N
Rendered on September 26, 2013
Reimer, Arnovitz, Chernek & Jeffery Co., L.P.A., and
Darryl E. Gormley, for plaintiff-appellee.
Wittenberg Law Group, Eric J. Wittenberg and Jennifer L.
Routte, for defendant-appellant.
APPEAL from the Franklin County Court of Common Pleas
DORRIAN, J.
{¶ 1} Defendant-appellant, Brian K. Urbanski, Trustee of the 424 Stonecrop
Court Trust ("appellant"), appeals from a judgment of mortgage foreclosure granted by the
Franklin County Court of Common Pleas in an action filed by plaintiff-appellee, JPMorgan
Chase Bank, N.A. ("Chase"). For the following reasons, we affirm.
No. 13AP-58 2
Facts and Case History
{¶ 2} On November 15, 2002, defendant-appellee, Raymond E. Romine
("Romine"), executed a promissory note in the amount of $73,500 in connection with a
loan in the same amount. The note identified the lender as Chase Manhattan Mortgage
Corp. ("Chase Manhattan"). On the same date, Romine executed a mortgage in favor of
Chase Manhattan on real property located at 424 Stonecrop Court in Galloway, Ohio ("the
real property"). The parties do not dispute that Chase Manhattan thereafter merged with
Chase Home Finance, LLC ("Chase Home Finance") and that Chase Home Finance, LLC
thereafter merged with Chase.
{¶ 3} Chase attached to the complaint copies of the note and the mortgage as well
as a copy of a preliminary judicial title report. The note bears a general "pay to the order
of" endorsement, in blank, initialed by an assistant secretary of Chase Manhattan. The
title report, based on examination of Franklin County records, disclosed that Romine, the
mortgagor, had on September 22, 2005, conveyed the mortgaged real property by general
warranty deed to "424 Stonecrop Court Trust, J.A. Gilcher, as Trustee." In addition, public
records included an "affidavit of successor trustee,"dated July 27, 2009, indicating that
Gilcher had resigned as trustee and that appellant had been appointed successor trustee of
the 424 Stonecrop Court Trust.
{¶ 4} On June 6, 2011, Chase filed a complaint seeking foreclosure of the real
property naming as defendants, inter alia, Romine and appellant. Chase alleged that it
was the holder of the promissory note and the mortgage; the note and mortgage were in
default for lack of payment, and Chase had declared the debt due. Chase further alleged
that the mortgage created a valid and first lien upon the real property. Chase sought
judgment against Romine in the amount of the sum it alleged was unpaid on the note
($46,173.13 plus interest dating from May 1, 2009), an order of foreclosure of the
mortgage, and sale of the premises to satisfy the amounts due it.
{¶ 5} Appellant answered the complaint and denied Chase's allegations that
Chase was the holder of a valid note and mortgage and was entitled to seek a decree of
foreclosure. Appellant asserted as a defense that Chase lacked legal standing to prosecute
the foreclosure. Appellant also included a counterclaim seeking to quiet title to the
No. 13AP-58 3
property and sought a judgment declaring the mortgage null and void or, alternatively, a
judgment rescinding the mortgage.
{¶ 6} Chase thereafter filed a motion pursuant to Civ.R. 12(B)(6) seeking
dismissal of appellant's counterclaims for failure to state a claim. Appellant opposed
Chase's motion, but the trial court ultimately granted Chase's Civ.R. 12(B)(6) motion and
dismissed appellant's counterclaims.
{¶ 7} The court referred the matter to a magistrate, who conducted a bench trial.
At trial, a Chase loan research officer, Frank Dean, testified that the original mortgagee,
Chase Manhattan, had merged into Chase Home Finance, which itself thereafter merged
into Chase. Dean further testified that the note and the mortgage had always been retained
by one of these Chase entities and that, to his knowledge, the note and mortgage had never
been delivered or transferred to a non-Chase entity. Dean further testified that Chase last
received payment on the note on May 1, 2009, and that Chase had accelerated the note
based on payment default. Chase introduced numerous exhibits, including copies of the
note and the mortgage, papers reflecting that payments on the note and mortgage were
delinquent, and documents evidencing the mergers of the Chase entities. These exhibits
were admitted into evidence without objection.
{¶ 8} On cross-examination, Dean acknowledged that Chase's records included a
document titled "Assignment of Mortgage," ("the assignment") that had been signed and
notarized on November 27, 2002—several weeks after Romine had executed the original
note and mortgage. The document stated that Chase Manhattan had assigned the Romine
note and mortgage to the Federal National Mortgage Association ("Fannie Mae"). Dean
testified, however, that, based on his review of the records, the assignment was never given
to Fannie Mae, nor was it ever recorded.
{¶ 9} Appellant also testified. He stated that Romine had deeded the real property
to the 424 Stonecrop Court Trust, of which he was the current trustee. He acknowledged
that the trust had initially made payments to Chase but had ultimately stopped making
payments.
{¶ 10} On August 21, 2012, the magistrate found that Chase had proved both the
existence of the note and the mortgage and their breach. The magistrate expressly found
Chase to be the holder of the original note and that there was "no documentation that [the
No. 13AP-58 4
assignment] was ever recorded or that the assignment was effectuated with the Federal
National Mortgage Association." (Aug. 21, 2012 Magistrate Decision, 3.) She further
concluded that, as a matter of law, Chase was the real party in interest—not Fannie Mae.
The magistrate recommended that the matter proceed to sheriff's sale as an in rem
foreclosure.1
{¶ 11} Appellant filed written objections to the magistrate's decision contending
that the magistrate erred in finding that the assignment had never been effectuated.
Appellant noted that the assignment indicated on its face that it had been executed and
notarized prior to the merger of Chase Manhattan into Chase Home Finance. He argued
that Chase Manhattan had thereby "assigned away" to Fannie Mae its rights to enforce the
mortgage and that the successor Chase entities similarly lacked standing to prosecute a
foreclosure. (Appellant's Sept. 21, 2012 Objections, 5.)
{¶ 12} In addition, appellant contended that the assignment had been "robo-
signed," which appellant defined as "signing legal documents without reviewing the file for
which one is signing the document." (Objections, 6.) Appellant suggested that the
assignment evidenced fraud in its execution and urged the court to find that the
assignment had, in fact, operated to transfer the mortgagee's rights to Fannie Mae as of the
date of the alleged robo-signing.
{¶ 13} On December 21, 2012, the common pleas court overruled appellant's
objections to the magistrate's decision and adopted the decision as its own. The court cited
a 2012 decision of this court in which we found that, "because the debtor is not a party to
the assignment of the mortgage, [the debtor] lacks standing to challenge its validity." LSF6
Mercury REO Invests. Trust Series 2008-1, c/o Vericrest Fin., Inc. v. Locke, 10th Dist. No.
11AP-757, 2012-Ohio-4499, ¶ 28, citing Bank of New York Mellon Trust Co. v. Unger, 8th
Dist. No. 97315, 2012-Ohio-1950, ¶ 35. The court cited Chase Home Fin., L.L.C. v. Heft,
3d Dist. No. 8-10-14, 2012-Ohio-876, as support for the same proposition and observed
that these cases followed precedent established in two federal court decisions, Livonia
Prop. Holdings 12840-12976 v. Farmington Rd. Holdings, 717 F. Supp. 2d 724 (2010) and
Bridge v. Aames Capital Corp., No. 1:0-9 CV 2947 (N.D.Ohio2010). In those cases, the
1 The record does not reflect successful service of process on the original borrower and mortgagor, Raymond
Romine, and Chase did not seek, nor did the court issue, a judgment finding any of the defendants
personally liable for monetary damages .
No. 13AP-58 5
court observed that a borrower may not challenge an assignment between an assignor and
assignee and that the borrower does not have standing to dispute the validity of such an
assignment because the borrower was not a party to those documents. The court noted
that there was no dispute in the case before it that appellant had stopped making
payments on the loan and was in default on the note. The court concluded that appellant
did not have standing to challenge the validity of the assignment of the note and mortgage.
In addition, the court held that Chase had provided sufficient evidence to support a finding
that it was the holder of the note and mortgage.
{¶ 14} Appellant timely filed a notice of appeal and asserts the following two
assignments of error:
1. The court erred in finding that Appellee, JP Morgan Chase
Bank, N.A., had standing to foreclose when a valid assignment
of mortgage existed and was admitted at trial as being signed
and executed with the original in Appellee's file.
2. The trial court erred in finding that Appellant lacked
standing to enforce the assignment because Appellant was not
a party to the assignment, citing LSF6 Mercury REO Invs.
Trust Series 2008-1 v. Locke, 10th Dist. No. 11AP-757, 2012-
Ohio-4499.
Analysis
{¶ 15} We first address the second assignment of error as we find it dispositive.
{¶ 16} In Locke, this court held that a defendant borrower in a foreclosure action
lacked standing to challenge the validity of an assignment of a note and mortgage the
borrower had executed where no dispute existed as to the fact that the borrower had
defaulted on her payment obligations. The allegedly invalid mortgage assignments did not
alter the homeowner's obligations under the note or mortgage. "The assignee bank filed
the foreclosure complaint based on the homeowners' default under the note and mortgage,
not because of the mortgage assignments, and the homeowners' default exposed them to
foreclosure regardless of which party actually proceeded with foreclosure." Locke at ¶ 29.
{¶ 17} This court followed Locke in Deutsche Bank Natl. Trust. Co. v. Whiteman,
10th Dist. No. 12AP-536, 2013-Ohio-1636, observing that Locke established that "because
a debtor is not a party to the assignment of a note and mortgage, the debtor lacks standing
to challenge their validity." Whiteman at ¶ 16. The court further acknowledged that there
was no dispute between the original mortgagee and the entity subsequently named as an
No. 13AP-58 6
assignee of the note and mortgage as to the identity of the holder of the note and the
mortgage. Rather, only the borrower challenged the assignment's validity, and there was
no dispute that the borrower had defaulted on his loan and was subject to foreclosure. Id.
{¶ 18} The trial court correctly applied the precedent this court established in
Locke and Whiteman. It therefore did not err in holding that appellant lacked standing to
enforce the assignment because appellant was not a party to the assignment. Accordingly,
we overrule appellant's second assignment of error.
{¶ 19} In his first assignment of error, appellant argues that Chase lacked standing
to seek foreclosure of the mortgage. Appellant contends that the undisputed evidence
justifies the legal conclusion that Chase had assigned its interests under the mortgage to
Fannie Mae and that Chase therefore was not the real party in interest with standing to
assert the right of foreclosure established by the mortgage.
{¶ 20} Our disposition of appellant's second assignment of error renders moot
appellant's first assignment of error. Notwithstanding, we find appellant's arguments in
support of his first assignment of error to be unpersuasive.
{¶ 21} Appellant bases his argument on the November 27, 2002 assignment of
mortgage to Fannie Mae contained in Chase's records.2 But appellant provided no
evidence to rebut the testimony of Chase's employee, Frank Dean, that Chase had never
legally assigned the note and mortgage to any other financial entity. Indeed, appellant
acknowledges that the purported mortgage assignment was "never actually delivered to
Fannie Mae." (Appellant's Brief, 6.) The absence of delivery of the assignment to Fannie
Mae defeats appellant's argument.
{¶ 22} It has long been recognized, and is well-established, that an executed
document of conveyance that is never delivered is a "mere nullity." Williams v. Schatz, 42
Ohio St. 47, 50 (1884). In Williams, the court recognized that "[a]n instrument may be in
the form of a deed; it may be properly signed, sealed, witnessed, acknowledged and
recorded; the grantor may have capacity to convey, and the grantee to receive and hold the
title; the transaction may be free from fraud or mistake; nevertheless, the instrument will
not take effect as a deed unless it is delivered." (Emphasis added.) Id. More recently, this
2 The record reveals that appellant became aware of the undelivered, unrecorded assignment because Chase
had attached it as part of an exhibit in an earlier mortgage foreclosure action, which Chase ultimately
voluntarily dismissed.
No. 13AP-58 7
court in 1981 relied on Williams in recognizing that a quitclaim deed executed by the
owner of real property, but kept in the owner's possession and never delivered to the
grantee, did not legally transfer ownership to the grantee. See also Gatts v. E.G.T.G.,
GMBH, 14 Ohio App. 3d 243, 245 (11th Dist.1983) ("It is fundamental under Ohio law that
recording is not necessary to give validity to instruments of conveyance. However, it is
equally basic that delivery is an essential requirement of instruments of conveyance, as
well as their acceptance, for purpose of passing title.").
{¶ 23} Accordingly, a document of conveyance of an interest in real property, even
if fully executed and notarized, takes legal effect only upon delivery. See Leonard v.
Kebler's Admr., 50 Ohio St. 444, 453 (1893) (" 'Delivery is the final step necessary to
perfect the existence of any written contract.' " [Citation omitted.]). While a written legal
conveyance has no legal effect until delivery, "no particular form or ceremony is essential
to constitute delivery; it need not be manual; it may be made by words and acts, or either,
if accompanied with intention that they shall have that effect; it may be made by the
grantor personally, or through his agent, to the grantee, either personally or through his
agent; and it may be made in escrow, or to take effect immediately." (Emphasis sic.)
Williams at 50. Delivery to the appropriate governmental office for recordation
constitutes prima facie evidence of delivery to the grantee. Gatts at 246. As recognized by
the court in Gatts, "A deed is effective for purposes of passing title at the time when
delivery and acceptance are completed." Id., citing Baldwin v. Bank of Massillon, 1 Ohio
St. 141 (1853). In addition, an effective delivery of a deed requires an acceptance on the
part of the grantee, coupled with the mutual intent of the parties to pass title. Kinasz-
Reagan v. Ohio Dept. of Job & Family Servs., 164 Ohio App. 3d 458, 2005-Ohio-5848 (8th
Dist.). "The general rule is that delivery is required to give effect to a mortgage, as well as
acceptance." Gatts at 246.
{¶ 24} The premise that delivery of a conveying instrument is required to effect a
transfer of property rights is applicable to cases involving assignments of notes and
mortgages as well as deeds. In Leonard, the Supreme Court of Ohio expressly provided in
the first paragraph of the syllabus of the decision that "[d]elivery is esstential to the
validity of an assignment." Absent evidence of either actual or constructive delivery,
through recordation or otherwise, of the assignment to Fannie Mae, the assignment in this
No. 13AP-58 8
case was a nullity. Appellant acknowledged that the assignment was never delivered to
Fannie Mae nor recorded. He offered no other evidence to support his contention that
Fannie Mae, rather than Chase, was the real party in interest to enforce the provisions of
the note and mortgage that Romine had executed.
{¶ 25} Appellant further argues that R.C. 5301.01 and 5301.32 justify the
conclusion that the assignment "was effective the moment it was executed and
acknowledged by the vice president and certified by the notary who took the
acknowledgement." (Appellant's reply brief, 7.) Those statutory sections establish that an
assignment shall, inter alia, be signed by the grantor; acknowledged by an official listed in
R.C. 5301.01(A) ( including notaries public); and recorded. The statutes do not, however,
affect existing law requiring delivery and acceptance of instruments of real property
conveyance as the final step in accomplishing a conveyance, nor do they otherwise purport
to establish the time at which an assignment legally occurs. Moreover, were we to accept
appellant's argument that the signing and acknowledgement of a conveying instrument is
itself sufficient to immediately transfer the real estate interests described in the
instrument, we would effectively destroy the legal foundation of the use of escrow in
connection with real estate transactions. See generally Ohio Jurisprudence 3d, Deeds,
Sections 68-70, at 288-90 (2002).
Conclusion
{¶ 26} For the foregoing reasons, we overrule appellant's second assignment of
error but render his first assignment of error moot. We therefore affirm the judgment of
the Franklin County Court of Common Pleas.
Judgment affirmed.
BROWN and CONNOR, JJ., concur.
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