First Natl. Bank of Pennsylvania v. Nader , 89 N.E.3d 274 ( 2017 )

[Cite as First Natl. Bank of Pennsylvania v. Nader, 2017-Ohio-1482.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF MEDINA )
FIRST NATIONAL BANK OF C.A. No. 16CA0004-M
PENNSYLVANIA
Appellee
APPEAL FROM JUDGMENT
v. ENTERED IN THE
COURT OF COMMON PLEAS
RUTH S. NADER, et al. COUNTY OF MEDINA, OHIO
CASE No. 11CIV0833
Appellants
DECISION AND JOURNAL ENTRY
Dated: April 24, 2017
CALLAHAN, Judge.
{¶1} Appellants, Ruth Nader, individually (“Ms. Nader”) and in her capacity as trustee
of the Almost Heaven Revocable Trust (“the Trust”), and Malek Abboud (“Malek Abboud”),
appeal the judgment of the Medina County Court of Common Pleas in favor of Appellee, First
National Bank of Pennsylvania, successor by merger to Park View Federal Savings Bank (“the
Bank”). For the reasons set forth below, this Court affirms.
I.
{¶2} In 1998, Ms. Nader and Elie Abboud were married and the owners of real
property located at 470 Boston Road, in Hinckley, Ohio. They executed a promissory note and
home equity line of credit, which were secured by mortgages on the real property. In 1999, they
transferred title of the real property to the Trust.
{¶3} In 2006, Malek Abboud, brother to Elie Abboud and brother-in-law to Ms. Nader,
executed an Unconditional and Continuing Guaranty as to the credit line. Ms. Nader and Elie
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Abboud divorced in 2007. In 2008, Ms. Nader and the Trust executed two Assumption and
Modification Agreements, one for the promissory note and one for the credit line. Elie Abboud
did not sign either of the Assumption and Modification Agreements. As a guarantor, Malek
Abboud consented to the Assumption and Modification Agreement of the credit line by Ms.
Nader and the Trust.
{¶4} In October 2010, Ms. Nader and the Trust defaulted on the promissory note, the
credit line, and the Assumption and Modification Agreements for both. The Bank filed a
complaint for breach of contract, breach of guaranty, and foreclosure against Ms. Nader, the
Trust, and Malek Abboud. They responded with a counterclaim and third-party complaint
asserting claims for breach of contract and fraud. Three months later, the Bank filed an amended
complaint, adding Elie Abboud as a defendant. Ms. Nader, the Trust, and Malek Abboud
answered the amended complaint and reasserted their counterclaim and third-party complaint. In
response to the Bank’s summary judgment motions on their claims, Ms. Nader, the Trust, and
Malek Abboud dismissed their counterclaim and third-party complaint. The Bank then dismissed
Elie Abboud. Only the Bank’s amended complaint against Ms. Nader, the Trust, and Malek
Abboud remained pending.
{¶5} The trial court granted the Bank’s motion in limine to preclude evidence of the
amount due arising prior to and contemporaneous with the signing of the modification
agreements. Additionally, the trial court sua sponte struck the jury demands of Ms. Nader, the
Trust, and Malek Abboud and denied their motions for leave to refile the counterclaim and
motion to join indispensable party. The trial court proceeded to grant summary judgment and
enter a decree of foreclosure in favor of the Bank.
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{¶6} Ms. Nader, the Trust, and Malek Abboud have timely appealed, raising six
assignments of error for this Court’s review. To facilitate the analysis, this Court will address the
assignments of error out of order.
II.
ASSIGNMENT OF ERROR NO. 5
THE TRIAL COURT ERRED IN GRANTING APPELLEE’S MOTION FOR
SUMMARY JUDGMENT.
{¶7} Appellate courts consider an appeal from summary judgment under a de novo
standard of review. Grafton v. Ohio Edison Co., 77 Ohio St. 3d 102, 105 (1996). This Court uses
the same standard that the trial court applies under Civ.R. 56(C), viewing the facts of the case in
the light most favorable to the non-moving party and resolving any doubt in favor of the non-
moving party. See Viock v. Stowe-Woodward Co., 13 Ohio App. 3d 7, 12 (6th Dist.1983).
Accordingly, this Court stands in the shoes of the trial court and conducts an independent review
of the record.
{¶8} Summary judgment is proper under Civ.R. 56 when: (1) no genuine issue as to
any material fact exists; (2) the party moving for summary judgment is entitled to judgment as a
matter of law; and (3) viewing the evidence most strongly in favor of the non-moving party,
reasonable minds can only reach one conclusion, and that conclusion is adverse to the non-
moving party. Civ.R. 56(C); Temple v. Wean United, Inc., 50 Ohio St. 2d 317, 327 (1977).
{¶9} Summary judgment consists of a burden-shifting framework. The movant bears
the initial burden of demonstrating the absence of genuine issues of material fact concerning the
essential elements of the non-moving party’s case. Dresher v. Burt, 75 Ohio St. 3d 280, 292
(1996). Specifically, the moving party must support the motion by pointing to some evidence in
the record of the type listed in Civ.R. 56(C). Id. at 292-293. Once the moving party satisfies this
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burden, the non-moving party has a reciprocal burden to “set forth specific facts showing that
there is a genuine issue for trial.” Id. at 293. The non-moving party may not rest upon the mere
allegations or denials in his pleadings, but instead must submit evidence as outlined in Civ.R.
56(C). Id. at 293; Civ.R. 56(E).
{¶10} To properly support a motion for summary judgment in a foreclosure action, a
plaintiff must present “evidentiary-quality materials” establishing: (1) that the plaintiff is the
holder of the note and mortgage, or is a party entitled to enforce the instrument; (2) if the
plaintiff is not the original mortgagee, the chain of assignments and transfers; (3) that the
mortgagor is in default; (4) that all conditions precedent have been satisfied; and (5) the amount
of principal and interest due. Wachovia Bank of Delaware, N.A. v. Jackson, 5th Dist. Stark No.
2010-CA-00291, 2011-Ohio-3203, ¶ 40-45. Ms. Nader, the Trust, and Malek Abboud assert
three main arguments as to how the trial court erred in granting the Bank summary judgment on
its amended complaint.
A. Condition Precedent
{¶11} “‘[T]he plaintiff in a foreclosure action must prove that all conditions precedent
have been met in order to meet its burden of proof for summary judgment.’” Wells Fargo Bank,
N.A. v. Awadallah, 9th Dist. Summit No. 27413, 2015-Ohio-3753, ¶ 26, quoting Huntington
Natl. Bank v. Payson, 2d Dist. Montgomery No. 26396, 2015-Ohio-1976, ¶ 18. A condition
precedent is “the happening of some event, or the performance of some act, after the terms of the
contract have been agreed on, before the contract shall be binding on the parties.” Mumaw v. W.
& S. Life Ins. Co., 97 Ohio St. 1, 11 (1917).
{¶12} Ms. Nader, the Trust, and Malek Abboud assert the Bank did not give Elie
Abboud notice of default prior to acceleration of the notes. Thus, they argue this omission
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constitutes a failure of a condition precedent and renders the amended complaint fatally
defective. The Bank did not respond to this specific assertion.
{¶13} Paragraph 21 of the open-ended mortgage securing the promissory note states, in
pertinent part “Lender shall give notice to Borrower prior to acceleration following Borrower’s
breach of any covenant or agreement in this Security Instrument[.]” Paragraph 13 of the open-
ended mortgage securing the credit line similarly states
[u]pon Borrower’s breach of any provision of this Mortgage or if a default shall
occur under the Agreement, Lender, upon notice to Borrower, may * * *, declare
all the sums secured by this Mortgage to be immediately due and payable, [and]
foreclose this Mortgage by judicial proceeding * * *.
Accordingly, prior to accelerating the balance due on the promissory note and the credit line and
filing an action to foreclose the mortgages, the Bank was required to give the borrowers, Ms.
Nader, the Trust, and Elie Abboud, notice of their default and opportunity to cure the default.
{¶14} The record reflects, and Ms. Nader and the Trust do not dispute, that she and the
Trust were served with notice of default. However, the record is void of any notice issued to Elie
Abboud. This, however, does not render the amended complaint fatally defective.
{¶15} The promissory note specifically permits the Bank to “enforce its rights under this
Note against each person individually or against all of us together.” Similarly, the credit line
states “you and the joint Account holder each promise to pay and are jointly and individually
responsible for all amounts due on the joint Account.” Additionally, the Assumption and
Modification Agreements for both the promissory note and the credit line indicate “[i]n all other
respects, all terms and conditions of the Loan Documents shall remain in full force and effect[.]”
Accordingly, the Bank is permitted to sue either one or both of the borrowers under the
promissory note, the credit line, and the Assumption and Modification Agreements.
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{¶16} At the time of the summary judgment motion, Elie Abboud was not a named
party. The Bank voluntarily dismissed him five months earlier, thereby electing not to enforce
its rights against Elie Abboud. Because the Bank was not pursuing an action for default on the
promissory note or the credit line against Elie Abboud, there was no requirement to give him
written notice of default. The Bank was only pursuing an action against Ms. Nader and the Trust
and did provide written notice of default to them.
{¶17} Based upon the review of the record, Ms. Nader, the Trust, and Malek Abboud
failed to meet their Dresher burden of establishing the existence of a genuine issue of material
fact regarding the condition precedent.
B. Enforceability of Assumption and Modification Agreements
{¶18} Ms. Nader, the Trust, and Malek Abboud assert three separate arguments as to
why the Assumption and Modification Agreements are unenforceable:
1) the Assumption and Modification Agreements were unilaterally modified;
2) the Assumption and Modification Agreements are unenforceable pursuant to R.C.
1303.15; and
3) the Assumption and Modification Agreements are unconscionable.
As discussed below, Ms. Nader, the Trust, and Malek Abboud failed to meet their Dresher
burden of establishing the existence of a genuine issue of material fact regarding the
enforceability of the Assumption and Modification Agreements.
1. Unilateral Modification
{¶19} “‘A contract cannot be unilaterally modified. In order to modify a contract, the
parties to that contract must mutually consent to the modification.’” Fraher Transit, Inc. v. Aldi,
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Inc., 9th Dist. Summit No. 24133, 2009-Ohio-336, ¶ 12, quoting Nagle Heating & Air
Conditioning Co. v. Heskett, 66 Ohio App. 3d 547, 550 (4th Dist.1990).
{¶20} It is undisputed that Elie Abboud executed the promissory note and the credit line,
but did not execute the Assumption and Modification Agreements for both of those notes. This
fact alone does not render the Assumption and Modification Agreements unenforceable. It is
necessary to review the loan documents to determine if Elie Abboud was also required to execute
the Assumption and Modification Agreements.
{¶21} The promissory note contains language that the Bank “may enforce its rights
under this Note against each person individually or against all of us together.” The credit line
also specifies that joint account holders are “jointly and individually responsible for all amounts
due.” Because the Bank had the option to pursue claims jointly or individually against Ms.
Nader and Elie Abboud, the Bank also had the option to enter a modification agreement jointly
or individually with Ms. Nader and Elie Abboud. In this case, the Bank chose to enter into
Assumption and Modification Agreements with Ms. Nader and the Trust, and not Elie Abboud.
Ms. Nader and the Trust agreed to enter into the Assumption and Modification Agreements.
Because the terms of the promissory note and the credit line allowed the Bank to work either
jointly or individually with the borrowers, the Bank did not need to include Elie Abboud in order
to have mutual consent for a modification.
2. R.C. 1303.15
{¶22} Ms. Nader, the Trust, and Malek Abboud argue that R.C. 1303.15 provides them
with a defense to their financial obligations under the Assumption and Modification Agreements.
R.C. 1303.15 states:
Subject to applicable law regarding exclusion of proof of contemporaneous or
previous agreements, the obligation of a party to an instrument to pay the
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instrument may be modified, supplemented, or nullified by a separate agreement
of the obligor and a person entitled to enforce the instrument, if the instrument is
issued or the obligation is incurred in reliance on the agreement or as part of the
same transaction giving rise to the agreement. To the extent an obligation is
modified, supplemented, or nullified by an agreement under this section, the
agreement is a defense to the obligation.
They claim to have executed the Assumption and Modification Agreements only because of the
explicit assurances of Mr. Male, a representative of the Bank, that Elie Abboud would have to
approve the Assumption and Modification Agreements and he would still be liable for the debt.
Under their theory, Mr. Male’s assurances modified the terms of the Assumption and
Modification Agreements. And because Mr. Male’s assurances were not satisfied, the
Assumption and Modification Agreements are unenforceable against them.
{¶23} Ms. Nader, the Trust, and Malek Abboud’s reliance on R.C. 1303.15 in this
instance is misplaced. The statute precludes the use of parol evidence to establish the facts in
such a situation.
{¶24} The Ohio Supreme Court explains the parol evidence rule as
a principle of common law providing that a writing intended by the parties to be a
final embodiment of their agreement cannot be modified by evidence of earlier or
contemporaneous agreements that might add to, vary, or contradict the writing.
The rule operates to prevent a party from introducing extrinsic evidence of
negotiations that occurred before or while the agreement was being reduced to its
final written form, and it assumes that the formal writing reflects the parties’
minds at a point of maximum resolution and, hence, that duties and restrictions
that do not appear in the written document * * * were not intended by the parties
to survive.
(Internal citations and quotations omitted.) Bellman v. Am. Internatl. Group, 113 Ohio St. 3d 323,
2007-Ohio-2071, ¶ 7.
{¶25} When construing a contract, it is imperative to ascertain the parties’ intent.
Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St. 3d 51, 53 (1989). Generally, courts
presume that the parties’ intent can be found in the written terms of their contract. Shifrin v.
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Forest City Ents., Inc., 64 Ohio St. 3d 635, 638 (1992). If a contract is unambiguous, the
language of the contract controls and “[i]ntentions not expressed in the writing are deemed to
have no existence and may not be shown by parol evidence.” Aultman at 53. If, however, “a
contract is ambiguous, parol evidence may be employed to resolve the ambiguity and ascertain
the intention of the parties.” Illinois Controls, Inc. v. Langham, 70 Ohio St. 3d 512, 521 (1994).
Therefore, “[p]arol evidence directed to the nature of a contractual relationship is admissible
where the contract is ambiguous and the evidence is consistent with the written agreement[.]” Id.
at paragraph two of the syllabus. Parol evidence is used only to interpret the terms, and not to
contradict the terms. See Blosser v. Enderlin, 113 Ohio St. 121, 134 (1925). Terms in a contract
are ambiguous if their meanings cannot be determined from reading the entire contract, or if they
are reasonably susceptible to multiple interpretations. Butler v. Joshi, 9th Dist. Wayne No.
00CA0058, 2001 WL 489962, *2 (May 9, 2001). “The decision as to whether a contract is
ambiguous and thus requires extrinsic evidence to ascertain its meaning is one of law.” Ohio
Historical Soc. v. Gen. Maintenance and Eng. Co., 65 Ohio App. 3d 139, 146 (10th Dist.1989).
{¶26} The Assumption and Modification Agreements to the promissory note and the
credit line both state “the Original Borrower is not to be released from the obligations imposed
under the Loan Documents, and [the Bank] is agreeing not to release the Original Borrower
therefrom[.]” Additionally, they state “[i]n all other respects, all terms and conditions of the
Loan Documents shall remain in full force and effect, without intending, however, to cancel or
extinguish said indebtedness or otherwise affect the validity, priority and enforceability of the
Loan Documents, as modified hereby.”
{¶27} The Assumption and Modification Agreements define Elie Abboud as one of the
“Original Borrower[s].” As an “Original Borrower,” Elie Abboud, is still responsible for the
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debts owed under the promissory note and the credit line. The Assumption and Modification
Agreements did not extinguish Elie Abboud’s obligations under the loan documents.
{¶28} Further, the Assumption and Modification Agreements name the parties to the
agreement as being the Bank and “Ruth S. Abboud, Trustee of the Almost Heaven Revocable
Trust, dated 1/29/99” who is defined as the “‘Borrower.’” The Trust and Ms. Nader “assum[ed]
and agree[d] to pay said indebtedness” listed therein. As to Malek Abboud, the guarantor, the
Assumption and Modification Agreements stated “[t]he undersigned * * *, hereby consent[s] to
the foregoing loan modification.” There are only signature lines for the borrowers (Ms. Nader,
personally and as trustee for the Trust) and the guarantor (Malek Abboud). There is no signature
line for Elie Abboud. Moreover, other than being defined as an “Original Borrower,” Elie
Abboud’s name is not listed anywhere on the Assumption and Modification Agreements.
Nothing in the Assumption and Modification Agreements required Elie Abboud’s approval
because there was no change in the terms as to him. Further, as discussed above, his approval
was unnecessary because the loan documents permitted the Bank to pursue the debt individually
or jointly.
{¶29} The above language is unambiguous and contains the signators’ intentions: Elie
Abboud is still responsible for the debts under the promissory note and the credit line, the Trust
assumed the debts under the promissory note and the credit line, and Ms. Nader, the Trust, and
Malek Abboud agreed to pay the debts per the modified terms. Accordingly, Ms. Nader, the
Trust, and Malek Abboud’s intentions are contained in the written terms of the Assumption and
Modification Agreements and no parol evidence is permitted. Without parol evidence, Ms.
Nader, the Trust, and Malek Abboud are unable to assert a defense under R.C. 1303.15.
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3. Unconscionable
{¶30} Lastly, Ms. Nader, the Trust, and Malek Abboud assert the Assumption and
Modification Agreements are unconscionable. An agreement is unconscionable when there is
“both an absence of meaningful choice on the part of one of the parties together with contract
terms which are unreasonably favorable to the other party.” (Internal citations and quotations
omitted.) Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St. 3d 352, 2008-Ohio-938, ¶ 34. Ms.
Nader, the Trust, and Malek Abboud have the burden of establishing that the Assumption and
Modification Agreements are both procedurally and substantively unconscionable. See Benfield
at ¶ 34. A determination regarding the unconscionability of a contract and its provisions is purely
a question of law and involves a de novo review. Featherstone v. Merrill Lynch, Pierce, Fenner
& Smith, Inc., 159 Ohio App. 3d 27, 2004-Ohio-5953, ¶ 12 (9th Dist.).
{¶31} “‘Procedural unconscionability concerns the formation of the agreement and
occurs when no voluntary meeting of the minds is possible.’” Brunke v. Ohio State Home Servs.,
Inc., 9th Dist. Lorain No. 08CA009320, 2008-Ohio-5394, ¶ 10, quoting Porpora v. Gatliff Bldg.
Co., 160 Ohio App. 3d 843, 2005-Ohio-2410, ¶ 7 (9th Dist.). To evaluate procedural
unconscionability, this Court considers factors bearing directly on the relative bargaining
position of the parties such as “age, education, intelligence, business acumen, experience in
similar transactions, whether the terms were explained to the weaker party, and who drafted the
contract.” Eagle v. Fred Martin Motor Co., 157 Ohio App. 3d 150, 2004-Ohio-829, ¶ 31 (9th
Dist.). Generally, no one factor alone determines whether a contract is procedurally
unconscionable. Hayes v. Oakridge Home, 122 Ohio St. 3d 63, 2009-Ohio-2054, ¶ 29. Instead, a
court must consider the totality of the circumstances. Id. at ¶ 30.
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{¶32} “Substantive unconscionability encompasses those factors that concern the
contract terms themselves[.]” Eagle at ¶ 31. “Contract terms are [substantively] unconscionable
if they are unfair and commercially unreasonable.” Porpora at ¶ 8, citing Bank One, NA v.
Borovitz, 9th Dist. Summit No. 21042, 2002-Ohio-5544, ¶ 16.
{¶33} At the time she executed the Assumption and Modification Agreements, Ms.
Nader was approximately 50 years old. She graduated from high school in 1975. She obtained
her teaching degree from The College of Wooster in 1979 and her law degree from Cleveland
Marshall Law School in 1982. She continued to take courses in education to renew her teaching
license.
{¶34} While Ms. Nader never held herself out to the public as an attorney, she
performed divorces, prepared wills for people, incorporated a business, and did immigration and
workers’ compensation work. Since 2008, she has worked for the family business in the human
resources department handling health insurance and workers’ compensation matters and
attending hearings.
{¶35} While she is an attorney, she did not setup the Trust. However, she testified that
the Trust existed for Elie Abboud “to group all the properties together” and that her children are
the successors to the Trust.
{¶36} Ms. Nader argues she had no involvement with any of the business transactions or
family expenses. She explained that Elie Abboud handled all of the financial matters and she did
not ask any questions. Then in 2006 her brother-in-law, Malek Abboud, took over the financial
matters and her sons became involved in 2010. She and Elie Abboud divorced in 2007.
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{¶37} Despite these claims, Ms. Nader acknowledges that she signed the promissory
note and the credit line in 1998 with Elie Abboud. She understood the promissory note was “to
finish the house” and the credit line was for the businesses.
{¶38} Ms. Nader also testified that she was aware that the home was heading toward
foreclosure in late 2007. She began questioning Malek Abboud about the financial
circumstances surrounding the promissory note in 2007. She also contacted the Bank in late
2007 and early 2008 for documents regarding the promissory note and the credit line and
questioned the amounts due on the accounts. The Bank sent Ms. Nader a letter in January 2008
regarding her inquiry as to a loan modification for the promissory note and the credit line. Also,
during this time she learned that there was a third lien on the home held by MEMO, a company
with which Elie Abboud conducted business. She contacted MEMO to inquire about the lien.
{¶39} On June 2, 2008, Ms. Nader and Malek Abboud had a meeting with Mr. Male, a
representative of the Bank, to discuss a modification of the promissory note and the credit line.
This meeting was approximately five months after she received a letter regarding the Bank’s
proposed payment terms for a modification. Ms. Nader understood the purpose of the loan
modification was to “allow [her] to get caught up on the mortgages, reduce the payments, and
remain in [her] home.”
{¶40} At the meeting, Ms. Nader read the Assumption and Modification Agreements
prepared by the Bank. She claims the Bank had paperwork stating Elie Abboud was to be
released from the promissory note and the credit line. She told Mr. Male “he couldn’t do that.”
She described her discussion with Mr. Male on this topic as “a really big disagreement.” Based
on the terms of the divorce decree, she objected to Elie Abboud not being listed on the
documents and to any release by the Bank of him from these debts. In fact, she had brought a
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copy of the divorce decree to the meeting “to show [Mr. Male] that Elie was to stay on there.
And [she] kept telling him no.” She insisted that Elie Abboud sign the Assumption and
Modification Agreements and not be released from the debts. Ms. Nader avers that she and
Malek Abboud signed the Assumption and Modification Agreements only after Mr. Male agreed
to her terms.
{¶41} Contrary to Ms. Nader, the Trust, and Malek Abboud’s position, Ms. Nader’s lack
of knowledge and involvement in the financial transactions of the family and the businesses prior
to 2007 does not create a great disparity in bargaining power. The record reflects Ms. Nader had
knowledge of the promissory note and the credit line, took action to investigate and challenge the
balances of these accounts and a newly discovered lien, took steps to obtain a modification of
these notes, and challenged the language and terms of Assumption and Modification Agreements
and got the Bank to agree to her demands prior to signing the documents. She came prepared to
the meeting and actively engaged in the meeting via discussions, reading documents, and
presenting documents. Additionally, five months lapsed from the time she received the letter
offering a modification to the time that she signed the modification. Thus, she had time to
explore other options to address the impending foreclosure.
{¶42} Further, Ms. Nader has been an attorney since 1982. While her legal experiences
do not include financial or business transactions, she understood the importance of a foreclosure
action and the ramifications of a divorce decree on financial obligations. While Ms. Nader and
Malek Abboud were not represented by an attorney during this transaction, she nonetheless
applied her legal and negotiating skills to effectuate the modification.
{¶43} Based on the totality of the circumstances, Ms. Nader, the Trust, and Malek
Abboud failed to carry their burden to show procedural unconscionability. Accordingly, this
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Court need not consider their arguments with respect to substantive unconscionability. See
Benfield, 117 Ohio St. 3d 352, 2008-Ohio-938, at ¶ 34.
C. Amounts due and owing on notes
{¶44} Ms. Nader, the Trust, and Malek Abboud argue there is a genuine issue of
material fact as to the amount due and owing under the promissory note and the credit line. They
argue the Assumption and Modification Agreements are unenforceable and cannot be used to
calculate the balance due because Ms. Nader was induced to enter these Agreements without
knowledge of other transactions which reduced the balances below those stated in the
Agreements. They also argue the Bank impermissibly accessed the credit line causing it to
exceed the amount of credit available. Additionally, they assert there has not been a proper
accounting of their proceeds from the absorption or sales of stock. All of these incidents
occurred prior to the execution of the Assumption and Modification Agreements in 2008.
{¶45} To establish the amounts due on the accounts, the Bank relied on the balances
stated in the Assumption and Modification Agreements and the affidavit and supporting bank
accounting statements from the Bank’s representative. The Bank limited its scope of evidence
based on the trial court’s motion in limine ruling which precluded evidence originating prior to
the execution of the Assumption and Modification Agreements.
{¶46} Motions in limine are only preliminary rulings on trial evidence and thus are not
procedurally applicable in a summary judgment context. Thyssen Krupp Elevator Corp. v.
Constr. Plus, Inc., 10th Dist. Franklin No. 09AP-788, 2010-Ohio-1649, ¶ 37. “[D]efendants’
motions in limine, and the trial court’s rulings on them, play no role in determining defendants’
summary judgment motions even though they may address admissibility issues the court also
considers under Civ.R. 56.” Id. Accordingly, this Court will conduct its de novo review
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considering the Civ.R. 56(C) evidence in this case and not based on the trial court’s motion in
limine ruling.
{¶47} Relative to the issue of the amount due on the promissory note and the credit line,
the Assumption and Modification Agreements each contain a sentence wherein they state the
amount of the unpaid principal balance as of June 2, 2008. The paragraph goes on to state the
modified interest rate, payments, and maturity date. Under the terms of the Assumption and
Modification Agreements, the Trust and Ms. Nader “assum[ed] and agree[d] to pay said
indebtedness” listed therein. As to Malek Abboud, the guarantor, the Assumption and
Modification Agreements stated “[t]he undersigned * * *, hereby consent[s] to the foregoing
loan modification.” The language regarding the amount of the unpaid balances and the
agreement to pay/guaranty the debts is unambiguous and contains the signators’ intentions: Ms.
Nader, the Trust, and Malek Abboud agreed to pay the unpaid balances stated in the Assumption
and Modification Agreements. Accordingly, Ms. Nader, the Trust, and Malek Abboud’s
intentions are contained in the written terms of the Assumption and Modification Agreements
and no parol evidence is permitted.
{¶48} Ms. Nader, the Trust, and Malek Abboud do not argue that the terms of the
Assumption and Modification Agreements are ambiguous and parol evidence is necessary to
interpret the terms. Instead, they attempt to improperly use parol evidence to contradict the
amount of the unpaid balances stated in the Assumption and Modification Agreements. See
Blosser, 113 Ohio St. at 134. Further, their argument that the Assumption and Modification
Agreements are unenforceable is a reiteration of their earlier assignment of error which this
Court overruled. Accordingly, the unpaid balance statements contained in the Assumption and
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Modification Agreements govern as to the starting point for calculating the amounts due and
owing on both accounts.
{¶49} The Bank submitted the affidavit of its Vice President of Special Lending, along
with annual account loan statements and loan payoff statements for both the promissory note and
the credit line. These documents calculated the current amount due and owing on the promissory
note and the credit line based on the balances contained in the Assumption and Modification
Agreements. Ms. Nader, the Trust, and Malek Abboud do not challenge these figures with non-
parol evidence.
{¶50} In light of the foregoing, Ms. Nader, the Trust, and Malek Abboud failed to meet
their Dresher burden of establishing the existence of a genuine issue of material fact regarding
the amounts due and owing on the promissory note and the credit line.
D. Conclusion
{¶51} After considering the foregoing arguments, the trial court did not err by granting
summary judgment in favor of the Bank as against Ms. Nader, the Trust, and Malek Abboud.
Their fifth assignment of error is overruled.
ASSIGNMENT OF ERROR NO. 4
THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION IN
OVERRULING THE MOTION OF DEFENDANT-APPELLANT MALEK
ABBOUD TO JOIN ELIE ABBOUD AS AN INDISPENSABLE PARTY.
{¶52} In the fourth assignment of error, Malek Abboud argues the trial court erred in
finding Elie Abboud was not a necessary and indispensable party. This Court disagrees.
{¶53} A trial court’s decision regarding a question of joinder is reviewed for an abuse of
discretion. See Hambleton v. R.G. Barry Corp., 12 Ohio St. 3d 179, 184 (1984). An abuse of
discretion is “‘more than an error of law or judgment; it implies that the trial court’s attitude was
18
unreasonable, arbitrary or unconscionable.’” Blakemore v. Blakemore, 5 Ohio St. 3d 217, 219
(1983), quoting State v. Adams, 62 Ohio St. 2d 151, 157 (1980). When applying the abuse of
discretion standard, this Court may not simply substitute its own judgment for that of the trial
court. Pons v. Ohio State Med. Bd., 66 Ohio St. 3d 619, 621 (1993).
{¶54} Civ.R. 19(A) governs the joinder of persons if feasible and states:
A person who is subject to service of process shall be joined as a party in the
action if (1) in his absence complete relief cannot be accorded among those
already parties, or (2) he claims an interest relating to the subject of the action and
is so situated that the disposition of the action in his absence may (a) as a practical
matter impair or impede his ability to protect that interest or (b) leave any of the
persons already parties subject to a substantial risk of incurring double, multiple,
or otherwise inconsistent obligations by reason of his claimed interest, or (3) he
has an interest relating to the subject of the action as an assignor, assignee,
subrogor, or subrogee. If he has not been so joined, the court shall order that he be
made a party upon timely assertion of the defense of failure to join a party as
provided in Rule 12(B)(7).
An indispensable party is defined as:
“one whose absence seriously prejudices any party to the action or prevents the
court from rendering any effective judgment between the parties, or is one whose
interests would be adversely affected or jeopardized by the judgment rendered
between the parties to the action. Mere avoidance of multiple litigation is not a
sufficient basis to render one an indispensable party.”
Englehart v. C.T. Taylor Co., Inc., 9th Dist. Summit No. 19325, 1999 WL 1215110, *2, quoting
Layne v. Huffman, 43 Ohio App. 2d 53, 59 (10th Dist.1974).
{¶55} Malek Abboud contends Elie Abboud is a necessary party to the case because he
is the maker of the promissory note and Malek Abboud’s obligations under the Unconditional
and Continuing Guaranty is expressly derivative of Elie Abboud’s obligations under the
promissory note. He argues a determination as to his obligations, independent of Elie Abboud’s
obligations, would create a risk of inconsistent obligations as to Malek Abboud pursuant to
19
Civ.R. 19(A)(2)(b). He also argues any liability found against him is subject to subrogation
against Elie Abboud and requires joinder under Civ.R. 19(A)(3).
{¶56} The terms of the Unconditional and Continuing Guaranty executed by Malek
Abboud in 2006 with respect to the credit line expressly contradict both of his arguments. The
Guaranty contains a provision specifying that the Bank may elect to proceed against either Malek
Abboud, Elie Abboud, or both of them:
[The Bank] shall not be obligated to proceed against, or exhaust any other
remedies it may have under the Note [credit line] or any of the Loan Documents,
or resort to any other security held by [the Bank] prior to enforcing the obligations
of [Malek Abboud] hereunder. The obligations of [Malek Abboud] hereunder are
independent of the obligations of [Elie Abboud], and a separate action or actions
may be brought against [Malek Abboud] whether or not action is brought against
[Elie Abboud] and whether or not [Elie Abboud] is joined in any such action or
actions.
This provision renders Malek Abboud’s obligations under the credit line separate and distinct of
Elie Abboud’s obligations under the credit line. Thus, Elie Abboud’s obligations under the
credit line do not need to be determined independently before the Bank can obtain judgment
against Malek Abboud under the Guaranty. Accordingly, Elie Abboud is not an indispensable
party to this action pursuant to Civ.R. 19(A)(2)(b).
{¶57} As to his claim for subrogation, the Guaranty specifically indicates Malek
Abboud has waived such rights against Elie Abboud:
[Malek Abboud] hereby waives and relinquishes any right to subrogation or other
right or claim to payment against [Elie Abboud] or [Elie Abboud’s] estate arising
out of or on account of any sum paid or agreed to be paid by [Malek Abboud]
under this Guaranty, whether such right or claim is liquidated, unliquidated, fixed,
contingent, matured or unmatured.
Based on this provision, Malek Abboud has no rights to subrogation against Elie Abboud.
Accordingly, Elie Abboud is not an indispensable party to this action pursuant to Civ.R.
19(A)(3).
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{¶58} Further, Malek Abboud’s argument is misplaced because he relies upon the wrong
financial documents in his request to join Elie Abboud. Malek Abboud states in his brief, “Elie
is a maker of the original promissory note” and references the “note” in the remainder of the
argument. (Emphasis added.) However, the Bank’s amended complaint sought judgment
against Malek Abboud as a guarantor of the credit line and not the promissory note. As the Bank
was not seeking judgment against Malek Abboud as to the promissory note, Malek Abboud’s
request to join Elie Abboud based on that instrument is misplaced.
{¶59} Based on the express language of the Unconditional and Continuing Guaranty, the
trial court did not abuse its discretion when it denied Malek Abboud’s motion to join Elie
Abboud as an indispensable party. Malek Abboud’s fourth assignment of error is overruled.
ASSIGNMENT OF ERROR NO. 3
THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION IN
OVERRULING THE MOTION OF [DEFENDANTS]-APPELLANT[S] RUTH
S. NADER, INDIVIDUALLY AND AS TRUSTEE OF THE ALMOST
HEAVEN REVOCABLE TRUST, FOR LEAVE TO REINSTATE HER
COUNTERCLAIM.
{¶60} In the third assignment of error, Ms. Nader and the Trust argue that the trial court
erred in denying her leave to refile her counterclaim. This Court disagrees.
{¶61} Whether to grant a party leave to file a counterclaim is solely within the discretion
of the trial court and will not be disturbed on appeal unless the ruling was an abuse of discretion.
See Natl. City Bank, Akron v. Donaldson, 95 Ohio App. 3d 241, 248 (9th Dist.1994); Natl. City
Bank v. Fleming, 2 Ohio App. 3d 50, 54 (8th Dist.1981). An abuse of discretion implies that the
court’s attitude was unreasonable, arbitrary or unconscionable. Blakemore, 5 Ohio St. 3d at 219.
{¶62} Civ.R. 13(A) generally requires a compulsory counterclaim to be filed with the
answer. Mulhollen v. Angel, 10th Dist. Franklin No. 03AP-1218, 2005-Ohio-578, ¶ 27. The
21
failure to do so constitutes res judicata once the original action reaches a final judgment. Quintus
v. McClure, 41 Ohio App. 3d 402, 403-404 (9th Dist.1987).
{¶63} Civ.R. 13(F), “Omitted counterclaim,” sets forth a procedure for “[w]hen a
pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or
when justice requires[.] [H]e may by leave of court set up the counterclaim by amendment.” An
amendment under Civ.R. 13(F) is also governed by Civ.R. 15(A) which favors leave to amend
unless there is “‘a finding of bad faith, undue delay or undue prejudice to the opposing party.’”
Josselson v. Josselson, 52 Ohio App. 3d 60, 61 (8th Dist.1988), quoting Hoover v. Sumlin, 12
Ohio St. 3d 1, 6 (1984).
{¶64} “‘The procedure for asserting an omitted counterclaim pursuant to Civil Rule
13(F) is for defendant to submit a motion requesting that the court permit him to amend his
answer to assert the counterclaim.’” Mulhollen at ¶ 27, quoting McCormac, Ohio Civil Rules
Practice, Section 8.08, at 203 (2d Ed.1992). The language of Civ.R. 13(F), places the burden on
the movant to justify why he should be permitted to file an untimely counterclaim. Rosenberg v.
Gattarello, 49 Ohio App. 2d 87, 94-95 (8th Dist.1976). The movant should include a factual
explanation to justify the untimely filing. Id. at 95. Failure to do so is grounds for denial of the
motion. Id.
{¶65} This foreclosure action was filed on June 2, 2011. Ms. Nader and the Trust,
timely filed an answer and counterclaim to the complaint. On September 16, 2011, the Bank
sought and was granted leave to amend the complaint. Ms. Nader and the Trust timely filed an
answer and counterclaim to the Bank’s amended complaint.
{¶66} The case was pending for 27 months, during which time the parties engaged in
extensive discovery disputes related to the counterclaims that escalated to the point of the trial
22
court appointing a special master to handle the disputes. On January 24, 2014, after the
resolution of the discovery disputes, the Bank filed a motion for summary judgment against Ms.
Nader and the Trust as to their counterclaims. In lieu of filing a response, Ms. Nader and the
Trust filed a Civ.R. 56(F) motion seeking additional time to respond because the parties planned
on taking depositions at the end of February. The trial court granted them an additional two
months, until April 24, 2014, to respond to the Bank’s summary judgment motion. On the date
of the new response brief deadline, Ms. Nader and the Trust dismissed the counterclaims without
prejudice in lieu of filing a response brief. This dismissal rendered the Bank’s summary
judgment motions moot. From June 2011 to August 2014, Ms. Nader and the Trust were
represented by Attorney Gold.
{¶67} Three months after the dismissal of their counterclaims, Ms. Nader and the Trust,
retained new counsel, Attorney Potash. During the next eight months, a number of legal issues
were addressed. The trial court granted Plaintiff’s motion in limine to exclude all “evidence at
trial concerning information and negotiations originating prior to or contemporaneous with the
execution of the Modification Agreement[s] regarding different amounts owed on the
Promissory Note and the Home Equity Line of Credit than those amounts agreed to in the
Modification Agreement[s].” Additionally, the trial court struck the jury demands of Ms. Nader,
the Trust, and Malek Abboud. They moved the trial court to reconsider the decision to strike
their jury demands and a hearing was held. That motion was held in abeyance pending the ruling
on other motions. Also, the Bank dismissed Elie Abboud from the case.
{¶68} On April 8, 2015, Attorney Aten appeared in the case as the third attorney for Ms.
Nader and the Trust. Attorney Potash was discharged as their counsel on April 14, 2015.
Attorney Aten filed a motion for leave to reinstate their counterclaim. The motion, which has
23
been restated verbatim in the appellate brief, moves for leave to essentially refile the
counterclaim in the original action because it is a compulsory counterclaim and res judicata
would prevent them from asserting the claims in another proceeding. Ms. Nader and the Trust
contend the previous counterclaim was dismissed by their first attorney without their knowledge
or consent and without notice “of the effect of the dismissal upon the scope of the evidence she
would be permitted to introduce in support of her defense.”
{¶69} The trial court held a hearing on the motion on May 22, 2015. Attorney Aten
readily admitted during at the hearing that they were seeking to refile the counterclaim in
response to the trial court’s adverse motion in limine ruling against Ms. Nader and the Trust:
As to the fact that this is a tactical reassertion of the Counterclaim, of course it is.
***
If the claims before the Court don’t put pre-2008 events at issue, then the motion
in limine was properly granted. If the claims before the Court do put those facts
at issue, then the motion in limine would have been properly denied. I don’t
dispute that that’s certainly our goal here.
(Emphasis added.) He also stated the causes of action in the original counterclaim were of the
same nature as those in the proposed counterclaim to be refiled.
{¶70} In this case, all of the parties agree the counterclaims are compulsory.
Accordingly, Ms. Nader and the Trust’s counterclaims must be asserted in the original case or
they will be barred by res judicata. See Quintus, 41 Ohio App. 3d at 403-404.
{¶71} The record reflects that Ms. Nader and the Trust timely filed a counterclaim in
response to the Bank’s amended complaint and voluntarily dismissed it 30 months later.
Accordingly, Ms. Nader and the Trust’s counterclaim was not “[o]mitted” as contemplated by
Civ.R. 13(F), but instead filed and voluntarily dismissed pursuant to Civ.R. 41(C). They sought
the ability to refile the previously dismissed counterclaim in the original case, which was still
pending. While this is not an omitted counterclaim, Civ.R. 13(F), in conjunction with Civ.R.
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15(A), provides a framework to consider whether a party should be afforded leave to file an
amended answer and to refile a counterclaim in a pending original action.
{¶72} In support their Civ.R. 13(F) motion, Ms. Nader and the Trust argue oversight,
inadvertence, or excusable neglect with respect to Attorney Gold dismissing the counterclaim
and the “when justice requires” provision because the counterclaim is compulsory and res
judicata bars them from asserting the claims in another action.
{¶73} The Bank focused on the lengthy pendency and procedural posture of the case in
relation to the timing of the motion. The Bank argued there was no showing of oversight,
inadvertence, or excusable neglect arising from the dismissal of the counterclaim because a party
“is generally responsible for acts or omissions of her counsel.” Crawford v. Crawford, 12th Dist.
Warren Nos. CA97-09-099, CA97-10-105, 1998 WL 191413, *2 (Apr. 20, 1998), citing GTE
Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St. 2d 146, 152 (1976); see Pickawillany
Condominium Unit Owners’ Assn. v. Kuhar, 10th Dist. Franklin No. 87AP-88, 1988 WL 4679,
*2 (Jan. 19, 1988) (The court found that the “[f]ailure to file an amended counterclaim was the
result of counsel’s advice, not as a result of ‘oversight, inadvertence, or excusable neglect’”).
Thus, the dismissal of the counterclaim by the first attorney and any alleged failure to advise Ms.
Nader and the Trust as to the ramifications of such a dismissal is not a result of oversight,
inadvertence, or excusable neglect.
{¶74} Additionally, the Bank argued a refiling of the counterclaim after the case had
been pending for almost four years and following the issuance of an adverse ruling would be
prejudicial to the Bank. See BAC Home Loans Servicing, LP v. Mullins, 12th Dist. Preble No.
CA2013-12-015, 2014-Ohio-4761, ¶ 17; see Chase Manhattan Mtge. Corp. v. Urquhart, 12th
Dist. Butler Nos. CA2004-04-098, CA2004-10-271, 2005-Ohio-4627, ¶ 18. The motion in
25
limine ruling and order striking the jury demands limited the issues and presentation of the case
at trial. The counterclaim would reintroduce those issues into the case.
{¶75} The trial court recognized the parties had engaged in disputed discovery
concerning the counterclaims for 27 months. Ms. Nader and the Trust obtained extra time to
respond to the summary judgment motion only to dismiss the counterclaim on the day their
response was due. The case had been pending for almost three years when the counterclaim was
dismissed and remained pending for another year after the counterclaim was dismissed. And yet
Ms. Nader and the Trust did not once argue to the court during that time that the counterclaim
was improperly dismissed.
{¶76} The trial court noted that Ms. Nader and the Trust had been through two prior
attorneys during which time it issued adverse rulings against Ms. Nader and the Trust by way of
the motion in limine and striking their jury demands. The timing of the motion for leave to
reinstate the counterclaim was viewed as a mechanism to circumvent the adverse rulings. The
trial court held the prior dismissal of the counterclaim in response to summary judgment, the
passage of a year, and then the request to refile the counterclaim as the trial date neared to be
prejudicial to the Bank as it would further delay a foreclosure action that had been pending for
four years.
{¶77} While Ohio courts recognize a policy that cases should be decided on the merits,
they also adhere to a policy that disputes be resolved in a timely manner. Based on the
foregoing, this Court finds no abuse of discretion by the trial court in denying Ms. Nader and the
Trust’s motion for leave to refile their counterclaim. Their third assignment of error is overruled.
ASSIGNMENT OF ERROR NO. 1
THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION IN
GRANTING THE MOTION OF PLAINTIFF-APPELLEE FIRST NATIONAL
26
BANK OF PENNSYLVANIA TO STRIKE THE JURY DEMAND OF
[DEFENDANTS]-APPELLANTS RUTH S. NADER, INDIVIDUALLY AND
AS TRUSTEE OF THE ALMOST HEAVEN REVOCABLE TRUST, AND
MALEK ABBOUD.
{¶78} In their first assignment of error, Ms. Nader, the Trust, and Malek Abboud argue
the trial court erred by striking their jury demands as to the Bank’s claims in the amended
complaint. Based on this Court’s resolution of the third, fourth, and fifth assignments of error,
this Court declines to address their first assignment of error as it has been rendered moot. See
App.R. 12(A)(1)(c).
ASSIGNMENT OF ERROR NO. 6
THE TRIAL COURT ERRED IN ENTERING JUDGMENT AGAINST
APPELLANTS AND ISSUING A DECREE OF FORECLOSURE IN FAVOR
OF APPELLEE.
{¶79} Ms. Nader, the Trust, and Malek Abboud stated the sixth assignment of error on
page 1 of their brief, but made no arguments as to how the trial court erred when it entered a
judgment and decree of foreclosure in favor of the Bank.
{¶80} App.R. 12(A)(2) states that “[t]he court may disregard an assignment of error
presented for review if the party raising it * * * fails to argue the assignment separately in the
brief, as required under App.R. 16(A).” “An appellant bears the burden of formulating an
argument on appeal and supporting that argument with citations to the record and to legal
authority.” State v. Watson, 9th Dist. Summit No. 24232, 2009-Ohio-330, ¶ 5, citing App.R.
16(A)(7). “This Court will not create an argument on the behalf of an appellant.” Id., citing
Cardone v. Cardone, 9th Dist. Summit No. 18349, 1998 WL 224934, *8 (May 6, 1998). (“If an
argument exists that can support this assignment of error, it is not this court’s duty to root it
out.”). Thus, pursuant to App.R. 12(A)(2) and App.R. 16(A), this Court declines to review their
sixth assignment of error.
27
ASSIGNMENT OF ERROR NO. 2
THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION IN
GRANTING APPELLEE’S MOTION TO EXCLUDE EVIDENCE
ORIGINATING PRIOR TO OR CONTEMPORANEOUS WITH EXECUTION
OF THE MODIFICATION AGREEMENTS REGARDING AMOUNTS OWED
ON THE PROMISSORY NOTE AND CREDIT LINE.
{¶81} The second assignment of error challenges the trial court’s ruling on a motion in
limine. While Ms. Nader, the Trust, and Malek Abboud listed the second assignment of error on
page 1 of their brief, they failed to make any arguments regarding this assignment of error in
their brief. Accordingly, the second assignment of error fails to comply with App.R. 16(A)(7).
{¶82} Further, the second assignment of error is not properly before this Court because
it involves a motion in limine. “Ohio law is clear * * * that a ruling on a motion in limine may
not be appealed and that objections to the introduction of testimony or statements of counsel
must be made during the trial to preserve evidentiary rulings for appellate review.” Gable v.
Gates Mills, 103 Ohio St. 3d 449, 2004-Ohio-5719, ¶ 34. In this case, there was no error
preserved because the trial court disposed of the case via summary judgment and there was no
trial. See Brannon v. Austinburg Rehab. and Nursing Ctr., 190 Ohio App. 3d 662, 2010-Ohio-
5396, ¶ 51 (11th Dist.) (Grendell, J., concurring in part and dissenting in part). Accordingly, this
Court declines to address their second assignment of error.
III.
{¶83} Ms. Nader, the Trust, and Malek Abboud’s third, fourth, and fifth, assignments of
error are overruled. This Court declines to address their first, second, and sixth assignments of
error. The judgment of the Medina County Court of Common Pleas is affirmed.
Judgment affirmed.
28
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Medina, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellants.
LYNNE S. CALLAHAN
FOR THE COURT
SCHAFER, P. J.
TEODOSIO, J.
CONCUR.
APPEARANCES:
MICHAEL ATEN, Attorney at Law, for Appellants.
RICHARD W. CLINE, ADAM C. SMITH, and JOSEPH M. MUSKA, Attorneys at Law, for
Appellee.