[Cite as U.S. Bank, N.A. v. Gullotta, 2011-Ohio-2235.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
U.S. BANK, N.A., AS TRUSTEE JUDGES:
Hon. W. Scott Gwin, P.J.
Plaintiff-Appellee Hon. William B. Hoffman, J.
Hon. Patricia A. Delaney, J.
-vs-
Case No. 2010CA00181
GIUSEPPE GULLOTTA, ET AL.
Defendant-Appellant OPINION
CHARACTER OF PROCEEDING: Appeal from the Stark County Court of
Common Pleas, Case No. 2009CV02397
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT ENTRY: May 9, 2011
APPEARANCES:
For Plaintiff-Appellee For Defendant-Appellant
SCOTT A. KING TIMOTHY D. MCKINZIE
TERRY W. POSEY, JR. KERRY G. FULTON
Thompson Hine LLP McKinzie and Associates
2000 Courthouse Plaza, N.E. 529 White Pond Drive
P.O. Box 8801 Adron, Ohio 44320-1123
Dayton, Ohio 45404-8801
Stark County, Case No. 2010CA00181 2
Hoffman, J.
{¶1} Defendant-appellant Giuseppe Gullotta appeals the June 11, 2011
Judgment Entry of the Stark County Court of Common Pleas entering summary
judgment in favor of Plaintiff-appellee U.S. Bank, N.A.
STATEMENT OF THE FACTS AND CASE
{¶2} On June 18, 2003, Appellant executed an adjustable rate note (“Note”) in
the amount of $164,900.00 payable to MILA, Inc. The same day, to secure payment of
the Note, Appellant executed a mortgage (“Mortgage”) granting MILA a security interest
in the property located at 218 Bonnett Street, S.W., North Canton, Ohio 44720. MILA
subsequently assigned the Note and Mortgage to U.S. Bank.
{¶3} Appellant failed to make payments when due, and defaulted under the
terms of the Note and Mortgage. On November 1, 2003, U.S. Bank declared the
promissory note in default, accelerating payment due. On April 9, 2004, U.S. Bank filed
a complaint against Appellant seeking judgment for the full balance of $164,390.91 due
on the Note, plus interest at the rate of 7.35 percent per annum from and after
November 1, 2003, and foreclosure of the Mortgage and a sheriff’s sale of the property
(“First Lawsuit”). On June 8, 2004, U.S. Bank voluntarily dismissed the First Lawsuit in
its entirety pursuant to Civil Rule 41(A).
{¶4} Appellant did not make any payments after June 8, 2004. Accordingly,
U.S. Bank filed a second complaint against Appellant on September 9, 2004, seeking
judgment for the full balance of $164,390.91, plus interest at the rate of 7.35 percent per
annum from and after December 1, 2003, and foreclosure of the Mortgage and a
Stark County, Case No. 2010CA00181 3
sheriff’s sale of the property (“Second Lawsuit”). On March 15, 2005, U.S. Bank
dismissed the Second Lawsuit in its entirety pursuant to Civil Rule 41(A).
{¶5} Appellant again did not make payments after March 15, 2005, or
otherwise cure the default. On October 26, 2005, U.S. Bank filed a third complaint
against Appellant seeking judgment for the full balance of $164,390.91, plus interest at
the rate of 7.35 percent per annum from and after November 1, 2003, and foreclosure of
the Mortgage and a sheriff’s sale of the property (“Third Lawsuit”).
{¶6} Appellant moved for summary judgment arguing the third foreclosure
action was barred by the doctrine of res judicata pursuant to Civil Rule 41(A), as the
second dismissal constituted an adjudication on the merits. The trial court denied
Appellant’s motion for summary judgment, and entered summary judgment in favor of
U.S. Bank.
{¶7} On appeal, this Court affirmed the trial court’s holding finding res judicata
did not bar U.S. Bank’s third foreclosure action as the complaint in the third foreclosure
action complaint covered different dates of default and months not litigated in the first
two complaints. U.S. National Bank Assn. v. Gullotta (April 30, 2007) Stark App. No.
2006CA00145.
{¶8} The Ohio Supreme Court later reversed the judgment of this Court,
holding res judicata barred U.S. Bank’s third foreclosure complaint. U.S. National Bank
Assn. v. Gullotta, 120 Ohio St. 3d 399, 2008-Ohio-6268. The Court held each missed
payment under the Note and Mortgage did not give rise to a new claim, and the Civil
Rule 41(A) two dismissal rule applied. Id.
Stark County, Case No. 2010CA00181 4
{¶9} U.S. Bank then filed the instant fourth cause of action against Appellant for
damages in the amount of $164,390.91 plus interest from November 1, 2003, and
foreclosure of the mortgage. Appellant filed a counterclaim to quiet title and for attorney
fees pursuant to the frivolous filing statute. On October 16, 2009, U.S. Bank dismissed
its claims for payment on the note and for foreclosure on the mortgage. Accordingly,
the case proceeded only as to Appellant’s claims for quiet title and for attorney fees.
Appellant claimed all of U.S. Bank’s interest in the premises was barred by the doctrine
of res judicata as decided by other court opinions. Appellant maintains U.S. Bank has
no remaining interest in the premises at issue; therefore, Appellant is entitled to quiet
title in the premises.
{¶10} The matter proceeded upon motions for summary judgment filed by each
party.
{¶11} The trial court granted summary judgment in favor of U.S. Bank and
denied Appellant’s motion for summary judgment.
{¶12} On appeal, Appellant assigns as error:
{¶13} “I. THE TRIAL COURT ERRED, AS A MATTER OF LAW, BY GRANTING
SUMMARY JUDGMENT TO PLAINTIFF-APPELLEE U.S. BANK ON DEFENDANT-
APPELLANT GULLOTTA’S CLAIM FOR QUIET TITLE WHERE A PRIOR
ADJUDICATION EXTINGUISHED ALL RIGHTS OF PLAINTIFF-APPELLEE U.S. BANK
TO MAKE ANY CLAIM AGAINST DEFENDANT-APPELLANT GULLOTTA FOR
PAYMENT UNDER A NOTE AND MORTGAGE AND EXTINGUISHED ALL INTEREST
OF PLAINTIFF-APPELLEE U.S. BANK IN DEFENDANT-APPELLANT GULLOTTA’S
PREMISES.
Stark County, Case No. 2010CA00181 5
{¶14} “II. THE TRIAL COURT ERRED, AS A MATTER OF LAW, BY DENYING
SUMMARY JUDGMENT TO DEFENDANT-APPELLANT GULLOTTA ON HIS CLAIM
FOR QUIET TITLE WHERE A PRIOR ADJUDICATION EXTINGUISHED ALL RIGHTS
OF PLAINTIFF-APPELLEE U.S. BANK TO MAKE ANY CLAIM AGAINST
DEFENDANT-APPELLANT GULLOTTA FOR PAYMENT UNDER A NOTE AND
MORTGAGE AND EXTINGUISHED ALL INTEREST OF PLAINTIFF-APPELLEE U.S.
BANK IN DEFENDANT-APPELLANT GULLOTTA’S PREMISES.”
I, II.
{¶15} Both assigned errors raise common and interrelated issues; therefore, we
will address the arguments together.
{¶16} Summary judgment proceedings present the appellate court with the
unique opportunity of reviewing the evidence in the same manner as the trial court.
Smiddy v. The Wedding Party, Inc. (1987), 30 Ohio St.3d 35, 36, 506 N.E.2d 212.
Therefore, we must refer to Civ.R. 56(C), which provides, in pertinent part: “Summary
judgment shall be rendered forthwith if the pleadings, depositions, answers to
interrogatories, written admissions, affidavits, transcripts of evidence in the pending
case, and written stipulations of fact, if any, timely filed in the action, show that there is
no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law. * * * A summary judgment shall not be rendered unless it
appears from the evidence or stipulation, and only from the evidence or stipulation, that
reasonable minds can come to but one conclusion and that conclusion is adverse to the
party against whom the motion for summary judgment is made, that party being entitled
to have the evidence or stipulation construed most strongly in the party's favor .”
Stark County, Case No. 2010CA00181 6
{¶17} Pursuant to the above rule, a trial court may not enter summary judgment
if it appears that a material fact is genuinely disputed. The party moving for summary
judgment bears the initial burden of informing the trial court of the basis for its motion
and identifying those portions of the record that demonstrate the absence of a genuine
issue of material fact. The moving party may not make a conclusory assertion that the
nonmoving party has no evidence to prove its case. The moving party must specifically
point to some evidence which demonstrates that the nonmoving party cannot support its
claim. If the moving party satisfies this requirement, the burden shifts to the nonmoving
party to set forth specific facts demonstrating there is a genuine issue of material fact for
trial. Vahila v. Hall, 77 Ohio St.3d 421, 429, 1997-Ohio-259, 674 N.E.2d 1164, citing
Dresher v. Burt (1996), 75 Ohio St.3d 280, 293, 662 N.E.2d 264.
{¶18} In reversing this Court’s prior opinion, the Ohio Supreme Court held in
U.S. National Bank Assn. v. Gullotta, 120 Ohio St.3d 399 2008-Ohio-6268, in relevant
part:
{¶19} “Do the claims here arise from a common nucleus of operative facts? U.S.
Bank argues that its third bite at the apple is different from its first two because in its
amended complaint, it sought interest only from April 1, 2005. However, all of the claims
in all of the complaints filed by U.S. Bank against Gullotta arise from the same note, the
same mortgage, and the same default. The note and mortgage have not been amended
in any way. From the time of Gullotta's original breach, he has owed the entire amount
of the principal. The amended third complaint alleged the same amount of principal due
as the other two complaints.
Stark County, Case No. 2010CA00181 7
{¶20} “The key here is that the whole note became due upon Gullotta's breach,
not just the installment he missed. There is a distinction between an action for recovery
of installment payments under an installment note where the entire principal is
accelerated, and an action to recover for nonpayment under an installment note where
only the amount of the principal to date, and no future amount, is sought. The general
rule that each missed payment in an installment loan gives rise to a separate cause of
action does not hold true when there is an acceleration clause in the loan agreement:***
{¶21} “By agreeing to an acceleration clause, the parties in this case have
avoided the operation of the general rule that nonpayment on an installment loan does
not constitute a breach of the entire contract. In a contract with an acceleration clause, a
breach constitutes a breach of the entire contract. Once Gullotta defaulted and U.S.
Bank invoked the acceleration clause of the note, the contract became indivisible. The
obligations to pay each installment merged into one obligation to pay the entire balance
on the note.” Id at paragraphs 28-29, 31.
{¶22} The Ohio Supreme Court, in Gullotta, further noted that although U.S.
Bank's complaint had changed, the operative fact remained the same and U.S. Bank
could not save its claims from the two-dismissal rule simply by changing the relief
sought in its complaint. Id.1
{¶23} In the case sub judice, U.S. Bank’s fourth cause of action arose from the
same note, the same mortgage and the same default. From the time of Appellant’s
original default, the entire principal became due as a result of the acceleration clause in
the note. The terms of the note and/or mortgage were never changed. As the Supreme
1
The Two Dismissal Rule is found at Ohio Civil Rule 41(A).
Stark County, Case No. 2010CA00181 8
Court’s held in Gullotta, from the time of Appellant’s original breach, Appellant owed the
entire amount of the principal because of the acceleration clause.
{¶24} Based on the foregoing, we find the two-dismissal rule of Civ.R. 41(A)
applies and res judicata barred U.S. Bank’s complaint in this case. We find the practical
effect of the same precludes U.S. Bank from pursuing any further action on the note.
Because the mortgage draws its essence from the note, we find it unenforceable. We
find the trial court erred in not granting Appellant’s motion for summary judgment to
quiet title.2
{¶25} Appellant’s two assignments of error are sustained.
{¶26} The judgment of the Stark County Court of Common Pleas is reversed.
By: Hoffman, J.
Gwin, P.J. and
Delaney, J. concur
s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN
s/ W. Scott Gwin _____________________
HON. W. SCOTT GWIN
s/ Patricia A. Delaney _________________
HON. PATRICIA A. DELANEY
2
Appellant has not appealed the trial court’s denial of attorney fees for alleged frivolous
conduct.
Stark County, Case No. 2010CA00181 9
IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
U.S. BANK, N.A., AS TRUSTEE :
:
Plaintiff-Appellee :
:
-vs- : JUDGMENT ENTRY
:
GIUSEPPE GULLOTTA, ET AL. :
:
Defendant-Appellant : Case No. 2010CA00181
For the reasons stated in our accompanying Opinion, the judgment of the Stark
County Court of Common Pleas is reversed and the matter remanded to that court to
enter judgment in accordance with our Opinion and the law. Costs to Appellee.
s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN
s/ W. Scott Gwin _____________________
HON. W. SCOTT GWIN
s/ Patricia A. Delaney _________________
HON. PATRICIA A. DELANEY