[Cite as Wells Fargo Bank, N.A. v. Stevens, 2014-Ohio-1399.]
STATE OF OHIO, MAHONING COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
WELLS FARGO BANK, N.A. ) CASE NO. 12 MA 219
)
PLAINTIFF-APPELLANT )
)
VS. ) OPINION
)
TIMOTHY A. STEVENS, et al. )
)
DEFENDANTS-APPELLEES )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas of Mahoning County, Ohio
Case No. 10 CV 27
JUDGMENT: Reversed.
Judgment Entry of June 23, 2011
Reinstated.
APPEARANCES:
For Plaintiff-Appellant: Atty. Scott A. King
Atty. Terry W. Posey, Jr.
Thompson Hine LLP
Austin Landing I
10050 Innovation Drive, Suite 400
Dayton, Ohio 45342-4934
For Defendants-Appellees: John A. McNally, III
John A. McNally, III Co., LPA
100 E. Federal Street, Suite 600
Youngstown, Ohio 44503
JUDGES:
Hon. Cheryl L. Waite
Hon. Gene Donofrio
Hon. Mary DeGenaro
Dated: March 25, 2014
[Cite as Wells Fargo Bank, N.A. v. Stevens, 2014-Ohio-1399.]
WAITE, J.
{¶1} This case arises from a decision to grant a Civ.R. 60(B)(5) motion for
relief from judgment in the Mahoning County Court of Common Pleas in a foreclosure
action. Appellant Wells Fargo Bank, N.A. (“Wells Fargo”) had previously been
granted summary judgment following an unopposed motion against Appellees
Timothy and Geraldine Stevens (“the Stevens”). Soon after Stevens’ original counsel
withdrew from the case, new counsel filed a motion for relief from judgment. The trial
court found that the Stevens had met all of the requirements pursuant to Civ.R.
60(B)(5) and vacated the judgment. Wells Fargo now appeals.
{¶2} Appellant argues that the Stevens did not meet at least two of the three
requirements for granting relief under Civ.R. 60(B)(5): a meritorious defense to the
underlying claim, a valid reason for relief under subsection (B)(5), and a timely filed
motion. GTE Automatic Electric, Inc. v. ARC Industries, 47 Ohio St.2d 146, 351
N.E.2d 113 (1976). The Stevens' basis for relief from judgment was that they were in
the process of negotiating a loan modification when summary judgment was granted,
and that judgment should have been delayed until all negotiations regarding the loan
modification had ended. Appellees' rationale is not a valid defense to a foreclosure
action, nor a basis for relief from judgment. Mere negotiations do not affect the
validity or enforceability of a loan or mortgage. Because Appellees did not allege a
valid defense, they did not meet the structures of Civ.R. 60(B)(5) and the trial court
should not have granted the motion. Further, Appellees should have filed their
motion under Civ.R. 60(B)(1), dealing with excusable neglect, since the basis of their
argument was that the loan renegotiation process explained why they did not oppose
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the bank's motion for summary judgment. Since there was no basis for granting the
Stevens' motion for relief from judgment, the judgment of the trial court is reversed
and the vacated judgment is reinstated.
Background
{¶3} On November 5, 2007, Timothy Stevens took out a mortgage on his
home. Sometime in 2010, Wells Fargo became the holder of the promissory note
and the mortgage on the house. On January 5, 2010, Wells Fargo commenced
action seeking judgment on the note and foreclosure on the mortgage.
{¶4} On August 31, 2010, Wells Fargo filed a motion for default judgment.
On September 3, 2010, the Stevens obtained counsel and sought leave to file an
answer instanter. The court allowed the delayed answer to be filed. On September
30, 2010, Wells Fargo filed a motion for summary judgment. The Stevens' former
counsel did not respond to this motion. On June 23, 2011, the trial court entered
summary judgment in favor of Wells Fargo. Appellees filed a motion for stay of
execution and a notice of appeal (Appeal No. 11 MA 114). Immediately after filing
the appeal, Appellees' counsel filed a motion to withdraw, which was granted. Prior
to resolution of the motion for stay, Appellees obtained new counsel, who filed the
Civ.R. 60(B) motion for relief from judgment on November 4, 2011. In the motion
counsel argued that Appellees were not in default when the complaint was filed and
that they had entered into loan modification proceedings, including payment of a
$3,000 fee required by Wells Fargo, prior to the court's issuance of summary
judgment.
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{¶5} The appeal was held in abeyance for the court to rule on the Civ.R.
60(B) motion, and the appeal was later dismissed as moot after the Civ.R. 60(B)
motion was granted.
{¶6} On November 16, 2011, Wells Fargo filed a response to the motion for
relief from judgment. On November 21, 2011, the magistrate granted the motion.
Wells Fargo filed objections, and on October 18, 2012, the trial court overruled the
objections and adopted the magistrate's decision. This appeal followed.
{¶7} An order that vacates or sets aside a final judgment is a final
appealable order. R.C. 2505.02(B)(3).
Assignment of Error
THE TRIAL COURT ERRED IN GRANTING THE MOTION FOR
RELIEF FROM JUDGMENT.
{¶8} According to Civ.R. 60(B), a court may relieve a party or legal
representative from a final judgment, order or proceeding for the following reasons:
(1) mistake, 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 Civ.R. 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 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.
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{¶9} Civ.R. 60(B) is a remedial rule to be liberally construed so that the ends
of justice may be served. Colley v. Bazell, 64 Ohio St.2d 243, 249, 416 N.E.2d 605
(1980). A trial court's ruling on a Civ.R. 60(B) motion is reviewed only for abuse of
discretion. Griffey v. Rajan, 33 Ohio St.3d 75, 77, 514 N.E.2d 1122 (1987); Pons v.
Ohio State Med. Bd., 66 Ohio St.3d 619, 621, 614 N.E.2d 748 (1993). Abuse of
discretion exists where a ruling is arbitrary, unreasonable or unconscionable.
Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).
{¶10} In order to prevail on a motion for relief from judgment, pursuant to
Civ.R. 60(B) the appellant must demonstrate that: (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 amount of 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 Electric, Inc., supra, 47 Ohio St.2d 146, 351
N.E.2d 113, paragraph two of the syllabus. If any of the three GTE Automatic
Electric, Inc. requirements are not met, the motion should be overruled. Volodkevich
v. Volodkevich, 35 Ohio St.3d 152, 153, 518 N.E.2d 1208 (1988).
{¶11} Civ.R. 60(B)(5) is considered a “catch-all provision” that “reflect[s] the
inherent power of a court to relieve a person from the unjust operation of a
judgment.” Caruso–Ciresi, Inc. v. Lohman, 5 Ohio St.3d 64, 448 N.E.2d 1365 (1983),
paragraph one of the syllabus. Civ.R. 60(B)(5) cannot be used as a substitute for
another more specific ground found in Civ.R. 60(B)(1)-(4). Id. at 66.
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{¶12} For cases arising out of Civ.R. 60(B)(5), the motion must be filed within
a reasonable time from the date of the judgment being challenged. Adomeit v.
Baltimore, 39 Ohio App.2d 97, 106, 316 N.E.2d 469 (8th Dist.1974). Whether the
motion is filed in a reasonable time depends on the facts and circumstances of the
case. LaSalle Bank Natl. Assn. v. Smith, 7th Dist. No. 11 MA 85, 2012-Ohio-4040,
¶38.
{¶13} Appellant argues that the standard of review in this appeal should be de
novo, claiming that the trial court based its discretionary decision on a
misconstruction of the law. Appellant is correct that questions of law are reviewed de
novo. Graham v. Drydock Coal Co., 76 Ohio St.3d 311, 313, 667 N.E.2d 949 (1996).
Nevertheless, the overall standard for reviewing a ruling on a Civ.R. 60(B) motion is
abuse of discretion.
{¶14} It appears from the record that the Stevens did not satisfy all the
requirements of GTE Automatic Electric, Inc. If only one of the three elements of
GTE Automatic Electric, Inc. is lacking, the motion should not be granted.
Volodkevich, supra. The record indicates that the Stevens did not present a
meritorious defense to the underlying cause of action. A meritorious defense is one
which “[goes] to the merits, substance, or essentials of the case.” USB Real Estate
Secs., Inc. v Teague, 191 Ohio App.3d 189, 196, 2010-Ohio-5634, N.E.2d 5733, ¶23
(2d Dist.2010). Although a party does not need to prove that the alleged defense will
prevail at trial, enough operative facts must be alleged to show that the defense can
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be proven. Rose Chevrolet, Inc. v. Adams, 36 Ohio St.3d 17, 20, 520 N.E.2d 564
(1988).
{¶15} The defense raised by the Appellees is that the loan modification
process should have prevented summary judgment from being granted to Wells
Fargo. In other words, the alleged defense is that they should have been allowed to
delay summary judgment by continuing negotiations with the bank. The affidavit of
Timothy Stevens that was attached to the motion for relief from judgment admits that
he knew the loan modification would not likely be granted and “all I could hope for
was to delay the foreclosure as long as possible.” (11/4/11 Motion, T. Stevens Aff.,
Item 11.) This is not a defense to the foreclosure action. It is, instead, a procedural
argument about the timing of the trial court's judgment.
{¶16} As Wells Fargo has pointed out, the mere fact that loan modification
talks were in progress does not constitute a defense to a foreclosure action under the
first prong of GTE Automatic Electric, Inc. See, e.g., CitiMortgage, Inc. v. Dudek, 9th
Dist. No. 25806, 2012-Ohio-899, ¶13; see also, Deutsche Bank Natl. Trust Co. v.
Davis, 5th Dist. No. 11CAE060055, 2011-Ohio-5791, ¶23; Glendale Federal Bank v.
Brown, 2d Dist. No. 17068, 1998 WL 906463 (Dec. 31, 1998). A lender has no duty
to modify a loan. Davis at ¶23. Until both parties agree to the modification, the
original terms of the loan are still in force, and mere negotiations are unenforceable.
Huntington v. R.R. Wellington, Inc., 2012-Ohio-5935, 983 N.E.2d 941, ¶25-27 (9th
Dist.). The Stevens have not alleged that any agreement was actually reached, but
simply that negotiations were taking place.
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{¶17} Additionally, the Stevens should have filed the motion under Civ.R.
60(B)(1), dealing with excusable neglect, because they neglected to oppose Wells
Fargo’s motion for summary judgment. The essence of their argument for relief from
judgment is that their failure to defend against the foreclosure action was excusable
because they thought Wells Fargo might agree to a loan modification. A party may
not rely on the catch-all provision in Civ.R. 60(B)(5) when the true basis of the motion
is excusable neglect under Civ.R. 60(B)(1). Caruso–Ciresi, Inc., supra, 5 Ohio St.3d
at 66. Even if the Stevens had filed under Civ.R. 60(B)(1), the motion clearly would
have been overruled because it is not excusable neglect to fail to defend against a
foreclosure action simply because loan renegotiation talks are in progress. PHH
Mtge. Corp. v. Northrup, 4th Dist. No. 11CA6, 2011-Ohio-6814, ¶22; Davis, supra,
5th Dist. No. 11CAE060055 at ¶23-24.
{¶18} The Stevens did not present a meritorious defense to the foreclosure
action and filed the motion for relief from judgment under the wrong subsection.
They did not meet the requirements of Civ.R. 60(B) as interpreted by GTE Automatic
Electric, Inc. The trial court should have overruled the motion. Therefore, Appellant's
assignment of error is meritorious and is sustained.
Conclusion
{¶19} Appellant contends that the trial court abused its discretion in granting
relief from judgment in a foreclosure action. Appellant is correct. A party filing for
relief from judgment under Civ.R. 60(B) must establish that there is a meritorious
defense to the underlying cause of action. The Stevens argued that summary
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judgment should not have been granted to Wells Fargo because they were
negotiating a loan modification. Although this might be reason for seeking to delay
summary judgment, it is not a defense to a foreclosure action. Mere negotiations to
modify a loan do not change the terms of the loan or make the loan unenforceable.
Furthermore, the Stevens did not oppose Appellant's summary judgment motion, nor
did they notify the trial court about the loan modification proceedings. For these
reasons, they should have asked for relief due to excusable neglect under Civ.R.
60(B)(1) rather than Civ.R. 60(B)(5). There was no basis for granting the Stevens'
motion for relief from judgment under Civ.R. 60(B)(5), and the trial court should have
overruled the motion. Nor would there have been a basis for relief had the Stevens
filed under Civ.R. 60(B)(1). We hereby sustain Appellant's assignment of error and
reverse the October 18, 2012, judgment of the trial court. The prior trial court
judgment entry of June 23, 2011, is reinstated.
Donofrio, J., concurs.
DeGenaro, P.J., concurs.
Wells Fargo Bank, N.A. v. Stevens
Combined Opinion