[Cite as Bank of Am. v. Sweeney, 2014-Ohio-1241.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 100154
BANK OF AMERICA, N.A.
PLAINTIFF-APPELLEE
vs.
MARY M. SWEENEY, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-11-770977
BEFORE: E.T. Gallagher, J., S. Gallagher, P.J., and Rocco, J.
RELEASED AND JOURNALIZED: March 27, 2014
ATTORNEY FOR APPELLANT
James R. Douglass
James R. Douglass Co., L.P.A.
4600 Prospect Avenue
Cleveland, Ohio 44103
ATTORNEYS FOR APPELLEE
Brett K. Bacon
Emily C. Barlage
Frantz Ward, L.L.P.
127 Public Square, Suite 2500
Cleveland, Ohio 44114
Cynthia Fischer
Lerner, Sampson & Rothfuss
P.O. Box 5480
Cincinnati, Ohio 45201
EILEEN T. GALLAGHER, J.:
{¶1} Defendant-appellant, Mary M. Sweeney (“Sweeney”), appeals the trial
court’s decision granting summary judgment in favor of plaintiff-appellee, Bank of
America, N.A. We find no merit to the appeal and affirm.
{¶2} On October 24, 2005, Sweeney granted an adjustable rate promissory note
(“note”) to America’s Wholesale Lender in the principal amount of $107,000.00 plus
interest in exchange for a loan in that amount. Sweeney also granted a mortgage to
Mortgage Electronic Registration Systems, Inc. (“MERS”), as nominee for America’s
Wholesale Lender, in the amount of $107,000.00 plus interest. The mortgage encumbers
real estate located at 315 Overlook Park Drive in Cleveland (the “property”). Sweeney
successfully made her monthly payments until October 1, 2009, when she defaulted.
{¶3} On January 5, 2010, BAC Home Loans, L.P., f.k.a. Countrywide Home
Loans Servicing, L.P. (“BAC”) filed a complaint and an amended complaint for
foreclosure against Sweeney (“Sweeney I”). The note attached to the amended complaint
included a copy of a mortgage assignment executed by Shellie Hill (“Hill”) on behalf of
MERS that transferred the mortgage from MERS, as nominee for America’s Wholesale
Lender, to BAC. The assignment was recorded in the Cuyahoga County recorder’s
office on January 6, 2009.
{¶4} Sweeney filed a motion to dismiss the amended complaint, which the court
granted. In its judgment dismissing the complaint, the trial court explained that BAC
“failed to provide an affidavit or other evidence indicating that it held the note on the date
the complaint was filed.”
{¶5} On December 9, 2011, a new foreclosure action was filed against Sweeney,
styled Bank of America v. Sweeney (“Sweeney II”). Bank of America is the successor by
merger to BAC. The note attached to the complaint in Sweeney II was the same note
attached to the amended complaint in Sweeney I and alleged the same date of default.
However, the note attached to the complaint in Sweeney I included an allonge executed by
the Assistant Vice President of America’s Wholesale Lender, which stated:
The undersigned, acting on behalf of America’s Wholesale Lender, hereby
transfers to BAC Home Loans Servicing, LP FKA Countrywide Home
Loans Servicing LP, the Note and all right to payment of all balances
outstanding thereunder.
This allonge, which reads like an assignment, was not included with the note attached to
the complaint in Sweeney II. Instead, there is an indorsement in blank on the last page of
the note signed by the managing director of Countrywide Home Loans, Inc.
{¶6} In her answer, Sweeney raised as an affirmative defense that the note is
unenforceable because it has been materially altered by virtue of the missing allonge and
the new indorsement in blank. Bank of America filed a motion for summary judgment,
arguing it was entitled to foreclosure because it was the holder of the note and Sweeney
defaulted on it. Sweeney filed a cross-motion for summary judgment, contending the
note is unenforceable because it has been materially altered and because there is
insufficient evidence establishing that Bank of America is the holder of the note. In
granting summary judgment in favor of Bank of America, the magistrate’s decision states,
in relevant part:
Plaintiff has an affidavit indicating that it held the original note and
mortgage prior to the filing of the case, that the original note is being held
by plaintiff’s counsel and the copy of the note attached to the complaint is
an exact duplicate of the original. Moreover, there is no evidence before
the court that any unauthorized alteration of the note occurred.
The trial court adopted the magistrate’s decision over Sweeney’s timely objections.
Sweeney now appeals and raises three assignments of error.
Standard of Review
{¶7} We review the trial court’s decision granting summary judgment de novo,
using the same standard the trial court applies under Civ.R. 56(C). Grafton v. Ohio
Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). Under Civ.R. 56(C),
summary judgment is only appropriate when the movant demonstrates that, viewing the
evidence most strongly in favor of the nonmovant, reasonable minds must conclude that
no genuine issue as to any material fact remains to be litigated and the moving party is
entitled to judgment as a matter of law. Doe v. Shaffer, 90 Ohio St.3d 388, 390, 738
N.E.2d 1243 (2000).
{¶8} To properly support a motion for summary judgment in a foreclosure action,
the moving party 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
met; and (5) the amount of principal and interest due. HSBC Bank USA, N.A. v.
Surrarrer, 8th Dist. Cuyahoga No. 100039, 2013-Ohio-5594, ¶ 16, citing United States
Bank, N.A. v. Adams, 6th Dist. Erie No. E-11-070, 2012-Ohio-6253, ¶ 10.
{¶9} Civ.R. 56(E) states that when a motion for summary judgment is properly
made and supported by a party seeking affirmative relief, the nonmoving party may not
rest upon the mere denials of the pleadings. Todd Dev. Co., Inc. v. Morgan, 116 Ohio
St.3d 461, 2008-Ohio-87, 880 N.E.2d 88, ¶ 11. Instead, the burden shifts to the
nonmoving party to set forth specific facts showing that there is a genuine issue for trial.
Id. If the defending party does not so respond, summary judgment, if appropriate, may
be entered in favor of the party seeking affirmative relief. Id. There is no requirement
that a moving party “negate the nonmoving party’s every possible defense to its motion
for summary judgment.” Id. ¶ 14.
{¶10} In the first assignment of error, Sweeney argues the trial court erred in
granting summary judgment in favor of Bank of America because the evidence submitted
in support of the motion for summary judgment failed to comply with Civ.R. 56(E).1 In
the second assignment of error, Sweeney argues the trial court erred in awarding damages
to Bank of America because Bank of America failed to demonstrate evidence of damages.
Bank of America argues Sweeney forfeited the right to raise this issue on appeal because
1
she did not raise it in the trial court. Indeed, Sweeney did not discuss this issue in her opposition
and cross-motion for summary judgment, but filed a separate motion to strike the affidavits for the
same reasons argued on appeal. However, the trial court’s order denying the motion to strike was
not designated in Sweeney’s notice of appeal as required by App.R. 3(D). Nevertheless, we are
bound to follow the mandates of Civ.R. 56(E) in our de novo review, whether or not an issue
regarding evidence supporting the summary judgment is raised by party.
In both assigned errors, Sweeney contends the two affidavits submitted in support of
Bank of America’s motion contained only conclusory statements without any evidentiary
value. Sweeney argues that without sufficient evidence, Bank of America can neither
prove it is the holder of the note nor the amount it claims is due under the note.2
Affidavits
{¶11} Pursuant to Civ.R. 56(E), affidavits “shall be made on personal knowledge,
shall set forth such facts as would be admissible in evidence, and shall show affirmatively
that the affiant is competent to testify to the matters stated in the affidavit.” “Copies of
all papers referred to in the affidavit are acceptable if the affidavit indicates that the
copies submitted are true and accurate reproductions of the originals.” Fed. Home Loan
Mtge. Corp. v. Zuga, 11th Dist. Trumbull No. 2012-T-0038, 2013-Ohio-2838, ¶ 15.
{¶12} The holder of an instrument is a “person entitled to enforce” the instrument
under R.C. 1303.31. R.C. 1301.201(B)(21)(a) defines a holder of a negotiable
instrument as “[t]he person in possession of a negotiable instrument that is payable either
to bearer or to an identified person that is the person in possession.” In a foreclosure
action, the current holder of the note and mortgage is the real party in interest. Wells
Fargo Bank, N.A. v. Stovall, 8th Dist. Cuyahoga No. 91802, 2010-Ohio-236, ¶ 15, citing
Chase Manhattan Mtge. Corp. v. Smith, 1st Dist. Hamilton No. C-061069,
2007-Ohio-5874. Further, a party has standing to invoke the court’s jurisdiction if, at the
time the complaint is filed, the party is either the holder of the note and mortgage or has
We discuss the first and second assigned errors together because they are interrelated.
2
received an assignment of the mortgage. Bank of Am., N.A. v. Harris, 8th Dist.
Cuyahoga No. 99272, 2013-Ohio-5749, ¶ 8-10. Therefore, Bank of America is not
entitled to summary judgment unless it can establish it is the owner of the note.
{¶13} In support of its motion for summary judgment, Bank of America submitted
the affidavit of Carol Ann Yagusic (“Yagusic”) in which she avers (1) she is an officer of
Bank of America; (2) she has personal knowledge of the procedures for creating business
records kept in the course of the bank’s regularly conducted business; (3) Bank of
America held the note prior to filing the complaint; and (4) the attached business records
indicate that Sweeney was in default, that the default has not been cured, and the amount
of debt owed on note. Although Yagusic does not authenticate the note, she establishes
the foundation necessary to authenticate business records outlining the payment history,
fees, and delinquency in Sweeney’s account.
{¶14} Bank of America also submitted the affidavit of Cynthia M. Fischer
(“Fischer”), who identifies herself as an employee of Lerner, Sampson & Rothfuss, a law
firm that represented Bank of America in the trial court proceedings. According to
Fischer’s affidavit, Lerner, Sampson & Rothfuss kept the original note in storage on
behalf of Bank of America. She also avers that the statements contained in her affidavit
are based on personal knowledge and her personal review of records, including the
original note, in the ordinary course of business as Bank of America’s legal counsel. She
authenticates the note as a true and accurate copy of the original note, which she
photocopied herself. Therefore, Fischer’s affidavit complies with the requirements of
Civ.R. 56(E).
{¶15} Nevertheless, Sweeney argues that Bank of America cannot enforce the note
because the assignment from MERS, as nominee for America’s Wholesale Lender, to
BAC is invalid. She contends Hill lacked authority to execute the assignment on behalf
of MERS because she was employed by Lerner, Sampson & Rothfuss.
{¶16} In support of this argument, Sweeney submitted unauthenticated deposition
transcripts of Hill in which she admits being a representative of MERS and an employee
of Lerner, Sampson & Rothfuss simultaneously and states that she has authority to
execute assignments on behalf of MERS. However, the case captions on the cover pages
of the transcripts indicate they were taken in connection with two unrelated cases.
Furthermore, the transcript is not authenticated by the court reporter and is, therefore,
inadmissible pursuant to Civ.R. 56(C). Bank of N.Y. Mellon Trust Co., N.A. v. Unger,
8th Dist. Cuyahoga No. 97315, 2012-Ohio-1950, ¶ 43.
{¶17} Sweeney offers no authority, in fact or law, to support her assumption that
the assignment is invalid as a result of Hill’s dual status. She also produced no evidence
challenging the allegations that (1) she executed the original note; (2) she was in default;
(3) Bank of America complied with all conditions precedent to foreclosure; or (4) the
principal and interest amounts were accurate. She also failed to refute the evidence
submitted by Bank of America that establishes it as the holder of the note.
{¶18} Accordingly, the first and second assignments of error are overruled.
Material Alteration
{¶19} In the third assignment of error, Sweeney argues the trial court erred in
awarding judgment to Bank of America because the note had been materially altered.
She contends the removal of the allonge and the addition of the indorsement in blank
constitutes an alteration that renders the note unenforceable.
{¶20} R.C. 1303.50(B), which governs the effect of alterations in commercial
paper, provides:
Except as provided in division (C) of this section, an alteration fraudulently
made discharges a party whose obligation is affected by the alteration
unless that party assents or is precluded from asserting the alteration. No
other alteration discharges a party, and the instrument may be enforced
according to its original terms.
(Emphasis added.) R.C. 1303.50(B) defines “alteration” as “[a]n unauthorized change in
an instrument that purports to modify in any respect the obligation of a party” or “[a]n
unauthorized addition of words or numbers or other change to an incomplete instrument
relating to the obligation of a party.” Thus, Sweeney’s obligations under the note could
only be discharged if the alterations made to the note modified her obligations in some
fashion.
{¶21} In this case, the only modification to the note between Sweeney I and
Sweeney II is the method of transfer from allonge to indorsement. Further, the allonge
and the indorsement are not in conflict with each other. The allonge transfers the note to
BAC Home Loan Servicing, L.P., f.k.a. Countrywide Home Loans Servicing, L.P., while
the indorsement transfers the note to Countrywide Home Loans, Inc., a New York
corporation doing business as America’s Wholesale Lender. Both the allonge and the
indorsement transfer the note to Countrywide, which eventually merged with BAC, which
later merged with Bank of America.
{¶22} Moreover, the removal of the allonge and substitution of the indorsement on
the note and mortgage did not alter Sweeney’s obligations under those instruments.
Sweeney’s payments did not increase or decrease, and the interest rate remained
unchanged. The payment due dates did not change. No transfer fees applied to the note
upon transfer and Bank of America did not accelerate the note; Sweeney defaulted, and
the note was accelerated before transfer. Therefore, while the missing allonge and the
addition of the blank indorsement to the note is curious, they do not discharge Sweeney of
her obligations under the note.
{¶23} Accordingly, the third assignment of error is overruled.
{¶24} Judgment affirmed.
It is ordered that appellee recover from appellant costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to the common pleas court to carry this
judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
EILEEN T. GALLAGHER, JUDGE
SEAN C. GALLAGHER, P.J., and
KENNETH A. ROCCO, J., CONCUR