[Cite as CapitalSource Bank FBO Aeon Fin., L.L.C. v. Donshirs Dev., Corp., 2013-Ohio-1563.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 99032
CAPITALSOURCE BANK FBO AEON FIN., L.L.C.
PLAINTIFF-APPELLANT
vs.
DONSHIRS DEVELOPMENT CORP., ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
REVERSED AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-767170
BEFORE: McCormack, J., S. Gallagher, P.J., and Rocco, J.
RELEASED AND JOURNALIZED: April 18, 2013
ATTORNEYS FOR APPELLANT
Kirk W. Liederbach
Matthew A. Marsalka
Maureen C. Zink
Law Offices of Schwartz and Associates
27 N. Wacker Drive, #503
Chicago, IL 60606
FOR APPELLEE
Donshirs Development Corp.
20525 Center Ridge Rd. #626
Rocky River, OH 44116
ALSO LISTED
Cuyahoga County Treasurer
Timothy J. McGinty
Cuyahoga County Prosecutor
Michael A. Kenny, Jr.
Assistant County Prosecutor
9th Floor, Justice Center
1200 Ontario Street
Cleveland, OH 44113
TIM McCORMACK, J.:
{¶1} This case came to be heard upon the accelerated calendar pursuant to
App.R. 11.1 and Loc.R. 11.1. Plaintiff-appellant, CapitalSource Bank FBO Aeon
Financial, L.L.C. (“Aeon”), appeals the trial court’s decision dismissing Aeon’s
complaint based upon Aeon’s failure to timely perform the condition precedent to the
statutory cause of action of a tax certificate foreclosure. The trial court determined that
Aeon failed to comply with R.C. 5721.37(C)(2), as amended, in failing to file its
complaint within 120 days after receipt of the county treasurer’s certification on the
notice of intent to foreclose (“NOI”). For the reasons that follow, we reverse the
decision of the trial court.
Facts and Procedural History
{¶2} On May 23, 2008, Aeon’s predecessor, Aeon Financial L.L.C., purchased at
public auction tax certificate no. B2008-1-2013, which represented the tax delinquency
for 2005-2006 on parcel no. 671-11-141, or 14722 Strathmore Avenue, East Cleveland,
Ohio. On October 8, 2009, Aeon Financial transferred the certificate to Aeon, who then
recorded that it was the certificate holder pursuant to R.C. 5721.30(C), by filing with the
Cuyahoga County recorder.
{¶3} On October 19, 2009, Aeon, as certificate holder, filed with the Cuyahoga
County treasurer its NOI, pursuant to R.C. 5721.37(A)(1). In response to this filing, and
pursuant to R.C. 5721.37(C)(2), the treasurer certified on that same day that the certificate
parcel had not been redeemed.
{¶4} Following receipt of the certification, Aeon filed a foreclosure action
against Donshirs Development Corporation and James Rokakis, Cuyahoga County
treasurer, as Cuyahoga C.P. No. CV-709716, on November 13, 2009. This action was
involuntarily dismissed by the court on October 19, 2010, “without prejudice,” for failure
to perfect service and for failure to prosecute its claims.
{¶5} One year later, on October 19, 2011, Aeon refiled its foreclosure action in
the common pleas court, as Case No. CV-767170, availing itself of Ohio’s savings
statute, R.C. 2305.19. Aeon states that the claims and the parties in each action are
identical. The county treasurer filed its answer on November 3, 2011. Thereafter, the
matter was referred to the court magistrate.
{¶6} On March 20, 2012, Aeon filed a motion for default judgment against the
non-answering defendant, Donshirs Development Corporation. A default hearing was
held on June 5, 2012, whereby the magistrate granted Aeon leave to submit proper
authorization with respect to a signatory’s authority to assign the tax certificate. The
magistrate further ordered as follows:
The court takes under advisement the issue of whether the cause of action
accrues pursuant to R.C. 5721.37(C)(1) if the complaint is filed more than
120 days after receipt of the county treasurer’s certification on the notice of
intent to foreclose that the certificate has not been redeemed. Failure to
comply with this order may result in dismissal without prejudice.
{¶7} In compliance with the magistrate’s order, Aeon filed a timely notice of
filing affidavit of authority. Thereafter, Aeon filed a motion to disqualify the magistrate
on July 12, 2012, which was denied by the trial court judge. Prior to the court’s ruling on
Aeon’s motion to disqualify, the magistrate issued its decision dismissing Aeon’s
complaint. In its order, the magistrate concluded that Aeon failed to file its complaint
within 120 days after the county treasurer provided certification that the certificate parcel
had not been redeemed, thus concluding that the tax certificate foreclosure was not timely
brought.
{¶8} Aeon filed its objections to the magistrate’s decision on July 30, 2012.
Aeon claims that the basis for dismissal by the magistrate has previously been decided by
the court to be in error. In support of its claim, Aeon cites to another action filed by
Aeon in the common pleas court in which the trial court rejected the magistrate’s
dismissal of Aeon’s claim and found that Aeon had met all of the procedural requirements
for refiling its previous action and, thus, it revived its claim in accordance with the
savings statute.1 See CapitalSource Bank FBO Aeon Fin., L.L.C. v. Young, Cuyahoga
The magistrate in the Young case was the same magistrate in the instant action; however,
1
the trial court’s opinion vacating the magistrate’s decision in Young was issued by a different judge.
Aeon also refers to a second matter filed in the common pleas court, CapitalSource Bank FBO
Aeon Fin., LLC v. Oldwine, Cuyahoga C.P. No. CV-736525 (Sept. 5, 2012), in which, again, another
trial judge presided. In that matter, the trial court overruled the magistrate’s decision dismissing
Aeon’s complaint for the same reasons outlined in the Young case. This opinion was rendered after
Aeon filed its objections in this matter, but prior to Aeon’s appeal to this court.
Following the filing of Aeon’s objections, Aeon filed a notice of supplemental authority in
support of its objections, which provided the court with the trial court’s Oldwine decision, in addition
C.P. No. CV-736549 (Feb. 24, 2012). On September 11, 2012, the trial court in this
matter overruled Aeon’s objections and adopted the magistrate’s decision, thus dismissing
Aeon’s complaint.
Assignments of Error
I. The trial court erred in failing to apply Ohio’s savings statute, R.C.
2305.19.
II. The trial court erred in retroactively applying the amendment to R.C.
5721.37(C)(2).
III. The trial court erred in sua sponte raising and deciding defenses to
Plaintiff’s complaint that were not pled or raised by any party.
IV. The trial court erred in finding a jurisdictional bar to Plaintiff’s
claims.
Law and Analysis
{¶9} In its first assignment of error, Aeon claims that the trial court erred in
failing to apply Ohio’s savings statute. The savings statute provides as follows:
In any action that is commenced or attempted to be commenced, * * * if the
plaintiff fails otherwise than upon the merits, the plaintiff or, if the plaintiff
dies and the cause of action survives, the plaintiff’s representative may
commence a new action within one year after the date of the reversal of the
judgment or the plaintiff’s failure otherwise than upon the merits or within
the period of the original applicable statute of limitations, whichever occurs
later. * * *
R.C. 2305.19(A).
to two other cases adopting the rationale of the Young court.
{¶10} Aeon asserts that the trial court failed to apply the savings statute in
dismissing its refiled action. For the following reasons, we agree with Aeon and find
that the savings statute applies.
{¶11} Aeon purchased the tax certificate at issue on May 23, 2008. Tax
certificates are sold with a stated period of time on the face of the certificate in which a
certificate holder may pursue foreclosure. Aeon’s tax certificate states that “[t]his
certificate will be cancelled three years after the date of sale * * *.” Therefore, the
certification period of Aeon’s tax certificate is three years from May 23, 2008, its
purchase date.
{¶12} R.C. 5721.37 governs tax certificate foreclosures and provides instructions
regarding initiating such an action. Relevant to this case are two versions of this statute.
At the time Aeon purchased its tax certificate on May 23, 2008, R.C. 5721.37(C)(2)
provided:
With respect to a certificate purchased under section 5721.32, 5721.33, or
5721.42 of the Revised Code, if the certificate parcel has not been
redeemed and a notice of intent to foreclose has been filed, the county
treasurer shall provide certification to the private attorney that the parcel
has not been redeemed. * * * After receipt of that certification, the private
attorney may commence a foreclosure proceeding in the name of the
certificate holder * * *.
{¶13} In accordance with R.C. 5721.37(A)(1), Aeon filed with the county treasurer
its NOI on October 19, 2009. This statutory provision provides that the certificate holder
may file with the county treasurer a request for foreclosure or a notice of intent to
foreclose “at any time after one year from the date shown on the tax certificate as the date
the tax certificate was sold, and not later than three years after that date.” R.C.
5721.37(A)(1). In this case, that time frame would be May 23, 2009 to May 23, 2011.
The NOI, therefore, was timely filed. Additionally, in accordance with the requirements
outlined in R.C. 5721.37(C)(2), the county treasurer certified that the certificate parcel
had not been redeemed.
{¶14} Following receipt of the certification, and pursuant to the time limits
imposed by statute, Aeon then filed a foreclosure action on November 13, 2009. In
further compliance with the statute, Aeon attached a copy of the treasurer-certified NOI to
the complaint for foreclosure. See R.C. 5721.37(C)(2). Had Aeon not filed its
complaint within the certification period outlined above, its lien against the parcel would
have been canceled. R.C. 5721.37(E)(1). Aeon’s complaint was involuntarily
dismissed on October 19, 2010, without prejudice. Aeon refiled its original action in
foreclosure one year later, on October 19, 2011, availing itself of the savings statute.
{¶15} Aeon met all of the statutory requirements outlined in the statute referenced
above, prior to filing its original action. The trial court, however, in dismissing Aeon’s
refiled complaint, applied R.C. 5721.37(C)(2), as amended. The amended statute,
effective September 23, 2008, imposed a narrower time limit for filing a foreclosure:
* * *After receipt of the treasurer’s certification and not later than one
hundred twenty days after the filing of the intent to foreclose * * * the
private attorney shall commence a foreclosure proceeding in the name of
the certificate holder * * *. (Emphasis added.)
R.C. 5721.37(C)(2), amended in 2008 Am.Sub. H.B. No. 562, section eff. Sept. 23, 2008.
{¶16} The trial court determined that the statute in effect at the time Aeon initiated
its foreclosure action — by filing the NOI in October 2009 — controls. In applying the
amended statute, the trial court determined that Aeon failed to file its complaint in
foreclosure within 120 days of receiving the treasurer’s certification of the NOI. In
doing so, the trial court concluded that Aeon’s cause of action arising from its statutory
claim had not accrued, and the tax certificate foreclosure was not timely filed. The trial
court’s conclusion was predicated upon its determination that the savings statute does not
apply. We disagree, however, with the trial court’s premise.
{¶17} The savings statute operates to “save” certain timely filed actions. The
statute contemplates the right of a party “to commence a new action within one year of a
failure otherwise than on the merits.” Graf v. Cirino, 8th Dist. No. 96011,
2011-Ohio-3473, citing Cero Realty Corp. v. Am. Mfrs. Ins. Co., 171 Ohio St. 82, 167
N.E.2d 774 (1960). A dismissal is “otherwise than on the merits” when the court
dismisses a case for failure to obtain service or for failure to prosecute. Thomas v.
Freeman, 79 Ohio St.3d 221, 228, 1997-Ohio-395, 680 N.E.2d 997.
{¶18} The trial court in this case concluded that Aeon’s refiled action was not
saved by the statute. It concluded that the savings statute does not apply because the
original statute of limitations had not expired, finding that “for the savings statute to
apply, there must be a re-filing of a case that failed other than on the merits after the
applicable statute of limitations has expired.” Thus, the trial court held that because “the
current case does not meet these requirements * * *the savings statute has no
applicability.” (Emphasis sic.) We find that this conclusion is in error.
{¶19} We agree, rather, with the decision of the trial court in Oldwine, Cuyahoga
C.P. No. CV-736525; see also Young, Cuyahoga C.P. No. CV-736549. In Oldwine, a
factually similar matter also involving Aeon, the trial court found that the savings statute
applied to preserve Aeon’s properly commenced tax certificate foreclosure. The court in
that case determined as follows: (1) Aeon’s foreclosure action was properly commenced;
(2) foreclosure actions are subject to the general savings statute; and (3) it would be
improper to require Aeon to again satisfy the same procedural requirements upon refiling
the original action.
{¶20} In 2004, the general savings statute was amended to its present language,
which closes the “malpractice trap” and permits a party to refile an original action within
one year after dismissal, “or the time left under the statute of limitations, whichever is
longer.” 2 R.C. 2305.19(A); Eppley v. Tri-Valley Local School Dist., 5th Dist. No.
CT2007-0022, 2008-Ohio-32, ¶ 17, rev’d on other grounds, sub nom. Eppley v.
Tri-Valley Local School Dist. Bd. of Edn., 122 Ohio St.3d 56, 2009-Ohio-1970, 908
N.E.2d 401. As a result of the amended language, the general savings statute “no longer
Before the amendment in 2004, R.C. 2305.19 granted a plaintiff an additional year in
2
which to refile an action that was dismissed without prejudice only if the dismissal occurred after the
original statute of limitations had run. R.C. 2305.19, in essence, became known as the “malpractice
trap,” because the effect of the statute was that a plaintiff whose case was dismissed without prejudice
prior to the running of the original statute of limitations had to refile the action before the relevant
statute of limitations had run, regardless of how much time was left. Eppley at ¶ 16.
distinguishes between cases dismissed before the statute of limitations has run and those
dismissed after.” Id.
{¶21} In this case, the record reflects that Aeon filed its original cause of action
within the statutory framework, meeting all procedural requirements. Its original action,
therefore, was properly commenced in accordance with R.C. 5721.37.
{¶22} The action was dismissed, “without prejudice,” on October 19, 2010.
Availing itself of the savings statute, Aeon refiled its original action on October 19, 2011.
Aeon’s refiled cause of action satisfies the statutory requirements of R.C. 2305.19(A):
its original action was dismissed for reasons “otherwise than on the merits” and the
refiled action was filed within one year after the court’s dismissal “without prejudice.”
We find, therefore, that Aeon properly availed itself of the savings statute.
{¶23} Under the savings statute, where Aeon’s original action has been properly
commenced and all jurisdictional requirements have been satisfied, Aeon’s refiled action
retains that status upon refiling. It would be improper to require Aeon to satisfy the
same prerequisites a second time, upon refiling the same action. Thus, the trial court
erred in not applying the savings statute. Moreover, the court erred in applying R.C.
5721.37(C)(2), as amended, when it determined that Aeon failed to file its complaint in
foreclosure within 120 days of receiving the treasurer’s certification of the NOI.
{¶24} Accordingly, we find that Aeon properly “saved” its original complaint in
foreclosure. Aeon’s first assignment of error is, therefore, sustained. Having found that
the savings statute does apply and Aeon’s refiled action was timely and has met all
procedural requirements, this court need not address Aeon’s remaining arguments.
{¶25} This cause is reversed and remanded to the lower court for further
proceedings consistent with this opinion.
It is ordered that appellant recover of said appellee costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing 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.
______________________________________________
TIM McCORMACK, JUDGE
SEAN C. GALLAGHER, P.J., and
KENNETH A. ROCCO, J., CONCUR