[Cite as Fannie Mae v. Trahey, 2013-Ohio-3071.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN )
FANNIE MAE ("FEDERAL NATIONAL C.A. No. 12CA010209
MORTGAGE ASSOCIATION")
Appellee
APPEAL FROM JUDGMENT
v. ENTERED IN THE
COURT OF COMMON PLEAS
KELLY ANN TRAHEY, et al. COUNTY OF LORAIN, OHIO
CASE No. 11CV172390
Appellants
DECISION AND JOURNAL ENTRY
Dated: July 15, 2013
WHITMORE, Judge.
{¶1} Appellant, Robert Trahey, appeals from the judgment of the Lorain County Court
of Common Pleas. This Court reverses.
I
{¶2} In May 2008, Robert and Kelly Ann Trahey executed a promissory note in favor
of Sirva Mortgage, Inc. (“Sirva”) to purchase a property in North Ridgeville, Ohio. At the same
time, the Traheys signed a mortgage granting a security interest in the property to Mortgage
Electronic Registration Systems, Inc. (“MERS”) acting solely as nominee for Sirva. In May
2011, MERS assigned the mortgage to Federal National Mortgage Association (“Fannie Mae”).
{¶3} In June 2011, Fannie Mae filed a complaint for foreclosure against the Traheys.
Fannie Mae listed the Traheys, their unknown spouses, and Waterbury Homeowners Association
as defendants. Attached to its complaint, Fannie Mae included copies of the promissory note and
mortgage executed in favor of Sirva and a copy of the assignment of mortgage from MERS to
2
Fannie Mae. Sirva had indorsed the promissory note in blank. There is no indication of when
this indorsement was made.
{¶4} In September 2011, Fannie Mae filed an amended complaint “to attach the fully
negotiated note with all [i]ndorsements.” The promissory note attached showed Sirva had
indorsed the note to CitiMortgage, Inc. and that CitiMortgage, Inc. had indorsed the note in
blank. Unlike the note attached to the original complaint, this copy of the note did not include an
indorsement from Sirva in blank. There are no dates associated with either of the indorsements.
{¶5} Fannie Mae filed a motion for summary judgment, which Robert Trahey opposed,
arguing that there is a genuine issue of material fact as to whether Fannie Mae had standing to
maintain the action. A magistrate issued a decision recommending the court grant default
judgment against Kelly Ann Trahey, the unknown spouses of both Kelly Ann and Robert Trahey,
and the Waterbury Homeowners Association for failure to file an answer or other responsive
pleading. The magistrate further recommended that the court grant the motion for summary
judgment. That same day, the trial court adopted the magistrate’s decision. Robert Trahey now
appeals and raises two assignments of error for our review.
II
Assignment of Error Number One
THE TRIAL COURT COMMITTED PREJUDICIAL ERROR WHEN IT
GRANTED THE MOTION FOR SUMMARY JUDGMENT WITHOUT
SUMMARY JUDGMENT EVIDENCE DEMONSTRATING THAT FANNIE
MAE WAS THE REAL PARTY IN INTEREST ENTITLED TO ENFORCE
THE NOTE AND THE MORTGAGE.
{¶6} In his first assignment of error, Trahey argues that the court erred in granting
summary judgment in favor of Fannie Mae because it did not establish that it had standing to
maintain the foreclosure action.
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{¶7} To prevail on a motion for summary judgment, the moving party must show:
(1) there is no genuine issue of material fact; (2) the moving party is entitled to
judgment as a matter of law; and (3) it appears from the evidence that reasonable
minds can come to but one conclusion when viewing evidence in favor of the
nonmoving party, and that conclusion is adverse to the nonmoving party.
Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105 (1996).
{¶8} An action may only be brought by the real party in interest. See Civ.R. 17(A).
“[A] party lacks standing to invoke the jurisdiction of the court unless he has, in an individual or
representative capacity, some real interest in the subject matter of the action.” (Emphasis
deleted.) Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, ¶
22, quoting State ex rel. Dallman v. Franklin Cty. Court of Common Pleas, 35 Ohio St.2d 176,
179 (1973). Standing is determined at the time the complaint is filed. Schwartzwald at ¶ 3.
{¶9} “In foreclosure actions, the real party in interest is the current holder of the note
and mortgage.” U.S. Bank, N.A. v. Richards, 189 Ohio App.3d 276, 2010-Ohio-3981, ¶ 13 (9th
Dist.), quoting Everhome Mtge. Co. v. Rowland, 10th Dist. Franklin No. 07AP-615, 2008-Ohio-
1282, ¶ 12. Thus, if a bank seeks to foreclose it must establish that, at the time of the filing of
the complaint, it was the holder of the note and mortgage. Obtaining a subsequent assignment of
a promissory note and mortgage from the real party in interest does not cure a lack of standing.
Schwartzwald at ¶ 3.
{¶10} One of the persons entitled to enforce a negotiable instrument is the holder of that
instrument. R.C. 1303.31(A)(1). If the instrument has been indorsed in blank, “the instrument
becomes payable to bearer and may be negotiated by transfer of possession alone” until specially
indorsed. R.C. 1303.25(B). An instrument that is specially indorsed is one that identifies a
specific payee, and “may be negotiated only by the indorsement of that person.” R.C.
1303.25(A).
4
{¶11} Here, Fannie Mae filed two copies of the promissory note, each containing
different indorsements. The first note, attached to the original complaint, was indorsed by Sirva
to blank. Therefore, Fannie Mae could have established that it was the real party in interest by
proving that it had possession of the note. See R.C. 1303.25(B). However, a second copy of the
promissory note, attached to the amended complaint, reflects that Sirva indorsed the note to
CitiMortgage, and CitiMortgage indorsed the note to blank. Neither copy indicates when the
various indorsements were made.
{¶12} The inconsistencies between the indorsements contained in the two copies of the
promissory notes raises a genuine issue of material fact. In reviewing the record, we cannot
determine what the status of the note was at the time the complaint was filed. Because there is a
genuine issue of material fact as to whether Fannie Mae was a holder of the promissory note at
the time the complaint was filed, the court erred in granting Fannie Mae’s motion for summary
judgment. Accordingly, Trahey’s first assignment of error is sustained.
Assignment of Error Number Two
THE TRIAL COURT COMMITTED PREJUDICIAL ERROR WHEN IT
GRANTED THE SUMMARY JUDGMENT WITHOUT SUMMARY
JUDGMENT EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT.
{¶13} In his second assignment of error, Trahey argues that the trial court erred in
granting Fannie Mae’s motion for summary judgment because it had failed to establish that it
had fulfilled its obligations of notice and acceleration. In light of our resolution of Trahey’s first
assignment of error, this argument is not ripe for review and we decline to address it.
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III
{¶14} Trahey’s first assignment of error is sustained. His second assignment of error is
not yet ripe for review. The judgment of the Lorain County Court of Common Pleas is reversed,
and the cause is remanded for further proceedings consistent with the foregoing opinion.
Judgment reversed,
and remanded.
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 Lorain, 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 Appellee.
BETH WHITMORE
FOR THE COURT
BELFANCE, P. J.
HENSAL, J.
CONCUR.
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APPEARANCES:
JOHN J. GILL and GEOFFREY R. SMITH, Attorneys at Law, for Appellant.
EDWARD KOCHALSKI, Attorney at Law, for Appellee.