[Cite as FCDB LBPL 2008-1 Trust v. Remely, 2013-Ohio-4960.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
GEAUGA COUNTY, OHIO
FCDB LBPL 2008-1 TRUST, : OPINION
Plaintiff-Appellee, :
CASE NO. 2012-G-3098
- vs - :
CELENE REMELY, et al., :
Defendants-Appellants. :
Civil Appeal from the Geauga County Court of Common Pleas, Case No. 11F000835.
Judgment: Affirmed.
S. Scott Martin and Bill L. Purtell, Lerner, Sampson & Rothfuss, 120 East Fourth
Street, Suite 800, P.O. Box 5480, Cincinnati, OH 45202 (For Plaintiff-Appellee).
Wendy S. Rosett, 16781 Chagrin Boulevard, Suite 304, Shaker Heights, OH 44120
(For Defendants-Appellants).
TIMOTHY P. CANNON, P.J.
{¶1} Appellants, Celene and Roger Remely, appeal the judgment of the
Geauga County Court of Common Pleas granting appellee, FCDB LBPL 2008-1 Trust’s,
motion for default judgment. On appeal, this court must determine whether the trial
court abused its discretion in denying appellants’ motion for leave to file an answer
instanter and in granting appellee’s motion for default judgment. Based on the following
reasons, we affirm the judgment of the trial court.
{¶2} Appellee filed a complaint in foreclosure on August 5, 2011, based upon
default in payment on a note and mortgage executed by appellants. Service of the
summons and complaint was perfected on August 12, 2011. On September 2, 2011,
appellants filed a pro se motion for extension of time to file a responsive pleading, as
appellants desired to secure legal counsel before filing an answer. The trial court
granted appellants an extension until September 30, 2011. On October 31, 2011,
appellants, then represented by counsel, filed an answer. This answer was
subsequently stricken from the record as it was filed after the September 30, 2011
deadline.
{¶3} On December 28, 2011, appellee moved for default judgment. On
January 6, 2012, appellants filed a motion for leave to plead instanter. The trial court
set both appellants’ motion for leave and appellee’s motion for default judgment for
hearing on March 12, 2012. That entry stated:
The Plaintiff does not object to the Court’s granting of the
Defendant’s Motion for Leave to File an Answer Instanter so long
as the Defendants participate timely and in good faith with a
mediation procedure. The Defendants must provide the information
necessary for the Plaintiff to make a meaningful decision as to
whether or not a negotiated resolution of the matter can be
accomplished. This includes completion of its financial packet that
it routinely provides homeowners in a work-out situation.
The Defendants are willing to cooperate and wish to enter into the
agreement. Both parties thereupon agreed that the case be
referred to mediation and stayed. The stay is conditioned upon the
Defendants cooperating with the mediation procedure and
providing timely information, as aforesaid. Providing that they do
so, the Motion for Leave to File an Answer Instanter will be granted.
{¶4} On May 24, 2012, the trial court issued a judgment finding the case not
appropriate for mediation, as appellants failed “to cooperate with mediation procedures
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and [failed] to provide information.” The trial court denied appellants’ request for
mediation and leave to file an answer.
{¶5} Subsequently, the trial court issued a judgment on June 4, 2012, granting
appellants 21 days to respond to appellee’s motion for default judgment. That order
indicated the court may enter an order without an oral hearing.
{¶6} On June 26, 2012, appellants filed a “motion for leave to file a brief in
opposition to plaintiff’s motion for default, instanter.” The trial court granted appellants’
motion. In that brief, appellants argued that although an answer had not been formally
filed, they had not “failed to plead or otherwise defend,” and therefore, a default
judgment was not appropriate.
{¶7} The trial court granted appellee’s motion for default judgment. In its July
16, 2012 judgment entry, the trial court outlined the history of the instant case noting
that appellants had not filed a timely answer despite being granted an extension. The
trial court indicated that both appellee’s motion for default judgment and appellants’
motion for leave to plead were heard on March 12, 2012. “On the same day the Court
entered an order which premised the granting of leave to answer upon Defendant
‘cooperating with the mediation procedure and providing timely information.’” Yet,
appellants failed to cooperate with the mediation process, as verified by the affidavit of
Christopher Horn, the Geauga County Common Pleas Court Foreclosure Mediator.
Consequently, the trial court granted appellee’s motion for default judgment.
{¶8} The matter was stayed pending appeal.
{¶9} On appeal, appellants assign the following errors:
[1.] The trial court erred to the prejudice of Appellants and abused
its discretion by denying Appellants’ Motion for Leave to Plead
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Instanter, striking their Answer from the Record, and granting
Default Judgment in favor of Appellee, particularly without the
benefit of a full evidentiary hearing.
[2.] The Record is clear and convincing that the trial court erred and
abused its discretion by granting Appellee’s Motion for Default on
the Foreclosure Complaint.
{¶10} We address appellants’ assigned errors in a consolidated fashion.
Appellants first argue the trial court erred by denying their motion for leave to plead
instanter. A trial court is granted discretion in permitting a party to file a pleading
outside of the time guidelines as set forth in the Civil Rules. Civ.R. 6(B)(2) allows for an
extension of time to file a late pleading within the trial court’s discretion “upon motion
made after the expiration of the specified period * * * where the failure to act was the
result of excusable neglect.”
{¶11} Here, appellants, acting pro se, requested an extension of time to file an
answer, which was granted. Therefore, appellants had until September 30, 2011, to
answer or otherwise plead. It is undisputed that appellants failed to timely file their
answer or responsive pleading. In fact, it was not until October 31, 2011, that
appellants, then represented by counsel, attempted to file their answer. At the time of
filing, appellants did not file a written motion setting forth grounds of excusable neglect
for not filing their answer by the extended deadline of September 30, 2011. Civ.R.
6(B)(2).
{¶12} Thereafter, appellants filed a motion for leave to answer instanter. In that
motion, appellants made the conclusory statement that they “can show excusable
neglect.” Even though appellants failed to set forth any facts indicative of excusable
neglect in their motion, the trial court, after a hearing, conditioned the granting of their
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motion on appellants’ cooperation with the mediation process. Appellants voluntarily
agreed to cooperate and engage in mediation as a condition for granting their motion for
leave to answer instanter. As a result, the trial court, as agreed to by the parties, was in
a position to monitor the mediation process.
{¶13} As demonstrated by the record, appellants failed to provide timely financial
disclosures, despite the trial court’s reminder to appellants’ attorney that the required
financial disclosures had not been received by the court.
{¶14} Based on the circumstances of this case and the fact that a Civ.R. 6(B)
determination lies within the trial court’s sound discretion, we cannot say the trial court
erred in denying appellants’ motion for leave to plead instanter. It was within the trial
court’s discretion to deny the motion, and we find such a conclusion was not an abuse
of discretion.
{¶15} Next, appellants argue it was error for the trial court to grant appellee’s
motion for default judgment without first holding a full evidentiary hearing. The record,
however, demonstrates that appellants received both notice and a hearing on appellee’s
default judgment motion.
{¶16} Here, appellee does not dispute the fact that appellants made an
appearance, as contemplated by Civ.R. 55, which provides, in pertinent part:
When a party against whom a judgment for affirmative relief is
sought has failed to plead or otherwise defend as provided by these
rules, the party entitled to a judgment by default shall apply in
writing or orally to the court therefor * * *. If the party against whom
judgment by default is sought has appeared in the action, he (or, if
appearing by representative, his representative) shall be served
with written notice of the application for judgment at least seven
days prior to the hearing on such application.
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{¶17} As appellants made an appearance in the instant action, notice and a
hearing were required prior to granting default judgment. Civ.R. 55(A). As evidenced
by the trial court’s order of January 12, 2012, appellants were advised that a hearing on
appellee’s motion for default judgment was set for March 12, 2012, at 9:00 a.m. The
record further reflects, contrary to appellants’ assertion, that a hearing on appellee’s
default judgment motion took place on said date. Appellants, however, have failed to
provide this court with a transcript of those proceedings.
{¶18} On appeal, appellants also attack the allegations of appellee’s complaint,
stating, inter alia, that appellee has failed to assert it was the real party in interest and
that appellee does not have standing or has not possessed the required authority, title,
interests, and/or rights. Challenges to the substance of a plaintiff’s complaint on appeal
from a trial court’s granting of default judgment are procedurally precluded. “A
defendant’s right to force a plaintiff to prove his or her claim depends on the defendant’s
compliance with the Civil Rules and the timely filing of an answer to the complaint.
Otherwise, the sanctions for noncompliance would lose their deterrent effect.” Davis v.
Immediate Medical Serv., Inc., 80 Ohio St.3d 10, 15 (1997).
{¶19} Despite appellants’ arguments regarding the substance of appellee’s
complaint, appellee attached to its complaint both the mortgage and the applicable
assignments to establish standing to sue. See Fed. Home Loan Mtge. Corp. v.
Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, ¶38-39. (“Standing is required to
invoke the jurisdiction of the common pleas court. * * * Accordingly, a litigant cannot
pursuant to Civ.R. 17(A) cure the lack of standing after commencement of the action by
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obtaining an interest in the subject of the litigation and substituting itself as the real party
in interest.”)
{¶20} Appellants argued below, and now argue on appeal, that appellee is not
the holder of the note and therefore lacks standing. Appellee was required to establish
that it is the current holder of the note or mortgage in order to establish itself as the real
party in interest. Federal Home Loan Mtge. Corp. v. Rufo, 983 N.E.2d 406, 2012-Ohio-
5930, ¶18 (11th Dist.).
{¶21} Here, appellee established that it was the holder of the note and mortgage
prior to the complaint being filed. See Schwartzwald, supra (holding that standing is
required to present a justiciable controversy and is a jurisdictional requirement). 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.”
{¶22} The note at issue was bearer paper; therefore, “it may be negotiated by
transfer of possession alone.” R.C. 1303.21(B). Appellee also attached to the
complaint copies of the note and mortgage, as well as a copy of the recorded
Assignment of Mortgage from Home Savings to appellee, executed July 27, 2009, and
recorded three days thereafter.
{¶23} Thus, appellee was presumptively entitled to invoke the jurisdiction of the
common pleas court as the real party in interest.
{¶24} Appellants’ assignments of error are without merit. The judgment of the
Geauga County Court of Common Pleas is hereby affirmed.
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THOMAS R. WRIGHT, J., concurs,
COLLEEN MARY O’TOOLE, J., dissents with a Dissenting Opinion.
____________________
COLLEEN MARY O’TOOLE, J., dissents with a Dissenting Opinion.
{¶25} The trial court conditioned granting appellants’ motion for leave to answer
instanter upon them cooperating in the mediation process. After the mediator reported
appellants’ failure to cooperate, the trial court denied appellants’ motion for leave to
answer instanter. Subsequently the trial court granted appellee’s motion for default
judgment.
{¶26} In response to Ohio’s foreclosure crisis, the General Assembly granted
trial courts discretionary power to require parties to a foreclosure to participate in
mediation. R.C. 2323.06 provides, “In an action for the foreclosure of a mortgage, the
court may at any stage in the action require the mortgagor and the mortgagee to
participate in mediation * * * [.]” (Emphasis added.) Nowhere in the statute does it state
that a court also has the power to require that participants waive confidentiality of the
mediation process.
{¶27} The majority implies that by agreeing to the conditions of mediation,
appellants waived the confidentiality of mediation communications under R.C. 2710.06.
However, the trial court’s power to require that parties participate under R.C. 2323.06
necessarily means the parties have no ability to agree or disagree with a mediation
order. How is a party to register their disagreement with the conditions of mediation
when they have no ability to disagree with the decision ordering mediation? The
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majority decision implies that as parties can be required to participate in mediation, they
can also be required to accept additional conditions imposed by a court—including
waiver of confidentiality.
{¶28} While R.C. 2323.06 grants trial courts the power to require parties to
participate in mediation, R.C. 2710.06(A) specifically prohibits a mediator from making
“a report, assessment, evaluation, recommendation, finding, or other communication
regarding mediation to a court * * *.” And R.C. 2710.06(C) states that communications
made in violation of division (A) “shall not be considered by a court * * *.” The statutory
language regarding waiver of mediation privilege is contained in R.C. 2710.04.
Specifically, R.C. 2710.04(A) states that the privilege “* * * may be waived in a record or
orally during a proceeding if it is expressly waived * * *.” (Emphasis added.) As a
general rule, specific statutes prevail over general statutes. R.C. 1.51; State ex rel.
Slagle v. Rogers, 103 Ohio St.3d 89, 2004-Ohio-4354, ¶14.
{¶29} The March 12, 2012 order of the trial court outlines that if appellants
cooperated with the mediation procedures and provided timely information, that the
motion for leave to answer instanter would be granted. What this order does not
contain is any record of an express waiver of confidentiality by any party.
{¶30} The Ohio General Assembly adopted the Uniform Mediation Act in R.C.
Chapter 2710. R.C. 2710.02(A)(1) states that the provisions of the act are applicable to
situations in which the parties to a civil action have been either referred to mediation by
a court order or required to engage in mediation by a court rule.
{¶31} In addition to setting forth provisions governing whether communications
made during the mediation process are privileged, R.C. Chapter 2710 delineates rules
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which expressly limit the substance of a mediator’s report. Specifically, R.C. 2710.06(A)
prohibits a mediator from making “a report, assessment, evaluation, recommendation,
finding, or other communication regarding a mediation” to the court that may ultimately
have to dispose of the underlying dispute in the case. In regard to possible items which
may be discussed in a mediator’s report, subsection (B) of that statute provides:
{¶32} “(B) A mediator may disclose any of the following:
{¶33} “(1) Whether the mediation occurred or has terminated, whether a
settlement was reached, and attendance.”
{¶34} In applying this provision, this court has consistently held that the statute
does not permit a mediator to inform the trial court of the behavior of a party during the
course of a mediation. JPMorgan Chase Bank, N.A. v. Hunter, 11th Dist. Portage No.
2011-P-0063, 2012-Ohio-5222, ¶20; Anthony v. Andrews, 11th Dist. Portage No. 2008-
P-0091, 2009-Ohio-6378, ¶5. In Anthony, this court reversed the imposition of
sanctions, holding that the trial court had erred in basing its decision upon a
communication from the mediator. Id. at ¶23. In addition to concluding that trial
counsel’s statement to the mediator was privileged under R.C. 2710.03, this court
expressly held that the substance of the statement could not be conveyed to the trial
court through a written report from the mediator. Id. at ¶22. Citing R.C. 2710.06(C), this
court indicated that, while the mediator could disclose to the trial court that the
mediation was terminated, he could not disclose the reason why no settlement had
been reached. Id.
{¶35} The trial court in this matter may have intended that appellants waive
confidentiality of the mediation process in order to obtain the benefit of having their
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motion for leave to answer instanter granted. Regardless, R.C. 2710.04(A) clearly
requires that such waiver be made expressly and not inferred from the conduct of the
parties. Without an express waiver, the communication from the mediator to the trial
court was in violation of the statute.
{¶36} The trial court based its decision to deny appellants’ motion for leave to
answer instanter on an improper communication from the mediator. The subsequent
granting of appellee’s motion for default judgment flowed directly from the denial of
appellants’ motion for leave to answer instanter. I would reverse the granting of the
motion for default judgment and remand this matter to the trial court for further
proceedings.
{¶37} Thus, I respectfully dissent.
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