Wells Fargo Bank, N.A. v. Myers

[Cite as Wells Fargo Bank, N.A. v. Myers, 2015-Ohio-4212.]

IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
FULTON COUNTY

Wells Fargo Bank, N.A. Court of Appeals No. F-14-011

Appellee Trial Court No. 12CV000324

v.

Jill T. Myers, et al. DECISION AND JUDGMENT

Appellants Decided: October 9, 2015

*****

Scott A. King and Terry W. Posey, Jr., for appellee.

George C. Rogers, for appellants.

*****

JENSEN, J.

{¶ 1} Defendants-appellants, Jill T. Myers and Darwin Myers, appeal the

October 6, 2014 judgment of the Fulton County Court of Common Pleas denying their

motion to vacate the January 10, 2013 judgment entry of default in favor of plaintiff-

appellee, Wells Fargo Bank, N.A. For the reasons that follow, we affirm the trial court’s

judgment.
 I. Background

{¶ 2} On May 27, 2003, the Myers executed a note and an accompanying

mortgage in connection with the purchase of their home. Wells Fargo is the current

holder of the note and mortgage. On November 19, 2012, Wells Fargo filed a complaint

in foreclosure after the Myers defaulted on their payment obligations. The Myers were

served with the complaint on November 20, 2012.

{¶ 3} The Myers failed to file an answer, and on January 7, 2013, the bank moved

for default judgment. The trial court granted the bank’s motion in a judgment entry and

decree of foreclosure journalized on January 10, 2013. The property was sold at sheriff’s

sale on July 11, 2013, and on August 22, 2013, the trial court journalized a confirmation

entry of sale and distribution of proceeds.

{¶ 4} The bank filed an alias praecipe for writ of possession on February 26, 2014.

On March 5, 2014, citing Civ.R. 60(B)(2) and (3) and 59(B), the Myers filed a motion to

stay writ of possession and motion to vacate sale pending determination of a federal

action. In that motion, the Myers claimed that they had filed an action in the United

States District Court for the Northern District of Ohio alleging violations of the federal

Truth-in-Lending and Real Estate Settlement Procedures Acts, in addition to civil RICO

violations. They accused the bank of fraudulent mortgage assignments and claimed that

it had no valid interest in the note and, therefore, no standing to institute foreclosure

proceedings.

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 {¶ 5} The bank filed a memorandum opposing the Myers’ motion on March 7,

2014. It asserted that the Myers had not, in fact, filed a federal action and it challenged

their motion as untimely. The bank claimed that the Myers lacked standing to challenge

the assignment of the mortgage, that it was the real party in interest to prosecute the

foreclosure action, that any alleged federal claims were compulsory counterclaims that

were required to be brought in the foreclosure action, that there existed no new evidence

to support a Civ.R. 60(B)(2) motion, and that there existed no evidence of fraud as

required to support a Civ.R. 60(B)(3) motion.

{¶ 6} On March 7, 2014, the trial court denied the Myers’ motion as untimely, and

agreed that there was no evidence that a federal action had been filed, thus the motion for

stay was unwarranted. It directed the sheriff to proceed with the writ of execution.

{¶ 7} On August 1, 2014, counsel entered an appearance on the Myers’ behalf for

the first time. Counsel filed a motion to vacate the judgment and decree of foreclosure

and sheriff’s sale, and for leave to file an answer. In their motion, they claimed that in

August or September of 2012, they encountered difficulty in paying their mortgage and

were contacted by Wells Fargo about applying for a loan modification. They completed

the application and provided all documents requested by the bank. They repeatedly told

the bank’s representative, Josephine Arku, that they intended to stay in the home. By

November of 2012, the Myers’ calls to Arku went to voice mail and were never returned.

On November 19, 2012, the bank filed its foreclosure complaint.

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 {¶ 8} According to the Myers’ motion, Mrs. Myers contacted the bank’s attorney,

Melissa Hamble, upon being served on November 20, 2012. Mrs. Myers informed

Hamble that they had applied for a loan modification and were awaiting approval. Mrs.

Myers asked Hamble what she should do and Hamble responded that she could not

provide legal advice. Hamble asked Mrs. Myers if they intended to stay in the home, and

she responded affirmatively. Despite this conversation, on January 8, 2013, the bank

filed its motion for default judgment, never indicating that it had been contacted by Mrs.

Myers or that it had been advised of the Myers’ efforts to avoid foreclosure. The motion

was granted by the court the following day without a hearing and without notice to the

Myers.

{¶ 9} The Myers argued that the default judgment was void because notice was

not provided as required by Civ.R. 55(A). They insisted that their phone call to Hamble,

albeit not a formal appearance, constituted an appearance such that the bank was required

to provide seven days’ notice. Alternatively, they argued that the elements of Civ.R.

60(B) were met. The Myers also claimed that the certificate of service on their motion

for default was not in compliance with Civ.R. 5(D) and they maintained that they had at

least one good and sufficient defense to the bank’s complaint because the bank failed to

perform the conditions precedent to foreclose and accelerate the note.

{¶ 10} The bank opposed the Myers’ motion. It argued that a single phone call,

which Hamble did not even recall taking place, was insufficient to invoke the Civ.R.

55(A) notice requirement. It also argued that because the Myers had filed a pleading in

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March of 2014 to vacate the sale and challenge the foreclosure, res judicata barred their

new challenge to the judgment. Finally, it again contended that the Myers’ motion was

untimely under Civ.R. 60(B).

{¶ 11} The Myers filed a reply brief, arguing that the failure to comply with

Civ.R. 55(A) rendered the judgment void and subject to direct and collateral attack at any

time and in any proceeding.

{¶ 12} On September 17, 2014, the trial court conducted a hearing on the Myers’

motion and heard testimony from Mrs. Myers and from Hamble. Mrs. Myers testified

that she lost her job in October of 2010 and fell behind on her mortgage in 2011. She

contacted Wells Fargo about a loan modification in August of 2012 and spoke to Arku,

who said she would put a loan modification package together for her. Myers completed

the application and provided a number of documents. Arku requested the same

documents a second time, and Mrs. Myers provided them. She received the foreclosure

complaint on November 20, 2012, and, according to cell phone records she produced at

the hearing, she called Hamble on November 21, 2012. The call lasted 16 minutes, most

of which she spent on hold. Upon speaking with Hamble, Mrs. Myers told her that she

had a loan modification in progress. Hamble responded that she could not provide legal

advice because she represented the bank.

{¶ 13} Mrs. Myers contacted Wells Fargo but could not get a hold of Arku despite

leaving approximately 20 messages. She spoke with other loan modification specialists

who told her that she needed to speak directly to Arku. She received a letter from the

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bank dated February 25, 2013, thanking her for sending documentation regarding her

request for mortgage assistance and instructing her to call. She received another letter

two days later asking for paperwork that she had already submitted, and yet another letter

dated March 8, 2013, identifying a new representative, Troy Whitted. She called Whitted

and he informed her that Arku had not been with the company for several months.

Whitted told Mrs. Myers that their paperwork was outdated and need to be resubmitted.

Mrs. Myers complied.

{¶ 14} The Myers received a notice in April of 2013 that a judgment of

foreclosure had been entered, however they also received a letter dated May 10, 2013,

indicating that the bank needed additional documentation to evaluate her eligibility for

mortgage assistance. Mrs. Myers testified that she believed that the foreclosure action

had been mistakenly filed and that Wells Fargo would get it straightened out. She

indicated that the sheriff’s sale had been put on hold twice and she was told that the bank

would put a hold on the property and ultimately modify the loan.

{¶ 15} On cross-examination, Mrs. Myers conceded that the complaint contained

bolded language warning that she must respond, that she did not seek counsel at that

time, and she never called around or asked anyone how to defend the case, despite being

told by Hamble that she could not provide advice. She acknowledged that she did not tell

Hamble that she intended to seek counsel, they did not discuss the complaint, and she did

nothing to stop the foreclosure other than calling Wells Fargo. She continued to receive

notices from the court captioned Wells Fargo v. Myers, but filed nothing until early 2014.

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When she did file with the court in early 2014, she made no mention of the phone call

with Hamble. She agreed that she was never granted a permanent loan modification.

{¶ 16} The bank presented testimony from Hamble. Hamble testified that she

does not recall speaking with Mrs. Myers and that her file notes contain no indication that

a conversation ever occurred. She said that it was her practice to consent to a 30-day

extension of time, if requested, but the Myers sought no such extension.

{¶ 17} On cross-examination, Hamble testified that her file did not indicate that

there was a pending loan modification application. The first time she became aware of

this was after the judgment when the bank asked her to cancel the sale because of a loss

mitigation. She said that when she is informed that there is a pending loss mitigation, her

practice is to put the file on hold and not proceed with the case, even without the bank’s

approval. She conceded that under Consumer Financial Protection Bureau (“CFPB”)

regulations, she is not permitted to proceed with a case upon learning that there is a

completed application for loan modification.

{¶ 18} At the hearing, the Myers offered a copy of a consent order entered into

between Wells Fargo and the U.S. Comptroller of Currency in April of 2011, agreeing to

notify a borrower of the bank’s final decision on an application for a permanent loan

modification within a reasonable period before proceeding with a foreclosure sale. The

trial court excluded the document because it had not been properly authenticated and was

not germane to the Civ.R. 55(A) issue before it.

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 {¶ 19} In a judgment entry journalized on October 6, 2014, the trial court denied

the Myers’ motion. It framed the issues before it as follows: (1) whether Mrs. Myers’

contact with Hamble constituted an “appearance” sufficient to invoke the notice

requirements of Civ.R. 55(A); and (2) if the Civ.R. 55(A) notice requirement was

invoked and not properly provided, was the January 9, 2013 judgment void or merely

voidable. It held that the single phone call did not constitute an “appearance.” Based on

this determination, it concluded that the issue of whether the judgment was void or

merely voidable need not be reached.

{¶ 20} The Myers appealed the trial court’s October 6, 2014 judgment. They

assign the following error for our review:

The Trial Court Erred in overruling the Myers [sic] Motion to

Vacate the (Default) Judgment of January 9, 2013.

They identify the issues presented as follows:

1. Does a phone call to a foreclosing bank’s counsel advising said

counsel that the debtor’s [sic] had a completed loan modification request

pending with the bank constitute an appearance to invoke the notice

requirement of Civ.R. 55(A) when said Bank has previously signed a

consent decree with the Comptroller of Currency to not institute foreclosure

proceedings when a homeowner had a loan modification request pending?

2. Does a foreclosing bank have notice of intent to oppose

foreclosure as a matter of law, that is imputable to its Attorney’s [sic] when

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 said bank has previously entered into a consent decree with the Comptroller

of Currency not to institute foreclosure proceedings when a homeowner has

a pending loan modification request to it, and such a loan modification

request has been submitted?

II. Law and Analysis

{¶ 21} Civ.R. 55(A) entitles a party to apply for a judgment by default where the

party against whom relief is sought has failed to plead or otherwise defend against the

complaint. The rule requires that “[i]f the party against whom judgment by default is

sought has appeared in the action, he * * * shall be served with written notice of the

application for judgment at least seven days prior to the hearing on such application.”

Civ.R. 55(A). Civ.R. 55(B) permits a court to set aside a default judgment in accordance

with Rule 60(B). However, “if a judgment is void, the trial court has the inherent power

to vacate the judgment, and a party need not seek relief under Civ.R. 60(B).”

CitiMortgage, Inc. v. Bumphus, 197 Ohio App.3d 68, 2011-Ohio-4858, 966 N.E.2d 278,

¶ 22 (6th Dist.), citing Patton v. Diemer, 35 Ohio St.3d 68, 70, 518 N.E.2d 941 (1988).

The court may vacate a void judgment at any time. CitiMortgage, Inc. v. Fishel, 7th Dist.

Mahoning No. 11MA97, 2012-Ohio-4117, ¶ 6, citing Westmoreland v. Valley Homes

Corp., 42 Ohio St.2d 291, 294, 328 N.E.2d 406 (1975).

{¶ 22} As the trial court identified, we must determine whether the Myers, in fact,

“appeared,” thereby requiring the bank to provide seven days’ written notice prior to the

hearing on its motion for default judgment. If they did appear, we must determine

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whether the failure to provide seven days’ notice rendered the judgment void such that

the judgment may be vacated without regard to the requirements of Civ.R. 60(B).

{¶ 23} The Myers claim that in light of the consent decree between the bank and

the Comptroller of Currency, under which the bank agreed not to institute foreclosure

proceedings when a homeowner has a pending loan modification application, Mrs.

Myers’ call to the bank’s attorney advising her of their pending loan modification

application constituted an appearance.

{¶ 24} The bank counters that when Mrs. Myers contacted its attorney, she did not

express an intention to defend. It argues that the consent decree does not serve as

evidence demonstrating an intention to defend because (1) the trial court excluded

evidence of the consent decree and the Myers did not appeal that decision, (2) there is no

case law suggesting that an agreement between a plaintiff and a governmental entity can

constitute an appearance by a defendant, and (3) the Myers lack standing to invoke the

consent decree in their defense. The bank also argues that res judicata barred the Myers

from arguing that they had “appeared” because they failed to raise this in their motion

filed on March 5, 2014. The Myers deny that res judicata applies because their initial

motion was a motion to stay proceedings—not a motion to vacate. They also assert that

the motion at issue was not a Civ.R. 60(B) motion, but was instead a request that the trial

court exercise its inherent power to vacate a void judgment.

{¶ 25} We first address whether Mrs. Myers’ single phone call to the bank’s

attorney constituted an “appearance.” For purposes of Civ.R. 55(A), an “appearance” is

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an overt action clearly expressing an intention and purpose to defend against a lawsuit.

AMCA Internatl. Corp. v. Carlton, 10 Ohio St.3d 88, 91, 461 N.E.2d 1282 (1984). In

construing the notice provisions of Civ.R. 55(A), Ohio courts liberally interpret the term

“appeared.” BancOhio Natl. Bank v. Mager, 47 Ohio App.3d 97, 98, 547 N.E.2d 383

(10th Dist.1988). “[T]he determination of whether a party has appeared in an action for

the purposes of Civ.R. 55(A) notice requirements does not necessarily hinge on whether a

formal filing was made with the court.” Miamisburg Motel v. Huntington Natl. Bank, 88

Ohio App.3d 117, 125-26, 623 N.E.2d 163 (2d Dist.1993). A party will be said to have

appeared in the action when that party clearly expresses to the opposing party an

intention to defend the suit. Id. No formal filing is required. Id.

{¶ 26} In support of their position, the Myers rely on the Ohio Supreme Court’s

decision in AMCA Internatl. Corp. There the plaintiff filed its complaint on August 13,

1982. Id. at 88. On September 28, 1982, a legal assistant employed by defendant’s law

firm called plaintiff’s counsel after learning from the clerk of courts that a complaint had

been filed. Id. at 89. Plaintiff’s counsel agreed to send a copy of the complaint to the law

firm so that an answer could be filed. Id. On September 29, 1982, the legal assistant

received the complaint, and he believed from his phone conversation with plaintiff’s

counsel that a reasonable time would be afforded for an answer to be filed. Id. The firm

filed the defendant’s answer seven days later. Id. However, on October 5, 1982, plaintiff

filed a motion for default judgment, granted by the trial court the next day. Id. at 88.

Defense counsel learned that the default judgment had been entered via a letter from

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plaintiff’s counsel dated October 18, 1982. Id. at 89. Defendant moved to set aside the

default judgment, but the court denied the motion. Id. Defendant appealed, arguing that

it was entitled to notice under Civ.R. 55(A) because it had entered an appearance. Id. at

90. The Supreme Court held that plaintiff had been made sufficiently aware of

defendant’s intention to defend the lawsuit by virtue of the telephone conversation

between plaintiff’s counsel and the legal assistant, therefore, the defendant had

“appeared” for purposes of Civ.R. 55(A). Id.

{¶ 27} The Myers also cite to our decision in Chiaverini v. Little, 6th Dist. Lucas

No. L-06-1344, 2007-Ohio-3683, for the proposition that a telephone call to counsel of

the foreclosing party is sufficient to constitute an appearance for purposes of Civ.R

55(A). In Chiaverini, we rejected the plaintiff’s argument that defendant had not entered

an appearance in the case, noting that the parties’ attorneys had communicated with each

other on three separate occasions before plaintiff filed its motion for default judgment.

Id. at ¶ 15. Chiaverini is not analogous to the present case, however, because the lawsuit

at issue there was a re-filed action, there was a second action pending between the parties

in federal court, and the parties had negotiated a settlement agreement that may or may

not have been binding. Id. at ¶ 3-5.

{¶ 28} Here, Mrs. Myers told counsel for the bank that she had a loan modification

in progress, but she conceded that the one phone call to counsel was the only action she

took. She acknowledged that Hamble told her that she could not provide advice and that

she and Hamble did not discuss the complaint. Mrs. Myers did not tell Hamble that she

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intended to seek counsel or defend the suit. She also conceded that she saw the bolded

language in the summons and complaint warning that she must respond, she did not seek

counsel at that time, and she never called around or asked anyone how to defend the case.

{¶ 29} Given this background, we find the Third District’s decisions in Holthaus

Elevator, Inc. v. Siegel, 3d Dist. Shelby No. 17-03-18, 2004-Ohio-1050, and Hyway

Logistics Services, Inc. v. Ashcraft, 3d Dist. Hancock No. 5-99-40, 2000 WL 123794

(Feb. 2, 2000), to be more factually on point than AMCA or Chiaverini.

{¶ 30} In Siegel, the defendant-debtors sent a letter to their creditor’s counsel in

response to a collection letter they received before the creditor filed a complaint. Id. at

¶ 5. In that letter, they acknowledged the debt but disputed the amount. Id. After being

served with the complaint, the debtors called the creditor’s counsel and asked why the

lawsuit had been filed. Id. The Third District considered whether the pre-suit letter or

the post-suit phone call constituted an appearance for purposes of Civ.R. 55(A). Id. at

¶ 7. It concluded that they did not. Id. In reaching that conclusion, it relied on its earlier

decision in Ashcraft. Id. In Ashcraft, the court found that a phone call from the

defendant to plaintiff’s counsel did not constitute an appearance. Ashcraft at *4. It

explained:

[T]he Defendant may have made telephone contact with Plaintiff’s

counsel, but there was no indication during the telephone communication

that Defendant * * * intended to enter a formal appearance in the lawsuit,

nor in any way intended to present a defense as to the lawsuit. The

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 telephone contact with Plaintiff’s attorney was in the nature of a protest of

Plaintiff’s counsel’s decision to go forward with the legal proceeding, as

opposed to an indication that the Defendant intended to file a formal

appearance or to defend the lawsuit. Further, Defendant * * * did not

indicate that he would take any action to attempt to resolve the dispute.

The Court therefore finds that the telephone conversation between the

Defendant and Plaintiff’s counsel does not rise to the level of an appearance

for the purpose of Rule 55. Therefore, a seven-day written notice of

hearing prior to the granting of a Default Judgment is and was not required.

Id.

{¶ 31} Because we find the present case factually analogous to Siegel and

Ashcraft, and factually distinguishable from AMCA Internatl. Corp., 10 Ohio St.3d 88,

461 N.E.2d 1282, and Chiaverini, 6th Dist. Lucas No. L-06-1344, 2007-Ohio-3683, we

conclude that the Myers did not “appear” for purposes of Civ.R. 55(A) by their single

phone call to the bank’s counsel, and were, therefore, not entitled to seven days’ notice.

{¶ 32} With respect to the consent decree, we agree with the bank that it was not

properly admitted as evidence and, as the bank points out, the Myers failed to assign error

in its exclusion from evidence. In any event, consistent with our previous analysis, the

existence of the consent decree did not relieve the Myers of their duty to respond to the

lawsuit in a manner evidencing their intention to defend against it. As the Second

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District held in Bank of Am., N.A. v. Thrasher, 2d Dist. Clark No. 2013-CA-20, 2013-

Ohio-3934, ¶ 13:

“[A] defendant in a foreclosure action who has been properly served

with the complaint may not sit on his rights.” Bank of New York v. Baird,

2d Dist. Clark No.2012-CA-28, 2012-Ohio-4975, ¶ 29, citing GMAC

Mortgage, L.L. C. v. Herring, 189 Ohio App.3d 200, 2010-Ohio-3650, 937

N.E.2d 1077, ¶ 47-50 (2d Dist.). He is “required to respond to the

complaint, either by filing an answer or by challenging the allegations in

the complaint by motion, such as a motion to dismiss, pursuant to Civ.R.

12(B), a motion for a more definite statement under Civ.R. 12(E), or a

motion to strike, pursuant to Civ.R. 12(F).” Herring at ¶ 50.

{¶ 33} Finally, as the trial court concluded, our determination that the Myers failed

to “appear” for purposes of Civ.R. 55(A) renders it unnecessary for us to determine

whether default judgment entered without providing notice to an appearing defendant

renders the judgment void or merely voidable. Also, because the Myers deny on appeal

that their motion was a Civ.R. 60(B) motion, we need not determine whether they were

entitled to relief under Civ.R. 60(B).

{¶ 34} We find the Myers’ sole assignment of error not well-taken.

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 III. Conclusion

{¶ 35} We affirm the October 6, 2014 judgment of the Fulton County Court

of Common Pleas. The costs of this appeal are assessed to the Myers pursuant to

App.R. 24.

Judgment affirmed.

A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.

Arlene Singer, J. _______________________________
JUDGE
Stephen A. Yarbrough, P.J.
_______________________________
James D. Jensen, J. JUDGE
CONCUR.
_______________________________
JUDGE

This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.sconet.state.oh.us/rod/newpdf/?source=6.

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