[Cite as U.S. Bank Natl. Assn. v. Stallman, 2016-Ohio-22.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 102732
U.S. BANK NATIONAL ASSOCIATION
PLAINTIFF-APPELLEE
vs.
JAMES J. STALLMAN, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-13-812128
BEFORE: Kilbane, P.J., McCormack, J., and E.T. Gallagher, J.
RELEASED AND JOURNALIZED: January 7, 2016
ATTORNEY FOR APPELLANT
Sam Thomas, III
1510 East 191 Street
Euclid, Ohio 44117
ATTORNEYS FOR APPELLEE
Matthew J. Richardson
David B. Bokor
John E. Codrea
Justin M. Ritch
Matthew P. Curry
Manley, Deas & Kochalski L.L.C.
P.O. Box165028
Columbus, Ohio 43216
MARY EILEEN KILBANE, J.:
{¶1} Defendant-appellant, James J. Stallman (“Stallman”), appeals from the trial
court’s judgment adopting the magistrate’s decision granting summary judgment in the
foreclosure action brought by U.S. Bank National Association, as Trustee for JP Morgan
Mortgage Acquisition Trust 2006-CW2 (“U.S. Bank”). For the reasons set forth below,
we affirm.
{¶2} In August 2013, U.S. Bank filed a foreclosure action against Stallman and
his wife, alleging that they are in default on a mortgage and note for their home in North
Olmsted, Ohio. U.S. Bank alleges that the Stallmans owe $165,473.43, plus interest and
late charges from June 1, 2008. U.S. Bank further alleges that it is entitled to enforce the
note pursuant to R.C. 1303.31.
{¶3} U.S. Bank attached a copy of the note and mortgage to its complaint. The
note was made in favor of Countrywide Home Loans, Inc. (“Countrywide”). On the
signature page of the note, there is a stamp that reads “pay to the order of
_________________ without recourse,” which is signed by David Spector of
Countrywide. U.S. Bank attached an allonge, in which Countrywide indorsed the note to
U.S Bank in May 2006. Also attached was a copy of a mortgage assignment from
Mortgage Electronic Registration System (“MERS”) as nominee for Countrywide to U.S.
Bank in 2010. In response to the complaint, the Stallmans filed an answer, asserting that
U.S. Bank lacks standing to bring the lawsuit and is not the real party in interest, and U.S.
Bank failed to satisfy all conditions precedent, including the notice and acceleration
provisions.
{¶4} In November 2013, U.S. Bank moved for summary judgment. In support
of its motion, U.S. Bank attached an affidavit from Leanna Johnstun (“Johnstun”)
alleging default. Johnstun is the document control officer of U.S. Bank’s servicer,
Select Portfolio Servicing, Inc. (“Select”). Also attached were copies of letters to the
Stallmans notifying them that they were in default, the promissory note and mortgage, the
assignment of mortgage from MERS to U.S. Bank, a power of attorney in favor of Bank
of America, N.A. relating to U.S. Bank, and a power of attorney in favor of Select from
Bank of America, N.A.
{¶5} The Stallmans opposed U.S. Bank’s motion, challenging the validity of the
documents attached to U.S. Bank’s motion for summary judgment. They argued that
Johnstun’s affidavit did not state “with any clarity who the actual holder of the ‘original
Note’ is nor the location of the ‘original Note.’” The Stallmans further argued that
Johnstun’s affidavit was “robo-signed” and the mortgage assignment from Countrywide
to U.S. Bank was “notarized by someone likely to be an employee of Lerner, Sampson &
Rothfuss in Columbus, Ohio” whereas MERS’s office is in Florida.
{¶6} After summary judgment was fully briefed, the trial court stayed the matter
in January 2014, so the parties could mediate their dispute. On October 2, 20l4, the trial
court concluded that mediation was unsuccessful and lifted the stay. Thereafter, the
magistrate granted U.S. Bank’s summary judgment motion. The Stallmans objected to
the magistrates decision, raising arguments similar to those made in their brief in
opposition to U.S. Bank’s summary judgment motion. The Stallmans also argued that
MERS lacked the legal authority to transfer interests in the note and mortgage, and
Johnstun testified on the basis of hearsay and did not authenticate the documents attached
to the summary judgment motion. The trial court overruled the Stallmans’ objections
and adopted the magistrate’s decision in December 2014.
{¶7} On January 7, 2015, the magistrate issued another decision on the matter in
favor of U.S. Bank. The Stallmans filed objections to this decision, which the trial court
overruled. The trial court adopted the magistrate’s decision and issued a decree in
foreclosure.
{¶8} Stallman now appeals, assigning the following three assignments of error
for review, which shall be discussed together.
Assignment of Error One
Reviewing [U.S. Bank’s] motion for summary judgment de novo, the record
is clear and convincing that the trial court erred to the prejudice of
[Stallman] by granting [U.S. Bank’s] motion for summary judgment in
favor of [U.S. Bank].
Assignment of Error Two
The trial court erred to the prejudice of [Stallman] by granting [U.S.
Bank’s] motion for summary judgment based upon the presence of genuine
issues of material fact regarding [U.S. Bank’s] failure to establish
satisfaction of all conditions precedent to institute the foreclosure action.
Assignment of Error Three
The trial court erred to the prejudice of [Stallman] by granting [U.S.
Bank’s] motion for summary judgment based upon the presence of genuine
issues of material fact regarding [U.S. Bank’s] failure to provide sufficient
evidence of entitlement to foreclosure and/or damages.
{¶9} Within these assigned errors, Stallman challenges the trial court’s grant of
summary judgment in U.S. Bank’s favor. We review an appeal from summary judgment
under a de novo standard of review. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102,
105, 1996-Ohio-336, 671 N.E.2d 241; Zemcik v. LaPine Truck Sales & Equip. Co., 124
Ohio App.3d 581, 585, 706 N.E.2d 860 (8th Dist.1997). In Zivich v. Mentor Soccer
Club, 82 Ohio St.3d 367, 369-370, 1998-Ohio-389, 696 N.E.2d 201, the Ohio Supreme
Court set forth the appropriate test as follows:
Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is
no genuine issue of material fact, (2) the moving party is entitled to
judgment as a matter of law, and (3) reasonable minds can come to but one
conclusion and that conclusion is adverse to the nonmoving party, said party
being entitled to have the evidence construed most strongly in his favor.
Horton v. Harwick Chem. Corp., 73 Ohio St.3d 679, 1995-Ohio-286, 653
N.E.2d 1196, paragraph three of the syllabus. The party moving for
summary judgment bears the burden of showing that there is no genuine
issue of material fact and that it is entitled to judgment as a matter of law.
Dresher v. Burt, 75 Ohio St.3d 280, 292-293, 1996-Ohio-107, 662 N.E.2d
264.
{¶10} Once the moving party satisfies its burden, the nonmoving party “may not
rest upon the mere allegations or denials of the party’s pleadings, but the party’s response,
by affidavit or as otherwise provided in this rule, must set forth specific facts showing
that there is a genuine issue for trial.” Civ.R. 56(E); Mootispaw v. Eckstein, 76 Ohio
St.3d 383, 385, 1996-Ohio-389, 667 N.E.2d 1197. Doubts must be resolved in favor of
the nonmoving party. Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 358-359,
1992-Ohio-95, 604 N.E.2d 138.
{¶11} To prevail on a motion for summary judgment claim in a foreclosure action,
the plaintiff must prove
(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.
Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657,
¶ 17.
{¶12} Stallman argues that U.S. Bank’s motion for summary judgment fails
because: (1) Johnstun’s affidavit failed to establish she had “personal knowledge of the
matter;” (2) U.S. Bank did not demonstrate that it has standing and is the real party in
interest; (3) U.S. Bank did not demonstrate that it gave Stallman prior notice of default
and acceleration as required by the mortgage; and (4) U.S. Bank did not submit “a
competent, credible ‘payment history.’”
Johnstun Affidavit
{¶13} In the instant case, U.S. Bank supported its summary judgment motion with
an affidavit from Johnstun, a document control officer of Select, its servicer. The
affidavit begins with a statement by Johnstun indicating that she, “being first duly sworn
according to law, deposes and says on the basis of personal knowledge[.]” As a
document control officer, she is authorized to make the certification on U.S. Bank’s
behalf. Johnstun averred to her familiarity with Select’s record keeping system and the
Stallmans’ specific loan records. She stated the statements she made in the affidavit are
based upon her personal knowledge of the Stallmans’ records and how those records are
maintained. Johnstun authenticated the note, mortgage, and default notice letter. She
further averred that U.S. Bank was the holder of the mortgage and note, the loan was in
default, the Stallmans had been provided notice of the default by letter sent to them, and
the Stallmans owe $165,473.43, plus interest and late charges from June 1, 2008.
{¶14} Civ.R. 56(E) sets forth the requirements for affidavits submitted with
motions for summary judgment. It provides in relevant part:
Supporting and opposing 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. Sworn or certified copies of all papers or parts of papers
referred to in an affidavit shall be attached to or served with the affidavit.
{¶15} Under Civ.R. 56(E ), a summary judgment affiant in a foreclosure action
testifies on the basis of personal knowledge with a “specific averment” that the affidavit
is made on the basis of personal knowledge and pertains to business. Nationstar Mtg.,
L.L.C. v. Wagener, 8th Dist. Cuyahoga No. 101280, 2015-Ohio-1289, ¶26, citing Najar,
8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657. In Najar, we stated:
“Unless controverted by other evidence, a specific averment that an
affidavit pertaining to business is made upon personal knowledge of the
affiant satisfies the Civ.R. 56(E) requirement that affidavits both in support
or in opposition to motions for summary judgment show that the affiant is
competent to testify to the matters stated.” Bank One, N.A. v. Swartz, 9th
Dist. No. 03CA008308, 2004-Ohio-1986, ¶ 14, citing State ex rel. Corrigan
v. Seminatore, 66 Ohio St.2d 459, 423 N.E.2d 105 (1981), paragraph two of
the syllabus. Where an affiant avers that he or she has personal knowledge
of a transaction “this fact cannot be disputed absent evidence to the
contrary.” Household Realty Corp. v. Henes, 8th Dist. No. 89516,
2007-Ohio-5846, ¶ 12, citing Papadelis v. First Am. Sav. Bank, 112 Ohio
App.3d 576, 579, 679 N.E.2d 356 (8th Dist.1996). Similarly, verification
of documents attached to an affidavit supporting or opposing a motion for
summary judgment is generally satisfied by an appropriate averment in the
affidavit itself, for example, that “such copies are true copies and
reproductions.” Seminatore at paragraph three of the syllabus.
Id. at ¶ 20.
{¶16} Here, Johnstun’s affidavit demonstrates her personal knowledge to testify.
Her affidavit specifically states that her averments were on the basis of personal
knowledge, her direct familiarity with the record keeping system utilized by Select, and
her direct familiarity with the records in that system related to the Stallmans’ loan.
Stallman did not attempt to refute this by producing any admissible evidence.
Accordingly, Johnstun’s affidavit was based on personal knowledge and complied with
Civ.R. 56(E).
Standing
{¶17} In order to commence an action, a party must have standing, which requires
“‘some real interest in the subject matter of the action.’” HSBC Bank USA, N.A. v.
Surrarrer, 8th Dist. Cuyahoga No. 100039, 2013-Ohio-5594, ¶ 8, quoting State ex rel.
Dallman v. Franklin Cty. Court of Common Pleas, 35 Ohio St.2d 176, 298 N.E.2d 515
(1973). Civ.R. 17(A) provides that a complaint must be brought in the name of the real
party in interest. Whether standing has affirmatively been established is a question of
law subject to de novo review. Id., citing Deutsche Bank Natl. Trust Co. v. Rudolph, 8th
Dist. Cuyahoga No. 98383, 2012-Ohio-6141.
{¶18} A party establishes its interest in the suit and has standing when, at the time
it files its foreclosure complaint, it either (1) has had a mortgage assigned or (2) is the
holder of the note. CitiMortgage, Inc. v. Patterson, 8th Dist. Cuyahoga No. 98360,
2012-Ohio-5894, 984 N.E.2d 392, ¶ 21, citing Fed. Home Loan Mtge. Corp. v.
Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214.
{¶19} A party can become the holder of a negotiable instrument by specific
endorsement to an identified payee or by holding the negotiable instrument while it is
indorsed in blank. R.C. 1303.25(A)-(B). When the note is indorsed in blank, the
instrument becomes payable to the bearer and may be negotiated by transfer and
possession alone. R.C. 1303.25(B); Bank of Am., N.A. v. Farris, 8th Dist. Cuyahoga No.
102256, 2015-Ohio-4980, ¶ 21, citing Third Fed. S & L Assn. of Cleveland v. Reids, 8th
Dist. Cuyahoga No. 99650, 2013-Ohio-4602.
{¶20} A review of the record in the instant case reveals that U.S. Bank had an
interest in the note and mortgage. U.S. Bank had been assigned the mortgage three
years before the complaint was filed. Additionally, Countrywide had indorsed the note
both in blank and specifically to U.S. Bank before the complaint was filed. Therefore,
U.S. Bank has standing to bring the foreclosure action against the Stallmans.
Conditions Precedent
{¶21} “This court has held that a term in a mortgage such as one requiring prior
notice of default or acceleration to the mortgagor is a condition precedent subject to the
requirements of Civ.R. 9(C).” Secy. of Veterans Affairs v. Anderson, 2014-Ohio-3493,
17 N.E.3d 1202, ¶ 15 (8th Dist.), citing Bank of Am., N.A. v. Pate, 8th Dist. Cuyahoga No.
100157, 2014-Ohio-1078; Puzzitiello v. Metro. Savs. Bank, 8th Dist. Cuyahoga No.
71814, 1997 Ohio App. LEXIS 5105 (Nov. 13, 1997).
{¶22} Here, Johnstun stated in her affidavit that the Stallmans were in default and
that all conditions precedent had been met. U.S. Bank attached two letters notifying the
Stallmans of the default, the amount necessary to cure the default, the possible
acceleration of the loan if the default was not cured, and provided them with the
opportunity to cure the default. U.S. Bank produced one letter from the Stallmans’ prior
servicer, Countrywide, and from the current servicer, Select. In opposition, the
Stallmans averred that they did not receive notice of the deficiency. This court has
stated that when the bank produces evidence that a notice was “sent” and the mortgage
does not require the bank to show receipt of notice, the borrower’s affidavit stating he did
not receive the notice does not create a genuine issue for trial. N.Y. Life Ins. & Annuity
v. Vengal, 2014-Ohio-4798, 23 N.E.3d 180, ¶ 16-17 (8th Dist.). Thus based on the
foregoing, we find no issue of fact existed as to whether conditions precedent were
satisfied.
Payment History
{¶23} We recognize that “[t]here is no requirement that a plaintiff provide a
complete ‘payment history’ in order to establish its entitlement to summary judgment in a
foreclosure action.” Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657, at ¶ 40,
citing Cent. Mtge. Co. v. Elia, 9th Dist. No. 25505, 2011-Ohio-3188, ¶ 7 (“‘An affidavit
stating [a] loan is in default, is sufficient for purposes of Civ.R. 56, in the absence of
evidence controverting those averments.’”), quoting Bank One, N.A. v. Swartz, 9th Dist.
Lorain No. 03CA008308, 2004-Ohio-1986, ¶ 14.
{¶24} In the instant case, Johnstun averred to all of the facts necessary to establish
U.S. Bank’s right to the amount due — the principal balance due, the applicable interest
rate, and date from which interest was due. Stallman did not present any evidence
controverting these averments. Accordingly, Johnstun’s affidavit and supporting
documents were sufficient to meet U.S. Bank’s burden.
{¶25} In light of the foregoing, we find the trial court properly adopted the
magistrate’s decision granting summary judgment in U.S. Bank’s favor.
{¶26} Accordingly, the first, second, and third assignments of error are overruled.
{¶27} Judgment affirmed.
It is ordered that appellee recover of appellant 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.
MARY EILEEN KILBANE, PRESIDING JUDGE
TIM McCORMACK, J., and
EILEEN T. GALLAGHER, J., CONCUR