Radatz v. Fed. Natl. Mtge. Assn. (Slip Opinion)

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Radatz v. Fed. Natl. Mtge. Assn., Slip Opinion No. 2016-Ohio-1137.]

NOTICE
This slip opinion is subject to formal revision before it is published in
an advance sheet of the Ohio Official Reports. Readers are requested
to promptly notify the Reporter of Decisions, Supreme Court of Ohio,
65 South Front Street, Columbus, Ohio 43215, of any typographical or
other formal errors in the opinion, in order that corrections may be
made before the opinion is published.

SLIP OPINION NO. 2016-OHIO-1137
RADATZ, APPELLEE, v. FEDERAL NATIONAL MORTGAGE ASSOCIATION,
APPELLANT.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Radatz v. Fed. Natl. Mtge. Assn., Slip Opinion No.
2016-Ohio-1137.]
Class actions—Subject matter jurisdiction—Statutory damages—Cease-and-
desist order did not preclude trial court from exercising jurisdiction under
12 U.S.C. 4635(b)—12 U.S.C. 4617(j)(4) prohibited trial court from
ordering payment of statutory damages—Court of appeals’ judgment
affirmed and matter remanded to trial court.
(No. 2014-1126—Submitted September 15, 2015—Decided March 23, 2016.)
APPEAL from the Court of Appeals for Cuyahoga County, No. 100205,
2014-Ohio-2179.
_________________________
 SUPREME COURT OF OHIO

FRENCH, J.
{¶ 1} In this appeal, we address whether a cease-and-desist order issued by
the Federal Housing Finance Agency (“FHFA”) to defendant-appellant, Federal
National Mortgage Association (“Fannie Mae”), divested the trial court of subject
matter jurisdiction over the class action of plaintiff-appellee, Rebekah R. Radatz,
for statutory damages against Fannie Mae under R.C. 5301.36(C). We agree with
the holding of the Eighth District Court of Appeals that the cease-and-desist order
did not preclude the trial court from exercising jurisdiction under 12 U.S.C.
4635(b), the federal statute governing judicial review of FHFA orders. However,
we conclude that a different federal statute, 12 U.S.C. 4617(j)(4), bars the trial
court from ordering Fannie Mae to pay damages under R.C. 5301.36(C) while
Fannie Mae is under FHFA’s conservatorship. The awarding of such damages
runs afoul of 12 U.S.C. 4617(j)(4), which prohibits Fannie Mae from incurring
liabilities “in the nature of penalties or fines” while under FHFA conservatorship.
We therefore affirm the Eighth District’s judgment reversing the decision of the
trial court, albeit for different reasons than those stated by the court of appeals,
and remand the matter to the trial court.
BACKGROUND ON FANNIE MAE AND THE FEDERAL HOUSING AND
ECONOMIC RECOVERY ACT OF 2008
{¶ 2} Fannie Mae is a federally chartered private corporation created by
the United States Congress to “provide stability in the secondary market for
residential mortgages” and to “promote access to mortgage credit” by “increasing
the liquidity of mortgage investments and improving the distribution of
investment capital available for residential mortgage financing.” 12 U.S.C.
1716(1), (4). Congress created the Federal Home Loan Mortgage Corporation
(“Freddie Mac”) for substantially similar purposes. See Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, Pub.L. No. 101-73, § 731(a),
103 Stat. 429. The two entities purchase residential mortgages from banks,

2
 January Term, 2016

repackage them for sale as mortgage-backed securities, and guarantee these
securities by promising to make investors whole if borrowers default.
Congressional Budget Office, Fannie Mae, Freddie Mac, and the Federal Role in
the Secondary Mortgage Market viii (2010), https://www.cbo.gov/
publication/21992#section0 (accessed Dec. 15, 2015).
{¶ 3} In response to the nationwide decline in housing prices, increase in
foreclosures, and heightened concern as to whether Fannie Mae and Freddie Mac
had enough capital to cover losses to their portfolios, id., Congress enacted the
Housing and Economic Recovery Act of 2008 (“HERA”), Pub.L. No. 110-289, §
1101, 122 Stat. 2654 (codified at 12 U.S.C. 4511). HERA created FHFA and
empowered the agency to act as both regulator and conservator of Fannie Mae
and Freddie Mac.
{¶ 4} As regulator, FHFA must ensure that each entity “operates in a safe
and sound manner,” “foster[s] liquid, efficient, competitive, and resilient national
housing finance markets,” operates “consistent[ly] with the public interest,” and
complies with all applicable law. 12 U.S.C. 4513(a)(1)(B). FHFA’s regulatory
powers include the authority to issue cease-and-desist orders if a regulated entity
is engaging in “unsafe or unsound practices.” 12 U.S.C. 4631(a). If FHFA has
reasonable cause to believe that a regulated entity is about to engage in unsafe or
unsound practices or is violating, has violated or is about to violate a law, rule,
regulation or order, the agency issues a notice of charges. 12 U.S.C. 4631(a)(1),
(c)(1). After a hearing or upon consent of the regulated entity, 12 U.S.C.
4631(c)(2), FHFA issues a cease-and-desist order, which becomes final and
effective 30 days after service or upon consent, 12 U.S.C. 4631(f).
{¶ 5} Congress also authorized FHFA to place the two entities under its
conservatorship “for the purpose of reorganizing, rehabilitating, or winding up the
affairs of a regulated entity.” 12 U.S.C. 4617(a)(2). Upon appointment as
conservator, FHFA succeeds to “all rights, titles, powers, and privileges of the

3
 SUPREME COURT OF OHIO

regulated entity,” 12 U.S.C. 4617(b)(2)(A)(i), and may take action “necessary to
put the regulated entity in a sound and solvent condition” and “appropriate to
* * * preserve and conserve the assets and property of the regulated entity.” 12
U.S.C. 4617(b)(2)(D).
FACTS AND PROCEDURAL HISTORY
Summary of R.C. 5301.36 class-action allegations
{¶ 6} On August 7, 2003—before Congress enacted HERA—Radatz filed
a class-action complaint in Cuyahoga County. Radatz alleges on behalf of
similarly situated class members that Fannie Mae failed to timely record in the
appropriate county recorder’s office the satisfaction of her residential mortgage
within 90 days after payoff, as state law (R.C. 5301.36(B)) requires. Radatz and
the class members each seek to recover $250 under R.C. 5301.36(C). Division
(C) of R.C. 5301.36 states that if a mortgagee fails to record the satisfaction of a
mortgage in compliance with R.C. 5301.36(B), “the mortgagor of the unrecorded
satisfaction and the current owner of the real property to which the mortgage
pertains may recover, in a civil action, damages of two hundred fifty dollars.”
R.C. 5301.36(C). This remedy “does not preclude or affect any other legal
remedies or damages that may be available to the mortgagor.” Id.
{¶ 7} In December 2006, the trial court certified the following class: “[a]ll
persons who, since May 9, 1997 and thereafter, paid off an Ohio residential
mortgage (as defined by R.C. 5301.36), where [Fannie Mae] was the mortgagee at
the time of the payoff, and a satisfaction was not recorded with any Ohio county
recorder within 90 days from the date of payoff.” The Eighth District Court of
Appeals affirmed certification of the class. Radatz v. Fed. Natl. Mtge. Assn., 176
Ohio App.3d 319, 2008-Ohio-1937, 891 N.E.2d 1236 (8th Dist.). This court
declined to hear Fannie Mae’s appeal of the class-certification order. Radatz v.
Fed. Natl. Mtge. Assn., 119 Ohio St.3d 1486, 2008-Ohio-5273, 894 N.E.2d 1244.

4
 January Term, 2016

{¶ 8} On September 6, 2008, during class-certification proceedings, FHFA
placed Fannie Mae and Freddie Mac under its conservatorship. Fannie Mae
thereafter sought to remove the class action to federal court, invoking the
conservatorship as a basis for its petition. The district court denied Fannie Mae’s
removal petition and remanded the matter to the Cuyahoga County Common
Pleas Court in March 2010.
FHFA’s consent order and Fannie Mae’s motion to dismiss
{¶ 9} Upon remand and during proceedings before the trial court as to the
scope of class membership, FHFA issued the following consent order dated
March 9, 2013:

Pursuant to 12 U.S.C. § 4631, [Fannie Mae] and [Freddie
Mac] (together “the Enterprises”) are hereby
1. ORDERED to CEASE and DESIST from violating
12 U.S.C. § 4617(j)(4) by paying, for any reason, directly or
indirectly, any fines or penalties imposed by any state mortgage
satisfaction law on the Enterprises for noncompliance.
Furthermore, Fannie Mae is
2. ORDERED to CEASE AND DESIST from
violating 12 U.S.C. § 4617(j)(4) by paying, for any reason, directly
or indirectly, any amount pursuant to Ohio Code 5301.36 or
pursuant to any judgment in connection with the pending lawsuit
styled Radatz v. Fed. Nat’l Mortgage Ass’n, Case No. CV-03-
507616 (Ohio Com. Pleas).

{¶ 10} On March 13, 2013, Fannie Mae moved to dismiss for lack of
subject matter jurisdiction. Fannie Mae argued that maintaining the class action
would “affect” FHFA’s enforcement of the consent order in contravention of 12

5
 SUPREME COURT OF OHIO

U.S.C. 4635(b), which states that “no court shall have jurisdiction to affect, by
injunction or otherwise, the issuance or enforcement of any notice or order under
section 4631 [cease-and-desist orders] * * * or to review, modify, suspend,
terminate, or set aside any such notice or order.” Fannie Mae also argued that the
consent order expressly prohibits Fannie Mae from paying any judgment in this
matter under R.C. 5301.36(C) because 12 U.S.C. 4617(j)(4) shields Fannie Mae
from any liability “in the nature of penalties or fines” while under FHFA’s
conservatorship. The trial court agreed with Fannie Mae and dismissed the
complaint for lack of subject matter jurisdiction.
{¶ 11} The Eighth District Court of Appeals reversed and held that the
FHFA consent order did not divest the trial court of jurisdiction. Relying in part
on Rosette v. Countrywide Home Loans, Inc., 105 Ohio St.3d 296, 2005-Ohio-
1736, 825 N.E.2d 599, the Eighth District held that R.C. 5301.36(C) awards
compensatory and not punitive damages. 2014-Ohio-2179, 11 N.E.3d 1230, ¶ 14.
The court therefore concluded that R.C. 5301.36(C) does not implicate 12 U.S.C.
4617(j)(4), which immunizes Fannie Mae from incurring liabilities in the nature
of a penalty or fine. Id. at ¶ 19. And based on its determination that R.C.
5301.36(C) does not award damages in the nature of a penalty or fine, the appeals
court concluded that a judgment awarding statutory damages under R.C.
5301.36(C) would not “affect” the FHFA consent order in contravention of 12
U.S.C. 4635(b). Id. at ¶ 20.
{¶ 12} We accepted Fannie Mae’s appeal on the following two
propositions of law: (1) “Under the controlling statutory framework established
by Congress, 12 U.S.C. 4635(b), no Ohio court has jurisdiction to review a cease-
and-desist order issued by [FHFA] as Regulator” and (2) “[FHFA]’s Order
determining that R.C. 5301.36 is ‘in the nature of a penalty’ under federal law is
not inconsistent with [Rosette, 105 Ohio St.3d 296, 2005-Ohio-1736, 825 N.E.2d
599].”

6
 January Term, 2016

ANALYSIS
Subject matter jurisdiction under 12 U.S.C. 4635(b)
{¶ 13} We begin our analysis with 12 U.S.C. 4635(b), the federal statute
that governs judicial review of FHFA cease-and-desist orders issued under 12
U.S.C. 4631. Subsection 4635(b) states:

Except as otherwise provided in this subchapter and sections
4619[1] and 4623[2] of this title, no court shall have jurisdiction to affect,
by injunction or otherwise, the issuance or enforcement of any notice or
order under section 4631 * * * or to review, modify, suspend, terminate,
or set aside any such notice or order.

{¶ 14} Subsection 4635(b) mirrors nearly identical language in 12 U.S.C.
1818(i)(1), which governs judicial review of cease-and-desist orders issued
against financial institutions by other federal agencies, including the Office of
Comptroller of the Currency (“OCC”). Given the dearth of case law addressing
12 U.S.C. 4635(b), we look to decisions examining 12 U.S.C. 1818(i)(1). The
United States Supreme Court has concluded that subsection 1818(i)(1) provides
“clear and convincing evidence that Congress intended to deny” the district courts
jurisdiction to review and enjoin an agency’s ongoing administrative proceedings.
Fed. Reserve Sys. Bd. of Governors v. MCorp Fin., Inc., 502 U.S. 32, 44, 112
S.Ct. 459, 116 L.Ed.2d 358 (1991). See also Am. Fair Credit Assn. v. United
Credit Natl. Bank, 132 F.Supp.2d 1304, 1311 (D.Colo.2001) (hereinafter
“AFCA”) (citing MCorp Fin. and collecting cases “agree[ing] that Congress’

1
12 U.S.C. 4619 has been repealed. Pub.L. No. 110-289, Div. A, Title I, § 1145(b)(4), 122 Stat.
2767 (2008).
2
12 U.S.C. 4623 allows an entity to appeal a capital classification by FHFA under 12 U.S.C.
4614 and is not applicable to cease-and-desist orders under section 4631.

7
 SUPREME COURT OF OHIO

withdrawal of jurisdiction over consent orders in Section 1818(i)(1) is far-
reaching”).
{¶ 15} Notwithstanding this broad language, subsections 1818(i)(1) and
4635(b) do not automatically bar courts from adjudicating claims involving a
regulated entity subject to a cease-and-desist order. The jurisdictional bar in
subsection 4635(b) “is not meant to displace a non-party’s right to present its
claims to a * * * court, or the jurisdiction of the court to hear those claims.” In re
JPMorgan Chase Mtge. Modification Litigation, 880 F.Supp.2d 220, 232
(D.Mass.2012) (construing subsection 1818(i)(1)). See also Newton v. Am. Debt
Servs., Inc., 75 F.Supp.3d 1048, 1059 (N.D.Cal.2014) (subsection 1818(i)(1)
“does not prevent a court from adjudicating the legality of conduct under
substantive laws and regulations simply because [an agency] has taken similar or
parallel actions”). As illustrated by various cases, a court may adjudicate state-
law claims against a regulated entity subject to a federal consent order so long as
the exercise of such jurisdiction does not conflict with or contradict the terms of
the consent order itself.
{¶ 16} AFCA provides an apt example of how the jurisdictional bar may
preclude some but not all claims against a regulated entity. In AFCA, the court
found that 12 U.S.C. 1818(i)(1) divested the court of jurisdiction over AFCA’s
claims against a national bank, which would have required payment of money
damages “in direct contravention” of a cease-and-desist order issued by the OCC.
AFCA at 1312. The cease-and-desist order prohibited the bank from “ ‘all activity
and transactions relating to the products of [AFCA], including but not limited to
payment of funds for any reason to AFCA.’ ” (Brackets and emphasis sic.) Id.
The court retained jurisdiction, however, over AFCA’s remaining claims against
the bank’s parent company. Id. at 1311-1312. The OCC cease-and-desist order
did not prohibit the parent company from making payments; it merely ordered the

8
 January Term, 2016

parent company to assume, pay off, and resolve all of the bank’s remaining
liabilities. Id.
{¶ 17} Subsection 1818(i)(1) also did not preclude the courts in Rex v.
Chase Home Fin., L.L.C., 905 F.Supp.2d 1111 (C.D.Cal.2012), and In re
JPMorgan Chase Mtge. Modification Litigation from adjudicating the plaintiffs’
claims against JPMorgan for breach of contract and violations of state consumer-
protection law. Both cases involved an OCC consent order requiring JPMorgan
Chase to implement a compliance program to remedy questionable mortgage
servicing and foreclosure practices. Because the consent order was “silent
regarding the relief Plaintiffs seek,” adjudication of the plaintiffs’ claim for
damages would not affect enforcement of the consent order. Rex at 1126. Accord
In re JPMorgan Chase Mtge. Modification Litigation at 232 (section 1818 did not
preclude the court from effectuating a remedy that did not affect or contradict
consent order).
{¶ 18} Likewise, we do not find here that the FHFA consent order against
Fannie Mae divested the trial court of jurisdiction. The terms of the consent order
narrowly prohibit Fannie Mae from “paying, for any reason, directly or indirectly,
any amount pursuant to [R.C.] 5301.36 or pursuant to any judgment in connection
with the pending [Radatz] lawsuit.” The consent order does not preclude the trial
court from, for example, certifying a class or determining for each alleged
violation whether Fannie Mae is the “mortgagee” of record, as defined by R.C.
5301.36(H)(1). While the consent order prohibits payment by Fannie Mae, it
does not prohibit a court from issuing a judgment or determining whether Fannie
Mae violated state law. Unlike the cases cited by Fannie Mae, adjudication of
Radatz’s claims here would not enjoin, modify or set aside the FHFA cease-and-
desist order or contravene the express terms of that order. See MCorp Fin., 502
U.S. 32, 112 S.Ct. 459, 116 L.Ed.2d 358 (court lacked jurisdiction over
adversarial bankruptcy proceedings filed by regulated entity seeking to enjoin

9
 SUPREME COURT OF OHIO

agency’s cease-and-desist order); Ridder v. Office of Thrift Supervision, 146 F.3d
1035 (D.C.Cir.1998) (court lacked jurisdiction to hear challenge filed by former
officers of regulated entity seeking payment of attorney fees prohibited by
consent order).
{¶ 19} We therefore conclude that the FHFA consent order and 12
U.S.C. 4635(b) do not bar the trial court from adjudicating Radatz’s class-action
claims under R.C. 5301.36.
The applicability of 12 U.S.C. 4617(j)(4) to damages paid under R.C.
5301.36(C)
{¶ 20} Notwithstanding our conclusion that 12 U.S.C. 4635(b) did not
divest the trial court of subject matter jurisdiction, a different provision in
HERA—12 U.S.C. 4617(j)(4)—bars Radatz’s recovery of money damages under
R.C. 5301.36(C).
{¶ 21} Subsection 4617(j)(4) states that while FHFA is acting as
conservator, “[t]he Agency shall not be liable for any amounts in the nature of
penalties or fines, including those arising from the failure of any person to pay
any real property, personal property, probate, or recording tax or any recording or
filing fees when due.” (Emphasis added.) 12 U.S.C. 4617(j)(4). At the outset,
we reject Radatz’s contention that 12 U.S.C. 4617(j)(4) applies only to “the
Agency” and therefore does not apply to Fannie Mae. Because FHFA succeeds to
all the rights, titles, powers, and privileges of a regulated entity during
conservatorship, see 12 U.S.C. 4617(b)(2)(A), courts have uniformly construed
subsection 4617(j)(4) to preclude the imposition of fees or penalties against
Fannie Mae while under FHFA’s conservatorship. Fed. Hous. Fin. Agency v.
Chicago, 962 F.Supp.2d 1044, 1064 (N.D.Ill.2013); Higgins v. BAC Home Loans
Servicing, L.P., E.D.Ky. No. 12-cv-183-KKC, 2014 WL 1332825, *2 (Mar. 31,
2014), rev’d on other grounds, 793 F.3d 688 (6th Cir.2015) (“there is essentially
no distinction between the Agency and Fannie Mae” during conservatorship);

10
 January Term, 2016

Nevada ex rel. Hager v. Countrywide Home Loans Servicing, L.P., 812 F.Supp.2d
1211, 1218 (D.Nev.2011).
{¶ 22} The question whether Congress intended to waive Fannie Mae’s
immunity from state-law penalties implicates a “strong federal interest.” United
States v. Lewis Cty., 175 F.3d 671, 676-677 (9th Cir.1999). We therefore turn to
federal law to determine whether the $250 recovery for each violation of R.C.
5301.36 constitutes a penalty. See also Natl. Loan Investors, L.P. v. Orange, 204
F.3d 407, 412 (2d Cir.2000) (whether a state-law charge constitutes a penalty
under a federal statute “is a federal question informed by state law”); Irving
Indep. School Dist. v. Packard Properties, Ltd., 741 F.Supp. 120, 123
(N.D.Tex.1990) (same).
{¶ 23} The federal test for determining whether a particular statutory
provision is punitive or remedial consists of three factors: (1) whether the purpose
of the statute as a whole primarily redresses individual wrongs or more general
wrongs to the public, (2) whether recovery under the statute runs to the harmed
individual or to the public, and (3) whether the recovery authorized by the statute
is wholly disproportionate to the harm suffered. Murphy v. Household Fin. Corp.,
560 F.2d 206, 209 (6th Cir.1977), citing Huntington v. Attrill, 146 U.S. 657, 666-
669, 13 S.Ct. 224, 36 L.Ed. 1123 (1892), and Bowles v. Farmers Natl. Bank of
Lebanon, 147 F.2d 425, 428 (6th Cir.1945). See also Cosgrove v. Williamsburg
of Cincinnati Mgt. Co., Inc., 70 Ohio St.3d 281, 288, 638 N.E.2d 991 (1994)
(Resnick, J., concurring), citing three-part test from Huntington, Murphy, and
Bowles.
{¶ 24} Application of these factors requires us to conclude here that
payments made under R.C. 5301.36(C) for failure to record a mortgage
satisfaction would be “in the nature of penalties” and therefore may not be
assessed against Fannie Mae under 12 U.S.C. 4617(j)(4) while under FHFA’s
conservatorship.

11
 SUPREME COURT OF OHIO

{¶ 25} When considered as a whole, R.C. 5301.36 is intended to promote
efficiency and certainty in real-estate transactions and to penalize the untimely
recording of satisfied mortgages rather than to compensate borrowers in full for
actual losses. See Pinchot v. Charter One Bank, F.S.B., 99 Ohio St.3d 390, 2003-
Ohio-4122, 792 N.E.2d 1105, ¶ 58, quoting decision below; Pinchot v. Charter
One Bank, F.S.B., 8th Dist. Cuyahoga No. 79359, 2002 WL 568400, *7 (Apr. 11,
2002) (R.C. 5301.36 “is not simply aimed at aiding the individual borrower; it
assists all others involved in all real estate transactions, and assists the State by
encouraging those transactions and reducing costly disputes”).
{¶ 26} While recovery of $250 accrues to the current owner of affected
property and not to the state or a third party, recovery of that amount is not tied to
any actual losses suffered by an aggrieved individual. “ ‘[D]amages are precisely
commensurate with the injury received.’ ” United States v. Witherspoon, 211
F.2d 858, 861 (6th Cir.1954), quoting 23 American Jurisprudence, Forfeitures and
Penalties, Section 29, at 625 (1939). A penalty, on the other hand, “ ‘has no
reference to the actual loss sustained by him who sued for its recovery.’ ” Id.
{¶ 27} In Witherspoon, the Sixth Circuit examined a statute that prohibited
fraudulent transactions with the federal government and required violators to pay
$2,000 for each offense and double the amount of any damages actually sustained
by the government. The court held that the “exaction of the arbitrary sum of
$2,000” for each offense of obtaining surplus property by fraud, “without regard
to [the property’s] value, is a provision for a penalty.” Id.
{¶ 28} Likewise, R.C. 5301.36(C) exacts an arbitrary sum of $250 for
each offense, without any reference to the value of mortgaged property or any
losses sustained by the borrower, for the purpose of punishing the mortgagee for
noncompliance. As with the statute examined in Witherspoon, R.C. 5301.36(C)
imposes a penalty on the offender and allows the injured person to recover actual
damages. See R.C. 5301.36(C) (“This division does not preclude or affect any

12
 January Term, 2016

other legal remedies or damages that may be available to the mortgagor”). If a
borrower suffers actual harm resulting from a mortgage-recording error or
delay—for example, a cloud on title that disrupts or prevents the disposition of
encumbered property—R.C. 5301.36(C) allows the borrower to pursue a claim for
damages. Where, as here, “statutory damages are allowed in addition to
compensatory (actual) damages[,] they are considered a penalty.” In re Trans
Union Corp. Privacy Litigation, 211 F.R.D. 328, 341 (N.D.Ill.2002).
{¶ 29} The ability of an affected borrower to collect $250 under R.C.
5301.36(C) and to pursue a separate action to recover actual damages
distinguishes this case from Higgins, 2014 WL 1332825. Higgins involved a
Kentucky statute allowing for recovery of three times the actual damages for
failure to record a mortgage assignment or a minimum of $500 but not both. Id.
at *6. The Higgins court distinguished its case from Witherspoon and concluded
that the $500 minimum was a liquidated-damages provision that approximated
actual damages and not a penalty. Id. In contrast, R.C. 5301.36(C) does not
attempt to tie recovery of $250 to any actual losses and expressly provides for
recovery of actual damages in a separate action. Thus, Witherspoon, and not
Higgins, informs our analysis here.
{¶ 30} Moreover, we can conclude here that payments under R.C.
5301.36(C) would be “in the nature of penalties” under 12 U.S.C. 4617(j)(4)
without overruling or contradicting Rosette, 105 Ohio St.3d 296, 2005-Ohio-
1736, 825 N.E.2d 599. In Rosette, this court concluded that R.C. 5301.36(C) is a
remedial rather than penal statute and therefore applied the six-year limitations
period in R.C. 2305.07 for “a liability created by statute other than a forfeiture or
penalty.” Id. at syllabus. The presence of the word “damages” in R.C.
5301.36(C) was dispositive to the court’s ruling. Id. at ¶ 13. Rosette is not
controlling here, however.

13
 SUPREME COURT OF OHIO

{¶ 31} Rosette addressed whether payments under R.C. 5301.36(C) should
be labeled as penal or remedial for statute-of-limitations purposes. Rosette has no
bearing on whether payments under R.C. 5301.36(C) are “in the nature of
penalties” under 12 U.S.C. 4617(j)(4), which requires a completely different test
under federal law. The court’s reliance in Rosette on a single word is
irreconcilable with the federal test for determining whether a particular statutory
provision is punitive. The federal test requires an examination of the statute as a
whole for its “essential character and effect,” and not “what name the statute is
called by the legislature.” Huntington, 146 U.S. at 683, 13 S.Ct. 224, 36 L.Ed.
1123. See also Genty v. Resolution Trust Corp., 937 F.2d 899, 912 (3d Cir.1991)
(“generally courts look in the first instance to whether the purpose of the statue as
a whole primarily redresses individual wrongs or more general wrongs to the
public”) (emphasis sic); Rosette at ¶ 18 (Lanzinger, J., dissenting, joined by
Lundberg Stratton and O’Connor, JJ.), citing Huntington and criticizing
majority’s reliance on “a single word” rather than statutory purpose to determine
whether R.C. 5301.36(C) is remedial or penal.
{¶ 32} We have also recognized that statutory sanctions may serve both
compensatory and punitive purposes. State ex rel. Emmich v. Indus. Comm., 148
Ohio St. 658, 668-669, 76 N.E.2d 710 (1947). See also Austin v. United States,
509 U.S. 602, 610, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993) (“sanctions
frequently serve more than one purpose”). In Emmich, this court held that an
additional award provided to employees under the Ohio Constitution for an
employer’s violation of any safety requirement did not exceed the statutory limit
for “ordinary compensation” because the constitutional provision served a dual
purpose. Emmich at 666-669. We explained that it provided “compensation so
far as the employee is concerned, but is in the nature of a penalty so far as such
award affects the employer.” Id. at paragraph three of the syllabus. Because
statutory sanctions can serve more than one purpose, we can conclude here that

14
 January Term, 2016

the statutory remedy in R.C. 5301.36(C) vindicates both punitive and remedial
purposes without disturbing our holding in Rosette.
{¶ 33} For all these reasons, we conclude that the $250 statutory award
under R.C. 5301.36(C) is intended to penalize noncompliance and is thus “in the
nature of penalties” in violation of 12 U.S.C. 4617(j)(4). While Fannie Mae is
under FHFA’s conservatorship, Fannie Mae is immune from liability for
payments pursuant to a judgment under R.C. 5301.36(C).
Radatz’s due-process claim
{¶ 34} Radatz also argues that dismissal of her claims based on FHFA’s
consent order without an opportunity to challenge the order deprives her of due
process. We do not address Radatz’s due-process challenge because the Eighth
District explicitly declined to address it, 2014-Ohio-2179, 11 N.E.3d 1230, at ¶ 5,
and we did not accept any proposition of law related to this issue.
CONCLUSION
{¶ 35} We agree with the holding of the Eighth District Court of Appeals
that the cease-and-desist order did not preclude the trial court from exercising
jurisdiction under 12 U.S.C. 4635(b). However, we conclude that 12 U.S.C.
4617(j)(4) prohibits the trial court from ordering Fannie Mae to pay damages
under R.C. 5301.36(C) while under FHFA’s conservatorship. We therefore
affirm, albeit on different grounds, the Eighth District’s judgment reversing the
trial court, and remand to the trial court for resolution of any remaining issues.
Judgment affirmed
and cause remanded.
O’DONNELL, and KENNEDY, JJ., concur.
PFEIFER, J., concurs in judgment only with an opinion in which O’NEILL,
J., joins.
LANZINGER, J., dissents with an opinion in which O’CONNOR, C.J., joins.
_________________

15
 SUPREME COURT OF OHIO

PFEIFER, J., concurring in judgment only.
{¶ 36} The majority opinion states that it affirms the appellate court, and
Radatz sincerely wishes that it had. The appellate court, after all, concluded that
requiring Fannie Mae to pay a judgment would not impose a penalty, something
that Radatz agrees with, but something the majority opinion most decidedly does
not agree with. Even as it technically affirms the lower court, it does so, in its
own words, “for different reasons.” Majority opinion at ¶ 1. Radatz’s pyrrhic
victory in this case is reminiscent of Nicholas Breton’s line that “a hollow friend
is but a hellish foe.” The Works in Verse and Prose of Nicholas Breton, Vol. 2
(1879).
{¶ 37} I would actually and truly affirm the court of appeals. It
determined that FHFA does not have the authority to “infinitely immunize Fannie
Mae from paying any amounts stemming from any actions.” 2014-Ohio-2179, 11
N.E.3d 1230, ¶ 10. It concluded that any immunity must derive from statute, such
as the prohibition against paying any amount “in the nature of a penalty or fine.”
Id. at ¶ 11, citing 12 U.S.C. 4617(j)(4). And it concluded that the statutory
damages attached to a violation of R.C. 5301.36 are not a penalty or fine and,
therefore, that the consent decree does not prohibit Fannie Mae from paying them.
Id. at ¶ 19.
{¶ 38} Because I believe that the court of appeals’ judgment should be
affirmed in toto, not just technically, I concur in judgment only.
O’NEILL, J., concurs in the foregoing opinion.
_________________
LANZINGER, J., dissenting.
{¶ 39} Because I agree with the trial court’s dismissal of this case for lack
of jurisdiction, I respectfully dissent.

16
 January Term, 2016

{¶ 40} Rebekah R. Radatz instituted a class-action lawsuit because Fannie
Mae allegedly failed to record the satisfaction of mortgages in various Ohio
county recorders’ offices within 90 days after payoff. Under R.C. 5301.36(C):

If the mortgagee fails to comply with division (B) of this
section, the mortgagor of the unrecorded satisfaction and the
current owner of the real property to which the mortgage pertains
may recover, in a civil action, damages of two hundred fifty
dollars. This division does not preclude or affect any other legal
remedies or damages that may be available to the mortgagor.

(Emphasis added.)
{¶ 41} The trial court dismissed the case for lack of jurisdiction pursuant
to 12 U.S.C. 4635(b), which states that “no court shall have jurisdiction to affect,
by injunction or otherwise, the issuance or enforcement of any notice or order
under section 4631 [cease-and-desist orders] * * * or to review, modify, suspend,
terminate, or set aside any such notice or order.” The remedy the class action
seeks is expressly covered by the Federal Housing Finance Agency’s (“FHFA”)
consent order dated March 9, 2013:

Pursuant to 12 U.S.C. § 4631, [Fannie Mae] and [Freddie
Mac] (together “the Enterprises”) are hereby
1. ORDERED to CEASE and DESIST from violating
12 U.S.C. § 4617(j)(4) by paying, for any reason, directly or
indirectly, any fines or penalties imposed by any state mortgage
satisfaction law on the Enterprises for noncompliance.
Furthermore, Fannie Mae is

17
 SUPREME COURT OF OHIO

2. ORDERED to CEASE AND DESIST from
violating 12 U.S.C. § 4617(j)(4) by paying, for any reason, directly
or indirectly, any amount pursuant to Ohio Code 5301.36 or
pursuant to any judgment in connection with the pending lawsuit
styled Radatz v. Fed. Nat’l Mortgage Ass’n, Case No. CV-03-
507616 (Ohio Com. Pleas).

{¶ 42} The Eighth District Court of Appeals held that R.C. 5301.36(C)
awards are compensatory damages. I disagree with this conclusion for reasons
expressed in my dissent in Rosette v. Countrywide Home Loans, Inc., 105 Ohio
St.3d 296, 2005-Ohio-1736, 825 N.E.2d 599. The statutory payment sought by
the class members is not “compensation” but in the nature of a fine or penalty
“imposed by any state mortgage satisfaction law * * * for noncompliance.”
{¶ 43} The majority refuses to hold that the trial court lacked jurisdiction
even though it determines that the class cannot recover under R.C. 5301.36
because the award is a penalty under federal law. It is difficult to say what is left
for the trial court to do upon remand, when it cannot order payment of $250 to
each class member. As R.C. 5301.36(C) notes, a mortgagor may have other
remedies available (presumably for compensatory damages), but adjudication of
the class members’ claims would modify the FHFA cease-and-desist order if the
class members prevailed.
{¶ 44} I therefore would reverse the judgment of the court of appeals and
reinstate the trial court’s order dismissing this action.
O’CONNOR, C.J., concurs in the foregoing opinion.
_________________
Dworken & Bernstein Co., L.P.A., Patrick J. Perotti, and James S.
Timmerberg; and Brian Ruschel, for appellee.

18
 January Term, 2016

Squire Patton Boggs (US), L.L.P., and Richard S. Gurbst; Porter Wright
Morris & Arthur, L.L.P., J. Philip Calabrese, and Kathleen M. Trafford; and
O’Melveny & Myers, L.L.P., and Jeffrey Kilduff, for appellant.
Bricker & Eckler, L.L.P., Anne Marie Sferra, and Sommer Sheely; and
Stephen E. Hart, Deputy General Counsel, Federal Housing Finance Agency,
urging reversal for amicus curiae Federal Housing Finance Agency.
Jeffrey M. McGaffick, urging affirmance for amicus curiae First Priority
Title Agency.
_________________

19