Houtz v. Houtz

[Cite as Houtz v. Houtz, 2018-Ohio-1738.]

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

Christine M. Houtz, Administratrix of Court of Appeals No. H-17-007
the Estate of Susan Marie Clowtis
Trial Court No. LS 2016 00003
Appellee

v.

Christine M. Houtz, et al.

Defendant

[PHH Mortgage Corporation—Appellant]

and

Mathew T. Crane, Administrator of Court of Appeals No. H-17-008
the Estate of Leon Anthony Clowtis
Trial Court No. LS 2016 00005
Appellee

v.

Christine M. Houtz, et al.

Defendant DECISION AND JUDGMENT

[PHH Mortgage Corporation—Appellant] Decided: May 4, 2018

*****
 Jeffrey S. Ream and Sheree L. Studer, for appellee Christine M. Houtz,
Administratrix of the Estate of Susan Marie Clowtis.

Paul D. Dolce, for appellee Mathew T. Crane, Administrator of the
Estate of Leon Anthony Clowtis.

Adam J. Turer, for appellant.

*****

SINGER, J.

{¶ 1} Appellant, PHH Mortgage Corporation, appeals the June 12 and July 18,

2017 judgments of the Huron County Court of Common Pleas, Probate Division, denying

its motions to intervene. For the reasons that follow, we affirm.

Assignments of Error

{¶ 2} Appellant sets forth the following assignment of error:

1. Appellant argues that the trial court erred when it found

Appellant PHH Mortgage Corporation was not entitled to post-judgment

intervention under Civ.R 24(A).

Background

{¶ 3} Susan and Leon Clowtis died in December 2015, leaving behind real

property (“the property”) located at 1518 Settlement Rd., Norwalk, Ohio 44857.

{¶ 4} At that time, the property was encumbered by two mortgages. The first

mortgage instrument was recorded in October 2012, and listed as lender was KeyBank

National Association, with an address of 1 Mortgage Way, Mount Laurel, New Jersey

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08054. Also listed in this first mortgage instrument was Mortgage Electronic

Registration Systems, Inc. (“MERS”), as mortgagee.

{¶ 5} The second mortgage instrument was recorded in June 2015. This mortgage

instrument was not made part of the record. However, a “judicial report,” issued based

on an examination of the record title by First American Title Insurance Company, reveals

that the second mortgage was issued to KeyBank National Association, 4910 Tiedeman

Rd., Suite C, Brooklyn, Ohio 44144.

{¶ 6} On June 22, 2016, a complaint to sell real estate was filed in case No.

LS 16 00003, by Christine Houtz, the administrator of the estate of Susan Clowtis. On

July 5, 2016, virtually the same complaint was filed in case No. LS 16 00005, by Mathew

Crane, the administrator for the estate of Leon Clowtis. These complaints sought

authorization to sell the property, as both Susan and Leon had a half-interest in the

property.

{¶ 7} Additionally, both complaints had instructions for the clerk to serve

KeyBank at its Mount Laurel, New Jersey and Brooklyn, Ohio addresses. The deputy

clerk certified and provided proof the complaints were served at both KeyBank locations.

MERS was not served with the complaints.

{¶ 8} On September 1, 2016, Christine Houtz as administrator in case No.

LS 16 00003 filed for default judgment against KeyBank. The court granted default

judgment against KeyBank on September 2, 2016.

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 {¶ 9} Mathew Crane, as administrator in case No. LS 16 00005, also filed for

default judgment against KeyBank on September 16, 2016. The court granted the default

judgment on September 26, 2016.

{¶ 10} KeyBank answered both complaints on September 6, 2016. Although the

trial court had already granted default judgment in case No. LS 16 00003, KeyBank and

Houtz submitted a joint motion to withdraw the default judgment as to the second

mortgage on October 3, 2016. The court granted the motion and withdrew the default

judgment as to the second mortgage only on October 4, 2016.

{¶ 11} KeyBank assigned its interest in the first mortgage to appellant, PHH

Mortgage Corporation, on October 13, 2016.

{¶ 12} Appellant filed for foreclosure on the first mortgage in the Huron County

Court of Common Pleas, General Division, on December 1, 2016, but voluntarily

dismissed the action on December 30, 2016. Appellant claims it dismissed the action

because it “discovered that the property was within the jurisdiction of the probate

court[.]”

{¶ 13} Appellant then filed motions to intervene and answers to both complaints in

the probate court. More specifically, appellant filed its answer in case No. LS 16 00003

on March 7, 2017, and in case No. LS 16 00005 on June 1, 2017.

{¶ 14} In its motions to intervene and answers, appellant claimed it had an interest

in the first mortgage. Attached to the motions were the mortgage and assignment.

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 {¶ 15} Hearings on the motions were held, and the court denied appellant’s

intervention in both cases. Although the judgment entry denying intervention from case

No. LS 16 00003 was journalized a month prior to that of case No. LS 16 00005, both

entries reflect the same ruling and rationale. Specifically, the entries both state as

follows:

The Court finds that when KeyBank assigned its interest in the First

Mortgage to PHH Mortgage, that interest had already been disposed of by

the default judgment entered against KeyBank. Even if KeyBank

effectively assigned to PHH an interest in filing a motion to vacate the

default judgment, PHH’s delay in filing its Motion to Intervene in this case

was also inexcusable. The Court therefore finds that PHH is not entitled to

intervention under either Civ.R. 24(A) or Civ.R. 24(B).

{¶ 16} The entry of case No. LS 16 00003 was journalized on June 12, 2017, and

that of No. LS 16 00005 was journalized on July 18, 2017. Appellant timely appealed

both cases, and the appeal was consolidated for purposes of addressing the assigned error.

Standard of Review

{¶ 17} A ruling on a motion to intervene under Civ.R. 24(A) is reviewed under an

abuse of discretion standard. State ex rel. Merrill v. Ohio Dept. of Natural Resources,

130 Ohio St.3d 30, 2011-Ohio-4612, 955 N.E.2d 935, ¶ 41. An abuse of discretion is

found only when it is determined that a trial court’s attitude in reaching its judgment was

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unreasonable, arbitrary or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217,

219, 450 N.E.2d 1140 (1983).

Legal Analysis

{¶ 18} In its assigned error, appellant claims the trial court acted inconsistent with

Civ.R. 24(A)(2) in denying its motions to intervene. Appellee claims appellant failed to

meet the elements of Civ.R. 24(A)(2), and thus that the court properly denied the

intervention.

{¶ 19} Civ.R. 24(A) provides:

(A) Intervention of right. Upon timely application anyone shall be

permitted to intervene in an action: (1) when a statute of this state confers

an unconditional right to intervene; or (2) when the applicant claims an

interest relating to the property or transaction that is the subject of the

action and the applicant is so situated that the disposition of the action may

as a practical matter impair or impede the applicant’s ability to protect that

interest, unless the applicant’s interest is adequately represented by existing

parties.

See, e.g., Velocity Dev., LLC v. Perrysburg Twp. Bd. of Trustees, 6th Dist. Wood No.

WD-11-037, 2011-Ohio-6192, ¶ 12-15.

{¶ 20} In order to intervene under Civ.R. 24(A)(2) the motion must be (1) timely,

and the following factors must be shown: (2) the intervenor’s interest relates to the

subject of the action, (3) the disposition of the action will, as a practical matter, impair or

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impede the intervenor’s ability to protect its interest, and (4) the intervenor must

demonstrate that its interest is not adequately represented by the existing parties.

Fairview Gen. Hosp. v. Fletcher, 69 Ohio App.3d 827, 830-831, 591 N.E.2d 1312 (10th

Dist.1990).

{¶ 21} “Failure of the party seeking to intervene to satisfy each of the

requirements will result in a denial of the motion.” Velocity Dev., LLC at ¶ 15, citing

Fletcher at 831.

{¶ 22} Here, we find the trial court did not err in denying appellant’s intervention

because appellant failed to meet the necessary elements for purposes of Civ.R. 24(A).

(1) Timeliness

{¶ 23} We first consider the following factors in determining timeliness: the point

to which the suit progressed; the purpose of the intervention; the length of time preceding

the application during which the proposed intervenor knew or reasonably should have

known of his interest in the case; the prejudice to the original parties due to the proposed

intervenor’s failure to apply promptly for intervention; and, the existence of unusual

circumstances militating against or in favor of intervention. First Natl. Bank of Bellevue

v. NE Port Invests., LLC, 6th Dist. Ottawa No. OT-13-024, 2014-Ohio-1760, ¶ 10, citing

Triax Co. v. TRW, Inc., 724 F.2d 1224 (6th Cir.1984).

{¶ 24} In this case, the trial court stated appellant’s delays in filing its motions to

intervene were “inexcusable.” We cannot say the trial court abused its discretion where

appellant acquired its interest in the subject property in October 2016, which was more

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than six months before it filed for intervention in March and June 2017. Appellant

concedes in its appellate brief that it had actual knowledge of the case as early as

December 2016. Even assuming appellant moved for intervention within three months of

being apprised of the case, we cannot say the trial court abused its discretion in denying

appellant’s motion.

{¶ 25} Although this alone is ground to affirm the trial court judgments, we

proceed and address the remaining elements of Civ.R. 24(A)(2).

(2) Intervenor’s Interest

{¶ 26} Default judgment rendered by the probate court against a party may

extinguish the party’s interest in the subject property. See, e.g., Kormanik v. Haley, 10th

Dist. Franklin No. 12AP-18, 2012-Ohio-5975, ¶ 42. Consequently, the party would no

longer be “in the proper position to assert a claim or seek judicial enforcement of a duty

or right.” Id. at ¶ 41. “The burden is on [the party] to establish it has a present interest

in the subject matter of the litigation and that [it] has been prejudiced.” (Inner quotations

omitted.) Id.

{¶ 27} Here, the trial court found appellant did not have standing to intervene

because the October 13, 2016 assignment of the first mortgage was null and void. More

specifically, the trial court stated that appellant’s interest “had already been disposed of

by the default judgment entered against KeyBank.” Thus the rationale was that KeyBank

no longer had an interest to convey when appellant was assigned the first mortgage. We

cannot say the trial court abused its discretion.

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 (3) Ability to Protect Interest and (4) Whether Adequately Represented

{¶ 28} R.C. 2127.12 provides that the following “shall be made parties defendant”

in “an action by an executor or administrator to obtain authority to sell real property[:]”

(A) The surviving spouse;

(B) The heirs, devisees, or persons entitled to the next estate of

inheritance from the decedent in the real property and having an interest in

it, but their spouses need not be made parties defendant;

(C) All mortgagees and other lienholders whose claims affect the

real property or any part of it;

(D) If the interest subject to sale is equitable, all persons holding

legal title to the interest or any part of it, and those who are entitled to the

purchase money for it, other than creditors;

(E) If a fraudulent transfer is sought to be set aside, all persons

holding or claiming under the transfer;

(F) All other persons having an interest in the real property.

See R.C. 2127.12 (A)-(F).

{¶ 29} Here, appellant argues it was not able to protect its interest before default

judgment was granted in September 2016, as it was not a party to the probate proceedings

and did not acquire its interest in the first mortgage until October 2016.

{¶ 30} Although we, like the trial court, find appellant did not have a valid

interest, we nevertheless address the arguments as if appellant maintained a valid interest.

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 {¶ 31} Appellant concedes KeyBank held the interest and was properly served as a

party in the proceedings. Accordingly, because KeyBank was properly served, had

ample opportunity to protect the first mortgage, and was holder of that interest before

default judgment was granted, we find that any interest appellant would have, albeit

through its predecessor, was adequately represented in the proceedings.

{¶ 32} Appellant further argues MERS was a necessary party and was not served

and, as a result, appellant was deprived of the opportunity to protect its interest. We,

nevertheless, find MERS was not a holder of an interest that would affect the real

property or any part of it. MERS was nominated and appointed by KeyBank, and the

record reflects KeyBank received notice and filed answers to the complaints in an effort

to protect its interest. Consequently, we cannot say MERS not being served with the

complaints rendered appellant unable to protect its interest.

{¶ 33} In sum, we find the trial court did not abuse its discretion, and appellant’s

assignment of error is not well-taken.

Conclusion

{¶ 34} The June 12 and July 18, 2017 judgments of the Huron County Court of

Common Pleas, Probate Division are affirmed. Appellant is ordered to pay the costs of

this appeal pursuant to App.R. 24.

Judgments affirmed.

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 Houtz, Admr. v. Houtz
C.A. Nos. H-17-007
H-17-008

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

Mark L. Pietrykowski, J. _______________________________
JUDGE
Arlene Singer, J.
_______________________________
Thomas J. Osowik, 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.supremecourt.ohio.gov/ROD/docs/.

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