PHH Mtge. Corp. v. Barker

[Cite as PHH Mtge. Corp. v. Barker, 2019-Ohio-5301.]

IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
VAN WERT COUNTY

PHH MORTGAGE CORPORATION,

PLAINTIFF-APPELLEE, CASE NO. 15-19-01

v.

DENISE L. BARKER, ET AL., OPINION

DEFENDANTS-APPELLANTS.

Appeal from Van Wert County Common Pleas Court
Trial Court No. CV-15-07-112

Judgment Affirmed

Date of Decision: December 23, 2019

APPEARANCES:

George R. Smith, Jr. for Appellants

Rick D. DeBlasis and William P. Leaman for Appellee
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ZIMMERMAN, P.J.

{¶1} Defendant-appellants, Denise L. Barker and Robert D. Barker, Jr.

(“Barkers”), appeal the December 31, 2018 judgment entry of the Van Wert County

Court of Common Pleas granting summary judgment in favor of PHH Mortgage

Corporation (“PHH”) as to the Barkers’ counterclaims for breach of contract,

declaratory judgment relief, and wrongful foreclosure and the January 29, 2019

judgment entry of the Van Wert County Court of Common Pleas granting

foreclosure in favor of the PHH. For the reasons that follow, we affirm.

{¶2} This case stems from PHH’s third foreclosure complaint in rem filed

against the Barkers.1 (Doc. No. 3). PHH had previously filed foreclosure

complaints against the Barkers in 2007 and 2011. (Id.).

{¶3} Relevant to this appeal, PHH filed its third foreclosure complaint

against the Barkers on July 30, 2015. (Doc. No. 3). On September 25, 2015, the

Barker’s filed their answer and counterclaims against PHH for breach of contract,

declaratory-judgment relief, tortious infliction of emotional distress, and wrongful

foreclosure.2 (Doc. No. 16). PHH filed an answer to the Barkers’ counterclaims on

November 23, 2015 and an amended answer on December 11, 2015. (Doc. Nos.

1
The Barkers’ obligation on the promissory note was discharged in bankruptcy. (Doc. No. 3).
2
This court recited much of the factual and procedural background of this case in previous appeals, and we
will not duplicate those efforts here. See PHH Mtge. Corp. v. Barker, 3d Dist. Van Wert No. 15-10-01, 2010-
Ohio-5061 (the “2007 case”); PHH Mtge. Corp. v. Denise L. Barker, et al., Case No. CV15-07-112 (the
“2011 case”). (Doc. No. 16).

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20, 22). Mediation was ordered on May 5, 2016 and concluded with the parties

unable to reach a settlement. (Doc. Nos. 25, 32). Thereafter, the Barkers requested

leave to file an amended answer and counterclaim, and leave was granted. (Doc.

Nos. 38, 40, 41). PHH then filed an amended answer to the Barkers’ amended

counterclaim. (Doc. No. 43).

{¶4} On March 31, 2017, PHH filed a motion for summary judgment. (Doc.

No. 54). (See also Doc. No. 55). The Barkers also filed a motion for summary

judgment together with their memorandum in opposition to PHH’s motion for

summary judgment on April 26, 2017. (Doc. No. 56).

{¶5} Ultimately, on December 31, 2018, the trial court issued judgment in

favor of PHH as to a decree in foreclosure (in rem only) and dismissed the Barkers’

counterclaims with prejudice. (Doc. No. 73). The trial court issued its judgment

entry and decree in foreclosure on January 29, 2019. (JE, Doc. No. 76).

{¶6} The Barkers filed their notice of appeal on February 20, 2019 and raise

seven assignments of error for our review. (Doc. No. 79). We will begin by

addressing the Barkers’ first, second, third, fourth and fifth assignments of error

together, followed by their sixth assignment of error, and then their seventh

assignment of error.

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Assignment of Error No. I

The trial court erred in granting summary judgment to plaintiff
[PHH] and in denying defendants’ [Barkers’] summary judgment
on their claim for breach of duty of good faith and fair dealing
and breach of contract by impermissibly weighing the evidence,
failing to accord the Barkers the benefit of all reasonable
inferences permissibly derived from the pleadings and evidence
of record and failing to construe the evidence most strongly in
their favor as it was undisputed that plaintiff [PHH] refused to
provide a valid reinstatement quote or an address where
payments would be accepted and thus unlawfully impeded or
prevented defendants’ [Barkers’] performance of their
obligations under contract and violated the court order
reinstating the loan.

Assignment of Error No. II

The trial court erred in granting summary judgment to plaintiff
[PHH] and in denying defendants’ [Barkers’] motion for
summary judgment as the notice of default included sums to
which plaintiff [PHH] was not legally entitled, failed to comply
with a prior order of the court and PHH failed to mail a notice of
default prior to filing this action.

Assignment of Error No. III

The trial court erred in granting summary judgment to plaintiff
[PHH] as it was undisputed plaintiff [PHH] failed to mitigate
damages by refusing to provide an address where payments
would be accepted or providing a reinstatement quote.

Assignment of Error No. IV

The trial court erred in denying defendants [Barkers] [sic] partial
summary judgment on their counterclaim for wrongful
foreclosure. Where, as here, a lender files successive foreclosure
actions in violation of a court judgment and refuses to provide
borrowers an opportunity to perform their obligations under the
court judgment and contract in an effort to coerce the borrowers

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into paying illegal sums under the constant threat of losing their
home, its acts in bad faith and the lender may be held to answer
for this tortious conduct in damages.

Assignment of Error No. V

The trial court erred in denying defendants’ [Barkers’] summary
judgment on their counterclaim for declaratory judgment relief
as the bad faith conduct of a lender in performance of its
contractual and legal obligations entitles borrowers to a
declaration that the note and mortgage are void as a matter of
law.

{¶7} In their first-five assignments of error, the Barkers argue that the trial

court erred by granting summary judgment in favor of PHH because PHH breached

its mortgage contract with them. In their second and third assignments of error, the

Barkers assert that the trial court improperly granted summary judgment in favor of

PHH because PHH assessed them for late charges and expenses incurred in prior

unsuccessful litigation; that PHH failed to provide the Barkers with an accurate

reinstatement quote prior to notice of intent to foreclose; and because PHH failed to

mitigate its damages. In their fourth and fifth assignments of error, the Barkers

assert that the trial court should have granted summary judgment on their wrongful-

foreclosure and declaratory-judgment counterclaims. 3

Standard of Review

3
The Barkers are not challenging the dismissal of the tortious infliction of emotional distress claim against
PHH.

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{¶8} Generally, we review a decision to grant summary judgment de novo.

Doe v. Shaffer, 90 Ohio St.3d 388, 390 (2000). “De novo review is independent

and without deference to the trial court’s determination.” ISHA, Inc. v. Risser, 3d

Dist. Allen No. 1-12-47, 2013-Ohio-2149, ¶ 25, citing Costner Consulting Co. v.

U.S. Bancorp, 195 Ohio App.3d 477, 2011-Ohio-3822, ¶ 10 (10th Dist.). Summary

judgment is proper where there is no genuine issue of material fact, the moving party

is entitled to judgment as a matter of law, and reasonable minds can reach but one

conclusion when viewing the evidence in favor of the non-moving party, and the

conclusion is adverse to the non-moving party. Civ.R. 56(C); State ex rel. Cassels

v. Dayton City School Dist. Bd. of Edn., 69 Ohio St.3d 217, 219 (1994).

{¶9} However, “‘“[t]o properly support a motion for summary judgment in

a foreclosure action, a plaintiff must present evidentiary-quality materials showing:

(1) the movant is the holder of the note and mortgage, or is a party entitled to enforce

the instrument; (2) if the movant is not the original mortgagee, the chain of

assignments and transfers; (3) the mortgagor is in default; (4) all conditions

precedent have been met; and (5) the amount of principal and interest due.”’” U.S.

Bank N.A. v. Jones, 3d Dist. Allen No. 1-16-15, 2016-Ohio-7168, ¶ 17, quoting

HSBC Mtge. Servs., Inc. v. Watson, 3d Dist. Paulding No. 11-14-03, 2015-Ohio-

221, ¶ 24, quoting Wright-Patt Credit Union, Inc. v. Byington, 6th Dist. Erie No. E-

12-002, 2013-Ohio-3963, ¶ 10.

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{¶10} “The party moving for summary judgment has the initial burden of

producing some evidence which demonstrates the lack of a genuine issue of material

fact.” Carnes v. Siferd, 3d Dist. Allen No. 1-10-88, 2011-Ohio-4467, ¶ 13, citing

Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996). “In doing so, the moving party is

not required to produce any affirmative evidence, but must identify those portions

of the record which affirmatively support his argument.” Id., citing Dresher at 292.

“The nonmoving party must then rebut with specific facts showing the existence of

a genuine triable issue; he may not rest on the mere allegations or denials of his

pleadings.” Id., citing Dresher at 292 and Civ.R. 56(E).

Analysis

{¶11} In the Barkers’ first, second, and third assignments of error, they argue

that the trial court erred when it granted summary judgment in favor of PHH.

Specifically, the Barkers argue that summary judgment in favor of PHH was

improper because there is no genuine issue of material fact that they were prevented

from performing under the terms of the contract (i.e., paying their mortgage

payments) through PHH’s refusal to provide an accurate reinstatement quote and to

provide an address where their mortgage payments were to be sent as a result of

PHH’s breach. That is, the Barkers contest PHH’s standing to initiate the

foreclosure action, arguing that PHH is not entitled to summary judgment because

PHH failed to demonstrate that they defaulted; that PHH did not meet all conditions

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precedent to advance the Barkers’ debt; that PHH had not established the accurate

principle and interest due; and because PHH failed to mitigate its damages.

Breach of Contract

{¶12} In order to address the Barkers’ assignments of error, we need to first

look to the contract between the parties. To succeed on a breach-of-a-written-

contract claim, a plaintiff must demonstrate proof of the contract’s existence,

performance by the plaintiff, breach by the defendant, and damage or loss to the

plaintiff. See Reddy v. Singh, 3d Dist. Marion No. 9-14-29, 2015-Ohio-1180, ¶ 75,

citing Caley v. Glenmoor Country Club, Inc., 5th Dist. Stark Nos. 2013 CA 00023

and 2013 CA 00018, 2013-Ohio-4877. ¶ 59. Here, the Barkers contend that PHH

breached its contract with them because it failed to provide them with an address to

which they could tender payment. (See Doc. No. 67, D. Barker Aff. at 2-3). In

other words, the Barkers argue that PHH breached the duty of good faith and fair

dealing.

{¶13} The duty of good faith and fair dealing by each of the parties in

performance and enforcement of the contract are implied covenants dictated by

public policy. Littlejohn v. Parris, 1st Dist. Hamilton No. C-040720, 2005-Ohio-

4850, ¶ 27 (concluding “[g]ood faith and fair dealing [] require[] not only honesty

but also reasonableness in the enforcement of the contract”). “‘Good faith

performance or enforcement of a contract emphasizes faithfulness to an agreed

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common purpose and consistency with the justified expectations of the other

party.’” Id. at ¶ 26, quoting 1 Restatement of the Law 2d, Contracts, Section 205,

Comment a (1981). Conversely, bad faith may consist of inaction, or may be the

“‘abuse of a power to specify terms, [or] interference with or failure to cooperate in

the other party’s performance.’” Id. at ¶ 26, quoting 1 Restatement of the Law 2d,

Contracts, Section 205, Comment d (1981).

{¶14} “‘[T]he doctrine is based on the long-established principle of law that

a party should not be able to take advantage of its own wrongful act.’” Lucarell v.

Nationwide Mut. Ins. Co., 152 Ohio St.3d 453, 2018-Ohio-15, ¶ 54, citing 13 Lord,

Section 39:6, at 582. There exists no independent cause of action for a breach of

the implied covenant of good faith or fair dealing separate and apart from the breach-

of-contract claim because those implied covenants are integral to any contract, and

thus, they “‘cannot stand alone.’” Krukrubo v. Fifth Third Bank, 10th Dist. Franklin

No. 07AP-270, 2007-Ohio-7007, ¶ 18-19, quoting Interstate Gas Supply, Inc., v.

Calex Corp., 10th Dist. Franklin No. 04AP-980, 2006-Ohio-638, ¶ 98.

{¶15} Even assuming that there are discrepancies as to the addresses

provided to the Barkers by PHH, there is no genuine issue of material fact that the

Barkers failed to tender any mortgage payment to PHH at any address after February

of 2008. (See Doc. No. 67, D. Barker Aff. at 2); (Doc. No. 54, Spare Aff. Exs. A,

B, C, D, E, F, G, H, I, J, K, L). Compare Lucarell at ¶ 54, (concluding that “[t]he

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prevention of performance doctrine provides that a party who prevents another from

performing its contractual obligations cannot rely on that failure of performance to

assert breach of contract”), citing Suter v. Farmers’ Fertilizer Co., 100 Ohio St. 403

(1919), paragraph four of the syllabus, Buckley Towers Condominium, Inc. v. QBE

Ins. Corp., 395 Fed.Appx. 659, 662 (11th Cir.2010), and 13 Lord, Section 39:3, at

569-571. Further, the Barkers failed to present any evidence that PHH prevented

them from tendering any mortgage payment to any address. Instead, the record

reveals that the Barkers had no intent on tendering a reinstatement payment; instead,

they sought modification, an accommodation, and mortgage-debt forgiveness. (See

Doc. No. 67, D. Barker Aff. at 2-3); (Doc. No. 54, Burchfield Aff. Exs. D, E).

{¶16} The record reflects that between August 26, 2009 and January 26,

2011, PHH attempted to engage the Barkers through correspondence indicating they

may qualify for the Home Affordable Modification Plan (“HAMP”), which would

create a trial-period-payment plan for the Barkers on their mortgage. (See Doc. No.

54, Spare Aff. Exs. F, G, H, I). However, this HAMP was denied because the

Barkers “did not make all of the Trial Period Plan payments by the end of the trial

period as required by the program.” Thereafter, the Barkers were denied a second

HAMP opportunity because they failed to timely return the necessary documents to

PHH. (See Doc. No. 54, Spare Aff. Ex. G, I). When subsequent loss-mitigation

reviews failed to result in permanent-loan modification, the Barkers then requested

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a payment plan beginning on October 1, 2007 “when the Barkers felt that they

entered into the accommodation with PHH.” (See Doc. No. 54, Burchfield Aff. Exs.

D, E). Additionally, when their attempts at modification and setting up a payment

plan and accommodation were unsuccessful, the Barkers sought mortgage-debt

forgiveness on July 15, 2011. Specifically, the Barkers’ attorney informed PHH:

I have been authorized by the Barkers to agree to go forward with their
mortgage and reinstate their mortgage as if they had made all their
payments that were necessary from October 1, 2007 to today with no
back interest assessment and with the principal adjusted as if those
payments had been made and then go forward and resume paying the
loan under those terms.

(Id.). Stated differently, the above correspondence (with PHH) negates any genuine

issue of material fact that the Barkers were seeking reinstatement.

{¶17} Moreover, the record reflects that the Barkers did not seek to make a

total-reinstatement payment. Thus, there is no genuine issue of material fact that

the Barkers were not prevented from performing under the terms of the mortgage

contract by PHH’s failure to provide an address to remit their payments.

{¶18} Next, we turn to Barkers’ claim that they were prevented from

performing under the terms of the contract by PHH’s failure to provide them an

accurate reinstatement quote.

{¶19} Ohio law does not provide a borrower with a right of reinstatement.

See Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306, ¶ 18.

However, the terms of a mortgage contract may grant a borrower these rights. Id.

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We therefore must review Paragraphs 19 and 22 of the Barkers’ mortgage contract

to determine whether they were entitled to reinstatement. Paragraph 22 of the

Barkers’ mortgage contract provides that the notice of intent to foreclose shall

specify the following:

(a) the default; (b) the action required to cure the default; (c) a date,
not less than 30 days from the date the notice is given to Borrower, by
which the default must be cured; and (d) that failure to cure the default
on or before the date specified in the notice may result in acceleration
of the sum secured by this Security Instrument, foreclosure by judicial
proceeding and sale of the Property. The notice shall further inform
Borrower of the right to reinstate after acceleration and the right to
assert in foreclosure proceeding the non-existence of default or any
other defense of Borrower to acceleration and foreclosure. If the
default is not cured on or before the date specified in the notice,
Lender at its option may require immediately [sic] payment in full or
all sums secured by this Security Instrument without further demand
and may foreclose this Security Instrument by judicial proceeding.
Lender shall be entitled to collect all expenses incurred in pursuing
the remedies provided in this Section 22, including, but not limited to,
costs of title evidence.

(Emphasis added.) (Doc. No. 54, Spare Aff. Ex. E). The notice of intent to foreclose

provided to the Barkers by PHH on July 7, 2011 states, in relevant part:

We recognize that your personal obligations to repay the debt secured
by the mortgage held by PHH Mortgage Services, on the above
referenced property, has been discharged, dismissed or relief granted
through your bankruptcy proceeding.

The mortgage would not be subject be subject to foreclosure at this
time if $ 16079.27 (total amount due) is remitted within 30 days from
the above date. We are required to notify you before foreclosure
proceedings commence.

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Any remittances must be in the form of “CERTIFIED FUNDS”; no
personal checks will be accepted.

(Doc. No. 54, Spare Aff. Ex. J). Paragraph 19 of the mortgage provides that the

borrower has the right to reinstatement after acceleration if the borrower meets

certain conditions, which are listed as follows:

19. Borrower’s Right to Reinstate after Acceleration. If Borrower
meets certain conditions, Borrower shall have the right to have
enforcement of this Security Instrument discontinued at any time prior
to the earliest of: (a) five days before sale of the Property pursuant to
any power of sale contained in this Security Instrument; (b) such other
period as Applicable Law might specify for the termination of
Borrower’s right to reinstate; or (c) entry of a judgment enforcing this
Security Instrument. Those conditions are that Borrower: (a) pays
Lender all sums which then would be due under this Security
Instrument and the Note as if no acceleration had occurred; (b) cures
any default of any other covenants or agreements; (c) pays all
expenses incurred in enforcing this Security Instrument, including but
not limited to reasonable attorneys’ fees, property inspection and
valuation fees, and other fees incurred for the purpose of protecting
Lender’s interest in the Property and rights under this Security
Instrument, shall continue unchanged. Lender may require that
Borrower pay such reinstatement sums and expenses in one or more
of the following forms, as selected by Lender: (a) cash; (b) money
order; (c) certified check, bank check, treasurer’s check or cashier’s
check, provided such check is drawn upon an institution whose
deposits are insured by a federal agency, instrumentality or entity; or
(d) Electronic Funds Transfer. Upon reinstatement by Borrower, this
Security Instrument and obligations secured hereby shall remain fully
effective as if no acceleration had occurred. However, this right to
reinstate shall not apply in the case of acceleration under Section 18.

(Emphasis added.) (Doc. No. 54, Spare Aff. Ex. E).

{¶20} Here, the notice’s reference to the right to reinstate in Paragraph 22

does not confer an absolute right to reinstatement. Rather, it confers a right to

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reinstatement subject to the terms of Paragraph 19. Because PHH complied with

the terms of mortgage contract by sending the Barkers a notice of intent to foreclose

which complied with the terms of Paragraph 22, and because the Barkers failed to

subsequently meet the conditions specified in Paragraph 19, we conclude the

Barkers’ argument (that they were unaware of the amount required for

reinstatement) to be without merit.4

{¶21} Moreover, there are no terms in the mortgage contract that support the

Barkers’ argument regarding the preciseness of the reinstatement quote. Instead,

and based upon the facts and circumstance of this case—the Barkers’ conduct—in

failing to remit the reinstatement amount of $16,079.27 by August 15, 2011 is the

issue of material fact in question. Therefore, there is no genuine issue of material

fact that the Barkers were not prevented from performing under the terms of the

mortgage contract by PHH’s failure to provide them with an accurate reinstatement

quote.

{¶22} Further, the Barkers argue that their July 15, 2011 letter to the PHH

(sent in response to the notice of intent to foreclose) constitutes a qualified written

request (“QWR”) under the Real Estate Settlement Procedures Act of 1974

(“RESPA”). Therefore, according to the Barkers, they were entitled to a response

from PHH within the statutory time frame. See 12 U.S.C. 2605 (1996) (current

4
To the extent that the Barkers argue that they were entitled successive notices of intent to foreclose, their
argument is specious. The terms of the mortgage contract require no such notices.

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version at 12 U.S.C. 2605 (2011)). We disagree. The Barkers waived this argument

because such was never raised in their answer, amended answer, or counterclaims

against PHH as required under 12 U.S.C. 2605. Furthermore, 12 U.S.C. 2614

creates a three-year statute of limitation for actions brought under 12 U.S.C. 2605.

12 U.S.C. 2614 (1996) (current version at 12 U.S.C. 2614 (2011)). Because the

Barkers were precluded from raising their claim under 12 U.S.C. 2605 as a result of

the expiration of the statute of limitations (on July 15, 2014) and concurrently failed

to demonstrate that the statute of limitation should be equitably tolled, any argument

related to the applicability of RESPA fails to create a genuine issue of material fact.

See 12 U.S.C. 2614. See Wells Fargo Bank, N.A., v. Sessley, 10th Dist. Franklin

No. 09AP-178, 2010-Ohio-2902, ¶ 24, (concluding that the statute of limitations

under 12 U.S.C. 2614 expired and without Sessley’s demonstration that the statute

of limitations were equitably tolled arguments related to RESPA “were insufficient

to create a genuine issue of material fact”). Thus, there is no genuine issue of

material fact that the Barkers were not prevented from performing under the terms

of the mortgage contract because they were not entitled to a response from PHH

under RESPA.

{¶23} Next, the Barkers assert that the accuracy of the notice of intent to

foreclose is called into question by PHH’s inclusion of late charges and property

inspection fees into reinstatement amount. Specifically, they argue that PHH is not

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entitled to late charges and property inspection fees as a result of PHH’s refusal to

communicate with the Barkers or accept payments and because PHH failed to advise

the Barkers that it was seeking a lump-sum payment on reinstatement. As we have

previously determined, the Barkers failed to establish any genuine issue of material

fact that they were entitled to any further form of communication under the terms

of the mortgage or RESPA other than the notice of intent to foreclose or that PHH

had failed to accept payments after December 7, 2009. (See Doc. No. 54, Spare Aff.

Ex. N). Thus, any argument suggesting that the Barkers did not know that PHH was

seeking a lump-sum payment on reinstatement is without merit. (See Doc. No. 54,

Spare Aff. Ex. J). Accordingly, we conclude that PHH was entitled to include late

fees and property inspection fees in the notice of intent to foreclose under the facts

presented in this case.

{¶24} Lastly, the Barkers argue that summary judgment in favor of PHH was

improper because PHH had a duty to mitigate their damages. “Under Ohio law, the

injured party in a breach-of-contract action has a duty to mitigate damages, meaning

that the injured party cannot recover damages ‘that it could have prevented by

“reasonable affirmative action.”’” First Fin. Bank, N.A. v. Cooper, 1st Dist.

Hamilton No. C-150664, 2016-Ohio-3523, ¶ 23, quoting Four Seasons

Environmental, Inc. v. Westfield Cos., 93 Ohio App.3d 157, 159 (1st Dist.1994),

quoting F. Ents. v. Kentucky Fried Chicken Corp., 47 Ohio St.2d 154 (1976),

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paragraph three of the syllabus. “An injured party need only use ‘reasonable,

practical care and diligence, not extraordinary measures to avoid excessive

damages.’” Id., quoting Provident Bank v. Barnhart, 3 Ohio App.3d 316, 320 (1st

Dist.1982). The burden of proof for the affirmative defense of failure to mitigate

damages lies with the breaching party. Id., citing Jindal Builders & Restoration

Corp. v. Brown & Cris, 1st Dist. Hamilton Nos. C-970029 and C-970050, 1997 WL

674621, *1 (Oct. 31, 1997). “Whether an injured party used reasonable care to

avoid damages presents a question of fact.” Id., citing Pinnacle Mgt. v. Smith, 12th

Dist. Butler No. CA2003-12-327, 2004-Ohio-6928, ¶ 12, citing Young v. Frank’s

Nursery Crafts, Inc., 58 Ohio St.3d 242, 244 (1991).

{¶25} Even though, PHH could have been more timely in initiating its third

foreclosure action (after its dismissal of the 2011 case on July 13, 2014) by filing

its foreclosure complaint before July 30, 2015, the mitigation argument ignores the

Barkers’ inaction throughout the course of the proceedings beginning with the 2007

case. The Barkers argue that PHH failed to take reasonable steps to provide them

with an address where payments could be remitted, answer correspondence, and

accept payments. However, the Barkers did not establish that PHH failed to use

reasonable care to avoid damages, as we previously determined, because PHH

provided the Barkers with an address where they could remit a reinstatement

payment; because the Barkers never attempted to tender any form of payment to

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PHH after February 2008; and because PHH was not legally required to respond to

the Barkers’ correspondence. See Cooper at ¶ 23.

{¶26} Moreover, the Barkers were not prejudiced by any failure on the part

of PHH to mitigate damages because they were permitted to live rent-free in the

residence throughout the entirety of the decade-long foreclosure actions.

{¶27} Thus, we conclude that there is no genuine issue of material fact that

PHH met the conditions precedent in order to advance the debt because there is no

genuine issue of material fact that the Barkers failed to perform under the terms of

the mortgage contract; that PHH did not breach the mortgage contract; that PHH

established accurate principle and interest due; and that PHH did not fail to mitigate

its damages.

Wrongful Foreclosure

{¶28} Under the fourth assignment of error, the Barkers argue that the trial

court should have granted their summary judgment request as to their wrongful

foreclosure counterclaim because PHH prevented them from performing under the

terms of mortgage contract. In particular, the Barkers request us to recognize an

independent cause of action for wrongful foreclosure. “Ohio courts have not yet

recognized an independent cause of action for wrongful foreclosure.” Nationstar

Mtge., L.L.C. v. Waisanen, 9th Dist. Lorain No. 16CA010904, 2017-Ohio-131, ¶ 6,

fn. 1. See also Third Fed. S. & L. Assn. of Cleveland v. Formanik, 8th Dist.

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Cuyahoga No. 103649, 2016-Ohio-7478, ¶ 53-54 (concluding that Ohio law does

not recognize wrongful-foreclosure actions). Accordingly, the trial court properly

denied summary judgment in favor of the Barkers as to their counterclaim for

wrongful foreclosure.

Declaratory Judgment

{¶29} In their fifth assignment of error, the Barkers assert that the trial court

erred in denying summary judgment as to their counterclaim for declaratory-

judgment relief because PHH acted in bad faith.

{¶30} A complaint seeking relief based on a breach of contract may be

treated as a claim for declaratory judgment seeking construction of the contract. See

Blackwell v. Internatl. Union, United Auto Workers, 9 Ohio App.3d 179 (8th

Dist.1983), paragraph one of the syllabus. See also R.C. 2721.04 (“a contract may

be construed by a declaratory judgment or decree either before or after a breach of

the contract”). An appellate court reviews a trial court’s determination “concerning

the appropriateness of the case for declaratory judgment” under an abuse-of-

discretion standard. See Arnott v. Arnott, 132 Ohio St.3d 401, 2012-Ohio-3208, ¶

1. After the trial court determines that a complaint for declaratory judgment

presents a justiciable question, an appellate court reviews de novo purely legal

issues. Id. at ¶ 17.

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{¶31} “A declaratory judgment action provides a means by which parties can

eliminate uncertainty regarding their legal rights and obligations.” Mid-Am. Fire

and Cas. Co. v. Heasley, 113 Ohio St.3d 133, 2007-Ohio-1248, ¶ 8, citing Travelers

Indemn. Co. v. Cochrane, 155 Ohio St. 305, 312 (1951). See also R.C. 2721.03.

“The purpose of a declaratory judgment action is to dispose of ‘uncertain or disputed

obligations quickly and conclusively,’ and to achieve that end, the declaratory

judgment statutes are to be construed ‘liberally.’” Mid-Am. at ¶ 8, quoting Ohio

Farmers Inemn. Co. v. Chames, 170 Ohio St.3d 209, 213 (1959). However, “the

declaratory judgment statutes are not without limitation,” and a declaratory

judgment should be used “only to decide ‘an actual controversy, the resolution of

which will confer certain rights or status upon the litigants.’” Id. at ¶ 9, quoting

Corron v. Corron, 40 Ohio St.3d 75, 79 (1980).

{¶32} Here, the trial court properly denied summary judgment as to the

Barkers’ declaratory-judgment counterclaim. That is, the trial court did not abuse

its discretion in determining that the Barkers were not entitled to declaratory-

judgment relief because PHH did not act in bad faith. Indeed, as we previously

determined, the record reflects that PHH did not act in bad faith by pursuing

foreclosure against the Barkers due to non-payment of their debt.

{¶33} For these reasons, the Barkers’ first, second, third, fourth, and fifth

assignments of error are overruled.

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Assignment of Error No. VI

The trial court erred in granting judgment of foreclosure to
plaintiff [PHH] as it did not have clean hands and considerations
of equity furthermore bar it from the equitable remedy of
foreclosure. Where a lender refuses to provide a reinstatement
quote or an address where payments would be accepted after a
court judgment ordering reinstatement of the mortgage loan, it
has created the very default giving rise to its claim for relief and
equity will not countenance such conduct.

{¶34} The Barkers argue that the trial court erred in granting a judgment of

foreclosure. Specifically, they argue that the trial court erred in granting the

judgment of foreclosure because PHH did not have “clean hands.”

Standard of Review

As this court has previously held,

a foreclosure involves a two-step process. Once it has been
determined as a matter of law that a default on the obligation secured
by the mortgage has occurred, the court must then consider the
equities to determine if foreclosure is the appropriate remedy.

PHH Mtge. Corp. v. Barker, 3d Dist. Van Wert No. 15-10-01, 2010-Ohio-5061, ¶

35, citing First Knox Natl. Bank v. Peterson, 5th Dist. Knox No. 08CA28, 2009-

Ohio-5096, ¶ 18, citing Rosselot v. Heimbrock, 54 Ohio App.3d 103, 105-106 (12th

Dist.1988). “Moreover, because foreclosure is equitable relief, ‘the simple assertion

of the elements of foreclosure does not require, as a matter of law, the remedy of

foreclosure.’” Id., quoting First Natl. Bank of Am. v. Pendergrass, 6th Dist. Erie

No. E-08-048, 2009-Ohio-3208, ¶ 22. “Therefore, as an equitable action, a

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foreclosure action should be reviewed for abuse of discretion.” Id., citing Buckeye

Retirement Co., L.L.C. v. Walling, 7th Dist. Mahoning No. 05 MA 119, 2006-Ohio-

7059, ¶ 16. An abuse of discretion suggests the trial court’s decision is

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

217, 219 (1983).

Analysis

{¶35} In their sixth assignment of error, the Barkers argue that the trial court

abused its discretion by granting a judgment of foreclosure in favor of PHH because

PHH violated the doctrine of “clean hands.” “The ‘clean hands doctrine’ of equity

requires that whenever a party takes the initiative to set into motion the judicial

machinery to obtain some remedy but has violated good faith by [his] prior-related

conduct, the court will deny the remedy.” Bank of New York Mellon v. Antes, 11th

Dist. Trumball No. 2014-T-0028, 2014-Ohio-5474, ¶ 32, quoting Crick v. Starr,

7ths Dist. Mahoning No. 08 MA 173, 2009-Ohio-6754, ¶ 38, quoting Bean v. Bean,

14 Ohio App.3d 358, 363-364 (10th Dist.1983). “‘A movant cannot obtain relief

on a matter if he is “guilty of reprehensible conduct with respect to the subject matter

of the suit.”’” Id., quoting Crick at ¶ 32, quoting Marinaro v. Major Indoor Soccer

League, 81 Ohio App.3d 42, 45 (9th Dist.1991). “‘However, the movant’s conduct

“must constitute reprehensible, grossly inequitable, or unconscionable conduct,

rather than mere negligence, ignorance, or inappropriateness.”’” (Emphasis sic.)

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Id., quoting Crick at ¶ 38, quoting Wiley v. Wiley, 3d Dist. Marion No. 9-06-34,

2007-Ohio-6423, ¶ 15.

{¶36} Here, the Barkers contend that PHH violated the “clean-hands

doctrine” because it did not provide them with a reinstatement quote or an address

to which they were to remit payment. However, as we previously determined, the

Barkers breached the terms of the mortgage contract and subsequently benefitted

from their breach. Consequently, we cannot say that PHH’s conduct constitutes

“reprehensible, grossly inequitable, or unconscionable conduct” which would

permit the Barkers equitable relief because the Barkers’ conduct of non-payment

was “reprehensible, grossly inequitable, or unconscionable conduct.” Accordingly,

we conclude that the trial court did not abuse its discretion by granting the equitable

relief of foreclosure to PHH.

{¶37} Accordingly, the Barkers’ sixth assignment of error is overruled.

Assignment of Error No. VII

The judgment of foreclosure is unlawful as it renders the prior
judgment ordering reinstatement of the loan a nullity and permits
collection of sums to which PHH is not entitled.

{¶38} Finally, and in their seventh assignment of error, the Barkers argue

that the trial court abused its discretion by granting PHH foreclosure because the

trial court’s order of foreclosure permits PHH to collect sums that it is not entitled

to collect from the confirmation of sale.

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Standard of Review

{¶39} Foreclosure actions progress through two, distinct stages which

culminate in “final, appealable judgment[s]: the order of foreclosure and the

confirmation of sale.” Farmers State Bank v. Sponaugle, 157 Ohio St.3d 151, 2019-

Ohio-2518, ¶ 18, citing CitiMortgage, Inc. v. Roznowski, 139 Ohio St.3d 299, 2014-

Ohio-1984, ¶ 39. Through the order of foreclosure, the trial court determines “the

extent of each lienholder’s interest, sets out the priority of the liens, determines the

other rights and responsibilities of each party, and orders the property to be sold by

sheriff’s sale.” Id., citing Roznowski at ¶ 39 and R.C. 2323.07. The parties may

challenge the trial court’s decision to grant the decree of foreclosure on appeal. Id.,

citing Roznowski at ¶ 39.

{¶40} “The confirmation of sale is an ancillary proceeding limited to whether

the sheriff’s sale conformed to law.” Id. at ¶ 19 citing Roznowski at ¶ 40. After the

trial court examines the proceedings and finds that the sheriff’s sale conformed with

R.C. 2329.01 through 2329.61, then the trial court enters a confirmation of sale

order which addresses the dispersal of proceeds. Id. citing R.C. 2329.31. “An

appeal of the confirmation of sale is limited to challenging the confirmation order

itself and to issues related to confirmation proceedings—for example, computation

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of the final total amount owed by the mortgagor, accrued interest, and amounts

advanced by the mortgagee for inspections, appraisals, property protection, and

maintenance.” (Emphasis added.) Id., citing Roznowski at ¶ 40. We review the

trial court’s decision to confirm a sheriff’s sale of property under an abuse-of-

discretion standard. Id., citing Ohio Savs. Bank v. Ambrose, 56 Ohio St.3d 53, 57

(1990). An abuse of discretion “implies that the court’s attitude is unreasonable,

arbitrary or unconscionable.” Blakemore, 5 Ohio St.3d at 219.

Analysis

{¶41} Because the confirmation-of-sale proceeding has not yet occurred, we

are without jurisdiction to review the Barkers’ argument. “‘In order to be

justiciable, a controversy must be ripe for review.’” State v. Loving, 10th Dist.

Franklin No. 08AP-278 and 08AP-281, 2009-Ohio-15, ¶ 4, quoting Keller v.

Columbus, 100 Ohio St.3d 192, 2003-Ohio-5599, ¶ 26. “A claim is not ripe for our

consideration if it rests on contingent future events that may not occur as anticipated

or may never occur at all.” Id. at ¶ 4, citing Texas v. United States, 523 U.S. 296,

300, 118 S.Ct. 1257 (1998). See State v. Robinson, 11th Dist. Lake No. 2009-L-

168, 2011-Ohio-4695, ¶ 35. See also Kalnasy v. Metro Health Med. Ctr., 8th Dist.

Cuyahoga No. 90211, 2008-Ohio-3035, ¶ 5. Accordingly, we decline to address the

Barkers’ seventh assignment of error.

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{¶42} Having found no error prejudicial to the appellant herein in the

particulars assigned and argued, we affirm the judgment of the trial court.

Judgment Affirmed

SHAW and WILLAMOWSKI, J.J., concur.

/jlr

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