Anderson v. Clark

[Cite as Anderson v. Clark, 2021-Ohio-1210.]

IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY

:
KATHLEEN PERRY ANDERSON :
: Appellate Case No. 28791
Plaintiff-Appellant :
: Trial Court Case No. 2019-CV-1348
v. :
: (Civil Appeal from
OLIVIA CLARK, et al. : Common Pleas Court)
:
Defendant-Appellee :

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OPINION

Rendered on the 9th day of April, 2021.

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MICHAEL R. ECKHART, Atty. Reg. No. 0031450, 5335 Far Hills Avenue, #109, Dayton,
Ohio 45429
Attorney for Plaintiff-Appellant

OLIVIA CLARK, 2231 Keenan Avenue, Dayton, Ohio 45414
Defendant-Appellee, Pro Se

.............

HALL, J.
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{¶ 1} Kathleen Perry Anderson appeals from a trial court judgment dismissing her

complaint in foreclosure against Olivia Clark, and others, based on Anderson’s failure to

prove default and the amount due. There was competent, credible evidence to support

the court’s judgment, so we affirm.

I. Factual and Procedural Background

{¶ 2} On February 15, 2012, Anderson and Clark executed a promissory note for

$48,000 plus interest, which matured in February 2022. The note required Clark to make

monthly payments. Clark used the money to purchase a house, and she gave Anderson

a mortgage on the house as security for the note.

{¶ 3} Several years later, in May 2018, Anderson agreed to let Clark stop making

payments so that Clark could make repairs to the house with an eye to selling it. After the

repairs were done, Clark found a buyer, but Anderson would not agree to the sale,

because they could not agree how much Clark owed under the note. Clark hired an

accountant to figure out what she owed, and he came up with an amount much lower

than the $25,000 that Anderson claimed she was owed. Ultimately, the sale of the house

fell through.

{¶ 4} In March 2019, Anderson filed a complaint against Clark, and other

potentially interested parties, seeking to enforce the note and to foreclose on the

mortgage. Anderson alleged that Clark had defaulted on the note and owed around

$25,762, plus interest. A bench trial was held in January 2020, at which both Anderson

and Clark testified and presented other evidence, including the testimony of Clark’s

accountant. On March 20, 2020, the trial court entered judgment against Anderson. The
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trial court dismissed the case after concluding that Anderson had failed to present

sufficient evidence that all conditions precedent to foreclosure had been met, had failed

to prove that Clark was in default, and had failed to prove the amount of principal and

interest that was due.

{¶ 5} Anderson appeals.

II. Analysis

{¶ 6} Anderson assigns three errors to the trial court. The first assignment of error

alleges that the trial court erred by concluding that the evidence was insufficient to prove

that Clark owed any amount of principal and interest due under the note. The second

assignment of error alleges that the trial court erred by concluding that all conditions

precedent were not met. The third assignment of error alleges that the trial court erred by

not admitting copies of payment receipts. We begin with the third assignment of error.

A. Exclusion of payment receipts

{¶ 7} The third assignment of error alleges:

THE TRIAL COURT ERRED AND ABUSED ITS DISCRETION IN FAILING

TO ADMIT PLAINTIFF’S EXHIBIT “E” WHICH WERE PLAINTIFF’S

CARBON COPIES OF THE PLAINTIFF’S RECEIPTS.

{¶ 8} Plaintiff’s Exhibit E consisted of copies of all but six handwritten payment

receipts that Anderson made recording Clark’s payments. Many of the receipts contained

discrepancies, because Anderson used several different receipt books with carbon

copies, and she later altered the carbon copies with different colored pens and pencils,

claiming that the carbon was often misplaced. Also, many of the receipts stated only the

payment month without the year. Anderson admitted that, in some instances, she added
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the year and made changes to the receipts later after this dispute arose. Because the

receipts had been altered, the trial court refused to admit them. Anderson argues that the

trial court should have admitted them anyway, because she testified extensively about

them during direct and cross-examination.

{¶ 9} “Decisions involving the admissibility of evidence are reviewed under an

abuse-of-discretion standard of review.” (Citation omitted.) Estate of Johnson v. Randall

Smith, Inc., 135 Ohio St.3d 440, 2013-Ohio-1507, 989 N.E.2d 35, ¶ 22. “For an abuse of

discretion to have occurred, the trial court must have taken action that is unreasonable,

arbitrary, or unconscionable.” (Citation omitted.) Id.

{¶ 10} Given the problems with the receipts, we see nothing unreasonable,

arbitrary, or unconscionable about the trial court’s decision not to admit them. Anderson

admitted that the receipts were altered after the dispute arose. This significantly

undermined—if not eliminated—their value as credible evidence. In any event, the court

did not abuse its discretion in this regard.

{¶ 11} The third assignment of error is overruled.

B. Conditions precedent

{¶ 12} The second assignment of error alleges:

TRIAL COURT ERRED IN DETERMINING THAT DEFENDANTS WERE

NOT PROVIDED PROPER NOTICE OF ACCELERATION OF THE NOTE,

THEREFORE THE CONDITION PRECEDENT TO FORECLOSURE WAS

NOT MET.

{¶ 13} The trial court found no evidence that the note’s provision regarding notice

of acceleration, a condition precedent to foreclosure, had been satisfied. The court relied
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on Clark’s testimony that she had never received a notice of acceleration and Anderson’s

failure to present evidence that she had. While the notice was mailed to Clark’s address

twice, the court noted that both mailings were returned undelivered. Anderson argues that

the note did not require that Clark actually receive notice, but only that notice be sent.

{¶ 14} There are two provisions in the note regarding notice of acceleration.

Paragraph 6(C), “Notice of Default,” provides:

If I am in default, the Note Holder may send me a written notice telling me

that if I do not pay the overdue amount by a certain date, the Note Holder

may require me to pay immediately the full amount of principal which has

not been paid and all the interest that I owe on the amount. That date must

be at least 30 days after the date on which the notice is mailed to me or

delivered by other means.

And paragraph 7, “Giving of Notices,” pertinently provides:

Unless applicable law requires a different method, any notice that must be

given to me under the Note will be given by delivering it or by mailing it by

first class mail to me at the Property Address above or at a different address

if I give the Note Holder a notice of my different address.

{¶ 15} Anderson testified that she authorized her attorney to send the notice of

acceleration. She presented copies of the two certified envelopes used to send the notice,

which had been returned as undelivered. The trial court indicated that it was looking for

evidence that the notice of acceleration had been delivered, saying, “I will give them

whatever weight is deemed appropriate; but the fact that this notice came back is

something I have to give very strong consideration to.” (Tr. 79.) When Anderson’s
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attorney offered to testify that he sent the two envelopes containing the notice of

acceleration to Clark, the court said, “I’ll assume that. That is fine. And they clearly weren’t

delivered.” (Tr. 134.)

{¶ 16} We agree that the trial court incorrectly required actual delivery for the

acceleration notice condition to be satisfied. We held in Ocwen Loan Servicing, LLC v.

Malish, 2018-Ohio-1056, 109 N.E.3d 659 (2d Dist.), that an identical notice provision in

the note in that case did not require delivery to be satisfied. We observed that, if delivery

were required, one might simply ignore the notice laying in the mailbox. “This is likely why

the mortgage deems undesirable mail, like a notice of default, is given when it is sent and,

unlike the more formal civil rules, the mortgage terms contain no requirement of ordinary

mail redelivery.” Id. at ¶ 41.

{¶ 17} The second assignment of error is sustained although this conclusion does

not result in reversal of the judgment of dismissal of the complaint for the reasons that

follow.

C. Default and amount due

{¶ 18} The first assignment of error alleges:

TRIAL COURT ERRED IN NOT FINDING THE DEFENDANTS OLIVIA

CLARK AND ERIC CLARK OWED PLAINTIFF THE AMOUNT ON THE

NOTE OR A LESSER AMOUNT.

{¶ 19} The trial court found that Anderson had failed to present sufficient evidence

of the amount of principal and interest that Clark owed.

{¶ 20} “The ‘standard of review following a civil bench trial is whether the trial

court’s judgment [was] against the manifest weight of the evidence.’ ” Somerfield v. Budz,
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2d Dist. Montgomery No. 28437, 2019-Ohio-4804, ¶ 9, quoting Downtime Rebuild, L.L.C.

v. Trinity Logistics, Inc., 2019-Ohio-1869, 135 N.E.3d 1253, ¶ 12 (1st Dist.). “Accordingly,

a judgment supported by competent, credible evidence should not be reversed on

appeal.” Id., citing Huntington Natl. Bank v. Miller, 10th Dist. Franklin No. 14AP-586,

2016-Ohio-5860, ¶ 13, citing C.E. Morris Co. v. Foley Constr. Co., 54 Ohio St.2d 279,

280, 376 N.E.2d 578 (1978). “An appellate court applying this standard ‘is guided by a

presumption that the [trial court’s] findings of [fact were] correct.’ ” Id., citing Huntington

Natl. Bank v. Miller, 10th Dist. Franklin No. 14AP-586, 2016-Ohio-5860, ¶

13, citing Seasons Coal Co., Inc. v. City of Cleveland, 10 Ohio St.3d 77, 80, 461 N.E.2d

1273 (1984). “Typically, ‘an appellate court should not disturb a trial court’s findings of

fact if the record contains competent, credible evidence to support those findings.’ ”

Parker v. Newmark Homes, Inc., 2d Dist. Montgomery No. 25686, 2013-Ohio-4402, ¶ 20,

quoting Johnson v. Albers, 1st Dist. Hamilton No. C-110628, 2012-Ohio-1367, ¶ 17, citing

C.E. Morris at syllabus.

Default

{¶ 21} The trial court found that Clark was not in default because the mortgage

was in forbearance until the house sold. Presumably, the time in which the parties

anticipated that the house would be sold was not indefinite. However, at trial, both

parties testified that Anderson agreed to forbear payments, but they differed on how long

the forbearance was to last. Anderson testified that she agreed to a short forbearance,

until the house was fixed up and ready for sale. Anderson testified that, once the house

was fixed up, she told Clark, “ ‘Now that the house is ready, I want you to start paying

again * * *.’ ” (Tr. 30.) But Clark testified that Anderson agreed to forbear payments until
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the house was sold:

Q: Did she agree to defer your payments while you fixed it and sold

it?

A: Yes.

Q: Okay.

A: She did say that. That she wanted what she’s owed when the

house sold.

(Tr. 101-102.)

{¶ 22} The trial court evidently believed Clark over Anderson. We see no reason

to second guess the court’s decision on this factual question. Therefore, given that at the

time of trial the house had not yet sold, the mortgage was still in forbearance and Clark

was not in default. Whether that forbearance could reasonably be said to continue after

the trial is not before us.

Principal and interest due

{¶ 23} As to the principal and interest due, the trial court did not find Anderson’s

testimony credible regarding payments under the note and, as we discussed earlier, the

court refused to admit Anderson’s payment receipts. Anderson claimed she was owed

$25,762. (Tr. 27.) Clark herself testified about the balance due: “I believe the CPA report

states it. It's $11,000 and something.” (Tr. 20.) Clark presented the testimony of Carl

Towe, the accountant whom she had retained to calculate what she owed under the note.

He testified that his calculations showed a balance as of September 1, 2018 of
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$11,873.17. (Tt. 81, Exhibit D6.) 1 Anderson did not present any expert evidence

rebutting Towe’s calculations.

{¶ 24} Although Anderson’s complaint was titled “Complaint in Foreclosure,” and

the trial court treated Anderson’s claim only as a foreclosure, the complaint actually had

two causes of action: one for judgment on the note and the second for foreclosure against

the property to satisfy the debt. In Deutsche Bank Natl. Trust Co. v. Holden, 147 Ohio

St.3d 85, 2016-Ohio-4603, 60 N.E.3d 1243, the Ohio Supreme Court held that, “[w]e have

long recognized that an action for a personal judgment on a promissory note and an action

to enforce mortgage covenants are ‘separate and distinct’ remedies.” Id. at ¶ 25, citing

and quoting Carr v. Home Owners Loan Corp., 148 Ohio St. 533, 540, 76 N.E.2d 389

(1947). If appropriate then, a court could enter judgment on the note even if a foreclosure

were not granted on the mortgage.

{¶ 25} Given Clark’s admission as to the amount due, and her CPA’s exhibit

showing an amount due as of September 1, 2018 of $11,873.17 (with interest

accumulating at 5% per year), the evidence demonstrated the amount due was at least

$11,873.17, plus interest, regardless of whether Anderson proved she was owed

$25,762. It is Anderson’s contention that the court should have entered judgment as to

the amount due, whatever that amount may be, as determined from the evidence. On this

record, we disagree.

{¶ 26} The trial court concluded that Anderson had failed to prove that Clark was

in default. Given this conclusion, Anderson was not entitled to judgment on the note

1 The transcript lists the amount as $1,187.17 but that is clearly a transcription or
typographical error. Towe was asked about the writing at the top of his amortization
schedule, D6, which undoubtedly indicated $11,873.17.
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regardless of the amount due. Anderson’s complaint was not one for declaratory

judgment for the trial court to determine the dispute about the amount due on the note, it

was for an enforceable monetary judgment and for foreclosure. Without proof of default,

a judgment on the note was properly rejected. We recognize that the trial court incorrectly

concluded that Anderson failed to prove the amount due on the note. Actually, what

Anderson failed to prove was that she was due $25,762. There was definitive evidence

that the amount due as of September 1, 2018 was at least $11,873.17, plus 5% interest.

But the amount due on the note was inconsequential if Clark was not proven to be in

default. Because others might argue or conclude that the trial court’s findings about the

amount due, or not due, on the note had preclusive effect in subsequent litigation to

declare rights under the note or to enforce the note, we will modify the judgment to delete

the unnecessary findings and conclusions about the amount due on the note or the

sufficiency of evidence thereon. But lack of evidence of default as of the time of trial

precluded judgment on the note.

{¶ 27} The first assignment of error is overruled.

III. Conclusion

{¶ 28} To succeed in her claim on the note and in her foreclosure action, Anderson

had to prove, in addition to being the holder of the note and mortgage, that Clark was in

default, the amount of principal and interest due, and that all conditions precedent had

been satisfied. See Ocwen, 2018-Ohio-1056, 109 N.E.3d 659, at ¶ 31. Although we

conclude that the trial court was incorrect in finding notice of acceleration of the debt was

not perfected, Anderson failed to prove default. Therefore, the trial court’s conclusion that
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Anderson was not entitled to foreclosure was correct.

{¶ 29} The trial court’s judgment is modified to exclude findings or conclusions

regarding the sufficiency of evidence of the amount due on the note. As modified, the

judgment of dismissal is affirmed.

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DONOVAN, J. and WELBAUM, J., concur.

Copies sent to:

Michael R. Eckhart
Olivia Clark
Michele Phipps
Eric Clark
Hon. Mary Katherine Huffman