[Cite as Home Loan Savs. Bank v. Jahweh L.L.C., 2022-Ohio-1118.]
COURT OF APPEALS
COSHOCTON COUNTY, OHIO
FIFTH APPELLATE DISTRICT
THE HOME LOAN SAVINGS BANK, : JUDGES:
: Hon. Earle E. Wise, P.J.
Plaintiff - Appellee : Hon. Patricia A. Delaney, J.
: Hon. Craig R. Baldwin, J.
-vs- :
:
JAHWEH LLC, et al., : Case No. 2022CA0001
:
Defendant - Appellant : OPINION
CHARACTER OF PROCEEDING: Appeal from the Coshocton County
Court of Common Pleas, Case No.
2018CI418
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT: March 31, 2022
APPEARANCES:
For Plaintiff-Appellee For Defendant-Appellant
JAMES R. SKELTON BRIAN W. BENBOW
Pomerene, Burns & Skelton Benbow Law Offices LLC
309 Main Street 265 Sunrise Center Drive
Coshocton, Ohio 43812 Zanesville, Ohio 43701
Coshocton County, Case No. 2022CA0001 2
Baldwin, J.
{¶1} Jahweh, LLC, appellant, is appealing the decision of the Coshocton County
Court of Common Pleas denying its motion to vacate the judgment rendered against it.
Appellant is The Home Loan Savings Bank.
STATEMENT OF FACTS AND THE CASE
{¶2} The Home Loan Savings Bank filed a complaint seeking judgment on a
cognovit note with the note attached. Home Loan filed a Statement and Confession of
Judgment with the complaint. On October 31, 2018 the trial court issued a judgment on
confession, awarding judgment in the amount of “$977,471.46, together with interest
thereon at the rate of five (5.00%) percent per annum from October 3, 2018” against
Jahweh, LLC, North Pointe Fitness Institute, LLC and Phillip F. Arthur. The clerk of courts
issued notice of the judgment to all defendants via registered mail, return receipt
requested, but all three notices were returned as unclaimed.
{¶3} More than three years after issuance of the judgment, on December 6,
2021, the defendants filed Defendants' Motion To Void The October 31, 2018 Judgment
And To Dismiss The Complaint. North Pointe, LLC and Philip Arthur argued that they did
not sign the note and therefor were “entitled to service of process. None was attempted.
The judgment against these Defendants must be vacated against these Defendants
accordingly.” (Defendants' Motion To Void The October 31, 2018 Judgment And To
Dismiss The Complaint, Dec. 6, 2021, p. 2) The defendants also argued that the note
signed on behalf of Jahweh, LLC was not a cognovit note because check boxes next to
the language what would create a cognovit note were not checked. Appellant and its co-
Coshocton County, Case No. 2022CA0001 3
defendants argued that parties did not agree to a cognovit provision and the judgment
must not stand.
{¶4} The defendants also argued that Home Loan did not present the underlying
promissory note, did not offer a running account and offered insufficient evidence to
pierce the corporate veil and hold Phillip Arthur individually liable.
{¶5} The trial court found in favor of Phillip Arthur and North Pointe Fitness, LLC,
holding that “there is only one guarantor on the note, and that guarantor is Jahweh, LLC.”
(Judgment Entry, January 5, 2022, p. 1). The trial court found against Jahweh, LLC,
finding that:
* * * the terms of the guarantee are unambiguous and clear, and need no
interpretation, and this Court must give effect to all of the contract
provisions. Sutton Bank v. Progressive Polymers, L.L.C., 161 Ohio St.3d
387 (2020). The cognovit language also complies with the statutory
requirements set forth in R.C. 2323.13. Defendant Jahweh argues that the
boxes next to the relevant language were not checked. However the
contract is completely silent as to what effect, if any, marking the box would
have on the terms of the contract. In addition, Defendant Jahweh cites no
caselaw in support of the proposition that the box must be checked for the
cognovit provisions to be enforceable. It is also beyond comprehension that
a businessman guaranteeing a note for $977,471.46 would misunderstand
the cognovit language or find that it was inconsistent with the guarantee
language on page 2 of the note.
Id. pp. 1-2.
Coshocton County, Case No. 2022CA0001 4
{¶6} Jahweh filed a timely appeal and submitted one assignment of error:
A. ASSIGNMENT OF ERROR NUMBER ONE
{¶7} “THE TRIAL COURT ERRED AS A MATTER OF LAW IN FINDING THAT
THE PARTIES ENTERED INTO A CONTRACT CONTAINING A COGNOVIT
PROVISION. THE TRIAL COURT FURTHER PREJUDICIALLY ERRED BY
CONSTRUING THE UNMARKED TERMS OF THE PARTIES' FORM AGREEMENT
AGAINST APPELLANT INSTEAD OF CONSTRUING THAT PROVISION AGAINST THE
DRAFTER OF THE CONTRACT AND THE COMMERCIAL ENTITY WHO CHOSE THE
BOILERPLATE COGNOVIT PROVISION.”
{¶8} “THE TRIAL COURT LACKED PERSONAL JURISDICTION OVER
APPELLANT IN THAT APPELLEE NEVER SERVED APPELLANT. THERE IS NO
EVIDENCE IN THE RECORD TO SUPPORT THE TRIAL COURT'S FINDING THAT
APPELLANT EXPRESSLY WAIVED SERVICE. THE TRIAL COURT THUS LACKED
SUBJECT MATTER JURISDICTION OVER APPELLEE'S COMPLAINT. THE TRIAL
COURT ACCORDINGLY COMMITTED PREJUDICIAL ERROR BY DENYING
APPELLANT'S MOTION TO VACATE THE OCTOBER 31, 2018 JUDGMENT ENTRY,
AS THAT JUDGMENT ENTRY WAS VOID FOR LACK OF PERSONAL JURISDICTION
OVER APPELLANT.”
{¶9} “THE TRIAL COURT COMMITTED PREJUDICIAL ERROR IN NOT
DISMISSING APPELLEE'S COMPLAINT IN THAT APPELLEE NEVER COMMENCED
ITS LAWSUIT BY SERVING ANY PARTY WITHIN ONE YEAR OF FILING ITS
COMPLAINT. THE TRIAL COURT LACKED SUBJECT MATTER JURISDICTION OVER
Coshocton County, Case No. 2022CA0001 5
APPELLEE'S COMPLAINT, AS THE CASE WAS NOT TIMELY COMMENCED UNDER
CIV.R. 3(A). THE TRIAL COURT'S RULING WAS THUS VOID AB INITIO.”
{¶10} “B. EVEN IF THE TRIAL COURT PROPERLY HAD JURISDICTION OVER
THE SUBJECT MATTER AND THE PARTIES, THE TRIAL COURT ERRED AS A
MATTER OF LAW WHEN IT ISSUED JUDGMENT WITHOUT PROOF OF A
CONTRACTUAL BREACH OR DAMAGES.”
{¶11} Appellant, Jahweh, LLC submitted only one assignment of error with distinct
subparts that could arguably stand as separate assignments of error. While Jahweh does
not expressly divide its brief, the argument can be logically divided into assertions that
the finding that the relevant document was a cognovit note was error and, because the
document was not a cognovit note, the trial court lacked jurisdiction and its judgment was
void ab initio.
{¶12} While Jahweh did not expressly frame its arguments as a motion to vacate
under Civ. R. 60(B), we find that portion of the motion presented to the trial court regarding
the judgment against Jahweh and the context within which it was presented provided
sufficient argument to trigger the application of that Rule. In the court below, Jahweh
captioned its motion “Defendants' Motion to Void the October 31, 2018 Judgment and to
Dismiss the Complaint.” We have previously found that “[c]ourts of this state have
recognized that the name given to a pleading or motion is not controlling. Lungard v.
Bertram, 86 Ohio App. 392, 395, 88 N.E.2d 308(1949). Rather, the substance of the
pleading or motion determines the operative effect thereof. Id. State ex rel. Browning v.
Browning, 5th Dist. Muskingum No. CT2011-CA-55, 2012-Ohio-2158, ¶ 43. In this matter
the motion, though captioned “Motion to Vacate” does state an argument for relief under
Coshocton County, Case No. 2022CA0001 6
Civ. R. 60(B).1 We will review the case and the facts to the extent that they are relevant
to the resolution of this issue
STANDARD OF REVIEW
{¶13} Jahweh sought an order vacating the judgment against it and cited several
grounds for relief, including an analysis of its allegations in the context of a motion under
Civ.R. 60(B). Because Jahweh seeks to vacate a prior judgment and because that relief
is available through Civ.R. 60(B), we will rely on that Rule and the relevant precedent to
frame our analysis.
{¶14} GTE Automatic Elec., Inc. v. ARC Industries, Inc., 47 Ohio St.2d 146, 351
N.E.2d 113 (1976), paragraph two of the syllabus, is the leading case regarding Civ.R.
60(B) motions:
To prevail on a motion brought under Civ.R. 60(B), the movant must
demonstrate that: (1) the party has a meritorious defense or claim to present
if relief is granted; (2) the party is entitled to relief under one of the grounds
stated in Civ.R. 60(B)(1) through (5); and (3) the motion is made within a
reasonable time, and, where the grounds of relief are Civ.R. 60(B)(1), (2) or
(3), not more than one year after the judgment, order or proceeding was
entered or taken.
{¶15} Where the judgment sought to be vacated is a cognovit judgment, the
standard set forth by GTE is modified. In such a case, the party seeking to vacate a
1
Appellant contends in its Reply in the case below that it was not arguing that Civ.R.
60(B) applies. After close review of that argument, we conclude that this reference is
intended to apply to the two co-defendants who are not part of this appeal and was not
intended to limit the argument regarding Jahweh.
Coshocton County, Case No. 2022CA0001 7
cognovit judgment need only show that the motion to vacate was timely made and that a
meritorious defense is available. See Fifth Third Bank v. Jarrell, Franklin App. No. 04AP-
358, 2005-Ohio-1260 at ¶ 11. World Tire Corp. v. Webb, 5th Dist. Knox No. 06CA10,
2007-Ohio-5135, ¶ 30.
Courts in this state have repeatedly held that cognovit judgments
present special circumstances, and ‘[t]he prevailing view is that relief from
a judgment taken upon a cognovit note, without prior notice, is warranted
by authority of Civ.R. 60(B)(5) when the movant (1) establishes a
meritorious defense, (2) in a timely application.’ Meyers v. McGuire (1992),
80 Ohio App .3d 644, 646, 610 N.E.2d 542. See also Medina Supply Co. v.
Corrado (1996), 116 Ohio App.3d 847, 850-51, 689 N.E.2d 600; Star Bank,
N.A. v. Jackson (Dec. 1, 2000), Hamilton App. No. C 000242, at *2.
Furthermore, in establishing a meritorious defense, the ‘movant's burden is
only to allege a meritorious defense, not to prove that he will prevail on that
defense.’ Meyers, supra, citing Rose Chevrolet, Inc. v. Adams (1988), 36
Ohio St.3d 17, 20, 520 N.E.2d 564.
World Tire Corp. v. Webb, 5th Dist. Knox No. 06CA10, 2007-Ohio-5135, ¶¶ 33.
{¶16} Trial courts are vested with discretionary authority in determining whether
movants have demonstrated meritorious defenses or claims. In order to find an abuse of
that discretion, we must determine the trial court's decision was unreasonable, arbitrary
or unconscionable and not merely an error of law or judgment. Blakemore v. Blakemore
(1983), 5 Ohio St.3d 217, as quoted in Bichsel v. Dr. Laughlin, 5th Dist. Tuscarawas
No. 95 AP 030010, 1995 WL 768029 (Sept. 27, 1995) *1.
Coshocton County, Case No. 2022CA0001 8
ANALYSIS
{¶17} Jahweh’s sole assignment of error contains references to several errors,
but we will focus on the assertion that “the trial court erred as a matter of law in finding
that the parties entered into a contract containing a cognovit provision” as addressing that
alleged error will allow the most efficient resolution of the case.
{¶18} First, we note that the record contains no clear evidence of when Jahweh
received notice of the judgment. The record shows that the trial court’s attempts to serve
notice of the judgment were returned as unclaimed. Home Loan refers to foreclosure
actions filed in Coshocton County Common Pleas Court that establish that Jahweh had
notice of the judgments in 2019, but none of this information is contained within the record
before us and, as noted by Home Loan “this Court is bound by the record and cannot
consider any facts that are not contained within said record.” (Appellee’s Brief, p.6).
{¶19} Further, the trial court did not expressly address the timeliness of the motion
in its entry but granted the motion in part and denied it in part, tacitly finding that the
motion was timely.
{¶20} The trial court overruled the motion with regard to Jahweh, LLC only. The
trial court rejected Jahweh’s defense that the note was not a cognovit note for lack of a
check mark by those provisions that are a mandatory part of a cognovit note. The trial
court found that cognovit language complied with R.C. 2323.13, that the “contract is
completely silent as to what effect, if any, marking the box would have on the terms of the
contract” and that Jahweh provided no caselaw supporting the proposition that the box
must be checked for the cognovit provisions to be effective. The trial court also found it
Coshocton County, Case No. 2022CA0001 9
beyond comprehension that a business person would misunderstand the cognovit
language.
{¶21} We find that the necessary cognovit language is contained within the
guaranty signed by Phillip F. Arthur, on behalf of Jahweh, LLC, but the question remains
as to whether the document was converted into a cognovit note by the addition of that
language or whether the checkboxes immediately adjacent to the required language must
be checked to activate that language.
{¶22} Marking one or more boxes or blank, underlined spaces in a document is a
common strategy that allows the drafter to create a multipurpose document that can be
used in different circumstances rather than producing one document for each distinct
factual situation. This shortcut can lead to questions regarding the meaning or validity of
an agreement based upon the presence or absence of a checkmark. PNC Bank, N.A. v.
May, 8th Dist. Cuyahoga No. 98071, 2012-Ohio-4291, ¶¶ 26-27, (Not unreasonable for
party to disregard section describing obligations of guarantor when box on application
near “guarantor” was not checked); Banez v. Banez, 5th Dist. Stark No. 2006CA00216,
2007-Ohio-4584, ¶¶ 304-306, (Check mark indicates intent to replace contract of
insurance); Commonwealth Petroleum Co. v. Petrosol Intern., Inc., 901 F.2d 1314, 1315
(6th Cir.1990), (No box checked for delivery method, because propane was not physically
moved); In re McZeal, Bankr. N.D. Ohio No. 14-15947, 2019 WL 1271398, *4, (Failure to
check box supported conclusion the transaction was a consumer transaction);
McCandlish v. McCandlish, 5th Dist. Licking No. 13-CA-37, 2013-Ohio-5066, ¶ 27,
(Father claims he was not aware that the issues of parenting time and child support would
be argued at the hearing because box was not checked); Robins v. Glob. Fitness
Coshocton County, Case No. 2022CA0001 10
Holdings, LLC, 838 F.Supp.2d 631, 646, (Failure to check appropriate cancellation box
supported denial of unjust enrichment claim); Planet Clair LLC, v. American Honda Motor
Co., Inc., Cal. App. No. B308151, 2022 WL 779270, (March 15, 2022) *4 (Defendant
requests judicial notice of contract on which plaintiff failed to check box indicating primary
use of vehicle was for business or commercial purposes); Albrecht v. Marinas Internatl.
Consol., L.P., 9th Dist. Summit No. 25246, 2010-Ohio-5732, ¶ 23, (Failing to check
appropriate box submitted as defense to failure to winterize intake generator.)
{¶23} The checkmark, whether in a box or a blank space, has become a material
part of many form pleadings, judgment orders and contracts and the presence or absence
of a checkmark can have a significant impact on the document. The presence or absence
of a check mark in a space so reserved indicates that the parties intended that the
adjacent language will play some role in the document. Generally, the presence of a
checkmark indicates that the language following it shall be considered a part of the
agreement and the lack of the checkmark is a signal that the language will not apply.
{¶24} In the matter before us, the document contains several check boxes, some
are checked and others are not. The box next to “Specific Debts” is checked and the box
next to “All Debts” is not checked, supporting a conclusion that Jahweh is guarantying
only the specific debt described and no other.
{¶25} The next section, captioned “Exclusions,” contains three check boxes with
related text and none of the boxes are checked. We would conclude that the language
after the unchecked boxes is inapplicable. In the next section, captioned “Security,” the
document contains two check boxes and the box next to the phrase “the guaranty is
Coshocton County, Case No. 2022CA0001 11
unsecured” is checked while the box near “secured by” is unchecked leading to the
conclusion that this guaranty is not secured.
{¶26} The next two check boxes are adjacent to the language relevant to this
appeal and none are checked. The first is next to the following:
CONFESSION OF JUDGMENT. If Guarantor defaults, it authorizes any
attorney to appear in a court of record and confess judgment against it
in favor of Lender. The confession of judgment may be without process
and for any amount due on this Guaranty including collection costs and
reasonable attorneys' fees.
{¶27} The second unchecked box precedes the statutory warning required by
R.C. 2323.13(D). Jahweh contends that because these boxes are not checked a cognovit
note was not created and that the judgment should therefore be vacated. The trial court
found that Jahweh failed to provide any authority supporting its contention, that the
agreement is silent regarding the consequence of unchecked boxes and that Jahweh’s
representative should have understood its obligations as a competent business person.
{¶28} The fact that the guaranty is silent regarding the meaning of a check mark
does not support a conclusion that the inclusion or omission of a check mark is
meaningless. The fact that the parties executed a document with some boxes checked
and others unchecked is a tacit recognition that the action of checking the boxes held
some significance. Due to the lack of checkmarks next to the cognovit note language, this
document could be interpreted as a simple guaranty of the debt of Northpointe, LLC
without the cognovit provisions. The record contains insufficient evidence to reach a
conclusion regarding this document, but the lack of the check mark and appellant’s
Coshocton County, Case No. 2022CA0001 12
allegations do raise a question regarding the intent of the parties and whether the trial
court abused its discretion by not finding that Jahweh had alleged a meritorious defense.
{¶29} We have held that “[a]ppellants need to allege operative facts with enough
specificity to allow the trial court to decide whether a meritorious defense exists” and that
“[f]or purposes of a successful motion for relief from a judgment obtained by cognovit
note, where relief is pursued in a timely manner and in light of a proper allegation of a
meritorious defense, any doubt should be resolved in favor of setting aside the judgment
so that the case may be decided on the merits.” (Citations omitted.) Advanced Clinical
Mgt., Inc. v. Salem Chiropractic Ctr., Inc., 5th Dist. Stark No. 2003CA00108, 2004-Ohio-
120, ¶¶ 15-16. “* * * [A] proffered defense is meritorious if it is not a sham and when, if
true, it states a defense in part, or in whole, to the claims for relief set forth in the
complaint. (Citations omitted.) Amzee Corp. v. Comerica Bank-Midwest, 10th Dist.
Franklin No. 01AP-465, 2002-Ohio-3084, ¶ 20.
{¶30} The lack of marks in the boxes, in conjunction with the allegations described
in the Appellant’s motion and its verification of their truth, if believed, cast doubt on the
validity and enforceability of the cognovit note.
{¶31} We also take issue with the trial court’s finding that the language of the
guaranty was unambiguous in light of its comment that it contained no instruction
regarding the treatment of the checkboxes adjacent to the language that comprised the
cognovit note provisions. While the trial court did not expressly state its rational, it is
evident that it concluded that the unchecked boxes were meaningless. That conclusion
contradicts the parties use of the checkbox in the language preceding the cognovit note
language and the common use of checkboxes as noted in the precedent we have cited.
Coshocton County, Case No. 2022CA0001 13
Upon the record before us, a reasonable person could conclude that the absence of any
mark in the checkboxes indicates that the cognovit note provisions do not apply,
potentially creating an enforceable guaranty without the remedy offered by R.C. 2323.13.
See PNC Bank, N.A. v. May, 8th Dist. Cuyahoga No. 98071, 2012-Ohio-4291, ¶ 27
(“Pocos did not check, however, the only box on the front of the application as the
‘guarantor’ of All Trade's obligations under the line of credit. It was not, therefore,
unreasonable for Pocos to simply disregard this section because he did not believe he
was a ‘personal guarantor.’ ”).
{¶32} We hold that Jahweh has filed a timely motion for relief from judgment and
that its assertion that the guaranty was not converted into a cognovit note supplies a
meritorious defense and that, therefor, the trial court abused its discretion by failing to
grant relief from judgment.
Coshocton County, Case No. 2022CA0001 14
{¶33} The decision of the Coshocton County Court of Common Pleas is reversed
and this matter is remanded for further proceedings consistent with this opinion.
By: Baldwin, J.
Wise, Earle, P.J. and
Delaney, J. concur.