Case Title: Wells Fargo Bank, N.A. v. Burd

Citation: 2018-Ohio-3891

Docket Number: 2017-0279

State: ohio

Court: Ohio Supreme Court

Date: 2018-09-27T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Wells Fargo Bank, N.A. v. Burd, Slip Opinion No. 2018-Ohio-3891.] 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in an 
advance sheet of the Ohio Official Reports.  Readers are requested to 
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65 
South Front Street, Columbus, Ohio 43215, of any typographical or other 
formal errors in the opinion, in order that corrections may be made before 
the opinion is published. 
 
 
SLIP OPINION NO. 2018-OHIO-3891 
WELLS FARGO BANK, N.A., APPELLANT, v. BURD, APPELLEE, ET AL. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Wells Fargo Bank, N.A. v. Burd, Slip Opinion No.  
2018-Ohio-3891.] 
Appeal dismissed as having been improvidently accepted. 
(No. 2017-0279―Submitted April 24, 2018―Decided September 27, 2018.) 
APPEAL from the Court of Appeals for Franklin County, 
No. 15AP-1044, 2016-Ohio-7706. 
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{¶ 1} This cause is dismissed as having been improvidently accepted. 
O’CONNOR, C.J., and FRENCH, FISCHER, DEWINE, and MILLER, JJ., concur. 
KENNEDY, J., dissents, with an opinion joined by PIPER, J. 
ROBIN N. PIPER, J., of the Twelfth District Court of Appeals, sitting for 
O’DONNELL, J. 
CHARLES M. MILLER, J., of the First District Court of Appeals, sitting for 
DEGENARO, J. 
Supreme Court of Ohio 
 
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KENNEDY, J., dissenting. 
{¶ 2} I respectfully disagree with the decision to dismiss this appeal as 
having been improvidently accepted.  I believe that one of the propositions of law 
submitted by appellant, Wells Fargo Bank, N.A., presents a matter of public or great 
general interest.  Therefore, I would address the merits of the appeal.  
 
Background 
{¶ 3} In September 2006, appellee, Christopher Burd, obtained a loan from 
Centennial Home Mortgage, L.L.C., and signed a note promising to repay the loan.  
The note was secured by a mortgage in favor of Centennial on property located in 
Blacklick, Ohio.  The mortgage provided that the underlying loan was insured by 
the Federal Housing Administration (“FHA”).  Subsequently, Centennial indorsed 
the note to Wells Fargo and assigned the mortgage to Wells Fargo. 
{¶ 4} In April 2009, Wells Fargo filed a complaint seeking judgment on the 
note and foreclosure of the mortgage.  Thereafter, Wells Fargo and Burd entered 
into a loan-modification agreement, and Wells Fargo voluntarily dismissed the 
complaint with prejudice. 
{¶ 5} A second complaint was filed by Wells Fargo in February 2012 
seeking judgment on the note and foreclosure of the mortgage.  The date of default 
alleged in the complaint was October 1, 2011. 
{¶ 6} The parties participated in court-sponsored mediation in August 2012, 
but were unsuccessful in resolving the dispute.  Thereafter, the trial court granted 
summary judgment in favor of Burd, holding that Wells Fargo had failed to satisfy 
the requirements of 24 C.F.R. 203.604. 
{¶ 7} In August 2014, Wells Fargo filed its third complaint seeking 
judgment on the note and foreclosure on the mortgage.  Wells Fargo asserted that 
the date of default was October 1, 2011, the same date of default alleged in the 
second foreclosure complaint.  The trial court again granted summary judgment in 
January Term, 2018 
 
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favor of Burd, holding that Wells Fargo had failed to comply with the face-to-face-
meeting requirement set forth in 24 C.F.R. 203.604, which it concluded was a 
condition precedent to foreclosure of an FHA-insured mortgage loan. 
{¶ 8} Wells Fargo appealed to the Tenth District Court of Appeals, arguing 
that the trial court erred in granting summary judgment in Burd’s favor.  
Specifically, it argued that the August 2012 court-sponsored mediation fulfilled the 
face-to-face meeting requirement of 24 C.F.R. 203.604. 
{¶ 9} The Tenth District assumed for the sake of analysis that the court-
sponsored mediation constituted a face-to-face meeting for purposes of 24 C.F.R. 
203.604.  2016-Ohio-7706, ¶ 14.  Nevertheless, the Tenth District rejected Wells 
Fargo’s assertion of compliance with the requirements of 24 C.F.R. 203.604.  2016-
Ohio-7706 at ¶ 14.  The appellate court reasoned that by asserting that the note was 
due and owing from October 1, 2011, and the face-to-face meeting between Wells 
Fargo and Burd occurred on August 1, 2012, “Wells Fargo effectively admits that 
it did not have a face-to-face meeting with Burd ‘before three full monthly 
installments due on the mortgage [were] unpaid’ as required by 24 C.F.R. 
203.604(b).”  (Brackets sic.)  2016-Ohio-7706 at ¶ 12.  The Tenth District further 
held that the fact that court-sponsored mediation occurred before the third 
foreclosure proceeding had been initiated did not alter the result: 
 
It is true that this appeal arises from a new foreclosure complaint 
filed after the unsuccessful mediation session occurred, but that 
new complaint was based on the same alleged default as the 
second complaint.  Thus, Burd had no opportunity to avoid 
foreclosure arising from that alleged default. 
 
Id. at ¶ 14. 
{¶ 10} We accepted the following issues for review:  
Supreme Court of Ohio 
 
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In interpreting an administrative regulation, a court should adopt an 
interpretation that is consistent with the overall regulatory scheme in which 
the individual regulation is included. 
 
A mortgagee’s failure to comply with the timelines provided in 24 
C.F.R. § 203.604 does not bar an action to foreclose a mortgage insured by 
the Federal Housing Association as long as the mortgagee holds or makes a 
reasonable effort to hold a face-to-face meeting prior to initiating 
foreclosure. 
 
See 150 Ohio St.3d 1451, 2017-Ohio-8136, 83 N.E.3d 938. 
Issue of Public or Great General Interest 
{¶ 11} The FHA, which is a part of the Department of Housing and Urban 
Development’s 
Office 
of 
Housing, 
https://www.hud.gov/ 
program_offices/housing/fhahistory (accessed Aug. 15, 2018), provides mortgage-
loan insurance on loans made by FHA-approved lenders.  The insurance protects 
lenders against losses that may result from homeowners defaulting on their 
mortgage loans. 
{¶ 12} When a mortgage loan is insured by the FHA, the mortgagee is 
required to satisfy certain obligations before it can file a foreclosure action.  See 
U.S. Bank, N.A. v. McMullin, 55 Misc.3d 1053, 1058, 47 N.Y.S.3d 882 (2017).  “It 
is the intent of the Department [of Housing and Urban Development] that no 
mortgagee shall commence foreclosure * * * until the requirements of this subpart 
have been followed.”  24 C.F.R. 203.500.  24 C.F.R. 203.606(a) goes on to provide:  
 
 
Before initiating foreclosure, the mortgagee must ensure 
that all servicing requirements of this subpart have been met. The 
mortgagee may not commence foreclosure for a monetary default 
January Term, 2018 
 
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unless at least three full monthly installments due under the 
mortgage are unpaid * * *. 
 
And 24 C.F.R. 203.604(b) obligates the mortgagee to “have a face-to-face interview 
with the mortgagor, or make a reasonable effort to arrange such a meeting, before 
three full monthly installments due on the mortgage are unpaid.” 
{¶ 13} A number of Ohio appellate courts have considered the effect of a 
mortgagee’s failure to have a timely face-to-face interview with the mortgagor or 
make a reasonable effort to arrange such a meeting.  There is a division in the courts 
as to whether 24 C.F.R. 203.604 creates a condition precedent or provides an 
affirmative defense.  The Third, Fifth, Seventh, Eighth, and Ninth Districts have 
held that it is a condition precedent.  Huntington Natl. Bank v. Filippi, 3d Dist. 
Union No. 14-15-03, 2015-Ohio-3096, ¶ 16; U.S. Bank, N.A. v. Detweiler, 191 Ohio 
App.3d 464, 2010-Ohio-6408, 946 N.E.2d 777, ¶ 53 (5th Dist.); PNC Mtge. v. 
Garland, 7th Dist. Mahoning No. 12 MA 222,  2014-Ohio-1173, ¶ 27, 31; Bank of 
Am., N.A. v. Michko, 8th Dist. Cuyahoga No. 101513, 2015-Ohio-3137, ¶ 18; Wells 
Fargo Bank, N.A. v. Awadallah, 9th Dist. No. 27413, 2015-Ohio-3753, 41 N.E.3d 
481, ¶ 21.  Only the Second District has held that it is an affirmative defense.  Wells 
Fargo Bank, N.A. v. Goebel, 2d Dist., 2014-Ohio-472, 6 N.E.3d 1220, ¶ 20. 
{¶ 14} The inconsistency on this issue creates uncertainty for trial courts 
and litigants and compels us to exercise our constitutional duty.  See Article IV, 
Section 2(B)(2)(e) of the Ohio Constitution.  Indeed, “our role as a court of last 
resort is not to serve as an additional court of appeals on review, but rather to clarify 
rules of law arising in courts of appeals that are matters of public or great general 
interest.”  State v. Bartrum, 121 Ohio St.3d 148, 2009-Ohio-355, 902 N.E.2d 961, 
¶ 31 (O’Donnell, J., dissenting).  The determination whether the face-to-face-
meeting requirement set forth in 24 C.F.R. 203.604 is a condition precedent or an 
affirmative defense will affect the decision as to what actions a mortgagee must 
Supreme Court of Ohio 
 
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take, and when, in order to satisfy 24 C.F.R. 203.604’s face-to-face-meeting 
requirement.  Deciding these issues will have a widespread effect by providing 
guidance to litigants, counsel, and courts, and therefore, the issues personify the 
concept of “public or great general interest.”  By dismissing this appeal, the 
majority is permitting the inconsistent outcomes in the appellate courts to continue 
and is denying the citizens of Ohio a uniform application of the law. 
{¶ 15} The court has missed an opportunity today.  The fact that the court 
accepted this case shows that it believed that this area of the law needed clarity, but 
by dismissing the case, the court permits 24 C.F.R. 203.604 to evade clarification.  
The issues were thoroughly briefed and well argued before the court; nonetheless, 
the legal and business communities and the public that are affected by Ohio 
foreclosure law and practice will have to continue to wait in silence. 
{¶ 16} Therefore, I must dissent from the judgment dismissing the appeal 
as having been improvidently accepted. 
 
PIPER, J., concurs in the foregoing opinion. 
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Thompson Hine, L.L.P., Scott A. King, and Terry W. Posey Jr., for 
appellant. 
Legal Aid Society of Columbus and Scott E. Torguson; Southeastern Ohio 
Legal Services and Peggy P. Lee; and Manner Law Firm, L.L.C., and Mathias D. 
Manner, for appellee, A. Christopher M. Burd. 
Steven Sharpe, Noel Morgan, Alpha Taylor, and John Schrider, urging 
affirmance for amicus curiae Legal Aid Society of Southwest Ohio, L.L.C. 
Katherine B. Hollingsworth and Thomas Mlakar, urging affirmance for 
amicus curiae Legal Aid Society of Cleveland. 
Stanley A. Hirtle, urging affirmance for amicus curiae Advocates for Basic 
Legal Equality, Inc. 
January Term, 2018 
 
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John M. Petit and Gregory R. Sain, urging affirmance for amicus curiae 
Community Legal Aid Services, Inc. 
Rosemary E. Scollard, urging affirmance for amicus curiae Pro Seniors, Inc. 
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