interesting dilemma called five forty four a one trustees hypothetical powers as a judgment lien creditor and whether the mandate of constructive notice under ohio law applies to destroy those rights our view the trial court improperly concluded that five forty four a one is not subject to constructive notice and in so doing relied on old eroni as cases dealing with mortgage avoidances which unfortunately have been apart for many years while ignoring the ohio supreme court mandate in the mess or case interpretating revised code section thirteen zero one four zero one which was a new statute passed by the ohio legislature  statutory constructive notice at the same time judge walter decided not to fall of two cases one was the bankruptcy decision in messer which followed the certified questions coming out of the supreme court where judge caldwell concluded that five forty four a one was in fact subject to constructive notice an earlier case called durham which was judge humphreys decision in the western district also concluded that five forty four a one powers are subject to constructive notice and in our preview that was the correct decision in that case which i'll discuss in a moment constructive notice as we know i question of state law five forty four a one may be a federal statute but we get there to constructive notice through state law and prior to the enactment of thirteen zero one for a one off constructive notice  precedent was largely common law and for hundreds of years courts in ohio interpreted the concept of constructive notice as a substitute for actual notice and found that in fact a bona fide purchaser for value under ohio law which is the equivalent of the trustee status under five forty four a three would not be subject to constructive notice unless facts were ascertained to create notice on behalf of a b s p and that's what ohio is the question of what role a judgment lien creditor has as a bona fide purchaser a bona fide purchasers are entitled to rely on the recording statutes to challenge a mortgage and those are the cases upon which judge walter relied below fact the cases all dealt with mortgages being challenged by other mortgagees who are as a matter of law in ohio bone fide purchasers but they didn't deal with judgment  creditors because in fact there aren't very many of those cases because judgement when creditors in ohio are not bona fide purchasers the high supreme court has said that a number of times and because they're not bona fide purchasers they don't get the benefit of tacking a recorded instrument that may or may not be defective under fifty three a one twenty three a day in fact they take the position they take when their lien is filed so as of the date of the petition filing here we interpret five forty four a one in the hypothetical lien of the trustee to take effect on the day to petition is filed and on that date following common law in ohio without regard for thirteen zero one four zero one we would have to conclude that our mortgage would be superior in interest to the hypothetical lien of the trustee we look at the cases relied on below in some of the cases relied on in the briefing here what jumps out this is two things one is as i said the case is look at whether mortgagees can challenge another mortgage that's defectively executed one hundred year old answered that question ohio is absolutely yes the cases cited by the trustee here in his briefing talk about older cases that not only predate thirteen zero one four zero one most of which also predate the period you just sit in which recollection serves was decided in two thousand and and those cases a deal with judges who avoided mortgages under five forty four a one where no issue of constructive notice was raised and no issue was raised with according to the law of ohio that a judgment lien creditor cannot be a bona fide purchaser which is the only way to secure you get to strip a mortgage now unless those cases exist whether or not they were properly decided that time is is a moot issue because we've now changed the law but regardless when it come when it came down to deciding this case what i had suggested to the trial court was because mesereau was pending we would hold the decision and of course then when mr came out in the ruled that constructive notice applies to any recorded mortgage even those that are deficient we executed and so i asked the court to follow the result in mass or both from the higher supreme court which is the mandate that all bankruptcy courts follow and also the bankruptcy court decision in messer which i believe is an accurate reflection of ohio law we're here obviously because trial court and i didn't agree on that point but in addition to thirteen zero one four a one in one i believe is a mandate from the ohio supreme court that all of us must follow we now have an interesting dilemma because since this case has been pending the ohio legislature has now passed a curative statute fifty three a one o seven c three which says any mortgage that's a record for more than four years is cured of any defect in its execution so we follow the rule that when we decide a case that law in question at the time of the decision is to hold i would suggest dog not asking you to do this that even if if the trial court bankruptcy or not reversed here if we would go back in the adversary cases with black acknowledgments and i don't believe that you can survive under any provision that without getting to the merits of the call the new statute didn't the trustees write such as they were vest in this case  filing a petition yes that's a matter of when an adversary proceeding might be remained it or the like yes but keep in mind that fifty three zero one zero seven is retroactive as a matter of the operation of the statute it's within the statute we had this issue come up judge wise i believe it was in two thousand and two in a case called norland that where prior statute fifty three a one to thirty four was deemed eventually to deemed unconstitutional by the high supreme court it was the statute the cured the number of witnesses on a mortgage and in that decision and i don't i don't want to presume it was a six circuit or what was the bapi don't recall but the court held that regardless of when the mortgage was filed in when the petition was filed the law is what it is and if it's retroactive it can apply to in that case the mortgage  co exist with ohio's recording statutes so that there's a limit on retroactivity in this new statute is there not there is no limit on retroactive to vittie and the statute if i remember correctly the statute is open ended on retroactivity i don't think it has an beginning or ending date and the reason the legislature did that is because it's a remedial statute i have it in my briefs i shouldn't speak from memory judge wise the the legislature knew is this is a remedial statute similar to fifty three a one to thirty four and so retroactively activity would kick in and i would suggest that that issue on retroactivity is also before now before the supreme result here i think the substantive result here is resolved by thirteen zero one four a one in the supreme court mandate in mass or i don't think we get to fifty three zero one zero seven and less we go back to the trial court but i think i would be remiss not advising this court that statute does exist i do think it applies but i don't think we have to get there i go back to the retro active measures i'm looking at i think is your brief where it's five three  seven g that says the statutes given retroactive effect to the fullest extent permitted but then it says this action the section would not give any retroactive effect if to do so would affect any or crude separative right or vested right in any person  any person or any real property in instrument so it sounds like stepping back from that so if we take judge wise as question that don't the rights are they determined the day the petition the statute was passed after the date of petition for a member pun correctly yes that's absolutely correct in fact it was the statute was passed in april of this year enacted after we've gone through the briefing and i believe the briefing was completed in this case at the time the statute was passed but on the retroactivity issue which again i don't think is our main argument i think that what the statute is telling is first of all it's following ohio law call in the fan fos in case cited by the us supreme court which deals with women statute is retroactive and when it's not so i believe that while the statute the statute is retroactive and would affect the trustees rights as of the date of the filing of the petition in this case because that's what the statute says and i also think it doesn't affect the substantive right because the right asserted by the trustee is not one of substance it's his remedy to which he would be entitled under five forty four a one and again the supreme court may decide that question when we get to vide rick perry i don't necessarily think that issue is before this court today i think we get a resolution of this court under thirteen zero one four zero one and i would urge the court to reverse the decision of the trial court if there are no other questions i'll reserve it one a one excuse me how do you deal with the priority issue and that part of the bankruptcy courts opinion i heard a lot about notice but i didn't hear any specific yes so here it is i'm of that if you will  my criticism of that is this is what we call the first in time first the right role or the race notice statute in ohio and again because the judgment lien creditor is not entitled to be of peace status between itself and another judgment li creditor the race to file at the clerk of courts office would determine priority between judgement ling creditors similarly under fifty three a one twenty three a day the race to file at the recorders office would determine priority between more he g s right but the problem is we can't cross pollinate so the race to file a judgment lien in the race to file a mortgage are two separate actions because that judgement when creditor is not entitled to rely on the recording statutes to say wait i got there first amy your mortgage is no good so i win they can't attack me right and so because of that i think i think that's a common misperception in the law and i frankly call it to a class set up classes of creditors judgement when creditors are in one side classes of mortgagees or on another side they don't cross each other because they can't as a matter of law things are thank you r i think the this case has gotten convoluted and i think judge walter did an excellent job of just breaking down what's going on here this is a case where we did the the court did look at thirteen zero one point four one and rightly called that statute which was passed in two thousand and thirteen a constructive notice statute because that's exactly what it is it's a constructive notice statute this is a situation where the ohio legislature was trying to fix stop whatever you want to say a lot of the defective executed mortgage situations so they passed the statute but unfortunately they didn't do the kind of job that perhaps they should have done because it does only pertain to constructive notice now as judge walter went through and you can see this  in a very detailed analysis of ohio law went through painstakingly and cited the cases that showed that notice is in a completely irrelevant consideration dealing with legislature recognizes that and that's why they in pretty much record time remember masseur was decided to sort of fight questions was decided in twenty sixteen we have on april sixth twenty seventeen this new statute which is not a remedial statute fifty three a one point zero seven which says we will now give to anything that's recorded a rebuttal presumption of validity it's there let's let's just keep it there and let's make that let's give some certainty in let's unless there's fraud or something like that that statute is going to head off prevent a lot of these judgment lien creditor situations as well it also says if it's been filed for four years this is again the new statute if it's been followed for four years there is there is this presumption and it's probably going to it's going to stick now what's that mean as a practical matter as a practical matter there are very limited cases right now that are going to fall into this this area this particular case obviously does because it was a twenty thirteen petition filing and this new statute as i think the court is is is recognizing should not be given retroactive treatment in this case because it very clearly excepts out if it's a substantive accrued right or vested right which is exactly what we've got here now so what do you say about your opponent's argument that you can't cross a judgment lean analysis if you will with a mortgagee analysis and i'm a little confused by that you have i really i don't know how to respond to that to be perfectly honest with you judge wise i only know that ohio law has long recognized that constructive notice only applies to  d it does not apply to a judgment lien creditor that is the law in ohio and that's that's very clear and your ohio law and judgment lien creditor would take precedence over an up filed judgment lien creditor would take precedence over and  recorded mortgage is that correct yes so you have a situation as well where yes judge caldwell did take in remaster and did obviously issue a decision but as judge walter noted in his footnote it is quote a limited decision without citation to ohio case law judge caldwell looked at mesereau and said well apply it to  a one and a three but again there's no citation to ohio authority judge walter was very cognizant of that and judge walter cited in his in his opinion one of his decisions judge walter held that neither the bankruptcy code nor ohio law requires that a judgment creditor have the same attributes of a bona fide purchaser as it pertains to notice of a prior interest neither requires a judgment creditor to lack notice of an unrecorded are defective lien in order to obtain a superior lien on a judgment debtors property this is i think an important decision and i think  decision those cases your honors if you if you read them or lose pendants cases and they really don't have anything to do with what we're talking about here as the ohio supreme court noted and it cited on page fifteen of the the trustees brief it's a two thousand and nine case lose pendens is not founded upon notice but it's founded upon public policy founded upon necessity so the whole line of liz pendens cases which seem to give some credence to the argument of the  simply not applicable in this situation so you take away those pendants cases and then the other cases that are cited or prank way outside of the state of ohio you've got to stay within the state of ohio like it or not that's where that's where we are you remove those cases you deal with ohio law you disregard the was pendants cases and then there's another category in there and this is a this is also and that case notes that there is a distinction between a defectively executed mortgage case and those with a land description that's another exception that we make so it's kind of like the lose pendant so again i would encourage the court to be cognizant of the lose pendants line of authority to be cognizant of the defective deed cases which are not the same as a defectively executed mortgage case which is what we have here and to look at ohio law and i think looking at ohio law it's it's very clear that this is  noted by again judge waldron walter and judge preston until the ohio legislature changed the statute recently right very recently yes and i i would i would suggest that it was  in response to the recognition that mass are only dealt with constructive notice and constructive notice only dealt with the b s p so oh no if we're going to get the mortgage situation in line in the recording in line in the state of ohio we need to do something and that's exactly what they did when they in really fairly record time for state legislature passed this new law this fifty three a one point zero seven on april sixth of seventeen are using the legal mountain has not broken don't fix it hi legislature must have seen something broken because they decided to fix something right they felt they felt in my opinion such as it is that thirteen zero one point four zero one didn't go as far as they intended it to i'm troubled by the mess or bankruptcy court opinion or how did the court get so far from your view because it's very clear that not only is the five forty four a three claim also five forty four a one claim how do they make that big jump from your viewpoint i can't answer that affectively any more effectively than judge walter did when he when he read that decision and decided you know with all due respect it's a limited decision without citation to ohio case law i see it i acknowledge it and this is what i'm going to do based upon my reading my detailed reading of ohio case creditor right when the case was filed then that statute should be read to preserve that right and can't be given recorrect room for that quote from your and that is correct your honor and that is actually again judge walter looked at that as well and he said well we've got this new statute out here as i'm writing this opinion this twelve thirteen fourteen page opinion as i'm writing this i see this new statute out here and looking at the statute well it doesn't really apply anyway is is pretty much what he said he did not go through analysis but i think if you go through the analysis and you see very plainly as i think judge wise noted at the bottom it says this shall not affect a substantive accrued right or a vested right and that's exactly what is the case creditor in ohio is not a bona fide purchaser as a matter of law therefore they can't get a higher status than b f p there below b f p and so constructive notices designed by the statue of facts a judgement link that are judged humphrey was right about that so let's talk about gibson for a minute both gibson and durham involved mortgages that were filed with affidavits that the issue of constructive notice wasn't raised in gibson that was my case by the way in the issue i did raise the judgment lien b s p issue i didn't prevail there but when it came to do our own judge humphrey quickly recognized following constructive notice applies and so the trustee was on notice and that and he specifically found that would affect five forty four a one rights judge caldwell was not out in the weeds somewhere when he followed messer five forty four a one is a constructive notice statute that applies to b f peace because they have the highest status but it also applies to judgment when creditors by because they cannot take advantage of our recording statutes to attack a mortgage right even if we didn't have thirteen no one for a when they couldn't do that in response judge wise to the dilemma i presented to you on judgement judgment liens and mortgagees and confusion i would direct the court's attention to mortgage a deed and a mortgage question in the court found that the judgment lng creditor couldn't take any priority because of the equitable and equitable interest of the grantee under a d finally counsel suggested that the trial court decision was replete with cases talking about why five forty four a one is not affected by constructive notice i would respectfully disagree the cases cited by the bankruptcy court are mcelroy which is the issue of an unrecorded mortgage didn't have anything to do with the judgment lien oh deed which is a defectively executed mortgage had nothing to do with the judgment lien the ohio supreme court case in denison which is cited in messer which deals with the defectively executed deed and the acacia decision which dealt with again legal descriptions and mortgages this notion that this idea that effectively executed mortgages somehow survived thirteen zero one four zero one is simply incorrect and i would urge this court to reverse the decision of the trial court thank you