Title: Radatz v. Fed. Nat’l Mortgage Ass’n

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Radatz v. Fed. Natl. Mtge. Assn., Slip Opinion No. 2016-Ohio-1137.] 
 
 
 
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. 2016-OHIO-1137 
RADATZ, APPELLEE, v. FEDERAL NATIONAL MORTGAGE ASSOCIATION, 
APPELLANT. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Radatz v. Fed. Natl. Mtge. Assn., Slip Opinion No.  
2016-Ohio-1137.] 
Class actions—Subject matter jurisdiction—Statutory damages—Cease-and-
desist order did not preclude trial court from exercising jurisdiction under 
12 U.S.C. 4635(b)—12 U.S.C. 4617(j)(4) prohibited trial court from 
ordering payment of statutory damages—Court of appeals’ judgment 
affirmed and matter remanded to trial court. 
(No. 2014-1126—Submitted September 15, 2015—Decided March 23, 2016.) 
APPEAL from the Court of Appeals for Cuyahoga County, No. 100205,  
2014-Ohio-2179. 
_________________________ 
 
 
SUPREME COURT OF OHIO 
 
2
FRENCH, J. 
{¶ 1} In this appeal, we address whether a cease-and-desist order issued by 
the Federal Housing Finance Agency (“FHFA”) to defendant-appellant, Federal 
National Mortgage Association (“Fannie Mae”), divested the trial court of subject 
matter jurisdiction over the class action of plaintiff-appellee, Rebekah R. Radatz, 
for statutory damages against Fannie Mae under R.C. 5301.36(C).  We agree with 
the holding of the Eighth District Court of Appeals that the cease-and-desist order 
did not preclude the trial court from exercising jurisdiction under 12 U.S.C. 
4635(b), the federal statute governing judicial review of FHFA orders.  However, 
we conclude that a different federal statute, 12 U.S.C. 4617(j)(4), bars the trial 
court from ordering Fannie Mae to pay damages under R.C. 5301.36(C) while 
Fannie Mae is under FHFA’s conservatorship.  The awarding of such damages 
runs afoul of 12 U.S.C. 4617(j)(4), which prohibits Fannie Mae from incurring 
liabilities “in the nature of penalties or fines” while under FHFA conservatorship.  
We therefore affirm the Eighth District’s judgment reversing the decision of the 
trial court, albeit for different reasons than those stated by the court of appeals, 
and remand the matter to the trial court. 
BACKGROUND ON FANNIE MAE AND THE FEDERAL HOUSING AND 
ECONOMIC RECOVERY ACT OF 2008 
{¶ 2} Fannie Mae is a federally chartered private corporation created by 
the United States Congress to “provide stability in the secondary market for 
residential mortgages” and to “promote access to mortgage credit” by “increasing 
the liquidity of mortgage investments and improving the distribution of 
investment capital available for residential mortgage financing.”  12 U.S.C. 
1716(1), (4).  Congress created the Federal Home Loan Mortgage Corporation 
(“Freddie Mac”) for substantially similar purposes.  See Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989, Pub.L. No. 101-73, § 731(a), 
103 Stat. 429.  The two entities purchase residential mortgages from banks, 
January Term, 2016 
 
3
repackage them for sale as mortgage-backed securities, and guarantee these 
securities by promising to make investors whole if borrowers default.  
Congressional Budget Office, Fannie Mae, Freddie Mac, and the Federal Role in 
the 
Secondary 
Mortgage 
Market 
viii 
(2010), 
https://www.cbo.gov/ 
publication/21992#section0 (accessed Dec. 15, 2015). 
{¶ 3} In response to the nationwide decline in housing prices, increase in 
foreclosures, and heightened concern as to whether Fannie Mae and Freddie Mac 
had enough capital to cover losses to their portfolios, id., Congress enacted the 
Housing and Economic Recovery Act of 2008 (“HERA”), Pub.L. No. 110-289, § 
1101, 122 Stat. 2654 (codified at 12 U.S.C. 4511).  HERA created FHFA and 
empowered the agency to act as both regulator and conservator of Fannie Mae 
and Freddie Mac. 
{¶ 4} As regulator, FHFA must ensure that each entity “operates in a safe 
and sound manner,” “foster[s] liquid, efficient, competitive, and resilient national 
housing finance markets,” operates “consistent[ly] with the public interest,” and 
complies with all applicable law.  12 U.S.C. 4513(a)(1)(B).  FHFA’s regulatory 
powers include the authority to issue cease-and-desist orders if a regulated entity 
is engaging in “unsafe or unsound practices.”  12 U.S.C. 4631(a).  If FHFA has 
reasonable cause to believe that a regulated entity is about to engage in unsafe or 
unsound practices or is violating, has violated or is about to violate a law, rule, 
regulation or order, the agency issues a notice of charges.  12 U.S.C. 4631(a)(1), 
(c)(1).  After a hearing or upon consent of the regulated entity, 12 U.S.C. 
4631(c)(2), FHFA issues a cease-and-desist order, which becomes final and 
effective 30 days after service or upon consent, 12 U.S.C. 4631(f). 
{¶ 5} Congress also authorized FHFA to place the two entities under its 
conservatorship “for the purpose of reorganizing, rehabilitating, or winding up the 
affairs of a regulated entity.”  12 U.S.C. 4617(a)(2).  Upon appointment as 
conservator, FHFA succeeds to “all rights, titles, powers, and privileges of the 
SUPREME COURT OF OHIO 
 
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regulated entity,” 12 U.S.C. 4617(b)(2)(A)(i), and may take action “necessary to 
put the regulated entity in a sound and solvent condition” and “appropriate to 
* * * preserve and conserve the assets and property of the regulated entity.”  12 
U.S.C. 4617(b)(2)(D). 
FACTS AND PROCEDURAL HISTORY 
Summary of R.C. 5301.36 class-action allegations 
{¶ 6} On August 7, 2003—before Congress enacted HERA—Radatz filed 
a class-action complaint in Cuyahoga County.  Radatz alleges on behalf of 
similarly situated class members that Fannie Mae failed to timely record in the 
appropriate county recorder’s office the satisfaction of her residential mortgage 
within 90 days after payoff, as state law (R.C. 5301.36(B)) requires.  Radatz and 
the class members each seek to recover $250 under R.C. 5301.36(C).  Division 
(C) of R.C. 5301.36 states that if a mortgagee fails to record the satisfaction of a 
mortgage in compliance with R.C. 5301.36(B), “the mortgagor of the unrecorded 
satisfaction and the current owner of the real property to which the mortgage 
pertains may recover, in a civil action, damages of two hundred fifty dollars.”  
R.C. 5301.36(C).  This remedy “does not preclude or affect any other legal 
remedies or damages that may be available to the mortgagor.”  Id. 
{¶ 7} In December 2006, the trial court certified the following class:  “[a]ll 
persons who, since May 9, 1997 and thereafter, paid off an Ohio residential 
mortgage (as defined by R.C. 5301.36), where [Fannie Mae] was the mortgagee at 
the time of the payoff, and a satisfaction was not recorded with any Ohio county 
recorder within 90 days from the date of payoff.”  The Eighth District Court of 
Appeals affirmed certification of the class.  Radatz v. Fed. Natl. Mtge. Assn., 176 
Ohio App.3d 319, 2008-Ohio-1937, 891 N.E.2d 1236 (8th Dist.).  This court 
declined to hear Fannie Mae’s appeal of the class-certification order.  Radatz v. 
Fed. Natl. Mtge. Assn., 119 Ohio St.3d 1486, 2008-Ohio-5273, 894 N.E.2d 1244. 
January Term, 2016 
 
5
{¶ 8} On September 6, 2008, during class-certification proceedings, FHFA 
placed Fannie Mae and Freddie Mac under its conservatorship.  Fannie Mae 
thereafter sought to remove the class action to federal court, invoking the 
conservatorship as a basis for its petition.  The district court denied Fannie Mae’s 
removal petition and remanded the matter to the Cuyahoga County Common 
Pleas Court in March 2010. 
FHFA’s consent order and Fannie Mae’s motion to dismiss 
{¶ 9} Upon remand and during proceedings before the trial court as to the 
scope of class membership, FHFA issued the following consent order dated 
March 9, 2013:   
 
Pursuant to 12 U.S.C. § 4631, [Fannie Mae] and [Freddie 
Mac] (together “the Enterprises”) are hereby   
1.  
ORDERED to CEASE and DESIST from violating 
12 U.S.C. § 4617(j)(4) by paying, for any reason, directly or 
indirectly, any fines or penalties imposed by any state mortgage 
satisfaction law on the Enterprises for noncompliance. 
Furthermore, Fannie Mae is  
2. 
ORDERED to CEASE AND DESIST from 
violating 12 U.S.C. § 4617(j)(4) by paying, for any reason, directly 
or indirectly, any amount pursuant to Ohio Code 5301.36 or 
pursuant to any judgment in connection with the pending lawsuit 
styled Radatz v. Fed. Nat’l Mortgage Ass’n, Case No. CV-03-
507616 (Ohio Com. Pleas). 
 
{¶ 10} On March 13, 2013, Fannie Mae moved to dismiss for lack of 
subject matter jurisdiction.  Fannie Mae argued that maintaining the class action 
would “affect” FHFA’s enforcement of the consent order in contravention of 12 
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U.S.C. 4635(b), which states that “no court shall have jurisdiction to affect, by 
injunction or otherwise, the issuance or enforcement of any notice or order under 
section 4631 [cease-and-desist orders] * * * or to review, modify, suspend, 
terminate, or set aside any such notice or order.”  Fannie Mae also argued that the 
consent order expressly prohibits Fannie Mae from paying any judgment in this 
matter under R.C. 5301.36(C) because 12 U.S.C. 4617(j)(4) shields Fannie Mae 
from any liability “in the nature of penalties or fines” while under FHFA’s 
conservatorship.  The trial court agreed with Fannie Mae and dismissed the 
complaint for lack of subject matter jurisdiction. 
{¶ 11} The Eighth District Court of Appeals reversed and held that the 
FHFA consent order did not divest the trial court of jurisdiction.  Relying in part 
on Rosette v. Countrywide Home Loans, Inc., 105 Ohio St.3d 296, 2005-Ohio-
1736, 825 N.E.2d 599, the Eighth District held that R.C. 5301.36(C) awards 
compensatory and not punitive damages.  2014-Ohio-2179, 11 N.E.3d 1230, ¶ 14.  
The court therefore concluded that R.C. 5301.36(C) does not implicate 12 U.S.C. 
4617(j)(4), which immunizes Fannie Mae from incurring liabilities in the nature 
of a penalty or fine.  Id. at ¶ 19.  And based on its determination that R.C. 
5301.36(C) does not award damages in the nature of a penalty or fine, the appeals 
court concluded that a judgment awarding statutory damages under R.C. 
5301.36(C) would not “affect” the FHFA consent order in contravention of 12 
U.S.C. 4635(b).  Id. at ¶ 20. 
{¶ 12} We accepted Fannie Mae’s appeal on the following two 
propositions of law:  (1) “Under the controlling statutory framework established 
by Congress, 12 U.S.C. 4635(b), no Ohio court has jurisdiction to review a cease-
and-desist order issued by [FHFA] as Regulator” and (2) “[FHFA]’s Order 
determining that R.C. 5301.36 is ‘in the nature of a penalty’ under federal law is 
not inconsistent with [Rosette, 105 Ohio St.3d 296, 2005-Ohio-1736, 825 N.E.2d 
599].” 
January Term, 2016 
 
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ANALYSIS 
Subject matter jurisdiction under 12 U.S.C. 4635(b) 
{¶ 13} We begin our analysis with 12 U.S.C. 4635(b), the federal statute 
that governs judicial review of FHFA cease-and-desist orders issued under 12 
U.S.C. 4631.  Subsection 4635(b) states: 
 
Except as otherwise provided in this subchapter and sections 
4619[1] and 4623[2] of this title, no court shall have jurisdiction to affect, 
by injunction or otherwise, the issuance or enforcement of any notice or 
order under section 4631 * * * or to review, modify, suspend, terminate, 
or set aside any such notice or order. 
 
{¶ 14} Subsection 4635(b) mirrors nearly identical language in 12 U.S.C. 
1818(i)(1), which governs judicial review of cease-and-desist orders issued 
against financial institutions by other federal agencies, including the Office of 
Comptroller of the Currency (“OCC”).  Given the dearth of case law addressing 
12 U.S.C. 4635(b), we look to decisions examining 12 U.S.C. 1818(i)(1).  The 
United States Supreme Court has concluded that subsection 1818(i)(1) provides 
“clear and convincing evidence that Congress intended to deny” the district courts 
jurisdiction to review and enjoin an agency’s ongoing administrative proceedings.  
Fed. Reserve Sys. Bd. of Governors v. MCorp Fin., Inc., 502 U.S. 32, 44, 112 
S.Ct. 459, 116 L.Ed.2d 358 (1991).  See also Am. Fair Credit Assn. v. United 
Credit Natl. Bank, 132 F.Supp.2d 1304, 1311 (D.Colo.2001) (hereinafter 
“AFCA”) (citing MCorp Fin. and collecting cases “agree[ing] that Congress’ 
                                                 
1  12 U.S.C. 4619 has been repealed.  Pub.L. No. 110-289, Div. A, Title I, § 1145(b)(4), 122 Stat. 
2767 (2008). 
2  12 U.S.C. 4623 allows an entity to appeal a capital classification by FHFA under 12 U.S.C. 
4614 and is not applicable to cease-and-desist orders under section 4631. 
SUPREME COURT OF OHIO 
 
8
withdrawal of jurisdiction over consent orders in Section 1818(i)(1) is far-
reaching”). 
{¶ 15} Notwithstanding this broad language, subsections 1818(i)(1) and 
4635(b) do not automatically bar courts from adjudicating claims involving a 
regulated entity subject to a cease-and-desist order.  The jurisdictional bar in 
subsection 4635(b) “is not meant to displace a non-party’s right to present its 
claims to a * * * court, or the jurisdiction of the court to hear those claims.”  In re 
JPMorgan Chase Mtge. Modification Litigation, 880 F.Supp.2d 220, 232 
(D.Mass.2012) (construing subsection 1818(i)(1)).  See also Newton v. Am. Debt 
Servs., Inc., 75 F.Supp.3d 1048, 1059 (N.D.Cal.2014) (subsection 1818(i)(1) 
“does not prevent a court from adjudicating the legality of conduct under 
substantive laws and regulations simply because [an agency] has taken similar or 
parallel actions”).  As illustrated by various cases, a court may adjudicate state-
law claims against a regulated entity subject to a federal consent order so long as 
the exercise of such jurisdiction does not conflict with or contradict the terms of 
the consent order itself. 
{¶ 16} AFCA provides an apt example of how the jurisdictional bar may 
preclude some but not all claims against a regulated entity.  In AFCA, the court 
found that 12 U.S.C. 1818(i)(1) divested the court of jurisdiction over AFCA’s 
claims against a national bank, which would have required payment of money 
damages “in direct contravention” of a cease-and-desist order issued by the OCC.  
AFCA at 1312.  The cease-and-desist order prohibited the bank from “ ‘all activity 
and transactions relating to the products of [AFCA], including but not limited to 
payment of funds for any reason to AFCA.’ ”  (Brackets and emphasis sic.)  Id.  
The court retained jurisdiction, however, over AFCA’s remaining claims against 
the bank’s parent company.  Id. at 1311-1312.  The OCC cease-and-desist order 
did not prohibit the parent company from making payments; it merely ordered the 
January Term, 2016 
 
9
parent company to assume, pay off, and resolve all of the bank’s remaining 
liabilities.  Id. 
{¶ 17} Subsection 1818(i)(1) also did not preclude the courts in Rex v. 
Chase Home Fin., L.L.C., 905 F.Supp.2d 1111 (C.D.Cal.2012), and In re 
JPMorgan Chase Mtge. Modification Litigation from adjudicating the plaintiffs’ 
claims against JPMorgan for breach of contract and violations of state consumer-
protection law.  Both cases involved an OCC consent order requiring JPMorgan 
Chase to implement a compliance program to remedy questionable mortgage 
servicing and foreclosure practices.  Because the consent order was “silent 
regarding the relief Plaintiffs seek,” adjudication of the plaintiffs’ claim for 
damages would not affect enforcement of the consent order.  Rex at 1126.  Accord 
In re JPMorgan Chase Mtge. Modification Litigation at 232 (section 1818 did not 
preclude the court from effectuating a remedy that did not affect or contradict 
consent order). 
{¶ 18} Likewise, we do not find here that the FHFA consent order against 
Fannie Mae divested the trial court of jurisdiction.  The terms of the consent order 
narrowly prohibit Fannie Mae from “paying, for any reason, directly or indirectly, 
any amount pursuant to [R.C.] 5301.36 or pursuant to any judgment in connection 
with the pending [Radatz] lawsuit.”  The consent order does not preclude the trial 
court from, for example, certifying a class or determining for each alleged 
violation whether Fannie Mae is the “mortgagee” of record, as defined by R.C. 
5301.36(H)(1).  While the consent order prohibits payment by Fannie Mae, it 
does not prohibit a court from issuing a judgment or determining whether Fannie 
Mae violated state law.  Unlike the cases cited by Fannie Mae, adjudication of 
Radatz’s claims here would not enjoin, modify or set aside the FHFA cease-and-
desist order or contravene the express terms of that order.  See MCorp Fin., 502 
U.S. 32, 112 S.Ct. 459, 116 L.Ed.2d 358 (court lacked jurisdiction over 
adversarial bankruptcy proceedings filed by regulated entity seeking to enjoin 
SUPREME COURT OF OHIO 
 
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agency’s cease-and-desist order); Ridder v. Office of Thrift Supervision, 146 F.3d 
1035 (D.C.Cir.1998) (court lacked jurisdiction to hear challenge filed by former 
officers of regulated entity seeking payment of attorney fees prohibited by 
consent order). 
{¶ 19} We therefore conclude that the FHFA consent order and 12 
U.S.C. 4635(b) do not bar the trial court from adjudicating Radatz’s class-action 
claims under R.C. 5301.36. 
The applicability of 12 U.S.C. 4617(j)(4) to damages paid under R.C. 
5301.36(C) 
{¶ 20} Notwithstanding our conclusion that 12 U.S.C. 4635(b) did not 
divest the trial court of subject matter jurisdiction, a different provision in 
HERA—12 U.S.C. 4617(j)(4)—bars Radatz’s recovery of money damages under 
R.C. 5301.36(C). 
{¶ 21} Subsection 4617(j)(4) states that while FHFA is acting as 
conservator, “[t]he Agency shall not be liable for any amounts in the nature of 
penalties or fines, including those arising from the failure of any person to pay 
any real property, personal property, probate, or recording tax or any recording or 
filing fees when due.”  (Emphasis added.)  12 U.S.C. 4617(j)(4).  At the outset, 
we reject Radatz’s contention that 12 U.S.C. 4617(j)(4) applies only to “the 
Agency” and therefore does not apply to Fannie Mae.  Because FHFA succeeds to 
all the rights, titles, powers, and privileges of a regulated entity during 
conservatorship, see 12 U.S.C. 4617(b)(2)(A), courts have uniformly construed 
subsection 4617(j)(4) to preclude the imposition of fees or penalties against 
Fannie Mae while under FHFA’s conservatorship.  Fed. Hous. Fin. Agency v. 
Chicago, 962 F.Supp.2d 1044, 1064 (N.D.Ill.2013); Higgins v. BAC Home Loans 
Servicing, L.P., E.D.Ky. No. 12-cv-183-KKC, 2014 WL 1332825, *2 (Mar. 31, 
2014), rev’d on other grounds, 793 F.3d 688 (6th Cir.2015) (“there is essentially 
no distinction between the Agency and Fannie Mae” during conservatorship); 
January Term, 2016 
 
11
Nevada ex rel. Hager v. Countrywide Home Loans Servicing, L.P., 812 F.Supp.2d 
1211, 1218 (D.Nev.2011). 
{¶ 22} The question whether Congress intended to waive Fannie Mae’s 
immunity from state-law penalties implicates a “strong federal interest.”  United 
States v. Lewis Cty., 175 F.3d 671, 676-677 (9th Cir.1999).  We therefore turn to 
federal law to determine whether the $250 recovery for each violation of R.C. 
5301.36 constitutes a penalty.  See also Natl. Loan Investors, L.P. v. Orange, 204 
F.3d 407, 412 (2d Cir.2000) (whether a state-law charge constitutes a penalty 
under a federal statute “is a federal question informed by state law”); Irving 
Indep. School Dist. v. Packard Properties, Ltd., 741 F.Supp. 120, 123 
(N.D.Tex.1990) (same). 
{¶ 23} The federal test for determining whether a particular statutory 
provision is punitive or remedial consists of three factors: (1) whether the purpose 
of the statute as a whole primarily redresses individual wrongs or more general 
wrongs to the public, (2) whether recovery under the statute runs to the harmed 
individual or to the public, and (3) whether the recovery authorized by the statute 
is wholly disproportionate to the harm suffered.  Murphy v. Household Fin. Corp., 
560 F.2d 206, 209 (6th Cir.1977), citing Huntington v. Attrill, 146 U.S. 657, 666-
669, 13 S.Ct. 224, 36 L.Ed. 1123 (1892), and Bowles v. Farmers Natl. Bank of 
Lebanon, 147 F.2d 425, 428 (6th Cir.1945).  See also Cosgrove v. Williamsburg 
of Cincinnati Mgt. Co., Inc., 70 Ohio St.3d 281, 288, 638 N.E.2d 991 (1994) 
(Resnick, J., concurring), citing three-part test from Huntington, Murphy, and 
Bowles. 
{¶ 24} Application of these factors requires us to conclude here that 
payments made under R.C. 5301.36(C) for failure to record a mortgage 
satisfaction would be “in the nature of penalties” and therefore may not be 
assessed against Fannie Mae under 12 U.S.C. 4617(j)(4) while under FHFA’s 
conservatorship. 
SUPREME COURT OF OHIO 
 
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{¶ 25} When considered as a whole, R.C. 5301.36 is intended to promote 
efficiency and certainty in real-estate transactions and to penalize the untimely 
recording of satisfied mortgages rather than to compensate borrowers in full for 
actual losses.  See Pinchot v. Charter One Bank, F.S.B., 99 Ohio St.3d 390, 2003-
Ohio-4122, 792 N.E.2d 1105, ¶ 58, quoting decision below; Pinchot v. Charter 
One Bank, F.S.B., 8th Dist. Cuyahoga No. 79359, 2002 WL 568400, *7 (Apr. 11, 
2002) (R.C. 5301.36 “is not simply aimed at aiding the individual borrower; it 
assists all others involved in all real estate transactions, and assists the State by 
encouraging those transactions and reducing costly disputes”). 
{¶ 26} While recovery of $250 accrues to the current owner of affected 
property and not to the state or a third party, recovery of that amount is not tied to 
any actual losses suffered by an aggrieved individual.  “ ‘[D]amages are precisely 
commensurate with the injury received.’ ”  United States v. Witherspoon, 211 
F.2d 858, 861 (6th Cir.1954), quoting 23 American Jurisprudence, Forfeitures and 
Penalties, Section 29, at 625 (1939).  A penalty, on the other hand, “ ‘has no 
reference to the actual loss sustained by him who sued for its recovery.’ ”  Id. 
{¶ 27} In Witherspoon, the Sixth Circuit examined a statute that prohibited 
fraudulent transactions with the federal government and required violators to pay 
$2,000 for each offense and double the amount of any damages actually sustained 
by the government.  The court held that the “exaction of the arbitrary sum of 
$2,000” for each offense of obtaining surplus property by fraud, “without regard 
to [the property’s] value, is a provision for a penalty.”  Id. 
{¶ 28} Likewise, R.C. 5301.36(C) exacts an arbitrary sum of $250 for 
each offense, without any reference to the value of mortgaged property or any 
losses sustained by the borrower, for the purpose of punishing the mortgagee for 
noncompliance.  As with the statute examined in Witherspoon, R.C. 5301.36(C) 
imposes a penalty on the offender and allows the injured person to recover actual 
damages.  See R.C. 5301.36(C) (“This division does not preclude or affect any 
January Term, 2016 
 
13
other legal remedies or damages that may be available to the mortgagor”).  If a 
borrower suffers actual harm resulting from a mortgage-recording error or 
delay—for example, a cloud on title that disrupts or prevents the disposition of 
encumbered property—R.C. 5301.36(C) allows the borrower to pursue a claim for 
damages.  Where, as here, “statutory damages are allowed in addition to 
compensatory (actual) damages[,] they are considered a penalty.”  In re Trans 
Union Corp. Privacy Litigation, 211 F.R.D. 328, 341 (N.D.Ill.2002). 
{¶ 29} The ability of an affected borrower to collect $250 under R.C. 
5301.36(C) and to pursue a separate action to recover actual damages 
distinguishes this case from Higgins, 2014 WL 1332825.  Higgins involved a 
Kentucky statute allowing for recovery of three times the actual damages for 
failure to record a mortgage assignment or a minimum of $500 but not both.  Id. 
at *6.  The Higgins court distinguished its case from Witherspoon and concluded 
that the $500 minimum was a liquidated-damages provision that approximated 
actual damages and not a penalty.  Id.  In contrast, R.C. 5301.36(C) does not 
attempt to tie recovery of $250 to any actual losses and expressly provides for 
recovery of actual damages in a separate action.  Thus, Witherspoon, and not 
Higgins, informs our analysis here. 
{¶ 30} Moreover, we can conclude here that payments under R.C. 
5301.36(C) would be “in the nature of penalties” under 12 U.S.C. 4617(j)(4) 
without overruling or contradicting Rosette, 105 Ohio St.3d 296, 2005-Ohio-
1736, 825 N.E.2d 599.  In Rosette, this court concluded that R.C. 5301.36(C) is a 
remedial rather than penal statute and therefore applied the six-year limitations 
period in R.C. 2305.07 for “a liability created by statute other than a forfeiture or 
penalty.”  Id. at syllabus.  The presence of the word “damages” in R.C. 
5301.36(C) was dispositive to the court’s ruling.  Id. at ¶ 13.  Rosette is not 
controlling here, however. 
SUPREME COURT OF OHIO 
 
14 
{¶ 31} Rosette addressed whether payments under R.C. 5301.36(C) should 
be labeled as penal or remedial for statute-of-limitations purposes.  Rosette has no 
bearing on whether payments under R.C. 5301.36(C) are “in the nature of 
penalties” under 12 U.S.C. 4617(j)(4), which requires a completely different test 
under federal law.  The court’s reliance in Rosette on a single word is 
irreconcilable with the federal test for determining whether a particular statutory 
provision is punitive.  The federal test requires an examination of the statute as a 
whole for its “essential character and effect,” and not “what name the statute is 
called by the legislature.”  Huntington, 146 U.S. at 683, 13 S.Ct. 224, 36 L.Ed. 
1123.  See also Genty v. Resolution Trust Corp., 937 F.2d 899, 912 (3d Cir.1991) 
(“generally courts look in the first instance to whether the purpose of the statue as 
a whole primarily redresses individual wrongs or more general wrongs to the 
public”) (emphasis sic);  Rosette at ¶ 18 (Lanzinger, J., dissenting, joined by 
Lundberg Stratton and O’Connor, JJ.), citing Huntington and criticizing 
majority’s reliance on “a single word” rather than statutory purpose to determine 
whether R.C. 5301.36(C) is remedial or penal. 
{¶ 32} We have also recognized that statutory sanctions may serve both 
compensatory and punitive purposes.  State ex rel. Emmich v. Indus. Comm., 148 
Ohio St. 658, 668-669, 76 N.E.2d 710 (1947).  See also Austin v. United States, 
509 U.S. 602, 610, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993) (“sanctions 
frequently serve more than one purpose”).  In Emmich, this court held that an 
additional award provided to employees under the Ohio Constitution for an 
employer’s violation of any safety requirement did not exceed the statutory limit 
for “ordinary compensation” because the constitutional provision served a dual 
purpose.  Emmich at 666-669.  We explained that it provided “compensation so 
far as the employee is concerned, but is in the nature of a penalty so far as such 
award affects the employer.”  Id. at paragraph three of the syllabus.  Because 
statutory sanctions can serve more than one purpose, we can conclude here that 
January Term, 2016 
 
15
the statutory remedy in R.C. 5301.36(C) vindicates both punitive and remedial 
purposes without disturbing our holding in Rosette. 
{¶ 33} For all these reasons, we conclude that the $250 statutory award 
under R.C. 5301.36(C) is intended to penalize noncompliance and is thus “in the 
nature of penalties” in violation of 12 U.S.C. 4617(j)(4).  While Fannie Mae is 
under FHFA’s conservatorship, Fannie Mae is immune from liability for 
payments pursuant to a judgment under R.C. 5301.36(C). 
Radatz’s due-process claim 
{¶ 34} Radatz also argues that dismissal of her claims based on FHFA’s 
consent order without an opportunity to challenge the order deprives her of due 
process.  We do not address Radatz’s due-process challenge because the Eighth 
District explicitly declined to address it, 2014-Ohio-2179, 11 N.E.3d 1230, at ¶ 5, 
and we did not accept any proposition of law related to this issue. 
CONCLUSION 
{¶ 35} We agree with the holding of the Eighth District Court of Appeals 
that the cease-and-desist order did not preclude the trial court from exercising 
jurisdiction under 12 U.S.C. 4635(b).  However, we conclude that 12 U.S.C. 
4617(j)(4) prohibits the trial court from ordering Fannie Mae to pay damages 
under R.C. 5301.36(C) while under FHFA’s conservatorship.  We therefore 
affirm, albeit on different grounds, the Eighth District’s judgment reversing the 
trial court, and remand to the trial court for resolution of any remaining issues. 
Judgment affirmed 
and cause remanded. 
O’DONNELL, and KENNEDY, JJ., concur. 
PFEIFER, J., concurs in judgment only with an opinion in which O’NEILL, 
J., joins. 
LANZINGER, J., dissents with an opinion in which O’CONNOR, C.J., joins. 
_________________ 
SUPREME COURT OF OHIO 
 
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PFEIFER, J., concurring in judgment only. 
{¶ 36} The majority opinion states that it affirms the appellate court, and 
Radatz sincerely wishes that it had.  The appellate court, after all, concluded that 
requiring Fannie Mae to pay a judgment would not impose a penalty, something 
that Radatz agrees with, but something the majority opinion most decidedly does 
not agree with.  Even as it technically affirms the lower court, it does so, in its 
own words, “for different reasons.”  Majority opinion at ¶ 1.  Radatz’s pyrrhic 
victory in this case is reminiscent of Nicholas Breton’s line that “a hollow friend 
is but a hellish foe.”  The Works in Verse and Prose of Nicholas Breton, Vol. 2 
(1879). 
{¶ 37} I would actually and truly affirm the court of appeals.  It 
determined that FHFA does not have the authority to “infinitely immunize Fannie 
Mae from paying any amounts stemming from any actions.”  2014-Ohio-2179, 11 
N.E.3d 1230, ¶ 10.  It concluded that any immunity must derive from statute, such 
as the prohibition against paying any amount “in the nature of a penalty or fine.”  
Id. at ¶ 11, citing 12 U.S.C. 4617(j)(4).  And it concluded that the statutory 
damages attached to a violation of R.C. 5301.36 are not a penalty or fine and, 
therefore, that the consent decree does not prohibit Fannie Mae from paying them.  
Id. at ¶ 19. 
{¶ 38} Because I believe that the court of appeals’ judgment should be 
affirmed in toto, not just technically, I concur in judgment only. 
O’NEILL, J., concurs in the foregoing opinion. 
_________________ 
LANZINGER, J., dissenting. 
{¶ 39} Because I agree with the trial court’s dismissal of this case for lack 
of jurisdiction, I respectfully dissent. 
January Term, 2016 
 
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{¶ 40} Rebekah R. Radatz instituted a class-action lawsuit because Fannie 
Mae allegedly failed to record the satisfaction of mortgages in various Ohio 
county recorders’ offices within 90 days after payoff.  Under R.C. 5301.36(C): 
 
If the mortgagee fails to comply with division (B) of this 
section, the mortgagor of the unrecorded satisfaction and the 
current owner of the real property to which the mortgage pertains 
may recover, in a civil action, damages of two hundred fifty 
dollars.  This division does not preclude or affect any other legal 
remedies or damages that may be available to the mortgagor. 
 
(Emphasis added.) 
{¶ 41} The trial court dismissed the case for lack of jurisdiction pursuant 
to 12 U.S.C. 4635(b), which states that “no court shall have jurisdiction to affect, 
by injunction or otherwise, the issuance or enforcement of any notice or order 
under section 4631 [cease-and-desist orders] * * * or to review, modify, suspend, 
terminate, or set aside any such notice or order.”  The remedy the class action 
seeks is expressly covered by the Federal Housing Finance Agency’s (“FHFA”) 
consent order dated March 9, 2013: 
 
Pursuant to 12 U.S.C. § 4631, [Fannie Mae] and [Freddie 
Mac] (together “the Enterprises”) are hereby 
1.  
ORDERED to CEASE and DESIST from violating 
12 U.S.C. § 4617(j)(4) by paying, for any reason, directly or 
indirectly, any fines or penalties imposed by any state mortgage 
satisfaction law on the Enterprises for noncompliance. 
Furthermore, Fannie Mae is 
SUPREME COURT OF OHIO 
 
18 
2. 
ORDERED to CEASE AND DESIST from 
violating 12 U.S.C. § 4617(j)(4) by paying, for any reason, directly 
or indirectly, any amount pursuant to Ohio Code 5301.36 or 
pursuant to any judgment in connection with the pending lawsuit 
styled Radatz v. Fed. Nat’l Mortgage Ass’n, Case No. CV-03-
507616 (Ohio Com. Pleas). 
 
{¶ 42} The Eighth District Court of Appeals held that R.C. 5301.36(C) 
awards are compensatory damages.  I disagree with this conclusion for reasons 
expressed in my dissent in Rosette v. Countrywide Home Loans, Inc., 105 Ohio 
St.3d 296, 2005-Ohio-1736, 825 N.E.2d 599.  The statutory payment sought by 
the class members is not “compensation” but in the nature of a fine or penalty 
“imposed by any state mortgage satisfaction law * * * for noncompliance.” 
{¶ 43} The majority refuses to hold that the trial court lacked jurisdiction 
even though it determines that the class cannot recover under R.C. 5301.36 
because the award is a penalty under federal law.  It is difficult to say what is left 
for the trial court to do upon remand, when it cannot order payment of $250 to 
each class member.  As R.C. 5301.36(C) notes, a mortgagor may have other 
remedies available (presumably for compensatory damages), but adjudication of 
the class members’ claims would modify the FHFA cease-and-desist order if the 
class members prevailed. 
{¶ 44} I therefore would reverse the judgment of the court of appeals and 
reinstate the trial court’s order dismissing this action. 
O’CONNOR, C.J., concurs in the foregoing opinion. 
_________________ 
Dworken & Bernstein Co., L.P.A., Patrick J. Perotti, and James S. 
Timmerberg; and Brian Ruschel, for appellee. 
January Term, 2016 
 
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Squire Patton Boggs (US), L.L.P., and Richard S. Gurbst; Porter Wright 
Morris & Arthur, L.L.P., J. Philip Calabrese, and Kathleen M. Trafford; and 
O’Melveny & Myers, L.L.P., and Jeffrey Kilduff, for appellant. 
Bricker & Eckler, L.L.P., Anne Marie Sferra, and Sommer Sheely; and 
Stephen E. Hart, Deputy General Counsel, Federal Housing Finance Agency, 
urging reversal for amicus curiae Federal Housing Finance Agency. 
Jeffrey M. McGaffick, urging affirmance for amicus curiae First Priority 
Title Agency. 
_________________