[Cite as U.S. Bank Trust, N.A. v. Watson , 2020-Ohio-3412.]

IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT PAULDING COUNTY

U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, PLAINTIFF-APPELLEE, CASE NO. 11-19-09

v. PAMELA J. WATSON, AKA PAMELA J. LAMBERT ET AL., O P I N I O N

DEFENDANTS-APPELLANTS.

Appeal from Paulding County Common Pleas Court Trial Court No. CI 16 167 Judgment Affirmed Date of Decision: June 22, 2020

APPEARANCES: 

### George C. Rogers for Appellants 

### Robert C. Folland and David J. Dirisamer for AppelleeCase No. 11-19-09

-2- PRESTON, J. {¶1} Defendants-appellants, Pamela J. Watson, now known as Pamela J. Lambert (“Pamela”), and William L. Lambert (“William”) (collect ively the “Watsons”), 1 appeal the February 9, 2018 and October 9, 2019 judgments of t he Paulding County Court of Common Pleas denying their motions for summary judgment and for sanctions against plaintiff-appellee, U.S. Ban k Trust, N.A., as trustee for LSF9 Master Participation Trust (“U.S. Bank”), and granting U.S. Bank’s motion for summary judgment. For the reasons that follow, we a ffirm. {¶2} This appeal, the third appeal brought by the Watsons in relatio n to the subject matter of this case, stems from U.S. Bank’s efforts to foreclose on their property in Oakwood, Paulding County, Ohio. The factual backgr ound and lengthy procedural history of this case are discussed in detail in the Watsons’ previous two appeals. See HSBC Mtge. Servs., Inc. v. Watson , 3d Dist. Paulding No. 11-14-03, 2015-Ohio-221 (“ Watson I ”); HSBC Mtge. Servs., Inc. v. Watson , 3d Dist. Paulding No. 11-16-03, 2017-Ohio-680 (“ Watson II ”). Thus, we will restate the history of this dispute only to the extent required to frame the issues pr esented in the instant appeal. {¶3} On November 24, 2004, Pamela allegedly signed a promissory note in which she agreed to repay Accredited Home Lenders, Inc. (“Accre dited”) the sum

1 In this opinion, we refer to Pamela and William as the Watsons rather than as the Lamberts because throughout their appellate brief, Pamela and William refer to t hemselves as the Watsons.Case No. 11-19-09

-3- of $79,500 plus interest in monthly installments. (Doc. No. 1, Ex. A). The note was secured by a mortgage on real property in Oakwood, Paulding Cou nty, Ohio. (Doc. No. 1, Ex. B). In the mortgage, Accredited designated Mortgage Electronic Registration Systems, Inc. (“MERS”) as its nominee. ( Id. ). Pamela purportedly stopped making payments on the note on April 1, 2011, sometime after which the note and mortgage were allegedly assigned and transferred to HS BC Mortgage Services, Inc. (“HSBC”). (Doc. No. 36, Exs. A-4, A-8). See Watson II at ¶ 2. {¶4} On August 22, 2012, HSBC filed a complaint for foreclosure agai nst the Watsons and the Paulding County Treasurer (the “first forec losure”). Watson I at ¶ 2. In late April 2013, HSBC filed a motion for summary ju dgment. Id. at ¶ 4. Following HSBC’s motion for summary judgment, the trial court e stablished a discovery cutoff date of June 21, 2013. Id. at ¶ 5. On May 24, 2013, the Watsons served discovery requests on HSBC, including requests for admis sions. Id. at ¶ 6. One of these requests for admissions asked HSBC to admit that “ HSBC does not have possession of the original note * * *.” Id. at ¶ 10. Another requested that HSBC admit that neither the person allegedly authorized to assi gn the mortgage to HSBC “nor [MERS] sought or received permission from the Bankrup tcy Trustee for [Accredited] to execute the assignment of [the Watsons’] mo rtgage [to HSBC].”

Watson II at ¶ 3. On June 28, 2013, the trial court granted HSBC’s motio n for additional time to respond to the Watsons’ discovery requests a nd ordered thatCase No. 11-19-09

-4- HSBC respond to the Watsons’ requests by July 23, 2013. Watson I at ¶ 7. Yet, despite this extension, HSBC failed to respond to the Watsons’ discovery requests by July 23, 2013. Id. at ¶ 9. {¶5} On August 2, 2013, the Watsons filed a memorandum in opposition to HSBC’s motion for summary judgment as well as their own motion for summary judgment. Watson I , 2015-Ohio-221, at ¶ 10. To support their motion for summary judgment, the Watsons relied on the requests for admissions the y propounded to HSBC, which were deemed admitted by HSBC’s failure to timely re spond. Id. See Civ.R. 36(A)(1). On August 30, 2013, HSBC filed a combined rep ly brief in support of its motion for summary judgment and memorandum in opposition to the Watsons’ motion for summary judgment. Watson I at ¶ 12. HSBC also filed a “Civ.R. 36(B) motion to withdraw requests for admission deemed admitted.” Id. On September 12, 2013, the Watsons filed their reply brief in s upport of their motion for summary judgment as well as a response to HSBC’s motion to withdraw its

admissions. Id. at ¶ 13. {¶6} On February 12, 2014, the trial court issued an order granting HSBC’s motion to withdraw its admissions, granting HSBC’s motion for s ummary judgment, and denying the Watsons’ motion for summary judgment. Id. at ¶ 14. On April 18, 2014, the trial court issued a decree of foreclosu re in favor of HSBC and ordered that the Watsons’ property be sold. Id. at ¶ 15. The WatsonsCase No. 11-19-09

-5- subsequently appealed, arguing that the trial court erred by gr anting HSBC’s motion to withdraw its deemed admissions and by granting HSBC’s motion for summary judgment. {¶7} On January 26, 2015, this court reversed the judgment of the tr ial court.

Id. at ¶ 38. Specifically, we concluded that “the trial court abu sed its discretion by granting HSBC’s motion to withdraw its admissions without allow ing [the Watsons] to conduct additional discovery.” Id. at ¶ 35. With respect to the trial court’s rulings on the parties’ motions for summary judgment, we held that beca use the trial court’s rulings “were based on its erroneous discovery order granting H SBC’s motion to withdraw its admissions,” “ruling on either party’s motion for summary judgment was premature.” Id. Accordingly, we remanded the matter to the trial court with the observation that the trial court could “proceed in any numb er of ways, including, for example, reopening discovery, allowing additional motions c oncerning discovery, and allowing the resubmission of motions for summary judgment.” Id. at ¶ 37. {¶8} On remand, HSBC filed a motion for substitution of plaintiff, i n which it stated that U.S. Bank had been assigned the mortgage on Janu ary 6, 2015 and that U.S. Bank was thus the real party in interest. Watson II , 2017-Ohio-680, at ¶ 5. On April 23, 2015, the Watsons filed a memorandum in opposition to HSBC’s motion for substitution of plaintiff. Id. at ¶ 6. In their memorandum in opposition, theCase No. 11-19-09

-6- Watsons, “[r]elying upon HSBC’s admission that [it] did not pos sess the original note, * * * argued that neither HSBC nor U.S. Bank could be rea l parties in interest as HSBC had nothing to transfer to U.S. Bank that would justify a substitution of plaintiff * * *.” Id. Nevertheless, the trial court ultimately granted HSBC’s motio n to substitute U.S. Bank as plaintiff. Id. at ¶ 7. {¶9} On the same day that the Watsons filed their memorandum in opposition to HSBC’s motion for substitution of plaintiff, they also filed a motion for R.C. 2323.51 sanctions against HSBC. Id. at ¶ 6. In addition, on February 29, 2016, the Watsons filed a motion for summary judgment. Id. at ¶ 7. Finally, on June 13, 2016, the Watsons submitted a motion asking the trial court to reconsider its decision to allow the substitution of U.S. Bank as plaintif f. Id. A hearing on all three motions was set for June 24, 2016. Id. {¶10} At the hearing, HSBC and U.S. Bank argued that the Watsons’ mot ion for summary judgment should be denied to allow for the reopenin g of discovery.

See id. at ¶ 7. However, in a July 5, 2016 judgment, the trial court “declined to reopen discovery, deemed the admissions of HSBC admitted, * * * granted [the Watsons’] motion for summary judgment,” and dismissed the first foreclosure. Id. ( See Doc. No. 16, Ex. 10). In addition, the trial court rejected th e Watsons’ request to reconsider its ruling allowing U.S. Bank to be substituted a s plaintiff, and “[s]ince the alleged frivolous conduct arose from HSBC’s motion to subst itute plaintiff,” theCase No. 11-19-09

-7- trial court denied the Watsons’ motion for sanctions on grounds that granting the

motion would be inconsistent with the affirmation of its decisi on permitting the

substitution. Watson II at ¶ 8. Although U.S. Bank and the Watsons both appealed from the trial court’s judgment, U.S. Bank subsequently dismiss ed its appeal. ( See Doc. No. 16, Exs. 11, 12). In their second appeal, the Watsons argued that the trial court erred by permitting U.S. Bank to be substituted as plaint iff and by denying

their motion for sanctions. {¶11} On February 27, 2017, this court affirmed the trial court’s jud gment.

Watson II , 2017-Ohio-680, at ¶ 18. First, we concluded that the Watsons were not prejudiced by the substitution of U.S. Bank as plaintiff. Id. at ¶ 11. We observed that, “[i]f anything, [the order substituting U.S. Bank as plai ntiff] is more likely to operate in [the Watsons’] favor as the substitution of U.S. Ban k for HSBC binds U.S. Bank to the summary judgment order that disposed of [the f irst foreclosure].”

Id. Furthermore, we held that the trial court did not abuse its d iscretion by denying

the Watsons’ motion for sanctions under R.C. 2323.51. Id. at ¶ 17. We concluded that, even assuming that HSBC’s actions amounted to frivolous c onduct, the Watsons were not adversely affected parties who were eligible f or an award of costs, fees, and other expenses under R.C. 2323.51. Id. at ¶ 16-17. We justified this conclusion, in part, by noting that “HSBC and U.S. Bank would b oth be barred by res judicata from filing this exact same claim a second time * * *.” Id. at ¶ 17.Case No. 11-19-09

-8- {¶12} Meanwhile, on November 17, 2016, while the appeal in Watson II was pending, U.S. Bank refiled the complaint for foreclosure agains t the Watsons (the “second foreclosure”). (Doc. No. 1). On December 5, 2016, the Watsons filed their answer to U.S. Bank’s complaint. (Doc. No. 7). That same day, the Watsons filed a combined motion for summary judgment and motion for R.C. 2323 .51 sanctions. (Doc. No. 8). In their combined motion, the Watsons argue that they are entitled to summary judgment because the doctrine of res judicata precludes U.S. Bank from “asserting the same previously dismissed claim based on the sam e asserted documents.” ( Id. ). In addition, the Watsons argue that “[t]he refiling of the lawsuit four months after it was previously dismissed on summary judgme nt and after an appeal of such prior judgment was abandoned is absolutely and o bjectively frivolous pursuant to R.C. 2323.51.” ( Id. ). {¶13} On January 3, 2017, U.S. Bank filed a memorandum in opposition to the Watsons’ motion for summary judgment and a memorandum in op position to the Watsons’ motion for sanctions. (Doc. Nos. 14, 15). On Jan uary 11, 2017, the Watsons filed their reply brief in support of their motion for summary judgment, along with exhibits in support of their motions for summary jud gment and for sanctions. (Doc. No. 16). In addition, on July 11, 2017, the Watsons provided the trial court with a copy of our decision in Watson II and suggested that our decision

in Watson II prevents U.S. Bank from disputing that it is barred from bringi ng theCase No. 11-19-09

-9- second foreclosure. (Doc. No. 22). On February 9, 2018, the t rial court denied both the Watsons’ motion for summary judgment and their motion for s anctions. (Doc. No. 23). {¶14} On March 19, 2018, the Watsons filed a motion asking the trial court to modify or supplement its February 9, 2018 judgment entry. ( Doc. No. 27). In their motion, the Watsons requested that the trial court explic itly address the doctrine of res judicata and explain why the doctrine of res ju dicata does not bar U.S. Bank from maintaining the second foreclosure. ( Id. ). On March 23, 2018, U.S. Bank filed a memorandum in opposition to the Watsons’ moti on to modify or supplement. (Doc. No. 29). On April 5, 2018, the Watsons file d their reply brief in support of their motion to modify or supplement. (Doc. No. 30) . On June 14, 2018, the trial court issued an entry in which it clarified the ratio nale for its conclusion that the second foreclosure is not barred by the doctrine of re s judicata. (Doc. No. 31). {¶15} On January 22, 2019, U.S. Bank filed a motion for summary judgm ent. (Doc. No. 36). On May 30, 2019, the Watsons filed their memora ndum in opposition to U.S. Bank’s motion for summary judgment. (Doc. N o. 45). That same day, the Watsons filed a second motion for summary judgmen t and a second motion for sanctions under R.C. 2323.51. (Doc. No. 46). In th eir second motion for summary judgment, the Watsons reassert their argument that they are entitled toCase No. 11-19-09

-10- summary judgment based on the doctrine of res judicata, and the y further argue that summary judgment in their favor is appropriate because U.S. Ban k does not, and will never, present admissible evidence sufficient to support i ts claim. ( Id. ); ( See Doc. No. 49). On June 13, 2019, U.S. Bank filed a combined rep ly brief in support of its motion for summary judgment and memorandum in opposition to the Watsons’ second motion for summary judgment and second motion f or sanctions. (Doc. No. 48). On June 28, 2019, the Watsons filed their reply brief in support of their second motion for summary judgment and second motion for sanctions. (Doc. No. 49). {¶16} On October 8, 2019, the trial court granted U.S. Bank’s motion for summary judgment, denied the Watsons’ second motion for summary judgment, and denied their second motion for sanctions. (Doc. No. 50). Consequently, the

trial court issued a decree of foreclosure in favor of U.S. Ban k and ordered that the Watsons’ property be sold. ( Id. ). {¶17} On November 5, 2019, the Watsons filed a notice of appeal. (Do c. No. 51). They raise three assignments of error for our review. For ease of discussion, we begin by considering the Watsons’ first and seco nd assignments of error together, followed by their third assignment of error. Assignment of Error No. I The trial court erred in its judgment entry of Feb. 9, 2018 and in Oct. 9, 2019 [sic] in denying the Watsons’ motion for summaryCase No. 11-19-09

-11- judgment that asserted U.S. Bank’s complaint was barred by the doctrine of res judicata. Assignment of Error No. II The trial court erred in its Oct. 9, 2019 judgment entry in den ying the Watsons’ motion for summary judgment and granting U.S. Bank’s motion for summary judgment when discovery was closed, the facts were undisputed, and the complaint failed to state a cause of action and the evidence failed to support the compla int. {¶18} In their first and second assignments of error, the Watsons arg ue that the trial court erred by denying their motions for summary judg ment and by granting U.S. Bank’s motion for summary judgment. Specifically, in thei r first assignment of error, the Watsons argue that the trial court should have gr anted their motions for summary judgment because the doctrine of res judicata precludes U.S. Bank from bringing the second foreclosure and from relitigating issues th at were resolved against it in the first foreclosure. In their second assignmen t of error, the Watsons argue that the trial court erred by granting U.S. Bank’s motion for summary judgment and by denying their second motion for summary judgmen t because the affidavit U.S. Bank submitted in support of its motion was not made by someone with personal knowledge sufficient to authenticate documents su ch as the promissory note, mortgage, and notice of default, photocopies o f which were attached to the affidavit and used by U.S. Bank to prove its cl aim. They also contend

that the averments in the affidavit were not based on the affia nt’s personalCase No. 11-19-09

-12- knowledge. Finally, the Watsons take issue with U.S. Bank’s ev idence establishing the chain of assignments from the original lender and mortgagee to U.S. Bank. {¶19} We review a decision to grant summary judgment de novo. Doe v. Shaffer , 90 Ohio St.3d 388, 390 (2000). “De novo review is independen t and

without deference to the trial court’s determination.” ISHA, Inc. v. Risser , 3d Dist. Allen No. 1-12-47, 2013-Ohio-2149, ¶ 25, citing Costner Consulting Co. v. U.S. Bancorp , 195 Ohio App.3d 477, 2011-Ohio-3822, ¶ 10 (10th Dist.). Summ ary judgment is proper where there is no genuine issue of material fact, the moving party is entitled to judgment as a matter of law, and reasonable mind s can reach but one conclusion when viewing the evidence in favor of the non-moving party, and the conclusion is adverse to the non-moving party. Civ.R. 56(C); State ex rel. Cassels v. Dayton City School Dist. Bd. of Edn. , 69 Ohio St.3d 217, 219 (1994). {¶20} “The party moving for summary judgment has the initial burden o f producing some evidence which demonstrates the lack of a genuin e issue of material

fact.” Carnes v. Siferd , 3d Dist. Allen No. 1-10-88, 2011-Ohio-4467, ¶ 13, citing

Dresher v. Burt , 75 Ohio St.3d 280, 292 (1996). “In doing so, the moving part y is not required to produce any affirmative evidence, but must iden tify those portions of the record which affirmatively support his argument.” Id. , citing Dresher at 292. “The nonmoving party must then rebut with specific facts showin g the existence ofCase No. 11-19-09

-13- a genuine triable issue; he may not rest on the mere allegation s or denials of his pleadings.” Id. , citing Dresher at 292 and Civ.R. 56(E). {¶21} Material facts are those facts “‘that might affect the outcome of the suit under the governing law.’” Turner v. Turner , 67 Ohio St.3d 337, 340 (1993), quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505 (1986). “Whether a genuine issue exists is answered by the following in quiry: [d]oes the evidence present ‘a sufficient disagreement to require submissi on to a jury’ or is it ‘so one-sided that one party must prevail as a matter of law[?] ’” Id. , quoting

Anderson at 251-252. {¶22} We begin with the Watsons’ first assignment of error, in which they argue that the trial court erred by denying their motions for s ummary judgment because, contrary to the trial court’s conclusion, the doctrine of res judicata precludes U.S. Bank from bringing the second foreclosure and fr om relitigating certain issues that U.S. Bank must resolve in its favor to prev ail on its claim. In Ohio, “‘“[t]he doctrine of res judicata encompasses the two rel ated concepts of claim preclusion, also known as res judicata or estoppel by jud gment, and issue preclusion, also known as collateral estoppel.”’” Crown Chrysler Jeep, Inc. v.

Boulware , 10th Dist. Franklin No. 15AP-162, 2015-Ohio-5084, ¶ 18, quoti ng State ex rel. Schachter v. Ohio Pub. Emps. Retirement Bd. , 121 Ohio St.3d 526, 2009-Case No. 11-19-09

-14- Ohio-1704, ¶ 27, quoting O’Nesti v. DeBartolo Realty Corp. , 113 Ohio St.3d 59, 2007-Ohio-1102, ¶ 6. Both concepts are in play in this case. {¶23} Claim preclusion, the first type of preclusion, “‘prevents subs equent actions, by the same parties or their privies, based upon any c laim arising out of a transaction that was the subject matter of a previous action.’” Id. , quoting Schachter at ¶ 27. “‘The previous action is conclusive for all claims th at were or that could have been litigated in the first action.’” Id. , quoting Schachter at ¶ 27. The Supreme Court of Ohio has identified four conditions that must be prese nt for claim preclusion to apply: (1) there is a final, valid decision on the merits by a court of competent jurisdiction; (2) the second action involves the same parties or their privies as the first; (3) the second action raises cla ims that were or could have been litigated in the first action; and (4) the second

action arises out of the transaction or occurrence that was the subject matter of the previous action. State ex rel. Dept. of Edn. v. Ministerial Day Care , 8th Dist. Cuyahoga No. 103685, 2016-Ohio-8485, ¶ 14, citing Portage Cty. Bd. of Commrs. v. Akron , 109 Ohio St.3d 106, 2006-Ohio-954, ¶ 84, quoting Hapgood v. Warren , 127 F.3d 490, 493 (6th Cir.1997) (construing Grava v. Parkman Twp. , 73 Ohio St.3d 379 (1995)). For purposes of claim preclusion, a “transaction” has been defined as a “‘commonCase No. 11-19-09

-15- nucleus of operative facts.’” Grava at 382, quoting 1 Restatement of the Law 2d, Judgments, Section 24, Comment b (1982). {¶24} On the other hand, issue preclusion, the second type of preclus ion, “serves to prevent relitigation of any fact or point that was d etermined by a court of competent jurisdiction in a previous action between the same pa rties or their privies.” O’Nesti at ¶ 7, citing Fort Frye Teachers Assn., OEA/NEA v. State Emp.

Relations Bd. , 81 Ohio St.3d 392, 395 (1998). “Issue preclusion applies eve n if the

causes of action differ.” Id. , citing Fort Frye at 395. Issue preclusion prevents the relitigation of an issue where (1) the party against whom issue preclusion is asserted was a party or is in privity with a party to a prior action; (2 ) the prior action ended in a final judgment on the merits following a full and fair opp ortunity to litigate the issue; (3) the issue was actually litigated and determined and necessary to the judgment in the prior action; and (4) the issue sought to be pr ecluded is identical to the issue decided in the prior action. See State ex rel. Davis v. Pub. Emp. Retirement

Bd. , 120 Ohio St.3d 386, 2008-Ohio-6254, ¶ 27-28, quoting Fort Frye at 395; Ginn

v. Stonecreek Dental Care , 12th Dist. Fayette No. CA2016-10-014, 2017-Ohio4370, ¶ 24, citing Balboa Ins. Co. v. S.S.D. Distrib. Sys. , 109 Ohio App.3d 523, 527 (12th Dist.1996); Wilson v. Semco, Inc. , 152 Ohio App.3d 75, 2002-Ohio-4695, ¶ 17 (3d Dist.), quoting Monahan v. Eagle Picher Indus., Inc. , 21 Ohio App.3d 179, 180-181 (1st Dist.1984).Case No. 11-19-09

-16- {¶25} Before addressing the merits of the Watsons’ first assignment o f error, we feel that we must clarify their arguments. Throughout their filings in the trial court and in their appellate brief, the Watsons regularly refer to the doctrine of res judicata. However, they never differentiate between claim prec lusion and issue preclusion or specify in any given instance whether they are ar guing for the application of claim preclusion or whether they are arguing for the application of issue preclusion. Yet, after reviewing the Watsons’ appellate arguments in light of the arguments they made at the trial-court level, it is evident that they rely to some extent on both types of preclusion. Although they do not thems elves outline their arguments in the following manner, we believe that the Watsons are in substance making three separate arguments based on claim preclusion and i ssue preclusion. {¶26} First, the Watsons repeatedly invoke this court’s discussion of res judicata in Watson II and insist that our statement that U.S. Bank “would * * * be barred * * * from filing [the] exact claim a second time” was “ necessary to the analysis and result reached” in Watson II . ( See Appellants’ Brief at 6-7, 10-11); ( See Doc. Nos. 22, 30). As a result, the Watsons seem to contend th at issue preclusion bars U.S. Bank from relitigating the issue of whethe r claim preclusion prevents it from filing and maintaining the second foreclosure. Second, the Watsons expressly assert that, irrespective of our decision in Watson II , the trial court’s July 5, 2016 judgment dismissing the first foreclosure was a final a djudication on theCase No. 11-19-09

-17- merits that itself operates to preclude U.S. Bank from bringing the second foreclosure. ( See Appellants’ Brief at 6, 11); ( See Doc. Nos. 7, 8, 16, 30). Finally, the Watsons seem to suggest that the matters deemed admitted in the first foreclosure, specifically those matters related to HSBC’s and U .S. Bank’s possession of the promissory note and the validity of earlier m ortgage assignments, remain conclusively established for purposes of the second fore closure. ( See Appellants’ Brief at 6-7); ( See Doc. Nos. 27, 46, 49). Thus, the Watsons appear to argue that issue preclusion prohibits U.S. Bank from relitigati ng the subject matter of the deemed admissions and that they are entitled to judgment as a matter of law because U.S. Bank is unable to relitigate these issues. We exa mine each of these arguments in turn, beginning with the argument that our decisio n in Watson II prevents U.S. Bank from challenging the Watsons’ contention tha t claim preclusion

bars the second foreclosure. {¶27} In Watson II , we reviewed two issues stemming from the trial court’s July 5, 2016 judgment in the first foreclosure. However, the o nly part of Watson II relevant to the present case is our analysis of the trial court ’s decision to deny the

Watsons’ motion for R.C. 2323.51 sanctions. In the trial court , the Watsons argued that sanctions should be imposed against HSBC because HSBC enga ged in frivolous conduct by moving to substitute U.S. Bank as plaintiff. ( See Doc. No. 16, Exs. 5, 6, 7, 10). After reaffirming its decision to allow U.S. Bank t o be substituted asCase No. 11-19-09

-18- plaintiff for HSBC, the trial court denied the Watsons’ motion for sanctions, concluding that it could not “grant [HSBC’s] motion for substit ution and call it frivolous at the same time.” (Doc. No. 16, Ex. 10). In its Ju ly 5, 2016 judgment denying the Watsons’ motion for sanctions, the trial court did not reach the question of whether the Watsons were adversely affected by HSBC’s conduc t. ( See id. ). See R.C. 2323.51(B)(1) (a party must be adversely affected by frivo lous conduct to be entitled to an award of costs, fees, and other expenses). {¶28} On appeal, we affirmed the trial court’s judgment denying the

Watsons’ motion for sanctions. Watson II , 2017-Ohio-680, at ¶ 17-18. We acknowledged that “[s]ince the trial court found that HSBC did not engage in frivolous conduct, it did not proceed to make a determination f or the record as to whether [the Watsons were parties] adversely affected by frivol ous conduct.” Id. at ¶ 14. However, rather than limiting our review to a determinat ion of whether the trial court correctly concluded that HSBC did not engage in fri volous conduct by moving to substitute U.S. Bank as plaintiff, we held that “[e]v en * * * assum[ing] that HSBC’s actions amounted to frivolous conduct, [the Watsons were not] adversely affected part[ies] that [were] eligible for an award of sanctions for

frivolous conduct.” Id. at ¶ 17. In reaching this conclusion, we observed that Civ.R. 17 and Civ.R. 25, the rules relating to the real-party-in-inter est requirement and the substitution of parties, exist, among other reasons, to assure the defendant that heCase No. 11-19-09

-19- “‘will be protected against another suit brought by the real pa rty [in] interest on the

same matter.’” Id. at ¶ 15, quoting Argent Mtge. Co. v. Ciemins , 8th Dist. Cuyahoga No. 90698, 2008-Ohio-5994, ¶ 10, quoting Shealy v. Campbell , 20 Ohio St.3d 23 (1985). In our view, the Watsons were not adversely affected b y HSBC’s motion for substitution in part because their interest in being protec ted from successive suits based on the same claim for foreclosure was not impaired by the substitution of U.S. Bank as plaintiff. Specifically, we held: [B]ringing in U.S. Bank was not going to expose [the Watsons] t o the risk of enduring another suit on this same matter. HSBC and U. S. Bank would both be barred by res judicata from filing this exac t claim a second time as HSBC was bound by the assignment [of its inter est to U.S. Bank], which effectively admitted that [it is] no longe r a real party in interest, and U.S. Bank was bound by HSBC’s admission that it did not have the promissory note.

Id. at ¶ 16. {¶29} Following our decision in Watson II , U.S. Bank filed an application

for reconsideration in this court in which U.S. Bank asked us t o reconsider our statement that it would be barred by res judicata from filing a n identical claim for foreclosure against the Watsons. ( See Doc. No. 22). Following briefing on the issues presented in U.S. Bank’s application, we denied U.S. Ban k’s application forCase No. 11-19-09

-20- reconsideration. ( See id. ). There is no indication in the record that U.S. Bank further appealed to the Supreme Court of Ohio from our decision in Watson II

. {¶30} After reviewing our decision in Watson II and considering the unique circumstances of this case, we conclude that issue preclusion d oes not prevent U.S. Bank from litigating the issue of whether claim preclusion bars it from maintaining the second foreclosure. As indicated above, issue preclusion a pplies only when the party against whom issue preclusion is asserted had a full and fair opportunity to litigate the issue in the prior action and when the issue was a ctually litigated in the prior action. We believe that, under the peculiar facts of thi s case, U.S. Bank was not afforded a full opportunity in the first foreclosure to lit igate the claim-preclusive effect of the first foreclosure on subsequent foreclosure actio ns and that the issue was not actually litigated. {¶31} First, as far as we can discern from the record, the question o f whether the first foreclosure precludes the refiling of an identical cl aim for foreclosure in a subsequent foreclosure action was not briefed, passed on, or ev en mentioned at any time prior to the issuance of our opinion in Watson II . It does not appear that the Watsons supported their motion for summary judgment or their mo tion for sanctions in the first foreclosure with an argument related to claim prec lusion; nor does it appear that U.S. Bank opposed the Watsons’ motions or supported its own motions in the first foreclosure with such an argument. In addition, i n its July 5, 2016Case No. 11-19-09

-21- judgment, the trial court did not make any determinations with respect to the claimpreclusive effect of the first foreclosure. This is hardly sur prising given that we used the supposedly claim-preclusive effect of the first forecl osure to support our conclusion that the Watsons were not adversely affected by U.S. Bank’s substitution as plaintiff—an issue that the trial court never reached. Fina lly, there is no indication that the issue was raised in the parties’ appellate briefs informing our

decision in Watson II . Thus, our determination in Watson II of the issue of the claim-preclusive effect of the first foreclosure does not appea r to be the product of

any actual litigation of the issue. {¶32} Furthermore, given the distinctive circumstances of this case, U.S. Bank was not afforded, and in fact could not have been afforded , an opportunity to obtain regular appellate review of our determination of the iss ue of the claimpreclusive effect of the first foreclosure. In the average cas e, the issue of the claimpreclusive effect of a prior final judgment is determined in th e first instance at the trial-court level. In many cases, the party who receives an un favorable decision on the issue of claim preclusion may then appeal the trial court’s determination to a court of appeals, and in most instances, the court of appeals m ust entertain the party’s appeal. If the issue of claim preclusion is resolved a dversely to the party by the court of appeals, the party may apply for reconsideration o f the appellate court’s decision. Finally, if the party’s application for reconsiderat ion is denied or if theCase No. 11-19-09

-22- issue of claim preclusion is decided against the party even aft er reconsideration, the party may petition the Supreme Court of Ohio for review, and as ide from a few exceptions, the Supreme Court of Ohio has discretion to accept or reject the party’s petition for review. {¶33} Yet, this case is not the average case. In this case, as far a s we can tell, the issue of the claim-preclusive effect of the first foreclosu re was determined for the first time in our opinion in Watson II . As a result, U.S. Bank was deprived of the opportunity to utilize the entire array of options for appe llate review normally available to parties who are adversely affected by decisions re lating to the applicability of claim preclusion. U.S. Bank’s only options we re to ask this court

to reconsider our decision in Watson II and to petition the Supreme Court of Ohio for review. However, both options have their limitations. In deciding whether to accept applications for reconsideration, we conduct a type of r eview that is much more limited and specialized than the review we perform when re viewing many trial court errors in the first instance. In addition, unlike most o f the cases that are presented to the courts of appeals for review, the Supreme Cour t of Ohio likely would not have been required to entertain an appeal by U.S. Ban k of our decision

in Watson II . Therefore, the procedures available to U.S. Bank in this par ticular case would not have been suitable substitutes for the ordinary procedures, i.e., an initial determination of the issue of claim preclusion and the option of an appeal asCase No. 11-19-09

-23- of right, only then followed by an application for reconsiderat ion or further appeal. U.S. Bank may have had some opportunity to litigate the issue of claim preclusion by filing an application for reconsideration and an appeal to t he Supreme Court of Ohio. However, even if U.S. Bank had taken advantage of both p rocedures, under the facts of this case, U.S. Bank would never have had a full opportunity to litigate the issue. For this reason, and for the reasons detailed in th e three preceding paragraphs, we conclude that our decision in Watson II does not bar U.S. Bank from litigating the issue of the claim-preclusive effect of the firs t foreclosure. Thus, to the extent that the Watsons based their motions for summary jud gment on the issuepreclusive effect of our decision in Watson II , the trial court did not err by denying

their motions. {¶34} Having concluded that our decision in Watson II does not prevent U.S. Bank from litigating the issue of the claim-preclusive effect o f the first foreclosure, we now consider whether the trial court’s July 5, 2016 judgment in the first foreclosure bars U.S. Bank from maintaining the second foreclos ure. In its February 9, 2018 judgment denying the Watsons’ first motion for summary judgment, the trial court did not specifically address the claim-preclusive e ffect of the July 5, 2016 judgment. ( See Doc. No. 23). However, in the trial court’s June 14, 2018 jou rnal entry in which it further clarified its decision to deny the Wa tsons’ first motion for summary judgment, the trial court explained that the second for eclosure “is not theCase No. 11-19-09

-24- exact same claim as [the first foreclosure] as four additional years of non-payment are alleged to have occurred in [the second foreclosure]. [U.S . Bank] is not barred * * * by the doctrine of res judicata as the present cause of a ction has not been litigated.” (Doc. No. 31). {¶35} We conclude that the trial court did not err by holding that th e doctrine of claim preclusion does not prevent U.S. Bank from bringing th e second foreclosure, albeit for different reasons than offered by the t rial court. Contrary to the trial court’s assertion in its June 14, 2018 journal entry, the claim in the second

foreclosure is identical to the claim in the first foreclosure despite the four additional years of alleged nonpayment. In the second foreclosure, U.S. B ank is demanding the same principal payment, $74,111.16, as it (and HSBC) demand ed in the first foreclosure. (Doc. No. 1); (Doc. No. 16, Ex. 1). Furthermore, in the second foreclosure, U.S. Bank is using the same alleged default date a s was used in the first foreclosure. (Doc. No. 1); (Doc. No. 16, Ex. 1). Though addit ional payments have purportedly been missed, the claim in the second foreclosure ar ises from the same set of operative facts as the claim in the first foreclosure—th at is, Pamela’s alleged failure to make her April 2011 mortgage payment and the consequ ent acceleration of the entire principal balance of her loan. See U.S. Bank Natl. Assn. v. Gullotta , 120 Ohio St.3d 399, 2008-Ohio-6268, ¶ 27-29, 31, 36 (concluding that a bank’s third complaint for foreclosure was barred by claim preclusion, despite the fact thatCase No. 11-19-09

-25- the third complaint was amended to use a different start date f or the collection of interest, because the complaint “still arose from [the] origina l default, when the entire principal balance became due”). It is therefore the sam e claim. As a result, in concluding that claim preclusion does not bar the second for eclosure because the

claim in the second foreclosure is not the same as the claim in the first foreclosure,

the trial court erred. {¶36} Nevertheless, “[a] reviewing court will not reverse a correct j udgment merely because a trial court relied on an erroneous reason as t he basis for its

determination.” Hassey v. Columbus , 10th Dist. Franklin No. 17AP-726, 2018- Ohio-3958, ¶ 33, citing Joyce v. Gen. Motors Corp. , 49 Ohio St.3d 93, 96 (1990)

and Reid v. Plainsboro Partners, III , 10th Dist. Franklin No. 09AP-442, 2010-Ohio4373, ¶ 20. In its July 5, 2016 judgment in the first foreclos ure, the trial court “consider[ed] the admissions deemed admitted, specifically that the note * * * is endorsed in blank and that [U.S. Bank] is not in possession of the note.” (Doc. No. 16, Ex. 10). After holding that U.S. Bank would need to prove its possession of the note indorsed in blank to prevail in the first foreclosure and that U.S. Bank could not meet this burden due to the deemed admissions, the trial co urt granted the Watsons’ motion for summary judgment and dismissed U.S. Bank’s complaint. ( Id. ).Case No. 11-19-09

-26- {¶37} While the trial court did not explicitly state that it was dism issing the first foreclosure because U.S. Bank could not prove that it had standing, given that the court’s judgment was based entirely on U.S. Bank’s inabilit y to prove possession of the promissory note, the only fair reading of the trial cour t’s judgment is that it dismissed the first foreclosure on standing grounds. See generally Fed. Home Loan Mtge. Corp. v. Schwartzwald , 134 Ohio St.3d 13, 2012-Ohio-5017, ¶ 20-39 (holding that, in a foreclosure action, a party does not have standing t o invoke the jurisdiction of a common pleas court unless it can establish that it had an interest in the note or mortgage at the time suit was filed). In a foreclosure action, a dismissal for lack of standing does not involve an adjudication on the underlying ind ebtedness and has “no effect on the underlying duties, rights, or obligations of the parties.” Id. at ¶ 40. Furthermore, “the dismissal of an action because one of the par ties is not a real party in interest or does not have standing is not a dismissal on the merits for purposes of res judicata.” State ex rel. Coles v. Granville , 116 Ohio St.3d 231, 2007-Ohio-6057, ¶ 51. Because the trial court’s July 5, 2016 dismissal was not an adjudication on the merits, claim preclusion does not bar U.S. Bank from bringing t he second

foreclosure. See Douglas v. Williams , 9th Dist. Summit No. 27459, 2015-Ohio1721, ¶ 5; U.S. Bank Natl. Assn. v. Perry , 8th Dist. Cuyahoga No. 99608, 2013- Ohio-3814, ¶ 12 (“Because the dismissal was without prejudice, U.S. Bank can refile the [foreclosure] action when it has uncontroverted evid ence of its standing.”).Case No. 11-19-09

-27- Therefore, although the trial court’s reasons were incorrect, t he trial court did not err by concluding that claim preclusion does not bar U.S. Bank from bringing the second foreclosure. Accordingly, to the extent that the Watson s based their motions for summary judgment on the claim-preclusive effect of the firs t foreclosure, the trial court did not err by denying their motions. {¶38} Finally, we consider whether the trial court erred by determini ng that U.S. Bank is not precluded in the second foreclosure from litig ating the matters deemed admitted in the first foreclosure. In denying the Watso ns’ first motion for summary judgment, the trial court held that “the admission that [U.S. Bank] did not have the note was for [the first foreclosure] action only” and that U.S. Bank “is not bound by [its] admission in [the first foreclosure].” (Doc. No . 23). The Watsons contend that the trial court erroneously credited U.S. Bank’s “ simplistic argument * * * that judicial admissions are limited to the case in which t hey are made, and are not binding in a new case,” an argument that the Watsons conced e “is true, but a misdirection.” (Appellants’ Brief at 6). The Watsons argue th at, in this case, preclusion arises not by operation of the deemed admissions alo ne, but “from the final judgment that occurred as a result of the evidence in the first case,” “from the failure to pursue an appeal taken from said judgment,” and “fro m the failure to appeal the denial of [the application for reconsideration] * * *.” ( Id. at 6-7).Case No. 11-19-09

-28- {¶39} The Watsons’ arguments are without merit. Under Civ.R. 36(A), “[a] party may serve upon any other party a written request for the admission, for purposes of the pending action only, of the truth of any matter s within the scope of Civ.R. 26(B) set forth in the request, that relate to statement s or opinions of fact or of the application of law to fact * * *.” “Any matter admitted under [Civ.R. 36] is conclusively established unless the court on motion permits wit hdrawal or amendment of the admission.” Civ.R. 36(B). However, “[a]ny ad mission made by a party under this rule is for the purpose of the pending actio n only and is not an admission by the party for any other purpose nor may it be used against the party in any other proceeding.” Id. {¶40} Although the text of Civ.R. 36 suggests that matters admitted i n one action are not given issue-preclusive effect in a subsequent ac tion, we have been unable to locate any Ohio state court decisions squarely addres sing this issue. The few cases that we have found that deal with the attempted use o f Civ.R. 36 admissions in subsequent actions did not arise, as this case do es, out of

circumstances in which a matter is deemed admitted in one actio n, a judgment is entered in that action solely on the basis of the admitted matt er, and a party seeks to litigate the subject matter of the deemed admission in a second action. Moreover,

the courts that have examined the conclusiveness of Civ.R. 36 a dmissions in subsequent actions have not done so through the lens of issue p reclusion.Case No. 11-19-09

-29- Nevertheless, after examining Civ.R. 36, precedent of the Supre me Court of Ohio, and other relevant case law, we believe that Civ.R. 36 admissio ns should not be granted issue-preclusive effect in subsequent actions because i ssues established by Civ.R. 36 admissions are not “actually litigated.” {¶41} In State ex rel. Davis v. Public Employees Retirement Board , the Supreme Court of Ohio reviewed the Tenth District Court of Appe als’s conclusion that a prior decision of the Supreme Court of Ohio “did not col laterally estop appellees’ claims that they were public employees when they wor ked for [the Franklin County Public Defender’s Office (“FCPDO”)]” because, i n the prior case, the court “did not actually litigate and determine” FCPDO’s sta tus as a public employer after it was incorporated as a nonprofit organization in 1984. 120 Ohio St.3d 386, 2008-Ohio-6254, at ¶ 29. The court observed that, “ [i]n effect, the claimants’ failure to raise or contest the issue [of FCPDO’s po stincorporation status] in [the prior case] * * * was tanta mount to a stipulation in th ose cases that FCPDO was a private employer after its incorporation in 1984,” and it quoted the Restatement’s position that an issue is not actually litigated “‘if it is the subject of a stipulation between the parties.’” Id. at ¶ 35, quoting 1 Restatement of the Law 2d, Judgments, Section 27, Comment e (1982). The court also cited to one of its previous cases, in which it suggested that matters established by stipulation in earlier actions are not subject to issue preclusion. Id. , citing Consolo v. Cleveland , 103Case No. 11-19-09

-30- Ohio St.3d 362, 2004-Ohio-5389, ¶ 9 (holding that a stipulation in a prior action that a union was a collective-bargaining representative did not collaterally estop a group of appellees from asserting that the union is not their e xclusive bargaining representative). Ultimately, the court concluded that the clai mants in Davis were not barred from litigating FCPDO’s postincorporation status bec ause that issue had not been “actually decided” in earlier cases. Id. at ¶ 36. However, the court stopped short of stating plainly that issue preclusion did not apply be cause issues established by stipulation are not “actually litigated.” See id. {¶42} While the court in Davis did not hold, in so many words, that matters stipulated to in previous actions are not “actually litigated” for purposes of issue preclusion, the court’s opinion can be fairly construed as supp orting this proposition. And though the court in Davis did not consider whether matters admitted under Civ.R. 36 are “actually litigated” or even refer ence Civ.R. 36, we think that this proposition is equally valid with respect to ad missions made under Civ.R. 36. First, Civ.R. 36 admissions function very similarly to stipulations. See In re Cassidy , 892 F.2d 637, 640 (7th Cir.1990), fn. 1 (analogizing deemed admissions to stipulations). Indeed, the Staff Notes to Civ.R. 36 provide that “Rule 36 admissions are not evidentiary admissions such as admissions against interest, but are more in the nature of stipulations.” 1970 Staff Note, Civ.R. 36. Moreover, the section of the Restatement that the court quoted with appar ent approval in DavisCase No. 11-19-09

-31- also provides that an issue is not actually litigated “if it is raised in an allegation by one party and is admitted by the other before evidence on the i ssue is adduced at trial * * *.” 1 Restatement, Section 27, Comment e. {¶43} Furthermore, at least one court has relied on Davis , along with federal authority, to conclude that, under Ohio law, matters deemed adm itted under Civ.R. 36 in a prior action are not subject to issue preclusion in a s ubsequent action. In re Somogye , Bankr.N.D.Ohio No. 18-30927, 2018 WL 5810447 (Nov. 5, 2018). The question in Somogye was the same as in the instant case: “whether a judgment base d on admissions under [Civ.R. 36], as opposed to the admissions t hemselves, can be used in a later proceeding to preclude litigation of the factua l issues admitted.” Id. at *5. The court noted that in the federal cases it reviewed, the courts “uniformly held that a judgment based on admissions under [Fed.R.Civ.P. 36 ] (or its counterpart under federal Tax Court Rule 90(f)) does not have issue preclus ive effect in a later proceeding.” Id. at *5-6 (collecting cases). The court then proceeded to exami ne

Davis , concluding: While the Ohio Supreme Court has not addressed the issue preclu sive effect of a judgment based on deemed admissions under [Civ.R. 3 6], to the extent that such admissions can be considered a type of stipulation * * *, Davis lends strong support for concluding that the Ohio Supreme Court would find that factual findings in a priorCase No. 11-19-09

-32- judgment based upon deemed admissions were not “actually litigated.”

Id. at *7. Finally, the court expressed its belief that the Supre me Court of Ohio would reach the same result by “simply giving effect to the sta ted limitation in [Civ.R. 36]” that deemed admissions are conclusive only for pur poses of the action in which they are made. Id. {¶44} Accordingly, based on the weight of authority, we conclude that issue preclusion does not bar U.S. Bank from relitigating the matters that were deemed

admitted in the first foreclosure and served as the basis of th e trial court’s July 5, 2016 judgment dismissing the first foreclosure. As a result, t o the extent that the Watsons based their motions for summary judgment on the issue-p reclusive effect of the matters deemed admitted in the first foreclosure, the tr ial court did not err by denying their motions. Further, as explained above, neither cl aim preclusion nor issue preclusion otherwise bars U.S. Bank from bringing the sec ond foreclosure. Accordingly, we conclude that the trial court did not err by de nying the Watsons’ first motion for summary judgment or by denying their second mo tion for summary judgment insofar as their second motion for summary judgment is based on the applicability of claim preclusion and issue preclusion. {¶45} Next, we consider the Watsons’ second assignment of error, in w hich they argue that the trial court erred by granting U.S. Bank’s m otion for summaryCase No. 11-19-09

-33- judgment and denying their second motion for summary judgment. In their second assignment of error, the Watsons propose that the trial court e rred by denying their second motion for summary judgment for the exact same reason th at it erred by granting U.S. Bank’s motion for summary judgment. They argue t hat the trial court should have granted their second motion for summary judgment an d denied U.S. Bank’s motion for summary judgment because U.S. Bank did not an d cannot produce admissible evidence to prove its claim. {¶46} In support of its motion for summary judgment, U.S. Bank submit ted the affidavit of Melinda Patterson (“Patterson”), an officer of U.S. Bank’s loan servicer, Caliber Home Loans, Inc. (“Caliber”). (Doc. No. 31). The following documents are attached to Patterson’s affidavit: a photocopy o f a promissory note signed and initialed by a Pamela J. Watson, as well as an allon ge to the note which is indorsed in blank; a photocopy of a mortgage signed and init ialed by a Pamela J. Watson; a photocopy of a corporate assignment of mortgage indic ating that the mortgage was assigned by MERS, as nominee for Accredited, to HS BC; a photocopy of a limited power of attorney authorizing Caliber to take all reasonable steps to complete the assignment of mortgages from a number of sellers, including HSBC, to LSF9 Mortgage Holdings, LLC; a photocopy of an assignm ent of mortgage and note purporting to assign the mortgage and note fr om HSBC to U.S. Bank as trustee for LSF9 Master Participation Trust; a copy of a computerCase No. 11-19-09

-34- spreadsheet purporting to depict the history of payments on the note and showing an outstanding principal balance of $74,111.16 as of March 1, 2 011; and a communication dated October 14, 2011, which is titled “Notice o f Right to Cure Default.” (Doc. No. 31, Exs. A-1, A-3, A-4, A-5, A-6, A-7, A-8 ). In her affidavit, Patterson avers that U.S. Bank “had possession of the original blank indorsed Note at the time the Complaint was filed * * * and continues to have possession of the original Note.” (Doc. No. 31). She also asserts that U.S. Ban k “is the current assignee of the Mortgage and was the assignee of the Mortgage a t the time of the filing of the Complaint,” that Pamela defaulted on the note, th at Pamela’s default has not been cured, that all conditions precedent have been com plied with, and that $74,111.16, plus interest, is owing as of March 1, 2011. ( Id. ). {¶47} The Watsons argue that the averments in Patterson’s affidavit a nd the documents attached to the affidavit are not competent summary j udgment evidence. Specifically, the Watsons note that Patterson’s affidavit “was made solely as an officer of [Caliber].” (Appellants’ Brief at 7). They argue t hat Patterson is not an officer or employee “of [HSBC] that can authenticate the docume nts submitted by U.S. Bank * * * as required by Civ.R. 56 and Evid.R. 801, 802, and 803(6).” ( Id. ). The Watsons conclude that Patterson’s affidavit was “not [made] on personal knowledge, or as [a] custodian[] of business records of [Accred ited], or [HSBC] and do[es] not provide any admissibility or evidentiary support” fo r most of the exhibitsCase No. 11-19-09

-35- attached thereto. ( Id. at 9). Thus, they contend that the documents attached to

Patterson’s affidavit are not admissible under the business-rec ords exception to the hearsay rule. See Evid.R. 803(6). {¶48} The Watsons’ argument is without merit. This court has previou sly considered and rejected arguments like the one raised by the Wa tsons. See Secy. of Veterans Affairs v. Leonhardt , 3d Dist. Crawford No. 3-14-04, 2015-Ohio-931, ¶ 40-60. Other courts have also rejected similar arguments. As explained by the Second District Court of Appeals, in mortgage-foreclosure cases , “a court may admit a document as a business record [under Evid. R. 803(6)] even when the proffering party is not the maker of the document, if the other requirements of Evid.R. 803(6) are met a nd the circumstances suggest that the record is trustworthy.” U.S. Bank, N.A.

v. Christmas , 2d Dist. Montgomery No. 26695, 2016-Ohio-236, ¶ 18, vacated on other grounds , 146 Ohio St.3d 1468, 2016-Ohio-5108, 54 N.E.3d 1267, citing Great Seneca Financial v. Felty , 170 Ohio App.3d 737, 2006-Ohio-6618, 869 N.E.2d 30, ¶ 14 (1st Dist.); Secy. of Veterans Affairs v. Leonhardt , 2015-Ohio-931, 29 N.E.3d 1, ¶ 57 (3d Dist.); State Farm Mut. Auto. Ins. Co. v. Anders , 197 Ohio App.3d 22, 2012-Ohio-824, 965 N.E.2d 1056, ¶ 24 (10th Dist.). “Trustworthiness of a record is suggested by the profferer’sCase No. 11-19-09

-36- incorporation into its own records and reliance on it.” Christmas , 2016-Ohio-236, ¶ 18, citing Leonhardt at ¶ 58. “Because ‘if information is sufficiently trustworthy that a business is will ing to rely on it in making business decisions, the courts should be willin g to rely

on that information as well.’” Id. , quoting Quill v. Albert M. Higley

Co. , 2014-Ohio-5821, 26 N.E.3d 1187, ¶ 44 (5th Dist.) (referring t o this as the rationale behind the business-records exception), c iting 1980 Staff Note, Evid.R. 803(6). Ocwen Loan Servicing, LLC v. Malish , 2d Dist. Montgomery No. 27532, 2018- Ohio-1056, ¶ 23. In Leonhardt , we explained why business records maintained by mortgage servicers, consisting in part of documents originally generated and maintained by other entities, are particularly trustworthy: Because of the nature of the mortgage industry, many mortgage lenders rely on mortgage servicers to handle the daily function s of mortgages. Similarly, the mortgage servicer may change through out the life of the loan. Considering the business relationship be tween the mortgage lender and the mortgage servicer, as well as amongst successor mortgage servicers, these entities rely on the underl ying loan records for accuracy in conducting ordinary business funct ions— that is, the mortgage servicers are under a business duty to th eCase No. 11-19-09

-37- mortgage lender to be accurate and successor mortgage servicers rely on the records of prior mortgage servicers for accuracy in serv icing

the loan.

Id. at ¶ 59. {¶49} In her affidavit, Patterson states that she is authorized to ex ecute the affidavit on behalf of U.S. Bank in her capacity as an “authori zed officer” of Caliber and that “[i]n the regular performance of [her] job functions, [she has] personal knowledge obtained through a review of the business records mai ntained by Caliber for the purpose of servicing mortgage loans.” (Doc. No. 31). She states that her job responsibilities include “reviewing the internal record-keeping systems of Caliber,” “reviewing the loan document,” and “ensuring completeness and a ccuracy of the loan documents and loan histories.” ( Id. ). Patterson’s affidavit also states that

Caliber’s business records are made “at or near the time of the occurrence of the matters,” “recorded by persons with knowledge of the informatio n in the business record, or from information transmitted by persons with knowled ge,” “kept in the course of Caliber’s regularly conducted business activities,” a nd “created by Caliber as a regular practice.” ( Id. ). See Evid.R. 803(6). The affidavit further provides that “Caliber’s records incorporate the records of their predecessor s in interest, and the prior servicers of this mortgage loan, * * * which are maintain ed and relied upon [in] the regular course of business by Caliber.” (Doc. No. 31) . Finally, the affidavitCase No. 11-19-09

-38- provides that it was made “from a review of those business reco rds and from [Patterson’s] knowledge of how said records are created and mai ntained,” that the documents attached to the affidavit were copied from the busine ss records Patterson reviewed prior to making the affidavit, and that the documents attached to the affidavit are true and accurate copies of the original business records. ( Id. ). {¶50} Based on the averments in her affidavit, Patterson is a person qualified to authenticate Caliber’s business records pursuant to Evid.R. 803(6) because the statements in her affidavit show that she “is sufficiently fami liar with [Caliber’s] business operations and the preparation, maintenance, and retri eval of [Pamela’s] loan documents” to reasonably attest that “the records are what they purport to be and that they were made in the ordinary course of business.” Leonhardt at ¶ 51, citing Pyles v. Midwest Neurosurgeons , 3d Dist. Allen No. 1-98-41, 1999 WL 152886, *5 (Feb. 18, 1999) and Anders at ¶ 15. See Secy. of Veterans Affairs v.

Anderson , 8th Dist. Cuyahoga No. 99957, 2014-Ohio-3493, ¶ 25 (“Employee s of servicing agents are competent to testify in foreclosure action s regarding loans they service.”). Furthermore, Patterson’s affidavit establishes tha t Caliber’s business records satisfy the requirements of Evid.R. 803(6) and that the documents attached to the affidavit, which Patterson reviewed before making the af fidavit, are part of

Caliber’s business records.Case No. 11-19-09

-39- {¶51} Moreover, Patterson’s statement that Caliber’s records incorpor ate the records of its predecessors and that Caliber maintains and reli es on its predecessors records in the regular course of business indicates that Calibe r deems its predecessors’ records to be trustworthy, and we have found no r eason to doubt the

trustworthiness of the source of the information in Caliber’s r ecords or the circumstances of their preparation. See Malish , 2018-Ohio-1056, at ¶ 25. Therefore, the documents attached to Patterson’s affidavit are properly authenticated and admissible under Evid.R. 803(6), and the aver ments in Patterson’s affidavit, made after she reviewed Caliber’s business records, are properly based on Patterson’s personal knowledge of the facts contained in Calibe r’s authenticated

business records. See id. ; U.S. Bank, N.A. v. Stocks , 2d Dist. Montgomery No. 27400, 2017-Ohio-8108, ¶ 61 (“‘That an affiant relies on busine ss records for her facts does not mean that the facts are not based on personal kn owledge.’”), quoting Bibbs v. Cinergy Corp. , 1st Dist. Hamilton No. C-010390, 2002 WL 537628, *2 (Apr. 12, 2002); PNC Mtge. v. Krynicki , 7th Dist. Mahoning No. 15 MA 0194, 2017-Ohio-808, ¶ 9-11, 13-15. Accordingly, we reject the Watso ns’ argument that U.S. Bank fails to support its motion for summary judgment with competent evidence. As we have rejected the Watsons’ challenge to the ad missibility of U.S. Bank’s summary judgment evidence, we conclude that the trial co urt did not err byCase No. 11-19-09

-40- denying the Watsons’ second motion for summary judgment or by r efusing to deny U.S. Bank’s motion for summary judgment for lack of competent e vidence. {¶52} Nonetheless, while we have concluded that U.S. Bank supports it s motion for summary judgment with competent evidence, U.S. Bank must still show that there are no genuine issues of material fact with respect to the essential elements of its claim and that it is entitled to judgment as a matter of law. When moving for summary judgment in a foreclosure action, the plaintiff must pr esent evidentiaryquality materials demonstrating: “(1) the movant is the holder of the note and mortgage, or is a party entitled to enforce the instrument; (2) if the movant is not th e original mortgagee, the chain of assignments and transfers; (3) the mort gagor is in default; (4) all conditions precedent have been met; and (5) the amount of principal and interest due.” Bank of New York Mellon v. Bridge , 9th Dist. Summit No. 28461, 2017-Ohio-7686, ¶ 10, quoting Bank of Am., N.A. v. Edwards , 9th Dist. Lorain Nos. 15CA010848 and 15CA010851, 2017-Ohio-4343, ¶ 10. We conclude that U.S. Bank h as carried its initial burden of demonstrating the absence of genuine issues o f material fact with respect to each of these five elements. {¶53} First, Patterson’s statement that U.S. Bank was in possession o f the note allegedly signed by Pamela when it filed the second forecl osure, her statementCase No. 11-19-09

-41- that U.S. Bank is still in possession of the note, and the phot ocopies of the note and the allonge containing a blank indorsement demonstrate that U.S . Bank had standing

to file the second foreclosure and is the holder of the note. “When an instrument is indorsed in blank, the instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.” R.C . 1303.25(B). A “holder” includes a person who is in possession of an instrumen t payable to bearer. R.C. 1301.201(B)(21)(a); Watson I , 2015-Ohio-221, at ¶ 25, quoting BAC Home Loans Servicing, L.P. v. Haas , 3d Dist. Marion No. 9-13-40, 2014-Ohio-438, ¶ 27. Therefore, by offering evidence that it was in possession of th e note, which is indorsed in blank, at the time it filed the second foreclosure and that it remains in possession of the note, U.S. Bank has presented evidence suffic ient to establish that it had standing to bring the second foreclosure and that it is the holder of the note. {¶54} In addition, the photocopies of the mortgage and note allegedly executed by Pamela, the various assignments, and the power of a ttorney document, along with Patterson’s averments that U.S. Bank was the assigne e of the mortgage

when it filed the second foreclosure and that it is the current assignee, are sufficient to bolster U.S. Bank’s standing to bring the second foreclosure , to establish its status as holder of the mortgage, and to demonstrate the chain of assi gnments and transfers culminating in its acquisition of the mortgage and note. Nonet heless, the Watsons contend that U.S. Bank’s evidence fails to establish a complete , valid chain ofCase No. 11-19-09

-42- transfers. They argue that U.S. Bank’s documents do “not conta in [a] listing of the mortgage loans referred to in the limited power of attorney” an d that its documents “certainly do[] not establish that a mortgage loan of [Pamela] was included in such power of attorney.” (Appellants’ Brief at 8). The Watsons att empt to portray their argument as a challenge to U.S. Bank’s assertion that it is act ually the assignee of the mortgage. ( See id. at 9) (citing two cases allegedly dealing with the “issue of missing documents which would show the specific mortgage loan w as transferred” and the “lack of chain of title by failure to provide documents of a specific obligation being transferred or assigned”). {¶55} Regardless of the way that the Watsons style their argument, by disputing that the mortgage allegedly signed by Pamela was one of the mortgages that Caliber was authorized to assign, but failing to account f or the copy of the recorded assignment between HSBC and U.S. Bank, it is clear tha t the Watsons are challenging whether the mortgage was validly assigned to U.S. Bank rather than challenging whether it was actually assigned. Yet, under the facts of this case, the Watsons lack standing to challenge the validity of the assignme nt from HSBC to

U.S. Bank. Christiana Trust v. Berter , 12th Dist. Butler No. CA2019-07-109, 2020- Ohio-727, ¶ 33, quoting MidFirst Bank v. Wallace , 12th Dist. Warren No. CA2013- 07-053, 2014-Ohio-4525, ¶ 14 (“‘[W]hen a debtor or mortgagor is neither a party to, nor a third-party beneficiary of, the assignment of a mortg age, the debtor orCase No. 11-19-09

-43- mortgagor lacks standing to challenge the validity of the mortg age assignment between an assignor and an assignee.’”); Chase Home Fin., L.L.C. v. Heft , 3d Dist. Logan Nos. 8-10-14 and 8-11-16, 2012-Ohio-876, ¶ 37. Because t he Watsons do not otherwise contest that the mortgage was actually assigned t o U.S. Bank, their arguments do not alter our conclusion that U.S. Bank has furthe r shown that it had standing to bring the second foreclosure, established its statu s as holder of the mortgage, and demonstrated the chain of assignments. {¶56} Furthermore, by providing Patterson’s sworn statement that the note is in default, her recitation of the amount of principal and in terest due, a copy of the computer spreadsheet documenting the payment history on the not e, and a copy of the default notice letter, U.S. Bank has shown that the note is in default and evidenced the amount of principal and interest due. Generally, “an affidavit establishing a loan is in default is sufficient to demonstrate entitlement to summary judgment where there is no evidence controverting the affiant’s averments.” Fifth Third Mtge. Co. v. Fantine , 5th Dist. Fairfield No. 15-CA-5, 2015-Ohio-4260, ¶ 21, citing Cent. Mtge. Co. v. Elia , 9th Dist. Summit No. 25505, 2011-Ohio-3188, ¶ 7. Moreover, courts have held that “‘an averment of outstanding in debtedness made in the affidavit of a[n] * * * officer with personal knowledge of the debtor’s account is sufficient to establish the amount due and owing on the note , unless the debtor

refutes the averred indebtedness with evidence that a different amount is owed.’”Case No. 11-19-09

-44- Id. at ¶ 27, quoting JPMorgan Chase Bank, N.A. v. Salazar , 6th Dist. Lucas No. L13-1038, 2014-Ohio-1002, ¶ 13 and citing Natl. City Bank v. TAB Holdings, Ltd. , 6th Dist. Erie No. E-10-060, 2011-Ohio-3715, ¶ 12. In addition , because copies of

the documents that Patterson relied on to inform her averments were attached to her affidavit, her averments concerning default and the principal a nd interest due can be properly considered in determining whether U.S. Bank demonstrat ed that the note is in default and established the amount of principal and inter est due. See HSBC Bank USA, Natl. Assn. v. Webb , 10th Dist. Franklin No. 16AP-845, 2017-Ohio9285, ¶ 15-17. Thus, U.S. Bank’s evidence is sufficient to mee t its initial burden of showing that the note is in default and of demonstrating the am ount of principal and

interest due. {¶57} Finally, we are satisfied that there is no genuine issue of mat erial fact with respect to whether all conditions precedent have been met. U.S. Bank contends that Patterson’s averments and the “Notice of Right to Cure Def ault” letter, which, under the terms of the mortgage, was required to be sent prior to accelerating the loan and filing for foreclosure, are sufficient to demonstrate that all conditions precedent have been met. However, even assuming that this evid ence does not show that all conditions precedent have been satisfied, based on our review of the parties’ pleadings, we find it to be beyond argument that all conditions precedent have been

met.Case No. 11-19-09

-45- {¶58} In paragraph one of its complaint, U.S. Bank averred generally that it has “complied with all conditions precedent as set forth in the note and mortgage.” (Doc. No. 1). U.S. Bank’s pleading is permissible under Civ.R. 9(C), which provides that “[i]n pleading the performance or occurrence of c onditions precedent, it is sufficient to aver generally that all conditions preceden t have been performed or have occurred.” In contrast, the denial of the performance or occurrence of conditions precedent “shall be made specifically and with parti cularity.” Civ.R. 9(C). The performance of conditions precedent is deemed admitt ed “when [a] party fail[s] to deny that the conditions precedent had been satisfie d with the specificity required by Civ.R. 9(C).” Bank of Am., N.A. v. Calloway , 8th Dist. Cuyahoga No. 103622, 2016-Ohio-7959, ¶ 19, citing Bank of Am., N.A. v. Michko , 8th Dist. Cuyahoga No. 101513, 2015-Ohio-3137, ¶ 20-21; U.S. Bank Natl. Assn. v. Stanze , 2d Dist. Montgomery No. 25554, 2013-Ohio-2474, ¶ 13-14, quoting Lewis v. WalMart, Inc. , 10th Dist. Franklin No. 93AP-121, 1993 WL 310411, *3 (Aug. 12 , 1993). Here, in their answer, the Watsons generally denied par agraphs one through four of U.S. Bank’s complaint. (Doc. No. 7). Therefore, becau se the Watsons failed to deny the performance of conditions precedent specifically an d with particularity as required by Civ.R. 9(C), the performance of all conditions p recedent is deemed admitted for purposes of this action.Case No. 11-19-09

-46- {¶59} Aside from their challenge to the validity of the assignment of the mortgage and note from HSBC to U.S. Bank, which we addressed ab ove, the Watsons do not seriously dispute any of the material facts of t his case or offer any evidence contradicting U.S. Bank’s evidence. The Watsons prese nt no evidence suggesting that Pamela did not sign the note and mortgage attac hed to U.S. Bank’s motion for summary judgment. The Watsons present no evidence s uggesting that U.S. Bank is not the holder of the note or that the mortgage wa s not in fact assigned to U.S. Bank. The Watsons present no evidence suggesting that Pamela is not in default of her obligations under the note. The Watsons do not assert that a different amount of principal and interest is due, and while their noncom pliance with Civ.R. 9(C) would likely frustrate any effort to prove that there are conditions precedent that have not been met, they do not argue that there are condit ions precedent that have not been performed. The Watsons have simply failed to reb ut with specific facts showing that there are any genuine issues for trial. {¶60} For these reasons, we conclude that there are no genuine issues of material fact with respect to any of the elements of U.S. Bank’ s claim and that U.S. Bank is entitled to judgment as a matter of law. Accordingly, we conclude that the trial court did not err by granting U.S. Bank’s motion for summ ary judgment. {¶61} The Watsons’ first and second assignments of error are overrule d.Case No. 11-19-09

-47- Assignment of Error No. III The trial court erred in failing to consider and to award sanct ions pursuant to R.C. 2323.51. {¶62} In their third assignment of error, the Watsons argue that the trial court erred by failing to grant either of their motions for sanctions . Specifically, the Watsons argue that U.S. Bank engaged in frivolous conduct becau se existing law did not support its decision to file the second foreclosure and it did not have a good faith argument for changing existing law. (Appellants’ Brief a t 9-11). C oncerning the “existing law,” the Watsons claim that “it must have been c rystal clear to U.S. Bank and its counsel after its motion to reconsider the res jud icata portion of [ Watson II ] was denied * * * that res judicata barred the complaint in th is case * * *.” ( Id. at 10). Thus, they contend, “[a]ll the conduct of U.S. Bank a nd its counsel in refusing to dismiss the second complaint and in resisting th e summary dismissal of such complaint was not only frivolous, but knowingly frivolo us.” ( Id. ). Moreover, the Watsons argue that “U.S. Bank and its counsel act ed frivolously in multiple areas when its * * * complaint [in the second foreclos ure] failed to allege that * * * Pamela * * * signed or otherwise made the note and m ortgage or that she was in default of said note and mortgage.” ( Id. ). Finally, the Watsons argue generally that U.S. Bank acted frivolously because it did not s upport its motion for summary judgment with competent evidence or provide evidence go ing to all the elements of its claim. ( Id. at 10-11).Case No. 11-19-09

-48- {¶63} R.C. 2323.51 is one of two mechanisms provided by Ohio law “for an aggrieved party to recover attorney fees, court costs, and othe r reasonable expenses arising out of frivolous conduc t * * *.” Reddy v. Singh , 3d Dist. Marion No. 9-14- 29, 2015-Ohio-1180, ¶ 69, citing ABN AMRO Mtge. Group, Inc. v. Evans , 8th Dist. Cuyahoga No. 98777, 2013-Ohio-1557, ¶ 15, citing Sigmon v. S.W. Gen. Health

Ctr. , 8th Dist. Cuyahoga No. 88276, 2007-Ohio-2117, ¶ 14. Under R. C. 2323.51, “at any time not more than thirty days after the entry of final judgment in a civil action or appeal, any party adversely affected by frivolous con duct may file a motion for an award of court costs, reasonable attorney’s fees, and ot her reasonable expenses incurred in connection with the civil action or appeal .” R.C. 2323.51(B)(1). R.C. 2323.51(A)(2), which defines frivolous con duct, provides in pertinent part: (2) “Frivolous conduct” means * * *: (a) Conduct of an inmate or other party to a civil action, of an in mate who has filed an appeal of the type described in [R.C. 2323.51(A)(1)(b)], or of the inmate’s or other party’s counsel of record that satisfies any of the following: (i) It obviously serves merely to harass or maliciously injure another party to the civil action or appeal or is for another i mproperCase No. 11-19-09

-49- purpose, including, but not limited to, causing unnecessary del ay or a needless increase in the cost of litigation. (ii) It is not warranted under existing law, cannot be support ed by a good faith argument for an extension, modification, or reversal of existing law, or cannot be supported by a good faith argument f or the

establishment of new law. (iii) The conduct consists of allegations or other factual con tentions that have no evidentiary support or, if specifically so identif ied, are not likely to have evidentiary support after a reasonable oppor tunity for further investigation or discovery. (iv) The conduct consists of denials or factual contentions th at are not warranted by the evidence or, if specifically so identified , are not reasonably based on a lack of information or belief. R.C. 2323.51(A)(2)(a)(i)-(iv). “Frivolous conduct, as contempl ated by R.C. 2323.51(A)(2)(a), is judged under an objective, rather than a s ubjective, standard * * * and must involve egregious conduct.” State ex rel. DiFranco v. S. Euclid , 144 Ohio St.3d 571, 2015-Ohio-4915, ¶ 15, citing State ex rel. Striker v. Cline , 130 Ohio St.3d 214, 2011-Ohio-5350, ¶ 21. “In determining whether a cla im itself is frivolous under the statute, the test is whether no reasonable lawyer wou ld have brought theCase No. 11-19-09

-50- action in light of the existing law.” Reddy at ¶ 71, citing Orbit Electronics, Inc. v. Helm Instrument Co., Inc. , 167 Ohio App.3d 301, 2006-Ohio-2317, ¶ 49 (8th Dist.). {¶64} “‘“[N]o single standard of review applies in R.C. 2323.51 cases .”’”

Id. at ¶ 67, quoting Namenyi v. Tomasello , 2d Dist. Greene No. 2013-CA-75, 2014- Ohio-4509, ¶ 19, quoting Wiltberger v. Davis , 110 Ohio App.3d 46, 51 (10th Dist.1996). “When the question regarding what constitutes friv olous conduct calls for a legal determination, such as whether a claim is warranted under existing law, an appellate court is to review the frivolous conduct determina tion de novo, without

deference to the trial court’s decision.” Id. , citing Natl. Check Bur. v. Patel , 2d Dist. Montgomery No. 21051, 2005-Ohio-6679, ¶ 10. “‘In contrast, if there is no disputed issue of law and the question is factual, we apply an abuse of discretion standard of

review.’” Id. , quoting Riverview Health Inst., L.L.C. v. Kral , 8th Dist. Cuyahoga No. 24931, 2012-Ohio-3502, ¶ 33, citing Natl. Check Bur. at ¶ 11. Likewise, the

ultimate decision whether to award sanctions under R.C. 2323.51 will not be reversed absent a showing of an abuse of discretion. DiFranco at ¶ 13, quoting State ex rel. Bell v. Madison Cty. Bd. of Commrs. , 139 Ohio St.3d 106, 2014-Ohio1564, ¶ 10, citing Striker at ¶ 11. An abuse of discretion suggests the trial court’s decision is unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore , 5 Ohio St.3d 217, 219 (1983).Case No. 11-19-09

-51- {¶65} In its February 9, 2018 judgment denying the Watsons’ first mot ion for sanctions, the trial court found that U.S. Bank “was justif ied in the filing of the new, albeit nearly identical, complaint in which the previous a dmissions deemed admitted were not an issue.” (Doc. No. 23). Consequently, the trial court concluded

that U.S. Bank “committed no frivolous conduct” and denied the Watsons’ first motion for sanctions. ( Id. ). Although the trial court did not make any findings of fact with respect to its denial of the Watsons’ second motion f or sanctions, the

Watsons’ second motion for sanctions was based on the same res judicata argument as its first motion for sanctions as well as arguments relating to supposed defects in U.S. Bank’s summary-judgment evidence. (Doc. Nos. 46, 49, 50). {¶66} In light of our resolution of the Watsons’ first and second ass ignments of error, we conclude that the trial court did not err by holdi ng that U.S. Bank did not engage in frivolous conduct. As explained in our discussio n of the Watsons’ first assignment of error, U.S. Bank is not barred either by cl aim preclusion or by issue preclusion from maintaining the second foreclosure or fro m litigating issues critical to succeeding on its claim. Therefore, we cannot conc lude that U.S. Bank’s claim is frivolous because existing law supports that the claim could be brought and litigated by a reasonable lawyer. Furthermore, in our examinat ion of the Watsons’ second assignment of error, we concluded that U.S. Bank support ed its motion for summary judgment with evidentiary-quality materials, that U.S. Bank demonstratedCase No. 11-19-09

-52- the absence of any genuine issues of material fact concerning t he elements of its claim, that the Watsons failed to rebut U.S. Bank’s showing, an d that U.S. Bank is entitled to judgment as a matter of law. Thus, because we have already necessarily rejected the Watsons’ arguments relating to the quality and suf ficiency of U.S. Bank’s allegations and evidence, we cannot now hold that U.S. B ank conducted this litigation in a frivolous manner. In sum, as we agree with the trial court that U.S. Bank did not engage in frivolous conduct, we conclude that the trial court did not abuse its discretion by denying the Watsons’ motions for sancti ons under R.C.

2323.51. {¶67} The Watsons’ third assignment of error is overruled. {¶68} Having found no error prejudicial to the appellants herein in t he particulars assigned and argued, we affirm the judgment of the trial court. Judgment Affirmed WILLAMOWSKI and ZIMMERMAN, J.J., concur. /jlr