         [Cite as Chase Home Fin.,  L.L.C. v. Pfaffl, 2016-Ohio-2621.] 

                           IN THE COURT OF APPEALS
                  FIRST APPELLATE DISTRICT OF OHIO
                            HAMILTON COUNTY, OHIO




CHASE HOME FINANCE, LLC,                          :          APPEAL NO.  C-150483
                                                             TRIAL NO.  A-0904243
        Plaintiff-Appellee,                       :
                                                                 O P I N I O N.
  vs.                                             :

SUSAN M. PFAFFL,                                  :

 and                                              :

JOSEPH PFAFFL,                                    :

    Defendants-Appellants,                        :

 and                                              :

RICHARD ROE,                                      :

  and                                             :

DANIEL M. HENDY,                                  :

    Defendants.                                    :



Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: April 22, 2016



Blank Rome, LLP, Chrissy M. Dunn and John R. Wirthlin, for Plaintiff-Appellee,

Ivan L. Tamarkin, for Defendants-Appellants. 


Please note: this case has been removed from the accelerated calendar. 
                    OHIO FIRST DISTRICT COURT OF APPEALS




SYLVIA S. HENDON, Judge. 

       {¶1}    Defendants-appellants Susan and Joseph Pfaffl have appealed from

the trial court’s grant of summary judgment to plaintiff-appellee Chase Home

Finance, LLC, (“Chase”) in a foreclosure action that Chase had filed against the

Pfaffls.  Because the trial court’s grant of summary judgment to Chase was proper,

we affirm its judgment. 

                               Factual Background


       {¶2}   On April 16, 2007, Susan Pfaffl signed an adjustable rate promissory

note, issued by Chase Bank USA, N.A., in the amount of $825,000.  The note was

secured by a mortgage on the Pfaffls’ property located at 9077 East Kemper Road in

Cincinnati.    That same day, the note was assigned to Chase, and Susan Pfaffl

executed a document acknowledging the assignment.  The mortgage on the Pfaffls’

property was recorded on August 14, 2007, and assigned to Chase on April 23, 2009. 

       {¶3}   The Pfaffls defaulted on their payments due to Chase under the note,

and on April 28, 2009, Chase filed a complaint for foreclosure against the Pfaffls

seeking judgment in the amount of $816,548.27 plus interest at a rate of 9.125

percent from November 1, 2008.  In their answer, the Pfaffls denied being in default

on the note, and raised the following affirmative defenses: the loan issued by Chase

was predatory; the loan had been fraudulently obtained; Chase had failed to comply

with a forbearance agreement; Chase had unclean hands; the notary signature on the

mortgage was different than the typed name of the notary who had witnessed the

Pfaffls sign the mortgage; and Chase had executed the loan knowing that the Pfaffls

would be unable to pay the associated fees and expenses. 



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       {¶4}   Chase moved for summary judgment.  After determining that Chase

had failed to prove that it was a holder in due course and that genuine issues of

material fact existed as to whether Chase Bank USA had perpetrated fraud against

the Pfaffls at closing, a magistrate with the Hamilton County Court of Common Pleas

denied Chase’s motion for summary judgment on July 21, 2010.                Chase filed

objections to the magistrate’s decision on August 5, 2010. 

       {¶5}   On May 7, 2013, the trial court issued a decision sustaining Chase’s

objections to the magistrate’s decision and granting summary judgment to Chase. 

The decision additionally remanded the case to the magistrate for further

proceedings.  But no further action was taken in the case until July 20, 2015, when

the trial court issued a final judgment granting Chase summary judgment and

awarding Chase judgment on the note in the amount of $816,548.27 plus interest at

a rate of 9.125 percent per annum from November 1, 2008. 

       {¶6}   The Pfaffls have appealed from the trial court’s final judgment entry,

raising two assignments of error for our review. 

                                Summary Judgment


       {¶7}   In their first assignment of error, the Pfaffls argue that the trial court

erred in granting Chase’s motion for summary judgment.  We review a trial court’s

grant of summary judgment de novo.  See Grafton v. Ohio Edison Co., 77 Ohio St.3d

102, 105, 671 N.E.2d 241 (1996).  Summary judgment is appropriately granted when

there exists no genuine issues of material fact, the party moving for summary

judgment is entitled to judgment as a matter of law, and the evidence, when viewed

in favor of the nonmoving party, permits only one reasonable conclusion that is




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                      OHIO FIRST DISTRICT COURT OF APPEALS



adverse to that party.  See State ex rel.  Howard v. Ferreri, 70 Ohio St.3d 587, 589,

639 N.E.2d 1189 (1994). 

       {¶8}    The Pfaffls specifically argue that summary judgment was improper

because genuine issues of material fact existed with respect to whether Chase had

committed fraud when executing the loan, whether the note was unconscionable,

and whether the loan could be rescinded because the Truth-in-Lending Act had been

violated.  Our resolution of these arguments depends on whether Chase was a holder

in due course, or just a holder, of the note. 

       {¶9}    Generally, when a negotiable instrument is assigned to a subsequent

lender, that lender takes the instrument subject to any claims and defenses that the

borrower could assert against the original lender.  See CitiMortgage Inc. v. Hoge,

196 Ohio App.3d 40, 2011-Ohio-3839, 962 N.E.2d 327, ¶ 19 (8th Dist.).  But an

exception to this general rule arises if the subsequent lender is a holder in due

course.  Id. A holder in due course takes a negotiable instrument free of the claims

and defenses that existed between the original parties to the documents.          See

Calvary Invest.,  L.L.C. v. Vonderheide, 1st Dist.  Hamilton No.  C-010359, 2001 Ohio

App.  LEXIS 5035, *9 (Nov. 9, 2001). 

       {¶10} A holder becomes a holder in due course “if the holder takes the

instrument (1) for value; (2) in good faith; (3) and without notice of any claims or

defenses otherwise available to the person obligated on the instrument or of various

defects in the instrument.”  Firstar Bank, N.A. v. First Serv.  Title Agency, 1st Dist. 

Hamilton No.  C-030641, 2004-Ohio-4509, ¶ 9.  At issue here is whether Chase took

the note without notice of any defects in the instrument, specifically whether it had

knowledge of the Pfaffls’ default at the time that the note was acquired.  Chase




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                      OHIO FIRST DISTRICT COURT OF APPEALS



received the note by assignment on April 16, 2007.  At that time, the Pfaffls were not

in default on the note.  Consequently, we hold that Chase took the note without

notice of any defects in it, and that it was a holder in due course of the note. 

        {¶11} As a holder in due course, Chase took the note free of the claims and

defenses asserted by the Pfaffls.  Consequently, we hold that the trial court did not

err in granting Chase’s motion for summary judgment.  The first assignment of error

is overruled. 

                                         Civ. R. 53


        {¶12} In their second assignment of error, the Pfaffls argue that the trial

court failed to act in accordance with Civ. R. 53. 

        {¶13} Although Chase filed objections to the magistrate’s decision in August

of 2010, the trial court did not overrule the objections until May of 2013, and then

did not enter a final judgment in the action until July of 2015.  The Pfaffls contend

that, pursuant to Civ. R. 53(D)(4)(e)(i), the trial court was required to rule on Chase’s

objections within 28 days.  But the Pfaffls’ argument is belied by the language of the

rule.    Civ. R. 53(D)(4)(e)(i) concerns the judgment entered by the trial court when

ruling on objections to a magistrate’s decision.  It provides that

        The court may enter a judgment either during the fourteen days

        permitted by Civ. R. 53(D)(3)(b)(i) for the filing of objections to a

        magistrate’s decision or after the fourteen days have expired.  If the

        court enters a judgment during the fourteen days permitted by Civ. R.

        53(D)(3)(b)(i) for the filing of objections, the timely filing of objections

        to the magistrate’s decision shall operate as an automatic stay of




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                       OHIO FIRST DISTRICT COURT OF APPEALS



       execution of the judgment until the court disposes of those objections

       and vacates, modifies, or adheres to the judgment previously entered. 

Nothing in this rule requires the trial court to rule on objections to a magistrate’s

decision within 28 days. 

       {¶14} The Pfaffls further argue that the trial court failed to undertake an

independent review of the matters objected to by Chase, as is required by Civ. R.

53(D)(4)(d).     This provision states that if objections are filed to a magistrate’s

decision, the trial court “shall undertake an independent review as to the objected

matters to ascertain that the magistrate has properly determined the factual issues

and appropriately applied the law.”  While the trial court did not provide reasons in

support of its decision to sustain Chase’s objections to the magistrate’s decision, the

record is clear that it had conducted an independent review.  In its May 7, 2013 entry

sustaining Chase’s objections, the trial court stated that it had considered the filed

objections and the other pleadings in the case.  And in its final judgment entry issued

on July 20, 2015, the court stated that it had conducted an independent review and

had determined that Chase was entitled to summary judgment. 

       {¶15} We find that the trial court complied with the requirements of Civ. R.

53.  The Pfaffls’ second assignment of error is overruled, and the judgment of the

trial court is affirmed. 

                                                                      Judgment affirmed. 



FISCHER, P.J., and CUNNINGHAM, J., concur. 



Please note:
       The court has recorded its own entry on the date of the release of this opinion. 


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