Opinion ID: 2994574
Heading Depth: 2
Heading Rank: 1

Heading: issues

Text: A federal court must give to a state-court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered. Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984). Therefore, we apply the doctrine of issue preclusion as interpreted by Ohio courts to determine whether the Ohio foreclosure action bars the Trustee’s challenge to the validity of the mortgage. See Cincinnati Cent. Credit Union v. Benson, 721 N.E.2d 410, 413 (Ohio Ct. App. 1998); Bank One Dayton, N.A. v. Ellington, 663 N.E.2d 660, 662 (Ohio Ct. App. 1995) (applying principles of res judicata to prevent relitigation of validity of a mortgage following a foreclosure action). Under Ohio law, the doctrine of issue preclusion precludes further action on an identical issue that has been actually litigated and determined by a valid and final judgment as part of a prior action among the same parties or those in privity with those parties. State v. Williams, 667 N.E.2d 932, 935 (Ohio 1996). The dispute in the present case turns on the issue of privity; the parties agree that the other elements necessary for preclusion are satisfied. Under Ohio law, in order to determine whether there is privity of parties, ’a court must look behind the nominal parties to the substance of the cause to determine the real parties in interest.’ Fort Frye Teachers Ass’n v. State Employment Relations Bd., 692 N.E.2d 140, 144 (Ohio 1998) (quoting Trautwein v. Sorgenfrei, 391 N.E.2d 326, 331 (Ohio 1979)). [A] person is in privity with another if he is so identified in interest with such person that he represents the same legal right. Deaton v. Burney, 669 N.E.2d 1, 5 (Ohio Ct. App. 1995) (citing Fightmaster v. Tauber, 183 N.E. 116, 117 (Ohio Ct. App. 1932)). As we have recognized, [a] trustee in bankruptcy represents the interests of creditors. In re Luster, 981 F.2d 277, 279 (7th Cir. 1992). Debtors’ creditors were not the real parties in interest in the foreclosure action. Furthermore, while Ohio Rev. Code Ann. sec. 5301.01 sets out certain requirements which must be satisfied in order for a mortgage to be valid against third parties, the Ohio Supreme Court has held that, absent fraud, an instrument which fails to satisfy sec. 5301.01 is nevertheless valid between the parties to the instrument. See Basil v. Vincello, 553 N.E.2d 602, 606 (Ohio 1990). Therefore, the Debtors were not so identified in interest with their creditors that they could be said to represent the same legal right in the Ohio foreclosure action. The Trustee was not in privity with the Debtors, and the foreclosure action does not preclude the Trustee’s challenge to the validity of the mortgage.