Court Opinion

ID: 8206723
Source: CourtListenerOpinion
Date Created: 2022-09-15 17:09:23.544058+00
Date Added: 2024-06-11T16:41:18.608899
License: Public Domain

[Cite as Kemba Fin. Credit Union v. Jackson on High Condominium Assn., 2022-Ohio-3247.]

                            IN THE COURT OF APPEALS OF OHIO

                                 TENTH APPELLATE DISTRICT

Kemba Financial Credit Union,                       :

                Plaintiff-Appellee,                 :

v.                                                  :                          No. 21AP-408
                                                                           (C.P.C. No. 20CV-5340)
The Jackson on High Condominium                     :
Association et al.,                                                     (REGULAR CALENDAR)
                                                    :
                Defendants-Appellees,
                                                    :
[Columbus Living, LLC,
                                                    :
                Defendant-Appellant].

                                         D E C I S I O N

                                Rendered on September 15, 2022

                On brief: Cole Kirby & Associates, and William S. Cole, for
                appellee Springhills of Gallipolis, LLC.

                On brief: Doucet Gerling Co., L.P.A., and Andrew J.
                Gerling, for appellant.

                 APPEAL from the Franklin County Court of Common Pleas

KLATT, J.

        {¶ 1} Defendant-appellant, Columbus Living, LLC ("Columbus Living"), appeals
from the July 15, 2021 decision and order entered by the Franklin County Court of Common
Pleas denying its motion for summary judgment, granting the motion for reconsideration
No. 21AP-408                                                                                                  2

filed by plaintiff-appellee, Kemba Financial Credit Union ("Kemba"),1 and granting in part
and denying in part Kemba's motion for summary judgment. For the following reasons, we
reverse.
          {¶ 2} This litigation involves a lien priority dispute regarding property located at
1147 North High Street, Columbus, Ohio ("the property").                         The pertinent facts are
undisputed. On December 20, 2017, the property owners, Short North Fitness, LLC,
Rebecca Evans, and Bradley A. Howe (collectively "Short North Fitness"), executed a
$240,000 promissory note payable to Kemba. The note was secured by an open-end
mortgage and assignment of rents and leases on the property (together "mortgage").
Kemba recorded its mortgage on December 21, 2017.
          {¶ 3} On May 8, 2018, Short North Fitness executed a $150,000 promissory note
payable to Columbus Living, Albert McAloon, Wenjing Zhang, and Xin Gao (collectively
Columbus Living). The note was secured by a mortgage on the same property. That
mortgage was recorded on May 10, 2018. Columbus Living was aware of Kemba's mortgage
prior to recording its own mortgage.
          {¶ 4} On July 18, 2019, The Jackson on High Condominium Association ("Jackson
on High") filed a complaint for foreclosure on the property in Franklin C.P. No. 19CV-5850.
("FCCP case No. 19CV-5850").2 Kemba and Columbus Living, among others, were named
as defendants; both filed answers.
          {¶ 5} On July 20, 2020, Kemba executed a "Release, Satisfaction and Discharge"
("release") of its mortgage. The release provided that "for valuable consideration, the
receipt of which is hereby acknowledged, [Kemba] does hereby certify that a certain Open-
end Mortgage and Assignment of Leases and Rents, in the original amount of $240,000.00
executed by Short North Fitness LLC, filed for record on December 21, 2017 * * * has been
fully satisfied." The release was signed by Don Guilbert, Kemba's "Director of CS,"3 and
acknowledged by a notary public.

1 On October 4, 2021, Springhills of Gallipolis, LLC, filed in this court a notice of substitution as successor-
in-interest to Kemba. However, because the trial court record exclusively references "Kemba," we likewise
do so in this decision.

2   In 2018, Jackson on High filed a certificate of lien against the property.

3   The release does not define the abbreviation "CS."
No. 21AP-408                                                                                           3

          {¶ 6} On July 28, 2020, the trial court issued a judgment entry and decree of
foreclosure in FCCP case No. 19CV-5850. The court found that Kemba held the first
mortgage on the property and ordered the balance of the funds from the sale of the property
to be held by the clerk of courts pending a further order.4
          {¶ 7} On August 12, 2020, Kemba recorded the release of its mortgage. The next
day, August 13, 2020, Kemba filed a complaint for declaratory judgment against Short
North Fitness, Columbus Living, and 12 additional defendants.5 Kemba alleged that the
release had been executed in error and that the debt underlying its mortgage had not been
paid in full. Kemba further alleged that it remained the holder of the note and that Short
North Fitness had defaulted on the note. Kemba sought a declaration that: (1) the release
was void and ineffective to terminate its mortgage; (2) its mortgage be judicially reinstated;
and (3) an equitable lien or constructive trust be imposed with lien priority under the theory
of equitable subrogation.
          {¶ 8} On September 25, 2020, Kemba filed a combined motion for default
judgment and motion for summary judgment. Kemba argued that it had "inadvertent[ly]"
released its mortgage, and, as such, it was entitled to reinstatement of its first-priority lien
as against each of the named defendants. (Sept. 25, 2020 Combined Mot. for Default Jgmt.
and Mot. for Summ. Jgmt. at 2.) Kemba noted that no intervening liens were recorded in
the one-day period between the mistaken release of its mortgage and its filing of the lawsuit
to reinstate it; thus, a judicial order voiding the release and reinstating its mortgage would
essentially place Kemba and all defendants in the same position as before the release was
recorded. Kemba alternatively argued that it was entitled to the imposition of an equitable
lien or constructive trust with lien priority via equitable subrogation. Kemba supported its
motion with copies of the note, mortgage, and release, along with an affidavit from Andrew
O'Connor, the Senior Vice President for Cooperative Business Services, LLC, Kemba's loan

4   The trial court vacated the decree of foreclosure in an order dated January 12, 2021.

5 Kemba's complaint names the following additional defendants: Jackson on High; McAloon; Zhang; Gao;
Avenue Strategic, dba TLOA of OH, LLC ("Avenue Strategic"); Columbus Income Tax Division; Franklin
County Treasurer; Ohio Department of Taxation ("Ohio DOT"); The Huntington National Bank
("Huntington"); TLOA of OH, LLC ("TLOA"); Springhills of Gallipolis, LLC ("Springhills"); and Adair Asset
Management ("Adair"). Kemba alleged that the named defendants may have an interest in the property
pursuant to various judgment liens, certificates of lien, and mortgages. In September 2020, Columbus
Living, Ohio DOT, Jackson on High, and Adair filed answers to Kemba's complaint.
No. 21AP-408                                                                               4

servicer. O'Connor attested that no consideration was paid to Kemba for execution of the
release, that the release was executed and recorded in error, and that Kemba did not intend
to release its security interest in the property.
       {¶ 9} On October 8, 2020, Columbus Living filed a memorandum contra, arguing
that Kemba's release of its mortgage extinguished its first-priority lien; thus, Columbus
Living was now entitled to first-priority lien status pursuant to the May 10, 2018
recordation of its mortgage. Kemba filed a reply in support of its motion, to which
Columbus Living filed a surreply.6
       {¶ 10} On January 25, 2021, the trial court issued a decision and order finding that
Kemba was not entitled to reinstatement of its previous first-priority lien status. The court
reasoned that under R.C. 5301.23, Kemba originally had first priority when it recorded its
mortgage on December 20, 2017; however, that placement was lost pursuant to R.C.
5301.28 when it released the mortgage on July 20, 2020. At that point, Columbus Living
moved to first-priority lien status pursuant to its mortgage recorded on May 10, 2018. In
so ruling, the court found "particularly persuasive" the Sixth District Court of Appeals'
decision in Croghan Colonial Bank v. Olena Food Farm, Inc., 6th Dist. No. H-13-006,
2013-Ohio-4520. The trial court further declined Kemba's request that its first-priority lien
position be reinstated under the theory of equitable subrogation. Accordingly, the trial
court denied Kemba's motion for summary judgment as to defendants Columbus Living,
Ohio DOT, Huntington, Jackson on High, and Adair. The trial court concluded that Kemba
"is not entitled to judgment as a matter of law on declaratory judgment because issues of
material fact remain on lien reinstatement and equitable subrogation." (Jan. 25, 2021
Decision & Order at 13.)
       {¶ 11} In the same decision and order, the trial court granted Kemba's motion for
default judgment against non-answering defendants Short North Fitness, McAloon, Zhang,
Gao, Columbus Income Tax Division, Franklin County Treasurer, TLOA, and Springhills.
In addition, the court determined that because service had not been perfected on Avenue

6 No other defendant responded to Kemba's combined motion for default judgment and motion for
summary judgment.
No. 21AP-408                                                                                 5

Strategic, neither summary judgment nor default judgment was appropriate; accordingly,
the court denied both motions as to Avenue Strategic.7
          {¶ 12} On May 19, 2021, Columbus Living filed a motion for summary judgment,
urging adherence to the court's previous conclusion that Kemba was not entitled to
reinstatement of its first-priority lien status. On May 26, 2021, Kemba filed a combined
memorandum in opposition to Columbus Living's motion for summary judgment and a
motion for reconsideration of the trial court's January 25, 2021 decision and order. Kemba
argued that the trial court misapplied Croghan and that a proper interpretation of Croghan
actually supported its position that its mortgage should be reinstated as against Columbus
Living and the other lienholders. On June 9, 2021, Columbus Living filed a response to
Kemba's combined memorandum contra and motion for reconsideration.
          {¶ 13} On July 15, 2021, the trial court filed a decision and order concluding, after
"another careful reading of Croghan Colonial Bank," that Kemba was entitled to
declaratory judgment that (a) the release was void and ineffective to terminate Kemba's
interest in the property via its mortgage, and (b) Kemba's mortgage on the property was
reinstated effective as of the original filing date. (July 15, 2021 Decision & Order at 10.) As
such, the court determined that Kemba was entitled to summary judgment regarding
reinstatement of its first-lien priority position as applied to defendants Columbus Living,
Ohio DOT, Huntington, Jackson on High, Adair, and Avenue Strategic. Given this result,
the court granted Kemba's motion for reconsideration and denied Columbus Living's
motion for summary judgment. The court adhered to its previous analyses regarding the
inapplicability of equitable subrogation and the granting of Kemba's motion for default
judgment against non-answering defendants Short North Fitness, McAloon, Zhang, Gao,
Columbus Income Tax Division, Franklin County Treasurer, TLOA, and Springhills.
          {¶ 14} In a timely appeal, Columbus Living assigns one error for review:
                  The trial court erred when it reinstated Plaintiff-Appellee's
                  first priority lien status in contravention of Ohio's recording
                  statutes.

          {¶ 15} Columbus Living's assignment of error arises from the trial court's July 15,
2021 decision which both granted reconsideration of its previous denial of Kemba's motion

7   Avenue Strategic filed its answer on January 28, 2021.
No. 21AP-408                                                                                   6

for summary judgment and denied Columbus Living's motion for summary judgment on
Kemba's declaratory judgment complaint.
       {¶ 16} A declaratory judgment action is a civil action and provides a remedy in
addition to other legal and equitable remedies available. Aust v. Ohio State Dental Bd., 136
Ohio App.3d 677, 681 (10th Dist.2000). "The essential elements for declaratory relief are:
(1) a real controversy exists between the parties; (2) the controversy is justiciable in
character; and (3) speedy relief is necessary to preserve the rights of the parties." Id., citing
Ohio Assn. of Life Underwriters, Inc. v. Duryee, 95 Ohio App.3d 532, 534 (10th Dist.1994).
R.C. 2721.02(A) provides, in part, "courts of record may declare rights, status, and other
legal relations whether or not further relief is or could be claimed. * * * The declaration may
be either affirmative or negative in form and effect. The declaration has the effect of a final
judgment or decree."
       {¶ 17} Appellate review of summary judgment is de novo. Andersen v. Highland
House Co., 93 Ohio St.3d 547, 548 (2001). " 'When reviewing a trial court's ruling on
summary judgment, the court of appeals conducts an independent review of the record and
stands in the shoes of the trial court.' " Abrams v. Worthington, 169 Ohio App.3d 94, 2006-
Ohio-5516, ¶ 11 (10th Dist.), quoting Mergenthal v. Star Banc Corp., 122 Ohio App.3d 100,
103 (12th Dist.1997). Civ.R. 56(C) provides that a trial court must grant summary judgment
when the moving party demonstrates that: (1) there is no genuine issue of material fact,
(2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds
can come to but one conclusion and that conclusion is adverse to the party against whom
the motion for summary judgment is made. Gilbert v. Summit Cty., 104 Ohio St.3d 660,
2004-Ohio-7108, ¶ 6.
       {¶ 18} Further, "[a]n appellate court reviewing a trial court's decision on a motion
for reconsideration of a grant or denial of summary judgment applies a de novo standard
of review." Crown Chrysler Jeep, Inc. v. Boulware, 10th Dist. No. 15AP-162, 2015-Ohio-
5084, ¶ 28, citing Hogrefe v. Mercy St. Vincent Med. Ctr., 6th Dist. No. L-13-1265, 2014-
Ohio-2687, ¶ 38 (further citations omitted). " 'Thus, we "afford no deference to the trial
court's decision and independently review the record in the light most favorable to the non-
movant to determine whether summary judgment is appropriate." ' " Id., quoting Hogrefe,
quoting Dunn v. N. Star Resources, Inc., 8th Dist. No. 79455, 2002-Ohio-4570, ¶ 10.
No. 21AP-408                                                                                7

       {¶ 19} Columbus Living asserts that the trial court erred in reinstating Kemba's first-
priority lien status after Kemba released its mortgage. Specifically, Columbus Living
maintains that reinstatement contravenes Ohio's recording statutes governing priority of
recorded mortgages and the release of recorded mortgages. We agree.
       {¶ 20} R.C. 5301.23 establishes the general rule that the first mortgage recorded
shall have priority over any subsequently recorded mortgage. R.C. 5301.23(A) ("The first
mortgage presented shall be the first recorded, and the first mortgage recorded shall have
preference."). R.C. 5301.28 addresses the release of a recorded mortgage, providing in part:
"[w]hen the mortgagee of property * * * receives payment of any part of the money due the
holder of the mortgage, and secured by the mortgage, and enters satisfaction or a receipt
for the payment, either on the mortgage or its record, that satisfaction or receipt, when
entered on the record * * * by the county recorder, will release the mortgage to the extent
of the receipt."
       {¶ 21} It is undisputed that Kemba was first to record its mortgage; thus, under R.C.
5301.23, Kemba's mortgage had preference over Columbus Living's subsequently recorded
mortgage. It is further undisputed that after Columbus Living recorded its mortgage,
Kemba executed and recorded a release of its mortgage pursuant to R.C. 5301.28.
Columbus Living argues that the recordation of a release of a mortgage pursuant to R.C.
5301.28 releases the mortgage by operation of law. According to Columbus Living, the
natural consequence of releasing a mortgage is that junior lienholders move up in priority
pursuant to R.C. 5301.23. Columbus Living maintains that "a court's equitable authority is
limited by the express language of the statute. This flows from the well-established maxim
that equity must follow the law." (Columbus Living's Brief at 12.) Kemba does not argue
that its execution or recording of the release were defective in any way; rather, Kemba
simply contends that because it mistakenly released the mortgage, the release should be
disregarded and its first-priority lien status be reinstated.
       {¶ 22} In support of its position, Columbus Living cites two common pleas court
decisions—GMAC Mtge. LLC v. Kiner, Franklin C.P. No. 11 CVE-0-3799, 2012 Ohio Misc.
LEXIS 1315 (Feb. 28, 2012), and Spring Valley Bank v. Ah&A Properties, LLC, Hamilton
C.P. No. A1102762, 2012 Ohio Misc. LEXIS 182 (Aug. 23, 2012). In Kiner, the Kiners signed
an open-end home equity credit agreement in favor of Telhio Credit Union ("Telhio") on
No. 21AP-408                                                                              8

May 17, 2004, secured by a mortgage on real property. Telhio obtained a property report
confirming there were no other mortgages or liens on the property. Accordingly, Telhio
expected it had the first lien priority. Telhio recorded its mortgage on June 2, 2004.
       {¶ 23} Two years later, the Kiners took out a loan with MERS, the predecessor to
GMAC Mortgage LLC, ("GMAC") secured by a mortgage on the same property. MERS
recorded the mortgage on September 27, 2006. On November 16, 2006, Telhio released its
mortgage. However, the equity line was never closed and the Kiners did not authorize its
termination. In November 2006, the Kiners resumed drawing money on the equity line.
The draws continued for several months before Telhio realized it had mistakenly released
its mortgage. Telhio attributed its mistake to an internal account number assignment error.
Telhio then refiled its mortgage on December 30, 2010.
       {¶ 24} The Kiners defaulted on both loans. GMAC filed a foreclosure action,
asserting that it had the first lien on the property but naming Telhio as having a potential
interest. The issue of lien priority was before the court on cross-motions for summary
judgment. GMAC argued that its lien had priority over Telhio's interests because GMAC's
lien was filed in September 2006 before Telhio re-recorded its lien in December 2010.
Telhio argued it had priority over GMAC because it recorded its lien first in June 2004 and
the borrowers never closed out the equity line; when it re-recorded the lien in December
2010, it revived the priority from its inception.
       {¶ 25} The common pleas court agreed with GMAC:
              [T]he Court finds that as of November 16, 2006, when Telhio
              filed its Satisfaction of Mortgage, GMAC held the first and best
              lien. Assuming that the December 30, 2010 re-recording of the
              Telhio equity line was facially valid, it is second to GMAC's
              interest. The Court's decision rests on R.C. 5301.23. The Court
              finds no authority that permits the re-filing of a previously
              released mortgage. Moreover, even if it could be re-filed the
              revival of the previous priority is not supported by Ohio's
              priority statute. Telhio's argument regarding mistake is
              inapposite. * * * [T]he evidence in this case is anything but
              conclusive that filing the Satisfaction was a mistake.

              ***
              [T]he Court finds that the general statutory rule of first in time
              applies. Telhio was first. GMAC was second. When Telhio
              vacated its record of mortgage, GMAC ascended to the priority
              post. The re-filing of the open-end mortgage could at best
No. 21AP-408                                                                                9

               notice any potential third mortgagor of Telhio's interest
               protected in its re-filed mortgage.

Id. at *8-9.
       {¶ 26} In Spring Valley, the plaintiff obtained a mortgage on the property at issue
in October 2006 and properly recorded the mortgage in November 2006. The defendant
obtained a mortgage on the property and properly recorded that mortgage in August 2007.
In October 2009, the plaintiff obtained the deed to the property in lieu of foreclosure. After
the transfer of the deed, the plaintiff recorded a release of the mortgage.
       {¶ 27} The plaintiff claimed that it mistakenly released its mortgage and would not
have done so had it known of the defendant's mortgage. The plaintiff filed for foreclosure,
and sought relief from its mistake and reinstatement of its mortgage and reinstatement of
its first priority in order to foreclose on the property. The defendant argued that the
plaintiff could not be relieved from the mistake that amounted to negligence on the
plaintiff's part.
       {¶ 28} The court determined that the plaintiff was not entitled to relief from its
mistaken release of its mortgage. The court found distinguishable the cases upon which
the plaintiff relied, stating:
               In this case, the Plaintiff has not committed the types of
               mistakes from which courts have provided relief. These
               mistakes dealt with clerical errors or circumstances out of the
               control of the mortgagee, such as a returned check. Plaintiff's
               circumstances were not outside its control. Plaintiff could have
               searched the records on the property and obtained knowledge
               of Defendant's mortgage, and did not. The Plaintiff's
               predicament is a result of its lack of due care. Plaintiff cannot
               be relieved from mistake to regain its senior priority.

Id. at *4.
       {¶ 29} Employing Kiner and Spring Valley, Columbus Living argues that "[u]nder
the plain language of Ohio's Recording Statute, Kemba lost its lien priority when it recorded
the Release. There was no defect with the Release. It contained all requirements of law.
* * * The only explanation Kemba offered was the 'Release was executed and recorded in
error.' * * * Kemba did not claim the recorder or a third party erroneously released the lien.
Kemba did not present any evidence suggesting anything beyond its own negligence when
it Released its mortgage. * * * The law does not support reinstating Kemba's negligently
No. 21AP-408                                                                               10

released lien in contravention of the recording statutes and to the detriment of other
creditors." (Columbus Living's Brief at 14-15.)
       {¶ 30} For its part, Kemba relies primarily on Croghan, 6th Dist. No. H-13-006,
2013-Ohio-4520, the case the trial court analyzed and applied (with conflicting results) in
both its original decision denying Kemba's motion for summary judgment and its
subsequent decision granting Kemba's motion for reconsideration and denying Columbus
Living's motion for summary judgment.
       {¶ 31} In Croghan, the Cassidys, on September 22, 2005, executed a cognovit note
payable to the Croghan National Bank ("the bank"). The note was secured by a mortgage
on certain property; the bank recorded its mortgage on October 5, 2005. On April 13, 2009,
the bank released the mortgage. On July 1, 2009, the Misseys executed a promissory note
payable to the Cassidys, secured by a mortgage on the same property. The Cassidys
recorded the mortgage on July 2, 2009. After the Cassidys' mortgage lien was recorded,
the bank recorded an affidavit with the intent to reinstate its mortgage lien.
       {¶ 32} On August 25, 2009, the bank filed a complaint for judgment on the cognovit
note and foreclosure of the mortgage. In their answer and cross-claim, the Cassidys alleged
that the Misseys were in default on the note and declared the note immediately due and
payable. The Cassidys sought a judgment in their favor on the note and foreclosure of their
mortgage, as well as a declaration that their mortgage was a valid first and best lien against
the property because the bank's mortgage had been released on April 13, 2009 and was
never re-recorded. The Cassidys asserted that there was no special provision under Ohio
law for reinstatement of an improperly released mortgage by affidavit; thus, argued the
Cassidys, their mortgage took precedence.
       {¶ 33} The trial court ultimately approved and confirmed the sale of the property.
The court deposited the balance of the sale proceeds with the clerk of courts for distribution
to one of the parties upon resolution of the lien-priority issue. Following cross-motions for
summary judgment, the trial court found that the bank's release of its mortgage was the
result of its own negligence and while the bank was entitled to reinstatement of its
mortgage, it could not do so at the expense of an intervening lienholder. Thus, determined
the trial court, since the Cassidys' note and mortgage were filed before the bank reinstated
its mortgage, the Cassidys' lien had first priority.
No. 21AP-408                                                                                   11

       {¶ 34} On appeal, the bank argued that the reinstatement of its lien revived the lien,
and its priority related back to the date the mortgage lien was originally recorded. The bank
further argued that the Cassidys were not intervening lienholders, as they had testified
during their deposition that they neither relied on the public record nor changed their
position as a result of the public record and learned of the bank's lien only after the bank
filed the foreclosure action.
       {¶ 35} The Cassidys argued that the recording of their mortgage secured their lien
as of the date of recording and, therefore, it ranked higher in priority than the bank's lien
as a matter of law under R.C. 5301.23. The appellate court agreed with the Cassidys and
affirmed the trial court.
       {¶ 36} The court noted that in cases where a first-priority lien was erroneously
released by a recorder or third-party, courts generally apply equitable principles to reinstate
the priority of the first lien recorded. Id. at ¶ 12, citing Farmers S. & L. Co. v. Kline, 92 Ohio
App. 406, 409 (7th Dist.1951) (court set aside the recorder's mistakenly recorded
cancellation of mortgage where the defendant would not be damaged); Commercial Bldg.
& Loan Co. v. Foley, 25 Ohio App. 402, 405 (4th Dist.1927) (the great weight of authority
supported the right of the first lienholder to have its lien reinstated after the recorder
erroneously released it, even though a subsequent bona fide purchaser had no notice or
knowledge of the erroneously released first lien). The court further noted that the same
analysis has been applied in cases involving mistaken releases by the lender where no
intervening interest was obtained. Id. at ¶ 14, citing First Natl. Bank of Pennsylvania v.
Pollock Inn Restoration Assn., 7th Dist. No. 96 CA 98, 1999 Ohio App. LEXIS 2956
(June 22, 1999) (equitable reinstatement of first mortgage permitted after the lender
mistakenly filed a satisfaction of mortgage because the second mortgage specifically
acknowledged the priority of the first mortgage and there was no harm caused by
reinstatement).
       {¶ 37} The court recognized, however, that where there has been an intervening
interest recorded, courts have ordered equitable reinstatement of the first lien and its
priority only when the intervening lienholder had actual or constructive notice of the first
lien and either did not detrimentally rely upon the erroneous release or were not prejudiced
by revival of the first lien. Croghan at ¶ 15, citing Fifth Third Mtge. Co. v. Fillmore, 5th
No. 21AP-408                                                                                 12

Dist. No. 12 CAE 04 0030, 2013-Ohio-312, ¶ 53 (generally "equity follows the law," but if
the rights of the parties are not clearly delineated, application of "broad equitable principles
of fairness" is appropriate); and Interstate Adviser, LLC v. McCalla, Conn.Super. No.
HHDCV106014396S, 2012 Conn.Super. LEXIS 2693 (Nov. 1, 2012) (a "court should not in
equity permit a lienor, who has not been prejudiced thereby, to acquire priority when that
was not the intent of the parties").
       {¶ 38} Based on the foregoing, the court concluded that "[w]hile the Cassidys did
not rely upon a clear record when they filed their mortgage lien, they certainly relied upon
the recording system to assure that their lien would have priority as of July 9, 2009."
Croghan, 6th Dist. No. H-13-006, 2013-Ohio-4520, at ¶ 24. Further, while the Cassidys
did not know about the bank's lien, there was evidence that the bank had knowledge of the
relevant recordings and liens. Id. The court also stated that the "issue of equity requires us
to focus on the [b]ank's position and not the knowledge or actions of the Cassidys." Id.
       {¶ 39} In the present case, in its original decision and order filed January 25, 2021,
the trial court, relying on Croghan, stated:
              After considering the law and equities of the case, while the
              Court is sympathetic to Kemba's mistake, the law compels this
              Court to deny Kemba's summary judgment request to
              reinstate its lien to its previous first priority position. * * *
              Croghan states equitable principles can apply to restore first-
              priority lien status when erroneously released by a "recorder
              or third party." Croghan at ¶ 13. Here, neither a recorder nor
              a third party erroneously released the mortgage, but instead,
              Kemba did. Like the bank in Croghan, Kemba mistakenly
              released its mortgage lien on July 20, 2020, and attempted to
              correct that mistake by filing this lawsuit soon thereafter,
              which was August 13, 2020. Also like the Cassidys in
              Croghan, once Kemba released this lien, the other lienholders
              with interests in the Real Estate here such as Columbus
              Living, moved ahead of Kemba as to lien priority.

              Additionally, much like the Cassidys, the numerous
              lienholders with interests in the Real Estate, such as
              Columbus Living, likely relied on the normal functioning of
              the property recording system under R.C. [5301.23] and R.C.
              5301.28. As detailed supra, the Real Estate is encumbered by
              a substantial number of liens, from judgments to mortgages.
              Kemba's request would require this Court to rule that Kemba's
              interest, despite its own negligence, should trump all these
No. 21AP-408                                                                             13

               other lienholders. The Court does not find that fair to
               Columbus Living or the other lienholders that answered the
               complaint.

               Indeed, as Croghan provides, an equitable reinstatement of
               priority is only proper when 1) the intervening lienholder had
               actual or constructive notice of the first lien and 2) either did
               not detrimentally rely upon the erroneous release or was not
               "prejudiced by revival of the first lien." Croghan at ¶ 15. In
               this case, Columbus Living either knew, or should have
               known, Kemba's lien was initially higher in priority before the
               mistaken release, thereby permitting Kemba to fulfil the first
               prong. Even so, Kemba cannot satisfy the second prong
               because Columbus Living would be "prejudiced by revival" of
               Kemba's lien. As this Court mentioned supra, foreclosure
               proceedings were underway regarding the Real Property since
               2019 in 19CV5850, which makes lien priority paramount for
               each party to enforce their various interests. Kemba, as a
               defendant, answered in 19CV5850 on July 21, 2019, so it
               should have been aware of the importance of protecting its
               own mortgage interest. It is unclear what led Kemba to
               mistakenly release its lien, but the Court declines to set
               dangerous precedent that would permit a party to recover
               from its own negligence when it harms other innocent parties.

               This conclusion is further supported by First Nat'l Bank [v.
               Adams, 10th Dist. No. 2003-Ohio-6651], which only permits
               equitable reinstatement when there is no harm caused by
               doing so. Kemba argues that "mistakes are correctable," but
               unfortunately, in contrast to First Nat'l Bank, in this case,
               they are not because Columbus Living and other lienholders-
               Ohio DOT, Huntington, Jackson on High, and Adair—would
               be harmed. See First Nat'l Bank, 1999 Ohio App. LEXIS 2956,
               * 7.

(Jan. 25, 2021 Decision & Order at 10-12.)
         {¶ 40} However, in its July 15, 2021 decision and order granting Kemba's motion for
reconsideration, the trial court concluded that Croghan supports Kemba's reinstatement
claim:
               First, Kemba is correct that Columbus Living is not an
               "intervening lienholder" as envisioned by Croghan Colonial
               Bank. As Kemba aptly argues, an intervening lienholder is
               one whose interest would be perfected after an inadvertent
               release. This situation occurred in Croghan Colonial Bank,
               but did not happen here. In Croghan Colonial Bank, the
No. 21AP-408                                                                    14

             Cassidys recorded their mortgage after the bank inadvertently
             released a mortgage. In the case at bar, Columbus Living did
             not record their mortgage after Kemba released their
             mortgage, but instead recorded it before. In contrast to this
             Court's prior interpretation, "intervening lienholder" does not
             mean the mere movement of [a] lienholder's priority interest
             that operates by default through the recording statutes, R.C. §
             5301.23 and R.C. § 5301.28. Instead, to become an
             intervening lienholder under Croghan Colonial Bank,
             Columbus Living would have had to record their mortgage
             between August 12, 2020 and August 13, 2020, which is the
             very short period of time from when Kemba mistakenly
             release the Open-End Mortgage and then filed this lawsuit to
             reinstate it. This is not what occurred in this case, however;
             Columbus Living recorded their mortgage years before on
             May 10, 2018. Thus, Columbus Living is not an intervening
             lienholder.

             Second, Kemba is also correct that Columbus Living did not
             detrimentally rely upon the erroneous release and was not
             prejudiced by revival of the first lien as envisioned by Croghan
             Colonial Bank. Because the Court has already ruled that
             Columbus Living is not an intervening lienholder, and
             accordingly there is no intervening interest recorded, the
             Court need not analyze the second aspect, but it will do so to
             clarify the record. In Croghan Colonial Bank, the Cassidys
             would have been prejudiced by the revival of the bank's
             mortgage because they relied on the property records as
             accurate when they recorded their own lien. Columbus Living
             did not face that situation here. Instead, Columbus Living was
             a passive party who would have received a higher priority
             windfall in foreclosure proceedings by benefiting from
             Kemba's inadvertent mistake. Columbus Living was not
             entitled to the windfall in the first place because it is not an
             intervening lienholder, and therefore there is no prejudice to
             Columbus Living in reviving Kemba's Open-End Mortgage.
             The Court's prior analysis interpreted "prejudice" too broadly;
             the narrower confines of Croghan Colonial Bank's definition
             is warranted instead. While the inadvertent release has
             certainly caused confusion and litigation for Columbus Living,
             it is not prejudiced.

(Emphasis sic.) (July 15, 2021 Decision & Order at 10-11.)
No. 21AP-408                                                                                           15

        {¶ 41} We note that the cases upon which the parties principally rely—Kiner, Spring
Valley, and Croghan—are not binding on this court.8 However, we find persuasive the legal
analysis set forth in Kiner, Spring Valley and the trial court's January 25, 2021 decision
interpreting Croghan and apply it in adopting Columbus Living's contention that a court's
equitable authority is limited by the express language of the recording statutes.
        {¶ 42} "The function of equitable relief is to supplement the law where the law is
insufficient to remedy a wrong." In re Barone, 11th Dist. No. 2004-G-2575, 2005-Ohio-
4479, ¶ 17. A court of equity is authorized to render an award "on the principle that it may
exercise its equitable jurisdiction to the extent of administering full relief which the case
demands." Sandusky Properties v. Aveni, 15 Ohio St.3d 273, 276 (1984). A court does not,
however, have unfettered discretion to award equitable relief. Barone at ¶ 18. Various long-
standing maxims, such as "equity follows the law," limit a court's application of equity.
"When the rights of parties are clearly defined and established by law (especially when the
source of such definition is through constitutional or statutory provision) the maxim 'equity
follows the law' is usually strictly applied." Civ. Serv. Personnel Assn., Inc. v. Akron, 48
Ohio St.2d 25, 27 (1976) Thus, "while it may be tempting to decide [a] case on subjective
principles of equity and fundamental fairness, [a] court has a greater obligation to follow
the law." State ex rel. Schwaben v. School Emps. Retirement Sys., 76 Ohio St.3d 280, 285
(1996).
        {¶ 43} As Kemba argues, equitable principles can apply to restore first-priority lien
status upon the erroneous recording of a release by entities other than the mortgagee or in
circumstances beyond the control of the mortgagee. Kemba does not argue that another
entity erroneously released its mortgage or that circumstances beyond its control resulted
in the release of its mortgage. Indeed, the record establishes that Kemba provided a
written, signed, notarized, and recorded release of its mortgage.                  It took deliberate,
intentional and formal action to release its first-lien position. Kemba simply states that it
released the mortgage by mistake, without further explanation. While we recognize the
equitable principles involved in this case, we cannot use these concepts to override the clear
statutory language of R.C. 5301.23 and 5301.28. Further, Columbus Living and other

8 There is no subsequent appellate history for either Kiner or Spring Valley, and no other appellate court
has adopted or cited Croghan.
No. 21AP-408                                                                             16

lienholders would be harmed by the reinstatement of Kemba's first lien priority position.
Finally, as Columbus Living points out, the release did not extinguish Short North Fitness's
underlying debt. Rather, the release served only to alter Kemba's status from a secured
creditor to an ordinary creditor, and Kemba remains free to pursue all other remedies
available to it against Short North Fitness.
       {¶ 44} For the foregoing reasons, we find that the trial court erred when it granted
Kemba's motion for reconsideration and denied Columbus Living's motion for summary
judgment. Kemba was not entitled to judgment as a matter of law on its declaratory
judgment complaint; rather, Columbus Living was entitled to judgment as a matter of law.
Therefore, Columbus Living's assignment of error is sustained.
       {¶ 45} Accordingly, the July 15, 2021 judgment of the Franklin County Court of
Common Pleas is hereby reversed, and the matter is remanded to that court for further
proceedings in accordance with law and consistent with this decision.
                                                    Judgment reversed; cause remanded.

                          DORRIAN and McGRATH, JJ., concur.