Court Opinion

ID: 4309581
Source: CourtListenerOpinion
Date Created: 2018-09-04 15:16:58.144816+00
Date Added: 2024-06-11T13:26:49.477194
License: Public Domain

[Cite as BP Metals, L.L.C. v. Glass, 2018-Ohio-3527.]

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

BP METALS, LLC,

        PLAINTIFF-APPELLANT,                            CASE NO. 11-17-08

        v.

JAMES A. GLASS, ET AL.,                                 OPINION

        DEFENDANTS-APPELLEES.

                Appeal from Paulding County Common Pleas Court
                            Trial Court No. CI 16 172

                       Judgment Reversed and Cause Remanded

                          Date of Decision: September 4, 2018

APPEARANCES:

        Steven L. Diller for Appellant

        Timothy C. Holtsberry for Appellee, James A. Glass
Case No. 11-17-08

PRESTON, J.

       {¶1} Plaintiff-appellant, BP Metals, LLC (“BP Metals”), appeals the October

20, 2017 judgment entry of the Paulding County Court of Common Pleas dismissing

its complaint in foreclosure against defendant-appellee, James A. Glass (“Glass”).

For the reasons that follow, we reverse.

       {¶2} On July 9, 2015, Glass, doing business as J. Glass & Co., an Ohio sole

proprietorship, executed a promissory note (the “note”) in the amount of

$129,500.00 payable to BP Metals as lender “for the sole purpose of developing a

precious metals refining technique * * *.” (Doc. No. 1, Ex. A). On July 6, 2016,

Glass, individually and as sole proprietor of J. Glass & Co., executed a “loan

modification and change in terms agreement” (the “modification”) in which “BP

Metals extended the additional sum of [$10,000.00] to Roseann Glass, the mother

of” Glass in exchange for his promise to repay that loan under the terms of the note

and modification. (Doc. No. 1, Ex. B). That same day, Glass executed a mortgage

against his residence located at 530 Plainfield Drive, Payne, Ohio 45880 to secure

the debt in favor of BP Metals. (Doc. No. 1, Ex. C). The mortgage was filed on

August 11, 2016, recorded in Volume 573 of the Official Records at Page 2088, in

the Paulding County, Ohio Recorder’s Office. (Id.).

       {¶3} Glass defaulted, and BP Metals instituted a foreclosure complaint

against him, The Antwerp Exchange Bank, and the Paulding County Treasurer on

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Case No. 11-17-08

November 21, 2016. (Doc. No. 1). In its complaint, BP Metals averred that it is the

holder of the note, the modification, and the mortgage and attached copies of each

to its complaint. (Id.). Glass, pro se, filed his answer on December 6, 2016. (Doc.

No. 5). The Antwerp Exchange Bank filed its answer on December 6, 2016. (Doc.

No. 8).

      {¶4} Throughout the pendency of the case, Glass filed a number of

“documents” and the parties exchanged various motions which do not pertain to the

outcome of this appeal. On February 3, 2017, BP Metals filed a motion to deem

admitted its requests for admission of Glass. (Doc. No. 18). On February 8, 2017,

Glass filed a “Motion to Withdraw Admission” requesting that the trial court

“withdraw [BP Metals’s] Motion to deem [its] requests for admission” admitted.

(Doc. No. 19). On March 27, 2017, the trial court granted BP Metals’s motion to

deem admitted its requests for admission of Glass and denied Glass’s February 8,

2017 motion. (Doc. No. 38).

      {¶5} On May 4, 2017, Glass, represented by counsel, filed a motion for leave

to file an answer to BP Metals’s complaint, which the trial court granted on May 8,

2017. (Doc. Nos. 60, 61). BP Metals filed a memorandum in opposition to Glass’s

motion for leave to file an answer and motion to vacate the trial court’s order

granting Glass’s motion for leave to file an answer. (Doc. No. 62).

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Case No. 11-17-08

       {¶6} On July 11, 2017, Glass filed a motion for leave to file instanter an

amended answer and counterclaims, which he filed instanter. (Doc. No. 70). BP

Metals filed a memorandum in opposition to Glass’s motion for leave to file

instanter an amended answer and counterclaims. (Doc. No. 74).

       {¶7} On April 4, 2017, BP Metals filed a motion requesting that the trial

court find Glass in contempt of court for failing “to obey the subpoena issued on

March 8, 2017 compelling him to appear for deposition on March 27, 2017.” (Doc.

No. 41). On April 6, 2017, the trial court ordered Glass to show cause and scheduled

a contempt hearing. (Doc. No. 44). On July 9, 2017, after a hearing, Glass admitted

to being in contempt of the trial court’s subpoena order. (Doc. No. 73). On July

20, 2017, BP Metals filed a motion requesting the assessment of fees and costs based

on the trial court’s order finding Glass in contempt of its subpoena order. (Doc. No.

75). Glass filed a memorandum in opposition to BP Metals’s motion for fees and

costs. (Doc. No. 76).

       {¶8} BP Metals filed a motion for summary judgment on April 28, 2017.

(Doc. No. 50).

       {¶9} On September 11, 2017, Glass filed a motion to dismiss BP Metals’s

complaint arguing that BP Metals lacked standing to sue Glass in foreclosure. (Doc.

No. 78). Glass did not articulate the ground under which he was requesting

dismissal of BP Metals’s complaint. (Id.). However, Glass attached numerous

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Case No. 11-17-08

exhibits to his motion. (Id.). BP Metals filed a memorandum in opposition to

Glass’s motion on September 18, 2017. (Doc. No. 79). BP Metals attached

numerous exhibits to its memorandum. (Id.). On October 12, 2017, Glass filed a

motion for leave to file instanter his response to BP Metals’s memorandum in

opposition to his motion, which he filed instanter. (Doc. No. 80). BP Metals filed

a memorandum in opposition to Glass’s motion for leave to file his response

instanter to its memorandum in opposition to Glass’s motion. (Doc. No. 81). On

October 20, 2017, the trial court denied Glass’s motion for leave to file his response

instanter to BP Metals’s memorandum in opposition to Glass’s motion to dismiss.

(Doc. No. 82). That same day, apparently treating Glass’s motion as a motion for

summary judgment, the trial court concluded that BP Metals lacked standing to sue

Glass in foreclosure and dismissed the action. (Doc. No. 83). In that same decision,

the trial court held moot all other pending motions and ordered Glass to pay BP

Metals $5,332.44 in fees in relation to its conclusion that Glass was in contempt of

its subpoena order. (Id.).

       {¶10} On November 20, 2017, BP Metals filed its notice of appeal. (Doc.

No. 84). It raises two assignments of error for our review.

                             Assignment of Error No. I

       The trial court erred when it granted Appellee’s Motion to
       Dismiss and ruled that Appellant lacked the standing required to
       invoke the jurisdiction of the common pleas court.

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Case No. 11-17-08

       {¶11} In its first assignment of error, BP Metals argues that the trial court

erred by dismissing its complaint in foreclosure after concluding that BP Metals

lacked standing to invoke the jurisdiction of the trial court. BP Metals contends that

it had standing to invoke the jurisdiction of the trial court because it is a “person”

entitled to enforce the negotiable instrument.

       {¶12} As an initial matter, it is not clear what form of dismissal Glass relied

on in arguing that dismissal was warranted in this case or what form of dismissal

the trial court ultimately determined was appropriate. However, because the parties

attached exhibits to their motion and memorandum in opposition, respectively, and

because the trial court considered evidence beyond the allegations contained in the

complaint, we are assuming that the trial court proceeded under summary judgment.

See Eichenberger v. Woodlands Assisted Living Residence, L.L.C., 10th Dist.

Franklin No. 12AP-987, 2013-Ohio-4057, ¶ 9, 20.

       {¶13} We review a decision to grant summary judgment de novo. Doe v.

Shaffer, 90 Ohio St. 3d 388, 390 (2000). Summary 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 minds 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).

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Case No. 11-17-08

       {¶14} “The party moving for summary judgment has the initial burden of

producing some evidence which demonstrates the lack of a genuine 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 party is

not required to produce any affirmative evidence, but must identify those portions

of the record which affirmatively support his argument.” Id., citing Dresher at 292.

“The nonmoving party must then rebut with specific facts showing the existence of

a genuine triable issue; he may not rest on the mere allegations or denials of his

pleadings.” Id., citing Dresher at 292 and Civ.R. 56(E).

       {¶15} “Civ.R. 17(A) requires that ‘a civil action must be prosecuted by the

real party in interest,’ that is, by a party who can discharge the claim upon which

the action is instituted or is the party who has a real interest in the subject matter of

that action.” U.S. Bank, N.A. v. Coffey, 6th Dist. Erie No. E-11-026, 2012-Ohio-

721, ¶ 13, quoting Discover Bank v. Brockmeier, 12th Dist. Warren No. CA2006-

057-078, 2007-Ohio-1552, ¶ 7. “If an individual or one in a representative capacity

does not have a real interest in the subject matter of the action, that party lacks the

standing to invoke the jurisdiction of the court.” Id., citing State ex rel. Dallman v.

Court of Common Pleas, Franklin Cty., 35 Ohio St. 2d 176 (1973), syllabus. “In a

foreclosure action, a party may establish its interest in the suit, and thus have

standing to bring a foreclosure suit, when at the time it files its complaint in

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Case No. 11-17-08

foreclosure, it either (1) has had the mortgage assigned to it, or (2) is the holder of

the note.” JP Morgan Chase Bank v. Stevens, 8th Dist. Cuyahoga No. 104835,

2017-Ohio-7165, ¶ 36, citing Bank of Am., N.A. v. Calloway, 8th Dist. Cuyahoga

No. 103622, 2016-Ohio-7959, ¶ 13, citing CitiMortgage, Inc. v. Patterson, 8th Dist.

Cuyahoga No. 98360, 2012-Ohio-5894, ¶ 21, citing Fed. Home Loan Mtge. Corp.

v. Schwartzwald, 134 Ohio St. 3d 13, 2012-Ohio-5017. See also BAC Home Loans

Servicing, L.P. v. Haas, 3d Dist. Marion No. 9-13-40, 2014-Ohio-438, ¶ 26 (noting

that “[i]n order to have standing, BAC was required to be either the holder of the

note or to have been assigned the mortgage prior to the complaint being filed”).

       {¶16} “A note secured by a mortgage is a negotiable instrument that is

governed by R.C. Chapter 1303.” Id. at ¶ 37, citing Wells Fargo Bank, N.A. v.

Carver, 8th Dist. Cuyahoga No. 102822, 2016-Ohio-589, ¶ 14. “Under R.C.

1303.31(A), three ‘persons’ are entitled to enforce an instrument: (1) the holder of

the instrument; (2) a nonholder in possession of the instrument who has the rights

of a holder; and (3) a person not in possession of the instrument who is entitled to

enforce the instrument under R.C. 1303.38 or 1303.58(D).”                 Id.    “R.C.

1301.201(B)(21)(a) defines a holder of a negotiable instrument as ‘[t]he person in

possession of a negotiable instrument that is payable either to bearer or to an

identified person that is the person in possession.’”             Id., quoting R.C.

1301.201(B)(21)(a).

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Case No. 11-17-08

       {¶17} Glass asserted that he is entitled to judgment as a matter of law with

evidence that he alleges demonstrates that BP Metals does not have possession of

the note depicting his “original” signature. As support for his contention, Glass

relied on an email from the attorney representing BP Metals to his attorney stating

that BP Metals “does not have a note with Mr. Glass’s original signature” because

“Mr. Glass sent [BP Metals] a copy via e-mail only and is believed to have not

forwarded the original. He signed his version and his that in [sic] his possession.”

(Doc. No. 78, Ex. B). Contrary to Glass’s assertion that this evidence entitles him

to judgment as a matter of law, this evidence creates a genuine issue of material fact

as to whether BP Metals is a holder of the instrument and entitled to enforce it. That

is, whether the instrument held by BP Metals does or does not bear Glass’s original

signature does not divest BP Metals of its status as a person entitled to enforce the

instrument.

       {¶18} The trial court’s conclusion that BP Metals is not a holder of the

instrument because Glass converted the instrument into electronic form and retained

the hardcopy wholly ignores that electronic records are enforceable under Ohio law.

Indeed, the Ohio Uniform Electronic Transaction Act codified under R.C. Chapter

1306 recognizes the enforceability of electronic records. R.C. 1306.06 provides:

       (A)    A record or signature may not be denied legal effect or

       enforceability solely because it is in electronic form.

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Case No. 11-17-08

       (B)    A contract may not be denied legal effect or enforceability

       solely because an electronic record was used in its formation.

       (C)    If a law requires a record to be in writing, an electronic record

       satisfies the law.

       (D)    If a law requires a signature, an electronic signature satisfies

       the law.

R.C. 1306.01(E) defines “electronic” as “relating to technology having electrical,

digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.” R.C.

1306.01(M) defines “record” as “information that is inscribed on a tangible medium

or that is stored in an electronic or other medium and is retrievable in perceivable

form.” In addition, R.C. 1306.01(G) defines “electronic record” as “a record

created, generated, sent, communicated, received, or stored by electronic means.”

Finally, “electronic signature” is defined as “an electronic sound, symbol, or process

attached to or logically associated with a record and executed or adopted by a person

with the intent to sign the record.” R.C. 1306.01(H).

       {¶19} A document converted to digital form and remitted by email is an

electronic record. As such, the email referenced above creates a genuine issue of

material fact as to whether the parties agreed to conduct the transaction by electronic

means and create a binding contract under Ohio law. See R.C. 1306.08(B) (“The

effect of an electronic record or electronic signature attributed to a person * * * shall

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Case No. 11-17-08

be determined from the context and surrounding circumstances at the time of its

creation, execution, or adoption, including the parties’ agreement, if any, and

otherwise as provided by law.”); R.C. 1306.12 (“In a proceeding, evidence of a

record or signature may not be excluded solely because it is in electronic form.”);

R.C. 1306.07(A) (“If the parties have agreed to conduct a transaction by electronic

means and a law requires a person to provide, send, or deliver information in writing

to another person, the requirement is satisfied if the information is provided, sent,

or delivered, as the case may be, in an electronic record capable of retention by the

recipient at the time of receipt.”). Because there is a genuine issue of material fact

as to whether the parties agreed to conduct the transaction by electronic means and

create a binding contract within the meaning of R.C. Chapter 1306, there is a

genuine issue of material fact as to whether BP Metals is a holder of the note and,

consequently, has standing to invoke the jurisdiction of the trial court.

       {¶20} Moreover, the trial court’s conclusion that summary judgment in favor

of Glass is proper because BP Metals lacked standing to invoke the jurisdiction of

the trial court is further erroneous because it ignores that Glass also executed a

mortgage in favor of BP Metals. Indeed, the record reflects that BP Metals attached

a copy of the mortgage to its complaint revealing that Glass executed the mortgage

to secure the debt in favor of BP Metals. (Doc. No. 1, Ex. C). See Haas, 2014-

Ohio-438, at ¶ 28.

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Case No. 11-17-08

       {¶21} For these reasons, we conclude that summary judgment in favor of

Glass is improper. BP Metals’s first assignment of error is sustained.

                           Assignment of Error No. II

       The trial court erred when it did not allow time for additional
       discovery before granting Appellee’s Motion to Dismiss.

       {¶22} Because we determined under BP Metals’s first assignment of error

that the trial court improperly granted summary judgment in favor of Glass, BP

Metals’s second assignment of error is rendered moot, and we decline to address it.

See App.R. 12(A)(1)(c); Chase Home Fin., L.L.C. v. Dunlap, 4th Dist. Ross No.

11CA3266, 2013-Ohio-1915, ¶ 2.

       {¶23} Having found error prejudicial to the appellant herein in the particulars

assigned and argued, we reverse the judgment of the trial court and remand for

further proceedings consistent with this opinion.

                                                            Judgment Reversed and
                                                                 Cause Remanded

ZIMMERMAN and SHAW, J.J., concur.

/jlr

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