Court Opinion

ID: 2760645
Source: CourtListenerOpinion
Date Created: 2014-12-15 14:08:32.628741+00
Date Added: 2024-06-11T11:27:05.350778
License: Public Domain

[Cite as Bank of New York Mellon v. Antes, 2014-Ohio-5474.]

                                  IN THE COURT OF APPEALS

                              ELEVENTH APPELLATE DISTRICT

                                   TRUMBULL COUNTY, OHIO

THE BANK OF NEW YORK MELLON                           :       OPINION
fka THE BANK OF NEW YORK, AS
TRUSTEE FOR THE CERTIFICATE-                          :
HOLDERS CWABS, INC., ASSET-                                   CASE NO. 2014-T-0028
BACKED CERTIFICATES, SERIES                           :
2006-BC4,
                                                      :
                 Plaintiff-Appellee,
                                                      :
        - vs -
                                                      :
DANNETTE L. ANTES, et al.,
                                                      :
                 Defendants-Appellants.
                                                      :

Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 2012 CV
00717.

Judgment: Affirmed.

Matthew J. Richardson, Manley, Deas, Kochalski, L.L.C., P.O. Box 165028, Columbus,
OH 43216-5028 (For Plaintiff-Appellee).

Bruce M. Broyles, 5815 Market Street, Suite 2, Youngstown, OH                 44512 (For
Defendants-Appellants).

CYNTHIA WESTCOTT RICE, J.

        {¶1}     Appellants, James E. Antes and Dannette L. Antes, appeal the summary

judgment and foreclosure decree of the Trumbull County Court of Common Pleas in

favor of appellee, The Bank of New York Mellon fna The Bank of New York, as trustee
for the certificate-holders CWABs, Inc., Asset-Backed Certificates, Series 2006-BC4

(“Bank of New York”). At issue is whether any genuine issue of material fact existed,

precluding the trial court from entering summary judgment in favor of Bank of New York.

For the reasons that follow, we affirm.

       {¶2}   On February 15, 2006, appellants obtained a mortgage loan from the Cit

Group/Consumer Finance, Inc. to purchase real property in Leavittsburg, Trumbull

County. On that date, appellant, Dannette L. Antes, signed a promissory note in favor

of Cit Group in the amount of $71,000. Subsequently, Cit Group endorsed the note to

Countrywide Home Loans, Inc. Thereafter, Countrywide endorsed the note in blank.

       {¶3}   On the same date appellants obtained said mortgage loan, February 15,

2006, appellants signed a mortgage in favor of Mortgage Electronic Registration

Systems, Inc. (“MERS”), acting as nominee of the lender, Cit Group, in order to secure

the note. The mortgage was duly recorded.

       {¶4}   On April 22, 2010, MERS assigned the mortgage to Bank of New York by

a written assignment that was duly recorded.

       {¶5}   One year later, in March 2011, appellants defaulted on the note.         On

March 23, 2011, appellant, Dannette L. Antes, signed a loan modification agreement,

which amended said note and mortgage by increasing the principal balance of the loan

to $90,826, which included unpaid amounts due to appellants’ pre-existing default.

       {¶6}   Eight months later, in November 2011, appellants defaulted again by

failing to make the November 2011 payment or any subsequent payments.

       {¶7}   Consequently, on March 28, 2012, Bank of New York filed the complaint in

this action against appellants. Bank of New York alleged that it is entitled to enforce the

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note and that MERS had assigned the mortgage to it. Bank of New York attached to

the complaint copies of the note, mortgage, assignment of the mortgage, and loan

modification agreement.

       {¶8}   Appellants filed an answer, denying the material allegations of the

complaint and asserting Bank of New York’s lack of standing as an affirmative defense.

       {¶9}   Subsequently, Bank of New York filed a motion for summary judgment

supported by the affidavit of Colleen Newsome of Bank of America, Bank of New York’s

loan servicer. Ms. Newsome testified by affidavit that as an officer of Bank of America,

she is authorized to testify on behalf of Bank of New York. She authenticated the note,

mortgage, assignment of mortgage, loan modification agreement, and the account

payment history of this loan. She said that Bank of New York has “possession of the

note.” She said that, based on her review of these documents, appellants defaulted on

this loan by failing to make the payment due on November 1, 2011 or any subsequent

payments. She said that Bank of New York had accelerated the debt and that the

principal amount of the balance owed is $89,960.

       {¶10} Appellants filed a brief in opposition. Subsequently, the trial court entered

summary judgment and a foreclosure decree in favor of Bank of New York.

       {¶11} Appellants appeal the trial court’s judgment, asserting the following for

their sole assignment of error:

       {¶12} “The trial court erred in granting summary judgment to Appellee when

there were genuine issues of material fact still in dispute.”

       {¶13} Summary judgment is proper when: (1) there is no genuine issue of

material fact; (2) the moving party is entitled to judgment as a matter of law; and (3)

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reasonable minds can come to but one conclusion, and that conclusion is adverse to

the nonmoving party, that party being entitled to have the evidence construed most

strongly in his favor. Civ.R. 56(C).

       {¶14} The party seeking summary judgment on the ground that the nonmoving

party cannot prove his case bears the initial burden of informing the trial court of the

basis for the motion and of identifying those portions of the record that demonstrate the

absence of a genuine issue of material fact on the essential elements of the nonmoving

party’s case. Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996).

       {¶15} The moving party must point to some evidence of the type listed in Civ.R.

56(C) that affirmatively demonstrates the nonmoving party has no evidence to support

his case. Dresher, supra, at 293. Such evidence includes affidavits, depositions, written

admissions, and answers to interrogatories. Civ.R. 56(C).

       {¶16} If this initial burden is not met, the motion for summary judgment must be

denied. Id. However, if the moving party meets his initial burden, the nonmoving party

must then produce competent evidence showing there is a genuine issue for trial.

Civ.R. 56(E).    When a motion for summary judgment is made and supported as

provided in Civ.R. 56, the adverse party may not rest on the mere allegations or denials

of his pleadings. The adverse party’s response must set forth specific facts by affidavit

or as otherwise provided by Civ.R. 56, showing that there is a genuine issue for trial. Id.

If the adverse party does not so respond, summary judgment, if appropriate, shall be

entered against him. Id.

                                            4
       {¶17} Since a trial court’s ruling on a motion for summary judgment involves only

questions of law, we conduct a de novo review of the judgment. DiSanto v. Safeco Ins.

of Am., 168 Ohio App.3d 649, 2006-Ohio-4940, ¶41 (11th Dist.).

       {¶18} In Ohio, courts of common pleas have jurisdiction over justiciable matters.

Ohio Constitution, Article IV, Section 4(B). “Standing to sue is part of the common

understanding of what it takes to make a justiciable case.” Steel Co. v. Citizens for a

Better Environment, 523 U.S. 83, 102 (1998). Standing involves a determination of

whether a party has alleged a personal stake in the outcome of the controversy to

ensure the dispute will be presented in an adversarial context. Mortgage Elec.

Registration Sys., Inc. v. Petry, 11th Dist. Portage No. 2008-P-0016, 2008-Ohio-5323,

¶18.

       {¶19} In a mortgage foreclosure action, the mortgage lender must establish an

interest in the promissory note or in the mortgage in order to have standing to invoke

the jurisdiction of the common pleas court. Fed. Home Loan Mortg. Corp. v.

Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, ¶28. Further, because standing is

required to invoke the trial court’s jurisdiction, standing is determined as of the filing of

the complaint. Id. at ¶24. This court followed Schwartzwald in Fed. Home Loan Mortg.

Corp. v. Rufo, 11th Dist. Ashtabula No. 2012-A-0011, 2012-Ohio-5930, ¶18.               “The

requirement of an ‘interest’ can be met by showing an assignment of either the note or

mortgage.”     (Emphasis added.) Fed. Home Loan Mtge. Corp. v. Koch, 11th Dist.

Geauga No. 2012-G-3084, 2013-Ohio-4423, ¶24.

       {¶20} Appellants assert three issues under their assigned error. For their first

issue, they concede that Ms. Newsome stated in her affidavit that Bank of New York

                                             5
“has possession of the note.” However, appellants argue this was insufficient because,

they contend, in order to be entitled to summary judgment, she was required, but failed,

to expressly state that Bank of New York has possession of the original promissory

note. We do not agree.

       {¶21} In addressing this identical argument, this court in Bank of America, N.A.

v. Merlo, 11th Dist. Trumbull No. 2012-T-0103, 2013-Ohio-5266, stated that because

the affiant “did not qualify her testimony by saying the bank has possession of a copy of

the note, she was referring to the actual note itself, i.e., the original, rather than a copy.”

Id. at ¶18. In support, this court in Merlo quoted Evid.R. 1001(3) and (4) as follows: “An

‘original’ of a writing * * * is the writing * * * itself,” as opposed to a ‘duplicate,’ which

“reproduce[s] the original.”

       {¶22} Thus, by stating in her affidavit that Bank of New York has possession of

the note, Ms. Newsome was saying that the bank has possession of the original, as

opposed to a copy, of the note.

       {¶23} Further, Evid.R. 1003 provides that “[a] duplicate is admissible to the

same extent as an original unless (1) a genuine issue is raised as to the authenticity of

the original or (2) in the circumstances it would be unfair to admit the duplicate in lieu of

the original.” The party opposing the introduction of the duplicate has the burden of

proving that there is a genuine question as to the authenticity of the original or that it

would be unfair to admit the duplicate. Natl. City Bank v. Fleming, 2 Ohio App.3d 50, 57

(8th Dist.1981). The objection must be something more than a frivolous objection. Id.

The decision to admit a duplicate is left to the trial court’s sound discretion, and, unless

                                              6
it is apparent from the record that the trial court’s decision is arbitrary or unreasonable,

the determination will not be disturbed on appeal. Id.

       {¶24} Here, appellants have not raised a genuine issue concerning the

authenticity of the note attached to Ms. Newsome’s affidavit or made any showing that it

would be unfair to admit a copy in lieu of the original.

       {¶25} Moreover, there is no requirement in Civ.R. 56(E) that Bank of New York

produce the original note in order to be entitled to summary judgment. In fact, that rule

allows copies of documents to be authenticated by affidavit. Regarding documents

referenced in an affidavit, “[s]worn or certified copies of all papers * * * referred to in an

affidavit shall be attached to * * * the affidavit.” (Emphasis added.) Id. This requirement

is satisfied by a statement in the affidavit declaring that the documents attached are true

copies. State ex rel. Corrigan v. Seminatore, 66 Ohio St.2d 459, 467 (1981).

       {¶26} Here, appellants argue that Ms. Newsome did not properly authenticate

the promissory note because she did not say in her affidavit that the original note is kept

as part of the business records or that she compared the copy of the note attached to

her affidavit to the original. However, to the contrary, Ms. Newsome in her affidavit said

that she has personal knowledge of how Bank of America, as servicing agent for Bank

of New York, created and maintained the loan documents in this case, which are Bank

of America’s business records.        She also indicated that Bank of New York has

possession of the original note. She said that she reviewed the note attached to her

affidavit and that it is a “true and correct” copy of the business record that was created

and maintained by Bank of America on behalf of Bank of New York. She thus indicated

                                              7
that the copy of the note attached to her affidavit is a true and correct copy of the

original.

       {¶27} Appellants’ first issue lacks merit.

       {¶28} For their second issue, appellants argue they created a genuine issue of

fact by presenting the affidavit of appellant, Dannette L. Antes, in which she stated that

after she and her husband defaulted on the mortgage loan, someone at their mortgage

company told her they could reinstate the loan. Again, we do not agree.

       {¶29} Appellants concede that the subject note and mortgage do not provide

them with the right to reinstate their loan after default. The Supreme Court of Ohio in

Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306, stated:

       {¶30} A defaulting borrower is not entitled by law to have a mortgage loan

              reinstated. Upon a borrower’s default, a lender is entitled to initiate

              foreclosure proceedings, to be paid in full, and to sever its

              relationship with the defaulting borrower. A defaulting borrower’s

              right to reinstate the mortgage loan arises solely from the terms of

              the residential-mortgage contract between the parties. Id. at ¶18.

       {¶31} In support of appellants’ argument that the loan was reinstated, appellant,

Dannette L. Antes, stated in her affidavit that in February 2012, she sent a check for

$5,000 to the Antes’ mortgage company, as they were instructed, to reinstate the loan,

but that the mortgage company returned the check to them. While appellants concede

they did not have a contractual right to reinstate the loan, they argue that because

someone at their mortgage company told them they could reinstate the loan by sending

them $5,000, Bank of New York cannot pursue foreclosure proceedings against them

                                             8
pursuant to the equitable “clean hands doctrine.” The Seventh District in Crick v. Starr,

7th Dist. Mahoning No. 08 MA 173, 2009-Ohio-6754, stated:

      {¶32} “The ‘clean hands doctrine’ of equity requires that whenever a party

             takes the initiative to set into motion the judicial machinery to obtain

             some remedy but has violated good faith by [his] prior-related

             conduct, the court will deny the remedy.” Bean v. Bean, 14 Ohio

             App.3d 358, 363-364 ([10th Dist.]1983). A movant cannot obtain

             relief on a matter if he is “guilty of reprehensible conduct with

             respect to the subject matter of the suit.” Marinaro v. Major Indoor

             Soccer League, 81 Ohio App.3d 42, 45 ([9th Dist.]1991). However,

             the movant’s conduct “must constitute reprehensible, grossly

             inequitable,   or   unconscionable    conduct,    rather   than   mere

             negligence, ignorance, or inappropriateness.” Wiley v. Wiley, 3d

             Dist. [Marion] No. 9-06-34, 2007-Ohio-6423, ¶15.            (Emphasis

             added.) Crick, supra, at ¶38.

      {¶33} Appellants argue that Bank of New York’s breach of its alleged agreement

to reinstate the loan amounted to unclean hands.         However, they do not cite any

pertinent case law in support of this argument. Further, we do not find any hint of the

type of “reprehensible,” “unconscionable,” or “grossly inequitable” conduct, which would

suggest that Bank of New York entered equity with “unclean hands.”

      {¶34} Appellants’ second issue is not well taken.

      {¶35} For their third and final issue, appellants argue that MERS’ assignment of

the mortgage to Bank of New York did not comply with the pooling and servicing

                                             9
agreement between those two entities and, thus, the assignment of the mortgage to

Bank of New York was invalid. As a result, appellants argue Bank of New York did not

have an interest in the note or mortgage when the complaint was filed and, therefore,

the bank did not have standing to file this action. Once again, we do not agree.

      {¶36} Appellants attempt to defeat summary judgment by arguing that a genuine

factual issue exists regarding Bank of New York’s standing. In support, they contend

that MERS’ assignment of the mortgage to Bank of New York was ineffective because

the assignment did not comply with a pooling and servicing agreement between MERS

and Bank of New York. Thus, they argue that Bank of New York did not receive a valid

assignment of the mortgage and, as a result, lacked standing to file this action.

However, this court rejected this argument in Waterfall Victoria Master Fund v. Yeager,

11th Dist. Lake No. 2012-L-071, 2013-Ohio-3206, ¶21. In Waterfall, a case decided

post-Schwartzwald, this court held that when mortgagor/debtors, such as appellants,

are not parties to the mortgage assignment, and their contractual obligations under the

mortgage are not affected in any way by the assignment, the debtors lack standing to

challenge the validity of the assignment. Id., citing Deutsche Bank Natl. Trust Co. v.

Rudolph, 8th Dist. Cuyahoga No. 98383, 2012-Ohio-6141, ¶24. In Waterfall, this court

said that its holding was based on the recognition that “an assignment does not alter the

mortgagor/debtor’s obligations under the note or mortgage and that the foreclosure

complaint is based on the mortgagor’s default under the note and mortgage - not

because of the mortgage assignment.” Id. at ¶25.

      {¶37} Pursuant to this court’s holding in Waterfall, appellants do not have

standing to challenge the mortgage assignment at issue here. Significantly, appellants

                                           10
concede that no Ohio Appellate courts have disagreed with this court’s holding in

Waterfall. Thus, appellants do not cite any Ohio case law authority holding that the

failure to follow the terms of a pooling and service agreement renders a mortgage

assignment invalid.

      {¶38} In addition, the pooling and servicing agreement submitted by appellants

was not properly authenticated. Appellants submitted a “Prospectus Supplement and

the Prospectus for the CWABS, Inc., Asset-Backed Certificates, Series 2006-BC4,

which contains a pooling and servicing agreement, in support of their argument that

Bank of New York lacked standing. According to the affidavit submitted by appellant’s

counsel, he obtained these documents from the internet by going on The Securities and

Exchange Commissions’ website.       Appellants argue these documents describe the

manner in which mortgage loans, such as the instant mortgage loan, are required to be

transferred to Bank of New York.       However, the Prospectus Supplement and the

Prospectus are not authenticated as required by Civ.R. 56(C), and the trial court thus

had discretion to disregard them in entering summary judgment. Lytle v. Columbus, 70

Ohio App.3d 99, 104 (10th Dist.1990); Minshall v. Cleveland Illum. Co., 11th Dist. Lake

No. 2004-L-156, 2006-Ohio-2241, ¶57 (in summary judgment proceedings, the trial

court “enjoys broad discretion in the admission and exclusion of evidence”).

      {¶39} Moreover, appellants failed to present any Civ.R. 56(C) evidentiary

materials demonstrating that the pooling and servicing agreement attached to their

attorney’s affidavit governed the assignment of the instant mortgage from MERS to

Bank of New York or that the assignment violated its provisions.

                                           11
       {¶40} In any event, any violation of the pooling and servicing agreement is

irrelevant in light of Bank of New York’s standing based on it possession of the

promissory note. The Eighth District in Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist.

Cuyahoga No. 98502, 2013-Ohio-1657, stated:

       {¶41} Whether * * * the parties to the [pooling and servicing agreement]

              failed to comply with the terms of [that agreement] is irrelevant to

              [the bank's] standing as the holder of the note. By virtue of its

              possession of the note endorsed in blank, [the bank] was the holder

              of the note, and thus was a person entitled to enforce the note

              under Ohio law. See R.C. 1301.01(T)(1) and 1303.31(A)(1). Najar,

              supra, at ¶62.

       {¶42} Here, because the note was endorsed in blank, the note was a bearer

instrument payable to anyone holding it.     Bank of N.Y. Mellon v. Froimson, 8th Dist.

Cuyahoga No. 99443, 2013-Ohio-5574, ¶23. The note was transferred to Bank of New

York on April 22, 2010, contemporaneous to the assignment of the mortgage to that

entity. Rufo, supra. Moreover, according to Ms. Newsome, Bank of New York has

possession of the original note. Thus, Bank of New York is entitled to enforce the note.

Id. As a result, appellants’ argument that the mortgage assignment was invalid is not

viable because they are not at risk of having to pay the same debt twice. Id. “The

purpose behind the defense relating to the chain of title for the mortgage is nullified and

thus inapplicable here.” Id.

       {¶43} Appellants’ third issue lacks merit.

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      {¶44} For the reasons stated in this opinion, appellants’ assignment of error is

overruled. It is the judgment and order of this court that the judgment of the Trumbull

County Court of Common Pleas is affirmed.

THOMAS R. WRIGHT, J., concurs,

COLLEEN MARY O’TOOLE, J., concurs in judgment only.

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