Court Opinion

ID: 2741586
Source: CourtListenerOpinion
Date Created: 2014-10-10 16:05:07.496957+00
Date Added: 2024-06-11T10:36:47.378835
License: Public Domain

[Cite as Multibank 2009-1 CML-ADC VENTURE, L.L.C. v. S. Bass Island Resort, Ltd., 2014-Ohio-4513.]

                           IN THE COURT OF APPEALS OF OHIO
                               SIXTH APPELLATE DISTRICT
                                   OTTAWA COUNTY

Multibank 2009-1 CML-ADC                                Court of Appeals No. OT-13-004
VENTURE, LLC
                                                        Trial Court No. 2008CV0479
        Appellee

v.

South Bass Island Resort, Ltd., et al.                  DECISION AND JUDGMENT

        Appellants                                      Decided: October 10, 2014

                                               *****

        Martha S. Sullivan, Stephanie E. Niehaus and F. Maximilian
        Czernin, for appellee.

        D. Jeffery Rengel and Thomas R. Lucas, for appellants.

                                               *****

        PIETRYKOWSKI, J.

        {¶ 1} South Bass Island Resort, Ltd. (“SBIR”), Cecil Weatherspoon, Terry L.

Ross, and John C. Tomberlin, appellants, appeal December 18, 2012, January 22, 2013,

and April 9, 2013 judgments of the Ottawa County Court of Common Pleas in a dispute
arising out of a June 14, 2006 loan by Columbian Bank to SBIR. Multibank 2009-1

CML-ADC VENTURE, LLC (“Multibank”) is the successor in interest to Columbian

Bank with respect to the transaction and is the appellee. For ease of reference, we will

refer to Columbian Bank and Multibank collectively in this decision and judgment as

“the Bank.”

       {¶ 2} Under the June 14, 2006 loan agreement, the Bank agreed to loan SBIR up

to $8,600,000 and SBIR executed a cognovit promissory note (“the Note”) and an open-

end mortgage, assignment of rents, and security agreement (“the Mortgage”). As

additional security for the loan, appellants Weatherspoon and Tomberlin together with

250 Centre Ltd. each executed separate cognovit unconditional guarantees of the loan.

Weatherspoon also executed, as collateral, an assignment of an insurance policy.

       {¶ 3} The loan mortgage relates to parcels of real property located in Erie and

Ottawa counties. On August 15, 2008, the Bank filed separate lawsuits in both counties.

The Bank filed this action in the Ottawa County Court of Common Pleas. The Bank filed

the other in the Erie County Court of Common Pleas in a case entitled Multibank 2009-1

CML-ADC Venture, LLC v. South Bass Island Resort, Ltd., case No. 2008-CV-0749 (Erie

Cty. C.P. Ct.).

       {¶ 4} The Bank filed a motion for summary judgment in this case. In the

December 18, 2012 judgment, the trial court found that the defendants were in default on

the terms of the loan agreement and mortgage and granted the Bank summary judgment

2.
on Counts 1, 2, 3, 5 and 8 of the complaint. The Bank had acknowledged that the other

counts of the complaint were moot.

       {¶ 5} In the January 22, 2013 judgment, the trial court granted relief. Under

Count 1 of the complaint, the court awarded the Bank judgment against SBIR and the

guarantors (identified as Weatherspoon, Tomberlin, and 250 Centre Ltd.), jointly and

severally for principal owing under the note of $7,849,093.30 together with interest,

taxes, attorney’s fees, demolition and repair charges levied by the Put in Bay Township

Board of Trustees and other amounts which were undetermined at that time.

       {¶ 6} Under Counts 2 and 3 of the complaint, the court determined that the

Mortgage secured indebtedness under the Note and that the Mortgage was a valid, first

and best lien on the property (excluding any lien for real estate taxes). The court found

that because of a scrivener’s error the Mortgage contained an incorrect legal description

and ordered the legal descriptions of Parcels 7 and 8 of the property set forth in the

Mortgage reformed to conform to descriptions of those parcels as set forth in Count 3 of

the complaint. The court ordered foreclosure against the real property subject to the

mortgage.

       {¶ 7} Under Count 5 of the complaint, the trial court granted the Bank judgment

under the security agreement entered into by SBIR with the Bank and granted the Bank

relief against personal property described in the security agreement and UCC financing

statements filed by the Bank.

3.
       {¶ 8} Under Count 8 of the complaint, the court determined that the assignment of

a term life insurance by appellant Cecil Weatherspoon was authentic and binding against

him. The court determined that as a result of breach of the loan agreement, the Bank may

exercise any and all rights under the assignment available to the Bank, including but not

limited to surrender of the insurance policy.

       {¶ 9} Appellants filed a Civ.R. 60(B) motion for relief from both the December

18, 2012 and January 22, 2013 judgments and filed a notice of appeal from those

judgments while the Civ.R. 60(B) motion was pending. Upon motion of appellants, we

remanded the case to the trial court to permit ruling on the Civ.R. 60(B) motion. The trial

court overruled the motion in a judgment filed on April 9, 2013.

       {¶ 10} We granted appellants leave to amend their notice of appeal to include the

trial court’s judgment denying Civ.R. 60(B) relief on July 29, 2013. Appellants assert

three assignments of error on appeal:

                                  Assignments of Error

              1. The trial court erred when it granted summary judgment in a

       foreclosure action where the underlying note was not a part of the action

       and had not been reduced to judgment.

              2. The trial court erred when it denied appellants’ 60(B) motion to

       vacate without providing appellants a hearing on that motion.

4.
               3. The trial court erred when it granted summary judgment to

       appellee after once previously denying the motion and where appellee

       never requested or was granted leave to file a second motion.

       {¶ 11} We consider the assignments of error out of turn, and consider assignment

of error No. 3 first.

       {¶ 12} The Bank filed two motions for summary judgment. It filed the first

motion on December 16, 2011. On December 20, 2011, the trial court denied the motion

“for failure to comply with Local Rule 25.01.” The local rule is procedural. It requires

that dispositive motions be accompanied by notice of a non-oral hearing date.

       {¶ 13} The Bank filed a second motion for summary judgment on January 13,

2012, together with the required notice of a non-oral hearing date. The trial court granted

the second motion for summary judgment in its judgment of December 18, 2012.

       {¶ 14} Under assignment of error No. 3, appellants argue that the motion for

summary judgment should have been denied as out of rule because Civ.R. 56(A) requires

leave of court to file a motion for summary judgment where the case has been set for

pretrial or trial. Appellants argue that the Bank did not seek leave of court to file the

second motion and the trial court did not grant leave to file when it granted the motion for

summary judgment on December 18, 2012.

       {¶ 15} Appellants raised this argument in its brief opposing the motion for

summary judgment in the trial court. The trial court did not address the issue in its

5.
judgment granting summary judgment. The trial court proceeded as if leave had been

granted and ruled on the merits.

      {¶ 16} In our view, the trial court impliedly granted the Bank leave to file the

second motion for summary judgment when it considered and ruled on the motion. See

St. Paul Fire & Marine Ins. Co. v. Corwin, 6th Dist. Wood No. WD-00-058, 2001 WL

536877, *2 (May 18, 2001); Capital One Bank (USA) N.A. v. Ryan, 10th Dist. Franklin

No 14AP-102, 2014-Ohio-3932, ¶ 31.

      {¶ 17} We find assignment of error No. 3 not well-taken.

      {¶ 18} Under assignment of error No. 1, appellants argue that the trial court erred

when it granted the motion for summary judgment.

      {¶ 19} Appellate review of trial court judgments granting motions for summary

judgment is de novo; that is, an appellate court applies the same standard in determining

whether summary judgment should be granted as the trial court. Grafton v. Ohio Edison

Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). To prevail on a motion for

summary judgment the moving party must demonstrate:

             (1) that there is no genuine issue as to any material fact; (2) that the

      moving party is entitled to judgment as a matter of law; and (3) that

      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, who is entitled to have the evidence construed most strongly in his

6.
       favor. Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 66, 375

       N.E.2d 46 (1978).

       {¶ 20} The grant of summary judgment is limited to circumstances where there is

no dispute of material fact. Civ.R. 56(C) provides:

              Summary judgment shall be rendered forthwith if the pleadings,

       depositions, answers to interrogatories, written admissions, affidavits,

       transcripts of evidence, and written stipulations of fact, if any, timely filed

       in the action, show that there is no genuine issue as to any material fact and

       that the moving party is entitled to judgment as a matter of law.

       {¶ 21} Under assignment of error No. 1, appellants argue that the trial court erred

in granting the Bank’s motion for summary judgment. Appellants contend first that the

Bank did not request judgment on the loan note in this action. Rather, appellants contend

that the Bank brought this action to foreclose against property in Ottawa County alone

and relied upon a November 16, 2011 judgment in Erie County to establish whether the

note was breached and the damages caused by any breach. Second, appellants contend

that the Erie County judgment on the note was not a final judgment to which res judicata

applies and that the trial court erred in granting summary judgment in reliance on the

preclusive effect of liability determinations in the Erie County judgment.

       {¶ 22} Appellee argues that the trial court did not err in granting summary

judgment based upon two alternative grounds. First, the Bank contends that the parties

are bound by a November 16, 2011 judgment by the Erie County Court of Common Pleas

7.
in Multibank 2009-1 CML-ADC Venture, LLC v. South Bass Island Resort, Ltd., case No.

2008-CV-0749 (Erie Cty. C.P. Ct.) and the judgment is to be given preclusive effect on

matters determined in the judgment. Second, the Bank contends that the grant of

summary judgment was fully supported by evidence submitted by it in support of the

motion.

       {¶ 23} The Bank acknowledges that the Erie County judgment did not resolve all

claims against all parties in that case. The issue of whether the guaranty executed by

appellant John Tomberlin is valid and enforceable was not resolved in the November 16,

2011 judgment and had been set for trial. The record demonstrates that the

November 16, 2011 judgment contains no express determination by the Erie County

Court of Common Pleas of “no just reason for delay” under Civ.R. 54(B).

                Scope of Relief Sought in Ottawa County Proceedings

       {¶ 24} A review of the complaint filed in this action demonstrates that appellants’

contention that the case seeks no determination of liability arising from claimed breach of

the loan note is incorrect. A copy of the executed loan agreement and cognovit

promissory note were attached as exhibit A to the complaint. Complaint, ¶ 8. Appellee

alleged that the loan note was “in default because payments required to be made under

the terms of the Note and Mortgage have not been made. The default has not been

cured.” Complaint, ¶ 10.

8.
      {¶ 25} In Count 1 of the complaint, the Bank alleged that it was

             due upon the Note principal in the amount of $7,849,093.30, plus

      interest on the outstanding principal balance at the rate of 11% per annum

      from November 14, 2007, plus late charges, plus advances made for the

      payment of taxes, assessments, insurance premiums, or costs incurred for

      the protection of the mortgaged premises under Section 5301.233 of the

      Ohio Revised Code. Complaint, ¶ 15.

             [Appellee prayed for] [j]udgment in Counts 1 and 2 against the

      interests of South Bass Island Resort, Ltd. In (sic) the subject real estate in

      the amount of $7,849.093, plus interest on the outstanding principal balance

      at the rate of 11% per annum from November 14, 2007, plus late charges,

      plus advances made for the payment of taxes, assessments, insurance

      premiums, or costs incurred for the protection of the mortgaged premises

      under Section 5301.233 of the Ohio Revised Code, plus reasonable attorney

      fees and court costs, and supplemented by any additional amounts found to

      be due and owing under the additional mortgage reference in this

      Complaint.” Complaint, ¶ 40.

      {¶ 26} Whether there had been a breach of obligations under the loan note and the

amount of any damages caused by any breach were issues properly before the trial court

for determination under the allegations of the complaint.

9.
       {¶ 27} In its motion for summary judgment, the Bank sought a monetary

judgment, foreclosure against real property and other relief against personal property.

The Bank sought monetary relief against SBIR, 250 Centre Ltd., and Cecil

Weatherspoon, jointly and severally, for $16,441,050.50,

       comprised of principal in the amount of $7,849.093.30, together with

       accrued but unpaid interest calculated at the default Note rate of 25% from

       December 15, 2007 (totaling $7,892,699.37), taxes totaling $125,752.94,

       title costs of $4,244.50, late charges and fees in the amount of $392,454.67,

       plus interest accruing at the default rate of 24% from December 2, 2011

       ($5,450.76 per diem), attorney’s fees and court costs related to this and the

       Erie County case (totaling $171,354.96) as of November 29, 2011), and any

       additional amounts found to be due and owing. Appellants’ second motion

       for summary judgment, p. 3.

       {¶ 28} Appellants’ contention that appellee did not seek judgment on the note in

this action is without merit.

                     Issue Preclusion Under Erie County Judgment

       {¶ 29} The doctrine of issue preclusion “holds that a fact or a point that was

actually and directly at issue in a previous action, and was passed upon and determined

by a court of competent jurisdiction, may not be drawn into question in a subsequent

action between the same parties or their privies.” Glidden Co. v. Lumbermens Mut. Cas.

Co., 112 Ohio St.3d 470, 2006-Ohio-6553, 861 N.E.2d 109, ¶ 44. The doctrine applies

10.
only to final judgments. Glidden at ¶ 45; Restatement of the Law 2d, Judgments, Section

27.

       {¶ 30} Appellants argue that the November 16, 2011 Erie County judgment in the

related case is not a final judgment and that, therefore, the appellants were not prevented

from relitigating issues determined in the Erie County judgment. We agree. The Erie

County judgment adjudicated the rights and liabilities of fewer than all the parties.

Liability of appellant Tomberlin under his guaranty remained to be adjudicated. The

judgment did not include a Civ.R. 54(B) determination of no just reason for delay.

       {¶ 31} Civ.R. 54(B) specifically provides that such a judgment remains subject to

revision by the trial court in the case:

              [I]n the absence of a determination that there is no just reason for

       delay, any order or other form of decision, however designated, which

       adjudicates fewer than all the claims or the rights and liabilities of fewer

       than all the parties * * * is subject to revision at any time before the entry

       of judgment adjudicating all the claims and the rights and liabilities of all

       the parties.

       {¶ 32} Absent the express determination of no just reason for delay, where the

judgment “adjudicates fewer than all claim or the rights and liabilities of fewer than all

the parties” a court is free to simply reconsider and revise prior rulings on summary

judgments in a case pending before it. Watson v. Ford Motor Co., 6th Dist. Erie No.

11.
E-06-074, 2007-Ohio-6374, ¶ 44; Hundsrucker v. Perlman, 6th Dist. Lucas No.

L-03-1293, 2004-Ohio-4851, ¶ 25.

       {¶ 33} We conclude that the November 16, 2011 Erie County judgment is not a

final judgment entitled to preclusive effect. See Cruse v. Finley, 4th Dist. Lawrence No.

12CA2, 2012-Ohio-5465, ¶ 19-20. Accordingly, whether summary judgment was

properly granted in this case must be determined from consideration of the evidence

submitted for court consideration on the motion under Civ.R. 56(C) alone.

                                     Summary Judgment

       {¶ 34} The only evidentiary material submitted by the Bank in support of its

motion for summary judgment is the affidavit of Michael Yaffe and a series of documents

attached as exhibits to the affidavit. Yaffe states in his affidavit that Multibank holds the

loan at issue in this litigation by assignment from the FDIC, as receiver of the Columbian

Bank, and that he is the asset manager of the loan at issue and familiar with it. He states

that he is familiar with the maintenance of the records as kept in the ordinary course of

business with respect to the loan.

       {¶ 35} Yaffe identified exhibit A, attached to his affidavit, as a true and accurate

copy of the loan agreement reflecting a loan from Columbian Bank to SBIR with the

cognovit promissory note by SBIR attached. Yaffe identified as exhibit B, attached to his

affidavit, as a true and accurate copy of the open-end mortgage to Columbian Bank

executed in consideration for the loan agreement.

12.
       {¶ 36} In the affidavit, Yaffe stated that both Cecil Weatherspoon and 250 Centre,

Ltd. each executed a cognovit unconditional guarantee to guarantee full and prompt

payment under the loan agreement to Columbian Bank and that true copies of the

cognovit guarantees were attached as exhibits C and D to his affidavit.

       {¶ 37} Yaffe stated in his affidavit that John Tomberlin also executed a guarantee

in favor of Columbian Bank, but made no statement concerning the guarantee other than

to state that liability of Tomberlin under the guarantee would be established at trial in

2012. The Bank did not seek judgment against Tomberlin in its motion for summary

judgment. Although a document marked exhibit E is attached to the Yaffe affidavit and

purports by its terms to be a guarantee by Tomberlin, the document was not authenticated

by Yaffe in his affidavit.

       {¶ 38} Yaffe stated in the affidavit that SBIR executed a security agreement

granting Columbian Bank a secured interest in all of SBIR’s personal property as listed in

the SBIR personal property security agreement as additional collateral for the loan

agreement. Yaffe stated that exhibit E, attached to his affidavit, is a true and accurate

copy of the SBIR personal property security agreement.

       {¶ 39} Yaffe also stated in the affidavit that Cecil Weatherspoon executed a

security agreement granting Columbian Bank a secured interest in his membership

interest in SBIR, as listed in the security agreement as additional collateral for the loan

agreement. Yaffe stated that exhibit F, attached to his affidavit, is a true and accurate

copy of the Weatherspoon security agreement.

13.
          {¶ 40} According to the affidavit Columbian recorded its secured interests in real

and personal property of SBIR and Cecil Weatherspoon through various financing

statements filed through the UCC filing system and the Ottawa County Recorder’s office.

Yaffe stated in the affidavit that true and accurate copies of the UCC filings were

attached as exhibit G to his affidavit.

          {¶ 41} Yaffe also stated in the affidavit that Cecil Weatherspoon executed an

assignment of life insurance policy as further collateral for the loan agreement and that

the assignment gave Columbian Bank rights under a term life insurance policy held by

Weatherspoon through First Colony Life Insurance Company. Yaffe identified exhibit H,

attached to the affidavit, as a true and accurate copy of the assignment of life insurance

policy.

          {¶ 42} At paragraph 11 of his affidavit, Michael Yaffe stated that the current

amount due and owing under the loan agreement and note as of December 2, 2011,

totaled the sum of $16,441,050.50 and that the amount was

                 comprised of principal in the amount of $7,849,093.30, together with

          accrued but unpaid interest at the default note rate of 25% from

          December 15, 2007 totaling $7,892,699.37, taxes totaling $125,752.94, title

          costs of $4,244.50, late charges and fees in the amount of $392,454.67, plus

          $5,450.76 per diem interest accruing at the default rate of 25% from

          December 2, 2011, attorney fees and court costs related to this litigation

14.
      and the Erie County litigation totaling $171,354.96 as of November 29,

      2011, and any additional amounts found to be due and owing.

      {¶ 43} Appellants did not file any affidavit or other evidentiary material for court

consideration in opposition to the motion for summary judgment.

      {¶ 44} The elements of proof necessary for a successful motion for summary

judgment in a foreclosure action are established:

             In order to properly support a motion for summary judgment in a

      foreclosure action, a plaintiff must present evidentiary-quality materials

      showing:

             1.) The movant is the holder of the note and mortgage, or is a party

      entitled to enforce the instrument;

             2.) if the movant is not the original mortgagee, the chain of

      assignments and transfers;

             3.) all conditions precedent have been met;

             4.) the mortgagor is in default; and

             5.) the amount of principal and interest due. Wachovia Bank of

      Delaware, N.A. v. Jackson, 5th Dist. Stark No. 2010-CA-00291, 2011-

      Ohio-3202, ¶ 40-45; JPMorgan Chase Bank, Natl. Assn. v. Salazar, 6th

      Dist. Lucas No. L-13-1038, 2014-Ohio-1002, ¶ 11; U.S. Bank, N.A. v.

      Coffey, 6th Dist. Erie No. E-11-026, 2012-Ohio-721, ¶ 26.

15.
       {¶ 45} The Yaffe affidavit and exhibits to the affidavit constitute the only

evidence submitted by the Bank in support of its motion for summary judgment. The

affidavit, however, did not state that SBIR was in default or that the Bank had complied

with all conditions precedent for foreclosure. Accordingly, we conclude appellee failed

to discharge its initial summary judgment burden and appellee’s motion for summary

judgment should have been denied on that basis.

       {¶ 46} As we have determined that the November 16, 2011 Erie County judgment

was not a final judgment and has no preclusive effect and that the grant of summary

judgment is not otherwise supported by evidence submitted for court consideration on the

motion, we conclude that the trial court erred in granting the Bank’s motion for summary

judgment.

       {¶ 47} We conclude that assignment of error No. 1 is well-taken.

       {¶ 48} We find assignment of error No. 2 with respect to claimed trial court error

in the denial of appellants’ Civ.R. 60(B) motion for relief from judgment moot.

       {¶ 49} Justice not having been afforded the parties complaining, we reverse the

December 18, 2012 and January 22, 2013 judgments of the Ottawa County Court of

Common Pleas and remand this cause to that court for further proceedings. We order

appellee to pay the costs of this appeal pursuant to App.R. 24.

                                                                       Judgments reversed.

16.
                                                        Multibank 2009-1 CML-ADC
                                                        VENTURE, LLC v. South Bass
                                                        Island Resort, Ltd.
                                                        C.A. No. OT-13-004

       A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.

Mark L. Pietrykowski, J.                       _______________________________
                                                           JUDGE
Arlene Singer, J.
                                               _______________________________
James D. Jensen, J.                                        JUDGE
CONCUR.
                                               _______________________________
                                                           JUDGE

           This decision is subject to further editing by the Supreme Court of
      Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
           version are advised to visit the Ohio Supreme Court’s web site at:
                 http://www.sconet.state.oh.us/rod/newpdf/?source=6.

17.