Court Opinion

ID: 2705468
Source: CourtListenerOpinion
Date Created: 2014-08-04 22:36:28.874248+00
Date Added: 2024-06-11T12:55:33.369426
License: Public Domain

[Cite as Flagstar Bank, FSB v. Harvey, 2013-Ohio-2666.]

STATE OF OHIO                    )                        IN THE COURT OF APPEALS
                                 )ss:                     NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT                 )

FLAGSTAR BANK, FSB                                        C.A. No.   26594

        Appellee

        v.                                                APPEAL FROM JUDGMENT
                                                          ENTERED IN THE
JIBAU HARVEY, et al.                                      COURT OF COMMON PLEAS
                                                          COUNTY OF SUMMIT, OHIO
        Appellant                                         CASE No.   CV 2011 01 0243

                                DECISION AND JOURNAL ENTRY

Dated: June 26, 2013

        MOORE, Presiding Judge.

        {¶1}    Defendant-Appellant, Jibau Harvey, appeals from the July 20, 2012 and August 8,

2012 judgment entries of the Summit County Court of Common Pleas. This Court reverses.

                                                    I.

        {¶2}    In January of 2011, Flagstar Bank, FSB filed a complaint in foreclosure against

Mr. Harvey alleging that he defaulted upon his mortgage note and owed $108,639.63, plus

interest at 5.50% per year from January 1, 2010. In addition, Flagstar Bank, FSB attached to its

complaint copies of the (1) note, (2) mortgage, (3) December 8, 2010 assignment of the

mortgage from Mortgage Electronic Registration Systems, Inc., acting solely as nominee for

Flagstar Bank, FSB, a Federally Chartered Savings Bank, to Flagstar Bank, FSB, and (4)

preliminary judicial report.

        {¶3}    Mr. Harvey filed a motion to dismiss the bank’s complaint alleging that Flagstar

Bank, FSB lacked standing to file this lawsuit, and that Flagstar Bank, FSB failed to join a
                                               2

necessary party. In support of his motion, Mr. Harvey attached copies of three assignments of

the mortgage evidencing transfers from: (1) Mortgage Electronic Registration Systems, Inc.,

acting solely as nominee for Flagstar Bank, FSB, A Federally Chartered Savings Bank, to

Flagstar Bank, FSB, dated December 8, 2010, (2) Flagstar Bank, FSB to the Secretary of

Housing and Urban Development, dated April 8, 2011, and (3) the Secretary of Housing and

Urban Development to DKR Mortgage Asset Trust I, dated May 9, 2011.

       {¶4}   Flagstar Bank, FSB then filed a motion to substitute the party plaintiff from

Flagstar Bank, FSB to DKR Mortgage Asset Trust I. In its motion, Flagstar Bank, FSB asserted

that, based upon its attached documents, DKR Asset Trust I is the proper party plaintiff in this

matter. The attached documents include a copy of the note showing the original “lender” as

Flagstar Bank, FSB, A Federally Chartered Savings Bank, endorsed to HUD then to DKR Asset

Trust I, and subsequent assignments of the mortgage from Flagstar Bank, FSB, to the Secretary

of Housing and Urban Development, and from the Secretary of Housing and Urban Development

to DKR Mortgage Asset Trust I.

       {¶5}   The trial court granted Flagstar Bank, FSB’s motion to substitute DKR Mortgage

Asset Trust I as the party plaintiff and denied Mr. Harvey’s motion to dismiss. Mr. Harvey then

filed an answer generally denying the allegations in Flagstar Bank, FSB’s complaint.

       {¶6}   DKR Mortgage Asset Trust I filed a motion for summary judgment arguing that

there are no genuine issues of material fact for trial because Mr. Harvey’s general denial and

undemonstrated defenses alone cannot overcome summary judgment. At the same time, it filed

the affidavit of Annette Torres, who is purportedly employed by the “plaintiff” in this matter as

servicer of Mr. Harvey’s account.
                                                3

         {¶7}   In response, Mr. Harvey jointly filed (1) a reply to DKR Mortgage Asset Trust

I’s motion for summary judgment and (2) a renewed motion to dismiss. Mr. Harvey asserted

that: (1) all of the pleadings filed on DKR Mortgage Asset Trust I’s behalf continue to be filed

under Flagstar Bank, FSB’s name, (2) it is unclear who the real party in interest is because all

negotiations and mediations were handled by Kondaur Capital Corporation, (3) DKR Mortgage

Asset Trust I did not meet its evidentiary burden entitling it to judgment as a matter of law, and

(4) it would be inequitable, under the circumstances, to foreclose upon the property.

         {¶8}   DKR Mortgage Asset Trust I filed a “sur-reply” stating, among other things, that,

in support of its motion for substitution of the party plaintiff, it attached a copy of the note

endorsed to DKR Mortgage Asset Trust I, as well as the assignment of the mortgage from the

Secretary of Housing and Urban Development to DKR Mortgage Asset Trust I. DKR Mortgage

Asset Trust I also attached a copy of a limited power of attorney, dated April 28, 2011, naming

Kondaur Capital Corporation as its attorney-in-fact.

         {¶9}   The trial court denied Mr. Harvey’s renewed motion to dismiss, and granted DKR

Mortgage Asset Trust I’s motion for summary judgment.             The trial court also issued a

foreclosure decree and ordered that the property be sold.

         {¶10} Mr. Harvey appealed, raising three assignments of error for our consideration.

Because it is dispositive of this appeal, we will now address Mr. Harvey’s second assignment of

error.

                                                II.

                                ASSIGNMENT OF ERROR II

         THE TRIAL COURT LACKED JURISDICTION TO ENTER JUDGMENT IN
         THIS CASE, AS THE CASE WAS NOT LITIGATED BY THE REAL PARTY
         IN INTEREST[.]
                                                 4

       {¶11} In Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-

5017, ¶ 3, the Supreme Court of Ohio stated that “receiving an assignment of a promissory note

and mortgage from the real party in interest subsequent to the filing of an action but prior to the

entry of judgment does not cure a lack of standing to file a foreclosure action.” “The Ohio

Constitution provides in Article IV, Section 4(B): ‘The courts of common pleas and divisions

thereof shall have such original jurisdiction over all justiciable matters and such powers of

review of proceedings of administrative officers and agencies as may be provided by law.’”

(Emphasis sic.) Id. at ¶ 20.

       Whether a party has a sufficient stake in an otherwise justiciable controversy to
       obtain judicial resolution of that controversy is what has traditionally been
       referred to as the question of standing to sue. Where the party does not rely on
       any specific statute authorizing invocation of the judicial process, the question of
       standing depends on whether the party has alleged * * * a personal stake in the
       outcome of the controversy.

(Internal quotations omitted.) Id. at ¶ 21, quoting Cleveland v. Shaker Hts., 30 Ohio St.3d 49, 51

(1987). Standing is a jurisdictional matter and, therefore, must be established at the time the

complaint is filed. Schwartzwald at ¶ 24.

       {¶12} At the commencement of an action, if a plaintiff does not have standing to invoke

the court’s jurisdiction, the “common pleas court cannot substitute a real party in interest for

another party if no party with standing has invoked its jurisdiction in the first instance.” Id. at ¶

38. “The lack of standing at the commencement of a foreclosure action requires dismissal of the

complaint; however, that dismissal is not an adjudication on the merits and is therefore without

prejudice.” Id. at ¶ 40.

       {¶13} Here, attached to its complaint, Flagstar Bank, FSB provided a copy of the

original note wherein Mr. Harvey promised to pay Flagstar Bank, FSB, A Federally Chartered
                                                  5

Savings Bank, $109,615.00, plus interest at the rate of 5.50% per year, until the amount is paid.

Flagstar Bank, FSB also provided a copy of the original mortgage between Mr. Harvey and

Mortgage Electronic Registration Systems, Inc., acting solely as a nominee for Flagstar Bank,

FSB, A Federally Chartered Savings Bank. Further, Flagstar Bank, FSB provided a copy of an

assignment of the mortgage from Mortgage Electronic Registration Systems, Inc., acting solely

as a nominee for Flagstar Bank, FSB, A Federally Chartered Savings Bank, to Flagstar Bank,

FSB.

       {¶14} It appears from the assignment of the mortgage from Flagstar Bank, FSB, A

Federally Chartered Savings Bank, to Flagstar Bank, FSB, that these are two separate and

distinct entities. However, the record is devoid of any proof that the note was ever endorsed to

Flagstar Bank, FSB, from Flagstar Bank FSB, A Federally Charted Savings Bank. Therefore, a

question arises as to whether Flagstar Bank, FSB was actually the holder of the note at the time it

filed its complaint.

       {¶15} In light of the Supreme Court of Ohio’s recent decision, we reverse and remand

this matter so that the trial court may apply Schwartzwald to the facts of this case in order to

determine whether Flagstar Bank, FSB had standing when it filed its complaint.

       {¶16} Mr. Harvey’s second assignment of error is sustained.

                                  ASSIGNMENT OF ERROR I

       THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT GRANTED
       JUDGMENT IN FAVOR OF A PLAINTIFF AND SUBSEQUENTLY
       ORDER[ED] THE PROPERTY TO BE SOLD WHEN [] [IT IS]
       QUESTIONABLE WHO THE PLAINTIFF IS, WHETHER THE PLAINTIFF IS
       NOT THE REAL PARTY IN INTEREST, OR WHETHER THE REAL PARTY
       IN INTEREST EVER [LITIGATED] THE CASE[.]
                                                 6

                                ASSIGNMENT OF ERROR III

       THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT GRANTED
       SUMMARY JUDGMENT IN FAVOR OF [DKR MORTGAGE ASSET TRUST
       I] AND ORDERED THAT THE PROPERTY BE SOLD WHEN [DKR
       MORTGAGE ASSET TRUST I] FAILED TO MEET ITS BURDEN OF PROOF
       UNDER CIV.R. 56[.]

       {¶17} Based upon our resolution of Mr. Harvey’s second assignment of error, his first

and third assignments of error are not yet ripe for review.

                                                III.

       {¶18} In sustaining Mr. Harvey’s second assignment of error, the judgment of the

Summit County Court of Common Pleas is reversed, and the cause remanded for further

proceedings consistent with this decision.

                                                                              Judgment reversed,
                                                                                cause remanded.

       There were reasonable grounds for this appeal.

       We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

       Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.
                                          7

      Costs taxed to Appellee.

                                              CARLA MOORE
                                              FOR THE COURT

BELFANCE, J.
HENSAL, J.
CONCUR.

APPEARANCES:

KANI HARVEY HIGHTOWER, Attorney at Law, for Appellant.

AUSTIN B. BARNES, Attorney at Law, for Appellee.