Court Opinion

ID: 4078925
Source: CourtListenerOpinion
Date Created: 2016-10-03 16:01:10.661694+00
Date Added: 2024-06-11T13:28:14.983361
License: Public Domain

FILED
                      NOT RECOMMENDED FOR PUBLICATION                            Sep 09, 2016
                              File Name: 16a0524n.06                         DEBORAH S. HUNT, Clerk
                                         No. 15-3524

                        UNITED STATES COURTS OF APPEALS
                             FOR THE SIXTH CIRCUIT

MSCI 2007-IQ16 GRANVILLE RETAIL, LLC,                  )
      Plaintiff-Appellee,                              )
                                                       )
v.                                                     )      ON APPEAL FROM THE
                                                       )      UNITED STATES DISTRICT
UHA CORPORATION, LLC,                                  )      COURT FOR THE SOUTHERN
                                                       )      DISTRICT OF OHIO
       Defendant-Appellant.                            )
                                                       )                  OPINION
                                                       )
                                                       )

       BEFORE:        DAUGHTREY, MOORE, and STRANCH, Circuit Judges.

       STRANCH, Circuit Judge.           Following UHA Corporation, LLC’s default on a

commercial loan, MSCI 2007-IQ16 Granville Retail, LLC sought in this diversity action to

foreclose and sell mortgaged premises in Ohio’s Delaware, Fairfield, and Franklin Counties.

The district court granted summary judgment to MSCI. While this appeal was pending, the

property was sold and distributed, and the sale and distribution was confirmed by the district

court. MSCI now files a motion to dismiss the appeal as moot. UHA responds with a motion to

certify the mootness question to the Ohio Supreme Court. We GRANT MSCI’s motion, DENY

UHA’s motion, and DISMISS the appeal as moot.

                                   I.     BACKGROUND

       MSCI’s predecessor, Bank of America, National Association, originally filed this action.

UHA petitioned for bankruptcy shortly thereafter, prompting the district court to stay the case.
No. 15-3524, MSCI 2007-IQ16 Granville Retail, LLC v. UHA Corporation, LLC

Two years later, following Bank of America’s notice that the bankruptcy petition had been

dismissed, the case was reopened. MSCI, to which the loan documents at issue had been

transferred during the bankruptcy stay, moved to be substituted as plaintiff under Federal Rule of

Civil Procedure 25(c). The district court entered an “agreed order” substituting MSCI.

       MSCI eventually moved for summary judgment, which the district court granted, finding

that MSCI owns and holds the note and mortgages on which UHA defaulted and is entitled to

foreclose and sell the properties. Pursuant to the court’s opinion and order, MSCI submitted, and

the court later adopted over UHA’s objections, a proposed judgment entry and decree in

foreclosure. The court noted that UHA owed MSCI more than $13,000,000.

       UHA timely appealed, alleging a number of errors by the district court. Because the

judgment entry and decree determined the rights and obligations of the parties and lienholders;

fixed a certain amount to be paid to MSCI that would be supplemented with future interest

accrued, advances made, and other contractual obligations; and identified the property to be sold

in satisfaction of that debt, it is a final decision within the meaning of 28 U.S.C. § 1291.

See, e.g., N.C. R.R. Co. v. Swasey, 90 U.S. 405, 409–10 (1874) (citing Whiting v. Bank of the

U.S., 38 U.S. (13 Pet.) 6 (1839)); Citicorp Real Estate, Inc. v. Smith, 155 F.3d 1097, 1101 (9th

Cir. 1998); Citibank, N.A. v. Data Lease Fin. Corp., 645 F.2d 333, 337–38 (5th Cir. 1981);

CitiMortgage, Inc. v. Roznowski, 11 N.E.3d 1140, 1145–46 (Ohio 2014); see also HSBC Bank

USA, N.A. v. Townsend, 793 F.3d 771, 781–797 (7th Cir. 2015) (Hamilton, J., dissenting).

But see HSBC Bank USA, N.A., 793 F.3d at 773–781 (majority opinion).                Thus, we had

jurisdiction over the appeal when it was filed.

       While the appeal was pending, UHA failed to move for a stay or post a supersedeas bond,

despite the district court’s directing the parties to address “whether or not further proceedings in

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No. 15-3524, MSCI 2007-IQ16 Granville Retail, LLC v. UHA Corporation, LLC

this action must be stayed pending resolution of [UHA’s] appeal.” In the absence of a stay, the

special master offered the property for sale, and MSCI successfully purchased it and then

assigned its bid to four separate entities. The district court confirmed the sale and distribution of

the property over UHA’s objection. Special master deeds were executed and recorded thereafter.

                                        II.    ANALYSIS

       MSCI now moves for dismissal of the appeal as moot. “[F]ederal jurisdiction under

Article III, Section 2 of the United States Constitution extends only to actual cases and

controversies.” United States v. City of Detroit, 720 F.2d 443, 448 (6th Cir. 1983) (citations

omitted). “It is basic principle of Article III that a justiciable case or controversy must remain

extant at all stages of review, not merely at the time the complaint is filed.” Ky. Riverkeeper,

Inc. v. Rowlette, 714 F.3d 402, 406 (6th Cir. 2013) (quoting Decker v. Nw. Envtl. Def. Ctr.,

133 S. Ct. 1326, 1335 (2013)). Accordingly, we are not empowered to decide moot issues. City

of Detroit, 720 F.2d at 448 (citations omitted); see also United States v. Alaska S. S. Co.,

253 U.S. 113, 116 (1920). “A case becomes moot only when it is impossible for a court to grant

any effectual relief whatever to the prevailing party, and a change in circumstances that renders a

court unable to grant petitioners meaningful relief may prudentially moot an action.”

Ky. Riverkeeper, Inc., 714 F.3d at 406 (citations and quotation marks omitted).

       Under Ohio law, if a judgment is voluntarily paid and satisfied, the “satisfaction of

judgment renders an appeal from that judgment moot.” Blodgett v. Blodgett, 551 N.E.2d 1249,

1250 (Ohio 1990) (citations omitted); see also Schiller v. Penn Cent. Transp. Co., 509 F.2d 263,

266 (6th Cir. 1975) (“Because the judgment has been discharged the appeal therefrom under

Ohio law has become moot.”). “[T]he mere filing of a notice of appeal without a stay order does

not deprive the trial court of authority to enforce its judgment.” White v. White, 362 N.E.2d

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No. 15-3524, MSCI 2007-IQ16 Granville Retail, LLC v. UHA Corporation, LLC

1013, 1019 (Ohio Ct. App. 1977). And where, as here, an appellee successfully collects on a

judgment after the appellant fails to request a stay, Ohio courts consider the appellant to have

satisfied the judgment voluntarily—which, again, renders moot the pending appeal. See, e.g.,

Wiest v. Wiegele, 868 N.E.2d 1040, 1043 (Ohio Ct. App. 2006) (citing Hagood v. Gail,

664 N.E.2d 1373, 1376–77, 1380 (Ohio Ct. App. 1995)); Art’s Rental Equip. Inc. v. Bear Creek

Constr., Nos. C-110544, 2012 WL 5870509, at *1–2 (Ohio Ct. App. Nov. 21, 2012). Consistent

with Ohio law, our sister circuits have routinely dismissed appeals as moot where the property at

issue is sold during the pendency of the appeal. See, e.g., Vegas Diamond Props., LLC v. FDIC,

669 F.3d 933, 936–37 (9th Cir. 2012); Christopher Vill., Ltd. P’ship v. Retsinas, 190 F.3d 310,

314–15 (5th Cir. 1999). As the Seventh Circuit explained,

       The rule that if a district court judgment authorizes the sale of property and the
       property is sold to a good faith purchaser during the pendency of the appeal
       because the appellant failed to obtain a stay of the enforcement of the judgment,
       the sale of the property moots the appeal of the judgment ordering the sale, is an
       application of the general rule that, “if an event occurs while an appeal is pending
       that renders it impossible for an appellate court to grant any relief or renders a
       decision unnecessary, the appeal will be dismissed as moot.”

FDIC v. Meyer, 781 F.2d 1260, 1263–64 (7th Cir. 1986) (citation omitted).

       In response to MSCI’s motion to dismiss the appeal as moot, UHA cites a line of Ohio

cases finding that the confirmed sale of the property at issue did not moot the pending appeal

because Ohio Revised Code § 2329.45 preserved the possibility of restitution. See Ohio Rev.

Code Ann. § 2329.45 (“If a judgment in satisfaction of which lands, or tenements are sold, is

reversed, such reversal shall not defeat or affect the title of the purchaser.      In such case

restitution must be made by the judgment creditor of the money for which such lands or

tenements were sold, with interest from the day of sale.”). Arguing that these cases conflict with

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No. 15-3524, MSCI 2007-IQ16 Granville Retail, LLC v. UHA Corporation, LLC

the principles outlined above, UHA moves us to certify the issue to the Ohio Supreme Court to

resolve.

       But the cases cited by UHA, in which there was a possibility of restitution, are inapposite

because UHA cannot obtain restitution. Those cases presume that appellant sought a stay.

See U.S. Bank Nat’l Ass’n v. Mobile Assocs. Nat’l Network Sys., Inc., 961 N.E.2d 715, 720 (Ohio

Ct. App. 2011); LaSalle Bank Nat’l Ass’n v. Murray, 902 N.E.2d 88, 92 (Ohio Ct. App. 2008);

see also Everhome Mortg. Co. v. Baker, No. 10AP-534, 2011 WL 2586751, at *3–4 (Ohio Ct.

App. June 30, 2011) (not stating whether appellant sought a stay, but relying on the reasoning of

Ameriquest Mortgage Co. v. Wilson, No. 2006-A-0032, 2007 WL 1535242 (Ohio Ct. App. May

25, 2007), in which appellant did seek a stay). And Ohio case law confirms that failure to seek a

stay is fatal to receiving restitution under § 2329.45. See, e.g., Bayview Loan Servicing, LLC v.

Salem, No. 27460, 2015 WL 4005890, at *2 (Ohio Ct. App. June 20, 2015) (“[The appellant]

never sought a stay of the distribution of the proceeds in the trial court.         Accordingly,

[§] 2329.45 does not apply.”); Ameriquest Mortg. Co., 2007 WL 1535242, at *2 (“Restitution is

appropriate in cases such as these, where the foreclosed property has been sold, and the appellant

filed for a stay, but was unsuccessful due to his or her failure to post a supersedeas bond.”

(citations omitted)).

       Read together, the Ohio cases cited by the parties are consistent. Because UHA did not

seek a stay, and MSCI enforced the judgment by selling the property and distributing the

proceeds, satisfaction of the judgment renders this appeal moot. That the Ohio Supreme Court

has declined to take up UHA’s alleged split in state law supports our finding that there is no

conflict, as well as MSCI’s argument that we should decline to certify the question. See, e.g.,

Art’s Rental Equip., Inc. v. Bear Creek Constr., LLC, 984 N.E.2d 1102 (Ohio 2013) (denying

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No. 15-3524, MSCI 2007-IQ16 Granville Retail, LLC v. UHA Corporation, LLC

review of appeal); Saxon Mortg. Servs. v. Whitely, 998 N.E.2d 1176 (Ohio 2013) (finding that no

conflict exists on review of order certifying conflict).      Moreover, even if Ohio law were

inconsistent, this case is not an appropriate vehicle for certification.         UHA cannot obtain

restitution here because its debt to MSCI is two times greater than the appraisal price for the

foreclosed properties, and thus any restitution would simply offset that debt.

                                     III.    CONCLUSION

       In sum, because we can no longer grant any effectual relief, this appeal must be

dismissed as moot. UHA’s motion to certify is denied.

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