Court Opinion

ID: 4676021
Source: CourtListenerOpinion
Date Created: 2021-04-09 14:13:57.550556+00
Date Added: 2024-06-11T08:03:30.283014
License: Public Domain

[Cite as Waker v. Lawson, 2021-Ohio-1218.]

                            IN THE COURT OF APPEALS OF OHIO
                               SECOND APPELLATE DISTRICT
                                   MONTGOMERY COUNTY

 RONALD A. WAKER                                   :
                                                   :
         Plaintiff-Appellant                       :   Appellate Case No. 28692
                                                   :
 v.                                                :   Trial Court Case No. 2018-CV-4218
                                                   :
 HOLLY A. LAWSON, et al.                           :   (Civil Appeal from
                                                   :   Common Pleas Court)
         Defendants-Appellees                      :
                                                   :

                                              ...........

                                             OPINION

                             Rendered on the 9th day of April, 2021.

                                              ...........

ANTHONY R. CICERO, Atty. Reg. No. 0065408, 500 East Fifth Street, Dayton, Ohio
45402
      Attorney for Plaintiff-Appellant, Ronald A. Waker

SEAN KOHL, Atty. Reg. No. 0086726 and TIMOTHY COOK, Atty. Reg. No. 0093538,
1900 Bethel Road, Columbus, Ohio 43220
      Attorneys for Defendant-Appellee, Holly A. Lawson

                                             .............

HALL, J.
                                                                                       -2-

       {¶ 1} Ronald A. Waker appeals from the trial court’s entry of summary judgment in

favor of appellee Holly Lawson on his foreclosure complaint and on her counterclaims to

quiet title and for slander of title.

       {¶ 2} Waker advances two assignments of error. First, he contends the trial court

erred in entering summary judgment in favor of Lawson on his foreclosure complaint and

on her counterclaims. Second, he asserts that the trial court erred in not entering

summary judgment for him on his complaint.

       {¶ 3} The present appeal stems from a real-estate transaction involving a house

at 1800 Far Hills Avenue in Oakwood. At the time of the transaction, Lawson lived with

Waker and worked for his real-estate business, which was engaged in buying and

renovating homes to sell or to rent. Waker discovered the property at issue when a realtor

brought it to his attention. The house was a bank-owned foreclosure, and the bank was

only accepting offers from buyers who intended to live in the home. Waker proceeded to

purchase the house for $99,900 using Lawson as the buyer. The closing was conducted

by the Triad Title Agency, a company with which Waker had a working relationship. A few

days before the closing, Waker directed Triad to draft a mortgage to be included in the

closing documents. The mortgage that was created identified Lawson as the mortgagor

and Waker as the mortgagee. The document stated that it was to secure her payment of

$110,000 plus interest as provided in a promissory note. Waker later explained that he

made the mortgage for $110,000 because he anticipated spending money to renovate

the house.

       {¶ 4} The parties agree that no promissory note ever existed. In fact, prior to the
                                                                                         -3-

purchase, Waker and Lawson never discussed any loan with regard to the Far Hills

property. Waker also did not recall any pre-closing conversation with Lawson or her real

estate agent about the existence of a mortgage on the property. Waker and Lawson

attended the closing together, and Lawson signed the closing documents, including the

mortgage, without reviewing them. According to Waker, “it was a one-minute closing

probably, you know, five minutes at the most.” The parties agree that Waker provided all

of the money to pay for the house at the closing. Lawson did not know what Waker

planned to do with the home at that time. She thought he might “flip” it or rent it. In her

deposition, Lawson stated that no one told her there was going to be a mortgage on the

property. She did not discover the mortgage until several weeks after the closing. She

moved into the house after she discovered the mortgage and her relationship with Waker

ended. Although the home was titled in Lawson’s name on the recorded deed, she

understood that it was not intended to be a gift to her at the time of purchase. Waker

never told her that it was her house “free and clear.”

       {¶ 5} In September 2018, Waker filed a complaint against Lawson. The three-

count complaint alleged breach of a promissory note and sought to foreclose on the

mortgage. It also sought enforcement of a mechanic’s lien based on work Waker had

done to the property. Lawson filed numerous counterclaims, including claims for quiet title

and slander of title.

       {¶ 6} In July 2019, Waker moved for summary judgment on count two of his

complaint, which sought foreclosure based on Lawson’s non-payment of the debt secured

by the mortgage. The following month, Lawson moved for summary judgment on Waker’s

entire complaint as well as on her counterclaims for quiet title and slander of title. In an
                                                                                              -4-

October 17, 2019 ruling, the trial court overruled Waker’s motion and sustained Lawson’s

motion. With regard to count one of Waker’s complaint, which alleged breach of a

promissory note, the trial court reasoned that no note ever existed and, therefore, no note

could have been breached. (October 17, 2019 Decision, Order, and Entry at 5.) With

regard to count two, which sought foreclosure based on the mortgage, the trial court

reasoned:

                In the present case, the parties both admit that Defendant Lawson

       did not intend to enter into a Mortgage at the time of the closing because,

       as Plaintiff himself stated, she was not aware of the Mortgage, or terms of

       any alleged loan from Plaintiff, prior to the purchase of the Property. In fact,

       Plaintiff admitted that Defendant Lawson knew the property would be in her

       name, but that she had no knowledge as to Plaintiff’s ultimate plans for the

       Property. Based upon the foregoing, the Court finds that, based upon the

       evidence presented including the testimony by both parties, it is clear that

       Defendant Lawson did not voluntarily enter into a Mortgage for the Property

       at issue and, therefore, Plaintiff is not entitled to foreclose on the Property.

       ***

(Id. at 7-8.)

       {¶ 7} With regard to count three of Waker’s complaint, which involved a

mechanic’s lien, the trial court declared the lien invalid because it was not timely filed. (Id.

at 8.) As to Lawson’s counterclaims, the trial court found her entitled to a decree of quiet

title because the property was titled in her name and Waker’s mortgage and mechanic’s

lien were invalid. (Id.) Finally, on the counterclaim for slander of title, the trial court found
                                                                                           -5-

that Waker’s invalid mortgage and mechanic’s lien constituted the publication of

slanderous statements that disparaged Lawson’s title, that Waker acted with malice, and

that he caused actual and special damages.

       {¶ 8} The trial court initially included Civ.R. 54(B) certification in its October 17,

2019 Decision, Order, and Entry, and Waker appealed. Waker subsequently dismissed

the appeal so that an attorney-fee issue could be resolved. The trial court resolved that

issue through a January 10, 2020 Order on a stipulation of the parties, and Lawson

voluntarily dismissed her remaining counterclaims. Waker appealed on January 26, 2020.

After a limited remand from this court, the trial court granted Civ.R. 60(A) relief on May

20, 2020, removing the Civ.R. 54(B) certification from its October 17, 2019 Decision,

Order, and Entry. The trial court noted that the certification had been affixed inadvertently,

as the matter had been expected to proceed to a hearing on attorney fees. Waker then

filed an amended notice of appeal, incorporating the trial court’s ruling on the summary

judgment motions, its order resolving the attorney-fee issue on stipulations, and its order

granting Civ.R. 60(A) relief.

       {¶ 9} In his first assignment of error, Waker challenges the trial court’s entry of

summary judgment in favor of Lawson. He argues that the mortgage at issue was valid

and enforceable in his foreclosure action, no cloud on Lawson’s title supported a quiet-

title action, and there was no slander of title.

       {¶ 10} With regard to the mortgage, Waker asserts that “the validity of the

mortgage is the lynchpin for deciding if the grant of summary judgment to Lawson, and

the denial of summary judgment to Waker, was appropriate.” (Appellant’s brief at 9.) He

stresses that she signed the mortgage at the closing without questioning its presence or
                                                                                        -6-

reading it. He argues that she is bound by what she signed and that she cannot rely on

her failure to read the document to avoid its consequences. Waker notes too that Lawson

has not alleged fraud on his part. He also argues that the mortgage is enforceable despite

the absence of a note. That being so, he asserts that the lack of a note does not negate

the existence of a debt underlying the mortgage. Waker maintains that the mortgage itself

contained all necessary terms and conditions regarding the debt and repayment. He

insists that parol evidence may not be used to establish Lawson’s lack of intent to enter

into or to be bound by the mortgage. Waker argues that Lawson’s signature on the

mortgage bound her to its unambiguous terms and that reliance on extrinsic evidence in

the form of her deposition testimony or affidavit was improper.

       {¶ 11} We review a trial court’s ruling on a summary-judgment motion de novo.

Schroeder v. Henness, 2d Dist. Miami No. 2012-CA-18, 2013-Ohio-2767, ¶ 42. Under

Civ.R. 56(C), summary judgment is proper when the movant demonstrates “that there is

no issue as to any material fact, that the moving party is entitled to judgment as a matter

of law, and that reasonable minds can come to but one conclusion, and that conclusion

is adverse to the nonmoving party.” Miller v. Bike Athletic Co., 80 Ohio St. 3d 607, 617,

687 N.E.2d 735 (1998).

       {¶ 12} With the foregoing standards in mind, we see no error in the trial court’s

summary-judgment ruling. We agree with Waker that the absence of a note is not by itself

fatal to the validity of a mortgage or to a foreclosure action. “A note is mere evidence of

a debt, not the debt itself. * * * The existence of a debt secured by a mortgage may be

established without a note.” Adams v. Bankers Trust Co., 2d Dist. Montgomery Nos.

25703, 25706, 2014-Ohio-231, ¶ 5.
                                                                                               -7-

       {¶ 13} It is equally true, however, that the existence of a debt secured by a

mortgage must be established, with or without a note, for a party to foreclose. This is so

because “[t]he purpose of a mortgage is to secure the payment of a debt.” Riegel v. Belt,

119 Ohio St. 369, 164 N.E. 347 (1928), at syllabus. “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.” Wilborn v. Bank One Corp., 121 Ohio St. 3d 546, 2009-Ohio-

306, 906 N.E.2d 396, ¶ 18. If there is no underlying debt, there is no obligation for a

mortgage to secure, and there can be no default.

       {¶ 14} In the present case, no note existed evidencing the debt for which Waker

sought to foreclose. Generally, such a note “is the primary evidence of the debt.”

Deutsche Bank Natl. Trust Co. v. Holden, 147 Ohio St. 3d 85, 2016-Ohio-4603, 60 N.E.3d
1243, ¶ 28. In the absence of a note, Waker asserts that the mortgage Lawson signed

constituted sufficient evidence of her debt obligation. The one-page document granted

Waker a mortgage to secure payment of $110,000 “with interest as provided in a Note of

even date, with a Final Payment due July 1, 2018.” (Lawson depo. at Exh. 5.) The

mortgage did not identify the applicable interest rate or Lawson’s monthly payment

obligation. Nevertheless, Waker maintains that the mortgage contained enough

information to prove Lawson’s debt, which the mortgage secured. Because the mortgage

was an unambiguous written agreement acknowledging the debt, Waker contends we

may not resort to parol evidence to find that there was no debt or that the mortgage was

unenforceable.

       {¶ 15} The parol evidence rule “is a rule of substantive law that prohibits a party

who has entered into a written contract from contradicting the terms of the contract with
                                                                                            -8-

evidence of alleged or actual agreements. ‘When two parties have made a contract and

have expressed it in a writing to which they have both assented as the complete and

accurate integration of that contract, evidence, whether parol or otherwise, of antecedent

understandings and negotiations will not be admitted for the purpose of varying or

contradicting the writing.’ ” (Citation omitted.) Ed Schory & Sons, Inc. v. Soc. Natl. Bank,

75 Ohio St. 3d 433, 440, 662 N.E.2d 1074 (1996), quoting 3 Corbin, Corbin on Contracts

(1960) 357, Section 573. “The principal purpose of the parol evidence rule is to protect

the integrity of written contracts.” Galmish v. Cicchini, 90 Ohio St. 3d 22, 27, 734 N.E.2d
782 (2000). The parol evidence rule thus provides that extrinsic evidence of prior or

contemporaneous oral agreements or prior written agreements may not be used to vary,

contradict, or supplement a final written contract. Id.

       {¶ 16} We see at least two problems with applying the parol evidence rule here.

First, there was no promissory note between Waker and Lawson obligating her to pay

him $110,000 plus interest. And the mortgage referencing the debt was not a written

contract between Waker and Lawson obligating her to pay a debt. Waker did not even

sign the mortgage, which simply granted him a security interest in the property. Although

a mortgage is security for a debt, it is not a contract for the debt itself. See, e.g., Century

Natl. Bank v. Gwinn, 4th Dist. Athens No. 11CA20, 2012-Ohio-768, ¶ 25. This remains

true even when a mortgage incorporates an underlying note by reference. Id. The

mortgage Lawson signed might have constituted some evidence of an underlying debt,

but it was not a written contract for the debt that precluded consideration of parol

evidence.

       {¶ 17} Second, even if the mortgage could be considered a contract between
                                                                                           -9-

Waker and Lawson for the debt itself, she did not seek to avoid the mortgage by relying

on any oral or written agreement entered into prior to or contemporaneous with her

signing of that document. Instead, she relyied on the parties’ subsequent joint recognition

in their depositions that she and Waker in fact had not discussed or entered into an

underlying agreement obligating her to pay him anything. Both parties agreed in their

depositions that when Lawson signed the mortgage, there was no note and there had

been no mutual agreement concerning her paying Waker for the house. In essence, both

parties agreed in their depositions that the $110,000 debt obligation referenced in the

mortgage was made up solely by Waker.

       {¶ 18} In his deposition, Waker acknowledged that Lawson “had no clue” what he

even planned to do with the house at the time of the closing. (Waker depo. at 26.) He also

admitted that prior to the purchase “there was never a discussion” with Lawson “with

regard to the terms of a loan[.]” (Id. at 30.) Waker unilaterally decided to create a mortgage

referencing a $110,000 debt and to have the mortgage document inserted in the closing

papers for Lawson to sign. (Id. at 35.) For her part, Lawson testified that she did not

discover the mortgage until weeks after the closing, and she never intended or agreed to

incur any debt obligation.1 (Lawson depo. at 31, 47; Lawson affidavit at ¶ 13.)

       {¶ 19} In light of the foregoing evidence, we see no genuine issue of material fact

as to the non-existence of an actual debt underlying the mortgage Lawson signed. Even

construing the evidence in a light most favorable to Waker, no rational trier of fact could

1 Sometime after the closing and after discovering the mortgage, Lawson did attempt to
compromise with Waker and to work out a payment plan with him. This after-the-fact
negotiation did not establish the existence of a valid underlying debt at the time of the
closing.
                                                                                          -10-

find that such a debt truly existed when Lawson executed the mortgage. Because Waker

failed to prove the existence of an underlying debt, he cannot prove a default and,

therefore, cannot foreclose on the mortgage. Accordingly, we see no error in the trial

court’s entry of summary judgment in favor of Lawson on count two of Waker’s complaint.

       {¶ 20} Waker also challenges the trial court’s entry of summary judgment for

Lawson on her quiet-title counterclaim. The trial court reasoned that the mortgage, which

it found to be invalid and unenforceable, constituted a cloud on the title. Waker argues

again that the mortgage was valid and enforceable through foreclosure. Therefore, he

asserts that his recorded mortgage did not constitute a “cloud” on Lawson’s title.

       {¶ 21} “A cloud on a title is a defect in title ‘that has a tendency even in the slight

degree, to cast doubt upon the owner’s title, and to stand in the way of a full and free

exercise of his ownership.’ ” Cuspide Properties, Ltd. v. Earl Mechanical Servs., 2015-

Ohio-5019, 53 N.E.3d 818, ¶ 27 (6th Dist.), quoting McClure v. Fischer Attached Homes,

145 Ohio Misc. 2d 38, 2007-Ohio-7259, 882 N.E.2d 61, ¶ 13 (C.P.). “An invalid lien creates

the appearance that there is an encumbrance on one’s land where one does not exist.”
Id.

       {¶ 22} The trial court found that Waker’s recorded mortgage and mechanic’s lien

constituted clouds on Lawson’s title because they were invalid. The trial court reasoned

that the mortgage and mechanic’s lien cast doubt on her possession of an unencumbered

title. Therefore, the trial court found Lawson entitled to a decree of quiet title under R.C.

5303.01, which provides that “[a]n action may be brought by a person in possession of

real property, by himself or a tenant, against any person who claims an interest therein

adverse to him, for the purpose of determining such adverse interest.”
                                                                                            -11-

       {¶ 23} Upon review, we see no error in the trial court’s ruling. Waker’s mortgage

was unenforceable because he failed to prove the existence of an underlying debt that

the mortgage secured. With regard to Waker’s mechanic’s lien, the trial court found it

invalid on the basis that it was not timely filed. Waker has not challenged that

determination on appeal. The invalid mortgage and mechanic’s lien created the

appearance of an encumbrance on Lawson’s title where no encumbrance existed.

Therefore, the trial court correctly found Lawson entitled to a decree of quiet title.

       {¶ 24} In a final argument under his first assignment of error, Waker challenges

the trial court’s entry of summary judgment in favor of Lawson on her counterclaim for

slander of title. Waker asserts that Lawson did not establish the elements of a slander-of-

title claim because the mortgage at issue was valid and enforceable.

       {¶ 25} “Typically, slander-of-title cases involve documents filed against a particular

piece of property by parties who claim an interest in the property.” Green v. Lemarr, 139
Ohio App. 3d 414, 431, 744 N.E.2d 212 (2d Dist. 2000). “To prevail, a claimant must prove

‘(1) there was a publication of a slanderous statement disparaging claimant’s title; (2) the

statement was false; (3) the statement was made with malice or made with reckless

disregard of its falsity; and (4) the statement caused actual or special damages.’ ” Id. at

430-431, quoting Colquhoun v. Webber, 684 A.2d 405, 409 (Me. 1996).

       {¶ 26} In its ruling, the trial court found that Lawson had established slander of title,

as a matter of law, with regard to both the mortgage and Waker’s mechanic’s lien. In

support, it reasoned:

              With respect to the elements of this claim, the Court notes that

       Plaintiff’s use of the invalid Mortgage to bring this action, as well as the
                                                                                         -12-

         invalid mechanic’s lien, constitute publications of slanderous statements

         that disparaged Defendant Lawson’s title. The Court further finds that

         Plaintiff acted with malice because he acted with reckless disregard for

         Defendant Lawson’s rights. Specifically, Plaintiff provided detailed

         testimony, admitting that he had extensive experience with buying and

         selling properties, the Property is titled in Defendant Lawson’s name and,

         yet, Plaintiff did not discuss the terms of the Mortgage with Defendant

         Lawson prior to the purchase of the Property. Moreover, Plaintiff admits that

         he arbitrarily determined the amount of the Mortgage, which did not reflect

         the actual purchase price of the Property. See Plaintiff’s Depo., generally.

         Accordingly, when Plaintiff brought this action for foreclosure, using the

         invalid Mortgage and untimely mechanic’s lien, he showed reckless

         disregard for Defendant Lawson’s rights as the titled owner of the Property

         and, therefore, acted with malice. With respect to the final element of this

         claim, the Court finds that Plaintiff’s actions have caused Defendant Lawson

         actual and special damages arising out of the litigation of this matter. The

         amount of any attorney fees will be addressed at a separate hearing as set

         forth below. Accordingly, the Court SUSTAINS Defendant Lawson’s claim

         for slander of title.

(October 17, 2019 Decision, Order, and Entry at 9-10.)2

         {¶ 27} On appeal, Waker argues that Lawson failed to establish the second

element of her slander-of-title claim, namely that the “statement” was false. Lawson

2   As noted above, the parties subsequently resolved the attorney-fee issue by stipulation.
                                                                                        -13-

contends the statement at issue was the mortgage and that it was not “false” because it

was valid and enforceable. Waker also claims Lawson failed to establish the third

element, malice, for the same reason. He reasons that “the mortgage is not invalid and

seeking to foreclose pursuant to the mortgage is neither a reckless disregard of Lawson’s

rights nor malicious.” (Appellant’s brief at 16.)

       {¶ 28} We find Waker’s argument to be unpersuasive. As an initial matter, the trial

court’s ruling makes clear that the “statement” at issue involved Waker’s assertion of both

a mortgage and a mechanic’s lien. The trial court found the mechanic’s lien invalid due to

it being untimely filed, and Waker has not challenged that determination on appeal. With

regard to the mortgage, we held above that it was not valid and enforceable because

Waker failed to establish the existence of an underlying debt. That being so, Waker’s sole

basis for challenging the second and third elements of Lawson’s claim lacks merit. The

first assignment of error is overruled.

       {¶ 29} In his second assignment of error, Waker contends the trial court erred in

overruling his competing motion for summary judgment on count two of his complaint,

which sought foreclosure. Waker reiterates his contention that the mortgage was valid

and enforceable and that it obligated Lawson to pay him $110,000 plus interest by July

1, 2018. Because she failed to make this payment, Waker asserts that she was in default

and that he was entitled to a decree of foreclosure as a matter of law.

       {¶ 30} In resolving Waker’s first assignment of error, we determined that he failed

to prove the existence of a debt and that he consequently could not prove a default by

Lawson. As a result, we held that he was not entitled to foreclose. In light of that

determination, Waker was not entitled to summary judgment on his complaint for
                                                                               -14-

foreclosure. The second assignment of error is overruled.

      {¶ 31} The judgment of the Montgomery County Common Pleas Court is affirmed.

                                    .............

TUCKER, P.J. and EPLEY, J., concur.

Copies sent to:

Anthony R. Cicero
Sean Kohl
Timothy Cook
Michele Phipps
John Doe
Hon. Dennis J. Adkins