Court Opinion

ID: 2707160
Source: CourtListenerOpinion
Date Created: 2014-08-05 13:24:34.895262+00
Date Added: 2024-06-11T12:57:54.641351
License: Public Domain

[Cite as Deutsche Bank Natl. Trust Co. v. Finney, 2013-Ohio-4884.]

                             IN THE COURT OF APPEALS OF OHIO

                                  TENTH APPELLATE DISTRICT

Deutsche Bank National Trust Co.,                   :

                Plaintiff-Appellee,                 :

v.                                                  :                      No. 13AP-198
                                                                     (C.P.C. No. 08CVE-09-12623)
Bradley Finney et al.,                              :
                                                                     (REGULAR CALENDAR)
                Defendants-Appellants.              :

Deutsche Bank National Trust Company :
in its Capacity as Indenture Trustee for the
Noteholders of Aames Mortgage                :
Investment Trust 2005-2, a Delaware
Statutory Agent,                             :

                Plaintiff-Appellee,                 :
                                                                           No. 13AP-373
v.                                                  :                (C.P.C. No. 08CVE-09-12623)

Bradley Finney et al.,                              :                (REGULAR CALENDAR)

                Defendants-Appellants.              :

                                           D E C I S I O N

                                   Rendered on November 5, 2013

                Manley Deas Kochalski, LLC, and Matthew J. Richardson,
                for appellee.

                Doucet & Associates Inc., Troy J. Doucet and Audra Lepi
                Tidball, for appellants.

                 APPEALS from the Franklin County Court of Common Pleas

DORRIAN, J.
       {¶ 1}    Defendants-appellants, Bradley Finney and Michele Finney ("appellants"),
appeal from a judgment of the Franklin County Court of Common Pleas denying their
Nos. 13AP-198 and 13AP-373                                                                  2

motion to vacate a default mortgage foreclosure judgment granted in favor of plaintiff-
appellee, Deutsche Bank National Trust Co. in its Capacity as Indenture Trustee for the
Noteholders of Aames Mortgage ("Deutsche Bank"). Appellants also appeal an order
confirming a sheriff's sale of the mortgaged real property. For the reasons that follow, we
affirm.
Facts and Case History
          {¶ 2}   On September 3, 2008, Deutsche Bank initiated this action by filing a
complaint naming appellants as defendants. Deutsche Bank alleged in its complaint that,
in February 2005, appellants had executed a promissory note and a mortgage; the
appellants had defaulted on making payments as required by the note and mortgage; and
the amount of unpaid principal on the note was $263,546.79, plus interest dating from
May 1, 2008. Deutsche Bank further alleged in the complaint that the promissory note
was "currently owned or being serviced by Plaintiff," but had been "misplaced and cannot
be located at this time." (Complaint, ¶ 2.) It attached to the complaint a copy of a
mortgage executed by appellants, which named as mortgagee Aames Funding
Corporation, dba Aames Home Loan ("Aames").           Deutsche Bank sought a judgment
awarding it monetary damages as well as an order of foreclosure and sale of the property.
          {¶ 3}   Appellants were served summons and a copy of the complaint on or about
September 1, 2008 but did not timely file an answer to the complaint. On October 15,
2008, Deutsche Bank moved for default judgment. It contemporaneously filed an affidavit
executed by one of its employees, which included as exhibits copies of what Deutsche Bank
represented to be true and accurate copies of the original note and mortgage. The attached
mortgage named Aames as the mortgagee and the attached note similarly named Aames as
the lender to whom appellants were required to make payments.          The affiant further
stated that Deutsche Bank had custody of both the note and mortgage and was entitled to
enforce the mortgage; appellants had defaulted on their obligations; and Deutsche Bank
had given notice of that default to appellants.
          {¶ 4}   On November 18, 2008, the trial court entered judgment in favor of
Deutsche Bank and ordered foreclosure and sale of the real property. Appellants did not
timely appeal the foreclosure judgment. Ultimately, the sheriff scheduled sale of the
Nos. 13AP-198 and 13AP-373                                                                    3

property for March 13, 2009. However, on March 13, 2009, Deutsche Bank moved the
court to vacate the order of sale, and the court granted the motion on the same day.
       {¶ 5}   Thereafter, Deutsche Bank on multiple occasions, i.e., in September 2009,
November 2009, March 2010, and January 2012, took steps to accomplish sale of the
property. On each of these occasions, however, scheduled sheriff's sales were stayed either
at the bank's request or as the result of action taken by the appellants, including their filing
of bankruptcy petitions.
       {¶ 6}   On November 13, 2012, Deutsche Bank again took steps to procure a
sheriff's sale of the property. On December 4, 2012, over four years after the court entered
the default judgment of foreclosure, appellants filed a motion requesting the court grant
them relief from judgment "pursuant to common law and/or Civ.R. 60(B)(5)." (Dec. 4,
2012 motion, 1.) The motion cited the decision of the Supreme Court of Ohio in Fed.
Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, and
asserted that the trial court had lacked subject-matter jurisdiction to enter the default
judgment because Deutsche Bank "lacked standing at the time the Complaint was filed."
(Dec. 4, 2012 motion, 1.) While the motion was pending, the sheriff scheduled sale of the
property for March 1, 2013.
       {¶ 7}   On February 28, 2013, the trial court denied appellants' motion for relief
from judgment and denied a pending motion filed by appellants to stay the March 1 sale.
The court cited, inter alia, PNC Bank, N.A. v. Botts, 10th Dist. No. 12AP-256, 2012-Ohio-
5383, ¶ 22, for the proposition that lack of standing of a foreclosure plaintiff does not
implicate the subject-matter jurisdiction of the court. (Feb. 28, 2013 Decision, 5, 6.)
       {¶ 8}   On March 1, 2013, the sheriff conducted a public sale of the real estate, and
Deutsche Bank submitted the highest and best bid for the property in the amount of
$195,000. On March 8, 2013, appellants moved the court to stay confirmation of the
sheriff's sale. They asserted that the Ninth District Court of Appeals had certified to the
Supreme Court of Ohio a conflict of one of its decisions, Bank of America, N.A. v. Kuchta,
9th Dist. No. 12CA-25-M, 2012-Ohio-5562, with our decision in Botts. On April 2, 2013,
the court granted appellants' motion to stay confirmation of the sheriff's sale contingent
upon appellants posting a supersedeas bond. The record does not reflect the posting of a
supersedeas bond and, on April 17, 2013, the trial court confirmed the sheriff's sale.
Nos. 13AP-198 and 13AP-373                                                                   4

       {¶ 9}   Appellants timely appealed the trial court's decision denying its motion to
vacate the default judgment of foreclosure.
       {¶ 10} In this appeal, appellant asserts the following assignments of error:
               [1.] The trial court erred in denying the Finney's common law
               motion for relief from Judgment because Deutsche lacked
               standing at the time the complaint was filed, rendering the
               underlying judgment void for lack of subject matter
               jurisdiction.

               [2.] The trial court erred in confirming the sheriff's sale
               without notice to the Finneys in violation of Local Rule 25.01.

Standard of Review
       {¶ 11} Appellants' original motion for relief from judgment was filed "pursuant to
common law and/or Civ.R. 60(B)(5)." Appellants do not argue in this court, however, that
the trial court abused its discretion in failing to grant them relief pursuant to Civ.R. 60(B).
They argue instead that the trial court should have used its inherent authority under the
common law to vacate a void judgment. Accordingly, we address only that argument.
       {¶ 12} Appellants contend that the trial court lacked subject-matter jurisdiction to
enter the default judgment because Deutsche Bank did not demonstrate that it had
standing as the real party in interest at the time it filed the foreclosure action. Appellants
argue that the default judgment was, therefore, void ab initio. They further contend that
the court has inherent authority to vacate a void judgment irrespective of the three
requirements of Civ.R. 60(B) as established in GTE Automatic Elec., Inc. v. ARC
Industries, Inc., 47 Ohio St.2d 146 (1976), i.e., demonstration of one of the grounds for
relief described in Civ.R. 60(B)(1) through (5); a meritorious defense; and timeliness.
       {¶ 13} We recognize that a "judgment rendered by a court lacking subject-matter
jurisdiction is void ab initio" and that "authority to vacate a void judgment is not derived
from Civ.R. 60(B) but rather constitutes an inherent power possessed by Ohio courts."
Patton v. Diemer, 35 Ohio St.3d 68 (1988), paragraphs three and four of the syllabus.
Moreover, a "judgment" issued by a court that lacks subject-matter jurisdiction is a nullity.
Id. at 71. Accord Freedom Mtge. Corp. v. Mullins, 10th Dist. No. 08AP-761, 2009-Ohio-
4482, ¶ 19 ("[A] judgment rendered without subject matter jurisdiction is * * * a nullity
and void ab initio * * * [;] the authority to vacate such void judgments originates from the
Nos. 13AP-198 and 13AP-373                                                                  5

inherent power possessed by Ohio courts, not Civ.R. 60(B)[;] * * * and the trial court's
determination of a common-law motion to vacate does not turn on Civ.R. 60(B)'s
requirements that the movant file timely and present a meritorious defense." (Citations
omitted.)).
       {¶ 14} We apply an abuse-of-discretion standard of review when considering a trial
court ruling on a Civ.R. 60(B) motion. The question whether a trial court possessed
subject-matter jurisdiction to adjudicate any particular case, however, is a question of law
subject to de novo review. Klosterman v. Turnkey-Ohio, L.L.C., 182 Ohio App.3d 515,
2009-Ohio-2508, ¶ 19 (10th Dist.) ("We review the issue of subject-matter jurisdiction de
novo."). We, therefore, consider de novo the parties' arguments as to whether the trial
court had subject-matter jurisdiction to enter default judgment against appellants.
Analysis
       {¶ 15} The parties in this case disagree as to the correct interpretation of the
decision of the Supreme Court of Ohio in Schwartzwald. Appellants argue that
Schwartzwald stands for the proposition that a common pleas court lacks subject-matter
jurisdiction over a foreclosure action where the plaintiff lacked standing to bring the action
at the time the complaint was filed. Appellants further argue that the trial court, in their
case, never possessed subject-matter jurisdiction because Deutsche Bank did not
demonstrate that it was the real party in interest with standing to assert rights arising from
the note and mortgage that appellants signed. They argue that our prior decision in Botts
is inconsistent with Schwartzwald and, therefore, must be overruled.
       {¶ 16} Appellants contend that the word "jurisdiction" refers to either subject-
matter jurisdiction or personal jurisdiction. They suggest that the Supreme Court of Ohio
in Schwartzwald clearly was not referring to personal jurisdiction throughout its analysis
and that the court was, instead, necessarily referring to subject-matter jurisdiction. We
agree that it appears the Supreme Court was not referring to personal jurisdiction.
However, we disagree that the Supreme Court was referring to subject-matter jurisdiction.
       {¶ 17} In addition to personal jurisdiction and subject-matter jurisdiction, the
Supreme Court has also recognized what it characterized as a "third category of
jurisdiction":
                 The term "jurisdiction" is also used when referring to a court's
                 exercise of its jurisdiction over a particular case. See State v.
Nos. 13AP-198 and 13AP-373                                                                     6

               Parker, 95 Ohio St.3d 524, 2002–Ohio–2833, 769 N.E.2d
               846, ¶ 20 (Cook, J., dissenting); State v. Swiger (1998), 125
               Ohio App.3d 456, 462, 708 N.E.2d 1033. " 'The third category
               of jurisdiction [i.e., jurisdiction over the particular case]
               encompasses the trial court's authority to determine a
               specific case within that class of cases that is within its
               subject matter jurisdiction. It is only when the trial court
               lacks subject matter jurisdiction that its judgment is void; lack
               of jurisdiction over the particular case merely renders the
               judgment voidable.' "

(Emphasis added.) Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980,¶ 12.
       {¶ 18} Consistent with this third use of the word "jurisdiction," Deutsche Bank
argues that a court of common pleas has subject-matter jurisdiction when the matter
alleged is within the class of cases in which a particular court has been empowered to act.
State v. Filiaggi, 86 Ohio St.3d 230, 240 (1999). It cites Pratts for the proposition that,
once subject-matter jurisdiction exists, any trial court error thereafter is an error in the
court's exercise of jurisdiction, resulting in a judgment that is voidable on timely direct
appeal, but not void ab initio.
       {¶ 19} Deutsche Bank asserts that its foreclosure complaint alleged cognizable
cause of action within the subject-matter jurisdiction of the court of common pleas, i.e.,
foreclosure. It argues that Schwartzwald's references to "jurisdiction" contemplate a
question of a court's jurisdiction over a particular case—not the court's underlying
subject-matter jurisdiction—and that an error in exercising jurisdiction over a particular
case because the plaintiff lacked standing renders a court's judgment in the case voidable
on direct appeal but not void so as to be subject to collateral attack following the expiration
of time for appeal. It argues that, in Pratts, the Supreme Court observed that the term
"jurisdiction" " 'encompasses the trial court's authority to determine a specific case within
that class of cases that is within its subject matter jurisdiction. It is only when the trial
court lacks subject matter jurisdiction that its judgment is void; lack of jurisdiction over
the particular case merely renders the judgment voidable.' " * * * "Once a tribunal has
jurisdiction over both the subject matter of an action and the parties to it, '* * * the right to
hear and determine is perfect; and the decision of every question thereafter arising is but
the exercise of the jurisdiction thus conferred * * *.' " (Citations omitted.) Pratts at ¶ 10-
12. Deutsche Bank notes that, in Schwartzwald, "the term 'jurisdiction' appears twenty-
Nos. 13AP-198 and 13AP-373                                                                 7

two times, but only once does the term 'subject matter jurisdiction' appear, and only in a
quotation for a plurality decision from the Court from 1998[.]" (Appellee's Brief, 7.)
       {¶ 20} Accordingly, Deutsche Bank defends this court's decisions in Botts, as well
as a subsequent Tenth District decision in Deutsche Bank Natl. Trust Co. v. Whiteman,
10th Dist. No. 12AP-536, 2013-Ohio-1636.         Deutsche Bank contends that Botts and
Whiteman are consistent with the law established by the Supreme Court of Ohio in Pratts
and that the Supreme Court did not change that law in Schwartzwald. It further contends
that the default judgment is now res judicata and that appellants may not raise issues
concerning the bank's alleged lack of standing in a post-judgment motion.
       {¶ 21} In Botts at ¶ 22-23, we relied on Washington Mut. Bank v. Beatley, 10th
Dist. No. 06AP-1189, 2008-Ohio-1679, for the proposition that lack of standing does not
challenge the subject-matter jurisdiction of the court. In Whiteman, at ¶ 27-28, citing
Wells Fargo Bank, N.A., v. Brandle, 2d Dist. No. 2012CA0002, 2012-Ohio-3492, ¶ 20, we
followed Botts and held that "[a] lack of standing does not deprive a court of subject-
matter jurisdiction."
       {¶ 22} Appellants encourage us to overrule our holdings in Botts and Whiteman.
They further point to Ohio Constitution, Article IV, Section 4(B), which provides:
               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.

       {¶ 23} Appellants argue that: (1) this constitutional provision states that a court of
common pleas has original jurisdiction over all justiciable matters; (2) a legal action filed
by a party who lacks standing is not justiciable; and therefore (3) a court lacks subject-
matter jurisdiction over a legal action in which the plaintiff lacks standing. We reject this
syllogism which we deem to be misleading and, if accepted, makes the subject-matter
jurisdiction of a court dependent upon the existence of standing of a plaintiff.
Justiciability does not confer subject-matter jurisdiction.
       {¶ 24} Rather, we recognize that subject-matter jurisdiction is not dependent upon
the justiciability of any particular case.    The fact that a case is justiciable does not
necessarily mean that a particular court has subject-matter jurisdiction over it, e.g, a case
brought in a municipal court in Ohio that exceeds the monetary jurisdiction limits set by
Nos. 13AP-198 and 13AP-373                                                                        8

statute or a case brought in the Court of Claims that does not name the State of Ohio as a
defendant. Similarly, a court may have jurisdiction over the subject-matter of a case and
yet not be empowered to adjudicate it to final judgment for reasons particular to that case,
including the lack of standing of the plaintiff. Where an action is brought by a plaintiff
who lacks standing, the action is not justiciable because it fails to present a case or
controversy between the parties before it. See State ex rel. Keller v. Columbus, 164 Ohio
App.3d 648, 2005-Ohio-6500, ¶ 19 (10th Dist.) (" 'For a cause to be justiciable, there must
exist a real controversy presenting issues which are ripe for judicial resolution and which
will have a direct and immediate impact on the parties.' " (Citations omitted.)). But the
court's lack of "jurisdiction," i.e., its ability to properly resolve a particular action due to the
lack of a real case or controversy between the parties, does not mean that the court lacked
subject-matter jurisdiction over the case.
         {¶ 25} The Supreme Court of Ohio has found the decision of the Ninth District
Court of Appeals in Kuchta to be in conflict with our decision in Botts on the following
issue:
                 When a defendant fails to appeal from a trial court's
                judgment in a foreclosure action, can a lack of standing be
                raised as part of a motion for relief from judgment.

Bank of Am., N.A. v. Kuchta, Sup. Ct. of Ohio case No. 2013-0304.
         {¶ 26} In resolving that issue, the Supreme Court may provide additional guidance
as to the proper interpretation of Schwartzwald. In the interim, we follow the precedent
this court has established at ¶ 22 of Botts and ¶ 27 of Whiteman that "a lack of standing
does not deprive a court of subject matter jurisdiction." We conclude that a default
judgment issued in a case in which the plaintiff lacked standing is, at best, voidable and
not void. Accordingly, although possessing inherent authority to vacate a void judgment,
the trial court in the case before us correctly refused to exercise that inherent authority
because the default judgment was not void. The trial court did not err in overruling
appellant's common law motion to vacate the default judgment.
         {¶ 27} We therefore overrule appellants' first assignment of error.
         {¶ 28} In their second assignment of error, appellants argue that the trial court
erred in signing an entry confirming the sheriff's sale that was prepared by counsel for
Nos. 13AP-198 and 13AP-373                                                                  9

Deutsche Bank but was not first submitted to appellant's counsel, as prescribed by
Franklin County Court of Common Pleas Loc.R. 25.01.
       {¶ 29} This court has held that a trial court has discretion in enforcing Loc.R.
25.01, as it is the trial judge who ultimately determines, and is responsible for, the content
of the entry. Sain v. Roo, 10th Dist. No. 01AP-360 (Oct. 23, 2001), citing Whitehurst v.
Perry Twp., 114 Ohio App.3d 729, 736 (10th Dist.1996) and Jackson Twp. v. Stickles, 10th
Dist. No. 95APC09-1264 (Mar. 21, 1996). R.C. 2329.31 provides that the common pleas
court shall confirm a sheriff's sale if it finds that "the sale was made, in all respects, in
conformity with sections 2329.01 to 2329.61 of the Revised Code." Appellants do not
argue that the sale failed to comply with any of those statutory provisions. We, therefore,
find no abuse of trial court discretion in signing and entering the confirmation of sale
prepared by Deutsche Bank's counsel. Appellants have not demonstrated that they were
prejudiced thereby.
       {¶ 30} Accordingly, we overrule appellants' second assignment of error.
Conclusion
       {¶ 31} Having overruled both of appellants' assignments of error, we affirm the
judgment of the Franklin County Court of Common Pleas.
                                                                        Judgment affirmed.
                          O'GRADY and T. BRYANT, JJ., concur.

               T. BRYANT, J., retired, of the Third Appellate District,
               assigned to active duty under the authority of the Ohio
               Constitution, Article IV, Section 6(C).
                                   ________________