Court Opinion

ID: 2700248
Source: CourtListenerOpinion
Date Created: 2014-08-04 18:16:09.413719+00
Date Added: 2024-06-11T11:18:53.679327
License: Public Domain

[Cite as U.S. Bank, N.A. v. Gullotta, 2011-Ohio-2235.]

                                        COURT OF APPEALS
                                       STARK COUNTY, OHIO
                                    FIFTH APPELLATE DISTRICT

U.S. BANK, N.A., AS TRUSTEE                                 JUDGES:
                                                            Hon. W. Scott Gwin, P.J.
        Plaintiff-Appellee                                  Hon. William B. Hoffman, J.
                                                            Hon. Patricia A. Delaney, J.
-vs-
                                                            Case No. 2010CA00181
GIUSEPPE GULLOTTA, ET AL.

        Defendant-Appellant                                 OPINION

CHARACTER OF PROCEEDING:                                 Appeal from the Stark County Court of
                                                         Common Pleas, Case No. 2009CV02397

JUDGMENT:                                                Reversed and Remanded

DATE OF JUDGMENT ENTRY:                                  May 9, 2011

APPEARANCES:

For Plaintiff-Appellee                                   For Defendant-Appellant

SCOTT A. KING                                            TIMOTHY D. MCKINZIE
TERRY W. POSEY, JR.                                      KERRY G. FULTON
Thompson Hine LLP                                        McKinzie and Associates
2000 Courthouse Plaza, N.E.                              529 White Pond Drive
P.O. Box 8801                                            Adron, Ohio 44320-1123
Dayton, Ohio 45404-8801
Stark County, Case No. 2010CA00181                                                       2

Hoffman, J.

       {¶1}   Defendant-appellant Giuseppe Gullotta appeals the June 11, 2011

Judgment Entry of the Stark County Court of Common Pleas entering summary

judgment in favor of Plaintiff-appellee U.S. Bank, N.A.

                           STATEMENT OF THE FACTS AND CASE

       {¶2}   On June 18, 2003, Appellant executed an adjustable rate note (“Note”) in

the amount of $164,900.00 payable to MILA, Inc. The same day, to secure payment of

the Note, Appellant executed a mortgage (“Mortgage”) granting MILA a security interest

in the property located at 218 Bonnett Street, S.W., North Canton, Ohio 44720. MILA

subsequently assigned the Note and Mortgage to U.S. Bank.

       {¶3}   Appellant failed to make payments when due, and defaulted under the

terms of the Note and Mortgage.         On November 1, 2003, U.S. Bank declared the

promissory note in default, accelerating payment due. On April 9, 2004, U.S. Bank filed

a complaint against Appellant seeking judgment for the full balance of $164,390.91 due

on the Note, plus interest at the rate of 7.35 percent per annum from and after

November 1, 2003, and foreclosure of the Mortgage and a sheriff’s sale of the property

(“First Lawsuit”). On June 8, 2004, U.S. Bank voluntarily dismissed the First Lawsuit in

its entirety pursuant to Civil Rule 41(A).

       {¶4}   Appellant did not make any payments after June 8, 2004. Accordingly,

U.S. Bank filed a second complaint against Appellant on September 9, 2004, seeking

judgment for the full balance of $164,390.91, plus interest at the rate of 7.35 percent per

annum from and after December 1, 2003, and foreclosure of the Mortgage and a
Stark County, Case No. 2010CA00181                                                       3

sheriff’s sale of the property (“Second Lawsuit”).      On March 15, 2005, U.S. Bank

dismissed the Second Lawsuit in its entirety pursuant to Civil Rule 41(A).

       {¶5}   Appellant again did not make payments after March 15, 2005, or

otherwise cure the default. On October 26, 2005, U.S. Bank filed a third complaint

against Appellant seeking judgment for the full balance of $164,390.91, plus interest at

the rate of 7.35 percent per annum from and after November 1, 2003, and foreclosure of

the Mortgage and a sheriff’s sale of the property (“Third Lawsuit”).

       {¶6}   Appellant moved for summary judgment arguing the third foreclosure

action was barred by the doctrine of res judicata pursuant to Civil Rule 41(A), as the

second dismissal constituted an adjudication on the merits.        The trial court denied

Appellant’s motion for summary judgment, and entered summary judgment in favor of

U.S. Bank.

       {¶7}   On appeal, this Court affirmed the trial court’s holding finding res judicata

did not bar U.S. Bank’s third foreclosure action as the complaint in the third foreclosure

action complaint covered different dates of default and months not litigated in the first

two complaints. U.S. National Bank Assn. v. Gullotta (April 30, 2007) Stark App. No.

2006CA00145.

       {¶8}   The Ohio Supreme Court later reversed the judgment of this Court,

holding res judicata barred U.S. Bank’s third foreclosure complaint. U.S. National Bank

Assn. v. Gullotta, 120 Ohio St. 3d 399, 2008-Ohio-6268. The Court held each missed

payment under the Note and Mortgage did not give rise to a new claim, and the Civil

Rule 41(A) two dismissal rule applied. Id.
Stark County, Case No. 2010CA00181                                                         4

         {¶9}   U.S. Bank then filed the instant fourth cause of action against Appellant for

damages in the amount of $164,390.91 plus interest from November 1, 2003, and

foreclosure of the mortgage. Appellant filed a counterclaim to quiet title and for attorney

fees pursuant to the frivolous filing statute. On October 16, 2009, U.S. Bank dismissed

its claims for payment on the note and for foreclosure on the mortgage. Accordingly,

the case proceeded only as to Appellant’s claims for quiet title and for attorney fees.

Appellant claimed all of U.S. Bank’s interest in the premises was barred by the doctrine

of res judicata as decided by other court opinions. Appellant maintains U.S. Bank has

no remaining interest in the premises at issue; therefore, Appellant is entitled to quiet

title in the premises.

         {¶10} The matter proceeded upon motions for summary judgment filed by each

party.

         {¶11} The trial court granted summary judgment in favor of U.S. Bank and

denied Appellant’s motion for summary judgment.

         {¶12} On appeal, Appellant assigns as error:

         {¶13} “I. THE TRIAL COURT ERRED, AS A MATTER OF LAW, BY GRANTING

SUMMARY JUDGMENT TO PLAINTIFF-APPELLEE U.S. BANK ON DEFENDANT-

APPELLANT        GULLOTTA’S       CLAIM     FOR    QUIET     TITLE    WHERE      A   PRIOR

ADJUDICATION EXTINGUISHED ALL RIGHTS OF PLAINTIFF-APPELLEE U.S. BANK

TO MAKE ANY CLAIM AGAINST DEFENDANT-APPELLANT GULLOTTA FOR

PAYMENT UNDER A NOTE AND MORTGAGE AND EXTINGUISHED ALL INTEREST

OF PLAINTIFF-APPELLEE U.S. BANK IN DEFENDANT-APPELLANT GULLOTTA’S

PREMISES.
Stark County, Case No. 2010CA00181                                                          5

       {¶14} “II. THE TRIAL COURT ERRED, AS A MATTER OF LAW, BY DENYING

SUMMARY JUDGMENT TO DEFENDANT-APPELLANT GULLOTTA ON HIS CLAIM

FOR QUIET TITLE WHERE A PRIOR ADJUDICATION EXTINGUISHED ALL RIGHTS

OF    PLAINTIFF-APPELLEE         U.S.    BANK     TO     MAKE    ANY     CLAIM     AGAINST

DEFENDANT-APPELLANT GULLOTTA FOR PAYMENT UNDER A NOTE AND

MORTGAGE AND EXTINGUISHED ALL INTEREST OF PLAINTIFF-APPELLEE U.S.

BANK IN DEFENDANT-APPELLANT GULLOTTA’S PREMISES.”

                                                I, II.

       {¶15} Both assigned errors raise common and interrelated issues; therefore, we

will address the arguments together.

       {¶16} Summary judgment proceedings present the appellate court with the

unique opportunity of reviewing the evidence in the same manner as the trial court.

Smiddy v. The Wedding Party, Inc. (1987), 30 Ohio St.3d 35, 36, 506 N.E.2d 212.

Therefore, we must refer to Civ.R. 56(C), which provides, in pertinent part: “Summary

judgment shall be rendered forthwith if the pleadings, depositions, answers to

interrogatories, written admissions, affidavits, transcripts of evidence in the pending

case, 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. * * * A summary judgment shall not be rendered unless it

appears from the evidence or stipulation, and only from the evidence or stipulation, 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, that party being entitled

to have the evidence or stipulation construed most strongly in the party's favor .”
Stark County, Case No. 2010CA00181                                                         6

        {¶17} Pursuant to the above rule, a trial court may not enter summary judgment

if it appears that a material fact is genuinely disputed. The party moving for summary

judgment bears the initial burden of informing the trial court of the basis for its motion

and identifying those portions of the record that demonstrate the absence of a genuine

issue of material fact. The moving party may not make a conclusory assertion that the

nonmoving party has no evidence to prove its case. The moving party must specifically

point to some evidence which demonstrates that the nonmoving party cannot support its

claim. If the moving party satisfies this requirement, the burden shifts to the nonmoving

party to set forth specific facts demonstrating there is a genuine issue of material fact for

trial. Vahila v. Hall, 77 Ohio St.3d 421, 429, 1997-Ohio-259, 674 N.E.2d 1164, citing

Dresher v. Burt (1996), 75 Ohio St.3d 280, 293, 662 N.E.2d 264.

        {¶18} In reversing this Court’s prior opinion, the Ohio Supreme Court held in

U.S. National Bank Assn. v. Gullotta, 120 Ohio St.3d 399 2008-Ohio-6268, in relevant

part:

        {¶19} “Do the claims here arise from a common nucleus of operative facts? U.S.

Bank argues that its third bite at the apple is different from its first two because in its

amended complaint, it sought interest only from April 1, 2005. However, all of the claims

in all of the complaints filed by U.S. Bank against Gullotta arise from the same note, the

same mortgage, and the same default. The note and mortgage have not been amended

in any way. From the time of Gullotta's original breach, he has owed the entire amount

of the principal. The amended third complaint alleged the same amount of principal due

as the other two complaints.
Stark County, Case No. 2010CA00181                                                        7

         {¶20} “The key here is that the whole note became due upon Gullotta's breach,

not just the installment he missed. There is a distinction between an action for recovery

of installment payments under an installment note where the entire principal is

accelerated, and an action to recover for nonpayment under an installment note where

only the amount of the principal to date, and no future amount, is sought. The general

rule that each missed payment in an installment loan gives rise to a separate cause of

action does not hold true when there is an acceleration clause in the loan agreement:***

         {¶21} “By agreeing to an acceleration clause, the parties in this case have

avoided the operation of the general rule that nonpayment on an installment loan does

not constitute a breach of the entire contract. In a contract with an acceleration clause, a

breach constitutes a breach of the entire contract. Once Gullotta defaulted and U.S.

Bank invoked the acceleration clause of the note, the contract became indivisible. The

obligations to pay each installment merged into one obligation to pay the entire balance

on the note.” Id at paragraphs 28-29, 31.

         {¶22} The Ohio Supreme Court, in Gullotta, further noted that although U.S.

Bank's complaint had changed, the operative fact remained the same and U.S. Bank

could not save its claims from the two-dismissal rule simply by changing the relief

sought in its complaint. Id.1

         {¶23} In the case sub judice, U.S. Bank’s fourth cause of action arose from the

same note, the same mortgage and the same default. From the time of Appellant’s

original default, the entire principal became due as a result of the acceleration clause in

the note. The terms of the note and/or mortgage were never changed. As the Supreme

1
    The Two Dismissal Rule is found at Ohio Civil Rule 41(A).
Stark County, Case No. 2010CA00181                                                       8

Court’s held in Gullotta, from the time of Appellant’s original breach, Appellant owed the

entire amount of the principal because of the acceleration clause.

        {¶24} Based on the foregoing, we find the two-dismissal rule of Civ.R. 41(A)

applies and res judicata barred U.S. Bank’s complaint in this case. We find the practical

effect of the same precludes U.S. Bank from pursuing any further action on the note.

Because the mortgage draws its essence from the note, we find it unenforceable. We

find the trial court erred in not granting Appellant’s motion for summary judgment to

quiet title.2

        {¶25} Appellant’s two assignments of error are sustained.

        {¶26} The judgment of the Stark County Court of Common Pleas is reversed.

By: Hoffman, J.

Gwin, P.J. and

Delaney, J. concur
                                             s/ William B. Hoffman _________________
                                             HON. WILLIAM B. HOFFMAN

                                             s/ W. Scott Gwin _____________________
                                             HON. W. SCOTT GWIN

                                             s/ Patricia A. Delaney _________________
                                             HON. PATRICIA A. DELANEY

2
 Appellant has not appealed the trial court’s denial of attorney fees for alleged frivolous
conduct.
Stark County, Case No. 2010CA00181                                                9

             IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO
                        FIFTH APPELLATE DISTRICT

U.S. BANK, N.A., AS TRUSTEE               :
                                          :
       Plaintiff-Appellee                 :
                                          :
-vs-                                      :         JUDGMENT ENTRY
                                          :
GIUSEPPE GULLOTTA, ET AL.                 :
                                          :
       Defendant-Appellant                :         Case No. 2010CA00181

       For the reasons stated in our accompanying Opinion, the judgment of the Stark

County Court of Common Pleas is reversed and the matter remanded to that court to

enter judgment in accordance with our Opinion and the law. Costs to Appellee.

                                          s/ William B. Hoffman _________________
                                          HON. WILLIAM B. HOFFMAN

                                          s/ W. Scott Gwin _____________________
                                          HON. W. SCOTT GWIN

                                          s/ Patricia A. Delaney _________________
                                          HON. PATRICIA A. DELANEY