In the Supreme Court of Ohio

Transcription

1 No. In the Supreme Court of Ohio HSBC BANK USA, NATIONAL POOLING DAT'ED A^OFNOVEMBER 1, 2006RFR AND SERVICING AGRE EMONT HOME LOAN TRUST 2006-D V. Plaintiff-Appellee MICHELLE SCACCHI AND RICHARD SCACCI, et al. Defendants-Appellants. On Discretionary Appeal From the Court of Appeals, Eleventh Appellate District Geauga County, Ohio Case No G-3062 NOTICE OF APPEAL James R. Douglass ( ) 4600 Prospect Avenue Cleveland, Ohio Tel: Fax: Counselfor Defendant-Appellants Michelle and Richard Scacchi Dean Kanellis ( ) 75 Public Square, 4th Floor Cleveland, Ohio Tel: Fax: Counselfor Plaintiff-Appellees HSBC Bank USA, National Assn, et ale MAR :^^^0113 CLERK OF COURT SUPREME COURT OF OHIO

2 Notice of Appeal of Appellants Richard and Michelle Scacchi Appellants Richard Scacchi and Michelle Scacchi, hereby gives notice of their appeal to the Supreme Court of Ohio from the judgment and order of the Geauga County Court of Appeals, Eleventh Appellate District entered in Court of Appeals Case No G-3062 and filed for journalization on February 13, This case raises a question of public or great general interest. Respectfully submitted, J S R. DOU AS ( 22085) MES R. DO LAS O. LPA 4600 Prospect Avenue Cleveland, Ohio (216) Office (216) Facsimile firedcoachgaol. com Counsel for Defendant-Appellants Michelle and Richard Scacchi -i-

3 CERTIFICATE OF SERVICE A copy of the foregoing has been served by ordinary U. S. Mail on this^ day of March, 2013 upon the following: Dean Kanellis 75 Public Square 4th Floor Cleveland, Ohio Marlon Primes 400 US Courthouse 801 W. Superior Avenue Cleveland, Ohio Attorney for United States Bridey Matheney Assistant Prosecuting Atty. 231 Main Street, Suite 3A Chardon, Ohio AttoNney for Treasurer 4JS R. DOUG ASS

4 ^ F I L E D 44 COURT OF t-ppeals FEB 1120[3 STATE OF OHIO ae NjsE M ^^^;skf CLERK of^^'^elrts COUNTY OF GEAUGX-3EAUGAPoUNTY IN THE COURT OF APPEALS ELEVENTH DISTRICT HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF NOVEMBER 1, 2006, FREMONT HOME LOAN TRUST 2006-D, - vs - Plaintiff-Appellee, MICHELLE SCACCHI, et a1., Defendants-Appellants, THE UNITED STATES OF AMERICA, et al., Defendants-Appel lees. JUDGMENT ENTRY CASE NO G-3062 This cause comes before this court upon consideration of appellants' application for reconsideration and motion for en banc consideration; On December 4, 2012, appellants, Michelle and Richard Scacchi, filed a motion requesting this court reconsider our decision in HSBC Bank v. Scacchi, 11th Dist. No G-3062, 2012-Ohio-5441, pursuant to App.R 26(A). Appellee, HSBC Bank USA ("HSBC"), successfully sought leave to file a delayed response and filed its answer in opposition on December 21, As the basis for their application, appellants highlight the recent Ohio Supreme Court case Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, / //^ ^f 7 /

5 II ` App.R. 26 does not provide specific guidelines to be used by an appellate court when determining whether a prior decision should be reconsidered or modified. State v. Black, 78 Ohio App.3d 130, 132 (1991). However, the standard that has been generally accepted for addressing an App.R. 26(A) motion was stated in Matthews v. Matthews, 5 Ohio App.3d 140 (1981). In Matthews, the court observed: "The test generally applied *** is whether the motion calls to the attention of the court an obvious error in its decision or raises an issue for consideration that was either not considered at all or was not fully considered by the court when it should have been." Id. at paragraph two of the syllabus. An application for reconsideration is not designed to be used in situations wherein a party simply disagrees with the logic employed or the conclusions reached by an appellate court. State v. Owens, 112 Ohio App.3d 334, 336 (1997). App.R. 26(A) is meant to provide a mechanism by which a party may prevent a miscarriage of justice that could arise when an appellate court makes an obvious error or renders a decision that is not supported by the law. Id. The issue of standing in the context of.a mortgage foreclosure action has developed significantly since this appeal was heard. Previously, the Ohio 11 Supreme Court, in- State ex rel Jones v. Suster, 84 Ohio St.3d 70 (1998), indicated that standing is not jurisdictional, explaining that, pursuant to Civ.R. 17, "lack of standing may be cured by substituting the proper party so that a court otherwise having subject matter jurisdiction may proceed to adjudicate the matter." Id. at 77. Relying on this proposition, this court held standing to not be 2

6 jurisdictional. Aurora Loan Servs., LLC v. Cart, 11th Dist. No A-0026, 2010-Ohio-1157; Waten`all Victoria Master Fund Ltd. v. Yeager, 11th Dist. No L-025, 2012-Ohio-124; Everhome Mtge. Co. v. Behrens, 11th Dist. No L-128, 2012-Ohio-1454; Bank of New York Mellon Trust Co., N.A. v. Shaffer, 11th Dist. No G-3051, 2012-Ohio Recently, however, the Ohio Supreme Court released Fed. Home Loan Mtge. Corp. v. Schwartzwald, 2012-Ohio-5017, wherein it criticized Jones, supra, and held that standing is jurisdictional. Id. at 22 & 29. As it is a jurisdictional requirement, the Supreme Court concluded that standing must be determined as of the commencement of the suit. Id. at 24. It further emphasized that Civ.R. 17(A), requiring actions to be prosecuted in the name of the real party in interest, does not address standing but, instead, merely concerns proper party joinder. Id. at 33. Thus, "a lack of standing at the outset of litigation cannot [subsequently] be cured by receipt of an assignment of the claim or by substitution of the real party in interest."!d. at 41 (emphasis added). We recently had occasion to evaluate the import of Schwartzwald as applied to the prior holdings of this court. In Fed. Home Loan Mtge. Corp. v. Rufo,* 11th Dist. No A-0011, 2012-Ohio-5930, we expressly overruled the holdings in Cart, supra; Yeager, supra; Behrens, supra; and Shaffer, supra, to the extent they were inconsistent with Schwartzwald. Id. at 29. Appeilants highlight the decision in Schwartzwald for the basis of their application. 3 i^/akj 3

7 r s, Appellants' application is meritorious to the extent that our decision is inconsistent with Schwartzwald on the issue of standing. Upon review, however, Schwartzwald does not directly influence the holding in this case. In accord with our decision in Rufo, 30, HSBC was "required to have an interest in the note or mortgage when it filed this action in order to have standing to invoke the jurisdiction of the trial court." The record indicates the mortgage was assigned prior to the initiation of the action, a copy of which was attached to the complaint. The assignment of the mortgage, though not containing an express transfer of the note, was sufficient to transfer both the mortgage and the note. Rufo, 44. The notarized assignment instrument attached to the complaint states that Mortgage Electronic Registration Systems, Inc., as nominee for Fremont Investment and Loan, transferred the mortgage of the subject parcel to HSBC. The promissory note listing Fremont Investment and Loan as the lender was also attached to the complaint. Appellants' application for reconsideration must therefore be overruled. We now turn to appellants' request for en banc consideration, filed with this court on December 19, App.R. 26(A)(2)(b) provides, in part: "An application for en banc consideration must explain how the panel's decision conflicts with a prior panel's decision on a dispositive issue and why consideration by the court en banc is necessary to secure and maintain uniformity of the court's decisions." Appellants cite the conflicting decision requiring en banc consideration as Rufo, supra. This court's decision in Rufo was released after the present case 4 i//ot'g

8 and was our first decision to evaluate the import of Schwartzwald. Rufo overruled this court's prior decisions to the extent they previously held standing to be non-jurisdictional. In Rufo, the subject mortgage was assigned one month after the complaint was filed. Id. at %44. As Freddie Mac failed to establish it held the note before filing the complaint, it did not have standing to bring its foreclosure action. Id. at ^45. Accordingly,. we determined the trial court erred in granting summary judgment in favor of Freddie Mac. Id. Here, however, the mortgage. was assigned prior to the filing of the complaint and was, in fact, attached to the complaint. Given that Rufo addressed Schwartzwald, and given the distinguishable facts, a hearing en banc is not warranted. Accordingly, appellants' motion for en banc consideration is overruled. ^ PRE IDING U GE TIMOTHY P. CANNON CYNTHIA WESTCOTT RICE, J., concurs, DIANE V. GRENDELL, J., concurs in judgment only. 5._ ^

9 , 7 HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF NOVEMBER 1, 2006, FREMONT HOME LOAN TRUST 2006-D, -vs- Plaintiff-Appellee, MiCHELLE SCACCHI, et al., Defendants-Appellants, THE UNITED STATES OF AMERICA, et al., Defendants-Appellees. IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT GEAUGA COUNTY, OHIO OPINION L,e PI /wc0qrt OF,, b oe NQV?s zd12 NIS^ cf Q. COVRT GpU^S CASE NO G-3062 %_qc8 Civil Appeal from the Geauga County Court of Common Pleas, Case No. 10F Judgment: Affirmed. Dean Kanellis, Keith D. Weiner & Associates Co., L.P.A., 75 Public Square, 4th Floor, Cleveland, OH (For Plaintiff-Appellee). James R. Douglass, James R. Douglass Co., L.P.A., Chagrin Boulevard, Suite D, Shaker Heights, OH (For Defendants-Appellants). Marlon A. Primes, Office of the U.S. Attorney, 801 W. Superior Avenue, Suite 400, United States Courthouse, Cleveland, OH (For Defendants-Appellees, The United States of America and The United States of America U.S. Department of Justice). David P. Joyce, Geauga County Prosecutor, and Bridey Matheney, Assistant Prosecutor, Courthouse Annex, 231 Main Street, Chardon, OH (For Defendant- Appellee, Treasurer of Geauga County). ^

10 a ' 3 TIMOTHY P. CANNON, P.J. { 1} Appellants, Michelle and Richard F. Scacchi, appeal the judgment of the Geauga County Court of Common Pleas denying their Civ.R. 60(B) motion seeking relief from a default judgment, which resulted in foreclosure of their real property. For the reasons that follow, the judgment is affirmed. { 2} On August 6, 2010, appellee, HSBC Bank USA National Association ("HSBC"), filed a complaint for foreclosure, alleging appellants' default on a note in the sum of $235,045.35, plus interest. The record indicates appellants were successfully served, though they did not respond to the complaint. HSBC filed a motion for default judgment, and a hearing on the motion was ultimately set. On July 22, 2011, the court entered default judgment in the amount set forth in the complaint. No appeal was taken from this judgment. { 3} The real property, appraised at $145,000.00, was subsequently sold to HSBC at sheriffs sale for $96, After the sheriffs sale, appellants moved for relief from the default judgment, pursuant to Civ.R. 60(B). In their motion, appellants contended that HSBC lacked standing to file the complaint, and thus, the trial court lacked subject matter jurisdiction. On February 8, 2012, the court confirmed the sale. On the same day, the court denied appellants' Civ.R. 60(B) motion in a separate entry. From this denial, appellants now timely appeal and assert one assignment of error: {14} "The court erred when it denied defendant[']s motion for relief from default judgment as the plaintiff failed to state a claim based upon which relief could be granted [sic]." 2 ^

11 . ) a {15} In their sole assignment of error, appellants contend the trial court erred in denying their Civ.R. 60(B) motion, which sought relief from the default judgment on the grounds the trial court lacked subject matter jurisdiction. { 6} Civ.R. 60(B) provides, in pertinent part: {17} On motion and upon such terms as are just, the court may relieve a party * * * from a final judgment * * * for the following reasons: (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(B); (3) fraud * * *; (4) the judgment has been satisfied, released or discharged * * *; or (5) any other reason justifying relief from the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than one year after the judgment, order or proceeding was entered or taken. { 8} Thus, Civ.R. 60(B) provides parties with an equitable remedy requiring a court to revisit a final judgment and possibly afford relief from that judgment when in the interest of justice., In re Edge11, 11th Dist. No L-065, 2010-Ohio-6435, 152. It is a curative rule which is to be liberally construed with the focus of reaching a just result. Hiener v. Moretti, 11th Dist. No A-0001, 2009-Ohio-5060, 118. "Moreover, Civ.R. 60(B) has been viewed as a mechanism to create a balance between the need for finality and the need for 'fair and equitable decisions based upon full and accurate information. " Id., quoting In re Whitman, 81 Ohio St.3d 239, 242 (1998). Whether relief should be granted under a Civ.R. 60(B) motion is a determination entrusted to the 3 e

12 sound discretion of the trial court. In re Whitman, 81 Ohio St.3d 239, 242 (1998), citing Griffey v. Rajan, 33 Ohio St.3d 75, 77 (1987). As such, the standard of review is whether the t(al court abused its discretion. Id. {19} It is wll founded that Civ.R. 60(B) relief is not to be used as a substitute for a direct appeal. Doe v. Trumbull Cty. Children Services Bd., 28 Ohio St.3d 128, paragraph two of the syllabus (1986). See Am. Express Bank, FSB v. Waller, 11th Dist. No L-047, 2012-Ohio-3117, 14 ("[an appellant] cannot, however, after the opportunity for direct appellate review has passed, use Civ.R. 60(B) as a means of indirect entry into appellate review"). Thus, "a Civ.R. 60(B) motion may not be based on arguments that could have been raised on direct appeal." Wells Fargo Bank, N.A. v. Smith, 10th Dist. No. 09AP-559, 2009-Ohio-6576, 11 (citation omitted). { 14} In this case, the trial court's July 22, 2011 foreclosure decree was a final, appealable order, pursuant to R.C , as it affected a substantial right and determined the action concerning the parties' rights to the subject parcel. Further, it certified there to be "no just reason for delay" pursuant to Civ.R. 54(B). See Bank of New York Mellon Trust Co. v. Shaffer, 11th Dist. No G-3051, 2012-Ohio-3638, 41. Thus, appellant's alleged error concerning standing could have been raised in a direct appeal of the foreclosure decree. See Deutsche Bank NatL Trust Co. v. Richardson, 2d Dist. Nos CA-3 & 2010-CA-13, 2011-Ohio-1123, 32. ("Any error by the trial court in granting a judgment in foreclosure * * * could have been raised in a direct appeal of the court's judgment in foreclosure.") In short, appellants "cannot use a Civ.R. 60(B) motion to raise an issue that should have been raised in a direct appeal." Id.; see also UBS Real Estate Secs., Inc. v. Teague, 191 Ohio App.3d 189, 2010-Ohio- 4 9

13 y.')?} 5634 (2d Dist.), 16; GMAC Mtge. LLC v. Herring, 189 Ohio App.3d 200, 2010-Ohio (2d Dist.), 135. { 11} Assuming the merits of the Civ.R. 60(B) motion could be considered, appellants' arguments nonetheless fail. The Ohio Supreme Court has set forth a threeprong test which the movant must meet to prevail on a Civ.R. 60(B) motion. First, the motion must be timely, i.e., not more than one year after the judgment or order was entered where the grounds of relief are Civ.R. 60(B)(1)-(3); otherwise, the motion must be made within a reasonable time. Second, the party must be entitled to relief under one of the outlets in Civ.R. 60(B)(1)-(5). Third, the party must have a meritorious defense or claim to raise if relief is granted. GTE Automatic Elec. v. ARC /ndustries, 47 Ohio St.2d 146, paragraph two of the syllabus (1976). A party must satisfy each prong to be entitled to relief. KMV V Ltd. v. Debolt, 11th Dist. No P-0032, 2011-Ohio- 525, 24. If one prong is not satisfied, the entire motion must be overruled. Id., quoting Rose Chevrolet, Inc. v. Adams, 36 Ohio St.3d 17, 20 (1988). {1[12} In their Civ.R. 60(B) motion before the trial court, appellants did not specifically allege which prong of Civ.R. 60(B) should afford them relief. Also, at oral argument, counsel for appellants did not attempt to explain under which prong of Civ.R. 60(B) relief had been sought. In fact, counsel noted he had no explanation as to why appellants failed to defend at the trial court level prior to default judgment, essentially abandoning any contention that the failure constituted "excusable neglect." Instead, appellants argued the trial court did not have subject matter jurisdiction because HSBC was not the real party in interest (i.e., that it lacked standing), as it was not the original 5 /0

14 holder of the note and nothing indicated a proper transfer of the note. As such, they argued the default judgment was void. { 13} However, this court has previously held that lack of standing challenges the capacity of a party to bring an action-it does not challenge the subject matter jurisdiction of the trial court. Waterfall Victoria Master Fund Ltd. v. Yeager, 11th Dist. No L-025, 2012-Ohio-124, 13; EverHome Mtge. Co. v. Behrens, 11th Dist. No L-128, 2012-Ohio-1454, 12. See also Aurora Loan Servs., LLC v. Cart, 11th Dist. No A-0026, 2010-Ohio-1157, 18, citing Washington Mut. Bank v. Novak, 8th Dist. No , 2007-Ohio-996, 16 (noting Civ.R. 17 is not necessary to invoke thejurisdiction of a common pleas court). Here, as the matter fell squarely within the class of cases over which the Geauga County Court of Common Pleas has subject matter jurisdiction, it was properly before the trial court. Thus, the default judgment is not void. {1%4} Further, the failure to raise an objection as to standing at the trial court level constitutes waiver of the claim. See Yeager, supra, 13 (failure to raise a standing or "real party in interest" defense results in waiver of the claim); Behrens, supra, 15 ("we do not reach the merits of this issue because Mr. Behrens failed to challenge EverHome's standing prior to the entry of default judgment"). In this case, as the matter of standing was not timely raised before the trial court, it has been waived. {115} Finally, though not framed as an individual assignment of error, appellants additionally suggest they were entitled to a hearing on the Civ.R. 60(B) motion. As appellants correctly point out, "`[i]f the movant files a motion for relief from judgment and it contains allegations of operative facts which would warrant relief under Civ.R. 60(B), 6 ^^

15 the trial court should grant a hearing to take evidence and verify these facts before it rules on the motion."' Kay v. Marc Glassman, Inc., 76 Ohio St.3d 18, 19 (1996), quoting 5 Ohio St.3d 12, 16 (1983). As explained above, however, Coulson v. Coulson, appellants did not set forth specific allegations of operative facts that wouid warrant relief. Therefore, as a hearing is not automatically required, and as no allegations were set forth which warranted relief, the trial court did not abuse its discretion in failing to hold a hearing. }116} Appellants' assignment of error is without merit. The judgment of the Geauga County Court of Common Pleas is affirmed. DIANE V. GRENDELL, J., CYNTHIA WESTCOTT RICE, J., concur. 7 f Z-

16 F I L E D r N COURT of A, PEALS STATE OF OHIO NOV DSNf SE A) MItVSKI COUNTY OF GEAUGAPLERx ok courrs GF-AUGA GGUNTY HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF NOVEMBER 1, 2006, FREMONT HOME LOAN TRUST 2006-D, IN THE COURT OF APPEALS ELEVENTH DISTRICT JUDGMENT ENTRY CASE NO G-3062 Plaintiff-Appellee, -vs- MICHELLE SCACCHI, et al., Defendants-Appellants, THE UNITED STATES OF AMERICA, et al., Defendants-Appel lees. For the reasons stated in the opinion of this court, appellants' assignment of error is without merit. It is the judgment and order of this court that the judgment of the Geauga County Court of Common Pleas is affirmed. Costs to be taxed against appellants. PR I G JUD TIMOTHY P. CANNON FOR THE COURT,% '.3