IN THE SUPREME COURT OF OHIO

IN THE SUPREME COURT OF OHIO PNC Bank, National Association successor Case No. 12-1182 in interest to National City Real Estate Services LLC successor by merger to National City Mortgage, Inc., fka National City Mortgage Co. dba Commonwealth United Mortgage Company, APPEAL FROM THE FRANKLIN COUNTY COURT OF APPEALS, TENTH APPELLATE Plaintiff-Appellee, DISTRICT -vs- Jennie B. Richards Jennie Price, et al., Court of Appeals Case No. I 1-AP-275 Defendant-Appellant. PLAINTIFF-APPELLEE PNC BANK, NATIONAL ASSOCIATION SUCCESSOR IN INTEREST TO NATIONAL CITY REAL ESTATE SERVICES LLC SUCCESSOR BY MERGER TO NATIONAL CITY MORTGAGE, INC., FKA NATIONAL CITY MORTGAGE CO. DBA COMMONWEALTH UNITED MORTGAGE COMPANY'S MEMORANDUM OPPOSING JURISDICTION ATTORNEY FOR APPELLEE Patricia K. Block Ohio Supreme Court Reg. #0069539 LERNER, SAMPSON & ROTHFUSS 120 East Fourth Street, Suite 800 Cincinnati, OH 45202 Phone: 513-241-3100 Email: pkbglsrlaw.com Counsel for Plaintiff-Appellee PNC Bank, National Association successor in interest to National City Real Estate Services LLC successor by merger to National City Mortgage, Inc., fka National City Mortgage Co. dba Commonwealth United Mortgage Company 1 ATTORNEY FOR APPELLANT Rachel K. Robinson Ohio Supreme Court Reg. #0067518 Equal Justice Foundation 97 Jefferson Avenue Columbus, OH 43215 Phone: 614-221-9800 Email: rkr@equaljusticefoundation.com Counsel for Defendant-Appellant Richards FLF AUG 1 5 co1z ;.AceiK rjf roufi't SUPREM[ CUUR7 OF OHIO

TABLE OF CONTENTS EXPLANATION AS TO WHY THIS IS NOT A CASE OF PUBLIC OR GREAT GENERAL INTEREST OR ONE WHICH INVOLVES A SUBSTANTIAL CONSTITUTIONAL ISSUE...1 RESPONSE TO DEFENDANT-APPELLANT'S PROPOSITIONS OF LAW...3 Response to Proposition of Law No. I: Where a holder of a note and a mortgage fails to prove its case on one occasion, by operation of Civ.R. 41(B)(3) the lender is forever barred from seeking judgment on the note and foreclosure of the mortgage....3 Response to Proposition of Law No. II: Where an appellate court determines that as a matter of law an appellant is entitled to have judgment or final order as a matter of law and renders judgment or final order involuntarily dismissing the appellee's complaint pursuant to App. R. 12(B), by operation of Civ.R. 41 (B)(3) the involuntary dismissal is a final adjudication on the merits on appellee's claim....:...4 Response to Proposition of Law No. III: Where an action is involuntarily dismissed the defendant proved an affirmative defense barring recovery or because plaintiff failed to prove the prima facie element of its claim, subject to limited exceptions and unless otherwise specified, that dismissal is a final adjudication on the merits....6 A. Response to Subheading: Subject to limited exceptions, under Civ.R. 41(B)(3), an unqualified involuntary dismissal is an adjudication on the merits even if the merits of the underlying substantive claim have not been adjudicated.......6 B. Response to Subheading: Exceptions to the operation of Civ.R. 41(B) and the doctrine of res judicata are limited and are to be narrowly construed....7 C. Response to Subheading: Dismissal based upon the failure to satisfy a condition precedent does not fall within the dismissal for lack ofjurisdiction under Civ.R. 41(B)(4)...8 CONCLUSION......:...:...9 ii

EXPLANATION AS TO WHY THIS IS NOT A CASE OF PUBLIC OR GREAT GENERAL INTEREST OR ONE WHICH INVOLVES A SUBSTANTIAL CONSTITUTIONAL ISSUE It is within the discretion of this Court to determine whether a case presents a question or questions of public or great general interest. Williamson v. Rubich, 171 Ohio St. 253, 254, 168 N.E.2d 876 (1960). The Propositions of Law upon which Defendant-Appellant Jennie B. Richards ("Ms. Richards") relies upon are well-settled and this case is not one of public or great general interest that this Honorable Court should accept for review. The crux of Ms. Richards' contention centers on the principles of former adjudication and the effect of an involuntary dismissal under Civ.R. 41(B). The operation of the doctrine of res judicata is not a novel concept, nor is it subject to a multitude of interpretations. The original foreclosure action, initiated in 2005 by National City Mortgage Company ("National City"), styled as National City Mortgage Co. v. Jennie B. Richards, Franklin County Common Pleas, Case No 05CVE12-14480, initially resulted in the trial court granting Summary Judgment and Decree in Foreclosure with Reformation of Mortgage. On appeal, the Tenth District Court of Appeals overruled the trial court's decision holding that National City failed to give Ms. Richards "the contractually required notice of default and an opportunity to cure her default before accelerating the balance due on the note and initiating proceedings to foreclose on the mortgage." National City Mortgage Co. v. Jennie B. Richards, loth Dist. No. 08AP-630. For this reason, the appellate court reversed the judgment of the trial court and ordered that the 2005 action be dismissed. Following the appeal, by Order dated October 16, 2009, the trial court dismissed the case without prejudice finding that "the Appellate decision only reversed and dismissed Plaintiff's Complaint based upon the finding that Plaintiff failed to give Defendant the proper notice of 1

default and an opportunity to cure her default before accelerating the balance due in accordance with the terms of the note." Accordingly, the 2005 foreclosure case was dismissed without prejudice in order for National City to give Ms. Richards proper notice of its intent to accelerate. Thereafter, PNC Bank, National Association successor in interest to National City Real Estate Services LLC successor by merger to National City Mortgage, Inc., flca National City Mortgage Co. dba Commonwealth United Mortgage Company ("PNC Bank"), complied with the notice tequirements, thereby finally developing its claim through the completion of the condition precedent, and filed a Complaint on April 16, 2010, styled as PNC Bank National Association v. Jennie B. Richards, Franklin County Common Pleas, Case No 10CVE04-05841. In response to the 2010 Complaint filing, Ms. Richards moved for Summary Judgment on grounds that PNC Bank's action was barred by res judicata. The trial court agreed and granted Ms. Richards' judgment. PNC Bank appealed the trial court's decision on grounds that the 2005 action was not adjudicated on the merits and that its 2010 claims could not have been brought in the 2005 action since the mortgage loan account was not properly accelerated. PNC Bank National Association v. Jennie B. Richards, 10th Dist. No. 11AP-275. In an extensive and wellreasoned Opinion, the appellate court found that the dismissal of the 2005 action did not result in a valid final judgment on the merits. This case presents no public or great general interest as it is clear that the 2005 foreclosure action dismissal was based upon a determination that National City failed to satisfy a condition precedent to accelerate and not on the merits of the action (whether Ms. Richards was in default on her loan obligation). As the previous dismissal was not rendered on grounds involving the merits of the case, Ms. Richards' arguments that Civ.R. 41(B)(3) and (4) provide a 2

basis for preclusion under res judicata are unfounded. Respectfully, there is no reason for this Court to accept jurisdiction in this case. RESPONSE TO DEFENDANT-APPELLANT'S PROPOSITIONS OF LAW Each of Ms. Richards Propositions of Law is premised on the argument that PNC Bank is barred under the doctrine of res judicata from bringing the underlying foreclosure action. Res judicata is defined as a "valid, final judgment rendered upon the merits [which] bars all subsequent actions based upon any claim arising out of the transaction or occurrence that was the subject matter of the previous action." Grava v. Parkman Twp., 73 Ohio St. 3d 379, 653 N.E.2d 226, ( 1995). "The party asserting res judicata must show the following four elements: (1) there was a prior valid judgment on the merits; (2) the second action involved the same parties as the first action; (3) the present action raises claims that were or could have been litigated in the prior action; and (4) both actions arise out of the same transaction or occurrence." Reasoner v. City of Columbus, 10'' Dist. No. 04AP-800, 2005-Ohio-468, 2005 Ohio App. LEXIS 493, 5. PNC Bank is not barred by res judicata, as the 2005 foreclosure was dismissed for a failed condition precedent and not on the merits. Additionally, elements three and four have also not been met, as PNC Bank's claims could not have been brought in the 2005 action because the mortgage loan account was not properly accelerated and the 2005 and 2010 foreclosures were not based on the same transaction or occurrence as no proper acceleration of the debt occurred prior to the 2005 foreclosure, but did occur prior to the 2010 foreclosure. Response to Proposition of Law No. I: Where a holder of a note and a mortgage fails to prove its case on one occasion, by operation of Civ.R. 41(B)(3) the lender is forever barred from seeking judgment on the note and foreclosure of the mortgage. Ms. Richards' attempt to extend this Court's decision in U.S. Bank Nat'l Assn. v. Gullotta, 120 Ohio St. 3d 399, 2008-Ohio-6268, 899 N.E.2d 987 (2008), to support her argument 3

that Civ.R. 41(B)(3) forever bars PNC Bank from ever seeking judgment on the note and foreclosure on the mortgage is completely baseless. The Gullotta decision centers on the doubledismissal rule of Civ.R. 41(A) and serves no basis to support an argument that a dismissal under Civ.R. 41(B) for a failed condition precedent forever bars a lender from seeking judgment in a subsequent action. Similarly, Pheils v. Garber-Lawrence Publishing Group, 6th Dist. No. L-92-418, 1993 Ohio App. LEXIS 5914 (Dec. 10, 1993), lends little, if any, support to Ms. Richards' First Proposition of Law. The Pheils case involves the initiation of four prior lawsuits, one related foreclosure action, stemming from the default of a promissory note. The court in this case determined that the fourth action reached the merits of the case and thus any subsequent suits were barred by res judicata. Id. at 26-27. The details of the Pheils case are very cumbersome, highly circumstantial, and cannot logically be extended to the facts of the instant case. In fact, the court in Pheils acknowledges that the "case produces a truly rare result; a promissory note exists which cannot be legally enforced by anyone." Pheils v. Garber-Lawrence Publishing Group, 1993 Ohio App. LEXIS at 26. Nevertheless, the Pheils court only reached its decision after determining that fourth prior action had reached the merits of the case.. The unique set of facts upon which Pheils was decided offers no route to avoid the fact that 2005 foreclosure dismissal was founded on a failed condition precedent and not on the merits of the case. Response to Proposition of Law No. II: Where an appellate court determines that as a matter of law an appellant is entitled to have iudement or final order as a matter of law and renders judgment or final order involuntarily dismissine the appellee's complaint pursuant to App. R. 12(B), by operation of Civ.R. 41(B)(3) the involuntary dismissal is a final adiudication on the merits on. appellee's claim. The premise of Ms. Richards' entire Civ.R. 41(B) argument is faulty because the 2005 foreclosure action was not adjudicated on the merits. "Where a judgment is rendered on grounds 4

not involving the merits of the case, that judgment cannot be used as a basis for the defense of res judicata." Crestmont Cleveland Pshp. v. Ohio Dep't of Health, 139 Ohio App. 3d 928, 933, 746 N.E.2d 222 (10th Dist. 2000). An adjudication made on purely technical grounds, and where the merits could not come into question, is limited to the point actually decided. Rogers v. Whitehall, 25 Ohio St. 3d 67, 69, 292 N.E.2d 1387 ( 1986). Further, "[w]here the word, `merits,' is used in speaking of the determination of an action upon the merits, it embraces the consideration of substance, not of form; of legal rights, not of mere defects of procedure or practice or the technicalities thereof." Cero Realty Corp. v. American Mfrs. Mut. Ins. Co., 171 Ohio St. 82 (Ohio 1960), syllabus (overruted in part on other grounds). National City failed to meet a condition precedent (sending the notice of default by ordinary mail to Ms. Richards) prior to filing that 2005 foreclosure. The earlier case did not result in adjudication on the underlying merits of the foreclosure. Instead, this purely technical defect barred National City's 2005 attempted claim well before the merits could be adjudicated. In short, because there was no acceleration in 2005 prior to the filing of the Complaint, there was no valid foreclosure that could be filed at that time that could be decided on the merits. There was no finding as to the merits of whether or not Ms. Richards was in default, and similarly there was no finding as to the merits of whether or not the Note and Mortgage could be enforced in light of a default. Instead, this appellate court simply held that National City did not have a claim because they had not yet properly notified Ms. Richards of the default as required under the terms of the mortgage. Accordingly, PNC Bank's claim is not barred by res judicata as the first element of Reasoner is not met. 5

Response to Proposition of Law No. III: Where an action is involuntarily dismissed the defendant proved an affirmative defense barring recovery or because plaintiff failed to prove the prima facie element of its claim, subiect to limited exceptions and unless otherwise specified, that dismissal is a final adjudication on the merits. A. Response to Subheading: Subject to limited exceptions, under Civ.R. 41(B)(3), an unqualified involuntary dismissal is an adjudication on the merits even if the merits of the underlying substantive claim have not been adjudicated. The appellate court's opinion properly recognized that the dismissal resulting from National City's failure to meet a condifionprecedent (sending the notice of default prior to filing its 2005 complaint) did not result in a valid final judgment on the merits, reasoning that: "[u]nder Ohio law, `res judicata bars a subsequent action based on any claim arising out of the transaction or occurrence that was the subject matter of the previous action, whether or not that particular claim was litigated, so long as there has been a valid, final judgment rendered upon the merits.' State v. Banks, 3rd Dist. No. 13-99-60, 2000 Ohio App. LEXIS 1682 (April 19, 2000), (citing Grava v. Parkman Twp., 73 Ohio St. 3d 379, 653 N.E.2d 226 (1995), syllabus. With respect to the word `merits' in the context of the phrase `upon the merits,' the word `implies a consideration of substance, not of form; of legal rights, not of mere defects of procedure, or the technicalities thereof.' Kimberlin v. Stoley, 49 Ohio App. 1, 3, 194 N.E. 885 (9`h Dist. 1934), (quoting People ex rel. Joseph Fallert Brewing Co. v. Lyman, 53 A.D. 470, 473, 65 N. Y. S. 1062 (1900)." PNC Bank v. Richards, 10`h Dist. No. 11AP-275, 2012 Ohio App. LEXIS 1411, 14. Ms. Richards attempts to disavow the holding in Kimberlin by claiming that Civ. R. 41(B)(3), in essence, overruled this decision. In support of her claim, Ms. Richards again relies on Pheils for the proposition that "Civ. R. 41(B)(3) and res judicata specifically bars a plaintiff that failed to prove that it was the real party in interest in a first action from bringing a second action." Memo in Support of Jurisdiction, p. 7. However, more recent case law expressly provides that a "dismissal of an action because one of the parties is not the real party in interest or does not have standing is not a dismissal on the merits." Freedom Mortg. Corp. v. Petty, 8th Dist. No. 95834, 2011-Ohio-3067, 2011 Ohio App. LEXIS 2608, 71 (citing Wells Fargo Bank 6

N.A. v. Byrd, 178 Ohio App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722, 18; see also State ex rel. Coles v. Granville, 116 Ohio St. 3d 231, 2007-Ohio-6057, 877 N.E.2d 968, 51). Ms. Richards' reliance on Troyer v. Janis, 10t" Dist. No. 10AP-434, 2011-Ohio-2538, is also misplaced and in no way negates the paramount principal of res judicata that the final judgment must be rendered upon the merits. The appellate court decision in Troyer was recently reversed and remanded by this Court. As will be more fully addressed in the next section, the rationale for why the Troyer appellate decision was reversed illustrates that the exceptions enumerated in Civ. R. 41(B)(4) are not exhaustive and that other circumstances will afford a dismissal to be without prejudice when the dismissal was not rendered upon the merits. B. Response to Subheading: Exceptions to the operation of Civ.R. 41(B) and the doctrine of res judicata are limited and are to be narrowly construed. The narrowly construed exception presented in Troyer is wholly consistent with the instant case in that both dismissals relate to failed conditions and not the merits of the case. The Troyer case involved a dismissal with prejudice for failure to attach an affidavit of merit to a complaint containing a medical claim as required by Civ. R. 10(D)(2). Troyer v. Janis, Slip Opinion No. 2011-1162, 2012-Ohio-2406, 2012 Ohio LEXIS 1401. In Troyer, this Court stated that it was not necessary to reach the issue of res judicata because it concluded that the previous dismissal was an adjudication otherwise than on the merits. Id. at 14. In reaching this conclusion, this Court determined that Civ. R. 10(D)(2) mandates that an affidavit of merit must be attached to the complaint and that when one is not attached, the proper remedy is to dismiss the complaint for failure to state a claim. Id. at 10. Such a dismissal is not based on the merits of the case, but on the insufficiency of the complaint. Id. (citing Fletcher v. Univ. Hosps. of Cleveland, 120 Ohio St. 3d 167, 2008-Ohio-5379, 897 N.E.2d 147, 18). 7

The logic of Troyer is applicable to the instant case. In Troyer, the original action was dismissed because the appellants failed to satisfy the necessary condition of filing an affidavit of merit along with their complaint containing a medical claim. In the case at bar, National City's 2005 complaint failed to satisfy the necessary condition precedent of not sending a notice of default letter prior to filing its foreclosure action. In both Troyer and this case the original dismissal was based on a failed condition and not upon the merits of the case. C. Response to Subheading: Dismissal based upon the failure to satisfy a condition precedent does not fall within the dismissal for lack of jurisdiction under Civ.R. 41(B)(4). A determination by the court that the plaintiff has no enforceable claim because he has failed to satisfy a precondition to filing suit, is not a determination that he may not have an enforceable claim thereafter and does not normally preclude him from maintaining an action when the claim has become enforceable. Restatement (Second) of Judgments 20(2), Comment k(1982). A dismissal will be characterized as "jurisdictional" based upon a plaintiff's failure to comply with a precondition requisite to a court going forward to determine the merits of the substantive claim. Costello v. United States, 365 U.S. 265, 81 S.Ct. 534, 5 L. Ed. 2d 551 (1961). A dismissal for failure to meet a condition for filing suit is not to be construed as an adjudication upon the merits and cannot bar a subsequent action between the parties. Truvillion v. King's Daughters Hosp., 614 F.2d 520, 524 (5' Cir. 1980). Furthennore, the case of Mitchell v. Chapman, 343 F.3d 811 (6' Cir. 2003), upon which Ms. Richards relies, is fundamentally distinguishable. The condition precedent at issue in Mitchell involved a party's failure to meet with an Equal Employment Opportunity counselor within the 45 day window as provided in the Rehabilitation Act of 1973. Id. In essence, the failed 8

condition precedent in Mitchell was analogous to statute of limitations violation and thus the dismissal served as a decision on the merits for claim preclusion purposes. Id. at 820. However, the basis for the dismissal on the merits in Mitchell does not stand for the blanket proposition that all dismissals for failing to meet a condition precedent will have this permanently barring effect. Id. at 821. According to the Mitchell court, a dismissal for failing to file a condition precedent is only a decision on the merits in cases where the aggrieved party is permanently foreclosed from fulfilling the condition. Id. The aggrieved party in Mitchell, "could not, and will forever remain unable, to meet with an EEO counselor within forty-five days of the discriminatory act..." and for that reason alone his failed condition precedent acted as a statute of limitations violation, barring him from refilling his action. Unlike the circumstances in Mitchell, the failed condition precedent of National City's not notifying Ms. Richards of its intent to accelerate cannot be assimilated to a violation of the statute of limitations. The condition in Mitchell was tied to a specific time frame and when that period passed the condition precedent could never be cured. In the present case, there exists no reason why the failed condition precedent could not be cured after the action was originally dismissed. The purpose for which Ms. Richards relies upon Mitchell is inapplicable to the case at bar. CONCLUSION This action does not present any issues of public or great general interest. The appellate court properly determined that the dismissal of the 2005 action was not decided upon the merits and the subsequent refilling of the foreclosure action after correcting the failed condition precedent should not invoke the doctrine of res judicata. Accordingly, there are no reasons for this Court to 9

address Ms. Richards' contentions farther; and, respectfully, this Court should decline jurisdiction of Ms. Richards' appeal. Respectfully Submitted, K Patricia K. Block Ohio Supreme Court Reg. #0069539 LERNER, SAMPSON & ROTHFUSS 120 East Fourth Street, Suite 800 Cincinnati, OH 45202 Phone: 513-241-3100 Email: pkbklsrlaw.com. Counsel for Plaintiff-Appellee PNC Bank, NationalAssociation successor in interest to National City Real Estate Services LLC successor by merger to National City Mortgage, Inc., fka National City Mortgage Co. dba Commonwealth United Mortgage Company CERTIFICATE OF SERVICE I hereby certify that on this day of August, 2012, this document was electronically filed via the Court's authorized electronic filing system which will send notifications of this filing to the following: Rachel K. Robinson 57 Jefferson Avenue, Suite G100 Columbus, OH 43215 And I hereby certify that I served the documents by regular U.S. mail to the following: Patricia K. Block 10