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IN THE SUPREME COURT OF OHIO
U.S. Bank, N.A., Case No. 2013-0453
Plaintiff-Appellee,
_v_
Williaan D. Downey, et al.,
Defendants-Appellants.
On Appeal from Cuyahoga County Courtof Appeals, Eighth Appellate District
Court of Appeals Case No. CA 12 098598
APPELLEE U.S. BANK, N.A.'S.MEMORANDUM OPPOSING JURISDTCTION
Stacy L. Hart, Primary CounselOhio Supreme Court Reg. #0081870LERNER, SAMPSON & ROTHFUSSP.O. Box 5480Cincinnati, OH 45201-5480(513) 241-3100(513) 241-4094 [email protected]
William D. Downey10716 South Highland AvenueGarfield Heights, OH 44125(216) 820-0916
Pro Se Appellant
Counselfor Appellee, U.S. Bank,1V.A.
U LLEMAY 15 2013
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CLERlr 01 COURTSUPREME CUUHl OF OHIO
TABLE OF CONTENTS
TABLE OF CONTENTS ................................ .............................................................. ... ...i
TABLE OF AITTIEIORITIES .................................................................................................. ii
EXPLANATION AS TO WHY THIS IS NOT A CASE OF PUBLIC OR GREATGENERAL INTEREST ...........................................................................................................1
STATEMENT OF THE CASE AND FACTS ..................... .................................................2
RESPONSE TO APPELLANT'S PROPOSITIONS OF LAW ............................................5
Response to Proposition of Law No. 1: The Court of Appeals erred when itruled that the appellant was correct when he stated that appropriate affidavitmust be filed before judgment can be issued in a foreclosure case, yet, U.S.Bank's failure to file appropriate affidavits had no bearing on this case . ................. 6
A. All requisite affidavits were filed by U.S. Bank, N.A. ........................................ 6
Response to Proposition of Law No. 2: The Court of Appeals erred when it
ruled that there was no standing issue. The Court of Appeals erroneously
found that U,S. Bank established that standing at the time the suit was filed inthe foreclosure action ...................................................................................................... 6
A. The evidence before the trial court established U.S. Bank, N,A.'sstanding ... ................................. ............. ......................................................6
Reponse to Proposition of Law No. 3: The Court of Appeals erred when itaffirmed the Common Pleas Court decision not to deem matters admitted byU,S. Batilc when they responded after the 28th day of service. The decision not to
deem matters admitted was an abuse of discretion ..........................................................9
A. U.S. Bank, N.A. timely responded to Mr. Downey's discovery requests ............9
CONCLUSION ... ... ... ....... .................................................. . ....... ....... ... ............... .. . .... ...........10
CERTIFICATE OF SERVICE ............................... ........................................................12
z
TABLE {?F AU^^^ORITIES
CitiMortgage, Inc. v. Patterson, 8th Dist. No. 98360, 2012-Ohio-5894 ...................................7
Fed, Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017,979 N.E.2d 1214 ........... . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . ...... .. ...............................,....., , .,.............,.7
Kernohan v. Manss, 53 Ohio St. 118,41 N.E. 258 (1895) ........................................................9
Pons v. Ohio State Medical Bd., 66 Ohio St.3d 619, 614 N.E.2d 748 (1993) .........................10
State ex rel. Tubbs Jones v, Suster, 84 Ohio St3d 70, 701 N.E.2d 1002 (1998) ......................7
Stevens v. Stevens, 5th Dist. No. 11CAF080074, 2011-Ohio-6741 ........................................10
U.S. Bank, N.A. v. Coffey, 6th Dist. No. E-11-026, 2012-Ohio-721 .........................................8
Washington Mut. Bank, F.A. v. Green, 156 Ohio App.3d 461, 2004-Ohio-1555,806 N.E.2d 604 (7th Dist,) ........................................... ............................ ...............................7
Williamson v. Rubich, 171 Ohio St. 253, 168 N.E.2d 876 (1960) ................................................1
Civ.R. 36 ......................................................................................................................,.......9, 10
Civ.R. 36(A)(1) ...... ....................................................................,............................. .............9
Civ.R. 36(B) .........................................................................9, 10
R.C. 1301.201(21)(a) ............................ :.................................................................................... 7
R.C. 1303.01 ........................ ........... ......................... ................................................ .. ., ....7
R.C. 1303.10 .................................... . .......................... ........................ ....... . .................7
R.C. 1303.21 ......... . . . ....................... ................................................. ..,..,.....,.............,.......8
................................. . ........ .......... .................................................................. .8R.C. 1303.25 .................................. . . . ........
R.C. 1303.31(A) .....................................................................................................................7
R.C. 1303.31(A)(1) ............................... .........................................,........................8
R.C. 130331(B) .. ................... ................. .... ...... ............ .... ..... ..... ... ... ..... ....... ..................... ..... ... 8
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EXPLANATION AS TO WHY THIS IS NOT A CASE OF PUBLICOR GREAT GENERAL INTERST
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 heart of this matter involves a defendant's basic misunderstanding
of the nature of the proceedings before him. The issues here are neither novel, nor subject to a
multitude of interpretations.
As with the majority of residential foreclosure actions, the instant matter involves a
lender's attempt to mitigate its loss resulting from a defaulted promissory note. Appellant
William D. Downey ("Mr. Downey") defaulted on his obligations under a cert ain promissory
note and mortgage held by Appellee, U.S. Bank, N.A. Accordingly, U.S. Bank, N.A.
attempted to recoup its losses by foreclosing on the property encumbered by its mortgage.
In his plea to the Eighth District Court of Appeals, Mr. Downey made numerous
arguments as to why judgment was improperly rendered in favor of U.S. Bank, N.A.,
arguments which summarily focused on U.S. Bank, N.A.'s standing and procedural
technicalities. The Eighth Appellate District correctly concluded that U.S. Bank, N.A. filed the
appropriate affidavits to obtain judgment as prayed for in its Amended Complaint in
Foreclosure; that it had standing to prosecute the foreclosure action; and that the trial court
acted within its discretion when permitting U.S. Bank, N.A.'s discovery responses to stand.
This case is simply personal to Mr. Downey. While Mr. Downey may disagree with the
outcome, there is nothing in this case that is of public or great general interest. Further, this
Court's jurisdiction would be futile based upon the correctly rendered decisions of both the trial
court and appellate court. U.S. Bank, N.A. established that Mr. Downey was delinquent on his
mortgage payments. It is well-established that once the default in payment has been made under
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the tenns of a note, and once the note has been accelerated, the holder of the note is entitled to
judgment. Respectfully, there is no reasotl for this Court to accept jtirisdiction in this case.
STATEMENT nF T1FIE CASE AND FACTS
This case is a standard foreclosure action arising from a payment default under a
promissory note, and the facts are largely undisputed. On September 28, 2006, Mr. Downey
signed a promissory note to National City Mortgage a division of National City Bank in the
original total sum of $121,000.00 ("Note") in exchange for a loan in that amount. The Note
was negotiated via specific indorsement from National City Mortgage a division of National
City Bank to National City Mortgage Co., and then to U.S. Bank, N.A. U.S. Bank, N.A.
subsequently endorsed the Note in blank.
Also on September 28, 2006, Mr. Downey granted a first mortgage to National City
Mortgage a division of National City Bank in the original amount of $121,000.00 ("Mortgage"),
which Mortgage encumbers 10716 South Highland Avenue, Garfield Heights, Ohio 44125
("Real Estate") and secures the borrowed sum. The Mortgage was thereafter transferred to U.S.
Bank, N.A., as memorialized by a formal Assignment of Mortgage and Promissory Note from
National City Mortgage a division of National City Bank to National City Mortgage Co.
executed on October 16, 2006, and a subsequent Assignment of Mortgage and Promissory Note
executed the same day by National City Mortgage Co. to U.S. Bank, N.A.
ln February of 2010, Mr. Downey signed and entered into a Home Affordable
Modification Agreement ("Loan Modification") with U.S. Bank, N.A. to amend and
supplement the terms of the original Note and Mortgage. Just a few months thereafter, Mr.
Downey defaulted in payment under the loan account, and U.S. Bank, N.A. accelerated the
amount due, filing its Complaint in Foreclosure ("Complaint") on October 6, 2010.
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Per leave of Court, on February 23, 2011, U.S. Bank, N.A. filed an Amended
Complaint in Foreclosure ("Amended Complaint") to attach a copy of the Loan Modification
as an exhibit, which was inadvertently excluded from the original Complaint.
Mr, Downey filed a pro se answer on May 9, 2011 ("Answer"), which Answer was a
general denial with various unsupported affirmative defenses. Upon order of the trial court,
U.S Bank, N.A, filed its Motion for Default Judgment against the non-answering parties. In
conjunction, U.S. Bank, N.A. filed a Notice of Filing Complete Note for the reason that the
scanned copy of the original Note attached as an exhibit to both the Complaint and Amended
Complaint mistakably excluded the second page (non-signature page) of the Note.
The Motion for Default was set for oral hearing, at which Mr. Downey appeared with
counsel. Default judgment was rendered and the case was referred to mediation by separate
order. Mediation stayed all discovery and motion practice. Mediation efforts failed to yield
a resolution, and the case was returned to the active docket. The stay on the discovery and
motion practice was lifted accordingly.
Per the trial court's Pretrial Order issued October 4, 2011, a discovery cut-off date
was scheduled for November 18, 2011, and dispositive motions were required to be filed by
December 16, 2011. U.S. Bank, N.A. received Mr. Downey's first set of discovery requests
via regular mail only on November 8, 2011 - just ten days before the discovery cut-off
deadline. On December 5, 2011, U.S. Bank, N.A.'s counsel requested from Mr. Downey's
counsel an extension of fourteen days to respond. This request was denied. The following
day, U.S. Bank, N.A.'s responses to the Requests for Admission and Requests for Production
were tendered. It was further advised the responses to the Interrogatories would come under
separate cover letter.
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On December 12, 2011, U,S. Bank, N.A. filed its Motion for Summary Judgment,
supported by Judgment Affidavit and Affidavit of its counsel. That same day, through his
counsel, Mr. Downey filed a Motion to Deem Admissions Admitted, alleging they were to be
deemed admitted because U.S. Bank, N.A. failed to respond or seek additional time to
respond within 30 days of receipt of the discovery requests. U.S. Bank, N.A. opposed this
Motion, as it was factually untrue. Mr. Downey's Motion was denied.
Mr. Downey further opposed U.S. Bank, N.A.'s Motion for Summary Judgment,
alleging U.S. Bank, N.A. never responded to discovery; that it failed to provide the original
loan documents; and that U.S. Bank, N.A. failed to tender an Affidavit, from its counsel,
prior to the default hearing.
The trial court granted summary judgment in favor of U.S. Bank, N.A. and issued a
Magistrate's Decision, which Mr. Downey opposed, again addressing what he purported was
a discovery defect, while newly raising issues regarding U.S. Bank, N.A.'s standing. On
May 22, 2012, the trial court adopted the Magistrate's Decision.
Thereafter, Mr. Downey filed a Notice of Appeal to the Eighth District Court of
Appeals. While his appeal was pending, Mr. Downey filed with the trial court a Motion to
Stay Execution of Judgment ("Motion to Stay"). An oral hearing was held on the Motion to
Stay. However, as U.S. Bank, N.A. had voluntarily withdrawn its Order of Sale, the Motion
to Stay was essentially deemed moot.
On appeal, Mr. Downey contended that the trial court had erred in granting Summary
Judgment for the following reasons: (1) the Decree in Foreclosure ordered a monetary
judgment against him, whereas the Complaint only sought an in rem judgment; (2) the
Request for Admissions propounded upon U.S. Bank, N.A. were not deemed as admitted; (3)
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the Motion for Summary Judgment was not served upon him, thus precluding a chance to
respond; (4) U.S. Bank, N.A. failed to file necessary affidavits in order to obtain judgment;
and (5) U.S. Bank, N.A. lacked standing to prosecute the foreclosure action.
The Eighth Appellate District recognized that Mr. Downey's appeal was without
merit and overruled his assignments of error. On February 25, 2013, Mr. Downey moved the
Eighth Appellate District for reconsideration of its decision, again arguing that U.S. Bank,
N.A. failed to timely respond to his discovery requests, and that he was not served with U.S.
Bank, N.A.'s Motion for Summary Judgment. Further, Mr. Downey contended that contrary
to that evidenced by the trial court record, he did not file a response' in opposition to the
Motion for Summary Judgment. U.S. Bank, N.A. opposed Mr. Downey's Application for
Reconsideration, and the same was denied by the Eighth Appellate District on March 12,
2013.
Mr. Downey now appeals to this Honorable Court, further propounding his arguments
that U.S. Bank, N.A. failed to file the appropriate affidavits in order to obtain a judgment and
decree in foreclosure; that U.S. Bank, N.A. lacked standing to prosecute its action in
foreclosure; and that U.S. Bank, N.A. failed to timely respond to the Request for Admissions,
warranting that they be deemed admitted.
RESPONSE TO APPELLANT'S PROPOSITIONS OF LAW
This Court should decline jurisdiction over Mr. Downey's Propositions of Law upon
the grounds that the evidence before the trial court demonstrated U.S. Bank, N.A. was both
the mortgagee of record and holder of the Note; and despite Mr. Downey's arguments to the
contrary, U.S. Bank, N.A. timely responded to his discovery requests and filed the requisite
affidavits to obtain summary judgment.
5
Res onse to Bro osition of I.aw PTo. 1: 'T'he ,III:" I ourt of A eals erred when it ruled thatthe a eilant was correct when he stated that a z•o riate affidavit must be filed before°ud ment can be issued in a foreclosure case et U.S. Bank's failure to file a ro riate
affidavits had no bearing or on this case.
A. All requisite affidavits were filed by U.S. Bank, N.A.
The allegation that U.S. Bank, N.A. failed to comply with the trial court's order of
June 28, 2011 ("Order") requiring the submission of an appropriate affidavit before judgment
is a simple misunderstanding of the Order, As U.S. Bank, N,A. was seeking summary
judgment, not default judgment, against Mr. Downey, the applicable portion of the Order
requiring the submission of affidavits was the portion that read affidavits were to be
submitted prior to "the date that a motion for summary judgment is ripe for ruling[,]" U.S.
Bank, N.A. did just that.
U.S. Bank, N.A.'s Motion for Summary Judgment was filed on December 12, 2011.
Filed concurrently with the Motion for Summary Judgment were the Affidavits in Support of
Summary Judgment and of Anita Maddix, counsel for U.S. Bank, N.A. As the Affidavits
were filed prior to the granting of summary judgment against Mr. Downey, there is no
question that they were timely filed in accordance with the trial court's Order.
Notably, Mr. Downey does not point to any perceived deficiency in the execution of
either of these Affidavits; rather he claims they were untimely filed. This argument is
unavailing, and further demonstrates that there is no question of public or great general
interest for this Court to review, Accordingly, jurisdiction should be declined.
Res onse to Fro . osition of Law hTo. 2: The Court of A eals erred when it ruled thatthere was no standin issue. The Gourt of A eals erroneousl found that U.S. Bankestablished that standinigy at the time the suit was filed in the foreclosure actX®n
A. The evidence before the trial court established U.S. Bank, N.A.'s
standing.
6
In the trial court, U.S. Bank, N.A. presented evidence establishing that at the time it
filed its Complaint it had standing to prosecute the foreclosure. "Standing is required to
invoke the jurisdiction of the common pleas court." Fed., Home Loan Mtge. Corp. v.
Sehwar^tzu,ald, 134 Ohio St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214, ¶ 38. In the context of
a foreclosure action, a plaintiff must establish its interest in the note or m.ortgage at the time
the complaint is filed. Id, at ¶ 28; see also CitiMortgage, Inc. v. Patterson, 8th Dist. No.
98360, 2012aOhio-5894, ¶ 21.
Standing is often defined in tandem with the term "real party in interest." If a party
is not a real party in interest, it lacks standing to prosecute the action. State ex rel, Tubbs
Jones v. Suster, 84 Ohio St.3d 70, 77, 701 N.E.2d 1002 (1998). In a foreclosure action, the
real party in interest is the holder of the note and mortgage, which due to the possibility of
assignment, could be different from the original lender on the face of the documents.
Washington Mut. Bank, F.A. v. Green, 156 Ohio App.3d 461, 2004-Ohio-1555, 806 N.E.2d
604, ¶ 16 (7th Dist.).
A promissory note i s a negotiable instrument, governed by Article Three of the
Uniform Commercial Code, as codified in R.C. 1303.01 et seq. According to Article 3, there
are three relevant classes of people entitled to enforce an instrument: (1) the holder of an
instrument; (2) a non-holder in possession of the instrument who has the rights of a holder;
and (3) a party who was in possession of a note that is now lost. R.C. 1303.31(A). In order
to be a holder of an instrument, a party must first be in possession of the instrument. R.C.
1301.201(21)(a). The instrument must also be payable either to the party in possession or to
bearer. Id. The party to whom the instrument is payable may be changed after the instrument is
issued through the process of negotiation. R.C. 1303.10. Negotiation is the transfer - either
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voluntary or involuntary - of possession of an instrument by a person other than the issuer to a
person who becomes the holder of the instru.ment. R.C. 1303.21. If the note is payable to
bearer, transfer of possession alone constitutes a negotiation and makes the receiving party the
holder. R.C. 1303.21, If it is payable to an identified person, transfer must be accompanied by
an indorsement by the holder. Id. This may be either a special indorsement - one which
identifies a person to whom the instrument is now payable - or a blank indorsement that rnakes
the instrument bearer paper. R.C. 1303.25.
Under those provisions setting forth which parties have the right to enforce a
negotiable instrument, persons need not rely on their status as "owners." In fact, it is
explicitly stated that "[a] person may be a`person entitled to enforce' the instrtunent even
though the person is not the owner of the instrument or is in wrongful possession of the
instrument." (Emphasis added.) R.C. 1303.31(B); see also U.S. Bank, N.A. v. Coffey, 6th
Dist. No. E-11-026, 2012-0hio-721.
Here, the Note attached to both U.S. Bank, N.A.'s Complaint and Amended
Complaint bears three indorsements. The first is a special indorsement from the original
lender, National City Mortgage a division of National City Bank to National City Mortgage
Co. The second is a special indorsement from National City Mortgage Co. to U.S. Bank,
N.A. The third is a blank indorsenient executed by U.S. Bank, N.A. U.S. Bank, N.A.
acquired its interest in Note via a special indorsement and converted the same into bearer
paper by execution of the blank indorsement thereon.
U.S. Bank, N.A. had possession of the original Note prior to and at the time of filing
its Complaint, and has retained possession since that time. Under R.C. 1303.31(A)(1), this
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fact alone (Note indorsed in blank and possession upon filing) provides U.S. Bank, N.A. the
right to enforce the Note,
As the holder of the Note, U.S.Bank, N.A. is also entitled to enforce the Mortgage.
Kernohan v. Manss, 53 Ohio St. 118, 133, 41 N.E. 258 (1895). Moreover, the chain of
Assignment attached to U.S. Bank, N.A,'s Complaint and Amended Complaint further
illustrates the transfer of the loan to U.S. Bank, N.A. It is unassailable that U.S. Bank, N.A.
is the holder of the Note and Mortgage.
As there is no question that U.S. Bank, N.A. had standing to bring the subject
foreclosure action, there is no question of public or great general interest for this Court to
review. Consequently, jurisdiction should be declined.
ltesponse to Proposition of Law No 3• The Court of Appeals erred when itaffirmed the
C®mmon Pleas Court decision not to deem matters admitted hy U.S. Sank when thel
res onded after the 28th da of service. The decision not to deem matters adrnitted was
an abuse of discretion.
A. U.S. Bank, N.A. timely responded to Mr. Downey's discovery requests.
Mr. Downey is correct that pursuant to Civ.R. 36(A)(1), a"inatter is admitted unless,
within a period designated in the request, not less than twenty-eight days after service of a
printed copy...the party to whom the copy request is directed serves upon the party
requesting the admission a written answer or objection addressed to the matter[.]" However,
Civ.R. 36 goes further in Subsection B to state that "[a]ny matter admitted under this rule is
conclusively established unless the court on motion permits withdrawal or amendment of the
admission." Civ.R. 36(B). Thus, Civ.R. 36(B) vests a trial court with discretion to permit
withdrawal or amendment of admissions, and an appellate court may not substitute its
judgment for that of the trial court when reviewing a matter directed to the court's discretion.
9
Stevens v. Stevens, 5th Dist. No. 11 CAF080074, 2011-Ohio-6741, ¶ 23 (citing Pons v. Ohio
State Medical Bd., 66 Ohio St.3d 619, 614 N.E.2d 748 (1993)).
U.S. Bank, N.A. received service of Mr. Downey's discovery requests on November
8, 2011 via ordinary mail (despite Mr. Downey's contention that they were sent on
November 4, 2011 by both regular mail and facsimile), which notably put U.S. Bank, N.A.'s
response period outside of the discovery cut-off date of November 18, 2011. U.S. Bank,
N.A. tendered its responses to Mr. Downey's First Request for Admissions and Request for
Production of Documents on December 6, 2011. Even if U.S. Bank, N.A.'s responses were
to be considered late, Mr. Downey has failed to appreciate the authority that the trial court is
vested with under Civ.R. 36(B). Further, there is no plausible reason as to how the trial
court's exercise of Civ.R. 36(B) prejudiced Mr. Downey's ability to present a defense on the
merits.
It is clear that the trial court acted wholly within its discretion by withdrawing any
matters deemed admitted under Civ.R. 36, and that there is no question of public or great
general interest for this Court to review. Accordingly, jurisdiction should be declined.
CONCLUSION
This standard foreclosure action, now bearing both trial and appellate court approval,
does not present any issued of public or great general interest. The Eighth Appellate District
properly held U.S. Bank, N.A. filed the appropriate affidavits to obtain judgment as prayed
for in its Amended Complaint; that it had standing to prosecute the foreclosure action; and
that the trial court acted within its discretion when permitting U.S. Bank, N.A.'s discovery
responses to stand. Accordingly, there is no reason for this Court to address Mr. Downey's
10
contentions further, and, respectfully, this Court should decline jurisdiction of Mr. Downey's
al?peal=
Respeetful y sub^?.itt^;d,
Stacy L. Hart, P 'r^.^.ry ^^unselOhio Supreme Court Reg. # 0081870LERNER, SAMPSON & RC.1FT'HUSSP.0, Box 5480Cincinnati, OH 45201W5480(513) 241-3100(513) 241-4094 [email protected]
CQunselfor Appellee, U.S. Bank,1V A.
11
CERTI^'^^^T"E ^?T RViCE
This is to certify that a true and exact copy of the MmQrandum Opposing
Jurisdiction has been duly served upon the following by ordinary U.S. mail, postage prepaid,
this J4t day of May, 2013:
V1i, liatn D. Dowrtcy10716 South Highland AvenueGarfield Heights, 4H 44125Pro Se Appellant
Stacy L. Hart
12