Bank of NY Mellon Trust Co. v. Shaffer | Ohio Appeals Court - BONY failed to establish it held either the note or mortgage as of the date it filed the complaint, it lacked standing...Assignment recorded 2-Weeks after complaint

IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT GEAUGA COUNTY, OHIO

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. f.k.a. THE BANK OF NEW YORK TRUST COMPANY, N.A., AS SUCCESSOR IN INTEREST TO JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, f.k.a. JPMORGAN CHASE BANK, AS TRUSTEE-SURF-BC2, Plaintiff-Appellee, - vs - THERESA A. SHAFFER a.k.a. THERESA MCFAUL, et al., Defendant-Appellant, GEAUGA COUNTY TREASURER, et al., Defendants-Appellees. Civil Appeal from the Geauga County Court of Common Pleas, Case No. 09F000648. Judgment: Reversed and remanded. CYNTHIA WESTCOTT RICE, J., {¶1} Appellant, Theresa A. Shaffer, appeals the default judgment of foreclosure entered in favor of Appellee, The Bank of New York Mellon Trust Company, N.A. (“New York Mellon”), by the Geauga County Court of Common Pleas. At issue is whether New York Mellon’s lack of standing when it filed this action could be cured by the assignment of the mortgage prior to the entry of final judgment. For the reasons that follow, the trial court’s judgment is reversed, and this matter is remanded for the trial court to dismiss the complaint without prejudice. {¶2} On June 8, 2009, New York Mellon filed a complaint in foreclosure in the Geauga County Court of Common Pleas against appellant. {¶3} New York Mellon alleged it was “the holder of a note, a copy of which is unavailable at this time.” New York Mellon further alleged that the note and the mortgage securing the note were in default. The mortgage attached to the complaint identifies “Wilmington Finance” as the lender. That mortgage was recorded on January 21, 2004. {¶4} On September 11, 2009, New York Mellon filed an affidavit in which it stated that the principal balance owed by appellant was $178,505.91; “[t]he Creditor does hold the Debtor[’]s note by assignment;” and “[a]n assignment of mortgage was recorded with [the] Geauga County Recorder on June 22, 2009.” As noted above, New York Mellon filed its complaint two weeks earlier on June 8, 2009. {¶5} Also, on September 11, 2009, New York Mellon filed a motion for default judgment against appellant. {¶6} On December 9, 2009, appellant filed a motion for leave to plead, which the trial court granted until January 4, 2010. {¶7} On January 5, 2010, appellant filed a motion for extension of time to respond to the complaint, which the trial court granted until February 8, 2010. {¶8} On February 8, 2010, appellant filed another motion for extension of time to respond to the complaint, which the trial court denied. {¶9} On February 25, 2010, the trial court entered a default judgment in foreclosure. The court found appellant was “in default of * * * Answer;” “that the allegations contained in the Complaint are true;” and “that the conditions of [the] Mortgage have been broken and plaintiff is entitled to have the equity of redemption of the defendant-titleholders foreclosed.” {¶10} Later that same date, appellant, appearing pro se, filed her answer. {¶11} On March 2, 2010, appellant filed a “motion to vacate order for sale and withdraw property from sale” in which she requested mediation “to prevent foreclosure sale.” {¶12} On March 19, 2010, the trial court ordered the case stayed and the parties to attend mediation. {¶13} On July 9, 2010, appellant filed a motion to dismiss on the grounds that New York Mellon did not have standing to file the action. She also asked that the mediation scheduled for that day (July 9) be cancelled. {¶14} On July 15, 2010, the trial court denied the motion to dismiss. {¶15} On September 2, 2010, appellant filed a motion for summary judgment. She argued she was entitled to judgment because New York Mellon “has no legal title to the mortgage and failed to prove ownership of the mortgage.” {¶16} On September 13, 2010, the trial court entered an order vacating the mediation stay, noting that such efforts were unsuccessful. {¶17} On October 28, 2010, the trial court denied appellant’s motion for summary judgment. {¶18} On November 22, 2010, appellant filed another motion to dismiss based on New York Mellon's alleged lack of standing. {¶19} On December 7, 2010, the trial court denied appellant’s November 22, 2010 motion to dismiss. {¶20} On September 26, 2011, appellant, now represented by counsel, filed a motion for relief from judgment, seeking to have the default judgment in foreclosure vacated. Again, appellant argued that New York Mellon lacked standing to invoke the trial court’s jurisdiction. New York Mellon did not attach or reference any evidence showing it had standing when it filed this action. Instead, New York Mellon argued that standing is not necessary to invoke the trial court’s subject-matter jurisdiction and that appellant waived any challenge to standing by not raising it within the time limits specified in Civ.R. 60(B). {¶21} On November 29, 2011, the trial court entered judgment denying appellant’s motion for relief from judgment. The court found that the motion was filed over 18 months after the default judgment was entered and that appellant “has offered no reason why the motion was filed so long after the entry of judgment.” The court continued: “Even had Ms. Shaffer filed her Motion for Relief from Judgment within a reasonable time, she has not demonstrated entitlement to such relief. Her motion offers no explanation as to why she failed to file an answer or responsive pleading within the time provided by the Rules of Civil Procedure and the extensions granted by the Court.” {¶22} Appellant appealed the trial court’s default judgment to this court. Appellant argued that New York Mellon lacked standing and failed to vest the trial court with subject-matter jurisdiction to enter its default judgment. Further, appellant argued that the trial court erred in denying her motion for relief from judgment. In Bank of New York Mellon Trust Co., N.A. v. Shaffer, 11th Dist. Geauga No. 2011-G-3051, 2012-Ohio- 3638, this court affirmed the trial court’s judgment, holding that there was no defect in New York Mellon’s standing and that appellant failed to show entitlement to relief from judgment under Civ.R. 60(B). {¶23} Appellant appealed this court’s decision to the Supreme Court of Ohio. In Bank of New York Mellon Trust Co., N.A. v. Shaffer, 134 Ohio St.3d 1435, 2013-Ohio- 161, the Supreme Court of Ohio accepted jurisdiction of this case and remanded the matter to this court for application of the Supreme Court’s recent decision in Fed. Home Loan Mortg. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017. {¶24} In Schwartzwald, the Supreme Court held that standing is required to present a justiciable controversy and is a jurisdictional requirement. Id. at ¶21-22. The Court held that, because standing is required to invoke the trial court’s jurisdiction, standing is determined as of the filing of the complaint. Id. at ¶24. Further, the Court held that a mortgage holder cannot rely on events occurring after the complaint is filed to establish standing. Id. at ¶26. Thus, the plaintiff cannot cure its lack of standing by obtaining an interest in the subject of the litigation after the action is filed. Id. at ¶36. Further, because standing is jurisdictional, it can never be waived and may be challenged at any time. See Pratts v. Hurley, 102 Ohio St.3d 81, 2004-Ohio-1980, ¶11. Finally, the Court in Schwartzwald held that when the evidence demonstrates the mortgage lender lacked standing when the foreclosure action was filed, the action must be dismissed without prejudice. Id. at ¶40. This court followed the Supreme Court’s holding in Schwartzwald in Fed. Home Loan Mortg. Corp. v. Rufo, 11th Dist. Ashtabula No. 2012-A-0011, 2012-Ohio-5930. {¶25} This court in Rufo held that, pursuant to Schwartzwald, courts of common pleas have subject-matter jurisdiction over justiciable matters and that standing to sue is required to make a justiciable case. Rufo at ¶28. Thus, without standing, a case is not justiciable and the court lacks subject-matter jurisdiction. Id. When the trial court lacks subject-matter jurisdiction, its final judgment is void. Id. at ¶15. {¶26} Applying the foregoing jurisprudence to this case, while New York Mellon filed its complaint on June 8, 2009, the record does not demonstrate that as of that date it held the note or mortgage. The mortgage attached to the complaint shows that Wilmington Finance, not New York Mellon, was the holder of the mortgage. Further, the affidavit filed by New York Mellon demonstrates that the assignment of the mortgage was recorded on June 22, 2009, two weeks after the complaint was filed. Thus, there is no evidence that New York Mellon held the mortgage on the date the complaint was filed. {¶27} Further, while the complaint alleges that New York Mellon is “the holder of a note,” New York Mellon did not attach a copy of the note to the complaint, as required by Civ.R. 10. Instead, it alleged a copy of the note was “unavailable at this time” without offering any reason for its unavailability. Thereafter, New York Mellon never filed a copy of the note. New York Mellon’s allegation in the complaint that it holds a note is conclusory without any detail concerning when New York Mellon obtained the note. Likewise, while New York Mellon stated in its affidavit that it holds the note by assignment, it did not state when or by whom the note was assigned to it. Thus, there is no evidence in the record that New York Mellon held the note on the date it filed the complaint. {¶28} Because New York Mellon failed to establish it held either the note or mortgage as of the date it filed the complaint, it lacked standing. As a result, this case is not justiciable; the trial court lacked subject-matter jurisdiction to enter its judgment of foreclosure; its judgment was void; and the court’s lack of subject-matter jurisdiction was subject to challenge at any time. {¶29} Further, the fact that Shaffer was in default of an answer does not mean she admitted New York Mellon held the note on the date it filed the complaint, thus conferring subject-matter jurisdiction on the court. As noted above, the allegation in the complaint that New York Mellon holds a note is merely conclusory, and does not include any detail as to when or how it obtained the note. In any event, it is well settled that “[p]arties may not, by stipulation or agreement, confer subject-matter jurisdiction on a court, where subject-matter jurisdiction is otherwise lacking.” Fox v. Eaton Corp., 48 Ohio St.2d 236, 238 (1976), overruled on other grounds by Manning v. Ohio State Library Bd., 62 Ohio St.3d 24, 29 (1991). Further, this court has held that the lack of subject-matter jurisdiction can be raised at any stage of the proceedings and can be raised for the first time on appeal. Smith v. Dietelbach, 11th Dist. Trumbull No. 2011-T- 0007, 2011-Ohio-4308, ¶14. {¶30} While this court in Self Help Ventures Fund v. Jones, 11th Dist. Ashtabula No. 2012-A-0014, 2013-Ohio-868, held that the assignment of a mortgage is sufficient to transfer a contemporaneous note, id. at ¶39, this court in Jones held that for standing to exist, the mortgage or note must have been assigned to the mortgagee-plaintiff prior to the filing of the complaint. Id. at ¶26. Because the only evidence offered by New York Mellon in its affidavit regarding the mortgage assignment was that it was recorded two weeks after the complaint was filed, the mortgage assignment was insufficient to confer standing on New York Mellon or to vest the trial court with subject-matter jurisdiction. {¶31} Further, since the trial court lacked subject-matter jurisdiction and its default judgment was therefore void, Shaffer was not required to comply with the time requirements of Civ.R. 60(B) in order to be entitled to an order vacating the judgment. A court’s authority to vacate a void judgment is not derived from the Rules of Civil Procedure, but rather is an inherent power possessed by courts. Hoffman v. New Life Fitness Centers, Inc. 116 Ohio App.3d 737, 739 (3d Dist.1996), appeal not allowed by Supreme Court of Ohio at 78 Ohio St.3d 1464 (1997). Further, a judgment rendered by a court lacking subject matter jurisdiction is void ab initio, and may be vacated by virtue of the court’s inherent power independent of the grounds for vacation of judgments set forth in Civ.R. 60(B). Falk v. Wachs, 116 Ohio App.3d 716, 721 (9th Dist.1996). Thus, a motion to vacate a void judgment need not comply with the requirements of Civ.R. 60(B). Id. {¶32} We note that, prior to appellant’s motion for relief from judgment, she repeatedly brought to the trial court’s attention New York Mellon’s lack of standing. She asserted the issue in her answer, filed February 25, 2010; in her motion to dismiss, filed July 9, 2010; in her second motion to dismiss, filed November 22, 2010; and in her motion for summary judgment, filed September 2, 2010. While Shaffer’s answer was out of rule by 13 days, thereafter, she diligently attempted to bring the issue of New York Mellon’s lack of standing to the trial court’s attention. {¶33} Whether a trial court has subject-matter jurisdiction is a question of law that we review de novo. Dietelbach, supra. Since the trial court lacked subject-matter jurisdiction in entering default judgment, the court erred in denying appellant’s motion to vacate the judgment. Further, since appellant was not required to comply with Civ.R. 60 in her efforts to vacate the court’s void judgment, the court erred in finding that, because she did not comply with the time requirement of Civ.R. 60(B), she was not entitled to relief from judgment. {¶34} For the reasons stated in this opinion, it is the judgment and order of this court that the judgment of the Geauga County Court of Common Pleas is reversed, and this matter is remanded for the trial court to dismiss this action without prejudice. [...]