[Cite as Freedom Mtge. Corp. v. Vitale,

.]

COURT OF APPEALS TUSCARAWAS COUNTY, OHIO FIFTH APPELLATE DISTRICT

JUDGES: FREEDOM MORTGAGE : Hon. W. Scott Gwin, P.J. CORPORATION : Hon. Sheila G. Farmer, J. : Hon. Patricia A. Delaney, J. Plaintiff-Appellee : : -vs- : Case No. 2013 AP 08 0037 : JANE R. VITALE AND : GERALD VITALE : OPINION

Defendants-Appellants

CHARACTER OF PROCEEDING: Civil appeal from the Tuscarawas County Court of Common Pleas, Case No. 2012 CF 05 0473

JUDGMENT: Affirmed

DATE OF JUDGMENT ENTRY: April 10, 2014

APPEARANCES:

For Plaintiff-Appellee For Defendants-Appellants

WILLIAM PURTELL KATHRYN EYSTER Lerner, Sampson & Rothfuss DANIEL MCGOOKEY 120 East Fourth Street, Suite 800 LAUREN MCGOOKEY Cincinnati, OH 45202 225 Meigs Street Sandusky, OH 44870 [Cite as Freedom Mtge. Corp. v. Vitale,

.]

Gwin, P.J.

{¶1} Appellants appeal the August 9, 2013 judgment entry of the Tuscarawas

County Court of Common Pleas granting appellee’s motion for summary judgment and

entering an in rem judgment and decree of foreclosure.

Facts & Procedural History

{¶2} On November 23, 2009, appellant Jane Vitale executed a promissory

note in favor of Freedom Home Mortgage Corporation in the amount of $279,125. The

note was indorsed in blank by Freedom Home Mortgage Corporation. Also on that

date, appellants Gerald and Jane Vitale executed a mortgage that secured the note and

encumbered the property located at 5221 Evans Creek Road Southwest, Sugarcreek,

Ohio, 44681. The mortgage indicated the lender was Freedom Home Mortgage

Corporation and listed Mortgage Electronic Registration Systems (“MERS”) as

mortgagee and as nominee for Lender and Lender’s successors and assigns. The

mortgage was recorded on December 9, 2009. In a document entitled “Assignment of

Mortgage” that was recorded August 12, 2010, MERS, as nominee for Freedom Home

Mortgage Corporation, assigned the November 23, 2009 mortgage to appellee Freedom

Mortgage Corporation.

{¶3} Appellee filed a complaint for foreclosure on May 22, 2012, stating

appellants failed to make a payment since February 1, 2010. Appellee attached to the

complaint a copy of the note, mortgage, and assignment of mortgage. The complaint

alleged appellee was in possession of the note and mortgage. Appellants filed an

answer on July 15, 2012 and subsequently filed a Chapter 7 bankruptcy on August 25, Tuscarawas County, Case No. 2013 AP 08 0037 3

2012. They listed Freedom Mortgage as a creditor for the 5221 Evans Creek Road

property. The bankruptcy court granted appellants a discharge in March of 2011.

{¶4} On March 11, 2013, Appellee filed a motion for summary judgment on its

foreclosure complaint. Appellee submitted the affidavit of Janet Garrett (“Garrett”) in

support of its motion for summary judgment. Garrett is the Vice-President of LoanCare.

LoanCare is the mortgage loan sub-servicer and attorney in fact for appellee. Garrett’s

affidavit states she has access to the business records, including loan account records,

and has personal knowledge of the operation of and the circumstances surrounding the

maintenance and retrieval of records in LoanCare’s record-keeping system. Further,

that the records were kept in the course of ordinary business. The affidavit states

Garrett has personal knowledge and made a personal review of the business records.

Garrett’s affidavit provides that the file includes the original note dated November 23,

2009 executed by Jane Vitale and the file also includes the original mortgage. Garrett

states that appellee Freedom Mortgage Corporation is the current holder of the note

and mortgage and had physical possession of the original note and mortgage the day

the complaint was filed. According to Garrett’s affidavit, after the complaint was filed,

the original documents were sent to Lerner, Sampson, and Rothfuss, counsel for

appellee, in October of 2012 and to LoanCare, sub-servicer and attorney in fact for

appellee, in February of 2013.

{¶5} Appellants filed a response to appellee’s motion for summary judgment

and several depositions were conducted during discovery. Gerald Vitale testified he

sent one payment to LoanCare, but that he has not made all the payments on the note

and mortgage. He recalls receiving a certified letter concerning a face-to-face meeting Tuscarawas County, Case No. 2013 AP 08 0037 4

and contacted LoanCare to schedule the face-to-face meeting, but there were

scheduling issues. Gerald testified a LoanCare representative did appear at the

property, asked if Jane Vitale was home, and delivered a loss mitigation package which

Gerald signed for. Jane Vitale testified she signed a note and mortgage, but never paid

on the note or mortgage because her husband pays all the bills. She testified if

LoanCare attempted to contact her, she would not talk to them and would instead refer

them to her husband.

{¶6} Allison Bielby (“Bielby”), a title resolution specialist at LoanCare, testified

Everbank owns the loan at issue. Everhome Mortgage is the document custodian for

appellee. Bielby testified when the note at issue was filed in a previous foreclosure

case in 2010, it did not contain a blank indorsement and she was unsure as to when the

indorsement was placed on the note. Bielby stated LoanCare had record of Gerald

Vitale contacting them for a face-to-face meeting, but when the vendor went to the

mortgaged property on April 24, 2012, only a third-party was available and Jane Vitale

was not available for the meeting. Bielby testified that when not in appellee’s physical

possession, the original loan documents are held by a custodian for appellee, including

Everhome Mortgage Records Management, the document custodian for appellee and

appellee’s legal firm Lerner, Sampson and Rothfuss. Bielby stated appellee holds the

original note and mortgage, which are stored for appellee at Everhome.

{¶7} The trial court granted appellee’s motion for summary judgment on April

30, 2013. The trial court denied appellants’ motion for reconsideration and, on August

9, 2013, the trial court entered an in rem judgment and decree in foreclosure. Tuscarawas County, Case No. 2013 AP 08 0037 5

Appellants are immune from personal liability on the note due to their bankruptcy

discharge.

{¶8} Appellants appeal the August 9, 2013 judgment entry of the Tuscarawas

County Court of Common Pleas and assign the following as error:

{¶9} “I. THE TRIAL COURT ERRED IN GRANTING FREEDOM’S MOTION

FOR SUMMARY JUDGMENT.”

I.

Summary Judgment

{¶10} Civ. R. 56 states in pertinent part:

“Summary judgment shall be rendered forthwith if the pleadings,

depositions, answers to interrogatories, written admissions, affidavits,

transcripts of evidence, and written stipulations of fact, if any, timely filed

in the action, show that there is no genuine issue of material fact and that

the moving party is entitled to judgment as a matter of law. No evidence

or stipulation may be considered except as stated in this rule. 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 mostly

strongly in the party’s favor. A summary judgment, interlocutory in

character, may be rendered on the issue of liability alone although there is

a genuine issue as to the amount of damages.” Tuscarawas County, Case No. 2013 AP 08 0037 6

{¶11} A trial court should not enter a summary judgment if it appears a material

fact is genuinely disputed, nor if, construing the allegations most favorably towards the

non-moving party, reasonable minds could draw different conclusions from the

undisputed facts. Hounshell v. Am. States Ins. Co.,

,

(1981). The court may not resolve any ambiguities in the evidence presented. Inland

Refuse Transfer Co. v. Browning-Ferris Inds. of Ohio, Inc.,

,

(1984). A fact is material if it affects the outcome of the case under the

applicable substantive law. Russell v. Interim Personnel, Inc.,

,

(6th Dist. 1999).

{¶12} When reviewing a trial court’s decision to grant summary judgment, an

appellate court applies the same standard used by the trial court. Smiddy v. The

Wedding Party, Inc.,

,

(1987). This means we review

the matter de novo. Doe v. Shaffer,

,

,

.

{¶13} The party moving for summary judgment bears the initial burden of

informing the trial court of the basis of the motion and identifying the portions of the

record which demonstrate the absence of a genuine issue of fact on a material element

of the non-moving party’s claim. Drescher v. Burt,

,

(1996). Once the moving party meets its initial burden, the burden shifts to the non-

moving party to set forth specific facts demonstrating a genuine issue of material fact

does exist.

The non-moving party may not rest upon the allegations and denials in

the pleadings, but instead must submit some evidentiary materials showing a genuine Tuscarawas County, Case No. 2013 AP 08 0037 7

dispute over material facts. Henkle v. Henkle,

,

(12th Dist. 1991).

Real Party in Interest

{¶14} Appellants argue summary judgment is not appropriate in this case

because appellee was not the holder of the note and mortgage when the foreclosure

case was filed. We disagree.

{¶15} To have standing to pursue a foreclosure action, a plaintiff “must establish

an interest in the note or mortgage at the time it filed suit.” Home Loan Mtge. Corp. v.

Schwartzwald,

-Ohio-5017,

. The current holder

of the note and mortgage is the real party in interest in a foreclosure action. U.S. Bank

Nat’l. Assn v. Marcino,

,

,

(7th

Dist.), citing Chase Manhattan Corp. v. Smith, 1st Dist. Hamilton No. C061069, 2007-

Ohio-5874. R.C. 1303.31 provides:

(A) Person entitled to enforce an instrument means any of

the following persons:

(1) The holder of the instrument;

(2) A nonholder in possession of the instrument who has the

rights of a holder;

(3) A person not in possession of the instrument who is

entitled to enforce the instrument pursuant to Section

1303.38 or division (D) of section 1303.58 of the Revised

Code. Tuscarawas County, Case No. 2013 AP 08 0037 8

(B) A person may be a “person entitled to enforce” the

instrument even though the person is not the owner of the

instrument or is in wrongful possession of the instrument.

{¶16} In this case, appellee pled in its complaint that it was in possession of the

note and mortgage and also attached to the complaint a copy of the mortgage and the

note, which was indorsed in blank. When an instrument is indorsed in blank, the

instrument becomes payable to bearer and may be negotiated by transfer of possession

alone until specially indorsed. R.C. 1303.25(B). Appellee included the affidavit of

Garrett in support of its motion for summary judgment providing that Freedom Mortgage

Corporation is the current holder of the note and mortgage and Freedom had physical

possession of the original note and mortgage the day the complaint was filed. Copies of

the note and mortgage were attached to the affidavit. Bielby testified that when not in

appellee’s physical possession, the original loan documents are held by a custodian for

the benefit of appellee. These custodians include Everhome Mortgage Records

Management, a document custodian for appellee, and Lerner, Sampson & Rothfuss,

counsel for appellee. A custodian acting on behalf of appellee does not destroy

appellee’s status as holder of the note. “Constructive possession exists when an agent

of the owner holds the note on behalf of the owner * * * consequently, a person is a

holder of a negotiable instrument, and entitled to enforce the instrument, when the

instrument is in the physical possession of his or her agent.” U.S. Bank, N.A. v. Gray,

10th Dist. Franklin No. 12AP-953,

. Garrett’s affidavit and Bielby’s

testimony establish the original note and mortgage were never out of appellee’s

constructive or legal possession as LoanCare is the servicer for appellee, Everhome is Tuscarawas County, Case No. 2013 AP 08 0037 9

the document custodian for appellee, and Lerner, Sampson, and Rothfuss is counsel for

appellee.

{¶17} Appellants contend a genuine issue of material fact exists because the

note attached to the complaint and motion for summary judgment filed in this case differ

from the note presented in a previous foreclosure case against appellants, in that the

note in this case contains a blank indorsement that was not on the previous version of

the note. Appellants cite Fannie Mae v. Trahey, 9th Dist. Lorain No. 12CA010209,

, for the proposition that an inconsistency between indorsements of a

note creates a genuine issue of material fact because it is unclear the status of the note

when the complaint was filed. However, we find Trahey distinguishable from the case

at hand. In Trahey, the plaintiff filed one version of the note with the original complaint

and another version of the note without an indorsement in an amended complaint in the

same foreclosure case.

{¶18} In this case, the note appellants cite to as not containing the blank

indorsement was submitted in a previous foreclosure case filed approximately two years

prior to the instant action. Schwartzwald requires a plaintiff establish an interest in the

note or mortgage at the time it filed suit. Here, as testified to by Bielby, the documents

were either in the physical possession of appellee or they were being held by a

custodian for the benefit of appellee. Garrett’s affidavit provides that Freedom

Mortgage Corporation had physical possession of the original note and mortgage the

day the complaint was filed and the original note and mortgage were subsequently sent

to counsel for Freedom and the servicer for Freedom, each custodians holding the note

and mortgage for the benefit of Freedom. Freedom thus had the authority to place the Tuscarawas County, Case No. 2013 AP 08 0037 10

blank indorsement on the note while it was in possession of the original note and

properly assigned the note prior to the initiation of the instant foreclosure action.

{¶19} We further find that even if the note was not properly indorsed in blank,

pursuant to Bank of New York v. Dobbs, 5th Dist. Knox No. 2009-CA-000002, 2009-

Ohio-4742, the assignment of the mortgage, without the express transfer of the note, is

sufficient to transfer both the note and mortgage because the record indicates that the

parties intended to transfer both the note and mortgage.

{¶20} This case is analogous to Dobbs as the record indicates the parties

intended to transfer both the note and the mortgage. The note dated November 23,

2009 provides that, “borrower’s promise to pay is secured by a mortgage that is dated

the same date as this Note and called the ‘Security Instrument.’ This Security

Instrument protects the Lender from losses which might result if Borrower defaults

under this Note.” The November 23, 2009 mortgage in which MERS is the mortgagee

and nominee for lender states that, “this debt is evidenced by Borrower’s note dated the

same date as this security instrument * * * this security instrument secures to Lender (1)

the repayment of the debt evidenced by the Note * * *.” The note refers to the mortgage

and the mortgage refers to the note. Thus, we find a clear intent by the parties to keep

the note and mortgage together rather than transferring the note alone. The

assignment of the mortgage was sufficient to transfer both the mortgage and the note.

Since the mortgage assignment was recorded on August 12, 2010, prior to the

complaint being filed in this case, the note was effectively transferred on that date.

{¶21} Accordingly, there are no genuine issues of material fact as to whether

appellee is the real party in interest with standing to pursue this foreclosure action. Tuscarawas County, Case No. 2013 AP 08 0037 11

Affidavit in Support of Motion for Summary Judgment

{¶22} Appellants argue appellee is not entitled to summary judgment because

appellee’s affidavit was insufficient to support a granting of summary judgment.

Appellants contend the copies of the note and mortgage were not authenticated by a

custodian of the records or by a witness with personal knowledge of the records. We

disagree.

{¶23} In Wachovia Bank Delaware, N.A. v. Jackson, we detailed the

requirements necessary for an affidavit in support of a motion for summary judgment in

a foreclosure case. 5th Dist. Stark No. 2010-CA-00291,

. The affidavit

must show:

(1) the affiant is competent to testify;

(2) the affiant has personal knowledge of the facts, as shown

by a statement of the operant facts sufficient for the court to

infer the affiant has personal knowledge;

(3) the affiant must state he or she was able to compare the

copy with the original and verify the copy is accurate, or

explain why this cannot be done;

(4) the affidavit must be notarized; and

(5) any documents the affidavit refers to must be attached to

the affidavit or served with the affidavit.

{¶24}

Personal knowledge is required to qualify the records of an affidavit

under the business records hearsay exception of Evid. R. 803(6). To qualify for

admission under Rule 803(6), a business record must manifest four essential elements: Tuscarawas County, Case No. 2013 AP 08 0037 12

(i) the record must be one regularly recorded in a regularly

conducted activity;

(ii) it must have been entered by a person with knowledge of

the act, event, or condition;

(iii) it must have been recorded at or near the time of the

transaction and

(iv) a foundation must be laid by the ‘custodian’ of the record

or by some ‘other qualified witness.’

Citimortgage, Inc. v. Cathcart, 5th Dist. Stark No. 2013CA00179,

.

{¶25} The phrase “other qualified witness” should be broadly interpreted and it is

not a requirement that the witness had firsthand knowledge of the transaction giving rise

to the business record.

“Rather, it must be demonstrated that: the witness is

sufficiently familiar with the operation of the business and with the circumstances of the

record’s preparation, maintenance and retrieval, that he can reasonably testify on the

basis of this knowledge that the record is what it purports to be, and that it was made in

the ordinary course of business consistent with the elements of Rule 803(6).”

{¶26} Affidavits which merely set forth legal conclusions or opinions without

stating supporting facts are insufficient to meet the requirements of Civil Rule 56(E).

Tolson v. Triangle Real Estate, 10th Dist. Franklin No. 03AP-715,

.

However, Ohio law recognizes that personal knowledge may be inferred from the

contents of an affidavit. Wells Fargo Bank, N.A. v. Dawson, 5th Dist. Stark No.

2013CA00095. The assertion of personal knowledge in an affidavit satisfies Civil Rule

56(E) if the nature of the facts in the affidavit combined with the identity of the affiant Tuscarawas County, Case No. 2013 AP 08 0037 13

creates a reasonable inference that the affiant has personal knowledge of the facts in

the affidavit.

{¶27} In this case, Garrett avers that the statements made in the affidavit are

based on personal knowledge and her personal review of the business records for the

loan which is the subject of the action. The affidavit provides that Garrett has access to

the loan documents and account records of LoanCare and her affidavit is based on

personal knowledge obtained from review of the records and from her personal

knowledge of the operation of the maintenance and retrieval of the records in

LoanCare’s record-keeping system. The affidavit states the loan account records are

compiled and recorded by LoanCare in the course of its regularly conducted business

activities and the loan account records are compiled and recorded at or near the time of

the occurrence of each act or event affecting the account by persons with knowledge of

said act or event, or from information transmitted by a person with knowledge of acts or

events described with the loan account records. Garrett avers the records are kept,

maintained, and relied upon in the course of ordinary and regularly conducted business

activity.

{¶28} From her position and her statement that she reviewed the documents in

the instant case, it may be reasonably inferred that Garrett has personal knowledge to

qualify the documents as an exception to the hearsay rule as a business document. We

find Garrett’s affidavit meets the requirements set forth in Wachovia Bank v. Jackson.

The affidavit is properly admissible Civil Rule 56 evidence and appellants fail to submit

any Civil Rule 56 evidence to contradict the affidavit. The trial court did not err in

granting summary judgment based on Garrett’s affidavit. Tuscarawas County, Case No. 2013 AP 08 0037 14

Assignment of Mortgage

{¶29} Appellants contend the assignment of mortgage does not support

appellee’s claim that it was the holder of the loan obligation because MERS did not

have an interest in the note or mortgage and thus could not convey any interest in the

note or mortgage. Appellants cite cases from New York and Oklahoma in support of

their position. We disagree with appellants.

{¶30} “Ohio courts have consistently held that MERS has authority to assign a

mortgage when it is designated as both a nominee and a mortgagee.” Daniely v.

Accredited Home Lenders, 8th Dist. Cuyahoga No. 99208,

; see also

BAC Home Loans Servicing, L.P. v. Haas, 3d Dist. Marion No. 9-13-40,

.

In Wells Fargo Bank, N.A. v. Elliott, 5th Dist. Delaware No. 13 CAE 03 0012, 2013-

Ohio-3690, we found MERS could assign a mortgage when they acted as the

mortgagee and nominee for Lender and Lender’s successors and assigns.

{¶31} In this case, the mortgage states that “this security instrument is given to

[MERS] (solely as nominee for Lender, as hereinafter defined, and Lender’s successors

and assigns) as mortgagee. The Lender is listed in the mortgage as Freedom Home

Mortgage Corporation. The assignment filed by appellee and attached to its complaint

and motion for summary judgment was recorded on August 12, 2010 and states that

MERS, as nominee for Freedom Home Mortgage Corporation, its successors and

assigns, assigns the mortgage to Freedom Mortgage Corporation. Accordingly, MERS

had the authority to assign the mortgage to appellee and MERS properly executed the

assignment as nominee for Freedom Home Mortgage Corporation prior to the filing of

the complaint in this case. Tuscarawas County, Case No. 2013 AP 08 0037 15

Face-to-Face Meeting

{¶32} Appellants argue appellee is not entitled to summary judgment because it

did not comply with the terms of the note, mortgage, and FHA guidelines. Appellants

specifically contend appellee failed to comply with the face-to-face meeting provision in

24 C.F.R. 203.604. We disagree.

{¶33} 24 C.F.R. 203.604 governs the instant action. The regulation requires a

face-to-face interview between a mortgagor and mortgagee before three full monthly

installments on the mortgage are unpaid or reasonable efforts to arrange such a

meeting. 24 C.F.R. 203.604(b). The fulfillment of 24 C.F.R. 203.604 is a condition

precedent to a foreclosure when this section applies to the mortgage at issue. Wells

Fargo Bank, N.A. v. Gerst, 5th Dist. Delaware No. 13 CAE 05 0042,

. 24

C.F.R. 203.604(c) provides, in pertinent part, that a face-to-face meeting is not required

if: (3) the mortgagor has clearly indicated that he will not cooperate in the interview and

(5) a reasonable effort to arrange a meeting is unsuccessful. The regulation further

states as follows:

(d) A reasonable effort to arrange a face-to-face meeting

with the mortgagor shall consist at a minimum of one letter

sent to the mortgagor certified by the Postal Service as

having been dispatched. Such a reasonable effort to

arrange a face-to-face meeting shall also include at least

one trip to see the mortgagor at the mortgaged property,

unless the mortgaged property is more than 200 miles from

the mortgagee, its servicer, or a branch office of either, or it Tuscarawas County, Case No. 2013 AP 08 0037 16

is known that the mortgagor is not residing in the mortgaged

property.

24 C.F.R. 203.604(d).

{¶34} Gerald Vitale recalled receiving a letter about a face-to-face meeting and

testified he contacted appellee to schedule a face-to-face meeting, but there were

scheduling issues. Gerald confirmed a representative came to the mortgaged property

on April 24 and inquired if Jane was home. When Gerald informed the representative

Jane was not home, the representative delivered a loss mitigation package which

Gerald signed for. Jane testified she would not respond or talk to anyone from

LoanCare or appellee and would refer them to her husband. Bielby confirmed appellee

sent a certified letter on February 27, 2012 to Jane and that LoanCare’s third-party

representative went to the property on April 24, spoke to a third party, and delivered a

loss mitigation package. While appellants argue appellee failed to make a reasonable

effort to arrange a face-to-face meeting, we find, in examining the plain language of 24

C.F.R. 203.604(d), appellee met the requirements contained in this section. The record

reflects that on February 27, 2012, LoanCare sent a letter, via certified mail, to Jane

Vitale. The certified mail receipt demonstrates Gerald signed for the letter on March 6,

2012. The letter stated, “Due to the delinquency of your mortgage, please call our

Collection Department at (800) 909-9525 to arrange a face-to-face meeting to discuss

your account.” The record further reflects that a representative for LoanCare made a

trip to see the mortgagor at the mortgaged property on April 24, 2012. Accordingly,

appellee fulfilled the conditions precedent to foreclosure as required by 24 C.F.R.

203.604. Tuscarawas County, Case No. 2013 AP 08 0037 17

{¶35} Based on the foregoing, we find the trial court did not err in granting

summary judgment to appellee. Appellants’ assignment of error is overruled and the

August 9, 2013 in rem judgment and decree in foreclosure of the Tuscarawas County

Court of Common Pleas is affirmed.

By Gwin, P.J.,

Farmer, J., and

Delaney, J., concur