The Ohio Court of Appeals, Ninth Judicial District, recently reversed a trial court’s order granting a mortgagee’s motion for summary judgment in a foreclosure action, because the affidavits submitted in support of the motion did not attach the business records referenced in the affidavits.
In so ruling, the Appellate Court held that the submission of affidavits containing conclusory assertions of personal knowledge does not satisfy the burden of proof for a motion for summary judgment. Rather, a moving party is required to submit any documents the affidavit refers to unless the nature of the facts averred to, combined with the affiant’s identity, creates a reasonable inference that he or she has personal knowledge of the affidavit’s facts.
A copy of the opinion is available at: http://www.supremecourt.ohio.gov/rod/docs/pdf/9/2014/2014-ohio-4652.pdf
In 2007, Defendant borrowers (“Borrowers”) executed a promissory note (the “Note”) secured by a mortgage (collectively the “Subject Loan”). Borrowers subsequently defaulted on the Note and the plaintiff note holder (“Note Holder”) initiated foreclosure proceedings alleging it was the holder of the Note. Note Holder then moved for summary judgment.
In support of its motion for summary judgment, Note Holder submitted two affidavits. The first of the two affidavits at issue was executed by the vice president of the mortgage servicer in charge of collecting monthly mortgage payments from Borrowers. Specifically, the vice president averred that her company collects regular payments from Borrowers, and based upon her review of its electronic records keeping system, Borrowers had defaulted on the Subject Loan (the “Servicer’s Affidavit”).
The second affidavit was executed by a document control officer who averred that Note Holder was in possession of the Note at the time the foreclosure was initiated, and that Note Holder had been in continuous possession of the Note since then (the “Document Officer’s Affidavit”).
Based upon the above, the trial court determined Note Holder had standing to foreclose, was entitled to judgment, and thus granted the motion for summary judgment. This appeal followed.
On appeal, Borrowers argued that Note Holder failed to demonstrate it had standing to foreclose because it failed to show that it was the holder of the Note at the time it filed its complaint to foreclose.
As you may recall, “to succeed on a summary judgment motion, the movant bears the initial burden of demonstrating that there are no genuine issues of material fact concerning an essential element of the opponent’s case.” Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996). “If the movant satisfies this burden, the nonmoving party ‘‘must set forth specific facts showing that there is a genuine issue for trial.’” Id. at 293, quoting Civ.R. 56(E).
“Affidavits submitted in support of or in opposition to motions for summary judgment ‘shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated in the affidavit.’” Maxum Indemn. Co. v. Selective Ins. Co. of S.C., 9th Dist. Wayne No. 11CA0015, 2012-Ohio-2115, ¶ 18, quoting Civ.R. 56(E).
Rule 56(E) of the Ohio Rules of Civil Procedure states that “sworn or certified copies of all papers or parts of papers referred to in an affidavit shall be attached to or served with the affidavit.” (“Civ.R.56(E)”).
Moreover, the “mere assertion of personal knowledge satisfies the personal knowledge requirement of Civ.R. 56(E) if the nature of the facts in the affidavit combined with the identity of the affiant creates a reasonable inference that the affiant has personal knowledge of the facts in the affidavit.” Bank One, N.A. v. Lytle, 9th Dist. Lorain No. 04CA008463, 2004-Ohio-6547, ¶ 13.
However, “if particular averments contained in an affidavit suggest that it is unlikely that the affiant has personal knowledge of those facts, then something more than a conclusory averment that the affiant has knowledge of the facts is required.” Bank One, N.A. v. Swartz, 9th Dist. Lorain No. 03CA008308, 2004-Ohio-1986, ¶ 14.
The Court began its analysis of whether Note Holder had standing to foreclose by examining the sufficiency of the Document Officer’s Affidavit. The Court explained that any information the document officer averred to in her affidavit was obtained by reviewing business records as opposed to information she gained through personal observation.
However, the only documents attached the Document Officer’s Affidavit were copies of the Note, Mortgage, Assignment of Mortgage, and a “Demand Letter.” The Court determined that these documents failed to indicate when, or even if, Note Holder had possession of the Note, and whether it had possession at the time the foreclosure complaint was filed. The Court held the Document Officer was “averring to the content of business records that are not attached to her affidavit,” and thus was impermissible hearsay. See, e.g., State v. Cicerchi, 182 Ohio App.3d 753, 2009-Ohio-2249, ¶ 52.
Accordingly, the Court determined the Document Officer’s Affidavit did not support Note Holder’s claim that it had standing to foreclose.
The Court next examined whether the Mortgage Servicer’s Affidavit established that Note Holder had possession of the Note at the time of filing the foreclosure complaint. Similar to its determination concerning the Document Officer’s Affidavit, the Court held the Mortgage Servicer’s Affidavit failed to establish that Note Holder had possession of the Note at the time it initiated the foreclosure action. The Court again determined the documents attached to the Mortgage Servicer’s Affidavit did not establish whether Note Holder had possession of the Note at the time it initiated foreclosure.
Furthermore, the Court explained that the Mortgage Servicer’s Affidavit failed to identify what entity was actually in possession of the Note as the affidavit merely stated that “Plaintiff, directly or through its agent,” was in possession of the Note prior to and at the time the foreclosure action was filed.
Accordingly, the Court held that the Mortgage Servicer’s Affidavit did “not establish an absence of a dispute of fact that Note Holder had possession of the Note at the time it filed the complaint in this case.”
Note Holder argued that the subject affidavits required “reasonable minds to come to but one conclusion, that Note Holder was in possession of the Note at the time it filed its complaint.” However, the Court rejected Note Holder’s argument stating it failed to cite any case law to support its position.
Accordingly, the Court held the materials submitted by Note Holder in support of its motion for summary judgment failed to “demonstrate an absence of a dispute of fact that it had legal standing at the time it filed its complaint,” and reversed the trial court’s granting Note Holder’s motion for summary judgment.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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