Tuesday, May 31, 2022

FYI: Ohio Sup Ct Rejects Series of Challenges by Borrower to Foreclosure

The Supreme Court of Ohio recently rejected the latest in a serious of appeals and other challenges by a borrower to the validity of a judgment of foreclosure entered against the borrower.


In so ruling, the Court held that the law-of-the-case doctrine applied, where the Supreme Court in a prior appeal held that the borrower's arguments lacked merit or were waived.


A copy of the opinion is available at:  Link to Opinion


The appeal arose out of a foreclosure action brought against a borrower ("Borrower") by a bank mortgagee ("Bank"). A final judgment of foreclosure was entered in favor of Bank and Borrower appealed.


In the first appeal ("Appeal One"), Borrower argued that the trial court lacked jurisdiction because she had not been properly served. The Court of Appeals found that Borrower had waived this defense and the Supreme Court did not accept the discretionary appeal.


Two years later, Borrower filed a prohibition action in the Court of Appeals, which sought to prevent the foreclosure sale. The complaint was dismissed on the basis that the trial court had subject-matter jurisdiction and Borrower had an adequate legal remedy by way of the appeal.


A year later, Borrower filed a second prohibition action in the Court of Appeals, which again sought to prevent the foreclosure sale. The court again dismissed the complaint and denied Borrower's motion for reconsideration. The Court of Appeals again reasoned that Borrower's appeal in the foreclosure action was an adequate legal remedy.


Borrower then filed a motion for relief from judgment in the Court of Appeals and a notice of appeal in the Supreme Court.


The Supreme Court denied relief in the direct appeal on the basis that Borrower had an adequate legal remedy to challenge the trial court's exercise of jurisdiction over the foreclosure action. In reaching its decision, the Supreme Court rejected Borrower's argument that the trial court lacked jurisdiction due to alleged insufficient service finding Borrower "voluntarily submitted to the jurisdiction of the common pleas court in the foreclosure action by filing an Ohio Civ. R.12(B) motion to dismiss without asserting insufficiency of service or lack of personal jurisdiction as a defense." Lundeen I,164 Ohio St. 3d 159, 2021-Ohio-1533, 172 N.E.3d 15 at ¶20. The Supreme Court also ruled that Borrower's reliance on Ohio Civ. R. 3(A) did not present a question which concerned the trial court's subject-matter jurisdiction.


The Court of Appeals later denied Borrower's Ohio Civ. R. 60(B) motion for relief finding the motion lacked merit as Borrower challenged personal jurisdiction and not subject matter jurisdiction, Borrower had an adequate legal remedy, and the defense of lack of service had been waived.


Here, in this latest action, Borrower appealed the Court of Appeals' denial of her motion for relief from judgment.


The Supreme Court found the appeal was based on two essential points: (1) there was no subject-matter jurisdiction over the foreclosure action as Bank supposedly failed to commence the action within Ohio Civ. R. 3(A)'s one-year limitations period; and (2) as the trial court lacked subject-matter jurisdiction, it also lacked personal jurisdiction over her.


In order to prevail, Borrower would have needed to establish (1) that she had a meritorious claim or defense in the event relief was granted, (2) that she was entitled to relief under one of the provisions of Ohio Civ. R . 60(B)(1) through (5), and (3) that the motion was timely.  Strack v. Pelton, 70 Ohio St.3d 172, 174, 637 N.E.2d 914 (1994).


Appellees argued that Borrower could not establish a meritorious claim or defense asserting that her motion failed under the law-of-the-case doctrine as the arguments were already decided by the court in Lundeen I.


The law-of-the-case doctrine is a "rule of practice rather than a binding rule of substantive law," which "provides that legal questions resolved by a reviewing court in a prior appeal remain the law of that case for any subsequent proceedings at both the trial and appellate levels."  Farmers State Bank v. Sponaugle, 157 Ohio St.3d 151, 2019-Ohio-2518, 133 N.E.3d 470, ¶ 22; see also State ex rel. Dannaher v. Crawford, 78 Ohio St.3d 391, 394, 678 N.E.2d 549 (1997) (recognizing that the doctrine applies to extraordinary-writ actions). In the absence of extraordinary circumstances, "an inferior court has no discretion to disregard the mandate of a superior court in a prior appeal in the same case." Nolan v.  Nolan, 11 OhioSt.3d 1, 462 N.E.2d 410 (1984), syllabus.


As the Supreme Court previously found Borrower's argument relating to the trial court's lack of subject matter jurisdiction under Civ.R.3(A) lacked merit and that Borrower had waived the argument of lack of personal jurisdiction for lack of service, the Supreme Court here held that Borrower could not establish a meritorious claim or defense.


The Supreme Court held that its prior resolutions remained the law of the case. The Court further found there was nothing "obviously unjust" in its decision which would promote not applying the doctrine. Thus, the Supreme Court held that Court of Appeals did not abuse its discretion in denying Borrower's motion for relief.


Borrower alternately requested the Court of Appeals grant her motion based on its inherent power to vacate a void judgment. "The authority to vacate a void judgment is not derived from Ohio Civ. R. 60(B) but rather constitutes an inherent power possessed by Ohio courts."  Patton  v.  Diemer,  35  Ohio  St.3d  68,  518  N.E.2d  941  (1988), paragraph four of the syllabus.  "The traditional rule long followed in Ohio is that a void judgment is one entered by a court lacking subject-matter jurisdiction over the case or personal jurisdiction over the parties."  State v. Hudson, 161 Ohio St.3d 166, 2020-Ohio-3849, 161 N.E.3d 608, ¶ 11 (collecting cases).


The Supreme Court found the judgment was not void. The Supreme Court noted the Court of Appeals was vested with subject-matter jurisdiction over the prohibition action by the Ohio Constitution. See Ohio Constitution, Article IV, Section 3(B)(1)(d). The Supreme Court further found that personal jurisdiction was conferred on the Court of Appeals to enter judgment against Borrower by Borrower when she filed her complaint seeking relief in prohibition. See Moore v. Mt. Carmel Health Sys., 162 Ohio St.3d 106, 2020-Ohio-4113, 164 N.E.3d 376, ¶ 34.


Thus, the Court affirmed the judgment of the Court of Appeals.





Ralph T. Wutscher
Maurice Wutscher LLP
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