[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Wells Fargo Bank, N.A. v. Burd, Slip Opinion No. 2018-Ohio-3891.]




                                        NOTICE
     This slip opinion is subject to formal revision before it is published in an
     advance sheet of the Ohio Official Reports. Readers are requested to
     promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
     South Front Street, Columbus, Ohio 43215, of any typographical or other
     formal errors in the opinion, in order that corrections may be made before
     the opinion is published.



                         SLIP OPINION NO. 2018-OHIO-3891
      WELLS FARGO BANK, N.A., APPELLANT, v. BURD, APPELLEE, ET AL.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
       may be cited as Wells Fargo Bank, N.A. v. Burd, Slip Opinion No.
                                   2018-Ohio-3891.]
Appeal dismissed as having been improvidently accepted.
   (No. 2017-0279―Submitted April 24, 2018―Decided September 27, 2018.)
              APPEAL from the Court of Appeals for Franklin County,
                          No. 15AP-1044, 2016-Ohio-7706.
                                 _________________
        {¶ 1} This cause is dismissed as having been improvidently accepted.
        O’CONNOR, C.J., and FRENCH, FISCHER, DEWINE, and MILLER, JJ., concur.
        KENNEDY, J., dissents, with an opinion joined by PIPER, J.
        ROBIN N. PIPER, J., of the Twelfth District Court of Appeals, sitting for
O’DONNELL, J.
        CHARLES M. MILLER, J., of the First District Court of Appeals, sitting for
DEGENARO, J.
                              Supreme Court of Ohio




                               _________________
       KENNEDY, J., dissenting.
       {¶ 2} I respectfully disagree with the decision to dismiss this appeal as
having been improvidently accepted. I believe that one of the propositions of law
submitted by appellant, Wells Fargo Bank, N.A., presents a matter of public or great
general interest. Therefore, I would address the merits of the appeal.
                                   Background
       {¶ 3} In September 2006, appellee, Christopher Burd, obtained a loan from
Centennial Home Mortgage, L.L.C., and signed a note promising to repay the loan.
The note was secured by a mortgage in favor of Centennial on property located in
Blacklick, Ohio. The mortgage provided that the underlying loan was insured by
the Federal Housing Administration (“FHA”). Subsequently, Centennial indorsed
the note to Wells Fargo and assigned the mortgage to Wells Fargo.
       {¶ 4} In April 2009, Wells Fargo filed a complaint seeking judgment on the
note and foreclosure of the mortgage. Thereafter, Wells Fargo and Burd entered
into a loan-modification agreement, and Wells Fargo voluntarily dismissed the
complaint with prejudice.
       {¶ 5} A second complaint was filed by Wells Fargo in February 2012
seeking judgment on the note and foreclosure of the mortgage. The date of default
alleged in the complaint was October 1, 2011.
       {¶ 6} The parties participated in court-sponsored mediation in August 2012,
but were unsuccessful in resolving the dispute. Thereafter, the trial court granted
summary judgment in favor of Burd, holding that Wells Fargo had failed to satisfy
the requirements of 24 C.F.R. 203.604.
       {¶ 7} In August 2014, Wells Fargo filed its third complaint seeking
judgment on the note and foreclosure on the mortgage. Wells Fargo asserted that
the date of default was October 1, 2011, the same date of default alleged in the
second foreclosure complaint. The trial court again granted summary judgment in


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                                January Term, 2018




favor of Burd, holding that Wells Fargo had failed to comply with the face-to-face-
meeting requirement set forth in 24 C.F.R. 203.604, which it concluded was a
condition precedent to foreclosure of an FHA-insured mortgage loan.
        {¶ 8} Wells Fargo appealed to the Tenth District Court of Appeals, arguing
that the trial court erred in granting summary judgment in Burd’s favor.
Specifically, it argued that the August 2012 court-sponsored mediation fulfilled the
face-to-face meeting requirement of 24 C.F.R. 203.604.
        {¶ 9} The Tenth District assumed for the sake of analysis that the court-
sponsored mediation constituted a face-to-face meeting for purposes of 24 C.F.R.
203.604. 2016-Ohio-7706, ¶ 14. Nevertheless, the Tenth District rejected Wells
Fargo’s assertion of compliance with the requirements of 24 C.F.R. 203.604. 2016-
Ohio-7706 at ¶ 14. The appellate court reasoned that by asserting that the note was
due and owing from October 1, 2011, and the face-to-face meeting between Wells
Fargo and Burd occurred on August 1, 2012, “Wells Fargo effectively admits that
it did not have a face-to-face meeting with Burd ‘before three full monthly
installments due on the mortgage [were] unpaid’ as required by 24 C.F.R.
203.604(b).” (Brackets sic.) 2016-Ohio-7706 at ¶ 12. The Tenth District further
held that the fact that court-sponsored mediation occurred before the third
foreclosure proceeding had been initiated did not alter the result:


        It is true that this appeal arises from a new foreclosure complaint
        filed after the unsuccessful mediation session occurred, but that
        new complaint was based on the same alleged default as the
        second complaint. Thus, Burd had no opportunity to avoid
        foreclosure arising from that alleged default.


Id. at ¶ 14.
        {¶ 10} We accepted the following issues for review:


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                                 Supreme Court of Ohio




               In interpreting an administrative regulation, a court should adopt an
       interpretation that is consistent with the overall regulatory scheme in which
       the individual regulation is included.
               A mortgagee’s failure to comply with the timelines provided in 24
       C.F.R. § 203.604 does not bar an action to foreclose a mortgage insured by
       the Federal Housing Association as long as the mortgagee holds or makes a
       reasonable effort to hold a face-to-face meeting prior to initiating
       foreclosure.


See 150 Ohio St.3d 1451, 2017-Ohio-8136, 83 N.E.3d 938.
                      Issue of Public or Great General Interest
       {¶ 11} The FHA, which is a part of the Department of Housing and Urban
Development’s           Office        of        Housing,     https://www.hud.gov/
program_offices/housing/fhahistory (accessed Aug. 15, 2018), provides mortgage-
loan insurance on loans made by FHA-approved lenders. The insurance protects
lenders against losses that may result from homeowners defaulting on their
mortgage loans.
       {¶ 12} When a mortgage loan is insured by the FHA, the mortgagee is
required to satisfy certain obligations before it can file a foreclosure action. See
U.S. Bank, N.A. v. McMullin, 55 Misc.3d 1053, 1058, 47 N.Y.S.3d 882 (2017). “It
is the intent of the Department [of Housing and Urban Development] that no
mortgagee shall commence foreclosure * * * until the requirements of this subpart
have been followed.” 24 C.F.R. 203.500. 24 C.F.R. 203.606(a) goes on to provide:


               Before initiating foreclosure, the mortgagee must ensure
       that all servicing requirements of this subpart have been met. The
       mortgagee may not commence foreclosure for a monetary default


                                           4
                                 January Term, 2018




        unless at least three full monthly installments due under the
        mortgage are unpaid * * *.


And 24 C.F.R. 203.604(b) obligates the mortgagee to “have a face-to-face interview
with the mortgagor, or make a reasonable effort to arrange such a meeting, before
three full monthly installments due on the mortgage are unpaid.”
        {¶ 13} A number of Ohio appellate courts have considered the effect of a
mortgagee’s failure to have a timely face-to-face interview with the mortgagor or
make a reasonable effort to arrange such a meeting. There is a division in the courts
as to whether 24 C.F.R. 203.604 creates a condition precedent or provides an
affirmative defense. The Third, Fifth, Seventh, Eighth, and Ninth Districts have
held that it is a condition precedent. Huntington Natl. Bank v. Filippi, 3d Dist.
Union No. 14-15-03, 2015-Ohio-3096, ¶ 16; U.S. Bank, N.A. v. Detweiler, 191 Ohio
App.3d 464, 2010-Ohio-6408, 946 N.E.2d 777, ¶ 53 (5th Dist.); PNC Mtge. v.
Garland, 7th Dist. Mahoning No. 12 MA 222, 2014-Ohio-1173, ¶ 27, 31; Bank of
Am., N.A. v. Michko, 8th Dist. Cuyahoga No. 101513, 2015-Ohio-3137, ¶ 18; Wells
Fargo Bank, N.A. v. Awadallah, 9th Dist. No. 27413, 2015-Ohio-3753, 41 N.E.3d
481, ¶ 21. Only the Second District has held that it is an affirmative defense. Wells
Fargo Bank, N.A. v. Goebel, 2d Dist., 2014-Ohio-472, 6 N.E.3d 1220, ¶ 20.
        {¶ 14} The inconsistency on this issue creates uncertainty for trial courts
and litigants and compels us to exercise our constitutional duty. See Article IV,
Section 2(B)(2)(e) of the Ohio Constitution. Indeed, “our role as a court of last
resort is not to serve as an additional court of appeals on review, but rather to clarify
rules of law arising in courts of appeals that are matters of public or great general
interest.” State v. Bartrum, 121 Ohio St.3d 148, 2009-Ohio-355, 902 N.E.2d 961,
¶ 31 (O’Donnell, J., dissenting). The determination whether the face-to-face-
meeting requirement set forth in 24 C.F.R. 203.604 is a condition precedent or an
affirmative defense will affect the decision as to what actions a mortgagee must


                                           5
                               Supreme Court of Ohio




take, and when, in order to satisfy 24 C.F.R. 203.604’s face-to-face-meeting
requirement. Deciding these issues will have a widespread effect by providing
guidance to litigants, counsel, and courts, and therefore, the issues personify the
concept of “public or great general interest.” By dismissing this appeal, the
majority is permitting the inconsistent outcomes in the appellate courts to continue
and is denying the citizens of Ohio a uniform application of the law.
       {¶ 15} The court has missed an opportunity today. The fact that the court
accepted this case shows that it believed that this area of the law needed clarity, but
by dismissing the case, the court permits 24 C.F.R. 203.604 to evade clarification.
The issues were thoroughly briefed and well argued before the court; nonetheless,
the legal and business communities and the public that are affected by Ohio
foreclosure law and practice will have to continue to wait in silence.
       {¶ 16} Therefore, I must dissent from the judgment dismissing the appeal
as having been improvidently accepted.
       PIPER, J., concurs in the foregoing opinion.
                                _________________
       Thompson Hine, L.L.P., Scott A. King, and Terry W. Posey Jr., for
appellant.
       Legal Aid Society of Columbus and Scott E. Torguson; Southeastern Ohio
Legal Services and Peggy P. Lee; and Manner Law Firm, L.L.C., and Mathias D.
Manner, for appellee, A. Christopher M. Burd.
       Steven Sharpe, Noel Morgan, Alpha Taylor, and John Schrider, urging
affirmance for amicus curiae Legal Aid Society of Southwest Ohio, L.L.C.
       Katherine B. Hollingsworth and Thomas Mlakar, urging affirmance for
amicus curiae Legal Aid Society of Cleveland.
       Stanley A. Hirtle, urging affirmance for amicus curiae Advocates for Basic
Legal Equality, Inc.



                                          6
                             January Term, 2018




      John M. Petit and Gregory R. Sain, urging affirmance for amicus curiae
Community Legal Aid Services, Inc.
      Rosemary E. Scollard, urging affirmance for amicus curiae Pro Seniors, Inc.
                             _________________




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