[Cite as Union Bank Co. v. North Carolina Furniture Express, L.L.C., 189 Ohio App.3d 538, 2010-
Ohio-4176.]




                      IN THE COURT OF APPEALS OF OHIO
                          THIRD APPELLATE DISTRICT
                              AUGLAIZE COUNTY


THE UNION BANK COMPANY ET AL.,

        APPELLEES,

        v.                                                        CASE NO. 2-10-01

NORTH CAROLINA FURNITURE
EXPRESS, L.L.C., ET AL.,

        APPELLANTS.
                                                                  OPINION




BAC HOME LOANS SERVICING L.P.,

        APPELLANT,                                            CASE NO. 2-10-02

        v.

SMITH ET AL.,                                                 OPINION

        APPELLEES.


               Appeals from Auglaize County Common Pleas Court
                Trial Court Nos. 2008 CV 0267 and 2009 CV 0312

                                    Judgments Affirmed

                         Date of Decision:        September 7, 2010



APPEARANCES:
Case Nos. 2-10-01 and 2-10-02



      Jason A. Whitacre, Laura C. Infante and Kathryn M. Eyster, for
appellant BAC Home Loans Servicing, L.P., f.k.a. Countrywide Home Loans
Servicing, L.P.

      Randy L. Reeves and Sarah N. Newland, for appellees Jeffrey Smith and
Kandi Smith.

      John F. Moul, for appellee of Auglaize County Treasurer.

      Jerry M. Johnson and Christine M. Bollinger, for appellee Union Bank
Company.

      Thomas J. Katterheinrich, for appellee Minster Bank.




      PRESTON, Judge.

      {¶ 1} Appellant-defendant, BAC Home Loans Servicing, L.P., f.k.a.

Countrywide Home Loans Servicing, L.P. (“BAC”), appeals the Auglaize County

Court of Common Pleas judgments, which vacated BAC’s foreclosure action and

denied motions to consolidate and substitute BAC as a party-defendant. For the

reasons that follow, we affirm.

      {¶ 2} This case involves two separate foreclosure actions filed in the

Auglaize County Court of Common Pleas that sought judgments on certain notes

and mortgages encumbering the same parcel of real estate, commonly known as

422 South Franklin Street, New Bremen, Ohio (“the property”). The facts of this

case are largely not in dispute. On November 13, 2002, Jeffrey Smith and Kandi



                                     -2-
Case Nos. 2-10-01 and 2-10-02


Smith, who were members of North Carolina Furniture Express, L.L.C., executed

a note in favor of SIB Mortgage Corp., a New Jersey corporation, and a mortgage

in favor of Mortgage Electronic Registration Systems, Inc. (“MERS”) solely as

nominee for SIB Mortgage Corp., for $141,000. The mortgage was subsequently

recorded in the Auglaize County Recorder’s Office on November 18, 2002.

        {¶ 3} Several years later, on January 19, 2007, the Smiths executed

another note and mortgage in favor of appellee Minster Bank for $30,000. This

mortgage was recorded in the Auglaize County Recorder’s Office on January 26,

2007. Then, on March 5, 2007, the Smiths executed three separate notes and

mortgages in favor of appellee The Union Bank Company for $100,000, $25,000,

and $24,500, which were subsequently recorded in the Auglaize County

Recorder’s Office on March 9, 2007.1

        {¶ 4} On July 23, 2008, Union Bank filed a complaint for foreclosure

against the property, which was designated case No. 2008 CV 0267 (“the 2008

foreclosure”).      In the complaint, Union Bank listed North Carolina Furniture

Express, L.L.C., the Smiths, Minster Bank, MERS, SIB, the Auglaize County

Treasurer, and Entrust Administration, Inc. as defendants possibly having an

interest in the property.           All named defendants were served with notice.


1
  Only with respect to their notes and mortgages in favor of Union Bank did the Smiths sign as both
members for North Carolina Furniture Express, L.L.C., and individually. With respect to the other notes
and mortgages executed, the Smiths signed only in their individual capacity.



                                                -3-
Case Nos. 2-10-01 and 2-10-02


According to the record, MERS was served on July 30, 2008, and SIB was served

on November 14, 2008. Minster Bank and the Smiths filed timely answers to the

complaint.

       {¶ 5} Union Bank filed a motion for default judgment against defendants

MERS, SIB, and Entrust Administration, Inc., on March 10, 2009. The motion for

default judgment was sent to all named defendants in the matter, including MERS

and SIB. The trial court granted Union Bank a default judgment on March 10,

2009, specifically stating that the defendants had “been legally served with

summons and that Defendants are in default for answer or appearance and

therefore ha[ve] no interest in and to said premises and the equity of redemption of

said Defendants in the real estate described in Plaintiff’s Complaint shall be

forever cut off, barred, and foreclosed.” On March 11, 2009, Union Bank filed a

motion for summary judgment against the Smiths, Minster Bank, and the Auglaize

County Treasurer. Similarly, a copy of the motion for summary judgment was

sent to all named defendants in the matter, including MERS and SIB. On March

30, 2009, the trial court granted the motion for summary judgment and issued a

judgment of foreclosure providing that the lien priority on the property was as

follows: the Auglaize County Treasurer, Minster Bank, and then Union Bank.

       {¶ 6} The Smiths filed for bankruptcy shortly thereafter, on May 12, 2009,

causing the matter to be stayed. On June 9, 2009, the bankruptcy court issued a



                                       -4-
Case Nos. 2-10-01 and 2-10-02


relief from stay and abandonment for Union Bank, which allowed the 2008

foreclosure matter to continue, effective on July 31, 2009, and the property was

scheduled for sheriff’s sale on October 1, 2009. However, due to a notice of sale

not being received or served on all party defendants, the sale was cancelled and

rescheduled for December 4, 2009.

        {¶ 7} During this time and right after the Smiths had filed for bankruptcy,

on June 1, 2009, MERS (acting solely as a nominee for SIB) assigned appellant

BAC its interest in the property. Consequently, on August 28, 2009, BAC filed a

complaint for foreclosure against the property in the Auglaize County Court of

Common Pleas, which was designated case No. 2009 CV 0312 (“the 2009

foreclosure”). Along with the complaint, BAC filed a preliminary judicial report

showing what it believed to be a representation of any and all interests in the

property.2 In its complaint, BAC named the Smiths, Minster Bank, Union Bank,

and the Auglaize County Treasurer as defendants having a possible interest in the

property. Only Minster Bank and Union Bank filed answers to the complaint.3

Thereafter, on October 7, 2009, BAC filed a motion for default judgment against

the nonanswering parties, and that same day, the trial court issued a judgment


2
 As noted by the parties at the final hearing on November 2, 2009, neither the preliminary judicial report
nor the supplemental judicial report showed the 2008 foreclosure action as pending against the property.
3
 In its answer, Union Bank specifically stated, “FURTHERMORE, Defendant, The Union Bank Company
admits it has an interest in the described premises by virtue of a Complaint of Foreclosure pending with the
Auglaize Count Common Pleas Court Case No.: 2008 CV 0267 file by The Union Bank Company on July
23, 2008.”


                                                   -5-
Case Nos. 2-10-01 and 2-10-02


entry and decree in foreclosure granting BAC’s motion for default judgment and

listing the lien priority on the property in the following order: the Auglaize County

Treasurer, BAC, Minster Bank, and then Union Bank.

        {¶ 8} As a result, on October 9, 2009, Union Bank filed a motion contra to

BAC’s motion for default judgment and a motion to dismiss BAC’s complaint in

the 2009 foreclosure action based on the existence of the 2008 foreclosure action.

Additionally, on October 16, 2009, Union Bank and Minster Bank filed a joint

motion to vacate the judgment entry of default in the 2009 foreclosure action,

because they had not been afforded sufficient time to respond to BAC’s motion

before the judgment entry of foreclosure had been granted.

        {¶ 9} In response to the existence of the 2008 foreclosure action, on

October 21, 2009, BAC filed several motions, which included (1) a motion to

substitute defendant BAC for defendant MERS, (2) a motion to set aside the

default-judgment action entered against MERS in the 2008 foreclosure action, (3)

a motion to stay the 2008 foreclosure default judgment entry pending resolution of

the motion to set aside the judgment entry, (4) a motion to consolidate cases 2008

CV 0267 and 2009 CV 0312, or in the alternative, (5) a motion for leave to file an

answer to the 2008 complaint and cross-claim.4 Union Bank filed a response

opposing all BAC’s motions in the 2008 foreclosure case.


4
  BAC filed its motions in the 2008 foreclosure proceedings, while Union Bank and Minster Bank filed
their motions in the 2009 foreclosure proceedings.


                                               -6-
Case Nos. 2-10-01 and 2-10-02


       {¶ 10} In both the foreclosure actions, the trial court set all the motions for

a hearing, which was held on November 3, 2009. Thereafter, on December 3,

2009, the trial court issued a judgment entry addressing the issues in both the 2008

and 2009 foreclosure cases, but specifically stating that it was not consolidating

the cases for any purposes other than the issues presented at the November 3, 2009

hearing. Consequently, in its judgment entry, the trial court vacated part of the

2009 foreclosure action, citing that the foreclosure portion of the action had been a

“clerical error” within Civ.R. 60(A). Nevertheless, the trial court found that there

had been no error as against the Smiths, and thus, it allowed the 2009 foreclosure

action to stand, but again only as against the Smiths individually. In addition, the

trial court dismissed the 2009 foreclosure complaint on the basis of res judicata

and denied the motion to consolidate and motion to substitute defendant BAC as a

party-defendant in the 2008 foreclosure action, finding that BAC had not acquired

an interest in the property by operation of the doctrine of lis pendens.

       {¶ 11} BAC now appeals and raises four assignments of error. For ease of

our discussion, we also elect to address all of BAC’s assignments of error

together.

                             Assignment of Error No. I

              The trial court abused its discretion when it failed to
       expressly rule on appellant’s motion to set aside default judgment
       and failed to apply the proper standard for ruling on such a motion.



                                         -7-
Case Nos. 2-10-01 and 2-10-02


                            Assignment of Error No. II

             The trial court abused its discretion when it vacated the
       October 7, 2009 judgment entry in case Number 2009 CV 0312
       pursuant to CIV.R. 60(A).

                            Assignment of Error No. III

              The trial court abused its discretion when it reprioritized the
       liens against the property subject to case Numbers 2008 CV 0267
       and 2009 CV 0312.

                            Assignment of Error No. IV

               The trial court erred and abused its discretion when it found
       that BAC did not obtain an interest in the property when it obtained
       its assignment by operation of the Lis Pendens doctrine.

       {¶ 12} Essentially, BAC argues that the follwing decisions in the trial

court’s December 3, 2009 judgment entry were erroneous: (1) its ruling on the

motion to substitute, (2) failing to rule on its motion to set aside the default

judgment pursuant to Civ.R. 60(B), (3) vacating part of the 2009 foreclosure

action, and (4) its reprioritization of the liens against the property in the 2008

foreclosure action.

       {¶ 13} As stated above, the trial court first denied the motion to substitute

BAC as a party-defendant because it did not obtain any interest in the property

when it obtained its assignment from MERS. As a result, the trial court vacated

part of the 2009 foreclosure action (only as against the banks) and failed to address

BAC’s motion to set aside the default judgment pursuant to Civ.R. 60(B). After



                                        -8-
Case Nos. 2-10-01 and 2-10-02


reviewing the record and the applicable law, we believe that the trial court did not

abuse its discretion in rendering its December 3, 2009 judgment entry.

       {¶ 14} First, we will address the motion to substitute BAC as a party-

defendant for MERS in the 2008 foreclosure action.         Civ.R. 25 governs the

substitution of parties.   Specifically, Civ.R. 25(C) provides, “In cases of any

transfer of interest, the action may be continued by or against the original party,

unless the court upon motion directs the person to whom the interest is transferred

to be substituted in the action or joined with the original party.” The decision of

whether to allow a substitution of parties is discretionary with the trial court and

may be granted only upon a finding of a transfer of interest. Ahlrichs v. Tri-Tex

Corp. (1987), 41 Ohio App.3d 207, 534 N.E.2d 1231. As a result, this court uses

an abuse-of-discretion standard of review when determining whether a trial court

erred with respect to a motion to substitute pursuant to Civ.R. 25. Argent Mtge.

Co. v. Ciemins, 8th Dist. No. 90698, 2008-Ohio-5994, ¶ 9, citing Young v. Merrill

Lynch, Pierce, Fenner & Smith (1993), 88 Ohio App.3d 12, 623 N.E.2d 94. An

abuse of discretion constitutes more than an error of judgment and implies that the

trial court acted unreasonably, arbitrarily, or unconscionably.      Blakemore v.

Blakemore (1983), 5 Ohio St.3d 217, 219, 450 N.E.2d 1140. When applying the

abuse-of-discretion standard, a reviewing court may not simply substitute its

judgment for that of the trial court. Id.



                                            -9-
Case Nos. 2-10-01 and 2-10-02


       {¶ 15} While an assignment typically transfers the lien of the mortgage on

the property described in the mortgage, as BAC acknowledged in its reply brief,

an assignee can take, and the assignor can give, only the interest currently held by

the assignor. R.C. 5301.31. With that stated, it is clear under the facts of this case

that BAC never obtained an interest in the property; thus, it could not have been

substituted as a party-defendant in the 2008 foreclosure action. Here, with respect

to the 2008 foreclosure action, the date that the last party was served with notice

was on January 28, 2009, which was almost six months before the purported

assignment from MERS to BAC. Next, on March 11, 2009, the trial court issued a

judgment entry of default against MERS foreclosing on its interest in the property.

Once again, this default judgment was entered against MERS almost three months

before the purported assignment from MERS to BAC occurred. The effect of this

default judgment against MERS resulted in MERS having “no interest in and to

said premises and the equity of redemption of said Defendants in the real estate

described in Plaintiff’s Complaint shall be forever cut off, barred, and foreclosed.”

Nevertheless, according to the documents filed by BAC to evidence its assignment

from MERS, MERS assigned its interest to BAC on June 1, 2009. Consequently,

as a result of the already entered default judgment against MERS, when BAC was

assigned MERS’s interest in the property on June 1, 2009, BAC did not receive a

viable interest in the property. See Quill v. Maddox (May 31, 2002), 2nd Dist. No.



                                        - 10 -
Case Nos. 2-10-01 and 2-10-02


19052, 2002-Ohio-2703, at ¶ 2 (mortgagee’s assignee failed to establish that it had

an interest in the property, as mortgagee’s interest was foreclosed by the court

before mortgagee assigned its interest to assignee, which could acquire no more

interest than mortgagee held). Thus, it was reasonable for the trial court to have

denied the motion to substitute BAC as a party-defendant for MERS, given its lack

of interest in the property.

       {¶ 16} Additionally, BAC argues that the trial court erred because it did not

apply the GTE Automatic standard to its motion for relief from judgment. See

GTE Automatic Elec., Inc. v. ARC Industries, Inc. (1976), 47 Ohio St.2d 146, 150,

351 N.E.2d 113. In particular, BAC claims that the trial court never ruled on its

Civ.R. 60(B) motion. BAC claims that not addressing its motion was erroneous.

However, in this particular case, in light of our discussion above, there would have

been no need to address the motion and apply any standard to the motion for relief

from judgment because BAC lacked standing to challenge the default judgment

entered against MERS.

       {¶ 17} Civ.R. 60(B) allows “a party or his legal representative” to vacate a

default judgment upon successfully demonstrating that “(1) the party has a

meritorious defense or claim to present if relief is granted; (2) the party is entitled

to relief under one of the grounds stated in Civ.R. 60(B)(1) through (5); and (3)

the motion is made within a reasonable time * * *.” (Emphasis added.) GTE



                                        - 11 -
Case Nos. 2-10-01 and 2-10-02


Automatic Elec., Inc., 47 Ohio St.2d at 150. However, BAC was neither a party

nor a legal representative because it was not included in the original 2008

foreclosure action and was not allowed to be substituted as a party-defendant for

MERS. Cent. Ohio Receivables Co. v. Huston (Sept. 20, 1988), 8th Dist. No.

87AP-1185, at *2-3 (holding that an assignee did not have standing to challenge a

default judgment entered against its assignor). Accordingly, BAC lacked standing

to challenge the default judgment entered against its assignor MERS in the 2008

foreclosure action, and the trial court did not abuse its discretion when it failed to

rule on its motion.

       {¶ 18} With respect to the trial court’s decision to vacate the 2009

foreclosure action, we note that the trial court did not vacate the 2009 foreclosure

action in its entirety; rather, the court vacated only the portion of the action that

pertained to an interest in the property. As we will discuss in further detail below,

after dismissing the parties who were brought in because they had an interest in

the property (i.e., Union Bank and Minster Bank), the only aspect in the 2009

foreclosure action that remained was the default judgment action against the

Smiths. Nevertheless, we find that the trial court’s decision to vacate part of the

2009 foreclosure action was not an abuse of discretion.

       {¶ 19} First of all, since MERS’s interest in the property had already been

foreclosed prior to the filing of the 2009 foreclosure action, BAC did not obtain



                                        - 12 -
Case Nos. 2-10-01 and 2-10-02


any interest in the property when it was assigned the mortgage from MERS. Thus,

BAC could not have brought a foreclosure action at all. Moreover, typically a

pending foreclosure action between the same parties is grounds for abatement or

dismissal of an assignee’s complaint. Avco Fin. Servs. Loan, Inc. v. Hale (1987),

36 Ohio App.3d 65, 520 N.E.2d 1378; High Point Assn. v. Pochatek (Nov. 30,

1995), 8th Dist. Nos. 68000 and 68395, at *3; Bates v. Postulate Invests., L.L.C.,

176 Ohio App.3d 523, 2008-Ohio-2815, 892 N.E.2d 937, ¶ 16. Accordingly, it

was reasonable for the trial court to dismiss BAC’s complaint based on the fact

that the 2008 foreclosure action was still pending at the time BAC filed its 2009

foreclosure action. Therefore, although we may not agree with the trial court’s

grounds for vacating most of the 2009 foreclosure action, the trial court’s decision

was reasonable under the circumstances and was not an abuse of discretion.

       {¶ 20} Finally, as mentioned above, despite the trial court’s denial of the

motion to substitute and its decision to vacate the 2009 foreclosure action as it

related to any interest in the property, the trial court did add BAC as a lien holder

in the December 3, 2009 judgment entry and stated that BAC had a fourth-priority

lien against the property. BAC claims that this decision was also an abuse of

discretion. Specifically, BAC claims that because the trial court recognized that it

had a lien against the property when it added BAC to the 2008-foreclosure lien

holder list, the trial court clearly abused its discretion when it recognized BAC as



                                       - 13 -
Case Nos. 2-10-01 and 2-10-02


being only the fourth priority lien holder, despite the fact that it had been assigned

MERS’s lien, which would have given it the first-priority lien holder to the

property. Overall, BAC claims that the trial court could not have recognized that

it had an interest in the property without finding that it was also the first-priority

lien holder. While we acknowledge that the trial court obviously recognized that

BAC had an interest in the property, we disagree with BAC’s argument that this

interest had to come from MERS’s first-priority-lien-holder status pursuant to the

mortgage.

       {¶ 21} Despite the fact that the trial court vacated most of the 2009

foreclosure action, the trial court found that BAC’s default judgment and decree of

foreclosure were valid but only as against the Smiths: “[A]s between BAC and

Defendants Smith, BAC should obtain recovery of its Promissory Note, as

assigned.” “ ‘The right to judgment on the note is one cause of action. The right

to foreclose a mortgage is another cause of action. One is legal—the other is

equitable.’ ” Fifth Third Bank v. Hopkins, 177 Ohio App.3d 114, 2008-Ohio-

2959, 894 N.E.2d 65, ¶ 15, quoting Fed. Deposit Ins. Corp. v. Simon (Aug. 17,

1977), 9th Dist. No. 8443. This is because a “mortgage is merely security for a

debt and is not the debt itself.” Id., quoting Gevedon v. Hotopp, 2nd Dist. No.

20673, 2005-Ohio-4597, ¶ 27. As another appellate court explained:

             A mortgage is a form of secured debt where the obligation,
       evidenced by a note, is secured by the transfer of an interest in


                                        - 14 -
Case Nos. 2-10-01 and 2-10-02


       property, accomplished by the delivery of a mortgage deed. Upon
       breach of condition of the mortgage agreement, a mortgagee has
       concurrent remedies. It may, at its option, sue in equity to foreclose,
       or sue at law directly on the note; or, bring an action in ejectment,
       Equity Savings & Loan v. Mercurio (1937), 24 Ohio Law Abs. 1, 2.
       Thus, suit on the note was not foreclosed by the disposition of the
       previous action in foreclosure * * *.

Broadview S. & L. Co. v. Crow (Dec. 30, 1982), 8th Dist. Nos. 44690, 44691, and

45002, at *3.

       {¶ 22} As we explained above, BAC did not obtain an interest in the

property because the mortgage it had obtained from MERS had already been

foreclosed. Nevertheless, the default judgment entered against the Smiths in the

2009 foreclosure action gave BAC a judgment lien on the note, so BAC still had a

right to collect its unsecured judgment lien out of the proceeds from the sale of the

real estate. However, BAC’s judgment lien was not superior to those of Minster

or Union Bank because BAC’s judgment on the note had not been issued until

after the Smiths had executed mortgages to Minster and Union Bank. Therefore,

the trial court did not abuse its discretion when it recognized BAC’s judgment lien

against the property in the 2008 foreclosure action and only recognized it as the

fourth lien holder, because BAC’s lien was the result of the promissory note

assigned from SIB, and not a result of the mortgage assigned by MERS.

       {¶ 23} Overall, while we may not necessarily agree with all the doctrines

and rules that the trial court used in reaching its decision, we nonetheless have



                                       - 15 -
Case Nos. 2-10-01 and 2-10-02


held that “ ‘[a] judgment by the trial court which is correct, but for a different

reason, will be affirmed on appeal as there is no prejudice to the appellant.’ ”

(Citations omitted.) Wedemeyer v. U.S.S. F.D.R. (CV-42) Reunion Assn., 3d Dist.

No. 1-09-57, 2010-Ohio-1502, ¶ 50, quoting Davis v. Widman, 184 Ohio App.3d

705, 2009-Ohio-5430, 922 N.E.2d 272, ¶ 16. Based on our discussion above, we

find that the trial court did not abuse its discretion when it denied the motion to

substitute BAC as a party-defendant for MERS in the 2008 foreclosure case on the

basis that BAC did not acquire any interest in the property, when it failed to rule

on BAC’s Civ.R. 60(B) motion, when it partially vacated the 2009 foreclosure

action, and when it allowed BAC to have a fourth-priority judgment lien.

       {¶ 24} BAC’s first, second, third, and fourth assignments of error are,

therefore, overruled.

       {¶ 25} Having found no error prejudicial to the appellant herein in the

particulars assigned and argued, we affirm the judgments of the trial court.

                                                               Judgments affirmed.

       WILLAMOWSKI, P.J., concurs in judgment only.

       ROGERS, J. concurs in part and dissents in part.

                             __________________

       ROGERS, Judge, concurring in part and dissenting in part.




                                       - 16 -
Case Nos. 2-10-01 and 2-10-02


       {¶26} I respectfully concur in part and dissent in part from the decision of

the majority.

       {¶27} As to assignment of error No. I, I concur fully with the majority’s

finding that the trial court did not err in denying BAC’s motion to substitute it as a

party-defendant for MERS. I agree with the majority’s finding that when the trial

court issued a judgment entry against MERS’s foreclosing on its interest on March

11, 2009, MERS no longer had any viable interest in the property that it could

assign to BAC on June 1, 2009. Therefore, I agree that given BAC’s lack of

interest in the property, the trial court was reasonable in denying BAC’s motion to

substitute.

       {¶28} Additionally, I wish to emphasize that the mortgage designated

MERS “solely as nominee for SIB Mortgage Corp.” As expressed in my dissent

in Countrywide Home Loans Servicing, L.P. v. Shifflet, 3d Dist. No. 9-09-31,

2010-Ohio-1266, ¶ 18-21, I believe this language served solely to designate

MERS as an agent for purposes of servicing the note and mortgage and did not

transfer to MERS any interest in the real estate or the repayment of moneys

loaned. Therefore, it was never a real party in interest.

       {¶29} Additionally, I believe that the majority’s finding in assignment of

error No. I, with which I concur, is inconsistent with the remainder of the majority

opinion.



                                        - 17 -
Case Nos. 2-10-01 and 2-10-02


       {¶30} In its analysis of assignment of error No. II, the majority finds that

the trial court did not abuse its discretion when it vacated the second foreclosure

action (filed by BAC) and its default judgment because (1) BAC never obtained

any interest in the property when MERS assigned to it the Smiths’ mortgage, and

(2) a pending foreclosure action may be grounds for dismissal of an assignee’s

complaint where the action is between the same parties. Nevertheless, the trial

court did not vacate the portion of the second foreclosure action against the Smiths

individually. Further, in its analysis of assignment of error No. II, the majority

holds that the trial court did not abuse its discretion in listing BAC as the fourth-

priority lien holder because (1) BAC had a right to collect its unsecured judgment

lien from the sale of the real estate foreclosed upon, and (2) BAC’s judgment lien

was subordinate to Minster’s and Union Bank’s interests.

       {¶31} While I agree with the majority’s conclusion that the trial court did

not err in vacating portions of the second foreclosure action, I believe that the trial

court erred in failing to vacate the entire second foreclosure action.          I find

inconsistent the majority’s finding that any interest MERS had in the property was

extinguished on March 11, 2009, and, thus, that it passed no viable interest to

BAC, and the majority’s subsequent validation of the trial court’s finding that

BAC’s default judgment and decree of foreclosure were valid against the Smiths.

For the same reason, I find inconsistent the majority’s validation of the trial



                                        - 18 -
Case Nos. 2-10-01 and 2-10-02


court’s prioritizing of BAC as the fourth lien holder in its December 2009 entry. I

believe that the March 11, 2009 default judgment extinguished both the legal and

equitable interests that MERS, and consequently, BAC, had in the property. I

would, therefore, reverse the trial court’s judgment, finding that it should have

vacated the entire second foreclosure action and that it abused its discretion in

recognizing BAC as a lien holder in the first foreclosure action, to which it was

never a party. See also Fifth Third Bank v. Hopkins, 177 Ohio App.3d 114, 2008-

Ohio-2959, ¶ 20 (Carr, P.J., concurring) (“[I]f such subsequent claims are not

barred, consumers will be needlessly forced to defend numerous separate lawsuits.

The ramifications could be onerous. First, to pay to defend against multiple

lawsuits, debt-laden consumers might be forced to assume even greater financial

burdens, taking out second or third mortgages on subsequent real estate purchases.

This cycle could lead to consumers’ overextending themselves financially and

facing additional subsequent foreclosure actions. Second, I believe that these

subsequent lawsuits for money due, which could be resolved in conjunction with

an initial foreclosure action, would clog the dockets of our trial courts”).

       {¶32} I also disagree with the trial court’s application of the lis pendens

doctrine, which it used to support its conclusion that BAC had never obtained an

interest in the property. I do not believe that this is an appropriate use of lis




                                        - 19 -
Case Nos. 2-10-01 and 2-10-02


pendens, but rather that any interest MERS had, and consequently that BAC could

have obtained, was extinguished as operation of judgment.

       {¶33} Finally, even if BAC had had a valid assignment from a real party in

interest, I would find that BAC’s foreclosure filing was barred by res judicata as

argued in Union Bank’s “Motion in Contra to Plaintiff’s Motion for Default

Judgment and Motion to Dismiss Plaintiff’s Complaint.” The Supreme Court of

Ohio has held that “[t]he doctrine of res judicata encompasses the two related

concepts of claim preclusion, also known as * * * estoppel by judgment, and issue

preclusion, also known as collateral estoppel.” Grava v. Parkman Twp. (1995), 73

Ohio St.3d 379, 381. This court has previously held that “[c]laim preclusion

prevents subsequent actions, by the same parties or their privies, based upon any

claim arising out of a transaction that was the subject matter of a previous action.”

Dawson v. Dawson, 3d Dist. Nos. 14-09-08, 14-09-10, 14-09-11, and 14-09-12,

2009-Ohio-6029, ¶ 36. Additionally, “[w]here a claim could have been litigated in

the previous suit, claim preclusion also bars subsequent actions on that matter.”

Dawson, 2009-Ohio-6029, at ¶ 36, citing Grava at 382.           Here, Union Bank

obtained a default judgment against BAC concerning the same subject matter in

March 2009. Consequently, I would find BAC’s foreclosure filing in August 2009

to be barred by res judicata.




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