[Cite as Third Fed. Sav. & Loan Assoc. of Cleveland v. Schlegel, 2013-Ohio-1978.]


STATE OF OHIO                     )                        IN THE COURT OF APPEALS
                                  )ss:                     NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT                  )

THIRD FEDERAL SAVINGS & LOAN                               C.A. No.         26505

        Appellee

        v.                                                 APPEAL FROM JUDGMENT
                                                           ENTERED IN THE
PAMELA M. SCHLEGEL, et al.                                 COURT OF COMMON PLEAS
                                                           COUNTY OF SUMMIT, OHIO
        Appellant                                          CASE No.   CV 2011 08 4889

                                 DECISION AND JOURNAL ENTRY

Dated: May 15, 2013



        WHITMORE, Judge.

        {¶1}     Defendant-Appellant, Pamela Schlegel fka Pamela Wahlgren, appeals from the

judgment of the Summit County Court of Common Pleas in favor of Third Federal Savings and

Loan Association of Cleveland (“Third Federal”). This Court reverses.

                                                      I

        {¶2}     On November 14, 2005, Jeffrey Wahlgren executed a promissory note (“the

Note”) in favor of Third Federal in the amount of $117,000. Although Wahlgren and Schlegel

were married at the time Wahlgren executed the Note, Schlegel did not sign it. She did,

however, sign a mortgage (“the Mortgage”) that was executed on the same day to secure the

Note. The Mortgage identified both Wahlgren and Schlegel as borrowers and mortgaged real

property located at 1196 Millhaven Drive to Third Federal as security for the $117,000 loan.

There is no dispute that: (1) the property was jointly titled to Wahlgren and Schlegel (under her
                                                2


former name); (2) Wahlgren and Schlegel divorced in 2009; and (3) the property remained

jointly titled after their divorce.

        {¶3}    Wahlgren died on March 19, 2011. On August 30, 2011, Third Federal filed a

complaint against Schlegel, seeking to accelerate the balance due on the Note and to foreclose on

the Mortgage.1      Third Federal then moved for summary judgment, and Schlegel filed a

memorandum in opposition to summary judgment. The court ultimately granted Third Federal’s

motion for summary judgment and issued a decree of foreclosure.

        {¶4}    Schlegel now appeals and raises one assignment of error for our review.

                                                II

                                       Assignment of Error

        THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT TO
        THE PLAINTIFF/APPELLEE WHEN MATERIAL FACTS ARE IN DISPUTE
        AS TO WHETHER THE PLAINTIFF/APPELLEE HAD THE ABSOLUTE
        RIGHT TO ACCELERATE THE BALANCE DUE ON THE NOTE AND
        FORECLOSE ON THE PROPERTY.

        {¶5}    In her sole assignment of error, Schlegel argues that the trial court erred by

granting Third Federal’s motion for summary judgment. Specifically, she argues that genuine

issues of material fact exist because Third Federal failed to show that a default on the Note

occurred, that it had a right to accelerate the balance due on the note, and that it gave Schlegel

proper notice of acceleration.

        {¶6}    This Court reviews an award of summary judgment de novo. Grafton v. Ohio

Edison Co., 77 Ohio St.3d 102, 105 (1996). Pursuant to Civ.R. 56(C), summary judgment is

proper if:




1
  Although the complaint also named several other individuals and entities as defendants, we
need not discuss the other defendants for purposes of this appeal.
                                                3


       (1) No genuine issue as to any material fact remains to be litigated; (2) the
       moving party is entitled to judgment as a matter of law; and (3) it appears from
       the evidence that reasonable minds can come to but one conclusion, and viewing
       such evidence most strongly in favor of the party against whom the motion for
       summary judgment is made, that conclusion is adverse to that party.

Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327 (1977). The party moving for summary

judgment bears the initial burden of informing the trial court of the basis for the motion and

pointing to parts of the record that show the absence of a genuine issue of material fact. Dresher

v. Burt, 75 Ohio St.3d 280, 292-293 (1996). Specifically, the moving party must support the

motion by pointing to some evidence in the record of the type listed in Civ.R. 56(C). Id. Once

this burden is satisfied, the non-moving party bears the burden of offering specific facts to show

a genuine issue for trial. Id. at 293. The non-moving party may not rest upon the mere

allegations and denials in the pleadings but instead must point to or submit some evidentiary

material that demonstrates a genuine dispute over a material fact. Henkle v. Henkle, 75 Ohio

App.3d 732, 735 (12th Dist.1991).

       {¶7}    This Court has held that “foreclosure requires a two[-]step process.” Wells Fargo

v. Burrows, 9th Dist. No. 26326, 2012-Ohio-5995, ¶ 10, quoting Natl. City Mtge. v. Skipper, 9th

Dist. No. 24772, 2009-Ohio-5940, ¶ 25. “The prerequisites for a party seeking to foreclose a

mortgage are execution and delivery of the note and mortgage; valid recording of the mortgage;

default; and establishing an amount due.”             (Internal quotations and citations omitted.)

CitiMortgage, Inc. v. Firestone, 9th Dist. No. 25959, 2012-Ohio-2044, ¶ 11. “Once a court has

determined that a default on an obligation secured by a mortgage has occurred, it must then

consider the equities of the situation in order to decide if foreclosure is appropriate.” (Internal

quotations and citations omitted.) Skipper at ¶ 25.
                                                 4


       {¶8}    In support of its motion for summary judgment, Third Federal attached the Note,

the Mortgage, an affidavit from one of its employees, and a copy of Wahlgren’s annual loan

statement for the time period between January 2009 and July 2011. Third Federal sought to

establish a default by virtue of Wahlgren’s death. David Shelton, a legal analyst for Third

Federal and its affiant, averred in his affidavit that “[d]efault of payment pursuant to the terms of

the Note and Mortgage has occurred due to the death of the borrower, Jeffery L. Wahlgren.”

Third Federal identified the default date as May 1, 2011, and asserted that the default gave it the

right to accelerate the balance due on the Note and to foreclose on the Mortgage.

       {¶9}    The Note defines a default of payment as a failure of the borrower to “pay the full

amount of each monthly payment on the date it is due.” Per the Note, the borrower’s payment of

$731.85 was due on the first of each month. The annual loan statement that Third Federal

attached to its motion reflects that Third Federal continued to receive payments of $731.85 after

Wahlgren’s death. The last payment reflected on the statement was made on July 9, 2011.

       {¶10} In her memorandum in opposition to summary judgment, Schlegel attached her

own affidavit. Schlegel averred that, per the terms of her and Wahlgren’s divorce decree, she

was to keep the house. She averred that she was the one who paid the Mortgage after the divorce

and that she made five monthly payments to Third Federal after Wahlgren’s death in March

2011. Schlegel further stated that, although she had tendered another $1,000 check to Third

Federal on August 2, 2011, Third Federal returned the check to her. Up until that point, Schlegel

averred, she “was current and timely making the payments on Third Federal’s Mortgage * * *.”

Schlegel also stated that she had lived at the property since she and Wahlgren purchased it, her

name was on the title, and she intended to reside there in the future.
                                                5


       {¶11} Third Federal did not file a reply brief in response to Schlegel’s memorandum in

opposition. In ruling on Third Federal’s motion, the trial court found that “the terms of the Note

and Mortgage have been breached by reason of non-payment from May 1, 2011 due to the death

of Jeffrey L. Wahlgren, the maker of the Note, and [] Third Federal is entitled to accelerate the

balance due and owing.” The court’s entry did not include any discussion about the payments

that Schlegel tendered to Third Federal. It also failed to include any discussion of “the equities

of the situation.” Skipper, 2009-Ohio-5940, at ¶ 25.

       {¶12} As previously set forth, the Note only defined a default of payment as the

borrower’s failure to “pay the full amount of each monthly payment on the date it [was] due.”

The Mortgage defined “Borrower” as “JEFFREY L WAHLGREN AND PAMELA M

WAHLGREN, HUSBAND AND WIFE,” and there was evidence before the court that Schlegel

continued to make payments to Third Federal after Wahlgren’s death. Indeed, Schlegel averred

that she was the one who had paid the Mortgage since the parties’ divorce in 2009.

       {¶13} To foreclose upon the property at issue here, Third Federal had to prove that a

default on the Note occurred. Firestone, 2012-Ohio-2044, at ¶ 11. Third Federal did not point to

any provision in either the Note or the Mortgage about what effect, if any, Wahlgren’s death

would have upon the continued timely payments of the mortgage.            Instead, Third Federal

construed Wahlgren’s death as an automatic trigger for default due to non-payment. The Note,

however, defined default for non-payment as the borrower’s failure to “pay the full amount of

each monthly payment on the date it is due.” There was evidence that Schlegel, a “Borrower”

per the definition in the Mortgage, made timely payments to Third Federal. Third Federal never

explained why a default occurred in spite of its acceptance of payments from one of the

individuals defined as a borrower in the Mortgage. Although Third Federal’s Master Mortgage
                                                  6


Form provides that co-signers2 are not personally obligated to pay the sum secured by the

Mortgage, it does not appear to prohibit a co-signer from paying the sum. As the summary

judgment movant, it was Third Federal’s burden to demonstrate the absence of a genuine issue of

material fact with regard to whether a default occurred. The record does not support the

conclusion that Third Federal met its burden.

       {¶14} The record also does not support the conclusion that the trial court properly

considered the equities before ordering foreclosure. As set forth above, foreclosure is a two-step

process. Burrows, 2012-Ohio-5995, at ¶ 10, quoting Skipper, 2009-Ohio-5940, at ¶ 25. Before a

court may order foreclosure, it “ must [] consider the equities of the situation in order to decide if

foreclosure is appropriate.” (Internal quotations and citations omitted.) Skipper at ¶ 25. There is

no indication in the record that the court considered whether or not it was equitable to foreclose

given the specific facts and circumstances here.         Thus, even if we were to assume that

Wahlgren’s death constituted a default under the terms of the Note and the Mortgage, this Court

would still conclude that the trial court erred by granting Third Federal’s motion for summary

judgment because it did so without first considering whether equity favored foreclosure.

       {¶15} For the foregoing reasons, we conclude that the trial court erred by granting Third

Federal’s motion for summary judgment. Consequently, Schlegel’s sole assignment of error is

sustained.




2
 The Master Mortgage Form defines a co-signer as a borrower who has signed a mortgage, but
not the note secured by the mortgage.
                                                 7


                                                III

       {¶16} Schlegel’s sole assignment of error is sustained. The judgment of the Summit

County Court of Common Pleas is reversed, and the cause is remanded for further proceedings

consistent with the foregoing opinion.

                                                                              Judgment reversed,
                                                                             and cause remanded.




       There were reasonable grounds for this appeal.

       We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

       Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

       Costs taxed to Appellee.




                                                      BETH WHITMORE
                                                      FOR THE COURT



MOORE, P. J.
CARR, J.
CONCUR.
                                          8


APPEARANCES:

MARK E. OWENS and JULIUS P. AMOURGIS, Attorneys at Law, for Appellant.

DEAN K. HEGYES, Attorney at Law, for Appellee.
