[Cite as First Fin. Bank, N.A. v. Cooper, 2016-Ohio-3523.]



                          IN THE COURT OF APPEALS
                 FIRST APPELLATE DISTRICT OF OHIO
                           HAMILTON COUNTY, OHIO



FIRST FINANCIAL BANK, N.A.,                       :          APPEAL NO. C-150664
                                                             TRIAL NO. A-1500091
         Plaintiff-Appellee,                      :

   vs.                                            :
                                                                O P I N I O N.
DOUGLAS J. COOPER,                                :

         Defendant-Appellant.                     :




Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed in Part, Reversed in Part, and Cause
                           Remanded

Date of Judgment Entry on Appeal: June 22, 2016



Lange, Quill & Powers, PLC, and John E. Lange, for Plaintiff-Appellee,

The Blessing Law Firm and David S. Blessing, for Defendant-Appellant.
                   OHIO FIRST DISTRICT COURT OF APPEALS


FISCHER, Presiding Judge.


       {¶1}   Defendant-appellant Douglas Cooper appeals from a judgment of the

Hamilton County Court of Common Pleas requiring him to pay plaintiff-appellee

First Financial Bank, N.A., (“First Financial”) $61,408.19 plus interest and costs for

breach of a promissory note. Because we determine that a genuine issue of material

fact exists with regard to whether First Financial mitigated its monetary damages, we

reverse that portion of the trial court’s judgment and remand the cause for further

proceedings. We affirm the remainder of the trial court’s judgment.

       {¶2}   In 2006, Cooper assisted his daughter in buying a home on Eustis

Court in Hamilton County, Ohio, through First Financial (formerly Peoples

Community Bank). Cooper and his daughter cosigned a promissory note in the

amount of $112,000.       Cooper’s daughter lived in the Eustis Court home for

approximately two years, and then moved out of state.         Instead of selling the

property, Cooper’s daughter rented the property to tenants, and Cooper continued to

make the note payments.

       {¶3}   In September 2009, Hamilton County filed a foreclosure action against

Cooper, his daughter, and his wife, for delinquent real-estate taxes in the amount of

$7,242.87.    It named the Coopers as defendants, as well as First Financial’s

predecessor Peoples Community Bank. The Coopers never answered or otherwise

responded to the foreclosure complaint. First Financial filed an answer stating that

it was the holder of a promissory note secured by the Eustis Court property, and that

$106,435.41 with interest remained due and owing on the note. Without opposition

from the Coopers, Hamilton County obtained a default judgment of foreclosure, and

the property was sold at a sheriff’s sale to First Financial for $50,000. In May 2011,


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First Financial filed a motion for distribution of the excess sale proceeds, claiming

that $118,212.42 was still owed under the promissory note.

       {¶4}   In January 2015, First Financial filed a complaint against Cooper for

breach of the promissory note. First Financial alleged that Cooper had failed to

make monthly payments due under the note since September 2010, and alleged that

$61,408.19 plus interest remained unpaid under the note. Cooper answered First

Financial’s complaint and asserted several affirmative defenses, including failure to

mitigate damages and res judicata, and Cooper filed a counterclaim for fraud.

Cooper alleged that he did not know about the foreclosure of the Eustis Court

property because service of the summons and complaint had been sent to him, his

wife, and his daughter at the Eustis Court property, where they did not reside.

Cooper alleged that First Financial had knowledge of the Coopers’ residential address

because of their ongoing banking relationship, but that First Financial made no

attempt to notify them of the pending foreclosure.

       {¶5}   First Financial filed a motion for summary judgment on its claim for

breach of the promissory note and on Cooper’s fraud counterclaim. First Financial

supported its motion with an affidavit from a retail collections manager, who averred

that Cooper had defaulted under the note by failing to make monthly payments since

September 2010. Cooper responded with his own motion for summary judgment

and memorandum in opposition. Cooper filed an affidavit in which he detailed that

he had been a longtime customer of Peoples Community Bank, and now First

Financial. Cooper had started his own business in 2009, and had received a business

loan from First Financial in April 2010, during the pendency of the foreclosure

lawsuit.


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         {¶6}   According to Cooper’s affidavit, no one at First Financial discussed the

foreclosure lawsuit with him until he tried to make a monthly payment under the

note in either September or October 2010, and First Financial refused to take the

payment. At that point, First Financial informed Cooper that he no longer owned the

property. Cooper stated that he offered to purchase the property back from First

Financial for $103,825.23, plus costs and fees of $11,871.21, and he attached a copy

of his written offer to the affidavit. According to Cooper, First Financial rejected his

offer.

         {¶7}   Cooper also attached to his affidavit an email from a First Financial

branch manager, Donna Farrell, in which Farrell discusses the Eustis Court property

with what appears to be another First Financial employee. In the email, Farrell

stated that Cooper is a valuable client who holds personal deposit and loan accounts

with First Financial, as well as a commercial checking account, loan, and credit card.

Farrell indicated that Cooper wanted to buy back the property, and that he wanted to

finance the purchase through First Financial.        Farrell acknowledged that First

Financial had a policy “prohibiting us from financing the purchase of our REO

properties[,]” but she wondered whether First Financial would reconsider this policy

in light of this “unique situation.”

         {¶8}   The trial court granted summary judgment in favor of First Financial

on all claims and entered judgment against Cooper for $61,408.19 plus interest and

costs. Cooper has appealed.

         {¶9}   At the outset, we note that our standard of review of a summary-

judgment ruling under Civ.R. 56(C) is de novo. Schmidt v. Village of Newtown, 1st

Dist. Hamilton No. C-110470, 2012-Ohio-890, ¶ 6. Summary judgment is proper


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only where no genuine issues of material fact remain, the moving party is entitled to

judgment as a matter of law, and it appears from the evidence that reasonable minds

can come to but one conclusion, and with the evidence construed most strongly in

favor of the nonmoving party, that conclusion is adverse to that party. Id., citing

Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).

       {¶10} In his first assignment of error, Cooper argues that the trial court erred

in granting summary judgment to First Financial because its cause of action was

barred under res judicata.

       {¶11} Under the doctrine of res judicata, “a valid final judgment rendered

upon the merits bars all subsequent actions based upon any claim arising out of the

transaction or occurrence that was the subject matter of the previous action.” Grava

v. Parkman Twp., 73 Ohio St.3d 379, 653 N.E.2d 226 (1995), syllabus. “Res judicata

requires a plaintiff to present every ground for relief in the first action or be forever

barred from asserting it.” State ex rel. Robinson v. Huron Cty. Court of Common

Pleas, 143 Ohio St.3d 127, 2015-Ohio-1553, 34 N.E.3d 903, ¶ 8.

       {¶12} In arguing that First Financial’s suit is barred by res judicata, Cooper

relies on U.S. Bank, N.A. v. Gullotta, 120 Ohio St.3d 399, 2008-Ohio-6268, 899

N.E.2d 987. The facts of Gullotta are wholly distinguishable. In Gullotta, the Ohio

Supreme Court considered whether each missed payment under a promissory note

constituted a new claim, and thus exempted successive actions from the rules of

voluntary dismissals under Civ.R. 41(A)(1). In Gullotta, the bank had voluntarily

dismissed its first two actions against the debtor for breach of a promissory note and

mortgage, and then filed a third action against the debtor based upon the same note,

mortgage, and default. The bank argued that the third action was not barred by res


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judicata because it sought relief in the form of interest only. The court held that once

the bank had invoked the acceleration clause of a contract, the debtor had an

obligation to pay the entire balance of the note, and the bank could not treat each

missed payment as a separate claim. The court held that res judicata applied to bar

the bank’s third cause of action.

       {¶13} By contrast, this case presents the issue of whether a mortgagee named

as a defendant in a foreclosure action because of its interest in the subject property

must bring its claims against a mortgagor, also named as defendant in the same

foreclosure action, or be barred by res judicata from bringing later claims. This issue

was decided by the Ninth Appellate District in Fifth Third Bank v. Hopkins, 177 Ohio

App.3d 114, 2008-Ohio-2959, 894 N.E.2d 65 (9th Dist.).

       {¶14} In Hopkins, Andrew Hopkins executed a promissory note and

mortgage with Fifth Third Bank, and subsequently executed an equity line of credit,

along with his wife, secured by the same property. Approximately four years later,

another mortgage company filed a foreclosure action against the Hopkinses for

defaulting on a promissory note secured by the same property. The foreclosure

complaint named Fifth Third Bank as a defendant as well. Neither the Hopkinses

nor Fifth Third Bank filed answers in the foreclosure action, and the mortgage

company obtained a default judgment. Fifth Third Bank then filed a complaint for

money damages against the Hopkinses. The Hopkinses answered Fifth Third Bank’s

complaint, raising res judicata as an affirmative defense. The trial court entered

judgment in favor of Fifth Third Bank, and the Hopkinses appealed the res judicata

issue. The appellate court determined that the prior foreclosure lawsuit did not bar

Fifth Third Bank’s lawsuit for money damages because the Hopkinses and Fifth


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Third Bank were codefendants in the foreclosure lawsuit—not adversarial parties—

and thus any claim that Fifth Third Bank may have had against the Hopkinses at that

time would have been a permissive cross-claim under Civ.R. 13(G). The appellate

court also rejected the Hopkinses’ argument that res judicata applied because the

remedies in the prior foreclosure action and the instant action were identical. The

appellate court reasoned that a note and mortgage are separate instruments, and

“even when a mortgage is incorporated into a promissory note, the note remains

independent of the mortgage and is a separate, enforceable contract between the

parties.” Id. at ¶ 16. Hopkins was relied upon by the Second Appellate District in a

similar case, SunTrust Bank v. Wagshul, 2d Dist. Montgomery No. 25567, 2013-

Ohio-3931.

       {¶15} Cooper argues that Hopkins and Wagshul are distinguishable because

in those cases the defendant banks never answered or sought any type of relief in the

foreclosure actions, and, in this case, First Financial answered and received proceeds

from the foreclosure sale. The amount of proceeds First Financial received from the

foreclosure sale is relevant to any damages calculation in this action by First

Financial against Cooper on the note, but the receipt of proceeds does not act as a

complete bar to any action against Cooper. Even though First Financial participated

in the first lawsuit and sought proceeds from the sale, First Financial did not pursue

any judgment against Cooper at that time, nor was it required to do so.           See

Hopkins; Wagshul.

       {¶16} As a result, we agree with the trial court that First Financial’s action

against Cooper to recover under the promissory note was not barred by the doctrine

of res judicata. We overrule the first assignment of error.


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                     OHIO FIRST DISTRICT COURT OF APPEALS



       {¶17} We will address Cooper’s third assignment of error next, in which he

argues that the trial court erred in granting summary judgment in favor of First

Financial on his fraud counterclaim.        Cooper’s counterclaim alleges that First

Financial had a duty to disclose its knowledge of Cooper’s residential address in the

foreclosure action, and that the court and the parties in that action justifiably relied

on First Financial’s failure to disclose.

       {¶18} Fraud requires proof of

       (a) a representation or, where there is a duty to disclose, concealment

       of a fact, (b) which is material to the transaction at hand, (c) made

       falsely, or with such utter disregard and recklessness as to whether it is

       true or false that knowledge may be inferred, (d) with the intent of

       misleading another into relying upon it, (e) justifiable reliance upon

       the representation or concealment, and (f) a resulting injury

       proximately caused by the reliance.

Gator Dev. Corp. v. VHH, Ltd., 1st Dist. Hamilton No. C-080193, 2009-Ohio-1802, ¶

26, quoting Burr v. Stark Cty. Bd. of Commrs., 23 Ohio St.3d 69, 491 N.E.2d 1101

(1986), paragraph two of the syllabus.

       {¶19} The first element of fraud by concealment requires proof of a duty to

disclose.   Cooper argues that First Financial had a duty to disclose Cooper’s

residential address to the court at commencement of the foreclosure proceedings

because First Financial had actual knowledge of Cooper’s address, and, as a claimant

in the foreclosure action, First Financial should have served its filings on Cooper at

his residential address.




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                   OHIO FIRST DISTRICT COURT OF APPEALS



       {¶20} Cooper has cited no authority for the proposition that a defendant-

mortgagee in a foreclosure action has a duty to disclose the residential address of a

codefendant-mortgagor to the court and plaintiff, nor could we locate any such

authority. Therefore, we determine that Cooper has not shown that First Financial

breached a legal duty owed to him, and the trial court properly entered summary

judgment in favor of First Financial on Cooper’s fraud counterclaim.

       {¶21} We overrule Cooper’s third assignment of error.

       {¶22} In his second assignment of error, Cooper argues that the trial court

erred in granting summary judgment in favor of First Financial on Cooper’s

affirmative defense of failure to mitigate damages.

       {¶23} Under Ohio law, the injured party in a breach-of-contract action has a

duty to mitigate damages, meaning that the injured party cannot recover damages

“that it could have prevented by ‘reasonable affirmative action.’ ” Four Seasons

Environmental, Inc. v. Westfield Cos., 93 Ohio App.3d 157, 159, 638 N.E.2d 91 (1st

Dist.1994), quoting F. Ents. v. Kentucky Fried Chicken Corp., 47 Ohio St.2d 154, 351

N.E.2d 121 (1976), paragraph three of the syllabus. An injured party need only use

“reasonable, practical care and diligence, not extraordinary measures to avoid

excessive damages.” Provident Bank v. Barnhart, 3 Ohio App.3d 316, 320, 445

N.E.2d 746 (1st Dist.1982).     The failure to mitigate damages is an affirmative

defense, meaning that the burden of proof lies with the breaching party. Jindal

Builders & Restoration Corp. v. Brown & Cris, 1st Dist. Hamilton Nos. C-970029

and C-970050, 1997 Ohio App. LEXIS 4768, *3 (Oct. 31, 1997). Whether an injured

party used reasonable care to avoid damages presents a question of fact. Pinnacle

Mgt. v. Smith, 12th Dist. Butler No. CA2003-12-327, 2004-Ohio-6928, ¶ 12.


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                   OHIO FIRST DISTRICT COURT OF APPEALS



       {¶24} Cooper argues that First Financial failed to mitigate its damages in

part by rejecting his offer to purchase the property from First Financial for

$103,825.23, after Cooper learned that he no longer owned the property. First

Financial rejected Cooper’s offer because Cooper needed financing in order to

purchase the property, and First Financial has a “policy not to finance the purchase

of its REO properties.” First Financial contends that it did mitigate its damages by

bidding on the property at the sheriff’s sale, nearly four times the amount that was

owed to Hamilton County for delinquent taxes.

       {¶25} First Financial’s action in repurchasing the property may have

mitigated its damages, but that ignores the question of whether First Financial acted

reasonably in rejecting Cooper’s offer to repay.     Because the record shows that

Cooper had been current on all of his note payments until completion of the tax

foreclosure, when First Financial rejected Cooper’s payment and Cooper discovered

he no longer owned the property, a question of fact exists as to whether First

Financial acted reasonably in rejecting Cooper’s offer to repurchase the property.

       {¶26} Because a fact issue remains as to whether First Financial failed to

mitigate its damages, summary judgment on this issue was not proper. We sustain

Cooper’s second assignment of error.

       {¶27} In conclusion, we affirm that portion of the trial court’s judgment

entered in favor of First Financial on Cooper’s fraud counterclaim. We reverse the

portion of the trial court’s judgment awarding damages in favor of First Financial,

because an issue of fact remains as to whether First Financial mitigated its damages,

and the cause is remanded for further proceedings consistent with this opinion.

                     Judgment affirmed in part, reversed in part, and cause remanded.


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                    OHIO FIRST DISTRICT COURT OF APPEALS




CUNNINGHAM and STAUTBERG, JJ., concur.



Please note:
       The court has recorded its own entry on the date of the release of this opinion.




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