[Cite as United Guar. Residential Ins. Co. of N. Carolina v. Hall, 2019-Ohio-3593.]




                             IN THE COURT OF APPEALS OF OHIO
                                SECOND APPELLATE DISTRICT
                                    MONTGOMERY COUNTY

 UNITED GUARANTY RESIDENTIAL                            :
 INSURANCE COMPANY OF NORTH                             :
 CAROLINA                                               :    Appellate Case No. 28372
                                                        :
         Plaintiff-Appellee                             :    Trial Court Case No. 2018-CV-3378
                                                        :
 v.                                                     :
                                                        :    (Civil Appeal from
 STEPHANIE HALL                                         :     Common Pleas Court)
                                                        :
         Defendant-Appellant


                                               ...........

                                               OPINION

                          Rendered on the 6th day of September, 2019.

                                               ...........

RACHEL J. MASON, Atty. Reg. No. 0076645, J. BLAKE THOMAS, Atty. Reg. No.
0082821, and JOSEPH M. RUWE, Atty. Reg. No. 0070141, P.O. Box 498367, Cincinnati,
Ohio 45249
      Attorneys for Plaintiff-Appellee

STEPHANIE HALL, 3817 Marshall Road, Kettering, Ohio 45429
     Defendant-Appellant, Pro Se

                                              .............

HALL, J.
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      {¶ 1} Stephanie Hall appeals pro se from the trial court’s entry of summary

judgment against her on appellee United Guaranty Residential Insurance Company of

North Carolina’s complaint to collect on a mortgage-related debt.

      {¶ 2} In her sole assignment of error, Hall contends the trial court erred in entering

summary judgment against her on the debt. She argues that United Guaranty was named

as a party in a 2011 foreclosure action related to her mortgage debt, that United Guaranty

chose not to respond in the foreclosure action (which was filed by another lender), and

that United Guaranty was in default. Hall asserts that R.C. 2329.08 precludes United

Guaranty from obtaining a judgment against her now because more than two years have

passed since the foreclosure action.

      {¶ 3} The record reflects that United Guaranty filed its complaint against Hall in

July 2018, seeking a judgment of $21,944.31 plus interest, which represented the amount

allegedly due under a lending agreement. (Doc. # 1). Accompanying the complaint were

a 2006 promissory note signed by Hall and a 2010 assignment of that note to United

Guaranty. The note stated that it was secured by a second mortgage on real estate

located at 5950 Algoma Street in Dayton, Ohio. Hall filed a pro se answer in which she

asserted that the note held by United Guaranty had been paid off during a refinancing.

(Doc. # 20). In answers to interrogatories, Hall later asserted that United Guaranty had

received $1,000 to “settle” her debt on the promissory note during a sheriff’s sale of her

home. (Doc. # 27).

      {¶ 4} United Guaranty moved for summary judgment in February 2019. (Doc. #

30). Accompanying the motion were an affidavit and supporting documentation detailing

the history of Hall’s loans, United Guaranty’s promissory note and second mortgage, and
                                                                                          -3-


the sale of her home through a sheriff’s sale. United Guaranty’s evidence showed that

Wells Fargo, the first mortgage holder, filed a February 2010 foreclosure action against

Hall and others seeking to foreclose on the Algoma Street property. The Mortgage

Electronic Registration System, Inc. (“MERS”) was joined in the foreclosure action, acting

solely as the nominee of the holder of the second mortgage that secured United

Guaranty’s note, but MERS did not appear and was found in default. United Guaranty’s

evidence showed that the real estate was purchased by Wells Fargo at a January 2011

sheriff’s sale, and the second mortgage securing United Guaranty’s note was discharged.

United Guaranty presented evidence that neither it nor its predecessors in interest

received any money due to the sheriff’s sale or Wells Fargo’s foreclosure action. United

Guaranty also presented evidence that it never had refinanced the debt represented by

Hall’s promissory note and that it had no knowledge of any prior holders of the note ever

refinancing it.

       {¶ 5} In response to the summary judgment motion, Hall appeared to

acknowledge that the promissory note held by United Guaranty had not been refinanced

out of existence. (Doc. #32 at 2). But she still claimed to have been “told” by someone

that United Guaranty’s predecessor in interest would receive $1,000 to settle the debt.

Hall suggested that United Guaranty should contact Wells Fargo to receive any additional

money owed.

       {¶ 6} On April 5, 2019, the trial court filed an entry awarding United Guaranty

summary judgment on its complaint. (Doc. # 39). This appeal followed.

       {¶ 7} Hall’s single assignment of error states: “The trial court abused its discretion

by granting the Appellee a Summary Judgment even though in 2011 Appellee was
                                                                                         -4-


included in the foreclosure, and chose not to respond and as a result was in default

EXHIBIT C. It has been more than two years O.R.C. 2329.08.”

       {¶ 8} Hall’s entire substantive argument is as follows:

              The trial court erred by granting Appellee summary judgment.

       Appellee was included doing [sic] the foreclosure process in 2011, but

       chose not to respond. Therefore, being barred from any claim. Seven years

       later Appellee filed for summery [sic] judgment and was granted the

       judgment. The statute of limitations for recovery of a deficienct [sic] balance

       relating to a mortgage foreclosure is two years (2), according to O.R.cC.

       [sic] 2329.08, and summary judgment should not have been granted.

(Appellant’s brief at 5).

       {¶ 9} Upon review, we find Hall’s argument to be unpersuasive. At the time of the

foreclosure action, Wells Fargo held a promissory note and a first mortgage on the

property at 5950 Algoma Street. An entity known as Intervale Mortgage Corporation held

a second promissory note and a second mortgage. MERS was joined in the foreclosure

action in its capacity as nominee of the holder of the second mortgage. As set forth above,

MERS never entered an appearance. As a result, MERS was found in default and the

second mortgage held by Intervale Mortgage Corporation was discharged. Intervale’s

second promissory note, however, was not involved in Wells Fargo’s foreclosure action

on the first note and first mortgage. Intervale was never made a party to the foreclosure

action for purposes of its promissory note. Intervale never obtained any judgment on its

promissory note. Nor was the debt represented by the note ever paid, satisfied, or

cancelled. This second promissory note is the one that ultimately was assigned to United
                                                                                              -5-


Guaranty. Contrary to Hall’s argument below about having been “told” by someone that

United Guaranty received $1,000 to settle that debt, United Guaranty presented

uncontroverted evidence that neither it nor its predecessors in interest ever received any

money as a result of the foreclosure action. United Guaranty presented a copy of the

order confirming the sheriff’s sale and distributing the proceeds. (Doc. # 30 at Exh. G).

The order demonstrated that none of the proceeds went to Intervale Mortgage

Corporation. United Guaranty also presented an affidavit from Terry Vernon, its senior

legal action specialist. He averred that “[n]o distribution of any kind was ever received by

the United Guaranty or United Guaranty’s predecessors in interest, due to the sale of the

real estate in the Wells Fargo foreclosure.” (Id. at Vernon affidavit ¶ 4). Therefore, we are

unpersuaded by Hall’s argument that Wells Fargo’s foreclosure action precludes United

Guaranty from obtaining a judgment on its promissory note.

       {¶ 10} Finally, we find Hall’s reliance on R.C. 2329.08 unpersuasive for two

reasons. First, she never cited the statute below or asked the trial court to find United

Guaranty’s complaint barred by a two-year statute of limitation. Therefore, we are limited

to plain-error review. Plain error in civil cases is defined as error that “seriously affects the

basic fairness, integrity, or public reputation of the judicial process, thereby challenging

the legitimacy of the underlying judicial process itself.” Goldfuss v. Davidson, 79 Ohio

St.3d 116, 679 N.E.2d 1099 (1997), syllabus. Civil plain error is applied “only in the

extremely rare case[.]” Id.

       {¶ 11} The trial court’s failure to find United Guaranty’s complaint barred by R.C.

2329.08 is not plain error. The statute provides in relevant part:

              Any judgment for money rendered in a court of record in this state
                                                                                            -6-


       upon any indebtedness which is secured or evidenced by a mortgage, or

       other instrument in the nature of a mortgage, on real property or any interest

       therein * * * shall be unenforceable as to any deficiency remaining due

       thereon, after the expiration of two years from the date of the confirmation

       of any judicial sale of such property completed subsequent to the rendition

       of such judgment. * * *

       {¶ 12} The foregoing language places a two-year time limit on enforcing a

judgment after confirmation of a judicial sale of property. It explicitly applies to a judgment

on a debt secured by a mortgage. It applies when the judgment is obtained before a

judicial sale, and it imposes a time limit for enforcing the judgment on any deficiency that

exists after the sale.

       {¶ 13} Here neither United Guaranty nor its predecessors in interest obtained a

judgment on the promissory note at issue prior to the judicial sale. As set forth above, the

holder of the note at the time of Wells Fargo’s foreclosure action was Intervale Mortgage

Corporation, which was not made a party to the foreclosure action for purposes of its

promissory note and did not obtain a judgment on the note. Because Intervale Mortgage

Corporation did not obtain a money judgment on a debt secured by a mortgage prior to a

judicial sale that left a deficiency owed, R.C. 2329.08 does not apply.

       {¶ 14} The Ohio Supreme Court reached the same conclusion on similar facts in

Carr v. Home Owners Loan Corp., 148 Ohio St. 533, 76 N.E.2d 389 (1947), which

involved a predecessor statute to R.C. 2329.08 containing the same language. In that

case, the Home Owners Loan Corporation held a first mortgage on the borrowers’

residence and brought a foreclosure action. The complaint named as an additional
                                                                                            -7-


defendant the Cleveland Trust Company, which held a second mortgage. The Cleveland

Trust Company did not ask for foreclosure and made no request for a money judgment

on the promissory note it held. In its foreclosure decree, the trial court “made a finding for

the trust company on its mortgage, but rendered no money judgment in its favor.” Id. at

535. Following a sheriff’s sale of the property, the Cleveland Trust Company obtained a

judgment against the borrowers on its promissory note in a separate action. When the

Cleveland Trust Company tried to execute on the judgment, the borrowers claimed that

the foreclosure action had fully and finally resolved everything. Id. at 534-536. Eventually,

the Eighth District Court of Appeals held that the “finding” in favor of the Cleveland Trust

Company on its second mortgage in the foreclosure proceeding constituted a “judgment”

under G.C. 11663-1, which imposed a two-year time limit after confirmation of a judicial

sale in a foreclosure action to enforce a deficiency judgment. Id. at 537. On further review,

the Ohio Supreme Court reversed. It noted that the Cleveland Trust Company did not

obtain a money judgment in the foreclosure proceeding and, therefore, that it did not have

a “deficiency” judgment within the meaning of the statute. Id. at 538-539. The Ohio

Supreme Court also noted that, when the Cleveland Trust Company subsequently did

obtain a judgment, the borrowers’ indebtedness no longer was secured by a mortgage.

Id. at 540-541. The majority found the statute inapplicable for this additional reason as

well. Id. It explained:

               In interpreting this decision it is important to bear in mind the peculiar

       facts of the case. We are dealing here with the holder of a second mortgage,

       which, in a foreclosure action instituted by the holder of the first mortgage,

       asked for and obtained no more than a finding of the amount owed it on
                                                                                         -8-


       account of its second mortgage, that amount being payable entirely out of

       the proceeds derived from the sale of the mortgaged premises. However,

       the amount realized from such sale was not enough to give the second

       mortgagee anything, with the result that the security it had held was wiped

       out and the indebtedness owed it remained wholly unsatisfied. The second

       mortgagee was awarded nothing in the foreclosure action which can

       properly be designated as a judgment for money, and the later money

       judgment it obtained on its promissory note did not constitute an attempt to

       collect a “deficiency,” because, as has already been pointed out, it got

       absolutely nothing out of the foreclosure proceeding and there was no

       “deficiency” as to it. Its position then became that of a general creditor to

       the full extent of the debt owed. Section 11663–1, General Code, in its

       wording, does not affect a situation of the kind described.

Id. at 543.

       {¶ 15} Relying on the Ohio Supreme Court’s opinion in Carr, the Ninth District

reached a similar result in First Union Mtge. Corp. v. Caverly, 9th Dist. Summit No. 19826,

2000 WL 296084 (March 22, 2000). The Ninth District held that R.C. 2329.08 did not

preclude the holder of a second mortgage from obtaining and enforcing a judgment it

obtained on a promissory note after a first mortgage holder had foreclosed on the

borrowers’ property, which was sold at a sheriff’s sale. The Ninth District reasoned:

              In this case, the trial court granted a judgment of foreclosure to First

       Union. First National did not seek a judgment against the appellants, and

       the trial court’s judgment did no more than set forth the amount of First
                                                                                             -9-


        National’s lien and a determination of its priority. This did not constitute a

        judgment in favor of First National. * * * By its claim in the subsequent

        litigation, First National attempted to recover the amount due on an

        outstanding mortgage note. That claim did not seek to recover the unpaid

        portion of a judgment in which the judicial sale yielded insufficient proceeds.

        The appellants’ argument that First National’s efforts to collect a judgment

        more than two years after the Sheriff’s sale are barred by R.C. 2329.08 must

        fail because there was no judgment in favor of First National in this case.

Id. at *2.

        {¶ 16} Based on our review of R.C. 2329.08, and consistent with the reasoning in

Carr and First Union, we hold that the trial court did not commit plain error in failing to find

United Guaranty’s complaint barred by the statute.

        {¶ 17} Hall’s assignment of error is overruled, and the judgment of the Montgomery

County Common Pleas Court is affirmed.

                                       .............



DONOVAN, J. and FROELICH, J., concur.


Copies sent to:

Rachel J. Mason
J. Blake Thomas
Joseph M. Ruwe
Stephanie Hall
Hon. Mary Katherine Huffman
