[Cite as Griffin v. First Natl. Acceptance Co., 2013-Ohio-4302.]


                                    IN THE COURT OF APPEALS

                                ELEVENTH APPELLATE DISTRICT

                                     TRUMBULL COUNTY, OHIO


DONALD L. GRIFFIN, SR.,                                   :        OPINION

                 Plaintiff-Appellant,                     :
                                                                   CASE NO. 2012-T-0075
        - vs -                                            :

FIRST NATIONAL ACCEPTANCE                                 :
COMPANY,
                                                          :
                 Defendant-Appellee.


Civil Appeal from the Trumbull County Court of Common Pleas, Case No. 2009 CV
1864.

Judgment: Reversed and remanded.


Philip Zuzolo, and Patrick B. Duricy, Zuzolo Law Office, LLC, 700 Youngstown-Warren
Road, Niles, OH 44446, and Gary J. Rosati, Rosati Law Office, LLC, 860 Boardman-
Canfield Road, Suite 102, Boardman, OH 44512 (For Plaintiff-Appellant).

Christopher John Klym, 24441 Detroit Road, Suite 200, Westlake, OH 44145 (For
Defendant-Appellee).


CYNTHIA WESTCOTT RICE, J.,

        {¶1}     Appellant, Donald L. Griffin, Sr., appeals the judgment of the Trumbull

County Court of Common Pleas granting summary judgment in favor of Appellee, First

National Acceptance Company (“FNAC”), and denying Donald’s motion for summary

judgment.        At issue is whether evidence was presented that FNAC breached the
covenant against encumbrances contained in a general warranty deed by which FNAC

conveyed the subject property to Donald’s predecessor in interest, thus precluding

summary judgment.        For the reasons that follow, we reverse and remand for

proceedings consistent with this opinion.

       {¶2}   In July 2009, Donald filed a complaint against FNAC.          The complaint

alleged that Donald is the current owner of a parcel of real property located on West

Market Street in Warren, Ohio. The complaint further alleged that FNAC had previously

owned the property, and transferred it to Donald’s predecessor in interest, his son,

David Griffin, in 2003 by general warranty deed. The complaint alleged that David then

transferred the property to Donald by quit-claim deed in 2004, and that Donald later

discovered the property was encumbered by a mortgage, which pre-dated the 2003

deed transferring the property to David.         As David’s successor in interest, Donald

asserted a claim against FNAC for breach of the covenant against encumbrances

contained in the 2003 deed. He also asserted a separate claim for fraud.

       {¶3}   FNAC filed an answer denying the material allegations of the complaint.

       {¶4}   In May 2012, FNAC filed a motion for summary judgment. Donald filed a

brief in opposition and his own motion for summary judgment, supported by David’s

affidavit. David stated in his affidavit that in 1992, he entered a land contract with Peter

and Anne Perich, as vendors, for the purchase of the West Market Street property.

From 1992 to 1997, David made monthly payments under the land contract to the

Periches. Then, in 1997, FNAC purchased the property from the Periches along with

their interest in the land contract. FNAC thus became the owner of the property, subject




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to David’s land contract. Beginning in 1997, David made his payments under the land

contract to FNAC.

        {¶5}     David stated that in April 2000, he obtained a mortgage loan from FNBA,

FNAC’s parent company, to buy a home on Heather Lane in Warren. As security for the

loan, David granted FNBA a mortgage on the Heather Lane property and on the West

Market Street property. As additional security for the loan, David also assigned his

interest in the land contract on the West Market Street property to FNBA. The mortgage

and assignment were duly recorded. FNAC, which is FNBA’s wholly-owned subsidiary,

acted as FNBA’s mortgage servicer for David’s mortgage loan.

        {¶6}     From 2000 to 2003, David made two separate monthly payments to

FNAC, one on the land contract for the West Market Street property (owed to FNAC)

and one on the mortgage for the Heather Lane property (owed to FNBA).

        {¶7}     David stated that in May 2003, he contacted FNAC; told FNAC’s

representative that his father Donald was interested in buying the West Market Street

property; and asked FNAC’s representative what it would take to release the property of

all liens. FNAC’s representative told David that if Donald paid the balance on the land

contract, $40,000, FNAC would release the West Market Street property to David “free

of all liens.”

        {¶8}     David stated that in June 2003, he paid the land contract on the West

Market Street property in full, and, in return, FNAC gave him a general warranty deed to

that parcel. In this deed, FNAC covenanted with David that “the premises are free from

all encumbrances” and “to forever warrant and defend the title to the said lands against




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all claims whatever.” The deed did not mention the mortgage on the property that David

had given to FNBA in 2000. The deed was duly recorded.

       {¶9}   In January 2004, David transferred the West Market Street property to

Donald by quit-claim deed. David ultimately defaulted on his mortgage loan on the

Heather Lane property, and, in 2007, FNBA filed a foreclosure action against David and

Donald as to both the Heather Lane and West Market Street properties. David stated in

his affidavit that FNAC did not defend the title of Donald, as David’s successor in

interest, to the West Market Street property. Instead, FNAC assisted FNBA in its efforts

to foreclose the mortgage. David ultimately consented to the foreclosure of the Heather

Lane property, which was sold at sheriff’s sale. FNBA voluntarily dismissed without

prejudice the foreclosure action against the West Market Street property pending the

outcome of this action.

       {¶10} In August 2012, the trial court entered summary judgment in favor of

FNAC and denied Donald’s motion for summary judgment. The court noted that the

facts in this case “are not easily resolved” and that this was a “novel” case.

       {¶11} Donald appeals the court’s judgment, asserting two assignments of error.

For his first assigned error, he alleges:

       {¶12} “The trial court erred in granting summary judgment to defendant FNAC

and denying summary judgment for the plaintiff on plaintiff Griffin’s complaint to enforce

the general warranty deed contract entered into by defendant FNAC.”

       {¶13} Donald argues that the 2003 general warranty deed for the West Market

Street property from FNAC to David, his predecessor in interest, contained a covenant

that the property was free of all encumbrances. Donald contends that, because the




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mortgage David gave to FNBA in 2000 was still an encumbrance on the property, FNAC

breached the covenant against encumbrances when it gave David the deed in 2003.

       {¶14} In contrast, FNAC argues that, following execution of the land contract in

1992, David received an equitable interest in the West Market Street property, and

FNAC retained the legal title until the land contract was paid in full. FNAC contends that

David’s mortgage on the property in favor of FNBA in 2000 created a lien against his

equitable interest and thus constituted an equitable mortgage.        FNAC argues that,

because the mortgage only attached to David’s equitable interest, not FNAC’s legal title,

it was not an encumbrance. Thus, FNAC argues it did not breach the covenant against

encumbrances.

       {¶15} This court has held that summary judgment is proper when: (1) there is no

genuine issue of material fact; (2) the moving party is entitled to judgment as a matter of

law; and (3) reasonable minds can come to but one conclusion, and that conclusion is

adverse to the nonmoving party, that party being entitled to have the evidence

construed most strongly in his favor. Civ.R. 56(C); Frano v. Red Robin International,

Inc., 181 Ohio App.3d 13, 2009-Ohio-685, ¶12 (11th Dist.), citing Leibreich v. A.J.

Refrigeration, Inc., 67 Ohio St.3d 266, 268 (1993).

       {¶16} The party seeking summary judgment on the ground that the nonmoving

party cannot prove his case bears the initial burden of informing the trial court of the

basis for the motion and of identifying those portions of the record that demonstrate the

absence of a genuine issue of material fact on the essential elements of the nonmoving

party’s claim. Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996).




                                            5
       {¶17} The moving party must point to some evidence of the type listed in Civ.R.

56(C) that affirmatively demonstrates that the nonmoving party has no evidence to

support his claim. Dresher, supra, at 293.

       {¶18} If this initial burden is not met, the motion for summary judgment must be

denied. Id. However, if the moving party has satisfied his initial burden, the nonmoving

party then has a reciprocal burden, as outlined in Civ.R. 56(E), to set forth specific facts

showing that there is a genuine issue for trial and, if the nonmovant does not so

respond, summary judgment, if appropriate, shall be entered against him. Id.

       {¶19} Since a trial court’s decision ruling on a motion for summary judgment

involves only questions of law, we conduct a de novo review of the trial court’s

judgment. DiSanto v. Safeco Ins. of Am., 168 Ohio App.3d 649, 2006-Ohio-4940, ¶41

(11th Dist.).

       {¶20} As a preliminary matter, we note that FNAC did not satisfy its duty under

Civ.R. 56 to file affidavits, depositions, or other evidentiary materials in compliance with

Civ.R. 56(C). That rule requires that the affidavits presented on summary judgment be

originals. Cementech, Inc. v. Fairlawn, 9th Dist. Summit No. 21282, 2003-Ohio-2632,

¶12; French v. New Paris, 12th Dist. Preble No. CA2010-05-008, 2011-Ohio-1309, ¶54.

However, the affidavits filed by FNAC in support of its summary-judgment motion are

not originals, as required by Civ.R. 56(C). To the contrary, they are merely copies of

affidavits that were apparently prepared and used by FNBA in support of a summary-

judgment motion filed in its 2007 foreclosure action. Further, FNAC’s affidavits do not

address the issues raised in the complaint and do not demonstrate the absence of any

factual issues. For this reason alone, FNAC is not entitled to summary judgment.




                                             6
      {¶21} However, even if FNAC had presented proper evidentiary materials in

support of its motion for summary judgment, FNAC would not have been entitled to

summary judgment. Pursuant to R.C. 5302.05, a general warranty deed, when properly

executed

      {¶22} has the force and effect of a deed in fee simple to the grantee, the

             grantee’s heirs, assigns, and successors * * * with covenants on the

             part of the grantor with the grantee, the grantee’s heirs, assigns,

             and successors, that, at the time of the delivery of that deed the

             grantor was lawfully seized in fee simple of the granted premises,

             that the granted premises were free from all encumbrances, * * *

             and that the grantor does warrant and will defend the same to the

             grantee and the grantee’s heirs, assigns, and successors, forever,

             against the lawful claims and demands of all persons.” (Emphasis

             added.)

      {¶23} A covenant against encumbrances in a general warranty deed is breached

“as soon as [it is] made if an encumbrance in fact exists.” Stockman v. Yanesh, 68 Ohio

St.2d 63 (1981), syllabus.

      {¶24} Ohio law provides that, under a warranty deed, the grantee will only be

barred from asserting a breach of the warranty if an encumbrance was specifically

excepted in the deed. Long v. Moler, 5 Ohio St. 271, 274 (1855). Further, known

encumbrances are not excepted from the operation of the covenant. Id.

      {¶25} This court in Liddy v. Studio, 11th Dist. Geauga No. 96-G-2009, 1997 Ohio

App. LEXIS 1465, *7 (Apr. 11, 1997), adopted the definition of “encumbrance” in Black’s




                                          7
Law Dictionary (6th Ed.1991) 527, as follows: ‘“[a]ny right to, or interest in, land which

may subsist in another to the diminution of its value, but consistent with the passing of

the fee by conveyance. * * * A claim, lien, charge, or liability attached to and binding

real property; e.g. a mortgage * * *. If the liability relates to a particular asset, the asset

is encumbered.”’ (Emphasis added.)

       {¶26} Further, in Voytecek v. Peoples Sav. Bank Co., 65 Ohio App. 118 (7th

Dist.1940), the Seventh District defined an “encumbrance” as “anything that impairs the

use or transfer of real estate; anything which constitutes a cloud on the title * * *.” Id. at

120. (Emphasis added.)

       {¶27} Moreover, in Thornton v. Guckiean & Co., 77 Ohio App.3d 794 (12th

Dist.1991), a case relied on by both parties, the Twelfth District held that after the

execution of the land contract in that case, the vendee “received an equitable interest in

the contract as personalty as well as an equitable interest in the land.” (Emphasis

added.) Id. at 798. Thereafter, before the land contract was paid off, the vendee

obtained a loan of money and granted his creditor an assignment of his interest in the

land contract and a mortgage on the subject property. The court held that the vendee’s

assignment of the land contract as security for his debt gave his creditor an equitable

interest, which “create[d] a cloud on the title to the property.” (Emphasis added.) Id. at

799. In addition, the appellate court held that the equitable mortgage gave the creditor

a right to foreclose on the vendee’s equitable interest in the land if he was in default. Id.

       {¶28} According to the well-established law of this state, the subject mortgage

satisfied the definition of “encumbrance.” First, an encumbrance is a cloud on title.

Voytecek, supra. Further, a land contract gives the vendee an equitable interest in the




                                              8
land.   Thornton, supra.    Moreover, when a vendee under an unpaid land contract

obtains a loan of money from a creditor and then grants to the creditor a mortgage on

the land, the debtor gives the creditor an equitable interest, which “creates a cloud on

the title to the property.” Id. Thus, the fact that David’s mortgage on the property was

equitable in nature did not alter the fact that it was a mortgage; that it was recorded; that

it was a cloud on the title to the property; and that it was, therefore, an encumbrance.

        {¶29}   However, David stated in his affidavit that the representative from FNAC,

FNBA’s mortgage servicer and wholly-owned subsidiary, told him in May 2003 that if

Donald paid the balance on the land contract, i.e., $40,000, FNAC would release the

West Market Street property “free of all liens.” In addition, the 2003 general warranty

deed to the West Market Street property from FNAC to David included a covenant that

the property was “free from all encumbrances, unless otherwise noted above.” The

deed did not contain an exception for any encumbrances. Yet, the mortgage David gave

to FNBA in 2000 remained an encumbrance on the property.

        {¶30} Donald argues persuasively that FNAC ignores the statutory difference

between a general warranty deed and a limited warranty deed.              Pursuant to R.C.

5302.05, a general warranty deed, such as the one FNAC gave David, warrants that the

property is free from all encumbrances. In contrast, under R.C. 5302.07, a limited

warranty deed warrants that the property is free only “from all encumbrances made by

the grantor.” FNAC argues that, because the mortgage at issue created a lien against

David’s equitable interest, not FNAC’s legal title, it was not an encumbrance. FNAC

thus argues that a lien is not an encumbrance unless the encumbrance is against the

grantor’s legal title, i.e., that the encumbrance was made by the grantor. However,




                                             9
pursuant to R.C. 5302.05, a general warranty deed warrants the title against all

encumbrances, not only those that are made by the grantor.

       {¶31} Since evidence was presented that the West Market Street property was

encumbered by a mortgage in favor of FNBA when FNAC gave David a general

warranty deed to the property, a genuine issue exists as to whether FNAC breached the

covenant against encumbrances contained in the deed.

       {¶32} Donald’s first assignment of error is sustained.

       {¶33} For his second assignment of error, Donald contends:

       {¶34} “The trial court erred by dismissing the plaintiff’s misrepresentation claim

by finding that there was no admissible evidence that indicated an intent by the

appellee/defendant to effectuate a release of the April 2000 mortgage on the West

Market Street property.”

       {¶35} In its motion for summary judgment, FNAC addressed only Donald’s claim

for breach of the covenant against encumbrances contained in the warranty deed. All of

FNAC’s argument was directed against that claim. FNAC did not present any argument

or evidentiary materials concerning Donald’s claim for fraud.         Thus, FNAC did not

satisfy its initial burden of informing the trial court of the basis for the summary-judgment

motion and pointing to Civ.R. 56(C) evidence that demonstrated Donald had no

evidence to support his claim for fraud. Dresher, supra, at 293. As a result, FNAC was

not entitled to summary judgment as to this claim, and the trial court erred in granting

summary judgment in its favor.

       {¶36} In any event, Donald presented evidence via David’s affidavit that FNAC’s

representative told him if the mortgage on the West Market Street property was paid off,




                                             10
FNAC would release the property “free of all liens.” However, when FNAC gave the

deed to the property to David, the property was encumbered by the pre-existing

mortgage from David to FNBA.        Thus, even if FNAC had met its initial burden on

summary judgment, a genuine issue of material fact exists with respect to Donald’s

fraud claim.

       {¶37} Donald’s second assignment of error is sustained.

       {¶38} For the reasons stated in the opinion of this court, it is the judgment and

order of this court that the judgment of the Trumbull County Court of Common Pleas is

reversed, and this matter is remanded to the trial court for further proceedings

consistent with this opinion.



THOMAS R. WRIGHT, J., concurs,

DIANE V. GRENDELL, J., dissents with a Dissenting Opinion.

                                ______________________


DIANE V. GRENDELL, J., dissents with a Dissenting Opinion.

       {¶39} I dissent from the majority’s decision to reverse the judgment of the trial

court, based on the conclusion that there is a genuine issue of fact as to whether First

National   Acceptance      Corporation   (FNAC)    breached    the   covenant    against

encumbrances contained in a general warranty deed to David Griffin. The majority’s

holding would lead to an unjust and unfair result, allowing David and his father, Donald,

as the new owner, to avoid the mortgage David himself took out on the property. Since

David’s mortgage was equitable, did not bind to FNAC’s legal title to the property, and

was not an encumbrance, FNAC was not required to disclose it in the general warranty



                                           11
deed. The trial court’s grant of summary judgment was proper.

       {¶40} In the present case, David had a land installment contract with FNAC on

his West Market Street property. While still making payments to FNAC under that

contract, he mortgaged his interest through First National Bank of America (FNBA).

After payment for the property under the land installment contract was complete, FNAC

conveyed the property to David with a general warranty deed. David subsequently gave

the property to Donald through a quit claim deed.

       {¶41} While a general warranty deed typically requires the party conveying real

estate to grant the land free of any encumbrances, under the unique circumstances of

this case, FNAC was not required to state the existence of the mortgage or to protect

Donald against any lawsuits related to the FNBA mortgage on the West Market Street

property.

       {¶42} In cases involving land installment contracts, such as the present case,

before final payment occurs, the purchaser has an equitable interest in the property,

while the legal title remains with the seller. Thornton v. Guckiean & Co., Inc., 77 Ohio

App.3d 794, 798, 603 N.E.2d 1066 (12th Dist.1991). The purchaser can mortgage his

equitable interest in the property prior to obtaining his full interest. See Basil v. Vincello,

50 Ohio St.3d 185, 189, 553 N.E.2d 602 (1990) (a purchaser of land under a land

installment contract has an equitable interest in the land prior to the completion of the

terms of the contract); Alemania Loan & Bldg. Co. No. 2 v. Frantzreb, 56 Ohio St. 493,

499, 47 N.E. 497 (1897).

       {¶43} A mortgage by the party contracting to purchase land under an installment

contract that occurs prior to the completion of the contract, then, is an equitable




                                              12
mortgage and creates a lien upon the mortgagor’s equitable interest only. Alemania

Loan at 499 (“[s]ince the mortgagor has never held the legal title, the mortgages

operated only to create a lien upon his equitable interest”); Thornton at 799 (“[w]here an

individual who has contracted to purchase real property mortgages the property before

actually receiving legal title, the mortgage does not create a legal lien but operates only

to create a lien upon the mortgagor’s equitable interest”). A mortgagee may foreclose

upon only the equitable interest of the mortgagor. Id.

       {¶44} In the present matter, David took out the FNBA mortgage prior to

completing the terms of the land installment contract, and prior to paying off his debt to

FNAC for the West Market Street property. This mortgage with FNBA was an equitable

mortgage and applied only to the interest he held at that time. Under the definition of an

encumbrance, the lien or liability, in this case, the equitable mortgage, was not

“attached to and binding” the real estate granted in the general warranty deed by FNAC,

since that mortgage was tied only to the equitable interest held by David. See Dietl v.

Sipka, 185 Ohio App.3d 218, 2009-Ohio-6225, 923 N.E.2d 692, ¶ 14 (11th Dist.) (an

encumbrance includes “[a] claim, lien, charge, or liability attached to and binding real

property”) (citation omitted) (emphasis sic).

       {¶45} The legal title held by FNAC had not been mortgaged or otherwise

encumbered, such that it would be necessary to make a statement of encumbrance in a

general warranty deed. While David received full legal title and interest in the property

after the general warranty deed was given to him, he did not have such title or interest

in the property prior to the transfer, and it cannot be said that his encumbrance was

attached to FNAC’s interest at the time of transfer.




                                            13
      {¶46} The majority’s opinion emphasizes the difference between general and

limited warranty deeds. However, this distinction is not relevant, since the real issue is

whether an encumbrance existed, as considered above, not whether FNAC was

required to grant the premises free of all encumbrances.

      {¶47} Furthermore, it is inequitable for Donald, as the present owner of the

property, to be entitled to defense of his title by FNAC. This is not a situation where

David, who took out the mortgage, was merely aware of the existence of a mortgage at

the time he received the general warranty deed. See Long v. Moler, 5 Ohio St. 271,

274 (1855) (known encumbrances are not presumed to be excluded from a general

warranty deed).   Instead, he took out the mortgage on his own property and then

conveyed that property to his father. To allow Donald to prevail in this matter would

have the effect of allowing his son, David, to avoid the responsibility of the mortgage

that he took out on his own equitable interest of his property. There is also no evidence

that FNAC intended to take action to extinguish the mortgage. Although a general

warranty deed was given, there are no allegations in the affidavit that FNAC specifically

stated it would remove David’s obligation to pay off the FNBA mortgage.

      {¶48} The purpose of a warranty deed is to protect the grantee and his heirs and

assigns, as explained in R.C. 5302.05, from claims that may arise in the future,

essentially preventing any surprises in the form of encumbrances. In this case, the

person to be protected by the warranty deed was fully aware of the equitable mortgage

on the property. The argument presented by Donald is essentially that both he and

David should be protected against an encumbrance that David himself created, a result

which should not be allowed and defies equity.




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      {¶49} Regarding the second assignment of error, the misrepresentation claim

relates to alleged promises made by FNAC that there would be no encumbrances on

the conveyed property.        Since FNAC properly claimed that there were no

encumbrances, as found above, it does not follow that it was fraud to state that fact.

There is no basis for proceeding on this claim.

      {¶50} For the foregoing reasons, I dissent from the majority’s decision, which

would result in an inequitable and improper result. The trial court’s decision should be

affirmed.




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