[Cite as Bank of Am., N.A. v. Dorenbusch, 2015-Ohio-3184.]


                                      COURT OF APPEALS
                                    LICKING COUNTY, OHIO
                                  FIFTH APPELLATE DISTRICT



BANK OF AMERICA, N.A.                            :           JUDGES:
                                                 :           Hon. William B. Hoffman, P.J.
        Plaintiff-Appellee                       :           Hon. Sheila G. Farmer, J.
                                                 :           Hon. John W. Wise, J.
-vs-                                             :
                                                 :
JAMES A. DORENBUSCH, ET AL.                      :           Case No. 14-CA-60
                                                 :
        Defendants-Appellants                    :           OPINION




CHARACTER OF PROCEEDING:                                     Appeal from the Court of Common
                                                             Pleas, Case No. 12 CV 00543




JUDGMENT:                                                    Affirmed




DATE OF JUDGMENT:                                            August 7, 2015




APPEARANCES:

For Plaintiff-Appellee                                       For Defendants-Appellants

AMANDA L. HOLZHAUER                                          BRIAN D. FLICK
BRYAN T. KOSTURA                                             632 Vine Street
25550 Chagrin Boulevard                                      Suite 305
Suite 406                                                    Cincinnati, OH 45202
Cleveland, OH 44122-9905
Licking County, Case No. 14-CA-60                                                        2

Farmer, J.

      {¶1}     On April 20, 2012, appellee, Bank of America, N.A., filed a foreclosure

complaint against appellants, James and Angela Dorenbusch, for money due and owing

on a mortgage secured by a balloon note. On May 23, 2012, appellants filed a notice

informing the trial court that the action had been removed to the United States District

Court, Southern District of Ohio, Eastern Division.

      {¶2}     On May 2, 2014, appellants filed a notice of filing record which included an

answer and counterclaim, appellee's reply to the counterclaim, and an order from the

district court remanding the matter to the trial court and terminating the case. In their

counterclaim, appellants claimed appellee failed to send them annual escrow

statements in violation of the Real Estate Settlement Procedures Act, 12 U.S.C.

2609(c).

      {¶3}     On May 7, 2014, appellee filed a motion for summary judgment on the

complaint and counterclaim, claiming genuine issues of material fact did not exist. By

judgment entry filed June 10, 2014, the trial court granted the motion and ordered

foreclosure.

      {¶4}     Appellants filed an appeal and this matter is now before this court for

consideration. Assignments of error are as follows:

                                             I

      {¶5}     "THE    TRIAL     COURT      ERRED      IN    DENYING      DEFENDANTS'

COUNTERCLAIMS AND FINDING THAT THERE IS NO PRIVATE RIGHT OF ACTION

UNDER 12 U.S.C. § 2609(c)."
Licking County, Case No. 14-CA-60                                                    3


                                          II

      {¶6}   "THE TRIAL COURT ERRED AS A MATTER OF LAW IN CONCLUDING

THAT COMPLIANCE WITH THE NOTICE PROVISIONS OF THE BALLOON NOTE

AND MORTGAGE ARE NOT A CONDITION PRECEDENT."

      {¶7}   Both of these assignments of error challenge the trial court's judgment on

a summary judgment motion.

      {¶8}   Summary Judgment motions are to be resolved in light of the dictates of

Civ.R. 56. Said rule was reaffirmed by the Supreme Court of Ohio in State ex rel.

Zimmerman v. Tompkins, 75 Ohio St.3d 447, 448, 1996-Ohio-211:



             Civ.R. 56(C) provides that before summary judgment may be

      granted, it must be determined that (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 nonmoving party, that conclusion is

      adverse to the party against whom the motion for summary judgment is

      made. State ex. rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511,

      628 N.E.2d 1377, 1379, citing Temple v. Wean United, Inc. (1977), 50

      Ohio St.2d 317, 327, 4 O.O3d 466, 472, 364 N.E.2d 267, 274.



      {¶9}   As an appellate court reviewing summary judgment motions, we must

stand in the shoes of the trial court and review summary judgments on the same
Licking County, Case No. 14-CA-60                                                     4

standard and evidence as the trial court. Smiddy v. The Wedding Party, Inc., 30 Ohio

St.3d 35 (1987).

      {¶10} A movant for summary judgment bears the burden of proving that no

genuine issue of material fact exists and he/she is entitled to judgment as a matter of

law. AAAA v. River Place Community, 50 Ohio St.3d 157 (1990). The moving party

bears the initial burden of demonstrating the basis for its motion. Dresher v. Burt, 75

Ohio St.3d 280, 292, 1996-Ohio-107. The only manner in which the movant can meet

such a burden is to present some evidentiary materials permitted by Civ.R. 56(C). Id. at

292-293. In Dresher at 293, the Supreme Court of Ohio held the following:



             Accordingly, we hold that a party seeking summary judgment, on

      the ground that the nonmoving party cannot prove its case, bears the

      initial burden of informing the trial court of the basis for the motion, and

      identifying those portions of the record that demonstrate the absence of a

      genuine issue of material fact on the essential element(s) of the

      nonmoving party's claims. The moving party cannot discharge its initial

      burden under Civ.R. 56 simply by making a conclusory assertion that the

      nonmoving party has no evidence to prove its case. Rather, the moving

      party must be able to specifically point to some evidence of the type listed

      in Civ.R. 56(C) which affirmatively demonstrates that the nonmoving party

      has no evidence to support the nonmoving party's claims. If the moving

      party fails to satisfy its initial burden, the motion for summary judgment

      must be denied.     However, if the moving party has satisfied its initial
Licking County, Case No. 14-CA-60                                                      5


      burden, the nonmoving party then has a reciprocal burden 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 the nonmoving party.



      {¶11} Civ.R. 56(E) provides the following:



             (E) Form of affidavits; further testimony; defense required

             Supporting and opposing affidavits shall be made on personal

      knowledge, shall set forth such facts as would be admissible in evidence,

      and shall show affirmatively that the affiant is competent to testify to the

      matters stated in the affidavit. Sworn or certified copies of all papers or

      parts of papers referred to in an affidavit shall be attached to or served

      with the affidavit. The court may permit affidavits to be supplemented or

      opposed by depositions or by further affidavits.       When a motion for

      summary judgment is made and supported as provided in this rule, an

      adverse party may not rest upon the mere allegations or denials of the

      party's pleadings, but the party's response, by affidavit or as otherwise

      provided in this rule, must set forth specific facts showing that there is a

      genuine issue for trial.   If the party does not so respond, summary

      judgment, if appropriate, shall be entered against the party.



      {¶12} We will review the assignments of error under these standards and rules.
Licking County, Case No. 14-CA-60                                                      6


                                             I

       {¶13} Appellants claim the trial court erred in granting summary judgment to

appellee on their counterclaim as they have a private right of action under the Real

Estate Settlement Procedures Act, 12 U.S.C. 2609(c). We disagree.

       {¶14} Appellants argue appellee failed to provide them with annual escrow

statements in violation of 12 U.S.C. 2609(c) states the following in pertinent part:



              (2) Annual statement

              (A) In general

              Any servicer that has established or continued an escrow account

       in connection with a federally related mortgage loan shall submit to the

       borrower for which the escrow account has been established or continued

       a statement clearly itemizing, for each period described in subparagraph

       (B) (during which the servicer services the escrow account), the amount of

       the borrower's current monthly payment, the portion of the monthly

       payment being placed in the escrow account, the total amount paid into

       the escrow account during the period, the total amount paid out of the

       escrow account during the period for taxes, insurance premiums, and

       other charges (as separately identified), and the balance in the escrow

       account at the conclusion of the period.

              (B) Time of submission

              The statement required under subparagraph (A) shall be submitted

       to the borrower not less than once for each 12-month period, the first such
Licking County, Case No. 14-CA-60                                                       7


       period beginning on the first January 1st that occurs after November 28,

       1990, and shall be submitted not more than 30 days after the conclusion

       of each such 1-year period.



       {¶15} In support of their respective positions on a private right of action, each

party discusses the language in Vega v. First Federal Savings and Loan Association of

Detroit, 622 F.2d 918 (6th Cir.1980), specifically fn. 8, which states the following:



               As a threshold matter, we must determine whether the Real Estate

       Settlement Procedures Act creates a private cause of action for violations

       of 12 U.S.C. s 2609 and 12 U.S.C. s 2610.           While the Act does not

       expressly provide for such a causes of action, we believe, based on the

       legislative history, that Congress intended to create a private remedy for

       violations of the Act.***



       {¶16} As the parties concede, Vega was decided prior to the amendments to 12

U.S.C. 2609, including subsection (d), wherein the exclusive remedy for a violation rests

with the "Secretary" of Housing and Urban Development, therefore indicating no private

right of action:



               (d) Penalties

               (1) In general
Licking County, Case No. 14-CA-60                                                      8


              In the case of each failure to submit a statement to a borrower as

       required under subsection (c) of this section, the Secretary shall assess to

       the lender or escrow servicer failing to submit the statement a civil penalty

       of $50 for each such failure, but the total amount imposed on such lender

       or escrow servicer for all such failures during any 12-month period

       referred to in subsection (b) [FN1 - So in original. Probably should be

       "subsection (c)"] of this section may not exceed $100,000.

              (2) Intentional violations

              If any failure to which paragraph (1) applies is due to intentional

       disregard of the requirement to submit the statement, then, with respect to

       such failure-

              (A) the penalty imposed under paragraph (1) shall be $100; and

              (B) in the case of any penalty determined under subparagraph (A),

       the $100,000 limitation under paragraph (1) shall not apply.



       {¶17} Based upon the language of 12 U.S.C. 2609(d), we find appellants do not

have a private right of action for a subsection (c) violation.

       {¶18} Upon review, we find the trial court did not err in granting summary

judgment to appellee on appellants' counterclaim.

       {¶19} Assignment of Error I is denied.

                                              II

       {¶20} Appellants claim the trial court erred as a matter of law in granting

summary judgment to appellee. We disagree.
Licking County, Case No. 14-CA-60                                                         9


       {¶21} Appellants argue two issues under this assignment of error: 1) notification

of default was required as a condition precedent to acceleration, and 2) appellee's

affidavit failed to demonstrate compliance with the note and mortgage.

       {¶22} Initially, appellee argues the defense of notification was not sufficiently

pled. We disagree. In their answer included in the May 2, 2014 notice of filing record,

appellants squarely placed this issue for consideration in their Tenth Affirmative

Defense:



              Plaintiff failed to meet certain conditions precedent under the

       promissory note and mortgage that are the subject of this lawsuit.

       Specifically, but not limited to, Plaintiff failed to meet any applicable notice

       requirements relating to advising Defendants of Plaintiff's intent to

       accelerate and/or foreclose and/or to advising Defendants of their right to

       reinstate/redeem prior to acceleration and/or foreclosure.



       {¶23} Despite finding that the defense of notification was sufficiently pled, we

nevertheless find that on a balloon payment, as set forth in the note and mortgage

acceleration clause, notification is not a condition precedent.

       {¶24} In support of their argument, appellants cite to paragraph 22 of the

mortgage, attached to the complaint as Exhibit B, which states the following:



              22. Acceleration; Remedies. Lender shall give notice to Borrower

       prior to acceleration following Borrower's breach of any covenant or
Licking County, Case No. 14-CA-60                                                     10


      agreement in this Security Instrument (but not prior to acceleration under

      Section 18 unless Applicable Law provides otherwise). The notice shall

      specify: (a) the default; (b) the action required to cure the default; (c) a

      date, not less than 30 days from the date the notice is given to Borrower,

      by which the default must be cured; and (d) that failure to cure the default

      on or before the date specified in the notice may result in acceleration of

      the sums secured by this Security Instrument, foreclosure by judicial

      proceeding and sale of the Property.       The notice shall further inform

      Borrower of the right to reinstate after acceleration and the right to assert

      in the foreclosure proceeding the non-existence of a default or any other

      defense of Borrower to acceleration and foreclosure. If the default is not

      cured on or before the date specified in the notice, Lender at its option

      may require immediate payment in full of all sums secured by this Security

      Instrument without further demand and may foreclose this Security

      Instrument by judicial proceeding. Lender shall be entitled to collect all

      expenses incurred in pursuing the remedies provided in this Section 22,

      including, but not limited to, costs of title evidence. (Emphasis added.)



      {¶25} This paragraph requires notice "prior to acceleration." However, the note

in default was a balloon note, attached to the complaint as Exhibit A, which was due by

October 1, 2010:



             3. PAYMENTS
Licking County, Case No. 14-CA-60                                                    11


            (A) TIME AND PLACE OF PAYMENTS

            I will pay principal and interest by making a payment every month.

            I will make my monthly payments on the first day of each month

      beginning on November 1, 2003. I will make these payments every month

      until I have paid all of the principal and interest and any other charges

      described below that I may owe under this Note. Each monthly payment

      will be applied as of its scheduled due date and will be applied to interest

      before Principal. If, on October 1, 2010, I still owe amounts under this

      Note, I will pay those amounts in full on that date, which is called the

      "Maturity Date."

            I will make my monthly payments at 5208 WEST RENO, SUITE

      255, OKLAHOMA CITY, OK 73127 or at a different place if required by the

      Note Holder.

            6. BORROWER'S FAILURE TO PAY AS REQUIRED

            (C) Notice of Default

            If I am in default, the Note Holder may send me a written notice

      telling me that if I do not pay the overdue amount by a certain date, the

      Note Holder may require me to pay immediately the full amount of

      Principal which has not been paid and all the interest that I owe on that

      amount. That date must be at least 30 days after the due date on which

      the notice is mailed to me or delivered by other means.          (Emphasis

      added.)
Licking County, Case No. 14-CA-60                                                     12


       {¶26} We find the note and mortgage were not accelerated. Appellants failed to

pay the balloon note by October 1, 2010 as required. The note does not provide for a

specific right to notice of default in order for appellee to foreclose upon the mortgage.

The defense of failure to give notice fails as a matter of law.

       {¶27} As for appellee's affidavit, appellants challenge the admissibility of the

affidavit and its failure to establish that appellee noticed appellants of default.

       {¶28} As we have found, the balloon note did not mandate notice.

       {¶29} Pursuant to Civ.R. 56(C), appellee provided the affidavit of Michele

Sexton, its Assistant Vice President and Operations Team Manager. In ¶ 1-4, Ms.

Sexton averred that she is competent to testify, has personal knowledge of appellee's

procedures for record keeping, and personally reviewed the business records kept in

the regular course of business relative to the subject balloon note and mortgage. See

Wachovia Bank of Delaware, N.A. v. Jackson, 5th Dist. Stark No. 2010-CA-00291,

2011-Ohio-3202, ¶ 40-57. Ms. Sexton further averred:



             7. The Balloon Note sets forth that if Defendants still owed any
       amount under the Balloon Note on October 1, 2010, they were required to
       pay that amount in full on that date. Exhibit 1 - Balloon Note, p. 1.

             8. On October 1, 2010, Defendants still owed $81,466.86 on the
       Balloon Note. See Exhibit 4 - Payment History.

             9. Defendants failed to pay the full $81,466.86 pursuant to the
       terms of the Balloon Note.

             10. The unpaid principal balance due and owing on the Balloon
       Note currently is $78,915.21 plus interest at the rate of 5.25% per annum
       from January 1, 2012, plus late charges, taxes, assessments and
       insurance premiums that may be advanced by BANA, costs, and
Licking County, Case No. 14-CA-60                                                         13


       advancements. See Exhibit 1 – Balloon Note and Exhibit 4 – Payment
       History.


       {¶30} Appellants' June 4, 2014 memorandum in opposition to appellee's motion

for summary judgment did not challenge these amounts or conclusions with any

evidentiary quality affidavits or exhibits as outlined in Civ.R. 56(E). Dresher, supra.

       {¶31} We find the Sexton affidavit to be of evidentiary quality, and the affidavit

established appellants' failure to pay the amount due and owing on the balloon note.

       {¶32} Upon review, we find the trial court did not err in granting summary

judgment to appellee.

       {¶33} Assignment of Error II is denied.

       {¶34} The judgment of the Court of Common Pleas of Licking County, Ohio is

hereby affirmed.

By Farmer, J.

Hoffman, P.J. and

Wise, J. concur.




SGF/sg 723
