[Cite as Bank of New York Mellon v. Primes, 2018-Ohio-1833.]


                Court of Appeals of Ohio
                              EIGHTH APPELLATE DISTRICT
                                 COUNTY OF CUYAHOGA


                             JOURNAL ENTRY AND OPINION
                                     No. 105678




                      BANK OF NEW YORK MELLON
                                                         PLAINTIFF-APPELLEE

                                                   vs.

                          MARVIN D. PRIMES, ET AL.
                                                         DEFENDANTS-APPELLANTS




                                          JUDGMENT:
                                           AFFIRMED


                                     Civil Appeal from the
                            Cuyahoga County Court of Common Pleas
                                   Case No. CV-15-838851

        BEFORE: Stewart, P.J., Blackmon, J., and Jones, J.

        RELEASED AND JOURNALIZED: May 10, 2018
ATTORNEYS FOR APPELLANTS

Marc E. Dann
William C. Behrens
The Dann Law Firm, Co., L.P.A.
P.O. Box 6031040
Cleveland, OH 44103


ATTORNEYS FOR APPELLEE

Brooke D. Turner-Bautista
Stefanie Deka
McGlinchey Stafford, P.L.L.C
25550 Chagrin Boulevard, Suite 406
Cleveland, OH 44122

Justin M. Ritch
Manley, Deas & Kochalski, L.L.C.
P.O. Box 165028
Columbus, OH 43216

Also Listed:

Keybank National Association
127 Public Square
Cleveland, OH 44114
MELODY J. STEWART, P.J.:

      {¶1} The Bank of New York Mellon brought this action on a promissory note

along with a demand to foreclose on real property owned by defendants-appellants

Marvin and Vicky Primes.        The court approved a magistrate’s decision granting

summary judgment on the note and foreclosure, overruling the Primeses’ objections that

(1) an affidavit offered by the bank to prove its standing to enforce the note had not been

made on personal knowledge, and (2) that the magistrate erred by finding that the

Primeses lacked standing to challenge the transfer of the mortgage from the original

mortgagee to the bank. The Primeses raise these same issues on appeal.

                                 I. Personal Knowledge

      {¶2} The bank supported its motion for summary judgment by appending the

affidavit of a loan analyst for the company that serviced the Primeses’ loan.          The

affidavit stated that a copy of the note appended to the motion was a true and accurate

copy of the note.     Despite the loan analyst stating that he “personally reviewed”

documents, including the promissory note, the Primeses maintain that the analyst could

not have personal knowledge of the note because he worked for the parent company of

the loan servicing company.

      {¶3} An affidavit submitted in support of a motion for summary judgment must be

made on “personal knowledge.”           “Personal knowledge” in this context means

“knowledge gained through firsthand observation or experience, as distinguished from a
belief based upon what someone else has said.” Bonacorsi v. Wheeling & Lake Erie Ry.

Co., 95 Ohio St.3d 314, 2002-Ohio-2220, 767 N.E.2d 707.

       Where an affiant indicates that he or she is an employee of the bank, his or
       her job duties include the supervision of the loan, he or she has personal
       knowledge of the loan, and he or she is the records custodian of the records
       relating to the mortgage and line of credit at issue, the affidavit complies
       with Civ.R. 56(E).

Bayview Loan Servicing, L.L.C. v. St. Cyr, 8th Dist. Cuyahoga No. 104655,

2017-Ohio-2758, ¶ 32.

       {¶4} The affiant stated that he is employed as a loan analyst for Ocwen Financial

Corporation, whose “indirect subsidiary is Ocwen Loan Servicing, L.L.C.” He stated

that Ocwen Loan Servicing is the “servicer and attorney-in-fact” for the bank and

maintains the records of the Primeses’ loan that he examined when preparing the

affidavit. The Primeses argue that a question of fact exists as to whether the loan

analyst, as an employee of Ocwen Financial, had personal knowledge of the records of

Ocwen Loan Servicing.

       {¶5} No question of fact exists. The loan analyst stated both that he was a loan

analyst at Ocwen Financial and that he was “a Loan Analyst for Ocwen Loan.” As the

nonmoving party, the Primeses were required to offer evidence to rebut the loan analyst’s

assertions, not just mere denials.   See Civ.R. 56(E) (“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.”). The Primeses offer no evidence in rebuttal, but argue

that the loan analyst’s statements about working for both Ocwen Financial and Ocwen

Loan Servicing were “self-rebutting.”

       {¶6} There is nothing so inherently contradictory about the loan analyst’s

statements that they create a question of fact. It is possible that the corporate structure of

the two entities was such that the loan analyst worked for both Ocwen Financial and

Ocwen Loan Servicing. And even if the loan analyst did not actually work for Ocwen

Loan Servicing, the nature of the subsidiary relationship between Ocwen Loan Servicing

and Ocwen Financial could be close enough that the loan analyst could truthfully state

that he has “personal knowledge of Ocwen Loan’s procedures for creating and

maintaining these records[,]” and that he “personally reviewed” the loan records,

including the promissory note. The Primeses could not merely assert a denial — they

had the duty to offer evidence in rebuttal. Their failure to do so means that the court did

not err by accepting the loan analyst’s affidavit as proof that the bank was in possession

of the note.

                                        II. Standing

       {¶7} The Primeses filed a counterclaim alleging that the bank was attempting to

collect on a debt that it did not own and that it was not a valid assignee of the mortgage.

The court relied on our decision in Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist.

Cuyahoga No. 98502, 2013-Ohio-1657, to hold that the Primeses lacked standing to

challenge the assignment of the mortgage because the transfer of the note created an
equitable transfer of the mortgage and the bank is the holder of a note indorsed in blank

with the right to enforce it.

       {¶8} The Primeses argue that our cases finding that issuers of promissory notes

lack standing to challenge alleged defects in the transfer or assignment of a mortgage

erroneously follow Livonia Properties Holdings, L.L.C. v. 12840-12976 Farmington Rd.

Holdings, L.L.C., 399 Fed.Appx. 97 (6th Cir.2010), in which the Sixth Circuit held that

an individual “who is not a party to an assignment lacks standing to challenge that

assignment.” They contend that the Sixth Circuit has limited this holding and that the

Ohio Supreme Court decision in Deutsche Bank Natl. Trust Co. v. Holden, 147 Ohio

St.3d 85, 2016-Ohio-4603, 60 N.E.3d 1243, holding that a foreclosure plaintiff must

prove that it is a party entitled to enforce the note and is a valid assignee of the mortgage,

means that defendants must have standing to challenge that proof.

       {¶9} Neither decision affects this case. As commonly used, the word “mortgage”

encompasses two separate instruments: a promissory note and a security instrument. The

security instrument makes the real property the collateral securing performance on the

note. A creditor can enforce a note as an unsecured debt without the security interest.

But apart from very peculiar circumstances, 1 the security interest has little meaning

without the note — the current holder of the promissory note is entitled to enforce the


          A peculiar circumstance existed in Holden: the debtor had a note discharged in bankruptcy,
       1


but the bankruptcy did not extinguish the mortgage lien on the secured property. The mortgage lien
holder at the time the action commenced “had standing to foreclose on the property and the right to
collect the deficiency on the note from the proceeds of the foreclosure sale.” Holden at ¶ 3. The
Supreme Court characterized the case as both an “outlier” and “unique.” Id. at ¶ 6.
mortgage lien. This rule incorporates the common law maxim that “the security follows

the debt,” a rule now codified in the Uniform Commercial Code. See R.C. 1309.203(G)

(“The attachment of a security interest in a right to payment or performance secured by a

security interest or other lien on personal or real property is also attachment of a security

interest in the security interest, mortgage, or other lien.”).

       {¶10} In Bank of New York Mellon v. Froimson, 8th Dist. Cuyahoga No. 99443,

2013-Ohio-5574, we stated:

       When a person signs a promissory note, that person incurs the obligation
       contained in R.C. 1303.52(B) that the instrument will be paid to a person
       entitled to enforce the note. A “person entitled to enforce” an instrument
       is, among other things, a “holder” of an instrument.             See R.C.
       1303.31(A)(1). A “holder” of a note is any person in possession of a
       negotiable instrument that is payable to a bearer.              See R.C.
       1301.201(B)(21)(a).

Id. at ¶ 13.

       {¶11} If the note is indorsed in blank, it becomes bearer paper, meaning that

anyone who possesses the note is a “holder” of the note. A person in possession of a

note indorsed in blank is automatically a person entitled to enforce the note, irrespective

of how the person came into possession of the note. See R.C. 1303.25(B); Froimson at ¶

14.

       {¶12} The undisputed facts show that the promissory note issued by the Primeses

was indorsed in blank and that the bank was in physical possession of the note by way of

foreclosure counsel for litigation purposes. The Primeses offered no evidence to dispute

possession.    As the holder of a note indorsed in blank, the bank satisfied all the
requirements to be considered a person entitled to enforce the note. Because Ohio

follows the rule that the security follows the debt, “the physical transfer of the note

indorsed in blank, which the mortgage secures, constitutes an equitable assignment of the

mortgage, regardless of whether the mortgage is actually (or validly) assigned or

delivered.” Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657, at ¶ 65; JP Morgan

Chase Bank v. Stevens, 8th Dist. Cuyahoga No. 104835, 2017-Ohio-7165, ¶ 42. This

equitable assignment of the mortgage makes immaterial the Primeses’ standing arguments

about the actual assignment of the mortgage. Deutsche Bank Natl. Trust Co. v. Baxter,

8th Dist. Cuyahoga No. 104585, 2017-Ohio-1364, ¶ 23 (question whether mortgage was

properly assigned is “immaterial” because “the physical transfer of a note indorsed in

blank constitutes an equitable assignment of the mortgage.”). The bank had standing to

foreclose on the note irrespective of any assignment of the mortgage.

       {¶13} Judgment affirmed.

       It is ordered that appellee recover of appellants costs herein taxed.

       The court finds there were reasonable grounds for this appeal.

       It is ordered that a special mandate issue out of this court directing the common

pleas court to carry this judgment into execution.

       A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.



______________________________________________
MELODY J. STEWART, PRESIDING JUDGE
PATRICIA ANN BLACKMON, J., and
LARRY A. JONES, SR., J., CONCUR
:
