[Cite as CitiMortgage, Inc. v. Elrod, 2017-Ohio-8442.]


                                    IN THE COURT OF APPEALS

                                ELEVENTH APPELLATE DISTRICT

                                     PORTAGE COUNTY, OHIO


CITIMORTGAGE, INC.,                                      :   OPINION

                 Plaintiff-Appellee,                     :
                                                             CASE NO. 2017-P-0022
        - vs -                                           :

DOUGLAS E. ELROD, et al.,                                :

                 Defendant-Appellant.                    :


Civil Appeal from the Portage County Court of Common Pleas, Case No. 2014 CV
00154.

Judgment: Affirmed.


Harry W. Cappel and Stacy A. Cole, Graydon Head & Ritchey LLP, 2400 Chamber
Center Drive, Suite 300, Fort Mitchell, KY 41017 (For Plaintiff-Appellee).

David N. Patterson, 30432 Euclid Avenue, #101, Wickliffe, OH 44092 (For Defendant-
Appellant).


DIANE V. GRENDELL, J.

        {¶1}     Defendant-appellant, Douglas E. Elrod, appeals the decision of the

Portage County Court of Common Pleas, entering judgment in favor of plaintiff-appellee,

CitiMortgage, Inc., for the foreclosure and sale of certain property mortgaged to secure

the indebtedness under a promissory note. The issues before this court are whether a

lender has standing to foreclose where it is the holder of the note but there is no direct

evidence of the mortgage’s assignment and whether evidence of notice sent to the
borrower and the borrower’s payment history are sufficient to establish the lender’s right

to foreclose. For the following reasons, we affirm the decision of the court below.

       {¶2}    On February 21, 2014, CitiMortgage, Inc. filed a Complaint for Foreclosure

and Declaratory Judgment in the Portage County Court of Common Pleas against

Douglas E. Elrod, Kimberly A. Elrod1, Vincorp, Inc., Mortgage Electronic Registration

Systems, Inc., and the Portage County Treasurer. CitiMortgage asserted that it was

“the holder of a certain promissory note and note loan modification agreement” and “the

holder of a certain mortgage deed, securing the payment of said promissory note and

modification agreement.” It further asserted that, “by reason of default in payment of the

said note, modification agreement and mortgage securing [the] same, * * * there is due

and unpaid thereon the sum of $111,397.47 plus interest.”

       {¶3}    CitiMortgage asserted that “it has been unable to obtain an assignment of

the mortgage from Integrity Mortgage Corporation,” although “Integrity Mortgage

Corporation intended to assign its interest in the note and mortgage to [CitiMortgage].”

       {¶4}    CitiMortgage sought, in relevant part, judgment in the amount of

$111,397.47 plus interest; “a declaration by the Court that [it] is the current holder of the

note and mortgage at issue herein”; and that “the Defendants named herein be required

to answer and set up any claim that they may have in said premises or be forever

barred.”

       {¶5}    On September 22, 2014, Elrod filed an Answer and Counterclaims,

alleging the Violation of Federal and State Protections and Laws, Negligence/Breach of




1. Kimberly Elrod, Douglas’ wife at the time the note and the mortgage were executed, did not answer
the Complaint and is not a party to this appeal.


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Fiduciary Duties, Fraud/Misrepresentation, Breach of Contract, Unjust Enrichment, and

Quiet Title.

       {¶6}    On March 12, 2015, CitiMortgage filed its Reply to the Counterclaims.

       {¶7}    On November 12, 2015, a bench trial was held before a magistrate.

       {¶8}    On November 25, 2015, a Magistrate Decision was issued and, in a

separate Judgment Entry, adopted by the trial court. The magistrate made the following

relevant findings:

               [T]here is due the Plaintiff on the promissory note and loan
               modification agreement set forth in the Complaint, the sum of
               $111,397.47, plus interest at 7.25% per annum from June 1, 2013,
               and * * * there is due the Plaintiff, $67.50 for advances made for
               taxes, insurance and otherwise to protect the property, for which
               sum, judgment is hereby rendered in favor of the Plaintiff against
               the Defendant, Douglas E. Elrod. * * *

               Defendant, Douglas E. Elrod, filed a petition commencing a case
               under Title 11 of the United States Code, for relief under Chapter 7
               of the Bankruptcy Code, in the United States Court, Northern
               District of Ohio, Eastern Division, and being Case No. 11-53252,
               and that he was subsequently discharged and release[d] from the
               indebtedness due and owing to the Plaintiff on its promissory note
               as set forth in the Complaint.[2]

               [I]n order to secure the payment of the promissory note aforesaid,
               the Defendants, Douglas E. Elrod and Kimberly A. Elrod, husband
               and wife, executed and delivered to Integrity Mortgage Corporation
               their certain mortgage deed, thereby conveying to it the * * *
               premises * * * known as 524 North Freedom Street, Ravenna, Ohio.
               ***

               [S]aid mortgage was duly filed * * * and thereby became and is a
               valid first mortgage lien upon said premises, subject only to the lien
               of the Treasurer for taxes; * * * said conditions in the mortgage
               deed have been broken, and the same has become absolute and


2. Note the holding of Deutsche Bank Natl. Trust Co. v. Holden, 147 Ohio St.3d 85, 2016-Ohio-4603, 60
N.E.3d 1243, paragraph two of the syllabus: “When debt on a promissory note secured by a mortgage
has been discharged by a bankruptcy court, the holder of the note may not pursue collection against the
maker of the note; however, the holder of the mortgage has standing to foreclose on the property and to
collect the deficiency on the note from the foreclosure sale of the property.”


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              the Plaintiff is entitled to have the equity of redemption and dower
              of the Defendants * * * in and to the said premises foreclosed.

              Defendants, Kimberly Elrod and Douglas Elrod, modified their first
              loan agreement on July 18, 2005. Said loan modification was done
              with CitiFinancial Mortgage Company, Inc.

              Defendants Elrod attempted to modify the loan again with Plaintiff
              in 2009 and had previously received notification of the change of
              the mortgage servicer and payment address to Plaintiff.

              Defendants Elrod were contacted by Plaintiff for a possible
              modification/resolution of this matter, but * * * Defendant, Douglas
              Elrod, refused to communicate with Plaintiff due to Plaintiff’s Fair
              Debt Collection Practices Act warning.

              Defendants Elrod continued to make their loan payments to Plaintiff
              from the change in servicing in June 2008 until June 2013 at which
              time Defendants Elrod failed to make any further payments.

              It is therefore ordered that Plaintiff is the current holder of the note
              and mortgage at issue herein.

       {¶9}   On December 7, 2015, Elrod filed an Objection to Magistrate’s Decision,

to which CitiMortgage replied on December 17, 2015.

       {¶10} On January 7, 2016, Elrod filed a Supplemental Objection, to which

CitiMortgage replied on April 24, 2017.

       {¶11} On April 25, 2017, the trial court issued a Judgment Entry Adopting

Magistrate’s Decision and Overruling the Defendant’s Objections.             In addition to

overruling Elrod’s objections, the court entered a default judgment against non-

answering defendants. The court further found that CitiMortgage “has been unable to

obtain an assignment of the mortgage from Integrity Mortgage Corporation * * *;

however, Integrity Mortgage Corporation intended to assign its interest in the note and

mortgage to plaintiff.”




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      {¶12} On May 19, 2017, Elrod filed a Notice of Appeal. On appeal, Elrod raises

the following assignment of error:

      {¶13} “[1.] The Record is clear and convincing that the trial court erred to the

prejudice of Appellant by entering judgment and decree of foreclosure in favor of

appellee on the foreclosure complaint.”

      {¶14} “In the ordinary civil case the degree of proof, or the quality of persuasion,

as some text-writers characterize it, is a mere preponderance of the evidence.” Merrick

v. Ditzler, 91 Ohio St. 256, 260, 110 N.E. 493 (1915); Cincinnati, Hamilton & Dayton Ry.

Co. v. Frye, 80 Ohio St. 289, 88 N.E. 642 (1909), syllabus. Under this standard, “the

trier of fact deals only with probabilities and * * * need not conclusively believe a fact

exists so long as the probabilities, when weighed, preponderate in favor of such.” W.

Res. Mut. Cas. Co. v. Eberhart, 81 Ohio App.3d 93, 97, 610 N.E.2d 481 (9th Dist.1991).

      {¶15} “When reviewing a civil appeal from a bench trial, an appellate court

utilizes a manifest-weight standard of review.” (Citation omitted.) Xtreme Elements,

L.L.C. v. Foti Contracting, L.L.C., 11th Dist. Lake No. 2016-L-043, 2017-Ohio-254, ¶ 25.

“Weight of the evidence concerns ‘the inclination of the greater amount of credible

evidence, offered in a trial, to support one side of the issue rather than the other.’”

(Citation omitted.) State v. Thompkins, 78 Ohio St.3d 380, 387, 678 N.E.2d 541 (1997).

Although a reviewing court may disagree with the factfinder’s resolution of conflicting

testimony, it “must always be mindful of the presumption in favor of the finder of fact.”

Eastley v. Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179, 972 N.E.2d 517, ¶ 21.

Reversal is limited to those cases where “the [finder of fact] clearly lost its way and




                                            5
created such a manifest miscarriage of justice that the [judgment] must be reversed and

a new trial ordered.” (Citation omitted.) Id. at ¶ 20.

        {¶16} Elrod raises several arguments under his sole assignment of error.

        {¶17} Elrod first maintains that CitiMortgage “failed to prove that any rights or

interest of the alleged original lender, non-party Integrity Mortgage Corporation, were

actually and eventually transferred to [it] via the alleged assignment and/or

endorsement stamp.” Appellant’s brief at 6 and 8.

        {¶18} At trial, Cindy Schneider testified as a business operations analyst

employed by CitiMortgage. Her duties involve “work[ing] with Citi’s outside counsel and

[its] in-house legal department to research the documents and the business records to

resolve the matter.”

        {¶19} Schneider identified the original note, executed by the Elrods and Integrity

Mortgage Corporation on December 12, 2003. The note contains two endorsements.

The first was to the order of CitiFinancial Mortgage Company and the second to

CitiMortgage, without recourse, successor in interest by merger to CitiFinancial

Mortgage Company. Schneider affirmed that CitiMortgage was in possession of the

original note prior to the filing of the Complaint on February 21, 2014, by virtue of the

merger between CitiMortgage and CitiFinancial in June 2006. Schneider produced a

letter to the Elrods, dated June 11, 2008, advising them that, effective July 1, 2008, the

servicing of the mortgage account would be transferred to CitiMortgage. Thereafter, the

Elrods’ mortgage payments were received by CitiMortgage.3



3. These actions satisfy Section 20 of the mortgage, which provides that “[t]he Note * * * can be sold one
or more times without prior notice to Borrower,” but, “[i]f there is a change of the Loan Servicer, Borrower
will be given written notice of the change which will state the name and address of the new Loan Servicer
* * *.”


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       {¶20} Schneider identified the original mortgage and a certified copy of the

recorded mortgage, given by the Elrods to Integrity Mortgage Corporation on December

12, 2003, as security for the note.

       {¶21} Schneider identified the original loan modification agreement entered into

by Douglas Elrod (“Borrower”) and CitiFinancial Mortgage Company (“Lender”), on

August 1, 2005.     The agreement amended and supplemented the promissory note

dated December 12, 2003 (“Note”). The agreement contained the following:

              Borrower acknowledges that Lender is the holder and the owner of
              the Note and understands that Lender may transfer the Note, as
              amended by this Agreement, and that anyone who takes the Note
              by transfer and who is entitled to receive payments under the Note
              is called the “Lender” in this Agreement.

       {¶22} Contrary    to   Elrod’s   assertion,   the   evidence   demonstrates     that

CitiMortgage is a “person entitled to enforce” the note by virtue of being “[t]he holder of

the instrument.” R.C. 1303.31(A)(1); R.C. 1301.201(B)(21)(a) (“‘[h]older’ means * * *

[t]he person in possession of a negotiable instrument that is payable either to bearer or

to an identified person that is the person in possession”).

       {¶23} Although there is no direct evidence of the assignment of the mortgage, it

is well-settled Ohio law that “the negotiation of a note operates as an equitable

assignment of the mortgage, even though the mortgage is not assigned or delivered.”

U.S. Bank Natl. Assn. v. Marcino, 181 Ohio App.3d 328, 2009-Ohio-1178, 908 N.E.2d

1032, ¶ 52 (7th Dist.); accord GMAC Bank v. Bradac, 8th Dist. Cuyahoga No. 105242,

2017-Ohio-7888, ¶ 39; Bank of Am. v. Jones, 11th Dist. Geauga No. 2014-G-3197,

2014-Ohio-4985, ¶ 26 (“[a]ssuming, arguendo, that the assignment of the mortgage to

MERS was devoid of any legal effect, Bank of America nevertheless had standing to




                                             7
foreclose by virtue of being holder of the note”). CitiMortgage was the holder of the note

at the time the Complaint was filed; it follows that it had standing to enforce the

mortgage.

       {¶24} Elrod next asserts that CitiMortgage “failed [to] properly establish[] by

competent, credible evidence that prior mandatory notice was provided.” Appellant’s

brief at 8.

       {¶25} The note provides that, if the Elrods default, “the Note Holder may send * *

* a written notice telling [the borrowers] that if [they] do not pay the overdue amount by a

certain date, the Note Holder may require [them] to pay immediately the full amount of

the Principal that has not been paid and all the interest that [they] owe on that amount.”

“That date must be at least 30 days after the date on which the notice is mailed to me *

* *.” Such notice “will be given by delivering it or by mailing it by first class mail to [the

borrowers] at the Property Address * * *.”

       {¶26} The mortgage similarly provides that, “following Borrower’s breach of any

covenant or agreement in this Security Instrument,” notice shall be given the Borrower

specifying: “(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 the 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.”

       {¶27} Schneider identified a letter, dated August 5, 2013, and sent by

CitiMortgage to the Elrods by first class mail, advising them that they are in default and

that failure to cure the default by September 9, 2013, “may result in the acceleration of




                                              8
all sums due under the Security Instrument” and the “property may be sold in

accordance with the terms of the Security Instrument and applicable law.” The notice

also provided the amount of the default and the actions necessary to effect its cure.

       {¶28} CitiMortgage thus demonstrated its compliance with the notice provisions

of the note and mortgage.

       {¶29} Finally, Elrod asserts that CitiMortgage “failed to proffer the requisite

substantive evidence in support of any real balance due, if any,” inasmuch as Schneider

“was not a true ‘analyst,’ but merely looked at and brought into Court the documents.”

Appellant’s brief at 9.

       {¶30} In fact, Schneider identified “a copy of the [Elrods’] payment history that

was retrieved from CitiMortgage’s business records,” establishing that the last payment

was received on June 4, 2013, and that the balance remaining on the principal was

$111,397.47.

       {¶31} Evidence Rule 803(6) provides that records of regularly conducted

business activity are admissible, as an exception to the rules of hearsay, if shown to be

such “by the testimony of the custodian or other qualified witness.” This court has held

that to qualify documents as business records, the witness must be “sufficiently familiar

with the operation of the business and with the circumstances of the record’s

preparation, maintenance and retrieval, that he can reasonably testify on the basis of

this knowledge that the record is what it purports to be, and that it was made in the

ordinary course of business.”      (Citation omitted.)   Jones, 2014-Ohio-4985, ¶ 34;

Christiana Trust v. Barth, 9th Dist. Lorain No. 16CA010959, 2017-Ohio-6924, ¶ 12-13.




                                            9
       {¶32} At trial, Schneider affirmed that she has personal knowledge of how

CitiMortgage’s loan records are created and maintained; it is the regular practice of

CitiMortgage to receive, maintain, and rely upon these records in the ordinary course of

its business; the records are created at or near the time of the activities or transactions

reflected therein by persons with knowledge thereof; and her duties as an analyst

include the accessing and reviewing of such records.

       {¶33} The admissibility of business records pursuant to Evidence Rule 803(6)

rests within the sound discretion of the trial court and determinations thereunder will not

be reversed absent a clear abuse of discretion. Peters v. Ohio State Lottery Comm., 63

Ohio St.3d 296, 299, 587 N.E.2d 290 (1992).

       {¶34} Here, we find no abuse of discretion in the magistrate’s decision to admit

the payment history under the business records exception to the hearsay rules and that

the document duly establishes the amount of default by a preponderance of the

evidence.

       {¶35} The sole assignment of error is without merit.

       {¶36} For the foregoing reasons, the judgment of the Portage County Court of

Common Pleas, ordering the foreclosure and sale of the subject property, is affirmed.

Costs to be taxed against the appellant.



CYNTHIA WESTCOTT RICE, P.J., concurs,

COLLEEN MARY O’TOOLE, J., dissents.




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