[Cite as Wells Fargo v. Phillabaum, 192 Ohio App.3d 712,, 2011-Ohio-1311.]




                             IN THE COURT OF APPEALS OF OHIO
                                FOURTH APPELLATE DISTRICT
                                    HIGHLAND COUNTY


WELLS FARGO,
                                                 :
          Appellant,                                          Case No. 10CA10

          v.                                     :

PHILLABAUM et al.,                               :           DECISION AND JUDGMENT ENTRY

          Appellees.                             :

_________________________________________________________________

                                           APPEARANCES:

Lerner, Sampson & Rothfuss, L.P.A., and Deanna C. Stoutenborough, for appellant.

Legal Aid Society of Southwest Ohio, L.L.C., Noel M. Morgan, and Carrie Dettmer Slye, for
appellees.
_________________________________________________________________
CIVIL APPEAL FROM COMMON PLEAS COURT
DATE JOURNALIZED: 3-16-11

          ABELE, Judge.

          {¶ 1} This is an appeal from a Highland County Common Pleas Court summary

judgment in favor of Dana and Linda Phillabaum, defendants below and appellees herein, on the

foreclosure action brought against them by Wells Fargo (“Bank”), plaintiff below and appellant

herein.

          {¶ 2} Appellant assigns the following error for review:

          The trial court erred in denying plaintiff-appellant, Wells Fargo Bank,
          N.A.’s motion for summary judgment and in granting defendant-appellant,
          Dana Phillabaum’s motion for summary judgment.
HIGHLAND, 10CA10                                                                                  2


       {¶ 3} On September 23, 2005, appellee Dana Phillabaum purchased a home.

Phillabaum executed a $89,528 promissory note with a 6¼ percent interest rate payable in monthly

installments for 30 years, and a mortgage as security on that loan. 1 He and appellee Linda

Ferguson (n.k.a. Linda Phillabaum) subsequently married. In late 2008, both lost their jobs and

were sent into default.

       {¶ 4} Appellant commenced the instant action on August 3, 2009, and requested that the

principal balance of the loan be accelerated and the mortgage foreclosed. Both parties eventually

requested summary judgment.

       {¶ 5} The dispositive issue in the case sub judice is whether the bank complied with

federal regulations, promulgated by the Department of Housing and Urban Development

(“HUD”), prior to pursuing foreclosure. In the end, the trial court found that it had not and ruled

in favor of the appellees. This appeal followed.

       {¶ 6} In its sole assignment of error, the bank asserts that the trial court erred by denying

its Civ.R. 56(C) motion and by granting summary judgment to the appellees. We disagree with

appellant.

       {¶ 7} Before we turn to the merits of the assignment of error, we first pause to address the

appropriate standard of review. Appellate courts review summary judgments de novo. See

Broadnax v. Greene Credit Serv. (1997), 118 Ohio App.3d 881, 887, 694 N.E.2d 167; Coventry

Twp. v. Ecker (1995), 101 Ohio App.3d 38, 41, 654 N.E.2d 1327. In other words, we afford no

deference whatsoever to a trial court's decision; Hicks v. Leffler (1997), 119 Ohio App.3d 424,


       1
           Appellant was not the original lender, but rather an assignee.
HIGHLAND, 10CA10                                                                                      3

427, 695 N.E.2d 777; Dillon v. Med. Ctr. Hosp. (1993), 98 Ohio App.3d 510, 514-515, 648 N.E.2d

1375. Instead, we conduct our own independent review to determine whether summary judgment

is appropriate. Woods v. Dutta (1997), 119 Ohio App.3d 228, 233-234, 695 N.E.2d 18; Phillips v.

Rayburn (1996), 113 Ohio App.3d 374, 377, 680 N.E.2d 1279.

       {¶ 8} Summary judgment under Civ.R. 56(C) is appropriate when a movant shows that

(1) no genuine issues of material fact exist, (2) he is entitled to judgment as a matter of law, and (3)

after the evidence is construed most strongly in favor of the nonmovant, reasonable minds can

come to one conclusion, and that conclusion is adverse to the nonmoving party. Zivich v. Mentor

Soccer Club, Inc. (1998), 82 Ohio St.3d 367, 369-370, 696 N.E.2d 201; Mootispaw v. Eckstein

(1996), 76 Ohio St.3d 383, 385, 667 N.E.2d 1197. The moving party bears the initial burden to

show that no genuine issue of material fact exists and that he is entitled to judgment as a matter of

law. Vahila v. Hall (1997), 77 Ohio St.3d 421, 429, 674 N.E.2d 1164; Dresher v. Burt (1996), 75

Ohio St.3d 280, 293, 662 N.E.2d 264. If that burden is met, the onus then shifts to the nonmoving

party to provide rebuttal evidentiary materials. See Trout v. Parker (1991), 72 Ohio App.3d 720,

723, 595 N.E.2d 1015; Campco Distribs., Inc. v. Fries (1987), 42 Ohio App.3d 200, 201, 537

N.E.2d 661. Additionally, to the extent that this case turns on the interpretation of federal

regulations, these are legal issues to which we also apply de novo review. See generally Howell v.

Ohio Dept. of Job & Family Servs., Belmont App. No. 08BE25, 2009-Ohio-1510, at ¶ 29; Dawson

v. Williamsburg of Cincinnati Mgt. Co. (Feb. 4, 2000), Hamilton App. No. C-981022 (cases

applying principle to interpretation of the Ohio Administrative Code). With these principles in

mind, we turn our attention to the case sub judice.

       {¶ 9} As we mentioned above, the dispositive issue is whether the bank complied with all
HIGHLAND, 10CA10                                                                                                   4

pertinent HUD regulations before it initiated the foreclosure process. After our review, we agree

with the trial court that it did not.

        {¶ 10} The acceleration clause of the note that the appellee executed states:

                If [b]orrower defaults by failing to pay in full any monthly payment, then
        [l]ender may, except as limited by regulations of the Secretary in the case of
        payment defaults, require immediate payment in full of the principal balance
        remaining due and all accrued interest.

(Emphasis added.)2

        {¶ 11} Both parties agree that the pertinent federal regulation at issue is set out in Title 24,

C.F.R. 203.604(b), and requires a “face-to-face” interview between a mortgagor and mortgagee

before three full monthly installments on the mortgage are unpaid. Here, there is no dispute that

the bank did not conduct such a meeting. Instead, the bank argues that it falls under an exception

to that requirement because the “mortgaged property is not within 200 miles of the mortgagee, its

servicer, or a branch office of either[.]” (Emphasis added.) 24 C.F.R. 203.604(C). However,

appellee’s affidavit in support of his cross-motion for summary judgment states, “Wells Fargo has

at least one branch office within 200 miles of my home” and asserts that he has visited that office at

least once. This evidence is sufficient for appellee to carry his initial Civ.R. 56(C) burden, and

thus, the burden shifted to the bank to provide rebuttal materials.

        {¶ 12} The bank countered that the branch that appellee identified is simply a regular bank

branch. It cited the HUD website (under “Frequently Asked Questions”) where “branch” was

qualified to mean a mortgage “servicing” office. The bank argued that the nearest “servicing

center” is in Frederick, Maryland, over 200 miles away, thus bringing Wells Fargo within the

regulatory exception to the face-to-face meeting requirement.
        2
            The term “Secretary” is thereafter defined to mean “the Secretary of Housing and Urban Development.”
HIGHLAND, 10CA10                                                                                                       5

         {¶ 13} First, even if we accept the bank’s interpretation of the regulation, we point out that

this argument was raised in its reply memorandum, and we find nothing in the way of Civ.R. 56(C)

evidentiary materials to establish that (1) there are no mortgage servicing personnel at the branch

in Hamilton County or (2) the closest servicing center is in Maryland. The only affidavit that the

bank submitted is attached to its original summary judgment motion, and it merely established

default and the amount due and owing under the note. Absent some Civ.R. 56(C) evidentiary

materials to support its claims regarding the Hamilton County branch, the bank has not carried its

burden of rebuttal.3

         {¶ 14} Second, aside from failing to carry its burden of rebuttal, we also agree with the

trial court that the bank’s argument is not particularly persuasive. The exception that the bank

claims to fall under excuses the face-to-face meeting only if a “mortgagee, its servicer, or a branch

office of either” is not within 200 miles of the property. (Emphasis added.) See 24 C.F.R.

203.604(c). Here, the trial court aptly noted that this language is phrased in the disjunctive,

meaning that there must be neither a “servicer” branch nor a "mortgagee" branch within 200 miles

of the property. Construing a “mortgagee” branch to mean a “servicing” center seems redundant

to the reference to “servicer” earlier in that very same sentence. There is no dispute that the

mortgagee in this case is Wells Fargo. Therefore, a plain reading of this subsection suggests that

the exception applies only if there is no branch of Wells Fargo within 200 miles. This court has

repeatedly held that statutes mean what they say. See, e.g., State v. McPherson (2001), 142 Ohio

App.3d 274, 280, 755 N.E.2d 426; State ex rel. Athens Cty. Child Support Enforcement Agency v.

Patel, Athens App. No. 05CA20, 2006-Ohio-2951, at ¶ 20. We see no reason to apply a different

         3
          The bank also argues that the HUD handbook supports its interpretation of the word “branch.” We reject
that argument for the same reason (lack of evidentiary materials) and because it was raised for the first time on appeal.
HIGHLAND, 10CA10                                                                                                     6

standard simply because the issue here is a federal regulation rather than an Ohio statute.

         {¶ 15} We also point out that our First Appellate District colleagues recently came to the

same conclusion on this issue. See Wells Fargo Bank, N.A. v. Isaacs, Hamilton App. No.

C-100111, 2010-Ohio-5811, at ¶ 10. Our decision is also consistent with a Second District Court

of Appeals decision.           See Washington Mut. Bank v. Mahaffey, 154 Ohio App.3d 44,

2003-Ohio-4422,796 N.E.2d 39, at ¶ 26.4 Although not explicitly addressing the HUD website’s

construction of “branch,” the court nevertheless rejected the bank’s argument that a branch in

Louisville, Kentucky excepted it from the 200-mile requirement simply because that branch did

not “service” mortgage loans.

         {¶ 16} If HUD desires to construe the word “branch” differently from its plain meaning, it

can amend its regulation. Until directed otherwise, however, we will give those words their plain

meaning. We also emphasize, as the trial court aptly noted, that nothing prohibits the bank from

again seeking foreclosure once it complies with the regulation.

         {¶ 17} Accordingly, based upon the reasons discussed above, we hereby overrule

appellant's assignment of error and affirm the trial court's judgment.

                                                                                               Judgment affirmed.

         HARSHA, P.J., and MCFARLAND, J., concur.




         4
            One federal district court came to the same conclusion and declined to interpret the word “branch” in light
of what was said on HUD’s website. The court noted that “branch” is an unambiguous term and should be construed as
it is used in common parlance. See Kersey v. PHH Mtge. Corp. (E.D.Va.2010), 682 F.Supp.2d 588, 602-605. This
opinion was later vacated, but it is unclear why.
