[Cite as Beal Bank S.S.B. v. Means, 2011-Ohio-5922.]


                Court of Appeals of Ohio
                              EIGHTH APPELLATE DISTRICT
                                 COUNTY OF CUYAHOGA


                              JOURNAL ENTRY AND OPINION
                                       No. 96252



                                    BEAL BANK S.S.B.
                                                 PLAINTIFF-APPELLEE

                                                       vs.


                            PHYLLIX MEANS, ET AL.
                                                 DEFENDANTS-APPELLANTS




                                  JUDGMENT:
                            REVERSED AND REMANDED


                                     Civil Appeal from the
                            Cuyahoga County Court of Common Pleas
                                     Case No. CV-679844

        BEFORE: Kilbane, A.J., Blackmon, J., and Jones, J.

        RELEASED AND JOURNALIZED:                            November 17, 2011
ATTORNEYS FOR APPELLANTS

Edward G. Kramer
Ryan DeYoung
Neil P. McGowan
The Fair Housing Law Clinic
3214 Prospect Avenue, East
Cleveland, Ohio 44115

ATTORNEYS FOR APPELLEE

David F. Hanson
David B. Bokor
John E. Codrea
Ann Marie Johnson
Matthew P. Curry
Manley Deas Kochalski, L.L.C.
P.O. Box 165028
Columbus, Ohio 43216-5028




MARY EILEEN KILBANE, A.J.:

       {¶ 1} Defendants-appellants, Phyllix Means and Ray Stovall, appeal from an

order that granted summary judgment and a decree in foreclosure in favor of

plaintiff-appellee, Beal Bank, S.S.B. (“Beal Bank”), in this mortgage-foreclosure action.

For the reasons set forth below, we reverse and remand for further proceedings consistent

with this opinion.
       {¶ 2} The record indicates that on January 24, 2003, the defendants executed an

adjustable rate promissory note in the amount of $62,3701 from Ameriquest Mortgage

Co. in connection with their purchase of residential property located at 14910 Kingsford

Avenue in Cleveland, Ohio. Also on January 24, 2003, defendants granted Ameriquest a

mortgage deed to the property.      Ameriquest subsequently assigned the mortgage to

Credit-Based Asset Servicing and Securitization, L.L.C. of New York, New York, and

Beal Bank of Plano, Texas, on March 13, 2008.

       {¶ 3} On December 22, 2008, Beal Bank filed a complaint for foreclosure,

alleging that defendants were in default of payment, and prayed for recovery of the

outstanding balance of the principal in the amount of $60,455.58, plus adjusted interest in

the amount of 10.624 percent per annum from February 2008. On March 6, 2009,

defendants filed an answer in which they denied liability and asserted various affirmative

defenses including billing errors pursuant to the Fair Credit Billing Act, 15 U.S.C.

1666(a)(3)(B), recoupment, set-off, and “other additional affirmative defenses which may

become apparent or discovered in this matter.”    They additionally asserted counterclaims

alleging predatory and racially discriminatory lending, trespass, and violations of the Fair

Credit Billing Act.

       {¶ 4} On March 17, 2009, the matter was referred to the court’s foreclosure

mediation program, and all discovery and motion practice was stayed pending the



      The loan was subject to a yearly interest rate of 9.990. There was also
       1

an adjustable rate rider effective February 1, 2005.
mediator’s report.     Mediation took place on December 17, 2009.               Negotiations

continued, and a follow-up mediation was held on February 26, 2010. On that date, the

court issued a journal entry in which it noted that the case did not settle, and it lifted the

stays on discovery and motion practice.     Approximately one week later, the court issued

a second entry that stated:

       {¶ 5} “Plaintiff is ordered to file a motion for summary judgment,

current title work, and submit a proposed magistrate’s decision no later than

March 31, 2010. Failure to do so will result in this case being dismissed

without prejudice at plaintiff’s cost.”

       {¶ 6} On March 30, 2010, Beal Bank filed a motion for a 45-day extension of

time within which to file its motion for summary judgment. On April 7, 2010, the trial

court granted this motion and extended the dispositive motion deadline to May 21, 2010.

       {¶ 7} Beal Bank filed its motion for summary judgment on the foreclosure claims

as well as defendants’ counterclaims on May 20, 2010. Plaintiff argued that defendants

were in default since they had failed to make required payments totaling $4,756.34, and

that the default had accelerated the total amount due under the note of $60,455.58.      Beal

Bank also maintained that it was entitled to judgment as a matter of law on defendants’

counterclaim for trespass because the property had been abandoned and, under the terms

of the mortgage, plaintiff had a right to enter and “secure” the property if abandoned.

Beal Bank also maintained that defendants could not establish a violation of the Fair

Credit Billing Act because it claimed that the notice of default does not constitute a
“statement of obligor’s account” pursuant to 15 U.S.C. 1666(a) and defendants’ written

notice of claimed billing error failed to set forth the reasons for the obligor’s belief that an

error had occurred as required under 15 U.S.C.             1666(a)(3).    Finally, Beal Bank

asserted that it was entitled to judgment on the counterclaims for predatory and

discriminatory lending because the counterclaims consisted only of unfounded,

broad-sweeping generalizations and were barred by the one-year limitations period set

forth in 15 U.S.C. 1640.

       {¶ 8} On June 25, 2010, defendants moved for a 90-day discovery continuance

under Civ.R. 56(F). In support of the motion, defendants presented the affidavit of its

counsel, Edward Kramer, who averred that the matter had been stayed pending the

mediation process, and after this time, on November 23, 2009, family health issues

prevented him from obtaining discovery.       Specifically, Kramer averred that he had been

ill and that his wife sustained injuries that    required her to receive in-home care.      He

further averred that it was essential to depose Beal Bank in order to discover facts

relevant to the counterclaim and to oppose the bank’s motion for summary judgment.

Appended to the request was a list of numerous Cleveland-area properties that Beal Bank

had financed, as well as copies of discovery requests that defendants were prepared to

serve upon plaintiff.

       {¶ 9} On July 9, 2010, the trial court entered summary judgment for Beal Bank on

the foreclosure complaint and defendants’ counterclaims, and denied defendants’ motion

for a continuance.      The court then referred the matter to the magistrate for findings of
fact and conclusions of law.   The Magistrate concluded that, based upon the Beal Bank’s

“complaint, the answers filed in this action, and the evidence submitted,” that Beal Bank

was entitled to summary judgment. The Magistrate then made detailed findings and

conclusions regarding the allegations of Beal Bank’s complaint for foreclosure, including

that $60,455.58 plus interest was due on the promissory note, that the conditions of the

“mortgage deed have been broken and the same has become absolute,” and included

various sums owed to other parties. The Magistrate did not address the matters set forth

in defendants’ counterclaim, however, and he stated:

       {¶ 10} “[R]easonable minds can come to but one conclusion, which is

adverse to Defendants, Phyllix Means and Ray Cameron Stovall, * * * and

therefore grants Plaintiff’s Motion for Summary Judgment on its Complaint

and Defendants’ Counterclaims.”

       {¶ 11} Defendants objected to the magistrate’s decision, and complained that the

magistrate had relied upon “conclusory assertions that the Defendant has no evidence to

prove its defenses and counter [sic] claims. Plaintiff failed to discharge its initial burden

of demonstrating the absence of genuine issues of material fact with respect to

Defendant’s affirmative defenses.”      The court overruled defendants’ objections and

entered judgment in favor of Beal Bank in the amount of $60,455.58 plus interest in the

amount of 10.625% per annum from February 1, 2008.            The court also certified that

there is no just reason for delay pursuant to Civ.R. 54(B). Defendants now appeal and

assign two errors for our review.
       {¶ 12} Defendants’ first assignment of error states:

       “The trial court erred by not granting a continuance to
       defendants-appellants so that discovery could be obtained as required
       under Civ.R. 56(F).”

       {¶ 13} Civ.R. 56(F) provides:

       “Should it appear from the affidavits of a party opposing the motion
       for summary judgment that the party cannot for sufficient reasons
       stated present by affidavit facts essential to justify the party’s
       opposition, the court may refuse the application for judgment or may
       order a continuance to permit affidavits to be obtained or discovery to
       be had or may make such other order as is just.”

       {¶ 14} Pursuant to Civ.R. 56(F), the trial court has discretion when considering a

motion for a continuance.      Frost v. Cleveland Rehab. & Special Care Ctr., Inc.,

Cuyahoga App. No. 89694, 2008-Ohio-1718. Where there is a realistic possibility that

genuine issues of material fact will require jury consideration that discretion should be

exercised liberally in favor of a nonmoving party who proposes any reasonable interval

for the production of those materials. Whiteleather v. Yosowitz (1983), 10 Ohio App.3d

272, 461 N.E.2d 1331.

       {¶ 15} The party seeking the continuance must submit affidavits that set forth a

factual basis indicating the reason for the continuance. Frost.      Where the reason set

forth in the affidavit is contradicted by the record, then the trial court may properly deny

the request. Frost.

       {¶ 16} Mere allegations requesting a continuance or deferral of action for the

purpose of discovery are not sufficient. Frost, citing Serrano v. McCormack Baron

Mgmt. (Dec. 7, 2000), Cuyahoga App. No. 77970, and Schuerger v. Wehner (June 25,
1998), Cuyahoga App. No. 72477.        However, the party who seeks a continuance for

further discovery is not required to specify what facts he hopes to discover, especially

where the facts are in the control of the party moving for summary judgment. Drake

Constr. Co. v. Kemper House Mentor, Inc., 170 Ohio App.3d 19, 2007-Ohio-120, 865

N.E.2d 938.

       {¶ 17} An appellate court reviews the trial court’s ruling on a Civ.R. 56(F) motion

for an extension of time to respond to a motion for summary judgment for an abuse of

discretion. Id.; Penix v. Avon Laundry & Dry Cleaners, Cuyahoga App. No. 91355,

2009-Ohio-1362.     The term “abuse of discretion” connotes more than an error of

judgment, it implies that the court’s attitude is unreasonable, arbitrary or unconscionable.

 Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 450 N.E.2d 1140.

       {¶ 18} In Countrywide Home Loans Servicing, L.P. v. Stultz, 161 Ohio App.3d

829, 2005-Ohio-3282, 832 N.E.2d 125, the defendants, in response to the plaintiff’s

motion for summary judgment in a foreclosure case, asserted that they may have been the

victim of predatory lending practices and sought additional time to complete discovery in

order to pursue this defense.   The request was supported by an affidavit from counsel.

One week later, however, and less than two weeks after the filing of plaintiff’s motion for

summary judgment, the court abruptly granted summary judgment without reference to

defendants’ motion for continuance, or the defenses and counterclaims raised by the

defense. The Franklin County Court of Appeals reversed, concluding that the trial court

had abused its discretion as the award of summary judgment to plaintiff had denied
defendants “a meaningful opportunity” to assert their defenses and counterclaims.      The

court of appeals stated:

       “By precluding appellants from obtaining discovery, the court limited
       itself to consideration of the facts as they appeared in Countrywide’s
       complaint, attached documents, and related pleadings. Obviously, if a
       nonmovant is denied a reasonable request for time to gather evidence
       that would allow him to establish a genuine issue of material fact, he
       will be unable to challenge the motion. Given the relatively short period
       of time between the filing of the summary judgment motion and the
       request for a continuance, the fact that the parties disagreed on at least
       two material issues of fact (the reasonability of the lock-out and the
       basis for finding a scrivener’s error), and the fact that the court
       appeared not to have considered appellants’ answer, the court’s refusal
       to grant appellants’ motion for continuance was unreasonable and,
       therefore, an abuse of discretion.” Id. at ¶17.

       {¶ 19} Similarly, in this matter, we conclude that the trial court abused its

discretion in denying defendants’ motion for a continuance pursuant to Civ.R. 56(F).

We note that the court stayed discovery from March 17, 2009 to February 26, 2010, and

beginning in November 2009 family health issues plagued defendants’ counsel. In an

affidavit, counsel for defendants indicated that he “had been ill and [his] wife continues

to be confined to a wheelchair and staying in a hospital bed in our livingroom because of

two fractured hips suffered on November 23, 2009.”     The affidavit set forth a legitimate,

good faith basis for the continuance.

       {¶ 20} Moreover, defense counsel explained to the trial court that these factors, in

addition to the stay of discovery, prevented him from conducting discovery in the short

time period allotted following mediation.      Defense counsel had no opportunity to

explore the counterclaim of discriminatory lending practices that    aided and abetted the
loan originators and inclusion of last minute, unauthorized, or erroneous contract terms.

The motion for a discovery continuance was filed within the same general time as the

brief in opposition would have been due, and in awarding summary judgment to Beal

Bank, the trial court denied a reasonable request for time to gather evidence with which to

establish a genuine issue of material fact, and therefore denied defendants a meaningful

opportunity to assert their defenses and counterclaims.

       {¶ 21} The trial court therefore abused its discretion in failing to view the request

liberally in favor of a nonmoving party seeking discovery of evidence.

       {¶ 22} Further, although we express no opinion as to the overall merits of the

claims for relief, we note to the extent that the trial court found that defendants cannot

prevail as a matter of law in light of the limitations period set forth in 15 U.S.C. 1640,

there is an established “recoupment exception” to the limitations period.       See Miller v.

Countrywide Home Loans (S.D.Ohio 2010), 747 F.Supp.2d 947, citing Moor v. Travelers

Ins. Co. (C.A. 5, 1986), 784 F.2d 632, 633.

       {¶ 23} The first assignment of error is therefore well taken.

       {¶ 24} Defendants’ second assignment of error states:

       “The trial court erred in granting plaintiff’s motion for summary
       judgment.”

       {¶ 25} In light of our disposition of the first assignment of error, this assignment of

error is moot.

       {¶ 26} Judgment reversed and case remanded for further proceedings consistent

with this opinion.
      It is ordered that appellants recover from appellee costs herein taxed.

      The court finds there were reasonable grounds for this appeal.

      It is ordered that a special mandate be sent to said 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.




MARY EILEEN KILBANE, ADMINISTRATIVE JUDGE

PATRICIA A. BLACKMON, J., and
LARRY A. JONES, J., CONCUR
