[Cite as Cent. Mtge. Co. v. Elia, 2011-Ohio-3188.]


STATE OF OHIO                     )                      IN THE COURT OF APPEALS
                                  )ss:                   NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT                  )

CENTRAL MORTGAGE COMPANY                                 C.A. No.   25505

        Appellee

        v.                                               APPEAL FROM JUDGMENT
                                                         ENTERED IN THE
ZIAD F. ELIA, et al.                                     COURT OF COMMON PLEAS
                                                         COUNTY OF SUMMIT, OHIO
        Appellants                                       CASE No.   CV 2009-03-1901

                                 DECISION AND JOURNAL ENTRY

Dated: June 29, 2011



        Per Curiam.

        {¶1}     Ziad F. Elia and Holley E. Elia have appealed from a judgment of the Summit

County Court of Common Pleas in favor of Central Mortgage Company in a foreclosure action.

This Court affirms in part and reverses in part.

                                                     I

        {¶2}     The Elias executed a mortgage and note in the amount of $61,600 in favor of

LoanCity.com for real property located on Sherman Street in Akron, Ohio. Subsequently,

Mortgage Electronic Registration Systems Inc., as a nominee for LoanCity.com, assigned the

Elias’ mortgage to Central Mortgage. The Elias ultimately defaulted, and Central Mortgage filed

a complaint for foreclosure.

        {¶3}     The Elias moved to dismiss the complaint against them, arguing that Central

Mortgage lacked standing, but the trial court denied their motion. Both Central Mortgage and

the Elias then moved for summary judgment. The trial court denied the Elias’ motion and
                                                 2


granted Central Mortgage’s motion. The court concluded that, as a result of the Elias’ default,

Central Mortgage was entitled to judgment in the amount of $46,036.55, plus interest at a rate of

8.625% per annum from September 1, 2008, along with applicable late charges. The Elias have

raised three assignments of error, which we have consolidated for ease of analysis.

                                                 II

                                Assignment of Error Number One

       “THE TRIAL COURT ERRED WHEN IT GRANTED SUMMARY
       JUDGMENT TO CENTRAL MORTGAGE COMPANY AS THERE WAS A
       GENUINE ISSUE OF MATERIAL FACT WHETHER CENTRAL
       MORTGAGE COMPLIED WITH A CONDITION PRECEDENT TO
       FORECLOSURE, DELIVERY OF THE NOTICE OF DEFAULT PRIOR TO
       ACCELERATION AS REQUIRED BY PARAGRAPH 22 OF THE
       MORTGAGE.”

                                Assignment of Error Number Two

       “THE TRIAL COURT ERRED WHEN IT GRANTED SUMMARY
       JUDGMENT TO CENTRAL MORTGAGE COMPANY AS THERE WAS A
       GENUINE ISSUE OF MATERIAL FACT WHETHER CENTRAL
       MORTGAGE HAD STANDING TO SUE.”

                               Assignment of Error Number Three

       “THE TRIAL COURT ERRED WHEN IT GRANTED SUMMARY
       JUDGMENT TO CENTRAL MORTGAGE COMPANY AS THERE WERE
       GENUINE ISSUES OF MATERIAL FACT AND CENTRAL MORTGAGE
       COMPANY WAS NOT ENTITLED TO SUMMARY JUDGMENT AS A
       MATTER OF LAW.”

       {¶4}    By all three of their assignments of error, the Elias have argued that the trial court

incorrectly granted Central Mortgage’s motion for summary judgment. Specifically, they have

argued that: (1) the affidavit upon which Central Mortgage relied in support of its motion is

deficient because it is conclusory and not based on personal knowledge; (2) Central Mortgage

lacks standing to pursue a foreclosure action against them because it is not the current holder and
                                                  3


owner of their note and mortgage; and (3) Central Mortgage failed to comply with the notice

provision set forth in paragraph 22 of their mortgage note before seeking foreclosure.

       {¶5}    In reviewing a trial court’s ruling on a motion for summary judgment, this Court

applies the same test a trial court is required to apply in the first instance: whether there are any

genuine issues of material fact and whether the moving party is entitled to judgment as a matter

of law. Parenti v. Goodyear Tire & Rubber Co. (1990), 66 Ohio App.3d 826, 829. The party

moving for summary judgment bears the initial burden of informing the trial court of the basis

for the motion and pointing to parts of the record that show the absence of a genuine issue of

material fact. Dresher v. Burt (1996), 75 Ohio St.3d 280, 292-93. If the moving party satisfies

its initial burden, the non-moving party bears the burden of offering specific facts to show a

genuine issue for trial. Id. at 293. The non-moving party may not rest upon the mere allegations

and denials in the pleadings, but instead must point to or submit some evidentiary material that

demonstrates a genuine dispute over a material fact. Henkle v. Henkle (1991), 75 Ohio App.3d

732, 735.

       {¶6}    In support of its motion for summary judgment, Central Mortgage relied upon an

affidavit from its vice president, a copy of the Elias’ promissory note and mortgage, and a copy

of an assignment of mortgage from Mortgage Electronic Registration Systems to Central

Mortgage. Because the affidavit upon which Central Mortgage relied incorporated by reference

the other items attached to its motion, we first consider the propriety of the affidavit.

       {¶7}    Under Rule 56(E) of the Ohio Rules of Civil Procedure, “[s]upporting 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.” Civ.R. 56(E). “[The] mere assertion of personal knowledge
                                                 4


satisfies the personal knowledge requirement of Civ.R. 56(E) if the nature of the facts in the

affidavit combined with the identity of the affiant creates a reasonable inference that the affiant

has personal knowledge of the facts in the affidavit.” Bank One, N.A. v. Lytle, 9th Dist. No.

04CA008463, 2004-Ohio-6547, at ¶13. “Verification of documents attached to an affidavit ***,

as required by Civ.R. 56(E), is satisfied by an appropriate averment in the affidavit itself. An

affidavit stating [a] loan is in default, is sufficient for purposes of Civ.R. 56, in the absence of

evidence controverting those averments.” (Internal citation omitted.) Bank One, N.A. v. Swartz,

9th Dist. No. 03CA008308, 2004-Ohio-1986, at ¶14.

       {¶8}    The Elias have challenged Central Mortgage’s affidavit on the basis that its

affiant, lacking any personal knowledge, was not competent to attest to the facts set forth therein.

Because the alleged assignment to Central Mortgage took place after their default, the Elias have

argued, the affiant could not have had personal knowledge of any events that occurred prior to

the alleged assignment.

       {¶9}    In her affidavit in support of Central Mortgage’s motion for summary judgment,

Lou Ann Howard asserted that she was the vice president of Central Mortgage and the custodian

of the business records described in the affidavit, that she had personal knowledge of the

contents of those business records, that Central Mortgage had physical possession of the Elias’

promissory note, and that she had reviewed the Elias’ loan history and loan file, including their

note, mortgage, and payment history. Her assertion of personal knowledge after a review of the

loan documents, coupled with her position at Central Mortgage and role as records custodian,

satisfies Rule 56(E). See Lytle at ¶14 (concluding affidavit comported with Rule 56(E) when

affiants were employees of bank, had custody or control of debtor’s note, and indicated that they

had personal knowledge of debtor’s loan account); Swartz at ¶16 (concluding affidavit
                                                  5


comported with Rule 56(E) when affiant was employed as a foreclosure specialist for the bank,

indicated that the debtor’s loan file was under her immediate control and supervision, and

referred to the specific loan documents in the affidavit). Compare Target Natl. Bank v. Enos, 9th

Dist. No. 25268, 2010-Ohio-6307, at ¶11 (rejecting affidavit when affiant failed to identify his

position with the bank, failed to state that he had personal knowledge of the matters contained in

the affidavit, and did not identify any specific documents attached to the affidavit). Moreover,

the Elias’ assertion that no one at Central Mortgage could have personal knowledge of their

default because Central Mortgage did not acquire any alleged assignment until after their default

occurred is inapposite. The authority that the Elias have cited in support of that argument

provides that “[a] witness providing the foundation [for a recorded business activity] need not

have firsthand knowledge of the transaction.” Moore v. Vandemark Co., Inc., 12th Dist. No.

CA2003-07-063, 2004-Ohio-4313, at ¶18. The Elias’ challenge to the affidavit upon which

Central Mortgage relied lacks merit.

       {¶10} We next consider the Elias’ argument that Central Mortgage lacks standing to

bring suit because a genuine issue of material fact remains regarding whether it is the current

owner and holder of the Elias’ note and mortgage. “This Court has held *** that a bank need not

possess a valid assignment at the time of filing suit so long as the bank procures the assignment

in sufficient time to apprise the litigants and the court that the bank is the real party in interest.”

Deutsche Bank Natl. Trust Co. v. Traxler, 9th Dist. No. 09CA009739, 2010-Ohio-3940, at ¶11,

citing Bank of New York v. Stuart, 9th Dist. No. 06CA008953, 2007-Ohio-1483, at ¶12. “When

an instrument is indorsed in blank, the instrument becomes payable to bearer and may be

negotiated by transfer of possession alone until specially indorsed.” R.C. 1303.25(B). Further,

even if an actual assignment of a person’s mortgage does not occur, this Court has recognized
                                                 6


that the physical transfer of a promissory note, which the mortgage secures, amounts to the

equitable assignment of the mortgage. Traxler at ¶19-20.

       {¶11} Central Mortgage provided the trial court copies of the Elias’ promissory note,

mortgage note, and an assignment of their mortgage from Mortgage Electronic Registration

Systems, as a nominee for LoanCity.com.          All of those documents were incorporated by

reference in Howard’s affidavit, in which she asserted that: (1) Central Mortgage was in

possession of the Elias’ promissory note, which was indorsed in blank; (2) the Elias defaulted on

their loan; and (3) Central Mortgage opted to accelerate and call due the entire balance due and

owing on the loan. The assignment indicates that Mortgage Electronic Registration Systems

assigned the Elias’ mortgage to Central Mortgage on February 10, 2009, one month before

Central Mortgage filed suit. Copies of the Elias’ promissory note, mortgage, and the assignment

of their mortgage to Central Mortgage were also attached to Central Mortgage’s complaint. And,

consistent with Howard’s affidavit, the copy of the promissory note in the record is indorsed in

blank. Consequently, we conclude that Central Mortgage showed it had standing to bring suit

against the Elias. See R.C. 1303.25(B) (outlining the effect of a blank indorsement); Traxler at

¶19-20 (recognizing bank as holder and owner of note and mortgage via assignment by Mortgage

Electronic Registration Systems).

       {¶12} In opposition to Central Mortgage’s motion for summary judgment, the Elias each

filed an affidavit in which they stated that: (1) they did not recall receiving any notice that their

note or mortgage had been sold or transferred to Central Mortgage; and (2) a search that they

performed on Fannie Mae’s website, a copy of which was incorporated by reference, indicated

that Fannie Mae still owned their mortgage. The website printout from Fannie Mae does not

create a genuine issue of material fact with regard to Central Mortgage’s standing. The printout
                                                 7


specifies that “Fannie Mae makes no representation, warranty, or guarantee regarding the

accuracy or completeness of the results. *** You should contact your mortgage lender to verify

these results.” Neither of the Elias indicated that they contacted their lender to verify the search

they performed on Fannie Mae’s website. Moreover, the Elias’ blanket assertion that they do not

recall receiving notice of the transfer of their note is not enough to create a genuine issue for

trial. At the very latest, the Elias received notice of the transfer when Central Mortgage filed its

complaint. This Court has recognized that a “bank need not possess a valid assignment at the

time of filing suit so long as the bank procures the assignment in sufficient time to apprise the

litigants and the court that the bank is the real party in interest.” Traxler at ¶11. Here, Central

Mortgage provided evidence that a valid assignment occurred before it even filed suit, and it

included that assignment in its complaint. The Elias did not argue, either in their brief in

opposition to Central Mortgage’s motion for summary judgment or their brief on appeal, that

they were not apprised in sufficient time of Central Mortgage’s status as the real party in interest.

The evidence in the record supports the trial court’s conclusion that the Elias did not satisfy their

Dresher burden on the issue of standing. The Elias’ argument that Central Mortgage lacks

standing is meritless.

       {¶13} Finally, the Elias have argued that Central Mortgage was not entitled to summary

judgment because it failed to demonstrate that it satisfied paragraph 22 of their mortgage.

Paragraph 22 of the mortgage requires that the Elias be given a notice of default, a period of at

least thirty days within which to cure the default, and warning that a failure to do so may result in

an acceleration.   Specifically, paragraph 22 provides that the “Lender shall give notice to

Borrower prior to acceleration[.]” Paragraph 15 of the mortgage provides that all notices given

under the mortgage must be written and “[a]ny notice to Borrower in connection with this
                                                 8


Security Instrument shall be deemed to have been given to Borrower when mailed by first class

mail or when actually delivered to Borrower’s notice address if sent by other means.” This

Court has recognized that if “prior notice of default and/or acceleration is required by a provision

in a note or mortgage instrument, the provision of notice is a condition precedent[.]” LaSalle

Bank, N.A. v. Kelly, 9th Dist. No. 09CA0067-M, 2010-Ohio-2668, at ¶13, quoting First

Financial Bank v. Doellman, 12th Dist. No. CA2006-02-029, 2007-Ohio-222, at ¶20.

       {¶14} The Elias rely upon Kelly in support of their argument that Central Mortgage was

not entitled to summary judgment. In Kelly, this Court held that LaSalle Bank N.A. “made no

attempt to establish that it complied with paragraph 22 [of the debtors’ mortgage,]” which

required prior notice of default and acceleration. Kelly at ¶14. There, the bank’s affidavit did

not indicate that the debtor was sent written notice prior to acceleration. The affiant merely

averred that the bank “ha[d] exercised the option contained in said mortgage note and ha[d]

accelerated and called due the entire principal balance due thereon.” Id. at ¶8. Because LaSalle

Bank’s affiant failed to specify that the bank sent notice of default/acceleration to the Kellys

prior to filing suit, we concluded that the bank did not meet its initial Dresher burden and

reversed the bank’s summary judgment award. Id. at ¶14. We agree with the Elias that Kelly is

applicable here.

       {¶15} The only reference to acceleration contained in Central Mortgage’s motion for

summary judgment is a conclusory statement in Howard’s affidavit that “all of the prerequisites

required under the note and mortgage necessary to accelerate the balance due on the note have

been performed[.]” Rule 56 of the Ohio Rules of Civil Procedure requires that affidavits in

support of a motion for summary judgment “shall set forth such facts as would be admissible in

evidence[.]” Civ.R. 56(E).      Howard’s assertion does not set forth any facts; it is a legal
                                                9


conclusion. See Grendell v. Ohio Environmental Protection Agency (2001), 146 Ohio App.3d 1,

fn.3 (“A proper affidavit must set forth facts and not legal conclusions.”). See, also, MacKeigan

v. Salvation Army, 9th Dist. No. 10CA009766, 2011-Ohio-515, at ¶11 (“Bare, unsubstantiated

allegations of what the evidence is are insufficient to support an order awarding summary

judgment.”). Central Mortgage did not present any evidence of written notice actually having

been sent to the Elias, despite the Elias having raised the issue in their answer. Accord Kelly at

¶8-14. Compare GMAC Mtge., L.L.C. v. Jacobs, 9th Dist. No. 24984, 2011-Ohio-1780, at ¶16-

18 (upholding summary judgment award to bank when bank’s affidavit provided that “written

notice of default was given in accordance with the terms of the note and mortgage”). The plain

language of the Elias’ mortgage requires that the Elias be given notice “prior to acceleration,”

and it was Central Mortgage’s burden to prove that the notice was given. Viewing the evidence

in a light most favorable to the Elias, we cannot conclude that Central Mortgage met its initial

Dresher burden and showed that it complied with paragraph 22 of the mortgage note. Accord

Kelly at ¶14. Therefore, the trial court erred by awarding Central Mortgage summary judgment.

       {¶16} The Elias’ second and third assignments of error are overruled, as Central

Mortgage showed, through a properly-framed affidavit, that it has standing to pursue this action.

The Elias’ first assignment of error, however, is sustained because a genuine issue of material

fact remains regarding whether Central Mortgage complied with paragraph 22 of their mortgage.

                                               III

       {¶17} The Elias’ first assignment of error is sustained. Their remaining assignments of

error are overruled. The judgment of the Summit County Court of Common Pleas is affirmed in
                                                 10


part, reversed in part, and remanded for further proceedings consistent with this opinion.

                                                                            Judgment affirmed in part,
                                                                                     reversed in part,
                                                                                 and cause remanded.




       There were reasonable grounds for this appeal.

       We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27.

       Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(E). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

       Costs taxed to all parties equally.


                                                      CARLA MOORE
                                                      FOR THE COURT

MOORE, J.
DICKINSON, J.
CONCUR

WHITMORE, P. J.
CONCURS IN JUDGMENT ONLY, SAYING:

       {¶18} I concur in judgment only. While I agree that Central Mortgage is not entitled to

judgment because a genuine issue of material fact exists, I would not reach this result on the

basis that Central Mortgage failed to satisfy its initial Dresher burden.
                                                 11


       {¶19} In determining whether a mortgagee has shown that it gave a debtor prior notice

of default/acceleration, this Court has closely examined the specific language used by the

mortgagee’s affiant in support of its summary judgment motion. Two cases have emerged as

points of reference. In Kelly, this Court held that LaSalle Bank, N.A., failed to satisfy its initial

Dresher burden on the issue of notice where its affiant attested solely that the bank “ha[d]

exercised the option contained in said mortgage note and ha[d] accelerated and called due the

entire principal balance due thereon.” LaSalle Bank, N.A. v. Kelly, 9th Dist. No. 09CA0067-M,

2010-Ohio-2668, at ¶8. We concluded that the foregoing language was insufficient to satisfy the

bank’s initial Dresher burden because it “d[id] not mention whether the bank sent notice to the

Kellys prior to filing suit.” Id. at ¶14. Conversely, in Jacobs, this Court concluded that GMAC

Mortgage, L.L.C. (“GMAC”), satisfied its initial Dresher burden on the notice issue where its

affiant stated that “written notice of default was given in accordance with the terms of the note

and mortgage.” GMAC Mtge., L.L.C. v. Jacobs, 9th Dist. No. 24984, 2011-Ohio-1780, at ¶16.

We held that GMAC was entitled to judgment because the debtor never responded to the bank’s

evidence that “proper notice of default was sent[.]” Id. at ¶18. The question in this case is

whether the language in Central Mortgage’s affidavit fits more closely within the parameters of

Kelly or Jacobs.

       {¶20} Howard’s affidavit provides that “all of the prerequisites required under the note

and mortgage necessary to accelerate the balance due on the note have been performed[.]” I

view the foregoing language as more akin to the language in Jacobs than the language in Kelly.

Howard’s affidavit does not claim merely that Central Mortgage exercised an option and

accelerated the balance, compare Kelly at ¶8, it states that Central Mortgage actually performed

all the required prerequisites for acceleration. Read in conjunction with the mortgage itself,
                                                12


which requires notice of default as a prerequisite to acceleration, Howard’s averment suffices as

proof of notice under Jacobs. While the better approach would have been for Howard’s affidavit

to detail each acceleration prerequisite that Central Mortgage actually performed (i.e. that it sent

written notice on a specific date), I would not hold that, by referring to the prerequisites as a

whole, Howard made an unsupported legal conclusion. Compare CitiMortgage, Inc. v. Elia, et

al., 9th Dist. No. 25482, 2011-Ohio-2499, at ¶15 (concluding that bank failed to meet its initial

Dresher burden where its affiant merely averred that the bank “elected to call the entire balance

of said account due and payable, in accordance with the terms of the note and mortgage”).

Because I believe Howard’s affidavit is distinguishable from the affidavit in Kelly as well as

CitiMortgage, I do not agree with the majority’s position that Central Mortgage failed to meet its

initial Dresher burden.

       {¶21} Nevertheless, I agree with the remainder of the majority’s opinion as well as its

ultimate conclusion that Central Mortgage was not entitled to summary judgment. In response to

Central Mortgage’s motion, the Elias filed affidavits in which they both averred that they never

received prior notice of default/acceleration. Central Mortgage did not respond to the Elias’

affidavits with any additional evidence. I would conclude that the Elias’ affidavits demonstrated

the existence of a factual dispute with regard to the notice issue. See Jacobs at ¶18 (noting that

debtor could have created a factual dispute “by providing evidence that he did not receive the

purported notice”). Because a genuine issue of material fact exists with regard to whether

Central Mortgage sent the Elias prior notice of default/acceleration, I agree that the trial court

erred by granting Central Mortgage’s motion for summary judgment. As such, I concur in

judgment only.
                                         13


APPEARANCES:

MARGARET A. MCDEVITT, and JULIUS P. AMOURGIS, Attorneys at Law, for Appellants.

C. SCOTT CASTERLINE, Attorney at Law, for Appellee.
