[Cite as Deutsche Bank v. Terdina, 2012-Ohio-5940.]
                         STATE OF OHIO, COLUMBIANA COUNTY

                                 IN THE COURT OF APPEALS

                                      SEVENTH DISTRICT

DEUTSCHE BANK NATIONAL TITLE                          )
CO., ETC.,                                            )
                                                      )
        PLAINTIFF-APPELLEE,                           )
                                                      )          CASE NO. 12 CO 3
V.                                                    )
                                                      )               OPINION
THOMAS R. TERDINA, ET AL.,                            )
                                                      )
        DEFENDANTS-APPELLANTS.                        )

CHARACTER OF PROCEEDINGS:                             Civil Appeal from Court of Common
                                                      Pleas of Columbiana County, Ohio
                                                      Case No. 11CV428

JUDGMENT:                                             Reversed and Remanded

APPEARANCES:
For Plaintiff-Appellee                                Atty. Jason A. Whitacre
                                                      Atty. Laura C. Infante
                                                      4500 Courthouse Blvd., Suite 400
                                                      Stowe, Ohio 44224

For Defendants-Appellants                             Atty. Bruce M. Broyles
                                                      5815 Market Street, Suite 2
                                                      Boardman, Ohio 44512




JUDGES:

Hon. Gene Donofrio
Hon. Cheryl L. Waite
Hon. Mary DeGenaro


                                                      Dated: December 13, 2012
[Cite as Deutsche Bank v. Terdina, 2012-Ohio-5940.]
DONOFRIO, J.

        {¶1}    Defendants-appellants, Thomas and Kimberly Terdina, appeal from a
Columbiana County Common Pleas Court judgment denying their Civ.R. 60(B)
motion for relief from judgment.
        {¶2}    Plaintiff-appellee, Deutsche Bank National Trust Company as Trustee
for Aames Mortgage Trust 2002-1 Mortgage Pass-Through Certificates Series 2002-
1, is the assignee of appellants’ home mortgage. Appellants’ home is located in
Hammondsville, Ohio.
        {¶3}    On June 14, 2011, appellee filed a complaint in foreclosure against
appellants alleging that appellants owed $48,440.88 as of August 1, 2010. Kimberly
was served with the complaint on June 18.
        {¶4}    Appellants failed to file an answer and, on September 19, 2011,
appellee filed a motion for default judgment. That same day, the trial court issued a
default judgment in the requested amount and an order of foreclosure. A few days
later, the court issued an order of sale.
        {¶5}    On October 24, 2011, appellants filed a Civ.R. 60(B) motion for relief
from judgment. In support of their motion, appellants alleged that appellee was not
entitled to foreclose on the mortgage because a condition precedent of acceleration
was not performed and the mortgage and accompanying note were not properly
placed within the applicable trust. They further alleged that their failure to respond to
the complaint was due to excusable neglect and or fraud. They asserted that after
receiving the complaint, they received a letter from appellee’s counsel advising them
to contact Ocwen Loan Servicing, LLC (Ocwen) if they had any questions. They
stated that they contacted Ocwen and the trial court and were led to believe it was
not necessary to take any action and they would be given the opportunity to resolve
the matter at a hearing. However, they stated no hearing was scheduled and the
court entered default judgment the day appellee filed the motion.
        {¶6}    The trial court denied appellants’ Civ.R. 60(B) motion without a hearing.
It found that appellants had “sufficiently alleged a meritorious defense.” However, it
denied the motion upon its further finding that appellants could not establish
                                                                                  -2-


excusable neglect or fraud.
      {¶7}   Appellants filed a timely notice of appeal on January 18, 2012.
      {¶8}   Appellants raise a single assignment of error, which states:

             THE TRIAL COURT ERRED IN DENYING THE MOTION FOR
      RELIEF FROM JUDGMENT.

      {¶9}   Appellants break their assignment of error down into two issues. First,
appellants argue that the trial court abused its discretion in finding that they did not
establish excusable neglect. They assert they did not act with a complete disregard
for the judicial system.   They state that when they received the complaint, they
contacted the trial court. They further state that when appellee instructed them to
contact the loan servicing company, they did so and were led to believe that a
hearing would be held during which they could resolve the matter. Appellants assert
that these facts establish excusable neglect.
      {¶10} The Ohio Supreme Court set out the controlling test for Civ.R 60(B)
motions in GTE Automatic Elec., Inc. v. Arc Industries, Inc., 47 Ohio St.2d 146, 351
N.E.2d 113 (1976), paragraph two of the syllabus:

             To prevail on a motion brought under Civ.R. 60(B), the movant
      must demonstrate that: (1) the party has a meritorious defense or claim
      to present if relief is granted; (2) the party is entitled to relief under one
      of the grounds stated in Civ.R. 60(B)(1) through (5); and (3) the motion
      is made within a reasonable time, and, where the grounds of relief are
      Civ.R. 60(B)(1), (2) or (3), not more than one year after the judgment,
      order or proceeding was entered or taken.

      {¶11} If the movant fails to satisfy any of the above elements, the court shall
deny relief. Argo Plastic Products Co. v. Cleveland, 15 Ohio St.3d 389, 391, 474
N.E.2d 328 (1984), citing GTE, at 151.
      {¶12} The standard of review used to evaluate the trial court's decision to
                                                                                 -3-


grant or deny a Civ.R. 60(B) motion is abuse of discretion.       Capital, Inc. v. Rock N
Horse, Inc., 9th Dist. No. 21703, 2004-Ohio-2122, ¶9. Abuse of discretion connotes
more than an error in judgment; it implies that the trial court's judgment is arbitrary,
unreasonable, or unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219,
450 N.E.2d 1140 (1983).
       {¶13} We will address the GTE elements out of order for ease of discussion.
There is no issue with the first or third elements.
       {¶14} As to the first element, the trial court found that appellants “sufficiently
alleged a meritorious defense.”      In their motion, appellants raised two defenses.
First, they asserted that appellee failed to meet a condition precedent of acceleration
of the loan balance because the lender failed to give proper notice of acceleration.
Second, appellants asserted that appellee lacked capacity to file the lawsuit because
it is only a trustee and the mortgage and note were not properly transferred into the
trust. Because the trial court found that appellants satisfied the first GTE element in
asserting a meritorious defense, we need not discuss this element further.
       {¶15} As to the third element, the trial court entered default judgment on
September 19, 2011. Appellants filed their motion for relief from judgment just over a
month later on October 24, 2011. This was a reasonable time within which to file the
motion.
       {¶16} As to the second element, the trial court found that appellants did not
demonstrate excusable neglect or fraud and, therefore, did not satisfy the second
GTE element.
       {¶17} The second element of the GTE test requires that the moving party be
entitled to relief under one of the grounds stated in Civ.R. 60(B)(1) through (5). The
grounds for relief under Civ.R. 60(B) and the second GTE element are:

       (1) mistake, inadvertence, surprise or excusable neglect; (2) newly
       discovered evidence which by due diligence could not have been
       discovered in time to move for a new trial under Rule 59(B); (3) fraud
       (whether     heretofore      denominated       intrinsic   or    extrinsic),
                                                                                  -4-


         misrepresentation or other misconduct of an adverse party; (4) the
         judgment has been satisfied, released or discharged, or a prior
         judgment upon which it is based has been reversed or otherwise
         vacated, or it is no longer equitable that the judgment should have
         prospective application; or (5) any other reason justifying relief from the
         judgment.

         {¶18} In their motion, appellants asserted they were entitled to relief based on
excusable neglect under Civ.R. 60(B)(1) and fraud under Civ.R. 60(B)(3). In their
brief on appeal, they rely exclusively on excusable neglect.
         {¶19} In support of their allegation of excusable neglect, appellants offered
Thomas’s affidavit.     In his affidavit, Thomas averred the following.      Shortly after
receiving the complaint, Thomas contacted the trial court by telephone. (Terdina Aff.
¶3). Shortly after receiving the complaint, appellants received a letter from appellee’s
attorney. (Terdina Aff. ¶4). The letter instructed appellants to contact Ocwen if they
had any questions. (Terdina Aff. ¶5). Thomas contacted Ocwen. (Terdina Aff. ¶6).
Based on the information provided to Thomas during the above referenced telephone
conferences, he formed the belief that a hearing would be conducted, that appellants
would receive notice of the hearing, and appellants could appear at the hearing and
discuss a resolution of the matter. (Terdina Aff. ¶7). No hearing was conducted and
appellants received a copy of the default judgment entry in the mail. (Terdina Aff.
¶8).
         {¶20} Attached to the affidavit, Thomas provided a copy of the letter from
appellee’s counsel dated June 24, 2011, less than a week after the lawsuit was
served. The letter stated that appellants could bring their loan current and reinstate
the loan by paying $4,590.90 to Ocwen. It also stated, “If you have any questions
regarding this reinstatement, please call Ocwen Loan Servicing, LLC at 877-596-
8580.”
         {¶21} The trial court found inexcusable neglect because appellants did not
“state to whom they spoke or even what an identified person said. They merely
                                                                               -5-


indicated that they ‘formed a belief’ that no Answer was required.”
       {¶22} The Ohio Supreme Court has only defined “excusable neglect” in the
negative. The Court has stated that neglect is not excusable if it is an act of complete
disregard for the judicial system. Kay v. Marc Glassman, Inc., 76 Ohio St.3d 18, 20,
665 N.E.2d 1102 (1996).
       {¶23} Additionally, the Court has cautiously advised that where a party
presents a meritorious defense in a timely manner, the trial court should resolve any
doubt on the categorization of neglect in favor of the motion to set aside the judgment
so that cases can be decided on their merits. WFMJ Television, Inc. v. AT&T Federal
Systems, 7th Dist. No. 01-CA-69, 2002-Ohio-3013, ¶21, citing GTE, 47 Ohio St.2d at
151. “This can be interpreted as meaning: the more merit to the defense, the more
neglect that will be permitted.” Fifth Third Bank v. Perry, 7th Dist. No. 03-MA-100,
2004-Ohio-1543, ¶16.
       {¶24} Here appellants did not act with a “complete disregard” of the judicial
system. They received the complaint stating that they owed the $48,440.88 balance
due on their mortgage. But just days later, they received a letter from appellee’s
counsel stating that they could reinstate their mortgage if they paid $4,590.90 to the
loan servicing company. In the letter, appellee’s counsel instructed appellants to call
the loan servicing company with any questions. According to Thomas’s affidavit, he
did just as appellee’s counsel instructed him to do and called Ocwen. Thomas’s
phone conference then led him to believe that a hearing would be set at which the
matter would be resolved. Presumably, appellants were waiting for notice of the
hearing when they received a copy of the default judgment. They then promptly filed
their motion for relief from judgment just over a month later.
       {¶25} Given these facts, we conclude that the trial court abused its discretion
in denying appellants’ motion for relief from judgment. Thomas’s affidavit coupled
with the corroborating letter from appellee’s counsel demonstrate that appellants
believed that they were complying with what they needed to do in order to resolve the
issue of their overdue mortgage. In light of the fact that appellants presented a
                                                                                  -6-


meritorious defense in a timely manner, the trial court should have resolved any
doubt on the categorization of neglect in appellants’ favor.
       {¶26} Second, appellants argue that the trial court erred in denying their
motion for relief from judgment without holding a hearing. Appellants point out that
the trial court found that they should have identified the individuals to whom they
spoke and the information that was conveyed to them during these telephone
conversations. They contend that these more detailed and specific facts should have
been explored during a hearing on their motion especially in light of the fact that the
trial court found that they had demonstrated a meritorious defense.
       {¶27} In WFMJ, 2002-Ohio-3013, ¶26, this court discussed when a hearing
on a Civ.R. 60(B) motion is necessary:

              It seems that the correct interpretation of case law surrounding
       the need for a hearing on a Civ.R. 60(B) motion is as follows. The court
       can deny relief from judgment without a hearing if the motion fails to
       even allege sufficient operative facts. The court must hold a hearing
       where sufficient operative facts are alleged but are not believed by the
       court or are disputed by the other party. Hence, a hearing was only
       required where the court granted relief if: the facts alleged support relief
       if believed and the plaintiff disputed the veracity of the facts alleged.
       The rationale behind this interpretation is that a court can apply law to
       facts without the need for a hearing; this is done as a matter of law.
       However, when facts are disputed by the parties or suspected by the
       court, the court must hold a hearing to evaluate credibility and weight.

       {¶28} In this case, because appellants alleged sufficient operative facts and
because it seems that the trial court did not believe them, the trial court should have
held a hearing to evaluate whether appellants’ assertion of the facts was true.
       {¶29} However, a hearing was not required in order to grant the motion for
relief from judgment. As this court observed in Perry, 2004-Ohio-1543, ¶27 (internal
                                                                                -7-


citation omitted):

       Although the Supreme Court has stated that a court should hold a
       hearing to verify the facts before granting a motion, it has also stated
       that it would not further the interests of justice to require a hearing
       where the motion sufficiently alleged a valid Civ.R. 60(B) claim. * * * In
       Kay, the Supreme Court granted relief without remanding for a hearing
       where the trial court had previously denied relief without a hearing.

       {¶30} Thus, in Perry, upon finding that the trial court should have granted
Perry’s Civ.R. 60(B) motion, we simply reversed the trial court’s denial of Civ.R. 60(B)
relief and ordered the trial court to vacate the default judgment and reinstate the
lawsuit instead of remanding for a hearing on the motion.
       {¶31} Because we find that the trial court should have granted appellants’
motion, we will follow the same resolution as in Perry instead of remanding the case
for an evidentiary hearing.
       {¶32} Accordingly, appellants’ sole assignment of error has merit.
       {¶33} For the reasons stated above, the trial court’s judgment is hereby
reversed and this matter is remanded for the trial court to vacate the default judgment
and reinstate the lawsuit.

Waite, P.J., concurs.

DeGenaro, J., dissents with attached dissenting opinion.

DeGenaro, J., dissenting:
       {¶34} I would affirm the trial court's decision for two reasons.        First, the
Terdinas used an improper avenue to challenge the judgment; they should have filed
an appeal rather than a motion for relief from judgment.        Second, they failed to
establish grounds for relief under Civ.R. 60(B); thus, the trial court did not abuse its
discretion in denying the motion.
                                                                               -8-


      {¶35} First, the default judgment entry is dated September 19, 2011. Instead
of filing a timely notice of appeal within 30 days as required by App.R. 4, the Terdinas
filed a motion to vacate on October 24, 2011. This was five days after their time to
appeal had expired.     It is well-settled law in Ohio that a motion for relief from
judgment cannot be a substitute for an appeal. Doe v. Trumbull County Children
Services Bd., 28 Ohio St.3d 128, 502 N.E.2d 605 (1986), paragraph two of the
syllabus.
      {¶36} Second, the Terdinas did not establish excusable neglect as
contemplated by Civ.R. 60(B)(1). The trial court rejected this claim, reasoning:

             The Defendants argue that "Defendants contacted Ocwen Loan
      Servicing and the Court. Defendants formed the belief that they could
      discuss a resolution of the matter at hearing."

             The Defendants do not state to whom they spoke or even what
      an identified person said. They merely indicate that they "formed a
      belief" that no Answer was required. This is insufficient to constitute
      excusable neglect. (Emphasis added.)

      {¶37} There is competent, credible evidence supporting the trial court's
decision to deny relief from judgment and therefore the trial court did not abuse its
discretion. The trial court’s findings were based upon averments made by Thomas
and Kimberly Terdina that they were aware of the lawsuit, and after being served
with the Complaint received correspondence from Deutsche Bank’s counsel advising
them to contact Ocwen with any questions.         Although the couple averred they
contacted unidentified individuals at Ocwen and the trial court; they made no
averments regarding exactly what either Ocwen or court personnel told them to
create their "belief" that they did not have to respond to the Complaint and would
receive notice of a future hearing at which the matter would be resolved. This belief
is contradicted by the language in the summons advising the Terdinas that they were
                                                                               -9-


required to file an Answer within 28 days of service of the Complaint, or run the risk
of default judgment being entered against them.             The Terdinas presented no
evidence to the trial court identifying who specifically, at either Ocwen or the court,
told them, for example, to disregard the language in the summons and not file an
Answer. As found by the trial court, they merely made the unsupported claim that
they "believed" they did not have to answer. The Terdinas failed to allege specific
operative facts demonstrating excusable neglect in this matter and the trial court
properly denied the motion for relief from judgment.
       {¶38} A motion for relief from judgment is not a procedural mechanism to be
used to circumvent the expired jurisdictional requirement of App.R. 4(A) to obtain
review of an unfavorable judgment.        And mindful of our deferential standard of
review, the trial court's decision should be affirmed because the Terdinas failed to
establish a basis for relief pursuant to Civ.R. 60(B)(1).
