Stop Foreclosure

Using Res Judicata

Since early common law cases the idea or rule has prevailed that cases in which there is a final judgment cannot be tried again. The term used for this is res judicata, from the Latin for “already judged.”
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In foreclosures there are times when a case is opened, then closed because of a bankruptcy or some other reason, as for instance if the homeowner paid the outstanding amounts and the lender dismissed the foreclosure. In these cases the Two Dismissal Rule bars a further foreclosure action after two dismissals because two dismissals act as if the case had been tried on its merits.
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To benefit from this defense you must state it in your Answer to the Foreclosure Complaint or in your Objection or Response to the plaintiff’s Motion for Summary Judgement.
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In the case copied below, the underlying note and mortgage are the same in the first two foreclosure actions as in the third.
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The key is that the whole note became due based on the acceleration clause. An acceleration clause requires the obligor/borrower to pay part or all of the balance sooner than the date or dates specified for payment because the occurrence of some event or circumstance described in the contract, such as a default by nonpayment.
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In a contract with an acceleration clause, a breach constitutes a breach of the entire contract. For instance, once G.E. Capital invoked the acceleration clause of the note, the contract became indivisible with one obligation: to pay the entire balance on the note. Successive actions on the same note and mortgage do not involve different claims and there is nothing in Rule 1-041(A) that indicates it should not apply to foreclosure cases.
In order for res judicata to bar a subsequent action, the claims asserted need not be identical to those asserted in the prior action; rather, a valid, final judgment rendered upon the merits bars all subsequent actions based upon any claim arising out of the transaction or occurrence that was the subject matter of the previous action.
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In the second case copied below, there appears to have been only one previous foreclosure action and based on that the court refused to hear a second. In that case the objection based on a previous foreclosure suit was raised in response to the lender’s motion for summary Judgment.
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Case Law supports 2 Dismissal Rule in foreclosure

U.S. Bank, N.A. v. Gullotta, 2011-Ohio-2235

Cite as: U.S. Bank, N.A. v. Gullotta, 2011-Ohio-2235


U.S. Bank, N.A., As Trustee, Plaintiff-Appellee,
v.
Giuseppe Gullotta, et al., Defendant-Appellant.

No. 2010CA00181.

Court of Appeals of Ohio, Fifth District, Stark County.
DATE OF JUDGMENT ENTRY: May 9, 2011.
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{¶20} “The key here is that the whole note became due upon Gullotta’s breach, not just the installment he missed. There is a distinction between an action for recovery of
installment payments under an installment note where the entire principal is accelerated, and an action to recover for nonpayment under an installment note where only the
amount of the principal to date, and no future amount, is sought. The general rule that each missed payment in an installment loan gives rise to a separate cause of action does not hold true when there is an acceleration clause in the loan agreement:***
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{¶21} “By agreeing to an acceleration clause, the parties in this case have avoided the operation of the general rule that nonpayment on an installment loan does not constitute a breach of the entire contract. In a contract with an acceleration clause, a breach constitutes a breach of the entire contract. Once Gullotta defaulted and U.S. Bank invoked the acceleration clause of the note, the contract became indivisible. The obligations to pay each installment merged into one obligation to pay the entire balance on the note.” Id at paragraphs 28-29, 31.
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{¶22} The Ohio Supreme Court, in Gullotta, further noted that although U.S. Bank’s complaint had changed, the operative fact remained the same and U.S. Bank could
not save its claims from the two-dismissal rule simply by changing the relief sought in its complaint. Id.1{¶23} In the case sub judice, U.S. Bank’s fourth cause of action arose from the same note, the same mortgage and the same default. From the time of Appellant’s original default, the entire principal became due as a result of the acceleration clause in the note. The terms of the note and/or mortgage were never changed. As the Supreme Court’s held in Gullotta, from the time of Appellant’s original breach, Appellant owed the entire amount of the principal because of the acceleration clause.{¶24} Based on the foregoing, we find the two-dismissal rule of Civ.R. 41(A) applies and res judicata barred U.S. Bank’s complaint in this case. We find the practical effect of the same precludes U.S. Bank from pursuing any further action on the note. Because the mortgage draws its essence from the note, we find it unenforceable. We find the trial court erred in not granting Appellant’s motion for summary judgment to quiet title.2

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{¶25} Appellant’s two assignments of error are sustained.

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{¶26} The judgment of the Stark County Court of Common Pleas is reversed.
Gwin, P.J. and Delaney, J. concur.

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JUDGMENT ENTRY
For the reasons stated in our accompanying Opinion, the judgment of the Stark County Court of Common Pleas is reversed and the matter remanded to that court to enter
judgment in accordance with our Opinion and the law.


Costs to Appellee.
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U.S. Bank, N.A. v. Gullotta, 2011-Ohio-2235 ~ Read more.

Foreclosure barred in 2nd action

Date: 05-17-2012

Case Style: Note Portfolio Advisors, LLC v. Adrienne M. Wilson

Case Number: 2012-Ohio-2199

Judge: Sean C. Gallagher

Court: Ohio Court of Appeals, Eighth Appellate District, on appeal from the Court of Common Pleas, Cuyahoga County

Plaintiff’s Attorney: Jason A. Whitacre, Ted A. Humbert and Laura C. Infante

Defendant’s Attorney: Kenneth J. Freeman

Description: {¶1} Plaintiff-appellant, Note Portfolio Advisors, LLC, appeals the decision of the Cuyahoga County Court of Common Pleas that dismissed the case with prejudice. For the reasons stated herein, we affirm.

{¶2} Appellant filed a foreclosure action against defendant-appellee, Adrienne M. Wilson, on December 10, 2010.1 The complaint alleges that appellant is the owner and holder of a promissory note on which Wilson had defaulted in payment. Appellant claimed there remained an unpaid balance of $97,015.95 plus interest at the rate of 7.75 percent per annum from May 1, 2006, and sought judgment in said amount. Wilson filed an answer that generally denied the allegations in the complaint.

{¶3} The note was executed on December 29, 2003, in favor of Homecomings Financial Services Network, Inc. The mortgage was executed the same date in favor of Mortgage Electronic Registration Systems, Inc., as nominee for Homecomings Financial, Inc. After several transfers, the mortgage eventually was assigned to appellant on November 17, 2009.

{¶4} On April 29, 2011, appellant filed a motion for summary judgment. In opposing the motion, Wilson argued that a previous foreclosure action involving the same

The complaint also named the following as defendants: John Doe, unknown spouse, if any, of Adrienne M. Wilson; Arrow Financial Services, LLC, and Golderberg Companies, Inc. Appellant obtained a default judgment against the John Doe defendant and Arrow Financial Services, LLC. property and the same note and mortgage had been dismissed with prejudice. That action had been brought by JPMorgan Chase Bank, a previous holder of the note and mortgage. The dismissal entry indicated that the matter was resolved and the plaintiff had charged off the loan. JPMorgan Chase Bank v. Wilson, Cuyahoga C.P. No. CV-619131 (Apr. 10, 2008). It was the second foreclosure action filed by JPMorgan Chase Bank, the first having been dismissed without prejudice. JPMorgan Chase Bank v. Wilson, Cuyahoga C.P. No. CV-600397 (Apr. 2, 2007). Within her response brief, Wilson requested that the trial court dismiss the present action.

{¶5} On August 19, 2011, the trial court denied the motion for summary judgment as moot and dismissed the case with prejudice. The trial court found the previous action was brought by appellant’s predecessor-in-interest, involved the same instruments, alleged the same default date, and alleged nearly the same unpaid principal balance. The court determined that the claims raised in this action were barred by res judicata and that the court lacked jurisdiction to further consider the complaint.2

{¶6} Appellant filed this appeal, raising the following assignment of error for our review: “The trial court erred as a matter of law by dismissing the case with prejudice and without notice to the dismissed party and by dismissing the case based upon a Civ.R. 8(C) affirmative defense that the appellee failed to raise.”

We note that this was not a dismissal for lack of subject matter jurisdiction as proferred by Wilson.

{¶7} Ohio courts have recognized that a defendant may raise the affirmative defense of res judicata for the first time on summary judgment. See Hillman v. Edwards, 10th Dist. No. 10AP-950, 2011-Ohio-2677, ¶ 18-19; E.B.P., Inc. v. 623 W. St. Clair Ave., LLC, 8th Dist. No. 93587, 2010-Ohio-4005, ¶ 29; Thayer v. Diver, 6th Dist. No. L-07-1415, 2009-Ohio-2053, ¶ 34. Although Wilson did not raise res judicata in her answer, the affirmative defense was set forth in her response to summary judgment. As such, it was not waived.

{¶8} Nonetheless, appellant argues that it was the only party to file a dispositive motion and that the trial court failed to provide notice of the court’s intent to dismiss the action. We find no merit to this argument.

{¶9} Once a party files a motion for summary judgment, a trial court may sua sponte grant summary judgment for a nonmoving party if (1) all relevant evidence is before the court, (2) no genuine issue of material fact exists, and (3) the nonmoving party is entitled to judgment as a matter of law. Todd Dev. Co. v. Morgan, 116 Ohio St.3d 461, 2008-Ohio-87, 880 N.E.2d 88, ¶ 16-17; Columbus v. Bahgat, 10th Dist. No. 10AP-943, 2011-Ohio-3315, ¶ 11; see also State ex rel. J.J. Detweiler Ents., Inc. v. Warner, 103 Ohio St.3d 99, 2004-Ohio-4659, 814 N.E.2d 482, ¶ 13. As explained in Todd at ¶ 17,

The reason for this exception is that the parties have had an opportunity to submit all evidence to the court, and the parties have notice that the court is considering summary judgment. As a result, neither party’s due process rights are violated.

In reviewing an award of summary judgment to a nonmoving party, we apply a de novo standard of review. Bahgat at ¶ 12.

{¶10} In this case, appellant filed a motion for summary judgment with the trial court. Appellant submitted the relevant instruments and an affidavit establishing Wilson’s default and the unpaid principal balance from May 1, 2006. Wilson responded with the argument that the action was barred by res judicata and requested a dismissal of the claims. Thus, appellant was on notice of Wilson’s defense. Wilson submitted documents evincing the prior foreclosure actions brought by JPMorgan Chase Bank against Wilson on the same mortgage and note and the same alleged default. The first action was dismissed without prejudice; the second was dismissed with prejudice in a journal entry reflecting that the parties had resolved the matter and the plaintiff had charged off the loan. Appellant did not file a reply brief or otherwise dispute that res judicata applied to the action.

{¶11} Summary judgment has been found appropriate where a successive foreclosure action is barred by res judicata because it arises from the same note and mortgage and same default as a prior action that was dismissed upon the merits. See U.S. Bank Natl. Assn. v. Gullotta, 120 Ohio St.3d 399, 2008-Ohio-6268, 899 N.E.2d 987; U.S. Bank, N.A. v. Gullotta, 5th Dist. No. 2010CA00181, 2011-Ohio-2235; see also Gordon v. Figetakis, 9th Dist. No. 22589, 2005-Ohio-5181. Further, it has been recognized that res judicata applies where there is privity between the parties to the cases and that an assignee of an interest in a promissory note and mortgage is in privity with its assignor for purposes of res judicata. EMC Mtge. Corp. v. Jenkins, 164 Ohio App.3d 240, 2005-Ohio-5799, 841 N.E.2d 855, ¶ 20 (9th Dist.).

{¶12} The record herein reflects that all relevant documents were before the court, no genuine issue of material fact existed, and Wilson was entitled to judgment as a matter of law. Although the trial court indicated that it was dismissing the action, rather than granting summary judgment to the nonmoving party, the matter was effectively presented and treated as a summary judgment matter. Thus, any error in this regard was harmless. See EMC Mtge. Corp. at ¶ 11-12. Further, even if the trial court stated the wrong basis for its decision, we have the authority to affirm the judgment if it is legally correct on other grounds. See Joyce v. Gen. Motors Corp., 49 Ohio St.3d 93, 96, 551 N.E.2d 172 (1990). Accordingly, we overrule appellant’s sole assignment of error.

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See: http://www.sconet.state.oh.us/rod/docs/pdf/8/2012/2012-ohio-2199.pdf

Outcome: {¶13} Judgment affirmed.

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