Advantage Bank v. Bodo

Citation: 2012 Ohio 2911Docket: 2011CA00249

Court: Ohio Court of Appeals; June 22, 2012; Ohio; State Appellate Court

Original Court Document: View Document

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Defendants-Appellants Kelly Bodo and Steven Bodo appealed two judgment entries from the Stark County Court of Common Pleas regarding a foreclosure action initiated by Plaintiff-Appellee Advantage Bank. The Bodos had executed a mortgage for $208,000 in favor of Camco Mortgage Corporation on August 29, 2003, recorded the same day, to secure a note for their property located at 12418 Stover Farm Dr., Canal Fulton, Ohio. The mortgage contained an allegedly incorrect legal description due to mutual mistake and scrivener's error, which Advantage Bank sought to reform in its foreclosure complaint. The Bodos argued that Advantage Bank failed to include the Stark County Treasurer as a necessary party in the action.

Advantage Bank filed for summary judgment asserting that there were no genuine issues of material fact regarding the reformation of the mortgage. The Bodos countered with their own motion for summary judgment, maintaining that the mortgage's legal description was defective and reiterating the failure to name the Treasurer. Following the reopening of the Bodos' bankruptcy case, which temporarily stayed the foreclosure action, the automatic stay was lifted on September 19, 2011. Ultimately, on October 12, 2011, the trial court granted Advantage Bank's motion for summary judgment and denied the Bodos' motion. The appellate court affirmed this judgment on June 22, 2012.

Advantage Bank sought a Decree of Foreclosure, which the trial court approved on October 26, 2011. This decree corrected the property’s legal description in the Mortgage and acknowledged the Stark County Treasurer's potential interest in the property, granting the Treasurer the primary lien for any taxes and assessments due following the Sheriff's sale. The Bodos are appealing this decision, presenting two Assignments of Error: 

1. The trial court erred in granting summary judgment to the appellee because the appellee cannot pursue foreclosure on a defective mortgage and cannot include a claim for reformation within the foreclosure action.
2. The trial court erred in granting summary judgment without including a necessary party as mandated by Ohio Civil Rule 19.

The appellate court reviews the summary judgment de novo, applying the same standards as the trial court, and will affirm if any grounds support the judgment. Under Civ. R. 56(C), summary judgment should be granted if no genuine issue of material fact exists, requiring the moving party to demonstrate this absence. The Bodos argue that Advantage Bank's foreclosure claim is flawed for three reasons: it cannot seek reformation in a foreclosure action, it lacks sufficient evidence to support its claim for reformation, and the legal description in the Mortgage is defective, thereby failing to encumber the property. These arguments are interconnected, focusing first on the issue of reformation.

Reformation is an equitable remedy that allows for correction of a written instrument to reflect the true agreement between parties due to mutual mistake, requiring clear and convincing evidence of such a mistake. It is meant to align the document with the parties' actual intent and does not create obligations but clarifies existing ones. The burden of proof lies with the party alleging the mutual mistake. 

In this context, the Bodos contended that a reformation claim could not be made within a foreclosure action; however, they provided no legal authority to support this assertion. Advantage Bank sought reformation to amend the legal description of the property in the mortgage to correctly indicate the encumbered property as 12418 Stover Farm Drive NW. The court found no genuine issue of material fact regarding the mutual mistake in the legal description, as the Bodos had acknowledged entering into the mortgage for their Stover Farm Drive property and did not dispute the foreclosure's basis.

Additionally, in a related case, Key Bank Natl. Assoc. v. Bolin, the court granted reformation of a mortgage due to mutual mistake and scrivener's error regarding the property description, affirming that one cannot mortgage more than they own and that the mistakes were understandable.

In affirming the decision in Bolin, it was established that no material factual dispute existed regarding a mutual mistake between the mortgagee and mortgagor, specifically that the mortgagor held only a leasehold interest in the property. The reformation of the mortgage documents was deemed appropriate to accurately reflect the parties' intentions. This reasoning applies to the current case involving Advantage Bank and the Bodos, who intended to secure a mortgage for their property at 12418 Stover Farm Drive NW. The court found no factual dispute about this intent and ruled that reformation to correct the legal description of the property aligned the mortgage with the parties' real intentions.

The Bodos contended that the mortgage was invalid due to an insufficient legal description, but the court deemed this argument unnecessary given the reformation decision. Consequently, the court overruled the first Assignment of Error.

Regarding the second Assignment of Error, the Bodos argued that the trial court erred by not including the Stark County Treasurer as a party in the foreclosure action. The court noted that Advantage Bank had not named the Treasurer in its complaint, and while the Bodos raised this as an affirmative defense, they provided no evidence of delinquent taxes or assessments on the property. The court referenced a prior Decree in Foreclosure, which indicated that the Treasurer's interests were protected. The Bodos failed to demonstrate that the Treasurer was a necessary party under Civ. R. 19, leading to the overruling of the second Assignment of Error.

Ultimately, the court conducted a de novo review of the summary judgment motions, affirming the Stark County Court of Common Pleas' ruling that Advantage Bank was entitled to judgment as a matter of law, with both Assignments of Error overruled. The judgment was upheld, with costs assessed to the appellants.