Park View Fed. Savs. Bank v. Village Builders Ltd.

Citation: 2013 Ohio 2994Docket: 98554, 98555, 98556

Court: Ohio Court of Appeals; July 11, 2013; Ohio; State Appellate Court

Original Court Document: View Document

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The Court of Appeals of Ohio affirmed the trial court's decision denying Village Builders Ltd. et al.'s motion for relief from cognovit judgments in favor of Park View Federal Savings Bank. Village Builders argued that the cognovit warrants did not comply with R.C. 2323.13 and that the judgments were void due to lack of subject matter jurisdiction. The case involved four promissory notes executed by Village Builders, with modifications and extensions over the years, the latest being in 2010 for the first three notes and in 2008 for the fourth. Park View Federal filed complaints for cognovit judgments on December 14, 2011, citing default on payments and provided cognovit notes with a warning about the waiver of rights to notice and court trial. The court found the trial court's decision to be correct after reviewing the record and applicable law.

On the date of judgment, the trial court ruled in favor of Park View Federal based on a cognovit judgment. Subsequently, Village Builders filed motions to vacate these judgments on December 22, 2011, which were denied by the trial court on May 22, 2012. Village Builders is appealing this denial, arguing that the cognovit judgment should be vacated due to the trial court's lack of subject matter jurisdiction, rendering the judgment void ab initio as per R.C. 2323.13. They assert that the judgment violates R.C. 2323.13(D) because the required statutory language was not presented in a clearly distinguishable type size or format.

While Village Builders’ counsel focused on R.C. 2323.13(D) during oral arguments, the motion to vacate referenced R.C. 2323.13(A) and the Ohio Supreme Court's decision in Patton v. Diemer, along with Civ. R. 60(B). The trial court's jurisdiction over cognovit notes is contingent upon compliance with R.C. 2323.12 and 2323.13. The review of subject matter jurisdiction is conducted de novo.

For a Civ. R. 60(B) motion, the movant must demonstrate a meritorious defense, entitlement to relief under specified grounds, and that the motion was made in a timely manner. In cognovit note cases, the movant only needs to establish a meritorious defense and timeliness. A trial court's denial of a motion for relief from judgment is reviewed under an abuse of discretion standard, which implies a decision that is unreasonable or arbitrary.

Village Builders specifically contends that the typeface of the warning language in the cognovit note is not more prominent than the title and other text, thus failing to meet the statutory requirements. They argue that the warnings are presented in a smaller, non-bolded typeface compared to the main text. However, previous rulings, such as in Medina, have upheld that if the warning is sufficiently highlighted (e.g., in capital letters), it satisfies legal standards, rejecting arguments that lack merit based on comparisons to titles.

To comply with R.C. 2323.13(D), a statutory warning in a cognovit note must be displayed in a manner that is "more clear and conspicuous than anything else on the document." Various methods can enhance visibility, including capitalization, italicization, underlining, bolding, framing, or distinctive type styles. In the current case, the cognovit notes signed by Village Builders featured the mandated warning prominently above the signatures, in all capital letters and bold print, thus meeting legal requirements. 

Village Builders contended that a loan modification to the fourth cognovit note, which extended the maturity date without including cognovit warnings, should be invalidated, referencing a precedent where a court ruled that the required warning was absent from supplemental documents. However, this case differs as the modification only affected the maturity date, not the interest rate, and the extended maturity date had already passed, leaving no judgment for modification.

As the cognovit notes adhered to R.C. 2323.13, the trial court possessed jurisdiction to issue judgment. Village Builders did not demonstrate a valid defense against the judgments, leading to the conclusion that the trial court did not abuse its discretion in denying motions to vacate the cognovit judgments. The judgment was affirmed, with costs awarded to the appellee. The court also mandated the execution of this judgment as per procedural rules.