Citi, Inc. v. Richey

Citation: 2015 Ohio 4154Docket: 15CA08

Court: Ohio Court of Appeals; October 5, 2015; Ohio; State Appellate Court

Original Court Document: View Document

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In *Citi, Inc. v. Richey*, 2015-Ohio-4154, the Court of Appeals for Richland County, Ohio affirmed the trial court's decision granting summary judgment in favor of CitiMortgage, Inc., the successor by merger to ABN AMRO Mortgage Group, Inc. The case arose from a mortgage refinance application by Gloria Richey and Lucy Harris for property at 503 Lida Street, which culminated in a Note for $78,600 secured by a mortgage. Paul Richey signed the mortgage to relinquish his dower rights. After defaulting on the loan in April 2012, CitiMortgage initiated a foreclosure action, which was dismissed without prejudice. Following a federal court ruling in favor of CitiMortgage regarding claims from the Richeys, CitiMortgage refiled its foreclosure complaint in April 2014. The Richeys contested CitiMortgage’s right to enforce the Note, alleging forgery of their signatures and claiming that notice of default was improperly served to Paul Richey. CitiMortgage moved for summary judgment, providing evidence including depositions and expert reports. The trial court granted summary judgment in favor of CitiMortgage, which the Richeys appealed, arguing that CitiMortgage failed to demonstrate compliance with the mortgage's notice provisions. The appeal did not succeed, affirming the lower court’s ruling.

Reversible error occurred when the trial court granted summary judgment to Citi Inc. due to a material factual dispute regarding the ownership of the appellants' loan, as the Federal Home Loan Mortgage Corporation (Freddie Mac) claimed ownership and Citi provided no evidence to establish its standing to foreclose. Under Civ.R. 56(C), summary judgment requires no genuine issue of material fact, with the moving party bearing the burden to demonstrate this absence. The nonmoving party must present specific facts to show a triable issue exists. In this case, the Richeys contended that Citi had not satisfied the conditions precedent outlined in the Note and Mortgage, specifically concerning the required notice prior to acceleration. Citi argued that since only Gloria Richey and Lucy Harris were designated as 'Borrower' in the Mortgage, it was not obligated to provide notice to Paul Richey. The court found that Citi was indeed not required to notify Paul Richey before acceleration as he was not a named borrower in the agreement.

Paul Richey signed the Mortgage to release his dower rights but is not considered a Borrower since he did not sign the Note. CitiMortgage fulfilled its obligation to notify Borrowers Gloria Richey and Lucy Harris before accelerating the mortgage, leaving no material fact dispute on this issue. 

In their second Assignment of Error, the Richeys argued that CitiMortgage lacked standing to enforce the Note and Mortgage, claiming there was uncertainty regarding CitiMortgage's status as the Note holder. CitiMortgage asserted it possessed the original Note, which was indorsed in blank, and provided supporting affidavits, including one from Cindy K. Schneider confirming CitiMortgage's possession of the Note prior to the foreclosure complaint. 

The Richeys countered with an affidavit from Paul Richey, who claimed an email from Freddie Mac indicated Freddie Mac owned the Mortgage, suggesting a genuine issue regarding CitiMortgage's status. Nonetheless, under R.C. 1303.31, a party producing the instrument can enforce it if they prove entitlement, and the court found no genuine issue that CitiMortgage was the Note holder. 

Referencing case law, the court reiterated that even if the mortgage is not formally assigned, the transfer of the Note grants equitable rights to enforce the mortgage. Citing previous rulings, the court concluded that CitiMortgage is the holder in due course of the Note and has standing to enforce it, overruling both of the Richeys' Assignments of Error. The judgment of the Richland County Court of Common Pleas was affirmed.