Opinion
CASE NO. 13 MA 160
06-09-2015
PHH CORPORATION, PLAINTIFF-APPELLANT, v. PAUL D. PHILLIPS, et al., DEFENDANTS-APPELLEES.
APPEARANCES: For Plaintiff-Appellant: Attorney Bill L. Purtell Lerner, Sampson & Rothfuss 120 East Fourth Street, Suite 800 Cincinnati, OH 45202 For Defendants-Appellees: Paul D. Phillips, Pro-se Debra A. Phillips, Pro-se 276 Oregon Avenue West Sebring, OH 44672 No Brief Filed
OPINION CHARACTER OF PROCEEDINGS: Civil Appeal from Common Pleas Court, Case No. 13 CV 14. JUDGMENT: Reversed and Remanded. APPEARANCES:
For Plaintiff-Appellant:
Attorney Bill L. Purtell
Lerner, Sampson & Rothfuss
120 East Fourth Street, Suite 800
Cincinnati, OH 45202
For Defendants-Appellees: Paul D. Phillips, Pro-se
Debra A. Phillips, Pro-se
276 Oregon Avenue West
Sebring, OH 44672
No Brief Filed
JUDGES:
Hon. Mary DeGenaro
Hon. Gene Donofrio
Hon. Cheryl L. Waite
DeGENARO, J.
{¶1} Plaintiff-Appellant PHH Mortgage Corporation appeals the September 10, 2013 judgment of the Mahoning County Court of Common Pleas dismissing its foreclosure claim against Defendants-Appellees Paul D. Phillips and Debra S. Phillips. On appeal, PHH contends that the trial court's dismissal of its foreclosure claim with prejudice—due to PHH's failure to comply with two court orders compelling its representative's appearance—was an abuse of discretion.
{¶2} Upon review, PHH did not receive actual notice of the possibility of dismissal from the trial court prior to dismissal of its claim. PHH did not receive implied notice of the possibility of dismissal because the Phillips did not file a motion to dismiss PHH's foreclosure claim. The Phillips' inaction, evidenced by their failure to answer PHH's complaint or file a brief opposing default judgment, suggests they were not prejudiced by PHH's representative's conduct. PHH's absences, viewed in light of its active prosecution of its foreclosure claim, do not constitute dilatory conduct. Accordingly, the trial court abused its discretion by dismissing PHH's foreclosure claim with prejudice. The trial court's decision is reversed and this case is remanded for further proceedings consistent with this Court's opinion.
Facts and Procedural History
{¶3} On January 3, 2013, PHH filed a complaint in foreclosure and attached copies of the note and mortgage securing the property commonly known as 276 Oregon Avenue West, Sebring, OH 44672, and assignments of the Note and Mortgage. PHH named Paul D. Phillips, Debra S. Phillips and the Mahoning County Treasurer as defendants. PHH alleged that it is the holder of the Note securing the Mortgage on the Property, conditions precedent to acceleration of payments and foreclosure were satisfied and the Phillips owe $15,871.34 plus interest accruing at 5.625% per year on the Note. PHH sought the relief of foreclosure of the Mortgage, a court-ordered sale of the Property and the proceeds resulting from the sale. The Phillips did not file an answer to PHH's complaint. On January 11, 2013, PHH filed a preliminary judicial report, attaching copies of title records and unpaid tax reports.
{¶4} On February 6, 2013, the County Treasurer of Mahoning County filed an answer and cross-claim, alleging that it had a first and best lien against the property for $2,061.17, resulting from unpaid taxes, assessments, penalties and interest. The Treasurer sought foreclosure of its lien and the Phillips' equity right of redemption, and a court-ordered sale of the Property. PHH filed an answer to Treasurer's cross-claim, denying each of Treasurer's allegations for lack of "knowledge, information or belief." The Phillips did not file an answer to Treasurer's complaint.
{¶5} On April 24, 2013, PHH filed a final judicial report and a motion for default judgment and decree in foreclosure. The magistrate subsequently scheduled a hearing for PHH's motion for default judgment on July 24, 2013 at 1:30 PM. The Magistrate's Order stated: "An authorized representative of Plaintiff, PHH Mortgage Corporation with full settlement authority shall attend the hearing on Plaintiff's Motion for Default Judgment." PHH's representative did not appear at the July 24, 2013 hearing because "PHH's representative accidentally went to the Common Pleas court in Cuyahoga County instead of Mahoning County."
{¶6} As a result, the magistrate rescheduled the hearing in an order, which stated:
Plaintiff's counsel and Defendants, Paul D. Phillips and Debra S. Phillips appeared before the Magistrate. Plaintiff's counsel advised that an authorized representative of Plaintiff, PHH Mortgage Corporation appeared before the Cuyahoga County Common Pleas Court in error, but was available by telephone.
For good cause shown, the hearing upon Plaintiff's Motion for Default Judgment is rescheduled to September 9, 2013 at 1:30 p.m. before Magistrate Timothy G. Welsh to afford Defendants an opportunity to negotiate resolution of this foreclosure proceeding. An authorized representative of Plaintiff, PHH Mortgage Corporation with full settlement authority shall attend the hearing on Plaintiff's Motion for Default Judgment.
{¶7} PHH's representative failed to appear for the September 9, 2013 hearing because "they had calendared this hearing as a telephone conference by mistake." Consequently, the trial court dismissed PHH's complaint with prejudice, stating:
Plaintiff's counsel and Defendants, Paul D. Phillips and Debra S. Phillips appeared before the Magistrate. An authorized representative of Plaintiff, PHH Mortgage Corp. with full settlement authority was ordered to attend this hearing pursuant to the Magistrate's Order of July 29, 2013. In fact, Plaintiff's representative was previously ordered to attend a hearing held on July 24, 2013. On both occasions, Plaintiff's representative failed to appear in direct contravention of the Magistrate's Orders of May 23, 2013 and July 29, 2013.
{¶8} PHH filed a notice of appeal on October 9, 2013, within thirty days of entry of the trial court's final order, in accordance with App.R. 4(A)(1). On December 12, 2013, PHH filed a brief seeking reversal of the trial court's decision. A review of the record indicates that neither the Treasurer nor the Phillips filed an Appellees' brief with this Court. Accordingly, pursuant to App.R. 18(C), "the court may accept the appellant's statement of the facts and issues as correct and reverse the judgment if appellant's brief reasonably appears to sustain such action."
Standard of Review
{¶9} "Where the plaintiff fails to prosecute, or comply with these rules or any court order, the court upon motion of a defendant or on its own motion may, after notice to the plaintiff's counsel, dismiss an action or claim." Civ.R. 41(B)(1). A Civ.R. 41(B)(1) dismissal "operates as an adjudication upon the merits unless the court, in its order for dismissal, otherwise specifies." Civ.R. 41(B)(3). When considering a Civ.R. 41(B)(1) dismissal, a court may weigh factors such as the history of the litigation, evidence of a plaintiff deliberately proceeding in dilatory fashion and the tenet that the disposition of cases on the merits is favored at law. Jones v. Hartranft, 78 Ohio St.3d 368, 372, 678 N.E.2d 530 (1997); Quonset Hut, Inc. v. Ford Motor Co., 80 Ohio St.3d 46, 49, 684 N.E.2d 319 (1997).
{¶10} "The decision to dismiss a complaint for failure to prosecute is within the sound discretion of the trial court, and an appellate court's review of such a dismissal is confined solely to the question of whether the trial court abused its discretion." Jones at 371. "An abuse of discretion means an error in judgment involving a decision that is unreasonable based upon the record; that the appellate court merely may have reached a different result is not enough." Downie v. Montgomery, 7th Dist. No. 12 CO 43, 2013-Ohio-5552, ¶ 50. ."[A]lthough reviewing courts espouse an ordinary 'abuse of discretion' standard of review for dismissals with prejudice, that standard is actually heightened when reviewing decisions that forever deny a plaintiff a review of a claim's merits." Jones, at 372. "A court should consider lesser sanctions before dismissing a case unless negligent, irresponsible, contumacious, or dilatory conduct supports dismissal with prejudice." El Mahdy v. Mahoning Natl. Bank, 7th Dist. No. 01-C.A.-27, 2002-Ohio-3851, ¶27. A factor to be considered in determining whether a plaintiff's claim should be dismissed for failure to prosecute is whether the plaintiff's conduct prejudiced the defendant. Allen v. Colfor Mfg., Inc., 7th Dist. No. 01 APO 757, 2002-Ohio-3052, ¶19.
{¶11} "[I]t is reversible error for the trial court to dismiss a plaintiff's case for failure to prosecute without first providing notice." Snyder v. Belmont Natl. Bank, 7th Dist. No. 09 BE 9, 2010-Ohio-1089, ¶16. "A dismissal with prejudice is proper only when counsel has been informed that dismissal is a possibility and has had a reasonable opportunity to defend against dismissal." Ball v. Sugar, 7th Dist. No. 01 C.A. 36, 2002-Ohio-2405, ¶12 citing Quonset Hut at syllabus. "[T]he notice required by Civ.R. 41(B)(1) "need not be actual but may be implied when reasonable under the circumstances." Wells Fargo Fin. Leasing, Inc. v. Trio Transp., Inc., 7th Dist. No. 04 JE 33, 2005-Ohio-4687, ¶42 citing Quonset Hut at 49.
Notice
{¶12} In its first of two assignments of error, PHH asserts:
{¶13} "The trial court erred by dismissing the foreclosure action without prior notice to the Plaintiff."
{¶14} The notice requirement for a motion to dismiss for lack of prosecution can be satisfied by actual or implied notice to the plaintiff. Allen, supra, at ¶13, 15 (holding that plaintiff had notice where there was a court order stating "[f]ailure to comply with this order or any further order of this Court may result in dismissal.").
{¶15} Neither of the magistrate's orders warned PHH of the possibility of dismissal for failure to attend the two hearings. The record indicates that the trial court did not provide PHH with actual notice. The magistrate's May 23, 2013 and July 29, 2013 orders stated that PHH's representative "shall attend" the scheduled hearings, but contained no language explaining that failure to attend would result in dismissal of the foreclosure claim.
{¶16} Our analysis next turns to whether PHH received implied notice of the possibility of dismissal. Notice "may be implied when reasonable under the circumstances." Trio Transp., supra, at ¶42. In Trio Transp., this Court held that where a defendant's motion specifically requested dismissal, the plaintiff had implied notice of the possibility of dismissal. Id. at ¶45. In contrast, the Phillips did not file a motion to dismiss in the trial court. Rather, the trial court dismissed PHH's complaint sua sponte. Thus, PHH did not receive implied notice.
{¶17} PHH's first assignment of error is meritorious. It did not have either actual or implied notice of the possibility of dismissal of its foreclosure claim. Accordingly, the trial court abused its discretion by dismissing PHH's foreclosure claim with prejudice.
Dilatory Conduct & Prejudice to Defendants
{¶18} In its second and final assignment of error, PHH asserts:
{¶19} "The trial court erred by dismissing the foreclosure action with prejudice."
{¶20} Although PHH merely restates the applicable standard of review, it makes two substantive arguments within this section of its brief. First, PHH argues that its representative's absences did not show "a dilatory spirit or an unwillingness to proceed in foreclosure." Second, PHH argues that the trial court's dismissal of its claim with prejudice was an abuse of discretion because the Phillips were not prejudiced by the representative's absences.
{¶21} An appellate court may find that a trial court abused its discretion in dismissing a claim with prejudice if a plaintiff did not engage in dilatory conduct and the defendant was not prejudiced by the plaintiff's conduct. Allen at ¶15, 19 (holding that where a plaintiff was provided with actual and implied notice of the possibility of dismissal, his "actions were not so dilatory as to provide substantial grounds for a dismissal with prejudice.").
{¶22} The absence of PHH representatives from two hearings did not prejudice the Phillips. PHH has actively pursued its foreclosure claim by filing a complaint and a motion for default judgment. In contrast, the Phillips did not file answers to PHH's or the Treasurer's complaints or respond to PHH's motion for default judgment. The Phillips' reluctance to contest the foreclosure claim suggests they were not prejudiced by the absences of PHH's representatives and the resulting delay in litigation.
{¶23} Whether the representative's absences constitute dilatory conduct is less clear. PHH asserts that its representative failed to attend the July 24, 2013 hearing because "PHH's representative accidentally went to the Common Pleas [C]ourt in Cuyahoga County instead of Mahoning County." PHH asserts that its representative was absent from the September 9, 2013 hearing because "they had calendared this hearing as a telephone conference by mistake." PHH's alleged excuses for its representative's absences, if taken as credible, demonstrate a lack of diligence. See Allen, supra, 7th Dist. No. 01 APO 757, at ¶17 (reversing the trial court's dismissal of plaintiff's claim even though "it [was] apparent [plaintiff] has not followed the trial court's orders as diligently as he should have."). Although PHH's representative was absent from both hearings, its counsel was present for both. PHH's conduct, while perhaps lacking diligence, does not rise to the level of dilatory conduct.
{¶24} Even if we were to hold that PHH's conduct was dilatory and/or prejudiced the Phillips, a lack of notice of the possibility of dismissal requires reversal of the trial court's dismissal. See Ball, supra, at ¶14 (reversing the trial court's decision dismissing defendant's counterclaim where the record contained "no evidence that [defendant] had notice of the possibility of a dismissal or that he had a reasonable opportunity to defend against dismissal.).
{¶25} In sum, PHH did not receive either actual or implied notice of the possibility of dismissal. The Phillips were not prejudiced by PHH's absences because the Phillips have not filed any pleadings or briefs to contest PHH's foreclosure claim. PHH did not deliberately proceed in a dilatory fashion by failing to send a representative to the scheduled hearings. Accordingly, the trial court abused its discretion by dismissing PHH's foreclosure claim with prejudice. The trial court's decision is reversed and this case is remanded for further proceedings consistent with this Court's opinion. Donofrio, P.J., concurs. Waite, J., concurs.