Opinion
A1102684
08-23-2012
SPRING VALLEY BANK Plaintiff. v. AH&A PROPERTIES, LLC, et al. Defendants.
DECISION
This case is before the Court on Plaintiffs Objections to the Magistrate's Decision and Defendant Carter's Objections to Magistrate's Decision. The additional Defendants in the case have not responded to the lawsuit. For the reasons discussed below, the Magistrate's decision is rejected and judgment is entered in favor of Defendant Carter.
STANDARD
This Court must "undertake an independent review as to the objected matters to ascertain [whether] the magistrate has properly determined the factual issues and appropriately applied the law." Civ.R. 53 (D)(4)(d). The Court "may adopt or reject a magistrate's decision in whole or in part, with or without modification, " and "may hear a previously-referred matter, take additional evidence, or return a matter to a magistrate." Civ.R. 53 (D)(4)(b).
DISCUSSION
Plaintiff obtained a mortgage on the property at issue in October of 2006 and properly recorded the mortgage in November of 2006. In October 2009, Plaintiff obtained the deed to the property in lieu of foreclosure. After the transfer of the deed, Plaintiff recorded a release of the mortgage. Defendant Carter previously obtained a mortgage on the property and properly recorded that mortgage in August of 2007.
Plaintiff claims it mistakenly released its mortgage, and would not have done so had it known of Defendant's mortgage. Plaintiff filed for foreclosure, and sought relief from its mistake and reinstatement of its mortgage and reinstatement of its first priority in order to foreclose on the property. Defendant argues that Plaintiff cannot be relieved from a mistake that amounted to negligence on the Plaintiffs part. Moreover, Defendant argues Plaintiffs mortgage was extinguished when it obtained the deed based on the doctrine of merger.
Defendant argues Plaintiffs release of the mortgage must be examined under the doctrine of equitable subrogation. The Magistrate discussed, but did not apply the doctrine of equitable subrogation in his decision. The doctrine of equitable subrogation operates as relief from the statutory principle that the first to record a mortgage has priority. Old Republic National Title Insurance v. Fifth Third Bank, 2008-Ohio-2059 (1 Dist. 2008). Plaintiff argues that its mortgage should be reinstated not on the basis of equitable subrogation, but on the basis of relief from mistake. Plaintiff argues that case law allows the Court to set aside its release based on mistake, allowing Plaintiff to regain its position as the senior mortgage on the property.
Dist. 1989); Union Savings and Loan v. King, 1934 WL 2641 (2nd Dist. 1934). However, each of these cases dealt with a factual situation distinguishable from this case.
The Court need not decide whether equitable subrogation applies to Plaintiffs claims, because Plaintiff is not entitled to relief even under the standard it argues should apply, relief from mistake. Plaintiff cites numerous cases for the proposition that a mortgagee who inadvertently releases a mortgage is entitled to relief from its mistake. See In re Kildow, 232 B.R. 686 (S.D. Ohio 1999); Farmers Savings and Loan Co. v. Kline, 92 Ohio App. 406 (7th Dist. 1951); Transamerica Financial Services v. Stiver, 61 Ohio App.3d 49 (2
In Kildow, the mortgagee had multiple mortgages on the property and mistakenly released the incorrect mortgage. In Kline, the recorder made an error and released the mortgage of a different property than the one the Plaintiff requested. In Stiver, the mortgage was released after the balance of the mortgage was repaid, and later the check was returned by the bank. The facts of King are the most similar to this case. In King, the mortgagee released its old mortgage in favor of a new mortgage executed with the mortgagor. Mortgagee did not have knowledge of an intervening lien placed on the property, and the Court allowed mortgagee to regain its first priority on the property. However, in this King, the Court stressed that the Plaintiff had not been negligent in its failure to discover the lien, and its lack of knowledge was not through want of due care, as the title examination the Plaintiff relied on failed to disclose the lien.
In this case, the Plaintiff has not committed the types of mistakes from which courts have provided relief. These mistakes dealt with clerical errors or circumstances out of the control of the mortgagee, such as a returned check. Plaintiffs circumstances were not outside its control. Plaintiff could have searched the records on the property and obtained knowledge of Defendant's mortgage, and did not. The Plaintiffs predicament is a result of its lack of due care. Plaintiff cannot be relieved from mistake to regain its senior priority. King, supra.
Defendant also argues that Plaintiff is not entitled to reinstate its mortgage, as Plaintiffs interest in the mortgage merged with the deed to the property when Plaintiff accepted the deed. The Magistrate found there was an issue of fact as to Plaintiffs intention to merge its interests in the property. While there may be an issue of fact, the issue of merger does not need to be reached. Even if the mortgage interest did not merge into Plaintiffs deed, Plaintiff released the mortgage, and Plaintiff is not entitled to relief from mistake. Therefore, Plaintiff does not hold a mortgage on the property regardless of the issue of merger.
Motion to Strike
Defendant also filed a Motion to Strike the Affidavit of David W. Wittkamp filed with Plaintiffs Objections to the Magistrate's Decision. This affidavit details the agreement between Plaintiff and buyer that Plaintiff will clear the title issues with the property. Defendant argues that the Court should strike the affidavit because it was sworn to and submitted after the hearing on the motions for summary judgment and could have been submitted at an earlier time. Plaintiff argues the agreement between it and the buyer of the property did not become relevant until the objections were raised.
Civ R. 53 (D)(4)(b) states that a Court may take additional evidence on an objection to the Magistrate's Decision. Likewise, Civ R. 53 (D)(4)(d) states that a Court may hear additional evidence but may refuse to do so unless the objecting party demonstrates that it could not, with reasonable diligence, have produced that evidence for consideration by the Magistrate. The Court denies the motion and will accept the affidavit.
The Court notes, however, that the affidavit was offered as evidence disputing Defendant's claims that the mortgage interest merged with the deed because Defendant had sold the property. The Court did not reach the question of merger, finding that Plaintiff could not be relieved from its mistake.
CONCLUSION
Plaintiffs Objections to the Magistrate's Decision are overruled. Defendant's objections are upheld. The Magistrate's Decision is rejected and judgment is entered in favor of Defendant. The parties are referred to Local Rule 17 for preparation of an Entry.