Opinion
No. 12AP-556 C.P.C. No. 11CVC06-6997
03-14-2013
Timothy Gilchrist et al., Plaintiffs-Appellants, v. Saxon Mortgage Services, Defendant-Appellee.
Doucet & Associates, LLC, Gregory A. Wetzel, and Troy J. Doucet, for appellant Timothy Gilchrist. Dinsmore & Shohl LLP, David P. Fornshell, and Luke E. Anderson, for appellee.
(REGULAR CALENDAR)
DECISION
Doucet & Associates, LLC, Gregory A. Wetzel, and Troy J. Doucet, for appellant Timothy Gilchrist.
Dinsmore & Shohl LLP, David P. Fornshell, and Luke E. Anderson, for appellee.
APPEAL from the Franklin County Court of Common Pleas.
SADLER, J.
{¶ 1} Plaintiff-appellant, Timothy Gilchrist, appeals from a judgment of the Franklin County Court of Common Pleas granting summary judgment in favor of defendant-appellee, Saxon Mortgage Services. For the following reasons, we affirm.
I. BACKGROUND
{¶ 2} On January 18, 2007, New Century Mortgage Corporation made a mortgage loan to appellant in the amount of $285,000, evidenced by a promissory note executed by appellant the same day. The note was secured by a mortgage on a residential property in New Albany. Appellee began servicing the mortgage on March 27, 2007. The mortgage was later assigned to Deutsche Bank National Trust Company as Trustee and Custodian for Morgan Stanley ABS Capital I Inc. MSAC 2007-NC4 ("Deutsche Bank"). Appellant defaulted on the note, and, on September 7, 2007, Deutsche Bank filed a foreclosure action against appellant. Appellee acted as the attorney in fact in the foreclosure case.
{¶ 3} While the foreclosure action was pending, appellant applied to participate in the federally sponsored Home Affordable Modification Program ("HAMP"). Morgan Stanley Mortgage Capital, Inc. ("Morgan Stanley"), as lender, and appellant, as borrower, executed a Home Affordable Modification Trial Period Plan ("TPP") pursuant to appellant's HAMP application. Appellee acted as mortgage servicer and attorney in fact for Morgan Stanley. Pursuant to the TPP, appellant was to make three monthly payments of $1,425, due on or before September 1, October 1, and November 1, 2009. The TPP further provided that if appellant complied with the terms of the TPP and if his representations about his financial status on which the TPP was based remained true in all material respects, Morgan Stanley would provide him with a modification agreement that would permanently modify the terms of his mortgage loan.
{¶ 4} By written correspondence dated December 30, 2009, appellee notified appellant that the United States Treasury Department, in an effort to assist HAMP participants convert to permanent loan modifications, had extended the HAMP review period until January 31, 2010. Under the extended review period, appellant was required to make continued monthly payments of $1,425. The letter further informed appellant that he was at risk of losing eligibility for permanent mortgage loan modification due to his failure both to make all required trial period payments and to submit all required documentation. On February 24, 2010, appellee informed appellant in writing that he was ineligible for a permanent loan modification due to his failure to make the payments required by the TPP by the end of the trial period. By letter dated April 21, 2011, appellee notified appellant that servicing of his mortgage loan would transfer to Ocwen Loan Servicing, LLC, on May 16, 2011.
{¶ 5} On June 7, 2011, appellant and his wife, Debra Gilchrist, filed a complaint against appellee alleging claims for (1) breach of contract, (2) promissory estoppel, (3) violation of the Ohio Consumer Sales Practices Act ("OCSPA"), (4) fraud, (5) breach of the covenant of good faith and fair dealing, (6) violation of the Fair Debt Collection Practices Act, (7) bad faith, (8) negligent supervision, (9) unjust enrichment/quasi- contract, (10) declaratory judgment, (11) rescission, and (12) emergency temporary and permanent injunction.
{¶ 6} On March 13, 2012, appellee filed a motion for summary judgment against both appellant and his wife. The motion was supported by the affidavit of Annette Anderson, appellee's assistant vice president, along with documentation detailing the history of the parties' interactions. Appellee maintained that its evidence, when viewed in a light most favorable to appellant, established the absence of any genuine issue of material fact on all the claims asserted in the complaint, and that it was entitled to judgment as a matter of law.
{¶ 7} On April 18, 2012, appellant filed a memorandum contra, supported by his own affidavit with no supporting documentation. Therein, appellant stated that he was withdrawing his claims for violation of the Fair Debt Collection Practices Act and bad faith; he maintained, however, that summary judgment was not appropriate on any of the remaining claims.
The trial court, noting that Debra Gilchrist had neither signed the promissory note, mortgage, and TPP, nor filed a response to appellee's motion for summary judgment, concluded that Debra Gilchrist had no valid claims against appellee. Accordingly, the trial court granted summary judgment against Debra Gilchrist. Appellant assigns no error in this regard.
{¶ 8} In a decision and entry issued June 1, 2012, the trial court found that no genuine issues of material fact remained for trial as to any of the claims asserted in appellant's complaint, and that appellee was entitled to judgment as a matter of law. Accordingly, the trial court granted appellee's motion for summary judgment.
II. ASSIGNMENT OF ERROR
{¶ 9} In a timely appeal, appellant presents a single assignment of error for our review:
The trial court erred when it improperly granted summary judgment in Appellee's favor.
A. Assignment of Error
{¶ 10} In his single assignment of error, appellant contends that the trial court erred by granting appellee's motion for summary judgment. We disagree.
{¶ 11} Appellate review of summary judgment is de novo. Comer v. Risko, 106 Ohio St.3d 185, 2005-Ohio-4559, ¶ 8. To obtain summary judgment, the movant must show that (1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) it appears from the evidence that reasonable minds can come to but one conclusion when viewing evidence in favor of the nonmoving party and that conclusion is adverse to the nonmoving party. Civ.R. 56(C); New Destiny Treatment Ctr., Inc. v. Wheeler, 129 Ohio St.3d 39, 2011-Ohio-2266, ¶ 24.
{¶ 12} The movant bears the initial burden of informing the trial court of the basis for the motion and identifying those portions of the record demonstrating the absence of a genuine issue of material fact. Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). The movant may not fulfill its initial burden simply by making a conclusory assertion that the nonmoving party has no evidence to prove its case. Id. Rather, the movant must support its motion by pointing to some evidence of the type set forth in Civ.R. 56(C), which affirmatively demonstrates that the nonmoving party has no evidence to support the movant's claims. Id. If the movant fails to satisfy its initial burden, the trial court must deny the motion for summary judgment. However, once the movant meets its initial burden, the nonmoving party has a reciprocal burden outlined in Civ.R. 56(E) to set forth specific facts showing that there is a genuine issue for trial. Id. The nonmoving party may not rest upon the allegations and denials in the pleadings, but must instead point to or submit some evidence showing a genuine dispute over the material facts. Henkle v. Henkle, 75 Ohio App.3d 732, 735 (12th Dist.1991). If the nonmoving party does not so respond, summary judgment, if appropriate, shall be entered against the nonmoving party. Dresher at 293.
{¶ 13} Preliminarily, we note that appellant raises arguments pertaining only to the trial court's grant of summary judgment on his claims for breach of contract, breach of the covenant of good faith and fair dealing, and violation of the OCSPA. Accordingly, appellant has waived any challenge to the trial court's disposition of summary judgment on the other claims.
{¶ 14} Appellant first contends the trial court improperly granted summary judgment in favor of appellee on his breach of contract claim. In his complaint, appellant asserted that the TPP constituted a contract between himself and appellee, and that appellee breached the contract "[b]y failing to offer [appellant] a permanent mortgage modification" (Complaint, ¶ 34) and "by failing to retain, employ, and supervise adequately trained staff; failing to provide written notices required by HAMP; and by deliberately acting to delay and otherwise frustrate loan modification processes; making inaccurate determinations of [appellant's] eligibility for HAMP; and failing to follow through on written and implied promises." (Complaint, ¶ 35.)
{¶ 15} Appellee noted in its motion for summary judgment that the TPP was executed by Morgan Stanley, as lender, and appellant, as borrower, and that appellee signed the TPP only in its representative capacity as attorney in fact for Morgan Stanley. Citing R.C. 1337.092(A), appellee maintained that if an attorney in fact enters into a contract in its representative capacity and the attorney in fact discloses its representative capacity, the attorney in fact is not personally liable on the contract. Appellee argued that, since it entered into the TPP in its representative capacity as attorney in fact and disclosed its representative capacity in the TPP, it could not be held personally liable on appellant's breach of contract claim. Appellee argued alternatively that it was entitled to summary judgment on the breach of contract claim because appellant had failed to perform the conditions precedent required under the TPP, i.e., he failed to make the required monthly payments—in particular, the September 2009 payment.
{¶ 16} In his memorandum contra, appellant argued that whether appellee acted as an attorney in fact was irrelevant because "[t]he face of the TPP [did] not disclose that [appellee was] acting as an attorney-in-fact in any capacity, nor did it disclose to [appellant] that it was an attorney-in-fact." (Memorandum Contra, 7.) In support, appellant cited his own affidavit, wherein he averred that he "did not have any actual knowledge that [appellee] was acting in any capacity as an attorney-in-fact for any other entity. When I dealt with [appellee], I believed I was dealing in all respects with [appellee]." (Gilchrist Affidavit, ¶ 6.) Appellant further argued that a genuine issue of material fact remained as to whether he satisfied the conditions precedent required under the TPP. Appellant supported this argument with citations to his affidavit, wherein he stated that he made the payments required under the TPP, including the September 2009 payment.
{¶ 17} In its decision and entry, the trial court noted that the signature page of the TPP clearly identified appellee as attorney in fact for Morgan Stanley. Accordingly, the trial court concluded that appellee was entitled to summary judgment as a matter of law on appellant's breach of contract claim pursuant to R.C. 1337.092(A).
{¶ 18} On appeal, appellant acknowledges that R.C. 1337.092(A) precludes personal liability when a party enters into a contract in a representative capacity as attorney in fact and discloses that representative capacity in the contract and appears to concede that appellee entered into the TPP as attorney in fact and identified itself as such in the TPP. Appellant now argues, however, that the trial court erred in failing to consider the exceptions to R.C. 1337.092(A) enumerated in R.C. 1337.092(B).
{¶ 19} R.C. 1337.092 provides:
(A) If an attorney in fact enters into a contract in the representative capacity of the attorney in fact, if the contract is within the authority of the attorney in fact, and if the attorney in fact discloses in the contract that it is being entered into in the representative capacity of the attorney in fact, the attorney in fact is not personally liable on the contract, unless the contract otherwise specifies. If the words or initialism "attorney in fact," "as attorney in fact," "AIF," "power of attorney," "POA," or any other word or words or initialism indicating representative capacity as an attorney in fact are included in a contract following the name or signature of an attorney in fact, the inclusion is sufficient disclosure for purposes of this division that the contract is being entered into in the attorney in fact's representative capacity as attorney in fact.
(B) An attorney in fact is not personally liable for a debt of the attorney in fact's principal, unless one or more of the following applies:
(1) The attorney in fact agrees to be personally responsible for the debt.
(2) The debt was incurred for the support of the principal, and the attorney in fact is liable for that debt because of another legal relationship that gives rise to or results in a duty of support relative to the principal.
(3) The negligence of the attorney in fact gave rise to or resulted in the debt.
{¶ 20} Thus, while the statute sets forth a general rule that an attorney in fact is not personally liable on the contract if the attorney in fact enters into the contract as attorney in fact and discloses its representative capacity as attorney in fact in the contract, the statute also sets forth exceptions to that general rule, one of which appellant argues is applicable here. More particularly, appellant contends the trial court should have considered whether R.C. 1337.092(B)(3) applied to his breach of contract claim. Citing the averments in his affidavit that he made the monthly payments required by the TPP, appellant contends that reasonable minds could conclude that appellee negligently misapplied his payments and thus negligently concluded that he failed to make the September 2009 payment required under the TPP.
{¶ 21} Appellee responds that appellant neither pleaded a claim of negligence in his complaint nor argued negligence under R.C. 1337.092(B)(3) as an exception to R.C. 1337.092(A) in his memorandum contra. Although paragraph 35 of appellant's complaint arguably can be construed as pleading a claim of negligence with regard to appellant's breach of contract claim, a careful review of appellant's memorandum contra reveals that appellant did not raise any argument regarding R.C. 1337.092(B)(3). As noted above, appellant only argued that appellee failed to properly identify itself in the TPP as attorney in fact.
{¶ 22} An appellant cannot change the theory of his case and present new arguments for the first time on appeal. See Havely v. Franklin Cty., Ohio, 10th Dist. No. 07AP-1077, 2008-Ohio-4889, fn. 3; Brewer v. Brewer, 10th Dist. No. 09AP-146, 2010-Ohio-1319, ¶ 23. Generally, appellate courts will not consider arguments that were never presented to the trial court whose judgment is sought to be reversed. Id., citing State ex rel. Quarto Mining Co. v. Foreman, 79 Ohio St.3d 78, 81 (1997). Because appellant did not raise the R.C. 1337.092(B)(3) exception in the trial court, he has waived any such argument for purposes of appeal.
{¶ 23} Appellant's breach of contract claim fails because appellee was not a party to the TPP pursuant to R.C. 1337.092(A). " 'A contract is binding only upon parties to a contract and those in privity with them.' " DVCC, Inc. v. Med. College of Ohio, 10th Dist. No. 05AP-237, 2006-Ohio-945, ¶ 19, quoting Samadder v. DMF of Ohio, Inc., 154 Ohio App.3d 770, 2003-Ohio-5340, ¶ 25 (10th Dist.). Because appellee was not a party to the TPP, it could not have breached it. Accordingly, the trial court did not err in granting summary judgment in favor of appellee on appellant's breach of contract claim.
{¶ 24} Appellant next contends the trial court erred in granting summary judgment in favor of appellee on his claim that appellee breached the covenant of good faith and fair dealing. In his complaint, appellant alleged that appellee breached the implied duty of good faith and fair dealing by "failing to approve [him] for a permanent loan modification in accordance with the TPP." (Complaint, ¶ 57.) Noting that "in every contract there exists an implied covenant of good faith and fair dealing," but that "[t]here can be no implied covenants in a contract in relation to any matter specifically covered by the written terms of the contract itself," the trial court concluded that appellant did not allege any implied claims that were not expressly governed by the written terms of the TPP. (June 1, 2012 Decision and Entry, 9.) Appellant misinterprets the trial court's conclusion, arguing that the court erroneously determined that claims for breach of the covenant of good faith and fair dealing can never exist alongside a written contract. As noted above, the trial court made no such determination. The trial court merely determined that the cause of action appellant asserted in his complaint, i.e., that appellee failed to approve him for a permanent loan modification, was specifically covered by the written terms of the contract. To the extent appellant's cause of action alleging breach of the implied covenant of good faith and fair dealing pertains to matters specifically covered by the written terms of the TPP, we agree with the trial court that no implied covenants lie as to those matters. Interstate Gas Supply, Inc. v. Calex Corp., 10th Dist. No 04AP-908, 2006-Ohio-638, ¶ 101.
{¶ 25} We note, however, that the trial court did not specifically address the argument raised by appellee in its motion for summary judgment regarding appellant's claim for breach of the covenant of good faith and fair dealing, i.e., that because no contractual relationship existed between it and appellant, appellee could not have breached any implied covenant of good faith and fair dealing. This court must affirm the trial court's decision if any of the grounds raised by the moving party support summary judgment, even if the trial court failed to consider those grounds. Coventry Twp. v. Ecker, 101 Ohio App.3d 38, 42 (9th Dist.1995).
{¶ 26} In our resolution of appellant's breach of contract claim, we concluded that no contract existed between appellant and appellee pursuant to R.C. 1337.092(A). There being no contract, appellee could not have breached any implied covenant of good faith and fair dealing. Lakota Local School Dist. Bd. of Edn. v. Brickner, 108 Ohio App.3d 637, 646 (6th Dist.1996) (finding that the covenant of good faith is part of a contract claim and does not stand alone as a separate cause of action from a breach of contract claim); Krukrubo v. Fifth Third Bank, 10th Dist. No. 07AP-270, 2007-Ohio-7007, ¶ 19 ("In essence, a claim for breach of contract subsumes the accompanying claim for breach of the duty of good faith and fair dealing. Because appellant's complaint fails to state a claim for breach of contract, it also fails to state a claim for breach of the duty of good faith and fair dealing."). Accordingly, albeit on different grounds, we affirm the trial court's grant of summary judgment in favor of appellee on appellant's claim for breach of the implied covenant of good faith and fair dealing.
{¶ 27} Finally, appellant contends the trial court erred in granting summary judgment in favor of appellee on his claim for violation of the OCSPA. In his complaint, appellant alleged that appellee violated the OCSPA by "engag[ing] in a pattern and practice of unfair, deceptive, and unconscionable acts in violation of R.C. §§ 1345.02, 1345.03, and/or 1345.031 by, among other things, proceeding to pursue a foreclosure against [him]." (Complaint, ¶ 47.) In its motion for summary judgment, appellee argued that appellant's OCSPA claim failed as a matter of law because appellant had failed to allege that appellee committed one of the 16 prohibited unconscionable acts or practices concerning a consumer transaction in connection with a residential mortgage enumerated in R.C. 1345.031(B). Appellee also pointed out that the 2007 foreclosure action filed by Deutsche Bank (and not appellee) occurred two years prior to execution of the TPP.
{¶ 28} In his memorandum contra, appellant did not expressly respond to the arguments raised in appellee's motion for summary judgment. Rather, appellant alleged that appellee violated the OCSPA when it "deliberately and intentionally misled" him. (Memorandum Contra, 8.) Appellant supported this assertion with citations to his affidavit, wherein he averred that "[o]ne of the specific misrepresentations that Saxon made to me was in advising me that if I made three TPP payments, I would receive a permanent loan modification. Saxon advised me that so long as I made the three TPP payments, I would be approved for a permanent loan modification." (Memorandum Contra, 8, citing Gilchrist Affidavit, ¶ 5.)
{¶ 29} The trial court noted that appellant had neither alleged in his complaint nor argued in his memorandum contra that appellee had committed any of the 16 actions deemed unconscionable under R.C. 1345.031(B), but had instead relied upon the averments in his affidavit regarding appellee's alleged misrepresentations. The court stated that "[e]ven if this Court were to conclude that [appellee] made such a misrepresentation, which it does not, said misrepresentation does not fall within the enumerated actions of R.C. 1345.031." (June 1, 2012 Decision and Entry, 8.) The court accordingly concluded that appellant's OCSPA claim failed as a matter of law.
{¶ 30} The OCSPA makes it unlawful for a "supplier" to commit an unconscionable act or practice in regard to a "consumer transaction" in connection with a residential mortgage. R.C. 1345.031(A). A "supplier" is defined generally as a "seller, lessor, assignor, franchisor, or other person engaged in the business of effecting or soliciting consumer transactions." R.C. 1345.01(C). But if the consumer transaction is in connection with a residential mortgage, "supplier" is more specifically defined as "a loan officer, mortgage broker, or nonbank mortgage lender." R.C. 1345.01(C). A "consumer transaction" includes transfers of goods and services generally but excludes transactions between financial institutions and their customers other than "transactions in connection with residential mortgages between loan officers, mortgage brokers, or nonbank mortgage lenders and their customers." R.C. 1345.01(A).
{¶ 31} The parties initially debate whether appellee, a mortgage servicer, is a "supplier" under the definition set forth in R.C. 1345.01(C). Appellant contends that when appellee began servicing his mortgage loan, it "engaged in the business of effecting * * * consumer transactions" and consequently is a "supplier" subject to the OCSPA. Appellee responds that it is exempt from the OCSPA because the definition of "supplier" in R.C. 1345.01(C) does not expressly include mortgage servicers. We note that the question of whether mortgage servicers fall within the definition of "supplier" under the OCSPA is currently pending before the Supreme Court of Ohio. See State ex rel. DeWine v. GMAC Mtge. L.L.C., 129 Ohio St.3d 1446, 2011-Ohio-4217.
{¶ 32} We need not settle this dispute, however, because, even if we were to find that appellee is a "supplier" and thus subject to the OCSPA, we agree with the trial court that appellant does not allege that appellee committed any of the 16 specifically enumerated actions deemed unconscionable under R.C. 1345.031(B). Moreover, even if appellant's allegations that appellee "proceed[ed] to pursue a foreclosure" and "deliberately and intentionally misled" him constituted unconscionable acts or practices under R.C. 1345.031(B), appellant has failed to offer sufficient evidence to create a genuine issue of material fact. As noted by appellee, it was Deutsche Bank, not appellee, who pursued the foreclosure action, and such action occurred two years prior to execution of the TPP. Appellant offers no argument or evidence to the contrary. As to the allegations of misrepresentation, appellant has not presented any additional evidence, other than his self-serving affidavit, in support of this contention. This court has held that, in general, a party's unsupported self-serving assertions in an affidavit, without any corroborating Civ.R. 56 evidence, are insufficient to establish the existence of material issues of fact. Porter v. Saez, 10th Dist. No. 03AP-1026, 2004-Ohio-2498, ¶43. Appellant's self-serving affidavit, without more, does not create an issue for trial on his OCSPA claim.
{¶ 33} Finally, to the extent appellant contends that the trial court should have broadly construed his allegations to constitute unfair, deceptive or unconscionable acts or practices under R.C. 1345.02 and 1345.03, we note that even if the trial court had done so, his self-serving affidavit alone does not create a genuine issue of fact for trial. Accordingly, we affirm the trial court's grant of summary judgment in favor of appellee on appellant's claim for violation of the OCSPA.
III. CONCLUSION
{¶ 34} For all the foregoing reasons, we overrule appellant's single assignment of error and affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.