Ohio Appeals Court Ruling Finding Wells Fargo "Lacked Standing" In Foreclosure Allowed To Stand; State High Court Declines Review Of Lender Appeal

From the Law Offices of Marc Dann:

• In a significant victory for consumers and particularly victims of predatory lending the Ohio Supreme Court [see Case Announcement #2009-1030 - Wells Fargo Bank, N.A. v. Jordan; three of seven Justices dissenting(1)] on Wednesday [Sept. 30, 2009] quietly let stand what may turn out to be a landmark decision prohibiting banks, trusts and other loan servicing entities who cannot prove ownership of a mortgage note from foreclosing on Ohio homeowners.

• Following a trend originally initiated by U.S. District Judge Christopher Boyko, Northern District of Ohio in Federal Court,(2) The 8th District Court of Appeals (Cuyahoga County) ruled in June of this year that banks, loan servicers and trusts did not have standing to pursue foreclosure of homes in Ohio if they could not prove that they owned the mortgage note at the time of the filing of the complaint.(3)

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Attorney Dann goes on to make this observation regarding the effect of a court's lack of jurisdiction in a foreclosure action could potentially have on the current status of title to real estate that has gone through the foreclosure process in the past:

• [S]ince Ohio Law has long recognized that the issue of Jurisdiction can be raised by a party in a lawsuit at anytime, there may be thousands of judgments granting foreclosure that are void putting the title to those properties in question. Ohio Courts have the inherent power to vacate the prior void ab initio judgments in foreclosure. Patton v. Diemer (1988), 35 Ohio St.3d 68, 70, 518 N.E.2d 952.

For more, see Ohio Supreme Court Lets Wells Fargo v. Jordan Stand (Foreclosure Plaintiffs Who Do Not Own the Mortgage at the Time of Filing Lack Standing to Pursue Cases).

Thanks to Richard Davet for the heads-up on this story.

(1) Apparently, three of the seven justices of the Ohio Supreme Court were eager to weigh in on this issue, only to be outvoted by their four colleagues. Maybe the four didn't feel this was the right case to create statewide precedent with.

(2) For Judge Boyko's ruling, see In re Foreclosure Cases, Case 1:07-cv-02282-CAB (N.D. Ohi0 2007).

(3) In Wells Fargo Bank, N.A. v. Jordan, 2009-Ohio-1092, 2009 Ohio App. LEXIS 881, Judge Frank D. Celebrezze Jr. writing for a unanimous panel of the 8th District held that in order to bring a lawsuit in Ohio the plaintiff must have an genuine interest in the subject matter of the lawsuit:

• {¶ 21} “A party lacks standing to invoke the jurisdiction of a court unless he has, in an individual or a representative capacity, some real interest in the subject matter of the action. State ex rel. Dallman v. Court of Common Pleas (1973), 35 Ohio St.2d 176, 298 N.E.2d 515, syllabus. The Eleventh Appellate District has held that ‘Civ.R. 17 is not applicable when the plaintiff is not the proper party to bring the case and, thus, does not have standing to do so. A person lacking any right or interest to protect may not invoke the jurisdiction of a court.’ Northland Ins. Co. v. Illuminating Co., 11th Dist. Nos.2002-A-0058 and 2002-A-0066, 2004-Ohio-1529, at ¶ 17 (internal quotations and citations omitted). The court also noted that ‘Civ.R. 17(A) was not applicable unless the plaintiff had standing to invoke the jurisdiction of the court in the first place, either in an individual or representative capacity, with some real interest in the subject matter. Civ.R. 17 only applies if the action is commenced by one who is sui juris or the proper party to bring the action.’ Travelers Indemn. Co. v. R.L. Smith Co. (Apr. 13, 2001), 11th Dist. No.2000-L-014.” Wells Fargo Bank, N.A. v. Byrd, 178 Ohio App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722.”

It went on to hold, "If plaintiff has offered no evidence that it owned the note and mortgage when the complaint was filed, it would not be entitled to judgment as a matter of law.” EpsilonMissingDocsMtg