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IN THE COURT OF COMMON PLEAS CUYAHOGA COUNTY, OHIO

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REO PROPERTIES CORP., Plaintiff,

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CASE NO. 666637 CUYAHOGA rniKi JUDGE EILEEN T. GALLAGHER MAGISTRATE STEPHEN M. BUCHA III
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vs.

MAGISTRATE'S DECISION

THOMAS E. JEFFERS, et al, Defendants.

This cause came on for trial before the Magistrate on August 26, 2011.

Considering the evidence and testimony introduced at the trial, the parties' stipulations and the parties' post-trial briefs, the magistrate makes the following findings of fact and conclusions of law.

I. Findings of Fact 1. Defendant Thomas Jeffers owns a parcel of property located at 6310 Big Creek Parkway, Parma Hts., Ohio and known as P.P.N. 473-12-006 ("the property"). 2. On June 8, 2006, Thomas Jeffers executed a note in the sum of $204,736.00 in favor of New Century Mortgage Corporation ("the note"). This note is endorsed in blank by New Century Mortgage Corporation. 3. To secure the payment of this note, also on June 8, 2006, Thomas Jeffers executed

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a mortgage in favor of New Century Mortgage Corporation ("the mortgage").

Thomas Jeffers's spouse, Stephanie Jeffers, also executed this mortgage to subject her dower rights in the property to the mortgage. The mortgage was filed for

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record on June 15, 2006, and recorded at AFN 200606150977 of the County Records. 4. New Century Mortgage Corporation assigned the mortgage to plaintiff REO

Properties Corp. ("REO") on April 2, 2007 ("the mortgage assignment"). This assignment was filed for record on February 8, 2008, and recorded at AFN

200802080521 of the County Records. The mortgage assignment also purports

to assign the note. Strangely, recorded along with the mortgage assignment is an allonge that also purports to assign the note to REO. The original note was

allonge .

5. Late in 2006, the Jeffers began experiencing financial difficulties. Thomas Jeffers

lower the monthly payment on the note and mortgage.

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contacted New Century Mortgage Corporation to request a loan modification to Thomas Jeffers claims he

was told that unless he defaulted on the loan, no loan modification was possible. Early in 2007, the Jeffers stopped making payments on the note and mortgage. 6. Prior to April 15, 2008, Ocwen serviced the note and mortgage. As the servicer Ocwen collected the monthly payments and communicated with defendants Jeffers concerning the status of the note and mortgage. 7. On July 23, 2007, Ocwen sent a letter to Thomas Jeffers concerning his default. Notwithstanding the mortgage assignment to REO dated April 2, 2007, this letter

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The purpose of an allonge is to add endorsements to a negotiable instrument. HSBC Bank USA, N.A. v. Thompson, (September 3, 2010), Montgomery App. No. 23761, unreported. An allonge that is not affixed to the negotiable instrument does not serve to transfer the negotiable instrument. See Id.; In re Weisband, (Bkr. D. Ariz. 2010), 427 B.R. 13, 19. Since the allonge to REO that was recorded with the mortgage assignment is not affixed to the original note it is of no effect and will not be considered in the magistrate's analysis of standing. See Id.

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produced at the trial of this matter. The original note does not contain this

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identifies the "creditor" regarding the note and mortgage as "DB Structured Products, Inc." 8. The servicer of the note and mortgage changed to Green Tree Servicing LLC ("Green Tree") on April 15, 2008. At the trial of this matter, Josh Degneau,

Director of Specialty Services for Green Tree ("Degneau") testified on behalf of REO. Regarding the above letter, Degneau stated that he had not seen any

records indicating that DB Structured Products, Inc. was the owner of the loan.

He further testified that DB Structured Products, Inc. and REO were different but

"creditor" in the above letter "could have been a mistake." 9. REO introduced several limited powers of attorney it claims gives Green Tree authority to service the note and mortgage. The powers of attorney in effect from May 6, 2008, to February 20, 2009, and from February 21, 2009, to October 1, 2009, are executed by REO and contain no reference to DB Structured Products, Inc. The powers of attorney in effect from October 1, 2009, to April 1, 2010, from April 1, 2010, to December 31, 2010, and from January 1, 2011, to December 31, 2011, are also executed by REO. These three powers of attorney, however, include a cover sheet not present on the earlier two powers of attorney. These cover sheets all provide:

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TO FROM DATED DEAL

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GREEN TREE SERVICING LLC REO Properties Corporation 3/17/10 DB Structured Product, Inc. (DBSP)

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LIMITED POWER OF ATTORNEY

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related entities, and that the identification of DB Structured Products, Inc. as

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No testimony was provided as to the meaning of the term "deal" in these coversheets.

a change in ownership of this loan. Dear Valued Customer:

This letter provides:

RE: DB Structured Products, Inc. Mortgage Loan Account Number: 890048945

Sincerely, Green Tree

11. Regarding the above letter, Degneau testified on cross-examination: Q. . . . [H]ave you ever seen these three entities [DB Structured Products, Inc., Green Tree SerVertis Acquisition LLC and U.S. Bank National Association, not in its individual capacity, but solely as trustee for SerVertis REO Pass-Through Trust I] listed as owners [of the note and mortgage] or having been owners in a succession?

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A. Not listed as owners . . . Green Tree services the loan for a group that's identified as SerVertis so its kind of an internal. . . classification. Q. SerVertis is a trust is it not?

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This notice does not change the address where you send your mortgage loan payments.

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The transfer of the ownership of your loan will be formally recorded in the real property records of the county in which your mortgage was originally recorded. A copy of the agreement pursuant to which the loan was transferred to the new owner is maintained at Green Tree Servicing LLC ('Green Tree'), 300 Landmark Towers, 345 St. Peter Street, St. Paul, MN 55102-1637.

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On September 29, 2009, the creditor that is the owner of your above-referenced mortgage loan changed from DB Structured Products, Inc. to Green Tree SerVertis Acquisition LLC. and then immediately changed to U.S. Bank National Association ('U.S. Bank'), not in its individual capacity, but solely as trustee for SerVertis REO Pass-Through Trust I ('the Creditor)[sic]. U.S. Bank may be reached at 1-800-034-6802, or write them at U. S. Bank Corporate Trust Services, 60 Livingston Avenue, EP-MN-WS3D. St. Paul, Minnesota, 55107-2292.

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10. On November 18, 2009, Green Tree sent Thomas Jeffers a letter informing him of

A. It's not necessarily a trust. It's sort of an investment group. . .. Q. So that investment group owns the notes and mortgages in [a] pool [of loans]?

A. In the pool yes. . . . But as far as in this case actually being the owner of record [given] the status of the account at the time of conversion it was a business decision not to change the owner of record at the time because the action has already been started. Q. [By the magistrate] Is this loan now owned by SerVertis? A. The owner of record is REO Properties Corp.

Q. I understand the owner of record . . . I want to know who owns it n o w . . .?

purchased [the subject loan]. .. and Green Tree services for them now. REO Properties is still the record owner. Q. I understand that. I want to know who is the actual owner and according to this [letter of November 18, 2009], it's SerVertis Trust, is that accurate? A. Well based on this I don't think I can say yes to that because based on this it says 'the transfer of the ownership of your loan will be formally recorded in the real property records of the county in which your mortgage was originally recorded'. It was not recorded as SerVertis Pass-Through Trust.

Q. Can you tell the Court why ownership was not changed from REO Properties to any other entity? . . . A. There's a legal action in place and the decision was made to . . . not change the owner of record until.. the situation was resolved. It's my assumption that after the action . . . there will be a new recording.

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12. No other entities other than Ocwen, Green Tree and REO have attempted to collect this debt from the Jeffers.

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Q. At the present time there has been no internal assignment or anything that has been done to transfer ownership?

A. No, there has been no other internal transfers at all.

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On redirect examination Degneau testified further:

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A. Green Tree services the loan for SerVertis who in a pool of loans

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13. After falling delinquent, the Jeffers made numerous attempts to secure a loan modification, first from New Century Mortgage Corporation, then from Ocwen.

Green Tree, Ocwen sent a proposed loan modification to the Jeffers ("the

modification"). The modification appears to have capitalized the Jeffers' missed payments, increasing the principal balance of the loan to $232,132.00, and

lowered the interest rate of the note from 9.85% per annum, variable, to 6.00 % per annum, fixed. The modification called for a three-month trial period.

During this trial period, the Jeffers were required to make one payment of

$4,519.00 on or before March 18, 2008, and two payments of $1,389.00, on May 1, 2008, and June 1, 2008. If these payments were made, the Jeffers were required to make ongoing monthly payments of $1,389.00 until the loan was paid. The modification also provides:

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14. Thomas Jeffers executed this modification on April 14, 2008, and sent in the first payment of $4,519.00 to Ocwen.

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BY EXECUTING THIS MODIFICATION, YOU IRREVOCABLY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS MODIFICATION ANY RELATED AGREEMENTS OR DOCUMENTS OR TRANSACTIONS CONTEMPLATED IN THIS MODIFICATION.

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BY EXECUTING THIS MODIFICATION, YOU FOREVER IRREVOCABLY WAIVE AND RELINQUISH ANY CLAIMS, ACTIONS OR CAUSES OF ACTION, STATUTE OF LIMITATIONS OR OTHER DEFENSES, COUNTERCLAIMS OR SETOFFS OF ANY KIND WHICH EXIST AS OF THE DATE OF THIS MODIFICATION, WHETHER KNOWN OR UNKNOWN, WHICH YOU MAY NOW OR HEREAFTER ASSERT IN CONNECTION WITH THE MAKING, CLOSING, ADMINISTRATION, COLLECTION OR THE ENFORCEMENT BY OCWEN OF THE LOAN DOCUMENTS, THIS MODIFICATION OR ANY OTHER RELATED AGREEMENTS.

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Just as the servicing of the note and mortgage was about to change from Ocwen to

15. By the time Ocwen received the payment, servicing of the note and mortgage had transferred to Green Tree. The payment was forward to Green Tree. Even though the modification calls for the first payment to be made on or before March 18, 2008, Green Tree accepted and applied the payment.

16. The modification has a signature line for Ocwen. No representative of Ocwen or Green Tree executed the modification.

17. Because Thomas Jeffers never received a copy of the loan modification executed

by Ocwen or Green Tree and, as a result of the servicing change, he was confused

period payments.

18. Thomas Jeffers contacted Green Tree to address these two issues and claims he was told not to make any payments until the status of the loan modification was clarified.

19. Before Thomas Jeffers received any clarification concerning the loan modification, on July 31, 2008, REO filed the present case seeking to foreclose the note and mortgage.

20. In response, the Jeffers filed numerous counterclaims. At the trial of this matter, the Jeffers dismissed all counterclaims save the Jeffers' claim of unconscionability. The unconscionability claim is based upon Thomas Jeffers's

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allegations that New Century and REO, through its servicing agents, instructed

him to cease making payments on the note and mortgage on various occasions and then later filed this foreclosure case.

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about where to send further payments, Jeffers did not send the additional trial

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II. Opinion A. Standing All cases must be prosecuted in the name of the real party in interest. Civ.R.

17(A). The real party in interest in a foreclosure case is one who holds both the debt and the security, i.e. both the note and the mortgage. Deutsche Bank National Trust Co. v.

Triplett, (February 3, 2011), Cuyahoga App. No. 94924, unreported; see also HSBC Bank USA v. Thompson, (September 3, 2010), Montgomery App. No. 23761, unreported

(Where assignee of mortgage and assignee of note are two different entities, the assignee of mortgage is not the real party in interest to assert claim for foreclosure of the

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mortgage); Curry & Durham, Ohio Real Property Law & Practice ( 5 Ed. 1996) Section 17-5(a) (To have the rights of the original mortgagee, an assignee must receive the debt as well as the security). The plaintiff must be the "owner" of the note and mortgage

when the case is filed to have standing to file the case. Wells Fargo Bank N.A. v. Jordan, (March 12, 2009), Cuyahoga App. No. 91675, unreported. A lender seeking foreclosure has the burden of proving it has standing and all other essential elements of its case by

App. No. 448, unreported.

The term "owner" for the purposes of standing has not been expressly defined by the Cuyahoga County Court of Appeals.

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record. If the plaintiff is able to provide evidence that the loan in question was

transferred to the plaintiff at some point prior to the filing of the case, standing is present.

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"Owner" for the purposes of standing does not necessarily mean assignee of

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the preponderance of the evidence.

1. "Owner" Based Upon Post-Jordan Practice

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See Montgomery v. Mosley, (August 24, 1990), Pike

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See Bank One, N.A. v. Dillon, (April 27, 2005), Lorain App. No. 04CA008571, unreported (Failure to record mortgage assignment has no effect on its validity between

foreclosure).

The Cuyahoga County Court of Common Pleas has routinely determined

standing and "ownership" of a note and mortgage based upon documents outside of the county records such as pooling and servicing agreements. This broad concept of

ownership may be best summarized by Black's Law Dictionary's definition of "owner" - "One who has the right to possess, use, and convey something." Black's Law Dictionary, (7 ed. 1999) 1130.
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To prove standing, REO has submitted the recorded assignment of the mortgage to REO, which also purports to assign the note. This assignment was executed before the case was filed. No subsequent assignments were recorded. No specific endorsements appear on the note transferring it to an entity other than REO. evidence, this would be sufficient to establish standing. Evidence exists, however, that an entity other than REO owned the note and mortgage at the time the case was filed. The letter from Ocwen to Thomas Jeffers dated after the mortgage assignment but before the case was filed identifies the "creditor" as DB Structured Products, Inc., not REO. A creditor is defined as, "One to whom a debt is owed; . . . A person or entity with a definite clam against another, esp. a claim that is

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capable of adjustment and liquidation." Black's Law Dictionary, (7 ed. 1999) 375. A

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letter sent to Thomas Jeffers from Green Tree on November 18, 2009, after the case was filed, states, "On September 29, 2009, the creditor that is the owner of your above-

referenced mortgage loan changed from DB Structured Products, Inc. to Green Tree

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In the absence of other
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the parties to the assignment or the authority of the assignee to enforce the mortgage via

SerVertis Acquisition LLC. and then immediately changed to U.S. Bank National Association ('U.S. Bank'), not in its individual capacity, but solely as trustee for SerVertis REO Pass-Through Trust I ('the Creditor)."

From these letters, one can conclude that the servicers of the subject loan use the term "owner" and "creditor" interchangeably. Moreover, one can conclude that the

various parties described in the letter of November 18, 2009, were owners of the loan because these parties freely conveyed their interests in the loan. See Black's Law
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Dictionary, (7 ed. 1999) 1130. Moreover, these letters and the powers of attorney

this loan.

REO points to the fact that record ownership of the mortgage is in REO as a basis

was not determinative of the true owner of the loan. He testified that the true ownership

investment trust and that "a business decision" was made not to transfer the mortgage of record because of this pending litigation. Thus, the fact that record ownership is in REO does not foreclose the possibility that some other entity such as DB Structured Products, Inc. actually owned the note and mortgage when the case was filed.

Ocwen and Green Tree attempted to enforce the note and mortgage as evidence that no

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other entity owns the note and mortgage. Based upon the letter from Green Tree to

Thomas Jeffers dated November 18, 2009, despite the ownership changes detailed As long as Green Tree remained

therein, Green Tree remained the servicer of the loan.

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REO also points to the Jeffers testimony that no other entity other than REO,

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of loan at this time is not in REO, but rather, an entity he identified as the SerVertis

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for standing. Its clear from Degneau's testimony that record ownership of the mortgage

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submitted by REO indicate that DB Structured Products Inc. had or has some interest in

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the servicer, all efforts to enforce the note and mortgage would likely be made by Green Tree, regardless of the owner. Thus, the fact that only Green Tree and REO attempted

note and mortgage.

REO cites Pinney v. Merchants' National Bank of Defiance, (1904), 71 Ohio St. 173 and Wagner v. Bank One, Athens, (December 20, 1995), Gallia App. No. 95CA7,

unreported, in support of its arguments related to standing. Each of these cases involved an assignee of a mortgage who failed to record the mortgage assignment. As a

consequence, the assignee's predecessor, not the assignee, was joined in the foreclosure case and failed to answer the foreclosure complaint. The assignee's mortgage was extinguished by the sheriffs sale of the property. In each case, it was held that if the

assignee does not record the assignment and thus is not named as a party to the foreclosure case, he is bound by the decree of foreclosure to the same extent as the named party assignor. Pinney v. Merchants' National Bank of Defiance, 71 Ohio St. at 184; Wagner v. Bank One, Athens, (December 20, 1995), Gallia App. No. 95CA7, unreported. It is unclear how these cases support REO's claimed standing. At issue is REO's right to assert the note and mortgage. The rights of an assignee who failed to record his assignment are not at issue. Thus, Pinney and Wagner are not relevant to the issue of standing in this case.

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more likely than not that the "owner" of the note and mortgage was DB Structured Products Inc. from some time before the Ocwen letter of July 23, 2007, to September 29,

2009. Thus, despite the recorded assignment to REO, REO has failed to prove that it was

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Considering all of the evidence submitted by the parties concerning standing, it is

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to enforce the note and mortgage is not necessarily indicative of REO's ownership of the

the owner of the note and mortgage at the time the case was filed on July 31, 2008, and has failed to meet its burden of proof concerning standing. See Montgomery v. Mosley, (August 24, 1990), Pike App. No. 448, unreported; Wells Fargo Bank N. A. v. Jordan, (March 12, 2009), Cuyahoga App. No. 91675, unreported.

2. "Owner" Based Upon UCC

Prior to the decision in Jordan, this court looked to Ohio's version of the Uniform Commercial Code ("UCC"), R.C. Sec. 1303.01 et seq., to determine whether the party seeking foreclosure was entitled to enforce the subject promissory note. It is unclear

who is entitled to enforce the negotiable instrument under the UCC. Neither party in this case addressed REO's ability to enforce the subject promissory note under the UCC. Nevertheless, even if the concept of "owner" under Jordan encompasses one with the ability to enforce the note under the UCC, REO has failed to prove that it is entitled to enforce the note. R.C. 1303.31 states:

(A) "Person entitled to enforce" an instrument means any of the following persons: (1) The holder of the instrument;

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(2) A nonholder in possession of the instrument who has the rights of a holder;

(3) A person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 1303.38 or division (D) of section 1303.58 of the Revised Code. a. Holder

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whether the Court of Appeals concept of "owner" as set forth in Jordan encompasses one

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One cannot become a holder of a negotiable instrument without the instrument having been negotiated to him. Vitols v. Citizens Banking Co., (6th Cir. 1993), 10 F.3d 1227,1235 (applying Ohio law). R.C. Sec. 1303.21 provides:

(A) "Negotiation" means a voluntary or involuntary transfer of possession of an instrument by a person other than the issuer to a person who by the transfer becomes the holder of the instrument. ( B ) . . . if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.
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In this case, the note in question is endorsed in blank. Thus, REO would have been the holder of the note and entitled to enforce the note at the time the case was filed only if it possessed the note when the case was filed. See R.C. Sec. 1303.21(B); Vitols v. Citizens Banking Co., 10 F.3d at 1235.

The original note was produced at trial. Off the record, REO's counsel indicated

disclosed. There is no direct testimony regarding who was in actual possession of the note either at the time of filing of the case or at the time of trial. Degneau, an employee of Green Tree, testified that he was familiar with the note and was able to identify it. Based on this testimony, it is likely that Green Tree possessed the note as servicing agent

not that Green Tree was servicing this loan for DB Structured Products, Inc., not REO, when this case was filed. Therefore, at that time, Green Tree possessed the note as agent

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Ohio's version of the UCC, like the original, uses the spelling of "indorsement" with an "i" rather than the more commonly seen "e" or "endorsement". The magistrate will use the common spelling in this opinion and spell indorsement with an "e", unless quoting the statute.

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on behalf of the party for whom it was servicing. As detailed above, it is more likely than

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that the note came from "the vault". The location or the owner of the vault was not

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of DB Structured Products, Inc. REO was not in possession of the note when the case was filed. Consequently, REO has filed to prove it was the "holder" of the note when the

R.C. Sec.1303.31.

b. Nonholder in Possession Who Has the Rights of a Holder

Part (A)(2) of R.C. Sec. 1303.31 states that a nonholder with the rights of a holder in possession of the negotiable instrument may enforce it. A "nonholder in possession" includes a person that acquired the rights of a holder by subrogation or who is the legal

3-301.

In may be, by virtue of the mortgage assignment that also purported to assign the

note to REO, that REO is a nonholder with the rights of a holder. In order to be entitled to enforce a note pursuant to R.C. Sec. 1303.31(A)(2), the nonholder must not only have the rights of a holder but must also possess the note. As detailed above, Green Tree possessed the note as agent of DB Structured Products, Inc. when the case was filed and REO has failed to prove it was in possession of the note at that time. Accordingly, REO has failed to prove it was a nonholder with rights of a holder in possession of the note when the case was filed and was not a party who is entitled to enforce the note as a nonholder in possession under R.C. 1303.31(A)(2). c. A Person Not in Possession Who is Entitled to Enforce the Instrument R.C. Sec.1303.31(A)(3) applies in situations where the negotiable instrument is lost or where payment was made or accepted by mistake. See R.C. Sec.1303.38; R.C. Sec.1303.58. Neither situation is applicable to this case. Accordingly, REO is not

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entitled to enforce the note under this section.

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successor entity to the holder. See Uniform Commercial Code, Official Comments, Sec.

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case was filed and was not a party who is entitled to enforce the note as a holder. See Id.;

B. Consequences of Lack of Standing Since REO has not proved that it is entitled to enforce the note under R.C. Sec.

to enforce the note pursuant to Ohio's version of the UCC, REO has failed to prove it has standing under this section.

In this county, standing is considered to be jurisdictional. See Mortgage

Electronic Registration Systems, Inc. v. Mosley, (June 24, 2010), Cuyahoga App. No. 93170, unreported; see also See Freedom Mortgage Corp. v. Perry, (June 23, 2011), Cuyahoga App. No. 95834, unreported.

If the plaintiff is not the owner of the note and

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mortgage at the time the case is filed, it cannot invoke the jurisdiction of the Court . Id. Thus, the appropriate action by the Court where a party fails to prove standing is not a decision on the merits, but rather, a dismissal without prejudice. See Freedom Mortgage Corp. v. Perry, (June 23, 2011), Cuyahoga App. no. 95834, unreported. Accordingly, REO's complaint is dismissed without prejudice. See Id. C. The Jeffers's Counterclaim

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The Jeffers have asserted a counterclaim under R.C. Sec. 1345.01 et seq. alleging that New Century and REO through its servicing agents committed an unconscionable act by instructing Thomas Jeffers to not make payments on the note and mortgage on various occasions.

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In most other counties, standing in foreclosure cases is not considered jurisdictional. See JPMorgan Chase Bank Trustee v. Murphy, (October 29, 2010), Montgomery App. No. 23927, unreported (The issue of lack of standing "challenges the capacity of a party to bring an action, not the subject matter jurisdiction of the court"); See also Federal Home Loan Mortgage Corp. v. Schwartzwald, (June 3, 2010), Greene App. No 2010 CA 41, unreported.
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Given that plaintiff has failed to properly invoke the

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1. Jurisdiction

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1303.31, if the concept of owner as set forth in Jordan encompasses one who is entitled

jurisdiction of the court, it is necessary to determine the Court's jurisdiction to consider the Jeffers's counterclaim before addressing the merits of said claim.

plaintiff failed to demonstrate standing if the counterclaim can be adjudicated

independently from the complaint. See Citimortgage v. Slack, (February 10, 2011), Cuyahoga App. No. 94899, unreported.

In Slack, the defendants filed a counterclaim

alleging breach of contract, fraud, and misrepresentation arising from a forbearance

agreement entered in relation to an earlier foreclosure case. Plaintiffs complaint was

dismissed for lack of standing. The trial court also dismissed the counterclaim because

"the jurisdiction of the court was never invoked and any judgment rendered in [the] case, including any judgments on counterclaims, would be a nullity." The Court of Appeals held that the counterclaim could be adjudicated independently from the complaint. Id. Thus, the Court had jurisdiction to consider the counterclaim despite the dismissal of the complaint for lack of standing and committed reversible error by dismissing the counterclaim. Id.

Likewise, in this case, the Jeffers's claim for unconscionability can be adjudicated independently from the complaint. Thus, the Court has jurisdiction to consider this

claim despite the dismissal of the complaint for lack of standing. See Id. 2. Unconscionability

R.C. Sec. 1345.031 provides in relevant part:

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(A) No supplier shall commit an unconscionable act or practice concerning a consumer transaction in connection with a residential mortgage. Such an unconscionable act or practice by a supplier violates this section whether it occurs before, during, or after the transaction.

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A trial court has jurisdiction over a counterclaim filed in a foreclosure case where

R.C. Sec. 1345.01 defines a "supplier" as a person engaged "in the business of

effecting or soliciting consumer transactions." Further, in relation to R.C. Sec. 1345.031 "supplier" includes the assignee of a supplier if the act complained of was committed by the assignee or if the assignee is affiliated by common control with the seller of the loan at the time of such assignment. R.C. Sec. 1345.09 provides:

For a violation of Chapter 1345. of the Revised Code, a consumer has a cause of action and is entitled to relief as follows: (A) Where the violation was an act prohibited by section .. . 1345.031 of the Revised Code, the consumer may, in an individual action, rescind the transaction or recover the consumer's actual economic damages plus an amount not exceeding five thousand dollars in noneconomic damages. (B) Where the violation was an act or practice declared to be deceptive or unconscionable by rule adopted under division (B)(2) of section 1345.05 of the Revised Code before the consumer transaction on which the action is based, or an act or practice determined by a court of this state to violate section 1345.02, 1345.03, or 1345.031 of the Revised Code and committed after the decision containing the determination has been made available for public inspection under division (A)(3) of section 1345.05 of the Revised Code, the consumer may rescind the transaction or recover, but not in a class action, three times the amount of the consumer's actual economic damages or two hundred dollars, whichever is greater, plus an amount not exceeding five thousand dollars in noneconomic damages or recover damages or other appropriate relief in a class action under Civil Rule 23, as amended.

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(F) The court may award to the prevailing party a reasonable attorney's fee limited to the work reasonably performed, if either of the following apply:

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(6) Recommending or encouraging a consumer to default on a mortgage or any consumer transaction or revolving credit loan agreement; . . .

(B) For purposes of division (A) of this section, the following acts or practices of a supplier in connection with such a transaction are unconscionable:

(G) As used in this section, "actual economic damages" means damages for direct, incidental, or consequential pecuniary losses resulting from a violation of Chapter 1345. of the Revised Code and does not include damages for noneconomic loss as defined in section 2315.18 of the Revised Code.

a. Damages Pursuant to R.C. Sec. 1345.09(A)

suffered as the result of REO's alleged unconscionable acts. In their post trial brief, the Jeffers claim that the amount claimed by REO on the note and mortgage is the measure of his damages. This sum is the measure of Thomas Jeffers's obligation to the owner of this loan, not a measure of damages. The Jeffers also claim their "non-economic damages

are a minimum of $5,000.00." How the Jeffers arrive at this figure is unclear. There is no evidence in the record of non-economic damages. The Jeffers also claim they have incurred attorney's fees as the result of REO's unconscionable acts.

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The Jeffers produced no testimony concerning damages, economic or otherwise,

have certainly incurred attorney's fees in this case, they neither produced evidence of these fees nor expert testimony in support of any claimed fees. Thus, the Jeffers have failed to prove that they are entitled to damages under R.C. Sec. 1345.09(A) for economic or non-economic loss as the result of REO's alleged unconscionable acts,

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Damages Pursuant to R.C. Sec. 1345.09(B)

Moreover, the Jeffers have not submitted any evidence that demonstrates REO

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has committed an act or practice declared to be deceptive or unconscionable by rule

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While the Jeffers

(2) The supplier has knowingly committed an act or practice that violates this chapter.

(1) The consumer complaining of the act or practice that violated this chapter has brought or maintained an action that is groundless, and the consumer filed or maintained the action in bad faith;

adopted under R.C. Sec. 1345.05(B) or by a court of this state. Thus, the Jeffers have failed to show that they are entitled to statutory damages pursuant to R.C. Sec. 1345.09(B). See Lewis v. ACB Business Services, Inc., (S.D. Ohio 1996), 911 F.Supp. 290,295 (Applying R.C. 1345.01 et seq.).

Consequently, assuming that REO is a supplier under R.C. 1345.01 et seq. and

that the acts complained of by the Jeffers were unconscionable, the Jeffers have failed to

prove any damages resulting therefrom and have failed to meet their burden of proof. See Id. at 295-296. Therefore, judgment must be rendered in favor of REO on this claim. See Id.

c. Attorney's Fees Pursuant to R.C. Sec. 1345.09(F) R.C. Sec.1345.09(F) allows the recovery of attorney's fees by "the prevailing party" under limited circumstances. The Jeffers have not prevailed on this claim and are not entitled to attorney's fees under this section.

D. Motion In Limine In conjunction with their post-trial brief, the Jeffers have moved to exclude the testimony of Donald McFadden, one of REO's witnesses, because REO's witness list was filed a day late and was not served on the Jeffers' counsel until the day before the trial . A motion in limine is rendered moot by the dismissal of the claims to which the challenged testimony relates. Brodnax v. Green Credit Service, (1997), 118 Ohio App.3d 881, 894. Since plaintiffs claims have been dismissed and Donald McFadden's testimony was offered in support of these claims, the Jeffers's renewed motion in limine is moot. See Id.
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This motion was made orally during the trial and was denied because the Jeffers were not prejudiced by the delay in identifying this witness.

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III. Ruling IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that the complaint of plaintiff REO Properties Corporation is dismissed without prejudice.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that judgment is rendered in favor of plaintiff REO Properties Corporation against Thomas Jeffers and Stephanie Jeffers on the Jeffers's counterclaim.

IT IS SO ORDERED

STEPHEN M. BUCHA III, MAGISTRATE

A party shall not assign as error on appeal the Court's adoption of any finding of fact or conclusion of law unless the party timely and specifically objects to that finding or conclusion as required by Civ.R. 53(D)(3).

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CERTIFICATE OF SERVICE

Mr. David Demers Attorney at Law Three North High Street P. O. Box 714 New Albany, Ohio 43054 Mr. Benjamin D. Carnahan Attorney at Law 5910 Landerbrook Drive Suite 200 Cleveland, Ohio 44124 Mr. Harry J. Depietro Attorney at Law 7 West Liberty Street Girard, Ohio 44420 State of Ohio Bureau of Worker's Compensation 30 West Spring Street Columbus, Ohio 43215

Mr. Kenneth A. Blech Attorney at Law 10850 Pearl Road, Suite D-3 Strongsville, Ohio 44136

following parties or their counsel of record: Copies mailed by the Clerk of Courts on

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Copies of the foregoing has been sent by ordinary U. S. Mail by the Clerk of Court to

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