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Court: Foreclosures can proceed to sheriff's sale without finalized amounts due
KEITH ARNOLD
Special to the Legal News
Published: November 27, 2019
The Ohio Supreme Court sorted out an appellate court ruling that seemingly stymied efforts to get to the root of the question originally brought before a trial court - whether the foreclosure on a mortgage is appealable before confirmation of a sheriff's sale.
The high court, in a lead opinion authored by Justice Judith French, reasoned a confirmation of sale is ancillary to the foreclosure action and dispatched the law-of-the-case doctrine which hamstrung the Second District Court of Appeals as it related to a previous appeal in the same matter.
"The Second District correctly concluded that the law-of-the-case doctrine precluded its re-examination of the non-finality of the foreclosure decree," French began. "Presented with the same facts and issues, the court was bound to its previous determination in the (Steven and Karen) Sponaugles' first appeal.
"We, however, are not bound by prior decisions of a lower court."
The court of appeals vacated the Darke County trial court's confirmation of the sheriff's sale for one reason- having determined that the trial court lacked authority to confirm the sale for lack of a final foreclosure decree, the high court reasoned.
"The non-finality of the foreclosure decree is squarely before us as the Second District's reason for vacating the confirmation order and for determining that the trial court abused its discretion," French continued. "No jurisdictional bar prevents us from reviewing that determination.
"We therefore decline to apply the law-of-the-case doctrine here and address the merits of Farmers (State Bank)'s second proposition of law with respect to the finality of the foreclosure decree."
The appellate court previously concluded that the foreclosure decree was not a final, appealable order, because it did not state the amounts due on the liens held by the Darke County Treasurer and American Budget Company, case summary provided.
Employing that rationale, the appellate panel reasoned the trial court lacked authority to execute the foreclosure decree by ordering the sale of the property or confirmation of sale.
Justices cited the high court's holding in CitiMortgage, Inc. v. Roznowski, 139 Ohio St.3d 299, 2014-Ohio-1984, 11 N.E.3d 1140, in its decision.
"Roznowski involved a foreclosure decree that included in its damage award the future expenses incurred by the bank for inspections, appraisals, property protection and maintenance," French wrote. "Even though the decree did not specify the amount of these liabilities, we concluded that it was a final, appealable order: 'Each party's rights and responsibilities were fully set forth - all that remained was for the trial court to perform the ministerial task of calculating the final amounts that would arise during confirmation proceedings.'
"Likewise, the foreclosure decree here resolved all the rights and liabilities of the parties."
Failure to list the amount of taxes due to the county does not render the foreclosure decree interlocutory, justices determined.
"No judgment of foreclosure and sale would ever be final if we required courts to compute taxes and all future costs as a prerequisite for finality," French noted. "If a dispute as to the final amounts due does arise, then parties may challenge those amounts by appealing the confirmation of sale."
Additionally, justices determined the financial decree was final with respect to the rights and claims of the other lienholder, American Budget Company.
The decision noted again that the final amount due may change between the time of the foreclosure entry and the time of the confirmation of sale as a result of accrued interest or possible penalties.
"But as with the tax lien, all that remains is the ministerial task of calculating the final amount due after sale of the property," French concluded. "The decree leaves no remaining question as to the rights of American Budget on its lien."
Farmers initiated the foreclosure action against the Sponaugles in October 2013, seeking judgment on three promissory notes secured by three mortgages on their property.
The trial court entered judgment against the couple in May 2014 in the amount of $236,378.89, plus interest, summary provided.
The entry also stated the bank would dismiss the action if the Sponaugles paid $120,000 on or before Aug. 23, 2014.
The Sponaugles made no payments, instead choosing to file a bankruptcy petition.
After dismissal of the bankruptcy case, the trial court reactivated the foreclosure case and granted summary judgment in December 2015 in favor of Farmers against the Sponaugles.
The property owners appealed, but failed to post the necessary bond, and the property was sold at sheriff's sale Feb. 26, 2016.
The couple appealed to the Second District court, which dismissed the appeal on the basis of a lack of a final, appealable order.
Upon the couple's subsequent appeal after confirmation of the sale, the appellate court held that the lower court was wrong to order sale of the property and confirm the sale on the basis of the law-of-the-case doctrine.
Chief Justice Maureen O'Connor joined French's decision along with justices Patrick Fischer, Michael Donnelly and Melody Stewart, while Justice Pat DeWine's concurring opinion was joined by Justice Sharon Kennedy.
The case is cited as Farmers State Bank v. Sponaugle, 157 Ohio St.3d 151, 2019-Ohio-2518.
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