Login | October 27, 2024
Appellate court upholds settlement dispute ruling
KEITH ARNOLD
Special to the Legal News
Published: February 27, 2024
A Franklin County appellate panel has affirmed a lower court ruling to deny a Dublin homeowner’s request to enforce a settlement agreement with mortgage holder HSBC Bank USA.
In a 3-0 decision, Tenth District Court of Appeals Judge Carly Edelstein reasoned that all necessary parties had not entered into an enforceable settlement agreement.
“In the trial court’s Nov. 2, 2017, foreclosure decree, the Franklin County Treasurer was found to have an interest in the property that was senior to all other lienholders, including the interest held by HSBC,” Edelstein wrote. “Therefore, … we find the trial court properly concluded that any agreement regarding the distribution of sale proceeds would require the treasurer’s consent, as the priority lienholder.”
In the motion filed Sept. 30, 2022, by Ganesh Rao, he alleged that HSBC reneged on the agreed purchase price and sought to increase the amount to $415,000 to ensuing negotiations between the parties.
Additionally, Rao stated that the lender, in its capacity of trustee
for Wells Fargo Home Equity
Asset-Backed Securities 2005-1 Trust, Home Equity Asset-Backed Certificates, Series 2005-1, provided no explanation for the increased demand, case summary provided.
He acknowledged, however, that the increase may be linked to “back property taxes that might be owed.”
Rao asserted in the motion that the settlement terms allocated the negotiated purchase price of $380,856 to lienholders listed in the foreclosure decree in the following amounts: $3,905 to the Clerk of Courts; $5,692 to the Franklin County Sheriff’s Office; $16,058 to the Franklin County Treasurer for 2019 real estate taxes; and $353,844 to HSBC.
Rao additionally submitted an affidavit in support of the motion, in which he stated that he was “to pay for any property taxes after 2019 pursuant to a payment plan I understand that I reached with the Franklin County Treasurer’s Office,” summary detailed.
HSBC and the Franklin County Treasurer filed opposition to the motion, with the treasurer specifically disputing Rao’s attestation that an agreement had been reached on unpaid property taxes, which by that time totaled $52,579.
According to the summary, two previous payment-plan offers had been rescinded by the treasurer after Rao had failed to act on either offer within an allotted time frame.
Similarly, HSBC argued that the filing of an earlier motion, which was subsequently withdrawn before the trial court ruling, was not evidence of a settlement agreement.
HSBC cited a June 21, 2022, email exchange between the attorneys for Rao and HSBC which did not include a representative of the treasurer.
The trial court denied the motion to enforce the settlement agreement April 18, 2023, having determined that the parties failed to reach an agreement during their negotiations.
Specifically, the trial court found that the emails Rao submitted in support of his motion did not demonstrate that the parties had resolved their disagreements and that the treasurer would not have agreed to a settlement that didn’t account for payment of outstanding property taxes.
Rao appealed to the Tenth District court.
“While not the basis for the trial court’s decision, we … note that the alleged settlement agreement would not have been appropriate under the judicial foreclosure process set forth in statute,” Edelstein wrote. “A foreclosure action proceeds in two stages: the foreclosure judgment and the judicial sale.”
The judge noted that in seeking enforcement of a settlement between himself and the lender, Rao appeared “willfully blind to the trial court’s earlier judgment entry setting forth the priority of lienholders in this case.
“Where the foreclosure decree has already been issued and affirmed on appeal, the parties may not negotiate the distribution of sale proceeds without agreement from each lienholder. Mr. Rao may not abrogate the interests of the lienholders through a settlement agreement that does not account for their rights.”
Tenth District judges Betsy Luper Schuster and Laurel Beatty Blunt concurred with Edelstein’s determination.
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