The Bullet Point: A Commercial Law Bulletin
When Can a Class be Certified?Read Time: 4 mins
Statute of Limitations of Note Enforcement After Acceleration
M&T Bank v. Wood, 2nd Dist. Clark No. 2019-CA-46, 2020-Ohio-10.
In this appeal, the Second Appellate District found that a claim on a promissory note was not barred by the six-year statute of limitations for such claims, because the lawsuit was filed within six years of the note being accelerated.
The Bullet Point: R.C. 1303.16(A) provides: “Except as provided in division (E) of this section, an action to enforce the obligation of a party to pay a note payable at a definite time shall be brought within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date.” What constitutes “acceleration” for statute of limitations has been the subject of significant litigation in Ohio. In Wood, the Second Appellate District found that the act of filing the foreclosure lawsuit was the event of acceleration that triggered the statute of limitation purposes. The Second Appellate District also found that the date a notice of default was mailed was not the trigger date for statute of limitations purposes because the lender sent multiple notices of default, which evidenced that it had not actually accelerated the mortgage loan.
Standing to Foreclose
U.S. Bank Nat’l Ass’n v. O’Malley, 8th Dist. Cuyahoga No. 108191, 2019-Ohio-5340.
In this appeal, the Eighth Appellate District affirmed the trial court’s decision finding that a lender had standing to foreclose.
The Bullet Point: To have standing in a foreclosure lawsuit, a lender must establish an interest in the promissory note or the mortgage at the time the lawsuit was commenced. With respect to a promissory note, a party has standing when it is a “party entitled to enforce” the note, which includes a “holder” of the note. A holder, in turn, is one in physical possession of a note that is endorsed in blank or endorsed specifically to it. While endorsements are typically on the note itself, sometimes they are on an Allonge that is attached to the note. Allonges do not have to be dated to be enforceable. Moreover, a lender is “not required to state, verbatim, that the allonges were physically attached to the note” in order to be considered a holder of the instrument.
Car Dealership Duty of Care
Burns v. Zurich, 4th Dist. Ross No. 19CA3676, 2019-Ohio-5255.
In this appeal, the Fourth Appellate District refused to overturn the trial court’s decision finding that a car dealership did not owe a heightened duty of care when allowing prospective purchasers to test drive a vehicle.
The Bullet Point: Relying on case law from outside of Ohio, the Fourth Appellate District noted: Courts across the country have established that “at common law, a dealer who holds a motor vehicle for purposes of sale is not liable for injuries or damages from negligence in the operation of the dealer’s vehicle by a prospective purchaser, or one acting for a prospective purchaser, who is seeking to determine whether to purchase such vehicle.” The situation also does not give rise to “imputed negligence.” “The doctrine of imputed negligence does not ordinarily apply in Ohio, an exception being when parties are engaged in a joint enterprise.” “A ‘joint enterprise’ within the law of imputed negligence is the joint prosecution of a common purpose under such circumstances that each member of such enterprise has the authority to act for all in respect to the control of the agencies employed to execute such common purpose.” “‘Parties cannot be said to be engaged in a joint enterprise, within the meaning of the law of negligence, unless there be a community of interests in the objects or purposes of the undertaking, and an equal right to direct and govern the movements and conduct of each other with respect thereto. Each must have some voice and right to be heard in its control or management.’”
Mitigation of Damages
PHH Mortgage Corp. v. Barker, 3rd Dist. Van Wert No. 15-19-01, 2019-Ohio-5301.
In this appeal of a foreclosure decision, the Third Appellate District affirmed the trial court’s decision to grant a lender summary judgment, finding, among other things, that the borrowers had no absolute right to reinstate the loan, that the lender mitigated its damages, and that Ohio law did not recognize a claim for “wrongful foreclosure.”
The Bullet Point: The burden of proof for the affirmative defense of failure to mitigate damages lies with the breaching party. “Under Ohio law, the injured party in a breach-of-contract action has a duty to mitigate damages, meaning that the injured party cannot recover damages ‘that it could have prevented by “reasonable affirmative action.’” “An injured party need only use ‘reasonable, practical care and diligence, not extraordinary measures to avoid excessive damages.’
FDCPA Class Certification
Midland Funding LLC v. Colvin, 3rd Dist. Hancock No. 5-18-15, 2019-Ohio-5382.
In this appeal, the Third Appellate District reversed a trial court’s decision to deny class certification to the defendant consumer under the Fair Debt Collection Practices Act for purportedly filing lawsuits against consumers in counties where they did not reside.The Bullet Point: Class actions are governed by Rule 23 of the Ohio Rules of Civil Procedure. To maintain a class action, a litigant must satisfy seven things: “(1) an identifiable class must exist and the definition of the class must be unambiguous; (2) the named representatives must be members of the class; (3) the class must be so numerous that joinder of all members is impracticable; (4) there must be questions of law or fact common to the class; (5) the claims or defenses of the representative parties must be typical of the claims or defenses of the class; (6) the representative parties must fairly and adequately protect the interests of the class; and (7) one of the three Civ.R. 23(B) requirements must be met.” The failure to meet any one of these elements will defeat a request for class certification. “The FDCPA was designed to eliminate abusive debt collection practices, to ensure that debt collectors who abstain from such practices are not competitively disadvantaged, and to promote consistent state action to protect consumers.” One issue that concerned Congress when enacting the FDCPA was “forum abuse,” or the practice of seeking to “obtain default judgments by filing suit in courts so distant or inconvenient that consumers cannot make an appearance.” To that end, the FDCPA prohibited such conduct and requires a debt collector (absent certain exceptions) to file suit either where the contract was signed or where the consumer resides when the lawsuit is commenced.