U.S. Bank National Association v. Viola et al

Filing 63

Opinion and Order signed by Judge James S. Gwin on 6/13/17. The Court, for the reasons set forth in this order, denies defendant Viola's motion to dismiss, denies plaintiff's motion for default judgment, and grants plaintiff's motions to dismiss defendant Viola's counterclaims and for relief from the Court's previous order dismissing the following defendants: Citibank (South Dakota), Chase Bank USA, N.A., Capital One Bank, N.A., Joanne Viola, State Department of Taxation, and Cuyahoga County Clerk of Courts. (Related Docs. 32 , 52 , 58 , and 61 ) (D,MA)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
-----------------------------------------------------:
U.S. BANK NATIONAL ASSOCIATION, :
:
Plaintiff,
:
:
vs.
:
:
ANTHONY L. VIOLA, et al.,
:
:
Defendants.
:
:
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CASE NO. 1:16-CV-969

OPINION & ORDER
[Resolving Docs. 32, 52, 58 & 61]

JAMES S. GWIN, UNITED STATES DISTRICT JUDGE:
Plaintiff U.S. Bank National Association (“U.S. Bank”) brings a foreclosure action
against Defendant Anthony L. Viola.1 Defendant Viola brings fraud and unjust enrichment
counterclaims against Plaintiff U.S. Bank.2
Defendant Viola moves to dismiss the complaint, arguing that Plaintiff U.S. Bank lacks
standing to enforce the note and mortgage in this case.3
Plaintiff U.S. Bank moves for default judgment for failure to properly plead or otherwise
defend.4 U.S. Bank also moves to dismiss Defendant Viola’s counterclaims for lack of subject
matter jurisdiction and failure to state a claim.5 Additionally, U.S. Bank moves for relief from
the Court’s previous order dismissing various defendants for want of prosecution.6
For the reasons stated below, the Court DENIES Defendant Viola’s motion to dismiss,
DENIES Plaintiff U.S. Bank’s motion for default judgment, and GRANTS Plaintiff U.S. Bank’s
motions to dismiss Viola’s counterclaims and for relief from the Court’s previous order.

1

Doc. 1-1.
Doc. 1-2 at 4-5.
3
Doc. 52.
4
Doc. 62.
5
Doc. 32.
6
Doc. 58.
2

Case No. 1:16-CV-969
Gwin, J.
I. Background
In this foreclosure action, Plaintiff U.S. Bank alleges that Defendant Anthony Viola
defaulted on obligations under a Note and Mortgage assigned to and held by U.S. Bank. The
parties bring several motions related to the viability of Plaintiff’s Complaint and Defendant’s
Answer and Counterclaims.
On December 23, 1993, Defendant Viola executed a promissory note for $126,000 in
favor of Union National Mortgage Co. (the “Note”).7 Union National Mortgage Co. endorsed the
Note to the Leader Mortgage Company.8 To secure the Note, Viola executed a mortgage on 3048
Meadowbrook Boulevard, Cleveland Heights, Ohio in favor of Union National Mortgage Co.
(the “Mortgage”).9 On December 30, 1993, Union National Mortgage Co. conveyed the
Mortgage to the Leader Mortgage Company.10 Plaintiff U.S. Bank is a successor by merger to
the Leader Mortgage Company, which merged into U.S. Bank in June 2004.11
In 2012, Defendant Viola defaulted on the Note. Plaintiff U.S. Bank alleges that Viola
currently owes the principal amount of $61,435.62, plus interest on the outstanding principal,
late charges, advances, and all costs and expenses incurred for the Note and Mortgage’s
enforcement.12
Procedural History
On February 24, 2016, Plaintiff U.S. Bank filed a complaint in the Cuyahoga County
Court of Common Pleas for foreclosure, alleging a breach of Defendant Viola’s Note and that
U.S. Bank sought to foreclose the Mortgage.13 The complaint named Anthony Viola; Joanne

7

Doc. 1-1 at 7.
Id.
9
Id. at 11.
10
Id. at 21.
11
Id. at 22.
12
Id. at 4.
13
Doc. 1-1.
8

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Case No. 1:16-CV-969
Gwin, J.
Viola; Cuyahoga Clerk of Courts; State of Ohio, Department of Taxation; Citibank (South
Dakota); Chase Bank USA, N.A.; and Capital One Bank USA, N.A. as defendants.
The complaint also named the United States as a defendant because the United States had
filed a Notice of Lien for Fine and/or Restitution and a Notice of Federal Tax Lien that attached
to Viola’s Cleveland Heights Meadowbrook Boulevard property. On April 22, 2016, Defendant
United States removed the case to this Court under 28 U.S.C. §§ 1442(a)(1) and 1444.14
In his answer, Defendant Viola brought two counterclaims against Plaintiff U.S. Bank.
First, Viola claims that U.S. Bank received unjust enrichment from its “double recovery” of both
mortgage-backed security settlements and mortgage fraud restitution orders.15 Second, Viola
claims that U.S. Bank committed fraud when it failed to notify the Court of U.S. Bank’s
settlement with the Department of Justice for illegal mortgage origination and foreclosure
practices.16
On December 20, 2016, the Court filed an order noting that Plaintiff U.S. Bank had
served copies of the complaint to Defendants Citibank (South Dakota); Chase Bank USA, N.A.;
Capital One USA, N.A.; Joanne Viola; State of Ohio Department of Taxation; and Cuyahoga
Clerk of Courts, but that those defendants had failed to file answers.17 The Court instructed
Plaintiff U.S. Bank to submit by January 6, 2017, a motion for default judgment or show cause
why the Court should not dismiss those defendants for want of prosecution.18 U.S. Bank failed to
comply with the Court’s order, and on January 13, 2017, the Court dismissed those defendants
for want of prosecution.19

14

Doc. 1 at 1-2.
Doc. 1-2 at 4-5.
16
Id. at 5-6.
17
Doc. 24.
18
Id.
19
Doc. 28.
15

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Case No. 1:16-CV-969
Gwin, J.
Several motions are now before the Court.
Defendant Viola moves to dismiss the Plaintiff’s complaint on the ground that Plaintiff
U.S. Bank lacks standing to sue.20
Plaintiff U.S. Bank moves for default judgment against Defendant Viola, arguing that
Viola has failed to properly plead or otherwise defend as required by Federal Rules of Civil
Procedure Rule 12.21 U.S. Bank also moves to dismiss Defendant Viola’s counterclaims for lack
of subject matter jurisdiction and failure to state a claim.22
Finally, Plaintiff U.S. Bank moves for relief from the Court’s order dismissing
Defendants Citibank (South Dakota); Chase Bank USA, N.A.; Capital One USA, N.A.; Joanne
Viola; State of Ohio Department of Taxation; and Cuyahoga Clerk of Courts.23 U.S. Bank argues
that its failure to properly respond to the Court’s order was excusable neglect and that if the
Court does not grant relief, U.S. Bank will have to dismiss and refile the action to add the
dismissed defendants.24
The Court addresses each motion in turn.
II. Discussion
A. Defendant Viola’s Motion to Dismiss
Defendant Viola moves to dismiss the Plaintiff’s complaint on the ground that Plaintiff
U.S. Bank lacks standing to sue.25 Viola argues that there is no assignment of his mortgage from
Leader Mortgage to U.S. Bank.26 Plaintiff U.S. Bank counters that its complaint provided prima

20

Doc. 52 at 1.
Doc. 61.
22
Doc. 32.
23
Doc. 58.
24
Id. at 4-5.
25
Doc. 52 at 1.
26
Id.
21

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Case No. 1:16-CV-969
Gwin, J.
facie evidence of U.S. Bank’s ownership of the Note and Mortgage.27 Moreover, U.S. Bank
argues that Defendant Viola lacks standing to challenge the assignment of his mortgage.28
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim for relief that is plausible on its face.’”29 The plausibility
requirement is not a “probability requirement,” but requires “more than a sheer possibility that
the defendant has acted unlawfully.”30
Plaintiff U.S. Bank’s complaint survives Defendant Viola’s motion to dismiss. U.S. Bank
supports its claims for money judgment and foreclosure with sufficient factual allegations. U.S.
Bank alleges that it is the owner of Defendant Viola’s Mortgage, that the Mortgage is in default,
and that Viola’s entire balance is due and payable. Moreover, U.S. Bank attached a copy of the
Note, a copy of the Mortgage, an assignment of the Mortgage to the Leader Mortgage Company,
and a document showing the merger of Leader Mortgage Company and Plaintiff U.S. Bank.31
Plaintiff U.S. Bank’s foreclosure claim is plausible on its face.
Defendant Viola counters that there is no assignment of the Mortgage to U.S. Bank, and
therefore U.S. Bank lacks standing to sue. This argument loses. It is Defendant Viola, in fact,
who lacks standing to challenge the Mortgage’s assignment. Viola was not a party to the
Mortgage’s assignment, nor has he suffered any new injury or faced any new obligation
following the assignment.32 Therefore, Viola lacks standing to challenge the Mortgage
assignment. “[Viola] is in default on [his] loan and subject to foreclosure proceedings by the
holder of the mortgage note . . . . Whether that holder is [Leader Mortgage Company] or [U.S.

27

Doc. 55 at 6.
Id. at 7-9.
29
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)).
30
Id.
31
Doc. 1-1 at 7-23.
32
See Bank of N.Y. Mellon Trust Co. v. Unger, 2012 WL 1567192, at *6 (Ohio Ct. App. May 3, 2012).
28

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Case No. 1:16-CV-969
Gwin, J.
Bank] makes no difference with respect to the obligations owed by Plaintiff under the mortgage
contract.”33
Accordingly, the Court DENIES Defendant Viola’s motion to dismiss.
B. Plaintiff U.S. Bank’s Motion for Default Judgment
Plaintiff U.S. Bank moves for default judgment against Defendant Viola.34 U.S. Bank
argues that Viola has failed to properly plead or otherwise defend within the allotted answer
period as required by Federal Rules of Civil Procedure Rule 12.35 Defendant Viola counters that
he has responded to the Complaint and all motions, and participated in the Court’s pretrial
conference.36
Defendant Viola received the Summons on March 4, 2016. Therefore, under the federal
rules,37 he had until March 25, 2016 to file an answer. Viola’s answer is dated March 24, 2016.38
There is nothing on the docket supporting Plaintiff U.S. Bank’s assertion that “Defendant failed
to properly plead within the allotted answer period.”39 The Court will not grant default judgment
on U.S. Bank’s mere words. The case will proceed on the merits.
The Court DENIES Plaintiff U.S. Bank’s motion for default judgment.

33

Bridge v. Aames Capital Corp., 2010 WL 3834059, at *4 (N.D. Ohio Sep. 29, 2010).
Doc. 61.
35
Id. at 1.
36
Doc. 62 at 1.
37
Federal Rules of Civil Procedure Rule 81(c) provides that “[t]hese rules apply to a civil action after it is removed
from a state court.” See also Granny Goose Foods v. Brotherhood of Teamsters & Auto Truck Drivers, 415 U.S.
423, 438 (1974) (“The Federal Rules of Civil Procedure, like other provisions of federal law, govern the mode of
proceedings in federal courts after removal.”). Under Fed. R. Civ. P. 12(a), a defendant must serve an answer within
twenty-one days after being served with the summons and complaint.
38
Doc. 1-2.
39
Doc. 61 at 1. Even if Viola filed his answer a few days late, there would be good cause. Viola filed his answer
before removal. Ohio courts allow defendants to serve an answer twenty-eight days after service of the summons.
Ohio Civ. R. 12. Viola, an imprisoned, pro se defendant, was operating under the assumption that he had until April
1, 2016, to serve the answer. While Viola is not excused from complying with basic procedural rules, see Jourdan v.
Jabe, 951 F.2d 108, 109 (6th Cir. 1991) (“[W]hile pro se litigants may be entitled to some latitude when dealing
with sophisticated legal issues, acknowledging their lack of formal training, there is no cause for extending this
margin to straightforward procedural requirements that a layperson can comprehend as easily as a lawyer.”), the
circumstances here counsel against default judgment.
34

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Case No. 1:16-CV-969
Gwin, J.
C. Plaintiff U.S. Bank’s Motion to Dismiss
U.S. Bank also moves to dismiss Defendant Viola’s fraud and unjust enrichment
counterclaims.40 U.S. Bank argues that the Court lacks supplemental jurisdiction over Viola’s
state law counterclaims.41 Alternatively, U.S. Bank argues that the counterclaims fail to state
plausible or viable claims under state law.42 Viola responds that jurisdiction exists because his
counterclaims directly relate to the federal lien providing this Court with jurisdiction.43
The Court does not address U.S. Bank’s supplemental jurisdiction argument because
Viola’s counterclaims fail to state a claim. In his first counterclaim, Viola alleges that U.S. Bank
received unjust enrichment from its “double recovery” of mortgage-backed security settlements
and mortgage fraud restitution orders.44 In his second counterclaim, Viola alleges that U.S. Bank
committed fraud by failing to notify the Court of U.S. Bank’s settlement with the Department of
Justice for illegal mortgage origination and foreclosure practices.45
As discussed above, “[t]o survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its
face.’”46
Viola’s unjust enrichment counterclaim fails to state a viable claim for relief. Under Ohio
law, an unjust enrichment claimant must allege the following: “(1) a benefit conferred by a
plaintiff upon a defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the
benefit by the defendant under circumstances where it would be unjust to do so without

40

Doc. 32.
Id. at 2.
42
Id. at 3.
43
Doc. 53.
44
Doc. 1-2 at 4-5.
45
Id. at 5-6.
46
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)).
41

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Case No. 1:16-CV-969
Gwin, J.
payment.”47 Viola does not allege that he conferred a benefit upon U.S. Bank, that U.S. Bank
knew of the benefit, or that U.S. Bank retained the benefit. Instead, Viola alleges that U.S. Bank
was “unjustly enriched” when it collected both mortgage-backed securities settlement payments
and restitution from mortgage fraud prosecutions. Viola’s double recovery theory is not a viable
claim for unjust enrichment.
Viola’s fraud counterclaim also fails to states a viable claim under state law. Under Ohio
law, a fraud claimant must show the following:
(a) a representation or, where there is a duty to disclose, concealment of a fact,
(b) which is material to the transaction at hand, (c) made falsely, with
knowledge of its falsity, or with such utter disregard and recklessness as to
whether it is true or false that knowledge may be inferred, (d) with the intent
of misleading another into relying upon it, (e) justifiable reliance upon the
representation or concealment, and (f) a resulting injury proximately caused
by the reliance.48
Viola does not allege that U.S. Bank misrepresented or concealed any facts when Viola applied
for his mortgage loan, nor that he relied on any representation or concealment. Rather, Viola says
that U.S. Bank defrauded the state court by failing to disclose its 2013 mortgage fraud settlement
with the Department of Justice. Viola cannot make a fraud claim based on a representation or
concealment to another person or entity. Viola also fails to identify an injury resulting from U.S.
Bank’s alleged fraud. Viola does not state a viable claim for fraud.
The Court GRANTS Plaintiff U.S. Bank’s motion to dismiss Defendant Viola’s
counterclaims for failure to state a claim.

47

Hambleton v. R.G. Barry Corp., 465 N.E.2d 1298, 1302 (Ohio 1984).
Camp St. Mary’s Ass’n. of the W. Ohio Conference of the United Methodist Church, Inc. v. Otterbein Homes, 889
N.E.2d 1066, 1075 (Ohio Ct. App. 2008).
48

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Case No. 1:16-CV-969
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D. Plaintiff U.S. Bank’s Motion for Relief
Plaintiff U.S. Bank moves for relief from the Court’s order dismissing Defendants
Citibank (South Dakota); Chase Bank USA, N.A.; Capital One USA, N.A.; Joanne Viola; State
of Ohio Department of Taxation; and Cuyahoga Clerk of Courts.49 Each had been joined as
potential lien holders. U.S. Bank argues that its failure to properly respond to the Court’s order
was excusable neglect and that, if the Court does not grant relief, U.S. Bank will have to dismiss
and refile the action to add the dismissed defendants.50 Defendant Viola argues that U.S. Bank
did not make a mistake, but rather ignored the Court’s order.51
Federal Rule of Civil Procedure 60(b)(1) permits courts to relieve a party from an order
for “mistake, inadvertence, surprise, or excusable neglect.” Federal Rule of Civil Procedure
60(b)(6) also permits relief from a court’s order for “any other reason that justifies relief,” but is
available “only in exceptional or extraordinary circumstances.”52
While a close call, the Court grants Plaintiff U.S. Bank relief from the Court’s order
dismissing the aforementioned defendants. The Court is reluctant to grant relief here. U.S. Bank
ignored this case for months. The timeline of the order dismissing the defendants is instructive.
On December 20, 2016, the Court ordered Plaintiff U.S. Bank to show cause as to why the Court
should not dismiss those defendants for want of prosecution by January 6, 2017.53 U.S. Bank
failed to meet this deadline, and the Court dismissed said defendants on January 13, 2017.54
During the March 1, 2017 case management conference, U.S. Bank asked the Court to
reconsider its dismissal of the defendants. The Court orally instructed U.S. Bank to file a motion

49

Doc. 58.
Id. at 4-5.
51
Doc. 60.
52
Olle v. Henry & Wright Corp., 910 F.2d 357, 365 (6th Cir. 1990).
53
Doc. 24.
54
Doc. 28.
50

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Case No. 1:16-CV-969
Gwin, J.
for reconsideration promptly. U.S. Bank waited nearly eight weeks to file the motion, and
offered no justification for the original or subsequent delay.55 There was certainly neglect on
U.S. Bank’s part, and the Court typically would not excuse it.
The Court excuses Plaintiff U.S. Bank’s neglect, however, in the interest of efficiently
resolving this foreclosure action. Because the Court dismissed defendants like Citibank (South
Dakota) and Chase Bank USA, the Meadowbrook property would not be marketable at a
foreclosure sale.56 Accordingly, if the Court’s order stood, Plaintiff would have to dismiss this
action and refile. U.S. Bank ignored this Court’s orders and let its own case languish. But
effectively requiring U.S. Bank to refile its case would be wasteful. Rule 1 advises that the
Federal Rules of Civil Procedure should be “employed by the court . . . to secure the just, speedy,
and inexpensive determination of every action and proceeding.”57 In the spirit of pragmatism, the
Court excuses Plaintiff U.S. Bank’s neglect under Rule 60(b)(1).
The Court therefore GRANTS Plaintiff U.S. Bank’s motion for relief from the Court’s
January 13, 2017 order dismissing Defendants Citibank (South Dakota); Chase Bank USA, N.A.;
Capital One Bank, N.A.; Joanne Viola; State of Ohio Department of Taxation; and Cuyahoga
Clerk of Courts.

55

Doc. 58.
Id. at 4.
57
Fed. R. Civ. P. 1.
56

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Case No. 1:16-CV-969
Gwin, J.
III. Conclusion
For the above reasons, the Court DENIES Defendant Viola’s motion to dismiss,
DENIES Plaintiff U.S. Bank’s motion for default judgment, and GRANTS Plaintiff U.S. Bank’s
motions to dismiss Viola’s counterclaims and for relief from the Court’s previous order.

IT IS SO ORDERED.

Dated: June 13, 2017

s/
James S. Gwin
JAMES S. GWIN
UNITED STATES DISTRICT JUDGE

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