PNC Bank, National Association v. Pataskala Town Center, LLC et al

Filing 70

OPINION AND ORDER denying 54 MOTION for Judgment on the Pleadings; granting 56 MOTION for Summary Judgment; denying 58 Cross MOTION for Summary Judgment. Judgment is entered in favor of PNC as outlined in this Order. Signed by Magistrate Judge Terence P. Kemp on 12/5/2016. (agm)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
PNC Bank, National
Association,

:
:

Case No. 2:15-cv-1038

:

Magistrate Judge Kemp

Plaintiff,
v.
Pataskala Town Center, LLC,
et al.,

:
:

Defendants.
OPINION AND ORDER
This case was brought by plaintiff PNC Bank, NA (“PNC”),
seeking judgment against defendants Pataskala Town Center, LLC
(“Pataskala”), Hazelton Retail I, Ltd. (“Hazelton”), The
Lafayette Partners, LLC (“Lafayette”), and Scott T. Mallory (“Mr.
Mallory”) in relation to a number of promissory notes,
guaranties, mortgages, and other loan documents.

This matter is

before the Court on three motions, all of which have been fully
briefed and are ripe for decision: (1)PNC’s motion for summary
judgment (Doc. 56); (2) defendant Lafayette’s and Mr. Mallory’s
motion for partial summary judgment (Doc. 58); and (3)
defendants’ motion for partial judgment on the pleadings (Doc.
54).

For the reasons set forth below, the defendants’ motions

for partial summary judgment and partial judgment on the
pleadings will be denied and PNC’s motion for summary judgment
will be granted.
I.

Background

The facts of this case are undisputed.

The factual

background of this case is set out in the pleadings and in the
Affidavit of Christopher Guyer, the Vice President of PNC, and
its supporting exhibits (Doc 56-1; hereinafter “Affidavit at
____”).

On March 28, 2007, the defendants executed a number of loan
documents with National City Bank (“NCB”).

Pataskala, an Ohio

limited liability company, executed a promissory note in the
amount of $1,510,500.00 (“Pataskala Loan Agreement”) as well as a
mortgage note in the same amount (“Pataskala Note”) to NCB.
Affidavit at ¶6.

In order to further secure its obligations to

NCB under the Pataskala Loan Agreement and Pataskala Note,
Pataskala entered into an open-end mortgage, granting to NCB a
security interest and lien upon its personal property, including
fixtures and equipment (“Pataskala Personal Property”), which was
perfected when NCB filed UCC financing statements with the Ohio
Secretary of State.

Id. at ¶9.

On the same day, Hazelton, an

Ohio limited liability company, executed an open-end mortgage
(“Pataskala Mortgage”), granting to NCB a security interest and
lien upon property known as 0 Hazelton-Etna Road, Pataskala,
Ohio, Parcel No. 064-152712-00.001 (“Pataskala Property”).
at ¶¶10-11.

Id.

Lafayette, an Ohio limited liability company, and

Mr. Mallory also executed an unconditional guaranty of payment
and performance (“Pataskala Guaranty”) whereby they jointly and
severally guaranteed to pay to NCB any and all of Pataskala’s
obligations to NCB under the Pataskala Note in the event of
default.

Id. at ¶12.

To further secure its obligations under

the Pataskala Loan Agreement and Pataskala Note, Pataskala also
executed to NCB an open-end mortgage agreement (“Pataskala Second
Mortgage”), granting to NCB and its successors a security
interest in and lien upon the real property at 0 Hazelton-Etna
Road, Pataskala, Ohio, Parcel No. 064-152712-00.003 (the
“Hazelton Property”).

On or about March 18, 2009, Pataskala,

Hazelton, Lafayette, and Mr. Mallory executed a modification of
the Pataskala Loan Agreement and Pataskala Note, which included
extending the maturity date of the Pataskala Note to June 1, 2009
(“Pataskala Modification”).

Id. at ¶13.
2

On March 28, 2007, Hazelton also executed a loan agreement
with NCB in the amount of $5,484,600.00 (“Hazelton Loan
Agreement”).

Affidavit at ¶14.

In relation to the Hazelton Loan

Agreement, Hazelton also executed a mortgage note in the same
amount (“Hazelton Note”).

To secure its obligations under the

Hazelton Loan Agreement and Hazelton Note, Hazelton executed an
open-end mortgage (“Hazelton Mortgage”) which granted NCB a
security interest in and lien upon its personal property,
including equipment and fixtures (“Hazelton Personal Property”).
The Hazelton Personal Property was perfected when NCB filed UCC
financing statements with the Ohio Secretary of State.
¶18.

Id. at

As further security on the Hazleton Loan Agreement and

Note, Pataskala executed an open-end mortgage, granting to NCB a
security interest in and lien on the Pataskala Property
(“Hazelton Second Mortgage”).

Id. at ¶19.

Lafayette and Mr.

Mallory executed an Unconditional Guaranty of Payment and
Performance (“Hazelton Guaranty”) in relation to the Hazelton
Note, in which they agreed, jointly and severally, to pay
Hazelton’s obligations under the Hazelton Note in the event of
default.

Id. at 21.

On March 18, 2009, Pataskala, Hazelton,

Lafayette and Mr. Mallory executed a modification of the Hazelton
Note (the “Hazelton Modification”) which, among other things,
extended the maturity date of the Hazelton Note to June 1, 2009.
Id. at ¶27.
The Pataskala Note, pursuant to the Pataskala Modification,
matured on June 1, 2009, at which time all sums were due,
including principal, interest, and advances made by NCB.
Pataskala failed to pay the full amount upon maturity.
at ¶29.

Affidavit

According to PNC’s motion for summary judgment, as of

September 21, 2016, the outstanding amount on the Pataskala Note
was $1,858,200.97 ($1,510,500.00 in principal, $217,784.75 in
interest, $118,592.22 in real estate taxes, and $11,324.00 in
3

other costs and advances).

The Hazelton Note, pursuant to the

Hazelton Modification, also matured on June 1, 2009, at which
time all outstanding sums were due and owing, but which was not
paid in full.

The outstanding amount due as of Sepember 21, 2016

totaled $4,047,806.47 ($3,289,021.60 in principal, $474,213.00 in
accrued interest, $269,103.87 in real estate taxes, $15,468.00 in
other costs and advances). Interest continues to accrue on the
principal of both mortgages at the rate of LIBOR plus 3.5%, which
is 4.031780% as of the date of the filing of PNC’s motion for
summary judgment.
On November 6, 2009, NCB merged into PNC Bank, National
Association (“PNC”), a Delaware corporation, and PNC assumed the
legal rights and obligations of NCB.
P.

Id. at ¶28, Exhibits O and

PNC filed this action against the defendants on March 24,

2015 seeking judgment for default of the loan documents.
claims are as follows:
1.

Cognovit Judgment on the Pataskala Note

2.

Cognovit Judgment on the Pataskala Guaranties

3.

Cognovit Judgment on the Hazelton Note

4.

Judgment on the Hazelton Guarantees

5.

Foreclosure of the Pataskala Mortgages

6.

Foreclsoure of the Pataskala Security Interests

7.

Foreclosure of the Hazelton Mortgages

8.

Foreclosure of the Hazelton Secuity Interests

9.

Appointment of a Receiver for the Pataskala
Property

10.

Appointment of a Receiver for the Hazelton
Property

4

The

On March 26, 2015, the defendants filed a cognovit answer to
Counts 1-3, and on April 16, 2015, an answer to the remaining
counts.

The Court has not entered cognovit judgments with

respect to counts 1-3 of the complaint.

On December 1, 2015, a

receiver was appointed for the Pataskala and Hazelton Properties,
which resolved counts 9 and 10 of the complaint in favor of PNC.
The defendants have filed a motion for judgment on the pleadings
with respect to counts 1-3 of the complaint.

PNC has filed a

motion for summary judgment as to counts 1-8, and the defendants
have filed a motion for partial summary judgment as to count 4 of
the complaint.

The Court will first address the motions for

summary judgment.
II.

Legal Standard for Summary Judgment

Summary judgment is not a substitute for a trial when
facts material to the Court's ultimate resolution of the case
are in dispute.

It may be rendered only when appropriate

evidentiary materials, as described in Fed. R. Civ. P. 56(c),
demonstrate the absence of a material factual dispute and the
moving party is entitled to judgment as a matter of law.
Poller v. Columbia Broadcasting Systems, Inc., 368 U.S. 464
(1962).

The moving party bears the burden of demonstrating

that no material facts are in dispute, and the evidence
submitted must be viewed in the light most favorable to the
nonmoving party.
(1970).

Adickes v. S.H. Kress & Co., 398 U.S. 144

Additionally, the Court must draw all reasonable

inferences from that evidence in favor of the nonmoving
party.

United States v. Diebold, Inc., 369 U.S. 654 (1962).

The nonmoving party does have the burden, however, after
completion of sufficient discovery, to submit evidence in
support of any material element of a claim or defense on
which that party would bear the burden of proof at trial,
even if the moving party has not submitted evidence to negate
5

the existence of that material fact.

See Celotex Corp. v.

Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242 (1986).

Of course, since "a party seeking

summary judgment ... bears the initial responsibility of
informing the district court of the basis for its motion, and
identifying those portions of [the record] which it believes
demonstrate the absence of a genuine issue of material fact,"
Celotex, 477 U.S. at 323, the responding party is only required
to respond to those issues clearly identified by the moving party
as being subject to the motion.

It is with these standards in

mind that the instant motions for summary judgment must be
decided.
III.

Discussion- Summary Judgment

Jurisdiction of this Court over this matter is based on the
diversity of the parties.

Because the agreements and property at

issue are located in Ohio, the parties agree that Ohio law
applies.
A.

Defendants’ Motion for Partial Summary Judgment

Lafayette and Mr. Mallory move for summary judgment on count
4 of the complaint, which seeks judgment on the Hazelton
Guaranty, because the original document has been lost.

They

state that under Ohio law, when a person signs an instrument as
its maker, that person becomes obligated to pay the instrument to
a “person entitled to enforce” it.

O.R.C. §1303.52.

In this

case, the Hazelton Guaranty is an instrument and Mr. Mallory and
Lafayette are its joint makers.

However, they assert that PNC

cannot prove that it is a person entitled to enforce it.
Under O.R.C. §1303.31, “person entitled to enforce is
defined as (1) the holder of the instrument; (2) a non-holder in
possession of the instrument who has the rights of a holder; or
(3) a person not in possession of the instrument who is entitled
to enforce the instrument pursuant to O.R.C. §1303.38.”
6

Lafayette and Mr. Mallory argue that because the original signed
Hazelton Guaranty is lost, PNC only qualifies as a “person
entitled to enforce” the Hazelton Guarantee if PNC can satisfy
the requirements of O.R.C. §1303.38; see Fannie Mae v. Hicks, 35
N.E.3d 37 (Cuyahoga Cty. App. 2015).

In the Hicks case, the

Court of Appeals reversed the trial court’s grant of summary
judgment in favor of the plaintiff/mortgagor where the original
mortgage note had been lost.

The Court looked to the then

current version of O.R.C. §1303.38 (Ohio’s enactment of UCC 3309), which permits a person to enforce a lost, destroyed or
stolen instrument through secondary evidence under the following
conditions:
(1) the person was in possession of the instrument and
entitled to enforce it when loss of possession
occurred; (2) the loss of possession was not the result
of a transfer by the person or a lawful seizure, and
(3) the person cannot reasonably obtain possession of
the instrument because the instrument was destroyed,
its whereabouts cannot be determined, or it is in the
wrongful possession of an unknown person or a person
that cannot be found or is not amenable to service of
process.
The mortgagor in Hicks did not satisfy the statutory conditions
because it was not in possession of the instrument at the time of
loss.

The Hicks court also relied on a federal case which

concluded that, under the plain language of UCC §3-309 (identical
to the Ohio statute), only the person in possession of a
negotiable instrument at the time of loss is entitled to enforce
the instrument.

Id. at 41-42, citing Dennis Joslin Co., LLC v.

Robinson Broadcasting Corp., 977 F.Supp. 491 (D.D.C 1997).
Subsequent to the Joslin decision, UCC §3-309 was amended to
permit enforcement of a negotiable instrument if the person was
entitled to enforce the instrument at the time of loss or
directly or indirectly acquired entitlement to enforce from a
person who was entitled to enforce it at the time of loss.
7

Id.

at 42.

At the time of the Hicks case, Ohio had not yet adopted

the amended version of UCC §3-309.

The defendants argue that

because the Hazelton Guaranty was lost at the time it was held by
NCB, under the Ohio statute PNC does not have the right to
enforce it.
In response, PNC points out that on March 18, 2009,
Hazelton, Lafayette, Mallory and Pataskala executed the Hazelton
Modification, in which Hazelton reconfirmed its obligations under
the Hazelton Mortgage and extended its maturity date (although
NCB did not merge into PNC until later that year). Affidavit at
8; Exhibit N.

It also points out the defendants’ answer states

that “[d]efendants admit that on or about March 28, 2007
Defendants Lafayette and Mallory executed with National City Bank
the Hazelton Guaranty.

Further answering, Defendants state that

the Hazelton Guaranty attached as Exhibit N speaks for itself.”
(Doc. 10). The Guyer Affidavit states that the Hazelton Guaranty
had not been transferred, assigned, or encumbered and that
although the original document had been lost, a true copy was
attached to the complaint and motion for summary judgment. Id. at
22-26; Exhibit N.

PNC further asserts that O.R.C. §1303.38 was

amended on September 28, 2016, to conform to the current version
of UCC §3-309.
Next, PNC argues that the Court’s initial inquiry should be
whether the Hazelton Guaranty is an “instrument” covered by the
statute. PNC argues that the Hazelton Guaranty is not.

The

chapter the Ohio Revised Code in which O.R.C. §1303.38 is found
states that “this chapter applies to negotiable instruments”
(emphasis added).

O.R.C. §1302(A).

The Ohio Supreme Court has

held that while promissory notes and mortgages are “negotiable
instruments,” separate guarantee agreements are not.

Buckeye

Federal Savings & Loan Assn. V. Guirlinger, 62 Ohio St.3d 312,
315 (1991); see also UCC §3-104:34 (“A separate written guaranty
8

does not satisfy the requirements of UCC §3-104 and therefore is
not governed by Article 3.”).

The Court finds PNC’s argument on

this point persuasive, and concludes that the guaranties at issue
in this case are not negotiable instruments covered by O.R.C.
§1303.38.
Nonetheless, even if O.R.C. §1303.38 does apply, PNC has
satisfied the requirements to be a person entitled to enforce the
instrument (either pre- or post- the September 2016 amendment).
NCB merged into PNC, which means that the rights and obligations
of NCB became those of PNC, and there was no transfer.

See e.g.

Cattron, Inc. v. Overhead Crane & Hoist, Inc. 32 Ohio App.3d 80
(Hamilton Cty. 1987) (a transferee corporation adopts the legal
rights and obligations of the transferor where the transaction is
merely a consolidation or a merger). It is not clear at what
point in time the Hazelton Guaranty was lost.

However, the Guyer

Affidavit confirms that there was no transfer, assignment or
encumbrance on the Hazelton Guaranty, and that the original was
simply lost.

The defendants do not contest the accuracy of the

copy of the Hazelton Guaranty in the record.

Thus, under either

the pre- or post- September 28, 2016 version of O.R.C. §1303.38,
PNC simply succeeded to NCB’s right to enforce the Hazelton
Guaranty at the time of loss.

For these reasons, Lafayette’s and

Mr. Mallory’s motion for partial summary judgment will be denied.
B.

PNC’ Motion for Summary Judgment

PNC moves for summary judgment on counts 1-8 of the
complaint.

Those are the only counts which remain to be decided,

because counts 9-10 were resolved upon the appointment of a
receiver for the Pataskala Property and the Hazelton Property.
1.

The Pataskala Note (Count 1) and the
Pataskala Guaranty (Count 2)

In order to prevail on summary judgment against Pataskala on
the Pataskala Note and against Lafayette and Mr. Mallory on the
9

Pataskala Guaranty, PNC must demonstrate that Pataskala executed
and delivered the Pataskala Note to PNC and that Lafayette and
Mr. Mallory executed and delivered the Pataskala Guaranty to PNC
or its predecessor in interest; that the outstanding balance of
the Pataskala Note is due and payable; that Pataskala failed to
pay the balance pursuant to the terms of the Pataskala Note, and
that Lafayette and Mr. Mallory are therefore liable for the
amount due to PNC pursuant to the Pataskala Guaranty.
Ohio law is well settled that the liability of a guarantor
arises under an unconditional guaranty when the debtor of the
note which was guaranteed fails to make timely payment.
v. Rickly, 44 Ohio St. 490, 496 (1886).

Castle

The guarantor is not

made a party to the note, and nothing more is required to
establish liability other than the default of the note which was
guaranteed.

Id.

The facts are not in dispute in this respect.

The Pataskala Note was executed by Pataskala on March 28, 2007 in
the amount of $1,510,500.00.

Affidavit at ¶¶5-6; Exhibit A.

The

Pataskala Guaranty was executed by Lafayette and Mr. Mallory.
Id. at ¶12; Answer at ¶12.

The Pataskala Note reached maturity

and Pataskala failed to pay the balance due.

The Pataskala

Guaranty contains the following provision:
“[Mr. Mallory and Lafayette]... for themselves, their
heirs, personal representatives, successors and
assigns, hereby jointly and severally, unconditionally
and absolutely guarantee to [PNC], its successors and
assigns, the faithful, punctual and complete
performance of any and all obligations, and the full
and prompt payment, whether at maturity or by
acceleration or otherwise, any and all indebtedness,
fixed or contingent.... of [Pataskala] to [PNC],
pertaining to the loan evidenced by [the Pataskala
Note]....”
Id., Exhibit F, ¶1.

Due to the default by Pataskala on the

Pataskala Note, Lafayette and Mr. Mallory are jointly and
severally liable for the amount due on the Pataskala Note

10

pursuant to the terms of the Pataskala Guaranty.
at ¶3.

Id. Exhibit F

For these reasons, summary judgment will be granted in

favor of PNC with respect to Counts 1 and 2 of the Complaint.
2.

The Hazelton Note (Count 3) & the
Hazelton Guaranty (Count 4)

The analysis for determining summary judgment on the
Hazelton Note and the Hazelton Guaranty mirrors that of the
analysis above regarding the Pataskala Note and the Pataskala
Guaranty.

In order to prevail on summary judgment PNC must

demonstrate that Hazelton executed and delivered the Hazelton
Note to PNC; that Lafayette and Mr. Mallory executed and
delivered the Hazelton Guaranty to PNC and that PNC is the holder
of the Hazelton Note and the Hazelton Guaranty; that the full
outstanding balance of the Hazelton Note is due and payable; that
Hazelton has failed to pay the balance to PNC; and thus,
Lafayette and Mr. Mallory are liable for the balance pursuant to
the terms of the Hazelton Guaranty.

As discussed above, the

Court rejects the argument that the defendants are entitled to
summary judgment on the Hazelton Guaranty due to the original
document’s being misplaced, and the accuracy of the copy of the
Hazelton Guaranty in the record is not at issue.
The facts are undisputed that Hazelton executed and
delivered the Hazelton Note to PNC’s predecessor, NCB, and that
following the merger, PNC because the owner and holder of the
Hazelton Note.

Affidavit at ¶15; Answer at ¶19.

It is also

undisputed that Lafayette and Mr. Mallory executed and delivered
the Hazelton Guaranty.

Affidavit at ¶21; Answer at ¶23.

There

is no question of fact as to whether the entire outstanding
amount of the Hazelton is due and payable due to Hazelton’s
default. Id. at ¶31.

In respect of the Hazelton Guaranty, there

is also no question of fact that the Hazelton Guaranty contains

11

the following provision (virtually identical to the provision in
the Pataskala Guaranty):
“[Mr. Mallory and Lafayette]... for themselves, their
heirs, personal representatives, successors and
assigns, hereby jointly and severally, unconditionally
and absolutely guarantee to [PNC], its successors and
assigns, the faithful, punctual and complete
performance of any and all obligations, and the full
and prompt payment, whether at maturity or by
acceleration or otherwise, any and all indebtedness,
fixed or contingent.... of [Hazelton] to [PNC],
pertaining to the loan evidenced by [the Hazelton
Note]....”
Id., Exhibit N at ¶1.

Due to the default by Pataskala on the

Pataskala Note, Lafayette and Mr. Mallory are jointly and
severally liable for the amount due on the Hazelton Note pursuant
to the terms of the Hazelton Guaranty.

Id. Exhibit F at ¶3.

For

these reasons, summary judgment will be granted in favor of PNC
with respect to Counts 3 and 4 of the Complaint.
3.

Decrees of Foreclosure (Counts 5, 6, 7 and 8)

It is well settled under Ohio law that once a default in
payment has been established under the terms of a promissory
note, the mortgagee is entitled to judgment.

First Merit Bank,

N.A. v. Miles & Miles Group, Inc., 2013 WL 5566229 at *4 (N.D.
Ohio July 23, 2013), citing Bradfield v. Hale, 67 Ohio St. 316
(1902).

The Court will apply the undisputed facts on the record

to each of the foreclosure claims.
i.

The Pataskala Mortgage and the Pataskala
Second Mortgage (Count 5)

The facts are undisputed that PNC is the holder of the
Pataskala Mortgage and the Pataskala Second Mortgage and that
these mortgages were executed and delivered by Pataskala and
Hazelton, respectively.
& E.

Affidavit at ¶¶7, 10 and 28; Exhibits C

As a result of the default of its obligations to PNC under

the Pataskala Loan Agreement and Pataskala Note, the conditions
12

of defeasance contained in the Pataskala Mortgage and the
Pataskala Second Mortgage have been broken. Id. at ¶29. Hazelton
is in default of its obligations to PNC under the Hazelton Loan
agreement and Hazelton Note for failing to pay the obligations
pursuant to the terms thereof. Id. at ¶31. Based upon the
undisputed evidence presented, PNC possesses the first and best
lien upon the Pataskala Property (subject to any real estate
taxes due and owing) pursuant to the Pataskala Mortgage.

PNC

also possesses the second priority lien upon the Hazelton
Property (subject to any real estate taxes due and owing),
pursuant to the Pataskala Second Mortgage.

Thus, PNC is entitled

to a judgment of foreclosure on the Pataskala Mortgage and the
Pataskala Second Mortgage.
ii.

The Hazelton Mortgage and the Hazelton
Second Mortgage (Count 6)

The facts are undisputed that PNC is the holder of the
Hazelton Mortgage and the Hazelton Second Mortgage and that these
mortgages were executed and delivered by Hazelton and Pataskala,
respectively.

Affidavit at ¶¶ 16-20; Exhibits J & L.

As a

result of the default of its obligations to PNC under the
Hazelton Loan Agreement and Hazelton Note, the conditions of
defeasance contained in the Hazelton Mortgage and the Hazelton
Second Mortgage have been broken.

Affidavit at ¶31.

Based upon

the undisputed evidence presented, PNC possesses the first and
best lien upon the Hazelton Property (subject to any real estate
taxes due and owing) pursuant to the Hazelton Mortgage.
¶18; Exhibit K.

Id. at

PNC also possesses the second priority lien upon

the Pataskala Property (subject to any real estate taxes due and
owing), pursuant to the Hazelton Second Mortgage.

Id. at ¶19.

Thus, PNC is entitled to a judgment of foreclosure on the
Hazelton Mortgage and the Hazelton Second Mortgage.
iii.

Foreclosure on the Security Interest in the
Pataskala Personal Property (Count 7)
13

Due to the default under the Pataskala Note, the conditions
of defeasance contained in the Pataskala Mortgage and the
Pataskala Second Mortgage have been broken.

Thus, PNC is

entitled to have the Pataskala Personal Property sold and the
proceeds applied to its debt.
iv.

Foreclosure on the Security Interest in the Hazelton
Personal Property (Count 8)

Due to the default of the Hazelton Note, the conditions of
defeasance contained in the Hazelton Mortgage and the Hazelton
Second Mortgage have been broken.

Thus, PNC is entitled to have

the Hazelton Personal Property sold and the proceeds applied to
its debt.
IV.

Defendants’ Motion for Judgment on the Pleadings

The defendants move for judgment on the pleadings pursuant
to Fed.R.Civ.P. 12(c) on Counts 1-3 of the complaint based on the
assertion that the warrants of attorney in the Pataskala Note,
the Pataskala Guaranty, and the Hazelton Note are void as
uncertain and indefinite and further because the warrants of
attorney are not transferrable to Plaintiff.

However, the Court

never entered judgment against the defendants on the cognovit
terms.

PNC subsequently moved for summary judgment seeking the

same relief based not on the cognovit answer, but on the terms of
the Pataskala Note, the Pataskala Guaranty, and the Hazelton
Note.

PNC argues in its memorandum in opposition to the motion

for judgment on the pleadings that it filed Counts 1-3 under the
warrants of attorney contained in the underlying promissory notes
and guaranty, and that it is entitled to judgment on the terms of
the instruments, whether or not the cognovit answer is deemed to
be valid.
The defendants rely in part on Pace v. Pace, 57 Ohio App.
281 (Stark Cty. 1936), in which a plaintiff originally brought
suit with respect to a cognovit note in the simple form, i.e. on

14

the terms of the note (not seeking cognovit judgment), but months
later sought to procure cognovit judgment by the warrant of
attorney.

The court held that “[w]hen plaintiff once selected

her forum, her form of procedure, and her remedy, appellant had a
right to the assumption that such would be pursued; and that she
had no right thereafter, without dismissal, amendment or notice,
to pursue another course....”

Id. at 287.

The defendants argue

that PNC must amend its pleading in order to pursue judgment on
the terms of the instrument, because “[a] litigant is not
authorized to request a form of relief in a motion for summary
judgment different from that requested in its pleading.”

Davis

v. Sun Oil Co., 953 F.Supp. 890 (S.D. Ohio 1996), aff’d, 148 F.3d
606 (6th Cir. 1998).

In Davis, the court held that because

plaintiff’s complaint did not seek restitution as a form of
relief, it was not entitled to a summary judgment order granting
restitution or ruling on the merits of a claim for relief in the
form of restitution.
This case is distinguishable from Davis, because the primary
reasoning behind that the decision was the plaintiff moved for an
entirely new form of relief not pled in the complaint.

The

defendants argue that if the Court fails to issue a cognovit
judgment, counts 1-3 are void.

The Court rejects that argument.

In this case, although the captions of counts 1-3 refer to a
cognovit judgment, the complaint specifically prayed for relief,
among other things: (1) judgment against Pataskala on Count One
for the amounts due on the Pataskala Note; (2) judgment against
Lafayette and Mr. Mallory on Count Two for the amounts due on the
Pataskala Guaranties; and (3) judgment against Hazelton for the
amounts due on the Hazelton Note.

It is not necessary for the

relief sought to be via a cognovit judgment because PNC is
entitled to the same relief based on the terms of the
instruments.

Thus, because a cognovit judgment has not been
15

entered, it is irrelevant to the outcome of this matter whether
the cognovit answer was valid or whether PNC possesses the right
to enforce the warrant.
For these reasons, and because the Court has found summary
judgment for the plaintiff on grounds unrelated to the issues
raised in the motion for judgment on the pleadings, the Court
will deny that motion as moot.
V.

Conclusion

The Court finds that there are no genuine issues of material
fact and that PNC is entitled to judgment as a matter of law as
to counts one through eight of the complaint.

Thus, the

defendants’ motions for partial judgment on the pleadings (Doc.
54) and partial summary judgment (Doc. 58) are denied.
motion for summary judgment (Doc. 56) is granted.

PNC’s

The Clerk is

directed to enter judgment in favor of PNC as follows:
As to counts one and two of the complaint, the Court finds
that Pataskala executed the Pataskala Note and promised, among
other things, to make payments in accordance with the terms of
the Pataskala Note.

The Court further finds that PNC is the

owner and holder of the Pataskala Note and that the sums due
under the Pataskala Note were not paid by Pataskala.

The Court

finds that Lafayette and Mr. Mallory executed and delivered the
Pataskala Guaranty, and under the terms thereof are liable for
the sums due and owing on the Pataskala Note.

Judgment is

therefore entered against Pataskala, Lafayette and Mr. Mallory,
jointly and severally, on the terms of the Pataskala Note and the
Pataskala Guaranty, in the amount of $1,510,500.00 in principal,
plus accrued interest at the rate of LIBOR plus 3.5%; $118,592.22
in real estate taxes paid by PNC; and $11,324.00 in other costs
and advances.
As to counts three and four of the complaint, the Court
finds that Hazelton executed the Hazelton Note and promised,
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among other things, to make payments in accordance with the terms
of the Hazelton Note.

The Court further finds that PNC is the

owner and holder of the Hazelton Note and that the sums due under
the Hazelton Note were not paid by Hazelton.

The Court finds

that Lafayette and Mr. Mallory executed and delivered the
Hazelton Guaranty, and under the terms thereof are liable for the
sums due and owing on the Hazelton Note.

Judgment is therefore

entered against Hazelton, Lafayette and Mr. Mallory, jointly and
severally, on the terms of the Hazelton Note and the Hazelton
Guaranty, in the amount of $4,047,806.47 in principal, plus
accrued interest at the rate of LIBOR plus 3.5%; $269,103.87 in
real estate taxes paid by PNC; and $15,468.00 in other costs and
advances.
As to count five of the complaint, the Court finds that
Pataskala executed and delivered the Pataskala Mortgage and that
Hazelton executed and delivered the Pataskala Second Mortgage and
that PNC is the owner and holder of those mortgages, and those
mortgages secure the amounts due under the Pataskala Note.

The

Court finds that the mortgages are in default because payments
have not been made.

The Court further finds that the conditions

of the mortgages have been broken, the break is absolute, and PNC
is entitled to have the equity of redemption and dower of the
current title holders of the following property, known as the
“Pataskala Property” be foreclosed:
Land located in Pataskala, Licking County,
Ohio with a street address of 0 Hazelton-Etna
Road, Pataskala, Ohio, designated as parcel
number 064-152712-00.001.
The Court finds that the mortgages were recorded with the
County Recorder and are valid and subsisting mortgages on the
Pataskala Property.

The Pataskala Mortgage is senior to the

Pataskala Second Mortgage, and they are junior in priority under
Ohio law to any lien held by the Licking County Treasurer to
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secure the payment of real estate taxes and assessments.

All

amounts payable under O.R.C. §323.47 shall be paid from the
proceeds of the sale before any distribution is made to other
lien holders.

It is therefore ordered that the equity of

redemption of the defendant title holders in the Pataskala
Property shall be foreclosed and the Pataskala Property shall be
sold free of the interests of all parties to this action subject
to the equity of redemption of Pataskala and Hazelton be forever
cutoff and barred.

Notice of the time and place of the sale of

the Pataskala Property shall be given to all persons who have an
interest in the property according to the provisions of O.R.C.
§2329.26.
As to count six of the complaint, the Court finds that
Hazelton executed and delivered the Hazelton Mortgage and that
Pataskala executed and delivered the Hazelton Second Mortgage and
that PNC is the owner and holder of those mortgages, and those
mortgages secure the amounts due under the Hazelton Note.

The

Court finds that the mortgages are in default because payments
have not been made.

The Court further finds that the conditions

of the mortgages have been broken, the break is absolute, and PNC
is entitled to have the equity of redemption and dower of the
current title holders of the following property, known as the
“Hazelton Property” be foreclosed:
Land located in Pataskala, Licking County,
Ohio with a street address of 0 Hazelton-Etna
Road, Pataskala, Ohio, designated as parcel
number 064-152712-00.003.
The Court finds that the mortgages were recorded with the
County Recorder and are valid and subsisting mortgages on the
Pataskala Property.

The Hazelton Mortgage is senior to the

Hazelton Second Mortgage, and the mortgages are junior in
priority under Ohio law to any lien held by the Licking County
Treasurer to secure the payment of real estate taxes and
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assessments.

All amounts payable under O.R.C. §323.47 shall be

paid from the proceeds of the sale before any distribution is
made to other lien holders.

It is therefore ordered that the

equity of redemption of the defendant title holders in the
Hazelton Property shall be foreclosed and the Hazelton Property
shall be sold free of the interests of all parties to this action
subject to the equity of redemption of Hazelton and Pataskala be
forever cutoff and barred.

Notice of the time and place of the

sale of the Hazelton Property shall be given to all persons who
have an interest in the property according to the provisions of
O.R.C. §2329.26.
As to count seven of the complaint, due to the default under
the Pataskala Note, the conditions of defeasance contained in the
Pataskala Mortgage and the Pataskala Second Mortgage have been
broken.

Thus, it is ordered that the personal property defined

in the complaint as the Pataskala Personal Property be sold and
the proceeds be used to satisfy the amounts due and owing to PNC.
As to count eight of the complaint, due to the default under
the Hazelton Note, the conditions of defeasance contained in the
Hazelton Mortgage and the Hazelton Second Mortgage have been
broken.

Thus, it is ordered that the personal property defined

in the complaint as the Hazelton Personal Property be sold and
the proceeds be used to satisfy the amounts due and owing to PNC.
IT IS SO ORDERED.

/s/ Terence P. Kemp
United States Magistrate Judge

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