CITIZENS BANK v. LEYLAND INVESTMENT CO., LLC

JUDGMENT ENTRY GRANTING COMBINED MOTION OF PLAINTIFF CITIZENS BANK, SUCCESSOR IN INTEREST BY MERGER TO REPUBLIC BANK, f/k/a REPUBLIC SAVINGS BANK FOR (I) DEFAULT JUDGMENT AGAINST DEFENDANT LEYLAND INVESTMENT CO., LLC; (II) SUMMARY JUDGMENT AGAINST DEFENDANTS AQUA MANAGEMENT GROUP, INC. DBA HOOK, LINE & DRINKERS AND SUMMIT COUNTY FISCAL OFFICER; AND DECREE OF FORECLOSURE

JOHN R. ADAMS, District Judge.

This cause was submitted to the Court on the Combined Motion of Plaintiff Citizens Bank, Successor in Interest by Merger to Republic Bank, f/k/a Republic Savings Bank for (1) Default Judgment against Defendant Leyland Investment Co., LLC; (2) Summary Judgment against Defendants Aqua Management Group, Inc. dba Hook, Line & Drinkers and Summit County Fiscal Officer; and (3) a Decree of Foreclosure (Doc No. 25), the Answers of Defendants Aqua Management Group, Inc. dba Hook, Line & Drinkers (Doc No. 24), and Summit County Fiscal Officer (Doc No. 6), and the evidence.

THE COURT FINDS THAT:

The real property that is the subject of this foreclosure action is located at:

All necessary parties have been served with summons according to law and are properly before the Court. Defendant Leyland Investment Co., LLC has failed to answer or otherwise defend as required by the Federal Rules of Civil Procedure, that Plaintiff properly filed a motion for default judgment and that Plaintiff has provided an evidentiary basis for the entry of default judgment.

The Court finds that there is no genuine issue as to any material fact, and that Plaintiff is entitled to judgment as a matter of law.

Accordingly, the Combined Motion of Plaintiff Citizens Bank, Successor in Interest by Merger to Republic Bank, f/k/a Republic Savings Bank for (1) Default Judgment against Defendant Leyland Investment Co., LLC; (2) Summary Judgment against defendants Aqua Management Group, Inc. dba Hook, Line & Drinkers and Summit County Fiscal Officer; and (3) a Decree of Foreclosure is GRANTED.

The Court finds that Defendant Aqua Management Group, Inc. dba Hook, Line & Drinkers has filed an answer claiming an interest in the Premises. Such interest shall transfer to the proceeds of the sale of the Premises, and Defendant Aqua Management Group, Inc. dba Hook, Line & Drinkers shall have the right to seek payment from the proceeds of the sale of the Premises. Such interest shall be released from the title to the Premises on confirmation of the sale to ensure that the buyer obtains title to the Premises free and clear of all interests. The Court makes no finding at this time as to the respective rights, title, interests or liens of said defendant as set forth in their pleadings, except as set forth herein.

The Court finds that on June 28, 2005, Plaintiff and Defendant Leyland Investment Co., LLC ("Borrower") entered into a certain Construction Loan Agreement, pursuant to which Plaintiff agreed to lend Borrower the sum of $850,000.00, pursuant to the terms and conditions set forth therein (the "First Loan Agreement"). A true and accurate copy of the First Loan Agreement is attached to the Complaint as Exhibit A.

The Court finds that Borrower executed and delivered to Plaintiff a certain Commercial Term Note referenced in and attached as Exhibit B to Plaintiff's Complaint (the "First Note") and promised, among other things, to make monthly payments on or before the date such payments were due. The Court further finds that Borrower has failed to pay in accordance with the terms of the First Note and is, therefore, in default. The Court also finds that Plaintiff is the owner and holder of the First Note, and that the sums due under the First Note were accelerated in accordance with the terms of the First Note and the First Mortgage, as defined herein.

The Court finds that to secure payment of the First Note, Borrower executed and delivered a certain Open-End Mortgage and Security Agreement, as referenced in and attached as Exhibit C to Plaintiff's Complaint (the "First Mortgage"), thereby conveying the Portage Lakes Property to Plaintiff as security for repayment of the First Note.

The Court finds that the First Mortgage was duly recorded and filed for record in the Summit County Fiscal Office on July 14, 2005 as Document No. 55208620, and thereby became and is a valid first mortgage lien on the Portage Lakes Property subject only to the lien of the Summit County Fiscal Officer for taxes and assessments; that the conditions in the First Mortgage have been broken and the same has become absolute; and that, as a result, Plaintiff is entitled to have the equity of redemption and dower of all defendants in and to the Portage Lakes Property foreclosed.

The Court finds that Plaintiff is the owner and holder of the First Mortgage, and that the First Mortgage secures the amounts due under the First Note. The Court also finds that there is or may be due Plaintiff sums advanced by it under the terms of the First Note and First Mortgage to pay real estate taxes, hazard insurance premiums, and property protection, the total amount of which is undetermined at the present time, but which amount will be ascertainable at the time of the sale, which amount may be added to the first mortgage lien of Plaintiff. The Court reserves for further order a determination of the exact amount due Plaintiff for said advances.

The Court finds that on September 1, 2005, Plaintiff and Borrower entered into a certain Commercial Loan Agreement, pursuant to which Plaintiff agreed to lend Borrower the sum of $127,500.00, pursuant to the terms and conditions set forth therein (the "Second Loan Agreement"). A true and accurate copy of the Second Loan Agreement is attached to the Complaint as Exhibit K.

The Court finds that Borrower executed and delivered to Plaintiff a certain promissory note referenced in and attached as Exhibit L to Plaintiff's Complaint (the "Second Note") and promised, among other things, to make monthly payments on or before the date such payments were due. The Court further finds that Borrower has failed to pay in accordance with the terms of the Second Note and is, therefore, in default. The Court also finds that Plaintiff is the owner and holder of the Second Note, and that the sums due under the Second Note were accelerated in accordance with the terms of the Second Note and the Second Mortgage, as defined herein.

The Court finds that to secure payment of the Second Note, Borrower executed and delivered a certain Open-End Mortgage, as referenced in and attached as Exhibit M to Plaintiff's Complaint (the "Second Mortgage"), thereby conveying the Portage Point Property to Plaintiff as security for repayment of the Second Note.

The Court finds that the Second Mortgage was duly recorded and filed for record in the Summit County Fiscal Office on September 2, 2005 as Document No. 55229777, and thereby became and is a valid first mortgage lien on the Portage Point Property subject only to the lien of the Summit County Fiscal Officer for taxes and assessments; that the conditions in the Second Mortgage have been broken and the same has become absolute; and that, as a result, Plaintiff is entitled to have the equity of redemption and dower of all defendants in and to the Portage Point Property foreclosed.

The Court finds that Plaintiff is the owner and holder of the Second Mortgage, and that the Second Mortgage secures the amounts due under the Second Note. The Court also finds that there is or may be due Plaintiff sums advanced by it under the terms of the Second Note and Second Mortgage to pay real estate taxes, hazard insurance premiums, and property protection, the total amount of which is undetermined at the present time, but which amount will be ascertainable at the time of the sale, which amount may be added to the first mortgage lien of the Plaintiff. The Court reserves for further order a determination of the exact amount due Plaintiff for said advances.

The Court finds that on February 27, 2007, Plaintiff and Borrower entered into a certain Commercial Loan Agreement, pursuant to which Plaintiff agreed to lend Borrower the sum of $660,000.00, pursuant to the terms and conditions set forth therein (the "Third Loan Agreement"). A true and accurate copy of the Third Loan Agreement is attached to the Complaint as Exhibit O.

The Court finds that Borrower executed and delivered to Plaintiff a Promissory Note (Commercial Term Note) in the principal amount of $660,000.00 referenced in and attached to the Complaint as Exhibit P (the "Third Note"). The Court further finds that Borrower subsequently executed and delivered to Plaintiff an Amended and Restated Cognovit Promissory Note (Commercial Term Note) in the principal amount of $660,000.00, which served to amend and restate the Third Note (the "Amended Third Note") and promised, among other things, to make monthly payments on or before the date such payments were due. The Court further finds that Borrower has failed to pay in accordance with the terms of the Amended Third Note and is, therefore, in default. The Court also finds that Plaintiff is the owner and holder of the Amended Third Note, and that the sums due under the Amended Third Note were accelerated in accordance with the terms of the Amended Third Note and the First Mortgage.

The Court finds that to secure payment of the Amended Third Note, Borrower executed and delivered a certain Amendment to Open-End Mortgage and Security Agreement and Mortgage Loan Modification Agreement, as referenced in and attached as Exhibit R to Plaintiff's Complaint (the "Amendment"), which served to modify and amend the First Mortgage such that it would also secure the indebtedness evidenced by the Amended Third Note.

The Court finds that the Amendment was duly recorded and filed for record in the Summit County Fiscal Office on March 1, 2007 as Document No. 55419068, and thereby became and is part of the first mortgage lien created by the First Mortgage on the Portage Lakes Property subject only to the lien of the Summit County Fiscal Officer for taxes and assessments.

The Court finds that Plaintiff is the owner and holder of the Amendment and First Mortgage, and that the First Mortgage secures the amounts due under the Amended Third Note. The Court also finds that there is or may be due Plaintiff sums advanced by it under the terms of the Amended Third Note and First Mortgage to pay real estate taxes, hazard insurance premiums, and property protection, the total amount of which is undetermined at the present time, but which amount will be ascertainable at the time of the sale, which amount may be added to the first mortgage lien of the Plaintiff. The Court reserves for further order a determination of the exact amount due Plaintiff for said advances. The First Note, the Second Note, the Amended Third Note may be collectively referred to herein as the "Notes." The First Mortgage and the Second Mortgage may be collectively referred to herein as the "Mortgages."

The Court finds that on April 27, 2012, in an action bearing Case No. CV 2012 04 2329, the Summit County Court of Common Pleas rendered judgment in favor of Plaintiff on the Notes in the aggregate amount of $1,430,205.49, plus interest on the principal balances of the Notes at the rates set forth therein from and after February 23, 2012, as referenced in and attached to the Complaint as Exhibit U (the "Judgment"). The Court further finds that Plaintiff obtained a lien in the Judgment amount in an action bearing Case No. JL-2012-3957, as referenced in and attached to the Complaint as Exhibit V (the "Certificate of Judgment").

The Court finds that there is due to the Summit County Fiscal Offer for taxes, accrued taxes, assessments, and penalties on the Premises described herein, as shown on the Summit County Fiscal Offer's tax duplicate, the exact amount being unascertainable at this time, but which amount will be ascertainable at the time of the sale of said Premises, which are a valid and subsisting first lien on the Premises.

The Court further finds that there is no just cause for delay.

IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED that Defendant Leyland Investment Co., LLC is in default in these proceedings and that judgment is entered in favor of Plaintiff and against Defendant Leyland Investment Co., LLC;

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that there is no genuine issue as to any material fact and Plaintiff is entitled to judgment as a matter of law, and therefore judgment is entered in favor of Plaintiff and against Defendants Aqua Management Group, Inc. dba Hook, Line & Drinkers and Summit County Fiscal Officer; and

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that unless the sums found to be due to Plaintiff, together with the costs of this action, including the cost of the Preliminary Judicial Reports filed herein for which Plaintiff is entitled to reimbursement, be fully paid within ten (10) days from the date of the entry of this Decree, the equity of redemption and the dower of all defendants in the Premises described above will be foreclosed and the Premises shall be sold free of the interest of all parties to this action subject to redemption by the Borrower pursuant to Ohio Revised Code § 2329.33. In addition, and until further order of this Court, David M. Hunter, the court-appointed receiver in this matter, is to proceed in accordance with the Court's Order Appointing David M. Hunter as Receiver (Doc No. 20), including, without limitation, the advertisement and private sale of the Premises and the reporting of his proceedings to this Court.

Subject to further order of this Court in the Order of Confirmation of Sale and Distribution, the proceeds of any sale of the Premises shall be paid as follows:

1. To the Clerk of Courts the costs herein, including all allowed and unpaid compensation to the Receiver and counsel to the Receiver as may be allowed, upon application, by order of this Court and the sum of $4,943.00, payable to Plaintiff's attorneys, Meyers, Roman, Friedberg & Lewis IOLTA, for the judicial reports filed herein, which is hereby taxed as costs;

2. To the Summit County Fiscal Officer, taxes, accrued taxes, assessments, and penalties on the Premises payable under Ohio Revised Code § 323.47 as set forth herein;

3. To Plaintiff, the sum of $1,430,205.49, plus interest on the principal balances of the Notes at the rates set forth therein from and after February 23, 2012, the exact amount of which is yet to be determined;

4. To Plaintiff, sums advanced for real estate taxes, hazard insurance and property protection, and Plaintiff's attorneys' fees in an amount yet to be determined; and

5. The balance, if any, to be held by the Court pending further order of the Court.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that on the distribution of the proceeds of sale pursuant to the Order of Confirmation of Sale and Distribution, a certified copy of the Order shall be issued to the Summit County Fiscal Office and the Clerk of Courts directing them to enter the same on the margin of the records of the mortgages and liens, releasing the liens adjudicated herein from the Premises.

IT IS SO ORDERED.