rieceove-0 - supreme court of ohio 7th dist. no. 12ma189, 2013-ohio-5380, ¶ 19-21; wells fargo...

IN THE SUPREME COURT OF OHIO

WELLS FARGO BANK, N.A. as Trusteefor the Registered Holders of CBACommercial Assets, Small BalanceCommercial Mortgage Pass-ThroughCertificates, Series 2005-1

Plaintiff-Appellee,

vs.

E. OKECHUKWU ODITA, et aL

Defendants-Appellants.

^ ^ / ....... /J J .^-.^

On Appeal from theFranklin County Court of Appeals,

Tenth Appellate District

Court of Appeals Case No.13AP-663

MEMORANDUM IN SUPPORT OF JCTRISDICTION OF APPELLANTS E.OKECHUKWU ODITA AND FLORENCE ODITA

Daniel A. Yarmesch (0089790)Doucet & Associates, Co., L.P.A.700 Stonehenge Parkway, Suite 2BDublin, OH 43017(614) 944-5219 Phone(818) 638- 5548 [email protected]

COUNSEL FOR APPELLANTS E. OKECHLTKWU ODITA AND FLORENCE ODITA

Ronald L. House, Jr. (0036752)J. Allen Jones, III (0072397)Benesch, Friedlander, Coplan & Aronoff LLP41 South High Street, Suite 2600Columbus, OH 43215-3506(614) 223-9300 Phone(614) 223-9330 [email protected]

COUNSEL FOR APPELLEE WELLS FARGO BANK, N.A.

RIECEOVE-0JUL 2 5 2014

CLERKOFCOUqY

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TABLE OF CONTENTS

I. EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLIC OR GREATGENERAL INTEREST AND INVOLVES A SUBSTANTIAL CONSTITUTIONALQUESTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

II. STATEMENT OF THE CASE AND FACTS .............................................. 3

III. ARGUMENT IN SUPPORT OF PROPOSITION OF LAW ... ... .. ....... . . . .. . .. .......6

Promosition ofLaw #1: A plaintiffmust establish its possession of theoriginal note indorsed in blank or indorsed to plaint^fat the time itfiles itsComplaint in order to establish its ability to enforce the note ...............6

Pro2osition ofLaw #2: If a plaintiff fails to establish its standing at the timeitfiles its complaint, it may not correct the deficiency in subsequentfilings.......................................................................................... 7

Pro2osition ofLaw #3: It is an abuse of discretion to permit a receiver tosell a property for far below market price, over the objection of the owner ofthe property ...........................................................................9

Promosition of Law #4: It is an abuse of discretion to award attorney's fees

based on evidence adduced by the trial court ....................................10

IV. CONCLUSION . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

CERTIFICATE OF SERVICE............ ...................................................

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Judgment Entry of the Tenth District Court of Appeals (June 12, 2014)

Decision of the Tenth District Court of Appeals (June 12, 2014)

Judgment Entry of the Franklin County Court of Common Pleas (July 1, 2013)

Judgment Entry of the Franklin County Court of Common Pleas (June 20, 2013)

Judgment Entry of the Franklin County Court of Common Pleas (May 9, 2013)

Judgment Entry of the Franklin County Court of Common Pleas (February 28,

2012)

Judgment Entry of the Franklin County Court of Common Pleas (November 9,

2011)

Judgment Entry of the Franklin County Court of Common Pleas (September 1,

2011)

I. EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLIC OR GREATGENERAI. INTEREST AND INVOLVES A SUBSTANTIALCONSTITUTIONAL QUESTION.

Despite this Court's crystal clear rule that standing in a foreclosure case must be shown

on the date of filing, the Tenth District allowed Plaintiff-Appellee Wells Fargo Bank, N.A. as

Trustee for the Registered Holders of CBA Commercial Assets, Small Balance Commercial

Mortgage Pass-Through Certificates, Series 2005-1 ("Wells Fargo") to establish its standing 7

days after Wells Fargo filed its Complaint. This Court should reverse and remand, with or

without a written decision, so Ohio litigants can have some predictability with the judiciary and

can rely on the equal application of this Court's rulings throughout the state.

"It is fundamental that a party commencing litigation must have standing to sue in order

to present a justiciable controversy and invoke the jurisdiction of the common pleas court."

(Emphasis added.) Fed. Home Loan Mortgage Corp. v. Schwartzwald, 134 Ohio St. 3d 13, 2012-

Ohio-5017, 979 N.E.2d 1214, ¶ 24. "Because standing to sue is required to invoke the

jurisdiction of the common pleas court, `standing is to be determined as of the commencement of

suit. "' Schwartzwald at ¶ 24. If a lender cannot enforce the note or mortgage at the time it files

its complaint, the complaint must be dismissed. Schwartzwald at ¶ 40. Standing is a

constitutional prerequisite of the jurisdiction of the courts. Schwartzwald at ¶ 20-22.

Outside the Tenth District, Ohio appellate courts have properly applied Schwartzwald and

required lenders to show they are able to enforce notes and mortgages at the time they file their

complaints. U.S. BankNatl. Assn. v. Kamal, 7th Dist. No. 12MA189, 2013-Ohio-5380, ¶ 19-21;

Wells Fargo Bank, N.A. v. Jordan, 8th Dist. No. 91675, 2009-Ohio-1092, ¶ 25; U.S. Bank Natl.

Assn. v. Perry, 8th Dist. No. 99608, 2013-Ohio-3814, ¶ 12; Deutsche Bank Natl. Trust Co. v.

Reynolds, 9th Dist. No. 27192, 2014-Ohio-2372, ¶ 14; U.S. Bank v. Cooper, 9th Dist. No.

12CA0084-M, 2014-Ohio-61; BAC Home Loan Servicing LP v. McFerren, 9th Dist. No. 26384,

2013-Ohio-3228, ¶ 9; Bank of New York Mellon Trust Co. v. Shaffer, 11 th Dist. No. 2011-G-

3051, 2013-Ohio-3205, ¶ 30-3 1.

In this matter, the Tenth District held that Plaintiff had established its possession of the

note "when the complaint was filed in May 2010." Wells Fargo v. Odita, 10th Dist. No. 13AP-

663, 2014-Ohio-2540, ¶ 10. Schwartzwald does not require Wells Fargo to establish its standing

in the same month it filed its Complaint. Schwartzwald requires Wells Fargo to establish

standing at the time it files its Complaint. The Tenth District misapplied Schwartzwald by

permitting Wells Fargo to establish its standing to foreclose with an affidavit attesting the

servicer possessed the note a week after Wells Fargo filed its Complaint.

- On May 20, 2010, Ryan Lucas, an employee of Wells Fargo's servicer, executed an

affidavit stating a note (or a copy of the note) was in his files. Odita at ¶ 10. Nothing in Mr.

Lucas's affidavit speaks to Wells Fargo's possession of the original note on May 13, 2010 - the

only date that matters for determining Wells Fargo's standing. At best, Mr. Lucas's affidavit

shows Wells Fargo or its servicer had possession of the note a week after the Complaint was

filed. Thus, Mr. Lucas's affidavit failed to show Wells Fargo had possession of the original note

as of the date the Complaint was filed. Accordingly, Wells Fargo has not established its

standing, or at the very least, a genuine issue of material fact remains, and granting Wells Fargo

summary judgment is inappropriate.

The Tenth District must follow Schwartzwald, and Schwartzwald requires Wells Fargo to

establish its possession of the original note as of the date it filed its Complaint. Wells Fargo

failed to establish its possession of the original note on May 13, 2010 so its Complaint should be

dismissed. At the very least, a genuine issue of material fact exists and the trial court should not

2

have granted Wells Fargo summary judgment. The Court should take this opportunity to bring

the Tenth District back into accord with other Ohio appellate courts.

Finally, this case is particularly relevant and timely as standing is frequently implicated in

foreclosure cases filed across the state. While foreclosure filings are down in 2014, lenders still

filed 935 foreclosures in Central Ohio in May 2014.1 Whatever one's opinion concerning the

foreclosure crisis, this Court should not tolerate lower courts giving lenders a free pass to sue

Ohio pToperty-owners without showing they can enforce the alleged obligations. If property

owners cannot rely on the courts to police standing, they may well be required to pay the same

debt twice. Livonia Properties Holdings, LLC v. 12840-12976 Farmington Rd. Holdings, LLC,

399 F.Appx. 97, 102 (6th Cir. 2010). Accordingly, the Court should reinforce its well-reasoned

holding in Schwartzwald by taking the Oditas' appeal and reversing the Tenth District's decision.

II. STATEMENT OF THE CASE AND FACTS

This case centers on a commercial loan on rental properties located at 21-39 South

Burgess Avenue, Columbus, Ohio ("Burgess Avenue Property"), that Defendants-Appellants E.

Okechukwu and Florence Odita ("the Oditas") assumed on June 10, 2008.

Wells Fargo filed foreclosure against the Oditas on May 13, 2010. On May 21, 2010,

Wells Fargo filed an affidavit from Ryan Lucas, an employee of Midland Loan Services, Inc. In

this affidavit, Mr. Lucas stated that "[a] copy of the note contained in his files was attached to the

Complaint as Exhibit A." Odita, ¶ 10. Mr. Lucas did not testify whether the note contained in

his files was an original or a copy. Furthermore, Mr. Lucas's affidavit was dated May 20, 2010,

seven days after Plaintiff filed its Complaint and does not state the note was in his files on May

13, 2010. Wells Fargo later amended its Complaint to allege additional claims against the Oditas-------------- --------1 Foreclosures fell in Ohio, U.S. in May, Columbus Dispatch, available athttp://www.dispatch.com/content/stories/business/2014/06/1 0/foreclosures-fell-in-ohio-u-s-last-month.html (accessed July 16, 2014.)

for fraudulent conveyance. The fraud claims were not a part of the Oditas' appeal except to the

extent they were predicated on Wells Fargo's underlying foreclosure claims.

On May 14, 2010, John A. Rothschild ("the Receiver") was appointed as receiver to

conduct all business associated with the Burgess Avenue Property. On July 14, 2010, the

Receiver filed an initial status report stating the value of the Burgess Avenue Property was

between $225,000.00 and $400,000.00. On July 5, 2011, the Receiver moved the Trial Court to

permit a sale of the entire Burgess Avenue Property as one unit at a price of $147,833.00. The

Oditas objected to the sale and requested the trial court replace the Receiver. The trial court held

a hearing on this issue on August 31, 2011. On September 1, 2011, the trial court issued an order

permitting the Receiver to sell the Burgess Avenue Property free and clear of encumbrances for

$147,833.00.

On November 9, 2011, the trial court granted Wells Fargo summary judgment on its

foreclosure claims. The trial court did not address Mr. Lucas's affidavit in its Judgment Entry.

However, the trial court did find that Wells Fargo held the note. (Judgment Entry dated

November 9, 2011, 2.) The case then proceeded on Wells Fargo's fraud claims. The trial court

confirmed the Receiver's sale of the Burgess Avenue Property on February 28, 2012.

From May 6 through May 8, 2013, the trial court held a trial on Wells Fargo's fraud

claims. On May 9, 2013, the trial court granted Wells Fargo judgment on its fraud claims and

awarded Wells Fargo its attorney's fees. (Judgment Entry dated May 9, 2013.)

Wells Fargo submitted a fee application on May 24, 2013. The Court held a hearing on

Wells Fargo's fees on June 14, 2013. The trial court was dissatisfied with the information

provided by Wells Fargo, so it conducted its own research as to the reasonableness of Wells

Fargo's fees. The Trial Court sent out requests for information to law firms in Columbus and

4

researched case law on the subject, and then presented the evidence during a hearing on June 14,

2013, in an attempt to justify Wells Fargo's attorney's fees for it. (Transcript of June 14, 2013

Hearing, 13-16.) On June 20, 2013, the Court awarded Wells Fargo all of the attorney's fees it

sought in the amount of $94,018.79. The trial court issued a final, appealable order on Wells

Fargo's foreclosure claims, the receivership sale, the fraud claims, and the attorney's fees award

on July 1, 2013.

The Oditas timely appealed the trial court's July 1, 2013 Judgment Entry to the Tenth

District. The Oditas argued the trial court erred in granting Wells Fargo summary judgment on

its foreclosure claims, in approving the sale of the Burgess Avenue Property for a fraction of its

appraised value, and in awarding attorney's fees based on the trial court's own investigation.

The Tenth District affirmed the trial court's decision on all three assignments of error. On June

20, 2014, the Oditas filed a Motion to Certify Conflict with the Tenth District. The motion is

fully briefed and pending in the Tenth District.

The Oditas now timely appeal the Tenth District's decision. The Tenth District erred in

holding Wells Fargo established its standing to enforce a note indorsed in blank without showing

it possessed the original note at the time it filed its Complaint. The Tenth District also erred in

affirming the Receiver's sale of the Burgess Avenue Property for a fraction of the appraised

value. Finally, the Tenth District erred in aff rming the trial court's award of attorney's fees

based on the trial court's own factual investigation. The errors undermine Schwartzwald and

give lenders a green light to sue property owners without being able to show they are entitled to

enforce the debt. Accordingly, the Court should take up this appeal and reverse the Tenth

District's decision.

5

III. ARGUMENT IN SUPPORT OF PROPOSITION OF LAW

Proposition ofLaw #1: A plaintiff must establish its possession of the original noteindorsed in blan& or indorsed to plaint ff at the time itfiles its Complaint in order toestablish its ability to enforce the note.

When a holder of a note indorses a note without naming an indorsee, also known as a

blank indorsement, the note becomes bearer paper. R.C. 1303.25 (B). A note indorsed in blank

is enforceable by the entity that has actual possession of it. Id.

Standing is determined at the commencement of the suit. Schwartzwald, at ¶ 24. Thus,

when a lender seeks foreclosure on a note indorsed in blank, the lender must establish its

possession of the original note at the time it files its Complaint. U.S. Bank Natl. Assn. v. Kamal,

7th Dist. No. 12MA189, 2013-Ohio-5380, ¶ 19-21; Deutsche BankNatl. Trust Co. v. Reynolds,

9th Dist. No. 27192, 2014-Ohio-2372, ¶ 14; BAC Home Loan Servicing LP v. McFerren, 9th

Dist. No. 26384, 2013-Ohio-3228, ¶ 9.

In Kamal, the Seventh District reversed a grant of summary judgment where the lender

had sworn it was the holder of the note in a summary judgment affidavit but failed to state when

it had acquired possession of the original note. Kamal at ¶ 19. Because possession must be

established as of the date the complaint was filed, the court remanded the case for further

proceedings. Id. at ¶ 22. In Reynolds, the Ninth District ordered the trial court to dismiss a

complaint where the lender presented an affidavit attesting to the lender's possession of the

original note at the time of filing but failed to present documentation of the transfers of the

original note. Reynolds at ¶ 13. Likewise, in McFerren, the Ninth District reversed a grant of

summary judgment where the lender showed it had possession of the original note as of the date

it filed its motion for summary judgment but failed to show it had possession as of the date it

filed its complaint. McFerren at ¶ 9-10.

6

In this matter, Wells Fargo attached a copy of a note indorsed in blank to its Complaint.

Accordingly, Wells Fargo had to show it had possession of the note at the time it filed its

Complaint in order to establish its standing to invoke the jurisdiction of the trial court. However,

the Tenth District found that Wells Fargo could establish its standing to foreclose through Mr.

Lucas's affidavit, which was filed subsequent to the filing of the Complaint. The Tenth District

held Wells Fargo established its possession of the note "when the complaint was filed in May

2010" through Mr. Lucas's affidavit. Odita at ¶ 10. In Mr. Lucas's affidavit, he states that "[a]

copy of the note contained in his files was attached to the Complaint as Exhibit A." Odita, ¶ 10.

However, Mr. Lucas did not state whether the note contained in his files was an original or a

copy. Furthermore, Mr. Lucas's affidavit was dated May 20, 2010, seven days after Wells Fargo

filed its Complaint and does not state the note was in his files on May 13, 2010. Mr. Lucas's

affidavit could not establish Wells Fargo or its servicer had possession of the original note on

May 13, 2010. Thus, the Tenth District has erred by permitting Wells Fargo to establish its

standing to enforce the note by showing it possessed the note after Wells Fargo filed its

Complaint.

In order to enforce a note indorsed in blank, a lender must establish its possession of the

original note on the date it files its complaint. The Tenth District's position interprets

Schwartzwald out of existence. Accordingly, the Court should take on this appeal to instruct the

lower court that Wells Fargo failed to establish its standing because it has not shown it had

possession of the note on May 13, 2010.

Promosition ofLarv #2: If a plaint^ffails to establish its standing at the timeitfiles its complaint, it may not correct the deficiency in subsequentfilings.

The Oditas' first Proposition of Law rests on the substance of Mr. Lucas's affidavit. Mr.

Lucas's affidavit does not show Wells Fargo possessed the note on the date it filed its Complaint.

7

The Oditas' second Proposition of Law rests on the timing of Mr. Lucas's affidavit. The trial

court and Tenth District erred in permitting Wells Fargo to establish its standing through Mr.

Lucas's affidavit because it was filed after Wells Fargo filed its Complaint.

Standing is determined at the commencement of the suit. Schwartzwald, at ¶ 24. As

described above, the Tenth District found that Wells Fargo could establish its standing to

foreclose through Mr. Lucas's affidavit, which was filed subsequent to the filing of the

Complaint. Leaving aside the substance of Mr. Lucas's affidavit, the Tenth District should not

have considered it at all when determining Wells Fargo's standing because Mr. Lucas's affidavit

was executed and filed after Wells Fargo filed its Complaint. Because Wells Fargo sought to

enforce a note indorsed in blank, Wells Fargo was required to file with its Complaint an affidivit

attesting to its possession of the original note.

The Ninth District has found that a plaintiff cannot cure defects present in the initial

pleading through subsequent affidavits or filings. Wells Fargo Bank, N.A. v. Horn, 9th Dist. No.

12CA010230, 2013-Ohio-2374, ¶ 11. While the Tenth District does not address Horn in Odita,

the two rulings are mutually exclusive. In this case, the Tenth District permitted Wells Fargo to

retroactively confer standing upon itself through Mr. Lucas's affidavit. However, the Ninth

District would have dismissed the Complaint because Wells Fargo did not establish its

possession of the note at the time it filed its Complaint.

The Ninth District's position is far more consistent with Schwartzwald's holding that

standing is determined at the commencement of the suit. Accordingly, the Court should take on

this appeal to adopt the Ninth District's position that standing must be established at the time a

plaintiff files its complaint.

8

ProRosition of Law #3: It is an abuse of discretion to permit a receiver to sell a propertyfor far below naarket price, over the objection of the owner of the property.

When the Receiver took possession of the Burgess Avenue Property in June 2010, the

appraised value of the property was between $225;000.00 and $400,000.00. Less than a year

later, the Receiver had decided of $147,833.00 was the best offer he could get for the property

and the trial approved the sale in September 2011. Despite the Oditas' objections to this fire sale

of the Burgess Avenue Property, the trial court approved and confirmed a sale of the Burgess

Avenue Property for $147,833.00.

A receiver should not simply do whatever a lender tells it to do. A receiver's job is to

maintain the value of property. R.C. 2735.01. (Receiver may be appointed in foreclosure action

when property is in danger of being removed, lost or injured.) Here, the Tenth District found

that the trial court did not abuse its discretion by approving the fire sale price due to deteriorating

condition of the Burgess Avenue Property and the lack of interest from prospective buyers.

Odita at ¶ 19. However, it was the Receiver's job to maintain the value of the property and

attract buyers. By failing to do so, the Receiver laid a massive deficiency judgment of

approximately $600,000.00 on the Oditas.

The trial court should have required the Receiver to make additional efforts maintain the

value of the Burgess Avenue Property and market the property as condominiums, which would

have substantially increased the final sale price. The Receiver did not take these actions because

Wells Fargo's goal was to sell the property as quickly and cheaply as possible. (Oditas'

Principal Appellate Brief, 26-27.) The trial court abused its discretion by tacitly indorsing this

misconduct and approving the fire sale of the Burgess Avenue Property. The Tenth District

erred by affirming the trial court's decision.

9

Property owners still have rights and interests in a property after an alleged default.

Accordingly, the Court should take on this appeal to protect property owners from indifferent

receivers and avaricious lenders who are more concerned with selling a property quickly than in

maximizing the value of the sale for the owner of the property.

d'roRosition of Law #4; It is an abuse of'discretion to award attorney's fees based onevidence adduced by the trial court.

Jud.Cond.R. 2.9(C) states "A judge shall not investigate facts in a matter independently,

and shall consider only the evidence presented and any facts that may properly be judicially

noticed." Here, the trial court, dissatisfied with the evidence regarding the reasonableness of

Wells Fargo's attorney's fees, conducted an independent investigation of what a reasonable

attorney rate is for creditor representation in Central Ohio. Odita at ¶ 25; (Oditas' Principal

Appellate Brief, 34-35.) (Transcript of June 14, 2013 Hearing, 13-15.) The trial court's staff

attorney asked his friend at a Dayton law firm about reasonable rates, and the trial court sent

requests for information to large firms and judges in Columbus. Then, during the hearing on

Wells Fargo's attorney's fees, the trial court essentially testified on Wells Fargo's behalf.

(Transcript of June 14, 2013 Hearing, 13-15.)

The trial court abused its discretion by taking on the role of fact investigator. The trial

court's ruling granting Wells Fargo the full attorney's fees it sought is tainted by the trial court's

independent investigation of the reasonableness of Wells Fargo's attorney's fees. The Tenth

District erred in approving the award of attorney's fees despite holding that best practices would

have been for the trial court to rely on the evidence adduced by the parties. Odita at ¶ 26.

The trial court awarded Wells Fargo over $90,000.00 in attorney's fees based on the trial

court's independent investigation as to the reasonableness of Wells Fargo's attorney's fees.

10

Accordingly, the Court should take on this appeal correct the trial court's error in conducting an

independent factual investigation and ensure the impartiality of the judiciary.

IV. CONCLUSION

The Oditas' appeal presents issues of great public and general concern and involves a

substantial constitutional question. The Tenth District has permitted Wells Fargo to establish its

standing by demonstrating its possession of the note after it filed its Complaint. The Tenth

District's ruling fails to give meaning to Schwartzwald's admonition that standing is determined

at the time of the filing of the lawsuit. The Tenth District has also permitted the trial court to

approve a receivership sale at far below market value, and award Wells Fargo attorney's fees

based on the trial court's independent investigation of the reasonableness of Wells Fargo's fees.

The Tenth District erred in these respects, and these errors are likely to be repeated given the

number of foreclosures still looming in Ohio. Accordingly, the Court should take on this appeal

and ensure a coherent and consistent application of the law for Ohio property owners.

Respectfully Submitted,

np^Daniel A. Yarm h (0089790)COL^1Sf;I, FO APl'LLLAN'I'S E.OKE Cfft^WU ODITA AND FF:ORENCEODITA

11

CERTIFICATE OF SERVICE

The undersigned certifies that a copy of the foregoing was served upon the following parties viaelectronic mail (e-mail) on July 23, 2014 per App.R. 13(C) and S. Ct. Prac. R. 3.11(B)(1).

J. Allen Jones II, Esq.Ronald L. House, Esq.Benesch Friedlander41 South High Street, 26th FloorColumbus, OH [email protected] for Wells Fargo Bank, N.A. As

Trustee for the Registered Holders of CBA

Commercial Assets, Small Balance

Commercial Mortgage Pass-Through

Certificates, Series 2005-1

Florence C. Odita, Esq.3155 Wareham RoadColumbus, OH 43221Attorney for E. Okechukwu Odita, 2605-2678Howey Road LLC, 1474 Cleveland Ave LLC,South Burgess Condominium Association,Florence Odita, 766 East Hudson St.LLC, 199West Fifth Ave LLC

The following parties were served via regular U.S. Mail, postage pre-paid per App.R. 13(C) andS. Ct. Prac. R. 3.11(B)(1).

Chris Sevis, Esq.600 South High Street, Suite 200Columbus, OH 43215Attorney for E. Okechukwu Odita, 2605-2678Howey Road LLC, 1474 ClevelandAve LLC

Adria L. Fields, Esq.Franklin County Prosecutor's Office373 South High Street, 14th FloorColumbus, OH 43215Attorney for Franklin County Treasurer

Sydney S. McLafferty, Esq.Cecil & Geiser495 South High Street, Suite 400Columbus, OH 43215Attorney for Sue Ann Smith and Estate ofWilliam Shepher

Rachel E. Reutzel, Esq.Robert T. Castor, Esq.Justin W. Ristau, Esq.Bricker & Eckler100 South Third StreetColumbus, OH 43215Attorneys for John A. Rothschild, Jr.

Andrew W. Cecil, Esq.Cecil & Geiser495 South High Street, Suite 400Columbus, OH 43215Attorney for Estate of William Shepher

David A. Herd, Esq.John C. Nemeth & Associates21 East Frankfort StreetColumbus, OH 43206Attorney for John A. Rothschild, Jr.

Michael L. Snyder, Esq.McDonald Hopkins Burke2100 Bank One Center600 Superiro Ave ECleveland, OH 44114-2653Attorney for Samuel Caliman

Beth I. Gillin, Esq.McDonald Hopkins LLC600 Superior Ave, Suite 2100Cleveland, OH 44114Attorney for Columbia Gas Ohio Inc.

12

David R. Mayo, Esq.2300 BP Tower200 Public SquareCleveland, OH 44114Attorneyfor Wells Fargo Bank, N.A. AsTrustee for the Registered Holders of CBACommercial Assets, Small BalanceCommercial Mortgage Pass-ThroughCertificates, Series 2005-1

'^.^__---------- ^^Daniel A. Yarme h (00^9790)COUNSEL FOR APPELLANTS E.OKECHUKWU ODITA AND FLORENCEODITA

13

APPENDIX

Judgment Entry of the Tenth District Court of Appeals (June 12, 2014)

Decision of the Tenth District Court of Appeals (June 12, 2014)

Judgment Entry of the Franklin County Court of Common Pleas (July 1, 2013)

Judgment Entry of the Franklin County Court of Common Pleas (June 20, 2013)

Judgment Entry of the Franklin County Court of Common Pleas (May 9, 2013)

Judgment Entry of the Franklin County Court of Common Pleas (February 28, 2012)

Judgment Entry of the Franklin County Court of Common Pleas (November 9, 2011)

Judgment Entry of the Franklin County Court of Common Pleas (September 1, 2011)

14

IN THE COURT OF APPEALS OF OHIO

TENTH APPELLATE DISTRICT

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Wells Fargo Bank, N.A., etc.,

Plaintiff-Appellee,

V.

E. Okechukwu Odita et al.,

Defendants-Appellants

No. 13AP-663(C.P.C. No. 2010 CVE-o5-7254)

(REGULAR CALENDAR)

JUDGMENT ENTRY

For the reasons stated in the decision of this court rendered herein on

June 12, 2014, appellants' three assignments of error are overruled, and it is the

judgment and order of this court that the judgment of the Franldin County Court of

Common Pleas is affirmed. Costs shall be assessed against appellants.

DORRIAN, BROWN & O'GRADY, JJ.

f S% o:TIJDCE

Tenth District Court of Appeals

Date: . 06-12-2014

Case Title: WELLS FARGO BANK NA TRUSTEE -VS- E OKECHUKWUODITA

Case Number: 13AP000663

Type: JEJ - JUDGMENT ENTRY

,So Ordered

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/s/ Judge Julia L. Dorrian

Electronically signed on 2014-Jun-12 page 2 of 2

IN THE COURT OF APPEALS OF OHIO

TENTH APPELLATE DISTRICT

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Wells Fargo Bank, N.A., etc.,

Plaintiff-Appellee,

V.

E. Okechukwu Odita et al.,

Defendants-Appellants

D E C I S I O N

No. 13A.P-663(C.P.C. No. 2010 CVE-o5-7254)

(REGULAR CALENDAR)

Rendered on June 12, 2014

Benesch, Friedlander, Coplan & Aronoff LLP, Ronald L.House, Jr. and J. Allen Jones, III, for appellee.

Doucet & Associates, Inc., Troy J. Doucet and Daniel A.Yarmesch, for appellants E. Okechukwu Odita and FlorenceOdita.

APPEAL from the Franklin County Court of Common Pleas

DORRIAN, J.

{¶ 1} Defendants-appellants, E. Okechukwu Odita and Florence Odita

("appellants"), appeal from a judgment of the Franklin County Court of Common Pleas

granting summary judgment in favor of plaintiff-appellee, Wells Fargo Bank, N.A.

("appellee"), on its complaint for foreclosure, approving the sale of the property at issue

by the court-appointed receiver, and awarding certain attorney fees sought by appellee.

For the following reasons, we affirm.

{¶ 2} The action giving rise to this appeal involves property located at 21-39 South

Burgess Avenue, Columbus, Ohio, which consists of multiple buildings containing a total

of 16 residential units ("the Property"). In June 2005, Paul and Kathleen Pearson ("the

No.13A.P-663 2

Pearsons") executed a promissory note for $445,000 ("the Note") to New Century

Mortgage Corporation ("New Century"). `I'o secure payment of the note, the Pearsons

executed a mortgage ("the Mortgage") to New Century on the Property. Appellee asserts

that it took the Note for value in 2005. Appellee further asserts that New Century assigned

the mortgage to appellee in 2005. On June 10, 20o8, appellants entered into a consent

and assumption agreement with the Pearsons, under which appellants assumed all

obligations under the Note and the Mortgage.

{¶ 3} In May 201o, appellee filed a complaint for foreclosure, asserting that

appellants were in default of the terms and conditions of the Note. Appellee sought

judgment against appellants for the outstanding balance due and accrued interest under

the Note, along with foreclosure of the Mortgage and sale of the Property. Appellee

subsequently amended its complaint to assert that appellants engaged in fraudulent

conveyances of certain other rental properties they owned to limited liability companies

under their control in an attempt to hinder appellee's ability to recover from them ("the

fraudulent conveyance claim").

{¶ 4} Appellee also sought the appointment of a receiver to manage the Property.

The trial court granted appellee's motion for appointment of a receiver, granting the

receiver authority to manage, control, operate, maintain, and protect the Property, as well

as authority to sell the Property. In July 2011, the receiver filed a motion requesting an

order authorizing sale of the Property free and clear of any liens, claims, encumbrances or

interests of the parties for $147,833. Following a hearing, the trial court issued an order

granting the receiver's motion and approving the sale.

{¶ 5} On November 9, 2011, the trial court granted summary judgment in favor of

appellee on its claims for judgment on the Note and foreclosure of the Mortgage. After

conducting a bench trial, on May 9, 2013, the trial court ruled in appellee's favor on the

fraudulent conveyance claim, concluding that the transfers of appellants' other rental

properties to limited liability companies were sham transactions performed with the

intent of avoiding obligations to appellants' creditors. The trial court also awarded

appellees attorney fees incurred in pursuing the fraudulent conveyance claim. After taking

evidence from the parties and conducting a hearing, on July 1, 2013, the trial court issued

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a judgment against appellants for $94,o18.79 in attorney fees on the fraudulent

conveyance claim.

{¶ 6} Appellants appeal from the trial court's judgment, assigning three errors for

this court's review:

1. The trial court erred when it granted Wells Fargo summaryjudgment on Counts I-IV of the Amended Complaint ("theForeclosure Claims").

2. The trial court erred when it permitted the receivership tosell the Burgess Avenue Property free and clear of all liens andencumbrances for $147,833.00.

3. The trial court erred when it awarded Wells Fargo itsattorney's fees in the amount of $94,ol8.79.

{¶ 7} In their first assignment of error, appellants assert that the trial court erred

by granting summary judgment in favor of appellee on the claims seeking judgment on

the Note and foreclosure of the Mortgage. Appellants argue that appellee failed to

demonstrate that it had standing to enforce the Note and the Mortgage at the time it filed

the complaint.

{¶ 8} We review a trial court's ruling on a summary judgment motion de novo.

Capella III, L.L.C. v. Wilcox, 19o Ohio APP.3d 133, 2oio-Ohio-4746, ¶ 16 (loth Dist.),

citing Andersen v. Highland House Co., 93 Ohio St.3d 547, 548 (2001). "De novo

appellate review means that the court of appeals independently reviews the record and

affords no deference to the trial court's decision." (Citations omitted.) Holt v. State, loth

Dist. No. ioAP-214, 2o1o-Ohio-6529, ¶ 9. Summary judgment is appropriate where "the

moving party demonstrates that (1) there is no genuine issue of material fact, (2) the

moving party is entitled to judgment as a matter of law, and (3) reasonable minds can

come to but one conclusion, and that conclusion is adverse to the party against whom the

motion for summary judgment is made." Capella III at ¶ 16, citing Gilbert v. Summit Cty.,

104 Ohio St.3d 660, 2004-Ohio-71o8, ¶ 6.

{¶ 9} A party seeking summary judgment in a foreclosure action must

demonstrate that it was entitled to enforce the note and had an interest in the mortgage

on the date the complaint in foreclosure was filed. See Fed. Home Loan Mtge. Corp. v.

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Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5o17, ¶ 28 ("[B]ecause [Federal Home

Loan] failed to establish an interest in the note or mortgage at the time it filed suit, it had

no standing to invoke the jurisdiction of the common pleas court."); Bank of New York

Mellon v. Watkins, ioth Dist. No. 1iAP-539, 2012-Ohio-4410, ¶ 18 ("An entity must prove

that it was the holder of the note and mortgage on the date that the complaint in

foreclosure was filed, otherwise summary judgment is inappropriate."); see also

Nationstar Mtge., L.L.C. v. Van Cott, 6th Dist. No. L-12-1002, 2012-Ohio-58o7, ¶ 19

(concluding that a party seeking foreclosure was not entitled to summary judgment

because there was a genuine issue of material fact as to whether it owned the note or was

otherwise entitled to enforce the note at the time the foreclosure complaint was filed).

Appellants argue that appellee failed to demonstrate it had possession of the Note at the

time it filed the complaint and, therefore, failed to establish its status as holder of the

Note. Although a party must prove that it had standing when the foreclosure complaint

was filed, such proof may be provided after the filing of the complaint. Watkins at ¶ 18

("[A] mortgagee can offer proof after the filing of the foreclosure action to establish that

the mortgage was assigned to the mortgagee prior to or at the time of the filing of the

foreclosure action."). See also Deutsche Bank Natl. Trust Co. v Najar, 8th Dist. No.

98502, 2013-Ohio-1657, ¶ 57 ("[A] plaintiff can offer additional proof after the filing of the

foreclosure action, including with its motion for summary judgment, establishing that it

became the holder of the note and mortgage prior to or at the time of the filing of the

foreclosure action.").

{¶ 10} In this case, appellee attached with its complaint a copy of the Note

executed by the Pearsons in favor of New Century on May 13, 2005. This copy of the Note

contained a blank indorsement, signed by an employee of New Century. The blank

indorsement had the effect of making the Note payable to the bearer. R.C. 1303•25(B)•

Because the Note was indorsed in blank, appellee may establish that it was the holder by

proving that it was possession of the Note at the time it filed the complaint. See R.C.1303.2oi(B)(2i)(a). See also Bank of Am., N.A. v. Pasqualone, ioth Dist. No. 13AP-87,

2013-Ohio-5795, ¶ 33 (concluding that the appellee was the holder of the note because it

was in possession of a promissory note containing a blank indorsement). In addition to

the copy of the Note attached to the complaint, we find further evidence in the record

No. 13A.P-6635

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demonstrating that appellee was the holder of the Note at the time it filed the complaint.

On May 21, 2o1o, approximately eight days after filing the complaint, appellee filed an

affidavit to address issues raised by the trial court at the hearing on the motion for

appointment of a receiver. The affidavit was made by Ryan Lucas ("Lucas"), who attested

that he was an asset manager with Midland Loan Services, Inc., which was the master and

special servicer for appellee. Lucas further attested that "[a] copy of the Note contained in

my files is attached to the Complaint as Exhibit A." (Lucas affidavit, 2.)1 Based on this

evidence, we conclude that appellee established it had possession of the Note when the

complaint was filed in May 2010.

{¶ 11} Appellants argue further that appellee failed to establish its standing

because the plain language of the Note prohibited its transfer by indorsement in blank.

The relevant clause of the Note provided that the Pearsons agreed to pay New Century,

"or order" the amount specified in the Note. Without citing any statutory or common law

authority, appellants appear to claim that the use of the term "or order" prohibited the

Note from being transferred by blank indorsement. We note generally that an instrument

payable to order is payable to the identified person. R.C. 1303.10(C). The law provides

that an instrument payable to an identified person may become payable to bearer if it is

indorsed in blank. R.C. 1303.io(D). Furthermore, the "or order" language in the Note is

general and nowhere does the clause restrict the transfer from an instrument payable to

order to one payable to bearer. Absent any supporting authority, we are not convinced by

appellants' argumerit that the language of the Note prohibited transfer through blank

indorsement.

{¶ 12} With respect to the Mortgage, appellants claim that appellee lacks standing

because the assignment from New Century to appellee was executed after New Century

had transferred its interest in the Note and Mortgage to another entity. However,

assuming for purposes of analysis that appellants are correct, we conclude that appellee

1 We note that, in support of its motion for summary judgment, appellee relied on a second affidavit fromLucas, made in August 2010, which referred to a copy of the Note as contained in his files as an exhibit to theaffidavit, not as an exhibit to the complaint. However, there is no evidence that any party contested theaccuracy of Lucas's May 201o affidavit and, therefore, we rely on it as farther evidence that appellee hadpossession of the Note when it filed the complaint.

No. 13AP-6636

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had standing to enforce the Mortgage when the complaint was filed. This court has

previously held that negotiation of a note secured by a mortgage operates as an equitable

assignment of the mortgage, even though the mortgage is not assigned or delivered.

Pasqualone at ¶ 39, citing U.S. Bank Natl. Assn. v. Gray, loth Dist. No. 12AP-953, 2013-

Ohio-3340, ¶ 32. "In other words, '[t]he physical transfer of the note endorsed in blank,

which the mortgage secures, constitutes an equitable assignment of the mortgage,

regardless of whether the mortgage is actually (or validly) assigned or delivered.'" Gray at¶ 32, quoting Najar at ¶ 65. As explained above, the evidence demonstrates that appellee,

through its special servicer, had possession of the Note, bearing a blank indorsement from

New Century, when the complaint was, filed. The transfer of the Note from New Century

to appellee constituted an equitable assignment of the Mortgage. See Gray at ¶ 34;Pasqualone at ¶ 40. Therefore, appellee had standing to enforce the Mortgage when it

filed the complaint.

{¶ 13} Accordingly, we overrule appellants' first assignment of error.

{¶ 14} Appellants' second assignment of error asserts that the trial court erred by

allowing the receiver to sell the Property. Appellants argue that the trial court abused its

discretion by allowing the receiver to sell the Property for a fraction of the amount

appellants owed on the Note.

{¶ 15} A court may appoint a receiver in a mortgage foreclosure case "when it

appears that the mortgaged property is in danger of being lost, removed, or materially

injured, or that the condition of the mortgage has not been performed, and the property is

probably insufficient to discharge the mortgage debt." R.C. 2735.oi(B). Once appointed, a

receiver's powers include the ability to take and keep possession of the property, make

transfers, and perform other acts respecting the property authorized by the court. R.C.

2735.04. The Supreme Court of Ohio has held that R.C. 2735.04 enables a trial court to

exercise its discretion to limit or expand a receiver's powers as it deems appropriate. Stateex rel. Celebrezze v. Gibbs, 6o Ohio St.3d 69, 74 (1991). "Absent a showing that the trial

court has abused that discretion, a reviewing court will not disturb the trial court's

judgment." Id. An abuse of discretion occurs where a trial court's decision is

"unreasonable, arbitrary or unconscionable." Blakemore v. Blakemore, 5 Ohio St.3d 217,219(1983).

No. 13AP-663 7

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{¶ 16} Appellants argue that the approved sale price of $147,833 was significantly

lower than the value of the Property and the amount they owed on the Note. They assert

that the existing balance on the loan exceeded $400,000, when they assumed the Note

and the Mortgage in 2oo8. Further, they claim that the Property was appraised at a value

of $88o,ooo in August 20o8. Appellants also refer to a 2011 property tax valuation from

the county auditor of $417,6oo. Based on these appraisals, appellants argue that the

receiver mismanaged the Property and that appellee simply wished to dispose of the

Property as quickly as possible. Appellants argue that, under these circumstances, the trial

court abused its discretion by approving the sale of the Property.

{¶ 17} In support of the motion to approve the sale, the receiver outlined the steps

taken with respect to marketing and selling the Property. Shortly after being appointed in

May 2010, the receiver retained a third-party residential management company to assist

in stabilizing and correcting problems with the Property. That company provided an

estimate of $41,000 in deferred maintenance and other improvements to make the

Property habitable. A witness for the receiver testified that, when the receiver took over

the Property, 13 of the i6 units were occupied, but io of the tenants were delinquent in

rent payments by a month or more. The receiver attempted to have the delinquent tenants

catch up on their rent but ultimately proceeded with eviction actions. Based on the

condition of the Property and the maintenance required, the receiver decided to secure

and hold the units, rather than trying to obtain new tenants.

{¶ 18} The receiver also obtained multiple opinions from real estate brokers

regarding the value of the Property. These value opinions ranged from $6,ooo to $15,625

per unit, for a total "as-is" sale price range of $96,ooo to $250,000. In support of the

motion to approve the sale, the receiver indicated that he listed the Property for sale in

September 20io at a price of $250,ooo. After several showings, three purchase offers

ranging from $8o,ooo to $ioo,ooo were received in January 2011. The receiver entered

into negotiations with two potential buyers, which ultimately resulted in two final offers in

Apri12o1i: one offer of $141,6oo and a competing offer of $147,833• The receiver argued

that, given the Property's location, occupancy rate, and deferred maintenance, the latter

offer was commercially reasonable.

No. i3AP-663 8

{¶ 19} The trial court admitted that the proposed sale price was far below the ideal

price but concluded that, under the circumstances, it was fair and reasonable. The trial

court further concluded that the 2011 appraisal value was not an appropriate reference

point because it did not reflect the present condition of the Property. Testimony presented

to the trial court suggested that the $88o,ooo appraisal was based on selling the units as

condominiums for $55,ooo each and that such a price was inconsistent with the location

and present condition of the Property. The receiver presented ample evidence and

testimony demonstrating the deteriorating condition of the Property, as well as the

relative lack of interest from prospective buyers. Under these circumstances, we conclude

that the trial court did not abuse its discretion by approving the receiver's request to sell

the Property. See, e.g., Fifth Third Bank v. Q.W.V. Properties, LLC, 12th Dist. No.

CA2o1o-09-245, 2o1i-Ohio-4341, ¶ 44-45 (trial court did not abuse discretion in

approving sale where receiver acted to procure the highest possible sale price and

preserve the remaining value of the property).

{¶ 20} Accordingly, we overrule appellants' second assignment of error.

{¶ 21} In their third assignment of error, appellants argue that the trial court erred

by granting appellant the full amount of attorney fees it sought related to the fraudulent

conveyance claim. Appellants assert that appellee failed to prove that the attorney fees it

sought were reasonable.

{¶ 22} We review an award of attorney fees for abuse of discretion. Bittner v. Tri-

County Toyota, Inc., 58 Ohio St.3d 143, 146 (1991). Moreover, the Supreme Court of Ohio

has held that, "[u]nless the amount of [attorney] fees is so high or so low as to shock the

conscience, an appellate court will not interfere." Id.

{¶ 23} When ruling on a request for attorney fees, the trial court must first

determine the number of hours reasonably expended on the litigation multiplied by a

reasonable hourly rate, also referred to as the "lodestar" figure. Sims v. Nissan N. Am.,

Inc., ioth Dist. No. 12AP-833, 2013-Ohio-2662, ¶ 46, citing Bittner at 145. The court may

then modify that calculation in accordance with the factors set forth in Prof.Cond.R. 1.5(a)

to be considered in determining the reasonableness of a fee. Id. The party seeking an

award of attorney fees bears the burden of proving the reasonableness of the fees sought.

Id. at ¶ 47. See also Groza-Vance v. Vance, 162 Ohio App.3d 510, 2005-Ohio-3815, ¶ 44

No. 13AP-663 9

(ioth Dist.) ("The party seeking an award of attorney fees bears the burden of proof to

establish their reasonableness."). An award of attorney fees must be based on actual

services performed, and there must be some evidence supporting the court's

determination. Sims at ¶ 47.

{¶ 24} Appellants argue that appellee failed to justify the reasonableness of its

attorney fees because appellee relied exclusively on an affidavit from its own attorney. In

the affidavit, appellee's attorney attested that his fees were reasonable based on his years

of experience and knowledge of the law. Appellee's attorney also asserted that his fees

were generally in accordance with rates charged by other attorneys in the area with

comparable experience and education. In Sims, this court noted that, absent contrary

evidence, an attorney's explanation of his fees may constitute sufficient evidence to

support a motion for attorney fees. Id. at ¶ 48. Appellants opposed the request for

attorney fees by citing the rate charged by their own attorney. However, the trial court

addressed this distinction in its judgment, explaining that appellants' attorney was a solo

practitioner with 1i years less legal experience than appellee's attorney, who was a partner

in a major, multi-city commercial law firm. The court also noted that Florence Odita

represented appellants herself for much of the case and concluded that the hours worked

and billing rate of appellants' attorney was limited by appellants' ability to pay. Therefore,

the court reasoned that the fees charged by appellants' attorney did not necessarily

contradict the reasonableness of the hourly rate charged by appellee's attorney.

{¶ 25} Appellants also argue that the trial court abused its discretion by conducting

an independent inquiry regarding the prevailing rates for attorney fees. As noted in its

judgment, the trial court inquired of several law firms regarding the hourly rates currently

charged in commercial litigation. At the hearing on the amount of attorney fees, the judge

asserted that he undertook this inquiry pursuant to common law providing that trial

judges may rely on their own experience and knowledge in determining the proper award

of attorney fees. In its judgment, the trial court indicated that the inquiries led to

discovery of a decision by a federal bankruptcy court in Columbus indicating that the

prevailing market rate for large firm bankruptcy partners was in the range of $400 per

hour or more. The court also noted that none of the parties objected or offered additional

data in response to the court's informal inquiry.

No. 13AP-663 10

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{¶ 26} It is true that, "[i]n very limited circumstances this court has held that the

trial court may use its own knowledge and experience in reviewing the record to

determine the necessity and reasonableness of attorney fees." Goode v. Goode, 70 Ohio

App.3d 125, 134 (ioth Dist.1991). That principle has generally been applied in domestic

relations cases. See id; Robinson v. Rummelhoff, loth Dist. No. 13AP-41o, 2014-Ohio-

1461, ¶ 49; Grundey v. Grundey, loth Dist. No. 13AP-224, 2014-Ohio-91, ¶ 35; Groza-

Vance at ¶ 44; Tonti v. Tonti, loth Dist. No. o3AP-494, 2004-Ohio-2529, ¶ 11o-11; Ward

v. Ward, loth Dist. No. 85AP-61 (June 18, 1985). But see Enyart v. Columbus Metro.

Area Community Action Org., 115 Ohio App.3d 348, 358 (ioth Dist.1996); Yoder v.

Hurst, loth Dist. No. o7AP-121, 2007-Ohio-4861, ¶ 36 (Sadler, J., concurring).

Furthermore, we note it is preferable that the trial court rely on the evidence presented by

the parties. See Enyart at 358 ("While the better practice is to receive testimony regarding

the reasonableness of fees, a trial court under some circumstances is permitted to use its

own knowledge in reviewing the record to determine the reasonableness and necessity of

the services rendered."). It appears that in this case the trial judge may have

supplemented his own knowledge by inquiring of sources not party to this case.

Nevertheless, because he relied on a recent federal bankruptcy decision addressing the

prevailing hourly rate in the same market area and the appellants offered little contrary

evidence, we conclude that the trial court's ultimate determination on fees was not an

abuse of discretion. Moreover, while the amount of fees awarded in this case was

substantial, given the significant complexity of fraudulent conveyance claims and the

lengthy history of the proceedings, this is not a case where the attorney fee award is so

high as to shock the conscience. See Bittner at 146.

{¶ 27} Accordingly, we overrule appellants' third assignment of error.

{¶ 28} For the foregoing reasons, we overrule appellants' three assignments of

error and affirm the judgment of the Franklin County Court of Common Pleas.

Judgment affirmed.

BROWN and O'GRADY, JJ., concur.

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 Jul 01 3:25 PM-10CV0072540B231 - U46

IN THE COURT OF COMMON PLEAS FRANKLIN COUNTY, OHIOCOMMERCIAL DOCKET

WELLS FARGO BANK, N.A., )AS TRUSTEE FOR THE REGISTERED)HOLDERS OF CBA COMMERCIAL )ASSETS, SMALL BALANCE )COMMERCIAL MORTGAGE )PASS-THROUGH CERTIFICATES, )SERIES 2005-1 )

)Plaintiff, )

)vs. )

)E. OKECHUKWU ODITA, et al. )

)Defendants. )

CASE NO. 10CVE-05-7254

(JUDGE FRYE)

JUDGMENT EN"I'RY

By Journal Entry dated November 9, 2011 ("Journal Entry"), the Court granted

summary judgment in favor of Plaintiff on Counts One through Four of its Amended

Complaint and on the Counterclaim filed by Defendants E. Okechukwu Odita and

Florence Odita (the "Oditas").

On May 6- 8, 2003, this Court conducted a bench trial and on May 9, 2013, the

Court issued its Decision After Bench Trial, and Preliminary Injunction Order

("Decision").

As further ordered in the Decision, the Court accepted affidavits and on June 14,

2013, heard written and oral arguments of counsel in regard to the Court's award of

attorney fees as part of its award of punitive damages in favor of Plaintiff. By Decision

on Attorney Fees Award and Arimendment to Preliminary Injunction Order dated June

20, 2013 ("Attorney Fee Decision"), the Court awarded attorney fees in favor of Plaintiff

as the award of punitive damages and amended the Decision insofar as it relates to

issuance of the preliminary injunction as set forth therein.

The Court incorporates herein its prior rulings on the claims and issues as

contained in the Journal Entry, Decision and Attorney Fee Decision and now enters

judgment in accordance with its findings and conclusions therein.

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 Jul 01 3:25 PM-10CV0072540B233. - U47

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that:

1. As a result of adjustments required to brings sums due under the

promissory note and mortgage that are the subject hereof current since the Decision was

issued on November 9, 2011, judgment is hereby entered in favor of Plaintiff and against

the Oditas in the amount of $543,465•78 as a result of the Oditas' breach of the note and

mortgage.

2. Judgment is hereby entered on Count Five of the Amended Complaint in

favor of Plaintiff and against Defendants 1474 Cleveland Ave., LLC, 766 Hudson St.,

LLC, 199 West Fifth Ave., LLC and 2605/2678 Howey Rd., LLC (collectively, the "Odita

LLC's") jointly and severally in the amount of $493,ooo.oo. The amount of the

judgment entered in this paragraph is concurrent with, and is not intended to be

duplicate or added to, the amount of the judgment set forth in paragraph 1.

3. Judgment is also hereby entered on Count Five of the Amended Complaint

in favor of Plaintiff and against Defendants Oditas individually in the amount of

$493,000.oo. The amount of the judgment entered in this paragraph is concurrent

with, and is not intended to be duplicate or added to, the amount of the judgment set

forth in paragraph i.

4. Judgment is hereby further entered for punitive damages against the Odita

LLCs and the Oditas in favor of Plaintiff in the amount of $94,oi8.79, consisting of

Plaintiff's attorney fees on Counts Five and Six.

5. The Odita LLCs, the Oditas, and anyone acting in concert with them are

enjoined from causing, or participating in causing, further transfer or conveyance of

ownership of, and from further voluntarily encumbering, the real properties owned by

the Odita LLCs that are the subject of this action.

6. The Odita LLCs, the Oditas, and anyone acting in concert with them, are

permanently enjoined from using rents or other funds derived from the real properties

or received from tenants of the real properties owned by the Odita LLCs for any purpose

other than for maintenance or repair of those properties or for other expenses typically

and legitimately related to ownership of rental properties. On the first business day of

each month hereafter, the Defendants shall provide Plaintiff with a sworn statement

setting forth the dates, names of tenants and amounts of each rent or other payment

2

Frank{in County Ohio Clerk of Courts of the Common Pleas- 2013 Jul 013 25 PM°10CV007254OB231 - U48

received for each property. The statement shall also show by date, amount, nature and

payee the expenditures made as allowed by this paragraph.

7. The Odita LLCs and the Oditas shall within ten (io) days hereof provide

Plaintiff with an accounting which shall show, since May 9, 2013, all funds received by

or on behalf of the Odita LLCs as rental or other revenue and which shall show

disbursement of Odita LLC funds, including any disbursement from the Odita LLC bank

account. The Odita LLCs shall provide to Plaintiff within five (5) business days of

receipt, a copy of each bank statement of any Odita LLC that covers May 1, 2013,

through the date of entry of this Judgment. Within five (5) business days hereof, the

Oditas shall return to the Odita LLC checking account any funds disbursed to them

personally since May 9, 2013.

8. The obligations in paragraphs six (6) and seven (7) or this Judgment

expire once the monetary amounts owed by the Odita LLCs and the Oditas individually

have been paid pursuant to this Judgment.

9. Nothing herein is intended to preclude Plaintiff from exercising any right

or remedy against any Defendant to seek collection of the money Judgment rendered

herein, including by foreclosure, garnishment, post-judgment discovery or otherwise.

10. All claims against the Odita LLCs, and the Oditas individually having been

determined, there is no justification for further delay in entering this as a fmal

Judgment. Accordingly, this judgment is final under Civ. R. 54(B).

IT IS SO ORDERED.

3

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 Jul 01 3:25 PAll-10CV0072540B231 -- U49

Franklin County Court of Common Pleas

Date: 07-01-2013


Case Number: 10CV007254

Type: ENTRY

It Is So Ordered.

Cj ^/s/ Judge Richard A. Frye

Electronically signed on 2013-Jul-01 page 4 of 4

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 Jul 01 3;25 PM-10CV007254OB231 - U50

Court Disposition


Case Style: WELLS FARGO BANK NA TRUSTEE -VS- EOKECHUKWU ODITA

Motion Tie Off Information:

1. Motion CMS Document Id: 10CV0072542011-12-2899980000

Document Title: 12-28-2011-MOTION

Disposition: MOTION RELEASED TO CLEAR DOCKET


Document Title: 12-06-2011 -MOTION FOR PROTECTIVE ORDER



Document Title: 11-04-2011-MOTION



Document Title: 07-28-2011-MOTION FOR SANCTIONS


Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 Jun 20 4:54 PIVI-10Ci/0072540B213 - E28

IN TIIE COURT OF COMMON PLEAS, FRANKLIN COUNTY, OHIOCOMMERCIAL DOCKET

WELLS FARGO BANK, NA,

Plaintiff,

V.Case No. 1o-CVH-05-7254

(JUDGE FRYE)E. OKECHUCKWU ODITA, et al.,

Defendants.

DECISION C?NATTOI^^°V'F,'Y FEES AWARDand

AMENDMENT TO PRELIMINARY INJUNCTION ORDER

1. Introduction.

In the court's decision filed May 9, 2013, following a bench trial, the court stated

its basis for finding actual intent to defraud the plaintiff in transactions that moved

rental property from the private ownership of Mr. and Mrs. Odita into LLC's that were

recently created, and which provided no equivalent value for the properties. As a result,

the court also determined this was an appropriate situation in which to award the

plaintiff its attorney fees and litigation expenses incurred in pursuing this litigation to

set aside those transfers.

On May 24, plaintiff filed a fee application together with an affidavit of counsel,

and itemized legal fee bills memorializing what the plaintiff actually incurred in fees and

expenses. Defense counsel Brian Garvine responded with a memorandum and his own

affidavit with legal fee bills for his time preparing for trial and trying the case in April

and May 2013. His filing was made on June 3. In addition, on June 7 defendant

Florence Odita filed her own objection to the fee application together with her own

affidavit. Finally, a hearing was held on the record on June 14 relative to the fees and

expenses issue, in addition to some remaining work on the Receivership portion of this

1

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 Jun 20 4:54 PM-10CV0072540B213 - E29

case and to making alterations to the preliminary injunction that is in force pending

entry of fmal judgment.

Due to the omission of one page of the fee invoice to plaintiff covering time

worked in November 2012, a supplemental filing was permitted to complete the record

following the hearing.

2. The Standardfor Attorney Fees Awards.

Attorney fee awards are ordinarily made using the so-called "lodestar" approach

in which one first determines the amount of work reasonably and necessarily expended

on a case, and then one applies a reasonable hourly rate to determine the value of the

work. A long list of factors may be considered in setting a reasonable hourly rate.

Among them are the time demands and novelty of a particular case; the professional

skill required to understand the issues in the case; the experience and reputation of the

lawyer doing the work; hourly rate(s) charges by comparable lawyers in the broader

legal community for comparable types of work; and other facts bearing on the amount of

time billed, and the hourly rate(s) reasonably charged. E.g., Reinbolt v. Kern, 6th Dist.

Case No. WD-12-o41, 2013-®hio-1359, at 1I 58•

3. The Hours Charged.

Plaintiff was billed monthly by lawyer Ronald L. House, through his law firm

Benesch, Friedlander, Coplan & Aronoff LLP. He billed in quarter hour increments,

which is reasonable.

Mr. House practices in the Columbus office of the Benesch finn. It is noteworthy

that only Mr. House's time is sought in this attorney fee application. That is,

notwithstanding the old joke that "civil lawyers are like nuns, they always travel in

pairs" Mr. House minimized his firm's charges, and performed all of the work himself,

at least in so far as plaintiff seeks to recover for it.

Mrs. Odita objects that attorney House should have used legal assistants for some

of the less demanding work, at a lower hourly rate (Affidavit ¶ 6); but then turns around

and objects when he used a courier service to bring heavy notebooks containing trial

exhibits to and from the courthouse, rather than doing that chore himself. The court

finds little value in such inconsistent arguments.

2


This case has been on this court's docket since May 201o. Hearings began as

quickly as the case was filed due to the receivership requested to protect th.e South

Burgess property. As a result, innumerable hearings and conferences have been held,

ordinarily on the record, over those three + years. The court gained ample familiarity

with the course of proceedings and the nature of the work required of plaintiff's counsel.

At times dilatory responses to discovery sought from defendants, and arguments raised

by Mrs. Odita (a lawyer admitted to the Ohio bar, but who apparently has never had a

private practice) presented stubborn, hard-fought situations that plaintiff's counsel was

obligated to address.

By their very nature, fraudulent conveyance cases require post hoc analysis of the

value of assets, liabilities, other financial circumstances, and parties' conduct when

challenged conveyances were made. Often in such cases outside CPA's, appraisers or

other expert witnesses assist in unraveling events and assigning financial values to

things. There were five real properties transferred here, to four LLC's, over and above

the need for a fuIl understanding of circumstances in 201.0 with the South Burgess

apartments that were at the heart of the "collection" portions of this case. Roughly

$500,000 in property claims were in issue by the time the case reached trial this spring.

Attorney House did that investigation arid analysis himself, without retained experts,

and thereby reduced the overall cost and complexity of the litigation.

While not the most complicated fraudulent conveyance case, this one was by no

means simple or uncontested. Professional hours totaling 222.75 were reasonably and

necessarily worked, based upon everything shown in the record. Accordingly,

compensation for that amount of the work performed on this case by Mr. House is

awarded as reasonable and necessary.

4. The Hourly Rates Sought.

As addressed in his affidavit, Mr. House seeks hourly rates ranging from $36o

per hour in 2009-2010, gradually rising to $420 per hour for trial and other work since

December 2012. (Affidavit ¶ 8) Attorneys typically tesify in connection with requests

for legal fees awards, "as they are in the best position to address the reasonableness and

necessity of their fees." Bell v. Nichols, ioth Dist. Case No. ioAP-io36, 2013-Ohio=

3


2559, at ¶ 51. Mr. House seeks substantial rates, to be sure, so the court has carefully

evaluated whether they are excessive.

Mr. House stated in his affidavit that it was his opinion these rates are

"reasonable based upon my years of experience and knowledge of the law in connection

with the issues presented in the Lawsuit, and are generally in accordance with the rates

charged by other lawyers in the community with similar experience, education, and trial

experience." (19) Mr. House is a partner in the Benesch firm, licensed to practice in

Ohio since 1986, and admitted before the Northern and Southern District Courts, and to

the bar of the Sixth Circuit. (¶ i) While his experience in trying cases or participating in

appeals is not set forth, his partnership in a major, multi-city commercial firm leaves the

inference that he is quite knowledgeable. Certainly nothing in Mr. House's participation

in this case, which the court observed on many separate occasions, raised any concern in

the court's mind about his first-rate skill or legal knowledge. Moreover, as explained

below, the relevant market recognizes that hourly legal fees are usually higher in multi-

city commercial-law firms in which lawyers are more specialized. Clients hire those

kinds of firms because they infer that they will get lawyers of somewhat greater ability,

expertise and specialization than may be found in smaller, so-called "general practice"

settings. In addition, clients anticipate that lawyers in such firms bring backup with

them; that is, an ability to call upon knowledgeable partners and associates should

unusual circumstances arise. Experience teaches that tax issues often come up in a

commercial trial case, to select but one example.

Mr. Garvin is in a solo practice setting. He was admitted to the bar in 1997. His

participation in this case was limited, as he entered a "revised Notice of Appearance" in

the case only on April i8, 2013. Mr. Garvin's work is documented only from April io,

2013 onward; thus, he was not responsible for pursuing the case through motion

practice, pretrial discovery, or other earlier phases which attorney House had to plan

and undertake.

In contrast to the higher hourly rates sought by Mr. House, fees charged to Mr.

and Mrs. Odita by attorney Garvine were calculated at only $226.00 per hour. This is

some evidence of reasonable rates in the market place because Mr. Garvin is a fine

lawyer, but by no means is conclusive. Unfortunately, as with Mr. House, there is little

specific information set forth in the affidavit of attorney Garvine about the breadth of

4

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 Jun 20 4:54 PiVi-10CV007254oB213 - E32

his prior trial or appellate experience, or other facts that might be helpful in assessing

his practice, experience and hourly rate structure. The court does note that he has 11

years less legal experience than attorney House which might alone explain his lower

hourly rate. The court also infers that, since Ms. Odita represented defendants in much

of this case herself without outside counsel - although one young lawyer did appear with

her at a hearing or two held more than a year ago -the economics of the case severely

limited the Odita's ability to pay a lawyer. As it appears Mr. Garvine's responsibilities

were thereby rather severely limited by his clients' ability to pay, the fact that in the end

his legal fees are much less than those billed to plaintiff tells us little about what, overall,

was a reasonable hourly rate for work in this case.

Mrs. Odita's affidavit states that based on her "contact with the community of

lawyers in Columbus, Ohio" the hourly rates sought by plaintiff's counsel are too high.

(Affidavit ¶¶ 9 - io) There is no substance to this self-serving criticism. She documents

no specific experience in other commercial litigation, or with any specific lawyers with

whom she is familiar.

As the court explained on the record at the June 14 hearing, to attempt to update

the court's own knowledge of legal fees in this community (which before taking the

bench included testimony in the United States District Court as an expert on fees) the

court inquired of several firms for hourly rates currently being used in commercial

litigation. Those inquiries lead the court to a March 2oio decision by United States

Bankruptcy Judge John Hoffman, Jr. In re: CWP Construction Services, LLC, et al.,

S.D. Ohio Case No. io-56152. Judge Hoffman, of course, sits in Columbus. He

concluded two years ago that "the prevailing market rate for large-firm bankruptcy

partners in the Southern District of Ohio is in the $400+ per hour range." (Opinion at

p. 6) He also concluded that the "'relevant legal community' for purposes of establishing

a reasonable hourly rate is the community of large Ohio-based law firms with multiple

offices, not the community of one-owner firms employing a single associate" which is

likely to charge rates $ioo or more less than the larger firms. (Opinion at 6--- 6) This,

5

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 Jun 20 4:54 PfN-10CV0072540B213 -- E33

as mentioned above, is a part of the reason the court discounts in importance the lower

hourly rate of attorney Garvine, notwithstanding his skill.l

Complicated commercial litigation, particularly cases involving fraud or cases

requiring some understanding of forensic accounting, are very comparable to adversary

proceedings heard in the Bankruptcy Courts. When significant amounts of money are at

stake, over and above the reputation of the participants in such transactions, lawyers

capable of handling such cases command substantial hourly rates in this community.

Based upon everything in the record, the court concludes Mr. House practices in that

legal community, and that his rates sought in this case are indeed reasonable.

5. Ccrnchrszots on Fees and Damages.

For the reasons stated, the court awards plaintiff attorney fees of $94,oi8.79 on

the fraudulent conveyance and piercing the corporate veil claims, as part of punitive

damages.

In the course of reviewing all of the fees charges to address this portion of the

case, Mr. House discovered that $4,803.75 represented the value of work actually

performed on the fraudulent conveyance and corporate veil portions of the case. Those

charges had inadvertently been included in the attorney fees assessed for breach of the

mortgage and commercial loan. Such a correction is not uncommon in cases where

legal fees span several years, and thousands of individual time entries. Accordingly, the

court reduces the amount due as compensatory damages for breach of those commercial

loan contracts to $543,465•78•

A Final Judgment awarding these amounts, as corrected, shall be circulated and

then promptly submitted to the court with Civ. R. 54(B) language as to all

determinations made on the fraudulent conveyance and piercing claims.

6. Amendment of the Preliminary Injunction.

As discussed at some length on the record on June 14, to preserve the value of the

five properties fraudulently conveyed to the Odita's LLC's the court ordered that rents or

1 In response to the Court's disclosure of its informal findings, neither side offered any objection oradditional data.

6

Fraraklara County Ohio CIerk of Courts of the Common Pleas- 2013 Jun 20 4:54 PM-'if^CV007254iYB213 -- E34

other money derived from them be held in trust as it was received, and only expended

with the express agreement of counsel for plaintiff or with specific court approval. As of

June 14, $3,896 had been received since May 9, 2013. It was being held by defense

counsel in his trust account.

The court understands that one or more mortgages, utility bills, and tax bills are

due (or overdue) for those properties - perhaps totaling more than $1o,ooo - and

therefore confirms what was said orally: the court authorizes payment of bona fide

third-party bills without further order of the court provided that plaintiffs counsel is

given advance notice, and that careful records are maintained of rent or other money

earned, and its disposition.

Counsel shall discuss how final arrangements ought to be structured for those

properties, and then suggest in their Final Judgment to be submitted to the court what

they deem suitable arrangements. In the court's view, the more those properties can be

maintained in good condition, with rents timely collected, the greater their value will

remain and, if sold, the more the plaintiff will realize without the need to garnish the

Odita's other assets. But, the court has neither a desire to turn Mr. Garvine into a defacto receiver without compensation, nor to dictate how plaintiff proceeds with post-

judgment collection. If the parties deem this too much trouble, the injunction can

simply be dissolved.

If possible counsel are asked to submit a Final Judgment --- or competing versions

of one - by e-mail to Sean Alto at [email protected] no later than 5 p.m. onThursday June 27, 2013.

IT IS SO ORDERED.

7

Franklin County Ohio Clerk of Courts of the Common P leas-2013 Jun 204: a4 PM-10CV007254oB213 - E35

Franklin County Court of Common Fleas

Date: 06-20-2013



Type: DECISION/ENTRY

It Is So Ordered.

/s/ Judge Richard A. Frye

Electronically signed on 2013-Jun-20 page 8 of 8

Franlclin County Ohio CIerEc of Courts of the Common P@eas- 2013 Jun 20 4:54 PMs10CV007254t3B213 - E36

Court Disposition


Case Style: WELLS FARGO BANK NA TRUSTEE -VS- EOKECHUKWU ODITA



Document Title: 06-07-2013-OBJECTION TO



Document Title: 05-24-2013-MOTION FOR ATTORNEY FEES

Disposition: MOTION GRANTED

oB138 - gg^ saklira County OteEss Clerk of Courts of the Common PIeas- 2013 May 09 12:48 I^M-ioo^lt#o7zs4

IN THE COURT OF COMMON PLEAS, FRANIKLIN COUNTY, OHIOCOMMERCIAL I)OCKET

WELLS FARGO BANK, NA,

Plaintiff,

V.

Case No. 1o-CVH-05-7254

JUDGE FRYEE. OKECHUCKWU ODITA, et al.,

Defendants.

DECISION_ AFTER BENCH T ` andPRELIMINARY INJUNCTION ORDER

Introduction.

Between May 6- 8, 2013 the court heard trial testimony from four witnesses,

received dozens of exhibits, and heard closing arguments of counsel as to the remaining

two discrete claims raised in counts V and VI of plaintiff's amended complaint.

The first issue presented at trial was whether defendants Florence C. Odita and E.

Okechukwu Odita, husband and wife, fraudulently transferred five rental properties that

they owned personally into four limited liability companies they hurriedly created in

violation of R.C. 1336.04. In May 2010 when the LLC's were created Wells Fargo was

already a significant creditor owed hundreds of thousands of dollars under a mortgage

loan that had fallen into default months earlier, for which the Oditas faced personal

liability. Plaintiff seeks judgment against both the Oditas and against the LLC's with

remedies as available under R.C. 1336.07. The second issue considered at trial was

whether the circumstances justify piercing the corporate veil of the four LLC's to impose

liability on the Oditas as owners, although under previous decisions in this case their

personal liability on the loan has already been established.

The reader will observe that this case is a poster-child for the subprirne, so-called

"toxic°° mortgage loan crisis that devastated the American economy beginning in

September 2oo8. Before it was over, institutions with household names like Lehman

Brothers and Washington Mutual had disappeared, and the "Great Recession" had

destroyed jobs and life savings across America. Scholarly work has been produced ever

r

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 May 09 12:48 PM-10CV007254oB.Z38 - B96

since seeking to identify all the causes, but the record in this case plainly shows

irresponsible lending, gullible borrowers, at least one grossly inflated appraisal report to

justify an unreasonably large loan, and other misconduct that contributed. Faced with

the dilemma of a huge loan that was going to potentially destroy their life savings, the

Oditas acted illegally in seeking to intentionally move key assets behind the veil of LLC's

that they controlled but which had paid nothing for their properties. The Oditas'

explanations are not creditable. The fact that they face a personal financial tragedy does

not, of course, trump the obligations owed under contracts they made or the legal rules

that must otherwise govern the court's examination of their conduct.

Many facts are undisputed. The following constitute the court's findings of fact

and conclusions of law. Based on these findings, the court also issues a preliminary

injunction pending completion of a handful of remaining issues, and the preparation

and entry of a final Judgment. Further property transfers or encumbrances are not

permitted with respect to any of the properties titled by the LLC's; and all rents or other

money derived from them are to be held in trust by defense counsel pending completion

of the case. The court intends to issue a final Judgment (with Civ. R. 54(B) findings) on

this aspect of the case in a matter of weeks, following completion of proceedings on

plaintiff's legal fees claim as spelled out below.

The preliminary injunction set out below is issued with no bond required, since

the court is satisfied the issues have received a full hearing at trial. The injunction is

effective immediately.

Fin ° gs of Fact.

A. The Parties.

Plaintiff is Wells Fargo Bank, N.A., as trustee for a pool of holders of mortgage-

backed, pass-through investment certificates issued in 2005.

Defendant Florence C. Odita is 70 years old. She is retired from state

employment with the Department of Human Services. She holds graduate degrees in

psychology and law. She has been a member of the Ohio bar since 1985, although she

has never been in private practice. Since 2005, she has held an active Broker's license as

well. In addition to their personal residence, for decades the Oditas have invested in

2

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 May 09 12:48 PM-10CV0072540B138 - B97

rental properties. Mrs. Odita testffled that she had "about 40 years experience" in real

estate.

E. Okechukwu Odita is Florence's husband, approximately 78 years of age, and a

retired full professor of African history and archaeology at The Ohio State University.

Mr. Odita was not a witness at trial. Nevertheless, it was stipulated by the parties that in

all relevant conduct Mr. and Mrs. Odita acted jointly such that any fmding of liability

against one should be a finding against both.

Eric Odita is 39 years old, holds a bachelor's degree in finance from OSU, and

works in real estate as a licensed agent under his mother's brokerage license.

Mr. and Mrs. Odita have three other adult children, all of whom reside out of

state. Other than becoming nominal members of the limited liability companies

described below, for which they made no financial contribution, none had any role in

the events in suit.

B. The South Burgess Property.

The dealings between Wells Fargo and the Odita family directly concerned rental

apartments at 21 - 39 South Burgess, just off West Broad Street in the Hilltop area of

Columbus. Mr. and Mrs. Odita became involved with the Burgess property in June

20io, apparently prompted by interest their son Exic had in obtaining the property and

attempting an upgrade and a condominium conversion with the 16 rental units. With

apparently little or no due diligence (at least as reflected in the record) Mr. and Mrs.

Odita took title, and assumed an existing mortgage loan for the property from the prior

owners with the consent of Wells Fargo. (Pltf. Ex. 3). The lender made a full recourse

loan. That is, the loan the Oditas assumed provided explicitly that the lender's remedies

in the event of default were not limited solely to the property as collateral directly

securing the loan. (Ex. 3, at § 6.)

The South Burgess apartments had originally been purchased in 2oo5 by non-

parties named Paul and Kathleen Pearson, residents of Costa Mesa, California. They

financed the property from Wells Fargo (as trustee) under a$44S,ooo mortgage loan.

The loan carried an interest rate floating above LIBOR. According to the evidence from

the witness supplied by Wells Fargo's loan servicer (Midland Loan Services, Inc. of

Overland Park, Kansas) that interest rate generally is pegged for simplicity at 7.85%.

3

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 May 09 12:48 PM-10CV007254®B138 - B98

The South Burgess property consisted of a 16-unit apartment complex. Built in

1951, the buildings were well constructed of brick and the grounds were landscaped.

Each unit had two above-ground floors in townhouse style, with two bedrooms and a

bath located upstairs. Each had a basement. However, there were no garages, no air

conditioning, and only one bath per unit. Because of the demographics of the

surrounding area, the lack of upscale amenities, and other factors, rents obtainable were

limited. The range of $400-500 per month seems to have been about all these units

could ever have hoped to command.

Beyond that low rent threshold, nonpayment of rent was a continuing challenge

for owners of the Burgess property. The area has a lower-income, somewhat transient

population. In 2008 when the Oditas assumed the loan only 9 of 16 units were rented.

The break-even point conceded by Eric Odita was rental of 14 units. After several years

when this case reached this court and a receivership was put in place in late spring 2010,

13 of the i6 units were ostensibly occupied but in reality only 3 of them were actually

producing any current rent. Some tenants were behind many months in rent.

In addition, other challenges like bedbug infestations faced any owner of these

apartments. Due to the highly transient population, remediation efforts for bedbugs

were sometimes unsuccessful. Tenants sometimes socialized with neighbors from

adjacent untreated units in newly treated units, passing the bugs back around; or

reclaimed old bedding that had not been properly cleaned from outside the units (even

from dumpsters) unde '' g bedbug treatment efforts.

The original 2005 loan was supported by a purportedly independent appraisal of

the apartments done by The Charles R. Porter Co. of Columbus. It shows fair market

value as of April 25, 2005 as $665,ooo. (Def. Ex. 2.) That purported value was grossly

overinflated. Indeed, a close reading disclosed glaring problems, such as that the tax

valuation for the property was only $139,300. (Def. Ex. 2, p. 3.) As such, this was

typical "appraisal inflation" used in securitization of many such loans across the county

prior to the fall of 2008 in order to create the illusion of artificially low loan-to-value

ratios, which in turn supported the illusion of lower credit risk.

When the Oditas bought the property and assumed the loan from the Pearsons in

June 2oo8, roughly $432,0oo remained due on the loan originally issued for $445,000.

$4751 per month was required. to carry the loan. That figure included $478 / mo.

4

OB138 - B99 nklin County Ohio C1erk of Courts of the Common Pleas- 2013 May 09 12:48 PM-10CV007254

escrow for insurance and another $i,ioo / mo. toward real property taxes. (Pltf.

Exhibits 4, 5, 6.)

While the Porter Co. appraisal done in 2005 had projected annual income (after

expenses and replacement reserve) of $55,466, (Def. Ex. 2, p. 3) twelve monthly

mortgage payments alone would cost $57,000 per year.

In addition, a management company called Commercial One was continued after

the Oditas bought the property to conduct leasing and otherwise attend to tenant needs.

How their additional fees impacted the financial picture is unclear, but it plainly added

another out-of-pocket cost.

No pro forma financial projection done by or for the Oditas before the property

acquisition is in evidence (Likewise, there is nothing in the record documenting why

the Pearsons wanted to walk-away from the project after three years; or what due

diligence Wells Fargo (or Midland as the servicing agent) undertook in approving the

2oo8 assumption agreement to assure that the Oditas actually could perform under this

large loan with a challenged property.)

Def. Ex. 3 is an appraisal report done in August 2008 by BH Brown Appraisal

Services for Eric Odita. It appears to have appraised only one unit, 35 A South Burgess

- ostensibly as a "condominium" - which was Eric Odita's proposed ultimate use of the

i6 units. However, the court finds that no one could sensibly read this report as

indicative that each of the i6 units was actually worth anything like $50,ooo, at least

without significant capital investment in the entire project. In the history of the

property section, however, Brown Appraisal did record that the Columbus Multiple

Listing Service ("MLS") showed the entire 16-unit complex had been on the market for

one year at $459,000, and that the MLS listing had "expired." Presumably this listing

was by the Pearsons before the June 20o8 Odita loan assumption.

In any event, warning signs were ignored. Soon after June 20o8 it became very

apparent that the Oditas had gone into deep water, and might drown under the debt

load associated with the Burgess property. Plaintiff's Ex. ro is their loan history. It

records that monthly late charges started to be assessed as early as August 2008. The

first payment of less than the full amount due (only $2,500 paid) occurred in February

2009 (that is, a payment for less than the required monthly amount of $4,751.) Mrs.

Odita testified that rents had previously been supplemented with personal funds, but

5

Franklin County Ohio Clerk of Courts of the Common Pleas- 2013 May 09 12:48 PM-10C1/007254OB138 - Cl

after exhausting personal financial reserves she and her husband resolved to merely pay

Wells Fargo whatever they actually received in rents.

The first explicit written threats of foreclosure arrived in letters from Midland in

late summer and fall 2009. (Pltf. Exs. 8 and 9).

The last payments by the Oditas were $1,250 received by Midland on Dec. 31,

2oo9, and another $i,loo received March 1, 2010. (Pltf. Ex. ii).

A purported rent roll for March 2010 is in evidence as Pltf. Ex. 34, but testimony

from Eric Odita confirmed that financial affairs with tenants were even more dire than

depicted on that report by the management company "Commercial One Realtors, Inc."

A flurry of emails were exchanged between Ryan Lucas, the "asset manager" for

this troubled loan at Midland, and Eric Odita acting on behalf of his parents in February

and March 2oao. Threats about legal action if the loan were not brought current drip

from every page. Mrs. Odita sent her own emails, too. Most noteworthy is her lengthy

correspondence dated May 3, 2010 which acknowledged difficulties with tenants and

property damage at the complex, recognized that "every communication comes with a

threat of foreclosure," and asked for "loan relief, restructuring of our loan" with lower

payments, a "moratorium on foreclosure and balloon payment in five years" to allow the

Oditas to seek a refinance. (Included in Pltf. Ex. 13.)

Three other factual matters pertinent to the time before this suit began deserve

mention. First, it appears that Eric Odita explored a possible refinance of the loan with

the FHA or other lenders here in Columbus, but received no interest. This leaves the

inference that the Burgess property was recognized by him, and other local lenders as so

far under water that no other lender would touch it.

Second, in November 2009 Mrs. Odita suffered a stroke. She and her husband

left Columbus for California around Thanksgiving, and thereafter went to a heath care

facility just south of San Diego in Ensenada, Mexico for care. They were gone from

Columbus for over three months. An email message to Mr. Lucas dated March 29, 2010

acknowledged that Mrs. Odita had returned to Columbus, and looked toward a face to

face meeting with Lucas about the Burgess loan. There was in fact a brief meeting at

some point early in 2oro between Eric Odita and Mr. Lucas in Columbus one evening

out at the property, while Lucas was traveling to see another project in the Cleveland

area. Little or nothing was accomplished.

Franklan County Ohio Clerk of Courts of the Common P@eas- 2013 May 09 1 2.48 PNf-10C9P'0072540B1.38 - C2

Third, Eric Odita's dream of condominiumizing the Burgess property never got

very far. While some $jL5,ooo was spent for a set of condominium documents, surveys,

and related work, Midland would not agree to individual-unit loan releases that were

necessary to make individual sales of units.

This suit was filed, and a receiver was sought by Wells Fargo, on May 13, 2010.

Pursuant to this court's standard practice, n®tice of an application for a receiver was

required to be given to the Oditas. It was given to Mrs. Odita by counsel for plaintiff by

email on Thursday May 13 at 2:55 p.m. (Pltf. Ex. 15) Following a hearing, a receiver was

appointed the following day. (Ex. 48).

C. The Od2.tas' other Rental properties.

In May 2010 the Oditas owned two single family homes on Howey Road in

Columbus, an apartment building between King and High Streets at 199 West Fifth

Avenue, a commercial building used as a day care center on Cleveland Avenue, and a

small commercial building used as an auto repair shop on East Hudson Street.

All of the properties were owned by Mr. and Mrs. Odita individually prior to May

2010. They were intended to be income producing. All had relatively modest value that

depended largely upon finding and keeping good tenants willing and able to pay rent.

D. Creaiaon of the LLC's.

Confronted by the dire financial situation they faced on South Burgess, repeated

threats of litigation, and the realization that family assets were likely to be lost due to

personal liability on the Burgess loan, Mrs. Odita prepared limited liability company

operating agreements essentially mimicking the names of the four individual rental

properties she owned. They were "i474 Cleveland Ave., LLC" (Pltf. Ex. i9); "260$/2678

Howey Rd., LLC" (Pltf. Ex. 22); "766 East Hudson St., LLC" (Pltf. Ex. 25); and "i99 West

Fifth Ave., LLC." (Pltf. Ex. 28.) The Operating Agreements aIl purported to have been

adopted by Mr. and Mrs. Odita and their children as of May 1.2, 2010.

Notices of the LLC's were filed with the Ohio Secretary of State on May 12, 2010.

(Exhibits 18, 21, 24, and 27.) No notice was given to Midland or Wells Fargo of any of

these arrangements.

Quit Claim deeds for all five properties were then signed six days after the court

entered the Burgess receivership, on May 20, 2010. (EXhibits 20, 23, 26, 29.) They

7

O]8138 -C3ranklin County Ohio Clerk of Courts of the Common Pleas- 2013 May 09 12:48 PM-10CV007254

were publicly filed by the County Recorder the following day. Again there was no notice

given to the Oditas' creditor.

The consideration recited for transfer of the five properties was the proverbial "$a

and other consideration." In fact, none of the LLC's was capitalized, and none of them

returned any reasonably equivalent consideration to the Oditas for their properties. The

transfers were a sham, made with actual intent to hinder, delay or defraud the plaintiff

in collection efforts on the Burgess loan.

Multiple badges of fraud have been established by clear and convincing evidence

to support this conclusion. First, the timing of the creation of the LLC's and the

immediate transfer of assets to them directly overlaps the onset of this litigation, and

was prompted by it. Only in late spring 2oio did the Oditas return to Columbus and

really come face-to-face with the dire situation they had embraced when they assumed

the Burgess loan. Mrs. Odita thought from previous experiences that she and her

husband would never really face personal liability on a real estate loan over and above

foreclosure on the property which was security for the loan. But, as mentioned before,

in thinking that in regard to the Wells Fargo loan she ignored a clear provision to the

contrary in the loan documents; and frankly was somewhat naive. The Oditas had

nothing but a vain hope that personal liability might be avoided. Their belated

realization of that looming and huge debt caused them to take this tack.

Another badge of fraud is that there was nothing approaching reasonably

equivalent value exchanged between any LLC and the Oditas. While defendants suggest

this effort was long considered in an effort to accomplish mere "estate planning" for the

transition of their property to their children, the court does not fmd that explanation

credible. No fmancial records or property valuations were done to record the

ca.pitalization of each LLC as real property was accepted from the Oditas.

The Oditas remained involved personally in management, operation and control

of all five rental properties conveyed to the LLC's just as they had when the properties

were titled in their individual names. As such, they plainly were "insiders" on both sides

of the Quit Claim deed transactions.

Rents that actually were the property of the individual LLC's that nominally

owned each property following the transfers were regularly co-mingled in the Oditas'

personal bank accounts for many months after the new LLC entities accepted the deeds.

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Although § 3.1 of each. Operating Agreements provided that each of the defendant

Oditas would own only a 30% interest in each LLC (while their four children held the

remaining 40% ownership in equal shares) and that profit and loss would be

proportional to ownership shares, this provision was ignored. Eric Odita tried to

explain that these provisions were unfair to their parents, whose money and property

were operating the businesses, so he and his siblings agreed that the gains and losses

provisions in the Operating Agreements were "orally amended" to distribute gains and

losses 50/50 only to their parents.

In all of these, and other significant respects the normal "corporate formalities"

for business records, financial records, and other business operations were not observed

following creation of the LLC's. Customary day-to-day distinctions between what

belonged to the LLC's and what belonged to the Oditas personally were disregarded

repeatedly and for many months. The LLC's did not even open a bank account until

January 2011. (Pltf. Ex. 45).

It is argued in response that there was no intent to defraud any creditor and that

a good example of why no such intent existed is that the residence of the Oditas

remained in their name. The residence had about $135,000 in equity as of May 2010.

However, given all of the other evidence the court finds this argument unavailing. Mr.

and Mrs. Odita were essentially insolvent once Wells Fargo accelerated the Burgess

loan, and while they might have tried to hid other assets - but did not - that does not

provide a sensible explanation for what they did do. Considering everything, the court

can only find - from evidence that is clear and convincing - that the LLC's were a sham

transaction whose creation and attempted use by the Oditas was done with actual intent

in violation of the obligations owed under R.C. 1336•04>

E. Damages and Other Relief.

As to Count V of the Amended Complaint, plaintiff sought judgment against the

Oditas, individuaIly, and the Odita LLCs for injunctive relief, as well as "compensatory

damages and punitive damages *** including attorneys fees, and costs." (Amended

Complaint, pp. 13-14.) The evidence supports a finding that the fair market value

conveyed fraudulently to the LLC's on these five rental properties, as of May 2010, was:

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Two Howey propertiesHudson St. propertyCleveland Ave. propertyWest Fifth Ave. property

$ 43,00070,00080,000

300,000

Total: $493, ®o®. o®

In due course, final Judgment will be entered against each of the four LLC's for

those amounts, jointly and severally with a judgment against Mr. and Mrs. Odita

individually for those same respective amounts due to the actual, intentional fraud

practiced here.

In addition, pending further orders of the court, all four LLC's, Mr. and Mrs.

Odita, and all persons acting in concert with them are preliYninarily enjoined from

conveying, encumbering, or otherwise acting to hinder plaintiffs coIlection efforts with

respect to those five real properties or other assets belonging to the LLC's. In addition,

all rents received from and after this date attributable to any property in any LLC shall

promptly be delivered to counsel for defendant and held in escrow in his trust account,

again pending further order of the court. Should some or all of the rent money or other

funds related to these properties be needed for emergency repairs or other legitimate

purposes pen ' completion of this case, counsel shall consult about a proposed

resolution and then approach the court to alter this order as needed.

F. T'he Piercing Claim.

As already mentioned, the court has found that "corporate" formalities which

ought to have been observed with regard to financial and other affairs of the four LLC's

were almost completely disregarded, in fraud of creditors. While there is a valid

piercing the corporate veil claim proven here, the court does not deem it necessary to

enter separate relief for plaintiff on Count VI because essentially all the relief sought by

plaintiff can be granted under the fraudulent conveyance claim.

G. Punitive Damages.

The court finds by clear and convincing evidence that the fraudulent conveyances

and related conduct proven here was done with actual intent, and demonstrates a

conscious disregard by Mr. and Mrs. Odita for the rights of the Oditas' creditors

including specifically Wells Fargo. The court declines to award punitive damages other

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than to award the plaintiff its attorney fees incurred in pursuing this litigation on Counts

V and VI.

Subject to further discussion with counsel, the court anticipates accepting one or

more affidavits on the reasonableness and necessity of counsel fees incurred by the

plaintiff to satisfy the need to have evidence in the record before making an award. The

fees application by plaintiff should include copies of actual fee statements reflecting

work, itemized as to the lawyer or other person who billed work to plaintiff and showing

individual hourly rates as actually charged. Fees statements may be redacted minimally,

as necessary, to protect against disclosure of privileged or work product

communications. The plaintiff's fee application is due no later than Friday May 24,

2013. Any contrary evidence bearing on the reasonableness or necessity of the fees

claimed must be filed by June 3, 2013, and again it is the court's intention to receive

the evidence by affidavit. If the amount of time reasonably spent by counsel for plaintiff

is challenged, the court may require defense counsel to divulge his own fee/time records

as bearing upon the work reasonably necessary.

The Court will hold a hearing on fees application, and endeavor to wrap up this

portion of this case on Friday June 7, at ii:oo a.m.

As discussed previously with counsel, the court does not presently see a need for

legal briefing on setting fees, or the need for live testimony. Should counsel encounter

difficulty with this proposed procedure, please advise the court well before June 7.

As already discussed on the record, counsel for plaintiff shall be especially careful

not to seek fees already billed to the Oditas for work filing the foreclosure, participating

in the Receivership, or for other matters already reflected in the judgment they owe. In

other words, this fee award is not intended to result in double or duplicative fees over

and above fees that the Oditas already owe Wells Fargo as basic compensatory damages

premised on the loan documents.

Conclusions of Law.

The court draws the conclusions of law implicit in the foregoing findings without

repeating them.

A creditor can establish a claim for fraudulent transfers by showing that a debtor

had an actual intent to commit fraud pursuant to R.C. 1336.o4(A)(i). The burden of

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proof is by clear and convincing evidence. Actual fraudulent intent may be established

by proof of "badges of fraud" listed in R.C. 1336.04(B). Reinbolt v. Kern, 6th District

Case No. WD-12-041, 2013-Ohio-1359, 2013 Ohio App. LEXIS 1286, at ¶1I 39-40.

Once a creditor establishes a sufficient number of "badges" an inference of actual

fraud arises and the burden then shifts to the debtor to prove that the transfer was not

fraudulent. As few as three "badges" have been held sufficient to constitute clear and

convincing evidence of actual fraudulent intent. Id. at ¶ 41, citing among other

decisions Bank One, N.A. v. Plaza East, ioth District Case No. 97APE02-184, i997 WL

71o664 (Nov. 10, 1997). See also, DeBlasio v. Sinclair, 7 th District Case No. o8-MA-23,

2012-Ohio-5848, at ¶¶ 38-39.

In the face of a substantial number of "badges of fraud" a court may find that a

defendant's explanation of transfer for so-called "estate planning" is unpersuasive.

Langaa v. Pauer, i1th District Case No. 2004-G-2602, 200$-Ohio-6296, at ¶ 46.

"A creditor need not show that a transfer was made with intent to defraud in

order to prevail under R.C. 1336.04(A)(2)(a)." Quality Car & Truck Leaszng, Inc. v.

Sark, 4th District Case No. 12CA4, 2013-Ohio-44, ¶ 14.

R.C. 1336.07 and .1336.o8 permit a court to fashion a remedy appropriate to the

facts of the case. A variety of remedies are available, including avoiding the fraudulent

transfer or attaching the fraudulently transferred property. Creditors may also obtain

any other relief that the circumstances may require. R.C. 1336.07(A)(3)(c). Other laws,

including the common law of fraud, supplement Chapter 1336. See R.C. 1336.1o. "The

amount of damages recoverable will depend on the facts of each case and what is

necessary to compensate the creditor for harm flowing from the fraud." Blood v.

Nofzinger, 162 Ohio App. 3d 545, 2005-Ohio-3859, 834 N.E.2d 358, ¶59 (6th Dist.)

In appropriate cases, a creditor may also recover punitive damages and attorney

fees. To recover punitive damages and attorneys' fees, a creditor must establish the

underlying claim and "that the debtor acted with actual malice when making the

fraudulent transfer." Reinbolt v. Kern, supra, ¶ 62. "Actual malice" requires proof that

the debtor acted with (i) hatred, ill will, or a spirit of revenge, or (2) a conscious

disregard for the rights of others that had a great probability of causing substantial

harm. (Id.)

IT IS SO ORDERED.

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Date: 05-09-2013



Type: DECISION/ENTRY

It Is So Ordered.

/s/ Judge Richard A. Frye

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®A2 6 3 - N5

IN THE COURT OF CO1lI1ti1ON PLEASFRANKLIN COI7 NTl', 01110

WEI.,I..S FAIt(iO BANK, N.A.,

AS 'I'I2[: S'1'EE FOR TH.E RE(i1S'1'}';REI)HOLDERS OF CBA C O\•I14IERCIAL-1SS1;'I'S. SN{.'11.I. I3:1I •1NC1; . Cttse No. 10-C\'I:-5-7254COIMMI;I2CI.\I, MOR'1'(3:1G1;PASS-THROUGH CERTIFICATES. . Judge FryeSERIES 2005-1

I'laintiff

V.

E. OKECHUKWU ODI'TA, ct al.,

I)ereaadants.

ORDER C'ONFIItMIN(Y SALE OF RECEIVERSHIP PItOPEIITY FI(EE A\I) CLEAROF L IE.NS, CI.,ABiS AND ENC,'i1MBIYAN(..'F>S

AND DISTRIBUTION OF SALE PROCEEDS

This matter eoincs beforc tlic Court upon thc Alotion ("i•lotion") of lolui A. Rothschild,

Jr. (Qte "Receiver"), I'or an order conlinning the Raceiver*ti private sale ol' tlie Propertx. (as

defined Iierein) to Xiao Yu Iiuang inadc pursuant to this Cotut's Order Approving Sale of

Ilectivertihip I'roperly Free and Clear ol' :1ny Lien. Claim. Interest or I;ncumbrance. dated

Septetnber 1. 2011. The Receiver is duly appointed for thc property located at 21-39 South

Btu-gess ;1venue, Columbus, Ohio 43204. as fulhy described as Exhibit :1 attachLd below, (the

.:Propertv').

Il11er carel'ul examination ol' all the proceedings ol' said sale and the evidence ,idduczd.

this Court, being satisfied that the proceedings have been in all respects in contonnity to laxv and

the orders of this Court, finds that said proceedings mid the Iteoaiver's sale of the Property shall

be approved atid conflnnc;d.

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It is therefore ORI:)1;RF,D, ;11).11_`D(il;ll ANI) DECRIM) that the Iteceiver's sale ol'the

Properh, to Xiao I'u Huvtg be and liereby is coiifinned.

It is FURTHER ORDERED. ADJUDGED. AND DECREED that the clerk shall cntcr

cutcellation ofthe following instruments upon the Records of'Pranklin Countv. Oliio to-wit:

• Mortgage bemeen Paul D. Pearson and Kathleen A. Pearson aka Katlileen Pearson.(1lusband and Wife). andNzw Century Mortgage Corporation, for $445,000.00, lilzd li)rrecord June 1. 2005 and recorded as Cuyahoga Countv Recorder's 1)ocument No.200506010105771.

rOssigned to Wells Fargo 13tutk N.A.. as 'I'n ►titee I<>r the Registered Iloldzrs ofC11.1Commercial Assets. Stnall Balance Cotnmorcial Mortgage Pass-11irough Certiticates,Series 2005-1. dated November 14. 2005. filed for record January 31. 2006 and recordedas Franklin County recorder's Docurnent No. 200601310018874.

Assigturnnt of Rents between Paul D. Pearson and ICathlcc.n A. Pearson aka KathleenPearson atnd NetY Century Mortgage Corporation. dated May 13. 2005. liled fi>r recordJune 1. 2005 and recorded as Cuyahoga County Recordcr's Document No.200506010105772.

Assigned to Wells Fargo 13an1: N.A.. as '1'nrstee for the Registered Holdars of ('13:1C'otnnierc,•ial .lssets. Srnall l3alance Commercial Mortgage Pass-'Illrough Cerlilicates,Series 2005-1. dated Novcmbcr 3. 2005. tilcd for record Jlnuati• 31. 2006 and recordedas I-ranklin County Recorders I)ocurncnt No. 200601310018873.

Conscnt and Assutnption Agreement with Limited Release br and among Paul D.Ptarson and Kalhleen A. Pearson, and R. ()kechukwu Odita and Florence ()dita andWells Fargo Bank. N.A., as tnrstoe for the registered ltolders of C13.1 C omtnercial Assets,Small Balance Commercial \aortgage Pass-Through Certificates, Series 2005-1. filed forrecord June 13. 2008 and recorded as Franklin Countxy Recorder's Documcnt `o.200806 1 30091 52(l.

• I:inaneing Statement I'rom I•:. Okechukwu Odita and Florence Odita. I)ehtors. to WellsFargo Bank, N.A., as 1'rustee for the registend holders of CBA Commcrcial Assets,Small Balance Conunercial Mottgage Pass-17irough Certificates, Series 2005-1. filed forrecord Jtme 13. 2008 and recorded as Franklin County Recorder's Documant No.200806130091522.

and that said real estate described in the cotnplaint be relea..scd fi•otn the opcration of said

instruments.

S lqG• Sd?v I

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0A2 63 - N7

It is FUR'1'HER URllERI.?1). AI).tUDGI;ll, ANI) 1)ECREEI.) that the ainounts disbursed

'tt tlte closing of tlte sale of thL Propert}• as set fortlt in the settieincnt stalemcnt attached to the

Motion as Eshibit B are liereby approved and confinned.

It is PI_TRTIIER ()RDT:RI:D. ADJUDGED. AND DECREED the Recziver's distribution

to `'t'alls Fargo Bank N.A., as 'Trustze 1'oi- the Registered Holder ol'C'B:i Coinme;rcial :lssets.

Small 13alancr Corninercial iklortgage 1'ass-11irough Carlitirate~, Series 200-i-1 ati payment

toward its fust priorit-,• inortgage licn, in the amouiit of S130,87,4.63 be and liereby is coitfu-ined.

It is FURTHER ORDI;RrD. AD.IIIDGED. ANI) DI.;CRI;I;I) that the Receiver shall use

the remaining atct sale proceeds and otlacr existing receivership fitnds in his possession to wind-

t►p the- receivership zmd pay remaining receivership zxpenszs, ineltiding Court-appro%°ed lae

applications of the Receiver uid his coutisel. To thc e-xtcnt thc Receiver does itot Itax-c sufficient

funtlti to pay tlic balance of appro%,ed adtninistrati%-z expense. the Ylainti.fl, is herebx• ordered to

pay such approved administrative expeuse witltin 30 daNIs of the Receiver's request.

It is so ORI)EIRE,1).

1)ato

st0tiS4-N!

3

JUDGE FRYE

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F,X I I I IiIT ALEGAL DESCRIPTION

Situated in lhe Cily of Columbus, Coun(y of Franklin. and State oCOhicr

Being Unit.s 21, 23. 25A. 25B_ 25('_ 2;1), 27. 29. 31. 33. 35A. 3513, 35C,, 35I), 37 and 39 ofSC)l:"I'H BURGESS C'O1v'1)C)ti4IV11)M, as tho same is designated. delittcaled and dcscribcd in theI)aclaration thereof. ot'record as Instrument Kumher 200X07030103370, and the drawings thereofof record as Instrument Number 200807030103377_ as fikd in Condominium Plat 13t-iok 205_ PageI. Recorders C)ftice, Frnnklin County. Ohio.

Parcel Numbers: 010-287297. 010-28729X. 010?X72Sx^ OIQ-2X7304. 010-287301, qlO.3X7302.010-287303, 010-287304. 010-2873,05. 010-287306, 010-?87307, 010-287308. 010-287309. 010-287310, 010-2873 i 1 nnd Q 10-287312Propen}° Address: 21-39 South Burgm r1venua. Columbux. Ohio 43204

5tc/-8anr!

4

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0A2 63 - N9

SUBMITTRD BY:

^s% Robert T. CastorJttstin W. Ristau, Esq. (0075222)Itobeit T. Castor, Esq. (0082566)Bricker & Eckler LLP100 South Third StreetColumbus, Ohio 43215Phone: (614) 227-4857Fax: (614) 227-2390-1 ttdrne}^s f'or Receiver

With copies to:

Ronald L. IIouse, Jr.I. ,lllen.lonas, IIIBcnescli, Fricdlandcr. Coplan & ?,ronolFLLP41 South Higlt Street. Suite 2600Columbus, OII 43215-3506

-mnd-

1)avid R. MavoBenesch, Friedlander. Coplan & Aronoff LLP2300 BP Tower200 Public SquareClevzland, OH 44114Counsel for If'ells FargoBank;^:=1 Trustee

Florence C. Odita3155 Warchatn RoadColumbtts, OH 43221C'onnsel for Florence Odita. 7766 East fludsonSt l.l,('. 1991! est /'ifih ,rl venue I.I.C. 1::Okechuk-ivu Odita. 2605- 26 %b' Ho+rey Rouc!LLC, and 1474 Cleveland.4 venueLLC

E. Okechttkwu Odita3155 Warchatn RoadColumbus, OII 43221C'ounsel for I: Ukechr.ck-iou Odita

Sottth Burgess Condominitun Associationc:o Eric Odita, Stattttory :lgent8136 Olentangy River RoadColtunbus, OH 43235

Adria I. FieldsFranlain County I'rosccutors Office373 South High Street. 141f' FloorColumbus, O11 43215Counsel fhr I•'rcrnklin Couniv 7'reasa^rer

Jocluetla S. We11sP.O. Box 272082Colutnbus, OH 43227Counsel forE: Okechukwu Odita

Chris Sevis600 South High Street. Suite 200Coluntbus, OH 43215Counsel f'or -66l;ast Fludson St t,l,(',199 II'est F^Th:-tvenrce LLC. K. Ohechul.-tcu

Odita, 2605-26"8 Hoire>> Road LLC. crnil 114.74Clevelarrd ,4venue LLC'

;i06sa^:^ i

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0 63 - N10


Date: 02-25-2012

Case Title: WELLS FARGO BANK NA TRUSTEE -VS- E OK:ECHI; KW1JODITA


Type: ORDER

It Is So Ordcrcd.

/s/ Judgc Richard A. Fryc

Electronically signed on 2012-Feh-28 page 6 of 6

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,OA263 - r?li

Court Disposition


Case Style: WELLS FARGO BANK NA TRUSTEE -VS- E OKEGHUKWU ODITA


1. Motion CMS Document Id: 1®CV0072542012-01-3199980000

Document Title: 01-31-2012-MOTION FOR ORDER CONFIRMING SALE

Disposition: MOTION GRANTED

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0A054 - S49

IN 'I'IIh: C:OiTR'1' OF COMMON PLEASFRANI:LIN COUNTY, OHIO

dl'I;LLS F:1ItG0 13ANK, N.A.,AS TRUSTEE FOR THE REGISTEREDHOLDERS OF CBA CO-NLNIERC:IALASSETS, SA-i.al..L BALANCT.COi4111-I ERCLA L MORT CT:1 GEPASS-THROUGH CER'I'IFICATE5,SERIES 2005-1

I'Istintltl,

o-s.

E. OKECHUKWU ODITA, et al.

Defendants.

.JOL-RNAL ENTRY

CASE \O. 10CVE-05-7254

.IU1)(TE FRYb:

"I1iis matter catne on upon the (1) Re-Ciled Motion of PlaintilT l'or Summary.ludgrnent

filed herein on Januarv 14. 2011; (2) Plaintill`s 'Xiotion for Summatv Judgment on Detcndants'

Oditas' Couarierclaim. liled herein on Julv 28. 201 1: (3) l'laintitl`s Motion to Cornptl 1)iscovery

and for Sanctions Against Defendants 1474 Cleveland Ave.. 1.1.C. 2605-2678 Iiowzv Rd. I.I.,C.

199 West Fifth Ave., I,L,C and 766 East liudson St.. I.,I,C, filed herein on Juh• 28. 2011: (4)

Plaintift's Motioti to Cotnpel Discovery and for Sanctions against Ih_tondvits Floronec. Odita

and E. OkechukdA,u Odita, filed lieroin on August 4, 2011; and (5) Aancilded Aiotion Of

Detendants Oditas to Fxtend the Time to File a Motion For Summan• Judgment.

'Iltc Coutt, Itaving hcard tlic argumrnts of counsr•l and having considcred the briefing

lilzd by the p.trties in connection with the Consant atid :lssumrtion :lgreement With l,imited

Release at the Cottrt's hearing on Octobcr 20. 2011. hercby finds as follows:

(1) Re-ftled rLlntion '(1f.Plauttiff Ior .Su»tntar3? .liulgrnent Filetl Oir .lanruerp 14,2011

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0A054 - S50

L-pon the bricfcng, arguments and evidence submittcd in regard to the Rc-filcd Motion of

Plaintill'li>r Summary Judgtnent filed herein on January 14, 2011. the Court linds that thera is no

genuine issue as to any material fact and that PlaintifJ' is entitled to jtidgtncnt on its claims as a

inatter of law. Accordingly, it is ORllEREll that the I'laintil7's \4otion is herzbv tTItAN'1'l;l) as

follows:

(ij Count One .liul;inent on the Pronu.t:tioi}',1 ote

On or about Jtuie 1. 2005. Paul D. Pearson and Kathleen A. Pzarson (the "Pzar .'ons")

exectited a Promissory Note in the principal ainount of $-145.000.00 ("Note") to Plaintill`s

assignor New Century Alortgage Corporation ("New Ccntttn '). PlaintitJ'ltolds tho Note.

B}' Conscnt and Assumption Agrecinctit With Limitcd Release dated Jtuic 10. 2008,

executed hv the Pearsons. the Oditas tmd Plaintill' (".\ssumption ;lgreement''), the Pearsons

transfcrrei and Defendants Florence Odita and E. Ukechukwu Odita (the "Oditas") assumcd the

obligations identified therein, including all ohligations ttndzr the Note.

As a result of Dcfcndants Oditas' dcfault undcr the 1\otc, the entire unpaid principal

bal.utce ol'the T;ote, together with all unpaid accrued interest and other charges thereon, have

becotnc immediately due atid payable.

1)efeiidants Oditas are indebted to PlaintilT l'or the fiollowing suins: (a) the outstanding principal

balance due undcr the Note in the stun of $428.009.07. (b) accntcd interest ciuc in the amouut of

S.35.368.80 through May 4. 2010. plus intei-Lst at S91.25 per diem lltcrealier through anul

iticluding the date the principal balance is paid in fitll; (e) dcfault interest in the amount of

S12.945.81 through May 4, 2010, pltts dcfatdlt interest at $35.67 per diem thereatter through and

ineluding the date that the principal balance is paid in fitll; (d) inoiithlv late charges of $3:165.00

through May 4, 2010 and acer-uing thereafter: (e) any sutns to be paid by PlaintilT on behalf of

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0A054 - S51

llefendants Oditas for real estate and other tates, insurance prentiutns, and appraisal costs: and

(t) legal costs and expenses including attornc-vc' tces.

Tlterefore, judgtnctit is hereby cntered against tlte Oditas oti the Note in the sum duc as of

May 4. 2010, of $479,488.68, togetlier xviih interest thereafter at the r.tte of' S126.92 per drefat.

any sums to be paid by Plaintiff on behalf of llefendarits Oditas for ttal estatL and otlicr taxes.

insttrutce premiums, and appraisal cotits, and legal costs tuid zxpentes including attc>rneys ICes.

(ii) Cottnts Dro. Three and Fotu• - Judgrrtent for F orecloslu•e of tlre _1lortgir;;c.Foreclo.sure of'C'ollateral and Declaration Regardirsg:I.sstgnnrent ofRent.s

In order to secure payment of the Note, the Pearsons execttted aX-fortgage to Nem•

Centttrv dated Aiav 13, 2005 ("Mortgage"), regarding the propertv that is tlte subject of this

action owned thcn by the Peat•sons and now owned by the Oditas at 21-39 South Burgess

Avenue. Columbut, Ohio 43204 (";tdortgaged Preinisas"). The Mortgage was filed lbr record

with the Recorder of I'ranklin County. Ohio. on .tune 1, 2005, as Official Iteuot•d

200506010105771. 'Ilie INdortgage constitutes avalid tuid suhsi4ting lirst :tnd best lizn upcm the

Mortgaged Premises. Tho Mortgage was assigned to Plaintiff^

In order to secure further payment ol' thz Note, the \fortgaga provides PlalntllY \1'1th a

sectirity interest in the rents derived frotn, and personal property attachod to or affixed to. the

Mortgiiged Preinises described in litrlher detail therein (hereinaller the "Collateral").

'niC CoUrt fUt'tller ttnds that the A'lortgage is a good , valid and stibsistiug first priority licn

on the Oditas' right, title and interest in the b•Iurtgaged 1'retnises and Collateral. Subject to am•

real estates taxes and assessments on the Niottgaged Preinises owed to the I'ratil:lin Countt°

Treasurer.

1.3y reason of its delault oFthe Oditas' ohligations, the Court finds that the conditions ol

the Mortgage have been broken, thal the conditions oF ihe lviortgage have b4cotne absolute and

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1'laintiir is entitled to have the ILlortgage forealosed, the provisions enforced, the equity ot'

redemption of the Defendants forever cutoff and thc Nlortgaged Protnists and Collateral be sold

and the proceeds tltcrcfrotn be applied in paytncnt of Plaintif.l`s claitn.

The Court fitrther finds that tuiless Defend.uu Oditas or any other party pay's to PlaintifT within

three (3) days ailer the entry of this Journal Entn• thc principal, interest, mid other sums pa^^ablc

under the Note as set liorth above, the costs ol'this case, taxes due :uid payable. together xvilh

interest due tlicrcoiL and any advattces duc Plaintiff for rcal estate taxos. insuranco pretnituns.

.uid property protection, the equity ol'rzdemption ol'all Delend<uits named in this action in and to

the Mortgaged Premises and Collateral sltall be foreclosed.

Purther, under the Assignment of 1Zents dated IMay 13, 2005, thz Uditas' right to collect

rents is rcvoked and Plaintiffis cntitled to recovcnf tltcrcof.

(2) Plaintiffs ,1•lotion hor Sttmrnart, Jurlgnient On 1)efettdants' Oditac'Cofutterclaitn, Filed Hereat On Jrrlr 28, 2011

Upon the hrieting, argumenls and evidence suhtnitled in regard to Plaintill's Riotion lior

Summary Jud,,tncttt filcd hcrcin on July 28, 2011, the Court finds that there is no gonuinc issue

as to any material tact and thttt Plaintiff is entitled to juddment on its Detand.unLs Odit.4s'

counterclaims as a matter of law. Accorduiglv, it is ORDERED that tlic Plaintiff^s Nlotion is

herzby (i1ZAN'1'1?1) and summar_y- judgment is hzreby entrred in lavor ol'Plaintill-on the ()ditas'

countorclaiuis.

(3) Pltrisuiffs ;ifotum '1'o Compell)iticovert': In^l For Sanc4inris,-lgaurst Defentlants1-E7-d Clevelat:d .d w., LLC, 260512678 Ho ►rx:p Rd. LLC. 199 Tf'est F-iftle : Ii-e..LLCAnd 766 EastHnrlson St., LLC. Eilecl Herein On Jtcli, 28. 2011

Upon the brieiing, argttments and evidence suhmitted in regard to 1'laintil7's Motion to

Cotnpzl Discovery and for Sanctions Against Detendmts 1474 Cleveland Ave.. LLC. 26()5.;2678

Howey Rd, LLC. 199 W,„%l hiftlt Ave.. LLC aud 766 East Hudson Sl., LLC. filed het-ein on -iulv

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0A054 - S53

28, 2011, Ihe Cottrt hereby CrRAN'1'S the motion insofar as it relates to response to Plaintil7`s

document requests and appearing for deposition and DENIES the tnotion insofar as it seeks

sanetions. Said dcfcndants sliall fttlly respond to Plaiutif!`s doeutncnt request by November 11,

2011. and shall appear Por deposition on or belore November 30. 2011.

(4) Plainti,f"s !1'lotion to C'onapcrl I)iscovert' rnrd for Sattcrions :-lgainst DefetidantsFloretrce Otlita nrul E. Olcechukfsat Odita, fale(i hereite on .4ragrrst 4, 2011

I'pon the brieling_ arguments and zvidrncc subinitted in regard to Plainti(l`s I'lanltl Il's

A•fotion to Compel Discocer}, and for Sanetions Against Delendwits Florence Odita and E.

Okechukwu Odita, 1'iled herein on :lugust 4. 2011, the Court herebY (iR:\N'1'S the motion

insofar as it relates to response to Plttintiffs doctunent requests and properl}, responding to

deposition questions and DENIES the inotion itisofar as it seeks sanctions. The Oditas shall fitlhr

respond to Plaintiil's doctunent request bv Novetnber 1 l, 2011. and Flnrence Odita shall appear

for her continued deposition oii or before Novetnbet- 30. 2011, to respotid to questions relevant to

1'laintitl`s remaining claims.

(5) ,-Irnended Alotion Of Defendants Oditas to l:xtend tlre "!'ime to 1°cle a ;ilotionFor Summan Judgmejit.

I;pon the briefing, arguinetits and evidence submitted and t'or thc reasons set forth at the

hcaring on October 20. 2011, in ro'v-d to thc Consent and Assumption Agrectnent V'.'ith Litnited

Release, Ihfc;ndants Oditas' amended Motion to Extend the Time to File a A4otion for Sumniarv

.ludgment is I7T:\IED. The premature tiling of said motion on August 23, 2011.. by tha Oditas

without leave is deemed stricken.

JLTt)Gh, hR1'13

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0A054 - S54

:11'PROVEll:

r's. Ronald L. HouseRonald L. Houso. Jr. (00367ti2)J. Allen Jones, III (0072397)Benesch, Friedlander, Coplan & Aronoll' LI_,I'41 Soutlt High Street, Suite 2600Coltttnbus, Ohio 43215-3506Telephone: (614) 223-9300Facsimile: (614) 223-9330

,---Email: rlî u::4 c-:lmc^; sclîzv:° citn^

:91 tornet:s for 1'lcrintiJj-(i'ells Fcr)-go l3cink. r\'.: f..as Trrtstee for the Register-ed Holcler•s of ' CBACommercial Assets, Snurll Balance C"onrmercialAlor(ga,;e Ycrss-7hrough Certi/icaies. Series 2005-1

(4uhrnilted Octobi;r 25. 2011 n^^t sa sri^d ^ c{ objections noted per a;-niail:: slatcci S.Dctol3er 27. 28.30 aaad 31 2011)Florence Odita (0011906)E. Okechtdcwu Odit<13155 Warehaan ItoadColumbus, Olxio 43221

(No ohiection - per e-mail dated 10; 27,-11)Chris S. Sevis (0068667)600 Soulh I ligh StreetSuite 200Columbus, Oliio 43215(614) 224-0370Fax: (614) 224-3556l:Si 41S((T^•11(.i::s:•otFi;iil:ltl.Ôm

.1 ttorne)! for I,l.C l)eJendants

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.OA054 - S55


Date: . 11-09-2011



Type: JOURNAL ENTRY

It Is So Ordered.

^:^.`\

/s/ Judge Richard A. Fryc

Electronically signed on 2011-Nov-09 pafle 7 of 7

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, E1301 - H88

http:/Bfcdcfcjs,co.frankl in.okt.us/CaseinformatianOnline/imagel.inkPr.:.

IN THE COMIMOIV PLEAS COURT OF FRANKLIN COUNTY, 0I110

WELLS FARGO 13ANK, N.A.,AS TRUSTEE FOR THE REGISTEREDh{ULDERS OF CBA COMMERCIALASSE'I°S. SMALL 13AL11.NCECOMMERCIAL MORTGAGE1'ASS-TH RpUGH CCR'I'I FICATLS.Sr-RIGS 2005-1

Plainti 11;

Y.

I:. OKECI-IUKWU ODITA, ct al.,

Dcfcndants.

C"7 cV'

Casc No. 10-CVC-5-72t, V__31

Judge Frye"*1 f rf °t'

c°" "q ByGroG

-^-4 = 1::7^, wr

c's CO

(}R[DFii; API'It()VING SALE OF IdF:CEiVE1tS1i1P I'I4iN'EI2TY FREE AND CI.EsAIt OFANY LIEN, CLAIM, INTEREST OR EhCIIMT4RAlti`CE

'1'his matter is bcforc the Court upon the Motion of John A. Rothschild, Jr., thc duly

appointed Receiver (the "Receiver") for the property locatcd at 21 - 39 South Burgcss Avenue,

Colun,bus, Ohio. a 16-unit residcntial apartmcnt complex that is the subjcct of the inst:ent

1`orcclosurc action (thc 'Propcny"), for an Order authorizing and approving thc private sale of

the !'roperty to Xiao Yu I•Iuang (`°Buycr'') free and clear of all licns and encumbrances pursuant

to the ternts of the Contract (as defincd in the Motion).

I3ascd upon a rcvicw of the information contained in the Receiver's Motion and the

conscnt tif the fitst priority lienholder, !'laintill" Wclls rargo Bank, N.A., as 7'rustee for the

Registered Holders of C13A Commcrcial Assets, Small Balance Co,nrnercial Mortgage Yass-

'fhrtsut;h Certificates, Scrics 2005-1 ("Plaintiff'), and the evidence and testimony presented at a

hearing on Motion on August 3 1. 2011, as ovcll as the oral alrgumcnt of counsel, and for good

cause shown, the Court iinds that the Receiver's Motion is well-taken and should bc GRANTED.

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, E1301 - H89

ll' IS THEREFORE ORDERED that the Contract, a copy of d`fiich is attached to the

Motion as Exhibit E3, is hereby approvcd, and thc Receivcr, as the Cuurt's dulv appointed

representative, is hereby authorized to sell and convey the Property to Buycr pursuant to the

terms of the Contract.

IT IS FURTI•fER ORDERED that the sale of the Propcrt;ar shall bc free and clcar oC all

liens. claims, interests, and encumbrances, except for the statutory lien lbr unpaid real estate

taxes and asscssrncnts, it'any.

17" IS FURTHER ORDERED that the Receiver is authorizcd to sign all documents and

take all othcr actions dcemcd nccessary by the Receiver, in his reasonable discrction, to complete

the transaction contcmplatc°d under the Contract as authorized by this Order.

IT IS FURTI•IER OIZDERED that, upon the closing of` the salc of` the I'ropcrty pursuant

to the tctms of the Contract, the Rccciver shall apply to the Court for an ordcr contirming the

sale of the t'ropcrty, extikeuishinb all liens and encumbrances, and authorizing the distribution of

the sula proceeds to the parties in the ordcr ot'priority in accordance with applicable law.

IT IS SO ORDERED.

f7atc: Q / --'Judb Fryc

APPROVEf7BY:

9^e {Robcrt'1`. Castor (0082566) Ronald L. Housc, Jr. (0036752)Rachel E. Rcutzcl (0085345) ^ jt 1 t t Bcnesch, Fricdlandcr, Coplan & tlronvf7° I.LIBRICKER & ECKLER LLP r 41 South High Strcct, Suite 2600100 South °I'hird Str^•et Columbus. Ohio 43215-3506Columbus, Ohio 43215-4291 Tclcphone: (614) 223-9300Telephone: (614) 227-2300 Facsiniile: (614) 223-9330Facsimile: (614) 227-2390 Coun.sel for Plafnti(J`Craun.r^.=J for Receiiwr

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