Ohio Appeals Court Gives Reminder On Importance Of "Real Party In Interest" Rule

In a recent ruling by an Ohio Court of Appeals in which it unanimously reversed a trial court's decision to grant what ostensibly was a rubber-stamped summary judgment in a foreclosure action, the three-judge panel gave this reminder of the importance that a foreclosing entity be a "real party in interest" in order to bring the lawsuit (reference to "Moore," below is a reference to the defendant/homeowner):

• {¶ 21} Civ.R. 17(1) requires that a civil action be prosecuted by the real party in interest. A real party in interest is one who is directly benefitted or injured by the outcome of the case rather than one merely having an interest in the action. Mickey v. Denk, Cuyahoga App. No. 90484, 2008-Ohio-3983, citing State ex. rel. Village of Botkins v. Laws, 69 Ohio St.3d 383, 387, 1994-Ohio-518, 632 N.E.2d 897. The purpose behind the real party in interest rule is “to enable the defendant to avail himself of evidence and defenses that the defendant has against the real party in interest, and to assure him finality of the judgment, and that he will be protected against another suit brought by the real party at interest in the same matter.” Morelli v. Walker, Cuyahoga App. No. 88706, 2007-Ohio-4832, citing Shealy v. Campbell (1985), 20 Ohio St.3d 23, 24, 485 N.E.2d 701.(2)

• {¶ 22} This action was filed by Sovereign Bank on December 27, 2006, one day after a letter was issued from Flagstar Bank to Moore stating that Flagstar Bank had assigned the loan to Countrywide Mortgage. Another document in the record indicates that on May 23, 2007, “MERS, Mortgage Electronic Registration Systems, Inc., as nominee for Lenders Choice Mortgage LLC (Assignor)” transferred and assigned the note and mortgage to Flagstar Bank, FSB. On this record, genuine issues of material fact exist as to who is the real party in interest and the trial court erred in granting judgment in favor of Flagstar Bank.

For the ruling, see Flagstar Bank, FSB v. Moore, 2010-Ohio-375 (February 5, 2010).

(1) Refers to Rule 17 of the Ohio Rules of Civil Procedure.

(2) For other Ohio appellate court rulings related to this point, see Lender Not Entitled To Foreclosure Judgment Due To Failure To Prove Promissory Note Ownership, Says Ohio Appeals Court.