The Supreme Court ruled Tuesday that after a court has granted a decree of foreclosure and ordered the sale of the foreclosed property, the plaintiff in a foreclosure action may not voluntarily dismiss its complaint under Ohio Civil Rule 41.

The Supreme Court ruled Tuesday that after a court has granted a decree of foreclosure and ordered the sale of the foreclosed property, the plaintiff in a foreclosure action may not voluntarily dismiss its complaint under Ohio Civil Rule 41.

The Supreme Court of Ohio ruled today that, after a court has entered judgment granting a decree of foreclosure and ordering the sale of the foreclosed property, the foreclosure action cannot be dismissed under Ohio Civil Rule 41, a procedural rule that allows the plaintiff in a civil lawsuit  to voluntarily dismiss a complaint that is still pending.

The court’s 7-0 decision, authored by Justice William M. O’Neill, reversed a ruling by the Sixth District Court of Appeals.

The case arose from a mortgage foreclosure action filed by Countrywide Home Loans against Michael and Joanne Nichpor in the Wood County Court of Common Pleas.  On May 18, 2009, the court entered a default judgment of foreclosure in favor of Countrywide and subsequently issued a writ ordering that the Nichpors’ home be sold at a sheriff’s sale.  The sale was held on July 1, 2009, and the property was purchased by a third party, Jennifer Reichert.

On July 12, 2009, before the trial court had entered an order confirming the sheriff’s sale, Countrywide filed a notice advising the court that it was dismissing its complaint in the case pursuant to Ohio Civil Rule 41, which allows the plaintiff in a civil lawsuit a one-time opportunity to voluntarily dismiss its case without prejudice (without affecting its right to refile the same complaint later) prior to the commencement of  a trial.  On July 16, Countrywide filed a new complaint for foreclosure of the Nichpor’s mortgage.

On August 3, 2009, the trial court declared that Countrywide’s original foreclosure action was dismissed based on it voluntary dismissal under Civ.R. 41.  On August 5, 2009, the court entered summary judgment in favor of  Countrywide on the refiled complaint, and granted a new decree of foreclosure. 

The Nichpors appealed, arguing that the default judgment recorded on May 18 and subsequent sheriff’s sale of their property were res judicata (matters already decided), and the trial court had erred by allowing Countrywide to dismiss its complaint after a judgment had been entered in the case. On review, the Sixth District Court of Appeals affirmed the action of the trial court, holding that a foreclosure action is a two-part process consisting of an order of foreclosure and an order confirming the sheriff’s sale, and that until the order confirming sale has been entered, the plaintiff retains its right to voluntarily dismiss the complaint without prejudice under Civ.R. 41.

The Sixth District subsequently certified that its holding was in conflict with a 1987 decision of the Second District Court of Appeals, Coates v. Navarro. The Supreme Court agreed to review the case to resolve the conflict between appellate districts.

Writing for a unanimous court in today’s decision, Justice O’Neill noted that Civ.R. 41 allows a plaintiff in a civil action to dismiss its claims against a defendant by filing a notice of dismissal “at any time before the commencement of trial.”

Justice O’Neill wrote: “The key to our analysis is how to apply this rule when a trial is not held.  Default judgment is the functional equivalent of a judgment following a trial. ... A trial is defined as ‘a judicial examination of the issues, whether of law or of fact, in an action or proceeding.’  ... In order to enter a default judgment, a court must determine that no issues of law or fact exist and that the plaintiff is entitled to judgment. Ohio courts have previously held that an order of default judgment means that a trial has commenced for purposes of Civ.R. 41(A) and the matter has proceeded to verdict and final judgment.”

“(I)n GTE Automatic Elec., Inc. v. ARC Industries, Inc. ...(1976)this court stated, ‘Regardless of whatever else may be said of a default judgment, it is a judgment. It is as good as any other judgment. It is a final determination of the rights of the parties.’ That this default judgment occurred within a foreclosure proceeding does not make the judgment any less final.  All that remained in this case were administrative matters finalizing the result of the sheriff’s sale and giving the mortgagors the opportunity to exercise their equitable right of redemption. These actions can be classified as proceedings to aid in execution of the judgment.”

“To reach the conclusion that the Sixth District Court of Appeals did, and to grant a lender the right to dismiss an action after a trial court has issued what it has indicated was a final judgment, would lead to the untenable result that an unhappy lender could simply wait until after the sheriff’s sale has occurred, decide that the sale price was too low, and then dismiss the case in order to get a second bite at the apple. This flies in the face of the general policy that judicial sales have a certain degree of finality.”

“Based upon the forgoing analysis, we ... hold that after a judgment entry grants a decree of foreclosure and order of sale, the foreclosure action cannot be dismissed pursuant to Civ.R. 41(A)(1)(a), because that rule pertains only to the voluntary dismissal of a pending case. This case is reversed, and the matter is remanded for further proceedings consistent with this opinion.”

Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion, but only for noteworthy cases. Opinion summaries are not to be considered as official headnotes or syllabi of court opinions. The full text of this and other court opinions are available online.

2012-0578. Countrywide Home Loans Servicing v. Nichpor, Slip Opinion No. 2013-Ohio-2083.
Wood App. No. WD-11-047, 2012-Ohio-1101.  Judgment reversed and cause remanded.
O’Connor, C.J., and Pfeifer, O’Donnell, Lanzinger, Kennedy, French, and O’Neill, JJ., concur.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2013/2013-Ohio-2083.pdf

View oral argument video of this case.

PDF files may be viewed, printed, and searched using the free Acrobat^® Reader
Acrobat Reader is a trademark of Adobe Systems Incorporated.