Foreclosure Action Upheld Despite Time-Barred Note in Ohio Case

Padgett successfully argues that an action for foreclosure of a mortgage securing a time-barred note can be maintained in Trinity Fin. Servs., LLC v. D'Apolito, 7th Dist. Mahoning No 23 MA 0028, 2024-Ohio-825.

​In D'Apolito, the borrower appealed the decision of the Mahoning County Common Pleas Court granting summary judgment to Plaintiff and ordering foreclosure of the mortgage asserting that the trial court erred in “failing to conclude the expiration of the statute of limitations on a note necessarily barred the action on the mortgage securing the debt.”  The borrower based his argument upon, "Long-standing Ohio Supreme Court precedent holds that when action on a promissory note is time-barred, then foreclosure of a mortgage securing that note is time-barred as well." The Seventh District agreed with the Ohio Supreme Court in that it has "long recognized that an action for a personal judgment on a promissory note and an action to enforce mortgage covenants are 'separate and distinct' remedies” and that “an action at law on a promissory note to collect a mortgage debt is separate and distinct from an action in equity to enforce the mortgage lien on the property." 

The Seventh District relied on the Supreme Court's Holden decision and the Eighth District case law in its holding that the mortgagee could bring a foreclosure action even when the underlying claim on the note was time-barred. The Seventh District noted its own prior decisions on the same issue.

The Seventh District then took its holding one step further by affirming that the home equity line of credit at issue in the underlying foreclosure did not meet the definition of a note for purposes of the statute of limitations in R.C. 1303.16(A), and that the suit was therefore "an action on an account where general contract law principles apply" and applied the eight-year statute of limitations in R.C. 2305.06 instead, thereby rendering moot Appellant's argument on alternative grounds.

This post was originally published on March 29, 2024.