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Wednesday, October 31, 2012

Ohio Supreme Court Reverses Schwartzwald

While the issue was not expressly addressed, I believe the language of the opinion allows motions to vacate void judgments based upon the lack of standing.

The Ohio Supreme Court addressed the following certified conflict:
“In a mortgage foreclosure action, the lack of standing or a real party in interest defect can be cured by the assignment of the mortgage prior to judgment.”

The Ohio Supreme Court held that standing is required to invoke the jurisdiction of the common pleas court, and therefore it is determined as of the filing of the complaint. 

The Ohio Supreme Court concluded:
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. Civ.R. 17(A) does not change this principle, and a lack of standing at the outset of litigation cannot be cured by receipt of an assignment of the claim or by substitution of the real party in interest.

The entire opinion can be viewed at the following link:


The Decision was unanimous without any concurring opinion.  The Legal Scholars do not need to attempt to decipher how the political winds may have affected the outcome.  The Court applied the Laws and Rules of Court.

Throughout this process I have been having a debate with others as to whether the lack of standing resulted in a void judgment or merely a voidable judgment.  A void judgment can be challenged at any time.  The issue can be raised at any point in the proceedings.  The issue cannot be waived.  I have always argued that standing was not "jurisdictional" and therefore the lack of standing did not result in a void judgment.  I had always asserted in the debate that the Courts used the phrase "invoke the jurisdiction" of the Court, but they did not really mean that a "jurisdictional" flaw existed. 

In the Ohio Supreme Court's decision today, I believe that there is a much stronger argument to be made that the lack of standing creates a jurisdictional flaw that results in a void judgment.

The Ohio Supreme Court addresses the issue of stadning by relying upon the Ohio Constitution's grant of original jurisdiction, stating:

 The Ohio Constitution provides in Article IV, Section 4(B): “The courts of common pleas and divisions thereof shall have such original jurisdiction over all justiciable matters
and such powers of review of proceedings of administrative officers and agencies as may be provided by law.”

The Ohio Supreme Court then cites holdings from its previous cases and holds:
“[s]tanding to sue is part of the common understanding of what it takes to make a justiciable case."

The resulting conclusion is that without standing there is no justiciable matter over which the Court of Common pleas can exercise jurisidiction, and any resulting judgment would be void, not merely voidable.

The Ohio Supreme Court also makes the following statement:

Standing is required to invoke the jurisdiction of the common pleas court.  Pursuant to Civ.R. 82, the Rules of Civil Procedure do not extend the jurisdiction of the courts of this state, and a common pleas court cannot substitute a real party in interest for another party if no party with standing has invoked its jurisdiction in the first instance.

Based upon the Ohio Supreme Court's decision in Schwartzwald 2012-Ohio-5017, a strong argument can be made that a Plaintiff that did not possess an interest in the promissory note and mortgage at the time the complaint was filed, had no standing to invoke the Court's jurisdiction, and any resulting judgment is void and subject to a motion to vacate.

1 comment:

  1. Bruce - There is absolutely no doubt that the judgments entered in foreclosure cases in which the plaintiff lacked standing when the complaint was filed can be attacked. They are void. Period. The hard part will be proving the lack of standing.

    ReplyDelete