List of Defenses to Foreclosure

We have helped over 1,400 people with their foreclosure and legal issues without bankruptcy. We hope this list of defenses to foreclosure is helpful if you are unable to locate an attorney and need to answer your foreclosure pro se.

Foreclosure Elements

A foreclosure action has two counts. The first is a breach of the terms of the note. The second is a breach of the terms of the mortgage, which allows for the sale of real estate to pay off the note.

At its core, these two claims are based in contract law. Thus, a plaintiff needs to prove a breach of contract in order to prevail. These elements in Ohio are:

(1) A binding contract or agreement was formed;

(2) The nonbreaching party performed its contractual obligations

(3) The other party failed to fulfill its contractual obligations without legal excuse; and

(4) The nonbreaching party suffered damages as a result of the breach.

Carbone v. Nueva Constr. Grp., L.L.C., 2017-Ohio-382, ¶ 14, 83 N.E.3d 375, 380 citing Textron Fin. Corp. v. Nationwide Mut. Ins. Co., 115 Ohio App.3d 137, 144, 684 N.E.2d 1261 (9th Dist.1996), citing Garofalo v. Chicago Title Ins. Co., 104 Ohio App.3d 95, 108, 661 N.E.2d 218 (8th Dist.1995).

Foreclosure actions get slightly more complicated because many times (but not always!), the note is considered a negotiable instrument that falls under UCC Article 3. Because of this, courts also require the plaintiff show it has rights to enforce the note in order to prevail under the first count of the foreclosure lawsuit.

In an excellent decision by the 10th District (US Bank v George,, the court stated the elements to a foreclosure regarding a negotiable instrument as the note this way:

A plaintiff moving for summary judgment in a foreclosure action must submit evidentiary-quality materials establishing: (1) that the plaintiff is the holder of the note and mortgage, or is a party entitled to enforce the instrument; (2) if the plaintiff is not the original mortgagee, the chain of assignments and transfers; (3) that the mortgagor is in default; (4) that all conditions precedent have been met; and (5) the amount of principal and interest due..

A Decade of Foreclosure Defense

Attorney Troy Doucet “wrote the book” on foreclosure defense and is a lawyer who knows this areas of law. He published 23 Legal Defenses to Foreclosure: How to Beat the Bank in 2008 (this material is substantially updated) and he has been helping families facing foreclosure since starting Doucet Gerling Co., LPA. Troy Doucet and Andrew Gerling both graduated at the top of their law school classes and are highly rated foreclosure defense lawyers. Our foreclosure defense lawyers and law firm are dedicated to helping families find the best solution to foreclosure. We are known for our excellent legal work and outstanding results.

Debt Collector Elements

Elements to prove an account stated Dept. Stores Natl. Bank v. McGee, 2013–Ohio–894, ¶ 16 (7th Dist.), cited by Citibank v. Hyslop, 2014-Ohio-844, ¶ 10 (10th Dist.); Mercer Health v. Welling, 2014-Ohio-5626, ¶ 18 (3rd Dist.); First Merit Bank v. Wilson, 2007-Ohio-3239 (9th Dist.) are:

1. [T]he existence of an account, this includes: 1) the cardholder agreement terms and conditions that apply to the account, 2) any subsequent revisions to those terms that it seeks to enforce, and 3) it mailed those documents to bind debtor to them. Citibank (S. Dakota), N.A. v. Perz, 2010-Ohio-5890, ¶ 33-34 (6th Dist.).

2. including that the account is in the name of the party charged, Debt collector must also prove any assignments to it. “Appellee could not prevail on the claims assigned by the bank without proving the existence of a valid assignment agreement.” Hudson & Keyse, LLC v. Carson, 2008-Ohio-2570, ¶11 (10th Dist.); Midland Funding LLC v. Coleman, 2019-Ohio-432, ¶ 17. An assignment of a contract requires showing mutual assent and consideration. “An assignment of contract rights is, itself, a contract, and thus, in order to establish an assignment, the elements of a contract must be present.” Hamrick v. Safe Auto Ins. Co., 2009-Ohio-1380, ¶ 15 (10th Dist.). “Those essential terms include mutual assent and consideration.” Id.

3. a beginning balance of zero, or a sum that can qualify as an account stated, or some other provable sum; All allegations made must be true. Taylor v. First Resolution Invest. Corp., 2016-Ohio-3444, ¶ 76, 148 Ohio St. 3d 627, 650, 72 N.E.3d 573, 595 (Ohio S.Ct.)

4. listed items, or an item, dated and identifiable by number or otherwise, representing charges, or debits, and credits; and The law prohibits creditor from representing a copy of billing statements as copies of the original. Hartman v. Great Seneca Fin. Corp., 569 F.3d 606, 613 (6th Cir. 2009). (Asserting a credit-card bill was a copy of the original when it was not.)

5. summarization by means of a running or developing balance, or an arrangement of beginning balance and items that permits the calculation of the amount claimed to be due.

Our foreclosure defense lawyers have experience with loan mods, write-offs, write-downs, walk-aways, and more. Damages and fees might also be available. 

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List of Defenses to Foreclosure

Unclean Hands

The unclean hands doctrine is a defense against claims in equity. It requires a showing that the party seeking relief engaged in reprehensible conduct with respect to the subject matter of the action. The doctrine of unclean hands considers whether the party seeking relief has engaged in inequitable conduct that has harmed the party against whom he seeks relief. The doctrine of unclean hands “precludes one who has defrauded his adversary in the subject matter of the action from equitable relief.” In re Dow, 132 B.R. 853, 860 (Bankr.S.D.Ohio 1991) (the doctrine of unclean hands does not apply where there is no allegation that the plaintiffs defrauded the defendant).

Failure to Mitigate

Under Ohio law, “an injured party is under a duty to mitigate its damages and may not recover those damages which it could have reasonably avoided.” Wilson v. Kreusch, 111 Ohio App. 3d 47, 52 (Ohio Ct. App. 2d Dist. 1996). While a failure to mitigate is an affirmative defense which limits the amount of damages a plaintiff can recover, it is not a defense to liability. A.B. & B, Inc. v. Banfi Products, Inc., 71 Ohio App. 3d 650 (Ohio Ct. App. 1991). Further, the failure to mitigate damages only reduces the amount recoverable; it does not bar recovery. Van Beusecum v. Continental Builders, 2008 Ohio App. LEXIS 1837, at *27 (Ohio Ct. App. 5th Dist. May 1, 2008) (citing A.B. & B, 71 Ohio App. 3d at 657. When the plaintiff failures to mitigate, the plaintiff is only precluded from recovering damages that could have been avoided by mitigation. Id. Infocision Management v. Foundation for Moral Law, ND Ohio, 5:08-cv-01342-SL;

Reformation Not Available; Mutual Mistake Denied

Reformation is available where it is shown by clear and convincing evidence that a written instrument does not express the true agreement entered into between the contracting parties because of a mutual mistake. Wagner v. Natl. Fire Ins. Co., 132 Ohio St. 405, 412, 8 N.E.2d 144 (1937); Dornbirer v. Conrad, 5th Dist. No. 99-CA-26, 2000 WL 1751264 (Nov. 20, 2000). The equitable remedy of reformation is available in order to make the writing conform to the real intention of the parties. Id. In Delfino v. Paul Davies Chevrolet, Inc., 2 Ohio St.2d 282, 286, 209 N.E.2d 194 (1965), the Ohio Supreme Court stated the following: The purpose of reformation is to cause an instrument to express the intent of the parties as to the contents thereof, i.e., to establish the actual agreement of the parties. 47 Ohio Jurisprudence 2d 120, Reformation of Instruments, Section 2. * * * A reformation presupposes the existence of a valid instrument which fails to express the actual intent of the parties. An action for reformation is not to create an obligation but to establish the content of the instrument as intended by the parties. The party alleging mutual mistake has the burden of proving its existence by clear and convincing evidence. Dornbirer, supra.


“Unconscionability includes both ‘ “an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” ’ Lake Ridge Academy v. Carney (1993), 66 Ohio St.3d 376, 383, 613 N.E.2d 183, quoting Williams v. WalkerThomas Furniture Co. (C.A.D.C.1965), 350 F.2d 445, 449; see also Collins v. Click Camera & Video, Inc. (1993), 86 Ohio App.3d 826, 834, 621 N.E.2d 1294. The party asserting unconscionability of a contract bears the burden of proving that the agreement is both procedurally and substantively unconscionable. See generally Ball v. Ohio State Home Servs., Inc., 168 Ohio App.3d 622, 2006-Ohio4464, 861 N.E.2d 553, ¶ 6; see also Click Camera, 86 Ohio App.3d at 834, 621 N.E.2d 1294, citing White & Summers, Uniform Commercial Code (1988) 219, Section 4-7 (‘One must allege and prove a “quantum” of both prongs in order to establish that a particular contract is unconscionable’).” Taylor Bldg., 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 34.

In determining whether an agreement is procedurally unconscionable, courts consider “the circumstances surrounding the contracting parties’ bargaining, such as the parties’ ‘ “age, education, intelligence, business acumen and experience, * * * who drafted the contract, * * * whether alterations in the printed terms were possible, [and] whether there were alternative sources of supply for the goods in question.” ’ ” (Ellipses sic.) Taylor Bldg., 117 Ohio St.3d 352, 2008-Ohio-938, 884 N.E.2d 12, ¶ 44, quoting Collins v. Click Camera, 86 Ohio App.3d at 834, 621 N.E.2d 1294, quoting Johnson v. Mobil Oil Corp. (E.D.Mich.1976), 415 F.Supp. 264, 268. Additional factors that may contribute to a finding of procedural unconscionability include the following: “ ‘belief by the stronger party that there is no reasonable probability that the weaker party will fully perform the contract; knowledge of the stronger party that the weaker party will be unable to receive substantial benefits from the contract; knowledge of the stronger party that the weaker party is unable reasonably to protect his interests by reason of physical or mental infirmities, ignorance, illiteracy or inability to understand the language of the agreement, or similar factors.’ ” Taylor Bldg., 117 Ohio St.3d 352, 2008- Ohio-938, 884 N.E.2d 12, ¶ 44, quoting Restatement of the Law 2d, Contracts (1981), Section 208, Comment d.

An assessment of whether a contract is substantively unconscionable involves consideration of the terms of the agreement and whether they are commercially reasonable. John R. Davis Trust 8/12/05 v. Beggs, 10th Dist. No. 08AP-432, 2008-Ohio-6311, ¶ 13; Dorsey v. Contemporary Obstetrics & Gynecology, Inc. (1996), 113 Ohio App.3d 75, 80, 680 N.E.2d 240. Factors courts have considered in evaluating whether a contract is substantively unconscionable include the fairness of the terms, the charge for the service rendered, the standard in the industry, and the ability to accurately predict the extent of future liability. John R. Davis Trust at ¶ 13; Collins v. Click Camera, 86 Ohio App.3d at 834, 621 N.E.2d 1294. No bright-line set of factors for determining substantive unconscionability has been adopted by this court. The factors to be considered vary with the content of the agreement at issue.

Failure to Attach Contract 12(E)

That the proper way to challenge a failure to make an attachment required under Civ.R. 10(D) is by serving a motion for a definite statement pursuant to Civ.R. 12(E). In Civ. R. 10 (D) When any claim or defense is founded on an account or other written instrument, a copy of the account or written instrument must be attached to the pleading. If the account or written instrument is not attached, the reason for the omission must be stated in the pleading.

Inauthentic Indorsement

Authentic indorsement on note irrelevant to enforcement claim. If presentment is made to the drawer or maker, there is no necessity for a warranty concerning the signature of that person or with respect to alteration. If presentment is made to an indorser, the indorser had itself warranted authenticity of signatures and that the instrument was not altered. Section 3-416(a)(2) and (3). Subsection (a)(1) retains the rule that the drawee does not admit the authenticity of indorsements and subsection (a)(3) retains the rule of Price v. Neal, 3 Burr. 1354 (1762), that the drawee takes the risk that the drawer's signature is unauthorized unless the person presenting the draft has knowledge that the drawer's signature is unauthorized. Under subsection (a)(3) the warranty of no knowledge that the drawer's signature is unauthorized is also given by prior transferors of the draft.

Not Holder in Due Course (HIDC)

(A) Subject to division (C) of this section and division (D) of section 1303.05 of the Revised Code, ‘holder in due course’ means the holder of an instrument if both of the following apply: {(1) The instrument when issued or negotiated to the holder does not bear evidence of forgery or alteration that is so apparent, or is otherwise so irregular or incomplete as to call into question its authenticity; “(2) The holder took the instrument under all of the following circumstances: “(a) For value; “(b) In good faith; “(c) Without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series; “(d) Without notice that the instrument contains an unauthorized signature or has been altered; “(e) Without notice of any claim to the instrument as described in section 1303.36 of the Revised Code; “(f) Without notice that any party has a defense or claim in recoupment described in division (A) of section 1303.35 of the Revised Code.”

Insufficiency of Process

Insufficiency of process, or insufficiency of service of process is waived (A) if omitted from a motion in the circumstances described in subdivision (G), or (B) if it is neither made by motion under this rule nor included in a responsive pleading or an amendment thereof permitted by Rule 15(A) to be made as a matter of course.

Spoliation of Evidence

The most remarkable aspect of the doctrine of spoliation of evidence is that it has been held to be: (1) a cause of action in tort (for either −12− intentional or negligent spoliation of evidence); (2) a defense to recovery; (3) an evidentiary inference or presumption; and (4) a discovery sanction. Furthermore, the doctrine of spoliation of evidence has been held in some jurisdictions to constitute a substantive rule of law, while other courts have held it to be a procedural evidentiary rule.

“Even if the court finds the evidence was not deliberately destroyed, ‘negligent or inadvertent destruction of evidence is sufficient to trigger sanctions where the opposing party is disadvantaged by the loss.’ Id. at 176, citing [Farley, supra]. ‘The intent of the spoliator in destroying or altering evidence can be inferred from the surrounding circumstances. In other words, intent can be inferred from the fact that the evidence was destroyed prior to the commencement of any litigation against the defendant and where there is only a potential for litigation. Therefore, the spoliator is under a duty to preserve evidence which it knows or reasonably should know is relevant to the action.’ Cincinnati, at 9 ***. {¶ 53} “Furthermore, ‘where the loss of evidence is belated, a court should not dwell on intent but, rather, focus on the importance of information legitimately sought and which is unavailable as a result of the destruction of evidence.’ [American States] at 176.

Failure to Join Others Under Civ. R.’s 19 and 19.1.

Civil Rule 19.1(A) controls the joinder of involuntary plaintiffs. It reads in pertinent part: "If [a party] should join as a plaintiff but refuses to do so, he may be made a defendant or, in a proper case, an involuntary plaintiff." Civ.R. 19.1(A). Therefore, a precursor to joining an involuntary plaintiff is that person or entity's refusal to join voluntarily.

MERS’s Beneficial Mortgage Transfer Ineffective

MERS acts only to hold legal interest in a mortgage as an agent, but not the beneficial interest. Therefore, its mortgage assignments are ineffectual to transfer the beneficial interest. This is especially a problem if the assignment purports to assign the mortgage after the lender has gone out of business. An agent cannot act on behalf of a defunct principle. See the following presentation for the legal issues here.


Plead as follows

1. Client's mortgage loan is a Federal Housing Administration (“FHA”) loan. 2. Plaintiff failed to comply with federal regulations requiring certain steps be taken prior to foreclosure with regard to Clients’ FHA loan, including but not limited to: a. Failure to comply with the face-to-face meeting requirement of 24 C.F.R. 203.604 by not having a face-to-face interview at the mortgaged property where client resided, b. Failure to make reasonable efforts to comply with the face-to-face meeting requirement of 24. C.F.R. 203.604 by not sending at least one certified letter to the Client referencing a face-to-face meeting, and not making at least one trip to see the Client at the mortgaged property where client resided. 3. Plaintiff’s failure to meet these minimum requirements imposed by 24 C.F.R. 203.604 is a failure to satisfy a condition precedent to a foreclosure action.

Conditions Precedent: Mortgage and Note

Plaintiff failed to meet the conditions precedent specified in the mortgage and note because it failed to mail the notices required under the terms of the mortgage and note prior to foreclosing, including paragraph 22 of the mortgage, paragraph 6(C) of the note.

Conditions Precedent – RESPA 120 Day Rule

A servicer cannot file a foreclosure until the loan is 120 days past due. 12 CFR 1024.41(f)(1) (f)Prohibition on foreclosure referral - (1)Pre-foreclosure review period. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless: (i) A borrower's mortgage loan obligation is more than 120 days delinquent; (ii) The foreclosure is based on a borrower's violation of a due-on-sale clause; or (iii) The servicer is joining the foreclosure action of a superior or subordinate lienholder.

Spouse Waived Dower Only

There is a difference between a spouse signing a mortgage to waive dowery versus signing a mortgage to encumber her property interest if on the deed. If a spouse is ½ owner of the real property as a result of being on the deed, then she must sign the mortgage encumbering her entire interest in order for the bank to take the full amount. If she signs only to “waiver dower” then she is releasing only a small amount of her interest in the real estate and is entitle to half of all the foreclosure proceeds, minus her dower interest. This is a decent defense to foreclosure, but subjects the mortgage to reformation. It also creates a spousal conflict.

The 10th District described dowery interests as follows: Pursuant to R.C. 2103.02, “[a] spouse who has not relinquished or been barred from it shall be endowed of an estate for life in one third of the real property of which the consort was seized as an estate of inheritance at any time during the marriage.” Such a dower interest is inchoate and contingent and vests in the surviving spouse only upon the owner-spouse's death. Goodman v. Gerstle (1952), 158 Ohio St. 353, 358, 49 O.O. 235, 109 N.E.2d 489. Despite the contingent, inchoate nature of a dower interest prior to the owner-spouse's death, a judicial sale of the property during the owner-spouse's lifetime does not vitiate the other spouse's dower interest. Rather, in an action involving a judicial sale, a court must determine the present value of the dower interest and award that amount to the spouse from the proceeds of the sale. R.C. 2103.041. 45 {¶ 12} The value of a dower interest is dependent upon the extent of the owner-spouse's interest in the property. In other words, “the dowable interest of the wife or widow must be measured by the beneficial interest of the husband in the real property of which he was seised in his own right * * *.” In re Hays (C.A.6, 1910), 181 F. 674, 679. See, also, Canan v. Heffey (1927), 27 Ohio App. 430, 437, 161 N.E. 235 (“the value of her dower is * * * coextensive with the husband's seisin”).

Plaintiff Lacks Standing

In Ohio, the plaintiff must be able to establish that it had standing at the time it filed the lawsuit, although it can produce that evidence at any point during the litigation. It probably only needs to show standing under either the note or the mortgage on the filing date to invoke the jurisdiction of the court, and then prove standing under the opposite document at any time.

As you will not be able to determine whether the proper note transfers and mortgage assignments are in place at the time of filing, this is a standard defense that should be included in each foreclosure. You should probably also include “lack of subject matter jurisdiction” as a defense too, as lack of standing will divest the court of the power to hear the case.

The 3 Major Ohio Supreme Court Cases on this issue are: Fed. Home Loan Mtg. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214. Wells Fargo Bank, N.A. v. Horn, 142 Ohio St.3d 416, 2015-Ohio-1484, 31 N.E.3d 637. Deutsche Bank Natl. Trust Co. v. Holden, 147 Ohio St.3d 85, 2016-Ohio-4603, 60 N.E.3d 1243.

The Loan Modification Destroyed the Notes Alleged Negotiability

Ohio caselaw on this issue has not been developed, but other courts have addressed it. “we have already found that the Modification Agreement supplements the mortgage and the note and is burdened by the covenants contained in the mortgage, both of which destroy its negotiability.”

Negotiation Not Effectual

State the reasons why the negotiation of the note is not proper.

Plaintiff’s Conduct Violates its PSA

Probably just in the 10th District, as suggested in George:

“U.S. Bank argued in its reply on summary judgment that the Georges lacked standing "to challenge violations of the trust prospectus" and that "[c]ourts have determined that pooling and servicing agreements concern mortgage loans, not mortgages," citing Bank of N.Y. Mellon v. Baird, 2d Dist. No. 2012-CA-28, 2012-Ohio-4975 (other citations omitted). We do not adhere to holdings that purport to prevent foreclosure defendants from pointing out that a plaintiff's proof falls short of establishing an entitlement to enforce.2”

ARM Adjustment Error (Breach of Contract)

In order to effectively claim that the adjustments made on an ARM are incorrect, you will need to obtain an audit of the loan. We have used David Ginsberg in the past (client covers cost, about $500):

National Settlement

Google your creditor or debt collector name with “Consent Order” or “foreclosure consent order” to see if any apply to it. If you determine one exists, please email a synopsis to the operations manager with a link to the order so we can include it in our templates. From time to time, entities enter into consent decrees with the government that limits or requires certain actions be taken with respect to loans. These can usually form the basis of a defense when not followed. You should identify the settlement terms specifically here.

Midland Funding Consent Terms Violated

Encore Capital Group Consent Agreement Violated

Portfolio Recovery Associates Consent Agreement Violated

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Mortgage Assignment Errors Invalidate Transfer to Plaintiff

Ohio Revised Code § 5301.01, requires four separate acts to properly execute a mortgage: (1) the mortgage shall be signed by the mortgagor; (2) the mortgagor shall acknowledge his signing in front of a notary public, or other qualified official; (3) the official shall certify the acknowledgment; and (4) the official shall subscribe his name to the certificate of acknowledgment. Ohio Rev.Code § 5301.01(A) (2004); see Drown v. GreenPoint Mortgage Funding, Inc. (In re Leahy), 376 B.R. 826, 832 (Bankr.S.D.Ohio 2007) (listing four requirements provided by Ohio Rev.Code. § 5301.01).3 At issue in this case is the third required step and whether the certificate of acknowledgment attached to the MERS mortgage is sufficient under Ohio law. In re Cala, No. 06-13361, 2008 WL 2001761, at *3 (Bankr. N.D. Ohio May 6, 2008) Transfers are obligated to follow the formalities of real estate documents: Ohio RC: 5301.01(A) “A deed, mortgage, land contract …shall be signed by the … mortgagor…[and]…[t]he signing shall be acknowledged…before…a… notary…who shall certify the acknowledgement…” Ohio RC 5301.32 “A mortgage may be assigned…[and then] acknowledged as provided by section 5301.01 of the Revised Code.”

Further, In re Peed, 403 B.R. 525, 531 (Bankr. S.D. Ohio 2009): In addition to the requirements of § 5301.01, the Court also must review Ohio Revised Code §§ 147.53, 147.54 and 147.55, which “clearly require some identification of the person whose signature is being acknowledged.” Geygan v. World Savs. Bank (In re Nolan), 383 B.R. 391, 396 (6th Cir. BAP 2009) (internal quotation marks omitted). Section 147.53 states as follows: The person taking an acknowledgment shall certify that: (A) The person acknowledging appeared before him and acknowledged he executed the instrument; (B) The person acknowledging was known to the person taking the acknowledgment, or that the person taking the acknowledgment had satisfactory evidence that the person acknowledging was the person described in and who executed the instrument. Ohio Rev.Code Ann. § 147.53 (West 2009). See Terlecky v. Countrywide Home Loans, Inc. (In re Baruch), Adv. Pro. No. 08–2069 (Bankr.S.D.Ohio Fed.23, 2009) (Doc. 46) at 13–14 (“[T]he Acknowledgment Clause must identify the ‘person acknowledging’ the acknowledgment.... An acknowledgment clause containing nothing relative to the mortgagor's identity is insufficient; rather, an acknowledgment clause must either identify the mortgagor by name or contain information that permits the mortgagor to be identified by reference to the mortgage.... [The Acknowledgment Clause here] does not indicate that anyone acknowledged the execution of the Mortgage.” (footnote omitted)). The Ohio Revised Code provides an acceptable form certificate of acknowledgment. This form clearly contemplates that the notarial certification is to include the name of the person acknowledging the document. The forms of acknowledgment set forth in this section may be used and are sufficient for their respective purposes under any section of the [Ohio] Revised Code.... The authorization of the forms in this section does not preclude the use of other forms.

(A) “For an individual acting in his own right: State of _____________________ County of ____________________ The foregoing instrument was acknowledged before me this (date) by (name of person acknowledged.) (Signature of person taking acknowledgment) (Title or rank) (Serial number, if any)”.... Ohio Rev.Code Ann. § 147.55(A) (emphasis added). Thus, when an acknowledgment does not recite the name of the mortgagor, “the acknowledgment is defective....” Nolan, 383 B.R. at 396. See also Smith's Lessee v. Hunt, 13 Ohio 260, 269 (1844) (holding that court was unable to infer name of grantor when acknowledgment was blank as to the grantor and, thus, the mortgage was defective and did not convey title); Cala, 2008 WL 2001761 at *6 (“In order to properly certify an acknowledgment, the notary must provide some indication that the party actually appeared.”).

No Deficiency Allowed

Either by virtue of bankruptcy, satisfaction of a deficiency through an MI policy (another available defense in PM), or some other reason. Plaintiff Attorneys’ Fees Award Prohibited by law “The rule in Leavans was affirmed several years later in Miller v. Kyle (1911), 85 Ohio St. 186, 97 N.E. 372, syllabus, which held: {¶ 13} “It is the settled law of this state that stipulations incorporated in promissory notes for the payment of attorney fees, if the principal and interest be not paid at maturity, are contrary to public policy and void.” Wilborn v. Bank One Corp., 121 Ohio St.3d 546, 2009-Ohio-306

However, the lender can force a homeowner to pay fees as part of a reinstatement of the loan. “A provision in a residential-mortgage contract requiring a defaulting borrower to pay a lender’s reasonable attorney fees as a condition of terminating pending lender-initiated foreclosure proceedings on a defaulted loan and reinstating the loan is not contrary to Ohio statutory or decisional law or against Ohio public policy.” Wilborn citing (Leavans v. Ohio Natl. Bank (1893), 50 Ohio St. 591, 34 N.E. 1089, and Miller v. Kyle (1911), 85 Ohio St. 186, 97 N.E. 372, distinguished.)

Mortgage Notarization Error

Transfers are obligated to follow the formalities of real estate documents: Ohio RC: 5301.01(A) “A deed, mortgage, land contract …shall be signed by the … mortgagor…[and]…[t]he signing shall be acknowledged…before…a… notary…who shall certify the acknowledgement…” Ohio RC 5301.32 “A mortgage may be assigned…[and then] acknowledged as provided by section 5301.01 of the Revised Code.”

Courts have found defects in the notarization reason to strike the security instrument. NOTE! If this applies to your case, you need to talk to an attorney about possibly looking at a bankruptcy to wipe out the mortgage and get our client over $130,000 equity free and clear.

In re Peed, 403 B.R. 525 (Bankr. S.D. Ohio 2009) Holdings: The Bankruptcy Court, John E. Hoffman, Jr., J., held that: 1 under Ohio law, acknowledgement clauses' failure to identify the name of the person acknowledging the signing of the mortgages rendered the mortgages defective, even though the notary public and the witness were the same person; 2 the mortgages did not substantially comply with the Ohio statute governing the acknowledgement of deeds and mortgages and were invalid; and 3 these defective mortgages did not take priority over a hypothetical bona fide purchaser such as the trustee.

In re Cala, No. 06-13361, 2008 WL 2001761, at *4 (Bankr. N.D. Ohio May 6, 2008): The court stated “[a] mortgage in which the magistrate's certificate does not show by whom the instrument was acknowledged, vests no legal interest in the mortgage.” Smith's Lessee, 13 Ohio at 260. While the deficiency in Smith's Lessee was apparent on the face of the certificate, the court has also held that latent defects can also render a mortgage ineffective as against subsequent interests. See Denison, 165 Ohio St. at 89, 133 N.E.2d 329. In Denison, the notary public who signed the certificate of acknowledgment to the mortgage at issue did not actually witness one of the joint mortgagors sign the mortgage or acknowledge her signature. Denison, 165 Ohio St. at 93, 133 N.E.2d 329. The court held that a “mortgage by two persons is not properly executed in accordance with the provisions of Section 5301.01 ... where ... the signing by one mortgagor is not in fact acknowledged before a notary public.” Denison, 165 Ohio St. at 89, 133 N.E.2d 329. Therefore, although the defect in execution was not apparent on the face of the instrument, the court nonetheless held that the defect rendered the mortgage “ineffective as against subsequent creditors.” Denison, 165 Ohio St. at 95, 133 N.E.2d 329

Fraud on the Court

Ohio Supreme Court in Coulson v. Coulson, 5 Ohio St. 3d 12, 15, 448 N.E.2d 809, 811–12 (1983): “Fraud upon the court” is an elusive concept. “The distinction between ‘fraud’ on the one hand and ‘fraud on the court’ on the other is by no means clear, and most attempts to state it seem to us to be merely compilations of words that do not clarify.” Toscano v. Commr. of Internal Revenue (C.A.9, 1971), 441 F.2d 930, 933.

One commentator, however, had provided this definition: “ ‘Fraud upon the court’ should, we believe, embrace only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by the officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. Fraud, inter partes, without more, should not be a fraud upon the court, but redress should be left to a motion under 60(b)(3) or to the independent action.” 7 Moore's Federal Practice (2 Ed.1971) 515, Paragraph 60.33. See, also, Serzysko v. Chase Manhattan Bank (C.A.2, 1972), 461 F.2d 699; **812 Kupferman v. Consolidated Research & Mfg. Corp. (C.A.2, 1972), 459 F.2d 1072, 1078; Kenner v. Commr. of Internal Revenue (C.A.7, 1968), 387 F.2d 689, 691. Accord Hartford v. Hartford (1977), 53 Ohio App.2d 79, at pages 83–84, 371 N.E.2d 591.

It is generally agreed that “ * * * [a]ny fraud connected with the presentation of a case to a court is a fraud upon the court, in a broad sense.” 11 Wright & Miller, Federal Practice and Procedure (1973) 253, Section 2870. Thus, in the usual case, a party must resort to a motion under Civ.R. 60(B)(3). Where an officer of the court, e.g., an attorney, however, actively participates in defrauding the court, then the court may entertain a Civ.R. 60(B)(5) motion for relief from judgment. See Toscano, supra.

As explained in Demjanjuk v. Petrovsky, 10 F.3d 338, 352 (6th Cir. 1993): “Fraud on the court is a somewhat nebulous concept usually discussed in civil cases. No court system can function without safeguards against actions that interfere with its administration of justice. This concern must be balanced against the necessity for finality of court judgments; thus, only actions that actually subvert the judicial process can be the basis for upsetting otherwise settled decrees. Professor Moore's definition is frequently cited:

Fraud upon the court should ... embrace only that species of fraud which does or attempts to, subvert the integrity of the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that are presented for adjudication, and relief should be denied in the absence of such conduct. 7 Moore's Federal Practice and Procedure ¶ 60.33. Cases dealing with fraud on the court often turn on whether the improper actions are those of parties alone, or if the attorneys in the case are involved. As an officer of the court, every attorney has a duty to be completely honest in conducting litigation. Professor Moore emphasizes this element of fraud in his treatise: [W]hile an attorney should represent his client with singular loyalty, that loyalty obviously does not demand that he act dishonestly or fraudulently; on the contrary his loyalty to the court, as an officer thereof, demands integrity and honest dealing with the court. And when he departs from that standard in the conduct of a case he perpetrates fraud upon a court.

Id. The author cites two Supreme Court decisions that illustrate the role of attorney actions in the fraud on the court analysis. Moore distinguishes between Hazel–Atlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250 (1944), in which the Supreme Court did find fraud, and U.S. v. Throckmorton, 98 U.S. 61, 25 L.Ed. 93 (1878), in which the Court did not find fraud. While the actions taken in both cases were similar—false documents were put before the court—the attorney was implicated in Hazel–Atlas as one of the perpetrators, while the attorney in Throckmorton was not. 7 Moore's Federal Practice at 60–358–59. See also Serzysko v. Chase Manhattan Bank, 461 F.2d 699 (2d Cir.1972), where the court of appeals as part of its finding of no fraud on the court, pointed out that none of the offending party's attorneys were involved in the alleged fraud. 461 F.2d at 702 n. 1.

MI Policy Pays Claim

Any amounts due should be off-set by amounts lender will receive from the Veteran’s Administration (“VA”)/ FHA / or through a mortgage insurance policy. You will need to ask how much lender will received from lender on a mortgage insurance policy. It could be tens of thousands of dollars. This money will be applied to setoff the amount due by our client, especially as a result of any deficiency. Also look to the closing statement, the HUD 1 settlement statement as evidence of a mortgage insurance premium paid. You can further ask for the mortgage insurance policy, and subpoena that company for the policy and limits if necessary. Civil Rule 26 requires insurance information be provided without request.

“There was nothing provided in the loan closing paperwork that indicated to the clients that they would not benefit from the VA guarantee on their loan. Further it was client’s understanding that the money paid at closing for the mortgage insurance premium would protect the them from liability in the event they could not make payments on the Note.”

Troy Doucet was cited in a news article about this issue here: For a description of what it is:

Loan Balance & Fees Incorrect

1. Plaintiff’s accounting for Defendants’ balance on the note is inaccurate due to improperly assessed charges and fees, and for failing to provide proper credits to the account. 2. Plaintiff’s accounting for Defendants’ unpaid balance includes fees and costs not authorized by paragraphs 4 and 14 of the mortgage.

Pari Delicto

The doctrine of in pari delicto “refers to the plaintiff’s participation in the same wrongdoing as the defendant.” The doctrine refers to equal fault, or equal culpability. It is premised on the policy that “no Court will lend its aid to a man who founds his cause of action upon an immoral or illegal act.” Id. {¶49} The “doctrine is only applicable when the plaintiff bears equal fault to, or more fault than, the defendant for the alleged wrong.” Antioch Litigation Trust v. McDermott Will & Emery LLP, 738 F.Supp.2d 758, 772 (S.D.Ohio 2010), citations omitted. In pari delicto is founded upon public policy, and does not depend upon the guilt or innocence of a party. Natl. Bank v. Wheelock, 52 Ohio St. 534, 548, 40 N.E. 636 (1895).


An easement is a property interest in the land of another that allows the owner of the easement a limited use of the land in which the interest exists.” (Internal quotations omitted) Merrill Lynch Mtge. Lending, Inc. v. Wheeling & Lake Erie Ry. Co., 9th Dist. Summit No. 24943, 2010-Ohio-1827, 2010 WL 1692011, ¶ 10. An easement is created by agreement whereby the servient estate confers a benefit upon the dominant estate, granting “some lawful use out of or from the estate of another.” Warren v. Brenner, 89 Ohio App. 188, 192, 101 N.E.2d 157 (9th Dist.1950). As a property interest, an easement runs with all transfers of the dominant estate. Merrill Lynch, 2010-Ohio-1827, 2010 WL 1692011, at ¶ 11. Dysart v. Circle J., L.L.C., 2016-Ohio-869, ¶ 13, 62 N.E.3d 575, 579

Prior Material Breach

The burden is on the party seeking to enforce a contract to prove, by a preponderance of the evidence, all of the elements for a claim of breach of contract. Cooper & Pachell v. Haslage (2001), 142 Ohio App. 3d 704, 707. These elements are the existence of a contract, performance by the plaintiff, breach by the defendant, and damage or loss to the plaintiff. Doner v. Snapp (1994), 98 Ohio App.3d 597, 600. Even if a valid contract is proven to exist, the defendant may raise an affirmative defense; the burden of proving that affirmative defense is on the defendant. MatchMaker Internat'l., 100 Ohio App.3d at 408. However, when the plaintiff is suing upon a contract and alleges performance that is denied by the defendant, "it is incumbent upon the plaintiff to prove performance, at least substantially." Enterprise Roofing & Sheet Metal Co. v. Howard Investment Corp. (1957), 105 Ohio App. 502, 503 (Citations omitted.). See, also, Steinlage v. Gabria (June 28, 1988), 2d Dist. No. 10747; Casto Property Management, Inc. v. Venetta, (Feb. 14, 1985), 10th Dist. No. 83-AP-799, citing Thomas v. Matthews (1916), 94 Ohio St. 32

As to materiality: In determining whether a breach of contract is material, five factors are provided: “(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; “(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; “(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; {“(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; “(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.”

No Subject Matter Jurisdiction

Subject-matter jurisdiction is the power of a court to entertain and adjudicate a particular class of cases. If a court possesses subject-matter jurisdiction, any error in the invocation or exercise of jurisdiction over a particular case causes a judgment to be voidable rather than void, otherwise the judgment is void. "[T]he court of common pleas is a court of general jurisdiction, with subject-matter jurisdiction that extends to 'all matters at law and in equity that are not denied to it.

No Personal Jurisdiction

The power of the court to exercise jurisdiction over the person. To determine whether it has personal jurisdiction over a nonresident defendant, an Ohio court must engage in a two-step analysis. It must first consider whether Ohio's long-arm statute and the applicable civil rule confer personal jurisdiction, and, if so, it must consider whether exercising jurisdiction under the statute and rule comports with the defendant's due process rights under the Fourteenth Amendment to the United States Constitution. First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Id. Second, the cause of action must arise from the defendant's activities there. Id. Third, the defendant's acts or the consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction reasonable.

Venue Improper

Improper venue must be raised in a motion pursuant to Civil Rule 12(H) at the start of the case or it is waived. Civ.R. 3(B) provides, in part: “ * * * Proper venue lies in any one or more of the following counties: “(1) The county in which the defendant resides…. Civ.R. 3(E), venue, provides: “In any action, brought by one or more plaintiffs against one or more defendants involving one or more claims for relief, the forum shall be deemed a proper forum, and venue therein shall be proper, if the venue is proper as to any one party other than a nominal party, or as to any one claim for relief. “Neither the dismissal of any claim nor of any party except an indispensable party shall affect the jurisdiction of the court over the remaining parties.” Nicholson v. Landis, 27 Ohio App. 3d 107, 108–09, 499 N.E.2d 1260, 1262 (1985)

Plaintiff Fails to State a Claim under Civ. Rule 12(B)(6)

Failure to state a claim upon which relief can be granted under Ohio Civ R 12(B)(6) A motion to dismiss for failure to state a claim upon which relief can be granted is procedural and tests the sufficiency of the complaint. In order for a trial court to grant a motion to dismiss for failure to state a claim upon which relief may be granted, “it must appear beyond doubt from the complaint that the plaintiff can prove no set of facts entitling him to recovery.” In resolving a Civ.R. 12(B)(6) motion to dismiss, the trial court may consider only the statements and facts contained in the pleadings, and may not consider or rely on evidence outside the complaint.

Note not Negotiable

Note is a NOT a Negotiable Instrument Rules

Note Not Negotiable: Takes Only the Rights Seller Has

Contains one of the prohibited items from 1303.05 (see above) Natl. City Bank, Northwest v. Columbian Mut. Life Ins. Co., 282 F.3d 407, 409 (6th Cir.2002) citing Restatement (Second) of Contracts § 336, cmt.b (1981). Note Not Negotiable: Mutual Assent Needed "An assignment of contract rights is, itself, a contract, and thus, in order to establish an assignment, the elements of a contract must be present." Hamrick v. Safe Auto Ins. Co. 10th Dist. No. o8AP-734, 2009-Ohio-1380 ¶15 citing Zenfa Labs, Inc. v. Big Lots Stores, Inc. 10th Dist. No. 02AP-691, 2003-Ohio-628. "Those essential terms include mutual assent and consideration. In addition, a plaintiff alleging the existence of a contract must show that there was a meeting of the minds, and that the contract was definite as to its essential terms." (Citations Omitted) Hamrick at ¶15. Hamrick v. Safe Auto Ins. Co. 10th Dist. No. o8AP-734, 2009-Ohio-1380 ¶15 Note Not Negotiable: Consideration Needed See above Hamrick v. Safe Auto Ins. Co. 10th Dist. No. o8AP-734, 2009-Ohio-1380 ¶15

Plaintiff Does Not Have Rights to Enforce the Note

Plaintiff Must Be a Person Entitled to Enforce the Note: Holder Who Has Possession (21) "Holder" means: (a) The person in possession of a negotiable instrument; that is payable either to bearer or to an identified person that is the person in possession…

Courts have said holding through an agent acceptable (although it shouldn’t be), but if that is the case, you should obtain a copy of the agreement establishing the agency relationship. 1303.31(A)(1); 1301.201(B)(21); Non-holder Who Has Possession (B) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument...(C) Unless otherwise agreed, if an instrument is transferred for value the transferee has a specifically enforceable right to the unqualified indorsement of the transferor…(D) If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur, the transferee of that instrument obtains no rights under this chapter, and the transferee of that instrument has only the rights of a partial assignee. Can be entitled to enforce even if not owner or in wrongful possession. 1303.31(A)(2); 1303.22(B)-(D); 1303.31(B)

Lost Note Must: 1) be person entitled to enforce when lost possession; acquired ownership from person entitled to enforce; 2) loss not a result of prior transfer or lawful seizure; 3) cannot obtain possession bc destroyed, lost, or wrongful possession of another. Requires adequate protection be provided to homeowner. 1303.31(A)(3); 1303.38

Plaintiff is Not Entitled to Enforce the Note/Loan

Plaintiff Must Be a Person Entitled to Enforce the Note (this is a defense option in the PM checkboxes):

Holder Who Has Possession (21) "Holder" means: (a) The person in possession of a negotiable instrument; that is payable either to bearer or to an identified person that is the person in possession…

Courts have said holding through an agent acceptable (although it shouldn’t be), but if that is the case, you should obtain a copy of the agreement establishing the agency relationship. 1303.31(A)(1); 1301.201(B)(21);

Non-holder Who Has Possession (B) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument...(C) Unless otherwise agreed, if an instrument is transferred for value the transferee has a specifically enforceable right to the unqualified indorsement of the transferor…(D) If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur, the transferee of that instrument obtains no rights under this chapter, and the transferee of that instrument has only the rights of a partial assignee. Can be entitled to enforce even if not owner or in wrongful possession. 1303.31(A)(2); 1303.22(B)-(D); 1303.31(B)

Lost Note Must: 1) be person entitled to enforce when lost possession; acquired ownership from person entitled to enforce; 2) loss not a result of prior transfer or lawful seizure; 3) cannot obtain possession bc destroyed, lost, or wrongful possession of another. Requires adequate protection be provided to homeowner. 1303.31(A)(3); 1303.38

Precedent Setting

Our foreclosure attorneys have set law in the Sixth Circuit and in the region that helps people. We have multiple precedent-setting consumer cases.

Avoid Bankruptcy

Our lawyers aggressively pursue claims and defenses on behalf of our clients.  This helps us get the best deals for our clients.

Leaders in the Field

Our partners have taught over a dozen courses on foreclosure defense and consumer law, including training other lawyers in this area.

Accord and Satisfaction

When an accord and satisfaction is plead by the defendant, the court’s analysis must be divided into three distinct inquiries. First, the defendant must show that the parties went through a process of offer and acceptance-an accord. Second, the accord must have been carried out-a satisfaction. Third, if there was an accord and satisfaction, it must have been supported by consideration.

Bankruptcy Discharge

“When debt on a promissory note secured by a mortgage has been discharged by a bankruptcy court, the holder of the note may not pursue collection against the maker of the note; however, the holder of the mortgage has standing to foreclose on the property and to collect the deficiency on the note from the foreclosure sale of the property.” Deutsche Bank Natl. Trust Co. v. Holden, 147 Ohio St.3d 85, 2016-Ohio-4603

Promissory Estoppel

To demonstrate promissory estoppel, the plaintiff must establish: "1) a promise, clear and unambiguous in its terms; 2) reasonable and foreseeable reliance; and 3) injury resulting from the reliance." CSX Transp. Inc. v. Occidental Chem. Corp., 130 F. Supp. 2d 936, 947 (S.D.Ohio 2001) (citing Nilavar v. Osborn, 127 Ohio App.3d 1, 711 N.E.2d 726 (1998)).

Equitable Estoppel

To invoke equitable estoppel, two elements must be shown: 1) reasonable reliance and 2) detriment. Id. at 59, 104 S. Ct. 2218. In its broadest sense, “estoppel” is a bar that precludes a person from denying a fact that has become settled by an act of the person himself. See Sanborn v. Sanborn (1922), 106 Ohio St. 641, 647, 140 N.E. 407. Mark-It Place Foods, Inc. v. New Plan Excel Realty Tr., 2004-Ohio-411, ¶ 49, 156 Ohio App. 3d 65, 90, 804 N.E.2d 979, 997

Judicial Estoppel

The doctrine of judicial estoppel bars a party from (1) asserting a position that is contrary to one that the party has asserted under oath in a prior proceeding, where (2) the prior court adopted the contrary position "either as a preliminary matter or as part of a final disposition.

Want Consideration for an Instrument

This rule applies contract law to negotiable instruments, to the extent that consideration must be exchanged between the parties. “Failure or want of consideration may be raised against the promisee of a note, such failure must be attributable to the promisee and not to some third person operating independently of the promisee.” Under the generally accepted view in Ohio and elsewhere, a failure of consideration is an affirmative defense and the burden of proof is on the one who asserts it. In a number of jurisdictions want or lack of consideration is treated in the same way. 8 American Jurisprudence 594, 597, Sections 1005, 1008. The burden of proof, according to the Ohio Supreme Court (1962) is placed on the defendant raising the defense. Ohio Loan & Disc. Co. v. Tyarks, 173 Ohio St. 564, 568, 184 N.E.2d 374, 376 (1962)


Generally speaking, waiver is the voluntary relinquishment of a known right. State ex rel. Wallace v. State Med. Bd. of Ohio (2000), 89 Ohio St.3d 431, 435, 732 N.E.2d 960; White Co. v. Canton Transp. Co. (1936), 131 Ohio St. 190, 5 O.O. 548, 2 N.E.2d 501, at paragraph one of the syllabus; Michigan Auto. Ins. Co. v. Van Buskirk (1927), 115 Ohio St. 598, 155 N.E. 186, at paragraph one of the syllabus. A “waiver” can be found in a great variety of circumstances. For example, “waiver by estoppel” exists when the acts and conduct of a party are inconsistent with an intent to claim a right, and have been such as to mislead the other party to his prejudice and thereby estop the party *93 having the right from insisting upon it. See Motz v. Root (1934), 53 Ohio App. 375, 376–377, 7 O.O. 174, 4 N.E.2d 990. We also note that the waiver of contractual rights typically requires consideration unless the actions of the party making the waiver are such that he must be estopped from insisting upon the right claimed to have been relinquished. Marfield v. Cincinnati, D. & T. Traction Co. (1924), 111 Ohio St. 139, 145, 144 N.E. 689. A waiver may be enforced by anyone having a duty to perform, but who has changed his or her position as a result of the waiver. Chubb, supra, 81 Ohio St.3d at 279, 690 N.E.2d 1267; Andrews v. Teachers Retirement Sys. (1980), 62 Ohio St.2d 202, 205, 16 O.O.3d 240, 404 N.E.2d 747. Mark-It Place Foods, Inc. v. New Plan Excel Realty Tr., 2004-Ohio-411, ¶ 57, 156 Ohio App. 3d 65, 92–93, 804 N.E.2d 979, 1000


Duress elements are: (1) that one side involuntarily accepted the terms of another; (2) that circumstances permitted no other alternative; and (3) that said circumstances were the result of coercive acts of the opposite party. * * * The assertion of duress must be proven to have been the result of the defendant's conduct and not by the plaintiff's necessities. * * *. To avoid a contract on the basis of duress, a party must prove coercion by the other party to the contract. It is not enough to show that one assented merely because of difficult circumstances that are not the fault of the other party.


This concept decreases plaintiff’s alleged award by an amount of damages claimed by defendant arising from the same transaction as the plaintiff's claim. A claim otherwise barred by the statute of limitations can be brought as recoupment as an affirmative defense. A recoupment is generally defined as a demand. A set-off is a demand asserted to diminish or extinguishes a plaintiff's demand, which arises out of a transaction different from that sued on. A set-off, which is in the nature of an independent affirmative action, would be time-barred. A recoupment is not barred as long as the main action itself is timely.

Claim Preclusion

Claim preclusion (historically called estoppel by judgment in Ohio) Under the Sixth Circuit's articulation of claim preclusion, a claim will be barred by prior litigation if all of the following four elements are present: (1) a final decision on the merits by a court of competent jurisdiction; (2) a subsequent action between the same parties or their "privies"; (3) an issue in the subsequent action which should have been litigated in the prior action; and (4) an identity of the causes of action.

Statute of frauds

Ohio’s statute of frauds, R.C. 1335.05, provides: “No action shall be brought whereby to charge the defendant upon a contract or sale of lands or interest in or concerning them unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith .” The well-settled rule of the law is that a verbal contract within the condemnation of the statute of frauds cannot be enforced in any way, either directly or indirectly, and cannot be made either the ground of a demand or the ground of a defense

Statute of Limitations

Look up your state's statute of limitations. Keep in mind that the limitations period for negotiable instruments may be different than the SOL for contracts. In Ohio, negotiable instruments are subject to a 6 year SOL.

Fraud in the Factum

Tricking someone to signing a document that they were unaware of the promise so that there was not a meeting of the minds. “A release is obtained by fraud in the factum where an intentional act or misrepresentation of one party precludes a meeting of the minds concerning the nature or character of the purported agreement. Thus, when the actions or representations of the releasee so impair the mind and judgment of the releasor that he fails to understand the nature or consequence of his release, there has been no meeting of the minds. Where device, trick, or want of capacity produces “ ‘no knowledge on the part of the releasor of the nature of the instrument, or no intention on his part to sign a release or such a release as the one executed,’ ” there has been no meeting of the minds. Picklesimer v. Baltimore & Ohio RR. Co., supra, 151 Ohio St. at 5, 38 O.O. at 478, 84 N.E.2d at 216. In such cases the act or representation of *14 one party against the other constitutes fraud in the factum and renders the release obtained void ab initio. Haller v. Borror Corp., 50 Ohio St. 3d 10, 13–14, 552 N.E.2d 207, 210 (1990)

Fraud in the Inducement

The victim signed the agreement voluntarily, but was led to doing so based on false information. Cases of fraud in the inducement “are those in which the plaintiff, while admitting that he released his claim for damages and received a consideration therefor, asserts that he was induced to do so by the defendant's fraud or misrepresentation. The fraud relates not to the nature or purport of the release, but to the facts inducing its execution, as, for instance, where there is a misrepresentation as to the nature or extent of the plaintiff's injuries.’ ” Picklesimer v. Baltimore & Ohio RR. Co., supra, 151 Ohio St. at 4, 38 O.O. at 478, 84 N.E.2d at 215–216. A release of liability procured through fraud in the inducement is voidable only, and can be contested only after a return or tender of consideration. Haller v. Borror Corp., 50 Ohio St. 3d 10, 14, 552 N.E.2d 207, 210 (1990)


An illegal contract is ‘a promise that is prohibited because the performance, formation, or object of the agreement is against the law. Where the performance of a contract violates a statute or act, public policy may prevent the enforcement of its obligations. Illegality of contract is an affirmative defense. When challenging a contract’s enforceability based on illegality, one does not challenge the terms to the agreement; ‘in short, asserting that defense does not contest the existence of an offer, acceptance, consideration, and/or a material breach of the terms of the contract.’ The burden of proving the contract’s illegality is upon the party seeking to avoid the obligation


Laches involves two elements: (1) an "omission to assert a right for an unreasonable and unexplained length of time;" (2) "under circumstances prejudicial to the adverse party." Under the second element "it must be shown that the person for whose benefit the doctrine will operate has been materially prejudiced by the delay of the person asserting his claim


A license, by contrast, is a “personal, revocable, and nonassignable privilege * * * to do one or more acts upon land without possessing any interest [in the land].” Yeager v. Tuning, 79 Ohio St. 121, 124, 86 N.E. 657 (1908). “ Dysart v. Circle J., L.L.C., 2016-Ohio-869, ¶ 14, 62 N.E.3d 575, 579. If it is determined at trial that the license agreement is not a valid contract and damages must be awarded under an equity theory of unjust enrichment. If the license agreement is determined to be a contract, then an equity claim of unjust enrichment cannot coincide with a breach-of-contract claim and the proper sources of damages and their amount must be reevaluated.

Voluntary Payment

The concept that voluntarily payment of a debt will bar a later claim to return that amount paid. “As articulated by the Ohio Supreme Court: ‘In the absence of fraud, duress, compulsion or mistake of fact, money, voluntarily paid by one person to another on a claim of right to such payment, cannot be recovered merely because the person who made the payment mistook the law as to his liability to pay.’” Scott v. Fairbanks Capital Corp., 284 F. Supp. 2d. 880, 894 (S.D. Ohio 2003) (quoting State ex. rel. Dickman v. Defenbacher, 86 N.E.2d 5, 7 (Ohio 1949)).

Part Payment

The concept that partial payment should be applied to the debt obligation. The party who asserts payment as a defense bears the burden of proving payment by a preponderance of the evidence; further, that party bears the burden of proving that a partial payment was intended to apply to the debt in question.


A release of a cause of action for damages is ordinarily an absolute bar to a later action on any claim encompassed within the release. Perry v. M. O'Neil & Co. (1908), 78 Ohio St. 200, 85 N.E. 41. Haller v. Borror Corp., 50 Ohio St. 3d 10, 13, 552 N.E.2d 207, 210 (1990)

Ohio presumes that a general, unconditional release is a satisfaction of the claim, absent express language or other proof to the contrary. The intention of the parties governs in interpretation of releases. In the case of a release that is unqualified and absolute in its terms, a presumption arises that the injury has been fully satisfied. Adams Express v. Beckwith, supra; Davis v. Buckeye Light & Power Co. (1945), 145 Ohio St. 172, 61 N.E.2d 90; Garbe v. Halloran (1948), 150 Ohio St. 476, 83 N.E.2d 217. This presumption may be rebutted by the express reservation of rights against other parties (Garbe v. Halloran, supra), or the release may be avoided under the powers of equity, where the releasor can establish by clear and convincing evidence. that it was executed by mutual mistake. Sloan v. Standard Oil Co. (1964), 177 Ohio St. 149, 203 N.E.2d 237,overruling O'Donnell v. Langdon (1960), 170 Ohio St. 528, 166 N.E.2d 756. A covenant not to sue, which does not purport to release or transfer any cause of action for an injury and which does not expressly recognize the consideration paid thereunder as full satisfaction for the injury, will not bar *61 actions against others for causing the injury where the injury has not been fully compensated. Such a covenant need not expressly reserve rights against others. Bacik v. Weaver, supra (173 Ohio St. 214, 180 N.E.2d 820).

Whitt v. Hutchison, 43 Ohio St. 2d 53, 58, 330 N.E.2d 678, 682 (1975)

“The general rules governing the construction of contracts are applicable in the construction of written releases.” 76 C.J.S. Release § 43. “Whether or not a contract is ambiguous is a question of law properly determined by the district court.” City of Wyandotte, 262 F.3d at 585 (citing Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 373 (6th Cir.1998)) (applying Michigan law).2 *431 “The court examines the contract as a whole, giving effect to all parts and language of a written agreement according to their ordinary and natural meaning.” Wonderland Shopping Ctr. Venture Ltd. P'ship v. CDC Mortg. Capital, Inc., 274 F.3d 1085, 1092 (6th Cir.2001) Hauf v. Life Extension Found., 454 F. App'x 425, 430–31 (6th Cir. 2011)

Issue Preclusion

Issue preclusion (traditionally known as collateral estoppel) In Smith v. SEC, 129 F.3d 356 (6th Cir.1997) (en banc), the Sixth Circuit restated the elements that are to be applied to determine whether a federal court decision is to be given collateral estoppel effect: (1) the precise issue raised in the present case must have been raised and actually litigated in the prior proceeding; (2) determination of the issue must have been necessary to the outcome of the prior proceeding; (3) the prior proceeding must have resulted in a final judgment on the merits; and (4) the party against whom estoppel is sought must have had a full and fair opportunity to litigate the issue in the prior proceeding.

Cognovit Defenses

You should review your state's requirements regarding Cognovits to see which apply. Here is a list we have put together for Ohio.

This is a shortened version:

Classic Bar & Billiards, Inc. v. Fouad Samaan, (10th Dist.) 2008-Ohio-5759, ¶8: “A cognovit note contains provisions designed to cut off defenses available to a debtor in the event of default. * * * The holder of a cognovit note in default obtains a judgment without a trial of possible defenses which the signers of the note might otherwise assert. * * * This is so because, under a cognovit note, the debtor consents in advance to the holder obtaining a judgment without notice or hearing. * * * An attorney, whom the note holder may designate, appears on behalf of the debtor and, pursuant to provisions of the cognovit note, confesses judgment and waives the debtor's right to notice of the proceedings. * * *”

Statutory Authority is found in ORC §§ 2323.12-13

The bulk of issues pertaining to cognovit judgments are contained in ORC 2323.13

ORC 2323.12 provides the authority to issue a judgment by confession (which is akin to a cognovit judgment entry since the judgment is issued after confession by the Defendant) “A person indebted, or against whom a cause of action exists, may personally appear in a court of competent jurisdiction, and, with the assent of the creditor, or person having such cause of action, confess judgment; whereupon judgment shall be entered accordingly. The debt or cause of action shall be briefly stated in the judgment, or in a writing to be filed as pleadings in other actions. Such judgment shall authorize the same proceedings for its enforcement as judgments rendered in actions regularly brought and prosecuted. The confession shall operate as a release of errors.”

 Must contain the following:

 Statement authorizing attorney to confess judgment against obligor

 Statement consenting to creditor bringing action to obtain judgment against obligor based on warrant and attorney’s confession of judgment

 Waiver of prior notice of judgment, right to trial and right to appeal

 Must contain warning from 2323.13(D) to be enforceable:

 "Warning -- By signing this paper you give up your right to notice and court trial. If you do not pay on time a court judgment may be taken against you without your prior knowledge and the powers of a court can be used to collect from you regardless of any claims you may have against the creditor whether for returned goods, faulty goods, failure on his part to comply with the agreement, or any other cause."

 Warning has to appear on promissory note, guaranty, lease (doc that evidences indebtedness) – directly above or below signature of party authorizing cognovit judgment

 Distinct type size, appearing more clearly or conspicuously than anything else in document

• ORC 2323.13(D)

 Warning must be more “clear and conspicuous” than other parts of document

 Has to comply strictly with all requirements of 2323.12(D) – if not, Court does not have jurisdiction to enter cognovit judgment on instrument

 If the amount in controversy is greater than $15K, can file in Court of Common Pleas with territorial jurisdiction over place where ANY obligor under warrant of attorney resides or where ANY obligor signed warrant of attorney (ORC 2323.13(A))

 Obligor cannot waive venue/jurisdiction requirements of 2323.13(A) by signing cognovit instrument with contrary forum selection clause

 Requirements for Complaint (Cognovit Complaint requirements for the most part are not enumerated specifically in the Rules of Civil Procedure/ORC)

 Statement of Plaintiff’s Attorney setting forth Defendant’s Last known address – ORC 2323.13(B)

 Statement that Warrant of Attorney did not arise out of Consumer Transaction/Consumer Loan

 Where Plaintiff is an attorney must include statement that warrant of attorney did not arise out of attorney/client relationship to collect fees

 This is a local rule from Cleveland Municipal Court Local Rule 6.07

 Statement that original instrument containing warrant of attorney accompanies complaint

 Allegation that cognovit instrument is in default and was accelerated by Plaintiff or instrument has matured

 Statement of amount due on instrument and that Defendant has not paid amount to Plaintiff

 Statement that Court has jurisdiction to render cognovit judgment against Defendant based on Defendant’s residency or location where defendant signed the warrant of attorney

 Allegation that instrument contains warrant of attorney and warning set forth in ORC 2323.13(D)

 Other documents/allegations as required by local rule – i.e. demand letter, affidavit from lender containing amount of unpaid principal/interest if these documents are required by local rule

 Common Practice to Submit Original Warrant of Attorney with Complaint

 2323.13(A) – “original or copy of the warrant shall be filed with the clerk”

 Civil Rule 10(D) (1) – Any claim or defense in a pleading is founded on an account or written instrument, the pleader must attach a copy of the account or written instrument to the pleading. If account or written instrument is not attached, the reason for omission must be stated in the pleading.

 In 9th and 10th Districts – Attorney for Plaintiff MUST present original warrant of attorney to judge for examination; examination of copy and judgment based thereon is void!!!!! (important for Columbus and Cincinnati)

 Notice sent to Defendant of Cognovit Judgment

• Upon entering judgment on warrant of attorney, court must notify defendant of entry of judgment by personal service or by letter sent registered/certified US mail to address for defendant in cognovit complaint

 ORC 2323.13(C)

• Cases involving unlimited and continuing personal guaranties:

o Cinemack Corp. 10th Dist. 1979 WL 209409: "an attempted conferring of an unlimited power to confess judgment for an uncertain and unliquidated amount of money is invalid, the warrant of attorney being too indefinite and uncertain to be enforceable." The issue isn't the ultimate enforceability of the guaranty but the enforceability of the warrant of attorney and confession of judgment.

 Follow-up appeal: 1982 WL 4551.

 See also BJ Bldg. Co., v. LBJ Linden Co., L.L.C., Second Dist. No. 21005, 2005 -Ohio- 6825.

• Situations where cognovit judgments have been vacated:

o Cognovit judgment against corporate officer in individual capacity (not against the corporation)

o Transaction underlying cognovit judgment was actually a consumer transaction

o Amount of cognovit judgment exceeded amount due on instrument

o Creditor/agent had told guarantor that guarantor was not personally liable for debt (fraud in inducement)