In what most pundits agreed would be a swift reversal, the Ohio Supreme Court did in fact unanimously reverse the Ninth District Court of Appeals in Wells Fargo Bank, N.A. v. Horn, Slip Opinion No. 2015-Ohio-1484, a 20-paragraph decision that helps to explain a sometimes-misunderstood line from Schwartzwald.

In Horn, Wells Fargo filed the foreclosure complaint on its behalf as “successor by merger to Wells Fargo Home Mortgage, Inc. fka Norwest Mortgage, Inc.” Both the note and the mortgage identified Norwest Mortgage as the lender and the Horns as the borrowers.  The Horns, first acting pro se and later with the assistance of counsel, defended against the complaint and Wells Fargo’s ensuing motion for summary judgment by asserting that Wells Fargo was not the real party in interest and lacked standing.  Wells Fargo then submitted the affidavit of a “Default Litigation Specialist” employed there, who averred that in 2000, Norwest Mortgage, Inc. had changed its name to Wells Fargo Home Mortgage, Inc., that Wells Fargo Home Mortgage, Inc. had later merged into Wells Fargo, and that Wells Fargo was the holder of the note and mortgage at the time it filed the complaint.  The trial court granted Wells Fargo’s motion for summary judgment and issued a decree of foreclosure in Wells Fargo’s favor. The Horns appealed, but did not challenge the trial court’s conclusion on standing grounds. Nevertheless, the Ninth District sua sponte considered the issue of standing.  Seizing on the language in Schwartzwald that standing is “determined as of the filing of the complaint,” 134 Ohio St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214, ¶ 3, the court of appeals held that a plaintiff in a foreclosure action must attach to its complaint documents that prove that it has standing at the time the complaint is filed. Because Wells Fargo had failed to attach such proof to its complaint, the Ninth District held that Wells Fargo lacked standing and remanded the case to the trial court to dismiss the complaint without prejudice.

After accepting Wells Fargo’s discretionary appeal, the Supreme Court agreed with various decisions from other courts of appeals holding that proof of standing may be submitted subsequent to filing the complaint. The Court confirmed that Schwartzwald does not require proof of standing at the time of filing.  Further, because Ohio is a notice-pleading state, the Court reasoned, at ¶ 13, that “[t]o require a plaintiff to attach proof of standing to a foreclosure complaint would also run afoul of Ohio’s notice-pleading requirements.” Therefore, the Court held that although the plaintiff in a foreclosure action must have standing at the time suit is commenced, proof of standing may be submitted after the filing of the complaint. Horn should end the spate of erroneous sua sponte dismissals at the pleadings stage, particularly by trial courts within the Ninth District, which have perplexed foreclosure litigators for some time.  Horn affirms that the accepted and proper practice is for a merged plaintiff to prove standing—at the summary judgment stage—by submitting an affidavit, together with proof that it has succeeded to the rights of its predecessors. Nevertheless, in situations analogous to Horn, it remains good practice to allege in the complaint that the plaintiff is the successor by merger to the original payee of the promissory note.