Sometimes what an appellate court doesn’t do is just as important as what it does. The Ohio Supreme Court recently declined to review the case of CitiMortgage, Inc. v. Patterson. And in doing so, it may have a clarified a critical issue in Ohio foreclosure law.

The Patterson case presented the Ohio Supreme Court the opportunity to expand on its recent decision in Federal Home Loan Mortgage Corp. v. Schwartzwald. In Schwartzwald the Ohio Supreme Court ruled that a lender who did not have an ownership interest in a promissory note or the underlying mortgage lacked “standing” to bring an action to collect on the debt. And because it lacked standing, the lender could not “cure” that deficiency by receiving an assignment of the note after it filed the foreclosure lawsuit. But a question remained after Schwartzwald. What if a lender had an interest in the note or the mortgage, but not in both? 

Would a lender in that situation have standing? In the Patterson case, CitiMortgage proved it had an interest in the note at the time it filed the complaint, even though it did not receive an assignment of the mortgage until after it filed the lawsuit. Patterson argued that the Schwartzwald holding meant CitiMortgage lacked standing to bring the suit because it had an interest in only the promissory note, not the mortgage. Patterson was the first case to raise this question after the Schwartzwald decision.

CitiMortgage argued that the Supreme Court’s Schwartzwald decision required only that the lender have some interest in the dispute. So long as the lender could demonstrate an interest in the note or the mortgage, it had standing to file the suit, and it could accept an assignment of the missing interest after it filed.

The Eighth District Court of Appeals agreed with CitiMortgage’s argument and upheld the trial court’s judgment in CitiMortgage’s favor. Patterson asked the Ohio Supreme Court to accept the case for review. While all litigants are entitled to appeal a trial court’s judgment, they only have a right to one bite of the apple. Appeals to the Supreme Court are “discretionary,” which means that the Supreme Court can choose to review a case or not. Here, the Supreme Court chose not to review the Eighth District’s decision, which suggests strongly that the Eighth District got it right.

The Patterson case clarifies a lingering question from Schwartzwald in a way that doesn’t unnecessarily penalize lenders. The Ohio Supreme Court’s decision to let the decision stand – by declining jurisdiction -- is big news for Ohio’s creditors.