In Bank of America NA v. Omega Design/Build Group, LLC (2011), Hamilton County No. C-100018, 2011-Ohio-1650 (Apr. 6, 2011) the Court of Appeals affirmed the granting of partial summary judgment to defendants-appellees Omega Design Build Group, LLC, Tru Wall Concrete, Inc., The Osterwisch Company, Tri-State Concrete, Jacob Masonry Contractors, LLC, and D.E.P.E., LLC, d.b.a Pella Windows & Doors (“the Construction Defendants”), finding that the Construction Defendant’s mechanic’s liens had priority over Bank of America NA’s (“the Bank”) mortgage under R.C. Chapter 1311.
On September 1, 2005 at the beginning of a luxury residential condominium complex project an original notice of commencement was filed with the Hamilton County Recorder. A year later the Bank’s predecessor in interest, after closing on a loan, filed a mortgage with the county recorder. Just three minutes after the mortgage was filed the Bank’s predecessor also filed an “Affidavit to Terminate Notice of Commencement.” The affidavit of termination stated that all improvements covered by the original notice were completed and have been paid—assertions that turned out to be completely untrue. Approximately one minute after filing the affidavit of termination the predecessor bank filed a new notice of commencement. The new notice of commencement identified exactly the same improvements on the property as the original notice and related to the same luxury condominium construction.
The Court of Appeals held that the Bank’s attempt to cancel the notice of commencement and obtain priority over the Construction Defendants mechanic’s liens was a legal nullity. The Bank argued that cancellation of a notice of commencement would place the Bank’s mortgage in first priority. However, the Court of Appeals held that under R.C. 1311.04(A) where more than one notice of commencement is filed for a single improvement all notices filed after the original notice shall be deemed to be amendments, and the date of filing of the amended notice is the filing of the original notice. The Court of Appeals found that the Bank’s attempt to cancel and immediately re-file an identical notice of commencement was simply an attempt to circumvent the statute. The Court noted that the “affidavit purporting to cancel the notice of commencement was meaningless,” as there was no substantive change and it was merely an attempt to obtain priority. The Court upheld partial summary judgment for the Construction Defendants as the second notice of commencement related back to the original notice, and the Construction Defendants mechanics’ liens had priority over the Bank’s mortgage.