^^^^^^ ^^ ^OURT REME COURT OF OHIO IN THE SUPREME COURT OF OHIO DONALD L. GRIFFIN, SR. . <:,:.,.. < Plaintiff-Appellee. vs.

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1 IN THE SUPREME COURT OF OHIO?;^ DONALD L. GRIFFIN, SR. vs. Plaintiff-Appellee FIRST NATIONAL ACCEPTANCE COMPANY Defendant-Appellant. <:,:.,.. < On Appeal from the Trumbull County Court of Appeals, Eleventh Appellate District Court of Appeals Case No T-0075 Trial Court No CV 1864 MEMORANDUM OF DEFENDANT-APPELLANT, FIRST NATIONAL ACCEPTANCE COMPANY, IN SUPPORT OF JURISDICTION Christopher J. Klym, Esq. ( ) HUFFMAN, ISAAC & KLYM, LLC Detroit Road, Suite 200 Westlake, OH Tel: Fax: Attorney for First National Acceptance Company, Defendant-Appellant Philip D. Zuzolo ( ) Patrick B. Duricy ( ) ZUZOLO LAW OFFICES, LLC 700 Youngstown-Warren Road Niles, Ohio Tel: Fax: Attorneys for Donald Griffin, Sr., Plaintiff- Appellee NQY 14 ^^^^ ^^^^^^ ^^ ^OURT REME COURT OF OHIO

2 TABLE OF CONTENTS EXPLANATION OF WHY THIS CASE IS OF PUBLIC OR GREAT GENERAL INTEREST... 1 STATEMENT OF THE CASE AND FACTS...>... 3 ARGUMENT IN SUPPORT... 7 Proposition of Law No An equitable mortgage, granted by a vendee under a land contract upon the equitable interest of the vendee in the real property which Vendee is purchasing by land contract, is not an encumbrance upon the legal title of the vendor of said real property, such that vendor must remove the equitable mortgage upon transfer of the real property to vendee upon conclusion of the land contract by general warranty deed or provide a defense under the covenant against encumbrances Proposition of Law No As an equitable mortgage, granted by a vendee under a land contract upon the equitable interest of the vendee in the real property which Vendee is purchasing by land contract, is not an encumbrance upon the legal title of the vendor of said real property, it cannot be said that vendor misrepresented the state of vendor's title, fraudulently or otherwise, upon transfer of legal title by vendor to vendee pursuant to a general warranty deed without causingthe equitable mortgage to be removed CONCLUSION CERTIFICATE OF SERVICE APPENDIX APpx. Pg. Opinion of the 11th District Court of Appeals, Trumbull County, Ohio (Sept. 30, 2013) Judgment Entry of the 11th District Court of Appeals, Trumbull County, Ohio (Sept. 30,2013)

3 EXPLANATION OF WHY THIS CASE IS OF PUBLIC OR GREAT GENERAL INTEREST When real property is transferred, it is essential to determine whether a mortgage, lien or other alleged encumbrance is attached to or binds the real property being transferred. When the grantor is certain of which potential encumbrances do indeed bind or attach to real property, the grantor may properly take steps to remove such encumbrances, except them from the warranties set forth in the deed by which the property is transferred, or choose to utilize a form of deed under the Ohio Revised Code which would limit andjor completely remove any warranties made upon conveyance of the real property. However, when parties are uncertain as to what constitutes an "encumbrance", the efficient transfer of property in the State of Ohio is affected and potentially damaged. This case presents issues which are important to land owners, land contract vendors and vendees, mortgage creditors, and land title companies in the State of Ohio. Upon an appeal from the decision of the Trumbull County Court of Common Pleas in favor of Defendant- Appellant, First National Acceptance Company, the 11ih District Court of Appeals determined that a vendor under a land contract must, upon completion of the land contract and transfer of the real property to vendee by general warranty deed, defend vendee, pursuant to the covenant against encumbrances, against an equitable mortgage granted by vendee upon such real property. This conclusion requires a vendor to pay a debt created by vendee during the term of the land contract, the benefits of which were enjoyed by vendee alone, in order meet vendors' obligation to deliver the real property to vendee by general warranty deed upon the conclusion of the land contract. This conclusion will lead to an unjust, unfair and inequitable 1

4 result, essentially permitting a land contract vendee to require a land contract vendor to pay vendee's own debts in order to meet vendor's contractual obligations. The decisions of the Ohio Supreme Court and various Ohio Appellate Court's provide ample basis for an equitable, just result. Prior decisions of the Ohio Supreme Court permit a vendee to mortgage the equitable interest held by vendee in real property under a land contract; determine that the equitable mortgage granted by such a vendee attaches only to the equitable interest held by vendee under the land contract; determine that upon a default under the equitable mortgage, the mortgagee may only foreclose upon the equitable interest held by vendee; and that once the land contract is completed and vendee obtains legal title in addition to the equitable title it held under the land contract, the equitable mortgage attaches to the legal title then held by the vendee. As an equitable mortgage may not be enforced against the vendor's legal title, it does not attach to or bind vendors legal title and is not an encumbrance upon it during the term of the land contract. Absent, however, from the record of legal precedent is a determination of whether such an equitable mortgage is an encumbrance upon the legal title of vendor upon the conclusion of the land contract and the transfer to the legal title of vendor to vendee under the terms of the land contract. The decision of the 11t" District Court of Appeals that an equitable mortgage is an encumbrance upon the legal title transferred by vendor to vendee upon conclusion of the land contract is contrary to law and to equity. As an equitable mortgage is not an encumbrance upon, and therefore may not be enforced against, the legal title of vendor during the term of a land contract, it does not logically follow that the simple act of conveyance upon the conclusion of the land contract should somehow modify the legal standing of the equitable mortgage in 2

5 relation to the legal title of vendor. Yet the 11 th District Court of Appeals has determined that such an equitable mortgage, even though it may not be enforced against the legal title of vendor, is an encumbrance against the legal title of vendor. Should the decision in this matter stand, vendor in this case may be required to pay the debt created by vendee. And should this decision stand, the legal title of vendors under land contracts would be at risk of being encumbered by vendees without the approval, permission or even knowledge of vendors. Unscrupulous vendees would be potentially permitted to mortgage their equitable interest at will, with no intention of repaying the debt, knowing that so long as they complete the land contract, their debt must be paid by vendor. For if vendor does not pay vendee's debt secured by an equitable mortgage and transfers the real property pursuant to a general warranty deed, a breach of the covenant against encumbrances exists; and if vendor refuses to transfer upon conclusion of the land contract by general warranty deed, vendor is in breach of the land contract. The issue raised herein is of great general and public interest in the State of Ohio. We urge the Court to review and correct the holding of the 11th District Court of Appeals in this case, removing the potential damage which may be caused to Defendant-Appellant, First National Acceptance Company, in the instant matter, and further removing the threat the decision of the 1.1th District Court of Appeals holds to the legal title of land contract vendees across the State of Ohio. STATEMENT OF THE CASE AND FACTS On December 16, 1992, David I. Griffin ("hereinafter "David") and Moe Nafisi, as Vendee's, entered into a Land Installment Contract (hereinafter the "Land Contract") with Peter 3

6 Perich and Anne Louise Perich, as Vendors (hereinafter the "Vendors"), for the purchase of the real property located at 2640'11Vest Market Street, Warren, Ohio (hereinafter the "West Market Street Property"). On or about December 10, 1997, Defendant-Appellant, First National Acceptance Company (hereinafter "FNAC") entered into an agreement to purchase the West Market Street Property from the Vendors. Vendors transferred their interest in the West Market Street Property to FNAC by Warranty Deed dated December 10, 1997 and by their Assignment of Seller(s)'s Interest in Land Contract dated December 10, FNAC identified the Land Contract, and the purchase of the West Market Street Property memorialized therein, as Account No On December 9, 1999, David and Moe Nafisi, as Vendees under the Land Contract, entered into a document entitled "Contract Amendment Agreement" with FNAC, as Vendor under the Land Contract, in which the parties agreed to modify certain terms and conditions of the Land Contract, and in which the parties agreed that the current amount due and owing under the Land Contract was $48, Moe Nafisi, on or about April 19, 2000, in a document titled "Assignment of Purchasers Interest in Real Estate / Land Contract", assigned all of his right, title and interest in the Land Contact to David and further noted that the current balance due and owing on the Land Contract was $47, On April 18, 2000, David and First National Bank of America (hereinafter "FNBA") entered into an agreement whereby FNBA agreed to lend David the sum of $76,500 at % interest, per annum. FNBA is a federally chartered national bank. FNAC is a Michigan Corporation and a wholly owned operating subsidiary of FNBA. David agreed to repay such sums to FNBA in 299 payments of $ each over 25 years (hereinafter the Mortgage 4

7 Loan"). David also agreed to provide to FNBA, as security for the Mortgage Loan, a mortgage deed upon the real property located at 2892 NW Heather Lane, Warren, Ohio (hereinafter the "Heather Lane Property") and the West Market Street Property. Such Mortgage Deed was recorded on April 25, 2000 as File No of the Trumbull County Records (hereinafter the "Mortgage Deed"). In addition to executing the Mortgage Deed as security for the loan, David executed a document entitled "Assignment of Purchaser's Interest in Land Contract as Security" in favor of FNBA on or about April 25, 2000 as additional security, which was filed for record with the Trumbull County Recorder on April 25, 2000, at FNBA identified the Mortgage Loan as Account No In May, 2003, in response to an inquiry from David, FNAC provided David with a Payoff Letter which indicated that the total payoff due under the Land Contract and Account No , as of May 10, 2003, was $39,715.00, and that if FNAC received such sum, along with a per diem payment of $9.22 per day for each day after May 10, 2003, until the date such payoff payment was received in certified funds, FNAC would provide the proper deed to the West Market Street Property to David. On or about June 11, 2003, FNAC received an Official Check in the amount of $39, from David which represented the Payoff on Account No as of May 10, 2003, but did not include the per diem amount due after May 10, On June 11, 2003, FNAC provided a corrected Payoff Letter to David which included the per diem rate up to June 11, Such remaining balance, based on the per diem rate from May 11, 2003, to June 11, 2003, was $ FNAC received, on June 12, 2003, from David, the sum of $336.08, which represented a full and final payoff of Account No FNAC provided David with a General Warranty Deed conveying all of its interest in the West Market Street Property to him 5

8 as a result of his full and final payment under the Land Contract and Account No The General Warranty Deed whereby the West Market Street Property was transferred to David was filed for record with the Trumbull County Recorder of September 23, Thereafter, a Corrective General Warranty Deed was filed, which clarified the record to confirm David was the sole grantee, was filed with the Trumbull County Recorder on May 18, 2006 (hereinafter such documents will be referred to Collectively as the "General Warranty Deed") David is in default of repayment of the Mortgage Loan, and FNBA received a Judgment against him in Trumbull County Court of Common Pleas Case No CV The Heather Lane Property was sold at sheriff's auction and FNBA holds a deficiency judgment in against David the amount of $87, plus accrued and accruing but unpaid interest thereon at the rate of 10.75% per annum from July 22, The West Market Street Property is currently subject to a re-filed foreclosure action brought by FNBA in Trumbull County Court of Common Pleas Case No CV Plaintiff-Appellee, Donald L. Griffin (hereinafter "Donald") was granted ownership of the West Market Street Property by Quit Claim Deed he received from his son, David in January, Donald filed his Complaint in the instant action with the Trumbull County Court of Common Pleas on July 25, 2009, demanding that FNAC provide him a defense against the foreclosure action brought against the West Market Street Property by FNBA, and further alleging that FNAC had fraudulently misrepresented the state of the condition of its ownership of title in the West Market Street Property. FNAC filed its answer on September 11, FNAC filed its Motion for Summary Judgment on May 21, On July 25, 2012, Donald filed its Memorandum Contra to FNAC's Motion for Summary Judgment and his own Motion for 6

9 Summary Judgment. On August 21, 2012, the Trumbull County Court of Common Pleas determined that "at the time of the warranty deed in question, the West Market St. property was subject to no encumbrances at law, but only to the equitable mortgage in favor of FNBA... [a]s there were no such encumbrances at the point of transfer to legal title to David, it cannot be said that [FNAC] breached any warranty against encumbrances or misrepresented the state of the title", thereby granted FNAC's Motion for Summary Judgment, denied Donald's Motion for Summary Judgment, and concluded the matter before such Court, On September 7, 2012, Donald appealed the decision of the Trumbull County Court of Common Pleas to the 11tn District Court of Appeals. On September 30, 2013, in a split decision, the 11th District Court of Appeals reversed the decision of the Trumbull County Court of Common Pleas and remanded the matter for further proceedings. The majority of the appellate court panel held that a general warranty deed warrants title against all encumbrances, not only those made by grantor, and that a genuine issue of material fact exists with respect to Donald's fraudulent misrepresentation claim. The dissent disagreed, concluding that as the Mortgage Deed was equitable, it did not bind FNAC's legal title to the real property, and was therefore not an encumbrance. In addition, the dissent concluded that as the Mortgage Deed was not an encumbrance, no misrepresentation occurred. ARGUMENT IN SUPPORT Proposition of Law No An equitable mortgage, granted by a vendee under a land contract upon the equitable interest of the vendee in the real property which Vendee is purchasing by land contract, is not an encumbrance upon the legal title of the vendor of said real property, such that vendor must remove the equitable mortgage upon transfer of the real property to vendee upon conclusion of the land contract by general warranty deed or provide a defense under the covenant against encumbrances. 7

10 In Ohio, is it settled law that a covenant against encumbrances set forth in a general warranty deed is breached "as soon as made if an encumbrance in fact exists." Stockman v. Yanesh, 68 Ohio St.2d 63, 428 N.E.2d 417 (1981). However, such encumbrance must in fact exist. The Ohio Supreme Court, in Alliance Towers, Ltd. v. Stark County Bd, of Revision, 37 Ohio St.3d 16, 22, 523 N.E.2d 826 (1988) citing Black's Law Dictionary (5 Ed.1979) 473, defined "encumbrance" as: "Any right to, or interest in, land which may subsist in another to diminution of its value, but consistent with the passing of the fee. Knudson v. Weeks, D.C. Oki. [1975], 394 F.Supp. 963, 976 [sic 978]. A claim, lien, charge, or liability attached to and binding real property; e.g. a mortgage; judgment lien; mechanics' lien; lease; security interest; easement or right of way; accrued and unpaid taxes." The 11th District Court of Appeals, in Dietl v. Sipka, 185 Ohio App.3d 218, 2009-Ohio- 6225, 923 N.E.2d 692 (11 Dist. 2009), goes further, specifically stating that: This court has previously defined "encumbrance" to mean "[a]ny right to, or interest in, land which may subsist in another to diminution of its value, but consistent with the passing of the fee by conveyance. *** A claim, (ien, charge, or liability attached to and binding real property; e.g. a mortgage; judgment lien; mechanics lien; lease; security interest; easement or right of way; accrued and unpaid taxes. If the liability relates to a particular asset, the asset is encumbered." (Emphasis added.) Liddy v. Studio, (Apr. 11, 1997),11th Dist. No. 96-G-2009, 1997 WL , at *3, quoting Black's Law Dictionary (6th Ed. 1991) 527. Dietl v. Sipka, 185 Ohio App.3d 218, 2009-Ohio-6225, 923 N.E.2d 692 (11 Dist. 2009). Key in this definition is the concept that an encumbrance is consistent with the passing of the fee and that it attaches to and binds the interest held in the real property. The emphasis on the phrase "attached to and binding" in the citation above was made by the Court itself in Dietl. The question then becomes, does an equitable mortgage granted by a vendee under a land contract attach to or bind the legal title to the real property held by the vendor under said 8

11 land contract? Is such an equitable mortgage an encumbrance upon the legal title of the vendor? A land installment contract is an executory contract because performance remains due on both sides. The Ohio legislature has defined a land installment contract as an executory agreement which must conform to the formalities required by law for the execution of deeds and mortgages. R.C In order to complete the terms of a land installment contract, the vendee must tender the final payment, at which time the vendor must deliver legal title to the property. See R.C to Until the final payment is made, the vendor retains legal title to the real property and the vendee has an equitable interest in the real property. Blue Ash Bldg. & Loan Co. v. Hahn, 20 Ohio App.3d 21, 23-24, 20 OBR 22, 484 N.E.2d 186, (1 Dist. 1984); Thornton v. Guckiean & Co., 77 Ohio App.3d 794, 603 N.E.2d 1066 (12 th Dist. 1991) A vendee can mortgage its' equitable interest to a third party. Philly v. Sanders, 11 Ohio St. 490 ( 1860). See also, Churchill v. Little 23 Ohio St. 301 (1872) ( a vendee under an executory land contract who assigns or mortgages the property creates a valid lien against the equitable interest of the vendee); Alemania Loan & Building Co. N. 2 v. Frantzreb, 56 Ohio St. 493, 499, 47 N.E. 497 (1897) ("Since the mortgagor has never held the legal title, the mortgages operated only to create a lien upon his equitable interest."). The vendee can only mortgage rights that the vendee may have or may subsequently acquire. Where an individual who has contracted to purchase real property by land installment contract mortgages the property before completing the land installment contract and receiving legal title, the mortgage does not create a legal lien but operates only to create a lien upon the mortgagor's equitable interest and is therefore an equitable mortgage. Alemania Loan & Bldg. 9

12 Co. No. 2 v. Frantzreb, 56 Ohio St. 493, 47 N.E. 497 (1897); see, also, Coe v. Columbus, Piqua & Indiana RR. Co., 10 Ohio St. 372, (1859). As the equitable mortgage only attaches to the equitable interest in the property held by vendee / mortgagor, upon default, the mortgagee may only foreclose upon the equitable interest of the vendee / mortgagor and not upon the legal title of the vendor. Philly v. Sanders, supra at 494; Thornton v. Guckiean & Co., supro, at 799. Once the land installment contract is completed and the vendee obtains legal title, the mortgage attaches to the legal title then held by the vendee. Philly v. Sanders, 11 Ohio St. 490 (1860). In the case of an equitable mortgage granted by the vendee of a land contract upon vendee's equitable interest in the property subject to the land contract, the equitable mortgage does not attach or bind itself to the legal title held by the vendor, only the equitable interest of the vendee. Hence, as it does not attach or bind itself to the vendor's legal title, it is not an encumbrance upon such title. As stated by the Ohio Supreme Court in Alemania Loan & Bldg. Co. No. 2 v. Frantzreb (1897), 56 Ohio St. 493, 499, 47 N.E. 497: It is true, as contended by counsel for defendants, that the mortgages were executed according to iaw. But it does not follow that, as against the company holding the legal title, they created legal liens. Since the mortgagor has never held the legal title, the mortgages operated only to create a lien upon his equitable interest. In the case of an equitable mortgage upon the equitable interest of a vendee under a land instaliment contract, the equitable mortgage does not attach or bind itself to the legal title held 10

13 by the vendor, only the equitable interest of the vendee. Hence, as it does not attach or bind itself to the vendor's legal title, it is not an encumbrance upon such title.' As an equitable mortgage is not an encumbrance upon, and therefore may not be enforced against, the legal title of vendor during the term of a land contract, the conveyance of the real property upon the conclusion of the land contract alone cannot modify the legal standing of the equitable mortgage in relation to the legal title of vendor. To permit an equitable mortgage to be enforced against the legal title of the vendor at the moment of transfer alone would be unjust and inequitable. But such a result is the holding of the 11th District Court of Appeals in this matter. In determining that an equitable mortgage is an encumbrance upon the legal title of vendor and that vendor owes vendee a defense against the equitable mortgage under the covenant against encumbrances in a general warranty deed, the 11th District Court of Appeals has confirmed a greater legal status upon the equitable mortgage at the moment of conveyance then it has during its existence under term of the land contract. In effect, the 11t" District has allowed a vendee to provide a mortgage upon real property to which vendee did not hold legal title in order to secure vendee's indebtedness. Such result is contrary to law and the rulings of this Court, inequitable, and should be reversed. 1 R.C (B) contemplates mortgages granted by a vendee under a land installment contract which survive the completion of the sale and are not a lien upon the legal title held by the vendor. Such section permits a vendor to hold a mortgage itself on the vendee's equitable interest in the property being sold by land contract, so long as the amount due upon such mortgage is not "greater than the balance due under the contract...". The purpose of such a mortgage would only be to secure repayment of sums due after the completion of the land contract and transfer of the legal title in the property from vendor/ mortgagee to vendee / mortgagor. It would be unreasonable and illogical to assume that a vendor who held such a mortgage would be required to defend vendee under the covenant against encumbrances in such a situation. 11

14 Proposition of Law No As an equitable mortgage, granted by a vendee under a land contract upon the equitable interest of the vendee in the real property which vendee is purchasing by land contract, is not an encumbrance upon the legal title of the vendor of said real property, it cannot be said that vendor misrepresented the state of vendor's title, fraudulently or otherwise, upon transfer of legal title by vendor to vendee pursuant to a general warranty deed without causing the equitable mortgage to be removed. In the Second Count of his Complaint, Donald alleged that FNAC represented the West Market Street Property to be free and clear of all liens, that said representation was false and FNAC knew or should have known it was false, and that Donald relied upon such statements and was damaged. The elements of a cause of action for fraudulent misrepresentation are: (a) a representation, or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation, and (f) a resulting injury proximately caused by the reliance. Brewer v. Brothers, 82 Ohio App.3d 148, 153, 611 N.E.2d 492 (12 Dist. 1992); Brothers v. Morrone-O'Keefe Dev. Co., LLC, loth Dist. Franklin No. 03AR-119, 2003-Ohio As the Mortgage Deed was not an encumbrance upon the legal title held by FNAC, specifically, as the Trial Court determined, that "... there were no... encumbrances at the point of transfer of legal title..." to David, no misrepresentation, fraudulent or otherwise, could have occurred as any statements made by FNAC to David which indicated that the West Market Street Property was free from encumbrances were in and of themselves correct. Without a false representation, there is no basis for a claim of fraudulent misrepresentation. The elements set forth above cannot be met. The Mortgage Deed was not an encumbrance upon 12

15 the legal title of FNAC, Donald's Second Count had no basis in law or fact and was properly dismissed by the Trial Court. CONCLUSION For all these reasons, further review of the Judgment of the 11th District Court of Appeals of Ohio is warranted. Defendant-Appellant, First National Acceptance Company, respectfully requests that the Court accept jurisdiction and adopt the propositions of law stated herein. rīsto$w J. Klym ( ) Huffman, Isaac & Klym, LLC Detroit Road, Suite 200 Westlake, Ohio Telephone Facsimile Attorney for Defendant-Appellant, First National Acceptance Company 13

16 CERTIFICATE OF SERVICE A copy of the foregoing Memorandum In support of Jurisdiction of Defendant-Appellant, First National Acceptance Company, was sent by regular U.S. Mail, postage prepaid, on this 13th of November, 2013 to: Phillip D. Zuzolo Patrick B. Duricy Zuzolo, Zuzolo & Zuzolo 700 Youngstown-Warren Road Niles, Ohio Attorneys for Appellant Ch ris^^'pjj,%kr J. KEyrrt ( ) 14

17 APPENDIX 15

18 IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT TRUMBULL COUNTY, OHIO DONALD L. GRIFFIN, SR.,. 0 P I N 10 N -vs- Plaintiff-Appel)ant, CASE NO T-0075 FIR ST NATIONAL ACCEPTANCE COMPANY, Defend ant-appell ee. FILED COURT OF APPEALS SEP SRUMguLLCoUNTY, OH KAREN INFANTE ALl.EN, CLERK Civil Appeal from the Trumbull County Court of Common Pleas, Case No CV Judgment: Reversed and remanded. Philip Zuzolo, and Patrick B. Duricy, Zuzolo Law Office, LLC, 700 Youngstown-Warren Road, Niles, OH 44446, and Gary J. Rosati, Rosati Law Office, LLC, 860 Boardman- Canfield Road, Suite 1 02, Boardman, OH (For Plaintiff-Appellant). Christopher John Klym, Detroit Road, Suite 200, Westlake, OH (For Defendant-Appellee). CYNTHIA WESTCOTT RICE, J., f, 1} Appellant, Donald L. Griffin, Sr., appeals the judgment of the Trumbull County Court of Common Pleas granting summary judgment in favor of Appellee, First National Acceptance Company ("FNAC"), and denying Donald's motion for summary judgment. At issue is whether evidence was presented that FNAC breached the

19 covenant against encumbrances contained in a general warranty deed by which FNAC conveyed the subject property to Donald's predecessor in interest, thus precluding summary judgment. For the reasons that follow, we reverse and remand for proceedings consistent with this opinion. { 2} In July 2009, Donald filed a complaint against FNAC. The complaint alleged that Donald is the current owner of a parcel of real property located on West Market Street in Warren, Ohio. The complaint further alleged that FNAC had previously owned the property, and transferred it to Donald's predecessor in interest, his son, David Griffin, in 2003 by general warranty deed. The complaint alleged that David then transferred the property to Donald by quit-claim deed in 2004, and that Donald later _ _ ----._. discovered the property was encumbered by a mortgage, which pre-dated the 2003 deed transferring the property to David. As David's successor in interest, Donald asserted a claim against FNAC for breach of the covenant against encumbrances contained in the 2003 deed. He also asserted a separate claim for fraud. { 3} FNAC filed an answer denying the material allegations of the complaint. { 41 In May 2012, FNAC fifed a motion for summary judgment. Donald filed a brief in opposition and his own motion for summary judgment, supported by David's affidavit. David stated in his affidavit that in 1992, he entered a land contract with Peter and Anne Perich, as vendors, for the purchase of the West Market Street property, From 1992 to 1997, David made monthly payments under the land contract to the Periches. Then, in 1997, FNAC purchased the property from the Periches along with their interest in the land contract. FNAC thus became the owner of the property, subject 2

20 to David's land contract. Beginning in 1997, David made his payments under the land contract to FNAC. { 5} David stated that in April 2000, he obtained a mortgage loan from FNBA, FNAC's parent company, to buy a home on Heather Lane in Warren. As security for the loan, David granted FNBA a mortgage on the Heather Lane property and on the West Market Street property. As additional security for the loan, David also assigned his interest in the land contract on the West Market Street property to FNBA. The mortgage and assignment were duly recorded. FNAC, which is FNBA's wholly-owned subsidiary, acted as FNBA's mortgage servicer for David's mortgage loan. { 6} From 2000 to 2003, David made two separate monthly payments to _, _ FNAC, one on the land contract for the West Market Street property (owed to FNAC) and one on the mortgage for the Heather Lane property (owed to FNBA). $T7} David stated that in May 2003, he contacted FNAC; told FNAC's representative that his father Donald was interested in buying the West Market Street property; and asked FNAC's representative what it would take to release the property of all liens. FNAC's representative told David that if Donald paid the balance on the land contract, $40,000, FNAC would release the West Market Street property to David "free of all liens." { 8j David stated that in June 2003, he paid the land contract on the West Market Street property in full, and, in return, FNAC gave him a general warranty deed to that parcei. In this deed, FNAC covenanted with David that "the premises are free from all encumbrances" and "to forever warrant and defend the title to the said lands against 3

21 all claims whatever." The deed did not mention the mortgage on the property that David had given to FNBA in The deed was duly recorded. }T9} In January 2004, David transferred the West Market Street property to Donald by quit-claim deed. David ultimately defaulted on his mortgage loan on the Heather Lane property, and, in 2007, FNBA filed a foreclosure action against David and Donald as to both the Heather Lane and West Market Street properties. David stated in his affidavit that FNAC did not defend the title of Donald, as David's successor in interest, to the West Market Street property. Instead, FNAC assisted FNBA in its efforts to foreclose the mortgage. David ultimately consented to the foreclosure of the Heather Lane property, which was sold at sheriff's sale. FNBA voiuntari(y dismissed without prejudice the foreclosure action against the West Market Street property pending the outcome of this action. { 10} In August 2012, the trial court entered summary judgment in favor of FNAC and denied Donald's motion for summary judgment. The court noted that the facts in this case "are not easily resolved" and that this was a"novei" case. {1111} Donald appeals the court's judgment, asserting two assignments of error. For his first assigned error, he alleges: { 12} "The trial court erred in granting summary judgment to defendant FNAC and denying summary judgment for the plaintiff on plaintiff Griffin's complaint to enforce the general warranty deed contract entered into by defendant FNAC." } 13} Donald argues that the 2003 general warranty deed for the West Market Street property from FNAC to David, his predecessor in interest, contained a covenant that the property was free of all encumbrances. Donald contends that, because the 4

22 mortgage David gave to FNBA in 2000 was still an encumbrance on the property, FNAC breached the covenant against encumbrances when it gave David the deed in I 14} In contrast, FNAC argues that, following execution of the land contract in 1992, David received an equitable interest in the West Market Street property, and FNAC retained the legal title until the land contract was paid in ful(. FNAC contends that David's mortgage on the property in favor of FNBA in 2000 created a lien against his equitable interest and thus constituted an equitable mortgage. FNAC argues that, because the mortgage only attached to David's equitable interest, not FNAC's legal title, it was not an encumbrance. Thus, FNAC argues it did not breach the covenant against encumbrances..-.. i 151 This court has held that summary judgment is proper when: (1) there is no genuine issue of material fact; (2) the moving party is entitled to judgment as a mateer of law; and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to the nonmoving party, that party being entitled to have the evidence construed most strongly in his favor. Civ.R. 56(C); Frano v. Red Robin International, Inc., 181 Ohio App.3d 13, 2009-Ohio-685, %12 (11th Dist.), citing Leibreich v. A.J. Refrigeration, Inc., 67 Ohio St.3d 266, 268 (1993). { 16} The party seeking summary judgment on the ground that the nonmoving party cannot prove his case bears the initial burden of informing the trial court of the basis for the motion and of identifying those portions of the record that demonstrate the absence of a genuine issue of material fact on the essential elements of the nonmoving party's claim. Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996). 5

23 { 17} The moving party must point to some evidence of the type listed in Civ.R. 56(C) that affirmatively demonstrates that the nonmoving party has no evidence to support his claim. Dresher, supra, at 293. { 18} If this initial burden is not met, the motion for summary judgment must be denied. Id. However, if the moving party has satisfied his initial burden, the nonmoving party then has a reciprocal burden, as outlined in Civ.R. 56(E), to set forth specific facts showing that there is a genuine issue for trial and, if the nonmovant does not so respond, summary judgment, if appropriate, shall be entered against him. Id. { 191 Since a trial court's decision ruling on a motion for summary judgment involves only questions of law, we conduct a de novo review of the trial court's _..- judgment. DiSanto v. Safeco lns. of Am., 168 Ohio App.3d 649, 2006-Ohio-4940, 41 (11th Dist.). { 20} As a preliminary matter, we note that FNAC did not satisfy its duty under Civ.R. 56 to file affidavits, depositions, or other evidentiary materials in compliance with Civ.R. 56(C). That rule requires that the affidavits presented on summary judgment be originals. Cementech, lnc. v. Fairfawn, 9th Dist. Summit No , 2003-Ohio-2632, 12; French v. New Paris, 12th Dist. Preble No. CA , Ohio-1 309, 54. However, the affidavits filed by FNAC in support of its summary-judgment motion are not originals, as required by Civ.R. 56(C). To the contrary, they are merely copies of affidavits that were apparently prepared and used by FNBA in support of a summaryjudgment motion filed in its 2007 foreclosure action. Further, FNAC's affidavits do not address the issues raised in the complaint and do not demonstrate the absence of any factual issues. For this reason alone, FNAC is not entitled to summary judgment. 6

24 {1[21} However, even if FNAC had presented proper evidentiary materials in support of its motion for summary judgment, FNAC would not have been entitled to summary judgment. Pursuant to R.C , a general warranty deed, when properly executed 1 22} has the force and effect of a deed in fee simple to the grantee, the grantee's heirs, assigns, and successors. * * * with covenants on the part of the grantor with the grantee, the grantee's heirs, assigns, and successors, that, at the time of the delivery of that deed the grantor was lawfully seized in fee simple of the granted premises, that the granted premises were free from al( encumbrances, * * * _-..._._. _.... and that the grantor does warrant and will defend the same to the grantee and the grantee's heirs, assigns, and successors, forever, against the lawful claims and demands of all persons." (Emphasis added.) { 23} A covenant against encumbrances in a general warranty deed is breached "as soon as [it is] made if an encumbrance in fact exists." Stockman v.yanesh, 68 Ohio St.2d 63 (1981), syllabus. { 24} Ohio law provides that, under a warranty deed, the grantee will only be barred from asserting a breach of the warranty if an encumbrance was specifically excepted in the deed, Long v. Moler, 5 Ohio St. 271, 274 (1855). Further, known encumbrances are not excepted from the operation of the covenant. Id. { 25} This court in Liddy v. Studio, 11fih Dist. Geauga No. 96-G-2009, 1997 Ohio App. LEXIS 1465, *7 (Apr. 11, 1997), adopted the definition of "encumbrance" in Black's 7

25 Law Dictionary (6th Ed.1991) 527, as follows: "'[a]ny right to, or interest in, land which may subsist in another to the diminution of its value, but consistent with the passing of the fee by conveyance. * * * A claim, lien, charge, or liability attached to and binding real property; e.g. a mortgage * * *. lf the liability relates to a particular asset, the asset is encumbered."' (Emphasis added.) 26} Further, in Voytecek v. Peoples Sav. Bank Co., 65 Ohio App. 118 (7th Dist.1940), the Seventh District defined an "encumbrance" as "anything that impairs the use or transfer of real estate; anything which constitutes a cloud on the title Id. at 120. (Emphasis added.) { 27} Moreover, in Thornton v. Guckiean & Co., 77 Ohio App.3d 794 (12th Dist.1991), a case relied on by both parties, the Twelfth District held that after the execution of the land contract in that case, the vendee "received an equitable interest in the contract as personalty as well as an equitable interest in the land." (Emphasis added.) Id. at* 798. Thereafter, before the land contract was paid off, the vendee obtained a loan of money and granted his creditor an assignment of his interest in the land contract and a mortgage on the subject property. The court held that the vendee's assignment of the land contract as security for his debt gave his creditor an equitable interest, which "create[d] a cloud on the title to the property.n (Emphasis added.) Id. at 799. In addition, the appellate court held that the equitable mortgage gave the creditor a right to foreclose on the vendee's equitable interest in the land if he was in default. Id. { 28} According to the weil-estabiished law of this state, the subject mortgage satisfied the definition of "encumbrance." First, an encumbrance is a cloud on title. Voytecek, supra. Further, a land contract gives the vendee an equitable interest in the 8

26 land. Thornton, supra. Moreover, when a vendee under an unpaid land contract obtains a loan of money from a creditor and then grants to the creditor a mortgage on the land, the debtor gives the creditor an equitable interest, which "creates a cloud on the title to the property." Id. Thus, the fact that David's mortgage on the property was equitable in nature did not alter the fact that it was a mortgage; that it was recorded; that it was a cloud on the title to the property; and that it was, therefore, an encumbrance. { 29) However, David stated in his affidavit that the representative from FNAC, FNBA's mortgage servicer and wholly-owned subsidiary, told him in May 2003 that if Donald paid the balance on the land contract, i.e., $40,000, FNAC would release the West Market Street property "free of all liens." In addition, the 2003 general warranty : _. deed to the West Market Street property from FNAC to David included a covenant that the property was "free from all encumbrances, unless otherwise noted above." The deed did not contain an exception for any encumbrances. Yet, the mortgage David gave to FNBA in 2000 remained an encumbrance on the property. { 30} Donald argues persuasively that FNAC ignores the statutory difference between a general warranty deed and a limited warranty deed. Pursuant to R.C , a general warranty deed, such as the one FNAC gave David, warrants that the property is free from all encumbrances, In contrast, under R.C , a limited warranty deed warrants that the property is free only "from all encumbrances made by the grantor." FNAC argues that, because the mortgage at issue created a lien against David's equitable interest, not FNAC's legal title, it was no.t an encumbrance. FNAC thus argues that a lien is not an encumbrance unless the encumbrance is against the grantor's legal title, i.e., that the encumbrance was made by the grantor. However, 9

27 pursuant to R.C , a general warranty deed warrants the title against ali encumbrances, not only those that are made by the grantor. {1[31} Since evidence was presented that the West Market Street property was encumbered by a mortgage in favor of FNBA when FNAC gave David a general warranty deed to the property, a genuine issue exists as to whether FNAC breached the covenant against encumbrances contained in the deed. { 32} Donald's first assignment of error is sustained. { 33} For his second assignment of error, Donald contends: 1[34} "The trial court erred by dismissing the plaintiffs misrepresentation claim by finding that there was no admissible evidence that indicated an intent by the - _- _-. appellee/defendant to effectuate a release of the Apri! 2000 mortgage on the West Market Street property." { 35} In its motion for summary judgment, FNAC addressed only Donald's claim for breach of the covenant against encumbrances contained in the warranty deed. All of FNAC's argument was directed against that claim. FNAC did not present any argument or evidentiary materials concerning Donald's claim for fraud. Thus, FNAC did not satisfy its initial burden of informing the trial court of the basis for the summary-judgment motion and pointing to Civ.R. 56(C) evidence that demonstrated Donald had no evidence to support his claim for fraud. Dresher, supra, at 293. As a result, FNAC was not entitled to summary judgment as to this claim, and the trial court erred in granting summary judgment in its favor In any event, Donald presented evidence via David's affidavit that FNAC's representative told him if the mortgage on the West Market Street property was paid off, 10

28 FNAC would release the property "free of all liens." However, when FNAC gave the deed to the property to David, the property was encumbered by the pre-existing mortgage from David to FNBA. Thus, even if FNAC had met its initial burden on summary judgment, a genuine issue of material fact exists with respect to Donald's fraud claim. {137} Donald's second assignment of error is sustained. { 38} For the reasons stated in the opinion of this court, it is the judgment and order of this court that the judgment of the Trumbull County Court of Common Pleas is reversed, and this matter is remanded to the trial court for further proceedings consistent with this opinion. THOMAS R.',I1/RiGHT, J., concurs, DIANE V. GRENDELL, J., dissents with a Dissenting Opinion. DIANE V. GRENDELL, J., dissents with a Dissenting Opinion. {139} 1 dissent from the majority's decision to reverse the judgment of the trial court, based on the conclusion that there is a genuine issue of fact as to whether First National Acceptance Corporation (FNAC) breached the covenant against encumbrances contained in a general warranty deed to David Griffin. The majority's holding would lead to an unjust and unfair result, allowing David and his father, Donald, as the new owner, to avoid the mortgage David himself took out on the property. Since David's mortgage was equitable, did not bind to FNAC's legal title to the property, and was not an encumbrance, FNAC was not required to disclose it in the general warranty 11

29 deed. The trial court's grant of summary judgment was proper. { 40} In the present case, David had a land installment contract with FNAC on his West Market Street property. While still making payments to FNAC under that contract, he mortgaged his interest through First National Bank of America (FNBA). After payment for the property under the land installment contract was complete, FNAC conveyed the property to David with a general warranty deed. David subsequently gave the property to Donald through a quit claim deed. {IT41} While a general warranty deed typically requires the party conveying real estate to grant the land free of any encumbrances, under the unique circumstances of this case, FNAC was not required to state the existence of the mortgage or to protect Donald against any lawsuits related to the FNBA mortgage on the West Market Street property. { 42} In cases involving land installment contracts, such as the present case, before final payment occurs, the purchaser has an equitable interest in the property, while the legal title remains with the seller. Thornton v. Guckiean & Co., Inc., 77 Ohio App.3d 794, 798, 603 N.E.2d 1066 (12th Dist.1991). The purchaser can mortgage his equitable interest in the property prior to obtaining his full interest. See Basil v. Vinceflo, 50 Ohio St.3d 185, 189, 553 N.E.2d 602 (1990) (a purchaser of land under a land installment contract has an equitable interest in the land prior to the completion of the terms of the contract); Alemania Loan & Bldg. Co. No. 2 v. Frantzreb, 56 Ohio St. 493, 499, 47 N.E. 497 (1897). { 43} A mortgage by the party contracting to purchase land under an installment contract that occurs prior to the completion of the contract, then, is an equitable 12

30 mortgage and creates a lien upon the mortgagor's equitable interest only. ACevnania Loan at 499 ("[s]ince the mortgagor has never held the legal title, the mortgages operated only to create a lien upon his equitable interest"); Thornton at 799 ("[w]here an individual who has contracted to purchase real property mortgages the property before actually receiving legal title, the mortgage does not create a legal lien but operates only to create a lien upon the morfigagor's equitable interest"). A mortgagee may foreclose upon only the equitable interest of the mortgagor. Id. { 44} In the present matter, David took out the FNBA mortgage prior to completing the terms of the land installment contract, and prior to paying off his debt to FNAC for the West Market Street property. This mortgage with FNBA was an equitable ----, mortgage and applied only to the interest he held at that time. Under the definition of an encumbrance, the lien or liability, in this case, the equitable mortgage, was not "attached to and binding" the real estate granted in the general warranty deed by FNAC, since that mortgage was tied only to the equitable interest held by David. See Diet/ v. Sipka, 185 Ohio App.3d 218, 2009-Ohio-6225, 923 N.E.2d 692, 7 14 (11th Dist,) (an encumbrance includes "[a] claim, lien, charge, or liability attached to and binding real property") (citation omitted) (emphasis sic). { 45} The legal title held by FNAC had not been mortgaged or otherwise encumbered, such that it would be necessary to make a statement of encumbrance in a general warranty deed. While David received full legal title and interest in the property after the general warranty deed was given to him, he did not have such title or interest in the property prior to the transfer, and it cannot be said that his encumbrance was attached to FNAC's interest at the time of transfer. 13

31 {1[46} The majority's opinion emphasizes the difference between general and limited warranty deeds. However, this distinction is not relevant, since the real issue is whether an encumbrance existed, as considered above, not whether FNAC was required to grant the premises free of all encumbrances. {1(471 Furthermore, it is inequitable for Donald, as the present owner of the property, to be entitled to defense of his title by FNAC. This is not a situation where David, who took out the mortgage, was merely aware of the existence of a mortgage at the time he received the general warranty deed. See Long v. Moler, 5 Ohio St. 271, 274 (1855) (known encumbrances are not presumed to be excluded from a general warranty deed). Instead, he took out the mortgage on his own property and then _ _ conveyed that property to his father. To allow Donald to prevail in this matter would have the effect of alfowing his son, David, to avoid the responsibility of the mortgage that he took out on his own equitable interest of his property. There is also no evidence that FNAC intended to take action to extinguish the mortgage. Although a general warranty deed was given, there are no allegations in the affidavit that FNAC specifically stated it would remove David's obligation to pay off the FNBA mortgage. { 48} The purpose of a warranty deed is to protect the grantee and his heirs and assigns, as explained in R.C , from claims that may arise in the future, essentially preventing any surprises in the form of encumbrances. In this case, the person to be protected by the warranty deed was fully aware of the equitable mortgage on the property. The argument presented by Donald is essentially that both he and David should be protected against an encumbrance that David himself created, a result which should not be allowed and defies equity. 14