In re: DOUGLAS R. HUFFMAN v. First Union Home Equity Bank

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0153P (6th Cir.)
File Name: 04a0153p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
No. 02-4468
In re: DOUGLAS R. HUFFMAN;
In re: ROBIN LYNN HUFFMAN;
In re: EDWARD N.
TUCHOLSKI; In re: DEBBIE S.
TUCHOLSKI; In re: JOHN J.
RICE; In re: JOSEPHINE E.
RICE,
Debtors.
PATRICIA A. KOVACS,
Trustee,
Plaintiff-Appellee,
v.
FIRST UNION HOME EQUITY
BANK, et al.,
Defendants,
FIRST UNION MORTGAGE
CORPORATION,
Defendant-Appellant.
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Nos. 02-4468;
03-3174/3175
2 In re Huffman, et al. Nos. 02-4468; 03-3174/3175
No. 03-3174
In re: DOUGLAS R. HUFFMAN;
In re: ROBIN LYNN HUFFMAN,
Debtors.
PATRICIA A. KOVACS,
Trustee,
Plaintiff-Appellee,
v.
FIRST UNION HOME EQUITY
BANK, et al.,
Defendants-Appellants.
No. 03-3175
In re: EDWARD N.
TUCHOLSKI; In re: DEBBIE S.
TUCHOLSKI,
Debtors.
JOHN N. GRAHAM, Trustee;
PATRICIA A. KOVACS,
Trustee,
Plaintiffs-Appellees,
V.
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Nos. 02-4468; 03-3174/3175 In re Huffman, et al. 3
*The Honorable William W Schwarzer, Senior United States District
Judge for the Northern District of California, sitting by designation.
NATIONAL LENDING CENTER,
INC.; FIRST UNION NATIONAL
BANK, as Indenture Trustee,
Defendants-Appellants.
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Appeal from the United States District Court
for the Northern District of Ohio at Toledo.
No. 01-07219/7220/7426—James G. Carr, District Judge.
Argued and Submitted: March 19, 2004
Decided and Filed: May 26, 2004
Before: COLE and GILMAN, Circuit Judges;
SCHWARZER, Senior District Judge.*
_________________
COUNSEL
ARGUED: Gregory W. Happ, Medina, Ohio, for Appellant.
Ericka S. Parker, HUNTER & SCHANK, Toledo, Ohio, for
Appellee. ON BRIEF: David A. Freeburg, MCFADDEN &
ASSOCIATES CO., Cleveland, Ohio, Gregory W. Happ,
Medina, Ohio, John C. Deal, KEGLER, BROWN, HILL &
RITTER, Columbus, Ohio, Robert B. Holman,
MCDONALD, FRANK, HITZMAN & HOLMAN, Oakwood
Village, Ohio, for Appellants. Ericka S. Parker, HUNTER &
SCHANK, Toledo, Ohio, for Appellees. Michael Sikora III,
HAVENS & WILLIS, Columbus, Ohio, for Amicus Curiae
4 In re Huffman, et al. Nos. 02-4468; 03-3174/3175
_________________
OPINION
_________________
WILLIAM W SCHWARZER, Senior District Judge.
These are three consolidated appeals from judgments of the
district court allowing the bankruptcy trustee to avoid
mortgages held by the defendants, First Union Home Equity
Bank and ContiMortgage Corporation, under 11 U.S.C.
§ 544. In In re Rice, No. 02-4468, the district court exercised
its appellate jurisdiction under 28 U.S.C. § 158(a) and
reversed a judgment by the bankruptcy court, which had
rejected the trustee’s challenge to the validity of the
mortgage. In In re Huffman and In re Tucholski, Nos. 03-
3174 and 03-3175, the district court exercised its original
jurisdiction under 28 U.S.C. § 1334(a) and granted summary
judgment upholding the trustee’s challenge to the validity of
the mortgages. We have jurisdiction pursuant to 28 U.S.C.
§ 158(d). Our review is de novo. Lanier v. Bryant, 332 F.3d
999, 1003 (6th Cir. 2003); Investors Credit Corp. v. Batie (In
re Batie), 995 F.2d 85, 88-89 (6th Cir. 1993). For the reasons
stated, we affirm the judgment of the district court.
I.
We must decide whether the trustee was entitled to avoid
the three mortgages under Ohio law. Under the bankruptcy
code, a bankruptcy trustee “may avoid any transfer of
property of the debtor or any obligation incurred by the debtor
that is voidable by . . . a bona fide purchaser.” 11 U.S.C.
§ 544(a)(3); Buzulencia v. TMS Mortgage, Inc. (In re Baker),
300 B.R. 298, 307 (Bankr. N.D. Ohio 2003) (stating that
“[s]ection 544(a) expressly provides that the trustee shall
have, as of the commencement of the case, the rights and
powers of a bona fide purchaser”). Only properly-executed
mortgages take priority over a bona fide purchaser under Ohio
law. OHIO REV. CODE (“ORC”) § 5301.25; Citizens Nat’l
Bank in Zanesville v. Denison, 133 N.E.2d 329, 332-33 (Ohio

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Nos. 02-4468; 03-3174/3175 In re Huffman, et al. 5
1Although the record is not entirely clear on whether one of the
mortgages may have been attested by two witnesses, co unsel for First
Union Home B ank conceded at oral argument that only one witness
attested to the signatures.
2Ohio Revised Code § 530 1.23 4(A) provided :
Any recorded mortgage is irrebuttably presumed to be properly
executed, regardless of any actual or alleged defect in the
witnessing or acknowledgment on the mortgage, unless one of
the following app lies:
(1) the mortgagor, under oath, denies signing the
mortgage;
(2) the mortgagor is not available, but there is other sworn
evidence of a fraud upon the mortgagor.
1956). Former ORC § 5301.01 (repealed Feb. 1, 2002)
required the presence of two witnesses at the signing of any
mortgage. The three mortgages at issue were not properly
witnessed and, thus, under the former law the trustee would
be entitled to avoid them.1 The question is whether
subsequent changes in Ohio law validate the execution of the
mortgages.
A. At the time the mortgages were executed and recorded
during 2000, ORC § 5301.234 (which has since been
repealed) was in effect. The statute provided that a recorded
mortgage was “irrebuttably presumed to be properly
executed, regardless of any actual or alleged defect in the
witnessing” of the mortgage. See § 5301.234(A).2 The
recording of a mortgage was constructive notice to all
persons, including a subsequent bona fide purchaser,
regardless of any defect in witnessing. § 5301.234(C). Thus,
under § 5301.234, the trustee would be unable to avoid the
mortgages.
The district court held that the statute violated the Ohio
Constitution’s one-subject rule, however, and we agree.
Article II, § 15(D) of the Ohio Constitution provides, in
relevant part, that “No bill shall contain more than one
subject, which shall be clearly expressed in its title.” The
6 In re Huffman, et al. Nos. 02-4468; 03-3174/3175
Ohio General Assembly passed ORC § 5301.234 as part of
House Bill No. 163 (1999) (“HB 163”). HB 163 had no title
identifying its subject. The bill contained thirty-one sections
and amended, reenacted or repealed fifty-three provisions of
the Ohio Revised Code relating to a wide range of subjects.
Other than the provision at issue here, none related to real
property. Rather, they involved the following sections of
Ohio’s code: State Government, Counties, Municipal
Corporations, Criminal Procedure, Liquor, Motor Vehicles,
Public Utilities, Roads and Highways and Taxation.
Section 1 of the bill, which enacted § 5301.234, also enacted
or amended provisions dealing with the appointment of peace
officers, Ohio’s public employee retirement and
compensation fund, compensation of county auditors, seizure
of property by law enforcement officials, liquor control
enforcement, privacy of information obtained by the registrar
of motor vehicles, creation of an aviation office in the
Division of Transportation Assistance, and food stamp
trafficking, among others. Thus, § 5301.234 was enacted as
part of a bill that on its face violated the one-subject rule. See
Wasserman v. Household Realty Corp. (In re Barkley), 263
B.R. 553, 558-60 (Bankr. N.D. Ohio 2001) (finding that
§ 5301.234 violates the one-subject rule).
Defendants advance two arguments in support of the
validity of § 5301.234. First, they assert that the one-subject
rule is merely directory and cannot be applied to invalidate a
legislative enactment. They cite Pim v. Nicholson, 6 Ohio St.
176 (1856), where the court stated that “[i]t would be most
mischievous in practice, to make the validity of every law
depend upon the judgment of every judicial tribunal of the
State as to whether an act or bill contained more than one
subject.” Id. at 180. The Ohio Supreme Court qualified the
holding of Pim in State ex rel. Dix v. Celeste, 464 N.E.2d 153
(Ohio 1984), stating that a “gross and fraudulent violation of
[procedural] rules might authorize the court to pronounce a
law unconstitutional.” Id. at 157 (quoting Pim, 6 Ohio St. at
180). Recent decisions, however, appear to have cut the
ground from under Pim. In Simmons-Harris v. Goff, 711

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Nos. 02-4468; 03-3174/3175 In re Huffman, et al. 7
N.E.2d 203 (Ohio 1999), the Ohio Supreme Court applied the
one-subject rule to invalidate a school voucher program
attached to an appropriations bill upon finding that there was
a “blatant disunity between topics and no rational reason for
their combination [so that] it may be inferred that the bill is
the result of logrolling.” Id. at 216 (quoting Hoover v.
Franklin County Bd. of Comm’rs, 482 N.E.2d 575, 580 (Ohio
1985)). While the Simmons-Harris court stated that it did not
overrule Dix, but only modified it, id., it is clear that the Ohio
Supreme Court no longer treats the one-subject rule as merely
directory. In State ex rel. Ohio Acad. of Trial Lawyers v.
Sheward, 715 N.E.2d 1062 (Ohio 1999), the Court’s most
recent case on this subject, the Court struck down Ohio’s
comprehensive tort reform legislation in toto, reasoning:
[T]his court has been emphatic about its reluctance to
interfere or become entangled with the legislative process
. . . . On the other hand, we have been equally emphatic
about not extending this reluctance to impede the
legislative process so far as to negate the one-subject
provision of Section 15(D), Article II. . . . With these
principles in mind, we have adopted the position that the
“one-subject provision is not directed at plurality but at
disunity in subject matter.” . . . Undoubtedly,
Am.Sub.S.B. No. 350 embraces a multitude of topics.
The bill affects some eighteen different titles, thirty-eight
different chapters, and over one hundred different
sections of the Revised Code, as well as procedural and
evidentiary rules and hitherto uncodified common law.
The pivotal question is whether these various topics
share a common purpose or relationship, i.e., whether
they unite to form a single subject for purposes of
Section 15(D), Article II of the Ohio Constitution. . . .
With all due respect and deference to the General
Assembly, it is simply impossible to uphold the
constitutionality of Am.Sub.H.B. No. 350 under the one-
subject provision of Section 15(D), Article II of the Ohio
Constitution.
8 In re Huffman, et al. Nos. 02-4468; 03-3174/3175
3This court must decide the question of § 5301.234’s validity by
predicting how the Ohio Supreme Court would decide it. James v. Meow
Media, Inc., 300 F.3d 683 , 689 (6th C ir. 200 2).
Id. at 1099-1100 (citations omitted). So here, the fifty-three
provisions of HB 163 lack any semblance of common
purpose or relationship. The reasoning of the Ohio Supreme
Court compels the conclusion that it would hold § 5301.234
to be unconstitutional.3
Defendants’ second argument is that the Ohio Supreme
Court has impliedly held ORC § 5301.234 to be
constitutional. They rely on In re Stewart, 771 N.E.2d 250
(Ohio 2002), in which the court responded to the following
question certified by the Bankruptcy Appellate Panel for the
Sixth Circuit: “Can Ohio Revised Code § 5301.234 be
applied to presume the validity of a mortgage in a bankruptcy
case filed after the effective date of the statute, when the
mortgage at issue in the bankruptcy case was recorded before
the statute’s effective date?” Id. at 250-51. The court
responded to the certified question in the affirmative. Id. at
251.
Defendants argue that this response implies that the statute
is constitutional on the theory that, to determine that the
statute operated retroactively, the court necessarily had to find
that it was valid. This contention is unavailing. The
Bankruptcy Appellate Panel’s order certifying the question to
the Supreme Court stated that “the parties in the captioned
cases did not raise the constitutionality issue. The question
being certified by the Panel assumes, without deciding, that
the statute is constitutional and raises the issue of how the
statute is to be applied under Ohio law.” The order also noted
that the constitutional issue had been separately certified in

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Nos. 02-4468; 03-3174/3175 In re Huffman, et al. 9
4The Supreme Court did not answer the question certified in that
proceeding. Hu nter v. First Union Home Equity Bank, 759 N.E.2d 784
(Ohio 200 1).
5Ohio courts recognize an exception to this rule “in those case s in
which contractual rights have arisen or a party has acquired vested rights
under prior law.” Roberts v. Treasurer, 770 N.E.2d 1085, 1091 (Ohio Ct.
App. 2001). That exception is not applicable here b ecause § 5301 .234 did
not create a vested right in Defendants. “[A] fundamental distinction
exists between a law changing accrued substantive rights and a law which
changes the remedy for the enforcement of those rights.” Weil v.
Taxicabs of Cincinnati, Inc., 39 N.E.2d 148, 151 (Ohio 1942). A law
changes substantive rights when it “creates or imposes an obligation
where none existed before,” whereas remedial provisions “have to do with
the methods and procedure by which rights are recognized, protected and
enforced, not with the rights themselves.” Id.; see also Bielat v. Bielat,
721 N.E .2d 2 8, 33 -34 (O hio 2000 ). Sectio n 5301.2 34 was rem edial: it did
not grant Defend ants any rights, but rather changed the quantum of proof
required to recognize, protect and enforce the rights created by the
mortgage contra cts. Cf. In re Stew art, 771 N.E.2d at 250-51 (advising
that § 53 01.2 234 can “be app lied to p resum e the validity of a mortgage
in a bankrup tcy case filed after the effective date of the statute, when the
mortgage at issue in the bankruptcy case was recorded before the statute’s
effective date”).
another proceeding.4 Thus, we cannot say that the Ohio
Supreme Court passed on the constitutionality question.
Section 5301.234 being unconstitutional, it had no force at
the commencement of the cases and could not bar the trustee
from avoiding the mortgages. Rossborough Mfg. Co. v.
Trimble, 301 F.3d 482, 491 (6th Cir. 2002) (“The rule in Ohio
has long been that when a statute is held to have been
unconstitutional as of its enactment, that statute is void
ab initio.”); see also City of Middletown v. Ferguson, 495
N.E.2d 380, 388 (Ohio 1986) (“‘An unconstitutional act is not
a law; it confers no rights; it imposes no duties; it affords no
protection; it creates no office; it is, in legal contemplation, as
inoperative as though it had never been passed.’”) (quoting
Norton v. Shelby County, 118 U.S. 425, 442 (1886)).5
10 In re Huffman, et al. Nos. 02-4468; 03-3174/3175
Therefore, the law in effect at the time these cases were
commenced was former § 5301.01, which required the
presence of two witnesses at the signing of the mortgages.
B. A question remains, however, whether the amended
version of ORC § 5301.01 saves the mortgages. In 2001,
after the filing of the complaints in the case at bar, the Ohio
legislature amended § 5301.01 by adding a savings provision.
Under that provision, a mortgage executed prior to the
amendment’s effective date is presumed valid even if not
attested by two witnesses, unless the mortgagor’s signature
thereon was obtained by fraud. § 5301.01(B)(1)(a).
Moreover, “[t]he recording of the [mortgage] in the office of
the county recorder . . . is constructive notice of the
instrument to all persons.” § 5301.01(B)(1)(b).
The provision, on its face, appears to save the mortgages.
But the amended statute, though retroactive by its terms,
cannot be applied retroactively to impair the trustee’s vested
rights. The statute specifically protects vested rights;
§ 5301.01(B)(2) states that “[d]ivision (B)(1) of this section
does not affect any accrued substantive rights or vested rights
that came into existence prior to the effective date of this
amendment.” Because § 5301.234 was unconstitutional, the
original version of § 5301.01 was the only valid law in effect
at the time the debtors’ petitions were filed, and its provisions
(requiring two witnesses) controlled. As the trustee was
entitled to avoid the mortgages under former § 5301.01, her
rights vested, and by the terms of § 5301.01(B)(2) they are
not affected by the subsequent amendment. See McClatchey
v. Altegra Credit Co. (In re Carte), 303 B.R. 338, 342 (Bankr.
S.D. Ohio 2003); Baker, 300 B.R. at 307-308 (“Section
544(a) vests a trustee’s rights as a bona fide purchaser of real
property as of the commencement of the case.”). Amended
§ 5301.01, therefore, does not divest the trustee of the rights
she had as a bona fide purchaser under the law governing at
the commencement of these cases, and she was entitled to
avoid the mortgages.

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Nos. 02-4468; 03-3174/3175 In re Huffman, et al. 11
II.
Defendants also argue that we should reverse the district
court’s ruling because it violated the Eleventh Amendment of
the United States Constitution. This contention is patently
meritless. The Eleventh Amendment protects a state from
actions seeking relief from the state. See Doe v. Wigginton,
21 F.3d 733, 736 (6th Cir. 1994); see also Edelman v. Jordan,
415 U.S. 651, 662-63 (1974). Although the complaints
named the Ohio Attorney General as a defendant, they sought
no relief from or against the state, but only against the
mortgage holders.
CONCLUSION
For the reasons stated, the judgments of the district court
are AFFIRMED.

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