COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 77264 KEYBANK NATIONAL ASSOCIATION : : Plaintiff-Appellee : : JOURNAL ENTRY -vs- : AND : OPINION SUSAN B. COLLINS, ET AL. : : Defendants-Appellants : DATE OF ANNOUNCEMENT OF DECISION: NOVEMBER 9, 2000 CHARACTER OF PROCEEDING: CIVIL APPEAL FROM THE COMMON PLEAS COURT CASE NO. CV-347809 JUDGMENT: REVERSED AND REMANDED DATE OF JOURNALIZATION: APPEARANCES: For Plaintiff-Appellee: RICHARD L. McNELLIE (#0032130) ERIC T. DEIGHTON (#0071456) Carlisle, McNellie & Rini Co. 25200 Chagrin Blvd., Suite 240 Cleveland, Ohio 44122 For Defendants-Appellants: DONALD A. WOCHNA (#0025193) 1585 King Road Hinckley, Ohio 44233 SPELLACY, J.: Defendants-appellants Susan B. Collins, A.K.A. Susan B. de Resendiz and Victor M. Resendiz ( appellants ) appeal from the -2- trial court's dismissal of their counterclaims against plaintiff- appellee Keybank National Association ( Keybank ). Appellants assign the following errors for review: I. THE TRIAL COURT ERRED IN ITS OCTOBER 18, 1999 JUDGMENT ORDER, GRANTING PLAINTIFF'S MOTION TO DISMISS, WHEN IT BASED ITS JUDGMENT, IN PART, ON DEFENDANT'S FAILURE TO ASSERT A COUNTERCLAIM FOR CONVERSION BECAUSE, AS A MATTER OF LAW, DEFENDANT HAD NO CONVERSION CLAIM AT THE TIME SHE FILED HER COUNTERCLAIM. II. THE TRIAL COURT ERRED, AS A MATTER OF LAW, IN ITS OCTOBER 18, 1999 JUDGMENT ORDER, GRANTING PLAINTIFF'S MOTION TO DISMISS, WHEN IT MISTAKENLY RELIED UPON PLAINTIFF'S REPRESENTATIONS THAT THE STATUTES CITED IN DEFENDANT'S COUNTERCLAIM, TEXAS REVISED CODE SECTION 5069-11.02(G) & (H), 5069-11.04(B) AND 5069.11.05(I), HAD BEEN REPEALED, WHEN THE STATUTES HAD MERELY BEEN RECODIFIED. III. THE TRIAL COURT ERRED BY FAILING TO PROVIDE APPELLANT WITH NOTICE THAT THE TRIAL COURT HAD WITHDRAWN THE REFERENCE OF THE FORECLOSURE MATTER WITHIN FROM THE MAGISTRATE, AND THAT THE JUDGMENT ORDER OF OCTOBER 18, 1999, WAS THE ORDER OF THE TRIAL COURT, RATHER THAN THE MAGISTRATE'S DECISION. Finding the appeal to have merit, the judgment of the trial court is reversed and remanded. I. In June of 1993, appellant Susan Collins executed an adjustable rate promissory note with Society Mortgage Company, refinancing her residence in Shaker Heights. Society Mortgage Company became Keybank. Susan Collins borrowed four hundred twenty-five thousand dollars ($425,000.00) at a yearly interest rate of 4.5000%. The contract provided that the interest rate -3- could change on the first day of July of 1994, and on that day each year thereafter. The new rate would go into effect beginning on the first monthly payment date after the change date. Keybank adjusted the interest rate but did so in September of each year, with the monthly payment changing in October. On August 29, 1996, Susan Collins entered into a second mortgage on the property with National City Bank in the amount of two hundred thousand dollars ($200,000.00). After the execution of the Keybank note, Susan Collins divorced. Her former husband quitclaimed his interest in the property. Susan Collins subsequently remarried and moved to Texas. After July of 1997, Susan Collins apparently defaulted on the Keybank mortgage note. On January 27, 1998, Keybank filed a complaint, asking for foreclosure in the amount of four hundred five thousand eight hundred eighteen dollars and thirty-eight cents ($405,818.38), plus interest. In the complaint, Keybank stated that the interest rate could be adjusted in September, in accordance with the terms of the note. On April 13, 1998, appellants filed their answer and counterclaim to the complaint. As an affirmative defense, appellants argued that Keybank charged and received interest in excess of that permitted by the note and mortgage. Appellants' counterclaim cited to Texas Revised Civil Statutes Annotated Articles 5069-11.02(g) and (h), 5069-11.04(b), and 5069-11.05(j). Appellants claimed to be entitled to the penalties and remedies available under Texas Revised Civil Statutes Annotated Article -4- 5069-11.09 and 11.10. Appellants further contended Keybank violated Texas Business and Commerce Code Section 17.41 et seq. ( DTPA ), or specifically DTPA Section 17.46(b)(5) and (12). They sought the remedies available under DTPA. On June 3, 1998, appellants filed a motion for summary judgment. In their motion, appellants asserted Keybank never sent any notice of a rate change prior to July 1, 1994, or any July 1st thereafter. Appellants argued that any other change date did not comply with the terms of the contract and, as such, was void. Based upon the contention that the interest rate remained 4.5000% due to Keybank's failure to change the rate in accordance with the terms of the note, appellants stated they overpaid the note and were not in default. On July 10, 1998, Keybank dismissed its complaint pursuant to Civ.R. 41(A)(1). Susan Collins sold her home in 1998 for five hundred seventy-five thousand dollars ($575,000.00). Keybank applied the proceeds to satisfy the note and mortgage. Appellants filed their intention to proceed with the counterclaims. Appellants stated they anticipated modifying their motion for summary judgment to add claims against Keybank. Appellants refiled their motion for summary judgment. Appellants reiterated their argument with regard to the change date set forth in the note. Susan Collins admitted receiving letters from Keybank each year starting in 1994. The interest rate changed each September 1st. The letters stated the changed interest rate and adjusted monthly payments went into effect each October. Susan -5- Collins further charged that Keybank's actions following the sale of the residence caused her economic harm. Collins had arranged with National City to refinance that mortgage with the proceeds from the sale after paying the principal and interest owed to Keybank. National City agreed to the refinancing as long as the unpaid amount did not exceed sixty thousand dollars ($60,000.00). Appellants argued that Keybank's improper calculation of the interest rates led to it claiming too much of the proceeds from the sale. If the amount owed Keybank was calculated according to Collins' contention that the rate never changed, there would have been sufficient funds to conclude the transaction with National City Bank. Collins withdrew funds from her retirement accounts to pay National City Bank. The withdrawal triggered tax penalties and income taxes. Keybank responded by stating that the July 1 date used in the note changed when the closing was delayed. Because the loan did not close until August 10, 1993, the terms of the loan began September 1, 1993. Therefore, the yearly interest changes could be made on September 1st of each year. Keybank admitted that the blanks in the promissory note amendment were never filled in to reflect the new dates. Keybank also argued that the issue could not be raised in a motion for summary judgment but should have been brought as a compulsory counterclaim. Keybank filed a motion to dismiss appellants' counterclaims. Keybank asserted Texas Revised Civil Statutes Annotated Article 5069-11.09, 11.10, and 5069-11.02(g) were repealed effective -6- September 1, 1997. Keybank pointed out that appellants filed their answer nearly eight months after the statutes were repealed. Keybank further argued that financial institutions probably were not liable under DTPA. Keybank also stated appellants would not be consumers under DTPA. Appellants responded by arguing that the statutes in question were recodified and not repealed. The trial court granted Keybank's motion to dismiss. The trial court found the Texas statutes had been repealed and that appellants were not consumers under DTPA. The trial court stated that appellants' counterclaim did not state a claim for conversion. II. For purposes of this appeal, appellants' first and second assignments of error will be addressed in reverse order. In their second assignment of error, appellants contend the trial court erred by dismissing its counterclaims based upon the Texas statutes. The trial court found the statutes in question had been repealed prior to the filing of appellants' counterclaims. Appellants argue the statutes were recodified and not repealed. When presented with a Civ.R. 12(B)(1) motion to dismiss for lack of subject matter jurisdiction, a trial court is not limited to the allegations set forth in the complaint but may consider any pertinent matter in making its decision. Howard v. Covenant Apostolic Church, Inc. (1997), 124 Ohio App.3d 24. The issue for the trial court to determine is whether the complaint alleges any cause of action cognizable in the forum. Id. Appellate review of a trial court's decision to dismiss a case pursuant to Civ.R. -7- 12(B)(1) is de novo. Shockey v. Fouty (1995), 106 Ohio App.3d 420, 424. A review of the statutes in question shows that the statutes were listed as having been repealed effective September 1, 1997. However, the historical and statutory notes state that the Finance Code was adopted instead. Chapter 392, Subchapter A of the Texas Finance Code reflects the changes made on September 1, 1997. The language in question is the same as that used in the repealed sections relied upon by appellants in their counterclaims. It appears that Texas replaced the repealed statutes with the provisions set forth in the Finance Code. Although appellants never amended their counterclaims to reflect the correct Texas law at issue, the cause of action would be cognizable in the trial court. Civ.R. 8(A) only requires a short, plain statement of the claim. Keybank was aware of the gist of the counterclaims. The trial court erred by dismissing the counterclaims based upon the repeal of the Texas statutes. The trial court also found that appellants were not consumers under the applicable Texas code sections. Keybank filed a Civ.R. 12(B)(1) motion which asserts the trial court lacks subject matter jurisdiction over the claim. The determination regarding whether appellants qualify as consumers does not involve a question of subject matter jurisdiction. As such, the trial court could not dismiss the counterclaims on this basis. Appellants' second assignment of error has merit. III. -8- In their first assignment of error, appellants argue the trial court erred by dismissing their counterclaim for conversion. Appellants aver the conversion claim against Keybank arose after the filing of the complaint. Appellants contend the conversion claim was not a compulsory counterclaim under Civ.R. 13(A). Appellants asserted the conversion claim in the second motion for summary judgment, filed after Keybank dismissed its complaint. Appellants never amended their counterclaim to add a cause of action for conversion. Civ.R. 13(A) provides: Compulsory counterclaims. A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. But the pleader need not state the claim if (1) at the time the action was commenced the claim was the subject of another pending action or (2) the opposing party brought suit upon his claim by attachment or other process by which the court did not acquire jurisdiction to render a personal judgment on that claim, and the pleader is not stating any counterclaim under this Rule 13. In order to be a compulsory counterclaim under Civ.R. 13(A), the claim must exist at the time the pleading is served and the claim has to arise out of the transaction or occurrence that is the subject matter of the opposing claim. See Rettig Enterprises, Inc. v. Koehler (1994), 68 Ohio St.3d 274. A compulsory counterclaim must be asserted in the original lawsuit, or it will be thereafter barred by res judicata once the original action reaches a final -9- judgment. Id. See also Quintus v. McClure (1987), 41 Ohio App.3d 402, 403. Keybank dismissed its complaint against appellants. In Climaco, Seminatore, Delligatti & Hollenbaugh v. Carter (1995), 100 Ohio App.3d 313, the Franklin County Court of Appeals noted that after a voluntary dismissal, an action is treated as if it had never been commenced. A voluntary dismissal is not a disposition of the case on its merits so that res judicata would not bar a second action. This court already has determined the trial court erred by dismissing appellants' counterclaims based upon the Texas statutes. Appellants never bothered to amend their complaint to bring the conversion claim against Keybank. Because the cause of action was not pled, the trial court could not render a judgment on the claim. As this court observed in ATAC Corp. v. Lindsay (Jan. 16, 1997), Cuyahoga App. Nos. 70293, 70294, 70572, unreported, the doctrine of res judicata only acts as a bar when there has been a final judgment. When the action still is pending, a party may amend his pleading with leave of court. See also Civ.R. 13(E) and (F). After this case is remanded to the trial court, appellants may ask the trial court for leave to amend their pleading to bring the conversion claim. Appellants' first assignment of error is well-taken. IV. Based upon the disposition of appellants' first and second assignments of error, the third assignment of error is moot. -10- Judgment reversed and remanded. The judgment of the trial court is reversed and remanded for further proceedings consistent with this Journal Entry and Opinion. It is ordered that appellants recover of appellee their costs herein taxed. It is ordered that a special mandate issue out of this court directing the Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. -11- ANN DYKE, ADM.J. and PATRICIA A. BLACKMON, J. CONCUR. LEO M. SPELLACY JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 22. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E)unless a motion for reconsideration with supporting brief, per App.R.26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the clerk per App.R. 22(E). See, also S.Ct.Prac.R. II, Section 2(A)(1). .