Background
Talismanic Properties, LLC, the developer of a planned residential community, filed a complaint for cognovit judgment against Cedar Grove of Tipp City Homeowner’s Association, Inc. based on a promissory note for $119,542.19. The promissory note contained a warrant of attorney authorizing a confession of judgment. On the same day the complaint was filed, May 8, 2025, the trial court entered judgment in favor of Talismanic for the full amount plus interest and late charges.
On the day before a scheduled judgment debtor exam, Cedar Grove filed a Civ.R. 60(B) motion for relief from judgment. Cedar Grove asserted meritorious defenses including the invalidity of the promissory note, apparent self-dealing that resulted in the note’s execution, and violations of Cedar Grove’s bylaws. The motion was supported by an affidavit from the current board president who stated that the promissory note was executed by a prior board member who was the sole member of Talismanic, creating a self-dealing conflict. The trial court granted Civ.R. 60(B) relief, and Talismanic appealed.
The Court’s Holding
The Second District affirmed the grant of Civ.R. 60(B) relief. The court applied the three-part test for Civ.R. 60(B) relief from a cognovit judgment: (1) the movant must have a meritorious defense, (2) the movant must be entitled to relief under one of the grounds stated in Civ.R. 60(B)(1)-(5), and (3) the motion must be made within a reasonable time. The court found that Cedar Grove satisfied all three requirements.
On meritorious defenses, the court held that the allegations of self-dealing — where the person who signed the note on behalf of Cedar Grove was the sole member of the entity seeking to enforce it — and violations of the HOA’s bylaws regarding authorization of debt created genuine questions that warranted further litigation. The court also found the motion was timely, having been filed less than 90 days after the judgment, and that Cedar Grove was entitled to relief under Civ.R. 60(B)(5) (any other reason justifying relief) given the circumstances surrounding the cognovit judgment.
Key Takeaways
- Civ.R. 60(B) relief from a cognovit judgment requires a meritorious defense, entitlement to relief under a specified ground, and timeliness — all three prongs must be satisfied.
- Self-dealing allegations — where the person executing a promissory note on behalf of the debtor is also the creditor — constitute a meritorious defense sufficient to warrant Civ.R. 60(B) relief.
- A Civ.R. 60(B) motion filed within 90 days of a cognovit judgment is generally considered timely.
Why It Matters
This decision is particularly relevant for Ohio real estate and HOA practitioners. It highlights the vulnerability of cognovit judgments when the underlying transaction involves potential self-dealing by an insider who controls both sides of the transaction. Developers who also serve as HOA board members should exercise extreme caution when executing financial instruments between their development companies and the associations they control. The opinion also provides a useful roadmap for parties seeking to challenge cognovit judgments through the Civ.R. 60(B) framework.