Background
In August 2021, the City of Columbus filed a petition for appropriation under R.C. Chapter 163, seeking to appropriate a fee simple interest and temporary easements for the Hudson Street Sidewalks Project. The petition named nine entities with potential interests in the property, including Ohio Wholesale Auto Sales (fee simple owner) and Wiltshire Capital Partners, LP (mortgage of record). By April 2022, only Wiltshire, Ohio Wholesale Auto Sales, and the Franklin County Treasurer remained as respondents.
The trial court initially scheduled an evidentiary hearing to determine Wiltshire’s standing, but later vacated that order and directed the parties to submit briefing instead. Wiltshire filed an untimely brief, which the court refused to consider. On July 24, 2023, the trial court ruled that because Wiltshire’s 2017 foreclosure action involving the same mortgage had been dismissed for failure to prosecute, res judicata barred Wiltshire from asserting any claim based on the mortgage. The court declared that Wiltshire lacked standing and was barred from presenting claims. Wiltshire appealed, but the Tenth District dismissed that appeal in 2024 for lack of a final, appealable order, though it noted that the trial court’s standing analysis appeared contrary to general notions of standing because the City had named Wiltshire as a defendant.
On April 2, 2025, the trial court reinstated the matter to active status and scheduled a status conference. At that conference, the City announced a settlement with Ohio Wholesale Auto Sales, but Wiltshire objected based on its asserted mortgage interest. On May 2, 2025, the trial court filed an entry noting its prior determination that Wiltshire’s rights had been foreclosed by the earlier dismissal. The court also agreed with Ohio Wholesale Auto Sales’ contention that Wiltshire was precluded from asserting its alleged interest because of its failure to set forth an interest and apparent assignment of the underlying note. The court then filed an agreed judgment entry on settlement and an entry vesting title in the City.
The Court’s Holding
The Tenth District sustained Wiltshire’s first, second, fourth, and fifth assignments of error, which collectively challenged the trial court’s determination that res judicata barred Wiltshire from asserting its mortgage interest. The court held that the 2018 dismissal of Wiltshire’s foreclosure action under Civ.R. 41(B)(1) for failure to prosecute was not an adjudication on the merits because Wiltshire had failed to obtain service of process on Ohio Wholesale Auto Sales and most other defendants.
Relying on the Ohio Supreme Court’s decision in Thomas v. Freeman, the court explained that where a plaintiff has not acquired service on the defendant, a dismissal characterized as failure to prosecute under Civ.R. 41(B)(1) operates as a dismissal otherwise than on the merits under Civ.R. 41(B)(4). Although service had been perfected on the Franklin County Treasurer, that did not give the court personal jurisdiction over Ohio Wholesale Auto Sales or the other unserved defendants. Therefore, the dismissal was without prejudice, and the trial court erred in precluding Wiltshire from asserting its claim in the appropriation action.
The court expressly declined to make any finding regarding the merits of Wiltshire’s claim or whether it holds a valid and enforceable mortgage interest. Because the court reversed on the first, second, fourth, and fifth assignments, it found Wiltshire’s third and sixth assignments of error—challenging the denial of leave to file a brief and the consideration of an oral motion for distribution at a status conference—were moot.
Key Takeaways
- A Civ.R. 41(B)(1) dismissal for failure to prosecute operates as otherwise than on the merits when the plaintiff failed to obtain service on defendants, even if service was perfected on one defendant.
- A mortgage holder named as a defendant in an appropriation action has standing to participate, and the question of whether res judicata bars its claim is not a standing issue.
- Appellate courts will not reach the merits of a mortgage’s validity when reversing on procedural grounds; the mortgagee must be given the opportunity to assert and prove its claim on remand.
Why It Matters
This decision clarifies the preclusive effect of Civ.R. 41(B)(1) dismissals in Ohio, confirming that such dismissals lack preclusive effect when service was never obtained on the relevant defendants. The ruling protects the rights of lienholders and mortgagees to participate in eminent domain proceedings affecting their security interests, ensuring they cannot be shut out based on prior procedural dismissals that did not reach the merits.
The reversal restores Wiltshire’s ability to assert its claimed mortgage interest in the appropriation action, though the court made no determination regarding the validity or enforceability of that interest. On remand, the trial court must allow Wiltshire to present its claim and argue the related validity and enforceability issues before any distribution of proceeds or final vesting of title can occur.