Opinion
No. CV09-6000935S
April 9, 2011
MEMORANDUM OF DECISION
The plaintiff is a foreclosing bank. The two defendants who have appeared by counsel are the subjects of the plaintiff's motion for default for failure to disclose a valid defense (#110). The mortgagor of the property and all other tenant defendants have previously been defaulted for failure to appear. At issue is the efficacy of the appearing defendants' disclosure of defense (#105)
On December 8, 2009, the plaintiff, Banco Popular, North America (the bank), filed an action in strict foreclosure against Yi Guan Ren and other defendants. In the complaint, the plaintiff alleges the following facts. Ren, by way of a promissory note dated June 13, 2008, promised to pay the bank $216,000 plus interest. The note was secured by a mortgage deed on real property at 26 Bellevue Street in Willimantic. The mortgage was recorded on June 17, 2008 in the Windham Land Records. The bank is the owner and holder of the note and mortgage. Since Ren has failed to pay the note, he is in default. The bank has exercised its option under the note and mortgage to declare the entire principal amount outstanding and accrued interest thereon due and payable in full. Demand has been made on Ren. Presently, the amount due is greater than $214,000. In addition, there are encumbrances on the property, which are prior in right to the mortgage. The bank is seeking strict foreclosure, immediate possession, a deficiency judgment against Ren and the costs of this action. Also, on December 8, 2009, the bank filed a notice of lis pendens on the subject property.
The defendants include: Sandy Lunn, Michael Bentley, Alexander Cuevas, Gabriela Salgado Quiroz, Filipa Guiterrez and Ana Moreno. All of whom and Guan were served with process on December 3, 2009. On January 4, 2010, a motion for default for failure to appear was filed against Ren, Lunn, Bentley, Cuevas and Guiterrez, which was granted by the court on January 11, 2010.
On January 4, 2010, an appearance was entered for Quiroz and Moreno. On that same date, pursuant to Practice Book § 13-19, the bank made a demand for disclosure of defense to the foreclosure action. The defendants on January 8, 2010 replied filing their statement of a defense. They claimed that under the federal Protecting Tenants at Foreclosure Act of 2009 (the act), Pub.L. No. 09-111 to 09-122 (codified as 7 U.S.C. §§ 701 et seq. (2009)), they are not required to vacate their tenancy until ninety days after having received notice from the successor in interest to the foreclosed property.
These two defendants will be referred to collectively as "the defendants."
The bank moved for a default judgment on January 12, 2010 on the ground that the defendants failed to disclose a valid defense. On January 21, 2010, the defendants filed an objection to the motion for default claiming that they had complied with Practice Book § 13-19 and filed, what they believed to be, a valid defense. The bank filed a reply memorandum of law on January 27, 2010. The matter was heard at short calendar on February 8, 2010.
Section 13-19 of the rules of practice provides: "In any action to foreclose or discharge any mortgage . . . in which there is an appearance by an attorney for any defendant, the plaintiff may at any time file and serve . . . a written demand that such attorney present to the court, to become a part of the file in such case, a writing signed by the attorney stating whether he or she has reason to believe and does believe that there exists a bona fide defense to the plaintiff's action and whether such defense will be made, together with a general statement of the nature or substance of such defense. If the defendant fails to disclose a defense within five days of the filing of such demand, the plaintiff may file a written motion that a default be entered against the defendant by reason of the failure of the defendant to disclose a defense . . .The bank argues that the defendants, who are tenants of the subject property, "have not set forth a valid defense to a foreclosure action [and] [that] [t]he sole purpose for filing their [o]bjection was to delay the foreclosure as it fails to suggest a meritorious defense. As such, the [p]laintiff's [m]otion for [d]efault should be granted." The bank further argues that under the act "if and when the [b]ank takes title to the [m]ortaged [p]remises, [t]enants have ninety (90) days to vacate the property once they [have] receive[d] [n]otice pursuant to [§ ]701(a)(1). This, however, on its face is not a defense to a foreclosure action, as [§ ]701(a)(1) only takes effect if the [b]ank takes title to the [m]ortgaged [p]remises."
The defendants counter that their disclosure of defense meets the "general statement of the nature or substance of the defense" that is required under § 13-19. The defendants maintain that the plaintiff is not permitted to test the legal sufficiency of their defense at this stage by way of a motion for default but must do so by a motion to strike or, after the pleadings are closed, by a motion for summary judgment.
"One of the purposes of [§ 13-19] is to enable the plaintiff, at an early stage of the proceedings, to ascertain whether a defense is in good faith claimed to exist, and is honestly intended to be made, or whether it is a mere sham defense to be interposed merely for delay. To this end it provides a speedy, informal, and summary way of probing the conscience of the counsel for the defendant with respect to this matter, by compelling him to state . . . to the court his belief that a bona fide defense exists, and will be made in good faith. He is required to state whether he has satisfactory reasons to believe, and does in truth believe these things." (Internal quotation marks omitted.) Jennings v. Parsons, 71 Conn. 413, 416-17, 42 A. 76 (1899).
"In Jennings v. Parsons . . . the court . . . held that testing the legal sufficiency of the disclosed defense is not appropriate at this state . . . Clearly Practice Book [§ 13-19] does not expressly confer any such power [to pass upon the legal sufficiency of the proposed defense and to render judgment in favor of the plaintiff, if the court found the defense to be legally insufficient], nor . . . does [it do] so by implication. It is evident from the language of the rule that the chief thing to be determined in a proceeding under it is the real belief of the counsel and his good faith in this matter, rather than the validity or sufficiency in point of law or of fact of the defense stated . . . He is . . . required to state the nature or substance of the defense, on account of its bearing upon the question of the reasonableness of his belief and the question of his good faith in this matter, and not for the purpose of enabling the court to pass finally upon the truth or the legal sufficiency or availability of the stated defense . . . In a proceeding under [§ 13-19] the nature or substance of the defense stated should be regarded chiefly as bearing upon the real belief, good faith and intention of the counsel making the statement. If he has complied with the rule, that is, has disclosed as required, and satisfied the court of his belief and good faith and intention to make the defense, then the truth or the legal sufficiency of it should be left to be tried and determined in the ordinary and regular way . . ." (Citation omitted; internal quotation marks omitted.) Cardello v. Brennan, Superior Court, judicial district of Litchfield, Docket No. 058632 (May 29, 1992, Pickett, J.) ( 6 Conn. L. Rptr. 492, 493). "[I]]f the disclosed defense in a given case is clearly and palpably untruthful, or irrelevant, or utterly frivolous, it would indicate bad faith on the part of the counsel, and might warrant the court in holding that it was not satisfied either that the attorney believed that a bona fide defense existed, or that he intended to make it . . ." (Internal quotation marks omitted.) Burns v. Bennett, 220 Conn. 162, 167 n. 7, 595 A.2d 877 (1991).
The bank relies on Tolland Bank v. Larson, 28 Conn.App. 332, 612 A.2d 778 (1992) for the proposition that where a defendant files an answer as a delay tactic after a default judgment entered against him, this is a nonmeritorious defense and insufficient to open that judgment. Therein, the named defendant, Robert Larson, was defaulted for failure to appear. Id., 333. The plaintiff bank filed a motion for judgment of strict foreclosure. Id. The defendant then filed an appearance. Id. On the date on which the motion for judgment was scheduled for a hearing, the defendant filed an answer to the complaint in which he claimed to have "insufficient knowledge or information on which to form a belief as to each and every paragraph." Id., 333-34. The defendant further claimed that the court should have "set aside the default for failure to plead because he filed an answer before judgment was rendered, and, that, therefore, judgment could not have been rendered." Id., 334. The Appellate Court stated that "[i]t is obvious that unless the defendant [was] incapacitated or otherwise unavailable to his attorney, such information [should have been] within his knowledge so as to require an admission or denial." Id., 336. The court determined that the sole purpose for the answer was to "thwart the orderly progress of [the] case" or for "delay." Id., 335-37. In upholding the decision of the trial court, the Appellate Court concluded that the court had acted reasonably since the defendant was given "full opportunity to participate in the proceedings" and there was "nothing in the record to suggest that a meritorious defense [existed]." Id.
The facts in the present case are distinguishable from the Tolland Bank case. Herein, the defendants state in their disclosure of defense that they "believe there exists a bona fide defense to the [bank's] action" and will "assert a defense under [the Act]. [That] [u]nder the Act, tenants in foreclosure may be required to vacate after title has been transferred to a successor in interest and the successor in interest has provided the tenant with the 90 day notice required by the Act. As title has not been transferred at this time, any action by the [bank] to remove them from the premises is premature." There is no indication of bad faith on the part of defense counsel to indicate that the disclosed defense is "clearly and palpably untruthful, or irrelevant, or utterly frivolous." The defendants have timely provided disclosure of their defense in what they characterize to be a good faith statement. The sufficiency of their defense is not at issue at this time. As noted by the court in Geha v. Lake Road Trust, LLC, Superior Court, judicial district of Windham, Docket No. CV 03 0071065 (May 25, 2004, Foley, J.), "[t]he defendants . . . are not required to specifically state their defense. They are only required to give the plaintiff timely notice of their defenses in general terms and in an informal manner."
The plaintiff's motion for default (#110) is, therefore, denied.