Opinion
No. CV-09-5005940S
October 28, 2010
MEMORANDUM OF DECISION RE ENSIGN'S MOTION TO DISMISS (#108)
One of the defendants, Joline A. Ensign, moves to dismiss the complaint for lack of subject matter jurisdiction. The plaintiff, Bank of America, NA, which seeks to foreclose a mortgage on property owned by Ensign, opposes the motion. The plaintiff asserts that it is the holder of a note executed by Ensign that is secured by a mortgage on her property. The plaintiff also asserts that the mortgage has been assigned to it. Ensign bases her motion to dismiss on the ground that the plaintiff lacks standing because it has not recorded the assignment of the mortgage. For the following reasons, Ensign's motion to dismiss is denied.
FACTS
The complaint alleges that Ensign owns real property in Washington Depot, Connecticut. The plaintiff claims that on January 4, 2007, Ensign signed a note in which she promised to repay Washington Mutual Bank for a loan in the amount of $680,000. On the same date, Ensign allegedly executed a mortgage on the real property and delivered it to Washington Mutual Bank. The complaint alleges that "[s]aid Mortgage was assigned to Bank of America, NA by virtue of an Assignment of Mortgage to be recorded on the Washington Depot Land Records. The Plaintiff, Bank of America, NA, is the holder of said Note and Mortgage." (Emphasis added.)
JP Morgan Chase Bank National Association is also named as a defendant by virtue of subsequent interest in the property, but it is nonappearing.
By motion dated June 24, 2009, Ensign moves to dismiss the complaint, asserting that the plaintiff is seeking to foreclose a mortgage that it does not own. Ensign's theory is based on her belief that this court lacks subject matter jurisdiction solely because the action was instituted without the assignment of mortgage having first been recorded on the Washington Depot land records. This matter was heard before the court on July 26, 2010.
DISCUSSION
Subject matter jurisdiction refers to the power of the court "to hear and determine cases of the general class to which the proceedings in question belong." (Internal quotation marks omitted.) Southern New England Telephone Co. v. Dept. of Public Utility Control, 261 Conn. 1, 21, 803 A.2d 879 (2002). A challenge to subject matter jurisdiction must be considered and decided before proceeding further with a case. Figueroa v. C S Ball Bearing, 237 Conn. 1, 4, 675 A.2d 845 (1996). Standing is the legal right to set judicial machinery in motion. Blumenthal v. Barnes, 261 Conn. 434, 441, 804 A.2d 152 (2002). Only parties with a "substantial and legitimate interest" can bring an action. Stamford Hospital v. Vega, 236 Conn. 646, 657, 674 A.2d 821 (1996); see also Ganim v. Smith Wesson Corp., 258 Conn. 313, 347, 780 A.2d 98 (2001) (injury must be direct, not indirect, remote or derivative); Ramos v. Vernon, 254 Conn. 799, 809, 761 A.2d 705 (2000) (party must make a "colorable claim of direct injury").
"In ruling upon whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." Pamela B. v. Ment, 244 Conn. 296, 308, 796 A.2d 1031 (1998); Mahoney v. Lensink, 213 Conn. 548, 567, 569 A.2d 518 (1990); Villager Pond, Inc. v. Darien, 54 Conn.App. 178, 183, 734 A.2d 1031 (1999).
Ensign's motion to dismiss rests primarily upon General Statutes § 47-10. That statute, she claims, stands for the proposition that one lacks standing to pursue a foreclosure action based upon a claimed assignment of a mortgage without having first filed that assignment on the appropriate land records. General Statutes § 47-10(a) provides in relevant part: "No conveyance shall be effectual to hold any land against any other person but the grantor and his heirs, unless recorded on the records of the town in which the land lies."
In Family Financial Services, Inc. v. Spencer, 41 Conn.App. 754, 760, 677 A.2d 479 (1996), the Appellate Court held that § 47-10 applied to an assignment of a mortgage and that such an assignment had to be recorded on the land records to be effective against the defendant in that case. Id., 760-62. Ensign also relies upon two Superior Court decisions for the proposition that, in order for the plaintiff to have standing, an assignment of a mortgage must be recorded prior to the commencement of the foreclosure action. See Electronic Mortgage v. Dorcely, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. 02 0187258 (September 18, 2002, Hickley, J.) ( 33 Conn. L. Rptr. 133); Wells Fargo Bank v. Hubyk, Superior Court, judicial district of Ansonia-Milford, Docket No. 02 0078152 (October 4, 2002, Curran, J.) ( 33 Conn. L. Rptr. 218).
In response, the plaintiff asserts that at the time this action commenced, it was in possession of the note and mortgage documents and forwarded them to its counsel so that this action could be brought. The plaintiff relies on General Statutes § 49-17, which provides in relevant part: "When any mortgage is foreclosed by the person entitled to receive the money secured thereby but to whom the legal title to the mortgaged premises has never been conveyed, the title to such premises shall . . . vest in him in the same manner and to the same extent as such title would have vested in the mortgagee if he had foreclosed, provided the person so foreclosing shall forthwith cause the decree of foreclosure to be recorded in the land records in the town in which the land lies."
The plaintiff cites to Banker's Trust Co. of Calilfornia, N.A. v. Vaneck, 95 Conn.App. 390, 899 A.2d 41, cert. denied, 279 Conn. 908, 901 A.2d 1225 (2006), and Fleet National Bank v. Nazareth, 75 Conn.App. 791, 818 A.2d 69 (2003), two decisions that post-date the authority cited by the defendant. Vaneck makes abundantly clear that "General Statutes § 49-17 permits the holder of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when the mortgage has not yet been assigned to him." Id., 391.
Moreover, in the recent case of Deutsche Bank National Trust Co. v. Bialobrzeski, 123 Conn.App. 791, 3 A.3d 183 (2010), the Connecticut Appellate Court explained: "General Statutes § 49-17 permits the holder of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when the mortgage has not yet been assigned to him . . . The statute codifies the common-law principle of long standing that the mortgage follows the note, pursuant to which only the rightful owner of the note has the right to enforce the mortgage . . . Our legislature, by adopting § 49-17, has provide[d] an avenue for the holder of the note to foreclose on the property when the mortgage has not been assigned to him . . ." Id., 797.
In Bialobrzeski, although the court concluded that the defendant's standing argument under § 49-17 was unsuccessful, the court also concluded that the defendant's argument that the bank was not in possession of the note at the commencement of the action had merit. See Deutsche Bank National Trust Co. v. Bialobrzeski, supra, 123 Conn.App. 791, 797-98.
In the present matter, the plaintiff alleges in its complaint that Ensign executed a note and delivered it to Washington Mutual Bank, FA. The plaintiff also alleges that the note is secured by a mortgage on the property and that the mortgage was assigned to it by virtue of an assignment of mortgage to be recorded on the Washington Depot land records. Finally, the plaintiff alleges that it " is the holder of said Note and Mortgage." (Emphasis added.) Thus, at the time the action commenced, the plaintiff claimed that it held the note and that the mortgage had been assigned to it, despite the lack of recording.
The plaintiff attaches two exhibits to its objection to the motion to dismiss. The first is a copy of the note, and the second is a copy of the mortgage. At page five, after the borrower's signature, the note provides: "Pay to the order of ____ Without Recourse Washington Mutual Bank, FA." The latter notation includes a signature above a signature line for "Cynthia A. Riley, Vice President." Additionally, page three of the mortgage deed provides that it serves to convey the property at issue "to Lender and Lender's successors and assigns . . ."
The plaintiff argues that the promissory note is a negotiable instrument, as defined in General Statutes § 42a-3-104. It further claims that § 42a-3-109 defines a negotiable instrument as payable to the bearer "if it . . . [d]oes not state a payee . . ." Thus, the plaintiff concludes that the note is a negotiable instrument payable to the bearer and that it is the bearer. In SKW Real Estate Ltd. Partnership v. Gallicchio, 49 Conn.App. 563, 571, 716 A.2d 903, cert. denied, 247 Conn. 926, 719 A.2d 1169 (1998), the Appellate Court concluded that a bearer's possession of a note endorsed in blank "imports prima facie that he acquired the note in good faith for value and in the course of business, before maturity and without notice of any circumstances impeaching its validity. The production of the note establishes his case prima facie against the makers and he may rest there . . . It was for the defendant to set up and prove the facts which limit or change the plaintiff's rights."
Here, Ensign has not challenged the plaintiff's standing with regard to the note's authenticity, whether the plaintiff possessed the note at the commencement of this action; see footnote 2; or whether the plaintiff possesses the note in good faith as a holder in due course. Rather, Ensign relies solely on her argument that the assignment of the mortgage has not been recorded on the Washington Depot land records. As long as the plaintiff is the holder in due course of the promissory note signed by Ensign, a note which, in this case, appears to be a negotiable instrument, the plaintiff has standing to foreclose pursuant to the terms of the mortgage even if the mortgage had never been assigned to it. Bankers Trust Co. of California v. Vaneck, supra, 95 Conn.App. 391. In the present matter, the plaintiff has produced unrefuted evidence that it not only holds a bearer note signed by Ensign, but that the mortgage has been assigned to it. As a result, Ensign's motion to dismiss is denied.
So ordered.