Summary
holding that settlement arrangements bringing account current would not be valid defense to foreclosure action "because it does not attack the making, validity or enforcement of the note and/or mortgage"
Summary of this case from Nationstar Mortg. LLC v. DadiOpinion
No. CV 09-6001411
February 17, 2011
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT (#127)
The substituted plaintiff in the above-entitled matter, DLJ Mortgage Capital, Inc. ("plaintiff") has filed a motion for summary judgment dated November 5, 2010, pursuant to Practice Book § 17-44. The plaintiff contends that there is no genuine issue of material fact and that a foreclosure judgment should be awarded on a matter of law. The owner on the equity redemption, Sheri A. Speer ("defendant") contends to the contrary. Both parties have filed memorandum of law together with exhibits. The matter was argued by the court on December 6, 2010.
Background and Facts
The plaintiff commenced this foreclosure action by writ, summons and complaint dated September 7, 2009. The plaintiff alleges that the defendant, on or about September 12, 2006, executed and delivered a note in favor of Mortgageit, Inc., in the original principal amount of $158,400.00. Prior to the commencement of this action, Mortgageit, Inc. endorsed the note over to CitiMortgage, Inc., which, in return, endorsed the note to DLJ Mortgage Capital, Inc. via an Allonge to Note, and supplied the same to the plaintiff.
Also on September 12, 2006, in order to secure the note, the defendant executed a Mortgage Deed (the "mortgage") in favor of Mortgage Electronic Registration Systems, Inc. as Nominee for Mortgageit, Inc., on the property known as 50 Sunnyside Avenue, Norwich, Connecticut (the "property"). Said mortgage was recorded on September 13, 2006 in Volume 2299 at Page 61 of the Norwich Land Records. The mortgage was thereafter assigned to CitiMortgage, Inc. by virtue of an Assignment of Mortgage dated March 8, 2010 and recorded March 31, 2010 in Volume 2608 at Page 82 of the Norwich Land Records. Thereafter, said mortgage was assigned to the plaintiff by virtue of an Assignment of Mortgage dated September 3, 2010 and recorded September 23, 2010 in Volume 2638 at Page 124 of the Norwich Land Records.
The plaintiff contends that the defendant has failed to make her monthly payments pursuant to the Note since the payment due for February 1, 2009, and each and every month thereafter. The plaintiff contends that it gave written notice of default to the defendant. Based upon the failure to cure the default, the plaintiff elected to accelerate the sums due and owing under the note. As authorized by the note and mortgage, the plaintiff accelerated the debt, and commenced this foreclosure action.
On August 30, 2010, the defendant filed an answer and special defenses to plaintiff's complaint. In her answer, defendant admits to ownership and possession of the property and execution of the note and mortgage. She denies being in default and having received written notice of the same. Defendant also alleged two special defenses, namely that: (1) plaintiff violated the covenant of good faith and fair dealing by (a) failing to provide the defendant with an opportunity to enter into the mediation program; and (b) defendant never received notice of a "final amount in demand;" and (2) plaintiff's complaint misrepresents the facts as defendant is undergoing a loan modification. The plaintiff contends that these conclusory alleged defenses are not supported by any facts tending to set forth a genuine disputed issue of material fact and/or are legally insufficient.
Law and Analysis
The plaintiff contends that there are no genuine issues of fact in this case. By the affidavits and exhibits presented, the plaintiff is the holder of the note and mortgage and the defendant has defaulted. This court is duty bound to grant a motion for summary judgment if there are no genuine issues of facts as to liability in this matter. Pursuant to Practice Book § 17-49, "summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Rivera v. Double A Transportation, Inc., 248 Conn. 21, 24, 727 A.2d 204 (1999) (quoting Miller v. United Technologies Corp., 233 Conn. 732, 744-45, 600 A.2d 810 (1995)). A material fact is one that would alter the outcome of the case. Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 14, 728 A.2d 1114 (1999), (citing Hammer v. Lumberman's Mutual Casualty Co., 214 Conn. 573, 578, 573 A.2d 699 (1990)). "In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the non-moving party. Miller v. United Technologies Corp., 233 Conn. 732, 745, 600 A.2d 810 (1995).
A party seeking summary judgment has the burden of showing the absence of any genuine issue of material fact which, under applicable principles of substantive law, entitles him to a judgment as a matter of law. D.H.R. Construction Co. v. Donnelly, 180 Conn. 430, 434, 429 A.2d 908 (1980); Charlemagne v. Progressive Northwest Ins. Co., 63 Conn.App. 596, 599, 777 A.2d 741 (2001). The party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact. Suarez v. Dickmont Plastics Corp., 229 Conn. 99, 105, 639 A.2d 507 (1994). The existence of a genuine issue of material fact must be demonstrated by counter-affidavits and concrete evidence. Pion v. Southern New England Telephone Co., 44 Conn.App. 657, 663, 691 A.2d 1107 (1997). "It is not enough for the opposing party merely to assert the existence of a disputed issue." Daily v. New Britain Machine Co., 200 Conn. 562, 569, 512 A.2d 893 (1986). Likewise, a party's conclusory statements in affidavits or other pleadings do not constitute evidence sufficient to establish the existence of disputed material facts. Gutpa v. New Britain General Hospital, 239 Conn. 574, 583, 687 A.2d 111 (1996). For example, a party's bare allegation that a notice of default is inadequate does not create a genuine issue of material fact. See Bank of America, FSB v. Hanlon, 65 Conn.App. 577 (2001).
"Construction of a mortgage deed is governed by the same rules of interpretation that apply to written instruments or contracts generally, and to deeds particularly. The primary rule of construction is to ascertain the intention of the parties. This is done not only from the face of the instrument, but also from the situation of the parties and the nature and object of their transactions." Saunders v. Stigers, 62 Conn.App. 138, 147, 773 A.2d 971 (2001) (internal quotation marks omitted). Therefore, in construing a mortgage deed, the court must interpret the provisions according to their ordinary and plain meaning, unless a special meaning is evident under the circumstances. Cohen v. Hartford, 244 Conn. 206, 214-15, 710 A.2d 746 (1998).
The purpose of summary judgment procedure is to allow the court to prevent vexatious and dilatory tactics and to facilitate the expeditious disposition of such cases. Ryan v. Dionne, 28 Conn.Sup. 35, 37, 248 A.2d 583 (1968). "Motions for summary judgment are designed to eliminate the delay and expense incident to a trial when there is no real issue to be tried."
In its complaint, the plaintiff alleges that the defendant executed a note in the amount of $158,4000.00 on September 12, 2006, and she executed the mortgage on the property on that same date. The plaintiff alleges it is the holder of the note and mortgage. The plaintiff further alleges that the note and mortgage are in default, that the plaintiff has elected to accelerate the indebtedness, that the plaintiff notified the defendant in writing of the default, and that the defendant has failed, refused and neglected to make payments pursuant to the terms of the note and mortgage.
The affidavits submitted by the plaintiff demonstrates that the defendant has not made a payment on this loan since the payment due for February 1, 2009, and each and every month thereafter and that the loan documents are in default due to the defendant's failure to make payments in accordance with the terms of the loan documents. This court concludes that the plaintiff notified the defendant in writing of the default on the note and mortgage. The plaintiff sent the notice of default, in accordance with the terms of the mortgage, to the defendant at the subject property address pursuant to ¶ 15 of the mortgage entitled "Notices" which states that the notice to the defendant "shall be deemed to have been given to borrower when mailed by first class mail."
The general rule of contracts is "that competent persons shall have the utmost liberty of contracting, and that their agreements voluntarily and fairly made shall be held valid and enforced by the courts." Real Estate Listing Service, Inc. v. Real Estate Commission, 179 Conn. 128, 137-38 (1979) (quoting Twin City Pipeline Co. v. Harding Glass Co., 238 U.S. 353, 356 (1931)).
When a party issues a promissory note, he agrees to pay the instrument according to its terms. C.G.S. § 42a-3-103(5), 42a-3-412 (2001). As such, when the maker's signature has either been admitted or established, the holder is entitled to recover upon the note and mortgage unless the defendant establishes a defense.
As evidenced by the mortgage deed, the defendant gave the plaintiff a mortgage to secure the payment of the promissory note. The terms of the mortgage determine the plaintiff's right to foreclose the mortgage. New England Savings Bank v. Bedford Realty Corp., 246 Conn. 594, 611, 717 A.2d 713 (1998). In the present case, the mortgage deed provides that upon a default under the promissory note, the plaintiff is entitled to foreclose on the mortgage, demand immediate payment of all sums due and owing, and collect all expenses incurred in pursuing its remedy.
"[T]he institution of a foreclosure action is a valid exercise of a mortgagee's acceleration right." Hartford Federal Savings Loan Ass'n v. Tucker, 196 Conn. 172, 180, 491 A.2d 1084 (1985) (citation omitted). A mortgagee has a legal title to the mortgages property, and the mortgagor has equitable title, also called the equity of redemption. Conference Center Ltd. v. TRC, 189 Conn. 212, 218, 455 A.2d 857 (1983). Foreclosure actions are instituted to enable a mortgagee or lienor to cut off equities of redemption and this bring enforcement or perfection to its incomplete title. Pettus v. Gault, 81 Conn. 415, 71 A. 509 (1908). When a plaintiff establishes it is the holder of the note and satisfies the court of its nonpayment, it establishes its right to avail itself of such security as the mortgage affords. See New England Savings Bank v. Bedford Realty Corp., 246 Conn. 594, 717 A.2d 713 (1998); Fleet v. Nazareth, 75 Conn.App. 791, 818 A.2d 69 (2003). This court concludes that the plaintiff is the holder of the note, it may enforce the note by foreclosing on the mortgage securing it. Fleet, 75 Conn.App. 794-5.
"In a mortgage foreclosure action [t]o make out its prima facie case, [the foreclosing party] ha[s] to prove by a preponderance of the evidence that it [is] the owner [or holder] of the note and mortgage and that [the mortgagor] ha[s] defaulted on the note." Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 838, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 136 (2003) (internal quotation marks omitted); see also Cadle Co. v. Errato, 71 Conn.App. 447, 458, 802 A.2d 887 (2002) (plaintiff met the requirements for a prima facie case in a foreclosure action by proving it was a holder of the subject note). "When a complaint and supporting affidavits establish an undisputed prima facie case for a foreclosure action, a court must only determine whether [a] special defense is legally sufficient before granting summary judgment." LaSalle National Bank v. Shook, No. 549266, 2000 Conn.Super. LEXIS 1756 (Conn.Super.Ct. July 13, 2000), aff'd, 67 Conn.App. 93, 787 A.2d 32 (2001). The affidavit and evidence clearly establish the plaintiff is the holder of the note, and the note is in default. Thus, the plaintiff has established a prima facie case, and is entitled to summary judgment as a matter of law.
Once the plaintiff proves that it's the holder of the note in default, the defendant is obligated to produce concrete evidence demonstrating a genuine issue of material fact in order to defeat a motion for summary judgment. It is not enough for the opposing party merely to assert the existence of a disputed issue. Daily, 200 Conn., 569.
"When a complaint and supporting affidavits establish an undisputed prima facie case for a foreclosure action, a court must only determine whether a special defense is legally sufficient before granting summary judgment." LaSalle National Bank v. Shook, 2000 Conn.Super. LEXIS 1756, Superior Court, judicial district of New London at New London, Docket No. 549266 (July 13, 2000, Martin, J.), aff'd, 67 Conn.App. 93 (2001); see also Bank of New York v. Conway, 50 Conn.Sup. 189, 195 (2006). Special defenses and counterclaims "[alleging] mere conclusions of law that are unsupported by the facts . . ." are legally insufficient. Novametrix Medical Systems v. BOC Group, Inc., 224 Conn. 210, 215 (1992). Furthermore, "[m]ere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." Socha v. Bordeau, 277 Conn. 579, 585-86 (2006) (internal quotation marks omitted).
The traditional special defenses available in a foreclosure action are payment, discharge, release, satisfaction and invalidity of a lien. Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 15-16, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999). In recognition that a foreclosure action is an equitable proceeding, courts have allowed mistake, accident, fraud, CUTPA, laches, tender of deed in lieu of foreclosure and a refusal to agree to a favorable sale to a third party to be pleaded as special defenses. Id. Other recognized defenses are usury, unconscionability of interest rate, duress, coercion, material alteration and lack of consideration. Id.; see also, Fidelity Bank v. Krenisky, 72 Conn.App. 700 (2002); Knights of Columbus Federal Credit Union v. Salisbury, 3 Conn.App. 201, 208-09, 486 A.2d 649 (1985). While courts have recognized equitable defenses in foreclosure actions, they have generally only been considered proper when they attack the making, validity or enforcement of the lien, rather than some act or procedure of the lien holder. See, generally, Chase Manhattan Mortgage Corp. v. Machado, 83 Conn.App. 183, 187-88, 850 A.2d 260, aff'd, 92 Conn.App. 904, 884 A.2d 22 (2004) ("A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both . . ."); Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 19, 728 A.2d 1114, cert. Denied, 249 Conn. 919, 733 A.2d 229 (1999). The rationale behind this is that special defenses and counterclaims that are not limited to the making, validity or enforcement of the note or mortgage do not assert any connection with the subject matter of the foreclosure action and, as such, do not arise out of the same transaction as the foreclosure action. Nationsbanc v. Howell, 1998 Conn.Super. LEXIS 3567, judicial district of Stamford/Norwalk at Stamford, Docket No. CV 98 0164649S (Dec. 16, 1998, Rodriguez, J.) At *1, quoting, Berkeley Federal Bank Trust v. Rotko, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 318648 (January 25, 1996, West, J.); see also, e.g., Liberty Bank v. New London Limited Partnership, Superior Court, judicial district of New London at New London, Docket No. 4005236 (May 1, 2007, Devine, J.) ( 43 Conn. L. Rptr. 326, 332, n. 2, 2007 Conn.Super. LEXIS 1065); CT Page 5276 Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999); Shoreline Bank Trust Co. v. Leninski, 8 Conn. L. Rptr. No. 17, 522 (April 26, 1993, Celotto, J.).
The plaintiff, in the present controversy contends that the defendant has not asserted a legally sufficient defense supported by any facts tending to set forth a genuine issue of material fact. The defendant has alleged three special defenses in her pleading dated August 30, 2010.
The defendant first alleges that plaintiff has violated the covenant of good faith and fair dealing in that (1) plaintiff allegedly failed to give defendant an opportunity to participate in the mediation program; and (2) that defendant never received notice of a "final amount in demand from the plaintiff." This court finds that plaintiff did in fact provide defendant with notice of her rights concerning the mediation program as well as the required forms which need to be filed for participation in said program. Defendant was served with the referenced documents, along with the writ, summons and complaint, on or about September 9, 2009.
This court also concludes that plaintiff did in fact provide defendant with a notice of default prior to the commencement of this action, thus giving her notice of the "final amount in demand." Bank of America, FSB v. Hanlon, 65 Conn.App. 577 (2001) (a party's bare allegation that a notice of default is inadequate does not create a genuine issue of material fact). The plaintiff has submitted a detailed affidavit evidencing that written notice was sent to the defendant concerning her default on the note pursuant to ¶ 15 of the mortgage.
Paragraph 15 of the mortgage entitled "Notices" states that the notice to the defendant "shall be deemed to have been given to borrower when mailed by first class mail . . ."Where the question whether proper notice was given depends upon the construction of a written instrument or the circumstances are such as lead to only one reasonable conclusion, it will be one of law . . ." Citicorp Mortgage, Inc. v. Porto, 41 Conn.App. 598, 602, 677 A.2d 10 (1996) (internal quotation marks omitted). Further, the "mailbox rule" creates a presumption that such letter was received by the addressee where the letter was mailed to a person at the correct address with the correct postage. Notice was "given" or should be "deemed to have been given" as the plaintiff mailed the notice via certified mail to the defendant at the subject property address. Since this condition precedent has been established, defendant's alleged defense is without merit.
Furthermore, the Appellate Court has held that breach of the implied covenant of good faith and fair dealing is not a viable claim in a foreclosure action.
We recently stated that special defenses and counterclaims alleging a breach of an implied covenant of good faith and fair dealing . . . are not equitable defenses to a mortgage foreclosure . . . Even if a breach of the implied covenant of good faith and fair dealing were an equitable defense to a mortgage foreclosure, the clear language of the mortgage and the note fails to support the defendant's claim that the plaintiff breached such an implied covenant because the plaintiff has acted in accordance with the rights as set forth in those documents.
Fidelity Bank v. Krenisky, supra, 72 Conn.App. 716-17, 807 A.2d 968. (Internal citations omitted; internal quotation marks omitted.)
Likewise, in this case, the plaintiff has "acted in accordance with its rights" to accelerate the loan and institute a foreclosure action upon the defendant's default. Moreover, the allegation of misconduct, which the defendant contends in her forensic accounting addresses post-loan origination conduct. This alleged misconduct does not arise out of the same transaction that is the subject of the plaintiff's complaint, and the alleged defense does not attack the making, validity or enforcement of the mortgage, it is an improper defense to this foreclosure action. Emigrant Mortgage Co. v. D'Agostino, 94 Conn.App. 793, 802, 896 A.2d 814 (2006), quoting Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705-06, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002); see also, Ocwen Federal Bank FSB v. Weinberg, 1999 Conn.Super. LEXIS 2204, Superior Court, judicial district of New London at New London, Docket No. 547629 (August 11, 1999, Mihalakos, J.); General Financial Services, Inc. v. Pasiakos, 1998 Conn.Super. LEXIS 1795, Superior Court, judicial district of Windham at Putnam, Docket No. CV 970054816 (June 18, 1998, Booth, J.)
The defendant next claims in her second defense that the facts as alleged in the complaint are inaccurate because she is undergoing a loan modification with the plaintiff. Defendant has failed to support her allegation that she has entered into a permanent loan modification. She has not provided such proof. The court concludes that there is no modification agreement between the parties.
Notwithstanding the foregoing, such a "defense" is not a valid defense to a foreclosure action because it does not attack the making, validity or enforcement of the note and/or mortgage in this case. Further, neither the plaintiff nor its loan servicing agent is required to review loans and enter into loan modification agreements pursuant to the terms of the note and mortgage upon defendant's default.
. . . [T]he concept of mitigation of damages is inapplicable to a mortgage foreclosure action where the damages consist of a sum certain, the repayment of which has been agreed to by the defendant maker of a promissory note. Fleet Bank v. Barlas, Superior Court, Judicial District of Hartford/New Britain at Hartford, Docket No. 518205, 12 Conn. L. Rptr. 32 (June 29, 1994) (Aurigemma, J.). See also Great Western Bank v. McNulty, Superior Court, Judicial District of Stamford/Norwalk at Stamford, Docket No. 139799 (March 16, 1995) (D'Andrea, J.) (holding that a refusal to accept past due payments or accept a reasonable schedule to bring the defendant's account current was not a valid special defense since mitigation of damages is inapplicable in foreclosure, and the defense did not address the making, validity, or enforcement of the note).
Berkeley Federal Bank Trust FSB v. Rotko, 1996 Conn.Super. LEXIS 249 at 17-18, Judicial District of Fairfield at Bridgeport, Docket No. CV940318648 (January 26, 1996, West, J.).
In addition, the allegations relate to settlement discussions. "The general rule is that evidence of an attempted settlement is not admissible against either party to the settlement negotiations." (Emphasis added.) Miko v. Commission on Human Rights Opportunities, 220 Conn. 192, 209, 596 A.2d 396 (1991). Restricting the rule's application to the parties involved in settlement negotiations is part and parcel of the rule's goal of encouraging the settlement of disputes. See PSE Consulting, Inc. v. Frank Mercedes Sons, Inc., 267 Conn. 279, 332, 838 A.2d 135 (2004) ("[t]he purpose of [Connecticut Code of Evidence] § 4-8 . . . is to preclude the admission of settlement offers between parties who are opposing parties at the trial in which the evidence of the settlement is sought to be introduced").
Order
It is hereby ordered that summary judgment on liability only is granted in favor of the plaintiff.