Opinion
No. CV 05-4006305
June 5, 2006
MEMORANDUM OF DECISION RE MOTION TO STRIKE
Plaintiff in this residential foreclosure action, Eastern Savings Bank, filed a motion to strike the defendants' Special Defenses as legally insufficient. For the reasons set forth below, the motion is DENIED in part and GRANTED in part.
The plaintiff commenced this mortgage foreclosure action seeking to foreclose a mortgage on real property located in Greenwich, Connecticut. The mortgage allegedly secured a note executed by the defendants and held by the plaintiff. By way of answer, the defendants admit that the plaintiff is the holder of the Note and Mortgage and that they executed same. Left open is the issue of default and right of foreclosure.
In addition, the defendants included four special defenses in their answer: (1) that the plaintiff violated the Fair Debt Collection Practices Act by failing to adequately provide notice of recission rights; (2) that the plaintiff violated the Fair Debt Collection Practices Act by the timing of the collection action; (3) that the plaintiff violated Title 15 U.S.C. § 1637a(a)(10) by failing to disclose certain features of the Note; and (4) that the plaintiff violated CUTPA.
While the special defense cites the FDCPA, the plaintiff assumed and the defendant confirmed in its briefing that the defense is based upon the Federal Truth in Lending Act (TILA), not the FDCPA. Insofar as the factual allegation clearly implicates TILA, the court will address the first special defense as adequately pled.
Discussion
The role of the trial court in ruling on a motion to strike is test the legal sufficiency of a pleading. RK Constructors, Inc v. Fusco Corp., 231 Conn. 381, 384 (1994). A motion to strike may challenge the legal sufficiency of special defenses. Practice Book § 39-10. In deciding a motion to strike, the court is limited "to a consideration of the facts alleged in the [pleading]. A speaking motion to strike (one imparting facts outside the pleadings) will not be granted." Doe v. Marseille, 38 Conn.App. 360, 364 (1995), rev'd on other grounds, CT Page 10484 236 Conn. 845 (1996).
For purposes of the motion to strike, the moving party admits all facts well pleaded. RK Constructors, Inc., supra. at 383 n. 2. The same is not so of legal conclusions and a motion to strike may be granted if the complaint alleges "mere conclusions of law that are unsupported by the facts alleged." Novametrix Medical Systems, Inc. v. BOC Group, Inc. 224 Conn. 210, 215 (1992).
Here, the plaintiff moved to strike all four special defenses. However, only the first and third special defenses remain in issue for purposes of this motion. At oral argument, the parties agreed that the motion can be and should be granted as to the second and fourth special defenses. The defendant conceded that the FDCPA is not a valid special defense to a foreclosure action, See, e.g. Washington Mutual Bank v. Delbuono, J.D. of Ansonia-Milford, Dkt. No. 03-0081479S (July 29, 2003) (Curran, J.), and that the CUTPA special defense was not adequately pled. See, e.g. S.M.A. Textile Mills, Inc. v. Brown, Jacobson, Tillinghas, Lahan and King, PC, 32 Conn.App. 786, 797 (1993) (A CUTPA claim must be pleaded particularly to allow evaluation of the legal theory upon which the claim is based.). The Court hereby grants the motion to strike as to counts two and four.
It is noted however, with respect to Count Four, the motion is granted insofar as the defendants have not adequately pled a CUTPA violation with the specificity required. The parties did not raise in their pleadings and did not brief in their memoranda whether, as a matter of law, CUTPA is a viable defense to a foreclosure action. The parties, and the court therefore, leave that issue to another day.
First Special Defense — A violation of TILA
"The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action . . . 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 . . . Where the plaintiff's conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles." (Internal quotation marks omitted.) Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002).; Homecomings Financial Network, Inc. v. Starbala, 85 Conn.App. 284 (2004). "Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction . . . or, if there had never been a valid lien . . . Where the plaintiff's conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles." (Internal quotation marks omitted.) Chase Manhattan Mortgage Corp. v. Machado, 83 Conn.App. 183, 187-88, CT Page 10485 850 A.2d 260 (2004); Loricco Towers Condominium Association v. Pantani, 90 Conn.App. 43 (2005). "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 lienholder." Lawall Realty, Ltd. v. Auwood, supra; National Mortgage Co. v. McMahon, supra. "The rationale behind this is that counterclaims and special defenses which are not limited to the making, validity or enforcement of the note or mortgage fail to 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." Lawall Realty, Ltd. v. Auwood, supra; National Mortgage Co. v. McMahon, supra, 9 CSCR 300-01. Moreover, courts have held that "defenses to foreclosure are recognized when they attack the note itself rather than some behavior of the mortgagor." (February 24, 1994) (Sylvester, J.)
The question for this court is whether, under these general principles, an alleged violation of TILA is a valid special defense to a foreclosure action. The Court holds that it is not.
Several Superior Court cases to consider the issue have held that a mortgage holder's failure to comply with truth-in-lending requirements is not a valid special defense to a mortgage foreclosure action. See, Yvonne Thanhauser v. Jurgis Nemickas, et al., 2001 Ct.Sup. 15570 (November 28, 2001) (Holden, J.); Mundaca Investment Corp. v. Atwood, Superior court, judicial district of Fairfield, Docket No. 0319174 (February 21, 1996, Moran, J.); Beneficial Mortgage Co. v. Brassington, Superior Court, judicial district of Danbury, Docket No. 318933 (June 19, 1995, Stodolink, J.); People's Bank v. Perkins, Superior Court, judicial district of Fairfield, Docket No. 310482 (November 3, 1994, Ballen, J.).
Indeed, the truth in lending laws were designed to "promote the informed use of consumer credit by requiring disclosures about its terms and cost." 12 C.F.R. § 226.1(b); Chesire Mortgage Service, Inc. v. Montes, 223 Conn. 80 (1992). By its express terms, it is aimed at regulating the conduct of the lender, or in this case, the lienholder. Therefore, violations of the truth in lending laws do not present a legal attack on the validity of the note or mortgage, but rather relate to the conduct of the lienholder. See, Lawall Realty, Ltd. v. Auwood, supra; National Mortgage Co. v. McMahon, supra. The defendant relies upon Chesire Mortgage Service, Inc. v. Montes, 223 Conn. 80 (1992) and Family Financial Services, Inc. v. Spencer, 1995 Ct.Sup. 481 (January 27, 1995) (Saden, J.T.R.). This reliance is misplaced. Chesire did not discuss the validity of TILA violations as a special defense to a foreclosure action. While the case involved TILA violations in the context of a mortgage foreclosure, the TILA violations were alleged in a Counterclaim, not a special defense, If successful, the defendants in Chesire, would then have had various remedies available to them, to include the right of recission, which they claimed had been exercised. Thus, the facts and procedural posture of the Chesire case make it inapplicable to the present motion to strike.
The defendants also rely upon Family Financial Services, Inc. v. Spencer, 1995 Ct.Sup. 481 (January 27, 1995) (Saden, J.T.R.). Again, this case is inapposite. There, a foreclosure matter was tried to the court, to include numerous special defenses, one of which was predicated on TILA violations and the right of recission which attaches thereto. However, the special defense asserted was not TILA violations, but rather was the recission itself. The allegations regarding the TILA violations were the factual support for the legal defense of "recission." Thus, the fact that the alleged recission occurred under the auspices of TILA does not convert the special defense to one of TILA violations on the part of the lienholder.
The Third Special Defense
With respect to the third special defense, the parties debate the applicability of Title 15 U.S.C. § 1637. However, whether the statute applies requires a factual determination as to the nature of the underlying transaction, and is therefore not appropriately determined in a motion to strike. See, Doe v. Marseille, 38 Conn.App. 360, 364 (1995), rev'd on other grounds, 236 Conn. 845 (1996) (A speaking motion to strike (one imparting facts outside the pleadings) will not be granted.).
For the foregoing reasons, the motion to strike the first, second and fourth special defenses is granted. The motion to strike the third special defense is denied.