Opinion
NNHCV146047103
07-20-2016
HSBC Bank USA, National Association Trustee v. Steward Leckey et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AS TO LIABILITY
Patty Jenkins Pittman, Judge.
On December 22, 2006, the defendants Stewart Leckey and Susan Leckey signed a promissory note and mortgage deed to Wells Fargo Bank, N.A. In January 2014 Wells Fargo Bank, N.A., assigned the mortgage to HSBC Bank USA, National Association as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 2007-2 (herein " HSBC"). HSBC is now the holder of the note.
The plaintiff HSBC has commenced this foreclosure action against the defendants after the defendants were declared in default of the terms of the note and mortgage. The plaintiff moves for summary judgment on liability. The defendants have filed an Answer and Special Defenses. They oppose summary judgment on the following grounds which the court discusses below.
STANDING OF THE PLAINTIFF
The defendants claim that HSBC has no standing to maintain this action because the loan was transferred from Wells Fargo to the current plaintiff HSBC in violation of a pooling and servicing agreement between those two entities. The identical issue was rejected in Wells Fargo v. Strong, 149 Conn.App. 384, 89 A.3d 392 (2014). In Strong, the Appellate Court ruled that any such violation did not implicate the standing of the plaintiff to bring the action. Accordingly, this claim of the defendants fails.
COMPETENCY OF THE AFFIDAVITS SUBMITTED BY THE PLAINTIFF
The defendants argue that the affidavits submitted by the plaintiff are deficient. The defendants point out that a discrepancy exists between the entity for whom certain of the affiants worked and the entity who both issued the default notice and who seeks foreclosure. The plaintiff has submitted supplemental evidence that explains that there were name changes due to mergers, a fact which does not appear to be disputed. Also the court rejects the contention of the defendants that the custodian of a document (who submits an affidavit regarding the circumstances under which she acts as custodian) cannot competently aver facts to establish on whose behalf the custodian retains custody. Summary judgment is not defeated by the claims that HSBC's affidavits and evidence are not competent as to HSBC's status as the holder of the note and the owner of the debt.
THE NOTICE OF DEFAULT
The defendants dispute that a notice of default was sent as a prerequisite to commencing the foreclosure. Both of the defendants state in affidavits that " I don't ever remember receiving that notice." The plaintiff's affidavits on the other hand aver that the proper notice was sent.
The affidavits of the defendants are insufficient to place this material fact in issue. The issue is whether the plaintiff sent the requisite notice of default. The lack of memory of receiving the notice does not negate the proposed fact that the notice was sent. The plaintiff has provided evidence that it sent the notice. There is no offer of proof to the contrary. Summary judgment does not fail as to this issue.
FORECLOSURE AS AN EQUITABLE PROCEEDING
The fact that the plaintiff may be able to make out a prima facie case for foreclosure does not end the inquiry in this case. The defendants have asserted certain Special Defenses, discussed below, which they claim ought to prevent a foreclosure judgment.
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. LaSalle National Bank v. Shook, 67 Conn.App. 93, 96-97, 787 A.2d 32 (2001). Because foreclosure is an equitable proceeding, the trial court may examine " all relevant factors to ensure that complete justice is done . . . The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court." (Citations omitted; internal quotation marks omitted.) Fidelity Bank v. Krenisky, 72 Conn.App. 700, 704-05, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002). This is true even when the plaintiff has sought summary judgment. Id. See also, Wells Fargo v. Strong, supra, 392.
With that in mind, the court turns to a consideration of the allegations in the Special Defenses.
THE SPECIAL DEFENSES
The defendants plead two related matters in Special Defense to the plaintiff's action. First, the defendants claim that the effect of Wells Fargo assigning the loan papers to HSBC was to prevent the defendants from participating in any of the Making Homes Affordable (" MHA") loss mitigation programs. Second, the defendants claim that the plaintiff's own affidavit of loss mitigation efforts, Doc. #102, should estop the plaintiff from denying that it is obliged to offer certain loss mitigation resources to the defendants.
In their papers opposing summary judgment, the defendants appear to argue that the primary reason for the assignment from Wells Fargo to HSBC was to prevent the defendants from availing themselves of the MHA loan modification programs. The Special Defense does not go that far, but only alleges that the transfer of the loan papers to HSBC had that effect.
The defendants have submitted affidavits and other documents in support of the fact that while Wells Fargo, the original lender and still the loan servicer, is obliged to participate in loss mitigation efforts on behalf of distressed homeowners, HSBC, as trustee of a securitized trust, does not participate in such programs, is not required to do so, and in fact denied the benefits of such programs to the defendants. The defendants claim that this goes to the enforcement of the note, LaSalle National Bank v. Shook, supra, that such conduct on the part of the plaintiff is unfair, and that the court ought to take such conduct into consideration in determining whether to permit the plaintiff to proceed with this foreclosure action.
The plaintiff argues that because the real estate trust was created before the MHA programs were enacted, the real estate trust could not have been created with the intent of being a repository of loan documents for the purpose of avoiding the MHA process. The court, however, places no reliance on the argument of the defendants that the transfer of the note was done solely for that purpose. Rather, in the court's view, it would be sufficient to create a triable issue if the defendants could demonstrate that avoiding the MHA programs or other loss mitigation efforts was the effect of the transfer. A trial court could then determine if, under the totality of the circumstances, the plaintiff should be permitted to foreclose.
The court is aware that it is usually the case 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. See New Haven Savings Bank v. LaPlace, 66 Conn.App. 1, 10, 783 A.2d 1174 (2001). However, where there is a question of whether the lender had an obligation to afford the defendants an opportunity to modify their loan obligation, the court may determine that the avoidance such obligation ought equitably to affect the enforcement of the note.
In the opinion of the court, the defendants have submitted enough evidence on this issue to create a material disputed issue of fact to prevent summary judgment.
CONCLUSION
The plaintiff's Motion for Summary Judgment is denied.