Opinion
No. CV-10-6007558
September 14, 2011
MEMORANDUM OF DECISION ON MOTION FOR SUMMARY JUDGMENT
The plaintiff, The Royal Bank of Scotland PLC ("RBS"), has moved for summary judgment on the grounds that the defendant, Lexham Farmington I, LLC ("Lexham"), is in default under the Note securing the Mortgage and that there are no material facts to dispute the default.
RBS has presented the Affidavit of Lance W. Haberin and copies of documents to establish that on January 3, 2008, Greenwich Capital Financial Products, Inc., and Lexham executed certain documents, including a Loan Agreement (the "Loan Agreement") and Promissory Note in the amount of $16.25 million ("Note"). As security for the Note, Lexham executed a mortgage ("Mortgage") with respect to certain parcels of commercial property in Farmington, Connecticut: (I) 10-50 Stanford Drive, (ii) 195 Farmington Avenue and (iii) 2 Batterson Park Road. The Mortgage was recorded in the Town of Farmington Land Records. On May 16, 2008, Greenwich Capital Financial Products, Inc. executed an allonge endorsing the Note to the order of RBS and assigned the Mortgage to RBS.
Under the terms of the Loan Agreement, if the Debt Service Coverage Ratio was less than one to one, then a Cash Management Period commenced. As of December 31, 2008, a Calculation Date, the Debt Service Coverage Ratio was .88, which triggered a Cash Management Period. Lexham has not contested the fact that a Cash Management Period was properly triggered.
All capitalized terms are terms used in the Loan Agreement.
Under the terms of the Loan Agreement, Lexham's failure to make certain payments in full on a Payment date during a Cash Management Period was an Event of Default entitling RBS to accelerate and make demand for payment of all sums due under the Loan Agreement.
On January 19, 2010, RBS advised Lexham of Events of Default by virtue of Lexham's failure to make certain payments in full on December 6, 2009, which was the December 2009 Payment Date, and January 6, 2010, which was the January 2010 Payment Date.
In opposition to the Motion for Summary Judgment, Lexham has submitted the Affidavit of Thomas Bailey, a principal and asset manager of Lexham Private Investors, LLC, which manages the affairs of Lexham. In the Affidavit, Mr. Bailey states that he has reviewed documentation which Lexham received from RBS in discovery in this case and has concluded that there was enough money in the lockboxes controlled by RBS to "allow for the timely disbursement of the required monthly payments to RBS in December 2009 and January 2010 to pay the subject mortgage loan, which are the mortgage payments that RBS claimed were not made by Lexham Farmington and which RBS asserts as a ground of default entitling it to accelerate the note and foreclose on the mortgage. As part of my responsibilities as asset manager of LPI and my management responsibilities to Lexham Farmington, I have prepared a summary analysis of the aforementioned lockbox documentation provided by RBS which substantiates those conclusions." Affidavit of Thomas Bailey, ¶ 8.
The summary prepared by Mr. Bailey indicates that funds were not available to make required payments until December 22, 2009 and January 21, 2010. However, as stated above, pursuant to the terms of the Loan Agreement § 1.1, the Payment Date is the 6th of each month with no grace period.
Under the terms of the Loan Agreement deposits made after the Payment Date have no bearing on whether sufficient deposits were made during the Interest Period preceding the Payment Date. Section 1.1 of the Loan Agreement defines the Interest Period to be the 6th of the month through the 5th of the following month, and § 3.11 of the Loan Agreement provides that and Event of Default occurs where deposits from the preceding Interest Period are insufficient to make all payments required therein on the Payment Date.
Lexham has presented no evidence to refute that there were insufficient deposits on the Payment Dates at issue, December 6, 2009 and January 6, 2010. The summary prepared by Lexham only confirms that the Defaults claimed by RBS exist.
Discussion of the Law and Ruling
Practice Book § 17-49 provides that 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. "In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact." (Citations omitted; internal quotation marks omitted.) Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 251-52, 819 A.2d 773 (2003). "A material fact . . . [is] a fact which will make a difference in the result of the case . . . Finally, the scope of our review of the trial court's decision to grant the plaintiff's motion for summary judgment is plenary." (Citation omitted; internal quotation marks omitted.) H.O.R.S.E. of Connecticut, Inc. v. Washington, 258 Conn. 553, 560, 783 A.2d 993 (2001). Summary judgment is "designed to eliminate the delay and expense of litigating an issue where there is no real issue to be tried." Wilson v. City of New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).
As set forth above, Lexham failed to make all payments required under the terms and conditions of the Loan Agreement. This led to an Event of Default under the Loan Agreement, which permits RBS to accelerate the entire outstanding amount of the loan. See § 8.2.1 of the Loan Agreement.
Lexham has presented an affidavit which indicates that at some point in time after the Payment Date under the Loan Agreement, it had enough money to make full payment. However, the Loan Agreement requires that full payment be made on the 6th of the month. The summary submitted as part of the affidavit of Mr. Bailey does not show that there were sufficient funds for full payment on the 6th of December 2009, or the 6th of January 2010. Instead, it shows the amount of funds available on December 22, 2009 and January 21, 2010, dates which are not relevant to the dates determinative of default under the Loan Agreement.
Lexham is apparently attempting to have this court rewrite the express terms of the sophisticated commercial Loan Agreement. It is not within the power of courts to create new and different agreements. Jay Realty, Inc. v. Ahearn Dev. Corp., 189 Conn. 52, 55, 453 A.2d 771 (1983). Competent persons shall have the utmost liberty of contracting, and their agreements voluntarily and fairly made shall be held valid and enforceable. Real Estate Listing Serv., Inc. v. Real Estate Comm., 179 Conn. 128, 137-38, 425 A.2d 581 (1979).
Lexham also argues that in the event that the court finds that it is in default, it should ignore the terms of the Loan Agreement for equitable reasons. Lexham has cited Petterson v. Weinstock, 106 Conn. 436, 442, CT Page 19850 138 A. 433 (1927), for the proposition that a foreclosure is inappropriate where a "mortgagor is prevented by accident, mistake or fraud, from fulfilling a condition of the mortgage." Lexham was not prevented from making payments as required under the loan documents by accident, mistake or fraud.
This case is more analogous to Bank of Boston Connecticut v. Schlesinger, 220 Conn. 152, 595 A.2d 872 (1991). In that case the defendants argued that the plaintiff should have been equitably precluded from exercising its contractual right, pursuant to the guaranty and indemnity agreement, to pursue, by way of attachment, other security for certain notes. The Court disagreed, stating:
The defendants are effectively requesting that we rewrite their commercially sophisticated guaranty and indemnity agreement to require the plaintiff to exhaust the collateral securing the notes before pursuing its available remedy under the agreement. The parties could have written such an agreement, but they did not do so. "It is not within the power of courts to create new and different agreements." Jay Realty, Inc. v. Ahearn Development Corporation, 189 Conn. 52, 55, 453 A.2d 771 (1983).
In this case the defendant, Lexham, is effectively requesting that the court rewrite the commercially sophisticated Loan Agreement to extend the Payment Date by some 16 days. The parties could have written that provision into the Loan Agreement, but they did not do so. The court will not create a new and different commercial agreement under the guise of exercising its equitable powers.
For the foregoing reasons, summary judgment enters in favor of the plaintiff RBS against Lexham.
By the Court,