Opinion
LLICV116004498S
01-21-2016
U.S. Bank, N.A., as Trustee for Lehman Brothers Small Balance Commercial Mortgage Pass Through Certificates, Series 2007-1 v. 199 Water Street Realty, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
HON. RUPAL SHAH, J.
The plaintiff, U.S. Bank, N.A., as trustee, brings this commercial foreclosure action against the defendant, 199 Water Street Realty, LLC (the defendant LLC), and the members of the defendant LLC, John Rhoades and James Rhoades. The plaintiff is the trustee for a security trust that owns certain mortgages, including a commercial mortgage granted by the defendant LLC on property located at 199 Water Street, Torrington, Connecticut (the property). The defendant LLC entered into the loan at issue with the plaintiff's predecessor in interest, Lehman Brothers Bank, FSB (Lehman), on November 17, 2006. The defendants allege that Lehman engaged in fraud; they assert various special defenses, and filed a counterclaim alleging unfair trade practices, negligent misrepresentation and fraud.
In its initial complaint the plaintiff brought a second claim against the defendants seeking to enforce the note and guarantees of the note executed by John Rhoades and James Rhoades. On October 19, 2015, the plaintiff withdrew this claim.
The matter was tried before the court on December 1, 2015. The plaintiff presented numerous documents into evidence and presented the testimony of one of the plaintiff's employees, the loan servicer, and an appraiser. The defendants presented no testimony and offered only two documents into evidence.
The defendant filed a motion to strike (#198) the plaintiff's post-trial reply memorandum on January 11, 2016. The court only relied on evidence and testimony provided at trial and not the post-trial briefs in issuing its decision. Thus, the matter is moot.
FINDINGS OF FACT
Based on the documents submitted into evidence and the testimony heard at trial, the court makes the following findings of fact.
On November 17, 2006, the defendant LLC executed a note in the amount of $1,750,000 to the plaintiff's predecessor in interest, Lehman. On November 22, 2006, the defendant LLC also executed and delivered to Lehman a mortgage on 199 Water Street, Torrington, Connecticut to secure the note.
On December 4, 2006, Lehman transferred physical possession of the note and allonge to the plaintiff. By an assignment of mortgage, dated January 18, 2011, the mortgage and loan documents were assigned to the plaintiff. The plaintiff remains the holder of the mortgage, note, and allonge.
From November 2006 until August 2010, the defendant LLC made regular payments on the note. After missing its August 2010 payment, the loan servicer at the time, Aurora, issued a notice of default to the defendant LLC on September 9, 2010. The defendant LLC failed to cure the default and has not made a payment on the note since July 2010.
The plaintiff commenced this foreclosure action on April 29, 2011. The loan balance, as of December 1, 2015, is $3,222,470.97; in order to make the loan current, the defendant LLC would need to pay $1,148,270.61. The value of the property as of November 20, 2015, is $800,000.
DISCUSSION
I. Foreclosure
To make out a prima facie case for foreclosure, a mortgagee must establish ownership of the promissory note and mortgage, and the mortgagor's default. Webster Bank v. Flanagan, 51 Conn.App. 733, 750-51, 725 A.2d 975 (1999). In determining whether a default has occurred, " [t]he terms of the mortgage determine the necessary elements of the plaintiff's prima facie [foreclosure] case." New England Savings Bank v. Bedford Realty Corp., 246 Conn. 594, 611, 717 A.2d 713 (1998).
In the present case, the court finds that the plaintiff has established the elements necessary to make out a prima facie case for foreclosure under Connecticut law with respect to the mortgage. The evidence establishes that the plaintiff is the present holder of the mortgage. The plaintiff owns the mortgage through the trust, and the defendant does not claim that the loan and mortgage have been paid. In addition, the plaintiff has established its entitlement to foreclose under the terms of the mortgage, which provides that the plaintiff is entitled to foreclose on the mortgage upon a default under the note, demand immediate payment of all amounts due and owing, and collect all expenses incurred in pursuing a remedy.
The defendant LLC defaulted on the note when it failed to make its monthly payment on August 1, 2010 and never cured the default after receiving a notice of default. Thus, the plaintiff has established a prima facie case for foreclosure and is entitled to judgment as to the defendant LLC's liability on the amended complaint. See Webster Bank v. Flanagan, supra, 51 Conn.App. 752-53.
The plaintiff also provided evidence that the value of the property is $800,000 and the amount owed on the note is $3,222,470.97. The defendants did not present any evidence disputing these amounts. Thus, the Court finds that the value of the property is $800,000 and the amount of debt owed by the defendant LLC is $3,222,470.97.
II. Special Defenses and Counterclaims
" 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." (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). The defendants asserted numerous special defenses and filed a counterclaim, but presented no evidence at trial that supports their claims.
At trial, the defendants entered two exhibits a commitment letter from Lehman and a 2006 appraisal. These exhibits do not support a finding for the defendants on their special defenses or counterclaims.
Accordingly, the court finds that the defendants failed to meet their burden of proof and finds for the plaintiff on the affirmative defenses and counterclaims.
ORDERS
The court finds that the plaintiff has met its burden of proof and grants the judgment of foreclosure on the defendant LLC's liability. The court further finds that the defendants failed to meet their burden of proof on any affirmative defenses and counterclaims and, therefore, finds in favor of the plaintiff on the defendants' counterclaims. The court orders a strict foreclosure based on the lack of any equity in the property and the substantial difference between the value and debt owed on the property. The law day shall be April 11, 2016. The plaintiff shall submit an affidavit of attorneys fees and a bill of costs.
So ordered.