Opinion
No. CV08 5014358S
October 4, 2010
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT #140
Background
On March 3, 2008, the plaintiff filed this foreclosure against the defendant, Jean Robert Suvernay. The complaint alleges the following facts. At all times relevant to the foreclosure action, the defendant owned real property situated at 168-172 Linwood Avenue in Bridgeport, Connecticut. On October 24, 2006, the defendant executed and delivered a note for a loan in the original principal amount of $320,000 to Sunset Mortgage Company, L.P. On that same date, the defendant executed and delivered mortgage on the property to Mortgage Electronic Registration Systems, Inc. as Nominee for Sunset Mortgage Company, L.P. The mortgage was later assigned to the plaintiff. The plaintiff is the current holder of the note and mortgage and the defendant is the owner of the equity of redemption of the property and is in possession of the property. The note is now in default, and the plaintiff has elected to accelerate the balance due on the note and foreclose the mortgage securing the note. The plaintiff provided written notice to the defendant pursuant to the terms of the note and mortgage, but the defendant has failed to cure the default. The plaintiff has caused a lis pendens to be recorded on the Bridgeport land records and has given notice to the defendant of his rights pursuant to the statutes pertaining to unemployment and underemployment.
The plaintiff named in the original complaint is "US Bank National Association, as Trustee for CSMS HEAT 2006-8." On March 22, 2010, the court ( Hartmere, J.) granted the plaintiff's motion to correct party plaintiff (#138), whereupon the name of the plaintiff in this action was changed to "US Bank National Association as Trustee for Credit Suisse First Boston Mortgage Securities Corp., Home Equity Asset Trust 2006-8, Home Equity Pass-Throug [sic] Series Certificates, 2006-08.
The case name lists the defendant as "Suvemay," however all of the pleadings list the defendant as "Suvernay." A second defendant, "Mortgage Electronic Registration Systems Inc. as Nominee for Sunset Mortgage Company, L.P." was named in this action but has not filed an appearance with the court. Hereinafter, "the defendant" shall refer only to Suvernay.
The plaintiff noted the following liens or encumbrances with an interest in the property at issue here. Interest holders prior to the right to the mortgage include the town/city of Bridgeport, by virtue of inchoate liens for real estate taxes, and the city of Bridgeport WPCA, by virtue of a sewer lien in the amount of $50.96, recorded on July 11, 2007. The defendant, Mortgage Electronic Registration Systems, Inc. as nominee for Sunset Mortgage Company, LP, holds an interest subsequent in right to the mortgage by virtue of a mortgage in the amount of $80,000 recorded on October 27, 2006.
On July 24, 2008, the defendant filed a motion to strike the complaint (#116) on the ground that the plaintiff does not have standing to bring the foreclosure action because it does not allege that the plaintiff is a trustee by virtue of an express trust. The court ( Stodolink, J.T.R.) denied the defendant's motion to strike on August 12, 2008. The defendant filed an answer, special defenses and counterclaims (#124) on September 9, 2008. On January 9, 2009, the plaintiff filed its first motion for summary judgment (#131), which the court ( Doherty, J.) denied on May 15, 2009. On August 5, 2009, the plaintiff filed a motion to reargue the summary judgment (#136), which the court ( Doherty, J.) denied on December 29, 2009. The court provided an explanation as to its denial of the plaintiff's motion to reargue as follows: "It appears from the pleadings that this motion is untimely. Even if it were timely, the court finds that the affidavits raise a genuine issue of fact as to payments made by the defendant. Also, it would appear that the notice of default was issued prematurely. For the foregoing reasons, the [motion to reargue] is denied."
On April 15, 2010, the plaintiff filed the instant motion for summary judgment (#140) along with a memorandum of law and supporting exhibits. On May 28, 2010, the defendant filed a memorandum in opposition to the motion for summary judgment and a supporting affidavit.
DISCUSSION
"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." (Internal quotation marks omitted.) Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007).
"In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact . . . [T]he moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere 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]." (Internal quotation marks omitted.) Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).
The plaintiff's motion for summary judgment argues that there are no genuine issues of material fact and that summary judgment should issue as a matter of law as to liability on the complaint, special defenses and counterclaims. The plaintiff specifically argues that the motion should be granted because it has established that it is the holder of the note and the mortgage and the defendant has defaulted. In support of its motion, the plaintiff has attached a copy of the defendant's answer, special defenses and counterclaims; a copy of the note endorsed in blank; a copy of the mortgage; a copy of a corrective assignment of the mortgage to the plaintiff; a copy of the notice of default letter to the defendant dated September 17, 2007; a printout of the defendant's payment history on the note; and an affidavit stating that the plaintiff owns the mortgage and the note, that payments are in default, and the balance due.
In its motion in opposition, the defendant argues that the plaintiff did not comply with the notice requirements of the mortgage. Specifically, the default notice mailed to the plaintiff covered a late payment for August and did not serve as a notice of default for subsequent late payments that were not yet due. The default letter also allegedly misstates the amount due and misrepresents how much the defendant had to pay to avoid acceleration, that the lender did not unequivocally exercise its option to accelerate the balance due, and that an identical default letter provided insufficient notice or at least presented a question of material fact in another action. The defendant has also filed an affidavit in opposition to the motion to summary judgment.
I. Summary Judgment as to Liability
In a mortgage foreclosure action, "[t]o make out its prima facie case, [the mortgagee] had to prove by a preponderance of the evidence that it was the owner of the note and mortgage and that [the mortgagor] had defaulted on the note." (Internal quotation marks omitted.) Ocwen Federal Bank v. Charles, 95 Conn.App. 315, 319 n. 5, 898 A.2d 197 (2006).
"[A] foreclosure complaint must contain certain allegations regarding the nature of the interest being foreclosed. These should include allegations relating to the parties and terms of the operative instruments, the nature of the default giving rise to the right to foreclosure, the amount currently due and owing, the name of the record owner and of the party in possession, and appropriate prayers for relief . . . The terms of the mortgage determine the necessary elements of the plaintiff's prima facie case." (Citation omitted; internal quotation marks omitted.) New England Savings Bank v. Bedford Realty Corp., 246 Conn. 594, 610-11, 717 A.2d 713 (1998).
"It is well established that the exercise of an acceleration clause is proper upon an event of default as provided for and controlled by the terms of the note and the mortgage deed . . . Notices of default and acceleration are controlled by the mortgage documents. 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." (Citations omitted; internal quotation marks omitted.) Bank of America, FSB v. Hanlon, 65 Conn.App. 577, 581-82, 783 A.2d 88 (2001).
A.
In support of its motion for summary judgment, the plaintiff has attached the note endorsed in blank, the mortgage, a corrective assignment of mortgage to the plaintiff and the notice of default letter sent to the defendant, dated September 17, 2007. The plaintiff has also attached a supporting affidavit averring that the plaintiff is the owner of the mortgage and the note, that the defendant is in default and that the defendant notified the plaintiff of the default in accordance with the terms of the note and the mortgage. In addition, the defendant's answer admits that payments on the note are in default.
Based on the exhibits submitted to the court in its pleadings, the court finds that the plaintiff has met its initial burden in the motion for summary judgment and established through its exhibits and supporting affidavit that there are no issues of material fact regarding issues of liability as to the complaint. The burden now shifts to defendant to either produce evidence demonstrating that some material fact is in dispute or to establish at least one legally sufficient special defense.
B.
In an effort to show that there are still disputed issues of material fact, the defendant argues that the plaintiff did not comply with the notice requirements of the mortgage and did not meet necessary requirements in its notice of default letter. In support, the defendant has attached an affidavit that makes three sets of claims in support of these arguments. To test these claims, the court shall examine the mortgage, the note, the default letter and the affidavits of both parties.
"Because the mortgage is controlled by contract law, the question of proper notice essentially is a question of proper performance on the part of the bank that sent the letter. The common law holds that questions of performance are questions of fact to be determined by a fact finder; thus the question of proper notice is a question of fact. Because proper notice is mandatory before acceleration of the loan and the commencement of the foreclosure proceeding, the question of proper notice is a question of material fact for a fact finder to decide." US. Bank National Association v. Meyer, Superior Court, judicial district of Fairfield, Docket No. CV 07 6000635 (November 28, 2007, Maiocco, J.T.R.) [ 44 Conn. L. Rptr. 576].
1.
The first deficiencies complained of in the defendant's affidavit with regards to the plaintiff's failure to comply with the terms of the mortgage documents include that "no monthly payment was ever returned [to the defendant] or rejected by the [loan] servicer; [the defendant] received no notification that a payment was not credited to his account; nor did [the plaintiff] receive interest on any payment because payment was rejected . . ."
Section one of the mortgage agreement discusses the payment of principal and interest and provides: "Lender may return any payment or partial payment if [it] is insufficient to bring the Loan current. Lender may accept any payment or partial payment insufficient to bring the Loan current, without waiver of any rights hereunder or prejudice in its rights to refuse such payment or partial payments in the future, but Lender is not obligated to apply such payments at the time such payments are accepted. If each Periodic Payment is applied as of its scheduled due date, then Lender need not pay interest on unapplied funds. Lender may hold such unapplied funds until Borrower makes payment to bring the Loan current. If Borrower does not do so within a reasonable period of time, Lender shall either apply such funds or return them to Borrower. If not applied earlier, such funds will be applied to the outstanding principal balance under the Note immediately prior to foreclosure."
Here, the defendant did not submit timely payments for either August or September 2007. According to the plaintiff's affidavit, the August payment was received and applied on October 1, 2007 and the September payment was received and applied on November 15, 2007. The defendant never made payments "to bring the Loan current." Under the terms of the mortgage, the plaintiff could accept or return the payments and was not required to "apply" the payments at the time of acceptance. In light of the plaintiff's affidavit and the language in the mortgage, the court finds that the defendant has failed to establish that the plaintiff rejected his payments. If the payments were not rejected, the defendant could not expect that any payment would be returned, credited to his account or earn interest. Accordingly, the defendant has failed to establish that any payments should have been returned, credited to his account or earn interest and the mortgage gave him sufficient notice of this.
2.
The defendant's affidavit also states that the defendant "was told the interest rate on any change date could not increase by more than [one percent but he] was not informed the interest rate on the first change date could increase by more than one [percent]."
The "Adjustable Rate Balloon Note" provides that the Borrower make payments in the initial amount of $2,542.50 on the first day of each month beginning on December 1, 2006. In its section on interest rates, the note states that the interest rate "may change on the 1st day of November, 2008, and on that day every 6th month thereafter. Each date on which [the] interest may change is called a `Change Date.' . . . Beginning with the first Change Date, [the] interest rate will be based on an index . . . [The] interest rate will never be increased or decreased on any single Change Date more than [one percent]."
This language shows that changes in the interest rate would be subject to the one percent limitation after November 1, 2008, which the defendant avers he was told. Nevertheless, the note does not preclude that other variances in the interest rate might occur prior to that date, the "Change Date." The defendant signed the note containing this information. Accordingly, the defendant has failed to establish that he did not have notice that the Interest rate on the first Change Date could increase by more than one percent.
3.
The last set of deficiencies in the plaintiff's compliance with the terms of the loan documents set forth in the defendant's affidavit are that "the September 17, 2007 default letter did not state what action was required for the defendant to cure the default and the amount required to cure the default was more than the defendant owed on the date of the letter."
The September 17, 2007 notice of default letter contains two sections where it states the amounts the defendant must pay to avoid negative consequences. Text relating to the first set of figures provides: "Unless the payments on your loan can be brought current by October 17, 2007, it will become necessary to accelerate your Mortgage Note and pursue the remedies provided for in your Mortgage Deed of Trust. The total delinquency against your account as of today's date is as follows: Past Due Payments $5,085.02 . . .] Late Charge Balance $254.26 . . .] Total Delinquency as of 09/17/2007 $5,339.28 [. . .] Payments due in next 30 days $2,542.51 [. . .] Total due to cure default and bring the loan current as of October 17, 2007 $7,881.79 [. . .]." The second part of the letter containing information on amounts owed provides: "To avoid the possibility of acceleration, you must pay . . .] $5,339.28 by September 30, 2007, 2:00 p.m. Central Time [. . .] $7,881.79 by October 17, 2007, 2:00 p.m. Central Time[.]"
Viewing the allegations in the light most favorable for the nonmovant, the court finds that the language in the default notice letter of September 17 2007 is ambiguous as to amount the defendant was required to pay to avoid acceleration on the default, and fails to clearly specify the actions required of the defendant to cure the default. Specifically, the format of the notice of default letter makes it appear as though the defendant must pay the sums of both $5,339.28 and $7,881.79 in order to avoid acceleration. This constitutes a failure by the plaintiff to fulfill the terms of the mortgage as they relate to proper notice for default and acceleration.
Accordingly, the defendant has raised an issue of material fact that must be decided by a fact finder. This is sufficient to defeat the plaintiff's motion for summary judgment. The court need not reach the parties' other arguments as to the issue of liability.
II. Special Defenses
The plaintiff has also moved summary judgment on each of the defendant's special defenses, arguing that there are no issues of material fact raised in any of the defenses, that the defenses are legal conclusions incapable of defeating a motion for summary judgment and that a violation of truth in lending laws is not a proper special defense in a foreclosure action.
"[T]he decisions of the Connecticut Superior Court are almost in unanimous agreement that a [plaintiff's] motion for summary judgment as to a special defense is improper. Such a motion is improper because Practice Book § 17-44 does not provide for summary judgment on special defenses . . . Summary judgment on a special defense is also improper because [e]ven if the special defenses were all to fail . . . the plaintiffs' motion and supporting documents do not remove from dispute facts relevant to determining whether they are entitled to judgment as a matter of law on the complaint itself . . ." (Citation omitted; internal quotation marks omitted.) Sound Post, LLC v. New Harvest Coffee Roasters, Inc., Superior Court, Housing Session at Bridgeport, Docket No. BRSP 056336 (May 6, 2005, Skolnick, J.); see also Wyatt Energy, Inc. v. Motiva Enterprises, LLC, 104 Conn.App. 685, 692 n. 7, 936 A.2d 280 (2007), cert denied, 286 Conn. 901, 943 A.2d 1103 (2008).
The court subscribes to the majority view of other Superior Court decisions that a motion for summary judgment as to special defenses is improper. Accordingly, the court denies the motion for summary judgment as to the defendant's special defenses.
III. Counterclaims
The plaintiff's motion for summary judgment also challenges the two counts raised in the defendant's counterclaim on the grounds that there are no issues of material fact raised in any of the defenses, that the defenses are legal conclusions incapable of defeating a motion for summary judgment and that a violation of truth in lending laws is not a proper special defense in a foreclosure action.
"[A]ny party may move for summary judgment upon any counterclaim or cross complaint as if it were an independent action." Practice Book § 17-44. "Because a counterclaim is a separate and distinct action . . . a party seeking summary judgment on both a complaint and a counterclaim must file an appropriate motion addressed to each." (Citations omitted; internal quotation marks omitted.) Miller v. Bourgoin, 28 Conn.App. 491, 500, 613 A.2d 292, cert. denied, 223 Conn. 927, 614 A.2d 825 (1992).
"[T]he use of a motion for summary judgment instead of a motion to strike [to challenge the legal sufficiency of a complaint] may be unfair to the nonmoving party because [t]he granting of a defendant's motion for summary judgment puts the plaintiff out of court . . . [while the] granting of a motion to strike allows the plaintiff to replead his or her case." (Internal quotation marks omitted.). Larobina v. McDonald, 274 Conn. 394, 401, 876 A.2d 522 (2005). Accordingly, "the use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate when the complaint fails to set forth a cause of action and the defendant can establish that the defect could not be cured by repleading." Id.
A.
The defendant's first counterclaim alleges that the plaintiff's "failure to provide notice of acceleration as required by the mortgage deed is an unfair trade practice in violation of [General Statutes] § 42-110a et seq." The plaintiff attacks the counterclaim by arguing it sent proper notice to the defendant.
"There are instances in which violations of CUTPA have been upheld as valid counterclaims brought in foreclosure actions. See Cheshire Mortgage Service, Inc. v. Montes, [ 223 Conn. 80, 105-15, 612 A.2d 1130 (1992)]; Monetary Funding Group, Inc. v. Pluchino, [ 87 Conn.App. 401, 412-15, 867 A.2d 841 (2005);] JP Morgan Chase Bank, Trustee v. Rodrigues, [ 109 Conn.App. 125, 133, 952 A.2d 56 (2008)]." (Internal quotation marks omitted.) EMC Mortgage Corp. v. Shamber, Superior Court, judicial district of Tolland, Docket No. CV 07 5001252 (November 12, 2009, Sferrazza, J.).
While the allegations of the first count of the counterclaim are exceedingly concise, it cannot be said that it fails to set forth a cause of action that cannot be cured by repleading. This count clearly attempts to set forth a claim under the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110A et seq. Because the counterclaim sets forth a cause of action that might be cured by repleading, the motion for summary judgment is denied. Likewise, in light of the court's findings above, the plaintiff's defense that it sent proper notice is not persuasive because this issue is an unresolved question of fact.
B.
The second count of the defendant's counterclaim alleges that "CMSC HEAT 2006-08 is not an express trust within the meaning of [General Statutes § ] 52-106," the plaintiff did not provide the defendant with notice as required under General Statutes § 36a-746b, that real estate values have fallen in Bridgeport in the last year, and requests that the court "exercise its equitable jurisdiction to adjust the principal balance to reflect the decline in market value and adjust the arrearage to permit the defendant's continued occupancy of the premises and to permit the payment of local real estate taxes." The court construes this count as based on the Connecticut Abusive Home Loan Lending Practices Act (CAHLPA), General Statutes § 36a-746b.
The other allegations of the second count of the counterclaim present no cognizable legal cause of action that this court can discern.
"The statutes encompassing CAHLPA are contained in Chapter 669, the activities regulated by the Bank Commissioner under the Banking Law of Connecticut . . . Given the focus on regulatory enforcement set forth [in this chapter] and the absence of any statutory indication that the legislature intended any private right of action, there are no genuine issues of material fact and the [plaintiff . . . is] entitled to summary judgment as a mafter of law . . ." (Citations omitted.) Pantanella v. Rowe, Superior Court, judicial district of Middlesex, Docket No. MMX CV 08 4009254 (October 14, 2009, Bear, J). This court finds persuasive the reasoning set forth in Pantanella that CAHLPA does not provide a private right of action. Because the second count fails to set forth a cause of action that the defendant can reestablish by repleading, the motion for summary judgment with respect to this count is granted.
CONCLUSION
For the foregoing reasons, the court denies the plaintiff's motion for summary judgment with respect to issues of liability on the complaint, the defendant's special defenses and the first count of the defendant's counterclaim, but grants the motion as to the second count of the defendant's counterclaim.