Opinion
CV156053178S
04-18-2017
Wells Fargo Bank, N.A. v. Janet Bailey
UNPUBLISHED OPINION
Filed April 19, 2017
MEMORANDUM OF DECISION
Edward T. Krumeich, J.
Defendant Janet Bailey has moved for an award of counsel fees against defendant Wells Fargo Bank, N.A. (" Wells Fargo") pursuant to C.G.S. § 42-150bb. For the reasons stated below, the motion is denied.
Connecticut General Statutes § 42-150bb provides, in pertinent part, as follows:
Whenever any contract . . . to which a consumer is a party, provides for the attorneys fee of the commercial party to be paid by the consumer, an attorneys fee shall be awarded as a matter of law to the consumer who successfully prosecutes or defends an action or a counterclaim based upon the contract . . . For the purposes of this section, " commercial party" means the seller, creditor, lessor or assignee of any of them, and " consumer" means the buyer, debtor, lessee or personal representative of any of them. The provisions of this section shall apply only to contracts . . . in which the money, property or service which is the subject of the transaction is primarily for personal, family or household purposes.
Wells Fargo challenges whether a mortgage foreclosure is " an action [by a consumer] based upon a contract" within the meaning of C.G.S. § 42-150bb citing Judge Leuba's decision in Ameriquest Mortgage Co. v. Sievers, 2010 WL 427214 *2 (Conn.Super. 2010) , citing Liapes v. Beaulieu, 18 Conn.App. 329, 331, 557 A.2d 934 (2011) (42-150aa does not apply to mortgage foreclosure).
In Bank of New York v. Bell, 52 Conn.Supp. 32, 38 (2011) , Judge Satter held that a mortgage foreclosure action to foreclose a commercial mortgage on a private residence was an action on a consumer contract for which a prevailing defendant was entitled to recover attorneys fees. Judge Satter held that a court need not look beyond the express language of C.G.S. § 42-150bb to determine whether the mortgage sought to be foreclosed was a consumer contract citing Rizzo Pool Co. v. Del Grosso, 240 Conn. 58, 72, 689 A.2d 1097 (1997), which implicitly overruled Liapes . Judge Mottolese declined to follow Ameriquest and Liapes in People's United Bank v. Wright, 2015 WL 4880142 *1 (Conn.Super. 2015) (Mottolese, J.T.R.) , and followed Bell in awarding attorneys fees under C.G.S. § 42-150bb in that mortgage foreclosure action. Many other superior courts have held that attorneys fees may be awarded under C.G.S. § 42-150bb in mortgage foreclosure actions. See e.g., Citimortgage v. Speer, 2012 WL 1759867 *1 (Conn.Super. 2012) (Devine, J.) ; U.S. Bank, N.A. v. Coley, 2011 WL 6413788 *4-5 (Conn.Super. 2011) (Hartmere, J.); J.P. Morgan Chase Bank v. Hinojosa, CV 10-6005068 S p. 1 (Conn.Super. 2010) (Matasavage, J.). This Court agrees that attorneys fees may be recovered under C.G.S. § 42-150bb in an appropriate mortgage foreclosure case.
The Court declines to find that the motion for fees was untimely under P.B. § 11-21 because it was not filed within 30 days after the Court granted her motion to dismiss for lack of personal jurisdiction. Plaintiff had moved to cite defendant back in the action after dismissal and defendant had appeared to defend against the motion so it was reasonable to assume the action would continue and had not yet been disposed favorably to defendant until the action was later withdrawn. Under the circumstances, defendant's delay in moving for fees was reasonable and defendant did not waive her rights to a fee award under C.G.S. § 42-150bb. See Rizzo, 240 Conn. at 63-64.
The question remains whether defendant " successfully . . . defend[ed] an action . . ." within the meaning of C.G.S. § 42-150bb. Defendant had prevailed on a motion to dismiss for lack of personal jurisdiction, but plaintiff moved to cite defendant back into the case, which motion was pending when the case was withdrawn by plaintiff after the parties entered into a mortgage modification agreement. In Connecticut Housing Finance Authority v. Alfaro, 163 Conn.App. 587, 592, 135 A.3d 1256 (2016), the Appellate Court set forth the standard for determining whether attorneys fees are to be awarded pursuant to C.G.S. § 42-150bb:
In this case, to be awarded attorneys fees pursuant to § 42-150bb, the defendant was required to prove that: (1) he is a consumer party; (2) the plaintiff is a commercial party; (3) the mortgage that the plaintiff attempts to foreclose upon is a contract " in which the money, property or service which is the subject of the transaction is primarily for personal, family or household purposes"; (4) the mortgage provides that the mortgage holder has the right to be awarded attorneys fees by the consumer if the mortgage holder successfully prosecutes an action on the basis of the mortgage; and (5) he successfully defended an action based upon the mortgage. See General Statutes § 42-150bb.
The Appellate Court in Alfaro assumed for purposes of that appeal that C.G.S. § 42-150bb applied to a mortgage foreclosure action: " [a]lthough we note that this court has held that the issue of whether the contract at issue falls within the purview of § 42-150bb must be resolved first; Tyler E. Lyman, Inc. v. Lodrini, 78 Conn.App. 582, 589, 828 A.2d 676 (2003); neither party has briefed this issue on appeal. Thus, we will assume, only for the purpose of resolving this appeal, that the remaining four requirements were met and that § 42-150bb applies to foreclosure cases in general and to this foreclosure case in particular." 163 Conn.App. at 592.
In Alfaro, the Appellate Court held that the question of whether a defendant successfully defended an action depends on the facts of the case. 163 Conn.App. at 592. " To successfully defend an action, a consumer party must prevail on the merits of its answer or special defense." Id. at 593. In Alfaro plaintiff withdrew its motion for summary judgment and the case in its entirety as a matter of right. Defendant moved for fees arguing that the withdrawal was motivated by the defenses that were raised. The Appellate Court upheld the trial court's denial of fees because there was no evidence in the record as to the reasons for the withdrawal.
The Supreme Court has accepted certification for appeal on the Alfaro case, Connecticut Housing Finance Authority v. Alfaro, 321 Conn. 925, 138 A.3d 286 (2016), limited to the following question: " Did the Appellate Court properly determine that the trial court correctly denied the defendant's request for attorneys fees pursuant to General Statutes § 42-150bb?" Until there is a contrary Supreme Court decision, the Appellate Court opinion is binding precedent. See e.g., Somers Mill Assoc., Inc. v. Fuss & O'Neill, Inc., 1998 WL 811384 *2-3 (Conn.Super. 1998).
Here, defendant argues that she successfully defended the action because she prevailed on a motion to dismiss and the action was withdrawn before she was brought back into the action on the motion to cite her into the action. Defendant argues that withdrawal of the action was sufficient to qualify for an award of fees " Section 42-150bb does not require the defendant to defeat the underlying obligation, but simply to defeat the plaintiff's action brought against him." Bell, 52 Conn.Supp. 32, 2011 WL 2184964 *11. This argument has a surface appeal and might have sufficed if the action were withdrawn after the dismissal because defendant satisfied all the other elements of a fee award under the statute, assuming the withdrawal was based on the defense and not on other factors. Compare, Hinojosa, supra (successful motion to dismiss for insufficient process supported fee award).
However, the withdrawal here was the result of a mortgage modification agreement entered into between defendant and the lender. Defendant did not prevail in the action, she settled. In the modification agreement defendant admitted default in the underlying obligations under the note and mortgage, the parties restructured the debt and plaintiff withdrew the action in accordance with the agreement. Plaintiff is not entitled to attorneys fees under C.G.S. § 42-150bb because she did not prevail in the underlying action; rather both sides compromised the controversy and reinstated the loan on modified terms so the foreclosure action was no longer necessary. See Wilkes v. Thomson, 155 Conn.App. 278, 283, 109 A.3d 543 (2015) (no fees awarded in summary process action when defendant voluntarily vacated premises). To interpret the statute to permit award of fees for withdrawal of a foreclosure action after modification of the loan would be contrary to the express requirement of Section 42-150bb that defendant " successfully . . . defends an action" and the strong public policy of this state that " favors and encourages the voluntary settlement of civil suits." Robinson v. Galino, 275 Conn. 290, 306, 880 A.2d 127 (2005).
That the mortgage modification agreement was entered into outside the action does not detract from the conclusion that one of the objects of the agreement was withdrawal of the pending foreclosure action and that it was the modification of the loan and not defendant's successful motion to dismiss that resulted in the withdrawal of the action.
Arguably, the fees allowed under Section 42-150bb serve the same purpose; to encourage voluntary settlements by allowing fee awards where consumers are required to defend or prosecute a civil action to successful conclusion. Compare, Bell, 52 Conn.Supp. at 39, citing Fraser v. ETA Ass'n, Inc., 41 Conn.Supp. 417, 418-19, 580 A.2d 94 (1990) (the benefits of fee awards under C.G.S. § 42-150bb).
The motion for counsel fees pursuant to C.G.S. § 42-150bb is denied.