Opinion
FBTCV166056445S
11-27-2017
WELLS FARGO BANK, N.A. v. Paul DEQUATTRO et al.
UNPUBLISHED OPINION
OPINION
Anthony D. Truglia, Jr., J.
Facts and Procedural Background
The plaintiff, Wells Fargo Bank, N.A. (Wells Fargo), commenced this action in April 2016. In its complaint, the plaintiff alleges that on March 26, 2004, Paul DeQuattro and Janice DeQuattro (the defendants) entered into a loan agreement in the amount of $200,000 with World Savings Bank FSB. The defendants memorialized their agreement by executing an Adjustable Rate Mortgage Note (the note) and an Open-End Mortgage Deed (the mortgage). On or before July 15, 2015, and since then, the plaintiff became the party entitled to collect the debt and enforce the mortgage. Months later, the defendants defaulted on the note. On August 30, 2017, the plaintiff filed a motion for summary judgment on the ground that it has established a prima facie case of liability in this foreclosure action. The plaintiff also claims a deficiency judgment and other relief, including a judgment awarding it attorneys fees and costs incurred in the prosecution of this action. On October 31, 2017, the defendants filed an objection to the plaintiff’s motion for summary judgment. The defendants’ objection is accompanied by an affidavit of Paul Dequattro. The court heard oral arguments on November 6, 2017 and took the matter under advisement.
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 ruling on a motion for summary judgment, the court’s function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). The purpose of a motion for summary judgment is to dispose of actions lacking a triable issue of material fact. See, e.g., Dorazio v. M .B. Foster Electric Co., 157 Conn. 226, 228, 253 A.2d 22 (1968). When deciding a motion for summary judgment, " the trial court must view the evidence in the light most favorable to the nonmoving party." Rodriguez v. Testa, 296 Conn. 1, 6, 993 A.2d 955 (2010). " The test is whether a party would be entitled to a directed verdict on the same facts." (Internal quotation marks omitted.) Connecticut Bank & Trust Co. v. Carriage Lane Associates, 219 Conn. 772, 781, 595 A.2d 334 (1991).
" In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts hold the movant to a strict standard ... Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Citation omitted; footnote omitted; internal quotation marks omitted.) Allstate Ins. Co. v. Barron, 269 Conn. 394, 405-06, 848 A.2d 1165 (2004). " A material fact is a fact that will make a difference in the result of the case." Tuccio Development, Inc. v. Neumann, 114 Conn.App. 123, 126, 968 A.2d 956 (2009). Special defenses that do not attack the making, validity or enforcement of the note and mortgage and, thus, raise no genuine issue of material fact that would warrant a trial do not prevent the. court from granting summary judgment in a foreclosure action. See, e.g., Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 16, 728 A.2d 1114 (1999).
The plaintiff asserts that there is no genuine issue of material fact as to the defendants’ liability and, therefore, it is entitled to judgment as a matter of law. The plaintiff’s main contention is that it has established all elements of a prima facie case. In support of its motion, the plaintiff submits an affidavit of Diane F. Duckett, Vice President of Loan Documentation of Wells Fargo. Duckett verifies as authentic copies of the note and mortgage attached to her affidavit as copies of the loan. documents executed by the defendants and a copy of the notice of default mailed to the defendants in November 2015.
The plaintiff argues that this court has the authority to grant summary judgment in a foreclosure case notwithstanding pending special defenses. The defendants assert four special defenses which state: (1) the plaintiff " made numerous errors in escrows and payments which have caused this mortgage to go into default without justification"; (2) the plaintiff failed to " mitigate the defendants’ damages in connection with this action, and that these damages have increased tremendously due to the negligent actions of the plaintiff in not properly crediting all amounts [they] paid"; (3) the plaintiff’s failure to properly apply payments to the defendants’ account were deceptive and abusive and, therefore, violate the Connecticut Unfair Trade Practices Act, General Statutes § § 42-110 et seq. and the Federal Consumer Financial Protection Act of 2010, 12 U.S.C. § § 5531-36; and (4) the plaintiff and its predecessor-in-interest failed to comply with federal loss mitigation obligations, even though the " defendants were eligible for relief." The plaintiff asserts that these special defenses are legally insufficient because they fail to comply with Practice Book § 10-50, which requires specific allegations of " [f]acts which are consistent with [the plaintiff’s] statements [of fact] but show, notwithstanding, that the plaintiff has no cause of action." The plaintiff also argues that the four special defenses asserted by the defendants are legally insufficient because they do not attack the making, enforcement or validity of the note and mortgage sued upon.
In response, the defendants argue that the endorsement on the note which forms the basis for the plaintiff’s cause of action is not dated. It is, therefore, impossible for the court to know when the plaintiff came into possession of the note. If so, there is a genuine issue of material fact as to when the plaintiff had the right to bring this foreclosure action, which implicates standing and the court’s subject matter jurisdiction to hear this action. The defendants also claim that the " cancelled" stamp which appears on the note gives rise to another issue of material fact as to the plaintiff’s standing that must be decided by the court in an evidentiary hearing. Second, the defendants argue that Paul Dequattro’s affidavit raises a genuine issue of material fact as to whether the note and mortgage is a true, accurate and complete copy of the note and mortgage which the defendants executed at closing.
It is clear to the court that the word " cancelled, " which is stamped twice on the last page of the note, refers to the endorsement to World Loan Company, and not to the note itself.
Paul Dequattro, in his affidavit, also denies that the defendants are in default of their loan obligations. This denial, the defendants argue, creates a material fact which precludes summary judgment at this time. Third, the defendants argue that " rights provided under federal and state consumer protection laws clearly lead to proper special defenses in foreclosure actions." More specifically, the defendants argue that " [i]mproper credit reporting which prevents a mortgagor from refinancing and saving his or her house clearly provides a special defense to enforcement of a mortgage." If so, the defendants appear to argue, such a claim of a violation of these rights creates questions of fact which require an evidentiary hearing and prevent entry of summary judgment against them. The defendants argue in closing that " [f]raud and misrepresentation cannot stand in a court of equity." They argue that, for all of the reasons stated, this court deny the motion.
A. The Plaintiff’s Prima Facie Case
The court first considers the plaintiff’s argument that it has established the elements of a prima facie cause of action for foreclosure of a mortgage. To establish a prima facie case, the mortgagee must prove by a preponderance of the evidence that: (1) it was the owner of the note at the time it commenced the action; and (2) the mortgagors defaulted on their obligations under the note. See, e.g., Webster Bank v. Flanagan, 51 Conn.App. 733, 751, 725 A.2d 975 (1999).
The plaintiff’s affiant states that she is familiar with the business records maintained by the plaintiff for the purpose of servicing mortgage loans. She attests that " [t]hese records (which include data compilations, electronically imaged documents, and others) [were] made at or near the time by, or from information provided by, persons with knowledge of the activity and transactions reflected in such records, and are made and kept in the course of business activity conducted regularly by Wells Fargo." She further states that " [i]t is the regular practice of Wells Fargo’s mortgage servicing business to make these records." The affiant also verifies copies of the adjustable rate mortgage note and open-end mortgage deed which the plaintiff alleges were signed by the defendants at the closing of their loan. The plaintiff’s affiant also certifies a copy of the notice of default dated November 24, 2015 and proof of mailing of that notice to the defendants. The affiant satisfies the foundational elements for the business records exception to the hearsay rule, C.C.E. § 8-4. The records also satisfy the reliability requirement for computer-generated records, see, e.g., Midland Funding, LLC v. Mitchell -James, 163 Conn.App. 648, 656-58, 137 A.3d 1 (2016), and the court may rely on them in deciding the plaintiff’s motion for summary judgment, see Practice Book § 17-46.
The affidavit states that the defendants borrowed the sum of $200,000 on March 26, 2004 and promised to pay it back in monthly installments commencing May 15, 2004. On that date, the defendants executed a note and mortgage, copies of which are attached to the affidavit as exhibits. The affiant further states: (1) that the plaintiff is now in possession of the note, which is endorsed in blank; (2) that the defendants are in default for failing to make payments due November 15, 2014 and thereafter; and (3) that the plaintiff sent a notice of default dated November 24, 2015 to the defendants.
With respect to the defendants’ argument as to the undated endorsement, the defendants are correct that " recent decisions by our [A]ppellate [C]ourts that have found that the plaintiff had standing to commence the foreclosure action have also generally required evidence to show when the plaintiff had possession of the note, even if the plaintiff has presented an endorsed note." (Emphasis omitted.) Deutsche Bank National Trust Co. v. Thompson, Superior Court, judicial district of Hartford, Docket No. CV-09-5027964-S (August 29, 2016, Robaina, J.) . In determining when a party came into possession of a note, our Appellate Court has also found that a court can rely on a party’s representation that it held the note prior to the commencement of a foreclosure action. See, e.g., Equity One, Inc. v. Shivers, 310 Conn. 119, 132-33, 74 A.3d 1225 (2013) (trial court correctly relied on the plaintiff’s representation that it held the note " at the time of the commencement of the foreclosure action").
In the present case, the defendants have offered no evidence challenging plaintiff’s counsel’s representation to the court that the plaintiff possessed the note prior to or at the time it commenced this action. The defendants promised to repay the loan to " World Savings Bank, [FSB], its successors and/or assignees." The plaintiff’s complaint alleges that " Wells Fargo Bank, National Association is successor by merger to Wachovia Bank, N.A., which is formerly known as World Savings Bank, FSB." It is not clear from the pleadings or affidavits precisely when the merger took place; however, it is clear from uncontradicted evidence before the court that the plaintiff made demand for payment upon the defendants in November 2014. The defendants challenge the plaintiff’s claim that they were in default of their loan obligations in November 2014; they do not, however, challenge whether the plaintiff was the proper party to notify them of the default on that date. In sum, the court relies on the plaintiff’s representation in paragraph 5 of its complaint (and the allegations of the affidavit submitted in support of the motion), that on or before July 15, 2015, and since then, it became the party " entitled to collect the debt."
The foregoing analysis establish the plaintiff’s prima facie case for foreclosure of the mortgage. Therefore, the plaintiff has carried its preliminary burden of showing that there are no genuine issues of material fact as to the defendants’ liability under the note and mortgage.
B. The Defendants’ Affidavit in Opposition to the Motion
The burden now shifts to the defendants to establish the existence of a material fact that would prevent the court from entering summary judgment in the plaintiff’s favor. General Statutes § 42a-3-308(a) provides in relevant part: " [i]n an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature."
Paragraph 2 of Paul DeQuattro’s affidavit states only that " he does not believe" that the note attached to the plaintiff’s affidavit is the same note that he and his wife signed at closing. The record, however, reflects that the defendants’ signatures on the copy of the mortgage deed, witnessed and acknowledged pursuant to General Statutes § 47-5, while faded, are similar, if not identical, to the signatures on the note. The defendants have not offered any evidence from which the court could infer that the note is not what it appears to be, namely, a true, complete and accurate copy of the promissory note he and his wife signed when they received the loan. A statement that a party does not believe that an instrument or signature is genuine is not sufficient, as a matter of law, to raise an issue as to authentication. The defendants’ signatures on the note and mortgage are presumed to be authentic and they have the burden to prove otherwise. General Statutes § 42a-3-308(a) provides that " [i]n an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature." Insofar as the defendants have produced no evidence from which the court could reasonably conclude that the note submitted is anything other than what it purports to be, the defendants have failed to carry their burden.
The court also overrules the defendants’ objections based on their claim that the plaintiff, or the plaintiff’s predecessor-in-interest or loan servicer, misapplied payments or violated other laws governing residential mortgage loans. The defendants offer no evidence at all from which the court could reasonably conclude that the defendants made all payments due under the note in a timely fashion, but were nevertheless declared to be in default under the loan documents for nonpayment. See Emmerson v. Super 8 Motel-Stamford, 59 Conn.App. 462, 466, 757 A.2d 651 (2000) (" a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an issue ... It is not enough ... 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 [in support of a motion for summary judgment]"); see also Bank of America, N.A. v. Chainani, 174 Conn.App. 476, 486, 166 A.3d 670 (2017) (" [a] defense is that which is offered and alleged ... as a reason in law or fact why the plaintiff should not recover or establish what he seeks ... In a mortgage foreclosure action, a defense to the amount of the debt must be based on some articulated legal reason or fact").
The record is also devoid of any evidence from which the court could reasonably conclude that the plaintiff, or its predecessor-in-interest, acted in a commercially deceptive or abusive manner, such that equity should intervene to bar the plaintiff’s action for foreclosure. Practice Book § 10-50 requires that a party asserting a special defense set forth facts which show, the allegations of the plaintiff’s complaint notwithstanding, that the plaintiff has no cause of action. The burden to plead facts to establish a special defense may be minimal, such as defenses involving a statute of limitations. In cases involving more complicated defenses, as in the present case, the burden may be greater. But in every case, the party asserting a special defense must assert sufficient facts to establish the defense. In the present case, the defendants have not done so.
Finally, the court is not persuaded by Paul DeQuattro’s assertion that misstatements in the plaintiff’s Federal Loss Mitigation Affidavit should bar the remedy of foreclosure in this action. Although not made clear by either the affidavit or the defendants’ memorandum in opposition, the defendants’ argument appears to be that misstatements of fact in the affidavit either create an issue of fact preventing summary judgment in favor of the plaintiff, or deprive the defendants of rights to due process. Under either theory, the defendants seem to be arguing, the court should deny the plaintiff’s motion. See, e.g., LaSalle National Bank v. Freshfield Meadows, LLC, 69 Conn.App. 824, 833, 798 A.2d 445 (2002) (" [w]here the plaintiff’s conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles").
The court respectfully disagrees with this argument. First, Connecticut courts which have considered defenses to foreclosure based on alleged failures or refusals by lenders to modify or restructure residential loan agreements have held that lenders have no obligation to modify or restructure loan agreements for borrowers who are in default. See, e.g., Nationsbanc v. Howell, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-98-0164649-S (December 16, 1998, Rodriguez, J.) (" [t]he plaintiff has no duty to enter into workout negotiations with the defendant unless provided for in the loan documents. Where such a provision exists, a special defense alleging workout goes to the making validity and enforcement of the mortgage and note"); Provident Financial Services, Inc. v. Berkman, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-93-0135310-S (February 17, 1995, D’Andrea, J.) (" while the equitable special defense of a breach of the covenant of good faith and fair dealing has been recognized in foreclosure actions, the failure to negotiate following default does not address the making, validity and enforcement of the note and is legally insufficient"); National Mortgage Co. v. McMahon, Superior Court, judicial district of New Haven, Docket No. CV-93-0349246-S (February 18, 1994, Celotto, J.)
More recent case law also support the notion that defenses based upon a lender’s post-default actions regarding modification or loan restructuring do not bar a foreclosure action. In Williams v. Geithner, Docket No. 09-1959 (ADM/JJG), 2009 WL 3757380 (D.Minn. November 9, 2009), a class of residential mortgagors sought a preliminary injunction to prohibit all foreclosures in Minnesota on the ground that their due process rights were violated when they failed to receive loan modifications under the Home Affordable Mortgage Program. The court, however, found that the program did not create a protected liberty or property interest and denied the plaintiffs’ request for an injunction. To prevail on a due process claim, the " [p]laintiffs [had to] ... show a deprivation of a protected liberty or property interest." Williams v. Geithner, Docket No. 09-1959 (ADM/JJG), 2009 WL 3757380, *5. In so ruling, the court explained that " the statute at issue did not create an absolute duty on the ... Secretary to consent to loan modifications, " id., *6, but rather, allowed the Secretary to exercise some discretion to determine " whether to modify loans in certain circumstances." Id.
The defendants cite to no Connecticut authority denying foreclosure based on failure to comply with federal foreclosure relief programs. The one case cited by the defendants, Consumer Financial Protection Bureau v. Ocwen Financial Corp. and Ocwen Loan Servicing, LLC, Docket No. 13-02025 (RMC), 2016 WL 1729555 (D.C.Cir. February 26, 2014), involved a consent judgment which provided funding for homeowners whose homes were sold by Ocwen Financial Corp. (Ocwen), and required Ocwen " to provide mortgage loan relief in the form of principal reduction loan modifications on certain first lien mortgage loans." It is true, as the defendants argue, that the Ocwen court imposed substantial penalties upon the defendant for its history of improper loan practices. However, the court’s rulings in the case do not provide authority for the defendants’ claim that " misapplication of payments" and other " improper loss mitigation practices, " without a specific factual basis for such claims, are legally sufficient defenses to foreclosures.
The court follows the reasoning and holdings of the cases cited above and rejects the defendants’ arguments that summary judgment should be denied based on alleged misstatements in the Federal Loss Mitigation Affidavit filed by the plaintiff or due to the plaintiff’s failure to comply with federal foreclosure relief programs.
Conclusion
For the reasons set forth above, the plaintiff’s motion for summary judgment as to liability is granted.