Opinion
No. 4004580
April 13, 2006
MEMORANDUM OF DECISION RE MOTION TO STRIKE
The plaintiff, Wells Fargo Bank NA as Trustee (hereinafter "plaintiff'), commenced a foreclosure action against the mortgagor, Heather A. Skoglund (hereinafter "defendant"), and other parties as subsequent encumbrancers. Said foreclose action was initiated by complaint dated September 30, 2005. The defendant filed an answer, special defenses and counterclaim dated and filed on November 1, 2005. The defendant alleged seven special defenses together with a counterclaim claiming violation of CUTPA. The substance of the various defenses filed by the defendant arise out of alleged unreasonable, unnecessary and/or intentional delay of the closing of the loan until the defendant was in default of prior loan obligations securing her residence. The alleged inappropriate acts of commission and/or omission were carried out by the assignor of the note and deed assigned to the present plaintiff.
The plaintiff has filed a motion to strike all of the special defenses and counterclaims filed by the defendant on February 16, 2006. As to the special defenses, the plaintiff claims that the first special defense, lack of standing, is a legal conclusion which is not supported by fact. As to the second, third, fourth and fifth special defense of duress, unconscionability, unclean hands and CUTPA, the plaintiff claims that they do not address the making, validity and enforcement of the mortgage and further fail to show that the plaintiff has no cause of action against the defendant. As to the sixth special defense, equity in the property, the plaintiff contends that it fails to show that the plaintiff has no cause of action and that this special defense is the proper subject of a motion for foreclosure by sale not a special defense to the plaintiff's claim. As to the seventh special defense, inflated expenses and fees, the plaintiff further contends that the defendant is stating a legal conclusion which is not supported by fact and furthermore does not address the making validity enforcement of the note and mortgage.
As to the defendants' counterclaim, the plaintiff contends that it should be stricken as it fails to state a cause of action for violation of CUTPA. Furthermore, the plaintiff contends that it does not arise out of the same transaction and occurrence as the plaintiff's complaint.
APPLICABLE LAW
The plaintiff has moved to strike each of the defenses on the ground that each fails to state a ground on which relief may be granted. "The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of the [pleadings] . . . to state a claim on which relief can be granted. In ruling on a motion to strike, the court is limited to the facts alleged in the [pleading]. The court must construe the facts in the [pleading] most favorably to the [nonmoving party]." Novametrix Medical Systems v. BOC Group, Inc., 224 Conn. 210, 214-15 (1992). "This includes the facts necessarily implied ad fairly provable under the allegations . . . It does not include, however, the legal conclusions or opinions stated in the [pleading]." S.M.S. Textile v. Brown, Jacobson, Tillinghast, Lahan King, P.C., 32 Conn.App. 786, 796 (1993).
"If facts provable in the [pleading] would support a cause of action, the motion to strike must be denied." Id. "A motion to strike is properly granted if the [pleading] alleges mere conclusions of law that are unsupported by the facts alleged." Novametrix supra, at 215. "The purpose of a special defense is to plead facts that are consistent with the allegations of a complaint but demonstrate, nonetheless, that the plaintiff has no cause of action." Grant v. Bassman, 221 Conn. 465, 472-73 (1992). Provident Financial Services v. Berkman, 1995 WL 80103 (D'Andrea, J.) (1995).
The traditional defenses available in a foreclosure action are "payment, discharge, release, satisfaction or invalidity of a lien." See First Federal v. Kakaletris, 11 Conn. L. Rptr. 113 (February 23, 1994) (Karazin, J.); Shawmut Bank v. Wolfrey, 9 CSCR 216 (January 24, 1994 (Dean, J.); Citicorp Mortgage, Inc. v. Kerzner, 8 Conn. L. Rptr. 229 (January 15, 1993) (Curran, J.). In recognition that a foreclosure action is an equitable proceeding, courts have allowed mistake, accident, fraud, equitable estoppel, CUTPA, laches, breach of implied covenant of good faith and fair dealing, tender of deed in lieu of foreclosure and a refusal to agree to a favorable sale to a third party to be pleaded as special defenses. See Lawall Realty, Inc. v. Auwood, Superior Court, judicial district of New London at New London, Docket No. 527050 (March 1, 1994) (Leuba, J.); First Federal v. Kakaletris, supra; National Mortgage Co. v. McMahon, 9 CSCR 300 (February 18, 1994) (Celotto, J.); Shawmut Bank v. Wolfrey, supra; Citicorp Mortgage, Inc. v. Kerzner, supra. Other defenses which have been recognized are usury, unconscionability of interest rate, duress, coercion, material alteration and lack of consideration. See Fleet Bank v. Barlas, 12 Conn. L. Rptr. 32 (June 29, 1994) (Aurigemma, J.); Donza v. Depamphilis, 9 CSCR 472 (April 7, 1994); Connecticut National Bank v. Montanari, Superior Court, judicial district of Hartford/New Britain at Hartford, Docket No. 517808, 11 Conn. L. Rptr 10 (January 26, 1994) (Aurigemma, J.).
While courts have recognized equitable defenses in foreclosure actions, they have generally only been considered proper when they "attack the making, validity or enforcement of the lien, rather than some act or procedure of the lienholder." Lawall Realty, Ltd. v. Auwood, supra; National Mortgage Co. v. McMahon, supra. "The rationale behind this is that counterclaims and special defenses which are not limited to the making, validity or enforcement of the note or mortgage fail to assert any connection with the subject matter of the foreclosure action and as such do not arise out of the same transaction as the foreclosure action. Lawall Realty, Ltd. v. Auwood, supra; National Mortgage Co. v. McMahon, supra, 9 CSCR 300-01. Moreover, courts have held that "defenses to foreclosure are recognized when they attack the note itself rather than some behavior of the mortgagor." (February 24, 1994) (Sylvester, J.). Other courts have determined, however, that the court consider all circumstances to ensure that complete justice is done between the parties. See Shawmut Bank v. Carriage Hill Estates, Inc., Superior Court, Judicial District of Waterbury, Docket No. 116593 (June 10, 1994) (West, J.); Harborwalk v. Errato, 11 Conn. L. Rptr. 534 (May 20, 1994) (Walsh, J.); Chase Manhattan Bank v. Indian River Green, 8 Conn. L. Rptr. 165 (January 6, 1993) (Rush, J.) Provident Financial Services, Inc. v. Berkman, supra, 80103-04.
In a foreclosure action, the relevant factors for a court to consider in determining whether the "transaction test" has been met by the counterclaim includes: (1) whether the counterclaim is based on factors outside of the note or mortgage; (2) whether different issues of fact and law are presented by the complaint and counterclaim; and (3) whether separate trials would involve a substantial duplication of effort. See Knutson Mortgage Corp. v. Williams, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 334486 (September 26, 1997) (West, J.); see also Atlantic Richfield Co. v. Cannan Oil Co., supra; Jackson v. Conland, supra.
ANALYSIS
The court has considered the applicable law, pleadings, briefs and arguments of counsel. As to the first special defense, lack of standing, and seventh special defense, inflated fees and expenses, the defendant failed to brief and/or argue the validity of said special defenses. The court concludes that the defendant has abandoned those special defenses. As to the sixth special defense, equity in property, the court finds that said special defense is improper. It is the proper subject of a motion for foreclosure of sale and/or request that the property to be sold at the time of judgment. The second special defense, duress, third special defense, unconscionability, fourth special defense, unclean hands, and fifth special defense, CUTPA, are proper special defenses to the plaintiff's foreclosure action pursuant to case law cited above.
The defendant's counterclaim under the Connecticut Unfair Trade Practices Act (CUTPA) is an applicable counterclaim to a foreclosure action. Practice Book § 10-10, entitled "Supplemental Pleadings; Counterclaims," provides in relevant part: "In any action for legal or equitable relief, any defendant may file counterclaims against any plaintiff and cross claims against any codefendant provided that each such counterclaim and cross claim arises out of the transaction or one of the transactions which is the subject of the plaintiff's complaint . . ."
A violation of CUTPA has been recognized as a valid counterclaim brought in a foreclosure action." (Internal quotation marks omitted.) Lord Corp. v. Widewaters New Castle, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 03 0083912 (July 1, 2005, Moran, J.); American Business Credit, Inc. v. DL Auto Body Towing, Inc., Superior Court, judicial district of New Britain, Docket No. CV 01 0507665 (November 14, 2002, Berger, J.). See also Cheshire Mortgage Service, Inc. v. Montes, 223 Conn. 80, 105-15, 612 A.2d 1130 (1992) (where the Connecticut Supreme Court addressed in a foreclosure matter the merits of the defendants' counterclaims alleging, inter alia, a CUTPA violation against the plaintiff mortgage company.).
However, the trial courts have required that the CUTPA claim in a defendant's counterclaim must address the making, validity, or enforcement of the note or mortgage being foreclosed. Fleet Mortgage Corp. v. Bruno, Superior Court, judicial district of Windham at Putnam, Docket No. 063054 (March 8, 2001, Foley, J.). See also Webster Bank v. Linsley, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 97 0260406 (August 9, 2001, Booth, J.) (where the court found the CUTPA counterclaim to have insufficient allegations addressing the making of the note and mortgage or the default; the facts did not support a CUTPA claim that arose out of the same transaction that was the subject of the foreclosure.); Huntington Condominium v. Jackson, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 01 0384036 (October 10, 2002, Stevens, J.) (where the court found that the defendant's CUTPA counterclaim did not relate to a condominium association's right to collect common charges and to foreclose upon such charges not paid by individual owners under General Statutes § 47-244, and, therefore, struck the CUTPA claim.).
The court concludes that the allegations of the counterclaim in the present case relate to the inducement to make the note and mortgage and, therefore, are sufficiently related to the foreclosure action in question.
American Business Credit v. DL Auto Body Towing, Inc., supra.
ORDER
The motion to strike the defendant's special defenses are hereby granted as to the first, sixth and seventh special defenses and are hereby denied as to the second, third, fourth and fifth special defenses. The motion to strike the counterclaim is hereby denied.