187 Conn. App. 511
Conn. App. Ct.2019Background
- Gonzalez bought property in 2006 with financing arranged by mortgage broker David J. Bigley (Main Street Mortgage, LLC); the lender was Mortgage Capital Group, LLC (Mortgage Capital), disclosed only at closing.
- Gonzalez alleged Bigley misrepresented monthly payments and closing costs, loaned him $16,000 at closing, and failed to disclose related-party relationships (seller mortgage, attorney, appraiser).
- Gonzalez asserted six special defenses (fraudulent inducement, negligent misrepresentation, equitable estoppel, unconscionability, duress, unclean hands) all premised on Bigley acting as an agent/employee of Mortgage Capital.
- Trial court found plaintiff Bank of America established a prima facie foreclosure case and rejected Gonzalez’s defenses, concluding Gonzalez failed to prove Bigley was an agent or employee of Mortgage Capital.
- Key documentary evidence showed Bigley identified himself as an independent contractor/mortgage broker and disclosures indicated no lender had been obtained when certain forms were signed.
- On appeal Gonzalez challenged the agency finding and the ruling on unconscionability; the appellate court affirmed, holding the agency finding was not clearly erroneous and thus the special defenses failed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gonzalez proved Bigley was agent/employee of Mortgage Capital | Bigley was an independent broker; no evidence Mortgage Capital controlled or directed Bigley | Bigley acted for and communicated on behalf of Mortgage Capital; agency can be inferred from conduct | Court: Gonzalez failed to prove agency; finding that Bigley was an independent contractor was not clearly erroneous |
| Whether Bigley had apparent authority from Mortgage Capital | No evidence Mortgage Capital’s acts created appearance of authority; plaintiff lacked liability for broker’s conduct | Apparent authority existed because Mortgage Capital communicated through Bigley | Court: No evidence principal caused third parties to rely on purported authority; Gonzalez did not rely on Mortgage Capital prior to closing |
| Whether Gonzalez’s special defenses (fraud, misrepresentation, estoppel, duress, unclean hands) can stand absent agency | Plaintiff: Defenses rest on broker’s conduct; agency to principal is required to impute those acts | Defendant: Broker’s misconduct establishes defenses regardless of formal agency status | Court: Defenses fail because they depended on establishing agency which Gonzalez did not prove |
| Whether the mortgage was unconscionable | Plaintiff: No procedural or substantive unconscionability proven tied to plaintiff | Defendant: Mortgage was unaffordable and procured by unfair practices; unconscionability independent of agency | Court: Unconscionability defense was aimed at broker’s conduct; because agency not proved, defense fails |
Key Cases Cited
- CitiMortgage, Inc. v. Coolbeth, 147 Conn. App. 183 (2013) (agency between broker and lender is critical to impute broker’s representations to lender)
- Gagliano v. Advanced Specialty Care, P.C., 329 Conn. 745 (2018) (elements and factors for establishing agency)
- Beckenstein v. Potter & Carrier, Inc., 191 Conn. 120 (1983) (apparent authority requires principal’s acts creating belief in agent’s authority)
- U.S. Bank, N.A. v. Foote, 151 Conn. App. 620 (2014) (elements of prima facie case in mortgage foreclosure)
- Hirsch v. Woermer, 184 Conn. App. 583 (2018) (doctrine of equitable defenses to foreclosure and unconscionability standard)