192 Conn.App. 826
Conn. App. Ct.2019Background:
- Ditech Financial, LLC filed a foreclosure complaint on Oct. 27, 2016, alleging it was the holder of a promissory note and mortgage on property owned by Maud Joseph (and co-defendant Manita Cenat).
- Ditech moved on June 22, 2017 to substitute MTGLQ Investors, L.P. (MTGLQ) as plaintiff, representing it had assigned the mortgage and note; the court granted substitution on July 13, 2017.
- The clerk entered default for failure to plead on Nov. 22, 2017, despite defendants having filed a request to revise on Sept. 29, 2017; the trial court later granted MTGLQ’s motion for judgment of strict foreclosure on March 12, 2018.
- Joseph appealed, arguing primarily that Ditech lacked standing to commence the action because it did not hold or own the note at filing (claiming the loan was owned by Fannie Mae or had been sold to MTGLQ before suit).
- The trial court’s foreclosure order contained a one‑sentence statement that the “Original Note and Mortgage documents have been reviewed,” but the appellate record lacked the note, a lost note affidavit, transcript of any hearing, or other findings showing who held or had authority to enforce the note when the suit was filed.
- Because the jurisdictional standing question turned on disputed factual findings that the record could not resolve, the appellate court reversed and remanded for determination of the jurisdictional issue and further proceedings.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / Subject‑matter jurisdiction | Ditech (as servicer and record mortgagee) was entitled to enforce the note at commencement; trial court made necessary findings | Ditech never held the note when suit began; loan owner (Fannie Mae) sold loan to MTGLQ before suit, so Ditech lacked standing | Record inadequate to resolve standing; remanded for factual determination because standing implicates subject‑matter jurisdiction |
| Substitution of plaintiff (Ditech → MTGLQ) | Substitution proper because Ditech assigned mortgage and cause of action to MTGLQ | Substitution improper if Ditech lacked standing when suit commenced | Court did not resolve substitution merits on appeal due to unresolved standing; remand required |
| Authority to render strict foreclosure | Trial court had authority to enter strict foreclosure after reviewing documents | Defendant argued defaults/procedural issues and lack of standing made foreclosure improper | Judgment reversed because underlying jurisdictional defect (standing) unresolved in record |
| Denial of motion for reargument | Denial proper; defendants were in default and motion to strike was ineffective | Denied because defendants filed responsive pleadings; reargument warranted | Court denied relief below, but appellate court could not reach merits because of jurisdictional record gap |
Key Cases Cited:
- J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307 (2013) (standing is required to invoke court jurisdiction)
- Equity One, Inc. v. Shivers, 310 Conn. 119 (2013) (holder of note presumed owner of debt and may foreclose absent rebuttal)
- Citibank, N.A. v. Stein, 186 Conn. App. 224 (2018) (possession of a note endorsed in blank is prima facie evidence of standing)
- Deutsche Bank Nat’l Trust Co. v. Thompson, 163 Conn. App. 827 (2016) (appellate record inadequate to resolve standing; remand for factual determination)
- Deutsche Bank Nat’l Trust Co. v. Bialobrzeski, 123 Conn. App. 791 (2010) (standing and record sufficiency principles)
- Deutsche Bank Nat’l Trust Co. v. Cornelius, 170 Conn. App. 104 (2017) (distinguishes cases where trial record affirmatively shows plaintiff produced note and court found possession before suit)