176 Conn. App. 314
Conn. App. Ct.2017Background
- Angela C. Griffin executed a reverse mortgage and note in July 2008; repayment becomes due on a "Maturity Event," including death, unless the lender and the decedent’s estate "agree in writing within 30 days" to extend repayment and require the estate to cooperate in selling the property.
- The decedent died April 16, 2010; Ann T. Griffin was later appointed executrix and listed the property for sale; no written agreement extending repayment was executed.
- Foreclosure was commenced by Financial Freedom Acquisition, LLC in May 2011; OneWest Bank, N.A. (the substitute plaintiff) was later substituted as plaintiff; during the litigation OneWest merged with CIT Bank and changed its name to CIT Bank, N.A.
- At trial OneWest/CIT produced the original note endorsed in blank and introduced testimony establishing chain of possession; defendants argued the merger/name change meant a nonparty owned the note so the plaintiff failed to prove ownership.
- Defendants also asserted a special defense and counterclaim for breach of the implied covenant of good faith and fair dealing, alleging the lender should have facilitated sale rather than foreclose because the estate was cooperating.
- Trial court found plaintiff proved a prima facie foreclosure case (note endorsed in blank) and rejected defendants’ covenant claim for lack of a written agreement extending repayment; judgment of strict foreclosure entered and affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether substitute plaintiff established prima facie ownership of the note | OneWest/CIT produced the original note endorsed in blank and testimony tracing possession; endorsement creates presumption of ownership | Merger and post-complaint name change vested ownership in a nonparty (CIT Bank, N.A.), so OneWest lacked standing/ownership | Affirmed: blank endorsement + merger law mean the surviving bank (OneWest now CIT) owned the note; merger/name change did not defeat plaintiff’s ownership presumption |
| Whether merger/name change required substitution or abated the action | Plaintiff: merger merely continued corporate identity; assets vested in surviving bank by operation of law; substitution not required | Defendants: merger produced a distinct entity that was not a party, so plaintiff could not prove ownership | Held: federal/state bank and corporate law treat survivor as continuation; action not abated and substitution optional |
| Whether lender breached implied covenant of good faith and fair dealing by foreclosing instead of facilitating sale | Plaintiff: no written agreement to extend repayment; it was enforcing contractual right to immediate repayment | Defendants: estate cooperated to sell property, so lender had duty (under implied covenant) to communicate and facilitate sale rather than foreclose | Held: covenant not breached—contract unambiguously required a written agreement to extend repayment; absent such agreement lender had no obligation to facilitate sale |
| Whether defendants met burden to rebut holder/owner presumption from endorsed note | Plaintiff: production of note endorsed in blank created rebuttable presumption of ownership that defendants failed to overcome | Defendants: evidence of corporate restructuring undermines presumption | Held: defendants failed to rebut presumption; trial court’s factual findings on chain of possession and absence of agreement were not clearly erroneous |
Key Cases Cited
- Deutsche Bank Nat’l Trust Co. v. Bliss, 159 Conn. App. 483 (Conn. App. 2015) (blank endorsement creates prima facie evidence of ownership in foreclosure)
- Capstone Bldg. Corp. v. American Motorists Ins. Co., 308 Conn. 760 (Conn. 2013) (scope of implied covenant of good faith and fair dealing; requires impairment of contractual rights and bad faith)
- Landry v. Spitz, 102 Conn. App. 34 (Conn. App. 2007) (claims for breach of implied covenant must be tied to breach of specific contract term)
- Poole v. Waterbury, 266 Conn. 68 (Conn. 2003) (contract interpretation principles; definitive language is question of law)
- In re Worcester County Nat’l Bank, 263 Mass. 394 (Mass. 1928) (change of name and consolidation do not interrupt corporate identity or duties)