196 Conn.App. 836
Conn. App. Ct.2020Background
- 2007: Charles and Holly Hellman executed a $532,000 promissory note to Bank of America, secured by a Westport mortgage; the note was endorsed in blank. Defendants defaulted in 2011.
- Jan 7, 2013: Bank of America assigned the note and mortgage to Hudson City Savings Bank (HCSB); Dec 4, 2013: HCSB commenced foreclosure.
- Aug 4, 2017: HCSB moved for summary judgment as to liability, supported by an affidavit of Regina Rhodes, a copy of the note (endorsed in blank), the assignment, and a June 21, 2013 notice of default; the trial court granted summary judgment on Oct 30, 2017.
- Nov 1, 2015 (earlier): HCSB had merged into Manufacturers and Traders Trust Company (M&T); HCSB filed a motion to substitute M&T as plaintiff on Nov 28, 2017, which the court allowed.
- Trial court entered a judgment of foreclosure by sale for M&T; defendants appealed, challenging (1) the substitution and (2) the grant of summary judgment in HCSB’s favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether substituting M&T for HCSB was improper | Merger vested HCSB’s assets in M&T; substitution merely named the real party in interest and did not prejudice defendants | Substitution came >2 years after merger and after summary judgment filing, misleading parties and impairing defense and discovery | Substitution was not an abuse of discretion: merger vested assets in M&T by operation of law; no demonstrated actual prejudice to defendants |
| Whether HCSB (as plaintiff) had standing (possession of the note when suit began) | Production of the note endorsed in blank plus Rhodes affidavit and the Jan 7, 2013 assignment established a rebuttable presumption HCSB held the note when suit began | Rhodes affidavit was conclusory about timing; defendants offered affidavit raising doubts about ownership and existence of HCSB | HCSB satisfied prima facie standing: note production + assignment established possession; defendants failed to rebut presumption |
| Whether a condition precedent (notice of default) was satisfied | Rhodes affidavit and a copy of the notice/envelope showed notice was given; M&T argued the envelope markings indicate first-class mailing | Rhodes averred certified mailing but produced no return receipt or proof of actual delivery; defendants argued no admissible evidence notice was sent by first-class mail or received | Summary judgment improper on this ground: plaintiff failed to prove notice was actually delivered or that it was sent by first-class mail as the mortgage required; genuine issue of material fact existed |
Key Cases Cited
- Financial Freedom Acquisition, LLC v. Griffin, 176 Conn. App. 314 (Conn. App. 2017) (surviving bank in merger succeeds to assets and may prosecute pending actions; substitution of surviving entity is discretionary and not always required)
- Aurora Loan Servs., LLC v. Condron, 181 Conn. App. 248 (Conn. App. 2018) (holding that a certified-mail notice of default, without evidence of actual delivery, does not satisfy a mortgage clause deeming notice given only by first-class mail)
- Equity One, Inc. v. Shivers, 310 Conn. 119 (Conn. 2013) (production of a note endorsed in blank creates a rebuttable presumption that the producing party is the rightful holder/owner for standing)
- Wells Fargo Bank, N.A. v. Henderson, 175 Conn. App. 474 (Conn. App. 2017) (summarizes standing rules in foreclosure: holder must produce the note; production shifts burden to defendant to rebut ownership)
- U.S. Bank Nat. Ass'n v. Christophersen, 179 Conn. App. 378 (Conn. App. 2018) (production of the note and supporting affidavit can establish a prima facie case that the plaintiff is the holder entitled to enforce the note)
Decision: judgment of foreclosure reversed; summary judgment denied; case remanded for further proceedings consistent with opinion.