161 Conn.App. 133
Conn. App. Ct.2015Background
- In 2007 Christos Simoulidis borrowed $415,000 from Washington Mutual Bank and executed a promissory note and mortgage on real property in Norwalk.
- Washington Mutual failed in 2008; the FDIC as receiver executed a September 25, 2008 purchase-and-assumption agreement conveying the bank’s assets to JPMorgan Chase (plaintiff).
- Plaintiff filed a foreclosure action in February 2010 and produced the original note, which contained an undated blank endorsement.
- The defendant moved to dismiss in 2013, claiming lack of subject matter jurisdiction because (1) JPMorgan was not the owner of the debt, (2) the note was not a negotiable instrument because the lender name was a trade name, and (3) the note and mortgage were nullities.
- The trial court found JPMorgan was a holder in possession of a note endorsed in blank and that the purchase-and-assumption agreement transferred the loans from the FDIC, denied the motion to dismiss, and a judgment of strict foreclosure was entered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose | JPMorgan is holder in possession of the note (blank endorsement) and thus entitled to enforce it | JPMorgan lacks ownership of the debt; witness testimony showed Freddie Mac was investor | Holder-in-possession presumption stands; defendant failed to rebut; JPMorgan has standing |
| Negotiability/trade name | Note endorsed in blank makes it negotiable and payable to bearer | Washington Mutual Bank, FA was a mere trade name and not a "person" under UCC, so instrument is invalid | Court found Washington Mutual Bank, FA was a valid corporate name (not a trade name); note is negotiable |
| Voidness of note/mortgage (nullity) | Documents and corporate records show the bank lawfully used both names; FDIC conveyed loans to JPMorgan | Because the lender name did not exist as an entity, the note and mortgage are void | Court found no nullity: bank’s name change was lawful and plaintiff acquired loans under purchase-and-assumption agreement |
Key Cases Cited
- J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307 (Conn. 2013) (clarifies holder presumption and when a defendant can rebut ownership of the debt)
- RMS Residential Properties, LLC v. Miller, 303 Conn. 224 (Conn. 2011) (holder in possession of a note endorsed in blank is presumed owner of the debt)
- Countrywide Home Loans Servicing, LP v. Creed, 145 Conn. App. 38 (Conn. App. 2013) (production of original note with blank endorsement sufficient to establish standing)
- AvalonBay Communities, Inc. v. Orange, 256 Conn. 557 (Conn. 2001) (standing implicates subject matter jurisdiction and requires a real interest)
- U.S. Bank, N.A. v. Schaeffer, 160 Conn. App. 138 (Conn. App. 2015) (summarizes Connecticut law on holder possession, presumption of ownership, and defendant’s burden to rebut)