197 Conn.App. 129
Conn. App. Ct.2020Background
- Sonia Syed borrowed on a note and mortgage originally made payable to Washington Mutual Bank, F.A. (Washington Mutual).
- JPMorgan, as attorney-in-fact for the FDIC (receiver for Washington Mutual), obtained an assignment and commenced this foreclosure in May 2013; Christiana Trust and later Wilmington were substituted as plaintiffs.
- The original note bore a stamped endorsement: “Pay to the order of [blank] Without Recourse WASHINGTON MUTUAL BANK, FA,” using a stamp with the name of former employee Cynthia Riley.
- Syed opposed summary judgment on liability, arguing the endorsement was invalid because Riley did not personally sign (and was no longer employed), so JPMorgan/assignees lacked holder status.
- The trial court granted Christiana Trust’s motion for summary judgment as to liability, rejected Syed’s payment-related special defenses for purposes of liability, deemed the attorney-fee counterclaim (count four) unconnected to the mortgage transaction for liability purposes, and later entered strict foreclosure; Syed appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the stamped endorsement created a valid endorsement and gave JPMorgan (possessor) holder status | The stamp satisfied UCC signature/endorsement rules; possession of a blank-endorsed note presumptively makes the possessor the owner and entitled to enforce | The stamped name was not Riley’s real signature and Riley lacked authority, so the endorsement was invalid and the note was not negotiated to JPMorgan | Stamp met UCC definition of signature and endorsement; endorsement was in blank; possession created presumption of ownership; defendant failed to rebut it |
| Whether first and third special defenses (payment/application) defeated summary judgment on liability | Plaintiff: defendants offered no admissible evidence undermining liability; those defenses relate to amount (damages) not liability | Defendant: those defenses should survive to be asserted at damages/strict-foreclosure stage | Court limited ruling to liability only; defenses implicated amount owed, and Syed produced no evidence to create a triable issue on liability; she failed to raise them at strict-foreclosure hearing, so they cannot be resurrected on appeal |
| Whether the fourth counterclaim (attorney’s fees under Conn. Gen. Stat. § 42-150bb) met the transaction test and barred summary judgment | Plaintiff: the counterclaim is collateral and does not defeat summary judgment on liability | Defendant: a successful defense would entitle her to fees under § 42-150bb and thus the claim arises from the same transaction | Court did not “strike” the count but held it failed the transaction test for purposes of defeating liability; even if viable, it did not prevent summary judgment |
Key Cases Cited
- RMS Residential Properties, LLC v. Miller, 303 Conn. 224 (Conn. 2011) (holder in possession is presumed owner of the debt and entitled to enforce note)
- In re Bass, 366 N.C. 464 (N.C. 2013) (signature stamp can constitute a valid endorsement under commercial code principles)
- Ulster Savings Bank v. 28 Brynwood Lane, Ltd., 134 Conn. App. 699 (Conn. App. 2012) (assignment, affidavit, and possession support transfer/standing)
- Bank of America, N.A. v. Kydes, 183 Conn. App. 479 (Conn. App. 2018) (defendant must present evidence that another party owns the note to rebut possession presumption)
- JPMorgan Chase Bank, N.A. v. Simoulidis, 161 Conn. App. 133 (Conn. App. 2015) (mere gaps in documentary chain do not suffice to defeat holder’s presumption)