349 Conn. 9
Conn.2024Background
- M&T Bank sought to foreclose on a mortgage after Robert R. Lewis defaulted on a promissory note secured by his property.
- The mortgage allowed the bank to purchase force-placed insurance if Lewis failed to maintain adequate coverage; Lewis did not contest this right but alleged improper conduct by the bank relating to how the insurance was purchased.
- Lewis claimed M&T Bank used a kickback arrangement with insurer ASIC (Assurant), obtaining rebates while overcharging the borrower for insurance, contrary to mortgage terms and specific representations.
- Lewis asserted special defenses of unclean hands and breach of the implied covenant of good faith and fair dealing, which the trial court struck as not sufficiently related to the individual mortgage.
- The trial court granted summary judgment for M&T Bank and entered a foreclosure judgment; Lewis appealed.
- M&T Bank moved to dismiss the appeal, invoking the federal "filed rate doctrine" and prior federal judgments involving similar allegations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the filed rate doctrine affect jurisdiction? | Doctrine makes defenses moot, barring state court jurisdiction. | Doctrine is a defense on the merits, does not affect jurisdiction. | Doctrine does not implicate subject matter jurisdiction; appeal allowed. |
| Sufficiency of special defenses: scope of nexus | Kickback allegations are too broad, not specific to this mortgage. | Allegations specifically relate to this mortgage and its enforcement. | Special defenses are sufficiently related to making/enforcement of note. |
| Unclean hands: can a defaulting mortgagor assert? | Default bars use of unclean hands as a defense. | Defaulting borrower can still assert unclean hands if misconduct pled. | Default does not bar the defense; Lewis's pleading is legally sufficient. |
| Good faith and fair dealing: legal sufficiency | No causal link between alleged bad acts and default. | Plaintiff’s conduct increased defendant’s debt in bad faith. | Allegations sufficiently plead interference with mortgage benefits. |
Key Cases Cited
- U.S. Bank Nat'l Ass'n v. Blowers, 332 Conn. 656 (Conn. 2019) (defined scope of "enforcement" in mortgage foreclosure special defenses, including postdefault conduct)
- Thompson v. Orcutt, 257 Conn. 301 (Conn. 2001) (described standards and purposes behind the unclean hands doctrine in equitable foreclosure proceedings)
- Renaissance Management Co. v. Connecticut Housing Finance Authority, 281 Conn. 227 (Conn. 2007) (explained elements of breach of implied covenant of good faith and fair dealing in contract)
- Bornemann v. Connecticut Siting Council, 287 Conn. 177 (Conn. 2008) (articulated Connecticut's mootness standard)
- Peters v. Dept. of Social Services, 273 Conn. 434 (Conn. 2005) (discussed when subject matter jurisdiction issues must be resolved)