TD Bank, N.A. v. M.J. Holdings, LLC
2013 Conn. App. LEXIS 317
Conn. App. Ct.2013Background
- M.J. Holdings and Mountain Top executed promissory notes secured by mortgages on multiple properties; Debra Schlachter Hall and Pierce Hall guaranteed the loans.
- TD Bank filed a foreclosure action in March 2010 and amended its complaint in June 2010.
- Defendants answered with four special defenses; TD Bank moved to strike these defenses, which the trial court granted in 2011.
- TD Bank then moved for summary judgment as to liability, which the court granted in July 2011; a foreclosure by sale followed.
- The appellate court reverses, agreeing in part that the trial court erred in striking a second special defense alleging a loan modification, and reverses summary judgment and the foreclosure judgment for further proceedings.
- PJH Realty, LLC did not appeal and counterclaims were handled in separate procedural actions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the second special defense alleging a loan modification is legally sufficient | TD Bank argues modification allegations attack the validity/enforcement of notes. | M.J. Holdings contends modification allegations are valid defenses. | Second defense properly framed as defense to enforceability; struck improperly. |
| Whether the third special defense (implied covenant) is proper or surplusage | Bank contends implied covenant claim is not necessary. | Defendants argue covenant breach could be a defense. | Not improperly struck; surplusage but permissible as related to second defense. |
| Whether the fourth special defense of equitable estoppel is valid | Equitable estoppel is insufficient against foreclosure. | Equitable estoppel supported by loan modification promises. | Equitable estoppel not proven; defense redundant to loan modification; properly not a basis to foreclose. |
| Whether summary judgment was proper given the striking of a defense | With no defense, summary judgment is appropriate. | Second defense should remain; summary judgment premature. | Summary judgment improper; remand with denial of strike and for further proceedings. |
Key Cases Cited
- Thompson v. Orcutt, 257 Conn. 301 (Conn. 2001) (directly connected post-note actions to foreclosure equity)
- Forte v. Citicorp Mortgage, Inc., 66 Conn. App. 475 (Conn. App. 2001) (modification/implied covenant discussions in foreclosure context)
- Congress Street Condominium Assn., Inc. v. Anderson, 132 Conn. App. 536 (Conn. App. 2011) (equitable defenses may be raised in foreclosure)
- Fidelity Bank v. Krenisky, 72 Conn. App. 700 (Conn. App. 2002) (equitable defenses recognized in foreclosure actions)
- Grenier v. Commissioner of Transportation, 306 Conn. 523 (Conn. 2012) (broad, realistic pleading interpretation; balance of equities in foreclosures)
- Barasso v. Rear Still Hill Road, LLC, 64 Conn. App. 9 (Conn. App. 2001) (pleading standards for special defenses in foreclosure)
- Morgera v. Chiappardi, 74 Conn. App. 442 (Conn. App. 2003) (equity principles in foreclosure proceedings)