TD Bank, N.A. v. J & M Holdings, LLC
2013 Conn. App. LEXIS 316
Conn. App. Ct.2013Background
- TD Bank foreclosed on Plainfield property of J&M Holdings, LLC secured by two open-end construction mortgages and notes totaling $3.3 million.
- Defendants, including Debra Schlachter Hall and Pierce Hall, filed seven special defenses in August 2010; bank moved to strike, and summary judgment on liability was granted.
- Fifth special defense alleged a modification of the loan in a related transaction with a related entity and that net proceeds were paid to the bank.
- Sixth and seventh defenses relied on implied covenant of good faith and fair dealing and equitable estoppel, respectively, tied to the modification.
- Appellate court reversed the trial court: fifth defense legally sufficient and summary judgment improper; remanded for further proceedings consistent with the decision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether second special defense was legally sufficient | Second defense ineffective; no unenforceable term alleged | Second defense valid under some cases as a defense to foreclosure | Second defense stricken |
| Whether fifth special defense alleging modification is legally sufficient | Modification not linked to Plainfield loan; not a defense | Modification directly affects enforceability of the Plainfield loan | Fifth defense not stricken; legally sufficient |
| Whether sixth special defense for breach of implied covenant is valid | Implied covenant claim insufficient to state a cause of action | Breach of implied covenant claims can rely on modification context | Sixth defense properly stricken |
| Whether seventh defense of equitable estoppel is valid | Estoppel not shown; no reliance by plaintiff justified | Estoppel supported by reliance on bank's promise | Seventh defense not supported; estoppel not established |
| Whether summary judgment on liability was proper given the fifth defense was struck | Summary judgment appropriate on liability | Reliance on fifth defense required denial of summary judgment | Summary judgment improper; remand warranted |
Key Cases Cited
- Ugrin v. Cheshire, 307 Conn. 364 (2012) (plenary review of strike rulings; pleadings construed in plaintiff-friendly manner)
- Fidelity Bank v. Krenisky, 72 Conn. App. 700 (2002) (equitable defenses recognized in foreclosure)
- Forte v. Citicorp Mortgage, Inc., 66 Conn. App. 475 (2001) (modification can be a valid defense in foreclosure)
- Mortgage Electronic Registration Systems v. Goduto, 110 Conn. App. 367 (2008) (modification directly affects validity/enforcement of loan)
- Congress Street Condominium Assoc. v. Anderson, 132 Conn. App. 536 (2011) (equitable estoppel recognized in foreclosure)
- O'Connor v. Waterbury, 286 Conn. 732 (2008) (elements of estoppel and reliance)
- Blumberg Associates Worldwide, Inc. v. Brown & Brown of Connecticut, Inc., 132 Conn. App. 85 (2011) (breach of implied covenant requires bad faith)