151 Conn.App. 620
Conn. App. Ct.2014Background
- Defendant Donna L. Foote executed a $528,000 adjustable-rate note (with an allonge endorsed in blank) secured by a mortgage on property in Old Saybrook; MERS later assigned the mortgage to plaintiff U.S. Bank, N.A., as trustee.
- Plaintiff filed a foreclosure action on May 29, 2012, alleging it was holder and owner of the note and that Foote had defaulted.
- A prior foreclosure action by the same plaintiff against Foote (commenced January 11, 2011) was dismissed for lack of standing because the plaintiff’s witness could not unequivocally show the plaintiff possessed the note when that action began.
- In the 2012 action plaintiff moved for summary judgment on liability, submitting the note, allonge (endorsed in blank), mortgage, notice of default, an attorney-bailee affidavit (Croog) stating the law firm had continuously retained the original note and allonge since February 22, 2011, and an affidavit of debt from the servicer.
- Defendant argued res judicata and collateral estoppel barred the action and that plaintiff failed to establish a prima facie case (specifically holder status); she submitted no counter‑affidavits or documentary evidence.
- Trial court granted plaintiff’s summary judgment as to liability and later rendered strict foreclosure; defendant appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether res judicata bars the 2012 action | Prior dismissal was for lack of merits-based adjudication; plaintiff may refile and prove holder status at time of new action | The prior dismissal for lack of standing was on the merits and therefore preclusive | Res judicata does not apply; prior dismissal for lack of standing is not a merits judgment and is not preclusive |
| Whether collateral estoppel prevents relitigation of holder status | Holder status may be re-litigated because the two actions involve different commencement dates (Jan 11, 2011 v. May 29, 2012) | Prior adjudication determined plaintiff was not holder, so issue is precluded | Collateral estoppel inapplicable because the precise issue decided (holder status as of Jan 11, 2011) is not identical to holder status as of May 29, 2012 |
| Whether plaintiff established prima facie case for foreclosure at summary judgment | Plaintiff produced note/allonge (endorsed in blank), mortgage, notice of default, and sworn bailee affidavit showing continuous possession of the original note at time action commenced | Plaintiff failed to prove possession/holder status and thus did not meet prima facie burden | Plaintiff met its burden: bailee affidavit and documents established possession/holder status; defendant offered no evidence to rebut; summary judgment proper |
| Whether the prior dismissal itself creates a genuine issue of material fact defeating summary judgment | Prior adverse finding does not automatically create a material factual dispute in new litigation | Prior dismissal should create a factual dispute about possession/standing | Mere existence of prior dismissal does not create a material fact; without specific counterevidence, summary judgment stands |
Key Cases Cited
- Equity One, Inc. v. Shivers, 310 Conn. 119 (2013) (holder defined under UCC; blank endorsement makes instrument payable to bearer)
- RMS Residential Properties, LLC v. Miller, 303 Conn. 224 (2011) (possession of bearer paper imports prima facie good faith and entitlement to enforce)
- GMAC Mortgage, LLC v. Ford, 144 Conn. App. 165 (2013) (mortgagee may satisfy summary judgment burden with sworn affidavit averring holder status)
- Chase Home Finance, LLC v. Fequiere, 119 Conn. App. 570 (2010) (possession of the note payable to bearer makes the possessor a valid holder entitled to enforce)
- Bruno v. Geller, 136 Conn. App. 707 (2012) (overview of claim and issue preclusion principles)
- Farmington Valley Recreational Park, Inc. v. Farmington Show Grounds, LLC, 146 Conn. App. 580 (2013) (elements and purposes of res judicata and collateral estoppel)