190 Conn. App. 773
Conn. App. Ct.2019Background
- Plaintiff U.S. Bank, as trustee, sued to foreclose a 2007 mortgage on Fitzpatrick’s Stratford property for defaults beginning May 1, 2009; plaintiff alleged it became entitled to collect the debt on or before May 26, 2015.
- Prior foreclosure by SunTrust (commenced 2009) led to substitution of the plaintiff as the owner of the debt; that action was later dismissed in 2014.
- In the present action plaintiff produced the original promissory note with two undated allonges and a blank endorsement on page three signed by SunTrust.
- Fitzpatrick moved to dismiss for lack of standing, arguing the first allonge specially endorsed the note to SunTrust and the second allonge transferring the note to plaintiff was stamped "VOID," so plaintiff lacked possession/holding.
- At hearing the trial court examined the original note, found a blank endorsement by SunTrust making the note payable to bearer, denied the motion to dismiss, and later granted plaintiff’s summary judgment on liability.
- Fitzpatrick’s asserted special defenses (laches and unclean hands) were rejected because he produced no evidentiary support showing inexcusable delay or prejudice; judgment of foreclosure by sale was entered and Fitzpatrick appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose | Plaintiff possessed the original note endorsed in blank (bearer paper) and thus was a valid holder entitled to enforce the note | Note was specifically endorsed to SunTrust via allonge; second allonge to plaintiff was stamped "VOID," so plaintiff lacked title/standing | Court: plaintiff produced note with blank endorsement; presumption that holder owns the debt stands; dismissal denied; plaintiff has standing |
| Sufficiency of evidence for summary judgment (prima facie case) | Plaintiff produced note, mortgage, affidavit of servicer showing default and entitlement to collect; no disputed material facts | Fitzpatrick argued standing was disputed and relied on the allonge defects | Court: plaintiff met prima facie burden; note in plaintiff’s possession + affidavit established liability; summary judgment for plaintiff affirmed |
| Laches defense | N/A (plaintiff disputed any unreasonable delay) | Fitzpatrick: ~6-year delay between default and filing prejudiced him (increased debt, decreased collateral value) | Court: defendant produced no evidentiary support of inexcusable delay or prejudice; bald assertions insufficient; laches fails |
| Unclean hands defense | N/A | Fitzpatrick: plaintiff ‘‘sat on its rights’’; delay shows unfair/equitable misconduct | Court: no evidence that plaintiff’s conduct was unfair/inequitable; defense unsupported; fails |
Key Cases Cited
- Equity One, Inc. v. Shivers, 310 Conn. 119 (Conn. 2013) (blank endorsement makes instrument payable to bearer and holder in possession may enforce)
- RMS Residential Properties, LLC v. Miller, 303 Conn. 224 (Conn. 2011) (possession of endorsed note creates prima facie presumption holder owns underlying debt)
- JPMorgan Chase Bank, N.A. v. Simoulidis, 161 Conn. App. 133 (Conn. App. 2015) (holder producing the note is presumed rightful owner; defendant must rebut with proof another owns the debt)
- Chase Home Finance, LLC v. Fequiere, 119 Conn. App. 570 (Conn. App. 2010) (possession of a note endorsed in blank renders party a valid holder entitled to enforce)
- 21st Mortgage Corp. v. Schumacher, 171 Conn. App. 470 (Conn. App. 2017) (possession of bearer paper establishes standing to foreclose)