183 Conn. App. 200
Conn. App. Ct.2018Background
- Defendants Eric Lorson and Laurin Maday executed an FHA‑insured mortgage; Wells Fargo is holder of the note and mortgage and sued for foreclosure after defaults beginning November 2010.
- Parties entered a special forbearance (three trial payments of $3,009.07) in 2012; the agreement stated any permanent modification required investor approval and was not guaranteed.
- After the first trial payment, Wells Fargo notified defendants that a judgment lien on the property had to be resolved before a final modification; defendants continued making trial payments but did not clear the lien.
- Defendants pleaded special defenses of equitable estoppel and unclean hands; they later attempted (after pleadings closed) to add a special defense alleging Wells Fargo’s noncompliance with HUD servicing regulations. The court denied that late amendment.
- After a two‑day bench trial the court entered strict foreclosure for Wells Fargo; defendants appealed arguing (1) plaintiff failed to prove prima facie case by proving HUD‑regulation compliance, (2) equitable estoppel, and (3) unclean hands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff had to prove compliance with HUD regulations as part of prima facie case | Plaintiff: defendants must plead noncompliance as a special defense; plaintiff need not prove compliance absent such pleading | Defendants: HUD servicing rules are conditions precedent to foreclosure and plaintiff must prove compliance in its prima facie case | Held: Defendants waived the claim by failing to plead it as a special defense; court’s prima facie finding not clearly erroneous |
| Whether equitable estoppel barred foreclosure | Plaintiff: no misleading conduct; agreement warned modification required approval and plaintiff notified defendants about the lien | Defendants: plaintiff’s forbearance induced belief that three payments would produce a permanent modification; they relied and were prejudiced | Held: Defendants failed to prove specific misleading conduct or reliance; estoppel defense failed |
| Whether doctrine of unclean hands barred relief | Plaintiff: no willful misconduct; evidence showed notice about lien and compliance; unclean hands not proved | Defendants: plaintiff knowingly ignored HUD requirements and acted in bad faith | Held: Trial court reasonably found no willful misconduct; unclean hands defense failed |
| Whether trial court abused discretion by denying late amendment to plead HUD noncompliance | Plaintiff: amendment on eve of trial would prejudice plaintiff and was untimely | Defendants: sought to raise HUD noncompliance after closed pleadings | Held: Denial was proper; defendants do not contest denial on appeal and waiver stands |
Key Cases Cited
- Wells Fargo Bank, N.A. v. Strong, 149 Conn. App. 384 (Conn. App. 2014) (plaintiff must prove conditions precedent to foreclosure if pleaded)
- Kolbe v. BAC Home Loans Servicing, LP, 738 F.3d 432 (1st Cir. 2013) (interpretation of uniform federal mortgage language is controlled by federal meaning)
- Wells Fargo Home Mortgage, Inc. v. Neal, 398 Md. 705 (Md. 2007) (borrower may raise HUD‑regulation violations as defense to foreclosure)
- Thompson v. Orcutt, 257 Conn. 301 (Conn. 2001) (unclean hands doctrine and its discretionary application in equity)