21ST MORTGAGE CORPORATION v. CHRISTOPHER N. SCHUMACHER
(AC 38219)
Appellate Court of Connecticut
Argued November 28, 2016—officially released March 14, 2017
Keller, Mullins and Sullivan, Js.
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Richard Lewis, for the appellant (defendant).
S. Bruce Fair, for the appellee (plaintiff).
Opinion
MULLINS, J. The defendant, Christopher N. Schumacher, appeals from the judgment of strict foreclosure rendered by the trial court in favor of the plaintiff, 21st Mortgage Corporation. On appeal, the defendant claims that the court improperly rendered summary judgment as to liability after finding that there was no genuine issue of material fact as to whether the plaintiff is the holder of the note and the
The following facts inform our review. In its complaint, the plaintiff alleged that the defendant and Patriot Lending Group, Inc. (Patriot), executed a promissory note in the amount of $877,500 on February 28, 2006. The note was secured by a mortgage on the defendant’s Bridgewater property in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for Patriot.1 The mortgage was executed on February 28, 2006, and recorded on the Bridgewater land records on March 7, 2006.
The complaint further alleged: (1) the mortgage then was assigned to GMAC Mortgage, LLC, on October 27, 2009, and the assignment was recorded on the land records on November 20, 2009; (2) the mortgage ‘‘is to be assigned’’ to the plaintiff by virtue of an assignment of mortgage ‘‘to be recorded’’ on the land records;2 and (3) the plaintiff is the holder of the note, the note is in default, and the plaintiff has elected to accelerate the balance due on the note, declare the note to be due in full, and to foreclose the mortgage securing the note.
In response, the defendant filed an answer, which, in relevant part, left the plaintiff to its proof. The defendant also filed three special defenses, namely, (1) the plaintiff is not the owner of the debt or the holder of the mortgage, (2) the plaintiff’s claim is based on the fraudulent dealings of the plaintiff or its assignors, and (3) the plaintiff’s actions are a continuing course of dealing in violation of the Connecticut Unfair Trade Practices Act,
On November 26, 2014, before filing a responsive pleading to the defendant’s special defenses; see
On May 4, 2015, with the defendant not present, the court heard argument from the plaintiff on the merits of its motion for summary judgment. On May 26, 2015, the court, in a memorandum of decision, granted the plaintiff’s motion for summary judgment as to liability, and, on July 20, 2015, it rendered a judgment of strict foreclosure. This appeal followed. Additional facts will be set forth as necessary.
The defendant claims that the court improperly rendered summary judgment as to liability in the instant foreclosure action when there were genuine issues of material fact concerning the ownership of the note in question. The defendant argues that the court improperly relied on American Home Mortgage Servicing Inc., v. Reilly, 157 Conn. App. 127, 132–34, 117 A.3d 500 (2015), because ‘‘[i]n this case, the note was not endorsed in blank, and, thus, the note was not bearer paper. As such, the plaintiff was not a holder as that term is defined in [
Furthermore, the defendant argues that, in support of his opposition to the plaintiff’s motion for summary judgment, he submitted a deposition from a prior foreclosure case between him and the most recent prior holder of the note, GMAC Mortgage, LLC. In that deposition, a spokesperson for GMAC Mortgage, LLC, admitted that there were additional endorsements to this note and that the note had broken off into two separate branches, with two different sets of allonges, thereby calling into question the plaintiff’s status as the holder of the note and the party entitled to foreclose. He contends that the missing endorsements raised a genuine issue of material fact that must be answered and that summary judgment, therefore, is inappropriate. Although we agree that the defendant has demonstrated that there may be some discrepancies in the allonges to the note, we, nevertheless, conclude that the court properly granted summary judgment.
The following additional facts, although somewhat cumbersome, are necessary to a full understanding of the plaintiff’s claim and our analysis. The plaintiff, in support of its motion for summary judgment, submitted the November 13, 2014 affidavit of Tiffany Moyer, the legal coordinator for the plaintiff, attesting that the information contained in her affidavit was taken from the plaintiff’s business records. She attested that the defendant and Patriot executed a note in the original amount of $877,500 and that the plaintiff, or its agent, has possession of the original note, the note has been duly endorsed, and a copy is attached to the affidavit as exhibit A.
Moyer also attested that the defendant, on February 28, 2006, conveyed by mortgage deed his interest in his Bridgewater property to MERS, as nominee for Patriot, and that this mortgage deed was recorded on March 7, 2006 in volume 68 at page 933 in the Bridgewater land records. She attested that the mortgage deed is attached to her affidavit as exhibit B.
Additionally, Moyer attested that the mortgage thereafter was assigned to GMAC Mortgage, LLC, on October 27,
Exhibit A to Moyer’s affidavit is the adjustable rate note between the defendant and Patriot in the amount of $877,500, executed on February 28, 2006, purportedly signed by the defendant, with several attached allonges. The allonges are as follows: (1) The first allonge to the note is from Patriot to the Ohio Savings Bank; it is not dated; (2) on that same allonge is an endorsement from Ohio Savings Bank to GMAC Bank; it also is not dated; (3) the next allonge is from Ally Bank formerly known as GMAC Bank to GMAC Mortgage, LLC, signed by Brenda Staehle, ‘‘Limited Signing Officer’’; it also is not dated; and (4) the final allonge is from GMAC Mortgage, LLC, to 21st Mortgage Corporation ‘‘By: 21st Mortgage Corporation, it’s attorney-in-fact,’’ signed by Troy Fussell, vice president and authorized signatory, and notarized by Michelle A. Wilson on February 14, 2014.
Exhibit B to Moyer’s affidavit is an open-end mortgage deed. The document provides that the borrower is the defendant and that MERS is acting as nominee for Patriot. At the very top of the document are the volume and page numbers for the Bridgewater land records; page one provides that the document is filed in volume 068, at page 0933. Approximately one third of the way down page one, there is a line across the page with a notation in the middle that provides: ‘‘Space Above This Line For Recording Data.’’ Above that line the document provides in relevant part: ‘‘After recording please return to: OHIO SAVINGS BANK ATTN: DOCUMENT CONTROL’’ along with an address.
Exhibit C to Moyer’s affidavit consists of two mortgage assignments. The first is recorded at volume 075, page 0907 of the Bridgewater land records, and provides that Patriot is assigning the defendant’s mortgage to GMAC Mortgage, LLC. The assignment is dated October 27, 2009, and is from MERS, as nominee for Patriot, to GMAC Mortgage, LLC. The assignment is signed by Brenda Staehle, vice president of MERS.5 The second assignment is from GMAC Mortgage, LLC, to 21st Mortgage Corporation. The assignment is dated May 7, 2014, and is signed by Troy Fussell, vice president of GMAC Mortgage, LLC.6
In its memorandum of law in support of its motion for summary judgment, the plaintiff argued that there were no genuine issues of material fact concerning whether it was the holder of the note or whether it was entitled to foreclose on the mortgage due to the defendant’s default on the note. The plaintiff, not having filed a responsive pleading, also addressed each of the defendant’s special defenses, arguing that they ‘‘are not legally sufficient and/or they fail
Specifically, as to the defendant’s first special defense, namely, that the plaintiff is not the owner of the debt or the holder of the mortgage, the plaintiff contended that it had ‘‘duly demonstrated that there are no genuine issues of material fact concerning its holdership of the subject promissory note, which is endorsed in blank.’’7
As to the defendant’s remaining special defenses, the plaintiff asserted that they failed as a matter of law because they did not set forth any supporting factual allegations, but, instead, relied on mere legal conclusions.
On February 24, 2015, the defendant filed an objection to the plaintiff’s motion for summary judgment, along with a memorandum of law and supporting affidavit, with exhibits. In his memorandum, the defendant argued that there were important issues of fact concerning the allonges to the note that were attached to the Moyer affidavit. He contended that the plaintiff’s evidence called into question its ownership of the debt, the note, and the mortgage, in that the Moyer affidavit contained discrepancies from the allonges that were attached to her affidavit, some known allonges were omitted, many allonges contained no dates, and the allonge from GMAC Mortgage, LLC, to 21st Mortgage Corporation was not signed by anyone from GMAC Mortgage, LLC. The defendant also alleged that the Moyer affidavit raised questions as to the transfers of the title of the note.
In support of his opposition, the defendant also provided his own affidavit. One of the documents attached to his affidavit was a January 11, 2012 deposition of Albert Augustine, a member of the document execution team of GMAC Mortgage, LLC, taken in a previous foreclosure action instituted by GMAC Mortgage, LLC, against the defendant.8 During his deposition, Augustine reviewed the endorsements to the defendant’s note with Patriot, and he stated that they demonstrated that the note was assigned to Ohio Savings Bank from Patriot, and then from Ohio Savings Bank to GMAC Bank, and then from GMAC Bank to GMAC Mortgage. He acknowledged that the endorsements were not dated and that he had no idea when they took place. The defendant’s attorney in that case then asked Augustine to examine additional allonges to the note that had been marked as exhibits. The following colloquy occurred:
‘‘Q. Okay. Flipping over to 0030, can you tell me what this is?
‘‘A. Allonge from Ohio Savings Bank to Residential Funding, LLC.
‘‘Q. Do you know who Residential Funding, LLC, is?
‘‘A. Yes.
‘‘Q. Who is Residential Funding, LLC?’’
‘‘A. I know them to be an additional mortgage company, another mortgage company slash investor.
‘‘Q. Are they affiliated with GMAC?
‘‘A. No. . . .
‘‘Q. So, this appears to be an assignment or an allonge of the note from Ohio Savings Bank to Residential Funding Company.
Do you know when this allonge took place? ‘‘A. No.
‘‘Q. Can you turn to your affidavit . . . . This allonge is not connected to the note in that affidavit, correct?
‘‘A. No. . . .
‘‘Q. If you flip to GMAC 0031, seems to be another allonge. Have you ever seen this document before?
‘‘A. No.
‘‘Q. Can you tell me what it is?
‘‘A. It’s another allonge endorsed in blank from Residential Funding. . . .
‘‘Q. In your affidavit, the allonges that you attached to the note in your affidavit show the note being transferred from Ohio Savings to GMAC Bank, but the allonge that is marked GMAC 0030 showed the note being transferred from Ohio Savings Bank to Residential Funding Company, LLC. . . . Just want to make sure that’s correct.
‘‘A. Yeah.
‘‘Q. . . . Did Ohio Savings Bank endorse only part of the note to GMAC?
‘‘A. I don’t know.
‘‘Q. Is it common for an entity to assign a portion of a note to another entity in your experience?
‘‘A. I don’t know.
‘‘Q. Can there be more than one owner of a note in your experience?
‘‘A. Again, I don’t know. . . .
‘‘Q. So, staying with exhibit A to your affidavit, the second allonge that is attached to your note, to the note in your affidavit, is from . . . Allied Bank formerly known as GMAC Bank to GMAC Mortgage, LLC, and that’s signed by Brenda Staehle,9 but GMAC 0029 in exhibit D, which purports to be an allonge to GMAC Mortgage, LLC, from Allied Bank formerly known as GMAC Bank, [is signed by someone named] Alana Gerhart. So, these are two different allonges, correct?
‘‘A. Yes.
‘‘Q. Signed by two separate people?
‘‘A. Yes.
‘‘Q. Any idea why that’s the case?
‘‘A. No.
‘‘Q. And, again, I think you already testified to this, but none of these allonges are . . . dated, correct?
‘‘A. No.
‘‘Q. So, you don’t actually know when the note was negotiated to . . . [GMAC Mortgage, LLC] in this case, do you?
‘‘A. No.’’
In a May 26, 2015 memorandum of decision, the court, after stating that it had examined the original note, which the plaintiff had presented at the May 4, 2015 hearing, granted the plaintiff’s motion for summary judgment as to liability. The court recognized that, as the holder of the note, the plaintiff is presumed to be the owner of the note and debt. The court found that the plaintiff had made a prima facie showing, and that ‘‘there is no dispute that the plaintiff possessed the note that
The defendant contends that the court’s summary judgment was improper because he had demonstrated the existence of genuine issues of material fact both by his examination of inconsistencies in the plaintiff’s motion and accompanying documents and in the documents he provided in his opposition to the plaintiff’s motion for summary judgment. He contends that ‘‘there can be no serious question that if the special endorsements into the plaintiff in this case are not valid or enforceable, then the plaintiff would not be entitled to summary judgment in this case, [and] it would not even have standing, thus implicating the court’s subject matter jurisdiction. . . . This issue of fact concerning the missing endorsements, therefore, is material . . . .’’10 (Citation omitted.) The defendant contends that ‘‘merely being in possession of the original note does not itself create a presumption that the party in possession is the owner; the presumption is only created when the party in possession of the note is also a holder.’’ (Emphasis in original.) The defendant concludes by arguing that the plaintiff in this case ‘‘is not a holder as that term is defined in . . .
‘‘Under the applicable standard of review, our review of summary judgment rulings is plenary. . . . Pursuant to
‘‘[B]ecause the . . . plaintiff sought summary judgment in a foreclosure action, which is an equitable proceeding, we note that the trial court may examine all relevant factors to ensure that complete justice is done. . . . The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court. . . .
‘‘In order to establish a prima facie case in a mortgage foreclosure action, the plaintiff must prove by a preponderance of the evidence that it is the owner of the note and mortgage, that the defendant mortgagor has defaulted on the note and that any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied. . . . Thus, a court may properly grant summary judgment as to liability in a foreclosure action if the complaint and supporting affidavits establish an undisputed prima facie case and the defendant fails to assert any legally sufficient special defense.’’ (Internal quotation marks omitted.) Bank of America, N.A. v. Aubut, 167 Conn. App. 347, 358–59, 143 A.3d 638 (2016).
In the present case, the defendant’s argument revolves around his claim that the plaintiff is not a ‘‘holder’’ of the note because the note is not endorsed in blank, but, rather, is specially endorsed to the plaintiff.11 At its core, the defendant’s contention is that the plaintiff does not have standing to foreclose. We disagree.
‘‘Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy. . . . Where a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause. . . . Our review of this question of law is plenary. . . .
‘‘A plaintiff’s right to enforce a promissory note may be established under the [Uniform Commercial Code (UCC),
A ‘‘[p]erson’’ is defined by the UCC as ‘‘an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency or instrumentality, public corporation or
The UCC defines the holder of a negotiable instrument as: ‘‘The person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.’’
In the present case, the plaintiff is the person in possession of the negotiable instrument that is payable specifically to the plaintiff. Clearly, then, the plaintiff, pursuant to the clear language of
Although we acknowledge that the defendant presented some evidence that called into question the possible existence of other allonges to this note, that evidence, even if credited, does not negate the fact that the plaintiff possesses both the original note specially endorsed to it and an assignment of mortgage on the defendant’s property, used to secure the note. On this basis, we conclude that the plaintiff had standing to foreclose and that the trial court properly rendered summary judgment in favor of the plaintiff.
The judgment is affirmed.
In this opinion the other judges concurred.
Notes
‘‘The benefit of naming MERS as the nominal mortgagee of record is that when the member transfers an interest in a mortgage loan to another MERS member, MERS privately tracks the assignment within its system but remains the mortgagee of record. According to MERS, this system saves lenders time and money, and reduces paperwork, by eliminating the need to prepare and record assignments when trading loans. . . .
‘‘If, on the other hand, a MERS member transfers an interest in a mortgage loan to a non-MERS member, MERS no longer acts as the mortgagee of record and an assignment of the security instrument to the non-MERS member is drafted, executed, and typically recorded in the local land recording office.’’ (Internal quotation marks omitted.) Equity One, Inc. v. Shivers, 310 Conn. 119, 122 n.1, 74 A.3d 1225 (2013).
The plaintiff did not move to strike any portion of the defendant’s opposition, his affidavit, or its attachments.