THE BANK OF NEW YORK MELLON, TRUSTEE v. JEFFREY J. MAURO ET AL.
(AC 38970)
Lavine, Sheldon and Harper, Js.
Argued May 23-officially released October 17, 2017
The “officially released” date that appears near the beginning of each opinion is the date the opinion will be published in the Connecticut Law Journal or the date it was released as a slip opinion. The operative date for the beginning of all time periods for filing postopinion motions and petitions for certification is the “officially released” date appearing in the opinion.
All opinions are subject to modification and technical correction prior to official publication in the Connecticut Reports and Connecticut Appellate Reports. In the event of discrepancies between the advance release version of an opinion and the latest version appearing in the Connecticut Law Journal and subsequently in the Connecticut Reports or Connecticut Appellate Reports, the latest version is to be considered authoritative.
The syllabus and procedural history accompanying the opinion as it appears in the Connecticut Law Journal and bound volumes of official reports are copyrighted by the Secretary of the State, State of Connecticut, and may not be reproduced and distributed without the express written permission of the Commission on Official Legal Publications, Judicial Branch, State of Connecticut.
Syllabus
The plaintiff bank sought to foreclose a mortgage on certain of the defendants’ real property. The trial court referred the parties to the foreclosure mediation program, and the mediator issued a final report indicating that the defendants did not appear for a scheduled mediation, and that time had expired. The mediator referred the matter for further proceedings back to the trial court, which granted in part the plaintiff‘s motion to strike the defendants’ special defenses and counterclaims. In August, 2015, the defendants filed their operative five count counterclaim, which reasserted claims for negligent, reckless and intentional misrepresentation, as well as claims for violations of the Connecticut Unfair Trade Practices Act (
- The trial court did not err in granting the plaintiff‘s motion for a judgment of strict foreclosure with respect to the property on the basis of its determination that there were no genuine issues of material fact and that the plaintiff was entitled to summary judgment as a matter of law as to liability on its foreclosure complaint: at the time of the granting of the plaintiff‘s motion for summary judgment, the trial court found that the plaintiff had established a prima facie case for foreclosure, the defendants’ operative pleading contained no special defenses to foreclosure, and the defendants’ affidavits in opposition to the plaintiff‘s motion for summary judgment failed to create a genuine issue of material fact as to any of the essential elements of the plaintiff‘s prima facie case, namely, whether the plaintiff was the holder of the note, the defendants defaulted on the loan, or the plaintiff had satisfied the necessary preconditions to foreclosure; moreover, the defendants’ claim that a genuine issue of material fact existed as to whether their counterclaims had a reasonable nexus to the making, validity or enforcement of the mortgage and note was unavailing, as the validity or invalidity of the counterclaims was irrelevant to whether the plaintiff was entitled to prevail in its primary action and, thus, to have summary judgment rendered in its favor in that action.
- The trial court properly rendered judgment in favor of the plaintiff on all five counts of the defendants’ operative counterclaim: that court properly concluded that, to the extent that the defendants’ counterclaims were based on alleged misdealings with the defendants by the plaintiff‘s predecessor, A Co., which was not a party to this foreclosure action, those counterclaims failed as a matter of law because there was no evidence of record that the plaintiff expressly assumed the liabilities of A Co. when it took the mortgage from A Co. by assignment, and, with respect to the counterclaims that pertained to the plaintiff‘s conduct during the mediation that occurred years after the execution of the mortgage and the defendants’ default, the trial court did not abuse its discretion in determining that those counterclaims failed the transaction test of the applicable rule of practice (
§ 10-10 ), as they did not have a reasonable nexus to the making, validity and enforcement of the mortgage and note; moreover, because the plaintiff‘s motion for summary judgment expressly sought the dismissal of the defendants’ counterclaims on that ground, and both parties analyzed that portion of the plaintiff‘s motion for summary judgment as a motion to strike the defendants’ counterclaims, this court treated the portion of the plaintiff‘s motion for summary judgment that sought the dismissal of the counterclaims for improper joinder as a properly presented motion to strike, the trial court‘s judgment in favor of the plaintiff on the defendants’ counterclaims had to be construed as a final judgment of dismissal for improper joinder, rather than a final judgment on the merits of the defendants’ substantive claims, and it was proper for the plaintiff to use a motion for summary judgment as a means of testing whether the counterclaims satisfied the transaction test of§ 10-10 .
Procedural History
Action to foreclose a mortgage on certain real property owned by the named defendant et al., and for other relief, brought to the Superior Court in the judicial district of Middlesex, where the named defendant et al. filed a counterclaim and special defenses; thereafter, the court, Domnarski, J., granted in part the plaintiff‘s motion to strike the counterclaim and special defenses; subsequently, the court, Aurigemma, J., granted the plaintiff‘s motion for summary judgment as to liability on the complaint and as to the counterclaim, and the named defendant et al. appealed to this court; thereafter, this court dismissed the appeal in part; subsequently, the court, Aurigemma, J., granted the plaintiff‘s motion for a judgment of strict foreclosure and rendered judgment thereon, and the named defendant et al. filed an amended appeal. Affirmed.
Kenneth A. Votre, for the appellants (named defendant et al.).
Zachary Grendi, with whom, on the brief, was Pierre-Yves Kolakowski, for the appellee (plaintiff).
Opinion
The record reveals the following facts and procedural history. On November 29, 2006, Jeffrey Mauro executed an “interest only fixed rate” note in favor of AWL, in the principal amount of $350,000. To secure that note, the defendants executed an open-ended mortgage in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for AWL, on their property located at 330 Roast Meat Hill Road in Killingworth. Under the terms of the note, Jeffrey Mauro was obligated to make monthly payments of $1968.75 for the first ten years of the loan, and increased monthly payments of $2661.27 thereafter, until his entire indebtedness under the note was paid in full.
Jeffrey Mauro received a notice of default, dated September 16, 2009, advising him that, as of September 16, 2009, he had missed several months of payments on the note, totaling $5769.17. He was instructed in the notice to cure the default by October 16, 2009, and informed that if he failed to do so, his obligation to make payments of principal, interest, costs and fees required under the note would be accelerated and foreclosure proceedings would be brought against him as to the mortgaged property. Ultimately, Jeffrey Mauro was unable to cure the default by the date specified in the notice of default.
On July 25, 2011, AWL, as the holder of the note, endorsed the note in blank and transferred physical possession of it to the
On June 24, 2013, the plaintiff commenced this action by serving the defendants with legal process returnable to the Superior Court for the judicial district of Middlesex.3 In its complaint, the plaintiff sought foreclosure of the mortgage, immediate possession of the mortgaged property, and reasonable attorney‘s fees and costs. By that time, the total remaining principal balance on the note was approximately $348,685.68, and Jeffrey Mauro‘s total indebtedness to the plaintiff thereunder, which also included unpaid interest, late charges and costs, was greater. Thereafter, on July 22, 2013, Jeffrey Mauro submitted to the plaintiff a request for foreclosure mediation pursuant to
On January 21, 2014, the defendants filed their answer to the plaintiff‘s complaint, along with seven special defenses and five counterclaims. The special defenses and counterclaims were later amended on December 2, 2014. In their amended pleading, the defendants asserted four special defenses to the plaintiff‘s claim for foreclosure, specifically: that AWL had “misrepresented the terms of the loan“; that the plaintiff itself had “failed to act in good faith during the [foreclosure] mediation“; that AWL had violated state and federal law by “failing to comply with specific disclosure requirements” during the loan initiation process; and that the mortgage, as originally negotiated by AWL, was the product of fraud, misrepresentations and violations of the Connecticut Unfair Trade Practices Act (CUTPA),
On December 17, 2014, the plaintiff filed a motion to strike the defendants’ special defenses and counterclaims, which the trial court, Domnarski, J., granted in part and denied in part on April 17, 2015. In striking each of the defendants’ four special defenses, the court ruled that such special defenses were improper because they were predicated upon the conduct of a nonparty,
On August 14, 2015, the defendants submitted a request for leave to file yet another amended counterclaim, along with their now operative, five count counterclaim. In the first three counts of their operative counterclaim, the defendants reasserted claims against the plaintiff of negligent, reckless and intentional misrepresentation based upon: AWL‘s alleged misrepresentations to them concerning the terms of the loan, the interest rate on the loan, and their right to rescind the loan; and the plaintiff‘s own, allegedly deceitful conduct toward them during the foreclosure mediation, more particularly, giving them multiple false assurances that the terms of the note would be modified to avoid foreclosure on the property, when the plaintiff had no intention to agree to such modifications. In the fourth count of the operative counterclaim, the defendants alleged that the plaintiff had violated CUTPA during the foreclosure mediation by making material misrepresentations of fact as to the status of the loan and “wrongfully [beginning] foreclosure proceedings against [them] by misapplying and miscrediting [their] payments, creating a default in the loan in order to proceed with the foreclosure.” Finally, in the fifth count of the operative counterclaim, the defendants alleged that the plaintiff was liable to them under TILA, because: at the time of the loan‘s execution, AWL had misrepresented to them both the terms of the loan and the suitability of the loan for them; and later, during the foreclosure mediation, the plaintiff itself had failed to provide them “with an accurate and truthful rate of calculation for their mortgage.”
Thereafter, on October 7, 2015, the plaintiff filed its answer and special defenses to the defendants’ operative counterclaim. The plaintiff asserted in that pleading that, to the extent that the defendants’ counterclaims were based upon alleged misdealings with them by a nonparty, AWL, the plaintiff was not liable for such misdealings and, in the alternative, because any such misdealings had
The following month, the plaintiff filed a motion for summary judgment. In support of its motion, insofar as it sought summary judgment on the issue of the defendants’ liability for foreclosure, the plaintiff asserted that it had established a prima facie case for foreclosure by showing that there was no genuine issue of material fact: that the plaintiff was the holder of the note; that the defendants had defaulted under the express terms of the note; and that the plaintiff had satisfied “any conditions precedent to foreclosure, as established by the note and mortgage . . . .” Insofar as the plaintiff sought summary judgment on the defendants’ operative counterclaims, the plaintiff argued that “the defendants’ counterclaims should be dismissed with prejudice because they are . . . time barred, relate to conduct by other parties for which [the] plaintiff is not responsible, or are unrelated to the making, validity or enforcement of the note and mortgage.” On the final ground of unrelatedness to the making, validity or enforcement of the note and mortgage, the plaintiff argued that the defendants’ counterclaims should be dismissed because they “all . . . fail the ‘transaction test’ propounded in Practice Book § 10-10 and . . . [the] defendants would not benefit from an opportunity to replead their counterclaims yet again, which they have already done four times previously.” (Emphasis omitted.)
In opposition to the motion for summary judgment, the defendants argued, inter alia, that summary judgment was improper because: (1) in partially denying the plaintiff‘s earlier motion to strike, Judge Domnarski had established, as the law of the case, that the defendants’ counterclaims for negligent, reckless and intentional misrepresentation were legally sufficient to state claims upon which relief could be granted; (2) there was a genuine issue of material fact as to whether the defendants’ counterclaims had a reasonable nexus to the making, validity or enforcement of the mortgage and note; and (3) the defendants’ counterclaim under TILA was not time barred because it was not based upon the initial execution of the mortgage by AWL, but instead upon the plaintiff‘s deceptive conduct during the 2013 foreclosure mediation, which had taken place less than three years before this action was commenced.5
Thereafter, on April 7, 2016, the plaintiff filed a motion for judgment of strict foreclosure. On April 25, 2016, the court entered a judgment of strict foreclosure, awarding the plaintiff $572,331.79, a sum representing the entire remaining unpaid principal balance on the loan, plus accrued interest, late charges, and reasonable attorney‘s fees. The court then designated May 31, 2016, as the applicable law day. The defendants subsequently filed the present appeal.6 Additional facts will be set forth as necessary.
I
The defendants’ first claim on appeal is that the court erred in granting the plaintiff‘s motion for strict foreclosure with respect to the property. More specifically,
“In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all material facts, which, under applicable principles of substantive law, entitle him to judgment as a matter of law. . . . Because the burden of proof is on the movant, the trial court must view the evidence in the light most favorable to the nonmoving party. . . .
“Of course, [o]nce the moving party has met its burden [of production] . . . the opposing party [to survive summary judgment] must present evidence that demonstrates the existence of some disputed factual issue.” (Citations omitted; internal quotation marks omitted.) Maltas v. Maltas, 298 Conn. 354, 365-66, 2 A.3d 902 (2010). It is well settled that “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.” GMAC Mortgage, LLC v. Ford, 144 Conn. App. 165, 176, 73 A.3d 742 (2013).
As discussed in the preceding paragraphs, the court, Domnarski, J., had previously granted the plaintiff‘s motion to strike the defendants’ four special defenses to the plaintiff‘s foreclosure action. Neither those nor any other special defenses to the plaintiff‘s foreclosure claim were ever repleaded thereafter. Thus, at the time the court, Aurigemma, J., rendered summary judgment in favor of the plaintiff on the issue of the defendants’ liability, the defendants’ operative pleading contained no special defenses to foreclosure, but only the operative counterclaims described in the preceding paragraphs. In granting the plaintiff‘s motion for summary judgment as to the defendants’ liability for foreclosure, the court held that the plaintiff had established a prima facie case for foreclosure because it had presented documentary evidence and affidavits establishing that: (1) the plaintiff was in physical possession of the note prior to filing the present action; (2) the defendants had defaulted on their loan by 2009; and (3) the plaintiff had satisfied all necessary conditions to seek foreclosure under the terms of the note by timely mailing the defendants the notice of default. The court further noted that the defendants had failed to put forth any evidence creating a genuine issue of material fact as to any such essential element, and held that the allegations in the defendants’ counterclaims “[were] not proper grounds for a defense to a foreclosure action.”
The defendants now assert that their affidavits in opposition to the plaintiff‘s motion for summary judgment created a genuine issue of material fact that should have precluded the court from rendering summary judgment in favor of the plaintiff in the primary foreclosure action. More specifically, the defendants point to the following assertions within their affidavits: (1) “[We] elected not to seek other financing or to seek family assistance to resolve [our] loan situation because [we] believed [that] the [plaintiff] would do what [it] told [us it] would do, and reinstate [our] loan“; (2) “the [plaintiff] promised to modify our mortgage, and then
The contents of those affidavits, however, do not create a genuine issue as to any of the essential elements of the plaintiff‘s prima facie case, namely, whether it was the holder of the note, the defendants defaulted on the loan, or the plaintiff satisfied the necessary preconditions to foreclosure. Nor do such allegations support any special defense to foreclosure for, as previously noted, no such special defense was then pending. Instead, the contents of the defendants’ affidavits provide—at most—factual support for their counterclaims against the plaintiff for misrepresentation, fraud, and violations of CUTPA and TILA. Curiously, the defendants attempt to overcome this fatal deficiency by arguing that there is “a genuine issue of material fact . . . as to whether [their] counterclaims have a reasonable nexus to the making, validity, or enforcement of the mortgage and note” and, on that ground, they claim that the court erred in granting the plaintiff‘s motion for summary judgment as to their liability for foreclosure and its subsequent motion for a judgment of strict foreclosure.
The validity or invalidity of a counterclaim, however—either substantively, as a claim upon which relief can be granted on its merits, or procedurally, as a claim that can properly be brought as a counterclaim in the context of the plaintiff‘s primary action—is completely irrelevant to whether the plaintiff is entitled to prevail in its primary action, and thus to have summary judgment rendered in its favor in that action. See 49 C.J.S. 357, Judgments § 304 (2009) (“The mere assertion of counterclaims does not prevent the granting of summary judgment on the complaint when the counterclaims are sufficiently separable from the plaintiff‘s causes of action. Likewise, the mere assertion of . . . a counterclaim that does not itself meet the criteria for summary judgment . . . will not preclude summary judgment on the complaint.” [Footnotes omitted.]). In the absence of evidence demonstrating the existence of a genuine issue of material fact as to any essential element of the plaintiff‘s prima facie case; GMAC Mortgage, LLC v. Ford, supra, 144 Conn. App. 176; or, in the alternative, as to any recognized special defense—and here there is none—the defendants’ claim of error as to the granting of the plaintiff‘s motion for summary judgment on the issue of their liability for foreclosure is completely devoid of merit, and must therefore be rejected. Cf. Haaser v. A. C. Lehmann Co., 130 Conn. 219, 220, 33 A.2d 135 (1943) (“a defense to the complaint cannot be supplied by the affirmative allegations of a cross-complaint“), citing Erwin M. Jennings Co. v. DiGenova, 107 Conn. 491, 495, 141 A. 866 (1928) (a defense to an action should be pleaded as a special defense, not as a counterclaim or a cross complaint).
II
The defendants’ final claim is that the trial court erred in rendering judgment in favor of the plaintiff on all five counts of their operative counterclaim. With respect to counts one, two and three of the operative counterclaim, sounding, respectively, in negligent, reckless and intentional misrepresentation, the defendants argue that the court misinterpreted and misapplied the Sorrentino case, and thus abused its discretion in holding that
The plaintiff disagrees, contending that the court properly rendered judgment in its favor on all of the defendants’ counterclaims. In support of its position, the plaintiff first distinguishes between those allegations in the counterclaims that are based upon AWL‘s alleged misdealings with the defendants at or before the time that the note was executed, and those allegations that are based upon the plaintiff‘s own alleged misdealings with the defendants during the foreclosure mediation several years later. To the extent that such counterclaims are based upon AWL‘s alleged misdealings with the defendants, the plaintiff argues that the trial court properly held that those claims fail as a matter of law because they are based upon the conduct of a nonparty, for which it could not be held liable without expressly assuming such liability, and, in the alternative, that such claims are barred by applicable statutes of limitations. To the extent that such claims are based upon allegations of the plaintiff‘s own alleged misdealings with the defendants during the foreclosure mediation, the plaintiff argues, under Sorrentino, that the court correctly held that such claims must be dismissed because they have no reasonable nexus to the making, validity or enforcement of the note, and thus they were not properly pleaded as counterclaims in this action.
We agree with the trial court that, to the extent that the defendants’ counterclaims are based upon alleged misdealings with the defendants by AWL, a nonparty to this foreclosure action, those counterclaims all fail as a matter of law because there is no evidence of record that the plaintiff expressly assumed the liabilities of the original lender, AWL, when it took the mortgage from AWL by assignment. Hartford v. McKeever, 314 Conn. 255, 258-59, 101 A.3d 229 (2014); Bank of America, N.A. v. Aubut, 167 Conn. App. 347, 370, 143 A.3d 638 (2016). The defendants do not claim to the contrary. Instead, in their reply brief, they narrow their challenge to the trial court‘s rendering of summary judgment for the plaintiff on their counterclaims to those portions of the counterclaims that are based upon the plaintiff‘s own alleged misdealings with the defendants during the foreclosure mediation. In light of this narrowing of the defendants’ challenge, we need not address the court‘s alternative basis for rendering summary judgment in favor of the plaintiff on those parts of the defendants’ counterclaims that were based upon alleged misdealings with them by AWL, more particularly, the plaintiff‘s challenges to such claims under applicable statutes of limitations.7 See Gold v. Rowland, 325 Conn. 146, 150 n.1, 156 A.3d 477 (2017).
Accordingly, the only remaining issue to be decided is whether the court properly held that the allegations of the defendants’ counterclaims, to the extent they are based upon the plaintiff‘s own alleged misdealings with the defendants during the foreclosure mediation, failed the transaction test of
In contrast, a motion to strike, pursuant to
Although, by their nature, these motions serve different purposes and are
Here, the plaintiff‘s motion for summary judgment expressly sought the dismissal of the defendants’ counterclaims because, inter alia, they were “unrelated to the making, validity or enforcement of the note and mortgage.” The plaintiff thus sought dismissal of the defendants’ counterclaims, in part, because they were improperly joined in this action pursuant to
The standard of review in an appeal challenging a trial court‘s granting of a motion to strike is well established. “A motion to strike challenges the legal sufficiency of a pleading . . . and, consequently, requires no factual findings by the trial court. As a result, our review of the court‘s ruling is plenary. . . . We take the facts to be those alleged in the [pleading] that has been stricken and we construe the [pleading] in the manner most favorable to sustaining its legal sufficiency.” (Internal quotation marks omitted.) Id., 349. As discussed in the preceding paragraphs, however, the court in this case determined that the defendants’ counterclaims
In the present case, the defendants argue that the court should not have rendered judgment on their counterclaims because the conduct alleged in support of those counterclaims had a reasonable nexus to the enforcement of the note. More specifically, the defendants claim that “the conduct on the part of the foreclosing party that is complained of by [the defendants] . . . encompasses actions taken by the [plaintiff] regarding possible loan modifications that would [have allowed Jeffrey] Mauro to cure [the] delinquency. This is directly related to the enforcement of the note . . . [because the] only purpose behind the statements was enforcement of the obligation.” We are not persuaded.
In Sorrentino, as in this case, a lender sought foreclosure on a parcel of real property after the borrowers defaulted on their loan. U.S. Bank National Assn. v. Sorrentino, supra, 158 Conn. App. 87. After the lender initiated foreclosure on the property, the lender and borrower entered into a foreclosure mediation. Id., 88. That mediation was unsuccessful, however, and thus the matter was referred back to the court. Id. Thereafter, the borrowers filed both an answer to the complaint and counterclaims against the lender, alleging, inter alia, that: the lender had made assurances that the loan would be modified to avoid foreclosure; the borrowers continually provided documents to assist in the modification process; the lender‘s promise to modify the loan was a “sham“; and the lender “continued to string [the borrowers] along, either expressly or impliedly representing that [the borrowers] would be eligible for a loan modification.” Id., 88-90. The lender subsequently moved for summary judgment as to both the borrowers’ liability in the primary foreclosure action and “the propriety of the [borrowers‘] counterclaims and special defenses.” Id., 90. The trial court granted the lender‘s motion for summary judgment as to both issues, and the borrowers subsequently appealed that determination. Id.
On appeal in Sorrentino, this court held, inter alia: “Our review of the allegations underlying the defendants’ mediation counterclaims shows that, even when viewed in a light most favorable to the defendants as the nonmoving party, all the allegations underlying those counterclaims are addressed to the plaintiff‘s improper conduct during the foreclosure mediation program. That program did not begin until after the execution of the note and mortgage, and after the foreclosure action was commenced, and, thus, does not reasonably relate to the making, validity or enforcement of the note or mortgage. . . . Moreover, the defendants have not posited how the factual allegations underlying the counterclaims have any reasonable nexus to the making, validity or enforcement of the mortgage or note, nor can we discern one. . . . Even if the defendants were provided with an opportunity to replead, we conclude as a matter of law that no permissible corrections could transform the counterclaims so that they comply with the transaction test set forth in
After reviewing the pleadings in this case, we conclude that the trial court did not abuse its discretion in determining that the defendants’ counterclaims did not have a reasonable nexus to the making, validity and enforcement of the note. Indeed, the trial court correctly determined that “the defendants’ counterclaims concerning the plaintiff‘s conduct during media-tion/mortgage modification are virtually indistinguishable from those of the defendant[s] in Sorrentino. They pertain to the plaintiff‘s conduct during [the mediation], which occurred years after the execution of the mortgage and the defendants’ default.” We agree with the court‘s interpretation of the counterclaims at issue, and thus we conclude that the court did not abuse its discretion in rendering judgment dismissing those counterclaims because, in accordance with our decision in Sorrentino, they were improperly joined in this action pursuant to the transaction test of
The Sorrentino court‘s decision affirming the trial court‘s rendering of summary judgment in the case before it is not to the contrary. In Sorrentino, the court noted, inter alia, that: “In its memorandum in support of summary judgment, the plaintiff argued to the court that . . . the defendants’ mediation counterclaims . . . were not part of the same transaction that is the subject of the foreclosure complaint and [thus] were improper. We view those arguments as directly challenging whether the counterclaims were properly joined pursuant to the transaction test set forth in
The judgment is affirmed and the case is remanded for the purpose of setting new law days.
In this opinion the other judges concurred.