OCWEN LOAN SERVICING, LLC v. MICHAEL A. MORDECAI ET AL.
(AC 43295)
Appellate Court of Connecticut
December 28, 2021
Prescott, Alexander and Suarez, Js.
Argued September 16
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Syllabus
In 2011, the plaintiff, O Co., sought to foreclose a mortgage on certain real property owned by the defendants, and thereafter filed a motion to substitute N Co. as the plaintiff. In 2017, N Co. filed a motion for summary judgment as to liability only as to its amended complaint. Soon thereafter, N Co. assigned the mortgage to W Co., and filed a motion to substitute W Co. as the plaintiff, which the court granted. For several months, the parties engaged in discovery and litigated discovery disputes, including W Co.‘s inability to locate and produce loan payment history records for a period of more than two years. While discovery objections were still outstanding, W Co. reclaimed the motion for summary judgment in 2018. Subsequently, the trial court ordered W Co. to provide additional discovery regarding its search efforts to locate the missing loan payment records. After the completion of discovery, the defendants filed a request to amend their answer and special defenses, which contained seven special defenses to address the incomplete payment records and related issues regarding changes in the amount of escrow payments. The defendants also submitted a caseflow request for a continuance to respond to W Co.‘s motion for summary judgment until after the court ruled on their request to amend, arguing, in relevant part, that the amended special defenses, if granted, would have direct significance on the motion for summary judgment, and, therefore, should be considered first. The court, however, denied the requested continuance. W Co. filed an objection to the defendants’ request to amend, claiming that the defendants’ counsel sought to delay the case, which the court sustained, and thereafter denied the defendants’ request to amend without explanation or analysis. In 2019, W Co. filed a reply to the defendants’ original special defenses and a certificate of closed pleadings. The court granted W Co.‘s motion for summary judgment, finding that no genuine issues of material fact existed as to liability on the note and mortgage, but provided no legal analysis. Thereafter, the court rendered a judgment of strict foreclosure in favor of W Co., from which the defendants appealed to this court. Held that the trial court‘s denial of the defendants’ request to amend their answer and special defenses constituted an abuse of discretion: the court failed to provide a sound reason for denying the defendants’ request as the granting of the amendment would not have unduly delayed trial or unfairly prejudiced W Co. in light of the facts that the proposed amendment was filed prior to W Co.‘s certificate of closed pleadings, the motion for summary judgment had languished on the docket for a significant period of time without being claimed for a hearing by W Co., and no trial date had been scheduled; moreover, it was appropriate procedurally and as a matter of legal strategy for the defendants to wait until discovery was completed as the missing information could have been relevant to the defendants’ theory of defense where such discovery related to the amount of the debt owed and the issue of default; furthermore, although the case had been pending for a significant period of time, some of that delay was attributable to W Co. or to its predecessors in interest and nothing in the record supported a finding that the defendants engaged in unreasonable or purely dilatory behavior in defending the foreclosure action; additionally, the defendants sought to have the trial court articulate the factual and/or legal basis for its decision to disallow the amendment but were thwarted in their efforts by the unavailability of the trial judge; accordingly, the trial court‘s error in failing to allow the defendants to amend their answer and special defenses required the reversal of the court‘s granting of the motion for summary judgment as to liability and the judgment of strict foreclosure because such judgment was rendered in part on the summary determination of liability.
Argued September 16-officially released December 28, 2021
Procedural History
Action to foreclose a mortgage on certain real property of the defendants, and for other relief, brought to the Superior Court in the judicial district of Fairfield, where Wilmington Savings Fund Society, F.S.B., was substituted as the plaintiff; thereafter, the court, Bruno, J., denied the defendants’ request to amend their answer and special defenses; subsequently, the court, Bruno, J., granted the substitute plaintiff‘s motion for summary judgment as to liability only; thereafter, the court, Bruno, J., rendered judgment of strict foreclosure, from which the defendants appealed to this court.
Christopher J. Picard, for the appellee (plaintiff).
Opinion
PRESCOTT, J. The defendants, Michael A. Mordecai and Elizabeth M. Keyser, appeal from the judgment of strict foreclosure rendered by the trial court in favor of the substitute plaintiff Wilmington Savings Fund Society, F.S.B., D/B/A Christiana Trust, not individually but as trustee for Pretium Mortgage Acquisition Trust (Wilmington).1 The defendants claim that the court (1) abused its discretion by denying their request to amend their special defenses, (2) improperly granted summary judgment as to liability because a genuine issue of material fact existed regarding whether they had defaulted on the note, and (3) misapplied
The record reveals the following relevant undisputed facts and procedural history. In 2007, the defendants purchased residential property in Fairfield. They executed a promissory note in favor of Taylor, Bean & Whitaker Mortgage Corporation (TB&W) in the principal amount of $340,000 (note). As security for the note, the defendants executed a mortgage on the Fairfield property in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for TB&W (mortgage).4 TB&W later endorsed the note in blank.
For more than four years, the parties participated in court-sponsored foreclosure mediation.5 The defendants, however, were unable to obtain a loan modification, and the mediation was terminated by order of the court on January 22, 2016.
On April 11, 2016, Ocwen filed a motion to default the defendants for failure to plead. It also filed a demand for a disclosure of defenses. The clerk initially granted the motion for default. That same day, however, the defendants filed a disclosure of defenses and a request to revise the complaint. As a result, the clerk vacated the default against the defendants. One of the revisions sought by the defendants was for Ocwen to provide more factual details regarding its allegation that it currently was the holder of the note. Ocwen filed an objection, which the court sustained.
Soon thereafter, however, Ocwen filed a motion to substitute Nationstar Mortgage, LLC (Nationstar), as the plaintiff. Ocwen stated in its motion that it had assigned the subject mortgage deed and note to Nationstar. Attached to the motion to substitute was a copy of a page from the Fairfield land records showing that an assignment of mortgage from Ocwen to Nationstar had been executed on October 29, 2013, and subsequently recorded on November 18, 2013.6 The defendants objected to the substitution, arguing, inter alia, that the assignment only referred to the mortgage and not the note. Further, the defendants argued that, in objecting to their request to revise, Ocwen had made admissions to the court about its own status as the holder of the note and that it had the right to enforce the mortgage that appeared to conflict with the assignment attached to the motion to substitute. The court sustained the defendants’ objection and denied the motion to substitute, stating: “There is no indication that Nationstar is the holder or owner of the note.”
On October 26, 2016, Ocwen filed a motion for judgment of strict foreclosure and a preliminary statement of the debt calculated as of October 5, 2016. According to
The clerk denied the motion for default, noting that, on November 1, 2016, the defendants filed a motion to strike the foreclosure complaint. In their motion to strike, the defendants argued, in relevant part, that the complaint failed to state a cause of action for foreclosure because Ocwen had failed to adequately plead regarding its status as the holder of the note or to identify the precise nature of the alleged default. Ocwen filed an opposition to the motion to strike and also renewed its motion to substitute Nationstar as the plaintiff. The renewed motion to substitute contained a representation that Nationstar, through its counsel, was in possession of the note, which was endorsed in blank, and, thus, Nationstar was the current holder of the note.
On January 5, 2017, the court granted the defendants’ motion to strike the foreclosure complaint, agreeing with the defendants that the original complaint lacked sufficient allegations regarding “prima facie elements of a cause of action for foreclosure of a mortgage. . . .” The court also granted Ocwen‘s motion to substitute Nationstar as the plaintiff by virtue of Ocwen‘s allegation that it had assigned the subject mortgage to Nationstar on October 29, 2013, and that Nationstar, through its counsel, was in possession of the note endorsed in blank. Nationstar then filed an amended complaint on January 11, 2017, which is the operative complaint in this action.
The defendants filed a timely answer to the amended complaint on February 2, 2017. The defendants also asserted four special defenses at that time.7
On June 22, 2017, Nationstar filed a motion for summary judgment as to liability only. On July 6, 2017, the defendants filed a motion to dismiss the foreclosure action in which they argued that the court lacked subject matter jurisdiction because Nationstar was neither the owner of the debt nor the holder of the note. Nationstar sought and was granted an extension of time to respond to the motion to dismiss, following which, on August 22, 2017, it filed a motion to substitute Wilmington as the plaintiff, stating that it had assigned the subject mortgage to Wilmington, which currently was in possession of the note. A copy of the assignment of mortgage from Nationstar to Wilmington was attached and showed that the assignment had been executed on July 6, 2017, the day the defendants filed their motion to dismiss.
The court granted the motion to substitute Wilmington as the plaintiff on September 14, 2017. On January 21, 2018, the court denied the defendants’ motion to dismiss. Over the next several months, the parties exchanged discovery and litigated several discovery disputes. The parties argued their outstanding discovery disputes to the court, Hon. Alfred J. Jennings, Jr., judge trial referee, on May 29, 2018, which issued a ruling on September 23, 2018. Among the issues to be resolved was Wilmington‘s
On December 26, 2018, following the completion of discovery, the defendants filed a request to amend their answer and special defenses. The attached proposed amended pleading contained seven special defenses, the primary basis of which were to address the incomplete payment records and related issues regarding changes in the amount of escrow payments. The first and second amended special defenses alleged unclean hands, asserting generally that Wilmington and its predecessors in interest knew about the incomplete payment history, and that the amount of the claimed debt was inaccurate, which unduly prejudiced the defendants both during mediation and in defending against the foreclosure action. The third special defense asserted that the defendants had not been given proper notice of the alleged default or other requisite statutory notice requirements. The fourth special defense sounded in payment pursuant to
The defendants also filed a separate caseflow request that sought a continuance to respond to and argue the motion for summary judgment as to liability until after the court had ruled on their request to amend their special defenses. Judge Jennings issued an order on December 28, 2018, denying the requested continuance. The court explained that, unless an objection to a request to amend is filed within fifteen days, it is deemed granted by consent; see
On January 7, 2019, the court ordered the defendants to file any opposition to the motion for summary judgment within fourteen days of the court‘s ruling on the objection to their request to amend, which was scheduled for a hearing on January 22, 2019. Following that hearing, on January 30, 2019, the court, Bruno, J., denied the defendants’ request to amend their special defenses without any explanation or analysis. Wilmington filed a reply to the defendants’ original special defenses on February 1, 2019, denying all allegations therein. The same day, Wilmington filed a certificate of closed pleadings.
On February 13, 2019, the defendants filed their memorandum in opposition to the motion for summary judgment. Wilmington
On April 25, 2019, the court, Bruno, J., issued an order granting the motion for summary judgment as to liability. The court provided no legal analysis for its ruling, including failing to address directly any of the defendants’ original special defenses. Rather, the court provided the following statement only: “When counsel for [Wilmington] and the defendant[s] appeared at short calendar in February to present their respective arguments on this motion for summary judgment . . . this case had been pending since 2011. Since that hearing, there have been many more pleadings filed . . . addressed to [the motion for summary judgment], and . . . specifically to information asserted by defense counsel during oral argument on the motion for summary judgment. The court has had the benefit of the able oral arguments of counsel, as well as the pleadings, and has considered all of this in reaching its decision that summary judgment should enter for the plaintiff. . . . The motion for summary judgment having been heard, the court finds that there are no genuine issues of material fact. The motion is granted as to liability. Judgment may enter for [Wilmington] on the complaint.”
On April 29, 2019, the court, Bellis, J., issued a dormancy dismissal order that required Wilmington “to file the appropriate motion and obtain judgment on or before [July 29, 2019], or the case will be dismissed for failure to prosecute with due diligence.” Wilmington, on July 23, 2019, filed a caseflow request asking the court to grant it an exemption to the court‘s dormancy order or, alternatively, to write in the matter on the upcoming foreclosure calendar for July 29, 2019. In support of its request, Wilmington stated that it “has all the requisite documents to obtain judgment including an updated appraisal and executed affidavit of debt. Given the aforementioned, it would be an exercise of futility and would unduly burden the court‘s docket to dismiss this matter and require [Wilmington] to commence a new action.” The following day, the court clerk issued an order that the motion for judgment would be written on the foreclosure docket for July 29, 2019.
On July 25, 2019, Wilmington filed a foreclosure worksheet, an affidavit of debt, and an affidavit regarding attorney‘s fees. The next day, the defendants filed a memorandum in opposition to the motion for judgment of strict foreclosure.8 Wilmington
The court, Bruno, J., proceeded with the hearing on the motion for judgment of strict foreclosure, following which it rendered judgment in favor of Wilmington. The court made findings as to the amount of the debt and the fair market value of the property, and it set law days to commence on October 29, 2019. The court‘s order did not address the substance of the defendants’ objections.9 The defendants timely filed the present appeal.
Shortly after the appeal was filed, on October 4, 2019, Wilmington filed a motion for articulation asking Judge Bruno to provide the factual and legal basis for her decision to grant the motion for summary judgment as to liability. Wilmington, citing this court‘s then recent decision in Bayview Loan Servicing, LLC v. Frimel, 192 Conn. App. 786, 218 A.3d 717 (2019), argued that the court‘s summary judgment ruling had failed to include any findings by the court that Wilmington had established a prima facie case for foreclosure or met its evidentiary burden of establishing in the first instance that there were no genuine issues of material fact.10
On February 4, 2020, Judge Stevens issued the following case management order: “This motion for articulation, and all other matters [in] this case involving Judge Bruno, are hereby reassigned to Judge Spader.” Judge Spader soon thereafter issued an order effectively granting the motion for articulation and articulating what it speculated to be the factual and legal basis for Judge Bruno‘s decision to grant summary judgment as to liability. The court indicated that it had read Judge Bruno‘s order on the motion for summary judgment, reviewed all the applicable pleadings, and listened to a recording of oral argument. It acknowledged that Judge Bruno did “not proactively make a statement in her order of the plaintiff‘s setting forth its prima facie case,” but the court nonetheless concluded that “[i]t is clear, however, that the plaintiff did set forth its prima facie case . . . .” Judge Spader then proceeded to set forth his analysis for why Wilmington was entitled to summary judgment. In addition to concluding that Wilmington had established its entitlement to summary judgment, the
This court later granted the defendants permission to file a late motion for articulation directed at Judge Bruno‘s denial of their request to amend their special defenses. Specifically, the defendants asked the trial court to articulate the factual and legal basis for denying their request to amend and to state whether the court had found that the proposed special defenses were valid under U.S. Bank National Assn. v. Blowers, 332 Conn. 656, 212 A.3d 226 (2019).12 This motion for articulation again was referred to Judge Spader, who denied the motion, stating in relevant part that “while Judge Bruno is unavailable presently, had the movant requested an articulation from her on a timelier basis, she may have been able to provide one. This court is unable to provide more articulation but posits that none is really necessary. A summary judgment motion was pending and it was then that the defendant[s] wanted to amend its defenses, the court would not then allow the late prejudicial amendment, which was in its discretion to do.”13 (Emphasis added.) The defendants filed a motion for review of the denial of their motion for articulation. This court granted the motion for review but denied the relief requested therein.14
“The granting or denial of a motion to amend the pleadings is a matter within the trial court‘s discretion. . . . In the interest of justice courts are liberal in permitting amendments; unless there is a sound reason, refusal to allow an amendment is an abuse of discretion. . . . The trial court is in the best position to assess the burden which an amendment would impose on the opposing party in light of the facts of the particular case. The essential tests are whether the ruling of the court will work an injustice to either the plaintiff or the defendant and whether the granting of the motion will unduly delay a trial.” (Citations omitted; emphasis added; internal quotation marks omitted.) Baker v. Cordisco, 37 Conn. App. 515, 522-23, 657 A.2d 230, cert. denied, 234 Conn. 907, 659 A.2d 1207 (1995).
“In determining whether there has been an abuse of discretion [in granting or denying an amendment], much depends on the circumstances of each case. . . . In the final analysis, the court will allow an amendment unless it will cause an unreasonable delay, mislead the opposing party, take unfair advantage of the opposing
“The court‘s discretion [to deny an amendment] is not unfettered; it is a legal discretion subject to review. . . . The trial court‘s discretion imports something more than leeway in decision making and should be exercised in conformity with the spirit of the law and should not impede or defeat the ends of substantial justice.” (Citation omitted; internal quotation marks omitted.) Id., 291-92.
“In exercising its discretion with reference to a motion for leave to amend, a court should ordinarily be guided by its determination of the question whether the greater injustice will be done to the mover by denying him his day in court on the subject matter of the proposed amendment or to his adversary by granting the motion, with the resultant delay.” (Internal quotation marks omitted.) Jacob v. Dometic Origo AB, 100 Conn. App. 107, 113, 916 A.2d 872, cert. granted, 282 Conn. 922, 925 A.2d 1103 (2007) (appeal withdrawn August 7, 2007). The law of this state favors courts allowing amendments in the absence of some sound basis for not doing so; id., 111; particularly if the record fails to disclose some significant injustice or prejudice to the nonmoving party. Id., 114; see also Conference Center Ltd. v. TRC, 189 Conn. 212, 216-17, 455 A.2d 857 (1983) (“a trial court may be well-advised to exercise leniency when amendments are proffered in response to a motion for summary judgment, rather than on the eve of trial“); Miller v. Fishman, supra, 102 Conn. App. 286 (holding that it was abuse of discretion for court to rule on motion for summary judgment without first considering pending request to amend because proposed amendment would not have unduly delayed trial or unfairly prejudiced other party); but see Citizens National Bank v. Hubney, 182 Conn. 310, 313, 438 A.2d 430 (1980) (court properly exercised discretion by not permitting amendment “after the pleadings had been closed and the motion for summary judgment filed“). We are mindful that, “[a]lthough it is not [the] habit [of appellate courts] to disturb a trial court‘s determination of whether an amendment should be permitted, we have done so on rare occasions when allowing the rul[ing] to stand would work an injustice to one of the parties.” (Internal quotation marks omitted.) Connecticut National Bank v. Voog, 233 Conn. 352, 369, 659 A.2d 172 (1995). Our careful review of the record before us leads us to conclude, for the following reasons, that this is such a case.
First, the pleadings had not yet been closed at the time the defendants sought to amend their answer and special defenses. Wilmington in fact had not yet filed any response to the original special defenses raised by the defendants. Accordingly, the court could not reasonably have viewed the need to respond to the amended answer and special defenses as an “inconvenience to the other party. . . .”
Second, it was appropriate procedurally and as a matter of legal strategy for the defendants to wait to fully develop and perfect their special defenses until Wilmington had complied with their discovery request. They made their request to
Third, to the extent that the case had been pending for a significant period of time, some of that delay fairly is attributable to Wilmington or its predecessors in interest rather than to the defendants. Certainly, the underlying foreclosure action had been on the trial court‘s docket for many years, and the court had a legitimate interest in advancing the case. A significant portion of the delay in this case, however, nearly four years, was the result of the lengthy court-sponsored mediation process. Moreover, the multiple transfers of the mortgage during the pendency of the action and the resulting need to substitute plaintiffs resulted in additional delays that were outside of the control of the defendants. Nothing in the record before us would support a finding that the defendants engaged in unreasonable or purely dilatory behavior in defending the foreclosure action, certainly none that would justify disallowing an amendment of their answer and special defenses prior to the close of pleadings. For example, the record does not reflect that the defendant filed multiple and frivolous bankruptcy proceedings, improper interlocutory appeals, or excessive and unproductive motions. Although the defendants engaged in motion practice, they only filed pleadings permitted under our rules of practice and in the proper order. See
Finally, we are mindful that the defendants sought to have the court articulate the factual and/or legal basis for its decision to disallow the defendants’ amendment, but they were thwarted in their efforts by the unavailability of Judge Bruno. “[O]ur appellate courts often have recited . . . that, in the face of an ambiguous or incomplete record, we will presume, in the absence of an articulation, a trial court acted correctly, meaning that it undertook a proper analysis of the law and made whatever findings of the facts were necessary.” (Emphasis in original.) Zaniewski v. Zaniewski, 190 Conn. App. 386, 396, 210 A.3d 620 (2019); see also Bell Food Services, Inc. v. Sherbacow, 217 Conn. 476, 482, 586 A.2d 1157 (1991). This court has made clear, however, that the adoption of such a presumption of correctness is not warranted in a case such as the present one “in which a party has done all that can reasonably be expected to obtain an articulation but has been thwarted through no fault of its own.” Zaniewski v. Zaniewski, supra, 397.15
In sum, the
The court‘s error in failing to allow the amended answer and special defenses requires the reversal of the court‘s subsequent order granting the motion for summary judgment. “[B]ecause any valid special defense raised by the defendant ultimately would prevent the court from rendering judgment for the plaintiff, a motion for summary judgment should be denied when any [special] defense presents significant fact issues that should be tried.” (Internal quotation marks omitted.) U.S. Bank National Assn. v. Eichten, 184 Conn. App. 727, 745, 196 A.3d 328 (2018). Furthermore, because the judgment of strict foreclosure was rendered in part on the summary determination of liability, that judgment likewise cannot stand.
The judgment of strict foreclosure, the summary judgment as to liability only, and the trial court‘s denial of the defendants’ request to amend their special defenses are reversed, and the case is remanded with direction to grant the defendants’ request to amend the answer and special defenses and for further proceedings in accordance with this opinion.
In this opinion the other judges concurred.