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Arch Bay Holdings, LLC v. Ryan L. Tompkins et al.
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT
On November 1, 2010, the plaintiff, Arch Bay Holdings, LLC, filed a one-count complaint seeking foreclosure of a mortgage given by the defendants, Ryan L. Tompkins and Starla E. Tompkins, to Mortgage Electronic Registration Systems, Inc. (MERS), solely as nominee for GMAC Mortgage Corporation. The mortgage was given to secure a debt in the amount of $123,000.00 as evidenced by a promissory note. The plaintiff alleges that, on or before August 24, 2010, it became the party entitled to collect the debt evidenced by the note and is the party entitled to enforce the mortgage. Further, the note and mortgage are currently in default by virtue of nonpayment of the installments of principal and interest due on July 1, 2008, and each month thereafter. The plaintiff has exercised its right to declare the entire balance of the note due and payable.
The defendants filed an answer and special defenses. The defendants assert that (1) the plaintiff lacks standing to bring the action; (2) the plaintiff failed to mitigate its damages by purchasing a fraudulent loan; (3) the plaintiff and its predecessor 1 committed fraud by having the defendants sign a VA loan and then bringing the present action based upon a non-VA loan; (4) the plaintiff and its predecessor committed misrepresentation by having the defendants sign a VA loan and then bringing the present action based upon a non-VA loan; and (5) there was no meeting of the minds at the signing of the contract between the plaintiff or its predecessor, and the defendants.
The plaintiff now moves for summary judgment and has filed a supporting memorandum of law and evidentiary support. The defendants filed an objection to the motion for summary judgment along with a supporting memorandum of law. The defendants did not, however, submit any evidentiary support.
“To obtain summary judgment in a foreclosure matter, the plaintiff must demonstrate the absence of a genuine issue of material fact as to its prima facie case ․ In a mortgage foreclosure action, [t]o make out its prima facie case, [the foreclosing party has] to prove by a preponderance of the evidence that it [is] the owner of the note and mortgage and that [the mortgagor has] defaulted on the note ․ Furthermore, the foreclosing party must demonstrate that all conditions precedent to foreclosure, as mandated by the note and mortgage, have been satisfied ․ [A] foreclosure complaint must contain certain allegations regarding the nature of the interest being foreclosed. These should include allegations relating to the parties and terms of the operative instruments, the nature of the default giving rise to the right to foreclosure, the amount currently due and owing, the name of the record owner and of the party in possession, and appropriate prayers for relief ․ The terms of the mortgage determine the necessary elements of the plaintiff's prima facie case ․ Only after this initial burden is met does the court then determine whether any special defenses alleged are legally sufficient to defeat a claim for foreclosure.” (Citations omitted; internal quotation marks omitted.) Comm 2006–C8 Asylum Street, LLC v. Northland Cityplace II, LLC, Superior Court, judicial district of Hartford, Docket No. CV 10 6005957 (May 9, 2011, Sheldon, J.).
The plaintiff claims that as there is no dispute between the parties regarding the allegations of the complaint and no genuine issue of material fact, the plaintiff has established a prima facie case of liability. In support of its motion, the plaintiff submits the affidavit of Attorney Jo–Ann R. Sensale who attests to the title search of the Plainville land records that she conducted for the property at issue. Sensale attests in relevant part that her search of the land records indicates that the plaintiff is the current mortgagee of record and the party entitled to enforce the mortgage. Attached to Sensale's affidavit are true and attested copies the assignments of mortgage. The plaintiff also submits the affidavit of Anthony Forsberg, the assistant vice president of Specialized Loan Servicing, LLC, which is the mortgage loan servicer for the mortgage loan account. Forsberg attests that “[o]n or before August 24, 2010, the plaintiff became and at all times since then has been the party entitled to collect the debt evidenced by said note and is the party entitled to enforce said mortgage.” In the absence of a counteraffidavit or other evidence from the defendants, there is no genuine issue of material fact that the plaintiff is the current holder of the mortgage. See Gianetti v. Health Net of Connecticut, Inc., 116 Conn.App. 459, 465, 976 A.2d 23 (2009) ( “[t]he existence of the genuine issue of material fact must be demonstrated by counteraffidavits and concrete evidence.” (Internal quotation marks omitted)).
In his affidavit, Fosberg avers “On December 10, 2001, [the defendants] owed GMAC Mortgage Corporation $123,000.00 as evidenced by a promissory note ․ for said sum dated on said date, and payable to the order of GMAC Mortgage Corporation with interest from said date, in monthly installments of principal and interest ․ On or before August 24, 2010, the plaintiff became and at all times since then has been the party entitled to collect the debt evidenced by said note and is the party entitled to enforce said mortgage ․” The authenticated copy of the note is endorsed in blank and constitutes bearer paper, the holder of which is entitled to enforce it.2 Although Forsberg's affidavit does not expressly contain a sworn statement that the plaintiff was in possession of the note at the time it commenced the present action, it is reasonable to infer from Forsberg's affidavit as well as the copy of the note, that the plaintiff was in possession of the note, endorsed in blank, on or before August 24, 2010. The court may consider not only the facts presented by the parties' affidavits and exhibits, but also the “inferences which could be reasonably and logically drawn from them ․” United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 381, 260 A.2d 596 (1969). In the absence of a counteraffidavit or other evidence from the defendants, there is no genuine issue of material fact that the plaintiff was the holder of the note when it commenced the present action.
“As there is no dispute that the defendants have defaulted and that all conditions precedent to foreclosure have been satisfied, the plaintiff has demonstrated the absence of a genuine issue of material fact as to its prima facie case. Only after this initial burden is met does the court then determine whether any special defenses alleged are legally sufficient to defeat a claim for foreclosure.” (Citations omitted; internal quotation marks omitted.) Comm 2006–C8 Asylum Street, LLC v. Northland Cityplace II, LLC, supra.
“The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless that the plaintiff has no cause of action ․ A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both.” Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002).
“The traditional defenses available in a foreclosure action are payment, discharge, release, satisfaction or invalidity of a lien ․ In recognition that a foreclosure action is an equitable proceeding, courts have allowed mistake, accident, fraud, equitable estoppel, CUTPA, laches, breach of the implied covenant of good faith and fair dealing, tender of deed in lieu of foreclosure and a refusal to agree to a favorable sale to a third party to be pleaded as special defenses ․ Other defenses which have been recognized are usury, unconscionability of interest rate, duress, coercion, material alteration, and lack of consideration ․ These special defenses have been recognized as valid special defenses where they were legally sufficient and addressed the making, validity or enforcement of the mortgage and/or note. The rationale behind this is that ․ special defenses which are not limited to the making, validity or enforcement of the note or mortgage fail to assert any connection with the subject matter of the foreclosure action and as such do not arise out of the same transaction as the foreclosure action ․ Further, based on the same rationale, the defenses ․ cannot attack some act or procedure of the lienholder.” (Citations omitted; internal quotation marks omitted.) Homeside Lending, Inc. v. Torres, Superior Court, judicial district of New Haven, Docket No. CV 98 0420452 (December 23, 1999, Celotto, J.T.R.).
The defendants argue that summary judgment is not proper because their five special defenses are legally sufficient in that they each go to the making or validity of the original note.
The defendants' first special defense alleges that the “plaintiff lacks standing to bring this action based on a fraudulent loan.” The defendants, however, plead no additional facts to support this special defense or submit any evidence to raise a genuine issue as to this fact. As previously determined, the plaintiff has established that it has standing to bring the present action based on its status as holder of the note and mortgage. The defendants' first special defense is legally insufficient and does not preclude summary judgment.
In their second special defense, the defendants allege that the “plaintiff has failed to mitigate their damages, by purchasing a fraudulent loan.” The plaintiff argues that this special defense does not preclude summary judgment because it is not a recognized defense to a foreclosure action as it does not attack the making, validity or enforcement of the note or mortgage.
“Various judges of this court have held that the special defense of failure to mitigate damages is not applicable to a mortgage foreclosure ․ The concept of mitigation of damages is inapplicable to a mortgage foreclosure action where the damages consist of a sum certain, the repayment of which has been agreed to by the defendant maker of a promissory note.” (Citations omitted.) Rockville Bank v. Southington Hospitality Group, LLC, Superior Court, judicial district of Hartford, Docket No. CV 10 6012854 (May 12, 2011, Aurigemma, J.); see Bank of America, N.A. v. Groton Estates, LLC, Superior Court, judicial district of New London, Docket No. CV 09 6001697 (July 13, 2010, Devine, J.); Citibank Mortgage, Inc. v. Conant, Superior Court, judicial district of Stamford–Norwalk, Docket No. CV 97 0156799 (March 13, 1998, Tobin, J.), aff'd, 54 Conn.App. 529, 736 A.2d 928, cert. denied, 251 Conn. 909, 739 A.2d 264 (1999); Fleet Bank, N.A. v. Barlas, Superior Court, judicial district of Hartford, Docket No. CV 92 0518205 (June 28, 1994; Aurigemma, J.) (12 Conn. L. Rptr. 32). The defendants' second special defense is legally insufficient and does not preclude summary judgment.
In their third special defense, the defendants allege that the “plaintiff and the plaintiff's [predecessor] have committed fraud by having the defendants sign a VA loan and then bringing this action based upon a non-VA loan.” The plaintiff argues that this special defense does not preclude summary judgment because it is factually insufficient in that the defendants failed to plead the proper elements of fraud.
“Fraud is an equitable defense to a foreclosure action.” (Internal quotation marks omitted.) Wells Fargo Bank, N.A. v. Craig, Superior Court, judicial district of Fairfield, Docket No. CV 09 5024543 (July 6, 2010, Hartmere, J.) (50 Conn. L. Rptr. 222). “Fraud involves deception practiced in order to induce another to act to her detriment, and which causes that detrimental action ․ The four essential elements of fraud are (1) that a false representation of fact was made; (2) that the party making the representation knew it to be false; (3) that the representation was made to induce action by the other party; and (4) that the other party did so act to her detriment.” (Internal quotation marks omitted.) Carr v. Fleet Bank, 73 Conn.App. 593, 595, 812 A.2d 14 (2002). “Because specific acts must be pleaded, the mere allegation that a fraud has been perpetrated is insufficient.” Chase Manhattan Mortgage Corp. v. Machado, 83 Conn.App. 183, 188, 850 A.2d 260 (2004).
The defendants allege that a false representation was made, specifically, that the loan was a VA insured loan. The defendants, however, fail to allege that the plaintiff or the plaintiff's predecessors knew that the loan would not become insured by the VA. Moreover, the defendants do not allege any conduct on the part of the plaintiff or its predecessors that was done to induce the defendants to act. The defendants do not allege that the plaintiff or its predecessors represented that the loan was or would be VA insured in order to induce action by the defendants. Finally, the defendants do not allege that they were harmed by entering into a loan that was not VA insured. There are no facts alleged or presented by way of affidavit or other evidence in conjunction with the objection to the motion for summary judgment from which the court can find that the defendants' third special defense is legally sufficient. The special defense of fraud is insufficient and does not preclude summary judgment.
In their fourth special defense, the defendants allege that the “plaintiff and the plaintiff's [predecessor] have committed a misrepresentation by having the defendants sign a VA loan and then brining this action based upon a non-VA loan.” The defendants do not, however, specify whether the defense is one of negligent or fraudulent misrepresentation. The plaintiff argues that whether the special defense is one of fraudulent or negligent misrepresentation, it is still legally insufficient because the defendants cannot demonstrate the necessary elements of either special defense.
“In addition to being recognized as a valid special defense in a foreclosure case, sufficient facts [must be] alleged by the defendant to state a cause of action for fraudulent misrepresentation ․ The essential elements of an action in fraud ․ are: (1) that a false representation was made as a statement of fact; (2) that it was untrue and known to be untrue by the party making it; (3) that it was made to induce the other party to act on it; and (4) that the latter did so act on it to his injury.” (Internal quotation marks omitted.) Federal National Mortgage Assn. v. Jessup, Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 98 0169417 (August 3, 1999, Hickey, J.). The elements of fraudulent misrepresentation are the same as those of fraud. As previously determined, the defendants did not sufficiently plead the elements of fraud. Likewise, the defendants did not sufficiently plead facts to support their special defense of fraudulent misrepresentation.
“[T]o establish the claim of negligent misrepresentation as a defense in [a] foreclosure action, the defendants had to establish (1) that the [plaintiff] made a misrepresentation of fact (2) that the [plaintiff] knew or should have known was false, and (3) that the [defendants] reasonably relied on the misrepresentation, and (4) suffered pecuniary harm as a result.” (Internal quotation marks omitted.) Johnnycake Mountain Associates v. Ochs, 104 Conn.App. 194, 201, 932 A.2d 472 (2007), cert. denied, 286 Conn. 906, 944 A.2d 978 (2008).
The defendants allege that the plaintiff made a misrepresentation. The defendants, however, failed to allege that the plaintiff or its predecessors knew or should have known that the loan would not be insured by the VA, that the defendants reasonably relied on the misrepresentation or that the defendants have suffered pecuniary harm as a result.
There are no facts alleged or presented by way of affidavit or other evidence in conjunction with the objection to the motion for summary judgment from which the court can find that the special defense of fraudulent or negligent misrepresentation is sufficient. The defendants' fourth special defense is legally insufficient and does not preclude summary judgment.
In their fifth special defense, the defendants allege that “[t]here was no meeting of the minds at the signing of any contract between the plaintiff and its [predecessors] and the defendants.” The plaintiff argues that this defense is legally insufficient because the defendants cannot demonstrate that there was no meeting of the minds. The plaintiff contends that the foundation for the defendants' claim relates to the fact that the note and mortgage were not VA insured. Nonetheless, the plaintiff argues that there is no dispute that (1) there was a mutual intent for the defendants to obtain $123,000 in financing for purposes of purchasing the property in exchange for the defendants' execution of the subject note and the mortgage securing the loan; (2) there was a mutual intent for the defendants to make monthly payments on the loan for purposes of repaying the indebtedness; and (3) the defendants made payments for a period of time on the loan and that the defendants sought a modification of the loan in 2005 upon default of their obligations at that time. The plaintiff contends that the defendants cannot support their special defense because they cannot offer evidence of any affirmative entitlements to which they have been robbed or losses that they could have avoided as a result of the fact that the defendants' loan is not VA insured.
The defendants' special defense alleges that there was a failure of the meeting of the minds, an essential element to contract formation. Thus, the special defense goes to the issue of whether a valid agreement was reached between the parties and is, therefore, a proper special defense in a foreclosure action. See Equicredit Corp. of America v. Pelizari, Superior Court, judicial district of Tolland, Docket No. CV 02 0077555 (April 4, 2003, Scholl, J.). Nonetheless, the defendants' special defense fails to incorporate the allegations of any of the previous special defenses and does not provide the court with an understanding of the contract formation issues. The special defense merely asserts that there was no meeting of the minds but the defendants failed to plead facts sufficient to support this legal conclusion.
The defendants argue that the original note and mortgage were made upon false pretenses because the defendants applied for a mortgage that was a VA loan. The defendants contend that they would not have signed for the loan if they knew that the loan was not going to be VA insured. Thus, there was no meeting of the minds and no valid contract. The court cannot rely on the factual background set forth in the defendants' memorandum of law without proper supporting evidence. “Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court [in support of a motion for summary judgment].” (Internal quotation marks omitted.) Gold v. East Haddam, 290 Conn. 668, 678, 966 A.2d 684 (2009). “Such assertions are insufficient regardless of whether they are contained in a complaint or a brief.” (Internal quotation marks omitted.) Karwowsky v. Fardy, 118 Conn.App. 480, 485, 984 A.2d 480 (2009).
There are no facts alleged or presented by way of affidavit or other evidence in conjunction with the objection to the motion for summary judgment from which the court can find that the special defense related to contract formation is sufficient. The defendants' fifth special defense is legally insufficient and does not preclude summary judgment.
Conclusion
The plaintiff met its burden of establishing the absence of a genuine issue of material fact as to its prima facie case for foreclosure. Moreover, there are no special defenses alleged that are legally sufficient to defeat the plaintiff's claim for foreclosure.
Accordingly, the motion for summary judgment is granted.
Tanzer, J.T.R.
FOOTNOTES
FN1. In their special defenses, the defendants include alleged acts by the plaintiff's “successors.” The plaintiff, however, has no successors. Thus, the court construes the defendants' allegations to mean “predecessors.” All references to “successor” have been changed to “predecessor.”. FN1. In their special defenses, the defendants include alleged acts by the plaintiff's “successors.” The plaintiff, however, has no successors. Thus, the court construes the defendants' allegations to mean “predecessors.” All references to “successor” have been changed to “predecessor.”
FN2. Pursuant to General Statutes § 42a–3–205(b), “[w]hen endorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially endorsed.” Pursuant to General Statutes § 42a–3–301(a), a person entitled to enforce an instrument includes “(i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 42a–3–309 or 42a–3–418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.”. FN2. Pursuant to General Statutes § 42a–3–205(b), “[w]hen endorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially endorsed.” Pursuant to General Statutes § 42a–3–301(a), a person entitled to enforce an instrument includes “(i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 42a–3–309 or 42a–3–418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.”
Tanzer, Lois, J.T.R.
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Docket No: CV106007605S
Decided: October 18, 2011
Court: Superior Court of Connecticut.
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