Wells Fargo Bank, N.A. v. Michael Toth et al. (2010)

MEMORANDUM OF DECISION

This is the plaintiff's motion for summary judgment (# 120) as to liability in this mortgage foreclosure.   For the reasons given, the motion must be denied.

On January 7, 2010, the plaintiff, Wells Fargo Bank, NA, filed an amended, one-count complaint against the defendants, Michael Toth and Karen Toth.¹ In its complaint, the plaintiff seeks to foreclose a mortgage on property in Winchester, Connecticut that the defendants own.   This mortgage was given to secure a note signed and executed by Michael Toth in the principal amount of $111,000.   The plaintiff alleges that the defendants executed and delivered their mortgage to Mortgage Electronic Registration Systems, Inc. (MERS), as a nominee for First Magnus Financial Corporation (First Magnus), on January 23, 2004.   The plaintiff alleges it is the holder of Michael Toth's note and the defendants' mortgage by virtue of an assignment that is to be recorded on the Winchester, Connecticut land records.

Michael Toth filed a revised answer and special defenses on June 7, 2010.²  In his answer, Michael Toth admits that he owns and is in possession of the property at issue.   Additionally, Michael Toth raises five special defenses.   In his fourth special defense, Michael Toth claims that the plaintiff lacks standing to bring this action.³

On July 6, 2010, the plaintiff filed a motion for summary judgment against both defendants as to liability only.   Michael Toth filed an objection to the plaintiff's motion on August 19, 2010, to which the plaintiff filed a reply brief on August 20, 2010.   Then, on August 30, 2010, Michael Toth filed a supplemental memorandum in opposition to the motion for summary judgment, to which the plaintiff filed a second reply on September 2, 2010.   This matter was heard at the short calendar on September 20, 2010.   On September 22, 2010, the defendant filed an affidavit in opposition to the motion for summary judgment.   This last affidavit has not been considered by the court in deciding this motion.

“Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party ․ The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law.”  (Internal quotation marks omitted.)  Southwick at Milford Condominium Assn., Inc. v. 523 Wheelers Farm Road, Milford, LLC, 294 Conn. 311, 318, 984 A.2d 676 (2009).  “It necessarily follows that it is only [o]nce [a] [movant's] burden in establishing [its] entitlement to summary judgment is met [that] the burden shifts to [a] [nonmovant] to show that a genuine issue of fact exists justifying a trial.”  (Internal quotation marks omitted.)  Himmelstein v. Windsor, 116 Conn.App. 28, 45 n.14, 974 A.2d 820, cert. granted in part by 293 Conn. 927, 980 A.2d 910 (2009).

“[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way ․ [A] summary disposition ․ should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party ․ [A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed.”  (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003).

The plaintiff asserts that there is no genuine issue of fact as to the defendants' liability under the loan documents.   Specifically, it asserts that it has established that it is the holder of the note and mortgage and that Michael Toth has defaulted on the note.   Moreover, the plaintiff argues, summary judgment may enter in its favor because Michael Toth's special defenses are legally insufficient or do not give rise to genuine issues of material fact.   Regarding the special defense related to standing, the plaintiff argues that standing is properly raised on a motion to dismiss.   Regardless, the plaintiff argues, its affidavit submitted in support of its motion clearly establishes that it is the holder of the note, and therefore, it has standing to bring this action.   In support of its motion, the plaintiff submits:  (1) an affidavit of Anne Neely, vice president of loan documentation on behalf of Wells Fargo Home Mortgage, Inc.;  (2) a copy of the note at issue;  (3) a copy of the mortgage deed;  (4) a copy of the assignment from MERS, as nominee for First Magnus, to the plaintiff, dated November 19, 2009;  (5) a July 19, 2009 letter from the plaintiff to Michael Toth, explaining that the loan is in default and that he has until August 18, 2009 to cure the default and bring the loan current before the plaintiff pursues remedies against him;  and (6) a memorandum of law.

In his objection, Michael Toth argues, inter alia, that the plaintiff has failed to meet its burden on summary judgment.   Specifically, he argues that nothing produced by the plaintiff in response to his discovery requests has shown that it is the holder of the note and mortgage, and the only documentary evidence supporting such a conclusion is dated November 19, 2009, after this action commenced on November 13, 2009.   Michael Toth submits his request for production and inspection with his objection.

In a reply brief filed on August 20, 2010, the plaintiff argues that although Michael Toth challenges its standing, he has not demonstrated any issues of material fact, nor has he cited any law or submitted counter affidavits in support of his arguments.   The plaintiff states that it has proven, by a preponderance of the evidence, that it is the holder of the note and mortgage.   As a result, it suggests, Michael Toth must now produce counter affidavits and evidence showing that it is not the holder of the note and mortgage.

In his August 30, 2010 supplement memorandum in opposition to the motion for summary judgment, Michael Toth once again argues that the plaintiff fails to establish that it is the holder of the note or that it was the holder at the time the action was filed.   Michael Toth also argues that there are several questions of fact at issue relating to the note and the mortgage.   One of those issues, he argues, is that the plaintiff cannot show that the note was delivered to it before the commencement of this action.   The plaintiff filed another reply brief on September 2, 2010.   In that brief, the plaintiff argues, inter alia, that it is the holder of the note and has standing.   Specifically, the plaintiff argues:  “Here, the Plaintiff has clearly pleaded that at all relevant times, it is the holder of the Note. The Plaintiff has, therefore, demonstrated its standing.”

In the recent case of Deutsche Bank National Trust Co. v. Bialobrzeski, 123 Conn.App. 791 (2010), the Connecticut Appellate Court considered whether the trial court properly denied a defendant mortgagor's motion to dismiss based on lack of standing, from which the court then rendered a judgment of foreclosure by sale.   The court stated:  “In this foreclosure action, the pro se defendant, Paul Bialobrzeski, claims that the plaintiff lacked standing to bring the action because it was not in possession of the subject note and mortgage at the time the action was commenced.”  Id., 792.   The defendant argued that “the mortgage was not assigned to the [bank] until sometime after the action was commenced, and the [bank] did not own the note at the time it commenced the action.”  Id., 796-97.

In response to the defendant's first argument regarding the timing of the assignment, the court stated:  “The defendant ․ cannot rely on the date the mortgage was assigned to the plaintiff as proof that the plaintiff did not own the note on the date the action was commenced.

“General Statutes § 49-17 permits the holder of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when the mortgage has not yet been assigned to him ․ The statute codifies the common-law principle of long standing that the mortgage follows the note, pursuant to which only the rightful owner of the note has the right to enforce the mortgage ․ Our legislature, by adopting § 49-17, has provide[d] an avenue for the holder of the note to foreclose on the property when the mortgage has not been assigned to him ․

“The key to resolving the defendant's claim is a determination of when the note came into the plaintiff's possession.   We cannot review the claim because Judge Domnarski made no factual finding as to when the plaintiff acquired the note.   Without that factual determination, we are unable to say whether Judge Domnarski improperly denied the defendant's motion to dismiss.   Although it is the appellant's responsibility to provide an adequate record for review;  see Practice Book §§ 60-5 and 61-10;  that cannot be the end of the matter because it concerns the trial court's subject matter jurisdiction.”  (Citation omitted;  emphasis added;  internal quotation marks omitted.)  Id., 797-98.

The court then addressed its subject matter jurisdiction and concluded:  “In this case, the defendant questioned the plaintiff's standing to bring the foreclosure action at the time the action was commenced.   The defendant's motion to dismiss was inspired by the exhibits attached to the plaintiff's motion for summary judgment.   The affidavit of Peter Read, an assistant vice president of Washington Mutual Bank, attests to the plaintiff being the holder of the note, but it does not resolve the factual issue as to when the plaintiff acquired the note ․ When the question regarding the plaintiff's standing was raised, the court should have held a hearing to determine whether the plaintiff was the owner or holder of the note at the time the action was commenced.”   (Citation omitted.)  Id., 799-800.   As a result, the court reversed the trial court's decision and remanded the case for a hearing to determine whether the bank was the owner or holder of the note at the time the action was commenced.

In the present matter, the plaintiff is moving for summary judgment on the ground that there is no question that it is the holder of the note and mortgage and that the defendants are in default.   In one of his special defenses, Michael Toth asserts that the plaintiff lacks standing, and in his objection to the motion for summary judgment, Michael Toth asserts that the plaintiff lacks standing because it has not established that it was in possession of the note at the time that this action commenced.   The motion before this court is one for summary judgment, and the plaintiff, the moving party, has the burden of establishing that it was the holder of the note and mortgage at the time that this action commenced, among other requirements.   The plaintiff concedes, and its supporting documentation establishes, that the mortgage was not assigned to it until November 19, 2009, after this action was commenced on November 13, 2009.   As in Bialobrzeski, however, the key issue is not when the note was assigned, but whether the plaintiff was in possession of the note on November 13, 2009.   This latter issue is essential to establishing the plaintiff's status as a holder of the note and its standing.

The plaintiff submits an affidavit in support of its motion in which Anne Neely, vice president of loan documentation, attests that:  “The Note was endorsed in blank and was delivered to the Plaintiff prior to the commencement of the instant foreclosure action.   The Plaintiff is the holder of the Note and Mortgage.”   Besides this statement, which is devoid of any allegation as to the exact date that the plaintiff received the note, the plaintiff fails to submit any additional documentary evidence as to when it received the note or any evidence from the assigning party as to when it provided the note to the plaintiff.   Moreover, standing implicates the court's subject matter jurisdiction, and “[t]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003).   Simply pleading that it is the holder of the note and submitting an affidavit to that effect, with minimal details, does not establish that fact and the plaintiff's standing.

For these reasons, the court concludes that the plaintiff has not established that it was the holder of the note at the time that this action commenced on November 13, 2009.   As a result, genuine issues of material fact remain, and the plaintiff's motion is denied.

BY ORDER OF THE COURT

John W. Pickard

FOOTNOTES

FN1. Thomaston Savings Bank was also named as a defendant in the amended complaint by virtue of a subsequent mortgage.   On May 13, 2010, however, the plaintiff filed a withdrawal of the action as to Thomaston Savings Bank..  FN1. Thomaston Savings Bank was also named as a defendant in the amended complaint by virtue of a subsequent mortgage.   On May 13, 2010, however, the plaintiff filed a withdrawal of the action as to Thomaston Savings Bank.

FN2. Unlike Michael Toth, Karen Toth is not represented by counsel.   Moreever, she has not filed an answer or special defenses..  FN2. Unlike Michael Toth, Karen Toth is not represented by counsel.   Moreever, she has not filed an answer or special defenses.

FN3. In his other special defenses, Michael Toth asserts that:  (1) The plaintiff violated 15 USC § 1637a(a)(10) by failing to disclose features of the note and/or mortgage and by failing to provide information regarding its ownership of the note and/or mortgage;  (2) the plaintiff violated the terms of the mortgage by failing to provide notice of default and acceleration;  (3) enforcement of the note is inequitable because the plaintiff failed to comply with the terms of the mortgage and its servicing agreement with Freddie Mac;  and (4) the plaintiff has violated Freddie Mac's home affordability modification program (HAMP) requirements in refusing a modification.   Thus, Michael Toth asserts, the plaintiff is estopped from pursuing foreclosure..  FN3. In his other special defenses, Michael Toth asserts that:  (1) The plaintiff violated 15 USC § 1637a(a)(10) by failing to disclose features of the note and/or mortgage and by failing to provide information regarding its ownership of the note and/or mortgage;  (2) the plaintiff violated the terms of the mortgage by failing to provide notice of default and acceleration;  (3) enforcement of the note is inequitable because the plaintiff failed to comply with the terms of the mortgage and its servicing agreement with Freddie Mac;  and (4) the plaintiff has violated Freddie Mac's home affordability modification program (HAMP) requirements in refusing a modification.   Thus, Michael Toth asserts, the plaintiff is estopped from pursuing foreclosure.

Pickard, John W., J.