T.D. Bank N.A. v. LLC (2011)

MEMORANDUM ORDER RE MOTION FOR PARTIAL SUMMARY JUDGMENT

Upon considering the briefs and arguments of counsel in support of and in opposition to the motion of plaintiff T.D. Bank, N.A. f/k/a T.D. Banknorth, N.A. f/k/a Banknorth, N.A. for partial summary judgment on the issue of liability against defendant Bristol Fields, LLC, the Court hereby concludes, for the following reasons, that said motion must be GRANTED.

1. This is an action to recover unpaid principal, interest and costs of collection allegedly due upon a note dated March 31, 2004, pursuant to which an entity known as Sound Enfield Group of Connecticut, LLC (“Sound Enfield”) promised to pay Banknorth, N.A. the principal sum of $12,130,000, plus interest thereon as provided in the note.   By deed of that same date, to secure the note, Sound Enfield mortgaged to Banknorth, N.A. a parcel of land known and designated as 1559 King Street, Enfield, Connecticut (“the mortgaged property”), of which Sound Enfield was then the record owner.

2. By an Assumption Agreement dated June 7, 2009, by and among Sound Enfield, Bristol Fields, LLC and T.D. Banknorth, N.A., Bristol Fields, LLC expressly assumed the obligations of Sound Enfield pursuant to the mortgage and note and became obligated to perform thereunder.

3. By a warranty deed dated June 1, 2005, Sound Enfield conveyed the mortgaged property to Bristol Fields, LLC.

4. Thereafter, on August 1, 2005, Bristol Fields, LLC and T.D. Bank, N.A. entered into a Modification Agreement, under which the note and mortgage were modified to change and clarify the interest rate and other provisions.   Plaintiff T.D. Bank, N.A. is the present holder and owner of the mortgage and the note.

5. Under the terms of the note, as modified by the Modification Agreement, Bristol Fields, LLC was required to make installment payments of principal and interest on the note to T.D. Bank, N.A. on the first day of each month until the entire balance due thereon was paid in full.   Failure to make any such installment payment in timely fashion constituted an event of default under § 3(a) of the note and § 5.5 of the mortgage.   In addition, Bristol Fields, LLC was obligated under § 3.1 of the mortgage to pay all real estate taxes on the mortgaged property “before the same become delinquent.”   Failure to keep such taxes current on the mortgaged property also constituted an event of default.

6. In her Complaint in this action dated August 12, 2010, the plaintiff alleged that it is now entitled to recover all monies due and owing to it under the note because the defendant has defaulted on its obligations thereunder in three ways:  first and second, by failing to make its monthly installment payments on the note for July and August 2010;  and third, by failing to pay the Town of Enfield $109,500.45 in real estate taxes on the mortgaged property, which became due on August 1, 2010.

7. The plaintiff has now moved this Court for partial summary judgment on the issue of liability only, claiming that there is no genuine issue of material fact that the defendant is in default under the note for failure to make its monthly installment payments on the note for July and August 2010 and failure to pay real estate taxes on the mortgaged property which became due on July 1, 2010.   On that basis, it claims that it is entitled to the immediate payment of all sums due and owing under the note, as principal, interest and costs of collection, in an amount to be established at a hearing in damages.

8. In support of its motion, the plaintiff has filed a memorandum of law and a sworn affidavit from Christopher Lippert, its Senior Vice President, in which he sets forth and avers to the above-described history of the note and mortgage and describes the defendant's actions claimed to constitute events of default thereunder.

9. The defendant has opposed the plaintiff's motion on two essential bases.   First, it claims that its non-payment of sums otherwise due and owing for July and August 2010 were not events of default because prior to June of 2010, the plaintiff accelerated the note due to what it claimed to have been a material change in the defendant's condition.   On that basis, it claims that the making of monthly installment payments ceased to be required of it since the plaintiff had made it clear, by its act of acceleration, that such a monthly payment scheme would no longer be an acceptable means by which to satisfy its payment obligations under the note.   Defendant's Memorandum in Opposition, p. 3 (citing and relying upon FDIC v. Napert-Boyer Partnership, 40 Conn.App. 434, 443 (1996)).

10. The second basis upon which the defendant opposes the plaintiff's motion is by claiming that its failure to pay the real estate taxes that assertedly became due to the Town of Enfield on or before August 1, 2010 was not an event of default because the Town has incorrectly claimed that it owes a much larger sum in taxes than that described in the plaintiff's motion and it is currently attempting to dispute that erroneous tax assessment.   The defendant insists that it is entitled to contest the erroneous tax assessment, and to that end, that it must not be found to have engaged in conduct constituting an event of default by refusing to pay the disputed amount.

11. The plaintiff responds to the defendant's first argument that the well-known basis upon which it accelerated the note before June of 2010 was the imposition of a second mortgage on the property, which the defendant duly satisfied by paying the second mortgage off immediately.   Thereafter, it notes, the defendant was not in default and the note was no longer accelerated-facts of which the defendant was plainly well aware since before July 1, 2010, it made further monthly installment payments on the note without suggesting that such payments were no longer due and owing by reason of the prior acceleration.

12. The plaintiff responds to the defendant's second argument by duly noting that the only failure to pay taxes it claims to have been an event of default was the failure to pay the $109,500.45 actually billed by the Town for payment by August 1, 2010, not some greater sum it may have contemplated claiming from the defendant in the future.   That lesser sum, it claims, is not disputed by the defendant, yet not one penny of it has ever been paid, which is undoubtedly an event of default.   Even, moreover, if the defendant did contest its liability for the $109,500.45 the Town billed it for real estate taxes by filing a timely appeal from that assessment, which it has not, there is nothing in the appeal statute, General Statutes § 12-117a, that suspends its obligation to pay the contested taxes pending the outcome of its appeal.   To the contrary, the statute specifically authorizes the Town to demand payment of at least 75% of the contested taxes while the appeal is pending, and up to 90% of such contested taxes for any property for which the assessed value is $500,000.00 or more.   Hence neither the statute nor the note allows the defendant to pay no tax at all while contesting the Town's assessment against it.   Here again, the plaintiff notes, the defendant has simply allowed its real estate taxes to become delinquent, which is an event of default.

13. The Court agrees with the plaintiff that, by failing to pay its real estate taxes on the mortgaged property, the defendant has defaulted upon its obligations under the note, under § 3.1 of the mortgage.   The plaintiff, as the holder of the note, is thus entitled to full payment by the defendant of all principal, interest and costs of collection due and owing to it under the note, in an amount to be determined at a hearing in damages.

14. Because of the Court's determination on this issue, it need not reach the plaintiff's additional claims of default based upon the defendant's failure to make the July and August 2010 installment payments alleged due from it under the note.

15. For the foregoing reasons, the Court hereby concludes that there is no genuine issue of material fact that the defendant is in default on its obligations under the note and mortgage, and thus that the plaintiff is entitled to partial summary judgment on its claim of liability against the defendant as a matter of law.   Accordingly, the plaintiff's Motion for Partial Summary Judgment must be GRANTED and this case must be scheduled for a hearing in damages.

IT IS SO ORDERED this 3rd day of February 2011.

Michael R. Sheldon, J.

Sheldon, Michael R., J.