The First National Bank of Litchfield v. LLC (2011)

MEMORANDUM OF DECISION RE MOTION TO STRIKE # 125

I

FACTS AND PROCEDURAL HISTORY

On November 3, 2009, the plaintiff, The First National Bank of Litchfield (“the bank”), commenced a foreclosure action against the first named defendant, Glen at Chestnut Hill, LLC (“The Glen”), in which it also asserted claims against assorted guarantors and subsequent encumbrances.   In its complaint, the bank seeks recovery of amounts due to it under certain notes payable to its order.   More specifically, the bank alleges that the Glen became indebted to the bank in the total principal amount of $5,400,000 by virtue of three notes (“the notes”).   The notes are secured by a mortgage and the payment of the notes is guaranteed by the following defendants:  Sage Holding, LLC;  CT Adult Condominiums, LLC;  Nathan Kahn;  Eliezer Goldwasser;  David Kramer;  Albert Spitzer;  and Yitzchok Mitnick (collectively, the “Guarantors”).   The notes are currently in default due to the failure to make payments when due and the bank has exercised its rights to declare the entire balance of the notes currently due and payable.   In the complaint, the bank seeks recovery of the amounts due under the notes from The Glen as the maker of the notes, from the guarantors, including Mitnick, by virtue of their guarantees, and through foreclosure of the mortgage

On December 10, 2009, Mitnick filed an answer and three special defenses.   In his first special defense, Mitnick alleges impossibility of performance.   In his second special defense, Mitnick alleges unequal bargaining position.   In his third special defense, Mitnick alleges impairment of collateral.   The plaintiff moves to strike all special defenses.

LEGAL DISCUSSION

“The purpose of a motion to strike is to contest ․ the legal sufficiency of the allegations of any complaint ․ to state a claim upon which relief can be granted.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).  “[A] plaintiff can [move to strike] a special defense ․” Nowak v. Nowak, 175 Conn. 112, 116, 394 A.2d 716 (1978);  see also Connecticut National Bank v. Voog, 233 Conn. 352, 354–55, 659 A.2d 172 (1995).   When ruling on a motion to strike a special defense, the court “take[s] the facts to be those alleged in the special defenses and [construes] the defenses in the manner most favorable to sustaining their legal sufficiency.”  Connecticut National Bank v. Douglas, 221 Conn. 530, 536, 606 A.2d 684 (1992).

A special defense must plead facts that “are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action.”  McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 491, 890 A.2d 140, cert. denied, 277 Conn. 928, 895 A.2d 798 (2006);  see also Almada v. Wausau Business Ins. Co., 274 Conn. 449, 456, 876 A.2d 535 (2005).   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.  Chase Manhattan Mortgage Corp. v. Machado, 83 Conn.App. 183, 188 (2004).   Thus, the traditional special defenses available in a foreclosure action are payment, discharge, release, satisfaction, and invalidity of a lien.  Petterson v. Weinstock, 106 Conn. 436, 441, 138 A. 433 (1927);  Dime Savings Bank v. Albir, Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. 132582 (February 7, 1995, D'Andrea, J.).  “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.”   Patriot National Bank v. Bobbi, Inc., Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. 08 5009026 (June 9, 2009, Mintz, J.) (47 Conn L. Rptr. 851, 851–52).   Where the plaintiff's conduct is inequitable, however, a court may withhold foreclosure on equitable considerations and principles.  Chase Manhattan Mortgage Corp. v. Machado, 83 Conn.App. 183, 188, 850 A.2d 260 (2004).

The defendant's first special defense alleges impossibility of performance in that unforeseen market conditions have rendered adherence to the terms of the contract unworkable.   In the second special defense, Mitnick alleges unequal bargaining power as he was an unsophisticated investor.   The third special defense alleges impairment of collateral based on the decline in real estate.

The three special defenses are not valid to a foreclosure action in Connecticut because they do not attack the making, validity or enforcement of the note itself.   Moreover, a “motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged.”  Novametrix Medical Systems v. BOC Group, Inc., 224 Conn. 210, 215, 618 A.2d 25 (1992).   Accordingly, the plaintiff's motion to strike special defenses is granted.

Pavia, J.

Pavia, Robin, J.