Vertical Lend, Inc. nka World Alliance Financial Corp. v. Estate of Dena G. Kaiko et al. (2011)

MEMORANDUM OF DECISION ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

The plaintiff has moved for summary judgment in this foreclosure action in which the defendant, Charles W. Kaiko, Jr. (the “defendant”), has alleged that the foreclosure is barred because the plaintiff has not accepted his offer to purchase the mortgaged property by means of a “short sale.”

Factual and Procedural History

The complaint alleges that the decedent-borrower, Dena G. Kaiko, executed a Note dated March 14, 2007, pursuant to which Dena G. Kaiko became obligated to repay Vertical Lend, Inc., its successors and assigns, for a loan not to exceed a maximum principal amount of $414,999.00.   To secure the Note, the decedent borrower executed and delivered to Vertical Lend, Inc. a Mortgage on property with improvements known as 498 Prospect Avenue, Hartford, Connecticut (the “Property”).   Said Mortgage was dated March 14, 2007 and recorded March 21, 2007 in Volume 5862 at Page 79 of the Hartford Land Record.   Thereafter, on October 2, 2007, Vertical Lend, Inc. changed its name to World Alliance Financial Corporation.

On November 11, 2009 the defendant filed an Answer and six Special Defenses.   On July 28, 2010 the plaintiff moved for summary judgment as to liability only.   On September 1, 2010, the defendant filed an Objection to the Motion for Summary Judgment and filed an Amended Objection on April 12, 2011.   In the interim, the plaintiff filed an Amended Complaint adding two counts to the complaint alleging fraud and unjust enrichment as to the defendant, Charles W. Kaiko, Jr. Therefore, the summary judgment pertains to the First Count only.

In the defendant's Objection and Amended Objection, he has abandoned five of his six alleged special defenses stating only that the Sixth Special Defense, which alleges that the plaintiff's rejection of the defendant's short sale offer precludes foreclosure, raises a genuine issue of material fact.

Discussion of the Law and Ruling

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.  Fojtik v. Hunter, 265 Conn. 385, 389, 828 A.2d 596 (2003);  Mytych v. May Dept. Stores Co., 260 Conn. 152, 158–59, 793 A.2d 1068 (2002);  Home Ins. Co. v. Aetna Life & Casualty Co., 235 Conn. 185, 202, 663 A.2d 1001 (1995).   Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact;  D.H.R. Construction Co. v. Donnelly, 180 Conn. 430, 434, 429 A.2d 908 (1980);  a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact, together with the evidence disclosing the existence of such an issue.  Practice Book §§ 17–45, 17–46;  Burns v. Hartford Hospital, 192 Conn. 451, 455, 472 A.2d 1257 (1984).   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.  Town Bank & Trust Co. v. Benson, 176 Conn. 304, 309, 407 A.2d 971 (1978);  Strada v. Connecticut Newspapers, Inc., 193 Conn. 313, 317, 477 A.2d 1005 (1984).   The test is whether a party would be entitled to a directed verdict on the same facts.  Batick v. Seymour, 186 Conn. 632, 647, 443 A.2d 471 (1982);  New Milford Savings Bank v. Roina, 38 Conn.App. 240, 243–44, 659 A.2d 1226 (1995).

Summary judgment should only be granted if the pleadings, affidavits and other proof submitted demonstrate that there is no genuine issue as to any material fact.  Scinto v. Stam, 224 Conn. 524, 530, cert. denied, 114 S.Ct. 176, 126 L.Ed.2d 136 (1993);  Connell v. Colwell, 214 Conn. 242, 246, 571 A.2d 116 (1991).   Summary judgment is “designed to eliminate the delay and expense of litigating an issue where there is no real issue to be tried.”  Wilson v. City of New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).

The plaintiff has submitted proof (Exhibit D) that the notice of default letter dated June 29, 2009, sent to the defendant set forth the following conditions by which a default under the reverse Mortgage could be cured:

The following options are available to cure the default of the loan:

1) Full payoff of the loan;  total amount currently due to pay off said Mortgage is $298,996, consisting of principal, accrued interest thru July 29, 2009 and payoff fees.

2) Property sold for the lesser of the debt or 95% of the appraised value;  borrower or borrower's estate may request an appraisal, at his or her own expense, if an estimate of the property's current value is desired.

3) Good marketable title to the property can be deeded to the lender.

You are hereby notified that you have 30 days from the date of this letter to fully comply and cure the loan default.

In his Objections to Motion for Summary Judgment, the defendant states that he believed he could purchase the subject Property in a short sale, when he received the default letter from the plaintiff it was unclear to him who was responsible for obtaining the appraisal, and plaintiff waived the 30–day cure period, or lead the defendant to believe that he had more than 30 days to complete the short sale.

The defendant has presented no evidence that he ever submitted a short sale offer to the plaintiff within the 30–day cure period.   Instead, he states that he first submitted such an offer on December 9, 2009, nearly six months after his receipt of the notice of default.   The defendant does admit that a representative of the plaintiff advised him in a mediation session that the short sale offer was too low and that the regulations of HUD required that the purchaser at a short sale be someone other than the defendant or another family member of the decedent.

As a matter of law, the court must reject the defendant's claim that his failure to understand who was to obtain the appraisal precludes the plaintiff's right to foreclose the Mortgage.   The language in the default notice clearly stated that the borrower's estate may request an appraisal.   The notice also clearly specified a 30–day cure period.   There is nothing contained in the defendant's affidavit which supports any finding that the plaintiff made any representation whatsoever about waiving the 30–day cure period or waiving the time required to present a short sale offer.

The only basis that the defendant presents for his claim of waiver are discussions which occurred during a mediation session.   Such session occurred after August 24, 2009, the date of the commencement of this action, well after the 30–day cure period.   Moreover, concessions made in mediation are made for the purpose of settlement and cannot be asserted as a defense in the litigation.   See Connecticut Code of Evidence § 4–8;  Miko v. Commission on Human Rights & Opportunities, 220 Conn. 192, 209, 596 A.2d 396 (1991).   The defendant claims that the plaintiff's act of faxing him the appraisal it obtained in conjunction with the foreclosure action is evidence that the plaintiff acquiesced in the defendant's offer to purchase the property in a short sale.   However, such action by the plaintiff provides no evidence that it acquiesced to the defendant's short sale.   To the contrary, as the defendant himself avers, the plaintiff advised him that HUD regulations prohibited him, the deceased mortgagor's relative, from buying the Property at a short sale.

Paragraph 14 of the Mortgage states that “any forbearance by Lender in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy.”   The defendant has presented no evidence that he cured the default under the Mortgage Note during the 30–day cure period and no evidence that the plaintiff waived that period.   Therefore, the plaintiff is not precluded from foreclosing on the Mortgage.   Summary judgment as to liability may enter in favor of the plaintiff on the Count One of the Complaint.

By the Court,

Aurigemma, J.

Aurigemma, Julia L., J.