PHH v. Melissa Cameron et al. (2012)

MEMORANDUM OF DECISION RE MOTION TO STRIKE

FACTS

On June 30, 2010, the plaintiff, PHH Mortgage Corporation, filed a complaint against the defendants, Melissa Cameron, Norman Cameron, Haven of Praise Evangelistic Ministries, First Liberty Association Transfer, Inc. and First Liberty Association Trust, Inc., to foreclose on Melissa Cameron and Norman Cameron's property.¹

In the single-count complaint, the plaintiff alleges the following relevant facts.   On June 10, 2011, “the defendant(s), Norman Cameron, became owner of real property” through a quitclaim deed from Melissa Cameron.   The real property was located at 631 Bloomfield Avenue in Bloomfield, Connecticut.   On or about July 22, 2005, “the defendant(s) Melissa Cameron” executed a note for a loan in the amount of $242,250 to Members Mortgage, Inc. On that same date, Melissa Cameron and Norman Cameron executed and delivered a mortgage on the property to Members Mortgage, Inc. The mortgage was then assigned by Members Mortgage, Inc. to Fannie Mae on July 25, 2005.   On September 3, 2008, the mortgage was assigned by Fannie Mae to the plaintiff.   The note is in default and the plaintiff, as the holder of the note, has accelerated the balance due and has declared the note to be due in full and to foreclose on the mortgage securing that note.

Written notice of the default was provided “in accordance with the note and mortgage” to Melissa Cameron and Norman Cameron, indicating that the note was due in full and declaring “said note ․ to foreclose the mortgage securing said note.”   As a result of the quitclaim deed, Norman Cameron is the owner of the equity of redemption of the property.   The plaintiff has caused a lis pendens to be recorded on the land records.   The plaintiff has provided Melissa Cameron and Norman Cameron with notice of their rights “pursuant to the statutes pertaining to unemployment and underemployment.”

On September 13, 2010, the defendants, Melissa Cameron and Norman Cameron,² who are self-represented parties,³ filed an amended answer, special defenses, and counterclaims.   On July 11, 2011, Melissa Cameron and Norman Cameron filed a “second amended special defenses.” ⁴  In total, Melissa Cameron and Norman Cameron allege twenty-eight special defenses.

The plaintiff moved to strike all of the defendants' special defenses.

DISCUSSION

“A party wanting to contest the legal sufficiency of a special defense may do so by filing a motion to strike.   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 ․ In ruling on a motion to strike, the court must accept as true the facts alleged in the special defenses and construe them in the manner most favorable to sustaining their legal sufficiency.”  (Citation omitted;  internal quotation marks omitted.)  Barasso v. Rear Still Hill Road, LLC, 64 Conn.App. 9, 13, 779 A.2d 198 (2001);  see also Practice Book § 10–39(a)(5).

“[A] motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court.”  (Internal quotation marks omitted.)  Lestorti v. DeLeo, 298 Conn. 466, 472, 4 A.3d 269 (2010).   It “admits all facts well pleaded;  it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings.”   (Internal quotation marks omitted;  emphasis in original.)  Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).  “A motion to strike is properly granted if the [special defense] alleges mere conclusions of law that are unsupported by the facts alleged.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).

“Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction ․ or, if there had never been a valid lien ․ 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 ․ Where the plaintiff's conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles ․ [O]ur courts have permitted several equitable defenses to a foreclosure action.  [I]f the mortgagor is prevented by accident, mistake or fraud, from fulfilling a condition of the mortgage, foreclosure cannot be had ․ Other equitable defenses that our Supreme Court has recognized in foreclosure actions include unconscionability ․ abandonment of security ․ and usury.”  (Internal quotation marks omitted.)  Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705–06, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002).

First Special Defense

The defendants allege in the first special defense that the plaintiff alleges in paragraph four of the complaint that it is the holder of the note, but that the note that “was included with the motion for summary judgment is not” the note signed by Melissa Cameron and that the plaintiff does not hold the true note.

The plaintiff moves to strike this special defense on the grounds that it is legally insufficient because it fails to recite facts consistent with the allegations of the complaint and that it does not allege facts but rather mere legal conclusions.   The defendants counter that the plaintiff's motion to strike does not address any portion of the first special defense but rather “challenges a non-existent assertion that the plaintiff is not the holder of the note.”

In the present action, the defendants' first special defense must be stricken.   The special defense attempts to explain the defendants' denial of the plaintiff's allegation contained in paragraph four of the complaint, and, thus, is inconsistent with the allegations of the complaint.   Further, Practice Book § 10–52 provides in relevant part:  “No special defense shall contain a denial of any allegation of the complaint ․ unless that denial is material to such defense.”   The defendants' denial is not material to any defense in this case.   The defendants simply seek to assert that the note held by the plaintiff is not the original note, and, therefore, simply restate their denial to paragraph four of the complaint.   Thus, the motion to strike the first special defense is granted.

Second Special Defense

The defendant's second special defense alleges the following relevant facts.   The note signed by Melissa Cameron on July 22, 2005 was three pages and she initialed page two and signed the third page.   The signed note had a handwritten clause in Norman Cameron's writing which provided:  “In the event this original note and/or original mortgage deed becomes d[e]stroyed, lost or stolen then together (the mortgage deed and note) they both become [ ] unenforceable, null, and void, releasing the borrowers of their obligation to repay this debt and borrow amount on the deed.   The lien must be removed from the land records.”   The law firm representing Members Mortgage Company, Inc. has a copy of this original note in its files.   On October 1, 2008, in connection with another action to foreclose on the defendants, the defendants submitted an affidavit of lost note which “avers that the original note is lost.”   At a proceeding for summary judgment in that case before Judge Freed, the defendant “revealed/claimed” that the plaintiff was “using a fraudulent document to foreclose.”   Judge Freed ruled to “sustain the defendant's objection to the motion for summary judgment.”   But, however, “the defense raised was not about the “lost note,” but directed to the copy of the fraudulent note presented to the court and mailed to the defendants.   The defendant then filed an amended answer and special defenses detailing the “affidavit of lost note.”   The plaintiff filed a “reply memorandum of law to memorandum in opposition to motion for summary judgment” which stated that the plaintiff did possess the original note.   It did not contain the handwritten clause.   The true note is destroyed, lost or stolen, and, therefore, by operation of the handwritten clause the mortgage and note are unenforceable.

The plaintiff moves to strike this defense on the grounds that it fails to recite facts consistent with the allegations of the complaint and that the defendants fail to allege that the handwritten clause was a valid part of the contract.   The defendants counter that the facts alleged are consistent with the allegations of the complaint and that “all of the components necessary for meeting of the minds are met in Melissa Cameron's offer of the note, and Members Mortgage Company, Inc.'s actions in acceptance.”

The plaintiff argues in the motion to strike that the defendants are attempting to assert a breach of contract special defense.   The court agrees.   “The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages.”  (Internal quotation marks omitted.)  Hawley Avenue Associates, LLC v. Robert D. Russo, MD. & Associates, P.C., 130 Conn.App. 823, 832, 25 A.3d 707 (2011).

“The rules governing contract formation are well settled.   To form a valid and binding agreement contract in Connecticut, there must be a mutual understanding of the terms that are definite and certain between the parties ․ To constitute an offer and acceptance sufficient to create an enforceable contract, each must be found to be based on an identical understanding by the parties.”  (Internal quotation marks omitted.)  Duplissie v. Devino, 96 Conn.App. 673, 688, 902 A.2d 30, cert. denied, 280 Conn. 916, 908 A.2d 536 (2006).  “An agreement is [t]he union of two or more minds in a thing done or to be done;  a coming together of parties in opinion or determination ․” (Internal quotation marks omitted.)  Viera v. Cohen, 283 Conn. 412, 429, 927 A.2d 843 (2007).

In the present action, the defendants fail to allege facts sufficient to state a special defense in breach of contract.   The defendants only allege that the handwritten clause was added by Norman Cameron and reviewed and initialed by Melissa Cameron.   The defendants fail to allege whether the agreement was accepted by Members Mortgage, Inc., an allegation that is necessary to state a special defense in breach of contract.   Consequently, the second special defense is stricken.

Third Special Defense

As for the third special defense, the defendants simply restate their second special defense, much of which is verbatim, and, accordingly, it is also stricken.

Fourth Special Defense

In the fourth special defense, the defendants reallege all of the allegations contained in the second special defense.   They also allege the following additional facts.   The plaintiff acquired the note without paying value or consideration and with notice that the note was overdue.   The plaintiff is not a holder in due course of the note under General Statutes §§ 42a–3–302 and 42a–3–305.   Therefore, the defendants are not obligated to pay the note.

The plaintiff moves to strike the special defense on the ground that it does not plead facts consistent with the allegations of the complaint, because the plaintiff is seeking the equitable remedy of foreclosing on the mortgage and § 42a–3–305 applies only to negotiable instruments.   The defendants counter by describing why the plaintiff is not a holder in due course.

“A plaintiff's status as a holder in due course is relevant only when he or she is seeking to enforce a negotiable instrument.   See Cadle Co. v. Errato, 71 Conn.App. 447, 456–57, 802 A.2d 887, cert. denied, 262 Conn. 918, 812 A.2d 861 (2002).”   Citibank South Dakota v. Beckford, Superior Court, judicial district of Hartford, Docket No. CV 11 6017714 (March 1, 2011, Wagner, J.).  “A mortgage given to secure a negotiable instrument partakes of the negotiable character of the instrument it secures ․ Such mortgages are governed by the law of negotiable instruments.”  Equity Bank v. Gonsalves, 44 Conn.Sup. 464, 467, 691 A.2d 1143 [17 Conn. L. Rptr. 252] (1996, Satter, J.).

General Statutes § 42a–3–302 provides in relevant part:  “ ‘holder in due course’ means the holder of an instrument if ․

“(2) The holder took the instrument (I) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in section 42a–3–306, and (vi) without notice that any party has a defense or claim in recoupment described in section 42a–3–305 (a).”

In the present action, the defendants set forth that the plaintiff is not a holder in due course under General Statutes § 42a–3–302, and, therefore, can assert that as a defense and other defenses under General Statutes § 42a–3–305.   While the defendants' allegations are disjointed, the court gives self-represented litigants “great latitude.”   The defendants have set forth a valid special defense that the plaintiff is not a holder in due course of the mortgage because it obtained the note without providing value and it was aware that the note was due, as required by General Statutes § 42a–3–302.   The plaintiff's argument that § 42a–3–305 only applies to negotiable instruments is valid, but not applicable, as a mortgage that secures a negotiable instrument “is governed by the law of negotiable instruments.”   Thus, the plaintiff's motion to strike the fourth special defense is denied.

Fifth Special Defense

The defendants' fifth special defense simply states:  “Pursuant to CGS 42a–3–308, Melissa Cameron and Norman Cameron specifically deny the authenticity of, and authority to make, each signature on the note, or any paper affixed to the note, except Melissa Cameron's own initials on page # 2 at the end of the clause and signature on page # 3.”

The plaintiff moves to strike this defense on the ground that it is “not a viable method of destroying the plaintiff's cause of action.”   The defendants fail to counter this argument.

General Statutes § 42a–3–308 provides:  “In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings ․” (Emphasis added.)   The court was unable to uncover any case law in which a defendant in a foreclosure action was allowed to assert a special defense under § 42a–3–308.   Further, the statute does not say that this can be asserted as a special defense but rather states that the authenticity must be denied in the pleadings.

In the present action, the plaintiff's second paragraph of the complaint alleges that Melissa Cameron executed a note.   In the defendants' answer, they specifically denied the “authenticity of, and the authority to make, each signature on the note.”   Accordingly, the motion to strike the fifth special defense is granted.

Sixth Special Defense

The defendants' sixth special defense attempts to combine two separate and distinct defenses.   First, the defendants claim that the plaintiff is a consumer collection agency, and, therefore, it is not lawful for them to bring this action pursuant to General Statutes § 36a–805.   Second, the defendants assert that the plaintiff violated the Truth in Lending Act.

The plaintiff moves to strike the portions of the special defense that purport to bring this cause of action pursuant to General Statutes § 36a–805 on the ground that the statute is inapplicable to the plaintiff.   The defendants attempt to counter the plaintiff's arguments by alleging more facts which would establish that the plaintiff is a consumer collection agency.

Here, the defendants fail to allege a special defense that has to do with the making, validity or enforcement of the mortgage or note.   Further, the courts have not recognized General Statutes § 36a–805 as a valid special defense to a foreclosure action.

As to the allegations concerning the Truth in Lending Act, the plaintiff moves to strike on the grounds that the Truth in Lending Act is not a special defense in a foreclosure action and that the defendants violated Practice Book § 10–3 in failing to identify the statute by its number.   The plaintiff counters by asserting that the assignment of the mortgage was unauthorized and therefore the plaintiff has been illegally collecting payments on “a debt that does not exist” for three years.

“Since the decision in Family Financial Services [, Inc. v. Spencer, 41 Conn.App. 754, 677 A.2d 479 (1996) ], Superior Court judges have generally found that [Truth in Lending Act (TILA) ] violations do not constitute a valid special defense in a foreclosure action, often relying on the reasoning set forth in Bank of New York v. Conway, 50 Conn.Sup. 189, 916 A.2d 130 (2006), and Eastern Savings Bank, FSB v. Mara, Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 05 4006305 (June 5, 2006, Dooley, J.).   These two decisions found that because a violation of TILA does not attack the validity of the note or mortgage, but relates to the conduct of the lienholder, it is an invalid foreclosure special defense ․ Nevertheless, both courts addressed the right of rescission pursuant to a violation of TILA as a distinct special defense ․ With respect to rescission under TILA, the court in Bank of New York v. Conway noted that a valid rescission could nullify the plaintiff's security interest ․ Likewise, Eastern Savings Bank v. Mara distinguished the TILA-based defense permitted in Family Financial Services, reasoning that [t]he allegations regarding the TILA violations [in Family Financial Services ] were the factual support for the legal defense of ‘rescission.’   Thus, the fact that the alleged rescission occurred under the auspices of TILA does not convert the special defense to one of TILA violations on the part of the lienholder ․ Although at least one Superior Court decision has accepted TILA as a special defense without qualification, the defense in that action was similarly based on the defendant's timely rescission of the mortgage transaction.   EMC Mortgage Corp. v. Shamber, Superior Court, judicial district of Tolland, Docket No. CV 07 5001252 (November 12, 2009, Sferrazza, J.).”  (Citations omitted;  internal quotation marks omitted.)   Indymac Bank, F.S.B. v. Khan, Superior Court, judicial district of Fairfield, Docket No. CV 08 5016789 (April 16, 2010, Hartmere, J.).

In the present case, the defendants' defense does not allege any facts regarding the defendants' rescission of the mortgage.   As a result, the court adheres to the greater weight of authority in the Superior Court, and, thus determines that the defendants have failed to assert a valid special defense under the Truth in Lending Act.

Seventh Special Defense

The defendants' seventh special defense alleges that the “plaintiff's claim is barred by the doctrine of unclean hands because the plaintiff has not been forthright with the court or Melissa and Norman Cameron in seeking a foreclosure judgment.”   It goes on to reallage that the original note is lost or stolen.

The plaintiff moves to strike this defense on the grounds that the defendants have failed to meet the pleading requirements for a claim of unclean hands because they fail to allege any wilful misconduct on the part of the plaintiff.   The defendants appear to have omitted any argument regarding the seventh special defense in their opposition.

“A successful unclean hands defense to a foreclosure action may be asserted in situations where a lender takes advantage of an unsophisticated borrower, unrepresented by counsel, such as by charging significant fees or an arbitrarily high interest rate.  Monetary Funding Group, Inc. [v. Pluchino, 87 Conn.App. 401, 407–08, 867 A.2d 841 (2005) ].   Similarly, where a lender misleads an unsophisticated borrower, a foreclosure of the note held by the lender may be barred by unclean hands.  Id. The lender's misdeeds must, however, arise to ‘intentional misconduct with respect to the various transactions' and be undertaken to gain some improper advantage, such as generating ‘excessive fees and costs' for the lender.  Id., at 410.”   Rockville Bank v. Southington Hospitality Group, LLC, Superior Court, judicial district of Hartford, Docket No. 10 6012854 (May 12, 2011, Aurigemma, J.) (holding that the special defense of unclean hands was insufficient to defeat a foreclosure action because:  “The defendants do not allege that they were unsophisticated borrowers, unrepresented by counsel, or that the plaintiff engaged in sharp lending practices, such as charging excessive fees”).

Here, in the present case, the defendants “do not allege that they were unsophisticated borrowers, unrepresented by counsel, or that the plaintiff engaged in sharp lending practices, such as charging excessive fees.”   The defendants simply allege that the note is not the original, that the plaintiff is acting as a collection agency, the plaintiff refused to accept late and partial payments from the defendants, and that the original note cannot be produced.   Therefore, the defendants' seventh special defense must be stricken.

Eighth Special Defense

The defendants' eighth special defense alleges that the defendants signed a mortgage with Members Mortgage Company, Inc., not Members Mortgage, Inc. as the complaint alleges.   They further allege that Members Mortgage, Inc. is not registered as a corporate entity in Massachusetts, and, therefore the mortgage isn't valid.

The plaintiff moves to strike this special defense on the grounds that it pleads facts that are inconsistent with the allegations of the complaint and that it is not a recognized defense in a foreclosure action.   The defendants respond that the plaintiff is attempting to make two distinct legal entities look the same without alleging any proper facts in the complaint.

As stated above:  “Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction ․ or, if there had never been a valid lien ․ 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.”  Fidelity Bank v. Krenisky, supra, 72 Conn.App. 705.   The allegations in the defendants' special defense are inconsistent with the complaint.   In the complaint, the plaintiff alleges that Melissa Cameron executed a mortgage with Members Mortgage, Inc. An allegation that the defendants deny in their answer and simply state that “Melissa Cameron executed a note ․ payable to the order of Members Mortgage Company, Inc.” This special defense simply seeks to restate their denial, and is, in fact, inconsistent with the allegations of the complaint.   Consequently, the motion to strike the eighth special defense must be granted.

Ninth Special Defense

The defendants' ninth special defense recapitulates the eighth special defense, using similar, and ultimately, identical, allegations.   Therefore, it must be stricken.

Tenth Special Defense

The defendant's tenth special defense alleges that the original note has not been produced because it is “destroyed, lost or stolen,” and, as a result, it is unenforceable.   The defendants' tenth special defense just restates the second special defense.   Therefore, it must be stricken.

Eleventh Special Defense

The eleventh special defense incorporates the allegations contained in the second and eighth special defenses, and adds the following additional allegations.   The note and mortgage never secured the same loan as the payee under the original note and the mortgagee under the mortgage presented are different entities.   The note executed by Melissa Cameron is not secured by a Mortgage on the property.   The note alone does not afford the plaintiff a right to foreclose.

These allegations merely duplicates the defendants' eighth special defense, and, consequently it must be stricken.

Twelfth Special Defense

The defendants allege the following relevant facts in their twelfth special defense.   The legal registered name of Members Mortgage Company, Inc., “never being the mortgagee on any mortgage made by” the defendants “was never in a position to bargain, sell, or assign any interest in any mortgage” which the defendants hold title to.   There was an assignment of the mortgage dated July 22, 2005 from Members Mortgage Company, Inc. to Fannie Mae. The plaintiff is not a holder in due course because the defendants never executed a mortgage to Members Mortgage Company, Inc. and they never had the right to “bargain, sell, or assign a mortgage originally executed to another entity.”

The plaintiff moves to strike this defense on the basis that General Statutes § 47–36aa, the validating act, remedies this defect with the mortgage.   The plaintiff adds that it ought to be stricken because it consists of mere legal conclusions and facts that are inconsistent with the complaint.   The plaintiff counters that Members Mortgage, Inc. never had a right to assign the mortgage and that § 47–36aa does not remedy such a defect.

The plaintiff's argument that General Statutes § 47–36aa(4) applies in the present action is incorrect.   Subsection four provides:  “The instrument was made to any grantee not recognized by law to have the capacity to take or hold an interest in real property.   Validation of an instrument under this subdivision confirms the conveyance to the grantee and any subsequent transfers of the interest by the grantee to any subsequent transferees, their heirs, successors and assigns.”   This does not apply to the mortgage lender, but rather to the borrower.   Therefore, it is inapplicable in the present action.

As for the plaintiff's additional arguments, the defendants have alleged more than mere legal conclusions in their special defense, and, thus, that is not a valid reason strike the special defense.   Lastly, the plaintiff states that the allegations are inconsistent with the complaint.  Practice Book § 10–52 provides:  “No special defense shall contain a denial of any allegation of the complaint ․ unless that denial is material to such defense.”

As the court has noted, self-represented parties are given “great latitude ․ in order that justice may both be done and be seen to be done ․ For justice to be done, however, any latitude given to [self-represented] litigants cannot interfere with the rights of other parties, nor can we disregard completely our rules of practice.”  (Internal quotation marks omitted.)  Marlow v. Starkweather, 113 Conn.App. 469, 473, 966 A.2d 770 (2009).   The court finds that although the defendants' special defense contains denials of some allegations of the complaint, those are material to the defense that the assignment was invalid.   Thus, the plaintiff's motion to strike the twelfth special defense is denied.

Thirteenth Special Defense

The defendants' thirteenth special defense simply repeats the twelfth special defense, and, consequently, it must be stricken.

Fourteenth Special Defense

The fourteenth special defense alleges that the assignment of the mortgage from Members Mortgage Company, Inc. to Fannie Mae is invalid because it omits where the mortgage was recorded, the county, the state, the volume, category and the property it purports to assign.   They further allege that the assignment fails to identify any valid mortgage.

The plaintiff moved to strike this special defense on the ground that General Statutes § 47–36aa remedies the defect in the mortgage.   The defendants counter that the statute does not remedy these defects.

General Statutes § 47–36aa(b) provides in relevant part:  “Any ․ assignment ․ made for the purpose of ․ mortgaging or affecting any interest in real property in this state recorded after January 1, 1997, which instrument contains any one or more of the following defects or omissions is as valid as if it had been executed without the defect or omission ․

“(8) The instrument fails to state the town and state in which the real property described in the instrument is located ․”

The court finds that the failure to provide the county, state and property description is an insubstantial defect that is cured by this statute.   There is not any Connecticut case law that suggests the missing volume number or category of the public record is a defect would invalidate the assignment.   Further, the defendants' allegation that the assignment “fails to identify any valid mortgage” is insufficient.   The defendants are not clear as to whether the assignment allegedly lacks reference to any mortgage or whether the mortgage referenced is invalid for some other reason.   As it stands, it is a mere legal conclusion.   For the foregoing reasons, the special defense much be stricken.

Fifteenth Special Defense

The fifteenth special defense alleges that any and all subsequent assignments from Members Mortgage, Inc. are invalid because Melissa Cameron signed her mortgage with Members Mortgage Company, Inc. and they are not the same legal entity.   The defendants simply repeat their thirteenth special defense.   Thus, the fifteenth special defense must be stricken.

Sixteenth Special Defense

The defendants allege that the assignment to and from Fannie Mae is invalid.

For the reasons discussed by the court in relation to the twelfth special defense, the plaintiff's motion to strike the sixteenth special defense is denied.

Seventeenth Special Defense

The seventeenth special defense simply rephrases the twelfth, thirteenth and twenty-fifth special defense.   Therefore, it must be stricken as there is no new special defense included.

Eighteenth Special Defense

In the eighteenth special defense, the defendants simply allege that “upon information and belief, no consideration was ever paid by ‘Fannie Mae’ to Members Mortgage Company, Inc. in purchase of the subject mortgage.”

The plaintiff moves to strike on the ground that the defendants failed to allege any facts which demonstrate how this relates to the making, validity or enforcement of the mortgage or note.   The defendants counter General Statutes § 42a–3–302(2)(ii) requires consideration to have been paid for the instrument.

“ ‘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.).”   Arch Bay Holdings v. Tompkins, Superior Court, judicial district of New Britain, Docket No. CV 10 6007605 (October 18, 2011, Tanzer, J.).

The defendants incorrectly cite General Statutes § 42a–3–302 in support of their position.  Section 42a–3–302 entitled “holder in due course” states in relevant part:  “The holder took the instrument (i) for value ․” The plaintiff does not allege in the complaint that it is the holder in due course of the mortgage, but rather that it is the holder.   Therefore, the statute is inapplicable.

While lack of consideration is a special defense in a foreclosure action, in the present case, the defendants have failed to allege sufficient facts in the special defense that demonstrate how the lack of consideration relates to the making, enforcement or validity of the note.   Thus, it must be stricken.

Nineteenth Special Defense

The nineteenth special defense alleges the following facts.   Fannie Mae is not the same entity as the Federal National Mortgage Association.   The Federal National Mortgage Association Charter Act does not designate Fannie Mae as an alternate legal name for the association.   The Federal National Mortgage Association Charter Act prohibits it from loaning to mortgage originators and from originating loans itself.  “Upon information and belief, the existence of the signed endorsement-in-blank stamp on the blank, unsigned note, prior to execution, existed to secure the funds lent to Members Mortgage Company, Inc. in order for them to fund the loan.”   The loan from Members Mortgage Company, Inc. was funded by Fannie Mae. “The Federal National Mortgage Association cannot be the same corporate entity as Fannie Mae unless it is grievously in breach of its Congressional charter, and of the public trust.”  “Fannie Mae does not exist as a corporation able to transact business, to buy and sell, to seek and obtain licenses with regulatory agencies, and/or to engage in lending and loan guarantees.”   There is no document assigning the mortgage “to, or from” the Federal National Mortgage Association and the association was never the owner in due course.   The plaintiff is not the owner in due course because it was not assigned the mortgage by an owner in due course.

The plaintiff moves to strike this defense on the ground that General Statutes § 47–36aa validates the defective assignment.   The plaintiff adds that it asserts mere legal conclusions and not facts.   The defendants counter that the assignment cannot be remedied by the statute “as one party sold an asset belonging to another” and the statute does not address such a defect.

The defendants' nineteenth special defense ought to be stricken.   The court need not determine whether § 47–36aa is applicable, because the special defense asserts legal conclusions rather than allegations to support their claim.   The defendants set forth two parallel and inconsistent ideas in the special defense.   First, that Fannie Mae is not a corporation that exists to engage in lending;  Fannie Mae is not the same entity as the Federal National Mortgage Association;  and that Fannie Mae funded the original loan.   Second, there is no document from Federal National Mortgage Association assigning the mortgage;  the Federal National Mortgage Association was never the holder in due course;  and the plaintiff is, therefore, not the holder in due course.   The defendants fail to allege why there must be an assignment to or from the Federal National Mortgage Association in order for the plaintiff to be a holder in due course, when they state that Fannie Mae funded the loan and that Fannie Mae and the Federal National Mortgage Association are not the same entity.   Therefore, the nineteenth special defense must be stricken.

Twentieth Special Defense

In the twentieth special defense, the defendants allege the following facts.   The plaintiff submitted in support of its claim the affidavit of Marc Hinkle, the Vice President of PHH Mortgage Corporation.   The affidavit bears his signature.   In the previous case to foreclose the subject mortgage, Mr. Hinkle signed various documents, and his signature was authenticated by a qualified witness in the previous action.   That signature does not match the signature of Mr. Hinkle in his affidavit.

The affidavit referenced by the defendants was not attached to the complaint, but rather was submitted in support of the plaintiff's motion for summary judgment.   Therefore, the dispute about the authenticity of the signature is not relevant to asserting special defenses in response to the complaint.   Additionally, this is not a valid defense in a foreclosure action as it does not relate to the making, validity or enforcement of the mortgage, but rather the authenticity of the affidavit.   Thus, it must be stricken.

Twenty First Special Defense

The twenty first special defense alleges that the plaintiff has not established proof of debt pursuant to Practice Book § 23–18 because it has not produced the original note, mortgage, or an affidavit of a person familiar with the indebtedness.   The defendants also allege that the note offered has been illegally altered and that the affidavit in the case is not authentic, and, therefore, the plaintiff does not have standing.

The plaintiff moves to strike this special defense on the ground that Practice Book § 23–18 does not set forth a defense but rather the procedural outline for the time of entry of judgment.   The defendants counter that the Practice Book requirements are specific and the plaintiff failed to comply with them.

Practice Book § 23–18 ⁵ provides:  “(a) In any action to foreclose a mortgage where no defense as to the amount of the mortgage debt is interposed, such debt may be proved by presenting to the judicial authority the original note and mortgage, together with the affidavit of the plaintiff or other person familiar with the indebtedness, stating what amount, including interest to the date of the hearing, is due, and that there is no setoff or counterclaim thereto.

“(b) No less than five days before the hearing on the motion for judgment of foreclosure, the plaintiff shall file with the clerk of the court and serve on each appearing party, in accordance with Sections 10–12 through 10–17, a preliminary statement of the plaintiff's monetary claim.”

“Under [§ 23–18], the plaintiff mortgagee need not present witnesses to testify as [to] the amount of the debt, but may instead submit certain documents to the court, including the original note and mortgage together with an affidavit stating the amount due.   Significantly, [§ 23–18] can be utilized by the plaintiff mortgagee only where no defense as to the amount of the mortgage debt is interposed by the defendant mortgagor ․ Connecticut National Bank v. N.E. Owen II, Inc., 22 Conn.App. 468, 472 (1990).   Nothing in this section indicates that it may be used as a basis for a special defense.”   (Internal quotation marks omitted.)   Home Savings of America v. Hier, Superior Court, judicial district of Danbury, Docket No. 33 08 25 (November 2, 1998, Moraghan, J.).

The Connecticut courts have never allowed Practice Book § 23–18 to be asserted as a special defense in a foreclosure action, nor is there any language in § 23–18 that suggests it can be asserted as a special defense.   Therefore, it must be stricken.

Twenty–Second Special Defense

The defendants simply express the nineteenth special defense in other words.   Thus, the twenty-second special defense must be stricken.

Twenty–Third Special Defense

The defendants' twenty-third special defense alleges the following facts.   “According to Dunn and Bradstreet, there are at least ten entities trading as Fannie Mae.” The plaintiff's complaint does not identify which of these entities engaged in the funding, originating, guaranteeing, bargaining, buying, selling and assigning of any loans.   The assignments to and from Fannie Mae fail to meet statutory requirements for assignment of mortgage.   The plaintiff is not the holder in due course.

The plaintiff moves to strike this special defense on the ground that it is legally insufficient because it fails to specifically allege which statute the assignment fails to comply with.   The defendants do not appear to counter this argument in their brief.

Practice Book § 10–3 provides in relevant part:  “When any claim made in a complaint, cross complaint, special defense, or other pleading is grounded on a statute, the statute shall be specifically identified by its number.”   “Although a plaintiff generally is required to identify specifically any statute on which a particular action is grounded;  see Practice Book § 10–3(a);  ‘our courts repeatedly have recognized that [this rule] is directory and not mandatory ․’ Burton v. Stamford, 115 Conn.App. 47, 65, 971 A.2d 739, cert. denied, 293 Conn. 912, 978 A.2d 1108 (2009).   The plaintiff is not barred from recovery thereby as long as the defendant sufficiently was apprised of the nature of the action.  Spears v. Garcia, 66 Conn.App. 669, 676, 785 A.2d 1181 (2001), aff'd, 263 Conn. 22, 818 A.2d 37 (2003);  see also Caruso v. Bridgeport, 285 Conn. 618, 629, 941 A.2d 266 (2008) (‘[t]he critical consideration under § 10–3(a) ․ is whether the [defendant was] on notice of the statutory basis for the plaintiff's claims');  Brewster Park, LLC v. Berger, 126 Conn.App. 630, 14 A.3d 334 (2011).”   Smigelski v. Dubois, Superior Court, judicial district of New Britain, Docket No. CV 10 6007570 (March 21, 2011, Young, J.).

The defendants state in their special defense that the assignments “fail to meet the statutory requirements for assignment of mortgage under Connecticut law.”   In making this allegation, the defendants put the plaintiff on notice of what their claim is.   Thus, the twenty-third special defense is not stricken.

Twenty–Fourth Special Defense

The defendants' twenty-fourth special defense simply states:  “According to the Copyright Office, ‘Fannie Mae’ is the copyrights property of a recording artist known as .' “ The plaintiff moves to strike this defense on the ground that it consists of a legal conclusion and does not relate in any way to the making, validity or enforcement of the note or mortgage.   The defendants appear to lack a response in their opposition.

The twenty-fourth special defense ought to be stricken.   The allegation is legally insufficient in that the defendants did not complete the allegation and it is a mere statement of a fact.   Further, the defendants fail to demonstrate how this relates in any way to the foreclosure action pending against them.   Without further allegations, the motion to strike the twenty-fourth special defense must be granted.

Twenty–Fifth Special Defense

Here, the defendants merely recapitulate their nineteenth and twenty-second special defenses, and, therefore, the special defense must be stricken.

Twenty–Sixth Special Defense

The defendants make a single allegation in their twenty-sixth special defense.   It states:  “Upon information and belief, no consideration was ever paid by PHH Mortgage Corporation to ‘Fannie Mae’ in purchase of the subject Mortgage.”   For the same reasons the eighteenth special defense was stricken, this special defense must be stricken as well.

Twenty–Seventh Special Defense

The defendants' twenty-seventh special defense alleges the following relevant facts.   The mortgage was never acknowledged.   The mortgage bears a line for acknowledgment and underneath the name of Attorney David A. Dee is printed.   David A. Dee has acknowledged in the attached affidavit that his signature is not the signature that appears above the line.   The mortgage was never acknowledge, therefore never consummated, and as a result it “never came into being to secure any debt or encumber any property.”

The plaintiff moves to strike this defense on the ground that the defect with the mortgage is remedied by General Statutes § 47–36aa.   The defendants fail to counter this argument.

General Statutes § 47–36aa(a) provides in relevant part:  “Any ․ mortgage ․ made for the purpose of ․ mortgaging or affecting any interest in real property in this state recorded after January 1, 1997, which instrument contains any one or more of the following defects or omissions is as valid as if it had been executed without the defect or omission unless an action challenging the validity of that instrument is commenced and a notice of lis pendens is recorded in the land records of the town or towns where the instrument is recorded within two years after the instrument is recorded:

“(1) The instrument contains a defective acknowledgment or no acknowledgment.”

The defendants do not allege that an action challenging the validity of the instrument and a lis pendens were filed within two years of the making of the mortgage.   Therefore, the defendants' defense that the mortgage is invalid because it was never acknowledged is without merit.   As a result, it must be stricken.

Twenty–Eighth Special Defense

The defendants' twenty-eighth special defense is a reiteration of the eighth and the twelfth special defenses.   Accordingly, it must be stricken.

CONCLUSION

For the foregoing reasons, the court denies the motion to strike as to the fourth, twelfth, sixteenth and twenty-third special defenses.   The motion to strike is granted as to the remainder of the special defenses.

Robaina, J.

FOOTNOTES

FN1. The action also named Bank of American National Association as a defendant, but they have not filed an appearance..  FN1. The action also named Bank of American National Association as a defendant, but they have not filed an appearance.

FN2. Melissa Cameron and Norman Cameron are the only two defendants who are parties to this motion to strike.   In the remainder of this memorandum, they will be collectively referred to as “the defendants.”.  FN2. Melissa Cameron and Norman Cameron are the only two defendants who are parties to this motion to strike.   In the remainder of this memorandum, they will be collectively referred to as “the defendants.”

FN3. The defendants are self-represented.  “[Our courts have] always been solicitous of the rights of [self-represented] litigants and ․ will endeavor to see that such a litigant shall have the opportunity to have his case fully and fairly heard so far as such latitude is consistent with the just rights of any adverse party ․ Although we will not entirely disregard our rules of practice, we do give great latitude to [self-represented] litigants in order that justice may both be done and be seen to be done ․ For justice to be done, however, any latitude given to [self-represented] litigants cannot interfere with the rights of other parties, nor can we disregard completely our rules of practice.”  (Internal quotation marks omitted.)  Marlow v. Starkweather, 113 Conn.App. 469, 473, 966 A.2d 770 (2009)..  FN3. The defendants are self-represented.  “[Our courts have] always been solicitous of the rights of [self-represented] litigants and ․ will endeavor to see that such a litigant shall have the opportunity to have his case fully and fairly heard so far as such latitude is consistent with the just rights of any adverse party ․ Although we will not entirely disregard our rules of practice, we do give great latitude to [self-represented] litigants in order that justice may both be done and be seen to be done ․ For justice to be done, however, any latitude given to [self-represented] litigants cannot interfere with the rights of other parties, nor can we disregard completely our rules of practice.”  (Internal quotation marks omitted.)  Marlow v. Starkweather, 113 Conn.App. 469, 473, 966 A.2d 770 (2009).

FN4. The defendants failed to file the proper request to amend their answer, special defenses and counterclaim.   Therefore, on July 28, 2011, the defendants filed the appropriate request to amend and it was not objected to.   The September 13, 2011 and July 11, 2011 special defenses are the subject of this motion to strike..  FN4. The defendants failed to file the proper request to amend their answer, special defenses and counterclaim.   Therefore, on July 28, 2011, the defendants filed the appropriate request to amend and it was not objected to.   The September 13, 2011 and July 11, 2011 special defenses are the subject of this motion to strike.

FN5. This was previously Practice Book § 527..  FN5. This was previously Practice Book § 527.

Robaina, Antonio C., J.