LLC v. National Republic Bank of Chicago (2012)

MEMORANDUM OF DECISION

This is an action brought by Sullo Investments, LLC, against the National Republic Bank of Chicago in which the plaintiff seeks a refund of money paid to the defendant as interest on a mortgage.   Plaintiff brings this action in four counts.   In count one plaintiff alleges some of the elements of conversion and misrepresentations.   In count two the plaintiff alleges conversion of funds.   In count three it alleges misrepresentation, and in count four the elements of a violation of CUTPA.

In its answer defendant denies all pertinent allegations in the four counts and in addition it filed seven special defenses.   Defendant claims that the plaintiff's claims are barred by the Doctrines of Unclean Hands, Equitable Conversion, Latches and in a fourth special defense that if the plaintiff has suffered any damages it has been made whole by virtue of their receipt of monetary considerations from collateral sources.   In the fifth special defense the defendant claims that in the event the plaintiff suffered any damages it has received monetary consideration from collateral sources and it claims a setoff to the extent that the plaintiff has received these monetary considerations.   In the sixth special defense the defendant claims that the plaintiff has divested itself of any interest in the property so that it is no longer the real party in interest.   In the seventh special defense, the defendant claims that the plaintiff's claims are barred by virtue of the Doctrine of Satisfaction and Release.

The plaintiff, Sullo Investments, LLC, (Sullo) is a limited liability company organized and existing under the laws of the State of Connecticut.   Sullo had a second mortgage on Connecticut Quality Condominiums, LLC, (Condo) in the principal amount of $250,000.   The mortgage was not paid when due and Sullo became the owner of the property by way of a warranty deed in lieu of foreclosure filed January 29, 2008.

The defendant, National Republic Bank of Chicago (Bank) held a first mortgage on the condo.   Neither Sullo nor Joseph Sullo had any interest in this first mortgage.   There were four guarantors on the debt owed by Condo.

Sullo alleges in its first and second counts that on January 31, 2008, at the request of the bank, it wired the sum of $55,651.57 (funds), to the Bank and that “the funds” were wired based upon the bank's representation that it would negotiate new and favorable terms for the first mortgage on the property but despite the representation, the Bank did not negotiate new terms for the first mortgage.   On March 18, 2008, Sullo demanded the return of the $55,651.57.   Sullo further represents that despite demand the bank has not returned the converted funds and has assumed control and exercised ownership over them to the exclusion of Sullo, its rightful owner.   The plaintiff further alleges that the bank intended to deprive Sullo of the funds and wrongfully took the converted funds from Sullo.

In the third count the plaintiff alleges that the defendant represented to Sullo that the bank would negotiate favorable new terms of the first mortgage but the representations were false, that the bank knew that Sullo would rely on the representations, did rely on the false representations made by the bank, and was induced to send the converted funds.

In its fourth count the plaintiff alleges that the bank's acts were immoral, unethical, oppressive or unscrupulous, that the injury caused to Sullo by the bank's acts is substantial and the bank's acts constitute an unfair trade practice in violation of Connecticut Gen.Stat. Sec. 43–110b (CUTPA).

Defendant in its answer in essence denies all of the allegations of wrongdoing contained in the complaint and offers its seven special defenses.

In the opinion of this court, the credible evidence in this case produces the following essential facts:  Mr. Sullo, acting for the plaintiff, now owner of the property, indicated an interest in negotiating terms for purchase of the first mortgage.   He was told that the first mortgage was four months in arrears and the bank was contemplating foreclosure of same but that if he brought the delinquent payments to date this would avoid foreclosure.   Mr. Sullo in order to gain time to negotiate new terms for the first mortgage willingly paid the exact sum to bring the first mortgage to date.   He paid the money solely for the purpose of delaying the foreclosure.   Mr. Sullo was experienced in dealing with banks and mortgages.   There is no accepted procedure in a situation such as this.   He never indicated to the bank any intention of making a temporary payment to be refunded in the event of failed negotiations.   The bank had no reason to expect that there would be any such request for refund.   It was not a customary procedure and Mr. Sullo had never indicated to them any such desire.   There was no meeting of the minds with respect to a possible refund in the event that the negotiations failed.   There is no evidence of any misrepresentation Mr. Sullo was told by the bank that it “might” entertain working with a new purchaser on a new deal at prime.   It directed Mr. Sullo as to whom to see about negotiations.   There is no credible evidence of any “intentional conversion” of the property nor of any conversion of the property.

The fact that the bank had four guarantors on the first mortgage was information available to Mr. Sullo had he read the mortgage he was planning on purchasing.   However, in any event, the guarantors had no influence on the crucial issue in this case, i.e., knowledge of a potential refund.

The fact that Sullo had sold off the furniture which was in the building had no bearing on the essential element of this case which is that Sullo never indicated to the bank that payment would be refundable in the event of failure of negotiations and that the bank had no reason to believe in the absence of some declaration that the payment of the interest for four months had any further purpose than getting the bank to forestall the procedure for foreclosure.

In the opinion of the court there was no conversion, no misrepresentation and no violations of CUTPA.   The plaintiff has failed to prove any of its allegations.

Judgment may enter for the defendant.

Hale, J.T.R.

Hale, Robert J., J.T.R.