Quantum Servicing Corporation v. Carol A. Fletcher et al. (2012)

MEMORANDUM OF DECISION

The issue before the court is whether to grant the defendant's motion to dismiss on the ground that the plaintiff lacks standing to bring this action.   The motion to dismiss is denied as the plaintiff was the holder of the note at the time it commenced the action and is entitled to foreclose on the mortgage.

I

FACTS

The plaintiff, Quantum Servicing Corporation, commenced the present foreclosure action against the defendant, Carol A. Fletcher,¹ on January 28, 2011, by way of service of the writ, summons and complaint.   On September 16, 2011, the defendant filed an answer and special defense, alleging that the plaintiff lacks standing to bring the action because it did not have ownership and/or control of the promissory note at the time it commenced the action.

On September 16, 2011, the defendant also filed the present motion to dismiss on the ground that the plaintiff lacks standing to bring this action because the plaintiff was not the owner of the promissory note at the time it commenced the action.   The plaintiff filed an objection on October 18, 2011.   The matter was heard at the January 17, 2012 short calendar.

II

DISCUSSIONAMotion to Dismiss Standard

“A motion to dismiss ․ properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court.”  (Internal quotation marks omitted.)  Bacon Construction Co. v. Dept. of Public Works, 294 Conn. 695, 706, 987 A.2d 348 (2010).  “A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction.”   (Internal quotation marks omitted.)  Wilcox v. Webster Ins., Inc., 294 Conn. 206, 213, 982 A.2d 1053 (2009).  “The grounds which may be asserted in [a motion to dismiss] are:  (1) lack of jurisdiction over the subject matter;  (2) lack of jurisdiction over the person;  (3) improper venue;  (4) insufficiency of process;  and (5) insufficiency of service of process.”  Zizka v. Water Pollution Control Authority, 195 Conn. 682, 687, 490 A.2d 509 (1985), citing Practice Book § 143, which is now § 10–31.  “The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss.  Practice Book § 10–31(a).”  (Internal quotation marks omitted.)   Wilcox v. Webster Ins., Inc., supra, 294 Conn. 213.

“[T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003).  “[I]t is the burden of the party who seeks the exercise of jurisdiction in his favor ․ clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute.”  (Internal quotation marks omitted.)  Wilcox v. Webster Ins., Inc., supra, 294 Conn. 213–14.  “It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged.”  (Internal quotation marks omitted.)  Id., 214.

B

Analysis

According to the defendant, although the plaintiff's complaint alleges that it is the holder of the promissory note and mortgage deed, the plaintiff has not proven that it had ownership of the note at the time it commenced the action.   In support of her argument, the defendant cites to LaSalle Bank, National Assn. v. Bialobrzeski, 123 Conn.App. 781, 3 A.3d 176 (2010).

In opposition, the plaintiff contends that to have standing it must only demonstrate that it was in possession of the note prior to the commencement of the action.   According to the plaintiff, the note is endorsed in blank and was transferred to the possession of the plaintiff prior to commencement of the action.

“General Statutes § 49–17 ² permits the holder of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when the mortgage has not yet been assigned to him ․ The statute codifies the common-law principle of long standing that the mortgage follows the note, pursuant to which only the rightful owner of the note has the right to enforce the mortgage ․ Our legislature, by adopting § 49–17, has provide[d] an avenue for the holder of the note to foreclose on the property when the mortgage has not been assigned to him ․

“The plaintiff's standing to enforce the promissory note is set forth by the provisions of the Uniform Commercial Code as adopted in General Statutes § 42a–1–101 et seq.   Under these statutes, only a ‘holder’ of an instrument or someone who has the rights of a holder is entitled to enforce the instrument ․ The ‘holder’ is the person or entity in possession of the instrument if the instrument is payable to bearer ³ ․ When an instrument is endorsed in blank, it becomes payable to bearer and may be negotiated by transfer of possession alone ․ Furthermore, [t]he possession by the bearer of a note endorsed in blank imports prima facie that he acquired the note in good faith for value and in the course of business, before maturity and without notice of any circumstances impeaching its validity.   The production of the note establishes his case prima facie against the makers and he may rest there ․ It [is] for the [makers] to set up and prove the facts which limit or change the [bearer's] rights.”  (Citations omitted;  internal quotation marks omitted.)  Chase Home Finance, LLC v. Fequiere, 119 Conn.App. 570, 576–78, 989 A.2d 606, cert. denied, 295 Conn. 922, 991 A.2d 564 (2010);  see LaSalle Bank, National Assn. v. Bialobrzeski, supra, 123 Conn.App. 781.

In the present case, in support of its position that it has standing, the plaintiff submits the affidavit of Christine Salyers, the litigation manager for the plaintiff.   Appended to the affidavit is a true and attested copy of the note.   The affiant attests to the following:  (1) on February 23, 2007, the defendant executed and delivered a note to EquiFirst Corporation (“EquiFirst”);  (2) on that same date, the defendant executed and delivered a mortgage deed to secure the note to Mortgage Electronic Registration Systems, Inc. (“MERS”) as nominee for EquiFirst;  (3) on December 1, 2010, the note was transferred to the plaintiff and, at that time, the plaintiff took physical control of the endorsed note;  and (4) the mortgage was thereafter assigned by MERS as nominee for EquiFirst to the plaintiff by an assignment of mortgage dated August 15, 2011, and recorded September 15, 2011.   A review of the note indicates that it was endorsed in blank.⁴

The defendant submitted no evidence to counter the affidavit submitted by the plaintiff attesting that the plaintiff was in possession of the note at the time it commenced the present action.   See HSBC Bank USA, N.A. v. Navin, 129 Conn.App. 707, 711–12, cert. denied, 302 Conn. 948, 31 A.3d 384 (2011) (plaintiff had standing where the defendant offered no evidence to contest the plaintiff's sworn statement that it possessed the note at the time it commenced the action).

The plaintiff commenced the present action on January 28, 2011, at which time the plaintiff was in possession of the note, endorsed in blank, having been transferred to the plaintiff on December 1, 2010.  “When an instrument is endorsed in blank, it becomes payable to bearer and may be negotiated by transfer of possession alone.”  (Internal quotation marks omitted.)  Chase Home Finance, LLC v. Fequiere, supra, 119 Conn.App. 577.   As holder of the note, the plaintiff had standing to commence the present action.   Accordingly, the defendant's motion to dismiss is hereby denied.

BY THE COURT,

Roche, J.

FOOTNOTES

FN1. Pelletier Mechanical Services, LLC is a non-appearing defendant..  FN1. Pelletier Mechanical Services, LLC is a non-appearing defendant.

FN2. General Statutes § 49–17 provides:  “When any mortgage is foreclosed by the person entitled to receive the money secured thereby but to whom the legal title to the mortgaged premises has never been conveyed, the title to such premises shall, upon the expiration of the time limited for redemption and on failure of redemption, vest in him in the same manner and to the same extent as such title would have vested in the mortgagee if he had foreclosed, provided the person so foreclosing shall forthwith cause the decree of foreclosure to be recorded in the land records in the town in which the land lies.”.  FN2. General Statutes § 49–17 provides:  “When any mortgage is foreclosed by the person entitled to receive the money secured thereby but to whom the legal title to the mortgaged premises has never been conveyed, the title to such premises shall, upon the expiration of the time limited for redemption and on failure of redemption, vest in him in the same manner and to the same extent as such title would have vested in the mortgagee if he had foreclosed, provided the person so foreclosing shall forthwith cause the decree of foreclosure to be recorded in the land records in the town in which the land lies.”

FN3. A bearer is the “person in possession of an instrument ․ payable to bearer or endorsed in blank.”  General Statutes § 42a–1–201(b)(5) and holder means ․ 42a–1–201(b)(21)(A–C)..  FN3. A bearer is the “person in possession of an instrument ․ payable to bearer or endorsed in blank.”  General Statutes § 42a–1–201(b)(5) and holder means ․ 42a–1–201(b)(21)(A–C).

FN4. “If an endorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the endorsement identifies a person to whom it makes the instrument payable, it is a ‘special endorsement’ ․ If an endorsement is made by the holder of an instrument and is not a special endorsement, it is a ‘blank endorsement.’   “ General Statutes § 42a–3–205(a), (b)..  FN4. “If an endorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the endorsement identifies a person to whom it makes the instrument payable, it is a ‘special endorsement’ ․ If an endorsement is made by the holder of an instrument and is not a special endorsement, it is a ‘blank endorsement.’   “ General Statutes § 42a–3–205(a), (b).

Roche, Vincent E., J.