LLC v. LLC (2012)

MEMORANDUM OF DECISION RE PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (# 125)

Constitution State Mortgage, LLC, (“plaintiffs”) filed a motion for summary judgment as to liability only against Deco Drive, LLC (“defendant”), dated January 20, 2012 (# 125), together with a memorandum of law, note, mortgage deed, construction rider and affidavits (# 126) on February 10, 2010.   A short calendar hearing was held on April 2, 2012.   The defendant was afforded the opportunity to submit an amended affidavit on or before April 16, 2012.   Said amended affidavit was filed on April 12, 2012 (# 128).

BACKGROUND

The plaintiff commenced this foreclosure action by its complaint and writ (“complaint”) dated August 20, 2010, with a return date of September 14, 2010.   On September 9, 2009, defendants, Deco Drive, LLC and Zane Megos, owed Constitution State Mortgage, LLC, the principal sum of $70,000.00, as evidenced by a promissory note (“note”) for said sum dated on said date and payable to the order of Constitution State Mortgage, LLC with interest from said date in equal monthly installments of principal and interest.   On September 9, 2009, by a deed of that date, said Deco Drive, LLC, to secure the note mortgaged (“mortgage”) to Constitution State Mortgage, LLC, the premises known as 25 Rogers Avenue and as further described in Exhibit A attached to the complaint and the mortgage.   The mortgage was recorded on the Groton Land Records on January 7, 2008, in Volume 1000 at page 519.   The plaintiff is the holder of the note and the mortgage and contends that the unpaid balance of the note is $73,139.90 plus interest from November 22, 2010, late charges, insurance advances and collection costs have not been paid although due and payable.   The plaintiff contends that the note and mortgage are now in default by virtue of nonpayment of the installments of principal and interest due on the note and the plaintiff has exercised its option to declare the entire balance of the note due and payable.

The defendant filed an answer, special defense and counterclaims dated February 3, 2011 ¹ and an amended counterclaim dated September 26, 2011.   In the amended counterclaim and special defense, the defendant claimed misrepresentation and fraud induced the defendant to enter into the making of the subject mortgage and leaves the plaintiff to its proof.

The plaintiff contends that the defendant never commenced any work on the property other than demolition of the roof, failed to procure and pay for the fire and casualty insurance requiring payment by the plaintiff and further failed to provide mechanic's lien waivers required in the disbursement agreement.   The defendant, through co-obligor Zane Megos, claimed in the amended affidavit that work was performed in addition to the removal of the roof and that fire and casualty insurance was maintained by the defendant.

DISCUSSION

“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.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  (Internal quotation marks omitted.)  Sherman v. Ronco, 294 Conn. 548, 553–54, 985 A.2d 1042 (2010).

“In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any issues exist.”  Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988).  “In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact.   The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law.   The courts hold the movant to a strict standard.   To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ․ As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent ․ When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ․ Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ․ It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17–34].”  (Internal quotation marks omitted.)   Zelenski v. Kotsoris, 279 Conn. 312, 318–19, 901 A.2d 1207 (2006).

“In a mortgage foreclosure action, to make out its prima facie case, [the foreclosing party has] to prove by a preponderance of the evidence that it [is] the owner of the note and mortgage and that [the mortgagee has] defaulted on the note.”  (Internal quotation marks omitted.)  Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 838, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 136 (2003).  “Furthermore, the foreclosing party must demonstrate that all conditions precedent to foreclosure, as mandated by the note and mortgage, have been satisfied.”   Washington Mutual Bank, F.A. v. Martins, Superior Court, judicial district of New London, Docket No. CV 03–0564550 (March 23, 2004, Martin, J.).

In support of the motion for summary judgment, the plaintiff submitted both copies of the note and mortgage, construction rider and disbursement schedule.   The plaintiff also submitted an affidavit of debt signed by Paul Bzowyckyj stating that written notice of default and acceleration were sent to the defendant.   The affidavit further states that defendant had defaulted in the failure to construct the property under the terms of the construction rider and failed to pay for fire and casualty insurance.   The plaintiff, in a subsequent filing, further contends that the defendant also failed to file any mechanic's lien waivers of money pursuant to the terms of the unchallenged disbursement agreement.   The court concludes that the plaintiff has established a prima facie case.   All of the plaintiff's claims have been proven true by competent evidence or admission.

“When a complaint and supporting affidavits establish an undisputed prima facie case for a foreclosure action, a court must only determine whether [a] special defense is legally sufficient before granting summary judgment.”   LaSalle National Bank v. Shook, Superior Court, judicial district of New London, Docket No. CV 99 0549266 (July 13, 2000, Martin, J.), aff'd, 67 Conn.App. 93, 787 A.2d 32 (2001).  “[T]he 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.”   (Internal quotation marks omitted.)  Braffman v. Bank of America Corp., 297 Conn. 501, 519, 998 A.2d 1169 (2010).  “If a plaintiff in a foreclosure action has shown that it is entitled to foreclose, then the burden is on the defendant to produce evidence supporting its special defense in order to create a genuine issue of material fact;  valid, legally sufficient special defenses alone do not.”   WM Specialty Mortgage, LLC v. Brandt, Superior Court, judicial district of Ansonia–Milford, Docket No. CV 09 5001157 (February 10, 2009, Moran, J.T.R.).

“A valid special defense at law to foreclose proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both.”  (Internal quotation marks omitted.)  Mortgage Electronic Registration Systems, Inc. v. Goduto, 110 Conn.App. 367, 369 n.2, 955 A.2d 544, cert. denied, 289 Conn. 956, 961 A.2d 420 (2008).  “[S]pecial 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.”  (Internal quotation marks omitted.)   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.).

“The phrase ‘making validity or enforcement’ has been interpreted by the trial courts to mean the execution and delivery of an enforceable instrument, not occurrences by the parties that arise during the course of their relationship.”   Mortgage Electronic Registration Systems, Inc. v. Venditto, Superior Court, judicial district of New London, Docket No. CV 05 4002228 (October 28, 2005, Devine, J.) (40 Conn. L. Rptr. 209, 211).  “The courts of our jurisdiction have held that special defense and counterclaims alleging post-default conduct by the plaintiff are invalid because they do not relate to the making, validity and enforcement of the note and mortgage.”   Charter Oak Federal Credit Union v. Paige, Superior Court, judicial district of New London, Docket No. CV 07 5003656 (February 19, 2009, Devine, J.);   see First Nationwide Mortgage Corp. v. Gooden, Superior Court, judicial district of New London, Docket No. CV 00 055982 (May 25, 2001, Martin, J.). (striking counterclaim concerning alleged improprieties occurring during foreclosure process);  Ocwen Federal Bank, FBS v. Weinberg, judicial district of New London, Docket No. CV 98 0547629 (August 11, 1999, Mihalakos, J.) (striking special defense alleging plaintiff failed to properly calculate owed debt and accept payments in timely manner);  Dime Savings Bank of New York FSB v. Furey, judicial district of Ansonia–Milford, Docket No. CV 94 0047557 (April 1, 1996, Curren, J.) (striking special defense citing plaintiff's failure to negotiate loan terms after default);  Federal National Mortgage Assn. v. Mallozzi, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 98 0165698 (February 10, 1999, Hickey, J.) (striking special defense dealing with lender's conduct subsequent to mortgage execution.)

The defendant, as stated above, filed a special defense and counterclaim based on good faith and fair dealing.   The court granted a motion to strike by order dated August 11, 2011 (# 122.50).   The defendant filed an amended Special Defense and counterclaim based upon a claim of fraud concerning the withholding of advancements.   The defendant claims that its pleadings and affidavits raise a genuine issue of material fact that cannot be decided by a motion for summary judgment.

This court concludes to the contrary.   The plain language of the commercial documents in question give the plaintiff sole discretion to determine when advancements are made.   Furthermore, the defendant failed to raise any issue of fact concerning the payment of the fire and casualty insurance that were advanced by the bank.   Future advancements were also contingent on the receipt of mechanic's lien waivers which were not provided to the plaintiff.   The defendant has provided no evidence of payment of fire and casualty insurance and/or the presentment of mechanic's lien waivers as required by the commercial mortgage documents.   The plaintiff claims that they are at best a challenge to the procedure of lien holder in servicing the loan and does not address the making, validity or enforcement of the mortgage and note.

ORDER

The plaintiff's motion for summary judgment (# 125) as to liability only is hereby granted.

Devine, J.

FOOTNOTES

FN1. Such counterclaim and special defense was the subject of plaintiff's motion to strike dated August 10, 2011, which motion was previously granted..  FN1. Such counterclaim and special defense was the subject of plaintiff's motion to strike dated August 10, 2011, which motion was previously granted.

Devine, James J., J.