JP v. Angela D. Simpson–Manigault et al. (2013)

MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO DISMISS DATED DECEMBER 2, 2011 (193.00)

The defendants, Angela D. Simpson–Manigault and Alpha/Delta Developers, LLC, moved to dismiss the plaintiff's foreclosure action for lack of subject matter jurisdiction.   The defendants raised three factual allegations supporting their claim of lack of subject matter jurisdiction;  (1) the lender lacked legal existence;  (2) the lender did not have the capacity to obtain or convey the note underlying this action;  and (3) the plaintiff, JP Morgan Chase Bank, National Association, lacks standing as it is not the legal owner of the promissory note underlying this action.   The parties, represented by counsel, commenced an evidentiary hearing on the Motion to Dismiss on October 23, 2012.   In the interim period of time the defendant, Angela D. Simpson–Manigault, filed a bankruptcy petition (# 230.00), which was dismissed by the bankruptcy court on November 25, 2013 (# 233.00).

This lawsuit was commenced in the Superior Court, J.D. of Stamford/Norwalk at Stamford returnable January 20, 2009.   The operative complaint is the February 24, 2009 Amended Complaint (# 113.00).   The lawsuit was commenced in the name of plaintiff, JP Morgan Chase Bank, National Association.   Paragraph 1 of the February 24, 2009 Amended Complaint describes the plaintiff as “JP Morgan Chase Bank, National Association f/k/a Washington Mutual Bank, FA.” Paragraph 3 alleges;  “On or about March 9, 2007, the Defendant(s), Angela D. Simpson–Manigault, executed and delivered to Washington Mutual Bank, FA, a Note (the ‘Note’) for a loan in the original principal amount of $4,420,000.00.”   Paragraph 4 of the February 24, 2009 Amended Complaint states:  “The Plaintiff, JP Morgan Chase Bank, National Association f/k/a Washington Mutual Bank, FA, is the holder of said Note and Mortgage.”   Paragraph 5 of the Amended Complaint repeats the allegations that the plaintiff is the “holder of said Mortgage and Note.” The address of the real property at issue is 5 Meadow Wood Drive, Greenwich, Connecticut.

“Trial courts addressing motions to dismiss for lack of subject matter jurisdiction ․ may encounter different situations, depending on the status of the record in the case ․ Lack of subject matter jurisdiction may be found in any one of three instances:  (1) the complaint alone;  (2) the complaint supplemented by undisputed facts evidenced in the record;  or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts ․ Different rules and procedures will apply, depending on the state of the record at the time the motion is filed.”   Gilland v. Sportmen's Outpost, Superior Court, judicial district of Hartford at Hartford, Complex Litigation Docket, Docket No. X04 CV–09–5032765 S (May 26, 2011, Sheldon, J.).   A commonly cited proposition in decisions on motions to dismiss is as follows.   “In ruling on a motion to dismiss, the trial court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to pleader.”   Fort Trumbull Conservancy, LLC v. City of New London, 265 Conn. 423, 432–33 (2003).   Since this is a full evidentiary hearing this court no longer has the obligation to conclusively presume the validity of the allegations of the complaint.  Electrical Contractors, Inc. v. Department of Education, 303 Conn. 402, 422 fn.17 (2012).   Since this is a fully contested hearing, the court must determine the jurisdictional facts.  Columbia Air Services, Inc. v. Department of Transportation, 293 Conn. 342, 347–48 (2009).   Therefore the proposition that a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations and construe them in a manner most favorable to the pleader, must fall by the wayside when a full evidentiary hearing is held on a motion to dismiss alleging lack of subject matter jurisdiction.  Id., 348;  Standard Tallow Corporation v. Jowdy, 190 Conn. 48, 56 (1983).  “The plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised.”  Fort Trumbull Conservancy, LLC v. City of New London, supra, 265 Conn. 430, fn.12.

Three days of evidentiary hearings occurred on October 23, 2012, April 19, 2013 and June 4, 2013.   Pre-hearing briefs had been filed and each party filed two separate post-hearing memorandum of law (# 224.00/# 225.00, # 226.00, # 227.00 and # 228.00).   The last brief was filed on September 6, 2013.   There were two witnesses who testified.   Peter Katsikas, a current Florida employee of JP Morgan Chase Bank, NA, is a home lending research officer in the Servicing and Default Department.   He worked for six years for Washington Mutual until the bank ceased to exist on September 25, 2008.   The second witness was Glenn L. Manigault, the husband of Angela D. Simpson–Manigault and a member of the defendant Alpha/Delta Developers, Inc. Fourteen trial court exhibits were offered before this court.

The court makes the following findings of fact and legal conclusions.

The original Adjustable Rate Note dated March 9, 2007 was presented to this court.   A photocopy of the Adjustable Rate Note was also given to this court for examination.   All counsel and the court carefully examined the original note and the photocopy of the note.   The original note was returned to plaintiff's counsel.   The photocopy of the note was marked as Exhibit 2. This satisfied the requirements that the plaintiff produce the original note for examination by the court.  Countrywide Home Loans Servicing, LP v. Creed, 145 Conn.App. 38, 43 (2013).   The court found that the September 3, 2009 Answer filed by Angela D. Simpson–Manigault admitted the due execution of the original note (# 129.00, paragraph 3 “Admitted”).   The court noted on the record that there were some slight differences between the photocopy of the note and the original note, such as the original note contained signatures in blue ink whereas the photocopy process lacked color and the signatures appear in black in the photocopy version.   The original note contains a cover page.   As a result there was different pagination.   The court concluded that these are distinctions without a difference and accepted Exhibit 2 in evidence as a full exhibit as a true and accurate copy of the original note.

The same process was conducted as to the Open–End Mortgage Deed. The original mortgage deed was presented to the court.   The original mortgage deed and a photocopy thereof was examined by all counsel as well as the court.   The original mortgage deed after examination, was returned to plaintiff's counsel and the photocopy of the mortgage deed became a full exhibit.   Ex. 1. The loan number on the original mortgage deed remained the full loan number whereas the Exhibit 1 loan number was redacted pursuant to P.B. § 4–7.   The lender in this note and in this mortgage deed was Washington Mutual Bank, FA.

There was a stamp on the original note on page 6 of 6 and that stamp was photocopied.   Ex. 2. The stamp is an undated blank endorsement that states “Pay to the order of Without Recourse WASHINGTON MUTUAL BANK, F.A. By CYNTHIA RILEY, VICE PRESIDENT.”   There was a signature on this stamp above the signature line.   The signature appears to be a stamped signature.

The plaintiff offered records of the Comptroller of the Currency.   Ex. 4. The defendants' counsel objected arguing that he could not obtain those same documents by reason of his Freedom of Information search.   Ex. 7. The defendants only attempted to obtain copies from the Comptroller of the Currency that were sent to the plaintiff's attorney.   The defendants did not attempt to obtain their own certified copies of the records of the Comptroller of the Currency.   The court will rely on the accuracy of the certified governmental provided records offered as Exhibit 4 in this hearing.

The documents submitted in support of the testimony of Peter Katsikas note the following as to the history of Washington Mutual Bank, FA. Effective January 1, 2005 Washington Mutual Bank merged with and into Washington Mutual Bank, FA, Stockton, California.   Ex. 4. Effective April 4, 2005 Washington Mutual Bank, FA, Stockton, California changed its name to Washington Mutual Bank. Ex 4. The Board of Directors of the bank approved two resolutions effective on April 4, 2005.   The first resolution amended Section 1 of the Federal Stock Charter (# 4539):  “Corporate Title.   The corporate title of the savings bank is Washington Mutual Bank.” The second amendment was to Article 1, Section 1 of the Association's By Laws to read as follows:  “Section 1 Corporate Title and Name. The corporate title of the savings bank is Washington Mutual Bank. The savings bank may also do business under the name Washington Mutual Bank, FA.” Ex. 4. From and after April 1, 2005 the employees of the bank when answering the telephone and speaking to customers, consistently would address themselves as being employed by Washington Mutual Bank, FA. Mr. Katsikas has also noted that the loan documents in this foreclosure referred to the lender as Washington Mutual Bank, FA. He testified that after April 5, 2005 many loan documents for other transactions for other customers were executed in the name of the lender, Washington Mutual Bank, FA.

On January 25, 2005 the bank sent a letter to the Office of Thrift Supervision (OTS) the predecessor to the Office of Comptroller of the Currency, a federal agency that administers and regulates all banks including the bank in question.   That January 25, 2005 letter noted the changes mentioned above.   Ex. 4. On July 28, 2005 the Office of Thrift Supervision issued a Certificate of Succession in Interest noting the history of the various names and other changes made to the bank.   This one-page document is before this court in Exhibit 4, page 7.

On September 25, 2008 the bank failed.   The notification of its failure was issued by the OTS and the FDIC, the Federal Deposit Insurance Corporation, was appointed as receiver of the bank.   On September 25, 2008 JP Morgan Chase Bank, National Association, the plaintiff in this foreclosure, purchased all the assets of the bank including this loan from the FDIC as receiver for the bank under a September 25, 2008 Purchase and Assumption Agreement.   Exhibit 5.

On January 7, 2009 the plaintiff commenced this instant foreclosure action seeking to foreclose the March 9, 2007 $4,420,000 mortgage.   See Return of Service in file.   The defendants had been in arrears for some period of time prior to January 2009 in the periodic payments due under the mortgage note and deed.   The operative complaint is the February 24, 2009 Amended Complaint (# 113.00).   On September 3, 2009 the defendant, Angela D. Simpson–Manigault, admitted that she executed the mortgage deed and the note and that she is in default (# 129.00, paragraphs 3 and 5).

The plaintiff presented the original note, with an accompanying affidavit detailing its transfer from Countrywide.   The plaintiff was entitled to a rebuttable presumption that, as the holder of the note endorsed in blank, it had standing.   In RMS Residential Properties, LLC v. Miller, supra, 303 Conn. 228–32, our Supreme Court held that, pursuant to Gen.Stat. § 49–17, the holder of a negotiable promissory note secured by a mortgage has standing to bring a foreclosure action against the maker of the note, even prior to the assignment of the mortgage to the holder.  “A holder of a note is presumed to be the owner of the debt, unless the presumption is rebutted, may foreclose the mortgage under Gen.Stat. § 49–17 ․ The production of the note establishes his case prima facie against the makers and he may rest there ․ It is for the defendant to set up and prove the facts which limit or change the plaintiff's rights.”  (Internal quotation marks omitted.)  Id., 231–32;  see also Deutche Bank National Trust Co. v. Shivers, 136 Conn.App. 291, 297 n.4, 44 A.3d 879 (same) cert. denied, 307 Conn. 938, 56 A.3d 950 (2012).

Countrywide Home Loans Servicing, LP v. Creed, 145 Conn.App. 38, 47–48, cert. denied, 310 Conn. 936 (2013).

The court therefore finds that the plaintiff has standing.   The court has subject matter jurisdiction over this foreclosure unless the defendants can rebut the presumption.

The essential factual dispute offered by the defendants is that Washington Mutual, FA was no longer in existence as of the March 9, 2007 $4,420,000.00 mortgage transaction and that Washington Mutual Bank, FA ceased to exist on April 4, 2005.   In support of that claim Glenn L. Manigault testified that he obtained a two-page print out from the internet from the Federal Deposit Insurance Corporation website;  research.fdic.gov/bankfind/detail.html. He then accessed that website to search for the name of Washington Mutual Bank, FA. That internet search produced the two-page print out.   Ex. 13.   According to the print out Washington Mutual Bank, FA was in existence having been established on December 27, 1988 as American Savings Bank, FA. During the 1990s the bank acquired six California banks and then changed its name to Washington Mutual Bank, FA on October 1, 1997, the date of the last California bank acquisition.   Washington Mutual Bank, FA acquired the Home Savings Bank of America, FSB, a California bank in 1988, Bank United, a Texas bank in 2001, and The Dime Savings Bank of New York, FSB, a New York bank in 2002.   On January 1, 2005 it acquired Washington Mutual Bank located in Seattle, Washington.   The FDIC website shows an entry of April 4, 2005;  “Changed name to Washington Mutual Bank (32633).”   The FDIC assigned # 32633 to the original American Savings Bank, FA in 1988 and that same number was assigned to both Washington Mutual Bank, FA when it changed its name in 1997 and to Washington Mutual Bank when it changed its name on April 4, 2005.   Exhibit 13 further notes that its bank headquarters was changed from Stockton, California to Henderson, Nevada on September 23, 2005.   Finally, the website print out Exhibit 13 notes the FDIC involvement in the acquisition by JP Morgan Chase Bank, National Association under the date of September 25, 2008.

The court did not read Glenn L. Manigault's December 2, 2011 Affidavit since he testified (# 194.00).   Glenn L. Manigault also testified that he searched the Connecticut Secretary of State's Office, the Connecticut Department of Banking and the Greenwich, Connecticut Town Clerk's records and found no reference therein to the name, Washington Mutual Bank, FA. Mr. Manigault produced four filings made with the Securities and Exchange Commission (SEC).   Exhibit 8 is a Form 10–K/A, an amended filing, dated December 31, 2005.   Exhibit 9 is a Form 10–K filing dated December 31, 2006.   Exhibit 10 is a Form 10–K filing dated December 31, 2007.   Exhibit 11 is an excerpt from Form S–3 dated January 9, 2006.   The first two filings, Exhibit 8 and 9, are made by the entity entitled Washington Mutual, Inc. Part of Exhibit 8 is Exhibit 21, a document attached to all three 10–K filings.   It lists subsidiaries of Washington Mutual Inc. Under the heading, “SUBSIDIARY LISTING” are the following entries:

WASHINGTON MUTUAL BANK

Federally Chartered under the laws of the United States

DBA:  Washington Mutual Bank

Washington Mutual Bank, FA.

NEW AMERICAN CAPITAL, INC., a Delaware corporation.

Exhibit 9 also contains a one-page Exhibit 21.   It lists the following information:

WASHINGTON MUTUAL BANK

Federally Chartered under the laws of the United States

DBA:  Washington Mutual Bank

Washington Mutual Bank, FA

Long Beach Mortgage Company or Long Beach Mortgage

WASHINGTON MUTUAL BANK fsb

Federally Chartered under the laws of the United States

NEW AMERICAN CAPITAL, INC., a Delaware corporation

Exhibit 10 is the first SEC filing that occurred after the March 9, 2007 mortgage closing.   Exhibit 10 is a Form 10–K dated December 31, 2007 filed by Washington Mutual, Inc. with the SEC. It too contains an Exhibit 21 but in this case Exhibit 21 is three pages.   The heading of Exhibit 21 states:  “WASHINGTON MUTUAL, INC. DIRECT AND INDIRECT SUBSIDIARIES.”   The defendants correctly point out that there is no subsidiary listed as Washington Mutual Bank, FA in the three pages of Ex. 10, Exhibit 21.

The defendants point to Exhibit 11, which is an excerpt from Form S–3 filed by Washington Mutual, Inc. with the SEC on January 9, 2006, which states as follows:  “ ‘Principle Subsidiary Bank’ is defined in the indenture as each of Washington Mutual Bank (formerly known as Washington Mutual Bank, FA) and any other subsidiary bank the consolidated assets of which constitute 20% or more of the consolidated assets of Washington Mutual, Inc. and its subsidiaries.   As of the date hereof, Washington Mutual Bank is our Principle Subsidiary Bank.”

The body of the 2005 Form 10–K on page 6 states:  “On January 1, 2005, the Company's state savings bank, the former Washington Mutual Bank merged into Washington Mutual Bank, FA, and ceased to exist;  subsequently, Washington Mutual Bank, FA changed its name to Washington Mutual Bank (‘WMB’).”  From this language the defendants argue that Washington Mutual Bank, FA ceased to exist upon its change of name.   For two reasons the defendants' arguments must fail;  (1) This is an SEC document, it assists in the securitization of mortgage instruments.   There is no evidence that this loan was ever securitized or packaged in a trust.   These SEC documents are not in the bank's chain of title.   The bank's resolution and the OTS filings are in the chain of title;  (2) The phrase “ceased to exist” was only used in this SEC filing relating to Washington Mutual Bank ceasing to exist after its January 1, 2005 merger into Washington Mutual Bank, FA. It does not state that Washington Mutual Bank, FA ceased to exist, either on January 1, 2005, its merger with Washington Mutual Bank or its later change of name to Washington Mutual Bank (WMB).  Ex. 8.

From these documents and the admitted April 5, 2005 change of name from Washington Mutual Bank, FA to Washington Mutual Bank, the defendants argue that Washington Mutual Bank, FA, the lender of this transaction, was not legally in existence as of March 9, 2007.   They argue that this court is deprived of subject matter jurisdiction because the plaintiff has no standing.   The first transaction to examine is the change of name dated April 4, 2005.   The parties do not dispute that such an event occurred.   On January 25, 2005 William L. Lynch, the secretary of Washington Mutual, wrote to the Office of Thrift Supervision notifying the OTS that Washington Mutual Bank, FA (the Association) proposes to change its corporate title to Washington Mutual Bank. It provided the January 25, 2005 letter pursuant to the rules and regulations of the OTS. The letter noted a merger that had been consummated on January 1, 2005 and noted that after that merger the Association proposed to take the additional step of changing its corporate title to Washington Mutual Bank. Two resolutions were submitted to the OTC that had been approved by the Board of Directors of the bank.   The first resolution amended Section 1 of the Association's Federal Stock Charter (No. 4539) to read “Section 1. Corporate Title.   The corporate title of the savings bank is Washington Mutual Bank.” The second resolution amended Article 1, Section 1 of the Association's By Laws to read:  “Section 1. Corporate Title and Name. The corporate title of the savings bank is Washington Mutual Bank. The savings bank also may do business under the name Washington Mutual Bank, FA.” Those two amendments became effective on April 4, 2005.   Exhibit 4, page 5. Exhibit 4, page 6. The OTC West Region approved those two identical amendments effective February 2, 2005.   On July 28, 2005 a Certificate of Succession in Interest was issued by the Office of Thrift Supervision.   Paragraph 4 thereof stated:  “Effective April 4, 2005, the Federal Stock Charter of Washington Mutual Bank, FA, Stockton, California, was amended to change its corporate title to Washington Mutual Bank, and its Bylaws were amended to provide that Washington Mutual Bank may also do business under the name ‘Washington Mutual Bank, FA.’ “ Furthermore, Mr. Katsikas testified that after 2005 the telephones and communications of the bank all identified the bank as Washington Mutual Bank, FA and loan documents contained the same information including the loan documents in this foreclosure.

The court finds that Washington Mutual Bank, FA did not go out of business on April 4, 2005, it merely changed its name.   The proper formal name of the bank after April 4, 2005 is Washington Mutual Bank also known as Washington Mutual Bank, FA. The chain of title documents are the records of the Board of Directors of the bank as well as the filings with the Office of Thrift Supervision.   Documents on file with the SEC relate to the securitization of certain assets of the bank and are not documents in the chain of title.   The defendants have produced no documents to indicate that after April 4, 2005 the Board of Directors made any further changes in the former corporate name of the bank.   The following individuals and entities knew that Washington Mutual Bank, FA was in existence after April 4, 2005;  (1) The Board of Directors of the bank by approval of the two resolutions;  (2) The stockholders of the bank by reason of the fact that the corporate resolutions of April 4, 2005 were not later modified, (3) The Controller of The Currency, the Federal regulator of the bank as successor to the OTS, by reason of its February 2, 2005 approval of the By Laws changes, (4) The employees of the bank dealing with customers, and (5) the customers who called in to the bank receiving an acknowledgment;  “Good morning, Washington Mutual Bank, FA.” The court finds that the defendants have failed to prove the bank went out of existence on April 4, 2005 and that the March 2, 2007 $4,420,000 mortgage loan is a void transaction.   Davila v. Morris, Superior Court, judicial district of Hartford at Hartford, Docket Number CV 08–5020220 S (December 4, 2009, Prescott, J.) [48 Conn. L. Rptr. 879].

The defendants furnish an alternative argument that the utilization of the name Washington Mutual Bank, FA was a trade name and that the bank failed to file appropriate notification of that trade name with the Commissioner of Banking of the State of Connecticut, the Connecticut Secretary of State and its CONCORD recording system, or the Town of Greenwich Town Clerk where the real property in question was located and the mortgage deed was recorded.   Gen.Stat. § 35–1 requires a certificate of trade name to be recorded in the town clerk's office and no other location in Connecticut.   The defendants claimed violation of the trade name statute concerning the failure to file a certificate of trade name in the Greenwich Land Records.   Mr. Manigault testified that he searched the land records and found no certificate of trade name.   It would be an easy fact to be able to produce a copy of a certificate of trade name.   The plaintiff having failed to produce a copy of a certificate of trade name, the court must find that no certificate of trade name was filed by either Washington Mutual Bank or Washington Mutual Bank, FA with the Greenwich, Connecticut Town Clerk.

No person, except as provided in this subsection, shall conduct or transact business in this state, under any assumed name, or under any designation, name or style, corporate or otherwise, other than the real name or names of the person or persons conducting or transacting such business, unless there has been filed, in the office of the town clerk in the town in which such business is or is to be conducted or transacted, a certificate stating the name under which such business is or is to be conducted or transacted the full name and post-office address of each person conducting or transacting such business or, in the case of a corporation or limited liability company using such an assumed name, its full name and principle post-office address.

Any person conducting or transacting business in violation of the provisions of this subsection shall be fined not more than five hundred dollars or imprisoned not more than one year.   Failure to comply with the provisions of this subsection shall be deemed to be an unfair or deceptive trade practice under subsection (a) of section 42–110b.

Conn. Gen.Stat. § 35–1(a).

This argument fails since, the defendants have failed to show that Washington Mutual Bank, FA is a trade name.   The corporate resolutions filed by the Board of Directors and approved by the OTS indicate that the proper name of the corporation is Washington Mutual Bank also known as Washington Mutual Bank, FA. The defendants have failed to prove that the use of Washington Mutual Bank, FA was the use of a trade name.   JP Morgan Chase Bank, NA v. Simoulidis, Superior Court, judicial district of Stamford/Norwalk of Stamford, Docket Number FST CV 10–6003807S (December 13, 2013, Tierney, J.T.R.).

More to the point assuming that Washington Mutual Bank, FA is a trade name for Washington Mutual Bank, the alleged violation of Gen.Stat. § 35–1(a) does not afford the defendants the relief that they seek.

The relief that they seek is to void this mortgage transaction on the basis that a trade name has no right to institute a lawsuit.   They cite America's Wholesale Lender v. Pagano, 87 Conn.App. 474 (2005).   The defendants by citing the Pagano case claim that JP Morgan Chase Bank, NA has no standing to commence and/or prosecute this action.   The defendants have failed to prove that JP Morgan Chase Bank, NA is operating under a trade name.   Their only claim is that the predecessor in title, Washington Mutual Bank f/k/a Washington Mutual Bank, FA violated the Connecticut trade name statute.   In Pagano, the plaintiff was America's Wholesale Lender.   They were not a corporate entity.   The lender for the transaction under foreclosure was America's Wholesale Lender.   The court determined that America's Wholesale Lender was the trade name of a California corporation, Countrywide Home Loans, Inc. America's Wholesale Lender commenced and prosecuted the foreclosure lawsuit, not Countrywide Home Loans, Inc. The defendant's Motion to Dismiss filed on the basis that America's Wholesale Lender had no standing to commence a lawsuit in its capacity of a trade name was denied by the trial court.   The Appellate Court reversed.

It is elemental that in order to confer jurisdiction on the court the plaintiff must have an actual legal existence, that is he or it must be a person in law or a legal entity with legal capacity to sue.”  (Internal quotation marks omitted.)  Isaac v. Mount Sinai Hospital, 3 Conn.App. 598, 600, 490 A.2d 1024, cert. denied, 196 Conn. 807, 494 A.2d 904 (1985).   Although a corporation is a legal entity with legal capacity to sue, a fictitious or assumed business name, a trade name, is not a legal entity;  rather, it is merely a description of the person or corporation doing business under that name.  Bauer v. Pounds, 61 Conn.App. 29, 36, 762 A.2d 499 (2000).   Because the trade name of a legal entity does not have a separate legal existence, a plaintiff bringing an action solely in a trade name cannot confer jurisdiction on the court.

America's Wholesale Lender v. Pagano, supra, 82 Conn.App. 477 (2005).

In this case the plaintiff is not Washington Mutual Bank, FA but JP Morgan Chase Bank, National Association.   The defendants have never claimed nor did they offer any evidence that JP Morgan Chase Bank, National Association has brought this lawsuit under any trade name.   The Pagano case does not support the defendants' legal claim that the plaintiff does not have standing to commence and prosecute this foreclosure action.

The violation of Gen.Stat. § 35–1 does not provide the court the authority to void the transaction.   The statute contains only three remedies.   The first is a five hundred dollar fine.   The second is one year in jail.   The third is monetary damages for a violation of Connecticut Unfair Trade Practices if an ascertainable loss can be proven.   The statute is silent concerning any authority to terminate the underlying transaction for failure to comply with Gen.Stat. § 35–1.  “The remedial purpose of the statute manifestly was that the public should have ready means of information as to the personal or financial responsibility behind the assumed name.   Its aim was the protection of those who might deal with or give credit to the fictitious entity.   It obviously was not to provide a means by which persons having received a benefit from another should be enabled to retain it without compensation and to repudiate any agreement for compensation.”  Sagal v. Fylar, 89 Conn. 293, 297–98 (1915).   The Sagal case ruled on Chapter 277 of Public Act 1911.   The language is markedly similar to the two quoted sections of Gen.Stat. § 35–1.   The Sagal trial court noted that the plaintiff's failure to file a trade name certificate with the town clerk as required by the trade name statute but ruled that failure would not invalidate the contract.   There was no evidence in Sagal that the contract itself was an impermissible agreement.

The only question before the Supreme Court was whether the failure to comply with the trade name statute rendered an otherwise valid contract unenforceable.  “We are of the opinion that the intent of the General Assembly was that the penalty expressed in the statute should be exclusive, and that contracts otherwise lawful entered into in the course of a business carried on in disregard of the statute should be neither void or unenforceable.”  Id., 298.

Sagal stands for the proposition that a violation of Gen.Stat. § 35–1 for failure to file a trade name does not void an otherwise enforceable underlying contract.

Here the defendants have not claimed that the underlying contract, the $4,420,000 mortgage transaction, was void for any reason other than failure to file a certificate of trade name under Gen.Stat. § 35–1 and thereby resulting in the failure of the plaintiff to maintain standing to foreclose the mortgage.   The defendants have not attacked the validity of the note or the mortgage deed.   The transaction itself is not being attacked in this Motion to Dismiss.   The Sagal rule remains valid law.  Soloman v. Gilmore, 248 Conn. 769, 775 fn.30 (1999);  Wofsey v. New York & Stamford Railway Company, 106 Conn. 254, 258 (1922);  Northeast Distribution, Inc. v. Premier Logistics Services, Inc., Superior Court, judicial district of New Britain at New Britain, Docket Number CV–00–0505085S (June 20, 2001, Winslow, J.);   Harved Realty v. Leekoff Superior Court, judicial district of Hartford/New Britain, Housing Session at Hartford, Docket Number SPH 94367 (May 4, 1998, Beach, J.) [22 Conn. L. Rptr. 395].

“Finally, in reply to JP Morgan Chase's Objection to the Motion to Dismiss which pointed out that the state cannot regulate a federally charted bank, defendant argues that the Dodd–Frank Act did away with preemption and made Connecticut General Statute § 35–1 applicable to federally chartered banks.”   Plaintiff's Post–Hearing Brief # 224.00, page 4.

Extensive citation has been furnished by both parties to federal law dealing with whether or not the state law, the certificate of trade name statute Gen.Stat. § 35–1, has been preempted by federal law and the federal regulations of federally chartered savings banks (# 197.00, page 4).   Two Supreme Court decisions, two law review articles and references to various federal statutes including the massive Dodd–Frank Act were briefed by the parties.  State Farm Bank, FSB v. Burke, 445 F.Sup.2d 207 (D.Conn.2006);  12 CFR 543.1, 12 CFR 544, 12 CFR 560.2;  Cuomo v. Clearing House Association, 557 U.S. 519, 129 S.Ct. 2710 (2009);  Burnett Bank of Marion City, NA v. Nelson, 512 U.S. 25 (1996);  12 USC 484(a);  12 CFR 7.4000;  Harvard Law Review, Volume 123, Number 1, November 2009, Leading Cases, Constitution Law, National Bank Act, Preemption of State Law Enforcement, page 322–32 (Unsigned and unattributed Case Notes);  The Journal of Corporation Law 4 (2011) The Dodd–Frank Act's Expansion Of State Authority to Protect Consumers Of Financial Services;  12 USC 1465, Dodd–Frank Wall Street Reform and Consumer Protection Act effective July 21, 2010, (approximately 2,300 pages);  Pub L. 111–203;  12 USC 25b.  12 USC 5301, and 12 USC 5553.   All of these citations assume that a violation of Gen.Stat. § 35–1 would void the underlying mortgage transaction.   Since this court has found that a violation of Gen.Stat. § 35–1 does not void or terminate this mortgage transaction, there is no need to determine whether or not Gen.Stat. § 35–1 is preempted by federal law.   There is nothing within the cited federal statutes, regulations, law review articles and cases that would void this mortgage transaction independent of its consideration of a filing violation of Gen.Stat. § 35–1.

The fact that a violation of Gen.Stat. § 35–1 does not void an otherwise valid contract permitting such a plaintiff to institute suit in Connecticut is supported by a trial court decision.   American Corporation v. Two River Road, LLC., Superior Court, judicial district of New Haven at New Haven, Docket No. 376007 (December 15, 1995, Celotto, S.J.R).

The court has concluded that the defendants have failed to sustain their burden and prove either of the first two reasons for dismissal:  (1) the lender lacked legal existence and (2) the lender did not have the capacity to obtain or convey the note underlying this action.   The third reason advanced by the defendants for dismissal is (3) the plaintiff, JP Morgan Chase Bank, National Association, lacks standing as it is not the legal owner of the promissory note underlying this action.   Since this court has found that the plaintiff, JP Morgan Chase Bank, National Association, is in possession of the original note, the original note was presented to this court for examination and the note is endorsed in blank, it is entitled as the holder of the note to be presumed to be the owner.   By Connecticut law, the plaintiff has standing unless the defendant, can offer sufficient evidence to rebut that presumption.

The first proffer made by the defendants was a October 10, 2008 letter notifying Angela D. Simpson–Manigault of the September 28, 2005 conveyance and that a new servicer is in place.   On or about October 10, 2008, Angela D. Simpson–Manigault received a letter on Chase letterhead that referred to the changing of loan services.   The defendants argue that this letter only notes JP Morgan Chase Bank, NA as the new mortgage loan servicer and not as the owner of the loan.  “Upon the closure, JP Morgan Chase Bank, National Association (‘JP Morgan Chase’) acquired certain assets of Washington Mutual Bank from the FDIC, including the right to service your loan.   As a result, this letter is to notify you that the servicing of your mortgage loan, that is, the right to collect payments from you, was assigned, sold or transferred from Washington Mutual Bank to JP Morgan Chase, effective September 25, 2008.”   Ex. 14.

The defendant then cross examined Peter Katsikas with the Purchase and Assumption Agreement dated September 28, 2005.   Ex. 5. He admitted that if did not contain the name of Washington Mutual Bank, FA, only Washington Mutual Bank. The Purchase and Assumption Agreement was entered into between the Federal Deposit Insurance Corporation (FDIC) as the Receiver of the Failed Bank and JP Morgan Chase, National Association as Assuming Bank. It noted the failure of Washington Mutual Bank but it did not reference the Bylaws of the bank that permitted the name, Washington Mutual Bank, FA to be used.   The second WHEREAS clause states:  “the Assuming Bank desires to purchase substantially all of the assets and assume all deposit and substantially all other liabilities of the Failed Bank ․” On page 2 DEFINITIONS is found:  “Assets means all assets of the Failed Bank purchased pursuant to Section 3.1.”   Article III. Purchase of Assets, 3.1, Assets Purchased by Assuming Bank contains a very broad description of all the assets of the Failed Bank;   “․ all right, title, and interest of the Receiver in and to all of the assets (real, personal and mixed, wherever located and however acquired) ․” There is a chart on pages 35 and 36 headed SCHEDULE 3–2—Purchase Price of Assets.   Paragraph (d) of that SCHEDULE 3.2 reads “(d) Loans:  Book Value” and “(n) rights of the Failed Bank to provide mortgage servicing for others and to have mortgage servicing provided to the Failed Bank by other and related contracts.   Book Value.”

The defendants have not offered any evidence that JP Morgan Chase Bank, National Association was not the owner of this mortgage.   The defendants have not briefed this third claim and this claim has been abandoned.  Russell v. Russell, 91 Conn.App. 619, 634–35 (2005).   Consideration of the testimony of Peter Katsikas and the other documents in evidence leads this court to conclude that the defendants' evidence is insufficient for the defendants to rebut the ownership presumption.

The court has found that the plaintiff has sustained its burden of proof and shown that it is the holder of the original note.   The plaintiff has presented the original note and mortgage deed to this court for its review.   This court has ascertained that JP Morgan Chase Bank, National Association is the successor to the original lender Washington Mutual Bank, FA. The court has further found that the plaintiff is entitled to the presumption that it is the owner of the underlying note and it is entitled to proceed in foreclosure.

The defendants now have the burden to prove that the court lacks subject matter jurisdiction and the plaintiff has no standing.  RMS Residential Properties, LLC. v. Miller, 303 Conn. 224, 230 (2011).   The court finds, after examination of all the testimony, documents and the findings set forth above, that the defendants have failed to sustain their burden of proof to rebut the presumption.  Id., 231–32.   The court finds that the plaintiff, JP Morgan Chase Bank, National Association, has standing to commence and litigate this foreclosure action.

The defendants' Motion to Dismiss dated December 2, 2011 (# 193.00) is denied.

BY THE COURT

Hon. Kevin Tierney

Judge Trial Referee

Tierney, Kevin, J.T.R.