Berkshire Bank v. The Hartford Club et al. (2014)

RULING ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

This case is an action by the plaintiff, Berkshire Bank, seeking, inter alia, foreclosure of a mortgage on property owned by the defendant, The Hartford Club, located at 46 Prospect Street, Hartford, Connecticut.   Pending before the court is the plaintiff's motion for summary judgment seeking judgment in its favor on its complaint, and against the defendant on its special defense, for the purposes of establishing the defendant's liability on the note and mortgage.   For the following reasons, the court finds that the material facts are not in dispute and the defendant is liable to the plaintiff on the note and mortgage.   The court finds in favor of the plaintiff on its complaint and against the defendant on its special defense.   Therefore, summary judgment may enter in favor of the plaintiff and against the defendant as to liability only.   The plaintiff may file a motion for judgment for all other necessary findings and orders as appropriate.

I

The law governing summary judgment is well settled.   As our Appellate Court has summarized:

Practice Book § [17–49] requires that 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.   A material fact is a fact that will make a difference in the result of the case ․ The facts at issue are those alleged in the pleadings.  (Citation omitted;  internal quotation marks omitted.)   Gohel v. Allstate Ins. Co., 61 Conn.App. 806, 809, 768 A.2d 950 (2001).

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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.  (Citations omitted;  internal quotation marks omitted.)  Allstate Ins. Co. v. Barron, 269 Conn. 394, 405, 848 A.2d 1165 (2004).

It is frequently stated in Connecticut's case law that, pursuant to Practice Book §§ 17–45 and 17–46, a party opposing a summary judgment motion “must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact.”  Harvey v. Boehringer Ingelheim Corp., 52 Conn.App. 1, 4, 724 A.2d 1143 (1999).   As noted by the trial court in this case, typically “[d]emonstrating a genuine issue requires a showing of evidentiary facts or substantial evidence outside the pleadings from which material facts alleged in the pleadings can be warrantably inferred.”   (Internal quotation marks omitted.)  New Milford Savings Bank v. Roina, 38 Conn.App. 240, 244, 659 A.2d 1226, cert. denied, 235 Conn. 915, 665 A.2d 609 (1995).   Moreover, “[t]o establish the existence of a material fact, it is not enough for the party opposing summary judgment merely to assert the existence of a disputed issue ․ Such assertions are insufficient regardless of whether they are contained in a complaint or a brief ․ Further, unadmitted allegations in the pleadings do not constitute proof of the existence of a genuine issue as to any material fact.”  (Citations omitted;  internal quotation marks omitted.)  Id., 244–45.

Rockwell v. Quintner, 96 Conn.App. 221, 227–29, 899 A.2d 738, cert. denied, 280 Conn. 917, 908 A.2d 538 (2006).

The Practice Book further mandates that “[a]ny adverse party shall at least five days before the date the motion is to be considered on short calendar file opposing affidavits and other available documentary evidence.   Affidavits, and other documentary proof not already part of the file, shall be filed and served as are pleadings.”  Practice Book § 17–45.  “Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.   Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto.”  Practice Book § 17–46.

II

In support of its motion for summary judgment, the plaintiff supplied two affidavits by Thomas S. Matejek, Vice President, Berkshire Bank, chronicling the chain of title of the note and mortgage and the events resulting in the default.   Mr. Matejek averred that he had personal knowledge of the facts contained in his affidavit, and he supplied copies of the note and mortgage and other pertinent records to document his facts.   In pertinent part, in his affidavits, he testified that the defendant executed the subject promissory note payable to the original lender, The Connecticut Bank and Trust Company (CBT) of Hartford, Connecticut, and it executed the subject mortgage deed on July 17, 2009.   He further averred that Berkshire Bank of Pittsfield, Massachusetts is the successor in interest to CBT by virtue of a merger, and he supplied a copy of a certificate of merger issued by the Commonwealth of Massachusetts, Division of Banks, showing that CBT merged with and into Berkshire Bank effective April 20, 2012.   Thus, he concluded that the plaintiff is the owner and holder of the note, mortgage and other loan documents executed in connection therewith.

The witness further averred that he reviewed the note and mortgage, and that he is personally familiar with the books and records maintained by Berkshire Bank. He thus averred that he had personal knowledge of the fact that the defendant is in default under the terms and conditions of the note as a result of the defendant's failure to make any principal payment due under the note since December 27, 2012, which payment was for the installment due on October 17, 2012 and other details of the notification of default and acceleration of the entire indebtedness under the terms of the note.

The defendant challenges the sufficiency of the affidavits, consistent with its special defense that “the ownership interest of the plaintiff in the subject mortgage has not been established.”   In particular, in its memorandums in opposition to the plaintiff's motion, it argues that the Matejek affidavits are inadmissible to prove the facts because they fail to adequately state the basis for his claimed personal knowledge or his competence to authenticate the exhibits attached to his affidavit, inter alia, because he never states that he worked for CBT or that a CBT employee gave him information or the source of his knowledge generally or how long he has worked for the plaintiff.   It also argues that the plaintiff's witness has not testified as to the elements that would permit the admission of otherwise hearsay documents under the business records exception to the hearsay rule, General Statutes § 52–180.¹  It is true that “only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment, and the applicable provision of our rules of practice contemplate supporting [or opposing] documents ․ be made under oath or be otherwise reliable.”  (Citations omitted;  internal quotation marks omitted.)  Rockwell v. Quintner, supra, 96 Conn.App. 233 n. 10.   However, the court is not persuaded that the affidavit is inadequate.   Our Supreme Court has held that “[t]he witness introducing the document need not have made the entry himself or herself, nor have been employed by the organization during the relevant time period ․ In addition, there is no requirement ․ that the documents must be prepared by the organization itself to be admissible as that organization's business records.”  (Citations omitted;  internal quotation marks omitted.)  New England Savings Bank v. Bedford Realty Corp., 246 Conn. 594, 603, 717 A.2d 713 (1998);  accord, Deutsche Bank National Trust Co. v. Shivers, 52 Conn.Sup. 358, 362 [49 Conn. L. Rptr. 679] (2010), aff'd, 136 Conn.App. 291, 44 A.3d 879, cert. denied, 307 Conn. 938, 56 A.3d 950 (2012).   It merely affects the weight of the evidence.  General Statutes § 52–180(b).  Moreover in its supplemental affidavit, the affiant specifically averred that he reviewed the note and mortgage;  that the note and mortgage were made in the regular course of business;  and that it is the regular course of business for Berkshire Bank to keep records of the sort contained in the note and mortgage;  and that such records were made when the act, transaction or event at issue occurred, or shortly thereafter, in satisfaction of General Statutes § 52–180.   The court finds the affiant competent, and his testimony sufficient to permit the court to find his testimony and evidence admissible, including under the business records exception to the hearsay rule.   Accordingly, the court can consider his affidavit and exhibits in resolving the motion for summary judgment.

Next, the defendant argues that the plaintiff has failed to present admissible evidence that it is the holder of the note or a non-holder in possession who has the rights of a holder.   This issue is pertinent because General Statutes § 49–17 ² permits the rightful owner of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when that mortgage has not been transferred to the holder because the mortgage follows the note.  RMS Residential v. Miller, 303 Conn. 224, 230, 32 A.3d 309 (2011).   A holder is presumed to be a rightful owner.  Id., 321.   In the instant case, the plaintiff is not the holder.   A holder is “[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.  General Statutes § 42a–1–201(b)(21)(A).   In the instant case, the note is payable to “The Connecticut Bank and Trust Company (“Lender”) or order” and it has not been endorsed to the order of the plaintiff or otherwise negotiated to cause the plaintiff to become its holder.  General Statutes § 42a–3–201.³  Thus, the only evidence is that CBT was the holder.   However, the holder is not the only entity entitled to enforce a negotiable instrument.  J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307, 319, 71 A.3d 492 (2013).  “ ‘Person entitled to enforce’ an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 42a–3–309 or 42a–3–418(d).  A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.”   General Statutes § 42a–3–301.   One who has the rights of a holder is entitled to enforce the instrument.  Equity One, Inc. v. Shivers, 310 Conn. 119, 126, 74 A.3d 1225 (2013).

In the instant case, the court agrees with the defendant that to be eligible to enforce the note, the plaintiff must establish its eligibility as a nonholder in possession of the instrument who has the rights of a holder.   The plaintiff qualifies here by reason of its possession of the instrument as a transferee.   Possession is not in dispute.   As for transfer, General Statutes § 42a–3–203(a) ⁴ concerns instances in which an instrument is transferred, other than by negotiation, by a person for the purpose of giving the transferee the right to enforce the instrument.  “Normally, such a transfer is accomplished by negotiation.   But if the instrument is payable to a specific person other than the transferee, and that specified person fails to indorse the instrument, the transfer is not a negotiation and the transferee does not become a holder ․ Nevertheless, [§ 3–203(b) ] ⁵ generally provides that, in such a case, the transferee acquires all of the rights that his transferor had to enforce the instrument [the “shelter doctrine].”   W.K. Lewis and S.H. Resnicoff, The New Law of Negotiable Instruments (1996) § 3–6.   The transferee must account for possession of the unendorsed instrument by proving the transaction through which the transferee acquired it.  General Statutes Annot. § 42a–3–203, comment 2 (West 2013).

The court finds that the undisputed facts show that the transfer in this case occurred by operation of law due to the merger.  “A transfer by operation of law grants rights to a person by the application of established rules of law rather than by an act of an individual ․ The persons who acquired title to an instrument by operation of law are successors in title.   A transfer by operation of law will also occur in a merger transaction between legal entities, usually corporations.   The surviving entity/corporation will succeed to the interests and rights of the merged (disappearing) entity/corporation in any instrument.   This rule has specific application to the rather common situation of bank mergers, where a bank, that is the holder of the note, merges into another financial institution.”   1 H.Weisblatt, Checks, Drafts and Notes (2013) § 115.02[1];  Accord, TD Banknorth, N.A. v. Owens, Superior Court, judicial district of Fairfield, Doc. No. CV 08–5013636–S (February 25, 2009, Bellis, J.).   Plaintiff's witness averred, from personal knowledge, that the plaintiff is owner of the note as the successor in interest to CBT by merger, and the essential facts were documented.   Thus, the plaintiff supplied evidence supporting its right to enforce the note.   The defendant provides no facts to dispute the plaintiff's rights in this regard.

Defendant, nevertheless, argues that summary judgment cannot enter in favor of the plaintiff on this point because the plaintiff did not provide admissible evidence of the merger;  rather, it supplied a mere letter, containing hearsay on hearsay, from the Massachusetts Division of Banks.   The court is not persuaded.   The plaintiff supplied a copy of certification by the General Counsel and Deputy Commissioner of Banks of the Commonwealth of Massachusetts, on state stationary with a seal affixed, certifying that the records of the agency show that the merger occurred effective April 20, 2012, and that the surviving entity is subject to the supervision and examination by the agency.   Records of public agencies, in any form, are admissible in evidence as exceptions to the hearsay rule “provided (A) the record, report, statement or data compilation was made by a public official under a duty to make it, (B) the record, report, statement or data compilation was made in the course of his or her official duties, and (C) the official or someone with a duty to transmit information to the official had personal knowledge of the matters contained in the record, report, statement or data compilation.”  Connecticut Code of Evidence (2009 Ed.) § 8–3(7).   The court is satisfied that the document qualifies as a public record admissible as evidence to prove the merger in this case.   The Commissioner of Banks in Massachusetts regulates and oversees various bank mergers in Massachusetts, and the banking laws provide for property transfer upon merger by operation of law.   See, generally, Mass. Ann. Laws c. 168 et seq.  (WestlawNext 2013);  Postal Community Credit Union v. Commissioner of Banks, 61 Mass.App.Ct. 563, 812 N.E.2d 923, review denied, 442 Mass. 1112, 816 N.E.2d 1222 (2004).   A certificate of merger from such an oversight agency suffices to establish the plaintiff's ownership of the note and mortgage by operation of law.   See New Alliance Bank v. Schaeppi, 139 Conn.App. 94, 98, 54 A.3d 1058 (2012), cert. denied, 307 Conn. 948, 60 A.3d 737 (2013).   Where there is a certificate of merger, the plaintiff is not required to produce a witness at a hearing to testify as to the fact of the merger or the plaintiff's assumption of the right to pursue the foreclosure action;  particularly, as in this case, where the defendant does not raise a factual issue as to the validity of the merger itself.  Id. Thus, the court finds that the plaintiff is owner of the note as the successor in interest to CBT under the merger, and that it has the right to enforce the note.

The defendant supplies no affidavit or other materials disputing these facts and there is no justification for doubting the plaintiff's facts.   The cases it cites in support of its opposition to plaintiff's motion for summary judgment do not involve facts similar to those in the instant case.   Thus, the plaintiff has demonstrated that the material facts are not in dispute and that the defendant is liable on the note and mortgage as alleged its complaint.   Additionally plaintiff has demonstrated that there is no merit the special defense alleged by the defendant.

Finally, the defendant argues that the court cannot enter summary judgment as to its special defense because Practice Book § 17–44 ⁶ does not provide for summary judgment on special defenses.   That assertion would be viable if the plaintiff sought summary judgment on the special defense alone without also seeking summary judgment on its complaint.   See Wyatt Energy, Inc. v. Motiva Enterprises, LLC, 104 Conn.App. 685, 692 n.7, 936 A.2d 280 (2007), cert. denied, 286 Conn. 901, 943 A.2d 1103 (2008).   However, in the instant case, the plaintiff sought summary judgment on its complaint as well as on the special defense.   In such cases, plaintiff is not only eligible to seek summary judgment on the special defense, it is probably necessary to do so.   See, e.g., CitiMortgage, Inc. v. Coolbeth, 147 Conn.App. 183 (2013).

III

For the foregoing reasons, the court finds that the material facts are not in dispute and the defendant is liable to the plaintiff on the note and mortgage.   The court finds in favor of the plaintiff on its complaint and against the defendant on its special defense.   Therefore, summary judgment may enter in favor of the plaintiff and against the defendant as to liability only.   The plaintiff may file a motion for judgment for all other necessary findings and orders as appropriate.

Robert F. Vacchelli

Judge, Superior Court

FOOTNOTES

FN1. General Statutes § 52–180 provides as follows:(a) Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible as evidence of the act, transaction, occurrence or event, if the trial judge finds that it was made in the regular course of any business, and that it was the regular course of the business to make the writing or record at the time of the act, transaction, occurrence or event or within a reasonable time thereafter.(b) The writing or record shall not be rendered inadmissible by (1) a party's failure to produce as witnesses the person or persons who made the writing or record, or who have personal knowledge of the act, transaction, occurrence or event recorded or (2) the party's failure to show that such persons are unavailable as witnesses.   Either of such facts and all other circumstances of the making of the writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect the weight of the evidence, but not to affect its admissibility.(c) Except as provided in the Freedom of Information Act, as defined in section 1–200, if any person in the regular course of business has kept or recorded any memorandum, writing, entry, print, representation or combination thereof, of any act, transaction, occurrence or event, and in the regular course of business has caused any or all of them to be recorded, copied or reproduced by any photographic, photostatic, microfilm, microcard, miniature photographic or other process which accurately reproduces or forms a durable medium for so reproducing the original, the original may be destroyed in the regular course of business unless its preservation is otherwise required by statute.   The reproduction, when satisfactorily identified, shall be as admissible in evidence as the original in any judicial or administrative proceeding, whether the original is in existence or not, and an enlargement or facsimile of the reproduction shall be likewise admissible in evidence if the original reproduction is in existence and available for inspection under direction of court.   The introduction of a reproduced record, enlargement or facsimile shall not preclude admission of the original.(d) The term “business” shall include business, profession, occupation and calling of every kind..  FN1. General Statutes § 52–180 provides as follows:(a) Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible as evidence of the act, transaction, occurrence or event, if the trial judge finds that it was made in the regular course of any business, and that it was the regular course of the business to make the writing or record at the time of the act, transaction, occurrence or event or within a reasonable time thereafter.(b) The writing or record shall not be rendered inadmissible by (1) a party's failure to produce as witnesses the person or persons who made the writing or record, or who have personal knowledge of the act, transaction, occurrence or event recorded or (2) the party's failure to show that such persons are unavailable as witnesses.   Either of such facts and all other circumstances of the making of the writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect the weight of the evidence, but not to affect its admissibility.(c) Except as provided in the Freedom of Information Act, as defined in section 1–200, if any person in the regular course of business has kept or recorded any memorandum, writing, entry, print, representation or combination thereof, of any act, transaction, occurrence or event, and in the regular course of business has caused any or all of them to be recorded, copied or reproduced by any photographic, photostatic, microfilm, microcard, miniature photographic or other process which accurately reproduces or forms a durable medium for so reproducing the original, the original may be destroyed in the regular course of business unless its preservation is otherwise required by statute.   The reproduction, when satisfactorily identified, shall be as admissible in evidence as the original in any judicial or administrative proceeding, whether the original is in existence or not, and an enlargement or facsimile of the reproduction shall be likewise admissible in evidence if the original reproduction is in existence and available for inspection under direction of court.   The introduction of a reproduced record, enlargement or facsimile shall not preclude admission of the original.(d) The term “business” shall include business, profession, occupation and calling of every kind.

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. General Statutes § 42a–3–201 provides:(a) “Negotiation” means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.(b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its endorsement by the holder.   If an instrument is payable to bearer, it may be negotiated by transfer of possession alone..  FN3. General Statutes § 42a–3–201 provides:(a) “Negotiation” means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.(b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its endorsement by the holder.   If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.

FN4. General Statutes § 42a–3–203(a) provides(a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument..  FN4. General Statutes § 42a–3–203(a) provides(a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

FN5. General Statutes 42a–3–203(b) provides:(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument..  FN5. General Statutes 42a–3–203(b) provides:(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

FN6. Practice Book § 17–44 provides:In any action, including administrative appeals which are enumerated in Section 14–7, any party may move for a summary judgment as to any claim or defense as a matter of right at any time if no scheduling order exists and the case has not been assigned for trial.   If a scheduling order has been entered by the court, either party may move for summary judgment as to any claim or defense as a matter of right by the time specified in the scheduling order.   If no scheduling order exists but the case has been assigned for trial, a party must move for permission of the judicial authority to file a motion for summary judgment.   These rules shall be applicable to counterclaims and cross complaints, so that any party may move for summary judgment upon any counterclaim or cross complaint as if it were an independent action.   The pendency of a motion for summary judgment shall delay trial only at the discretion of the trial judge..  FN6. Practice Book § 17–44 provides:In any action, including administrative appeals which are enumerated in Section 14–7, any party may move for a summary judgment as to any claim or defense as a matter of right at any time if no scheduling order exists and the case has not been assigned for trial.   If a scheduling order has been entered by the court, either party may move for summary judgment as to any claim or defense as a matter of right by the time specified in the scheduling order.   If no scheduling order exists but the case has been assigned for trial, a party must move for permission of the judicial authority to file a motion for summary judgment.   These rules shall be applicable to counterclaims and cross complaints, so that any party may move for summary judgment upon any counterclaim or cross complaint as if it were an independent action.   The pendency of a motion for summary judgment shall delay trial only at the discretion of the trial judge.

Vacchelli, Robert F., J.