Amy Mase v. LLC (2014)

MEMORANDUM OF DECISION RE DEFENDANTS' MOTION FOR SUMMARY JUDGMENT (# 131)

FACTS

The plaintiff, Amy Mase, in this action, seeks to foreclose on a mortgage she holds from the defendants, Riverview Realty Associates, LLC and Thames Restaurant Group, LLC.¹ The plaintiff's complaint alleges the following.   On September 1, 2011, Riverview executed a promissory note in favor of 111 Bank Street Limited Liability Company in the amount of $640,000.00.   The note was secured by a mortgage on real property owned by Riverview and located at 109–111 Bank Street in New London, Connecticut.   On December 12, 2011, Bank Street assigned the note and mortgage to the plaintiff.   Riverview failed to make the principal and interest payments due on December 1, 2011 and February 1, 2012 and failed to pay the property taxes due on January 1, 2012.

On September 30, 2013, the defendants filed a motion for summary judgment arguing that the plaintiff lacks standing to bring this action because the plaintiff did not give sufficient notice of acceleration.   In support of their motion, the defendants append a copy of the “Assignment of Note and Mortgage” (Exhibit 1);  a December 19, 2011 letter from Czaczkes & Czaczkes informing Riverview of its default (Exhibit 2);  an affidavit executed by Albert Farrah, the “sole member of both defendants” as well as an October 10, 2012 letter from Bank of America (Exhibit 3);  and a fax sent by Czaczkes & Czaczkes to John Carta, the defendants' attorney, along with two checks (Exhibit 4).   On October 17, 2013, the plaintiff filed a memorandum of law in opposition and appended a copy of the mortgage deed and security agreement as well as a May 29, 2012 letter from the New London tax collector to Edward Czaczkes, the plaintiff's attorney, stating that the mortgaged property was in collections.   The defendants filed a reply memorandum on November 20, 2013 and the motion was argued on January 27, 2014.

DISCUSSION

“Summary judgment is a method of resolving litigation when 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 ․ The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried.”  (Citations omitted.)  Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).  “However, since litigants ordinarily have a constitutional right to have issues of fact decided by a jury ․ the moving party for summary judgment is held to a strict standard ․ of demonstrating his entitlement to summary judgment.”  (Citation omitted;  internal quotation marks omitted.)   Kakadelis v. DeFabritis, 191 Conn. 276, 282, 464 A.2d 57 (1983).

“In a mortgage foreclosure action, [t]o make out its prima facie case, [the foreclosing party has] to prove by a preponderance of the evidence that it was the owner of the note and mortgage and that [the mortgagee] had 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, 937–38, 815 A.2d 136 (2003).  “[T]he foreclosing party must demonstrate that all conditions precedent to foreclosure, as mandated by the note and mortgage, have been satisfied.”  (Internal quotation marks omitted.)   U.S. Bank v. Bachelder, Superior Court, judicial district of New London, Docket No. CV–09–6002288–S (August 20, 2012, Martin, J.).   Accordingly, “[t]he right of a mortgagee to initiate a foreclosure action against a defaulting debtor depends on the mortgagee's compliance with the notice provisions contained in the mortgage.”  Mortgage Electronic Registration Systems, Inc. v. Goduto, 110 Conn.App. 367, 368, 955 A.2d 544, cert. denied, 289 Conn. 956, 961 A.2d 420 (2008).

“Notices of default and acceleration are controlled by the mortgage documents.   Construction of a mortgage deed is governed by the same rules of interpretation that apply to written instruments or contract generally, and to deeds particularly.   The primary rule of construction is to ascertain the intention of the parties.   This is done not only from the face of the instrument, but also from the situation of the parties and the nature and the object of their transactions ․ A promissory note and a mortgage deed are deemed parts of one transaction and must be construed together as such.”   (Internal quotation marks omitted.)  Webster Bank v. Oakley, 265 Conn. 539, 547, 830 A.2d 139 (2003).  “Ordinarily, the question of the adequacy of notice is one for the jury and not for the court, and the cases make clear that this question must be determined on the basis of the facts of the particular case.”  (Internal quotation marks omitted.)  Bresnan v. Frankel, 224 Conn. 23, 27, 615 A.2d 1040 (1992).

The notice of acceleration provision upon which the defendants' argument relies is found in section five, subsection five of the mortgage note (attached to plaintiff's memorandum in opposition) and reads as follows:  “Acceleration shall occur thirty (30) days after Lender has given Borrower written Notice of acceleration.   Within said thirty (30) days Borrower may cure the cause of the proposed acceleration.”   That clause does not specify that notice of the borrower's right to cure must be given;  merely that notice of acceleration must be given and the borrower must be permitted time to cure.   On December 19, 2011, Riverview received a letter identifying its failure to make the December 1 payment and further stating that “[t]his is a default under the Promissory Note and the mortgage it secures.   Pursuant to said Note, the Lender is accelerating the total amount due under said Note. This letter is written Notice of the acceleration, pursuant to said Promissory Note.” Subsequently, Riverview was sent another letter, dated March 8, 2012, which discussed Riverview's failure to make its February 2012 payment or pay its property taxes.   The letter stated that “[t]he purpose of this letter is to give you Notice of Default and Acceleration under the Note and Mortgage unless all of the above is cured pursuant to said Note and Mortgage.”

First, the acceleration provision in the mortgage note is ambiguous as to whether notice of the borrower's right to cure is required.   Certainly, the provision requires written notice of acceleration.   The provision also clearly requires granting the borrower thirty days to cure the purported default.   However, it is entirely unclear as to whether the lender was required to give the borrower written notice of the borrower's right to cure.  “[T]he meaning of ambiguous contract language presents a question of fact for the trier.”   Williams v. Freedom of Information Commission, 108 Conn.App. 471, 475–76 n.4, 948 A.2d 1058 (2008).   Given that the court cannot decide as a matter of law whether notice of the right to cure was required, the court cannot decide whether the letters sent on December 19, 2011 and March 8, 2012 were insufficient.²

Second, the defendants rely on two checks (dated December 9, 2011 and February 9, 2012) executed by the defendants as well as a letter from Bank of America indicating that those checks were never presented to the bank.   It's not entirely clear whether the defendants rely upon this evidence to argue that they never defaulted or that they made a good faith attempt to cure the default.   The evidence presented suggests that the checks were rejected because they were executed in favor of the wrong payee, as opposed to being rejected for insufficient funds.   The December 9 check was executed in favor of 111 Bank St., LLC and the February 9 check was executed in favor of “Attorney Ed Czaczkes, trustee.” ³  It seems to be the plaintiff's position that both checks should have been executed in favor of Amy Mase. Certainly, a borrower's good faith attempt to perform or cure a defect can be an equitable defense to foreclosure:  “[I]f the mortgagor is prevented by accident, mistake or fraud, from fulfilling a condition of the mortgage, foreclosure cannot be had ․” (Internal quotation marks omitted.)  LaSalle National Bank v. Shook, 67 Conn.App. 93, 97, 7878 A.2d 32 (2001).   However, the evidence presented by the parties is not nearly sufficient to warrant summary adjudication in favor of the defendants.   See Flagstar Bank v. Silvestri, Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV–00–0180425–S (May 21, 2002, Hickey, J.).

ORDER

For the foregoing reasons, the defendants' motion for judgment is denied.

Cosgrove, J.

FOOTNOTES

FN1. According to the complaint, Thames Restaurant Group, LLC is a tenant occupying the mortgaged property..  FN1. According to the complaint, Thames Restaurant Group, LLC is a tenant occupying the mortgaged property.

FN2. The defendants filed a reply brief relying upon Judge Hartmere's opinion in U.S. Bank National v. Suvernay, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV–08–5014358–S (October 4, 2010).   Judge Hartmere denied the plaintiff's motion for summary judgment on its foreclosure action after finding that the plaintiff's notice of acceleration was ambiguous as to the precise amount required to cure.   Its unclear why the defendants found Suvernay helpful given that Judge Hartmere determined that an ambiguity in the acceleration notice raised a genuine issue of material fact that had to be decided by the trier.   So too here.   The ambiguity in the mortgage note's notice provision requires the court to deny summary judgment.   Also, in Suvernay, the plaintiff lender was the movant and, therefore, the evidence was viewed in the light most favorable to the defendant borrower.   In this case, the reverse is true and the court will view all evidence presented in the light most favorable to the plaintiff as the nonmoving party..  FN2. The defendants filed a reply brief relying upon Judge Hartmere's opinion in U.S. Bank National v. Suvernay, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV–08–5014358–S (October 4, 2010).   Judge Hartmere denied the plaintiff's motion for summary judgment on its foreclosure action after finding that the plaintiff's notice of acceleration was ambiguous as to the precise amount required to cure.   Its unclear why the defendants found Suvernay helpful given that Judge Hartmere determined that an ambiguity in the acceleration notice raised a genuine issue of material fact that had to be decided by the trier.   So too here.   The ambiguity in the mortgage note's notice provision requires the court to deny summary judgment.   Also, in Suvernay, the plaintiff lender was the movant and, therefore, the evidence was viewed in the light most favorable to the defendant borrower.   In this case, the reverse is true and the court will view all evidence presented in the light most favorable to the plaintiff as the nonmoving party.

FN3. The first December 9 check was executed ten days before Riverview received notice of the assignment to Amy Mase when Riverview was sent a letter with the subject line “RE:  111 Bank Street Limited Liability Company—Mortgage & Note Assigned to Amy Mase–Lender.”.  FN3. The first December 9 check was executed ten days before Riverview received notice of the assignment to Amy Mase when Riverview was sent a letter with the subject line “RE:  111 Bank Street Limited Liability Company—Mortgage & Note Assigned to Amy Mase–Lender.”

Cosgrove, Emmet L., J.