CitiMortgage, Inc. v. Frederick Nichlen et al. (2014)

MEMORANDUM OF DECISION on MOTION FOR SUMMARY JUDGMENT (# 124) and on OBJECTION TO MOTION FOR SUMMARY JUDGMENT (# 128)

In this mortgage foreclosure action, plaintiff moves for a summary judgment as to liability on the promissory note defendants ¹ issued to it, and which they secured by their mortgage on a property located on Squaw Hollow Road in the Town of Ashford.

The complaint contains two counts, the first of which sets forth the material allegations as to the note and mortgage and their status as of the return date of May 8, 2012.   The second count seeks a reformation of the mortgage itself, to correct an apparent typographical error in the instrument (the street address having been stated as “5” Squaw Hollow Road, when “359” was the accurate location).   The court will examine the allegations of each count momentarily, but notes that the defendants filed a revised answer on May 30, 2013, in which as to each and every paragraph of both counts they indicated that “Plaintiff is left to it's (sic) proof.”   That pleading also included seven special defenses, and these, too, will be scrutinized in detail.

The motion now before this court seeks a summary judgment as to liability.   Plaintiff accompanied its motion with a detailed memorandum of law, an affidavit and relevant exhibits, and defendants responded with their own objection, affidavits and exhibits.

I. Legal Standards

Recently, in Marinos v. Poirot, 308 Conn. 706 (2013), at pages 711–12, the Supreme Court articulated how deliberations on a motion for summary judgment must proceed:

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.”   A party moving for summary judgment is held 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 § 17–45 (citations omitted).

This court has utilized that process in its review of this motion so as to require of plaintiff a showing excluding any real doubt as to any issue of material fact as to its right to a judgment on the allegations of its complaint, and so as to require of defendants a showing establishing that their special defenses address material factual issues and are sufficient to show that such issues are genuinely disputed.

Since this motion seeks a judgment relative to the foreclosure of mortgages, the court takes guidance from the recent Appellate Court decision in GMAC v. Ford, 144 Conn.App. 165, (2013), outlining the essential elements of such a proceeding:  “In order to establish a prima facie case in a mortgage foreclosure action, the plaintiff must prove by a preponderance of the evidence that it is the owner of the note and mortgage, that the defendant mortgagor has defaulted on the note and that any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied ․ Thus, a court may properly grant summary judgment as to liability in a foreclosure action if the complaint and supporting affidavits establish an undisputed prima facie case and the defendant fails to assert any legally sufficient special defense”;  144 Conn.App. 165, 176 (citations omitted).

II. Plaintiff's Case in Chief—First Count (Foreclosure)

Plaintiff's motion is supported by the affidavit of Amy Burgess, Citimortgage's Vice President—Document Control, executed with due formalities on December 12, 2013.   The affiant swears that she is personally familiar with the books and records of plaintiff as they apply to defendants' account, and further avers:

1. On April 25, 2005, defendants Frederick Nichlen and Mai Vang, a/k/a Mai Nichlen, issued and delivered their promissory note in the amount of $270,000 to ABN AMRO Mortgage Group, Inc.

2. On that same date, defendants issued to ABN AMRO Mortgage Group, Inc., a mortgage securing that note and encumbering real property owned by them located at 359 (a/k/a 5) Squaw Hollow Road in the town of Ashford, which mortgage was duly recorded in the Ashford land records.

3. On September 1, 2007, ABN AMRO Mortgage Group, Inc. merged with and into the plaintiff, CitiMortgage, Inc., by a written certificate of merger.

4. The note and mortgage required defendants to make monthly payments of principal and interest on the first day of each month beginning June 1, 2005, and continuing until the maturity date of May 1, 2035.

5. The defendants failed to make the monthly payments required since the payment due September 1, 2011, and for each month thereafter.

6. The failure to make payments constitutes a default under the terms of the note and mortgage.

7. Plaintiff notified defendants that failure to cure the default could result in acceleration of the debt.

8. Thereafter, plaintiff did accelerate the debt and the remaining principal balance owed it, together with interest, attorney fees, and costs are due and owing to plaintiff;  and that

9. Plaintiff is the holder of the note and mortgage.

The affiant affixed copies of the note, mortgage, and certificate of merger to her affidavit.   Having perused them, and taking the allegations of the affidavit into account in light of the standard articulated in GMAC v. Ford, the court finds that the plaintiff has established a prima facie right to summary judgment as to liability in this case;  see, Citimortgage, Inc. DLJ Mortgage Capital, Inc. v. Speer, Docket No. CV09 6001411, Superior Court, New London Judicial District (2011;  Devine, J.);  One West Bank, FSB v. Reinoso, Docket No. CV10 6006307, Superior Court, judicial district of Fairfield (2012;  Hartmere, J.).

III. Special Defenses to Foreclosure Count

The court is entitled to rely upon plaintiff's affidavit unless it is met with sufficient contrary factual assertions to call its representations into question;  RMS Residential Properties, LLC v. Miller, 303 Conn. 224 (2011);  Citimortgage, Inc. v. Coolbeth, 147 Conn.App. 183 (2013).  “The party opposing a motion for summary judgment must present evidence that demonstrates the existence of some disputed factual issue ․ The movant has the burden of showing the nonexistence of such issues but the evidence thus presented, if otherwise sufficient, is not rebutted by the bald statement that an issue of fact does exist ․ To oppose a motion for summary judgment successfully, the nonmovant must recite specific facts ․ which contradict those stated in the movant's affidavits and documents ․ The opposing party to a motion for summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an issue ․ The existence of the genuine issue of material fact must be demonstrated by counteraffidavits and concrete evidence.”  (Internal quotation marks omitted);  Deutsche Bank National Trust Co. v. Shivers, 136 Conn.App. 291, 295–96, cert. denied, 307 Conn. 938 (2012).

Over a three-month period, defendants filed seven separate “answers” including special defenses.   First, on February 19, 2013 each of them filed two separate documents bearing the caption “answer.”   On May 10, 2013, each separately filed a revised answer.   Next, on May 30, 2013, they jointly filed a single pleading signed by both of them.   The court views this latest instrument as the operative answer.   It contains seven special defenses, and supersedes and restates the several prior editions, except that the earlier versions contain a passing reference to plaintiff's second count which is missing from their May 30 pleading.

Plaintiff argues that their special defenses are late and ought not to be considered at all.   It has not briefed this objection and the court will consider it abandoned.

Plaintiff further argues that all of the special defenses amount to mere conclusory statements unsupported by anything of a factual nature.   This observation is correct if one looks only within the four corners of the May 30 pleading;  see, Smith v. Furness, 117 Conn. 97, 99 (1933) (“Acts ․ may be stated according to their legal effect, but in doing so the pleadings should be such as to fairly apprise the adverse party of the state of facts which it is intended to prove”).   As pled, the special defenses lack any statements of fact.   Defendants, however, provide additional detail in the objection and affidavit which they have submitted in response to plaintiff's motion.   Having to cobble together two documents to comprehend an argument that could and should have been expressed in one does not appear to have caught plaintiff unawares, since it anticipated and addressed each of the seven special defenses in its own memorandum.   The court will extend to the self-represented defendants the latitude trial courts are commended to afford them;  see, e.g., Mourning v. Commissioner of Correction, 120 Conn.App. 612, 624 (2010) (“[I]t is the established policy of the Connecticut courts to be solicitous of pro se litigants and when it does not interfere with the rights of other parties to construe the rules of practice liberally in favor of the pro se party ․ The modern trend ․ is to construe pleadings broadly and realistically, rather than narrowly and technically”).   This is not a case where their positions are incapable of determination on the basis of what they have thus far submitted.   Therefore, in the interest of equity and of judicial economy, lest they later cast a shadow over its rulings, this court will assess these special defenses now.

A. First Special Defense—Plaintiff does not own the note

Special defense number one reads, verbatim “Freddie Mac owns our loan, Citimortgage is the loan servicer therefore Citimortgage has no legal claim to the property.”   Exhibits A and B to defendants' affidavit consist of a copy of a webpage apparently made on January 13, 2014, asserting that Freddie Mac is the owner of the defendants' mortgage since May of 2005, and a copy of a July 23, 2009 letter to them from a Georgia entity with letterhead inscribed “Consumer Credit Counseling Service” making that same assertion.   Other than incorporating these exhibits into their affidavit and thereby swearing to their genuineness, defendants offer no further information on the question of who now holds their loan.

While establishing that it has present possession of the note and mortgage is essential to plaintiff's success here;  see, JPMorgan Chase, N.A. v. Eldon, 144 Conn.App. 260 (2013);  the means by which that possession may be established is uncomplicated.   When a plaintiff asserts in an affidavit that it possesses the note and mortgage in question, that assertion creates a presumption of standing to bring a foreclosure which imposes upon a party arguing to the contrary a burden of adducing sufficient contradictory evidence.   Recent cases such as RMS Residential Properties, LLC v. Miller, 303 Conn. 224 (2011), Equity One, Inc. v. Shivers, 310 Conn. 119 (2013), Farmington Valley Recreational Park, Inc. v. Farmington Show Grounds, LLC, 146 Conn.App. 580 (2013) and Torrington Savings Bank Mortgage Servicing Co. v. Chance, 146 Conn.App. 696 (2013) are but four from a much larger number of cases so ruling.   The two emanating from the Supreme Court recognize General Statutes § 49–17 as one of the several sources of that principle;  we are instructed by the RMS decision, at page 230, “Our legislature, by adopting § 49–17, created a statutory right for the rightful owner of a note to foreclose on real property regardless of whether the mortgage has been assigned to him.”   Plaintiff has attached to its affidavit accompanying this motion a copy of the note, bearing a blank endorsement, as support for its claim of present ownership.   At the future hearing on the form and other details of a final judgment, the court will examine the original.   For the present purposes, the court is entitled to rely upon the plaintiff's submissions.

Overlooking, for the sake of argument, the purely hearsay quality of defendants' two exhibits describing Freddie Mac as the owner of their loan, their proffer nevertheless does not raise a genuine issue of material fact as to who holds their note.   Freddie Mac is not a lender;  its website ² indicates that “Freddie Mac does not work directly with consumers to get mortgages or provide mortgage relief options ․ Your lender is your biggest ally if you are struggling with your mortgage payments ․” Defendants' implication that ownership and holder status are inseparable does not correctly state Connecticut law.   In J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307, at 325 (2013), the Court commented that under § 49–17 a loan originator (as is plaintiff here, by virtue of its merger with its predecessor, ABN AMRO) who has assigned rights to another (Freddie Mac) is only required in a foreclosure action “to prove that they are ‘the person entitled to receive the money secured [by the mortgage],’ and such a party may be someone other than the owner of the note ”;  (emphasis added).

In that case, “someone other than the owner” was the servicer of the loan, acting as agent of the owner.   In the instant case, defendants admit in their first special defense that “CitiMortgage is the loan servicer.”   They may not have appreciated the significance of that admission, but it alone conclusively establishes that plaintiff is a suitable party to bring this foreclosure case under this recent authority.

A 2013 superior court decision examining the owner/holder dichotomy is quite factually similar to the instant case.   Defendant-mortgagors in JP Morgan Chase Bank Nat. Ass'n v. Simoulidis, Superior Court, judicial district of Stamford at Norwalk, Docket No. FSTCV106003807S (Dec. 13, 2013;  Tierney, J.T.R.), contended that Freddie Mac's inclusion of their loan on a schedule of assets it owned raised a question of plaintiff's standing to foreclose, and argued on that basis that the complaint should be dismissed.   Plaintiff expressly declined to claim servicer status, and argued only that its holder status gave it standing whether or not Freddie Mac was its owner.   The court noted that “Freddie Mac is the commonly understood name for the Federal Home Loan Mortgage Corporation (FHLMC).  Freddie Mac is a government sponsored enterprise (GSE) created in 1970 in order to expand the secondary market for mortgages in the United States.   It was created by an act of the U.S. Congress.   Freddie Mac is a private corporation.”   Since plaintiff declined to call itself a servicer, the court did not look to J.E. Robert for the answer to the standing challenge.   The court nevertheless concluded that the case ought not to be dismissed, under the authority of Countrywide Home Loans Servicing, LP v. Creed, 145 Conn.App. 38 (2013).   There, the Appellate Court had concluded that a party's status as holder of a note endorsed in blank was enough to avoid dismissal.   CitiMortgage claims to hold a note endorsed in blank, and beyond the suggestion that Freddie Mac “owns” their loan defendants have offered nothing to refute that claim.   This court believes that the Creed decision provides a second and independent reason for concluding that defendants' objection arising from ownership of the loan by Freddie Mac, even if proven, is yet immaterial.

As a final comment on this special defense, this court notes that the practical result of eliminating it from this case is consistent with the discussion in the J.E. Robert case, at page 325, as to why a plaintiff's standing and status are of concern in a case such as this.   Citing the case of Waterbury Trust Co. v. Weisman, 94 Conn. 210 (1919), the Court identifies the harm that may arise from ignoring these distinctions to be that while one party is collecting money from debtors, another may be pursuing them into foreclosure, thereby costing the mortgagors double payments or depriving the true owner of the debt of its entitlement to payment.   That mischief is not even remotely suggested here.   All the documents submitted by defendants in objection to this motion indicate that they have been dealing directly with CitiMortgage over the course of the last several years, including by making payments to plaintiff until the payments ceased.   Conversely, they have provided no information indicating that they have ever dealt directly with Freddie Mac, or any other entity but plaintiff with respect to this loan.   A different result might be appropriate if they had evidence of payment to Freddie Mac, but that is a case for another day.

B. Second Special Defense—Violation of Bankruptcy Discharge

The second special defense—”Citimortgage violated a Bankruptcy Discharge by reporting inaccurate information to credit boroughs (sic)”—is devoid of a factual basis.   The only dimension defendants give to it is contained in paragraph 2 of their January 14 objection, where they claim that plaintiff reported their payment history and added derogatory comments in violation of the terms of their discharge.   As proof, they attach as Exhibit C what purports to be a copy of an Experian credit report dated August 20, 2012.   It contains no derogatory comments.   Its inclusion of their payment history appears accurate when measured against other documents they have supplied.   Moreover, even assuming that their allegations are fact-based, they supply no authority, and the court is unaware of any, that a bankruptcy creditor's violation of a hypothetical bankruptcy rule insulates the affected bankruptcy debtor from a state court foreclosure action.   If bankruptcy rules have been violated, defendants ought to pursue any remedies available to them in bankruptcy court.

C. Third Special Defense—Violation of TILA/RESPA

The third special defense in its entirety states “Citimortgage defrauded us & violated our rights under TILA/RESPA.”   Presumably, these acronyms denote the Truth in Lending Act and the Real Estate Settlement Procedures Act, both aspects of federal law.   The only factual basis claimed for this assertion is the inclusion, as an Exhibit B to their January 2014 objection, of about ten pages of documents apparently prepared in connection with a 2011 modification agreement between the parties.   The court is left to guess how anything therein “defrauded” defendants or “violated [their] rights” under either statute.   This special defense is inadequately pled and supported, and is but “a bald statement that an issue of fact does exist” without an iota of support for that assertion.

D. Fourth Special Defense—Payment

Defendants claim payment of the loan, and supply by affidavit proof that they made payments through May 28, 2011 (although plaintiff has credited them with payments through September 1, 2011).   They show no proof of any payment thereafter.   Plaintiff commenced this action with a return date of May 8, 2012.   Defendants' claim of payment as a special defense is frivolous.

E. Fifth Special Defense—Bad Faith Mediation

The fifth special defense claims that “Citimortgage acted in bad faith before & during mediation.”   They attack the accuracy of plaintiff's “Affidavit of Federal Loss Mitigation,” on form JD–CL–114.   Their attack is completely without specificity, merely asserting that they believe plaintiff's statements to be false.   In Chadha v. Charlotte Hungerford Hospital, 97 Conn.App. 527 (2006), and Mara v. Otto, 127 Conn.App. 404 (2011), parties claiming that their opponents had acted with malice lost appeals challenging trial courts' summary judgments when they had failed to aver facts sufficient to rebut their adversaries' denial of that allegation.   Bad faith has a kinship with malice.   For defendants to defeat the motion before this court on that basis, they, too, must adduce some evidence greater than the unsubstantiated broadside against plaintiff that they have fired off here.

F. Sixth Special Defense—Withholding of Insurance Proceeds

“Citimortgage has withheld insurance proceeds & has us living in a house that is in disrepair.   The original note has guidelines in which to follow (sic) & Citimortgage has ignored them,” reads the sixth special defense.   One may glean from the content of their objection that at some point there was damage to the mortgagors' home from some undisclosed cause.   Insurance proceeds were issued to cover that damage, and, as is the custom, were held in escrow by the mortgagee pending repairs to the premises.   By inference, it appears that the parties dispute whether a disbursement of about $2,600 should have been paid out of the escrow to defendants.   Defendants also argue that the $2,600 ought to have been used to pay down principal and interest and avoid this foreclosure.

Whether or not this $2,600 should have been previously paid to defendants is not a material circumstance impeding plaintiff's election of foreclosure for non-payment of the mortgage.   Similarly, a mortgagor may not fail to pay monthly installments due and then insist that an account holding funds escrowed for another purpose must first be depleted as a condition precedent to foreclosure.³  At the time of the hearing on the form and other terms of a final judgment, this court must make a finding as to the amount owed to plaintiff, taking into account all credits available in the form of funds escrowed for this or any other purpose.   Defendants may attend that hearing and be heard on the accuracy of plaintiff's affidavit of debt.   That is the occasion on which the merits of this argument may be determined.

G. Seventh Special Defense—Availability of HAMP Modification

Lastly, defendants' seventh special defense asserts “We should be eligible for a HAMP trial modification.”   This assertion is buttressed by an amalgam of the same arguments made above in support of one or another of the previous special defenses.

“HAMP” is an acronym for the Home Affordable Modification Program, a creation of federal statute conceived within the Emergency Economic Stabilization Act of 2008, and amended by the American Recovery and Reinvestment Act of 2009.   These statutes and the corresponding regulations set forth procedures and substantive provisions which even in the vernacular editions which the administration has published to enlighten the public run to hundreds of pages.   The conclusory assertion that “we should be eligible” for the benefits of this program suffers from the same deficiency as do the second, third, fourth, and fifth special defenses set forth by defendants, that is, an utter absence of factual basis.

IV. Plaintiff's Case in Chief—Second Count (Reformation of Instrument)

The second count seeks a correction in the mortgage, merely to correct a scrivener's error by which “359” Squaw Hollow Road was expressed as “5” Squaw Hollow Road. The May 30 answer merely states that “plaintiff is left to its proof” on this point.   Defendants also state in their earlier versions of their special defenses that “Citimortgage states that we are unwilling and unable to join them in rectifying this mistake.   This could be further from the truth ⁴ as we can and will show the court.”   To date no further effort has been made to show the court anything on this subject, but the court does note that all documents which defendants have filed here, excepting those which are the target of this reformation count, bear the address of 359 Squaw Hollow Road.

It is unclear whether the plaintiff seeks a summary judgment on this count.   Plaintiff's motion itself, and the introduction to its memorandum of law, both speak of the complaint as a singular item without mentioning that it has two counts.   Defendants seem to have no real objection to this reformation being ordered.   On the record to this point, the court discerns no reason why a judgment for plaintiff should not enter on this second count regardless of what happens on the first.

The court will defer a ruling on the second count until the time of a final hearing on the foreclosure question.   At that time, if the parties cannot stipulate to the result on this count, plaintiff should be prepared to offer some evidence in support of its allegation, and defendants should be prepared to offer contradictory evidence if they claim any such evidence exists.

V. Conclusion and Orders

The court concludes that the plaintiff has set forth a sufficient basis upon which to conclude that the defendants are liable to it upon the promissory note described above.   The motion for summary judgment as to liability is granted.

A hearing will be held on the form and terms of a foreclosure judgment upon plaintiff's filing of an appropriate motion.

Boland, J.

FOOTNOTES

FN1. Although JPMorgan Chase Bank, N.A., is a named and appearing defendant in this case, the instant motion and all filings associated with it address the relationship between plaintiff and the two individuals named as defendants, Frederick Nichlen, a/k/a Frederick A. Nichlen, and Mai Vang, a/k/a Mai V. Nichlen.   References in this memorandum to “defendants” are to these individuals only..  FN1. Although JPMorgan Chase Bank, N.A., is a named and appearing defendant in this case, the instant motion and all filings associated with it address the relationship between plaintiff and the two individuals named as defendants, Frederick Nichlen, a/k/a Frederick A. Nichlen, and Mai Vang, a/k/a Mai V. Nichlen.   References in this memorandum to “defendants” are to these individuals only.

FN2. http://www.freddiemac.com/homeownership/mortgage-help/.  FN2. http://www.freddiemac.com/homeownership/mortgage-help/

FN3. From other documents it is evident that defendants' monthly payment obligation was at least $900.   Their last payment to plaintiff was posted as of September of 2011, and the complaint in this action was not filed until May of 2012.   Assuming, arguendo, that defendants' principle is correct, their $2,600 would have been fully paid out by December of 2011 and have had no impact upon the commencement of this suit more than five months later..  FN3. From other documents it is evident that defendants' monthly payment obligation was at least $900.   Their last payment to plaintiff was posted as of September of 2011, and the complaint in this action was not filed until May of 2012.   Assuming, arguendo, that defendants' principle is correct, their $2,600 would have been fully paid out by December of 2011 and have had no impact upon the commencement of this suit more than five months later.

FN4. Meaning “this could not be further from the truth”?.  FN4. Meaning “this could not be further from the truth”?

Boland, John D., J.