GCCF 2007 GG11 LLC v. 2187 SPE LLC (2014)

MEMORANDUM OF DECISION re MOTION FOR SUMMARY JUDGMENT (# 117.00)

Nature of the Proceeding

This is an action arising from a $30 million financing agreement relating to commercial property in Stamford, Connecticut.   The named plaintiff, claiming to be successor in interest to the original lender for purposes of this litigation, commenced this matter in 2012, asserting three causes of action.   The first count seeks a foreclosure of the mortgage loan made to the defendant;  the second count asserts a breach of contract with respect to obligations associated with the loan transaction;  and the third count is based on guarantee obligations of other defendants.

A few months after the action was commenced, a motion was filed seeking to substitute BDCM Real Estate Holding, LLC as plaintiff.   That motion was granted (# 107.87), and the substitute plaintiff subsequently moved for summary judgment (# 117.00).   After the motion was argued, the court noted that no substitute complaint has been filed indicating the claimed interests of the substitute plaintiff and ordered that plaintiff file a suitably amended complaint (# 117.86).   The order also gave opposing counsel a brief opportunity to address any new issues that might be raised by virtue of the complaint.   Defendants availed themselves of the opportunity to do so, and plaintiff filed a response.¹

Legal Standards

The law governing summary judgment and the accompanying standard of review are well settled.   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 ․

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 ․

“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.

[T]ypically [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 ․ 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 ․

Although the court must view the inferences to be drawn from the facts in the light most favorable to the party opposing the motion ․ a party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment.   Only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment.   Requiring the nonmovant to produce such evidence does not shift the burden of proof.   Rather, it ensures that the nonmovant has not raised a specious issue for the sole purpose of forcing the case to trial. ( [i]ndeed, the whole summary judgment procedure would be defeated if, without any showing of evidence, a case could be forced to trial by a mere assertion that an issue exists).  Walker v. Dept. of Children & Families, 146 Conn.App. 863, 869–71 (2013) (citations and internal quotation marks, omitted;  ellipses as in cited case).

(See, also, Citimortgage, Inc. v. Coolbeth, 147 Conn.App. 183 (2013), discussing summary judgment in the context of a foreclosure action.)

Discussion

As a preliminary matter, defendant has raised the issue of whether plaintiff (and its predecessors) had any rights under the note, claiming, especially in the supplemental brief dated November 21, 2013 (# 128.00), that there was no evidence that the actual debt (as opposed to the mortgage, UCC filings, and assignment of leases and rents) had been assigned to the successive plaintiffs.   Plaintiff has addressed this issue—effectively implicating standing—by way of # 131.00, to which is attached documentation specifically referencing the assignment of the debt/note to the various plaintiffs.   To the extent standing has been raised as an issue, the current plaintiff has established that it has standing to pursue the claims asserted in the motion for summary judgment.

Some of the other objections raised by defendant can be traced to the “style” utilized by plaintiff and its predecessors, in drafting the complaint.   Although ¶¶ 1–55, which precede the first count, are incorporated into all three counts, those paragraphs do not represent a common core of facts applicable to each of the counts.   As a result, the first count, which sounds in foreclosure based on the failure to pay the note, also includes allegations relating to such matters as environmental remediation, seemingly relevant to the second count but not the first count;  see, e.g. ¶¶ 46 and 51.   In response to the motion for summary judgment, although nominally based only on the first count, defendant has addressed the issue of environmental remediation, and whether plaintiff has satisfied the summary judgment standard with respect to such remediation claims.

Despite the inclusion of such extraneous matters, the court is focusing solely on the note-based allegations and the sufficiency of the submission to satisfy the burden associated with a limited claim of that nature.

As alluded to earlier, any possible issues relating to plaintiff's status as possessor of the debt was laid to rest by the attachments to the affidavit recently submitted (# 131.00)—the series of allonges reflect the transfer/assignment of the note by way of endorsement, ultimately leading to the current plaintiff.  (Paragraph 16 of the original affidavit submitted in support of the motion for summary judgment (# 118.00) states that “Plaintiff is the owner and holder of the loan, the loan documents (including, without limitation, the Note and the Mortgage), and the liens on the Property created thereby.”)

Paragraphs 17–20 of the affidavit originally submitted in support of the motion for summary judgment (# 118.00) go on to allege that defendant Antares is in default of payments required, has failed to cure that default, and the note has been accelerated as allowed by the loan documents.  (Copies of appropriate notice documents are attached to the affidavit.)   Defendant has not submitted any affidavit, nor has it challenged the sufficiency of these allegations and submissions to demonstrate that the predicates for a foreclosure due to default in payments have been satisfied.   Accordingly, the court will focus on the claims and arguments that have been advanced by defendant.   See, Citimortgage, 147 Conn.App. 188.

Section B of defendants' brief focuses on the issue of environmental remediation, which as discussed above, the court is treating as surplusage with respect to the first count.   Section C is a variation on the issue of environmental remediation, focusing less on the first count directly but instead concentrating on the impact that judgment on the first count would have on the claims being asserted in the second and third counts.   Again, the court is not addressing environmental concerns at all such that there is no environmental spillover into the second and third counts;  conversely, to the extent that liability for failure to pay the debt under the first count spills over into the second and/or third counts, that is not a reason to deny summary judgment on the first count.

Section D claims that the allegation seeking monetary relief with respect to the first count is inconsistent with a claim that plaintiff is seeking summary judgment only as to liability.   The very concept of seeking “partial” summary judgment with respect to a claim seeking monetary relief is that there is initially a determination of liability, unliquidated, to be followed by subsequent proceedings in which the amount would be determined.   That is precisely what plaintiff appears to be doing, and that strategy is not an impediment to granting partial summary judgment as to liability.

Section E asserts that the affiant lacks an adequate foundation for testimony relating to information gleaned from business records, and the business records being proffered similarly lack a foundation pursuant to General Statutes § 52–180.   Our Supreme Court repeatedly has stated that the statute should be liberally interpreted and applied, in furtherance of the intended purpose.   Calcano v. Calcano, 257 Conn. 230, 241–42 (2001).

The affidavit initially submitted in support of the motion for summary judgment (# 118.00) incorporates by reference exhibits S and U to the complaint, which documents, in turn, are notices of default and acceleration.   While it might have been “cleaner” for plaintiff to have attached those documents to the affidavit itself, and included in the affidavit the recitations needed to satisfy § 52–180, the court believes that plaintiff has complied, substantially, with the requirement of Practice Book § 17–46 relating to submission of sworn or certified copies of records—by incorporation by reference rather than the intended “physical” attachment to the affidavit.

In Evans Products v. Clinton Building Supply, Inc., 174 Conn. 512, 513–16 (1978), the court discussed the need for an affiant's personal knowledge and familiarity with business records in connection with a motion for summary judgment.   In particular, the court stated that “[t]he better practice is to aver personal knowledge,” 174 Conn. 514.   That is present in the affidavits submitted by plaintiff.

Further, the authenticity of the documents effectively has been admitted in the pleadings.   As noted earlier, plaintiff refers to the documents attached to the various versions of the complaint, and defendants' responses to the relevant paragraphs deny the accuracy of the interpretations and characterizations given to them by plaintiff, but go on further to state that the documents speak for themselves—without ever challenging the authenticity or validity of any of the documents.   See, e.g. ¶¶ 17–29 of most recent answer (# 122.00);  see especially, responses to ¶¶ 47 and 52 (letters notifying defendant Antares of default and acceleration).

“The interpretation of pleadings is always a question of law for the court ․” TD Bank, N.A. v. M.J. Holdings, LLC, 143 Conn.App. 322, 329 (2013) (internal quotation marks, omitted).   Answers are required to be specific, especially with respect to denials, Practice Book §§ 10–46 through 10–48.   Material allegations that are not denied and are not claimed to be matters for which the party lacks sufficient information to form a belief, are deemed admitted, Practice Book § 10–19.   Under the circumstances, defendants' failure to deny or allege insufficient information as to a document being what it is claimed to be (including authenticity), coupled with a “the document speaks for itself” approach to the substance of the document, is an admission of authenticity under the Practice Book rules cited.   An admission in the pleadings obviates the need for the adverse party to proffer any evidence, given the conclusive nature of an admission in the pleadings.  Brye v. State, 147 Conn.App. 173, 177 (2013).

Defendant also relies upon the existence of its special defenses—equitable estoppel and unclean hands.   The claim of equitable estoppel arises from the course of dealing between the parties (predecessors) with respect to a possible restructuring or other negotiated resolution.   Defendant specifically invokes a particular situation in which it claims that it made a proposal to LNR (as servicer) but that LNR failed to respond in a timely manner, resulting in defendant unnecessarily investing resources into the property.   Plaintiff, however, has provided an email indicating a prompt response to the offer identified by defendant—one week later.   See, Exhibits A and B to the Lagan affidavit attached to # 125.00. Defendant has made no effort to suggest that there was no receipt of that response, or that the response did not address, unambiguously, the terms of the proposal.

More to the point, plaintiff points to a “ground rules” type of agreement between the then-existing parties, reflecting that any communications relating to proposals were not to be used for any purpose (other than further discussions), unless and until the parties agreed to all terms of a settlement.   See, Exhibit D to Lagan affidavit attached to # 125.00. Again, defendant has made no effort to suggest that there had not been a prior agreement prohibiting such use of settlement discussions and communications.   Under the circumstances—specific refutation in writing of the one instance invoked by defendant, plus a general prohibition against use of such communications for the purposes proffered—the court finds that there is no material issue of fact in this regard.

The arguments raised by defendant Antares are insufficient to create a material issue of fact with respect to the substitute plaintiff's right to summary judgment on the first count.   Accordingly, the court grants the motion for summary judgment as to liability only;  the actual relief to be granted, whether equitable or legal, is to be determined in future proceedings.

POVODATOR, J.

FOOTNOTES

FN1. The court notes that after all pleadings had been filed, new counsel filed an appearance on behalf of defendants, in lieu of prior counsel..  FN1. The court notes that after all pleadings had been filed, new counsel filed an appearance on behalf of defendants, in lieu of prior counsel.

Povodator, Kenneth B., J.