Opinion
No. CV02-0175061
July 20, 2006
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT #120
FACTS
On November 14, 2002, the plaintiff, DH Platt, LLC, filed a complaint against the defendants Frank Mazzalupo and 1365 Whittemore Associates, LLC. The plaintiff alleges the following relevant facts in the complaint. On May 1, 1998, the defendants owed $104,000 pursuant to two promissory notes payable to DH Platt, LLC. On April 8, 1999, 1365 Whittemore Associates, LLC (Whittemore), to secure the notes, provided a mortgage deed to DH Platt, LLC, describing real property located in Middlebury and known as 1365 Whittemore Road. Whittemore is the owner of the property and Mazzalupo is Whittemore's managing member. The mortgage was held by Joel M. Jolles, Esq., as escrow agent and was never recorded in the Middlebury land records.
The plaintiff further alleges that it is now the holder of the mortgage and notes in question. The mortgage and notes are now in default by way of nonpayment of principal and interest due on June 1, 1998, as well as all installments due since that date. The plaintiff has exercised its option to declare the entire balance of the note due and payable. The plaintiff seeks a judgment of strict foreclosure of the mortgage, a deficiency judgment against the defendants, immediate possession of the premises, appointment of a receiver to collect rents and profits, other equitable relief and damages.
On November 6, 2002, the plaintiff recorded a notice of lis pendens in the Middlebury land records, volume 184; page 192 and 193. On July 3, 2003, the defendants filed an answer and special defenses in response to the plaintiff's complaint. Specifically, the defendant asserts the following special defenses: (1) Whittemore never executed promissory notes payable to the order of the plaintiff, (2) the plaintiff is estopped from pursuing an action against Whittemore because it failed to provide certain personal property to the defendant, (3) the plaintiff failed to meet a condition precedent to the enforcement of the note and mortgage by failing to convey certain personal property in accordance with a written agreement between the parties, (4) the plaintiff is precluded from pursuing any remedies set forth in the note or mortgage deed because it breached an escrow agreement, (5) the plaintiff is barred from enforcing the note or mortgage deed based upon the doctrine of unclean hands, (6) the plaintiff failed to provide consideration to Whittemore in connection with the guaranty and mortgage deed.
On January 24, 2005, the defendants filed a motion for summary judgment on the grounds that no genuine triable issue of material fact exists and that the plaintiff is entitled to summary judgment as a matter of law. The defendants filed a memorandum of law in support of the motion and attached a sworn affidavit of Frank Mazzalupo, a copy of the plaintiff's answers to the defendants' request for admissions as well as copies of several portions of the plaintiff's deposition.
On January 17, 2006, the plaintiff filed a memorandum in opposition to the motion. The plaintiff attached the following in support of the memorandum: (1) a copy of a sworn affidavit from David Platt, (2) a copy of a promissory note from Mazzalupo to the plaintiff, (3) a copy of a lease agreement between the plaintiff and Connecticut Architectural Millwork, Inc. (CAM), (4) a copy of an option agreement between the plaintiff and CAM, (5) a copy of an escrow agreement letter, (6) a copy of a promissory note from Whittemore to DH Platt, LLC, (7) a copy of a deed purporting to transfer real property at 1365 Whittemore Street, Middlebury, Connecticut, from DH Platt, LLC to Whittemore, (8) a copy of an unsigned mortgage deed from Whittemore to DH Platt, LLC, (9) a copy of a guaranty from Mazzalupo to DH Platt, LLC, (10) a copy of an escrow agreement providing that Joel M. Jolles would hold, as escrow agent, and not record on the Middlebury land records, the guaranty and mortgage deed, (11) a copy of letter from Joel M. Jolles, attorney at law to Mark J. Sciota, Esq., (12) a copy of a letter from Joel N. Jolles, attorney at law, to Elliot, Stanek, Mazzaccaro Sciota, P.C., (13) a copy of a portion of the plaintiff's deposition, (14) a copy of a portion of Mazzalupo's deposition, (15) a copy of a "UCC-1" form naming Joseph Ambrozaitis, Cabinet Works and Interior Finish, Inc., as debtor, (16) a copy of an information report naming Joseph Ambrozaitis, Cabinet Works and Interior Finish, Inc., as debtor, (17) copies of letters from Tinley, Nastri, Renehan Dost, LLP to Mark J. Sciota, Esq., and Frank Mazzalupo. The motion for summary judgment was argued to the court, at which time this court, sua sponte, raised the issue of subject matter jurisdiction with regard to a foreclosure action on an unrecorded mortgage. The court provided the parties an opportunity to file memoranda addressing the issue which supplemental memoranda have been received by the court and additional oral argument heard on the issue.
DISCUSSION
"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 . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Larobina v. McDonald, 274 Conn. 394, 399, 876 A.2d 522 (2005).
"In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). "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 . . . 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]." (Internal quotation marks omitted.) Martel v. Metropolitan District Commission, 275 Conn. 38, 46-47, 881 A.2d 194 (2005).
As a threshold matter and in response to the court's inquiry in the present case, the parties addressed, by way of memoranda, the issue of subject matter jurisdiction with regard to a foreclosure action on an unrecorded mortgage. The defendants argue that the unrecorded mortgage cannot be foreclosed based upon two reasons. First, they argue that pursuant to General Statutes § 47-10, an unrecorded mortgage is ineffective. Second, they contend that the plaintiff is not the mortgage holder. The defendants assert that because the mortgage is held in escrow it was never delivered to the plaintiff, thus the plaintiff never became the mortgage holder and, therefore, is precluded from foreclosing.
General Statutes § 47-10 states in relevant part: "(a) No conveyance shall be effectual to hold any land against any other person by the grantor and his heirs, unless recorded on the records of the town in which the land lies."
The plaintiff counters that the Superior Court has jurisdiction to hear and decide this foreclosure action. It asserts that recording a mortgage is not a prerequisite of the court's subject matter jurisdiction. It further contends that as long as the property in question is in Connecticut and the plaintiff has standing to bring the action, the court has jurisdiction. Additionally, it argues that an unrecorded mortgage is binding on the grantor and that recording the mortgage on the land records merely affects priority. It asserts that foreclosure is a statutory right flowing from the breach of a condition of a valid mortgage. It further argues that as a holder of a promissory note, it has standing to bring a foreclosure action notwithstanding a recorded assignment of the mortgage to the noteholder.
"Subject matter jurisdiction involves the authority of a court to adjudicate the type of controversy presented by the action before it . . . A court does not truly lack subject matter jurisdiction if it has competence to entertain the action before it . . . Once it is determined that a tribunal has authority or competence to decide the class of cases to which the action belongs, the issue of subject matter jurisdiction is resolved in favor of entertaining the action . . . [Finally] . . . in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Citations omitted; internal quotation marks omitted.) Connor v. Statewide Grievance Committee, 260 Conn. 435, 442-43, 797 A.2d 1081 (2002).
"Undoubtedly, the Superior Court has jurisdiction to hear and to decide foreclosure actions . . ." Loricco Towers Condominium Assn. v. Pantani, 90 Conn.App. 43, 48, 876 A.2d 1211, cert. denied, 276 Conn. 925, 888 A.2d 93 (2005); see, e.g., Peppermill Village Condominium Assn., Inc. v. Bozena, Superior Court, judicial district of Middlesex, Docket No. CV 00 093499 (January 30, 2001, Arena, J.) ("There is no question of the jurisdiction of the Superior Court to hear cases involving the foreclosure of mortgages"). Before the court is the plaintiff's action for strict foreclosure. Under the reasoning of Loricco, this court has subject matter jurisdiction to hear and decide this foreclosure action. This court must next decide if summary judgment may be granted in this case.
In their memorandum of law in support of the motion for summary judgment, the defendants argue that the escrow agreement at issue conditioned the ability to enforce the mortgage upon the conveyance of the UCC-1 interest. Additionally, in their supplemental memorandum of law, the defendants argue that the mortgage cannot be foreclosed because the plaintiff is not the mortgage holder. They assert that because the mortgage is currently held in escrow, it was never delivered to the plaintiff and, therefore, the plaintiff is precluded from foreclosing.
The plaintiff counters that the UCC-1 lien ceased to be effective in September 1999. They contend that the failure to renew the lien caused it to be terminated, thus rendering the conveyance of the release a moot issue. The plaintiff further asserts that pursuant to a previous lease agreement, the defendants were required to pay $20,000 as consideration for the UCC-1 release and that the defendants had not made that payment. Further, the plaintiff argues that an unrecorded security interest is valid between the parties to the security interest.
"Mortgages have always been regarded as conveyances of land within the meaning of the recording statute." Family Financial Services, Inc. v. Spencer, 41 Conn.App. 754, 761, 677 A.2d 479 (1996). "Delivery of a deed coupled with intent by the grantor to pass title is necessary for a valid conveyance . . . The delivery of a deed includes not only an act by which the grantor parts with the possession of it, but also a concurring intent on the part of the grantor that it shall vest the title in the grantee." (Citations omitted; internal quotation marks omitted.) McCook v. Coutu, 31 Conn.App. 696, 701, 626 A.2d 1321, cert. denied, 227 Conn. 911, 632 A.2d 692 (1993). "The party who asserts nondelivery has the burden of proving it by clear and convincing evidence." Bell v. Bloom, 146 Conn. 307, 309, 150 A.2d 300 (1959).
General Statutes § 51-81h governs escrow agreements and the effect of a party's attorney, law firm or agent serving as escrow agent in a particular transaction. That section provides: "(a) For the purposes of this section: (1) `Escrow agreement' means a written or oral agreement under which money, documents, instruments or other property is delivered by a party to the agreement or another person to a third party to be held by such third party for delivery or disbursement to another party to the agreement or another person upon the occurrence of an event or condition specified in the agreement. (2) `Escrow holder' means a third party to whom money, documents, instruments or other property is delivered for subsequent delivery or disbursement in accordance with the escrow agreement. (b) No escrow agreement shall be ineffective, invalid or unenforceable because the escrow holder is the attorney-at-law, law firm or agent for one or more parties to the escrow agreement, whether in correction with the matter to which the escrow agreement is related or otherwise."
In Young v. Young, 64 Conn.App. 651, 781 A.2d 342, cert. denied, 258 Conn. 908, 782 A.2d 1255 (2001), aff'd, 78 Conn.App. 394, 827 A.2d 722 (2003), the Appellate Court affirmed the trial court's conclusion that an escrow agreement existed between the parties and that there had been no delivery of a deed. "The [trial] court found that the quitclaim deed did not divest the plaintiff of ownership of the premises because the deed was given to the defendants' attorney to be held in escrow until [the defendant] paid $12,000 to the attorney and that this condition had not been satisfied. The court concluded that the defendants' prior right or privilege of possession had terminated and . . . rendered judgment of possession in favor of the plaintiff." Id., 653. Specifically, regarding the issue of delivery, the Appellate Court concluded that "because [the defendant] failed to satisfy the agreed on conditions for the delivery of the deed to be accomplished, the deed was not delivered to him, and the plaintiff remains the legal owner of the property." Id., 656-57.
In the present case, the defendant Mazzalupo states in his affidavit that on April 8, 1999, the defendant Whittemore purchased the real estate at issue. Mazzalupo further states that three transactions took place between the parties: (1) the real estate purchase, (2) "the securing of the $104,000 note promised in the original escrow agreement of May 13, 1998," and (3) transfer of the UCC-1 interest also promised in the May 13, 1998 agreement. Mazzalupo further asserts that at the time of the real estate closing and as a result of the plaintiff's inability to convey an assignment of the UCC lien, another escrow agreement was executed. Mazzalupo states that this escrow agreement provides that the mortgage at issue would be held in escrow and not recorded until the conveyance of the UCC lien interest took place.
Because the parties have submitted identical copies of the second escrow agreement, dated April 8, 1998, the court finds that no genuine issue exists as to the authenticity of this agreement, although neither copy is authenticated.
As noted previously, the plaintiff submitted David Platt's affidavit as an exhibit along with its memorandum in opposition to the defendants' motion for summary judgment. Platt avers, inter alia, that he is a member of DH Platt, LLC, and that on April 8, 1998, as part of the closing on the real estate at issue, a second escrow agreement was executed because he had not obtained the UCC-1 release. Platt concedes that pursuant to the agreement, the mortgage deed would be held in escrow by "Attorney Jolles" and not recorded on the Middlebury land records unless DH Platt, LLC, conveyed a UCC-1 release to Whittemore. Platt states that the parties intended the mortgage deed to be effective from the date it was executed whether or not the UCC-1 release was delivered but provides no additional evidence in support of this assertion. Platt further states that the intent of the parties was that Mazzalupo was obligated to make payments according to the note and that the note would be secured by the mortgage deed. Platt avers that the intent of the parties in executing the escrow agreement was that the mortgage deed would be held in escrow and not recorded on the land records if Mazzalupo was not provided with a UCC-1 release.
"While summary judgment is ordinarily inappropriate where an individual's intent and state of mind are implicated . . . [t]he summary judgment rule would be rendered sterile . . . if the mere incantation of intent or state of mind would operate as a talisman to defeat an otherwise valid motion . . . Our Supreme Court has held that even with respect to questions of motive, intent and good faith, the party opposing summary judgment must present a factual predicate for his argument in order to raise a genuine issue of fact." (Internal quotation marks omitted.) Jaser v. Fischer, 65 Conn.App. 349, 357, 783 A.2d 28 (2001). A party's "conclusory statements, in the affidavit and elsewhere . . . do not constitute evidence sufficient to establish the existence of disputed material facts." Gupta v. New Britain General Hospital, 239 Conn. 574, 583, 687 A.2d 111 (1996). The plaintiff in the present case has failed to provide a factual predicate to counter the defendants' evidence regarding placement of the mortgage deed in escrow, therefore, Platt's conclusory statements concerning intent are not sufficient to dispute that evidence.
It is noted that this motion for summary judgment addresses only the mortgage deed, and, consequently, the promissory note executed and delivered by Mazzalupo in favor of DH Platt, LLC, does not need to be addressed by the court as to whether it may be enforceable.
The parties agree that the mortgage deed at issue was placed in escrow as a result of the plaintiff's failure to provide Whittemore with a UCC-1 release. Because undisputed evidence demonstrates that the mortgage deed was placed, and remains, in escrow, the mortgage deed was never delivered to the plaintiff. Thus, absent the element of delivery, a valid conveyance of the mortgage deed from the defendants to the plaintiff has never occurred. Accordingly, the court finds that there is no genuine issue of material fact and the defendant is entitled to judgment as a matter of law. The defendant's motion for summary judgment is granted.