Opinion
No. X06-CV-99-0168669-S
May 19, 2003
MEMORANDUM OF DECISION REGARDING THE PLAINTIFF'S MOTION FOR JUDGMENT ON THE COUNTERCLAIM (#254.5)
This case is before the court on the plaintiff's motion to enter judgment in its favor on the defendants' counterclaim. The operative counterclaim was filed on April 17, 2002, and is contained within the same document as the defendants' substituted answer and special defenses.
On November 4, 2002, the court severed the actions for trial. The complaint for strict foreclosure was heard courtside on November 12 and 13, 2002, and was adjudicated in favor of the plaintiff by judgment of foreclosure by sale entered November 13, 2002, as modified on November 22, 2003 (##251 and 255).
The court made the following findings from the evidence at trial on the complaint: The allegations contained in paragraph (3) of the complaint regarding the defendants' execution of a mortgage were proven; the allegations contained in paragraph (4) of the complaint relating to the history of assignments and recordings of the mortgage, as well as the plaintiff's status as the owner and holder of the note and mortgage, were proven; the defendants executed a loan adjustment agreement with the Wilshire Credit Corporation (the previous owner of the note and mortgage) which provided, effective October 1, 1998, that the outstanding balance on the mortgage would be in the amount of $125,000, and that the defendants would make monthly payments commencing October 1, 1998, in the amount of $952.30 (Plaintiff's Exhibit 13); the defendants, on October 8, 1998, made their October payment (Defendants' Exhibit C); on October 25, 1998 they made their November payment (Defendants' Exhibit D); on November 30, 1998, they made their December payment (Defendants' Exhibit E), and on January 25, 1999, they made their January 1999 payment (Defendants' Exhibit F); at the defendants' suggestion, Wilshire agreed to escrow the defendants' property taxes beginning in January 1999 (Plaintiff's Exhibit 14); the agreement between Wilshire and the defendants provided that the escrow payment was to be paid in January of 1999, but the defendants neglected to pay it (Plaintiff's Exhibit 15); the defendants, on February 20, 1999, paid their February payment with the escrow monthly portion included (Defendants' Exhibit G); the defendants became delinquent with their payments due in March of 1999 (Plaintiff's Exhibit 16); pursuant to an agreement with Wilshire, the defendants were to cure the delinquency on their mortgage in May of 1999, by paying the March and April installments on May 7, 1999, and the May installment on May 14, 1999; the defendants made the payment for the March and April installments by check dated May 6, 1999 (Defendants' Exhibit I); the defendants neglected to pay the May 1999 installment, which should have been made in the amount of $1,380.04 payable on May 14, 1999; the defendants' payments for October 1998 through April 1999 (Defendants' Exhibits C, D, E, F, G and I) were made from the same People's Bank account and/or numbered consecutively from check numbers 235, 236, 271, 291, 299 and 309 during the period from October 8, 1998 through May 6, 1999; the defendants contended that the May 1998 payment was in the form of a check dated April 22, 1999 from a Fleet account in the amount of $997.64, a check which, on its back, is marked as received by Wilshire but was never negotiated or cashed (Defendants' Exhibit H); the defendants conceded that this check was returned to them in August of 1999; at the time of trial, the defendants maintained that this check (Defendants' Exhibit H), which was never cashed or negotiated, represents their May payment for which they should be given full credit. The court specifically rejected this claim and found that the May payment was never made; in June of 1999, the defendants were notified of the assignment of their note and mortgage to the plaintiff; the defendants made a payment in the proper amount of the monthly installment of $1,380.04, on or about September 26, 1999 (Defendants' Exhibit K); the payment on or about September 26, 1999 was applied by the plaintiff to the May of 1999 payment; on August 22, 1999, the defendants made a payment in the amount of $2,760.08 equivalent to two monthly payments (Defendants' Exhibit J), which the defendants attributed to payment of the July and August 1999 installments; the plaintiff properly applied the August 22, 1999 payment to the installments outstanding for June and July 1999; after the September 26, 1999 payment (Exhibit K), the defendants did not make a payment which was accepted by the plaintiff; the defendants, on September 28, 1999, were sent by certified mail a notice of default notifying them of their default under the note and mortgage (Plaintiff's Exhibit 19).
The court also found that the defendants, on September 28, 1999, were in default for failure to make two monthly payments; the defendants on September 28, 1999, were in default for failure to either pay their property taxes or escrow tax payments with the plaintiff; the defendants never cured the default in the note and mortgage; the defendant Josue Charles, Sr., refused to clear the default, enter into a forbearance agreement, or continue discussions about a resolution under his mistaken belief that: (a) he should be credited for the May payment because of sending the check in April for a reduced amount, which was never cashed by Wilshire; (b) he would somehow be prejudiced by entering into a forbearance agreement which acknowledged that the original promissory note had been in the amount of $127,100; (c) his obligation could not exceed the principal balance remaining on the mortgage; and (d) that he had escrowed sufficient funds to pay the taxes due the City of Bridgeport. The court further found that the plaintiff met all of its notice obligations under the note, mortgage and the law, and, pursuant to its rights under the note and mortgage, properly accelerated the note, which is due in full. The defendants failed to cure the default or pay the note.
On November 22, 2002, the court entered judgment of strict foreclosure, having determined that there was no equity in the property.
The counterclaim in issue is asserted in six counts: (1) fraudulent misrepresentation, (2) negligent misrepresentation, (3) intentional misrepresentation, (4) breach of good faith and fair dealing, fraud, (5) violation of the Fair Debt Collection Practices Act (FDCPA), and (6) violation of the Connecticut Unfair Trade Practices Act (CUTPA). Each count incorporates by reference the first twenty-nine paragraphs of the defendants' first special defense. In those twenty-nine paragraphs, the defendants rehearse their version of the facts underlying this litigation, and more specifically, their special defenses and counterclaim.
The plaintiff moves for judgment in its favor on the counterclaim on the basis of collateral estoppel. The plaintiff argues that the essential allegations for the cause of action of each count of the counterclaim were also the essential allegations of the special defenses, which were negated by the November 22, 2002 judgment of strict foreclosure.
Collateral estoppel, or issue preclusion, is that aspect of res judicata prohibiting the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties upon a different claim. Jackson v. R.G. Whipple, Inc., 225 Conn. 705, 713, 627 A.2d 374 (1993); Scalzo v. Danbury, 224 Conn. 124, 128, 617 A.2d 440 (1992). "For a party to use the doctrine of collateral estoppel with success, three requirements must be met. The issue must have been fully and fairly litigated in the first action, it must have been actually decided, and the decision must have been necessary to the judgment . . . The principles of collateral estoppel always apply where both of the parties in the second action were present in the first action . . ." (Citations omitted; internal quotation marks omitted.) Busconi v. Dighello, 39 Conn. App. 753, 767-68, 668 A.2d 716 (1995).
"Because res judicata, or collateral estoppel, if raised, may be dispositive of a claim, summary judgment [is] the appropriate method for resolving a claim of res judicata . . ." (Citations omitted.) Jackson v. R.G. Whipple, Inc., supra, 225 Conn. 712. The court regards the plaintiff's motion for judgment as, more specifically, a motion for summary judgment. The defendants have objected to the motion.
"[S]ummary 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 party seeking summary judgment has the burden of showing the absence of any genuine issue as to all material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . ." (Citation omitted; internal quotation marks omitted.) DaCruz v. State Farm Fire Casualty Co., 69 Conn. App. 507, 511, 794 A.2d 1117 (2002). "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 . . ." (Citation omitted.) Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). Also see Pelletier v. Sordoni Skanska Construction Co., 262 Conn. 372, 815 A.2d 82 (2003); Amoco Oil Co. v. Liberty Auto Electric Co., 262 Conn. 142, 147-48, 810 A.2d 259 (2002). "The test is whether a party would be entitled to a directed verdict on the same facts." Batick v. Seymour, 186 Conn. 632, 647, 443 A.2d 471 (1982).
Practice Book § 10-10 provides that a defendant may file a counterclaim against a plaintiff on the condition that "each such counterclaim . . . arises out of the transaction or one of the transactions which is the subject of the plaintiff's complaint." Id. "The courts in this state have generally held that where the allegations of a counterclaim in a foreclosure action do not pertain to the making, validity or enforcement of the note and mortgage being foreclosed, they should be stricken." Mountain Ridge Estates, Inc. v. Bank of Boston, Superior Court, judicial district of Hartford/New Britain at Hartford, Docket No. 50663 (Oct. 14, 1992, Aurigemma, J.), relying on Wallingford v. Glen Valley Associates, Inc., 190 Conn. 158, 459 A.2d 525 (1983) (counterclaim for unlawful diversion of waters onto subject property stricken); Connecticut Savings Bank v. Reilly, 12 Conn. Sup. 328 (1944) (counterclaims for abuse of process due to excessive attachment stricken); Citytrust v. Kings Gale Developers, Inc., 2 Conn.L.Rptr. 639 (1990, Lewis, J.) (counterclaim that bank tortiously interfered with a contract to sell mortgaged property stricken); Ostrager v. Hasiuk, 191 Westlaw 86203, J.D. Tolland at Rockville (May 9, 1991, Dunn, J.) (counterclaims for intentional interference with performance of third-party agreement stricken). Accordingly, the court will assume for the purpose of adjudicating this motion that each count of the counterclaim pertains to the making, validity or enforcement of the note and mortgage at issue in the complaint.
In this case, the issues underlying the plaintiff's complaint on the making, validity and enforcement of the note and mortgage necessarily were decided by the court upon the taking of evidence during a two-day trial, from which special findings of fact were issued, and judgment of strict foreclosure was entered. These issues were fully and fairly litigated in the foreclosure proceeding, and the decision on them was necessary to the judgment. In addition, the parties involved in the counterclaim were the same parties involved in the foreclosure action. Therefore collateral estoppel applies. See Busconi v. Dighello, supra, 39 Conn. App. 767-68.
Judgment is entered in favor of the plaintiff and against the defendants on the counterclaim.
ROBERT F. McWEENY, J.