Opinion
No. CV 09 5012519
December 21, 2009
MEMORANDUM OF DECISION RE MOTION TO STRIKE SPECIAL DEFENSES #134
The plaintiff, Sovereign Bank (hereinafter "plaintiff"), moves, pursuant to Connecticut Practice Book §§ 10-39 to 10-45, to strike the special defenses of the defendant, Eric V. Litsky d/b/a Litsky Associates (hereinafter "defendant"). The defendant filed an answer and three special defenses dated August 17, 2009. The plaintiff claims that each of the three special defenses does not set forth facts sufficient to support the alleged offense. The defendant contends when the allegations of each special defense are viewed in light most favorable to the defendant, the defendant has properly pled his special defenses.
BACKGROUND
The plaintiff commenced the above-captioned action on or about June 24, 2009, seeking to foreclose on a note and open-end mortgage in the original principal amount of $17,400,000, executed and granted by 2nd Family, LLC (hereinafter "2nd Family"). The note and mortgage were executed on or about December 28, 2004, and were subsequently modified thereafter until the principal amount of the loan reached $22,704,858.
The mortgage granted to secure the note encumbered certain real property owned by 2nd Family located in Montville, Connecticut, on which is located a shopping plaza (hereinafter "the property"). The original open-end mortgage in favor of the plaintiff was recorded in Volume 456 at Page 81 of the Montville land records. The defendant was named in the present foreclosure lawsuit because of various interests that the defendant has recorded on the Montville land records, to wit:
a. a Certificate of claim for Broker's Lien in the amount of $428,375, dated June 12, 2007, and recorded in Volume 510 at Page 1090 of the Montville land records;
b. a Certificate of claim for Broker's Lien in the amount of $428,375, dated June 15, 2007, and recorded in Volume 511 at Page 20 of the Montville land records;
c. a Certificate of claim for Broker's Lien in the amount of $89,000, dated December 21, 2007, and recorded in Volume 519 at Page 1056 of the Montville land records;
d. a Notice of Lis Pendens, dated June 6, 2008, and recorded in Volume 526 at Page 531 of the Montville land records.
All of the foregoing interests of the defendant are junior to the open-end mortgage interest of the plaintiff.
The defendant has now filed three special defenses in response to the plaintiff's foreclosure action. The first special defense alleges that the plaintiff knew that the defendant's broker services increased or added to the value of the property, and thus the plaintiff's mortgage should be equitably subrogated to the defendant's liens. The second special defense alleges that the plaintiff, in advancing funds to the defendant under the open-end mortgage, "allocated portions of the advances" to pay the defendant, and thus the plaintiff's mortgage should be equitably subrogated to the defendant's liens. The third special defense contains no facts, but asserts that the plaintiff's claims are barred under the doctrine of unclean hands. The plaintiff has moved to strike all three of these special defenses.
APPLICABLE LAW
"A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 2006 Conn. 766, 771, 802 A.2d 44 (2002). "[F]or the purpose of a motion to strike, the moving party admits all facts well pleaded." RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 383 n. 2, 650 A.2d 153 (1994); see also CT Page 1408 Ferryman v. Groton, 212 Conn. 138, 142, 561 A.2d 432 (1989). Under our rules of practice, a motion to strike is the appropriate vehicle for challenging the legal sufficiency of a special defense. See Practice Book § 10-39(a); see also Connecticut National Bank v. Voog, 233 Conn. 352, 354-55, 659 A.2d 172 (1995); Nowak v. Nowak, 175 Conn. 112, 116, 394 A.2d 716 (1978). Furthermore, "[a] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).
ANALYSIS
The plaintiff contends that the plaintiff's first and second special defenses should be stricken because the defendant has failed to allege sufficient facts to support any claim of equitable subrogation against the plaintiff. The defendant alleges, in his first two special defenses that (1) the plaintiff was aware that the defendant was providing broker services to the property; (2) the defendant's services added value to the property; and (3) the plaintiff allocated or intended that some of the funds advanced to 2nd Family under the terms of the open-end mortgage would be used to pay the plaintiff.
The defendant, at the short calendar hearing on November 30, 2009, argued that the plaintiff engaged in collusion, bad faith and/or other misconduct to the detriment of the plaintiff. The first and second special defense, as pled, however, makes no such allegations. These two special defenses also fail to allege any express agreement between the plaintiff and the defendant to advance money for the direct benefit of the defendant.
A senior lien-holder has no duty beyond a duty to act in "good" faith. The Connecticut Supreme Court rejected the claim that the senior lien-holder had any duty to ensure that a junior lien-holder was paid from loan advances made from a construction mortgage to a junior lien-holder. Connecticut Bank and Trust Co. v. Carriage Lane Assoc., 219 Conn. 772, 781-83 (1991). While that case involved a motion for summary judgment and not a motion to strike, its logic applies to the present controversy. That court went on to state, "In the absence of collusion, or an express agreement, [a senior mortgagee] is under an obligation to see that moneys it advances are employed by the borrower in the manner contemplated by the [junior] mortgagee." First Connecticut Small Business Investment Co. v. Arba, Inc. et al., 17 Conn. 168, 177 (1976).
The defendant has failed to allege fraud, collusion or any legal misconduct in its first and second defenses. Furthermore, the doctrine of equitable subrogation applies in the case where a "lender who pays off a prior lien through a refinance stands in the shoes of the prior lender." Connecticut Foreclosures Sec. 28.05 F, Page 614 (Caron Milne, 4th Edition 2004). Rosenblit, Trustee v. Williams, 57 Conn.App. 788 (2000). "Subrogation is a doctrine which equity borrowed from the civil law and administers so as to secure justice without regard to form or mere technicality. Story's Eq. Juris. (Vol. 2, 14th Ed.) § 706, says: It is broad enough to include every instance in which one party pays a debt for which another is primarily answerable and which, in equity and good conscience, should have been discharged by the latter. It is a legal fiction through which one who, not as a volunteer or in his own wrong and where there are no outstanding and superior equities, pays the debt of another, is substituted to all the rights and remedies of the other, and the debt is treated in equity as still existing for his benefit." (Internal quotation marks omitted.) Home Owners' Loan Corp. v. Sears, Roebuck supra, 238.
The defendant has failed to allege any debt paid for which another party is primarily responsible and should have been discharged by the latter. Based upon the above analysis, the defendant has failed to allege specific facts in special defense first and second upon where relief sought can be granted on the basis of equitable subrogation.
As to the third special defense asserting unclean hands, the defendant fails to allege any facts whatsoever in support of a special defense of unclean hands. This defense should also be stricken.
The defense of unclean hands can be found by the court without the express pleading as a special defense when equity requires it. Connecticut Foreclosures, Sec. 28.05 A (Caron Milne, 2004), McKeever v. Fiore, CT Page 1410 78 Conn.App. 783 (2003).
ORDER
The plaintiff's motion to strike the defendant's first, second and third special defenses are hereby granted.