Opinion
No. CV07 5004183S
May 16, 2008
MEMORANDUM RE (#118) PLAINTIFF'S MOTION TO STRIKE DEFENDANT'S SPECIAL DEFENSES AND COUNTERCLAIM
This matter concerns the plaintiff's motion to strike the defendants' special defenses and counterclaims alleging their inapplicability in this foreclosure action.
On October 12, 2007, the plaintiff, Frederick Volpe, filed a foreclosure action against the defendants Kerski Associates Limited Partnership (Kerski Associates), Cheryl Nadeau, Karen Keller, and Frank Kerski. On January 30, 2008, the defendants filed an answer to the complaint, along with special defenses and counterclaims. In support of their special defenses and counterclaims, the defendants alleged the following facts: In May of 2005, the plaintiff, or an entity under his control, acted as a real estate agent for Kerski Associates and helped execute a Purchase and Sales Agreement for the subject property between Kerski Associates and Country Club of Connecticut, LLC (Country Club). This agreement provided a brokers commission for the Frederick Corporation and/or F.J. Volpe Realty, entities controlled by the plaintiff. While this sale was pending the plaintiff purchased the first mortgage on the subject property. Upon purchasing the mortgage, the plaintiff commenced negotiating the sale of the contractual rights to the subject property held by Country Club to an entity known as SCTNT. As part of this negotiation, the plaintiff agreed to forebear foreclosing on the subject property. Kerski Associates was not a party to this agreement. When the sale of the subject property did not occur, the plaintiff recommended transferring the property to a limited partnership consisting of Kerski Associates, Country Club, SCTNT and the plaintiff. The defendants claim that these facts support five special defenses: breach of fiduciary duty, equitable estoppel, waiver, violation of General Statutes § 42-110a, the Connecticut Uniform Trade Practices Act (CUTPA), and unclean hands respectively. The defendants also assert that these facts support counterclaims of breach of fiduciary duty and violation of CUTPA.
The other defendants in this case hold mortgages, liens or attachments against the subject property. References to "the defendants" refer only to the defendants subject to the note held by the plaintiff.
On March 18, 2008, the plaintiff filed a motion to strike (with a supporting memorandum), the defendant's special defenses and counterclaims on the grounds that the defendant's special defenses and counterclaims were legally insufficient. Additionally, claiming the special defenses or counterclaims were not valid in this foreclosure action because they do not relate to the making, validity or enforcement of the note and mortgage. On April 2, 2008, the defendants filed a memorandum in opposition regarding their first, second, fourth and fifth special defenses. The defendants did not respond to the plaintiff's motion to strike the third special defense and the counterclaims.
DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "[A] plaintiff can [move to strike] a special defense or counterclaim." Nowak v. Nowak, 175 Conn. 112, 116, 394 A.2d 716 (1978). "It is fundamental that in determining the sufficiency of a complaint challenged by a [party's] motion to strike, all well-pleaded facts and those necessarily implied from the allegations are taken as admitted . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006).
I.
As mentioned earlier, the defendants did not respond to the plaintiff's arguments regarding the third special defense and the counterclaims in their memorandum in opposition. "Prior to the amendment of . . . Practice Book § [10-42 in 1989], a party who failed to timely file a memorandum of law in opposition to a motion to strike was deemed to have consented to the granting of the motion . . . With the deletion of the foregoing provision from Section [10-42], the failure to timely file an opposing memorandum will not necessarily be fatal and the court may therefore address the merits of the motion. However, despite the amendment to . . . Practice Book § [10-42], the filing of a memorandum in opposition to a motion to strike is mandatory and the failure to file such may still serve as a ground for granting a motion to strike." Consiglio v. Street, Superior Court, judicial district of New Haven, Docket No. CV 06 5001967 (April 11, 2008, Bellis, J.). The Consiglio case also points out that although there is a split of authority as to whether failure to file a memorandum in opposition necessitates the granting of a motion to strike, "[a] majority of the trial courts have held that the court has discretion to consider the motion to strike on its merits." Id. With that said, in cases where the party has filed a memorandum in opposition that responds to some issues in a motion to strike, but not others, the court has been inclined to strike those issues not addressed. See Milltex Properties v. Johnson, Superior Court, judicial district of New London, Docket No. 565866 (March 15, 2004, Hurley, J.T.R.) ( 36 Conn. L. Rptr. 780, 782) (Striking count three of the plaintiff's complaint because plaintiff failed to respond to defendant's arguments regarding the third count when responding to defendant's motion to strike); Wells v. Plainfield, Superior Court, judicial district of Windham, Docket No. CV 02 0068211 (January 20, 2004, Foley, J.) ("[t]he court . . . in the exercise of its discretion, will limit its discussion to those counts that the plaintiff has contested and grants the motion to strike as to the other . . . counts").
In this case, the defendants have failed to respond to the plaintiff's motion to strike the third special defense alleging waiver, and the motion to strike the counterclaims alleging breach of fiduciary duty and violation of CUTPA. The plaintiff's motion to strike the third special defense and the counterclaims is granted due to the defendants having effectively abandoned the issues by not addressing to them in their memorandum in opposition.
II.
Although the plaintiff challenges the legal sufficiency of each special defense, the plaintiff's primary argument is that the special defenses do not relate to the making, validity or enforcement of the note or mortgage. In response, the defendants contend that the equitable nature of a foreclosure action allows the court to consider the defenses they have pled.
"Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction . . . or, if there had never been a valid lien . . . The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action . . . A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both . . ." (Emphasis added; internal quotation marks omitted.) Chase Manhattan Mortgage Corp. v. Machado, 83 Conn.App. 183, 187-88, 850 A.2d 260, aff'd, 92 Conn.App. 904, 884 A.2d 22 (2004). "An often cited explanation of the `making, validity or enforcement' limitation is as follows: While courts have recognized equitable defenses in foreclosure actions, they have generally only been considered proper when they attack the making, validity or enforcement of the lien, rather than some act or procedure of the lienholder . . . The rationale behind this is that counterclaims and special defenses which are not limited to the making, validity or enforcement of the note or mortgage fail to assert any connection with the subject matter of the foreclosure action and as such do not arise out of the same transaction as the foreclosure action. Moreover, courts have held that defenses to foreclosure are recognized when they attack the note itself rather than some behavior of the [mortgagee] . . ." (Emphasis in original; internal quotation marks omitted.) Liberty Bank v. New London Limited Partnership, Superior Court, judicial district of New London, Docket No. 4005236 (May 1, 2007, Devine, J.) ( 43 Conn. L. Rptr. 326, 332 n. 2).
Some Superior Court decisions have held "that defenses dealing with the conduct of the lender after execution of the mortgage may not be asserted in a foreclosure action as a defense, and such assertions do not deal with the making, validity or enforcement of the note . . . Where the defendant's special defenses attack the acts of the plaintiff during the course of their relationship . . . [t]hese are improper special defenses to a foreclosure action." (Citation omitted; internal quotation marks omitted.) Ocwen Federal Bank FSB v. Weinberg, Superior Court, judicial district of New London, Docket No. 547629 (August 11, 1999, Mihalakos, J.); see also Dime Savings Bank of New York, FSB v. Furey, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 94 0047557 (April 1, 1996, Curran, J.). Other courts have not taken such a limited view. "[N]otwithstanding the language used by some Superior Court decisions, a court may consider the mortgagee's conduct throughout the course of the parties' relationship. The basis for this conclusion is three-fold. First, due consideration must be given to the broad equitable powers of the trial court . . . Second, by definition, some recognized special defenses necessarily involve post-execution behavior of the mortgagee. Examples include abandonment of security . . . and laches . . . Third, our Supreme Court and Appellate Court have clearly taken into consideration post-execution conduct of the parties when evaluating defenses to a foreclosure action." (Citations omitted.) Liberty Bank v. New London Limited Partnership, supra, 43 Conn. L. Rptr. 328. "Simply stated, allowing a defendant to craft a defense that is based on facts associated with the mortgagee's post-execution behavior is not inimical to the requirement that a special defense in a foreclosure action relate to the `making, validity or enforcement' of the note or mortgage. Such behavior of the mortgagee throughout the course of the relationship may be directly related to the `enforcement' of the note or mortgage." Id.
Courts have routinely applied these principles when considering each of the special defenses alleged by the defendants. Whether it be breach of fiduciary duty, see Southbridge Associates, LLC v. Carofalo, 53 Conn.App. 11, 19, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999) (holding that "the trial court properly concluded that even if a defense of a fiduciary relationship did exist, summary judgment was proper because the defense did not relate to the making, validity or enforcement of the notes and mortgages"); equitable estoppel, see Liberty Bank v. New London Limited Partnership, supra, 43 Conn. L. Rptr. 328-29 (holding that special defense of equitable estoppel was valid because defendant defaulted relying on plaintiff's prior continuous acceptance of late payment); a violation of CUTPA, see Connecticut Bank and Trust Co. v. Katske, 40 Conn.Sup. 560, 566-67, 535 A.2d 836 (1986) (holding that the alleged violation of CUTPA did not grant defendants relief from foreclosure because the alleged violations are not related to the loan itself); or the doctrine of unclean hands, see Thompson v. Orcutt, 257 Conn. 301, 314, 777 A.d 670 (2001) (holding that doctrine of unclean hands applies to the foreclosure action because "[t]he plaintiff perpetuated the fraud in the bankruptcy court in order to retain title to the . . . mortgage; he would have had no cause to foreclose on the . . . mortgage without the fraud"); courts have consistently held that these special defenses must relate to the making, validity or enforcement of the note or mortgage in order to be valid special defense to a foreclosure.
The facts on which all of the defendants' special defenses rely do not relate to the making, validity or enforcement of the mortgage. All of the alleged actions taken by the plaintiff occurred some fifteen years after the mortgage was created. The defendants do allege that the mortgage assignment occurred while the plaintiff was still acting as a real estate broker for the defendants, but fail to make any argument, either factual or legal, that this act alone makes the assignment invalid or led to their default. Although the facts alleged by the defendants suggest questionable action on the part of the plaintiff as a real estate broker, the defendants have failed to relate this to the matter at hand, the foreclosure of the note and mortgage. As a result, these facts cannot form the basis of a valid special defense of a foreclosure action.
Consequently, the plaintiff's motion to strike the defendants' first, second, fourth and fifth special defenses is also granted.