Opinion
FSTCV096001536S
10-11-2016
Wachovia Mortgage, FSB et al. v. Pawel Toczek et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO DISMISS DATED JANUARY 14, 2014 (#150.00)
Hon. Kevin Tierney, Judge
This is a Memorandum of Decision resolving a Motion to Dismiss filed by one of the two individual defendants in a residential foreclosure lawsuit. This Motion to Dismiss alleges that the plaintiff does not have standing to commence and maintain this foreclosure action.
The operative complaint is the original one-count complaint dated June 22, 2009. The plaintiff is seeking to foreclose a $880,000 first mortgage dated May 10, 2007 issued by World Savings Bank, FSB to Pawel Toczek and Aleksandra Toczek. The mortgage that secured the $880,000 loan was duly recorded in the Stamford, Connecticut land records. The complaint alleges that the borrower on the May 10, 2007 promissory note was the defendant, Pawel Toczek, and that the real property was owned by the defendants, Pawel Toczek and Aleksandra Toczek. They both executed the May 10, 2007 mortgage deed that was duly recorded on the Stamford land records. Both Pawel Toczek and Aleksandra Toczek were named as individual defendants in the original writ, summons and complaint, which was returnable to the Superior Court on July 7, 2009. On August 12, 2009 attorney Ridgely Whitmore Brown filed an appearance for Pawel Toczek and Aleksandra Toczek. On December 20, 2012 Aleksandra Toczek filed her self-represented appearance in lieu of the appearance of attorney Ridgely Whitmore Brown. On September 26, 2014 attorney Peter V. Lathouris appeared for the defendant, Aleksandra Toczek whose appearance form noted: " This appearance is in addition to an appearance already on file." Therefore as of September 26, 2014 Aleksandra Toczek had two appearances on her behalf, that of attorney Peter V. Lathouris and her self-represented appearance filed on December 20, 2012. On July 27, 2015 the court granted attorney Peter V. Lathouris' Motion to Withdraw as counsel for Aleksandra Toczek (#174.02). Thereafter Aleksandra Toczek continued to represent herself in a self-represented capacity.
On August 31, 2015 attorney Peter V. Lathouris' appearance on behalf of the defendant, Pawel Toczek, was permitted to be withdrawn (#174.03). Although Pawel Toczek has not filed this instant Motion to Dismiss, he still has a self-represented appearance for himself in this litigation. The Motion to Dismiss dated January 14, 2014, now before this court, was filed only by the self-represented defendant, Aleksandra Toezek.
On February 20, 2015 the Motion to Dismiss (#150.00) was assigned to the undersigned for a hearing to be held in May 2015 (#170.01). Extensive discovery ensued. Discovery orders were entered by Judge Mintz and the undersigned. The court commenced the evidentiary hearing on the Motion to Dismiss (#150.00) on November 19, 2015. The Motion to Dismiss was amended on August 15, 2016 and filed on August 18, 2016 (#241.00) in redacted form. A number of the hearing dates thereafter were devoted to discovery. Valentine v. Valentine, 164 Conn.App. 354, 378, fn. 16, 141 A.3d 884 (2016). The evidentiary hearings on the Motion to Dismiss as amended concluded on August 16, 2016. Oral arguments were presented on August 16, 2016. No post-hearing briefs were ordered. Throughout the hearings held by this court, the defendant, Aleksandra Toczek, represented herself.
" Subject matter jurisdiction involves the authority of the court to adjudicate the type of controversy presented by the action before it . . . and a judgment rendered without subject matter jurisdiction is void . . ." Deutsche Bank National Trust Company v. Bialobrzeski, 123 Conn.App. 791, 798, 3 A.3d 183 (2010). Although the defendant filed her motion to dismiss alleging lack of subject matter jurisdiction, the burden of demonstrating that a party has standing to bring an action and that the court has subject matter jurisdiction is on the plaintiff. Id. 798; Seymour v. Region One Board of Education et al., 274 Conn. 92, 104, 874 A.2d 742, cert. denied, 546 U.S. 1016, 126 S.Ct. 659, 163 L.Ed.2d 526 (2005).
In this case the defendant is alleging that the plaintiff lacks standing therefore the court is deprived of subject matter jurisdiction. Although motions to dismiss alleging personal jurisdiction deficiencies must be raised within a certain time limit from the filing of an appearance by that party, no such time limit exists for a motion to dismiss alleging lack of subject matter jurisdiction. " Because standing implicates the court's subject matter jurisdiction, the issue of standing is not subject to waiver and may be raised at any time." Equity One, Inc. v. Shivers, 310 Conn. 119, 125-26, 74 A.3d 1225 (2013).
" Standing is the legal right to set the judicial process in motion. One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of the action, or a legal or equitable right, title or interest in the subject matter of the controversy . . . Standing is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticeable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented . . . These two objectives are met when a complainant makes a colorable claim of direct injury he has suffered or is likely to suffer, in an individual or representative capacity . . . Standing focuses on whether a party is a proper party to request adjudication of the issues, rather than on the substantive rights of the aggrieved parties." The Investors Mortgage Company, Trustee v. Rodia, 31 Conn.App. 476, 479, 625 A.2d 833 (1993). " Standing does not hinge on whether the plaintiff will ultimately be entitled to relief on the merits of an action, but on whether he is entitled to seek the relief." Cottman Transmission Systems, Inc. v. Hocap Corporation, 71 Conn.App. 632, 638, 803 A.2d 402 (2002).
It is well established that the holder of a note has standing to bring an action for foreclosure. New England Savings Bank v. Bedford Realty Corporation, 238 Conn. 745, 759, 680 A.2d 301 (1996). " A holder of a note is presumed to be the owner of the debt, and unless the presumption is rebutted, may foreclose the mortgage under § 49-17. The possession by the bearer of a note endorsed in blank imports prima facie that he acquired the note in good faith for value and in the course of business, before maturity and without notice of any circumstances impeaching its validity. The production of the note establishes his case prima facie against the makers and he may rest there . . . It is for the defendant to set up and prove the facts which limit or change the plaintiff's rights." Equity One, Inc. v. Shivers, supra, 310 Conn. 135. In addition to establishing standing, there must be evidence as to when the note came into the plaintiff's possession. GMAC Mortgage, LLC. v. Ford, 144 Conn.App. 165, 174, 73 A.3d 742 (2013); Deutsche Bank National Trust Company v. Thompson, 163 Conn.App. 827, 832, 136 A.3d 1277 (2016). As already stated, it is the plaintiff's burden to prove the above elements to satisfy that this court has subject matter jurisdiction over this residential foreclosure action. Id., 836.
On the first day of the evidentiary hearing, November 19, 2015, the plaintiff produced a blue ink version of the Adjustable Rate Mortgage Note, a photocopy of that blue inked Adjustable Rate Mortgage Note, a certified copy of the Open-End Mortgage Deed, and a blue ink version of the Open-End Mortgage Deed. The copies of the Note and Mortgage deed were offered into evidence by the plaintiff. Exhibits 1 and 2. The court, the defendant, Aleksandra Toczek, conducted an examination of each of these four documents. The blue ink Adjustable Rate Mortgage Note and the blue ink Open-End Mortgage Deed were thereafter returned to plaintiff's counsel for safekeeping. The photocopy of the blue ink Note was marked as Exhibit 1. The copy of the Mortgage Deed was marked as Exhibit 2. The court and the defendant, Aleksandra Toczek, had ample opportunity to examine and to compare in detail the two blue ink documents along with the photocopies marked as Exhibits 1 and 2. This procedure satisfied the court's inspection obligations. Equity One, Inc. v. Shivers, supra, 310 Conn. 123-24, 129, 131; Countrywide Home Loans Servicing, LP v. Creed, 145 Conn.App. 38, 43-44, 75 A.3d 38 (2013).
The court noted from its examination that the blue ink Note was payable to World Savings Bank, FSB and was not endorsed. The photocopy marked in evidence contains no endorsement. Ex. 1. The lender on the Note is stated to be World Savings Bank, FSB.
The court finds that the plaintiff is in possession of the blue ink Note at issue in this foreclosure having presented the Note to this court. The lender is World Savings Bank, FSB. The plaintiff offered into evidence the Office of the Comptroller of the Currency records indicating that " World Savings Bank, FSB" changed its name on December 31, 2007 to " Wachovia Mortgage, FSB." Ex. 3. The entity remained the same before and after December 31, 2007. The plaintiff provided another Certificate from the Office of the Comptroller of the Currency that traced the change from " Wachovia Mortgage, FSB" to the current plaintiff, " Wells Fargo Bank, National Association." Ex. 4. Exhibit 4 notes the conversion of " Wachovia Mortgage, FSB" to a national bank with a name change to " Wells Fargo Bank Southwest, National Association" and its merger into " Wells Fargo Bank, National Association" effective November 1, 2009. The plaintiffs' Motion to Substitute Party Plaintiff dated December 16, 2009 was granted on April 12, 2010 (#116.87). The motion stated: " The undersigned moves that Wells Fargo Bank, N.A. successor by merger to Wells Fargo Bank Southwest, N.A., f/k/a Wachovia Mortgage, FSB, f/k/a World Savings Bank, FSB be substituted as the Plaintiff in the action." (#116.00, pages 1-2.) The court finds that the plaintiff has been in possession of the Note since May 10, 2007. The possessing entity has always been the same entity but the name of the entity changed on a number of times after May 10, 2007. Thus the plaintiff has proven it was in possession of the Note from May 10, 2007 through and including the commencement of this lawsuit on June 23, 2009. See Return of Service dated June 23, 2009 in the court's Edison computer file. The holder of a note is presumed to be the rightful owner of the underlying debt and unless the party defending against the foreclosure action rebuts that presumption, the holder has standing to foreclose the mortgage; the holder only has to produce the note to establish that presumption. RMS Residential Properties, LLC v. Miller, 303 Conn. 224, 231-32, 32 A.3d 307 (2011). Based upon this evidence, the court finds that the plaintiff has sustained its burden of proof to show that it has standing.
The court has examined carefully the defendant's Motion to Dismiss dated January 14, 2014, a three-page document and the four-page Memorandum of Law filed in support of the Motion to Dismiss, both of which are coded in as one pleading (#150.00). From the court's review of the legal and factual issues raised in those two documents, the court is able to find sixteen separate reasons filed by the self-represented defendant, Aleksandra Toczek, in seeking to dismiss this residential foreclosure action. By offering insufficient evidence or legal authority to support these claims the defendant has deemed to have abandoned all of the reasons set forth in pleading #150.00 except for one issue that will be discussed below. Kelib v. Connecticut Housing Finance Authority, 100 Conn.App. 351, 353, 918 A.2d 288 (2007).
After the conclusion of the evidentiary hearing and the completion of the defendant's oral argument, the court believes that there are only three issues that are before the court for a decision. (1) Has the plaintiff adequately demonstrated that it was in possession of the Note at the time it commenced the foreclosure action? (2) Was this loan securitized or sold to another entity other than the plaintiff? and (3) Whether this " PICK-A-PAYMENT LOAN" loan is a nonnegotiable instrument since it does not contain a " fixed amount of money" as required by General Statutes § 42a-3-104(a)? The court will discuss each of these three issues.
(1) The Plaintiff Was in Possession of the Note at the Time of the Commencement of This Lawsuit
The operative complaint is the original complaint dated June 22, 2009. The Return of Service on file shows service on June 23, 2009. The court finds that this foreclosure lawsuit commenced on June 23, 2009. The $880,000 blue ink version of the Note signed by Pawel Toczek was examined by this court and returned to plaintiff's counsel with a photocopy of the Note marked as Exhibit I. According to the Note: " The Lender is WORLD SAVINGS BANK, FSB, a FEDERAL SAVINGS BANK, its successors and/or assignees, or anyone to whom this Note is transferred." Exhibit 1, Page 1, Paragraph 1.
Jessica Jones from Frederick, Maryland, a verification analyst employed by the plaintiff Wells Fargo Bank, N.A., testified before this court on November 19, 2015. She has been employed by Wells Fargo Bank, N.A. for over fourteen years and has full familiarity with the operation and reliability of its computer systems. Midland Funding, LLC v. Mitchell-James, 163 Conn.App. 648, 656-57, 137 A.3d 1 (2016). Through her testimony two exhibits were offered; Exhibit 3, which is a one-page Certificate of a Federal Savings Association Title Change for World Savings Bank, FSB and Exhibit 4, which is a two-page Certificate of Authenticity. In addition Jessica Jones, having been employed by Wells Fargo Bank, N.A. for all these years, was personally familiar with the above mentioned name changes and mergers since they occurred during her employment. Those two documents, Exhibit 3 and Exhibit 4, demonstrate that as of the date of the $880,000 loan closing, May 10, 2007, World Savings Bank, FSB was in business and remained in business until November 1, 2009. Exhibit 3 demonstrates the change of name from World Savings Bank, FSB to Wachovia Mortgage, FSB. Exhibit 4 demonstrates the change of names from Wachovia Mortgage, FSB to the current plaintiff herein, Wells Fargo Bank, National Association a/k/a Wells Fargo Bank, N.A. The court finds that this $880,000 Note is dated May 10, 2007, well before the above mentioned change of names and mergers. The court further finds that as of June 23, 2009, the date that this foreclosure action commenced, Wachovia Mortgage, FSB was the proper name of the entity, World Savings Bank, FSB having been renamed Wachovia Mortgage, FSB on December 31, 2007. Ex. 3.
Ms. Jones testified credibly that the computer record she examined disclosed that the Note had never been owned by any other entity than mentioned in Ex. 3 and Ex. 4. She testified that the mortgage was never assigned and there is no assignment of mortgage in the computer records she examined.
The June 22, 2009 operative complaint alleges in paragraph 1: " The Plaintiff, Wachovia Mortgage, FSB. f.k.a. World Savings Bank has an office and place of business with an address of P.O. Box 900001, Raleigh, NC 27675-9000." The heading of the complaint names the plaintiff as " Wachovia Mortgage, FSB. F.K.A. World Savings Bank." Paragraph 4 of the complaint alleges: " The Plaintiff, Wachovia Mortgage, FSB f.k.a. World Savings Bank, is the holder of said Note and Mortgage." The name change from World Savings Bank, FSB, the lender of the $880,000 on May 10, 2007, to Wachovia Mortgage, FSB, occurred on December 31, 2007 prior to the commencement of this lawsuit. The court finds that the plaintiff always had possession of this Note from the May 10, 2007 closing to June 23, 2009, the date this foreclosure lawsuit commenced and throughout the entire litigation thereafter. On April 12, 2010 the current plaintiff, Wells Fargo Bank N.A., was duly substituted as the party plaintiff by a court order (#116.87). The Motion to Substitute Party Plaintiff outlined the merger and name change history by stating: " . . . the undersigned moves that Wells Fargo Bank, N.A. successor by merger to Wells Fargo Bank Southwest N.A., f/k/a Wachovia Mortgage, FSB, f/k/a World Savings Bank, FSB be substituted as the Plaintiff in the action." (#116.00.)
As to the first issue, where the defendant claims that the plaintiff has failed to prove that it had possession of the Note at the time of the commencement of this lawsuit, that claim is rejected by this court.
(2) An Entity Other Than the Plaintiff is the Holder, Owner and/or Investor of this Note
At the evidentiary hearing before this court, the plaintiff produced the blue ink version of the May 10, 2007 Adjustable Rate Mortgage Note. The court and the defendant examined the Note in open court. The court returned the blue ink version of the Note back to the plaintiff and a photocopy was marked as Exhibit 1. There was no endorsement on the Note. The lender on the Note is World Savings Bank, FSB. As already found by this court, Wachovia Mortgage, FSB became the owner of the Note by reason of the name change from World Savings Bank, FSB and it possessed the Note as of the commencement of this lawsuit. Wells Fargo Bank, N.A. has been duly substituted as the party plaintiff in this case pursuant to the order of this court (#116.87).
The court finds that the plaintiff is the holder of the Note. The holder of a note is presumed to be the rightful owner of the underlying debt and unless the party defending against the foreclosure action rebuts that presumption, the holder has standing to foreclose the mortgage; the holder only has to produce the note to establish that presumption. RMS Residential Properties, LLC. v. Miller, supra, 303 Conn. 231-32. It is the defendant who now has the obligation to prove that some other person or entity is the holder, owner and/or investor of the mortgage.
Plaintiff's witness, Jessica Jones, submitted a copy of the screenshot printed directly from the computer records of Wells Fargo, N.A. Ex. 5. Exhibit 5 contains the following language " INV WELLS FARGO BANK, N.A." Ms. Jones testified that according to these computer records, the investor of this $880,000 Toczek loan is Wells Fargo Bank, N.A. The court has already found that Wells Fargo Bank, N.A. is the holder of the mortgage by reason of change of name from World Savings Bank and Wachovia Mortgage, FSB. The court finds that Wells Fargo Bank, N.A. is the owner of this loan. No other computer records were produced that stated otherwise.
The defendant produced computer records from the Security and Exchange Commission (SEC) Ex. 9. They demonstrate that " World Savings Bank, FSB, the wholly-owned subsidiary of Golden West Financial Corporation, initiated a bank note program for the possible issuance from time to time of $8 billion of unsecured senior banknotes . . ." This $880,000 mortgage does not meet the definition of " unsecured senior bank notes." This SEC document does not refer to any real estate mortgage loans made by World Savings Bank, FSB. The court finds that this $880,000 mortgage loan is not included in the assets set forth in the SEC document that is before this court as Exhibit 9.
The defendant produced a letter with a redacted loan number. Ex. 8. Connecticut Superior Court records indicate that a number of loans have been taken out by Aleksandra Toczek with World Savings Bank a/k/a Wells Fargo Bank, N.A. Each has a separate loan number. This letter in evidence is dated October 21, 2014 and was furnished to Aleksandra Toczek in compliance with a QWR, a Qualified Written Request. The last paragraph of the first page of the October 21, 2014 letter indicates that " Wells Fargo is the investor and servicer on the loan." According to Jessica Jones who testified on behalf of Wells Fargo, " Investor" means that Wells Fargo Bank, N.A. itself owns this mortgage loan and there is no other person or entity that is defined as the " Investor."
Exhibit 5 shows that Wells Fargo Bank, N.A. is the investor. Despite multiple requests by the plaintiff, the defendant, Aleksandra Toczek, failed to show the original Exhibit 8 letter in unredacted form. The plaintiff believes that the unredacted October 21, 2014 letter would show a different loan number than this $880,000 loan. The plaintiff argues that the October 21, 2014 letter is not relevant to this foreclosure. This court gave the defendant a number of opportunities to produce the original October 21, 2014 letter with an unredacted loan number by mentioning it in open court on a number of the trial dates. No such original October 21, 2014 letter with an unredacted loan number was produced. In addition the defendant was given the opportunity to produce the original QWR request letter that she addressed to Wells Fargo, N.A. It is likely that the request letter signed by the defendant, Aleksandra Toczek, asked Wells Fargo, N.A. to produce the name of the " investor" and that because the defendant, Aleksandra Toczek, used the word " investor, " Wells Fargo responded in kind by using the word " investor" in Exhibit 8. The defendant was given a number of opportunities to produce that original QWR request letter. She failed to do so at the time of trial.
The court finds that the defendant has failed to produce sufficient evidence to demonstrate that another entity or a person was the holder, owner and/or investor of this loan. U.S. Bank, National Association v. Schaeffer, 160 Conn.App. 138, 150, 125 A.3d 262 (2015). The issues on this second claim are found for the plaintiff.
(3) The Pick-A-Payment Loan is Not for a Fixed Amount and is in Violation of General Statutes § 42a-3-104(a)
Exhibit 1, the photocopy of the blue ink Note, indicates that the loan is entitled " Adjustable Rate Mortgage Note." It is further defined as " PICK-A-PAYMENT LOAN." Paragraph 1 of the Note states: " In return for a loan that I have received, I promise to pay U.S. $880,000.00, called " Principal, " plus interest, and any other charges incurred during the course of the loan, to the order of the Lender." The initial interest rate was 7.870% as stated in Paragraph 2. There are provisions for the interest rate to change in this Adjustable Rate Mortgage Note. Paragraph 3. (E) states as follows: " From time to time, my biweekly payments may be insufficient to pay the total amount of biweekly interest that is due. If this occurs, the amount of interest that is not paid each payment, called 'Deferred Interest, ' will be added to my Principal and will accrue interest at the same rate as Principal."
Paragraph 3. (F) states as follows: " My unpaid Principal balance can never exceed 125% of the Principal I originally borrowed, called 'Principal Balance Cap.' If, as a result of the addition of Deferred Interest to my unpaid Principal balance, the Principal Balance Cap limitation would be exceeded on the date that my biweekly payment is due, I will instead pay a new biweekly payment. Notwithstanding Sections 3(C) and 3(D) above, I will pay a new biweekly payment which is equal to an amount that will be sufficient to repay my then unpaid Principal balance in full on the Maturity Date at the interest rate then in effect, in substantially equal payments."
The defendant claims that the terms of this " PICK-A-PAYMENT LOAN" violate the " fixed amount" provision of General Statutes § 42a-3-104(a). She cites no case law for that proposition. She merely cites the language of the statute. She has furnished no legal authority that the violation of the statute renders the foreclosing court without subject matter jurisdiction.
As stated this is a May 10, 2007 loan. On July 1, 2008 the General Statutes were amended to include provisions relating to nonprime home loans. Effective October 1, 2009 that statute, P.A. 09-207 Section 4, was amended to state: " A lender shall not offer a nonprime home loan that contains; (4) A payment schedule with regular periodic payments that cause the principal balance to increase." That statute was last amended by P.A. 14-7, § 8, effective May 8, 2014. The language cited remains currently the law of Connecticut. General Statutes § 36a-760e(a)(4). Since Section 4 of the statute was effective on October 1, 2009 and this loan closed more than two years prior to that, the prohibition of General Statutes § 36a-760e(a)(4) is not applicable to this transaction.
Only one Connecticut case discusses the World Savings Bank, FSB " PICK-A-PAYMENT LOAN." That case outlines the same history of World Savings Bank, FSB to and including Wells Fargo Bank, N.A. in the manner found by this court. Wells Fargo Bank, N.A. v. Pinsky, Superior Court, judicial district of Connecticut at New Haven, Docket Number NNH CV12 6032136 S (April 1, 2015 Ecker, J.) [60 Conn.L.Rptr. 116, ]. Summary judgment was granted by Judge Ecker on this " pick-a-pay mortgage transaction."
Judge Ecker opined: " The great danger inhering in these particular loans arises from a feature, referred to as 'negative amortization, ' which allows the borrower to choose to make only a minimum monthly payment at an amount less than the accruing interest, thus resulting in an increasing loan balance. 'Negative amortization' can lead to disaster for an unsophisticated and/or lower-income borrower, particularly in a market declining home values." Judge Ecker also noted " the potential for predatory practices in connection with this particular type of loan." He noted the multiple lawsuits filed seeking class action damages against Wachovia and/or its successors.
In the Pinsky case Judge Ecker did not find for the plaintiff as to the Eighth Special Defense in which the defendant alleged that the plaintiff fraudulently deceived or induced Moshe Pinsky " with a 'pick-a-pay' mortgage transaction which under existing circumstances at the time of the loan would almost certainly leave the defendant with a mortgage debt in excess of the value of his home." Judge Ecker, by granting summary judgment as to all the other claims, determined that this court has subject matter jurisdiction over a negative amortization loan and left the allegations of predatory lending to another day. The issue of predatory lending has not been raised by the defendant in this instant Motion to Dismiss.
Only one case discusses a defendant's claim that a note is not a negotiable instrument since it does not contain a fixed amount of money in violation of General Statutes § 42a-3-104(a). It is Nationstar Mortgage, LLC. v. Decormier, Superior Court, judicial district of New London, Docket Number CV09-6001681 S, (July 30, 2015, Cosgrove, J.). The issues decided in Nationstar by a Motion to Strike addressed multiple defenses including the Sixth Special Defense that claimed that the note violated General Statutes § 42a-3-104(a). The Nationstar court found that even though the terms of the note in question would add unpaid interest to the principal amount and therefore result in unpredictable monthly payments and an unpredictable principal amount, those allegations were not sufficient to allege that the note does not contain a fixed amount of money. The court found that the note called for negative amortization. The Motion to Strike the Sixth Special Defense was granted. In discussing the Sixth Special Defense, Judge Cosgrove cited Pinsky .
Negative amortization loans have been held not to violate General Statutes § 42a-3-104(a). Bank of New York v. Baldwin, Superior Court, judicial district of Fairfield at Bridgeport, Docket Number CV08-5019044 S, (August 13, 2009 Doherty, J.).
This court is of the opinion that the Adjustable Rate Mortgage Note, " PICK-A-PAYMENT LOAN, " offered as Exhibit 1 in this case, satisfies General Statutes § 42a-3-104(a) for the following reasons: (1) The principal amount of the note is stated on the first page in paragraph 1 as $880,000.00; (2) The adjustable interest rate feature of the note is conceded by the defendant not to be in violation of General Statutes § 42a-3-104(a) since she is only addressing the variable amount of principal that would result; (3) Although it was anticipated that this would be a negative amortization note and that the periodic payments per month would be insufficient under certain circumstances to pay the interest as adjusted pursuant to the index, the unpaid interest would be added to the principal increasing the principal of the loan. There was a dollar amount cap set forth in paragraph 3.1(F). Ex. 1. This cap limited the amount of the increased principal to a certain dollar amount. The cap is 125% of the original principal amount. That cap number is $1,100,000 ($880,000 x 125% = $1,100,000). This court concludes that, although the amount of the principal may not be known at a point in time, the beginning amount is known as $880,000 and the highest possible amount is known as $1,100,000. Those two terms comply with General Statutes § 42a-3-104(a) as they set forth a fixed amount of principal.
The defendant has failed to furnish any legal authority that negative amortization loans violate General Statutes § 42a-3-104(a). Negative amortization loans are all too common and in all the years since the financial crisis occurred in 2007, surely at least one case would have surfaced to declare negative amortization loans in violation of General Statutes § 42a-3-104(a). Failing to find that legal authority, the court is persuaded by the above cited cases.
The third reason for the Motion to Dismiss is rejected by this court.
The court denies the defendant, Aleksandra Toczek's, Motion to Dismiss dated January 14, 2014 (#150.00) as Amended on August 15, 2016 (#241.00).
Hon. Kevin Tierney
Judge Trial Referee