Opinion
CV146024874
04-28-2017
Wells Fargo Bank, National Association, as Trustee for Asset Backed Securities Corporation Home Equity Loan Trust, Series OOMC 2005-HE6, Asset Backed Pass Through Certificate, Series OOMC 2005-HE6 v. Paul Bissonnette
UNPUBLISHED OPINION
OPINION
Mark H. Taylor, Judge.
I
BACKGROUND
This is an action to foreclose the defendant's home mortgage, in which the plaintiff has filed this motion for summary judgment. The defendant has objected and the parties were heard by the court on March 20, 2017. The defendant appeared through counsel in opposition to the motion and rested upon his brief and the record of these proceedings, with no additional evidence submitted. After considering the arguments and evidence presented by the parties, the motion is granted, in part, and denied, in part.
The plaintiff in this action is Wells Fargo Bank, National Association, As Trustee For Asset Backed Securities Corporation Home Equity Loan Trust, Series OOMC 2005-HE6, Asset Backed Pass Through Certificate, Series OOMC 2005-HE6 (Wells Fargo). There is a long history of litigation between the parties, involving the defendant's longstanding disagreements with the plaintiff, initially involving a dispute over the original loan transaction to refinance his home on May 5, 2005 with Opteum Financial Services, LLC.
According to the closing Settlement Statement, used to refinance the defendant's mortgage (HUD 1), the loan amount is stated as $229,500, $17,000 higher than the loan application. The mortgage note that the defendant signed is consistent with this higher loan amount of $229,500. The annual interest rate on this note is 7.9 percent, which is 0.4 percent higher than the rate stated on his loan application. In addition, the defendant asserts that the refinanced mortgage payoff amount was in excess of what he owed on his old mortgage. The HUD 1 reflects a disbursement to Option One Mortgage of $193,636.23, apparently disbursed for the release of the existing mortgage. This amount is approximately $9,000 higher than the mortgage lien reflected on his loan application of $184,702 . . . The defendant also contends that the old mortgage has not been released, although he offers no evidence in support of this claim." As set forth by the court in the first motion for summary judgment: " The plaintiff seeks to foreclose on a mortgage loan in the amount of $229,500 that the defendant originally obtained to refinance his home in 2005, as modified in 2012. Underlying the longstanding dispute between the parties is the defendant's assertion that the amount and interest rate of this mortgage note were in excess of his loan application agreement. As evidence of this, the plaintiff offers his signed loan application, dated May 5, 2005, in which the loan amount is stated as $212,500.00, at the annual interest rate of 7.5 percent . . .
This is the plaintiff's third action to foreclose the mortgage on the defendant's home. The court will briefly outline the history of these actions, as they are important to the court's determination of the present motion for summary judgment. The first action to foreclose the defendant's mortgage was filed in 2007: Wells Fargo v. Bissonnette, UWY 07 5004508. After a default judgment of strict foreclosure was entered on June 19, 2007, this action was stayed in state court by the defendant's bankruptcy in federal court. Judgment was subsequently reentered after bankruptcy on May 12, 2008, with the first law day set for June 10, 2008.
The plaintiff in this first action was " Wells Fargo Bank, N.A., as Trustee" without identifying the specific trust, otherwise identified in the two subsequent cases.
Although this first foreclosure was not opened or withdrawn, a second foreclosure was filed by Wells Fargo on July 1, 2011: Wells Fargo v. Bissonnette, UWY 11 6010612, presumably based upon a March 1, 2009 modification of the mortgage, as alleged in this case. This second foreclosure was withdrawn on June 5, 2012, after the parties reported it settled with a new modification, allegedly entered into several days earlier on June 1, 2012.
This foreclosure was brought by Wells Fargo in a slightly different iteration of the name of the trust in the present case. Instead of being brought in the name of the plaintiff " as trustee" of the same trust, it was brought " in trust for the benefit of the certificate holders of" the trust. See assignment dated July 15, 2011.
See Foreclosure Mediator's Final Report in that action, dated April 25, 2012.
This third foreclosure action was filed on August 29, 2014, which the defendant answered with special defenses on June 11, 2015. After a partial summary judgment was entered on the original complaint in this action, the plaintiff filed an amended complaint on November 1, 2016. The amended complaint was answered with special defenses on November 14, 2016.
A
First Summary Judgment
This is the second motion for summary judgment considered by the court in this case. At the hearing on the first motion for summary judgment held on May 16, 2016, the plaintiff presented the original note and mortgage deed for review. The court concluded that they were originals, bearing the acknowledged, original signatures of the defendant and of witnesses where appropriate and that the note was endorsed in blank. Although many of the defendant's objections to summary judgment focus upon the authenticity of these documents, he offered no specific objections or evidence, challenging the authenticity of his signature at the hearing. Simply stated, his loan agreement reflects a different transaction than the one represented by the mortgage note and deed.
The first motion for summary judgment was granted, in part, on July 26, 2016, leaving five of the defendant's original special defenses for resolution at trial. These five remaining special defenses survived summary judgment, primarily due to a question of fact over the defendant's ratification of the 2005 mortgage loan, which he asserts was lawfully rescinded pursuant to 15 U.S.C. § 1635. The question of ratification arises from two alleged modifications of the original mortgage-one in 2009 and the other in 2012.
On June 11, 2015, the defendant filed an answer to the original complaint, which alleged eighteen special defenses. On March 9, 2016, the plaintiff moved for summary judgment, which was granted, in part, on 13 of the defendant's 18 special defenses, leaving in place special defense No. 5: " negligent misrepresentation/inducement in the making"; No. 6: " intentional concealment in the making"; No. 7: " unconscionable transaction"; No. 14: no modification was accepted by the defendant in 2012; and, No. 18: " rescission/no default 15 U.S. Code § 1635."
In ruling on the first summary judgment, the court determined that there was a question of fact over an alleged modification of the mortgage in 2012, because the defendant produced evidence that this modification agreement was subject to a counteroffer, thereby leaving both questions of modification and ratification material issues of fact. Although the 2009 modification was undisputed by the parties, it had not been pled in the underlying complaint and was, therefore, ruled to be immaterial.
In a memorandum of decision on the first motion for summary judgment, the court held that, although the defendant's 2009 modification was undisputed, it was immaterial, as follows: " In its motion for summary judgment, the plaintiff provides a copy of the defendant's mortgage modification, entered into on March 1, 2009 with American Home Mortgage Servicing, Inc. Plaintiff's Motion for Summary Judgment, Exhibit D. The modification is signed by the defendant and recites the fact that it is a modification of his May 5, 2005 mortgage note and deed. The principal amount is identified as $289,858.69, with annual interest set at 7.9 percent. Despite the presentation of this evidence in the motion for summary judgment, however, the 2009 modification is not alleged in the complaint. The court therefore finds the 2009 modification to be immaterial to the dispute between the parties, absent an amended complaint with the inclusion of this allegation."
If either of the modifications was entered into in 2009 or in 2012, the court concluded that the 2005 loan transaction would have been ratified. If the challenged 2005 mortgage transaction was ratified, the special defenses related to improprieties in the original 2005 loan transaction would be nullified, including the issue of a timely rescission of that loan. These remaining special defenses were: No. 5: " negligent misrepresentation/inducement in the making"; No. 6: " intentional concealment in the making"; No. 7: " unconscionable transaction"; No. 14: no modification was accepted by the defendant in 2012; and, No. 18: " rescission/no default 15 U.S. Code § 1635."
B
Second Summary Judgment
The plaintiff's second motion for summary judgment is now before the court, based upon its amended complaint, dated November 1, 2016, which includes the alleged 2009 mortgage modification. The defendant answered the amended complaint on November 14, 2016, denying, inter alia, the " veracity, validity and authenticity" of the original mortgage note and deed, his receipt of a copy of his right to cancel the original mortgage transaction under federal law, his failure to timely rescind the mortgage transaction pursuant to 15 U.S.C. § 1635(a) and (f) and also denies defaulting on the note, mortgage and 2012 modification of the mortgage. In his answer, he otherwise leaves the plaintiff to its proof on the remaining allegations, including entering into the 2009 and 2012 modifications. His answer to the amended complaint also includes the following special defenses entitled: (1) " Rescission 15 U.S.C. § 1635" (previously filed as his eighteenth special defense); (2) " Invalid Mortgage, Lack of Standing"; (3) " Invalid Modification"; (4) " Void Assignments"; as well as special defenses alleged by reference to those filed previously, namely: (5) Negligent Misrepresentation; (6) Intentional Concealment; (7) Unconscionability and (8) No 2012 Modification.
In his brief, the defendant refers to Regulation Z § 226.17(a).
II
SUMMARY JUDGMENT
Pursuant to Practice Book § 17-49, 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 . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue of 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." J.E. Robert Co., Inc. v. Signature Properties, LLC, 309 Conn. 307, 333, 71 A.3d 492 (2013).
" In order to establish a prima facie case in a mortgage foreclosure action, the plaintiff must prove by a preponderance of the evidence that it is the owner of the note and mortgage, that the defendant mortgagor has defaulted on the note and that any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied . . . Thus, a court may properly grant summary judgment as to liability in a foreclosure action if the complaint and supporting affidavits establish an undisputed prima facie case and the defendant fails to assert any legally sufficient special defense.
" A mortgagee that seeks summary judgment in a foreclosure action has the evidentiary burden of showing that there is no genuine issue of material fact as to any of the prima facie elements, including that it is the owner of the debt. Appellate courts in this state have held that the burden is satisfied when the mortgagee includes in its submissions to the court a sworn affidavit averring that the mortgagee is the holder of the promissory note in question at the time it commenced the action . . . The evidentiary burden of showing the existence of a disputed material fact then shifts to the defendant. It is for the maker of the note to rebut the presumption that a holder of the note is also the owner of it." (Citations omitted.) Wells Fargo Bank, N.A. v. Strong, 149 Conn.App. 384, 392, 89 A.3d 392 (2014).
In shifting the burden of proof, " the burden is on the defending party to provide sufficient proof that the holder of the note is not the owner of the debt, for example, by showing that ownership of the debt had passed to another party. It is not sufficient to provide that proof, however, merely by pointing to some documentary lacuna in the chain of title that might give rise to the possibility that some other party owns the debt. In order to rebut the presumption, the defendant must prove that someone else is the owner of the note and debt. Absent that proof, the plaintiff may rest its standing to foreclose on its status as the holder of the note." (Emphasis in original.) U.S. Bank, National Association v. Schaeffer, 160 Conn.App. 138, 150, 125 A.3d 262 (2015).
III
DISCUSSION
A
Second Special Defense of Standing
The court will address the second special defense first, as it implicates the subject matter jurisdiction of the court. In this second special defense, the defendant challenges the plaintiff's standing to foreclose this mortgage. He again asserts a lack of standing, as he did in opposing the first motion for summary judgment, because he claims that he rescinded the original mortgage transaction, thereby making it void pursuant to 15 U.S.C. § 1635(b) and Regulation Z § 226.23.
In the defendant's brief in opposition to summary judgment, standing is also challenged by the defendant, without further explanation, as follows: First, " [p]laintiff was not the holder of the note at the time this action was commenced." Second, " [t]he Defendant did not receive proper notice of default and acceleration of the subject note and mortgage." And third, " [t]he alleged assignment from Wells Fargo Bank, N.A. to Plaintiff is facially invalid and incapable of transfer of the subject note and mortgage."
At the hearing on the motion for the first summary judgment, held on May 16, 2016, as well as for the second motion for summary judgment, held on March 27, 2017, the plaintiff presented the original note and mortgage deed for review. The defendant presented no evidence contrary to the authenticity of the defendant's signatures on these documents. The court concluded on each occasion that the mortgage note and deed were originals, bearing the acknowledged, original signatures of the defendant and of witnesses, where appropriate. The mortgage note is endorsed in blank by Option One Mortgage Corporation, which held the mortgage note by the special endorsement of the original lender, Opteum Financial Services, LLC. The court has also reviewed the assignments of the mortgage deed and is satisfied that there is a complete chain of title to Wells Fargo.
In paragraph 9 of its affidavit in support of summary judgment, the plaintiff states that it has been in possession of the mortgage note since May 25, 2005. It further attests to the fact that it provided notice of default and acceleration to the defendant at the mortgaged address on July 19, 2012. In response, the defendant cites no evidence to the contrary.
Possession of a mortgage note endorsed in blank, as established here, creates a presumption that the plaintiff has the right to enforce the mortgage. J.E. Robert Co., Inc. v. Signature Properties, LLC., 309 Conn. 307, 71 A.3d 492 (2013). " In order to rebut the presumption, the defendant must prove that someone else is the owner of the note and debt. Absent that proof, the plaintiff may rest its standing to foreclose on its status as the holder of the note." (Emphasis in original.) U.S. Bank, National Assn. v. Schaeffer, 160 Conn.App. 138, 150, 125 A.3d 262 (2015). In the present case, the rebuttal of the presumption by the defendant is based upon his second special defense, alleging rescission of the mortgage transaction. The question of rescission, however, does not appear to affect the plaintiff's standing to initiate this action.
The court concludes that the plaintiff has standing. The issue raised by the defendant, therefore, is not one of the plaintiff's standing to initiate this foreclosure, but its right to enforce the note after determining the validity of the defendant's other legal defenses. See Bank of Am., N.A. v. Aubut, 167 Conn.App. 347, 371, 143 A.3d 638 (2016), (plaintiff did take the note subject to all defenses that could be asserted by the defendants, including equitable defenses), citing City of Hartford v. McKeever, 139 Conn.App. 277, 286, 55 A.3d 787 (2012), aff'd but criticized, 314 Conn. 255, 101 A.3d 229 (2014).
B
First Special Defense of Rescission
The court previously denied summary judgment on the question of rescission of the mortgage transaction pursuant to TILA. The defendant has sworn that he received no copies of the 2005 closing documents until January 23-24, 2006, upon which he rescinded the transaction within three days on January 26. The court concluded that, standing alone, this would have represented a dispute regarding a material fact. The plaintiff, however, further asserted that the defendant ratified the original mortgage transaction of May 5, 2005 by making payments on the original mortgage and, in addition, through subsequent modifications of the note.
In denying summary judgment previously, the court concluded that the initial payments made by the defendant on the 2005 mortgage, while awaiting copies of his closing documents, did not conclusively prove intent to ratify. As to the plaintiff's assertion that the defendant ratified the original mortgage transaction by entering into subsequent modifications, the court concluded that a 2009 modification had not been pled and was, therefore, immaterial, but that there was a material question of fact as to whether the parties entered into a 2012 modification. Although the defendant admitted to signing the 2012 offer of modification, he provided evidence that his signature was subject to a counter-offer which was not accepted. " It is a basic principle of contract law that in order to form a binding contract there must be an offer and acceptance based on a mutual understanding by the parties. " Lyon v. Adgraphics, Inc., 14 Conn.App. 252, 254, 540 A.2d 398 (1988), see TD Bank, N.A. v. M.J. Holdings, LLC, 143 Conn.App. 322, 332, 71 A.3d 541 (2013).
The power of acceptance of an offer " may be terminated by (a) rejection or counter-offer by the offeree, or (b) lapse of time or (c) revocation by the offeror, or (d) death or incapacity of the offeror or offeree. (Emphasis added.) Restatement (Second) of Contracts § 36 (1981).
The plaintiff has now alleged that the defendant entered into a 2009 mortgage modification agreement, to which the defendant answered this allegation by leaving the plaintiff to its proof. The court concludes that this issue now raises a material question in this case. The defendant, however, offers no factual evidence to dispute its validity, other than rescission. Contrary to the defendant's legal assertion, the court previously found that the underlying mortgage transaction was voidable and not void ab initio. Therefore, the court now concludes that the 2005 mortgage transaction was ratified by the 2009 mortgage modification and summary judgment is, therefore, granted for the plaintiff on the first special defense of rescission. This conclusion now forms the basis for granting summary judgment on many, but not all, of the remaining special defenses.
C
Third Special Defense: Invalid Modification
In the defendant's third special defense, he asserts that the alleged mortgage modifications are invalid, based upon his legal conclusion that the underlying mortgage transaction is void or invalid by an effective rescission. The court has concluded otherwise and, for this reason, summary judgment is therefore granted for the plaintiff on the third special defense.
The court notes that the validity of the 2012 modification remains a question of material fact for a different reason, based upon the alleged counter-offer.
D
Fourth Special Defense: Void Assignments
In the defendant's fourth special defense, he asserts that the alleged mortgage assignment of July 15, 2011 is invalid, based upon his legal conclusion that the underlying mortgage transaction is void or invalid by an effective rescission. The court has concluded otherwise and, therefore, summary judgment is granted for the plaintiff on the fourth special defense.
E
Fifth Special Defense: Negligent Misrepresentation/Inducement In The Making
The defendant's fifth special defense is identical to his previously filed fifth special defense, which survived summary judgment. It alleges that the 2005 " note and mortgage are unenforceable and invalid because they were made as a result of false representations and disclosures made to the Defendant, by virtue of a bait and switch scheme . . ."
Although not addressed in the defendant's brief, the court concludes that this special defense involves the core factual dispute between the parties. In his answer, the defendant denies " executing and delivering the note as described in the complaint or to the terms as described." He does not, however, specifically deny the authenticity of the signatures on those documents. Instead, his claim is that he entered into or, at least, intended to enter into, a different mortgage agreement. He primarily maintains that the mortgage note and deed do not reflect his understanding of the agreed-upon loan amount, interest rate and mortgage payoff and, for this reason, he asserts that he rescinded the mortgage transaction pursuant to Truth In Lending Act, 15 U.S.C. § 1635(a) (TILA).
General Statutes § 42a-3-308(a) provides: " In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature. If an action to enforce the instrument is brought against a person as the undisclosed principal of a person who signed the instrument as a party to the instrument, the plaintiff has the burden of establishing that the defendant is liable on the instrument as a represented person under section 42a-3-402(a)."
Evidence the defendant relies upon was considered in the first motion for summary judgment. The plaintiff offered his signed loan application, dated May 5, 2005, in which the loan amount is stated as $212,500.00, at the annual interest rate of 7.5 percent. However, according to the real estate closing Settlement Statement, and consistent with the signed note and mortgage, the loan amount is stated as $229,500. This figure, however, is $17,000 higher than the loan application. Further, the annual interest rate on the note is 7.9 percent, which is 0.4 percent higher than the rate stated on his loan application. Finally, the defendant asserts that the refinanced mortgage payoff amount was in excess of what he owed on his old mortgage. The Settlement Statement reflects a disbursement to Option One Mortgage of $193,636.23, apparently disbursed for the release of the existing mortgage. This amount is approximately $9,000 higher than the mortgage lien reflected on his loan application, in the amount of $184,702.
These unexplained differences are disturbing to the court and are certainly more so to the defendant. For many years, the defendant appears to have been obligated to a higher interest rate on a higher principal amount on his mortgage than he believes he bargained for, based upon his loan application. According to the defendant, he did not receive copies of the 2005 closing documents until many months later. The defendant stated in his affidavit in opposition to the first motion for summary judgment, that he was not provided with any mortgage closing documents until January 23-24, 2006. Upon discovering that they reflected a transaction contrary to his understanding of their contract, he asserts that he executed a timely rescission pursuant to TILA. The mortgaged real estate, however, remains in the plaintiff's name, and the mortgage funds were not tendered to the owner of the debt.
These very concerning issues might otherwise be material facts in dispute, but for the mortgage modification requested by the defendant and entered into by the parties on March 1, 2009. In its motion for summary judgment, the plaintiff provides a copy of the defendant's 2009 mortgage modification, entered into with American Home Mortgage Servicing, Inc. Plaintiff's Motion for Summary Judgment, Exhibit F. The modification is signed by the defendant and recites the fact that it is a modification of his May 5, 2005 mortgage note and deed. The principal amount is identified as $289,858.69, with annual interest set at 7.9 percent. To this, the defendant offers no evidence to the contrary and, instead, relies upon his legal conclusion that the original 2005 mortgage transaction was void.
The court concludes otherwise, that the 2005 mortgage was voidable and subsequently ratified. Ratification is " [t]he acceptance of the results of the act with an intent to ratify, and with full knowledge of all the material circumstances . . ." (Internal quotation marks omitted.) Hartford Accident & Indemnity Co. v. South Windsor Bank & Trust Co., 171 Conn. 63, 72, 368 A.2d 76 (1976). In the first motion for summary judgment, this legal standard was clearly set forth in the court's memorandum of decision. In this second motion for summary judgment, the defendant offers no evidence to show that he was unaware of the material circumstances of the original mortgage transaction. The motion for summary judgment on the defendant's fifth special defense is therefore granted.
F
Sixth Special Defense: Intentional Concealment In The Making
The defendant's sixth special defense is identical to his previously filed sixth special defense, which also survived summary judgment. It alleges that the " Plaintiffs [sic] and its predecessors intentionally concealed the true nature of the alleged [2005] transaction and continues to conceal certain essential facts concerning the transaction by continually denying Defendant's numerous request for copies of the transaction documents which were never provided to the Defendant . . ."
For the same reasons set forth above in subsection E, in that the 2005 mortgage transaction has been ratified, the motion for summary judgment on the sixth special defense is granted.
G
Seventh Special Defense: Unconscionable Transaction
The defendant's seventh special defense is also identical to his previously filed seventh special defense, which survived summary judgment. It alleges that the mortgage should be " rendered invalid, void ab initio, and unenforceable because it represents an unconscionable mortgage transaction [due to t]he unscrupulous lending practices, false representations and lack of transparency in conducting mortgage business with the Defendant, and the violations of the provisions set forth in CGS § 36a-485 to 36a-498a et seq., violates public policy . . ."
For the same reasons set forth above in subsection E, in that the 2005 mortgage transaction has been ratified, the motion for summary judgment on the sixth special defense is granted.
In addition to ratification, the court previously addressed the questions raised regarding state banking statutes in the defendant's originally filed second special defense, involving the plaintiff's capacity as a mortgage banker or broker, as well as the originally filed third and fourth special defenses alleging an illegal transaction.
H
Eighth Special Defense: No 2012 Modification
The defendant's eighth special defense is also identical to his previously filed fourteenth special defense, which survived summary judgment. In these special defenses, the defendant denies a valid contract to modify his mortgage, in that he alleges that the " Plaintiffs [sic] Servicer, American Home Mortgage Servicing, received [a] counteroffer on April 29, 2012 [and that the] Plaintiffs [sic] servicer failed to respond to Defendants counteroffer within the time set forth therein . . ."
The court has previously concluded that there is a dispute of material fact over whether the parties entered into the 2012 mortgage modification, by the defendant producing evidence of a contemporaneous counter-offer to the modification. In paragraphs nine and ten of the plaintiff's amended complaint, a default of the 2012 mortgage modification is alleged. Without a default of the operative mortgage agreement, there is no prerequisite for foreclosure. Summary judgment is therefore denied, in part, as there is a material dispute between the parties over the existence, and therefore default, of the mortgage as allegedly modified in 2012.
Although there was an alleged default of the 2005 mortgage in the 2007 action to foreclose, this mortgage was later modified by agreement of the parties. And although there was an alleged default of the 2009 mortgage modification in the 2011 foreclosure, this matter was withdrawn after reporting an agreement to modify in 2012, which is now in material dispute between the parties.
IV
CONCLUSION
The motion for summary judgment is granted on special defenses one through seven.
The motion is denied with regard to the defendant's eighth special defense.
SO ORDERED.