Opinion
No. CV 02 0068584
July 22, 2003
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT (#108)
The plaintiff, Wells Fargo Home Mortgage, Inc., filed a complaint on August 5, 2002, seeking foreclosure of a mortgage on property owned by the defendant, Larry Palmer. In the complaint, the plaintiff alleges that the mortgage and promissory note were executed on July 28, 1995, by First Eastern Mortgage Corporation and were subsequently assigned to Norwest Mortgage, Inc. On April 12, 2000, Norwest Mortgage, Inc. changed its name to Wells Fargo Mortgage, Inc. by certificate of name change. The plaintiff further alleges that the unpaid balance on the note and mortgage is $95,255.57 plus interest, late charges and collection costs. The plaintiff alleges that the note and mortgage are currently in default because of the nonpayment of the installments of principal and interest that were due on January 1, 2002, and each and every month thereafter. Accordingly, the plaintiff exercised its option and declared the entire balance of the note due and payable.
The defendant purchased the property under the department of veterans affairs home loan guarantee program.
The defendant filed an answer on August 28, 2002, in which he admits that he is the owner and is in possession of the property. The defendant, however, denies that the note and mortgage are owned by the plaintiff, that the balance is $95,255.57, and that the note and mortgage are in default. The defendant also filed a special defense claiming that the plaintiff has failed to satisfy the notice requirements of 38 U.S.C. § 3732.
The plaintiff filed a motion for summary judgment on the issue of liability alone on April 23, 2003. In support of its motion, the plaintiff submits a memorandum of law, affidavits from Janet Burke and Scott Patterson, and other documentary evidence. The defendant has neither filed a memorandum of law nor submitted counter affidavits or documentation in opposition to the plaintiff's motion for summary judgment.
"Summary judgment shall be rendered forthwith if the pleadings, affidavits and other proof submitted show that there is no genuine issue CT Page 8453-hw as to any material fact and that the moving party is entitled to judgment as a matter of law." (Internal quotation marks omitted.) Doucette v. Pomes, 247 Conn. 442, 452, 724 A.2d 481 (1999). "A summary judgment . . . may be rendered on the issue of liability alone, although there is a genuine issue as to damages." Practice Book § 17-50.
The plaintiff moves for summary judgment on the ground that there are no issues of material fact as to the defendant's liability concerning the allegations of the complaint. Specifically, the plaintiff argues that it is entitled to judgment as a matter of law because it has established its prima facie case and the defendant's special defense is invalid.
To make out its prima facie case of liability in a foreclosure action, the plaintiff must "prove by a preponderance of the evidence, that it [is] the owner of the note and the mortgage and that [the defendant has] defaulted on the note." Webster Bank v. Flanagan, 51 Conn. App. 733, 750-51, 725 A.2d 975 (1999). The plaintiff has included with its motion for summary judgment the affidavit of Janet Burke, who conducted a title search for the property. In her affidavit, Burke avers that the property was mortgaged to First Eastern Mortgage Corporation on July 28, 1995, and that the note and mortgage were subsequently assigned to Norwest Mortgage, Inc. on July 28, 1995. Burke further avers that Norwest Mortgage, Inc. later changed its name to Wells Fargo Home Mortgage, Inc. The plaintiff has also made an adequate showing that the defendant has defaulted on the note. The plaintiff has included an affidavit from Scott Patterson, assistant vice president of Wells Fargo, which establishes that a default occurred as a result of nonpayment of the installments due on January 1, 2002, and the months thereafter.
The defendant, however, has not submitted any evidence to contradict the plaintiff's evidence. "To defeat a motion for summary judgment, a nonmovant must recite specific facts that contradict those stated in the movant's documents to show there exists a genuine issue of fact for trial." (Internal quotation marks omitted.) Redding v. Elfire, LLC, 74 Conn. App. 491, 496, 812 A.2d 211 (2003). Despite the defendant's assertion in his answer that he believes that his mortgage is "fully or substantially current at this time," the defendant has submitted no documentary evidence to contradict the movant's evidence. The plaintiff has established a prima facie case for a foreclosure action.
In the defendant's answer, the defendant states that "I have been making monthly payments regularly since February 2002, when I filed a bankruptcy petition. I provided my bankruptcy attorney, Paul Veilleux with payments sufficient to cover pre-bankruptcy arrearages. I believe my mortgage is fully or substantially current at this time."
"Where the plaintiff has made out a prima facie case [for foreclosure], the court must only determine whether [any] special defenses asserted by the defendant are legally sufficient before granting summary judgment." (Internal quotation marks omitted.) Federal National Mortgage v. Budhi, Superior Court, judicial district of Stamford-Norwalk CT Page 8453-hx at Stamford, Docket No. CV 01 0185095 (August 15, 2002, Burke, J.). "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." (Citation omitted; internal quotation marks omitted.) Salomon Brothers Realty Corp. v. Noll, Superior Court, judicial district of Waterbury, Docket No. CV 01 0166311 (March 26, 2002, West, J.). "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." Lasalle National Bank v. Shook, 67 Conn. App. 93, 96-97, 787 A.2d 32 (2001).
The defendant's special defense alleges that the plaintiff failed to satisfy the notice requirements of 38 U.S.C. § 3732. The plaintiff counters that neither § 3732 nor any other section of Title 38 provides that giving notice to the VA is a precondition to commencing foreclosure proceedings. Specifically, the plaintiff argues that no provision of Title 38 requires notification to the VA and no court has held that failure to notify the VA may be asserted by a mortgagor as a defense to a nonpayment in a foreclosure proceeding. The plaintiff claims that the defendant's special defense is invalid and does not preclude summary judgment as to liability.
38 U.S.C. § 3732 provides in relevant part: "(a) (1) In the event of default in the payment of any loan guaranteed under this chapter, the holder of the obligation shall notify the Secretary [of Veterans Affairs] of such default. (2) Before suit or foreclosure the holder of the obligation shall notify the Secretary of the default, and within thirty days thereafter the Secretary may, at the Secretary's option, pay the holder of the obligation the unpaid balance of the obligation plus accrued interest and receive an assignment of the loan and security."
Before this court addresses the validity of the defendant's special defense, it notes the following: "The VA provides housing assistance to qualified veterans by providing a government guaranty for home loans made to veterans by private lenders. In the event of a default on these mortgages by a veteran or a subsequent purchaser, the lender is required to give the VA at least 30 days' notice before foreclosing on the property . . . The VA then has 15 days to instruct the lender how to proceed . . . The VA may either purchase the loan, or advise the lender to go forward with foreclosure . . . Should the VA direct the lender to proceed with foreclosure, the lender must follow the VA's instructions as to the appropriate method and timing . . . Foreclosure of the property is conducted in accordance with state law." (Citations omitted.) Vail v. Brown, 841 F. Sup. 909, 911-12 (D.Minn. 1994), cert. denied, 515 U.S. 1102, 132 L.Ed.2d 254, 115 S.Ct. 2245 (1995).
The plaintiff's argument that no provision of Title 38 requires notification to the VA before beginning a foreclosure proceeding is misplaced. The plaintiff has cited no statutory or common-law authority to support its position. "Because a mortgage foreclosure action is an equitable proceeding, the trial court may consider all relevant circumstances to ensure that complete justice is done . . . The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court . . . CT Page 8453-hy Where the plaintiff's conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles." (Internal quotation marks omitted.) New Haven Savings Bank v. LaPlace, 66 Conn. App. 1, 9, 783 A.2d 1174, cert. denied, 258 Conn. 942, 786 A.2d 426 (2001).
After examining the documents in the present case, this court concludes that the mortgage is subject to Title 38. Paragraph twelve of the mortgage, in relevant part, provides: "If the indebtedness secured hereby be granted or insured under Title 38, United States Code, such Title and Regulations issued thereunder and in effect on the date hereof shall govern the rights, duties and liabilities of the parties hereto, and any provisions of this or other instruments executed in connection with said indebtedness which are inconsistent with said Title or Regulations are hereby amended to conform thereto." In addition, the guaranty provision of the Policy Rider provides: "Should the Department of Veterans Affairs fail or refuse to issue its guaranty in full amount within sixty days from the date that his loan would normally become eligible for such guaranty committed upon by the Department of Veterans Affairs under the provisions of Title 38 of the U.S. Code "Veterans Benefits," the Mortgagee may declare the indebtedness hereby secured at once due and payable and may foreclose immediately or may exercise any other rights hereunder or take any other proper action as by law provided."
The special defense alleges that the plaintiff in the present case did not notify the VA about the defendant's default as required by the mortgage and the provisions of Title 38. Instead, the plaintiff began foreclosure proceedings on the defendant's property without seeking redress from the VA. "Notices of default and acceleration are controlled by the mortgage documents. Construction of a mortgage deed is governed by the same rules of interpretation that apply to written instruments or contracts generally, and to deeds particularly. The primary rule of construction is to ascertain the intention of the parties. This is done not only from the face of the instrument, but also from the situation of the parties and the nature and object of their transactions . . . A promissory note and a mortgage deed are deemed parts of one transaction and must be construed together as such . . . Where the terms of the note and mortgage require notice of default, proper notice is a condition precedent to an action for foreclosure." (Citations omitted; internal quotation marks omitted.) New Haven Savings Bank v. LaPlace, supra, 66 Conn. App. 12. Moreover, notice requirements have been strictly construed in related contexts. See, e.g, Novastar Mortgage, Inc. v. Mendoza, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 99 169865 (June 22, 2000, Rodriguez, J.) ("The language of [the plaintiff's] notice did not inform the [defendants] of CT Page 8453-iz their right to reinstate the note and mortgage . . . Consequently, a genuine issue of material fact exists as to whether [the plaintiff] properly exercised the acceleration clause in the mortgage." [citation omitted]); see also Buzinski v. Brown, 6 Vet. App. 360, 365 (1994) ("the VA's right to indemnity may be defeated if a veteran does not receive adequate notice [pursuant to 38 U.S.C. § 3732] that the transferee has defaulted upon the mortgage and that foreclosure may result").
The court finds, therefore, that the special defense asserted by the defendant is legally sufficient to create a genuine issue of material fact regarding the plaintiff's compliance with the notice of default and acceleration requirements of the mortgage prior to the commencement of foreclosure.
The plaintiff's motion for summary judgment is denied.
Potter, J.