Opinion
FBTCV166058298S
02-13-2018
The Bank of New York Mellon fka The Bank of New York, as Successor Trustee to JP Morgan Chase Bank, N.A. Successor by Merger to Chase Bank of Texas, National Association, as Trustee for Saxon Asset Securities Trust 1992-2, Mortgage Loan Asset Backed Certificates, Series 1999-2 v. Douglas Gilmore et al.
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Jennings, Alfred J., J.T.R.
MEMORANDUM OF DECISION ON DEFENDANT’S MOTION TO DISMISS (NO. 122)
Alfred J. Jennings, Jr. Judge Trial Referee
This is an action by the holder of a mortgage (Mortgage) on residential property in Westport granted on February 5, 1999 by Bess P. Gilmore to the original mortgagee Saxon Mortgage, Inc. to secure a $375,000 promissory note (Note). The plaintiff Bank of New York Mellon f/k/a The Bank of New York is the successor trustee to JP Morgan Chase Bank, NA successor by merger to Chase Bank of Texas, National Association, as trustee for Saxon Asset Securities Trust 1999-2, Mortgage Loan Asset Backed Securities, Series 1999-2 to whom the Note and Mortgage had been assigned from the original mortgagee Saxon Mortgage, Inc. on February 5, 1999. The Note and Mortgage were thereafter assigned successively to Bank of New York Trust Company as Successor to JP Morgan Chase Bank fka The Chase Manhattan Bank Successor by Merger to Chase Bank of Texas, National Association fka Texas Commerce Bank, NA as Custodian, and to the plaintiff. The original Mortgage and all three assignments thereof are recorded in the Westport land records. Bess P. Gilmore died testate on January 13, 2009 the property passed to the Bess Gilmore Revocable Trust (Trust). The defendant is Douglas Gilmore as the surviving grantee of a deed from himself as Trustee of the Trust to Douglas Gilmore and Keith Gilmore. Keith Gilmore died on June 7, 2015.
This is the third iteration of the foreclosure action. The first case brought in the Judicial District of Stamford/Norwalk at Stamford in 2003 (Docket No. FST CV03-0197163S) was withdrawn on December 8, 2003. The second action commenced in 2004, also in Stamford, (Docket No. FSTCV04-4001641S) was dismissed for dormancy under Practice Book § 14-3 on February 1, 2010. This third action was brought here in the Judicial District of Fairfield at Bridgeport with a return date of July 26, 2016.
Under Conn. Gen. Stat. § 51-345(b)(5) foreclosure actions against property in the Town of Westport may be made returnable at plaintiff’s option to either the Judicial District of Stamford/Norwalk or the Judicial District of Fairfield.
Now before the court is defendant Douglas Gilmore’s Motion to Dismiss this action pursuant to Practice Book Section 10-30(a)(1) for lack of subject matter jurisdiction. No affidavit has been filed by either party. Both parties rely on the existing record of this case and the previous Stamford cases. The defendant’s Memorandum of Law in Support of Motion to Dismiss argues six specific claimed grounds of dismissal. Each will be addressed specifically in this Memorandum of Decision.
(1) " Plaintiff is not a holder and owner of the Note or a non-holder party entitled to enforce the Note."
In his seven pages of briefing on this first point the defendant weaves in references to his subsequent points, but the main theme of his argument is that the plaintiff lacks standing because it is not a holder of the Note or a non-holder with the power to enforce the Note.
The Amended Complaint alleges at paragraph 5 that the Mortgage has been assigned to the plaintiff by a series of three assignments recorded in the Westport Land Records. Copies of the three assignments attached as exhibits to the Plaintiff’s Memorandum in Opposition to Defendant Gilmore’s Motion to Dismiss have been reviewed by the court, and reveal by their own terms that each assignment transferred not only the assignor’s interest in the Mortgage, but that the interest in the Mortgage was transferred in each instance " together with certain note(s) and obligations therein described and the money due and to become due thereon with interest." (Ex. 1); " together with certain note(s) therein together with all interest secured thereby." (Ex. 2); and " securing the payment of a certain promissory note(s) for the sum listed below, together with all rights therein and thereon all liens created or secured thereby, all obligations therein described, the money due and to become thereon with interest ..." (Ex. 3.) Although it is true, as defendant points out, as a general rule of law the mortgage follows the note, and conversely, the note does not follow the mortgage, citing RMS Residential Properties, LLC v. Miller, 303 Conn. 224, 230 (2011) (" Conn. Gen Stat. § 49-17 codifies the well-established common-law principle that the mortgage follows the note, pursuant to which only the rightful owner of the note has the right to enforce the mortgage" ), the plaintiff in this case is not relying on Section 49-17 or the common law to establish its standing as the owner of the Note. It alleges in paragraph 6 that " Said Note is in default and the Plaintiff ... as the holder of said Mortgage and Note has elected to accelerate the balance due on said Note" and has alleged ownership of the Note by documented and recorded assignments from the original payee down a chain of title to itself.
Section 49-17 provides: " When any mortgage is foreclosed by the person entitled to receive the money secured thereby but to whom legal title to the mortgaged premises has never been conveyed, title to such premises shall, upon the expiration of the time limited for redemption and on failure of redemption, vest in him in the same manner and to the same extent as such title would have vested in the mortgagee, provided the person so foreclosing shall forthwith cause the decree of foreclosure to be recorded in the land records in the town in which the land lies."
It is well-settled that when considering a motion to dismiss:
[A court] must consider the allegations of the complaint in their most favorable light ... In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader ... The motion to dismiss admits all facts well pleaded, invokes the existing record, and must be decided upon that alone. Derry v. Garden, 313 Conn. 516, 522 (2014).
Defendant Gilmore makes several futile arguments challenging plaintiff’s status as a holder and owner of the Note. He argues that the second Assignment of Mortgage dated August 16, 2008 from Bank of New York Trust Company As Successor by Merger to Chase Bank of Texas to itself as trustee is a nullity as " an assignment to itself recorded before it occurred." The latter claim is that the assignment was executed in Florida on August 16, 2008 but was somehow recorded in the Westport Land Records two years earlier on October 23, 2006. The recording date rubber stamped on the Assignment is somewhat illegible and the year of recording could conceivably be read as 2006. But given that the procedure for recording a document in Connecticut calls for the original executed document to be delivered to the Town Clerk with the proper recording fee, it seems impossible that one could record a document two years before its execution, and even the defendant conceded at oral argument that the assignment was in fact recorded on October 23, 2008- not 2006- slightly more than two months following its execution.
Defendant also argues that " the complaint has failed to establish who has physical possession of the note and who owns the note, nor has it in any way demonstrated the transactional history or chain of custody of the note." The claim of failure to establish ownership has already been addressed and rejected. The argument as to physical possession is based on the Uniform Commercial Code (UCC) § 42a-1-201(21) definition of " holder" as (A) " the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession." The defendant’s argument of lack of possession comes from an Affidavit of Lost Note filed by the plaintiff in the previous 2004 litigation in Stamford. The affidavit (Ex B. To Defendant’s Memorandum in Support of Motion to Dismiss) signed by Craig Allen as Assistant Vice President of JP Morgan Chase Bank on November 30, 2004 attests that: " 2. The Plaintiff [then JP Morgan Chase Bank] is the Holder of a Mortgage Note date February 5, 1999 in the original principal amount of $375,000 by and between Bess Gilmore (hereinafter the " Borrowers" ) and Saxon Mortgage, Inc. (Lender) 3. The original Promissory Note is customarily kept in our files for the Borrower at our offices in Texas. 4. The Plaintiff has examined the Borrower’s original loan file for the original Note but has been unable to locate same. 5. The plaintiff has diligently reviewed and searched all of the files in their possession to discover the lost original note. 6. The plaintiff was unable to discover the location of the original Promissory Note after diligent efforts. 7. JP Morgan Chase Bank has not assigned, pledged, or hypothecated the Promissory Note." In light of its predecessor trustee having lost the Note, defendant argues that the plaintiff cannot be a " holder in possession of the note" and therefore lacks standing to maintain this action for forclosure of the Property.
The first problem with the argument is that the Affidavit of Lost Note was filed in an earlier lawsuit some thirteen years ago. No Affidavit of Lost Note has been filed in this 2016 action. For all we know the original Note may have been found since the fall of 2004, and plaintiff may be a holder in possession of the Note which would confer automatic standing. But, even if the Note is still lost, plaintiff would have standing simply by filing an updated Affidavit of Lost Note similar to the 2004 affidavit. Defendant argues in his Reply Memorandum that the Affidavit of Lost Note is technically deficient under the UCC, Conn. Gen. Stat. § 42a-3-309(a) because it does not state that JP Morgan Chase Bank was " the person in possession when the loss of possession of the Note occurred." That technicality of the UCC would apply if this was an action at law for nonpayment of the Note, or if the plaintiff in this case were to move post judgment under Conn. Gen. Stat. 49-14 for a deficiency judgment. But, in its present position, this current phase of the case is strictly an equitable proceeding in foreclosure and, even if the original note is still missing, plaintiff can achieve standing by filing at the appropriate time another Affidavit of Lost Note similar to the 2004 affidavit.
Connecticut Courts have regularly permitted foreclosure of mortgages where the original promissory note has been lost. JP Morgan Chase Bank v. Porzio, Superior Court, Judicial District of Stamford Norwalk at Stamford, Docket No. FST CV09-5010388S (March 30, 2015, Tierney, J.), 2015 WL 1727760, *3
Affidavits of lost notes are readily acceptable under Connecticut law. It is not necessary that the original note be in possession of the plaintiff as long as it can prove the circumstances of the lost note. In this case those circumstances were well documented by the Affidavit of Lost Note ... Id. *10
’The mortgage secures the indebtedness itself, not the written evidence of it.’ G. Osborne, Mortgages (2d Ed. 1970) § 105. Because GHR has chosen to pursue the equitable action of foreclosure of the mortgage, rather than a legal action on the note, the fact that GHR never possessed the lost promissory note is not fatal to foreclosure of the mortgage. Moreover, GHR has not sought a deficiency judgment. Thus, whatever restrictions § § 42a-3-301 and 42a-3-309 might put on the enforcement of personal liability based solely upon a lost note, they do not prohibit GHR from pursuing an action of foreclosure to enforce the terms of the mortgage. New England Savings Bank v. Bedford Realty Corporation, 238 Conn. 745, 759-60 (1996).
The lost note equals lack of possession of the note equals lack of standing argument fails.
Defendant’s argument re standing that " plaintiff has failed to nor has it in any way demonstrated the transactional history or chain of custody of the note" also fails. The first claim is that the initial assignment of the mortgage from Saxon Mortgage to Chase Bank of Texas was signed prior to the execution of the mortgage. That would not affect the validity or enforceability of the assignment. " An assignment executed in accordance with this section shall operate to assign the interest of the assignor in the mortgage which is the subject of the assignment, even if such interest is, in fact, acquired by the assignor after executing such assignment ..." Conn. Gen. Stat. § 49-10(i). The second claim in this area is that, although plaintiff has provided copies of all three assignments of the Mortgage and Note, it had not adequately demonstrated the transactional history or chain of custody of the Note. The custody or possession of the Note has already been discussed. With respect to the " transactional history" the defendant mentions the absence of " a full history of any and all transfers of the note with supporting documentation as well as documentation to act on behalf of the owner." (Memorandum, p. 3.) Since the Assignments of Mortgage have all been provided, presumably defendant is complaining of the absence of merger documents and powers of attorney.
The complaint alleges that the plaintiff is the holder of the Note, which, for purposes of this motion to dismiss, the court must accept as true. The plaintiff’s ownership of the Note is supported by the three assignments of both the Mortgage and the Note, and there is no contrary evidence. The plaintiff’s failure to have possession of the original Note, if that is, in fact, still the case, can be adequately explained by an Affidavit of Lost Note similar to the affidavit filed in the 2004 predecessor action. Under these circumstances the plaintiff being the holder of the Note and the presumptive owner of the debt by assignment, the burden is on the defending party " ... to prove that the holder of the note is not the owner of the debt ... This may be done, for example, by demonstrating that ownership of the debt had passed to another party. The defendant does not carry its burden by merely identifying some documentary lacuna in the chain of title that might give rise to the possibility that a party other than the foreclosing party owns the debt." (Emphasis in original), Chase Bank, National Association v. Simozilidis, 161 Conn.App. 133, 145-46 (2015), quoting and citing U.S. Bank, National Association v. Schaeffer, 160 Conn.App. 138, 146-47 (2015). The defendant Gilmore has presented no evidence that any party other than the plaintiff is the owner of the Note or the debt evidenced by the Note, and points out only the " lacuna" of plaintiff’s chain of title documentation, which is inadequate to overcome the presumption flowing from plaintiff’s status as a holder of the Note that it is the owner of the Note and the underlying debt and the party having standing to maintain this action in foreclosure.
" Lacuna" is defined in Webster’s Third New International Dictionary (1971) as " a blank space, gap, hole, missing part ..."
(2) " The Mortgage, the subject of this lawsuit, was released, duly filed pursuant to law, and as such the plaintiff does not have standing, and therefore this court lacks subject matter jurisdiction."
Defendant has produced as Exhibit " A" to its Memorandum a copy of a Release of Mortgage dated March 31, 2014, from JP MORGAN CHASE BANK N.A., F/K/A THE CHASE MANHATTAN BANK S/B/M/ TO CHASE BANK OF TEXAS, NATIONAL ASSOCIATION FORMERLY NAMED TEXAS COMMERCE BANK NATIONAL ASSOCIATION AS CUSTODIAN purporting to release this Mortgage. In that document the foregoing releasor confirms that it " is the holder of a certain mortgage that was made by BESS P. GILMORE to SAXON MORTGAGE, INC., dated 02/0/5/1999 and recorded in the land records of the Town of WESTPORT, State of Connecticut, in Volume 1671 at Page 234." The said releaser further " does hereby acknowledge that it has received full payment and satisfaction of the same, and in consideration thereof, does hereby cancel and release said Mortgage." The release is dated March 31, 2014 and is signed by a vice president of the releasing entity (JP Morgan Chase Bank, etc.) The signature is acknowledged before a New York Notary Public and bears a legend " Received for Record at Westport, CT on 4/16/2014 at 12:58:56 pm." There is no dispute but that the mortgage purportedly released is the Mortgage alleged in the Amended Complaint as the subject of this foreclosure action. The defendant argues that because under Connecticut law the mortgage follows the note, when the mortgage is released in consideration of payment in full, there is no more debt under the note, so the mortgage becomes a nullity. He cites no Connecticut authority, however, that a release of the mortgage deprives the foreclosure court of subject matter jurisdiction. That proposition may be doubtful, seeing that the payment, upon which the release purports to be based, and the release itself would be a special defense and therefore not inconsistent with subject matter jurisdiction. See Practice Book § 10-50: " Facts which are consistent with [the allegations of the complaint] but show, notwithstanding, that the plaintiff has no cause of action, must be specially alleged. Thus accord and satisfaction, ... payment (even though nonpayment is alleged by the plaintiff), release, the statute of limitations and res judicata must be specially pleaded ..." (Emphasis added.) If something must be a special defense, it follows that it must be resolved by the court which would be an exercise of subject matter jurisdiction. The point need not be belabored, however, since the purported release is granted by a party outside the chain of title of the Mortgage and is therefore itself a nullity.
Chase Bank of Texas, National Association Formerly Named Texas Commerce Bank National Association as Custodian (" Chase Texas" ) acquired the Note and Mortgage from the original mortgagee Saxon Mortgage, Inc. by assignment dated February 5, 1999 and recorded February 10, 1999. (Ex. 1 to Plaintiff’s Memorandum.) The record interest of Chase Texas remained in place until October 23, 2008 when an Assignment of Mortgage dated August 16, 2008 was recorded assigning the Mortgage from Bank of New York Trust Company, as Successor to JP Morgan Chase Bank Formerly Known as Chase Manhattan Bank Successor by Merger to Chase Bank of Texas, National Association Formerly Known as Texas Commerce Bank as Custodian, to itself. (Ex. 2 to Plaintiff’s Memorandum.) Bank of New York Trust Company, as Successor to JP Morgan Chase Bank Formerly Known as Chase Manhattan Bank Successor by Merger to Chase Bank of Texas, National Association Formerly Known as Texas Commerce Bank as Custodian then assigned the Mortgage to the Plaintiff by an Assignment dated November 27, 2009 and recorded on December 21, 2009. (Ex. 3 to Plaintiff’s Memorandum.) Any and all interest of JP Morgan Chase Bank (JPMCB) as Custodian, then, was conveyed away by the Assignment of Mortgage dated August 16, 2008 recorded on October 23, 2008. But the purported release from JPMCB upon which defendant now relies was not signed and recorded until March 31, 2014 and April 16, 2014, respectively, about five and one-half years after JPMCB has ceased to be record holder of any interest in the Mortgage. The Release of Mortgage by JPMCB purports to release something it no longer owned, that could only be released by the plaintiff. An assignment of mortgage " is in effect a conveyance of the land included in the mortgage." Astoria Federal Mortgage Corp. v. Genesis, Ltd. Partnership, 167 Conn.App. 183, 197 (2016). Meanwhile, " a Release of Mortgage is an event which terminates one’s interest in property." Capital One, N.A. v. Hutchins-Orsi, Superior Court, Judicial District of Litchfield, Docket No. LLI CV11-6003748S (October 16, 2012, Pickard, J.), 2012 WL 547678, *3. Obviously one cannot terminate an interest in a property more than once.
The purported March 31, 2014 Release of Mortgage is a nullity. It was given and recorded outside the chain of title and did not terminate plaintiff’s interest in the Mortgage. The purported release does not deprive this court of subject matter jurisdiction.
(3) " [Since] The underlying note in this action is substantively unenforceable as a matter of law, and the ‘mortgage follows the note’ by law, the mortgage is unenforceable as a matter of law, and as such this action lacks subject matter jurisdiction."
Defendant’s argument is that the only maker of the Note with personal liability on the Note was his mother Bess Gilmore. Since Bess Gilmore is deceased and the plaintiff made no claim against her estate, there is no person having personal liability on the Note, which is therefore unenforceable. Since under Connecticut law the mortgage follows the Note, the Mortgage is also unenforceable, and this foreclosure court therefore lacks subject matter jurisdiction. Although the argument might appear to be logically sound, it over extends the concept of " follows the note" and lacks legal validity.
A mortgage is enforceable even if a party defendant is not personally liable under the Note. The unenforceability of the Note against a specific individual " does not supercede the bank’s continuing access to equitable foreclosure proceedings." New Milford Savings Bank v. Jajer, 244 Conn. 251, 267 (1998). See also, Grand Lodge of the Ancient Order of United Workmen of Dakota v. Sperry, 8 Conn.Supp. 43 (Conn.Super., 1940) (" All that appears with reference to the defendants is that they were the owners and in possession of the mortgaged premises at the time of the institution of the foreclosure proceedings. Nothing is alleged which in any way makes them liable for the indebtedness. To be sure, if they wish to retain the property they would have to redeem and thus pay the debt. But as mere owners in possession of the mortgaged premises this is the extent of their liability" ); Wells Fargo Home Mortgage, Inc. v. Bemis, Superior Court, Docket No. 518748 (February 26, 2002, Martin, J.), 2002 WL 449100. (Mortgagor’s bankruptcy discharge from personal liability on underlying debt does not extinguish security interest of mortgagee.)
Defendant Douglas Gilmore is not a party defendant to this action in order to charge him with personal liability on the Note signed only by his mother, now deceased. He is a party to this foreclosure case because he is the record owner of the mortgaged Property. Plaintiff seeks to extinguish the equity of redemption in the property and Mr. Gilmore, now being the sole owner of that equity is a necessary party to the foreclosure case. See Practice Book § 9-6 and Conn. Gen. Stat. § 52-102 (allowing person to be made a party " if that person is necessary for a complete determination of settlement of any question involved therein). In addition, necessary parties to an action have been defined as " [p]ersons having an interest in the controversy, and who ought to be made parties, in order that the court may act that rule which requires it to decide on, and finally determine, the entire controversy, and do complete justice by adjusting all the rights involved in it." Biro v. Hill, 214 Conn. 1, 5 (1990). Because defendant is the sole owner of the Property, and a judgment in this case may terminate his rights in the property, defendant is an interested and absolutely necessary party to this action. Defendant’s inability to charge defendant Gilmore, or anyone else, with personal liability under the Note does not mean that the foreclosure case has failed. Defendant’s lack of personal liability on the Note is irrelevant to the foreclosure case.
Defendant’s reliance on Conn. Gen. Stat.§ 45a-375(c) is likewise misguided. Section 45a-375(c) (part of Chapter 802b- Decedent’s Estates) provides, in part:
[N]o claim may be presented and no suit on such claim may be commenced against the fiduciary, the estate of the decedent, or any creditor or beneficiary of such estate but within ... two years from the date of decedent’s death ...
The statute is totally inapplicable to this case. This is not a suit against the executor or administrator of the Estate of Bess Gilmore, deceased, on a claim against the estate, which undoubtedly was closed years ago. This a foreclosure case of mortgage on property of the decedent which survived the probate of the estate.
(4) " The dismissal of the prior 2004 foreclosure action in Stamford under Practice Book § 14-3, for failure to prosecute with reasonable diligence and that court’s denial of plaintiff’s motion to reopen that dismissal under Practice Book § 17-43 are res judicata/collateral estoppel as a matter of law against Bess Gilmore."
The 2004 Stamford case was- as is this present Bridgeport case- an action to foreclose on the home in Westport then owned by Bess Gilmore for default in payment of the Note and Mortgage signed by her on February 5, 1999 in favor of plaintiff’s predecessor Saxon Mortgage, Inc. The 2004 foreclosure case never went to final judgment of foreclosure. It was dismissed by Judge Adams on February 1, 2010 pursuant to Practice Book § 13-4 for failure to prosecute with reasonable diligence. Plaintiff’s Motion to reopen that dormancy dismissal was denied by Judge Mintz on August 27, 2012. Defendant Douglas Gilmore, as present owner of the Property, now moves in this 2016 subsequent foreclosure case commenced in Bridgeport to dismiss this case on the ground that the dormancy dismissal of the 2004 Stamford case and the denial of plaintiff’s motion to reopen the dormancy dismissal of that case are binding on the plaintiff under the doctrine of res judicata. But that dormancy dismissal and the ruling denying plaintiff’s motion to reopen that dormancy dismissal were not final judgments having res judicata binding effect. " The doctrine of res judicata, or claim preclusion [provides that] a former judgment on a claim, if rendered on the merits, is an absolute bar to a subsequent action on the same claim." U.S. Bank, N.A. v. Foote, 151 Conn.App. 620, 626 (2014). " The doctrine of res judicata applies if the following elements are satisfied: the identities of the parties are the same; the same claim, demand, or cause of action is at issue, and the parties had an opportunity to litigate the issues fully." Id. " A decision with respect to the rights and liabilities of the parties is on the merits where it is based on the ultimate fact or state of facts disclosed by the pleadings or evidence, or both, and on which the right of recovery depends." Rosenfield v. Cymbala, 43 Conn.App. 83, 91-92 (1996). The 2004 Stamford case never got to the point of a hearing on the ultimate facts of the plaintiff’s prayer for relief of a judgment of foreclosure. In fact, that failure to achieve a final judgment of foreclosure after being in litigation for six years is precisely why it was dismissed for dormancy under Practice Book § 13-4.
In Lacasse v. Burns, 214 Conn. 464, 473 (1990), our Supreme Court specifically ruled:
We have held, however, that a dismissal entered pursuant to [Practice Book] § 251 [now § 14-3] is not an adjudication on the merits that can be treated as res judicata. Gionfrido v. Wharf Realty, Inc., 193 Conn. 28, at 34, n.6, 474 A.2d 757 (1989), Green v. Liquor Control Commission, 191 Conn. 528, 544, 469 A.2d 382 (1983), and Milgrin v. DeLuca, 195 Conn. 191, 195, 487 A.2d 522 (1985). On the basis of these holdings, we have also stated, albeit in dicta, that § 52-295 is available to plaintiffs who have suffered dismissal pursuant to § 251 [now § 13-13] for lack of reasonable diligence in the prosecution of their actions. Gionfrido v. Wharf Realty, Inc., supra; see Hughes v. Bernier, 2016 Conn. at 494, n.5. 538 A.2d 703.
Our Appellate Court has reached the same conclusion. See Bruno v. Geller, 136 Conn.App. 707, 725 (2012) (Judgments based on the following reasons are not rendered on the merits: want of jurisdiction; pre-maturity; failure to prosecute; unavailable or inappropriate relief or remedy; lack of standing." (Emphasis added.))
Clearly, then, the current action is not barred by res judicata as the result of the dormancy dismissal of the prior 2004 foreclosure action in Stamford for failure to prosecute.
Defendant also argues that Judge Mintz’ August 27, 2012 denial of plaintiff’s motion to reopen the February 21, 2010 dormancy dismissal of the 2004 foreclosure action has res judicata binding effect as to this motion to dismiss the present 2016 action. The fact that the dismissal itself under Practice Book § 14-3 for failure to prosecute with due diligence is not a final judgment entitled to res judicata effect militates heavily toward the position that any ruling on a motion to reopen such a dismissal must also not be a final judgment for purposes of the doctrine of res judicata. The cases cited by defendant are not inconsistent with that position and can be distinguished because the dismissals in each of those cases were not granted merely- or at all- for failure to prosecute with reasonable diligence under § 14-3, but also for other more serious sanctionable misconduct of counsel for the plaintiff causing the dismissal and the action on any motion to reopen the dismissal be a final judgment. In Skinner v. Doelger, 99 Conn.App. 540 (2009), a dismissal entered initially under § 14-3, but that dismissal was opened one month later. Thereafter, the case was assigned for trial and a second dismissal was entered for failure of plaintiff’s trial counsel to appear ready for trial, because counsel had been " less than candid with the court," and because an affidavit of counsel " was clearly intended to mislead the court." 99 Conn.App. at 550-51. When the second dismissal was appealed, the Appellate Court affirmed the second dismissal and the failure to reopen that dismissal without even mentioning its prior decision in Bruno v. Gellar, supra, where it had held that Section 14-3 dismissals were not final judgments, clearly indicating that the court considered the disciplinary dismissal in Skinnner to be something more serious than just a failure to prosecute with reasonable diligence. Similarly, in Gionfrido v. Wharf Realty, Inc. supra, 193 Conn. 28 (1984), the case was dismissed during jury selection when counsel for the plaintiff failed to return to court after the lunch recess. There was no mention of Section 14-3. Similarly, in Stein v. Horton, 99 Conn.App. 477 (2007), the court dismissed the case " with prejudice" when the plaintiff failed to appear on three occasions for a hearing in damages. There was no mention of Section 14-3. And in Housing Authority of the Town of East Hartford v. Melanson, Superior Court, Judicial District of Hartford/ New Britain, Docket No. SPH 8810-46860EH (April 4, 1991, Berger, J.), 1991 WL 86259, the plaintiff had tried postjudgment unsuccessfully to reopen a stipulated judgment that had entered before the court. Practice Book § 14-3 was not involved. The case had been prosecuted to judgment.
There is no indication in this case that the dismissal of the 2004 action entered on February 1, 2010 was anything other than a dormancy dismissal under Practice Book § 14-3. The court’s electronic file entry for Docket No FST CV04-4001641 for February 1, 2010 (position 215) indicates simply " Dismissed under P.B. 14-3. Notices Sent- Court Ordered Dismissal Only." Under Lacasse v. Burns, supra, and Bruno v. Geller, supra, that was not a final judgment.
Neither the dormancy dismissal under Practice Book § 14-3 nor the subsequent denial of plaintiff’s Motion to Open Dismissal were final judgments having res judicata binding effect of barring this subsequent action. When Judge Mintz denied the Motion to Open on August 27, 2012 he did so for the procedural reason that the Motion for Reopen had been pending for two years without seeking a ruling- not for any substantive reason. His final comment was " Go start your new action."
Judicial Branch, digital audio recording of proceedings before Judge Mintz in Docket No. FST CV0404001641, August 27, 2012.
Defendant also suggests that this court’s denial of the plaintiff’s motion for summary judgment as to liability only in the 2004 case by Memorandum of Decision filed October 25, 2006 is res judicata as to this 2016 case. That argument is rejected. A ruling denying summary judgment is not a final judgment. The result of the ruling is that the case must go to trial.
Defendant also argues in support of this Motion to Dismiss that entry of dormancy dismissal in the 2004 action under Practice Book 14-3 for failure to prosecute with reasonable diligence, and the Stamford court’s denial of plaintiff’s motion to reopen that dismissal, have collateral estoppel binding effect on the plaintiff in this 2016 Bridgeport action " [u]nder the historically recognized special defense in equity and foreclosure of laches, the court [having] made a final ruling on this legal issue as a matter of law."
" Collateral Estoppel ... is that aspect of res judicata which prohibits the relitigation of an issue when the issue was actually litigated and necessarily determined in a prior action between the same parties on a different claim." U.S. Bank, N.A. v. Foote, 151 Conn.App. 620, 628-29 (2014). Defendant argues without analysis that " The issue of laches is collateral estoppel. The lack of diligence in prosecution of the case has been legally adjudicated, § 14-3, and the fact that that such delay was not based on ‘mistake, accident, or other reasonable cause’ has also been legally adjudicated, § 17-43(a)."
Section 17-43(a) of the Practice Book sets the grounds for reopening a judgment of nonsuit or default, one of which is " ... that the plaintiff or the defendant was prevented by mistake, accident or other reasonable cause from prosecuting, or appearing to make the same."
The problem with the argument is that the issue of lack of reasonable diligence at issue in the 2004 case was entirely different from any issue of unreasonable delay that would be at issue if the defendant were to file a special defense of laches in this case. The delay in prosecuting the 2004 case was strictly limited in that action to the period from commencement in 2004 until the case was dismissed on February 1, 2010 under Practice Book § 14-3. Laches, on the other hand, if it were to be pleaded as a special defense in this 2016 case (which it has not) where the motion to dismiss now before the court has been filed, goes only to the delay in starting this case (not including any delay while a previous action was pending)- in other words, delay commencing on August 27, 2012 when Judge Mintz denied the plaintiff’s motion to reopen the dismissal of the 2004 case until this case was served on June 22, 2016. Obviously, that laches issue was not and could not have been previously litigated in the 2004 action. Mr. Gilmore cites a reference to laches made by Judge Mintz at the August 27, 2012 hearing when he denied the motion to open the dormancy dismissal of the 2004 case. The reference was that his denial of the motion to reopen the dormancy dismissal of the 2004 case was " sort of a laches type ruling." Obviously that 2014 " laches-type" comment had absolutely nothing to do with a possible laches defense to this 2016 action and was referring to Judge Mintz’ denial of the motion to open dormancy dismissal because of the delay from the filing of the motion to reopen on August 10, 2010 until it came before the court for a ruling on August 27, 2012.
See footnote 4.
All of defendant Gilmore’s arguments under the doctrines of res judicata and collateral estoppel as a basis for granting his Motion to Dismiss this case are rejected.
(5) This action and/or the enforcement of this action against defendant violates the defendant’s right to procedural Due Process under the 14th Amendment to the U.S. Constitution and under Article First, § 10 to the Connecticut Constitution
The due process clause of Section 1 of the Fourteenth Amendment to the United States Constitution provides:
No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States, nor shall any state deprive any person of life, liberty, or property without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
Article First, Section 10 to the Connecticut Constitution provides:
All courts shall be open, and every person, for an injury done to him in his person, property, or reputation, shall have remedy by due course of law, and right and justice administered without sale, denial or delay.
Practice Book § 10-30 provides that a Motion to Dismiss " ... shall always be filed with a supporting memorandum of law and, where appropriate, with supporting affidavits as to facts not apparent on the record." Defendant has provided a Memorandum of Law in Support of Motion to Dismiss and a Reply Memorandum to Plaintiff’s Memorandum in Opposition to Defendant Gilmore’s Motion to Dismiss, but provides no affidavit setting forth the factual basis for his claim that he has been or will, if this action proceeds, be deprived of due process of law which he correctly defines as " ... that persons whose property rights will be affected by a court’s decision are entitled to be heard ‘at a meaningful time and in a meaningful manner.’ " Citing Roundhouse Construction Corporation v. Telesco Mason Supplies Co., 168 Conn. 371, 367-77, vacated 423 U.S. 809 (1975), on remand, 170 Conn. 155, cert. denied, 429 U.S. 889 (1976). Nor has defendant requested an evidentiary hearing as to such facts. In lieu of such an affidavit, or a hearing, the defendant states in his Memorandum:
This constitutional presentation is action only as applied. The powers of this court are being utilized to deprive the defendant of constitutionally protected property which requires procedural due process pursuant to both the U.S. and Connecticut Constitutions. (Memorandum, p. 24); and
There cannot be any procedural due process when the defendant [presumably defendant in this case Douglass Gilmore as opposed to the original defendant in the first two cases, his mother Bess Gilmore who died in 2009] was not a party to either the note or the mortgage. Defendant cannot be imputed with the actions and responsibilities of a third party, and by legal force and the acts of " state actors" to be compelled by threat of loss of constitutionally protected property be required to act for another person to defend the conduct of another person, or to speak for another person over whom the defendant has no legal responsibility, obligation or right without constituting a denial of Due Process. (Memorandum, p. 25); and
The constitutional argument of the defendant is a simple one. It is the plaintiff’s case and request before this court of state action. The plaintiff asks this court to use state action to enforce a mortgage against a party not a maker or obligor under the note; to use state action to enforce a mortgage under a note that is legally unenforceable against no person over whom the court can have jurisdiction; to use state action to enforce the mortgage whether the note is lost or physically exists or not; to use state action to enforce the mortgage rendering the UCC’s lost instrument statute, § 42a-309 immaterial and unenforceable in a foreclosure action; to use state action to enforce the note regardless of the execution of a release duly filed on the land records; to use state action to enforce the mortgage in a foreclosure action filed on the same issue 12 years after the identical action had been filed; after a judgment of Dismissal against this plaintiff; after denial of a Motion to Open against this plaintiff; after no appeal; to use state action to enforce the mortgage in a foreclosure action on the same issue 10 years after a mortgagor’s motion for summary judgment on the identical issues and defendant’s counterclaim has been denied; to use state action to enforce the mortgage without any limitation of the application of estate statutes; the Practice Book; or the requirements of appeals; to use state action to enforce the mortgage, after the maker, maker and obligor is dead, witnesses gone, evidence lost; special defenses and counterclaims defeated by time; to use state action to enforce the mortgage even though the holder cannot be a holder in due course; to use state action to enforce the mortgage against a non-party without demand, notice, acceleration, or possibility of cure against a defendant not a party to the note; to use state action to enforce the mortgage to save the note, so the mortgage can then follow the note. (Memorandum, p. 28.)
Nowhere in this (somewhat more than " simple" ) recitation has the defendant articulated how or when or by whom he has been deprived of the right " be heard at a meaningful time and in a meaningful manner." which is at the core of his due process argument. This not a situation similar to that presented in Society for Savings v. Chestnut Estates, Inc., 176 Conn. 563, 572 (1979) where the court found that the statute on foreclosure deficiency judgments was constitutionally defective because it did not require that the defendant be afforded an opportunity to participate in the determination of the value of the property by presenting evidence. Every one of the grievances listed above by defendant Gilmore can be raised and litigated in this case by denials in an answer, by special defenses (which may or may not be found to be legally sufficient, but may be pleaded), by motion to strike, by motion for summary judgment, by affidavits in opposition to a motion for summary judgment (including Bess Gilmore’s affidavits which were filed in opposition to summary judgment in the 2004 action) or by participation in a full trial on the merits in this court resulting in a final judgment which is subject to appeal to the Appellate Court and, upon petition for certification, to our Supreme Court. There is no claim otherwise. Many of these grievances have been decided today in this ruling on defendant’s Motion to Dismiss after an abundance of due process. The Motion to Dismiss and objection thereto have been argued twice at short calendar. Defendant has submitted his 34-page (plus attachments) Memorandum in Support of Motion to Dismiss, and his 28-page (plus attachments) Reply Memorandum to Plaintiff’s Memorandum in Opposition to Defendant Douglas Gilmore’s Motion to Dismiss, which have been carefully reviewed and considered by the court. To the extent that some of the grievances have not been addressed today, defendant has the full panoply of discovery and procedural rights under our Rules of Practice and our statutes and common law to have those grievances heard and determined in open court with his full participation. The Motion to Dismiss for violation of procedural due process is denied for lack of any showing that defendant’s due process right have been violated or restricted by this civil action.
Defendant Douglas Gilmore filed 25 Special Defenses and a Ten-Count Counterclaim in the 2004 action which were unresolved when the case was dismissed for dormancy.
Defendant Douglas Gilmore opposed Plaintiff’s Motion for Summary Judgment as to liability in the 2004 action which Motion for Summary Judgment was denied by this court (then sitting in Stamford) on October 25, 2006.
(6) " Connecticut public policy prohibits (a) violation of the Practice Book which manipulate the process of the Court to influence the availability quality, or presentation of material evidence in the case, or to defeat special defenses or counterclaims, whether such conduct be by design or consequence, or (b) the enforcement by the court of a private agreement against any person not a party to such agreement to suffer loss of any property recognized as protected under the Constitution of the United States and Connecticut Constitution, which public policies are grounded in Connecticut statutory and common law, as well as the Constitution of the United States and Connecticut Constitution, and, as such pursuant to the supervisory powers of the Court and the Complaint should be dismissed."
There is Superior Court authority that a claim that a contract is unenforceable because it violates public policy does not implicate subject matter jurisdiction and is not properly raised by a Motion to Dismiss under Practice Book § 10-30, but rather pertains to the legal sufficiency of the complaint. The Wireless Connection, LLC v. Wireless Concepts of Orange, LLC, Superior Court, Docket No. CV02-0344791S (September 16, 2002, White, J.), 2002 WL 31303826 at *1. But even if it should be held that the issue does implicate subject matter jurisdiction or may be raised by motion to dismiss, the public policy argument advanced by Motion to Dismiss in this case is legally inadequate and must fail.
In support of his conclusion that the doctrine of public policy may be used as a bar to defeat a foreclosure action, the defendant relies entirely on Solomon v. Gilmore, 248 Conn. 769 (1997), which holds that a secondary mortgage issued by an unlicensed lender in violation of Conn. Gen. Stat. § 36a-511 is unenforceable in a foreclosure action. There is no claim but that the plaintiffs who loaned the money secured by a second mortgage in their favor on the defendant’s property were unlicensed at all relevant times in violation of the licensing statute. The Court’s analysis leading to the conclusion that the second mortgage on the defendant’s property was not enforceable is guided and informed by three well-settled principles of law:
Section 36a-511 provides in relevant part; " (a) No person shall engage in the secondary mortgage loan business in this state as a lender or broker unless such person has obtained a license under section 36a-510 to 36a-524, inclusive."
In light of the fact that § 36a-511 does not expressly address the enforceability of a contract entered into by the unlicensed lender, we undertake our consideration of this question bearing in mind that, in construing statutes, " our fundamental objective [is to ascertain and give effect] to the apparent intent of the legislature" ... Second, it is well established that contracts that violate public policy are unenforceable ... Third, the secondary mortgage act is a remedial statute that is intended to protect the consumer. Thus, because " remedial statutes should be construed liberally in favor of those whom the law is intended to protect" ... we liberally construe the secondary mortgage act in favor of the defendant ...
(Citations omitted.) Id., 283.
The Solomon v. Gilmore court also underscored the caution to be exercised in declaring a contract unenforceable: " Finally, it is true, as plaintiffs point out in their brief, that this court has often stated that [the principle that] agreements contrary to public policy are [unenforceable] should be applied with caution and only in cases plainly within the reasons on which that doctrine rests." (Citations omitted.) Id., 790.
In exercising that caution the Solomon v. Gilmore court reviewed other statutes related to § 36a-511 in the Secondary Mortgage Act; reviewed the legislative history of that statute, reviewed the amendments to the statute since it was first enacted as part of a 1990 Public Act, and reviewed the decisions of Connecticut courts and decisions of sister states in comparable areas, before declaring that it was the intent of the legislature in enacting of Section 36a-511, although not expressly stated, that contracts entered into by unlicensed secondary mortgage lenders in violation of the statute are unenforceable.
The defendant in this case offers no such analysis in his few pages devoted to this argument. Indeed, this court doubts that a Solomon v. Gilmore analysis would even be possible as to a claimed public policy of 120 words based on unspecified rules of the Connecticut Practice Book, which " manipulate the process of the court to influence the availability, quality or presentation of material evidence in the case [none offered in this case] or to defeat special defenses [none filed in this case], at least five Connecticut statutes [none of which are claimed to be remedial consumer statutes] unspecified provisions of the United States Constitution and the Constitution of Connecticut, and unspecified use of the " supervisory powers of the Court." The public policy claimed to be violated is simply too vague, too broad, and too diffuse to be addressed seriously.
There are no special defenses filed in this case. If the reference is to the 25 special defenses filed in the 2004 case, then this argument should have been made in that case. In any event, none of the 25 special defenses in that 2004 case were " defeated" and in fact this court denied the plaintiff’s motion for summary judgment against this defendant’s mother and predecessor in title, Bess Gilmore.
One of the statutes cited as having a public policy violated by this action is the " Statute of Frauds," Conn. Gen. Stat. § 52-550 which does not even apply. The promissory note secured by the mortgage sought to foreclosed in this case was signed as maker only by defendant’s deceased mother Bess Gilmore. Defendant Douglas Gilmore is not a maker of the Note, nor is there any claim or evidence of a separate written " memorandum" of the loan signed by him. But the plaintiff in the action is not seeking to " charge" Douglas Gilmore with personal liability on that Note. He is only named as a defendant in this foreclosure action because he is the current owner of the mortgaged Property. He inherited the Property in 2010 subject to the mortgage deed signed by Bess Gilmore on February 5, 1999. No motion for deficiency judgment has been filed or could be filed against defendant Douglas Gilmore as a non-signatory of the Note.
Section 52-550 provides, in relevant part: " (a) No civil action may be maintained in the following cases; unless the agreement, or a memorandum of the agreement, is made in writing and signed by the party or the agent of the party, to be charged: ... (6) upon any agreement for a loan in an amount which exceeds fifty thousand dollars."
The court has already addressed and rejected in this Memorandum of Decision the defendants’ arguments under Conn. Gen. Stat. § 49-17 and the provisions of Article Three of the Connecticut Uniform Commercial Code.
Order
For all the foregoing reasons the Defendant’s Motion to Dismiss is denied.