Opinion
FBTCV166056879S
05-23-2017
Citimortgage, Inc. v. Isabel Otero
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Edward T. Krumeich, J.
Plaintiff Wilmington Savings Fund Society F.S.B. as Trustee for Stanwich Mortgage Loan Trust A (" Wilmington"), has moved for summary judgment (1) to quiet title to certain real property located at 1087 Kossuth Street, Bridgeport, Connecticut (the " Property") pursuant to C.G.S. § 47-31, and (2) to reform a deed executed by defendants Isabel Otero (" Otero") and Janelle Wolitsky (" Wolitsky") dated June 6, 2014, recorded in the Bridgeport Land Records in Book 9067 at Page 149 on June 25, 2014 (the " Deed"), that plaintiff asserts mistakenly designated Wolitsky, rather than Otero, as sole owner of the fee interest in the Property, mortgaged by Otero to CitiMortgage by mortgage deed dated June 6, 2014, recorded in the Bridgeport Land Records in Book 9067 at Page 151 on June 25, 2014 (the " Mortgage").
On April 3, 2017, the Court granted the motion to substitute Wilmington for CitiMortgage, Inc. (" CitiMortgage") as plaintiff; in granting the motion to substitute plaintiff, the Court received and reviewed evidence that the Mortgage had been assigned from the original mortgagee, Mortgage Electronic Registration Systems, Inc. (" MERS"), to CitiMortgage and then by CitiMortgage to Wilmington, the current owner of the Mortgage and holder of the note and mortgage lien on the Property.
Defendant Wolitsky has been defaulted for failure to appear. Defendant Otero has answered the complaint and asserted various special defenses, including defenses challenging the validity of the Mortgage and plaintiff's standing because Otero is not the owner of record of the Property. Otero has not submitted any papers in opposition to the summary judgment motion. For the reasons stated below, the motion for summary judgment is granted.
The Effect of Defendant Wolitsky's Default
Default has entered against Wolitsky. In an equitable action such as one seeking reformation of a deed " the principles of equity require that the plaintiff prove the allegations contained in his complaint so that equitable relief may be granted." Baldwin v. Harmony Builders, Inc., 31 Conn.App. 242, 245, 624 A.2d 393 (1993), citing Ratner v. Willametz, 9 Conn.App. 565, 576, 520 A.2d 621 (1987). An action brought by a plaintiff which requests equitable instead of legal relief poses a situation in which a determination of monetary damages in a hearing in damages is not appropriate. The plaintiff, however, is still required to establish his right to receive equitable relief after the entry of default. 1 E. Stephenson, Connecticut Civil Procedure § 163. This necessarily entails a hearing in which the plaintiff must prove the matters he has alleged in his complaint. Id.; see also Starr Cash & Package Car Co. v. Starr, 69 Conn. 440, 441, 37 A. 1057 (1897). Thus, in contrast to a default entered in a legal action, the facts alleged in the plaintiff's complaint are not treated as confessed when a default is entered in an equitable action. Id. In equitable as well as legal actions, however, the entry of a default bars a defendant from asserting a defense. Kloter v. Carabetta Enterprises, Inc., 186 Conn. 460, 464, 442 A.2d 63 (1982). Thus, the distinction between defaults entered in equitable and legal actions lies merely in what must be proven by the plaintiff in the subsequent hearing on the relief to be granted. In legal actions, the plaintiff must establish that the amount of damages he claimed is appropriate, whereas in equitable actions the principles of equity require that the plaintiff prove the allegations contained in his complaint so that equitable relief may be granted. Thus, in both equitable and legal actions, the plaintiff must " establish his right to relief to the court's satisfaction, even though some issues may have been laid at rest by the default." 1 E. Stephenson, Connecticut Civil Procedure § 163, p. 656. Ratner, 9 Conn.App. at 575-76.
To establish the basis for reformation of the Deed and to quiet title to the Property in favor of Otero and Wilmington, plaintiff has moved for summary judgment and submitted evidence relating to the transactions at issue, which has not been controverted by defendants.
The Standards for Deciding a Motion for Summary Judgment
" The standards . . . [for] review of a . . . motion for summary judgment are well established. Practice Book [§ 17-49] provides that 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 . . . A material fact . . . [is] a fact which will make a difference in the result of the case . . ." DiPietro v. Farmington Sports Arena, LLC, 306 Conn. 107, 115-16, 49 A.3d 951 (2012), quoting H.O.R.S.E. of Connecticut, Inc. v. Washington, 258 Conn. 553, 558-60, 783 A.2d 993 (2001) (citations omitted).
The Deed Is Reformed to Correct the Parties' Mutual Mistake and to Enforce their Understanding that Otero Was to be Sole Owner of the Mortgaged Property.
On or about March 28, 2014, Otero applied to CitiMortgage to refinance an existing loan secured by a mortgage on the Property from Otero and Wolitsky, who then jointly owned the fee interest in the Property and were jointly obligated on the note and mortgage. Otero testified the decision to refinance was " [b]ecause Janelle Wolitski wanted to buy a property for herself." The replacement mortgage was to be from Otero as sole owner of the Property. Wolitsky, who was a debtor and mortgagor on the existing mortgage, would be released from liability and the loan would be to Otero only secured by a mortgage on the Property from Otero. Both Otero and Wolitsky agreed that Otero would become the sole owner of the Property before it was mortgaged to CitiMortgage. The loan application was approved on condition that Otero would be the sole debtor and the sole owner of the Property subject to the new mortgage lien.
On June 6, 2014, the mortgage loan was closed. Otero signed a note to CitiMortgage in the amount of $160, 181.00 and executed a mortgage deed to the Property to secure the loan in favor of MERS, as nominee for CitiMortgage. In the Mortgage Otero represented she was the owner of the Property with the right and ability to convey a lien to the lender. Also on June 6, 2014, Otero and Wolitsky executed a quitclaim deed to the Property. All parties to the closing intended that the Deed would convey sole title to the Property to Otero, but because of a drafting error that identified Wolitsky as " Releasee" rather than Otero, the Deed instead conveyed sole fee title to the Property to Wolitsky rather than Otero. The erroneous Deed was recorded prior to the Mortgage from Otero. Both Otero and the attorney for CitiMortgage who prepared the quitclaim deed acknowledged the error and swore the Deed was intended by the parties to convey sole title to Otero, who had executed the Mortgage to secure Otero's refinanced debt to CitiMortgage. The effect of the error in the Deed is that Otero was not record title owner of the fee when the old mortgage was released and the Mortgage was recorded.
In Deutsche Bank Nat'l Trust Co. v. Perez, 146 Conn.App. 833, 838-39, 80 A.3d 910 (2013), the Appellate Court recited the principles underlying equitable proceedings to reform a deed:
" A cause of action for reformation of a contract rests on the equitable theory that the instrument sought to be reformed does not conform to the real contract agreed upon and does not express the intention of the parties and that it was executed as the result of mutual mistake, or mistake of one party coupled with actual or constructive fraud, or inequitable conduct on the part of the other . . . Reformation is not granted for the purpose of alleviating a hard or oppressive bargain, but rather to restate the intended terms of an agreement when the writing that memorializes that agreement is at variance with the intent of both parties . . . Equity evolved the doctrine because an action at law afforded no relief against an instrument secured by fraud or as a result of mutual mistake . . . The remedy of reformation is appropriate in cases of mutual mistake--that is where, in reducing to writing an agreement made or transaction entered into as intended by the parties thereto, through mistake, common to both parties, the written instrument fails to express the real agreement or transaction . . . In short, the mistake, being common to both parties, effects a result which neither intended." . . . " [w]here a writing that evidences or embodies an agreement in whole or in part fails to express the agreement because of a mistake of both parties as to the contents or effects of the writing, the court may at the request of a party reform the writing to express the agreement except to the extent that rights of third parties . . . will be unfairly affected" . . .
" [T]here can be no reformation unless there is an antecedent agreement upon which the minds of the parties have met. The relief afforded in reforming an instrument is to make it conform to the previous agreement of the parties. Therefore a definite agreement on which the minds of the parties have met must have pre-existed the instrument in question. The court cannot supply an agreement which was never made, for it is its province to enforce contracts, not to make or alter them." . . . " Note the limited scope for reformation. Contracts are not reformed for mistake; writings are. The distinction is crucial." (Citations omitted).
The burden of proof for reformation is " clear, substantial and convincing evidence." Lopinto v. Haines, 185 Conn. 527, 534, 441 A.2d 151 (1981). The Appellate Court explained this heightened standard of proof in Deutsche Bank, 146 Conn.App. at 839-40:
A court in the exercise of its power to reform a contract must act with the utmost caution and can only grant the relief requested if the prayer for reformation is supported by convincing evidence . . . In the absence of fraud, it must be established that both parties agreed to something different from what is expressed in writing, and the proof on this point should be clear so as to leave no room for doubt . . . If the right to reformation is grounded solely on mistake, it is required that the mistake be mutual, and to prevail in such a case, it must appear that the writing, as reformed, will express what was understood and agreed to by both parties . . . A party seeking the reformation of a contract must show proof justifying reformation by " clear, substantial and convincing evidence, " meaning evidence that " induces in the mind of the trier a reasonable belief that the facts asserted are highly probably true, [and] that the probability that they are true or exist is substantially greater than the probability that they are false or do not exist." (Citations omitted.)
Here, the evidence clearly and convincing proves that all parties to the refinancing understood and agreed that Otero would become sole owner of the Property, not Wolitsky. By mutual mistake, Otero and Wolitsky executed the Deed that, through scrivener's error, conveyed sole title to Wolitsky instead of Otero as the parties had intended. Otero and Wolitsky had actually intended the reverse, that sole title to the Property be conveyed to Otero so she would be the sole owner of the Property able to execute the Mortgage to secure Otero's refinanced loan from CitiMortgage.
In exercising its equitable power of reformation, a court is limited to correcting mistakes in a written instrument so that the writing conforms with the true agreement and intent that existed between the actual parties to that agreement. The court generally " does not have the power to add a party to a contract or [to] substitute parties to a contract" . . . This is because someone who was not involved in the formation of an agreement could not have reached a " meeting of the minds" that would conflict with the writing memorializing the intended agreement, and, therefore, there could not be any mistake amenable to reformation.Deutsch Bank, 146 Conn.App. at 842 (citations omitted).
This case is unlike the situation in Deutsche Bank, 146 Conn.App. at 842-43, where the Court held that a wife could not be added as a party to a mortgage deed signed by her husband through reformation because there was no evidence she participated in the loan transaction. Here, Wolitsky executed the Deed and was aware of and participated in the refinancing transaction that relieved Wolitsky of liability on the prior note and mortgage to which she was party. There was clear and convincing evidence that Wolitsky benefitted from the transaction, and knew the intention of the parties to the Deed was to convey sole title to Otero, not to her. The Deed's identification of Wolitsky rather than Otero as sole owner of the fee was done by mutual mistake and was contrary to the actual intention of the parties when they executed the Deed.
As assignee of the Mortgage granted by Otero, plaintiff's interest is derived from Otero and therefore Wilmington has standing to seek to reform the Deed so that it conveys the entire fee interest to Otero, not to Wolitsky, as the intended owner of the Property subject to the Mortgage. See Wolchesky v. Wolchesky, 2013 WL 6334724 *2 (Conn.Super. 2013) (Boland, J.) , citing Johnson v. Gavin, 131 Conn. 489, 498, 41 A.2d 113 (1945). In Wolchesky Judge Boland explained that privity with a party to the deed to be reformed is the key to standing of a non-party to reform a deed:
When the instrument a party seeks to reform is a deed, it is widely accepted that grantees in the chain of title do have standing to raise issues relative to the accuracy of the legal description, inter alia . Proper parties to an action for reformation of a deed include " all persons having an interest in the subject matter which will be affected by a decree reforming [the] instrument . . . the original grantee and the parties to whom he conveyed are proper parties plaintiff in a suit to correct a deed"; 76 C.J.S. Reformation of Instruments, § 73. A rationale for this rule is set forth in Am.Jur.2d, Reformation of Instruments, § 60, which explains that as applied to real estate conveyances " [p]rivity is defined as the mutual or successive relationship to the same rights of property, title, or estate. Privity with a party to a deed, for the purposes of determining whether a nonparty to a deed can seek reformation of the deed, refers to successive possessions that are connected by an understanding that the rights of the possessor will be transferred, and a transfer of possession in fact occurs . . . A grantee in property succeeds to the grantor's right to maintain a suit to reform a prior deed . . . If a mistake of description occurs in a series of conveyances under circumstances that would entitle any one of the grantees to a reformation as against the original grantor, the equity court will work back through all and give the last grantees a right of reformation against the original grantor." Wolchesky, 2013 WL 6334724 *2.
For the reasons stated above plaintiff's summary judgment motion to reform the Deed to state that Otero is the sole owner of the fee interest in the Property, and that Wolitsky has no interest therein, is granted.
As Reformed the Quitclaim Deed Conveyed the Fee Interest in the Property to Otero and the Mortgage Conveyed a Mortgage Lien Now Held by Wilmington
C.G.S. § 47-31(a) provides in relevant part: " An action may be brought by any person claiming title to, or any interest in, real or personal property, or both, against any person who may . . . have any interest in the property . . . to quiet and settle the title to the property . . ." In Har v. Boreiko, 118 Conn.App. 787, 986 A.2d 1072, (2010), the Appellate Court described the scope of a quiet title decree: " [u]nder § 47-31, the claim for relief calls 'for a full determination of the rights of the parties in the land.' . . . To prevail, the plaintiff must do so on the strength of her own title, not on the weakness of the defendants'; . . . and by the preponderance of the evidence." By virtue of the Mortgage and the assignments from its predecessors in interest MERS and CitiMortgage, Wilmington has an interest in the Property and is entitled to a decree " to quiet and settle the title to the property" under Section 47-31(a).
Accordingly, pursuant to C.G.S. § 47-31(a), the Court quiets and settles title to the Property as follows: the Court declares that, by virtue of the Deed as reformed, Otero is the sole owner of the fee interest in the Property, and that Wolitsky has no interest therein, and further declares that Otero by executing the Mortgage conveyed a mortgage interest in her title to the Property and created a mortgage lien in favor of MERS, which Mortgage was duly assigned by MERS to CitiMortgage and by CitiMortgage to Wilmington, the present owner of the Mortgage and holder of a mortgage lien on the Property.
Plaintiff requests the Court find that the Mortgage has a " first priority position." Plaintiff has not submitted title search evidence that would permit the Court to declare that the Mortgage enjoys a first priority position. Also the only parties to this action are plaintiff, Otero and Wolitsky. The complaint has not joined others with an interest in the Property, known and unknown, as provided by C.G.S. § 47-31(b). If there are any other lienors on the Property, their priority may not be determined in this action. See 98 Lord's Highway, LLC v. 100 Lord's Highway, LLC, 138 Conn.App. 776, 786, 54 A.3d 232 (2012) (non-parties without notice of the action are not bound by quiet title declaration).
Plaintiff's summary judgment motion is granted.