Opinion
FSTCV136017689S
02-01-2017
CitiMortgage, Inc. v. Dorothy Partch
UNPUBLISHED OPINION
MEMORANDUM OF DECISION re MOTIONS TO DISMISS (#212.00 AND #251.00)
Kenneth B. Povodator, J.
Background
This is a mortgage foreclosure proceeding that was commenced in the spring of 2013. An appearance was filed on behalf of the named defendant on April 16, 2013, the return date. Summary judgment was entered on December 22, 2014 (#124.01), more than a year after the summary judgment motion has been filed (September 10, 2013). A judgment of foreclosure by sale was entered on May 11, 2015 (#136.01). Those are events that are generally typical in a proceeding such as this.
On June 3, 2016, Marjorie Partch filed a motion to be substituted for the named defendant, her mother who had died (#206.00). There is nothing unusual about that motion to substitute, in and of itself, but in this case, it represented the culmination of almost 3 years of efforts by Marjorie Partch to be made a party, commencing with #113.00 filed on March 17, 2013, with efforts persisting well into 2016. On or about September 30, 2013, she appealed from the denial of the motion she had filed seeking to be made a party, which appeal eventually was dismissed in 2014. On or about June 1, 2015, she filed a writ of error (#147.00), attacking the granting of the motion for summary judgment (despite her status as a non-party), which writ was dismissed some three months later (#150.00). This is in addition to numerous other filings, including an application to be allowed to participate in mediation and further efforts to be made a party. The first of the above-referenced motions to dismiss, #212.00, was filed on June 20, 2016, prior to the granting of her motion seeking to be substituted-but because she eventually was made a party, and because it raises subject matter jurisdictional issues, the court believes that it is appropriate if not necessary to consider the issues raised in that motion, to the extent that the issues are not also raised in the later, more properly filed motion to dismiss (#251.00). (For the remainder of this decision, all references to the defendant are references to the substituted defendant, Marjorie Partch.)
If anything, the pace of filings since the substitution has approached characterization as a cascade or avalanche--when the motion to substitute was filed, in early June 2016, that motion was docketed as #206.00. Primarily attributable to the defendant's filings, and responses to her filings, and further proceedings necessitated by her filings (including delays caused by those filings), the latest filing as of the date that this introductory paragraph is being written (January 30, 2017) was docketed as #333.00-127 filings, not including orders, in less than seven months.
The sheer volume of submissions, many relating to the claimed jurisdictional defects, makes it difficult to address issues in a logical manner (or even identify them in a comprehensive manner), but the court will attempt to do so. Before doing so, however, a clear identification of the posture of the case is essential as a predicate.
This case has had summary judgment granted and has had the entry of a judgment of foreclosure, followed by at least six motions to open the judgment. The case is still in a judgment-entered status, such that subject matter jurisdictional issues are the only issues that the court must entertain. Conversely, the jurisdictional challenges being advanced are against a backdrop of the court having entered judgment, which necessarily implies that the court was satisfied that the plaintiff had established, at least on a required prima facie basis, the possession of the (original) note and the right to pursue foreclosure.
Discussion
To summarize the defendant's jurisdictional claims as presented in her motions: The defendant argues in #212.00 that the assignment from MERS is missing essential/required language relating to successors and assignees (and that defect tainted further assignments, including to Fannie Mae); based on the existence of a subordination agreement, Flagstar Bank has an interest that should have required it to be made a party, and its absence precludes foreclosure; there is inadequate documentation concerning payment/extinguishment of an obligation involving First Constitution Bank such that it too may have an interest in the property. The motion further states that
[f]or the foregoing reasons, lacking capacity or standing before the Court, CitiMortgage could not have retained the appearing counsel for the Plaintiff herein [and] [t]he instant complaint was invalid ab initio, filed by a non-party [and] [f]or reasons of the foregoing, the alleged loan failed and was never consummated. While in abeyance, the original lender failed to provide consideration to settle the prior loan.
The motion then goes on to allege that the " property is unsecured" and asserts equitable issues such as unclean hands.
The second motion to dismiss focuses on claimed flaws in the endorsement:
The Court is directed to review the note proffered by the nominal Plaintiff herein. The note itself has no endorsement within the numbered pages [and] [w]ithout an endorsement in blank by the original lender, the instant loan never transferred out of the original lender to the nominal Plaintiff.
The defendant then goes on to challenge further transfers/endorsements:
There is no conceivable explanation for why Fannie Mae would have accepted an endorsement not attached to the note, and on a blank page, separate from the note. Nor would Fannie Mae have attempted to pass an obviously fraudulent and defective instrument to another party, committing fraud itself.
The defendant then goes on to assert that there was a failure " to accelerate the loan and send a cure letter in accordance with the terms of the note and mortgage, " and that for all of the reasons stated, the court lacks subject matter jurisdiction.
Of potential significance are two expert-type submissions--#242.00 is characterized as a mortgage auditor's report (or title examination report), and #318.00 is an affidavit from a forensic consultant (forensic handwriting examiner) relating to the signatures of the notary on certain documents submitted by the plaintiff. The court will discuss these reports/opinions, first.
The mortgage auditor's report (or title examination report) cannot be considered for any purpose, given its highly tentative nature. The document does not assert anything in terms of probability (more likely than not), but rather in terms of possibilities-problems that " may" be present" (or for which there is equivocal evidence):
1. The chains of endorsements and assignments show that at one time or another the Mortgage has been separated from the note.
2. There is evidence that the signatures on the notarizing officials on the first and second assignments have been forged or robo-signed or signed by surrogate signers which may be grounds for rendering these assignments null and void.
3. CitiMortgage, Inc. may not have the capacity to foreclose on the mortgaged property on the following ground:
3.1. There may be grounds to render null and void the three Assignments of Mortgage in which it is the last assignee because of possible fraud associated with the signatures.
The first identified issue does not appear to relate to jurisdiction--there is a claim (articulated later in the report) that the identified separation may constitute a breach of a contractual requirement, but that does not rise to the level of a jurisdictional defect. The second issue is equivocal as to what evidence shows, which in turn " may be grounds for rendering these assignments null and void; " there is no statement of evidentiary value that the evidence establishes a probability--more likely than not--that the assignments were null and void.
The preparer disclaims legal expertise, but bases the opinion on his interpretation of language in the contractual documents that he states preclude separation.
The third issue has multiple " may" components--CitiMortgage, Inc. may not have the capacity to foreclose on the mortgaged property because " [t]here may be grounds" because of " possible fraud." As discussed below, the threshold issue for a jurisdictional challenge is establishing facts calling into question the existence of jurisdiction, not simply identifying possible issues that may exist, and this submission identifies possible issues rather than stating facts that undermine the claim of jurisdiction.
This is compounded by the extent to which the auditor/examiner's report is a blend of formulaic recitation of issues regardless of whether applicable (e.g., discussion of securitization, followed by statement that there was no evidence of securitization of this mortgage); reliance on explanations/definitions from commercial websites (e.g., reliance on discussion of " Connecticut Assignment and Satisfaction of Mortgages Law" from website USLegal.com); reliance on (citation to) generic/uniform versions of UCC provisions rather than the Connecticut-adopted versions; recitation of criminal penalties (seemingly based on California law as incorporated into a referenced blog on 123notary.com); etc., The court recognizes that an expert can rely on matters that are otherwise not admissible, but they must be sources of information that experts customarily rely upon, and the formulaic and generic sources identified do not appear to satisfy even such a relaxed standard; see, § 7-4(b) of the Connecticut Code of Evidence.
The contention that there is evidence that may suggest a possible problem is not evidence that, if unchallenged, could support a jurisdictional challenge. The formulaic presentation makes it difficult even to discern identification of an evidence-based " possible problem" as opposed to a merely hypothetical problem. For example, on page 35, in a recap (examiner's comments) there is the following: " The foreclosure law in Connecticut requires that 60 days prior to the filing of a Lis Pendens, a demand letter must be sent to the borrower. If this letter was not sent, there may be grounds to invalidate the foreclosure proceedings due to a breach in procedure."
See, also, page 32 of the report, containing something of a recap:
Is this a theoretical observation, or is there claimed evidence that the notice was not sent? The court is unaware of any such evidence being presented--and the court notes that the current defendant would not have been the recipient of any such notice such that her ability to assert competent personal knowledge is doubtful. (The named defendant was represented by counsel through March 28, 2016 when a motion to withdraw appearance was granted (#200.02) but the court could find no indication of a claimed defense much less a factual submission in this regard, prior to the substitution of the current defendant.)
The answer to paragraph 6 of the complaint (which contains an allegation of notice) leaves the plaintiff to its proof--the same answer given with respect to allegations as to her execution of the mortgage and note.
This expert's report, then, does not suffice to create a factual issue relating to jurisdiction.
The forensic consultant's affidavit, set forth in #318.00, is far more concise and to the point. In effect, it is a more fact-based and definitive recitation along the lines of the second point identified by the mortgage auditor in #242.00. However, the significance is refuted, as a matter of law, by the plaintiff in its " motion to strike" (#321.00) (which the court has treated as in the nature of a substantive response). Aside from application of the validating act with respect to claimed defects in the notarization of signatures (General Statutes § 47-36aa(a)), this claimed defect has no bearing on the transfer of the note, and plaintiff correctly states that the rule in Connecticut is that the mortgage follows the note, as recently reaffirmed in appellate decisions:
[Section] 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 . . . Our legislature, by adopting § 49-17, created a statutory right for the rightful owner of a note to foreclose on real property regardless of whether the mortgage has been assigned to him. Astoria Federal Mortgage Corp. v. Genesis Limited Partnership, 167 Conn.App. 183, 202, 143 A.3d 1121, 1134 (2016).
The Supreme Court recently stated the proposition more succinctly and more emphatically:
" Under the common-law rule, as codified in many states, the mortgage follows the note, so that an investor who acquires a residential note automatically obtains the attached security interest as well ." (Emphasis added.) MERSCORP Holdings, Inc. v. Malloy, 320 Conn. 448, 453, 131 A.3d 220, 224, cert. denied, 137 S.Ct. 372, 196 L.Ed.2d 291 (2016).
Therefore, even assuming that there was a flaw in the notarizations that were not cured by the validating act, and assuming further that the improper notarization(s) might undermine the validity of the mortgage documentation, as a matter of law, the assignment/transfer of the note controls. Accordingly, this claimed defect in the mortgage paperwork chain cannot implicate subject matter jurisdiction, as it does not impact the ability of the note-holder (or party with authority to enforce the note) from pursuing foreclosure.
The defendant's identification of a claimed absence of actual or possible encumbrancers (First Constitution Bank and Flagstar Bank) as parties--whether the claimed characterization/status of those non-parties is correct or not--does not implicate jurisdiction. Aside from the due process notion that a proceeding could not affect the rights of a party who did not receive notice, General Statutes § 49-30 explicitly addresses the situation, implicitly recognizing that foreclosures sometimes take place with that " flaw" and recognizing the continuing validity of the proceeding: " [A]ll other parties foreclosed by the foreclosure judgment shall be bound thereby as fully as if no such omission or defect had occurred and shall not retain any equity or right to redeem such foreclosed real estate." (The name assigned to the statute, while not part of the statute in a formal sense, is, in itself, instructive as to the intended purpose and scope (State v. State Employee's Review Board, 239 Conn. 638, 649, 687 A.2d 134 (1997)): " Omission of parties in foreclosure actions.") A foreclosure can proceed in such circumstances, and if deemed necessary or appropriate, a statutorily-authorized postjudgment procedure can be utilized.
The court has difficulty in understanding the possible jurisdictional implications of the claim(s) that " the alleged loan failed and was never consummated. While in abeyance, the original lender failed to provide consideration to settle the prior loan." If a party (the lender) failed to perform some or all of its obligations, or performed them in an improper manner, those are matters going to the merits--denial of the affirmative claims of the plaintiff and/or possible defenses including equitable considerations, but there is nothing that appears to be properly subject to characterization as subject matter jurisdiction.
That provides an appropriate segue to the more general attack by the defendant on the paperwork, including issues of whether an endorsement is in the proper location (" [t]he note itself has no endorsement within the numbered pages"). It is not enough--even before judgment is rendered--to identify possible flaws in the paperwork history; there needs to be presentation of evidence of a material flaw, and in the context of a postjudgment attack on jurisdiction, the evidence must be such as to implicate jurisdiction.
We reject the defendant's claim that the plaintiff was required to provide a full history of any and all transfers of the note with supporting documentation, as well as documentation of the plaintiff's authority to act on behalf of the owner of the mortgage debt.
. . . The defendant has provided no authority, nor are we aware of any, that supports his suggestion that a note holder, such as the plaintiff, is obligated to produce the documentation showing the full history of the note when filing a foreclosure action. In fact, it is well settled that a note holder may initiate a foreclosure action because of the presumption that the note holder is also the note owner. (Internal quotation marks and citations, omitted.) U.S. Bank, N.A. v. Schaeffer, 160 Conn.App. 138, 149, 125 A.3d 262 (2015).
More recently, the Appellate Court emphasized that the burden is on the defendant not simply to raise questions but to proffer actual evidence justifying the challenge to the authority of the plaintiff to pursue a foreclosure:
If the foreclosing party produces a note demonstrating that it is a valid holder of the note, the court is to presume that the foreclosing party is the rightful owner of the debt . . . The defending party may rebut the presumption that the holder is the rightful owner of the debt, but bears the burden to prove that the holder of the note is not the owner of the debt . . . The defending party 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 . . . To rebut the presumption that the holder of a note endorsed specifically or to bearer is the rightful owner of the debt, the defending party must prove that another party is the owner of the note and debt . . . Without such proof, the foreclosing party may rest its standing to foreclose the mortgage on its status as the holder of the note. (Internal quotation marks and citations, omitted.) AS Peleus, LLC v. Success, Inc ., 162 Conn.App. 750, 754, 133 A.3d 503 (2016).
The ability of the defendants to raise questions, then, does not suffice to deprive the plaintiff of standing or otherwise demonstrate a lack of subject matter jurisdiction. The plaintiff established, via evidence offered prior to the entry of judgment that it was a proper party to pursue this foreclosure, at least on a requisite prima facie basis. Note that the need for evidence challenging jurisdiction seemingly is even more pronounced in a postjudgment context--in a prejudgment context, the court often has only a complaint alleging facts which are presumed accurate for purposes of jurisdiction (until challenged), and even then, there is something of a hierarchy of proof, starting with the need for the defendant to offer evidence challenging the presumption. See, e.g., Conboy v. State, 292 Conn. 642, 650-54, 974 A.2d 669 (2009). (Note that if the issue were to be presented during a trial, the court would weigh the competing evidence presented--which again emphasizes the need for actual evidence submitted to support a challenge, since in the absence of contrary evidence, the prima facie quality of the plaintiff's submission would control.)
Conclusion
The court appreciates that the self-represented defendant may not be aware of the procedural and substantive issues relating to determination of the existence of subject matter jurisdiction, and although the court must allow a self-represented party some latitude, that latitude does not allow disregard for regularity in the process of determining jurisdiction, coupled here with the need for recognition of the finality of judgments (subject to limited challenges to such essential considerations as subject matter jurisdiction).
Connecticut courts are solicitous of self-represented parties when it does not interfere with the rights of other parties. Our courts allow self-represented parties some latitude, but that latitude is constrained by our rules of practice; the purpose of which is to provide a just determination of every proceeding. (Internal quotation marks and citations, omitted.) Argentinis v. Fortuna, 134 Conn.App. 538, 539, 39 A.3d 1207 (2012).
Adjudicating the existence of jurisdiction is not an area in which there is significant latitude to be allowed--the rules are somewhat technical and the need for competent evidence cannot be disregarded (at least in the absence of a waiver). Conversely, as exemplified by the quoted Appellate Court passages from Schaeffer and AS Peleus, our appellate courts are insisting that trial courts focus on actual evidentiary issues rather than " issue spotting, " at least in the context of jurisdictional challenges in foreclosure proceedings. Here, the defendant has identified numerous possible issues, but has submitted no competent evidence relating to any bona fide jurisdictional issue, and especially any issue that needs to be considered in this postjudgment context.
For all of these reasons, then, the motions to dismiss are denied.
Examiners' Comments As has been stated above, there may be illegal signatures on the first and second assignments which could render these assignments null and void. Additionally, there may be grounds for a breach of contract cause of action due to the improper selling of the note and security instrument. The issue of possibly-illegal signatures is discussed, below; there is no suggestion in this report or the defendant's submission that a possible basis for a claim of breach of contract has any jurisdictional implications (and the court is unaware of any such connection).
The court notes that in connection with the motion for summary judgment, an affidavit was submitted addressing the issues that had not been admitted, and in particular, attesting to the notice given to the named defendant with a copy of that notice attached to the affidavit, such that the court had a factual record of notice at the time that the motion for summary judgment was granted (see, affidavit attached to #125.00).