Opinion
FSTCV166028092S
03-19-2018
CONNECTICUT COMMUNITY BANK, N.A. dba v. James T. KIERNAN, Jr.
UNPUBLISHED OPINION
POVODATOR, J.
Nature of the Proceeding
Currently before the court are the cross motions of the remaining active parties to this dispute, seeking summary judgment. Given the complexities of the case (as it has evolved over time), the court believes that an appropriate starting point is the history as recited in an earlier decision, granting summary judgment in favor of the plaintiff as against defendant James Kiernan.
" This is a foreclosure action that had a minor/modest twist when originally commenced, but has now evolved into something significantly different. According to the initial complaint, the defendants Elizabeth and James Kiernan executed a note in favor of the plaintiff. In connection with the transaction, defendant Elizabeth Kiernan, only, executed a mortgage in favor of the plaintiff. Therefore, the original proceeding sought to foreclose the mortgage as to defendant Elizabeth Kiernan, and sought a judgment on the underlying note against both individual defendants.
" Subsequently, the property was sold with the money being put into escrow. Additionally, a subsequent development was the removal of Elizabeth Kiernan as a party. Conversely, there has now become an active dispute between the plaintiff and defendant M & T Bank relating to the relative priority of the parties with respect to the proceeds of the sale of the property. This latter phase is now present in this litigation in the form of a claim for interpleader, and the court already has entered an interlocutory judgment of interpleader, in which the two institutions will litigate their rights to the proceeds."
As noted above, the cross moving parties are functionally the only parties remaining in the case- summary judgment has been granted as against defendant James Kiernan, and the case has been withdrawn with respect to Elizabeth Kiernan (apparently in connection with the sale of the property that had been security for the loans made by both moving parties, resulting in the current interpleader phase of the case). Therefore, it is necessary to focus only on the respective actions and positions of the remaining parties. (For simplicity, the court will refer to M & T Bank, formerly known as Hudson City Savings Bank, as the defendant, there not being any other defendant actively involved in the case at this time.)
At least in the trial court. The plaintiff has taken an appeal from the court’s award of attorneys fees with respect to the plaintiff’s claim against defendant James Kiernan.
The specific dispute relates to priority of liens/mortgages, which in turn requires a more detailed recitation of the relevant loan history. In 2005, the Kiernans obtained a home equity line of credit (HELOC) from the plaintiff. Both Kiernans signed the note; Mrs. Kiernan, as the sole owner of record of the property providing security for the loan by way of a mortgage, executed the necessary documents for the mortgage in favor of the plaintiff. The face amount of that loan is/was $1 million. At the time of this transaction, the HELOC mortgage was junior to a first mortgage on the property that had been issued to WAMU (a loan subsequently transferred to Chase), in connection with a much larger first mortgage loan.
Presumably as a result of Chase’s acquisition of most or all of WAMU’s assets as a result of WAMU’s insolvency.
In 2011, the Kiernans sought to refinance the loan secured by the first mortgage, and acting through a mortgage originator and/or broker, submitted an application to the defendant. The original application had been for a loan of approximately $3 million; as eventually approved, the loan was to be less than $2.5 million. The requested loan would have paid off the Kiernans’ indebtedness on the first mortgage loan and would/could have substantially paid down the second mortgage loan; the reduced figure as actually approved would pay off the first mortgage loan, with little if anything available to be paid against the loan secured by the second mortgage in favor of the plaintiff (the HELOC).
The Kiernans were told that a condition of the new loan from the defendant was that the indebtedness to the plaintiff had to be satisfied, with proof of cancellation of the loan and/or release of the mortgage being required. As a factual matter, the HELOC loan and mortgage were never satisfied or canceled; however, a duly-authorized representative of the defendant signed a release of the mortgage. That release was never filed on the land records, and an original was never formally delivered to the Kiernans (or any representative of the Kiernans) and no original ever was delivered to the defendant, but a copy of that document was provided one or more representatives of the Kiernans, and the existence of that copy became known to the defendant. At the loan closing in 2011, no original document was provided indicating that the plaintiff’s loan had been satisfied, and no original release or other documents suitable for filing on the land records was provided. No money was set aside for purposes of satisfying the HELOC. No cancelled note was provided or shown to the defendant or anyone acting on its behalf. A request was made for original documentation (proof that the HELOC and mortgage were no longer in effect or had priority), but nothing ever was provided, and the transaction proceeded in the absence of any actual proof of satisfaction of the HELOC or release of any lien associated with it. Again, the only " indication" that the mortgage had been (or might have been) released or that the HELOC had been paid off was the implicitly recognized-to-be-insufficient copy of a release that had been provided earlier.
Although there does not appear to be any indication that it was explicitly discussed, presumably a subordination agreement would have been acceptable.
The parties do not seem to disagree- a title search at the time of the closing on the 2011 loan would have revealed the existence of the plaintiff’s security interest (mortgage) in the subject property as outstanding, second only in priority to the WAMU/Chase loan that was being refinanced. If the Chase loan were to be paid off and the associated mortgage released, the mortgage related to the HELOC presumptively would move up in seniority, and any subsequent lien/mortgage would be junior to the plaintiff’s lien.
The plaintiff has taken the position that the current state of title to the subject property gives the plaintiff first priority with respect to the proceeds of the sale of the subject property (the proceeds being " substituted" for the property as a result of the sale, in lieu of the previously pending foreclosure phase of this litigation). The plaintiff relies upon the absence of any indication that as of the date of the 2011 closing (and necessarily any time thereafter), the plaintiff had canceled the note in its favor from the Kiernans, had voided the mortgage, had filed on the land records (or given to someone else for filing on the land records) a release of the mortgage, or done anything that would affect its entitlement to first priority, based on the state of the land records. (None of this is seriously disputed by the defendant.)
The defendant claims that it is entitled to all of the proceeds based on a theory of equitable subrogation, and in the alternative is entitled to a recovery under the theory of unjust enrichment. It also has filed special defenses to the plaintiff’s claims, asserting equitable estoppel, waiver, release and unclean hands. The plaintiff has denied the various affirmative claims and defenses of the defendant, and has asserted the defendant’s knowledge of the plaintiff’s mortgage as an affirmative defense to the defendant’s affirmative claim to the proceeds. Subsequently, the plaintiff added special defenses of unclean hands and laches.
The claim of entitlement to a recovery based on unjust enrichment has not been identified as a claimed basis for summary judgment, and therefore the merits of that claim will not be addressed at this time.
Legal Standards/Principles
The court will not recite the well-established general principles governing summary judgment; those core principles are recited in the briefs filed by the parties, and need no repetition here. A number of narrower principles, however, should be identified, as they are directly or indirectly relevant to the determination of the issues presented in the pending motions, and especially the plaintiff’s motion.
See, e.g., Costa v. Board of Education, 175 Conn.App. 402, 406-07 (2017); Wells Fargo Bank, N.A. v. Henderson, 175 Conn.App. 474, 481 (2017).
A motion for summary judgment must be decided based on the grounds identified in the moving papers- it cannot be decided based on issues not addressed by the parties. Greene v. Keating, 156 Conn.App. 854 (2015).
" [W]e note that it is only [o]nce [the moving party’s] burden in establishing his entitlement to summary judgment is met [that] the burden shifts to [the non-moving party] to show that a genuine issue of fact exists justifying a trial." Romprey v. Safeco Insurance Company of America, 310 Conn. 304, 320 (2013) (internal quotation marks and citation, omitted).
To prevail on summary judgment, a plaintiff is required to establish not only the direct merits of its claim but also must negate each of the special defenses filed by a defendant; see, TD Bank, N.A. v. J and M Holdings, LLC, 143 Conn.App. 340, 351 (2013), reversing entry of summary judgment because trial court had not considered fifth special defense (in turn, because Appellate Court had concluded that that defense erroneously had been stricken). See, also, Wells Fargo Bank, N.A. v. Henderson, 175 Conn.App. 474, 485 (2017), rejecting claim that the trial court had not considered the defendant’s special defenses in determining that it was appropriate to grant summary judgment.
Absent a situation in which a pleading deficiency is not subject to cure, a motion for summary judgment generally is inappropriate for testing the legal sufficiency of allegations- sufficiency of allegations is distinct from the merits of the underlying claim. See, Larobina v. McDonald, 274 Conn. 394, 402, 876 A.2d 522, 528 (2005), citing Brill v. Ulrey, 159 Conn. 371, 374, 269 A.2d 262 (1970); see, also, Robert S. Weiss Associates, Inc. v. Wiederlight, 208 Conn. 525, 535 n.5 (1988), citing Starnezer v. Sage-Allen & Co., 146 Conn. 460, 461 (1959) and Brill, supra . More generally, see also, Tedesco v. City of Stamford, 215 Conn. 450, 457, 576 A.2d 1273, 1277 (1990), stating that if parties do not address pleading issues via mechanisms designed for that purpose in a timely manner (there, a motion to strike), then absent demonstrable prejudice, the merits of the dispute will control with respect to " issues framed in a slovenly manner."
Generally speaking, the moving party has the burden of establishing " what the truth is" ; Ferri v. Powell-Ferri, 317 Conn. 223, 228, 116 A.3d 297 (2015).
Discussion
Each of the parties appears to take the position that summary judgment is an appropriate tool to resolve the existing dispute- priority of entitlement to the proceeds of the sale of the subject property. Somewhat oversimplified: With respect to the defendant’s central claim of equitable subrogation, the plaintiff appears to argue that that theory can be defeated, as a matter of law, by pointing to the claimed knowledge of the defendant of the true situation (implicitly if not explicitly coupled with the ease with which the situation could have been avoided). The defendant, in turn, claims that appellate authority indicates that knowledge is not a determinative factor, but then appears to argue that the fact that knowledge is not a determining factor in some sense establishes its entitlement to equitable subrogation as a matter of law.
The court will discuss the issues raised by the parties in their respective motions, noting that there is no sharp line between them- the defendant’s opposition to the plaintiff’s motion is reinforced by the affirmative claims asserted by the defendant in support of its motion, and the plaintiff’s opposition to the defendant’s motion is reinforced by the plaintiff’s affirmative claims against the defendant.
The defendant’s motion is explicitly supported in large measure by incorporation of arguments and documents submitted in opposition to the plaintiff’s motion, and the plaintiff’s objection to the defendant’s motion is largely based on the substance of its submission in support of its motion for summary judgment.
I. The plaintiff’s Motion
The court has not spent much time in discussing the most general principles applicable to summary judgment, because those general principles shed little light on the true controversy between the parties for purposes of these motions. Although the defendant may not formally concede the point, the defendant does not seriously dispute that the plaintiff has established that its mortgage, as recorded on the land records, is senior to that of the defendant, by a time period measured in years, and that the Kiernans were in default on the debt to the plaintiff that was secured by that mortgage (such that its initial application for foreclosure was appropriate). To the extent that the sum of money being held in escrow is a substitute or surrogate for the property that had provided security for both loans, the parties appear to be in agreement that the priority/seniority of the parties as reflected on the land records and the amounts secured by the relevant mortgages, are the starting point for any decision as to the disposition of the funds being held in escrow. The court is unaware of any evidence submitted or identified by the defendant suggesting any deficiency in the plaintiff’s prima facie right to satisfy its debt from the proceeds. Thus, but for any defenses or affirmative claims asserted by the defendant, the plaintiff would be entitled to satisfaction of its claim, under the mortgage and related note, with any remaining funds going to the defendant (based on its loan and mortgage, also in default).
As reflected in the legal authorities cited above, the plaintiff must prove not only the material allegations of its complaint to the requisite level of certainty (no material issue of fact) but it also must negate the defenses and affirmative claims of the defendant. The plaintiff, however, has only attempted to negate the merits of the defendant’s affirmative claim of equitable subrogation. The motion and initial brief make no mention of, much less attempt to refute, the defenses asserted by the defendant, and especially the defense of equitable estoppel.
Further, a substantial portion of the argument relating to equitable subrogation focuses on the claimed failure of the defendant to assert necessary allegations in such a claim. While the court is reluctant to encourage extended pleading battles, the ultimate issue is not whether the defendant formalistically has recited all of the required elements for its claim, but rather whether such elements can be proven or, more to the point for this motion, whether the plaintiff can establish the negation of any required element to the requisite level of certainty (no material issue of fact) or even at a minimum that such an essential element cannot be proved by the defendant. In other words, it is not enough for the plaintiff to recite pleading deficiencies in the counterclaim or defenses asserted; the plaintiff must establish either that in an affirmative sense, the opposite of a required element is true, or in a negative sense, that there is no evidence that would create a material issue of fact as to the existence of the identified necessary element. (Emphasizing the problem with pointing to claimed pleading deficiencies, as discussed below, the defendant has identified appellate authority that the claimed pleading defect relating to lack of knowledge is not an essential element of its claim, such that it does not have to be alleged for the defendant to prevail.)
In its reply, the plaintiff does address some of these issues, issues that should have been addressed in its initial submission. The belated treatment of issues is especially problematic to the extent that the plaintiff points to omissions in the evidence/proof proffered by the defendant- the non-moving party has no burden of presenting anything, unless and until the moving party has satisfied its burden.
The plaintiff notes the ongoing failure of the defendant to verify that the plaintiff’s lien had been satisfied or released, or that the associated loan had been paid off, as part of the process of closing on its loan to the Kiernans. The question that remains insufficiently addressed, however, is the significance of the copy of a release that had been provided to one or more parties/participants involved in that loan transaction. The plaintiff does not dispute the defendant’s claim that the copy- but not the original- had been provided in the time leading up to the closing on the loan. Similarly, the plaintiff does not appear to challenge the contention of the defendant, based on deposition testimony of an appropriate witness, that the " original" of that copy of a release had been signed by an authorized representative of the plaintiff. No evidence appears to have been submitted to the court- especially undisputed evidence- that that copy had been provided with a cover letter or the equivalent, unambiguously indicating that the plaintiff was prepared to provide the original only under specified circumstances (never arising), or otherwise describing why the copy had been provided at all. In retrospect, it may be a plausible inference that there was some conditional quality, but there is no undisputed or indisputable evidence to that effect (and the evidence submitted by the defendant seems to reflect the absence of any explicit condition or qualification); for purposes of deciding a motion for summary judgment, it is the non-moving party that is entitled to the benefit of reasonable favorable inferences.
The court is compelled to return to the issue of equitable estoppel, which the plaintiff has not addressed directly, except to the extent that it insists, in its reply, that the defendant had actual or constructive knowledge of the true state of the plaintiff’s loan/mortgage- the state of title on the land records providing that information, supplemented by indicated requirements that it be provided with proof that the lien had been released and/or that the debt/note had been cancelled. That does not refute equitable estoppel- it tends to sidestep the claim of equitable estoppel, in a sense identifying the context in which the claim of estoppel arose.
" The doctrine of equitable estoppel is well established. [W]here one, by his words or actions, intentionally causes another to believe in the existence of a certain state of things, and thereby induces him to act on that belief, so as injuriously to affect his previous position, he is [precluded] from averring a different state of things as existing at the time ... Our Supreme Court ... stated, in the context of an equitable estoppel claim, that [t]here are two essential elements to an estoppel: the party must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief; and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done. Estoppel rests on the misleading conduct of one party to the prejudice of the other ... Broadly speaking, the essential elements of an equitable estoppel ... as related to the party to be estopped, are: (1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; and (3) knowledge, actual or constructive, of the real facts." (Internal quotation marks and citation, omitted.) TD Bank, N.A. v. M.J. Holdings, LLC, 143 Conn.App. 322, 337-38, 71 A.3d 541 (2013).
Working backwards, it is clear that the plaintiff had actual knowledge of the real facts relating to its release of its mortgage, and the status of the underlying loan- the loan remained unsatisfied/outstanding and there was (claimed to be) no intent to release the mortgage until the indebtedness had been paid off or otherwise satisfied. As to the second element, at least implicitly, it is clear that the plaintiff is now claiming that it did not have the intention or expectation that anyone would act upon, or be influenced by, execution of a document that appeared to be a release of the mortgage, and transmission of a copy of it to someone outside the organization, but that really avoids the critical question: Why was a copy provided to someone outside the plaintiff’s organization (prior to the closing), and was it reasonably to be expected that the parties to the loan transaction might be influenced by the existence of such a " copy" (necessarily implying that an original existed)? Finally, the first element does not appear to be amenable to resolution by summary judgment- by providing a copy of such a document, there is at least a material issue of fact as to whether such a document was " calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert." (The defendant’s position appears to be that there is not even a material issue of fact- that of course the document (even if just a copy) was " calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert." )
Thus, while the true state of affairs might have been knowable to the defendant (if one were to ignore the existence of the copy of a release), the issue is whether the defendant was misled by the conduct of the plaintiff in generating a non-delivered-original release but providing a copy of that document to someone involved in the 2011 loan transaction, such that at least some of the participants were aware of that " document" at the time of the closing.
Turning to the attempt to refute equitable subrogation, the court cannot weigh and evaluate evidence in the context of summary judgment, yet a decision implicating an equitable determination almost necessarily involves balancing of interests and weighing evidence. As an overlay, this is not a situation in which it can be said, free of any material issue of fact, that " the [plaintiff’s] conduct was not improper in any way," Equicredit Corp. of Connecticut v. Kasper, 122 Conn.App. 94, 98, 996 A.2d 1243, 1246 (2010). A trier of fact may be free to disregard- choose to disregard- the creation of a release of mortgage followed by (limited) dissemination of a copy of the release, but that is a factfinding function (weighing the evidence), not a more limited issue-identification function, suitable for summary judgment.
Further, the Appellate Court has rejected the notion that constructive notice of the lien sought to be denied priority is a bar to invocation of equitable subrogation, the position that the plaintiff repeatedly advances:
The plaintiff relies on three Appellate Court cases to support its claim that the trial court abused its discretion when it applied the doctrine of equitable subrogation because the defendant bank had constructive notice of the intervening lien. The plaintiff contends that the Appellate Court has established a rule that constructive notice of the prior lien necessarily defeats the application of equitable subrogation. We disagree that this court has established such a per se rule and conclude that the application of the doctrine remains a matter of equity for the trial court’s consideration even when the party seeking subrogation has constructive notice of the prior lien. AJJ Enterprises, LLP v. Jean-Charles, 160 Conn.App. 375, 402, 125 A.3d 618, 633 (2015).
The court will discuss equitable subrogation in greater detail, in connection with the defendant’s motion for summary judgment.
Having failed to negate equitable subrogation in a conclusive sense (no material issue of fact), and having failed to address much less conclusively negate equitable estoppel, the plaintiff is not entitled to summary judgment. It has not refuted, to the requisite level of certainty, the defendant’s affirmative claim and it has not refuted, to the requisite level of certainty, at least one defense to the plaintiff’s claim. The court cannot grant summary judgment in such a situation.
II. The Defendant’s Motion
In moving for summary judgment, the defendant relies on the documentation submitted in opposition to the plaintiff’s motion for summary judgment. The defendant further relies upon its affirmative claim of entitlement to equitable subrogation, expanding upon the arguments presented in opposition to the plaintiff’s motion. Some of the discussion, above, is applicable to resolution of the defendant’s motion.
In a highly oversimplified sense, the defendant’s position is undermined by the discussion of Equicredit near the conclusion of the first section of this decision. In Equicredit, the party who had a subordinate interest but was seeking to invoke equitable subrogation could point to nothing improper that had been done by the lienor whose interests had " moved up" as a result of a release of a previously-existing first lien. Absent any countervailing circumstance, judgment was deemed appropriate in favor of the priorities established by the land records and the actual dates of filing of liens/mortgages (finding equitable subrogation to be inapplicable). There is nothing in Equicredit, or any other cited appellate case, suggesting that any specific level of improper conduct by the adverse party would warrant granting equitable subrogation- as a matter of law, regardless of any evidence or considerations that might make application of the doctrine potentially inapplicable. Knowledge of the true state of affairs would be a factor, as would be any impropriety by the adverse party, but the issue before this court is not identification of the factors that might need to be considered but rather whether there is entitlement to invocation of equitable subrogation as a matter of law.
In effect, then, the defendant is claiming that there is only one possible outcome (as a matter of law) despite the arguably-blameworthy conduct all around. The plaintiff generated and disseminated a copy of a release of mortgage, despite the underlying loan never having been satisfied (and seemingly inadequate funds being generated as a result of the reduced amount of the approved loan to be granted by the defendant). A title search would have disclosed the absence of any such release, and although an original release and/or canceled note had been requested as part of the closing, neither document was ever provided. No attempt apparently was made by or on behalf of the defendant to confirm that the release was going to be filed (or that the copy that had been provided was, in fact, reflective of an operative instrument or that the original had been delivered to anyone for purposes of filing on the land records). Mr. Kiernan claims not to have been aware that a condition of the new loan was that the plaintiff’s loan had to be satisfied or subordinated, as a condition to the issuance of a new loan by the defendant. The mortgage originator and/or broker did not confirm that all necessary documentation was available at the time of the closing. The plaintiff claims that there was deposition testimony that the defendant was relying on title insurance rather than the actual state of title. Given the inadequacy of the loan as approved by the defendant to cover anything more than an insubstantial portion of the principal of the HELOC, no one seems to have been concerned about the possible source of the funds that would be needed to satisfy that loan (again, with satisfaction of the loan (or subordination) being a condition for the issuance of the loan by the defendant).
The court recognizes that in AJJ Enterprises, the court identified the rationale and requirements for equitable subrogation, in a manner that appears to be aligned with the position advanced by the defendant, negating any claim of knowledge as a determinative factor- but that does not negate knowledge (actual or constructive) as a factor.
More importantly, the court believes that the parties have overlooked the mismatch between summary judgment and the desire to have the court sort out the conflicting claims of the parties through that mechanism. Generally speaking, summary judgment is not suitable for resolving these issues, and there is nothing about this case that would warrant an exception.
The court does not wish to oversimplify or trivialize legal principles, but equitable subrogation is an equitable principle. In general, application of an equitable principle requires balancing of equities, which in turn requires weighing of evidence. Weighing evidence, and balancing equities, however, are aspects of issue resolution. Summary judgment focuses on issue identification- if a material issue of fact exists, then the court must stop; it cannot proceed to resolve the issue. Summary judgment is not intended to allow for the weighing of evidence and the balancing of equities that are components of a determination of applicability of equitable subrogation. The exercise of discretion by the court is repeatedly identified as the mechanism through which a decision is made.
In AJJ Enterprises, in addressing the significance of claimed actual or constructive knowledge, the court stated:
We conclude that constructive notice of an intervening interest in the property is not a per se bar to the application of the doctrine of equitable subrogation; rather, whether to apply this doctrine is left to the sound discretion of the trial court following a careful balancing of the equities in each particular case. 160 Conn.App. 394.
(The court notes that AJJ Enterprises was not a summary judgment case.)
Deutsche Bank National Trust Co., Trustee v. DelMastro, 133 Conn.App. 669, 38 A.3d 166 (2012) is another case in which the issue of applicability of equitable subrogation was addressed on appeal. Early in that decision, the court noted that the trial court had recognized the unsuitability of the issue for resolution by way of summary judgment:
The court, Sferrazza, J., denied the motion, finding that genuine factual issues existed as to the parties’ intentions and whether consideration was exchanged and that " equitable subrogation claims are usually unsuitable for resolution by summary judgment." 133 Conn.App. 673
Later passages in that same decision emphasized the need for exercise of discretion in the process of determining whether equitable subrogation should apply:
We begin by noting that courts apply equitable subrogation sparingly. Our review of a decision rendered in equity is limited. The determination of what equity requires in a particular case ... is a matter for the discretion of the trial court ... (Internal quotation marks and citation, omitted.) 133 Conn.App. 674.
The circumstances of the particular case determine whether equitable subrogation applies; see Independence One Mortgage Corp. v. Katsaros, supra, 43 Conn.App. at 75-76, 681 A.2d 1005 (" [t]he determination of what equity requires in a particular case, the balancing of the equities is a matter for the discretion of the trial court" [internal quotation marks omitted] ); and the court must weigh the equities. We emphasize that the court exercises a broad discretion, and we cannot conclude that it unreasonably considered the absence of any neglectful, fraudulent or unfair behavior on the part of Mary Lou DelMastro. 133 Conn.App. 676.
(As already noted, this case was not decided via summary judgment.)
Similarly, in Rosenblit v. Williams, 57 Conn.App. 788, 792, 750 A.2d 1131 (2000), the court again focused on the exercise of discretion by the trial court:
Our standard of review is whether the trial court abused its discretion. A foreclosure action is an equitable proceeding ... The determination of what equity requires is a matter for the discretion of the trial court ... In determining whether the trial court has abused its discretion, we must make every reasonable presumption in favor of the correctness of its action ... Our review of a trial court’s exercise of the legal discretion vested in it is limited to the questions of whether the trial court correctly applied the law and could reasonably have reached the conclusion that it did. (Internal quotation marks and citations, omitted.)
(Yet again, the court notes that this case was not decided via summary judgment.)
In Equicredit, supra, the court also emphasized the exercise of discretion by a trial court in determining applicability of equitable subrogation:
Our review of a decision rendered in equity is limited. The determination of what equity requires in a particular case ... is a matter for the discretion of the trial court ... In determining whether the trial court abused its discretion, this court must make every reasonable presumption in favor of [the trial court’s] action ... The manner in which [this] discretion is exercised will not be disturbed so long as the court could reasonably conclude as it did. (Internal quotation marks and citation, omitted.) 122 Conn.App. 96-97.
Unlike the appellate cases discussed earlier, Equicredit, supra, was a case in which equitable subrogation was determined to be applicable by way of summary judgment. However, in Equicredit, there was an explicit agreement of the parties that summary judgment would be an appropriate vehicle, effectively asking the court to adjudicate the matter without regard to the usual limitations of summary judgment. In effect, the parties agreed to having the trial done " on the papers" with summary judgment as the formal means of submission. This was noted in footnote 2 (122 Conn.App. 96): " Both parties agree that no material facts are in dispute, and neither party challenges the propriety of the court’s disposal of the case by summary judgment." Implicitly, then, the parties recognized the presumptive impropriety of use of summary judgment to resolve the issue, and it is only because the parties agreed that there were no material issues of fact and because the parties agreed to the mechanism, that the case was resolved in that fashion.
Here, the parties do not appear to have agreed (on the record) that the cross motions for summary judgment should be treated as the equivalent of a submission of the case for a trial-type decision without regard to otherwise-applicable limitations of summary judgment. The parties have not agreed that there are no material issues of fact, and they certainly do not agree as to the weight that the court should afford to any particular evidence. In particular, the plaintiff clearly relies heavily on the defendant’s constructive if not actual knowledge of the existence of the plaintiff’s existing lien at the time of the closing on the defendant’s loan to the Kiernans. The defendant, in turn, relies on case law indicating that such knowledge is not determinative, coupled with the policies behind the concept of equitable subrogation, as reinforced by the conduct of the plaintiff in generating a release of mortgage, a copy of which (but not the original) having been disseminated prior to the closing.
The court noted that the defendant’s affirmative claim is largely based on incorporation of its objection to the plaintiff’s motion; the plaintiff reciprocated by largely relying upon its submission in support of its motion in opposing the defendant’s motion. The plaintiff’s objection directed specifically to the defendant’s motion largely is premised on evaluation of what was reasonable behavior, including whether the defendant acted reasonably promptly in its assertion of equitable subrogation. Reasonableness generally is a legal (as opposed to equitable) concept but only in the most extreme situations can it be determined (absence or presence) as a matter of law. Otherwise, reasonableness presents a factual issue, and if reasonableness is a critical component of a party’s claim, it cannot be resolved via summary judgment (again, except in the most extreme circumstances).
Conclusion
Summary judgment is not intended to be a means of evaluating the relative strength of a claim or defense. For a party seeking an affirmative result, it must demonstrate the absence of any material issue of fact as to its ability to establish each of the essential elements of its claim and it must demonstrate the absence of any material issue of fact that might support a defense asserted against it, i.e., prove the inapplicability of each and every defense. (A party seeking summary judgment based on a defense to a claim must establish a claimant’s inability to prove at least one essential element of the claim or the affirmative existence of a defense, to the requisite level of certainty (no material issue of fact).) Here, however, each side is claiming entitlement to affirmative relief, and each side has presented the evidence in the light most favorable to its position, but neither side has established the absence of any material issue of fact, or the lack of a need for the exercise of discretion in weighing the evidence, especially to the requisite level of certainty- entitlement to judgment as a matter of law. To an extent, both sides overstate their respective positions- the plaintiff keeps returning to its mantra that the defendant knew of the existence of the plaintiff’s mortgage at the time of its loan in 2011, notwithstanding cases indicating that such knowledge is not necessarily determinative. The defendant, in turn, relies on the general notion that a HELOC typically is secured by a secondary lien and that the defendant expected to have a first lien position, coupled with the mantra that the plaintiff generated a release of the lien, disregarding (and not attempting to account for) the lack of any evidence of actual delivery of the original of that instrument to anyone.
This is somewhat amplified by its apparent awareness that it did not have any original release or cancelled note, as of the closing, recognizing that it needed such documents but not following through.
The only thing established to a relative certainty is that each side has points that the court will have to weigh, in order to determine the outcome of this interpleader phase of the litigation, but that presumably will be based on a complete evidentiary submission without the procedural constraints of summary judgment.
For all of these reasons, then, each of the motions for summary judgment must be denied.