Opinion
HHDCV156060522S
02-05-2018
FEC ENTERPRISES, LLC v. LIN MARE, LLC
UNPUBLISHED OPINION
OPINION
Dubay, J.
The plaintiff, FEC Enterprises, LLC, commenced this foreclosure action in June 2015 against the defendant, Lin Mare, LLC. In its complaint, the plaintiff alleges the following facts: on June 23, 2010, it entered into a loan agreement with the defendant in the amount of $130,000. The parties memorialized their agreement by executing a promissory note, open-ended mortgage deed, and security agreement. This agreement was later modified by the parties, resulting in a loan modification agreement dated July 15, 2011. The defendant eventually defaulted on the note, and the plaintiff brought the current foreclosure action. In response, the defendant brings two special defenses and five counterclaims against the plaintiff. The plaintiff filed a motion for summary judgment as to the defendant’s liability under the note on July 27, 2017. The defendant filed a memorandum in opposition to the plaintiff’s motion for summary judgment on. October 11, 2017. The court heard oral argument for this matter on October 16, 2017.
" Because a counterclaim is a separate and distinct action ... a party seeking summary judgment on both a complaint and a counterclaim must file an appropriate motion addressed to each." (Citations omitted; internal quotation marks omitted.) Miller v. Bourgoin, 28 Conn.App. 491, 500, 613 A.2d 292, cert. denied, 223 Conn. 927, 614 A.2d 825 (1992). In the present action, the plaintiff has filed for partial summary judgment as to the defendant’s liability only in the plaintiff’s claim for foreclosure. Thus, the court will not address the defendant’s counterclaims in this memorandum.
DISCUSSION
" 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." (Internal quotation marks omitted.) Sherman v. Ronco, 294 Conn. 548, 553-54, 985 A.2d 1042 (2010). " Connecticut Practice Book § 17-50 authorizes the entry of partial summary judgment, as to liability, where there is a genuine issue as to damages only. Pursuant to this rule, judges of the Superior Court may grant motions for partial summary judgment as to liability in foreclosure actions." (Footnote omitted.) COMM 2006-C8 Asylum Street, LLC v. Northland CityPlace II, LLC, Superior Court, judicial district of Hartford, Docket No. CV 10-6005957-S (May 9, 2011, Sheldon, J.).
" The courts hold the [summary judgment] movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ... As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent ... When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ... Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ... It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact ... are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." Socha v. Bordeau, 277 Conn. 579, 585-86, 893 A.2d 422 (2006).
To obtain summary judgment in a foreclosure matter, the plaintiff must demonstrate the absence of a genuine issue of material fact as to its prima facie case. See Bank of New York v. Conway, 50 Conn.Supp. 189, 193-95, 916 A.2d 130 (2006). If " the plaintiff has made out its prima facie case, the motion for summary judgment will be granted unless at least one of the special defenses is ‘valid." Homeside Lending, Inc. v. Haggerty, Superior Court, judicial district of New London, Docket No. 551725 (May 19, 2000, Martin, J.).
a. The Plaintiff’s Prima Facie Case
" In a mortgage foreclosure action, [t]o make out its prima facie case, [the foreclosing party has] to prove by a preponderance of the evidence that it [is] the owner of the note and mortgage and that [the mortgagee has] defaulted on the note." (Internal quotation marks omitted.) Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 838, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 136 (2003).
In the present action, the plaintiff has attached the following exhibits to his motion for summary judgment: copies of the Promissory Note, Open-End Mortgage Deed, and Mortgage Modification Agreement; the signed and sworn affidavit of Forrest E. Crisman, Jr., the sole member of FEC Enterprises, LLC; excerpts of a certified copy of the deposition of Linda Marotta, the sole member of Lin Mare, LLC; a copy of an unsigned loan modification agreement; and a sworn copy of a document provided to the plaintiff’s attorney during Linda Marotta’s deposition, which the defendant alleges is the operative loan modification agreement.
Exhibit B, the Promissory Note, is signed by Linda Marotta both in her individual capacity and as a member of Lin Mare, LLC, and shows that Lin Mare, LLC promised to pay FEC Enterprises, LLC $130,000 at an interest rate of 12%, secured by an open-end mortgage deed. Exhibit C, the Open-End Mortgage Deed, shows that it was entered into by Lin Mare, LLC and FEC Enterprises, LLC, was signed by Linda Marotta in her capacity as a member of the defendant, and secures the promissory note with the property at 80-82 West Center Street, Manchester, Connecticut. Also attached as Exhibit C is a mortgage modification agreement, signed by Forrest E. Crisman, Jr., and Linda Marotta, extending the maturity date for the repayment of the $130,000 principal from July 23, 2011 to January 23, 2012.
A condition precedent to foreclosure is set out in the mortgage at Article 2, section 2.01(a)(iii), which provides that a mortgagor is in default for any failure to pay the " outstanding principal balance on the Note, together with interest accrued thereon, at final or accelerated maturity." Article 3, section 3.01 states upon default, the mortgagee may " declare without demand or notice the outstanding Indebtedness to be due and payable immediately, and upon such declaration such Indebtedness shall immediately become due and payable without demand or notice."
Exhibit D, the affidavit of Forrest E. Crisman, Jr., shows on its face that it was made on his personal knowledge as the sole member of the plaintiff, FEC Enterprises, LLC. In the affidavit, Crisman asserts that the allegations in the plaintiff’s complaint are true, including that the plaintiff is the owner of the note and mortgage at issue. Crisman further states that the defendant currently owes the full principal amount of $130,000, along with associated fees and interest, which according to the 2011 loan modification agreement was due on the maturity date of January 23, 2012.
The foregoing exhibits show that the plaintiff is the owner of the note and mortgage, and that all conditions precedent to foreclosure, as mandated by the mortgage, have been satisfied. Thus, unless the defendant can be found to have raised a genuine issue of material fact in support of the existence of a viable special defense, there is sufficient evidence before the court to warrant granting the plaintiff’s motion for a partial summary judgment as to liability on its claim for foreclosure.
b. Special Defenses
" Only after [the] initial burden is met does the court then determine whether any special defenses alleged are legally sufficient to defeat a claim for foreclosure." Bank of New York v. Conway, supra, 50 Conn.Supp. 195.
In the present action, the defendant sets forth two special defenses: unclean hands and equitable estoppel. The defendant argues that its defenses arise out of the plaintiff’s failure to abide by the terms of a loan modification agreement entered into by the parties in 2015, as well as representations made by the plaintiff surrounding negotiations for said agreement. The plaintiff argues that the. defendant provides no evidence showing the parties entered into a valid modification agreement in 2015 and thus neither defense attacks the making, validity, or enforcement of the operative note or mortgage. The court agrees with the plaintiff.
" [A] foreclosure action constitutes an equitable proceeding ... In an equitable proceeding, the trial court may examine all relevant factors to ensure that complete justice is done ... The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court." (Internal quotation marks omitted.) LaSalle National Bank v. Freshfield Meadows, LLC, 69 Conn.App. 824, 833, 798 A.2d 445 (2002).
" Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction ... A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both ... Where the plaintiff’s conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles ... [O]ur courts have permitted several equitable defenses to a foreclosure action. [I]f the mortgagor is prevented by accident, mistake or fraud, from fulfilling a condition of the mortgage, foreclosure cannot be had ... Other equitable defenses that our Supreme Court has recognized in foreclosure actions include unconscionability ... abandonment of security ... and usury." (Citations omitted; internal quotation marks omitted.) Id., 833-34.
" [O]ur courts have determined that conduct occurring during loan modification negotiations and foreclosure mediation does not give rise to a valid counterclaim or special defense in a foreclosure action unless such conduct affects the making, validity, or enforcement of the original note or mortgage." U.S. Bank National Assn. v. Blowers, 177 Conn.App. 622, 635, 172 A.3d 837 (2017) (" In the present case, neither of the defendants’ special defenses [of unclean hands and equitable estoppel] directly attacks the making, validity, or enforcement of the note or mortgage ... [since] [a]ll events giving rise to the special defenses took place during the loan modification negotiation period" ); see also U.S. Bank National Assn. v. Sorrentino, 158 Conn.App. 84, 97, 118 A.3d 607, cert. denied, 319 Conn. 951, 125 A.3d 530 (2015); T.D. Bank, N.A. v. M.J. Holdings, LLC, 143 Conn.App. 340, 346, 70 A.3d 156 (2013). " [I]f ... modification negotiations ultimately result in a final, binding, loan modification, and the mortgagee subsequently breaches the terms of that new modification, then any special defenses asserted by the mortgagor in regard to that breach would relate to the enforcement of the mortgage." U.S. Bank National Assn. v. Blowers, supra, 177 Conn.App. 630.
" A modification of a written agreement [for a loan exceeding $50,000] must be in writing to satisfy the statute of frauds." Deutsche Bank Trust Co. v. DeGennaro, 149 Conn.App. 784, 788, 89 A.3d 969 (2014); Union Trust Co. v. Jackson, 42 Conn.App. 413, 419, 679 A.2d 421 (1996). The relevant statute of frauds is codified in General Statutes § 52-550, which states in part: " (a) No civil action may be maintained in the following cases unless the agreement ... is made in writing and signed by the party ... to be charged ... (4) upon any agreement for the sale of real property or any interest in or concerning real property ... or (6) upon any agreement for a loan in an amount which exceeds fifty thousand dollars."
Further, " [i]n order to satisfy the statute of frauds, an agreement must state the contract with such certainty that its essentials can be known from the memorandum itself, without the aid of parol proof, or from a reference contained therein to some other writing or thing certain; and these essentials must at least consist of the subject of the sale, the terms of it and the parties to it, so as to furnish evidence of a complete agreement." Carta v. Marino, 13 Conn.App. 677, 680, 538 A.2d 1091 (1988); see also Montanaro v. Pandolfini, 148 Conn. 153, 157, 168 A.2d 550 (1961).
Where essential terms are absent, a loan modification agreement will not comply with the statute of frauds. See Montanaro v. Pandolfini, supra, 148 Conn. 153 (1961) (agreement that did not specify when monthly payments were to commence, the amount of each payment, and whether payments went towards the principal or interest did not satisfy statute of frauds); Benton v. Colson, 115 Conn. 720, 161 A. 860 (1932) (agreement missing how and when balance was to be paid was insufficient under statute of frauds); Carta v. Marino, supra 13 Conn.App. 677 (1988) (where it was not possible to know from the agreement the amount of each monthly payment or whether the payments are to be of interest only or interest and principal, agreement did not comply with statute of frauds); Turner v. Hobson, 16 Conn.App. 240, 243, 547 A.2d 111 (1988) (memorandum missing terms of payment is insufficient under the statute of frauds).
In its memorandum in opposition to the plaintiff’s motion for summary judgment, the defendant attached the following exhibits: the signed and sworn affidavit of Linda Marotta, the sole member of Lin Mare, LLC; a copy of the parties’ alleged 2015 loan modification agreement; a copy of an email sent from Forrest E. Crisman, Jr. to Linda Marotta; and a partial copy of the deposition of Linda Marotta.
The exhibits do not support the defendant’s contention that the parties reached a final, binding, loan modification in 2015. Because the agreement concerns property and is for more than $50,000, the agreement must conform to the statute of frauds. General Statutes § 52-550. Exhibit 1 does not identify any party other than Forrest E. Crisman, Jr. and FEC Enterprises, LLC, specify the subject property, or include the essential terms of the agreement. Specifically, the document lacks vital payment information, such as when monthly payments would commence and whether the payments would go towards principal or interest. Further, the document suggests that the defendant was to pay the plaintiff $130,000 in total within a twenty-four-month period by performing only the following: (1) paying one down-payment of $30,000 and (2) making monthly payments of $600. However, had the defendant followed these two terms, it would have paid only $44,400 over the 24-month period, leaving an outstanding balance of $85,600. The document does not identify any other payment terms nor does it refer to another document which would clarify these essential terms. Clearly, the document provided as defendant’s Exhibit I does not meet the requirements of the statute of frauds and thus cannot be used by the defendant to attack the making, validity, or enforcement of the note or mortgage.
The defendant offers no other evidence of an agreement that would satisfy this requirement. To the contrary, defendant’s Exhibit 2, the email sent from Crisman to Marotta, suggests that the parties were still in the process of negotiating the terms of the modification on July 3, 2015, several months after the defendant alleges the valid and binding modification agreement was entered into in May 2015. Without evidence of a valid agreement, defenses involving loan modification negotiations do not attack the making, validity or enforcement of the original note or mortgage. See U.S. Bank National Assn. v. Blowers, supra, 177 Conn.App. 635. Consequently, the defendant’s special defenses are insufficient to overcome the plaintiff’s prima facie case.
CONCLUSION
For the foregoing reasons, the plaintiff’s motion for summary judgment as to liability is granted.