Opinion
No. CV 09 6001296
October 6, 2011
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT [#131]
The plaintiff, U.S. Bank National Association (U.S. Bank) filed a motion for summary judgment as to the substituted counterclaim of the defendant, 2221 Avenue U Realty, LLC (defendant LLC), dated June 10, 2011. U.S. Bank also filed a memorandum of law in support of its motion. The defendant LLC objected to the motion by pleading dated July 27, 2011, together with its memorandum of law. The court heard argument on the motion at short calendar on August 1, 2011.
BACKGROUND
On August 17, 2009, GMAC Mortgage, LLC (GMAC) commenced the present foreclosure action against the defendants, Chaim Tornheim and the defendant LLC, by virtue of a writ, summons and complaint dated August 11, 2009, with a return date of September 1, 2009. In its complaint, GMAC alleges that Tornheim executed a note dated May 15, 2007, pursuant to which Tornheim became obligated to repay GMAC the original principal amount of $198,900, together with interest and all costs of collection as set forth in the terms of the note and mortgage.
To secure the note, Tornheim executed and delivered to Mortgage Electronic Registration Systems, Inc., as nominee for GMAC, a mortgage on a certain piece or parcel of land, together with the improvements thereon, known as 27 West Avenue, Norwich, Connecticut (the property). Said mortgage was dated May 15, 2007, and recorded June 14, 2007, in Volume 2392 at Page 144 of the Norwich Land Records. In its five-count complaint, GMAC alleged, respectively, foreclosure, equitable mortgage, reformation, unjust enrichment and mistake, as title to the subject property was discovered to be held in the name of the defendant LLC upon performing the title search in preparation for the commencement of the present action.
On November 6, 2009, the defendant LLC filed an answer, special defenses and counterclaim against GMAC. GMAC assigned the note and mortgage to U.S. Bank on November 12, 2009. On December 3, 2009, GMAC filed a motion strike the defendant LLC's special defenses and counterclaim, which this court, Devine, J., granted on March 24, 2010. On December 15, 2009, this court, Devine, J., granted GMAC's motion to correct party plaintiff, thereby naming U.S. Bank as the plaintiff and removing GMAC from the present action. On April 8, 2010, the defendant LLC filed substitute special defenses and counterclaim against GMAC. GMAC moved to strike the defendant LLC's substitute special defenses and counterclaim, which this court, Devine, J., denied on September 16, 2010. U.S. Bank now moves for summary judgment as to the defendant LLC's substitute counterclaim.
APPLICABLE LAW
"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." (Internal quotation marks omitted.) Sherman v. Ronco, 294 Conn. 548, 553-54, 985 A.2d 1042 (2010).
"In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). "In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the 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]." (Internal quotation marks omitted.) Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).
COUNTERCLAIM
U.S. Bank first argues that summary judgment should be granted in its favor as to the defendant LLC's counterclaim in its entirety because the allegations are directed at GMAC, which is not the plaintiff in the present case, and U.S. Bank cannot be held liable for claims made against GMAC. The defendant LLC counters that U.S. Bank, as the assignee, may be held liable for actions taken by GMAC, its assignor.
The court recently addressed this issue in Deutsche Bank v. Lobaton, Superior Court, judicial district of New London, Docket No. CV 09 5009907 (May 5, 2010, Devine, J.) ( 49 Conn. L. Rptr. 779), in which the plaintiff, as assignee of the note and mortgage, moved for summary judgment as to the defendant's special defenses and counterclaims, arguing that claims of improper conduct by the original lender could not be used as defenses to its foreclosure action. While our appellate courts have not yet directly addressed whether an assignee may be held liable for the alleged fraudulent conduct of an assignor occurring prior to the assignment, the court aligned itself with the line of Superior Court cases that have held that "[a]lthough many of the facts alleged concern the acts or omissions of the loan originator, the defenses and a counterclaim can be asserted against the plaintiff despite the fact that the plaintiff is an assignee of the note and the mortgage because the plaintiff stands in the shoes of the assignor and because the defendant's allegations are sufficient to show the existence of agency relationship between the loan originator and . . . the assignor." (Internal quotation marks omitted.) Id., 781. Pursuant to the foregoing and viewing the evidence in the light most favorable to the defendant LLC, although the allegations in the counterclaim reference GMAC and GMAC's actions, the court will not grant summary judgment on this basis. Therefore, U.S. Bank's motion for summary judgment as to the defendant LLC's counterclaim on these grounds must be denied.
First Count
The first count of the defendant LLC's counterclaim alleges in relevant part: "The [defendant LLC] did not apply for the loan from [GMAC], and never intended to be a party to the [n]ote and [m]ortgage with [GMAC]; nor did [the defendant LLC] ever intend to establish title in [Tornheim]; and the [defendant LLC] did not sign the [m]ortgage and received no benefit from the [h]ome [e]quity [l]ine of [c]redit proceeds which were paid directly to [Tornheim]. [Tornheim] has never been the owner of the [p]roperty and had no legal capacity or standing, on his own behalf or on behalf of the [defendant] LLC, to deliver a [m]ortgage to [GMAC]. Following the closing and upon receipt of the recorded documents, [GMAC] knew or should have known that [Tornheim] did not own the property at the time the [m]ortgage was signed and that he had no capacity to convey a mortgage interest to [GMAC]. Despite the fact that it knew or should have known that the [defendant] LLC was still the record title owner to the property, [GMAC] failed to give the [d]efendant LLC any notice that a mortgage was recorded against the property until the time of foreclosure." As a result, the defendant LLC alleges that "an encumbrance and cloud [exist] on [the defendant LLC's] title to the property which diminish the value of the property in the eyes of third parties because [the defendant LLC] is unable to convey clear title to the property."
U.S. Bank first argues that the court should grant summary judgment as to the first count of the defendant LLC's counterclaim for slander of title because there exists no genuine issue of material fact to support a finding that U.S. Bank acted with malice or intention. The defendant LLC counters that a genuine issue of material fact exists as to whether malice existed, relying on the court's September 16, 2010 decision to deny GMAC's motion to strike the same count, in which the court ruled that the defendant LLC sufficiently alleged the requisite elements for a slander of title claim.
"A cause of action for slander of title consists of the uttering or publication of a false statement derogatory to the plaintiff's title, with malice, causing special damages as a result of diminished value of the . . . property in the eyes of third parties. The publication must be false, and the plaintiff must have an estate or interest in the property slandered. Pecuniary damages must be shown in order to prevail on such a claim." (Internal quotation marks omitted.) Gilbert v. Beaver Dam Assn. of Stratford, Inc., 85 Conn.App. 663, 672-73, 858 A.2d 860 (2004), cert. denied, 272 Conn. 912, 866 A.2d 1283 (2005). "Acting with malice has been defined by our courts as with the knowledge that [the statement was] false or with a reckless disregard of the truth or falsity of the facts stated." (Internal quotation marks omitted.) R.A. Villanova Co., Inc. v. Chatfield, Superior Court, judicial district of Waterbury, Docket No. CV 04 01827023 (February 8, 2005, Agati, J.).
Upon review of the record, the court finds that a genuine issue of material fact exists as to whether the actions taken that resulted in an encumbrance and cloud on the defendant LLC's title were conducted with a reckless disregard of the truth for purposes of a slander of title claim. Therefore, U.S. Bank failed to meet its strict burden of demonstrating the nonexistence of any issue of fact. As a result, U.S. Bank's motion for summary judgment as to the first count of the defendant LLC's counterclaim on these grounds must be denied.
U.S. Bank argues that summary judgment should enter as to the first count of the defendant LLC's counterclaim on the grounds that its claim is legally insufficient because the defendant LLC fails to allege that it demanded that the encumbrance be removed or withdrawn, and such a demand is an essential element for a slander of title claim. The defendant LLC counters that the first count of its counterclaim is legally sufficient, relying again on the court's September 16, 2010 decision to deny GMAC's motion to strike the same count, in which the court ruled that the defendant LLC sufficiently alleged the requisite elements for a slander of title claim.
Our Supreme Court has held that "the use of a motion for summary judgment instead of a motion to strike [to challenge the legal sufficiency of a complaint] may be unfair to the nonmoving party because the granting of a defendant's motion for summary judgment puts the plaintiff out of court . . . [while the] granting of a motion to strike allows the plaintiff to replead his or her case." (Internal quotation marks omitted.) Larobina v. McDonald, 274 Conn. 394, 401, 876 A.2d 522 (2005). Accordingly, "the use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate when the complaint fails to set forth a cause of action and the defendant can establish that the defect could not be cured by repleading." Id. "If, however, the nonmoving party argues that any purported defects could be cured by repleading, and the moving party fails to demonstrate that, if the nonmoving party were permitted to replead, the legal deficiency underlying the motion for summary judgment would not be cured, the trial court should treat the motion for summary judgment as a motion to strike, under which the nonmoving party would be afforded the opportunity to replead upon the granting of the motion." (Internal quotation marks omitted.) Giannettino v. Scarpetti, Superior Court, judicial district of New Haven, Docket No. CV 09 5030562 (July 14, 2001, Woods, J.).
In the present case, U.S. Bank challenges the legal sufficiency of the allegations for the defendant LLC's slander of title claim, but fails to argue that the defect could not be cured by repleading. Therefore, the court will treat this argument by U.S. Bank as a motion to strike. "The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any [pleading] . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "A motion to strike . . . may properly be used to challenge the sufficiency of a counterclaim." Fairfield Lease Corp. v. Romano's Auto Service, 4 Conn.App. 495, 496, 495 A.2d 286 (1985). "The court must construe the facts in the [pleading] most favorably to the plaintiff." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." Id., 588.
"[S]lander of title is a falsehood published to third parties that is not withdrawn after a demand by the titleholder, which impugns the basic integrity or creditworthiness of an individual or a business . . . It follows, therefore, that A may bring an action for slander of title when B improperly records a mortgage against the deed to A's home and does not correct such an impropriety upon A's demand." (Citation omitted, emphasis added.) Bellemare v. Wachovia Mortgage Corp., 284 Conn. 193, 202, 931 A.2d 916 (2007). An allegation that one who was slandered demanded that the attachment be released, and the slanderer refused to do so, is a necessary element for a slander of title claim. Bank, N.A. v. Alden Design, Inc., Superior Court, judicial district of New Britain, Docket No. CV 09 5013469 (March 4, 2010, Trombley, J.) [ 49 Conn. L. Rptr. 467]. Even construing the facts in the counterclaim most favorably to the defendant LLC, the court finds that the defendant LLC has failed to allege that it made a demand for the encumbrance to be removed, and therefore, its claim for slander of title is legally insufficient. As a result, the first count of the defendant LLC's counterclaim must be stricken.
Second Count
The second count of the defendant LLC's counterclaim incorporates the allegations set forth in the first count of the counterclaim and further alleges that U.S. Bank's "actions as alleged in the [f]irst and [s]econd [special] [d]efenses and [the first count of the counterclaim] are unfair and deceptive in violation of the Connecticut Unfair Trade Practice[s] Act [(CUTPA), General Statutes § 42-110a et seq.] for which [the defendant LLC] has sustained an ascertainable loss." U.S. Bank first moves for summary judgment as to the second count of the defendant LLC's counterclaim on the grounds that it is entirely derivative of the first count, and it is premised on the recording of the lis pendens in conjunction with the present action, a document that was prepared in connection with a court proceeding and therefore is encompassed within the doctrine of absolute immunity. While the court has stricken the first count, the second count also incorporates the allegations contained in the first and second special defenses, and is not premised entirely upon the allegations in its slander of title claim. Therefore, the defendant LLC's CUTPA claim need not fail because its slander of title claim is stricken. Furthermore, the defendant LLC's CUTPA claim is not solely premised on the recording of the lis pendens, and therefore, the court need not address whether the doctrine of absolute immunity applies in the present case. As a result, U.S. Bank's motion for summary judgment as to the second count of the defendant LLC's counterclaim on these grounds are denied.
U.S. Bank also argues that summary judgment as to the second count of the defendant LLC's counterclaim is proper because its claim cannot meet the ascertainable loss requirement necessary for an actionable CUTPA violation. The defendant LLC counters that a genuine issue of material fact exists as to whether the ascertainable loss requirement can be met, relying on the court's September 16, 2010 decision to deny GMAC's motion to strike the same count, in which the court ruled that the defendant LLC sufficiently alleged the requisite elements for a CUTPA claim.
"The ascertainable loss requirement is a threshold barrier which limits the class of persons who may bring a CUTPA action seeking either actual damages or equitable relief . . . Thus, to be entitled to any relief under CUTPA, a plaintiff must first prove that he has suffered an ascertainable loss due to a CUTPA violation . . . The words any ascertainable loss [however] . . . do not require a plaintiff to prove a specific amount of actual damages in order to make out a prima facie case." (Citations omitted; internal quotation marks omitted.) Larobina v. Home Depot, USA, Inc., 76 Conn.App. 586, 593, 821 A.2d 283 (2003). "Loss has a broader meaning than the term damage . . . For purposes of CUTPA, an ascertainable loss is a deprivation, detriment, [or] injury that is capable of being discovered, observed or established." (Internal quotation marks omitted.) Id. "[O]ur Supreme Court [does] not require that a claimant make a purchase to establish an ascertainable loss; it define[s] ascertainable loss in much broader terms." (Internal quotation marks omitted.) Id., 597.
In Service Road Corp. v. Quinn, 241 Conn. 630, 698 A.2d 258 (1997), our Supreme Court found that a loss of potential customers constitutes a "deprivation, detriment [or] injury that is capable of being discovered, observed or established." (Internal quotation marks omitted.) Id., 638. The Court held further that "[t]he fact that a plaintiff fails to prove a particular loss or the extent of the loss does not foreclose the plaintiff from obtaining injunctive relief and attorneys fees pursuant to CUTPA if the plaintiff is able to prove by a preponderance of the evidence that an unfair trade practice has occurred and a reasonable inference can be drawn by the trier of fact that the unfair trade practice has resulted in a loss to the plaintiff." Id., 644. In the present case, the defendant LLC identifies its damages as an inability to "convey clear title to the property" and "damages in the form of time, and [a]ttorney fees it must incur to defend this litigation." Pursuant to the record and the aforementioned case law, the court finds that a genuine issue of material fact exists as to whether the defendant LLC suffered an ascertainable loss as a result of a CUTPA violation. As a result, U.S. Bank's motion for summary judgment as to the second count of the defendant LLC's counterclaim on these grounds must be denied.
ORDER
For the foregoing reasons, the court hereby grants U.S. Bank's motion to strike as to the first count of the defendant LLC's counterclaim, and hereby denies U.S. Bank's motion for summary judgment as to the second count of the defendant LLC's counterclaim.