Opinion
HHDCV136041948S
01-02-2018
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION v. Sonia SYED aka Sonia Haque et al.
UNPUBLISHED OPINION
OPINION
Sheridan, J.
In this foreclosure action, the substitute plaintiff Christiana Trust, A Division of Wilmington Savings Fund Society, FSB, as Trustee for Normandy Mortgage Loan Trust, Series 2013-18, moves for summary judgment in its favor as to liability. The defendant Sonia Syed opposes the motion " on the grounds that there exists disputes of material fact, namely that the Plaintiff took assignment of the loan through a fraudulent endorsement."
I. FACTS
The plaintiff moves for summary judgment as to liability only, asserting that there is no genuine issue of material fact as to all the elements of a prima facie case for foreclosure, and the defendant’s special defenses and counterclaim do not create any genuine issue of material fact as to the plaintiff’s entitlement to the remedy of foreclosure.
In support of its motion, the plaintiff submits an affidavit of Danielle Cull, a Litigation Specialist, employed by Selene Finance, LP, the mortgage loan servicer for the mortgage loan account in question. Ms. Cull attests that authentic copies of the loan documents (note and mortgage) executed by the defendant are attached to her affidavit. Ms. Cull recites that, prior to the commencement of this action, the note was endorsed in blank, negotiated and delivered to the original plaintiff, JPMorgan Chase Bank, N.A. While this action was pending, the note was transferred to the present, substitute, plaintiff, Christiana Trust, A Division of Wilmington Savings Fund Society, FSB, as trustee for Normandy Mortgage Loan Trust, Series 2013-18.
Ms. Cull attests that the note and mortgage are in default by virtue of nonpayment of monthly installments of principal and interest due on July 1, 2009 and continued nonpayment each and every month thereafter. The holder of the note exercised its option to declare the entire balance of said note due and payable, and the unpaid balance of $510, 434.19 plus interest from June 1, 2009, late charges and collection costs has not been paid.
Ms. Cull also verifies the authenticity of a copy of the notice of default which was mailed to the defendant on June 29, 2010. The notice specified the default, the action required to cure the default and a date by which the default had to be cured. Cull verifies that the default, as specified in the notice, was not cured.
The plaintiff argues that this court has the authority to grant summary judgment in a foreclosure case notwithstanding pending special defenses. The defendant asserts seven special defenses, as follows: First Special Defense- Payment and Incorrect Computation of Debt; Second Special Defense- Standing; Third Special Defense- Payment (C.G.S. § 42a-3-602); Fourth Special Defense- Unclean Hands; Fifth Special Defense- Unfair Trade Practices; Sixth Special Defense- Unauthorized Signatures (C.G.S. § 42a-3-308 and 42a-3-403); Seventh Special Defense- unclean hands.
The defendant opposes the motion on the basis that " the plaintiff took assignment of the loan through a fraudulent endorsement." The defendant represents that the note in this case, which was endorsed in blank by Washington Mutual Bank, FA, purportedly signed by an individual named Cynthia Riley. But, the defendant argues, Cynthia Riley did not actually sign the document; someone else signed her name or used a signature stamp on the endorsement. In support of this claim, the defendant has offered excerpts from a deposition of Cynthia Riley taken in the Florida case of JPMorgan Chase Bank, NA v. Eduardo Orozco, 11th Judicial Circuit in and for Miami-Dade County, Case No. 0929997 CA (11).
II. ANALYSIS
A court may properly grant summary judgment as to liability in a foreclosure action if the complaint and supporting affidavits establish an undisputed prima facie case and the defendant fails to assert any legally sufficient special defense. Wells Fargo Bank, N.A. v. Strong, 149 Conn.App. 384, 392, 89 A.3d 392 (2014); GMAC Mortgage, LLC v. Ford, 144 Conn.App. 165, 176, 73 A.3d 742 (2013).
A. Plaintiff’s Prima Facie Case
" In order to establish a prima facie case in a mortgage foreclosure action, the plaintiff must prove by a preponderance of the evidence that it is the owner of the note and mortgage, that the defendant mortgagor has defaulted on the note and that any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied ... Thus, a court may properly grant summary judgment as to liability in a foreclosure action if the complaint and supporting affidavits establish an undisputed prima facie case and the defendant fails to assert any legally sufficient special defense. (Citations omitted.) GMAC Mortgage, LLC v. Ford, 144 Conn.App. 165, 176, 73 A.3d 742 (2013)." Wells Fargo Bank, N.A. v. Strong, 149 Conn.App. 384, 392, 89 A.3d 392 (2014).
" A mortgagee that seeks summary judgment in a foreclosure action has the evidentiary burden of showing that there is no genuine issue of material fact as to any of the prima facie elements, including that it is the owner of the debt. Appellate courts in this state have held that the burden is satisfied when the mortgagee includes in its submissions to the court a sworn affidavit averring that the mortgagee is the holder of the promissory note in question at the time it commenced the action ... The evidentiary burden of showing the existence of a disputed material fact then shifts to the defendant. It is for the maker of the note to rebut the presumption that a holder of the note is also the owner of it." (Citations omitted.) Wells Fargo Bank, N.A. v. Strong, 149 Conn.App. 384, 392 (2014).
" A mortgagee is not obligated to produce the original note in order to meet the mortgagee’s burden at summary judgment; that burden is satisfied when the mortgagee includes in its submissions to the court a sworn affidavit averring that the mortgagee is the holder of the promissory note in question ..." (Internal quotation marks omitted.) U.S. Bank, N.A. v. Foote, 151 Conn.App. 620, 633, 94 A.3d 1267, cert. denied, 314 Conn. 930, 101 A.3d 952 (2014). " The evidentiary burden of showing the existence of a disputed material fact then shifts to the defendant." Id., 632.
In the present case, the Affidavit of Danielle Cull establishes that, prior to the commencement of this action, the note was endorsed in blank, negotiated and delivered to the original plaintiff, JPMorgan Chase Bank, N.A. The evidence submitted by the defendant does not controvert the affiant’s representation that the note was in the possession of the plaintiff prior to commencement of the action. Thus, the defendants have failed to establish a genuine issue of material fact as to the plaintiff’s proof of ownership of the note and mortgage in support of its prima facie case of foreclosure. See Equity One, Inc. v. Shivers, 310 Conn. 119, 132-33, 74 A.3d 1225 (2013) (trial court correctly relied on the plaintiff’s representation that it held the note " at the time of the commencement of the foreclosure action").
The court therefore finds that there are no genuine issues of material fact remaining and that the plaintiff has made out a prima facie case in this mortgage foreclosure action.
B. Special Defenses
Where a complaint and supporting affidavits establish an undisputed prima facie case in a foreclosure action, the court must then determine whether any special defense is legally sufficient before granting summary judgment. " 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." (Internal quotation marks omitted.) Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705-06, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002). " If a plaintiff in a foreclosure action has shown that it is entitled to foreclose, then the burden is on the defendant to produce evidence supporting its special defenses in order to create a genuine issue of material fact; valid, legally sufficient special defenses alone do not." WM Specialty Mortgage, LLC v. Brandt, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 09 5001157 (February 10, 2009, Moran, J.).
" As a general rule, facts must be pleaded as a special defense when they are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action." (Emphasis added; internal quotation marks omitted.) Mitchell v. Guardian Systems, Inc., 72 Conn.App. 158, 166, 804 A.2d 1004, cert. denied, 262 Conn. 903, 810 A.2d 269 (2002); see Practice Book § 10-50.
The traditional special defenses available in a foreclosure action are payment, discharge, release, satisfaction and invalidity of a lien. See Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 15-16, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999). In recognition that a foreclosure action is an equitable proceeding, courts also have recognized defenses based on mistake, accident, fraud, CUTPA, laches, tender of deed in lieu of foreclosure and a refusal to agree to a favorable sale to a third party, usury, unconscionability of interest rate, duress, coercion, material alteration and lack of consideration to be pleaded as Special Defenses. See Fidelity Bank v. Krenisky, 72 Conn.App. 700 (2002); Knights of Columbus Federal Credit Union v. Salisbury, 3 Conn.App. 201, 208-09, 486 A.2d 649 (1985).
The defendant has offered no evidence that would conceivably support her First and Third Special Defenses related to payment. Thus, the First and Third Special Defenses raise no genuine issue of material fact that could defeat the present motion.
The court will discuss each of the remaining special defenses in turn.
1. Second Special Defense- Standing
The Second Special Defense alleges that " the Plaintiff did not have an ownership interest in the note or mortgage before commencement of the action ... [and that] ... the Plaintiff did not have possession of the note before commencement of the action."
In connection with the plaintiff’s case-in-chief, the court has already concluded that the plaintiff has established its possession of the note prior to the commencement of the action. The defendant did not offer any evidence creating a genuine issue of material fact as to the plaintiff’s standing to enforce the note and mortgage that would preclude the remedy of foreclosure.
2. Fourth and Seventh Special Defenses- Unclean Hands
" [F]oreclosure is an equitable action. Our jurisprudence has recognized that those seeking equitable redress in our courts must come with clean hands. The doctrine of unclean hands expresses the principle that where a plaintiff seeks equitable relief he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue ... The party seeking to invoke the clean hands doctrine to bar equitable relief must show that his opponent engaged in wilful misconduct in regard to the matter in litigation." (Emphasis added; internal quotation marks omitted.) Monetary Funding Group, Inc. v. Pluchino, 87 Conn.App. 401, 407, 867 A.2d 841 (2005). " Our Supreme Court defines wilful misconduct as intentional conduct with the design to injure either actually entertained or to be implied from the conduct and circumstances ... Not only the action producing the injury but the resulting injury must also be intentional." Witczak v. Gerald, 69 Conn.App. 106, 116, 793 A.2d 1193 (2002).
The Fourth Special Defense alleges that
2. The originator, seller, depositor, servicer, and Plaintiff and/or all intervening holders of the note participated in a conspiracy to wrongfully endorse each note " without recourse" and/or in blank. This practice pre-dates the origination of the mortgage note;
3. Said practice was designed with the intent to mislead and deprive the Defendant and Creditors of their due process rights and to mislead and obstruct the fair administration of justice;
As to the Seventh Special Defense, it is difficult to determine how that affirmative defense differs substantively from the Fourth Special Defense. It relies upon the same facts and alleges that:
2. Upon information and belief, the originator, seller, depositor, servicer, and Plaintiff and/or all intervening holders of the note participated in a conspiracy to fund unaffordable mortgages in order to fill demands of preformed mortgage backed securities, the Plaintiff, its agents and predecessors, made misrepresentations during the origination process to benefit itself while damaging the Defendant;
3. The originator, seller, depositor, servicer, and Plaintiff and/or all intervening holders of the note participated in a conspiracy to wrongfully endorse each note " without recourse" and/or in blank. This practice pre-dates the origination of the mortgage note;
4. Said practice was designed with the intent to mislead and deprive the Defendant and Creditors of their due process rights and to mislead and obstruct the fair administration of justice;
In the present case, the defendant has not offered any proof, other than conjecture and allegations " upon information and belief" (nor can any inferences reasonably be drawn from the facts presented) that would create any genuine issue of material fact as to the existence of a " conspiracy" to deprive the defendant of her due process rights and to mislead and obstruct the fair administration of justice. Thus, the defendant has failed to meet her burden to show there is a genuine issue of material fact that as to whether the plaintiff should be barred from seeking the equitable remedy of foreclosure because it enters this litigation with unclean hands.
3. Fifth Special Defense- Unfair Trade Practices Act
The Fifth Special Defense alleges that the plaintiff used unfair acts, deceptive practices, and wrongful methods and means prior to and during its attempt to collect the debt, in violation of the Connecticut Unfair Trade Practices Act (General Statutes § 42-110a et seq.). The defendant expressly states that she does not base the Fifth Special Defense on whether the plaintiff " is the right party to collect the debt." Therefore, the information offered in opposition to the summary judgment regarding Cynthia Riley has no bearing on this defense. As a result, it is clear that the defendant has offered no evidence as to the plaintiff’s debt collection practices therefore has failed to meet her burden to show there is a genuine issue of material fact that as to whether the plaintiff should be barred from seeking the equitable remedy of foreclosure because of a violation of the Connecticut Unfair Trade Practices Act.
4. Sixth Special Defense- Unauthorized Signatures CGS § 42a-3-308 and 42a-3-403
Defendant’s Sixth Special Defense alleges that the note was " not endorsed by a party who both possessed the note and was designated as payee at the time such party endorsed said note, " and that " the endorser was not authorized to endorse the instrument ..."
This special defense appears to focus specifically upon the defendant’s claim that the endorsement in blank which appears on the note in this case appears to have been made using the name and signature stamp of a person (Cynthia Riley) who was not employed by Washington Mutual Bank, FA at the time of the endorsement. The defendant has established only that Cynthia Riley did not personally sign the endorsement or personally authorize the use of her signature stamp for that purpose. The defendant has not offered evidence to suggest that the endorsement was " false and fraudulent" in that it was not authorized or adopted by the holder of the note, Washington Mutual Bank, FA, or that the subsequent negotiation of the note and mortgage to JPMorgan Chase Bank, N.A., was fraudulent and, as a result, JPMorgan Chase Bank, N.A. was not the owner of the debt at the time this action was commenced.
Connecticut General Statutes § 42a-3-401 specifies the manner in which a signature is made: " A signature may be made (i) manually or by means of a device or machine, and (ii) by the use of any name, including a trade or assumed name, or by a word, mark, or symbol executed or adopted by a person with present intention to authenticate to authenticate a writing." Comment 2 of § 42a-3-401 explains that " [a] signature may be handwritten, typed, printed or made in any other manner ... It may be made by mark, or even thumb print. It may be made in any name, including any trade name or assumed name, however false and fictitious, which is adopted for the purpose."
To establish a " fraudulent endorsement" and create a genuine dispute of material fact as to ownership of the debt, " the burden is on the defending party to provide sufficient proof that the holder of the note is not the owner of the debt, for example, by showing that ownership of the debt had passed to another party. It is not sufficient to provide that proof, however, merely by pointing to some documentary lacuna in the chain of title that might give rise to the possibility that some other party owns the debt. In order to rebut the presumption, the defendant must prove that someone else is the owner of the note and debt. Absent that proof, the plaintiff may rest its standing to foreclose on its status as the holder of the note." U.S. Bank, National Association v. Schaeffer, 160 Conn.App. 138, 150 (2015).
" The possession by the bearer of a note indorsed in blank imports prima facie that he acquired the note in good faith for value and in the course of business, before maturity and without notice of any circumstances impeaching its validity. The production of the note establishes his case prima facie against the makers and he may rest there ... It [is] for the defendant to set up and prove the facts which limit or change the plaintiff’s rights." (Citations omitted; internal quotation marks omitted.) RMS Residential Properties, LLC v. Miller, 303 Conn. 224, 232, 32 A.3d 307 (2011), quoting Garris v. Calechman, 118 Conn. 112, 115, 170 A. 789 (1934). The plaintiff, by production of the note in this case bearing an endorsement in blank, has established a prima facie case. The defendant has failed to meet her burden to " to set up and prove the facts which limit or change the plaintiff’s rights."
Finally, even if the endorsement were invalid, the resulting lack of an endorsement would not create any genuine issue of material fact regarding the plaintiff’s standing to enforce the note and mortgage. See Ulster Sav. Bank v. 28 Brynwood Lane, Ltd., 134 Conn.App. 699, 709-10, 41 A.3d 1077 (2012) (" [A] note that is unendorsed still can be transferred to a third party. Although that third party technically is not a holder of the note, the third party nevertheless acquires the right to enforce the note so long as that was the intent of the transferor."). See also, Bank of New York Mellon v. Bell, No. 3:11-CV-1255 JAM, 2014 WL 7270232, at *4 (D.Conn. Dec. 18, 2014); J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307, 320, n.14, 71 A.3d 492 (2013); Berkshire Bank v. Hartford Club, 158 Conn.App. 705, 712, 120 A.3d 544 (2015).
C. The Counterclaims Do Not Preclude Summary Judgment
The legal sufficiency of a special defense in a foreclosure action may be decided by means of a motion for summary judgment. U.S. Bank Nat. Ass’n v. Sorrentino, 158 Conn.App. 84, 94, 118 A.3d 607 (2015). In assessing the legal sufficiency of counterclaims to a foreclosure action, the court should employ the transaction test set forth in Practice Book § 10-10. CitiMortgage, Inc. v. Rey, 150 Conn.App. 595, 605-06, 92 A.3d 278, 284 (2014).
" In a foreclosure action, a counterclaim must relate to the making, validity or enforcement of the mortgage note in order properly to be joined with the complaint." JP Morgan Chase Bank, Trustee v. Rodrigues, 109 Conn.App. 125, 133, 952 A.2d 56 (2008); see also New Haven Savings Bank v. LaPlace, 66 Conn.App. 1, 9-11, 783 A.2d 1174 (affirming summary judgment for plaintiff on counterclaims not related to making, validity or enforcement of mortgage note), cert. denied, 258 Conn. 942, 786 A.2d 426 (2001). Thus, " [c]onduct on the part of the [foreclosing party] that occurred after the loan documents were executed and not necessarily directly related solely to enforcement of the note ... properly has been found not to arise out of the same transaction as the complaint." JP Morgan Chase Bank, Trustee v. Rodrigues, supra, at 134-35, 952 A.2d 56, citing Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 16-21, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999).
1. Counterclaim Count One- Fraud
Counterclaim Count One alleges that the plaintiff knowingly presented false documents, including the mortgage note with a " fabricated endorsement" to the Court with the intent that the Court rely on said documents. Count one asserts a cause of action for fraud. " ‘Fraud involves deception practiced in order to induce another to act to her detriment, and which causes that detrimental action ... The four essential elements of fraud are (1) that a false representation of fact was made; (2) that the party making the representation knew it to be false; (3) that the representation was made to induce action by the other party; and (4) that the other party did so act to her detriment ... Because specific acts must be pleaded, the mere allegation that a fraud has been perpetrated is insufficient ..." Bank of Am., N.A. v. Aubut, 167 Conn.App. 347, 378-79, 143 A.3d 638 (2016).
A question arises from the pleadings whether the fraud alleged is one practiced upon the court or upon the defendant. For purposes of satisfying the transaction test set forth in Practice Book § 10-10, the court will assume it is fraud upon the defendant. That being the case, the defendant has not brought forth evidence, much less clear and convincing evidence, that would demonstrate a genuine issue of material fact as to whether the plaintiff has committed fraud to the detriment of the defendant. Fraud will not be presumed by the court and must be affirmatively established by the party seeking to preclude the remedy of foreclosure.
As the defendant has not met her burden of bringing forth evidence sufficient to create a genuine issue of material fact as to the claim of fraud alleged in Counterclaim Count One, the court is not precluded from granting summary judgment to the plaintiff.
2. Counterclaim Count Two- Declaratory Judgment Pursuant to Practice Book § 17-54
Counterclaim Count Two seeks a judgment, declaratory in nature, that " the Mortgage assignment is void ab initio as to Plaintiff’s interest in the Property, such that the Mortgage, and mortgage assignment, did not, and does not, give Plaintiff any interest in the Property"
As explained herein, even if the mortgage assignment was void, that would not create any genuine issue of material fact regarding the plaintiff’s standing as the transferee of the note to enforce the note and mortgage. See Ulster Sav. Bank v. 28 Brynwood Lane, Ltd., 134 Conn.App. 699, 709-10 (2012).
The factual allegations of Counterclaim Count Two do not create a genuine issue of material fact as which would preclude the court from granting summary judgment to the plaintiff.
3. Counterclaim Count Three- Connecticut Unfair Trade Practices Act
Counterclaim Count Three alleges that the plaintiff used unfair acts, deceptive practices, and wrongful methods and means prior to and during its attempt to collect the debt, in violation of the Connecticut Unfair Trade Practices Act (General Statutes § 42-110a et seq.). The defendant expressly states that she does not base her counterclaim on whether the plaintiff " is the right party to collect the debt." That being said- as with the Fifth Special Defense which makes similar factual allegations- the question is what evidence, if any, does the defendant bring forth to support her conclusory allegations of unfair acts, deceptive practices, and wrongful methods and means used to collect the debt. The court can discern none. Nor is it clear how the factual allegations underlying this particular counterclaim have any reasonable nexus to the making, validity or enforcement of the mortgage or note. See CitiMortgage, Inc. v. Rey, supra, 150 Conn.App. at 605-06, 92 A.3d 278.
As the defendant has not met her burden of bringing forth evidence sufficient to create a genuine issue of material fact as to the claim alleged in Counterclaim Count Three, the court is not precluded from granting summary judgment to the plaintiff.
4. Counterclaim Count Four- Attorneys Fees Pursuant to CGS § 42-150bb
Counterclaim Count Four makes the bizarre claim that, based upon a paragraph in the Mortgage which allows the lender to proceed with a foreclosure action to protect its interests and collect from the borrower any attorneys fees expended to protect the lender’s interests in the mortgaged property, that the defendant- borrower is somehow entitled to attorneys fees for defending this action. Assuming such a right or remedy exists, it has no reasonable nexus to the making, validity or enforcement of the mortgage or note, and is therefore legally insufficient as a counterclaim.
As Counterclaim Count Four violates the transaction test set forth in Practice Book § 10-10 because it does not arise out of the same transaction as the Complaint, this Court is not precluded from granting summary judgment to Plaintiff.
III. CONCLUSION
For the foregoing reasons, the court finds that there is no genuine issue of material fact as to all the elements of a prima facie case for foreclosure, and the defendant’s special defenses and counterclaim do not create any genuine issue of material fact as to the plaintiff’s entitlement to the remedy of foreclosure.
Therefore, there is no genuine issue of material fact as to liability, but there is a genuine issue as to the amount of the debt, including costs and attorneys fees. Partial summary judgment as to liability only is therefore GRANTED.