Opinion
FBTCV156050091S
12-22-2016
Nationstar Mortgage, LLC v. Marcio Demelo
UNPUBLISHED OPINION
MEMORANDUM OF LAW ON MOTION FOR SUMMARY JUDGMENT
Edward T. Krumeich, J.
Plaintiff Nationstar Mortgage LLC (" plaintiff") has moved for summary judgment as to liability against defendants Marcio R. Demelo and Lucia Santa Cruz Assis (" defendants"). For the reasons stated below, the motion for summary judgment is granted as to liability.
The Standards for Deciding a Motion for Summary Judgment
" The standards . . . [for] review of a . . . motion for summary judgment are well established. 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 . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact . . . A material fact . . . [is] a fact which will make a difference in the result of the case . . ." DiPietro v. Farmington Sports Arena, LLC, 306 Conn. 107, 115-16, 49 A.3d 951 (2012), quoting H.O.R.S.E. of Connecticut, Inc. v. Washington, 258 Conn. 553, 558-60, 783 A.2d 993 (2001) (citations omitted).
Plaintiff Has Made a Prima Facie Case That It is Entitled to Foreclose the Mortgage
In Bank of America, N.A. v. Aubut, 167 Conn.App. 347, 143 A.3d 638, (2016) (" Aubut"), the Appellate Court recently stated how to establish a prima facie case in a mortgage foreclosure:
'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.' . . . 'A promissory note and a mortgage deed are deemed parts of one transaction and must be construed together as such . . . Where the terms of the note and mortgage require notice of default, proper notice is a condition precedent to an action for foreclosure.' (Citations omitted).
Plaintiff has presented evidence that on September 21, 2007, defendants owed $288,000 to Bank of America, N.A. as evidenced by a promissory note and secured by a mortgage. On November 5, 2013, the mortgage was assigned to plaintiff, which is entitled to collect the debt under the note and enforce the mortgage. On January 28, 2005, a default notice was sent based on defendants' failure to pay the amounts plaintiff claimed was due on December 1, 2014 and January 1, 2015. Defendants failed to pay the amount demanded and plaintiff elected to exercise its right to accelerate the loan.
In support of its motion for summary judgment plaintiff submitted an affidavit which declared: " [t]he Note and Mortgage are now in default by virtue of nonpayment of the monthly installments of principal and interest due on December 1, 2014 and each and every month thereafter, and Nationstar has exercised its option to declare the entire balance of the Note due and payable. " The default notice dated January 28, 2015 addressed to Mr. Demelo, appended to the plaintiff's affidavit, states: " You have not made payments on your loan since 12/01/2014. You are now due for all payments from and including that date. The failure to make these payments is a default under the terms and conditions of the mortgage loan."
Plaintiff has made out a prima facie case to foreclose the mortgage,
Defendants Have Failed to Raise a Genuine Issue of Material Fact As to Their Default
Defendants have not submitted any evidence to dispute their nonpayment of principal and interest since December 1, 2014 or that the failure to pay principal and interest is a default under the loan documents. Instead, they have submitted an affidavit from Mr. Demelo that admits the principal and interest due each month but disputes the amount of escrow payments demanded by plaintiff. The affidavit asserts that plaintiff withdrew $2,325.08 from affiant's bank account on November 14, 2014, instead of the monthly payment total of $1,708.78 established in the loan modification agreement they had entered into with Bank of America, N.A. on October 19, 2012. In a letter dated November 20, 2014, appended to the affidavit, Mr. Demlo informed plaintiff that the negative balance in his escrow account of $5,699.73, as of October 1, 2012, should have been zeroed out as a result of the modification agreement and was not subject to collection by plaintiff. Mr. Demelo then stated " I will send payments based on the previous escrow amount and request that my payments be applied correctly and that all fees be waived due to your error."
There is nothing in the note, mortgage or modification agreement that would grant Mr. Demelo the privilege of withholding payments of principal and interest because of a dispute over escrow payments. Indeed, all three instruments make it clear the failure to pay principal and interest when due is a default and could lead to acceleration of debt repayments and foreclosure of the mortgage. Compare, Fidelity Bank v. Krenisky, 72 Conn.App. 700, 716, 807 A.2d 968 (2002) (partial payments by mortgagor will not forestall foreclosure; substantial performance doctrine of payment duty under note is inapplicable in mortgage foreclosures).
Defendants Have Failed to Raise a Legally Sufficient Special Defense that Would Prevent Foreclosure
'A foreclosure action is an equitable proceeding.' . . . '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.' . . . 'Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction or [lien invalidity] . . . [Connecticut courts, however] have permitted several equitable defenses to a foreclosure action.' Aubut, 167 Conn.App. at 371-72 (citations omitted).
The Aubut Court expanded upon the equitable defenses that could be asserted in a mortgage foreclosure:
" As we have stated previously in this opinion, [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." . . . " Practically speaking . . . neither this court nor our Supreme Court has ever expressed a finite list of equitable defenses available in a foreclosure action. Typically, [t]he assertion of equitable defenses to a mortgage foreclosure requires that the defenses . . . challenge the making, validity and enforcement of the loan note and mortgage. This principle was . . . considered to include events leading up to the execution of the loan documents, exclusive of issues involving administration of the loan, such as misapplication of payments . . . Nevertheless, given the equitable nature of a foreclosure action, events subsequent to the execution of the loan documents also have been considered."
It is clear from our case law that, generally, a legally valid special defense in a foreclosure action, insofar as it relates to the making, validity, or enforcement of the loan, note and mortgage, is a means of asserting that a party who has commenced a foreclosure action may not prevail. Thus, a special defense operates as a shield, to defeat a cause of action, and not as a sword, to seek a judicial remedy for a wrong.167 Conn.App. at 373-74 (citations omitted).
The second special defense alleges without detail " [t]he plaintiff unilaterally changed the monthly payment obligation in contravention of the mortgage modification agreement entered into by Bank of America with the defendants." Reading the allegations and Demelo affidavit together it appears that defendants' defense is that the dispute about a negative $5,699.73 escrow balance on October 1, 2013, and plaintiff's efforts to collect the shortfall somehow excused defendants from paying the principal and interest due under the note secured by the mortgage.
Any dispute about the escrow account collections would not be a valid defense to payment of principal and interest due on the note. That defendants may have a claim to recover overpayments of the escrow or a defense to a portion of the debt claimed by plaintiff to the extent it includes the disputed escrow does not excuse non-payment of the sums admittedly due under the note. Thus, it is not a valid defense to liability for foreclosure. See Aubut, 167 Conn.App. at 372-73 (" [t]he purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that [a] plaintiff has no cause of action").
When the loan was modified the principal balance due under the note was raised to $291,341.71, which included " all amounts and arrearages that will be past due as of the Modification Effective Date (including unpaid and deferred interest, fees, escrow advances . . .)" The modified repayment terms called for " [m]onthly [p]rincipal and [i]nterest payment" of $933.29 and " [e]stimated monthly [e]scrow [p]ayment" of $775.49 for " [t]otal [m]onthly [p]ayment" of $1,708.78. Defendant's affidavit raises issues about the $4,000 reported escrow fund and withdrawn payment of $2,325.08 on November 14, 2014. There will likely be a hearing to ascertain the total amount of debt to resolve defendants' claim there is an error of ($5,699.73) in the escrow account, which defendants assert was forgiven by the loan modification.
The Other Two Special Defenses Do Not Preclude Summary Judgment
Defendants have raised two other special defenses: 1. that plaintiff failed to provide information about the " loan history" in violation of the federal Fair Debt Collection Practices Act (" FDCPA"), and 2. That plaintiff failed to provide foreclosure relief notice required by statute in the summons and complaint. Neither defense is addressed in the Demelo affidavit and the answer, which does not cite the statute to which it refers in violation of P.B. § 10-60 (a)(3), is also sparse on factual allegations, which alone would be grounds to find these defenses insufficient to preclude summary judgment. See GMAC Mortgage, LLC v. Ford, 144 Conn.App. 165, 177, 73 A.3d 742 (2013).
Defendants also asserted a special defense that " plaintiff was not the record holder of the alleged mortgage obligation" but offered no proof to rebut plaintiff's proof of ownership. See GMAC Mortgage, LLC, 144 Conn.App. at 177. Certified copies of the recorded mortgage and assignment were appended to the plaintiff's affidavit.
In Aubut the Appellate Court held that predatory lending practices may be alleged as a special defense to foreclosure provided that the factual allegations fall within accepted equitable defenses, like fraud, unconscionability, unclean hands or equitable estoppel. See Aubut, 167 Conn. at 375-82. Neither defense is based on facts that rise to the level of a recognized equitable defense or which would preclude enforcement of the mortgage in equity. Moreover, neither statute includes remedies for violation that would preclude foreclosure of the mortgage.
" The court finds that a violation of the FDCPA is not a valid defense to a foreclosure action." Washington Mut. Bank v. Delbuono, 2003 WL 21958417 *4 (Conn.Super. 2003) (Curran, J.) (and cases cited therein). " [A] violation of [The Fair Debt Collection Practices Act (FDCPA)] is not a valid defense to a foreclosure action. The FDCPA was implemented to 'eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.' 15 U.S.C. § 1692(e). Pursuant to the FDCPA, '[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.' 15 U.S.C. § 1692e. Thus, the FDCPA addresses a creditor's collection practices rather than the making, validity or enforcement of the note or mortgage." Id. Accord, Everbank v. Shine, 2015 WL 2344728 *9 (Conn.Super. 2015) (Russo, J.).
" A foreclosure action is not the collection of a debt, and thus does not trigger the notice provision of the FDCPA." Gallaher v. U.S. Bank N.A., 2016 WL 118239 *12 (D.Conn. 2016) (Bryant, J.), citing Cheung v. Wells Fargo Bank N.A., 987 F.Supp.2d 972, 977 (N.D. Cal. 2013). Accord, Garcia v. American Home Mortgage Servicing, Inc., 2011 WL 614047 *5 (N.D. Cal. 2011). The FDCPA does not preclude summary judgment in this case.
Connecticut General States § 49-31l requires notice of mediation rights, but limits the remedies for violation to temporary delay in the foreclosure proceeding to facilitate mediation; the statutory remedies do not preclude granting summary judgment on liability in the appropriate case after the mediation period has expired:
(5) If at any time on or after July 1, 2008, but prior to July 1, 2019, the court determines that the notice requirement of subdivision (1) of this subsection has not been met, the court may, upon its own motion or upon the written motion of the mortgagor, issue an order that no judgment may enter for fifteen days during which period the mortgagor may submit a foreclosure mediation request form to the court.
(6) Notwithstanding any provision of the general statutes or any rule of law to the contrary, prior to July 1, 2019, no judgment of strict foreclosure nor any judgment ordering a foreclosure sale shall be entered in any action subject to the provisions of this subsection and instituted by the mortgagee to foreclose a mortgage on residential real property unless: (A) Notice to the mortgagor has been given by the mortgagee in accordance with subdivision (1) of this subsection and the time for submitting a foreclosure mediation request form has expired and no foreclosure mediation request form has been submitted, or if such notice has not been given, the time for submitting a foreclosure mediation request form pursuant to subdivision (2) or (3) of this subsection has expired and no foreclosure mediation request form has been submitted, or (B) the mediation period set forth in subsection (b) of section 49-3n in has expired or has otherwise terminated, whichever is earlier.
In this case, commenced on or about May 18, 2015, notice of mediation and community based resources was given to Mr. Demelo with the letter dated January 28, 2015, the mediation process was followed and the mediation period ended on June 10, 2015. C.G.S. § 49-31l does not preclude summary judgment in this case.
Conclusion
The motion for summary judgment as to liability is granted.