Opinion
MMXCV136009982
02-18-2016
The Bank of New York Mellon fka the Bank of New York as Trustee for the Certificateholders of the Walt, Inc. Alternative Loan Trust 2006-43CB, Mortgage Passthrough Certificates, Series 2006-43CB v. Jeffrey J. Mauro et al
UNPUBLISHED OPINION
Filed February 19, 2016
MEMORANDUM OF DECISION ON MOTION FOR SUMMARY JUDGMENT
Julia L. Aurigemma, J.
The plaintiff, The Bank of New York Mellon f/k/a The Bank of New York, as Trustee for the Certificate holders of the WALT, Inc., Alternative Loan Trust 2006-43CB, Mortgage Pass-Through Certificates, Series 2006-43CB (" plaintiff") has moved for summary judgment on its complaint and on the defendants' counterclaims on the grounds that no material issue of fact exists and it is entitled to judgment as to liability only against the defendants, Jeffery J. Mauro and Renee A. Mauro (" defendants") as a matter of law. In support of the motion for summary judgment the plaintiff has submitted the affidavit of Kajay Williams which appends loan documents. The defendants have filed a Memorandum in Opposition to the Summary Judgment and have submitted their own affidavits in support thereof. The plaintiff has also filed a Reply Memorandum of Law to which it has appended a letter from the defendants.
Facts
The plaintiff has submitted the Williams affidavit, which constitutes evidence of the following facts. On November 29, 2006, Jeffrey Mauro executed an Interest Only Fixed Rate Note " the " Note"), wherein he promised to pay to the order of America's Wholesale Lender (" AWL") the principal sum of Three Hundred Fifty Thousand Dollars ($350,000). The Note evidenced a loan from AWL to the defendants, which was assigned loan number xxxxxx1773 (" Mauro Loan"). The Note was secured by an Open-End Mortgage Deed dated November 29, 2006 (the " Mortgage") from the defendants to Mortgage Electronic Registrations Systems, Inc. (" MERS") as nominee for AWL on the property at 330 Roast Meat Hill Road, Killingworth, Connecticut (the " Property").
AWL endorsed the Note in blank and on July 25, 2011, MERS executed an Assignment of Mortgage evidencing the assignment of the Mortgage to the plaintiff. The defendants defaulted under the terms of the Note and Mortgage by failing to make monthly payments of principal and interest due. By letter dated September 16, 2009, notice was given to the defendants of their default. When the defendants failed to cure the default, the plaintiff elected to accelerate the total amount of the debt due by commencing this action.
The plaintiff is in physical possession of the original loan documents including the Note endorsed in blank and was in possession of same at the time this action was commenced.
The defendants have filed a Memorandum in Opposition to Summary Judgment and have submitted one document in support thereof, a Bailee Letter Agreement from Bank of America, N.A. to Bennett & McHugh. They have also submitted their own affidavits. Those affidavits claim that the plaintiff's predecessor made various misrepresentations about the original loan such as " That an interest only loan which was designed to present me with an attractive low payment was the solution to my financing need when it was a certainty that I could never, based on my income, the real estate market, and the size of the loan never sic) obtain sufficient financing to pay down the principal." Affidavit Jeffrey Mauro, December 9, 2015, ¶ 5.c.
The majority of the defendants' affidavits address the conduct of the plaintiff during the mediation process. However, there is one paragraph which alleges that " the Bank of New York wrongfully began foreclosure proceedings against myself and Rene Mauro by misapplying and miscrediting our payment which wrongfully which (sic) created a default in the loan in order to proceed with the foreclosure." The defendants have presented no documents to support the claims in their affidavits.
The plaintiff filed a Reply Memorandum to which it appended a letter from the defendants dated August 26, 2011 to BAC Home Loans Servicing LP, which stated:
The purpose of this letter is to explain to BAC Home Loans Servicing LP the circumstances in our lives which have resulted in an economic hardship for us causing us to have difficulty paying our monthly mortgage payments over the past two years.
To begin with, prior to owning and operating our cleaning business, Elite Cleaning Service, LLC, we owned a restaurant catering business. Two years ago, a former employee of the business filed a lawsuit against us. Recently, we settled the case. However, the lawsuit cost us approximately $80,000.00 in costs, expenses and attorneys fees.
During the same time, a close uncle of ours passed away. Jeffrey Mauro was the primary care giver for his uncle and he expended much time and money for the care of his uncle before he passed away, not to mention the emotional loss he suffered after his uncle's death.
Furthermore, because of the downturn of the economy over the past three years, our cleaning business has suffered dramatically. Many of our business accounts relocate to locations outside of Connecticut. Because of this we have incurred a steady loss of business income during that time.
Recently, we have been able to persevere and reestablish our business, but we continue to struggle financially. Therefore, we are requesting that BAC Home Loans Servicing LP consider our request for modification of our mortgage loan.
We thank you in advance for your consideration of this matter. If you should have any comments or questions, please do not hesitate to contact us at the telephone number and address above.
The aforementioned letter from the defendants, written two years after their 2009 default, contradicts their affidavits to the extent the affidavits allege that misrepresentations by the plaintiff's predecessor and the plaintiff's misapplication of payments caused the defendants to default.
Discussion of the Law and Ruling
Pursuant to Practice Book § 17-49, " 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." Rivera v. Double A Transportation, Inc., 248 Conn. 21, 24, 727 A.2d 204 (1999) (quoting Miller v. United Technologies Corp., 233 Conn. 732, 744-45, 660 A.2d 810 (1995)). A material fact is one that would alter the outcome of the case. Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 14, 728 A.2d 1114 (1999), (citing Hammer v. Lumberman's Mutual Casualty Co., 214 Conn. 573, 578, 573 A.2d 699 (1990)). " 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 deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. Miller v. United Technologies Corp., 233 Conn. 732, 745, 660 A.2d 810 (1995).
The party seeking summary judgment has the burden of showing the absence of any genuine issue of material facts which, under applicable principals of substantive law, entitle him to a judgment as a matter of law. D.H.R. Construction Co. v. Donnelly, 180 Conn. 430, 434, 429 A.2d 908 (1980); Charlemagne v. Progressive Northwest Ins. Co., 63 Conn.App. 596, 599, 777 A.2d 741 (2001). The party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact. Suarez v. Dickmont Plastics Corp., 229 Conn. 99, 105, 639 A.2d 507 (1994). The existence of a genuine issue of material fact must be demonstrated by counter-affidavits and concrete evidence. Pion v. Southern New England Telephone Co., 44 Conn.App. 657, 663, 691 A.2d 1107 (1997). " It is not enough for the opposing party merely to assert the existence of a disputed issue." Daily v. New Britain Machine Co., 200 Conn. 562, 569, 512 A.2d 893 (1986). Likewise, a party's conclusory statements in affidavits or other pleadings do not constitute evidence sufficient to establish the existence of disputed material facts. Gupta v. New Britain General Hospital, 239 Conn. 574, 583, 687 A.2d 111 (1996).
The purpose of summary judgment procedure is to allow the court to prevent vexatious and dilatory tactics and to facilitate the expeditious disposition of such cases. Ryan v. Dionne, 28 Conn.Supp. 35, 37, 248 A.2d 583 (1968). " Motions for summary judgment are designed to eliminate the delay and expense incident to a trial when there is no real issue to be tried." Wilson v. City of New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).
" '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] holder of a note is presumed to be the owner of the debt, and unless the presumption is rebutted, may foreclose the mortgage under § 49-17. The possession by the bearer of a note [e]ndorsed 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 established his case prima facie against the makers and he may res there . . . It [is] for the defendant to set up and prove the facts which limit or change the plaintiff's rights." Equity One, Inc. v. Shivers, 310 Conn. 119, 135, 74 A.3d 1225 (2013).
" A plaintiff's right to enforce a promissory note [in a mortgage foreclosure] may be established under the UCC." J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307, 319, 71 A.3d 492 (2013). The UCC defines a " holder" as " [t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession. Connecticut General Statutes § 42a-1-201(b)(21)(A). Negotiation of an instrument means a transfer of possession by someone other than the issues of the instrument to another person, who through negotiation, becomes the " holder" of the instruments. See Connecticut General Statutes § 42a-3-201(a).
In this case the plaintiff is the holder of the Note because the plaintiff is in physical possession of the Note endorsed in blank. The plaintiff was in physical possession of the Note endorsed in blank prior to the filing of this action. In addition, the Mortgage was assigned to the plaintiff and the plaintiff is the assignee of record. When the defendants defaulted by failing to make monthly payments, the plaintiff satisfied the conditions precedent to the enforcement of the Mortgage and Note by timely mailing defendants the Notice of Default.
The defendants have presented no evidence to rebut the prima facie case established by the plaintiff. " '[A] party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an 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 [an issue of] material fact and, therefore, cannot refute evidence properly presented to the court [in support of a motion for summary judgment].' (Internal quotation marks omitted.) Gould v. Mellick & Sexton, 263 Conn. 140, 151, 819 A.2d 216 (2003)." Mercer v. Cosley, 110 Conn.App. 283, 296, 955 A.2d 550 (2008).
The plaintiff argues that the defendants' counterclaims are not legally sufficient because they:
1) pertain to the actions of the originator of the loan, and not the plaintiff; 2) do not relate to the making, validity or enforcement of the Note; and 3) are time barred.
Other than conduct that occurred prior to the time the Note and Mortgage were executed, the allegations in the counterclaims complain about the plaintiff's conduct which occurred in post-default mortgage modification negotiations. These are not proper grounds for a defense to a foreclosure action. U.S. Bank, N.A., Trustee v. Sorrentino, 158 Conn.App. 84, 97, 118 A.3d 607 (2015). In Sorrentino, supra, the court affirmed a summary judgment on the defendants' counterclaims rendered in favor of the plaintiff, mortgagee. The counterclaims in Sorrentino, as most of those in the present case, all pertained to the post-default conduct of the plaintiff. The court in Sorrentino reviewed the law as follows:
A counterclaim that has been filed in contravention of our rules of practice is legally insufficient. Section 10-10 of the Practice Book provides in relevant part that " [i]n any action for legal or equitable relief, any defendant may file counterclaims against any plaintiff . . . provided that each such counterclaim . . . arises out of the transaction or one of the transactions which is the subject of the plaintiff's complaint . . ." This court previously has held that, " [i]n 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, **614 258 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, *96 249 Conn. 919, 733 A.2d 229 (1999). In CitiMortgage, Inc. v. Rey, 150 Conn.App. 595, 605-06, 92 A.3d 278, cert. denied, 314 Conn. 905, 99 A.3d 635 (2014), this court clarified that a proper application of Practice Book § 10-10 in a foreclosure context requires consideration of whether a counterclaim has some reasonable nexus to, rather than directly attacks, the making, validity or enforcement of the mortgage and note.U.S. Bank N.A., Trustee v. Sorrentino, 158 Conn.App. 84, 95-96, 118 A.3d 607 (2015).
The defendants' counterclaims concerning the plaintiff's conduct during mediation/mortgage modification are virtually indistinguishable from those of the defendant in Sorrentino . They pertain to the plaintiff's conduct during mediations, which occurred years after the execution of the Mortgage and the defendants' default. The defendants attempt to avoid Sorrentino by arguing that their counterclaims have a reasonable nexus to the making, validity or enforcement of the Note because " the misrepresentations about the status of the loan resulted in Plaintiff's foreclosure of the loan and subsequent enforcement of the Mortgage." Defendant's Memorandum of Law in Opposition to the Defendant's [sic] Motion for Summary Judgment, p. 6. This statement is contradicted by the fact that the defendants defaulted on the Note in 2009. See Williams Affidavit, Ex. D and by the defendants' own writing, their letter of August 26, 2011, quoted above, in which they admit that the default on their Mortgage was caused by an employee lawsuit, a death in the family and a downturn in the economy.
The plaintiff argues that the other counterclaims either are directed against the plaintiff's predecessor and/or are barred by the applicable statutes of limitations. The allegations against the plaintiff's predecessor pertain to misrepresentations made to the defendants concerning the terms of the loan, interest rate, right of rescission and the defendants' ability to retain the Property, which allegedly induced the defendants to execute the Note and Mortgage.
The assignee of a Note is not responsible for the wrongful conduct of the lender. Deutsche Bank v. Gregory-Bouton, WWMCV085003138S, Id. at*14 (July 15, 2009); Deutsche Bank National Trust Co. v. Ganci, HHDCV054017440, Id. at*3 (April 5, 2006).
The plaintiff argues that the defendants' preclosing allegations must also fail because they are time barred. The court agrees. The Note and Mortgage were executed on November 29, 2006. The defendants did not asset any claims against the plaintiff or the plaintiff's predecessor concerning pre-origination conduct until January 21, 2014, over seven years after the date of any alleged misrepresentations. Whether framed as a violations of the Connecticut Unfair Trade Practice Act (" CUTPA"), negligent or reckless misrepresentation, fraud or a violation of the Truth in Lending Act (" TILA"), the violations are time barred. Connecticut General Statutes § 52-577 contains a three-year statute of limitations for tort claims such as misrepresentations and fraud. Connecticut General Statutes § 42-110g provides a three-year statute of limitations for CUTPA claims.
A rescission claim under TILA must be brought no later than three years from the date of loan closing. See U.S.C. § 1640(e)(f); Bank of New York v. Conway, 50 Conn.Supp. 189, 198, 916 A.2d 130 (2006). This time period cannot be extended, even if brought as a counterclaim or affirmative defense. Beach v. Ocwen Federal Bank, 523 U.S. 410, 419, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998). The defendants did not bring their TILA counterclaim until December 2, 2014, more than eight years after the date of the alleged failed rescission notice.
The plaintiff has established a prima facie case that it is entitled to foreclose the Mortgage. The defendants have offered no evidence to rebut that case. Their counterclaims all fail as a matter of law. The counterclaims which pertain to the plaintiff's conduct which allegedly occurred during the post-default mediation process cannot defeat a foreclosure action under Sorrentino, supra . The counterclaims which pertain to the conduct of the plaintiff's predecessor are directed at the wrong party and are barred by the applicable statutes of limitations and, therefore, cannot serve as a bar to the foreclosure of the Mortgage. For the foregoing reasons, summary judgment enters in favor of the plaintiff as to liability only and judgment enters in favor of the plaintiff on the defendants' counterclaims.