Opinion
FSTCV166030403
06-21-2018
U.S. BANK, N.A., as Trustee FOR CITIGROUP MORTGAGE LOAN TRUST, INC. v. Cynthia ARMIJO et al.
UNPUBLISHED OPINION
OPINION
Hon. Charles T. Lee
On October 4, 2017, defendants, Anthony and Cynthia Armijo, filed the instant motion to dismiss the complaint in this foreclosure action for plaintiff’s lack of standing. They claimed that they executed a note and mortgage to the Mortgage Electronic Registration Systems (MERS) as nominee for Coldwell Banker Mortgage "care of PHH Mortgage" (Coldwell). Because Coldwell is admittedly a d/b/a (doing business as), defendants contend that it was not a real entity and therefore could not have executed the note and mortgage or caused the mortgage to be assigned to the plaintiff, U.S. Bank N.A. as trustee for Citigroup Mortgage Loan Trust Inc. For the reasons set forth below, the court disagrees and denies the motion to dismiss.
Background
Another court of this judicial district previously denied this motion to dismiss in a memorandum of decision dated January 22, 2018. Subsequently, the same court granted motion to reargue without opinion on March 7, 2018 and vacated its decision. That court also directed that the original motion to dismiss should be returned to the foreclosure short calendar and determined by another court. As a result, the instant motion appeared on short calendar on June 4, 2018 and argument was heard by this court. Counsel for plaintiff appeared and as did the self-represented defendants. Defendants, without objection, also submitted for the court’s consideration the decision of the Circuit Court for Seminole County, Florida, dated October 16, 2014, in the matter of Bank of America v Nash, Case No. 59-2011-CA-004389.
The complaint in this action alleges that the defendants executed and delivered a note to Coldwell on September 30, 2005 in the amount of $548,000, which was the subject of several loan modifications not relevant to this discussion. The complaint also alleges that the defendants executed and delivered a mortgage to MERS as nominee for Coldwell, which was assigned to the plaintiff U.S. Bank, N.A. on or about September 29, 2009. The complaint alleges that the mortgage is in default and that U.S. Bank is the holder of the note endorsed in blank. Following appropriate notice, this foreclosure action was commenced on or about November 9, 2016.
On August 24, 2017, a default for failure to appear was entered against the defendants. A judgment of strict foreclosure was granted on September 25, 2017 with a law date of January 30, 2018. Defendants filed an answer on September 28, 2017, in which they did not deny the allegations of the complaint and did not assert any special defenses or counterclaims. On October 4, 2017, defendants filed their motion to dismiss for plaintiff’s lack of standing (Doc. No.132). On the same date, defendants filed a memorandum in support of their motion and an objection to the motion for strict foreclosure. On October 5, 2017, defendants were permitted to participate in the mortgage mediation process without change to the law date. The court heard the motion to dismiss on November 20, 2017. On January 2, 2018, the mediation period was terminated. As mentioned above, the court denied the motion in a decision dated January 22, 2018. On February 9, 2018, defendants filed their motion to reargue, which the court granted on March 7, 2018 and vacated its decision dated January 22, 2018 denying the motion to dismiss. On June 4, 2018, the motion to dismiss was heard by this court, which reserved decision and indicated it would render its decision on the papers. On June 7, 2018, the defendants filed a copy of the transcript of the November 20, 2017 proceeding.
Defendants contend that Coldwell was a d/b/a of PHH Home Loans, LLC, which is duly registered and authorized to do business in Connecticut. However, defendants claim that, because Coldwell is a trade name and not an incorporated entity, it could not have entered into the financing transaction with them and the note could not have been transferred to the plaintiff U.S. Bank, N.A. Similarly, the defendants claim that Coldwell could not be a valid mortgagee and MERS could not have assigned the mortgage on its behalf to the plaintiff, U.S. Bank, N.A. Further, defendants assert that there is no proof of an endorsement or allonge on the note to either PHH or to the plaintiff, U.S. Bank, N.A. As a result, defendants claim that the plaintiff U.S. Bank lacks standing to bring this foreclosure action against them.
Discussion
"[A] motion to dismiss ... properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court." (Internal quotation marks omitted.) Santorso v. Bristol Hospital, 308 Conn. 338, 350, 63 A.3d 940 (2013). "A court deciding a motion to dismiss must determine not the merits of the claim or even its legal sufficiency, but rather, whether the claim is one that the court has jurisdiction to hear and decide." (Internal quotation marks omitted.) Hinde v. Specialized Education of Connecticut, Inc., 147 Conn.App. 730, 740-41, 84 A.3d 895 (2014).
"[S]tanding ... implicates a court’s subject matter jurisdiction, which may be raised at any point in judicial proceedings." Stamford Hospital v. Vega, 236 Conn. 646, 656, 674 A.2d 821 (1996). "Standing is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430, 829 A.2d 801 (2003). Where subject matter jurisdiction, or in this case standing, is challenged, the burden of establishing the court’s jurisdiction rests on the plaintiff. Id., 265 Conn. 430 n. 12; see also Wilcox v. Webster Ins., Inc., 294 Conn. 206, 213-14, 982 A.2d 1053 (2009) (same).
The appellate court has recently restated the standards relating to standing to bring a foreclosure action in Bank of New York Mellon v. Horsey, 182 Conn.App. 417, 440-41 (2018):
The rules for standing in foreclosure actions [in which] the issue of standing is raised may be succinctly summarized as follows. [If] a holder seeks to enforce a note through foreclosure, the holder must produce the note. The note must be sufficiently endorsed so as to demonstrate that the foreclosing party is a holder, either by a specific endorsement to that party or by means of a blank endorsement to bearer. If the foreclosing party shows that it is a valid holder of the note and can produce the note, it is presumed that the foreclosing party is the rightful owner of the debt. That presumption may be rebutted by the defending party, but 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. (Emphasis in original; footnote omitted.) [U.S. Bank, National Ass’n v. Schaeffer, 160 Conn.App. 138, 125 A.3d 262 (2015) ] at 150, 160 Conn.App. 138, 125 A.3d 262.
Plaintiff’s counsel has represented that plaintiff was the holder of the note prior to commencement of the foreclosure action. See Transcript of November 20, 2017 proceedings, at p. 18, line 19-21. The court is permitted to rely on the representation of plaintiff’s counsel that plaintiff was the holder of the note prior to commencement of the action. Equity One, Inc. v. Shivers, 310 Conn. 119, 132, 74 A.3d 1225 (2013). As a result, the court finds that plaintiff has demonstrated that it is the holder of the note endorsed in blank, which confers standing to foreclose under the holding in Horsey, supra, and defendants have not satisfied their burden of proof that any other party owns the debt.
The defendants also claim that the plaintiff lacks standing because they entered into to the financing transaction with the d/b/a Coldwell. Because Coldwell is a trade name and was not an incorporated entity, they claim it could not have properly entered into the loan with them and could not have assigned its (non-existing) rights to U.S. Bank. Plaintiffs refer in a passing to the decisions in Am.’s Wholesale Lender v. Pagano, 87 Conn.App. 474, 866 A.2d 698 (2005), and Lend America v. MacDougall, FST CV 09-6002508 S, 2016 WL 1099186 (February 18, 2016, Tierney, J.T.R.). However, those cases stand for the proposition that a foreclosure action cannot be commenced in the name of a d/b/a, which is not the case here, where this plaintiff, U.S. Bank N.A. is a duly incorporated entity.
In support for their theory, defendants submitted a copy of the decision of the Circuit Court for Seminole County, Florida, dated October 16, 2014, in the matter of Bank of America v Nash, Case No. 59-2011-CA-004389. In that case, the court found, among other things, that the original lender was a d/b/a, and therefore was not authorized to enter into the loan transaction. The court directed a refund of all loan payments made to date and allowed the defendants to retain the principal.
This decision was reversed on appeal by the District Court of Appeal of Florida in Bank of America, N.A. v. Nash, 200 So.3d 131 (2016). The appeal court held that the use of a fictitious or trade name did not invalidate the loan. Even if the d/b/a was not registered, "[t]he failure to comply with the licensing requirement would ‘not affect the validity of enforceability of any mortgage loan ..." Id., at *2. Further, the court found that activities including "creating or acquiring indebtedness, mortgages and security interests and securing or enforcing mortgages" do not constitute transacting business within the meaning of the Florida statute requiring out of state corporations to obtain a certificate of authority. Id. Accordingly, the court reversed and remanded the judgment of the trial court and directed entry of judgment in favor of plaintiff bank.
Connecticut law compels a comparable result. It has been the law in this state for at least a century that contracts entered into with a fictitious or trade name, even if not properly registered as a d/b/a, as required by General Statutes Section 35-1, are nevertheless valid. As the Supreme Court of Errors held in Sagal v. Fylar, 89 Conn. 293 (1915), regarding the predecessor statute to Section 35-1:
The remedial purpose of the statute manifestly was that the public should have ready means of information as to the personal or financial responsibility behind the assumed name. Its aim was the protection of those who might deal with, or give credit to, the fictitious entity. It obviously was not to provide a means by which persons having received a benefit from another should be enabled to retain it without compensation and to repudiate any agreement for compensation. Doubtless a penalty which held out a reasonable promise of securing compliance with the statute was intended; but one which had in it the possibility of a year’s imprisonment would seem to be adequate to accomplish that end, and it would seem that a further penalty such as the defendants contend for would create a cumulative penal result with which the evil sought to be remedied was scarcely commensurate.
We are of the opinion that the intent of the General Assembly was that the penalty expressed in the statute should be exclusive, and that contracts entered into in the course of a business carried on in disregard of the statute should not be either void or unenforceable.
Accord Chmielewski v. Aetna Cas. & Sur. Co., 218 Conn. 646, 668, 591 A.2d 101 (1991) ("[P]roperty owned by an individual in a trade name is nonetheless owned by him ... We also agree that one who operates a business under a trade name is nonetheless an individual insured under a policy issued in that trade name"); McGhee-Fichtner v. Kusek, No. CV 09 5010446S, 2009 WL 4684209, at *4, n.4 (Conn.Super.Ct. Nov. 12, 2009, Martin, J.) ("The designation ‘d/b/a’ means ‘doing business as’ but [it] is merely descriptive of the person or corporation who does business under some other name." Simpson v. D & L Tractor Trailer School, Superior Court, judicial district of Fairfield, Docket No. CV 05 4008081 (December 19, 2007, Maiocco, J.T.R.) . "In essence ... the trade names [are] not distinct separate entities, but rather ... the owners of the trade name and the trade name entities [are] one and the same." Id. ... Thus, if a valid contract existed between [the d/b/a] and the defendant, the plaintiff is the actual party to that contract. It follows, therefore, that the plaintiff may validly assert rights under that contract. See Nadeau v. Bagley, Superior Court, judicial district of Tolland, Docket No. CV 93 54613 (September 12, 1994, Kaczak, J.)"). In short, Connecticut law permits entities to use a d/b/a to do business.
As a result of the foregoing principles, the use of the Coldwell trade name did not invalidate the loan transaction at issue in this litigation and did not impede the conveyance of the loan and mortgage to the plaintiff U.S. Bank. Accordingly, U.S. Bank was entitled to commence this foreclosure action in its own name as the holder of the note endorsed in blank and as the assignee of the mortgage.
Conclusion
Accordingly, the motion to dismiss is denied.