Opinion
No. CV 08 5014358
September 2, 2011
MEMORANDUM OF DECISION ON PLAINTIFF'S MOTION TO STRIKE
On March 3, 2008 the plaintiff, US Bank, filed a complaint against the defendant, Jean Robert Suvernay. Many of the relevant facts of this case were set forth in a prior decision by this court. See Memorandum of Decision Re: Motion for Summary Judgment #140 (October 4, 2010, Hartmere, J.).
The plaintiff named in the original complaint is "US Bank National Association, as Trustee for CSMS Heat 2006-8." On March 22, 2010, the court (Hartmere, J.) granted the plaintiff's motion to correct party plaintiff (#138), whereupon the name of the plaintiff in this action was changed to "US Bank National Association as Trustee for Credit Suisse First Boston Mortgage Securities Corp., Home Equity Asset Trust 2006-8, Home Equity-Pass Throug [sic] Series Certificates, 2006-8."
The case name lists the defendant as "Suvemay," however, all of the pleadings list his name as "Suvernay." "Mortgage Electronic Registration Systems, Inc. as Nominee for Sunset Mortgage Company, L.P." is named as a defendant in this action, but has not filed an appearance. Thus, "the defendant" refers only to Suvernay.
On July 24, 2008, the defendant filed a motion to strike the complaint on the ground that the plaintiff lacked standing. On August 12, 2008, the court (Stodolink, J.TR.) denied this motion. On September 9, 2008, the defendant filed its first answer, special defenses and counterclaims. On January 8, 2009, the plaintiff filed its first motion for summary judgment, which the court (Doherty, J.) denied on May 15, 2009. On April 15, 2010, the plaintiff filed a second motion for summary judgment. On October 4, 2010, the court (Hartmere, J.) denied most of the motion, but granted summary judgment in favor of the plaintiff with respect to count two of the defendant's counterclaim.
On February 22, 2011, the defendant filed a revised answer, special defenses and counterclaim. On March 21, 2011, the plaintiff filed the present motion to strike the defendant's two special defenses and counterclaim, and a memorandum in support of its motion. On April 28, 2011, the defendant filed a memorandum in opposition to the plaintiff's motion to strike, as well as several exhibits in support of his opposition. On May 2, 2011, the plaintiff filed a reply memorandum. On July 5, 2011, the court heard oral argument at short calendar.
DISCUSSION
Practice Book § 10-39(a) provides, in relevant part: "[w]henever any party wishes to contest (1) the legal sufficiency of the allegations of any . . . counterclaim . . . to state a claim upon which relief can be granted . . . or (5) the legal sufficiency of any answer to any complaint . . . or any part of that answer including any special defense contained therein, that party may do so by filing a motion to strike the contested pleading or part thereof." "[A] plaintiff can [move to strike] a . . . counterclaim." Nowak v. Nowak, 175 Conn. 112, 116, 394 A.2d 716 (1978). "[A] plaintiff can [move to strike] a special defense . . ." Id.; see also Connecticut National Bank v. Voog, 233 Conn. 352, 354-55, 659 A.2d 172 (1995).
"We take the facts to be those alleged in the complaint that has been stricken and we construe the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Moreover, we note that [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . . It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252-53, 990 A.2d 206 (2010).
The plaintiff raises six arguments in support of its motion to strike. The first two arguments reason that the court should strike the defendant's first special defense because: (1) by the law of the case, the plaintiff is a proper party to this action; and (2) the defendant fails to articulate facts to show that the plaintiff is not a trustee that can maintain its action under state law. The third argument reasons that the court should strike the defendant's second special defense because the plaintiff provided the defendant with sufficient notice. The last three arguments reason that the court should strike the defendant's counterclaim because: (1) it fails to allege any ascertainable loss or damages; (2) is barred by the statute of limitations; and (3) fails to allege an unfair trade practice.
`The defendant objects to the plaintiff's motion and raises the following arguments. First, the plaintiff's motion seeks to avoid the prior summary judgment decision rendered by this court. Second, the defendant's first special defense is adequate because it alleges that the trust does not have a settlor and the law of the case doctrine does not apply because the first special defense presents a new issue which the court has yet to consider. Third, the trust is not an "express trust" under Connecticut law. Fourth, the plaintiff's default letter was defective and since it concerns demand and acceleration, this serves as a defense to the plaintiff's action. Fifth, the defendant properly alleges an ascertainable loss to support its CUTPA counterclaim. Sixth, there is no statute of limitations issue because of the relation back doctrine. Last, the defendant's counterclaim otherwise satisfies all requirements to establish a CUTPA claim.
In its reply memorandum, the plaintiff raised the following arguments. First, the court cannot consider the notice of default or the "underlying trust document" filed by the plaintiff because "[n]either has been attached to any pleading." Second, the court's prior summary judgment decision actually supports the granting of the present motion to strike, contrary to the argument brought by the defendant in its objection. Third, the plaintiff is an express trust, and the court cannot even consider the arguments made by the defendant in its objection because of the law of the case doctrine. Fourth, the defendant's CUTPA counterclaim fails because he has failed to allege a "measurable" loss. Fifth, the defendant's CUTPA counterclaim fails because it alleges nothing more than mere negligence.
A. The Defendant's First Special Defense
The following is the defendant's first special defense. "1. CMSC Heat 2006-08 is not an express trust within the meaning of Connecticut Statutes § 52-106 in that . . . a. It does not have a settlor who donated property to the trust . . . b. It does not have beneficiaries or donees. It has investors who can convey their interest in the trust at any time without the consent of the trustee . . . c. The trust property consists of pooled mortgages. No trust asset is specifically allocated to a specific beneficiary . . . d. The plaintiff is a `pass-through.' It has no discretion over the trust property other than to pass through the payments it receives to others . . . 2. Because the plaintiff is not an express trust within the meaning of Connecticut Statutes § 52-106, this action cannot be brought by the purported trustee . . . 3. The persons entitled to receive the principal interest from the defendant's note are necessary parties to this action."
The defendant first argues that the plaintiff is not a proper party to this action. The plaintiff argues that the defendant already raised this argument in an unsuccessful motion to strike, and thus, the law of the case doctrine applies and bars this special defense. "The law of the case doctrine provides that [w]here a matter has previously been ruled upon interlocutorily, the court in a subsequent proceeding in the case may treat the decision as the law of the case, if it is of the opinion that the issue was correctly decided, in the absence of some new or overriding circumstance . . . A judge is not bound to follow the decisions of another judge made at an earlier stage of the proceedings, and if the same point is again raised he has the same right to reconsider the question as if he himself made the original decision . . . [O]ne judge may, in a proper case, vacate, modify, or depart from an interlocutory order or ruling of another judge in the same case, upon a question of law." (Internal quotation marks omitted.) Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 129 Conn.App. 296, 304, 20 A.3d 716, cert. granted on other grounds, 302 Conn. 908 (2011). However, "the practice of judges [is] generally to refuse to reopen what [already] has been decided . . . New pleadings intended to raise again a question of law which has been already presented on the record and determined adversely to the pleader are not to be favored." (Internal quotation marks omitted.) Brown Brown, Inc. v. Blumenthal, 288 Conn. 646, 656, 954 A.2d 816 (2008).
On July 24, 2008, the defendant filed a motion to strike the plaintiff's complaint on the ground that "the complaint . . . does not allege that the plaintiff is a Trustee by virtue of an express trust." Thus, the defendant argued that the plaintiff lacked standing to bring its complaint. On August 12, 2008, the court (Stodolink, J.TR.) denied the motion to strike, without a written decision. By its denial of the defendant's prior motion to strike, the court found that the plaintiff had standing to bring its complaint.
"A written memorandum of decision in response to a motion to strike is required, under Practice Book § [10-43], only if `more than one ground of decision is set up [in the motion to strike].'" Kaminski v. Fairfield, 216 Conn. 29, 33 n. 1, 578 A.2d 1048 (1990). As the plaintiff set out one ground in its initial motion to strike, the court did not need to issue a written decision.
The defendant, however, asserts that consideration of the present motion requires analysis of a new issue, "the trust document which states the trust purchased the mortgages, an issue not considered in the previous decision." This trust document was not admitted into evidence and may not be considered.
The court previously determined that the plaintiff was a proper party to pursue this action, in denying the defendant's prior motion to strike. The defendant's only argument that the law of the case doctrine does not apply is that evidence that was not admitted presents the court with a new issue to consider. While the law of the case doctrine does not require this court to follow Judge Stodolink's decision, the defendant fails to present the court with a viable reason to reopen that judgment. The court therefore recognizes that the plaintiff is a proper party to bring this action. For this reason, the court will grant the plaintiff's motion to strike the defendant's first special defense.
Since the court is granting the plaintiff's motion to strike the defendant's first special defense based on the law of the case doctrine, the court need not address the plaintiff's second argument regarding the first special defense, whether the defendant articulates facts to show that the plaintiff is not a trustee.
B. The Defendant's Second Special Defense
The following is the defendant's second special defense. "1. The plaintiff did not serve the defendant with a notice of default or a notice of acceleration in accordance with the mortgage deed . . . 2. The notice plaintiff served was defective in that: a. its language was ambiguous as to the amount the defendant was required to pay to avoid acceleration on the default . . . b. it fails to clearly specify the actions required of the defendant to cure the default . . . c. it overstated the amount due from the defendant to cure the default . . . 3. The foregoing constitutes a failure by the plaintiff to fulfill the terms of the mortgage as they relate to proper notice for default and acceleration . . . 4. The notice plaintiff served did not comply with the mortgage terms and as such a condition precedent to bringing this foreclosure action was not fulfilled."
The plaintiff argues that it provided the defendant with sufficient notice and for this reason, the court should strike the defendant's second special defense. The defendant argues that the notice provided was defective and moreover, that this issue was already decided in the court's decision regarding the plaintiff's second motion for summary judgment.
On October 4, 2010, the court issued a memorandum of decision regarding the plaintiff's motion for summary judgment. In this decision, the court addressed the defendant's allegation that "the September 17, 2007 default letter did not state what action was required for the defendant to cure the defect and the amount required to cure the default was more than the defendant owed on the date of the letter." The court then found that, when viewed in the light most favorable to the defendant, the September 17, 2007, default letter "is ambiguous as to [the] amount the defendant was required to pay to avoid acceleration on the default, and fails to clearly specify the actions required of the defendant to cure the default." The court then concluded that, "[t]his constitutes a failure by the plaintiff to fulfill the terms of the mortgage as they relate to proper notice for default and acceleration." Thus, the court concluded that the defendant alleged a failure of notice and that the plaintiff failed to eliminate all issues of material fact with respect to the sufficiency of the notice of default.
The plaintiff maintains that a special defense for deficient notice of default and acceleration is only valid where the defendant is prejudiced by the allegedly deficient notice. Thus, the court must determine whether the facts alleged by the defendant in his second special defense are sufficient.
"[N]otices of default and acceleration are controlled by the mortgage documents . . . Where the terms of the note and mortgage require notice of default, proper notice is a condition precedent to an action for foreclosure." Fidelity Bank v. Krenisky, 72 Conn.App. 700, 706-07, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002). Where a party receives actual, but deficient notice, "literal enforcement of the relevant notice provision would serve no purpose because the defendants had actual notice of their right to reinstate the mortgage after acceleration. Further, the plaintiff's deficient written notice [would have] caused no harm to the defendants . . . [L]iteral enforcement of notice provisions when there is no prejudice is no more appropriate than literal enforcement of liquidated damages clauses when there are no damages." (Citation omitted; internal quotation marks omitted.) Id., 712.
The defendant does not appear to dispute that it received actual notice of default. Instead, he argues that the notice he received was deficient. He does not specifically allege that he was prejudiced by the plaintiff's allegedly deficient notice. Rather, the defendant alleges that the notice was deficient because: (1) its language was ambiguous as to the amount the defendant needed to pay to avoid acceleration on the default; (2) it failed to specify what actions the defendant needed to take to cure the default; and (3) the notice overstated the amount the defendant needed to pay to cure the default. Construing the defendant's second special defense "broadly and realistically," his allegations imply that he was prejudiced by the allegedly deficient notice. If true, it would be prejudicial for the plaintiff to overstate the amount required to cure the default and not to explain to the defendant what actions he must take to cure the default. Therefore, the court will deny the plaintiff's motion to strike with respect to the defendant's second special defense.
C. The Defendant's Counterclaim
The court must first consider the plaintiff's argument that the defendant's counterclaim is barred by the statute of limitations. "[O]rdinarily, [a] claim that an action is barred by the lapse of the statute of limitations must be pleaded as a special defense, not raised by a motion to strike." (Internal quotation marks omitted.) Greco v. United Technologies Corp., 277 Conn. 337, 344 n. 12, 890 A.2d 1269 (2006). "[T]here are two exceptions to that holding. Those exceptions relate to situations in which a motion to strike, filed instead of a special defense of a statute of limitations, would be permitted." Girard v. Weiss, 43 Conn.App. 397, 415, 682 A.2d 1078, cert. denied, 239 Conn. 946, 686 A.2d 121 (1996). The second exception "exists . . . when a statute gives a right of action which did not exist at common law, and fixes the time within which the right must be enforced, the time fixed is a limitation or condition attached to the right — it is a limitation of the liability itself as created, and not of the remedy alone." (Internal quotation marks omitted.) Greco v. United Technologies Corp., supra, 277 Conn. 345 n. 12.
The second exception applies here since the defendant's counterclaim alleges a statutory cause of action, under General Statutes § 42-110a, et seq. Thus, the court may consider the plaintiff's argument that the defendant's counterclaim is barred by the applicable statute of limitations, General Statutes § 42-110g(f).
Section 42-110g(f) provides, "[a]n action brought under this section may not be brought more than three years after the occurrence of a violation of this chapter." The plaintiff claims that the CUTPA violation alleged by the defendant surrounds a notice of default from December 2007. The present counterclaim was filed on February 22, 2011, more than three years after the alleged CUTPA violation.
The defendant, however, argues that the relation back doctrine applies and thus, the statute of limitations does not bar his counterclaim. Specifically, he argues that he filed his original counterclaim alleging a CUTPA violation on September 9, 2008. He therefore contends that his revised counterclaim relates back to the original counterclaim.
"[I]t is well settled that an amended complaint relates back to and is treated as filed at the time the original complaint unless it alleges a new cause of action." (Internal quotation marks omitted.) Wright v. Teamsters Local 559, 123 Conn.App. 1, 6, 1 A.3d 207 (2010). "It is proper to amplify or expand what has already been alleged in support of a cause of action, provided the identity of the cause of action remains substantially the same . . . Our relation back doctrine provides that an amendment relates back when the original complaint has given the party fair notice that a claim is being asserted stemming from a particular transaction or occurrence, thereby serving the objectives of our statute of limitations, namely, to protect parties from having to defend against stale claims." (Internal quotation marks omitted.) Id., 7.
Although lacking many factual allegations, the first count in the defendant's original counterclaim contains, at least, an attempt at a CUTPA violation, relating to the same allegedly defective notice of default. The revised counterclaim therefore relates back to the original counterclaim. Since the original counterclaim was brought within three years of the conduct complained of, the statute of limitations does not bar the defendant's counterclaim. Accordingly, the court will deny the plaintiff's motion to strike on this ground.
The plaintiff also argues that the court should strike the defendant's counterclaim because it does not allege an unfair trade practice. "In determining whether a practice violates CUTPA we are guided by the criteria set out in the Federal Trade Commission's so-called cigarette rule: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other businesspersons]." (Internal quotation marks omitted.) Pinette v. McLaughlin, 96 Conn.App. 769, 776, 901 A.2d 1269, cert. denied, 280 Conn. 929, 909 A.2d 958 (2006).
"All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three . . . Thus a violation of CUTPA may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy . . . Furthermore, a party need not prove an intent to deceive to prevail under CUTPA." (Internal quotation marks omitted.) Keller v. Beckenstein, 117 Conn.App. 550, 566, 979 A.2d 1055, cert. denied, 294 Conn. 913, 983 A.2d 274 (2009). The defendant must allege that the plaintiff "engaged in an unfair method of competition or an unfair or deceptive act or practice in the conduct of trade or commerce and that this caused the plaintiff to sustain an ascertainable loss." Bank of America, N.A. v. Leong, Superior Court, judicial district of Stamford, Docket No. CV 09 5012214 (July 6, 2011, Brazzel-Massaro, J.), citing Neighborhood Builders, Inc. v. Madison, 294 Conn. 651, 657, 986 A.2d 278 (2010).
The defendant's counterclaim alleges the following facts. The plaintiff failed to provide notice of default and acceleration that complied with the requirements of the mortgage deed. The plaintiff brought the present foreclosure action even though it knew or should have known that its notice did not comply with the requirements of the mortgage deed. The notice was ambiguous with respect to the amount the defendant needed to pay to avoid acceleration and it failed to clearly specify the actions required of the defendant to cure the default. The format of the default letter also made it appear that the defendant was required to pay more than the amount due to avoid acceleration.
The defendant's allegations in his counterclaim are simply inadequate. The defendant does not allege a violation of public policy. He does not allege that the practice was immoral, unethical, oppressive or unscrupulous. He does not allege that he suffered a specific injury. Even when construed in the light most favorable to the defendant, the allegations in his counterclaim fail to set forth a cause of action for a CUTPA violation. Therefore, the court will grant the plaintiff's motion to strike the defendant's counterclaim.
Since the court is granting the plaintiff's motion to strike the defendant's counterclaim because it fails to allege a CUTPA violation, the court need not address the plaintiff's second argument for striking the counterclaim, regarding the need to allege an ascertainable loss or damages.
CONCLUSION
For the foregoing reasons, the court will grant the plaintiff's motion to strike with respect to the defendant's first special defense and counterclaim; the court will deny the motion to strike with respect to the defendant's second special defense.