Opinion
No. CV 09 5012757
June 9, 2010
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT (#111)
BACKGROUND
The plaintiff, U.S. Bank National Association, as successor trustee to Bank of America, National Association, as successor by merger to LaSalle Bank, N.A. as trustee for the MLMI Trust Series 2006-MLN1 ("U.S. Bank"), has filed a motion for summary judgment on the issue of liability against the defendant, Sonya Hahnel. The plaintiff asserts that it is entitled to summary judgment pursuant to Practice Book § 17-49 because it has made out a prima facie case for foreclosure and that there is no issue of material fact precluding summary judgment. The defendant contends that there are issues of material fact precluding summary judgment.
FACTS AND PROCEDURAL HISTORY
The plaintiff commenced this action on August 12, 2009 by a one-count complaint sounding in foreclosure of a residential mortgage. The defendant filed her answer on September 4, 2009, in which she admitted being the record owner of the property in question and asserted a special defense, claiming that the plaintiff's calculation of interest, penalties and attorneys fees was incorrect. The defendant, with leave of the court, filed an amended answer on December 9, 2009. On October 16, 2009, the plaintiff filed the present motion for summary judgment.
In its complaint, the plaintiff alleges that the defendant entered into mortgage agreement for the property at 169 Old Colchester Road, Salem, Connecticut, with Mortgage Lenders Network USA, Inc. in exchange for a $204,000 promissory note. The plaintiff alleges that the repayment terms of the Adjustable Rate Balloon Note 30-Year Term/40 Year Amortization ("note") and mortgage required the defendant to pay monthly installments of principal and interest. The plaintiff alleges that it was the holder of the note as successor trustee to Bank of America, National Association, as successor by merger to LaSalle Bank, N.A. as trustee for the MLMI Trust Series 2006-MLN1 by an assignment of mortgage, which was recorded on the Salem land records after the commencement of the present suit. The plaintiff further alleges that it is the holder of the mortgage and note, and that the unpaid balance of the note is $201,948.34, plus interest from December 1, 2008, as well as late charges and collection costs. The plaintiff alleges that the note and mortgage are in default because the defendant has not paid the installments due January 1, 2009 and every month thereafter, and the plaintiff has exercised its option to declare the entire balance of the note due and payable.
In its complaint, the plaintiff also alleges interests prior to its own, including: any outstanding real property taxes due to Salem. Moreover, the plaintiff alleges that Mortgage Electronic Registration Systems, Inc. has an interest subsequent to its own, created by a mortgage agreement in the original principal amount of $51,000 dated April 28, 2006 and recorded in the Salem Land Records on May 5, 2006. Mortgage Electronic Registration Systems, Inc. has not filed an appearance in the present action.
The defendant admitted ownership of 169 Old Colchester Road in her initial answer. In her amended answer the defendant raises the following as special defenses: that the plaintiff failed to state a claim upon which relief could be granted; that the plaintiff lacks standing to sue; that the assignment of the note to the plaintiff was invalid; fraud; and, excuse of performance.
The defendant is self-represented.
In the present motion for summary judgment the plaintiff argues that it is entitled to judgment as a matter of law because there is no material issue of fact warranting trial, and because it has established a prima facie case for foreclosure. Specifically, the plaintiff contends that its evidentiary submissions establish that it was the holder of the defendant's note and mortgage, and that the defendant defaulted on her note. In support of its motion, the plaintiff cites that the defendant admitted ownership of the premises at 169 Old Colchester Road in her answer. In further support, the plaintiff has submitted the affidavits of John Cook, a title searcher in the employ of the plaintiff, and Cheston Dooley, a foreclosure specialist and servicer with the Wilshire Credit Corporation. The plaintiff has also submitted a copy of the note executed by the plaintiff of April 28, 2006, a copy of an allonge made to the note bearing a blank endorsement, a certified copy of the mortgage agreement executed by the plaintiff of April 28, 2006, and a certified copy of an assignment of the defendant's mortgage from Mortgage Electronic Registration Systems, Inc. to the plaintiff, certified on August 17, 2009 and recorded in the land records of the town of Salem on September 15, 2009.
The defendant filed a motion in opposition to the plaintiff's motion for summary judgment on December 4, 2009. In her memorandum of law in support thereof, the defendant argues that the plaintiff lacks standing to sue for foreclosure, because the plaintiff was the holder but not the owner of the note and mortgage at the time that it commenced the present action. The defendant also argues that the plaintiff failed to comply with notice procedure laid out in the note and mortgage agreement. Moreover, the defendant argues that: (1) that the assignment of the mortgage and/or note to the plaintiff was invalid, (2) that the plaintiff's evidentiary submissions do not establish sufficiently the amount that the defendant owes to the plaintiff, and that the amount of debt is in dispute, (3) that the plaintiff has violated its filings with the Securities and Exchange Commission, (4) due process under the Fifth Amendment to the United States Constitution, (5) that the plaintiff altered the terms of the note and, (6) that securitization of the defendant's mortgage operated to cancel the agreement.
This argument, although not specially pleaded, sounds in fraud.
The plaintiff filed a reply to the defendant's objection on March 1, 2010. Therein, the plaintiff maintains that it need not be the record owner of the mortgage in order to have standing to foreclose if it is entitled to enforce the promissory note secured by the mortgage as a holder. Specifically, the plaintiff argues that the note executed by the defendant is endorsed in blank, and as such, it is bearer paper as defined under General Statutes § 49a-3-109, which the plaintiff holds and is entitled to enforce under General Statutes § 42a-3-205(b). The plaintiff also replied to the defendant's supplementary arguments. In particular, the plaintiff argues that the defendant's claims of fraud are legally insufficient because they are not specifically pleaded; that the plaintiff's filings with the Securities and Exchange Commission are not properly applicable to a foreclosure action; and, that the defendant's assertion that the debt is disputed does not create a valid special defense nor issue of material fact warranting a trial. Lastly, the plaintiff maintains that it has proved its entitlement to summary judgment because the defendant's objection fails to raise an issue of material fact to rebut the presumption that the plaintiff argues arose when it proved a valid prima facie case for foreclosure.
The plaintiff also notes, in its reply to the defendant's objection to the plaintiff's motion for summary judgment, that the defendant failed to raise the issue of standing in her answer or special defenses. This argument fails to give the court pause, because standing implicates the court's subject matter jurisdiction, and, as such, may be raised at any time. Webster Bank v. Zak, 259 Conn. 766, 774, 792 A.2d 66 (2002) ("the question of subject matter jurisdiction, because it addresses the basic competency of the court, can be raised by any of the parties, or by the court sua sponte, at any time").
The plaintiff's motion and the defendant's objection were heard before this court at short calendar on April 19, 2010.
LAW AND ANALYSIS A Standing
"It is well settled that, because the issue of standing implicates the court's subject matter jurisdiction . . . it presents the threshold issue for [the court's] determination." West Farms Mall, LLC v. West Hartford, 279 Conn. 1, 11 n. 6, 901 A.2d 649 (2006). "Subject matter jurisdiction [implicates] the authority of the court to adjudicate the type of controversy presented by the action before it . . . [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction . . . The objection of want of jurisdiction may be made at any time . . . [a]nd the court or tribunal may act on its own motion, and should do so when the lack of jurisdiction is called to its attention . . . The requirement of subject matter jurisdiction cannot be waived by any party and can be raised at any stage in the proceedings . . ." Bingham v. Dept. of Public Works, 286 Conn. 698, 701, 945 A.2d 927 (2008).
An objection based on subject matter jurisdiction is raised properly by a motion to dismiss under Practice Book § 10-31. "Nevertheless, [o]nce the question of lack of [subject matter] jurisdiction is raised, it must be disposed of no matter in what form it is presented." (Internal quotation marks omitted.) State v. Booker, 28 Conn.App. 34, 39, 611 A.2d 878, cert. denied, 223 Conn. 919, 614 A.2d 826 (1992), cert. denied, 507 U.S. 916, 113 S.Ct. 1271, 122 L.Ed.2d 666 (1993). "[T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n. 12, 829 A.2d 801 (2003). "[I]t is the burden of the party who seeks the exercise of jurisdiction in his favor . . . clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute." (Internal quotation marks omitted.) May v. Coffey, 291 Conn. 106, 113, 967 A.2d 495 (2009). "[I]n determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Connor v. Statewide Grievance Committee, 260 Conn. 435, 443, 797 A.2d 1081 (2002).
The defendant bases her challenge to the plaintiff's standing to foreclose on two arguments: (1) that the plaintiff was neither the holder nor owner of the note at the time that it commenced the present foreclosure action, and (2) that the plaintiff had not been assigned the mortgage at the time that it commenced the present foreclosure action. The defendant maintains in her objection that having merely an expectancy interest in a note and mortgage does not grant the plaintiff standing to foreclose. In support of these arguments, the defendant contends that the proof offered by the plaintiff fails to establish standing.
The plaintiff, in reply to the defendant's objection, asserts that its evidentiary submissions in support of its motion for summary judgment establish that it is the holder of the note, and, thus, is entitled to enforce the note. The plaintiff relies on the provisions of the Uniform Commercial Code in maintaining that the note was endorsed in blank, that the blank endorsement characterized the note as bearer paper, and that the plaintiff, being the holder of the note, is thus entitled to foreclose. Moreover, the plaintiff also asserts Mortgage Electronic Registration Systems assigned the mortgage deed to the plaintiff before the plaintiff commenced the present foreclosure action.
Codified at General Statutes § 49a-1-101 et seq.
General Statutes § 49-17 provides: "When any mortgage is foreclosed by the person entitled to receive the money secured thereby but to whom the legal title to the mortgaged premises has never been conveyed, the title to such premises shall, upon the expiration of the time limited for redemption and on failure of redemption, vest in him in the same manner and to the same extent as such title would have vested in the mortgagee if he had foreclosed, provided the person so foreclosing shall forthwith cause the decree of foreclosure to be recorded in the land records in the town in which the land lies." "General Statutes § 49-17 permits the holder of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when the mortgage has not yet been assigned to him . . . The statute codifies the common-law principle of long standing that `the mortgage follows the note,' pursuant to which only the rightful owner of the note has the right to enforce the mortgage. (Internal citations omitted.) Bankers Trust Co. of California, N.A. v. Vaneck, 95 Conn.App. 390, 391-92, 899 A.2d 41, cert. denied, 279 Conn. 908, 901 A.2d 1225 (2006); see also Chase Home Finance v. Fequiere, 119 Conn.App. 570, 576, 989 A.2d 606 (2010).
Under the provisions of the Uniform Commercial Code, in order to be entitled to enforce a negotiable instrument, one must be either "(i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 42a-3-309 or 42a-3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument." General Statutes § 42a-3-301. A holder of a negotiable instrument is one who is "in possession of a negotiable instrument that is payable either to bearer or to an identifiable person that is the person in possession . . ." General Statutes § 42a-1-201(b)(21)(A). General Statutes 41a-3-205(b) provides that: "If an endorsement is made by the holder of an instrument and is not a special endorsement, it is a `blank endorsement.' When endorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially endorsed." A "bearer" is the "person in possession of an instrument . . . payable to bearer or endorsed in blank." General Statutes § 42a-1-201(b)(5).
In the present case, the plaintiff submitted an authenticated copy of the note executed between the defendant and Mortgage Lenders Network USA, Inc. in support of its motion for summary judgment. That note is endorsed in blank on an allonge by an agent of Mortgage Lenders Network USA, Inc. Since the plaintiff here is in possession of the defendant's note endorsed in blank, it is a holder of the note, and entitled to its enforcement. Thus, the plaintiff had standing to foreclose on the note and mortgage, regardless of whether it had received and recorded its assignment of the defendant's mortgage prior to commencing the present foreclosure action.
"An allonge is defined as a piece of paper annexed to a negotiable instrument or promissory note, on which to write endorsements for which there is no room on the instrument itself." SKW Real Estate Limited Partnership v. Gallicchio, 49 Conn.App. 563, 566 n. 3, 716 A.2d 903 (1998).
B Plaintiff's Motion for Summary Judgment
Having determined that the plaintiff has standing to foreclose on the defendant's mortgage, the court now turns to the plaintiff's motion for summary judgment and the defendant's special defenses and arguments asserted in opposition thereto.
"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." (Internal quotation marks omitted.) Provencher v. Enfield, 284 Conn. 772, 790-91, 936 A.2d 625 (2007). "[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way . . . [A] summary disposition . . . should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party." (Citations omitted; internal quotation marks omitted.) Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003).
Initially, the burden is on the moving party to demonstrate the absence of any triable issue of material fact. "To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual 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 a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." Zielinski v. Kotsoris, 279 Conn. 312, 318-19, 901 A.2d 1207 (2006).
The plaintiff moves for summary judgment on the grounds that it has established a prima facie case for foreclosure of a mortgage, and that the defendant's special defenses and are legally insufficient and fail to present genuine issues of material fact.
To make out a prima facie case for mortgage foreclosure, the foreclosing party must "prove by a preponderance of the evidence that it was the owner of the note and mortgage and that [the mortgagor] had defaulted on the note." (Internal quotation marks omitted.) Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 838, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 163 (2003). "Furthermore, the foreclosing party must demonstrate that all conditions precedent to foreclosure, as mandated by the note and mortgage, have been satisfied." Bank of New York v. Conway, 50 Conn.Sup. 189, 194, 916 A.2d 130 (2006) (citing Bank of America, FSB v. Hanlon, 65 Conn.App. 577, 581, 783 A.2d 88 (2001)). "When a complaint and supporting affidavits establish an undisputed prima facie case for a foreclosure action, a court must only determine whether [a] special defense is legally sufficient before granting summary judgment." Bank of New York v. Conway, 50 Conn.Sup. 189, 916 A.2d 130 (2006); LaSalle National Bank v. Shook, Superior Court, judicial district of New London, Docket No. 549266 (July 13, 2000, Martin, J.), aff'd, 67 Conn.App. 93, 787 A.2d 32 (2001). In order to defeat a motion for summary judgment, an opposing party need only demonstrate a legally sufficient special defense. See, e.g., FV-1, Inc. v. Forgey, Superior Court, judicial district of New London, Docket No. CV 075002447 (May 22, 2008, Martin, J.).
In the present case, the plaintiff has demonstrated ownership of the note by holding the note and by offering the affidavit of Dooley, a foreclosure specialist for Wilshire Credit Corporation, who avers that the plaintiff is in possession of the note. The plaintiff has offered proof that the note is endorsed in blank and that the plaintiff became its holder before commencing the present foreclosure action. The plaintiff has also offered proof that it is the owner of the mortgage deed, which it obtained by assignment on August 17, 2009.
The plaintiff, has not, however, offered evidence to show that it has complied with the provisions of the note and mortgage deed regarding default. Specifically, the plaintiff has not offered any documentary evidence of its compliance with paragraph seven, section C, entitled "Notice of Default" of the note. That paragraph states that: "[T]he note holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the note holder may require me to pay immediately the full amount of principal that has not been paid and all the interest that I owe on that amount. That date must be at least 30 days after the date on which the notice is mailed to me or delivered by other means." Paragraph eight of the note, entitled "Giving of Notices," requires that: "unless applicable law requires a different method, any notice that must be given to me under this note will be given by delivering it or by mailing it by first class mail to me at the property address above or at a different address if I give the note holder a notice of my different address."
The plaintiff has also not offered any evidence to show that it has complied with the several provisions of the mortgage deed that mandate notice. Paragraph fifteen of the deed defines notice: "All notices given by borrower or lender in connection with this security instrument must be in writing. Any notice to borrower in connection with this security instrument shall be deemed to have been given to borrower when mailed by first class mail or when actually delivered to borrowers notice address if sent by other means." Paragraph twenty requires that notice as provided for under paragraph fifteen is required from the borrower to the lender when the lender intends to take legal action against the borrower. Paragraph twenty provides, in relevant part: "Neither borrower nor lender may commence . . . any judicial action . . . that arises from the other party's actions pursuant to this security instrument or that alleges that the other party has breached any provision of . . . this security instrument, until such borrower or lender has notified the other party . . . of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action." Paragraph twenty-two requires the lender to provide the borrower with notice "prior to acceleration following borrower's breach of any covenant or agreement in this security instrument . . . The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than thirty days from the date the notice is given to borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this security instrument and foreclosure of the property."
In the present case, the plaintiff has established ownership of both the note and mortgage, but has failed to offer proof to establish that it has complied with the notice provisions of the note and mortgage deed. Because the plaintiff has failed to provide this proof, it cannot be said to have made its prima facie case for foreclosure by a preponderance of the evidence. Since the plaintiff has not met its burden of proving a prima facie case for foreclosure, it has not established that it is entitled to summary judgment as a matter of law. Therefore, the burden does not shift to the defendant to assert a valid special defense or material issue of fact warranting trial.
ORDER
For the foregoing reasons, the plaintiff's motion for summary judgment on the issue of liability is hereby denied.