Opinion
No. CV03 0081479S
July 29, 2003
MEMORANDUM OF DECISION RE MOTION TO STRIKE (#106)
Before the court is a motion to strike filed by the plaintiff, Washington Mutual Bank, on May 8, 2003, and an objection thereto filed by the defendant, Cynthia Delbuono, on May 22, 2003. For the following reasons, the motion to strike is granted.
On April 3, 2003, the plaintiff commenced this foreclosure action against the defendant seeking to foreclose the mortgage encumbering her property located at 19 Spruce Lane, Ansonia, Connecticut.
The court notes that the complaint names Frank Delbuono as an additional defendant. For purposes of this memorandum, however, the court will treat Cynthia Delbuono as the sole defendant.
The plaintiff alleges in its complaint that on January 24, 1997, the defendant executed and delivered to PNC Mortgage Corp. of America (PNC), a promissory note in the original amount of $83,589.00. To secure the note, the defendant executed and delivered to PNC a mortgage on the property, which was properly recorded in Volume 298 at page 13 of the Ansonia land records on January 28, 1997. The plaintiff further alleges that it is the current holder of the mortgage, that the note is in default and that it has elected to accelerate the balance due on the note and foreclose the mortgage.
On May 1, 2003, the defendant filed an answer and five special defenses. The special defenses allege: unclean hands (first defense); laches (second defense); a violation of the Fair Debt Collection Practices Act (FDCPA) and Connecticut General Statutes § 36-243c et seq. (third defense); a mutually negotiated payment plan (fourth special defense); and a violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110 (a) et seq. (CUTPA) (fifth special defense).
On May 8, 2003, the plaintiff filed the present motion to strike all of the defendant's special defenses. The plaintiff moves on the ground that: 1) the special defenses are legally insufficient because they fail to show that the Plaintiff has no cause of action; 2) the special defenses are legally insufficient because they do not address the making, validity or enforcement of the note and/or mortgage; 3) the special defenses plead no facts or insufficient facts; 4) the first special defense is legally insufficient because it is not a recognized special defense; 5) the third special defense is legally insufficient because the plaintiff is not a debt collector; 6) the fifth special defense is legally insufficient as it does not satisfy the three criteria of CUTPA; 7) the third, fourth and fifth special defenses do not satisfy the statute of frauds; and 8) the special defenses do not arise out of the same transaction as the plaintiff's complaint. The plaintiff has filed a memorandum of law in support of its motion.
On May 22, 2003, the defendant filed an objection to the plaintiff's motion. The defendant objects on the ground that all the special defenses "comply with the factual specificity requirements as cited in the Connecticut Practice Book and Connecticut Case Law and are proper within Foreclosure actions." The defendant has also filed a memorandum of law in opposition to the plaintiff's motion to strike.
"The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action." (Internal Quotation Marks Omitted.) Danbury v. Dana Investment Corp., 249 Conn. 1, 17, 730 A.2d 1128 (1999); see also Practice Book § 10-50.
"A party wanting to contest the legal sufficiency of a special defense may do so by filing a motion to strike." Barasso v. Rear Still Road, LLC, 64 Conn. App. 9, 13, 779 A.2d 198 (2001). "A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 575, 588, 693 A.2d 293 (1997). Consequently, "[a] motion to strike is properly granted if the [challenged pleading] alleges mere conclusions of law that are unsupported by the facts alleged." Novametrix Medical Systems, Inc. v. BOC Group, Inc., 224 Conn. 210, 215, 618 A.2d 25 (1992). In ruling on a motion to strike special defenses, a trial court is obligated "to take the facts to be those alleged in the special defenses and to construe the defenses in the manner most favorable to sustaining their legal sufficiency." Connecticut National Bank v. Douglas, 221 Conn. 530, 536, 606 A.2d 684 (1992). Nevertheless, "[t]he burden of alleging recognizable special defenses . . . rests upon the defendant." Cowart v. Grimaldi, 46 Conn. Sup. 248, 250, 746 A.2d 833 (1997), 18 Conn.L.Rptr. 682.
"A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, note or both." LaSalle National Bank v. Shook, 67 Conn. App. 93, 96-97, 787 A.2d 32 (2001); First Union National Bank v. Bogardus, Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. CV 00 0071447 (Dec. 10, 2001, Curran, J.). "At common law, the only defenses to [a foreclosure action] would have been payment, discharge, release or satisfaction . . . or, if there had never been a valid lien . . . Moreover, our courts have permitted several equitable defenses to a foreclosure action. [I]f the mortgagor is prevented by accident, mistake or fraud, from fulfilling a condition of the mortgage, foreclosure cannot be had . . . Other equitable defenses that our Supreme Court has recognized in foreclosure actions include unconscionability; . . . abandonment of security; . . . and usury." (Citations omitted; internal quotation marks omitted.) Southbridge Associates, L.L.C. v. Garofalo, 53 Conn. App. 11, 15, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999). Superior Court decisions have also recognized the equitable defenses of "equitable estoppel, CUTPA, laches, breach of the implied covenant of good faith and fair dealing, tender of deed in lieu of foreclosure . . . refusal to agree to a favorable sale to a third party . . . duress, coercion, material alteration, and lack of consideration." (Citations omitted; internal quotation marks omitted.) Norwest Mortgage v. Edwards, judicial district of Ansonia/Milford at Milford, Docket No. 057496 (May 4, 1998, Curran, J.) ( 22 Conn.L.Rptr. 123).
I
In her first special defense, the defendant alleges: "The plaintiff has operated and administered the loan which is the subject of this foreclosure with unclean hands in that it has refused to provide the defendant with a payoff and/or itemization of arrearage."
The plaintiff argues that the first special defense should be stricken as the plaintiff has provided the defendant with an itemization of the arrearage. Even if an itemization was not provided, the plaintiff argues that the allegations do not address the plaintiff's actions prior to the defendant's default, and therefore, are insufficient. Finally, the plaintiff argues that the special defense is insufficient as it does not allege willful conduct on the part of the defendant.
The defendant counters that the allegations of the first special defense are sufficient to support a defense of unclean hands. Specifically, the defendant argues that the claim should stand as the plaintiff has failed to honor an oral forbearance agreement between the defendant and PNC Bank, the former holder of the note and mortgage. The court is unpersuaded by the defendant's argument.
"The defense of unclean hands to a mortgage foreclosure has generally been disallowed in this state." Mechanics Farmers Savings Bank, FSB v. Delco Development Co., 43 Conn. Sup. 408, 420, 656 A.2d 1075 (1993), aff'd., 232 Conn. 594, 656 A.2d 1034 (1995). This court, following the aforementioned principle, has previously held that "such a defense is inappropriate." Chemical Mortgage Co. v. Carbone, Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. 059462 (Dec. 16, 1998, Curran, J.). Thus, the court finds that the defendant's first special defense is inappropriate as it alleges unclean hands.
II
The defendant's second special defense alleges: "The plaintiff's claim is barred by the doctrine of laches insofar as its own inaction and failure to provide a payoff figure has precluded the defendant from refinancing the subject mortgage prior to commencement of foreclosure."
The plaintiff argues that the second special defense should be stricken as it does not allege sufficient facts to support the equitable defense of laches. The plaintiff further argues that the second special defense does not address the making, validity or enforcement of the note. The defendant, on the other hand, argues that the allegations contained in the second special defense are sufficient.
The parties agree that "[l]aches occurs when neglect or omission to assert a right taken in conjunction with lapse of time and other circumstances, causes prejudice to an adverse party so as to operate as a bar to relief in equity . . . Laches consists of two elements. First, there must have been a delay that was inexcusable, and, second, that delay must have prejudiced the defendant . . . The mere lapse of time does not constitute laches." (Citations omitted; internal quotation marks omitted.) Traggis v. Shawmut Bank of Connecticut, N. A., 72 Conn. App. 251, 262, 805 A.2d 105 (2002).
Despite the defendant's arguments, the court finds these allegations to be insufficient. They do not address the making, validity or enforcement of the mortgage. Such allegations "reference conduct of the plaintiff subsequent to the note and mortgage being executed. Where the defendant[s'] special defenses attack the acts of the plaintiff during the course of their relationship . . . [t]hese are improper special defenses to a foreclosure action." (Internal quotation marks omitted.) First Union National v. Woermer, Superior Court, judicial district of Waterbury, Docket No. 159515 (Mar. 26, 2002, West, J.); Ocwen Federal Bank FSB v. Weinberg, Superior Court, judicial district of Hartford/New Britain at Hartford, Docket No. 547629 (August 11, 1999, Mihalakos, J.). Even if these allegations were to address the making, validity or enforcement of the mortgage, the defendant fails to allege that she ever requested a payoff figure. She also fails to allege that she would have been able to refinance the property had she received the payoff figure. The court, therefore, finds that the allegations contained in the second special defense are insufficient to support a defense of laches.
III
In her third special defense, the defendant alleges: "The plaintiff or its predecessor or successor have violated the Fair Debt Collection Practices Act (FDCPA) and Connecticut General Statutes Section 36-243c et seq. in one or more of the following ways: a) Defendant violated the terms of a verbal forbearance agreement with the defendant and has refused to accept payments tendered under same[;] b) Defendant has failed to provide defendant with itemization of payoff and/or arrearage despite repeated demand[;] c) Defendant failed to give notices as required by Section 1692 or failed to follow verbal communications with a written statement including the FDCPA's `Miranda Warnings.'"
The court notes that General Statutes § 36-243c has been transferred to § 36a-647. Section 36a-647, however, is part of a larger statutory scheme known as the Creditors' Collection Practices Act, General Statutes § 36a-645, et seq. (CCPA). Rather than referring solely to § 36a-647, the court will hereinafter refer to the act as a whole.
The plaintiff argues that the court should strike the third special defense as the verbal forbearance agreement with the defendant violates the statute of frauds. Furthermore, the plaintiff argues that the third special defense should be stricken because the plaintiff is not a debt collector under the fair debt collection practices act (FDCPA), and thus, is not subject to its provisions. Finally, the plaintiff argues that the third special defense does not address the making, validity or enforcement of the note or mortgage.
The defendant counters that the statute of frauds does not apply under these circumstances as its application would permit the plaintiff to disclaim its obligations under an oral forbearance agreement. The defendant further argues that the plaintiff is a debt collector as defined by the FDCPA, and therefore, is subject to its provisions.
The court finds that a violation of the 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. At least one court has come to the same conclusion. See G.E. Capital Mortgage v. Choinski, Superior Court, judicial district of Tolland at Rockville, Docket No. 068877 (June 4, 1999, Klaczak, J.), 24 Conn.L.Rptr. 565 (violation of FDCPA is not valid defense to foreclosure action); see also First Federal Bank v. Craco, Superior Court, judicial district of New Haven at Meriden, Docket No. 249553 (April 2, 1996, Silbert, J.), 16 Conn.L.Rptr. 377 (FDCPA provides independent claim of civil or criminal liability, not defense to debt).
The court further finds that the Creditors' Collection Practices Act (CCPA) is also not a valid defense to a foreclosure action. Section 36a-646 of the CCPA provides: "No creditor shall use any abusive, harassing, fraudulent, deceptive or misleading representation, device or practice to collect or attempt to collect any debt." This language mirrors that of the FDCPA. Thus, the court finds that, like the FDCPA, the CCPA does not address the making, validity or enforcement of the underlying note or mortgage.
Additionally, the CCPA is not a valid defense because it "does not explicitly provide the debtor with a private right of action. The legislative history of the Act indicates that the legislature rejected the inclusion of a private remedy in the Act. The three sections of the Act originated as Sections 1, 2 and 3 of P.A. 77-418. Early drafts of the bill included a Section 4, which provided for a private cause of action. Section 4 was removed for the reasons described by Senator Denielli on the Senate floor: [T]he amendment removes section 4 which authorized the recovery of damages by the consumer for violations of the Act. It was felt that at the present time, the Commissioner, the Bank Commissioner, has enough powers to enforce the law and it would not be necessary for direct action by the consumer." Yale-New Haven Hospital v. DeMatteo, Superior Court, judicial district of New Haven, Docket No. 407311 (August 12, 1998, Fracasse, J.), 23 Conn.L.Rptr. 37; Connecticut National Bank v. Montanari, Superior Court, judicial district of Hartford/New Britain at Hartford, Docket No. 517808 (January 26, 1994, Aurigemma, J.); see also Larobina v. Stamford Water Co., Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. 149234 (February 26, 1996, Ryan, J.), 16 Conn.L.Rptr. 265. By raising the CCPA as a special defense, the defendant is attempting to enforce the act's provisions. The above cases clearly stand for the proposition that a private person such as the defendant may not do so. Thus, the court finds that allegations contained in the third special defense are insufficient as both the FDCPA and the CCPA are not valid defenses to a foreclosure action.
The court, therefore, need not address the parties' other arguments.
IV CT Page 8779
The defendant's fourth special defense alleges: "The note and mortgage which is the subject of this foreclosure is not in default pursuant to a mutually negotiated payment plan."
The plaintiff argues that this special defense does not satisfy the statute of frauds in that it alleges that the parties entered into an oral agreement involving an interest in real property. The plaintiff further argues that the fourth special defense is insufficient in that it fails to allege that the defendant made payments pursuant to the agreement and that the plaintiff accepted those payments.
The plaintiff's argument assumes that the payment plan referred to in the fourth special defense and the verbal forbearance agreement referred to in the third special defense are one and the same. This court agrees and will treat them as such.
The defendant counters that the statute of frauds does not apply under these circumstances as its application would permit the plaintiff to disclaim its obligations under an oral forbearance agreement. The defendant further argues that the fourth special defense alleges sufficient facts.
This court has previously held that "[a]n agreement to forbear from foreclosing a mortgage involves an interest in real property; therefore, such an agreement is within the purview of the Statute of Frauds and must be in writing." (Internal quotation marks omitted.) First Union National Bank v. Bogardus, Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. 071447 (December 10, 2001, Curran, J.), citing Glastonbury Bank Trust Co. v. Corbett Construction Co., Superior Court, judicial district of New London, Docket No. 521355 (October 15, 1992, Walsh, J.) ( 7 Conn.L.Rptr. 519, 521); see also GE Capital Mortgage Services v. Rumbin, Inc., Superior Court, judicial district of Ansonia/Milford at Milford, Docket No. 064715 (July 6, 1999, Curran, J.) (forbearance agreement not reduced to writing violates statute of frauds.). Thus, the court finds that the defendant's fourth special defense is insufficient as it is based on an oral agreement, which violates the statute of frauds.
V
In her fifth special defense, the defendant alleges: "The plaintiff's conduct in refusing to comply with its own payment plan, refusal to accept properly tendered payments pursuant to such plan and failure to provide a payoff statement and/or itemization of arrearage/deficiency constitutes unfair or deceptive acts or practices within the meaning of Connecticut General Statutes Section 42-110 (a) et seq."
The plaintiff argues that the defendant has not alleged sufficient facts to support a defense based on a violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA). The plaintiff further argues that the fifth special defense is insufficient as it refers to an oral forbearance agreement, which violates the statute of frauds.
The defendant, on the other hand, contends that she has sufficiently alleged facts to support a claim under CUTPA. She further contends that the statute of frauds does not apply under these circumstances.
This court has already concluded that a special defense based on an oral forbearance agreement violates the statute of frauds, and therefore, is insufficient. Thus, an allegation that the plaintiff violated CUTPA by refusing to comply with that same agreement is also insufficient.
As explained, however, the defendant also alleges that the plaintiff violated CUTPA by not providing a payoff figure or itemization of the arrearage on the defendant's account. "[I]n determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the federal trade commission for determining when a practice is unfair: (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] . . . All three criteria do not need to be satisfied to support a finding of [a violation of CUTPA]." (Internal quotation marks omitted.) Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 644, 804 A.2d 180 (2002). "An act or practice is deceptive if three conditions are met. First, there must be a representation, omission, or other practice likely to mislead consumers. Second, the consumers must interpret the message reasonably under the circumstances. Third, the misleading representation, omission, or practice must be material — that is, likely to affect consumer decisions or conduct." (Internal quotation marks omitted.) Southington Savings Bank v. Rodgers, 40 Conn. App. 23, 28, 668 A.2d 733 (1995), cert. denied, 236 Conn. 908, 670 A.2d 1307 (1996), quoting Caldor, Inc. v. Heslin, 215 Conn. 590, 597, 577 A.2d 1009 (1990), cert. denied, 498 U.S. 1088, 111 S.Ct. 996, 112 L.Ed.2d 1053 (1991). "A claim under CUTPA must be pleaded with particularity to allow evaluation of the legal theory upon which the claim is based." (Internal quotation marks omitted.) S.M.S. Textile Mills, Inc. v. Brown, Jacobson, Tillinghast, Lahan King, P.C., 32 Conn. App. 786, 797, 631 A.2d 340, cert. denied, 228 Conn. 903, 634 A.2d 296 (1993).
In this case, the defendant has failed to allege how such actions would offend public policy as it has been established by statutes, the common law, or otherwise. Furthermore, the defendant fails to allege how the plaintiff's failure to provide a payoff figure or an itemization of arrearage would create substantial injury to consumers. Thus, the court finds that the allegations contained in the fifth special defense are insufficient.
For the foregoing reasons, the court strikes the defendant's special defenses.
The Court
By Curran, JTR