Opinion
WWMCV146008236S
04-26-2017
Wilmington Savings Fund Society, FSB dba v. Julie Blake aka
UNPUBLISHED OPINION
MEMORANDUM OF DECISION (MOTION TO DISMISS, #140, SHORT CALENDAR, JANUARY 30, 2017 AND APRIL 24, 2017)
Harry E. Calmar, J.
The defendant moves to dismiss on the ground that the court lacks subject matter jurisdiction over the case because the plaintiff lacks standing to commence the foreclosure action.
The original plaintiff, CitiMortgage, Inc. (CitiMortgage), filed this foreclosure action on April 22, 2014. The complaint alleges the following facts. The defendant, Julie Blake, owns real property located at 197 Dugg Hill Road in Woodstock, Connecticut (property). On December 10, 2007, the defendant executed and delivered a note (note) in favor of CitiMortgage for the original principal amount of $417,000. On the same date, to secure the note, the defendant executed and delivered a mortgage (mortgage) on the property to Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for CitiMortgage. The mortgage was later assigned to CitiMortgage on June 20, 2011 (assignment). Thereafter, the defendant defaulted on the note. As a result, CitiMortgage elected to accelerate the balance due and to foreclose the mortgage. CitiMortgage provided written notice of the foreclosure in accordance with the note and mortgage provisions. After the defendant failed to cure the default, CitiMortgage caused a Lis Pendens to be recorded on the property.
Julie Blake is also known as " Julie D. Blake" and " Julie K. Blake." For the purpose of this memorandum, she will simply be referred to as the defendant.
On January 27, 2016, CitiMortgage assigned the mortgage, the note, and this foreclosure action to Wilmington Savings Funds Society, FSB, DBA Christiana Trust, not individually but as Trustee for Ventures Trust 2013-I-H-R (Wilmington). As a result of the assignment, CitiMortgage filed a motion to substitute the plaintiff to Wilmington. This court (Calmar, J.) granted the motion to substitute the plaintiff to Wilmington on October 24, 2016.
The defendant filed a motion to dismiss with prejudice on December 12, 2016 on the ground that Wilmington lacks standing and therefore, the court is without subject matter jurisdiction. The defendant also argues that dismissal with prejudice is merited due to two previous foreclosure actions regarding this property, which were each dismissed for failure to prosecute. The defendant's motion to dismiss is accompanied by a memorandum of law.
Prior to the defendant's motion to dismiss, Wilmington moved for summary judgment at entry #138. The defendant combined her objection to the summary judgment with her motion to dismiss at entry #141. For the purposes of this memorandum, the court will only consider the motion to dismiss arguments. The court will, however, consider the exhibits attached to the motion for summary judgment as raised in both the defendant's and Wilmington's motion to dismiss arguments.
Wilmington filed a memorandum in opposition to the motion to dismiss on January 26, 2017. On January 30, 2017, both parties argued at short calendar. After short calendar, the defendant filed a motion to file a late reply to the plaintiff's objection. In her motion, the defendant stated she needed to file a late reply because her arguments presented at short calendar were not in her filings to date. The motion was granted by this court (Calmar, J.) on February 14, 2017. The matter was scheduled to be reargued on March 20, 2017. The defendant, however, filed a motion for continuance on March 15, 2017. This court (Calmar, J.) granted the motion for continuance on March 16, 2017. The matter was then scheduled to be reargued on April 24, 2017. The defendant did not appear on April 24th, nor did she file a late reply.
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 motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) MacDermid, Inc. v. Leonetti, 310 Conn. 616, 626, 79 A.3d 60 (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).
" Pursuant to the rules of practice, a motion to dismiss is the appropriate motion for raising a lack of subject matter jurisdiction." St. George v. Gordon, 264 Conn. 538, 545, 825 A.2d 90 (2003). " [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).
" Because the issue of standing implicates subject matter jurisdiction, it may be a proper basis for granting a motion to dismiss." (Internal quotation marks omitted.) Electrical Contractors, Inc. v. Dept. of Education, 303 Conn. 402, 413, 35 A.3d 188 (2012). " When a . . . court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light . . ." Id. " In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader . . ." Id. " The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone." Id. " If . . . the plaintiff's standing does not adequately appear from all materials of record, the complaint must be dismissed." (Footnote omitted; internal quotation marks omitted.) Burton v. Dominion Nuclear Connecticut, Inc., 300 Conn. 542, 550, 23 A.3d 1176 (2011).
In the present case, the defendant moves to dismiss the complaint with prejudice on the ground Wilmington lacks standing; therefore the court is without subject matter jurisdiction. The defendant asserts that Wilmington lacks standing because its assignment is invalid. Specifically, the defendant contends that CitiMortgage assigned the mortgage to Citibank, N.A. (Citibank) before it assigned it to Wilmington. The defendant further asserts that Wilmington does not possess the note because its predecessor, CitiMortgage, lost the note before it assigned it to Wilmington. Accordingly, the defendant concludes that Wilmington does not possess the note or the mortgage, and therefore it does not have standing. The defendant further argues that even if the assignment was valid, it only transfers the mortgage, not the note. Last, the defendant contends that the motion to dismiss should be granted with prejudice because it is the third attempt by Wilmington and its predecessor, CitiMortgage, to foreclose.
Wilmington counters that CitiMortgage and Wilmington have always maintained standing. First, Wilmington states that CitiMortgage was the holder of the original note, endorsed in blank, prior to the commencement of this action. Wilmington explains that CitiMortgage, in possession of the original note, delivered the note to its counsel, Hunt Leibert Jacobson, P.C. (counsel), on or about June 18, 2013, for the sole purpose of beginning foreclosure proceedings. Wilmington states that note has remained with its counsel since June 18, 2013, well before this foreclosure action commenced on April 22, 2014. Wilmington further asserts that it thereafter became the holder of the note and was substituted into this case on October 24, 2016. Additionally, Wilmington counters that even if the assignment of the mortgage is invalid, as holder of the note, endorsed in blank; it has the right to enforce the mortgage. Last, Wilmington states that while it is true that a lost note affidavit was utilized in a prior foreclosure action, it is immaterial that in the past the note was misplaced because it was located well before the present foreclosure action commenced.
This court notes that Hunt Leibert Jacobson, P.C. is also the counsel for Wilmington in the present matter.
I
Subject Matter Jurisdiction
" Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy . . ." Property Asset Management, Inc. v. Lazarte, 163 Conn.App. 737, 745, 138 A.3d 290 (2016). " When a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause . . ." (Internal quotation marks omitted.) Id.
" Generally, in order to have standing to bring a foreclosure action the plaintiff must, at the time the action is commenced, be entitled to enforce the promissory note that is secured by the property . . ." (Emphasis in original.) Id., 746. " Whether a party is entitled to enforce a promissory note is determined by the provisions of the Uniform Commercial Code, as codified in General Statutes § 42a-1-101 et seq. . . ." Id.
" Under the Uniform Commercial Code, only a holder of an instrument or someone who has the rights of a holder is entitled to enforce the instrument." (Internal quotation marks omitted.) Equity One, Inc. v. Shivers, 310 Conn. 119, 126, 74 A.3d 1225 (2013); see also General Statutes § 42a-3-301. " The holder is the person or entity in possession of the instrument if the instrument is payable to bearer." (Internal quotation marks omitted.) Equity One, Inc. v. Shivers, supra, 126; see also General Statutes § 42a-1-201(b)(21)(A). " When a note is endorsed in blank . . . the note becomes payable to the 'bearer' of the note." U.S. Bank, National Assn. v. Schaeffer, 160 Conn.App. 138, 146, 125 A.3d 262 (2015); see also General Statutes § 42a-3-205(b).
General Statutes § 42a-3-301 provides in relevant part: " 'Person entitled to enforce' an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder . . ." General Statutes § 42a-3-301 further provides in relevant part: " A person may be entitled to enforce the instrument even though the person is not the owner of the instrument . . ."
General Statutes § 42a-1-201(b)(21)(A) provides in relevant part: " 'Holder' means . . . [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 . . ."
General Statutes § 42a-3-205(b) provides in relevant part: " When endorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially endorsed."
" The plaintiff's possession of a note endorsed in blank is prima facie evidence that it is a holder and is entitled to enforce the note, thereby conferring standing to commence a foreclosure action . . ." Property Asset Management, Inc. v. Lazarte, supra, 163 Conn.App. 746. " After the plaintiff has presented this prima facie evidence, the burden is on the defendant to impeach the validity of the evidence that the plaintiff possessed the note at the time that it commenced the . . . action or to rebut the presumption that the plaintiff owns the underlying debt . . ." (Internal quotation marks omitted.) Id., 746-47. " The defendant must . . . prove the facts which limit or change the plaintiff's rights." (Internal quotation marks omitted.) Id., 747.
A
Wilmington's Mortgage Assignment
In the present case, the defendant makes several arguments, all of which ultimately contend that Wilmington lacks standing because its assignment is invalid.
First, the defendant argues that the assignment is invalid because CitiMortgage previously assigned the mortgage to Citibank. In support of this argument, the defendant submits a copy of a letter she received from Citibank, dated May 17, 2013, indicating the assignment of the mortgage from CitiMortgage to Citibank in May 2013.
The letter is attached to the defendant's own signed and sworn affidavit in opposition of summary judgment, submitted to the court at #139. As previously noted, the defendant combined her objection to the summary judgment with her motion to dismiss at entry #141. For the purposes of this memorandum, the court will only consider the motion to dismiss arguments. The court will, however, consider the exhibits attached to the motion for summary judgment as raised in both the defendant's and Wilmington's motion to dismiss arguments.
Wilmington counters that the defendant overlooks the fact that the note is bearer paper and that General Statutes § 49-17 allows the holder of the note who has not been assigned the mortgage to foreclose. This court agrees.
" Section 49-17 codifies the well established common-law principle that the mortgage follows the note, pursuant to which only the rightful owner of the note has the right to enforce the mortgage." RMS Residential Properties, LLC v. Miller, 303 Conn. 224, 230, 32 A.3d 307 (2011). " Our legislature, by adopting § 49-17, created a statutory right for the rightful owner of a note to foreclose on real property regardless of whether the mortgage has been assigned to him." Id. ; see, e.g., HSBC Bank USA, N.A. v. Navin, 129 Conn.App. 707, 711, 22 A.3d 647, cert. denied, 302 Conn. 948, 31 A.3d 384 (2011); Chase Home Finance, LLC v. Fequiere, 119 Conn.App. 570, 576-77, 989 A.2d 606, cert. denied, 295 Conn. 922, 991 A.2d 564 (2010); Bankers Trust Co. of California, N.A. v. Vaneck, 95 Conn.App. 390, 391, 899 A.2d 41, cert. denied, 279 Conn. 908, 901 A.2d 1225 (2006); Fleet National Bank v. Nazareth, 75 Conn.App. 791, 795, 818 A.2d 69 (2003).
Therefore, " the rightful owner of a mortgage note has a right to foreclose the mortgage regardless of whether the mortgage had been assigned to him." See Astoria Federal Mortgage Corp. v. Genesis Ltd. Partnership, 167 Conn.App. 183, 201 n.13, 143 A.3d 1121 (2016); see also Equity One, Inc. v. Shivers, supra, 310 Conn. 126-27; RMS Residential Properties, LLC v. Miller, supra, 303 Conn. 230.
Accordingly, it is irrelevant if the mortgage was assigned to Citibank because Wilmington only needs to be the rightful owner of the note to enforce the mortgage.
B
Lost Notes and Bailor-Bailee Relationships
The defendant further argues that Wilmington does not possess the note because its predecessor, CitiMortgage, lost the note before it assigned it to Wilmington. Wilmington counters that it is immaterial that the note was previously lost because it was located before the present foreclosure action commenced. Wilmington further asserts that it has established a valid chain of title in regards to the note. This court agrees.
" The law is clear that it is unnecessary for a plaintiff to possess a note at the time it was lost." (Internal quotation marks omitted.) Bankers Trust of California, N.A. v. Neal, 64 Conn.App. 154, 157, 779 A.2d 813 (2001). " Connecticut courts have regularly permitted foreclosure of mortgages where the original promissory note has been lost." JP Morgan Chase Bank, N.A. v. Porzio, Superior Court, judicial district of Stamford, Docket No. CV-09-5010388-S, (March 20, 2015, Tierney, J.). " Affidavits of lost notes are a routine solution to the requirement that the original of the loan documents must be presented for examination to the court at the time of trial." Id. ; see also Countrywide Home Loans Servicing, LP v. Creed, 145 Conn.App. 38, 48, 75 A.3d 38, cert. denied, 310 Conn. 936, 79 A.3d 889 (2013); Silicon Valley Bank v. Miracle Faith World Outreach, Inc., 140 Conn.App. 827, 834, 60 A.3d 343, cert denied, 308 Conn. 930, 64 A.3d 119 (2013); Equity One, Inc. v. Shivers, supra, 310 Conn. 124; PHH Mortgage Corp. v. Cameron, 130 Conn.App. 238, 240, n.3, 22 A.3d 1282 (2011).
Here, Wilmington does not dispute that CitiMortgage's counsel could not locate the note in 2012 during a previous foreclosure action. Wilmington explains that the note was located and returned to CitiMortgage, who then sent it back to its counsel on January 18, 2013, to hold as a bailee, for the sole purpose of pursuing the present foreclosure action which commenced on April 22, 2014. Wilmington supports this argument by referencing in its objection to the motion to dismiss, to its summary judgment affidavit which contains copies of the note, endorsed in blank (Exhibit A) and the bailee letter (Exhibit B).
" A relationship of bailor-bailee arises when the owner, while retaining general title, delivers personal property to another for some particular purpose upon an express or implied contract to redeliver the goods when the purpose has been fulfilled, or to otherwise deal with the goods according to the bailor's directions." B.A. Ballou & Co. v. Citytrust, 218 Conn. 749, 753, 591 A.2d 126 (1991). " In bailment, the owner or bailor has a general property interest in the goods bailed . . ." (Internal quotation marks omitted.) Id. " The bailee, on the other hand, has mere possession of items left in its care pursuant to the bailment." Id. Therefore, when CitiMortgage delivered the note to its counsel as bailee, it did not give its counsel legal title, but merely possession of the note for purposes of beginning foreclosure proceedings.
Review of the bailee agreement demonstrates that a bailor-bailee relationship was established between CitiMortgage and its counsel in regards to the note. Review of the affidavit further supports that CitiMortgage's counsel did in fact receive the note as bailee on June 18, 2013, where it has since remained. A sworn affidavit is sufficient proof of a bailee relationship. See United States, N.A. v. Foote, 151 Conn.App. 620, 634-35, 94 A.3d 1267, cert. denied, 314 Conn. 930, 101 A.3d 952 (2014) (finding that plaintiff's sworn affidavit that its counsel was bailee for plaintiff's note was sufficient proof plaintiff's counsel held note on behalf of plaintiff). Accordingly, Wilmington has demonstrated that the note was not lost when this foreclosure action commenced because it was delivered to its counsel as bailee where it has remained since.
As previously noted, CitiMortgage's counsel, Hunt Leibert Jacobson, is also the counsel for Wilmington in the present matter.
C
Wilmington's Note Assignment
As previously established, " [u]nder Connecticut law, the rightful holder of the note is presumed to be the owner of the debt, and the defendant has the burden to rebut such position." U.S. Bank, National Assn. v. Schaeffer, supra, 160 Conn.App. 153. " 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." (Internal quotation marks omitted.) Equity One, Inc. v. Shivers, supra, 310 Conn. 135. " The key question to resolve . . . is when the note came into the plaintiff's possession." Deutsche Bank National Trust Co. v. Thompson, 163 Conn.App. 827, 832, 136 A.3d 1277 (2016).
Here, complete review of the record demonstrates the following. CitiMortgage was assigned the note on or around December 10, 2007. It held the note until June 18, 2013, when it delivered physical possession only of the note to its counsel as bailee for sole purpose of pursuing the present foreclosure proceedings, which commenced on April 22, 2014. CitiMortgage then assigned the note to Wilmington on January 27, 2016. Thereafter, Wilmington, as holder of the note, was substituted into the present foreclosure action on October 24, 2016. Therefore, it is clear that CitiMortgage held the note since December 10, 2007, until it assigned the note to Wilmington on January 27, 2016.
Further, Wilmington presented the note itself at short calendar on January 30, 2017. At short calendar, the defendant countered that the note presented by the plaintiff was a color copy and doubted its authenticity. This court notes, however, that section 10-2 of the 2017 edition of the Connecticut Code of Evidence provides: " [a] copy of a writing . . . is admissible to the same extent as an original unless . . . a genuine question is raised as to the authenticity of the original or the accuracy of the copy or . . . it would be unfair to admit the copy in lieu of the original." Here, aside from mere doubts, the defendant has not offered any legal authority to raise a genuine question as to the authenticity to the note presented to the court, or the accuracy of the copy, if it is in fact a copy. See JP Morgan Chase Bank, N.A. v. Porzio, supra, Superior Court, Docket No. CV-09-5010388-S, (finding that defendant furnished no legal authority to support claim that photocopy of note was not a valid substitute of original).
The plaintiff also brought the note to short calendar on April 24, 2017. The court noted it was already on record. As previously stated, the defendant failed to appear to short calendar on April 24, 2017.
After examination of the note presented at short calendar, the court noted that while it appeared to be the original note, with a pen signature, the court had not considered the capabilities of modern technology and color copies.
Accordingly, Wilmington has established a valid chain of title as holder of the note. As holder of the note, Wilmington has the right to enforce the mortgage.
CONCLUSION
For the foregoing reasons, Wilmington has alleged ample facts to demonstrate that it has standing in the present foreclosure action. The defendant has not met its burden in rebutting the presumption that Wilmington is the holder of the note. The court denies the defendant's motion to dismiss with prejudice.
As previously stated, the defendant moves for the court to grant the motion to dismiss with prejudice, arguing res judicata, stating that it is the third attempt by Wilmington and its predecessor, CitiMortgage, to foreclose. The defendant states that previous attempts were dismissed for failure to prosecute. " The doctrine of res judicata applies if the following elements are satisfied: the identity of the parties to the actions are the same; the same claim, demand or cause of action is at issue; the judgment in the first action was rendered on the merits; and the parties had an opportunity to litigate the issues fully." Farmington Valley Recreational Park, Inc. v. Farmington Show Grounds, LLC, 146 Conn.App. 580, 588, 79 A.3d 95 (2013). This court notes, however, that " [j]udgments based on the following reasons are not rendered on the merits: want of jurisdiction; pre-maturity; failure to prosecute ; unavailable or inappropriate relief or remedy; lack of standing." (Emphasis added.) Bruno v. Geller, 136 Conn.App. 707, 725, 46 A.3d 974, cert. denied, 306 Conn. 905 52 A.3d 732 (2012). Accordingly, even if the motion to dismiss was granted, res judicata is not proper when the previous action was based on failure to prosecute. Id.