Opinion
No. CV 03-0081297
October 30, 2003
MEMORANDUM OF DECISION RE MOTION TO STRIKE ( #105')
This is an action to foreclose a mortgage. The Defendant has filed an Answer and Four Special Defenses as well as a three-count Counterclaim. The Plaintiff has moved to strike all of the Defendant's Special Defenses as well as all counts of the Counterclaim because they fail to address the making, validity or enforcement of the mortgage and/or note which are the subject matter of the Plaintiff's complaint.
A motion to strike is the appropriate means to test the legal sufficiency of a special defense or counterclaim. Practice Book § 10-39(a)(5). In ruling on a motion to strike, the trial court must take the facts to be those alleged in the pleadings and to construe them in the manner most favorable to sustaining their legal sufficiency. Connecticut National Bank v. Douglas, 221 Conn. 530, 536 (1992).
In a mortgage foreclosure, special defenses which address the making, validity or enforcement of the mortgage and/or note have been allowed. Mercantile Bank v. Hurowitz, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 95 0381091 S (May 2, 2000, Celotto, J.). "`At common law, the only defenses to an action of [foreclosure] 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, LLC v. Garofalo, 53 Conn. App. 11, 15-16, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999). In recognition that a foreclosure action is equitable in nature, courts have also allowed equitable estoppel, CUTPA, laches, breach of the implied covenant of good faith and fair dealing, tender of deed in lieu of foreclosure, a refusal to agree to a favorable sale to a third party, and lack of consideration to be pleaded as special defenses. See, e.g., Mercantile Bank v. Hurowitz, Superior Court, judicial district of New Haven at New Haven, Docket No. 381091 (May 2, 2000, Celotto, J.); Norwest Mortgage v. Edwards, Superior Court, judicial district of Ansonia-Milford at Milford, Docket No. 057496 (May 4, 1998, Curran, J.) ( 22 Conn. L. Rptr. 123, 124). Numerous Superior Court decisions have held that equitable defenses to mortgage foreclosure are valid only if they address the making, validity or enforcement of the note and mortgage (principle of limitation). See, e.g., Mercantile Bank v. Hurowitz, supra; Dime Savings Bank of New York, FSB v. Furey, Superior Court judicial district of Ansonia-Milford at Milford, Docket No. 047557 (April 1, 1996, Curran, J.). `[The] special defenses [listed above] have been recognized as valid special defenses where they were legally sufficient and addressed the making, validity or enforcement of the mortgage and/or note. The rationale behind this is that . . . special defenses which are not limited to the making, validity or enforcement of the note or mortgage fail to assert any connection with the subject matter of the foreclosure action and as such do not arise out of the same transaction as the foreclosure action. Further, based on the same rationale, the defenses . . . cannot attack some act or procedure of the lienholder.' Mercantile Bank v. Hurowitz, supra; Dime Savings Bank of New York, FSB v. Furey, supra." Webster Bank v. Linsley, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 97 0260406 S (August 9, 2001, Booth, J.)
In the First Special Defense the Defendant claims a setoff in that the Plaintiff and the Plaintiff's decedent have failed to convey to the Defendant all the real estate as they had agreed, and that three parcels of land were excepted from the deed. The deed referred to is that referenced in the complaint as describing the land which is the subject of this action. In the Second Special Defense the Defendant claims, alternatively, that the failure of the Plaintiff to convey the three parcels of land as agreed constitutes a partial failure of consideration for the purchase money mortgage described in the complaint and is a set-off against the purchase money obligation. In the Third Special Defense the Defendant claims, alternatively, that the retention of the three parcels by the Plaintiff was made as an alternative security device and that if the Plaintiff is entitled to foreclose, the Plaintiff should first foreclose the equitable mortgage retained in these three parcels. In the Fourth Special Defense the Defendant claims that the Plaintiff comes to court with unclean hands because the Plaintiff interfered with a contract the Defendant had with Robert Wood to buy land that is contiguous to the land which is the subject of the foreclosure action. In the First Count of the Counterclaim the Defendant claims that the Plaintiff's failure to convey the three parcels constitutes a breach of contract. In the Second Count of the Counterclaim the Defendant claims that the Plaintiff tortiously interfered with its contract to purchase contiguous land from Robert Wood. The Third Count of the Counterclaim alleges a claim pursuant to the Connecticut Unfair Trade Practices Act against the Plaintiff based on the actions alleged in the second count of the counterclaim.
Section 10-10 of the Practice Book provides that "[i]n any action for legal or equitable relief, any defendant may file counterclaims against any plaintiff . . . provided that each such counterclaim arises out of the transaction or one of the transactions which is the subject of the plaintiff's complaint . . ." For purposes of the determination of the transaction referred to in Section 10-10 "`[t]he making of the note and the . . . subsequent default is the transaction at issue' (Internal quotation marks omitted.) Norwest Mortgage v. Clapper, Superior Court, judicial district of Windham at Putnam, Docket No. 060598 (January 4, 2002, Kocay, J.)." Homestead Funding Corp. v. Welch, Superior Court, judicial district of Windham at Putnam, Docket No. 067260 (August 28, 2002, Foley, J.). Section 10-15 of the Practice Book also provides that: "Facts which are consistent with the [plaintiff's] statements but show, notwithstanding, that the plaintiff has no cause of action, must be specially pleaded."
The Defendant cites the decision in Morgera v. Chiappardi, 74 Conn. App. 442, 456-57 (2003) in support of the validity of its special defenses and counterclaim. There the court found that the trial court erred in not considering evidence regarding the Defendant's claims concerning a package type transaction involving other properties not the subject of that foreclosure action. The court noted that a foreclosure action is an action in equity and stated: "`Courts of equity may grant relief from the operation of a judgment when to enforce it is against conscience, and where the appellant had no opportunity to make defense, or was prevented from so doing by . . . the fraud . . . of the opposite party, and [the appellant was] without fault on his [or her] own part.' (Internal quotation marks omitted.) Cavallo v. Derby Savings Bank, 188 Conn. 281, 284, 449 A.2d 986 (1982). `Foreclosure is peculiarly an equitable action, and the court may entertain such questions as are necessary to be determined in order that complete justice may be done.' (Emphasis added.) Hartford Federal Savings Loan Assn. v. Lenczyk, 153 Conn. 457, 463, 217 A.2d 694 (1966); Beach v. Isacs, 105 Conn. 169, 176, 134 A. 787 (1926). We have stated that `[b]ecause a mortgage foreclosure action is an equitable proceeding, the trial court may consider all relevant circumstances to ensure that complete justice is done.' (Emphasis added.) Reynolds v. Ramos, 188 Conn. 316, 320, 449 A.2d 182 (1982); Southbridge Associates, LLC v. Garofalo, 53 Conn. App. 11, 15, 728 A.2d 1114, cert. denied, 249 Conn. 919, CT Page 12007 733 A.2d 229 (1999). `Where the plaintiff's conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles.' Southbridge Associates, LLC v. Garofalo, supra, 15; see also Hamm v. Taylor, 180 Conn. 491, 497, 429 A.2d 946 (1980)."
Construing the defenses and counterclaim in a manner most favorable to sustaining their validity, they allege that the Plaintiff's decedent and the Defendant had an agreement that the Plaintiff's decedent would convey to the Defendant all the property known as 168 Wood Road, Somers, Connecticut, for $500,000, and, in return, the Defendant would execute a note and mortgage for $500,000; and that three parcels of land valued at $400,000 were excepted from the conveyance of the land by the Plaintiff contrary to their agreement. Thus, as in Morgera, the transaction involving the execution of the mortgage and note, which are the subject of this foreclosure action, were allegedly part of a larger transaction to which the claims set forth in the Defendant's Special Defenses and Counterclaim relate. This is true as to the first three special defenses and the First Count of the Counterclaim. The Fourth Special Defense, and the Second and Third Counts of the Counterclaim, however, refer to a transaction involving another party and another piece of land which is not the subject of this foreclosure or part of the package transaction to which the mortgage relates.
Therefore the Motion to Strike is granted as to the Fourth Special Defense, and the Second and Third Counts of the Counterclaim and denied as to First, Second and Third Special Defenses and the First Count of the Counterclaim.
Jane S. Scholl, J.