Aurora Loan Servs., LLC v. Condron

• Decision Date: 24 April 2018
• Docket Number: AC 38934
• Court: Connecticut Court of Appeals
• Parties: AURORA LOAN SERVICES, LLC v. Karen CONDRON, et al.

181 Conn.App. 248

186 A.3d 708

AURORA LOAN SERVICES, LLC

v.Karen CONDRON, et al.

AC 38934

Appellate Court of Connecticut.

Argued October 11, 2017

Officially released April 24, 2018

Christopher G. Brown, Wilton, for the appellants (named defendant et al.).

Christopher S. Groleau, with whom, on the brief, was Jonathan Adamec, Stamford, for the appellee (substitute plaintiff).

Alvord, Elgo and Sullivan, Js.

ELGO, J.

The defendants, Karen Condron and James L. Condron,¹ appeal from the judgment of strict foreclosure rendered by the trial court in favor of the plaintiff Nationstar Mortgage, LLC.² On appeal, the defendants claim that the court improperly rendered judgment of strict foreclosure because (1) the plaintiff failed to satisfy a contractual condition precedent to foreclosure, namely, compliance with the requirement of notification by mail specified in the mortgage deed;³ (2) the plaintiff failed to satisfy a statutory condition precedent, as required by the Emergency Mortgage Assistance Program (mortgage program) pursuant to the provisions of General Statutes § 8–265ee(a) ; and (3) the plaintiff lacked the authority to foreclose. The judgment is reversed and the case is remanded with direction to dismiss the action.

The following facts and procedural history are relevant to the present appeal. On February 16, 2007, the defendants executed and delivered an adjustable rate promissory note (note) payable to the order of Lehman Brothers Bank, FSB (bank), in the original principal amount of $980,000. The loan was secured by a mortgage (mortgage deed) on the property. The mortgage deed was executed and delivered on February 16, 2007, to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for the bank. The bank specially endorsed the note to Lehman Brothers Holdings, Inc., which endorsed the note in blank.

On March 1, 2007, Aurora Loan and Lehman Brothers Holdings, Inc., entered into a written servicing agreement (servicing agreement). Structured Asset Securities Corporation, Wells Fargo Bank, N.A. (Wells Fargo), and Aurora Loan entered into a written trust agreement, dated March 1, 2007 (trust agreement). Under the trust agreement, the defendants' note and mortgage deed became part of the trust. Wells Fargo, as trustee, is the owner of the debt under the trust agreement. Aurora Loan, or any successor in interest,⁴ is identified in the trust agreement as the master servicer and as a servicer.⁵ MERS, as nominee for the bank, assigned the mortgage deed to Aurora Loan by virtue of a corporate assignment of the mortgage deed.

The defendants have been in default on the note and mortgage deed since at least May 1, 2009. On June 19, 2009, Aurora Loan, as the servicer of the loan at the time, sent a letter to the defendants, by certified mail, return receipt requested , notifying them that the loan was in default and advising them of the amount required to cure the default and reinstate the loan as of that date. On the same date, Aurora Loan also provided notice to the defendants by certified mail of their rights under the mortgage program, pursuant to the provisions of General Statutes §§ 8–265cc through 8–265kk. The defendants failed to cure the default and Aurora Loan elected to accelerate the balance due on the note, declare the note due in full, and foreclose the mortgage deed securing the note. Aurora Loan commenced the present foreclosure action against the defendants on November 19, 2009. Aurora Loan assigned the mortgage to the plaintiff by virtue of a corporate assignment of mortgage on June 29, 2012. On August 22, 2012, Wells Fargo, as trustee, provided a limited power of attorney to the plaintiff, as assignee of Aurora Loan. The plaintiff was in possession of the note and presented it to the court and to the defendants' counsel for inspection at the foreclosure trial. On April 8, 2013, Aurora Loan moved to substitute Nationstar Mortgage, LLC, as the plaintiff in the present action, and the court granted the motion to substitute on May 1, 2013.

The action was tried to the court on August 25, 2015. At trial, the defendants claimed that they did not receive either the default notice or the mortgage program notice from Aurora Loan. No evidence was offered by either party to show that the mortgage program notice or the default notice had been returned to Aurora Loan by the United States Postal Service (USPS) with an endorsement showing failure of delivery. In addition, no evidence was offered of a return receipt confirming actual delivery. In its memorandum of decision, the court concluded that (1) the plaintiff had standing to prosecute the present foreclosure action; (2) the plaintiff had proven compliance with the notice provisions of the mortgage deed by a preponderance of the evidence; (3) the plaintiff had proven by a preponderance of the evidence that the mortgage program notice was sent to the defendants by certified mail on June 19, 2009; and (4) the plaintiff was entitled to a judgment of strict foreclosure against the defendants. On appeal, the defendants challenge the propriety of that decision. Additional facts will be provided as necessary.

I

We first address the issue of standing because an absence of subject matter jurisdiction would deprive this court of the opportunity to review any other matters raised in the present appeal. See Wells Fargo Bank, N.A. v. Henderson , 175 Conn. App. 474, 481, 167 A.3d 1065 (2017). The defendants claim that the plaintiff failed to demonstrate that it had standing to foreclose because the plaintiff does not own the note and the note's owner, Wells Fargo, as trustee, did not authorize the plaintiff to foreclose in its own name. The plaintiff maintains that it has standing to foreclose in its own name because it was the holder of the note and it provided sufficient evidence of its authority to foreclose. We agree with the plaintiff.

"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.... Where a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause.... Our review of this question of law is plenary." (Citations omitted; internal quotation marks omitted.) J.E. Robert Co. v. Signature Properties, LLC , 309 Conn. 307, 318, 71 A.3d 492 (2013).

"The rules for standing in foreclosure actions when the issue of standing is raised may be succinctly summarized as follows. When a holder seeks to enforce a note through foreclosure, the holder must produce the note. The note must be sufficiently endorsed so as to demonstrate that the foreclosing party is a holder, either by a specific endorsement to that party or by means of a blank endorsement to bearer. If the foreclosing party shows that it is a valid holder of the note and can produce the note, it is presumed that the foreclosing party is the rightful owner of the debt. That presumption may be rebutted by the defending party, but the burden is on the defending party to provide sufficient proof that the holder of the note is not the owner of the debt, for example, by showing that ownership of the debt had passed to another party. It is not sufficient to provide that proof, however, merely by pointing to some documentary lacuna in the chain of title that might give rise to the possibility that some other party owns the debt. In order to rebut the presumption, the defendant must prove that someone else is the owner of the note and debt. Absent that proof, the plaintiff may rest its standing to foreclose on its status as the holder of the note." (Emphasis added; internal quotation marks omitted.) Wells Fargo Bank, N.A. v. Henderson , supra, 175 Conn. App. at 483, 167 A.3d 1065.

"[I]n defending against an action to enforce a note, a debtor may be able to produce evidence demonstrating that the plaintiff, who might otherwise appear to be entitled to enforce the debt nevertheless lacks standing, perhaps because ownership of the debt has passed to another party." J.E. Robert Co. v. Signature Properties, LLC , supra, 309 Conn. at 325, 71 A.3d 492. "[I]t is the foreclosing party's burden, when the issue of standing is raised, to demonstrate by way of proper documentation that it has the right to enforce the note. It may, for example, produce documents showing a valid transfer of the right to enforce the note between the original holder and the foreclosing party." U.S. Bank, National Assn. v. Schaeffer , 160 Conn. App. 138, 150–51, 125 A.3d 262 (2015).

In the present case, Aurora Loan, the original plaintiff, was the holder of the note when it commenced the present action in November, 2009. Aurora Loan assigned its rights, title, and interest in the mortgage deed to the plaintiff by a corporate assignment of the mortgage on June 29, 2012. As a result, the court granted Aurora Loan's motion to substitute Nationstar Mortgage, LLC, as the plaintiff in the present action, and the plaintiff is now the holder of the note endorsed in blank. The plaintiff presented the note to the court at the foreclosure trial. According to the trust agreement, however, Wells Fargo is the owner of the debt.

The issue is whether the plaintiff, despite not owning the note, demonstrated that it had the authority to foreclose on the mortgage deed securing the note. See American Home Mortgage Servicing, Inc. v. Reilly , 157 Conn. App. 127, 134, 117 A.3d 500, cert. denied, 317 Conn. 915, 117 A.3d 854 (2015). "[A] plaintiff, in establishing the loan servicer's authority to enforce the instrument, must provide sufficient evidence of such authority to demonstrate that the principals unequivocally manifested their intention to authorize [the loan servicer] to exercise [those] rights ...." (Internal quotation marks omitted.) J.E. Robert Co....