Bank of Am., N.A. v. Gonzalez

• Decision Date: 29 January 2019
• Docket Number: AC 40405
• Citation: 202 A.3d 1092,187 Conn.App. 511
• Court: Connecticut Court of Appeals
• Parties: BANK OF AMERICA, N.A. v. William GONZALEZ et al.

187 Conn.App. 511

202 A.3d 1092

BANK OF AMERICA, N.A.

v.William GONZALEZ et al.

AC 40405

Appellate Court of Connecticut.

Argued October 24, 2018

Officially released January 29, 2019

Ridgely Whitmore Brown, with whom, on the brief, was Benjamin Gershberg, for the appellant (named defendant).

Pierre-Yves Kolakowski, for the appellee (plaintiff).

David Lavery filed a brief for the Connecticut Fair Housing Center as amicus curiae.

Sheldon, Prescott and Pellegrino, Js.

PELLEGRINO, J.

The defendant William Gonzalez¹ appeals from the judgment of strict foreclosure rendered by the trial court in favor of the plaintiff, Bank of America, N.A. On appeal, the defendant claims that the court erred by concluding that he had failed to satisfy his burden of proving that the mortgage broker was an agent or employee of the original mortgagee and concluding, on that basis, that he had failed to prove any of his special defenses, all of which were based on the alleged conduct of the broker. The defendant further claims that the trial court incorrectly concluded that he had failed to sustain his burden of proving that the mortgage was unconscionable.² We disagree with the defendant and, accordingly, affirm the judgment of the trial court.

The following facts and procedural history are relevant to the resolution of the defendant's claims on appeal. The plaintiff filed this action in August, 2013, seeking to foreclose a residential mortgage on property located at 80 Oakwood Street in Bridgeport. According to the complaint, on March 20, 2006, the defendant executed the mortgage in favor of Mortgage Electronic Registration Systems, Inc., as nominee for Mortgage Capital Group, LLC (Mortgage Capital), as security for a $ 267,750 promissory note payable to the order of Mortgage Capital. The complaint alleged that the note was in default and that the plaintiff, which was in possession of the note, was exercising its option to declare the entire balance of the note due and payable.

On June 25, 2015, the defendant filed an amended answer and six special defenses. The special defenses alleged fraudulent inducement, negligent misrepresentation, equitable estoppel, unconscionability, duress and unclean hands. Each of the special defenses alleged misconduct by David J. Bigley, an alleged employee and/or agent of the original lender and mortgagee, Mortgage Capital.³ On May 5, 2016, the plaintiff filed its reply, denying each of the defendant's special defenses. Following a trial on April 18 and 19, 2017, the court rendered a judgment of strict foreclosure.⁴ In its oral decision, the court found that the plaintiff had presented prima facie evidence to support the judgment of strict foreclosure. The court rejected the defendant's special defenses, finding that the defendant had not satisfied his burden of proving that Bigley was an agent or employee of Mortgage Capital. The defendant then filed the present appeal.

We first set forth our standard of review. "The standard of review of a judgment of ... strict foreclosure is whether the trial court abused its discretion.... In determining whether the trial court has abused its discretion, we must make every reasonable presumption in favor of the correctness of its action.... Our review of a trial court's exercise of the legal discretion vested in it is limited to the questions of whether the trial court correctly applied the law and could reasonably have reached the conclusion that it did." (Internal quotation marks omitted.) Bank of New York Mellon v. Talbot , 174 Conn. App. 377, 382, 165 A.3d 1253 (2017).

"In order to establish a prima facie case in a mortgage foreclosure action, the plaintiff must prove by a preponderance of the evidence that it is the owner of the note and mortgage, that the defendant mortgagor has defaulted on the note and that any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied." (Internal quotation marks omitted.) U.S. Bank, N.A. v. Foote , 151 Conn. App. 620, 632, 94 A.3d 1267, cert. denied, 314 Conn. 930, 101 A.3d 952 (2014). In its decision, the trial court noted that there was no disagreement that the plaintiff had established a prima facie case. On appeal, the defendant has not challenged the plaintiff's standing as the owner of the note and mortgage or the defendant's default on the note. We, therefore, limit our review to the issues raised by the defendant concerning his special defenses.

"Where the plaintiff's conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles.... [O]ur 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 ...." (Internal quotation marks omitted.) Hirsch v. Woermer , 184 Conn. App. 583, 588, 195 A.3d 1182, cert. denied, 330 Conn. 938, 195 A.3d 384 (2018). The defendant bears the burden of proof on his or her special defenses. Kaye v. Housman , 184 Conn. App. 808, 817, 195 A.3d 1168 (2018).

The defendant argues that the court erred in concluding that he had failed to prove that Bigley was an agent or employee of the original mortgagee, Mortgage Capital.⁵ Each of the special defenses alleged that Bigley, as an agent or employee of Mortgage Capital, induced the defendant to enter into this mortgage transaction. In order to prevail on these special defenses, therefore, the defendant was required to prove that Bigley was an agent or employee of Mortgage Capital. See CitiMortgage, Inc. v. Coolbeth , 147 Conn. App. 183, 192, 81 A.3d 1189 (2013), cert. denied, 311 Conn. 925, 86 A.3d 469 (2014). "The existence of an agency relationship is a question of fact ... which may be established by circumstantial evidence based upon an examination of the situation of the parties, their acts and other relevant information." (Citation omitted; internal quotation marks omitted.) Gagliano v. Advanced Specialty Care, P.C. , 329 Conn. 745, 755, 189 A.3d 587 (2018). We review the trial court's findings of fact under the clearly erroneous standard of review. Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership , 157 Conn. App. 139, 158, 117 A.3d 876, cert. denied, 318 Conn. 902, 122 A.3d 631 (2015) and 318 Conn. 902, 123 A.3d 882 (2015). "A finding of fact is clearly erroneous when there is no evidence in the record to support it ... or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." (Internal quotation marks omitted.) Ackerman v. Sobol Family Partnership, LLP , 298 Conn. 495, 507–508, 4 A.3d 288 (2010).

"Three elements are required to show the existence of an agency relationship: (1) a manifestation by the principal that the agent will act for him; (2) acceptance by the agent of the undertaking; and (3) an understanding between the parties that the principal will be in control of the undertaking.... Although stated as a three part test, [our Supreme Court] has also acknowledged there are various factors to be considered in assessing whether [an agency] relationship exists [which] include: whether the alleged principal has the right to direct and control the work of the agent; whether the agent is engaged in a distinct occupation; whether the principal or the agent supplies the instrumentalities, tools, and the place of work; and the method of paying the agent.... In addition, [a]n essential ingredient of agency is that the agent is doing something at the behest and for the benefit of the principal." (Citation omitted; internal quotation marks omitted.) Gagliano v. Advanced Specialty Care, P.C. , supra, 329 Conn. at 755, 189 A.3d 587.

Additionally, "[a]pparent authority is that semblance of authority which a principal, through his own acts or inadvertences, causes or allows third persons to believe his agent possesses.... Apparent authority thus must be determined by the acts of the principal rather than by the acts of the agent.... Furthermore, the party seeking to impose liability upon the principal must demonstrate that it acted in good faith based upon the actions or inadvertences of the principal." (Citations omitted; internal quotation marks omitted.) Beckenstein v. Potter & Carrier, Inc. , 191 Conn. 120, 140–41, 464 A.2d 6 (1983).

At trial, the defendant testified that after he received an inheritance from his brother's estate, he consulted his friend, Vincent Curcio, who recommended that he purchase the subject property. Curcio also referred the defendant to Attorney Thomas V. Battaglia, Jr., to represent him in the purchase of the property. Bigley, a mortgage broker doing business as Main Street Mortgage, LLC, assisted the defendant with securing financing to purchase the house.⁶ Bigley obtained a lender, Mortgage Capital, who was not disclosed to the defendant until the date of the closing.

The defendant testified that he paid $ 40,000 as a deposit on the property. He testified that when he first met Bigley, he told Bigley that he could only afford a mortgage in the amount of $ 1250 per month. On the date of the closing, however, he was told that his monthly payment would be $ 2618.16 per month and that if he did not proceed with the transaction, he would lose $ 20,000 of his deposit. At that point, Bigley agreed to loan the defendant the shortfall of $ 16,000 to complete the closing. The defendant was not informed that Bigley held a mortgage on the property from Sunrise Contracting, LLC, the seller of the property, in the amount of $ 249,600, that would be paid off with the proceeds of the sale to the defendant. The mortgage from Sunrise Contracting, LLC, to Bigley was witnessed by Battaglia who, unbeknownst to the defendant, was Bigley's cousin.⁷

In addition to the defendant's testimony, the court considered several exhibits that were admitted into evidence. Specifically, the mortgage loan...