Bank of N.Y. Mellon v. Madison

• Decision Date: 02 March 2021
• Docket Number: AC 43719
• Citation: 247 A.3d 210,203 Conn.App. 8
• Court: Connecticut Court of Appeals
• Parties: The BANK OF NEW YORK MELLON, Trustee v. Russell M. MADISON et al.

203 Conn.App. 8

247 A.3d 210

The BANK OF NEW YORK MELLON, Trustee

v.Russell M. MADISON et al.

AC 43719

Appellate Court of Connecticut.

Argued October 21, 2020

Officially released March 2, 2021

Earle Giovanniello, New Haven, for the appellants (named defendant et al.).

Christopher J. Picard, Hartford, for the appellee (plaintiff).

Alvord, Prescott and Moll, Js.

MOLL, J.

In this foreclosure action, the defendants Russell M. Madison and Margit Madison¹ appeal from the judgment of the trial court rendered in favor of the plaintiff, The Bank of New York Mellon, Trustee,² on its amended two count complaint asserting claims for foreclosure and reformation of the mortgage. On appeal, the defendants claim that the court improperly granted (1) the plaintiff's oral motion for judgment on its reformation claim when the plaintiff failed to produce any evidence in support thereof and (2) the plaintiff's motion for summary judgment as to liability only on its foreclosure claim when the plaintiff failed to establish that the default notice that it had mailed to the defendants complied with the notice requirements of the mortgage. We reverse in part the judgment of the trial court.³

The following facts and procedural history are relevant to our resolution of this appeal. In May, 2017, the plaintiff commenced this foreclosure action. The plaintiff's original complaint set forth a single count alleging the following relevant facts. On or about February 25, 2005, Russell executed a promissory note, in the principal amount of $473,400, in favor of Mortgage Capital Group, LLC. The loan was subsequently subjected to several loan modification agreements. To secure the note, the defendants executed a mortgage on certain real property located at 140 Seymour Road in Woodbridge. Appended to the original complaint was a copy of the schedule affixed to the mortgage containing a description of the property encumbered by the mortgage (original schedule). On March 2, 2005, the mortgage was recorded on the Woodbridge land records. Following several antecedent assignments, the mortgage was assigned to the plaintiff by virtue of an assignment recorded on the Woodbridge land records on October 26, 2011, and the plaintiff became the holder of the note. On an unspecified date, Russell defaulted on the note. Thereafter, the plaintiff provided the defendants with written notice of the default, which was not cured. As a result, the plaintiff elected to accelerate the balance due on the note, declare the note to be due in full, and commence this action seeking to foreclose on the mortgage.

On October 19, 2018, the plaintiff filed a request for leave to file an amended complaint.⁴ Attached to the request was a proposed two count amended complaint, which was deemed to have been filed by consent, without objection. Appended to the amended complaint was an amended schedule describing the property encumbered by the mortgage (amended schedule). The amended schedule was otherwise identical to the original schedule, except that the amended schedule described an additional parcel of land that abutted the previously identified parcel. Count one of the amended complaint asserted a claim for foreclosure (count one) and mirrored the allegations set forth in the plaintiff's original complaint, except that count one alleged that the amended schedule described the property secured by the mortgage, whereas the original complaint alleged that the original schedule described the encumbered property. The newly added count two of the amended complaint asserted a claim for reformation of the mortgage (count two). In support of count two, the plaintiff alleged in relevant part that, following a title search completed in relation to the plaintiff's foreclosure claim, it was discovered that the property description affixed to the mortgage (as reflected in the original schedule) was inaccurate, and that the amended schedule set forth the correct description of the property encumbered by the mortgage.

On November 14, 2018, the defendants answered the amended complaint. As to count one, the defendants admitted, inter alia, that they owned and were in possession of the property as described in the amended schedule, but they left the plaintiff to its proof regarding its allegations that, inter alia, the plaintiff was the holder of the note, the note was in default, the plaintiff had properly notified them of the default, and the default had not been cured. As to count two, other than restating their admission that they owned the property as described in the amended schedule, the defendants either denied the plaintiff's allegations or left the plaintiff to its proof. The defendants did not plead any special defenses. On November 21, 2018, the plaintiff filed a demand for disclosure of a defense. On November 30, 2018, the defendants filed a disclosure of defense demanding that the plaintiff produce the "original mortgage note" and provide proof that it had a legal right to foreclosure, produce evidence that the assignment of the mortgage to the plaintiff was validly executed, and produce evidence that it had sent a proper default notice to them.

On June 17, 2019, the plaintiff filed a motion, accompanied by a supporting memorandum of law and exhibits, seeking summary judgment as to liability only with respect to count one. The plaintiff claimed that it had established a prima facie case for foreclosure because there was no genuine issue of material fact that (1) it was the holder of the note, (2) a default had occurred, (3) in accordance with the terms of the mortgage, it had mailed a default notice to the defendants, and (4) the default had not been cured. Notably, the plaintiff did not move for summary judgment as to count two or mention the reformation count in its motion. On July 30, 2019, the defendants filed an objection, principally arguing that the default notice mailed to them by the plaintiff did not comply with the notice provisions of the mortgage.

On October 8, 2019, after having heard argument on September 23, 2019, the trial court, Baio , J. , issued an order granting the plaintiff's motion for summary judgment as to liability only on count one and overruling the defendants’ objection. None of the parties nor the court referred to count two or reformation during argument on September 23, 2019, and the court's order granting the motion for summary judgment did not mention count two.

On December 2, 2019, the court held a hearing on a motion for judgment of strict foreclosure that the plaintiff had filed on November 9, 2018. On the record, over the defendants’ objection, the court granted the plaintiff's motion and rendered a judgment of strict foreclosure as to count one. Immediately thereafter, the plaintiff orally requested that the court also render judgment in its favor on count two. The defendants objected on the ground that the plaintiff's motion for summary judgment, which was granted by the court on October 8, 2019, did not encompass count two.

After passing the matter to allow the parties an opportunity to review the relevant materials in the record, the court allowed brief argument. The defendants argued that the plaintiff failed to submit evidence in support of its reformation claim, and, therefore, they requested that the court reserve its ruling on the plaintiff's oral motion for judgment as to count two until the plaintiff had met its evidentiary burden. The plaintiff argued that its motion for summary judgment was "generic enough to ask for liability as to the entire [amended] complaint," and that it interpreted the court's granting of the motion for summary judgment as encompassing both counts of the amended complaint. In addition, after conceding that its November 9, 2018 motion for judgment of strict foreclosure was limited to count one, the plaintiff orally moved for judgment with respect to count two. The court reiterated that it had rendered a judgment of strict foreclosure as to count one before stating that it was reserving its decision on the plaintiff's oral motion for judgment on count two.

On December 6, 2019, the court summarily granted the plaintiff's oral motion for judgment as to count two. This appeal followed. Additional facts and procedural history will be set forth as necessary.

I

We first address the defendants’ claim that the trial court improperly granted the plaintiff's oral motion for judgment on count two. The defendants assert that the court had no ground on which to render judgment in the plaintiff's favor on count two because the plaintiff had failed to produce any evidence demonstrating that reformation of the mortgage was justified. We agree.

We begin by observing that "[r]eformation and foreclosure are both equitable proceedings." ... "We will reverse a trial court's exercise of its equitable powers only if it appears that the trial court's decision is unreasonable or creates an injustice .... [E]quitable power must be exercised equitably ... [but] [t]he determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court .... 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." ...

"A cause of action for reformation of a contract rests on the equitable theory that the instrument sought to be reformed does not conform to the real contract agreed upon and does not express the intention of the parties and that it was executed as the result of mutual mistake, or mistake of one party coupled with actual or constructive fraud, or inequitable conduct on the part of the other .... Reformation is not granted for the purpose of alleviating a hard or...