Carvalho v. Torres, NNHCV136041738S
| Decision Date | 11 April 2016 |
| Docket Number | NNHCV136041738S |
| Court | Connecticut Superior Court |
| Parties | Antonio Carvalho v. Martha Torres |
UNPUBLISHED OPINION
On September 17, 2013, the plaintiff, Antonio Carvalho, filed a foreclosure action against the defendant, Martha Torres concerning real property known as 141 Portsea Street, New Haven, Connecticut (property). The plaintiff filed an amended complaint[1] on June 1, 2015, in which he added a count for reformation of the commercial mortgage deed. The plaintiff requests that the court order foreclosure of the commercial mortgage deed, possession, money damages attorneys fees and costs, and interest by way of a deficiency judgment (unless precluded by virtue of the bankruptcy proceedings), the appointment of a receiver of rents, and other equitable relief. On June 5, 2015, the defendant filed an amended answer and special defenses, [2] in which she primarily leaves the plaintiff to his proof but: (1) she admits that she owns and possesses the property and the equity of redemption and that she executed the subject mortgage deed, which is no longer binding; (2) she denies that the plaintiff is entitled to reform the subject mortgage, that the plaintiff owns the subject note or the subject mortgage, and that she was in default under the same and (3) she alleges the special defenses of the doctrine of merger, lack of consideration, duress, release, and the doctrine of unclean hands. On June 18, 2015, the plaintiff filed an amended reply to special defenses, [3] in which he denies all allegations set forth in the defendant's special defenses. This court heard testimony during a trial on October 29, 2015. Pursuant to this court's order at the conclusion of the trial, the parties filed posttrial briefs on December 8, 2015, and posttrial reply briefs on December 15, 2015.
The court heard testimony from the plaintiff on October 29, 2015, found the plaintiff's testimony to be generally credible, and finds the following facts. The parties were married at one time, are now divorced, and had a child together. After the divorce, the plaintiff purchased the property, paid the taxes and the insurance, and he collected the rental income. The title to the property, however, was in the defendant's name, granted to her by limited warranty deed given to the defendant dated September 9, 2010, and recorded on September 17, 2010, in volume 8599, page 280 on the New Haven land records (land records), and had been put in her name for liability purposes. The plaintiff testified that he transferred money to purchase the property from his business account into the defendant's account. The plaintiff admitted that he owed the Internal Revenue Service (IRS) money at that time, he still owes the IRS money, and he acknowledged that on November 1, 2007, the IRS recorded two notices of federal tax lien dated October 17, 2007, on the land records against the plaintiff in volume 8090, pages 137 and 138.
The plaintiff commenced a prior action titled Carvalho v. Torres, Superior Court, judicial district of New Haven, Docket No. CV-11-6019396-S (first action), whereby both parties were represented by counsel. On March 22, 2012, the parties agreed to a settlement (settlement) of the first action, and such settlement included the following terms: (1) the defendant conveyed other real property to the plaintiff, but she retained the property; (2) the defendant would pay the plaintiff $40, 000 to retain title to the property; (3) the defendant paid the plaintiff $5, 000 of the $40, 000 amount; (4) the defendant gave the plaintiff a signed promissory note (note) in the principal amount of $35, 000, which included interest at five percent per annum for sixty months, which was secured by an executed mortgage deed (mortgage) to the plaintiff dated March 22, 2012, and recorded on March 23, 2012, in volume 8807, page 341 on the land records; and (5) the defendant executed a quitclaim deed (escrow deed) of the property in favor of the plaintiff to be held in escrow. The plaintiff would only record the escrow deed if the defendant defaulted and failed to cure under the terms of the note or the mortgage. If the defendant fully complied with the terms of and paid off the note, the plaintiff would return the escrow deed to her. Moreover, this was a commercial transaction, and the defendant executed a document acknowledging the same.
The first payment on the note and the mortgage was due on April 1, 2012, and the plaintiff testified that he alerted his counsel that he had not received the same. The plaintiff's counsel notified the defendant of the default, the defendant appeared to have failed to cure the same, the plaintiff instructed his counsel to record the escrow deed, and the escrow deed was recorded on April 18, 2012, in volume 8819, page 226 on the land records. Thereafter, on April 18, 2012, the plaintiff discovered that the defendant had made a payment by way of a direct deposit, which he had not recognized initially as the defendant's payment because it was in a different format and in a different amount than usual, and he informed his counsel that the escrow deed should not have been recorded. On April 18, 2012, the plaintiff executed a quitclaim deed (quitclaim deed) to correct the plaintiff's mistake and restore title back to the defendant and recorded the same on April 19, 2012, in volume 8819, page 278 on the land records. The plaintiff testified that he executed and recorded the quitclaim deed because the defendant and/or the defendant's counsel threatened sanctions if he did not do so, and that he had no intention to merge his legal and equitable interests in the property or release the mortgage. The plaintiff testified that he is the owner and holder of the note and the mortgage, and the defendant is in possession of the property. The plaintiff further testified that after the quitclaim deed was recorded, the defendant continued to make monthly payments and receive the rental income from the property, but she refused to sign a new quitclaim deed to be held in escrow or a new mortgage deed pursuant to the terms of the settlement. The plaintiff instructed his counsel to re-record the mortgage on the land records, to which the plaintiff's counsel complied.
Subsequently, the defendant defaulted by virtue of her non-payment of the applicable monthly installments of principal and interest due on August 1, 2013. The defendant's payment, dated August 1, 2013, was returned for insufficient funds, and the plaintiff's counsel sent the defendant a letter dated August 29, 2013, informing her of the returned check and stating that she was still in default. The letter demanded payment representing the August and September 2013 payments and attorneys fees by September 5, 2013. The plaintiff did not receive a payment by September 5, 2013, and commenced this action. The plaintiff testified that the defendant tried to tender a late payment, after September 5, 2013, and he refused to accept the same.
In the present action, the plaintiff argues that judgment as to liability should enter against the defendant because the plaintiff is the holder and owner of a note owed by the defendant, secured by a mortgage on the property, and the defendant has defaulted and failed to make timely payments on the note and/or the mortgage. The plaintiff asserts that (1) the recorded quitclaim deed corrected his mistaken recording of the escrow deed so that title to the property is in the name of the defendant, (2) he had no intention to merge any of his interests in the property or release the mortgage, and (3) the defendant is in possession of the property and is the owner of the equity of redemption. If his interests in the property unintentionally merged or the mortgage mistakenly released, the plaintiff requests that the court reform the same and/or grant other equitable relief to comply with the terms and intentions of the settlement.
The defendant counters that the plaintiff does not have a valid mortgage to foreclose in this action because (1) the mortgage merged into the ownership interest the plaintiff acquired when he recorded the escrow deed; and (2) the plaintiff transferred all his right, title, and interest in the property and released the mortgage when he recorded the quitclaim deed. The defendant argues that reformation of the mortgage cannot reverse the resulting effects from the recorded deeds, and it would be inequitable for the court to consider reformation of the mortgage at this time because IRS liens now encumber the property due to the recorded escrow deed. In addition, the defendant asserts that the plaintiff has acted with unclean hands[4] and, therefore, a judgment as to liability should not enter against her.
" In a mortgage foreclosure action, [t]o make out its prima facie case, [the foreclosing party has] to prove by a preponderance of the evidence that it [is] the owner of the note and mortgage and that [the mortgagor has] defaulted on the note . . . Furthermore, the foreclosing party must demonstrate that all conditions precedent to foreclosure, as mandated by the note and mortgage, have been satisfied ." (Internal quotation marks omitted.) PNC Bank N.A. v. Wagner, Superior Court, judicial district of Windham, Docket No. CV-11-6003374-S, (December 17, 2012, Potter, J.T.R.); see Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 838, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 136 (2003). ...
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