Chase Home Finance, LLC v. Fequiere

Decision Date02 March 2010
Docket NumberNo. 31301.,31301.
Citation119 Conn.App. 570,989 A.2d 606
CourtConnecticut Court of Appeals
PartiesCHASE HOME FINANCE, LLC v. Germanie FEQUIERE.

Edward F. Kunin, for the appellant (defendant).

S. Bruce Fair, for the appellee (substitute plaintiff U.S. Bank National Association, as trustee).

GRUENDEL, BEACH and BORDEN, Js.

BORDEN, J.

The defendant, Germanie Fequiere, appeals from the judgment of strict foreclosure rendered by the trial court following the denial of her motion to dismiss, for lack of subject matter jurisdiction, this foreclosure action brought by the substitute plaintiff, U.S. Bank National Association, as trustee.1 The defendant claims that the court improperly concluded that the plaintiff had standing to bring the foreclosure action. Specifically, the defendant claims that the court improperly concluded that (1) the plaintiff was a valid assignee of the mortgage securing the defendant's promissory note to BNC Mortgage, Inc., the plaintiff's predecessor in interest and (2) the Structured Asset Investment Loan Trust (SAIL), the entity for which the plaintiff is trustee, was a valid express trust as required by General Statutes § 52-106. We affirm the judgment of the trial court.

The following facts and procedural history are relevant to our resolution of the defendant's appeal. On August 25, 2005, the defendant executed and delivered a promissory note in the principal amount of $240,000 to BNC Mortgage, Inc. As security for the note, the defendant executed and delivered a mortgage on real property located at 208-210 Wheeler Avenue in Bridgeport to Mortgage Electronic Registration Systems, Inc. (MERS). The property was mortgaged to MERS, its successors and assigns "as nominee for [BNC Mortgage, Inc.] and [its] successors and assigns...."2 MERS subsequently assigned the mortgage to the plaintiff by virtue of a recorded assignment of the mortgage. The promissory note was endorsed in blank by BNC Mortgage, Inc., and is in possession of the plaintiff.

On September 29, 2008, the plaintiff commenced this foreclosure action against the defendant. In its complaint, the plaintiff alleged, inter alia, that it was the holder of the note and mortgage, that the note was in default and that it was exercising its option to accelerate the balance due on the note. On February 17, 2009, the court entered a default for failure to appear against the defendant and rendered a judgment of strict foreclosure. The court set May 19, 2009, as the first law day.

On May 8, 2009, the defendant filed a motion to open the judgment of strict foreclosure. In support of her motion, the defendant claimed that she did not receive the summons and complaint3 in connection with the plaintiff's foreclosure action and that "[t]here may be a defense to this action...." On May 11, 2009, the court granted the defendant's motion to open the judgment of strict foreclosure to the extent of extending the first law day to July 28, 2009.4

On May 19, 2009, the defendant filed a motion to dismiss the underlying foreclosure action for lack of subject matter jurisdiction, accompanied by a memorandum of law in support of her motion. See Practice Book §§ 10-30 and 10-31. In her motion and supporting memorandum of law, the defendant claimed that the plaintiff did not have standing to commence its foreclosure action. Specifically, the defendant asserted that the plaintiff lacked standing to bring the action because MERS, the original mortgagee as nominee for BNC Mortgage, Inc., did not have proper title to the mortgage and, therefore, its purported assignment of the mortgage to the plaintiff was ineffective. Additionally, the defendant claimed that the trust for which the plaintiff claimed to be trustee was not an enforceable "express trust" as required by § 52-106. The result of this alleged impropriety, according to the defendant, also deprived the plaintiff of standing to bring its foreclosure action. The defendant did not request an evidentiary hearing to support these claims. Instead, the court heard oral argument from the parties and received briefs, to which were attached copies of various documents, namely, excerpts of a prospectus detailing the SAIL trust agreement, the promissory note endorsed in blank by BNC Mortgage, Inc., the mortgage deed and the assignment of the mortgage from MERS to the plaintiff. The defendant has not supplied this court with a transcript of this oral argument, however.

On July 13, 2009, the court denied the defendant's motion to dismiss without a written opinion.5 This appeal followed.

At the outset, we set forth the appropriate standard of review. "A motion to dismiss ... properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court.... [O]ur review of the trial court's ultimate legal conclusion and resulting [denial] of the motion to dismiss will be de novo." (Internal quotation marks omitted.) State v. Bonner, 290 Conn. 468, 477-78, 964 A.2d 73 (2009).

Our analysis of the defendant's claim is also governed by our well established principles of standing. "The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss.... [I]t is the burden of the party who seeks the exercise of jurisdiction in his favor ... clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute.... It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged.... Because a determination regarding the trial court's subject matter jurisdiction raises a question of law, our review is plenary....

"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." (Citations omitted; internal quotation marks omitted.) Wilcox v. Webster Ins., Inc., 294 Conn. 206, 213-14, 982 A.2d 1053 (2009). "Standing [however] is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticiable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented." (Internal quotation marks omitted.) Fleet National Bank v. Nazareth, 75 Conn.App. 791, 793-94, 818 A.2d 69 (2003).

I

The defendant first claims that the plaintiff lacked standing to bring its foreclosure action because it was not a bona fide assignee of the mortgage. This claim is based on the defendant's assertion that the designation of MERS as the mortgage "nominee" for BNC Mortgage, Inc., was insufficient to bestow proper title to the mortgage on MERS. As such, the defendant maintains that MERS did not have the authority to assign the subject mortgage to any entity other than its "nominator," BNC Mortgage, Inc. The defendant claims, therefore, that the assignment of the mortgage by MERS to the plaintiff was ineffective and that, consequentially, the plaintiff lacks standing to pursue foreclosure of the property. We disagree.

Even if we were to assume arguendo that the assignment of the mortgage from MERS to the plaintiff was invalid, the defendant's claim fails. "General Statutes § 49-176 permits the holder of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when the mortgage has not yet been assigned to him. Fleet National Bank v. Nazareth, [supra, 75 Conn.App. at 795, 818 A.2d 69]. The statute codifies the common-law principle of long standing that `the mortgage follows the note,' pursuant to which only the rightful owner of the note has the right to enforce the mortgage. New Milford Savings Bank v. Jajer, 244 Conn. 251, 266, 708 A.2d 1378 (1998); Restatement (Third), Property, Mortgages § 5.4, p. 380 (1997)." Bankers Trust Co. of California, N.A. v. Vaneck, 96 Conn. App. 390, 391-92, 899 A.2d 41, cert. denied, 279 Conn. 908, 901 A.2d 1225 (2006). Our legislature, by adopting § 49-17, has "provide[d] an avenue for the holder of the note to foreclose on the property when the mortgage has not been assigned to him." Fleet National Bank v. Nazareth, supra, at 795, 818 A.2d 69.

The defendant has failed to offer any evidence to counter the plaintiff's claim that it is a bona fide holder of the promissory note secured by the mortgage on the defendant's property. In contrast, the plaintiff offered a copy of the promissory note that was endorsed in blank by BNC Mortgage, Inc., by way of an allonge.7 It is undisputed that the plaintiff is also in possession of the note.

The plaintiff's standing to enforce the promissory note is set forth by the provisions of the Uniform Commercial Code as adopted in General Statutes § 42a-1-101 et seq. Under these statutes, only a "holder" of an instrument or someone who has the rights of a holder is entitled to enforce the instrument. General Statutes § 42a-3-301. The "holder" is the person or entity in possession of the instrument if the instrument is payable to bearer. General Statutes § 42a-1-201(b)(21)(A). When an instrument is endorsed in blank, it "becomes payable to bearer and may be negotiated by transfer of possession alone...." General Statutes § 42a-3-205(b).

As stated previously, the subject promissory note was endorsed in blank by BNC Mortgage, Inc., and, therefore, is payable to bearer. The plaintiff, by way of its possession of an instrument payable to bearer, is a valid holder of the instrument and, therefore, is entitled to enforce it. Ninth RMA...

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