Emigrant Mortg., Co., Inc. v. D'Agostino, No. 25939.

• Citation: 896 A.2d 814,94 Conn.App. 793
• Decision Date: 18 April 2006
• Docket Number: No. 25939.
• Court: Appellate Court of Connecticut
• Parties: EMIGRANT MORTGAGE COMPANY, INC. v. Walter D'AGOSTINO.

896 A.2d 814

94 Conn.App. 793

EMIGRANT MORTGAGE COMPANY, INC. v. Walter D'AGOSTINO.

No. 25939.

Appellate Court of Connecticut.

Argued September 22, 2005.

Decided April 18, 2006.

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Brendan J. O'Rourke, New Canaan, with whom, on the brief, was Marianne F. Murray, for the appellant (defendant).

Robert A. Ziegler, with whom, on the brief, were Leslee B. Hill and Jeffrey M. Knickerbocker, Plainville, for the appellee (plaintiff).

LAVERY, C.J., and SCHALLER and BERDON, Js.^*

SCHALLER, J.

The defendant, Walter D'Agostino, appeals from the judgment of foreclosure by sale, rendered by the trial court, in favor of the plaintiff, Emigrant Mortgage Company, Inc. On appeal, the defendant claims that the court improperly (1) concluded that the plaintiff satisfied a condition precedent to commencing the foreclosure action and (2) admitted an exhibit into evidence that was neither a business record nor properly authenticated. We affirm the judgment of the trial court.

The following facts and procedural history are relevant to the defendant's appeal. On June 26, 2001, the defendant executed an adjustable rate note in favor of the plaintiff in the amount of $2,025,000, secured by a mortgage on property known as One Ivanhoe Lane in Greenwich. The plaintiff is the owner of both the note and the mortgage.

Section two of the adjustable rate note set the defendant's annual interest rate at 6.75 percent. Section two also explained that the interest rate was subject to change in accordance with § 4 of the note and included the last sentence, "[t]he interest rate required by ... Section 2 and Section 4 of this Note is the rate [the defendant] will pay both before and after any default described in Section 7(B) of this note." Section 4(D) addressed the limits on interest rate changes and specifically provided that the defendant's interest rate "will never be greater than 12.750%." On the same day that the defendant executed the note and mortgage, he also signed a default interest rate rider. The rider replaced the last sentence of § 2 of the note, established the default interest rate as 18 percent and incorporated the mortgage by reference.¹

On July 5, 2002, the plaintiff notified the defendant, by way of letter, that he was in default under the terms of the note and mortgage. The default notice specified that to cure the default and to reinstate the mortgage, the defendant would be required to pay $54,731.36. That amount was calculated, in part, on the basis of the 18 percent default interest rate. More than two months later, on September 9, 2002, the plaintiff initiated this action to foreclose the mortgage. The plaintiff subsequently filed an amended complaint alleging that the defendant had been in default of payment since June 1, 2002. On May 2, 2003, the defendant filed an amended answer, which admitted the execution of the note and mortgage and asserted five special defenses, namely, duress, unconscionability, equitable estoppel, unclean hands and lack of proper notice of default or acceleration.

The first four of the defendant's special defenses primarily challenged the propriety of calculating the reinstatement amount on the basis of the 18 percent default interest rate. On the first day of trial, however, the plaintiff orally and in writing, waived its right to collect the default interest rate of 18 percent. Instead, the plaintiff agreed to calculate the default debt at 6.75 percent interest, the rate set forth in § 2 of the adjustable rate note.² In its September 17, 2004 memorandum of decision, the court acknowledged that because the plaintiff waived its right to interest payments calculated at the 18 percent default interest rate, the defendant's first four special defenses were no longer applicable.

With respect to the remaining special defense of lack of proper notice of default or acceleration, the court concluded that the defendant had received notice of the default, the right to reinstate and acceleration. The court explained: "First, the plaintiff presented a very credible witness, Patricia Gilligan, an assistant vice president, who testified that notice of default, etc., was mailed to the defendant on or about July 5, 2001, by certified and regular mail at his home at One Ivanhoe Lane, Greenwich. Second, the return receipt was signed by `Inga,' who was admittedly a housekeeper for the defendant at the time of the notice, and the notice sent by regular mail was never returned. Third, the defendant agreed that he knew he was in default and talked to bank officers at the time regarding the situation. Fourth, the defendant was not in a financial position to reinstate the mortgage and, even if he had not received notice of the right to reinstate, it would have made no difference." The court concluded, therefore, that the plaintiff was entitled to a foreclosure of its mortgage and that the defendant had failed to prove any of its special defenses. Consequently, the court ordered a foreclosure by sale and appointed a committee to sell the subject property. This appeal followed. Additional facts will be set forth as necessary.

I

The defendant first claims that, by issuing a defective default notice, the plaintiff failed to satisfy a condition precedent to commencing the foreclosure action. The defendant also claims that the plaintiff acted unconscionably and with unclean hands.³ We disagree.

A

We first address the defendant's claim that the July 5, 2002 default notice was defective. Specifically, the defendant argues that the default notice failed to comply with the notice provisions of the mortgage, and contravened the terms of the note and mortgage.⁴ The defendant asserts that the notice provision of the mortgage contained express language that entitled him to specific information regarding default and the manner in which to cure default. The defendant further contends that the July 5, 2002 default notice did not comply with these provisions because it instructed that the defendant would be required to pay a reinstatement amount based, in part, on the 18 percent default interest rate. According to the defendant, use of the 18 percent default interest rate was improper because § 4(D) of the note set 12.75 percent as the absolute cap on the interest rate. The defendant argues that the plaintiff's default notice was predicated on a "grossly inaccurate calculation" and, therefore, that the plaintiff failed to meet the condition precedent required for bringing the foreclosure action. We conclude that the default notice complied with the notice provisions and did not contravene the terms of the note and mortgage.

At the outset, we note that "[i]t is well established that [n]otices of default and acceleration are controlled by the mortgage documents. Construction of a mortgage deed is governed by the same rules of interpretation that apply to written instruments or contracts generally, and to deeds particularly. The primary rule of construction is to ascertain the intention of the parties. This is done not only from the face of the instrument, but also from the situation of the parties and the nature and object of their transactions.. . . A promissory note and a mortgage deed are deemed parts of one transaction and must be construed together as such. . . .

"In construing a deed, a court must consider the language and terms of the instrument as a whole. . . . Moreover, the words [in the deed] are to be given their ordinary popular meaning, unless their context, or the circumstances, show that a special meaning was intended. . . .

"A promissory note is nothing more than a written contract for the payment of money, and, as such, contract law applies. . . . In construing a contract, the controlling factor is normally the intent expressed in the contract, not the intent which the parties may have had or which the court believes they ought to have had. . . . Where . . . there is clear and definitive contract language, the scope and meaning of that language is not a question of fact but a question of law. . . . In such a situation our scope of review is plenary, and is not limited by the clearly erroneous standard. . . . The court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity." (Citations omitted; internal quotation marks omitted.) Fidelity Bank v. Krenisky, 72 Conn.App. 700, 706-707, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002).

"Notice provisions in mortgage documents usually require default notices to contain specific information, which serves a very clear and specific purpose; it informs mortgagors of their rights so that they may act to protect them. Therefore, when the terms of the note and mortgage require notice of default, proper notice is a condition precedent to an action for foreclosure." (Internal quotation marks omitted.) Id., at 710, 807 A.2d 968. Consequently, we must determine whether such a condition precedent was satisfied in the present case.

Paragraph twenty-two of the mortgage sets forth, in clear and unambiguous terms, the notice provisions. It states in relevant part: "Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant. . . . The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date that notice is given to Borrower, by which the default must be cured; and (d) failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by the Security Agreement and foreclosure or sale of the Property."

The defendant's argument depends on the existence of ambiguity among the relevant documents and is based on the claim that he was misinformed regarding "the action required to cure the default . . . ." The record, however, reveals no ambiguity. Although § 4(D) of the note...