Fidelity Bank v. Krenisky

• Decision Date: 01 October 2002
• Docket Number: (AC 21862)
• Citation: 807 A.2d 968,72 Conn. App. 700
• Court: Connecticut Court of Appeals
• Parties: FIDELITY BANK v. JOHN M. KRENISKY ET AL.

72 Conn. App. 700

807 A.2d 968

FIDELITY BANK v. JOHN M. KRENISKY ET AL.

(AC 21862)

Appellate Court of Connecticut

Argued June 5, 2002

Officially released October 1, 2002

Lavery, C. J., and Foti and Dranginis, Js. John A. Keyes, with whom, on the brief, was Martin M. Looney, for the appellant (defendants).

David F. Borrino, for the appellee (plaintiff).

Opinion

FOTI, J.

In this foreclosure action, the defendants, John M. Krenisky and Frances G. Krenisky, appeal from the summary judgment as to liability rendered by the trial court in favor of the plaintiff, Fidelity Bank. On appeal, the defendants claim that the court improperly (1) granted the plaintiff's motion for summary judgment by concluding that their special defenses were legally insufficient and (2) struck their six count counterclaim.¹ We affirm the judgment of the trial court. On April 3, 1987, the defendants executed a promissory note payable to the order of Connecticut Bank and Trust Company, which was secured with a mortgage for their property at 512 Yale Avenue in New Haven. The note and mortgage provided for monthly payments of principal and interest to the plaintiff. Following several assignments of the note and mortgage, the plaintiff became the holder and owner of both on October 31, 1995.

Following an audit of the plaintiff's files, it came to the plaintiff's attention that current property tax receipts for the defendants' property were absent. Thereafter, on May 29, 1996, the plaintiff demanded, in accordance with its rights under the mortgage documents, that the defendants provide such receipts. Having not received the property tax receipts as demanded and after confirming with the city of New Haven that the defendants had failed to pay their property taxes when such taxes became due, the plaintiff sent another demand letter to the defendants. The letter informed the defendants that they had thirty days to provide the plaintiff with copies of property tax receipts. It further informed them that failure to do so would result in the bank's setting up an escrow account, in accordance with its rights under the mortgage documents, for the purpose of paying present and future property taxes. Again, the defendants failed to perform as demanded, and the plaintiff paid the taxes to the city and set up an escrow account. The defendants refused to make any additional monthly payments into the escrow account. What followed was an extended dispute between the parties regarding the tax escrow account.

Regarding the defendants' refusal to make payments into the escrow account as a breach of their obligations under the mortgage documents, the plaintiff notified the defendants of their default and accelerated the entire debt. Thereafter, the plaintiff commenced its first foreclosure action, which the court dismissed under its dormancy program on June 2, 1999. On the basis of the default that gave rise to the first foreclosure action, the plaintiff commenced its second foreclosure action on July 12, 1999. In response, the defendants asserted various special defenses and filed a six count counterclaim. Upon the plaintiff's motion, the court struck the defendants' counterclaim, and the plaintiff filed a motion for summary judgment as to liability. Having found the defendants' special defenses to be legally insufficient, the court granted the plaintiff's motion for summary judgment. Subsequently, the court ordered foreclosure by sale, and this appeal followed. Additional facts will be discussed as necessary.

I

The defendants claim that the court improperly granted the plaintiff's motion for summary judgment despite their special defenses alleging that (1) the plaintiff gave them improper notice of default, (2) they had substantially complied with the terms of the note and mortgage, (3) the plaintiff violated the principles of good faith and faith dealing, (4) foreclosure was inequitable under the circumstances and (5) the parties had resolved the dispute by an accord and satisfaction. We will address each claim and special defense in sequence.

Before doing so, however, we set forth the standard of review that we employ when evaluating a court's decision to grant a motion for summary judgment. "On appeal, [w]e must decide whether the trial court erred in determining that there was no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.... Because the trial court rendered judgment for the [plaintiff] as a matter of law, our review is plenary and we must decide whether [the trial court's] conclusions are legally and logically correct and find support in the facts that appear in the record." (Citation omitted; internal quotation marks omitted.) Yancey v. Connecticut Life & Casualty Ins. Co., 68 Conn. App. 556, 558, 791 A.2d 719 (2002).

"Practice Book § 384 [now § 17-49] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party....

"A material fact is a fact that will make a difference in the outcome of the case.... Once the moving party has presented evidence in support of the motion for summary judgment, the opposing party must present evidence that demonstrates the existence of some disputed factual issue.... It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact ... are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § 380 [now § 17-45].... The movant has the burden of showing the nonexistence of such issues but the evidence thus presented, if otherwise sufficient, is not rebutted by the bald statement that an issue of fact does exist.... To oppose a motion for summary judgment successfully, the nonmovant must recite specific facts ... which contradict those stated in the movant's affidavits and documents." (Citations omitted; internal quotation marks omitted.) Yancey v. Connecticut Life & Casualty Ins. Co., supra, 68 Conn. App. 558-59.

Further, because the plaintiff sought summary judgment in a foreclosure action, which is an equitable proceeding, we note that "the trial court may examine all relevant factors to ensure that complete justice is done.... The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court." (Internal quotation marks omitted.) LaSalle National Bank v. Freshfield Meadows, LLC, 69 Conn. App. 824, 833, 798 A.2d 445 (2002).

Moreover, because the defendants have asserted various special defenses, we set forth the legal principles regarding defenses to foreclosure actions. "Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction ... or, if there had never been a valid lien.... The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action.... A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both.... 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.... Other equitable defenses that our Supreme Court has recognized in foreclosure actions include unconscionability ... abandonment of security ... and usury." (Citation omitted; internal quotation marks omitted.) Id., 833-34. In light of the foregoing, we first determine whether the court properly concluded that no genuine issues of material fact existed and, if so, whether its conclusion, based on the undisputed facts, was legally and logically accurate.

A

The defendants' first claim and special defense is that the plaintiff failed to provide them with sufficient notice as required by paragraph nineteen of the mortgage. Specifically, the defendants assert that (1) an additional notice of default was required before the plaintiff could commence its second foreclosure action, and (2) if an additional notice of default was not required, then the first notice of default was "deficient on its face and improper." Conversely, the plaintiff argues that a single notice of default before acceleration is the only notice requirement in the mortgage documents, and that such notice, which was given to the defendants prior to the first foreclosure action, was sufficient under the circumstances. We agree with the plaintiff.

It is not disputed that the plaintiff gave notice of default to the defendants prior to accelerating the mortgage debt and commencing its first foreclosure action. Following the court's dismissal of that action, the plaintiff commenced the present action absent any further notice of default to the defendants.

It 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...