Fin. Freedom Acquisition, LLC v. Griffin

• Decision Date: 12 September 2017
• Docket Number: (AC 38960).
• Citation: 176 Conn.App. 314,170 A.3d 41
• Court: Connecticut Court of Appeals
• Parties: FINANCIAL FREEDOM ACQUISITION, LLC v. Ann T. GRIFFIN, Executrix (Estate of Angela C. Griffin), et al.

176 Conn.App. 314

170 A.3d 41

FINANCIAL FREEDOM ACQUISITION, LLC

v.Ann T. GRIFFIN, Executrix (Estate of Angela C. Griffin), et al.

(AC 38960).

Appellate Court of Connecticut.

Argued April 11, 2017

Officially released September 12, 2017

Ronald P. Sherlock, for the appellants (named defendant et al.).

Michael T. Grant, for the appellee (substitute plaintiff).

Sheldon, Mullins and Flynn, Js.

MULLINS, J.

In this action to foreclose a reverse mortgage, the defendants, Ann T. Griffin, in her representative capacity as executrix of the estate of Angela C. Griffin, and Ann T. Griffin, in her individual capacity, appeal from the judgment of strict foreclosure rendered in favor of the substitute plaintiff, OneWest Bank, N.A.¹ On appeal, the defendants claim that the court erred in (1) concluding that the substitute plaintiff established a prima facie case of foreclosure and (2) rejecting their special defense and counterclaim sounding in breach of the implied covenant of good faith and fair dealing. We affirm the judgment of the trial court.

In its December 10, 2015 memorandum of a decision, the trial court set forth the following facts. "[Angela C.] Griffin [ (decedent) ] was the owner of the real property located at 312 Milton Road, Litchfield, Connecticut (property). On or about July 23, 2008, [the decedent] executed a note and reverse annuity mortgage (mortgage) on the [p]roperty in favor of Financial Freedom Senior Funding Corporation, [a predecessor in interest to the substitute plaintiff]. ... [The note and mortgage] established an open-ended line of credit not to exceed $692,180 ( [decedent's] loan). At that time, Financial Freedom [Senior Funding Corporation] advanced $378,791 to [the decedent] to pay off a loan from Deutsche Bank, which sought to foreclose on the mortgage it held on the property. Financial Freedom [Senior Funding Corporation] obtained an appraisal at the time that valued the property at $612,709.

"[The decedent] ... entered into the loan so that [she] could remain in the home that she had lived in for thirty years. The property is a private property that includes a colonial residence located on eleven acres of land with a pond. It has a stable and many acres of well-maintained pasture. The home was a central part of [Ann Griffin's] and [the decedent's] lives.

"Since the mortgage is a reverse annuity mortgage, no principal became due until a maturity event occurred. On April 16, 2010, [the decedent] passed away, which constituted a maturity event and rendered the balance of the loan due and payable unless there was an agreement in writing between the [named] plaintiff and certain legal representatives of [the decedent] within thirty days to cooperate fully in selling the property. The [named] plaintiff and the [executrix] had no agreement in writing to this effect, and the [executrix] did not pay the balance due upon [the decedent's] death. Thus, the nonpayment constituted a default under the mortgage. ... The [named] plaintiff initiated the present foreclosure action in May of 2011.

"On April 30, 2010, prior to the notice of intent to foreclose, [Ann Griffin] contacted the [named plaintiff] to inform it that she intended to sell the property. The [named plaintiff's] electronic system notes indicate that [Ann Griffin] spoke with ... a maturities administrator .... They discussed repayment of the [decedent's] loan, and [Ann Griffin] indicated she planned to sell the property and use the proceeds of the sale to repay the debt. Subsequent to the conversation, [the maturities administrator] sent a cash account reverse mortgage repayment notice to [Ann Griffin]. The repayment notice informed [Ann Griffin] that the death of [the decedent] constituted a maturity event, that upon the occurrence of a maturity event the loan became due, and that [Ann Griffin] needed to discuss plans with [the named plaintiff] concerning repayment of the loan by sending in the enclosed repayment questionnaire. ...

"On May 6, 2010, the defendant[s'] counsel faxed a correspondence, attaching the death certificate and will of [the decedent], and informing [the maturities administrator] that he was representing the defendant[s]. [Ann Griffin] was appointed executrix of [the decedent's] estate on May 17, 2010. [Ann Griffin] lacked legal authority to enter into contractual agreements on behalf of the estate until such time as she was appointed executrix.

"On or about June 17, 2010, the [executrix] entered into a listing agreement with [a realty company] for the sale of the property, with a listing price of $614,900 (listing agreement). On June 23, 2010, the defendant[s'] counsel sent a second correspondence to [the maturities administrator], which included the probate decree admitting the [decedent's] will to probate; a certified copy of the death certificate; a copy of the [decedent's] will; a certified probate certificate reflecting the appointment of [Ann Griffin] as executrix; and a signed copy of the listing agreement. The [named] plaintiff admitted to having received both written communications and attachments. The [named] plaintiff still had not received the repayment questionnaire .... There was no agreement in writing or any other communication that demonstrated a mutual understanding to extend the repayment date."

In addition to those facts expressly found by the trial court, the following supplemental facts, which also reasonably could have been found by the court, are relevant. Through a series of assignments and corporate restructurings, ownership of the decedent's loan changed several times. As previously explained, on July 23, 2008, the decedent executed a note and mortgage in favor of Financial Freedom Senior Funding Corporation, making it the original mortgagee and holder of the note. At the time the decedent executed the note in July, 2008, Financial Freedom Senior Funding Corporation was a subsidiary of IndyMac Bank, F.S.B. (IndyMac). The Federal Deposit Insurance Corporation (FDIC) had been appointed as receiver for IndyMac prior to the decedent's execution of the note and mortgage.

In March, 2009, OneWest Bank, F.S.B, through its parent company, IMB HoldCo, LLC, purchased from the FDIC certain IndyMac assets, including the decedent's loan. As part of that transaction, Financial Freedom Senior Funding Corporation executed an allonge to the note, specially endorsing it to "OneWest Bank, F.S.B." The named plaintiff in this action was formed during this transaction as a subsidiary of OneWest Bank, F.S.B.

At some point after it was assigned the note, OneWest Bank, F.S.B., executed an allonge to the note, endorsing it in blank. OneWest Bank, F.S.B., then transferred the note to the named plaintiff, which held it until transferring it back to OneWest Bank, F.S.B., around July, 2011.

Around February, 2014, OneWest Bank, F.S.B., converted from a federal savings bank into a national banking association and, thus, became OneWest Bank, N.A., the substitute plaintiff.

On August 3, 2015, which was slightly more than four years after this action was commenced, but before trial had begun, IMB HoldCo, LLC, the holding company of OneWest Bank, N.A., merged with CIT Group, the holding company of a bank called CIT Bank. As part of their holding companies' merger, OneWest Bank, N.A., and CIT Bank also merged. Specifically, "CIT Bank ... merged into OneWest Bank, N.A." (Emphasis added.) Although OneWest Bank, N.A., was the surviving entity of the merger with CIT Bank, OneWest Bank, N.A., as part of the merger, changed its name to "CIT Bank, N.A." "CIT Bank, N.A.," was never substituted for OneWest Bank, N.A., as the party plaintiff in this action.

Having outlined the relevant substantive facts, we now review the pertinent procedural history. The named plaintiff commenced this action in May, 2011. As previously explained, the named plaintiff was a subsidiary of OneWest Bank, N.A., which was substituted as the plaintiff in this action on September 22, 2014.

Prior to the substitution of OneWest Bank, N.A., for the named plaintiff, the defendants pleaded several special defenses. Relevant to this appeal is the defendants' special defense that the named plaintiff breached the implied covenant of good faith and fair dealing. The defendants also filed a counterclaim against the named plaintiff sounding in breach of the implied covenant of good faith and fair dealing. Although the named plaintiff was removed from this action as a plaintiff by virtue of a substitution, it still is a party to the action as a counterclaim defendant.

The case was tried to the court over the course of two days. At trial, the substitute plaintiff introduced the original note into evidence. Accompanying the note was an allonge specially endorsing the note to OneWest Bank, F.S.B., and an allonge wherein OneWest Bank, F.S.B., endorsed the note in blank. The substitute plaintiff also offered the testimony of Dion Kala, a vice president and foreclosure litigation manager employed by CIT Bank, N.A. In addition to working for CIT Bank, N.A., Kala also had been employed by OneWest Bank, N.A., as well as its predecessors in interest, including OneWest Bank, F.S.B., Financial Freedom Acquisition, LLC, and Financial Freedom Senior Funding Corporation. Kala provided testimony concerning the several assignments and corporate restructurings that eventually brought the note into the possession of CIT Bank, N.A.

In its memorandum of decision, the court concluded that the substitute plaintiff had established a prima facie case of foreclosure and that the defendants had failed to meet their burden of proof on their special defense and counterclaim. The defendants filed a motion for articulation, asking the trial court to identify which plaintiff the court found owns the decedent's loan. In denying that motion, the court stated: "The defendant[s] rais[e] a specious claim. The plaintiff is OneWest Bank, now known as CIT Bank, N.A., because of a legal name change." The court rendered a judgment of...