Jpmorgan Chase Bank, Nat'l Ass'n v. Virgulak

• Decision Date: 17 September 2019
• Docket Number: AC 40479
• Citation: 218 A.3d 596
• Court: Connecticut Court of Appeals
• Parties: JPMORGAN CHASE BANK, NATIONAL ASSOCIATION et al. v. Robert J. VIRGULAK et al.

218 A.3d 596

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION et al.

v.Robert J. VIRGULAK et al.

AC 40479

Appellate Court of Connecticut.

Argued January 14, 2019

Officially released September 17, 2019

Brian D. Rich, Hartford, with whom, on the brief, were Laura Pascale Zaino, Hartford, and Peter R. Meggers, for the appellant (substitute plaintiff).

Alexander H. Schwartz, Southport, for the appellee (defendant Theresa Virgulak).

Sheldon, Keller and Bear, Js.^*

KELLER, J.

In this foreclosure action, the plaintiff, Manufacturers and Traders Trust Company, also known as M & T Bank (M & T Bank),¹ appeals from the judgment of the trial court in favor of the defendant Theresa Virgulak.² The plaintiff claims that the trial court improperly (1) failed to exercise its discretion in considering the plaintiff's foreclosure claim as a stand-alone claim independent from its other causes of action and failed to grant the plaintiff the equitable remedy of foreclosure, (2) declined to reform the mortgage deed, (3) denied its motion to amend its responses to the defendant's requests for admission, (4) concluded that its admissions limited its recovery under its unjust enrichment count, and (5) denied its motion for reargument. We disagree and affirm the judgment of the trial court.

The following procedural history and facts, which either are undisputed in the record or were found by the trial court in its memorandum of decision, are relevant to our resolution of this appeal. On or about December 11, 2006, Robert J. Virgulak (Robert), the defendant's husband, executed and delivered to JPMorgan Chase Bank, National Association (JPMorgan Chase) a note for a loan in the principal amount of $533,000 (note). The defendant was not a signatory on the note. On the same date, the defendant signed a document titled "Open-End Mortgage Deed" (mortgage) for residential property she owns at 14 Bayne Court in Norwalk (property). The mortgage recited that it was given to secure a note dated December 11, 2006, and recited that the note was signed by the defendant as "Borrower" in the amount of $533,000. The term "Borrower" is defined in the mortgage deed as "THERESA VIRGULAK, MARRIED." The mortgage did not reference Robert. The defendant did not sign any guarantee.

On or about February 1, 2010, after JPMorgan Chase failed to receive payments in accordance with the terms of the note, the note went into default and JPMorgan Chase elected to accelerate the balance due. On January 3, 2011, notices of default were sent to both the defendant and Robert and, in February, 2013, JPMorgan Chase commenced this foreclosure action against the couple. The action sought to foreclose the mortgage that JPMorgan Chase claimed to have on the property. In September, 2014, JPMorgan Chase withdrew the foreclosure action against Robert, as he had filed for bankruptcy and been granted an unconditional discharge of the debt.

Thereafter, JPMorgan Chase filed a motion to substitute party plaintiff, stating that it had assigned the subject mortgage deed and note to Hudson City Savings Bank (Hudson). This motion was granted by the court on August 18, 2015.

On September 25, 2015, the defendant filed a motion for summary judgment arguing that Hudson was precluded from foreclosing the mortgage. In particular, she argued that she had not defaulted under the terms of the note because she was never a party to a promissory note with the plaintiff or any of its predecessors-in-interest. The motion was denied by the court on January 14, 2016, on the basis of the court's determination that an issue of material fact remained with respect to whether the mortgage deed provided reasonable notice to third parties that the defendant was securing Robert's obligation.

On March 18, 2016, the defendant served Hudson with requests for admission. On May 6, 2016, Hudson filed notice with the court that it had responded to the defendant's requests.

On August 9, 2016, the plaintiff, M & T Bank, into which Hudson had merged, filed a motion to substitute itself as the party plaintiff and requested leave to amend the complaint in order to add two additional causes of action. The court granted the motion on August 15, 2016. In the first count of the plaintiff's three count amended complaint, the plaintiff sought a judgment of foreclosure against the defendants. In the second count, it sought equitable reformation of the note in order to include the defendant as a borrower on the note.³ In the third count, the plaintiff pleaded that the defendant had been unjustly enriched because (1) the proceeds of the note were used to pay off loans which she was obligated to pay and (2) she had free use of the subject property without satisfying the terms of the mortgage, which she had executed.

On December 1, 2016, the defendant filed an amended answer denying the essential allegations of the amended complaint regarding her liability for the debt and the claim of unjust enrichment. She also set forth eight special defenses.

On December 5, 2016, the defendant filed a motion in limine seeking to have the trial court order that all of the plaintiff's earlier admissions in response to her March 18, 2016 requests for admissions "be conclusively established at trial." The trial court indicated subsequently that it would rule on the motion in limine during the course of trial "when a context develop[ed] that require[d] [its] ruling."

The parties tried the case before the court on December 6, 2016. The plaintiff presented three witnesses, including Wilkin Rodriguez, a mortgage banking research officer at JPMorgan Chase, the defendant, and Robert. After the plaintiff rested, the defendant did not present additional evidence; she relied instead on the testimony and exhibits introduced during cross-examination of the witnesses called by the plaintiff. The next day, the court met with the parties to discuss the issues it believed to be germane to its decision and set a briefing schedule. As noted in the court's memorandum of decision, the court requested that the parties address the following issues in their briefs: (1) "Is the plaintiff entitled to foreclose the mortgage against [the defendant's] property without first reforming the mortgage note to make her a maker or guarantor of the note and/ or reforming the mortgage deed to alter the description of the debt secured by the mortgage?"; (2) "If the answer to #1 is negative, is there sufficient evidence to support equitable reformation of the mortgage note and/or deed?"; (3) "If the answer[s] to both #1 and #2 are negative, is the plaintiff entitled to recover, by way of a claim of unjust enrichment, any of the following: [use and occupancy of the property, property taxes paid by the plaintiff for the property, or property insurance premiums paid by the plaintiff for coverage of the property?]"; (4) "If the plaintiff is otherwise entitled to recover under #1, #2, or #3, is such recovery precluded by [the] plaintiff's responses to the requests for admissions ... which included the admission that the defendant did not owe any money to the plaintiff?"; (5) "If [the] plaintiff is otherwise entitled to recover under #1, #2, or #3, is there adequate evidence to support any of the defendant's special defenses?"

On December 21, 2016, approximately two weeks after the conclusion of the trial, the plaintiff filed a motion seeking to withdraw and amend its responses to the requests for admissions that it had previously provided to the defendant. On December 27, 2016, the court entered orders stating that it would not entertain arguments on the plaintiff's motion until all of the posttrial briefs it had ordered had been filed by the parties.

On April 12, 2017, the court issued its memorandum of decision. The court found in favor of the defendant on the foreclosure and reformation counts of the complaint. In particular, the court stated, among other things, that "[t]he court finds that the plaintiff has not sustained its burden of proving, by clear and convincing evidence, that it [was] entitled to the equitable remedy of reformation of the mortgage deed .... Accordingly, the court finds the issues on the second count for [the defendant] and against the plaintiff. Since the plaintiff failed to present any authority to the court which would allow the plaintiff to prevail on the first count [foreclosure claim] in the absence of reformation of the mortgage deed, the court [also] finds the issues on the first count for [the defendant] and against the plaintiff."

The court then proceeded to address the plaintiff's unjust enrichment claim, noting that the defendant had been benefitted in several respects as a result of the loan that Robert had obtained, but determining that, prior to ruling on the unjust enrichment claim, it needed to determine whether the plaintiff was entitled to withdraw and amend its responses to the defendant's requests for admissions. The court ultimately found that, pursuant to Practice Book § 13-24 (a), a motion to withdraw and amend responses to requests for admissions could not be filed following trial, as was done here, because § 13-24 (a) required the court to find (1) that "the presentation of the merits of the action will be subserved thereby" and (2) the party who obtained the admission will not be prejudiced "in maintaining his or her action or defense on the merits." The court concluded that it was unable to find "that ‘the presentation of the merits of the action will be subserved’ by the granting of the plaintiff's motion" after trial. It further found that it would be "hard to imagine how the defendant would not be prejudiced at the time the case was tried because defense counsel had every reason to believe that the plaintiff's admissions were both operative and binding." The court, therefore, denied the plaintiff's motion to withdraw and amend, which it had filed on December 21, 2016.⁴ The court ultimately determined that the plaintiff's responses to the requests for...