JPMorgan Chase Bank, Nat'l Ass'n v. Syed

• Decision Date: 28 April 2020
• Docket Number: AC 41723
• Citation: 197 Conn.App. 129,231 A.3d 286
• Court: Connecticut Court of Appeals
• Parties: JPMORGAN CHASE BANK, NATIONAL ASSOCIATION v. Sonia SYED et al.

197 Conn.App. 129

231 A.3d 286

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION

v.Sonia SYED et al.

AC 41723

Appellate Court of Connecticut.

Argued January 9, 2020

Officially released April 28, 2020

John L. Radshaw III, for the appellant (named defendant).

Adam L. Avallone, for the appellee (second substitute plaintiff)

Lavine, Bright and Devlin, Js.

Opinion

BRIGHT, J.

In this foreclosure action, the defendant Sonia Syed¹ appeals from the judgment of strict foreclosure rendered by the trial court in favor of the second substitute plaintiff, Wilmington Savings Fund Society, FSB, doing business as Christiana Trust, as Trustee for Normandy Mortgage Loan Trust, Series 2017-1 (Wilmington). On appeal, the defendant claims that the trial court erroneously (1) granted the motion filed by the first substitute plaintiff, Christiana Trust, A Division of Wilmington Savings Fund Society, FSB as Trustee for Normandy Mortgage Loan Trust Series 2013-18 (Christiana Trust), for summary judgment as to liability, despite questions concerning whether the original plaintiff, JPMorgan Chase Bank, National Association (JPMorgan), was the holder of the note at the time it commenced this foreclosure action, (2) rejected the defendant's first and third special defenses when granting summary judgment as to liability, and (3) struck the defendant's fourth count of her amended counterclaim when it granted summary judgment as to liability. We affirm the judgment of the trial court.

The following facts and procedural history are relevant to our disposition of this appeal. The defendant is the borrower on a note and the mortgagor of a mortgage, which initially were executed in favor of Washington Mutual Bank, FA (Washington Mutual), on property located at 1200 Neipsic Road in Glastonbury (property). JPMorgan, as attorney in fact for the Federal Deposit Insurance Corporation, as receiver for Washington Mutual, assigned the mortgage to itself via an assignment dated April 17, 2013.

On May 17, 2013, JPMorgan commenced the present foreclosure action by service of process on the defendant. On December 2, 2014, JPMorgan filed a motion to substitute Christiana Trust as the first substitute plaintiff, which the court granted on December 18, 2014. On January 8, 2014, JPMorgan executed an assignment of mortgage to Christiana Trust. On March 12, 2015, the defendant filed an answer with eighteen affirmative defenses and a two count counterclaim. On May 5, 2015, the defendant filed a disclosure of defense, alleging that Christiana Trust was not the party entitled to collect the debt and enforce the mortgage.

On May 28, 2015, Christiana Trust filed a motion to strike the defendant's special defenses and counterclaim, which the court granted on July 13, 2015. On July 28, 2015, the defendant filed an amended answer, with seven special defenses, and, on September 9, 2015, she filed an amended counterclaim, in which she alleged four counts. On January 5, 2016, Christiana Trust filed a motion for summary judgment as to liability, which was opposed by the defendant on the grounds that she had viable special defenses and a counterclaim, and that the note, "which was endorsed in blank by [Washington Mutual] was endorsed falsely by an individual named Cynthia Riley, who was not who she said she was at the time of endorsement and/or was not an employee of [Washington Mutual] at the time of the endorsement, and/or did not actually sign the document and someone else signed her name or used a signature stamp on the endorsement."

On January 2, 2018, the court, in a thorough memorandum of decision, concluded that the defendant's special defenses and counterclaim did not create a triable issue as to the defendant's liability to Christiana Trust and that there was no dispute that JPMorgan was the holder of the note at the time it commenced this foreclosure action. Accordingly, the court granted Christiana Trust's motion for summary judgment as to liability. On January 26, 2018, Christiana Trust filed a motion for judgment of strict foreclosure.

On May 2, 2018, Christiana Trust filed a motion to substitute Wilmington as the second substitute plaintiff, which the court granted on May 14, 2018.² Also on May 14, 2018, the court rendered a judgment of strict foreclosure, with law days commencing on September 17, 2018. This appeal followed.

On appeal, the defendant claims that the court erred in granting Christiana Trust's motion for summary judgment as to liability. Specifically, the defendant claims that the trial court improperly granted summary judgment as to liability despite questions concerning whether JPMorgan was the holder of the note at the time that it commenced this foreclosure action, that it improperly rejected the defendant's first and third special defenses, and that it improperly struck the defendant's fourth count of her counterclaim. We disagree.

"The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. ... Our review of the trial court's decision to grant [a] motion for summary judgment is plenary." (Internal quotation marks omitted.) Misiti, LLC v. Travelers Property Casualty Co. of America , 132 Conn. App. 629, 637–38, 33 A.3d 783 (2011), aff'd, 308 Conn. 146, 61 A.3d 485 (2013).

"[T]o establish a prima facie case in a mortgage foreclosure action, the plaintiff must prove by a preponderance of the evidence that it is the owner of the note and mortgage, that the defendant mortgagor has defaulted on the note and that any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied. ... Thus, a court may properly grant summary judgment as to liability in a foreclosure action if the complaint and supporting affidavits establish an undisputed prima facie case and the defendant fails to assert any legally sufficient special defense." (Citations omitted; internal quotation marks omitted.) GMAC Mortgage , LLC v. Ford , 144 Conn. App. 165, 176, 73 A.3d 742 (2013).

I

The defendant claims that the court improperly rendered summary judgment despite the existence of a genuine issue of material fact regarding whether JPMorgan was the holder of the note at the time it commenced this foreclosure action. The defendant specifically argues that, due to an invalid endorsement of the note by Washington Mutual, JPMorgan and the subsequent substitute plaintiffs were not holders entitled to enforce the note.³ We are not persuaded.

"In Connecticut, one may enforce a note pursuant to the [Uniform Commercial Code (UCC) as adopted in General Statutes § 42a-1-101 et seq. ] .... General Statutes § 42a-3-301 provides in relevant part that a [p]erson entitled to enforce an instrument means ... the holder of the instrument .... When a note is endorsed in blank, the note is payable to the bearer of the note. ... A person in possession of a note endorsed in blank, is the valid holder of the note. ... Therefore , a party in possession of a note , endorsed in blank and thereby made payable to its bearer , is the valid holder of the note, and is entitled to enforce the note ....

"In RMS Residential Properties, LLC v. Miller , [303 Conn. 224, 32 A.3d 307 (2011), overruled on other grounds by J.E. Robert Co. v. Signature Properties, LLC , 309 Conn. 307, 71 A.3d 492 (2013) ], our Supreme Court stated that to enforce a note through foreclosure, a holder must demonstrate that it is the owner of the underlying debt. The holder of a note , however , is presumed to be the rightful owner of the underlying debt , and unless the party defending against the foreclosure action rebuts that presumption , the holder has standing to foreclose the mortgage. A holder only has to produce the note to establish that presumption . The production of the note establishes his case prima facie against the [defendant ] and he may rest there .... It [is ] for the defendant to set up and prove the facts [that ] limit or change the plaintiff's rights ." (Citations omitted; emphasis in original; internal quotation marks omitted.) U.S. Bank , National Assn . v. Fitzpatrick , 190 Conn. App. 773, 784–85, 212 A.3d 732, cert. denied, 333 Conn. 916, 217 A.3d 1 (2019).

The defendant attempts to rebut the presumption that JPMorgan, as the party in possession of the note, was the rightful owner of the debt and was therefore entitled to foreclose on the property securing it. She argues that the presumption of ownership only exists when the note is endorsed in blank and contends that, due to Washington Mutual's allegedly fraudulent or otherwise invalid endorsement, the requirement for the presumption to apply was not met. According to the defendant, JPMorgan's simple possession of the note was insufficient to establish its right to enforce the note. To support this claim, the defendant relies on the fact that the endorsement by Washington Mutual was made using the name and signature stamp of Cynthia Riley, a former employee of the bank who was no longer employed at the time of the endorsement.⁴ The defendant argues that because the endorsement bore the signature of an individual who no longer had the capacity to make endorsements on behalf of Washington Mutual, the note was never properly negotiated to JPMorgan and, therefore, remained a specially endorsed note payable only to Washington Mutual, rather than a blank endorsement payable to the bearer. The defendant contends that, consequently, neither JPMorgan nor any of the subsequent substitute plaintiffs could have been holders entitled to enforce the note.

Wilmington argues that Riley's employment status was immaterial to the validity of the signature and, therefore, the endorsement was unaffected by the fact that it was made using Riley's signature stamp even though she was no longer employed by Washington Mutual. We agree with Wilmington.

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