New Century Mortgage Corp. v. Reynolds, No. CV 05 4002848 (CT 1/27/2006), CV 05 4002848

• Decision Date: 27 January 2006
• Docket Number: No. CV 05 4002848,CV 05 4002848
• Court: Connecticut Supreme Court
• Parties: New Century Mortgage Corp. v. Gary F. Reynolds et al. Opinion No.: 91997

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Unpublished Opinion

New Century Mortgage Corp. v. Gary F. Reynolds et al. Opinion No.: 91997

No. CV 05 4002848

Superior Court of Connecticut

Judicial District of Litchfield at Litchfield

January 27, 2006

MEMORANDUM OF DECISION

JOHN W. PICKARD, JUDGE.

This is a motion to strike four special defenses which have been filed in this mortgage foreclosure action. For the reasons given below, the motion to strike must be granted as to the first and fourth special defenses, and denied as to the second and third special defenses.

The plaintiff, New Century Mortgage Corporation, alleges that the defendants, Gary R. Reynolds and Wendy A. Reynolds, owned real estate, known as 317-19 W. Lake Street ("property"), located in Winchester, Connecticut. The defendants executed and delivered a note to The Anyloan Company ("Anyloan") for a loan in the original principal sum of $132,600 on or about November 14, 2003. To secure the note, the defendants executed and delivered to Anyloan a mortgage on the property. This mortgage was dated November 14, 2003, and was recorded on November 19, 2003, in the Winchester land records. Anyloan later assigned this mortgage to the plaintiff by an assignment of mortgage, which was dated November 21, 2003, and recorded on April 25, 2005, in the Winchester land records. The plaintiff is the owner and holder of both the note and mortgage.

The plaintiff alleges that the defendants defaulted on the note and although the plaintiff gave the defendants written notice of the default as per the note and mortgage, the defendants did not cure the default. The plaintiff "has elected to accelerate the balance due on said Note, to declare said Note to be due in full and to foreclose the Mortgage securing said Note."

On August 2, 2005, the plaintiff filed a motion for a judgment of strict foreclosure. In its preliminary statement of debt, the plaintiff claimed the principal balance of $131,198.50 and "accrued interest thereon from March 1, 2005, plus late charges, escrow advances for taxes and insurance, counsel fees and court costs."

The defendants have filed four amended special defenses. The plaintiff's motion to strike each special defense will be discussed separately after a brief statement of the applicable legal principles.

"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." (Internal quotation marks omitted.) Louis Gherlone Excavating, Inc. v. McLean Construction Co., 88 Conn.App. 775, 781, 871 A.2d 1057, cert. granted in part, 274 Conn. 909, 876 A.2d 1201 (2005). "The fundamental purpose of a special defense, like other pleadings, is to apprise the court and opposing counsel of the issues to be tried, so that basic issues are not concealed until the trial is underway." (Internal quotation marks omitted.) Almada v. Wausau Business Ins. Co., 274 Conn. 449, 456, 876 A.2d 535 (2005). "Generally, in any affirmative or special defense, the burden of proof rests with the defendant." Lumbermens Mutual Casualty Co. v. Scully, 3 Conn.App. 240, 245 n.5, 486 A.2d 1141 (1985).

"A party wanting to contest the legal sufficiency of a special defense may do so by filing a motion to strike . . . In ruling on a motion to strike, the court must accept as true the facts alleged in the special defenses and construe them in the manner most favorable to sustaining their legal sufficiency." (Citations omitted; internal quotation marks omitted.) Barasso v. Rear Still Hill Road, LLC, 64 Conn.App. 9, 13, 779 A.2d 198 (2001).

"A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Ventres v. Goodspeed Airport, LLC, 275 Conn. 105, 154, 881 A.2d 937 (2005). "A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Emphasis in original; internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).

First Special Defense

In the first special defense, the defendants allege that the plaintiff has alleged that the mortgage was recorded on November 9, 2003, a date five days prior to its signing. Thus, the defendants allege that "[a]n unsigned mortgage is invalid as a matter of law." Both parties agree that there was typographical error in the original complaint which has now been corrected. In their memorandum of law, the defendants concede that this court may strike this special defense. Therefore, the motion to strike the first special defense is granted.

Second Special Defense

The defendants' second special defense alleges that the plaintiff failed to provide the defendants with written notice of its intent to accelerate the mortgage despite the fact that the mortgage deed obligated the plaintiff to provide the defendants with written notice "of its intention to accelerate the mortgage prior to so doing."

The plaintiff first moves to strike the second special defense on the grounds that this special defense is merely a legal conclusion unsupported by fact and "[i]t fails to show that the Plaintiff has no cause of action because it does not address the making, validity, or enforcement of the mortgage but rather the conduct of the mortgagee subsequent to the Defendants' default." This first claim must be rejected because the defense is more than a mere legal conclusion, and, furthermore, if the plaintiff wanted more specific allegations of fact, it could have filed a request to revise to obtain these allegations. See Bristol Savings Bank v. EFA Acceptance Corp., Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. CV 91 0515249 (June 1, 1993, Aurigemma, J.).

The plaintiff's further argument that this special defense is not legally sufficient as "it fails to address the making, validity or enforcement of the note and mortgage," presents an issue on which there appears to be limited appellate authority and a split of Superior Court authority. A brief review of the available appellate authority is necessary before turning to the Superior Court cases.

"Notices 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." (Internal quotation marks omitted.) Webster Bank v. Oakley, 265 Conn. 539, 547, 830 A.2d 139 (2003), cert. denied, 541 U.S. 903, 124 S. Ct. 1603, 158 L.Ed.2d 244 (2004).

In Northeast Savings, F.A. v. Scherban, 47 Conn.App. 225, 226, 702 A.2d 659 (1997), cert. denied, 244 Conn. 907, 714 A.2d 2 (1998), the defendants mortgagors appealed from the trial court's judgment of strict foreclosure in favor of the plaintiff mortgagee. In that case, the plaintiff notified the defendants by letter "that the [promissory] note was in default and that failure to cure the deficiency within thirty days might result in the acceleration of the debt." Id., 227. The plaintiff sent the defendants a second letter informing them that the note was still in default and that the defendants had thirty days to cure the default. Id. After the second letter was sent, the defendants were again informed "that their account was in default and that, unless they remitted the full amount past due by August 2, 1993, foreclosure proceedings would commence." Id. The plaintiff later commenced a foreclosure action. Id.

On appeal, the defendants claimed that the plaintiff did not give the defendants adequate notice of the debt's acceleration. Id., 226-27. The defendants claimed that because the plaintiff did not provide them with proper notice, "a condition precedent to a foreclosure action"; id., 227; the foreclosure judgment was void. Id.

The Appellate Court examined the operative agreement between the plaintiff and the defendants, which provided in relevant part: "[T]he lender shall give notice to borrower prior to acceleration . . . which shall specify the default, the action required to cure the default, a date not less than thirty days within which to cure the default and that failure to cure the default may result in acceleration . . ." (Internal quotation marks omitted.) Id., 227-28.

The Appellate Court stated that "[t]he use of 'shall' in the note creates a condition precedent that must be satisfied prior to foreclosure. See Citicorp Mortgage, Inc. v. Porto, 41 Conn.App. 598, 602, 677 A.2d 10 (1996)." Id., 228. The Appellate Court further stated that "[t]he condition precedent under the note is the notice of the default, and it is clear that the defendants were timely notified of the default." Id. The Appellate Court also stated: "[T]he first notice of default stated that failure to cure might result in an acceleration of the debt, language similar to that contained within the note itself. We conclude that the note did not require that notice regarding the acceleration of the debt be a document separate from the notice of default.

"We further conclude that the notice of default satisfied the notice requirement contained in the note because it notified the defendants of the default and the possibility of acceleration. The note provision required only that the plaintiff give notice of the default and notice that failure to cure the default ' may result in acceleration.' " Id. Therefore, the Appellate Court held that the contract provisions pertaining to notice were satisfied and therefore, the judgment of...