Ocwen Federal Bank, Fsb v. Charles

• Decision Date: 16 May 2006
• Docket Number: No. 23957, 24540.,23957, 24540.
• Citation: 898 A.2d 197,95 Conn.App. 315
• Court: Connecticut Court of Appeals
• Parties: OCWEN FEDERAL BANK, FSB v. Josue CHARLES, Sr., et al.

898 A.2d 197

95 Conn.App. 315

OCWEN FEDERAL BANK, FSB v. Josue CHARLES, Sr., et al.

No. 23957, 24540.

Appellate Court of Connecticut.

Argued January 3, 2006.

Decided May 16, 2006.

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Briget T. Cusack, for the appellants (defendants).

Nathalie Feola-Guerrieri, with whom, on the brief, was Daniel Shepro, Stratford, for the appellee (plaintiff).

SCHALLER, GRUENDEL and HARPER, Js.

SCHALLER, J.

These two appeals stem from the judgment of strict foreclosure rendered in favor of the plaintiff, Ocwen Federal Bank, FSB. On appeal, the defendants, Josue Charles, Sr., and Irene Charles, claim that the trial court improperly (1) failed to enforce a settlement agreement, (2) denied their motion to open the judgment on the ground that the plaintiff had engaged in bad faith settlement practices, (3) denied their right to a trial by jury, (4) rendered summary judgment on their counterclaim and (5) precluded their expert witness from testifying. We conclude that the defendants' claims relating to the foreclosure action are moot and must be dismissed. With respect to the claims pertaining to the counterclaim, we affirm the judgment of the trial court.

A recitation of the extensive factual and procedural history is necessary.¹ In December, 1990, the defendants executed a note secured by a mortgage deed² in the amount of $127,100 in favor of GMAC Mortgage Corporation of Pennsylvania. The note and mortgage deed were assigned several times.³ The plaintiff obtained the note and mortgage deed in June, 1999.

The plaintiff commenced a foreclosure action on December 2, 1999. The defendants proceeded pro se until May 7, 2001, and did not file their answer, special defenses, counterclaim, setoff and recoupment pleading until June 21, 2001. On July 11, 2001, the plaintiff filed a motion to sever the counterclaim from the foreclosure action. This motion was denied on August 8, 2001.

On April 18, 2002, the defendants filed an amended answer, special defenses and counterclaim. The defendants asserted four special defenses consisting of unclean hands, fraud, estoppel and unconscionability. They also pleaded a six count counterclaim alleging fraudulent misrepresentation, negligent misrepresentation, innocent misrepresentation, breach of the implied duty of good faith and fair dealing, violation of 15 U.S.C. § 1692g of the Fair Debt Collection Practices Act and violation of General Statutes § 42-110b et seq. of the Connecticut Unfair Trade Practices Act.

After a certificate of closed pleadings was filed, the defendants placed the case on the jury trial list. The plaintiff responded with a motion to strike the case from the jury trial list or, in the alternative, to sever the counterclaim and permit the foreclosure action to be tried to the court separately. The court denied the plaintiff's motion on July 10, 2002, noting that "there [was] no reason to reverse the August 8, 2001 decision denying the motion to sever."

On July 22, 2002, the court issued an amended scheduling order that required the defendants to disclose their expert witnesses by August 10, 2002, and to complete their depositions by September 12, 2002. On August 22, 2002, the defendants untimely disclosed Karen Brody, a physician, as an expert witness. The plaintiff filed a motion to preclude Brody from testifying at trial because the disclosure of her as an expert witness was done outside of the time frame set forth in the amended scheduling order.⁴ On September 9, 2002, the court granted the plaintiff's motion to preclude Brody as an expert witness.

On October 10, 2002, the defendants filed a motion to enforce a settlement agreement. The parties had attended a mediation before Judge Barry K. Stevens. The defendants claimed that a settlement had been articulated orally and that once it had been reduced to writing, it would be executed. The plaintiff obtained new counsel and successfully moved the court to vacate its order enforcing the settlement agreement. The basis for the plaintiff's argument was that its prior counsel lacked the authority to consummate the settlement agreement without the plaintiff's approval.

On November 4, 2002, the plaintiff again requested that the counterclaim be tried to the jury separately from the foreclosure action. The defendants objected and noted that the issue previously had been ruled on twice. The court stated that the defendants were not prepared with their exhibits and that the foreclosure action could be tried quickly. The defendants maintained their objection, but the court severed the foreclosure action from the counterclaim.

The foreclosure action was tried to the court on November 13, 2002. The court found that the plaintiff owned the note and that the defendants had defaulted on it. The court rendered judgment in favor of the plaintiff.⁵ The court further found the property's value to be $164,000 and the debt to be $124,202.18. The court awarded attorney's fees in the amount of $10,000 and interest in the amount of $30,056.20 from July 1, 1999. The defendants filed a request for a special finding of facts on which the judgment had been rendered. On November 22, 2002, the court filed its findings and ordered strict foreclosure with law days beginning on April 15, 2003. On February 20, 2003, the defendants filed an appeal, designated AC 23957, from the judgment of strict foreclosure.⁶

On December 11, 2002, the plaintiff filed a motion for judgment⁷ on the defendants' counterclaim. The plaintiff specifically argued that the essential allegations of the counterclaim were the same as those found in their special defenses, and therefore the doctrine of collateral estoppel precluded the defendants from prevailing. The defendants objected to the plaintiff's motion on January 24, 2003.

On May 19, 2003, the court issued its memorandum of decision. The court noted that each of the six counts of the counterclaim incorporated by reference the first twenty-nine paragraphs of the defendants' first special defense. The court then concluded: "[T]he issues underlying the plaintiff's complaint on the making, validity and enforcement of the note and mortgage necessarily were decided by the court upon the taking of evidence during a two day trial, from which special findings of fact were issued and judgment of strict foreclosure was entered. These issues were fully and fairly litigated in the foreclosure proceeding, and the decision on them was necessary to the judgment. In addition, the parties involved in the counterclaim were the same parties involved in the foreclosure action. Therefore, collateral estoppel applies." The court rendered judgment in favor of the plaintiff. The defendants then amended their appeal and challenged the court's decision in regard to the judgment on the counterclaim.

On June 3, 2003, the court denied the defendants' motion for an extension of time to appeal. On June 9, 2003, the defendants filed a motion to enforce a settlement agreement that they alleged had been reached on October 3, 2002, before Judge Stevens, or alternatively on May 29, 2003, during an appellate preargument conference. The defendants also filed a motion to open the judgment, to set aside the judgment, for a new trial and to enforce the settlement agreement. The court denied this motion on July 7, 2003.

Following our denial of the defendants' motion for review of the trial court's order vacating the automatic stay, the plaintiff, on July 30, 2003, filed a motion to set new law days. On August 7, 2003, the defendants filed a motion to dismiss the plaintiff's motion for new law days, arguing that they would be deprived of due process if the court set new law days while their appeal was pending. The court denied the defendants' motion to dismiss and granted the plaintiff's motion to set new law days on August 7, 2003. The defendants filed the appeal designated AC 24540 challenging this order.⁸

On March 24, 2004, in response to the plaintiff's motion, the court opened the judgment and rescheduled the law days. The court stated: "The first law day is for the owners of the equity, March 25, 2004. In the event they do not redeem, title shall become vested in the plaintiff on March 26, 2004." Both parties, in their briefs, have indicated that the defendants relinquished the subject property to the plaintiff on January 20, 2004, and the plaintiff indicated that the title to the subject property has vested in the plaintiff after the passing of the law days. The defendants do not dispute that title to the property vested in the plaintiff following the passing of the law days.⁹ Additional facts will be set forth as necessary.

I

Before we reach the merits of the defendants' appeal, we must consider whether any claims have been rendered moot as a result of the passing of the law days and the plaintiff's taking title to the subject property. The question of mootness implicates our subject matter jurisdiction. Connecticut Coalition Against Millstone v. Rocque, 267 Conn. 116, 125, 836 A.2d 414 (2003). Accordingly, we must address this threshold issue first.¹⁰

A review of the basic legal principles regarding mortgages and foreclosures will facilitate our discussion. "Connecticut follows the `title theory' of mortgages, which provides that on the execution of a mortgage on real property, the mortgagee holds legal title and the mortgagor holds equitable title to the property.... As the holder of equitable title, also called the equity of redemption, the mortgagor has the right to redeem the legal title on the performance of certain conditions contained within the mortgage instrument. ... The mortgagor continues to be regarded as the owner of the property during the term of the mortgage." (Citations omitted.) Sargent v. Smith, 78 Conn.App. 691, 695-96, 828 A.2d 620 (2003), rev'd on other grounds, 272 Conn. 722, 865 A.2d 1129 (2005); see also Ferrigno v. Cromwell Development Associates, 244 Conn. 189,...