Rms Residential Props., LLC v. Miller

Citation303 Conn. 224,32 A.3d 307,76 UCC Rep.Serv.2d 295
Decision Date13 December 2011
Docket NumberNo. 18746.,18746.
CourtSupreme Court of Connecticut

303 Conn. 224
32 A.3d 307
76 UCC Rep.Serv.2d 295

Anna M. MILLER et al.

No. 18746.

Supreme Court of Connecticut.

Argued Sept. 19, 2011.Decided Dec. 13, 2011.

[32 A.3d 310]

Christopher G. Brown, for the appellant (named defendant).

Jeffrey M. Knickerbocker, for the appellee (plaintiff).

Robert M. Brochin, pro hac vice, with whom, on the brief, was Michael A. Leone, New Haven, for the appellee (intervening plaintiff).ROGERS, C.J., and NORCOTT, PALMER, ZARELLA, McLACHLAN and EVELEIGH, Js.*EVELEIGH, J.

[303 Conn. 226] The principal issue in this appeal is whether General Statutes § 49–17 1 confers

[32 A.3d 311]

standing on a holder of a promissory note to foreclose a mortgage. The named defendant, Anna M. Miller,2 appeals 3 from the judgment of foreclosure by sale rendered by the trial court following the granting of a motion for summary judgment in favor of the plaintiff, RMS Residential Properties, LLC (RMS).4 On appeal, the defendant contends that RMS lacked standing to commence the foreclosure action because it was not the owner of the promissory note at the time it commenced the foreclosure action and there is no statutory authority that confers standing on a mere holder of a note to foreclose a mortgage. Accordingly, the defendant further claims that the trial court improperly concluded that there was no genuine issue as to any material fact and that RMS was entitled to judgment of foreclosure by sale as a matter of law. The defendant next contends that (1) the mortgage was void, ab initio, and (2) that the court improperly relied upon a fatally infirm affidavit. In response, the plaintiffs, [303 Conn. 227] RMS and the intervening plaintiff, Mortgage Electronic Registration Systems, Inc. (MERS), contend that because possession of a note raises a rebuttable presumption that a holder of a note is the owner of the debt, § 49–17 may confer standing to foreclose a mortgage on a holder of a note, and that the mortgage was not void, ab initio, nor the affidavit fatally infirm. We agree with the plaintiffs. Accordingly, we affirm the judgment of the trial court.

“Because this appeal arises from the granting of summary judgment in favor of the [plaintiff], our review proceeds from a view of the facts in the light most favorable to the [defendant].” Gupta v. New Britain General Hospital, 239 Conn. 574, 576, 687 A.2d 111 (1996). The record reveals the following facts and procedural history. The defendant executed a promissory note in the principal amount of $637,500 to Finance America, LLC. As security for the note, the defendant conveyed by way of mortgage deed her interest in real property located at 32 Overshore Drive in the town of Madison to MERS, as nominee for Finance America, LLC. The defendant failed to make even a single mortgage payment and, thus, the balance due on her promissory note was accelerated. The defendant's mortgage was thereafter assigned to RMS, and the assignment was recorded in the town of Madison land records. RMS became the holder of the note prior to the commencement of the present foreclosure action, which was commenced by service of the summons and complaint. Thereafter, the defendant filed an answer, special defenses and a counterclaim. RMS next filed the affidavit of Thomas Gilmore, vice president

[32 A.3d 312]

with Specialized Loan Servicing, LLC, attorney in fact of RMS, alleging that, “prior to the commencement of this action, [RMS], through its attorney ... became the holder of the note.” 5 The affidavit accompanied a motion for summary[303 Conn. 228] judgment seeking judgment as to the complaint and the defendant's counterclaim. The defendant filed a cross motion for summary judgment, arguing that the mortgage was void ab initio, and a motion to dismiss, claiming that even if the mortgage was not void, RMS lacked standing to institute the foreclosure action because (a) it was not the rightful owner of the note at the time the action was commenced, and (b) the Gilmore affidavit was fatally infirm. Subsequently, the trial court denied the motions for summary judgment filed by RMS and the defendant, as well as the defendant's motion to dismiss. Thereafter, RMS moved to reargue the denial of its motion for summary judgment. The trial court granted the motion to reargue, and after a hearing, granted RMS' motion for summary judgment and thereafter rendered judgment of foreclosure by sale. This appeal followed.


We begin with the defendant's claim that RMS lacked standing to commence this foreclosure action because it presents a question as to the trial court's subject matter jurisdiction. See, e.g., New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 511, 518, 970 A.2d 583 (2009). The defendant specifically argues that even if RMS' affidavit is admissible and the mortgage was not void ab initio, RMS did not have standing to bring this foreclosure action because it did not own the underlying debt when it commenced the action and no statutory authority confers standing to foreclose on a mere holder of the note. In response, the plaintiffs argue that a holder of the note is presumed to be the owner of the debt, and unless the defendant rebuts that presumption, a holder of the note is entitled to foreclose [303 Conn. 229] the mortgage. We conclude that RMS had standing to commence this action.

“Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy.” (Internal quotation marks omitted.) Bysiewicz v. Dinardo, 298 Conn. 748, 758, 6 A.3d 726 (2010). “Standing is established by showing that the party claiming it is authorized by statute to bring suit or is classically aggrieved.” (Internal quotation marks omitted.) St. Paul Travelers Cos. v. Kuehl, 299 Conn. 800, 809, 12 A.3d 852 (2011). “Statutory aggrievement exists by legislative fiat, not by judicial analysis of the particular facts of the case. In other words, in cases of statutory aggrievement, particular legislation grants standing to those who claim injury to an interest protected by that legislation.” (Internal quotation marks omitted.) Andross v. West Hartford, 285 Conn. 309, 322, 939 A.2d 1146 (2008). “Where a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause.” (Internal quotation marks omitted.) Monroe v. Horwitch, 215 Conn. 469, 473, 576 A.2d 1280 (1990). “We

[32 A.3d 313]

have long held that because [a] determination regarding a trial court's subject matter jurisdiction is a question of law, our review is plenary.” (Internal quotation marks omitted.) State v. Tabone, 301 Conn. 708, 713–14, 23 A.3d 689 (2011).

Whether § 49–17 provides a holder of a note secured by a mortgage with standing to bring a foreclosure action is an issue of first impression for this court. The Appellate Court has, however, consistently answered this question in the affirmative. See, e.g., HSBC Bank USA, N.A. v. Navin, 129 Conn.App. 707, 22 A.3d 647 (2011). We agree. Section 49–17 permits the “person [303 Conn. 230] entitled to receive the money secured” by a mortgage to foreclose on the mortgage, even when the mortgage has not yet been assigned to him. The defendant contends that only the owner of the debt, not a mere holder of the note, is entitled to foreclose on a mortgage. The plaintiffs agree, but further contend that a holder of the note is presumed to be the owner of the debt, and unless the defendant rebuts that presumption, a holder of the note is entitled to foreclose the mortgage. We agree with the plaintiffs.

Section 49–17 codifies the well established common-law principle that the mortgage follows the note, pursuant to which only the rightful owner of the note has the right to enforce the mortgage. See New Milford Savings Bank v. Jajer, 244 Conn. 251, 266, 708 A.2d 1378 (1998); Restatement (Third), Property, Mortgages § 5.4, p. 380 (1997). Our legislature, by adopting § 49–17, created a statutory right for the rightful owner of a note to foreclose on real property regardless of whether the mortgage has been assigned to him. See, e.g., HSBC Bank USA, N.A. v. Navin, supra, 129 Conn.App. at 711, 22 A.3d 647; Chase Home Finance, LLC v. Fequiere, 119 Conn.App. 570, 576–77, 989 A.2d 606, cert. denied, 295 Conn. 922, 991 A.2d 564 (2010); Bankers Trust Co. of California, N.A. v. Vaneck, 95 Conn.App. 390, 391, 899 A.2d 41, cert. denied, 279 Conn. 908, 901 A.2d 1225 (2006); Fleet National Bank v. Nazareth, 75 Conn.App. 791, 795, 818 A.2d 69 (2003).

Although the defendant challenges the existence of a mortgage on her property; see part II B of this opinion; she also challenges the application of § 49–17 to RMS, a mere holder of the promissory note. The defendant contends that RMS' affidavit amounts to an admission that it is not the rightful owner of the underlying debt and, as a matter of law, a mere holder of the note lacks standing to foreclose unless that holder is also the owner of the underlying debt. We disagree. RMS' [303 Conn. 231] standing to enforce the promissory note is provided by the Uniform Commercial Code,6 pursuant to which only a holder of an instrument, or someone who has the rights of a holder, is a “ ‘[p]erson entitled to enforce’ an instrument....” General Statutes § 42a–3–301.7 A holder is the entity, or person, in possession of the instrument if the instrument is payable to the bearer. General Statutes § 42a–1–201(b)(21)(A). An instrument endorsed in blank “becomes payable to bearer and may be negotiated by transfer of possession

[32 A.3d 314]

alone....” General Statutes § 42a–3–205 (b). In the present matter, Finance America, LLC, endorsed the promissory note in blank. Accordingly, “[RMS], by way of its possession of an instrument payable...

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