U.S. Bank v. Fitzpatrick

• Decision Date: 25 June 2019
• Docket Number: AC 41513
• Citation: 212 A.3d 732,190 Conn.App. 773
• Court: Connecticut Court of Appeals
• Parties: U.S. BANK, NATIONAL ASSOCIATION, Trustee v. Christopher M. FITZPATRICK et al.

190 Conn.App. 773

212 A.3d 732

U.S. BANK, NATIONAL ASSOCIATION, Trustee

v.Christopher M. FITZPATRICK et al.

AC 41513

Appellate Court of Connecticut.

Argued January 30, 2019

Officially released June 25, 2019

Ryan P. Driscoll, with whom, on the brief, was Richard J. Buturla, Milford, for the appellant (named defendant).

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

DiPentima, C.J., and Alvord and Eveleigh, Js.

DiPENTIMA, C.J.

The defendant Christopher M. Fitzpatrick ¹ appeals from the denial of his motion to dismiss and from the summary judgment rendered in favor of the plaintiff, U.S. Bank, National Association, as trustee for MASTR 2007-2. On appeal, the defendant claims that the court improperly (1) denied his motion to dismiss by concluding that the plaintiff had standing to commence and maintain its foreclosure action and (2) granted the plaintiff's motion for summary judgment by determining that no genuine issues of material fact existed with respect to the plaintiff's standing and his special defenses of laches and unclean hands. We disagree and, accordingly, affirm the denial of the defendant's motion to dismiss and the summary judgment rendered in favor of the plaintiff.

The following detailed recitation of the facts and procedural history is necessary for the resolution of the defendant's appeal. The origin of the present case lies in a prior foreclosure action commenced on October 21, 2009, by SunTrust Mortgage, Inc. (SunTrust), against the defendant concerning property located at 48 Second Avenue in Stratford. On June 14, 2010, SunTrust filed a motion to substitute the plaintiff in the present case as the plaintiff, stating that the subject mortgage deed and note had been assigned to the plaintiff. The court granted this motion on July 6, 2010. An unsuccessful mediation effort ensued.

In the SunTrust action, on September 27, 2013, the court, Tyma , J. , granted the plaintiff's motion for summary judgment as to liability only. SunTrust Mortgage, Inc. v. Fitzpatrick , Superior Court, judicial district of Fairfield, Docket No. CV-09-6004428-S, 2013 WL 5663600 (September 27, 2013). First, the court noted that the plaintiff had presented evidence, by way of an affidavit, a copy of the note and two allonges, that SunTrust had been the proper party to initiate the foreclosure action and that the plaintiff was the current owner of the debt and, thus, the proper party to maintain the foreclosure action. Id. Additionally, the court concluded: "Having failed to present any evidence rebutting the presumption that SunTrust was the rightful owner of the debt at the time that it commenced the foreclosure action, and that the ... plaintiff is presently the rightful owner, the defendant had failed to satisfy his burden of providing any evidentiary foundation to demonstrate the existence of a genuine issue of material fact concerning the note holder." Id.

On June 5, 2014, the plaintiff moved for a judgment of strict foreclosure, and the defendant filed an objection fifteen days later. On June 26, 2014, the court, Bellis, J. , issued an order dismissing the action.² The plaintiff unsuccessfully moved to open the judgment of dismissal.

The plaintiff subsequently commenced the present action in May, 2016. In its complaint, the plaintiff alleged that the defendant and Comp-U-Fund Mortgage Corporation (Comp-U-Fund) had executed a promissory note in the amount of $580,000 on August 16, 2007. The note was secured by a mortgage on the defendant's property, located at 48 Second Avenue in Stratford, in favor of Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for Comp-U-Fund.³ The mortgage was executed on August 16, 2007, and recorded on the Stratford land records on August 20, 2007.

The plaintiff further alleged that on or before May 26, 2015, it became, and at all times thereafter has been, the party entitled to collect the debt evidenced by the August 16, 2007 note. It further alleged that as a result of the defendant's nonpayment of the monthly installment of principal and interest starting on May 1, 2009, the note was in default. The plaintiff accelerated the balance on the note, declaring it to be due in full, and sought to foreclose on the mortgage.

After an unsuccessful mediation, the defendant filed an answer and counterclaim on March 2, 2017.⁴ On December 22, 2017, the plaintiff moved for summary judgment as to liability, attaching a supporting affidavit, documentary evidence and a memorandum of law to its motion. In its memorandum of law, the plaintiff argued that it had established a prima facie case⁵ of the defendant's liability in this mortgage foreclosure action. Additionally, the plaintiff directed the court to the attached mortgage, note, assignments of the mortgage and affidavit of Shaundra Hunt, an officer employed by SunTrust. The plaintiff claimed that these documents established that no genuine issue of material fact remained, and, therefore, it was entitled to summary judgment as to the liability with respect to its foreclosure complaint.

On February 5, 2018, the defendant filed an objection to the plaintiff's motion for summary judgment. Specifically, he argued that genuine issues of material fact existed as to whether his special defenses of laches and unclean hands, as set forth in his amended answer, barred the plaintiff's claim. With respect to the former, the defendant argued that "[a] genuine issue of material fact exists as to whether there was an inexcusable delay and whether that delay prejudiced [the defendant] by unnecessarily increasing his alleged debt and/or by decreasing the value of his collateral through the passage of time." Specifically, the defendant contended that six years had elapsed from the claimed nonpayment until the commencement of the present action. With respect to the unclean hands defense, the defendant argued: "Here, given the considerable passage of time between the alleged default and the [p]laintiff's commencement of the foreclosure, there are genuine issues of material fact as to whether the [plaintiff's] ‘sitting on its rights’ for many years has been fair, equitable, and honest."

Before the trial court decided the plaintiff's motion for summary judgment, the defendant initiated, on two fronts, an attack on the plaintiff's standing to bring its foreclosure action. First, on March 2, 2018, he filed a motion to dismiss, pursuant to Practice Book § 10-30,⁶ arguing that the plaintiff lacked standing. In his accompanying memorandum of law, the defendant asserted that the court lacked subject matter jurisdiction because the plaintiff was not a holder of the note or the mortgage. In support thereof, the defendant argued that he had executed the note with Comp-U-Fund on August 16, 2007. The defendant claimed that Comp-U-Fund transferred the note to SunTrust via the special endorsement⁷ in the first allonge attached to the note.⁸ A second allonge to the note was specially endorsed by SunTrust to the plaintiff; however, this document was stamped "VOID." The defendant argued, therefore, that the note had not been transferred to the plaintiff, and, therefore, it lacked standing to foreclose on the property.

The defendant also challenged the plaintiff's standing in a March 2, 2018 supplemental objection to the plaintiff's motion for summary judgment wherein he repeated the legal argument set forth in his memorandum of law in support of his motion to dismiss. Specifically, the defendant asserted that the note had been transferred from Comp-U-Fund to SunTrust via the special endorsement in the first allonge. The second allonge, which would have transferred the note from SunTrust to the plaintiff, was stamped "VOID" and therefore was ineffective. In conclusion, the defendant stated: "The evidence produced to date shows that there is a genuine issue of material fact as to whether [the plaintiff] is entitled to enforce the note. Therefore, [the plaintiff's] motion for summary judgment should be denied."

On March 2, 2018, the plaintiff filed an objection to the defendant's motion to dismiss. It emphasized that page three of the note contained an endorsement in blank, executed by SunTrust, and, therefore, the note was payable to the bearer.⁹ See, e.g., Equity One, Inc. v. Shivers , 310 Conn. 119, 126, 74 A.3d 1225 (2013). Thus, the plaintiff maintained that it did not need to be in possession of a specifically endorsed note to pursue this foreclosure action. It also argued that the defendant had offered only speculation rather than proof, in challenging the plaintiff's standing.

The court conducted a hearing on March 5, 2018, during which it first addressed the defendant's motion to dismiss. The defendant repeated its argument that the plaintiff lacked standing, stating that the note was not a negotiable instrument payable to the bearer because the first allonge contained the SunTrust specific endorsement. The plaintiff's counsel responded that he was in possession of the original note, which contained a blank endorsement¹⁰ executed by SunTrust and the allonges. The court examined the original note and concluded that it contained a blank endorsement, making it a bearer instrument. After hearing further argument, the court denied the defendant's motion to dismiss.¹¹

The court then turned to the plaintiff's motion for summary judgment. The plaintiff's counsel argued that the court, in denying the defendant's motion to dismiss, had considered and rejected the standing argument raised in the defendant's supplemental objection.¹² The plaintiff's counsel then turned to the special defenses of laches and unclean hands. He argued that the defendant had failed to present any evidence in support of his special defenses. The defendant's counsel countered that genuine issues of material fact existed as to laches and unclean hands, and, therefore, the court should deny the motion for summary judgment.

On March 14, 2018, the court issued a memorandum of decision granting the...