Superior Court of Connecticut, Judicial District of Fairfield, Bridgeport
MEMORANDUM OF DECISION
Michael Hartmere, Judge Trial Referee.
On February 18, 2010, the plaintiff, Naugatuck Valley Savings and Loan filed this commercial foreclosure lawsuit against Handsome, Inc. c/o Corporation Service Company, Todd Cascella, Mona Cascella and other defendants in the judicial district of Ansonia/Milford, seeking a judgment of strict foreclosure and a deficiency judgment. On March 11, 2013 the case was transferred to the judicial district of Fairfield at Bridgeport. The plaintiff filed a third amended complaint on August 22, 2013 in two counts: the first count seeking strict foreclosure and the second count alleging breach of guaranty. The defendants filed an amended answer and two special defenses, unclean hands and equitable estoppel, on November 21, 2013. All defendants, other than Todd Cascella and Mona Cascella, have been defaulted. The matter was tried to the court on November 13 and 19, 2014, subsequent to which the parties submitted post trial briefs and replies. Based on the evidence submitted, the court makes the following findings.
FINDINGS OF FACT
On July 12, 2007, Handsome, Inc., Todd Cascella and Mona Cascella secured a loan from the plaintiff, Naugatuck Valley Savings and Loan, in the amount of $880, 000. The purpose of the loan was real estate development. The indebtedness is evidenced by a commitment letter dated July 2, 2007, and a variable interest rate mortgage note dated July 12, 2007 in the amount of $880, 000. To secure the indebtedness evidenced by the note, the defendants gave the bank a mortgage on their real estate located at 260, 264 and 268 Garder Road and 490 Fan Hill Road, all in the town of Monroe, Connecticut. The open end mortgage deed and security agreement dated July 12, 2007 was recorded in the Monroe land records on July 13, 2007. Subsequently the defendants missed payments and made late payments on the note and consequently on December 1, 2008 were defaulted for failure to pay all sums due at maturity. The defendants admit their default on the note and mortgage for missed and late payments in 2007 and for failure to pay all sums due at maturity on December 1, 2008.
The plaintiff owns and holds all of the original documents including the commitment letter, note and mortgage. Those documents were examined by the court during trial.
As of November 19, 2014, the defendants were indebted to the bank on the note in the amount of $1, 306, 850.29, which includes legal fees and costs provided for by the note and mortgage. The mortgaged properties have a fair market value of $1, 232, 000. The plaintiff seeks a judgment of strict foreclosure because the debt owed exceeds the value of the mortgage properties. However, the plaintiff recognizes that because the Internal Revenue Service is a party defendant, a foreclosure by sale is mandated.
Although admitting to defaulting on the note and mortgage for missed and late payments in 2007, and to failing to pay the sums due at maturity on December 1, 2008, the defendants have alleged special defenses. The defendants have pled two special defenses, unclean hands and equitable estoppel, based upon an alleged forbearance agreement entered into between the defendants and the plaintiff bank. The defendants claim that they entered into an oral forbearance agreement with the plaintiff bank in August 2008 pursuant to which the plaintiff bank agreed to forbear from commencing a foreclosure lawsuit against the defendants, if the defendants sued the town of Monroe over issues related to the mortgaged properties. The defendants claim that the plaintiff breached the parties' alleged oral agreement when it commenced this lawsuit in February 2010. The defendants claim that the forbearance agreement was entered into between Todd Cascella on behalf of the defendants and William C. Nimons, a senior vice president of the plaintiff bank, on behalf of the bank. The forbearance agreement claimed by the defendants was oral. There was no written agreement and no documentary evidence supporting the defendants' contention of the forbearance agreement was produced at trial. At trial the defendant, Todd Cascella, claimed that the alleged oral forbearance agreement was explained to the plaintiff bank's full board, although defendants presented no supporting documentation of a presentation to the board. Todd Cascella's testimony was impeached by his responses to interrogatories, his prior affidavit, and his deposition testimony.
William C. Nimons, a former senior vice president of the plaintiff Naugatuck Valley Savings and Loan at the time of the events in question here, gave testimony diametrically opposed to the testimony of the defendant, Todd Cascella. Mr. Nimons emphatically stated that the bank and he never agreed at any time to forbear. Documentary evidence, including emails, a letter and a " legal update" memorandum that corroborated Mr. Nimons' testimony. Any delays in instituting foreclosure proceedings against the defendants were due to Nimons' efforts to collect on the loan and settlement discussions with the defendants, aside from his other responsibilities. Nimons' testimony also was corroborated by Paul Kritemeyer, also a vice president of the plaintiff bank, who testified that the plaintiff bank had never entered into a forbearance agreement with the defendants concerning this loan and note.
CONCLUSIONS OF LAW
The evidence at trial clearly established that the defendants received the loan in the amount of $880, 000 from the plaintiff bank, that the defendants executed the commitment letter, that the defendants gave the mortgage to the plaintiff to secure the loan and note, and that the defendants defaulted on the loan documents in 2007 for missed and late payments and on December 1, 2008 for failure to pay all sums due at maturity of the note. The defendants admitted or did not dispute the foregoing. The defendants also did not dispute the bank's ownership of the loan documents. To establish a prima facie case, the plaintiff had to prove by a preponderance of the evidence that it was the owner of the note and mortgage and that the defendants had defaulted on the note. Webster Bank v. Flanagan, 51 Conn.App. 733, 750-51, 725 A.2d 975 (1999). Based on the evidence at trial, the plaintiff clearly established a prima facie case for the entry of a judgment of foreclosure.
The issues disputed at trial were whether the defendants had proven their special defenses, unclean hands and equitable estoppel, filed on November 21, 2013. The defendants special defenses were based upon the alleged oral forbearance agreement between the plaintiff bank and the defendants. The plaintiff bank also filed special defenses on October 10, 2014. A special defense must plead facts that are consistent with the allegations of the complaint but demonstrate notwithstanding, that the plaintiff has no cause of action. In a foreclosure proceeding, a special defense must address the making, validity or enforcement of the mortgage, the note or both. Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705-06, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002).
In the present case, the defendants have failed to establish their special defenses by a preponderance of the evidence. The defendant, Todd Cascella, presented unsupported testimony of the alleged oral forbearance agreement. No documentary evidence was presented in support of the alleged oral forbearance. In addition, Todd Cascella's testimony was inconsistent with his previously sworn testimony, affidavit and discovery responses. In short, Cascella's testimony lacked credibility.
While the defendants did not establish their special defenses, the plaintiff bank clearly proved that it did not enter into a forbearance agreement with the defendants. Through the testimony of William Nimons and Paul Kritemeyer as corroborated by the documentary evidence, the plaintiff bank clearly disproved the defendants' special defenses. The credible evidence, including the Nimons emails, legal update and letter, supports the plaintiff bank's contention that it never entered into a forbearance agreement with the defendants. The testimony and documentary evidence demonstrated that only after unsuccessfully attempting to have the borrowers make payments on the note subsequent to defaulting, did the bank authorize the filing of this foreclosure lawsuit.
The court will find that the defendants failed to prove a forbearance agreement between the parties and that, therefore, the defendants did not prove their special defenses. Because of these findings, it is unnecessary ...