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Financial Freedom Acquisition, LLC v. Griffin

Court of Appeals of Connecticut

September 12, 2017

FINANCIAL FREEDOM ACQUISITION, LLC
v.
ANN T. GRIFFIN, EXECUTRIX (ESTATE OFANGELA C. GRIFFIN), ET AL.

          Argued April 11, 2017

          Ronald P. Sherlock, for the appellants (named defendant et al.).

          Michael T. Grant, for the appellee (substitute plaintiff).

          Sheldon, Mullins and Flynn, Js.

         Syllabus

         The plaintiff bank, F Co., sought to foreclose a mortgage on certain real property of the decedent. After the foreclosure action was commenced, but before trial had begun, O Co., of which F Co. was a subsidiary, was substituted as the plaintiff. Thereafter, another bank merged into O Co., and although O Co. was the surviving entity of the merger, as part of the merger it changed its name to C Co., which was never substituted as the party plaintiff. Subsequently, the trial court granted O Co.'s motion for a judgment of strict foreclosure and rendered judgment thereon, from which the defendant A, individually and as the executrix of the estate of the decedent, appealed to this court. A claimed, inter alia, that the trial court improperly rejected her special defense and counterclaim sounding in breach of the implied covenant of good faith and fair dealing. In her special defense and counterclaim, A had alleged that, in light of a provision in the note executed by the decedent that permitted the decedent's estate to avoid its obligation to repay the loan upon the decedent's death if it cooperated with F Co. in selling the subject property, F Co. breached the covenant of good faith and fair dealing when it initiated the foreclosure action instead of communicating with the executrix to facilitate such a sale.

         Held:

         2. The trial court properly found that A failed to meet her burden of proof with respect to her special defense and counterclaim sounding in breach of the implied covenant of good faith and fair dealing; the relevant provision in the note provided that the death of the decedent was a maturity event that made the loan immediately due and payable, except if the parties extended the repayment deadline by entering into a separate written agreement within thirty days of the decedent's death that required the decedent's estate to cooperate fully with F Co. in selling the property, and the trial court properly concluded that, in the absence of such a separate written agreement extending the deadline to allow the executrix to sell the decedent's home, the relevant provision of the note did not provide for a contractual right to an extension of the deadline to sell the property, and F Co., therefore, had no obligation to undertake any action facilitating the sale of the property by the executrix, and did not breach the terms of the note by never agreeing to such an extension.

         Procedural History

         Action to foreclose a mortgage on certain real property owned by the named defendant et al., and for other relief, brought to the Superior Court in the judicial district of Litchfield, where the defendant John T. Griffin et al. were defaulted for failure to appear; thereafter, the named defendant et al. filed a counterclaim; subsequently, the court, Pickard, J., granted the plaintiff's motion to substitute OneWest Bank, N.A., as the plaintiff; thereafter, the matter was tried to the court, Shah, J.; judgment for the substitute plaintiff on the complaint and the counterclaim; subsequently, the court, Pickard, J., granted the substitute plaintiff's motion for a judgment of strict foreclosure and rendered judgment thereon, from which the named defendant et al. appealed to this court; thereafter, the court, Shah, J., issued an articulation of its decision. Affirmed.

          OPINION

          MULLINS, J.

         In this action to foreclose a reverse mortgage, the defendants, Ann T. Griffin, in her representative capacity as executrix of the estate of Angela C. Griffin, and Ann T. Griffin, in her individual capacity, appeal from the judgment of strict foreclosure rendered in favor of the substitute plaintiff, OneWest Bank, N.A.[1]On appeal, the defendants claim that the court erred in (1) concluding that the substitute plaintiff established a prima facie case of foreclosure and (2) rejecting their special defense and counterclaim sounding in breach of the implied covenant of good faith and fair dealing. We affirm the judgment of the trial court.

         In its December 10, 2015 memorandum of a decision, the trial court set forth the following facts. ‘‘[Angela C.] Griffin [(decedent)] was the owner of the real property located at 312 Milton Road, Litchfield, Connecticut (property). On or about July 23, 2008, [the decedent] executed a note and reverse annuity mortgage (mortgage) on the [p]roperty in favor of Financial Freedom Senior Funding Corporation, [a predecessor in interest to the substitute plaintiff]. . . . [The note and mortgage] established an open-ended line of credit not to exceed $692, 180 ([decedent's] loan). At that time, Financial Freedom [Senior Funding Corporation] advanced $378, 791 to [the decedent] to pay off a loan from Deutsche Bank, which sought to foreclose on the mortgage it held on the property. Financial Freedom [Senior Funding Corporation] obtained an appraisal at the time that valued the property at $612, 709.

         ‘‘[The decedent] . . . entered into the loan so that [she] could remain in the home that she had lived in for thirty years. The property is a private property that includes a colonial residence located on eleven acres of land with a pond. It has a stable and many acres of well-maintained pasture. The home was a central part of [Ann Griffin's] and [the decedent's] lives.

         ‘‘Since the mortgage is a reverse annuity mortgage, no principal became due until a maturity event occurred. On April 16, 2010, [the decedent] passed away, which constituted a maturity event and rendered the balance of the loan due and payable unless there was an agreement in writing between the [named] plaintiff and certain legal representatives of [the decedent] within thirty days to cooperate fully in selling the property. The [named] plaintiff and the [executrix] had no agreement in writing to this effect, and the [executrix] did not pay the balance due upon [the decedent's] death. Thus, the nonpayment constituted a default under the mortgage. . . . The [named] plaintiff initiated the present foreclosure action in May of 2011.

         ‘‘On April 30, 2010, prior to the notice of intent to foreclose, [Ann Griffin] contacted the [named plaintiff] to inform it that she intended to sell the property. The [named plaintiff's] electronic system notes indicate that [Ann Griffin] spoke with . . . a maturities administrator . . . . They discussed repayment of the [decedent's] loan, and [Ann Griffin] indicated she planned to sell the property and use the proceeds of the sale to repay the debt. Subsequent to the conversation, [the maturities administrator] sent a cash account reverse mortgage repayment notice to [Ann Griffin]. The repayment notice informed [Ann Griffin] that the death of [the decedent] constituted a maturity event, that upon the occurrence of a maturity event the loan became due, and that [Ann Griffin] needed to discuss plans with [the named plaintiff] concerning repayment of the loan by sending in the enclosed repayment questionnaire. ...

         ‘‘On May 6, 2010, the defendant[s'] counsel faxed a correspondence, attaching the death certificate and will of [the decedent], and informing [the maturities administrator] that he was representing the defendant[s]. [Ann Griffin] was appointed executrix of [the decedent's] estate on May 17, 2010. [Ann Griffin] lacked legal authority to enter into contractual agreements on behalf of the estate until such time as she was appointed executrix.

         ‘‘On or about June 17, 2010, the [executrix] entered into a listing agreement with [a realty company] for the sale of the property, with a listing price of $614, 900 (listing agreement). On June 23, 2010, the defendant[s'] counsel sent a second correspondence to [the maturities administrator], which included the probate decree admitting the [decedent's] will to probate; a certified copy of the death certificate; a copy of the [decedent's] will; a certified probate certificate reflecting the appointment of [Ann Griffin] as executrix; and a signed copy of the listing agreement. The [named] plaintiff admitted to having received both written communications and attachments. The [named] plaintiff still had not received the repayment questionnaire . . . . There was no agreement in writing or any other communication that demonstrated a mutual understanding to extend the repayment date.''

         In addition to those facts expressly found by the trial court, the following supplemental facts, which also reasonably could have been found by the court, are relevant. Through a series of assignments and corporate restructurings, ownership of the decedent's loan changed several times. As previously explained, on July 23, 2008, the decedent executed a note and mortgage in favor of Financial Freedom Senior Funding Corporation, making it the original mortgagee and holder of the note. At the time the decedent executed the note in July, 2008, Financial Freedom Senior Funding Corporation was a subsidiary of IndyMac Bank, F.S.B. (Indy-Mac). The Federal Deposit Insurance Corporation (FDIC) had been appointed as receiver for IndyMac prior to the decedent's execution of the note and mortgage.

         In March, 2009, OneWest Bank, F.S.B, through its parent company, IMB HoldCo, LLC, purchased from the FDIC certain IndyMac assets, including the decedent's loan. As part of that transaction, Financial Freedom Senior Funding Corporation executed an allonge to the note, specially endorsing it to ‘‘OneWest Bank, F.S.B.'' The named plaintiff in this action was formed during this transaction as a subsidiary of OneWest Bank, F.S.B.

         At some point after it was assigned the note, OneWest Bank, F.S.B., executed an allonge to the note, endorsing it in blank. OneWest Bank, F.S.B., then transferred the note to the named plaintiff, which held it until transferring it back to OneWest Bank, F.S.B., around July, 2011.

         Around February, 2014, OneWest Bank, F.S.B., converted from a federal savings bank into a national banking association and, thus, became OneWest Bank, N.A., the substitute plaintiff.

         On August 3, 2015, which was slightly more than four years after this action was commenced, but before trial had begun, IMB Hold Co, LLC, the holding company of OneWest Bank, N.A., merged with CIT Group, the holding company of a bank called CIT Bank. As part of their holding companies' merger, OneWest Bank, N.A., and CIT Bank also merged. Specifically, ‘‘CIT Bank . . . merged into OneWest Bank, N.A.'' (Emphasis added.) Although OneWest Bank, N.A., was the surviving entity of the merger with CIT Bank, OneWest Bank, N.A., as part of the merger, changed its name to ‘‘CIT Bank, N.A.'' ‘‘CIT Bank, N.A., '' was never substituted for OneWest Bank, N.A., as the party plaintiff in this action.

         Having outlined the relevant substantive facts, we now review the pertinent procedural history. The named plaintiff commenced this action in May, 2011. As previously explained, the named plaintiff was a subsidiary of OneWest Bank, N.A., which was substituted as the plaintiff in this action on September 22, 2014.

         Prior to the substitution of OneWest Bank, N.A., for the named plaintiff, the defendants pleaded several special defenses. Relevant to this appeal is the defendants' special defense that the named plaintiff breached the implied covenant of good faith and fair dealing. The defendants also filed a counterclaim against the named plaintiff sounding in breach of the implied covenant of good faith and fair dealing. Although the named plaintiff was ...


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