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Bank of New York Mellon v. Mauro

Court of Appeals of Connecticut

October 17, 2017

THE BANK OF NEW YORK MELLON, TRUSTEE
v.
JEFFREY J. MAURO ET AL.

          Argued May 23, 2017

          Kenneth A. Votre, for the appellants (named defendant et al.).

          Zachary Grendi, with whom, on the brief, was Pierre-Yves Kolakowski, for the appellee (plaintiff).

          Lavine, Sheldon and Harper, Js.

         Syllabus

         The plaintiff bank sought to foreclose a mortgage on certain of the defendants' real property. The trial court referred the parties to the foreclosure mediation program, and the mediator issued a final report indicating that the defendants did not appear for a scheduled mediation, and that time had expired. The mediator referred the matter for further proceedings back to the trial court, which granted in part the plaintiff's motion to strike the defendants' special defenses and counterclaims. In August, 2015, the defendants filed their operative five count counterclaim, which reasserted claims for negligent, reckless and intentional misrepresentation, as well as claims for violations of the Connecticut Unfair Trade Practices Act (§ 42-110a et seq.) and the federal Truth in Lending Act (15 U.S.C. § 1601 et seq.). Subsequently, the court granted the plaintiff's motion for summary judgment as to liability on the complaint, and as to the five counterclaims. In addressing the motion for summary judgment as to the counterclaims, the court ruled that the counterclaims failed as a matter of law because they pertained to the plaintiff's conduct during mediation, which occurred years after the execution of the mortgage and the defendants' default. The court also concluded that the counterclaims that pertained to the conduct of A Co., the plaintiff's predecessor in interest to the note and mortgage, were directed at the wrong party and were barred by the applicable statutes of limitations. Thereafter, the defendants appealed to this court, which dismissed the appeal in part. Subsequently, the trial court granted the plaintiff's motion for a judgment of strict foreclosure and rendered judgment thereon, and the defendants filed an amended appeal.

         Held:

         1. The trial court did not err in granting the plaintiff's motion for a judgment of strict foreclosure with respect to the property on the basis of its determination that there were no genuine issues of material fact and that the plaintiff was entitled to summary judgment as a matter of law as to liability on its foreclosure complaint: at the time of the granting of the plaintiff's motion for summary judgment, the trial court found that the plaintiff had established a prima facie case for foreclosure, the defendants' operative pleading contained no special defenses to foreclosure, and the defendants' affidavits in opposition to the plaintiff's motion for summary judgment failed to create a genuine issue of material fact as to any of the essential elements of the plaintiff's prima facie case, namely, whether the plaintiff was the holder of the note, the defendants defaulted on the loan, or the plaintiff had satisfied the necessary preconditions to foreclosure; moreover, the defendants' claim that a genuine issue of material fact existed as to whether their counterclaims had a reasonable nexus to the making, validity or enforcement of the mortgage and note was unavailing, as the validity or invalidity of the counterclaims was irrelevant to whether the plaintiff was entitled to prevail in its primary action and, thus, to have summary judgment rendered in its favor in that action.

         2. The trial court properly rendered judgment in favor of the plaintiff on all five counts of the defendants' operative counterclaim: that court properly concluded that, to the extent that the defendants' counterclaims were based on alleged misdealings with the defendants by the plaintiff's predecessor, A Co., which was not a party to this foreclosure action, those counterclaims failed as a matter of law because there was no evidence of record that the plaintiff expressly assumed the liabilities of A Co. when it took the mortgage from A Co. by assignment, and, with respect to the counterclaims that pertained to the plaintiff's conduct during the mediation that occurred years after the execution of the mortgage and the defendants' default, the trial court did not abuse its discretion in determining that those counterclaims failed the transaction test of the applicable rule of practice (§ 10-10), as they did not have a reasonable nexus to the making, validity and enforcement of the mortgage and note; moreover, because the plaintiff's motion for summary judgment expressly sought the dismissal of the defendants' counterclaims on that ground, and both parties analyzed that portion of the plaintiff's motion for summary judgment as a motion to strike the defendants' counterclaims, this court treated the portion of the plaintiff's motion for summary judgment that sought the dismissal of the counterclaims for improper joinder as a properly presented motion to strike, the trial court's judgment in favor of the plaintiff on the defendants' counterclaims had to be construed as a final judgment of dismissal for improper joinder, rather than a final judgment on the merits of the defendants' substantive claims, and it was proper for the plaintiff to use a motion for summary judgment as a means of testing whether the counterclaims satisfied the transaction test of § 10-10.

         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 Middlesex, where the named defendant et al. filed a counterclaim and special defenses; thereafter, the court, Domnarski, J., granted in part the plaintiff's motion to strike the counterclaim and special defenses; subsequently, the court, Aurigemma, J., granted the plaintiff's motion for summary judgment as to liability on the complaint and as to the counterclaim, and the named defendant et al. appealed to this court; thereafter, this court dismissed the appeal in part; subsequently, the court, Aurigemma, J., granted the plaintiff's motion for a judgment of strict foreclosure and rendered judgment thereon, and the named defendant et al. filed an amended appeal. Affirmed.

          OPINION

          SHELDON, J.

         In this mortgage foreclosure action, the defendants, [1] Jeffrey J. Mauro and Renee A. Mauro, appeal from the judgment rendered by the trial court, Aurigemma, J., in favor of the plaintiff, The Bank of New York Mellon, [2] on: the plaintiff's claim for strict foreclosure as to the defendants' mortgaged property in Killingworth, Connecticut; and the defendants' counterclaims against the plaintiff, seeking damages and equitable relief based upon alleged misrepresentations to them and other alleged misdealings with them concerning the note and mortgage here at issue, both by the plaintiff and by the original lender, America's Wholesale Lender (AWL), which was the plaintiff's predecessor in interest to the note and mortgage. As to the plaintiff's claim for strict foreclosure, the defendants argue that the court erred in basing its judgment for the plaintiff upon its prior, erroneous decision rendering summary judgment for the plaintiff as to the defendants' liability for foreclosure in this action, assertedly without sufficient evidence to establish the absence of any genuine issues of material fact on that issue. As to their counterclaims against the plaintiff, the defendants argue that, to the extent that such counterclaims are based upon the plaintiff's own alleged misdealings with them rather than those of AWL, the court erred in rendering summary judgment for the plaintiff by: (1) ruling that such counterclaims, so narrowed, were not properly pleaded in this action because they have no reasonable nexus to the making, validity, or enforcement of the subject note and mortgage; (2) ruling that one such counterclaim was barred by the applicable statute of limitations; and (3) failing to follow the prior ruling of a different judicial authority, in partially denying a motion to strike, that certain such counterclaims were legally sufficient to state claims upon which relief could be granted. We disagree with the defendants on each of their claims, and thus affirm the judgment of the trial court in its entirety.

         The record reveals the following facts and procedural history. On November 29, 2006, Jeffrey Mauro executed an ‘‘interest only fixed rate'' note in favor of AWL, in the principal amount of $350, 000. To secure that note, the defendants executed an open-ended mortgage in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for AWL, on their property located at 330 Roast Meat Hill Road in Killingworth. Under the terms of the note, Jeffrey Mauro was obligated to make monthly payments of $1968.75 for the first ten years of the loan, and increased monthly payments of $2661.27 thereafter, until his entire indebtedness under the note was paid in full.

         Jeffrey Mauro received a notice of default, dated September 16, 2009, advising him that, as of September 16, 2009, he had missed several months of payments on the note, totaling $5769.17. He was instructed in the notice to cure the default by October 16, 2009, and informed that if he failed to do so, his obligation to make payments of principal, interest, costs and fees required under the note would be accelerated and foreclosure proceedings would be brought against him as to the mortgaged property. Ultimately, Jeffrey Mauro was unable to cure the default by the date specified in the notice of default.

         On July 25, 2011, AWL, as the holder of the note, endorsed the note in blank and transferred physical possession of it to the plaintiff. Concurrently with this transfer, MERS, as nominee for AWL, executed an assignment of the mortgage in favor of the plaintiff. Accordingly, by August, 2011, the plaintiff was both the holder of the note and the assignee of the mortgage.

         On June 24, 2013, the plaintiff commenced this action by serving the defendants with legal process returnable to the Superior Court for the judicial district of Middle-sex.[3] In its complaint, the plaintiff sought foreclosure of the mortgage, immediate possession of the mortgaged property, and reasonable attorney's fees and costs. By that time, the total remaining principal balance on the note was approximately $348, 685.68, and Jeffrey Mauro's total indebtedness to the plaintiff thereunder, which also included unpaid interest, late charges and costs, was greater. Thereafter, on July 22, 2013, Jeffrey Mauro submitted to the plaintiff a request for foreclosure mediation pursuant to General Statutes §§ 49-31k through 49-31o. That request was granted by the court on July 26, 2013, after which a foreclosure mediation was conducted during the months of August and October, 2013. On November 22, 2013, the foreclosure mediator filed a final report with the court, in which she noted that the ‘‘defendant[4] did not appear for the [October 11, 2013] mediation, and time has expired.'' (Footnote added.) Accordingly, the mediator referred the matter back to the court for further proceedings.

         On January 21, 2014, the defendants filed their answer to the plaintiff's complaint, along with seven special defenses and five counterclaims. The special defenses and counterclaims were later amended on December 2, 2014. In their amended pleading, the defendants asserted four special defenses to the plaintiff's claim for foreclosure, specifically: that AWL had ‘‘misrepresented the terms of the loan''; that the plaintiff itself had ‘‘failed to act in good faith during the [foreclosure] mediation''; that AWL had violated state and federal law by ‘‘failing to comply with specific disclosure requirements'' during the loan initiation process; and that the mortgage, as originally negotiated by AWL, was the product of fraud, misrepresentations and violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., therefore barring the plaintiff from foreclosing on the property. In their six counterclaims, the defendants asserted claims for breach of contract, negligent misrepresentation, reckless misrepresentation, intentional misrepresentation, violation of CUTPA and violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq.

         On December 17, 2014, the plaintiff filed a motion to strike the defendants' special defenses and counterclaims, which the trial court, Domnarski, J., granted in part and denied in part on April 17, 2015. In striking each of the defendants' four special defenses, the court ruled that such special defenses were improper because they were predicated upon the conduct of a nonparty, AWL, and/or they were not related to the making, validity or enforcement of the note or mortgage. In striking counts one, five and six of the defendants' counterclaims, the court ruled that: (1) the first counterclaim, alleging breach of contract, failed to allege the existence of a written agreement between the parties, and thus was barred by the statute of frauds; (2) the fifth counterclaim, alleging a violation of CUTPA, was based solely upon alleged misdealings with the defendants by a non-party, AWL, for which the plaintiff could not be held liable without expressly assuming such liability; and (3) the sixth counterclaim, alleging a violation of TILA, had been pleaded improperly without the court's permission. The court denied the plaintiff's motion to strike, however, as to the defendants' second, third and fourth counterclaims, which alleged, respectively, negligent, reckless and intentional misrepresentation by both AWL and the plaintiff. In denying the motion to strike as to those counterclaims, the court held that, although the plaintiff could not be held liable for AWL's alleged misdealings with the defendants unless the plaintiff expressly assumed such liability, which had not been alleged, the challenged counterclaims also contained allegations that the plaintiff ...


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