Argued
February 4, 2019
Procedural
History
Action
to foreclose a mortgage on certain real property owned by the
defendants, and for other relief, brought to the Superior
Court in the judicial district of New London, where the
defendants were defaulted for failure to disclose a defense;
thereafter, the court, Cos-grove, J., denied the
defendants' motion to dismiss and motion for an order to
produce certain documentation; subsequently, the court
granted the defendants' motion for a stay; thereafter,
the defendants filed counterclaims; subsequently, the court
granted the plaintiffs motion to lift the stay; thereafter,
the court, Nazzaro, J., granted the plaintiffs
motion to strike the defendants' counterclaims;
subsequently, the court, Cosgrove, J., rendered
judgment of foreclosure by sale, from which the defendants
appealed to this court. Affirmed.
Albert
L.J. Speziali, with whom, on the brief, were Paul M. Geraghty
and Mark R. Kepple, self-represented, for the appellants
(defendants).
Scott
H. Bernstein, for the appellee (plaintiff).
DiPentima, C. J., and Alvord and Moll, Js.
OPINION
MOLL,
J.
The
defendants, Christine Kepple and Mark Kepple, [1] appeal from the
judgment of foreclosure by sale rendered in favor of the
plaintiff, Flagstar Bank, FSB. On appeal, the defendants
claim that the trial court lacked subject matter jurisdiction
over this action as a result of the plaintiffs alleged lack
of standing. We disagree and, accordingly, affirm the
judgment of the trial court.
The
following facts and procedural history are relevant to the
resolution of the defendants' claim on appeal. The
plaintiff filed this action in February, 2011, seeking to
foreclose a residential mortgage on property located at 140
Elm Street in Stonington. According to the complaint, on
November 19, 2004, Mark Kepple executed a promissory note
payable to the order of Atlantis Mortgage Co., Inc., in the
amount of $322, 700. To secure the note, the defendants
executed a mortgage on the property in favor of Mortgage
Electronic Registration Systems, Inc., as nominee for
Atlantis Mortgage Co., Inc. The complaint alleged that the
plaintiff was the owner of the note and mortgage by virtue of
an assignment of the mortgage dated February 3, 2011. The
complaint further alleged that the note was in default and
that the plaintiff was exercising its option to declare the
entire balance on the note due and payable. On October 23,
2017, the court rendered a judgment of foreclosure by sale.
The court thereafter denied the defendants' motion to
reconsider, and the defendants filed the present appeal.
On
appeal, the defendants claim that the trial court lacked
subject matter jurisdiction over this action because of the
plaintiffs alleged lack of standing. Specifically, the
defendants argue that (1) the plaintiff merely was the holder
of the note and not the owner of the debt, and (2) the
evidence in the record, taken as a whole, rebutted the
presumption that the plaintiff, as the holder of the note,
was the owner of the debt.[2]We disagree.
At the
outset, we note that "[t]he issue of standing implicates
[the] court's subject matter jurisdiction. . . . 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. . . . When standing is put in issue, the
question is whether the person whose standing is challenged
is a proper party to request an adjudication of the issue
.... Because standing implicates the court's subject
matter jurisdiction, the plaintiff ultimately bears the
burden of establishing standing." (Citation omitted;
internal quotation marks omitted.) JPMorgan Chase Bank,
National Assn. v. Simoulidis, 161 Conn.App. 133, 142,
126 A.3d 1098 (2015), cert, denied, 320 Conn. 913, 130
A.3d266 (2016). "Because a determination regarding the
trial court's subject matter jurisdiction raises a
question of law, [the standard of] review is plenary."
(Internal quotation marks omitted.) Id. "In
addition, because standing implicates the court's subject
matter jurisdiction, the issue of standing is not subject to
waiver and may be raised at any time." (Internal
quotation marks omitted.) U.S. Bank, National Assn. v.
Schaeffer, 160 Conn.App. 138, 145, 125 A.3d 262 (2015).
The
following additional facts are necessary for the resolution
of the defendants' claim. On March 14, 2012, the
plaintiff filed a motion for default for failure to disclose
a defense, which the court, Martin, J., granted on
March 26, 2012. On April 3, 2012, Mark Kepple filed (1) an
appearance as a self-represented party in lieu of the
appearance filed by his initial attorney and (2) a motion for
inclusion in the foreclosure mediation program. On August 13,
2012, Attorney Paulann Hosier Sheets filed an appearance for
the defendants in addition to the self-represented appearance
filed by Mark Kepple. The defendants then filed a motion to
open the default, an answer, and a motion to dismiss,
claiming that the plaintiff lacked standing to prosecute the
action because it did not own the underlying debt.
In
support of the motion to dismiss, the defendants filed an
affidavit of Mark Kepple with accompanying exhibits. In the
affidavit, Mark Kepple stated facts in support of the
defendants' claim that Federal Home Loan Bank of
Indianapolis was the owner of the mortgage and that the
plaintiff lacked standing to bring this action.[3] The defendants
also submitted a document produced by Mortgage Electronic
Registration Systems, Inc., indicating that Federal Home Loan
Bank of Indianapolis was the "investor." At a
hearing on the defendants' motion to dismiss on September
7, 2012, the defendants argued that the owner of the
underlying debt was Federal Home Loan Bank of Indianapolis
and not the plaintiff.[4] The plaintiff responded by arguing that it
had standing to bring the foreclosure action as the holder of
the note.[5] The plaintiff also argued that the
affidavit submitted in support of the motion to dismiss
contained inadmissible hearsay.
In a
memorandum of decision dated September 21, 2012, the court,
Cosgrove, J., denied the defendants' motion to
dismiss, concluding that the plaintiff had standing to
commence the action. In its decision, the court noted that
the plaintiff had produced a copy of the note, endorsed by
Atlantis Mortgage Co., Inc., to the plaintiff, and
established a prima facie case for foreclosure against the
defendants. With regard to Mark Kepple's affidavit, the
court stated: "Absent some exception to the hearsay
rule, which is not present here, the statements of third
parties contained within Mark Kepple's affidavit
constitute hearsay and cannot be considered by the court for
the truth of the matters contained therein. Even if
considered . . . Kepple's statement would not, alone,
rebut the presumption created by possession of the note in
this case. In viewing the remainder of the available
evidence, the court finds that the defendants failed to rebut
the presumption that the plaintiff owns the underlying debt,
and thus the plaintiff has standing to commence the present
foreclosure action."
On
October 2, 2012, the court denied the defendants' motion
to open the default and granted the defendants' motion to
participate in the foreclosure mediation program. The parties
participated in the foreclosure mediation program from
October, 2012 through August, 2014. The final foreclosure
mediation took place on August 6, 2014. The foreclosure
mediator's report from that mediation stated in part that
"[t]he parties have been in mediation since [October 26,
2012] and the same issues are brought up at every mediation
without resolution."
Following
the denial of the defendants' motion to dismiss, and
after almost two years in the foreclosure mediation program,
the defendants continued to raise the plaintiffs alleged lack
of standing in various proceedings over the next several
years. On August 21, 2014, the defendants filed a petition
for reinclusion in the foreclosure mediation program and a
motion to order the plaintiff to produce documentation of a
purported investor restriction. In the latter motion, the
defendants contended that the plaintiff repeatedly had denied
their request for a loan modification because of an alleged
investor restriction and sought, inter alia, an order that
the plaintiff produce evidence of the purported investor
restriction. On September 4, 2014, the defendants filed a
second motion to open the default for failure to disclose a
defense. In that motion, the defendants argued that they were
waiting for the plaintiff to disclose any agreements between
itself and Federal Home Loan Bank of Indianapolis regarding
the servicing, including modification, of the defendants'
loan. According to the defendants, these documents were
relevant to their defense that the plaintiff lacked standing
to bring this action.
On
September 8, 2014, a hearing took place on the
defendants' petition for reinclusion in the foreclosure
mediation program and the defendants' motion to order the
plaintiff to produce documentation of a purported investor
restriction. At that hearing, counsel for the defendants
argued that this matter should be referred back to mediation
and that the court should order the plaintiff to produce
documentation regarding the relationship and the restrictions
between the investor, Federal Home Loan Bank of Indianapolis,
and the plaintiff. The plaintiff argued in response that the
defendants were not entitled to any of the documents
requested and that the defendants were trying to interfere
with the contractual relationship between the plaintiff and
Federal Home Loan Bank of Indianapolis. The plaintiff further
argued that the defendants were pursuing such discovery as a
means to effectuate a settlement. During the argument on the
defendants' motions, the court engaged in a colloquy with
counsel for the plaintiff regarding the distinction between
the owner and the holder of the note.[6]
On
September 17, 2014, the court denied the defendants'
petition for reinclusion in the foreclosure mediation
program, stating: "This case has been through an
extended mediation process. Most recently, the mediator filed
a report with the court indicating in part that the mortgagor
was denied relief due to 'debt to income ratio.'
Further, the mediator stated she had no material reason to
disagree with the response. The court cannot find that
further mediation has a high probability of success." On
September 17, 2014, the court also denied the defendants'
motion to order the plaintiff to produce documentation of a
purported investor restriction.
On
October 14, 2014, during a hearing on the defendants'
second motion to open the default, the court questioned
counsel for the plaintiff regarding whether the plaintiff was
a bank or a servicer of the loan. In response, counsel for
the plaintiff stated: "They're a bank and the
servicer of this loan. They're also the holder of the
note authorized to commence the foreclosure action which has
already been resolved by the prior motion to dismiss, which
is a standing issue [that] counsel's attempting to raise
again, which has already been denied." On December 5,
2014, the court denied the defendants' second motion to
open the default.[7]
On
December 19, 2014, the defendants filed a motion for a stay,
contending that this action was barred by a September 29,
2014 consent order entered into between the federal Consumer
Financial Protection Bureau and the plaintiff regarding
deceptive and unfair practices committed by the plaintiff. On
January 21, 2015, the defendants filed an affidavit of Mark
Kepple in support of their motion to stay the foreclosure
proceedings. The defendants attached as exhibits (1) some of
the same documents that were previously found to be
inadmissible hearsay by the trial court when it ruled on the
defendants' motion to dismiss, and (2) additional
correspondence from the plaintiff to the defendants.
Specifically, Mark Kepple included a letter from the
plaintiff to the defendants dated August 8, 2012, identifying
Federal Home Loan Bank of Indianapolis as the investor of the
mortgage loan, and letters from the plaintiff dated July 22,
August 27, and November 2, 2013, in which the plaintiff
identified itself as the servicer of the defendants'
mortgage loan. The latter two letters each stated that the
defendants were "not approved for loss mitigation
options by the investor/owner of the
loan."[8]
On
December 24, 2014, the plaintiff filed an objection to the
defendants' motion for a stay, along with an affidavit of
Susan Dowd, an officer of the plaintiff.[9] A hearing on the
motion for a stay took place on January 26, 2015. During a
colloquy with counsel for the defendants at the conclusion of
the hearing, the court commented that it appeared that the
owner of the note was Federal Home Loan Bank of
Indianapolis.[10] On January 26, 2015, the court entered a
stay in this matter without prejudice to the plaintiff
demonstrating that the defendants' loan was not covered
by the consent order entered into by the plaintiff with the
Consumer Financial Protection Bureau. On May 19, 2016, the
plaintiff filed a motion for an order requesting that the
court lift the stay. In that motion, the plaintiff maintained
that (1) the defendants' loan was not covered by the
consent order and (2) even if it were covered, which was
denied, the plaintiff had offered the defendants the very
relief they had been seeking, namely, a new loan modification
review. In this connection, the motion detailed the efforts
...