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U.S. Bank National Association v. Blowers

Supreme Court of Connecticut

August 13, 2019

U.S. BANK NATIONAL ASSOCIATION, Trustee
v.
Robin BLOWERS et al.

         Argued December 11, 2018

         The Superior Court, Judicial District of Hartford, Dubay, J.

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[Copyrighted Material Omitted]

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          Eli Jacobs Hartford, and Michael Linden, certified legal interns, with whom were Jeffrey Gentes and, on the brief, J.L. Pottenger, Jr., and Jessica Lefebvre, Victoria Stilwell, Anderson Tuggle, and Emily Wanger, certified legal interns, for the appellant (defendant Mitchell Piper).

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

         Robinson, C.J., and Palmer, McDonald, D’Auria, Mullins, Kahn and Ecker, Js.

         OPINION

         McDONALD, J.

         [332 Conn. 658] This certified appeal calls upon the court to decide whether allegations that a mortgagee engaged in a pattern of misrepresentation and delay in postdefault loan modification negotiations before and after initiating a foreclosure action— thereby adding to the mortgagor’s debt and frustrating the mortgagor’s ability to avoid foreclosure— can establish legally sufficient special defenses and counterclaims in that action. The defendant mortgagor, Mitchell Piper,[1] appeals from the judgment of the Appellate Court affirming the trial court’s judgment of strict foreclosure in favor of the plaintiff mortgagee, U.S. Bank National Association,[2] following the trial court’s decision striking the defendant’s special defenses and counterclaims. See U.S. Bank National Assn. v. Blowers, 177 Conn.App. 622, 638, 172 A.3d 837 (2017). The defendant’s principal claim is that the

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Appellate Court incorrectly concluded that such allegations cannot establish legally sufficient special defenses or counterclaims because the misconduct alleged does not relate to the making, validity, or enforcement of the note or mortgage. We agree with the defendant and reverse the Appellate Court’s judgment.

          The record reveals the following undisputed background facts. In August, 2005, the defendant executed a promissory note in exchange for a loan in the original [332 Conn. 659] principal amount of $488,000. The plaintiff subsequently became the holder of the note. The note was secured by a mortgage on the defendant’s real property in Avon, and the mortgage was assigned to the plaintiff in 2010. The defendant defaulted on the note in January, 2010.

         In February, 2014, the plaintiff commenced the present foreclosure action. Upon the defendant’s election, the parties participated in the state’s court-supervised foreclosure mediation program; see General Statutes § § 49-31k through 49-31o ; [3] but were unable to reach a loan modification agreement during that process. The defendant thereafter filed an answer, special defenses, and counterclaims. The special defenses sounded in equitable estoppel and unclean hands; the counterclaims sounded in negligence and violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.[4]

         The defendant alleged the following facts in support of all of his special defenses and counterclaims. In early 2010, the defendant fell behind on his mortgage payments due to decreased business revenue resulting from the "Great Recession."[5] Shortly thereafter, the plaintiff, [332 Conn. 660] through its servicing agent,[6] reached out to the defendant and offered him a rate reduction that would result in a monthly mortgage

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payment of $1950.[7] After the defendant successfully completed a three month trial modification period, the plaintiff informed the defendant that the reduced monthly amount previously offered was too low. Thereafter, over an approximately two year period, the plaintiff similarly offered and reneged on at least four additional modifications after accepting trial payments from the defendant. Each successive modification offer sharply increased the defendant’s monthly payment, rising from the initial proposal of $1950 to approximately $3445.

         In April, 2012, the defendant contacted the state’s Department of Banking,[8] which intervened on the defendant’s behalf, "resulting in an immediate modification being received." Within months, however, the plaintiff notified the defendant that his monthly payment was increasing nearly 20 percent from that modified payment. The defendant was unable to afford the increased payments but continued to make the monthly payment set by the April modification until October, 2012, when the plaintiff rejected them as " ‘partial’ " payments.

         [332 Conn. 661] In late 2013, the plaintiff erroneously informed the defendant’s insurance company that the Avon property was no longer being used as the defendant’s residence. As a result, the defendant’s insurance policy was cancelled, and the defendant was forced to replace ...


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