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HSBC Bank USA, National Association v. Karlen

Court of Appeals of Connecticut

January 7, 2020

HSBC BANK USA, NATIONAL ASSOCIATION, TRUSTEE
v.
GERARD M. KARLEN ET AL.

          Argued October 25, 2019

         Procedural History

         Action to foreclose a mortgage on certain real property owned by the defendant Carla Rivers Karlen, and for other relief, brought to the Superior Court in the judicial district of Stamford-Norwalk, where the court, Randolph, J., granted the plaintiff's motion for summary judgment as to liability; thereafter, the court, Genuario, J., rendered a judgment of foreclosure by sale, from which the named defendant et al. appealed to this court. Reversed; further proceedings.

          Thomas P. Willcutts, with whom, on the brief, was Michael J. Habib, for the appellants (named defendant et al.).

          Sean R. Higgins, for the appellee (plaintiff).

          Elgo, Bright and Devlin, Js.

          OPINION

          BRIGHT, J.

         The defendants Gerard M. Karlen and Carla Rivers Karlen[1] appeal from the judgment of foreclosure by sale rendered by the trial court in favor of the plaintiff, HSBC Bank USA, National Association, as Trustee for Wells Fargo Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 2007-2. On appeal, the defendants claim that the trial court improperly granted the plaintiff's motion for summary judgment as to liability.[2] We reverse the judgment of the trial court.

         In 2014, the plaintiff commenced the underlying foreclosure action against the defendants with regard to property located at 10 Pheasant Lane in Westport. The plaintiff alleged the following facts in its complaint. On November 2, 2006, the defendants executed and delivered to Mortgage Electronic Registration Systems, Inc., as nominee for Wall Street Mortgage Bankers, Ltd., doing business as Power Express, a note for a loan in the original principal amount of $800, 000, which was secured by a mortgage on the property.[3] The note was thereafter affected by a loan modification agreement dated effective November 17, 2010. The mortgage subsequently was assigned to the plaintiff by virtue of an assignment of mortgage dated February 2, 2012, and the plaintiff is the holder of the note. The note was in default, and the plaintiff elected to accelerate the balance due and declared the note to be due in full. When payment was not made, the plaintiff filed this action to foreclose the mortgage that secured the note.

         In their answers and in a later disclosure of defenses, the defendants denied the essential allegations of the plaintiff's complaint and alleged defenses, including lack of jurisdiction, lack of standing, misapplied payments, and the lack of a contract between the parties.

         On May 17, 2016, the plaintiff filed a motion for summary judgment as to liability. Attached to the plaintiff's motion was the affidavit of Diane F. Duckett, the vice president of loan documentation for Wells Fargo Bank, N.A., the servicing agent for the plaintiff. Duckett averred that the defendants executed a promissory note dated November 2, 2006, in the amount of $800, 000, with the first payment being due on or about January 1, 2007, and the final payment being due on December 1, 2036. She further averred that the note was endorsed in blank and that the plaintiff was in possession of the note when this foreclosure was commenced in 2014. Duckett averred that the defendants executed a mortgage, also on November 2, 2006, conveying the property to Mortgage Electronic Registration Systems, Inc., as nominee for Wall Street Mortgage Bankers, Ltd., doing business as Power Express, which thereafter was assigned to the plaintiff in an assignment dated January 31, 2012. Duckett averred that the ‘‘unpaid balance of the note [was] $846, 894.50 plus interest from [April 1, 2013], '' and that the defendants had failed to make their May 1, 2013 payment or any payment thereafter. Duckett attached a copy of the November 2, 2006 note and mortgage to her affidavit. She also attached the January 31, 2012 assignment and a default letter sent by the plaintiff to the defendants on November 26, 2013, notifying them that they had past due payments of $50, 602.86.[4] She did not mention or attach the November 17, 2010 loan modification agreement. Nevertheless, the plaintiff's memorandum of law in support of its motion for summary judgment did state that the note ‘‘was modified by virtue of a [m]odification [a]greement dated effective November 17, 2010.''

         On August 11, 2017, the defendants filed a motion for an extension of time to respond to that plaintiff's motion for summary judgment so that they could pursue additional discovery, which the court granted, extending the filing deadline for the defendants' opposition to October 10, 2017. The defendants, however, did not file a response to the plaintiff's motion. The court scheduled the short calendar hearing on the plaintiff's motion for summary judgment as to liability for December 18, 2017. On December 15, 2017, the defendants filed a motion for continuance of the December 18, 2017 hearing on the ground that their counsel was unavailable on that date; they requested a one to two week continuance. Despite the defendants' request for a continuance and the plaintiff's acknowledgment to the court that such a motion had been filed, the court stated that it did not have the motion for continuance in front of it, and it granted the plaintiff's motion for summary judgment, without argument and in the defendants' absence.

         On February 7, 2018, the plaintiff filed a motion for a judgment of strict foreclosure, to which the defendants objected. On February 20, 2018, the court rendered a judgment of foreclosure by sale, setting a sale date of April 28, 2018. This appeal followed.

         On appeal, the defendants claim that the court improperly granted the plaintiff's motion for summary judgment as to liability. Specifically, they argue that although the plaintiff readily acknowledged in both its complaint and in its memorandum of law in support of its motion for summary judgment that the parties had entered into a loan modification agreement on November 17, 2010 (2010 modification agreement), neither the plaintiff nor its affiant, Duckett, ever alleged that the defendants were in default of the 2010 modification agreement; the only allegation of default was as to the original November 2, 2006 promissory note (2006 note), which, the plaintiff acknowledges in its complaint, was ‘‘affected'' by the 2010 modification agreement. The defendants further argue that the plaintiff also failed to provide a copy of the 2010 modification agreement to the court or to set forth its terms. Accordingly, they argue, ...


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