Opinion
No. CV 07-5013037-S
January 4, 2011
MEMORANDUM OF DECISION ON PLAINTIFF'S MOTION TO WITHDRAW
Plaintiff Bank of New York as Trustee for B.S. Alt. A 2005-9 moves to withdraw its foreclosure action, pursuant to Conn. Gen. Stat. § 52-80, in this hotly contested case. The procedural history is as follows:
Plaintiff initiated a foreclosure action against defendant Sonja Bell on September 6, 2006. The complaint alleges that on June 17, 2005, Sonja Bell executed a note in the amount of $650,000 in favor of Altara Home Mortgage, LLC and a mortgage on her home at 54 Main Street, Glastonbury, Connecticut in favor of Mortgage Electronic Registration Systems, Inc. The complaint further alleges plaintiff is the holder of the note, and the mortgage was assigned to it and will be recorded in the Glastonbury Town Records. Finally, the complaint alleges the note is in default and plaintiff has elected to accelerate the balance due on the note.
An attorney for defendant Sonja Bell filed an answer, special defenses and counterclaim. On April 18, 2008, plaintiff moved for summary judgment. In support of the motion, an affidavit of China Brown, Vice President of Loan Documentation, Bank of New York, stated that Altara Home Mortgage, LLC endorsed the note to Ohio Savings Bank and that bank then endorsed the note to J.P. Morgan Chase as trustee. The Bank of New York acquired the corporate trust business of J.P. Morgan Chase pursuant to a Purchase and Assumption Agreement by and between Bank of New York and J.P. Morgan Chase Company, dated April 7, 2006, as amended and restated as of October 1, 2006. By reason of the effectuation of the Agreement, plaintiff is now the holder of the note. The affidavit further states that defendant has failed to make monthly mortgage payments since the payment due June 1, 2007.
The affidavit of Diane Pickett, Vice President of the Bank of New York, certified that J.P. Morgan Chase Bank was appointed trustee under certain agreements; pursuant to a Purchase and Assumption Agreement by and between the Bank of New York and J.P. Morgan Chase, dated as April 7, 2006, as amended and restated of October 1, 2006, the Bank of New York acquired the corporate trust business of J.P. Morgan Chase; as a result of that transaction, the Bank of New York, as successor trustee, has all the rights, title and interest to the trust under the Agreement; and that the Agreement does not require the filing of any documentation or further acts on the part of the parties to the Agreement to enable the Bank of New York to act as trustee under the Agreement.
Based on these affidavits, the court granted plaintiff's motion for summary judgment, as to liability only, on the complaint against defendant Sonja Bell and later on defendant Sonja Bell's counterclaim.
On June 10, 2008, judgment of strict foreclosure was entered in favor of plaintiff against defendant Sonja Bell, finding the debt to be $726,602.67, the appraised value to be $634,000 and setting a law day of July 27, 2008. On the day before that law day, defendant filed for bankruptcy which opened the judgment of strict foreclosure and vacated the law date. Plaintiff moved to reset the law day, and it was reset for February 9, 2009. After further motions to extend the law day, it was finally reset for May 26, 2009. On February 13, 2009, defendant filed a motion to dismiss due to lack of subject matter on the ground that plaintiff was not the holder of the note. This motion was filed by Sonja Bell pro se even though she was then represented by an attorney.
Thereafter, there began a flurry of motions mainly related to discovery. On April 28, 2009, the court determined the motion to dismiss required an evidentiary hearing. In its memorandum of decision so holding, the court vacated the foreclosure judgment but stated plaintiff could move to reinstate the judgment if the motion to dismiss was denied. The hearing commenced on May 27, 2009, and continued for several days. Plaintiff endeavored to prove it had standing through the testimony of Mr. Mitchell, Vice President of Bank of New York and by submitting into evidence numerous documents to show plaintiff was the holder of the note by virtue of the transfer of corporate trust assets of J.P. Morgan Chase to the plaintiff. During the course of the evidentiary hearing, Jonathan Bell, husband of Sonja Bell, moved to be made a party on the ground that he has an interest in the property by virtue of a resulting trust. The court required testimony. Jonathan Bell testified that he put up the money for the property, and Sonja Bell and he agreed that he would have an ownership interest in the property. Plaintiff cross-examined Jonathan Bell. The court found that Jonathan had a resulting trust and, as a consequence, had an interest in the property and could be allowed as a pro se defendant to participate in the case.
Plaintiff and defendants sought additional discovery, resulting in the filing of interrogatories and requests to produce by both sides, objections to interrogatories and rulings by this court, motions to reargue, motions for compliance, and motions for contempt.
On September 9, 2009, defendant Jonathan Bell, pro se, moved to dismiss with prejudice due to lack of subject matter jurisdiction based on plaintiff's lack clean hands. The battle over discovery continued. Defendants obviously intended to prove their motions to dismiss on the basis of documents. During all this time, defendants never took the deposition of any witnesses.
On January 8, 2010, plaintiff filed a withdrawal of the complaint as to all defendants. On January 15, 2010, plaintiff filed a withdrawal of the action and, noting its judgment against Sonja Bell, stated "plaintiff's action was withdrawn as to all remaining defendants."
Before plaintiff's application for withdrawal could be heard, plaintiff removed the case to the federal district court. The case was remanded to this court in July 2010. Plaintiff then sought to move the case to complex litigation which motion was eventually denied. The court tried to set a date to hear all pending motions on October 4, 2010. The parties indicated they needed more time for discovery and the court set the date for hearing of all motions on December 4, 2010. The first motion heard was plaintiff's application to withdraw.
The statute invoked, Conn. Gen. Stat. § 52-80, provides in part as follows:
"The plaintiff may withdraw any action so returned to and entered in the docket of any court, before the commencement of a hearing on the merits thereof. After the commencement of a hearing on an issue of fact in any such action, the plaintiff may withdraw such action, or any other party thereto may withdraw any cross complaint or counterclaim filed therein by him, only by leave of court for cause shown." (Emphasis added.)
At the start of the hearing, plaintiff's attorney stated he sought to withdraw the action against Sonja Bell and all other defendants. Since the withdrawal would not affect defendants' counterclaims, he stated plaintiff was not withdrawing the summary judgment denying Sonja Bell's counterclaims. The court will deal with that contention infra.
Section 52-80 permits withdrawal in two situations: (1) before the commencement of a hearing on the merits; and (2) after the commencement of a hearing on an issue of fact "by leave of the court for cause shown."
Plaintiff, in its brief in support of its application to withdraw, asserts that the motion for summary judgment, which was not opposed by Sonja Bell, was not a hearing on the merits, citing A.I. Credit Corp. v. M.A. Grenski, Inc., Superior Court, judicial district of New Haven, Docket No. CV 01-0452088 (March 11, 2003, Silbert, J.) ( 34 Conn. L. Rptr. 317). Plaintiff further asserts that a hearing on a motion to dismiss is likewise not a hearing on the merits, citing Isaac v. Mount Sinai Hospital, 210 Conn. 721, 732, (1989). As a consequence, plaintiff claims that its right "to withdraw an action before a hearing on the merits, as allowed by Section 52-80, is absolute and unconditional." Housing Authority v. Hird, 13 Conn.App. 150, 157, (1998). See also Sicaras v. Hartford, 44 Conn.App. 771, 775-76, cert. denied, 241 Conn. 916, (1997).
As will be shown below, superior court decisions have denied the right to withdraw even though there is no hearing on the merits.
The cases cited by plaintiff are not applicable here because, in the instant case there has been a hearing on the merits. The court entered a judgment of strict foreclosure in favor of plaintiff against defendant Sonja Bell. Of necessity, the court had to determine that plaintiff possessed the original note, find the amount of the debt, the amount of the appraised value of the property, determine that the proper remedy was a strict foreclosure and set the law day. A judgment entered in a case is quintessentially a hearing on the merits of a case. The fact that this court vacated the judgment when the court found it had to hear evidence on the motion to dismiss is irrelevant. In that decision, the court said plaintiff could reinstate the judgment if the motion to dismiss was denied.
This leaves plaintiff with the necessity to establish cause for the withdrawal. In oral argument, plaintiff stated its cause was judicial economy. The central fact of this case is that the original note was last endorsed to J.P. Morgan Chase. Plaintiff, in the evidentiary hearing on the motion to dismiss, endeavored to prove ownership of the note based on the enormously complex transaction between J.P. Morgan Chase and the Bank of New York. That transaction has been vigorously attacked by the defendants.
This case was started in September 2006. After defendant Sonja Bell filed her motion to dismiss in February 2009, the case has been the subject of an evidentiary hearing and flurry of discovery motions relating to the J.P. Chase and Bank of New York transaction. Some of those motions have still not been argued to this date. The paper file of this case consists of five cartons, and there are 428 computer entries to date. The likelihood is that a hearing on defendants' motion to dismiss will not be concluded until at least May of 2011. If a hearing on the merits of plaintiff's complaint is necessary, that will not be concluded until at least June or July of 2011, and there will be the inevitable appeal.
All this litigation plaintiff argues, can be obviated by J.P. Morgan Chase simply endorsing the note to Bank of New York. Then Bank of New York can bring a new foreclosure action based on it, not only having the original note, but it being endorsed to it. Its standing will be clear and not be grounded on the extremely complicated transaction between J.P. Morgan Chase and plaintiff, which is the reason for the extended litigation in this case. The judicial economy realized by such a step constitutes adequate cause for plaintiff to withdraw this action.
However, as indicated above, the declarations in the Hird and Sicaras cases, that the right of a plaintiff to withdraw a case when there has been no hearing on the merits is "absolute and unconditional," is not necessarily so. In the early case of Bristol v. Bristol Water Co., 85 Conn. 663, 673, (1912), the court held: "Every action may be withdrawn prior to a verdict or final judgment whenever it can be done without injuriously affecting rights of the defendant acquired by reason of the action." That case was decided before the enactment of Section 52-80. It recognized that by stating a withdrawal may be allowed "in the absence of statutory prohibition." Id., 670-71.
Section 52-80 was enacted in 1925. See 1925 Public Acts, Chapter 163.
Nevertheless, since the Bristol case, a number of Superior Court cases have relied on it for denying withdrawals, even when there has not been a hearing on the merits but when the withdrawal would "undermine or compromise defendants' rights." Rocque v. Sound Mfg., Inc., Superior Court, judicial district of New London, Docket No. CV 99-588424 (April 9, 2003, Sheldon, J.) ( 34 Conn. L. Rptr. 502, 503).
In Kantrowitz v. Clipfel, 21 Conn.Sup. 371, 372, (1959), a plaintiff, who had failed to timely file for a jury trial, withdrew the case and brought a new suit for the same cause of action, claiming the case to the jury. The court granted defendants' motion to restore the original case to the docket on the ground that the defendants had acquired substantial rights in the original action by the denial of a jury trial. Id., 373. To the same effect is Hughes v. Carmody Torrance, Superior Court, judicial district of Waterbury, Docket No. 128305 (October 15, 1996, Leheny, J.) [ 18 Conn. L. Rptr. 24].
In Nationwide Mutual Ins. Company v. Blesso, Superior Court, judicial district of New Britain, Docket No. CV 98-485520 (May 11, 1999, Shortall, J.) [ 24 Conn. L. Rptr. 541], a plaintiff insurance company sought to sever two consolidated cases it brought against an insured and a tortfeasor. The court denied plaintiff's motion to sever and six days later plaintiff withdrew the action. Defendants then moved that the case be restored to the docket. The court held defendants had a "vested" right to have the cases heard in one proceeding and granted defendants' motion to restore the case to the docket.
In Byrd v. Leszcynski, Superior Court, judicial district of Hartford, Docket No. CV 96-0564351 (August 25, 2000, Berger, J.) ( 28 Conn. L. Rptr. 88), plaintiff withdrew the action after the court precluded plaintiff from offering three expert witnesses. The court allowed the case to be restored to the docket, finding plaintiff's tactical use of the withdrawal after a ruling against him deprived defendant of substantial rights. Id., 89.
In Green v. Green, Superior Court, judicial district of Stamford, Docket No. FA 96-0154265 (April 27, 1998, Tierney, J.) ( 22 Conn. L. Rptr. 175, 176-78), in which plaintiff sought to withdraw a marital dissolution action after defendant had been granted an order of visitation, the court restored the case to the docket.
The import of these cases is that the vested right of the party opposing the withdrawal was the result of a ruling in the original action.
In oral argument, defendants claim they will lose certain vested rights based on rulings of this court if a withdrawal is allowed. One of these claimed vested rights is certain admissions claimed to be made by plaintiff by reason of its failure to respond to defendants' requests for admission. However, the court has granted plaintiff the right to amend its responses to defendants' requests for admissions and plaintiff's amended responses eliminate the admissions which defendants claimed were favorable to it.
Defendant Jonathan Bell claims another procedural advantage he will lose if this case is withdrawn is the court's ruling that he has an interest in the property as a consequence of a resulting trust that allowed him to be deemed a defendant and to appear and argue pro se. However, the court takes judicial notice that, in a foreclosure action plaintiffs endeavor to cite in all persons as defendants who have an interest in the property or claim to have such an interest. The reason plaintiffs do so is that the judgment of strict foreclosure on the day after the last law day of right of redemption will give a plaintiff clear title to the property or, in the event of a foreclosure by sale, the successful bidder will obtain clear title. The court concludes that when plaintiff initiates its second foreclosure action against the subject property it will surely cite Jonathan Bell as a defendant because he claims an interest in the property as a result of a purported resulting trust.
As a consequence, the court has made no ruling from which either of the defendants have acquired any vested rights that would be denied to them by reason of a withdrawal of this action.
In Roque v. Sound Mfg, Inc., supra, 34 Conn. L. Rptr. 503-04, a plaintiff's motion to withdraw was granted when defendants made claims of prejudice but had not acquired any rights arising from any judicial rulings of the court. In the present case, defendants' amended motion to dismiss, based on plaintiff's lack of clean hands, alleges plaintiff filed false documents with government agencies, filed a false assignment of mortgage on the Glastonbury Land Records, manufactured fabricated documents, produced false documents alleging completion of the Purchase and Assumption Agreement, and back dated the signing of other agreements. These are allegations only. No hearing has been held on them, plaintiff has not had the opportunity to refute them, and the court has not rendered any ruling on them. As held in CT Page 2310 Rocque, mere claims do not create a vested right to preclude a withdrawal.
Defendants further claim they have a right to have the motion to dismiss ruled on before the court can grant a withdrawal. Section 52-80 does not provide such a condition for withdrawal. Moreover, in Hird, supra, 13 Conn.App. 150, the court allowed a plaintiff to withdraw a summary process action when a motion to dismiss was pending. Likewise, in Marsillio v. Marsillio, Superior Court, judicial district of Fairfield, Docket No. FA 93-0301875 (November 2, 1994, Bassick, J.) ( 12 Conn. L. Rptr. 665), the court similarly granted a request to withdraw while a motion to dismiss was pending. Further, in Travelers Property Casualty Co. v. Twine, 120 Conn.App. 823, 826-27 (2010), a plaintiff was allowed to withdraw its action even after a hearing on a defendant's motion for summary judgment had been held, but the motion not yet decided.
In the present case, insofar as defendants' motion to dismiss is based on lack of standing because plaintiff allegedly is not holder of the note, the granting of that motion has the same effect as plaintiff's withdrawal of this action. In either event, plaintiff may bring another foreclosure action.
Defendants' amended motion to dismiss claims a right to dismiss with prejudice based on plaintiff's lack of clean hands. In certain circumstances, the doctrine of unclean hands may be pleaded as a special defense to a mortgage foreclosure proceeding. Thompson v. Orcott, 257 Conn. 301, 308-11, (2001). While the doctrine may be asserted as a special defense on the merits of the case, there exists no Connecticut cases to support the proposition that the doctrine may, in and of itself, provide the basis for a motion to dismiss for lack of jurisdiction. Rather, as stated in Mortgage Electronic Registration Systems, Inc. v. Leslie, Superior Court, judicial district of Tolland, Docket No. CV 04-4001051 (May 25, 2005, Scholl, J.), "Unclean hands may be cited as a defense to an equitable action such as a foreclosure, but by its nature it does not affect the standing of the Plaintiff to pursue the action, or the court's jurisdiction to determine it, but only whether the court will grant the relief requested." (Emphasis added.)
Moreover, defendant Sonja Bell has filed a federal district court lawsuit and both defendants have filed counterclaims in this court alleging virtually the same facts as alleged in their amended motion to dismiss. Neither the federal suit nor the defendants' counterclaims are affected by granting plaintiff's motion to withdraw. See Boothe v. Armstrong, 76 Conn. 530, 533, (1904); Green v. Green, supra, 22 Conn. L. Rptr. 176-78. In their counterclaims, defendants allege negligence, fraudulent foreclosure, six counts of fabricating physical evidence, four counts of conspiracy to a wrongful foreclosure, counts of negligent and intentional infliction of emotional harm, and four counts of violation of Connecticut Unfair Trade Practices Act. In either the federal district court case or the counterclaims filed in this action, the defendants have recourse for their claims of plaintiff's alleged fraud and if they succeed, they may recover punitive damages and legal fees.
Finally, § 52-80 provides for a withdrawal "by leave of the court for cause shown." Here, this court has determined plaintiff has shown cause. Therefore, it is within its discretion to grant the withdrawal. Derby v. Di Yanno, 142 Conn. 708, 713, (1955).
In determining whether to exercise its discretion, the court takes into account the following factors: (1) this protracted litigation over the motion to dismiss which has generated five boxes of paper files and over four hundred entries on the computer; (2) how easily this litigation, based upon the complex transaction between J.P. Morgan Chase and Bank of New York, can be obviated by J.P. Morgan Chase endorsing the note to the Bank of New York and plaintiff bringing a second foreclosure action based on its possession of the endorsed note; (3) defendants have a remedy for the claims of plaintiff's alleged fraud in their federal district court suit and the counterclaims in this action; and (4) defendants have remained in their home for over three and a half years without paying the mortgage and not even paying the real estate taxes, which plaintiff has incurred over this time. Based on these factors, the court exercises its discretion to grant plaintiff's motion to withdraw.
The withdrawal of an action "effectively erase[s] the court slate clean as though the action had never been commenced." H.G. Bass Associates, Inc. v. Ethan Allen, Inc., 26 Conn.App. 426, 431 (1992). See also Daigneault v. Consolidated Controls Corp., 89 Conn.App. 712, 714, cert. denied, 276 Conn. 913 (2005), cert. denied, 546 U.S. 1217, 126 S.Ct. 1434, 164 L.Ed.2d 137 (2006). Consequently, the court's ruling, granting plaintiff's motion for summary judgment as to the defendant Sonja Bell's counterclaim, is erased. However, this order of withdrawal of the plaintiff's action does not affect defendants' counterclaims.