Opinion
FSTCV096002651S
04-05-2017
Richard Caires v. JP Morgan Chase Bank, N.A. et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE PLAINTIFF MOTION TO DISMISS FOR LACK SUBJECT MATTER JURISDICTION AND LACK OF STANDING DATED APRIL 11, 2016 (#302.00)
Hon. Kevin Tierney, Judge Trial Referee.
The plaintiff, Richard Caires, commenced this litigation on December 1, 2009 against the holder of a mortgage on Mr. Caires' real property, the named defendant, JP Morgan Chase Bank, NA, et al. The defendant, JP Morgan Chase Bank, N.A. et al., in turn filed a one-count Counterclaim on October 21, 2010 (#126.00) seeking a foreclosure of the Richard Caires August 1, 2007 $5,500,000 mortgage. The Counterclaim is the operative pleading in this litigation. This litigation has not gone to judgment.
This is the second Motion to Dismiss that the plaintiff has filed as against the October 21, 2010 Counterclaim. The first Motion to Dismiss was filed by Richard Caries by his attorney alleging lack of standing and subject matter jurisdiction in a somewhat rambling Motion to Dismiss (#220.01). This April 22, 2015 Motion to Dismiss was heard by the undersigned January 4, 2016 at a short calendar hearing. This court denied the Motion to Dismiss from the bench (#220.01). The court's oral decision set forth the reasons for the denial of the Motion to Dismiss, along with the underlying facts and legal authorities. The entire decision on the first Motion to Dismiss was rendered orally. No memorandum of decision was prepared, executed or filed by this court. Neither party ordered a transcript. No signed transcript of the court's January 4, 2016 oral decision is on file.
The April 11, 2016 Motion to Dismiss (#302.00) now before this court contains no specific reasons, facts or legal authority. It merely states: " The Plaintiff moves this Court to dismiss the above action for lack of subject matter jurisdiction and lack of staying." A simultaneous April 11, 2016 seven-page Memorandum was filed that outlined three reasons for the Motion to Dismiss (#303.00). JP Morgan Chase Bank, NA filed its eleven-page February 7, 2017 Objection memorandum (#313.00). The Motion to Dismiss was heard at an evidentiary hearing held by this court on March 21, 2017 at which both parties participated.
Without stating these precepts, the court has applied the rules relating to standing and lack of subject matter jurisdiction in foreclosure actions in considering the motion to dismiss before this court. JP Morgan Chase Bank, National Association v. Simoulidis, 161 Conn.App. 133, 142-46, 126 A.3d 1098 (2015), cert. denied, 320 Conn. 913, 130 A.3d 266 (2016).
" Standing requires no more than a colorable claim of injury; a party ordinarily establishes . . . standing by allegations of injury." Electrical Contractors, Inc. v. Department of Education, 303 Conn. 402, 35 A.3d 188 (2012). " The plaintiff ultimately bears the burden of establishing standing." Wells Fargo Bank, NA v. Strong, 149 Conn.App. 384, 398, 89 A.3d 392 (2014). Once the plaintiff establishes standing, it is the defendant's burden of proof to establish facts that show this court has lack of subject matter jurisdiction by proving the claims set forth in the Motion to Dismiss. Defendant's standard of proof in that regard is the civil standard of proof; fair preponderance of the evidence. Deutsche Bank National Trust Company as Trustee et al. v. Juchniewich et al., Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. FST CV 16-6028759 S, (February 27, 2017, Tierney, J.T.R.). In this case the moving party in the Motion to Dismiss is the plaintiff who commenced this litigation in 2009 and he is the defendant in the October 21, 2010 Counterclaim. Therefore, this court has used the given names of the parties instead of the usual designations of plaintiff and defendant. The above citation of general law assumes that the plaintiff is the foreclosing party, wherein in this litigation the defendant is the foreclosing party.
The court makes the following findings of fact and legal conclusions:
At the March 21, 2017 hearing Richard Caires was represented by counsel of record. JP Morgan's counsel produced a blue ink Adjustable Rate Note dated August 1, 2007. The face amount of the note was $5,500,000 with Richard Caires as the borrower and Washington Mutual Bank, FA as the lender. A photocopy of that Adjustable Rate Note was marked as a full Exhibit. Ex. 1. The Adjustable Rate Note contained a stamped endorsement in blank executed by Cynthia Riley, Vice President, Washington Mutual Bank, FA. Counsel for Richard Caires and the court conducted an examination of both documents on the record. After various objections were made to the photocopy being marked in evidence as a full exhibit of the hearing, the photocopy was marked as Exhibit 1, a full exhibit. The blue ink Adjustable Rate Note was returned to the bank's counsel. This procedure complied with the trial court's inspection obligations. Equity One, Inc. v. Shivers, 310 Conn. 119, 124, 74 A.3d 1225 (2013); Countrywide Home Loans Servicing, Inc. v. Creed, 145 Conn.App. 38, 48, 75 A.3d 38, cert. denied, 310 Conn. 936, 79 A.3d 889 (2013).
The court finds that lender of the $5,500,000 loan was Washington Mutual Bank, FA. That bank has failed and was placed in receivership by the Federal Deposit Insurance Corporation (FDIC). All of the assets of Washington Mutual Bank, FA were acquired by JP Morgan Chase Bank, National Association on September 25, 2008 pursuant to a Purchase and Assumption Agreement (PAA). The PAA was an exhibit before this court. Ex. 3. This court found that the Defendant, Counterclaimant, JP Morgan Chase Bank, N.A. had established that JP Morgan Chase Bank, National Association or its duly authorized agents had possession of the blue ink August 1, 2007 Adjustable Rate Note on October 21, 2010, the date this foreclosure counterclaim was commenced. See date of Counterclaim October 21, 2010 (#126.00). Deutsche Bank National Trust Company, Trustee v. Thompson, 163 Conn.App. 827, 832-33, 136 A.3d 1277 (2016); Deutsche Bank National Trust Company, Trustee v. Cornelius, 170 Conn.App. 104, 114, 154 A.3d 79 (2017). The burden now shifts to Richard Caires to show lack of standing or any of the other reasons set forth in his Motion to Dismiss. " The possession by the bearer of a note indorsed in blank imports prima facie that he acquired the note in good faith for value and in the course of business, before maturity and without notice of any circumstances impeaching its validity. The production of the note establishes his case prima facie against the makers and he may rest there . . . It is for the defendant to set up and prove the facts which limit or change the plaintiff's rights." RMS Residential Properties, LLC v. Miller, 303 Conn. 224, 232, 32 A.3d 307 (2011).
The court will now discuss the three reasons set forth in Richard Caires' Memorandum in support of his Motion to Dismiss (#303.00). (1) " If the plaintiff did not hold the note at the time it commenced this action, then it would have lacked standing and the case must be dismissed." (2) " Therefore, the issue is (sic) did Chase acquire as a result of the PAA (Purchase and Assumption Agreement)." (3) " The Plaintiff is now aware that he should not have named Chase as a Defendant in his case and that the proper party was the FDIC, receiver for WAMU." The court will discuss each of these claims.
(1) If the Plaintiff Did Not Hold the Note at the Time it Commenced This Action, Then it Would Have Lacked Standing and the Case Must be Dismissed
This court has already found that the original named defendant, JP Morgan Chase Bank, National Association, as the plaintiff in the October 21, 2010 foreclosure Counterclaim, had possession of the August 1, 2007 Adjustable Rate Note as of the October 21, 2010 commencement of this foreclosure. That finding satisfies the standards of Deutsche Bank National Trust Company Trustee v. Thompson, supra, 163 Conn.App. 832-33. The court rejects Richard Caires' first claim in his Motion to Dismiss.
(2) Therefore, the Issue is (sic) Did Chase Acquire as a Result of the PAA (Purchase and Assumption Agreement)
The Purchase and Assumption Agreement (PAA) dated September 25, 2008 was marked as a full exhibit in evidence. Ex. 3. It consists of 43 pages including the Table of Contents. Richard Caires argues that JP Morgan Chase Bank, N.A. did not acquire this Adjustable Rate Note as a result of this Purchase and Assumption Agreement because; (1) the Caires' $5,500,000 Adjustable Rate Note is not referenced within the 43-page PAA that Richard Caires obtained from the Federal Deposit Insurance Corporation; (2) There is no schedule of loans whatsoever attached to the PAA and No SCHEDULE 3.1a as stated in Article III 3.1, (3) The language of the PAA indicates " Certain Assets Not Purchased" in Schedule 3.5 and therefore by inference not all assets were conveyed from Washington Mutual Bank, FA to JP Morgan Chase Bank, NA by the September 25, 2008 PAA, (4) Plaintiff's Opposition memorandum states: " Thereafter, the FDIC sold certain WaMu assets to JP Morgan Chase Bank, NA. (#313.00, page 2), and (5) the plaintiff submitted a February 21, 2013 Affidavit in Support of Motion for Summary Judgment that paragraph 9 judicially admitted that not all assets of WaMu were conveyed by the PAA by the use of the phrase " Certain assets." Ex. 6.
This court has tried a number of contested foreclosures in which the original lender was Washington Mutual Bank, FA. This court has found that the September 25, 2008 Purchase and Assumption Agreement conveyed all of the mortgage loans held by Washington Mutual Bank, FA. These loans were conveyed pursuant to the September 25, 2008 Purchase and Assumption Agreement to JP Morgan Chase Bank, NA via the FDIC that had been the receiver of Washington Mutual Bank, NA. Those findings have been confirmed by our Appellate Courts. JP Morgan Chase Bank, National Association v. Simoulidis, supra, 161 Conn.App. 142-46, cert. denied, 320 Conn. 913, 130 A.3d 266 (2016). This fact has been affirmed by our trial and appellate courts even though none of the PAAs in these cases contained either the names of the defendant borrowers, loan numbers or reference to any of the terms of the underlying mortgage at issue.
The Purchase and Assumption Agreement that this court has found in previous trials and the Appellate and Supreme Courts have affirmed in the Simoulidis case, equally contain no attached subsection with specific loans and names of borrowers and equally did not contain any Schedules or listings of specific notes, loans or mortgages. Despite those deficiencies within the PAA, this court has found, as affirmed by the Appellate Court with cert. denied by the Supreme Court, that the September 25, 2008 Purchase and Assumption Agreement conveyed all of the Washington Mutual Bank, FA loans in question to JP Morgan Chase Bank, National Association. The underlying facts placed before this court on the Richard Caires August 1, 2007 $5,500,000 loan and mortgage do not warrant a different conclusion.
The PAA contains several references to the phrase " certain assets." Richard Caires argues that phrase must mean that not all of the assets of Washington Mutual Bank, FA were sold, transferred or conveyed to JP Morgan Chase Bank, N.A. SCHEDULE 3.5 is entitled " Certain Assets Not Purchased." Page 11 in Article 3.5 is headed: " Assets Not Purchased by Assuming Bank." Page 16 in Article 4.8 references the right of JP Morgan Chase Bank, NA to " elects to assume or not to assume each such agreement." The court notes that SCHEDULE 3.5 is clear that the four categories of " Certain Assets Not Purchased" do not relate to promissory notes secured by a mortgage. The SCHEDULE relates to bonds, judgments, furniture and criminal restitution orders. So too, Article 4.8 relates to agreements of the bank to render services, which does not refer to promissory notes or mortgages.
The JP Morgan Chase Bank NA Opposition Memorandum (#313.00, page 2) refers to a quote from Richard Caires's pleadings and is not an affirmative statement by the bank's lawyers that not all mortgage were conveyed to JP Morgan Chase Bank, NA.
The final document submitted by Richard Caires in support of this second claim is contained in paragraph 9 of the February 21, 2013 Affidavit filed as a pleading in this case. (#180.00, page 19 of 99), Ex. 6. " Certain assets of WaMu, including the Note and Mortgage that are the subject of this action were acquired by JPMC." The court finds that statement accurate since the Agreements in Article 4.8 and the four types of assets listed in SCHEDULE 3.5 can be excluded from the sale, conveyance and transfer without affecting JP Morgan Chase Bank, NA ownership claim to promissory notes served by mortgages. The court cannot ascertain a judicial admission binding on JP Morgan Chase Bank, NA that would deprive this court of subject matter jurisdiction by such a simple statement buried in an otherwise routine Affidavit.
Richard Caires' counsel argues and submits a copy of a decision issued by the Florid. District Court of Appeal, Fourth District on March 23, 2016; Cruz v. JP Morgan Chase Bank, N.A. Richard Caires offered as a full exhibit, that March 23, 2016 decision of Cruz v. JP Morgan Chase Bank, NA . Ex. 4. The legal citation was not apparent in this copy of the Cruz decision. The defendant failed to inform this court that the March 23, 2016 decision was withdrawn by the Florida District Court of Appeal, Fourth District. A new and different decision was issued in that case by the same court on June 15, 2016. " We . . . withdraw our previously issued opinion and substitute the following in its place." 199 So.3d 992, 993 (June 15, 2016). The March 23, 2016 decision currently states: " Opinion withdrawn and superceded on denial of rehearing." " See 2016 WL 334651." This court finds that the current Cruz decision is not binding on this court because; (1) it is based on a Florida foreclosure procedure which is unlike Connecticut foreclosure procedure; (2) Cruz involved a lost note and herein the blue ink Adjustable Rate Note was presented to the court; (3) The Florida trial court denied the bank's amendment to add a lost note count, called in Florida a reestablishment count; and (4) the Cruz decision did not turn on the wording of the September 25, 2008 PAA.
A number of Appellate Courts in various jurisdictions have upheld trial court's finding that the September 25, 2008 Purchase and Assumption Agreement conveyed all of Washington Mutual Bank, FA assets to JP Morgan Chase Bank, National Association. JP Morgan Chase Bank, NA v. Carmichael, Court of Appeal, Fourth District, Division 1, State of California, Docket No. D063531 January 30, 2015. 2015 WL 401766. Not officially Published.
Article 3.1 " Assets Purchased by Assuming Bank" of the Purchase and Assumption Agreement in evidence before this court is identical to that version in the Carmichael case. Article 6.1 " Transfer of Records" of the Purchase and Assumption Agreement before this court is identical to that same clause in Carmichael . Article 6.1(c)(v) refers to " mortgages." The Carmichael court held; " Accordingly, the PAA established that Chase acquired WaMu's interest in the Loan and Chase was the real party in interest with standing to sue to protect its interests." Id., pg. 7.
The following Connecticut trial courts have found that the PAA conveyed all mortgages to JP Morgan Chase Bank, NA. JP Morgan Chase Bank, NA v. Porzio, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket Number FST CV 09-5010388 S, (March 20, 2015, Tierney, J.T.R.); JP Morgan Chase Bank v. Simpson Manigault, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket Number FST CV 09-5009920 S (December 31, 2012, Tierney, J.T.R.); JP Morgan Chase Bank, NA v. Essaghoff, Superior Court, judicial district of Stamford/Norwalk at Stamford, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket Number FST CV 09-5010920 S (October 15, 2015, Tierney, J.T.R.); JP Morgan Chase Bank, NA v. McPhaden, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket Number FST CV 09-5009848 S (September 14, 2010, Mintz, J.) [50 Conn.L.Rptr. 658, ]; Stepney, LLC v. JP Morgan Chase Bank NA, Superior Court, judicial district of Fairfield at Bridgeport, Docket Number FBC CV 12-6024610 S, (October 5, 2012, Richards, J.); JP Morgan Chase Bank, NA v. South Park Apartments, LLC, Superior Court, judicial district of Hartford, Docket Number HHD CV 09-5026117 (September 10, 2007, Stengel, J.T.R.).
Scott v. JP Morgan Chase Bank, NA, 214 Cal.App.4th 743, 154 Cal.Rptr.3d 394 (2014), held that the Purchase and Assumption Agreement was entitled to judicial notice as conveying all mortgage loans from Washington Mutual Bank. (" Moreover, as explained post the FDIC's official act of transferring certain WaMu assets (but not certain liabilities) to J P Morgan as of September 25, 2008 as--evidenced by the P& A Agreement--is an official act subject to judicial notice under Section 452, subdivision (c) under the circumstances of this case").
The court rejects Richard Caires' second claim in this Motion to Dismiss.
(3) The Plaintiff is Now Aware That He Should Not Have Named Chase as a Defendant in His Case and That the Proper Party Was the FDIC, Receiver for WAMU
" When a holder seeks to enforce a note through foreclosure, the holder must produce the note. The note must be sufficiently endorsed so as to demonstrate that the foreclosing party is a holder, either by specific endorsement to that party or by means of a blank endorsement to bearer. If the foreclosing party shows that it is a valid holder of the note and can produce the note, it is preassumed that the foreclosing party is the rightful owner of the debt. U.S. Bank, National Association, Trustee v. Schaeffer, 160 Conn.App. 138, 150, 125 A.3d 262 (2015)."
In this case the defendant Counter claimant, JP Morgan Chase Bank, NA, has presented the August 1, 2007 blue ink Adjustable Rate Note for examination by the court a photocopy of which has been marked as Ex. 1. The blue ink version was then returned by the court on the record to the bank's counsel. Nowhere within either Ex. 1 nor the blue in Adjustable Rate Note is the mention of the Federal Deposit Insurance Corporation being a party to the note, neither in the body of the Adjustable Rate Note or any endorsement or allonge attached to the Adjustable Rate Note. Richard Caires offers no evidence that the FDIC was the actual owner of the note. He appears to be claiming that since the Purchase and Assumption Agreement only conveyed " certain assets" and there was no schedule of any notes attached to the Purchase and Assumption Agreement, by inference, the transfer to JP Morgan Chase Bank, National Association failed and the Note remained owned by the FDIC that had taken over a failed bank, Washington Mutual Bank, FA in September 2008. No documentary or testimonial proof to that effect was offered at the hearing.
Since the court found that JP Morgan Chase Bank, National Association had proven in its first instance that it had possession and ownership of the note, the burden of proof to show lack of subject matter jurisdiction and lack of standing fell to Richard Caires. " That presumption may be rebutted by the defending party, but the burden is on the defending party to provide sufficient proof that the owner of the note is not the owner of the debt, for example, by showing that ownership of the debt had passed to another party. It is not sufficient to provide that proof, however, merely by pointing to some documentary lacuna in the chain of title that might give rise to the possibility that some other party owns the debt. In order to rebut the presumption, the defendant must prove that someone else is the owner of the note and debt. Absent that proof, the plaintiff may rest its standing to foreclose on the status as the holder of the note." U.S. Bank, National Association Trustee v. Schaeffer, supra, 160 Conn.App. 150.
The court finds that Richard Caires' argument in this regard merely has pointed to a claim of documentary lacuna and this is insufficient proof that the FDIC was proper party to commence and maintain this foreclosure.
This court rejects Richard Caires' third claim in this Motion to Dismiss.
Although not cited within the body of the Motion to Dismiss nor in its supporting Memorandum, Richard Caires' counsel made a number of other arguments claiming that they rise to the level of lack of subject matter jurisdiction. Among those claims are; (1) the signature on the August 1, 2007 Adjustable Rate Note is not that of Richard Caires; (2) there is no discernable imprint or indentation on the back of the page where the Richard Caires signature appears on the August 1, 2007 Adjustable Rate Note; (3) the Adjustable Rate Note offered to the court is a fraud and forgery; and (4) the attorney offering the note should have testified that it was " the original" August 1, 2007 Adjustable Rate Note and failing that testimony the Adjustable Rate Note should not have been examined by the court. The defendant offered no legal authority for any of these legal or factual claims. There is no legal authority furnished to this court that these objections rise to the level that deprive this court of subject matter jurisdiction.
The court will discuss separately each of the above four claims even though they were not contained in the Motion to Dismiss (#302.00) or the Supporting Memorandum (#303.00).
(1) The signature on the August 1, 2007 Adjustable Rate Note is not that of Richard Caires.
(2) There is no discernable imprint or indentation on the back of the page where the Richard Caires signature appears on the August 1, 2007 Adjustable Rate Note.
The court will discuss both claims (1) and (2) in this first section.
The validity of the signature was not " specifically denied" in any of Richard Caires' pleadings as required by Gen. Stat. § 42a-3-308(a). In effect it is trial by ambuscade to raise forged signatures without advance notice in the pleadings. Nweeia v. Nweeia, 142 Conn.App. 613, 618, 64 A.3d 1251 (2013) " (. . . would encourage trial by ambuscade, which is unfair to both the trial court and the opposing party").
(3) The Adjustable Rate Note offered to the court is a fraud and forgery.
In addition to the forgery of the Richard Caires' signature, he claims that there were multiple versions of the Adjustable Rate Note, which itself is proof of fraud. The first copy was before this court marked as Exhibit 1. It is a photocopy of the August 1, 2007 blue ink Adjustable Rate Note.
The second copy was obtained by Richard Caires on January 26, 2016 in response to his prior written request. That second copy of the August 1, 2007 Adjustable Rate Note is different from Exhibit 1 in the following aspects: there is no endorsement, there is a Certified Stamp on the front page, there is no squiggle stamp on the top of the front page, the font is smaller, the printing is brown, and there are prong holes on the top. Ex. 5.
The third copy was offered as Exhibit 2. The differences from Exhibit 1 are: a bar code on the upper left of the first page, " Case 3:09-cv-02142.VLB" is at the top of each page, " Caires Original 0241" is printed at the bottom right of each page, the font is smaller than Ex. 2, there is an ink squiggle on the front page, and there is no endorsement.
The court was presented with only one blue ink copy of the above three notes and it was marked as Exhibit 1. That fact is sufficient for the court to establish subject matter jurisdiction. The court notes no difference in any of the three versions of the note as to the preprinted language or the typed language. Additional copies obtained from scanned computer records that show differences, do not deprive this court of subject matter jurisdiction.
(4) The attorney offering the note should have testified. No case law requires that testimony. None was offered to this court. Only one case discusses attorney statements as to the note and that was as to the possession of the note at the commencement of the foreclosure. One trial court accepted counsel's uncontested statement not under oath as to his law firm's possession of the blue ink version of the note. Equity One, Inc. v. Shivers, supra, 310 Conn. 124.
Attorney's testifying in contested issues are a fault of Rules of Professional Conduct, Rule 3.7, Lawyer as Witness. The court should allow the litigating attorney as a witness as a last result, if ever.
The court rejects all four of the above stated additional reasons as being insufficient to deprive this court of subject matter jurisdiction.
The court has the power to hear as defenses to foreclosure including whether or not the Adjustable Rate Note presented to the court was in fact a fraud or a forgery. Amodio v. Amodio, 247 Conn. 724, 728, 724 A.2d 1084 (1999). This court has subject matter jurisdiction to hear and try those issues and the mere claim that the note was forged should not deprive this court of the subject matter jurisdiction to determine what the true facts are. Schiavone v. Urbain, Superior Court, judicial district of Fairfield at Bridgeport, Docket Number CV11-6021020-S (April 12, 2012, Radcliffe, J.) [53 Conn.L.Rptr. 833, ]; 73-75 Main Avenue, LLC v. P.P. Door Enterprise, Inc. et al., 120 Conn.App. 150, 158, 991 A.2d 650 (2010); Tasoulas v. Tasoulas, Superior Court, judicial district of New London, Docket Number KNL CV 15-5014977 S, (May 20, 2016, Vacchelli, J.) No authority to that effect was offered other than the objection made at the time of proffer for this court's inspection of the documents in open court. The two cases, Shrivers and Creed, previously cited, that require this court to inspect the loan documents do not even hint of any subject matter jurisdiction issues that deprive the court of the right to inspect the loan documents.
The Plaintiff Motion to Dismiss for Lack Subject Matter Jurisdiction and Lack of Standing dated April 11, 2006 (#302.00) is denied.