Opinion
No. HHD-CV-10-6012207-S
August 25, 2011
MEMORANDUM OF DECISION ON MOTION FOR PARTIAL SUMMARY JUDGMENT
INTRODUCTION
In this case, plaintiff CCMS 2005-CD1 Goodwin Office, L.L.C. ("Lender") has sued defendants Northland Goodwin, L.L.C. ("Borrower") and Northland Fund II, L.P. ("Guarantor") to foreclose on a mortgage for certain real property known as 1 Haynes Street, 225 Asylum Street, 100-116 Ann Street and 252 Pearl Street in Hartford, Connecticut, and to recover a deficiency judgment for all money due and owing to it in excess of the value of the mortgaged property under a note evidencing the $33 million loan secured by the mortgage. The loan was made to the Borrower by the Lender's predecessor-in-interest, Deutsche Banc Mortgage Capital, L.L.C. ("Original Lender"), on September 8, 2005. Under the terms of the note and mortgage, the Borrower promised to make monthly payments of principal and interest through October 1, 2010, by which date the entire loan was to be repaid. Under the terms of the note and mortgage, failure by the Borrower to make any such promised payment would constitute an event of default, upon the occurrence of which the Original Lender or its successor-in-interest would become entitled, if the Borrower failed to cure within thirty days of receiving notice of the default and a demand for cure, to accelerate the loan and demand immediate payment of all sums due and owing to it under the loan documents. The note was further secured by a guaranty, under which the Guarantor promised, inter alia, that, in the event of a default, it would both pay to the Original Lender or its successor-in-interest all sums generated by rental of the mortgaged property net of operating expenses and compensate the Original Lender or its successor-in-interest for all waste committed by the Borrower upon such property.
On September 13, 2005, the Original Lender assigned the loan to LaSalle Bank National Association, as Trustee for the Registered Holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-C1 ("Trustee"). Thereafter, on or about January 1, 2010, the Borrower ceased making monthly payments under the note and mortgage to the Trustee. On March 15, 2010, the Trustee duly notified the Borrower and the Guarantor, in a letter from its counsel, that there had been a default in payment under the terms of the note and mortgage and demanded immediate compliance with such terms. When the Borrower failed to cure its default, the Trustee notified the Borrower, in another letter from its counsel, that it had accelerated the loan and demanded immediate repayment of the entire loan. On that same date, in a separate letter to the Guarantor from its counsel, the Trustee demanded that the Guarantor begin at once to turn over to it all rents generated by the mortgaged property.
Following the above-described demands for payment, which neither the Borrower nor the Guarantor complied with, the Trustee assigned the loan, the note, the mortgage, and all other loan documents to the plaintiff Lender, which brought this action to foreclose on the mortgaged property and to recover a deficiency judgment in an amount due representing the difference between the value of the mortgaged property and the amount of the Borrower's unpaid debt under the loan documents. The case is now before this Court on the plaintiff's motion for partial summary judgment dated April 1, 2011.
In its motion, the plaintiff seeks summary judgment as to liability only on its claims for foreclosure of the mortgage and enforcement of the note, as pleaded in counts one and two of the complaint. It acknowledges, in so doing, that its claim for a deficiency judgment is not amenable to summary judgment, for there are still genuine issues of material fact to be decided as to the fair market value of the mortgaged property and the amount of the Borrower's total debt under the loan documents. Those determinations, it concedes, must be made at a hearing in damages.
The plaintiff argues that it is entitled to summary judgment as to the defendants' liability on its claims for foreclosure of the mortgage and for enforcement of the note, because there is assertedly no genuine issue of material fact either that it owns the loan, the note, the mortgage, and all other loan documents or that the Borrower defaulted on the loan by failing to make all payments required of it under those documents. In support of its motion, the plaintiff initially filed a supporting memorandum of law together with an affidavit and several attached exhibits from Mr. Dennis van der Reis, an asset manager for LNR Partners, LLC. LNR Partners, LLC is the successor by statutory conversion to LNR Partners, Inc., the non-member manager of the plaintiff Lender and the special servicer for it of the subject loan.
The exhibits attached to the van der Reis Affidavit were as follows: a promissory note from Northland Goodwin, LLC to Deutsche Banc Mortgage Capital, LLC, dated September 8, 2005 (exhibit A); an open-end mortgage and security agreement from Northland Goodwin, LLC to Deutsche Banc Mortgage Capital, LLC, dated September 8, 2005 (exhibit B); two Uniform Commercial Code financing statements (UCC) (exhibits C and D); an assignment of leases and rents from Northland Goodwin, LLC to Deutsche Banc Mortgage Capital, LLC (exhibit E); a guarantee and indemnity agreement by Northland Goodwin, LLC and Northland Fund II, LP in favor of Deutsche Banc Mortgage Capital, LLC, dated September 8, 2005 (exhibit F); an environmental indemnity agreement by the defendants in favor of Deutsche Banc Mortgage Capital, LLC, dated September 8, 2005 (exhibit G); a manager's consent and subordination of management agreement by Northland Investment Corp., dated September 8, 2005 (exhibit H); an allonge to the promissory note, transferring it from Deutsche Bank Mortgage Capital, LLC to LaSalle Bank National Association as trustee for the registered holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-C1, executed by Sandy Vergano (exhibit I); an assignment of mortgage, security agreement and leases and rents from Deutsche Banc Mortgage Capital, LLC to LaSalle Bank National Association as trustee for the registered holders of the CD 2005-C1 Commercial Mortgage Pass Through Certificates, Series 2005-C1, executed on September 13, 2005 by Sandy Vergano (exhibit J); a corrected assignment of mortgage, security agreement and leases and rents from Deutsche Banc Mortgage Capital, LLC to LaSalle Bank National Association as trustee for the registered holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, executed January 7, 2009, correcting the name of the assignee (exhibit K); five additional UCC statements (exhibits L, M, N, O and P); a limited power of attorney (exhibit Q); an allonge transferring the note from Bank of America, N.A., a National Banking Association, successor by merger to LaSalle Bank National Association as trustee for the registered holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1, executed by Randolph J. Wolpert (exhibit R); an assignment of the mortgage to CCMS 2005-CD1 Goodwin Office, LLC (exhibit S); an assignment of leases and rents to CCMS 2005-CD1 Goodwin Office, LLC (exhibit T); two additional UCC statements (exhibits U and V); three demand letters (exhibits W, X, Y); two records of financial transactions (exhibits Z and AA); a copy of a notice of lis pendens (exhibit BB); a certified copy of a transcript of the deposition of Steven P. Rosenthal (exhibit CC); and copies of emails between the parties' attorneys regarding witnesses (exhibit DD).
The defendants initially responded to the plaintiff's motion by filing both a reply memorandum in opposition to it and a motion to strike the van der Reis Affidavit. In their reply memorandum, the defendants argued: (1) that partial summary judgment is not available in a foreclosure action; (2) that partial summary judgment is not available to dispose of a defendant's special defenses; (3) that the initial van der Reis Affidavit is insufficient to establish the competence of the affiant to testify to the matters averred to therein; (4) that summary judgment as to liability cannot be granted in a foreclosure action without first establishing the amount of the defendant's debt, which in this case admittedly cannot be done; (5) that several exhibits identified as "true and complete copies" in the van der Reis Affidavit are insufficiently validated to support the granting of summary judgment; (6) that the plaintiff cannot establish its right to recover a prepayment penalty in a motion for partial summary judgment on the issue of liability only; (7) that the plaintiff cannot establish its ownership of the note; and (8) that the defendants' special defense of "unclean hands," which the plaintiff has not negated, is a legally sufficient basis for defeating its claims in this action.
In their motion to strike the van der Reis Affidavit and supporting memorandum, the defendants reiterated many of the same grounds asserted in their above-described reply memorandum, including that there is no basis in the Affidavit to establish the competence and personal knowledge of the affiant as to the matters averred to therein and that the Affidavit fails to establish a proper evidentiary foundation for many of the exhibits attached thereto.
The plaintiff filed a supplemental memorandum in support of its motion for partial summary judgment and in opposition to the defendants' motion to strike the van der Reis Affidavit, and a second memorandum in support of that motion together with three additional supporting affidavits, including a Supplemental Affidavit from Mr. van der Reis. The defendants responded to the plaintiff's additional supporting affidavits by filing their own final memorandum in opposition to summary judgment, wherein it conceded that the Supplemental Affidavit from Mr. Van der Reis is sufficient to establish the affiant's competence to establish that the records he refers to and relies therein upon are admissible as business records. They contended, however, that the plaintiff's motion must still be denied because: (1) there remains a genuine issue of material fact as to the validity and sufficiency of the their special defense of unclean hands; (2) all three affidavits attached to the plaintiff's second supporting memorandum are insufficient to support the granting of summary judgment because they fail to aver that the facts set forth in them are true and correct to the best of the affiant's knowledge, information and belief; (3) certain exhibits to the Supplemental van der Reis Affidavit are irrelevant to the plaintiff's claims, and thus inadmissible in support of its motion for partial summary judgment; and (4) the plaintiff has failed to establish its ownership of the promissory note by affidavit because it is unable to establish that the signature on an allonge by which the loan was purportedly assigned is that of the assignor's putative representative, Sandy Vergano. The plaintiff replied to the defendants' final memorandum with a final memorandum of its own, wherein it rejected each of the defendants' opposing arguments.
The plaintiff's motion was argued at the short calendar on July 7, 2011.
ANALYSIS I. STANDARD OF REVIEW ON SUMMARY JUDGMENT MOTIONS
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law." (Citations omitted.) Weiss v. Weiss, 297 Conn. 446, 457, 988 A.2d 766 (2010).
"A material fact is a fact that will make a difference in the outcome of the case." Byrne v. Burke, 112 Conn.App. 262, 267, 962 A.2d 825, cert. denied, 290 Conn. 923, 966 A.2d 235 (2009). "As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." (Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10-11, 938 A.2d 576 (2008).
II. AVAILABILITY OF PARTIAL SUMMARY JUDGMENT AS TO ISSUE OF LIABILITY IN A FORECLOSURE ACTION
The plaintiff argues that, under our case law, a plaintiff in a foreclosure action may properly seek summary judgment as to liability on its claim for foreclosure, without pursuing any claim for a deficiency judgment or for enforcement of a guaranty relating to the same property until a proper hearing in damages. The defendants respond that neither our Appellate Court nor our Supreme Court has explicitly agreed that partial summary judgment as to liability only is appropriate in a foreclosure action.
This Court recently ruled as follows when deciding the very issue here presented in COMM 2006-C8 Asylum Street, LLC v. Northland CityPlace II, LLC, Superior Court, judicial district of Hartford, Docket No. CV 10 6005957 (May 9, 2011, Sheldon, J.). "Connecticut Practice Book § 17-50 authorizes the entry of partial summary judgment, as to liability, where there is a genuine issue as to damages only. Pursuant to this rule, judges of the Superior Court may grant motions for partial summary judgment as to liability in foreclosure actions. See, e.g., Bank of New York v. Sebastian Mangiafico, Superior Court, judicial district of Hartford, Docket No. CV 08 5022713 (October 21, 2010, Aurigemma, J.) (granting summary judgment as to liability in foreclosure action); U.S. Bank National Assn. v. Joseph, Superior Court, judicial district of Hartford, Docket No. CV 10 6007164 (September 9, 2010, Aurigemma, J.) (granting summary judgment of foreclosure); Chase Home Finance, LLC v. Fequiere, Superior Court, judicial district of Fairfield, Docket No. CV 09 6004786 (October 25, 2010, Hartmere, J.) (outlining conditions precedent to grant of summary judgment in foreclosure actions); U.S. Bank National Assn. v. 3060 Main, LLC, Superior Court, judicial district of Fairfield, Docket No. CV 08 5019806 (July 6, 2010, Hartmere, J.) (granting summary judgment as to liability in foreclosure action). See also Danzig v. PDPA, Inc., 125 Conn.App. 242, 9 A.3d 382 (2010) (affirming trial court's entry of summary judgment in foreclosure action), appeal denied, 300 Conn. 920, 14 A.3d 1005 (2011)." In light of the above-referenced authorities, this Court remains persuaded, and therefore holds, that partial summary judgment may properly be granted in a foreclosure action as to the defendant's liability on the plaintiff's claim for foreclosure.
Connecticut Practice Book § 17-50 provides: "A summary judgment, interlocutory in character, may be rendered on the issue of liability alone, although there is a genuine issue as to damages. In such case the judicial authority shall order an immediate hearing before a judge trial referee, before the court, or before a jury, whichever may be proper, to determine the amount of the damages. If the determination is by a jury, the usual procedure for setting aside the verdict shall be applicable. Upon the conclusion of these proceedings, the judicial authority shall forthwith render the appropriate summary judgment."
III. THE DEFENDANTS' OBJECTIONS TO THE EVIDENCE SUBMITTED BY THE PLAINTIFF IN SUPPORT OF THIS MOTION A. ADMISSIBILITY OF DEPOSITIONS
In their response to the plaintiff's motion for summary judgment (#131), the defendants initially argued that certified deposition transcripts are not acceptable as evidence to support a motion for summary judgment; and that the plaintiff cannot rely upon the deposition of Steven P. Rosenthal (exhibit CC) without specifying the portions of the testimony on which it relies because the parties agreed to reserve their objections until trial. The defendants later abandoned this argument by stating, in their response to the defendants' supplemental affidavits (#140), that "the Defendants have no objection to the admission of the . . . Rosenthal deposition transcript, and the Court may consider the entire [seventy-two] page deposition transcript as the supporting affidavit submitted by the defendants."
"While [a party's] deposition testimony is not conclusive as a judicial admission . . . it is sufficient to support entry of summary judgment in the absence of contradictory competent affidavits that establish a genuine issue as to a material fact." Collum v. Chapin, 40 Conn.App. 449, 450 n. 2, 671 A.2d 1329 (1996). Indeed, even where uncertified deposition transcripts are submitted without objection in support of or in opposition to a motion for summary judgment, the court may, in its discretion, choose to consider or exclude them. Barlow v. Palmer, 96 Conn.App. 88, 92, 898 A.2d 835 (2006).
Under the foregoing authorities, deposition transcripts, including the certified deposition transcript of Steven Rosenthal, are admissible as evidence and may properly be considered on this motion for summary judgment.
B. SUFFICIENCY OF SWORN AFFIDAVITS
In their second memorandum in opposition to the plaintiff's motion (#140), the defendants argue that the supplemental affidavit of Dennis van der Reis and the affidavits of Randolph J. Wolpert and Sandy Vergano are deficient because they are assertedly unsworn. They contend, pursuant to Practice Book § 17-46, that affidavits are unsworn because they do not attest that "the facts set forth herein are true and correct to the best of my knowledge, information and belief." The plaintiff disagrees, arguing that an affidavit need not contain such a specific averment and that in fact each challenged affiant was sworn in compliance with § 17-46.
The defendants rely on Louis Gherlone Excavating, Inc. v. McLean Construction Co., 88 Conn.App. 775, 785, 871 A.2d 1057, cert. granted, 274 Conn. 909; 876 A.2d 1201 (2005), in which the Court held that a certification on a mechanic's lien, which contained an affirmation by a notary that the lien was "subscribed and sworn" before him, did "not contain a verification that the facts contained in it are true." Certiorari was granted, limited to the following issue: "Did the Appellate Court properly conclude that the mechanic's lien was invalid?" Louis Gherlone Excavating Co. v. McLean Construction Co., 274 Conn. 909, 909-10, 876 A.2d 1201 (2005); the appeal was, however, withdrawn.
In Stone-Krete Construction, Inc. v. Eder, 280 Conn. 672, 682 n. 8, 911 A.2d 300 (2006), our Supreme Court stated: "Our conclusion in the present appeal demonstrates our disagreement with the majority in Louis Gherlone Excavating, Inc." The Court went on to state: "[H]ad the legislature intended to require a written recital of the oath within the lien, that requirement could have been included in the text of § 49-34(1)(c). In the present case, it is undisputed that on its face the mechanic's lien evidences that . . . the plaintiff's representative, took part in an oath ceremony conducted and administered by the plaintiff's attorney and that the plaintiff's attorney, in her capacity as a commissioner of the Superior Court, certified on the face of the lien by signing the jurat that the oath had been taken. We therefore conclude that the mechanic's lien satisfied the requirements of § 49-34(1)(c)." CT Page 18232 Id., 683.
General Statutes § 49-34, which was at issue in Louis Gherlone Excavating, Inc. v. McLean Construction. Co., supra, 88 Conn.App. at 775 and Stone-Krete Construction, Inc. v. Eder, supra, 280 Conn. at 672, provides, in pertinent part: "A mechanic's lien is not valid unless the person performing the services or furnishing the materials (1) within ninety days after he has ceased to do so, lodges with the town clerk . . . a certificate in writing . . . (c) subscribed and sworn to by the claimant . . ."
The relevant requirements in the present case are found in Practice Book § 17-46, which provides: "Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto." Had the legislature intended to require a written recital within the affidavit that the facts set forth therein are true and correct to the best of the affiant's knowledge, information and belief, that requirement could have been included in the text of § 17-46. See Stone-Krete Construction, Inc. v. Eder, supra, 280 Conn. 683. "[T]his court cannot, by judicial construction, read into legislation provisions that clearly are not contained therein." Id., 682.
The supplemental affidavit of Dennis van der Reis shows that it was made on his personal knowledge as an asset manager for LNR Partners, Inc., the non-member manager for the plaintiff and the special servicer for the loan, with job duties that include reviewing and maintaining loan documents, overseeing litigation, reviewing loan files, interacting with borrowers, master servicers and legal counsel. The affidavit provides that the affiant was "duly sworn" before a notary public, and contains the notary's signature and stamp.
Randolph Wolpert's affidavit (#138) shows on its face that it was made on his personal knowledge as the vice president of LNR Partners, Inc. who signed the 2010 allonge and the assignment of mortgage. He attested that he had reviewed the books and records made in the regular course of business related to the loan; that it was in the regular course of business for such books and records to be kept by LNR Partners, Inc.; and that these books and records were made at or about the time stated therein. The affidavit provides that Wolpert was "duly sworn" before a notary public, and contains the notary's signature and stamp.
Sandy Vergano's affidavit (#139) shows that it was made on his or her personal knowledge as a previous director of Deutsche Bank Mortgage Capital, LLC, and that the signatures on an allonge and assignment of mortgage "appear" to be his or her signature. The affidavit provides that Vergano was "duly sworn" before a notary public, and contains the notary's signature and stamp.
The challenged affidavits meet the requirements of Practice Book § 17-46.
C. VALIDITY OF SIGNATURES ON LOAN DOCUMENTS
The defendants next question the authenticity of the signatures on exhibit I, an allonge, and exhibit J, an assignment of mortgage, because they are similar to the signature on exhibit R, another allonge. The defendants also argue that Exhibit I is unauthenticated because Ms. Vergano only attests that the signature on it "appears" to be her signature, and thus that there is a missing link in the plaintiff's chain of ownership.
Exhibit I is an allonge transferring the note from Deutsche Bank Mortgage Capital, LLC to LaSalle Bank National Association as trustee for the registered holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1, executed by Sandy Vergano, Director of Deutsche Bank Mortgage Capital, LLC.
Exhibit J is an assignment of mortgage from Deutsche Bank Mortgage Capital, LLC to LaSalle Bank National Association as trustee for the registered holders of the CD 2005-C1 Commercial Mortgage Pass-Through Certificates, Series 2005-CD1, executed on January 7, 2009 by Sandy Vergano, Director of Deutsche Bank Mortgage Capital, LLC.
Exhibit R is an allonge transferring the note from Bank of America, N.A., a National Banking Association, successor by merger to LaSalle Bank National Association as trustee for the registered holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1, dated May 28, 2010 and executed by Randolph J. Wolpert.
In the plaintiff's reply (#142), it argues that the affidavits of Mr. Wolpert and Ms. Vergano are not necessary to authenticate any loan documents, but were submitted to show that the defendants' speculation regarding the authenticity of their signatures was not well-founded.
As discussed in part III.B, supra, the supplemental affidavit of Mr. van der Reis meets the requirements of Practice Book § 17-46 to authenticate the exhibits.
The affidavits of Mr. Wolpert and Ms. Vergano are not necessary to authenticate any loan documents that are authenticated by the supplemental affidavit of Mr. van der Reis.
D. ADMISSIBILITY OF LOAN DOCUMENTS AS BUSINESS RECORDS
In its reply memorandum, the plaintiff argues that each of the documents attached to the van der Reis Affidavit is admissible under the business records exception to the hearsay rule, and that the affiant's averment that they are true and correct copies of the plaintiff's original records is sufficient to authenticate them.
The defendants initially contended that nearly all of the exhibits to the van der Reis Affidavit are inadmissible for the following reasons. Exhibits L, R, W, X, and Y are assertedly not authenticated; exhibits W, X, and Y are assertedly subject to hearsay objections; exhibits C, D, E, G, H, L, M, N, O, P, T, U, V are assertedly irrelevant; exhibits C, D, E, J, K, L, M, N, O, P, Q, S, T, U, V are assertedly not certified; and exhibit CC is assertedly irrelevant and unnecessarily voluminous. "[O]nly evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment, and the applicable provisions of our rules of practice contemplate that supporting [or opposing] documents . . . be made under oath or be otherwise reliable." (Internal quotation marks omitted.) Rockwell v. Quintner, 96 Conn.App. 221, 233 n. 10, 899 A.2d 738, cert. denied 280 Conn. 917, 908 A.2d 538 (2006). "Practice Book § 17-45 provides, in relevant part, that: `[a] motion for summary judgment shall be supported by such documents as may be appropriate, including but not limited to affidavits, certified transcripts of testimony under oath, disclosures, written admissions and the like . . .'"
The defendants also argued that van der Reis Affidavit failed to establish his personal knowledge and competence to lay the foundation for the exhibits. However, after the plaintiff submitted van der Reis' supplemental affidavit (#137) with the same exhibits (except exhibit DD, see footnote 2), the defendants conceded that he is competent to lay the foundation for "certain of the documents" to be admitted under the business record exception to the hearsay rule.
"`Practice Book § [17-45], although containing the phrase "including but not limited to," contemplates that supporting documents to a motion for summary judgment be made under oath or be otherwise reliable . . . [The] rules would be meaningless if they could be circumvented by filing [unauthenticated documents] in support of or in opposition to summary judgment.'" New Haven v. Pantani, 89 Conn.App. 675, 678, 874 A.2d 849 (2005); see also Gianetti v. Anthem Blue Cross Blue Shield of Connecticut, 111 Conn.App. 68, 72-73, 957 A.2d 541 (2008), cert. denied, 290 Conn. 915, 965 A.2d 553 (2009).
"General Statutes § 52-180 provides: `(a) Any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall be admissible as evidence of the act, transaction, occurrence or event, if the trial judge finds that it was made in the regular course of any business, and that it was the regular course of the business to make the writing or record at the time of the act, transaction, occurrence or event or within a reasonable time thereafter."
"`To be admissible under the business record exception to the hearsay rule, a trial court judge must find that the record satisfies each of the three conditions set forth in . . . § 52-180. The court must determine, before concluding that it is admissible, that the record was made in the regular course of business, that it was the regular course of such business to make such a record, and that it was made at the time of the act described in the report, or within a reasonable time thereafter . . . In applying the business records exception . . . [§ 52-180] should be liberally interpreted.' (Internal quotation marks omitted.) Connecticut Light Power Co. v. Gilmore, 289 Conn. 88, 116, 956 A.2d 1145 (2008). `[I]t is not necessary . . . that the witness have been the entrant himself or in the employ of the business when the entry was made . . . It is sufficient for a witness to testify that it was the regular business practice to create a document within a reasonable time after the occurrence of the event.' (Citation omitted.) Calcano v. Calcano, 257 Conn. 230, 241, 777 A.2d 633 (2001). While there is no requirement in the business records exception to the hearsay rule that the documents be prepared by the organization itself to be admissible as that organization's business records; see, e.g., New England Savings Bank v. Bedford Realty Corp., 246 Conn. 594, 603, 717 A.2d 713 (1998); the witness whose testimony provides the foundation for the admission of a business record must testify to the three requirements outlined in General Statutes § 52-180. See, e.g., Calcano v. Calcano, supra, 257 Conn. 241; First Union National Bank v. Woermer, 92 Conn.App. 696, 709, 887 A.2d 893, cert. denied, 277 Conn. 914, 895 A.2d 788 (2005); Webster Bank v. Flanagan, 51 Conn.App. 733, 745, 725 A.2d 975 (1999)." COMM 2006-C8 Asylum Street, LLC v. Northland CityPlace II, LLC, supra, Superior Court, Docket No. CV 10 6005957.
In the present case, the supplemental affidavit of Dennis van der Reis states: "These books and records were made in the regular course of business related to the Loan. It is the regular course of business for such records to be kept by LNR Partners, LLC and Plaintiff, and these books and records were made at or about the time stated therein." Van der Reis' affidavit then specifically references exhibits A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, W, X, Y, Z, AA, BB, and CC; the affiant attesting that the documents are all "true and correct" copies.
All of the foregoing exhibits are admissible under the business records exception to the hearsay rule, and thus may properly be considered in support of the instant motion for summary judgment.
IV. PLAINTIFF'S ENTITLEMENT TO SUMMARY JUDGMENT AS TO THE DEFENDANTS' LIABILITY ON ITS CLAIM FOR FORECLOSURE A. ELEMENTS OF THE PLAINTIFF'S CLAIM
"`To obtain summary judgment in a foreclosure matter, the plaintiff must demonstrate the absence of a genuine issue of material fact as to its prima facie case. See Bank of New York v. Conway, 50 Conn.Sup. 189, 193-95, 916 A.2d 130 (2006). "In a mortgage foreclosure action, [t]o make out its prima facie case, [the foreclosing party has] to prove by a preponderance of the evidence that it [is] the owner of the note and mortgage and that [the mortgagor has] defaulted on the note . . . Furthermore, the foreclosing party must demonstrate that all conditions precedent to foreclosure, as mandated by the note and mortgage, have been satisfied." (Citation omitted; internal quotation marks omitted.) Id., 193-94.' Webster Square Investors, LLC v. Rebelo, Superior Court, judicial district of New Britain, Docket No. CV 08 5008381 (January 31, 2011, Shortall, J.T.R.). See also Ocwen Federal Bank, FSB v. Charles, 95 Conn.App. 315, 319 n. 5, 898 A.2d 197, cert. denied, 279 Conn. 909, 902 A.2d 1069 (2006) (`[t]o make out its prima facie case, [the mortgagee] had to prove by a preponderance of the evidence that it was the owner of the note and mortgage and that [the mortgagor] had defaulted on the note')."
"`[A] foreclosure complaint must contain certain allegations regarding the nature of the interest being foreclosed. These should include allegations relating to the parties and terms of the operative instruments, the nature of the default giving rise to the right to foreclosure, the amount currently due and owing, the name of the record owner and of the party in possession, and appropriate prayers for relief . . . The terms of the mortgage determine the necessary elements of the plaintiff's prima facie case.' (Citation omitted; internal quotation marks omitted.) New England Savings Bank v. Bedford Realty Corp., 246 Conn. 594, 610-11, 717 A.2d 713 (1998). U.S. Bank National v. Suvemay, Superior Court, judicial district of Fairfield, Docket No. CV 08 50143585 (October 4, 2010, Hartmere, J.)." COMM 2006-C8 Asylum Street, LLC v. Northland CityPlace II, LLC, supra, Superior Court, Docket No. CV 10 6005957.
The exhibits to the Supplemental van der Reis Affidavit show an unbroken chain of ownership that ends with the plaintiff. Exhibit A is a promissory note showing that the borrower, Northland Goodwin, LLC, promised to pay $33,000,000 plus interest to Deutsche Banc Mortgage Capital, LLC; that the promise was secured by a mortgaged property and an assignment of leases and rents; and that the holder of the note is entitled to the benefits of the mortgage and the assignment.
Exhibit B is a mortgage and security agreement showing that the borrower mortgaged a property with the same legal description as that in exhibit A of the plaintiff's complaint to secure the debt evidenced by the note. Exhibit I is an allonge showing that Deutsche Banc Mortgage Capital, LLC transferred the note to LaSalle Bank National Association as trustee for the registered holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1.
Exhibit J is an assignment showing that Deutsche Banc Mortgage Capital, LLC assigned the mortgage, security agreement and assignment of leases and rents to LaSalle Bank National Association as Trustee for the Registered Holders of the CD 2005-C1 Commercial Mortgage Pass-Through Certificates, Series 2005-C1, on September 13, 2005. The parties later executed another assignment, in order to change the assignee's name to LaSalle Bank National Association as Trustee for the Registered Holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, on January 7, 2009. (Exhibit K.)
Exhibit R is an allonge showing that LNR Partners was attorney-in fact-for Bank of America, N.A., a National Banking Association, success or by merger to LaSalle Bank National Association as Trustee for the registered holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1, transferred the note to CCMS 2005 CD1 Goodwin Office, LLC on May 28, 2010.
The National Information Center (NIC) is a central repository of data about banks and other institutions for which the Federal Reserve has a supervisory, regulatory, or research interest, including both domestic and foreign banking organizations operating in the United States. See http://www.ffiec.gov/nicpubweb/nicweb/nichome.aspx (last accessed July 25, 2011).
The NIC has two listings for La Salle Bank National Association, and each listing shows that it "has become a branch and been renamed . . . BANK OF AMERICA, NATIONAL ASSOCIATION." See http://www.ffiec.gov/nicpubweb/ nicweb/InstitutionProfile.aspx?parID_Rssd=133636parDT_E ND=19990430 (last accessed July 25, 2011) and http://www.ffiec.gov/nicpubweb/ nicweb/InstitutionProfile.aspx?parID_Rssd=455534parDT_E ND=20081016 (last accessed July 25, 2011).
Exhibit S is an assignment showing that LNR Partners as attorney-in fact-for Bank of America, N.A., a National Banking Association, success or by merger to LaSalle Bank National Association as Trustee for the Registered Holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1 assigned the mortgage, security agreement and assignment of leases and rents to CCMS 2005 CD1 Goodwin Office, LLC on May 28, 2010.
Exhibit T is an assignment showing that LNR Partners was attorney-in fact-for Bank of America, N.A., a National Banking Association, successor by merger to LaSalle Bank National Association as Trustee for the Registered Holders of the CD 2005-C1 Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CD1 assigned the assignment of leases and rents to CCMS 2005 CD1 Goodwin Office, LLC on May 28, 2010.
A condition precedent to foreclosure is set out in the mortgage at Article XIV, section 14.1(c), which provides that in the event of a default the mortgagor has thirty days to cure "after written notice thereof from Mortgagee to Mortgagor." The plaintiff has shown that this condition precedent has been fulfilled by submitting the following exhibits: exhibit W, which is a March 15, 2010 letter from the plaintiff's counsel to Suzanne Abair (Northland Goodwin LLC's general counsel) informing her that it did not receive the January 1, 2010 mortgage payment or any payments thereafter, notifying her that such non-payment was an event of default, and demanding cure; and exhibit X, which is a similar letter, dated April 1, 2010. Exhibit CC, the deposition of Steven P. Rosenthal, the CEO of Northland Investment Corporation, shows that the plaintiff stopped making payments on the note as of January 1, 2010.
The foregoing exhibits show that the plaintiff is the owner of the note and mortgage, and that all conditions precedent to foreclosure, as mandated by the mortgage, have been satisfied. See Webster Square Investors, LLC v. Rebelo, supra, Superior Court, Docket No. CV 08 5008381. See also Ocwen Federal Bank, FSB v. Charles, supra, 95 Conn.App. 319 n. 5. The plaintiff has thus established, as a matter of law, its prima facie case for foreclosure of the mortgage.
B. THE DEFENDANTS' SPECIAL DEFENSES
In their initial memorandum in opposition, the defendants argue that it is procedurally improper to dispose of special defenses by summary judgment. That, however, is not the purpose of the plaintiff's pending motion. Instead, the plaintiff seeks a determination by this Court that it is entitled to judgment as a matter of law as to the defendants' liability on its claim for foreclosure, which requires it to establish that there is no genuine issue as to any material fact upon which the defendants' liability depends. Those material facts include both the essential elements of its own claim for foreclosure and the essential elements of any duly pleaded special defense which, if proved by the defendants at trial, would defeat the plaintiff's claim. To prevail on a motion for summary judgment on any claim as to which a special defense has been interposed, the plaintiff must demonstrate either that no competent evidence supporting that special defense has been placed before the Court or that the special defense, even if supported by some competent evidence, would be legally insufficient to defeat its claim as a matter of law. As this Court recently held: "`Only after [the] initial burden is met does the court then determine whether any special defenses alleged are legally sufficient to defeat a claim for foreclosure. [ Bank of New York v. Conway, supra, 50 Conn.Sup. 195]; see also LaSalle National Bank v. Shook, Superior Court, judicial district of New London, [Docket No. CV 0549266 (July 13, 2000, Hurley, J.) ( 29 Conn. L. Rptr. 462)] ("When a complaint and supporting affidavits establish an undisputed prima facie case for a foreclosure action, a court must only determine whether the special defense is legally sufficient before granting summary judgment"), aff'd, 67 Conn.App. 93, 787 A.2d 32 (2001).' Webster Square Investors, LLC v. Rebelo, supra, Superior Court, Docket No. CV 08 5008381." COMM 2006-C8 Asylum Street, LLC v. Northland CityPlace II, LLC, supra, Superior Court, Docket No. CV 10 6005957.
In this case, the defendants have interposed the following special defenses: (1) lack of evidence of ownership and assignment; (2) unclean hands; (3) failure to state a monetary claim; (4) lack of authority to execute the assignment; and (5) absence of waste in and upon the mortgaged property. In its reply, the plaintiff argues that no such special defenses is legally sufficient to defeat its present motion because it is either legally insufficient to defeat its claims as a matter of law or it is wholly unsupported by the evidence of record on this motion.
1. First Special Defense: Deficient Evidence of Ownership and Assignment
The defendants question the authenticity of the signatures on exhibits I, J and R. They also contend that the van der Reis Affidavit is insufficient to authenticate the plaintiff's ownership of the note and mortgage. The plaintiff argues that defenses to foreclosure are limited to payment, discharge, release or satisfaction. Specifically, regarding the first special defense, lack of evidence of ownership and assignment, the plaintiff argues that the defendants' mere assertion that they deny the signatures on the loan assignments is insufficient, as a matter or law, because the defendants have not presented any evidence of a disputed fact.
See footnotes 4, 5 and 6.
As discussed in part III.B, supra, the signatures of Mr. Wolpert and Ms. Vergano are not necessary to establish a foundation for the admissibility of exhibits I, J and R, for those exhibits have been authenticated by Dennis van der Reis. The van der Reis' Affidavit is sufficient to authenticate the plaintiff's ownership of the note and mortgage.
The plaintiff is entitled to summary judgment notwithstanding the defendants' first special defense.
2. Second Special Defense: Unclean Hands
The defendants argue that the defendants have unclean hands because the plaintiff's claim for foreclosure depends on its own inequitable conduct after the execution of the note and mortgage. The plaintiff counters that the defense of unclean hands is only proper if the plaintiff would not be able to bring the foreclosure action but for its improper conduct.
"A successful unclean hands defense to a foreclosure action may be asserted in situations where a lender takes advantage of an unsophisticated borrower, unrepresented by counsel, such as by charging significant fees or an arbitrarily high interest rate. Monetary Funding Group, Inc. [v. Pluchino, 87 Conn.App. 401, 407-08, 867 A.2d 841 (2005)]. Similarly, where a lender misleads an unsophisticated borrower, a foreclosure of the note held by the lender may be barred by unclean hands. Id. The lender's misdeeds must, however, arise to `intentional misconduct with respect to the . . . transaction' and be undertaken to gain some improper advantage, such as generating `excessive fees and costs' for the lender. Id., 410. Accord, Rockville Bank v. Southington Hospitality Group, LLC, Superior Court, judicial district of Hartford, Docket No. CV 10 6012854 (May 12, 2011, Aurigemma, J.) (holding that the special defense of unclean hands was insufficient to defeat a foreclosure action because, "The defendants do not allege that they were unsophisticated borrowers, unrepresented by counsel, or that the plaintiff engaged in sharp lending practices, such as charging excessive fees").
Here, as in the above-quoted cases, the defendants "do not allege that they were unsophisticated borrowers, unrepresented by counsel, or that the plaintiff engaged in sharp lending practices, such as charging excessive fees." Id. In his deposition, CEO Steven Rosenthal states that the plaintiff did not respond to its attempts to engage the plaintiff in a conversation about how to handle the financial situation related to the property. The defendants do not present any evidence or authority for their position that the plaintiff had an obligation to respond to their attempts to negotiate an amicable settlement to their dispute.
See Rosenthal deposition, Exhibit CC, pp. 20-21.
Therefore, this special defense is legally insufficient to defeat the plaintiff's motion for partial summary judgment as to the defendants' liability on its claim for foreclosure
3. Third Special Defense: Failure to State a Monetary Claim
The defendants next interpose the special defense that, because all rental amounts net of the ordinary operating expenses have been held in a separate account, the motion should be denied. The plaintiffs correctly argue that this raises no genuine issue of material fact regarding the defendants' default on the note or the plaintiff's entitlement to foreclose on the mortgaged property as a result of that default. This special defense is therefore legally insufficient to defeat the plaintiff's claim for partial summary judgment as to the defendants' liability on its claim for foreclosure.
4. Fourth Special Defense: Lack of Authority to Execute the Assignment
The defendants deny that the persons who signed documents purporting to assign the mortgage and note had authority to do so, and contend that the signatures on such documents are not authentic. The plaintiff counters that the defendants have presented no evidence that the loan documents are unauthorized or false.
The plaintiff relies on One West Bank, F.S.B. v. Dzierzbinski, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 09 6001141 (May 10, 2010, Moran, J.T.R.), in which the Superior Court rejected the foreclosure defendants' argument that a creditor is required to prove ownership of a note by producing the testimony of an affiant who can personally attest to the execution and delivery of the note and the subsequent indorsement, stating: "It is worth noting that, albeit in the context of the introduction of business records for purposes of proving an outstanding debt on a note that had changed hands, our Supreme Court has rejected the notion that an affiant from each financial institution involved must attest to a chain of custody in order to properly authenticate business records. See New England Savings Bank v. Bedford Realty Corp., 246 Conn. 594, 604-06. There, the Court observed that `[t]o require testimony regarding the chain of custody of such documents, from the time of their creation to their introduction at trial, would create a nearly insurmountable hurdle for successor creditors attempting to collect loans originated by failed institutions.' Id., . . . 605. The Court also directed that, for purposes of authenticating a document submitted to the trial court, `[t]he witness introducing the document need not have made the entry himself or herself, nor have been employed by the organization during the relevant time period.' Id., . . . 603."
In the present case, the defendants question the authenticity of the signatures on exhibit I, an allonge, and exhibit J, an assignment of mortgage, because they are similar to the signature on exhibit R, another allonge. The defendants also argue that Exhibit I is unauthenticated because Ms. Vergano only attests that the signature on it "appears" to be her signature, and thus that there is a missing link in the plaintiff's chain of ownership.
See footnotes 4, 5 and 6.
The defendants present no evidence that the signatories lacked authority or that the signatures were false. As discussed in part VII, the signatures of Wolpert and Vergano are not necessary to establish a foundation for the admissibility of the exhibits, since the exhibits have been authenticated by van der Reis.
This special defense is therefore legally insufficient to defeat the plaintiff's motion for partial summary judgment as to the defendants' liability on its claim for foreclosure.
5. Fifth Special Defense: Absence of Waste
The defendants' fifth special defense is that it did not commit waste in or upon the mortgaged property because the borrower properly managed the property, the plaintiff did not expend any funds to pay property taxes, the Borrower's decision not to sue on the hotel lease guarantee was not waste, the Borrower made reasonable efforts to find a new hotel operator, and its efforts to do so were publicly known.
The plaintiff argues that this defense does not raise any genuine issue of material fact as to the defendants' liability on its claim for foreclosure. It contends that the issues of tax payments, the hotel lease and the Borrower's efforts to find a new hotel operator do not relate to foreclosure, and have no bearing on any fact that could make a difference in the outcome of this motion.
There is no requirement that the plaintiff prove waste by tile defendants as an element of a cause of action for foreclosure. "To make out its prima facie case, [the mortgagee] had to prove by a preponderance of the evidence that it was the owner of the note and mortgage and that [the mortgagor] had defaulted on the note." Ocwen Federal Bank, FSB v. Charles, supra, 95 Conn.App. 319 n. 5. Therefore, this special defense is legally insufficient to defeat the plaintiff's motion for partial summary judgment as to the defendants' liability on its claim for foreclosure.
V. CONCLUSION
For all of the following reasons, the Court hereby concludes that the plaintiff's motion for a partial summary judgment of foreclosure must be GRANTED. IT IS SO ORDERED this 25th day of August 2011.