Opinion
CV126014840
10-23-2017
Dovenmuehle Mortgage, Inc. v. Frank J. Janniello et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Irene P. Jacobs, J.
The plaintiff instituted this foreclosure action on July 8, 2012 to foreclose a mortgage on real property located at 11 Warchol Lane in Stamford, CT, said property owned by the defendants Frank J. and Lisa Ann Janniello. (The defendants, Lisa Ann Janniello and State of Connecticut, Department of Revenue Services, were defaulted for failure to plead on March 31, 2014 [#117.86]. Defendants Chase Bank USA, N.A. and Connecticare, Inc. were defaulted for failure to appear on January 31, 2014 [#116.86].)
In the First Count of its Amended Complaint [#205], the plaintiff alleges that it is entitled to enforce the note and foreclose the mortgage on the Warchol property. In the Second Count, the plaintiff seeks foreclosure under the doctrine of equitable subrogation, alleging that it stands in the shoes of the prior mortgagee and its assignees.
In his First, Second, and Third Special Defenses, the defendant alleges that the plaintiff lacks standing to maintain this action. In his Fourth Special Defense, the defendant alleges that the plaintiff should be equitably estopped from maintaining this action on the basis of the plaintiff's representations to the court in prior pleadings during the pendency of this action.
The following facts are undisputed by the parties. On February 19, 2003, the defendants, Frank J. Janniello and Lisa Ann Janniello, signed and delivered a certain promissory note in the principal amount of $177, 500.00 to Dovenmuehle Funding, Inc., the plaintiff's predecessor in interest. To secure such debt, on the same date, said defendants conveyed by mortgage deed their interests in certain real property known as 11 Warchol Lane, Stamford, Connecticut. The value of the subject property, as evidenced by an appraisal report and as admitted into evidence as a full exhibit, is $350, 000.00. This mortgage was thereafter assigned to the plaintiff. The mortgage was recorded on Page 1 in Volume 06694 of the Stamford Land Records. The signature page of the 2003 note is lost. A 2010 Modification Agreement was executed by the parties. The plaintiff filed an EMAP affidavit and a loss mitigation affidavit with the court. Attorneys fees and costs are provided for in both the note and/or the mortgage.
The matter was tried to the court on December 20 and 22, 2016. Two witnesses testified: the plaintiff's default litigation specialist Elaine Henning and Attorney Daniel McCabe. Numerous documents were entered into evidence. Post-trial memoranda of law were filed by the plaintiff [#215] and the defendant [#216] on June 22, 2017.
In finding the facts and reaching the conclusions set forth below, the court has considered the exhibits, the testimony, the demeanor and credibility of the witnesses, the case law, and the memoranda submitted by counsel.
DISCUSSION
In order to establish a prima facie case in a mortgage foreclosure action, the plaintiff, or its agent, must prove by a preponderance of the evidence that it is the owner of the note and mortgage, that the defendant mortgagor has defaulted on the note and that any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied. Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 136 (2003); Bank of America, FSB v. Hanlon, 65 Conn.App. 577, 783 A.2d 88 (2001).
Ownership of the Note
The defendant alleges that the plaintiff, as a servicer but not the owner of the subject loan, does not have standing to bring this action of foreclosure. However, a servicing agent of a lender has standing to foreclose a mortgage. American Home Mortgage Servicing, Inc. v. Peter A. Reilly, 157 Conn.App. 127, 117 A.3d 500 (2015) (servicer granted summary judgment in mortgage foreclosure when debt was owned by Fannie Mae and authority to enforce existed based upon Fannie Mae guidelines); Kennedy Funding, Inc. v. Greenwich Landing, LLC, 135 Conn.App. 58, 43 A.3d 664 (2012), cert. denied, 305 Conn. 914, 45 A.3d 99 (2012). In addition, Connecticut General Statutes § 49-17 authorizes a servicer to initiate a mortgage foreclosure on behalf of the owner of the note. JE Robert Company, Inc. v. Signature Properties, LLC, 309 Conn. 307, 71 A.3d 492 (2013). " [A] loan servicer is authorized to conduct foreclosure proceedings as an agent for its principal." LoanCare v. Channer, United States District Court, D.Conn., 2013 WL3208565 (6/24/13), Underhill, J. (not reported in F.Sup.2d).
An assignment of a note and mortgage is sufficient to confer standing in a mortgage foreclosure. Connecticut General Statutes § 52-118; Bankers Trust v. Retha Neal, 64 Conn.App. 154, 779 A.2d 813 (2001); American First Federal, Inc. v. Sheldon Gordon, 173 Conn.App. 573, 164 A.3d 776, . " An assignment is a transfer of property or some other right from one person (the assignor) to another (the assignee), which confers a complete and present right in the subject matter to the assignee. An assignment is a contract between the assignor and the assignee, and is interpreted or construed according to the rules of contract construction." (Footnotes omitted; internal quotation marks omitted.) 6 Am.Jur.2d 145-46, Assignments § 1 (2008). " Generally, to constitute an assignment there must be a purpose to assign or transfer the whole or a part of some particular thing, debt, or chose in action, and the subject matter of the assignment must be described with such particularity as to render it capable of identification." (Internal quotation marks omitted.); New England Savings Bank v. Bedford Realty, 238 Conn. 745, 680 A.2d 301 (1996); Connecticut National Bank v. Marland, 45 Conn.App. 352, footnote 8, 696 A.2d 374 (1997); see also Connecticut General Statutes § 49-17.
The credible evidence, through the testimony of the witness Elaine Henning, demonstrated that the note and mortgage transferred from Dovenmuehle Funding, Inc. to Dovenmuehle Mortgage Company, LP and then from Dovenmuehle Mortgage Company, LP to the plaintiff.
The credible evidence, presented by witness testimony and exhibits, demonstrated that the plaintiff's primary business is the servicing of mortgage loans for the Federal National Mortgage Association (" Fannie Mae"), that Fannie Mae has continuously owned the subject loan since 2003, and that the plaintiff has been acting as servicer on the subject loan for Fannie Mae since 2003. As servicer of the current holder of the note, the plaintiff stands in the shoes of the mortgagee of the note and has standing to bring this action. Furthermore, the credible evidence demonstrated that, in prosecuting the subject mortgage, the plaintiff was servicing the subject mortgage according to Fannie Mae's guides or guidelines.
The defendant presented no evidence that any other creditor is seeking to recover the debt claimed by the plaintiff from him.
Lost Page of Note
It is undisputed that the third page of the 2003 note is lost. However, a party foreclosing a mortgage is not required to be in physical possession of a promissory note to foreclose a mortgage if the original note is lost. New England Savings Bank v. Bedford Realty, 238 Conn. 745, 680 A.2d 301 (1996); Bankers Trust v. Retha Neal, 64 Conn.App. 154, 779 A.2d 813 (2001). Loss of the original note does not bar enforcement of the mortgage. " It is well established . . . that the [mortgagee] is entitled to pursue its remedy at law on the notes, or to pursue its remedy in equity upon the mortgage, or to pursue both. A note and a mortgage given to secure it are separate instruments, executed for different purposes and in this State action for foreclosure of the mortgage and upon the note are regarded and treated, in practice, as separate and distinct causes of action, although both may be pursued in a foreclosure suit." (Internal quotation marks omitted.) New England Savings Bank, citing Hartford National Bank & Trust Co. v. Kotkin, 185 Conn. 579, 441 A.2d 593 (1981); see also First Bank v. Simpson, 199 Conn. 368, 507 A.2d 997 (1986).
Furthermore, a party foreclosing a mortgage based on a lost note is not required to submit a lost note affidavit. Silicon Valley Bank v. Miracle World Faith Outreach, Inc., 140 Conn.App. 827, 60 A.3d 343 (2013). In addition, the limitations imposed by the UCC do not apply to the enforcement of a mortgage if a lost note is lost. New England Savings Bank v. Bedford Realty, 238 Conn. 745, 680 A.2d 301 (1996). Bankers Trust v. Retha Neal, 64 Conn.App. 154, 779 A.2d 813 (2001) (failure to timely present a lost note affidavit did not provide grounds to reverse and remand for a new trial when the outcome would be the same because the borrower did not contest that the loan or lien was invalid). The defendant has never disputed the validity of the loan, the note, or the modification. Through his deposition, the defendant testified that he made payments on the loan. The plaintiff presented evidence of the contents of the lost page of the note, through the exhibits and the testimony of the closing attorney Daniel McCabe. The court finds the testimony as to the contents of the lost page of the 2003 note to be credible.
Default
The plaintiff demonstrated, by a preponderance of the evidence, through credible witness testimony, the defendant's deposition testimony, and documents entered into evidence as full exhibits, that the loan is in default. Demand letters were sent to the Defendants in 2010 and 2012. Both demand letters were sent by certified mail. Language regarding the Emergency Mortgage Assistance Program is contained in at least one of the demand letters.
In addition, the Modification Agreement provides that " if the original promissory note is replaced, the lender hereby indemnifies me against any loss associated with a demand on the original note." The court finds that the 2010 Modification of the Note and Mortgage is a form of a " replacement" of the original note. As such, the Defendant, Frank Janniello, has no risk of a claim by a third party under the original note, because he has the right to indemnification for any such risk.
Equitable Estoppel
In his fourth special defense, the defendant alleges that the plaintiff should be equitably estopped from maintaining this action as a result of the plaintiff's representations to the court during the pendency of this action. While courts have recognized equitable defenses in foreclosure actions, they have generally only been considered proper when they " attack the making, validity or enforcement of the lien, rather than some act or procedure of the lienholder." Lawall Realty, Ltd. v. Auwood, J.D. of New London, No. 527050 (3/1/94) Leuba, J., supra; National Mortgage Co. v. McMahon, 9 CSCR 300 (2/18/94) Celotto, J. " The rationale behind this is that counterclaims and special defenses which are not limited to the making, validity or enforcement of the note or mortgage fail to assert any connection with the subject matter of the foreclosure action and as such do not arise out of the same transaction as the foreclosure action. Lawall Realty, Ltd. v. Auwood, supra; National Mortgage Co. v. McMahon, supra . The defendant has failed to provide this court with authority which supports his theory that a party's conduct subsequent to the commencement of an action may give rise to a finding of equitable estoppel.
FINDINGS AND CONCLUSIONS
The plaintiff has proved all of the elements of strict foreclosure by a preponderance of the evidence, i.e., that it is the servicer of the owner of the note and mortgage, that the defendant mortgagor has defaulted on the note and that any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied. Judgment of strict foreclosure is ordered. The defendant has failed to meet his burden of proof on any of his special defenses by a preponderance of the evidence. Plaintiff's attorneys' submitted affidavits of counsel fees [#132, #202, #218].
The court makes the following findings:
1. All necessary defaults have been entered.
2. The proper party has sued and been sued.
3. The fair market value of the subject property is $350, 000.00.
4. The total debt on the subject property is $271, 118.49.
5. The debt on the subject property is not in excess of the property's value. Subordinate liens of the property are $30, 926.52 (Chase Bank N.A.), $949.29 (Connecticut, Inc.) and $2, 186.29 (State of Connecticut DRS).
6. Interest due on the loan as of 5/31/17 is $32, 056.74. The per diem on the loan is $19.01.
7. The unpaid principal balance on the loan is $173, 410.03.
8. The escrow advances on the loan are $68, 711.34.
The court makes the following awards:
1. appraisal fee: $335.00.
2. attorneys fees and costs as follows:
As of 11/30/16: $19, 289.12;
From 11/30/16 to 8/17/17: $10, 515.90;
Total fees and costs: $29, 805.02.
3. title search fee: $225.00.
Law Days are assigned in their inverse order of priority as follows:
1st law day: December 5, 2017: Frank J. Janniello and Lisa Ann Janniello;
2nd law day: State of Connecticut, Department of Revenue Services;
3rd law day: Connecticare, Inc.;
4th law day: Chase Bank, USA, N.A.