Opinion
LLI-CV116004685S
12-10-2015
Financial Freedom Acquisition, LLC v. Ann T. Griffin, Executrix to the Estate of Angela C. Griffin et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
HON. RUPAL SHAH, J.
The plaintiff, OneWest Bank N.A., brings this action in foreclosure on a reverse mortgage secured by property located at 312 Milton Road, Litchfield, Connecticut. The defendant, Ann Griffin, is the executrix for the estate of her mother, Angela Griffin (Mrs. Griffin). The defendant asserts three special defenses to the foreclosure action: (1) lack of standing; (2) breach of the implied covenant of good faith and fair dealing, and (3) statute of limitations pursuant to General Statutes § 45a-358. She has also filed a counterclaim against the plaintiff's predecessor in interest, Financial Freedom Acquisition LLC (Financial Freedom), alleging in two counts: (1) breach of the implied covenant of good faith and fair dealing and (2) violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq.
One West Bank N.A. was substituted as the plaintiff on September 22, 2014, and subsequently changed its name to CIT Bank, N.A.
The third special defense was dismissed by the Court's Memorandum of Decision dated March 13, 2015 (#154.10) .
The matter was tried before the court on September 29 and 30, 2015. The court received numerous documents into evidence and heard testimony from two of the plaintiff's employees, the defendant, and a local realtor.
FINDINGS OF FACT
Based on the documents submitted into evidence and the testimony heard at trial, the court makes the following findings of fact:
Mrs. Griffin was the owner of the real property located at 312 Milton Road, Litchfield, Connecticut (the property). On or about July 23, 2008, Mrs. Griffin executed a note and reverse annuity mortgage (the mortgage) on the Property in favor of Financial Freedom Senior Funding Corporation, which established an open-ended line of credit not to exceed $692, 180 (the Griffin loan). At that time, Financial Freedom advanced $378, 791 to Mrs. Griffin to pay off a loan from Deutsche Bank, which sought to foreclose on the mortgage it held on the property. Financial Freedom obtained an appraisal at the time that valued the property at $612, 709.
Mrs. Griffin and the defendant entered into the Griffin loan so that Mrs. Griffin could remain in the home that she had lived in for thirty years. The property is a private property that includes a colonial residence located on eleven acres of land with a pond. It has a stable and many acres of well-maintained pasture. The home was a central part of the defendant's and Mrs. Griffin's lives.
Since the mortgage is a reverse annuity mortgage, no principal became due until a maturity event occurred. On April 16, 2010, Mrs. Griffin passed away, which constituted a maturity event and rendered the balance of the loan due and payable unless there was an agreement in writing between the plaintiff and certain legal representatives of Mrs. Griffin within thirty days to cooperate fully in selling the property. The plaintiff and the defendant had no agreement in writing to this effect, and the defendant did not pay the balance due upon Mrs. Griffin's death. Thus, the non-payment constituted a default under the mortgage. The plaintiff sent a notice of intent to foreclose, dated July 21, 2010, and the defendant did not cure the default within thirty days. The plaintiff initiated the present foreclosure action in May of 2011.
On April 30, 2010, prior to the notice of intent to foreclose, the defendant contacted the bank to inform it that she intended to sell the property. The bank's electronic system notes indicate that the defendant spoke with Lisa Harkness, a maturities administrator with the plaintiff. They discussed repayment of the Griffin loan, and the defendant indicated she planned to sell the property and use the proceeds of the sale to repay the debt. Subsequent to the conversation, Harkness sent a cash account reverse mortgage repayment notice to the defendant. The repayment notice informed the defendant that the death of Mrs. Griffin constituted a maturity event, that upon the occurrence of a maturity event the loan became due, and that the defendant needed to discuss plans with Financial Freedom concerning repayment of the loan by sending in the enclosed repayment questionnaire. The defendant indicated she never received the repayment questionnaire form.
On May 6, 2010, the defendant's counsel faxed a correspondence, attaching the death certificate and will of Mrs. Griffin and informing Harkness that he was representing the defendant. The defendant was appointed executrix of Mrs. Griffin's estate on May 17, 2010. The defendant lacked legal authority to enter into contractual agreements on behalf of the estate until such time as she was appointed executrix.
On or about June 17, 2010, the defendant entered into a listing agreement with the E.J. Murphy Realty Co. for the sale of the property with a listing price of $614, 900 (listing agreement). On June 23, 2010, the defendant's counsel sent a second correspondence to Harkness which included the probate decree admitting the Griffin will to probate; a certified copy of the death certificate; a copy of the Griffin will; a certified probate certificate reflecting the appointment of the defendant as executrix; and a signed copy of the listing agreement. The plaintiff admitted to having received both written communications and attachments. The plaintiff still had not received the repayment questionnaire from the defendant. There was no agreement in writing or any other communication that demonstrated a mutual understanding to extend the repayment date.
DISCUSSION
I. Foreclosure
To make out a prima facie case for foreclosure, a mortgagee must establish ownership of the promissory note and mortgage, and the mortgagor's default. Webster Bank v. Flanagan, 51 Conn.App. 733, 750-51, 725 A.2d 975 (1999). In determining whether a default has occurred, " [t]he terms of the mortgage determine the necessary elements of the plaintiff's prima facie [foreclosure] case." New England Savings Bank v. Bedford Realty Corp., 246 Conn. 594, 611, 717 A.2d 713 (1998).
In the present case, the court finds that the plaintiff has established the elements necessary to make out a prima facie case for foreclosure under Connecticut law with respect to the Griffin loan. The evidence establishes that the plaintiff is the present holder of the Griffin loan. The plaintiff owns the Griffin loan and mortgage through a series of assignments, and the defendant does not claim that the Griffin loan and mortgage has been paid. In addition, the plaintiff has established its entitlement to foreclose under the unambiguous terms of the mortgage, which provide that:
All amounts owed under th[e] Agreement become due and payable in the ordinary course and without acceleration upon the first occurrence of a Maturity Event . . . Loan Agreement, ¶ 6.
If all amounts [owed] under th[e] Agreement and [Mortgage] are not repaid to [the plaintiff] on or before the date upon which they become due, [the plaintiff] may exercise any of the remedies available to [it] in the [Mortgage]. Id.
An " Event of Default" occurs when, inter alia, " I do not meet my material obligations under this Agreement." Id., ¶ 13.
If the Event of Default is not cured on or before the date specified in the notice, [the plaintiff] at [its] option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke any other remedies permitted by Applicable Law. Mortgage, ¶ 21.
It is undisputed that a maturity event occurred on April 16, 2010, and the defendant never submitted any payments to the plaintiff after the maturity event. The failure to tender all amounts due and payable after the maturity event constituted a default. Additionally, the defendant failed to cure the default within thirty days after receiving the notice of intent to foreclose dated July 21, 2010. Thus, the plaintiff has established a prima facie case for foreclosure and is entitled to judgment as to the defendant's liability on the amended complaint. See Webster Bank v. Flanagan, supra, 51 Conn.App. 752-53.
II. Special Defenses
" A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both." (Internal quotation marks omitted.) Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705, 807 A.2d 968, cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002). The defendant asserted two special defenses at trial.
The defendant first asserts that the plaintiff lacks standing as it is not the proper owner of the Griffin loan and mortgage. The court finds that the defendant has not met its burden of proof with respect to this special defense. The plaintiff has shown that it is the legal holder of the Griffin loan and mortgage based on the evidence that was provided. Moreover, the defendant alleged its special defense against Financial Freedom and did not amend its special defense to name the plaintiff. Thus, this special defense is not properly pled against the plaintiff.
The defendant also asserts a special defense on the same basis as its first counterclaim: that the plaintiff breached the implied covenant of good faith and fair dealing by filing the foreclosure action. The same analysis applies to both the special defense and counterclaim so it will be discussed at more length in the next section. The court does not find that this defense has any merit and thus finds that the defendant has not met its burden of proof with respect to this special defense.
III. Implied Covenant of Good Faith and Fair Dealing
" In a foreclosure action, a counterclaim must relate to the making, validity or enforcement of the mortgage note in order to be properly joined with the complaint." JP Morgan Chase Bank v. Rodrigues, 109 Conn.App. 125, 133, 952 A.2d 56 (2008).
The defendant's special defense and counterclaim claiming breach of the implied covenant of good faith and fair dealing are legally insufficient because they seek to enforce nonexistent obligations under the loan agreement and/or mortgage. The provision at issue provides:
The Maturity Events are: . . . my death . . . provided, however, that if my administrator, devisees, estate, executors, heirs, legatees or personal representative, as the case may be, agree(s) with you in writing within thirty (30) days after the death of the last living Borrower to cooperate fully with you in selling the Property, including listing the Property for sale, caring for the Property and making any necessary repairs to the Property prior to its sale, then repayment of the Account will not be due until six months after the death of the last living Borrower, or such other date as may be provided in the written agreement . . .
Loan Agreement, ¶ 6.
There is no evidence of a written agreement between the plaintiff and the defendant that extended the maturity date of the loan. Connecticut law clearly provides that an implied covenant derives exclusively from the terms of the agreement. Atlantic Mortgage & Investment Corp. v. Stephenson, 86 Conn.App. 126, 143, 860 A.2d 751 (2004) (implied covenant of good faith and fair dealing imposed in every contract for its performance and its enforcement). Here, there is no allegation by the defendant that she actually had a written agreement to extend the date.
Second, the defendant did not allege sufficient evidence to demonstrate that there was any kind of meeting of the minds regarding the verbal representations made to the plaintiff regarding her intentions. Her intentions to sell the property do not equate to a legally enforceable agreement allowing the defendant six months to sell the property. Even if such an agreement had existed, the evidence demonstrates that the defendant, in fact, had more than a year after the maturity event to sell the property before the plaintiff commenced the present foreclosure action. Moreover, the defendant did not sustain any damages as a result of Financial Freedom recording a lis pendens in October 2010, six months after Mrs. Griffin's death, or commencing the present foreclosure action in May 2011.
IV. Connecticut Unfair Trade Practices Act
CUTPA claims arise under § 42-110g of the Connecticut General Statutes. General Statutes § 42-110b(a) provides: " No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." " ' [I]n determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise-in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other business persons] All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.' . . . Harris v. Bradley Memorial Hospital & Health Center, Inc., 296 Conn. 315, 350-51, 994 A.2d 153 (2010)." Artie's Auto Body, Inc. v. Hartford Fire Ins. Co., 317 Conn. 602, 609 n.9, 119 A.3d 1139 (2015).
The defendant's CUTPA counterclaim is based on the same allegations and evidence that form the basis of her breach of implied covenant of good faith and fair dealing counterclaim. The defendant claims that the plaintiff's failure to act in accordance with her verbal understanding of the Griffin loan is an unfair or deceptive practice in violation of CUTPA. The defendant has not met her burden of proof of showing that the plaintiff took any action counter to the written terms of the Griffin loan or that the specific terms of the Griffin loan were unfair or deceptive. The defendant did not present sufficient evidence of any agreement that altered the plaintiff's ability to act in accordance with the Griffin loan terms and its foreclosure rights. Accordingly, the CUTPA claim fails for the same reason as the breach of covenant counterclaim. See JP Morgan Chase Bank v. Rodrigues, supra, 109 Conn.App. 134-35 (affirming dismissal of CUTPA claim that did not address the making, validity or enforcement of the loan documents); Bank of America, N.A. v. Groton Estates, LLC, Superior Court, judicial district of New London, Docket No. CV-09-6001697-S (July 13, 2010, Devine, J.) (striking CUTPA counterclaim that was predicated on allegations that mortgagee failed to perform non-existent obligations). In sum, the plaintiff's conduct was neither unfair nor deceptive. Rather, it was in accordance with its rights under the Griffin Loan. Moreover, the defendant failed to carry her burden of demonstrating that any of the plaintiff's conduct caused her to sustain any ascertainable loss.
ORDERS
The court finds that the plaintiff has met its burden of proof and grants the judgment of foreclosure on the defendant's liability. The court further finds that the defendant has failed to meet her burden of proof on her counterclaim and, therefore, finds in favor of the plaintiff on the defendant's counterclaim.
So ordered.