Opinion
No. CV-08-5007137
April 14, 2009
MEMORANDUM OF DECISION RE MOTION TO STRIKE (#105)
FACTS
The plaintiff, LaSalle Bank National Association, commenced this foreclosure action by service of process on the defendant, Brenda Bardales, on May 30, 2008. The plaintiff alleges the following facts. The defendant, on or about September 27, 2006, executed and delivered to First Franklin Mortgage Loan Trust (lender) a note for a loan in the original amount of $261,000 secured by a mortgage on certain real property the defendant owns in Colchester. The lender assigned the mortgage to the plaintiff and the plaintiff is now the holder of the note and mortgage. The note is in default and the plaintiff has given notice of the default to the defendant and elected to accelerate the balance due on the note.
On December 22, 2008 the defendant filed an answer, five special defenses and a three-count counterclaim. The defendant makes the following factual allegations, which are common to all of the special defenses and counterclaims. The property that is subject to the mortgage in the present case is the defendant's primary residence and the loan was a refinance of the defendant's existing mortgage loan on the same property. The defendant refinanced the mortgage after Joyce Wadbrook of Capitol City Financial Corporation (Capitol City), an agent of the lender, called her on a weekly basis in an attempt to get her to refinance her existing mortgage loan. The note has an interest rate of 9.4 percent, a prepayment penalty and a balloon payment of $220,162.23 payable after 15 years. The first five years of payments on the loan are sufficient only to pay the accruing interest and will not reduce the principal balance of the loan. Prior to the closing, the defendant questioned the balloon payment, but Wadbrook led her to believe that Wadbrook would help her refinance the loan before the maturity date to avoid the balloon payment. The defendant was unaware that the 9.4 percent interest rate was 3 percent higher than the average interest rate at the time, and was told that it was "the going rate." Although the defendant was not provided with notice of her right to receive a free copy of the appraisal on her property as required by General Statutes § 36a-755, she did, in fact, request a copy of the appraisal from Capitol City, but was never provided with a copy. She also was not provided with a copy of a good faith estimate of charges for settlement services as required by the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq.
Presently before the court is the plaintiff's motion to strike all five special defenses and counts one and two of the counterclaim. The plaintiff's motion is supported by a memorandum of law as required by Practice Book § 10-42(a), and the defendant has likewise filed a memorandum of law pursuant to § 10-42(b). The court heard argument on the motion at the January 10, 2009 short calendar.
The motion to strike was filed on November 20, 2008, and originally was directed against the defendant's original answer filed on September 24 2008. As previously indicated, the defendant subsequently filed an amended answer on December 22, 2008. The sole change in the amended answer is the addition of count three of the counterclaim.
Practice Book § 10-61 provides: "When any pleading is amended the adverse party may plead thereto . . . or, if the adverse party has already pleaded, alter the pleading, if desired . . . If the adverse party fails to plead further, pleadings already filed by the adverse party shall be regarded as applicable so far as possible to the amended pleading."
The plaintiff has not filed a new pleading or altered its motion to strike in response to the defendant's amended answer. Accordingly, pursuant to § 10-61, the plaintiff's motion to strike shall be regarded as applicable to the amended answer.
Additional facts are set forth below as they relate to each special defense and counterclaim.
DISCUSSION
"Pursuant to Practice Book § 10-39(a)(5), when a party seeks to contest the `legal sufficiency of any answer to any complaint, counterclaim or cross complaint, or any part of that answer including any special defense contained therein, the party may do so by filing a motion to strike the contested pleading or part thereof.' . . . [A] counterclaim is a cause of action existing in favor of the defendant against the plaintiff and on which the defendant might have secured affirmative relief had he sued the plaintiff in a separate action . . . A motion to strike tests the legal sufficiency of a cause of action and may properly be used to challenge the sufficiency of a counterclaim." (Citation omitted; internal quotation marks omitted.) JP Morgan Chase Bank, Trustee v. Rodrigues, 109 Conn.App. 125, 130-31, 952 A.2d 56 (2008). "It is fundamental that in determining the sufficiency of a complaint challenged by a . . . motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006). "A motion to strike is properly granted where [the pleading] alleges legal conclusions unsupported by facts." Mora v. Aetna Life Casualty Ins. Co., 13 Conn.App. 208, 211, 535 A.2d 390 (1988).
First Special Defense
In her first special defense, in addition to the facts previously recited, the defendant further alleges that she did not enter into a loan with the plaintiff, that the plaintiff is not the owner or holder of the promissory note at issue, that the plaintiff consequently lacks standing to bring this action, and that the court accordingly lacks jurisdiction over the subject matter. The plaintiff moves to strike this defense on the grounds that it consists entirely of legal conclusions unsupported by factual allegations and that lack of jurisdiction over the subject matter should be raised by way of a motion to dismiss rather than a special defense. The plaintiff also argues that it has standing to bring the action. The defendant responds by arguing that the plaintiff "has not made the note and assignment part of the complaint and therefore lacks proof that [it has] standing to bring an action."
"It is well settled that, because the issue of standing implicates the court's subject matter jurisdiction . . . it presents the threshold issue for [the court's] determination." West Farms Mall, LLC v. West Hartford, 279 Conn. 1, 11 n. 6, 901 A.2d 649 (2006). "A motion to dismiss is the proper procedural device to raise a claim of lack of subject matter jurisdiction. Practice Book § [10-31]. Nevertheless, [o]nce the question of lack of [subject matter] jurisdiction is raised, it must be disposed of no matter in what form it is presented." (Internal quotation marks omitted.) Branford v. Monaco, 48 Conn.App. 216, 219 n. 4, 709 A.2d 582, cert. denied, 245 Conn. 903, 719 A.2d 900 (1998). "Subject matter jurisdiction [implicates] the authority of the court to adjudicate the type of controversy presented by the action before it . . . [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction . . . The objection of want of jurisdiction may be made at any time . . . [a]nd the court or tribunal may act on its own motion, and should do so when the lack of jurisdiction is called to its attention . . . The requirement of subject matter jurisdiction cannot he waived by any party and can be raised at any stage in the proceedings." (Internal quotation marks omitted.) Bingham v. Dept of Public Works, 286 Conn. 698, 701, 945 A.2d 927 (2008).
Accordingly, before a court may examine the merits of the plaintiff's motion to dismiss, it must first examine the defendant's claim that the court lacks jurisdiction over the subject matter of the plaintiff's foreclosure action. Further, because the defendant has not submitted any evidence in support of her claim that the court lacks jurisdiction, the court should evaluate that claim by applying the standards for a motion to dismiss. See Manifold v. Ragaglia, 94 Conn.App. 103, 120-21, 891 A.2d 106 (2006) (stating that summary judgment standard may be appropriate in some cases where evidence has been submitted on jurisdictional issue).
"When a . . . court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light . . . In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007). "The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone . . . Where, however, . . . the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue . . ." (Internal quotation marks omitted.) Id. In the present case, the defendant claims that the plaintiff lacks standing because it is not the owner or holder of the promissory note at issue. The defendant's claim, however, ignores the allegations of the plaintiff's complaint indicating that the original lender assigned the mortgage to the plaintiff and that the plaintiff is now the holder of the note and mortgage. Because the defendant has not submitted any affidavits or other evidence containing facts to the contrary, the court must accept those allegations as true. Accordingly, on the present record, the court shall not dismiss this action for lack of jurisdiction over the subject matter.
This does not mean that the defendant may not renew her jurisdictional claim should she obtain supporting evidence. See Manifold v. Ragaglia, supra, 94 Conn.App. 103.
With regard to the merits of the motion to strike as to the first special defense, the plaintiff correctly argues that a motion to dismiss is the proper procedural vehicle by which to raise a claim that the court lacks jurisdiction over the subject matter. Branford v. Monaco, supra, 48 Conn.App. 219 n. 4; see also Buddington v. Sterling Winthrop, Inc., Superior Court, judicial district of New Haven, Docket No. CV 92 0327296 (November 12, 1993, Zoarski, J.). Moreover, Practice Book § 10-50 defines a special defense as setting forth "[f]acts which are consistent with [the plaintiff's statement of facts] but show, notwithstanding, that the plaintiff has no cause of action . . ." The defendant alleges in the first special defense that the plaintiff lacks standing because it is not the owner or holder of the note. The plaintiff, however, has alleged in the complaint that it is the holder of the note. The first special defense is therefore premised on facts inconsistent with the plaintiff's allegations. Accordingly, the claim is not appropriately made by way of a special defense, and the court shall grant the motion to strike as to the first special defense.
Second Special Defense
In her second special defense, labeled "Unconscionability of the Mortgage," the defendant further alleges the following facts. By telling the defendant that the 9.4 percent interest rate was the "going rate," the lender's agent misled her into believing that there would be no benefit in shopping elsewhere for a more favorable mortgage. In addition, because the defendant was not provided with a disclosure statement pursuant to the federal Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq., or a good faith estimate of the settlement charges, she did not understand the nature and cost of the loan prior to the closing when she could have renegotiated the terms of the loan, shopped for a better loan, or withdrawn her application. As a result of the prepayment penalty provision, the defendant would be subject to more than $12,000 in prepayment penalties if she were to refinance the loan within the first thirty-six months. The lender knew or should have known that the defendant would be unable to pay the balloon payment, representing eighty-four percent of the loan principal, that would come due after fifteen years.
The plaintiff moves to strike this special defense on the ground that the defendant's allegations do not rise to the level of unconscionability as established by the case law of this state. Specifically, the plaintiff argues that a 9.4 percent interest rate and a balloon payment provision are "standard terms of real estate contracts and mortgage notes" and "are within the normal range for loans entered into within the time frame that this loan was executed . . ." In response, the defendant argues that the plaintiff, by making assertions regarding the standard terms of mortgages and the normal range for loans during a particular time period, is impermissibly bringing a "speaking" motion to strike imparting facts outside the pleadings.
In ruling on a motion to strike, the courts "are limited . . . to a consideration of the facts alleged in the complaint. A `speaking' motion to strike (one imparting facts outside the pleadings) will not be granted." Doe v. Marselle, 38 Conn.App. 360, 364, 660 A.2d 871 (1995), rev'd on other grounds, 236 Conn. 845, 675 A.2d 835 (1996); see also Rowe v. Godou, 209 Conn. 273, 278, 550 A.2d 1073 (1988). "Where the legal grounds for . . . a motion [to strike] are dependent upon underlying facts not alleged in the . . . pleadings, the defendant must await the evidence which may be adduced at trial, and the motion should be denied." (Internal quotation marks omitted.) Commissioner of Labor v. C.J. M. Services, Inc., 268 Conn. 283, 293, 842 A.2d 1124 (2004).
There are no facts alleged in either the complaint or the second special defense indicating, as the plaintiff maintains, that a 9.4 percent interest rate was within the normal range for loans entered into during the September 2006 time period or that a balloon payment representing 84 percent of the principal amount is or was a standard mortgage term. Moreover, even if such evidence were offered by the plaintiff, the court could not consider it in the context of a motion to strike. Finally, the court cannot take judicial notice of whether an interest rate is reasonable. Federal Deposit Ins. Corp. v. Napert-Boyer Partnership, 40 Conn.App. 434, 441-43, 671 A.2d 1303 (1996). In short, the defendant is correct that the plaintiff's motion to strike is a speaking motion because it attempts to impart facts outside the pleadings. Accordingly, the motion to strike shall be denied as to the second special defense.
Third Special Defense
In her third special defense, labeled "Unclean Hands," the defendant repeats her previous allegations and further alleges that, because she was not provided with a copy of a good faith estimate after making her initial loan application, she was deprived of the ability to see the actual cost of the loan and determine whether she could afford it. The plaintiff moves to strike this special defense on the grounds that (1) the plaintiff is not answerable for the acts of the mortgage broker because the broker was an independent contractor, not the lender's agent, (2) a defendant who has breached a contract may not invoke the equitable powers of the court because, as a result of the breach, the defendant herself has unclean hands, and (3) the failure to provide a good faith estimate is not a proper basis for a special defense in a foreclosure action because it does not implicate the making, validity or enforcement of the note or mortgage. In response, the defendant argues that this is a speaking motion to strike because it attempts to introduce a fact outside the pleadings, namely, that Wadworth was an independent contractor, rather than the lender's agent. The defendant further argues that her claim of unclean hands is not barred by her default on the note because that default was itself caused by the plaintiff's unclean hands, and because a party who is less culpable may assert unclean hands against a party who is more culpable. Finally, the defendant argues that the plaintiff's failure to provide a good faith estimate relates to the formation of the contract, and therefore implicates the making, validity or enforcement of the note and mortgage.
It does not appear that the plaintiff claims that, as assignee of the note and mortgage, it is not subject to defenses that could have been asserted against the original lender. Nevertheless, the plaintiff's memorandum of law is not entirely clear. To the extent that the plaintiff makes such a claim, it lacks merit, as an assignee of a note and mortgage generally stands in the shoes of the assignor with respect to defenses. See the section of this memorandum addressing the first count of the counterclaim, infra.
The plaintiff has not provided any legal authority for any of these three grounds. Practice Book § 10-42(a) provides: "Each motion to strike must be accompanied by an appropriate memorandum of law citing the legal authorities upon which the motion relies." (Emphasis added.) As a number of judges of the Superior Court have noted, "[w]hen a memorandum of law fails to cite any legal authority, the memorandum is functionally equivalent to no memorandum at all." (Internal quotation marks omitted.) Giordano v. Waterbury, Superior Court, judicial district of Waterbury, Docket No. CV 07 5005420 (October 21, 2008, Alvord, J.); see also Palmieri v. Greaux, Superior Court, judicial district of New Haven, Docket No. 252090 (July 21, 1987, Schaller, J.) (2 C.S.C.R. 889). While the motion fails on the merits as set forth in the body of this memorandum, the court also could deny the motion to strike as to the third special defense on the independent ground that the plaintiff has failed to comply with § 10-42(a).
The plaintiff first moves to strike this defense on the ground that the plaintiff is not answerable for the acts of the mortgage broker because the broker was an independent contractor, not the lender's agent. The plaintiff overlooks the fact that the defendant has specifically pleaded that the broker was "Joyce Wadbrook of Capital City Financial Corporation, an agent for the lender . . ." "The determination of the status of an individual as an independent contractor or employee is, in the absence of controlling considerations, a question of fact." Rosenblit v. Danaher, 206 Conn. 125, 146, 537 A.2d 145 (1988); see also Hanson v. Transportation General, Inc., 45 Conn.App. 441, 446, 696 A.2d 1026 (1997), aff'd, 245 Conn. 613, 716 A.2d 857 (1998). "It has long been established that [t]he fundamental distinction between an employee and an independent contractor depends upon the existence or nonexistence of the right to control the means and methods of work . . . The test of the relationship is the right to control. It is not the fact of actual interference with the control, but the right to interfere, that makes the difference between an independent contractor and a servant or agent." (Citations omitted; internal quotation marks omitted.) Tianti v. Williams Raveis Real Estate, Inc., 231 Conn. 690, 696-97, 651 A.2d 1286 (1995).
Although the plaintiff argues that "there is no recognized theory of agency by any court of this State that allows for the actions of a mortgage broker . . . to be imputed to a lender," the defendant has alleged, as a matter of fact, that the broker was the lender's agent. While it may be true that mortgage brokers are not generally employed as agents of lenders, the plaintiff has not presented, and a search has not revealed, any authority for the proposition that, as a matter of law, a mortgage broker cannot be a lender's agent. Nor has the plaintiff pointed to any controlling consideration that would remove the present case from the general rule that the existence of an agency relationship is a question of fact. If, as a matter of fact, the lender in the present case had the right to control the broker's means and methods, then the broker was the lender's agent for purposes of liability. Because the plaintiff asks the court to consider a fact outside of the pleadings, namely, that the broker was not the lender's agent, this is an impermissible speaking motion.
The plaintiff next moves to strike this counterclaim on the ground that a defendant who has breached a contract may not invoke the equitable powers of the court because, as a result of the breach, the defendant herself has unclean hands. Put another way, the plaintiff argues that a defendant who has defaulted on a mortgage or, more precisely in light of the procedural posture of the present motion, who is alleged to have defaulted on a mortgage, cannot invoke the defense of unclean hands.
Default is an element of the plaintiff's prima facie case in any mortgage foreclosure action. See Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 838, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 136 (2003). Consequently, the plaintiff's assertion that an allegation of a defendant's default precludes the defendant from asserting the defense of unclean hands would, in effect, make that defense unavailable in all mortgage foreclosure actions. Contrary to the plaintiff's assertion, however, our Supreme Court has recognized unclean hands as a valid special defense in mortgage foreclosure actions. See Thompson v. Orcutt, 257 Conn. 301, 310-18, 777 A.2d 670 (2001).
Finally, the plaintiff moves to strike the third special defense on the ground that the failure to provide a good faith estimate is not a proper basis for a special defense in a foreclosure action because it does not implicate the making, validity or enforcement of the note or mortgage. Our Appellate Court has stated that "[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 . . . Where the plaintiff's conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles." (Internal quotation marks omitted.) Homecomings Financial Network, Inc. v. Starbola, 85 Conn.App. 284, 289, 857 A.2d 366 (2004).
"It is a fundamental principle of equity jurisprudence that for a complainant to show that he is entitled to the benefit of equity he must establish that he comes into court with clean hands . . . The clean hands doctrine is applied not for the protection of the parties but for the protection of the court . . . It is applied not by way of punishment but on considerations that make for the advancement of right and justice . . . The doctrine of unclean hands expresses the principle that where a plaintiff seeks equitable relief, he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue . . . Unless the plaintiff's conduct is of such a character as to be condemned and pronounced wrongful by honest and fair-minded people, the doctrine of unclean hands does not apply." (Citation omitted; internal quotation marks omitted.) Thompson v. Orcutt, supra, 257 Conn. 310.
Our Supreme Court discussed the scope of the defense of unclean hands in mortgage foreclosure actions in Thompson v. Orcutt, supra, 257 Conn. 301. In that case, the defendant pleaded a special defense of unclean hands based on the plaintiff's fraudulent conduct in a separate bankruptcy proceeding. Id., 304-05. The plaintiff had made misrepresentations to the bankruptcy trustee that caused the trustee to abandon the mortgage as an asset of the bankruptcy estate. Id., 304. The plaintiff argued that, because the fraud occurred in the bankruptcy proceeding, the mortgage itself was not premised on fraud, and the defense therefore did not relate to the making, validity or enforcement of the mortgage note. Id., 311-12.
The Supreme Court rejected the plaintiff's argument. Id. 312. It relied on earlier case law that stated that "[t]hough an obligation be indirectly connected with an illegal transaction, it will not thereby be barred from enforcement, if the plaintiff does not require the aid of the illegal transaction to make out his case." (Emphasis added; internal quotation marks omitted.) Id., 311, quoting Samasko v. Davis, CT Page 6705 135 Conn. 377, 383, 64 A.2d 682 (1949). The Supreme Court concluded that because the facts showed that the plaintiff would not have been the owner of the mortgage had he not lied to the bankruptcy court, the unclean hands defense was proper. Thompson v. Orcutt, supra, 257 Conn. 313. The court explained: "The original transaction creating the . . . mortgage was not tainted with fraud, but the plaintiff's ability to foreclose on the [defendants'] property in this case depended upon his fraudulent conduct in the bankruptcy proceeding." Id., 313-14.
Accordingly, a defense of unclean hands is proper in a mortgage case when the "plaintiff . . . require[s] the aid of the illegal transaction to make out his case." (Internal quotation marks omitted.) Id., 311. In other words, the unclean hands defense is proper if the plaintiff would not be able to bring the action but for its improper conduct. See Id., 313-14. In the present case, the defendant alleges in the third special defense that the lender's failure to provide a good faith estimate as required by 12 U.S.C. § 2604(c) "deprived her of the ability to see the cost of the loan in advance and to determine whether she could afford the loan." She also alleges in the second special defense, the allegations of which are incorporated into the third special defense, that if the lender timely had made all required disclosures, "she could have renegotiated the loan terms, shopped for better terms, or withdraw[n] her loan application." When these allegations are read in the light most favorable to the defendant, as they must be in the context of a motion to strike a special defense, the defendant has alleged that, had she known the true costs involved in the loan, she would have obtained a loan with more favorable terms. This meets the test set forth in Thompson v. Orcutt. Moreover, the conduct alleged in the present case is even more closely connected with the making of the mortgage and note than the conduct in Thompson, in that the lender is alleged to have failed to supply legally required information regarding the actual cost of obtaining the mortgage itself.
Because all of the plaintiff's grounds for striking the third special defense are without merit, the court shall deny the motion to strike.
Fourth Special Defense
In her fourth special defense, labeled "Fraud," the defendant repeats her previous allegations and further alleges the following facts. The defendant was provided with a "Non Impound Notice" indicating that the monthly payments would cover principal and interest, yet an addendum to the mortgage states that the first sixty payments are interest only payments. The lender's agent repeatedly assured the defendant that the 9.4 percent interest rate was the best rate available, and the defendant reasonably relied on these assurances in attending the closing and signing the loan documents. The plaintiff moves to strike this special defense on the grounds that (1) a mortgage broker is not the agent of a lender, (2) the defendant has failed to set forth facts establishing the elements of fraud, (3) the defense does not meet the definition of a special defense under Practice Book § 10-50, and (4) the defense sets forth mere legal conclusions unsupported by facts. The defendant argues in response that the court should not grant the motion based on counsel's mere assertion that there was no agency relationship, and that she has adequately pleaded the elements of fraud.
As an initial matter, it is noted that there is no merit to the plaintiff's first and fourth grounds for the motion on this special defense. With regard to the first ground, the plaintiff's assertion that the mortgage broker was not the lender's agent is a speaking motion for the same reasons set forth above with regard to the second special defense. As for the fourth ground, although the fourth special defense does include legal conclusions, it also sets forth extensive factual allegations, including the allegations common to all the special defenses and counterclaims and the additional factual allegations set forth in the first through third special defenses.
With regard to the plaintiff's second and third grounds, "it is well settled that the essential elements of fraud are: (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon that false representation to his injury." (Internal quotation marks omitted.) Leonard v. Commissioner of Revenue Services, 264 Conn. 286, 296, 823 A.2d 1184 (2003). The fourth special defense does not include any factual allegations indicating that any untrue statements of the lender or its agents were made knowingly or for the purpose of inducing the defendant to act on them. Accordingly, the defendant has failed to allege all of the elements of fraud, and the facts alleged do not "show . . . that the plaintiff has no cause of action" as required by Practice Book § 10-50. The court shall grant the motion to strike as to the fourth special defense for failure to include the factual allegations required.
Fifth Special Defense
In her fifth special defense, labeled "Breach of Fiduciary Duty," the defendant repeats her previous allegations and further alleges the following facts. The mortgage broker provided the defendant with a document entitled "Understanding the Role of Your Broker and Broker Compensation," which described the broker's contractual and fiduciary duties to the defendant. These duties required the broker to ensure that the defendant would not be offered a loan she could not afford, help the defendant obtain a competitive interest rate, and provide the defendant with a good faith estimate of the closing costs. By breaching these duties, the broker caused the defendant to enter into the mortgage at issue in this foreclosure action.
The plaintiff moves to strike this special defense on the grounds that (1) there is 110 fiduciary relationship between a lender and a borrower, (2) a mortgage broker is not an agent of a lender, (3) the defendant has alleged mere legal conclusions unsupported by facts, and (4) the defense does not address the making, validity or enforcement of the note or mortgage. In response, the defendant argues that she does not claim that the lender owed her a fiduciary duty, but instead claims that the broker owed her fiduciary duties and that the broker's breach is imputed to the lender.
As an initial matter, it is noted that the second and third grounds for the plaintiff's motion to strike on this defense have already been adequately addressed with regard to the previous defenses. As indicated previously, the plaintiff's claim that the broker was not the lender's agent constitutes an impermissible speaking motion. Furthermore, the defendant has made extensive factual allegations and the defense therefore does not consist of mere legal conclusions.
With regard to its first ground, the plaintiff is correct that "[g]enerally there exists no fiduciary relationship merely by virtue of a borrower-lender relationship between a bank and its customer." Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 19, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999). Nevertheless, in the present case, the defendant has not alleged the existence of a fiduciary duty merely by virtue of the borrower-lender relationship. Instead, the defendant alleges that "[t]he mortgage broker, in its capacity as the lender's agent assumed a fiduciary and contractual duty to act in the Defendant's best interest . . ." It is well established that, under the doctrine or respondeat superior, a principal is liable for torts that its agents commit in the course of their agency. Matthiessen v. Vanech, 266 Conn. 822, 840 n. 16, 836 A.2d 394 (2003). Moreover, "a mortgage broker has a fiduciary relationship with his client." ABN Amro Mortgage Group, Inc. v. Pristine Mortgage, LLC, Superior Court, judicial district of Hartford, Docket No. CV 04 4005389 (September 8, 2005, Satter, J.T.R.) (40 Conn. L. Rptr. 46). If, in fact, the mortgage broker breached its fiduciary duties to the defendant and the broker was acting as the lender's agent, the broker's breach would be imputed to the lender.
Finally, with regard to the plaintiff's fourth ground, as previously stated, defenses to foreclosure proceedings generally must address the making, validity or enforcement of the note or mortgage. Homecomings Financial Network Inc. v. Starbala, supra, 85 Conn.App. 289. Here, the defendant has alleged that she obtained the mortgage through a mortgage broker who was, in fact, an agent of the lender, and that the broker breached the fiduciary duty it owed her by failing to ensure that she received a loan that she could afford and with a competitive interest rate. Accordingly, this special defense asserts conduct of the lender in inducing the defendant to enter into a mortgage relationship, and thus implicates the making of the mortgage.
Counterclaim: Count One
In count one of her counterclaim, labeled "Negligent and Intentional Misrepresentation," the defendant repeats all of the allegations previously set forth in her special defenses and further alleges that the "Plaintiff committed negligent or, alternatively, intentional misrepresentation by leading Defendant to believe that the interest rate of 9.4% was the best rate available." The plaintiff moves to strike this count on the grounds that (1) the plaintiff is not liable for the acts of a mortgage broker, (2) "it is quite possible . . . that the 9.4 percent interest rate was the best rate available to [the defendant]," (3) the plaintiff, as assignee of the note and mortgage, is not responsible for the acts of the lender, and (4) the defendant's claim does not arise out of the same transaction as the plaintiff's complaint because it is based on the acts of the mortgage broker, who is a nonparty to this action. The defendant argues in response that the plaintiff's motion is a speaking motion and that this count does arise from the same transaction as the plaintiff's complaint because it involves misrepresentation made about the terms of the mortgage in the course of the making of the mortgage.
The plaintiff's first two grounds for striking count one again rely on facts outside the pleadings. Specifically, the plaintiff would like the court to conclude that mortgage broker was not the lender's agent and that the 9.4 percent interest rate was the best rate available to the defendant. Because these arguments rely on facts outside the pleadings, this is an impermissible speaking motion.
The plaintiff's third and fourth grounds both are premised on the fact that the allegations of this counterclaim focus on the allegedly tortious acts of nonparties to this action. "Ordinarily an assignee of a contract takes it subject to all defenses which might have been asserted against the assignor." (Emphasis added.) Fairfield Credit Corp. v. Donnelly, 158 Conn. 543, 548, 264 A.2d 547 (1969). Nevertheless, "[g]enerally, if there has been no assumption of liability, the assignee is not liable to the debtor on account of liabilities incurred by the assignor in connection with the subject matter of the assignment." 6A C.J.S., Assignments § 117 (2004); see also ICC Performance 2 Ltd. Partnership v. Pollack, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 94 0313596 (April 16, 1997, Levin, J.) (19 Conn. L. Rptr. 384); Mundaca Investment Corp. v. Daddona, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 95 0144551 (January 4, 1996, Hickey, J.). The defendant alleges that the lender's agent made misrepresentations to her and she seeks to hold the plaintiff liable for those alleged misrepresentations. She has not pleaded any facts, however, indicating that the plaintiff assumed the lender's liability for this alleged tortious conduct, or any other facts that would provide a basis for an exception to the general rule that an assignee does not assume the assignor's liabilities.
Accordingly, the court shall grant the motion to strike as to count one of the counterclaim for reasons stated above.
Counterclaim: Count Two
In count two of the counterclaim, the defendant repeats the facts previously alleged and further alleges that the lender violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., by failing to provide the defendant a copy of the appraisal, a good faith estimate of closing costs and a TILA disclosure statement in advance of the mortgage closing. The plaintiff moves to strike this count on the ground that the defendant has failed to allege any facts indicating that the plaintiff violated CUTPA. In response, the defendant asserts that the alleged acts constituted unethical conduct in violation of CUTPA.
The plaintiff is correct that count two does not set forth any allegations of improper conduct by the plaintiff. The allegations focus entirely on the conduct of the assignor of the mortgage and the assignor's alleged agent. Because, as stated in the authorities cited in the previous section, an assignee is generally not liable for the torts of the assignor, the court shall grant the motion to strike as to the second count of the counterclaim.
ORDER
For the foregoing reasons, the court hereby grants the plaintiff's motion to strike as to the first and fourth special defenses and counts one and two of the counterclaim, and denies the motion to strike as to the second, third and fifth special defenses.