Opinion
FSTCV136017120S
04-12-2017
Manufacturers & Traders Trust Company aka M& T Bank, Successors by Merger to Hudson City Savings Bank v. Theresa Virgulak et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
David R. Tobin, Judge Trial Referee.
This mortgage foreclosure action with a return date of February 26, 2013, was commenced by JPMorgan Chase Bank, N.A. (" Chase") against defendants Robert J. Virgulak (" Robert"), Theresa Virgulak (" Theresa") and State of Connecticut Department of Revenue Services (" DRS"). The action sought to foreclose a mortgage that the plaintiff claimed to have on residential real property owned by Theresa located at 14 Bayne Court in Norwalk, which is the sole residence of both Theresa and Robert. The single count of the original complaint alleged that on December 11, 2006, Theresa had executed a mortgage on her property in favor of the plaintiff to secure a $533,000 note executed in favor of the plaintiff by Robert.
JPMorgan Chase Bank, N.A. filed a motion to substitute Hudson City Savings bank as plaintiff representing that the mortgage deed and note had been assigned to Hudson City on July 2, 2015. That motion was granted by the court (Heller, J.) on August 18, 2015 (#124.01). On August 9, 2016, the presently named plaintiff filed a motion to substitute itself as plaintiff representing that it was the successor by merger to Hudson City. That motion was granted by the court (Heller, J.) on August 15, 2015 (#170.01).
On January 24, 2011, Robert filed a petition for protection under Chapter 7 of the United States Bankruptcy Code listing his obligations to the plaintiff as an unsecured debt. Subsequently, the plaintiff unsuccessfully attempted to obtain relief from the Automatic Bankruptcy Stay. On April 26, 2011, Robert obtained an unconditional discharge of the debt he owed to the plaintiff under the note he signed on December 11, 2006, and subsequently the case against him was withdrawn.
Presently, the only remaining defendants in this action are Theresa and DRS, which holds a lien on the subject property filed after the plaintiff's mortgage. The operative complaint is the plaintiff's amended complaint dated August 9, 2016 (#170.00) that sets forth three counts.
The Office of the Attorney General entered an appearance of behalf of the Department of Revenue Service but did not participate in the trial.
In its first count, the plaintiff claims that despite the fact that Theresa never signed a note in favor of the plaintiff, nor a guaranty of that note, she is nevertheless indebted to the plaintiff and that debt is secured by a mortgage on 14 Bayne Court. The second count alleges that the parties to the mortgage intended that both Robert and Theresa were to be makers of the mortgage note, but that " by mutual mistake, or by the unilateral mistake of the Plaintiff and/or the Defendant" Theresa did not sign the note. In the second count, the plaintiff seeks the equitable remedy of reformation of the mortgage note to include Theresa as a borrower. The third count asserts that Theresa was unjustly enriched in two respects: first, by using the proceeds of the note signed by Robert to pay off loans which she was obligated to pay; and second, by having use and occupancy of 14 Bayne Court without having performed " the terms of the Mortgage which she executed."
Neither in the second count nor in its prayers for relief does the plaintiff seek to reform the mortgage deed.
On November 30, 2016, Theresa filed an answer and special defenses, denying the essential allegations of the complaint regarding her liability for the mortgage debt and the claims of unjust enrichment. The eight special defenses asserted by Theresa include: (1) the plaintiff misapplied funds paid on the loan in contravention to the loan documents; (2) the plaintiff failed to give proper notice of default and acceleration; (3) the parties entered into an oral forbearance agreement; (4) the plaintiff acted in a commercially unreasonable manner with respect to the defendants' obligations under the loan; (5) the plaintiff violated the implied covenant of good faith and fair dealing; (6) the mortgage debt was discharged in bankruptcy proceedings filed by Robert; (7) the determination of the United States Bankruptcy Court that the note executed by Robert was unsecured estops the plaintiff from claiming a security interest in 14 Bayne Court; (8) the plaintiff's claims are barred by the applicable statute of limitations.
STIPULATION OF FACTS NOT IN DISPUTE
On December 5, 2016, the plaintiff and Theresa filed a Stipulation of Facts Not In Dispute (#191.00). In that pleading, the following facts were agreed to by stipulation. On or about December 11, 2006, Robert executed and delivered to Chase a note in the principal amount of $533,000 (the " Note"). Theresa did not sign the Note. The Note was not timely paid, went into default on or about February 1, 2010, and the plaintiff elected to accelerate the balance due on the Note. The present foreclosure action was commenced by Chase in February 2013, at which time it held the Note executed by Robert.
The present plaintiff is Manufacturers & Traders Trust Company a/k/a M& T Bank, successors by merger to Hudson City Savings Bank. While M& T Bank owns the mortgage, Chase has at all times been the servicer of the mortgage. On January 24, 2011, Robert filed for protection under Chapter 7 of the U.S. Bankruptcy Code, listing the Note as an unsecured debt. The filing listed no real property owned by Robert. The then holder of the Note filed a Motion for Relief from the Automatic Bankruptcy Stay, claiming it wished to foreclose on the property known as 14 Bayne Court, Norwalk and asserting that it was, in fact, a secured creditor. Following Robert's objection to the motion for relief, the Bankruptcy Court denied the motion for relief from stay and sustained Robert's objection. Thereafter, on April 26, 2011, Robert was granted an unconditional discharge from the Bankruptcy Court for his obligations under the Note.
JPMorgan Chase Bank, N.A. is referred to in this memorandum of decision as the " plaintiff."
Theresa signed a document entitled " Open-End Mortgage Deed" on December 11, 2006, which recited that it was given to secure a note dated December 11, 2006, signed by Theresa as " Borrower" in the amount of $533,000. The term " Borrower" is defined in the Mortgage Deed as " Theresa Virgulak, married." The plaintiff currently holds the Note and is the assignee of the Mortgage Deed. Theresa has never signed a guaranty of Robert's obligations under the Note.
Notices of default were sent to both Robert and Theresa on January 3, 2011. Since December 11, 2006, Theresa has not made any mortgage payments or rent payments with respect to 14 Bayne Court. The parties agree that 14 Bayne Court has a present market value of $785,000. THE EVIDENCE
The court heard the evidence of the parties on December 6, 2016. Wilkin Rodriguez, a mortgage research officer employed by Chase, testified regarding the files and records maintained by Chase. He testified that Chase maintains files for each mortgage it holds or services, including the collateral file which contains the original mortgage note and deed, title insurance policies and records regarding loan origination, payments and escrow balances. Through his testimony, the plaintiff introduced into evidence numerous documents relating to the subject mortgage, including a copy of the mortgage note, (Ex. 1) and deed, (Ex. 4) as well as Chase's calculation of the then current balance owed on the mortgage--$824,087.92 (Ex. 7). Exhibit 8 is an " Escrow Transaction History" covering the period December 11, 2006 through November 7, 2016. That document shows a number of payments made by or on behalf of the plaintiff for " City Tax" and " Homeowners Insurance." The testimony of Rodriguez and the documents he authenticated, established that the subject mortgage was originated by Chase, but was subsequently transferred to Hudson City Savings Bank, which thereafter merged with the plaintiff. However, despite the transfer of the mortgage, Chase has continually serviced the mortgage from origination to the present.
The original mortgage note was missing, apparently misfiled. See Exhibit 3.
The mortgage note is signed only by Robert above a signature line labeled " Robert J. Virgulak." The note does not have a signature line with Theresa's name.
The mortgage deed is consistent with the description of that document set forth in the Stipulation of Facts Not in Dispute.
The Note (Ex. 1) recites the obligations of the " Borrower" and does not otherwise define that term. However, page 3 of the Note bears the signature of " Robert J. Virgulak--Borrower." The Note does not bear Theresa's signature nor does it indicate in any way that any person, other than Robert, is obligated under the terms of the Note.
On cross examination, Rodriguez admitted that the Chase's files did not contain any originals or copies of notes signed by Theresa. Rodriguez authenticated numerous documents relating to the approval and closing of the mortgage (Exs. G though Y) that were addressed to or signed by Robert only. On re-direct examination, Rodriguez authenticated the following documents relating to the mortgage signed by Theresa: Ex. 9--HUD form 1A Settlement Statement; Ex. 10--Transfer of Servicing Disclosure Agreement; Ex. 11--Truth in Lending Statement; and Ex. 12--Notice of Right to Cancel.
Ex. 9 is signed by both Robert and Theresa. Robert's signature is dated 12/11/06. Theresa's signature is dated 12/10/06; however, the second digit of the day " 0" is struck through with a vertical line and reads " 11."
After being called as a witness by the plaintiff, Theresa testified that she had lived at 14 Bayne Court in Norwalk for thirty-four years and had owned that residence for thirty years. She acknowledged that she had signed the mortgage deed (Ex. 4). She stated she did so at Robert's request. She knew that at the time there was an existing mortgage on the residence, but did not recall the mortgage lender or the balance of the mortgage loan. She supposed that the old mortgage was paid off with the proceeds of the loan Robert obtained from Chase. She acknowledged signing the HUD closing statement (Ex. 9), the Transfer of Servicing Disclosure (Ex. 10), the Truth-in-Lending Disclosure (Ex. 11) and the Notice of Right to Cancel, (Ex. 12) but claimed that she had not read those documents before signing them. On being confronted by her deposition testimony, Theresa acknowledged that she had agreed that the proceeds of the 2006 mortgage had been used to pay off a prior mortgage on the property to People's Bank for which she may have been responsible.
On cross examination by her attorney, Theresa claimed that she did not consider the prior mortgages to be her debts since they were " taken out" by Robert, who managed all the family's bills and paid all the property taxes. She stated that she did not sign any of the documents relating to the mortgage in front of witnesses. She signed them at her husband's office in his presence only. She never filed joint tax returns with Robert and they never had credit cards in both their names. She denied that she had signed any guarantees of her husband's debts. On re-direct examination, she testified that even though she signed the HUD closing statement (Ex. 9) as " Borrower, " she did not receive any portion of the $155,236.22 shown as paid to " Borrower" at closing. She believed that Robert had been paid all of that sum.
After being called as a witness by the plaintiff, Robert testified that on the loan application submitted to Chase he included the value of the family residence at 14 Bayne Court, even though he knew that title to that property was solely in Theresa's name. He testified that his belief was that the prior mortgages on 14 Bayne Court were the joint responsibility of his and Theresa's. Robert testified that he had received all of the funds available to the borrower at the closing of the mortgage and that Theresa did not receive any portion of the $155,236.22 shown in Exhibit 9 as paid to " Borrower" at closing. Some of the proceeds of the mortgage were used by Robert to improve the kitchen and bathroom at 14 Bayne Court. Robert also testified that he made the required payments on the mortgage, the real estate taxes and the property insurance for 14 Bayne Court until he filed for bankruptcy in 2010. He never made any additional payments on the mortgage or real estate taxes, but thinks he may have instated the property insurance after one or two years. Currently, the property is insured though an insurance agent in Norwalk. Since 2006, Theresa has occupied 14 Bayne Court and has not made mortgage payments or paid property taxes or rent with respect to that property.
On cross examination, Robert testified that the vast majority of the documents relating to the closing of the mortgage were given to him but not to Theresa. Theresa was not at the closing which was held at attorney John Milici's office. All communications regarding the mortgage were sent to Robert and not to Theresa. Robert testified that a portion of the proceeds of the mortgage were used to pay off credit cards that were Robert's exclusive responsibility, which were shown in Exhibit 9 as totaling $109,070.48. Robert testified that he used approximately $35,000 of the $155,236.22 paid to him at closing to improve the kitchen and bathroom of 14 Bayne Court.
On re-direct examination Robert testified that Chase required that the prior mortgages be paid off as a condition of granting the loan. Those mortgage balances were shown in Exhibit 9 as totaling $255,882.56. After the plaintiff rested, the defense did not present additional evidence, instead relying solely on the testimony and exhibits introduced during cross examination of the witnesses called by the plaintiff.
On December 7, 2016, the court met with counsel to discuss the issues presented by the pleading and the evidence. During the course of that discussion, the court requested the parties address the following issues in post-trial briefs:
1. Is the plaintiff entitled to foreclose the mortgage against Theresa's property without first reforming the mortgage note to make her a maker or guarantor of the note and/or reforming the mortgage deed to alter the description of the debt secured by the mortgage?
2. If the answer to #1. is negative, is there sufficient evidence to support equitable reformation of the mortgage note and/or deed?
3. If the answer to both #1. and #2. are negative, is the plaintiff entitled to recover, by way of a claim of unjust enrichment, any of the following:
a. Use and occupancy of 14 Bayne Court,
b. Property taxes paid by the plaintiff for 14 Bayne Court,
c. Property insurance premiums paid by the plaintiff for coverage of 14 Bayne Court?
4. If plaintiff is otherwise entitled to recover under #1., #2. or #3, is such recovery precluded by plaintiff's responses to the requests for admissions (Ex. TT), which included the admission that the defendant did not owe any money to the plaintiff?
5. If plaintiff is otherwise entitled to recover under #1., #2. or #3, is there adequate evidence to support any of the defendant's special defenses?
The court ordered that the plaintiff file an initial brief by January 27, 2017, and that the defendant file a responsive brief by February 17, 2017. The court stated that it would permit, but not require, the plaintiff to file a second brief responding to the defendant's brief not later than March 10, 2017, if desired.
On December 21, 2016, the plaintiff filed a motion seeking to withdraw and amend its response to the requests for admission (#197.00). The plaintiff's motion relies on Practice Book § 13-24(a), which provides in relevant part:
Any matter admitted under this section is conclusively established unless the judicial authority on motion permits withdrawal or amendment of the admission. The judicial authority may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the judicial authority that withdrawal or amendment will prejudice such party in maintaining his or her action or defense on the merits . . .
On December 23, 2016, although no hearing had been scheduled on the plaintiff's motion to withdraw and amend its admissions, the defendant filed a motion for a continuance (#198.00) until January 17, 2017, claiming that the plaintiff's motion implicated " disputed trial testimony" and that a transcript of the trial testimony was not yet available. On December 27, 2016, the court entered orders stating that it would not hear the plaintiff's motion until all post-trial briefs had been filed. DISCUSSION
In its January 27, 2017 post-trial brief (#201.00), the plaintiff does not argue that the law would permit the plaintiff to foreclose a mortgage on 14 Bayne Court without first obtaining equitable reformation of the mortgage note and/or deed. Accordingly, the court will first address the plaintiff's second count which requests reformation.
SECOND COUNT--REFORMATION
As noted above, in the second count of its complaint the plaintiff seeks reformation of the mortgage note, but not the mortgage deed. However, on page 7 of its post-trial brief (#201.00), the plaintiff concedes: " Quite simply, there is simply no support for any notion that the mortgage was ever intended to secure a note executed by Theresa." According to the brief, it is now the plaintiff's position that the mortgage deed should be reformed " to reference the fact that the Mortgage executed by Theresa was to secure the Note executed by Robert."
The plaintiff's response to the defendant's request for admissions #4. conceded that Theresa did not borrow any money from the plaintiff, making it difficult for the plaintiff to persist in its claim that the note, rather than the mortgage deed needed to be reformed.
The plaintiff relies on cases including Russo Roofing, Inc. v. Rottman, 86 Conn.App. 767, 863 A.2d 713 (2005), and McKeever v. Fiore, 78 Conn.App. 783, 829 A.2d 846 (2003), for the proposition that, in an equitable proceeding such as a mortgage foreclosure, the trial court may consider equitable principles even though they may not have been specifically pleaded and " may consider all relevant circumstances to insure that complete justice is done." 86 Conn.App. at 776, 78 Conn.App. at 788. In McKeever, supra, the Appellate Court held that, in a mortgage foreclosure case, the trial court could consider the equitable defense of unclean hands, even though it had denied the defendant's motion to amend the answer to allege such a defense.
" The party seeking the reformation of a deed must establish the asserted ground for reformation by clear and convincing proof . . . [The burden] is sustained if evidence induces in the mind of the trier a reasonable belief that the facts asserted are highly probably true, that the probability that they are true or exist is substantially greater than the probability that they are false or do not exist." (Citations omitted; internal quotation marks omitted.) Czeczotka v. Roode, 130 Conn.App. 90, 98, 21 A.3d 958 (2011). " A cause of action for reformation of a deed rests on the equitable theory that the instrument sought to be reformed does not conform to the real contract agreed upon and does not express the intention of the parties and that it was executed as the result of mutual mistake, or mistake of one party coupled with actual or constructive fraud, or inequitable conduct on the part of the other . . . Reformation is not granted for the purpose of alleviating a hard or oppressive bargain, but rather to restate the intended terms of an agreement when the writing that memorializes that agreement is at variance with the intent of both parties." Id., 98-99. " Reformation is also available in equity when the instrument does not express the true intent of the parties owing to the mistake of one party." (Internal quotation marks omitted.) Derby Savings Bank v. Oliwa, 49 Conn.App. 602, 604, 714 A.2d 1278 (1998).
" A cause of action for reformation of a contract rests on the equitable theory that the instrument sought to be reformed does not conform to the real contract agreed upon and does not express the intention of the parties and that it was executed as the result of mutual mistake, or mistake of one party coupled with actual or constructive fraud, or inequitable conduct on the part of the other . . . Reformation is not granted for the purpose of alleviating a hard or oppressive bargain, but rather to restate the intended terms of an agreement when the writing that memorializes that agreement is at variance with the intent of both parties . . . Equity evolved the doctrine because an action at law afforded no relief against an instrument secured by fraud or as a result of mutual mistake . . . The remedy of reformation is appropriate in cases of mutual mistake--that is where, in reducing to writing an agreement made or transaction entered into as intended by the parties thereto, through mistake, common to both parties, the written instrument fails to express the real agreement or transaction . . . In short, the mistake, being common to both parties, effects a result which neither intended." (Citations omitted, internal quotations marks omitted.) Lopinto v. Haines, 185 Conn. 527, 531-32, 441 A.2d 151 (1981).
In its post-trial brief, the plaintiff refers to the failure of the Mortgage Deed to refer to any obligation for which Theresa is legally responsible as an inadvertent " discrepancy." The plaintiff does not claim any basis for reformation of the Mortgage Deed other than mutual mistake.
In that brief, the plaintiff relies on the following facts, established by the evidence, to sustain its burden of proving mutual mistake by clear and convincing evidence:
1. Theresa was, at all relevant times, and is still, married to Robert.
2. The Note and Mortgage Deed were executed on the same date.
3. The Mortgage Deed (Ex. 4) describes the obligation secured as: the promissory note signed by the Borrower and dated December 11, 2006. The Note states that the Borrower owes Lender Five Hundred Thirty-Three Thousand, and 00/100 Dollars (U.S. $533,000.00) plus interest. Borrower has promised to pay this debt in regular Period Payments and to pay the debt in full not later than January 1, 2037.
The term " Borrower" is defined in the Mortgage Deed as " Theresa Virgulak, married."
4. Consistent with the description set forth in the Mortgage Deed:
a) the Note is dated December 11, 2006;
b) the amount of the Note is $533,000.00 and provides for interest; and
c) provides for a final maturity of January 1, 2037.
The plaintiff also makes two additional arguments in support of its case for reformation of the Mortgage Deed. First, that the evidence establishes that Robert and Theresa had a " practice for many years for Robert to execute promissory notes and for Theresa to execute mortgage (sic) to secure such notes." The plaintiff directs the court's attention to the trial testimony of Theresa and Robert. In responding to questions asked by her counsel regarding prior mortgages that had been placed on 14 Bayne Court, Theresa testified that the mortgage loans were taken out by Robert and that she was not " on any of those notes" and did not consider them to be her debts. Robert testified in a similar vein when he stated that after he had transferred his interests in 14 Bayne Court to Theresa he had signed at least four promissory notes secured by mortgages on 14 Bayne Court, and in each case, Theresa had to sign in order for Robert to get the money. However, Robert's answers to the questions asked by plaintiff's counsel with regard to prior mortgages on 14 Bayne Court were somewhat uncertain. They included responses such as: " Probably, yes."; " I--I believe so. I'm not--I'm not 100% sure but I guess they were."; and " I--I think so but I am not sure--."
Since the prior mortgages in question were undoubtedly recorded in the Norwalk Land Records, either party could have obtained copies of the mortgage deeds and learned whether 14 Bayne Court was pledged to secure Theresa's personal obligations to the mortgagees or to secure her guarantee of Robert's debts. In the final analysis, the court concludes that the conduct of Robert and Theresa with respect to past mortgages has little probative value regarding the question of whether the plaintiff is entitled to equitable reformation of the mortgage deed.
The court has, and will consider all of the testimony given by Robert and Theresa to the extent that their credibility is at issue.
The plaintiff's second additional argument is that the evidence establishes that Theresa signed " a plethora of documents which all lead to the indisputable conclusion that the parties all intended for the Mortgage to secure the Note on the date of closing." The evidence actually shows that the plaintiff only signed four additional documents, the HUD 1A form (Ex. 9), the transfer of servicing disclosure statement (Ex. 10), a truth-in-lending statement (Ex. 11) and a notice of right to cancel. (Ex. 12.) Those documents either individually or collectively describe, or allow the court to infer that, the transaction they are related to was one in which Theresa was to have personal responsibility for the mortgage debt, either as a maker of the mortgage note, or as a guarantor of the note.
The documents in evidence and the testimony of the witnesses leave many gaps in the factual record. It is not clear if Robert spoke with any individual representing Chase prior to applying for the mortgage. There was no mortgage commitment listing the terms under which Chase was prepared to close the loan and what role, if any, Chase intended Theresa to play in the transaction. The HUD1A settlement statement lists only one disbursement to a law firm--the $525.00 paid to Bove & Milici. Although Robert testified that the closing took place in John Milici's office, he did not testify as to whether Milici was representing him, Chase or both. There was no testimony as to who prepared or reviewed the closing documents. Both Robert and Theresa testified that Theresa did not attend the closing and that she signed the Mortgage Deed and four related documents at the family home. However, there was no explanation of how the mortgage came to bear the signatures of two witnesses, one of whom, Attorney Milici, also purported to take Theresa's acknowledgement.
The records authenticated by Wilkin Rodriguez are silent as to any understanding which Chase may have had with Theresa regarding her responsibility for the loan being made to Robert. Those records did not include a mortgage commitment letter or closing instructions, both of which typically would describe the transaction in detail and contain a checklist of documents required to be executed prior to disbursement of the proceeds of the loan.
The court finds that the plaintiff has not sustained its burden of proving, by clear and convincing evidence, that it is entitled to the equitable remedy of reformation of the mortgage deed (Ex. 4). Accordingly, the court finds the issues on the Second Count for Theresa and against the plaintiff. Since the plaintiff failed to present any authority to the court which would allow the plaintiff to prevail on the First Count in the absence of reformation of the mortgage deed, the court finds the issues on the First Count for Theresa and against the plaintiff.
COUNT THREE--UNJUST ENRICHMENT
In Count Three, the plaintiff alleges an alternative basis for recovery of damages against Theresa--a claim of unjust enrichment. The count alleges a number of ways in which Theresa was unjustly enriched. First, by having her personal debts, in an amount exceeding $200,000, repaid with the proceeds of the loan. (Amended Complaint ¶ 13.) Second, by enjoying continuous use and occupancy of 14 Bayne Court since 2006 " without making adequate payment to the Plaintiff; and continuing to have " a free home." (Amended Complaint ¶ ¶ 14 & 15.) Third, by benefitting from " the funds advanced at closing, in addition to interest and other charges." (Amended Complaint ¶ 17.)
In its post-trial brief, the plaintiff reformulates its unjust enrichment claim asserting three benefits unjustly enjoyed by Theresa. First, " prior mortgages in her name were paid off"; second, " the plaintiff has paid property taxes and homeowner's insurance premiums on the Property, without reimbursement, since 2010"; and third " she received the benefit of the home improvements which were paid for with the proceeds from the mortgage loan." In that brief, the plaintiff has apparently abandoned the claim that Theresa was unjustly enriched by being able to have " free" occupancy of 14 Bayne Court.
" Unjust enrichment applies wherever justice requires compensation to be given for property or services rendered under a contract, and no remedy is available by an action on the contract . . . A right of recovery under the doctrine of unjust enrichment is essentially equitable, its basis being that in a given situation it is contrary to equity and good conscience for one to retain a benefit which has come to him at the expense of another . . . With no other test than what, under a given set of circumstances, is just or unjust, equitable or inequitable, conscionable or unconscionable, it becomes necessary in any case where the benefit of the doctrine is claimed, to examine the circumstances and the conduct of the parties and apply this standard . . . Unjust enrichment is, consistent with the principles of equity, a broad and flexible remedy . . . Plaintiffs seeking recovery for unjust enrichment must prove (1) that the defendants were benefitted, (2) that the defendants unjustly did not pay the plaintiffs for the benefits, and (3) that the failure of payment was to the plaintiffs' detriment." (Citations omitted; internal quotation marks omitted.) Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire, Co ., 231 Conn. 276, 282-83, 649 A.2d 518 (1994).
In its post-trial brief the defendant argues that " plaintiff may be entitled to restitution, but not in the amount it demands." Specifically, the defendant " concedes that she should reimburse plaintiff for the taxes it and Chase paid on her behalf." However, it makes no similar concessions with respect to payments made to maintain property insurance on the property or proceeds of the loan used to pay off prior mortgages and to make improvements on the property.
A. Payment of Theresa's Debts from Mortgage Proceeds
Both the plaintiff's amended complaint and post-trial brief claim that Theresa was unjustly enriched because debts for which she was personally responsible were discharged from the proceeds of the 2006 mortgage. The HUD Settlement Statement (Ex. 9) shows that at the closing Wachovia Bank, N.A. was paid $240,993.18 and M& T Bank was paid $14,889.38, apparently to discharge the balance of the then-existing mortgages on 14 Bayne Court.
In pressing its claims for reformation of the mortgage deed, the plaintiff argued that the testimony of Robert and Theresa established " that it had been the practice for many years [for] Robert to execute promissory notes and for Theresa to execute mortgages to secure such notes." In support of its claim of unjust enrichment, the plaintiff urges that the evidence establishes that the prior mortgages, instead of being solely Robert's debts, were security for notes that were Theresa's personal obligations.
The plaintiff introduced into evidence copies of the mortgages which were paid at the closing of the 2006 mortgage, lenders' pay-off letters, transmittal letters from closing counsel sending forwarding funds to pay-off balances and releases of those mortgages. (Exs. 14, 15, 20 & 21.) The court finds that those documents establish by a preponderance of the evidence that Theresa was personally liable for both the $240,993.18 balance of the 1998 mortgage held by Wachovia Bank and the $14,889.38 balance of the 1993 mortgage held by M& T Mortgage Corporation. The court finds that a preponderance of the evidence establishes that debts for which Theresa was personally liable, totaling $255,882.56, were paid from the proceeds of the closing of the 2006 mortgage.
In its post-trial brief, an apparent typographical error states that the pay-off of that mortgage totaled $14,669.38
B. Property Taxes and Insurance
The plaintiff also claims that Theresa was unjustly enriched because, following Robert's failure to pay property taxes and property insurance premiums on 14 Bayne Court, the plaintiff advanced funds to pay those taxes and premiums. Such payments are shown on the Escrow Transaction History (Ex. 8). The payments of property taxes to the City of Norwalk totaled $65,807.96. As the sole owner of 14 Bayne Court, Theresa was responsible for the payment of those taxes and it is clear that she enjoyed a benefit when they were paid on her behalf by the plaintiff.
The plaintiff further claims that Theresa benefitted from premium payments made by the plaintiff for property insurance on 14 Bayne Court. Those premiums are shown in Exhibit 8 and total $5,224. Neither the policies nor declaration pages were introduced into evidence. No evidence was produced to show that Theresa did not benefit from the coverage afforded by the insurance coverage provided by the premiums paid by the plaintiff, either because the coverage duplicated coverage already paid for by Robert or Theresa, or because the premiums paid by the plaintiff did not provide for coverage of Theresa's interests in the property. The court finds that the preponderance of the evidence establishes that Theresa received benefits in the full amount of the premiums paid.
C. Home Improvements
Both Theresa and Robert testified that a portion of the proceeds of the loan were used to improve the kitchen and a bathroom at 14 Bayne Court. The court agrees with the plaintiff that, as the sole owner of the property, such improvements conferred a direct benefit on Theresa. Without further explanation, the plaintiff invites the court to find that 50% of the $155,236.32 of the net proceeds of the mortgage, or $77,618.16, should be equitably apportioned toward the improvements. The evidence as to the cost of the improvements to 14 Bayne Court consisted of the testimony of Robert that he believed that he had spent $35,000 after the closing of the mortgage on those improvements. Neither party offered any other evidence as to the cost or value of the improvements. The court finds that a preponderance of the evidence produced at trial establishes that Theresa benefitted from the improvements to the property in the amount of $35,000.
D. Plaintiff's Admissions
Having determined that Theresa may have been unjustly enriched in several respects from the proceeds and the loan made by the plaintiff to Robert, the court must first determine whether the plaintiff is entitled to withdraw and/or amend its responses to requests for admission served on it by Theresa; and if not, whether and the extent to which the plaintiff's responses to the requests for admissions preclude the court from finding for the plaintiff on Count Three.
1. Plaintiff's Motion to Withdraw and Amend Admissions (#197.00)
On December 21, 2016, the plaintiff filed a motion seeking to withdraw and amend its response to the requests for admission. (#197.00.) As noted above, the court entered orders stating that it would not entertain argument on the plaintiff's motion until all post-trial briefs were filed. Having considered the relevant arguments set forth in the briefs and having reviewed the relevant authorities, the court concludes that no oral argument on the plaintiff's motion is necessary.
The plaintiff brings the motion pursuant to Practice Book § 13-24(a) which provides in relevant part:
Any matter admitted under this section is conclusively established unless the judicial authority on motion permits withdrawal or amendment of the admission. The judicial authority may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the judicial authority that withdrawal or amendment will prejudice such party in maintaining his or her action or defense on the merits . . .
In support of its motion the plaintiff relies on Kelley v. Tomas, 66 Conn.App. 146, 176-79, 783 A.2d 1226 (2001), in which the Appellate Court held that a trial court did not abuse its discretion when it allowed new counsel for the defendants to file responses to requests for admissions that preceding counsel had failed to address due to " personal problems." Id., 176. The original requests for admissions was filed on August 29, 1997, and the court granted the motion permitting the defendants to amend their responses on October 1, 1997. Id., 176-77.
The plaintiff further relies on two Superior Court cases, Patel v. Barot, Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X01-CV-96-0158463-S (June 8, 2000, Hodgson, J.) 27 Conn.L.Rptr. 297, and Mucci v. General Motors Corp ., Superior Court, judicial district of Danbury, Docket No. CV-91-0306260-S (May 24, 1993, Moraghan, J.) 9 Conn.L.Rptr. 145, . In Patel, the court addressed the issue of whether, pursuant to Practice Book § 13-24, a party could be permitted to change responses to requests to admit after the opponent had filed a motion for summary judgment. The court held that " the standard for allowing amendment (to the admission) is not the impact on the possible success of a particular motion, but on prejudice at trial." Patel v. Barot, supra . The court found that there was ample time before the trial (scheduled for approximately 16 months after the court's decision) to allow discovery on the issues covered by the requests for admissions. Id.
In Mucci, the court permitted a defendant to file untimely denials of requests for admissions where the plaintiff could not demonstrate actual prejudice to the court's satisfaction and the admissions were tantamount to an admission of liability. Mucci v. General Motors Corp., supra .
In all three cases relied on by the plaintiff, the motion seeking to withdraw admissions was filed in advance of the trial on the merits, rather than following the presentation of evidence.
In JPMorgan Chase Bank v. Eldon, 144 Conn.App. 260, 73 A.3d 757, cert. denied, 310 Conn. 935, 79 A.3d 889 (2013), the Appellate Court affirmed the trial court's denial of the plaintiff's motions to reopen summary judgment entered in favor of the defendants and permitted the plaintiff to file amended answers to requests for admissions. The court held that the holding of Kelley v. Tomas, supra, applied only where the merits of the action had not yet been adjudicated. Id.
In Montanaro v. Balcom, 132 Conn.App. 520, 35 A.3d 280 (2011), the Appellate Court affirmed the trial court's decision to enter summary judgment in a medical malpractice case where the plaintiff claimed that he developed complication following surgery when the surgeon failed to examine the plaintiff during his recovery to assess his condition. In response to requests for admissions filed by the defendant, the plaintiff admitted (contrary to the allegations of his complaint) that the surgeon had evaluated his post-operative condition on the day following the surgery. Id., 523. In granting summary judgment, the trial court disregarded an affidavit signed by the plaintiff stating that he had not been seen by the surgeon on the day after the operation, holding that the plaintiff's responses to the requests for admissions had established the fact that the plaintiff had been evaluated on the day in question and that no issue of material fact remained. Id., 526.
The Appellate Court held when the plaintiff failed to file a motion pursuant to Practice Book § 13-24(a) seeking to withdraw his admission, he was precluded from contesting the admitted fact by way of an opposing affidavit. Id. The Appellate Court further held that, under these circumstances, the defendant was entitled to summary judgment " as a matter of law." Id., 526.
The plaintiff has not called to the court's attention any case in which a Connecticut court has found that Practice Book § 13-24(a) permits a party to seek to withdraw or amend an admission after a hearing on the merits has been concluded. The language employed by the Practice Book only permits the amendment or withdrawal of an admission when a two-part test has been met. First, the court must find that " the presentation of the merits of the action will be subserved" by permitting the amendment or withdrawal. Second, the court must find that the party who obtained the admission is unable to satisfy the court that the withdrawal or amendment will not " prejudice such party in maintaining his or her action or defense on the merits."
The use of the future tense in both prongs of the test limits the application of Practice Book § 13-24(a) to situations in which the presentation of the evidence on the merits on the action has not yet taken place. In this case, the plaintiff responded to the defendant's requests for admissions on May 7, 2016. The parties completed presentation of evidence on December 6, 2016. The plaintiff's motion seeking to withdraw its admissions was not filed until December 21, 2016, more than two weeks after the close of evidence. Under these circumstances, it would be impossible for the court to find that " the presentation of the merits of the action will be subserved" by the granting of the plaintiff's motion.
Moreover, it is hard to imagine how the defendant would not be prejudiced at the time the case was tried because defense counsel had every reason to believe that the plaintiff's admissions were both operative and binding. Practice Book § 1-8 mandates that rules set forth in the Practice Book " be interpreted liberally in any case where it shall be manifest that strict adherence to them will work surprise or injustice." The court finds that even if a liberal interpretation of § 13-24(a) would allow the court to entertain the plaintiff's motion, granting that motion after the conclusion of evidence would be an abuse of the court's discretion.
The court denies the plaintiff's motion to withdraw and amend its responses to defendant's requests for admissions.
2. The Effect of Plaintiff's Admissions
Practice Book § 13-24 provides that " Any matter admitted under this section is conclusively established unless the judicial authority permits withdrawal or amendment of the admission." Some of the matters admitted by the plaintiff are not at issue and are covered by the Stipulation of Facts Not In Dispute (#191.00). The request for admissions and the responsive admissions, most relevant to the issues of the case, are the following:
4. Do you admit that the Defendant did not borrow any money from the Plaintiff?
RESPONSE: Admitted but this did not preclude the Defendant from obtaining a benefit from the loan.
5. Do you admit that the Defendant does not owe any money to the Plaintiff?
RESPONSE: Admitted.
In its post-trial brief (#201.00), the plaintiff notes that at the time the admissions were filed " the case was a straightforward foreclosure claim." The plaintiff suggests that because neither of the requests for admissions asks whether Theresa received a benefit without paying for it, the admissions cannot be construed as applicable to the unjust enrichment claim set forth in the third count of the plaintiff's amended complaint.
The court disagrees. Practice Book § 13-22(a) which establishes the procedure for filing admissions of fact states: " A party may serve . . . upon any other party a written request . . . for the admission, for purposes of the pending action only, of the truth of any matters relevant to the subject matter of the pending action set forth in the request . . ." The question of whether Theresa owes any money to the plaintiff is relevant not only to the question of whether she is liable to the plaintiff under the mortgage note and/or the mortgage deed, but also whether she owes money to the plaintiff under any legal or equitable claim.
If, after having amended its complaint, the plaintiff had wished to be relieved of the consequences of its admissions, it could have filed a timely motion, pursuant to Practice Book § 13-24(a), to withdraw or amend its admissions. As noted above, the court finds no authority permitting a party to seek withdrawl or amendment of admissions following the completion of trial.
a. Waiver
The plaintiff claims that under the holding of Larson v. Fazzino, 216 Conn. 431, 582 A.2d 179 (1990), Theresa waived her right to rely on the responses to her requests for admissions when she did not object to the testimony of Wilkin Rodriguez, specifically that he did not agree with admission #5, and believed that Theresa did, in fact, owe money to the plaintiff. In support of its claim of waiver, the plaintiff relies on the following statement in Larson :
A party waives his right to rely on the conclusive effect of response to requests for admission when he permits the party who made the responses to testify at trial, without objection, contrary to his responses.Id., 435.
In Larson, the requests for admissions were not responded to within the thirty-day period set forth in the Practice Book. Id., 433. However, the defendant filed responses denying the truth of the facts that were the subject of the requests for admissions. Id. At trial, the plaintiff introduced into evidence the requests for admissions and the defendant's responses. Id. The plaintiff did not advise the defendant or the attorney trial referee assigned to hear the case that he intended to claim that the facts set forth in the requests for admissions should be considered as conclusively established because of the defendant's untimely response. Id. However, in a post-trial memorandum, the plaintiff, for the first time, requested that the attorney trial referee find that such facts had been conclusively established. Id., 434. The attorney trial referee found the facts in favor of the defendant and judgment entered against the plaintiff. Id. On appeal, the plaintiff claimed error in the finding of facts, which he claimed had been conclusively established by the defendant's untimely response to the requests for admissions. Id.
The Supreme Court found that the plaintiff had waived any right to claim that the facts were conclusively established in his favor by failing to ask the trier of fact to so find. Id., 435. The court found that merely entering the request for admissions along with the timely responses into evidence did not adequately inform either the trier of fact or the defendant that the plaintiff was seeking to have the facts established in his favor due to the defendant's procedural lapse. Id. After finding that the waiver existed, the court noted that plaintiff " further waived his right to rely on the preclusive effect of [the] Practice Book . . . by failing to object when the defendants introduced evidence at trial that directly contradicted the contents of the plaintiff's requested admissions." Id., 435.
In this case, the plaintiff was well aware that the defendant intended to rely on the preclusive effect of the plaintiff's answers to the requests for admissions. The defendant's pre-trial brief dated December 5, 2016, clearly shows that the defendant intended to rely on the plaintiff's responses to the requests for admissions. In addition, the failure of the defendant to object to Wilkin Rodriguez's testimony that he did not agree with the responses to the requests for admissions is of little value. Rodriguez was called as a mortgage research officer employed by the plaintiff who had access to the plaintiff's records concerning the mortgage loan. Under questioning by the plaintiff's attorney, he acknowledged that his opinion would change the response already given by his employer. His testimony as to the basis for his opinion showed that he was presenting his opinion as to how the ultimate issues should be resolved. In light of the fact that the plaintiff had not yet sought to withdraw or amend the responses to the requests for admissions when Rodriguez testified, the court cannot agree that the failure to object constituted a waiver of the plaintiff's right to present the responses to the request for admissions into evidence and to have those answers deemed " conclusively established" under Practice Book § 13-24(a).
The plaintiff's arguments on waiver were asserted in its January 27, 2017, post-trial brief, and accordingly, did not address the defendant's concession of liability for taxes paid by the plaintiff on behalf of the defendant made in the defendant's post-trial brief filed on February 21, 2017 (#205.00). In its responsive post-trial brief filed on March 10, 2017 (#206.00), the plaintiff does not address what the impact would be on its claims in the event that the court denied its motion to withdraw or amend its responses to the request for admission. Moreover, that brief does not assert that the concession of liability for taxes made by the defendant in some way waived the defendant's right to rely on the admissions with respect to the other aspects of the plaintiff's unjust enrichment claim.
b. Meaning of Responses
In considering Count Two, the court has found that the plaintiff has not presented evidence supporting claim that it is entitled to have the mortgage deed reformed to reflect the fact that the obligation secured by the mortgage was the promissory note signed only by Robert. Even if the court had found otherwise, the plaintiff's response to request #5 would preclude the court from reforming the mortgage deed as requested. As noted above, the plaintiff concedes that, absent reformation of the mortgage deed, it cannot prevail on Count One.
Imposing liability on Theresa for the debt represented by the mortgage note would make her liable for money damages, despite the fact that the plaintiff's admissions had conclusively established that she owed no money to the plaintiff.
In its initial post-trial brief, the plaintiff addresses the effect of the admissions on Count Three. The plaintiff asserts that, when read in conjunction with the response to request #4, the plaintiff's response to request #5 does not admit that the plaintiff has no claims against Theresa which could result in a money judgment. Instead, the plaintiff urges the court to construe the admission as being limited to claims against Theresa for legal liability under the mortgage documents. The plaintiff also notes that the requests for admissions were filed when the plaintiff's complaint was limited to a single count claiming foreclosure of the mortgage based solely on the documents executed in December 2006. Subsequent to filing its responses to the requests for admissions, the plaintiff successfully moved to amend its complaint to add the Second Count seeking equitable reformation and the Third Count claiming unjust enrichment. The plaintiff claims that when viewed in light of allegations of the Third Count, the plaintiff's response to Request #5 admitting that Theresa does not owe any money to the plaintiff is " vague and the response to it may be interpreted in a number of ways."
The brief does not provide examples of such interpretations.
The defendant also correctly points out that the plaintiff never propounded a request for admissions, asking " if Theresa had received a benefit without paying for." However, the plaintiff fails to explain why it did not seek to clarify or amend its responses to the requests for admissions until after the conclusion of the trial.
Count Three bases its claim on the equitable theory of unjust enrichment. Nevertheless, that count seeks money damages, which is essentially a legal remedy. In Misisco v. La Maita, 150 Conn. 680, 684, 192 A.2d 891 (1963), the Supreme Court observed " [An unjust enrichment claim] is an action in quasi contract, i.e. an obligation, arising by law, on which the same remedy is given as would be given it the obligation arose out of contract . . . Although the right of recovery is based on equitable principles, it is nevertheless an action at law, the purpose of which is to prevent unjust enrichment . . . The only remedy is an award of money damages." (Citation omitted; internal quotation marks omitted.) See also, Gagne v Vaccaro, 80 Conn.App. 436, 441, 835 A.2d 491 (2003). The court does not agree with the plaintiff that it can avoid the consequences of its admission that Theresa does not owe any money to the plaintiff simply because the money judgment which the plaintiff seeks is sought as damages on a claim based on equitable principles. Under these circumstances, the court is compelled to find that the plaintiff's responses to the requests for admissions preclude the plaintiff from any recovery on Count Three of the plaintiff's amended complaint, except to the extent of the tax payments which the defendant has conceded she owes.
SPECIAL DEFENSES
Having considered the defendant's special defenses, the court finds that none of them preclude the plaintiff from recovering from the defendant the amount advanced to pay the property taxes on the defendant's property after Robert defaulted on his obligations under the note.
CONCLUSION
The court finds the issues for the defendant, Theresa Virgulak, and against the plaintiff on Counts One and Two of the plaintiff's amended complaint. The court finds that plaintiff is entitled to damages on Count Three for the amount of the property taxes paid by the plaintiff to the City of Norwalk on Theresa's property in the amount of $65,807.96.