Opinion
No. MMX-CV09-5007148-S
September 3, 2010
MEMORANDUM OF DECISION
On June 22, 2009, the plaintiff, Connie D. Raymond, filed a one-count complaint seeking payment of a $30,000 promissory note payable to the plaintiff. The plaintiff alleges the following facts in her complaint. On November 30, 2005, the defendant, Joseph Benson Jr., executed a promissory note for the sum of $30,000. The note specifies that it "shall be due and payable in full on the sale of 44 South Front Street, Middletown, CT or upon demand by the [p]ayee of this [n]ote if not paid sooner." The note further specifies that "[e]ach party constituting [m]aker hereby waives presentment, demand, protest, notice of protest or other notice or notice of dishonor of any kind . . ." On May 5, 2009, the plaintiff made a demand for the payment of the note, the note was not paid and the note remains due and payable $30,000 plus any interest that accrued subsequent to May 11, 2009, pursuant to the terms of the note.
On August 3, 2009, the defendant filed his answer, special defenses and counterclaim. In his answer, the defendant admitted that he executed the note and that the plaintiff made a demand for payment of the note. The defendant denied the plaintiff's remaining allegations or pleaded insufficient knowledge and left the plaintiff to her proof. The defendant also asserted three special defenses: (1) the parties executed mutual releases from any and all claims; (2) the defendant is entitled to set off for the reasonable use and occupancy for the period of time the plaintiff occupied the premises located at 44 South Front Street, Middletown, CT; and (3) the court lacks subject matter jurisdiction because the plaintiff's case is nonjusticiable. The defendant also filed a one-count counterclaim sounding in vexatious litigation. On October 5, 2009, the defendant withdrew his counterclaim, and on November 2, 2009, the court, Bear, J., granted the plaintiff's motion to strike the defendant's second and third special defenses, leaving only the defendant's first special defense.
As gleaned from the pleadings, motions and evidence, the parties agree on the following underlying facts of the case. The plaintiff and the defendant were involved in an intimate relationship. On November 30, 2005, the plaintiff loaned the defendant $30,000 to use as a down payment on the premises located at 44 South Front Street, Middletown, CT. The defendant obtained a loan from a bank secured by a mortgage (the first mortgage) to pay the balance of the purchase price. In exchange for the loan, the defendant executed a promissory note and mortgage (the second mortgage) promising to pay the plaintiff $30,000 upon the sale of 44 South Front Street, Middletown, CT or upon demand. Additionally, the defendant conveyed a one-half interest in the premises to the plaintiff. Shortly thereafter, the plaintiff moved into the premises and the parties lived together for approximately three years as tenants in common. The parties split up in December 2008, and on December 26, 2008, a statutory quitclaim deed and mutual releases were signed. The deed, which was drafted by attorney Elizabeth Crowe upon the plaintiff's request, included mutual releases that provided in relevant part: "Connie D. Raymond (Grantor) grants to Joseph F. Benson, Jr. (Grantee), as consideration for an exchange of mutual releases from any and all claims, counterclaims, actions, causes of action, suits, set-offs, costs, losses, expenses, sums of money, accounts, reckonings, debts, charges, complaints, controversies, disputes, damages, judgments, executions, promises, omissions, duties, agreements, rights, and any and all demands, obligations and liabilities, of whatever kind or character, direct or indirect, whether known or unknown or capable of being known from the beginning of time to the date hereof, arising at law or in equity, by right of action or otherwise, arising out of or related to the property known as 44 South Front Street, Middletown, Connecticut, up until the date of this agreement, [with quitclaim covenants], her interest in [44 South Front Street, Middletown, Connecticut]."
The parties disagree on the scope and effect of the mutual releases. The defendant contends that he could have asserted a claim of fraudulent execution of loan documents against the plaintiff and that she agreed to release his obligation to pay the balance on the promissory note in exchange for the defendant agreeing not to pursue any civil actions against her. By contrast, the plaintiff contends that the deed simply released her title and interest in the property and that she never released the defendant from his obligations under the promissory note and mortgage.
On January 1, 2010, the plaintiff filed a certificate of closed pleadings and the matter was assigned to a nonjury trial to begin on October 20, 2010. On April 12, 2010, the court, Holzberg, J., granted the defendant's motion for permission to file summary judgment, and on April 28, 2010, the defendant filed a motion for summary judgment along with a memorandum of law, affidavits and documentary evidence. On April 29, 2010, the plaintiff filed a motion for summary judgment and an opposition to the defendant's motion for summary judgment along with a memorandum of law, affidavit and documentary evidence. The court heard the matter at the short calendar on May 24, 2010.
Practice Book § 17-44 provides in relevant part: "In any action . . . any party may move for a summary judgment at any time . . ." Practice Book § 17-49 provides: "The judgment sought shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." "Practice Book § [17-49] requires that judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. A material fact is a fact that will make a difference in the result of the case . . . The facts at issue are those alleged in the pleadings . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue as to all material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . The party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party . . . The test is whether a party would be entitled to a directed verdict on the same facts . . . A motion for summary judgment is properly granted if it raises at least one legally sufficient defense that would bar the plaintiff's claim and involves no triable issue of fact." (Citations omitted; internal quotation marks omitted.) Washington v. Blackmore, 119 Conn.App. 218, 220-21, 986 A.2d 356, cert. denied, 296 Conn. 903, 991 A.2d 1104 (2010). Furthermore, "summary judgment is ordinarily inappropriate where an individual's intent and state of mind are implicated . . . The summary judgment rule would be rendered sterile, however, if the mere incantation of intent or state of mind would operate as a talisman to defeat an otherwise valid motion . . . [E]ven with respect to questions of motive, intent and good faith, the party opposing summary judgment must present a factual predicate for his argument in order to raise a genuine issue of fact." (Internal quotation marks omitted.) Chadha v. Charlotte Hungerford Hospital, 97 Conn.App. 527, 539, 906 A.2d 14 (2006). Moreover, "[e]ven where a trial court finds that the evidence strongly favors one party, that court may not arrogate to itself the role of trier of fact and, thus, decide issues of material fact as a matter of law. A party has the same right to submit a weak case [to the jury] as he has to submit a strong one." (Internal quotation marks omitted.) Maffucci v. Royal Park Ltd. Partnership, 42 Conn.App. 563, 572, 680 A.2d 333 (1996), rev'd on other grounds, 243 Conn. 552, 707 A.2d 15 (1998).
The defendant argues that he is entitled to summary judgment because the parties executed mutual releases of all claims and debts the parties have against each other, and, therefore, his obligation to pay the promissory note is released. The defendant filed the following evidence in support of his motion: a copy of the deed in which the plaintiff quitclaimed her interest in the property in exchange for the mutual releases; the defendant's affidavit; the affidavit of attorney Crowe; an email from the plaintiff to Crowe; and a letter from the plaintiff that was attached to the email. In response, the plaintiff counters that the language in both the promissory note and the quitclaim deed is clear and unambiguous and that she released only her title interest in the property and not the note and mortgage. The plaintiff argues that, as the note falls outside the scope of the release, she is entitled to summary judgment because she is the holder of the note and is entitled to enforce it. The plaintiff submitted the following evidence in support of her motion: the plaintiff's affidavit; a copy of the promissory note; a copy of the plaintiff's letter demanding payment of the promissory note; a copy of the mortgage securing the promissory note; a copy of the quitclaim deed conveying a one-half interest in property to the plaintiff; and a copy of the deed in which the plaintiff quitclaimed her interest in the property in exchange for mutual releases.
"A promissory note is nothing more than a written contract for the payment of money, and, as such, contract law applies." Alco Standard Corp. v. Charnas, 56 Conn.App. 568, 571, 744 A.2d 924 (2000). A promissory note that is (1) payable to order or to bearer, (2) payable on demand or at a definite time and (3) contains an unconditional promise or order to pay a fixed amount of money, is a negotiable instrument governed by General Statutes § 42a-3-104. Florian v. Lenge, 91 Conn.App. 268, 277-78, 880 A.2d 985 (2005). "To prevail in an action to enforce a negotiable instrument, the plaintiff must be a holder of the instrument or a nonholder with the rights of a holder . . . Only a holder in due course may enforce a negotiable instrument." (Citations omitted; internal quotation marks omitted.) Cadle Co. v. Errato, 71 Conn.App. 447, 456-57, 802 A.2d 887, cert. denied, 262 Conn. 918, 812 A.2d 861 (2002). Further, General Statutes § 42a-3-604(a) provides in relevant part: "A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument . . . by agreeing not to sue or otherwise renouncing rights against the party by a signed writing." In addition, release is a recognized defense at common law to an action on a promissory note. Mechanics Farmers Savings Bank, FSB v. Delco Development Co., 43 Conn.Sup. 408, 421, 656 A.2d 1075 (1993), aff'd, 232 Conn. 594, 656 A.2d 1034, cert. denied, 516 U.S. 930, 116 S.Ct. 335, 133 L.Ed.2d 235 (1995). Moreover, "[a] creditor's intent to cancel a debt is an issue of fact to be determined by the trier of fact." Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 841-42, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 136 (2003).
General Statutes § 42a-3-104(a) provides: "Except as provided in subsections (c) and (d), `negotiable instrument' means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it: (1) Is payable to bearer or to order at the time it is issued or first comes into possession of a holder; (2) Is payable on demand or at a definite time; and (3) Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (I) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor."
Further, "[i]t is well settled that a release, being a contract whereby a party abandons a claim to a person against whom that claim exists, is subject to rules governing the construction of contracts . . . The intention of the parties, therefore, controls the scope and effect of the release, and this intent is discerned from the language used and the circumstances of the transaction." (Internal quotation marks omitted.) Sakon v. Manager, 113 Conn.App. 802, 804-05, 969 A.2d 781 (2009). "Where there is no ambiguity [in the language of a contract] . . . there is no occasion for construction [to determine intent] and the agreement will be enforced as its terms direct . . . Contract language is unambiguous when it has a definite and precise meaning about which there is no reasonable basis for a difference of opinion." (Citation omitted; internal quotation marks omitted.) Paul Revere Life Ins. Co. v. Pastena, 52 Conn.App. 318, 322, 725 A.2d 996, cert. denied, 248 Conn. 917, 734 A.2d 567 (1999). "Further, [a] court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity . . . Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms." (Internal quotation marks omitted.) Embalmers' Supply Co. v. Giannitti, CT Page 17449 103 Conn.App. 20, 43, 929 A.2d 729, cert. denied, 284 Conn. 931, 934 A.2d 246 (2007). "When only one interpretation of a contract is possible, the court need not look outside the four corners of the contract . . . On the other hand, [w]hen an ambiguous term is at issue, the trial court can examine the extrinsic evidence to resolve the question of the parties' intent." (Citation omitted; internal quotation marks omitted.) Rund v. Melillo, 63 Conn.App. 216, 220, 772 A.2d 774 (2001). General releases written in broad language releasing "any and all claims" have been held to be ambiguous. See, e.g., Hoydic v. BE Juices, Inc., Superior Court, complex litigation docket at Stamford, Docket No. X08 CV 03 4010104 (June 7, 2007, Jennings, J.) ( 43 Conn. L. Rptr. 591, 593); Nova Dye Print Co. v. Winogradow, Superior Court, judicial district of Waterbury, Docket No. CV 99 0153399 (May 4, 2001, Doherty, J.); see also Pudlo v. Allstate Insurance Co., Superior Court, judicial district of New London at Norwich, Docket No. 117153 (August 23, 200, Martin, J.) ( 28 Conn. L. Rptr. 27, 29) (summary judgment denied because question of fact existed as to parties' intent in executing release written in broad terms that could reasonably be interpreted two ways).
Moreover, "[i]t is well established . . . that the [mortgagee] is entitled to pursue its remedy at law on the notes, or to pursue its remedy in equity upon the mortgage, or to pursue both. A note and a mortgage given to secure it are separate instruments, executed for different purposes and in this State action for foreclosure of the mortgage and upon the note are regarded and treated, in practice, as separate and distinct causes of action, although both may be pursued in a foreclosure suit." (Internal quotation marks omitted.) Monetary Funding Group, Inc. v. Pluchino, 87 Conn.App. 401, 415, 867 A.2d 841 (2005). Furthermore, "[i]t is hornbook law that the mortgage follows the note . . . The mortgage cannot survive the extinction of the debt." (Internal quotation marks omitted.) Franklin Credit Management Corp. v. Nicholas, supra, 73 Conn.App. 848. Thus, "whatever extinguishes the debt discharges the mortgage." Shapiro v. Neiditz, 16 Conn.Sup. 166, 168 (1949). Consequently, "[i]f, by an action solely on the note, the owner secures full payment on the debt, his right to enforce the mortgage is gone . . ." (Internal quotation marks omitted.) Federal Deposit Ins. Corp. v. Owen, 88 Conn.App. 806, 811, 873 A.2d 1003, cert. denied, 275 Conn. 902, 882 A.2d 670 (2005). Similarly, a mortgage is extinguished if the underlying debt is released. Franklin Credit Management Corp. v. Nicholas, supra, 73 Conn.App. 848.
In the present case, the court must decide if a genuine issue of material fact exists as to whether the promissory note falls within the scope and effect of the mutual releases: if it does not, then the plaintiff is entitled to summary judgment on her action; if it does, then the defendant is entitled to summary judgment on his special defense.
The plaintiff argues that she is entitled to summary judgment because "there is no genuine issue of material fact that she is the holder in due course of the [p]romissoiy [n]ote . . . that proper demand was made, all amounts are due and owing and that no defense exists to this promise to pay." Specifically, she argues that the mutual releases unambiguously released only her title interest in the property. She further argues that Connecticut law distinguishes a conveyance from a release of mortgage and that pursuant to General Statutes § 49-9 the deed "must set forth the mortgage, the date of the mortgage and the volume and page in which it is recorded in the land records" in order to release the mortgage. Here, according to the plaintiff, the release does not comply with § 49-9 and, as the mortgage and the note go hand-in-hand, it follows that she never intended to release the defendant from his obligations under the note and mortgage. Finally, she argued at the hearing that if the court finds the language of the mutual releases ambiguous, the intention of the parties is a question of fact and the court should deny both motions on that ground. In response, the defendant argued at the short calendar hearing that the quitclaim deed clearly states the intentions of the parties and that the parties intended "mutual relief of all claims" they could assert against each other. He further argued that the plaintiff sued on the note and that the mortgage follows the note.
For his part, the defendant does not dispute that the plaintiff is the holder in due course of the promissory note and that she made a proper demand for payment of the note. Rather, he argues that he is entitled to summary judgment because the plaintiff's action to collect on the note is barred by the mutual releases executed by the parties as consideration for the quitclaim deed. Specifically, he argues that between November 30, 2005, the execution date of the promissory note, and December 29, 2008, multiple incidents occurred between the parties that resulted in the defendant having a cause of action that he could have asserted against the plaintiff, and that "in consideration for a mutual release the plaintiff and the defendant executed a [q]uit [c]laim [d]eed, releasing each other from any [and] all liability that existed at that time." According to the defendant, the plaintiff specifically intended to release him from his obligation under the note, and, therefore, his obligation to pay the note is released pursuant to the mutual releases. In response, the plaintiff argued at the short calendar hearing that the intent of the parties as expressed in the language of the deed is unambiguous, and, therefore, the court need not look outside the four corners of the contract. She further argued at the hearing that the release makes no mention of either the note or the mortgage, that "a mortgage and promissory note go hand-in-hand" and that, because the release is not written in accordance with the statutory release of mortgage form as provided in § 49-9, the parties did not intend to include the mortgage and note within the scope of the release.
General Statutes § 49-9 provides in relevant part: "(a) A mortgage of real or personal property . . . may be released by an instrument in writing executed, attested and acknowledged in the same manner as deeds of land, setting forth that the mortgage . . . is discharged or that the indebtedness or other obligation secured thereby has been satisfied. That instrument vests in the person or persons entitled thereto such legal title as is held by virtue of the mortgage . . . An instrument in substantially the form following is sufficient for the release: Know all Men by these Presents, That . . . of . . . in the county of . . . and state of . . . do hereby release and discharge a certain (mortgage, mechanic's lien or power of attorney for the conveyance of land) from . . . to . . . dated . . . and recorded in the records of the town of . . . in the county of . . . and state of Connecticut, in book . . . at page . . . In Witness Whereof . . . have hereunto set . . . hand and seal, this . . . day of . . ., A.D . . ."
First, the court notes that the plaintiff elected to pursue this action at law for the amount due on the promissory note rather than pursue her remedy in equity upon the mortgage. As noted previously, a note and a mortgage given to secure it are separate instruments, are executed for different purposes and are regarded and treated as separate and distinct causes of action. Here, the plaintiff's action and the defendant's special defense relate solely to the note. As the defendant points out, the mortgage follows note, and if his obligation to pay the note is released, then the mortgage securing the note is extinguished. Consequently, the parties' failure to release the mortgage pursuant to § 49-9 has no bearing on the present case.
Second, a release, no matter how broad its terms, is ambiguous if it can reasonably be interpreted more than one way. Here, the release is written in broad language rather than definite and precise language and it is unclear whether the parties intended to release the defendant from his obligations under the note. Accordingly, the court may examine extrinsic evidence to determine the question of the parties intent. The defendant attested in his affidavit that he had cause to sue the plaintiff and that the mutual releases discharged his obligation to pay the note. Furthermore, he submitted an affidavit from attorney Crowe attesting that the plaintiff executed the deed and mutual release in exchange for the defendant agreeing not to sue her for her alleged fraudulent execution of loan documents. Crowe points to an email and letter sent by the plaintiff to Crowe on November 18, 2008. The plaintiff states in the letter that she is "willing to forget about that balance [due on the note] and quitclaim the house back over to the [defendant] and it will be his to do with what he wishes." Additionally, she stated in the body of the email that "as per our conversation, [the] fraud suit against me must stop." On the other hand, the plaintiff attested in her affidavit that "[o]ur intent was that I would give him back his house, move out and no longer assist paying his mortgage to the bank and other household expenses. I never released him from [either] the promissory note [or] the mortgage."
At the short calendar hearing, the plaintiff objected to Crowe's affidavit on the ground that the "evidentiary rules do not allow [it]." Practice Book § 5-5 provides in relevant part: "Whenever an objection to the admission of evidence is made, counsel shall state the grounds upon which it is claimed or upon which objection is made, succinctly and in such form as he or she desires it to go upon the record, before any discussion or argument is had." "Our rules require that counsel clearly state the grounds upon which he is relying either to admit or to object to the proffered evidence." DiSorbo v. Grand Associates One Limited Partnership, 8 Conn.App. 203, 208, 512 A.2d 940 (1986). Further, the court may admit evidence over a general objection if the evidence is admissible for any purpose. Katsonas v. W.M. Sutherland Building Contracting Co., 104 Conn. 54, 70, 132 A. 553 (1926); cf. Railway Express Agency, Inc. v. Goodman's Express Corp., 129 Conn. 386, 390, 28 A.2d 869 (1942) (general objections will not avail on appeal if evidence is admissible for any purpose); Panaroni v. Johnson, 158 Conn. 92, 105, 256 A.2d 246 (1969) (general objection based on parol evidence rule did not render testimony inadmissable for any one of several reasons). Here, Crowe's affidavit is probative on the issue of whether the parties intended to include the promissory note within the scope of the release and is, therefore, admissible. See Addison v. Velez, 72 Conn.App. 402, 407, 805 A.2d 762 (2002) (overruled trial court's grant of summary judgment in favor of defendant because affidavit of plaintiff's attorney and letter sent by defendant's agent demonstrated existence of question of material fact with regard to intent of parties at time release at issue was executed); cf. Shawmut Bank Connecticut, N.A. v. Connecticut Limousine Service, Inc., 40 Conn.App. 268, 275, 670 A.2d 880, cert. denied, 236 Conn. 915, 673 A.2d 1143 (1996) (trial court properly allowed attorney's testimony into evidence because it was not offered to contradict agreement and was probative on proper construction of two inconsistent clauses in agreement).
Even when viewed in a light most favorably to the plaintiff, the evidence submitted strongly favors the defendant. Nevertheless, the issue of a creditor's intent to cancel a debt is a question of fact, and the plaintiff's affidavit provides an evidentiary foundation to demonstrate the existence of a genuine issue of material fact. See Fulmore v. Coleman, 41 Conn.Sup. 353, 356, 574 A.2d 1337 (1989) (genuine issue of material fact as to whether release applied to defendant because plaintiff's opposing affidavit indicated that it was not her intention to release defendant).
Accordingly, both motions for summary judgment are denied.