Opinion
HHDCV166069888S
08-21-2018
RKL FINANCIAL CORPORATION v. Tina DELUCO et al.
UNPUBLISHED OPINION
OPINION
Dubay, J.
On November 7, 2017, the plaintiff, RKL Financial Corporation, moved for summary judgment against the defendants as to liability only on the ground that there exist no genuine issues of material fact and the plaintiff is entitled to judgment as a matter of law. In support, the plaintiff submits a memorandum of law, and multiple exhibits. On January 12, 2018, the defendants, Tina DeLuco and John Spagna, objected to the entering of summary judgment arguing that there exist disputed issues of material fact, as asserted in their special defenses. In their defense, the defendants argue that the plaintiff: (1) breached the implied covenants of good faith and fair dealing; (2) has unclean hands for failing to negotiate or participate in good faith in the mediation process; (3) should be estopped from pursuing this action, as this is the third foreclosure action brought against the defendants; (4) the action is barred by the statute of limitations set form in General Statutes § 52-576 and/or General Statutes § 42a-3-118; (5) violated the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq. (1976); and, (6) is guilty of laches after having waited so long to commence this suit. See Defendants’ Amended Special Defenses, Entry No. 119. Accompanying their objection is the sworn affidavit of Tina DeLuco (Entry No. 126). On April 16, 2018, the plaintiff replied to the defendants’ objection. The parties appeared before the court on April 30, 2018, to argue their respective positions.
The court notes that the defendants have not asserted the fifth special defense enumerated in their Amended Special Defenses dated December 21, 2017 (Entry No. 119). In their Amended Special Defenses, the defendants claim that the plaintiff "acted in a commercially unreasonable manner and should be estopped from foreclosing the subject mortgage." Given that this specially enumerated defense has not been asserted along with the remaining special defenses argued and briefed in connection with this motion, the court, therefore, considers this special defense to be abandoned.
I
LEGAL STANDARD
"Summary 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." Practice Book § 17-49. "In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Bozelko v. Papastavros, 323 Conn. 275, 282, 147 A.3d 1023 (2016). "Summary judgment, interlocutory in character, may be rendered on the issue of liability alone ..." Practice Book § 17-50.
"[S]ummary judgment is appropriate only if a fair and reasonable person could conclude only one way ... [A] summary disposition ... should be on evidence which a jury would not be at liberty to disbelieve and which would require a directed verdict for the moving party ... [A] directed verdict may be rendered only where, on the evidence viewed in the light most favorable to the nonmovant, the trier of fact could not reasonably reach any other conclusion than that embodied in the verdict as directed." (Citations omitted; emphasis in original; internal quotation marks omitted.) Dugan v. Mobile Medical Testing Services, Inc., 265 Conn. 791, 815, 830 A.2d 752 (2003).
"The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law ... and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact ... A material fact ... [is] a fact which will make a difference in the result of the case." (Internal quotation marks omitted.) Stuart v. Freiberg, 316 Conn. 809, 821, 116 A.3d 1195 (2015).
"In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ... As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent ... When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ... Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ... It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact ... are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book [§ 17-45]." (Internal quotation marks omitted.) State Farm Fire & Casualty Co. v. Tully, 322 Conn. 566, 573, 142 A.3d 1079 (2016). "The movant has the burden of showing the nonexistence of such issues but the evidence thus presented, if otherwise sufficient, is not rebutted by the bald statement that an issue of fact does exist ... To oppose a motion for summary judgment successfully, the nonmovant must recite specific facts ... which contradict those stated in the movant’s affidavits and documents." (Internal quotation marks omitted.) Bank of America, N.A. v. Aubut, 167 Conn.App. 347, 358, 143 A.3d 638 (2016).
II
DISCUSSION
"In order to establish a prima facie case in a mortgage foreclosure action, the plaintiff must prove by a preponderance of the evidence that it is the owner of the note and mortgage, that the defendant mortgagor has defaulted on the note and that any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied ... Thus, a court may properly grant summary judgment as to liability in a foreclosure action if the complaint and supporting affidavits establish an undisputed prima facie case and the defendant fails to assert any legally sufficient special defense ... A promissory note and a mortgage deed are deemed parts of one transaction and must be construed together as such ... Where the terms of the note and mortgage require notice of default, proper notice is a condition precedent to an action for foreclosure." (Citations omitted; internal quotation marks omitted.) Bank of America, N.A. v. Aubut, supra, 167 Conn.App. 359.
"The purpose of a special defense is to plead facts that are consistent with the allegations of the complaint but demonstrate, nonetheless, that the plaintiff has no cause of action." TD Bank, N.A. v. M.J. Holdings, LLC, 143 Conn.App. 322, 326, 71 A.3d 541 (2013). "A foreclosure action is an equitable proceeding ... 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 ... Historically, defenses to a foreclosure action have been limited to payment, discharge, release or satisfaction ... or [lien invalidity] ... [Connecticut courts, however] have permitted several equitable defenses to a foreclosure action." (Citations omitted; internal quotation marks omitted.) Bank of America, N.A. v. Aubut, supra, 167 Conn.App. 371-72. "It is clear from our case law that, generally, a legally valid special defense in a foreclosure action, insofar as it relates to the making, validity, or enforcement of the loan, note and mortgage, is a means of asserting that a party who has commenced a foreclosure action may not prevail." Id., 374.
In the present case, the plaintiff has established a prima facie case by demonstrating that: it is the owner of the note and mortgage; the defendants have defaulted on the note; and, any conditions precedent to foreclosure, as established by the note and mortgage, have been satisfied. The court now examines the special defenses asserted by the defendants, along with the evidence submitted, in an effort to determine if there exists any genuine issue of material fact demonstrating that the plaintiff is not entitled to summary judgment; thus, warranting a trial.
A
Breach of Covenants of Good Faith and Fair Dealing
The defendants allege that the plaintiff breached the covenants of good faith and fair dealing in negotiating and closing the original loan. It is the law in Connecticut, however, that "special defenses and counterclaims alleging a breach of an implied covenant of good faith and fair dealing ... are not equitable defenses to a mortgage foreclosure." (Internal quotation marks omitted.) LaSalle National Bank v. Freshfield Meadows, LLC, 69 Conn.App. 824, 835, 798 A.2d 445 (2002). Accordingly, this special defense is legally insufficient; and, additionally, it does not address the making, validity or enforcement of the mortgage, or the note.
B
Unclean Hands
The defendants allege that the plaintiff has unclean hands based upon the plaintiff’s "failure to negotiate or participate in good faith in the mediation process." In support, the defendants offer the sworn affidavit of Tina M. DeLuco (Entry No. 126) averring that the defendants repeatedly requested that the plaintiff consider their current financial situation, and the fact that real estate values have dropped dramatically in Connecticut since 2006. The defendants also requested that the plaintiff consider other options permitting the defendants to remain in their home, such as: repurchasing the property at the current fair market value, or a loan modification allowing the defendants to receive an amount of money equal to at least what the plaintiff would receive at a foreclosure sale, or after entry of a judgment of strict foreclosure.
The court concludes that this special defense is legally insufficient, as it doesn’t challenge the making, validity and enforcement of the note and mortgage. See U.S. Bank National Assn., Trustee v. Blowers, 177 Conn.App. 622, 629-30, 172 A.3d 837 (2017), cert. granted, 328 Conn. 904, 177 A.3d 1160 (2018). Additionally, the mediator’s report filed January 20, 2017 (Entry No. 112), reflects that while the plaintiff denied the defendants’ offer to purchase the property at a reduced price, the mediator did not report "any material reason to disagree with that response." See Foreclosure Mediator’s Report, Entry No. 112, para. 5. Moreover, the plaintiff complied with the applicable statutory time frames in deciding whether to accept this offer. See Foreclosure Mediator’s Report, Entry No. 112, para. 11. Accordingly, this special defense is legally insufficient; and, additionally, it does not address the making, validity or enforcement of the mortgage, or the note.
C
Estoppel
The defendants allege that the plaintiff should be estopped from pursuing this action, as this is the third foreclosure action brought against the defendants in this judicial district. The first action was withdrawn by the plaintiff in 2008, and the second was dismissed by the court in 2016 due to the plaintiff’s failure to appear at the hearing in damages.
The court takes judicial notice of the previous actions between the parties, and concludes that neither action was adjudicated on the merits. "A judgment on the merits is one which is based on legal rights as distinguished from mere matters of practice, procedure, jurisdiction or form ... A decision with respect to the rights and liabilities of the parties is on the merits where it is based on the ultimate fact or state of facts disclosed by the pleadings or evidence, or both, and on which the right of recovery depends." (Citations omitted; internal quotation marks omitted.) Rosenfield v. Cymbala, 43 Conn.App. 83, 91-92, 681 A.2d 999 (1996).
The court takes judicial notice of: HHD-CV-07-5012716-S, SLM Financial Corp v. Tina M. Deluco, which was withdrawn by the plaintiff on January 27, 2009; and, HHD-CV-08-5022153-S, SLM Financial Corp v. Tina M. Deluco, which was dismissed by the court, Peck, J., on September 14, 2012, for "failure to proceed to judgment." See Entry No. 138.87 in that action’s docket history.
The facts and circumstances demonstrate that the first action was withdrawn by the plaintiff, while the second action was dismissed by the court for the plaintiff’s failure to appear at the hearing in damages. Both actions were disposed of as a matter of procedure. Neither action adjudicated the legal rights of the parties; thus, they do not stand as a bar to this action. See Bruno v. Geller, 136 Conn.App. 707, 726, 46 A.3d 97, cert. denied, 306 Conn. 905, 52 A.3d 732 (2012). Accordingly, this special defense is legally insufficient; and, additionally, it does not address the making, validity or enforcement of the mortgage, or the note.
D
Statute of Limitations
The defendants allege that this action is barred by the statute of limitations set forth in General Statutes § 52-576 and/or General Statutes § 42a-3-118. There is, however, no statute of limitations applicable to foreclosure proceedings. "[T]he rule in Connecticut, as far back as the early nineteenth century, is that a statute of limitations does not bar a mortgage foreclosure ... Repeatedly reaffirmed and generally known, it has taken on the aspect of a rule of property and in all probability many mortgages in this State are now held, after any action upon the debt secured has been barred, in reliance upon it ... [T]he rule is in harmony with the accepted principle that the statute of limitations does not destroy the debt but merely bars the remedy ... Because the statute does not speak to the continued existence of the mortgage debt, it does not supersede the bank’s continuing access to equitable foreclosure proceedings." (Citations omitted; internal quotation marks omitted.) Federal Deposit Ins. Corp. v. Owen, 88 Conn.App. 806, 815, 873 A.2d 1003, cert. denied, 275 Conn. 902, 882 A.2d 670 (2005). Accordingly, this special defense is legally insufficient; and, additionally, it does not address the making, validity or enforcement of the mortgage, or the note.
E
Violation of TILA
The defendants allege that the plaintiff violated TILA for following reasons: (1) allowing the defendants to enter into an unsuitable loan agreement; (2) the disclosure statement accompanying the transaction may have violated the Act; and, (3) the defendants did not receive accurate and truthful disclosures during the loan transaction.
Connecticut’s courts have concluded that: "Violations of [TILA’s] disclosure provisions are not valid special defenses in a mortgage foreclosure action because such violations do not relate to the validity of the note or mortgage, but rather relate to the conduct of the lienholder." (Internal quotation marks omitted.) Bank of New York v. Conway, 50 Conn.Supp. 189, 203, 916 A.2d 130 (2006), accord GMAC Mortgage, LLC v. McCormack, Superior Court, judicial district of New London, Docket No. CV-085009019-S (September 12, 2011, Devine, J.). Accordingly, this special defense is legally insufficient; and, additionally, it does not address the making, validity or enforcement of the mortgage, or the note.
F
Laches
The defendants allege that the plaintiff is guilty of laches after waiting so long to commence this action. "Laches consists of two elements. First, there must have been a delay that was inexcusable, and, second, that delay must have prejudiced the defendant ... Lapse of time, alone, does not constitute laches. It must result in prejudice to the defendant as where, for example, the defendant is led to change his position with respect to the matter in question ... or the delay works a disadvantage to another." (Citations omitted; internal quotation marks omitted.) LaSalle National Bank v. Shook, 67 Conn.App. 93, 98-99, 787 A.2d 32 (2001).
In the present case, the defendants have not provided evidence demonstrating that the plaintiff’s delay was inexcusable or that it substantially prejudiced them. To overcome summary judgment, mere assertions are insufficient to establish the existence of a material fact. The defendant must make a showing of specific facts and evidence contradicting the movant’s affidavits and documents. See Bank of America, N.A. v. Aubut, supra, 167 Conn.App. 358. Accordingly, this special defense is legally insufficient; and, additionally, it does not address the making, validity or enforcement of the mortgage, or the note.
III
CONCLUSION
The court concludes that the evidence, viewed in a light most favorable to the defendants, demonstrates that the plaintiff has established a prima facie case of foreclosure; and, that the defendants’ special defenses are legally insufficient and do not address the making, validity or enforcement of the mortgage or note. As a matter of law, the plaintiff is entitled to summary judgment as to liability only. Accordingly, the plaintiff’s motion for summary judgment as to liability only is granted.