Opinion
No. CV 08 5003346 S
May 14, 2009
MEMORANDUM OF DECISION
I. Issues
Does the plaintiff have standing to bring the instant matter, a foreclosure action, against the defendant? Should the defendant's motion to dismiss be granted on the basis that the plaintiff held no interest in either the defendant's note or mortgage at the time that this action was commenced?
II. Facts
On August 8, 2008, the plaintiff, U.S. Bank National Association as Trustee, commenced this foreclosure action by service of process on the defendant, Randall Weigand. The plaintiff filed a Revised Complaint dated January 14, 2009 (#112) which was filed in response to defendant's request to revise dated December 1, 2008 (#111). The revised complaint is the operative pleading with regard to the defendant's motion to dismiss (#113). The defendant, Randall L. Weigand a/k/a Randall Weigand, owned property situated in the Town of Canterbury, in Windham, Ct., known as 273 Wauregan Road. On November 22, 2005, the defendant executed and delivered to Mortgage Lenders Network USA, Inc., a Note and a mortgage, for a loan in the original principal amount of $185,000.00. The mortgage was recorded November 30, 2005 in the Canterbury Land Records. The mortgage was assigned to U.S. Bank National as Trustee by virtue of an Assignment of Mortgage dated November 12, 2008 and recorded on November 24, 2008 in the Canterbury Land Records. The complaint clearly states, "The Plaintiff, U.S. Bank National Association as Trustee, is the holder of said Note and Mortgage." Attached to the complaint were copies of (1) Lis Pendens, dated August 4, 2008, recorded at the Town of Canterbury on August 6, 2008 at 12:35 p.m. stamped by Town Clerk; (2) a Notice to Homeowner of Foreclosure Proceedings; (3) Availability of Foreclosure Mediation information and forms; (4) a metes and bounds description of the property; and (5) the Marshall's Return dated August 8, 2008.
On January 16, 2009, the defendant filed a motion to dismiss (#113) along with a supporting memorandum of law (#113.50), to which the plaintiff replied on January 27, 2009, by filing a memorandum of law in opposition (#114). Attached to the memorandum of opposition were copies of the Adjustable Rate Note, Prepayment Penalty Note Addendum and an Allonge to Note. This matter was heard on the short calendar on February 17, 2009.
III. Discussion
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted; citation omitted.) R.C. Equity Group, LLC v. Zoning Commission, 285 Conn. 240, 248, 939 A.2d 1122 (2008).
"Subject matter jurisdiction [implicates] the authority of the court to adjudicate the type of controversy presented by the action before it . . . [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction . . . The requirement of subject matter jurisdiction cannot be waived by any party and can be raised at any stage in the proceedings." (Citation omitted.) Bingham v. Department of Public Works, 286 Conn. 698, 701, 945 A.2d 927 (2008).
"[I]n ruling [on] whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader[.]" (Internal quotation marks omitted; citation omitted.) Windels v. Environmental Protection Commission, 284 Conn. 268, 290, 933 A.2d 256 (2007). "[I]t is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Citations omitted.) Novak v. Levin, 287 Conn. 71, 79, 951 A.2d 514 (2008).
The defendant has not offered any evidence with its motion to dismiss. In opposition, the plaintiff submitted a memorandum of law with attached copies of the Note, a Prepayment Penalty Note Addendum, and an Allonge to the Note. These documents reinforce the basic factual allegations of the complaint. Accordingly, the court must address the motion by looking at the allegations of the complaint, including any facts necessarily implied from the allegations, and construe these facts in a light most favorable to the plaintiffs. Cox v. Aiken, 278 Conn. 204, 211, 897 A.2d 71 (2006). "[W]hen a motion to dismiss does not seek to introduce facts outside of the record it is equivalent to our former motion to erase and admits all well pleaded facts, the complaint being construed most favorably to the plaintiff . . . A motion to dismiss may raise issues of fact and would, therefore, require a hearing to determine the facts . . . Where, however, no genuine issue as to a material fact exists a hearing is not required because the motion merely presents a question of law as applied to the facts well pleaded." (Citations omitted; internal quotation marks omitted.) Sagamore Group, Inc. v. Commissioner of Transportation, 29 Conn.App. 292, 298, 614 A.2d 1255 (1992).
In his memorandum supporting the motion to dismiss, the defendant argues that the plaintiff lacks standing to prosecute the complaint since it neither held the defendant's mortgage loan nor owned any other legal or equitable interest in it. The defendant cites the plaintiff's active complaint to show that the mortgage was assigned to the plaintiff, three months after the date that the action was commenced. The defendant argues that the complaint does not allege sufficient facts to establish that the plaintiff owned the note and mortgage at the time it commenced this action.
In its memorandum in opposition, the plaintiff counters: (1) That as trustee, it was the holder of the note and the mortgage at the inception of this action, evidenced in the complaint, "said mortgage was assigned to U.S. Bank National Association as Trustee by virtue of an Assignment of Mortgage to be recorded on the Canterbury Land Records. The Plaintiff U.S. Bank National Association as Trustee, is the holder of the note and the mortgage"; (complaint, p. 1) (2) Statutory authority provides that, the holder of a note is entitled to foreclose on an accompanying mortgage whether or not such mortgage was assigned prior to the institution of the action or assigned at all. The plaintiff cites General Statutes § 49-17 as an avenue for the holder of a note to obtain foreclosure of an accompanying mortgage deed even if not or never formally assigned; and to C.G.S. 42a-3-104, that defines a negotiable instrument and a promissory note is a negotiable instrument in Connecticut; as well as C.G.S. 42a-3-109, that defines a negotiable instrument that is payable to the bearer. Thus, the plaintiff asserts that because it holds the promissory note, as a negotiable instrument assigned to the plaintiff, it has the ability to enforce the security instrument even if the mortgage had not been assigned prior to the issuance of the summons and complaint or at all during the pendency of this action.
The Connecticut version of Article 3 is codified in General Statutes § 42a-3-101 et seq. Section 301 spells out who is entitled to enforce a negotiable instrument. The section provides as follows: "Person entitled to enforce an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 42a-3-309 or 42a-3-418(d). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument."
IV. Substantive law CT Page 8479
General Statutes § 49-17 pertains to foreclosure by owner of debt without legal title and provides in relevant part: "When any mortgage is foreclosed by the person entitled to receive the money secured thereby but to whom the legal title to the mortgaged premises has never been conveyed, the title to such premises shall, upon the expiration of the time limited for redemption and on failure of redemption, vest in him in the same manner and to the same extent as such title would have vested in the mortgagee if he had foreclosed, provided the person so foreclosing shall forthwith cause the decree of foreclosure to be recorded in the land records in the town in which the land lies.""This statute codifies the longstanding common law principle that the mortgage follows the note, pursuant to which the note's rightful owner has the right to enforce the mortgage." Bankers Trust Co. v. Vaneck, 95 Conn.App. 390, 392, 899 A.2d 41, cert. denied, 279 Conn. 908, 901 A.2d 1225 (2006); see, also, Fleet National Bank v. Nazareth, 75 Conn.App. 791, 795, 818 A.2d 69 (2003).
The defendant moves the court to dismiss the plaintiff's complaint on grounds that the plaintiff, U.S. Bank National as Trustee, lacks standing to bring suit. The defendant argues that because he originally executed and delivered a promissory note and mortgage deed to Mortgage Lenders Network USA, INC., the plaintiff does not have standing to sue because it had no interest in the mortgage before bringing suit.
"Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy . . . When standing is put in issue, the question is whether the person whose standing is challenged is a proper party to request an adjudication of the issue . . . Standing requires no more than a colorable claim of injury; a [party] ordinarily establishes . . . standing by allegations of injury. Similarly, standing exists to attempt to vindicate arguably protected interests . . ." St. Germain v. Labrie, 108 Conn.App. 587, 591, 949 A.2d 518 (2008).
The defendant relies on Fleet National Bank v. Nazareth, supra, 75 Conn.App. 791, to support his contention that the plaintiff does not have standing because the mortgage was not assigned to the plaintiff when it commenced this foreclosure action; however, the defendant's reliance is misplaced. In Fleet National Bank, the court held that a party that holds only the mortgage and not the note, does not have standing to pursue foreclosure. Additionally, the court declared that the General Assembly passed legislation to provide an avenue for the holder of a note to foreclose when the mortgage has not been assigned to the holder, but there is no such legislation giving the holder of a mortgage, who has not been assigned the note, the right to foreclose. Here, unlike Fleet National Bank, where the plaintiff held the mortgage and not the note, the plaintiff asserts that it holds the note and the mortgage, even though the mortgage was not assigned at the time it chose to pursue foreclosure.
General Statues § 49-17, Foreclosure by owner of debt without legal title.
To make out a prima facie case in an action to foreclose a mortgage, (1) the foreclosing party must prove that it is the owner of the note and mortgage; and (2) that the mortgagor has defaulted on the note. Ocwen Federal Bank, FSB v. Charles, 95 Conn.App. 315, 319 n. 5, 898 A.2d 197, cert. denied, 279 Conn. 909, 902 A.2d 1069 (2006). To demonstrate its ownership of the note and mortgage, the plaintiff appended to the opposition memorandum copies of the Adjustable Rate Note, Prepayment Penalty Note Addendum and an Allonge to Note (Exhibit A). To show that the defendant mortgagor defaulted on the note, the plaintiff appended to the complaint copies of (1) Lis Pendens, dated August 4, 2008, recorded at the Town of Canterbury on August 6, 2008 at 12:35 p.m. stamped by Town Clerk; (2) A Notice to Homeowner of Foreclosure Proceedings; (3) Availability of Foreclosure Mediation Information and forms; (4) A metes and bounds description of the property; and (5) the Marshall's Return dated August 8, 2008.
In the present case, the plaintiff argues it has standing because, in Connecticut, by statute, any person entitled to enforce the note can foreclose on the mortgage even if he or she does not have legal title to the mortgage. Bankers Trust Co. v. Vaneck, supra, 95 Conn.App. 392. Appended to the plaintiff's memorandum of law in opposition to the motion to dismiss is a group of stapled documents entitled Exhibit A. Exhibit A contained an Allonge to Note, dated December 27, 2005, that contained a Special Indorsement which specifies the person to whom or to whose order it makes the instrument payable. Any instrument specially indorsed becomes payable to the order of the special indorsee and may be further negotiated only by his indorsement. U.C.C. § 3-204 (1). The allonge contained a specially indorsed statement that read, "Pay to the order of U.S. Bank National Association as Trustee without recourse Residential Funding Corporation, signed by Judy Faber, Vice President."
Allonge is a piece of paper annexed to a bill of exchange or promissory note, on which to write endorsements for which there is no room on the instrument itself. Such must be so firmly affixed thereto as to become a part thereof. Black's Law Dictionary (5th Edition, 1990).
"An allonge is defined as a piece of paper annexed to a negotiable instrument or promissory note, on which to write endorsements for which there is no room on the instrument itself." SKWReal Estate Limited Partnership v. Gallicchio, 49 Conn.App. 563, 566 F.N. 3, 716 A.2d 903 (1998) (Internal citation and quotation marks omitted; emphasis added.) Allonges are appended to promissory notes and other negotiable instruments for the purpose of further endorsing and negotiating them. Id. See also Grand Pacific Finance Corp. v. Augeri-Newfield Associates, LLC, Superior Court, judicial district of Middlesex, Docket No. CV 07 5002206 (December 21, 2007, Aurigemma, J.).
The court finds that on a date not specified in the complaint, Mortgage Lenders Network USA, Inc. assigned the mortgage to the plaintiff, as indicated on the attached Allonge to Note (date of assignment as stated on the Allonge to Note is 12.27.2005), making it the holder of the note and the mortgage. The note is in default, and the plaintiff provided the defendants with written notice of the default, the defendants have failed to cure the default, and the plaintiff has elected to accelerate the balance due on the note. The evidence, appended to the complaint and to the memorandum of opposition by the plaintiff, demonstrates that the plaintiff was in possession of the note prior to the commencement of this action and is sufficient for this court to presume, absent any evidence to the contrary, that the plaintiff was the owner of the note prior to the commencement of this action. Accordingly, the court finds that the plaintiff had standing to bring this action. Motion to dismiss is DENIED.