Opinion
CV125016343S
12-01-2015
Karl Paul Vossbrinck v. Accredited Home Lenders, Inc. [Deutsche Bank National Trust, Company as Indenture Trustee on Behalf of the Holders of the Accredited Mortgage Loan Trust 1005-4 Asset Backed Notes, Substituted Plaintiff]
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO STRIKE
Mark H. Taylor, J.
I
BACKGROUND
The defendant has filed a motion to strike the plaintiff's revised complaint, stated in four counts. At the hearing held on November 9, 2015, the plaintiff stipulated that the motion should be granted on counts two through four, conceding that the defendant is not a state actor for purposes of the constitutional claims asserted in those counts. Therefore, the motion is granted by agreement regarding counts two, three and four. The remaining dispute between the parties is over the legal sufficiency of the first count, alleging fraud.
The court notes that the complaint is labeled as a " revised verified complaint." However, it is not verified by an affidavit or otherwise sworn to as factually accurate.
The original complaint was formatted in two counts, alleging fraud " and or" negligent misrepresentation by Deutsche Bank in foreclosing the mortgage on the plaintiff's home without proper standing and seeking relief in the of form of damages, costs, sanctions and the restoration of his title to the foreclosed property. After Deutsche Bank moved to strike the original complaint, the plaintiff requested leave to amend the complaint, expanding it to eighteen counts, to which Deutsche Bank objected. The plaintiff filed the latest revised complaint on August 27, 2015. The present complaint contains four counts, the first alleging fraud, the second a violation of 42 U.S.C. § 1983 and the third and fourth, respectively, alleging violations of the takings clauses of the 5th and 14th amendments of the constitution of the United States. It is upon this latest complaint that the defendant has filed the present motion to strike.
The essence of the plaintiff's claim in count one is that Accredited Home Lenders, Inc. (Accredited Home Lenders) fraudulently misrepresented that it was the holder of the plaintiff's note and mortgage at the time it initiated the action to foreclose the mortgage on his home. The plaintiff further asserts that Accredited Home Lenders' successor, Deutsche Bank, repeated this fraudulent misrepresentation on multiple occasions in its pleadings, through and until the conclusion of the foreclosure case on March 27, 2012.
The defendant states three reasons in support of its motion to strike the first count of the complaint. The first is collateral estoppel, the second is the statute of limitations and the third is the plaintiff's failure to adequately allege a cause of action for fraud. For reasons set forth below, the motion to strike is granted.
II
Motion to Strike
The court will begin by setting forth the legal standard applicable to a motion to strike. Practice Book § 10-39 provides in relevant part: " (a) Whenever any party wishes to contest (1) the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or of any one or more counts thereof, to state a claim upon which relief can be granted . . . that party may do so by filing a motion to strike the contested pleading or part thereof." Simply stated, " [t]he purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).
When deciding a motion to strike, the court must " take the facts to be those alleged in the complaint . . . [and] construe the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Moreover . . . [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . . It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252-53, 990 A.2d 206 (2010).
" A motion to strike challenges the legal sufficiency of a pleading . . . and, consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007). " Annexation of an agreement to [the motion to strike] . . . makes it the equivalent of a 'speaking motion to strike, ' which is not proper." Connecticut State Oil Co. v. Carbone, 36 Conn.Supp. 181, 183, 415 A.2d 771 (1979). " A speaking motion to strike is one improperly importing facts from outside the pleadings . . . Speaking motions have long been forbidden by our practice . . ." (Citations omitted.) Mercer v. Cosley, 110 Conn.App. 283, 292 n.7, 955 A.2d 550 (2008). " It is well established that a motion to strike must be considered within the confines of the pleadings and not external documents . . . We are limited . . . to a consideration of the facts alleged in the complaint." (Internal quotation marks omitted.) Zirinsky v. Zirinsky, 87 Conn.App. 257, 268 n.9, 865 A.2d 488, cert. denied, 273 Conn. 916, 871 A.2d 372 (2005).
III
SALIENT FACTS BASED UPON THE RECORD
A motion to strike is generally limited to an examination of the language of the challenged pleading, without consideration of extratextual evidence. However, a limited review of the long and complicated procedural history of this ongoing dispute between these parties, involving several thousand pages, will elucidate the basis for the court's decision. From the record, the court gleans the following, salient facts.
This case is based upon the foreclosure of the plaintiff's home, filed by Accredited Home Lenders. See Accredited Home Lenders, Inc. v. Vossbrinck, Superior Court, Judicial District of Waterbury, Docket No. CV-08-5007144-S. Critical to the plaintiff's claim in this case is the allegedly fraudulent assertion by Accredited Home Lenders that it " held the mortgage and note" at the time the foreclosure was initiated. There is no dispute between the parties that this claim has been made in pleadings and other court filings.
The plaintiff signed the original mortgage note and granted the mortgage deed to Accredited Home Lenders, with MERS as its nominee, on or about October 19, 2005. Accredited Home Lenders' successor to the underlying note and mortgage was Deutsche Bank National Trust Company, As Indenture Trustee, On Behalf of the Holders of the Accredited Mortgage Loan Trust 2005-4 Asset Backed Notes (Deutsche Bank), the substituted plaintiff in the foreclosure case. Although both Accredited Home Lenders and Deutsche Bank were separately served in this civil action, the plaintiff states in his complaint that Deutsche Bank is " the sole Defendant" in the present case.
Accredited Home Lenders originally filed the foreclosure with the court on December 21, 2007, asserting in the complaint that it was the holder of the plaintiff's note and mortgage. However, it was revealed by the date of its assignment that, at the time the foreclosure was initiated, MERS was the assignee of the mortgage. The original mortgage deed, dated October 19, 2005, identifies Accredited Home Lenders as the mortgage lender and MERS as the lender's nominee. Two months after the foreclosure was filed, MERS as nominee for Accredited Home Lenders assigned the mortgage to Accredited Home Lenders, thereby removing itself from the chain of title to the mortgage. The assignment was signed on February 21, 2008 by Jeffrey M. Knickerbocker as Assistant Secretary and Vice President of MERS. The assignment was recorded in the Southbury land records on April 7, 2008.
However, and somewhat inconsistently, the mortgage deed further states that " MERS is the mortgagee under this security instrument."
In view of the fact that the complaint was filed with the court on December 21, 2007, the plaintiff concludes that Accredited Home Lenders committed fraud because the assignment disproves its statement in the complaint that it was the holder of both the plaintiff's mortgage and note at the time the foreclosure was initiated. However, the court highlights the fact that the assignment of the mortgage deed to Accredited Home Lenders does not include the mortgage note. The note itself is signed by the plaintiff to the original lender, Accredited Home Lenders. Attached to the note is an undated allonge, endorsed in blank by Yanira Febres, Assistant Secretary of Accredited Home Lenders. Therefore, the note appears to be a bearer instrument pursuant to General Statutes § 42a-3-205(b).
During the foreclosure proceedings, Accredited Home Lenders assigned its rights to both the mortgage and note to Deutsche Bank on January 6, 2010. The assignment states that the original mortgage was executed by the plaintiff and was granted to MERS as nominee for Accredited Home Lenders. It also specifically states that the assignment includes the original note, which was for the principal sum of $575, 000.00, and that it was purchased for $10.00 and " other good and valuable consideration." The assignment was signed by Bill Koch on January 6, 2010 in his capacity as a document control officer for Accredited Home Lender's attorney in fact, Select Portfolio Servicing, Inc.
From this record, it appears that legal title to the note and mortgage were initially separated and later joined several months after the action to foreclose the plaintiff's home was filed on December 21, 2007. Importantly, there is no record of a transfer or endorsement of mortgage note to any entity at that time, other than Accredited Home Lenders. In addition, there is no record of the transfer of possession of the mortgage deed.
It is the court's understanding that MERS is not a depository of mortgage documents.
As the substituted plaintiff in the foreclosure, Deutsche Bank reiterated the assertion that Accredited Home Lenders was the holder of the mortgage and note at the time the foreclosure was filed with the court.
IV
DISCUSSION
A
Collateral Estoppel
This is a civil action for fraud, based upon the question of the defendant's standing in a previous action to foreclose the plaintiff's mortgage. In reviewing the judgment of foreclosure, the question presented is whether the issue of standing previously has been fully and fairly litigated between these parties.
Collateral estoppel precludes an action based upon an issue that has been previously litigated. It is similar to the broader doctrine of res judicata, or claim preclusion, but the test for issue preclusion is narrower. For collateral estoppel to apply, the court must determine whether an issue previously has been fully and fairly litigated. New England Estates, LLC v. Branford, 294 Conn. 817, 838, 988 A.2d 229 (2010). For res judicata to apply, the appropriate and distinguishable inquiry is whether the party had an adequate opportunity to litigate the matter in the earlier proceeding. Summitwood Development, LLC v. Roberts, 130 Conn.App. 792, 806, 25 A.3d 721 (2011), cert. denied, 132 S.Ct. 1745, 182 L.Ed.2d 530 (2012).
The question of whether standing was fully and fairly litigated requires a review of evidence beyond the four corners of the complaint. Since " [a] motion to strike challenges the legal sufficiency of a pleading . . . and, consequently, requires no factual findings by the trial court"; (internal quotation marks omitted) Batte-Holmgren v. Commissioner of Public Health, supra, 281 Conn. 294; the motion to strike is an improper procedural mechanism through which to evaluate this claim.
Similarly, for res judicata to apply, the question of whether the plaintiff had an adequate opportunity to litigate would also require the court to examine the record. However, this determination might appropriately be gleaned from the very extensive record of the foreclosure case.
Moreover, " [c]ollateral estoppel is an affirmative defense that may be waived if not properly pleaded." (Internal quotation marks omitted.) Red Buff Rita, Inc. v. Moutinho, 151 Conn.App. 549, 558, 96 A.3d 581 (2014); see also Practice Book § 10-50 (" res judicata must be specially pleaded"). " Because res judicata or collateral estoppel, if raised, may be dispositive of a claim, summary judgment [is] the appropriate method for resolving a claim of res judicata." Jackson v. R.G. Whipple, Inc., 225 Conn. 705, 712, 627 A.2d 374 (1993), quoting Zizka v. Water Pollution Control Authority, 195 Conn. 682, 687, 490 A.2d 509 (1985). In the present case, the defendant has neither answered the complaint nor filed special defenses.
B
Statute of Limitations
A similar analysis applies to the adjudication of statutes of limitations. " A claim that an action is barred by the lapse of the statute of limitations must be pleaded as a special defense, not raised by a motion to strike. Practice Book § [10-50]." Forbes v. Ballaro, 31 Conn.App. 235, 239-40, 624 A.2d 389, 391 (1993), citing Mac's Car City, Inc. v. DeNigris, 18 Conn.App. 525, 528, 559 A.2d 712, cert. denied, 212 Conn. 807, 563 A.2d 1356 (1989). The rationale underlying this principle of law is that adjudicating a lapse of the statute of limitations via a motion to strike " deprives the plaintiff of an opportunity to reply a new promise, or an acknowledgement . . . A motion to strike might also deprive a plaintiff of an opportunity to plead matters in avoidance of the statute of limitations defense." Id.
" In two limited situations, however, we will allow the use of a motion to strike to raise the defense of the statute of limitations. The first is when [t]he parties agree that the complaint sets forth all the facts pertinent to the question whether the action is barred by the Statute of Limitations and that, therefore, it is proper to raise that question by [a motion to strike] instead of by answer . . . The second is where a statute gives a right of action which did not exist at common law, and fixes the time within which the right must be enforced, the time fixed is a limitation or condition attached to the right-it is a limitation of the liability itself as created, and not of the remedy alone." (Citations omitted; internal quotation marks omitted.) Forbes v. Ballaro, 31 Conn.App. 235, 239-40, 624 A.2d 389 (1993).
In the present case, the defendant has neither answered the complaint nor filed special defenses. Therefore, the motion to strike is an improper procedural mechanism through which to evaluate this statute of limitation claim, especially absent a special defense and opportunity for the plaintiff to file a responsive pleading.
C
Fraud
Count one of the plaintiff's complaint is for fraud, alleging that Accredited Home Lenders " knew or should have known that it lacked standing when they filed their foreclosure." Based upon this conclusion, the plaintiff specifically alleges that " 1. A false representation was made as a statement of fact. Defendant stated repeatedly that he was the holder of Plaintiff's Note and Mortgage when he was not. 2. Defendant's aforementioned statements were untrue and known by Defendant to be untrue as proven by the alleged transfer of title of Plaintiff's property months after foreclosure proceedings had begun. 3. Defendant's untrue statements prompted Plaintiff, a pro se litigant, to allow his foreclosure to proceed believing that Defendant had the legal right to do so. In addition, as officers of the court, it was assumed by the court that Defendant had standing to foreclose when, in fact, he did not. 4. Plaintiff acted upon this information, believing it to be true, and as such received enormous injury, loss of property, and great inconvenience." Complaint dated August 26, 2015, Part III, Count 1.
The court turns now to the pleading requirements for fraud under Connecticut law. " Fraud consists [of] deception practiced in order to induce another to part with property or surrender some legal right, and which accomplishes the end designed . . . The elements of fraud action are: (1) a false representation was made as a statement of fact; (2) the statement was untrue and known to be so by its maker; (3) the statement was made with the intent of inducing reliance thereon; and (4) the other party relied on the statement to his detriment . . . Additionally, [t]he party asserting such a cause of action must prove the existence of the first three of [the] elements by a standard higher than the usual fair preponderance of the evidence, which higher standard we have described as clear and satisfactory or clear, precise and unequivocal . . . The determination of what acts constitute fraud is a question of fact . . ." (Internal quotation marks omitted.) McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn.App. 486, 518, 890 A.2d 140, cert. denied, 277 Conn. 928, 895 A.2d 798 (2006); see also Simms v. Seaman, 308 Conn. 523, 548, 69 A.3d 880 (2013).
The defendant assigns three legal insufficiencies to the language of count one, quoted above. First, that the defendant fails to allege the specific acts it engaged in to perpetrate a fraud, rendering the allegations conclusory. Second, that the complaint fails to allege facts showing that the defendant knew its statements regarding possession of the note and mortgage were untrue. And third, that there is no allegation made, or necessarily implied, that any representation was made to induce reliance by the plaintiff.
Before ruling on the plaintiff's pleadings, the court highlights the fact that he represents himself in these proceedings. Therefore, the court must comply with the liberal rules of construction afforded to him by virtue of his layman status and be guided by the assurances of our Supreme Court, namely, to reach the substantive issues of procedure and law presented by parties representing themselves before our courts. " [I]t is the established policy of the Connecticut courts to be solicitous of pro se litigants and when it does not interfere with the rights of other parties to construe the rules of practice liberally in favor of the pro se party . . . The modern trend . . . is to construe pleadings broadly and realistically, rather than narrowly and technically . . . The courts adhere to this rule to ensure that pro se litigants receive a full and fair opportunity to be heard, regardless of their lack of legal education and experience . . .
" This rule of construction has limits, however. Although we allow pro se litigants some latitude, the right of self-representation provides no attendant license not to comply with relevant rules of procedural and substantive law." (Citations omitted; internal quotation marks omitted.) Oliphant v. Commissioner of Correction, 274 Conn. 563, 569-70, 877 A.2d 761 (2005).
There are several problems with the language of count one of the complaint. In the prologue to the enumerated allegations of fraud, the plaintiff uses the following language: the defendant " knew or should have known that it lacked standing when they filed their foreclosure." (Emphasis added.) The pleading must be limited to what the defendant knew, not what it " should have known." The court finds this quoted language to be inconsistent with the pleading requirements for an allegation of fraud and the motion to strike is therefore granted with respect to what the defendant " should have known."
In paragraph three of the enumerated allegations of fraud, the plaintiff alleges that the " Defendant's untrue statements prompted Plaintiff, a pro se litigant, to allow his foreclosure to proceed . . ." (Emphasis added.) This language is technically inconsistent with an allegation of fraud. " Fraud consists [of] deception practiced in order to induce another to part with property or surrender some legal right, and which accomplishes the end designed." (Emphasis added.) McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., supra, 93 Conn.App. at 518. Use of the word " prompted" in paragraph 3 is improper nomenclature for an allegation of fraud and alone, without additional allegations, insufficiently alleges a specific intent to defraud the plaintiff by knowingly making a false representation to induce detrimental reliance. The motion to strike is therefore granted for this reason, as well.
The more significant problem with count one is that the fraud alleged does not appear to have a basis in Connecticut law regarding standing in foreclosure matters. The allegation made, construed in the manner most favorable to sustaining its legal sufficiency, is that the defendant initiated a foreclosure without the legal authority to do so. The plaintiff alleges that the defendant fraudulently misrepresented that its predecessor, Accredited Home Lenders, was the holder of the plaintiff's mortgage and note at the time the foreclosure was initiated. The alleged factual basis of this fraudulent misrepresentation is that, at the time the foreclosure was filed, the plaintiff's mortgage was assigned. to MERS as Accredited Home Lenders' nominee. Very importantly, there is no allegation made or inferred by the plaintiff that Accredited Home Lenders was not the holder of the mortgage note or, alternatively, that it had no right to bring the action on behalf of the owner of the mortgage debt.
Our Supreme Court has often stated that " [s]tanding 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] a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause." (Citations omitted; internal quotation marks omitted.) Equity One, Inc. v. Shivers, 310 Conn. 119, 125, 74 A.3d 1225 (2013).
In Shivers, the Supreme Court specifically set forth the legal analysis applicable to standing in mortgage foreclosures, as follows: " Standing to enforce [a] promissory note is [established] by the provisions of the Uniform Commercial Code. . . . [See] General Statutes § 42a-1-101 et seq. Under [the Uniform Commercial Code], only a 'holder' of an instrument or someone who has the rights of a holder is entitled to enforce the instrument. General Statutes § 42a-3-301. The 'holder' is the person or entity in possession of the instrument if the instrument is payable to bearer. General Statutes § 42a-1-201(b)(21)(A). When an instrument is endorsed in blank, it 'becomes payable to bearer and may be negotiated by transfer of possession alone . . .' General Statutes § 42a-3-205(b) . . . In addition, General Statutes § 49-17 allows the holder of a note to foreclose on real property even if the mortgage has not been assigned to him . . . This court also has recently determined that a loan servicer for the owner of legal title to a note has standing in its own right to foreclose on the real property." Id. at 126-27.
Under facts analogous to the case before this court, the Appellate Court found that the holder of a note has the right to enforce the associated mortgage, although the assignment may not be valid. " Even if we were to assume arguendo that the assignment of the mortgage from MERS to the plaintiff was invalid, the defendant's claim fails. General Statutes § 49-17 permits the holder of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when the mortgage has not yet been assigned to him . . . The statute codifies the common-law principle of long standing that the mortgage follows the note, pursuant to which only the rightful owner of the note has the right to enforce the mortgage . . . Our legislature, by adopting § 49-17, has provided an avenue for the holder of the note to foreclose on the property when the mortgage has not been assigned to him." (Citation omitted; footnotes omitted; internal quotation marks omitted.) Chase Home Finance, LLC v. Fequiere, 119 Conn.App. 570, 576-77, 989 A.2d 606, cert. denied, 295 Conn. 922, 991 A.2d 564 (2010); see also RMS Residential Properties, LLC v. Miller, 303 Conn. 224, 229-30, 32 A.3d 307 (2011).
At the oral argument on the motion to strike, this holding of the Supreme Court was stated for the record. The plaintiff's response was that this was not the law at the time the foreclosure was initiated in 2007. However, General Statute § 49-17 originated with the 1949 revision to the General Statutes.
There is no allegation in the challenged complaint that states or implies that Accredited Home Lenders did not have possession or the legal right to enforce the mortgage note on December 21, 2007. The court therefore grants the motion to strike count one for this reason, in addition to those previously identified by the court.
SO ORDERED.