Opinion
186038450
08-29-2019
WELLS FARGO BANK, N.A. v. Cheryl B. PURRONE et al.
UNPUBLISHED OPINION
Mark H. Taylor, Judge.
I
BACKGROUND
The plaintiff, Wells Fargo Bank, N.A., filed this motion for summary judgment on May 31, 2019, in this action to foreclose the defendant’s mortgage. The defendant, Cheryl B. Purrone, is a self-represented litigant who holds a quitclaim deed and who occupies to the property, subject to a mortgage note and deed entered into by her deceased parents, Albert and Estelle Bellucci. In her answer to the complaint, the defendant denies that the plaintiff is the holder of the note and mortgage, as well as the existence of a default and any prior or subsequent encumbrances. She also asserts several special defenses involving her very aged parents at the time of the mortgage transaction, inter alia, resulting in claims of unclean hands, equitable estoppel, unconscionability and predatory lending, citing the Appellate Court case of Bank of America, N.A. v. Aubut, 167 Conn.App. 347, 143 A.3d 638 (2016).
The defendant’s initial special defenses, filed on April 1, 2018, were subsequently amended on November 15, 2018.
In support of her special defenses, the defendant filed an objection to the motion for summary judgment, dated June 3, 2019, in which she reasserts her special defenses and, in addition, asserts more specifically that the plaintiff’s predecessor engaged in predatory lending in violation of the Telephone Consumer Protection Act (TCPA). The dispute between the parties was heard by the court on August 14, 2019. A post-hearing brief was filed by the plaintiff on August 16, 2019, permitted by the court to address the newly-asserted violation of the TCPA and the defendant was likewise afforded the opportunity to file additional documents after the hearing, which she did on August 19, 2019.
It is undisputed that the mortgage note and deed were for the purpose of refinancing a then-existing Wachovia mortgage, which was closed by the parties on August 25, 2005. The then-existing mortgage appears to have been a twenty-year mortgage in the face amount $70,148, with a fixed rate of 6.49 percent and monthly payments of $525.47. Exhibit J, Plaintiff’s Brief. The new mortgage, which closed two-and-a-half years later and is now subject to this foreclosure, is for a substantially longer period of 30 years, and is in the amount of $81,438, with a fixed rate of 6.37 percent and monthly payments of $510.03, both of which are slightly lower than the refinanced mortgage. Exhibit A, Plaintiff’s Brief.
At the time of the loan transaction, the mortgagors were in advanced years: Albert Bellucci was ninety years old and Estelle Bellucci was eighty-seven years old, and it is clear that the mortgagors would not live long enough to pay the mortgage to its conclusion thirty years hence. Although the defendant provided some evidence of the physical maladies her parents faced at the time of the mortgage transaction, as well as the diminished mental capacity of her mother several years later, there was no evidence offered of their mental incapacity at the time they refinanced their mortgage.
The balance due on the then-existing mortgage at the time of the refinance was $67,123.14, which was paid out of the closing and released. Also paid from the closing proceeds were the Belluccis’ $4,761 debt to Chase Bank and a $5,840 debt to Sears, leaving $2,275.86 remaining in cash for their benefit after closing costs. Exhibit I, Plaintiff’s Brief. The Belluccis paid the refinanced mortgage for many years, until Estelle passed away in 2010 and then Albert several years later in 2014. By then, the defendant had taken title to the property and continued to pay the mortgage until she defaulted on the loan three years later in May 2017.
The defendant asserts that the thirty-year mortgage her parents entered into was unconscionable, primarily due to the plaintiff’s solicitation of her elderly parents for a mortgage they would never complete, especially in that there was no mortgage insurance provided or recommended. The defendant therefore asserts that her parents were victims of predatory lending practices by the plaintiff’s predecessor, Wachovia Bank, by entering into an unadvisable mortgage refinancing transaction, initiated by Wachovia Bank via an unsolicited telephone call. She has identified two agents of Wachovia, apparently now with Wells Fargo, who were involved in the original transaction, but any evidence they would offer at trial is without verification by affidavit or by other admissible evidence of an admission of any relevant facts. The court therefore left the evidence open in this regard, if it is necessary in the court’s view.
II
DISCUSSION
A
Summary Judgment
"Practice Book [§ 17-49] provides that 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 ... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party ...
"A material fact is a fact that will make a difference in the outcome of the case ... Once the moving party has presented evidence in support of the motion for summary judgment, 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] ... 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 ...
"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." (Internal quotation marks omitted.) Bank of America, N.A. v. Aubut, supra, 167 Conn.App. 358-59.
B
Prima Facie Case
The plaintiff has adequately presented evidence that it is the holder of the note and mortgage and that there was proper notice of a default. Further, the defendant offered no contradictory evidence on the plaintiff’s case in chief and, instead, sought to raise material issues of fact with regard to her special defenses.
C
Special Defenses Alleged
The defendant generally alleges several special defenses involving her parents who were very aged at the time of the mortgage transaction, resulting in her assertions of unclean hands, equitable estoppel, unconscionability and predatory lending, citing the Appellate Court case of Bank of America, N.A. v. Aubut . The court will therefore recite the elements of each of these special defenses and conclude with an analysis of the defendant’s defenses and her primary assertions of predatory lending and a violation of the TCPA.
1. Unclean Hands
The first special defense is unclean hands, based upon the facts and circumstances of the refinance transaction, as alleged. "The doctrine of unclean hands expresses the principle that where a plaintiff seeks equitable relief, he must show that his conduct has been fair, equitable and honest as to the particular controversy in issue ... For a complainant to show that he is entitled to the benefit of equity he must establish that he comes into court with clean hands ... The clean hands doctrine is applied not for the protection of the parties but for the protection of the court ... It is applied ... for the advancement of right and justice ... The party seeking to invoke the clean hands doctrine to bar equitable relief must show that his opponent engaged in wilful misconduct with regard to the matter in litigation ... The trial court enjoys broad discretion in determining whether the promotion of public policy and the preservation of the courts’ integrity dictate that the clean hands doctrine be invoked." (Internal quotation marks omitted.) Monetary Funding Group, Inc. v. Pluchino, 87 Conn.App. 401, 407, 867 A.2d 841 (2005).
"Wilful misconduct has been defined as intentional conduct designed to injure for which there is no just cause or excuse ... [Its] characteristic element is the design to injure either actually entertained or to be implied from the conduct and circumstances ... Not only the action producing the injury but the resulting injury also must be intentional ... [T]he term wilful has [also] been used to describe conduct deemed highly unreasonable or indicative of bad faith." (Citation omitted; internal quotation marks omitted.) 19 Perry Street, LLC v. Unionville Water Co., 294 Conn. 611, 630-31 n.10, 987 A.2d 1009 (2010).
The court concludes that there is no wilful misconduct, based upon the analysis set forth, infra, regarding predatory lending and the TCPA.
2. Equitable Estoppel
The second special defense of equitable estoppel is again based upon the facts and circumstances of the refinance transaction, as alleged. "[T]raditional mortgage foreclosure standards ... permit the assertion of certain special defenses, including that of equitable estoppel." Congress Street Condominium Assn., Inc. v. Anderson, 132 Conn.App. 536, 544, 33 A.3d 274 (2011). "The doctrine of equitable estoppel is well established. [W]here one, by his words or actions, intentionally causes another to believe in the existence of a certain state of things, and thereby induces him to act on that belief, so as injuriously to affect his previous position, he is [precluded] from averring a different state of things as existing at the time ... Our Supreme Court ... stated, in the context of an equitable estoppel claim, that [t]here are two essential elements to an estoppel: the party must do or say something which is intended or calculated to induce another to believe in the existence of certain facts and to act upon that belief; and the other party, influenced thereby, must actually change his position or do something to his injury which he otherwise would not have done. Estoppel rests on the misleading conduct of one party to the prejudice of the other ... Broadly speaking, the essential elements of an equitable estoppel ... as related to the party to be estopped, are: (1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; and (3) knowledge, actual or constructive, of the real facts ... Estoppel rests on the misleading conduct of one party to the prejudice of the other." (Citation omitted; internal quotation marks omitted.) U.S. Bank National Assn. v. Eichten, 184 Conn.App. 727, 754-55, 196 A.3d 328 (2018); see also TD Bank, N.A. v. M.J. Holdings, LLC, 143 Conn.App. 322, 337-38, 71 A.3d 541 (2013).
The court concludes that there has been no evidence submitted of misleading conduct.
3. Unconscionability
The defendant’s third special defense is unconscionability, again based upon the facts and circumstances of the refinance transaction, as alleged. "[T]he defense of unconscionability is a recognized defense to a foreclosure action ... The purpose of the doctrine of unconscionability is to prevent oppression and unfair surprise ... As applied to real estate mortgages, the doctrine of unconscionability draws heavily on its counterpart in the Uniform Commercial Code which, although formally limited to transactions involving personal property, furnishes a useful guide for real property transactions ... As Official Comment 1 to § 2-302 of the Uniform Commercial Code suggests, [t]he basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract ... Unconscionability is determined on a case-by-case basis, taking into account all of the relevant facts and circumstances ... The classic definition of an unconscionable contract is one which no man in his senses, not under delusion, would make, on the one hand, and which no fair and honest man would accept, on the other ...
"Claims of unconscionability fall into two categories: substantive and procedural. Substantive unconscionability focuses on the content of the contract, as distinguished from procedural unconscionability, which focuses on the process by which the allegedly offensive terms found their way into the agreement ... Procedural unconscionability is intended to prevent unfair surprise and substantive unconscionability is intended to prevent oppression ...
"The doctrine of unconscionability, as a defense to contract enforcement, generally requires a showing that the contract was both procedurally and substantively unconscionable when made- i.e., some showing of an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party ..." (Citations omitted; internal quotation marks omitted.) Hirsch v. Woermer, 184 Conn.App. 583, 588-90, 195 A.3d 1182, cert. denied, 330 Conn. 938, 195 A.3d 384 (2018).
The court concludes that there is no unconscionability, based upon the analysis set forth, infra, regarding predatory lending and the TCPA.
4. Predatory Lending
After setting forth the facts surrounding the mortgage transaction in the present case, the defendant asserts that these bundled counterclaims amount to predatory lending, recently recognized as a special defense by our Appellate Court in Bank of America, N.A. v. Aubut, supra, 167 Conn.App. 382. This hybrid special defense to foreclosure appears to have been entwined with other recognized equitable defenses, such as the defendant has done in the present case.
In Aubut, the Appellate Court viewed the pleadings broadly and realistically, as this court similarly does in the present case, and held that "the allegations set forth in the special defense at issue implicate the equitable defenses on which the defendants rely. Although the defendants did not explicitly characterize their special defense in terms of fraud, unconscionability, unclean hands, or equitable estoppel, their failure to do so is not dispositive in our analysis. The allegations, read broadly and realistically, set forth a general theory that the facts known to the original plaintiff concerning the financial situation of David Aubut were such that, at the time that the parties entered into the subject loan, the original plaintiff knew or should have known that the loan would fail." Bank of America, N.A. v. Aubut, supra, 167 Conn.App. 381.
The special defense alleged in Aubut, however, "did not merely rely on a bald assertion that the original plaintiff had engaged in ‘predatory lending’ practices. Instead, in twenty-seven paragraphs, they set forth allegations in support of that purported special defense ... Notably, the defendants set forth detailed allegations concerning the financial circumstances of David Aubut at the time of the making of the loan at issue ... Among other allegations, the defendants alleged that David Aubut’s income, the sole source of income for the defendants’ household, was $36,000 per year. His take-home pay was $1,950 per month. He owed $45,000 in credit card debt and $132,000 on an existing mortgage. The defendants alleged, in relevant part, that monthly payments on the new loan were approximately $1,400 per month, which comprised more than 70 percent of David Aubut’s take-home pay, leaving him approximately $550 per month to pay other expenses. The defendants alleged that ‘[a]t the time of the subject loan, [David Aubut] was insolvent within the definition of the United States Bankruptcy Code.’ " Bank of America, N.A. v. Aubut, supra, 167 Conn.App. 377-78.
The court concludes that the defense of predatory lending does not apply under Aubut, based upon the fact that the mortgage in the present case was successfully paid for approximately 9 years by both of the Belluccis until 2010 and then by Mr. Bellucci alone until 2014. This fact distinguishes the present case from the facts in Aubut, where the mortgagor was incapable of making his mortgage payments at the time of the transaction, which was therefore immediately doomed to fail.
Although the mortgage here would not have been completely paid at the end of thirty years by the Belluccis based upon their age, this alone cannot be the basis of a defense. For if that were true, untold mortgages would be invalid and unavailable to elderly individuals for underwriting reasons of age alone and, paradoxically, would create a situation where lenders would be forced to choose between either issuing an unenforceable mortgage or discriminating against potential borrowers on the basis of age.
5. Telephone Consumer Protection Act (TCPA)
At the hearing on the plaintiff’s motion for summary judgment, the defendant raised the question that the solicitation of her parents constituted a violation of the TCPA. The plaintiff was therefore permitted to brief the defendant’s newly alleged special defense and, having done so, counters that the transaction is exempt from the TCPA because Wachovia, its predecessor, had an existing business relationship with the mortgagors, Albert and Estelle Bellucci, as the mortgage transaction involved a refinance of a Wachovia mortgage.
"First enacted in 1991 in response to consumer complaints regarding the growing number of unsolicited telemarketing calls and fax advertisements, the [TCPA] was intended to protect the privacy interests of residential telephone subscribers by placing restrictions on unsolicited, automated telephone calls to the home and to facilitate interstate commerce by restricting certain uses of [fax] machines and automatic dialers ... The act makes it unlawful ‘for any person within the United States ... to use any telephone [fax] machine, computer, or other device to send an unsolicited advertisement to a telephone [fax] machine ...’ 47 U.S.C. § 227(b)(1)(C) (2000). An ‘unsolicited advertisement’ is one that is ‘transmitted to any person without that person’s prior express invitation or permission.’ 47 U.S.C. § 227(a)(4) (2000)." (Citation omitted; internal quotation marks omitted.) Weber v. U.S. Sterling Securities, Inc., 282 Conn. 722, 727, 924 A.2d 816 (2007).
Notwithstanding the prohibitions of the act, the TCPA specifically excludes established business relationships, as follows: "The term ‘telephone solicitation’ means the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person, but such term does not include a call or message ... to any person with whom the caller has an established business relationship ..." 47 U.S.C. § 227(a)(4). The court therefore concludes that the TCPA is inapplicable under the facts of this case, in that the Belluccis refinanced their Wachovia mortgage with Wachovia.
III
CONCLUSION
The defendant’s essential assertion in her defenses is that the plaintiff’s predecessor should not have solicited her elderly parents into a mortgage that they would never have been reasonably expected to successfully complete. The essential problem with this assertion is that the refinance in question was with their existing bank, on better monthly terms than their existing mortgage and that they successfully paid the mortgage for many years.
It is true that the plaintiff’s parents would never have been expected to complete the mortgage at their advanced ages at the time of the transaction. This alone, however, cannot be the basis for rendering the mortgage a nullity; otherwise, virtually all mortgages entered into with elderly individuals might be voidable. Absent evidence of incapacity at the time of the mortgage transaction, the court is not inclined to uphold the special defenses asserted under the facts of this case. Although the evidence remained open for the defendant to show a violation of the TCPA, the Belluccis are categorically exempt from its prohibitions, as they were existing Wachovia customers at the time of the mortgage transaction. Therefore, no additional evidence is necessary for the court to reach its decision.
The motion for summary judgment is therefore granted.