Judicial District of New London at Norwich
CV-07-0510407-S – 2008 Conn. Super. LEXIS 1834
July 29, 2008
MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT [#155]
FACTS
On November 13, 2007, the plaintiff, TD Banknorth, N.A. filed the present foreclosure action against the defendant, Norwich River, LLC.(fn1) In ts complaint the plaintiff alleges the following facts. At all times relevant to the foreclosure action, the defendant owned real property situated at 285 Taftville-Occum Road, Norwich, Connecticut. By way of two separate lines of credit notes, both dated June 19, 2006, the defendant promised to pay to the order of the plaintiff the principal sums of $2,000,000 and $2,300,000, payable with interest thereon. On or about June 19, 2006, the defendant, to secure the obligations arising under the $2,000,000 and $2,300,000 notes, executed and delivered to the plaintiff an open-end mortgage and security agreement encumbering the property situated at 285 Taftville-Occum Road, Norwich, Connecticut. The plaintiff remains the owner and holder of the mortgage and the notes. To further secure the obligations under the note, a guaranty agreement was executed and delivered to the plaintiff unconditionally guaranteeing the obligations of the defendant to the plaintiff under the notes. In connection with the subject loans, the plaintiff and defendant also executed a loan agreement to permit and govern advances made under the notes. Pursuant to the terms of the notes, the defendant is obligated to pay monthly installments of interest thereunder, however, on July 19, 2007, and each month thereafter, the defendant has failed to tender the monthly payments of interest due under the notes. Accordingly, pursuant to the terms of the notes, the defendant is in default and the plaintiff has exercised its option to declare the entire principal and interest balance on the notes due and payable. Demand for payments of the amounts due has been made upon the defendant and the guarantor, however, such payment has been refused. Therefore, the plaintiff seeks the remedy of foreclosure of the mortgage.
On March 11, 2008, the plaintiff filed a motion for partial summary judgment, as to liability on the complaint, on the ground that there are no genuine issues as to any material fact regarding the plaintiff’s ownership of the note and mortgage, and the defendant’s default on the payments.
On April 3, 2008, the defendant, with the permission of this court, filed an amended answer and special defenses. Therein, the defendant asserts the following special defenses: (1) “As part of the loan agreement an interest reserve was retained by the [p]laintiff for the purpose of making monthly interest payments on the debt, however said interest reserve was not exhausted prior to the commencement of the action”; and (2) “The [p]laintiff refused to make appropriate advances under the construction mortgage based upon construction work that had [been] completed thereby preventing the [defendant] from having sufficient funds from which to pay its subcontractors and property taxes and thus causing the [defendant’s] defaults as alleged.” The court refers to the defendant’s amended special defenses in analyzing the plaintiff’s motion for partial summary judgment. See Practice Book §10-61.
DISCUSSION
“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 . . . The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law.” (Internal quotation marks omitted.) Cadlerock Joint Venture II, L.P. v. Milazzo, 287 Conn. 379, 390, 949 A.2d 450 (2008). “In ruling on a motion for summary judgment, the court’s function is not to decide issues of material fact, but rather to determine whether any such issues exist.” Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988).
Prima Facie Case – Mortgage Foreclosure Action
In a mortgage foreclosure action, “[t]o make out its prima facie case, [the foreclosing party has] to prove by a preponderance of the evidence that it [is] the owner of the note and mortgage and 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). “Furthermore, the foreclosing party must demonstrate that all conditions precedent to foreclosure, as mandated by the note and mortgage, have been satisfied.” Washington Mutual Bank, F.A. v. Martins, Superior Court, judicial district of New London, Docket No. CV 03 0564550 (March 23, 2004, Martin, J.). See Bank of America, FSB v. Hanlon, 65 Conn.App. 577, 581, 783 A.2d 88 (2001).
In support of its motion for summary judgment, the plaintiff has submitted properly authenticated copies of the notes, the loan agreement, and the open-end mortgage and security agreement signed by the defendant via its managing member. The plaintiff has also submitted documentary evidence in the form of an affidavit establishing that the plaintiff is the owner and holder of the notes and that the defendant is in default for failure to pay property taxes due on the mortgaged premises, for failure to timely discharge several mechanics liens which have been placed on the mortgaged premises, for failure to timely pay monthly interest on the loans, and for ceasing construction on the mortgaged premises for more than fourteen days.
By way of its answer and special defenses the defendant admits that it executed the notes and that the notes are secured by a mortgage encumbering the subject property. In its memoranda of law in opposition to the motion for summary judgment, the defendant does not contest that it has defaulted, that the default has not been cured, or that the plaintiff owns both the notes and mortgage. The plaintiff therefore, has sufficiently demonstrated that there is no genuine issue of material fact as to the plaintiff’s ownership of the note and mortgage or as to the defendant’s status as a defaulter. The court also finds that the plaintiff’s documentary evidence satisfies the conditions precedent to foreclosure. Thus, the plaintiff has established a prima facie case for a mortgage foreclosure action.
IILegal Sufficiency of Special Defenses
“When a complaint and supporting affidavits establish an undisputed prima facie case for a foreclosure action, a court must only determine whether [a] special defense is legally sufficient before granting summary judgment.” LaSalle National Bank v. Shook, Superior Court, judicial district of New London, Docket No. 549266 (July 13, 2000, Martin, J.), aff’d, 67 Conn.App. 93, 787 A.2d 32 (2001); see also Bank of New York Trust Co. v. GBEH, Superior Court, judicial district of Litchfield, Docket No. CV 07 5002495 (February 26, 2008, Marano, J.). “[T]he 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 . . . 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.” (Internal quotation marks omitted.) Emigrant Mortgage Corp. v. D’Agostino, 94 Conn.App. 793, 802, 896 A.2d 814, cert. denied, 278 Conn. 919 (2006). “Summary judgment in favor of the defendant is properly granted if the defendant in its motion raises at least one legally sufficient defense that would bar the plaintiff’s claim and involves no triable issue of fact.” (Internal quotation marks omitted.) Serrano v. Burns, 248 Conn. 419, 424, 727 A.2d 1276 (1999). “Only one of [a defendant’s] defenses needs to be valid in order to overcome [a] motion for summary judgment. [S]ince a single valid defense may defeat recovery, [a movant’s] motion for summary judgment should be denied when any defense presents significant fact issues that should be tried.” (Internal quotation marks omitted.) Union Trust Co. v. Jackson, 42 Conn.App. 413, 417, 679 A.2d 421 (1996). Furthermore, “[w]here the plaintiff’s conduct is inequitable, a court may withhold foreclosure on equitable considerations and principles.” (Internal quotation marks omitted.) Loricco Towers Condominium Ass’n. v. Pantani, 90 Conn.App. 43, 51, 876 A.2d 1211, cert. denied, 276 Conn. 925 (2005).
Since the plaintiff has established a prima facie case for the foreclosure action, this court must only determine whether the defendant has raised a legally sufficient special defense. The defendant has asserted two special defenses. The first special defense alleges that as part of the loan agreement an interest reserve was retained by the plaintiff for the purpose of making monthly interest payments and, notwithstanding, said reserve was not exhausted prior to the commencement of this action. This defense, however, does not attack the note, the mortgage or any part thereof. “[S]pecial defenses which are not limited to the making, validity or enforcement of the note or mortgage fail to assert any connection with the subject matter of the foreclosure action and as such do not arise out of the same transaction as the foreclosure action.” (Internal quotation marks omitted.) Volpe v. Kerski Associates, L.P., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 07 5004183 (May 16, 2008, Ronan, J.); see Option One Mortgage Corp. v. Crouch, Superior Court, judicial district of New London, Docket No. CV 03 056687 (March 23, 2004, Martin, J.). Accordingly, because this special defense does not challenge the making, validity or enforcement of the note or the mortgage, the defendant’s first special defense is legally insufficient. Furthermore, aside from its nonpayment of the monthly interest due on the loans, the defendant is also in default for failure to pay property taxes due on the mortgaged premises, for failure to timely discharge several mechanics liens which have been placed on the mortgaged premises, and for ceasing construction on the mortgaged premises for more than fourteen days.
The defendant’s second special defense alleges that the plaintiff refused to make appropriate advances under the construction mortgage thereby preventing the defendant from having sufficient funds from which to pay its subcontractors and property taxes, thus causing the defendant’s defaults with regard to the mechanics liens and tax obligations. “[D]efenses dealing with the conduct of the lender after execution of the [mortgage, however, may] not be asserted in a foreclosure action as a defense, as such assertions do not deal with the making, validity or enforcement of the note.” (Internal quotations marks omitted.) United States Department of Agriculture v. Vieaux, Superior Court, judicial district of New London, Docket No. CV 02 0561215 (March 23, 2004, Martin, J.). Additionally, this court has specifically held in a prior decision that a “special defense . . . based on an allegation that the plaintiff failed to comply with its obligations in making construction advances . . . is not a valid special defense to a foreclosure proceeding because it does not address the making, validity or enforcement of the mortgage, the note or both.” Point Center Financial, Inc. v. Phoenix Development Group, Superior Court, judicial district of New London, Docket No. 07 6000460 (February 5, 2008, Martin, J.). Thus, the defendant’s second special defense is legally insufficient.
CONCLUSION
Based on the foregoing, the court finds that the plaintiff has established a prima facie case in this foreclosure action. The two special defenses offered by the defendant are legally insufficient to prevent foreclosure. Accordingly, the court hereby grants the plaintiff’s motion for summary judgment as to liability.
Martin, J.
__________________________
Footnotes:
1. The other named defendants include: Matthew P. Barach, Chace Building Supply of CT, Inc., Viking Kitchen Cabinet, LLC, Native Sons, LTD, Lyon & Billard Company, NLC Enterprises, Coventry Lumber, Inc., Willie’s Quality Installations, LLC, Delia Mechanical, LLC, and United Rentals.