1ST BRIDGE, LLC v. CHARTER PROPERTIES, LLC ET AL.

2010 Ct. Sup. 10616
No. CV-09-6000504-SConnecticut Superior Court Judicial District of Tolland at Rockville
May 18, 2010

[EDITOR’S NOTE: This case is unpublished as indicated by the issuing court.]

RULING ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
BRIGHT, J.

I. INTRODUCTION
This foreclosure action arises out of a promissory note (the “Note”) entered into between the plaintiff, 1st Bridge LLC, as the lender and the defendant Charter Properties, LLC as the borrower. The Note, in the amount of $90,000, was dated February 8, 2008. All principal and interest due on the Note was to be paid by February 7, 2009. The Note was secured by a Commercial Mortgage Deed (the “Mortgage”) on property that is the subject of this foreclosure action. The Note was also personally guaranteed (the “Guaranty”) by Roger V. Pelizari, the sole member of Charter Properties, LLC. The first count of the complaint seeks to foreclose on the Mortgage. The second count seeks damages and other relief from Pelizari under the Guaranty.

The defendants do not dispute these allegations. Nor do they dispute that the Note remains unpaid. Instead, they have raised a number of special defenses. As to Count One, Charter Properties has alleged three defenses. First, it argues that the plaintiff breached its promise to release the mortgage proceeds in a timely manner.[1] Second, it alleges that the plaintiff made fraudulent misrepresentations that Charter Properties relied upon when it entered into the Note and Mortgage. In its Third Special Defense, Charter Properties alleges that the plaintiff’s fraudulent conduct constitutes a violation of the Connecticut Unfair Trade Practices Act (“CUTPA”), Conn. Gen. Stat. § 42-110g.

Pelizari has alleged five special defenses in response to the plaintiff’s second count. In his Third, Fourth and Fifth Special Defenses, Pelizari raises the same three special defenses Charter Properties has asserted to Count One. In addition, Pelizari alleges in his First Special Defense to Count Two that the plaintiff acted “unfairly and inequitably” in how it disbursed funds and enforced the Note. In his Second Special Defense, Pelizari argues that the conduct alleged in his First Special Defense constitutes a breach of the implied covenant of CT Page 10617 good faith and fair dealing.

The plaintiff has moved for summary judgment claiming that the undisputed facts prove the allegations of the complaint. It also argues that the special defenses do not preclude the granting of summary judgment because those defenses do not go to the “making, validity, or enforcement” of the Note and Mortgage, and even if they did, there is no evidence to support them.

The defendants concede that the issue comes down to whether their special defenses are valid defenses in a foreclosure action and whether there is evidence to support them. They argue first that a court cannot grant summary judgment as to special defenses. They also argue that their defenses do go to the making, validity, or enforcement of the Note and Mortgage and that there is sufficient evidence to create a triable issue of fact as to each.

II. SUMMARY JUDGMENT STANDARD
“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 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.” (Citations omitted; internal quotation marks omitted.) Liberty Mut. Ins. v. Lone Star Indus., Inc., 290 Conn. 767, 787, 967 A.2d 1
(2009). Furthermore, on summary judgment all inferences from the facts must be construed in a light most favorable to the nonmoving party. Buell Industries, Inc. v. Greater New York Mutual Ins., 259 Conn. 527, 558, 791 A.2d 489 (2002). “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 [in support of a motion for summary judgment].” (Citations omitted; internal quotation marks omitted.) Home Ins. Co. v. Aetna Life Casualty, Co., 235 Conn. 185, 202, 663 A.2d 1001 (1995).

III. FACTUAL BACKGROUND
The parties agree that the issue on this motion is whether there are disputed issues of material fact as to any of the defendants’ special defenses and whether, if proved, any of those defenses provide a defense to the plaintiff’s claims. The evidence submitted by the parties, viewed CT Page 10618 in a light most favorable to the nonmoving parties, establishes the following facts. During the months of December 2007 and January 2008 David Shapard, a mortgage broker working with Pelizari, had several conversations with Izhar Groner, the managing member of 1st Bridge. Affidavit of David Shapard, ¶ 5. Shapard discussed with Groner Pelizari’s need for a bridge loan that would ultimately allow Pelizari to accomplish a number of refinances, including of his mortgage on his principal residence by way of a reverse mortgage. Id., ¶ 4. Shapard told Groner that Pelizari needed the bridge loan as soon as possible. Id., ¶ 5. 1st Bridge agreed to make the bridge loan, but only to a limited liability company. Hence, Pelizari formed Charter Properties at Groner’s insistence. Affidavit of Roger Pelizari at ¶ 2. On January 31, 2008, 1st Bridge issued a Commercial Mortgage Commitment to Charter Properties for $90,000. Plaintiff’s Exhibit F. Pursuant to the commitment, 1st Bridge would disburse no more than $40,000 at closing, with the rest to be disbursed “only after Lender’s due diligence indicates that the Collateral satisfactorily secures such advances.” Id. Pelizari and Shapard understood the post closing due diligence to be limited to an appraisal of the property securing the Note. Pelizari Aff. at ¶ 4; Shapard Aff., Ex. C. The loan closed on February 8, 2008 and $61,000 was disbursed by 1st Bridge. Plaintiff’s Ex. 8. Of that amount, $3,861.75 was paid to 1st Bridge to cover the lender’s fee and prepaid interest for one month. Id. Another $2,610 appears to have been disbursed to 1st Bridge’s attorney to cover its closings expenses. Id. After these deductions, Charter Properties received, either into its attorney’s escrow account or to satisfy another mortgage, a net amount of $54,528.25. Id. 1st Bridge held back the remaining $29,000 “upon satisfactory completion by Lender of its due diligence regarding the collateral for the loan.” Id.

Despite knowing that Pelizari needed the balance of the loan proceeds as soon as possible to complete his refinancing, 1st Bridge disbursed no other funds to Charter Properties over the next two months. On April 11, 2008, Shapard e-mailed Groner requesting that the remaining funds be released “without providing any further documentation as the agreement was originally set.” Shapard Aff., Ex. A. He also told Groner that “it is imperative that we complete this portion of the strategy so that we can continue to move forward.” Id. Groner responded by e-mail the next day stating that he had been waiting for additional documents, including letters from prospective lenders, tax returns and financials. Shapard Aff., Ex. B. In that response he also indicated that 1st Bridge would not release any additional funds “without seeing how we will be out of this loan.” Id.

Shapard responded to Groner by e-mail on April 14, 2010. In that response, Shapard stated his understanding that 1st Bridge’s due CT Page 10619 diligence was limited to “assurance of the value of the property.” Shapard Aff., Ex. C. He also restated Pelizari’s strategy and noted that “this was discussed from the outset.” Id. He went on to say to Groner, “I thought I was very clear during our conversations pertaining to Roger Pelizari and that he would need your understanding and cooperation to be successful.” Id.

Groner responded the same day in an e-mail saying “you need my cooperation and I need yours.” Shapard Aff., Ex. D. He also reiterated his request for the information requested in his email of April 12. Id.
He concluded the e-mail by saying “now I want to know what I stepped into, before I am stepping even deeper.” Id. 1st Bridge disbursed no additional funds at that time.

Instead, three weeks later, on May 7, 2008, the attorney for 1st Bridge sent a letter to Pelizari claiming that Charter Properties was in default under the Note. Defendants’ Exhibit A. Charter Properties’ attorney responded on May 12, 2008 by pointing out that there was no default, and, noting under the terms of the Note, a default was not possible. Defendants’ Exhibit C. Ultimately, 1st Bridge released to Charter Properties on June 15, 2008 $16,500 of the $29,000 it had originally held back at the February 8, 2008 closing. Plaintiff’s Exhibit 9. It disbursed to itself the remaining $12,500, presumably to cover prepaid interest due under the Note.

By the time these funds were disbursed, the housing market had fallen apart and the value of Pelizari’s residence had fallen so much between February and June that he could no longer execute his plan of obtaining a reverse equity mortgage on the property. Pelizari Aff., ¶ 9; Shapard Aff., ¶ 11. According to Shapard, at all times, Groner “was aware that Roger Pelizari needed the balance of the funds shortly after the February 8, 2008 closing, knew about Mr. Pelizari’s refinancing plan and strategy and knew that if the funds were not promptly remitted to Mr. Pelizari or Mr. Pelizari’s company, Mr. Pelizari’s refinancing plan would not be able to be implemented because of the passage of time.” Shapard Aff., ¶ 12.

Charter Properties never completed its refinancing strategy and has never repaid any portion of the Note to 1st Bridge. Nor has Pelizari paid any money under the Guaranty.

IV. LEGAL ANALYSIS
The question is whether the above evidence creates a genuine issue of material fact as to any of the defendants’ special defenses. If such an issue exists as to even one special defense then the motion for summary CT Page 10620 judgment must be denied. Conversely, if there are no genuine issues of material fact as to all of the special defenses, then the motion for summary judgment must be granted. The defendants disagree with this latter point, first arguing that as a matter of law the court cannot grant summary judgment as to a special defense.

As to this issue, the plaintiff has misinterpreted the law regarding summary judgment as applied to special defenses. With one exception, every case the defendants rely on for this proposition involved the plaintiff moving for summary judgment only as to a special defense raised by the defendant. See, e.g., Dubourg v. Osborn, 1995 Ct.Sup. (LOIS) 7513 (Conn.Super.Ct., July 5, 1995) (Pickett, J.); Bond v. General Accident Insurance Company, 1998 Ct.Sup. (LOIS) 10273 (Conn.Super.Ct., September 4, 1998) (Handy, J.). In each case, the court refused to consider the motion for summary judgment because merely eliminating the special defense, if summary judgment was granted, would not dispose of the plaintiff’s cause of action.

Here though, the plaintiff is not moving for summary judgment as to any particular special defense. It is instead seeking summary judgment on its complaint. It is true that in order for the plaintiff to be entitled to summary judgment there must be no genuine issues of material fact not just as to the allegations of the complaint, but also as to the special defenses. However, if no such issues exist, the plaintiff is entitled to summary judgment. Accepting the defendants’ argument would mean that any time a defendant pleads a special defense that survives a motion to strike the court may not grant summary judgment on the complaint. That is clearly not the law. Thus, the defendants’ first argument is rejected, and the court will consider the factual merits of the special defenses raised.

“At common law, the only defenses to an action of this character would have been payment, discharge, release or satisfaction . . . or, if there had never been a valid lien . . . Moreover, our courts have permitted several equitable defenses to a foreclosure action. [I]f the mortgagor is prevented by accident, mistake or fraud, from fulfilling a condition of the mortgage, foreclosure cannot be had . . . Other equitable defenses that our Supreme Court has recognized in foreclosure actions include unconscionability . . . abandonment of security . . . and usury.” (Citations omitted; internal quotation marks omitted.) New Haven Savings Bank v. LaPlace, 66 Conn.App. 1, 10, 783 A.2d 1174 (2001). Moreover, given the equitable nature of a foreclosure action, courts in this state have also recognized equitable estoppel, violations of CUTPA, laches, and breach of the implied covenant of good faith and fair dealing as defenses in foreclosure actions. Franklin Credit Management Corp. v. Nichols, 2001 CT Page 10621 Ct.Sup. (LOIS) 9446 (Conn.Super.Ct., July 21, 2001) (Parker, J.), aff’d, 73 Conn.App. 830, 812 A.2d 51 (2002). Regardless of the defense raised though, in order to be a valid defense to a foreclosure action it must attack the making, validity or enforcement of the note and mortgage Southbridge Associates, LLC v. Garafalo, 53 Conn.App. 11, 17, 728 A.2d 1114 (1999).

The defendants claim that the First Special Defense to Count One and the Third Special Defense to Count Two, which are identical, go to the making of the Note, Mortgage and Guaranty because they set forth claims of misrepresentation. They further allege that the evidence submitted by them in opposition to the plaintiff’s motion for summary judgment raises genuine issues of material fact as to the defense. The court need not reach the evidentiary issue as to these defenses because a fair reading of those claims do not allege misrepresentation in the making of the Note, Mortgage and Guaranty. Instead, as noted above, they simply allege that the plaintiff withheld money that should have been disbursed, knowing that doing so would harm the defendants. Such actions occurred, if at all, after the loan documents were executed, and, therefore could not relate to the making of those documents. See, e.g., First Federal Bank v. Zavatsky,

1993 Ct.Sup. (LOIS) 8950, 8 CSCR 112, (Conn.Super.Ct., September 24, 1993) (Moraghan, J.).[2] Consequently, neither special defense can preclude summary judgment here.

The defendants similarly claim that the Second Special Defense to Count One and the Fourth Special Defense to Count Two go to the making of the loan documents. In particular, both defenses allege that the plaintiff made fraudulent misrepresentations to induce the defendants to enter into the transaction and sign the documents. Unlike the special defenses discussed above, these special defenses specifically allege that the plaintiff made knowingly false promises that the defendants relied upon in entering into the transaction. Such a claim goes to the making of the Note, Mortgage and Guaranty. Thus, the question is whether the defendants have presented evidence that creates a genuine issue of material fact as to the defenses. To establish the elements of fraudulent misrepresentation, whether as an affirmative cause of action or as a special defense, a party must establish four elements: (1) that a false representation was made as a statement of fact; (2) that it was known to be untrue by the maker when made; (3) the statement was made with the intent that the person to whom it was made would rely upon it; and (4) the other party did rely upon the misrepresentation to his or her detriment. First National Charter Bank v. Ross, 29 Conn.App. 667, 670, 627 A.2d 909 (1992). CT Page 10622

The defendants have presented evidence through the affidavit of Shapard that 1st Bridge knew of Pelizari’s need for the release of the remaining loan proceeds as soon as possible after closing. Shapard Aff., ¶¶ 4-5, 12. This knowledge is based on Shapard’s direct communications with Groner. The defendants have also presented evidence from which a fact finder could draw an inference that 1st Bridge, through Groner, represented to Shapard that 1st Bridge’s post-closing due diligence would be limited to an “assurance of the value of the property” securing the Note. Exhibit C to Shapard’s affidavit states that understanding. In the paragraph immediately following his statement of this understanding, Shapard said “this was discussed from the outset.” Furthermore, in a subsequent e-mail to defendants’ counsel, Shapard said that Groner unilaterally changed the original deal post-closing by requiring information far beyond an appraisal to determine the value of the property. Shapard Aff., Ex. D. Viewing all of this evidence together in a light most favorable to the nonmoving parties and drawing all reasonable inferences from this evidence in their favor, a fact finder could determine that 1st Bridge did in fact represent to Shapard and his client, Charter Properties, that the only condition to a release of the remaining loan proceeds post-closing was due diligence as to the value of the property. See also Shapard Aff., Ex. A.

The defendants have also presented evidence that such a representation turned out to be untrue because post-closing 1st Bridge required much more, including payoff letters from borrowers, correspondence with prospective lenders, tax returns and financial statements. Shapard Aff., Ex. B. The question is whether there is any evidence from which a fact finder could find that 1st Bridge knew the statements it made were false when made, as opposed to simply reflecting a change in position post-closing. The court has reviewed the evidence submitted by the defendants and finds nothing, either directly or by inference, that supports the conclusion that 1st Bridge knowingly misrepresented the scope of its intended post-closing due diligence. To the contrary, the evidence shows, if anything, a post-closing modification by 1st Bridge. Shapard states in both his affidavit and the exhibits attached thereto that Groner unilaterally changed the terms of 1st Bridge’s commitment “post-closing.” Shapard Aff., ¶ 12, Ex. D (emphasis added). In addition, the evidence shows that Shapard, Pelizari and Groner all understood that the real estate market deteriorated significantly post-closing. Shapard Aff., ¶ 11; Pelizari Aff., ¶ 9; Shapard Aff., Ex. B. A fact finder could reasonably infer that because of the decline in the market post-closing 1st Bridge decided not to release the remaining funds as promised, breaching its agreement with Charter Properties. That is not what is pled though. The defendants have pled that the plaintiff CT Page 10623 intentionally misrepresented the post-closing due diligence required to induce the defendants to enter into the transaction. The defendants have presented no evidence from which a reasonable fact finder could reach that conclusion. Thus, there is no triable issue of fact as to their claims of fraudulent misrepresentation.

In addition, the defendants have failed to present any evidence to show that the defendants relied on any misrepresentation to their detriment. The defendants’ theory is that if 1st Bridge had released the remaining loan proceeds when promised shortly after the February 8, 2008 closing, that additional approximately $16,000 would have been the difference that would have allowed them to complete their financial restructuring. Yet, the defendants have offered no evidence to support this theory. They have submitted no bank commitments, letters of interest or other documents from which a fact finder could conclude that the defendants’ plans would have been achieved but for the plaintiff’s actions. The only evidence on this point is the general statement in Shapard’s April 14, 2008 e-mail to Groner in which he stated, “We are looking to satisfy this loan via multiple avenues and are moving in that direction consistently . . . what we don’t have is the money needed to put [Pelizari’s] residence into a reverse situation. You have an important role in this strategy. I have no doubt that we will be able to satisfy your position if allowed to continue this process.” Shapard Aff., Ex. C. Nowhere though, whether in e-mail correspondence to Groner or in his affidavit does Shapard provide any details regarding what the defendants were doing. Nor does Pelizari describe the defendants’ efforts in his affidavit. Such broad, vague comments as those made by Shapard are not sufficient evidence to create a triable issue of fact as to this element. For this reason as well, there is insufficient evidence to create a triable fact as to the special defenses asserting claims of fraudulent misrepresentation. Those defenses therefore cannot preclude summary judgment in favor of the plaintiff.

Finally, the defendants claim that the Third Special Defense to Count One and the Fifth Special Defense to Count Two also go the making of the Note, Mortgage and Guaranty and raise a genuine issue of material fact which precludes summary judgment. Both defenses allege that the plaintiff violated CUTPA in entering into the loan documents with the defendants. Specifically, each defense alleges that the plaintiff’s fraudulent misrepresentations discussed above constitute CUTPA violations. Because the only alleged CUTPA violation is the previously discussed alleged misrepresentation, the CUTPA claim must rise or fall with the fraud claim. As noted above, the defendants have failed to present sufficient evidence to create a triable issue of fact as to the necessary element that the plaintiff knew its representation was false when made. Consequently, the fraud claim fails, as must the dependent CUTPA claim. CT Page 10624[3] For this reason, the Third Special Defense to Count One and the Fifth Special Defense to Count Two cannot preclude the granting of summary judgment where the evidence shows that there are no genuine issues of material facts as to the allegations of the complaint.

Given that Charter Properties does not dispute the allegations of the complaint and was relying exclusively on its three special defenses to ward off judgment, its failure to present sufficient evidence to raise a genuine issue of material fact as to any valid defense means that the plaintiff is entitled to summary judgment as to liability as to Count One of the complaint. Before reaching a conclusion as to Count Two, the court must consider whether there are any genuine issues of material fact as to Pelizari’s First and Second Special Defenses to that count.

Pelizari’s First Special Defense to Count Two alleges that the plaintiff acted inequitably and unfairly. Specifically, Pelizari points to the plaintiff’s delay in releasing the remaining proceeds when he knew that Pelizari needed the money to complete his refinancing plan. In addition, he claims that the plaintiff’s actions in May 2008 of demanding payment and declaring the Note in default when there was no default was inequitable and unfair conduct in the enforcement of the Note, Mortgage and Guaranty. In support of this argument Pelizari relies upon Connecticut case law that holds that because a foreclosure action is a peculiarly equitable action, the trial court “may consider all relevant circumstances to ensure that complete justice is done.” (Citations omitted; internal quotation marks omitted.) Monetary Funding Group, Inc. v. Pluchino, 87 Conn.App. 401, 405, 867 A.2d 841 (2005).

As an initial matter, it is worth noting that Pelizari has mischaracterized Count Two. It is not a foreclosure claim. It is instead a breach of contract claim for breach of the Guaranty by Pelizari. Thus, it is not an equitable claim at all, but a legal claim. This fact does not change the court’s analysis though as “it is . . . well settled that equitable defenses or claims may be raised in an action at law.” Kerin v. Udolf, 165 Conn. 264, 269, 334 A.2d 434 (1973). There, the Supreme Court held that a defendant could raise equitable defenses to an action brought for breach of a promissory note, even though the plaintiff was not seeking to foreclose on the mortgage that secured the note. As noted above though, such an equitable defense must go to the making, validity or enforcement of the note, or in this case, the guaranty.

First, Pelizari claims that the plaintiff’s delay in disbursing the post-closing proceeds of the Note goes to the making of the Note and the Guaranty. However, the special defense does not allege any pre-closing inequitable conduct. Instead, it alleges that “knowing that the Defendant CT Page 10625 Pelizari required the mortgage loan balance of funds promptly, [the plaintiff] failed to promptly release the balance of the loan until such time that the housing market had crashed . . .” Like the First Special Defense to Count One, there is simply no allegation of any pre-closing misrepresentations or other inequitable conduct. This special defense does no more than allege that the plaintiff acted inequitably post-closing. As noted above, such a defense does not go to the making of the loan documents. Nor, as noted above, do post-closing decisions about how to disburse funds go to the enforcement of the Note.

Pelizari makes a second claim in his First Special defense regarding the plaintiff’s default notice and demand for payment made in May 2008. He claims that there was no basis for such a notice and demand, and that the plaintiff’s actions constitute inequitable conduct towards Pelizari. Actions taken regarding payment and default do relate to enforcement of the Note and Guaranty and can form the basis of a defense.

Although not expressly stated by Pelizari in his First Special defense, the claim he appears to be making is that the plaintiff acted with unclean hands. “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.” Monetary Funding Group, Inc., supra, 407. Pelizari has presented sufficient evidence from which a fact finder could conclude that 1st Bridge, through its attorney, sent a default notice and demand for payment when there was no basis to do so. Defendants’ Ex. A and C. However, there is no evidence that the plaintiff took any action regarding the alleged default. To the contrary, Shapard and Pelizari both state in their affidavits that as soon as the commitment terms and the fact that the balance of the loan proceeds had not been released were brought to the plaintiff’s attorney’s attention, those funds were in fact released. Pelizari Aff., ¶¶ 8-9; Shapard Aff., ¶ 10. There is no evidence that the plaintiff thereafter took any steps to enforce the Note, Guaranty or Mortgage until after the maturity date of the Note. Viewing this evidence, or the lack thereof, in a light most favorable to Pelizari, the one letter sent by plaintiff’s counsel and never pursued does not constitute wilful misconduct sufficient to support invocation of the clean hands doctrine. Consequently, Pelizari’s First Special Defense to Count Two does not preclude the granting of summary judgment in the plaintiff’s favor.[4]

Finally, Pelizari claims in his Second Special Defense to Count Two that the plaintiff breached the implied covenant of good faith and fair dealing through its conduct. The alleged wrongful conduct is exactly the same as that alleged in Pelizari’s First Special Defense. Breach of the covenant of good faith and fair dealing is a possible special defense in CT Page 10626 an action such as this. EMC Mortgage Corp., supra, 18114. However, it is only a valid defense “if the specific breach asserted goes to the making, validity, or enforcement of the note and/or mortgage [and/or guaranty]. Id. The court has already addressed in connection with Pelizari’s First Special Defense why his allegations regarding delayed disbursement of loan proceeds go to neither the making nor enforcement of the Note, Guaranty and Mortgage. That same analysis applies here.

As to the default notice and demand sent by the plaintiff’s attorney, which does relate to enforcement of the Note, Mortgage and Guaranty, the question is whether there is sufficient evidence to create a triable issue of material fact as to whether sending it violated the covenant of good faith and fair dealing. “The common-law duty of good faith and fair dealing implicit in every contract requires that neither party [will] do anything that will injure the right of the other to receive the benefits of the agreement . . . Essentially it is a rule of construction designed to fulfill the reasonable expectations of the contracting parties as they presumably intended.” (Internal quotation marks omitted.) Elm Street Builders, Inc. v. Enterprise Park Condominium Ass’n, Inc., 63 Conn.App. 657, 665, 778 A.2d 237 (2001). “Bad faith means more than mere negligence; it involves a dishonest purpose . . . Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one’s rights or duties, by some interested or sinister motive.” (Internal quotation marks omitted; citations omitted.) Cadle Co. v. Ginsberg, 70 Conn.App. 748, 768, 802 A.2d 137 (2002).

Viewing the evidence in a light most favorable to Pelizari, he simply has not submitted sufficient evidence from which a fact finder could conclude that the default notice and demand constituted bad faith. The only evidence presented is that no action was taken on the demand after the plaintiff’s counsel learned that he had erred in sending it. In fact, shortly after Pelizari’s counsel pointed out the mistake to 1st Bridge’s counsel, the plaintiff disbursed the remaining loan proceeds and took no other enforcement actions until the maturity date on the Note had passed without payment.

Consequently, neither of the specific breaches identified by Pelizari in his Second Special Defense to Count Two is sufficient to defeat the plaintiff’s motion for summary judgment.

V. CONCLUSION
Because the defendants do not dispute the allegations of the CT Page 10627 complaint, and because there are no genuine issues of material facts as to any special defense that might preclude recovery by the plaintiff, the plaintiff is entitled to summary judgment as to liability on both Counts One and Two. The plaintiff’s motion is GRANTED as to liability only on each count.

[1] In its Memorandum of Law in Support of Objection to Motion for Summary Judgment, the defendants claim that Charter Properties’ First Special Defense to First Count alleges misrepresentation by the plaintiff. A reading of the defense though does not support this characterization. Nowhere in that defense does Charter Properties allege that the plaintiff made a misrepresentation prior to entering into the contract. While Charter Properties alleges that the plaintiff purposely delayed disbursing funds to try to foreclose on the property, the claim cannot be reasonably read as a claim that the decision to withhold the funding was made prior to entering into the contract. This conclusion is further supported by the fact that the Second Special Defense to Count One specifically does allege that the “Plaintiff’s commitment and promise to release the balance of the mortgage funds shortly after the February 8, 2008 closing was false, and the Plaintiff knew his promise to release the balance of the mortgage loan funds was false at the time it made the promise.”
[2] Nor do the alleged facts relate to the enforcement of the Note, Mortgage or Guaranty. Courts have held that defenses based on post-closing conduct can relate to enforcement of the note or mortgage, but such cases are limited to allegations relating to the plaintiff’s collection efforts, agreement to modify payment dates or conditions, or refusals to accept or properly credit payments. See, e.g., Liberty Bank v. New London, LP,

2007 Ct.Sup. (LOIS) 5927, 43 Conn. L. Rptr. 326 (Conn.Super.Ct., May 1, 2007) (Devine, J.); Ulster Savings Bank v. 28 Brynwood Lane, LTD, 2010 Ct.Sup. (LOIS) 2855 (Conn.Super.Ct., January 11, 2010) (Jennings, JTR) Patriot National Bank v. Bobbi, Inc.,

2009 Ct.Sup. (LOIS) 9798, 47 Conn. L. Rptr. 851 (Conn.Super.Ct., June 9, 2009) (Mintz, J.). No such allegations are made here. Instead, the claim is that the plaintiff did not perform its obligations under the Note to timely disburse funds. This has nothing to do with the enforcement of the Note, Mortgage or Guaranty. And the defendants do not claim otherwise.

[3] It is true that a misrepresentation does not need to be knowingly false to support a CUTPA claim. Web Press Services Corp. v. New London Motors, Inc., 203 Conn. 342, 363, 525 A.2d 57 (1987). However, here the CT Page 10628 defendants have alleged no basis for their CUTPA special defenses other than fraud. “It is axiomatic that the parties are bound by their pleadings . . . and it is equally clear that the court is not permitted to decide issues outside of those raised in the pleadings . . . A judgment in the absence of written pleadings defining the issues would not merely be erroneous, it would be void.” (Citations omitted; internal quotation marks omitted.) Russell v. Russell, 91 Conn.App. 619, 634, 882 A.2d 98
(2005).
[4] It is worth noting that Pelizari does not even allege that the plaintiff acted wilfully when his attorney incorrectly sent the default notice and demand. Failure to make such an allegation has been held by at least one court to render a defense of unclean hands legally insufficient. EMC Mortgage Corp. v. Shamber, 2009 Ct.Sup. (LOIS) 18109, 18111 (Conn.Super.Ct., November 12, 2009) (Sferrazza, J.).

CT Page 10629

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