ACCREDITED HOME LENDERS v. ZAYAS, No. CV 07-6000575 (Sep. 3, 2010)

ACCREDITED HOME LENDERS, INC. v. LUIS ZAYAS

2010 Ct. Sup. 17404
No. CV 07-6000575Connecticut Superior Court Judicial District of New London at New London
September 3, 2010

[EDITOR’S NOTE: This case is unpublished as indicated by the issuing court.]

MEMORANDUM OF DECISION MOTION FOR SUMMARY JUDGMENT #111
MARTIN, J.

FACTS
In this mortgage foreclosure action, the plaintiff, Deutsche Bank National Trust Company (Deutsche Bank), Trustee of the LSF MRA Pass-Through Trust, moved for summary judgment on March 24, 2010. The defendant, Luis A. Zayas, objected to the motion on May 21, 2010. The plaintiff filed a reply on June 9, 2010, and the defendant filed a further response on June 23, 2010.

The plaintiff alleges the following facts. During all relevant times, the defendant owned real property located at 12-14 Hamast Avenue in Waterford, Connecticut (the property). On December 9, 2005, the defendant executed and delivered a note for a loan in the amount of $264,000 and a mortgage on the property to Mortgage Electronic Registration Services, Inc. as nominee for Accredited Home Lenders, Inc. The mortgage was recorded on December 12, 2005, in the Waterford land records. Thereafter, the mortgage and note were assigned to CIT Group/ Consumer Finance, Inc., now known as CIT Loan Corporation. Subsequently, the mortgage and deed were transferred to Deutsche Bank, as Trustee. Deutsche Bank was substituted as party plaintiff in this action on December 15, 2009.

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.” (Internal quotation marks omitted.) Durrant v. Board of CT Page 17405 Education, 284 Conn. 91, 99-100 n. 7, 931 A.2d 859 (2007). “[T]he `genuine issue’ aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred . . . A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.” (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).

The plaintiff asserts that there are no genuine issues of material fact in dispute and that it is the holder and owner of a note executed by the defendant that is secured by a mortgage deed. The plaintiff asserts that the defendant is in default under the terms of the note and that the defendant’s special defenses fail as a matter of law. Accordingly, the plaintiff asserts that it is entitled to summary judgment.

The defendant has asserted six special defenses: failure to state a cause of action upon which relief can be granted, fraudulent inducement, unclean hands, breach of the implied covenant of good faith and fair dealing, equitable estoppel and unconscionability.[1] In short, the defendant alleges that Accredited Home Lenders participated in a scheme to defraud, intentionally misrepresent and/or conceal the contents of various documents related to the defendant’s purchase of the property. The defendant alleges that the plaintiff and its coconspirators did so in order to collect money/fees and sell the property to the defendant at an inflated price.

I
“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.” (Internal quotation marks omitted.) Franklin Credit Management Corp. v. Nicholas, 73 Conn.App. 830, 838, 812 A.2d 51 (2002), cert. denied, 262 Conn. 937, 815 A.2d 136 (2003). “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 CT Page 17406 America, F.S.B. v. Hanlon, 65 Conn.App. 577, 581-82, 783 A.2d 88 (2001).

In support of its motion for summary judgment, the plaintiff has submitted the note signed by the defendant, a copy of the mortgage deed signed by the defendant and the assignment of mortgage agreement from CIT Loan Corporation to the plaintiff. The plaintiff has also submitted the affidavit of Paul Laird, which details that the note and mortgage have been assigned to the plaintiff and that the defendant has defaulted on the loan. In his objection, the defendant does not contest that he has defaulted, but asserts that genuine issues of material fact exist as to his special defenses. Accordingly, the plaintiff has 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 default. The plaintiff has established a prima facie case for a mortgage foreclosure.

II
As the plaintiff notes, a court cannot grant summary judgment if any of the defendant’s special defenses are legally sufficient. “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). “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 Company, Inc. v. D’Agostino, 94 Conn.App. 793, 896 A.2d 814 cert. denied, 278 Conn. 919, 901 A.2d 43 (2006). 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 Assn. v. Pantani, 90 Conn.App. 43, 51, 876 A.2d 1211, cert. denied, 276 Conn. 925, 888 A.2d 93 (2005).

The court need look no further than the defendant’s second special defense to determine that the motion for summary judgment must be denied. This court has previously addressed the issue of fraud as a special defense in a foreclosure proceeding. “Fraud is an equitable CT Page 17407 defense to a foreclosure action. Fraud involves deception practiced in order to induce another to act to her detriment, and which causes that detrimental action . . . The four essential elements of fraud are (1) that a false representation of fact was made; (2) that the party making the representation knew it to be false; (3) that the representation was made to induce action by the other party; and (4) that the other party did so act to her detriment . . . Actions of agents of a lender may also give rise to a defense of fraud . . . However, a court, generally, will not invalidate a mortgage agreement against the lender unless [it] in some way participated in or knew of the fraud . . .

“Fraud and misrepresentation cannot be easily defined because they can be accomplished in so many different ways. They present, however, issues of fact . . . [S]ummary judgment procedure is particularly inappropriate where the inferences which the parties seek to have drawn deal with questions of motive, intent and subjective feelings and reactions.” (Citations omitted; internal quotation marks omitted.)FV-1, Inc. v. Forgey, Superior Court, judicial district of New London, Docket No. CV 07 5002447 (May 22, 2008, Martin, J.).

In the second special defense, the defendant alleges that Accredited Home Lenders, along with several co-conspirators, knowingly misrepresented to the defendant that he qualified for two mortgage loans. The defendant alleges that the co-conspirators fraudulently induced him into accepting the mortgages to purchase the property and that the plaintiff relied on the representations to his detriment because he did not have the finances to afford the mortgages. The defendant alleges that his reliance is reasonable because he was a first time home buyer and Accredited Home Lenders was in the business of providing mortgages to home buyers. The defendant claims that Accredited Home Lenders knew that the defendant was relying on its mortgage approval and that the defendant would be unable to purchase the property without the mortgages.

The defendant has offered the deposition transcript of Jose Guzman, the loan originator, in support of his objection.[2] The defendant alleges in his second special defense that Guzman is one of the parties who participated in the scheme to defraud the defendant, along with Accredited Home Lenders. In his deposition, Guzman states that, at the time he was explaining the mortgage payments to the defendant, the payments “didn’t make sense” in comparison to the defendant’s pay stub and that there was no way CT Page 17408 that the defendant could have afforded the mortgage. Deposition of Jose Guzman, Vol. II, p. 169. The plaintiff responds that the defendant signed a Uniform Residential Loan Application, in which the defendant agreed that the information was true and accurate and that the information in the application could continually be relied upon. The plaintiff argues the defendant cannot show that Accredited Home Lenders knew that the contents of the mortgage application were false and that the defendant himself attested to the contents of the application. The court finds, however, that the contradictory testimony in Guzman’s deposition creates an issue of fact, one that goes to the making, validity and enforcement of the mortgage and note.

CONCLUSION
Based on the foregoing, the defendant’s second special defense presents a significant fact issue. Accordingly, the plaintiff’s motion for summary judgment is denied.

[1] The defendant filed a request to amend and amended special defenses on March 31, 2010, which is after the plaintiff filed its motion for summary judgment. Nevertheless, the amended special defenses are the operative pleading, as the plaintiff is deemed to have consented to the defendant’s request to amend pursuant to Practice Book § 10-60(a)(3), in that it did not file a timely objection thereto. Pursuant to Practice Book § 10-61, the plaintiff’s motion for summary judgment will be applied to the defendant’s amended special defenses. The court notes, however, that the plaintiff’s reply to the defendant’s objection to the motion for summary judgment was filed subsequent to the amendment.

[2] The plaintiff argues that Guzman’s deposition is inadmissible because the plaintiff was not present, was not represented by counsel and had no reasonable notice of the deposition. The plaintiff and defendant agree that only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment. See Gianetti v. Anthem Blue Cross Blue Shield of Connecticut, 111 Conn.App. 68, 73, 957 A.2d 541 (2008), cert. denied, 290 Conn. 915, 965 A.2d 553 (2009). Practice Book § 13-31(a) provides: “At the trial of a civil action . . . or upon the hearing of a motion or an interlocutory proceeding, any part or all of a deposition, so far as admissible under the rules of evidence applied as though the witness were there present and testifying, may be used against any party who was present or CT Page 17409 represented at the taking of the deposition or who had reasonable notice thereof . . .” The defendant has provided evidence that he sent notice to the attorney for Accredited Home Lenders prior to the deposition of Guzman. Accredited Home Lenders was the original party plaintiff in this matter and preceded Deutsche Bank as the mortgage and note holder. As the assignee, Deutsche Bank takes the mortgage and note subject to all defenses which might have been asserted against Accredited Home Lenders for the purposes of this action Fairfield Credit Corp. v. Donnelly, 158 Conn. 543, 548, 264 A.2d 547 (1969). The defendant has provided evidence that Accredited Home Lenders was properly informed of the deposition; accordingly, the deposition evidence is admissible.

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