Bank of N.Y. Mellon v. Mauro

177 Conn.App. 295

172 A.3d 303

The BANK OF NEW YORK MELLON, Trustee

v.Jeffrey J. MAURO et al.

AC 38970

Appellate Court of Connecticut.

Argued May 23, 2017

Officially released October 17, 2017

Kenneth A. Votre, for the appellants (named defendant et al.).

Zachary Grendi, with whom, on the brief, was Pierre–Yves Kolakowski, for the appellee (plaintiff).

Lavine, Sheldon and Harper, Js.

SHELDON, J.

In this mortgage foreclosure action, the defendants,¹ Jeffrey J. Mauro and Renee A. Mauro, appeal from the judgment rendered by the trial court, Aurigemma, J., in favor of the plaintiff, The Bank of New York Mellon,² on: the plaintiff's claim for strict foreclosure as to the defendants' mortgaged property in Killingworth, Connecticut; and the defendants' counterclaims against the plaintiff, seeking damages and equitable relief based upon alleged misrepresentations to them and other alleged misdealings with them concerning the note and mortgage here at issue, both by the plaintiff and by the original lender, America's Wholesale Lender (AWL), which was the plaintiff's predecessor in interest to the note and mortgage. As to the plaintiff's claim for strict foreclosure, the defendants argue that the court erred in basing its judgment for the plaintiff upon its prior, erroneous decision rendering summary judgment for the plaintiff as to the defendants' liability for foreclosure in this action, assertedly without sufficient evidence to establish the absence of any genuine issues of material fact on that issue. As to their counterclaims against the plaintiff, the defendants argue that, to the extent that such counterclaims are based upon the plaintiff's own alleged misdealings with them rather than those of AWL, the court erred in rendering summary judgment for the plaintiff by: (1) ruling that such counterclaims, so narrowed, were not properly pleaded in this action because they have no reasonable nexus to the making, validity, or enforcement of the subject note and mortgage; (2) ruling that one such counterclaim was barred by the applicable statute of limitations; and (3) failing to follow the prior ruling of a different judicial authority, in partially denying a motion to strike, that certain such counterclaims were legally sufficient to state claims upon which relief could be granted. We disagree with the defendants on each of their claims, and thus affirm the judgment of the trial court in its entirety.

The record reveals the following facts and procedural history. On November 29, 2006, Jeffrey Mauro executed an "interest only fixed rate" note in favor of AWL, in the principal amount of $350,000. To secure that note, the defendants executed an open-ended mortgage in favor of Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for AWL, on their property located at 330 Roast Meat Hill Road in Killingworth. Under the terms of the note, Jeffrey Mauro was obligated to make monthly payments of $1968.75 for the first ten years of the loan, and increased monthly payments of $2661.27 thereafter, until his entire indebtedness under the note was paid in full.

Jeffrey Mauro received a notice of default, dated September 16, 2009, advising him that, as of September 16, 2009, he had missed several months of payments on the note, totaling $5769.17. He was instructed in the notice to cure the default by October 16, 2009, and informed that if he failed to do so, his obligation to make payments of principal, interest, costs and fees required under the note would be accelerated and foreclosure proceedings would be brought against him as to the mortgaged property. Ultimately, Jeffrey Mauro was unable to cure the default by the date specified in the notice of default.

On July 25, 2011, AWL, as the holder of the note, endorsed the note in blank and transferred physical possession of it to the plaintiff. Concurrently with this transfer, MERS, as nominee for AWL, executed an assignment of the mortgage in favor of the plaintiff. Accordingly, by August, 2011, the plaintiff was both the holder of the note and the assignee of the mortgage.

On June 24, 2013, the plaintiff commenced this action by serving the defendants with legal process returnable to the Superior Court for the judicial district of Middlesex.³ In its complaint, the plaintiff sought foreclosure of the mortgage, immediate possession of the mortgaged property, and reasonable attorney's fees and costs. By that time, the total remaining principal balance on the note was approximately $348,685.68, and Jeffrey Mauro's total indebtedness to the plaintiff thereunder, which also included unpaid interest, late charges and costs, was greater. Thereafter, on July 22, 2013, Jeffrey Mauro submitted to the plaintiff a request for foreclosure mediation pursuant to General Statutes §§ 49–31k through 49–31o. That request was granted by the court on July 26, 2013, after which a foreclosure mediation was conducted during the months of August and October, 2013. On November 22, 2013, the foreclosure mediator filed a final report with the court, in which she noted that the "defendant⁴ did not appear for the [October 11, 2013] mediation, and time has expired." (Footnote added.) Accordingly, the mediator referred the matter back to the court for further proceedings.

On January 21, 2014, the defendants filed their answer to the plaintiff's complaint, along with seven special defenses and five counterclaims. The special defenses and counterclaims were later amended on December 2, 2014. In their amended pleading, the defendants asserted four special defenses to the plaintiff's claim for foreclosure, specifically: that AWL had "misrepresented the terms of the loan"; that the plaintiff itself had "failed to act in good faith during the [foreclosure] mediation"; that AWL had violated state and federal law by "failing to comply with specific disclosure requirements" during the loan initiation process; and that the mortgage, as originally negotiated by AWL, was the product of fraud, misrepresentations and violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42–110a et seq., therefore barring the plaintiff from foreclosing on the property. In their six counterclaims, the defendants asserted claims for breach of contract, negligent misrepresentation, reckless misrepresentation, intentional misrepresentation, violation of CUTPA and violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq.

On December 17, 2014, the plaintiff filed a motion to strike the defendants' special defenses and counterclaims, which the trial court, Domnarski, J., granted in part and denied in part on April 17, 2015. In striking each of the defendants' four special defenses, the court ruled that such special defenses were improper because they were predicated upon the conduct of a nonparty, AWL, and/or they were not related to the making, validity or enforcement of the note or mortgage. In striking counts one, five and six of the defendants' counterclaims, the court ruled that: (1) the first counterclaim, alleging breach of contract, failed to allege the existence of a written agreement between the parties, and thus was barred by the statute of frauds; (2) the fifth counterclaim, alleging a violation of CUTPA, was based solely upon alleged misdealings with the defendants by a nonparty, AWL, for which the plaintiff could not be held liable without expressly assuming such liability; and (3) the sixth counterclaim, alleging a violation of TILA, had been pleaded improperly without the court's permission. The court denied the plaintiff's motion to strike, however, as to the defendants' second, third and fourth counterclaims, which alleged, respectively, negligent, reckless and intentional misrepresentation by both AWL and the plaintiff. In denying the motion to strike as to those counterclaims, the court held that, although the plaintiff could not be held liable for AWL's alleged misdealings with the defendants unless the plaintiff expressly assumed such liability, which had not been alleged, the challenged counterclaims also contained allegations that the plaintiff itself had made material misrepresentations to the defendants during the foreclosure mediation, which allegations stated claims upon which relief could be granted. Notably, the plaintiff did not challenge the defendants' amended counterclaims, as it had challenged their amended special defenses, on the ground that they were improperly pleaded because they were not related to the making, validity or enforcement of the note or mortgage.

On August 14, 2015, the defendants submitted a request for leave to file yet another amended counterclaim, along with their now operative, five count counterclaim. In the first three counts of their operative counterclaim, the defendants reasserted claims against the plaintiff of negligent, reckless and intentional misrepresentation based upon: AWL's alleged misrepresentations to them concerning the terms of the loan, the interest rate on the loan, and their right to rescind the loan; and the plaintiff's own, allegedly deceitful conduct toward them during the foreclosure mediation, more particularly, giving them multiple false assurances that the terms of the note would be modified to avoid foreclosure on the property, when the plaintiff had no intention to agree to such modifications. In the fourth count of the operative counterclaim, the defendants alleged that the plaintiff had violated CUTPA during the foreclosure mediation by making material misrepresentations of fact as to the status of the loan and "wrongfully [beginning] foreclosure proceedings against [them] by misapplying and miscrediting [their] payments, creating a default in the loan in order to proceed with the foreclosure." Finally, in the fifth count of the operative counterclaim, the defendants alleged that the plaintiff was liable to them under TILA, because: at the time of the loan's execution, AWL had misrepresented to them both the terms of...