Bank of New York Mellon v. Malick

The BANK OF NEW YORK MELLON fka The Bank of New York, Successor in Interest to JP Morgan Chase Bank, N.A. as Trustee for Structured Asset Mortgage Investments II, Inc., Bear Stearns ALT-A Trust, Mortgage Pass-Through Certificates, Series 2005-7 v. Javid I. MALICK et al.

No. CV166030339S

Superior Court of Connecticut, Judicial District of Waterbury, Waterbury

July 6, 2018

UNPUBLISHED OPINION

Mark H. Taylor, Judge

I BACKGROUND

The plaintiff in this action to foreclose, Bank of New York Mellon, moves for summary judgment, filed with the court on April 18, 2018, to which the defendants, Javid Malick and Talat Malick, objected on June 18, 2018. For reasons set forth in this memorandum of decision, the motion is denied without prejudice.

As in the court’s previous decision on the plaintiff’s motion to strike, the court takes judicial notice^[1] of the following facts: In a prior foreclosure action between the same parties, Bank of New York v. Malick, Superior Court judicial district of Waterbury, Docket No. CV-09-5013125-S, a mortgage modification was reported on April 1, 2011 by the court mediation specialist as accepted by the defendants. The matter was subsequently dismissed by the court six months later on October 28, 2011, for failure to prosecute pursuant to Practice Book § 14-3. The present foreclosure was filed with the court five years later on March 21, 2016. In the present action, the plaintiff alleges a default of the original underlying mortgage on October 1, 2008, rather than the modified mortgage alleged by the defendants and previously reported to the court.

The defendants filed an answer, special defenses and counterclaims with the court on April 27, 2017, through which they oppose the plaintiff’s attempt to foreclose. The defendants allege two special defenses, and two counterclaims. In their first special defense, asserting breach of the implied warranty of good faith and fair dealing, the defendants allege that on March 10, 2011, they accepted a loan modification agreement and that consideration was exchanged. The defendants further allege that funds were prepared to make payments in accordance with the modification. Based upon these allegations, the defendants conclude that the plaintiff breached its duty to the defendants by reneging on its promise to execute a final modification agreement and by defaulting them on the original mortgage note. In their second special defense, asserting unclean hands, the defendants allege that, on the basis of the mortgage modification agreement, the plaintiff engaged in willful misconduct by reneging on its promise to execute a final modification agreement and by alleging a mortgage default. Accordingly, the defendants conclude that the plaintiff should be equitably estopped from foreclosing their mortgage.

In their counterclaims, the defendants reassert the factual allegations of their special defenses, and in their first counterclaim, sounding in breach of contract, they allege that the plaintiff breached the modification agreement by defaulting them on their mortgage and initiating this action causing them to incur damages. In their second counterclaim sounding in promissory estoppel, the defendants allege that in making a clear and unambiguous promise that the loan agreement would be modified, the plaintiff should reasonably have expected the defendants to change their position in reliance upon the plaintiff’s promises. Consequently, the defendants suffered damages. As noted, the plaintiff has since moved for summary judgment, to which the defendants have objected. This matter was heard by the court on June 10, 2018.

II DISCUSSION

"[S]ummary 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.) Bozelko v. Papastavros, 323 Conn. 275, 282, 147 A.3d 1023 (2016). "[T]he party moving for summary judgment ... is required to support its motion with supporting documentation, including affidavits." (Internal quotation marks omitted.) Romprey v. Safeco Ins. Co. of America, 310 Conn. 304, 324 n.12, 77 A.3d 726 (2013).

In their motion seeking summary judgment, the plaintiff asserts that the defendants’ special defenses are unavailing and, in light of its prima facie case, it has established its right to foreclose as a matter of law. As to the defendants’ special defenses and counterclaims, the plaintiff asserts that there is no valid modification agreement and that any mediation misconduct asserted is not actionable unless it affects the making, validity, or enforcement of the original note or mortgage. Absent evidence of a legally enforceable modification, the plaintiff concludes that the defendants’ defenses and counterclaims must fail as a matter of law. In light of this, the plaintiff contends that it has established a prima facie case for foreclosure, showing that it is the holder of the note and mortgage, and that the defendants are in default and, thus, summary judgment should be entered in its favor.

In their memorandum in opposition, the defendants contend that genuine issues of material fact exist on which the court should withhold summary judgment. The defendants state that their special defenses and counterclaims present issues of fact and have submitted an affidavit attesting to facts in support of their claims of bad faith, unclean hands, breach of contract and promissory estoppel. These claims, insofar as they are briefed, presume the existence of a valid mortgage modification, albeit oral and not in writing. The defendants’ brief additionally asserts an unpleaded legal defense of accord and satisfaction. Lastly, the defendants challenge the plaintiff’s prima facie case, asserting that it has not adequately shown through admissible evidence that it is the holder of the mortgage note because its affidavit of lost note is based upon double hearsay, and is therefore insufficient to establish the plaintiff’s right to foreclose.

A

Modification

The original mortgage loan, signed on May 31, 2005, was in the amount of $187,000 and the debt reflected in the plaintiff’s current affidavit is $186,983.86. Therefore, as a debt in excess of $50,000, any modification of this mortgage is required to be in writing. The statute of frauds is codified in General Statutes § 52-550, which states in relevant part that: "(a) No civil action may be maintained in the following cases unless the agreement ... is made in writing and signed by the party ... to be charged ... (4) upon any agreement for the sale of real property or any interest in or concerning real property ... or (6) upon any agreement for a loan in an amount which exceeds fifty thousand dollars." See Deutsche Bank Trust Co. v. DeGennaro, 149 Conn.App. 784, 788, 89 A.3d 969 (2014) (A modification of a written agreement for a loan exceeding $50,000 must be in writing to satisfy the statute of frauds).

The factual foundation for the defendants’ defenses and counterclaims is that the plaintiff orally agreed to a modification of the mortgage note during a mediation session in 2011 but, despite this oral agreement, the plaintiff never memorialized the modified mortgage in writing. A written denial of a modification of the mortgage did, in fact, arrive many years later on October 27, 2017. The written denial came after, and was based upon, a change in position from the defendants who sought a short sale in place of a modification, which was conditionally approved by the plaintiff. In their affidavit opposing summary judgment, the defendants assert they have complied with the conditions of the plaintiff’s offer. From these facts, the defendants make their legal and equitable claims.

The court concludes there is no valid modification agreement between the parties, as it is alleged to have been made orally, and not in writing as required by statute. See Deutsche Bank Trust Co. v. DeGennaro, supra, 149 Conn.App. 788. Without the existence of a valid modification agreement, the defendants’ contractual and equitable claims, insofar as they allege misconduct, must fail. Moreover, the allegation of mediation misconduct is not actionable without a valid modification agreement, based upon the recent case of U.S. Bank National Assn. v. Blowers, 177 Conn.App. 622, 172 A.2d 837 (2017), cert. granted, 328 Conn. 904, 177 A.3d 1160 (2018). This Appellate Court case was decided two weeks subsequent to the court’s memorandum of decision on the plaintiff’s motion to strike the defendants’ claims. "[C]onduct occurring during loan modification negotiations and foreclosure mediation does not give rise to a valid counterclaim or special defense in a foreclosure action unless such conduct affects the making, validity, or enforcement of the original note or mortgage ... In the present case, the plaintiff’s alleged conduct does not relate to the enforcement of the note or mortgage because no binding modification was reached between the parties that rendered the original note and mortgage unenforceable." (Citation omitted; footnote omitted.) Id., 635-36. Accordingly, these claims must fail.

B Short Sale

The defendants have presented facts in support of an agreement for a short sale in their affidavit in opposition to summary judgment.^[2] At first glance, this argument appears to invoke a question of fact as to whether the conditions of the approval have been met, which may involve an accord and satisfaction of the debt. This fact, however, is not material because it is not within the pleadings of ...