Ditech Fin., LLC v. Joseph

192 Conn.App. 826

218 A.3d 690

DITECH FINANCIAL, LLC

v.Maud JOSEPH et al.

AC 41702

Appellate Court of Connecticut.

Argued May 13, 2019

Officially released September 17, 2019

Maud Joseph, self-represented, the appellant (named defendant).

Benjamin T. Staskiewicz, Hartford, for the appellee (substitute plaintiff).

Lavine, Keller and Harper, Js.

KELLER, J.

The self-represented defendant, Maud Joseph, appeals from the judgment of strict foreclosure rendered by the trial court in favor of the plaintiff, MTGLQ Investors, L.P. (MTGLQ).¹ On appeal, the defendant claims that the court (1) lacked subject matter jurisdiction because the named plaintiff, Ditech Financial, LLC (Ditech), lacked standing to commence this action, (2) improperly granted Ditech's motion to substitute, (3) lacked authority to render a judgment of strict foreclosure, and (4) improperly denied her motion for reargument. Because the resolution of the defendant's first claim as to standing is dependent on disputed factual findings that cannot be resolved due to an inadequate appellate record, and because this claim implicates the subject matter jurisdiction of the trial court, we are unable to review the merits of this appeal. We therefore reverse the judgment of the trial court and remand the case for further proceedings.

We briefly set forth the procedural history and facts relevant to this appeal. On October 27, 2016, Ditech commenced this action alleging that the defendant and Manita Cenat (Cenat) executed and delivered to Countrywide Bank, FSB, a note for a loan in the principal amount of $140,000 (note). To secure the note, Ditech alleged that the defendant and Cenat executed a mortgage dated December 12, 2007, for property located at 116 North Bishop Avenue in Bridgeport. Ditech alleged that it was the holder of the note and that the note was in default. Accordingly, it elected to accelerate the balance due, declared the balance due in full, and sought to foreclose the mortgage securing the note.

On May 11, 2017, the defendant and Cenat filed jointly a motion to dismiss arguing that the court lacked personal jurisdiction over them because service of process was not properly effectuated. By order dated June 7, 2017, the court denied the defendant's motion. The court concluded that the defendant had not sustained her burden of overcoming the presumption of the truth of the facts stated in the return of service attested to by the marshal.

As discussed in footnote 1 of this opinion, Ditech filed a motion to substitute MTGLQ as the plaintiff on June 22, 2017, representing that it had assigned the subject mortgage deed and note, including the cause of action, to MTGLQ. The defendant filed an objection to Ditech's motion to substitute arguing, inter alia, that the assignment was not made while the action was pending and that Ditech lacked standing in the first instance. The court granted Ditech's motion on July 13, 2017. In addressing the defendant's objection, it concluded that the assignment took place thirty-nine days after this action commenced and, thus, it overruled the defendant's objection. The court did not address the defendant's standing argument and stated: "Defendant's challenge to Ditech Financial's standing to commence this action is not properly raised in an objection to motion to substitute. See Practice Book § 10-30."

On September 22, 2017, the plaintiff filed a motion for default for failure to plead arguing that the defendant and Cenat had failed to plead within the time required by Practice Book § 10-8. That same day, the plaintiff filed a motion for judgment of strict foreclosure.

On September 29, 2017, pursuant to Practice Book § 10-35, both the defendant and Cenat filed requests to revise the plaintiff's complaint. The plaintiff filed an objection to the requests of the defendant and Cenat to revise on October 5, 2017. On October 23, 2017, the court sustained all of the plaintiff's objections.

On November 22, 2017, despite the defendant having filed her request to revise, which is a responsive pleading,² on September 29, 2017, the clerk granted the plaintiff's September 22, 2017 motion for default for failure to plead against the defendant and Cenat.

On March 6, 2018, the defendant and Cenat jointly filed a motion to strike requesting that the court strike the plaintiff's prayer for relief and the notice attached thereto. The court denied the motion to strike on March 12, 2018.

On March 12, 2018, the defendant and Cenat filed an objection to the plaintiff's motion for strict foreclosure arguing that no default had entered and no summary judgment had been obtained. Additionally, they argued that their March 6, 2018 motion to strike was a responsive pleading.

On that same day, the court granted the plaintiff's motion for a judgment of strict foreclosure setting the law day for July 17, 2018. On April 2, 2018, the defendant and Cenat filed a motion to reargue the court's order granting the plaintiff's motion for a judgment of strict foreclosure on the basis of the default for failure to plead, arguing that the court misapprehended the fact that the defendant and Cenat had filed a responsive pleading to the complaint before the hearing on the motion for a judgment of strict foreclosure and over-looked General Statutes § 52-121.³ The plaintiff filed an objection to the motion for reargument.

On May 8, 2018, the court denied the motion to reargue. In its order, the court stated: "Motion for Reargument of Motion for Judgment of Strict Foreclosure is denied. The motion to strike filed on March 6, 2018 was ineffective because the defendants were in default status when the motion to strike was filed, having been defaulted for failure to [plead] on November 22, 2017. The motion to strike did not automatically open the defaults because the plaintiff had previously moved for judgment of strict foreclosure on September 22, 2017. Practice Book § 1732 (b). The court had the authority to act on the motion to strike on March 12, 2018 even though it was not on the short calendar for that day. Practice Book § 1040 (b). The motion to strike was frivolous and obviously filed solely for purposes of delay." This appeal followed.⁴

On appeal, the defendant argues that the court lacked subject matter jurisdiction over this action because Ditech lacked standing. In particular, the defendant argues that Ditech was not the holder of the note and had no interest in the note at the time it commenced this action. The defendant essentially argues that the loan was serviced by Ditech but owned by Fannie Mae, which allegedly sold the loan to MTGLQ in June, 2016, prior to the commencement of this action. The defendant, therefore, argues that Ditech lacked standing to bring this action and, thus, the court's substitution of MTGLQ as party plaintiff also was improper.

The plaintiff argues that the court did not lack subject matter jurisdiction. It contends that Ditech was the servicer of the loan through the commencement of this action and was the mortgagee of record and, therefore, was the party entitled to enforce the note and mortgage when this action was commenced. The plaintiff further contends that the trial court made the necessary findings establishing that Ditech and, thus, MTGLQ, has standing in this case. We do not agree.

"Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless [it] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy .... Where a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause." (Citation omitted; internal quotation marks omitted.) J.E. Robert Co. v. Signature Properties, LLC , 309 Conn. 307, 318, 71 A.3d 492 (2013).

"Generally, in order to have standing to bring a foreclosure action the plaintiff must, at the time the action is commenced, be entitled to enforce the promissory note that is secured by the property .... The plaintiff's possession of a note endorsed in blank is prima facie evidence that it is a holder and is entitled to enforce the note, thereby conferring standing to commence a foreclosure action .... After the plaintiff has presented this prima facie evidence, the burden is on the defendant to impeach the validity of [the] evidence that [the plaintiff] possessed the note at the time that it commenced the ... action or to rebut the presumption that [the plaintiff] owns the underlying debt."

(Internal quotation marks omitted.) Citibank, N.A. v. Stein , 186 Conn. App. 224, 243, 199 A.3d 57 (2018), cert. denied, 331 Conn. 903, 202 A.3d 373 (2019) ; see Equity One, Inc. v. Shivers , 310 Conn. 119, 135, 74 A.3d 1225 (2013) ("[a] holder of a note is presumed to be the owner of the debt, and unless the presumption is rebutted may foreclose the mortgage under [General Statutes] § 4917" [internal quotation marks omitted] ).

In the present case, if Ditech did not hold the note or did not have authority to enforce the note and mortgage at the commencement of this action; see J.E. Robert Co. v. Signature Properties, LLC , supra, 309 Conn. at 327–28, 71 A.3d 492 ("a loan servicer need not be the owner or holder of the note and mortgage in order to have standing to bring a foreclosure action if it otherwise has established the right to enforce those instruments"); then it lacked standing, thus depriving the trial court of subject matter jurisdiction and requiring a dismissal of the plaintiff's action. In resolving the defendant's challenge to the plaintiff's standing in this case, we must determine if Ditech was the holder of the note or had the authority to enforce the note on behalf of another party in interest at the time this action was commenced. On the basis of our review of the record before us, we conclude that we are unable to review the defendant's...