Equity One, Inc. v. Shivers

310 Conn. 119

74 A.3d 1225

EQUITY ONE, INC.

v.Thomas J. SHIVERS.

No. 18775.

Supreme Court of Connecticut.

Argued Feb. 15, 2013.

Decided Sept. 3, 2013.

Robert J. Wichowski, with whom was David F. Borrino, Farmington, for the appellant (plaintiff).

J. Hanson Guest, for the appellee (defendant).

ROGERS, C.J., and NORCOTT, PALMER, ZARELLA, EVELEIGH and McDONALD, Js.

PALMER, J.

In this certified appeal, the plaintiff, Equity One, Inc., as servicer for Nomura Home Equity Loan, Inc., appeals from the judgment of the Appellate Court, which reversed the judgment of strict foreclosure rendered by the trial court in favor of the plaintiff. The plaintiff claims that the Appellate Court incorrectly concluded that the trial court improperly had failed to conduct an evidentiary hearing to determine whether the plaintiff had standing to bring this action after the defendant, Thomas J. Shivers, challenged the plaintiff's standing. We agree with the plaintiff and, accordingly, reverse the judgment of the Appellate Court.

The following facts and procedural history, some of which are set forth in the opinion of the Appellate Court, are relevant to our disposition of this appeal. On November 28, 2006, the defendant executed a promissory note in favor of ResMAE Mortgage Corporation in the principal amount of $201,600. That note was secured by a mortgage deed on property located at 27 Mountain Street in the town of Vernon, which the defendant also executed on November 28, 2006, and delivered to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for ResMAE Mortgage Corporation.¹ On June 27, 2007, the plaintiff commenced this action, seeking to foreclose on the mortgage. The plaintiff alleged that, because the defendant had failed to make payments as required by the note, the plaintiff, as the holder of the note and mortgage, had elected to declare the entire balance of the note due and payable and to foreclose on the mortgage. “On July 19, 2007, the plaintiff filed a motion for default for the defendant's failure to file a responsive pleading and a motion for a judgment of strict foreclosure. On July 23, 2007, the court granted the plaintiff's motion for default. On September 24, 2007, the court rendered a judgment of foreclosure by sale, with a sale date of January 5, 2008. The sale date was extended twice: the first time it was extended to May 3, 2008, at the request of the plaintiff; the second time it was extended to May 10, 2008, at the request of the committee appointed to conduct the sale. The May 10, 2008 foreclosure sale did not go forward because the defendant filed a bankruptcy petition on May 8, 2008.

“[Thereafter, on October 9, 2008, the automatic stay that had been imposed following the defendant's bankruptcy filing was lifted.] After the bankruptcy stay was lifted, the plaintiff filed a motion to reopen and to reenter the judgment on November 7, 2008. On November 21, 2008, the defendant filed an objection to the foreclosure, asserting that he was no longer in default and ... that the plaintiff did not have standing to foreclose the mortgage. The defendant also filed a motion to compel, [in] which [he] requested that the court direct the plaintiff to produce the original note to prove that the plaintiff had standing to institute the foreclosure action. On November 24, 2008, the court ... heard argument from the parties [on] the motion to reopen and to reenter the judgment. At the conclusion of that hearing, the court [found that the plaintiff had standing to institute the action and] rendered judgment of strict foreclosure with the law days commencing on January 12, 2009.” Equity One, Inc. v. Shivers, 125 Conn.App. 201, 203–204, 9 A.3d 379 (2010).

The defendant appealed to the Appellate Court from the judgment of the trial court, claiming, inter alia, that the trial court improperly had failed to conduct an evidentiary hearing to ascertain whether the court had subject matter jurisdiction after the defendant raised the issue of the plaintiff's standing. Id., at 204, 9 A.3d 379. In agreeing with the plaintiff, the Appellate Court explained that, “[w]hen issues of fact are necessary to the determination of a court's jurisdiction, due process requires that a trial-like hearing be held, in which an opportunity is provided to present evidence and to cross-examine adverse witnesses.” (Internal quotation marks omitted.) Id., at 205, 9 A.3d 379. The Appellate Court further explained: “The [trial] court never held an evidentiary hearing to determine whether the plaintiff was the holder of the note at the time that it instituted the foreclosure action. The only hearing that the [trial] court held was in November, 2008, in response to the plaintiff's motion to reopen and to reenter [the] judgment.... [The court's] conclusion [that the plaintiff had standing] ... was based on a brief colloquy between the court and the plaintiff's counsel in which the plaintiff's counsel presented an original copy of the note to the defendant and stated that he believed that the note was provided to the court at the time of the original judgment. The court did not find specifically that the plaintiff was the holder of the note at the time that [the plaintiff] instituted the action.” Id., at 206, 9 A.3d 379.

Thereafter, we granted the plaintiff's petition for certification, limited to the following issue: “Did the Appellate Court properly determine that the trial court should have conducted an evidentiary hearing when the defendant challenged the plaintiff's standing to bring the action?” Equity One, Inc. v. Shivers, 300 Conn. 936, 17 A.3d 474 (2011). In support of its contention that a full evidentiary hearing was not required, the plaintiff argues that, by presenting the note endorsed in blank at both the September 24, 2007 and the November 24, 2008 foreclosure hearings, a presumption of standing was thereby created, which the defendant was required but failed to rebut. The plaintiff further contends that, even if the transcripts of the foreclosure hearings do not expressly refer to the plaintiff's presentation of the note to the trial court, a presumption exists that the court acted in accordance with the legal requirements pertaining to mortgage foreclosures, including the requirement that the court inspect both the note and mortgage prior to rendering a judgment of foreclosure. The defendant contends that the Appellate Court correctly determined that a trial-like evidentiary hearing was necessary to resolve the standing issue that the defendant had raised in the trial court. We agree with the plaintiff because the record establishes, consistent with the trial court's finding, that the plaintiff had standing to commence this action, and the defendant has failed to demonstrate, either at the time of the foreclosure hearings or on appeal, that the finding was flawed or that the procedure that the trial court followed was inadequate.²

“Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] 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.” (Internal quotation marks omitted.) Wilcox v. Webster Ins., Inc., 294 Conn. 206, 214, 982 A.2d 1053 (2009). “[When] a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause.... We have long held that because [a] determination regarding a trial court's subject matter jurisdictionis a question of law, our review is plenary.” (Citation omitted; internal quotation marks omitted.) RMS Residential Properties, LLC v. Miller, 303 Conn. 224, 229, 32 A.3d 307 (2011). In addition, because standing implicates the court's subject matter jurisdiction, the issue of standing is not subject to waiver and may be raised at any time. E.g., Burton v. Dominion Nuclear Connecticut, Inc., 300 Conn. 542, 550, 23 A.3d 1176 (2011).

Several general principles concerning mortgage foreclosure procedure also guide our analysis. “[S]tanding to enforce [a] promissory note is [established] by the provisions of the Uniform Commercial Code.... [See] General Statutes § 42a–1–101 et seq. Under [the Uniform Commercial Code], only a ‘holder’ of an instrument or someone who has the rights of a holder is entitled to enforce the instrument. General Statutes § 42a–3–301.³ The ‘holder’ is the person or entity in possession of the instrument if the instrument is payable to bearer. General Statutes § 42a–1–201 (b)(21)(A). ⁴ When an instrument is endorsed in blank, it ‘becomes payable to bearer and may be negotiated by transfer of possession alone....’ General Statutes § 42a–3–205 (b).” ⁵ (Footnotes added.) Chase Home Finance, LLC v. Fequiere, 119 Conn.App. 570, 577, 989 A.2d 606, cert. denied, 295 Conn. 922, 991 A.2d 564 (2010). In addition, General Statutes § 49–17⁶ allows the holder of a note to foreclose on real property even if the mortgage has not been assigned to him. See, e.g., RMS Residential Properties, LLC v. Miller, supra, 303 Conn. at 230, 32 A.3d 307 (“[o]ur legislature, by adopting § 49–17, created a statutory right for the rightful owner of a note to foreclose on real property regardless of whether the mortgage has been assigned to him”); Chase Home Finance, LLC v. Fequiere, supra, at 576, 989 A.2d 606 ( § 49–17 “codifies the common-law principle of long standing that the mortgage follows the note, pursuant to which only the rightful owner of the note has the right to enforce the mortgage” [internal quotation marks omitted] ). This court also has recently determined that a loan servicer for the owner of legal title to a note has standing in its own right to foreclose on the real property securing the note. J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307, 311, 317, 71 A.3d 492 (2013).

Before turning to the merits of the...