U.S. Bank Trust, N.A. v. Dallas

U.S. BANK TRUST, N.A., as Trustee FOR LSF9 MASTER PARTICIPATION TRUST v. Lesley DALLAS et al.

No. LLICV166013346S

Superior Court of Connecticut, Judicial District of Litchfield, Torrington

April 30, 2018

UNPUBLISHED OPINION

OPINION

Bentivegna, J.

The plaintiff, U.S. Bank Trust, N.A. as Trustee for LSF9 Master Participation Trust, moves to strike the defendant’s, Lesley Dallas, revised thirteen special defenses and counterclaims to the plaintiff’s mortgage foreclosure action on the ground of legal insufficiency. In response, the defendant files a request to amend those special defenses and counterclaims along with an objection to the motion to strike, which references that request to amend. The defendant does not otherwise address the legal sufficiency of her special defenses and counterclaims.

The court follows the majority of Superior Court decisions and sustains the plaintiff’s oral objections to the defendant’s request to amend the revised special defenses and counterclaims because the plaintiff’s motion to strike is pending. For the reasons set forth below, the motion to strike is granted in part and denied in part.^[1]

I Fraud Special Defenses

The plaintiff moves to strike the fraud special defenses- special defense one (" residential mortgage fraud" ) special defense two (" fraudulent nondisclosure" ) special defense three (" document fraud" ), special defense four (" fraud in the inducement" ), special defense five (" fraud in the factum" ), and special defense seven (" illegality" )- on the ground of legally insufficiency because they are not plead with " the requisite level of specificity." Specifically, the defendant does not specifically plead the fraudulent acts at issue in each of these special defenses. As to the second third, and fifth special defense, the plaintiff argues that the defendant also does not set forth the elements of fraud in the special defenses.

Practice Book § 10-50 provides in relevant part: " No facts may be proved under either a general or special denial except such as show that the plaintiff’s statements of fact are untrue. Facts which are consistent with such statements but show, not withstanding, that the plaintiff has no cause of action must be specially alleged. Thus ... fraud ... must be specially pleaded ..."

" Fraud ... is an equitable defense to a foreclosure action. [See Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705-06, 807 A.2d 968 (2002), cert. denied, 262 Conn. 915, 811 A.2d 1291 (2003).] Fraud involves deception practices 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 ... Because specific acts must be pleaded, the mere allegation that a fraud has been perpetrated is insufficient ..." (Citation omitted; internal quotation marks omitted.) Chase Manhattan Mortgage Corp. v. Machado, 83 Conn.App. 183, 188, 850 A.2d 260 (2004).

A Special Defense One- " Residential Mortgage Fraud

Special defense one (" residential mortgage fraud" ) contains the following general assertions of fraud without reference to any actor, " making of intentional fraudulent Origination documents," and " intentional and willful fraud from fulfilling the condition of her mortgage." Our Appellate Court in CitiMortgage, Inc. v. Coolbeth, 147 Conn.App. 183, 189, 81 A.3d 1189 (2013), cert. denied, 311 Conn. 925, 86 A.3d 469 (2014) stated, " [b]ecause specific acts must be pleaded, the mere allegation that a fraud has been perpetrated is insufficient." (Citation omitted; internal quotation mark omitted.) Accordingly, those mere allegations of fraud are legally insufficient because they do not contain reference to what false statements of fact were made and by whom. The defendant, however, later pleads in the special defense that the plaintiff " forged, fabricated, and robo-signed documents they knew were untrue." That allegation is that the plaintiff made a false representation of fact in a document that it signed. It is not conclusory. Accordingly, special defense one contains a legally sufficient specific allegation of fraud and the court denies the plaintiff’s motion to strike special defense one in its entirety.^[2]

B

Special Defenses Two- " Fraudulent Non-Disclosure," Three- " Document Fraud," Four- " Fraud in the Inducement," Five- " Fraud in the Factum," and Seven- " Illegality."

Special defenses two (" fraudulent non-disclosure" ), three (" document fraud" ) and five (" fraud in the factum" ) do not contain factual pleadings to identify what specific false statements of fact were made and by whom. For example, special defense two (" fraudulent non-disclosure" ) and three (" document fraud" ) allege that the defendant " was prevented by reason of fraud from fulfilling a condition of her mortgage." Such allegations are legally insufficient to specifically plead fraud. See CitiMortgage v. Coolbeth, supra, 147 Conn.App. 189 (" mere allegation that a fraud has been perpetrated is insufficient" ). Special defense five (" fraud in the factum" ) alleges that the loan originator " forged key documents and omitted mandatory HUD1A and TILA disclosures from pre-closing package sent to Defendant regarding key material facts." That special defense does not contain factual allegation or demonstrate that the defendant was " tricked [by the plaintiff] into signing a note in the belief that it is merely a receipt or some other document ... and had no reasonable opportunity to obtain knowledge [of the nature of the document]." Cadle Co. v. Ginsburg, 51 Conn.App. 392, 403-04, 721 A.2d 1246 (1998), cert. denied, 247 Conn. 963, 724 A.2d 1125 (1999). For all of these reasons, special defenses two, three, and five are legally insufficient and the court grants the plaintiff’s motion to strike special defenses two, three, and five.

Special Defense Four- " Fraud in the Inducement

Special defense four (" fraud in the inducement" ), to be legally sufficient, must advise the plaintiff of what relevant facts are claimed as fraud that induced the defendant to enter into the agreement. Horse Tavern Builders, LLC v. Pizzino, Superior Court, judicial district of Fairfield, Docket No. CV-15-6049934-S (April 13, 2016, Kamp, J.) (special defense legally insufficient for that reason). The plaintiff argues that special defense four cannot rely upon a vague, self-serving or conclusory allegation of fraud and cites Maruca v. Phillips, 139 Conn. 79, 81, 90 A.2d 159 (1952) (" Where a claim for damages is based upon fraud, the mere allegation that a fraud has been perpetrated is insufficient; the specific acts relied upon must be set forth in the complaint" ). In this special defense, the defendant pleads that the loan originator and the plaintiff " and their agents made knowing, willful and intentionally false, misleading statements, trickery, lies, deceit, forged documents, and/or omissions in the making of the Original Note and subsequent fabricated assignments; that induced the Defendant to act on their behalf ..." The loan originator and the plaintiff " willfully, knowingly, and intentionally intended that their representation mislead and induce Defendant to act on it; and did so to her detriment of an alleged $1.3 million in debt." The court disagrees with the plaintiff that these allegations are conclusory and not specific, and the court denies the plaintiff’s motion to strike special defense four on those grounds.

Special Defense Seven- " Illegality

Similarly, the plaintiff moves to strike special defense seven (" illegality" ) on the ground the defendant has not specifically pleaded the fraudulent act and inappropriately relies upon a conclusory allegation of fraud in that special defense. The plaintiff specifically pleads in special defense seven, like special defense four, that " each and every cause of action therein [the plaintiff’s complaint], is barred by the Doctrine of Fraud in the Factum ..." In addition, the defendant alleges, the loan originator and the plaintiff, generally, engaged in " fraudulent conduct," " willful, knowing and intentionally wrongful conduct" and " willful[ly] and intentionally] fail[ed] to comply with the rules and regulations promulgated by the State of Connecticut" and engaged in " fraud in the making, validity and enforcement of the loan note and mortgage." The defendant alleges that " was intentionally prevented by reason of fraud from fulfilling a condition of her mortgage." Such allegations do not allege that the defendant was tricked by the plaintiff into signing the note, so special defense seven does contain a legally sufficient allegation of fraud to state a fraud in the factum special defense against the plaintiff under Cadle Co. v. Ginsburg, supra, 51 Conn.App. 403-04. These allegations of fraud in the special defense are also conclusory. Accordingly, special defense seven is legally insufficient and the court grants the motion to strike special defense seven.

II Breach of Contract Special Defense

The sixth special defense (" breach of contract" ) alleges that " each and every cause of action" in the complaint is " barred by Breach of Contract law violations" so that " foreclosure cannot be had" because " she was prevented by reason of intentional fraud from fulfilling a condition of her mortgage."

The plaintiff moves to strike this special defense on the ground of legal insufficiency because, inter alia, the defendant has failed to set forth the elements of breach of contract and fraud. " The elements of a breach of...