Wells Fargo Bank, N.A. v. Fitzpatrick

190 Conn.App. 231

210 A.3d 88

WELLS FARGO BANK, N.A.

v.James R. FITZPATRICK et al.

AC 41113

Appellate Court of Connecticut.

Argued December 12, 2018

Officially released May 21, 2019

Bryan L. LeClerc, Milford, for the appellants (defendants).

David M. Bizar, with whom was J. Patrick Kennedy, for the appellee (plaintiff).

Keller, Elgo and Bright, Js.

ELGO, J.

The defendants, James R. Fitzpatrick and Marsha A. Fitzpatrick,¹ appeal from the judgment of foreclosure by sale rendered by the trial court in favor of the plaintiff, Wells Fargo Bank, N.A. On appeal, the defendants claim that the court improperly (1) denied their motion to dismiss and rendered judgment of foreclosure by sale because the plaintiff did not comply with the terms of the note and mortgage, namely, compliance with the notice requirements, and (2) concluded that the defendants had not proved their special defense of laches. We affirm the judgment of the trial court.

The following facts and procedural history are relevant to the present appeal. On January 31, 2003, the defendants executed and delivered a promissory note payable to World Savings Bank, FSB, in the original principal amount of $ 315,000. The loan was secured by a mortgage deed on the property. The mortgage deed was executed and delivered on January 31, 2003. Effective December 31, 2007, World Savings Bank, FSB, was renamed Wachovia Mortgage, FSB (Wachovia).

The defendants have been in default on the note and mortgage deed since March 1, 2009. On May 13, 2009, Wachovia sent a letter to the defendants at the property address by first class mail and certified mail, notifying them that the loan was in default and advising them of the amount required to cure the default and its intent to accelerate if the default was not cured (2009 letter). When the defendants failed to cure the default, Wachovia elected to accelerate the balance due on the note, declare the note due in full, and foreclose the mortgage deed securing the note. Wachovia commenced a foreclosure action against the defendants on July 27, 2009 (first foreclosure action). Berchem Moses, P.C. (Berchem Moses),² filed an appearance on behalf of the defendants on August 4, 2009. Effective November 1, 2009, Wachovia converted to a national bank with the name Wells Fargo Bank Southwest, National Association, and merged with and into the plaintiff.³ The first foreclosure action was in foreclosure mediation for approximately two years; the mediation period was terminated by the court on September 29, 2011. The first foreclosure action subsequently was dismissed for dormancy on May 8, 2014.

On June 19, 2014, the law firm formerly known as Hunt Leibert Jacobson, P.C., acting in its capacity as counsel to the plaintiff, sent a letter by certified mail, return receipt requested, to Berchem Moses notifying them, inter alia, that the note was in default (2014 letter). The 2014 letter listed the plaintiff as the creditor, the loan number, and the property address and stated, in relevant part: "Dear BERCHEM MOSES & DEVLIN PC: We are writing to you as counsel for BERCHEM MOSES & DEVLIN PC, MARSHA A FITZPATRICK*. Please be advised that this office represents WELLS FARGO BANK, N.A., who is the holder of a certain Note (the ‘Note’) and Open-End Mortgage (the ‘Mortgage’) made by you originally in favor of WORLD SAVINGS BANK, FSB dated January 31, 2003 in the original principal amount of $ 315,000.00. This is to advise you that the above-referenced Note and Mortgage is in DEFAULT because installments of principal and interest have not been paid when due. The amount of payments and other charges due is $ 218,906.08 as of July 19, 2014 (Please see attached itemization). If the full amount needed to bring the loan current has not been paid on/or before said date, WELLS FARGO BANK, N.A. will declare all sums secured by the mortgage immediately due and payable (technically called acceleration) without further demand." A memo sent with the 2014 letter to Berchem Moses provided in relevant part: "Pursuant to the language in the mortgage deed you signed, the Lender is required to advise you that you have the right to reinstate after acceleration and the right to assert in court the non-existence of a default or any other defense of Borrower to acceleration and foreclosure and sale. If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of sums secured by the Mortgage without further demand and may invoke any of the remedies permitted by Applicable Law."

The defendants failed to cure the default and the plaintiff elected to accelerate the balance due on the note, to declare the note due in full, and to institute foreclosure of the mortgage deed securing the note. The plaintiff then commenced the present foreclosure action against the defendants on September 26, 2014. On October 21, 2014, Berchem Moses entered an appearance on behalf of the defendants. On September 16, 2016, the plaintiff's motion to default the defendants for failure to plead was granted. On that same date, the defendants filed a motion to open the default and filed their answer with three special defenses and a counterclaim.⁴ The defendants' motion to open the default was granted on September 28, 2016.

The action was tried to the court on July 18, 2017. At the close of the plaintiff's case, the defendants moved to dismiss the case "based upon the plaintiff's failure to establish a prima facie case, specifically their failure to establish a notice of default against the defendants, which is a condition precedent to the foreclosure." After a recess, the court denied the defendants' motion to dismiss. The court, relying on Mortgage Electronic Registration Systems, Inc. v. Goduto , 110 Conn. App. 367, 955 A.2d 544, cert. denied, 289 Conn. 956, 961 A.2d 420 (2008), considered the 2009 letter and the 2014 letter jointly as substantively affording the defendants the requisite notice in paragraph twenty-two of the mortgage deed. The court further noted the absence of any prejudice to the defendants, and that the 2014 letter was sent to the defendants' counsel within approximately thirty days of the dismissal of the first foreclosure case. In its memorandum of decision, the court concluded that the plaintiff was entitled to a judgment of foreclosure by sale against the defendants. The court also concluded that the defendants had proven their first special defense of unclean hands,⁵ but failed to prove their second and third special defenses of laches and failure to mitigate damages. This appeal followed. Additional facts will be set forth as necessary.

I

The defendants first claim that the plaintiff failed to provide them with proper notice as required by paragraphs fifteen and twenty-two of the mortgage deed.

Specifically, the defendants argue that the contents of the 2014 letter should not be considered by the court because it was sent to Berchem Moses instead of the property address and further contend that the 2009 letter considered alone does not constitute sufficient notice.⁶ In the alternative, the defendants argue that the 2009 letter and 2014 letter together do not constitute sufficient notice.

In response, the plaintiff contends that, "by admitting the adequacy of [the] notice in their answer to the complaint and by failing to file a special defense," the defendants have waived their right to challenge the sufficiency of the notice. The plaintiff argues that the defendants admitted that the notice was adequate in their answer when they did not specifically deny paragraph six of the complaint, which states: "The plaintiff has provided written notice in accordance with the note and mortgage to the defendant(s) of the default under the note and mortgage, but said defendant(s) have failed and neglected to cure the default. The plaintiff has elected to accelerate the balance due on said note, to declare said note to be due in full and to foreclose the mortgage securing said note." In response, the defendants answered: "The allegations of paragraph 6 are admitted to the extent that the plaintiff declared the note in default and elected to accelerate the balance due, declared the note to [be] due in full and commenced a foreclosure of the mortgage. The defendants deny that monies are owed to the plaintiff." The plaintiff asks us to read this as a judicially binding admission by the defendants that the plaintiff had provided them with compliant notice under the note and mortgage deed. Although we decline to read the defendants' answer so broadly, we note that the defendants in their answer did not deny that they had received the 2014 letter sent to Berchem Moses. Indeed, the defendants have never advanced that argument and, instead, contend that the 2014 letter was improper notice because it was not sent to the property address.⁷

We begin by noting that "[i]t is well established that [n]otices of default and acceleration are controlled by the mortgage documents. Construction of a mortgage deed is governed by the same rules of interpretation that apply to written instruments or contracts generally, and to deeds particularly. The primary rule of construction is to ascertain the intention of the parties. This is done not only from the face of the instrument, but also from the situation of the parties and the nature and object of their transactions.... A promissory note and a mortgage deed are deemed parts of one transaction and must be construed together as such....

"In construing a deed, a court must consider the language and terms of the instrument as a whole.... Moreover, the words [in the deed] are to be given their ordinary popular meaning, unless their context, or the circumstances, show that a special meaning was intended....

"A promissory note is nothing more than a written contract for the payment of money, and, as such, contract law applies.... In construing a contract, the controlling factor is normally the...