JPMorgan Chase Bank, National Assn. v. Essaghof , 177 Conn. App. 144 ( 2017 )

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JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
v. ROGER ESSAGHOF ET AL.
(AC 38736)
Lavine, Mullins and Mihalakos, Js.
Syllabus
The plaintiff bank sought to foreclose a mortgage on certain of the defen-
dants’ real property after they had defaulted on a loan that had been
modified by agreement. The original adjustable interest rate loan was
signed by the defendants in favor of W Co. and provided that the interest
rate would be recalculated monthly on the basis of the interest rates
listed in a certain monthly yield index. After making one payment, the
defendants’ monthly payments were insufficient to cover the interest
accruing, which increased the principal balance of the loan and resulted
in negative amortization. One of the defendants, R, a highly experienced
real estate investor, met with W Co. about potentially modifying the
terms of the original loan. W Co. represented that, because interest rates
were rising, it would be in the defendants’ best interest to modify the
loan so as to set a fixed interest rate. The defendants executed the
modification agreement to set a fixed interest rate, but thereafter
defaulted on the loan by failing to make the monthly payments. After
the plaintiff acquired W Co. and all of its assets, including the defendants’
loan, it commenced this foreclosure action, seeking a judgment of strict
foreclosure. The defendants filed special defenses of, inter alia, fraud
in the inducement and unclean hands, alleging that W Co. had induced
them into executing the modification agreement by making false repre-
sentations, concealed that its true motivation for encouraging the defen-
dants to sign the modification agreement was to benefit itself financially
by reducing its number of negative amortization loans, and insisted that
they sign the modification agreement without an attorney present. The
trial court rendered judgment of strict foreclosure, from which the
defendants appealed to this court. While the appeal was pending, the
trial court granted the plaintiff’s motion for equitable relief and ordered
the defendants to reimburse the plaintiff for the property taxes and
homeowner’s insurance premiums that the plaintiff paid during the pend-
ing appeal, and the defendants filed an amended appeal. Held:
1. The trial court’s finding that the defendants were not fraudulently induced
into executing the modification agreement was not clearly erroneous:
the record provided ample support for the court’s finding that W Co.’s
representations were not false, as that court correctly found that, on
the basis of the monthly yield index, rates had risen during the four
month period in which W Co. had told R that they were increasing, and,
therefore, notwithstanding the fact that interest rates were in an overall
period of decline, W Co.’s representations about rising interest rates
were not false; moreover, the record supported the court’s finding that
the defendants had failed to prove that W Co. was motivated by a policy
to convert negative amortization loans, and this court would not disturb
the trial court’s finding that the defendants’ were not pressured into
signing the modification agreement, as it was based on that court’s
determination that R’s testimony was not credible given his experience
as a real estate investor.
2. The trial court did not abuse its discretion in declining to apply the
doctrine of unclean hands to the present case; the defendants’ special
defense of unclean hands was predicated on the same alleged miscon-
duct on which the defendants relied to establish their fraudulent induce-
ment special defense, which this court already rejected and found did
not amount to misconduct, and the trial court properly found that the
defendants had failed to establish a factual predicate for a defense of
unclean hands.
3. The trial court did not abuse its discretion in determining that a balancing
of the equities justified ordering the defendants to pay the real estate
taxes during the pending appeal; the defendants would have been
required to pay the taxes regardless of the outcome of the appeal, and
that court was understandably concerned that the defendants would
experience a windfall if they were allowed to live on the property for
free until the conclusion of the foreclosure proceedings.
Argued April 26—officially released October 10, 2017
Procedural History
Action to foreclose a mortgage on certain real prop-
erty owned by the named defendant et al., and for other
relief, brought to the Superior Court in the judicial dis-
trict of Stamford-Norwalk, where the defendant JPMor-
gan Chase Bank, National Association, was defaulted
for failure to appear; thereafter, the matter was tried
to the court, Hon. Kevin Tierney, judge trial referee;
judgment of strict foreclosure, from which the named
defendant et al. appealed to this court; subsequently,
the court, Hon. Kevin Tierney, judge trial referee,
granted the plaintiff’s motion for reimbursement of
property taxes and insurance payments, and the named
defendant et al. filed an amended appeal. Affirmed.
Ridgely Whitmore Brown, with whom, on the brief,
was Benjamin Gershberg, for the appellants (named
defendant et al.).
Brian D. Rich, with whom, on the brief, was Peter
R. Meggers, for the appellee (plaintiff).
Opinion
MULLINS, J. In this foreclosure action, the defen-
dants Roger Essaghof and Katherine Marr-Essaghof1
appeal from the judgment of strict foreclosure, ren-
dered after a trial to the court, in favor of the plaintiff,
JPMorgan Chase Bank, National Association, and from
the court’s entry of a posttrial financial order. The
defendants claim that the court (1) erred in rejecting
their special defenses of fraudulent inducement and
unclean hands, and (2) abused its discretion in ordering
them to reimburse the plaintiff for property taxes paid
by the plaintiff during the pendency of this appeal. We
affirm the judgment of the trial court.
The following facts, as found by the court in its
November 27, 2015 memorandum of decision,2 and pro-
cedural history are relevant to this appeal. On May
11, 2006, the defendants executed an adjustable rate
promissory note (original note) in favor of Washington
Mutual Bank, F.A. (Washington Mutual) in exchange
for a loan in the amount of $1,920,000. The original note
was secured by a mortgage on the defendants’ property
located at 19 Bernhard Drive in Weston.
The original note required monthly payments of
$7736.90 and provided that, from the date the note was
executed until June 1, 2006, any unpaid principal would
be subject to a yearly interest rate of 8.856 percent.
During the month of June, 2006, the yearly interest rate
would be 2.65 percent. On July 1, 2006, and on the
first day of every month thereafter (change date), the
interest rate would be recalculated to conform to the
current interest rates set forth in an index published
by Federal Reserve Board entitled ‘‘Selected Interest
Rates (H.15)’’ (monthly yield index). On each of these
change dates, the new interest rate would be calculated
by adding 4.713 percentage points to the applicable rate
set forth in the monthly yield index. The original note
also provided that on July 1, 2007, and on that date every
year thereafter (payment change date), the defendants’
monthly payment would be recalculated to reflect the
amount necessary to pay the balance of the loan in full
by the maturity date—June 1, 2036—at the interest rate
that was in effect forty five days prior to the payment
change date. The monthly payments, however, could
not increase or decrease on any payment change date
by more than 7.5 percent.
Given the interest rates, the defendants’ first monthly
payment of $7736.90 on June 1, 2006, reduced the princi-
pal balance by a few thousand dollars. Every month
thereafter, however, their payments of $7736.90 were
insufficient to cover the interest, causing the principal
balance to increase at a compounding rate.3 To account
for this negative amortization, the original note pro-
vided that the defendants’ ‘‘unpaid principal can never
exceed a maximum amount equal to 110 [percent] of the
principal amount [of $1,920,000] original[ly] borrowed.’’
Once the defendants’ principal balance reached the cap,
which was $2,112,000, their monthly payments would
increase to the amount necessary to pay the balance
in full by the June 1, 2036 maturity date even if that
required their payments to increase by more than 7.5
percent.
In early 2008, Roger Essaghof, a highly experienced
real estate investor who had negotiated numerous resi-
dential and commercial mortgages, began meeting with
Washington Mutual on a regular basis about potentially
modifying the terms of the original note. During those
meetings, Washington Mutual represented that modi-
fying the note to a fixed interest rate was in his best
interest because interest rates were rising. The defen-
dants executed a modification on June 24, 2008 (modifi-
cation agreement), which provided that, as of May, 2008,
the principal balance on the original note was
$2,043,190.89. It also changed the loan from an adjust-
able interest rate to a fixed annual rate of 6.625 percent.
The modification also required monthly payments of
$11,280.12, which were sufficient to cover the accrued
interest but not any principal.
Had the defendants’ loan remained subject to the
adjustable interest rates as required by the terms of
the original note, their principal balance would have
reached the $2,112,000 cap no later than August 1, 2009.
Once that occurred, their monthly payments would
have almost doubled from $7736.90 to $14,061.60—the
amount needed to pay the loan in full by the June 1, 2036
maturity date. Because of the modification agreement,
however, the defendants’ payments remained at
$11,280.12.
Shortly after executing the modification agreement
on June 24, 2008, the defendants defaulted on the loan
by failing to make payments. The plaintiff acquired
Washington Mutual and all of its assets, including the
defendants’ loan, in September, 2008, and commenced
this foreclosure action against the defendants in
March, 2009.
The defendants filed revised special defenses on July
22, 2011, raising the defenses of, inter alia, fraud in the
inducement and unclean hands. Essentially, the defen-
dants alleged that Washington Mutual had induced them
into executing the modification agreement, which
increased their monthly payments and caused their
default, by making false representations that the modifi-
cation was in their best interest because interest rates
were rising. Furthermore, the defendants asserted that
Washington Mutual never provided them with a copy
of the modification agreement, insisted that they sign
the modification agrement at their home without an
attorney present, and concealed its true motivation for
recommending that they modify their loan, which was
to benefit itself financially by reducing the number of
negative amortization loans on its books. The defen-
dants argued that these facts amounted to fraudulent
inducement and unclean hands, which precluded
enforcement of the note and mortgage.
Following a bench trial, the court issued a memoran-
dum of decision on November 17, 2015, finding in favor
of the plaintiff on the issue of liability. After concluding
that the plaintiff was the holder of the note and mort-
gage, and that the defendants had defaulted by failing
to make payments, the court found that the defendants
failed to meet their burden of proof as to either fraud in
the inducement or unclean hands. As further explained
subsequently in this opinion, the court found that any
representations by Washington Mutual that interest
rates were increasing were not false because rates did
in fact increase during the months leading up to the
June 24, 2008 modification. The court also found that
the defendants failed to demonstrate that Washington
Mutual secretly was motivated by a desire to eliminate
its negative amortization mortgages, and that the fact
that the defendants executed the modification
agreement at their home without an attorney present
did not evince fraud or unclean hands. Accordingly, the
court rendered a judgment of strict foreclosure for the
plaintiff, found that the amount of the debt was
$3,210,145.12, and set the law days for February 23,
2016. The defendants appealed to this court on Decem-
ber 16, 2015.
While the appeal was pending, the plaintiff filed a
motion for, inter alia, equitable relief, in which it urged
the trial court to invoke its equitable powers to order
the defendants to pay for the property taxes and home-
owner’s insurance premiums that the plaintiff had been
forced to incur during the pendency of the appeal.4
After hearing argument and ordering supplemental
briefing, the court issued a memorandum of decision
dated February 23, 2016, granting the plaintiff’s motion
for equitable relief and ordering the defendants to pay
for the property taxes and insurance premiums paid by
the plaintiff during the pendency of the appeal or any
time thereafter until the conclusion of litigation.
The defendants amended their appeal to include a
challenge to the court’s February 23, 2016 order. Addi-
tional facts and procedural history will be set forth
where necessary.
I
The defendants first claim that the court erred in
rejecting their special defenses of fraud in the induce-
ment and unclean hands. We disagree.
The following additional facts and procedural history
are relevant to this claim. As previously set forth, the
defendants relied upon the same alleged conduct on the
part of Washington Mutual to establish both fraudulent
inducement and unclean hands. In particular, the defen-
dants asserted that Washington Mutual (1) lied to them
that interest rates were increasing, and, therefore, that
the modification would be in their best interest, when in
fact interest rates were decreasing; (2) failed to disclose
that the real reason it wanted them to modify their
loan was to reduce its financial exposure to negative
amortization mortgages; and (3) pressured them to sign
the modification agreement at their home without an
attorney present.
In its November 27, 2015 memorandum of decision,
the court found that the defendants failed to prove any
of these underlying factual allegations and rejected both
special defenses. First, the court found that Washington
Mutual’s representations about rising interest rates
were not false. At trial, Roger Essaghof testified that a
representative from Washington Mutual began con-
tacting him around April or May, 2008, and regularly
represented that the rising interest rates would cause
his monthly payments to increase dramatically if he did
not modify the loan to a fixed interest rate. Randall
Huinker, an expert in banking practices and mortgage
lending, testified for the defendants that, on the basis
of his review of the monthly yield index,5 interest rates
were in the midst of an overall period of decline around
the time that Washington Mutual represented they were
increasing. After conducting its own examination of the
monthly yield index, however, the court reached the
opposite conclusion. Rejecting Huinker’s testimony, the
court found that, consistent with Washington Mutual’s
representations, interest rates were indeed increasing
in the four months leading up to the defendants’ execu-
tion of the modification agreement on June 24, 2008.
Specifically, the court noted that rates rose from 1.54
percent in March, 2008, to 2.42 percent in June, 2008,
an increase of over fifty percent. Thus, the court found
that Washington Mutual’s representations that the inter-
est rates were increasing ‘‘were spot on correct.’’
Second, the court found unpersuasive the defendants’
allegation that Washington Mutual’s ulterior motive for
encouraging the modification was to benefit itself finan-
cially by converting its negative amortization mortgages
to fixed rate mortgages. To prove this ulterior motive,
the defendants relied exclusively on a document enti-
tled ‘‘Form 10-Q,’’ which the entity ‘‘Washington Mutual,
Inc.,’’ had filed with the United States Securities and
Exchange Commission. The defendants cited to the sec-
tion of Form 10-Q that refers to ‘‘fast-track loan modifi-
cation,’’ which evidently was a method developed by
the American Securitization Forum for converting
adjustable rate loans into other mortgage products in
order to reduce lenders’ exposure to widespread
defaults. Form 10-Q further states that Washington
Mutual, Inc., ‘‘elected to apply the fast-track loan modifi-
cation provisions [developed by the American Securiti-
zation Forum] beginning in March 2008 . . . .’’
The court found that Form 10-Q did not prove any
alleged ‘‘system wide’’ scheme by Washington Mutual
to convert its negative amortization loans to fixed rate
loans. The court noted that, for one thing, Form 10-Q
was filed by Washington Mutual, Inc., not Washington
Mutual, the plaintiff’s predecessor-in-interest, and there
was no indication that Washington Mutual was a subsid-
iary of or otherwise connected with Washington Mutual,
Inc. Furthermore, the court noted that Form 10-Q did
not indicate whether the ‘‘fast-track’’ program applied
specifically to negative amortization mortgages, and
that the program appeared to have been developed by
the American Securitization Forum, an entity that was
not related to or controlled by Washington Mutual.
Accordingly, the court found that the ‘‘fast-track’’ pro-
gram ‘‘cannot be any evidence of fraud or unclean hands
by Washington Mutual . . . .’’
Finally, the court rejected the defendants’ allegation
that Washington Mutual pressured them to execute the
modification agreement at their home without an attor-
ney present, finding instead that Roger Essaghof ‘‘was
an experienced investor in real property having pur-
chased property with multiple residential commercial
mortgages. He was well aware of the routine matters
involving the execution of mortgage documents and the
reading of mortgage documents. The court does not
find [Roger] Essaghof’s testimony credible that it was
an act of . . . fraud . . . or unclean hands that the
mortgage documents were executed [in] the comfort
of his own home in the presence of his wife [Katherine
Marr-Essaghof] and a Washington Mutual . . . repre-
sentative without the presence of an attorney.’’ On the
basis of these findings, the court concluded that the
defendants failed to meet their burden of proof with
respect their defenses of fraud in the inducement and
unclean hands.
With this factual basis in mind, we proceed to resolve
the defendants’ claims that the court improperly
rejected their defenses of fraudulent inducement and
unclean hands.
A
The defendants first claim that the court erred in
rejecting their defense of fraudulent inducement. ‘‘It is
well settled that a trial court in foreclosure proceedings
has discretion, on equitable considerations and princi-
ples, to withhold foreclosure or to reduce the amount
of the stated indebtedness.’’ (Internal quotation marks
omitted.) Bank of America, N.A. v. Aubut, 167 Conn.
App. 347, 378, 143 A.3d 638 (2016). Fraud, a well recog-
nized special defense in foreclosure actions, ‘‘involves
deception practiced 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.’’ (Internal quotation
marks omitted.) Id., 378–79; see also Peterson v. McAn-
drew, 160 Conn. App. 180, 204, 125 A.3d 241 (2015). A
trial court’s decision as to the essential elements of
fraud is subject to the clearly erroneous standard of
review. Cohen v. Roll-A-Cover, LLC, 131 Conn. App.
433, 450, cert. denied, 303 Conn. 915, 33 A.3d 739 (2011).
The defendants’ claim that the court erred in rejecting
their defense of fraudulent inducement focuses almost
entirely on the court’s subsidiary factual findings.6 Spe-
cifically, they assert that the court erroneously found
(1) that Washington Mutual’s representations that inter-
est rates were increasing were not false, and (2) that
they failed to prove that Washington Mutual’s efforts
to secure the modification were motivated by a policy
to reduce the number of negative amortization mort-
gages on its balance sheet. ‘‘The trial court’s findings
are binding upon this court unless they are clearly erro-
neous in light of the evidence and the pleadings in the
record as a whole. . . . We cannot retry the facts or
pass on the credibility of the witnesses. . . . A finding
of fact is clearly erroneous when there is no evidence
in the record to support it . . . or when although there
is evidence to support it, the reviewing court on the
entire evidence is left with the definite and firm convic-
tion that a mistake has been committed . . . .’’ (Inter-
nal quotation marks omitted.) Jo-Ann Stores, Inc. v.
Property Operating Co., LLC, 91 Conn. App. 179, 191,
880 A.2d 945 (2005).
The record provides ample support for the court’s
findings. With regard to interest rates, Roger Essaghof
testified at trial that, around April or May, 2008, Wash-
ington Mutual’s representatives told him on multiple
occasions that interest rates were increasing. The court,
on the basis of its review of the interest rates listed in the
monthly yield index, found that these representations
were not false because rates had indeed risen during
that period. Our review of the monthly yield index con-
firms that finding. Although interest rates were in an
overall period of decline from January, 2006 through
September, 2011, there was a four month window of
time from March through June, 2008, during which inter-
est rates rose dramatically each month.7 According to
Roger Essaghof’s testimony, it was during this window
when Washington Mutual told him that interest rates
were increasing. Because rates in fact were increasing
during this, albeit brief, period of time, the court’s find-
ing that Washington Mutual did not make any misrepre-
sentations regarding the state of the defendants’ interest
rates was not clearly erroneous.
The defendants contend that Washington Mutual’s
representations that rates were increasing nonetheless
were false because interest rates were in an overall
period of steady decline from 2007 through 2011, and
the four month period in 2008 during which rates
increased was merely an aberration in that overall
trend. In reviewing factual findings under the clearly
erroneous standard of review, however, ‘‘[w]e do not
examine the record to determine whether the [court]
could have reached a conclusion other than the one
reached,’’ but, instead, make ‘‘every reasonable pre-
sumption . . . in favor of the trial court’s ruling.’’
(Internal quotation marks omitted.) In re Jeisean M.,
270 Conn. 382, 397, 852 A.2d 643 (2004). As previously
explained, Washington Mutual told the defendants in
April or May, 2008, that interest rates were increasing,
and the monthly yield index reflects that those represen-
tations were accurate at the time they were made.
Accordingly, the record provides adequate support for
the court’s finding, and we are not left with a definite
and firm conviction that a mistake has been made.8
There also is adequate evidence in the record to sup-
port the court’s finding that the defendants failed to
prove that Washington Mutual’s true motivation for
obtaining the modification was to benefit itself finan-
cially by converting its negative amortization loans to
fixed rate loans. To prove this allegation, the defendants
relied exclusively on Form 10-Q and the references
therein to a ‘‘fast-track loan modification’’ program for
converting adjustable rate loans into other mortgage
products for the purpose of reducing lenders’ financial
exposure to risky loans.
As the court found, however, Form 10-Q does not
demonstrate Washington Mutual’s participation in the
‘‘fast-track’’ program, much less that the program was
applied to the defendants in this case. ‘‘It is axiomatic
that [the] [t]he trier [of fact] is free to accept or reject,
in whole or in part, the evidence offered by either party.’’
(Internal quotation marks omitted.) Olson v. Olson, 71
Conn. App. 826, 833, 804 A.2d 851 (2002). Form 10-Q
was filed by Washington Mutual, Inc., a distinct entity
from Washington Mutual, and there is no evidence that
the policies implemented by Washington Mutual, Inc.,
were binding upon or otherwise adopted by Washington
Mutual. Indeed, Form 10-Q states that the ‘‘fast-track’’
program was developed by the American Securitization
Forum, another entity whose connection to Washington
Mutual was not established at trial. Nor does Form 10-
Q indicate whether the ‘‘fast-track’’ program applies
specifically to negative amortization mortgages, as the
defendants claimed it did. Rather, Form 10-Q states that
the program was designed to apply to ‘‘Segment 2’’
borrowers—those who are unable to refinance or afford
their ‘‘reset rates’’ and for whom ‘‘default is considered
to be reasonably foreseeable.’’ There was no evidence
that the defendants had been classified as ‘‘Segment 2’’
borrowers prior to being approached by Washington
Mutual about modifying their loan. Therefore, the court
was wholly justified in rejecting the defendants’ allega-
tion that Washington Mutual concealed from them an
ulterior, financial motive for obtaining the modification.
Finally, the defendants argue in their brief to this
court that Washington Mutual pressured them to exe-
cute the modification agreement as quickly as possible
by having them sign it at their home without an attorney
present. The court, however, did not credit Roger
Essaghof’s testimony that the absence of an attorney
or the setting in which the modification agreement was
executed contributed to any alleged fraud by Washing-
ton Mutual. Because ‘‘the trial court is the arbiter of
credibility, this court does not disturb findings made
on the basis of the credibility of witnesses.’’ Ruiz v.
Gatling, 73 Conn. App. 574, 576, 808 A.2d 710 (2002).
As the court noted, Roger Essaghof was an experienced
real estate investor, had taken out several residential
and commercial mortgages prior to the transaction in
question, and was ‘‘well aware of the routine matters
involving the execution of mortgage documents and
the reading of mortgage documents.’’ Accordingly, the
court’s finding that the defendants were not fraudu-
lently induced into executing the modification
agreement was not clearly erroneous.9
B
The court also did not err in rejecting the defendants’
defense of unclean hands. ‘‘Our jurisprudence has rec-
ognized that those seeking equitable redress in our
courts must come with clean hands. The doctrine of
unclean hands expresses the principle that where a
plaintiff seeks equitable relief, he must show that his
conduct has been fair, equitable and honest as to the
particular controversy in issue. . . . For a complainant
to show that he is entitled to the benefit of equity he
must establish that he comes into court with clean
hands. . . . The clean hands doctrine is applied not
for the protection of the parties but for the protection
of the court. . . . It is applied . . . for the advance-
ment of right and justice. . . . The party seeking to
invoke the clean hands doctrine to bar equitable relief
must show that his opponent engaged in wilful miscon-
duct with regard to the matter in litigation. . . . The
trial court enjoys broad discretion in determining
whether the promotion of public policy and the preser-
vation of the courts’ integrity dictate that the clean
hands doctrine be invoked.’’ (Internal quotation marks
omitted.) Bank of America, N.A. v. Aubut, supra, 167
Conn. App. 380.
As the defendants acknowledge in their appellate
brief, they rely on the same alleged misconduct by
Washington Mutual to establish their defense of unclean
hands as they did to demonstrate fraudulent induce-
ment. Because we already have concluded that the
court did not clearly err in finding that the defendants
failed to prove that Washington Mutual engaged in any
of the misconduct asserted by the defendants for pur-
poses of their fraudulent inducement special defense;
see part I A of this opinion; it follows that their unclean
hands defense also must fail. This is so despite the fact
that the unclean hands doctrine is subject to different
legal standards than fraudulent inducement. Put simply,
the court’s determination that the defendants failed to
establish a factual predicate for a defense under the
unclean hands doctrine was not clearly erroneous.
Accordingly, the court did not abuse its discretion in
failing to apply the doctrine of unclean hands in the
present case. See Monetary Funding Group, Inc. v.
Pluchino, 87 Conn. App. 401, 406, 867 A.2d 841 (2005).
II
The defendants next claim that the court abused its
discretion in ordering them to reimburse the plaintiff
for real estate taxes paid by the plaintiff during the
pendency of this appeal because ‘‘such an order effec-
tively exposes the [defendants] to a threat of imprison-
ment for a component of the debt owed to the plaintiff
and would be equivalent to the re-creation of debtors’
prison.’’ They further assert that the court issued the
order ‘‘without authority or precedent’’ to do so and
that a provision of the original note ‘‘converts these
payments to debt and [is] the only remedy in a defi-
ciency proceeding.’’ We are not persuaded.
In its February 23, 2016 memorandum of decision,
the court granted the plaintiff’s motion for equitable
relief and ordered the defendants to reimburse the
plaintiff for the property taxes and homeowner’s insur-
ance premiums incurred by the plaintiff during the pen-
dency of the appeal and in the future until the
conclusion of litigation. The court reasoned that the
defendants had been liable to pay property taxes and
homeowner’s insurance on their property since they
mortgaged their property on May 11, 2006, and would
continue to be liable for those costs even were they to
prevail in their appeal before this court. The court noted
that, despite the onus being on the defendants, the
plaintiff had been covering the taxes and insurance
expenses since 2010 in order to maintain its priority
over other encumbrancers. The court noted that the
expenses paid by the plaintiff from March 31, 2010
through January 14, 2016, amounted to $331,232.48. The
court further found that the order was warranted not-
withstanding the appellate stay because ‘‘the obligation
of [the defendants] to pay the future real estate taxes
. . . is not subject to the automatic stay and will not
be affected by the trial court and appellate litigation.’’
‘‘In an equitable proceeding, the trial court may exam-
ine all relevant factors to ensure that complete justice
is done. . . . The determination of what equity requires
in a particular case, the balancing of the equities, is a
matter for the discretion of the trial court.’’ (Internal
quotation marks omitted.) People’s United Bank v.
Sargo, 160 Conn. App. 748, 754, 125 A.3d 1065 (2015).
‘‘Although we ordinarily are reluctant to interfere with
a trial court’s equitable discretion . . . we will reverse
[a judgment] where we find that a trial court acting as
a court of equity could not reasonably have concluded
as it did . . . or to prevent abuse or injustice.’’ (Internal
quotation marks omitted.) 19 Perry Street, LLC v.
Unionville Water Co., 294 Conn. 611, 629–30, 987 A.2d
1009 (2010); see also Petterson v. Weinstock, 106 Conn.
436, 446, 138 A. 433 (1927) (‘‘[o]ur practice in this [s]tate
has been to give a liberal interpretation to equitable
rules in working out, as far as possible, a just result’’).
‘‘[Because] a mortgage foreclosure is an equitable pro-
ceeding, either a forfeiture or a windfall should be
avoided if possible.’’ Farmers & Mechanics Savings
Bank v. Sullivan, 216 Conn. 341, 354, 579 A.2d 1054
(1990). ‘‘[T]he trial court must exercise its . . . equita-
ble powers with fairness not only to the foreclosing
mortgagee, but also to subsequent encumbrancers and
the owner.’’ (Internal quotation marks omitted.) Id.
We cannot conceive of any abuse of discretion on
the part of the trial court. The court understandably
was concerned that, absent an order requiring the
defendants to pay for their own property taxes and
homeowner’s insurance, they would experience a wind-
fall because they would be allowed to live on their
property for free at the plaintiff’s expense until the
conclusion of the foreclosure proceedings.10 Such a
result plainly is within the realm of issues that the
court’s equitable powers were designed to address.
Moreover, in their brief on appeal, the defendants do
not challenge the court’s reasoning that they would
continue to be responsible for paying taxes and insur-
ance on their property regardless of whether they pre-
vailed in their appeal. The court did not abuse its
discretion in determining that a balancing of the equities
justified ordering the defendants to pay for expenses
that they would have been required to pay no matter
the outcome of this case.11
The judgment is affirmed and the case is remanded
for the purpose of setting a new law day.
In this opinion the other judges concurred.
1
The plaintiff, JPMorgan Chase Bank, National Association, acquired
Washington Mutual Bank, F.A., the originator of the note and mortgage from
which this foreclosure action arises. Washington Mutual Bank, F.A., also
held a junior lien with respect to the mortgage that was foreclosed in this
action and, therefore, JPMorgan Chase Bank, N.A., also is named as a
defendant in this action but is not a party to this appeal. Accordingly, we
refer to Roger Essaghof and Katherine Marr-Essaghof as the defendants
throughout this opinion.
2
The court originally set forth its factual findings and legal conclusions
in a memorandum of decision dated October 15, 2015. After granting the
defendants’ motion for reargument and reconsideration, the court issued a
corrected memorandum of decision on November 27, 2015.
3
The original note provided that if the defendants’ monthly payment was
insufficient to cover the interest that accrued during that month, then the
unpaid interest would be added to the principal balance and interest would
accrue thereon. If their monthly payment exceeded the interest, the excess
would be applied towards the principal balance.
4
In the same motion in which it sought equitable relief, the plaintiff also
moved for a termination of the appellate stay pursuant to Practice Book
§ 61-11 (d). The court treated the motion to terminate the appellate stay as
a separate motion, and denied it on February 23, 2016.
5
The court found that, although the document admitted into evidence at
trial and relied upon in determining the applicable interest rates was not
the official index published by the Federal Reserve Board, it accurately
reflected the interest rates contained therein.
6
In addition to contesting the court’s factual findings, the defendants
argue that the court’s ‘‘conclusion that [their] special defense of fraudulent
inducement did not sufficiently allege the elements of fraud was legally and
logically incorrect . . . .’’ This argument is in reference to a portion of
the court’s memorandum of decision in which it isolated certain factual
allegations that the defendants set forth in support of each of their special
defenses, including fraud in the inducement and unclean hands, and stated
that those allegations ‘‘are insufficient [even if proven] to sustain the defen-
dants’ burden of proof as to any of their . . . special defenses.’’ The import
of this statement is unclear. As the defendants correctly point out, they
supported their defenses of fraudulent inducement and unclean hands with
additional allegations beyond those that the court stated were legally insuffi-
cient. In any case, however, our review of the court’s memorandum of
decision convinces us that the court’s rejection of the defendants’ special
defenses was not based upon an erroneous belief that they failed to suffi-
ciently plead their defenses. Rather, the court carefully considered each of
the facts alleged by the defendants and determined either that those facts
had not been proven at trial or that they did not amount to fraudulent
inducement or unclean hands. In other words, the court’s decision was based
upon the evidence at trial, not the sufficiency of the defendants’ pleadings.
7
Interest rates climbed from 1.54 percent in March, 2008, to 1.74 percent
in April, to 2.06 percent in May, to 2.42 percent in June, an overall increase,
as the court found, of over fifty percent. Of course, Washington Mutual’s
representatives could not then have known that interest rates would decline
after June, 2008, and the defendants have not identified anything in the record
to suggest that Washington Mutual’s representatives believed, contrary to
their statements to the defendants, that interest rates would decline after
June, 2008.
8
That Huinker, the defendants’ expert witness, considered the long-term
trends in testifying that interest rates were ‘‘decreasing’’ does not compel
a different result. The court did not credit his testimony and, given the
evidence, was well within its prerogative to do so. See Sellers v. Sellers
Garage, Inc., 155 Conn. App. 635, 642, 110 A.3d 521 (2015) (‘‘[I]t is the
exclusive function of the finder of fact to reject or accept evidence and to
believe or to disbelieve any expert testimony. The trier may accept or reject,
in whole or in part, the testimony of an expert witness.’’ [Internal quotation
marks omitted.]).
9
The defendants do not explicitly challenge the court’s finding that they
failed to prove their special defense of duress, and it is unclear to us whether
the assertion in their appellate brief that Washington Mutual ‘‘pressed’’ them
into executing the modification agreement is an attempt to raise such a
challenge. In any case, even if we construed the defendants’ brief as challeng-
ing the trial court’s determination regarding the claim of duress, that claim
fails for the same reasons that their challenges to the court’s rulings on
unclean hands and fraudulent inducement fail.
10
As the court stated during the February 8, 2016 hearing on the motion,
‘‘it’s not fair that the [defendants] can live in this house and not pay the
real estate taxes that they’re obligated to [pay even if] they win this appeal.
It’s not fair that they live in this house and not pay the insurance on the
house that they’re living in. When they win the appeal, they have to pay it.
It’s not fair.’’
11
The defendants raise an additional argument in connection with this
claim, which consists entirely of the following sentence: ‘‘Paragraph 9 of
the mortgage converts these payments to debt and [is] the only remedy in
a deficiency proceeding.’’ The defendants provide no further analysis, cita-
tion to the record or legal authority to support the proposition that this
paragraph of the mortgage agreement renders the court’s exercise of its
equitable power an abuse of discretion. ‘‘It is well settled that [w]e are not
required to review claims that are inadequately briefed. . . . We consis-
tently have held that [a]nalysis, rather than mere abstract assertion, is
required in order to avoid abandoning an issue by failure to brief the issue
properly.’’ (Internal quotation marks omitted.) Benedetto v. Dietze & Associ-
ates LLC, 159 Conn. App. 874, 880–81, 125 A.3d 536, cert. denied, 320 Conn.
901, 127 A.3d 185 (2015). Accordingly, we decline to review this argument.