Chevy Chase Bank, F.S.B. v. Avidon

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CHEVY CHASE BANK, F.S.B. v. VLADIMIR AVIDON
(AC 36873)
Sheldon, Prescott and Flynn, Js.
Argued October 8—officially released December 22, 2015
(Appeal from Superior Court, judicial district of
Fairfield, Hartmere, J. [motion to open; motion to
dismiss]; Tyma, J. [judgment of foreclosure by sale].)
David Eric Ross, for the appellant (named
defendant).
Joseph J. Cherico, for the appellee (substitute
plaintiff).
Opinion
FLYNN, J. The defendant Vladimir Avidon1 appeals
from the trial court’s judgment of foreclosure by sale
entered on May 5, 2014, in favor of the substituted
plaintiff, Capital One, N.A. (Capital One).2 The defen-
dant claims that the trial court improperly (1) denied
the defendant’s motion to dismiss for lack of standing,
(2) denied the defendant’s motion to open the default
for failure to plead, and (3) struck the defendant’s
answer with special defenses. We disagree and affirm
the judgment of the trial court.
We conclude that the court properly found that on
July 13, 2009, there was both standing and jurisdiction
to commence this foreclosure matter brought in the
name of Chevy Chase Bank, F.S.B. (Chevy Chase),
because its acquisition by Capital One, according to the
certificate of merger in evidence, was not effective until
July 30, 2009, approximately two weeks after the action
had been commenced. We further conclude that the
court did not abuse its discretion by denying the defen-
dant’s motion to open the default and striking the defen-
dant’s answer with special defenses.
The following facts are relevant to the defendant’s
appeal. On July 13, 2009, Chevy Chase commenced this
action to foreclose its mortgage on real property located
at 10 and 20 Abbey Road in Easton and Monroe. The
defendant had executed an adjustable rate note, dated
October 24, 2005, in favor of Chevy Chase in the original
principal amount of $1,311,260, which was secured by
an open-end mortgage deed on the premises.3 The
return date in this action was August 4, 2009. The defen-
dant subsequently filed an appearance on his own
behalf, then on September 21, 2009, a foreclosure medi-
ation request; however, he failed to plead in response
to the complaint at that time. For that reason, on Octo-
ber 15, 2009, Chevy Chase filed a motion for default for
failure to plead, which was granted by the clerk on
November 17, 2009. Chevy Chase also filed a motion
for judgment of strict foreclosure on October 15, 2009.
On January 22, 2010, two months after the default
was entered, Chevy Chase, without objection, filed a
motion to cite in as a party defendant Webster Bank,
N.A. (Webster) because Webster had an interest in the
matter by virtue of being a subsequent encumbrancer
on the premises. Also on January 22, 2010, Chevy Chase
requested leave to amend its complaint to add a new
paragraph containing allegations detailing Webster
Bank’s interest in the premises. The court granted the
motion to cite in on February 27, 2010. On April 21,
2010, Chevy Chase again requested leave to amend its
complaint in order to change the legal description of
the premises because of a release of a portion of the
premises from the mortgage. There was no objection
to the second request for leave to amend, and, subse-
quently, Chevy Chase filed an updated motion for judg-
ment of strict foreclosure on May 26, 2010.
The defendant had been self-represented up until
June 14, 2010, when counsel filed an appearance on his
behalf. That same day, the defendant’s counsel also filed
a motion for extension of time to plead,4 a foreclosure
mediation request, and a motion to modify the foreclo-
sure mediation period. On June 15, 2010, the defendant’s
counsel filed a motion to open the default for failure
to plead, which was denied almost five months later
by order dated November 3, 2010. Then, on November
22, 2010, the defendant filed a motion to dismiss,
arguing that Chevy Chase did not have standing because
it was merged into and acquired by Capital One on or
about February 27, 2009, prior to the commencement
of this action, and, therefore, was not the holder of the
mortgage and note at the time this action was com-
menced. The defendant’s motion was based upon infor-
mation and belief, supported by newspaper articles
published on December 4, 2008, stating that Capital
One intended to purchase Chevy Chase, as well as a
Wikipedia5 entry for Chevy Chase indicating that Capital
One completed its acquisition of Chevy Chase on Febru-
ary 27, 2009.
Chevy Chase objected to the motion to dismiss on
January 20, 2011, explaining that it was not merged into
Capital One until July 30, 2009. Judge Hartmere held
an evidentiary hearing regarding the motion to dismiss
on September 1, 2011, during which both the defendant
and Charity Benson, an officer and employee of Capital
One, testified. Benson was a vice president of mortgage
lending for Capital One. Among the exhibits admitted
at the hearing were a group of documents that included
a ‘‘Certificate of Merger’’ issued by the Comptroller of
the Currency evidencing the conversion of Chevy Chase
to a national bank and the merger of Chevy Chase into
Capital One, both effective July 30, 2009; and a letter
dated July 15, 2009, sent jointly by Chevy Chase and
Capital One to the defendant stating that the parent
company of Capital One acquired Chevy Chase earlier
in the year and that, effective July 30, 2009, Capital One
would become the servicer of the loan evidenced by
the note. The July 15, 2009 letter was entitled ‘‘Notice
of Transfer of Servicing Rights’’ and provided, inter
alia, that ‘‘Capital One Financial Corporation, the parent
company of [Capital One] acquired [Chevy Chase] ear-
lier this year. As a result, effective July 30, 2009, the
servicer of your mortgage is changing from [Chevy
Chase] . . . to [Capital One].’’
During the hearing, the defendant testified that, prior
to receiving the July 15, 2009 letter, when he engaged
in or received communications regarding the mortgage
loan, he was told that Capital One, not Chevy Chase, was
handling his loan. Following the evidentiary hearing on
September 1, 2011, the court denied the defendant’s
motion to dismiss. The court found that ‘‘the controlling
date of the merger . . . is that contained on the certifi-
cate of merger issued by the Comptroller of the Cur-
rency that is effective as of July 30, 2009,’’ which it
found ‘‘was the date that [Chevy Chase] was merged
into Capital One.’’ The court further found that Chevy
Chase ‘‘met its burden of proving that it was the holder
of the note at the time this action was commenced.’’
Chevy Chase then filed a motion to substitute Capital
One as the plaintiff in this action on November 4, 2011,
which was later granted on November 21, 2011.
Over one year later, on February 4, 2013, the defen-
dant filed a motion for extension of time, seeking to
postpone a hearing on the plaintiff’s motion for judg-
ment of strict foreclosure for sixty days in order to
obtain his own appraisal. That same day, the court
granted the motion and allowed the defendant until
March 30, 2013, to submit his own appraisal. On April
19, 2013, forty-five months after this action had been
commenced, by service of process occurring July 13,
2009, the defendant filed an answer with three special
defenses. The defendant’s answer to the complaint
admitted only that the defendant was the owner of the
premises and the equity of redemption. The defendant
either denied or claimed insufficient knowledge leaving
the plaintiff to its proof on all other allegations, includ-
ing the allegation that the defendant had executed the
subject mortgage in the principal amount of $1,311,260.
The first two special defenses asserted that the plaintiff
lacked standing and was not the owner or holder of
the note at the time the action was commenced. In his
third special defense, the defendant alleged that the
plaintiff ‘‘failed to comply with the conditions precedent
under the subject mortgage and/or note necessary to
accelerate any alleged debt, commence and/or maintain
this action.’’
Also on April 19, 2013, the defendant filed an objec-
tion to the pending motion for judgment of strict fore-
closure, maintaining that judgment could not be entered
given the recently filed answer. Consequently, by order
dated April 22, 2013, the court again marked off the
motion for judgment of strict foreclosure. On May 10,
2013, Capital One filed an objection to the defendant’s
attempt to set aside the prior default for failure to plead
and to file the answer with special defenses. Also on
May 10, 2013, the defendant filed a brief supporting the
filing of his answer with special defenses. By order
dated May 17, 2013, the court, Tyma, J., held that the
defendant’s answer with special defenses was untimely
filed and, therefore, the answer with special defenses
was stricken. The court (Tyma, J.) ultimately entered
a judgment of foreclosure by sale on May 5, 2014, with
the sale date scheduled for September 13, 2014. How-
ever, on May 23, 2014, the defendant filed this appeal.
I
We first address the defendant’s claim regarding lack
of standing, as this claim presents a question of the
trial court’s subject matter jurisdiction. See Castro v.
Viera, 207 Conn. 420, 429, 541 A.2d 1216 (1988) (‘‘once
the question of lack of jurisdiction of a court is raised,
[it] must be disposed of no matter in what form it is
presented . . . and the court must fully resolve it
before proceeding further with the case’’ [citations
omitted; internal quotation marks omitted]). The defen-
dant claims that Chevy Chase did not have standing to
bring the foreclosure action because it did not own or
hold the note at the time the action was commenced.
We disagree.
‘‘A determination regarding a trial court’s subject mat-
ter jurisdiction is a question of law. When . . . the trial
court draws conclusions of law, our review is plenary
and we must decide whether its conclusions are legally
and logically correct and find support in the facts that
appear in the record.’’ (Internal quotation marks omit-
ted.) Stepney Pond Estates, Ltd. v. Monroe, 260 Conn.
406, 417, 797 A.2d 494 (2002). ‘‘We conduct that plenary
review, however, in light of the trial court’s findings of
fact, which we will not overturn unless they are clearly
erroneous.’’ (Internal quotation marks omitted.) Sey-
mour v. Region One Board of Education, 274 Conn.
92, 104, 874 A.2d 742, cert. denied, 546 U.S. 1016, 125
S. Ct. 659, 163 L. Ed. 2d 526 (2005).
We begin by noting some of the governing principles
in reviewing whether Chevy Chase had legal standing
to bring this foreclosure action. ‘‘Standing is established
by showing that the party claiming it is authorized by
statute to bring an action, in other words statutorily
aggrieved, or is classically aggrieved. . . . The funda-
mental test for determining [classical] aggrievement
encompasses a well-settled twofold determination:
[F]irst, the party claiming aggrievement must success-
fully demonstrate a specific, personal and legal interest
in [the challenged action], as distinguished from a gen-
eral interest, such as is the concern of all members of
the community as a whole. Second, the party claiming
aggrievement must successfully establish that this spe-
cific personal and legal interest has been specially and
injuriously affected by the [challenged action]. . . .
Aggrievement is established if there is a possibility, as
distinguished from a certainty, that some legally pro-
tected interest . . . has been adversely affected.’’
(Internal quotation marks omitted.) Wesley v. Schaller
Subaru, Inc., 277 Conn. 526, 538, 893 A.2d 389 (2006).
‘‘A finding of fact is clearly erroneous when [either]
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 conviction that a mistake has been
committed.’’ (Internal quotation marks omitted.) Sey-
mour v. Region One Board of Education, supra, 274
Conn. 104. Therefore, ‘‘[u]nder the clearly erroneous
standard of review, a finding of fact must stand if, on
the basis of the evidence before the court and the rea-
sonable inferences to be drawn from that evidence, a
trier of fact reasonably could have found as it did.’’
(Internal quotation marks omitted.) McBurney v.
Paquin, 302 Conn. 359, 368, 28 A.3d 272 (2011). To
establish standing ‘‘[t]he burden rests with the party
who seeks the exercise of jurisdiction in his favor . . .
clearly to allege facts demonstrating that he is a proper
party to invoke judicial resolution of the dispute.’’
(Internal quotation marks omitted.) Goodyear v. Dis-
cala, 269 Conn. 507, 511, 849 A.2d 791 (2004). To prove
standing in a foreclosure action, the plaintiff is obligated
to prove that it is the holder of the note and thus pos-
sesses the legal right to enforce the note. See Equity
One, Inc. v. Shivers, 310 Conn. 119, 126–27, 74 A.3d
1225 (2013) (‘‘Standing to enforce [a] promissory note
is [established] by the provisions of the Uniform Com-
mercial Code . . . . 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.’’ [Citations omitted; internal quotation
marks omitted.]).
The defendant contends that this case is similar to
the situation in U.S. Bank v. Coley, a Superior Court
case, in which a ‘‘pooling and servicing’’ agreement
presented in an attempt to establish standing, was
deemed insufficient by the trial court. U.S. Bank v.
Coley, Superior Court, judicial district of Fairfield,
Docket No. CV-07-6001426, at *3 (June 10, 2011). How-
ever, in that case the plaintiff was not a party to the
agreement. Id. Here, both the original plaintiff, Chevy
Chase, and the successor plaintiff, Capital One, were
parties to the merger documented in the certificate in
evidence. Furthermore, and even more significant, the
acquisition of Chevy Chase, according to the certificate
of merger issued by the Comptroller of the Currency,
which the court credited, was not yet effective at the
time the foreclosure was commenced in Chevy Chase’s
name. The defendant also relies on the July 15, 2009
letter which indicated that Capital One had ‘‘acquired
Chevy Chase Bank earlier this year.’’ However, the trial
court was, as the trier of fact, permitted to weigh the
evidence, and was entitled to rely on the certificate of
merger as the more credible evidence.
The certificate of merger indicated that Chevy Chase
was merging with Capital One, but that the merger
was not effective until July 30, 2009, well after the
commencement of this action by Chevy Chase on July
13, 2009. Therefore, we conclude that the defendant
has failed in his burden to show that the court was
clearly erroneous in its factual finding that Chevy Chase
had proved that it was the holder of the note when the
foreclosure action was commenced on July 13, 2009,
and thus it was the proper party to commence the
foreclosure action. We further conclude that as the note
holder at the time of the commencement of this action,
Chevy Chase had the specific personal and legal interest
to constitute standing to bring this action, and that the
court properly denied the defendant’s motion to
dismiss.
II
Next, we address Judge Hartmere’s denial of the
defendant’s motion to open the default. The defendant
claims that the court improperly denied the defendant’s
motion to open the default for failure to plead. We
disagree.
The court’s order on the motion to open the default
simply stated that the motion was denied. The motion
to open is governed by Practice Book § 17-42, because
the default was entered prior to a final judgment.6 Sec-
tion 17-42 provides in relevant part that ‘‘[a] motion to
set aside a default where no judgment has been ren-
dered may be granted by the judicial authority for good
cause shown . . . .’’ The defendant argues that there
was good cause to set aside the default. Specifically,
the defendant contends that there was no prejudice to
the plaintiff, because the defendant’s counsel filed the
motion to open default less than two months after the
complaint was amended for the second time. In Higgins
v. Karp, 243 Conn. 495, 509, 706 A.2d 1 (1998), our
Supreme Court adopted prejudice against the adversary
as a widely accepted factor in determining whether to
set aside a default. However, we conclude that the court
did not abuse its discretion in denying the defendant’s
motion to open the default.
It is well established that ‘‘[the] determination of
whether to set aside [a] default is within the discretion
of the trial court . . . [and] such a determination will
not be disturbed unless that discretion has been abused
or where injustice will result. In the exercise of its
discretion, the trial court may consider not only the
presence of mistake, accident, inadvertence, misfor-
tune or other reasonable cause . . . factors such as
[t]he seriousness of the default, its duration, the reasons
for it and the degree of contumacy involved . . . but
also, the totality of the circumstances, including
whether the delay has caused prejudice to the nonde-
faulting party.’’ (Citations omitted; internal quotation
marks omitted.) Id., 508.
The defendant’s motion to open the default did not
allege any facts demonstrating that good cause existed
to set aside the default. Additionally, the motion to open
was filed almost one year after the return date and
nearly seven months after the motion for default for
failure to plead was granted by the clerk. Furthermore,
the defendant’s counsel did not provide any explanation
for the defendant’s initial failure to plead in response to
the complaint or give a reason as to why the defendant
waited almost seven months to file a motion to open
the default. The motion simply stated that the defendant
had just retained counsel and that counsel needed an
opportunity to consult with the defendant to ascertain
whether any defenses or other claims existed that
would have required filing an answer, special defenses,
and/or other respective pleadings.7 However, the defen-
dant’s counsel then waited five months before filing his
motion to dismiss, and almost an additional three years
before filing the answer with special defenses. There-
fore, we conclude that the court did not abuse its discre-
tion by denying the defendant’s motion to open the
default for failure to plead.
III
We next address the court’s striking of the defen-
dant’s answer with special defenses. The defendant
claims that the court improperly struck, and erred in
failing to allow him to file, his answer with special
defenses. We disagree.
The defendant argues that the plaintiff’s amendments
to the complaint made substantive changes to the opera-
tive complaint sufficient to allow the court to have
considered his answer with special defenses. It is true
that ‘‘[i]f the effect of an amendment of a complaint so
made is to substantially change the cause of action
originally stated, the defendant is entitled to file new
or amended pleadings and present further evidence.
Also, if the amendment interjects materially new issues,
the adversary is entitled to reasonable opportunity to
meet them by pleading and proof.’’ Mazulis v. Zeldner,
116 Conn. 314, 317, 164 A. 713 (1933). However, the
only changes made to the original complaint included
the addition of a new defendant based on its acquiring
a subsequent interest in the premises, the altering of
the legal description of the premises due to a partial
release of the mortgage, and the substitution of Capital
One for Chevy Chase as the plaintiff due to their merger.
All substantive allegations in the complaint remained
the same.
The defendant argues that he can demonstrate preju-
dice if the answer with special defenses is not allowed.
However, we note that the first two special defenses
filed in the defendant’s answer dealt with issues of
standing already addressed and decided after the Sep-
tember 1, 2011 evidentiary hearing by Judge Hartmere.
Additionally, the third special defense alleged a non-
compliance with unspecified conditions precedent
under the mortgage and note necessary to accelerate
any debt or to commence or maintain this action, but
never specified what they were. Not only was there no
specificity pleaded as to what conditions had not been
met that were necessary for accelerating payment of
the note and obtaining a judgment of foreclosure, but
it is also worth noting that the third special defense
was never characterized as a claim regarding a lack of
subject matter jurisdiction. This claim was not raised
in the defendant’s motion to dismiss, nor was the trial
court ever alerted to the assertion that the defendant
makes for the first time on appeal, that this claim is
jurisdictional in nature. Thus, the defendant’s substan-
tive rights were not affected by the amendments, and
he has not demonstrated prejudice. See Willamette
Management Associates, Inc. v. Palczynski, 134 Conn.
App. 58, 68, 38 A.3d 1212 (2012).
Furthermore, the defendant’s answer with special
defenses was not filed until April 19, 2013, almost four
years after this action was commenced by the original
plaintiff. Nonetheless, the defendant argues that
because the plaintiff amended its complaint, he was
authorized to file his answer with special defenses pur-
suant to Practice Book § 10-61, and, therefore, the court
abused its discretion in striking his answer with special
defenses. Practice Book § 10-61 provides in relevant
part that ‘‘[w]hen any pleading is amended the adverse
party may plead thereto . . . .’’ However, the defen-
dant’s argument fails because Practice Book § 10-61
continues to qualify the adverse party’s ability to plead
‘‘within the time provided by Section 10-8 . . . .’’8 Prac-
tice Book § 10-8 provides that in actions to foreclose a
mortgage on real estate, the pleadings shall advance
within fifteen days of each other. Therefore, even if the
defendant would have been entitled to plead in response
to the plaintiff’s amended complaints, pursuant to Prac-
tice Book § 10-8 he would only have been able to plead
within fifteen days of the filing of the plaintiff’s amend-
ments. Given the fact that the plaintiff amended its
complaint on January 22, 2010, and April 21, 2010, and
its motion to substitute Capital One as the plaintiff was
granted on November 21, 2011, the defendant’s answer
with special defenses filed on April 19, 2013, was filed
long after the fifteen days allowed by Practice Book
§§ 10-61 and 10-8, and therefore, was untimely. See
Richards v. Trudeau, 54 Conn. App. 859, 863, 738 A.2d
215 (1999) (holding that court did not abuse discretion
in refusing to give effect to defendants’ answer when
filed almost one year after default was entered
against them).
On the basis of our review of the record, we conclude
that the court did not abuse its discretion by striking
the defendant’s answer with special defenses as
untimely filed.
The judgment is affirmed and the case is remanded
with direction to set a new sale date.
In this opinion the other judges concurred.
1
Webster Bank, N.A., was cited in as a party defendant in this action, but
is not involved in this appeal. We therefore refer in this opinion to Avidon
as the defendant.
2
The original plaintiff, Chevy Chase Bank, F.S.B. (Chevy Chase), com-
menced this action by service occurring July 13, 2009. Thereafter, on Novem-
ber 4, 2011, Chevy Chase filed a motion to substitute Capital One as the
plaintiff in the action, which was granted on November 21, 2011.
3
The mortgage on the property was executed by the defendant and deliv-
ered to Mortgage Electronic Registration Systems, Inc., as nominee for
Chevy Chase. The mortgage was then assigned to Chevy Chase by virtue
of an assignment of mortgage dated October 7, 2009, and recorded on
November 23, 2009.
4
The record does not indicate that the defendant’s counsel ever claimed
his motion for extension of time to plead, and it was never granted by
the court.
5
Wikipedia is an encyclopedia website, which is accessible to the public
free of charge, and updated collaboratively by the site’s visitors.
6
‘‘Practice Book § 17–32, entitled Where Defendant is in Default for Failure
to Plead, provides, in relevant part: (b) If a party who has been defaulted
under this section files an answer before a judgment after default has been
rendered by the judicial authority, the clerk shall set aside the default. If a
claim for a hearing in damages or a motion for judgment has been filed
the default may be set aside only by the judicial authority.’’ (Emphasis in
original; internal quotation marks omitted.) Snowdon v. Grillo, 114 Conn.
App. 131, 137, 968 A.2d 984 (2009). Due to the fact that a motion for judgment
of strict foreclosure had already been filed by the plaintiff on May 26, 2010,
the latter provision of § 17-32 would be applicable in this case. Therefore,
only the judicial authority would have been able to set aside the default.
7
It is important to note that although we allow pro se litigants some
latitude, the right of self-representation, however, ‘‘provides no attendant
license not to comply with relevant rules of procedural and substantive
law.’’ Galland v. Bronson, 204 Conn. 330, 334–35, 527 A.2d 1192 (1987).
8
Practice Book § 10-61 also provides in relevant part that ‘‘if the adverse
party has already pleaded, [the adverse party may] alter the pleading, if
desired, within ten days after such amendment or such other time as the
rules of practice, or the judicial authority, may prescribe . . . .’’ However,
the defendant had not already pleaded, so this alternative provision does
not apply here.