Financial Freedom Acquisition, LLC v. Griffin

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FINANCIAL FREEDOM ACQUISITION, LLC v. ANN
T. GRIFFIN, EXECUTRIX (ESTATE OF
ANGELA C. GRIFFIN), ET AL.
(AC 38960)
Sheldon, Mullins and Flynn, Js.
Syllabus
The plaintiff bank, F Co., sought to foreclose a mortgage on certain real
property of the decedent. After the foreclosure action was commenced,
but before trial had begun, O Co., of which F Co. was a subsidiary, was
substituted as the plaintiff. Thereafter, another bank merged into O Co.,
and although O Co. was the surviving entity of the merger, as part of
the merger it changed its name to C Co., which was never substituted
as the party plaintiff. Subsequently, the trial court granted O Co.’s motion
for a judgment of strict foreclosure and rendered judgment thereon,
from which the defendant A, individually and as the executrix of the
estate of the decedent, appealed to this court. A claimed, inter alia, that
the trial court improperly rejected her special defense and counterclaim
sounding in breach of the implied covenant of good faith and fair dealing.
In her special defense and counterclaim, A had alleged that, in light of
a provision in the note executed by the decedent that permitted the
decedent’s estate to avoid its obligation to repay the loan upon the
decedent’s death if it cooperated with F Co. in selling the subject prop-
erty, F Co. breached the covenant of good faith and fair dealing when
it initiated the foreclosure action instead of communicating with the
executrix to facilitate such a sale. Held:
1. A could not prevail on her claim that the trial court improperly determined
that O Co. established a prima facie case of foreclosure, which was
based on her claim that because C Co., a nonparty entity, owned the
note as a result of the merger, O Co. failed to produce evidence sufficient
to establish that it was the holder and owner of the note; the trial court’s
conclusion that O Co. was the holder and owner of the note executed
by the decedent was legally and factually correct, as O Co. produced the
note, which was endorsed in blank, at trial, which created a rebuttable
presumption that O Co. was the note’s owner, and O Co.’s status as
holder and owner of the note and this foreclosure action were not
affected by the merger and the change of name that occurred during
the pendency of the foreclosure action, as O Co.’s corporate existence
and identity continued in the resulting bank, O Co.’s assets, including
the decedent’s note, vested in the resulting bank by operation of law and
without any deed or transfer, this action was not abated, discontinued,
or otherwise affected by the merger and change of name, O Co. could
have substituted the resulting bank in this action, but it was not required
to do so, and the change of name did not create a new corporate entity,
alter the resulting bank’s corporate identity, or end the resulting bank’s
corporate existence.
2. The trial court properly found that A failed to meet her burden of proof
with respect to her special defense and counterclaim sounding in breach
of the implied covenant of good faith and fair dealing; the relevant
provision in the note provided that the death of the decedent was a
maturity event that made the loan immediately due and payable, except
if the parties extended the repayment deadline by entering into a separate
written agreement within thirty days of the decedent’s death that
required the decedent’s estate to cooperate fully with F Co. in selling
the property, and the trial court properly concluded that, in the absence
of such a separate written agreement extending the deadline to allow
the executrix to sell the decedent’s home, the relevant provision of the
note did not provide for a contractual right to an extension of the
deadline to sell the property, and F Co., therefore, had no obligation to
undertake any action facilitating the sale of the property by the executrix,
and did not breach the terms of the note by never agreeing to such
an extension.
Argued April 11—officially released September 12, 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 Litchfield, where the defendant John T. Griffin
et al. were defaulted for failure to appear; thereafter,
the named defendant et al. filed a counterclaim; subse-
quently, the court, Pickard, J., granted the plaintiff’s
motion to substitute OneWest Bank, N.A., as the plain-
tiff; thereafter, the matter was tried to the court, Shah,
J.; judgment for the substitute plaintiff on the complaint
and the counterclaim; subsequently, the court, Pickard,
J., granted the substitute plaintiff’s motion for a judg-
ment of strict foreclosure and rendered judgment
thereon, from which the named defendant et al.
appealed to this court; thereafter, the court, Shah, J.,
issued an articulation of its decision. Affirmed.
Ronald P. Sherlock, for the appellants (named defen-
dant et al.).
Michael T. Grant, for the appellee (substitute
plaintiff).
Opinion
MULLINS, J. In this action to foreclose a reverse
mortgage, the defendants, Ann T. Griffin, in her repre-
sentative capacity as executrix of the estate of Angela
C. Griffin, and Ann T. Griffin, in her individual capacity,
appeal from the judgment of strict foreclosure rendered
in favor of the substitute plaintiff, OneWest Bank, N.A.1
On appeal, the defendants claim that the court erred
in (1) concluding that the substitute plaintiff established
a prima facie case of foreclosure and (2) rejecting their
special defense and counterclaim sounding in breach
of the implied covenant of good faith and fair dealing.
We affirm the judgment of the trial court.
In its December 10, 2015 memorandum of a decision,
the trial court set forth the following facts. ‘‘[Angela C.]
Griffin [(decedent)] was the owner of the real property
located at 312 Milton Road, Litchfield, Connecticut
(property). On or about July 23, 2008, [the decedent]
executed a note and reverse annuity mortgage (mort-
gage) on the [p]roperty in favor of Financial Freedom
Senior Funding Corporation, [a predecessor in interest
to the substitute plaintiff]. . . . [The note and mort-
gage] established an open-ended line of credit not to
exceed $692,180 ([decedent’s] loan). At that time, Finan-
cial Freedom [Senior Funding Corporation] advanced
$378,791 to [the decedent] to pay off a loan from
Deutsche Bank, which sought to foreclose on the mort-
gage it held on the property. Financial Freedom [Senior
Funding Corporation] obtained an appraisal at the time
that valued the property at $612,709.
‘‘[The decedent] . . . entered into the loan so that
[she] could remain in the home that she had lived in
for thirty years. The property is a private property that
includes a colonial residence located on eleven acres
of land with a pond. It has a stable and many acres of
well-maintained pasture. The home was a central part
of [Ann Griffin’s] and [the decedent’s] lives.
‘‘Since the mortgage is a reverse annuity mortgage,
no principal became due until a maturity event
occurred. On April 16, 2010, [the decedent] passed
away, which constituted a maturity event and rendered
the balance of the loan due and payable unless there
was an agreement in writing between the [named] plain-
tiff and certain legal representatives of [the decedent]
within thirty days to cooperate fully in selling the prop-
erty. The [named] plaintiff and the [executrix] had no
agreement in writing to this effect, and the [executrix]
did not pay the balance due upon [the decedent’s] death.
Thus, the nonpayment constituted a default under the
mortgage. . . . The [named] plaintiff initiated the pre-
sent foreclosure action in May of 2011.
‘‘On April 30, 2010, prior to the notice of intent to
foreclose, [Ann Griffin] contacted the [named plaintiff]
to inform it that she intended to sell the property. The
[named plaintiff’s] electronic system notes indicate that
[Ann Griffin] spoke with . . . a maturities administra-
tor . . . . They discussed repayment of the [dece-
dent’s] loan, and [Ann Griffin] indicated she planned
to sell the property and use the proceeds of the sale to
repay the debt. Subsequent to the conversation, [the
maturities administrator] sent a cash account reverse
mortgage repayment notice to [Ann Griffin]. The repay-
ment notice informed [Ann Griffin] that the death of
[the decedent] constituted a maturity event, that upon
the occurrence of a maturity event the loan became
due, and that [Ann Griffin] needed to discuss plans with
[the named plaintiff] concerning repayment of the loan
by sending in the enclosed repayment questionnaire.
. . .
‘‘On May 6, 2010, the defendant[s’] counsel faxed a
correspondence, attaching the death certificate and will
of [the decedent], and informing [the maturities admin-
istrator] that he was representing the defendant[s]. [Ann
Griffin] was appointed executrix of [the decedent’s]
estate on May 17, 2010. [Ann Griffin] lacked legal author-
ity to enter into contractual agreements on behalf of the
estate until such time as she was appointed executrix.
‘‘On or about June 17, 2010, the [executrix] entered
into a listing agreement with [a realty company] for the
sale of the property, with a listing price of $614,900
(listing agreement). On June 23, 2010, the defendant[s’]
counsel sent a second correspondence to [the maturi-
ties administrator], which included the probate decree
admitting the [decedent’s] will to probate; a certified
copy of the death certificate; a copy of the [decedent’s]
will; a certified probate certificate reflecting the
appointment of [Ann Griffin] as executrix; and a signed
copy of the listing agreement. The [named] plaintiff
admitted to having received both written communica-
tions and attachments. The [named] plaintiff still had
not received the repayment questionnaire . . . . There
was no agreement in writing or any other communica-
tion that demonstrated a mutual understanding to
extend the repayment date.’’
In addition to those facts expressly found by the
trial court, the following supplemental facts, which also
reasonably could have been found by the court, are
relevant. Through a series of assignments and corporate
restructurings, ownership of the decedent’s loan
changed several times. As previously explained, on July
23, 2008, the decedent executed a note and mortgage
in favor of Financial Freedom Senior Funding Corpora-
tion, making it the original mortgagee and holder of the
note. At the time the decedent executed the note in
July, 2008, Financial Freedom Senior Funding Corpora-
tion was a subsidiary of IndyMac Bank, F.S.B. (Indy-
Mac). The Federal Deposit Insurance Corporation
(FDIC) had been appointed as receiver for IndyMac
prior to the decedent’s execution of the note and
mortgage.
In March, 2009, OneWest Bank, F.S.B, through its
parent company, IMB HoldCo, LLC, purchased from the
FDIC certain IndyMac assets, including the decedent’s
loan. As part of that transaction, Financial Freedom
Senior Funding Corporation executed an allonge to the
note, specially endorsing it to ‘‘OneWest Bank, F.S.B.’’
The named plaintiff in this action was formed during
this transaction as a subsidiary of OneWest Bank, F.S.B.
At some point after it was assigned the note, OneWest
Bank, F.S.B., executed an allonge to the note, endorsing
it in blank. OneWest Bank, F.S.B., then transferred the
note to the named plaintiff, which held it until transfer-
ring it back to OneWest Bank, F.S.B., around July, 2011.
Around February, 2014, OneWest Bank, F.S.B., con-
verted from a federal savings bank into a national bank-
ing association and, thus, became OneWest Bank, N.A.,
the substitute plaintiff.
On August 3, 2015, which was slightly more than four
years after this action was commenced, but before trial
had begun, IMB HoldCo, LLC, the holding company
of OneWest Bank, N.A., merged with CIT Group, the
holding company of a bank called CIT Bank. As part
of their holding companies’ merger, OneWest Bank,
N.A., and CIT Bank also merged. Specifically, ‘‘CIT Bank
. . . merged into OneWest Bank, N.A.’’ (Emphasis
added.) Although OneWest Bank, N.A., was the surviv-
ing entity of the merger with CIT Bank, OneWest Bank,
N.A., as part of the merger, changed its name to ‘‘CIT
Bank, N.A.’’ ‘‘CIT Bank, N.A.,’’ was never substituted for
OneWest Bank, N.A., as the party plaintiff in this action.
Having outlined the relevant substantive facts, we
now review the pertinent procedural history. The
named plaintiff commenced this action in May, 2011.
As previously explained, the named plaintiff was a sub-
sidiary of OneWest Bank, N.A., which was substituted
as the plaintiff in this action on September 22, 2014.
Prior to the substitution of OneWest Bank, N.A., for
the named plaintiff, the defendants pleaded several spe-
cial defenses. Relevant to this appeal is the defendants’
special defense that the named plaintiff breached the
implied covenant of good faith and fair dealing. The
defendants also filed a counterclaim against the named
plaintiff sounding in breach of the implied covenant of
good faith and fair dealing. Although the named plaintiff
was removed from this action as a plaintiff by virtue
of a substitution, it still is a party to the action as a
counterclaim defendant.
The case was tried to the court over the course of
two days. At trial, the substitute plaintiff introduced
the original note into evidence. Accompanying the note
was an allonge specially endorsing the note to OneWest
Bank, F.S.B., and an allonge wherein OneWest Bank,
F.S.B., endorsed the note in blank. The substitute plain-
tiff also offered the testimony of Dion Kala, a vice presi-
dent and foreclosure litigation manager employed by
CIT Bank, N.A. In addition to working for CIT Bank,
N.A., Kala also had been employed by OneWest Bank,
N.A., as well as its predecessors in interest, including
OneWest Bank, F.S.B., Financial Freedom Acquisition,
LLC, and Financial Freedom Senior Funding Corpora-
tion. Kala provided testimony concerning the several
assignments and corporate restructurings that eventu-
ally brought the note into the possession of CIT
Bank, N.A.
In its memorandum of decision, the court concluded
that the substitute plaintiff had established a prima facie
case of foreclosure and that the defendants had failed
to meet their burden of proof on their special defense
and counterclaim. The defendants filed a motion for
articulation, asking the trial court to identify which
plaintiff the court found owns the decedent’s loan. In
denying that motion, the court stated: ‘‘The defendant[s]
rais[e] a specious claim. The plaintiff is OneWest Bank,
now known as CIT Bank, N.A., because of a legal name
change.’’ The court rendered a judgment of strict fore-
closure and set a law day. This appeal followed.
I
PRIMA FACIE CASE OF FORECLOSURE
The defendants’ first claim on appeal is that the trial
court improperly concluded that the substitute plaintiff
established a prima facie case of foreclosure. In particu-
lar, the defendants argue that the substitute plaintiff
did not produce evidence sufficient to establish that it
was the holder and owner of the note. According to
the defendants, the substitute plaintiff’s own evidence
established that a ‘‘separate and different legal entity’’
is the owner and holder of the note. That is, as a result
of a corporate merger in which the substitute plaintiff
was involved after this action commenced, ownership
of the note vested in a distinct entity that was never
made a party to this action. Thus, the defendants argue,
a nonparty entity, ‘‘CIT Bank, N.A.,’’ owns the note, and
the substitute plaintiff does not. We disagree with the
defendants and conclude that their argument is flawed
both in fact and in law.
We begin by setting forth our standard of review. ‘‘A
plaintiff establishes its prima facie case in a mortgage
foreclosure action by demonstrating by a preponder-
ance of the evidence that it is the owner of the note,
that the defendant mortgagor has defaulted on the note,
and that conditions precedent to foreclosure have been
satisfied. . . .
‘‘In order to establish a prima facie case, the propo-
nent must submit evidence which, if credited, is suffi-
cient to establish the fact or facts which it is adduced
to prove. . . . [W]hether the plaintiff has established
a prima facie case [in a foreclosure action] is a question
of law, over which our review is plenary.’’ (Citation
omitted; emphasis omitted; footnote omitted; internal
quotation marks omitted.) Deutsche Bank National
Trust Co. v. Bliss, 159 Conn. App. 483, 495–96, 124 A.3d
890, cert. denied, 320 Conn. 903, 127 A.3d 186 (2015),
cert. denied, U.S. , 136 S. Ct. 2466, 195 L. Ed.
2d 801 (2016).
The only element of the substitute plaintiff’s prima
facie case that the defendants challenge on appeal is
ownership of the note. Thus, we limit our review of the
relevant law to the principles governing the possession
and ownership of promissory notes. ‘‘Being the holder
of a note satisfies the plaintiff’s burden of demonstra-
ting that it is the owner of the note because under our
law, the note holder is presumed to be the owner of
the debt, and unless the presumption is rebutted, may
foreclose the mortgage . . . . The possession by the
bearer of a note [e]ndorsed in blank imports prima facie
[evidence] that he acquired the note in good faith for
value and in the course of business, before maturity
and without notice of any circumstances impeaching
its validity. The production of the note [endorsed in
blank] establishes [the possessor’s] case prima facie
against the makers and he may rest there. . . . It [is]
for the defendant to set up and prove the facts which
limit or change the plaintiff’s rights.’’ (Internal quotation
marks omitted.) Id., 496.
We now provide a review of the law governing bank
mergers, which will guide our resolution of the defen-
dants’ claim that a bank merger affects the merging
banks’ corporate identities and, concomitantly, their
ownership rights in promissory notes. Since the merger
in the present case involved one banking entity merging
into, and continuing as, a national banking association,
we begin with a brief exposition of the National Bank
Act, 12 U.S.C. § 21 et seq. (2012).
‘‘[N]ational bank[ing] [associations] . . . [are] cor-
porate entities chartered not by any State, but by the
Comptroller of the Currency of the U.S. Treasury.’’
Wachovia Bank v. Schmidt, 546 U.S. 303, 306, 126 S.
Ct. 941, 163 L. Ed. 2d 797 (2006). Thus, ‘‘[t]he National
Bank Act . . . governs the operations of national bank-
ing associations.’’ Jackson v. First National Bank of
Valdosta, 349 F.2d 71, 72 (5th Cir. 1965).
Pursuant to the National Bank Act, a national banking
association is formed by ‘‘making and filing articles of
association and an organization certificate [with the
Comptroller of the Currency of the United States]
. . . .’’ 12 U.S.C. §§ 21 and 24 (2012). A duly formed
national banking association is ‘‘a body corporate,’’ and
the National Bank Act vests such an association with
several enumerated ‘‘corporate powers.’’ 12 U.S.C. § 24
(2012). These enumerated ‘‘corporate powers’’ include
the power ‘‘[t]o make contracts’’ and the power ‘‘[t]o
sue and be sued, complain and defend, in any court of
law and equity . . . .’’ 12 U.S.C. § 24 (2012).
The National Bank Act also governs mergers and
consolidations of banking entities in which the surviv-
ing entity is a national banking association. See 12
U.S.C. §§ 215, 215a, and 215a-1 (2012). Specifically, that
act permits, among other things, (1) the ‘‘merger’’ of
multiple national banking associations into a single
national banking association; 12 U.S.C. §§ 215a (a) and
215a-1 (a) (2012); and (2) the ‘‘consolidation’’ of a
national banking association and a state bank into a
national banking association. 12 U.S.C. §§ 215 (a) and
215a-1 (a) (2012). The type of entity that survives either
a ‘‘merger’’ between multiple national banking associa-
tions or a ‘‘consolidation’’ between a state bank and a
national banking association is the same—a national
banking association. 12 U.S.C. §§ 215 and 215a (2012).
Mergers and consolidations, although differentiated
by the National Bank Act in some respects, have identi-
cal legal ramifications for the participating entities’ (1)
corporate identities and (2) assets. With respect to the
participants’ corporate identity, ‘‘[t]he corporate exis-
tence of each of the consolidating [or merging] banks
or [national] banking associations participating in such
consolidation [or merger] shall be merged into and con-
tinued in the [resulting] national banking association
and such [resulting] national banking association shall
be deemed to be the same corporation as each bank or
[national] banking association participating in the
consolidation [or merger].’’ (Emphasis added.) 12
U.S.C. § 215 (e) (2012). That is, ‘‘[t]he resulting national
bank[ing] [association] . . . shall be deemed to be a
continuation of the entity of each participating insti-
tution, the rights and obligations of which shall suc-
ceed to such rights and obligations and the duties and
liabilities connected therewith.’’ (Emphasis added.) 12
C.F.R. § 5.33 (l) (1).
With respect to the participating entities’ assets, ‘‘[i]n
any consolidation or merger in which the resulting
[association] is a national bank[ing] [association] . . .
on the effective date of the merger or consolidation, all
assets and property (real, personal and mixed, tangi-
ble and intangible, choses in action, rights, and cred-
its) then owned by each participating institution or
which would inure to any of them, shall, immediately
by operation of law . . . become the property of the
resulting national bank[ing] [association] . . . .’’
(Emphasis added.) Id., § 5.33 (l) (1). Thus, in a merger
or a consolidation, ‘‘[a]ll rights . . . in and to every
type of property . . . and choses in action shall be
transferred to and vested in the [resulting] national
banking association by virtue of such consolidation
[or merger] without any deed or other transfer. The
[resulting] national banking association, upon the con-
solidation [or merger] and without any order or other
action on the part of any court or otherwise, shall hold
and enjoy all rights of property . . . in the same man-
ner and to the same extent as such rights . . . were
held or enjoyed by any one of the consolidating [or
merging] banks or [national] banking associations at
the time of consolidation [or merger] . . . .’’ (Empha-
sis added.) 12 U.S.C. § 215 (e) (2012).
In addition to prescribing the legal ramifications of a
bank merger resulting in a national banking association,
the National Bank Act outlines the process by which a
national banking association may change its name. See
12 U.S.C. §§ 30–32 (2012). Specifically, it provides that
‘‘[a]ny national banking association, upon written
notice to the Comptroller of the Currency, may change
its name, except that such new name shall include the
word ‘National.’ ’’ 12 U.S.C. § 30 (a) (2012). A change
of name does not affect the rights and liabilities of
a national banking association: ‘‘All debts, liabilities,
rights, provisions, and powers of the association under
its old name shall devolve upon and inure to the associa-
tion under its new name.’’ 12 U.S.C. § 31 (2012). Further-
more, a change of name does not ‘‘release any national
banking association under its old name . . . from any
liability’’ or ‘‘affect any action or proceeding . . . in
which said association may be or become a party or
interested.’’ 12 U.S.C. § 32 (2012).
In In re Worcester County National Bank, 263 Mass.
394, 161 N.E. 797 (1928), the Supreme Judicial Court
of Massachusetts was asked to interpret the provisions
of the National Bank Act governing consolidations and
changes of name. In that case, a national banking associ-
ation called Merchants National Bank of Worcester was
appointed as the administrator of a decedent’s estate
in 1924. Id., 397. Three years later, Merchants National
Bank of Worcester was consolidated with a state bank
into a surviving consolidated national banking associa-
tion. Id. As part of the consolidation process, the name
of the surviving consolidated national banking associa-
tion was changed to ‘‘Worcester County National Bank
of Worcester.’’ Id.
The question before the court was whether the
national banking association’s obligation to administer
the decedent’s estate pursuant to its appointment was
affected by either (1) the consolidation or (2) the change
of name. Id., 398–400. Answering that question in the
negative, the court first held that the ‘‘corporate identity
of the national bank[ing] [association] ha[d] continued
unaffected by anything in connection with the consoli-
dation.’’ Id., 399. Despite the consolidation, the national
banking association had ‘‘maintained an unbroken and
unchanged identity of corporate existence . . . .’’ Id.,
400. Second, with respect to the change of name, the
court held that ‘‘[t]he simple change of name of the
national bank[ing] [association] did not disturb its cor-
porate identity or continuity of existence, which ha[d]
remained uninterrupted.’’ Id., 399.
Having outlined the relevant provisions of federal
banking law, we now turn to Connecticut’s banking
law. Although Connecticut banking law applies only to
banks organized under Connecticut law; see General
Statutes §§ 36a-1 and 36a-2 (12); it provides guidance
for determining the impact of a merger of banking enti-
ties. As an initial matter, Connecticut banking law con-
firms the applicability of the National Bank Act to
national banking associations. See General Statutes
§ 36a-126 (b) (in merger of banks resulting in national
banking association, resulting national banking associa-
tion ‘‘shall be considered the same business and corpo-
rate entity as the constituent Connecticut bank . . .
[and] as to rights, powers and duties [it] shall be a
federal bank’’). With respect to a banking merger
resulting in a Connecticut bank, Connecticut law pro-
vides that (1) ‘‘the corporate existence of the constit-
uent banks shall be continued by and in the resulting
bank’’; (2) ‘‘the entire assets . . . of each of the constit-
uent banks shall be vested in the resulting bank without
any deed or transfer’’; (3) ‘‘[n]o suit, action or other
proceeding pending at the time of the merger . . .
before any court or tribunal in which any of such con-
stituent banks is a party shall be abated or discontinued
because of such merger . . . but may be continued and
prosecuted to final effect by or against the resulting
bank’’; and (4) ‘‘[t]he resulting bank shall have the right
to use the name of any of the constituent banks . . . .’’
General Statutes § 36a-125 (g).
With federal and state banking law in mind, we seek
additional guidance from the corporate law of this state
and other jurisdictions relating to mergers and changes
of name of nonbanking entities. In a merger of corpora-
tions governed by Connecticut law, ‘‘[a]ll property
owned by, and every contract right possessed by, each
corporation that merges into the survivor . . . vest[s]
in the survivor without reversion or impairment.’’ Gen-
eral Statutes § 33-820 (a) (4). Furthermore, the ‘‘name
of the survivor may, but need not be, substituted in any
pending proceeding for the name of any party to the
merger whose separate existence ceased in the
merger.’’ (Emphasis added.) General Statutes § 33-820
(a) (5). Regarding the effect of a Connecticut corpora-
tion’s change of name, our law provides: ‘‘An amend-
ment to the certificate of incorporation does not affect
. . . a proceeding to which the corporation is a party
. . . . An amendment changing a corporation’s name
does not abate a proceeding brought by or against the
corporation in its former name.’’ (Emphasis added.)
General Statutes § 33-803.
Connecticut’s corporate law is substantially similar
to the provisions of the American Bar Association’s
Model Business Corporation Act; see, e.g., Trevek
Enterprises, Inc. v. Victory Contracting Corp., 107
Conn. App. 574, 583 n.4, 945 A.2d 1056 (2008) (‘‘[i]n
1994, the General Assembly enacted . . . a compre-
hensive revision . . . designed to bring our corpora-
tions statutes into conformity with the American Bar
Association’s revised Model Business Corporation
Act’’); which has been adopted in full or in substantial
part by at least thirty other states. Shawnee Telecom
Resources, Inc. v. Brown, 354 S.W.3d 542, 553 (Ky.
2011). Indeed, the provisions of the Model Business
Corporation Act relating to the effect of corporate merg-
ers and changes of name are nearly identical to Connect-
icut law. See Model Business Corporation Act, § 11.07
(a), p. 11-89 (‘‘[A]ll property owned by, and every con-
tract right possessed by, each corporation or eligible
entity that merges into the survivor is vested in the
survivor without reversion or impairment . . . . [Fur-
thermore] the name of the survivor may, but need not
be, substituted in any pending proceeding for the name
of any party to the merger whose separate existence
ceased in the merger . . . .’’); Model Business Corpora-
tion Act, § 10.09, p. 10-70 (‘‘An amendment to the arti-
cles of incorporation does not affect . . . a proceeding
to which the corporation is a party . . . . An amend-
ment changing a corporation’s name does not abate a
proceeding brought by or against the corporation in its
former name.’’).
Mergers of corporations and mergers of limited liabil-
ity companies are treated similarly under Connecticut
law.2 When Connecticut limited liability companies
merge, ‘‘[a]ny property, real, personal and mixed, and
all debts due on whatever account . . . and all other
choses in action . . . belonging to or due to each party
to the merger . . . vest[s] in the survivor without fur-
ther act or deed.’’ (Emphasis added.) General Statutes
§ 34-197 (4). Furthermore, any ‘‘proceeding pending by
or against any limited liability company that was a party
to the merger . . . may be prosecuted as if such
merger . . . had not taken place, or the survivor may
be substituted in the action.’’ (Emphasis added.) Gen-
eral Statutes § 34-197 (6).3 The Uniform Limited Liability
Company Act similarly provides that ‘‘all property of
each merging entity vests in the surviving entity’’ and
that ‘‘the name of the surviving entity may be substituted
for the name of any merging entity that is a party to
any pending action or proceeding . . . .’’ Unif. Limited
Liability Company Act § 1026 (a) (amended 2013), 6C
U.L.A. 189 (2016). The rationale behind not requiring the
substitution of the surviving entity’s name in a pending
proceeding is that ‘‘[s]uch a substitution has no substan-
tive effect because, whether or not the survivor’s name
is substituted, the survivor succeeds to the claims of any
party to the merger whose separate existence ceased
as a result of the merger.’’ Unif. Limited Liability Com-
pany Act § 1026 (a) (7), comment, supra, 6C U.L.A. 191.
Regarding the change of a limited liability company’s
name, Connecticut law provides that ‘‘amend[ing] the
name set forth in [the] articles of organization . . .
[does not] dissolv[e] or otherwise chang[e] the legal
entity itself.’’ David Caron Chrysler Motors, LLC v.
Goodhall’s, Inc., 304 Conn. 738, 746 n.8, 43 A.3d 164
(2012).
With banking law and corporate law as our legal
backdrop, we turn to the present case to determine
whether the trial court properly concluded that the
substitute plaintiff was the holder and owner of the
promissory note executed by the decedent. Our review
of the record leads us to conclude that the court’s deter-
mination was legally and factually correct. At trial, the
substitute plaintiff, an entity called OneWest Bank, N.A.,
produced the decedent’s note, which had been
endorsed in blank. The note was admitted into evidence
during the testimony of Kala, who, at the time, was
working for an entity called CIT Bank, N.A., and who
previously had worked for the substitute plaintiff and
the named plaintiff. Kala testified that the decedent’s
note currently was in the possession of ‘‘CIT Bank,
N.A.’’ According to Kala, ‘‘CIT Bank, N.A.’’ was the name
of the entity surviving the merger in which (1) CIT Bank
merged into OneWest Bank, N.A., and (2) OneWest
Bank, N.A., changed its name to ‘‘CIT Bank, N.A.’’
Accordingly, the evidence presented at trial revealed
that the name of the entity holding the note, ‘‘CIT Bank,
N.A.,’’ did not match the substitute plaintiff’s name,
‘‘OneWest Bank, N.A.’’ As previously explained, this
discrepancy, which is the basis for the defendants’ chal-
lenge to the substitute plaintiff’s ownership of the note,
was the result of a corporate merger during the pen-
dency of the present action to which the substitute
plaintiff was a party. Kala’s uncontroverted testimony
established that a bank called ‘‘CIT Bank’’ merged into
the substitute plaintiff, which had been a national
banking association prior to the merger. Thus, the type
of entity surviving the merger also was a national bank-
ing association. Despite the uncertainty surrounding
the substitute plaintiff’s name and corporate identity
caused by the merger, the trial court concluded that
the substitute plaintiff was the holder and owner of the
decedent’s note.
Our comprehensive review of federal and state bank-
ing law and state corporate law convinces us that the
merger and change of name involving the substitute
plaintiff did not affect its status as holder and owner
of the decedent’s note. Under the relevant federal and
state authority, the merger to which the substitute plain-
tiff was party had the following consequences.
First, the substitute plaintiff’s corporate existence
and identity continued in the resulting bank. See 12
U.S.C. § 215 (e) (2012); 12 C.F.R. § 5.33 (l) (1); General
Statutes § 36a-125 (g). Second, the substitute plaintiff’s
assets, including the decedent’s note, vested in the
resulting bank by operation of law and without any
deed or transfer. See 12 U.S.C. § 215 (e) (2012); 12 C.F.R.
§ 5.33 (l) (1); General Statutes §§ 34-197 (4) and 36a-
125 (g); Model Business Corporation Act, supra, § 11.07
(a), p. 11-89; Unif. Limited Liability Company Act § 1026
(a), supra, 6C U.L.A. 189. Third, the present action,
which was pending at the time of the merger’s consum-
mation, was not abated, discontinued, or otherwise
affected. See 12 U.S.C. § 32 (2012); General Statutes
§§ 36a-125 (g), 33-820 (a) (5), and 34-197 (6); Model
Business Corporation Act, supra, § 11.07 (a), p. 11-89;
Unif. Limited Liability Company Act § 1026 (a) (7), com-
ment, supra, 6C U.L.A. 191. Last, the substitute plaintiff
could have substituted the resulting bank in this action,
but it was not required to do so. See General Statutes
§§ 36a-125 (g), 33-820 (a) (5), and 34-197 (6); Model
Business Corporation Act, supra, § 11.07 (a), p. 11-89;
Unif. Limited Liability Company Act § 1026 (a), supra,
6C U.L.A. 189. Thus, the substitute plaintiff’s status as
holder and owner of the note and this proceeding were
not affected by the merger.
Similarly, the resulting bank’s change of name
affected neither this proceeding nor the substitute plain-
tiff’s status as holder and owner of the note. As a matter
of law, the change of name did not (1) create a new
corporate entity; (2) alter the resulting bank’s corporate
identity, which merely was a continuation of the substi-
tute plaintiff’s corporate identity; (3) end the resulting
bank’s corporate existence, which merely was a contin-
uation of the substitute plaintiff’s corporate existence;
or (4) divest the resulting bank of the substitute plain-
tiff’s assets, which had vested in the resulting bank as
a result of the merger. See 12 U.S.C. §§ 30, 32, and
215 (e) (2012); General Statutes § 36a-125 (g); In re
Worcester County National Bank, supra, 263 Mass.
399–400.
Furthermore, the change of name did not abate, dis-
continue, or otherwise affect this proceeding, and it did
not require the substitute plaintiff to substitute the
resulting bank’s new name in this proceeding. See 12
U.S.C. § 32 (2012); General Statutes §§ 33-803, 33-820
(a) (5), 34-197 (6), and 36a-125 (g); In re Worcester
County National Bank, supra, 263 Mass. 399; Model
Business Corporation Act, supra, § 10.09, p. 10-70.
In light of the foregoing, we conclude that the substi-
tute plaintiff’s production of the decedent’s note
endorsed in blank, like in any other foreclosure action,
created a rebuttable presumption that the substitute
plaintiff was the note’s owner. See Deutsche Bank
National Trust Co. v. Bliss, supra, 159 Conn. App. 496.
It was incumbent on the defendants then to marshal
facts rebutting that presumption. See id. For the reasons
already identified, the merger and change of name of
which the defendants complain do not call into question
the substitute plaintiff’s ownership of the decedent’s
note.4 Thus, on the basis of the record before us, we
conclude that the substitute plaintiff established, and
the defendants did not rebut, that the substitute plaintiff
owned the note.
In exercising plenary review over the defendants’
claim, we conclude that the court’s determination that
the substitute plaintiff owns the decedent’s note was
factually and legally correct. Accordingly, we conclude
that the court properly concluded that the substitute
plaintiff established a prima facie case of foreclosure.
II
THE DEFENDANTS’ SPECIAL DEFENSE AND
COUNTERCLAIM
The defendants’ second claim is that the trial court
erroneously found that the defendants failed to meet
their burden of proof with respect to their special
defense and counterclaim sounding in breach of the
implied covenant of good faith and fair dealing. Specifi-
cally, the defendants argue that a provision in the note
executed by the decedent permitted the decedent’s
estate to avoid its obligation to repay the loan upon
the decedent’s death if it cooperated with the named
plaintiff in selling the decedent’s property. In light of
that provision, the defendants contend, the covenant
of good faith and fair dealing implied into the note
required the named plaintiff, upon the decedent’s death,
to communicate with the executrix for the purpose of
facilitating the sale of the decedent’s property. Thus,
according to the defendants, the named plaintiff
breached the covenant of good faith and fair dealing
when it initiated a foreclosure action and filed a lis
pendens instead of communicating with the executrix
to facilitate such a sale. We disagree.
The following additional facts and procedural history
are necessary to our resolution of the defendants’ sec-
ond claim. In response to the named plaintiff’s foreclo-
sure complaint, the defendants filed a special defense
and a counterclaim alleging that the named plaintiff
breached the covenant of good faith and fair dealing
implied into the note. In particular, the defendants pred-
icated their theory of the breach of the covenant of
good faith and fair dealing on the provision in the note
establishing the date on which repayment of the loan
was due. That provision, § 6 of the note, provided in
relevant part: ‘‘All amounts owed under this Agreement
become due and payable . . . upon the first occur-
rence of a Maturity Event . . . unless [the decedent]
default[s] . . . . [The decedent] must repay the out-
standing balance in one large or ‘balloon’ payment upon
the occurrence of a Maturity Event or, if sooner, [when
the decedent defaults].’’
Pursuant to that provision, the death of the decedent
generally constituted a ‘‘Maturity Event’’ requiring
immediate repayment of the loan. The provision also
permitted, however, the named plaintiff and the dece-
dent’s estate to extend the repayment date upon the
decedent’s death: ‘‘If [the decedent’s] administrator,
devisees, estate, executors, heirs, legatees or personal
representative . . . agree[s] with [the named plaintiff]
in writing within thirty (30) days after the death of the
[decedent] . . . then repayment . . . will not be due
until six months after the death of the [decedent], or
such other date as may be provided in that written
agreement . . . .’’ In the event that the parties entered
such a written agreement, the decedent’s estate also
would have to promise in that agreement ‘‘to cooperate
fully with [the named plaintiff] in selling the Property,
including listing the Property for sale, caring for the
Property and making any necessary repairs to the Prop-
erty prior to its sale . . . .’’
With the relevant contractual provisions in mind,
the thrust of the defendants’ allegations in their special
defense and counterclaim are as follows. Section 6 of
the note provided that, upon the decedent’s death, the
executrix had two options—immediately repay the loan
or cooperate with the named plaintiff in selling the
decedent’s property. If the executrix elected the second
option, repayment of the loan would not be due until
six months after the decedent’s death or on whatever
date to which the parties agreed. The executrix elected
to cooperate in selling the property. Specifically, she
maintained the property, made repairs to the property,
obtained appraisals of the property, and listed the prop-
erty for sale with a real estate agency. Thus, since the
executrix chose to cooperate with the named plaintiff
in selling the property, the named plaintiff was not
entitled to immediate repayment of the loan and it had
to communicate with the executrix to facilitate the
property’s sale. Failing to communicate with the execu-
trix for that purpose, and instead filing a foreclosure
action and a lis pendens, the named plaintiff failed to
act in good faith and deal fairly with the executrix.
At trial, the parties introduced evidence of various
correspondences that they had with each other follow-
ing the decedent’s death on April 16, 2010. On April,
30, 2010, the named plaintiff sent the decedent’s estate
a letter informing it that the ‘‘loan is due and payable.’’
On that same day, a telephone conversation, the con-
tents of which were disputed by the parties, occurred
between Ann Griffin and an employee of the named
plaintiff. The testimony of the named plaintiff’s
employee, which was corroborated by tracking notes
of the conversation maintained by the named plaintiff,
indicated that she informed Ann Griffin that the estate
had three months to repay the loan. Ann Griffin denied
that the named plaintiff’s employee informed her that
the loan had to be repaid within three months. On May 6,
2010, the defendants’ attorney sent the named plaintiff
a copy of the decedent’s death certificate and will. On
June 23, 2010, the defendants’ attorney sent the named
plaintiff a copy of the probate court’s decree, a probate
certificate reflecting Ann Griffin’s appointment as exec-
utrix of the decedent’s estate, and a copy of an
agreement between the decedent’s estate and a real
estate agent to list and sell the decedent’s property. On
July 7, 2010, the executrix informed the named plaintiff
that she had listed the decedent’s property for sale. On
July 21, 2010, the named plaintiff sent the executrix a
Notice of Intent to Foreclose, requiring that she repay
the loan within thirty days. On July 29, 2010, the defen-
dants’ attorney sent a letter to the named plaintiff
responding to the named plaintiff’s Notice of Intent
to Foreclose. In that letter, the defendants’ attorney
warned that initiating foreclosure proceedings ‘‘would
constitute a patent breach of the contractual obliga-
tions’’ because the loan agreement provided that ‘‘repay-
ment of the loan is not required until six months after
the death of [the decedent],’’ and the defendants ‘‘fully
cooperated . . . as required by the [loan agreement].’’
On August 6 and September 8, 2010, the executrix again
called the named plaintiff, informing it that the property
still was on the market.
The trial court concluded that the defendants failed
to meet their burden of proof with respect to their
special defense and counterclaim sounding in breach
of the implied covenant of good faith and fair dealing.
Specifically, it reasoned that the defendants’ ‘‘special
defense and counterclaim . . . [sought] to enforce
nonexistent obligations under the [note].’’ Moreover, it
found that there was no written agreement between
the named plaintiff and the defendants extending the
repayment due date and that there was no meeting of
the minds between the parties regarding a repayment
extension.
With these additional facts in mind, we begin our
analysis of the defendants’ second claim by setting forth
the relevant legal principles. ‘‘[W]ith any issue of con-
tract interpretation, we begin with the language of the
contract.’’ Poole v. Waterbury, 266 Conn. 68, 90, 831
A.2d 211 (2003). ‘‘Although ordinarily the question of
contract interpretation, being a question of the parties’
intent, is a question of fact . . . [w]here there is defini-
tive contract language, the determination of what the
parties intended by their contractual commitments is
a question of law. . . . When only one interpretation
of a contract is possible, the court need not look outside
the four corners of the contract.’’ (Citation omitted;
internal quotation marks omitted.) Id., 88–89.
‘‘[I]t is axiomatic that the . . . duty of good faith and
fair dealing is a covenant implied into a contract or a
contractual relationship. . . . In other words, every
contract carries an implied duty requiring that neither
party do anything that will injure the right of the other
to receive the benefits of the agreement. . . . The cove-
nant of good faith and fair dealing presupposes that the
terms and purpose of the contract are agreed upon
by the parties and that what is in dispute is a party’s
discretionary application or interpretation of a contract
term. . . .
‘‘To constitute a breach of [the implied covenant of
good faith and fair dealing], the acts by which a defen-
dant allegedly impedes the plaintiff’s right to receive
benefits that he or she reasonably expected to receive
under the contract must have been taken in bad faith.
. . . Bad faith in general implies both actual or con-
structive fraud, or a design to mislead or deceive
another, or a neglect or refusal to fulfill some duty or
some contractual obligation, not prompted by an honest
mistake as to one’s rights or duties, but by some inter-
ested or sinister motive. . . . Bad faith means more
than mere negligence; it involves a dishonest purpose.’’
(Internal quotation marks omitted.) Capstone Building
Corp. v. American Motorists Ins. Co., 308 Conn. 760,
794–95, 67 A.3d 961 (2013).
Critically, our Supreme Court has stated that the cov-
enant of good faith and fair dealing ‘‘is not implicated
by conduct that does not impair contractual rights.’’ Id.,
795. ‘‘In Renaissance Management Co. v. Connecticut
Housing Finance Authority, [281 Conn. 227, 240, 915
A.2d 290 (2007)], for example, [the Supreme Court] held
that the defendant housing authority’s refusal to accept
mortgage prepayments, in order to facilitate new loans
for owners of low income housing, did not violate the
covenant of good faith and fair dealing when the agency
was not contractually obligated to accept prepayments.
In so holding, we reasoned that [t]he covenant of good
faith and fair dealing presupposes the terms and pur-
pose of the contract are agreed upon by the parties
and that what is in dispute is a party’s discretionary
application or interpretation of a contract term.’’
(Emphasis omitted; internal quotation marks omitted.)
Capstone Building Corp. v. American Motorists Ins.
Co., supra, 795.
Indeed, we previously have observed that ‘‘[m]ost
courts decline to find a breach of the covenant apart
from a breach of an express contract term. . . . Stated
otherwise, the claim [that the covenant has been
breached] must be tied to an alleged breach of a specific
contract term . . . .’’ (Citation omitted; emphasis
added; internal quotation marks omitted.) Landry v.
Spitz, 102 Conn. App. 34, 47, 925 A.2d 334 (2007); see
also Forte v. Citicorp Mortgage, Inc., 90 Conn. App.
727, 733–34, 881 A.2d 386 (2005) (mortgagee did not
violate covenant of good faith and fair dealing by failing
to allow mortgagor to refinance ‘‘because the note and
the mortgage [did] not guarantee or discuss any right
to refinance’’); Southbridge Associates, LLC v. Garo-
falo, 53 Conn. App. 11, 15, 17, 728 A.2d 1114 (covenant
of good faith and fair dealing not implicated by mortgag-
ee’s refusal to sell note to mortgagor because ‘‘loan
documents [did] not contain a provision requiring a
holder of the notes and mortgages to negotiate with
or sell the notes to [mortgagor] prior to enforcing its
foreclosure rights’’), cert. denied, 249 Conn. 919, 733
A.2d 229 (1999).
In the present case, the defendants’ theory of breach
of the covenant of good faith and fair dealing is predi-
cated on the provision in the note prescribing the date
on which repayment of the loan was due. In construing
that provision, the trial court concluded that it did not
obligate the named plaintiff to extend the repayment
due date. Our construction of that provision conforms
to the trial court’s construction.
Our plenary review of the relevant contractual lan-
guage reveals the following. The provision first sets out
a general rule: The death of the decedent is a maturity
event that makes the loan immediately due and payable.
It subsequently provides, however, an exception to that
general rule: ‘‘If [the decedent’s estate] . . . agree[s]
with [the named plaintiff] in writing within thirty . . .
days after the [decedent’s] death . . . to cooperate
fully with [the named plaintiff] in selling the Property
. . . then repayment . . . will not be due until six
months after the [decedent’s] death . . . or such other
date as may be provided in that written agreement
. . . .’’ (Emphasis added.) Thus, the unambiguous lan-
guage of the provision permits, but does not require,
the parties to extend the repayment deadline by enter-
ing into a separate written agreement.
The defendants’ interpretation of the repayment pro-
vision belies the plain, unambiguous meaning of the
provision’s language. The defendants mistakenly con-
strue the provision as granting the executrix a right
to unilaterally extend the repayment deadline and as
imposing upon the named plaintiff an obligation to
honor the executrix’s unilateral decision to extend the
deadline. The provision guarantees no such right to the
executrix and imposes no such obligation on the named
plaintiff. The fact that the provision uses the terms
‘‘agree’’ and ‘‘agreement’’ with respect to an extension
indicates that such an extension can be created only by
the parties’ mutual assent. See Black’s Law Dictionary
(10th Ed. 2014) (defining ‘‘agreement’’ as ‘‘manifestation
of mutual assent by two or more persons’’ and ‘‘agree’’
as act of ‘‘exchang[ing] promises’’).
Thus, in the absence of a written agreement
extending the deadline to allow the executrix to sell
the decedent’s home, the named plaintiff had no obliga-
tion to undertake any action facilitating the executrix’s
sale of the property, e.g., communicating with the exec-
utrix regarding the sale. As previously explained, the
trial court found that there was no evidence that the
parties entered into such a written agreement. After
reviewing the record, we conclude that this finding is
not clearly erroneous. Indeed, a review of all of the
correspondences between the parties reveals that there
is no document that fairly can be characterized as a
written agreement wherein both parties agree to extend
the repayment deadline. The record discloses that the
executrix certainly represented to the named plaintiff
that she was maintaining the property and planning on
selling it, but it does not disclose that the named plaintiff
agreed in writing to extend the repayment deadline.
In light of the foregoing, we conclude that the defen-
dants’ special defense and counterclaim sounding in
breach of the covenant of good faith and fair dealing
must fail. The special defense and counterclaim are not
predicated on a breach of an express term in the note;
Landry v. Spitz, supra, 102 Conn. App. 47; and the
named plaintiff’s conduct did not impair any contractual
right of the decedent or her estate. Capstone Building
Corp. v. American Motorists Ins. Co., supra, 308 Conn.
795. That is, the note guaranteed no contractual right
to an extension to sell the property, and, consequently,
the named plaintiff did not breach the terms of the note
by never agreeing to such an extension.
Moreover, since it properly never agreed to an exten-
sion, the named plaintiff was not obligated to take any
action facilitating the executrix’s sale of the property
pursuant to a nonexistent extension agreement. In
doing so, the named plaintiff retained its right under
the note to receive immediate repayment of the loan
upon the decedent’s death. Thus, by initiating foreclo-
sure proceedings and filing a lis pendens, the named
plaintiff merely was enforcing its contractual rights,
not acting in bad faith to impair the rights of the dece-
dent and her estate. Accordingly, we conclude that the
trial court properly rejected the defendants’ counter-
claim and special defense based on a breach of the
covenant of good faith and fair dealing.
The judgment is affirmed.
In this opinion the other judges concurred.
1
A brief explanation of the numerous parties involved in this action is
necessary. Regarding the plaintiffs, this action was commenced by Financial
Freedom Acquisition, LLC. The successor in interest to Financial Freedom
Acquisition, LLC, OneWest Bank, N.A., subsequently was substituted for
Financial Freedom Acquisition, LLC. Although Financial Freedom Acquisi-
tion, LLC, was removed from this action as a plaintiff, it still is a party to
the action as a counterclaim defendant. Thus, throughout this opinion, we
refer to OneWest Bank, N.A., as the substitute plaintiff and Financial Free-
dom Acquisition, LLC, as the named plaintiff and counterclaim defendant.
Regarding the defendants, the named plaintiff brought this action against
seven defendants. Five of the defendants, John T. Griffin, Mary K. Griffin,
Thomas V. Griffin, Pauline Griffin Voghel, and the Connecticut Department
of Revenue Services, are nonappearing. The two appearing defendants are
Ann T. Griffin, in her individual capacity, and Ann T. Griffin, in her capacity
as executrix of the estate of Angela C. Griffin. In this opinion, we use ‘‘Ann
Griffin’’ to refer to Ann T. Griffin in her individual capacity, ‘‘the executrix’’
to refer to Ann T. Griffin in her capacity as executrix, and ‘‘the defendants’’
to refer to Ann T. Griffin in both her individual and representative capacities.
2
Mergers of partnerships also receive similar treatment under Connecticut
law. See General Statutes § 34-33f (in merger of limited partnerships, ‘‘all
property, real, personal and mixed . . . . and choses in action . . . shall
be vested in [surviving] limited partnership without further act or deed,’’
and any ‘‘action or proceeding . . . pending . . . against [one of the merg-
ing entities] may be prosecuted as if such merger or consolidation had not
taken place, or . . . [the] survivor may be substituted in its place’’); General
Statutes § 34-389 (a) (in merger of limited liability partnerships, ‘‘[a]ll prop-
erty owned by each of the merged partnerships vests in the survivor,’’ and
‘‘[a]n action or proceeding pending against a partnership that is a party to
the merger may be continued as if the merger had not occurred, or the
survivor may be substituted as a party to the action or proceeding’’).
3
Number 16-97 of the 2016 Public Acts repealed the Connecticut Limited
Liability Company Act, § 34-100 et seq., effective July 1, 2017. On the effective
date, the Connecticut Uniform Limited Liability Company Act replaced the
Connecticut Limited Liability Company Act. With respect to the provisions
governing the effect of mergers, the repealed act and the Uniform Act do
not differ substantially. See Public Acts 2016, No. 16-97, § 91 (a) (‘‘[w]hen
a merger becomes effective . . . [a]ll property owned by each merging
limited liability company that ceases to exists vests in the surviving limited
liability company . . . [and] [a]n action or proceeding pending . . . against
any merging limited liability company that ceases to exist may be continued
as if the merger had not occurred’’).
4
The defendants also draw our attention to another aspect of the merger
at issue that supposedly calls into question the substitute plaintiff’s owner-
ship of the note. Specifically, the defendants argue that the trial court erred
in failing to address how the substitute plaintiff’s ownership of the note
was affected by the fact that the merger also involved the acquisition of
the substitute plaintiff’s parent company by CIT Bank’s parent company.
We fail to see how this aspect of the merger undermines the substitute
plaintiff’s ownership of the note.
There is nothing in the record suggesting that the merger caused the
substitute plaintiff to relinquish its status as an entity legally separate from
its parent company, whoever that might have been after the merger. SFA
Folio Collections, Inc. v. Bannon, 217 Conn. 220, 232, 585 A.2d 666 (‘‘it is
a fundamental principle of corporate law that the parent corporation and
its subsidiary are treated as separate and distinct legal persons even though
the parent owns all the shares in the subsidiary’’), cert. denied, 501 U.S.
1223, 111 S. Ct. 2839, 115 L. Ed. 2d 1008 (1991). Indeed, the record reveals
that the substitute plaintiff merged with another subsidiary, CIT Bank, not
the parent company of CIT Bank. Furthermore, as previously explained,
notwithstanding the change of name, the substitute plaintiff survived the
merger because CIT Bank merged into the substitute plaintiff. Regardless
of whose subsidiary the substitute plaintiff became as a result of the merger,
it remained ‘‘a separate legal entity possessing its own separate assets and
liabilities.’’ Capital Parks, Inc. v. Southeastern Advertising & Sales Systems,
Inc., 30 F.3d 627, 629 (5th Cir. 1994); see also Wright v. JPMorgan Chase
Bank, N.A., 169 So. 3d 251, 252 (Fla. App. 2015) (‘‘[a]s a separate legal
entity, a parent corporation . . . cannot exercise the rights of its subsidiary’’
[internal quotation marks omitted]). The rule that the assets of a parent
company and its subsidiary are separate has obvious implications in the
foreclosure context. That is, ‘‘ownership of the note by [a] subsidiary . . .
does not give [a] parent corporation . . . the right to enforce the note
. . . .’’ Wright v. JPMorgan Chase Bank, N.A., supra, 252. Accordingly, we
are convinced that the substitute plaintiff, not its parent’s company, owns
the note and is the proper plaintiff in this foreclosure action.