Hirsch v. Woermer

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SANDRA M. HIRSCH, TRUSTEE v.
WILLIAM S. WOERMER
(AC 40653)
Keller, Elgo and Beach, Js.
Syllabus
The plaintiff trustee sought to foreclose a mortgage on certain real property
owned by the defendant. In response, the defendant filed three special
defenses, including a claim of unconscionability of the initial loan. The
trial court granted the plaintiff’s motion to strike the special defenses
and, thereafter, rendered judgment in the plaintiff’s favor. The defendant
subsequently filed motions to open the judgment and to amend his
answer with an additional special defense of a violation of the Connecti-
cut Abusive Home Loan Lending Practices Act (§ 36a-746 et seq.), which
the trial court denied. The court rendered a judgment of foreclosure by
sale, from which the defendant appealed to this court. Held:
1. The trial court properly granted the plaintiff’s motion to strike the defen-
dant’s special defense of unconscionability; the defendant failed to suffi-
ciently plead facts to support his special defense on procedural grounds
in that he did not allege facts constituting unfair surprise that related
to the making, validity, or enforcement of the mortgage or note, and
his assertion that the loan was predatory because of its term of one
year with an interest rate of 15 percent, and points of 5 percent, alone,
was not sufficient to render the contract unenforceable on the ground
of substantive unconscionability, as claims of an unconscionable interest
rate are not enough to sustain the special defense without facts related
to the defendant’s financial circumstances, the type of property for
which the loan would be utilized, whether the property was associated
with a second mortgage, or the income-producing capacity of the prop-
erty, which the defendant failed to provide.
2. The trial court did not abuse its discretion when it denied the defendant’s
motion to open the judgment; that court was not required to open the
judgment to consider a claim not previously raised, the proposed special
defense alleged for the first time the violation of a statute, which the
defendant did not raise until two months after the judgment was ren-
dered against him, he did not offer any authority to support his claim
that the court abused its discretion in denying his motion to open but
merely argued that his proposed amended answer and special defenses
included allegations that the loan was unconscionable because it alleg-
edly violated certain statutes, and there was no indication that such a
claim was unavailable to him prior to when judgment was rendered or
that new evidence was discovered, nor did the defendant offer any
evidence that there was a good and compelling reason for the modifica-
tion to his special defenses after judgment was rendered.
Argued May 17—officially released September 11, 2018
Procedural History
Action to foreclose a mortgage on certain real prop-
erty owned by the defendant, and for other relief,
brought to the Superior Court in the judicial district of
New Haven at Meriden, where the court, Hon. John
F. Cronan, judge trial referee, granted the plaintiff’s
motion to strike the defendant’s special defenses; there-
after, the court granted the plaintiff’s motion for judg-
ment and rendered judgment in part thereon;
subsequently, the court denied the defendant’s motion
to open the judgment; thereafter, the court denied the
defendant’s motion to amend; subsequently, the court
granted the plaintiff’s motion for judgment of foreclo-
sure by sale and rendered judgment thereon, from
which the defendant appealed to this court; thereafter,
the court denied the defendant’s motion for articula-
tion. Affirmed.
Robert M. Singer, for the appellant (defendant).
Harry Hirsch, for the appellee (plaintiff).
Opinion
ELGO, J. The defendant, William S. Woermer, appeals
from the judgment of foreclosure by sale rendered by
the trial court in favor of the plaintiff, Sandra M. Hirsch,
Trustee. On appeal, the defendant claims that the court
improperly (1) granted the plaintiff’s motion to strike
his special defense of unconscionability and (2) denied
his motion to open. We affirm the judgment of the
trial court.
The following facts and procedural history are rele-
vant to our resolution of this appeal. The plaintiff holds
a note from the defendant, which is now in default, for
the original principal amount of $73,200 secured by a
mortgage on real property located in Branford. The
mortgage was dated March 31, 2015, and recorded on
the Branford land records.
The plaintiff initiated this foreclosure action on May
3, 2016. On October 5, 2016, the defendant filed an
answer and three special defenses on the basis of lack
of standing, invalid mortgage, and unconscionability.
On October 11, 2016, the plaintiff filed an amended
complaint, and subsequently moved to strike the defen-
dant’s three special defenses on December 15, 2016. On
January 30, 2017, the defendant filed an objection.
On January 31, 2017, the court granted the plaintiff’s
motion to strike. In striking the special defense of
unconscionability, the court stated that ‘‘the defen-
dant’s claim that the initial loan was ‘outrageous and
unconscionable’ is without any statutory or case law
basis. There is nothing in the record that indicates that
the defendant was tricked or coerced into entering the
original instrument.’’
The plaintiff filed a motion for judgment on the plead-
ings1 in March, 2017. In support of the motion, the plain-
tiff argued that the defendant admitted liability on the
complaint and had no valid special defense. On March
20, 2017, the court granted the plaintiff’s motion and
rendered judgment in her favor.
On May 15, 2017, the defendant filed a motion to
open the judgment.2 In addition, the defendant filed
a motion for permission to amend on May 15, 2017.3
Specifically, the defendant requested permission to file
a proposed amended special defense and a counter-
claim alleging a violation of General Statutes § 36a-746
et seq., the Connecticut Abusive Home Loan Lending
Practices Act (act). In response, the plaintiff filed sepa-
rate objections on May 25, 2017, to the defendant’s
motion to open and the motion to amend. At the hearing
on the motion to open and motion to amend, the plaintiff
argued that the act does not provide a private right
of action; rather the act describes activities that are
regulated by the Commissioner of Banking. Following
the hearing, the court denied both motions on May 31,
motion for judgment of foreclosure by sale, and on July
3, 2017, the court rendered a judgment of foreclosure
by sale, determining the amount of debt and setting the
sale date as September 2, 2017. This appeal followed.
I
The defendant first claims that the court improperly
granted the plaintiff’s motion to strike his special
defense of unconscionability. We disagree.
In his answer, the defendant claimed that the mort-
gage and note are unconscionable for one or more of
the following reasons: ‘‘(a) the attorney performing the
closing is the same attorney foreclosing on the property;
(b) the attorney performing the closing failed to provide
a retainer agreement; (c) the loan is predatory for one
or more of the following reasons: (1) the term is for
just over [one] year, (2) the interest rate is 15 [percent],
and (3) the points charged were in excess of 5
[percent].’’
At the outset, we set forth our well-established stan-
dard of review. ‘‘Because a motion to strike challenges
the legal sufficiency of a pleading and, consequently,
requires no factual findings by the trial court, our review
of the court’s ruling on [a motion to strike] is plenary.
. . . A party wanting to contest the legal sufficiency of
a special defense may do so by filing a motion to strike.
The purpose of a special defense is to plead facts that
are consistent with the allegations of the complaint
but demonstrate, nonetheless, that the plaintiff has no
cause of action.’’ (Internal quotation marks omitted.)
TD Bank, N.A. v. M.J. Holdings, LLC, 143 Conn. App.
322, 326, 71 A.3d 541 (2013).
‘‘A motion to strike does not admit legal conclusions.
. . . Conclusions of law, absent sufficient alleged facts
to support them, are subject to a motion to strike. The
trial court may not seek beyond the complaint for facts
not alleged, or necessarily implied . . . . Historically,
defenses to a foreclosure action have been limited to
payment, discharge, release or satisfaction . . . or, if
there had never been a valid lien. . . . A valid special
defense at law to a foreclosure proceeding must be
legally sufficient and address the making, validity or
enforcement of the mortgage, the note, or both. . . .
Where the plaintiff’s conduct is inequitable, a court may
withhold foreclosure on equitable considerations and
principles. . . . [O]ur courts have permitted several
equitable defenses to a foreclosure action. [I]f the mort-
gagor is prevented by accident, mistake or fraud, from
fulfilling a condition of the mortgage, foreclosure can-
not be had . . . .’’ (Citation omitted; internal quotation
marks omitted.) U.S. Bank National Assn. v. Blowers,
177 Conn. App. 622, 629, 172 A.3d 837 (2017), cert.
granted, 328 Conn. 904, 177 A.3d 1160 (2018).
We first note that the defense of unconscionability
is a recognized defense to a foreclosure action. See id.,
629 (‘‘equitable defenses that our Supreme Court has
recognized in foreclosure actions include unconsciona-
bility . . . abandonment of security . . . and usury’’
[internal quotation marks omitted]); Monetary Funding
Group, Inc. v. Pluchino, 87 Conn. App. 401, 411, 867
A.2d 841 (2005). ‘‘The purpose of the doctrine of uncon-
scionability is to prevent oppression and unfair sur-
prise. . . . As applied to real estate mortgages, the
doctrine of unconscionability draws heavily on its coun-
terpart in the Uniform Commercial Code which,
although formally limited to transactions involving per-
sonal property, furnishes a useful guide for real prop-
erty transactions. . . . As Official Comment 1 to § 2-
302 of the Uniform Commercial Code suggests, [t]he
basic test is whether, in the light of the general commer-
cial background and the commercial needs of the partic-
ular trade or case, the clauses involved are so one-
sided as to be unconscionable under the circumstances
existing at the time of the making of the contract. . . .
Unconscionability is determined on a case-by-case
basis, taking into account all of the relevant facts and
circumstances.’’ (Internal quotation marks omitted.)
Monetary Funding Group, Inc. v. Pluchino, supra, 411.
‘‘The classic definition of an unconscionable contract
is one which no man in his senses, not under delusion,
would make, on the one hand, and which no fair and
honest man would accept, on the other.’’ (Internal quo-
tation marks omitted.) R.F. Daddario & Sons, Inc. v.
Shelansky, 123 Conn. App. 725, 741, 3 A.3d 957 (2010).
Claims of unconscionability fall into two categories:
substantive and procedural. ‘‘Substantive unconsciona-
bility focuses on the content of the contract, as distin-
guished from procedural unconscionability, which
focuses on the process by which the allegedly offensive
terms found their way into the agreement.’’ (Internal
quotation marks omitted.) Cheshire Mortgage Service,
Inc. v. Montes, 223 Conn. 80, 87 n.4, 612 A.2d 1130
(1992), quoting J. Calamari & J. Perillo, Contracts (3d
Ed.) § 9-37. Procedural unconscionability is intended
to prevent unfair surprise and substantive unconsciona-
bility is intended to prevent oppression. Smith v. Mit-
subishi Motors Credit of America, Inc., 247 Conn. 342,
349, 721 A.2d 1187 (1998).
‘‘The doctrine of unconscionability, as a defense to
contract enforcement, generally requires a showing that
the contract was both procedurally and substantively
unconscionable when made—i.e., some showing of an
absence of meaningful choice on the part of one of the
parties together with contract terms which are unrea-
sonably favorable to the other party . . . .’’ (Internal
quotation marks omitted.) R.F. Daddario & Sons, Inc.
v. Shelansky, supra, 123 Conn. App. 741; see also Emeri-
tus Senior Living v. Lepore, 183 Conn. App. 23, 29,
A.3d. (2018).
On our review of the pleadings, we conclude that
the defendant has failed to sufficiently plead facts to
support his special defense of unconscionability on pro-
cedural or substantive grounds. The defendant alleged
that the attorney performing the closing is the same
attorney foreclosing on the property and that the attor-
ney performing the closing failed to provide a retainer
agreement. To the extent that the allegations implicate
procedural unconscionability, the defendant has not
sufficiently alleged facts constituting unfair surprise
that relate to the making, validity, or enforcement of
the mortgage or the note.
As to substantive unconscionability, the defendant
asserts that the loan is predatory because of the one
year term with a 15 percent interest rate and points
in the amount of 5 percent. These allegations, alone,
however, are not sufficient to render the contract unen-
forceable on the ground of substantive unconscionabil-
ity. In Cheshire Mortgage Service, Inc. v. Montes, supra,
223 Conn. 85, 94, our Supreme Court held that a mort-
gage with an annual interest rate of 18 percent was
neither procedurally nor substantively unconscionable.
Furthermore, in Emigrant Mortgage Co. v. D’Agostino,
94 Conn. App. 793, 803, 896 A.2d 814, cert. denied, 278
Conn. 919, 901 A.2d 43 (2006), this court held that a
defendant’s ‘‘bald assertion’’ that a default interest rate
of 18 percent was unconscionable, ‘‘without more, was
insufficient to establish that the default interest rate
. . . was unconscionable.’’ As the United States District
Court for the District of Connecticut has noted, in cases
analyzing whether an interest rate is substantively
unconscionable, unpaid property taxes in Connecticut
are subject to an annual interest rate of 18 percent,
which suggests that such a rate is not unconscionable
in and of itself. See Pierce v. Emigrant Mortgage Co.,
Docket No. 3:04cv1767 (JCH), 2007 WL 4800725, *6 n.1
(D. Conn. December 27, 2007) (‘‘the Connecticut legisla-
ture’s imposition of an 18 [percent] rate for unpaid taxes
suggests that such a rate is not unconscionable per se’’);
see also General Statutes § 12-146.
Furthermore, our Supreme Court has noted that
‘‘[w]hether interest rates are unconscionable is a ques-
tion that should not be decided simply by judicial sur-
mise about prevailing prime interest rates. The financial
circumstances of the borrower, the increased risk asso-
ciated with a second mortgage, and the income-produc-
ing capacity of the mortgaged property are some of the
questions of fact that might appropriately be explored
to shed light on whether a designated interest rate is
or is not unconscionable.’’ (Footnote omitted.) Hamm
v. Taylor, 180 Conn. 491, 495, 429 A.2d 946 (1980).
Accordingly, if a bald allegation of an annual or
default interest rate of 18 percent is not enough to
establish unconscionability, it follows that the mere
allegation of an annual interest rate of 15 percent like-
wise is not enough to establish unconscionability. The
other alleged predatory terms, including the points ‘‘in
excess of 5 [percent]’’ and the term of the loan for
‘‘just over [one] year,’’ do not tip the scale to support
a defense on substantive unconscionability. See Hottle
v. BDO Seidman, LLP, 268 Conn. 694, 721, 846 A.2d 862
(2004); Smith v. Mitsubishi Motors Credit of America,
Inc., supra, 247 Conn. 352. To survive a motion to strike,
the defendant must plead additional facts for such terms
to be sufficient to support the defense of unconsciona-
bility. As this court stated in R.F. Daddario & Sons, Inc.
v. Shelansky, supra, 123 Conn. App. 742, a defendant’s
‘‘mere claim that the terms of the subject note and
mortgage were unconscionable is insufficient to estab-
lish [the] special defense.’’
In this case, the defendant has failed to provide any
information about his financial circumstances, the type
of property that the loan would be utilized for, whether
the property was associated with a second mortgage,
or the income-producing capacity of the property. Fur-
thermore, the defendant has not alleged any facts that
he was unfairly surprised by the terms of the note, that
he was misled; see Monetary Funding Group, Inc. v.
Pluchino, supra, 87 Conn. App. 412; or any other facts
that would support that there was an absence of mean-
ingful choice on the part of the defendant. Bender v.
Bender, 292 Conn. 696, 732, 975 A.2d 636 (2009).
Construed in the light most favorable to the defen-
dant, the facts alleged in his special defense do not
support his claim that the note and the mortgage are
unconscionable.4 Accordingly, we conclude that the
court properly granted the plaintiff’s motion to strike
the defendant’s special defense of unconscionability.
II
The defendant’s second claim of error alleges that
the court improperly denied his motion to open the
judgment for the purpose of amending his special
defenses. In essence, the defendant argues that the
court abused its discretion when it denied his motion
to open because the proposed amended answer and
special defenses ‘‘specifically [pleaded] that the loan
violated . . . An Act Concerning Abus[ive] Home
[Loan] Lending Practices.’’ We disagree.
We first set forth our standard of review and applica-
ble law. ‘‘The denial of a motion to open is an appealable
final judgment. . . . Although a motion to open can be
filed within four months of a judgment . . . the filing
of such a motion does not extend the appeal period
for challenging the merits of the underlying judgment
unless filed within the [twenty day period provided by
Practice Book § 63-1]. . . . When a motion to open is
filed more than twenty days after the judgment, the
appeal from the denial of that motion can test only
whether the trial court abused its discretion in failing
to open the judgment and not the propriety of the merits
of the underlying judgment. . . . This is so because
otherwise the same issues that could have been
resolved if timely raised would nevertheless be
resolved, which would, in effect, extend the time to
appeal. . . .
‘‘The principles that govern motions to open or set
aside a civil judgment are well established. Within four
months of the date of the original judgment, Practice
Book [§ 17-4] vests discretion in the trial court to deter-
mine whether there is a good and compelling reason
for its modification or vacation. . . .
‘‘Because opening a judgment is a matter of discre-
tion, the trial court [is] not required to open the judg-
ment to consider a claim not previously raised. The
exercise of equitable authority is vested in the discre-
tion of the trial court and is subject only to limited
review on appeal. . . . We do not undertake a plenary
review of the merits of a decision of the trial court to
grant or to deny a motion to open a judgment. The only
issue on appeal is whether the trial court has acted
unreasonably and in clear abuse of its discretion. . . .
In determining whether the trial court abused its discre-
tion, this court must make every reasonable presump-
tion in favor of its action.’’ (Citation omitted; internal
quotation marks omitted.) JPMorgan Chase Bank, N.A.
v. Eldon, 144 Conn. App. 260, 272–73, 73 A.3d 757, cert.
denied, 310 Conn. 935, 79 A.3d 889 (2013).
‘‘The criteria for a court to open a judgment is analo-
gous to the conditions needed for a petition for a new
trial on grounds of newly discovered evidence. . . . A
petition for a new trial is governed by [General Statutes]
§ 52-270 (a), which provides in relevant part: The Supe-
rior Court may grant a new trial of any action that may
come before it, for . . . the discovery of new evidence
. . . . The standard that governs the granting of a peti-
tion for a new trial based on newly discovered evidence
is well established. The petitioner must demonstrate, by
a preponderance of the evidence, that: (1) the proffered
evidence is newly discovered, such that it could not
have been discovered earlier by the exercise of due
diligence; (2) it would be material on a new trial; (3)
it is not merely cumulative; and (4) it is likely to produce
a different result in a new trial. . . . These rules are
motivated by the policy that [o]nce a judgment [is]
rendered it is to be considered final and it should be
left undisturbed by post-trial motions except for a good
and compelling reason.’’ (Citations omitted; emphasis
in original; internal quotation marks omitted.) Worth v.
Korta, 132 Conn. App. 154, 160–61, 31 A.3d 804 (2011),
cert. denied, 304 Conn. 905, 38 A.3d 1201 (2012).
We note that the defendant had the opportunity to
plead over after the court granted the plaintiff’s motion
to strike, yet failed to do so. Instead, the defendant did
not raise any allegation of a violation of the act until
May, 2017, two months after judgment had been ren-
dered against him. In his appellate brief, the defendant
offers no authority to support his claim that the court
abused its discretion in denying the motion to open.
Rather, he merely argues that the proposed amended
answer and special defenses included allegations that
the loan is unconscionable because it allegedly violated
the act. There is no indication that such claims were
unavailable to the defendant prior to judgment entering
or that new evidence was discovered. Furthermore, the
defendant failed to offer any evidence that there was
a good and compelling reason for the modification to
his special defenses after judgment was rendered.
As we previously stated, ‘‘the trial court [is] not
required to open the judgment to consider a claim not
previously raised.’’ (Internal quotation marks omitted.)
JPMorgan Chase Bank, N.A. v. Eldon, supra, 144 Conn.
App. 273. The proposed special defense not only alleges
for the first time the violation of a statute, the statute
itself is not synonymous with the previously raised spe-
cial defense of unconscionability. Accordingly, the
court was not required to consider this new claim.
Making every reasonable presumption in favor of the
court’s action, we cannot conclude that the court acted
unreasonably and in clear abuse of its discretion when
it denied the defendant’s motion to open.
The judgment is affirmed.
In this opinion the other judges concurred.
1
Our Practice Book does not provide for a motion for judgment on the
pleadings. Our Supreme Court, however, recognized the motion in
DelVecchio v. DelVecchio, 146 Conn. 188, 191, 148 A.2d 554 (1959). See Sewer
Commission v. Norton, 164 Conn. 2, 5, 316 A.2d 775 (1972); Boucher Agency,
Inc. v. Zimmer, 160 Conn. 404, 408–409, 279 A.2d 540 (1971).
2
In his motion to open, the defendant argued as follows: ‘‘The defendant
herein moves that the judgment on the pleadings be opened. The defendant
is filing herewith the following:
‘‘Motion for Order to Amend Special Defense & Counterclaim
‘‘The subject mortgage was in violation of An Act Concerning Abuse Home
Lending Practices, [General Statutes § 36a-746 et seq.]. Attached hereto is
the following:
‘‘a. U.S. Department of Treasury Yield Curve Rate—showing Treasury
Bond Rate of 2.61 [percent] on March 31, 2016;
‘‘b. FreddieMac.com [thirty] year fixed rate mortgage—rate in April
3.61 [percent];
‘‘c. [Office of Legislative Research] Research Report 2002-R-0855 entitled
‘Predatory Lending Laws’;
d. Relevant Portions of Chapter 669 of the Connecticut General Statutes,
including Connecticut Abusive Home Loan Lending Practices, [§ 36a-746
et seq.].’’
3
The defendant’s motion to amend stated as follows: ‘‘Pursuant to Practice
Book [§] 10-60, the [defendant], through his attorney, hereby moves that he
be allowed to add a special defense and file a counterclaim. The mortgage
is in violation of [General Statutes §] 36a-746, and the statute provides for
a defense and counterclaim per [General Statutes §] 36a-760i.’’
4
To the extent that the defendant argues the merits of his special defense
of unconscionability, we note that our review is restricted to the motion to
strike the special defense. As we have already articulated, our review of
the motion to strike is limited to the facts as set forth in the complaint and
the answer. Any facts in the defendant’s brief that are not included in the
complaint and the answer are irrelevant to our review.