Berkshire Bank v. Hartford Club

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BERKSHIRE BANK v. THE HARTFORD CLUB ET AL.
(AC 36711)
Gruendel, Alvord and West, Js.
Argued March 11—officially released July 28, 2015
(Appeal from Superior Court, judicial district of
Hartford, Vacchelli, J. [summary judgment]; Robaina,
J. [foreclosure by sale].)
John W. Larson, with whom was Eric Henzy, for the
appellant (named defendant).
Matthew T. Wax-Krell, with whom, on the brief, was
Michael D. Blumberg, for the appellee (plaintiff).
Opinion
ALVORD, J. The defendant The Hartford Club appeals
from the judgment of foreclosure by sale rendered by
the trial court in favor of the plaintiff, Berkshire Bank.1
On appeal, the defendant claims that the court improp-
erly granted the plaintiff’s motion for summary judg-
ment as to liability because the affidavits and exhibits
offered in support of the motion were (1) not admissible
evidence with respect to the plaintiff’s status to enforce
the negotiable instrument at issue, and (2) insufficient
to establish the absence of a genuine issue of material
fact.2 We disagree and affirm the judgment of the
trial court.
The court’s memorandum of decision and the record
reveal the following facts and procedural history. On
July 17, 2009, the defendant executed an open-end mort-
gage in favor of The Connecticut Bank and Trust Com-
pany (CBT) on property located on Prospect Street in
Hartford to secure the payment of a promissory note
in the principal amount of $977,000. Effective April 20,
2012, CBT merged with and into the plaintiff, under
the charter, bylaws and name of Berkshire Bank. The
plaintiff commenced the present foreclosure action
when payments of principal and interest that were due
on November 17, 2012, and thereafter, were not made
as required by the terms of the loan documents. In its
complaint dated June 17, 2013, the plaintiff sought, inter
alia, a judgment of foreclosure, a deficiency judgment
and attorney’s fees.
On August 19, 2013, the defendant filed an answer
with one special defense, which alleged that ‘‘the owner-
ship interest of the [p]laintiff in the subject mortgage
has not been established.’’ The plaintiff filed a reply to
the defendant’s answer and special defense, in which
it denied the allegations in the special defense. On Octo-
ber 9, 2013, the plaintiff filed a motion for summary
judgment as to liability, claiming that a prima facie case
for foreclosure had been established and that there
were no remaining issues of fact. With its motion for
summary judgment, the plaintiff filed a memorandum
in support of the motion and the affidavit of Thomas
S. Matejek, the plaintiff’s vice president. The defendant
filed a memorandum in opposition to the plaintiff’s
motion for summary judgment on November 20, 2013.
No affidavits or documents were filed with the defen-
dant’s memorandum. On November 21, 2013, the plain-
tiff filed a supplemental affidavit of Matejek in support
of its motion for summary judgment. The defendant
filed a supplemental memorandum in opposition to the
motion for summary judgment on December 11, 2013,
again, with no affidavits or documents, and a hearing
was held on December 16, 2013.
On January 13, 2014, the court issued its memoran-
dum of decision rendering summary judgment in favor
of the plaintiff as to liability only. The plaintiff filed a
motion for a judgment of strict foreclosure on March
12, 2014. On March 18, 2014, the defendant filed a
motion for a judgment of foreclosure by sale. There-
after, the court rendered a judgment of foreclosure by
sale. This appeal followed.
On appeal, the defendant claims that the court
improperly granted the plaintiff’s motion for summary
judgment as to liability. It argues that the court should
not have concluded that Matejek’s affidavits and the
letter from a Massachusetts banking official certifying
the merger of CBT with and into the plaintiff (certifi-
cate)3 constituted ‘‘admissible evidence regarding the
plaintiff’s ability to enforce the negotiable instrument
in question.’’ The defendant claims that the affidavits
are deficient because they (1) ‘‘do not chronicle the
chain of title of the note,’’ (2) include only Matejek’s
unsupported statement that the plaintiff owns the note,
(3) fail to include a statement that CBT was the holder
and owner of the note at the time of the merger, and
(4) fail to state the basis for Matejek’s averment that
he had personal knowledge of the statements within
the affidavits. The defendant further argues that the
certificate was not admissible evidence because it was
not the best evidence of the alleged merger. Addition-
ally, it is the defendant’s position that, even if the chal-
lenged documents were admissible evidence, they were
insufficient to establish the right of the plaintiff to
enforce the note. According to the defendant: ‘‘What
[the plaintiff] asked the trial court to do was draw
inferences based on [the plaintiff’s] possession of the
note and evidence of doubtful admissibility of a merger
that [the plaintiff] is a nonholder in possession with the
right to enforce the note.’’
‘‘The law governing summary judgment and the
accompanying standard of review are well settled. Prac-
tice Book § [17-49] requires that judgment shall be ren-
dered forthwith if the pleadings, affidavits and any other
proof submitted show that there is no genuine issue as
to any material fact and that the moving party is entitled
to judgment as a matter of law. A material fact is a fact
that will make a difference in the result of the case.
. . . The facts at issue are those alleged in the plead-
ings. . . .
‘‘In seeking summary judgment, it is the movant who
has the burden of showing the nonexistence of any
issue of fact. The courts are in entire agreement that
the moving party for summary judgment has the burden
of showing the absence of any genuine issue as to all
the material facts, which, under applicable principles
of substantive law, entitle him to a judgment as a matter
of law. The courts hold the movant to a strict standard.
To satisfy his burden the movant must make a showing
that it is quite clear what the truth is, and that excludes
any real doubt as to the existence of any genuine issue
of material fact. . . . As the burden of proof is on the
movant, the evidence must be viewed in the light most
favorable to the opponent. . . .
‘‘The party opposing a motion for summary judgment
must present evidence that demonstrates the existence
of some disputed factual issue . . . . The movant has
the burden of showing the nonexistence of such issues
but the evidence thus presented, if otherwise sufficient,
is not rebutted by the bald statement that an issue of
fact does exist. . . . To oppose a motion for summary
judgment successfully, the nonmovant must recite spe-
cific facts . . . which contradict those stated in the
movant’s affidavits and documents. . . . The opposing
party to a motion for summary judgment must substanti-
ate its adverse claim by showing that there is a genuine
issue of material fact together with the evidence disclos-
ing the existence of such an issue. . . . The existence
of the genuine issue of material fact must be demon-
strated by counteraffidavits and concrete evidence.
. . . Our review of the trial court’s decision to grant a
motion for summary judgment is plenary.’’ (Citations
omitted; emphasis in original; internal quotation marks
omitted.) Deutsche Bank National Trust Co. v. Shivers,
136 Conn. App. 291, 295–96, 44 A.3d 879, cert. denied,
307 Conn. 938, 56 A.3d 950 (2012).
‘‘In order to establish a prima facie case in a mortgage
foreclosure action, the plaintiff must prove by a prepon-
derance of the evidence that it is the owner of the
note and mortgage,4 that the defendant mortgagor has
defaulted on the note and that any conditions precedent
to foreclosure, as established by the note and mortgage,
have been satisfied. . . . Thus, a court may properly
grant summary judgment as to liability in a foreclosure
action if the complaint and supporting affidavits estab-
lish an undisputed prima facie case and the defendant
fails to assert any legally sufficient special defense.’’
(Internal quotation marks omitted.) Wells Fargo Bank,
N.A. v. Strong, 149 Conn. App. 384, 392, 89 A.3d 392,
cert. denied, 312 Conn. 923, 94 A.3d 1202 (2014).
In the present case, the plaintiff submitted the two
Matejek affidavits. In those affidavits, Matejek averred
that he was the plaintiff’s vice president and that he had
personal knowledge of the facts stated in the affidavits.
Particularly relevant were Matejek’s following sworn
statements: (1) he reviewed the subject note and mort-
gage; (2) the plaintiff was the successor in interest to
CBT; (3) CBT merged with and into the plaintiff under
the plaintiff’s charter and bylaws and name effective
April 20, 2012; (4) the defendant was in default as a
result of its failure to make any principal payment due
under the note since December 27, 2012, which payment
was for the installment that was due on October 17,
2012; (5) the plaintiff sent the defendant a letter on April
11, 2013, accelerating the entire indebtedness under the
note; (6) the defendant failed to cure its default; (7) on
July 24, 2013, the parties entered into an agreement
wherein the plaintiff represented that it would not file
any additional pleadings in the foreclosure action until
August 19, 2013, to afford the defendant the opportunity
to bring the interest current on the note, but the defen-
dant failed to pay the requisite amount; (8) Matejek
was personally familiar with the plaintiff’s books and
records with respect to the amount owed by the defen-
dant; and (9) the plaintiff was the owner of the subject
note, mortgage, assignment of rents and all other loan
documents executed in connection with the defendant’s
debt. The defendant did not file a counteraffidavit or
any documentary evidence at any time to contradict
the plaintiff’s evidence or to support its special defense
to the action. Instead, the defendant relied on its argu-
ments that the Matejek affidavits and the certificate
were not admissible evidence and that, even if admissi-
ble evidence, they were insufficient to show that the
plaintiff had the right to enforce the note.
We begin with basic principles governing the enforce-
ment of the note at issue, which the parties agree is a
negotiable instrument. The mortgage note, as a negotia-
ble instrument, is governed by the provisions of Con-
necticut’s Uniform Commercial Code (UCC)
concerning negotiable instruments, General Statutes
§ 42a-3-101 et seq. Ulster Savings Bank v. 28 Brynwood
Lane, Ltd., 134 Conn. App. 699, 709, 41 A.3d 1077 (2012).
Under the UCC, a person entitled to enforce an instru-
ment includes the holder of the instrument or a non-
holder in possession of the instrument who has the
rights of a holder. General Statutes § 42a-3-301. ‘‘The
UCC’s official comment underscores that a person enti-
tled to enforce an instrument . . . is not limited to
holders. . . . A nonholder in possession of an instru-
ment includes a person that acquired rights of a holder
. . . under [§ 42a-3-203 (a)]. . . . Under § 42a-3-203
(b), [t]ransfer of an instrument . . . vests in the trans-
feree any right of the transferor to enforce the instru-
ment . . . . An instrument is transferred when it is
delivered by a person other than its issuer for the pur-
pose of giving to the person receiving delivery the right
to enforce the instrument. General Statutes § 42a-3-203
(a).’’ (Citation omitted; emphasis omitted; internal quo-
tation marks omitted.) J.E. Robert Co. v. Signature
Properties, LLC, 309 Conn. 307, 319–20, 71 A.3d 492
(2013). ‘‘Accordingly, a note that is unendorsed still can
be transferred to a third party. Although that third party
technically is not a holder of the note, the third party
nevertheless acquires the right to enforce the note so
long as that was the intent of the transferor.’’ Ulster
Savings Bank v. 28 Brynwood Lane, Ltd., supra,
709–10.
Here, the note at issue is payable to CBT or order,
and it was not endorsed to the order of the plaintiff.
The plaintiff is the successor in interest to CBT by virtue
of a merger, which became effective April 20, 2012. It
is undisputed that the plaintiff was in possession of the
original note and mortgage at all relevant times. The
trial court determined that the plaintiff was not the
‘‘holder’’ of the note; see General Statutes § 42a-1-201
(b) (21) (A); because the note was not payable to bearer
or to an identified person who is the person in posses-
sion of the note. The court further determined that the
plaintiff was a nonholder in possession of the instru-
ment who had the rights of a holder (CBT) as the ‘‘trans-
feree’’ by merger. Through the affidavits and attached
exhibits, which were not contradicted by a counteraffi-
davit or any documentary evidence by the defendant,
the court concluded that the plaintiff was the owner
of the note and had documented the essential facts
supporting its right to enforce the note. We agree with
the trial court.
The claims of the defendant addressed to its argu-
ment that the affidavits and certificate were not admissi-
ble evidence are not persuasive. The defendant argues
that the affidavits were deficient because they did ‘‘not
chronicle the chain of title of the note.’’ This argument
is comparable to the chain of custody argument raised
in New England Savings Bank v. Bedford Realty Corp.,
246 Conn. 594, 604–605, 717 A.2d 713 (1998). In that
case, our Supreme Court rejected the notion that a
proponent must prove a chain of custody in order to
authenticate a business record. Id. Any gap or break in
the chain of custody goes to the weight of the evidence
rather than its admissibility. Id. Our Supreme Court
provided the following policy reason for adopting such
a rule: ‘‘To require testimony regarding the chain of
custody of such documents, from the time of their cre-
ation to their introduction at trial, would create a nearly
insurmountable hurdle for successor creditors
attempting to collect loans originated by failed institu-
tions.’’ Id., 605.
The defendant’s arguments that the affidavits were
inadmissible evidence because there was no support
for Matejek’s statement that the plaintiff owned the
note and they lacked a statement that CBT was the
holder and owner of the note at the time of the merger
likewise fail. Matejek’s averred statements that he had
reviewed the records of CBT and the plaintiff and that
CBT had merged into Berkshire Bank, together with
the undisputed fact that the plaintiff had possession of
the original note and mortgage, supported Matejek’s
statement that the plaintiff was the owner of the note.
The failure to include a statement that CBT was the
holder and owner of the note at the time of the merger
did not preclude the court from rendering summary
judgment as to liability. The defendant has provided no
more than a mere allegation that CBT may have divested
itself of the ownership of the note before the merger.
No evidence whatsoever was provided in support of
such an allegation and, significantly, the plaintiff had
possession of the original note and mortgage. Accord-
ingly, this allegation, without more, did not create a
genuine issue of material fact under the circumstances
of this case.
We also reject the defendant’s claim that the affidavits
were not admissible evidence because Matejek failed
to state the basis for his sworn statement that he had
personal knowledge of the information contained in the
affidavits. ‘‘The witness’ personal knowledge goes to
the weight of the evidence, not to its admissibility.’’
Federal Deposit Ins. Corp. v. Carabetta, 55 Conn. App.
369, 376, 739 A.2d 301, cert. denied, 251 Conn. 927,
742 A.2d 362 (1999). Furthermore, as previously noted,
Matejek averred that he had reviewed the business
records of the plaintiff and CBT. ‘‘The defendant pro-
vides no authority, and we know of none, that precludes
affiants from obtaining personal knowledge of underly-
ing transactions by review of business records. Under
General Statutes § 52-180, to be competent to testify,
the affiant need only have personal knowledge of the
relevant business records.’’ (Footnote omitted; internal
quotation marks omitted.) American Home Mortgage
Servicing, Inc. v. Reilly, 157 Conn. App. 127, 136,
A.3d (2015).
With respect to the certificate, the defendant claims
that the letter from the Deputy Commissioner of Banks
and General Counsel, Division of Banks of the Common-
wealth of Massachusetts, certifying that its records indi-
cate that the merger of CBT with and into the plaintiff
was effective April 20, 2012, was not admissible evi-
dence. The defendant argues that the certificate was not
the best evidence of the merger and that ‘‘the relevant
merger documents’’ should have been produced. The
defendant provided no evidence whatsoever that the
merger did not take place or that the contents of the
certificate were inaccurate. Furthermore, ‘‘[t]he best
evidence rule is a preferential, rather than an exclusion-
ary rule.’’ Cadle Co. v. Errato, 71 Conn. App. 447, 453,
802 A.2d 887, cert. denied, 262 Conn. 918, 812 A.2d
861 (2002).
For the foregoing reasons, the court did not rely on
inadmissible evidence when it rendered its summary
judgment. The evidence presented by the plaintiff, as
contained in the affidavits and certificate, as well as
the fact that the plaintiff was in possession of the origi-
nal note and mortgage, were sufficient to establish that
the plaintiff had the requisite authority to enforce the
note. The plaintiff’s vice president, after reviewing the
business records of the plaintiff and CBT, and upon his
personal knowledge, averred that the note signed by
the defendant was payable to CBT, that the $977,000
debt was secured by a mortgage on the defendant’s
Prospect Street property, that the plaintiff was the suc-
cessor in interest to CBT by virtue of a merger that
was effective April 12, 2012, that the defendant was in
default because it failed to make payments of principal
and interest that were due on November 17, 2012, and
thereafter, that the plaintiff notified the defendant of
its default, that the plaintiff exercised its option to accel-
erate the entire indebtedness under the note, that the
defendant failed to cure its default, and that the plaintiff
was the owner of the note, mortgage and related
loan documents.5
It is difficult to draw any other inference from the
facts here except that the note and related loan docu-
ments were transferred from CBT to the plaintiff at the
time of the merger and that the plaintiff was the owner
of the note and mortgage when it commenced the fore-
closure action. The plaintiff established an undisputed
prima facie case. Without any evidence to contradict
the plaintiff’s evidence, there was no evidentiary foun-
dation to demonstrate the existence of a genuine issue
of material fact. Accordingly, we conclude that the court
did not err in rendering summary judgment in favor of
the plaintiff.
The judgment is affirmed and the case is remanded
for the purpose of setting a new sale date.
In this opinion the other judges concurred.
1
Two subsequent encumbrancers also were named as defendants in this
action, but they are not parties to this appeal. We therefore refer in this
opinion to The Hartford Club as the defendant.
2
Because these two claims are interrelated, we address them together in
this opinion.
3
The certification from the Division of Banks of the Commonwealth of
Massachusetts was attached to both affidavits and provided as follows:
‘‘This letter is to certify that records currently in the possession of the
Division of Banks indicate that The Connecticut Bank and Trust Company,
Hartford, Connecticut, merged with and into Berkshire Bank, Pittsfield,
Massachusetts under the charter, by-laws and name of Berkshire Bank
effective April 20, 2012. Berkshire Bank continues to operate as a state-
chartered savings bank under the provisions of Massachusetts General Laws
chapter 168 and other related statutes subject to supervision and examina-
tion by the Commissioner of Banks.’’ The letter was signed by Joseph A.
Leonard, Jr., the deputy commissioner of banks and general counsel.
4
Our Supreme Court has concluded that standing to enforce a note extends
to a holder in possession of the note, who is presumed to be the owner of
the debt unless the presumption is rebutted; RMS Residential Properties,
LLC v. Miller, 303 Conn. 224, 231–32, 32 A.3d 307 (2011), overruled in part
by J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307, 325 n.18,
71 A.3d 492 (2013); and to a plaintiff who is not the owner or holder of the
note and mortgage if it otherwise has established the right to enforce those
instruments. J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307,
327–28, 71 A.3d 492 (2013).
5
The affidavits additionally provided the amounts due as a result of the
defendant’s default, but the amount of the debt has not been challenged
on appeal.