HSBC Bank USA, National Assn. v. Karlen

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HSBC BANK USA, NATIONAL ASSOCIATION,
TRUSTEE v. GERARD M. KARLEN ET AL.
(AC 41432)
Elgo, Bright and Devlin, Js.
Syllabus
The plaintiff bank sought to foreclose a mortgage on certain real property
owned by the defendant C, who, together with the defendant K, had
executed a certain promissory note in 2006, which was secured by a
mortgage on the subject property. In its complaint, the plaintiff alleged,
inter alia, that the note was affected by a 2010 loan modification agree-
ment, that the mortgage was assigned to the plaintiff in 2012, that the
plaintiff was the holder of the note, that the note was in default for
nonpayment, and that the plaintiff had elected to accelerate the balance
due on the note and to declare the note due in full. Thereafter, the
plaintiff filed a motion for summary judgment as to liability and attached
an affidavit from D, the vice president for loan documentation for the
plaintiff’s servicing agent, who attested concerning the history of the
2006 note, including averring that the defendants had defaulted on the
note by failing to make their May, 2013 payment or any payment there-
after. D attached to her affidavit a copy of the 2006 note and mortgage,
the 2012 assignment and a notice of default letter sent by the plaintiff
to the defendants in November, 2013, but she did not mention or attach
the 2010 loan modification agreement. The defendants did not file an
objection to the motion for summary judgment. The trial court granted
the plaintiff’s motion for summary judgment as to liability and, thereafter,
rendered a judgment of foreclosure by sale, from which the defendants
appealed to this court. Held that the trial court improperly granted the
plaintiff’s motion for summary judgment as to liability, the plaintiff
having failed to establish an undisputed prima facie case for foreclosure:
despite the allegations in the plaintiff’s complaint, D’s supporting affida-
vit and the attached documents regarding the defendants’ default on the
2006 loan, the plaintiff pleaded that a 2010 loan modification agreement
affected the 2006 note but, thereafter, failed to provide the trial court
with a copy of that agreement or any evidence of its terms, and, therefore,
that court had no way to assess whether the agreement had a substantive
effect on the 2006 note or to ascertain whether the agreement modified
any conditions precedent to foreclosure, whether the defendants were
in default of the agreement or whether the plaintiff was in compliance
with its terms, and although the defendants did not file an objection to
the motion for summary judgment or raise an issue concerning the
absence of the agreement via a special defense or otherwise before the
trial court, it was the plaintiff’s burden to establish its prima facie
case; moreover, there was no merit to the plaintiff’s contention that it
presented evidence that the defendants defaulted on the loan as modified
in 2010, as the notice of default letter was not proof of any default, D
did not aver in her affidavit to a default on the modified note, and the
fact that the plaintiff provided the trial court with an affidavit averring
to a default without producing evidence of the underlying obligation
that is in default was insufficient to establish entitlement to summary
judgment.
Argued October 25, 2019—officially released January 7, 2020
Procedural History
Action to foreclose a mortgage on certain real prop-
erty owned by the defendant Carla Rivers Karlen, and
for other relief, brought to the Superior Court in the
judicial district of Stamford-Norwalk, where the court,
Randolph, J., granted the plaintiff’s motion for summary
judgment as to liability; thereafter, the court, Genuario,
J., rendered a judgment of foreclosure by sale, from
which the named defendant et al. appealed to this court.
Reversed; further proceedings.
Thomas P. Willcutts, with whom, on the brief, was
Michael J. Habib, for the appellants (named defendant
et al.).
Sean R. Higgins, for the appellee (plaintiff).
Opinion
BRIGHT, J. The defendants Gerard M. Karlen and
Carla Rivers Karlen1 appeal from the judgment of fore-
closure by sale rendered by the trial court in favor of
the plaintiff, HSBC Bank USA, National Association, as
Trustee for Wells Fargo Asset Securities Corporation,
Mortgage Pass-Through Certificates, Series 2007-2. On
appeal, the defendants claim that the trial court improp-
erly granted the plaintiff’s motion for summary judg-
ment as to liability.2 We reverse the judgment of the
trial court.
In 2014, the plaintiff commenced the underlying fore-
closure action against the defendants with regard to
property located at 10 Pheasant Lane in Westport. The
plaintiff alleged the following facts in its complaint.
On November 2, 2006, the defendants executed and
delivered to Mortgage Electronic Registration Systems,
Inc., as nominee for Wall Street Mortgage Bankers, Ltd.,
doing business as Power Express, a note for a loan in
the original principal amount of $800,000, which was
secured by a mortgage on the property.3 The note was
thereafter affected by a loan modification agreement
dated effective November 17, 2010. The mortgage subse-
quently was assigned to the plaintiff by virtue of an
assignment of mortgage dated February 2, 2012, and
the plaintiff is the holder of the note. The note was in
default, and the plaintiff elected to accelerate the bal-
ance due and declared the note to be due in full. When
payment was not made, the plaintiff filed this action to
foreclose the mortgage that secured the note.
In their answers and in a later disclosure of defenses,
the defendants denied the essential allegations of the
plaintiff’s complaint and alleged defenses, including
lack of jurisdiction, lack of standing, misapplied pay-
ments, and the lack of a contract between the parties.
On May 17, 2016, the plaintiff filed a motion for sum-
mary judgment as to liability. Attached to the plaintiff’s
motion was the affidavit of Diane F. Duckett, the vice
president of loan documentation for Wells Fargo Bank,
N.A., the servicing agent for the plaintiff. Duckett
averred that the defendants executed a promissory note
dated November 2, 2006, in the amount of $800,000,
with the first payment being due on or about January
1, 2007, and the final payment being due on December
1, 2036. She further averred that the note was endorsed
in blank and that the plaintiff was in possession of the
note when this foreclosure was commenced in 2014.
Duckett averred that the defendants executed a mort-
gage, also on November 2, 2006, conveying the property
to Mortgage Electronic Registration Systems, Inc., as
nominee for Wall Street Mortgage Bankers, Ltd., doing
business as Power Express, which thereafter was
assigned to the plaintiff in an assignment dated January
31, 2012. Duckett averred that the ‘‘unpaid balance of
the note [was] $846,894.50 plus interest from [April 1,
2013],’’ and that the defendants had failed to make their
May 1, 2013 payment or any payment thereafter. Duck-
ett attached a copy of the November 2, 2006 note and
mortgage to her affidavit. She also attached the January
31, 2012 assignment and a default letter sent by the
plaintiff to the defendants on November 26, 2013, notify-
ing them that they had past due payments of $50,602.86.4
She did not mention or attach the November 17, 2010
loan modification agreement. Nevertheless, the plain-
tiff’s memorandum of law in support of its motion for
summary judgment did state that the note ‘‘was modi-
fied by virtue of a [m]odification [a]greement dated
effective November 17, 2010.’’
On August 11, 2017, the defendants filed a motion
for an extension of time to respond to that plaintiff’s
motion for summary judgment so that they could pursue
additional discovery, which the court granted,
extending the filing deadline for the defendants’ opposi-
tion to October 10, 2017. The defendants, however, did
not file a response to the plaintiff’s motion. The court
scheduled the short calendar hearing on the plaintiff’s
motion for summary judgment as to liability for Decem-
ber 18, 2017. On December 15, 2017, the defendants
filed a motion for continuance of the December 18,
2017 hearing on the ground that their counsel was
unavailable on that date; they requested a one to two
week continuance. Despite the defendants’ request for
a continuance and the plaintiff’s acknowledgment to
the court that such a motion had been filed, the court
stated that it did not have the motion for continuance
in front of it, and it granted the plaintiff’s motion for
summary judgment, without argument and in the defen-
dants’ absence.
On February 7, 2018, the plaintiff filed a motion for a
judgment of strict foreclosure, to which the defendants
objected. On February 20, 2018, the court rendered a
judgment of foreclosure by sale, setting a sale date of
April 28, 2018. This appeal followed.
On appeal, the defendants claim that the court
improperly granted the plaintiff’s motion for summary
judgment as to liability. Specifically, they argue that
although the plaintiff readily acknowledged in both its
complaint and in its memorandum of law in support of
its motion for summary judgment that the parties had
entered into a loan modification agreement on Novem-
ber 17, 2010 (2010 modification agreement), neither the
plaintiff nor its affiant, Duckett, ever alleged that the
defendants were in default of the 2010 modification
agreement; the only allegation of default was as to the
original November 2, 2006 promissory note (2006 note),
which, the plaintiff acknowledges in its complaint, was
‘‘affected’’ by the 2010 modification agreement. The
defendants further argue that the plaintiff also failed
to provide a copy of the 2010 modification agreement
to the court or to set forth its terms. Accordingly, they
argue, the court improperly rendered summary judg-
ment because it had no way of ascertaining whether
the defendants were in default of the 2010 modification
agreement or whether the plaintiff, itself, was in compli-
ance with the terms of that agreement. We agree.
‘‘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. . . . When documents sub-
mitted in support of a motion for summary judgment
fail to establish that there is no genuine issue of material
fact, the nonmoving party has no obligation to submit
documents establishing the existence of such an issue.
. . . Once the moving party has met its burden, how-
ever, the opposing party must present evidence that
demonstrates the existence of some disputed factual
issue. . . . It is not enough, however, for the opposing
party merely to assert the existence of such a disputed
issue. Mere assertions of fact . . . are insufficient to
establish the existence of a material fact and, therefore,
cannot refute evidence properly presented to the court
under Practice Book § [17-45]. . . . Our review of the
trial court’s decision to grant [a] motion for summary
judgment is plenary.’’ (Citations omitted; footnote omit-
ted; internal quotation marks omitted.) Allstate Ins. Co.
v. Barron, 269 Conn. 394, 405–406, 848 A.2d 1165 (2004).
‘‘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, 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
[render] summary judgment as to liability in a foreclo-
sure action if the complaint and supporting affidavits
establish an undisputed prima facie case and the defen-
dant fails to assert any legally sufficient special
defense.’’ (Citations omitted; internal quotation marks
omitted.) GMAC Mortgage, LLC v. Ford, 144 Conn. App.
165, 176, 73 A.3d 742 (2013).
In the present case, the plaintiff, in its complaint,
alleged that it was the holder of the 2006 note that was
secured by the defendants’ mortgage on the property.
See U.S. Bank National Assn. v. Eichten, 184 Conn.
App. 727, 744, 196 A.3d 328 (2018) (‘‘[a] holder of a note
is presumed to be the owner of the debt, and unless the
presumption is rebutted, may foreclose the mortgage
under [General Statutes § 49-17]’’ [internal quotation
marks omitted]). This allegation is supported by the
affidavit of Duckett and by copies of the 2006 note and
mortgage attached to her affidavit. The plaintiff also
alleged in its complaint that the defendants were in
default of the 2006 note and mortgage; this allegation
also is supported by Duckett’s affidavit in which she
attests that the defendants have failed to make their
May 1, 2013 payment on the 2006 note and that they
failed to make every payment thereafter. The plaintiff
also alleged in its complaint that it complied with the
conditions precedent to foreclosure, as established by
the 2006 note and mortgage; this allegation also is sup-
ported by Duckett’s affidavit and her supporting doc-
uments.
Nevertheless, despite these allegations and the sup-
porting affidavit and documents, the plaintiff’s com-
plaint also alleged that the 2006 note was the subject
of a modification agreement in 2010; Duckett’s affidavit,
however, contains no mention of the 2010 modification
agreement or its terms. The complaint also failed to set
forth the terms of the 2010 modification agreement and
what effect that agreement had on the 2006 note. Addi-
tionally, there is no copy of the 2010 modification agree-
ment in the record, which may have allowed the court
to assess whether the agreement had a substantive
effect on the 2006 note on which the defendants were
alleged to have defaulted. The trial court also had no
way of assessing whether the 2010 modification agree-
ment modified any conditions precedent to foreclosure.
See id. (to establish prima facie case in foreclosure
action, plaintiff must prove, among other things, that
it satisfied all conditions precedent to foreclosure).
Although the plaintiff argues that the defendants did
not file an objection to its motion for summary judgment
or raise an issue concerning the absence of the 2010
modification agreement via a special defense or other-
wise before the trial court, because it is the plaintiff’s
burden to establish its prima facie case before it is
entitled to summary judgment, this argument is not
persuasive. See Bayview Loan Servicing, LLC v. Fri-
mel, 192 Conn. App. 786, 795, 218 A.3d 717 (2019) (trial
court, before granting motion for summary judgment
as to liability in foreclosure action, first must determine
whether plaintiff has established prima facie case, even
if defendant has not filed opposition). The plaintiff
pleaded the existence of a loan modification agreement
that ‘‘affected’’ the 2006 note and, thereafter, failed to
produce that agreement or to provide any evidence of
its terms.
Alternatively, the plaintiff argues that it did present
evidence that the defendants defaulted on the loan as
modified in 2010. In particular, the plaintiff argues that
Duckett averred that the defendants defaulted on their
obligations in May, 2013, more than two years after the
modification and that the notice of default attached to
Duckett’s affidavit is dated November 26, 2013, more
than three years after the modification. We are not per-
suaded.
The default notice is nothing more than an allegation
of a default. It is not proof of any default. Furthermore,
Duckett’s affidavit avers that the defendants ‘‘are in
default under the terms of the [n]ote and [m]ortgage
. . . .’’ The affidavit defines the note as ‘‘a [p]romissory
[n]ote . . . dated [November 2, 2006] . . . .’’ Nowhere
in Duckett’s affidavit does she aver a default on the
modified note. Finally, there is little question that
merely providing the court with an affidavit averring to
a default without producing evidence of the underlying
obligation that is in default would be insufficient for
the court to render summary judgment.
Accordingly, in the present case, the plaintiff did not
establish an undisputed prima facie case, and we con-
clude that the court improperly granted the plaintiff’s
motion for summary judgment as to liability. See U.S.
Bank National Assn. v. Eichten, supra, 184 Conn. App.
744 (court properly may grant motion for summary
judgment as to liability in foreclosure action only if
complaint and supporting affidavits establish undis-
puted prima facie case).
The judgment is reversed and the case is remanded
for further proceedings according to law.
In this opinion the other judges concurred.
1
The Internal Revenue Service has an interest in the subject property and
was named as a defendant in this case, but has not participated in this
appeal. We, therefore, refer to Gerard M. Karlen and Carla Rivers Karlen
as the defendants throughout this opinion.
2
The defendants also had claimed that the court erred in failing to grant
their motion for a continuance. During oral argument before this court,
however, the defendants’ counsel acknowledged that he could not demon-
strate prejudice flowing from the trial court’s failure to grant the defendants’
motion for a continuance. Accordingly, the defendants cannot succeed on
this claim, and we afford it no review. See Bove v. Bove, 93 Conn. App. 76,
84, 888 A.2d 123 (‘‘[a]bsent a showing of actual prejudice, the court will not
be found to have abused its discretion when denying the defendant’s motion
for a continuance’’ [internal quotation marks omitted]), cert. denied, 277
Conn. 919, 895 A.2d 788 (2016).
3
On July 6, 2012, Carla Rivers Karlen became the owner of the property
by way of a quit claim deed.
4
The 2006 note attached to Duckett’s affidavit demonstrates that the
defendants’ monthly payments were $4990.96. Duckett averred that the
defendants were ‘‘in default under the terms of the [n]ote and [m]ortgage
by failing to make the payment due for [May 1, 2013] and every payment
thereafter.’’ The default letter attached to Duckett’s affidavit, dated Novem-
ber 26, 2013, states that the defendants owe past due payments of $50,602.86
and other fees of $2855, for a total delinquency as of that date of $53,457.86.
If the defendants had failed to make seven successive monthly payments
of $4990.96, it appears that their past due amount would be $34,936.72.
Neither the default letter nor Duckett’s affidavit explains the significant
difference in these amounts.