Norwest Mortgage, Inc. v. Cook, No. 546601 (May 21, 1999)

[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]

MEMORANDUM OF DECISION RE: PLAINTIFF'S MOTION TO STRIKE (#117) I. FACTS On May 26, 1998, the plaintiff, Norwest Mortgage, Inc., filed a complaint against Kenneth P. Cook, Jr. and Nancy Anne Cook (hereinafter the "defendants"),¹ seeking foreclosure of a mortgage, immediate possession of the mortgaged property, a deficiency judgment, appointment of a receiver and reasonable attorney's fees and costs.

According to the complaint, the plaintiff is an assignee of a note and mortgage executed by the defendants to the McCue Mortgage Company (hereinafter "McCue"). The defendants allegedly mortgaged property located at 279 Black Ash Road in Montville, Connecticut, to McCue in exchange for $175,000. Through various subsequent assignments, the plaintiff now allegedly holds and owns the note and mortgage.

The plaintiff alleges that the defendants have an unpaid balance of $172,361.83 in principal, plus interest and late charges from October 1, 1996 to present and continuing. The plaintiff also alleges that it has exercised its option to declare the entire balance due and payable.

On August 25, 1998, the defendants filed their answer and two special defenses to the plaintiff's complaint. Their first special defense alleges that the plaintiff improperly administered the defendants' account by: (1) failing to properly calculate the indebtedness; (2) failing to accept payments made in a timely fashion; (3) failing to properly credit payments; and (4) misapplying payments made and failing to account for payments made. Their second special defense alleges that the plaintiff, "in accepting payments and through other conduct, has waived its right to accelerate the indebtedness." CT Page 6711

On January 25, 1999, the plaintiff filed a motion to strike both of the defendants' special defenses. The defendants timely filed a memorandum in opposition to which the plaintiff filed a reply. This court heard oral argument at short calendar on February 22, 1999.

II. DISCUSSION "A motion to strike is the proper vehicle by which to contest the legal sufficiency of any special defense contained in an answer to the complaint." Doran v. Waterbury Parking Authority,35 Conn. Super. Ct. 280, 281, 408 A.2d 277 (1979); Practice Book § 10-39 (a)(5). "In its ruling on the [plaintiff's] motion to strike, the trial court [has an] obligation to take the facts to be those alleged in the special defenses and to construe the defenses in the manner most favorable to sustaining their legal sufficiency."Connecticut National Bank v. Douglas, 221 Conn. 530, 536,606 A.2d 684 (1992).

"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." Grant v.Bassman, 221 Conn. 465, 472-73, 604 A.2d 814 (1992); Practice Book § 10-50.

The grounds for the plaintiff's motion to strike are twofold: (i) the special defenses are not valid defenses to a foreclosure action because they fail to attack the making, validity or enforcement of the note and mortgage; and (ii) the special defenses are mere legal conclusions and fail to allege supporting facts. The defendants argue in opposition that their special defenses allege sufficient facts showing: (i) that the plaintiff has failed to administer the account properly; and (ii) that the plaintiff has waived its right to accelerate the debt. These special defenses, the defendants argue, directly affect the enforceability of the note and mortgage.

"The traditional defenses available in a foreclosure action are payment, discharge, release, satisfaction or invalidity of a lien. . . . In recognition that a foreclosure action is an equitable proceeding, courts have allowed [inter alia] mistake, accident, fraud, equitable estoppel. . . . While courts have recognized equitable defenses in foreclosure actions, they have generally only been considered proper when they attack the CT Page 6712making, validity or enforcement of the lien, rather than some act or procedure of the lienholder. . . ." (Citations omitted; internal quotation marks omitted; emphasis added.) Dime SavingsBank v. Albir, Superior Court, judicial district of Stamford/Norwalk, Docket No. 132582 (February 7, 1995, D'Andrea, J.). "Courts have not been receptive to foreclosure defendants who have asserted defenses . . . based on factors outside of the note or mortgage." (Internal quotation marks omitted.) Home Savings of America, Inc. v. Newkirk, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. 150962 (January 5, 1998, Hickey, J.).

A. FIRST SPECIAL DEFENSE The first special defense alleges that the plaintiff improperly administered the account by allegedly: (1) failing to properly calculate the indebtedness; (2) failing to accept payments made in a timely fashion; (3) failing to properly credit payments; and (4) misapplying payments made and failing to account for payments made.

These allegations, albeit not factually specific, do not attack the making, validity or enforcement of the note or mortgage. Equitable defenses to a foreclosure action are only proper when they attack the note itself, rather than some act or omission by the mortgagee. See Great Western Bank v. McNulty, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. 139799 (March 15, 1995, D'Andrea, J.). Here, the defendants essentially claim that the plaintiff erroneously concluded that the account is in default because of miscalculations and improperly withholding credits. "Miscalculat[ions] [of] the amount of interest and other charges for which the defendants are allegedly liable . . . [do] not amount to an equitable defense which may be raised in a foreclosure action." Ali Inc. v. Veronneau, Superior Court, judicial district of Waterbury, Docket No. 126431 (October 11, 1996, Kulawiz, J.) (17 Conn. L. Rptr. 677). If the defendants prove these allegations, they would only be successful in contesting the amount of the debt. See F.D.I.C. v. Brunetti, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 294979 (March 31, 1993, Fuller, J.) (holding improper calculation of mortgage debt not recognized defense to foreclosure). Proof of these allegations would not, however, attack the making, validity or enforcement of the note itself. The first special defense, therefore, is legally insufficient. CT Page 6713

Accordingly, the motion to strike the first special defense is granted.

B. SECOND SPECIAL DEFENSE The second special defense alleges that the plaintiff waived its right to acceleration by accepting payments. The defense of waiver is permissible in a foreclosure action, provided that the defense addresses the making, validity or enforcement of the note or mortgage. See Southbridge Association v. Garofalo, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 339031 (October 7, 1997, West, J.); Berkeley Federal Bank Trustv. Rotko, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 318648 (January 25, 1996, West, J.);Security Pacific National Trust Co. v. Rolny, Superior Court, judicial district of Litchfield, Docket No. 065267 (July 31, 1995, Pickett, J.); People's Bank v. Perkins, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 310482 (November 3, 1994, Ballen, J.); The Glastonbury Bank Trust Co.v. Corbett Construction Co., Superior Court, judicial district of New London, Docket No. 521355 (October 15, 1992, Walsh, J.) (7 Conn. L. Rptr. 519, 520). Our Supreme Court has held that inconsistent conduct on the part of the mortgagee, such as previously accepting late payments, may amount to a waiver of the right to accelerate the debt. See Christensen v. Cutaia,211 Conn. 613, 619-20, 560 A.2d 456 (1989). Because the mortgagee's right to accelerate the debt is a necessary prerequisite to maintaining its foreclosure action; see Hartford Federal Savings Loan Assn. v. Tucker, 196 Conn. 172, 180, 491 A.2d 1084 (1985) ("institution of a foreclosure action constitutes a valid exercise of a mortgagee's acceleration rights"); CiticorpMortgage, Inc. v. Porto, 41 Conn. App. 598, 603, 677 A.2d 10 (1996) ("notice of acceleration is a necessary condition precedent to an action for foreclosure"); it logically follows that the defense of waiver is a valid special defense to a foreclosure action.

"In order for [a mortgagee] to have waived its right to foreclosure, there would have to be an intentional relinquishment of that right on their part. Such relinquishment may be implied if the circumstances deem reasonable to do so. . . . The conduct of both parties is relevant in determining whether there has been a waiver. (Citations omitted.) Milford Bank v. Barbieri, Superior Court, judicial district of Ansonia/Milford at Milford, Docket CT Page 6714 No. 043315 (August 30, 1994, Curran, J.).

The defendants allege that the plaintiff accepted payments. Construing this allegation in the light most favorable to sustaining its legal sufficiency, this court finds that the second special defense alleges sufficient facts to demonstrate the plaintiff's waiver of its right to accelerate the debt due. If proven, this defense would certainly affect the plaintiff's right to enforce the note. On the other hand, if the plaintiff proves the existence of a non-waiver clause as in Christensen v.Cutaia, supra, then this defense would fail.² As pleaded, however, this special defense is legally sufficient.

Accordingly, the motion to strike the second special defense is denied.

III. CONCLUSION The court grants the motion to strike with respect to the first special defense, and denies the motion as to the second special defense.

Martin, J.