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Standing in Mortgage Foreclosures

Posted By USFN, Thursday, October 3, 2013
Updated: Wednesday, October 14, 2015

October 3, 2013

 

by Robert Wichowski
Bendett & McHugh, P.C. – USFN Member (Connecticut, Maine, Vermont)

In the latest in a series of cases recently handed down by Connecticut’s high courts regarding standing in mortgage foreclosures, the Supreme Court (Connecticut’s highest appellate court), in Equity One v. Shivers, 301 Conn. 190, overturned the appellate court’s decision that required an evidentiary hearing be held every time a party attempts to challenge a foreclosing plaintiff’s standing. This author’s firm represented the plaintiff in the appeal.

The appellate court’s decision had wide implications in Connecticut practice, as some trial courts interpreted the case to require a full evidentiary hearing, replete with fact witnesses, anytime a defendant merely uttered the word “standing.” It was the plaintiff’s contention that the appellate court’s opinion also contradicted longstanding decisional law, which stated that the production of the note, endorsed in blank, created a presumption of standing requiring the opposing party to introduce and prove facts that would limit the right to enforce the note.

The plaintiff had obtained judgment previously, at which time the defendant did not object or attempt to challenge the plaintiff’s standing. Prior to the sale being held, the matter was stayed due to the defendant’s bankruptcy filing. The plaintiff moved to reset judgment after obtaining relief from the automatic stay. It was at this hearing that the defendant filed a motion to compel the production of the original documents and an objection to the plaintiff’s motion to re-set judgment, claiming that the plaintiff did not have standing to commence the action. The defendant’s objection was devoid of any documentary evidence. The defendant appealed, inter alia, the entry of judgment absent a hearing to determine whether the plaintiff had standing to commence the action. The appellate court held that the borrower’s oral challenges and written statements were sufficient to require the lower court to hold a “trial-like evidentiary hearing” on the issue of standing. The plaintiff appealed to the Connecticut Supreme Court.

The Supreme Court held that the defendant had failed to demonstrate, either at the time of the entry of judgment or on appeal, that the trial court’s finding that the plaintiff had standing was flawed or that the trial court’s procedure was inadequate. The defendant did not object to the authenticity of the note or mortgage and offered no evidence to the trial court or on appeal that the plaintiff was not in possession of the note when it commenced the action. The court also opined that it was proper for the trial court to rely on the representation of counsel, as an officer of the court, that the note presented to the court in connection with the entry of judgment was the same note that the plaintiff held at the time of commencement of the action.

Also, the Supreme Court looked to the date of execution of the assignment of mortgage and noted that it was executed 20 days prior to the commencement of the action. Although there is no firm requirement that the foreclosing plaintiff be assigned the mortgage prior to commencement, it is interesting to note that the court looked at that date as further proof of the plaintiff’s standing.

The Supreme Court’s opinion reduces the likelihood of meritless and dilatory challenges to a foreclosing plaintiff’s standing, and evidentiary hearings required as a result thereof.

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