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Trial Court Decision on Standing, Laches, Unclean Hands Upheld on Appeal

Posted By USFN, Monday, October 21, 2019
Updated: Tuesday, October 15, 2019

by Jeffrey M. Knickerbocker
Bendett & McHugh, P.C.
USFN Member (CT, MA, ME, NH, RI, VT)

In U.S. Bank v. Fitzpatrick, 190 Conn. App. 773 (2019), the Connecticut Appellate Court upheld the decision of a trial court which entered a judgment of strict foreclosure[1] in favor of plaintiff.  This was, in fact, the second foreclosure against this particular defendant involving the same mortgage.  The first action was not resolved through foreclosure mediation, and the plaintiff had thereafter prevailed in establishing liability of the defendant on a motion for summary judgment, defeating the defendant’s defenses which challenged plaintiff’s standing to foreclose. However, before the plaintiff secured a final foreclosure judgment in this initial foreclosure, the case was dismissed pursuant to the court’s docket management program, and the court declined to open that dismissal, which necessitated the restarted, second foreclosure action.   The borrower then attempted to challenge the second foreclosure action by claiming that the length of time (six years) from the time of the default to the commencement of the action, precluded the mortgagee and holder of the note from enforcing the note and mortgage. In addition, the defendant again claimed that the plaintiff lacked standing.  The trial court rejected the borrower’s arguments the mortgagee could not enforce the mortgage, and the appellate court affirmed that decision.  Fitzpatrick v. U.S. Bank, 173 Conn. App. 686, cert denied 327 Conn. 902 (2017).      

As far as the standing argument, the defendant claimed that the two specific endorsements on the note, neither to the plaintiff, required the court to find that the plaintiff was not the holder of the note and therefore the plaintiff lacked the standing to foreclose. The trial court rejected these arguments and found that the note was endorsed in blank, making same bearer paper.  Further, the appellate court had found “…(t)he defendant did not address the blank endorsement contained on page three of the note in his memorandum of law in support of his motion to dismiss or in his supplemental objection to the plaintiff's motion for summary judgment.” U.S. Bank, Nat'l Ass'n v. Fitzpatrick, supra, 190 Conn. App. at 781, n.9.  Defendant argued that a voided endorsement somehow invalidated the other endorsements.  Neither the trial court nor the appellate court were swayed by this argument.

The defendant also claimed that the trial court erred in entering a judgment of foreclosure because of defendant’s laches and unclean hands argument.  Laches is a defense that alleges that there has been inexcusable delay which prejudices the defendant.  The defense of unclean hands alleges that the defendant should be granted equitable relief in this foreclosure case because plaintiff had acted unfairly.  Defendant claimed that summary judgment, which can only be granted when there is no genuine issue of fact and when plaintiff is entitled to judgment as a matter of law, was inappropriate because issues existed as to whether (1) the plaintiff's delay in commencing this action caused the debt to become greater than his equity in the property, (2) the value of the property declined as a result of the plaintiff's delay, and (3) the plaintiff's delay had been fair, equitable and honest.  The trial court had observed from the record of the first foreclosure that delays were caused by the defendant during the first action by his efforts to extend foreclosure mediation.  The appellate court pointed out that defendant failed to provide any evidence to support his assertions.  Accordingly, the appellate court found that bald assertions of the defendant were insufficient to satisfy his burden to preclude the entry of judgment in plaintiff’s favor.

This case underscores the importance of avoiding unnecessary delays in foreclosure actions. An unnecessary delay can be used, unsuccessfully in this case, as an equitable means, known as laches, to defend a foreclosure action in Connecticut, where there is no specific statute of limitations on foreclosures.

[1] The rare form of judicial foreclosure in Connecticut and Vermont that permits a lender to take title without a sale.


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