Bank of New York Mellon v. Bell et al

Filing 274

MEMORANDUM OF DECISION. On the basis of all of the evidence and arguments, I find in plaintiff's favor. A judgment of strict foreclosure shall enter accordingly. With respect to plaintiff's request for scheduling of law days and an immediat e order of possession of the property, the parties shall jointly submit a proposed consent order to set such schedule; if they are unable to agree on the terms of such an order, the parties shall appear before the Court for a hearing to set such schedule. That hearing is set for 1/8/2015 at 3:30 PM in Courtroom Two, 915 Lafayette Blvd., Bridgeport, CT before Judge Jeffrey A. Meyer. Please see attached ruling. Signed by Judge Jeffrey A. Meyer on 12/18/2014.(Ramesh, S)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

BANK OF NEW YORK MELLON,
as Trustee for BS ALT A 2005-9,
Plaintiff,

No. 3:11-cv-1255 (JAM)

v.
SONJA BELL and
JOHNATHAN BELL,
Defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW
Plaintiff is a bank that seeks foreclosure on the home of defendants Sonja and Johnathan
Bell. The Court conducted a five-day bench trial in this matter from September 22 to September
26, 2014. For reasons set forth below, I conclude that plaintiff has proven all the requisites for a
judgment of foreclosure and that the defendants‘ defenses are without merit.
FINDINGS OF FACT
On June 17, 2005, defendant Sonja Bell closed on a loan and mortgage in the amount of
$650,000 in connection with residential property at 54 Main Street in South Glastonbury,
Connecticut. The original note, which was entered into evidence at trial, reflects Sonja Bell‘s
blue-ink signature (Pl.‘s Ex. 1), and the mortgage securing it also bears her signature and was
duly recorded (Pl.‘s Ex. 2). The attorney who represented her, James Wittstein, testified credibly
at trial about the closing, at which he was present, and about related documentation.

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Both of the Bells are well educated and have extensive professional work backgrounds.
There is no question in my mind that they fully understood the nature of the mortgage transaction
that Sonja Bell was entering into and the obligations to be undertaken.1
The proceeds of the loan, along with the proceeds of a second loan not at issue in this
litigation, were used to satisfy an earlier mortgage on Sonja Bell‘s property (Pl.‘s Exs. 94, 99),
and the remaining balance after the satisfaction of her earlier mortgage was distributed directly to
her (Pl.‘s Exs. 96, 99). Both defendants testified that they have lived in and shared the home as
husband and wife, and that Johnathan Bell took care of all matters relating to the mortgage and
for which purpose he was made an authorized third party with the loan servicer (Pl.‘s Exs. 53,
59). Testimony at trial established the property‘s current market value to be around $550,000
(Pl.‘s Ex. 82).
The Bells made payments on the loan for about two years (Pl.‘s Exs. 42–44). By early
2007, however, their payments had become irregular, and after a last payment in late September
2007, they stopped altogether (Pl.‘s Exs. 44–47). Since then the Bells have continued to live in
the house but have not made any mortgage payments. They have also failed to pay any of the
real estate taxes, which have since been paid by the bank on their behalf.
The trial evidence showed numerous entities involved with the ownership and servicing
of the Bells‘ mortgage, and its eventual placement into a pool of mortgages known as BS Alt A
2005-9. The note was originally in favor of Altara Home Mortgage, LLC (Pl.‘s Ex. 1). Allonges
that are attached to the note reflect its endorsement from Altara to Ohio Savings Bank; then from
Ohio Savings Bank to JPMorgan Chase Bank, as Trustee; and in two successive allonges,
apparently revised for clarity, from JPMorgan to the Bank of New York Mellon, as Trustee, and
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Defendants proceeded pro se at trial. Johnathan Bell has previously worked as a paralegal, and he conducted all of
the defendants‘ case in court. Notwithstanding his lack of formal legal training, he proved himself to be an
exceptionally bright, diligent, and resourceful trial advocate.

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from JPMorgan to the Bank of New York Mellon, as Trustee for BS Alt A 2005-9 (Ibid.). In
addition to the endorsements on the note allonges, the assignment of the mortgage to the Bank of
New York, as Trustee for BS Alt A 2005-9, was recorded (Pl.‘s Exs. 3-4).
EMC Mortgage Corporation was the loan‘s servicer until June 2006 (Pl.‘s Ex. 42), when
servicing was transferred to Wells Fargo and began to be performed by America‘s Servicing
Company (ASC) (Pl.‘s Exs. 43–47), which is a division of Wells Fargo that services loans
originating from other lenders. Abundant evidence of Wells Fargo‘s right to service the Bells‘
mortgage loan was offered at trial, including powers of attorney granted by the Bank of New
York to Wells Fargo (Pl.‘s Exs. 24–31) and other documents relating to their custodial agreement
(Pl.‘s Exs. 32–34).
On June 18, 2007, ASC sent Sonja Bell a default and demand letter (Pl. Exs. 22, 53).
Although the Bells dispute receiving the letter, I conclude by a preponderance of the evidence
that the servicer sent it in accordance with testimony about its regular business practice and that
the Bells received it. In any event, it is undisputed that by the summer of 2007, the Bells knew
that they were not making their payments. Indeed, even apart from the formal default notice, the
loan servicer repeatedly contacted the Bells. A letter from ACS‘s Borrower Counseling Services
and addressed to Sonja Bell, dated May 3, 2007, memorializes a conversation in which, as the
letter says, ―we were unable to reach a mutual agreement regarding the options available to assist
you with your current situation‖ (Pl.‘s Ex. 64). The letter provided information about a credit
counseling agency and requested further contact ―as soon as possible‖ (Ibid.). The loan servicer
attempted to contact the Bells by telephone many times in late May and early June 2007 and
finally succeeded on June 14 (Pl.‘s Ex. 53). Notations made in the call log indicate that the Bells
were unable or unwilling to provide information or commit to payment (Ibid.). Other evidence

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showed extensive efforts by the ACS loss mitigation department to negotiate a payment plan
with the Bells until December 2007 (Pl.‘s Ex. 52). Even as late as August 2009, the Bells were
given an opportunity in light of their non-payment to engage in a ―short sale‖ of their property to
avoid further collection activity or a foreclosure action (Pl‘s Ex. 73). On the basis of extensive
testimony at trial, it is clear that the bank tried to work with the Bells to give them an opportunity
to become current on the loan but that the Bells did not wish to pay or did not have enough
income or other resources to pay.
This foreclosure action is the second that the bank has initiated to collect on the debt that
the Bells stopped paying more than seven years ago. The first foreclosure action was filed in
Connecticut Superior Court on September 6, 2007. A motion for summary judgment was granted
in the bank‘s favor, and on June 10, 2008, a judgment of strict foreclosure was entered and a law
day was set. Bank of New York v. Bell, 2011 WL 383843, at *1 (Conn. Super. Ct. 2011)
(summarizing procedural history). On the day before the law day, however, Sonja Bell filed for
bankruptcy, which opened the judgment and vacated the law day. Ibid. Litigation continued, and
from early 2009 its focus was the Bells‘ contention that the bank was not the true owner of the
note, which at that time had not been endorsed from JPMorgan to the Bank of New York. The
state court allowed a large volume of discovery on the enormously complex pooling and
securitization transaction that resulted in the Bell mortgage being placed into a pool along with
thousands of others, and on the plaintiff‘s relationship to the pool. Id. at *2–3. Eventually, as the
state court litigation bogged down, the bank moved to withdraw its action, in order to have
JPMorgan endorse the note to it and clarify its standing to foreclose; its motion to withdraw the
state court action was granted on January 4, 2011. Id. at *7.

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The bank then set about to initiate the instant foreclosure action. On March 11, 2011,
another default and demand letter was sent to Sonja Bell. It was sent by plaintiff‘s counsel to
Sonja Bell‘s counsel in the state court action (Pl.‘s Ex. 77). The Bells did not pay or otherwise
cure the default. On August 9, 2011, the bank followed with this foreclosure action in federal
court, invoking the Court‘s diversity jurisdiction under 28 U.S.C. § 1332. On the basis of
evidence presented at trial, the debt as of September 22, 2014 (the first day of trial in this action)
amounted to $997,357.14. This includes components for unpaid principal ($650,000), unpaid
interest ($239,647.19), and unpaid real estate taxes ($107,709.95). Doc. #244 at 28–29.
CONCLUSIONS OF LAW
I first discuss below the evidence that supports plaintiff‘s right to foreclose, before then
discussing defendant‘s affirmative defenses to foreclosure.
A. Plaintiff’s Right to Foreclose
In order to succeed on a foreclosure action, plaintiff must establish three elements: (1)
that it owns the secured debt, (2) that the defendants have defaulted on the note, and (3) that any
conditions precedent to foreclosure established by the note or mortgage are satisfied. See Wells
Fargo Bank, N.A. v. Strong, 149 Conn. App. 384, 392, 89 A.2d 392, cert. denied, 94 A.3d 1202
(2014); GMAC Mortg., LLC v. Ford, 144 Conn. App. 165, 176, 73 A.3d 742 (2013). I conclude
that plaintiff has met all three elements.
1.

Ownership of the Debt

Plaintiff in this case was in physical possession of the original note at issue when this
action commenced, and submitted it as Plaintiff‘s Exhibit 1. As discussed in greater detail above,
the original note now includes a chain of attached endorsements, culminating in an endorsement
to plaintiff. I admitted the note with its attached endorsements into evidence at trial on the basis

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of its credibility, and I cannot conclude that it is falsified or fabricated; my examination of the
document did not raise any concerns in my mind about authenticity or other irregularity.
The Connecticut Supreme Court has held that the holder of a note secured by a mortgage
is presumptively the owner of the debt and, unless the defendant rebuts that presumption, is thus
entitled to foreclose. RMS Residential Props., LLC v. Miller, 303 Conn. 224, 231–32, 32 A.3d
207 (2011). That is true even when the holder of the note is not an assignee of the mortgage,
because the state legislature has codified the common-law principle that the mortgage follows
the note, providing that the owner of a debt secured by real property can foreclose on the
property even without having been assigned the mortgage. See Conn. Gen. Stat. § 49-17. In the
present case, however, plaintiff is also the assignee of the mortgage, and the assignment was
recorded (Pl.‘s Ex. 3).
Defendants have offered no persuasive evidence tending to rebut the presumption that
plaintiff is the owner of the debt. Nor does the evidence show that any of the transfers,
endorsements, or assignments was fabricated or ineffective. The Bells have not paid anyone for
the debt for more than seven years. The fact that no other claimant has come forward to demand
payment from the Bells is highly indicative that it is plaintiff who is the rightful claimant in this
case.
Moreover, the Uniform Commercial Code, as adopted by the Connecticut legislature,
provides that the holder of an instrument, or a nonholder in possession who has the rights of a
holder, is entitled to enforce it. Conn. Gen. Stat. § 42a-3-301. A ―holder‖ includes an entity in
possession of an instrument payable to that entity or to the bearer, Conn. Gen. Stat. § 42a-1201(b)(21), or endorsed in blank, Conn. Gen. Stat. § 42a-3-205, and the entity to whom an
instrument is payable may be ―identified in any way‖ and is determined by intent. Conn. Gen.

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Stat. § 42a-3-110. Even in the absence of a blank or special endorsement, the law allows that the
―transfer of an instrument . . . vests in the transferee any right of the transferor to enforce the
instrument, including any right as a holder in due course,‖ Conn. Gen. Stat. § 42a-3-203, and an
instrument is so transferred whenever ―it is delivered by a person other than its issuer for the
purpose of giving to the person receiving delivery the right to enforce the instrument.‖ Ibid. Even
an unendorsed note thus can still be transferred to a party who, though not becoming a ―holder,‖
will nevertheless acquire the right to enforce the note if that was the intent of the transferor. See
generally Strong, 149 Conn. App. at 398 (discussing UCC requirements for ―holder‖ status); see
also J.E. Robert Co., Inc. v. Signature Props., LLC, 309 Conn. 307, 319–27, 71 A.3d 492 (2013)
(holding that nonholder transferee was entitled to enforce note under Uniform Commercial
Code); Ulster Sav. Bank v. 28 Brynwood Lane, Ltd., 134 Conn. App. 699, 709–10, 41 A.3d 1077
(2012) (―[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.‖).
Plaintiff commenced this action with physical possession of the note, and the chain of
endorsements on the note culminating in endorsement to the plaintiff is sufficiently clear to
demonstrate intent under Connecticut law. Plaintiff is the holder of the note, the special endorsee
of the note, and the transferee of the note. Moreover, plaintiff is the assignee of the mortgage,
with the assignment properly recorded. It is abundantly clear that plaintiff owns the debt and is
entitled to bring this foreclosure action.
2.

Default

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Defendants have failed to make any payments on the note since their last payment in
September 2007. They have continued to live on the property but have done nothing since 2007
to pay or to cure their default despite ample opportunity to do so.
3.

Conditions Precedent to Foreclosure

The mortgage instrument requires that the lender ―give notice to Borrower prior to
acceleration following Borrower‘s breach of any covenant or agreement‖ and that the notice
specify: ―(a) the default; (b) the action required to cure the default; (c) a date, not less than 30
days from the date the notice is given to Borrower, by which the default must be cured; and (d)
that failure to cure the default on or before the date specified in the notice may result in
acceleration of the sums secured . . . and foreclosure or sale of the Property‖ (Pl.‘s Ex. 2 para.
22). The mortgage instrument further provides that if the default is not cured by the specified
date, the lender may require immediate repayment in full without further demand and will be
entitled to collect all expenses incurred in pursuing its remedies (Ibid.).
As discussed above, the loan servicer sent Mrs. Bell a default and demand letter on June
18, 2007 (Pl.‘s Ex. 22), and the letter satisfied those conditions precedent to foreclosure. The
letter (a) informed her of the default; (b) indicated that curing the default required bringing the
loan current by paying the delinquency; (c) indicated that this must be done by July 18, 2007,
thirty days after the date of the letter; and (d) warned her that unless her payments were brought
current by that date, her mortgage note would be accelerated and foreclosure might be pursued
(Ibid.).
The Bells contend that they never received the 2007 default letter, but as already stated
above, I find by a preponderance of the evidence that they did, in accord with the loan servicer‘s
business records and practice. It is clear from defendants‘ own testimony that they became aware

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of the default, and the loan servicer repeatedly made contact with them before and after the
default notice was mailed. The Connecticut Appellate Court has held that substantial compliance
with mortgage notice provisions is sufficient and ―literal enforcement . . . would serve no
purpose‖ where the defendants have actual notice and are not harmed by deficient notice.
Fidelity Bank v. Krenisky, 72 Conn. App. 700, 712, 807 A.2d 968 (2002).
In addition to the 2007 notice, a second default and demand letter was sent, this time
through counsel, on March 11, 2011, prior to the commencement of this action (Pl.‘s Ex. 77).
There is no contention that the second letter was not received. The demand letter and subsequent
correspondence (Pl.‘s Ex. 78) fully explained the basis for liability. Either one of the two default
letters from 2007 and 2011 would satisfy the condition precedent to foreclosure established by
the mortgage instrument.
I conclude that plaintiff has met its burden on all elements for foreclosure.
B. Defendants’ Affirmative Defenses
Defendants plead numerous affirmative defenses, under a heading of ―Affirmative
Defenses and Counterclaims,‖ some of them divided into multiple enumerated counts. Because
defendants are pro se litigants, their pleadings are ―liberally construed‖ and ―held to less
stringent standards than formal pleadings drafted by lawyers.‖ Erickson v. Pardus, 551 U.S. 89,
94 (2007) (internal quotation marks omitted); cf. Fed. R. Civ. P. 8(e) (―Pleadings must be
construed so as to do justice.‖). Even applying these liberal standards, however, defendants‘
arguments are not availing, especially when considered in light of evidence adduced at trial.
1.

Diversity Jurisdiction and Venue

Defendants dispute the Court‘s subject matter jurisdiction. For this Court to have subject
matter jurisdiction under the relevant provisions of 28 U.S.C. § 1332(a), the amount in

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controversy must exceed $75,000 exclusive of interest and costs, and the action must be between
citizens of different states. It is not contested that the minimum amount in controversy is met. All
that remains is the question of citizenship.
A corporation is a citizen of any state that has incorporated it and of the state where it has
its principal place of business. 28 U.S.C. § 1332(c)(1). There is also a subsidiary issue of the
Bank of New York‘s status as a trustee. The United States Supreme Court held in Navarro
Savings Association v. Lee, 446 U.S. 458 (1980), that ―active trustees whose control over the
assets held in their names is real and substantial . . . [may] sue in their own right, without regard
to the citizenship of the trust beneficiaries.‖ Id. at 465–66. Trustees that are ―not ‗naked trustees‘
who act as ‗mere conduits‘ for a remedy flowing to others,‖ but rather who have legal title,
manage the assets, and control the litigation, are the real and substantial parties to the
controversy. Id. at 465 (citation omitted); see also Universitas Educ., LLC v. Nova Grp., Inc.,
513 F. App‘x. 62, 63–64 (2d Cir. 2013) (rejecting argument for diversity purposes ―that a court
must also consider the citizenship of trust beneficiaries for purposes of subject matter
jurisdiction if suit is brought by a trustee‖).
This case is brought by the Bank of New York Mellon, as Trustee for BS Alt A 2005-9; it
is brought by a corporation as a trustee for a trust, and I find that the trustee possesses customary
powers to hold and manage assets and is not a ―naked trustee.‖ The rule of Navarro thus applies:
the citizenship of the trust beneficiaries is irrelevant, and the citizenship of the trustee
corporation controls for diversity purposes.
Plaintiff Bank of New York Mellon, as Trustee for BS Alt A 2005-9, is a citizen of New
York, being organized in New York and having its principal place of business in New York
(Pl.‘s Ex. 20). The defendants are citizens of Connecticut. There is complete diversity of

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citizenship. The amount in controversy exceeds $75,000, exclusive of interests and costs. This
Court therefore has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. Moreover, because
the defendants reside in Connecticut and the real property in question is located in Connecticut,
venue is proper in the District of Connecticut under 28 U.S.C. § 1391.
2.

Prior Exclusive Jurisdiction

The defendants contend that this Court lacks subject matter jurisdiction as a result of the
doctrine of prior exclusive jurisdiction. That doctrine is in essence a rule of comity that prevents
conflicts from arising between multiple courts attempting to exercise jurisdiction over the same
property. Such conflicts are prevented by application of ―the principle . . . that the court first
assuming jurisdiction over [a] property may maintain and exercise that jurisdiction to the
exclusion of the other.‖ Penn Gen. Cas. Co. v. Pennsylvania, 294 U.S. 189, 195 (1935); accord,
e.g., Marshall v. Marshall, 547 U.S. 293, 311 (2006) (―[W]hen one court is exercising in rem
jurisdiction over a res, a second court will not assume in rem jurisdiction over the same res.‖).
Despite the years of litigation in state court that precede the present case, that situation of
potential conflict does not present itself. The Superior Court granted the withdrawal of the earlier
foreclosure action in January 2011, as discussed above. In exercising its discretion to grant that
withdrawal, the court observed that pending counterclaims were unaffected, and that if the
defendants succeed on those claims, "they may recover punitive damages and legal fees.‖ Bell,
2011 WL 383843, at *6. The state court did not contemplate maintaining jurisdiction over the
property, but on the contrary, ―erase[ed] the court slate clean as though the action had never been
commenced.‖ Id. at *7 (internal quotation marks omitted) (quoting H.G. Bass Assocs., Inc. v.
Ethan Allen, Inc., 26 Conn. App. 426, 431, 601 A.2d 1040 (1992)). The lis pendens relating to
the state-court action was released in April 2010 (Pl.‘s Ex. 14). Jurisdiction in this Court is

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therefore proper. Moreover, the defendants have already raised this argument in a motion to
dismiss filed on November 27, 2013. That motion to dismiss was denied, and the Court held that
the Superior Court no longer had jurisdiction over the property once the earlier action had been
withdrawn (Hr‘g Tr., Mar. 14, 2014, Doc. #139 at 31–32). That ruling is the law of the case.
3.

Plaintiff’s Standing

Defendants offer various arguments that plaintiff cannot enforce the note because it is not
the owner of the debt, or is not the trustee of the mortgage trust, or cannot demonstrate its right
to enforce the note as a result of the complex transactions related to the pooling and servicing of
various mortgage loans. To the extent that these arguments seek to defend against foreclosure by
purporting that noncompliance with pooling and servicing agreements affects the plaintiff‘s
standing to foreclose, they fail as a matter of law. See Strong, 149 Conn. App. at 397–401
(foreclosure plaintiff‘s alleged noncompliance with a pooling and servicing agreement to which
defendant was not a party is not a defense against foreclosure). To the extent that defendants
argue that the transfers and assignments culminating in plaintiff‘s ownership of the debt and the
mortgage were otherwise defective, they are unpersuasive. As discussed above, plaintiff offered
sufficient evidence to prove it is the holder and transferee of the note and owner of the mortgage,
and no evidence has been offered sufficient to rebut it. Trial evidence showed that Wells Fargo
possessed the original note, transmitted it to plaintiff‘s counsel, and that defendant Johnathan
Bell personally inspected the original note at the office of plaintiff‘s counsel in 2010 before this
federal litigation began (Doc. #244 at 49).
4.

Fraud and Lack of Authenticity

Despite some dispute about whether the mortgage documentation was properly witnessed
at the closing, I conclude that there is no doubt that Sonja Bell signed this documentation, and I

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further conclude that any possible irregularity with respect to the location of the closing or
witnessing of her signature did not conceivably prejudice her rights. See, e.g., Treglia v. Zanesky,
67 Conn. App. 447, 454, 788 A.2d 1263 (2001) (―a conveyance of property rights is not
automatically nullified by lack of adherence to certain formalities‖). Nor is there evidence that
defendants timely sought relief from any defect in accordance with the Connecticut Validating
Act, Conn. Gen. Stat. § 47-36aa. Having accepted the bank‘s money, there is no evidence that
defendants raised any concern about the documentation until after they defaulted and faced
foreclosure.
Defendants also challenge the authenticity of the power-of-attorney (Pl.‘s Ex. 132) for the
year 2011 from the Bank of New York to Wells Fargo, on grounds that its attachment with
listing of trusts (Schedule A) appears to bear a computer-file date stamp that is later than the date
on which the power-of-attorney itself was signed. Although no satisfactory explanation emerged
for this apparent date discrepancy, I do not conclude that the document is fraudulent when
considered in context of the powers of attorney for preceding and succeeding years and the
ongoing relationship between the Bank of New York and Wells Fargo. Whether an amended
version of Schedule A was attached to the power of attorney does not establish that any original
version of Schedule A did not list the applicable trusts to which defendants‘ loan belonged.
Defendants have not shown that Wells Fargo was not authorized to act on the Bank of New
York‘s behalf.
In a related vein, defendants devoted much of their effort at trial to contending that the
business records of the various banks and loan servicers in this case were not authentic or
admissible. I considered and overruled these objections on grounds that an adequate foundation
was laid for admission of these records. In particular, the testimony of Beverly DeCaro as

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custodian of records was sufficient to lay a foundation for these records, notwithstanding her
lack of first-hand knowledge of the transactions appearing in the company‘s business records.
See, e.g., RMS Residential. Props., 303 Conn. at 235–36.
5.

Statute of Limitations

Defendants‘ argument that this action is barred by the statute of limitations overlooks the
well-established rule that no statute of limitations otherwise applies to mortgage foreclosure
actions. See, e.g., Fed. Deposit Ins. Corp. v. Owen, 88 Conn. App. 806, 815, 873 A.2d 1003
(Conn. App. 2005). Defendants otherwise contend that a different statute (Conn. Gen. Stat. § 52588) applies, but this statute applies only to actions brought on negotiable notes obtained by
fraud. Defendants make various allegations of fraud in several of their affirmative defenses, but
the burden of proof on their allegations of fraud rests with defendants, and they have not met that
burden. As discussed above, there is no evidence establishing fraud. I cannot conclude that
defendants were in any way induced into closing on a loan that they did not want or into
accepting its proceeds under false pretenses. Defendants‘ various allegations of fraud are
unavailing, and any defense under Conn. Gen. Stat. § 52-588 is thus inapplicable.
6.

Technical Defects in Default Notices

The defendants allege various technical deficiencies in the default notices, including the
lack of authority to issue them, and the failure to give notice of the right to counsel in violation
of section 49-6d of the Connecticut General Statutes. The sufficiency of the default notices has
already been addressed above. It is disputed whether Mrs. Bell received notice of the right to
counsel, but the statute does not by its terms create a private remedy, and there is a presumption
in Connecticut law that private enforcement does not exist unless expressly provided by statute.
Gerardi v. City of Bridgeport, 294 Conn. 461, 468, 985 A.2d 328 (2010); Bank of New Haven v.

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Liner, 1993 WL 107819, at *6 (Conn. Super. Ct. 1993) (rejecting reliance on Conn. Gen. Stat. §
49-6d as special defense). The defendants offer no authority for the contention merely that a
failure to provide notice of the right to counsel is a defense against foreclosure. Nor can I see any
possible prejudice if there had been lack of notice of their right to counsel. Mrs. Bell was
represented by Attorney Wittstein at the closing. In addition, defendants extensively litigated
against plaintiff in the state court prior to the receipt of their second notice of default and the
filing of this federal court action; they were certainly aware of their right to retain counsel to
defend against this action.
7.

Predatory Mortgage Allegations

Defendants further argue that they were subject to a ―predatory mortgage.‖ That phrase is
widely used but not clearly defined, and defendants did not offer any persuasive evidence that
the loan was illegal, or that any alleged illegality entitles them to keep all the proceeds without
making any payments. They allege in broad and conclusory terms that the loan was made in
violation of public policy and the regulations of numerous federal agencies, but they do not offer
evidence that, if those violations are real, there is some private remedy for them, or that they
constitute a valid defense to a foreclosure action. To the extent that defendants would rely on
state statutory law as grounds for their claim that the mortgage was predatory, the loan originated
with a federally chartered savings bank (Ohio Savings Bank), and therefore any state statutory
law claim would be preempted. See, e.g., Lewis v. Wells Fargo Bank, N.A., 2014 WL 1429684,
at *3 (D. Mass. 2014) (state-law-based predatory lending defense in foreclosure action
preempted by federal Office of Thrift Supervision (OTS) regulations); cf. Flagg v. Yonkers Sav.
& Loan Ass’n, FA, 396 F.3d 178, 181–83 (2d Cir. 2005) (discussing preemptive effect of OTS
regulations). To the extent that defendants rely on any federal lending regulation as grounds to

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invalidate their mortgage, they have not shown that any such regulation gives rise to a private
right of action or is otherwise judicially enforceable to defeat a foreclosure action. See, e.g., In re
Ocwen Loan Serv. LLP Mortg. Serv. Litig., 491 F.3d 638, 643 (7th Cir. 2005).
8.

Other Defenses

Defendants assert a few other defenses, including spoliation of evidence at some earlier
stage of litigation, and perhaps related to various alleged frauds; failure to mitigate damages on
the basis that plaintiff allegedly could have recovered from other parties based on alleged
agreements to which defendants are neither parties nor third-party beneficiaries; and even a
defense that the mortgage trust that owns their debt does not exist. They have not offered
credible evidence tending to show spoliation of evidence; they cannot assert as a defense to
foreclosure the alleged violation of the rights of third parties; and—notwithstanding defendants‘
claim to the contrary—I find by a preponderance of the evidence that the mortgage trust that
owns their debt and is named in the caption of this case does, in fact, exist.
Defendants‘ various allegations of a ―void complaint‖ resulting from allegations of the
plaintiff‘s lacking counsel licensed in this state, or plaintiff‘s counsel lacking authority to pursue
the action, or plaintiff‘s counsel failing to produce documents establishing authority, are not
supported by the record, and defendants offer no substantial evidence tending to prove them.
What scattered assertions and arguments remain of affirmative defenses are either not
defenses or are not supported by credible evidence. I have considered but find none of
defendants‘ affirmative defenses to be persuasive.
CONCLUSION
The facts and equities in this case are clear. Both defendants are well educated and have
extensive professional work backgrounds. They knowingly accepted a large mortgage loan to

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buy and build their home. They became unable or unwilling by 2007 to pay their loan or their
property taxes. They then chose to litigate for years rather than to make their payments or to
reach a sensible compromise with the bank to vacate a property that they could not afford. On
arcane grounds of alleged technical defects that did not actually prejudice them or cause them to
be unable to pay, they contend in essence that they are entitled to receive hundreds of thousands
of dollars and to have their house and property essentially for free. I conclude that no law or
principle of justice requires this to be so.
On the basis of all of the evidence and arguments, I find in plaintiff‘s favor, and a
judgment of strict foreclosure shall enter accordingly. Plaintiff may file any proposed orders to
the extent necessary to effectuate the findings and conclusions of this ruling. With respect to
plaintiff‘s request for scheduling of law days and an immediate order of possession of the
property (Doc. # 244 at 30), the parties shall jointly submit a proposed consent order to set such
schedule; if they are unable to agree on the terms of such an order, the parties shall appear before
the Court at 3:30 pm on Thursday, January 8, 2015 for a hearing to set such schedule.
So ordered.
Dated at Bridgeport, Connecticut, this 18th day of December 2014.

/s/
Jeffrey Alker Meyer
United States District Judge

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