Court Opinion

ID: 4370911
Source: CourtListenerOpinion
Date Created: 2019-02-25 20:03:10.501398+00
Date Added: 2024-06-11T11:59:08.650027
License: Public Domain

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          BANK OF AMERICA, N.A. v. WILLIAM
                 GONZALEZ ET AL.
                    (AC 40405)
                   Sheldon, Prescott and Pellegrino, Js.

                                  Syllabus

The plaintiff bank sought to foreclose a mortgage on certain real property
   owned by the defendant G. In response, G filed an answer and six special
   defenses, each of which alleged misconduct by B, a mortgage broker
   who allegedly was an employee or agent of the original lender and
   mortgagee, M Co. Following a trial, the trial court rendered a judgment
   of strict foreclosure. In reaching its decision, the court rejected G’s
   special defenses, finding that he had not satisfied his burden of proving
   that B was an agent or employee of M Co. On G’s appeal to this court,
   held that the trial court correctly concluded that G could not prevail
   on his special defenses, as that court’s finding that B was not an agent
   or employee of M Co. was not clearly erroneous and the existence of
   the agency relationship between B and M Co. was critical to the viability
   of G’s special defenses; G failed to produce evidence to establish that
   B was an agent or employee of M Co. or that he was acting with its
   apparent authority, and although G argued that M Co. communicated
   with him exclusively through B and that M Co. had the power to control
   the means by which such communications were to be made, there was
   no evidence that M Co. knew of or promoted the line of communication
   between B and G, and there was no evidence indicating that G knew
   of or relied on any statement or action of M Co. when he entered into
   the subject transaction, especially given that G testified that he did not
   learn that M Co. was the lender until the date of the closing.
      Argued October 24, 2018—officially released January 29, 2019

                            Procedural History

  Action to foreclose a mortgage on certain real prop-
erty of the named defendant, and for other relief,
brought to the Superior Court in the judicial district of
Fairfield and tried to the court, Hon. Michael Hartmere,
judge trial referee; judgment of strict foreclosure, from
which the named defendant appealed to this court.
Affirmed.
  Ridgely Whitmore Brown, with whom, on the brief,
was Benjamin Gershberg, for the appellant (named
defendant).
   Pierre-Yves Kolakowski, for the appellee (plaintiff).
  David Lavery filed a brief for the Connecticut Fair
Housing Center as amicus curiae.
                         Opinion

  PELLEGRINO, J. The defendant William Gonzalez1
appeals from the judgment of strict foreclosure ren-
dered by the trial court in favor of the plaintiff, Bank
of America, N.A. On appeal, the defendant claims that
the court erred by concluding that he had failed to
satisfy his burden of proving that the mortgage broker
was an agent or employee of the original mortgagee
and concluding, on that basis, that he had failed to
prove any of his special defenses, all of which were
based on the alleged conduct of the broker. The defen-
dant further claims that the trial court incorrectly con-
cluded that he had failed to sustain his burden of
proving that the mortgage was unconscionable.2 We
disagree with the defendant and, accordingly, affirm
the judgment of the trial court.
  The following facts and procedural history are rele-
vant to the resolution of the defendant’s claims on
appeal. The plaintiff filed this action in August, 2013,
seeking to foreclose a residential mortgage on property
located at 80 Oakwood Street in Bridgeport. According
to the complaint, on March 20, 2006, the defendant
executed the mortgage in favor of Mortgage Electronic
Registration Systems, Inc., as nominee for Mortgage
Capital Group, LLC (Mortgage Capital), as security for
a $267,750 promissory note payable to the order of
Mortgage Capital. The complaint alleged that the note
was in default and that the plaintiff, which was in pos-
session of the note, was exercising its option to declare
the entire balance of the note due and payable.
   On June 25, 2015, the defendant filed an amended
answer and six special defenses. The special defenses
alleged fraudulent inducement, negligent misrepresen-
tation, equitable estoppel, unconscionability, duress
and unclean hands. Each of the special defenses alleged
misconduct by David J. Bigley, an alleged employee and/
or agent of the original lender and mortgagee, Mortgage
Capital.3 On May 5, 2016, the plaintiff filed its reply,
denying each of the defendant’s special defenses. Fol-
lowing a trial on April 18 and 19, 2017, the court ren-
dered a judgment of strict foreclosure.4 In its oral
decision, the court found that the plaintiff had pre-
sented prima facie evidence to support the judgment
of strict foreclosure. The court rejected the defendant’s
special defenses, finding that the defendant had not
satisfied his burden of proving that Bigley was an agent
or employee of Mortgage Capital. The defendant then
filed the present appeal.
   We first set forth our standard of review. ‘‘The stan-
dard of review of a judgment of . . . strict foreclosure
is whether the trial court abused its discretion. . . .
In determining whether the trial court has abused its
discretion, we must make every reasonable presump-
tion in favor of the correctness of its action. . . . Our
review of a trial court’s exercise of the legal discretion
vested in it is limited to the questions of whether the
trial court correctly applied the law and could reason-
ably have reached the conclusion that it did.’’ (Internal
quotation marks omitted.) Bank of New York Mellon v.
Talbot, 174 Conn. App. 377, 382, 165 A.3d 1253 (2017).
   ‘‘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.’’ (Internal quotation marks omit-
ted.) U.S. Bank, N.A. v. Foote, 151 Conn. App. 620, 632,
94 A.3d 1267, cert. denied, 314 Conn. 930, 101 A.3d 952
(2014). In its decision, the trial court noted that there
was no disagreement that the plaintiff had established
a prima facie case. On appeal, the defendant has not
challenged the plaintiff’s standing as the owner of the
note and mortgage or the defendant’s default on the
note. We, therefore, limit our review to the issues raised
by the defendant concerning his special defenses.
   ‘‘Where the plaintiff’s conduct is inequitable, a court
may withhold foreclosure on equitable considerations
and principles. . . . [O]ur courts have permitted sev-
eral equitable defenses to a foreclosure action. [I]f the
mortgagor is prevented by accident, mistake or fraud,
from fulfilling a condition of the mortgage, foreclosure
cannot be had . . . .’’ (Internal quotation marks omit-
ted.) Hirsch v. Woermer, 184 Conn. App. 583, 588, 195
A.3d 1182, cert. denied, 330 Conn. 938, 195 A.3d 384
(2018). The defendant bears the burden of proof on his
or her special defenses. Kaye v. Housman, 184 Conn.
App. 808, 817, 195 A.3d 1168 (2018).
   The defendant argues that the court erred in conclud-
ing that he had failed to prove that Bigley was an agent
or employee of the original mortgagee, Mortgage Capi-
tal.5 Each of the special defenses alleged that Bigley,
as an agent or employee of Mortgage Capital, induced
the defendant to enter into this mortgage transaction.
In order to prevail on these special defenses, therefore,
the defendant was required to prove that Bigley was
an agent or employee of Mortgage Capital. See CitiMor-
tgage, Inc. v. Coolbeth, 147 Conn. App. 183, 192, 81 A.3d
1189 (2013), cert. denied, 311 Conn. 925, 86 A.3d 469
(2014). ‘‘The existence of an agency relationship is a
question of fact . . . which may be established by cir-
cumstantial evidence based upon an examination of the
situation of the parties, their acts and other relevant
information.’’ (Citation omitted; internal quotation
marks omitted.) Gagliano v. Advanced Specialty Care,
P.C., 329 Conn. 745, 755, 189 A.3d 587 (2018). We review
the trial court’s findings of fact under the clearly errone-
ous standard of review. Coppola Construction Co. v.
Hoffman Enterprises Ltd. Partnership, 157 Conn. App.
139, 158, 117 A.3d 876, cert. denied, 318 Conn. 902, 122
A.3d 631 (2015) and 318 Conn. 902, 123 A.3d 882 (2015).
‘‘A finding of fact is clearly erroneous when there is no
evidence in the record to support it . . . or when
although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite and
firm conviction that a mistake has been committed.’’
(Internal quotation marks omitted.) Ackerman v. Sobol
Family Partnership, LLP, 298 Conn. 495, 507–508, 4
A.3d 288 (2010).
   ‘‘Three elements are required to show the existence
of an agency relationship: (1) a manifestation by the
principal that the agent will act for him; (2) acceptance
by the agent of the undertaking; and (3) an understand-
ing between the parties that the principal will be in
control of the undertaking. . . . Although stated as a
three part test, [our Supreme Court] has also acknowl-
edged there are various factors to be considered in
assessing whether [an agency] relationship exists
[which] include: whether the alleged principal has the
right to direct and control the work of the agent;
whether the agent is engaged in a distinct occupation;
whether the principal or the agent supplies the instru-
mentalities, tools, and the place of work; and the
method of paying the agent. . . . In addition, [a]n
essential ingredient of agency is that the agent is doing
something at the behest and for the benefit of the princi-
pal.’’ (Citation omitted; internal quotation marks omit-
ted.) Gagliano v. Advanced Specialty Care, P.C., supra,
329 Conn. 755.
  Additionally, ‘‘[a]pparent authority is that semblance
of authority which a principal, through his own acts or
inadvertences, causes or allows third persons to believe
his agent possesses. . . . Apparent authority thus must
be determined by the acts of the principal rather than
by the acts of the agent. . . . Furthermore, the party
seeking to impose liability upon the principal must dem-
onstrate that it acted in good faith based upon the
actions or inadvertences of the principal.’’ (Citations
omitted; internal quotation marks omitted.) Beck-
enstein v. Potter & Carrier, Inc., 191 Conn. 120, 140–41,
464 A.2d 6 (1983).
  At trial, the defendant testified that after he received
an inheritance from his brother’s estate, he consulted
his friend, Vincent Curcio, who recommended that he
purchase the subject property. Curcio also referred the
defendant to Attorney Thomas V. Battaglia, Jr., to repre-
sent him in the purchase of the property. Bigley, a
mortgage broker doing business as Main Street Mort-
gage, LLC, assisted the defendant with securing financ-
ing to purchase the house.6 Bigley obtained a lender,
Mortgage Capital, who was not disclosed to the defen-
dant until the date of the closing.
  The defendant testified that he paid $40,000 as a
deposit on the property. He testified that when he first
met Bigley, he told Bigley that he could only afford a
mortgage in the amount of $1250 per month. On the date
of the closing, however, he was told that his monthly
payment would be $2618.16 per month and that if he
did not proceed with the transaction, he would lose
$20,000 of his deposit. At that point, Bigley agreed to
loan the defendant the shortfall of $16,000 to complete
the closing. The defendant was not informed that Bigley
held a mortgage on the property from Sunrise Con-
tracting, LLC, the seller of the property, in the amount
of $249,600, that would be paid off with the proceeds
of the sale to the defendant. The mortgage from Sunrise
Contracting, LLC, to Bigley was witnessed by Battaglia
who, unbeknownst to the defendant, was Bigley’s
cousin.7
   In addition to the defendant’s testimony, the court
considered several exhibits that were admitted into evi-
dence. Specifically, the mortgage loan origination
agreement, signed by the defendant on January 30, 2006,
identified Main Street Mortgage, LLC, as an independent
contractor and licensed mortgage broker under the laws
of the state of Connecticut. This document provided in
relevant part: ‘‘In connection with this mortgage loan
we are acting as an independent contractor and not as
your agent. We will enter into separate independent
contractor agreements with various lenders.’’ Similarly,
the mortgage broker fee disclosure, signed by the defen-
dant on January 30, 2006, provided in relevant part:
‘‘The mortgage broker will submit your application for
a residential mortgage loan to a participating lender
with which it from time to time contracts upon such
terms and conditions as you may request or a lender
may require. . . . The mortgage broker may be acting
as an independent contractor and not as your agent. If
you are unsure of the nature of your relationship, please
ask the mortgage broker for clarification. . . . The
mortgage broker has entered into separate independent
contractor agreements with various lenders.’’ Finally,
the mortgage broker fee disclosure also provided: ‘‘You
may work with the mortgage broker to select the
method [by] which it receives its compensation
depending on your financial needs, subject to the lend-
er’s program requirements and credit underwriting
guidelines.’’ The ‘‘Good Faith Estimate,’’ also signed by
the defendant on January 30, 2006, provided that it
was ‘‘being provided by Main Street Mortgage, LLC, a
mortgage broker, and no lender has yet been obtained.’’
  On cross-examination, the defendant testified that he
had no evidence that Mortgage Capital set Bigley’s
hours or supplied any office supplies to Bigley. He fur-
ther testified that he had no evidence that Mortgage
Capital provided or told Bigley who to get as customers.
Finally, the defendant testified that he did not read any
of the closing documents.
  In its oral decision at the conclusion of the trial,
the court stated: ‘‘The defenses basically rely on an
allegation that Bigley induced the defendant to enter
into this mortgage. In order to prove each or any of the
special defenses, the defendant had to prove that Bigley
[was] an agent or employee of the originating lender,
the originating lender being Mortgage Capital . . .
[and] the court will find that the evidence showed that
Bigley, at that time, was not an agent or employee of
Mortgage Capital . . . . Bigley acted as an indepen-
dent contractor who worked for and owned, according
to Battaglia’s statement, Main Street Mortgage, LLC,
and that’s who Bigley was working for. The defendant,
in order to make out or prove any of these special
defenses, had to establish a link, connection between
Bigley, the broker, and the lender. And the evidence,
credible evidence, just didn’t show that.’’
   The court further stated that Mortgage Capital ‘‘had
little control over the actions of . . . Bigley. Bigley was
not acting for the sole benefit of [Mortgage Capital] and
[it] did not . . . provide the instrumentalities, the
tools, or place of work for the broker and all of that
tends to prove the lack of an agency relationship.’’ The
court continued by stating that ‘‘another important fac-
tor . . . is that neither the plaintiff nor [Mortgage Capi-
tal], according to the evidence, told the defendant
anything. All the allegations, which [the defendant] tes-
tified to, are against Bigley, and there’s no evidence
that the plaintiff or [Mortgage Capital] made any repre-
sentations to [the defendant] at all. Now the court is
not unsympathetic to the position and the predicament
that [the defendant] found himself in, but based upon
the evidence and the credible evidence that’s been pre-
sented, again, the . . . special defenses simply aren’t
supported. And the fact that [the defendant] has testi-
fied that he didn’t read these various documents is not
a defense.’’8
   In support of its decision, the court relied on CitiMor-
tgage, Inc. v. Coolbeth, supra, 147 Conn. App. 183. In
that case, the trial court granted the plaintiff’s motion
for summary judgment as to liability on its complaint
and as to the defendants’ special defenses and counter-
claim, which alleged fraud and unconscionable conduct
by the plaintiff. Id., 188. The court concluded that the
defendants had failed to raise a genuine issue of mate-
rial fact with respect to the existence of an agency
relationship among the plaintiff, the mortgage broker,
and Citibank, which maintained the defendants’ credit
card accounts. Id. In affirming the judgment of the trial
court, this court stated: ‘‘The existence of an agency
relationship is critical to the viability of the defendants’
special defenses and counterclaim, insofar as the spe-
cial defenses and counterclaim are primarily directed
toward the representations and actions of the mortgage
broker and Citibank—not the plaintiff.’’ Id., 192, citing
Barasso v. Rear Still Hill Road, LLC, 81 Conn. App.
798, 805, 842 A.2d 1143 (2004).
   On the basis of our review of the evidence in the
present case, we agree that the defendant did not pro-
duce evidence to establish that Bigley was an agent or
employee of Mortgage Capital, or that he was acting
with its apparent authority. Although the defendant
argues that Mortgage Capital communicated with him
exclusively through Bigley and that Mortgage Capital
had the power to control the means by which such
communications were to be made, there is no evidence
that it knew of or promoted the line of communication
between Bigley and the defendant. Furthermore, there
is no evidence indicating that the defendant knew of
or relied upon any statement or action of Mortgage
Capital when he entered into the transaction at issue;
the defendant, rather, testified that he did not learn that
Mortgage Capital was the lender until the date of the
closing. ‘‘It is not within the province of this court to
‘connect the dots’ ’’ to find that Bigley was an agent of
Mortgage Capital. CitiMortgage, Inc. v. Coolbeth, supra,
147 Conn. App. 198. We cannot say, therefore, that the
trial court’s finding that Bigley was not an agent or
employee of Mortgage Capital was clearly erroneous.
Because the existence of the agency relationship was
critical to the viability of the defendant’s special
defenses; id., 192; the court correctly concluded that
the defendant could not prevail on his special defenses.9
  The judgment is affirmed and the case is remanded
for the purpose of setting new law days.
      In this opinion the other judges concurred.
  1
     David J. Bigley and the state of Connecticut also were named as defen-
dants but are not parties to this appeal. We therefore refer in this opinion
to Gonzalez as the defendant.
   2
     The Connecticut Fair Housing Center, as amicus curiae, also argues
that multiple indicia of fraud are present in this case and that the subject
transaction has many of the hallmarks of a ‘‘property flip fraud’’ as described
by the white paper prepared by the Federal Financial Institutions Examina-
tion Council. Because the defendant did not allege, and the court did not
find, that this was a fraudulent property flip, we decline to review this issue.
   3
     The special defenses alleged that Mortgage Capital, through its employ-
ees and/or agents, including, but not limited to, Bigley, falsely represented
to the defendant that his monthly mortgage payment would be $1200 per
month and later informed him that it would be $2165 per month; falsely
represented to the defendant that the total closing costs would be $9000
but then demanded an additional $16,000 in closing costs; falsely informed
the defendant that if he did not pay the additional $16,000 in closing costs
and enter into the mortgage transaction, he would forfeit his deposit of
$20,000; failed to disclose that Bigley had a second mortgage on the property
that would be paid off as part of the closing on the defendant’s property;
failed to disclose that the attorney that the defendant hired was Bigley’s
cousin; and failed to disclose that the appraiser who conducted the appraisal
for Mortgage Capital was Bigley’s brother.
   4
     This matter was previously tried to the court, Hon. Richard P. Gilardi,
judge trial referee, but the court failed to render a decision within 120 days
as required by General Statutes § 51-183b. The matter was then reassigned
to the court, Hon. Michael Hartmere, judge trial referee.
   5
     The defendant also argues that the court erred in concluding that he
had failed to prove that Attorney Thomas V. Battaglia, Jr., was an agent or
employee of Mortgage Capital. The defendant’s special defenses, however,
were all premised on the allegation that Bigley was an agent or employee
of Mortgage Capital. The special defenses did not allege that Battaglia was
an agent or employee of Mortgage Capital. Furthermore, the court’s decision
focused solely on whether Bigley was an agent or employee of Mortgage
Capital, and did not make a finding regarding whether Battaglia was an
agent or employee of Mortgage Capital. The defendant did not file a motion
for articulation regarding whether Battaglia was an agent or employee of
Mortgage Capital. ‘‘Without the necessary factual and legal conclusions
furnished by the trial court, either on its own or in response to a proper
motion for articulation, any decision made by us . . . would be entirely
speculative.’’ (Internal quotation marks omitted.) Bayview Loan Servicing,
LLC v. Park City Sports, LLC, 180 Conn. App. 765, 781, 184 A.3d 1277,
cert. denied, 330 Conn. 901, 192 A.3d 426 (2018). We, therefore, limit our
consideration of this issue to the court’s conclusion that the defendant had
failed to prove that Bigley was an agent or employee of Mortgage Capital.
   6
     According to the statement of Battaglia, which was admitted into evi-
dence, Curcio referred the defendant to Main Street Mortgage, LLC, which
was owned by Bigley.
   7
     The defendant filed a prior action against Bigley and Battaglia based on
the same underlying transaction, but the trial court, Sommer, J., rendered
summary judgment in favor of the defendants on the ground that the action
was time barred.
   8
     The court further stated: ‘‘[T]he defendant . . . signed off on these vari-
ous documents and whether the—what credits that testimony or not, the
documents speak for themselves. They were signed. Some of them signed
in multiple places and multiple times, and the documents speak for them-
selves and . . . contradict the special defenses.’’ According to the defen-
dant, these statements indicate that, because the documents ‘‘speak for
themselves,’’ the court failed to consider the credibility of the defendant’s
testimony in light of all of the evidence presented. We disagree with the
defendant’s narrow reading of the court’s decision, which states that ‘‘based
upon the . . . credible evidence that’s been presented,’’ the defendant had
not proven his special defenses.
   9
     This conclusion is dispositive of the defendant’s separately briefed claims
that the court’s finding that Bigley was not an agent of Mortgage Capital
was clearly erroneous and that the court’s ultimate conclusion that he had
failed to satisfy his burden of proving each of his special defenses was
improper. The defendant further argues, however, that the court incorrectly
concluded that he had failed to sustain his burden of proving that the
mortgage was unconscionable. In support of this argument, the defendant
attempts to distinguish the present case from CitiMortgage, Inc. v. Coolbeth,
supra, 147 Conn. App. 183, arguing that although the alleged misrepresenta-
tions in CitiMortgage, Inc., may have resulted in a mortgage that was more
expensive than the borrowers originally sought, there is no indication that
the mortgage in that case was completely unaffordable and would almost
certainly result in a default and foreclosure. The defendant further points
out that CitiMortgage, Inc., involved a refinance rather than the purchase
of a home, while in this case, the defendant lost his home and the $40,000
he paid because the mortgage was completely unaffordable. Under these
circumstances, the defendant argues that a finding of procedural unconscio-
nability was not required and the status of Bigley as an agent was irrelevant.
We disagree.
   ‘‘The doctrine of unconscionability, as a defense to contract enforcement,
generally requires a showing that the contract was both procedurally and
substantively unconscionable when made—i.e., some showing of an absence
of meaningful choice on the part of one of the parties together with contract
terms which are unreasonably favorable to the other party . . . .’’ (Internal
quotation marks omitted.) Hirsch v. Woermer, 184 Conn. App. 583, 589–90,
195 A.3d 1182, cert. denied, 330 Conn. 938, 195 A.3d 384 (2018). The trial
court concluded, and we agree, that an agency relationship was required
for the defendant to prevail on his special defenses, including his special
defense of unconscionability, insofar as the special defense was primarily
directed toward the representations and actions of Bigley. See CitiMortgage,
Inc. v. Coolbeth, supra, 147 Conn. App. 192. Because the defendant did not
establish that Bigley was an agent or employee of Mortgage Capital, the
court correctly concluded that the defendant could not prevail on his special
defense of unconscionability.