Wells Fargo Bank, N.A. v. Lorson ( 2022 )

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WELLS FARGO BANK, N.A. v.
ERIC LORSON ET AL.
(SC 20194)
Robinson, C. J., and Palmer, McDonald, D’Auria,
Mullins, Kahn and Ecker, Js.*
Syllabus
The plaintiff bank sought to foreclose a mortgage on certain real property
owned by the defendants. The defendants had executed a promissory
note, which was secured by the mortgage on the defendants’ property.
The mortgage, which was guaranteed and insured by the Federal Housing
Administration (FHA), was later assigned to the plaintiff. Both the note
and the mortgage contained provisions that conditioned the plaintiff’s
acceleration of the debt owed on the mortgage and the plaintiff’s initia-
tion of foreclosure proceedings, in the event of a default, on compliance
with the federal Department of Housing and Urban Development (HUD)
regulatory requirements. The defendants subsequently defaulted, and
the plaintiff accelerated payment of the debt and commenced this fore-
closure action. The trial court rendered a judgment of strict foreclosure,
from which the defendants appealed to the Appellate Court. On appeal,
the defendants claimed, inter alia, that compliance with the applicable
HUD regulations was a condition precedent to acceleration of the debt
and the initiation of foreclosure proceedings, the plaintiff was therefore
required to prove compliance, and, because it had not done so, the
trial court’s finding that the plaintiff had proven its case was clearly
erroneous. The Appellate Court affirmed the trial court’s judgment,
concluding that the burden was on the defendants to plead and prove
noncompliance with the HUD regulations and that they waived that
special defense because they failed to assert it. On the granting of
certification, the defendants appealed to this court, claiming that the
Appellate Court had incorrectly determined that the burden was on them
to plead and prove noncompliance with the applicable HUD regulations.
Held that compliance with the applicable HUD regulations is a condition
precedent to accelerating the debt and foreclosing on a mortgage that
is guaranteed or insured by the FHA, such compliance, contrary to the
Appellate Court’s decision, must be pleaded and ultimately proven by
the plaintiff lender, and, because the trial court did not require the
plaintiff to establish compliance with the applicable HUD regulations,
the case was remanded for a new trial limited to that issue: this court
concluded, on the basis of its review of the applicable HUD regulations,
their purpose, and the public policies that the compliance provisions in
the note and mortgage were intended to advance, that those compliance
provisions were intended to constrain the ability of lenders to accelerate
the mortgage debt or foreclose without first providing homeowners
with an opportunity to take informed steps to retain their homes, and,
accordingly, the compliance provisions served as a condition precedent
such that, if the condition of compliance was not fulfilled, the lender’s
right to acceleration and foreclosure did not come into existence; more-
over, there was no merit to the plaintiff’s claim that its compliance with
the applicable HUD regulations was a condition subsequent rather than
a condition precedent, as a lender’s failure to comply with the applicable
HUD regulations could not suspend a preexisting right to acceleration
and foreclosure because there was no identifiable date on which the
failure to comply occurred and no defined temporal period preceding
the failure to comply during which the right to acceleration and foreclo-
sure could have been asserted; furthermore, this court rejected the
plaintiff’s argument that, even if compliance with the applicable HUD
regulations is a condition precedent to the foreclosure of a mortgage
insured by the FHA, the defendant borrower should still shoulder the
burden of pleading and proving noncompliance as a special defense, as
HUD’s policy statement with respect to the compliance provisions at
issue and case law concerning that burden did not compel such a conclu-
sion, and a lender is in the best position to know what specific steps
it has taken to comply with the HUD regulations; accordingly, this court
adopted a burden shifting procedure pursuant to which the plaintiff
lender has the initial burden of pleading compliance with the applicable
HUD regulations, if the defendant borrower contests compliance, he or
she then has the burden of pleading noncompliance, after which the
burden shifts back to the plaintiff lender to prove compliance, and,
because the trial court never considered whether the plaintiff complied
with the applicable HUD regulations, the Appellate Court’s conclusion
that, even if the burden was on the plaintiff to plead and prove compli-
ance, evidence in the record supported the conclusion that it had met
its burden was speculative.
Argued February 26, 2020—officially released December 3, 2021**
Procedural History
Action to foreclose a mortgage on certain of the
defendants’ real property, and for other relief, brought
to the Superior Court in the judicial district of Fairfield
and tried to the court, Hon. Richard P. Gilardi, judge
trial referee, who, exercising the powers of the Superior
Court, rendered judgment of strict foreclosure, from
which the defendants appealed to the Appellate Court,
Elgo, Bright and Beach, Js., which affirmed the trial
court’s judgment, and the defendants, on the granting
of certification, appealed to this court. Reversed; new
trial.
Ridgely Whitmore Brown, with whom, on the brief,
was Benjamin Gershberg, for the appellants (defen-
dants).
David M. Bizar, for the appellee (plaintiff).
J.L. Pottenger, Jr., Jeffrey Gentes, and Stephanie
Garlock and Keith Woolridge, law student interns, filed
a brief for the Housing Clinic of the Jerome N. Frank
Legal Services Organization as amicus curiae.
Opinion
McDONALD, J. The issue that we must resolve in
this appeal is whether compliance with federal Depart-
ment of Housing and Urban Development (HUD) regula-
tory requirements applicable to mortgage loans guaran-
teed or insured by the Federal Housing Administration
(FHA) is a condition precedent to acceleration of the
debt, enforcement of the note, and foreclosure of the
mortgage, such that the burden is on mortgagees to
plead and prove compliance. The defendants, Eric Lor-
son and Laurin Maday, executed a mortgage note in
favor of The McCue Mortgage Company (McCue) and
a mortgage deed to secure payment of the note. The
note and mortgage deed, which were guaranteed and/
or insured by the FHA, were ultimately assigned to the
plaintiff, Wells Fargo Bank, N.A. Under the terms of
the note and mortgage deed, the plaintiff was not
authorized to accelerate payment of the debt or to initi-
ate foreclosure proceedings unless permitted by HUD
regulations. The defendants defaulted on the note and
mortgage, and the plaintiff accelerated payment of the
debt and commenced a foreclosure action. After a trial,
the trial court found that the plaintiff had met its burden
proving its case and that the defendants had failed to
prove their special defenses of equitable estoppel and
unclean hands. Accordingly, the court rendered a judg-
ment of strict foreclosure. The defendants then appealed
to the Appellate Court, claiming, among other things,
that the trial court’s finding that the plaintiff had proved
its case was clearly erroneous because compliance with
applicable HUD regulations is a condition precedent to
acceleration of the debt and the initiation of foreclosure
proceedings, and, therefore, the plaintiff was required
to prove compliance, which it had not done. The Appel-
late Court affirmed the judgment of the trial court; Wells
Fargo Bank, N.A. v. Lorson, 183 Conn. App. 200, 224,
192 A.3d 439 (2018); concluding that the burden was
on the defendants to plead and prove noncompliance
and that, ‘‘by failing to assert that special defense, [they
had] waived it.’’ Id., 216. We then granted the defen-
dants’ petition for certification on the following issue:
‘‘Did the Appellate Court correctly hold that noncompli-
ance with [HUD] regulations is a special defense that
the defendant must plead and prove?’’ Wells Fargo
Bank, N.A. v. Lorson, 330 Conn. 920, 193 A.3d 1214(2018). We conclude that compliance with applicable
HUD regulations is a condition precedent to enforce-
ment of the note and foreclosure of the mortgage, and
must be pleaded and ultimately proved by the mort-
gagee. Because the trial court did not require the plain-
tiff to establish compliance with HUD regulations at
trial, we further conclude that the case must be
remanded to the trial court for a trial on that issue.
Accordingly, we reverse the judgment of the Appellate
Court affirming the trial court’s judgment of strict fore-
closure.
The opinion of the Appellate Court sets forth the
following facts and procedural history, which we sup-
plement with additional facts as necessary. ‘‘The defen-
dants and [McCue] executed a promissory note on
December 1, 2008 (note). The note was secured by a
mortgage on the defendants’ property at 40 McGuire
Road in Trumbull (property), in favor of Mortgage Elec-
tronic Registration Systems, Inc., as nominee for
McCue. The mortgage was recorded on the Trumbull
land records on December 1, 2008. The mortgage was
assigned to the plaintiff on December 16, 2011, and the
assignment was recorded on the Trumbull land records
on December 21, 2011. It is undisputed that the plaintiff
is the holder of both the note and the mortgage.’’ Wells
Fargo Bank, N.A. v. Lorson, supra, 183 Conn. App. 202.
‘‘The defendants’ mortgage was guaranteed and
insured by the [FHA and, therefore, was subject to
certain] . . . HUD regulations. Section 6 (b) of the note
provides in relevant part that, ‘[i]f [the] [b]orrower
defaults by failing to pay in full any monthly payment,
then [the] [l]ender may, except as limited by regulations
of the [s]ecretary [of HUD] in the case of payment
defaults, require immediate payment in full of the princi-
pal balance remaining due and all accrued interest.
[The] [l]ender may choose not to exercise this option
without waiving its rights in the event of any subsequent
default. In many circumstances regulations issued by
the [s]ecretary [of HUD] will limit [the] [l]ender’s rights
to require immediate payment in full in the case of
payment defaults. This [n]ote does not authorize accel-
eration when not permitted by HUD regulations.’ Sec-
tion 9 (a) of the mortgage deed provides in relevant
part: ‘[The] [l]ender may, except as limited by regula-
tions issued by the [s]ecretary [of HUD] in the case of
payment defaults, require immediate payment in full of
all sums secured by this [s]ecurity [i]nstrument . . . .’ ’’
(Footnote omitted.) Id., 207–208. Section 9 (d) of the
mortgage deed provides: ‘‘In many circumstances regu-
lations issued by the [s]ecretary [of HUD] will limit
[the] [l]ender’s rights, in the case of payment defaults,
to require immediate payment in full and foreclose if
not paid. This [s]ecurity [i]nstrument does not authorize
acceleration or foreclosure if not permitted by regula-
tions of the [s]ecretary.’’
‘‘The plaintiff filed this foreclosure action on October
19, 2011. The complaint alleged that the note and mort-
gage were in default by virtue of nonpayment of the
installments of principal and interest due on November
1, 2010, and each and every month thereafter. The com-
plaint further alleged that the plaintiff is entitled to
collect the debt evidenced by the note and to enforce
the terms of the mortgage, that the plaintiff had elected
to accelerate the balance of the note, and that the plain-
tiff requested a foreclosure of the mortgaged premises.’’
Wells Fargo Bank, N.A. v. Lorson, supra, 183 Conn.
App. 202.
After failed foreclosure mediation proceedings that
have no bearing on this appeal, ‘‘[t]he defendants filed
an answer [to the foreclosure complaint] on July 19,
2013, in which they effectively denied each allegation
and left the plaintiff to its proof. The defendants also
filed two special defenses alleging unclean hands and
equitable estoppel. The plaintiff filed a motion for sum-
mary judgment on November 12, 2013. The defendants
filed an amended answer and special defenses along
with their objection to the plaintiff’s summary judgment
motion on February 19, 2014. In the amended answer,
the defendants alleged a third special defense titled
‘Mortgage Modification Agreement,’ claiming that the
plaintiff refused to issue a permanent modification and
‘breached the terms of the agreement’ by requiring pay-
ment of the judgment lien.
‘‘The [trial] court denied the plaintiff’s motion for
summary judgment on March 21, 2014, ruling that ‘the
counteraffidavit submitted by the defendants in opposi-
tion to the motion raises issues of fact relating to the
defendants’ special defenses of unclean hands and equi-
table estoppel to be resolved at trial.’ The plaintiff filed
a reply to the defendants’ special defenses and a certifi-
cate of closed pleadings on October 22, 2015.’’ Id., 204–
205.
Eight days later, on October 30, 2015, ‘‘the defendants
moved to amend their answer . . . . In the proposed
amended answer, the defendants added a special
defense titled ‘Breach of Contract,’ which alleged the
plaintiff’s noncompliance with various [HUD] regula-
tions . . . as set forth in 24 C.F.R. § 203.500 et seq.
(HUD regulations). The plaintiff filed an objection to
the defendants’ request to amend on November 9, 2015,
and the [trial] court sustained the plaintiff’s objection
on December 1, 2015, the first day of trial.
‘‘Following a two day bench trial, the court rendered
judgment of strict foreclosure in favor of the plaintiff
on January 6, 2016. On January 20, 2016, the defendants
[appealed to the Appellate Court from the judgment of
strict foreclosure]. The defendants filed a motion for
articulation on August 4, 2016, requesting an explana-
tion for the judgment of strict foreclosure. On Novem-
ber 25, 2016, the court issued a written response ‘to the
allegations contained in the defendants’ motion [for]
articulation and, specifically, the defendants’ misrepre-
sentations and failure to disclose necessary evidence
within their knowledge.’ In that response, the court
stated: ‘[On the basis of] the factual history of this
litigation, it is the finding of this court that the plaintiff
has established [its] burden of proof with respect to
the allegations of the complaint. The court further finds
that the defendants failed to submit sufficient evidence
with respect to their burden of proof [as] to the denial
of the complaint, as well as the special defenses of
unclean hands and equitable estoppel. Accordingly,
judgment is [rendered] in favor of the plaintiff with
respect to the complaint and special defenses.’ The
court denied the motion for articulation and stated as
follows: ‘With respect to the motion for articulation, it
is the finding of the court that the motion is based
on the misrepresentations and intentional omissions of
necessary evidence. The docket sufficiently provides
the basis for the rulings by the court. Accordingly, the
motion for articulation is denied.’ ’’1 Id., 205–206.
On appeal to the Appellate Court, the defendants
claimed, among other things, that the trial court’s find-
ing that ‘‘the plaintiff had sustained its burden of proving
that it had satisfied the conditions precedent in the note
and mortgage, [i.e., compliance with HUD regulations],
was clearly erroneous.’’ The Appellate Court concluded
that ‘‘the defendants had the affirmative duty to plead
the special defense of the plaintiff’s noncompliance
with the HUD regulations and, by failing to assert that
special defense, waived it. Consequently, they may not
challenge the plaintiff’s compliance on appeal.’’ Wells
Fargo Bank, N.A. v. Lorson, supra, 183 Conn. App. 216;
see id., 215 (‘‘in this particular context, it makes much
more sense to require the defendant to plead the spe-
cific requirements that have not been met and [to] bear
the burden of proving the plaintiff’s noncompliance
with those requirements’’). The Appellate Court further
concluded that, even if the plaintiff had the burden of
pleading and proving compliance, because there was
evidence in the record to support the conclusion that
the plaintiff had complied, and no evidence to the con-
trary, the trial court’s ruling that the plaintiff had satis-
fied its prima facie case was not clearly erroneous.
Id., 217 n.10. After also rejecting the defendants’ other
claims on appeal, the Appellate Court affirmed the judg-
ment of the trial court. Id., 224.
This certified appeal followed.2 The defendants con-
tend that the Appellate Court incorrectly determined
that the burden was on them to plead and prove non-
compliance with applicable HUD regulations because
compliance with those regulations is a condition prece-
dent to accelerating payment of the debt and foreclosing
on a mortgage. See, e.g., Wells Fargo Bank, N.A. v.
Strong, 149 Conn. App. 384, 392, 89 A.3d 392 (‘‘the
plaintiff must prove by a preponderance 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 omitted)), cert. denied, 312 Conn. 923,
94 A.3d 1202 (2014). In addition, the defendants contend
that the Appellate Court incorrectly determined that,
even if the plaintiff had the burden of proving compli-
ance, the evidence established that it had done so. The
plaintiff contends that, to the contrary, compliance with
applicable HUD regulations is not a condition precedent
to accelerating the debt and bringing a foreclosure
action but, instead, is a condition subsequent. Accord-
ingly, it contends, the Appellate Court correctly held
that the burden was on the defendants to plead and
prove noncompliance as a special defense. The plaintiff
further contends that, even if compliance with HUD
regulations is a condition precedent, policy concerns
mandate that the burden should be on the defendants
to plead and prove noncompliance. Finally, the plaintiff
contends that, even if it had the burden of proving
compliance, the Appellate Court correctly determined
that it had done so.
We conclude that compliance with applicable HUD
regulations is a condition precedent to accelerating the
debt and foreclosing a mortgage that is guaranteed or
insured by the FHA. We further conclude that, in this
context, it is appropriate to adopt a burden shifting
procedure pursuant to which the plaintiff has the bur-
den of pleading its compliance with the applicable regu-
lations. If they deny the plaintiff’s allegation relating to
that compliance, the defendants have the burden of
pleading that the plaintiff has not complied with specific
regulations that are applicable. In that event, the burden
would then shift back to the plaintiff to prove compli-
ance with the specific regulations alleged by the defen-
dants. Finally, we conclude that, because the trial court
did not apply this procedure, the case must be remanded
to that court for a new trial limited to this issue.
We note, preliminarily, that the defendants’ claim that
the burden was on the plaintiff to prove compliance
with applicable HUD regulations is unpreserved
because they did not raise it before the trial court.
Accordingly, the claim ordinarily would be unreview-
able. See Practice Book § 60-5 (‘‘[t]he court shall not
be bound to consider a claim unless it was distinctly
raised at the trial’’). Nevertheless, because the plaintiff
did not raise this preservation issue before the Appellate
Court and has not raised it before this court, we will
review the claim here. See Mueller v. Tepler, 312 Conn.
631, 643–44, 95 A.3d 1011 (2014) (when plaintiff did not
argue before Appellate Court that defendants’ claim
was unpreserved, this court would consider issue in
certified appeal, and defendants’ claim was review-
able).3
We begin our analysis with the defendants’ threshold
claim that the provisions of the mortgage stating that
it ‘‘does not authorize acceleration or foreclosure if not
permitted by regulations of the [s]ecretary [of HUD]’’
and of the note stating that it ‘‘does not authorize accel-
eration when not permitted by HUD regulations’’ (com-
pliance provisions) created a contractual condition prece-
dent to debt acceleration and foreclosure by the plain-
tiff. ‘‘A condition precedent is a fact or event which the
parties intend must exist or take place before there is
a right to performance. . . . A condition is distin-
guished from a promise in that it creates no right or
duty in and of itself but is merely a limiting or modifying
factor. . . . If the condition is not fulfilled, the right
to enforce the contract does not come into existence.
. . . Whether a provision in a contract is a condition
the [nonfulfillment] of which excuses performance
depends [on] the intent of the parties, to be ascertained
from a fair and reasonable construction of the language
used in the light of all the surrounding circumstances
when they executed the contract.’’ (Internal quotation
marks omitted.) Blitz v. Subklew, 74 Conn. App. 183,
189, 810 A.2d 841 (2002), quoting Lach v. Cahill, 138
Conn. 418, 421, 85 A.2d 481 (1951).
One of the relevant circumstances to consider in our
condition precedent analysis is the public policy that
the compliance provisions of the note and mortgage
were intended to advance. See, e.g., Lacy-McKinney v.
Taylor, Bean & Whitaker Mortgage Corp., 937 N.E.2d
853, 864 (Ind. App. 2010) (court considered ‘‘precedents,
the language of the HUD regulations, and the public
policy of HUD’’ in determining whether compliance pro-
visions created condition precedent). Accordingly, we
look to the public policy underlying FHA guaranteed
loans for guidance. ‘‘The FHA, which was created by the
National Housing Act of 1934, is the largest government
insurer of mortgages in the world. . . . The FHA,
which is a part of HUD, provides mortgage insurance
on single-family, multifamily, manufactured homes, and
hospital loans made by FHA-approved lenders through-
out the United States and its territories. . . . Under
this program, mortgagee/lenders are induced to make
essentially risk-free mortgages by being guaranteed
against loss in the event of default by the mortgagor.
. . . This program allows mortgagees to offer loans to
[low income] families at a more favorable rate than
would otherwise be available in the market. . . . The
availability of affordable mortgages, in turn, promotes
[Congress’] national goal of a decent home and suitable
living environment for every American family.’’ (Cita-
tions omitted; internal quotation marks omitted.) Id.,
860.
‘‘Because these government-insured mortgage loan
programs recognize that [their] mortgagors will often
have difficulty making full and timely payments, HUD
promulgated very specific regulations outlining the
mortgage servicing responsibilities of mortgagees, which
include notice requirements that are integral to the pro-
gram. . . . These notice requirements [e]nsure that
financially strapped homeowners will have every oppor-
tunity to take informed steps to retain their homes.’’
(Citation omitted; footnote omitted.) HSBC Bank USA,
N.A. v. Teed, 48 Misc. 3d 194, 196, 4 N.Y.S.3d 826 (2014).
The court in Lacy-McKinney v. Taylor, Bean & Whi-
taker Mortgage Corp., supra, 937 N.E.2d 853, explained
the underlying considerations of public policy: ‘‘Fami-
lies who receive HUD-insured mortgages do not meet
the standards required for conventional mortgages. It
would be senseless to create a program to aid families
for whom homeownership would otherwise be impossi-
ble without promulgating mandatory regulations for
HUD-approved mortgagees to [e]nsure that objectives
of the HUD program are met. Foreseeable obstacles to
these families’ maintaining regular payments, such as
temporary illness, unemployment or poor financial
management, should be handled with a combination of
understanding and efficiency by mortgagees or ser-
vicers. Poor servicing techniques such as computerized
form letters and unrealistic forbearance agreements
. . . defeat the purpose of the National Housing Act
and the HUD program. The prevention of foreclosure
in HUD mortgages [whenever] possible is essential. The
HUD program’s objectives cannot be attained if HUD’s
involvement begins and ends with the purchase of the
home and the receipt of a mortgage by a [low income]
family.’’ (Internal quotation marks omitted.) Id., 863.
‘‘The regulations regarding a mortgagee’s servicing
responsibilities of such mortgages are codified in [t]itle
24, [p]art 203 (Single Family Mortgage Insurance), [s]ub-
part C (Servicing Responsibilities) [subpart C] of the
Code of Federal Regulations . . . . 24 C.F.R.
§§ [203.500 through 203.681]. Subpart C contains mort-
gagee servicing responsibilities and also provides cer-
tain relief for the mortgagor, e.g., conditions of special
forbearance, 24 C.F.R. § 203.614, mortgage modifica-
tion, 24 C.F.R. § 203.616, and a requirement that [c]ollec-
tion techniques must be adapted to individual differences
in mortgagors and take account of the circumstances
peculiar to each mortgagor, 24 C.F.R. § 203.600.’’ (Inter-
nal quotation marks omitted.) Lacy-McKinney v. Tay-
lor, Bean & Whitaker Mortgage Corp., supra, 937 N.E.2d
860. Significantly, title 24 of the 2011 edition of the Code
of Federal Regulations, § 203.500, provides in relevant
part: ‘‘It is the intent of [HUD] that no mortgagee shall
commence foreclosure or acquire title to a property
until the requirements of [subpart C] have been fol-
lowed.’’
The purpose of the HUD regulations is not only to
help ensure that homeowners will have every opportu-
nity to retain their homes, but also to ensure that lenders
will take all ‘‘appropriate actions which can reasonably
be expected to generate the smallest financial loss to
[HUD].’’ 24 C.F.R. § 203.501 (2011). To ensure uniform
advancement of these goals, it is the policy of HUD
that lenders participating in the program must use the
mortgage and note forms that HUD promulgates, which
contain the compliance provisions. See Requirements
for Single Family Mortgage Instruments, 54 Fed. Reg.
27,596, 27,601 (June 29, 1989) (‘‘[m]ortgagees must use
the model form [for mortgage provisions], Exhibit A,
and the footnotes accompanying the model form, with
only such adaptation as may be necessary to conform
to state or local requirements’’); id. (‘‘[m]ortgagees must
use the model form [for note provisions], Exhibit B,
and the footnotes accompanying the form, with only
such adaptation as may be necessary to conform to
state or local requirements’’); see also id., 27,603–608
(model mortgage form); id., 27,609–10 (model note
form).
With this background in mind, we conclude that the
compliance provisions of the note and mortgage clearly
were intended to constrain the ability of lenders to
accelerate the debt payment or to foreclose without
first providing the homeowners with ‘‘every opportu-
nity to take informed steps to retain their homes,’’ as
provided in the regulations. HSBC Bank USA, N.A. v.
Teed, supra, 48 Misc. 3d 196. It follows that the compli-
ance provisions are conditions precedent to accelerat-
ing the debt and initiating foreclosure proceedings such
that, ‘‘[i]f the condition[s] [are] not fulfilled, the right
to enforce the contract does not come into existence.’’
(Internal quotation marks omitted.) Blitz v. Subklew,
supra, 74 Conn. App. 189. This conclusion is bolstered
by the language of the Code of Federal Regulations
providing that ‘‘[i]t is the intent of [HUD] that no mort-
gagee shall commence foreclosure or acquire title to a
property until the requirements of [subpart C] have
been followed.’’ (Emphasis added.) 24 C.F.R. § 203.500(2011); see 24 C.F.R. § 203.606 (a) (2011) (‘‘[b]efore ini-
tiating foreclosure, the mortgagee must ensure that all
servicing requirements of [subpart C] have been met’’
(emphasis added)). Numerous other courts have reached
the same conclusion. See, e.g., Bates v. JPMorgan Chase
Bank, N.A., 768 F.3d 1126, 1132 (11th Cir. 2014) (under
Georgia law, compliance provision of FHA insured
mortgage ‘‘clearly makes compliance with HUD regula-
tions a condition precedent to the bank’s right to accel-
erate the debt or exercise the power of sale’’); Pfeifer
v. Countrywide Home Loans, Inc., 211 Cal. App. 4th
1250, 1279, 150 Cal. Rptr. 3d 673 (2012) (agreeing with
court that held that compliance provision of FHA
insured mortgage was condition precedent); Palma v.
JPMorgan Chase Bank, National Assn., 208 So. 3d 771,
775 (Fla. App. 2016) (like notice provision of standard
mortgage, compliance provisions of FHA insured mort-
gage are conditions precedent to right to accelerate debt
payment and to foreclose); Lacy-McKinney v. Taylor,
Bean & Whitaker Mortgage Corp., supra, 937 N.E.2d
864 (‘‘HUD servicing responsibilities . . . are binding
conditions precedent that must be complied with before
a mortgagee has the right to foreclose on a HUD prop-
erty’’); Wells Fargo Bank, N.A. v. Cook, 87 Mass. App.
382, 386, 31 N.E.3d 1125 (‘‘compliance with the [HUD]
regulations has been held to be a condition precedent
to foreclosure of FHA-insured mortgages’’), review
denied, 472 Mass. 1107, 36 N.E.3d 31 (2015); Wells Fargo
Bank, N.A. v. Awadallah, 41 N.E.3d 481, 487 (Ohio App.
2015) (‘‘[when] compliance with HUD regulations is
required by a note and mortgage, such compliance is a
condition precedent to bringing a foreclosure action’’);
Mathews v. PHH Mortgage Corp., 283 Va. 723, 736,
724 S.E.2d 196 (2012) (HUD regulation is ‘‘a condition
precedent to the accrual of the rights of acceleration
and foreclosure’’).
The plaintiff contends that the compliance provisions
are not conditions precedent but conditions subsequent
and, therefore, that the defendants were required to
raise noncompliance with HUD regulations as a special
defense. Unlike a condition precedent, which ‘‘is a fact
or event [that] the parties intend must exist or take
place before there is a right to performance’’; (internal
quotation marks omitted) Blitz v. Subklew, supra, 74
Conn. App. 189; nonperformance of a condition subse-
quent operates to cut off an existing right. See, e.g.,
Karp v. Urban Redevelopment Commission, 162 Conn.
525, 530, 294 A.2d 633 (1972) (‘‘[t]his limitation is to be
regarded as creating a condition subsequent, by which
an existing right is cut off by the nonperformance of
the condition, rather than a condition precedent to a
continuing right’’ (internal quotation marks omitted)).
A classic example of a condition subsequent is compli-
ance with the applicable statute of limitations. See, e.g.,
Bulkley v. Norwich & Westerly Railway Co., 81 Conn.
284, 287, 70 A. 1021 (1908) (comparing statutory notice
provision that ‘‘ma[de] the giving of a prescribed notice
a condition precedent to the existence of [the right of
action] under any and all circumstances’’ with statutory
notice provision that ‘‘simply place[d] a limitation, anal-
ogous to the general statute of limitations, [on] the right
of an injured party to prosecute such an action,’’ which
constituted condition subsequent).4 This is because,
when a person fails to comply with an applicable statute
of limitations, the right to recover that had existed from
the time that the cause of action accrued is thereby
lost. In contrast, when a person fails to comply with a
condition precedent to initiating a cause of action, the
right to recover never comes into existence. ‘‘A defense
predicated on a condition subsequent, and limitations
generally, need not be anticipated and negatived by the
plaintiff. They may properly be left to be pleaded by
the defendant.’’ Karp v. Urban Redevelopment Com-
mission, supra, 531–32.
In the present case, the plaintiff contends that compli-
ance with applicable HUD regulations requiring lenders
to give defaulting homeowners every opportunity to
retain their homes before accelerating the debt or ini-
tiating foreclosure proceedings is a condition subse-
quent because a lender’s rights to accelerate and fore-
close ‘‘come into existence when the borrower defaults
on the loan,’’ and the regulations merely act as a limita-
tion on or exception to those preexisting rights. The
plaintiff points to the language in § 6 (b) of the note
providing that the ‘‘[l]ender may, except as limited by
regulations of the [s]ecretary in the case of payment
defaults, require immediate payment in full,’’ and ‘‘[t]his
[n]ote does not authorize acceleration when not permit-
ted by HUD regulations.’’ (Emphasis added.) Similarly,
§ 9 (a) of the mortgage provides in relevant part that
the ‘‘[l]ender may, except as limited by regulations
issued by the [s]ecretary in the case of payment
defaults, require immediate payment in full . . . .’’
(Emphasis added.) Section 9 (d) of the mortgage further
provides: ‘‘In many circumstances regulations issued
by the [s]ecretary will limit [the] [l]ender’s rights, in
the case of payment defaults, to require immediate pay-
ment in full and foreclose if not paid. This [s]ecurity
[i]nstrument does not authorize acceleration or foreclo-
sure if not permitted by regulations of the [s]ecretary.’’
(Emphasis added.) According to the plaintiff, ‘‘[t]his
language expressly presupposes that the lender already
has existing ‘rights’ to accelerate and foreclose and
imposes certain limitations on those rights.’’
We disagree with this analysis. The distinction
between conditions precedent and conditions subse-
quent is not that conditions subsequent limit or restrict
rights whereas conditions precedent do not. Rather,
they both limit and restrict rights but in different ways.
Specifically, the nonoccurrence of a condition prece-
dent limits a right by preventing it from coming into
existence; see, e.g., Blitz v. Subklew, supra, 74 Conn.
App. 189 (‘‘A condition [precedent] . . . is merely a
limiting or modifying factor. . . . If the condition is
not fulfilled, the right to enforce the contract does not
come into existence. (Emphasis added; internal quota-
tion marks omitted.)); whereas the nonoccurrence of
a condition subsequent limits the right by extinguishing
it. See, e.g., Karp v. Urban Redevelopment Commis-
sion, supra, 162 Conn. 530 (‘‘[t]his limitation is to be
regarded as creating a condition subsequent, by which
an existing right is cut off by the nonperformance of the
condition’’ (emphasis added; internal quotation marks
omitted)).
Accordingly, contrary to the plaintiff’s contention,
the fact that the loan instruments use words of limita-
tion does not expressly presuppose that the right was
in existence before the condition—compliance with
applicable HUD regulations—failed to occur. Indeed,
unlike a statute of limitations, noncompliance with
which occurs on a specific date, after which the right
to recover, which had existed for a defined period up
to that time, is ‘‘cut off,’’ it is difficult to conceive how
the ongoing failure to comply with HUD regulations
could ‘‘cut off’’ any right because there simply is no
identifiable date on which the failure occurred and no
defined temporal period preceding the failure to comply
during which the right could have been asserted in the
first place. Contrary to the plaintiff’s claim, the right to
accelerate payments and to foreclose did not come into
existence when the defendants defaulted on the note
and mortgage because that right was conditioned on the
plaintiff’s compliance with applicable HUD regulations.
Indeed, the plaintiff has not cited a single case in which
a court has concluded that the compliance provisions of
an FHA note and mortgage are conditions subsequent.
Accordingly, we reject the plaintiff’s claim that the com-
pliance provisions are not conditions precedent.
Ordinarily, compliance with conditions precedent to
foreclosing on a mortgage must be pleaded and proved
by the lender. See, e.g., GMAC Mortgage, LLC v. Ford,
144 Conn. App. 165, 176, 73 A.3d 742 (2013) (‘‘[i]n order
to establish a prima facie case in a mortgage foreclosure
action, the plaintiff must prove by a preponderance
of the evidence . . . that any conditions precedent to
foreclosure, as established by the note and mortgage,
have been satisfied’’); cf. Young v. American Fidelity
Ins. Co., 2 Conn. App. 282, 285, 479 A.2d 244 (1984)
(‘‘one instituting an action [on] an insurance policy is
. . . obliged to allege in his complaint . . . that the
various conditions precedent stated in the policy have
been fulfilled’’ (internal quotation marks omitted)). The
plaintiff contends, for a variety of reasons, however,
that, even if the compliance provisions are conditions
precedent, for purposes of FHA insured mortgages, the
burden should be on the homeowner to plead and prove
noncompliance with the provisions as a special defense.
First, the plaintiff contends that HUD has interpreted
the compliance provisions as requiring homeowners to
raise noncompliance with HUD regulations as a special
defense. See Requirements for Single Family Mortgage
Instruments, supra, 54 Fed. Reg. 27,599 (‘‘we believe
that a borrower could appropriately raise [a violation
of 24 C.F.R. § 203.606, prohibiting foreclosure unless
three full monthly payments due on the mortgage are
unpaid] in his or her defense’’). The plaintiff contends
that this interpretation is binding on all courts because,
‘‘[w]hen dealing with uniform contract language imposed
by the United States, it is the meaning of the United
States that controls. In interpreting such a government
mandated term, a court’s assessment of context and
purpose is informed by the traditional tools of legisla-
tive and regulatory construction. This is a matter of law
to be determined by a court. When the United States
mandates that private parties use uniform language for
a certain type of contract, the United States is enacting
a policy that all parties to that type of contract should
be subject to identical obligations. Those obligations
are the ones the United States intended them to be,
as determined by a court, regardless of the personal
interpretation offered by a party. If such contracts were
subjected to different meanings depending merely on
whether a particular party’s interpretation was plausi-
ble, it would not only undermine the efficiency benefits
of standardization, but it would also undermine the
federal policy that motivated the United States to
impose uniform contractual obligations on parties in
the first place.’’ (Footnote omitted.) Kolbe v. BAC Home
Loans Servicing, L.P., 738 F.3d 432, 442 (1st Cir. 2013).
We are not persuaded that this policy statement by
HUD requires the states to treat noncompliance with
applicable HUD regulations as a special defense to a
foreclosure action to be pleaded and proved by the
homeowner. As the amicus points out, the statement
that a homeowner could raise noncompliance with
applicable regulations ‘‘in his or her defense’’; Require-
ments for Single Family Mortgage Instruments, supra,
54 Fed. Reg. 27,599; reasonably can be interpreted as
meaning merely that noncompliance could prevent the
lender from prevailing in the foreclosure action, not as
mandating any particular mode of procedure for raising
the issue. There is no reason to believe that HUD has
any deep familiarity with local pleading procedures and
practices in the various states and intended, for some
reason, to prohibit states from requiring lenders to
plead and prove compliance, even though the compli-
ance provisions were intended to be conditions prece-
dent. Rather, it is reasonable to conclude that HUD was
simply rejecting the proposition that a lender’s duty of
compliance runs only to HUD, not to homeowners as
well. In this regard, it is significant that HUD made this
statement in response to a person who had commented
on the proposed uniform mortgage form and who was
concerned that the mandated compliance provisions
‘‘would create foreclosure proceedings that would be more
[time-consuming] and expensive.’’ Id. HUD responded
that, ‘‘[a]s long as [mandatory requirements remain] in
the regulations, we do not expect mortgagees to violate
[them] even though the mortgage fails to repeat the
requirement, and we believe that a borrower could
appropriately raise the regulatory violation in his or her
defense.’’ Id. It bears noting that HUD followed up this
statement by stating that it ‘‘retains the general position
recited in 24 C.F.R. § 203.500, that whether a mortgag-
ee’s refusal or failure to comply with servicing regula-
tions is a legal defense is a matter to be determined by
the courts.’’ Id. At the time HUD made this statement in
June, 1989, § 203.500 contained the following sentence:
‘‘[HUD] takes no position on whether a mortgagee’s
refusal or failure to comply with §§ 203.640 through
203.658 is a legal defense to foreclosure; that is a matter
to be determined by the courts.’’ 24 C.F.R. § 203.500(1989); see Temporary Mortgage Assistance Payments,
52 Fed. Reg. 6908, 6915 (March 5, 1987) (to be codified
at 24 C.F.R. pts. 203 and 204). Accordingly, courts that
hold that noncompliance with HUD regulations bars
relief to a foreclosing lender abide by this ‘‘interpreta-
tion’’ of the compliance provisions, regardless of
whether they treat compliance as an element of a fore-
closure action that must be pleaded and proved by
the lender or treat noncompliance as a defense to be
pleaded and proved by the homeowner.
Second, the plaintiff contends that ‘‘[e]very jurisdic-
tion to have considered the issue . . . has followed
HUD’s interpretation and found that borrowers may
raise certain instances of HUD noncompliance to
defend against foreclosures. By contrast, no jurisdiction
has burdened a lender with proving compliance with
all HUD regulations as part of its prima facie case.’’
Again, we are not persuaded. Although a number of
jurisdictions have concluded that noncompliance with
HUD regulations should be raised by the homeowner
as an affirmative defense,5 many of the cases cited by
the plaintiff merely hold that noncompliance with appli-
cable HUD regulations can be raised as a ‘‘defense’’ to
a foreclosure action in the generic or colloquial sense
that, if established (or not disproved), noncompliance
will bar relief to the lender, and do not analyze who
has the burden of pleading and proof. See, e.g., PNC
Bank, National Assn. v. Wilson, 74 N.E.3d 100, 105 (Ill.
App.) (‘‘it is undisputed . . . that the failure to comply
with HUD’s mortgage services requirements contained
in its regulations is a defense to a mortgage foreclosure
action’’), appeal denied, 89 N.E.3d 763 (Ill. 2017); ABN
AMRO Mortgage Group, Inc. v. Tullar, Docket No. 06-
0824, 2009 WL 1066511, *4 (Iowa App. April 22, 2009)
(decision without published opinion, 770 N.W.2d 851)
(‘‘HUD foresaw—and approved—the concept that fail-
ure to comply with its so-called ‘mitigation’ or ‘forbear-
ance’ rules could be raised as a defense in a foreclosure
proceeding’’); HSBC Bank USA, N.A. v. Teed, supra, 48
Misc. 3d 197 (‘‘compliance with the appropriate federal
regulations is not merely a procedural requirement but
is a condition precedent to the imposition of liability,’’
and, therefore, ‘‘the failure to comply with the HUD
servicing requirements is a complete defense to a mort-
gage foreclosure action’’); Federal Land Bank of Saint
Paul v. Overboe, 404 N.W.2d 445, 449 (N.D. 1987) (‘‘vari-
ous courts have held that the failure of a lender to
follow HUD regulations governing mortgage servicing
constitutes a valid defense sufficient to deny the lender
the relief it seeks in a foreclosure action’’); Fleet Real
Estate Funding Corp. v. Smith, 366 Pa. Super. 116, 124,
530 A.2d 919 (1987) (‘‘a mortgagor of an FHA-insured
mortgage may raise as an equitable defense to foreclo-
sure . . . the mortgagee’s deviation from compliance
with the forbearance provisions of the HUD Handbook
and regulations’’).
More important, contrary to the plaintiff’s contention
that no court has ever placed the burden of pleading
and proving compliance with HUD regulations on the
lender, the defendants have cited two cases in which
a state’s appellate court expressly did so. In Palma v.
JPMorgan Chase Bank, National Assn., supra, 208 So.
3d 771, the court held that compliance with HUD regula-
tions, like other conditions precedent to initiating a
foreclosure action, must be generally pleaded by the
lender. See id., 775. The burden then shifts to the bor-
rower to specifically deny compliance with particular
regulations. Id. In turn, once the borrower has pleaded
a specific denial, the burden shifts back to the lender
to prove at trial that it complied with the regulations.
Id. Similarly, in Wells Fargo Bank, N.A. v. Awadallah,
supra, 41 N.E.3d 481, the court held that ‘‘compliance
with [HUD] regulations is a condition precedent and
[the] bank must [therefore] generally plead in its com-
plaint that it has complied with the . . . regulations,
which shifts the burden to the borrower to plead with
particularity in the answer . . . which specific regula-
tions were not complied with, in order to preserve the
issue. Then upon summary judgment, the burden shifts
back again to the bank, which must provide evidence
sufficient to dispel a genuine issue of material fact, that
it complied with the specific HUD regulation raised by
the borrower in its answer.’’ (Internal quotation marks
omitted.) Id., 487. Accordingly, we reject the plaintiff’s
contention that the great weight of authority favors its
position that the burden should be on the defendants
to plead and prove noncompliance.
Third, the plaintiff contends that the Appellate Court
correctly determined that ‘‘[r]equiring mortgagees to
plead and prove compliance with all HUD regulations
would undermine this state’s policy of promoting econ-
omy and efficiency in foreclosure actions . . . .’’ See
Wells Fargo Bank, N.A. v. Lorson, supra, 183 Conn.
App. 215 (if lenders had burden of pleading and proving
compliance, ‘‘[f]oreclosure trials, and motions for sum-
mary judgment in foreclosure actions, in which the facts
are largely undisputed, would become drawn out,
expensive affairs as a plaintiff presents evidence regard-
ing a lengthy list of requirements’’). The plaintiff points
out that foreclosure trials are entitled to priority by
statute; see General Statutes § 52-192; see also, e.g.,
Suffield Bank v. Berman, 25 Conn. App. 369, 373, 594
A.2d 493 (‘‘due to the nature of foreclosure actions,
the spirit of the rules is to expedite matters’’), cert.
dismissed, 220 Conn. 913, 597 A.2d 339 (1991), and
cert. denied, 220 Conn. 914, 597 A.2d 340 (1991); and
contends that, because the HUD regulations are so volu-
minous and Byzantine, the position taken by the defen-
dants and the amicus ‘‘would saddle mortgagees with
a massive and complex burden that would greatly com-
plicate, lengthen, and add expense to foreclosures . . .
of mortgages containing the HUD uniform covenants.’’
As the plaintiff recognizes, however, this court has
held in another context that, ‘‘in the very exceptional
situation created by the [existence of a contract con-
taining] numerous conditions [precedent],’’ a burden
shifting approach is appropriate, with the plaintiff
retaining the ultimate burden of proving compliance.
Harty v. Eagle Indemnity Co., 108 Conn. 563, 566, 143
A. 847 (1928). Specifically, ‘‘it has become the estab-
lished law of this [s]tate that one instituting an action
[on] an insurance policy is only obliged to allege in his
complaint, in general terms, that the various conditions
precedent stated in the policy have been fulfilled; that it
is then incumbent [on] the defendant, by way of special
defense,6 to set up such failures to comply with such
conditions as it proposes to claim; that the burden rests
[on] the plaintiff to prove compliance with the condi-
tions so put in issue, but that, as to other conditions
precedent, compliance is presumed, without offer of
proof by the plaintiff.’’ (Footnote added.) Id., 565. The
‘‘underlying reason for the rule . . . [is] that, in the
interest of economy of time and effort and of simplicity
of procedure, the plaintiff should be relieved of the
necessity of pleading and proving facts which the defen-
dant never proposes to put in actual issue.’’ Id.There are two additional reasons that placing the
ultimate burden of proof on the plaintiff makes sense
in the present context. First, ‘‘the task of proving a
negative [i.e., noncompliance with HUD regulations]
is an inherently difficult one, and it may be further
complicated by the opposing party’s interest in conceal-
ment.’’ Arrowood Indemnity Co. v. King, 304 Conn.
179, 203, 39 A.3d 712 (2012). Second, mortgagees pos-
sess their own records and are in the best position to
know what specific steps they have taken to comply
with specific HUD regulations that control their actions
or, if they have taken no such steps, to explain why
they believed that doing so was unnecessary under the
circumstances. Cf. id. (‘‘[i]mposing this difficult task
[of proving lack of prejudice from failure to comply
with a notice provision] on the insured—the party least
well equipped to know, let alone demonstrate, the effect
of delayed disclosure on the investigatory and legal
defense capabilities of the insurer—reduces the likeli-
hood that the fact finder will possess sufficient informa-
tion to determine whether prejudice has resulted from
delayed disclosure’’).
The Appellate Court nevertheless concluded that,
pursuant to Practice Book § 10-50,7 the defendants had
the affirmative duty to plead the plaintiff’s noncompli-
ance with HUD regulations as a special defense. See
Wells Fargo Bank, N.A. v. Lorson, supra, 183 Conn.
App. 213–14. The Appellate Court reasoned, ‘‘[t]here
are potentially dozens of HUD requirements that a
defendant could argue are necessary prerequisites to
the bringing of a foreclosure action. . . . It is inconsis-
tent with our expectation that trials are not supposed
to be a game of blindman’s bluff to expect a plaintiff
in a foreclosure action to anticipate which HUD require-
ment a defendant will seize upon to argue after the
plaintiff rests that it has failed to prove its case. . . .
Consequently, in this particular context, it makes much
more sense to require the defendant to plead the spe-
cific requirements that have not been met and bear the
burden of proving the plaintiff’s noncompliance with
those requirements.’’ Id., 215. We disagree that a lend-
er’s noncompliance with HUD regulations is most
appropriately pleaded by the borrower as a special
defense and conclude that, because compliance with
the various HUD regulations is a condition precedent,
compliance must be generally pleaded by the lender.
As we explained, ‘‘[a] condition precedent is a fact
or event which the parties intend must exist or take
place before there is a right to performance. . . . A
condition is distinguished from a promise in that it
creates no right or duty in and of itself but is merely a
limiting or modifying factor. . . . If the condition is
not fulfilled, the right to enforce the contract does not
come into existence. . . . Whether a provision in a con-
tract is a condition the [nonfulfillment] of which
excuses performance depends [on] the intent of the
parties, to be ascertained from a fair and reasonable
construction of the language used in the light of all
the surrounding circumstances when they executed the
contract.’’ (Emphasis added; internal quotation marks
omitted.) Blitz v. Subklew, supra, 74 Conn. App. 189,
quoting Lach v. Cahill, supra, 138 Conn. 421. For the
reasons we have explained, language in the mortgage
and note makes clear that compliance with HUD regula-
tions is a condition precedent to debt acceleration and
foreclosure by the plaintiff. Specifically, the mortgage
provides that it ‘‘does not authorize acceleration or
foreclosure if not permitted by regulations of the [s]ec-
retary [of HUD].’’ The note similarly provides that it
‘‘does not authorize acceleration when not permitted
by HUD regulations.’’ Our conclusion that compliance
with HUD regulations is a condition precedent is sup-
ported by the policy of those regulations. ‘‘It is the intent
of [HUD] that no mortgagee commence foreclosure or
acquisition of the property until the requirements of
[§§ 203.650 through 203.662 of the HUD regulations] or
instructions issued pursuant to said sections have been
complied with.’’ Mortgage Servicing Generally, 45 Fed.
Reg. 29,573, 29,574 (May 5, 1980) (to be codified at 24
C.F.R. pt. 203); see Temporary Mortgage Assistance
Payments, supra, 52 Fed. Reg. 6915 (‘‘[b]efore initiating
foreclosure, the mortgagee must ensure that all servic-
ing requirements of [subpart C] have been met’’). This
is because ‘‘[t]he prevention of foreclosure in HUD
mortgages [whenever] possible is essential. The HUD
program’s objectives cannot be attained if HUD’s
involvement begins and ends with the purchase of the
home and the receipt of a mortgage by a [low income]
family.’’ (Internal quotation marks omitted.) Lacy-
McKinney v. Taylor, Bean & Whitaker Mortgage Corp.,
supra, 937 N.E.2d 863; see 24 C.F.R. § 203.501 (2011)
(purpose of HUD regulations is not only to help ensure
that homeowners will have every opportunity to retain
their homes, but also to ensure that lenders will take
all ‘‘appropriate actions which can reasonably be
expected to generate the smallest financial loss to
[HUD]’’). It is clear that HUD intended that, like a quint-
essential condition precedent, the right to enforce the
note and to foreclose on the mortgage would not come
into existence unless the various HUD regulations,
designed to avoid foreclosure in the first place, had been
complied with. Indeed, unlike with a special defense,
notwithstanding a lender’s noncompliance with HUD
regulations, the lender still has a cause of action; it
simply does not have the right to enforce the terms
of the mortgage and note until it complies with the
regulations.
Given our conclusion that compliance with the HUD
regulations is a condition precedent, a lender must nec-
essarily plead compliance. See, e.g., GMAC Mortgage,
LLC v. Ford, supra, 144 Conn. App. 176 (‘‘[i]n order to
establish a prima facie case in a mortgage foreclosure
action, the plaintiff must prove by a preponderance
of the evidence . . . that any conditions precedent to
foreclosure, as established by the note and mortgage,
have been satisfied’’). The policy underlying the HUD
regulations—prevention of foreclosures—would be under-
mined if a lender were not required to plead compliance
with the regulations and, instead, a borrower had to
raise noncompliance as a special defense.
Moreover, in many circumstances, a borrower would
have no way of knowing whether a lender failed to
comply with specific HUD regulations until he has
access to discovery.8 Although a borrower may be
aware of the various payment plans a lender offered
him pursuant to HUD regulations, he would not know
whether the lender complied with other requirements
under the HUD regulations; see 24 C.F.R. § 203.500 et
seq.; such as the requirement that the lender must evalu-
ate various loss mitigation techniques. See 24 C.F.R.
§§ 203.501 and 203.605. As the amicus curiae contends,
‘‘lenders are the only party equipped to assure trial
courts of compliance.’’ (Emphasis added.) Lenders and
servicers possess their own records and are in the best
position to know whether they have complied with the
HUD regulations that control their actions.
In addition to the lack of a good faith basis to make
such an allegation, a defendant could not allege non-
compliance with HUD regulations generally as a special
defense. Practice Book § 10-50 requires that ‘‘[f]acts
which are consistent with [the plaintiff’s statements of
fact] but show, notwithstanding, that the plaintiff has no
cause of action, must be specially alleged.’’ (Emphasis
added.) Indeed, ‘‘[t]he fundamental purpose of a special
defense, like other pleadings, is to apprise the court
and opposing counsel of the issues to be tried, so that
basic issues are not concealed until the trial is under-
way.’’ (Internal quotation marks omitted.) Almada v.
Wausau Business Ins. Co., 274 Conn. 449, 456, 876 A.2d
535 (2005). A general allegation in a special defense
that a plaintiff failed to comply with HUD regulations,
without more specificity, would not meet the require-
ment under § 10-50 that facts that show why the plaintiff
has no cause of action must be ‘‘specially alleged’’ and
would not serve to apprise the court and opposing coun-
sel of the issues to be tried. See, e.g., Standard Petro-
leum Co. v. Faugno Acquisition, LLC, 330 Conn. 40,
72, 191 A.3d 147 (2018) (‘‘Each of the special defenses
states a summary legal conclusion, lacking any support-
ing facts or indication as to which counts they are
directed. As such, they would not even meet our fact
pleading requirements for special defenses as set forth
in . . . § 10-50.’’). As we have explained, a burden shift-
ing procedure has been adopted by at least two jurisdic-
tions in the context of foreclosures of FHA insured
mortgages. See Palma v. JPMorgan Chase Bank,
National Assn., supra, 208 So. 3d 775; Wells Fargo Bank,
N.A. v. Awadallah, supra, 41 N.E.3d 487. Under this
burden shifting procedure, once a plaintiff lender gener-
ally pleads compliance with HUD regulations, a defen-
dant borrower will have access to discovery to deter-
mine whether the plaintiff actually complied with the
various regulations. Should the defendant discover a
basis to allege that the plaintiff failed to comply with
specific HUD regulations, the defendant would move
to dismiss the action. We conclude that this procedure
strikes the appropriate balance between the interests
of the parties, and, therefore, we adopt the procedure
in the present context. Accordingly, we reverse the
holding of the Appellate Court that the burden was on
the defendants to plead and prove that the plaintiff had
not complied with HUD regulations before accelerating
the debt and initiating foreclosure proceedings.
We turn finally to the defendants’ claim that the
Appellate Court incorrectly determined that, even if the
burden was on the plaintiff to establish compliance
with HUD regulations, because there was evidence in
the record to support the conclusion that the plaintiff
had complied, and no evidence to the contrary, the trial
court’s ruling that the plaintiff had satisfied its prima
facie case was not clearly erroneous. See Wells Fargo
Bank, N.A. v. Lorson, supra, 183 Conn. App. 217 n.10.
The defendants contend that, because the trial court
never considered this issue, the Appellate Court’s con-
clusion that the plaintiff had met its burden of proof
was speculative.9 We agree with the defendants.
Although the plaintiff presented testimony that it was in
possession of documents showing that it had complied
with HUD regulations, as well as evidence of actions
that it took to comply with specific regulations, the
defendants had no reason to present any evidence of
noncompliance with specific regulations, or to rebut
the plaintiff’s evidence of compliance, because the trial
court had denied their request to amend their answer
to include the special defense of noncompliance. Simi-
larly, the plaintiff was not on notice that it was required
to present evidence of compliance with any specific
HUD regulation. We conclude, therefore, that the case
must be remanded to the trial court for a new trial
limited to the issue of whether the plaintiff complied
with the specific HUD regulations with which the defen-
dants claim the plaintiff was noncompliant. The plaintiff
need not establish that it has satisfied the other ele-
ments of its prima facie case, as the defendants make
no other claim of error with respect to the trial court’s
finding on that issue. See, e.g., Ostrowski v. Avery, 243
Conn. 355, 368, 703 A.2d 117 (1997) (remanding matter
to trial court for new trial limited to issue on which
trial court misallocated burden of proof).
The judgment of the Appellate Court is reversed and
the case is remanded to that court with direction to
reverse the judgment of the trial court and to remand
the case to the trial court for a new trial limited to the
issue of whether the plaintiff complied with applicable
HUD regulations before accelerating payment of the
defendants’ debt and initiating foreclosure proceedings.
In this opinion the other justices concurred.
* The listing of justices reflects their seniority status on this court as of
the date of oral argument.
** December 3, 2021, the date that this decision was released as a slip
opinion, is the operative date for all substantive and procedural purposes.
1
Thereafter, the defendants filed a motion for review of the trial court’s
denial of their motion for articulation with the Appellate Court, which the
Appellate Court denied. See Wells Fargo Bank, N.A. v. Lorson, supra, 183
Conn. App. 206.
2
After the defendants filed this appeal, we granted permission to the
Housing Clinic of the Jerome N. Frank Legal Services Organization to file
an amicus curiae brief in support of the defendants’ position.
3
We acknowledge that the plaintiff claimed before the Appellate Court
that the defendants ‘‘waived the argument [that the plaintiff bore the initial
burden of proving that it complied with HUD regulations] by failing to plead
noncompliance with the HUD regulations as a special defense.’’ (Emphasis
in original.) But this argument is directed at an alleged pleading defect; the
plaintiff does not claim that the defendants failed to preserve the HUD
compliance issue. Indeed, the Appellate Court reached and decided the legal
issue of whether the plaintiff had the burden of proving compliance with
HUD regulations with no objection from the plaintiff, and now the plaintiff
urges us to uphold that decision in this certified appeal.
4
See also, e.g., Fields v. Housing Authority, 63 Conn. App. 617, 621, 777
A.2d 752 (when compliance with statutory notice provision is not essential
to determination of liability but concerns only whether plaintiff has taken
proper steps to warrant recovery, provision operates as condition subse-
quent to liability rather than condition precedent, but statutory notice provi-
sion is condition precedent when statute containing provision creates new
cause of action unrecognized by common law), cert. denied, 257 Conn. 910,
782 A.2d 133 (2001). It seems to us that there is a difference between an
ordinary statute of limitations and a statutory notice provision, in that a
person need not take any action—other than to assert the right at issue—
before the statute of limitations has expired to preserve the right to recover,
whereas the failure to comply with a statutory notice provision bars the
right to recover even before the time for filing the notice has expired.
Ordinarily, if the right to performance does not exist until an act takes
place, the act is considered a condition precedent. Indeed, contractual notice
provisions are considered conditions precedent to performance. See, e.g.,
Fidelity Bank v. Krenisky, 72 Conn. App. 700, 710, 807 A.2d 968 (‘‘when
the terms of the note and mortgage require notice of default, proper notice
is a condition precedent to an action for foreclosure’’ (internal quotation
marks omitted)), cert. denied, 262 Conn. 915, 811 A.2d 1291 (2002). Moreover,
it is difficult to understand why the distinction between common-law causes
of action and purely statutory causes of action should have any bearing
on whether a notice provision is properly characterized as a condition
subsequent or a condition precedent, as those terms are ordinarily under-
stood. To say that a notice provision is not of the essence and that compliance
with it may be waived may mean that the provision is not, strictly speaking,
a condition precedent, but it is difficult to understand why it should mean
that the provision is a condition subsequent. We recognize, however, that
there are historical reasons for sometimes treating statutory notice provi-
sions like conditions subsequent, even though they do not fit neatly into
that category. Accordingly, to the extent that the plaintiff in the present case
relies on the cases treating some statutory notice provisions as conditions
subsequent to support its contention that ongoing noncompliance with HUD
regulations would constitute nonperformance of a condition subsequent,
we conclude that its reliance is misplaced. Indeed, it is arguable that, outside
the law of contracts, the concepts of conditions precedent and conditions
subsequent no longer serve a particularly useful purpose and that the ques-
tion of whether compliance with a particular statutory notice provision is
an element of the plaintiff’s case or, instead, must be pleaded and proved
by the defendant, and whether compliance is a prerequisite to the court’s
subject matter jurisdiction or, instead, is merely a prerequisite to recovery,
should be resolved solely on policy grounds.
5
See, e.g., Bankers Life Co. v. Denton, 120 Ill. App. 3d 576, 579, 458 N.E.2d
203 (1983) (‘‘we believe that the failure to comply with these servicing
regulations which are mandatory and have the force and effect of law can
be raised in a foreclosure proceeding as an affirmative defense’’); Lacy-
McKinney v. Taylor, Bean & Whitaker Mortgage Corp., supra, 937 N.E.2d
864 (holding, without analysis regarding who has burden of proof, that
homeowner ‘‘can properly raise as an affirmative defense that [the lender]
failed to comply with the HUD servicing regulations prior to commencing
this foreclosure action’’); Wells Fargo Home Mortgage, Inc. v. Neal, 398 Md.
705, 727, 922 A.2d 538 (2007) (‘‘we are of the opinion that the violations of
the HUD mortgage servicing regulations alleged of [the lender] by [the
homeowner] may be asserted effectively as an affirmative defense within
the injunctive relief apparatus provided’’ by Maryland statute). We note
that the issue in both Bankers Life Co. and Lacy-McKinney was whether
homeowners were intended to be beneficiaries of the applicable HUD regula-
tions at all or, instead, whether HUD was the sole beneficiary. See Bankers
Life Co. v. Denton, supra, 579; Lacy-McKinney v. Taylor, Bean & Whitaker
Mortgage Corp., supra, 864. There was no analysis as to whether noncompli-
ance must be pleaded by the homeowner or, instead, compliance must be
pleaded by the lender.
6
We note that this pleading is a special defense in form only, inasmuch
as the defendant ordinarily has the ultimate burden of proving a special
defense. See, e.g., Wyatt Energy, Inc. v. Motiva Enterprises, LLC, 308 Conn.
719, 736, 66 A.3d 848 (2013) (‘‘the party raising a special defense has the
burden of proving the facts alleged therein’’). As a practical matter, this
pleading functions as a specific denial of the plaintiff’s general pleading of
compliance.
7
Practice Book § 10-50 provides: ‘‘No facts may be proved under either
a general or special denial except such as show that the plaintiff’s statements
of fact are untrue. Facts which are consistent with such statements but
show, notwithstanding, that the plaintiff has no cause of action, must be
specially alleged. Thus, accord and satisfaction, arbitration and award,
duress, fraud, illegality not apparent on the face of the pleadings, infancy, that
the defendant was non compos mentis, payment (even though nonpayment
is alleged by the plaintiff), release, the statute of limitations and res judicata
must be specially pleaded, while advantage may be taken, under a simple
denial, of such matters as the statute of frauds, or title in a third person to
what the plaintiff sues upon or alleges to be the plaintiff’s own.’’
Although Practice Book § 10-50 was amended in 2017, the amendment
has no bearing on the merits of this appeal. In the interest of simplicity, we
refer to the current version of that rule.
8
It is also for this reason that we decline to adopt the burden shifting
procedure this court has employed in the insurance context. See, e.g., Harty
v. Eagle Indemnity Co., supra, 108 Conn. 565. The rationale underlying the
burden shifting procedure in the insurance context—‘‘that, in the interest
of economy of time and effort and of simplicity of procedure, the plaintiff
should be relieved of the necessity of pleading and proving facts which the
defendant never proposes to put in actual issue’’—is different from the
rationale in the foreclosure context. Id. Unlike an insurance company that
likely has reason to know that an insured did not comply with the terms
of an insurance policy and, therefore, pleads noncompliance as a special
defense, a borrower would have no reason to know whether a lender com-
plied with specific HUD regulations.
9
We have already rejected the plaintiff’s contention that the defendants
‘‘waived’’ this issue when they failed to raise the special defense that the
plaintiff had not complied with HUD regulations. See footnote 3 of this opin-
ion.