U.S. Bank National Assn. v. Eichten , 184 Conn. App. 727 ( 2018 )

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U.S. BANK NATIONAL ASSOCIATION, TRUSTEE
v. KARIN C. EICHTEN ET AL.
(AC 39679)
Alvord, Keller and Bright, Js.
Syllabus
The plaintiff bank sought to foreclose a mortgage on certain real property
owned by the defendant homeowner, E. The trial court granted the
plaintiff’s motion for summary judgment as to liability on the complaint
and on a counterclaim that E had filed. Thereafter, the court rendered
judgment of strict foreclosure, from which E appealed to this court. After
E had defaulted on her mortgage loan, she applied with the plaintiff’s
loan servicer, C Co., for a modification of her mortgage loan under
the federal Home Affordable Modification Program (HAMP). Under the
HAMP program and a directive issued by the United States Department
of the Treasury, borrowers who participated in a certain trial period
plan, and who timely made three monthly payments in place of their
normal monthly mortgage payments and met all other program eligibility
requirements, would have their mortgage loans permanently modified.
The Treasury Department directive also required loan servicers to send
borrowers notice if their documentation for a loan modification was
incomplete and a list of additional required documents. C Co. approved
E for entry into the trial period plan and sent her a letter, which stated,
inter alia, that after she timely made all trial period payments and
continued to meet all other program eligibility requirements, C Co. would
send her a modification agreement. The letter further stated that E’s
credit score could be affected if she accepted entry into the trial period
plan. Thereafter, C Co. informed E in a letter that her ‘‘housing ratio,’’
or housing expense as a percentage of her household income, exceeded
the maximum allowed for C Co.’s lending program. C Co. stated that
under applicable HAMP guidelines, E’s monthly mortgage payment could
not be less than 31 percent of her household monthly gross income in
order to qualify for a loan modification. C Co. informed E that her
housing ratio at that time was 24.76 percent. C Co. subsequently sent
E two more letters, the first of which stated that she had been denied
a permanent loan modification because her housing ratio exceeded the
maximum allowed for the modification program, and the second of
which explained that her housing expense was not a large enough per-
centage of her household income to qualify for a loan modification. E
objected to the plaintiff’s motion for summary judgment and claimed,
inter alia, that she had contacted C Co. to discuss mortgage assistance
options but was told that C Co. would not speak to her unless or until
she stopped making her mortgage payments. E claimed that she relied
on that information and stopped making payments, but that C Co. did
not follow through with its promise to help her with mortgage assistance.
E further claimed that she had timely made the monthly payments under
the trial plan period and remained eligible under the HAMP guidelines
for a loan modification. E also claimed that certain of C Co.’s internal
documents showed that approximately nine months after she had com-
pleted the trial period plan, C Co. approved her application for a loan
modification, but did not inform her of that approval, and did not offer
her a loan modification or send her notice that her documentation was
incomplete. The trial court concluded that no genuine issue of material
fact existed as to any of the special defenses that E had filed. The court
determined, as to the counterclaim, that E and the plaintiff did not enter
into a new contract when she accepted entry into and complied with
the terms of the trial period plan, that the allegations in the counterclaim
did not satisfy the transaction test set forth in the applicable rule of
practice (§ 10-10) and that the counterclaim was barred by the statute
of frauds (§ 52-550 [a]). On appeal to this court, E claimed, inter alia,
that the trial court improperly rendered summary judgment as to liability
on the plaintiff’s complaint and on her counterclaim, and improperly
concluded that a genuine issue of material fact did not exist with respect
to her special defenses. Held:
1. The trial court improperly rendered summary judgment as to liability on
the plaintiff’s complaint, as genuine issues of material fact existed as
to E’s special defense of unclean hands:
a. The trial court improperly concluded that there was no genuine issue
of material fact as to whether E could prevail on her special defense
of unclean hands, the plaintiff having failed to establish that it adhered
to the requirements of the Treasury Department directive; the plaintiff
produced no evidence that it made a determination as to E’s eligibility
for a loan modification at the end of the trial period plan, the plaintiff
failed to explain its apparent internal approval of a loan modification
for E or to produce evidence as to why it failed to offer her a loan
modification, the unexplained length of time it took C Co. to deny E
an offer of a permanent loan modification raised a question as to whether
C Co. treated her in a fair, equitable and honest manner, and there
was no evidence that C Co. sent E notice that her documentation was
incomplete and a list of additional required documentation.
b. The trial court improperly concluded that E’s special defense of
unclean hands was invalid because it did not relate to the making,
validity or enforcement of the mortgage note; E’s allegations raised a
genuine issue of material fact as to whether deceitful or unfair practices
on the part of the plaintiff led to its filing of the foreclosure action,
the plaintiff’s submissions did not defeat the evidence set forth in E’s
objection that the procedures required by HAMP may not have been
followed during the trial period plan process, and the defense of unclean
hands does not necessarily need to relate to the making, enforcement
or validity of a mortgage loan.
2. E could not prevail on her unpreserved claim that the trial court erred
in concluding that her special defense of equitable estoppel failed to
raise a genuine issue of material fact as to whether C Co. induced her
to default: E’s claim on appeal that C Co. knew or should have known that
telling her she had to stop payments as a requirement to be considered
for a loan modification was misleading differed from her argument to
the trial court that C Co. had a practice of instructing mortgagors to
stop making payments under the false pretense that doing so would not
hurt their credit scores, E never directed the trial court to any authority
that supported her claim that C Co. knew or should have known that
it was misleading to tell her that she had to stop making mortgage
payments to be considered for a loan modification, and E failed to
present evidence that she reasonably relied on any promise by C Co.
that her credit score would be unaffected or that a loan modification
would take place if she defaulted, as the maintenance of a favorable
credit score or a loan modification were never certainties at the time
she elected to default; moreover, even if E had preserved her equitable
estoppel claim, she could not prevail, as she did not claim that C Co.
directed her to default or promised her a loan modification if she were
to default, the only detriment E alleged was the negative impact on her
credit score, and C Co. followed through on its promise to discuss
mortgage assistance with her after she defaulted.
3. E could not prevail on her claim that a genuine issue of material fact
existed as to her breach of contract special defense, which was based
on her assertion that C Co.’s letter in which it offered her entry into
the trial period plan created an offer that if she timely made all of the
trial period payments, her mortgage would be permanently modified; E
failed to allege that she had maintained her eligibility for the HAMP
program, which was a condition precedent in the letter, and, thus, her
conduct never triggered the plaintiff’s duty to perform its obligations
under the contract.
4. The trial court did not err in concluding that there was no genuine issue
of material fact as to E’s special defense of breach of the covenant of
good faith and fair dealing in the note and mortgage agreements: C Co.’s
failure to offer E a loan modification under the trial period program
could not violate the covenant of good faith and fair dealing, as there was
no evidence that C Co. impeded E’s rights under the note or mortgage
agreements, or that it acted in bad faith by misleading her into defaulting,
and once E defaulted, C Co. discussed mortgage assistance with her
and gave her a trial period plan; moreover, the note and mortgage
agreements, and the plaintiff’s notices to E that she had defaulted, made
clear the consequences of default, the note and mortgage did not require
the plaintiff to notify E that her credit rating may be affected if she
were to default, neither the note nor the mortgage addressed the situa-
tion where E might need relief from the payment provisions or promised
to offer E a loan modification, and there was no evidence that C Co.
was motivated to induce E to default for greater fees.
5. The trial court properly concluded that E’s special defense of promissory
estoppel did not raise a genuine issue of material fact; the plaintiff did
not break any promise to E when it declined to modify her loan after
she made the three trial period payments, which were not the only
contingency under the trial period plan, and E failed to allege that she
fulfilled the condition precedent in the trial period plan that required that
her housing expense be greater than 31 percent of her household income.
6. The trial court improperly rendered summary judgment in favor of the
plaintiff on E’s counterclaim sounding in breach of contract:
a. The trial court erred in determining that the counterclaim did not
satisfy the transaction test in Practice Book § 10-10, which requires that
a counterclaim have a sufficient relationship to the making, validity or
enforcement of the note or mortgage; the counterclaim was intertwined
sufficiently with the subject of the foreclosure complaint, as the counter-
claim alleged the formation and breach of a contractual agreement that
was intended to lead to an offer of a permanent modification of E’s
mortgage loan, E sought relief that was directly connected to the relief
sought in the plaintiff’s complaint, and the note, mortgage and trial period
plan involved the same lender, the same borrower and the same property.
b. On the basis of the record, there was a genuine issue of material fact
as to whether a contract was formed and whether there was a breach
by the plaintiff; genuine issues of material fact existed as to whether the
plaintiff and E formed a contract when E complied with the conditions
of the trial period plan and as to whether C Co. was permitted to continue
to review E’s financial eligibility for the HAMP program after the end
of her trial period plan, as the HAMP guidelines suggested an intention
not to leave E without notice of a final determination for months after
the conclusion of her trial period plan, although a HAMP handbook may
have contemplated a trial period plan that lasted more than three months,
there was no definite indication in the record that the plaintiff and E
ever agreed to a prolonged trial period plan, and it was unquestionable
that E suffered some detriment in addition to any preexisting duties
that she owed to the plaintiff, as the trial period plan imposed new
obligations on her.
c. The trial court improperly determined that the contract that E claimed
was created by the trial period plan did not satisfy the statute of frauds,
§ 52-550 (a), which requires, inter alia, that an agreement for a loan in
excess of $50,000 must be in writing; the trial period plan was not an
agreement for the sale of real property or any interest in or concerning
real property within the meaning of § 52-550 (a), and because the trial
period plan, which was supposed to be performed within one year, was
not an agreement for a loan in excess of $50,000, it was not a purported
contract that fell within the statute frauds, and even if § 52-550 (a) were
applicable, the trial period plan was in writing on C Co.’s letterhead
and provided proof of the contract.
(One judge concurring in part and dissenting in part)
Argued January 25—officially released September 18, 2018
Procedural History
Action to foreclose a mortgage on certain of the
named defendant’s real property, and for other relief,
brought to the Superior Court in the judicial district of
New Haven, where the named defendant filed a counter-
claim; thereafter, the court, Avallone, J., granted the
plaintiff’s motion for summary judgment as to liability
on the complaint and the counterclaim; subsequently,
the court rendered judgment of strict foreclosure, from
which the named defendant appealed to this court;
thereafter, the court, Avallone, J., issued an articulation
of its decision. Reversed; new trial.
Loraine Martinez, with whom were David F. Lavery
and, on the brief, Sarah E. White, for the appellant
(named defendant).
Pierre-Yves Kolakowski, with whom, on the brief,
was Zachary Grendi, for the appellee (plaintiff).
Opinion
KELLER, J. In this foreclosure action, the defendant
Karin C. Eichten1 appeals from the judgment of strict
foreclosure rendered by the trial court in favor of the
plaintiff, U.S. Bank National Association, as trustee,
successor in interest to Bank of America, National Asso-
ciation as trustee as successor by merger to LaSalle
Bank, National Association as trustee for Washington
Mutual Mortgage Pass-Through Certificates WMALT
2007-HY2. The defendant claims that, in rendering sum-
mary judgment as to liability in the plaintiff’s favor
with respect to the plaintiff’s foreclosure complaint,
the court erred in concluding that a genuine issue of
material fact did not exist with respect to her special
defenses of equitable estoppel, breach of the covenant
of good faith and fair dealing, promissory estoppel,
unclean hands, and breach of contract, all of which
pertain to the conduct of the plaintiff’s loan servicer,
Chase Home Finance, LLC (Chase), in denying the
defendant’s application for a loan modification under
the federal Home Affordable Modification Program
(HAMP).2 Additionally, the defendant claims that the
court improperly rendered summary judgment in the
plaintiff’s favor on her counterclaim sounding in breach
of contract. We reverse the judgment of the trial court.
‘‘In February, 2009, faced with a nationwide foreclo-
sure crisis, the Secretary of the Treasury and the Direc-
tor of the Federal Housing Finance Agency exercised
their authority under the Emergency Economic Stabili-
zation Act, the American Recovery and Reinvestment
Act, and the Troubled Asset Relief Program, 12 U.S.C.
§§ 5201—5253, and created [HAMP].’’ Belyea v. Litton
Loan Servicing, LLP, United States District Court, Civil
Action No. 10-10931-(DJC), 2011 WL 2884964, *2 (D.
Mass. July 15, 2011). HAMP was a national home mort-
gage modification program aimed at helping at-risk
homeowners who were in default or at imminent risk
of default by reducing monthly payments to sustainable
levels through the restructuring of their mortgages with-
out discharging any of the underlying debt. Id. It was
designed to create a uniform loan modification process
governed by federal standards that could be used by
any loan servicer that chose to participate. Id. ‘‘As an
incentive for servicers to participate in HAMP, the fed-
eral government awards servicers three annual $1,000
payments for each permanent mortgage loan that [was]
successfully modified . . . .’’ Id.
On August 28, 2013, the plaintiff commenced this
action against the defendant to foreclose on its mort-
gage on the defendant’s property at 630 Cook Hill Road
in Cheshire. The defendant filed a substitute answer and
special defenses. The defendant alleged in her special
defenses that (1) the plaintiff is equitably estopped from
proceeding with the foreclosure action because the
plaintiff instructed her to default on her note and mort-
gage obligations, resulting in her credit rating being
negatively impacted; (2) the plaintiff breached the cove-
nant of good faith and fair dealing by instructing her
to default on her note and mortgage obligations without
informing her that a default would result in adverse
consequences such as acceleration of the debt; (3) the
plaintiff is precluded by promissory estoppel from pur-
suing a foreclosure action because the plaintiff induced
the defendant to default and promised her the offer
of a loan modification if she made three trial period
payments,3 and the defendant relied on that promise to
her detriment because she never received the promised
offer; (4) the plaintiff is guilty of unclean hands because,
although she qualified for a loan modification upon
completion of her trial period payments, the plaintiff
did not offer her a loan modification, but instead, placed
her in a forbearance program without her consent; and
(5) the plaintiff breached a contract between the parties
by failing to offer the defendant a loan modification
after she performed her part of the bargain by making
the three agreed upon trial period payments.4
In her substitute counterclaim, the defendant alleged
that the plaintiff breached a contract between the par-
ties when it failed to offer her a loan modification after
the defendant performed her obligations under the con-
tract by making her three trial period payments and
continued to meet all program eligibility requirements
during the trial period. The plaintiff filed an answer to
the defendant’s counterclaim on September 29, 2015,
in which it posited that the alleged contract did not
comply with the statute of frauds, and that the counter-
claim is legally insufficient and barred by the doctrines
of waiver and estoppel. On November 12, 2015, the
plaintiff moved for summary judgment as to liability
on its complaint, claiming that the defendant’s special
defenses are insufficient because they are not sup-
ported by any evidence and cannot defeat the plaintiff’s
prima facie showing that it is entitled to foreclose on
the subject property. The plaintiff also argued that the
defendant’s counterclaim is barred by the statute of
frauds and has no factual basis.
In support of its motion for summary judgment, the
plaintiff provided the court with the affidavit of Michael
Piz, a document control officer with the plaintiff’s sub-
sequent loan servicer, Select Portfolio Servicing, Inc.,5
the contents of which are summarized as follows. On
December 15, 2006, the defendant executed an adjust-
able rate note to pay Washington Mutual Bank, FA
(Washington Mutual), the principal sum of $480,000,
payable with interest, including late charges, costs, and
expenses. The indebtedness evidenced by the note was
secured by a mortgage, which also is dated December
15, 2006, on the defendant’s property at 630 Cook Hill
Road in Cheshire. Washington Mutual endorsed the
note in blank and on or about September 9, 2009, the
Federal Deposit Insurance Corporation, as receiver of
Washington Mutual, executed an assignment of the
mortgage to the plaintiff. The assignment later was cor-
rected due to a clerical error in the name of the plaintiff
in the original assignment. Copies of the note, mortgage,
assignment, and corrected assignment were annexed to
the plaintiff’s motion for summary judgment as exhibits.
In 2009, the defendant defaulted pursuant to the
terms of the note and mortgage, and the plaintiff noti-
fied her of the default. The notice of default advised
that if the amount required to cure the default was not
received within sixty days, immediate acceleration of
all moneys due under the note and mortgage could be
declared without further notice or demand. Piz further
avers that the defendant failed to cure her default and,
as a result, the plaintiff elected to accelerate the total
amount of the indebtedness due and owing by com-
mencing this action. No part of the outstanding indebt-
edness has been paid by the defendant. Subsequently,
the defendant received multiple notices of her default,
including notices on November 30, 2009, January 21,
2010, and May 10, 2010.
Piz further alleges that the plaintiff is in physical
possession of the original loan documents, including,
without limitation, the original note endorsed in blank,
and was in possession of the same at the time this
action was commenced.6
Piz also addresses in his affidavit what transpired
regarding the defendant’s application for a HAMP loan
modification. On July 15, 2010, the plaintiff sent the
defendant a letter offering her a trial period plan (TPP).
A copy of this letter is annexed to the motion for sum-
mary judgment. It reads, in pertinent part: ‘‘You are
approved to enter into a [TPP] under [HAMP]. This
is the first step toward qualifying for more affordable
mortgage payments. . . . To accept this offer, you
must make new monthly ‘trial period payments’ in place
of your normal monthly mortgage payment. . . . After
all trial period payments are timely made and you con-
tinue to meet all program eligibility requirements, your
mortgage would then be permanently modified. You
will be required to execute a permanent mortgage modi-
fication agreement that we will send you before your
modification becomes effective. Until then, your
existing loan and loan requirements remain in effect
and unchanged during the trial period. If each trial pay-
ment is not received by us in the month in which [it]
is due, this offer will end and your loan will not be
modified under [HAMP].’’ (Emphasis omitted.) The let-
ter also includes answers to ‘‘frequently asked ques-
tions,’’ one of which advised the borrower that ‘‘[y]our
credit score may be affected by accepting a [TPP] or
modification.’’ In response to a question, ‘‘[w]hen will
I know if my loan can be modified permanently and
how will the modified loan balance be determined?’’
the letter provided, ‘‘[o]nce we confirm you are still
eligible for [HAMP] and you make all of your trial period
payments on time, we will send you a modification
agreement detailing the terms of the modified loan.’’7
Piz further avers in his affidavit that in or about May
and June, 2011, the defendant sent the plaintiff evidence
of her combined income with her then ‘‘spouse,’’8 and
that, on the basis of the defendant’s profit and loss
statement and pay stubs, the plaintiff calculated that the
defendant and her ‘‘spouse’’ had a combined monthly
income of $13,826.35 and a total housing expense of
$3423.94. Thus, the defendant’s ‘‘housing ratio,’’ or hous-
ing expense as a percentage of household income, was
24.76 percent. Under the then applicable HAMP guide-
lines, the borrower’s current monthly mortgage pay-
ment could not be less than 31 percent of the borrower’s
household monthly gross income to qualify for a loan
modification.
Consequently, the plaintiff concluded that ‘‘[b]or-
rower [h]ousing [r]atio exceeds the maximum for our
lending program.’’ In addition, the plaintiff submitted
a handbook for the HAMP program, version 3.2, which
indicated that one of the requirements under the pro-
gram was that ‘‘verified income documentation must
confirm that the borrower’s monthly mortgage payment
ratio prior to the modification is greater than 31 per-
cent.’’ On July 15, 2011, the plaintiff sent the defendant
a letter explaining that the defendant had been denied
a permanent modification because her ‘‘housing ratio9
exceeds the maximum allowed for the modification
program.’’ The plaintiff sent another letter to the defen-
dant on July 28, 2011, explaining in greater detail why
the defendant’s housing ratio made her ineligible for a
loan modification under HAMP. Although the reference
in the July 15, 2011 letter to a ‘‘housing ratio that exceeds
the maximum allowed’’ is confusing, the July 28, 2011
letter clearly explains why the defendant’s housing
expense was not a large enough percentage of her
household income to qualify for a loan modification.
The defendant filed her objection to the motion for
summary judgment on January 11, 2016, essentially
asserting that the evidence relevant to her special
defenses and counterclaim, which involve the plaintiff’s
course of conduct in considering and ultimately denying
her loan modification application, creates a genuine
issue of material fact as to whether the plaintiff should
be permitted to proceed to foreclosure.
The defendant attached her own affidavit to her
objection to the motion for summary judgment, summa-
rized as follows. She faithfully submitted her mortgage
payments in a timely fashion and without incident until
late 2009. In the beginning of 2009, she was laid off
from her job and forced to use her cash reserves and
savings to make her payments. She became concerned
about her continued ability to make her payments. In
the fall of 2009, she contacted her loan servicer, Chase,
to discuss mortgage assistance options and was told
by a representative that Chase would not speak to her
unless or until she stopped making her payments. As
a result of her reliance on this information, she stopped
making any payments commencing on October 1, 2009.
The plaintiff did not follow through with its promise to
help her with mortgage assistance, and she had to retain
a law firm to help her. Starting in March, 2010, and
continuing until July, 2010, she supplied the plaintiff
with all of the financial information it requested of her.
The defendant attached additional documentation to
her objection to the plaintiff’s summary judgment
motion, focusing on her participation in the TPP and
the plaintiff’s denial of her application for a loan modifi-
cation. After the defendant retained counsel, the plain-
tiff finally sent the defendant a letter dated July 15,
2010, congratulating her and stating that she was
‘‘approved to enter into a [TPP] under the [HAMP] (pro-
gram),’’ and explaining that ‘‘[t]his is the first step
toward qualifying for more affordable mortgage pay-
ments. . . . After all trial period payments are timely
made and you continue to meet all program eligibility
requirements, your mortgage would then be perma-
nently modified. You will be required to execute a per-
manent mortgage modification agreement that we will
send you before your modification becomes effective.
Until then, your existing loan and loan requirements
remain in effect and unchanged during the trial period.’’
Under the plan, the defendant was to make three con-
secutive monthly payments of $3373.86 on August 1,
September 1, and October 1, 2010.
In her affidavit, the defendant avers that she timely
made all three payments under the TPP and some addi-
tional trial payments into 2011.10 The plaintiff continued
to send her letters on different letterhead and from
different locations, asking her for the same financial
information and thanking her for her interest in a HAMP
modification. According to the defendant, to be safe,
she kept resending the requested information to the
plaintiff. She also avers that she received two notices
that her request for unemployment forbearance had
been received even though she had never made any such
request. Finally, the defendant avers that the plaintiff,
approximately nine months after the TPP had ended,
sent her a letter dated July 15, 2011, which stated that
‘‘[w]e received your request for a permanent loan modi-
fication . . . . We are unable to offer you a modifica-
tion through the federal [program] . . . . This decision
was confirmed through a second level of review. . . .
We are unable to offer you a modification because your
housing ratio exceeds the maximum allowed for the
modification program.’’ The letter also recommended
other possible options for the defendant to avoid fore-
closure.
As part of her objection to the plaintiff’s motion for
summary judgment, the defendant also submitted inter-
nal documents of the plaintiff and a number of other
letters sent to her by the plaintiff. The plaintiff does not
dispute the existence or accuracy of these documents
or letters, which reveal the following. In or about June
and July, 2010, the defendant submitted to the plaintiff
a loan modification application with supporting docu-
ments. The plaintiff reviewed these submissions, which
included bank statements from the defendant’s busi-
ness from February through May, 2010, and a contribu-
tion letter and pay stubs from the defendant’s fiance´
from May and June, 2010.11 The analysis, called an ‘‘MOD
Summary Report,’’ revealed that the defendant’s hous-
ing ratio was 37.892 percent, which was within HAMP’s
limits for approval of a loan modification. As a result,
the plaintiff forwarded the defendant a letter offering
her a TPP. In August, 2010, the plaintiff sent the defen-
dant a letter requesting a packet of financial information
regarding her loan modification request. In September,
2010, the plaintiff sent the defendant another letter stat-
ing that it was still waiting for the requested package
of information to be returned. In and about February
and March, 2011, according to an updated MOD Sum-
mary Report, the plaintiff again reviewed the defen-
dant’s application, determined that her housing ratio
was 31.208 percent, which was still within HAMP limits,
and, the defendant claims, approved her pending appli-
cation for a loan modification. On March 10, 2011, the
plaintiff entered the following messages into its Loss
Mitigation Tracking Steps system: ‘‘Final Review Com-
plete,’’ ‘‘Order/Prepare Mod Docs,’’ and ‘‘QA Final
Approved,’’ which corresponded to a charge of $2838.92
to the defendant’s bank account. There is no dispute
that the plaintiff never sent the defendant any perma-
nent loan modification documents. The Loss Mitigation
Tracking Steps later reflect that on July 11, 2011, the
defendant was found ineligible for a loan modification.12
In its reply to the defendant’s opposition to the
motion for summary judgment, the plaintiff claimed
that despite the defendant’s allegations of the plaintiff’s
internal generation of alleged final loan modification
documents, the defendant admits she never received
or accepted the final loan modification documents. The
plaintiff also argued that the defendant’s special
defenses do not relate to the making, validity or enforce-
ment of the note, and that her counterclaim does not
have a sufficient connection to the making, validity or
enforcement of the note and mortgage to satisfy the
‘‘transaction test’’ in Practice Book § 10-10.13
On May 23, 2016, the court held a hearing on the
plaintiff’s motion for summary judgment. After oral
argument, the defendant filed a supplemental brief in
opposition to the motion for summary judgment on May
23, 2016. Following the hearing, the court summarily
granted the plaintiff’s motion for summary judgment.
On July 8, 2016, the defendant filed a motion for clarifi-
cation of whether the court’s order granting the sum-
mary judgment motion pertained to her counterclaim.
The court issued an order on September 8, 2016, stating
that its ruling included rendering summary judgment
on the defendant’s counterclaim. On September 12,
2016, the court rendered judgment of strict foreclosure
with a law day of December 5, 2016. This appeal
followed.
Thereafter, on October 27, 2016, the defendant filed
a motion for articulation of the court’s granting of the
plaintiff’s motion for summary judgment. The defendant
requested that the court articulate its ‘‘findings of fact
and conclusions of law upon which the trial court relied
in granting the motion for summary judgment as to the
special defenses and counterclaim of the defendant
. . . .’’ (Emphasis omitted.) On February 15, 2017, the
court issued an articulation. In its articulation, the court
determined that ‘‘the plaintiff has established the
absence of a genuine issue of material fact regarding
the prima facie case for foreclosure,’’ and that none of
the defendant’s special defenses raised a genuine issue
of material fact that might defeat the plaintiff’s cause
of action. The court also concluded that summary judg-
ment was appropriate on the defendant’s breach of
contract counterclaim. The court determined that the
undisputed facts show that the parties did not enter into
a new contract and that the defendant’s counterclaim
regarding the denial of her application for a loan modifi-
cation did not present an issue that satisfied the transac-
tion test in Practice Book § 10-10. Finally, the court
ruled that even if the transaction test were satisfied,
the counterclaim was barred by the statute of frauds,
General Statutes § 52-550, because the amount due on
the note was $480,000, which exceeds the threshold
amount of $50,000 for loan agreements in the statute,
and thus any contract for a modification needed to be
in writing.
We first set forth the applicable standard of review.
‘‘In seeking summary judgment, it is the movant who
has the burden of showing the nonexistence of any
issue of fact. . . . Although the party seeking summary
judgment has the burden of showing the nonexistence
of any material fact . . . a party opposing summary
judgment must substantiate its adverse claim by show-
ing that there is a genuine issue of material fact together
with the evidence disclosing the existence of such an
issue.’’ (Internal quotation marks omitted.) Rosenfield
v. I. David Marder & Associates, LLC, 110 Conn. App.
679, 684, 956 A.2d 581 (2008). A material fact is one
that makes a difference in the outcome of a case. Catz
v. Rubenstein, 201 Conn. 39, 48, 513 A.2d 98 (1986).
‘‘Summary judgment shall be granted if the pleadings,
affidavits and any other proof submitted show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of law.
. . . The trial court must view the evidence in the light
most favorable to the nonmoving party. . . .
‘‘Appellate review of the trial court’s decision to grant
summary judgment is plenary. . . . [W]e must [there-
fore] decide whether [the trial court’s] conclusions are
legally and logically correct and find support in the
facts that appear in the record.’’ (Citations omitted;
internal quotation marks omitted.) McFarline v. Mick-
ens, 177 Conn. App. 83, 90, 173 A.3d 417 (2017), cert.
denied, 327 Conn. 997, 176 A.3d 557 (2018).
‘‘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. . . . Thus, a court may properly
grant summary judgment as to liability in a foreclosure
action if the complaint and supporting affidavits estab-
lish an undisputed prima facie case and the defendant
fails to assert any legally sufficient special defense.’’
(Internal quotation marks omitted.) Wells Fargo Bank,
N.A. v. Strong, 149 Conn. App. 384, 392, 89 A.3d 392,
cert. denied, 312 Conn. 923, 94 A.3d 1202 (2014).
‘‘[A] holder of a note is presumed to be the owner
of the debt, and unless the presumption is rebutted,
may foreclose the mortgage under [General Statutes
§ 49-17]. . . . It [is] for the defendant to set up and
prove the facts which limit or change the plaintiff’s
rights.’’ (Internal quotation marks omitted.) Equity
One, Inc. v. Shivers, 310 Conn. 119, 135, 74 A.3d
1225 (2013).
‘‘[T]he party raising a special defense has the burden
of proving the facts alleged therein.’’ Wyatt Energy,
Inc. v. Motiva Enterprises, LLC, 308 Conn. 719, 736,
66 A.3d 848 (2013). ‘‘If the plaintiff in a foreclosure
action has shown that it is entitled to foreclose, then
the burden is on the defendant to produce evidence
supporting its special defenses in order to create a
genuine issue of material fact . . . .’’ WM Specialty
Mortgage, LLC v. Brandt, Superior Court, judicial dis-
trict of Ansonia-Milford, Docket No. CV-XX-XXXXXXX-S,
2009 WL 567040, *4 (February 10, 2009); see Union
Trust Co. v. Jackson, 42 Conn. App. 413, 417–20, 679
A.2d 421 (1996). Legally sufficient special defenses
alone do not meet the defendant’s burden. ‘‘The purpose
of a special defense is to plead facts that are consistent
with the allegations of the complaint but demonstrate,
nonetheless, that the plaintiff has no cause of action.
. . . Further . . . [t]he applicable rule regarding the
material facts to be considered on a motion for sum-
mary judgment is that the facts at issue are those alleged
in the pleadings.’’ (Citation omitted; internal quotation
marks omitted.) Fidelity Bank v. Krenisky, 72 Conn.
App. 700, 718, 807 A.2d 968, cert. denied, 262 Conn.
915, 811 A.2d 1291 (2002). ‘‘[B]ecause any valid special
defense raised by the defendant ultimately would pre-
vent the court from rendering judgment for the plaintiff,
a motion for summary judgment should be denied when
any [special] defense presents significant fact issues
that should be tried.’’ (Internal quotation marks omit-
ted.) Ulster Savings Bank v. 28 Brynwood Lane, Ltd.,
134 Conn. App. 699, 704, 41 A.3d 1077 (2012).
I
First, the defendant claims that the court improperly
rendered summary judgment against her as to liability
on the foreclosure complaint because genuine issues
of material fact exist with respect to her special
defenses of equitable estoppel, breach of the covenant
of good faith and fair dealing, promissory estoppel,
unclean hands, and breach of contract. We agree with
the defendant that her special defense of unclean hands
raises a genuine issue of material fact, and therefore,
summary judgment in favor of the plaintiff should not
have been rendered. We disagree, however, that the
remainder of the defendant’s special defenses pre-
cluded summary judgment in the plaintiff’s favor.
A
The defendant claims in her fifth special defense that
the plaintiff violated the doctrine of unclean hands and
should be precluded from proceeding with the foreclo-
sure action because the plaintiff did not offer her a
permanent loan modification under the program despite
the fact that, pursuant to regulations published by the
United States Department of the Treasury, she was enti-
tled to a permanent modification upon the completion
of her three trial payments. She argues that instead,
the plaintiff placed her into a mortgage forbearance
program for which she did not apply. She contends that
the plaintiff’s internal records indicate that it approved
her for a loan modification under the program in March,
2011, months before it mailed her the denial letter. She
argues that a number of documents in evidence suggest
that the plaintiff approved the defendant for a loan
modification in March, 2011, when she had a housing
ratio of 31.2 percent. She notes that the plaintiff only
appended evidence to its motion for summary judgment
that supported its version of the narrative while failing
to make any argument or even reference to its own
internal processes, evidence of which raises more ques-
tions than answers. We agree with the defendant.
Because an action to foreclose a mortgage is an equi-
table proceeding, the doctrine of unclean hands may
be applicable. ‘‘It is a fundamental principle of equity
jurisprudence that for a complainant to show that he
is entitled to the benefit of equity he must establish
that he comes into court with clean hands. . . . The
clean hands doctrine is applied not for the protection
of the parties but for the protection of the court. . . .
It is applied not by way of punishment but on considera-
tions that make for the advancement of right and justice.
. . . The doctrine of unclean hands expresses the prin-
ciple that where a plaintiff seeks equitable relief, he
must show that his conduct has been fair, equitable
and honest as to the particular controversy in issue.
. . . Unless the plaintiff’s conduct is of such a character
as to be condemned and pronounced wrongful by hon-
est and fair-minded people, the doctrine of unclean
hands does not apply.’’ (Citation omitted; internal quota-
tion marks omitted.) Thompson v. Orcutt, 257 Conn.
301, 310, 777 A.2d 670 (2001). ‘‘The party seeking to
invoke the clean hands doctrine to bar equitable relief
must show that his opponent engaged in wilful miscon-
duct with regard to the matter in litigation. . . . The
trial court enjoys broad discretion in determining
whether the promotion of public policy and the preser-
vation of the courts’ integrity dictate that the clean
hands doctrine be invoked.’’ (Internal quotation marks
omitted.) Monetary Funding Group, Inc. v. Pluchino,
87 Conn. App. 401, 407, 867 A.2d 841 (2005). ‘‘Wilful
misconduct has been defined as intentional conduct
designed to injure for which there is no just cause or
excuse. . . . [Its] characteristic element is the design
to injure either actually entertained or to be implied
from the conduct and circumstances. . . . Not only the
action producing the injury but the resulting injury also
must be intentional.’’ (Internal quotation marks omit-
ted.) 19 Perry Street, LLC v. Unionville Water Co., 294
Conn. 611, 630–31 n.10, 987 A.3d 1009 (2010).
This special defense questions the legitimacy of the
plaintiff’s processing of the defendant’s application for
a loan modification. It raises a question as to why the
plaintiff failed to send the defendant a permanent loan
modification agreement if she was approved for a loan
modification in March, 2011. The court rejected the
defendant’s special defense of unclean hands and char-
acterized it as another ‘‘inducement to default’’ special
defense, similar to the defendant’s equitable estoppel
special defense. We, however, conclude that the nature
of the allegations in this special defense are distin-
guishable.
The defendant submitted as evidence a copy of a
supplemental directive issued on January 28, 2010, by
the Treasury Department to provide guidance to loan
servicers in making HAMP eligibility determinations for
borrowers currently participating in a TTP. This direc-
tive notes a change from a prior directive issued in
2009, which gave loan servicers the option of placing
a borrower into a TPP on the basis of verbal financial
information obtained from the borrower, subject to
later verification during the TPP. Effective on or after
June 1, 2010, a loan servicer was instructed to evaluate
a borrower for HAMP only after the servicer received
an initial package that included a request for modifica-
tion and an ‘‘affidavit (RMA) form,’’ an Internal Revenue
Service form 4506-T or 4506T-EZ to request transcripts
of tax returns, and documentation of income that may
not be more than ninety days old as of the date the
initial package is received by the servicer. If the loan
servicer received an incomplete initial package or
needed additional documentation to verify the borrow-
er’s eligibility and income, the servicer had to send the
borrower an ‘‘Incomplete Information Notice’’ that lists
the additional required verification documentation.
Loan servicers were required to use a two step process
for HAMP modifications. In referencing conversion
from trial to permanent modification, the directive
stated: ‘‘Following underwriting and a determination
that the borrower qualifies for a HAMP trial modifica-
tion, servicers will place qualified borrowers in a trial
period plan by preparing and sending a [TPP] [n]otice
to the borrower describing the terms of the trial modifi-
cation and the payment due dates. Borrowers who make
all trial period payments timely and who satisfy all other
trial period requirements will be offered a permanent
HAMP modification.’’
In this case, the plaintiff produced no evidence that
it made a determination as to the defendant’s eligibility
for a HAMP modification at the end of her TPP, which
was at the end of the month in which she made her
third payment, October, 2010. Furthermore, there is
evidence in the defendant’s submissions that the defen-
dant’s application was approved by the plaintiff in
March, 2011, and the plaintiff has produced no evidence
to explain why it failed, at that time, to complete the
process and forward to the defendant an offer of a
permanent loan modification. In addition, there is no
evidence that the plaintiff ever sent the defendant the
required ‘‘Incomplete Information Notice’’ that her doc-
umentation was incomplete, as required by the
directive.
The plaintiff’s failure to establish that it adhered to
the Treasury Department’s directives, which appear to
encourage that final determinations on whether to offer
the borrower a loan modification be made before the
end of the TPP, and the plaintiff’s failure to provide an
explanation as to its apparent internal approval of the
loan modification in March, 2011, which was not com-
municated to the defendant, create a genuine issue of
material fact as to whether the defendant can prevail
on her special defense of unclean hands. When viewing
the evidence in the light most favorable to the defen-
dant, the unexplained length of time it took the plaintiff
to deny the defendant an offer of a permanent modifica-
tion, almost twenty months, commencing with the date
it told her that the only way to explore modification of
her loan was to stop paying in November, 2009, and
ending with the date it denied her a modification, July
15, 2011, raises the question of whether the plaintiff
treated the defendant in a fair, equitable and honest
manner knowing that prolonged delay would place the
defendant in an untenable financial situation, such that
she could not possibly extricate herself to prevent fore-
closure. We have no evidentiary basis to determine if
wilful misconduct or simple negligence occurred in the
plaintiff’s handling of her application.
We, therefore, conclude that the court erred in
determining that there was no genuine issue of material
fact as to whether the defendant can prevail on her
special defense of unclean hands.
B
Having concluded that there is a genuine issue of
material fact raised in the allegations in the defendant’s
unclean hands special defense, we next address the
plaintiff’s argument that this special defense is invalid
because it does not relate to the making, validity, or
enforcement of the note and mortgage.14 The court did
not expressly address or rely on this rationale, but we
address it because it presents a question of law that is
subject to plenary review. See, e.g., TD Bank, N.A. v.
M.J. Holdings, LLC, 143 Conn. App. 340, 343, 70 A.3d
156 (2013) (issues concerning legal sufficiency of plead-
ing subject to plenary review). In mortgage foreclosure
cases, ‘‘courts require that a viable legal defense directly
attack the making, validity or enforcement [of the note
and mortgage].’’ (Internal quotation marks omitted.)
CitiMortgage, Inc. v. Rey, 150 Conn. App. 595, 603, 92
A.3d 278, cert. denied, 314 Conn. 905, 99 A.3d 635 (2014).
‘‘[S]pecial defenses which are not limited to the making,
validity or enforcement of the note or mortgage fail to
assert any connection with the subject matter of the
foreclosure action and as such do not arise out of the
same transaction as the foreclosure action.’’ (Internal
quotation marks omitted.) Id., 600.
In U.S. Bank National Assn. v. Sorrentino, 158 Conn.
App. 84, 97, 118 A.3d 607, cert. denied, 319 Conn. 951,
125 A.3d 530 (2015), this court concluded that counter-
claims that addressed the plaintiff’s alleged improper
conduct concerning the defendants’ qualification for a
possible loan modification during a foreclosure media-
tion program that began after the execution of the note
and mortgage did ‘‘not reasonably relate to the making,
validity or enforcement of the note or mortgage,’’ and,
thus, could not be joined properly with the complaint.
Recently, in U.S. Bank National Assn. v. Blowers, 177
Conn. App. 622, 625–26, 172 A.3d 837, cert. granted,
328 Conn. 904, 177 A.3d 1160 (2018), an appeal from a
judgment of strict foreclosure, this court held that the
trial court properly granted the plaintiff’s motion to
strike the defendants’ special defenses and counter-
claims. The counterclaims sounded in negligence; viola-
tion of the Connecticut Unfair Trade Practices Act,
General Statutes § 42-110a et seq.; and unjust enrich-
ment. U.S. Bank National Assn. v. Blowers, supra, 626.
The special defenses sounded in equitable estoppel,
unjust enrichment and unclean hands. Id. The defen-
dants in Blowers claimed that shortly after they had
defaulted on their mortgage payments, a servicing agent
for the plaintiff reached out to the defendants, offering
a rate reduction. Id., 628. After the defendants success-
fully completed a three month trial modification period,
however, the plaintiff withdrew its offer to modify the
loan and ultimately commenced a foreclosure action.
Id. The defendants essentially claimed that the plaintiff
and its servicing agent failed to conduct themselves in
a manner that was fair, equitable and honest during
the court mediation and loan modification negotiation
period. Id. Relying on U.S. Bank National Assn. v. Sor-
rentino, supra, 96, this court held that the alleged
improper conduct occurring during mediation and mod-
ification negotiations lacked ‘‘a reasonable nexus to
the making, validity, or enforcement of the note or
mortgage.’’ U.S. Bank National Assn. v. Blowers, supra,
632. By contrast, if ‘‘the modification negotiations ulti-
mately result in a final, binding, loan modification, and
the mortgagee subsequently breaches the terms of that
new modification, then any special defenses asserted
by the mortgagor in regard to that breach would relate
to the enforcement of the mortgage.’’15 Id., 630.
The court in Blowers further noted that ‘‘our courts
have allowed exceptions to the making, validity, or
enforcement requirement where traditional notions of
equity would not be served by its strict application. For
example, in Thompson v. Orcutt, [supra, 257 Conn. 301],
our Supreme Court reversed this court’s determination
that a special defense of unclean hands did not apply
where the plaintiff’s fraudulent conduct occurred in a
separate bankruptcy proceeding that was not strictly
related to the making, validity, or enforcement of the
note or mortgage. In reversing this court’s decision, the
Supreme Court observed that the plaintiff would not
have had the legal authority to bring the foreclosure
action against the defendants but for its fraudulent con-
duct during the bankruptcy proceeding. . . . The court
[in Thompson] noted, [b]ecause the doctrine of unclean
hands exists to safeguard the integrity of the court . . .
[w]here a plaintiff’s claim grows out of or depends upon
or is inseparably connected with his own prior fraud,
a court of equity will, in general, deny him any relief,
and will leave him to whatever remedies and defenses at
law he may have.’’ (Citation omitted; internal quotation
marks omitted.) U.S. Bank National Assn. v. Blowers,
supra, 177 Conn. App. 633–34. Our Supreme Court fur-
ther clarified that an equitable defense of unclean hands
need not strictly relate to the making, validity, or
enforcement of the note or mortgage, provided the alle-
gations set forth were ‘‘directly and inseparably con-
nected’’ to the foreclosure action. (Internal quotation
marks omitted.) Thompson v. Orcutt, supra, 313. Thus,
we are not persuaded by the plaintiff’s argument that the
defendant’s unclean hands defense is invalid because
it does not relate to the making, validity, or enforcement
of the note. First, the defense of unclean hands, as our
Supreme Court recognized, does not necessarily need
to relate to the making, enforcement, or validity of the
loan. Second, if the plaintiff did engage in fraudulent
conduct by deliberately failing to communicate its inter-
nal approval of the loan modification, then that raises
questions as to whether, but for this conduct, the plain-
tiff would have had the legal authority to bring this
action.
We conclude that the allegations in the defendant’s
special defense of unclean hands raise a genuine issue
of material fact as to whether deceitful or unfair prac-
tices on the part of the plaintiff led to the filing of a
foreclosure action that could have been avoided by the
timely processing of the defendant’s application for a
permanent loan modification in accordance with the
HAMP guidelines. The plaintiff’s submissions do not
satisfactorily defeat the evidence set forth in the defen-
dant’s objection that HAMP’s required procedures may
not have been followed during the TPP process. Thus,
the court erred in rendering summary judgment in favor
of the plaintiff in light of the defendant’s unclean hands
special defense.
C
Because we conclude that the case is to be remanded
for further proceedings, it is appropriate for us to
address certain issues raised by the defendant that are
likely to recur on remand. See Sullivan v. Metro-North
Commuter Railroad Co., 292 Conn. 150, 164, 971 A.2d
676 (2009). The defendant claims that the court erred in
concluding that her equitable estoppel special defense
failed to raise a genuine issue of material fact as to
whether the plaintiff induced her default. In this special
defense, the defendant alleges that the plaintiff advised
her that she had to stop making her mortgage payments,
as this was the only way to explore a modification. She
claims that the plaintiff should be equitably estopped
from foreclosing on her mortgage because ‘‘the event
of default was contrived by [the plaintiff],’’ who
‘‘reported the default to various credit reporting agen-
cies . . . which substantially interfered with her ability
to . . . pursue refinancing options with other financial
institutions.’’ We are not persuaded.
‘‘The doctrine of equitable estoppel is well estab-
lished. [W]here one, by his words or actions, intention-
ally causes another to believe in the existence of a
certain state of things, and thereby induces him to act
on that belief, so as injuriously to affect his previous
position, he is [precluded] from averring a different
state of things as existing at the time. . . . Our
Supreme Court . . . stated, in the context of an equita-
ble estoppel claim, that [t]here are two essential ele-
ments to an estoppel: the party must do or say
something which is intended or calculated to induce
another to believe in the existence of certain facts and
to act upon that belief; and the other party, influenced
thereby, must actually change his position or do some-
thing to his injury which he otherwise would not have
done. Estoppel rests on the misleading conduct of one
party to the prejudice of the other. . . . Broadly speak-
ing, the essential elements of an equitable estoppel . . .
as related to the party to be estopped, are: (1) conduct
which amounts to a false representation or concealment
of material facts, or, at least, which is calculated to
convey the impression that the facts are otherwise than,
and inconsistent with, those which the party subse-
quently attempts to assert; (2) the intention, or at least
the expectation, that such conduct shall be acted upon
by, or influence, the other party or other persons; and
(3) knowledge, actual or constructive, of the real facts.’’
(Internal quotation marks omitted.) TD Bank, N.A. v.
M.J. Holdings, LLC, 143 Conn. App. 322, 337–38, 71 A.3d
541 (2013). ‘‘Estoppel rests on the misleading conduct
of one party to the prejudice of the other.’’ (Internal
quotation marks omitted.) Fischer v. Zollino, 303 Conn.
661, 668, 35 A.3d 270 (2012).
In opposing summary judgment, the defendant
argued that the plaintiff should be equitably estopped
from bringing the foreclosure action because she with-
held mortgage payments beginning in October, 2009,
only after the plaintiff advised her ‘‘that in order to
discuss modification options, she would have to default
on her mortgage by withholding payment.’’ In her affida-
vit that was submitted to the court in support of her
opposition to the plaintiff’s motion for summary judg-
ment, the defendant averred that she had called the
plaintiff in the fall of 2009, and further averred: ‘‘I was
told by the representative with whom I spoke that [the
plaintiff] would not speak to me about mortgage assis-
tance unless or until I stopped making my payments.’’
On appeal, the defendant claims as grounds for equi-
table estoppel that she was not in default and had not
missed any mortgage payments in the past but that
when she reached out to the plaintiff to inquire about
modifying her monthly payments, it instructed her to
stop making her payments, as this was the only way to
explore a modification. She claims, for the first time
on appeal, that this was a misleading statement by the
plaintiff because, under the HAMP program standards,
she only needed to be at imminent risk of default and
did not have to be in default in order to be considered
for a modification. She also claims that her default,
contrived by the plaintiff, negatively impacted her credit
score, and thus her ability to pursue refinancing with
other financial institutions.
A major problem with the defendant’s claim that the
plaintiff misled her by telling her she first had to stop
making payments to be considered for a loan modifica-
tion, rather than merely be at imminent risk of default,
is that she raises this argument for the first time on
appeal.16 ‘‘Our appellate courts, as a general practice,
will not review claims made for the first time on appeal.
We repeatedly have held that [a] party cannot present
a case to the trial court on one theory and then seek
appellate relief on a different one . . . .’’ (Internal quo-
tation marks omitted.) White v. Mazda Motor of
America, Inc., 313 Conn. 610, 619, 99 A.3d 1079 (2014).
We also do not consider evidence not presented to the
trial court. See O’Hara v. State, 218 Conn. 628, 639–40
n.8, 590 A.2d 948 (1991). In the present case, the argu-
ment that the defendant made in her opposition to sum-
mary judgment was that the plaintiff’s servicer had a
widespread practice of instructing mortgagors to stop
making mortgage payments under the false pretense
that doing so would not hurt their credit scores. In the
portion of her memorandum of law in opposition to the
motion for summary judgment where she discusses her
equitable estoppel special defense, the defendant never
directs the court’s attention to any authority that sup-
ports her appellate contention that the plaintiff knew
or should have known that telling her she had to stop
payments as a requirement to be considered for a loan
modification was misleading. Accordingly, the claim as
framed on appeal is unpreserved.
Assuming, arguendo, that the defendant had pre-
served her equitable estoppel claim, we would conclude
that she cannot prevail on the merits of the defense as
currently pleaded and argued. The following additional
facts pertaining to the defendant’s decision to default
are relevant to this claim. In her affidavit, the defendant
states that after she was laid off from her job, she
used cash reserves and savings to make her mortgage
payments, but soon became concerned about her ability
to continue making the payments. In her affidavit, the
defendant avers that the plaintiff’s loan servicer did not
direct her to default, but rather informed her that it
could not speak with her regarding loan assistance until
she was in default. Thereafter, the defendant elected
to default and was not coerced or forced to do so by
the plaintiff.
This special defense fails to allege that the plaintiff
promised her that her credit score would be unaffected
by her default, and the only detriment she alleges was
the negative impact on her credit score. In her equitable
estoppel special defense, the defendant also does not
claim that the plaintiff promised her a loan modification
when it instructed her that the only way to explore
modifying her payment was for her to default.
After the defendant defaulted, the plaintiff followed
through on its promise to discuss mortgage assistance
with the defendant, and engaged in documented com-
munications, internal calculations and correspondence
with the defendant in an effort to conclude a mort-
gage modification.
Because the allegations in this special defense in no
way set forth a claimed promise from the plaintiff that
her credit score would be unaffected or that a future
loan modification would take place if she defaulted
and there is no evidence of any such promises, the
defendant cannot claim that she relied to her detriment
on promises she fails to allege or prove existed. At the
time the defendant elected to default, the maintenance
of a favorable credit score or a loan modification were
never certainties, and she chose to default at her own
peril. The defendant has failed to plead or present evi-
dence of a promise or reasonable reliance on any
promise.
Carlson v. Bank of America, N.A., United States Dis-
trict Court, Civ. No. 12-1440 (DSD/AJB), 2012 WL
5519733 (D. Minn. November 14, 2012), is factually anal-
ogous and provides further justification for why the
defendant’s ‘‘induced to default’’ special defense is
insufficient for lack of proof of detrimental reliance on
her part. The court in Carlson stated: ‘‘The homeowners
argue that Bank of America fail[ed] to properly commu-
nicate with plaintiffs and encourag[ed] plaintiffs to
default on their loan. . . . Absent from the verified
complaint, however, is any allegation that Bank of
America hindered performance by refusing payment.
. . . In other words, the homeowners never alleged
that the lender’s actions prevented them from per-
forming their responsibilities under the mortgage
agreement. . . . For this reason, the homeowners’
claim fails. . . .
‘‘Here, the homeowners did not plead plausible fac-
tual allegations indicating that they would have been
able to pay the mortgage absent their reliance on the
instructions to default. . . . The homeowners allege
that they would have continued to make payments had
they not been instructed to default on the loan; however,
they also allege financial concerns beginning in fall 2009
and do not allege an ability to pay.’’ (Citations omitted;
internal quotation marks omitted.) Id., *2.
Carlson is instructive. In rejecting the defendant’s
‘‘instruction to default’’ defense therein, the court found
that the defendant’s own admitted financial problems
were the undisputed overriding impetus for the defen-
dant’s decision to default on the note and mortgage.
Similarly, the defendant in the present case has not
presented evidence that she could have or would have
remained current on the mortgage had she not been
instructed to default to take advantage of the opportu-
nity for a modification. The fact that she claims she
was current on certain other financial obligations while
she was in default does not equate to an ability to pay
her mortgage. As the plaintiff points out, the defendant’s
argument is ‘‘self-contradictory and illogical.’’ On the
one hand, the defendant claims that she defaulted only
because she was wrongfully induced to default by the
plaintiff and would not have defaulted but for plaintiff’s
supposedly inequitable conduct. On the other hand, she
claims she should have been considered for a modifica-
tion before defaulting, but the HAMP guidelines only
permit predefault modification consideration if the bor-
rower’s default is imminent. If, in 2009, the defendant
was about to default in the near future, how can she
argue that the plaintiff’s actions were the wrongful
cause of her default? If she was able to continue to
afford her mortgage payments and only was induced
by the plaintiff to default, then her default was not
imminent, and presumably she could have afforded the
existing terms of her mortgage and would not have
been eligible for HAMP. See Pennington v. HSBC Bank
USA, N.A., 493 Fed. Appx. 548, 553 (5th Cir. 2012) (not-
ing borrower could not have possibly qualified for
HAMP if her claim that she would not have missed
payment but for servicer’s ‘‘demand that she quit mak-
ing her regular monthly payments’’ were true [internal
quotation marks omitted]), cert. denied, 568 U.S. 1161,
133 S. Ct. 1272, 185 L. Ed. 2d 185 (2013).
D
We next address the defendant’s claim that a genuine
issue of material fact exists with respect to her breach
of contract special defense. She argues that her submis-
sions give rise to a genuine issue of material fact as to
whether the plaintiff breached its contract with her by
failing to offer her a permanent loan modification. She
alleges in this special defense that the July 15, 2010
TPP created an offer from the plaintiff that if all trial
period payments were timely made, her mortgage
would be permanently modified.17
‘‘[D]ue to the adversarial nature of our judicial sys-
tem, [t]he court’s function is generally limited to adjudi-
cating the issues raised by the parties on the proof they
have presented . . . . Connecticut is a fact pleading
jurisdiction. . . . Pleadings have an essential purpose
in the judicial process. . . . The purpose of pleading
is to apprise the court and opposing counsel of the
issues to be tried . . . . For that reason, [i]t is impera-
tive that the court and opposing counsel be able to rely
on the statement of issues as set forth in the pleadings.
. . . Fairness is a double-edged sword and both sides
are entitled to its benefits throughout the trial.’’ (Cita-
tions omitted; emphasis in original; internal quotation
marks omitted.) Somers v. Chan, 110 Conn. App. 511,
528–29, 955 A.2d 667 (2008); see also 71 C.J.S. 33, Plead-
ing § 2 (2011) (‘‘purpose of pleadings is to frame, pre-
sent, define, and narrow the issues and to form the
foundation of, and to limit, the proof to be submitted’’).
‘‘The elements of a breach of contract action are the
formation of an agreement, performance by one party,
breach of the agreement by the other party and dam-
ages.’’ (Internal quotation marks omitted.) Pelletier v.
Galske, 105 Conn. App. 77, 81, 936 A.2d 689 (2007),
cert. denied, 285 Conn. 921, 943 A.2d 1100 (2008). The
promise of an offer of a loan modification must be
pleaded as enforceable by the terms of the agreement.
See Everbank v. Engelhard, Superior Court, judicial
district of Waterbury, Docket No. CV-XX-XXXXXXX, 2016
WL 4507540, *4 (July 28, 2016).
The defendant avers that the plaintiff breached the
terms of the TPP letter. The plaintiff argues that it was
the defendant’s failure to perform a condition prece-
dent—maintaining her financial eligibility for HAMP—
that resulted in the rejection of her application for a
permanent loan modification. There is no dispute that
maintaining eligibility for HAMP was a condition prece-
dent in the TPP letter, and, because the defendant failed
to allege her compliance with this condition precedent
in her breach of contract special defense, her argument
necessarily fails because she failed to allege full perfor-
mance on her part.18 Thus, by her own allegations, her
conduct never triggered the plaintiff’s duty to perform
its obligations under the contract, rendering this
defense as currently pleaded legally insufficient.
E
We next address whether the court erred in conclud-
ing that there was no genuine issue of material fact
as to the defendant’s special defense of breach of the
covenant of good faith and fair dealing. We are not
persuaded by the defendant’s arguments.
The defendant claims that the plaintiff violated its
duty of good faith and fair dealing by instructing her
to default on her mortgage, on which she then was
current, as a precondition to discussing a loan modifica-
tion; and by failing to advise her of the risks that would
result from her failure to make her monthly mortgage
payments—the acceleration of the debt, the application
of default interest, the assessment of penalties and late
fees, and unfavorable reports to credit agencies. She
further alleges that the instruction to default delivered
to her by the plaintiff was made in bad faith and moti-
vated by financial gain on behalf of the plaintiff, to wit,
the promise of financial incentives from the Treasury
Department, to modify the loan.19
‘‘[I]t is axiomatic that the . . . duty of good faith and
fair dealing is a covenant implied into a contract or a
contractual relationship. . . . In other words, every
contract carries an implied duty requiring that neither
party do anything that will injure the right of the other
to receive the benefits of the agreement. . . . The cove-
nant of good faith and fair dealing presupposes that the
terms and purpose of the contract are agreed upon
by the parties and that what is in dispute is a party’s
discretionary application or interpretation of a contract
term. . . . To constitute a breach of [the implied cove-
nant of good faith and fair dealing], the acts by which
a defendant allegedly impedes the plaintiff’s right to
receive benefits that he or she reasonably expected to
receive under the contract must have been taken in bad
faith. . . .
‘‘Bad faith has been defined in our jurisprudence in
various ways. Bad faith in general implies both actual
or constructive fraud, or a design to mislead or deceive
another, or a neglect or refusal to fulfill some duty or
some contractual obligation, not prompted by an honest
mistake as to one’s rights or duties, but by some inter-
ested or sinister motive. . . . Bad faith means more
than mere negligence; it involves a dishonest purpose.’’
(Citation omitted; emphasis omitted; internal quotation
marks omitted.) Landry v. Spitz, 102 Conn. App. 34,
42–43, 925 A.2d 334 (2007). In general, bad faith ‘‘implies
both actual or constructive fraud, or a design to mislead
or deceive another, or a neglect or refusal to fulfill some
duty or some contractual obligation, not prompted by
an honest mistake as to one’s rights or duties, but by
some interested or sinister motive.’’ (Internal quotation
marks omitted.) TD Bank, N.A. v. J & M Holdings, LLC,
supra, 143 Conn. App. 348.
The defendant argues that a genuine issue of material
fact exists as to whether the plaintiff violated the cove-
nant of good faith and fair dealing. Specifically, she
argues that the plaintiff acted in bad faith when it
instructed her to default on her mortgage as a precondi-
tion to discussing loan modification.20
Viewing this special defense in the light most favor-
able to the defendant, we will presume that she is claim-
ing that the plaintiff breached the implied covenant of
good faith and fair dealing in the note and mortgage
agreements because there must be an existing contract
in order for there to be a breach of the implied covenant,
and the defendant does not allege the existence of any
other contract in this special defense. ‘‘[T]he existence
of a contract between the parties is a necessary anteced-
ent to any claim of breach of the duty of good faith
and fair dealing. . . . [N]o claim of breach of the duty
of good faith and fair dealing will lie for conduct that
is outside of a contractual relationship.’’ (Citations
omitted; emphasis omitted; internal quotation marks
omitted.) Carford v. Empire Fire & Marine Ins. Co.,
94 Conn. App. 41, 45–46, 891 A.2d 55 (2006). Because
a special defense admits the facts pleaded in the com-
plaint, and the complaint alleges the existence of note
and mortgage agreements, we fairly can make this pre-
sumption.21
We agree with the plaintiff that there is no evidence
that it impeded the defendant’s rights under the note
or mortgage or that it acted in bad faith. As detailed in
part I C of this opinion, there is no evidence that the
plaintiff misled the defendant into defaulting; rather,
she elected to default. See part I C of this opinion. The
note and mortgage, which the defendant signed, made
clear the consequences of default. Commencing on
November 30, 2009, the first month in which the defen-
dant stopped making her mortgage payments, the plain-
tiff sent the defendant numerous notices of default,
including several notices that predated her application
for a loan modification. These letters advised the defen-
dant of the consequences of her default, as required
by the terms of the note and mortgage. The note and
mortgage, however, do not require the plaintiff to notify
her that her credit rating may be affected were she to
be in default. Once the defendant defaulted, the plaintiff
discussed mortgage assistance and gave the defendant
a TPP, as promised. Although the defendant makes the
sweeping generalization that many mortgage servicers
are motivated to induce defaults for greater fees, there
is no evidence that any employee of Chase, acting on
behalf of the plaintiff, was so motivated in this case.
Moreover, neither the note nor the mortgage contem-
plate addressing a situation where the defendant might
need relief from the payment provisions, nor does either
of these documents promise to offer the defendant a
loan modification. Accordingly, a failure to provide the
defendant with an offer for a loan modification under
the program cannot be a violation of the covenant of
good faith and fair dealing under the note or mort-
gage agreements.
F
The defendant also claims that the court erred in
determining that there was no genuine issue of material
fact regarding her promissory estoppel special
defense.22 She contends that submissions presented to
the court show that the plaintiff promised to offer to
permanently modify her loan if she made three trial
period payments and met the eligibility requirements
of the TPP, but that the plaintiff did not fulfill its promise
to modify her mortgage after she made the payments
and met the requirements. We are not persuaded
because the allegations in this special defense, which
state that the defendant was promised a permanent
modification of her mortgage so long as she made three
consecutive trial payments in a specified amount, are
contradicted by the undisputed evidence. In reviewing
the language of this particular special defense, it is not
asserted that the defendant met all the terms of the
purported offer she submitted as evidence.
‘‘[U]nder the doctrine of promissory estoppel [a]
promise which the promisor should reasonably expect
to induce action or forbearance on the part of the prom-
isee or a third person and which does induce such action
or forbearance is binding if injustice can be avoided
only by enforcement of the promise. . . . A fundamen-
tal element of promissory estoppel, therefore, is the
existence of a clear and definite promise which a promi-
sor could reasonably have expected to induce reliance.
Thus, a promisor is not liable to a promisee who has
relied on a promise if, judged by an objective standard,
he had no reason to expect any reliance at all. . . .
‘‘Additionally, the promise must reflect a present
intent to commit as distinguished from a mere state-
ment of intent to contract in the future. . . . [A] mere
expression of intention, hope, desire, or opinion, which
shows no real commitment, cannot be expected to
induce reliance . . . and, therefore, is not sufficiently
promissory. The requirements of clarity and definite-
ness are the determinative factors in deciding whether
the statements are indeed expressions of commitment
as opposed to expressions of intention, hope, desire or
opinion. . . . Finally, whether a representation rises
to the level of a promise is generally a question of fact,
to be determined in light of the circumstances under
which the representation was made.’’ (Citations omit-
ted; internal quotation marks omitted.) Stewart v. Cen-
dant Mobility Services Corp., 267 Conn. 96, 104–106,
837 A.2d 736 (2003). ‘‘[A] promisor is not liable to a
promisee who has relied on a promise if, judged by an
objective standard, he had no reason to expect any
reliance at all.’’ D’Ulisse-Cupo v. Board of Directors of
Notre Dame High School, 202 Conn. 206, 213, 520 A.2d
217 (1987).
Again, the defendant’s claim is limited to the allega-
tions she made in her promissory estoppel defense. See
Somers v. Chan, supra, 110 Conn. App. 528–29. It is
undisputed that the defendant made all of the trial
period payments on time. According to the July 15,
2010 letter, however, the defendant also was required
to continue to meet the eligibility requirements of the
program. Both parties submitted a letter dated July 15,
2010, addressed to the defendant from the plaintiff,
in which the plaintiff states that the defendant was
approved to enter into a trial period plan, and explained
that ‘‘[a]fter all trial period payments are timely made
and you continue to meet all program eligibility
requirements, your mortgage would then be perma-
nently modified.’’ (Emphasis added.) The plaintiff fur-
ther explained in the letter that ‘‘[o]nce we confirm you
are still eligible for a Home Affordable Modification
and you make all of your trial period payments on time,
we will send you a modification agreement detailing
the terms of the modified loan.’’
The undisputed evidence reveals that the defendant
was required to continue to meet the requirements of
the program in order to qualify for a permanent modifi-
cation. The plaintiff contends that she did not satisfy
the requirement that her housing ratio be greater than
31 percent.23 In her claim of promissory estoppel, the
defendant does not allege that she fulfilled that condi-
tion and, thus, did not satisfy all the conditions prece-
dent in the TPP to receive an offer of a permanent loan
modification. Accordingly, the plaintiff did not break
any promise to the defendant by declining to modify
her loan under the program. As such, the party against
whom estoppel is claimed, the plaintiff, indisputably
never promised to form a binding modification
agreement once the defendant made her three consecu-
tive trial period payments because those payments were
not the only contingency.
The court properly concluded that the defendant’s
promissory estoppel special defense as currently
pleaded did not raise a genuine issue of material fact
that would preclude the rendering of summary judg-
ment on the plaintiff’s complaint.
II
Finally, the defendant claims that the court improp-
erly rendered summary judgment in the plaintiff’s favor
on her counterclaim sounding in breach of contract.
Specifically, she argues that the court improperly con-
cluded that the counterclaim (1) failed to allege the
formation of a contract, (2) failed to meet the transac-
tion test set forth in Practice Book § 10-10, and (3)
was barred by the statute of frauds. We agree with
the defendant.
In her counterclaim, the defendant alleged that the
plaintiff breached its contract with her when it failed
to offer her a permanent loan modification within a
reasonable period of time after she made the trial period
payments and continued to meet all HAMP program
eligibility requirements.24 The court concluded: ‘‘[T]he
undisputed facts show that the plaintiff and [the] defen-
dant did not enter into a new contract or agreement,’’
ruling that ‘‘[t]he defendant was obligated to make pay-
ments on her mortgage as demonstrated by the note,
and therefore, the undisputed facts show that the defen-
dant would be obligated to pay the monthly trial plan
amount at a minimum. . . . Therefore, the offer of a
trial modification, even with a promise of a future alter-
ation to the original mortgage, did not form a new con-
tract.’’ (Citation omitted.) The court further concluded
that the purported contract would be unenforceable
due to its noncompliance with the statute of frauds,
and that the counterclaim, which alleged the failure to
execute a loan modification agreement, did not meet
the transaction test set forth in Practice Book § 10-10
because it did not satisfy the same transaction standard.
A
Initially, we discuss whether the court erred in
determining that the defendant’s counterclaim failed to
satisfy the transaction test set forth in Practice Book
§ 10-10. In its reply to the defendant’s objection to the
motion for summary judgment, the plaintiff raised the
procedural issue that the counterclaim was improper
because it did not arise out of the ‘‘transaction or one
of the transactions which is the subject of the plaintiff’s
complaint . . . .’’ Practice Book § 10-10.25 The defen-
dant claims that the court erred in its application of
the transaction test. This is a question of law subject to
plenary review. U.S. Bank National Assn. v. Sorrentino,
supra, 158 Conn. App. 94.
‘‘Although, ordinarily, a challenge to the legal suffi-
ciency of a pleading should be raised by way of a motion
to strike; see Practice Book § 10-39 (a); our Supreme
Court has held that a motion for summary judgment also
may be used to challenge a pleading’s legal sufficiency
provided that the party seeking summary judgment can
establish as a matter of law both that the cause of action
alleged is legally insufficient and, more importantly,
that any defect in the pleading could not be cured by
repleading, which the nonmoving party would have had
an opportunity to do if the alleged insufficiency had
been raised by way of a motion to strike. See Larobina
v. McDonald, 274 Conn. 394, 401, 876 A.2d 522 (2005)
. . . . If both prongs are met, the court may properly
grant summary judgment as a matter of law. The court
in Larobina further explained that we will not reverse
the trial court’s ruling on a motion for summary judg-
ment that was used to challenge the legal sufficiency
of [a pleading] when it is clear that the motion was
being used for that purpose and the nonmoving party,
by failing to object to the procedure before the trial
court, cannot demonstrate prejudice. . . .
‘‘A counterclaim that has been filed in contravention
of our rules of practice is legally insufficient. Section
10-10 of the Practice Book provides in relevant part
that [i]n any action for legal or equitable relief, any
defendant may file counterclaims against any plaintiff
. . . provided that each such counterclaim . . . arises
out of the transaction or one of the transactions which
is the subject of the plaintiff’s complaint . . . .’’ (Cita-
tions omitted; footnote omitted; internal quotation
marks omitted.) U.S. Bank National Assn. v. Sorren-
tino, supra, 158 Conn. App. 94–95.
‘‘[A] proper application of Practice Book § 10-10 in
a foreclosure context requires consideration of whether
a counterclaim has some reasonable nexus to, rather
than directly attacks, the making, validity or enforce-
ment of the mortgage or note.’’ (Internal quotation
marks omitted.) U.S. Bank National Assn. v. Blowers,
supra, 177 Conn. App. 631–32.26 Essentially, a counter-
claim must have a sufficient relationship to the making,
validity or enforcement of the subject note or mortgage
in order to meet the transaction test as set forth in
Practice Book § 10-10 and the policy consideration it
reflects, judicial economy. With respect to that policy
consideration, which is one of practicality, the interest
of efficiency and judicial economy are served by
allowing the complaint and counterclaim to be adjudi-
cated in the same action when the competing claims
are closely related. See, e.g., Jackson v. Conland, 171
Conn. 161, 166, 368 A.2d 3 (1976).
The court, relying on Sorrentino, found that the
defendant’s counterclaim failed to satisfy the transac-
tion test because it did not bear some reasonable nexus
to the making, validity or enforcement of the note. We
conclude, however, that the subject counterclaim in the
present case sufficiently meets the transaction test of
Practice Book § 10-10 because it is intertwined suffi-
ciently with the subject of the foreclosure complaint.
The defendant’s counterclaim alleges the formation and
breach of a contractual agreement, prior to the com-
mencement of this action, intended to lead to an offer
from the plaintiff for a permanent modification of the
defendant’s note and mortgage, which, if accepted,
would avoid a foreclosure. In her prayer for relief, the
defendant is seeking specific performance of that
agreement, or other equitable relief, which is directly
and inseparably connected to the relief sought in the
plaintiff’s complaint because, were the defendant to
prevail, the result may be a modification of her obliga-
tions under the note and mortgage sought to be
enforced in the foreclosure action. ‘‘[B]ecause a mort-
gage foreclosure action is an equitable proceeding, the
trial court may consider all relevant circumstances to
ensure that complete justice is done.’’ (Internal quota-
tion marks omitted.) TD Bank, N.A. v. M.J. Holdings,
LLC, supra, 143 Conn. App. 326. The connection
between the note, the mortgage and the TPP involves
the same lender, the same borrower and the same prop-
erty. Moreover, this interrelationship involves the same
constellation of facts underlying the defendant’s surviv-
ing special defense, and all of these same facts will be
part of this case with or without the counterclaim.27
Accordingly, the court erred in concluding that the
defendant’s counterclaim did not satisfy the transac-
tion test.
B
Having concluded that the defendant’s counterclaim
satisfied the transaction test, we turn to whether the
counterclaim was legally sufficient. We address
whether there is a genuine issue of material fact as to
whether the parties formed a contract. An essential
issue for this analysis on which the parties differ is
whether, under the HAMP guidelines, the plaintiff was
permitted to continue to require additional documenta-
tion to verify the defendant’s eligibility for a loan modifi-
cation months after the conclusion of the TPP, or
whether the defendant, who made all her trial period
payments and remained eligible during the TPP, should
have been tendered a permanent modification offer
after she successfully completed the trial period. The
defendant makes it clear that she is not claiming that
the TPP was itself a contract for a permanent loan
modification. Rather, a contract governed the terms of
the TPP that, if fully performed, required the plaintiff
to tender her offer to permanently modify her loan.
The defendant claims that on July 15, 2010, the plain-
tiff made a definite offer to enter into a contractual
relationship that, when accepted by the defendant, cre-
ated a contract binding on both parties.28 See Auto Glass
Express, Inc. v. Hanover Ins. Co., 293 Conn. 218, 227,
975 A.2d 1266 (2009); see also 1 Restatement (Second),
Contracts § 24 (1981) (offer defined as ‘‘manifestation
of willingness to enter into a bargain, so made as to
justify another person in understanding that his assent
to that bargain is invited and will conclude it’’). The
defendant argues that her acceptance of the contract
was evidenced through her performance of the two
conditions precedent in the offer: timely payment of all
amounts due during the trial period, a fact which is not
disputed, and her continued eligibility, a primary source
of contention in this case. She maintains that these
conditions precedent were solely in her control and did
not hinge on the ‘‘whims of the plaintiff.’’ She notes
that the plaintiff concedes that the terms of the TPP
were supplemented by the HAMP guidelines issued by
the Treasury Department and that the HAMP guidelines
in effect at the time she received the offer from the
plaintiff, effective June 1, 2010, namely, HAMP Supple-
mental Directive 10-01, dated January 28, 2010, required
‘‘full verification of borrower eligibility prior to offering
a trial period plan.’’ She claims that the record supports
her assertion that she submitted extensive income doc-
umentation to the plaintiff at its request prior to receiv-
ing the TPP offer, and that the plaintiff’s underwriting
department reviewed her income documentation, veri-
fied she was eligible for HAMP and then determined
her modified loan terms on July 8, 2010, prior to offering
her the July 15, 2010 TPP. She further claims that she
submitted more information to the plaintiff at its request
during the trial period to verify her continuing eligibility.
She maintains that her compliance with these two con-
ditions precedent constituted acceptance of the plain-
tiff’s definite offer, and consideration to induce and
bargain for the plaintiff’s promise to tender her an offer
of a permanent HAMP loan modification, as the acts
she promised to perform under the TPP encompassed
acts that were not preexisting legal duties. See Turbe-
ville v. JPMorgan Chase Bank, United States District
Court, Docket No. SA CV 10-01464 DOC (JCG), 2011
WL 7163111, *4 (C.D. Cal. April 4, 2011) (plaintiff’s sub-
mission of TPP financial documents not previously
required constituted consideration).
The defendant notes, with regard to further consider-
ation, that any permanent loan modification would have
required her to pay interest on a higher principal bal-
ance and that the modified loan would have matured
with a two month balloon payment that did not pre-
viously exist. While she participated in the TPP, her
original obligations on the note and mortgage remained
unchanged and in effect, and continued to accrue. By
delaying in making her full monthly payments, the
defendant committed herself to paying a greater amount
in the long run because during the months she made
reduced payments, interest accrued on a larger sum of
principal than it otherwise would have. Thus, it is unfair
to categorize the defendant’s promise to pay reduced
monthly payments solely as a preexisting duty, as she
actually suffered some detriment by agreeing to pay
less than the full amount she owed. See Henderson v.
Wells Fargo Bank, NA, United States District Court,
Civ. No. 3:13-cv-378 (JBA), 2016 WL 324939, *6 (D. Conn.
January 27, 2016) (although plaintiff did have preex-
isting duty to pay reduced monthly payments, she actu-
ally suffered some detriment by agreeing to pay less
than full amount owed, committing herself to pay
greater amount in long run).
The plaintiff concedes that the defendant made all
of her trial period payments on time, but argues that she
failed to comply with the second condition precedent
in its offer, which is that she continue to meet all HAMP
program eligibility requirements, because eventually
the plaintiff confirmed, on the basis of updated docu-
ments that the defendant sent at its request in May,
2011, six months after the TPP ended, that she no longer
qualified. The plaintiff asks this court to reject the
defendant’s argument that the HAMP guidelines forbid
a loan servicer from requesting additional documents
to confirm a borrower’s continuing eligibility under the
program, as HAMP Supplemental Directive 10-01 specif-
ically states that ‘‘[b]orrowers who make all trial period
payments timely and who satisfy all other trial period
requirements will be offered a permanent HAMP modifi-
cation.’’ Moreover, HAMP guidelines state that when
‘‘evaluating a borrower’s eligibility for HAMP, servicers
should use good business judgment consistent with the
judgment employed when modifying mortgage loans
held in their own portfolio.’’
Our review of the HAMP guidelines leads us to con-
clude that there is a genuine issue of material fact as
to whether the plaintiff was permitted to continue to
review the defendant’s financial eligibility for the HAMP
program after the end of her trial period. The plaintiff’s
own contention, which is that HAMP Supplemental
Directive 10-01 specifically states that ‘‘[b]orrowers
who make all trial period payments timely and who
satisfy all other trial period requirements will be
offered a permanent HAMP modification’’; (emphasis
added); may be interpreted as indicating that all other
requirements have to be met only during the trial period,
suggesting an intention not to leave the borrower with-
out notice of a final determination for months after-
ward, as took place in this case. Although the HAMP
handbook may contemplate a prolonged TPP, lasting
more than three months, there is no definite indication
in the record before us that the plaintiff and the defen-
dant ever agreed to a prolonged TPP.
The plaintiff also claims that the trial court correctly
held that the defendant provided no consideration to
the plaintiff because she paid less than she already was
obligated to pay under the terms of the existing note
and mortgage. ‘‘Consideration consists of a benefit to
the party promising, or a loss or detriment to the party
to whom the promise is made. . . . Although an
exchange of promises usually will satisfy the consider-
ation requirement . . . a promise to do that which one
is already bound by his contract to do is not sufficient
consideration to support an additional promise by the
other party to the contract.’’ (Citations omitted; internal
quotation marks omitted.) Christian v. Gouldin, 72
Conn. App. 14, 23, 804 A.2d 865 (2001). ‘‘A modification
of an agreement must be supported by valid consider-
ation and requires a party to do, or promise to do,
something further than, or different from, that which
he is already bound to do.’’ (Internal quotation marks
omitted.) Thomas v. Oxford Performance Materials,
Inc., 153 Conn. App. 50, 56, 100 A.3d 917 (2014).
In this case, the TPP imposed new obligations on the
defendant. The July 15, 2010 letter from the plaintiff
that offered the defendant a TPP informed her that in
addition to making monthly trial period payments in
place of her normal monthly mortgage payments, she
had to continue to meet all program eligibility require-
ments. Attached to this letter was a list of frequently
asked questions, which informed the defendant that her
credit score may be affected, she may be required to
attend credit counseling, that she would be required to
have an escrow account for payment of property taxes,
insurance premiums and other required charges, and
that she was required to provide income and expenses
documentation. By not making her full monthly mort-
gage payments, the plaintiff committed herself to paying
a greater amount in the long run, as during the months
she made reduced payments, interest accrued on a
larger sum of principal than it otherwise would have.
In addition, the defendant’s account was assessed a
charge of $2838.92 when her loan modification was
‘‘approved.’’ It is unquestionable that the defendant suf-
fered some detriment additional to any preexisting
duties she owed to the plaintiff.
The documents submitted by the defendant and her
arguments lead us to conclude that there is a genuine
issue of material fact as to whether a contract was
formed when she accepted the TPP and complied with
its conditions, including remaining financially eligible
for the HAMP program throughout the trial time period.
There also is a genuine issue of fact as to whether the
plaintiff failed to meet its obligations under the TPP,
particularly as to the timing of when it made its relevant
determinations. Thus, on the existing record, there is
a genuine issue as to whether a contract was formed
and whether there was a breach by the plaintiff. We
therefore conclude that the trial court should not have
rendered summary judgment on the counterclaim due
to the nonexistence of a contract.
C
We next address whether the contract that the defen-
dant claims was created would be unenforceable under
our statute of frauds, § 52-550 (a).29 The court, after
noting that the defendant in her affidavit is alleging
an oral agreement, relied on relevant language from
Deutsche Bank Trust Co. Americas v. DeGennaro, 149
Conn. App. 784, 788, 89 A.3d 969 (2014), which held
that an oral agreement would be ineffective because
‘‘[a] modification of a written agreement [for a loan
exceeding $50,000] must be in writing to satisfy the
statute of frauds.’’ (Internal quotation marks omitted.)
As the defendant argues, the TPP was not a modifica-
tion of the note and mortgage, but rather, it was a
promise by the plaintiff to tender an offer of a perma-
nent loan modification if the defendant successfully
completed the requirements during the three month
trial period. Because the TPP was not an agreement
for the sale of real property or any interest in or concern-
ing real property, and, arguably was supposed to be
performed within one year, and because it was not an
agreement for a loan in an amount that exceeded
$50,000, it was not a purported contract that falls within
the statute of frauds. The TPP is unlike the oral modifi-
cation agreement that the court in DeGennaro found
was barred by the statute of frauds, as it is not a modifi-
cation agreement.
Even if the statute of frauds were applicable to the
agreement at issue here, the TPP was in writing, on the
letterhead of the plaintiff’s mortgage servicer, Chase,
included a salutation, stating, ‘‘Sincerely, Chase Home
Finance, LLC,’’ contained the electronic signature of
a Chase representative, and satisfied the evidentiary
function of the statute of frauds by providing proof of
the contract itself. The defendant further claims that
she performed her part of the contract after being
induced to do so by the plaintiff. She relies on Red Buff
Rita, Inc. v. Moutinho, 151 Conn. App. 549, 96 A.3d 581
(2014), wherein this court held that ‘‘[t]he doctrine of
part performance . . . is an exception to the statute
of frauds. . . . This doctrine originated to prevent the
statute of frauds from becoming an engine of fraud.’’
(Citation omitted; internal quotation marks omitted.)
Id., 554–55. In explaining this exception, this court cited
Glazer v. Dress Barn, Inc., 274 Conn. 33, 873 A.2d 929
(2005), when stating in Red Buff Rita, Inc. v. Moutinho,
supra, 549, that ‘‘our Supreme Court clarified and
explained the circumstances in which a contract may
be enforced despite its noncompliance with the statute
of frauds. It also concluded that part performance and
equitable estoppel are not separate and independent
exceptions to the statute of frauds, but rather, that part
performance is an essential element of the estoppel
exception to the statute of frauds. . . . [T]he elements
required for part performance are: (1) statements, acts
or omissions that lead a party to act to his detriment
in reliance on the contract; (2) knowledge or assent to
the party’s actions in reliance on the contract; and (3)
acts that unmistakably point to the contract. . . .
Under this test, two separate but related criteria are
met that warrant precluding a party from asserting the
statute of frauds. . . . First, part performance satisfied
the evidentiary function of the statute of frauds by pro-
viding proof of the contract itself. . . . Second, the
inducement of reliance on the oral agreement impli-
cates the equitable principle underlying estoppel
because repudiation of the contract by the other party
would amount to the perpetration of a fraud.’’ (Citations
omitted; internal quotation marks omitted.) Id., 555.
There remain genuine issues of material fact as to
(1) whether the statute of frauds would be applicable
to the nature of the contract the defendant has alleged,
and (2) whether, even if the statute applies, the defen-
dant could prove that the facts in this case entitle her
to the application of an exception to it.30 We therefore
conclude that the court erred in rendering summary
judgment in favor of the plaintiff on the defendant’s
counterclaim on the ground that it was legally unen-
forceable under § 52-550.
The judgment is reversed and the case is remanded
for further proceedings according to law.
In this opinion BRIGHT, J., concurred.
1
The complaint also named as defendants American Fuel Corporation
and the town of Cheshire. Neither of these defendants filed an appearance
in the trial court or is a party to this appeal. We will refer to Eichten only
as the defendant.
2
For simplicity, the actions of the plaintiff’s loan servicer, Chase, will be
referred to as the plaintiff’s actions. The plaintiff indicated in its brief, and
we agree, that ‘‘there is no principled reason to draw a distinction between
the alleged actions of Chase and/or [the] plaintiff.’’
3
As a condition precedent to qualifying for a HAMP loan modification,
borrowers are required to make reduced payments on the note and mortgage
during a trial period plan.
4
In her special defenses, the defendant also alleged payment and claimed
attorney’s fees. In its memorandum of decision, the court addressed the
issue of attorney’s fees but did not address the issue of payment. The
defendant does not raise an issue on appeal regarding the sufficiency of
her special defense of payment or her claim for attorney’s fees. We therefore
consider these claims abandoned. See, e.g., Grimm v. Grimm, 276 Conn.
377, 393–94, 886 A.2d 391 (2005), cert. denied, 547 U.S. 1148, 126 S. Ct. 2296,
164 L. Ed. 2d 815 (2006).
5
The record does not reflect how Select Portfolio Servicing, Inc., suc-
ceeded Chase as servicer of the loan in question for the plaintiff, but Chase
was the servicer at the time the events alleged in the special defenses and
counterclaim took place.
6
The plaintiff, in its complaint, alleges that it was the party entitled to
collect the debt evidenced by the note and to enforce the mortgage. Although
the defendant denied these allegations in her answer, she did not object to
the rendering of summary judgment as to liability or make any claim on
appeal that was based on an alleged lack of standing by the plaintiff to bring
this foreclosure action.
7
This letter, which the defendant purports to be the contract between
the parties, does not contain any place for a signature by either the plaintiff
or the defendant, and it does not contain a time is of the essence clause or
any particular date by which a determination on her application for a loan
modification would be made.
8
The defendant alleges that the other person residing in the home was
her fiance´, not her spouse, but does not challenge the propriety of the
inclusion of her fiance´’s income in calculating monthly gross income for
purposes of determining eligibility for the HAMP program.
9
The housing ratio or monthly mortgage payment ratio, is defined in the
HAMP program handbook for servicers submitted by the defendant, as ‘‘the
ratio of the borrower’s current monthly mortgage payment to the monthly
gross income of all borrowers on the mortgage note, whether or not those
borrowers reside in the property.’’ To qualify for HAMP, verified income
documentation must confirm that the borrower’s monthly mortgage payment
ratio prior to modification is greater than 31 percent.
10
Internal records of the plaintiff, submitted by the defendant with her
objection, reveal that she made six payments of $3373.86 between August,
2010, and January, 2011
11
The HAMP guidelines provide that ‘‘[s]ervicers should include non-bor-
rower household income in monthly gross income if it is voluntarily provided
to the borrower and if, in the servicer’s business judgment, that income
reasonably can continue to be relied upon to support the mortgage payment.’’
12
As of July, 2011, the $12,578.85 monthly income of the defendant’s
fiance´, when combined with her monthly income, was too high a sum for
the defendant to qualify for HAMP assistance.
13
Practice Book § 10-10 provides in relevant part: ‘‘In any action for legal
or equitable relief, any defendant may file counterclaims against any plaintiff
. . . provided that each such counterclaim . . . arises out of the transac-
tion or one of the transactions which is the subject of the plaintiff’s com-
plaint . . . .’’
14
The plaintiff argues on appeal that the court properly granted the motion
for summary judgment because the defendant’s special defenses do not
relate to the making, validity or enforcement of the note and mortgage.
Without objection from the defendant, the plaintiff raised this issue at the
hearing on the motion for summary judgment and in its reply memorandum
of law in support of the motion for summary judgment.
15
The dissenting opinion in Blowers did not agree that a special defense
that is based on loan modification negotiations can be viable only if the
parties actually reach a modification agreement because it ‘‘would unneces-
sarily shield mortgagees or their agents from judicial scrutiny of potentially
unscrupulous behavior that may have directly resulted in the foreclosure
action. Courts have not always strictly applied the making, validity, or
enforcement requirement in evaluating the sufficiency of equitable special
defenses such as those raised here, particularly if a strict application would
offend traditional notions of equity.’’ U.S. Bank National Assn. v. Blowers,
supra, 177 Conn. App. 648 (Prescott, J., dissenting).
16
A fair reading of the HAMP guidelines, Supplemental Directive 09-01,
dated April 6, 2009, reveals that, in order to qualify for relief, a borrower
must be in default, or, in very limited circumstances, must claim a hardship
and be determined to be at imminent risk of default, or ‘‘reasonably foresee-
able’’ default. Courts have recognized, however, that servicers are permitted
to give priority to borrowers on the basis of their payment or default status.
Lindsay v. Bank of America, N.A., United States District Court, Civ. No.
12-00277 LEK-BMK, 2012 WL 5198160, *12 (D. Haw. October 19, 2012).
17
In her special defense of breach of contract, the defendant does not
allege, as she does in her counterclaim, that she was promised a permanent
loan modification if she made all trial payments on a timely basis and
continued to meet all program eligibility requirements.
18
The fact that the defendant avers in her affidavit that she continued to
comply with all guidelines during the trial period does not cure the pleading
deficiency in her special defense, as the allegations necessarily frame the
party’s claim.
19
Actually, such financial incentives would have been paid to the servicer,
not directly to the plaintiff, and only would have been paid if and when the
loan was modified.
20
The defendant also argues that the court erred in determining, on the
basis of the language in the note and mortgage, that there was no genuine
issue of material fact as to whether the defendant was aware of the conse-
quences of default. She contends that a reasonable fact finder could deter-
mine that the defendant was unaware that the plaintiff would treat her loan
as delinquent, given that the plaintiff instructed her to default, the program
did not exist at the time of the execution of the note and mortgage, the
defendant may not have understood the intricacies of her mortgage contract
and was relying on the plaintiff’s superior knowledge, and the note and
mortgage do not discuss adverse credit reporting. For the reasons set for
previously, we are unpersuaded.
21
To the extent that the defendant is attempting to claim in her second
special defense that the plaintiff violated the covenant of good faith and
fair dealing pursuant to a purported agreement to provide her with an offer
for a permanent loan modification, she cannot prevail because she fails to
allege the formation of such a contract in this special defense.
22
We note that promissory estoppel is usually pleaded as a cause of action
as an alternative to a breach of contract claim. ‘‘Promissory estoppel is
asserted when there is an absence of consideration to support a contract.
. . . [T]he doctrine of promissory estoppel serves as an alternative basis
to enforce a contract in the absence of competing common-law considera-
tions . . . .’’ (Citation omitted; internal quotation marks omitted.) Glazer
v. Dress Barn, Inc., 274 Conn. 33, 88–89, 873 A.2d 929 (2005).’’ Although
the promise must be clear and definite, it need not be the equivalent of an
offer to enter into a contract because [t]he prerequisite for . . . application
[of the doctrine of promissory estoppel] is a promise and not a bargain and
not an offer.’’ (Emphasis in original; internal quotation marks omitted.)
Stewart v. Cendant Mobility Services Corp., 267 Conn. 96, 105, 837 A.2d
736 (2003).
23
The defendant does not dispute that by May, 2011, when she provided
the plaintiff with additional requested documentation she no longer qualified
under the program.
24
We note that the counterclaim, unlike the defendant’s breach of contract
and promissory estoppel special defenses, sufficiently alleges that she fully
performed her part of the bargain pursuant to the alleged contract.
25
See footnote 21 of this opinion regarding the defendant’s claim that the
court improperly addressed this issue because it was first raised by the
plaintiff in its memorandum of law in reply to the defendant’s objection to
the motion for summary judgment.
26
In Blowers, this court determined that counterclaims arising from factual
allegations pertaining to the mortgagee’s ‘‘conduct during postdefault media-
tion and loan modification negotiations’’ did not relate to the making, validity
or enforcement of the note, and, thus, failed the transaction test. U.S. Bank
National Assn. v. Blowers, supra, 177 Conn. App. 632. The present case is
factually distinguishable because the defendant claims that the plaintiff was
required to offer her a modification under the terms of their TPP agreement.
Cf. id., 630.
27
We also note that we have concluded in part I of this opinion that the
defendant’s special defense of unclean hands meets the making, validity or
enforcement test.
28
‘‘Whether the TPP is an enforceable contract for a loan modification
has been the subject of extensive litigation [in federal circuit courts] . . .
with courts reaching mixed results. The [United States Court of Appeals
for the] Second Circuit has not weighed in on the issue, but the First, Ninth,
and Seventh Circuits have held that the TPP is an enforceable contract. See
Corvello [v. Wells Fargo Bank, N.A., 728 F.3d 878, 885 (9th Cir. 2013)]; Young
v. Wells Fargo Bank, N.A., 717 F.3d 224, 235 (1st Cir. 2013); Wigod [v. Wells
Fargo Bank, N.A., 673 F.3d 547, 566 (7th Cir. 2012)]. Those courts reasoned
that the most natural and fair interpretation of the TPP is that the servicer
must send a signed Modification Agreement offering to modify the loan
once borrowers meet their end of the bargain. . . . [T]here could be no
actual mortgage modification until all the requirements were met, but the
servicer could not unilaterally and without justification refuse to send the
offer.’’ (Internal quotation marks omitted.) Henderson v. Wells Fargo Bank,
NA, United States District Court, Civ. No. 3:13-cv-378 (JBA), 2016 WL 324939,
*4 n.5 (D. Conn. January 27, 2016); see also Markey v. Ditech Financial
LLC, United States District Court, Docket No. 3:15-cv-1711 (MPS), 2016 WL
5339572, *3 (D. Conn. September 22, 2016).
29
General Statutes § 52-550 provides in relevant part: ‘‘(a) No civil action
may be maintained in the following cases unless the agreement, or a memo-
randum of the agreement, is made in writing and signed by the party, or
the agent of the party, to be charged . . . (6) upon any agreement for a
loan in an amount which exceeds fifty thousand dollars . . . .’’
30
See Everbank v. Engelhard, Superior Court, judicial district of Water-
bury, Docket No. CV-XX-XXXXXXX, 2016 WL 4507450, *2 (July 28, 2016) (late
payments accepted by lender under TPP constituted part performance, pre-
venting application of statute of frauds); Corvello v. Wells Fargo Bank, N.A.,
728 F.3d 878, 885 (9th Cir. 2013) (finding part performance exception to
statute of frauds under California law applicable to HAMP TPP because
borrowers fully performed under TPP).