Chelsea Groton Bank v. Belltown Sports, LLC

Citations

• 199 Conn. App. 294

Syllabus

The plaintiff bank sought to foreclose a mortgage on certain real property owned by the defendants. The defendants had obtained a loan from the plaintiff, secured by the mortgage, to build a sports facility but, due to construction delays, the facility had a late opening and did not generate enough revenue for the defendants to meet their mortgage obligations. As part of the mortgage transaction, the defendants agreed to obtain a small business loan, which would thereafter be used to pay down the mortgage debt. In order to receive the small business loan, the plaintiff certified that there was no significant changes in the defendants' finan- cial status, despite its knowledge that the defendants had no working capital to be profitable. The defendants received the small business loan; however, they had already defaulted on the mortgage payments and the plaintiff commenced the foreclosure proceedings. The trial court thereafter rendered a judgment of foreclosure by sale, from which the defendants appealed, claiming that the plaintiff's certification of the defendants' financial status for the small business loan, when it knew that the defendants had no ability to make mortgage payments, consti- tuted misconduct relating to the mortgage, and that the trial court improperly found that the defendants' claims of inequitable conduct did not relate to the mortgage. Held that the defendants could not meet their burden of proving an evidentiary basis to establish the existence of a genuine issue of material fact regarding their unclean hands special defense and, therefore, the trial court properly determined that the plaintiff's alleged misconduct failed to sufficiently relate to the making, validity, or enforcement of the mortgage; the defendants failed to allege any conduct by the plaintiff that would have challenged the plaintiff's legal authority to bring the foreclosure action, the defendants conceded that the plaintiff had the right to commence foreclosure on the ground