Wells Fargo Bank LLC v. Heritage New London LLC
Allegations that a bank promised a borrower it would receive additional funds, that the bank reneged and that the borrower would not have signed the mortgage, in the absence of the bank's promise, are adequate to allege conduct that concerns the making of the note. In April 2012, the plaintiff, Wells Fargo Bank, moved to foreclose the defendant's property, which is operated as a Clarion Inn Hotel. The plaintiff bank alleges that the defendant failed to make payments and defaulted on the $8.5 million loan. The defendant filed an answer and special defenses, arguing that the plaintiff bank's predecessor reneged on a promise that additional funds would be furnished to rehabilitate the property. The special defenses alleged breach of contract, breach of the covenant of good faith and fair dealing, unclean hands and that the plaintiff bank is estopped from enforcement of the note. The plaintiff bank moved to strike these special defenses and argued that they do not relate to the making, validity or enforcement of the note. "A valid special defense at law to a foreclosure proceeding must be legally sufficient and address the making, validity or enforcement of the mortgage, the note or both," pursuant to Emigrant Mortgage Co. v. D'Agostino, a decision of the Connecticut Appellate Court. "If a representation made by a mortgagee induces a mortgagor to enter into a mortgage agreement," wrote the Connecticut Superior Court, "that action can relate to the making of the note." The defendant alleges that, if not for the promise of additional funds, it would not have signed the note. The defendant adequately alleges conduct that concerns the making of the note, and the court denied the plaintiff bank's motion to strike the defendants' special defenses of breach of contract, breach of the covenant of good faith and fair dealing, unclean hands and that the plaintiff bank is estopped from enforcement of the note.