CT Appeals: AC Reverses Foreclosure for Standing Issue

In this Connecticut appeal, Deutsche Bank National Trust Company, Trustee v. Thompson, the Appellate Court reversed the judgment of foreclosure because the trial court did not make any factual findings as to plaintiff’s standing.

Plaintiff alleged in the complaint that it was the holder of the note. Defendant was defaulted for failure to plead. The trial court entered a judgment of foreclosure but made no factual findings as to whether plaintiff was the holder or owner of the note at the time it commenced the action. The Appellate Court reversed, concluding that, absent such factual findings, it could not answer “[t]he key question … [of] when the note came into the plaintiff’s possession.”

Plaintiff argued on appeal that if it had not presented the note to the trial court, the trial court could not have entered the foreclosure judgment. Plaintiff claimed, in other words, that it’s implicit from the judgment that the trial court had the note before it at the time of entry. The Appellate Court rejected this contention because there was no evidence that plaintiff ever presented the original note to the trial court. Plus, the copy of the note in the record was payable to the original lender, not plaintiff, and was not endorsed. Without an endorsement, plaintiff could not be the holder.

Plaintiff also argued that it had established holder status because it alleged that status in the complaint and defendant was defaulted for failure to plead. The Appellate Court rejected this argument.  Finding standing by a default in pleading would be akin to finding standing by waiver or consent, which the law expressly precludes.

The Appellate Court also “reject[ed] the plaintiff’s argument that an inadequate record precludes our review of its standing.” Though the appellant has the burden of presenting a record adequate for review, plaintiff has the burden of proving standing whenever the issue is raised, including on appeal. Because it is not the Appellate Court’s function to find facts, “[t]he judgment [was] reversed and the case [was] remanded for a determination of the jurisdictional issue and for further proceedings according to law.”