Federal Deposit Ins. Corp. v. Napert-Boyer Part

This is an appeal by the defendants1 from a judgment on two promissory notes for $12,301,165.61. The notes called for a variable interest rate of 1 percent above the prime rate of Connecticut Bank and Trust Company (CBT). The defendants claim that the trial court improperly (1) substituted the prime rate of Fleet Financial Group for the prime rate of the failed CBT, (2) found that a prior foreclosed $1 million mortgage did not merge with the two notes in question and that General Statutes § 49-12 did not prevent the plaintiff from seeking a judgment on the mortgage debt, (3) found that the defendants were liable for late fees after acceleration, and (4) found that the defendants' special defenses, claims of setoffs and counterclaim for damages were not supported by the evidence and were barred by the D'Oench, Duhme doctrine.3 We agree with the defendants that the plaintiff did not prove that the substitution of the prime rate of Fleet Bank was reasonable and that the trial court's use of judicial notice was improper. We also conclude that there was no evidence of how the interest rate was calculated during the period that New Connecticut Bank and Trust Company, N.A. (New CBT), existed, and that late charges should not have been assessed against the defendants once the notes were accelerated. Accordingly, we reverse the judgment of the trial court and remand the matter for further proceedings.