American First Federal, Inc. v. Gordon
164 A.3d 776
Conn. App. Ct.2017Background
- Gordon (borrower) and Sovereign Bank executed a commercial loan (2006 note), later amended by a 2008 note; GGI guaranteed repayment.
- Sovereign and American First Federal (plaintiff) entered an asset sale agreement (Sept. 22, 2010) under which Sovereign agreed to sell its interest in the loan to plaintiff at a later closing; originals of the notes were lost though copies (and later an allonge and lost-note affidavit) were delivered.
- After closing, documents and lost-note affidavits were transferred, Sovereign and plaintiff notified Gordon of the transfer, and Gordon made payments to plaintiff through Feb. 9, 2011; plaintiff sued May 27, 2011 for unpaid principal, interest, fees and costs.
- Trial court found Sovereign had assigned the loan to plaintiff, entered judgment for plaintiff (damages ~ $4.33M) and reserved attorney’s fees and postjudgment interest for a hearing.
- Court later awarded attorney’s fees (~ $483,452 reduced from $699,644 request) and held postjudgment interest accrues under § 37-1 applied to outstanding principal only; both parties appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sovereign assigned the loan to plaintiff | Assignment occurred by closing and related acts; plaintiff is assignee entitled to collect | Asset sale agreement alone did not effect assignment; complaint limited plaintiff to that theory; no bill of sale was produced | Assignment found: asset sale + transfer of documents, lost-note affidavits/allonges, notices to borrower, and borrower payments established present assignment |
| Whether complaint pleaded assignment beyond asset sale agreement | Complaint gave notice by referencing asset sale agreement and closing terms; sufficient to try assignment theory | Complaint limited recovery to asset sale agreement; surprise/prejudice argued | Pleadings construed broadly; referencing asset sale and closing was sufficient notice; no prejudice shown |
| Whether trial court abused discretion by reducing attorney fees sought | Requested fees supported by affidavits/time records (redacted); reduction was unwarranted | Fees unreasonable, redactions impaired proof, and some duplication of effort by two firms | No abuse of discretion: court reasonably discounted fees for redactions, apparent duplication, and judged reasonableness based on case familiarity |
| Proper base for postjudgment interest calculation | Interest should run on entire judgment (principal + interest/fees/costs) | Interest should run only on unpaid principal balance | Court applied Sikorsky: § 37-1 governs (interest eo nomine) because parties did not disclaim postmaturity interest; under loan documents interest is calculated on outstanding principal only; affirmed |
Key Cases Cited
- Schoonmaker v. Lawrence Brunoli, Inc., 265 Conn. 210 (assignment requires intent and identifiable subject matter)
- One Country, LLC v. Johnson, 314 Conn. 288 (plenary review when facts undisputed and intent inferred from words/actions for assignment question)
- Smith v. Snyder, 267 Conn. 456 (burden to prove reasonableness of attorney's fees and necessary evidentiary showing)
- Sikorsky Financial Credit Union, Inc. v. Butts, 315 Conn. 433 (distinguishes § 37-1 interest eo nomine and § 37-3a damages interest; parties can contract for postmaturity interest)