City of Hartford v. McKeever
139 Conn. App. 277
| Conn. App. Ct. | 2012Background
- Hartford City appeals a $195,909 damages award to defendant McKeever on his counterclaim for overpayments on a note secured by a Hartford property; the trial court found the plaintiff, as assignee, liable for overpayments to itself and prior holders and awarded that sum; the plaintiff challenges the liability scope as to post- vs preassignment payments.
- Loans and security: May 1983 two notes totaling $143,065 secured by mortgages, plus an assignment of rents to collect rents if defendant defaulted.
- Corporation assigned the two notes to Colonial Bank, which became State Street Bank; in July 2001 State Street Bank assigned loan two to the plaintiff for $1; defendant had paid loan one in full and allegedly defaulted on loan two by 2003 Foreclosure was filed but withdrawn after admitting overpayment of loan two.
- The defendant asserted counterclaims including CUTPA, the Creditor’s Collection Practices Act, and an accounting; the court awarded the defendant $195,909 for overpayments with no explicit count identified on the judgment; the plaintiff sought articulate clarification but was denied meaningful articulation.
- The central legal issue is whether an assignee of a mortgage note may be liable for the assignor’s preassignment overpayments; the majority holds the assignee is not liable for preassignment overpayments, and can only be liable for postassignment overpayments, with possible setoff for preassignment amounts depending on the circumstances.
- Dissenting views argue for a flexible, equitable exception allowing recovery against an assignee where the assignor and assignee maintained a close, ongoing relationship and where the overpayments benefited the plaintiff as trustee/assignee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an assignee is liable for preassignment overpayments | Hartford argues no liability for preassignment overpayments | McKeever argues assignee liable for all overpayments | Assignee not liable for preassignment overpayments; liability limited to postassignment overpayments (setoff possible) |
| Scope of liability when an assignment is involved in an equitable foreclosure | Plaintiff contends no affirmative liability for assignor’s preassignment acts | Defendant seeks recovery for overpayments tied to assignor’s preassignment conduct | Equitable considerations do not create blanket assignee liability for preassignment overpayments; potential equity-based exception only for postassignment issues |
| Effect of the articulation process on review | Articulation request should identify the exact count | Record adequate for appeal despite articulation failure | Record inadequate to review the specific count; remanded for articulation context or review remedy |
| Whether the plaintiff’s admission about rent collections binds the issue | Admission does not bind beyond the stated context | Admission shows close participation and counters lack of distinction between assignor and assignee | Court’s credibility findings sustain equitable relief; admission supports conclusion of a substantial close relationship and potential liability |
Key Cases Cited
- Hartford-Connecticut Trust Co. v. Riverside Trust Co., 123 Conn. 616 (1938) (assignee takes subject to equities and defenses at assignment time)
- Fairfield Credit Corp. v. Donnelly, 158 Conn. 543 (1969) (assignee generally not liable for assignor's preassignment liabilities unless expressly assumed)
- Reynolds v. Ramos, 188 Conn. 316 (1982) (shoes-in-the-holds rule; defenses against assignor)
- Adams v. Leavens, 20 Conn. 73 (1849) (assignee takes subject to equities existing at assignment time)