183 Conn. App. 128
Conn. App. Ct.2018Background
- In 2006 Stoneridge Associates obtained a $1,650,000 construction loan from Sovereign Bank; various parties (including Jennifer Tine) executed personal guarantees securing the Stoneridge note.
- Tine executed a limited, nonrecourse guarantee (liability limited to her interest in Cromwell real property) and a mortgage on that property to secure her guarantee; she later reaffirmed the guarantee with subsequent note modifications.
- In March 2012 Sovereign assigned the Stoneridge note and related mortgage to Jenzack Partners, LLC, which then sued in 2012 to foreclose the Tine mortgage after Stoneridge defaulted.
- At bench trial Jenzack introduced a computation of the amount due (exhibit 22) based on a starting balance supplied by Sovereign; its witness (Buland) relied on data received from Sovereign but had no personal knowledge of the original starting balance.
- The trial court entered strict foreclosure for Jenzack and later awarded attorney’s fees; Tine appealed, challenging (1) Jenzack’s standing to enforce her guarantee, (2) admissibility of the computation establishing debt, and (3) admission of billing records supporting fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether assignment of the Stoneridge note to Jenzack operated to assign Tine’s limited guarantee so Jenzack had standing to foreclose | Assignment of the note necessarily carried the underlying guarantees; Jenzack is the assignee and can enforce the guarantee and mortgage | Guarantee was not specifically mentioned in the allonge; without explicit assignment Jenzack lacks standing to enforce the guarantee/mortgage | Court held Jenzack had standing: under Restatement (Third) §13 and analogous authority the assignment of the note carried the secondary obligations given surrounding circumstances and parties’ intent |
| Whether exhibit 22 (computation of debt) was admissible under the business‑records exception to show amount due | Exhibit 22 was a business record prepared/kept in ordinary course by Jenzack and admissible to establish debt | Starting balance came from Sovereign and was hearsay; Buland lacked personal knowledge and Jenzack received (not made) that starting balance; thus exhibit 22 is inadmissible | Court held the starting balance portion was inadmissible hearsay and exhibit 22 could not establish the amount due; error was harmful and required reversal as to Tine and remand for new trial |
| Whether billing records referencing a third party (Rockstone 6 Capital, LLC) were improperly admitted to support attorney’s fees | Records and testimony showed the bills identified Jenzack as client (unique client number) and that the third‑party notation was for mailing only; fees recoverable under the guarantee’s indemnity clause | The notation suggests fees belong to a nonparty and documents were unauthenticated | Court affirmed fee award: trial judge credited counsel’s testimony, the guarantee permits recovery of attorney’s fees, and admitting the billing records was not an abuse of discretion |
Key Cases Cited
- JP Morgan Chase Bank, N.A. v. Winthrop Properties, LLC, 94 A.3d 622 (Conn. 2014) (guaranty is a separate and distinct obligation from the primary debt)
- New England Savings Bank v. Bedford Realty Corp., 680 A.2d 301 (Conn. 1996) (definition and limits of hearsay; admissibility requires personal knowledge of maker or proper exception)
- Lemmon v. Strong, 22 A. 293 (Conn. 1890) (assignment of a note can carry equitable assignment of an unseparated guaranty based on intent and surrounding circumstances)
- River Dock & Pile, Inc. v. O & G Industries, Inc., 595 A.2d 839 (Conn. 1991) (documents received, rather than made, in ordinary course ordinarily do not qualify under business‑records exception)
- D’Amato Investments, LLC v. Sutton, 978 A.2d 1135 (Conn. App. 2009) (standing implicates subject matter jurisdiction; surrounding documents may be considered to determine effect of assignment)