190 Conn. App. 221
Conn. App. Ct.2019Background
- U.S. Bank Trust, N.A., as mortgagee, obtained a judgment of foreclosure by sale against Gary and Anna‑Marie Giblen after they defaulted; a committee of sale was appointed and the sale occurred Dec. 3, 2016, with a winning bid of $1,230,000.
- The committee filed a motion to approve the sale on Dec. 7, 2016; the Giblens filed for Chapter 7 bankruptcy on Dec. 18, 2016, triggering an automatic stay.
- The committee moved in Bankruptcy Court; after an evidentiary show‑cause hearing, the Bankruptcy Court annulled the stay retroactively to Dec. 18, 2016, expressly to allow the committee to ‘‘prosecute and complete the Foreclosure Action, including to complete the pre‑petition foreclosure sale.’’
- The committee reclaimed its motion in state court; the Giblens objected, asserting (inter alia) lack of an interior appraisal, inadequate advertising, failure to maintain the sale sign, and disputing committee fees.
- The trial court held a hearing addressing the limited issues, found noncompliance with some prior orders but no resulting injury to the Giblens, and approved the sale; the Giblens appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bankruptcy Court’s annulment allowed state court approval of the Dec. 3 sale | Annulment permitted the committee to exercise all rights/remedies and complete the foreclosure, including approval of the sale | Annulment was limited to permitting recovery of fees/expenses and did not authorize pursuing approval of the sale | Held: Annulment expressly authorized completion of the foreclosure and approval of the sale; defendants’ argument rejected |
| Whether trial court abused discretion in approving sale due to procedural irregularities (interior appraisal, advertising, sign) | Approval was proper; court scrutinized irregularities and found no injury to defendants | Irregularities deprived defendants of realizing substantial equity and otherwise prejudiced them | Held: No abuse of discretion; court found failures but no injury resulting from them |
| Whether other irregularities (e.g., bidders’ conduct, standing, committee advocacy) bar approval | These matters were not raised below and thus not properly before the appellate court | Irregularities (multiple listed) prevented realization of equity and tainted approval | Held: Issues not preserved for appeal; in any event defendants failed to show specific injury from those alleged irregularities |
| Standard for reviewing approval of committee sale | Court should review for abuse of discretion, ensuring fairness to mortgagee and owners | N/A (defense focused on factual irregularities and injury) | Held: Abuse‑of‑discretion standard applied; no abuse shown |
Key Cases Cited
- In re Albany Partners, Ltd., 749 F.2d 670 (11th Cir. 1984) (discusses bankruptcy court power to annul stay retroactively to validate pre‑petition actions)
- Rockville Bank v. Victory Outreach Ministries, Inc., 125 Conn. App. 1 (Conn. App. 2010) (describes equitable discretion in approving committee sales and protecting owners and mortgagees)
- First Nat’l Bank of Chicago v. Maynard, 75 Conn. App. 355 (Conn. App. 2003) (court must scrutinize judicial sale irregularities and require a showing of injury to deny confirmation)
- Citicorp Mortgage, Inc. v. Burgos, 227 Conn. 116 (Conn. 1993) (party seeking relief for sale irregularity must show injury resulting from the irregularity)