71 Conn. App. 550 | Conn. App. Ct. | 2002
Opinion
This appeal in a foreclosure action returns to this court on remand from our Supreme Court. Webster Bank v. Zak, 259 Conn. 766, 792 A.2d 66 (2002).
“The bank subsequently assigned its interest in the note and mortgage to EMC .... Thereafter, EMC moved to substitute itself as the plaintiff in the foreclosure action and Zak moved to extend the foreclosure sale date. On July 13, 1998, the trial court granted both motions. The court also opened the November 24,1997 judgment and rendered a new judgment of foreclosure by sale with a sale date of September 19, 1998.
“On September 17,1998, Zak filed in the United States Bankruptcy Court for the District of Connecticut for protection under chapter 13 of the United States Bankruptcy Code, which was later converted to a chapter 7 bankruptcy. See 11 U.S.C. § 101 et seq. The filing of the bankruptcy petition stayed the trial court proceedings,
“On March 31, 1999, Zak conveyed all of her right, title and interest, including her equity of redemption, in the foreclosed property to MFR by quitclaim deed. Saxe was not a signatory to the deed. Thereafter, MFR moved to be cited in as a party defendant, pursuant to General Statutes § 52-107 and Practice Book § 9-6, claiming that it was ‘the record titleholder of the property that is the subject of the foreclosure, and any judgment of foreclosure will necessarily affect it by foreclosing out its interest as the titleholder . . . .’
“MFR filed an answer and special defense to EMC’s second amended complaint. In its special defense, MFR claimed that EMC’s failure to provide the appropriate notice of default pursuant to the requirements of the mortgage agreement barred it from instituting foreclosure proceedings. No other party filed a pleading in response to EMC’s second amended complaint.
“On October 8,1999, EMC filed a motion for summary judgment. EMC claimed that MFR was bound by the trial court’s November 24, 1997 judgment as Zak’s successor in interest, and was precluded, therefore, from asserting new defenses to liability that Zak had not asserted prior to that judgment. Similarly, EMC contended that MFR was bound by the amount of the mortgage debt as determined by the trial court in connection with that judgment. MFR opposed the motion for summary judgment as to both the issue of liability and the amount of the debt. On February 8, 2000, the trial court granted summary judgment on the issue of liability, and scheduled a hearing on the amount of the debt for May 31, 2000.
“At that hearing, EMC claimed that the trial court should calculate the amount by adding to the debt established at the November 24,1997 judgment the per diem interest that had accrued on that debt since that date. MFR contended, in response, that EMC’s second amended complaint citing in MFR opened the pleadings and, thereby allowed MFR to assert new defenses to liability, as well as to contest the amount of the debt established by the trial court’s November 24, 1997 judgment. Therefore, MFR claimed, the court should hear evidence regarding the amount of the debt.
MFR claims that the court improperly held that EMC’s second amended complaint did not open and vacate the entire November 24, 1997 judgment. Stated otherwise, MFR claims that the “new complaint gives all parties the opportunity to start the case anew for all purposes,” and that the court’s decision is contrary to established procedural rules and violative of due process. We disagree.
We first set forth the legal principles that govern our resolution of that issue. We review the court’s decision not to open the pleadings as to all issues under an abuse of discretion standard. Townsley v. Townsley, 37 Conn. App. 100, 104, 654 A.2d 1261 (1995); see Wagner v. Clark Equipment Co., 259 Conn. 114, 128, 788 A.2d 83 (2002). Further, “ ‘[a] foreclosure action constitutes an equitable proceeding. ... In an equitable proceeding, the trial court may examine all relevant factors to ensure that complete justice is done. . . . The determination
Because MFR relies on the second amended complaint as the vehicle for opening the November 24,1997 judgment as to all issues in the case, including liability and the amount of debt, we focus our attention on that complaint and its attendant circumstances.
Following its acceptance of the quitclaim deed from Zak, MFR moved to be cited in as an additional party defendant. The court properly granted MFR’s motion. In response, the court ordered EMC to amend its complaint by naming MFR as a party defendant. To satisfy the court’s order, EMC filed a motion requesting leave to do so. The motion specifically stated its limited purpose as “adding MFR . . . as a party defendant.” MFR’s motion to be cited in predicated the court’s order for EMC to amend its complaint. In other words, but for MFR’s motion to be cited in, EMC never would have had to file the second amended complaint. The filing of the second amended complaint, therefore, was compulsory in nature and not voluntary.
MFR, nevertheless, argues that the filing itself resulted in the opening of the judgment, as if the court never had rendered judgment, thereby allowing MFR
Having disposed of MFR’s arguments regar ding the survival of the November 24, 1997 judgment, we again note that in its memorandum of decision, the court held that “[n]othing in the court record indicates that the judgment of foreclosure by sale was ever vacated . . . [and that] any opening of the judgment was limited to a specific purpose.” Because EMC’s second amended complaint was ordered by the court, and its motion for leave to revise the complaint was specifically limited to the purpose of naming MFR as a substitute party to the action, the court acted within its sound discretion in deciding that the November 24, 1997 judgment of debt was opened only for limited purposes and never
Thereafter, the court granted EMC’s motion for summary judgment as to liability and scheduled a hearing in damages. At the hearing in damages, the court ruled the November 24, 1997 judgment of debt to be the law of the case.
In making its ruling, the court explained that the judgment of debt had not been opened and that it had
MFR further claims that “the default by another party . . . deprived MFR of its constitutional right to procedural due process.” Specifically, MFR emphatically argues that due process requires it to get a meaningful hearing regarding all aspects of the debt because Zak’s default, along with the court’s subsequent determination of debt, which was based on an uncontested affidavit, cannot deprive MFR of its rights to challenge that debt. We disagree.
The “[fundamental tenets of due process . . . require that all persons directly concerned in the result of an adjudication be given reasonable notice and the opportunity to present their claims or defenses. . . . Moreover, [t]he guarantee of procedural due process requires that persons whose rights are to be affected have a right to notice and an opportunity to be heard at a meaningful time and in a meaningful manner.” (Citation omitted; internal quotation marks omitted.) Henriquez v. Allegre, 68 Conn. App. 238, 245, 789 A.2d 1142 (2002).
Long before MFR gained any interest whatsoever in the foreclosed real estate, a notice of lis pendens was filed on the land records. “A notice of lis pendens is appropriate in any case where the outcome of the case will in some way, either directly or indirectly, affect the title to or an interest in real property. ... As [General
MFR knowingly and willingly stepped into Zak’s shoes when it accepted the quitclaim deed from her for the foreclosed property. Because Zak had a meaningful opportunity to be heard at a meaningful time and in a meaningful manner, MFR had the same. The notice of lis pendens served to bind MFR as if it had been a party to the foreclosure action against Zak, which was the same action during which the court received evidence regarding her liability and debt on the note and mortgage. As a result, MFR is bound by Zak’s failure to plead and subsequent default, as well as by the fact that she did not contest the amount of the debt. MFR, therefore, cannot now assert defenses that Zak failed to assert.
Finally, in support of its decision not to allow MFR to contest the debt, the court cited the public policy of maintaining certainty and stability in foreclosure actions. MFR, however, asserts otherwise, claiming that such policy provides no justification for the court’s judgment. We respond to that argument because the facts of this case demonstrate precisely why public policy should prevent MFR from contesting what already has been determined.
As the court aptly stated, “[to] allow such postjudgment challenges to the debt would create chaos and instability to foreclosure judgments. The mere substitution of a judgment debtor and mortgagor in a foreclosure action cannot be a ground for the challenge of the judgment debt.” On the other hand, MFR claims that any “instability in a prior judgment of foreclosure [in this case] was caused by the reopening of the judgment of foreclosure and the filing of an amended complaint to allow MFR to be cited in as a party . . . [and, that] MFR was not amere substitute defendant.” MFR further claims that allowing it to contest the debt would not “prevent the conclusion of . . . foreclosure action[s] by permitting . . . property to be repeatedly conveyed to other entities before there could be any final adjudication of the issues” because “the court is able to use its broad equitable powers inherent in any foreclosure action to restrain any such abuse of the foreclosure process.”
MFR fails to recognize that if the court allowed it to challenge the November 24, 1997 judgment of debt, the
Sitting in equity, the court properly considered all of the relevant factors in this case and acted within its sound discretion by not opening the November 24,1997 judgment of debt and by ruling it to be the law of the case. Further, in considering the equities of this case, the court properly struck the balance in favor of EMC and the public policies underlying the stability of foreclosure actions as well as the policies underlying the notice of lis pendens. Equity favors EMC in this case, and MFR cannot now attempt to play the victim, especially in light of the fact that any interest MFR gained in the foreclosed property was acquired with full notice of all claims and judgments against it. Therefore, the
The judgment is affirmed and the case is remanded for the purpose of setting a new sale date.
In this opinion the other judges concurred.
Prior to the appeal, MFR appealed to this court from the trial court’s judgment of foreclosure. See Webster Bank v. Zak, 61 Conn. App. 402, 763 A.2d 1090 (2001). We, however, without reaching the merits of MFR’s claim, “sua sponte, reversed and remanded the case to the trial court for the purpose of making factual findings to determine whether [MFR had] standing to assert its claim to an interest in the property under foreclosure and to otherwise participate in the proceedings.” (Internal quotation marks omitted.) Webster Bank v. Zak, supra, 259 Conn. 772-73. Our Supreme Court reversed our judgment and held that MFR had standing to assert its claim. Id., 783. We now reach the merits of MFR’s claim.
“Also included as defendants in the bank’s foreclosure action were Kenneth A. Zak, an original mortgagor of the properly who had since transferred his interest to Zak, and the following parties, all of which claimed some interest in the mortgaged properly: GTT Corporation, as trustee of Oregon Properties Realty Trust (GTT); Jonathan Googel; Stephen J. Dellaquila; New Haven Savings Bank; Ferndale Condominium Association, Inc.; Boston Safe Deposit and Trust Company; the state of Connecticut; and the United States of America. The trial court subsequently granted motions to cite in MFR, Zak’s successor in interest to the property, and Tracy M. Saxe, the trustee of Zak’s bankruptcy estate, as defendants and a motion to substitute Donald Mondani as a defendant for GTT.” Webster Bank v. Zak, supra, 259 Conn. 768-69 n.1.
General Statutes § 52-107 provides in relevant part: “If a person not a party has an interest or title which the judgment will affect, the court, on his application, shall direct him to be made a party.”
Practice Book § 9-6 provides in relevant part: “Any person may be made a defendant who has or claims an interest in the controversy, or any part thereof, adverse to the plaintiff, or whom it is necessary, for a complete determination or settlement of any question involved therein, to make a party. . . .”
Practice Book § 10-61, entitled “Pleading after Amendment,” provides: “When any pleading is amended the adverse party may plead thereto within the time provided by Section 10-8 or, if the adverse party has already pleaded, alter the pleading, if desired, within ten days after such amendment or such other time as the rules of practice, or the judicial authority, may prescribe, and thereafter pleadings shall advance in the time provided by that section. If the adverse party fails to plead further, pleadings already filed by the adverse party shall be regarded as applicable so far as possible to the amended pleading.”
We also note that because “[t]he design of these rules being to facilitate business and advance justice, they will be interpreted liberally in any case where it shall be manifest that a strict adherence to them will work surprise or injustice.” Practice Book § 1-8. Further, the “[rjules of practice must be construed reasonably and with consideration of this purpose. . . . Rules are a means to justice, and not an end in themselves; their purpose is to provide for a just determination of every proceeding.” (Internal quotation marks omitted.) Tolland Bank v. Larson, 28 Conn. App. 332, 335, 610 A.2d 720 (1992). As we will discuss, had the court allowed MFR to contest the prior judgment of debt, it would have required EMC to relitigate an already established debt and it would have undermined important public policies to the contrary of such a decision.
The judgment was opened two times prior to the naming of MFR as a defendant for the limited purposes of extending the sale date and for adding Saxe as a party defendant.
“The law of the case doctrine applies only to subsequent proceedings in the same case." (Emphasis in original.) Forte v. Citicorp Mortgage, Inc., 66 Conn. App. 475, 481, 784 A.2d 1024 (2001). The doctrine, therefore, applies to the present case.
General Statutes § 52-325 (a), entitled “Notice of lis pendens,” provides in relevant part: “In any action in a court of this state or in a court of the United States (1) the plaintiff or his attorney, at the time the action is commenced or afterwards, or (2) a defendant, when he sets up an affirmative cause of action in his answer and demands substantive relief at the time the answer is filed, if the action is intended to affect real property, may cause to be recorded in the office of the town clerk of each town in which the property is situated a notice of lis pendens, containing the names of the parties, the nature and object of the action, the court to which it is returnable and the term, session or return day thereof, the date of the process and the description of the properly .... Such notice shall, from the time of the recording only, be notice to any person thereafter acquiring any interest in such property of the pendency of the action; and each person whose conveyance or encumbrance is subsequently executed or subsequently recorded or whose interest is thereafter obtained, by descent or otherwise, shall be deemed to be a subsequent purchaser or encumbrancer, and shall be bound by all proceedings taken after the recording of such notice, to the same extent as if he were made a party to the action. . . .”