TD Bank, N.A. v. Doran

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TD BANK, N.A. v. JOHN J.
DORAN, JR., ET AL.
(AC 37001)
DiPentima, C. J., and Lavine and Alvord, Js.
Argued October 26, 2015—officially released January 19, 2016
(Appeal from Superior Court, judicial district of
Middlesex, Marcus, J. [foreclosure judgment];
Domnarski, J. [deficiency judgment].)
Matthew S. Carlone, for the appellant (named defen-
dant et al.).
Pierre-Yves Kolakowski, for the appellee (plaintiff).
Opinion
DiPENTIMA, C. J. The defendants John J. Doran, Jr.,
and Jodie Chase1 appeal from the deficiency judgment
rendered by the trial court in favor of the plaintiff, TD
Bank, N.A.,2 in the amount of $167,022.23. On appeal,
the defendants claim that the court (1) improperly con-
cluded that their special defense of laches was not
relevant to the deficiency judgment proceeding and (2)
erroneously found that the plaintiff did not inexcusably
delay the strict foreclosure proceedings. We affirm the
judgment of the trial court.
The following facts and procedural history are rele-
vant to this appeal. The defendants, a married couple,
executed a $525,000 home equity line of credit note in
2002, mortgaging their home located at 103 Meadow
Woods Road, Deep River (property) to secure the debt.
Due to the foreclosure of another mortgage on the prop-
erty not pertinent to this appeal, the defendants vacated
the property in March, 2008.
The plaintiff commenced the underlying foreclosure
action to this appeal by summons and complaint dated
May 4, 2012, with a return date of June 12, 2012. In
its prayer for relief, the plaintiff sought, inter alia, a
deficiency judgment against the defendants. The defen-
dants entered appearances on June 12, 2012, as self-
represented parties. On June 29, 2012, the plaintiff
moved for default for failure to plead pursuant to Prac-
tice Book § 17-32 (a). On July 20, 2012, the defendants
filed a pleading entitled ‘‘Defense’’ acknowledging, in
relevant part, that because the mortgage had been in
arrears for sixteen months at that point and interest,
taxes, and penalties were accruing, ‘‘the potential for
a deficiency against . . . the defendants existed.’’ The
motion for default was granted on August 2, 2012.
The plaintiff filed a motion for judgment of strict
foreclosure on November 8, 2012. The court held a
hearing on this motion on September 3, 2013, which
the defendants did not attend.3 On the same day, the
court granted the motion for judgment of strict foreclo-
sure establishing that (1) the defendants’ debt was
$551,537.51 and (2) the fair market value of the property
was $450,000. The law day was set for October 7, 2013.
See Practice Book § 23-17. The defendants did not seek
to reargue; see Practice Book § 11-12; or to open the
judgment; see General Statutes § 49-15. No appeal was
taken from the judgment of strict foreclosure. On Octo-
ber 8, 2013, title to the property vested in the plaintiff.
On October 22, 2013, the plaintiff filed a timely motion
for deficiency judgment pursuant to General Statutes
§ 49-14 (a) and Practice Book § 23-19. Through counsel,
the defendants filed an objection to the motion for
deficiency judgment on January 8, 2014, claiming for the
first time that the plaintiff’s action was barred by laches.
At the June 10, 2014 hearing on the motion for defi-
ciency judgment, the defendants were represented by
counsel. At the outset, the plaintiff informed the court
that the parties had reached a stipulation regarding the
value of the property. Specifically, the parties agreed
that as of October 28, 2012, the value was $550,000; as
of July 3, 2013, the value was $450,000; and as of October
8, 2013, the value was $400,000. The court then allowed
the defendants the opportunity to prove their laches
defense.
Chase testified in support of the laches defense. She
explained that, after receiving notice of the foreclosure
action and the property’s appraised value of $550,000,
the defendants decided in November, 2012, not to chal-
lenge the foreclosure because it would not lead to a
deficiency. Chase acknowledged that the defendants
received notice in July, 2013, that the property was
worth less than the debt. Chase, nonetheless, asserted,
‘‘If we felt that we were going to be in a position where
we would have a deficiency, we would have taken
action.’’ On cross-examination, Chase testified in rele-
vant part that she could not recall if they had filed
any documents objecting to the strict foreclosure, or if
Doran had received an appraisal of the property in
August, 2013, or if they had attended the September,
2013 strict foreclosure hearing. Moreover, when ques-
tioned by the court, Chase insisted that the defendants
‘‘repeatedly asked [the plaintiff] to foreclose’’ on the
property. She conceded, however, that once the foreclo-
sure action was filed, the defendants took no action to
move the foreclosure action along.
Ultimately, the court overruled the defendants’ objec-
tion and rendered a deficiency judgment in favor of the
plaintiff. As to the laches defense, the court concluded
that the defendants failed to carry their burden for two
reasons. First, evidence that the defendants asked the
plaintiff to foreclose on the property years earlier was
‘‘not relevant to the issue before the court [because] it
is an issue that could have been raised in the foreclosure
proceeding at the time of [that] judgment.’’ Second, as
to the deficiency judgment proceeding, the defendants
did not prove laches because the court could not find
that the plaintiff inexcusably delayed the foreclosure
action, noting the 180 day moratorium that had been
in place. See footnote 3 of this opinion. The court deter-
mined that the deficiency amounted to $167,022.23. In
its calculations, the court relied on the amended calcu-
lation of deficiency judgment provided by the plaintiff
that fixed the value of the property at $400,000. This
appeal followed.
On appeal, the defendants make two claims. First,
they argue that the court improperly concluded that
the special defense of laches was irrelevant to the defi-
ciency judgment. Specifically, the defendants contend
that they could not have raised laches at the strict
foreclosure hearing because they could not have shown
that they were prejudiced by the plaintiff’s delay in
foreclosing on the property. Second, the defendants
claim that the court’s finding that the plaintiff had not
inexcusably delayed the foreclosure proceeding was
erroneous. The thrust of the latter claim centers on
the court’s taking judicial notice, which the defendants
contend was erroneous, of the United States Depart-
ment of Housing and Urban Development letters estab-
lishing a 180 day moratorium on foreclosures in the
wake of Hurricane Sandy.
Because we agree with the court as to the defendants’
first claim, we need not address their second claim.
Therefore, the dispositive issue on appeal is whether
the defendants, after the judgment of strict foreclosure
was rendered and not appealed, the law day passed,
and title vested, could raise the special defense of laches
at the deficiency judgment hearing. The court answered
in the negative, and, for the reasons stated herein,
we agree.
We begin our analysis by setting forth the applicable
standard of review and principles of law. ‘‘The defense
of laches, if proven, bars a plaintiff from [obtaining]
equitable relief in a case in which there has been an
inexcusable delay that has prejudiced the defendant.
. . . First, there must have been a delay that was inex-
cusable, and, second, that delay must have prejudiced
the defendant. . . . A conclusion that a plaintiff has
been guilty of laches is one of fact for the trier and
not one that can be made by this court, unless the
subordinate facts found make such a conclusion inevita-
ble as a matter of law. . . . We must defer to the court’s
findings of fact unless they are clearly erroneous. . . .
Whether the defense of laches was applicable to this
action, however, is a question of law. When there is a
question of law, our review of the court’s decision is
plenary.’’ (Citation omitted; internal quotation marks
omitted.) Florian v. Lenge, 91 Conn. App. 268, 281, 880
A.2d 985 (2005).
‘‘In Connecticut, a mortgagee has legal title to the
mortgaged property and the mortgagor has equitable
title, also called the equity of redemption. . . . The
equity of redemption gives the mortgagor the right to
redeem the legal title previously conveyed by per-
forming whatever conditions are specified in the mort-
gage, the most important of which is usually the
payment of money. . . . Under our law, an action for
strict foreclosure is brought by a mortgagee who, hold-
ing legal title, seeks not to enforce a forfeiture but
rather to foreclose an equity of redemption unless the
mortgagor satisfies the debt on or before his law day.’’
(Citations omitted.) Barclays Bank of New York v. Ivler,
20 Conn. App. 163, 166, 565 A.2d 252, cert. denied, 213
Conn. 809, 568 A.2d 792 (1989).
‘‘Under General Statutes § 49-1, a judgment of strict
foreclosure extinguishes all rights of the foreclosing
mortgagee on the underlying note, except those
enforceable through the use of the deficiency judgment
procedure delineated in General Statutes § 49-14.’’ First
Bank v. Simpson, 199 Conn. 368, 370, 507 A.2d 997
(1986). In relevant part, § 49-14 (a) provides: ‘‘At any
time within thirty days after the time limited for redemp-
tion has expired, any party to a mortgage foreclosure
may file a motion seeking a deficiency judgment. Such
motion shall be placed on the short calendar for an
evidentiary hearing. . . . At such hearing the court
shall hear the evidence, establish a valuation for the
mortgaged property and shall render judgment for the
plaintiff for the difference, if any, between such valua-
tion and the plaintiff’s claim. . . .’’ (Emphasis added.)
Our rules of practice provide an analogous rule that
states in relevant part: ‘‘Whenever a deficiency judg-
ment is claimed in a foreclosure action, the party claim-
ing such judgment shall file with the clerk of the court
within the time limited by statute a written motion
setting forth the facts relied on as the basis for the
judgment, which motion shall be placed on the short
calendar for an evidentiary hearing. . . . At such hear-
ing the judicial authority shall hear the evidence, estab-
lish a valuation for the mortgaged property and shall
render judgment for the plaintiff for the difference, if
any, between such valuation and the plaintiff’s claim.’’
(Emphasis added.) Practice Book § 23-19 (a).
The purpose of a strict foreclosure hearing is distinct
from that of a deficiency judgment hearing. ‘‘[I]n a strict
foreclosure, the vesting of title operates to reduce the
debt by the value of the property.’’ National City Mort-
gage Co. v. Stoecker, 92 Conn. App. 787, 794, 888 A.2d
95, cert. denied, 277 Conn. 925, 895 A.2d 799 (2006).
Thus, the strict foreclosure hearing establishes the
amount of the debt owed by the defendant. See Federal
Deposit Ins. Corp. v. Voll, 38 Conn. App. 198, 209–210,
660 A.2d 358, cert. denied, 235 Conn. 903, 665 A.2d
901 (1995). As contemplated by § 49-14, the deficiency
judgment hearing has a ‘‘very limited purpose.’’ Id., 208.
The intent of the deficiency proceeding ‘‘is to determine
through a hearing the value of the property that has been
foreclosed as of the date title vests in the mortgagee and
to award the difference between that value and the
amount of the debt as established by the foreclosure
judgment.’’ Citicorp Mortgage, Inc. v. D’Avanzo, 31
Conn. App. 621, 626, 626 A.2d 800, cert. denied, 227
Conn. 909, 632 A.2d 688 (1993), cert. denied, 510 U.S.
1195, 114 S. Ct. 1303, 127 L. Ed. 2d 655 (1994). Therefore,
because ‘‘[i]n a deficiency proceeding . . . the judg-
ment of foreclosure has already determined that a debt
is owed and the amount of that debt . . . [t]hose issues
are not relitigated in the deficiency hearing.’’ Federal
Deposit Ins. Corp. v. Voll, supra, 209–210. For this rea-
son, defenses, such as laches, that ‘‘could have been
raised during the foreclosure proceedings may not be
raised in the deficiency hearing.’’ Id., 211.4 Applying
these principles, we conclude that the special defense
of laches claimed by the defendants was not relevant
to the deficiency judgment hearing. Accordingly, the
defendants’ claim that at the deficiency judgment hear-
ing the court should have applied the equitable doctrine
of laches after the judgment of strict foreclosure was
rendered, the law day passed, and title vested, must fail.
The judgment is affirmed.
In this opinion the other judges concurred.
1
The complaint also names as defendants several parties who have an
interest in the subject property as the result of a previous foreclosure action.
Those parties are not relevant to this appeal and consequently we refer to
John J. Doran, Jr., and Jodie Chase collectively as the defendants.
2
The plaintiff was formerly known as BankNorth, N.A., successor by
merger to American Savings Bank.
3
According to the plaintiff in its reply memorandum to the defendants’
objection to the deficiency judgment, this delay in pursuing the foreclosure
action was caused by a moratorium on foreclosures in the aftermath of
Hurricane Sandy. The United States Department of Housing and Urban
Development published ‘‘Mortgagee Letter 2012-23’’ that established a ninety
day ‘‘moratorium on foreclosures on properties’’ in areas affected by the
hurricane. On January 31, 2013, ‘‘Mortgagee Letter 2013-06’’ extended this
moratorium by ninety additional days. Therefore, the 180 day moratorium
prevented the plaintiff from proceeding with the motion for judgment of
strict foreclosure. As a consequence, the plaintiff had to reclaim its Novem-
ber, 2012 motion in August, 2013. The defendants did not object to the
reclaimed motion for judgment of strict foreclosure. The plaintiff acknowl-
edged that the property was one of many that were ‘‘placed on the Federal
Emergency Management Agency’s disaster list after Hurricane Sandy.’’
4
The record does not support the contention advanced by the defendants
that they could not have raised the laches defense at the strict foreclosure
hearing. As demonstrated by the pleading they filed in July, 2012, the defen-
dants acknowledged the possibility of a deficiency about fifteen weeks prior
to the plaintiff’s filing a motion for judgment of strict foreclosure. Chase’s
testimony established that the defendants were on notice that the value of
the property was $550,000 in November, 2012, which was approximately
the same as the debt owed to the plaintiff. Chase also testified that the
defendants first received notice that the property was worth less than the
debt that was owed around July, 2013, which was approximately one month
before the strict foreclosure hearing. We infer that the defendants knew
that the devaluation as of the summer of 2013 meant that a deficiency
likely existed.