U.S. Bank Trust, N.A. v. Giblen

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U.S. BANK TRUST, N.A., TRUSTEE v. GARY M.
GIBLEN ET AL.
(AC 40664)
Sheldon, Moll and Seeley, Js.*
Syllabus
The plaintiff, as trustee, sought to foreclose a mortgage on certain real
property owned by the defendants G and A. Following the defendants’
default for failure to appear, the trial court rendered a judgment of
foreclosure by sale and appointed a committee of sale. The foreclosure
sale subsequently was held, with a winning bid of $1,230,000. Thereafter,
the committee filed a motion for approval of the sale, but prior to the
hearing on the motion, the defendants filed for chapter 7 bankruptcy
protection, triggering an automatic stay of the foreclosure proceedings.
Following a show cause hearing, the Bankruptcy Court annulled the
stay retroactive to the date that the defendants filed for bankruptcy
protection to allow the committee to exercise all rights and remedies
that it had under the applicable law. Thereafter, the committee filed a
supplemental report and reclaimed the motion for approval of the sale.
The defendants filed an objection to the motion for approval, challenging
the approval of the sale on a number of grounds, as well as the amount
of fees and expenses claimed by the committee. Following a hearing
during which the defendants’ specific objections were addressed, the
trial court granted the committee’s motion for approval of the sale, and
the defendants appealed to this court, held:
1. The defendants could not prevail on their claim that the trial court’s
approval of the foreclosure sale was void ab initio because it exceeded
the scope of the Bankruptcy Court’s order annulling the bankruptcy
stay; contrary to the defendants’ claim that the Bankruptcy Court’s order
annulling the stay was intended only to permit the committee to recover
fees and expenses, and not to pursue approval of the foreclosure sale,
the clear purpose of the Bankruptcy Court’s order of annulment was
to allow the committee to pursue approval of the foreclosure sale.
2. The trial court did not abuse its discretion in granting the committee’s
motion for approval of the sale: the defendants’ claim that certain irregu-
larities with the motion for approval of the sale prevented them from
realizing a substantial amount of equity in the subject property was not
reviewable, as they did not raise the five claimed irregularities before
the trial court, and, therefore, those claims were not properly before
this court; moreover, although the approval of the sale extinguished the
defendants’ right to redeem their property and the loss of the right to
the equity in that property was injurious to them, the defendants failed
to show any injury resulting specifically from any of the five claimed
irregularities with the motion for approval of the sale.
Argued February 5—officially released May 21, 2019
Procedural History
Action to foreclose a mortgage on certain real prop-
erty of the named defendant et al., and for other relief,
brought to the Superior Court in the judicial district of
Stamford-Norwalk, where the named defendant et al.
were defaulted for failure to appear and the defendant
JPMorgan Chase Bank et al. were defaulted for failure
to plead; thereafter, the court, Mintz, J., rendered a
judgment of foreclosure by sale; subsequently, the
court, Hon. Kevin Tierney, judge trial referee, granted
in part, the committee’s motion for approval of sale,
deed, fees and expenses, and the named defendant et
al. appealed to this court. Affirmed.
Christopher G. Brown, for the appellants (named
defendant et al.).
Christopher J. Picard, for the appellee (plaintiff).
Opinion
SHELDON, J. In this foreclosure action, the defen-
dant mortgagors, Gary M. Giblen, also known as Gary
Giblen, and Anna-Marie L. Giblen, also known as Anna-
Marie Giblen,1 appeal from the judgment of the trial
court approving the sale of their mortgaged property,
on the motion of the committee of sale (committee),
following the court’s rendering of a judgment of foreclo-
sure by sale in favor of the plaintiff mortgagee, U.S.
Bank Trust, N.A., as Trustee for LSF9 Master Participa-
tion Trust. On appeal, the defendants claim that (1) the
trial court’s approval of the sale of the subject property
was void ab initio because it exceeded the scope of the
Bankruptcy Court’s order annulling the automatic stay
that was triggered by the defendants’ filing for chapter
7 bankruptcy protection, and (2) the trial court abused
its discretion in approving the sale of the subject prop-
erty because there were ‘‘irregularities with the motion
to approve the foreclosure sale’’ that were ‘‘injurious’’
to them. We affirm the judgment of the trial court.
The following procedural history is relevant to the
defendants’ claims on appeal. In March, 2016, the plain-
tiff commenced this action against the defendants to
foreclose a mortgage on property owned by the defen-
dants at 11 Top O’HiIl Road in Darien. On May 20, 2016,
the defendants were defaulted for failure to appear
in the action. On May 23, 2016, the court rendered a
judgment of foreclosure by sale. The court found that,
as of that date, the defendants owed the plaintiff
$584,801.05, and the fair market value of the subject
property was $1,750,000. The court appointed a commit-
tee to sell the property at a public auction on June 30,
2016. On June 14, 2016, the defendants filed a motion
to the open judgment and extend the sale date. The
court granted the motion to open the judgment and set
the new sale date as December 3, 2016. On November
22, 2016, the defendants filed a second motion to open
the judgment and extend the sale date, which was
denied. The foreclosure sale was held on December 3,
2016, with a winning bid of $1,230,000. On December
7, 2016, the committee filed a motion for approval of
the sale.
On December 18, 2016, prior to the hearing on the
committee’s motion for approval of the sale, the defen-
dants filed for chapter 7 bankruptcy protection, trig-
gering an automatic stay of the foreclosure proceedings
pursuant to 11 U.S.C. § 362 (a) (2012). On March 7,
2017, the committee appeared before the Bankruptcy
Court and informed it that a foreclosure sale of the
subject property had been conducted on December 3,
2016. Because neither the foreclosure action nor the
sale had been disclosed by the defendants, the Bank-
ruptcy Court issued an order to appear and show cause
to the defendants, their bankruptcy attorney, and the
bankruptcy trustee. On March 23, 2017, an evidentiary
hearing was held on the order to show cause to deter-
mine, inter alia, ‘‘why . . . [a]n order should not enter
terminating, annulling, modifying, and/or conditioning
relief from the automatic stay pursuant to 11 U.S.C.
§ 362 (d) (1), 11 U.S.C. § 362 (d) (2) and/or 11 U.S.C.
362 (d) (4), to allow the Committee to continue to prose-
cute and complete the Foreclosure Action, including to
complete the pre-petition foreclosure sale conducted
on December 3, 2016.’’ Following the show cause hear-
ing, the Bankruptcy Court annulled the stay, retroactive
to December 18, 2016, the date on which the defendants
filed for bankruptcy protection.
On March 30, 2017, the committee filed a supplemen-
tal report with the trial court and reclaimed her motion
for approval of the committee sale. On April 17, 2017,
the defendants filed an objection to the motion for
approval, arguing that (1) the appraised value of the
subject property was substantially higher than the suc-
cessful bid at the foreclosure auction because an inte-
rior appraisal of the property, which the court had
ordered, had not been performed, (2) the committee
had failed to advertise the sale in the newspaper two
times, as the court had ordered, and (3) the committee
had failed to ensure that the sign that she had posted
on the property, pursuant to the court’s order, remained
there until the date of the sale. The defendants also
challenged the amount of fees and expenses claimed
by the committee.2
On May 9, 2017, the trial court ordered that a hearing
on the motion for approval of the committee sale be
held on July 6, 2017, to address the following limited
issues: ‘‘(1) lack of interior inspection; (2) lack of a
second sale advertisement; and (3) the intentional
removal of the sale sign by the defendant[s].’’ On July
7, 2017, the trial court granted the committee’s motion
for approval of the sale.3 This appeal followed. Addi-
tional facts will be set forth as necessary.
I
The defendants first claim that the trial court’s
approval of the committee sale of the subject property
was void ab initio because it exceeded the scope of
the Bankruptcy Court’s order annulling the bankruptcy
stay. Specifically, the defendants claim that the Bank-
ruptcy Court’s order annulling the stay was intended
only to permit the committee to recover fees and
expenses, not to pursue approval of the December 3,
2016 foreclosure sale. We disagree.
‘‘It is true that acts taken in violation of the automatic
stay are generally deemed void and without effect. . . .
Nonetheless, [11 U.S.C.] § 362 (d) expressly grants
bankruptcy courts the option, in fashioning appropriate
relief, of ‘annulling’ the automatic stay, in addition to
merely ‘terminating’ it. The word ‘annulling’ in this pro-
vision evidently contemplates the power of bankruptcy
courts to grant relief from the stay which has retroactive
effect; otherwise its inclusion, next to ‘terminating’,
would be superfluous. As is stated in 2 Collier’s Bank-
ruptcy Manual ¶ 362.06 (3d Ed.1983): ‘In addition to
the obvious power to terminate the stay, [§ 362 (d)]
also gives the bankruptcy court the power to annul the
stay. The difference between the two is that an order
annulling the stay could operate retroactively to the
date of the filing of the petition which gave rise to the
stay, and thus validate actions taken by the party at a
time when he may have been unaware of the existence
of the stay. On the other hand, an order terminating the
stay would be operative only from the date of its entry.’
‘‘To similar effect is the advisory committee’s note
accompanying former Bankruptcy Rule 601 (c), a prede-
cessor to § 362 (d), which explains the role of
annullment as follows: ‘This rule consists with the view
that . . . an act or proceeding [against property in the
bankruptcy court’s custody taken in violation of the
automatic stay] is void, but subdivision (c) recognizes
that in appropriate cases the court may annul the stay
so as to validate action taken during the pendency of
the stay.’ Accordingly . . . § 362 (d) permits bank-
ruptcy courts, in appropriately limited circumstances,
to grant retroactive relief from the automatic stay.’’
In re Albany Partners, Ltd., 749 F.2d 670, 675 (11th
Cir. 1984).
Here, following the evidentiary hearing, the Bank-
ruptcy Court found that ‘‘[n]o party has shown cause as
to why an Order should not enter terminating, annulling,
modifying, and/or conditioning relief from the auto-
matic stay pursuant to 11 U.S.C. § 362 (d) (1), 11 U.S.C.
§ 362 (d) (2) and/or 11 U.S.C. § 362 (d) (4), to allow the
Committee to continue to prosecute and complete the
Foreclosure Action, including to complete the pre-peti-
tion foreclosure sale conducted on December 3,
2016. . . .
‘‘The testimony, evidence, and information presented
at the show cause hearing supports a finding under
11 U.S.C. § 362 (d) (1) that cause exists to annul the
automatic stay provisions of 11 U.S.C. § 362 (a) to
December 18, 2016, the date of the filing of the [defen-
dants’] case, to allow the Committee to take whatever
actions are necessary and appropriate under applicable
law in connection with the pending Foreclosure
Action . . . .’’
On the basis of those findings, the Bankruptcy Court
ordered, inter alia: ‘‘Pursuant to 11 U.S.C. § 362 (d) (1),
the automatic stay provided by 11 U.S.C. § 362 (a) is
annulled for cause to December 18, 2016, the date of
the filing of the [defendants’] case, to allow the Commit-
tee to exercise all rights or remedies it may have under
applicable law . . . .’’
The defendants contend that the Bankruptcy Court’s
order was not intended to allow the committee to pur-
sue approval of the foreclosure sale. ‘‘The construction
of a judgment is a question of law for the court. . . .
We review such questions of law de novo. . . . As a
general rule, judgments are construed in the same fash-
ion as other written instruments. . . . The determina-
tive factor is the intention of the court as gathered from
all parts of the judgment. . . . The judgment should
admit of a consistent construction as a whole. . . . To
determine the meaning of a judgment, we must ascer-
tain the intent of the court from the language used and,
if necessary, the surrounding circumstances.’’ (Internal
quotation marks omitted.) Kent v. DiPaola, 178 Conn.
App. 424, 436–37, 175 A.3d 601 (2017).
We reject the defendants’ contention that the sole
purpose of the Bankruptcy Court’s annulment of the
automatic stay was to permit the committee to recover
fees and expenses. The court’s intent is clearly
expressed in its order, in which it specifically stated
that the defendants failed to show cause as to why
relief from the automatic stay should not be granted
‘‘to allow the [c]ommittee to continue to prosecute and
complete the [f]oreclosure [a]ction, including to com-
plete the pre-petition foreclosure sale conducted on
December 3, 2016.’’ (Emphasis added.) The court unam-
biguously found cause to annul the stay ‘‘to allow the
[c]ommittee to take whatever actions are necessary
and appropriate under applicable law with the pending
[f]oreclosure [a]ction’’ and, accordingly, annulled the
stay ‘‘to allow the [c]ommittee to exercise all rights and
remedies it may have under applicable law . . . .’’ The
clear purpose of the Bankruptcy Court’s order of annul-
ment was to allow the committee to pursue approval
of the foreclosure sale. Accordingly, the defendants’
argument to the contrary must be rejected.
II
The defendants also claim that the trial court abused
its discretion in approving the sale of the subject prop-
erty because there were ‘‘irregularities’’ with the motion
for approval of the foreclosure sale that were ‘‘injuri-
ous’’ to them. We are not persuaded.
Following the evidentiary hearing on the committee’s
motion for approval of the sale and the defendants’
objection thereto, the court issued its ruling from the
bench. The court addressed in detail the defendants’
arguments in opposition to the approval of the sale,
namely, the lack of an interior appraisal of their prop-
erty and the committee’s failure to comply with the
court’s orders to advertise the foreclosure auction twice
in the newspaper and to ensure that a sign be posted
on the property from no later than November 13, 2016,
until the date of the sale. The court found that, although
its orders that an interior appraisal of the subject prop-
erty be performed, that the sale be advertised twice in
the newspaper, and that a sign be posted on the property
until the sale date, had not been complied with, the
defendants had not suffered any damage as a result of
such failures to comply. It thus approved the sale of
the property for the winning bid of $1,230,000.
‘‘[T]he applicable standard of review applied to a
court’s approval of a committee sale is the abuse of
discretion standard. . . . [A]n action of foreclosure is
peculiarly equitable and . . . the court exercises dis-
cretion in ensuring that justice be done. . . . In approv-
ing the committee sale, [t]he court must exercise its
discretion and equitable powers with fairness not only
to the foreclosing mortgagee, but also to . . . the own-
ers [of the foreclosed property]. . . . Most import-
antly, the court possesses the authority to refuse to
confirm sales upon equitable grounds where [the sales
are] found to be unfair or the price bid was inadequate.’’
(Citation omitted; internal quotation marks omitted.)
Rockville Bank v. Victory Outreach Ministries, Inc.,
125 Conn. App. 1, 9–10, 6 A.3d 177 (2010).
‘‘[W]hen a court order respecting the conduct of a
judicial sale is not complied with the court should scru-
tinize the transaction very carefully to assure itself that
the sale has been conducted fairly and impartially and,
if any irregularity has occurred, that no interested party
has been injured by it. If any likelihood of injury is
shown it would be an abuse of discretion for the trial
court to approve the sale.’’ (Emphasis omitted; internal
quotation marks omitted.) First National Bank of Chi-
cago v. Maynard, 75 Conn. App. 355, 358–59, 815 A.2d
1244, cert. denied, 263 Conn. 914, 821 A.2d 768 (2003).
On appeal, the defendants do not challenge the fac-
tual or legal bases on which the trial court relied in
rejecting their arguments in opposition to the commit-
tee’s motion for approval of the sale. Rather, they now
claim that other irregularities with the motion pre-
vented them ‘‘from realizing any of the substantial
equity’’ they had in their property. Specifically, the
defendants claim that the following irregularities pre-
vented them from realizing a substantial amount of
equity in their property: both they and the plaintiff
objected to the approval of the sale; the successful
bidders admitted that they were prejudiced by the delay
in approving the sale; the successful bidders filed their
motion for return of the deposit because of the bank-
ruptcy, but withdrew it before the Bankruptcy Court
granted relief from the stay; the successful bidders had
no standing to support the sale because they were not
parties to the action; and the committee exceeded its
role in advocating for approval of the sale. Because the
defendants did not assert these claims before the trial
court, such claims are not properly before us now.
See Saye v. Howe, 92 Conn. App. 638, 642, 886 A.2d
1239 (2005).
Moreover, we are not persuaded by the defendants’
claim that the alleged irregularities ‘‘led to the approval
of the sale, which blocked [them] from realizing any of
the substantial equity they had in their home.’’ To be
sure, the approval of the sale extinguished the defen-
dants’ right to redeem their property, and the loss of
the right to the equity in that property was injurious to
the defendants.4 As previously noted, however, in order
to recover, the defendants must show ‘‘injury to [them-
selves] resulting from the irregularity complained of.’’
(Emphasis added; internal quotation marks omitted.)
Citicorp Mortgage, Inc. v. Burgos, 227 Conn. 116, 121,
629 A.2d 410 (1993). The defendants have failed to do
so. The defendants have not shown any injury resulting
specifically from any of the five claimed irregularities
with the motion for approval of the sale. We thus cannot
conclude that the court abused its discretion in granting
the committee’s motion for approval of the sale.
The judgment is affirmed.
In this opinion the other judges concurred.
* The listing of judges reflects their seniority status on this court as of
the date of oral argument.
1
The complaint also named as defendants JPMorgan Chase Bank, the
United States Internal Revenue Service, U.S. Equities Corp., Top O’Hill Road
Association, and Connecticut Light and Power Company, doing business as
Eversource Energy. With the exception of Gary Giblen and Anna-Marie
Giblen, all of the defendants were defaulted for failure to plead. Any refer-
ences to the defendants in this opinion are to Gary Giblen and Anna-
Marie Giblen.
2
On April 19, 2017, the plaintiff also filed an objection to the motion for
approval of the sale, requesting an additional six months to work with the
defendants to market and sell the property on their own. The court denied
that motion, and the plaintiff has not challenged that ruling on appeal.
3
At the hearing on the motion for approval of the sale, the court specifically
asked the parties whether there was any ‘‘stay . . . in effect by any matter
pending in any jurisdiction’’ and, more specifically, asked for the parties’
confirmation that there was ‘‘[n]o stay for the bankruptcy proceeding that
would prevent this matter from going forward.’’ The defendants, through
counsel, confirmed that there was no such stay in effect.
4
It is noteworthy that at the time of the judgment of foreclosure by sale,
the subject property was encumbered by liens held by multiple entities,
most notably a lien by the Internal Revenue Service (IRS) in an amount
exceeding $100,000,000. Assuming, as they contended before the Bankruptcy
Court, that the IRS liens are invalid, the defendants, whose debt to the
plaintiff was $569,000, stood to realize a substantial amount of equity on
the court’s approval of the sale for $1,230,000.