DocketNumber: No. CV 91 0057279S
Citation Numbers: 1995 Conn. Super. Ct. 8114
Judges: FINEBERG, JUDGE.
Filed Date: 7/26/1995
Status: Non-Precedential
Modified Date: 7/5/2016
On June 7, 1994, a judgment of strict foreclosure entered in favor of the named plaintiff, Federal Deposit Insurance Corporation (FDIC), Receiver for Summit National Bank (Bank) upon two parcels of real property located in Torrington, Connecticut, mortgaged to the Bank by the Defendant MRP-14. The judgment debt, inclusive of principal, interest, attorney's fees and costs, amounted to $214,167.43.
The mortgage secured the promissory note of MRP-14 to the order of the Bank, dated July 10, 1987, in the principal amount of $211,000. The obligations evidenced by the note and mortgage were guaranteed by each of the individual defendants under separate CT Page 8115 instruments.
The foreclosure judgment set law days for the various defendants, commencing on July 5, 1994. The defendants failed to redeem and title became absolute in the plaintiff FDIC on July. 27, 1994. (Defendant Exhibit C, Certificate of Foreclosure dated August 3, 1994 and recorded March 16, 1995).
The FDIC filed a motion for a deficiency judgment on August 25, 1994. Thereafter, on September 16, 1994 and later supplemented by an amended motion filed on April 3, 1995, Empire Mortgage Limited Partnership (Empire) moved to be substituted as a party plaintiff respecting the motion for deficiency judgment on the ground that the FDIC had assigned to Empire its interest in the deficiency judgment.
The defendant Jeanne Samele has objected to Empire's motion, and on March 20, 1995, filed a motion to dismiss this deficiency judgment proceeding on the ground that the court is without jurisdiction because the FDIC lacked standing to move for a deficiency judgment. The defendants Carmen Samele, Carmella Tromba and Scott Tromba have orally joined in the objection and motion to dismiss of the defendant Jeanne Samele.
The court is confronted with three basic issues: (1) whether to grant the defendant's motion to dismiss; (2) whether to grant Empire's motion for substitution; and, (3) the valuation of the mortgaged properties for deficiency judgment purposes.
I. The Defendant's Motion To Dismiss
The defendant argues that FDIC had no standing to file the motion for a deficiency judgment because prior to filing the motion, it assigned all of its interests in the underlying note and mortgage and the subject premises to Empire, and thereby surrendered any interest in the deficiency judgment proceeding. The defendant also contends that Empire lacks standing because it is not a party to this action and if it were made a party, Empire's substitution would not relate back to the deficiency judgment motion because the motion to substitute was filed after FDIC filed the deficiency judgment motion.
The plaintiff FDIC did not file any opposition to this motion. Empire, who has yet to be made a party to this action, filed a memorandum in opposition to the motion to dismiss arguing that CT Page 8116 FDIC, as a party to the mortgage foreclosure, had standing to file the motion for deficiency judgment under General Statutes Sec.
"A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." Upson v. State,
The deficiency judgment statute, General Statutes Sec.
The defendants contend, however, that even though FDIC was a party to the mortgage foreclosure, it lacked standing to move for a deficiency judgment because on July 6, 1994, FDIC executed an assignment of the underlying note and mortgage to Empire, which was recorded on August 22, 1994. On August 18, 1994, FDIC also executed a quit claim deed to Empire, which was recorded on November 22, 1994. The defendants argue that by virtue of these transactions, FDIC surrendered its interest in a deficiency judgment, and, therefore, lacked any standing to move for a deficiency judgment on August 25, 1994. The court disagrees.
The issue of standing focuses on whether a party is a proper CT Page 8117 party to request adjudication of the issues, rather than on the substantive rights of the parties. Nye v. Marcus,
Additionally, the plaintiff FDIC's assignment of the note and mortgage to Empire was ineffective to transfer its rights to a deficiency judgment. "Under General Statutes Sec.
Therefore, the FDIC was the proper party to request adjudication of a deficiency judgment and it had standing to move for such a judgment. The defendant's motion to dismiss, therefore, is denied.
II. Empire's Motion For Substitution
On September 16, 1994, Empire moved to be substituted as the plaintiff in this proceeding. This motion was later supplemented by an amended motion in which Empire clarified the basis of its motion.1 Empire claims that it should be substituted as the plaintiff because it is the real party in interest by virtue of the FDIC's assignment of its judgment and deficiency rights to Empire on March 9, 1995.
The defendants object to this motion on the ground that Empire has no standing to file this motion and that it has failed to show CT Page 8118 that it is the real party in interest. The defendants also argue that if the court grants Empire's motion, the substitution will only relate back to the date that Empire originally filed its motion, September 16, 1995. They claim that since the substitution will relate back only to this time, Empire will have no standing to pursue this deficiency judgment.
Connecticut's rules of practice permit the substitution of parties as the interests of justice require. General Statutes Secs.
Contrary to the defendant's assertion, Empire does not need to be a party to the action to move to be substituted as a plaintiff because Practice Book Sec. 99 provides that "[i]f a person not a party to the action has an interest or title which the judgment will affect, the court, on his motion, shall direct him to be made a party." Investors Mortgage Co. v. Rodia, supra,
In this case, there is no question that the real party in interest is Empire. The original plaintiff, FDIC, assigned to Empire its interest in the deficiency judgment on March 7, 1995. The defendant has presented no evidence that this transaction is invalid. As a result of this transaction, FDIC no longer has an interest in this deficiency judgment. Instead, Empire is the real party in interest as the owner of the obligation and is the proper CT Page 8119 party to seek the deficiency judgment. See Investors Mortgage Co.v. Rodia, supra,
Since Empire is the real party in interest, the granting of its motion for substitution will "relate back to the original pleading;" Federal Deposit Ins. Corporation v. RetirementManagement Group, Inc., supra,
Since Empire is the proper party to prosecute this motion for a deficiency judgment, its motion to be substituted as the plaintiff is granted.
III. Valuation
A party seeking a deficiency judgment following a judgment of strict foreclosure bears the burden of establishing the fair market value of the property in question as of the date that title vested in such party. Eichman v. J J Building Company,
The parties acknowledge that previous orders of this Court provided that (1) no further interest shall accrue on the mortgage debt for purposes of determining the deficiency, and (2) the foreclosed properties shall be valued for deficiency purposes as of August 2, 1993.2 The parties further acknowledge that the value of the foreclosed properties has steadily decreased since August 2, 1993.
The foreclosed properties consist of two multi-family structures of wood frame construction, each approximately 70 years of age, respectively located and known as Numbers 690-692 Main Street and 694-696 Main Street, in Torrington, Connecticut. At this hearing, Empire and the participating defendants each presented the testimony and appraisal report of an expert on the issue of value as of the August 2, 1993 valuation date.
The Court has carefully considered the testimony and reports of these experts. The court accepts the valuations presented by Defendants' expert. He has had extensive experience in the subject Torrington area, as well as familiarity with the subject properties, contrary to that of Empire's expert.
Accordingly, the Court values 690-692 Main Street at $100,000 and 694-696 Main Street at $85,500, totalling in all $185,500. Deducting that sum from the judgment debt of $214,167.43 leaves a deficiency of $28,667.43.
In addition, attorney's fees of $500.00 are awarded to counsel for Empire. Under the circumstances, no costs shall be assessed against any party.
Judgment shall enter in favor of the substituted plaintiff Empire Mortgage Limited Partnership against the defendants in the amount of $28,667.43 plus attorney's fees of $500.00, in all totalling $29,167.43.
DAVID L. FINEBERG, J. Superior Court Judge CT Page 8121