DocketNumber: No. CV02 38 94 19 S
Citation Numbers: 2003 Conn. Super. Ct. 2905-h, 34 Conn. L. Rptr. 212
Judges: THIM, JUDGE.
Filed Date: 2/27/2003
Status: Non-Precedential
Modified Date: 4/17/2021
The following facts are relevant. Pursuant to court order, the committee conducted the foreclosure auction on October 5, 2002. A few weeks before the auction, an appraiser valued the property at $210,000.00 with $50,000.00 of the value allocated to the lot and $160,000.00 to the building, which is a two and a half story wood framed structure that was erected as a single-family residence in 1912 and converted around 1972 into professional office space. Alliance, who was not a party to the foreclosure proceeding, submitted a successful bid of $186,100.00, gave the committee a deposit of $20,000.00, and signed a bond for deed wherein it promised to pay the committee the further sum of $166,100.00 "on the date of transfer and closing . . ."
On December 3, 2002, the court, Stevens, J., approved the sale. The clerk of the court thereafter, pursuant to court order, disbursed $6,334.72 for the committee's fee and costs and the appraiser's fee.
On December 9, 2002, Alliance received notification by telephone that the court had approved the sale. Prior to this date, Tim Burke, one of the Alliance partners, received a telephone call from a real estate broker who reported hearing the sound of running water coming from the CT Page 2905-i interior of the building. Burke immediately inspected the premises and discovered water was running freely from a broken water pipe in the third floor attic down into the rooms on the lower floors. Cold, windy weather had caused the pipe to freeze and break.
No one claims that the mortgagor is to be blamed for the water damage. Until the day of the auction, a law firm occupied the building. At the time of the auction, the mortgagor's debt was approximately $184,000.00.
On December 19, 2002, Alliance through its attorney filed an appearance in this case, obtained an order extending the time to close, and disclosed that it might seek an order reducing the price. Alliance now wants this court to reduce the price by $104,000 or to cancel the transaction and return its deposit.
After discovering the damage, Burke had the building examined by a public adjuster. Ceilings, walls, flooring, and other things were damaged throughout the building as shown by photographs. See Exhibits 2 through 29. Alliance has shown that it will cost $86,000.00 to repair the water damage. In addition, it will cost $18,000.00 to remove mold that was caused by the water damage. This evidence, as the plaintiff correctly points out, does not show that the market value has been diminished by $104,000.00. It does, however, show that the property has been extensively damaged and that the market value has been substantially reduced.
Burke tried to find out if the mortgagor or mortgagee had insurance coverage for the loss. He was told by the mortgagor that the mortgagor's insurance policy had lapsed. The mortgagee, CitiFinancial, told Burke that it did not know whether or not it had coverage. The court notes that the mortgage deed provides that the mortgagee may insure the property at the mortgagor's expense "in a sum not exceeding the amount of Mortgagor's indebtedness for a period not exceeding the term of such indebtedness." The court's orders pertaining to the auction do not provide for insuring the building against property damage.
CitiFinancial, in opposing Alliance's motion, first contends that this court lacks jurisdiction to entertain Alliance's motion. CitiFinancial relies on dicta in a footnote from Northeast Savings, F.A. v. Hopkins,
In Citicorp Mortgage, Inc. v. Burgos,
The plaintiff next contends that the risk of loss caused by damage to the property passed to the successful bidder upon the court's confirmation of the sale. No such rule has been enunciated by our appellate courts, although there is dicta in appellate and trial court opinions that a court's confirmation has such effect.2 Burgos, however, clearly stands for the proposition that the trial court may "reluctantly" set aside a sale if the closing has not yet occurred. It does not stand for the proposition that the risk of loss automatically passes to the successful bidder on confirmation of the sale.
A successful bidder does incur some risk with respect to property damage. Justice Katz, in a footnote to a dissenting opinion filed in NewEngland Savings v. Lopeza,
In support of its motion, Alliance claims that the rule enunciated inAnderson v. Yaworsky,
The following factors show that equitable relief should be granted. The water damage caused a substantial reduction in the market value of the property. The damage was not due to the fault of any of the parties to this proceeding. None of the parties changed position in reliance on the court's confirmation of the sale. Alliance is not presently in default under the bond for deed.
No one other than CitiFinancial and Alliance has shown an interest in this issue. Alliance moved for relief within a short time after the damage occurred. CitiFinancial could have insured itself against the loss.
For relief, Alliance requests either a reduction in the purchase price or rescission of the contract of sale and a return of its deposit. There is no basis for this court to set a new purchase price, although all interested parties could, with court approval, agree on a new price. Setting aside the sale is the appropriate remedy. With respect to the deposit, the court notes that Alliance did not file an appearance in court as soon as it became the successful bidder although it could have done so. If it had done so, it could have taken a position as to whether committee fees and expenses should be paid before the anticipated closing. At the time Alliance signed the bond for deed, it was put on notice that it could forfeit the deposit should it not make the payments stated in the contract. The court concludes that a partial forfeiture should result since Alliance did not attend the confirmation hearing. CT Page 2905-l
Based on the foregoing, the judgment confirming the sale is set aside and all but $6,334.72 of the deposit is ordered to be returned to Alliance. The plaintiff may move for a new sale.
THIM, J.