Opinion
No. CV 09-6001534 S
November 22, 2010
MEMORANDUM OF DECISION
This matter is before the court on joint motions for summary judgment. The plaintiff, TD Bank, N.A., filed a motion for summary judgment (#129) and the defendants, Martin Carlin, Shawn Carlin and Robert Sandell, filed a cross-motion for summary judgment (#132).
In essence, both parties argue that they are entitled to summary judgment as a matter of law because there is no genuine issue regarding the defendants' liability as guarantors on a mortgage note owned and held by the plaintiff. Specifically, the plaintiff argues that it is entitled to summary judgment as a matter of law because there is no genuine issue that the defendants defaulted on the guaranty agreements. Conversely, the defendants argue that they are entitled to summary judgment as a matter of law because there is no genuine issue that the plaintiff (1) is not entitled to enforce the guaranty agreements; and (2) is unable to establish that the debt has not been paid.
I
On June 30, 2009, the plaintiff brought a four-count complaint against Northern Expansion, LLC (borrower) and the defendants. In count one, the plaintiff sought to foreclose its mortgage on the property owned by the borrower. In counts two, three and four the plaintiff sued the defendants alleging breach of guaranty in that each defendant failed to make payment to the plaintiff in accordance with his guaranty agreement to guarantee the borrower's mortgage note (note) debt owed to the plaintiff. The prayer for relief requested, among other remedies, a strict foreclosure of the property and a deficiency judgment against the borrower and the defendants.
Northern Expansion, LLC is not a party to the present cross-motions for summary judgment. As such, all references to the defendants refer only to Martin Carlin, Shawn Carlin and Robert Sandell. Northern Expansion, LLC will be referred to only as the borrower. The other named defendant, Chozick Realty, Inc., is not a party to the present cross-motions for summary judgment and is not included in any reference to the defendants.
On or about June 20, 2003, the borrower became indebted to the plaintiff in the amount of $1,424,000. To secure the borrower's note, on or about June 30, 2003, the defendants individually executed separate written guaranty agreements whereby each defendant unconditionally guaranteed payment of the borrower's obligations to the plaintiff. By an open-end mortgage recorded on July 1, 2003, the borrower granted the plaintiff a lien on its property to secure its obligations under the note. On or about March 20, 2009, the borrower defaulted and the plaintiff declared the entire amount including principal, interest and late charges immediately due and payable. On September 18, 2009, the plaintiff filed a motion for summary judgment against the borrower only on count one of the complaint. On March 1, 2010, the plaintiff's motion for summary judgment on count one was granted and on April 12, 2010, the court, Cronan, J., entered a judgment of strict foreclosure on that count. On May 7, 2010, title to the property became absolute in the plaintiff. On May 26, 2010, the plaintiff filed a motion for deficiency judgment against the borrower and the defendants. The motion for deficiency judgment is currently pending. No judgment has entered on counts two, three or four of the complaint.
A law date of May 4, 2010, was set with subsequent days for subsequent encumbrancers in the inverse order of their priorities.
On June 29, 2010, the plaintiff filed a motion for summary judgment against the defendants on counts two, three and four of the complaint along with a supporting memorandum of law and evidentiary proof. The plaintiff moves for entry of a judgment as to liability on the guaranty agreements against the defendants so that it may proceed with its motion for deficiency judgment. The plaintiff argues that it is entitled to summary judgment as a matter of law because there is no genuine issue regarding the defendants' liability as guarantors on the note owned and held by the plaintiff. On July 20, 2010, the defendants filed a cross-motion for summary judgment along with a memorandum of law in support of its motion and in opposition to the plaintiff's motion for summary judgment. The defendants argue that they are entitled to summary judgment as a matter of law because there is no genuine issue regarding their liability as guarantors on the note because the plaintiff (1) is not entitled to enforce the individual guaranty agreements; and (2) cannot establish that the debt has not been paid. On August 4, 2010, the plaintiff filed a memorandum of law in opposition to the defendants' cross-motion for summary judgment and in further support of its motion for summary judgment. The court heard oral argument on October 12, 2010.
II
"Practice Book § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Sherman v. Ronco, 294 Conn. 548, 553-54, 985 A.2d 1042 (2010). "[T]he `genuine issue' aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred . . . A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case." (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).
"In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact . . . As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent . . . When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue . . . Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue . . . It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17-45]." (Internal quotation marks omitted.) Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10-11, 938 A.2d 576 (2008).
"An important exception exists . . . to the general rule that a party opposing summary judgment must provide evidentiary support for its opposition, and that exception has been articulated in our jurisprudence with less frequency than has the general rule. On a motion by the defendant for summary judgment the burden is on [the] defendant to negate each claim as framed by the complaint . . . It necessarily follows that it is only [o]nce [the] defendant's burden in establishing his entitlement to summary judgment is met [that] the burden shifts to [the] plaintiff to show that a genuine issue of fact exists justifying a trial." (Internal quotation marks omitted.) Baldwin v. Curtis, 105 Conn.App. 844, 850-51, 939 A.2d 1249 (2008).
III.
The plaintiff seeks summary judgment only as to the defendants' liability arguing that the defendants are liable on the guaranty agreements because each defendant's guaranty agreement is an unconditional promise to guarantee the borrower's payment obligations on the note, that the borrower's default on the note promptly caused the defendants to become liable to the plaintiff and that the debt owed to the plaintiff has not been paid by either the borrower or the defendants. Conversely, in their cross-motion for summary judgment, the defendants argue that they are entitled to summary judgment because there is no genuine issue concerning their liability as guarantors. Specifically, the defendants contend that the plaintiff's motion for summary judgment must be denied and theirs granted because the entry of strict foreclosure in favor of the plaintiff on count one of the complaint and the subsequent vesting of title in the plaintiff precludes the plaintiff from (1) further enforcing the guaranty agreements against the defendants; and (2) establishing that the debt has not been paid. In reply, the plaintiff argues that the courts have already determined that following a judgment of strict foreclosure entering on one count of a complaint, a plaintiff may pursue a deficiency judgment against a guarantor in another count of the complaint, even though judgment against the guarantor will enter after title to the foreclosed property has vested in the plaintiff.
IV.
In their cross-motion for summary judgment, the defendants argue that the plaintiff's motion for summary judgment must be denied and theirs granted because once the plaintiff obtained an entry of strict foreclosure against the borrower in count one of its complaint, it was precluded from proceeding against the guarantors on the other counts. According to the defendants, because a deficiency judgment is part of a foreclosure claim, in order to hold the defendants liable as guarantors, the plaintiff was required to name the defendants in the foreclosure action and proceed against them in the subsequent deficiency judgment proceeding. The foreclosure claim (count one of the plaintiff's complaint), however, was against the borrower only, not the defendants. Thus, because the plaintiff obtained a judgment of foreclosure in count one against the borrower and title to the property has vested in the plaintiff, the plaintiff is precluded from holding the defendants liable as guarantors. In support of its argument, the defendants rely on General Statutes §§ 49-1 and 49-14. It is the defendants' contention that these two statutes read in conjunction require a plaintiff seeking a money judgment against a guarantor to ultimately choose between its common-law claim for damages based on the guaranty and its equitable claim for foreclosure. In its reply, the plaintiff argues that the courts have already determined that following a judgment of strict foreclosure entering on one count of a complaint, a plaintiff may pursue a deficiency judgment against a guarantor in another count of the complaint, even though judgment against the guarantor will enter after title to the foreclosed property has vested in the plaintiff.
General Statutes § 49-1 states, in relevant part: "The foreclosure of a mortgage is a bar to any further action upon the mortgage debt, note or obligation against the person or persons who are liable for the payment thereof who are made parties to the foreclosure and also against any person or persons upon whom service of process to constitute an action in personam could have been made within this state at the commencement of the foreclosure . . ."
General Statutes § 49-14 states, in relevant part: "At any time within thirty days after the time limited for redemption has expired, any party to a mortgage foreclosure may file a motion seeking a deficiency judgment."
A.
"Connecticut enacted its first deficiency judgment statute in 1833 . . . Prior to 1818, therefore, there was no such proceeding. At common law, a mortgagee was required to elect between a foreclosure action or an action on the underlying debt . . . If the mortgagee recovered successfully on the debt, the mortgage [was] released. If [the mortgagee chose] to take the land and make it his own absolutely, whereby the mortgagor [was] totally divested of his equity of redemption, the debt [was] thereby paid and discharged: And if it eventually prove[d] insufficient to raise the sum due, it [was] the mortgagee's own fault, and at his risk." (Citations omitted; internal quotation marks omitted.) Federal Deposit Ins. Co., v. Voll, 38 Conn.App. 198, 205, 660 A.2d 358, cert. denied, 235 Conn. 903, 665 A.2d 901 (1995).
"It was, therefore, precisely because the entry of judgment of foreclosure precluded any further common law proceedings on the note that the legislature in 1833 created the remedy of the deficiency judgment as the only available means of satisfying a mortgage debt when the security was inadequate to make the plaintiff whole . . . In other words, the 1833 statute lifted the bar at common law on any further action on the mortgage debt after foreclosure . . . [T]herefore . . . an action on a promissory note is [not] the historical analogue of a deficiency proceeding . . ." Id., 205-06.
"The common law rule requiring a creditor to choose between an action at law on the note and an action at equity by foreclosing remains in effect. It is well established that a mortgagee has two separate and distinct causes of action against a defaulting mortgagor. A mortgagee may pursue an action at law for the amount due on the promissory note, or it may pursue its remedy in equity and foreclose on the mortgage . . . The mortgagee may also pursue both of these remedies simultaneously in one consolidated foreclosure suit . . ." Id., 206.
"Beginning in 1878, the statutory right to a deficiency judgment was conditioned on making the persons liable for the deficiency parties to the foreclosure action . . . In 1957 the legislature adopted the statute that is now designated General Statutes [§]49-1. The statute prohibits a second action on the mortgage obligation against persons who could have been made parties to the foreclosure. [General Statutes § 49-1] prohibits the foreclosing mortgagee from maintaining a separate action on the underlying mortgage debt, note or obligation against any person liable except those upon whom personal service could not have been made at the outset of the foreclosure . . . The legislature's purpose in adopting [the law] was as clear as the statutory language itself: Actually what we are trying to accomplish is this. A person who may be liable upon a note or upon a foreclosure of mortgage, should be brought into the action if he can be found at the time the action is first brought. It's good practice not to permit one person to be sued and then someone else might be liable along with it, be left out and then sued a year later or something like that. The intention of this bill and also the technical amendment is to bring in all those parties who are in this state, who can be served and make them respond at that time, and if there's going to be any deficiency judgment those matters will be determined at that one action at that one time." (Citation omitted; emphasis in original.) Mikolinski v. Valley View Joint Venture, Superior Court, judicial district of Waterbury, Docket No. CV 91 106018 (August 5, 1998, Vertefeuille, J.) ( 22 Conn. L. Rptr. 471), aff'd, 56 Conn.App. 901, 741 A.2d 15 (1999).
"The only restriction on the mortgagee's election of remedies is contained in General Statutes § 49-1, which provides that `[t]he foreclosure of a mortgage is a bar to any further action upon the mortgage debt, note or obligation against the person or persons who are liable for payment thereof who are made parties to the foreclosure . . .' General Statutes § 49-14 furnishes an exception to [General Statutes] § 49-1 by providing that, `[a]t any time within thirty days after the time limited for redemption has expired, any party to a mortgage foreclosure may file a motion seeking a deficiency judgment.' . . . Thus, a mortgagee who elects to pursue his right of foreclosure of a mortgage and his right to obtain payment of a promissory note may also, in the same action, seek a deficiency judgment. When a deficiency judgment is sought, the plaintiff may recover the difference between the amount due on the underlying debt and the amount received upon foreclosure . . . As shown in the legislative history, however, deficiency proceedings are not, and never have been, independent actions on the debt. Rather, they are part of the main foreclosure suit . . . A deficiency judgment proceeding is a part of the foreclosure action, but is distinct from, although dependent on, the common law, nonstatutory process of strict foreclosure . . . It is complementary to, the traditional and equitable common law action." (Citations omitted; internal quotation marks omitted.) Federal Deposit Ins. Co., v. Voll, supra, 38 Conn.App. 206-07.
B.
General Statutes § 49-1 "is intended to bar subsequent actions for deficiency against guarantors who were not named in the foreclosure action . . . There is no doubt that co-makers and endorsers must be parties to the foreclosure if the plaintiff seeks to hold them liable on the note. General Statutes § 49-1 mandates that . . . [i]f the mortgagee is not willing to take the property mortgaged as full payment for his debt, he has only to make all persons to whom he may wish to resort for further payment parties to his foreclosure suit." (Citations omitted; emphasis in original.) Northwest Bank For Savings v. Bisceglio, Superior Court, judicial district of Litchfield, Docket No. CV 93 0063855 (July 25, 1994, Dranginis, J.) ( 12 Conn. L. Rptr. 200).
Nonetheless, "General Statutes [§]49-1 does not prohibit [a] plaintiff from joining [a] second count, seeking collection pursuant to a guaranty agreement, with the first count, seeking foreclosure of a mortgage. The second count may be construed as stating a basis for any deficiency judgment against the defendant guarantor, or as . . . stating an alternative claim for relief for the entire unpaid debt. In either event, however, the plaintiff will not recover twice on the same obligation since a guarantor is only obligated to pay the unpaid amount due on the underlying debt." (Internal quotation marks omitted.) Connecticut Bank Trust Co. v. Boston Post Limited Partnership, Superior Court, judicial district of New London, Docket No. 51 52 94 (December 12, 1990, Leuba, J.) ( 3 Conn. L. Rptr. 56). In Connecticut Bank Trust Co., the court denied the defendants' motion to strike count two of the complaint alleging guarantor liability finding that "the terms of the guaranty agreement . . . [appeared] to authorize the plaintiff to proceed against the guarantor for satisfaction of the entire unpaid debt without resorting to any other source of payment. Connecticut Practice Book sections 137, 138 permit a plaintiff to plead alternative claims for relief and to join separate causes of action in one complaint." Id.
Several trial courts have recognized that a plaintiff may, following a judgment of strict foreclosure entering on one count of a complaint, pursue a deficiency judgment against a guarantor in another count of the complaint. "Our courts do not enter a generic judgment in a multiple count complaint. They enter a judgment on each specific count . . . Entry of judgment in one count does not preclude the entry of a subsequent judgment on the second count of the complaint. This is the clear holding of our Appellate Court in Connecticut Commercial Lenders, LLC v. Teague, 105 Conn.App. 806, 940 A.2d 831 (2008)." (Citations omitted.) Wells Fargo Bank, N.A. v. Spring Time #1, LLC, 51 Conn.Sup. 183, 187-88, 976 A.2d 112 [ 46 Conn. L. Rptr. 495] (2008); see Connecticut Commercial Lenders, LLC v. Teague, supra, 813 ("It is axiomatic that a partial judgment does not fully resolve the claims of a given complaint"). In Wells Fargo Bank, N.A. v. Spring Time #1, LLC, supra, 184, the plaintiff's complaint brought two distinct counts. "Count one states a cause of action in foreclosure . . . That count makes no mention whatsoever of a guaranty . . . Count two states the cause of action on the guaranty." Id. In that case, a "judgment of strict foreclosure was entered on count one. No judgment was entered on count two relating to the guaranty." Id., 187. The court explained that "[p]ursuant to the holding in Connecticut Commercial Lenders LLC, the judgment of strict foreclosure on count one . . . left unresolved and still outstanding, count two alleging the guaranty . . . A judgment on the foreclosure count is not a judgment on the guaranty count." Wells Fargo Bank, N.A. v. Spring Time #1, LLC, supra, 188-89. The court relied on New England Savings Bank v. High Ridge, Inc., Superior Court, judicial district of New London at Norwich, Docket No. 097113 (October 3, 1991, Leuba, J.) ( 5 Conn. L. Rptr. 110) in finding that "[i]f in a single-count complaint, the issues of foreclosure and the obligations of the guarantor are deemed separate, a fortiori, in a two-count complaint alleging those claims, they must be deemed separate causes of action." Wells Fargo Bank, N.A. v. Spring Time #1, LLC, supra, 189; see New England Savings Bank v. High Ridge, Inc., supra, Superior Court, Docket No. 097113 (guarantor's defenses to the guaranty were "separate from the foreclosure action itself . . ." even though the plaintiff filed a single-count complaint seeking a foreclosure and alleging liability of the guarantor).
Additionally, in TD Banknorth, N.A. v. Salemme Development, Superior Court, judicial district of Fairfield, Docket No. CV 07 5012298 (April 27, 2010, Hartmere, J.), the court instructed that a plaintiff, following a judgment of strict foreclosure entering on one count of a complaint, may obtain recovery on the remainder of the note against the defendant-guarantor by pursuing a deficiency judgment. In that case, the plaintiff, in count one, stated a cause of action in foreclosure of a mortgage against the borrower, and in count two a cause of action on a guaranty against the defendant-guarantor. Id. Moreover, "in the prayer for relief, the plaintiff sought a deficiency judgment as a remedy against [the borrower and the defendant-guarantor]." Id. The court entered a judgment of strict foreclosure on count one of the complaint and thereafter the plaintiff moved for a judgment on damages as to count two rather than filing a motion for a deficiency judgment. Id. The court denied the plaintiff's motion for judgment on damages holding that granting the motion "would run counter to the safeguards guaranteed through" a deficiency judgment proceeding. Id.
In the present case, contrary to the defendants' assertion, the plaintiff may proceed against the defendants on the remaining counts even though the defendants were not named in count one, the foreclosure action. To review the pertinent facts, the plaintiff brought a four-count complaint against the borrower and the defendants. In count one, the plaintiff sought to foreclose its mortgage on the property owned by the borrower. In counts two, three and four the plaintiff seeks recovery from the defendants pursuant to the guaranty agreements. In the prayer for relief, the plaintiff seeks, among other remedies, a deficiency judgment against the borrower and the defendants. A judgment of strict foreclosure entered on count one of the plaintiff's complaint and title to the property became absolute in the plaintiff. Thereafter, the plaintiff filed a timely motion for deficiency judgment against the borrower and the defendants. The motion for deficiency judgment is currently pending and no judgment has entered on counts two, three or four of the complaint.
For the following reasons, the plaintiff may seek enforcement of the guaranty agreements in the separate counts. First, as set forth in TD Banknorth, N.A. v. Salemme Development, supra, Superior Court, Docket No. CV 07 5012298, after a judgment of strict foreclosure has entered on one count of a multi-count complaint, the proper procedure for recovery against a guarantor is through a deficiency judgment in accordance with General Statutes §§ 49-1 and 49-14. Second, the case law makes it clear that separate counts are deemed separate causes of action and therefore, a judgment on the foreclosure count is not a judgment on the guaranty counts. Finally, as explained in Connecticut Bank Trust Co. v. Boston Post Limited Partnership, supra, 3 Conn. L Rptr. 56, General Statutes § 49-1 does not prohibit the plaintiff from joining the additional counts seeking collection pursuant to the guaranty agreements with the first count seeking foreclosure of a mortgage because the additional counts may be construed as stating a basis for any deficiency judgment against the defendant guarantor, or as stating an alternative claim for relief for the entire unpaid debt. In the present case, the terms of the guaranty agreements, like those in Connecticut Bank Trust Co., appear to authorize the plaintiff to proceed against each of the defendants for satisfaction of the entire unpaid debt without resorting to any other source of payment.
The guaranty agreements provide, in relevant part: "[T]he Undersigned does hereby unconditionally guaranty to the Lender, its successors, endorsees and assigns, the full and prompt payment, together with interest, as and when the same become due and payable, whether in accordance with the terms thereof or upon demand or by acceleration or otherwise, of all of the Obligations, all whether now existing or hereafter arising, direct or indirect, absolute or contingent and of any and all renewals and extensions thereof . . . This Guaranty is a continuing guaranty of payment and not of collection, and is a continuing guaranty of performance of all Obligations now due or owing or which may hereafter at any time arise and/or become due or owing . . . For all purposes of the liability of the Undersigned under this Guaranty Agreement, every one of the Obligations which may now be or which hereafter may from time to time become due or owing by Borrower to Lender shall be deemed to continue due and owing to Lender until the same shall be actually repaid to Lender, nothwithstanding the bankruptcy or winding up of Borrower or any other event whatever . . . No action of any sort need be taken by Lender against Borrower and/or with respect to any collateral given to secure the note, the agreement, the mortgage and/or this guaranty agreement, in order to charge the undersigned hereunder."
V.
The plaintiff's motion for summary judgment seeks a determination of entitlement to recover on the guaranty agreements; that is, a determination of the defendants' liability under the guaranty agreements. The court finds that the plaintiff has established a prima facie case for liability against the defendants under the guaranty agreements.
"[A] guaranty is a promise to answer for the debt, default or miscarriage of another . . . It is simply a species of contract." (Citations omitted.) Regency Savings Bank v. Westmark Partners, 59 Conn.App. 160, 164, 756 A.2d 299 (2000). "More specifically, a guaranty is an undertaking by a guarantor to answer for payment of some debt, or performance of some contract, of another person in the event of default." TD BankNorth, NA v. Norwich River, LLC, Superior Court, judicial district of New London, Docket No. CV 07 5008138 (December 8, 2008, Martin, J.), quoting 38 Am.Jur.2d Guaranty § 1. "Where the guaranty is absolute — that is, subject to no condition except the default of the principal debtor . . . the guarantor is primarily liable for the debt. In that event, the creditor may maintain an action against the guarantor immediately upon default of the debtor, without demand upon the debtor for payment, and without first proceeding against the debtor." TD BankNorth, NA v. Norwich River, LLC, supra, Superior Court, Docket No. CV 07 5008138, quoting 38 Am.Jur.2d Guaranty § 105. "To establish a prima facie case of entitlement to recover on [a] [g]uaranty . . . [the] plaintiff must show (1) that it is owed a debt from a third party; (2) that [the] defendant made a guaranty of payment of the debt; and (3) that the debt has not been paid by either the third party or [the] defendant." (Emphasis in original.) Chase Manhattan Bank, N.A. v. Harris, 899 F.Sup. 64, 67 (Conn. 1995); TD BankNorth, NA v. Norwich River, LLC, supra, Superior Court, Docket No. CV 07 5008138.
A.
The plaintiff, as the moving party, must first establish that there is no genuine issue that it is owed a debt from the borrower. "[T]he liability of the guarantor is based on the liability of the debtor." Cadle Co. of Connecticut, Inc. v. C.F.D. Development Corp., 44 Conn.App. 409, 413, 689 A.2d 1166 (1997), appeal dismissed, 243 Conn. 667, 706 A.2d 975 (1998). "[S]ince the guaranty contract secures a principal or primary obligation, the liability of the guarantor also depends upon a construction and application of the primary contract." TD BankNorth, NA v. Norwich River, LLC, supra, Superior Court, Docket No. CV 07 5008138, quoting 38 Am.Jur.2d Guaranty § 69. In the present case, on March 1, 2010, the court, Cronan, J., granted the plaintiff's motion for summary judgment (#113) against the borrower as to liability on count one of the complaint finding that the plaintiff owns the note and that the borrower defaulted thereon. On April 12, 2010, the court, Cronan, J., entered a judgment of strict foreclosure finding that the debt owed to the plaintiff exceeded the fair market value of the property. Accordingly, based on the court's prior decision, the plaintiff has carried its burden of showing the absence of a genuine issue that the plaintiff is owed a debt from the borrower. The burden now shifts to the defendants to show the existence of a genuine issue. The defendants, however, fail to dispute this issue and did not submit any affidavits or other documents in opposition to the plaintiff's motion or in support of their cross-motion for summary judgment.
Dated September 19, 2009.
B.
The plaintiff must also establish that there is no genuine issue that the defendants made a guaranty of payment of the debt that is owed by the borrower. "As the party moving for summary judgment, the [movant] is required to supporting its motion with supporting documentation . . ." Heyman Associates No. 1 v. Ins. Co. of Pennsylvania, 231 Conn. 756, 796, 653 A.2d 122 (1995). In support of its motion, the plaintiff submitted properly authenticated copies of each of the guaranty agreements between itself and each of the defendants.
The plaintiff submitted the affidavit of Fred Casale, the vice-president of TD Bank, NA. His affidavit is made on personal knowledge by a person competent to testify and serves to authenticate the attached copies of the note, the open-end mortgage agreement, and the individual guaranty agreements. "[B]efore a document may be considered by the court [in connection with] a motion for summary judgment, there must be a preliminary showing of [the document's] genuineness, i.e., that the proffered item of evidence is what its proponent claims it to be. The requirement of authentication applies to all types of evidence, including writings . . . Conn. Code Evid. § 9-1(a), commentary. Documents in support of or in opposition to a motion for summary judgment may be authenticated in a variety of ways, including, but not limited to, a certified copy of a document or the addition of an affidavit by a person with personal knowledge that the offered evidence is a true and accurate representation of what its proponent claims it to be." (Internal quotation marks omitted.) Gianetti v. Health Net of Connecticut, Inc., 116 Conn.App. 459, 466-67, 976 A.2d 23 (2009); accord New Haven v. Pantani, 89 Conn.App. 675, 679, 874 A.2d 849 (2005). "Practice Book § [17-45], although containing the phrase `including but not limited to,' contemplates that supporting documents to a motion for summary judgment be made under oath or be otherwise reliable . . . [The] rules would be meaningless if they could be circumvented by filing [unauthenticated documents] in support of or in opposition to summary judgment." (Internal quotation marks omitted.) New Haven v. Pantani, supra, 89 Conn.App. 678; accord Gianetti v. Anthem Blue Cross Blue Shield of Connecticut, 111 Conn.App. 68, 72-73, 957 A.2d 541 (2008), cert. denied, 290 Conn. 915, 965 A.2d 553 (2009). "[O]nly evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment, and the applicable provisions of our rules of practice contemplate that supporting [or opposing] documents . . . be made under oath or be otherwise reliable." (Internal quotation marks omitted.) Rockwell v. Quintner, 96 Conn.App. 221, 233 n. 10, 899 A.2d 738, cert. denied 280 Conn. 917, 908 A.2d 538 (2006). "Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto." Practice Book § 17-46.
"[A] guaranty contract defines the obligations and rights of both the guarantor and the creditor, and contains any express conditions on the guarantor's liability. Thus, the liability of a guarantor depends primarily on the construction and application of the guaranty contract . . . [O]ur Supreme Court has stated that where the guaranty of a note [is] unconditional or absolute `default of the maker or endorser to pay the note promptly . . . [causes] the guarantor [to become] liable to the holder, and the relation of debtor and creditor [is] at once established between the guarantor and the holder of the note' . . ." (Citations omitted; internal quotation marks omitted.) TD BankNorth, N.A. v. Norwich River, LLC, supra, Superior Court, Docket No. CV 07 5008138; see Perry v. Cohen, 126 Conn. 457, 459, 11 A.2d 804 (1940); 38 Am.Jur.2d Guaranty § 69.
In the present case, the guaranty agreements executed between the plaintiff and each defendant state that the plaintiff agrees to lend the borrower the principal sum of $1,424,000 evidenced by a mortgage note and secured by an open-end mortgage and security agreement. The guaranty agreements further state that the plaintiff requires that, as a condition for making the loan to the borrower, the defendants enter into guaranty agreements to "unconditionally guaranty to Lender [the plaintiff] . . . the full and prompt payment . . . of all of the Obligations [of the borrower] . . . whether now existing or hereafter arising . . . and . . . any and all renewals and extensions thereof." Additionally, the guaranty agreements state, in relevant part: "1. This [g]uaranty is a continuing guaranty of payment and not of collection, and is a continuing guaranty of performance of all Obligations now due or owing or which may hereafter at any time arise and/or become due or owing . . . 2. For all purposes of the liability of the Undersigned under this [g]uaranty [a]greement, every one of the Obligations which may now be or which hereafter may from time to time become due or owing by Borrower to Lender shall be deemed to continue due and owing to Lender until the same shall be actually repaid to Lender, notwithstanding the bankruptcy or winding up of Borrower or any other event whatever . . . 11. No action of any sort need be taken by Lender against Borrower and/or with respect to any collateral given to secure the note, the agreement, the mortgage and/or this guaranty agreement, in order to charge the undersigned hereunder."
The guaranty agreements define "Obligations" as follows: "Whereas . . . Borrower . . . desires to borrow from Lender [the plaintiff] $1,424,000, as evidenced by a certain Mortgage Note . . . made by Borrower to the order of Lender . . . Lender will only lend said sum to Borrower . . . if . . . the Undersigned guaranties to Lender the payment . . . under the Note . . ."
The plaintiff has carried its burden of showing the absence of a genuine issue that the defendants made a guaranty of payment of the debt that is owed by the borrower. The language of the guaranty agreements makes clear that the defendants unconditionally guaranteed the payment of the borrower's debt. The default of the borrower promptly caused the defendants to become liable to the plaintiff, and the relationship of debtor and creditor was at that instant established between the defendants and the plaintiff. Accordingly, the burden now shifts to the defendants to show the existence of a genuine issue. The defendants, however, fail to dispute this issue and did not submit any affidavits or other documents in opposition to the plaintiff's motion or in support of their cross-motion for summary judgment.
C.
Finally, the plaintiff must establish that the debt currently due and owing, and personally guaranteed by the defendants, has not been paid by either the borrower or the defendants. The plaintiff argues that the borrower's debt has not been paid and submits the affidavit of Fred Casale, the vice-president of TD Bank, N.A., in which Casale attests that the note debt has not been fully paid by either the borrower or the defendants. Conversely, the defendants contend that the plaintiff is unable to establish that the debt owed on the note has not been paid. The defendants argue that once a note and mortgage are the subject of a foreclosure action that has gone to judgment and the title has vested in the mortgagee, there is no debt that is owed under the note or guaranty in the absence of a deficiency judgment. In reply, the plaintiff submits a copy of the April 12, 2010 judgment in which the court, Cronan, J., entered an order of strict foreclosure on count one of the complaint based on the finding that the debt owed to the plaintiff exceeded the fair market value of the property. Specifically, the court found the debt owed to the plaintiff to be $1,416,422.88, inclusive of legal fees, appraisal fee and title search fee. The fair market value of the property was found to be $1,400,000. The plaintiff also submits a copy of a May 7, 2010 appraisal for the property showing that the value of the property decreased to $1,300,000 on the date that the plaintiff took title. The court concludes that the plaintiff has carried its burden of showing an absence of a genuine issue that it is owed a debt. As such, the burden now shifts to the defendants to show the existence of a disputed factual issue.
The defendants argue that there is no debt owed under the note or guaranty after the entry of strict foreclosure in the absence of a deficiency judgment. This argument, however, is a misunderstanding of the interplay between General Statutes § 49-1 and the function of a deficiency judgment. "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). General Statutes § 49-1, "by barring further action `against the person or persons who are liable for the payment thereof,' [was not meant] to extinguish the defendants' personal liability as well as their mortgage debt . . . By barring action on the mortgage debt, [General Statutes] § 49-1 proscribes a remedy, but does not eliminate the underlying debt." (Citation omitted; internal quotation marks omitted.) LaPenta v. Bank One, N.A., Superior Court, judicial district of Hartford, Docket No. CV 05 4008885 (May 26, 2006, Keller, J.) ( 41 Conn. L. Rptr. 436), aff'd, 101 Conn.App. 730, 924 A.2d 868 (2007). "The value of the premises on the date that title becomes vested in the mortgagee determines whether the mortgagee is entitled to a deficiency judgment." (Internal quotation marks omitted.) Eichman v. J J Building Co., 216 Conn. 443, 449, 582 A.2d 182 (1990). "[A] deficiency judgment proceeding has a very limited purpose . . . [T]he court, after hearing the party's appraisers, determines the value of the property and calculates any deficiency. This deficiency judgment procedure presumes the amount of the debt as established by the foreclosure judgment and merely provides for a hearing on the value of the property . . . The deficiency hearing concerns the fair market value of the subject property as of the date title vests in the foreclosing plaintiff under [General Statutes] § 49-14." (Internal quotation marks. omitted.) Brownstein v. Spilke, 117 Conn.App. 761, 765, 982 A.2d 198 (2009), cert. denied, CT Page 22628 294 Conn. 927, 986 A.2d 1053 (2010). A deficiency proceeding "presupposes that all questions of liability shall have been theretofore determined." Smith v. Emerald Corp., 6 Conn.Sup. 117, 122 (1938).
Accordingly, in the present case, the entry of strict foreclosure on count one of the complaint did not extinguish the underlying debt. Rather, the entry of strict foreclosure established that a debt was owed. It is the deficiency judgment that will determine the amount of debt for which the defendants could be held liable. See Domestic Bank v. Aubee, Superior Court, judicial district of Windham, Docket No. CV 09 6000798 (August 10, 2010, Riley, J.) ("deficiency judgment [is] the only available means of satisfying a mortgage debt when the security is inadequate to make the plaintiff whole . . . [A] proceeding for a deficiency judgment following a strict foreclosure establishes the amount of remaining indebtedness").
As such, the plaintiff has carried its burden of showing an absence of a genuine issue regarding whether it is owed a debt by presenting evidence that the debt has not been fully paid by either the borrower or the defendants. The defendants, however, failed to meet their burden as the non-moving party of showing the existence of a disputed factual issue. Additionally, as the moving party in their cross-motion for summary judgment, the defendants failed to present any evidence to show that there was no genuine issue that the plaintiff is not owed a debt.
VI.
The court finds that the plaintiff carried its burden of establishing a prima facie case for the defendants' guarantor liability — that (1) it is owed a debt from the borrower; (2) that the defendants made a guaranty of payment of the debt; and (3) that the debt has not been paid by either the borrower or the defendants. As such, the plaintiff's motion for summary judgment is granted and the defendants' motion for summary judgment is denied.