Opinion
No. FST CV 03 0193472
June 30, 2005
MEMORANDUM OF DECISION
This case, which was tried by an attorney trial referee, involves a dispute about a promissory note and the foreclosure of a mortgage. The plaintiff is Michael Treglia. The defendants, including the named defendant, Christos Seitarides, are alleged to be the makers of a promissory note payable to the plaintiff, and the mortgagors of property known as lots 1-9 on Kossuth and Olijen Streets in Norwalk.
The other defendants are Maria Seitaridis, Vasilios Seitaridis, Christina Seitaridis, George Stefanidis, Nikolaos Giantomides and Alexander Christofor. The attorney trial referee referred to these individuals as the Seitarides defendants which will be adopted in this decision as well. Also joined as defendants were Pontos Realty, Inc., 32 and 34 Kossuth Street, LLC and Jose Ceja, whose interests in the subject premises were described by the referee as subsequent to and subordinate to the plaintiff's mortgage. Christofor was a maker of the note only, not a mortgagor.
The plaintiff's complaint, dated January 10, 2003, alleges that the Seitaridis defendants executed a promissory note dated June 18, 1986, payable to the plaintiff in the amount of $100,000, for which there is a principal balance due as of January 2003, of approximately $67,000, plus interest. The plaintiff seeks a strict foreclosure, a deficiency judgment, the appointment of a receiver and attorneys fees.
The defendant 32 and 34 Kossuth Street, LLC (Kossuth) filed an answer dated July 23, 2003, leaving the plaintiff to his proof. The Seitarides defendants filed an answer dated January 20, 2004, denying the material allegations of the complaint and containing four special defenses as well as a counterclaim. In the first special defense, these defendants claim that a six-year statute of limitations had expired. The second special defense asserts that there had been an accord and satisfaction. In their third special defense, these defendants allege that the note was fully paid. In the fourth special defense, these defendants contend that the mortgage is invalid because another piece of property was mortgaged to the plaintiff in substitution for the subject premises. In the counterclaim, these defendants allege that in 1993 the plaintiff's brother filed a suit against some of the defendants in this action claiming that the 1986 deed of the subject premises to Pontos Realty, Inc. (Pontos) was forged and that the plaintiff "has refused to defend the warranty covenants" contained in that deed.
The case was referred to Attorney David Albert, an attorney trial referee, pursuant to General Statutes § 52-434(a)(4) and Practice Book § 19-2A. The referee conducted a two-day trial and submitted a report dated June 7, 2004, as required by Practice Book § 19-8. The report contains a number of separate findings of fact that may be summarized as follows: (1) the Seitarides defendants executed a promissory note dated June 18, 1986, payable to the plaintiff, in the original principal amount of $100,000, and on the same date executed a mortgage to the plaintiff of lots 1-9 on Kossuth and Olijen Streets in Norwalk to secure said note; (2) the note was for five years and hence was due and payable in June 1991; (3) the note was paid until December 23, 1986, on which date the plaintiff received his last timely periodic payment; (4) the mortgage deed of June 18, 1986 remains recorded, unreleased and undischarged on the Norwalk Land Records as a second mortgage subject to a first mortgage to Norwalk Savings Society; (5) in February of 1991, the Seitarides defendants made a payment of $20,000 against the principal due in exchange for a partial release of the mortgage relating to property on Kossuth Street; (6) prior to December 23, 1996, other payments were made, leaving a balance of $67,000 of principal, plus interest, as of that date; (7) on the same date as the note and mortgage, June 18, 1986, the individual Seitarides defendants conveyed the subject premises by quit-claim deed to Pontos, a corporation of which they were the principals; (8) on February 12, 1991, Pontos executed an $80,000 mortgage to the plaintiff, a conveyance of which the plaintiff had no knowledge; (9) in 2003, counsel for the Seitarides defendants asked the plaintiff for the pay-off figures for the 1986 mortgage of the subject premises, without reference to the purported 1991 mortgage to the plaintiff; (10) the defendants presented no evidence that the 1991 mortgage by Pontos to the plaintiff was in substitution for the original 1986 mortgage; (11) in terms of the statute of limitations defense, the parties to the note had agreed to delay this litigation until the other case referred to in the counterclaim filed by the Seitarides defendants, which was brought by the plaintiff's brother, and which affected title to the subject premises, had been resolved; (12) the defendants did not prove their counterclaim concerning the alleged failure of the plaintiff to "defend the warranties" in the deed to Pontos; and (13) admission of the testimony of the plaintiff's real estate agent was proper as the defendants did not claim at the time of trial that they were prejudiced by the presentation of this witness.
Based on these findings of fact, the attorney trial referee concluded that: (1) the promissory note to the plaintiff remains due and payable in the amount of $67,000, plus interest at the rate of 12%, from December 23, 1996, to the date of this judgment; and (2) the mortgage of the subject premises by the Seitarides defendants has not been released as of record and remained valid and enforceable. Accordingly, the attorney trial referee recommended that judgment enter in favor of the plaintiff to obtain a strict foreclosure of the subject premises, including attorneys fees and costs as provided in the note and mortgage, and that judgment enter in favor of the plaintiff with respect to the counterclaim filed by the Seitarides defendants.
Thereafter, as authorized by Practice Book § 19-14, the defendants filed objections to the attorney trial referee's report and recommendations which were heard at the law or motion short calendar of March 7, 2005, in accordance with Practice Book § 11-18(a). The defendant Kossuth objected on the basis that: (1) the referee erred in calculating the amount of the debt because he relied on a payment ledger book maintained by the other defendant and not on the plaintiff's own knowledge; (2) admission of the ledger at the trial violated the "best evidence" rule; (3) the note in question was paid in full by Pontos in February 1991, when it made a payment of $20,000 to the plaintiff and executed an $80,000 mortgage in favor of the plaintiff and in substitution for the original mortgage; (4) the plaintiff violated Practice Book § 23-18 by failing to make a timely disclosure of the amount of the debt; and (5) the defendant was prejudiced by a continuance of the trial after the plaintiff had failed to timely disclose his expert real estate witness. Practice Book § 13-4(4).
Practice Book § 19-14 provides: "A party may file objections to the acceptance of a report on the ground that conclusions of fact stated in it were not properly reached on the basis of the subordinate facts found, or that the . . . attorney trial referee erred in rulings on evidence or other rulings or that there are other reasons why the report should not be accepted."
The Seitarides defendants also objected to the attorney trial referee's report for the reason that: (1) they had never agreed to waive the statute of limitations; and (2) the referee should have found in their favor with regard to the counterclaim as they had spent approximately $150,000 in defending a law suit brought by the plaintiff's brother challenging the validity of the deed to Pontos.
The standard of review for this court applicable to attorney trial referee reports is well established. As noted in Practice Book § 19-17(a): "The court shall render such judgment as the law requires upon the facts in the report. If the court finds that the . . . attorney trial referee has materially erred in its rulings or that there are other sufficient reasons why the report should not be accepted, the court shall reject the report and refer the matter to the same or another . . . attorney trial referee . . . for a new trial or revoke the reference and leave the case to be disposed of in court."
In reviewing this attorney trial referee's report and the objections thereto, it is "axiomatic that [a] reviewing authority may not substitute its findings for those of the trier of the facts. This principle applies no matter whether the reviewing authority is the Supreme Court . . . the Appellate Court . . . or the Superior Court reviewing the findings of . . . attorney trial referees. See Practice Book § [19-17] . . . [Our Supreme Court] has articulated that attorney trial referees and factfinders share the same function . . . whose determination of the facts is reviewable in accordance with well established procedures prior to the rendition of judgment by the court . . . The factual findings of a [referee] on any issue are reversible only if they are clearly erroneous . . . [A reviewing court] cannot retry the facts or pass upon the credibility of the witnesses . . . A finding of fact is clearly erroneous when there is no evidence in the record to support it . . . or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." (Citation omitted; internal quotation marks omitted.) Meadows v. Higgins, 249 Conn. 155, 162, 733 A.2d 172 (1999).
As to the objections to the report filed by the defendants, it is rather clear that they are attempting to substitute their own version of the facts for that of the referee. If the objections to this report were sustained, the court in effect would be retrying the case and reexamining the credibility of the witnesses, which is not permitted. Argentis v. Gould, 23 Conn.App. 9, 19, 579 A.2d 1078, rev'd on other grounds, 219 Conn. 151, 592 A.2d 375 (1991).
In deciding to credit the testimony of the plaintiff with regard to the balance due on the promissory note and the waiver of the statute of limitations, "the attorney trial referee implicitly found certain witnesses to be credible and believable in their testimony. This was precisely his function as a fact finder. The resolution of conflicting factual claims falls within the province of the trial court." Nor'easter Group, Inc. v. Colossale Concrete, Inc., 207 Conn. 468, 473, 542 A.2d 692 (1988).
Additionally, "[g]reat deference is given to the trial court's findings because the trial court is responsible for weighing the evidence and determining the credibility of witnesses." Beizer v. Goepfert, 28 Conn.App. 693, 704-05, 613 A.2d 1336, cert. denied, 224 Conn. 901, 615 A.2d 1049 (1992), cert. denied, 507 U.S. 973, 113 S.Ct. 1416, 122 L.Ed.2d 786 (1993). A reviewing court should not retry the facts or assess the credibility of the witnesses. The "finder of fact is in a better position to determine the credibility of the witnesses and the weight to be accorded their testimony." Id., 706.
Turning to the specific objections filed by the defendant Kossuth, the first is that the attorney trial referee erred in calculating the debt owed the plaintiff, and that the payment ledger should not have been admitted because it was not the "best evidence." A promissory note is in effect a contract, and "[w]hether there has been a material breach of a contract is a question of fact." Alaimo v. Beacon Industries, Inc., 89 Conn.App. 363, 365, 873 A.2d 1015 (2005). The defendants also argue that the payment ledger card kept by Pontos was erroneously entitled "second" mortgage. That, however, was an accurate description as the subject mortgage was subordinate to the first mortgage to Norwalk Savings Society.
Regarding the amount of the debt, monetary damages are "a matter peculiarly within the province of the trier of fact." Hughes v. Lamay, 89 Conn.App. 378, 384, 873 A.2d 1055 (2005). The plaintiff testified that he had personal knowledge of the amount of the debt. The ledger book in issue was prepared by the defendant Alexander Christofor and showed all payments to the plaintiff from 1993 to 1996. A photostatic copy was admitted into evidence because the ledger book itself was in the possession of Christofor, according to the attorney trial referee. Also, in terms of the amount of the debt, the attorney trial referee remarked at the trial that: "[the plaintiff] really was accepting what a defendant who owed the money said he owed. Is that binding on everybody? I don't know. But it is pretty strong evidence that that is the debt, unless you can find that there was some fraud, something, or conspiracy among the parties . . . But I have to tell you I am very impressed by the fact that the guy who [owes] it says yeah, that was the debt."
Question: "Mr. Treglia, are you claiming that there is an amount due under the note?" Answer: "Yes, sir." Question: "Do you have personal knowledge of what that amount is?" Answer "Yes, sir." Question: "Can you tell the court what that amount is?" Answer: "It is . . . the principal amount is sixty-seven thousand dollars . . ."
The referee explained his admission of the exhibit as follows: "[The plaintiff] doesn't have possession of the original document. The ledger book is I assume in the hands of Pontos Realty. For his purposes it is an original document. It is what was given to him and what he made his notations on. That is what his testimony is."
The defendants contend that the "best evidence rule" was violated by the admission of a photostatic copy of the payment ledger book. Our Supreme Court has stated that: "the best evidence rule requires a party to produce an original writing, if it is available, when the terms of that writing are material and must be proved." Brookfield v. Candlewood Shores Estates, Inc., 201 Conn. 1, 10, 513 A.2d 1218 (1986).
The best evidence rule is a preferential, rather than an exclusionary rule. Brookfield v. Candlewood Shores Estates, Inc., supra, 201 Conn. 12. In this present case, the defendants offered no evidence that the copy of the payment ledger book was not accurate, nor did they dispute the contents of the copy. Guaranty Bank Trust Co. v. Dowling, 4 Conn.App. 376, 381-82, 494 A.2d 1216, cert. denied, 197 Conn. 808, 499 A2d 58 (1985). There was no denial or evidence submitted that the defendants had not executed a promissory note in favor of the plaintiff. "[W]here the terms of a document are not in actual dispute, it is inconvenient and pedantic to insist on the production of the instrument itself." (Internal quotation marks omitted.) Farr v. Zoning Board of Appeals, 139 Conn. 577, 582, 95 A.2d 792 (1953). The attorney trial referee, therefore, properly concluded that the copy of the ledger book was admissible.
The defendant Kossuth's claim that a subsequent mortgage from Pontos to the plaintiff dated February 12, 1991 was in substitution of the original mortgage is not correct. The defendants moved to substitute this 1991 mortgage or the mortgage being foreclosed in this action, the plaintiff objected, and the objection was sustained by Judge R.J. Tobin on April 14, 2003. A motion by the defendants to "reargue" was denied by Judge Tobin on June 3, 2003. Thus, the subsequent mortgage by Pontos was not substituted for the original mortgage. The plaintiff is not claiming any interest in or benefit from that later mortgage, and the defendants did not introduce any form of promissory note relating to that mortgage.
Question: "As a matter of fact, you [the plaintiff] are not claiming any interest in the eighty thousand dollar mortgage, what has been marked as Defendant's Exhibit Two?" Answer: "That is correct."
The case was called for trial on January 22, 2004, but the attorney trial referee, at the request of the parties, continued the case until February 25, 2004. The defendant Kossuth contends that at the time the case was postponed, the plaintiff had not yet disclosed his expert witness nor had he filed the statement required by Practice Book § 23-18(b) regarding the amount of the debt before the trial began in January of 2004. Thus, according to the defendants, Kossuth "could have moved for judgment, in that, the Plaintiff would not have been able to prove its debt and the value of the property." This assertion is highly speculative.
The parties all agreed to the continuance, including Kossuth, with the proviso that it not be "prejudiced." In the interim, the plaintiff disclosed his expert witness pursuant to Practice Book § 13-4(4) and filed a Practice Book § 23-18(b) statement of debt. In terms of the disclosure of expert witnesses, the defendants do not appear to have filed a written motion to preclude the expert or to have sought a continuance as the trial began on February 25, 2004. Furthermore, the section of the Practice Book relating to notice of the debt refers to a notice being required "on a motion for judgment of foreclosure." This proceeding is a trial before an attorney trial referee regarding the validity of a note and mortgage, not a motion for a judgment of foreclosure. As noted hereafter, this matter will be claimed for the foreclosure short calendar to determine the terms of the foreclosure, including type thereof, value of the premises and exact amount of the debt. Thus, contrary to the contention by Kossuth, it was not prejudiced by the continuance.
Although the meaning of the following seems obscure, counsel stated: "Your Honor, it's okay with the understanding that obviously no prejudice to my client in the event that a Judge subsequently ruled down the line that they don't agree with the agreement that we've reached here today."
The attorney trial referee, in overruling the objection to the testimony at the trial on February 25, 2004, indicated that: "Well, the continuance was — there was really nothing that went on on the first day. And while this is very technically a continuance I think today is the first day of real trial. And I am going to overrule the objection."
With specific reference to the various objections filed by the Seitarides defendants, their claim that the statute of limitations had expired is not persuasive. In the first place, an equitable action to foreclose a mortgage is not subject to a statute of limitation. F.D.I.C. v. Owen, 88 Conn.App. 806, 814, 873 A.2d 1003 (2005). Moreover, the plaintiff testified that he had an agreement with the defendants that he would not start this foreclosure action until the suit by his brother, Patrick, had been resolved, and the attorney trial referee obviously found this testimony to be credible.
Question: "Did you have an agreement with Pontos Realty concerning this note, which is the subject of this action?" CT Page 10736 Answer: "Not Pontos Realty. The individuals." Question: "And what was your agreement with the individuals?" Answer: "That I would not start the foreclosure action until after the case with my brother was over. It would just muddy the water too much to have him fighting. And they agreed."
Additionally, in a letter dated October 27, 2003, the attorney for the Seitarides defendants asked for a payoff figure on the subject mortgage. The letter was offered into evidence by the plaintiff's attorney because, as he put it, "no one asks for a payoff statement on the note that they don't believe is valid."
The counterclaim by the Seitarides defendants alleges that the plaintiff did not "defend the warranties" in the deed to Pontos and that they had to spend $150,000 to defend the validity of that deed. The plaintiff's brother, Patrick Treglia, sued Pontos and the plaintiff, among others, in a quiet title action, claiming that his name had been forged on the deed conveying title to the subject premises to Pontos. In Treglia v. Zanesky, 67 Conn.App. 447, 788 A.2d 1263 (2001), the Appellate Court upheld a jury verdict that the plaintiff's father, Frank Treglia, was authorized to sign Patrick Treglia's name and that the plaintiff in this case did not commit the tort of conversion as his brother claimed. The Supreme Court denied certification in Treglia v. Zanesky, 259 Conn. 926, 793 A.2d 252 (2002). In that earlier suit by Patrick Treglia, Pontos had its own lawyer as did the plaintiff in this action. The Seitarides defendants cite no authority as to why the plaintiff should pay the legal fees for another defendant in that action. The parties were obliged to defend themselves and did so successfully. The defendants do not point to any indemnity agreement requiring the plaintiff to pay for the defendants' litigation expenses in the suit by Patrick Treglia nor to any warranties in the deed to Pontos to that effect.
Based on the standard of review outlined above, the attorney trial referee's report and recommendations are accepted. No material error in the report has been found, and there is no other sufficient reason for rendering the report unacceptable. Practice Book § 19-17(a). As recommended by the attorney trial referee, judgment hereby enters in favor of the plaintiff to recover $67,000 as principal and $68,362.33 as interest from December 23, 1996, to the date of this judgment, for a total debt as of this date in the amount of $135,362.33
The case should now be claimed to the foreclosure motion or short calendar in order to determine the value of the subject premises, the type of foreclosure, attorneys fees and costs, as well as other matters associated with the foreclosure of a mortgage.
See Steiger v. J.S. Builders, Inc., 39 Conn.App. 32, 38, 663 A.2d 432 (1995), regarding legal fees in foreclosures.
So Ordered.
William B. Lewis, J.T.R.