Opinion
FSTCV146023496S
04-04-2017
Webster Bank, N.A. v. Brian J. Frasca et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION ON PLAINTIFF'S MOTION FOR DEFICIENCY JUDGMENT DATED DECEMBER 11, 2015 (#143.00)
Hon. Kevin Tierney, Judge Trial Refer.
The principal issue in this postjudgment Motion for Deficiency Judgment is the determination by the court of the fair market value of real property at 83 East Middle Patent Road, Greenwich, Connecticut 06831.
It is two acres of residential zoned property improved with a single-family house built in 1750. The two acres are located within the boundaries of the City of Stamford, Connecticut but for reasons not fully explained at the hearing is entitled to receive a Greenwich, Connecticut address. Apparently a number of properties located on East Middle Patent Road share that same distinction, being Stamford, Connecticut real property with deeds and documents recorded in the Stamford land records but possessing a Greenwich, Connecticut address. The two defendants, then husband and wife, Brian J. Frasca and Allison D. Brant, executed an Adjustable Rate Note to Webster Bank, National Association for $1,252,000.00 on January 19, 2006. That Note was secured by a first mortgage on 83 East Middle Patent Road recorded on the Stamford Land Records in volume 8410 at page 239. A Loan Modification Agreement dated February 24, 2011 was executed in which it was agreed as of March 1, 2011 that the principal balance due was $1,270,156.98. The Loan Modification Agreement modified the interest rate, provided for interest-only payments at a lower interest rate, higher interest-only payments starting on March 1, 2014, and amortized principal and interest monthly payments commencing on March 1, 2016.
This current foreclosure action was returnable to the Superior Court, judicial district of Stamford/Norwalk at Stamford on October 7, 2014. The Operative Complaint was the May 14, 2015 Amended Complaint, which alleged non-payment of the installment payments due on or about March 1, 2014. It was a one-count complaint. Both parties hired separate attorneys. The defendant, Allison D. Brant, filed a July 20, 2015 Answer and Special Defenses (#130.00). There were four Special Defenses. The defendant, Brian J. Frasca, filed an Answer and Special Defense dated May 1, 2015 (#120.00). The one special defense filed by Brian J. Frasca was unconscionability alleging that: " It was obvious from the Defendant's credit and income information that the Defendant could not afford the monthly mortgage payments." and " The Defendant did not have sufficient income to support a loan amount close to the $1,252,000.00 approved by the Plaintiff."
The plaintiff's May 7, 2015 Motion for Summary Judgment (#121.00) as to the defendant, Brian J. Frasca, was granted by the court, Mintz, J., on July 13, 2015 (#121.01). The plaintiff's July 22, 2015 Motion for Summary Judgment as to the defendant, Allison D. Brant, (#132.00) was granted by the court, Mintz, J., on August 31, 2015 (#132.01). The plaintiff's March 30, 2015 Motion for Judgment of Strict Foreclosure (#114.00) was granted by the court, Mintz, J., on October 19, 2015 (#114.01). That motion was prosecuted after the granting of the two Motions for Summary Judgment and was supported by an Affidavit of Debt (#134.00), an Updated Calculation of Debt (#136.00), an Affidavit of Attorneys Fees (#137.00), a real estate appraisal dated September 11, 2015 (#135.00), and a September 22, 2015 Foreclosure Worksheet (#138.00). The plaintiff's Motion for Judgment of Strict Foreclosure (#114.00) was assigned for the regular foreclosure short calendar and was heard and decided on October 19, 2015 at that assigned short calendar. On October 19, 2015 a judgment of strict foreclosure entered with a law day of December 8, 2015 (#114.01). The law day of December 8, 2015 passed. No appeal to the Appellate Court was filed. No stay of the judgment entered. No motion to open the judgment was filed. The defendants failed to redeem by their law day. Title therefore passed to the plaintiff, Webster Bank, NA, for the real property at 83 East Middle Patent Road, Greenwich, Connecticut 06831.
Immediately thereafter the plaintiff's instant Motion for Deficiency Judgment was filed on December 11, 2015 (#143.00). The motion was assigned to this court and the court conducted two days of evidentiary hearings on October 26, 2016 and March 1, 2017. At the conclusion of evidence each of the three parties represented by counsel furnished oral argument. Post-hearing briefs were waived.
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. Such motion shall be placed on the short calendar for an evidentiary hearing. Such hearing shall be held not less than fifteen days following the filing of the motion, except as the court may otherwise order. At such hearing the court shall hear the evidence, establish a valuation for the mortgaged property and shall render judgment for the plaintiff for the difference, if any, between such valuation and the plaintiff's claim. The plaintiff in any further action upon the debt, note or obligation, shall recover only the amount of such judgment.
Gen. Stat. § 49-14(a)
The court finds that the plaintiff has timely filed this Motion for Deficiency Judgment " within thirty days after the time limited for redemption has expired." Neither party objected to the two assigned hearing dates. The court finds that the two days of evidentiary hearings occurred with the consent of the parties in a timely manner as set forth in Gen. Stat. § 49-14(a) despite the fact that the hearing was held more " than fifteen days following the filing of the motion" for deficiency judgment. As stated the major issue was ability of the plaintiff to " establish a valuation for the mortgaged property."
The December 11, 2015 Motion for Deficiency Judgment (#143.00) alleges that at the time of the judgment, the subject property was appraised at $750,000 and that the debt was $1,425,498.13. The court finds that both of those figures are the exact figures contained in the foreclosure judgment of October 19, 2015 (#114.01). The court notes that the real estate appraisal was not subject to cross-examination or intensive review at the October 19, 2015 hearing as was the case in the two days of hearings before this court on the Motion for Deficiency Judgment. The Motion for Deficiency Judgment does not state the plaintiff's claim as to the fair market value of the subject real property as of the date of passage of title. The $750,000 fair market value was obtained from the September 11, 2015 real estate appraisal on file as pleading #135.00. Judge Mintz found the fair market value to be $750,000. That September 11, 2015 real estate appraisal was not subject to cross examination or scrutiny at the October 19, 2015 hearing.
The fair market value for the real property for the determination of a deficiency judgment is the fair market value as of the date that Webster Bank, NA took title to the property, which would be December 9, 2015. Aurora Loan Services, LLC v. Hirsch, 170 Conn.App. 439, 449-50, 154 A.3d 1009 (2017). The court's obligation is to make an independent determination of the fair market value based upon all the evidence offered at the two evidentiary hearings conducted by this court on October 26, 2016 and March 1, 2017. Aurora Loan Services, LLC v. Hirsch, supra, 170 Conn.App. 450. In making a determination of the fair market value the court may give whatever weight it believes to the evidence and testimony presented to it. Statewide Grievance Committee v. Dixon, 62 Conn.App. 507, 511, 772 A.2d 160 (2001). The court's finding as to the fair market value must take into consideration the court's assessment of the credibility of the witnesses that appeared before it. Coppola Constr. Co. v. Hoffman Enters. Ltd. P'ship, 157 Conn.App. 139, 197-98, 117 A.3d 876 (2015) " It is the exclusive province of the trier of fact to weigh conflicting testimony and make determinations of credibility, crediting some, all or none of any given witness' testimony." Wall Systems, Inc. v. Pompa, 324 Conn. 718, 741 (2017).
The plaintiff offered the expert testimony of Allen Glucksman, a licensed real estate appraiser, at the hearings on the deficiency judgment. He had previously appraised this real property on March 23, 2015, on September 9, 2015 and finally on December 23, 2015. Ex. 1, First Page. His written appraisal report dated January 4, 2016 was filed as pleading #145.00 and that 27-page report was also before this court as Ex. 1. The format was a typical residential real estate appraisal prepared on a preprinted form. Allen Glucksman used the sales comparison approach to obtain a fair market value of $725,000. Ex. 1. This court has examined Exhibit 1 in great detail. The cross examination by the attorney for Brian J. Frasca noted multiple deficiencies and inconsistencies within the real estate appraisal. Of over arching consideration was the fact that this loan had been furnished by the plaintiff, Webster Bank, NA, on January 19, 2006 in the amount of $1,252,000. Therefore, the fair market value of this real property as of January 19, 2006 had to have exceeded by some percentage $1,252,000. That information had to be known by Webster Bank, NA as of January 19, 2006 or they would not have issued this mortgage without the fair market value being in excess of $1,252,000. Yet it is that same entity, Webster Bank, NA, that is now claiming that the fair market value of the same real property is $725,000. That dichotomy demands that the appraisal opinion be examined with careful scrutiny.
The evidence reveals that this real property is two acres in size and conforms to the zoning of the City of Stamford. The property has been in conformity with the zoning since January 2006 and no change in the zoning in the interim was brought to the attention of this court. There was no evidence of any condemnation made by the municipality for road widening or any other purposes that occurred after January 2006. There was no evidence of any environmental contamination of any portion of the two acres. The real property was improved by a single-family house that is listed in the appraisal as being built in 1750. The appraisal lists a building age of 265 years. The property consists of seven rooms, three bedrooms, and two bathrooms with a total living area of 2, 171 square feet. The property is improved by patios, a two-car garage and a swimming pool. There was no evidence whatsoever that this building or any improvements thereon changed since January 2006 other than the mere passage of eleven years. This property is immediately adjacent to real property owned by the family of the defendant, Allison D. Brant, and in this court's opinion would be a natural acquisition by the Brant family of this additional two acres. There was no direct evidence of that interest by the Brant family.
In cross examination the following information was obtained.
Ex. 1, at page 3 Allen Glucksman stated that " the current market is overall considered stable at this time" and yet Mr. Glucksman's opinion of the fair market value from March 2015 to January 2016, lowered in value from $770,000 to $725,000. The court does not find this $45,000 decrease in the fair market value with no change in the land or buildings in the interim period of time to be inconsistent with Mr. Glucksman's opinion that the " market is stable."
Ex. 1 states that the property is served by " Public Water." The evidence discloses that it is not served by Public Water, but by a private well on the two-acre parcel.
Ex. 1 stated that the property is served by " Public Sanitary Sewer." The evidence discloses that the property is not connected to the public sewer either in the Town of Greenwich and/or the City of Stamford. The property is served by its own septic system.
Mr. Glucksman did not do an interior appraisal. Yet the property was vacant and available for inspection. The nature of this historical house should have alerted Mr. Glucksman to conduct an interior inspection to see if the interior of the house demonstrates its pre-revolutionary history.
The Tax Assessor Field Card attached to the real estate appraisal on pages 21 through 23 of Ex. 1 still contains the statement that the owners of the premises are Brant and Frasca, not Webster Bank, NA.
The three pages of the Field Card attached to Ex. 1 refers to 2012, 2013 and 2014 assessments but not to the current year's 2015 and 2016 assessments.
The first page of the Field Card on page 21 of 22 of Exhibit 1 lists the January 2006 Sales Price at $1,595,000.
In Exhibit 1, comparable #1 at 60 East Middle Patent Road on page 4 of 27 sold for $975,000 on December 17, 2014. Mr. Glucksman failed to indicate that was a short sale, which would have depressed the sales price and fair market value. That fact was not stated in Mr. Glucksman's written appraisal report nor in his testimony until his cross examination.
Also as to comparable #1 on Exhibit 1, Mr. Glucksman's square footage calculation of 3, 654 above ground with a finished basement of 1, 000 square feet in his appraisal report was inconsistent with the square footage listed on the city records/CMLS #98508746.
The resulting $40 square foot adjustment made in comparable #1 using the 4, 654 square feet for a $99,300 downward adjustment in the FMV of comparable #1 is an incorrect mathematical calculation since the actual square footage of comparable #1 is less.
Ex. 2 is the March 2015 appraisal performed by Mr. Glucksman. Both Ex. 1 and Ex. 2 appraisals used comparable #1 at 60 East Middle Patent Road. It is the same property with the same square footage with the same land but the adjustments were $55 per square foot in that March 2015 appraisal, not $40 per square foot.
The comparison between Ex. 1 and Ex. 2 as to the comparable #1 at 60 East Middle Patent Road had a " Condition" reduction in December 2015 of $75,000 whereas the " Condition" was reduced in March 2015 by only $50,000. No explanation was given for that large change of opinion.
Ex. 3 was the September 2015 appraisal done by Mr. Glucksman. The same comparable #160 East Middle Patent Road was used with a $50 per square foot adjustment, not the current $40 per square foot adjustment.
Comparable #2 was 198 East Middle Patent Road, in Exhibit 1. Mr. Glucksman assumed that the entire square footage was all above ground. Mr. Glucksman was shown a Field Card for 198 East Middle Patent Road on cross examination. It showed that a portion of the 3, 994 square feet was not above ground.
Comparable #2 in Ex. 1 was a contemporary house built in the 1970s, whereas the premises in question was a pre-revolutionary war colonial.
65 Haviland Road, Stamford, Connecticut was used both in the current appraisal Ex. 1 and the September 11, 2015 appraisal Ex. 3. The appraisals are inconsistent as to the inclusion of a swimming pool, unfinished basement or partially finished basement.
Ex. 2, the March 27, 2015 appraisal report, states on page 4 of 27 that there is an addendum: " see attached addendum." There is no addendum attached to Ex. 1. There is no " Summary of Sales Comparable Appraisal" in Exhibit 1 despite the claim that there is an addendum performing that summary.
Ex. 2, the March 27, 2015 appraisal, used an $888,019 fair market value for the Cost Approach. That finding was not discussed in the Exhibit 1 appraisal and the lower figure of $8, 46, 421 was used, again without an explanation.
Ex. 1 uses a $40 per square foot adjustment rate whereas the March 2015 in Ex. 3 uses a $55 per square foot adjustment rate.
Although the real property has a Greenwich address, none of the four Exhibit 1 comparable properties were in the Town of Greenwich. Mr. Glucksman did agree on cross examination that if Greenwich properties were used, the land value would have increased because of the Greenwich address.
Ex. 4 is a 17-page real estate appraisal dated January 11, 2006, which is the real estate appraisal on file with Webster Bank, NA at the time of the issuance of this instant mortgage. The fair market value at that time was $1,565,000. Mr. Glucksman did not prepare this 2006 real estate appraisal. This appraisal uses comparable properties located in Greenwich, Connecticut: three on Cat Rock Road; and one at 374 Riversville Road and two comparable properties are located in Stamford; one at 342 Mayapple Road and one at 519 Haviland Road. Mr. Glucksman, when confronted with that appraisal, agreed that if the Greenwich properties had been used the land values would have increased.
Mr. Glucksman noted that the decrease from $1,565,000 in Ex. 4, the January 11, 2006 appraisal, to his current January 2016 appraisal, Ex. 1, of $725,000 was a 54% decrease in value. Mr. Glucksman could not state what conditions would cause such a decrease in property values.
The court notes that the real estate appraisal, Ex. 4, in the amount of $1,565,000 was not supported by expert testimony. Mr. Glucksman was not the appraiser in January 2006. The appraiser who prepared that January 2006 report was not brought to court and did not testify. The court is merely using the appraisal for two points; the dichotomy between the large value in 2006 with the change to a 54% lesser value according to Mr. Glucksman's January 2016 opinion and the failure of Mr. Glucksman to utilize Greenwich properties for comparables.
Mr. Glucksman did note that in 2006 the prices of real estate were going up and the real estate market had a sudden downturn in 2007 and 2008. He is not familiar with the percentage downturn of Greenwich properties. He is familiar that some areas of Fairfield County had a decrease of approximately 50% from its 2006 value.
The parties requested that this court to take judicial notice of Judge Mintz's October 19, 2015 Judgment of Strict Foreclosure that contained the fair market value of $750,000 with a debt of $1,425,498.13 as of October 19, 2015 (#114.01). The court did so.
The plaintiff is waiving any claims for additional costs, interest and attorney fees after October 19, 2015. The plaintiff is claiming that the total debt as of the hearing on the Motion for Deficiency Judgment is that contained in the October 19, 2015 judgment (#114.01); to wit $1,425,498.13. Therefore the determination of the debt is conclusive on this court. TD Bank NA v. Doran, 162 Conn.App. 460, 468, 131 A.3d 288 (2016); Gen. Stat. § 49-14; FDIC v. Voll, 38 Conn.App. 198, 209-10, 660 A.2d 358, cert. denied, 235 Conn. 903, 665 A.2d 901 (1995).
The defendant, Frasca, called Taylor Beerbower, a licensed real estate appraiser from Fairfield, Connecticut. He performed an evaluation of the Exhibit 1 appraisal. When asked on cross examination, he indicated that he had no opinion as to the fair market value of the real property in question. Mr. Beerbower's testimony was that the real estate appraisal of $725,000 marked as Exhibit 1 is not reliable. Mr. Beerbower examined each of the Field Cards, reviewed the prior appraisals, reviewed the January 2016 appraisal, and inspected the interior and exterior of the house. He notes that this is an antique house. It is an important to do an interior inspection of very old houses. He noted that Mr. Glucksman's appraisal report Ex. 1 did not examine the interior.
He noted that Mr. Glucksman did not include any antique houses in his list of comparables. This subject house is 265 years old.
In Exhibit 1 comparable #1 was a short sale. A short sale in the real estate appraisal business is not useful for identifying a fair market value. A short sale is not between a willing buyer and a willing seller each with no constraints. D'Addario v. Commissioner of Transportation, 180 Conn. 355, 365, 429 A.2d 890 (1980).
The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. United States v. Cartwright, 411 U.S. 546, 93 S.Ct. 1713, 1716-17, 36 L.Ed.2d 528, 73-1 U.S. Tax Cas. (CCH) P12, 926 (1973) (quoting from U.S. Treasury regulations relating to Federal estate taxes, at 26 C.F.R. sec. 20.2031-1(b)).
Comparable #3 and comparable #4 have different marketing times.
One of those houses sold for over its asking price. Comparable #4 sold in three days which is too fast a period of time to get a proper fair market value. The market found that the property was too cheap in price.
Mr. Beerbower noted errors as to the square footage in comparable #1, which was listed in Ex. 1 as 4, 654 square feet. According to the Field Card is 3, 654 square feet.
Comparable #2 on 198 Middle Patent Road was in the Field Card as 2, 752 square feet. In the real estate appraisal Ex. 1 it was listed at 3, 994 square feet.
Comparable #2 on 198 Middle Patent Road was not " superior" condition as stated by Mr. Glucksman.
Comparable #3 was listed in the appraisal at 3, 826 square feet whereas the City Assessor had it listed at 3, 026 square feet.
The $40 a square foot is a very conservative rate for adjustment purposes and should have been higher.
A mistake was made concerning the square footage of the lot on 65 Haviland Road, Stamford, CT since it contains a substantial amount of wetlands, which fact was not indicated in the Ex. 1 report.
Mr. Glucksman had a cost approach of $846,421 in his Ex. 1 but there is inadequate reconciliation of how he arrived at that number.
Mr. Beerbower testified that the test for fair market value is " what a willing buyer fully informed would pay to a willing seller with no constraints." He further testified that a short sale does not meet those requirements. In the real estate appraisal business a short sale should not be used for the determination of the current fair market value.
This court finds that the plaintiff has failed to establish by sufficient credible evidence to satisfy the plaintiff's burden of proof by a fair preponderance of the evidence as to what the fair market value is of 83 East Middle Patent Road, Greenwich, Connecticut 06831 that is actually located within the boundaries of the City of Stamford, Connecticut.
Gen. Stat. § 49-14(a) requires that the plaintiff produce credible evidence of such fair market value at the time that Webster Bank, N.A. took title by reason of the October 19, 2015 judgment of strict foreclosure.
The court finds that because of the plaintiff's failure to establish the fair market value by credible and accurate evidence, the court must deny the plaintiff's Motion for Deficiency Judgment dated December 11, 2015 (#143.00).
The Plaintiff's Motion for Deficiency Judgment dated December 11, 2015 (#143.00) is denied.