Opinion
No. TTD CV 08 5002341 S
May 21, 2008
MEMORANDUM OF DECISION
The committee, Robert C. DuBeau, in this foreclosure action moves for an allowance of fees and expenses. The plaintiff, Webster Bank, contends that this court cannot act on this request because the mortgagor, Sherri Lee-Hunihan, has filed a bankruptcy petition which instigates the automatic stay provisions of 11 U.S.C. 362(a). The court rejects this contention.
On March 3, 2008, the court entered a judgment of foreclosure by sale. DuBeau was appointed as committee of sale, and the sale was scheduled for May 3, 2008. Certain fees and expenses were earned and/or incurred by the committee in the execution of the court's mandate. The plaintiff makes no attack on the propriety or reasonableness of the sums requested.
The day before the auction, May 2, 2008, the mortgagor filed a bankruptcy petition in the U.S. District Court of Connecticut. Under 11 U.S.C. § 362(a), the filing of a bankruptcy petition "operates as a stay, applicable to all entities, of — (1) the . . . continuation . . . of a judicial . . . action or proceeding against the debtor that was or could have been commenced before the [bankruptcy filing] . . . to recover a claim against the debtor that arose before the [filing] . . ."
However, the committee's motion in this case falls under General Statutes § 49-25 which states that if "for any reason the sale does not take place, the expense of the sale and appraisal or appraisals shall be paid by the plaintiff and be taxed with the costs of the case." (Emphasis added.) Committee fees and expenses assessed by the court against the plaintiff are not part of the mortgagor's debt but rather constitute an item of costs which may be taxed if the foreclosing plaintiff prevails ultimately. Norwalk v. Farrell, 80 Conn.App. 399, 408-09 (2003).
The automatic stay triggered under 11 U.S.C. § 362(a) fails to protect CT Page 8686 nondebtor parties "for transactions or events involving the debtor," 3 Collier on Bankruptcy § 362.03[3][d], p. 362-17. Aspects of litigation which only collaterally affect the bankruptcy petitioner are not stayed. Id., § 362.03[3], p. 362-15. For example, the automatic stay fails to halt an action against a guarantor of the debtor despite the possibility that the guarantor, if found liable, might then have a right to indemnification from the debtor. In Re Smith, 14 B.R. 956, 957-58 (D.Conn. 1981).
The motion before the court seeks to require the plaintiff to compensate the committee for the sums engendered by the committee's efforts to fulfill the court's orders before the sale was thwarted by the bankruptcy filing. This is precisely the situation for which such an obligation against the plaintiff arises under § 49-25. The fact that the plaintiff may, at some future date, pursue reimbursement of such costs from the mortgagor is immaterial. This circumstance appears entirely analogous to the guarantor/debtor action allowed under In Re Smith, supra.
The taxation of costs would, of course, only arise if the plaintiff prevails which necessarily implies a cessation of the automatic stay under 11 U.S.C. § 362(a). In that event, the mortgagor would be free to contest such costs under Practice Book § 18-5.
At least one other trial court decision is in accord with this reasoning. Paragon Mortgage Co. v. Singleton, Superior Court, Hartford J.D., d.n. 379735 (March 4, 1991), Satter, J. The motion to award committee fees and expenses payable by the plaintiff is granted.