Opinion
FSTCV166030425S
12-28-2017
WELLS FARGO BANK, N.A. v. Stanley BOSILL, et al.
UNPUBLISHED OPINION
OPINION
Hon. Kevin Tierney, Judge Trial Referee
The issue before this court is what is the date certain for redeeming the mortgage in a judgment of foreclosure by sale?
Although our Appellate Courts have discussed this issue on a number of occasions, the exact chronological date has not been discussed in detail. " Nonetheless, the exact moment of vesting has not been defined." First National Bank of Chicago v. Leucken, 66 Conn.App. 606, 612-13 (2001). That fact has caused the Committee in this residential foreclosure to file this instant November 27, 2017 Motion for Advice.
On May 22, 2017 this court entered a judgment of foreclosure by sale in favor of the plaintiff, Wells Fargo Bank, N.A., and scheduled the sale for August 12, 2017. (# 109.01, # 115.00) The Committee proceeded to conduct the sale as scheduled and two individuals, not parties to this foreclosure litigation, were the successful bidders. The Committee filed its Motion for Approval of Committee Sale in the usual fashion, which was heard and granted at a duly assigned foreclosure short calendar (# 123.01). On November 7, 2017 the court approved the Committee’s sale, the Committee deed and the Committee’s report and ordered the payment of certain fees. (# 123.01). Also on November 7, 2017 the judge entering the above order executed the Committee Deed to the two successful bidders (# 124.00). The Committee then made arrangements to conduct the closing that was scheduled for November 28, 2017. The Committee discovered from an examination of the land records that title to the subject property had passed to Citizens Bank, N.A., the holder of a second mortgage on the premises and a non-appearing party defendant in the instant foreclosure action. The Committee noted that Citizens Bank, N.A. had acquired title to the subject premises by reason of a December 5, 2016 judgment of strict foreclosure in Citizens Bank, N.A. et al. v. Stanley Bosill et al., Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket Number FST CV 16-6028048 S. (# 122.01, # 127.55). The law days commencing on April 18, 2017 passed in that other foreclosure and thereafter a Certificate of Foreclosure to Citizens Bank, N.A. dated April 20, 2017 was recorded on the Norwalk Land Records. (# 118.00.) In addition the Committee noted the filing of a pleading by the plaintiff in this instant foreclosure action on November 22, 2017 entitled Satisfaction of Judgment. (# 125.00.) The Satisfaction of Judgment stated: " The Plaintiff, Wells Fargo Bank NA, does hereby certify that on November 22, 2017 the defendant(s), Citizens Bank NA f/k/a Citizens, NA f/k/a Citizens Bank of Massachusetts, satisfied the terms of the judgment entered on May 22, 2017 in the above-entitled action, by payment to the plaintiff of all amounts due it thereunder." (# 125.00.)
The defendant, Citizen Bank, N.A., had been properly served at the commencement of this foreclosure action. (# 100.30.) It was served with the Motion for Default for Failure to Appear. (# 106.00.) It was served with the clerk’s order of default with a JDNO notice. (# 106.01, JDNO notice dated May 16, 2017.) It was sent a Notice of Judgment on May 3, 2017 by the plaintiff. (# 116.00.) Yet Citizens, N.A. chose not to appear by counsel of record, even during the redemption process. Counsel for Citizen, N.A. first appeared on November 30, 2017.
This court assigned a hearing on December 1, 2017 on the Committee’s November 27, 2017 Motion for Advice and requested the presence of the Committee, the attorneys for the two banks and the two successful bidders. All three of those parties appeared in court and were heard on December 1, 2017. Post-hearing briefs were filed on December 15, 2017. Although the two successful bidders, because of the time constraints, did not have the opportunity to intervene, the court permitted their appearing attorney to argue at the December 1, 2017 hearing and file a brief as a friend of the court. Briefs were filed by all parties except the Committee by the December 15, 2017 deadline.
Connecticut law has established dates certain in dealing with judgments of foreclosure. Many contested foreclosure matters are tried in a bifurcated fashion. The first trial determines liability and rules on defenses. Thereafter a written decision is filed by the trial judge. The foreclosure action is then assigned to the regular foreclosure short calendar docket for the determination of the amount of the debt, attorneys fees, costs, fair market value of the real property, and the method of foreclosure. Only when a court has established the debt and determined the type of foreclosure is the decision of the court in a foreclosure matter a final appealable judgment. Pinnix v. Lamorte, Trustee, 182 Conn. 342, 343-44 (1980); Essex Savings Bank v. Frimberger, 26 Conn.App. 80, 80-81 (1991).
In judgments of strict foreclosure a statute sets forth a strict timeline with a date certain. " [N]o such judgment shall be opened after the title has become absolute in any encumbrancer ..." Gen. Stat. § 49-15(a)(1). In that regard the trial court’s judgment of strict foreclosure establishes a series of law days, which can be no less than twenty days after the date of the entry of the judgment. The judgment of strict foreclosure and its laws days therefore take into consideration the twenty-day appeal period. Practice Book § 63-1(a), § 61-4(b), 61-5(a). Continental Capital Corporation v. Lazarte, 57 Conn.App. 271, 272-74 (2000).
Despite the clarity of the date certain in both of the above situations, a date certain for a judgment of foreclosure by sale is less clear. There is no statute covering those circumstances and there is a paucity of Connecticut Appellate authority on the subject. " Generally, foreclosure means to cut off the equity of redemption, the equitable owners right to redeem the property ... The equity of redemption can be cut off by sale or by strict foreclosure." Mortgage Electronic Registration Systems, Inc. v. White, 278 Conn. 219, 229 (2006); National City Mortgage Company v. Stoecker, 92 Conn.App. 787, 793 (2006). Although the statutes set forth the procedure pursuant to which a foreclosure sale is conducted, the exact time for the right to open the judgment of foreclosure by sale and/or redeem is not contained within those statutes. Gen. Stat. § 49-25. The Foreclosure by Sale Standing Orders, JD-CV-79 Rev. 10-10, Order 20 requires: " The high bidder/purchaser must close no sooner than 21 days but no later than 30 days from the date of notice of the Court’s approval of the committee sale." Thus the 20-day appeal period, although not mentioned, is considered in Order 20.
Under Connecticut law, the rights of the mortgagor or debtor in the ... property are terminated by confirmation of the foreclosure sale, and subsequent to such sale, any interest the mortgagor or debtor may claim is in the proceeds of the sale solely and not in the property ... A judicial sale becomes complete and creates a legal right to obligations among parties when it is confirmed and ratified by the court ... Although the court’s approval of a sale extinguishes the right of redemption of other parties, it does not automatically vest title with the purchaser.
Mortgage Electronic Registration Systems, Inc. v. White, supra, 278 Conn. 230.
" When a sale has been made pursuant to a judgment therefor and ratified by the court, a conveyance of the property sold shall be executed by the person appointed to make the sale, which conveyance shall vest in the purchaser the same estate that would have vested in the mortgagee or lienholder ..." Gen. Stat. § 49-26. The most recent case on the subject is the well-known case of First Connecticut Capital, LLC v. Homes of Westport, LLC, 112 Conn.App. 750, 752, fn. 3 (2009). This case involved a defendant’s continual filing of motions to open judgments of foreclosure by sale and extend the sale dates. The court held: " Rather, the motion to open a judgment of foreclosure by sale has two restrictions. It must be filed within the four-month restriction of General Statutes § 52-212a, and this motion has to filed before the committee sale is approved." Id. 752, fn. 3. An earlier case stands for the same proposition: " Thus, a motion to open the judgment of strict foreclosure may be filed later than four months after the judgment has been rendered, but not after absolute title passes in any encumbrancer. On the other hand, a motion to open the judgment of foreclosure by sale has two restrictions. It must be filed within the four month restriction of § 52-212a, and this motion has to be filed before the committee sale is approved." Northeast Savings, F.A. v. Hopkins, 22 Conn.App. 396, 399, fn. 3 (1990).
Returning to the court orders, the aforementioned Committee’s report was approved and the Committee Deed was executed on the same day, November 7, 2017. The successful bidders claim that Citizens Bank, N.A. had no right to either file a Motion to Open the Judgment of Foreclosure by Sale or to redeem after the court approval of the Committee’s sale on November 7, 2017. This court agrees that this legal and factual position is in accordance with the above cited case law.
The defendant, Citizens Bank, N.A., argues that the statutory scheme of filing Motions to Open and/or redemption in a judgment of strict foreclosure has already taken into account the passage of the twenty-day appeal period. The defendant points out that no law day would have been scheduled or ordered by the trial court until after the twenty-day appeal period had run from the entry of the judgment of strict foreclosure. The defendant further argues that the twenty-day appeal period had not yet run from the November 7, 2017 approval of Committee’s sale and that the defendant had until November 27, 2017 to either file a Motion to Open the Judgment of Foreclosure by Sale and/or to redeem. The court notes that the defendant, Citizens Bank, N.A., did redeem in full on November 22, 2017 and a Satisfaction of Judgment was duly filed on November 22, 2017 as a pleading in this case to that effect. (# 125.00.)
The court notes that in a foreclosure by sale only the holder of the equity of redemption has the right to redeem. Had Citizens Bank, N.A. remained as a holder of the second mortgage on this property as of November 2017 it would not have had a right to redeem ... Gen. Stat. § § 49-21, 49-25. By statute a subsequent encumbrance can redeem on its law day in a judgment of strict foreclosure. Gen. Stat. § § 49-19; 49-20. This right of redemption by subsequent encumbrancers does not exist in a judgment of foreclosure by sale. (" It is important to recognize that the procedure described above only has application in a strict foreclosure, and not in a foreclosure by sale, since such a judgment makes no provision for redemption by anyone other than the owner.") D. Caron & G. Milne, Connecticut Foreclosure, Seventh Edition, Section 10-2:1.2. Only the holder of the equity of redemption, Stanley Bosill and his wife, would have the right to redeem under that theory. When Citizens Bank, N.A. acquired the title to the real property by its foreclosure of its second mortgage on April 20, 2017, it stood in the shoes of the Bosills, therefore Citizens Bank, N.A. became the holder of the equity of redemption. Citizens Bank, N.A. had the right to redeem which they did on November 22, 2017. Ghent v. Meadowhaven Condominium, Inc., 77 Conn.App. 276, 287-88 (2003).
The Appellate Court affirmed the right to file a motion to open judgment of foreclosure by sale after the date the court accepted the Committee’s sale report. The trial court denied the motion to open on the basis it had no jurisdiction to entertain such a motion after the approval of the Committee’s sale. On May 9, 2005 the trial court approved the Committee’s sale. The defendant filed a motion to open the judgment, which the court later denied after a hearing. The motion to open was filed during the appeal period from the court’s approval of the sale. The Appellate Court found that the court order approving the Committee’s sale was an appealable order. The Appellate Court reversed, finding that the motion to open stayed the appeal period. Wells Fargo Bank of Minnesota, N.A. v. Morgan, 98 Conn.App. 72, 82 (2006).
Morgan only ruled on the right to file a motion to open a judgment of foreclosure by sale after the court ordered the approval of the sale. In dicta, Wells Fargo v. Morgan discussed the right of redemption in a judgment of foreclosure by sale, a matter not at issue in Morgan.
In a foreclosure by sale, a mortgagor may exercise his rights of redemption " until such time as the judicial authority approves the foreclosure sale. The [judicial] sale is not absolute until confirmed. The order of confirmation gives the judicial sanction of the court, and when made it relates back to the time of the sale ..." (Emphasis in original; internal quotation marks omitted.) Washington Trust Co. v. Smith, 241 Conn. 734, 742, 699 A.2d 73 (1997); see also Willow Funding Co., L.P. v. Grencom Associates, 63 Conn.App. 832, 837-38, 779 A.2d 174 (2001) (" [r]ights to redemption ... survive the auction of the foreclosed property and may be exercised until such time as the judicial authority approves the foreclosure sale" [internal quotation marks omitted]); Hartford Federal Savings & Loan Assn. v. Tucker, 13 Conn.App. 239, 247, 536 A.2d 962 (" [u]nder Connecticut law, a judicial sale becomes complete and creates a legal right to obligations among parties when it is confirmed and ratified by the court"), cert. denied, 207 Conn. 805, 540 A.2d 373 (1988). Generally, once a court has approved the foreclosure sale and the applicable appeal period has elapsed, the mortgagor’s right of redemption is extinguished and the court’s jurisdiction to modify that judgment ends. See D. Caron & G. Milne, Connecticut Foreclosure (4th Ed. 2004) § 9.01B, p. 203 (" [a]bsent the possibility of an appeal from [the court’s] determination, the approval of the sale generally operates to divest the owner of his equity of redemption and consequently places the property beyond the power of the court"). Accordingly, after the sale is approved and the relevant appeal periods have expired, any action by the mortgagor to redeem should be dismissed as moot. See, e.g., Connecticut Savings Bank v. Howes, 9 Conn.App. 446, 447-48, 519 A.2d 1216 (1987).Wells Fargo Bank of Minnesota, N.A. v. Morgan, supra, 98 Conn.App. 79-80.
This court finds that the defendant, Citizens Bank, N.A., as the then holder of the equity of redemption had the right to redeem at any time within twenty days after the approval of sale and the execution of the Committee Deed, both of which occurred on November 7, 2017. BNY Western Trust v. Roman, 102 Conn.App. 265, 267 (2007). The court therefore finds that the redemption by Citizens Bank, N.A. and the Satisfaction of Judgment filed as a pleading in this court were valid transactions.
By redeeming Citizens Bank, N.A. acquired full and complete title to the real property terminating the efforts that the two successful bidders had made to acquire title to the property, free and clear of any claims by the holder of the second mortgage, Citizens Bank, N.A. " Once a court has approved the foreclosure sale and the applicable appeal period has elapsed, the mortgagor’s right of redemption is extinguished ..." Id. 79. This quote, although dicta in Wells Fargo v. Morgan, furnishes the answer to this court’s initial question: What is the date certain for redemption?
Gen. Stat. § 49-21 contain certain procedural requirements. An examination of the November 22, 2017 Satisfaction of Judgment reveals certain non-compliance with Gen. Stat. § 49-21. The court finds that such non-compliance is in the nature of scrivener’s errors and the proceedings of redemption can be rightly understood. The court further finds that any deficiencies in the form of the Satisfaction of Judgment dated November 22, 2017 (# 125.00) are circumstantial defects. Gen. Stat. § 52-123. The court declines to void the redemption due to failure to comply with all of the requirements of Gen. Stat. § 49-21.
The court finds that Citizens Bank, N.A. was negligent in failing to appear and participate in the sale, and the motion to approve the sale. Had Citizens Bank, N.A. so informed the court or the parties of its intention to redeem, court time and efforts of counsel of record could have been avoided or lessened. The court finds that despite the non-appearance and non-participation of Citizens Bank, N.A. in this foreclosure litigation, it timely redeemed, as was its right. The court declines to exercise its equitable jurisdiction and void the timely and full redemption by Citizens Bank, N.A. Fidelity Bank v. Krenisky, 72 Conn.App. 700, 705 (2002).
The court hereby grants the Motion for Advice. The court orders that the Committee not convey title to the successful bidders, return the Committee Deed to the clerk of the court and return the deposit to the two successful bidders. The court orders the plaintiff to pay a reasonable Committee’s fee for the additional services performed by the Committee after November 7, 2017 as well as reimbursement for any out of pocket costs incurred by the Committee. The Committee shall file a Motion for Additional Committee Fees, which shall be heard and assigned at a regular foreclosure short calendar by the judge duly assigned to that short calendar.
The Motion for Advice states, " Your Committee seeks advice as to whether the Satisfaction of Judgment renders the order of the court approving the sale moot, and, if so, seeks an order from the court as to the return of the deposit to the successful bidders." This court does not deem it necessary for the court to respond in kind to this request. This court believes that the orders that this court has just entered in the Motion for Advice covers the interests of all three parties to this transaction.