Summary
allowing recovery of interest and late charges up until the point that plaintiff could have taken title
Summary of this case from Fleet National Bank v. SquillacoteOpinion
File No. 510457
Foreclosure; deficiency judgment; determination of fair market value of property for deficiency judgment purposes; whether upon facts, plaintiff-mortgagee was to receive interest from date of defendants' default to date of judgment of strict foreclosure; whether plaintiff's failure to comply with defendants' repeated requests to take title prior to foreclosure was inequitable; whether plaintiff's same failure to comply constituted breach of implied covenant of good faith and fair dealing; whether defendants' claim regarding plaintiff's inequitable conduct was properly before court.
Memorandum filed August 28, 1992
Memorandum of decision on the plaintiff's motion for deficiency judgment. Motion granted.
Kantor Silver, for the plaintiff.
Tarlow, Levy Droney, for the defendants Lisa M.E. and Peter N. Upton.
Seth Feigenbaum, for the defendant Quail Ridge of Farmington Homeowner's Association, Inc.
After having obtained a judgment of strict foreclosure, the plaintiff moves pursuant to General Statutes 49-14a for a deficiency judgment.
Pursuant to a stipulation, judgment was entered on June 15, 1992. The appeal period was waived and title passed on June 17, 1992. The final calculation of the debt was to be determined at a later date. All parties agreed that the fair market value of the property was $342,000 on the date of judgment. The plaintiff submitted an appraisal as to that amount, and the defendants, Lisa and Peter Upton, having submitted a written agreement as to the same amount. The court accordingly found the fair market value of $342,000 at that time.
At a hearing on August 10, 1992, both parties presented evidence to the court as to different values. In addition, the Uptons argued that the plaintiff was not entitled to the interest claimed because the interest was for a longer period than the plaintiff was equitably entitled to under the circumstances of this case.
At a deficiency judgment hearing, the court is bound to determine the fair market value of the property on the date of vesting of title in the plaintiff. New Haven Savings Bank v. West Haven Sound Development, 190 Conn. 60, 459 A.2d 999 (1983); Equitable Life Assurance Society v. Slade, 122 Conn. 451, 190 A. 616 (1932).
At the hearing of August 10, 1992, the plaintiff's expert testified that the value of the property on the date of vesting was not $342,000 as indicated in his report dated May 11, 1992, but $317,000 as of June 17, 1992, scarcely one month and six days later. This difference, he attributed to "better comparables" that he was able to secure subsequent to his original appraisal. The defendants Upton now claimed through their appraiser that the property on the date of vesting was worth $365,000. They, in fact, had stipulated on June 1, 1992 that the value of the property was $342,000.
This court can only conclude that the testimony provided by both experts was nothing more than protagonistic and accordingly finds the fair market value on the date of vesting of title to be $342,000.
In the present case, the plaintiff is claiming interest on the debt from November 1, 1990 until June 15, 1992, a period of approximately one year and seven months.
The evidence adduced at trial has established that commencing on January 9, 1991 the defendant, Peter N. Upton, began sending a series of letters and made a similar series of telephone calls to the plaintiff indicating that the Uptons could no longer make their mortgage payments and wanted to resolve the issue. Starting in February, 1991, correspondence to the plaintiff (February 12, March 4, September 23, November 7 and December 31, 1991) contained offers by the Uptons to convey good title to the plaintiff so as to avoid further interest charges, penalties and costs. No response to these offers was ever made by the plaintiff.
The Uptons now claim that, the plaintiffs' conduct has resulted in excessive interest charges, penalties, and costs being charged to them. They ask that the court disallow these charges.
This court is of the opinion that the defendants are entitled to consideration of this claim for several reasons.
Aside from the consideration of the equity involved in a foreclosure action, Connecticut has long recognized the doctrine of good faith and fair dealing in the performance of contractual obligations. General Statutes § 42a-203; Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 567, 479 A.2d 781 (1984).
This doctrine has been reaffirmed by our Supreme Court in a landlord-tenant situation wherein it reaffirmed its reliance on the Restatement (Second) of Contracts § 205, which provides: "Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement." Warner v. Konover, 210 Conn. 150, 154, 553 A.2d 1138 (1989).
Further, a foreclosure action is equitable in nature. Boretz v. Segar, 124 Conn. 320, 324, 199 A. 548 (1938). If at trial the court found that the plaintiff's conduct was inequitable it could withhold foreclosure on such equitable considerations and principles. Lettieri v. American Savings Bank, 182 Conn. 1, 12 437 A.2d 822 (1980); Hamm v. Taylor, 180 Conn. 491, 497, 429 A.2d 946 (1980).
In Hamm v. Taylor, supra, 497, the court also held that on such equitable considerations, the trial court could reduce the amount of the stated indebtedness. See also Hartford Federal Savings Loan Assn. v. Lenczyk, 153 Conn. 457, 463, 217 A.2d 694 (1966); Mackey v. Dobrucki, 116 Conn. 666, 670, 166 A. 393 (1933).
The Appellate Court has also recently recognized this principle in permitting a setoff on an equitable basis. Connecticut Bank and Trust Co. v. Winters, 26 Conn. App. 317, 321, 600 A.2d 1046 (1991), cert. granted, 221 Conn. 911, 602 A.2d 10 (1992).
In the opinion of this court, the plaintiff's actions in failing to respond and comply with the Uptons' request that it take title to the property was both a breach of good faith and fair dealing and inequitable conduct on its part toward these defendants. The plaintiff should have taken title to the property no later then May 1, 1991, and consequently should not be allowed interest or late charges beyond that date.