Opinion
UWYCV186039241
09-11-2018
NUTMEG FINANCIAL HOLDINGS, LLC Assignee of ION Bank fna Naugatuck Savings Bank v. 249 RIVER STREET, LLC et al.
UNPUBLISHED OPINION
Mark H. Taylor, Judge
I
BACKGROUND
The plaintiff, Nutmeg Financial Holdings, LLC, brings this action seeking ejectment of the named defendants in possession of the subject premises, 249-253 River Street and 259-263 River Street, in Waterbury. Subsequent to taking title pursuant to a judgment of strict foreclosure, the plaintiff filed this Application and Execution for Ejectment on July 30, 2018, to which the defendant, Rosa Munoz, filed an objection on August 6, 2018. Munoz is joined by defendant Nydia Acevedo in objecting to the execution, asserting they are protected from immediate ejectment as bona fide tenants, as defined by General Statutes § 49-31p and the Federal Act, Title VII of the Helping Families Save Their Homes Act of 2009, also known as the Protecting Tenants at Foreclosure Act of 2009, Pub. L. No. 111-22, § § 701-04 123 Stat. 1660, (PTFA). As bona fide tenants under these substantially similar enactments, the defendants assert their right to a separate notice to vacate of not less than ninety days, which, they contend, was not provided. The parties were heard by the court on August 20, 2018. After considering the evidence presented and applicable law, the defendants’ objections are overruled.
The following parties are named as defendants in possession: Rosa Rivera, Rosa Munoz, Benjamin Jirmez, Nydia Acevedo, Jose Vasquez, Hermino Chiboga, Maggie Bonillo, Okesha Burrus, Maurice Gonzalez, Vanderleia Gnaraccao, John Sarmiento. Only Rose Munoz and Nadia Acevedo have objected to the pending application and execution for ejectment.
The parties do not dispute whether the foreclosed property is subject to a federally-related mortgage loan and, therefore, subject to the PTFA.
This action was originally filed with the court on March 7, 2018. Both defendants filed appearances, but were later defaulted for failure to plead on June 21, 2018. A judgment of strict foreclosure was granted by the court on July 2, 2018, with law days commencing on July 24, 2018. No defendant redeemed the property on their assigned law day and, as a result, title vested with the plaintiff on July 26, 2018, which then filed this application for ejectment soon thereafter.
The evidence presented reveals that both parties were bona fide tenants at the time the foreclosure was filed in March; however, neither Munoz nor Acevedo have tendered monthly rental payments since May of this year, before the plaintiff took title. Munoz satisfactorily proved to the court by a preponderance of the evidence that she received a general release from the defendant landlord, who was the owner of the equity of redemption, in the amount of $6,000 for an injury she sustained at the foreclosed premises. The release afforded her rental credits of $750 per month, beginning on October 1, 2017 through May 1, 2018. Def.’s Exh. C. Since May, however, she has not tendered her rental payments, despite notice and specific directions of how and to whom to make such payments. Pl.’s Exhs 1 and 2. In addition, Acevedo admitted in her testimony to the court that she had withheld the previous three monthly rental payments, apparently since May as well, due to alleged defects with the flooring and fixtures in her dwelling unit. No remedy has been employed by Acevedo to enforce the landlord’s responsibilities pursuant to Title 47a.
This was Munoz’s approximate monthly rental payment prior to obtaining rental credits as provided in her release. See Def.’s Exhs. A and B. In the court’s view, this amount satisfies the PTFA’s tripartite conjunctive test for establishing a bona fide lease or tenancy, for the time prior to the plaintiff taking title: "(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) the lease or tenancy was the result of an arms-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State or local subsidy." (Emphasis in original; internal quotation marks omitted.) Customers Bank v. Boxer, 148 Conn.App. 479, 485, 84 A.3d 1256 (2014). "General Statutes § 47a-1(h) defines ‘rent’ as ‘all periodic payments to be made to the landlord under the rental agreement.’ Black’s Law Dictionary defines ‘payment as [t]he money or other valuable thing so delivered in satisfaction of an obligation.’ Black’s Law Dictionary (9th Ed. 2009) ... Accordingly, we consider a bona fide lease or tenancy for purposes of applying the PTFA in Connecticut to be a lease or tenancy that requires the receipt of periodic monetary payments or periodic payments of something of value, to the landlord in satisfaction of the tenant’s obligation, ‘that [are] not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State or local subsidy.’ " (Citation omitted; footnote omitted.) Id., 855-56.
II
DISCUSSION
In the court’s view, two legal issues arise in this case. First, is a title holder subsequent to foreclosure required to provide a ninety-day notice to tenants who have been cited as party-defendants? Second, if a ninety-day notice is required, do tenants lose their right to a 90-day right to vacate if they are no longer bona fide tenants at the time the foreclosing plaintiff takes title?
There appear to be no appellate or superior court cases addressing these questions of law. The court will therefore begin with a brief overview of the PTFA and the Connecticut corollary, General Statute § 49-31p. The PTFA provides in relevant part, and § 49-31b substantially echoes, that "[i]n the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property ..., any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to ... the provision, by such successor in interest, of a notice to vacate to any bona fide tenant at least [ninety] days before the effective date of such notice ..." Pub. L. No. 111-22, § 702(a). See also General Statutes § 49-31p (requiring ninety-day notice requirement).
Pub. L. No. 111-22, § 702(a), provides in relevant part: "In general.- In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title [May 20, 2009], any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to- (1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and (2) the rights of any bona fide tenant- (A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90-day notice under paragraph (1); or (B) without a lease or with a lease terminable at will under state law, subject to the receipt by the tenant of the 90-day notice under subsection (1) ... (b) Bona fide lease or tenancy.- For purposes of this section, a lease or tenancy shall be considered bona fide only if- (1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) the lease or tenancy was the result of an arms-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State, or local subsidy."
General Statutes § 49-31p similarly provides, in relevant part: "(a) In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property that has a return date on or after July 13, 2011, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to (1) the provision, by such successor in interest, of a notice to vacate to any bona fide tenant not less than ninety days before the effective date of such notice; and (2) the rights of any bona fide tenant, as of the date absolute title vests in such successor in interest (A) under any bona fide lease entered into before such date to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the ninety-day notice under subdivision (1) of this subsection; or (B) without a lease or with a lease terminable at will under state law, subject to the receipt by the tenant of the ninety-day notice under subdivision (1) of this subsection ... (b) For purposes of this section, a lease or tenancy shall be considered bona fide only if (1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant, (2) the lease or tenancy was the result of an arms-length transaction, and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a federal, state or local subsidy ..."
These statutory provisions are. substantially the same, citing different effective dates. In addition, the state statute refers to "... not less than ninety days before the effective date of such notice," General Statutes § 49-31p(a), where the federal code provision uses similar language: "... at least 90 days before the effective date of such notice ..." Pub. L. No. 111-22, § 702.
Both the PTFA and § 49-31p, were enacted after General Statutes § 49-22a was amended in 1984, which permitted the ejectment of tenants in foreclosed property, so long as they were cited as defendants in the foreclosure. Prior to the enactment of the PTFA and General Statute § 49-31p, a foreclosing mortgagee had two options for obtaining possession of premises from a tenant: "The mortgagee can name the tenant as a party in the foreclosure action and obtain a judgment of ejectment pursuant to General Statutes § 49-22, or after obtaining title, the mortgagee can proceed with a summary process action pursuant to § 47a-23." (Footnote omitted.) Federal Home Loan Mortgage Corp. v. Van Sickle, 52 Conn.App. 37, 42-43, 726 A.2d 600 (1999); see Tappin v. Homecomings Fin. Network, Inc., 265 Conn. 741, 743, 830 A.2d 711 (2003) ("a tenant must be joined as a party to the foreclosure action in order to be ejected pursuant to § 49-22(a)").
Sec. 49-22(a) provides in relevant part: "In any action brought for the foreclosure of a mortgage or lien upon land, or for any equitable relief in relation to land, the plaintiff may, in his complaint, demand possession of the land, and the court may, if it renders judgment in his favor and finds that he is entitled to the possession of the land, issue execution of ejectment, commanding the officer to eject the person or persons in possession of the land and to put in possession thereof the plaintiff or the party to the foreclosure entitled to the possession by the provisions of the decree of said court ..."
General Statute § 49-22, as amended and otherwise referred to as "[n]umber 84-539 of the 1984 Public Acts (P.A. 84-539) was adopted in response to Hite v. Field, 38 Conn.Supp. 70, 462 A.2d 393 (1982), a Superior Court decision concerning the rights of tenants in a mortgage foreclosure action. In Hite, the court enjoined an execution of ejectment against tenants under an oral, month-to-month lease who had not been named as parties to the foreclosure action, finding that the lis pendens filed in the land records did not give adequate notice of the foreclosure to the tenants ... The court ruled that the tenants’ constitutional due process rights were violated because they were deprived of notice and an opportunity to be heard during the foreclosure action ..." (Citations omitted.) Tappin v. Homecomings Fin. Network, Inc., 265 Conn. 741, 756, 830 A.2d 711 (2003).
The clear language of these more recent federal and state enactments; see footnotes four and five; specifically require a ninety-day notice as a prerequisite to the ejectment of bona fide tenants. There is no exception for tenants who were otherwise made parties to the foreclosure, despite the prior existence of § 49-22(a), which seemingly would not require such a notice. Thus, the court is required to construe the proper meaning of these later enacted and more specific state and federal provisions.
The court will begin with our rules of statutory construction. "When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature ... In seeking to determine that meaning, General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered ... When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common-law principles governing the same general subject matter ... An additional principle of statutory construction that is relevant to this issue is that the legislature is always presumed to have created a harmonious and consistent body of law ... [T]his tenet of statutory construction ... requires [this court] to read statutes together when they relate to the same subject matter ... Accordingly, [i]n determining the meaning of a statute ... we look not only at the provision at issue, but also to the broader statutory scheme to ensure the coherency of our construction." (Citations omitted; internal quotation marks omitted.) Brennan v. Brennan Associates, 316 Conn. 677, 684-85, 830 A.2d 711 (2015).
Similarly, "[w]ith respect to the construction and application of federal statutes, principles of comity and consistency require us to follow the plain meaning rule for the interpretation of federal statutes because that is the rule of construction utilized by the United States Court of Appeals for the Second Circuit ..." Dark-Eyes v. Commissioner of Revenue Services, 276 Conn. 559, 571 (2006).
As to the first issue identified by this court, whether a ninety-day notice is required to bona fide tenants who are parties to a foreclosure action, the court answers this question in the affirmative. Reading the language of these enactments together, § 49-22(a) the PTFA and § 42-31p, giving weight to the later and more specific provisions, their clear meaning requires a ninety-day notice to vacate, issued to all bona fide tenants by an immediate successor in interest to the foreclosure, such as the plaintiff in the present case. See Pub. L. No. 111-22, § 702(a)(1) (requiring immediate successor in interest to foreclosure to provide "a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice" [emphasis added] ), accord, General Statutes § 49-31p(a). This unambiguous requirement permits tenants to plan ahead, including those cited as defendants, without having to predict when a foreclosure will go to judgment or the length of time that will be allowed for a law day. Bona fide tenants, who continue to be tenants in good standing, will also be permitted to continue their tenancies for a reasonable period, once the foreclosing party takes title. Therefore, the PTFA and General Statute § 49-31p provide greater clarity in establishing tenants’ rights to continued occupancy, so long as they are bona fide tenants in good standing. The purpose of the PTFA and General Statutes § 49-31p therefore appears to be remedial in nature, to ensure that bona fide tenants facing eviction from foreclosed property avoid immediate displacement following foreclosure.
In light of the court’s construction of the state statutes referred to in this case, there is no need to specifically address the questions of preemption and supremacy which may attach to the federal enactment.
The second issue presented to the court is whether the ninety-day notice is required if the defendants are no longer bona fide tenants at the time the foreclosing plaintiff takes title. The court answers this question in the negative. The notice requirements of the PTFA and General Statutes § 49-31p only apply to bona fide tenants. In this regard, however, the court finds that Munoz and Acevedo were in default of their rental agreements at the time the plaintiff took title pursuant to the judgment of strict foreclosure on July 26, 2018, and, thus, were not bona fide tenants. Both parties did not pay rent since May, and have failed to establish that the lease required receipt of rent that was not substantially less than the fair market value, or that they paid such an amount. See Customers Bank v. Boxer, 148 Conn.App. 479, 486, 84 A.3d 1256 (2014) ("[W]e consider a bona fide lease or tenancy for purposes of applying the PTFA in Connecticut to be a lease or tenancy that requires the receipt of periodic monetary payments or periodic payments of something of value, to the landlord in satisfaction of the tenant’s obligation ..." (Emphasis added.) Therefore, no notice to vacate was required to be provided to Munoz and Acevedo because they were no longer bona fide tenants. As such, neither defendant may assert the rights afforded to bona fide tenants pursuant to the PTFA and General Statute § 49-31p, and are subject to summary ejectment as historically provided by General Statutes § 49-22.
III
CONCLUSION
In light of the foregoing, the defendants’ objections to the Application and Execution for Ejectment are overruled.
SO ORDERED.