Opinion
MMXCV146012680S
06-06-2019
TD BANK, N.A. v. SUNTECH OF CONNECTICUT, INC. et al.
UNPUBLISHED OPINION
OPINION
Domnarski, J.
The plaintiff, TD Bank, N.A., filed this action against the defendants Suntech of Connecticut, Inc. (Suntech), and Michael Berkun (Berkun), by complaint dated September 22, 2014. In count one, the plaintiff alleges that Suntech executed a promissory note, dated June 28, 2012, in the original amount of $300,000 (note). The plaintiff further alleges that Suntech has defaulted on its obligations under the note and the plaintiff has demanded the entire amount due under the note.
In count two, the plaintiff alleges that the defendant Berkun unconditionally guaranteed payment of the Suntech note referenced in count one. To secure his guaranty, on June 28, 2012, Berkun mortgaged to the plaintiff property he owned located at 63 and 65 Iron Works Road, Killingworth, Connecticut (Iron Works Road property). It is undisputed that this was a first mortgage upon the defendant’s property.
In count three, the plaintiff alleges Suntech signed a revolving line of credit note in the amount of $600,000 on October 24, 2006 (credit line note). The plaintiff further alleges that Suntech has defaulted on its obligations under the revolving line of credit note and the plaintiff has demanded the full amount due under the note.
In count four, the plaintiff alleges the defendant Berkun has unconditionally guaranteed payment of the Suntech credit line note referenced in count three. To secure his guaranty, on June 28, 2012, Berkun mortgaged to the plaintiff the Iron Works Road property. It is undisputed that this was a second mortgage upon the defendant’s property.
At a hearing conducted on May 16, 2019, the plaintiff orally moved for a judgment of strict foreclosure of the first mortgage on defendant’s property, described in count two of the complaint. At the hearing, the defendant Berkun stipulated that the plaintiff was entitled to a judgment of strict foreclosure of the first mortgage on his property, and he expressly waived his right to an appraisal of the property to determine fair market value. Counsel for the plaintiff, and the defendants, acknowledged that a determination of fair market value, as of the law day, would be required if the plaintiff sought a deficiency judgment on the mortgage being foreclosed.
The parties do not agree on the amount due to the plaintiff on the two Suntech notes guaranteed by Berkun. The plaintiff submitted an affidavit of debt setting forth the amount due for each note. For the note, the plaintiff states that the amount due, as of May 10, 2019, is $244,633.52. This sum includes accumulated interest in the amount $50,211.34, with a per diem of $46.83. For the credit line note, the plaintiff states that the amount due, as of May 10, 2019, is $349,574.32. This sum includes accumulated interest of $91,750.35, with a per diem of $71.58. Berkun maintains that based upon equitable considerations, the bank is not entitled to all of the interest it seeks.
The parties entered into a forbearance agreement on March 27, 2015. The purpose of the agreement was to enable Berkun to orderly liquidate the Iron Works Road property in order to satisfy his obligation under the guaranty agreements. Under the forbearance agreement, Berkun had the opportunity to list and sell the Iron Works Road property by September 15, 2015. If the property was not sold by September 15, 2015, Berkun was required to enter into an exclusive right to sell contract with Salvadore Auctions, Inc. (auction agreement). The forbearance agreement provided that it would expire on October 1, 2015. Berkun did not sell the property and he did not enter into the auction agreement provided for in the forbearance agreement.
An e-mail correspondence chain admitted into evidence establishes that plaintiff’s counsel, and Berkun’s prior counsel, discussed numerous issues pertaining to the auction agreement over a period which began on August 10, 2015, and ended on December 5, 2016. The issues discussed by counsel included the appraisal of the property, a possible sale of a portion of the property, subdivision of the property, the amount of credit from an appraisal of the property to be applied to the debt, environmental report costs, and the issue of a deficiency judgment against Berkun. The court finds that the correspondence illuminates a typical, but protracted, give and take negotiation of issues of importance to both parties. The court cannot find a reason to equitably disallow the plaintiff the interest on the notes which accumulated during the period of these negotiations.
In the last e-mail correspondence, dated December 5, 2016, counsel for the plaintiff notified Berkun’s prior counsel that his office had been instructed by the bank to move forward with the foreclosure. The docket entry listing for this case reflects the following relevant entries: On January 4, 2017, the plaintiff filed a demand for disclosure of defense; on February 2, 2017, the defendants filed an answer and special defense. Thereafter, on April 6, 2018, the plaintiff filed a motion for summary judgment as to liability. At the hearing before this court, the plaintiff did not provide any explanation for the fourteen-month hiatus between defendants’ answer and the plaintiff’s motion for summary judgment.
The plaintiff’s motion for summary judgment was denied on August 6, 2018. Thereafter, the matter was claimed to the trial list on January 25, 2019. On January 28, 2019, the parties requested a pretrial, which was conducted by another judge on March 1, 2019. As noted earlier, this court conducted a hearing on judgment issues on May 16, 2019. The length of time between the date of denial of the plaintiff’s motion for summary judgment, August 6, 2018, and the hearing date of May 16, 2019, is not unreasonable in the context of this litigation.
"[A] trial court in foreclosure proceedings has discretion, on equitable considerations and principles, to withhold foreclosure or to reduce the amount of the stated indebtedness." Hamm v. Taylor, 180 Conn. 491, 497, 429 A.2d 946 (1980). MTGLQ Inv’rs, L.P. v. Egziabher, 134 Conn.App. 621, 623-24, 39 A.3d 796, 798 (2012). In Egziabher, the Court upheld the trial court’s decision to deduct 180 days of interest from the plaintiff’s deficiency judgment debt because it found "there was no reasonable explanation for the substantial period of time it took for the plaintiff to get judgment." In Egziabher the issue of the amount of the plaintiff’s debt arose at the deficiency judgment proceeding, here, the parties have submitted the issue of the amount of the plaintiff’s debt as part of the judgment of foreclosure. The court knows of no reason why the equitable considerations set forth in Egziabher cannot be applied at this stage of the proceedings.
As noted earlier, the plaintiff offered no explanation for the fourteen-month delay in filing the April 6, 2018 motion for summary judgment, after the defendants filed their answer on February 2, 2017. The court concludes that it is not equitable for the defendants to bear the cost of the plaintiff’s inaction during that period of delay. Based upon the equitable considerations in this case, it is appropriate for the court to deduct 360 days of interest from both the note, and the credit note, as set forth in the calculations below.
Under the two notes, and guaranty agreements, the plaintiff is entitled to reasonable attorneys fees in connection with any action to collect the notes, or enforce the guaranty agreements. The plaintiff seeks attorneys fees in the amount of $43,201.49 for the services rendered by its counsel regarding both notes. Plaintiff’s counsel has submitted an affidavit of attorneys fees, together with an itemization of dates of service, description of services, time expended and the charges. The period of legal services begins on August 20, 2014, and continues to April 3, 2019. The initial hourly rate charged was $250, and the later services were billed at $275 per hour. The court has reviewed the itemizations and find the rates charged, and the time expended, to be reasonable. The parties have agreed that any award of attorneys fees should be divided equally, and the amounts added to the debt of each of the two notes which are the subject of this action. Accordingly, $21,600.74 will be included in the calculation of debt for each note.
Judgment as to Count One
Suntech has admitted that it signed the subject note and the plaintiff has established that the note is in default. The court determines that the amount due to the plaintiff from Suntech on the note described in count one is $216,692.13, based upon the following calculation: Principal $182,075.18, plus allowed interest as of May 10, 2019, $33,352.54 (Claimed interest of $50,211.34, less 360 days per diem interest of $46.83 = $16,858.80) (resulting in allowed interest of $33,352.54), plus additional interest from May 11 to June 6, 2019, 27 days per diem interest of $46.83= $1,264.41. The plaintiff is awarded attorneys fees in the amount of $21,600.74. Total amount due to plaintiff on the note as of June 6, 2019, is $238,292.87. Judgment may enter in favor of the plaintiff against Suntech as to count one in the amount $238,292.87. Plaintiff is allowed postjudgment interest at the rate of 6% per annum.
Principal: $182,075.18
Allowed interest: $33,352.54
Interest (May 11 to June 6, 2019) $1,264.41
Attorney Fees $21,600.74
TOTAL $238,292.87
Judgment as to Count Two
Berkun has admitted that he signed the guaranty agreement and mortgage described in count two. Upon stipulation, the plaintiff is entitled to a judgment of strict foreclosure of the mortgage described in count two of the complaint. In connection with the judgment of strict foreclosure, the court finds that the amount due the plaintiff is $238,292.87, which includes an attorneys fee of $21,600.74. The court enters a judgment of strict foreclosure, the first law day is July 8, 2019.
Judgment as to Count Three
Suntech has admitted that it signed the subject credit line note, and the plaintiff has established that the note is in default. The court determines that the balance due to the plaintiff from Suntech, on the credit line note described in count three, is $325,619.21, based upon the following calculation: Principal $257,705.00, plus allowed interest as of May 10, 2019, $65,981.55, (Claimed interest of $91,750.35, less 360 days per diem interest of $71.58 = $25,768.80), (resulting in allowed interest of $65,981.55), plus additional interest from May 11 to June 6, 2019, 27 days per diem interest of $71.58= $1,932.66. The plaintiff is awarded attorneys fees in the amount of $21,600.74.
Total amount due to plaintiff on the credit line note as of June 6, 2019, is $347,219.95. Judgment may enter in favor of the plaintiff against Suntech as to count three in the amount $347,219.95. Plaintiff is allowed postjudgment interest at the rate of 6% per annum.
Principal: $257,705.00
Allowed interest: $65,981.55
Interest (May 11 to June 6, 2019) $1,932.66
Attorney Fees $21,600.74
TOTAL $347,219.95
Judgment as to Count Four
Berkun has admitted that he signed the guaranty agreement related to the credit line note described in count four. The plaintiff has established that the credit line agreement is in default. Although this guaranty agreement is secured by a second mortgage on the Iron Works Road property, the plaintiff has exercised its right to foreclose on the first mortgage securing the note. The court will construe count four, and the claim for relief thereon, as a claim for money damages based upon Berkun’s guaranty of the credit line note. See the calculations for the amount due on the credit line note set forth in count three. Judgment may enter in favor of the plaintiff, against Berkun, as to count four, in the amount of $347,219.95.