Opinion
FSTCV054005884S
04-12-2017
Wells Fargo Bank v. George Pampoukidis
UNPUBLISHED OPINION
MEMORANDUM OF DECISION re ATTORNEYS FEES (#214.00 and #217.00)
Kenneth B. Povodator, J.
Currently before the court is the application of the defendants for attorneys fees, pursuant to General Statutes § 42-150bb (#214.00). In its memorandum of decision more than two years ago, this court characterized the case as having had a tortured history; the characterization as " tortured" continues.
A supplemental supporting affidavit was filed much later (#217.00) and an objection was filed shortly thereafter (#218.00). The court heard argument on December 19, 2016.
After the court had ruled in favor of the sole remaining defendants after a trial on the merits of two counts of the latest version of the complaint, an appeal was taken. The trial had been limited to the claims for reformation of the mortgage instruments, all claims for monetary relief and foreclosure of the existing mortgage having been withdrawn (as well as claims against certain non-appearing defendants). The current application was filed shortly after the appeal had been filed, within the time limit set forth in Practice Book § 11-21, and a supplemental application was filed after the appeal had been withdrawn.
The court notes that recently, the Appellate Court determined that the time limit set forth in Practice Book § 11-21 is directory; Meadowbrook Ctr., Inc. v. Buchman, 169 Conn.App. 527, 529, 151 A.3d 404 (2016). Therefore, to the extent that the objection to the supplemental application was based, in part, on lack of timeliness, that issue lacks the definitive quality initially claimed.
The appeal in this case, in turn, was withdrawn shortly after the Supreme Court had dismissed an appeal which would have resulted in the review of an Appellate Court decision that had been essentially determinative in this court's earlier decision; see, Deutsche Bank v. Perez, 146 Conn.App. 833, 80 A.3d 910 (2013); appeal dismissed, 315 Conn. 542, 109 A.3d 452 (2015). In other words, it appears to be more than a coincidence that the appeal of this case was terminated about a month after the Supreme Court determined that it was not going to review the Appellate Court decision in Perez .
A subsequent appeal, AC 37902, relating to the award of attorneys fees--as here, after the conclusion of appellate review of the merits--was withdrawn.
The court notes that new litigation has been commenced, FSTCV166028230S. This appears to be the fifth or sixth proceeding brought by the plaintiff against Candace and/or George Pampoukidis relating to this particular property and matters pertaining to the attempted foreclosure of the subject property.
Further complicating any determination of fees to be awarded is the existence of trial court decisions applying varying standards to a statutory fee claim in foreclosure-related cases--some decisions have applied a form of parity, limiting a consumer's attorney's hourly rate to a local cap on the rate that can be charged by a foreclosing party's attorney, e.g., JP Morgan Chase Bank Nat. Ass'n v. Eldon, No. FSTCV106004512S, 2014 WL 5138013 (Conn.Super.Ct. Sept. 10, 2014) [59 Conn.L.Rptr. 46, ], supplemented, No. FSTCV106004512S, 2014 WL 6765102 (Conn.Super.Ct. Oct. 9, 2014) [59 Conn.L.Rptr. 53, ], and others have approved fees based on a reasonable-but-uncapped hourly rate (although some of the latter cases may not have presented the court with a claim that the rate should have been capped).
The award of attorneys fees in Perez, the appeal of which was withdrawn (AC 37902), included a range of rates, some above the local cap allowed for foreclosing parties (see, #175.00, #175.50 and #176.00 in FSTCV095011926S)--an attempt was made to distinguish defense of foreclosure (capped rate) from reformation-related issues (not capped). The defendant in this case also refers to an earlier decision of this court in a related case, Wells Fargo v. Pampoukidis, FSTCV075003898S, where the court had awarded the fees claimed, but no cap was claimed to be applicable.
A necessarily-considered overlay is the recent case of Connecticut Housing Finance Authority v. Alfaro, 163 Conn.App. 587, 135 A.3d 1256 (2016), identifying as an issue of fact the question of whether a withdrawal of an action constitutes successful defense for purposes of General Statutes § 42-150bb. The court cited Wilkes v. Thomson, 155 Conn.App. 278, 283, 109 A.3d 543 (2015) for the proposition that a successful defense requires the defendant to " prevail on the merits of their answer or special defenses." Therefore, prior cases treating a withdrawal of claims as essentially automatically qualifying a party as having " prevailed" can no longer be treated as controlling or persuasive authority. In this regard, the court notes that the motion was filed long before Alfaro was decided, and therefore necessarily relies on pre- Alfaro cases--and trial court decisions of that vintage, necessarily, must be re-evaluated in light of Alfaro . (Accordingly, the attempted reliance on a prior decision of this court, specifically relating to a claim by Candace Pampoukidis after a separate proceeding had been withdrawn, cannot carry any weight.)
Wilkes was factually clearer in that the defendant had vacated the premises that were subject to a summary process proceeding, thereby rendering the eviction proceeding moot, which in turn resulted in a dismissal. There certainly is a Through-the-Looking-Glass quality to a claim that a party has prevailed as a result of having voluntarily provided the relief being sought by the plaintiff. Query whether the same analysis can or should apply in a situation where a withdrawal is filed in order to avoid a likely dismissal or granting of summary judgment--in Alfaro, the court left open the question of whether a defendant might succeed in recovering attorneys fees if he/she were able to prove that a withdrawal had been filed based on the perceived strength of the defendant's defense 163 Conn.App. 591.
The only claims actually litigated on the merits were the reformation-based claims, such that in the absence of evidence that the withdrawn claims should be treated as if the defendant(s) had prevailed in an on-the-merits sense, Alfaro suggests that the court can only consider fees incurred in connection with the reformation claims. But is Alfaro the proper starting point? Or. does Alfaro come into play only after considering Total Recycling Services of Connecticut, Inc. v. Connecticut Oil Recycling Services, LLC, 308 Conn. 312, 63 A.3d 896 (2013), in which the court addressed the need to allocate attorneys fees as between successful claims that allow attorneys fees and other claims that do not allow such a claim? After all, it is undisputed that the defendant(s) prevailed on the issues that actually were tried to the court.
When contrasted with Total Recycling, the Alfaro decision is contextually limited in application. In Alfaro, the defendant had prevailed exclusively as a result of withdrawal of claims, and in the absence of any indication that the defendant had prevailed " on the merits, " the court held that the defendant had not proven status as a prevailing party, for purposes of an award of attorneys fees under the statute. By contrast, Total Recycling was multidimensional--the defendant had prevailed on some claims but not others, and only some of the claims upon which it had prevailed entitled it to attorneys fees.
Total Recycling stands for at least two significant propositions that are germane to this case. Its primary holding is that a prevailing party is not precluded from an award of attorneys fees, simply because it may be impossible to separate successful claims allowing attorneys fees from other claims not allowing attorneys fees--as long as the claims are sufficiently interrelated as to make such segregation impossible or impractical. Less obvious is that this same rule seems to apply with respect to claims (or defenses) on which the party may not have succeeded, so long as the unsuccessful claims are sufficiently interrelated to the allowable-fee-recovery claim. In other words, having established the validity of an attorneys fee claim, anything that was effectively symbiotic (if not parasitic) to that claim, too intertwined to be capable of meaningful apportionment/allocation, does not detract from claims that are entitled to such a recovery.
That, in turn, requires a review of the parties, and their roles in the litigation.
The facts, as recited in an earlier decision, were generally undisputed:
On March 20, 2002, George Pampoukidis submitted a mortgage loan application to Sand Canyon Corporation (Sand Canyon) for a first mortgage on property located at 89 Strawberry Hill Avenue in Norwalk. At that time, George Pampoukidis and Theocharis Pampoukidis each owned 50 percent of the subject property. Subsequent to the filing of this mortgage application, George Pampoukidis and Candace Pampoukidis jointly submitted a second uniform residential loan application with respect to the subject property. On this application, [defendants] represented that [Candace Pampoukidis] jointly owned this property with her husband, George Pampoukidis. [The application did not] disclose that Theocharis Pampoukidis had an ownership interest in the premises. On April 8, 2002 . . . Sand Canyon made a mortgage loan in the amount of $225,000 to George Pampoukidis and Candace Pampoukidis, and, in return, Sand Canyon . . . obtained [what appeared to be] a first mortgage on the property. The mortgage document prepared by Sand Canyon had . . . signature line[s] for Candace Pampoukidis, George Pampoukidis and Theocharis Pampoukidis. At the closing held on April 8, 2002, [defendants] [told] Sand Canyon's attorney, William Kroll, that Theocharis Pampoukidis had no ownership interest in the property, and [they] . . . crossed out his name on the signature page of the mortgage document [and initialed it] . . . On the same date, George Pampoukidis conveyed one-half of his one-half interest in the property to Candace Pampoukidis by [quitclaim] deed for no consideration. Sand Canyon eventually assigned this mortgage to the plaintiff.
The critical events/facts relate to the closing; as the court observed earlier: " the case arose due to the fact that the lender's closing attorney became confused or was misled or otherwise lost focus on his own at the time of closing, concerning the proper identity of the owners of the property--the required parties for execution of the loan and mortgage documents. If the focus solely were on the culpability of George Pampoukidis in that process, there would be little to discuss--the court is convinced that he intentionally misled the lawyer."
The attempted reformation of the mortgage documents was an attempt to reinsert Theocharis Pampoukidis into the mortgage transaction (or perhaps more accurately, his interest in the property), despite the action of the lender's representative in crossing out his name at the time of the transaction and despite the absence of any evidence that he assented to, or benefited from, the transaction. The ultimate irony is that George Pampoukidis has stepped into the shoes of Theocharis Pampoukidis (as a result of the latter's death) with respect to the disputed interest in the property, such that from one perspective, there would have been a sense of justice if the documents had been amenable to reformation; from that same perspective, there might be a sense of injustice in that George Pampoukidis is seeking attorneys fees in connection with a proceeding that would not have been necessary but for his successful confusion of the lender's representative at the time of the closing.
The court cannot ignore the similarities to Aaron Manor, Inc. v. Irving, 307 Conn. 608, 57 A.3d 342 (2013)--in both cases, the plaintiff unsuccessfully sought to hold a defendant liable under a contract to which that defendant was not actually a party. In Aaron Manor, the court held that the defendant, by virtue of successfully resisting the attempt to establish liability under a contract providing for attorneys fees, in turn was entitled to recover attorneys fees under the reciprocal fee provision of General Statutes § 42-150bb. The statute, in general terms, allows for recovery of attorneys fees if there is a successful defense, and the court held that the successful defense of an effort to establish the liability of a non-signatory comes within the scope of the statute.
The court recognizes that there is a technical distinction between this case and Aaron Manor. Aaron Manor involved an attempt to hold a person liable under an agreement in which the person had played a role in contract formation but had not been designated a party to the contract. By contrast, the current situation involves the interests of the party who had not played a role in contract formation, and indeed had refused to play any role, such that the plaintiff seeks reformation of the operative instruments.
That technical recitation ignores two overlapping considerations. First, in both instances, a plaintiff is seeking to hold a person who had not agreed to be bound by contract to liability under the contract. Second, this lawsuit was commenced as a foreclosure proceeding, which expanded in scope before contracting down to a proceeding involving only the reformation claims. As identified by the defendants, at least through the fourth amended complaint, there were claims in the complaint that specifically sought attorneys fees from the defendants.
Returning to the determination of the proper measure of attorneys fees: The court believes that a synthesis of Alfaro and Total Recycling, in the context of the purpose of § 42-150bb, requires the court to adopt a practical rather than technical approach. The plaintiff's complaint, at one time, contained eleven counts, but by the time of trial, the plaintiff was pursuing only two counts, variations on the theme that Theocharis Pampoukidis should be deemed a party to the mortgage transaction by way of reformation. The practical consideration is this: while it is somewhat laudable that the plaintiff sought to narrow the scope of trial, the only reasonable inference is that the focus on two counts was the result of a winnowing process--what claims were most likely to be productive--which claims were most likely to be successful, with respect to the goal being sought? In so doing, the plaintiff was, as a practical matter, abandoning weaker or unlikely-to-be-productive claims. From this perspective, the abandonment of claims was not unrelated to the merits of the claims, the concern identified in Alfaro --this was not an inherently-ambiguous act but inferentially at least partially merit-related. And perhaps simplistically, the case was tried, went to judgment, and the defendants prevailed.
The court has reviewed the cases cited by the plaintiff relating to the nature of the claim being litigated and the required relationship to a contract providing for attorneys fees. In addition to finding the analogy to Aaron Manor compelling--an attempt to hold a defendant liable based on a contract to which the defendant had not agreed to be a party--the court further notes that many of the claims that the plaintiff now says were not contract-related are claims for which the plaintiff had been seeking contractual attorneys fees. See, e.g., #133.00 (second amended complaint), in which there are claims both in a number of counts as well as at the end of the complaint, seeking contractual attorneys fees for claims not properly characterized as breach of contract claims.
While perhaps not a generalized principal for purposes of attorneys fees under the statute, the court also cannot help to recognize the highly unusual situation presented here--a series of proceedings, all focused on the foreclosure of a single property; see footnote 4, adopting a range of strategies. This is not a situation where a case was withdrawn because the plaintiff was not ready to go to trial or a witness became unavailable or some other reason having nothing to do with the merits. Perhaps somewhat cynically, there has been a series of lawsuits, a desired result seeking a mechanism to achieve that result and to date, the plaintiff has been unsuccessful in accomplishing that end. The 2016 action previously mentioned is an attempt to invoke a variety of equitable principles, and without regard to the merits of such claims, it is indicative of the ongoing pursuit of the goal of being able to proceed against the successor to the interests of Theocharis Pampoukidis, (while also eventually proceeding against the interests of the current defendants, separate and apart from those successor interests).
The court believes that the plaintiff's best case scenario would be if the court were to cut off attorneys fees as of January 23, 2014, the date on which an amended complaint was filed whereby the plaintiff had effectively abandoned all claims but the reformation claims. In other words, prior to that date, they were numerous claims asserted by the plaintiff, contract-based in nature, requiring reciprocity of the right to attorneys fees, and with respect to the overall outcome of the litigation, it is clear that the defendants prevailed. However, given the remedial nature of the statute and the court's perception that the Aaron Manor case warrants allowance of attorneys fees through the outcome of the reformation phase of the case, the court declines to impose a sharp cut off of that nature.
The defendants have claimed attorneys fees totaling $79,387.50. The claim is based on actual fees charged, rather than the capped rate typically imposed by the court in Stamford with respect to foreclosure actions. Given the predominance of the reformation aspect of the lawsuit, with the recognition of the corollary that a reason for capping allowed rates for foreclosures is the relatively-routine nature of such proceedings with this case being outside of that routine nature, the court is not inclined to impose such a cap. This was not, especially as tried, a routine case--there were issues of law that were decided in Perez adversely to the plaintiff, and the appellate process as anticipated and commenced was a further overlay in that regard. The court therefore declines to impose an hourly-rate cap on the defendants' recovery.
The court notes that the statutory reciprocity provisions do not apply to the 15% limit on attorneys fees that a commercial party can collect. In Rizzo Pool Co. v. Del Grosso, 240 Conn. 58, 73-76, 689 A.2d 1097 (1997), the court held that the consumer is not limited by § 42-150aa as arguably incorporated into § 42-150bb, but rather is governed by the contract and concepts of reasonableness.
In this case, the court already has rejected the hourly-cap contention given the highly unusual issue of reformation that ultimately dominated the litigation. The court further notes that the overwhelming majority of work was done by Attorney DaSilva, and through the time of trial, his hourly rate slowly climbed to $275--not appreciably higher than the rate " cap" sought by the plaintiff. On the appeal phase, which was in the range of 10% of the total fees being claimed, the rates were higher, but given the extended period of time over which proceedings took place, " rate creep" can hardly be perceived as unusual. Additionally, even if a rate cap is typical for the trial level proceedings in a foreclosure, the plaintiff has not cited authority for the proposition that a rate cap would be appropriate on appeal. To the contrary, the plaintiff seems to rely on the contention that the nature of the dispute controls and this was not a contract dispute.
The court already has noted that it perceives the analogy to Aaron Manor to be persuasive. To the extent that the plaintiff relies on such cases as Gladu v. BAC Home Loans Servicing, LP, No. X04HHDCV106014923S, 2011 WL 1169434 (Conn.Super.Ct. Mar. 7, 2011) [51 Conn.L.Rptr. 561, ], the court notes that that decision relies on a per curiam decision, Gardner Heights Health Care Ctr., Inc. v. Korolyshun, 117 Conn.App. 745, 982 A.2d 186, 187 (2009), such that there was no real discussion of the required level of proximity to a true contract claim. The court further notes that Gladu involved claims for attorneys fees relating to postjudgment proceedings, collaterally attacking a foreclosure judgment that had been entered; the current matter is not analogous but again, as repeatedly noted, sought to impose contractual liability under the mortgage obligations which, as a result of status as successor in interest, directly implicated the potential liability of the named defendant. The issue is but an unusual variation on the question of who is liable under the mortgage instruments.
The court recognizes that this is not a " clear" situation. The court has concluded, however, that under these relatively unique circumstances, and given the ultimate goal of establishing contractual responsibility, the defendants were prevailing parties even as to the reformation claims actually tried, for purposes of § 42-150bb.
Conclusion
This is a lawsuit that went to judgment. The defendants prevailed on the merits of the claims actually adjudicated, and the moving-target quality of the claims over the years this case was pending (the case did not go to trial until more than nine years after it had been commenced), necessarily imposed significant legal costs on these defendants. Defendant Candace Pampoukidis probably was perceived as a necessary or indispensable party for purposes of the reformation claims, even if the outcome of the litigation when limited to the reformation claims seemingly could not have affected her interests adversely--in a sense, her status as a party was collateral damage. The same cannot be said, of course, for George Pampoukidis; as successor in interest to Theocharis Pampoukidis, he very much was an involved party, and clearly prevailed on the claims litigated. He successfully resisted the effort to establish his liability as a successor in interest to Theocharis Pampoukidis, under the mortgage transaction.
Given the shifting focus and interrelatedness of all the claims, coupled with parties of varying interests but with united representation, with the overlay of the analogy to Aaron Manor, the court cannot conclude that Total Recycling precludes a recovery due to an inability to separate claims. Much of the case involved claims specifically allowing for attorneys fees had the plaintiff prevailed; the remainder of the case was an attempt to bring in the interests of a " third party" so as to make his interest subject to the mortgage and note under which attorneys fees would have been recoverable.
In effect, the plaintiff is arguing that if Theocharis Pampoukidis had not passed away, his defense of the claim that he should have been a party to the mortgage transaction and therefore should be made a party and therefore ultimately is liable for the default status of the mortgage loan, notwithstanding the clarity of the record that he would have refused to be a party to such a transaction (and did not benefit from it), is sufficiently unrelated to contractual claims that he would have had to have absorbed the costs of defense of such a claim. All of this, of course, is in the context of a situation not of his making, but rather attributable to the apparent duplicity of George Pampoukidis coupled with the failure of the lender's closing attorney to follow through on the initial designation of Theocharis Pampoukidis as an owner of the property (the attorney eventually crossing out his name on the paperwork, during the course of execution of the documents). An attempt to correct a claimed error made by a representative of the lender in the mortgage paperwork (even if induced by one of the defendants) is perceived to be sufficiently based on and related to the mortgage instruments--contracts--to allow an award of attorneys fees under § 42-150bb.
For all of these reasons, with respect to the defendants' claim for attorneys fees, the court awards attorneys fees in the amount of $79,387.50, which the court finds to be reasonable under the circumstances of this case.