Opinion
UWYCV146022708
03-25-2019
Berkshire Bank v. Orwell, LLC et al.
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Taylor, Mark H., J.
Mark H. Taylor, Judge
I
BACKGROUND AND FACTS
In this action to foreclose a commercial mortgage deed, the defendants Orwell, LLC (Orwell) and Thomas W. Briggs (Briggs) have filed a "Motion To Determine Deficiency, If Any, And To Discharge Or. Reduce Lien," dated September 7, 2018. The substituted plaintiff in this action, CSB Service Corporation, filed an objection on October 24, 2018, followed by the defendants’ reply on January 14, 2019 and the plaintiff’s sur-reply filed on February 22, 2019. After hearing this matter on February 25, 2019, the court concludes there is sufficient authority for the court to conduct a deficiency judgment hearing, as requested by Orwell, and its motion is therefore granted, in part.
Briggs is a member of Orwell, LLC.
The facts in this matter are highly unusual, generally described as follows: In November 2006, Berkshire Bank (Berkshire) loaned $700,000 to Orwell, as evidenced by a "Mortgage Note and Open-End Mortgage, Security Agreement and Fixture Filing," from Orwell to Berkshire dated November 6, 2006. Briggs separately and unconditionally guaranteed the making of all payments and the performance of all obligations due by Orwell under the mortgage note. In this action to foreclose the commercial mortgage on Orwell’s property, the defendant, Briggs, is the guarantor of Orwell’s mortgage debt; however, Briggs did not sign the mortgage note or deed.
He was nonetheless cited as a defendant in the single-count complaint to foreclose Orwell’s mortgage, which complaint does not include a separate count to enforce Briggs’ guarantee.
Interestingly, in a prior action filed in the Hartford judicial district, Berkshire obtained a judgment against Orwell and Briggs on the mortgage note and guarantee in the amount of $701,877.72. See Berkshire Bank v. Orwell, LLC, Superior Court, judicial district of Hartford, Docket No.CV13-6040284-S. In October 2013, Berkshire caused a judgment lien to be recorded on the title of Briggs’ residence in New Haven. All parties appear to agree that the debt owed on the Hartford judgment should be reduced by the value of the mortgaged property, but disagree as to the amount and the process by which that determination should occur.
The plaintiff asserts that after an unsuccessful effort to collect on the Hartford judgment, Berkshire commenced the present action to foreclose the Orwell mortgage here in Waterbury. On June 19, 2014, this court granted an unopposed motion for summary judgment against both defendants, upon which this court entered a judgment of strict foreclosure on August 25, 2014 and set law days starting on September 16, 2014. Before the commencement of the law days, on or about September 12, 2014, Berkshire assigned the subject mortgage, judgment and indebtedness to the substituted plaintiff and title to the property vested on its law day, September 17, 2014. The plaintiff then timely filed a motion for a deficiency judgment on September 18, 2014, but elected not to pursue the motion, it asserts, for two reasons: 1) Orwell was defunct with no assets, and 2) Briggs, as guarantor, is not a proper party to a foreclosure and a deficiency judgment would not enter against him.
The motion to substitute was filed after Berkshire’s law day on September 18, 2014 and was thereafter granted by this court on October 8, 2014.
Three and a half years later in April 2018, the defendants claimed the plaintiff’s motion for a deficiency judgment. On April 27, 2018, however, the plaintiff withdrew its motion for a deficiency judgment, giving rise to the defendants’ unusual motion before the court, seeking a determination of the mortgage deficiency, if any, and the commensurate reduction or discharge of the Hartford court’s judgment lien, recorded against Briggs’ residence. The defendants assert that the value of the property on the plaintiff’s law day was greater than the mortgage debt and, therefore, no deficiency exists.
II
DISCUSSION
The facts of the present case do not fit easily into the statutory framework for deficiency judgments, even as construed by our Appellate and Supreme Courts. In resolving this matter, therefore, the court considers underlying legal principles implicated by the facts of this case, as well as the arguments of the parties. Specifically, the court considers the unique role deficiency judgments play in actions to foreclose mortgages on real property, the distinguishable rights and obligations of guarantors and mortgagors, the potential advisory nature of any opinion that may issue in this matter and the remedies conferred by law to holders of judgment liens.
The plaintiff primarily relies upon JP Morgan Chase Bank v. Winthrop Properties, 312 Conn. 662, 94 A.3d 622 (2014), in which our Supreme Court held that guarantors are not proper parties to an action to foreclose a mortgage deed. It therefore asserts that a deficiency judgment against a guarantor is improper. Id., 682-83. Although the Winthrop Properties case is instructive in these proceedings, the facts and posture of this case are significantly distinguishable and require further analysis.
In Winthrop Properties, the plaintiff was permitted to proceed against a guarantor, even though a motion for a deficiency judgment against the foreclosed mortgagor was untimely. The Supreme Court considered the guarantor’s defense in Winthrop Properties to be misplaced, that an untimely deficiency judgment, following the expiration of the mortgagor’s right of redemption, extinguished the guarantor’s obligations as well. Although the mortgage debt was extinguished by the foreclosure, the Court held that the defendant had a separate, contractual obligation to pay the remaining debt pursuant to its guarantee. The court reasoned that the foreclosure of a mortgage involved a distinguishable set of rights and obligations, centered upon the mortgagor’s right of redemption in a foreclosed property. Therefore, the guarantor was not a proper party to the action to foreclose the mortgage, and its obligation to pay the remaining debt was not extinguished by virtue of a judgment of strict foreclosure. Id., 678.
In discussing the distinguishable rights and obligations of mortgagors and guarantors, the court set forth the rationale for combining actions to foreclose with actions on guarantees. "At common law, it originally was established that a foreclosure and consequent possession [of the property was] in the nature of satisfaction of a debt secured by [the ] mortgage. It [was] deemed an appropriation of the thing pledged, in payment of the demand, for which it was security ... Accordingly, a mortgagee was required to elect either a foreclosure action or an action on the underlying debt or obligation ... After the legislature modified the common-law rule to allow a mortgagee to pursue a separate deficiency action after foreclosure of the mortgage ... concerns arose because of potential injustices to persons remotely liable on the mortgage debt, who might lack knowledge that the property had been foreclosed, and to subsequent grantees of the property who had promised to assume and pay the mortgage debt ... Accordingly, the legislature amended the statute to return to the original law of the state, insofar as the foreclosure of a mortgage operate[d] as a payment of the debt to secure which the mortgage was given, unless the creditor chose to make all the persons liable for the payment of such debt parties to the foreclosure proceedings ... The various iterations of the statute since that time have conformed to that basic expression, mandating that the rights between the mortgagee and those liable on the underlying obligation secured by the mortgage be concluded in a single proceeding ." (Emphasis added; emphasis in original omitted; citations omitted; footnote omitted; internal quotation marks omitted.) Id. 680-81. This, of course, makes sense because "the guarantors have a general interest in the foreclosure due to their separate and distinct obligation under the guarantee to pay any remaining amount due on the underlying debt ..." (Emphasis added; footnote omitted.) Id., 683.
The Winthrop court further stated that "[w]hen payment of a promissory note secured by a mortgage is further protected by a separate guarantee, in addition to the aforementioned potential remedies against the mortgagor, the mortgagee may pursue a claim against the guarantors to recover any of the unpaid debt of the mortgagor." JP Morgan Chase Bank v. Winthrop Properties, 312 Conn., supra, 675.
In the present case, the defendants are seeking a judgment on the mortgage debt, as opposed to avoiding one, as was the case of the guarantor in Winthrop Properties. Although a timely motion for a deficiency judgment was filed by the plaintiff, it was withdrawn after the defendants claimed the motion for a hearing. One further and important distinction here, however, is that there is no action against Briggs on the guarantee as there was in Winthrop Properties, despite the fact he was made a party to the foreclosure as a guarantor. The plaintiff here, therefore, asserts that a deficiency judgment is irrelevant because it would not enter against Briggs and would, therefore, be moot. Viewing it in this manner, the plaintiff considers the relief sought in the defendants’ motion to be hypothetical, requiring the court to issue an ill-advised advisory opinion.
In response, the defendants properly point out that both Orwell and Briggs were cited as defendants in the plaintiff’s single-count foreclosure complaint and, therefore, assert that the plaintiff cannot now disavow Briggs as a party to the foreclosure, upon which both summary judgment and strict foreclosure have been granted. Although it appears that Briggs may have been improvidently included in the foreclosure count, upon which the foreclosure judgment was granted, Orwell nonetheless remains a proper party to the foreclosure as the mortgagor of the subject property. The defendants rely upon these procedural facts to assert that they have the right to a deficiency judgment pursuant to General Statutes § 49-14, which allows this determination to be initiated by "any party" to the foreclosure.
General Statutes § 49-14(a) provides: "At any time within thirty days after the time limited for redemption has expired, any party to a mortgage foreclosure may file a motion seeking a deficiency judgment. Such motion shall be placed on the short calendar for an evidentiary hearing. Such hearing shall be held not less than fifteen days following the filing of the motion, except as the court may otherwise order. At such hearing the court shall hear the evidence, establish a valuation for the mortgaged property and shall render judgment for the plaintiff for the difference, if any, between such valuation and the plaintiff’s claim. The plaintiff in any further action upon the debt, note or obligation, shall recover only the amount of such judgment." (Emphasis added.)
The rationale for the separate treatment of mortgagors and guarantors in foreclosures is additionally set forth in Winthrop Properties, as follows: "Unlike the equitable nature and aims of foreclosure, a claim on the note at law is grounded in contract, and is enforceable as between the parties to that contract— the debtor and the creditor, as well as persons who succeed to those obligations or rights by transfer or assignment ... Thus, any deficiency judgment sought in connection with the foreclosure arises from the contractual relationship between the parties to the promissory note ... When payment of a promissory note secured by a mortgage is further protected by a separate guarantee, in addition to the aforementioned potential remedies against the mortgagor, the mortgagee may pursue a claim against the guarantors to recover any of the unpaid debt of the mortgagor ... A guarantee is a promise to answer for another’s debt, default or failure to perform a contractual obligation ... As a contractual obligation separate from the contractual agreement between the lender and borrower, a guarantee imports the existence of two different obligations: the obligation of the borrower and the obligation of the guarantor." (Citations omitted.) JP Morgan Chase Bank v. Winthrop Properties, supra, 312 Conn. 674-75.
The court concludes that Briggs is not a proper party to the foreclosure because his obligation arises from a separate and distinct contractual obligation. Thus, it appears mortgagors, such as Orwell, who directly encumber their property with a mortgage deed are cloaked with the equitable protections of foreclosure, while guarantors are left to their purely legal defenses and remedies. This conclusion, however, is not dispositive of the question presented. Winthrop Properties also clearly states that a "mortgagee may pursue a claim against the guarantors to recover any of the unpaid debt of the mortgagor ." (Emphasis added.) Id. Therefore, there is no doubt that the plaintiff’s recovery against a guarantor is limited to what would, otherwise, be a deficiency judgment, absent some contractual provision to the contrary and Briggs clearly has an interest in such a determination. The defendants, therefore, seek a deficiency judgment in this court, where the record of the foreclosure proceedings and findings occurred and are more conveniently located.
The court perceives at least two problems with this approach. First, deficiency judgments require a separate hearing at which findings are made on the mortgage debt and the value of the mortgaged property, as of the day title passed to the plaintiff. The record reveals, however, that these facts were not established by the court in this case. Although this court found the appraised value of the property to be $700,000 at the time of the judgment of strict foreclosure, entered on August 25, 2014, this finding was based upon a much earlier appraised value date of May 5, 2014. Once the plaintiff took title to the property on its law day, September 17, 2014, over four months had passed since the date of the appraisal. Accordingly, in light of this lapse of time, the record provides the court with an insufficient factual basis upon which to make a lawful deficiency calculation. Additionally, at the time of judgment, the court found the mortgage debt to be $750,737.29, plus fees and costs, with interest accrued through August 13, 2014. This figure also provides an insufficient factual basis upon which to make a lawful deficiency calculation. Generally, a deficiency judgment requires the court to reduce the principal debt owed by the value of the property, both measured as of the law day. From this figure, the interest calculation is modified going forward from the law day, based only upon the interest running on the remaining principal amount owed, as reduced by the value of the property. Thus, the existing record of the foreclosure proceeding in the Waterbury judicial district is legally insufficient for the purpose of determining a deficiency at this time.
The second problem is that there is no timely motion filed upon which a deficiency judgment may be rendered. The plaintiff, perhaps unfairly, withdrew its otherwise timely motion for a deficiency judgment after the defendants claimed the motion for their own purposes, leaving them without a clearly prescribed procedural path to a deficiency judgment. The defendants now seek equitable relief in permitting their untimely motion to proceed to judgment. Looking beyond the fact that Briggs is listed as a defendant in the foreclosure, he should not necessarily be afforded the equitable rights arising from the unique role of a mortgagor in a mortgage transaction. Although Orwell may have such a right, as the true defendant qua mortgagor in the foreclosure case, that equitable right is being pursued for the benefit of Briggs, whose lien they seek to reduce or eliminate.
Unlike Winthrop Properties and as stated previously, there is no existing count to enforce the deficiency in the present case against Briggs.
The court now turns to the question of the advisory nature of the defendants’ motion, absent a direct remedy through a count in the complaint on Briggs’ guarantee. The rule against rendering advisory opinions is deeply rooted in our jurisprudence. "Indeed, we note that courts are called upon to determine existing controversies, and thus may not be used as a vehicle to obtain advisory judicial opinions on points of law ... Justiciability requires (1) that there be an actual controversy between or among the parties to the dispute ... (2) that the interests of the parties be adverse ... (3) that the matter in controversy be capable of being adjudicated by judicial power ... and (4) that the determination of the controversy will result in practical relief to the complainant." (Internal quotation marks omitted.) ABC, LLC v. State Ethics Comm’n, 264 Conn. 812, 824-25 (2003). All but the fourth of these prongs are clearly met in the present case. Practical relief, although attenuated in the present case, is available to the parties, but may well be effectuated in another action in another jurisdiction.
Apparently for the sake of efficiency, at the very least, second counts on guarantees are not only permitted in actions to foreclose a mortgage, they may very well be favored. JP Morgan Chase Bank v. Winthrop Properties, supra, 312 Conn. 680-81. Ordinarily, a foreclosure proceeds to judgment, followed by an action to enforce the remaining debt, either against the mortgagor or guarantor. See F.D.I.C. v. Voll, 38 Conn.App. 198, 206-10, 660 A.2d 358, cert. denied, 235 Conn. 903, 665 A.2d 901 (1995). There is no guarantee count in the present case, however, upon which to collect against Briggs. Instead, the plaintiff chose the course of seeking two remedies on the debt, one here and one that has been brought to a conclusion in Hartford, resulting in a judgment lien in the amount of $701,737.29 pursuant to General Statutes § 52-380a.
General Statutes § 52-380a provides: "(a) A judgment lien, securing the unpaid amount of any money judgment, including interest and costs, may be placed on any real property by recording, in the town clerk’s office in the town where the real property lies, a judgment lien certificate, signed by the judgment creditor or his attorney or personal representative, containing: (1) A statement of the names and last-known addresses of the judgment creditor and judgment debtor, the court in which and the date on which the judgment was rendered, and the original amount of the money judgment and the amount due thereon; and (2) a description, which need not be by metes and bounds, of the real property on which a lien is to be placed, and a statement that the lien has been placed on such property. (b) From the time of the recording of the judgment lien certificate, the money judgment shall be a lien on the judgment debtor’s interest in the real property described."
The court now turns to the remedy available in the context of a judgment lien. Where such a lien has been effectuated, it may be released for full satisfaction pursuant to § 52-380g or substitution of security, inter alia . See General Statutes § 52-380a et seq. This statutory scheme does not appear to provide for a modification or reduction of the lien but, instead, only for its full discharge or substitution by a bond or other security. The general procedure applicable to judgment liens therefore lacks a specifically identified procedure, tailored for the foreclosure of a mortgage on real property, in which the value of the mortgaged property is ultimately accounted for in a final judgment, which may thereafter be levied against either the mortgage debtor or guarantor.
General Statutes § 52-380g provides: On satisfaction of a judgment, the judgment creditor shall release any judgment liens of record based thereon by sending a release sufficient under section 52-380d by first class mail, postage prepaid, to the judgment debtor and to any other interested person requesting a release. If, on the written request of any interested person, the judgment creditor fails within ten days to so release a lien, the judgment creditor shall be liable to the aggrieved person pursuant to section 49-51 for any damages resulting therefrom, such damages not to exceed one-half the amount of the lien.
Presumably in an action to discharge a judgment lien, the parties would be afforded a hearing, followed by a finding of debt, perhaps similar in nature to a proceeding leading to a deficiency judgment. That procedure may, however, simply determine whether the collateral obtained by the plaintiff through foreclosure was sold in a commercially reasonable manner. See 42a-9-610 et seq. If the defendants fail to account for the full value of the debt in an action to discharge the judgment lien, their relief would be denied and the parties would be left with a finding of debt without the force of a judgment. Such a finding would be at least as advisory and, perhaps, of less force than the conclusion this court would reach in rendering a deficiency judgment.
The procedures and the standards related to the auction or disposal of collateral pursuant to Article 9 appear to be more applicable to chattel mortgages than to mortgages of real property, generally.
One can also imagine that, as an alternative to the discharge of lien process in the Hartford, the plaintiff could foreclose the judgment lien on Briggs’ home in New Haven. Using this approach, it would appear that a full hearing on the debt and deficiency would be available to Briggs; however, it would only occur upon the entering of a judgment of foreclosure on his home, which might occur many months or even years after its initial filing.
Although this statutory provision is scheduled to sunset on July 1, 2019, the court notes that the legislative history of the mediation program reveals a series of sunset extensions by legislative action. General Statutes § 49-311(c)(6) provides: "Notwithstanding any provision of the general statutes or any rule of law, prior to July 1, 2019, (A) for the period of time which shall not exceed eight months from the return date, the mortgagor shall be permitted to file an answer, special defenses or counterclaims, but no mortgagee or mortgagor shall make any motion, request or demand with respect to the other, except those motions, requests or demands that relate to the mediation program described in section 49-31m and the mediation sessions held pursuant to such program, provided (i) a mortgagor seeking to contest the court’s jurisdiction may file a motion to dismiss and the mortgagee may object to such motion to dismiss in accordance with applicable law and the rules of the courts, and (ii) if the mortgagor elects to make any other motion, request or demand with respect to the mortgagee, the eight-month limit shall no longer apply to either party; and (B) no judgment of strict foreclosure nor any judgment ordering a foreclosure sale shall be entered in any action subject to the provisions of this subsection and instituted by the mortgagee to foreclose a mortgage on residential real property or real property owned by a religious organization unless: (i) The mediation period set forth in subsection (c) of section 49-31n has expired or has otherwise terminated, whichever is earlier, and, if fewer than eight months has elapsed from the return date at the time of termination, fifteen days have elapsed since such termination and any pending motion or request to extend the mediation period has been heard and denied by the court, or (ii) the mediation program is not otherwise required or available. Nothing in this subdivision shall affect any motion made or any default or judgment entered on or before June 30, 2011." (Emphasis added.)
The parties to this action have a substantial disagreement over the value of the property taken by strict foreclosure and, therefore, the remaining debt owed. Near the time of the judgment of strict foreclosure, the plaintiff’s appraised value of the property exceeded the principal amount due on the mortgage note, absent accrued interest and costs. Upon taking title to the foreclosed property, however, the plaintiff sold it for approximately $130,000— a figure substantially lower than the mortgage debt and its own appraised value of $700,000.
The plaintiff has elected to exercise at least two of several remedies in its attempt to collect the debt owed on the mortgage note and guarantee— one in this court and one in Hartford. In this foreclosure action, the plaintiff took title to the mortgaged property and then sold it for an amount less than twenty percent of its own appraised value. Had this been a foreclosure sale, authorized and supervised by the court, by analogy, the sale may well not have been approved, absent very unusual circumstances.
Although foreclosure sales are an available remedy where equity in the property may be realized, these forced sales rarely realize the full value of the property. "It is not unusual for a foreclosure sale to yield considerably less than the property’s appraised fair market value ... [A] foreclosure by sale may result in bids not only less than the appraised value of the property, but even less than the foreclosing mortgagee’s loan, allowable expenses and taxes. Because the trial court has control of the foreclosure proceedings, it can, in the exercise of its discretion, accept or reject a proposed sale ... No appellate case has established whether there is a certain percentage of fair market value below which a sale would trigger a trial court’s obligation to reject a foreclosure sale on the ground that the price was inadequate or unfair as a matter of law. Nevertheless, this court has affirmed a court’s approval of a foreclosure sale yielding as little as 40 percent of the property’s fair market value." (Citations omitted; internal quotation marks omitted.) National City Real Estate Services, LLC v. Tuttle, 155 Conn.App. 290, 295-96 (2015).
They may also be required where the federal government is a party.
The subsequent sale of the mortgaged property here, although not a "forced" foreclosure sale, yielded an amount substantially lower than the yield that would likely have been approved by the court. Even if such a sale had been approved, for example, General Statutes § 49-28 would apply to reduce any resulting deficiency by half where a foreclosure sale is sought by a plaintiff.
The remedy of strict foreclosure was specifically initiated by the plaintiff in the present case. In instances of strict foreclosure, such as this case, the procedure is generally designed to determine the value of the mortgaged property at the time of foreclosure, and go on to provide the remedy of a deficiency judgment in the event that the debt exceeds the value of the mortgaged property. Instead of establishing the deficiency here, the plaintiff apparently seeks a remedy elsewhere.
From the foregoing analysis, the court concludes that the clear, established and proper procedure for determining a mortgage debt is in the foreclosure court. Although a guarantor such as Briggs has no right to proceed against the plaintiff in this action to foreclose, as there is no guarantee count, Orwell held the right to pursue a deficiency judgment pursuant to General Statutes § 49-14. In its attempt to exercise that right by claiming the plaintiff’s motion, Orwell was thwarted by the plaintiff’s withdrawal of its motion for a deficiency judgment, and is now procedurally unable to timely file its own motion within thirty days of redemption, now passed by many years. In contrast, the court concludes there is no clear and efficient path to the establishment of the remaining mortgage debt, underlying the judgment lien in the Hartford matter, other than by a determination of the deficiency by this court or the agreement of the parties, which appears unlikely. The judgment in the Hartford collection matter entered in 2013 and may not be reopened to account for the value of the property securing the mortgage debt, as would be inherently available in a foreclosure, which was initiated but not fully concluded by the plaintiff here in Waterbury.
The court does not reach the question of whether Briggs would have the right to a deficiency determination had there been an independent count brought to enforce the guarantee.
Foreclosures are considerably different than other litigation, such as collection matters in which final judgments are entered, in that the court’s jurisdiction to determine the ultimate debt owed continues after the judgment of foreclosure enters and it does so for a number of other purposes, such as, inter alia, the right to possession, the approval of deeds, the payment of expenses and supplemental judgments. The only impediment to considering an issue within the court’s continuing jurisdiction in this case, therefore, is the plaintiff’s withdrawal of its own motion for a deficiency judgment, limited in time by law.
The court is unable to identify any statute, rule or appellate authority addressing the question of a party’s right to withdraw a motion. By analogy, a party has the right to withdraw its own action, absent a pending counterclaim and subject to the provisions of General Statutes § 52-80, as well as Practice Book § 10-55. In cases involving the withdrawal of entire actions, our Appellate Court has stated that "[a]ny lack of authority of the court to stop the withdrawal of an action prior to a hearing on the merits in the first instance, for example, in no way extends to or diminishes the court’s power to restore a previously withdrawn action to the docket ... This is particularly true if restoration of the action is necessary to vindicate a right acquired by another party during the course of the withdrawn litigation ... In Bristol v. Bristol Water Co., 85 Conn. 663, 673, 84 A. 314 (1912), our Supreme Court stated that ‘[e]very action may be withdrawn prior to verdict or final judgment, whenever it can be done without injuriously affecting rights of the defendant acquired by reason of the action .’" (Citations omitted; emphasis in original; footnote omitted; internal quotation marks omitted.) Palumbo v. Barbadimos, 163 Conn.App. 100, 113, 134 A.3d 696 (2016).
General Statutes § 52-80 provides: "If the plaintiff, in any action returned to court and entered in the docket, does not, on or before the opening of the court on the second day thereof, appear by himself or attorney to prosecute such action, he shall be non-suited, in which case the defendant, if he appears, shall recover costs from the plaintiff. The plaintiff may withdraw any action so returned to and entered in the docket of any court, before the commencement of a hearing on the merits thereof. After the commencement of a hearing on an issue of fact in any such action, the plaintiff may withdraw such action, or any other party thereto may withdraw any cross complaint or counterclaim filed therein by him, only by leave of court for cause shown."
Practice Book § 10-55 provides: "The withdrawal of an action after a counterclaim, whether for legal or equitable relief, has been filed therein shall not impair the right of the defendant to prosecute such counterclaim as fully as if said action had not been withdrawn, provided that the defendant shall, if required by the judicial authority, give bond to pay costs as in civil actions."
Although it is alleged that only Briggs’ rights would be affected by a deficiency judgment in this case, as Orwell is "defunct and without assets," he was made a defendant in this case by the plaintiff and, as guarantor, his debt is dependent upon and legally tied to Orwell’s. Although the Hartford court may be fully competent to determine the "deficiency" owed, that procedure does not appear to be clearly available in a collection action, and, absent full satisfaction, there is no remedy that is apparently available other than a judgment of discharge. Here in Waterbury, there is a clearly established procedure leading to a deficiency judgment. In this context, the parties would then be able to determine whether and when to discharge the lien arising in the Hartford action or await the foreclosure of the judgment lien in New Haven. Taken together, the most efficient way to reach a conclusion to the dispute between the parties is to conduct a deficiency judgment hearing in this foreclosure case, brought by the plaintiff against both Orwell and Briggs as defendants.
Although Briggs is not a proper party to the foreclosure, Orwell is a foreclosure defendant in this case and may therefore pursue a deficiency judgment. As Briggs is similarly not a defendant in a guarantee action here, he may not seek a hearing in damages on the debt remaining on his guarantee. The court further construes the defendant Orwell’s motion as an objection to the plaintiff’s withdrawal of its motion for a deficiency judgment, which is and would otherwise have been sustained, if formally filed.
III
CONCLUSION
Accordingly, Orwell’s motion is granted, in part, and the parties may therefore proceed to schedule a deficiency hearing to determine the unpaid debt owed on the mortgage note. The motion is denied, in part, insofar as both defendants seek to discharge or reduce the judgment lien rendered in the judicial district of Hartford, as this question involves a matter outside the jurisdiction of this court.
SO ORDERED.