Opinion
HHDCV176080086S
03-11-2019
FEDERAL NATIONAL MORTGAGE ASSOCIATION v. Sabah KENNAWI
UNPUBLISHED OPINION
Dubay, J.
I
FACTUAL BACKGROUND
In this foreclosure action, the plaintiff, Federal National Mortgage Association, moves for an order of the court finding that title has vested in it, or in the alterative, to reset the law days. The plaintiff commenced this action by way of service of process on July 3, 2017, against the non-appearing defendant, Sabah Kennawi, concerning mortgaged premises owned by her at 36 Belden Street in East Hartford. The plaintiff’s motion, and uncontested evidence, assert the following relevant facts. On November 9, 2017, the defendant filed a Chapter 13 Bankruptcy Petition, which was dismissed on November 21, 2017, for failure to cure deficiencies. Pl’s Ex. 4 & 5. Hence, on December 22, 2017, the plaintiff filed with the court a notice of relief of the stay imposed by virtue of that petition, pursuant to 11 U.S.C. § 362(a) (2016). Subsequently, on February 23, 2018, the defendant again filed a Chapter 13 Bankruptcy Petition. Pl’s Ex. 6. On March 26, 2018, the plaintiff filed an affidavit averring that the defendant was in bankruptcy. The defendant’s second bankruptcy petition was dismissed on April 16, 2018, for failure to cure deficiencies; furthermore, the bankruptcy court barred the defendant from filing another petition for a period of a year. See Pl’s Ex. 7. On June 22, 2018, the plaintiff again filed a notice of relief from the bankruptcy stay.
Additionally, the plaintiff named the following parties as defendants with interests in the property: CitiMorgage, Inc., Better Loan Society, Inc., Amy Criscuolo, Legacy MMH, Connecticut Natural Gas Corp., State Of Connecticut-Department of Social Services, and George Cavanna. These defendants, whose law days have all run, are not relevant to the issues presently before the court.
On August 6, 2018, the court, Pittman, J., entered a judgment of strict foreclosure. Subsequently, an order setting the law days was issued: running from November 5, 2018, until the plaintiff’s law day of November 15, 2018. On November 13, 2018, the defendant filed a Chapter 7 Bankruptcy Petition, and on November 20, 2018, the Bankruptcy Court struck the petition, pursuant to its prior April 16 order, and barred any further petitions until April 16, 2019. Pl’s Ex. 8 & 9.
On December 12, 2018, the plaintiff filed a motion for order, requesting the court determine whether title has vested upon the running of law days. The defendant filed no objection. The matter was heard at short calendar on January 2, 2019.
II
DISCUSSION
The court has authority to determine this matter. The court retains "continuing jurisdiction to effectuate its prior judgments, either by summarily ordering compliance with a clear judgment or by interpreting an ambiguous judgment and entering orders to effectuate the judgment as interpreted ..." (Internal quotation marks omitted.) Wells Fargo Bank, N.A. v. Melahn, 148 Conn.App. 1, 10, 85 A.3d 1 (2014). This authority is "grounded in [the trial court’s] inherent powers, and is not limited to cases wherein the noncompliant party is in contempt, family cases, cases involving injunctions, or cases wherein the parties have agreed to continuing jurisdiction." (Internal quotation marks omitted.) Id.
In its memorandum in support of its motion for order, the plaintiff contends that no automatic stay ever went to effect, and, as such, title should vest in its favor. In so asserting, the plaintiff argues both federal and state law support such a result. As to federal law, the plaintiff argues that, pursuant to 11 U.S.C. § 362(c)(4), when a defendant has filed two previous bankruptcy petitions pending within the past year that were both dismissed, as here, then the automatic stay of 11 U.S.C. § 362(a) does not go into effect upon the filing of the third petition. As to state law, the plaintiff argues that, despite language that might indicate otherwise, General Statutes § 49-15(b) does not operate to open the judgment of strict foreclosure in this matter, nor does it reset the law days, because to construe it otherwise would ignore relevant language within the statute, and work to subvert the intent and purpose of federal and state law. Consequently, the plaintiff contends that the court should enter an order in its favor.
The resolution of this matter requires the interpretation of federal and state statutes. General Statutes § 1-2z directs us that: "The meaning of a statute shall, in the first instance, be ascertained from 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 or would yield absurd or unworkable results, however, 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 ..." (Internal quotation marks omitted.) Desrosiers v. Diageo North America, Inc., 314 Conn. 773, 782, 105 A.3d 103 (2014). Moreover, statutes must be read as a whole and in context. See Stewart v. Watertown, 303 Conn. 699, 711, 38 A.3d 72 (2012). This same analysis applies to federal statutes. See Webster Bank v. Oakley, 265 Conn. 539, 555-56, 830 A.2d 139 (2003), cert. denied, 541 U.S. 903, 124 S.Ct. 1603, 158 L.Ed.2d 244 (2004).
Pursuant to federal law, a stay upon a foreclosure action is typically effectuated upon the filing of a bankruptcy petition. Title 11 of the United States Code, § 362(a), provides in relevant part: "[A] petition filed under section 301, 302, or 303 of this title ... operates as a stay, applicable to all entities, of (1) the commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title; (2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title; (3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate; (4) any act to create, perfect, or enforce any lien against property of the estate; (5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title; (6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title ..." Any actions taken by a creditor in violation of the stay "are void and without effect." (Internal quotation marks omitted.) Krondes v. O’Boy, 69 Conn.App. 802, 810, 796 A.2d 625 (2002).
Nevertheless, as amended by the Bankruptcy Abuse Protection and Consumer Protection Act of 2005 (BAPCPA), federal law also provides that the automatic stay may never go into effect if successive petitions have been filed and dismissed. Section 362(c)(4)(A) of title 11 of the United States Code further provides, in relevant part: "[I]f a single or joint case is filed by or against a debtor who is an individual under this title, and if [two] or more single or joint cases of the debtor were pending within the previous year but were dismissed ... the stay under subsection (a) shall not go into effect upon the filing of the later case; and on request of a party in interest, the court shall promptly enter an order confirming that no stay is in effect ..."
Here, the plaintiff filed two previous bankruptcy petitions that were dismissed within the previous year. Thus, the third petition, which was similarly dismissed, did not effectuate a stay pursuant to federal law. See 11 U.S.C. 362(c)(4)(a). See also Financial Freedom Acquisitions LLC v. Mastriorianni, Superior Court, judicial district of Fairfield, Docket No. CV-11-6021559-S (September 17, 2017, Jennnings, J.T.R.) (no stay arose upon filing of third bankruptcy petition). Nevertheless, the state statute addressing bankruptcy stays must also be considered.
General Statutes § 49-15(b) provides: "Upon the filing of a bankruptcy petition by a mortgagor under Title 11 of the United States Code, any judgment against the mortgagor foreclosing the title to real estate by strict foreclosure shall be opened automatically without action by any party or the court, provided, the provisions of such judgment, other than the establishment of law days, shall not be set aside under this subsection, provided no such judgment shall be opened after the title has become absolute in any encumbrancer or the mortgagee, or any person claiming under such encumbrancer or mortgagee. The mortgagor shall file a copy of the bankruptcy petition, or an affidavit setting forth the date the bankruptcy petition was filed, with the clerk of the court in which the foreclosure matter is pending. Upon the termination of the automatic stay authorized pursuant to [11 U.S.C. § 362], the mortgagor shall file with such clerk an affidavit setting forth the date the stay was terminated."
Two potential interpretations of this statute immediately present themselves, one narrow, and the other broad. A narrow construction would cause the filing of any bankruptcy petition to result in both the opening of a judgment of strict foreclosure, as well as the resetting of law days, regardless of whether an actual federal stay exists. Conversely, a broader interpretation would require the existence of a federal stay for § 49-15(b) to so apply.
In the present case, the court determines that a broad reading of the statute is justified and that, where no federal stay exists, § 49-15(b) does not operate to open the judgment of strict foreclosure, nor does it reset the law days. This conclusion is based upon the language of the statute, the strong federal and state policies at play, as well as the overall context in which the state and federal laws are situated.
The plain language of § 49-15(b) appears to contemplate the existence of an automatic stay. As noted by other courts "the first sentence of [§ 49-15(b) ], standing alone, requires resetting of law days after any filing of a bankruptcy petition before the law days have run. However, the last sentence of the section, which must be read in conjunction with the first sentence, states that in order to move forward with resetting the law days, a mortgagor must file an affidavit affirming that the ‘automatic stay authorized pursuant to 11 U.S.C. § 362’ has been terminated. The first sentence, therefore, contemplates that law days must be reset due to operation of an automatic stay." U.S. Bank, N.A. v. Morwaska, Superior Court, judicial district of Fairfield, Docket No. CV096003421S (January 25, 2018, Truglia, Jr., J.) (65 Conn.L.Rptr. 792, 795). Thus, in the absence of such a stay, § 49-15(b) neither opens a judgment of strict foreclosure, nor does it operate to automatically suspend the running of the law days or prevent title from vesting in a foreclosing party. See Connecticut National Mortgage Co. v. Knudsen, Superior Court, Judicial District of Danbury, Docket No. CV89-0299519-S (May 14, 2018, Shaban, J.). This broader interpretation is particularly appropriate in light of the strong federal and state policies at play.
Moreover, a narrow construction of § 49-15 would raise the issue of a "perpetual motion machine." Repeated filings of motions to open, appeals, and bankruptcy petitions, followed by repeated automatic suspensions of the law days, creates a scenario that could continue in perpetuity. This issue was recognized in First Connecticut Capital, LLC v Homes of Westport, LLC, 112 Conn.App 750, 762, 966 A.2d 239 (2009) wherein the court invited resolution of a similar issue by our legislature and rules committee. Id., 766. The Superior Court rules committee responded by enacting Practice Book § § 61-11(g) and (h), which limit the applicability of automatic appellate stays after multiple motions to open foreclosure judgments Thus, construing § 49-15 broadly furthers the policy of our rules of practice, and avoids this issue. ---------
Construing these statutes broadly in relation to each other harmonizes them, and promotes their respective underlying policies, whereas a narrow interpretation threatens to raise the specter of preemption. See Dowling v. Slotnik, 244 Conn. 781, 791, 712 A.2d 396, cert. denied sub nom. Slotnik v. Considine, 525 U.S. 1017, 119 S.Ct. 542, 142 L.Ed.2d 451 (1998) (preemption may occur where "Congress has legislated comprehensively to occupy an entire field of regulation, leaving no room for the States to supplement federal law ... or where the state law at issue conflicts with federal law, either because it is impossible to comply with both ... or because the state law stands as an obstacle to the accomplishment and execution of congressional objectives" [citations omitted; emphasis added; internal quotation marks omitted]).
Repeated, last minute, filings of bankruptcy petitions is "precisely the type of bad faith misuse of the Bankruptcy Code that the Bankruptcy Abuse Protection and Consumer Protection Act of 2005 (BAPCPA), Public Law 109-8, 119 Stat. 23 (2005), was designed to address." Connecticut National Mortgage Co. v. Knudsen, supra, Superior Court, Docket No. CV89-0299519-S. Indeed, BAPCPA was intended as a "comprehensive package of reform measures pertaining to both consumer and business bankruptcy cases ... With respect to the interests of creditors, the proposed reforms respond to many of the factors contributing to the increase in consumer bankruptcy filings, such as lack of personal financial accountability, the proliferation of serial filings, and the absence of effective oversight to eliminate abuse in the system." (Footnote omitted; internal quotation marks omitted.) H.R. Doc. No. 109-31, p. 1 (2005). See also Connecticut Bar Assn. v. United States, 620 F.3d 81, 85 (2d Cir. 2010). Connecticut courts also recognize a foreclosing plaintiff’s rights in the subject property, and the public policy of this state to expedite foreclosure cases "whenever possible." First National Bank of Chicago v. Luecken, 66 Conn.App. 606, 610, 785 A.2d 1148 (2001), cert. denied, 259 Conn. 915, 792 A.2d 851 (2002).
Thus, a narrow interpretation of § 49-15(b), which specifically refers to the Bankruptcy Code, would stand as an obstacle to the accomplishment and execution of the congressional objective of BAPCPA, which specifically attempts to address the "proliferation of serial filings." Such an interpretation would also conflict with the expressed intent of state foreclosure law, as well as the intent underlying our amended rules of practice. See First National Bank of Chicago v. Luecken, supra, 66 Conn.App. 610. See also footnote two of this memorandum of decision.
Accordingly, construing these statutes broadly, so that the stay of § 49-15(b) is contingent upon the existence of an automatic federal bankruptcy stay, harmonizes them, and accomplishes the important underlying federal and state policies underlying these statutes. This conclusion has been echoed by persuasive authority. U.S. Bank, N.A. v. Morwaska, supra, 65 Conn.L.Rptr. 795 (concluding that when no automatic stay arose § 49-15(b) did not operate to open judgment of strict foreclosure); Connecticut National Mortgage Co. v. Knudsen, supra, Superior Court, Docket No. CV89-0299519-S (same). But see Aurora Loan Services, LLC v. Bracey, Superior Court, judicial district of Litchfield (October 16, 2017, Moore, J.) (narrowly construing § 49-15(b) to require resetting law days).
Consequently, reading both the BAPCPA and our state foreclosure statutes in relation to each other, and within the context of a typical mortgage foreclosure action, the court concludes that § 49-15(b) does not automatically suspend the running of the law days in a judgment of strict foreclosure, nor does it prevent title from vesting in a foreclosing mortgagor, where, as here, no automatic stay arises as a result of a voluntary federal bankruptcy filing. Thus, because the defendant’s two previous petitions were dismissed within the previous year, and no stay arose upon the filing of the third petition, title to the mortgaged premises vested in the plaintiff on November 16, 2018, upon the running of the law days.
III
CONCLUSION
For the foregoing reasons, the plaintiff’s motion for order is granted.