Opinion
No. CV 06-5007258
March 20, 2008
MEMORANDUM OF DECISION
In this action for foreclosure of a judgment lien, plaintiff moves for a partial summary judgment on liability only.
At the outset defendants argue such a motion cannot be granted because the Appellate Court in Homecomings v. Starbala, 85 Conn.App. 284, 290, fn.2 (2004) stated that a motion for summary judgment on the issue of liability only "is problematic because the borrowers are not liable to anyone; rather, the property is liable for the debt that it secures." That observation of the Appellate Court was pure dicta. The Appellate Court ignored the very salutary function that a motion for summary judgment on liability only serves when a specious answer is filed in a foreclosure action. Any answer creates a contested case which requires that the trial be delayed until it comes up on the court trial calendar. A motion for summary judgment allows the court to determine whether or not the answer presents any issue of fact. If not, the motion is granted and the case can proceed on the foreclosure short calendar and be expeditiously determined. Superior Court judges sitting on the foreclosure calendar in all the judicial districts of Connecticut have ignored the Appellate Court's dicta in Homecomings v. Starbala, and have been granting motions for summary judgment on the issue of liability only for years before and after that case was decided. Both Judge Samuel Freed and I, sitting on the foreclosure calendar in the Hartford judicial district, grant at least three such motions every Monday. There is simply no merit to the defendants' assertion
Defendants also argue that the Homestead Exemption prohibits judgment lien holders from obtaining a foreclosure judgment against an owner-occupied home. Conn. Gen. Stat. §§ 52-352a and 52-352b, when read together, provide that a homestead, meaning "owner-occupied real property," shall be exempt, meaning not "subject to any form of process of court order for the purpose of debt collection," up to a value of $75,000.00, and such "value shall be determined as the fair market value of the real property less the amount of any statutory or consensual liens which encumber it."
Cases hold that when two persons are joint owners of the property, the homestead exemption is $150.00. Bolduc v. Ritches, judicial district of Hartford at Hartford, CV 02-08208803 (February 6, 2003, Booth, J.).
Under § 52-352b(t), a homestead is not completely protected from "any form or process of court order for the purpose of debt collection," but only up to the value of $75,000.00, or in the case of a couple owning the property, $150,000.00. The clear interpretation of the statute is that since only $75,000.00 or $150,000.00 is exempt and cannot be subject to process or order, the judgment lienor can foreclose on the non-exempt portion of the equity.
However, the issue of what portion of the defendants' interest in their property is exempt and what portion non-exempt gives rise to an issue of fact which, in this case, precludes the granting of plaintiff's motion for summary judgment.
As stated in Lien Factors, LLC v. Belamour, judicial district of Fairfield at Bridgeport, No. CV 06-5002622 (November 20, 2007, Arnold, J.) "When a party asserts a Homestead Exemption, the court is required to conduct an evidentiary hearing to determine the value of the property, the amount of the liens on the property, and the applicability of the Homestead Exemption . . . The court at the hearing must determine whether the subject property is (1) the primary residence of the debtor; (2) the amount of the first mortgage; and (3) the current value of the subject real property . . . Expert testimony regarding the value of the property will be required, as well." It went on to say that "claims of exemption are to be liberally construed in favor of the owner who is claiming the exemption."
Plaintiff claims there is no issue of fact because the plaintiff responded to an interrogatory to the effect that the value of the subject property was "no more than $190,000.00." Plaintiff further claims that the first mortgage on the property is $37,600.00 and with $150,000.00 exemption, there is left an equity of $2,400.00. Thus, plaintiff argues that the foreclosure should continue and the plaintiff is entitled to a summary judgment.
The defendants assert that two judgment liens were recorded before plaintiff's lien and they bring the prior liens on the property to $58,700.00. However, those judgment liens are not "consensual or statutory" and so should not be considered in calculating the value of the non-exempt interest under the Homestead Act. KLC, Inc. v. Trayner, 426 F.3d 172 (Conn. 205), Caron Milne, Connecticut Foreclosures, 4th ed. (2004), p. 344.
However, defendants' statement of the value of their home was far from a statement of its fair market value. Their answer to the inquiry as to the value of the property was, "No more than $190,000.00. The real estate agency sells units at Surrey Hill, did a complete walk through, noting the conditions of the property, to derive a realistic listing price, which was $190,000.00." That indicates defendants were talking about a listing price rather than fair market value.
Moreover that response was made on July 11, 2007, and the court can take judicial notice that in the last eight months, the market value of properties in the area have declined. As a result, the court concludes that the fair market value of the property has not been established. In fact, in Lien Factors, LLC v. Belamour, supra, the court said it must be established by expert testimony.
Fair market value of the property is a material fact. If it does not exceed the amount of the mortgage and the $150,000.00 exemption, the plaintiff is not entitled to a judgment of foreclosure. Plaintiff concedes this repeatedly in its briefs. And, as noted in Bankers Trust of California, N.A. v. Neal, 64 Conn.App. 154, "When the debt of a prior mortgage exceeds that of a latter encumbrance, the latter is worthless because the property contains no equity to satisfy the later encumbrance."
Even assuming the $190,000.00 value and a non-exempt interest of the defendants to be $2,400.00, the court can assume, after reviewing the two huge folders of this file, that the legal fees the court would award would far exceed $2,400.00 and plaintiff would not receive anything.
A foreclosure action is equitable in nature. City Savings Bank v. Lawlor, 163 Conn. 149 (1972). A trial court has discretion, after review of the equities, to withhold foreclosure. Lettieri v. American Savings Bank, 182 Conn. 1, 12 (1980); Hamm v. Taylor, 180 Conn. 491, 497 (1980). When this plaintiff could well realize nothing in this action, the court can properly deny the plaintiff a foreclosure judgment.
Thus, because the value of defendants' property is in doubt, there is a disputed material issue of fact which requires that plaintiff's motion for summary judgment be denied.
There is another ground upon which the plaintiff's motion for summary judgment must be denied and that goes to the merits of the plaintiff's case.
The plaintiff alleges in its original complaint dated October 12, 2006, and subsequent amended complaints that, "On July 19, 2006, the plaintiff obtained a judgment in [this] court against the defendant in the amount of $11,143.36 and $302.00 in costs." Further the plaintiff alleges that "on July 21, 2006, said judgment being unsatisfied, the plaintiff caused a certificate of judgment lien to be filed in the office of the town/city clerk in said town/city of Glastonbury." Attached to the complaint is the judgment lien certifying, "Plaintiff on June 19, 2006 in Superior Court, Judicial District of Hartford, did obtain a judgment in its favor against the defendants for the sum of $9,382.05 principal damages, plus prejudgment interest as awarded by the court and costs of suit."
In an affidavit in support of plaintiff's motion for summary judgment, one of plaintiff's officers asserts: "That the plaintiff . . . obtained judgment against the Defendants in the action Unifund CCR Partners v. Scheappi, et al., CV 04-4000979-S, judicial district of Hartford, "That . . . the judgment entered in the amount of $9,382.05 plus prejudgment interest of $1,760.95 and costs of $302.00 was for a total judgment of $11,445.00."
This court has the right to take judicial notice of and in fact, has examined the file of Unifund CCR Partners v. Scheappi, et al., CV 04-4000979-S. Such an examination reveals that no such money judgment claimed by the plaintiff was entered in that case.
On July 28, 2004, the plaintiff initiated an action to recover an alleged credit card debt owed by the defendants to the original creditor CitiBank in the amount of $9,382.05 together with interest. The debt was subsequently allegedly assigned to the plaintiff. Defendants interposed an answer. On January 5, 2006 a hearing was held before factfinder Sherwood S. Willard. Plaintiffs were represented by their present attorney and the defendants appeared pro se. In the course of the factfinder reciting the evidence in the case, he noted "As of August 29, 2002, the defendants owed AT T Universal $9,382.05 (Plaintiff's Exhibit I)." However, in its report dated January 5, 2006, the factfinder reviewed the evidence of the assignment to plaintiff and concluded that the plaintiff had failed to prove the validity of its assignment. The conclusion was as follows: "Based on the findings of fact, it is recommended to the court that a finding in favor of the defendants be entered without prejudice."
The plaintiff objected to the acceptance of the factfinder's report. Judge Miller entered an order, "The matter is hereby remanded to factfinder Willard for a rehearing on the issue of whether or not there was a valid assignment to the plaintiff of the account in question."
A second hearing was held on March 30, 2006 where factfinder determined that a valid assignment had been made and he also stated: "Accordingly, the defendants are liable to the plaintiff for the amount of the credit card charges made on AT T Universal account no. 5491130094475852, with interest." His conclusion was, "Based on the findings of fact, it is recommended to the court that a finding in favor of the plaintiff be entered." Judge Grant Miller, on June 19, 2006 entered the following judgment: "Judgment shall enter in favor of the plaintiff on the factfinder's report as revised after remand."
Conn. Gen. Stat. § 52-549r states that:
A fact finder shall proceed to determine the matters in controversy submitted to them, and shall prepare and sign a finding of fact, which shall include an award of damages if applicable.
In the instant case, the factfinder made no finding as to the amount of the debt. Recitation of the evidence with reference to an exhibit is not a finding of fact.
The court construes the phrase "an award of damages" in the above statute to mean a precise dollar amount. Factfinder Willard found the defendants liable for the amount of the credit card charges made on the specific account number but did not state that amount. Judge Grant Miller on June 19, 2006 ordered that judgment enter in favor of the plaintiff on the factfinder's report, again without stating the amount of the judgment.
Conn. Gen. Stat. § 52-350j states, "The money judgment may be enforced by execution or by foreclosure of a real property lien to the amount of the money judgment . . ." (Italics added).
Conn. Gen. Stat. § 52-380a(a) provides:
A judgment lien securing the unpaid amount of any money judgment including interests 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 . . . containing the original amount of the money judgment and the amount due thereon; (Italics added).
Since no money judgment was entered in the underlying case (CV 04-4000979) in the amount stated in the judgment lien, signed and recorded by plaintiff's attorney, that lien is of questionable validity.
The lien also said "prejudgment interest as awarded by the court." The court made no award of prejudgment interest. Moreover, plaintiff had no right to calculate the prejudgment interest, add it to the principal, and file a judgment lien for the total dollar amount. That calculation is for the fact-finder to make in his "award of damages."
However, this court is not making such a ruling. The only motion before it is plaintiff's for summary judgment. For the reasons stated above, that motion is denied.