Opinion
FBTCV096003421S
01-25-2018
U.S. BANK, N.A. as Trustee FOR the BS ARM TRUST, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-1 v. Anna MORAWSKA et al.
UNPUBLISHED OPINION
OPINION
Anthony D. Truglia, Jr., J.
The question before the court in this case is whether General Statutes § 49-15(b) resets the law day in a judgment of strict foreclosure when: (1) an owner files a petition for relief under the U.S. Bankruptcy Code after entry of judgment but before the law days have run; and (2) there is no bankruptcy stay in effect pursuant to 11 U.S.C. § 362.
Salient Factual and Procedural History
The facts and procedural history of this case are not disputed. The plaintiff, U.S. Bank N.A. as trustee for the BS Arm Trust, Mortgage Pass-Through Certificates, Series 2005-1, commenced this action in July 2009 to foreclose the rights of redemption of the defendant, Anna Morawska, in a mortgage executed by her in December 2004. This court originally entered a judgment of strict foreclosure against the defendant on September 30, 2013, after summary judgment was granted in favor of the plaintiff as to liability only. That judgment set a first law day of January 28, 2014. The defendant filed a petition for relief under Chapter 13 of the U.S. Bankruptcy Code on January 28, 2014. The plaintiff then filed a motion to reset the law days after a bankruptcy filing in accordance with § 49-15(b). This court granted the plaintiff’s motion on October 20, 2014, and set January 20, 2015, as the first law day. The defendant filed a motion to reargue on November 10, 2014, which was denied by this court on March 29, 2015. The defendant appealed the court’s order denying her request for re-inclusion into the foreclosure mediation program and entry of judgment on April 20, 2015. The Appellate Court affirmed the court’s judgment by decision dated May 10, 2016 and remanded the case back to this court for the sole purpose of resetting the law days.
See U.S. Bank, Trustee v. Morawska, 165 Conn.App. 421, 139 A.3d 747 (2016).
This court entered an order resetting October 25, 2016 as the first law day. The defendant then filed a second petition for relief under Chapter 7 of the U.S. Bankruptcy Code, which was dismissed by the Bankruptcy Court on December 8, 2016, for failure to file all missing documents. This court then granted the plaintiff’s motion to reset the law days yet again, setting April 25, 2017, as the new first law day. The defendant then filed a third petition for relief under the U.S. Bankruptcy Code prior to the running of the law days, which the Bankruptcy Court dismissed on May 10, 2017. On June 19, 2017, this court granted the plaintiff’s fourth motion to reset the law days after a bankruptcy filing and set September 19, 2017, as the new first law day. On September 19, 2017, the defendant then filed another petition for relief under Chapter 7 of the U.S. Bankruptcy Code. The defendant failed to redeem her interest in the mortgaged premises on September 19, 2017, or at any time thereafter. The defendant’s third bankruptcy filing was dismissed by the Bankruptcy Court on October 5, 2017, for failure to file necessary documentation. Although 11 U.S.C. § 362(c)(4)(B) allows a debtor, such as the defendant in this case, to move for imposition of a stay when no automatic stay arises, there is no evidence that the defendant moved for or received such stay following the September 19, 2017 filing.
Title 11 of the United States Code, § 362(c)(4)(A) and (B), provide: " [I]f a single or joint case is filed by or against a debtor who is an individual under this title, and if 2 or more single or joint cases of the debtor were pending within the previous year but were dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b), 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;
The plaintiff now moves for an order from this court affirming that title has vested in the plaintiff absolutely in accordance with the court’s June 19, 2017 judgment. Alternatively, should the court find that title did not vest in the plaintiff on September 21, 2017, the plaintiff asks this court to reset the law days pursuant to General Statutes § 49-15(b). The defendant did not file an objection or memorandum in opposition to the plaintiff’s motion.
Discussion
General Statutes § 49-15(b) provides as follows: " 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."
In an ordinary case, when the owner of the equity of redemption in a mortgage foreclosure action files a petition under Chapter 7 of the U.S. Bankruptcy Code, an automatic stay goes into effect that stops all collection activity against the defendant. The stay applies to the running of law days after a judgment of strict foreclosure, and vesting of title in the foreclosing party. 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).
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 2 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 ..."
In the present case, it is undisputed that the defendant filed two voluntary cases under section 301 of the Bankruptcy Code in the twelve months immediately prior to September 19, 2017, the first law day reset by the court in its June 19, 2017 order. Nonetheless, the plaintiff argues that General Statutes § 49-15(b) does not apply to suspend the running of the law days in a strict foreclosure judgment when there is no automatic stay from a bankruptcy filing. The plaintiff argues that the statute, when read as a whole, operates to open a judgment of foreclosure automatically and suspend running of the law days only in those cases when the automatic stay of 11 U.S.C. § 362 applies. The first sentence of the statute clearly states that any filing of a bankruptcy petition by a mortgagor under Title 11 of the United States Code automatically opens the judgment " without action by any party or the court." However, the plaintiff argues, the last sentence clearly contemplates that law days may be reset by the court " [u]pon termination of the automatic stay authorized pursuant to 11 U.S.C. § 362." Thus, if § 49-15(b) opens a judgment of strict foreclosure because of an automatic stay, then it is reasonable to assume that the legislature intended that the statute not have that effect if no automatic stay arises from a bankruptcy petition. Therefore, in the present case, notwithstanding the fact that the defendant filed a third petition for relief on her law day, no automatic stay came into effect on that day and accordingly, the provisions of § 49-15(b) did not operate to automatically suspend running of the law days. As a result, title then vested in the plaintiff as foreclosing mortgagee on September 21, 2017, the day following the law day assigned to both defendants in this case.
In support of this contention, the plaintiff makes several arguments. First, the plaintiff relies on the principles of statutory construction. General Statutes § 1-2z provides: " 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." Although the first sentence of § 49-15(b) does not mention the automatic stay of 11 U.S.C. § 362, the last sentence does. Read as a whole and in context, therefore, the plaintiff maintains that the only fair and workable interpretation of the section is that it was intended to operate only when an automatic stay applies.
The plaintiff also argues that the defendant’s last-minute, repeat filing of a Chapter 7 petition is precisely the type of bad faith misuse of the Bankruptcy Code that the Bankruptcy Abuse Protection and Consumer Protection Act (BAPCPA), Public Acts 2005, No. 109-8, was intended to stop. " S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, is a comprehensive package of reform measures pertaining to both consumer and business bankruptcy cases. The purpose of the bill is to improve bankruptcy law and practice by restoring personal responsibility and integrity in the bankruptcy system and ensure that the system is fair for both debtors and creditors. 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 Ass’n v. United States, 620 F.3d 81, 85 (2d Cir. 2010) (" In 2005, Congress enacted BAPCPA, intended as a comprehensive reform measure to curb abuses and improve fairness in the federal bankruptcy system" ).
Connecticut law has also addressed this problem of foreclosure actions becoming " perpetual motion machines" of multiple motions to open, appeals and repeated bankruptcy filings, followed by repeated automatic suspensions of the law days. See, e.g., First Connecticut Capital, LLC v. Homes of Westport, 112 Conn.App. 750, 766, 966 A.2d 239 (2009) (" We appreciate the concerns raised in this appeal by the plaintiffs, which merit attention by the rules committee of the Superior Court and the General Assembly. As presently enacted, however, our rules of practice permitted the perpetual motion machine employed, by the defendant in the present case" ). The Superior Court rules committee responded to the problem identified by the court in First Connecticut-Capital, LLC v. Homes of Westport, supra, 766, by enacting Practice Book § § 61-11(g) and (h), which limit applicability of automatic appellate stays after multiple or late-filed motions to open foreclosure judgments.
Practice Book § 61-11(g) provides, in relevant part: " In any action for foreclosure in which the owner of the equity has filed, and the court has denied, at least two prior motions to open or other similar motion, no automatic stay shall arise upon the court’s denial of any subsequent contested motion by that party, unless the party certifies under oath, in an affidavit accompanying the motion, that the motion was filed for good cause arising after the court’s ruling on the party’s most recent motion."
Practice Book § 61-11(h) provides: " In any action for foreclosure in which the owner of the equity has filed a motion to open or other similar motion, which motion was denied fewer than twenty days prior to the scheduled auction date, the auction shall proceed as scheduled notwithstanding the court’s denial of the motion, but no motion for approval of the sale shall be filed until the expiration of the appeal period following the denial of the motion without an appeal having been filed. The trial court shall not vacate the automatic stay following its denial of the motion during such appeal period."
Therefore, if § 49-15(b) opens a judgment of strict foreclosure every time a petition is filed, regardless of whether a stay is in place, the problem of a defendant owner filing multiple petitions for relief remains. If, however, a bankruptcy filing without a stay does not automatically suspend running of the law days under § 49-15(b), the perpetual motion problem of repeated, bad faith filings is resolved.
Second, the plaintiff argues that this court should infer that Congress intended to preempt state law pertaining to foreclosure where it conflicts with federal bankruptcy law. " The question of preemption is one of federal law, arising under the supremacy clause of the United States constitution ... Determining whether Congress has exercised its power to preempt state law is a question of legislative intent ... Preemption may be express or implied ... Express preemption occurs to the extent that a federal statute expressly directs that state law be ousted to some degree from a certain field ... Even where there is no express statutory statement ousting state law from a given area, [however] there may be implied preemption ... The United States Supreme Court has instructed us that, absent an explicit statement that Congress intends to preempt state law, courts should infer such intent 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; internal quotation marks omitted.) 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). The plaintiff argues, essentially, that Congress has preempted the law of debtors’ and creditors’ rights, and has expressed a clear intent that no automatic stay or other encumbrance on creditors’ rights under state law should result from multiple bankruptcy filings. If so, the plaintiff maintains, it follows that Congress’ intent in enacting the BAPCPA would be frustrated by a narrow reading of § 49-15(b).
The court agrees with this analysis. First, while an argument could be made that Congress never intended to comprehensively legislate all aspects of state foreclosure law, through BAPCPA or other legislation, it is clear that a literal and narrow reading of § 49-15(b) conflicts with the expressed intent of state and federal law. Connecticut courts recognize a foreclosing plaintiff’s rights in the subject property and the public policy of this state to expedite foreclosure cases whenever possible. See 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). See also Suffield Bank v. Berman, 25 Conn.App. 369, 373, 594 A.2d 493, cert. denied, 220 Conn. 914, 597 A.2d 340 (1991) (" In a civil case, the matter may take years before the parties go to trial, whereas, in a foreclosure action, the parties are afforded almost immediate access to court. It is readily apparent that due to the nature of foreclosure actions, the spirit of the rules is to expedite matters" ). Second, a narrow, conservative construction of § 49-15(b) does not address the problem of repeated, bad faith bankruptcy filings in foreclosure actions identified by both state and federal law. Third, as a matter of statutory construction, the first sentence of the section, 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.
Statutes must be read as a whole and in context. See Stewart v. Watertown, 303 Conn. 699, 711, 38 A.3d 72 (2012) (" It is an elementary rule of statutory construction that we must read the legislative scheme as a whole in order to give effect to and harmonize all of the parts." [Internal quotation marks omitted.] ); LaFrance v. Lodmell, 322 Conn. 828, 838, 144 A.3d 373 (2016) (" [I]n determining the meaning of a statute ... we look not only at the provision at issue, but also to the broader statutory scheme to ensure the coherency of our construction." [Internal quotation marks omitted.] ). Reading the entire statute, and in consideration of the context of a typical mortgage foreclosure action, the court concludes that § 49-15(b) does not automatically suspend running of the law days in a judgment of strict foreclosure, or prevent title from vesting in a foreclosing mortgagor, when no automatic stay arises as a result of a voluntary filing under the federal bankruptcy code.
This specific issue was recently addressed in Aurora Loan Services, LLC v. Bracey, Superior Court, judicial district of Litchfield, Docket No. CV-11-6005113-S (October 16, 2017, Moore, J.) . In that case, the court, Moore, J., concluded that " under the operation of the automatic opening provision of the first sentence of § 49-15(b), the judgment of strict foreclosure was automatically opened as to the running of the law day," despite the lack of an associated bankruptcy stay in place. This court respectfully disagrees with that interpretation. While a narrower reading of § 49-15(b) does not necessarily lead to absurd or unworkable results, this court nevertheless finds that the language of the statute, taken as a whole, in conjunction with the expressed intent of both state and federal law to combat repeated, bad faith bankruptcy petitions, compels a broader interpretation.
Conclusion
The court has authority to rule on the plaintiff’s motion for order. This court has " 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). In light of the foregoing, the defendant’s filing of a petition for relief under the Bankruptcy Code on September 19, 2017, did not suspend running of the law days in her case. Title to the mortgaged premises vested in the plaintiff on September 21, 2017.
So Ordered.
(B) if, within 30 days after the filing of the later case, a party in interest requests the court may order the stay to take effect in the case as to any or all creditors (subject to such conditions or limitations as the court may impose), after notice and a hearing, only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed ..."