Rockstone Capital, LLC v. Sanzo
Rockstone Capital, LLC v. Sanzo
Opinion
*772 The plaintiff, Rockstone Capital, LLC, appeals and the defendants, John Sanzo and Maria Sanzo, 1 cross appeal from the judgment of the trial court. On appeal, the plaintiff claims that the trial court erred in not foreclosing its mortgage on the defendants' property and in applying the homestead exemption to its judgment liens, for which foreclosure was not sought. In their cross appeal, in part agreeing with the plaintiff, the defendants claim that the trial court erred in entering a judgment of foreclosure in favor of the plaintiff as to the judgment liens. As to the plaintiff's appeal, we reverse the judgment of the trial court that determined that the mortgage was void as against public policy and remand the matter for further proceedings in accordance with law. We also reverse the judgment of the trial court with respect to the defendants' cross appeal.
The trial court decided this case in part on the following stipulated facts. "The defendants are individuals with their primary residence located at 59 Crossbow Lane in Monroe ... ( [property] ). On or about June 21, 2000, Fleet National Bank (Fleet) commenced an action against the defendants and, on August 9, 2000, Fleet obtained a judgment in the amount of $103,535.57 *773 plus costs of $274.40 and lawful interest. Thereafter, on April 19, 2001, Fleet recorded two judgment liens on the [property] against each of the defendants.
"On October 23, 2007, the successor to Fleet, Bank of America, assigned all of its interest in the judgment to the plaintiff. Thus, the plaintiff is the current holder and owner of the judgment and of the liens against the [property]."
On February 28, 2008, after the defendants had defaulted on their payments, the plaintiff commenced this action to foreclose the judgment liens on the property. Thereafter, on April 26, 2009, the parties entered *80 into a forbearance agreement. The forbearance agreement provided that the defendants would pay additional interest and fees as well as the amount of the judgment liens over a period of time in exchange for the plaintiff's agreement to refrain from collection activities. The forbearance agreement also provided that a mortgage would be placed on the defendants' property, securing the defendants' obligations under the forbearance agreement. The agreement further provided that the plaintiff would refrain from continuing its action for foreclosure on the judgment liens as long as the defendants strictly complied with the modified payment schedule. 2
After the defendants failed to make certain payments under the forbearance agreement, the plaintiff proceeded with its foreclosure action on the judgment liens. Thereafter, the plaintiff requested permission to amend its complaint to foreclose on the mortgage instead of the judgment liens. On May 13, 2014, the *774 defendants filed an objection to the plaintiff's request for leave to amend its complaint.
On May 15, 2014, the trial court, Hon. Michael Hartmere, judge trial referee, issued an order granting the plaintiff's request to amend its complaint. At that time, the court also issued an order overruling the defendants' objection to the plaintiff's request for leave to amend its complaint. The plaintiff's amended complaint sought a strict foreclosure of the mortgage and not the judgment liens, hereinafter referred to as the operative complaint. The defendants then filed an answer to the operative complaint and, by way of special defense, claimed that the mortgage was void as against public policy because the forbearance agreement amounted to a waiver of the homestead exemption set forth in General Statutes § 52-352b (t). 3
On December 12, 2014, the trial court, Hon. Richard P. Gilardi , judge trial referee, concluded that the forbearance agreement was valid and rendered a judgment of foreclosure. Both parties moved to reargue and reconsider that ruling. On July 15, 2015, the trial court issued a corrected memorandum of decision concluding that the forbearance agreement was void as against public policy such that the plaintiff could not foreclose on the mortgage. The court also concluded that the defendants had a right as a matter of law to file a claim for a homestead exemption and rendered judgment for the plaintiff on the judgment liens. It did not determine the amount of the debt and whether foreclosure of the judgment liens would be by strict foreclosure or foreclosure by sale.
*775 On July 28, 2015, the plaintiff appealed from the trial court's July 15, 2015 decision, claiming that it improperly denied the foreclosure of its mortgage in order to allow the defendants to assert the homestead exemption against its judgment liens that were not part of the mortgage foreclosure action. Shortly thereafter, on August 7, 2015, the defendants filed a cross appeal claiming that the court improperly rendered judgment on the judgment liens because the plaintiff amended *81 its complaint to seek foreclosure solely of the mortgage.
During the pendency of this appeal, the parties were ordered to appear for a hearing before this court to give reasons, if any, as to why the appeal and cross appeal should not be dismissed for lack of a final judgment because the trial court had not yet determined the amount of debt or whether foreclosure should be strict or by sale. See
Essex Savings Bank
v.
Frimberger
,
With respect to the first question, the court articulated that it "denied foreclosure of the mortgage pursuant to the foreclosure agreement because the terms of the forbearance agreement included a waiver of the homestead [exemption]." In addressing the second question, the court articulated that once it "voided the forbearance agreement and underlying mortgage, the remaining matter to be resolved involved judgment on the original judgment liens. The court, therefore, turned to the issue of whether judgment should be granted on the judgment liens." Next, in response to the third *776 question, the court articulated that "[i]t was the court's intention to preserve the defendants' right to the homestead exemption while preserving the plaintiff's right to sue on the original judgment liens. Therefore, the court voided the forbearance agreement and the mortgage within the agreement, but entered judgment in favor of the plaintiff on both of the original judgment liens." (Footnote omitted.) Finally, with respect to the fourth question, the court articulated that it "entered judgment in favor of the plaintiff on both of the judgment liens."
In light of the trial court's articulation, this court ordered the parties to address the final judgment question in their briefs on the merits of the appeal and cross appeal.
I
THE PLAINTIFF'S APPEAL
A
We first must consider whether the court's judgment denying the request for foreclosure on the mortgage constitutes an appealable final judgment. The plaintiff claims that the court's decision is a final judgment in that it denied the relief requested in its operative complaint, namely, the foreclosure of the mortgage. The defendants argue that there was not a final judgment as the court has not determined the amount of the debt and whether foreclosure on the judgment liens should be by strict foreclosure or foreclosure by sale. We conclude that this appeal was taken from a final judgment.
We have long held that "[t]he lack of a final judgment implicates the subject matter jurisdiction of an appellate court to hear an appeal. A determination regarding ... subject matter jurisdiction is a question of law [over which we exercise plenary review]. ... As our
*777
Supreme Court has explained: To consider the [plaintiff's] claims, we must apply the law governing our appellate jurisdiction, which is statutory. ... The legislature has enacted General Statutes § 52-263, which limits the right of appeal to those appeals filed by aggrieved parties on issues of law from final judgments. Unless
*82
a specific right to appeal otherwise has been provided by statute, we must always determine the threshold question of whether the appeal is taken from a final judgment before considering the merits of the claim. ... Further, we have recognized that limiting appeals to final judgments serves the important public policy of minimizing interference with and delay in the resolution of trial court proceedings." (Footnote omitted; internal quotation marks omitted.)
J & E Investment Co., LLC
v.
Athan
,
Moreover, this court previously has determined that "[a] judgment of foreclosure constitutes an appealable final judgment when the court has determined the method of foreclosure and the amount of the debt."
In the present case, the plaintiff argues that the court's decision is final in that it denied the relief requested in its operative complaint, namely, the foreclosure of the mortgage, in favor of the defendants. See
Morici
v.
Jarvie
, supra,
In
Essex Savings Bank
, supra,
The facts of this case are distinguishable from Essex Savings Bank , in that the plaintiff here is challenging the court's failure to render judgment in its favor on the mortgage. 4 The court found the issues for the defendants on the operative complaint. Practice Book § 61-2 ("[w]hen judgment has been rendered on an entire complaint ... such judgment shall constitute a final judgment."). Specifically, the trial court concluded that the forbearance agreement was void as against public policy such that the plaintiff could not foreclose on the mortgage. Because the court denied the relief requested in the plaintiff's operative complaint, we conclude that there was a final judgment.
B
Having determined that we have jurisdiction over this appeal, we now address the merits of the plaintiff's claims.
*83 The plaintiff claims that the trial court improperly denied the foreclosure of its mortgage in order to *779 allow the defendants to assert the homestead exemption against the judgment liens that were not part of the mortgage foreclosure action. 5 In response, the defendants argue that the mortgage is void on public policy grounds because it is a de facto waiver of the homestead exemption. We agree with the plaintiff.
The following facts and procedural history are relevant to our resolution of this claim. On July 15, 2015, the court issued a memorandum of decision and noted that "this case has a unique procedural history, in that the plaintiff has amended its complaint to take the present dispute out of the ordinary realm of the homestead exemption. The plaintiff instituted this action suing on the unpaid judgment and its attached liens. Only after the defendants filed notice that they intended to claim the homestead exemption did the plaintiff amend its complaint to sue on the forbearance agreement instead. The calculated steps taken by the plaintiff demonstrate that the progression of this action has been to get around the homestead exemption. Had the plaintiff continued to sue on the judgment liens, there would be no question that the homestead exemption applied. It would be an absurd result if the court were to validate the waiver under these set of facts since it appears the purpose of amending the complaint was to evade the goal the legislature sought to achieve when passing the homestead exemption. Given the potential annihilation of [General Statutes] § 52-352b (t) and the plaintiff's attempts to avoid the homestead exemption that our legislature deemed necessary, this court finds the waiver of the homestead exemption, incorporated by reference into the forbearance agreement is void, and against public policy. ... For all the aforementioned reasons, the court finds that the entire forbearance agreement is void. The defendants have a right as a *780 matter of law to file a claim for a [h]omestead exemption, and, accordingly, judgment is entered on the judgment lien."
In response to our request for articulation, the trial court stated that it "determined that the entire forbearance agreement including the mortgage created by the forbearance agreement was void as against public policy, because it resulted in a waiver of the homestead [exemption]. The court understands that a mortgage is a consensual lien and that the homestead [exemption] does not apply to consensual liens. However, the court determined that as per the facts of this case, the mortgage created pursuant to the forbearance agreement was invalid, and, as a result, judgment was entered as to the judgment liens." The court further articulated that "[i]t was not until [the] defendants raised their claim to the homestead exemption pursuant to ... § 52-352b (t), that [the] plaintiff sought to amend the complaint. The reason for this, ostensibly, is that while the homestead exemption of $75,000 per owner applies to the value of the property after consensual liens are taken into account (such as mortgages), it is paid to [the] defendants before payment is made to holders of judgment liens. Therefore, [the] plaintiff could avoid having the homestead exemption applied to [the] defendants' interest in [their home], and thus recover more from a foreclosure, if it were to foreclose the purported mortgage, rather than the [j]udgment [l]iens. ...
"In other words, if [the] plaintiff were to foreclose on the judgment liens, as it had intended to do for several years after it *84 obtained the mortgage, [the] defendants would be entitled to the homestead exemption after any consensual or statutory liens were paid, but before [the] plaintiff received any part of the foreclosure judgment. However, if the mortgage is still valid, [the] plaintiff is entitled to be paid on the foreclosure judgment (in an action on the mortgage), without [the] *781 defendants receiving the amount of the homestead exemption before [the] plaintiff is paid." (Internal quotation marks omitted.) "To that end, the court determined that the mortgage is invalid and that judgment is entered in favor of the plaintiff as to the judgment liens, but, not the mortgage."
We begin our analysis by setting forth our well established standard of review and the relevant legal principles that govern the issue before us. This court reviews questions of statutory interpretation under the plenary standard of review.
Spears
v.
Elder
, 156 Conn.App. at 778, 785,
Pursuant to General Statutes § 52-350f, which governs the enforcement of money judgments, a judgment creditor may enforce a money judgment "against any property of the judgment debtor unless the property is exempt from application to the satisfaction of the judgment under section ... 52-352b ...." 6 " Section 52-352b identifies assets that are exempt from postjudgment procedures. Subsection (t) exempts '[t]he homestead of the exemptioner to the value of seventy-five thousand dollars, or, in the case of a money judgment arising out of services provided at a hospital, to the value of one hundred twenty-five thousand dollars, provided value shall be determined as the fair market value of the real property less the amount of any statutory or consensual lien which encumbers it ....' "
*782
JP Morgan Chase Bank, N.A.
v.
Zubretsky
,
Here, the plaintiff contends that it is not relying on any waiver of the homestead exemption, whether in the forbearance agreement or in the mortgage. 7 Rather, *85 the plaintiff argues that under § 52-352b, the homestead exemption does not apply to the mortgage as it is a consensual lien. We agree with the plaintiff.
Although our appellate courts have yet to address the specific question of whether mortgages are consensual liens, our superior court has. See
Garcia
v.
Amaranto
, Superior Court, judicial district of Fairfield, Docket No. CV-98-0355695-S (January 7, 2003) (
*783
General Statutes § 52-352b (t)." [Emphasis added; internal quotation marks omitted.] ). These statutory or consensual liens, such as a tax lien or a mortgage, are used to determine the fair market value of the homestead under § 52-352b (t).
L. Suzio Asphalt Co.
v.
Ferreira Construction Corp.
, Superior Court, judicial district of New Haven, Docket No. 351912 (October 19, 1993) (
The defendants, however, claim that the mortgage is void on public policy grounds because it is a de facto waiver of the homestead exemption. In particular, the defendants rely on
Tuxis-Ohr's Fuel, Inc.
v.
Trio Marketers, Inc.
, supra,
II
THE DEFENDANTS' CROSS APPEAL
A
Before addressing the merits of the defendants' cross appeal, we first must consider whether the court's judgment foreclosing on the judgment liens constitutes an
*785
appealable final judgment. A judgment of foreclosure on judgment liens is not, ordinarily, an appealable final judgment until "the court has determined the method of foreclosure and the amount of debt."
J & E Investment Co., LLC
v.
Athan
, supra,
For example, in
Santorso
v.
Bristol Hospital
,
*786
Collins
v.
Anthem Health Plans, Inc.
, [supra,
Applying Santorso to this case, we determine that the claim the defendants raise in their cross appeal is inextricably intertwined with the claim raised in the plaintiff's appeal. In particular, under the *87 unusual circumstances of this case, both parties contend that the court erred in rendering a judgment of foreclosure on the judgment liens, since the operative complaint did not seek that relief. It is clear that this cross appeal, like the plaintiff's appeal, rests heavily on Judge Gilardi's determination, both in the court's memorandum of decision and articulation, that "[o]nce the court voided the forbearance agreement and underlying mortgage, the remaining matter to be resolved involved judgment on the original judgment liens." Because this cross appeal is related so closely to the issues underlying the plaintiff's appeal, we conclude that it is appropriate for us to assume jurisdiction over the cross appeal.
B
Having assumed jurisdiction, we consider whether the trial court improperly rendered a judgment of foreclosure on the judgment liens in favor of the plaintiff. Specifically, the defendants argue that the court erred in rendering a judgment of foreclosure on the judgment liens because the plaintiff amended its complaint to seek to foreclose solely the mortgage. The defendants, therefore, contend that it was an error for the court to render a judgment of foreclosure on the judgment liens as this claim was no longer in the plaintiff's operative complaint. We agree with the defendants.
*787
We begin by setting forth our well established standard of review and the legal principles that guide our resolution of the defendants' claim. "The defendants' claim requires us to interpret the allegations of the plaintiff's complaint to determine what it fairly alleges and to compare those allegations with the court's judgment, as informed by the trial record. The interpretation of pleadings presents a question of law over which our review is plenary."
Landry
v.
Spitz
,
"The purpose of the complaint is to limit the issues to be decided at the trial of a case and is calculated to prevent surprise. ... A complaint should fairly put the defendant on notice of the claims against him. ... Thus, a plaintiff during trial cannot vary the factual aspect of his case in such a way that it alters the basic nature of the cause of action alleged in his complaint. ... In other words, [a] plaintiff may not allege one cause of action and recover upon another." (Citations omitted; internal quotation marks omitted.)
Landry
v.
Spitz
, supra,
Practice Book § 10-60 (3) permits a party to file a request for leave to file an amended complaint and permits the opposing party to file an objection to any part of such request. In the present case, the court overruled the defendants' objection to the plaintiff's request for leave to amend its complaint. Our Supreme Court previously has concluded that an amended complaint operates as a withdrawal of the original complaint.
Wesley
v.
DeFonce Contracting Corp.
,
In the present case, the parties agree that the court rendered a judgment of foreclosure on a claim that was no longer in the plaintiff's operative complaint. Specifically, after the defendants defaulted on their payments in the forbearance agreement, the plaintiff commenced an action to foreclose the judgment liens. Shortly thereafter, the plaintiff requested permission to amend its complaint to seek foreclosure of the mortgage instead of the judgment liens, which the court granted on May 15, 2014. The plaintiff then filed an operative complaint seeking a strict foreclosure on the mortgage and abandoning its request for foreclosure of the judgment liens. See
Wesley
v.
DeFonce Contracting Corp.
, supra,
The judgment is reversed and the case is remanded for further proceedings according to law.
In this opinion the other judges concurred.
The Housatonic Lumber Company was also named as a defendant by virtue of its encumbrances on the Sanzos' property both prior and subsequent to the encumbrance sought to be foreclosed, but it was defaulted for failure to plead. All references to the defendants therefore refer to John Sanzo and Maria Sanzo only.
A document entitled "Open-End Mortgage" (mortgage), dated April 26, 2009, was executed by the defendants and secures their obligation due under the forbearance agreement, which includes the judgment liens, fees, costs and additional interest.
Connecticut's homestead exemption is codified at General Statutes § 52-352b, which provides in relevant part: "The following property of any natural person shall be exempt ... (t) The homestead of the exemptioner to the value of seventy-five thousand dollars ... provided value shall be determined as the fair market value of the real property less the amount of any statutory or consensual lien which encumbers it ...."
Specifically, the plaintiff contends that although the court failed to determine the amount of debt and the method of foreclosing on the judgment liens, it did determine that the forbearance agreement was void and thus refused to render judgment of foreclosure on the mortgage.
In part II B of this opinion, we address the court's error in foreclosing on the judgment liens. Such relief was not sought in the operative complaint.
General Statutes § 52-350f provides: "A money judgment may be enforced against any property of the judgment debtor unless the property is exempt from application to the satisfaction of the judgment under section 52-352a, 52-352b, 52-352d or 52-361a or any other provision of the general statutes or federal law. The money judgment may be enforced, by execution or by foreclosure of a real property lien, to the amount of the money judgment with (1) all statutory costs and fees as provided by the general statutes, (2) interest as provided by chapter 673 on the money judgment and on the costs incurred in obtaining the judgment, and (3) any attorney's fees allowed pursuant to section 52-400c."
We note that the mortgage did in fact include a waiver of the homestead exemption. Specifically, paragraph sixteen of the mortgage states: "The [m]ortgagor waives all rights of homestead exemption in, and statutory redemption of, the [p]roperty and all right of appraisement of the [p]roperty and relinquishes all rights of courtesy and dower in the [p]roperty." We need not further discuss this issue, as the issues raised by the plaintiff on appeal do not involve its reliance on the homestead exemption waiver in the forbearance agreement.
See footnote 7 of this opinion.
Reference
- Full Case Name
- ROCKSTONE CAPITAL, LLC v. John SANZO, Et Al.
- Cited By
- 3 cases
- Status
- Published