Bank of America, N.A., successor by merger with Fleet v. Estate of Donald Burnell (2010)

MEMORANDUM OF DECISION

I. Nature of Proceedings:

The defendant, David W. Burnell, Executor for the Estate of Donald Burnell, has moved to open the judgment of strict foreclosure entered in the above-captioned matter on November 17, 2008 for lack of adequate notice of the proceedings and mistaken representations by the plaintiff that materially impacted the in personum jurisdiction and the essential factual basis for exercise of discretion by the court (Sommer, J.) in entering judgment of strict foreclosure.   In support of its motion, defendant claims the court docket and testimony received at the hearing conducted by the court (Sommer, J.) on August 31, 2009 confirm a failure to provide notice of the pleadings, short calendar hearings or notice of the judgment itself and that plaintiff's counsel had direct knowledge that the defendant was represented in probate proceedings commenced after the initiation of the subject foreclosure action.   Defendant further argues that despite an inherent duty to the court as Commissioners of the Superior Court, and several specific rules of procedure to require notice of all pleadings and the disclosure of new material or information the subject of court order, more than one attorney from the plaintiff's law firm of Bendett and McHugh filed pleadings and appeared in court proceedings without correcting the record of an earlier affidavit which erroneously claimed the subject residential property was abandoned and the whereabouts of any heirs or legal representatives of the deceased mortgagor were unknown.

Having belatedly learned the history of the case and material facts not previously disclosed, the court agrees that plaintiff's counsel failed to fulfill basic obligations as officers of the court.   It is deeply disturbing that counsel for the plaintiff knowingly allowed the court to proceed in this case and to enter orders without advising the court of the history of the case and also took advantage of defendant's counsel, snidely refer to defendant's “slumbering” on his rights.   Furthermore although plaintiff is correct that David Burnell delayed filing an application for probate for over six years after the Mortgagor's death, this statement is merely a red herring and does not excuse plaintiff.

By way of background on August 30, 2001, Donald B. Burnell and the Connecticut Department of Revenue Services executed a promissory note in the amount of $121,000 in favor of Fleet National Bank. Donald B. Burnell died on September 11, 2001, leaving two heirs David B. Burnell and Dwayne Burnell.   Dwayne Burnell died four days after his father on September 15, 2001.   Plaintiff commenced this action for foreclosure in November 2006 and filed motions for default for failure to appear and judgment of strict foreclosure on December 22, 2006.   Strict foreclosure was granted January 16, 2007, opened and judgment by sale ordered.   The sale did not proceed, and plaintiff returned requesting strict foreclosure.   During this entire time there was neither notice to, nor appearance by the defendant Estate as discussed further below.

On November 17, 2008, the court granted judgment of strict foreclosure as requested by the plaintiff following default of the Estate of Donald Burnell.   Counsel for the plaintiff did not advise the court that lawyers from the law firm representing the plaintiff had communicated directly with an attorney for the estate regarding this very debt without advising him of the pending foreclosure action, that he had requested reinstatement figures and they had responded the 18 past due payments were $18,326.80 plus over $7,500 in fees.   It is not clear that Attorney Savarese should have gleaned that there was a pending foreclosure action.   The letter was silent despite the fact that plaintiff moved for judgment soon afterward stating that the reinstatement figure was subject to correction and requesting checks payable to Reiner, Reiner & Bendett, P.C., Trustees.

The text of Attorney Savarese's February 29, 2008 letter to Attorney Staron indicates he still has no idea that the firm to which he was writing not only prosecuted a foreclosure action but had obtained a judgment against his client.   The text of the March 24, 2008 response is similarly silent and misleading.

Plaintiff's claim that it was not obligated to revisit Judge Thim's orders on the plaintiff's Motion for Order of Notice and Motion for Default because neither Connecticut rules of practice nor reported caselaw is without merit.   The allegations of Attorney Stephen Savarese in his affidavit and the attached correspondence dated October 19, 2007 and February 29, 2008 do not disclose the plaintiff's foreclosure action had been pending for almost a year and that plaintiff had already obtained judgment.   Although there is some weight to plaintiff's claim that defendant did not act timely to protect himself, it was largely as a result of plaintiff's misleading communication that he failed to do so.   Much later in the proceedings, the court learned that David Burnell, executor and heir, had been living in the house for most of the time and that the plaintiff made no effort to ascertain occupancy of the house.   More recently, Mr. Burnell had been quite ill requiring care offsite and was thus unaware of and even if aware, apparently unable to pursue his rights.   Regardless of how much of these facts plaintiff's counsel knew, it is clear they chose to take advantage of the situation, mislead Attorney Savarese and by telling the court what they wanted it to hear, were less than candid.   The fact that the debt was approximately a third of the fair market value raised further concern that the plaintiff was trying to secure an unjustified windfall.   Had the plaintiff advised the court of the above facts at the hearing the court would not have rendered judgment.   The plaintiff however, was satisfied to leave the court with the impression that there was no representative of the mortgagor.

The numerous remaining questions and inconsistencies in the history of this case are exacerbated by plaintiff's mishandling of the critical loan documents.   The plaintiff's own documentation of the mortgage debt presents numerous problems, including the defective acknowledgment of the mortgage, which was allegedly executed by a power of attorney which the plaintiff never recorded and cannot locate.   When the sale committee realized this it moved for advise and the judgment was opened in 2007.   By August 2007 plaintiff's counsel was aware that an estate had been opened and that Attorney Savarese represented the Estate of Donald B. Burnell.   Plaintiff's counsel communicated with counsel for the estate regarding payoff but never advised him that the bank had initiated a foreclosure action.

Conclusion

Plaintiff alleges that the court lacks discretion to open the judgment of strict foreclosure, citing New Milford Savings Bank v. Jajer, 244 Conn. 251, 260 (1998);  First National Bank of Chicago v. Leuken, 66 Conn.App. 606 (2001), cert. denied, 259 Conn. 915 (2002);  Connecticut Commercial Lenders, LLC v. Teague, 105 Conn.App. 806 (2008).

The opening of judgments of strict foreclosure is governed by General Statutes § 49-15.   That section provides in relevant part that “[a]ny judgment foreclosing the title to real estate by strict foreclosure may, at the discretion of the court rendering the same, upon the written motion of any person having an interest therein, and for cause shown, be opened and modified ․ but no such judgment shall be opened after the title has become absolute in any encumbrancer.”  (Emphasis added.)

“The legislature's purpose in enacting § 49-15 was ․ to set out an orderly framework for a mortgagee's exercise of the equity of redemption;” New Milford Savings Bank v. Jajer, 244 Conn. 251, 258, 708 A.2d 1378 (1998);  and “to ensure equitable foreclosure proceedings.”  Id., 259.   The Jajer court further emphasized the “duty of the [trial] court [in applying § 49-15] to do justice to protect the rights of all the interested parties;” (emphasis added) id., 260;  and, after title has vested, “to prohibit the mortgagor from subsequent challenges to the enforceability of the mortgagee's property rights.”  Id.

The court agrees with defendant that our rules entitle all parties to fair notice and forthright disclosure.  Practice Book § 4-2 and § 13-5 govern parties equally in their conduct before the courts of the State of Connecticut reinforced by the Rules of Professional Conduct (especially Rule 3.3(a)(1)) when read all together provide a safeguard against incomplete or erroneous information being presented to a court proceeding.   It need not be repeated that litigation is not a game of cat and mouse.

Practice Book § 4-2 provides that every pleading be signed and that the signing shall constitute a certificate “to the best of the signer's knowledge, information and belief there is good ground to support it ․” Practice Book § 13-5 provides an affirmative and continuing duty to disclose information requested on parties in a civil action.

“The trial court has authority to regulate the conduct of attorneys and has a duty to enforce the standards of conduct regarding attorneys.”  Bergeron v. Mackler, 225 Conn. 391, 397 (1993);  Yamin v. Savarese & Schefiliti, P.C., 58 Conn.App. 171, 175 (2000).  Rule 3.3(a)(1) of the Rules of Professional Conduct provides in relevant part:  “A lawyer shall not knowingly ․ (1) Make a false statement of material fact or law to a tribunal “ ․ Repeatedly in its Request to Amend Complaint dated April 10, 2008 (No. 116 on the case docket), Motion to Substitute Plaintiff dated April 10, 2008 (No. 115) on the case docket) and Affidavit of Non-Military Service dated October 8, 2008 (No. 121 on the case docket).   Plaintiff continued to make affirmative representation regarding the unknown whereabouts of the non-appearing property owners despite collective knowledge to the contrary and are the most likely source of the “misunderstanding of the facts.”   The critical information needed for the court to exercise its discretion was purposely omitted.   These same pleadings were specifically reviewed and acted upon by the court (Sommer, J.) on November 17, 2008 as the supporting documentation to the final rendering of the Judgment of Strict Foreclosure.   The affidavits, pleadings and presentation by the plaintiff's attorneys, in their pursuit of the subject foreclosure of the mortgage securing the home equity loan debt, were the entire source of the information on which the court applied its discretion.   As the court (Sommer, J.) remarked on the record in the hearing on August 31, 2009:

“The problem is, this court was led to believe that the property was uninhabited, that it was an estate that had-that there was no one living there, that there were no heirs, that it had been abandoned.   The-this court entered a judgment in this case based on a misunderstanding of the facts, I am about to pursue right now, ․ this mortgage appears to have been executed, pursuant to a power of attorney, the power of attorney wasn't provided, it wasn't acknowledged, counsel stood up and said, the validation act takes care of that.   Well, the validation act may take care of it, if there is not a challenge to the circumstances.   And, although there is-that set in motion a sequence of events which frankly, I blame the plaintiff and I blame the defendant here ․ ) Transcript p. 35-36.

The cases cited by plaintiff are distinguishable from the instant case on their facts although the court recognizes the importance of adhering to the fundamental principles of law on which they are based.   Here title has vested in the plaintiff largely because plaintiff misled the defendant and the court.   The court had originally ordered foreclosure by sale, converting the order to one of strict foreclosure based on the representations of plaintiff's counsel that the property was abandoned.   Fortunately, no other parties are involved.   The plaintiff's right to foreclose must be balanced against the defendant's basic rights to fair and adequate notice of proceedings by the plaintiff and action by the court.   The court having weighed the rights of both parties, under the particular facts of this case, enters an order voiding the judgment of strict foreclosure;  and reinstating the original judgment of foreclosure by sale.

Further findings shall be made, a committee appointed and dates set for sale in accordance with the standing orders of this court.

BY THE COURT

SOMMER, J.

Sommer, Mary E., J.