New Alliance Bank v. Ernest A. Schaeppi et al. (2012)

ARTICULATION OF DECISION MOTION TO SUBSTITUTE PLAINTIFF

This foreclosure action was commenced by NewAlliance Bank (NewAlliance) on September 28, 2009.   On August 1, 2011, NewAlliance filed a motion to substitute First Niagara Bank, National Association (First Niagara) as plaintiff in the action.   In its motion, NewAlliance stated that on April 15, 2011, NewAlliance was merged into and succeeded by First Niagara.   In support of its motion, NewAlliance submitted a certificate of change of name, certificate of merger, and the official certification of the Comptroller of the Currency merging the two entities effective April 15, 2011.   On the certificate of merger there is a time stamp showing that these documents were recorded with the town clerk of Glastonbury, Connecticut on June 13, 2011.

On August 16, 2011, the defendants, Ernest and Ellen Schaeppi, filed an objection to the plaintiff's motion to substitute plaintiff in which they claim they did not receive certified notice from First Niagara after the merger stating that First Niagara had assumed title to the defendants' mortgage, they had not received notice that First Niagara was aware the defendants' home was in foreclosure, and they had not received notice that the attorney previously representing NewAlliance had been retained by First Niagara to continue the foreclosure action against them.   In their objection, the defendants also request an evidentiary hearing to require the plaintiff to prove First Niagara had assumed title to the defendants' mortgage.

General Statutes § 52–109 ¹ and Practice Book § 9–20 govern a motion to substitute plaintiff in an action.  “The decision whether to grant a motion for the addition or substitution of a party to legal proceedings rests in the sound discretion of the trial court.”  Poly–Pak Corp. of America v. Barrett, 1 Conn.App. 99, 102, 468 A.2d 1260 (1983).  “As a remedial statute, § 52–109 must be construed liberally in favor of those whom the law is intended to protect ․” (Internal quotation marks omitted.)  Lupinacci v. Stamford, 48 Conn.Sup. 1, 6, 823 A.2d 456 (2002).

“The two conditions that must be met to invoke the statutory remedy of substitution are:  first, that the action was commenced in the name of the wrong person by mistake;  and second, that the proposed substitution is necessary for the determination of the real matter in dispute.”  (Internal quotation marks omitted.)   Daleth v. County Obstetrics & Gynecology, Superior Court, judicial district of Waterbury, Docket No. CV 97 0150435 (January 31, 2000, Sheldon, J.) (26 Conn. L. Rptr. 345, 347).  “[T]he term ‘through mistake,’ as used in Section 52–109, means an honest conviction, entertained in good faith and not resulting from the plaintiff's own negligence, that [the plaintiff] is the proper person to commence the lawsuit.”  Id., 351.   “Substitution of the ‘real party in interest’ to pursue a claim is obviously ‘necessary for the determination of the real issue in dispute’ whenever the original party lacks standing to pursue it.”  Id., 350.  “The ‘real party in interest’ with respect to a claim is the true legal owner of the claim—one who has a sufficient legal interest in the claim to have standing to pursue it.”   Id., 349–50.

In the present case, the court is satisfied that NewAlliance commenced this action with the honest conviction that it was the proper plaintiff, and in fact, was initially the proper plaintiff to bring the action.   As the complaint sets forth, the defendants, by a note dated October 15, 1992, promised to pay The Savings Bank of Manchester (Savings Bank) the principal sum of $50,000.   To secure the note, the defendants mortgaged certain real property, located at 266 Conestoga Way in Glastonbury, by mortgage deed dated the same date.   According to the complaint, on or about April 19, 2004, Savings Bank merged into and was succeeded by NewAlliance.   As the successor in interest of Savings Bank, and bonafide owner and holder of the note and mortgage, NewAlliance commenced this action when the defendants failed to make payments on the note, and consequently, defaulted on the mortgage.

The motion to substitute plaintiff is appropriate because NewAlliance, having merged into and been succeeded by First Niagara, is no longer the proper plaintiff to be named in the present action.   First Niagara is the real party in interest with respect to this foreclosure action because it is now the owner and holder of the note and mortgage as a result of the merger.   See General Statutes § 33–820(a)(4).²  See also Ferrato v. Webster Bank, 67 Conn.App. 588, 589 n.1, 789 A.2d 472, cert. denied, 259 Conn. 930, 793 A.2d 1084 (2002) (finding that by virtue of the merger between two banks, the surviving corporation acquired all the liabilities of its predecessor in interest, and the separate existence of its predecessor ceased).   Likewise, by filing the certificate of change of name with the Glastonbury town clerk, First Niagara complied with the statutory notice requirements set forth in General Statutes § 47–12.³  See Webster Bank v. Flanagan, 51 Conn.App. 733, 742, 725 A.2d 975 (1999) (finding that a properly recorded certificate filed pursuant to § 47–12 served to place the public on notice as to the bank's name change following a merger).

For the foregoing reasons, the court granted the plaintiff's motion to substitute plaintiff.

MOTION TO OPEN

The court (Satter, J.T.R.) rendered a judgment of foreclosure by sale on June 22, 2010, and set the original sale date of October 23, 2010.   On July 27, 2010, the defendants filed a motion to open and vacate judgment of foreclosure by sale, pursuant to General Statutes § 52–212a and Practice Book § 17–4,⁴ which was denied by the court (Aurigemma, J.) on September 7, 2010.   Subsequently, the defendants filed an appeal of the court's decision on September 21, 2010, which was dismissed by the Appellate Court on July 21, 2011.   On August 1, 2011, the plaintiff ⁵ filed a motion to open the judgment of foreclosure by sale and set a new sale date.   The defendants filed an objection to said motion on August 15, 2011, on the grounds that the plaintiff captioned in the motion, First Niagara, was not the plaintiff “tied to” the case because the court had not yet ruled on the plaintiff's motion to substitute plaintiff at that time.⁶  Practice Book § 61–11(a) provides in relevant part:  “Except where otherwise provided by statute or other law, proceedings to enforce or carry out the judgment or order shall be automatically stayed until the time to take an appeal has expired.   If an appeal is filed, such proceedings shall be stayed until the final determination of the cause.”  Section 61–11 applies to mortgage foreclosures.  RAL Management, Inc. v. Valley View Associates, 278 Conn. 672, 899 A.2d 586 (2006).

“[T]he mere filing of a motion to reopen the judgment does not result in an automatic stay ․ Rather, it is the trial court's decision denying the defendant's motion to reopen the judgment that resulted in the entry of an appealable final judgment invoking the automatic stay under [§ 61–11].   Thus, an automatic stay went into effect when the court rendered its decision on the motion, not when the motion to reopen the judgment was filed.   The stay remains in effect until the disposition of [the] appeal because the defendant's appeal was timely filed during the appeal period ․” (Citation omitted.)   Brooklyn Savings Bank v. Frimberger, 29 Conn.App. 628, 631, 617 A.2d 462 (1992).  “The effect of ․ [Practice Book § 61–11 is] to stay the enforceability of the foreclosure judgment until the [motion to open the judgment] was decided ․” Farmers & Mechanics Savings Bank v. Sullivan, 216 Conn. 341, 347, 579 A.2d 1054 (1990).

In the present case, the defendants appealed the court's decision denying their motion to open and vacate judgment of foreclosure by sale.   As a result of the defendants' appeal, there was an automatic stay of execution on the judgment of foreclosure by sale ordered by the court on June 22, 2010 (Satter, J.T.R.), and the judgment could not be executed until the disposition of the defendants' appeal.   The court finds that since the judgment of foreclosure by sale could not be executed in accordance with the original order because the sale date passed during automatic stay, it is appropriate to grant the plaintiff's motion to open the judgment for the purpose of setting a new sale date in fulfillment of the court's judgment of foreclosure by sale.   While the court acknowledges that the plaintiff filed its motion to open after the four-month filing limitation set forth in § 52–121a, other judges of the Superior Court have allowed for an exception to the four-month restriction when the sale date set in the original judgment of foreclosure by sale passed while a stay of appeal was in effect.   See, e.g., Citibank FSB v. Kaufman, Superior Court, judicial district of Stamford–Norwalk, Docket No. CV 02 0191026 (August 11, 2006, Jennings, J.).

In addition, the court finds that it has jurisdiction to open the judgment of foreclosure by sale because the court's jurisdiction ends when a sale is approved.  “Generally, once a court has approved the foreclosure sale and the applicable appeal period has elapsed, the mortgagor's right of redemption is extinguished and the court's jurisdiction to modify that judgment ends.   See D. Caron & G. Milne, Connecticut Foreclosures (4th Ed.2004) § 9.01B, p. 203 (“[a]bsent the possibility of an appeal from [the court's] determination, the approval of the sale generally operates to divest the owner of his equity of redemption and consequently places the property beyond the power of the court”).”  Wells Fargo Bank of Minnesota, N.A. v. Morgan, 98 Conn.App. 72, 79, 909 A.2d 526 (2006);  see also GMAC Mortgage, LLC. v. Tufano, Superior Court, judicial district of New London, Docket No. CV 09 5010580 (February 17, 2010, Devine, J.) (49 Conn. L. Rptr. 330, 331) (finding that the court has jurisdiction to open a summary judgment in a foreclosure action even when filed beyond the four-month limitation set forth in § 52–212a).

For the foregoing reasons, the court granted the plaintiff's motion to open the judgment of foreclosure by sale and set a new sale date.

EVIDENTIARY HEARING

In the defendants' objection to the plaintiff's motion to substitute plaintiff, the defendants request an evidentiary hearing during which the plaintiff must provide “a live witness and admissible evidence” to prove that First Niagara assumed title to the defendants' mortgage.   The defendants' major contention, as indicated in the transcript of the hearing held on September 6, 2011, is that “the substitution of plaintiff has not yet been adjudicated.”

By challenging whether First Niagara is the bonafide owner of the note and mortgage, the defendants' objection implicates First Niagara's standing in the action and, more specifically, the court's subject matter jurisdiction over the case.⁷  “In determining whether a court lacks subject matter jurisdiction, the inquiry usually does not extend to the merits of the case ․ Because the elements of subject matter jurisdiction are dependent upon both law and fact ․ in some cases it may be necessary to examine the facts of the case to determine if it is within a general class the court has power to hear ․ Further, [w]hen issues of fact are necessary to the determination of a court's jurisdiction, due process requires that a trial-like hearing be held, in which an opportunity is provided to present evidence and to cross-examine adverse witnesses.”  (Citations omitted;  internal quotation marks omitted.)  Cross v. Hudon, 27 Conn.App. 729, 733, 609 A.2d 1021 (1992).

The Connecticut Appellate court has required an evidentiary hearing to determine a plaintiff's status as holder of the note at the time it commenced a foreclosure action.  Park National Bank v. 3333 Main, LLC, 127 Conn.App. 774, 780, 15 A.3d 1150 (2011).   In Park National Bank, the Court found that the plaintiff had not demonstrated it was the holder of the note when it initiated the foreclosure action because the documents provided by the plaintiff showed discrepancies as to the date the note was transferred to it.   Id. In the present case, the court finds that the plaintiff provided both the court and the defendants with sufficient documentation to demonstrate that First Niagara is the current owner of the defendant's mortgage by virtue of the merger between NewAlliance and First Niagara without requiring a full evidentiary hearing.   In addition, as previously stated, the plaintiff complied with the statutory notice requirements set forth in General Statutes § 47–12, and is not required to provide additional notice to the defendants.

For the foregoing reasons, the court denied the defendants' request for an evidentiary hearing.

Robaina, J.

FOOTNOTES

FN1. General Statutes § 52–109 provides:  “When any action has been commenced in the name of the wrong person as plaintiff, the court may, if satisfied that it was so commenced through mistake, and that it is necessary for the determination of the real matter in dispute so to do, allow any other person to be substituted or added as plaintiff.”   Practice Book § 9–20 is identical to the statutory language of § 52–109..  FN1. General Statutes § 52–109 provides:  “When any action has been commenced in the name of the wrong person as plaintiff, the court may, if satisfied that it was so commenced through mistake, and that it is necessary for the determination of the real matter in dispute so to do, allow any other person to be substituted or added as plaintiff.”   Practice Book § 9–20 is identical to the statutory language of § 52–109.

FN2. General Statutes § 33–820(a)(4) provides in relevant part:  “When a merger becomes effective ․ [a]ll property owned by, and every contract right possessed by, each corporation or other entity that merges into the survivor is vested in the survivor without reversion or impairment ․.  FN2. General Statutes § 33–820(a)(4) provides in relevant part:  “When a merger becomes effective ․ [a]ll property owned by, and every contract right possessed by, each corporation or other entity that merges into the survivor is vested in the survivor without reversion or impairment ․

FN3. General Statues § 47–12 provides in relevant part:  “Any person, corporation, limited liability company or limited liability partnership owning real estate or having an interest therein whose name has been changed, any corporation which has been merged into or consolidated with another ․ shall, within sixty days after the change, merger, consolidation or conversion file with the town clerk of the town in which the real estate is located a certificate, duly acknowledged, giving the name before and after the change, merger, consolidation or conversion and the town clerk shall record and index the certificate in the land records.”.  FN3. General Statues § 47–12 provides in relevant part:  “Any person, corporation, limited liability company or limited liability partnership owning real estate or having an interest therein whose name has been changed, any corporation which has been merged into or consolidated with another ․ shall, within sixty days after the change, merger, consolidation or conversion file with the town clerk of the town in which the real estate is located a certificate, duly acknowledged, giving the name before and after the change, merger, consolidation or conversion and the town clerk shall record and index the certificate in the land records.”

FN4. General Statutes § 52–212a provides in relevant part:  “Unless otherwise provided by law and except in such cases in which the court has continuing jurisdiction, a civil judgment or decree rendered in the Superior Court may not be opened or set aside unless a motion to open or set aside is filed within four months following the date on which it was rendered or passed.”  Practice Book § 9–20 is almost identical to the statutory language of § 52–212a..  FN4. General Statutes § 52–212a provides in relevant part:  “Unless otherwise provided by law and except in such cases in which the court has continuing jurisdiction, a civil judgment or decree rendered in the Superior Court may not be opened or set aside unless a motion to open or set aside is filed within four months following the date on which it was rendered or passed.”  Practice Book § 9–20 is almost identical to the statutory language of § 52–212a.

FN5. Due to the fact that the court granted NewAlliance's motion to substitute plaintiff on September 12, 2011, hereinafter First Niagara will be referred to as the plaintiff..  FN5. Due to the fact that the court granted NewAlliance's motion to substitute plaintiff on September 12, 2011, hereinafter First Niagara will be referred to as the plaintiff.

FN6. The court's order granting the plaintiff's motion to substitute relates back in time to affect the motion to open and substitute First Niagara as the real party in interest.   See Connecticut National Bank v. Marland, 45 Conn.App. 352, 356, 696 A.2d 374, cert. denied, 243 Conn. 907, 701 A.2d 328 (1997) (“an amendment substituting a new plaintiff [will] relate back if the added plaintiff is the real party in interest”)..  FN6. The court's order granting the plaintiff's motion to substitute relates back in time to affect the motion to open and substitute First Niagara as the real party in interest.   See Connecticut National Bank v. Marland, 45 Conn.App. 352, 356, 696 A.2d 374, cert. denied, 243 Conn. 907, 701 A.2d 328 (1997) (“an amendment substituting a new plaintiff [will] relate back if the added plaintiff is the real party in interest”).

FN7. “Where a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause.”  (Internal quotation marks omitted.)  Blakeney v. Commissioner of Correction, 47 Conn.App. 568, 574, 706 A.2d 989, cert. denied, 244 Conn. 913, 713 A.2d 830 (1998)..  FN7. “Where a party is found to lack standing, the court is consequently without subject matter jurisdiction to determine the cause.”  (Internal quotation marks omitted.)  Blakeney v. Commissioner of Correction, 47 Conn.App. 568, 574, 706 A.2d 989, cert. denied, 244 Conn. 913, 713 A.2d 830 (1998).

Robaina, Antonio C., J.