Karen S. Chandler v. William S. Chandler et al. (2012)

MEMORANDUM OF DECISION

The defendant in this foreclosure action, Pennymac Loan Servicing LLC, moves to strike the second amended complaint of the plaintiff, Karen Chandler.   A motion to strike “admits all the facts well pleaded;  it does not admit conclusions or the truth or accuracy of opinions stated in the pleading.”   Mingachos v. CBS, Inc., 196 Conn. 91, 108 (1985).

As a preliminary matter, the plaintiff objects to this motion to strike because the defendant filed an answer on June 22, 2011, and Practice Book § 10–7, in conjunction with the order of pleadings set forth in Practice Book § 10–6, indicates that the filing of an answer waives the right to file a motion to strike the complaint.   However, § 10–7 authorizes the court to vary the order of pleadings, and the court does so in this case.   It should be noted that the defendant had filed the motion to strike before filing an answer.   The answer was filed because a default had entered previously for failing to plead, which default preceded the motion to strike.

Addressing the merits of the motion to strike, the second amended complaint against the defendant, alleges the following facts.   Karen Chandler and William Chandler were married until November 15, 1999, when a judgment of dissolution was entered in this Superior Court, Steinberg, J.T.R. Prior to the dissolution of marriage, the parties shared a marital home located at 754 Old Stafford Road in Tolland, of which William Chandler was the owner of record.   Incorporated into the judgment of dissolution was a separation agreement, which provided, inter alia, that William Chandler was to retain ownership of the subject property, subject to the right of the plaintiff to receive half of the net proceeds of the property whenever it was sold.   The separation agreement further provided that William Chandler was not to allow the property to be voluntarily or involuntarily encumbered without the express permission of the plaintiff, where the encumbrance would have the legal effect of compromising the plaintiff's interest in the property.   A “caveat” giving notice of the judgment of dissolution and the portions of the separation agreement pertaining to the subject property was executed by William Chandler and was recorded on February 24, 2000, on the Tolland land records.   On or about January 19, 2007, William Chandler executed a promissory note in favor of Nations Home Mortgage Corporation, which was secured by a mortgage deed, recorded on January 30, 2007, in favor of Mortgage Electronic Registration Systems, Inc. William Chandler failed to distribute any of the cash proceeds from this transaction to the plaintiff.   As a result, William Chandler was found in contempt of the separation agreement by the court, Abery–Wetstone, J., and a total of $56,635.71 was awarded to the plaintiff following the June 30, 2009 hearing.   Finally, on May 10, 2010, judgment of strict foreclosure was entered by the court, Suarez, J., on the subject mortgage in favor of Citimortgage, Inc. The plaintiff further alleges that MERS, as nominee for Nations Home Mortgage Corporation, assigned its interest in the William Chandler mortgage to Citimortgage, Inc. on November 17, 2009, and this assignment was recorded on December 3, 2009.   Citimortgage subsequently transferred its interests in the subject property to the defendant by virtue of an unrecorded quitclaim deed.   The plaintiff now seeks foreclosure of the caveat, possession of the subject property, as well as other damages.

The defendant argues that the plaintiff has failed to establish a basis to commence a foreclosure action because the defendant is not a debtor, nor has it pledged the property to the plaintiff as security.   Further, the defendant argues that the plaintiff cannot legally foreclose on a caveat.

“Our Supreme Court has explained that the purpose of the land records is to give constructive notice to the world of instruments recorded therein ․ [I]t has always been the policy of our law that the land records should be the authentic oracle of title on which a bona fide purchaser or attaching creditor might safely rely.”  (Citation omitted;  internal quotation marks omitted.)   Kopylec v. North Branford, 130 Conn.App. 146, cert. granted, 302 Conn. 930 (2011).

In the present case, the question presented is whether a document entitled a “caveat,” which was placed on the land records by the plaintiff, is a valid encumbrance on the subject property.   There is very little statutory language or case law regarding this question, and the only statutory references to caveats being placed on the land records appear in General Statutes §§ 7–137c and 7–249, which involve the deferred assessment of benefits for approved water main or sewerage system plans, respectively.   These statutes allow a municipality that has approved a plan to extend water mains or sewerage systems to place a caveat on the land records of the properties that will be assessed benefits when such work is completed.   Our Supreme Court noted in Hartford Federal Savings and Loan Assn. v. Lenczyk, 153 Conn. 457, 462–63 (1966), that such a caveat does not constitute a lien on the property.  “[T]he lien can have no existence prior to the date of the act which constitutes it.   That act is—not the commencement of the work of constructing the public improvement in question—but the making of the assessment of the expense of the improvement upon the property benefitted ․ Accordingly, the caveat did not constitute a lien against the foreclosed property.   At best it was merely a warning that a right to perfect a lien existed, which right could not come into existence unless and until the work was completed and the cost ascertained.”   (Citation omitted;  internal quotation marks omitted.)

The United States Bankruptcy Court for the District of Connecticut was faced with a set of facts very similar to the present case in In Re DePastino, 209 B.R. 585 (Bkrtcy.D.Conn.1997).   There, the defendant, as part of a property and settlement agreement, had transferred her interest in certain real property to her ex-husband in consideration for which the ex-husband was to pay her $40,000 upon the sale and closing of said property.   The defendant placed a caveat on the land records, which referenced the dissolution judgment and purported to serve as a lien prior in right to title of any subsequent purchaser until its release.  “Connecticut law, both statutory and common, provides procedures for obtaining a lien upon real property post-judgment.  [General Statutes § 52–380a] contains the requirements for the filing of a judgment lien ․ The defendant does not refer the court to any Connecticut law recognizing the filing of a caveat executed by attorneys at law as a means to obtain a lien against realty.   Whether the caveat is binding as between the debtor and the defendant is not the issue before the court.   Rather, the issue is whether a document, such as the instant “Caveat,” is valid under Connecticut law as an encumbrance enforceable against a lien creditor or bona fide purchaser of the realty.”  Id. 587–88.

The court went on to conclude:  “Under the defendant's theory, any recorded document indicating an intent to create a lien will create a valid charge against the realty.   The court does not believe such is the law in Connecticut.   Cf Dent & Pflugner, P.A. v. Kalivas, 8 Conn.App. 512, 516, 513 A.2d 198 (1986) (The filing of a certified copy of a judgment on the land records of a town where affected real estate is situated is not sufficient compliance with judgment lien statute and is therefore unenforceable.  ‘[A] judgment lien is a creature of statute, [and] a lienor must comply with statutory requirements in order to perfect his claim.’)  ․ The court concludes that the document entitled “Caveat” does not represent a lien enforceable against a bankruptcy trustee under any provision of Connecticut statutes or any established standard of Connecticut common law.”  In Re Depastino, supra, 209 B.R. 588.

In Rosenberg v. Winer, Superior Court, judicial district of Fairfield, at Bridgeport, Docket No. CV 94 0316570 (August 28, 1997, West, J.) (20 Conn. L. Rptr. 354), the court distinguished the caveat in Depastino from a notice of lis pendens.  “Unlike a caveat, a notice of lis pendens ‘is a creature of statute’ and may be filed by a party to an action that will in ‘some way, either directly or indirectly, affect the title to or an interest in the real property itself.’  First Constitution Bank v. Harbor Village Ltd. Partnership, 37 Conn.App. 698, 703, 657 A.2d 1110, cert. denied, 235 Conn. 902, 665 A.2d 901 (1995) ․ Unlike a ‘caveat,’ a notice of lis pendens is a statutorily authorized method of providing notice of pending litigation to any potential future encumbrancer.   See General Statutes § 52–325.   Clearly, there exists no relationship between a ‘caveat’ and a statutorily authorized notice of lis pendens.”

Instruments recorded on the land records, absent authority, statutory or otherwise, confer no constructive notice of the facts contained therein.   Laudano v. Laudano, 108 Conn. 37, 39 (1928).   See Riverview Development Co., LLC, v. Pulte Homes of New England, LLC, Superior Court, judicial district of Tolland, Docket No. CV 03 0081189 (May 20, 2003, Scholl, J.) (34 Conn. L. Rptr. 595);  Alaska Seaboard Partners, LP v. Legare, Superior Court, judicial district of Tolland, Docket No. CV 08 5002827 (July 23, 2009, Sferrazza, J.) (48 Conn. L. Rptr. 338).   See also Connecticut Bar Association, Connecticut Standards of Title (1999), standard 2.4 (effect of the recording of unauthorized instruments).  “[E]ven though the standards of title of the Connecticut Bar Association are not controlling, contractually or otherwise, they do establish the custom in the legal community.”  Kopylec v. Town of North Branford, 130 Conn.App. 146, 162 n.17 (2011).

In the present case, the plaintiff does not argue that she filed a notice of lis pendens, or any other statutorily authorized recording, prior to or directly subsequent to the entry of dissolution of her marriage.   The plaintiff brings this foreclosure action based solely on a document entitled “caveat,” which was filed on the land records pursuant to a separation agreement dated November 15, 1999.   Because such filing is not authorized by statute, its recordation has no legal effect on the title to the subject property, and therefore, such an instrument cannot be the basis of a foreclosure action.

The motion to strike the amended complaint is granted.

Sferrazza, J.

Sferrazza, Samuel J., J.