Savings Institute Bank & Trust Company v. 48 54 LLC (2012)

MEMORANDUM OF DECISION RE MOTION TO TERMINATE STAY (# 175.00)

The Savings Institute Bank & Trust Company (“plaintiff”) filed a motion to terminate stay in the Appellate Court pursuant to § 61–11(c) and (d) of the Rules of Appellate Practice.   The plaintiff requests that the trial judge terminate the automatic stay triggered by the May 4, 2012 notice of appeal filed by the defendants, 48–54 Hartford Avenue, LLC, 56 Hartford Avenue, LLC, 58–62 Hartford Avenue, LLC, Claude M. Brouillard and Mia–Wa Cheng Brouillard (“defendants”).   The Appellate Court, pursuant to practice rule, forwarded the motion to the trial court for hearing (§ 61–11)(d).  Since the forwarding of the present controversy, the Appellate Court granted the plaintiff's motion to dismiss, the appeal for lack of a final judgment and denied its request for sanctions with notice date of June 28, 2012.   The defendants, in turn, filed a motion for reconsideration en banc at the Appellate Court (dated July 8, 2012) respectfully moving that the Appellate Court reconsider its decision of June 28, 2012 with a response date of July 19, 2012.¹

The trial court, as a result of the direction of the Appellate Court and § 61–11(d) of the Rules of Appellate Practice, scheduled a short calendar hearing for July 9, 2012, at 3:00 p.m. (order # 175.00).   Prior to the July 9, 2012 hearing, the plaintiff filed a supplemental brief dated June 14, 2012 (order # 178.00) and the defendants filed an objection to the motion to terminate with exhibits on June 18, 2012 (# 179.00 and # 180.00).   In response, the plaintiff filed a motion for leave to reply to defendants' opposition to motion to terminate stay with an additional brief including transcript and other exhibits (# 186.00).

At the July 9, 2012 hearing, the defendants' counsel advised the court that she objected to the motion for leave to reply and was not prepared to respond.   The court, after hearing the defendants' objection, granted the plaintiff's request for leave and ordered the defendants to file a reply by Friday, July 13, 2012.   The court continued the hearing to July 16, 2012, at 2:00 p.m. (order # 186.50).   The defendants, through counsel, filed their reply on July 16, 2012 (order # 189.00).   The parties appeared through counsel and were heard by the court on July 16, 2012.   The court heard arguments on the termination of stay including prospective stays.

History of the Case

This case involves five parcels of land zoned for commercial and residential use located in the Town of Old Lyme and known as 48 Hartford Avenue, 52 Hartford Avenue, 56 Hartford Avenue, 58 Hartford Avenue and 59 Swan Avenue.   The properties were mortgaged by the corporate defendants, 48–54 Hartford Avenue, LLC, 56 Hartford Avenue, LLC and 58–62 Hartford Avenue, LLC in the original principal amount of $325,000.00 under the terms of a certain commercial mortgage note and a certain open-end mortgage deed and security agreement with the Savings Institute Bank & Trust Company both dated October 19, 2004.   Defendants Claude Brouillard, Mei–Wa Cheng Brouillard and James Varano are individual guarantors of the mortgaged debt.

The plaintiff commenced this commercial foreclosure proceeding by summons and complaint dated April 11, 2011.   Defendants failed to timely appear and plaintiff moved for the entry of default, which was granted by the clerk on June 20, 2011 (order # 103, # 103.01).   Defendants also failed to file a pleading or a motion for extension of time on or before the deadline of June 23, 2011.

On July 12, 2011, plaintiff filed a motion to substitute SI Realty as a party plaintiff which was granted over objection on January 6, 2012 (Order # 104, 104.1.) ²  On July 14, three months after service of the complaint and summons, defendants appeared through Attorney Mei–Wa Cheng Brouillard, including on behalf of herself.³  On July 25, defendants filed a motion for extension of time to file their answers, defenses and counterclaims and also for oral argument on the motion to substitute.

At oral argument on the motion to substitute, the court ordered defendants to file their answers, defenses and counterclaims by August 29, 2011 (order # 104.20).   Defendants failed to file any of those documents by that date, or to seek an extension, and on September 1, plaintiff moved for default for defendants' failure to comply with the court's specific order requiring compliance by August 29, 2011 (# 121.00).   The defendants did not object to the motion for default and they did not attempt to cure the default by filing answers and counterclaims.   Default was granted on October 3, 2011 (order # 121.50).   The next day, defendants filed a “Notification of Bankruptcy by Ravenwood Properties, LLC (order # 122.00).”   The Notification stated:

Ravenwood Properties, LLC was and is the owner and managing member in the Defendants 48–54 HARTFORD AVENUE, LLC, 56 HARTFORD AVENUE, LLC, 58–62 HARTFORD AVENUE, LLC (the “Defendant Companies”).   As a result of such bankruptcy filing, the above-captioned matter is stayed as it relates to the debtor, Ravenwood Properties, LLC in accordance with 11 U.S.C. 362(a).

Ravenwood Properties, LLC, however, is not a party to this proceeding.   Plaintiff filed a motion to strike the bankruptcy notice from the docket pointing out that Ravenwood Properties, LLC is not a party in this matter and the “Notification is noting more than a misleading delay tactic (order # 124.00).”   Defendants failed to show up to the first hearing on the motion to strike the Notification on October 31, 2011, and the court held a second hearing on November 4, 2011, to give them a second opportunity to be heard.   Defendants were ordered to submit the bankruptcy orders to the court, but they never did (order # 122.50).

After months of delay, on February 2, 2012, the court struck the Notification from the docket (order # 124.10).   The court determined that defendants' bankruptcy filing was “inappropriate” and was for the purpose of delay as set out in memorandum of decision (# 167.00).   Defendants never challenged the order striking the Notification.

SI Realty filed a motion for judgment of strict foreclosure on January 25, 2012 (order # 132.00).   The court scheduled the hearing for February 6, 2012.   By agreement of the parties and due to alleged scheduling conflicts cited by the corporate defendants, Claude Brouillard and Mei–Wa Cheng Brouillard, the hearing on the motion for judgment was continued until February 27, 2012 (order # 132.10).   Counsel for the defendants agreed not to seek further continuances of the hearing.

In the interim, defendants moved to open the defaults for failure to comply with the August 15 order of the court (orders # 152.00 and 154.00).   SI Realty objected to these motions (orders # 156.00 and 157.00).   On February 21, 2012, the court heard oral argument on the motions and then ordered the parties to mediation.   The court advised the parties that the motion to open defaults would be taken on the papers.   The parties attended three mediation sessions with Judge Cosgrove on February 24, 2012, February 27, 2012,⁴ and March 2, 2012, respectively.   The mediation efforts were ultimately unsuccessful.

On April 20, 2012, this court denied defendants' motions to open the defaults (order # 167.00).   SI Realty reclaimed its motion for judgment on April 24, 2012, which was marked ready and was scheduled to be heard on Monday, May 7, 2012.

Defendants have appealed the decision (# 167).   On May 4, 2012, the Friday before the Monday, May 7, 2012, hearing on plaintiff's motion for judgment, defendants filed a form notice of appeal (order # 172.00).   The form stated that defendants are appealing the “judgment denying motions to open defaults, disposing and striking of all defendants' answers, defenses and counterclaims.”   Id. The notice refers to the decision which denied defendants' motions to reopen and struck their proposed answers, special defenses and counterclaims (orders # 152.00 and 154.00).   Because of the notice of appeal, pursuant to § 61–11, the hearing on plaintiff's motion for judgment did not go forward on May 6 as scheduled.

On or about May 14, 2012, defendants filed appeal papers, including a preliminary statement of the issues.   The statement adds a host of unrelated issues regarding the propriety of other orders that were not decided in the decision.   For example, defendants take issue with the January 6, 2012 default entered against defendant, Varano, but Varano is not one of the appellants and has never challenged the default entered against him.⁵  Defendants also take issue with the court's February 2, 2012 order striking the inappropriate bankruptcy notice of Ravenwood Properties LLC.

Analysis

This court concludes that the defendants have delayed the present proceeding at the trial and the Appellate Court level.   The defendants were ordered to file responsive pleadings by a certain date extended by the trial court for more than the time period requested by defendants' counsel, Mei–Wa Cheng Brouillard.   Instead of filing a responsive pleading, the defendant filed a notice of bankruptcy of a non-party (Ravenwood LLC) claiming a bankruptcy stay.   The plaintiff argued to the contrary, and this court ordered the defendants' counsel to submit copies of the bankruptcy orders when she contended that Ravenwood was an owner of the subject properties (order # 122.50).   The defendants failed to comply with the court's order when it was clear that said LLC is not a record owner of the subject properties resulting unreasonable delay in ruling favorably to the plaintiff's motion to strike notification of bankruptcy (# 124) by order # 124.10.

The court concludes, based upon the history of the case and the defendant's tactics in not meeting court orders, filing of an inappropriate notice of bankruptcy filing and stalling conduct, that the present appeal was and is taken for delay purposes. (§ 61–11(c).)

As an alternative, the court further concludes that the appeal stay should be terminated because due administration of justice so requires.   As argued by the plaintiff, the present appeal is an appeal from an interlocutory order, not a final judgment.   The court also concludes that the defendants intentionally delayed the present proceedings in violation of clear court orders resulting in the disciplinary granting of the motion for default for failure to comply with a court order (order # 121.50) and the court's decision to deny the defendants' motion to reopen and default for failure to plead (see memorandum of decision # 167).

When deciding whether to terminate a stay because the “due administration of justice” so requires, a trial court should consider 1) the likelihood that the appellant will prevail on the appeal;  2) whether the appellee will suffer irreparable harm if the stay remains in place;  3) the affect of delay upon other parties to the proceeding;  and 4) any public interest involved.   Griffin Hospital v. Commission on Hospitals & Healthcare, 196 Conn. 45, 456 (1985).   For reasons previously stated in the memorandum of decision (# 167), the answers, special defenses and counterclaims (# 148.00 and # 151.00) make allegations and legal conclusions without sufficient material facts which are required to be pled under Practice Rule 8–1.   The court concludes that the defendants in addition to unreasonably delay would not have prevailed on the merits based upon their proposed insufficient allegations.⁶

As to power to terminate stays prospectively, as argued by the plaintiff, the trial court is vested with such power.   HSBC Bank USA v. Kriz, 2011 Conn.Super. LEXIS 77 at *4;  Ameriquest Mortgage Co. v. Delulio, 2008 Conn.Super. LEXIS 3307 at *7 (Conn.Super.2008).   This court further concludes that the automatic stay be terminated prospectively because of the repeated dilatory tactics, failure to comply with court orders and continuances of court hearings.   Otherwise, every order of this court would be subject to another appeal an automatic stay.

Order

The plaintiff's motion to stay is hereby granted as to the present appeal and prospective appeals.

Devine, J.

FOOTNOTES

FN1. The Appellate Court denied the appellant defendants' motion for reconsideration en banc by order dated July 25, 2012, notice sent July 26, 2012..  FN1. The Appellate Court denied the appellant defendants' motion for reconsideration en banc by order dated July 25, 2012, notice sent July 26, 2012.

FN2. By objecting to the substitution, seeking continuances and filing an improper notice of bankruptcy, discussed below, defendants successfully delayed a decision on the motion to substitute for almost six months.   (Order # 104.01 and 167 at 5.).  FN2. By objecting to the substitution, seeking continuances and filing an improper notice of bankruptcy, discussed below, defendants successfully delayed a decision on the motion to substitute for almost six months.   (Order # 104.01 and 167 at 5.)

FN3. On February 6 and February 24, 2012, Claude Brouillard entered his appearance for the defendants..  FN3. On February 6 and February 24, 2012, Claude Brouillard entered his appearance for the defendants.

FN4. Attorney Brouillard failed to appear for the second mediation session..  FN4. Attorney Brouillard failed to appear for the second mediation session.

FN5. Neither Attorney Brouillard not Cheng–Brouillard represents Varano in this case..  FN5. Neither Attorney Brouillard not Cheng–Brouillard represents Varano in this case.

FN6. The court concludes that there is no public interest involved in the present controversy.   The other parties to the action are guarantors and the Connecticut Light & Power Company, all representing themselves or by counsel.   Continual delays and appeals without merit could result in irreparable harm to the appellee bank by way of a potential deficiency judgment after a court ordered sale of the real estate secured by the mortgage in question..  FN6. The court concludes that there is no public interest involved in the present controversy.   The other parties to the action are guarantors and the Connecticut Light & Power Company, all representing themselves or by counsel.   Continual delays and appeals without merit could result in irreparable harm to the appellee bank by way of a potential deficiency judgment after a court ordered sale of the real estate secured by the mortgage in question.

Devine, James J., J.