Pamela Hils nka Pamela Deroy v. Kerry Hils (2013)

MEMORANDUM OF DECISION

This matter comes before the court on the plaintiff, Pamela Hils, now known as Pamela Deroy's, motion for contempt postjudgment (docket item # 156.00) alleging that the defendant, Kerry Hils, has failed to cooperate with her in obtaining a deed in lieu of foreclosure on their former marital home.   Most of the facts are not in dispute.   At the time of their dissolution on September 4, 2012, the parties owned jointly the real property located at 17 Horse Run Hill in Cromwell, which was the former marital home.   The property is encumbered by a first mortgage with a principle balance of approximately $360,000 and by a second mortgage with a principle balance of approximately $150,000.   The parties agreed that it has a fair market value of approximately $445,000, resulting in a negative equity of approximately $65,000.

The judgment of dissolution (docket item # 152.00) incorporated by reference the separation agreement (docket item # 15100) of the parties.   Section 9.1 of the agreement provides as follows:

Marital Home:  The marital home shall be turned over to the bank via a deed in lieu of foreclosure.   Husband and Wife shall forthwith, execute the necessary paperwork to facilitate the immediate transfer of the property.   Any tax consequences of this transfer shall be split equally between Husband and Wife.

When questioned by the court at the dissolution hearing, the parties indicated that they would also share any other liability that came about as a result of their deed in lieu of foreclosure.¹  The agreement did not specify that two mortgages were held by two different lenders encumbering the property.   Although both encumbrances were listed on their respective financial affidavits, neither party testified about that second encumbrance at the final hearing.

Also, in another provision of the agreement, they consented to share any profit earned from an investment in a business venture located in Southington.   No evidence, however, was provided as to the details of this investment.

At the instant hearing on the motion for contempt, both parties testified that the second mortgage, with an original principle balance of $150,000, was to fund this investment.   The investment was for an interest in a sports bar and its real property.   The plaintiff and defendant were silent partners and received some modest returns on the investment.   The nature of the investment was such that it would produce a profit or not, but they had no risk or liability beyond their initial investment.

The question before the court at this point is that both parties agreed to deal with the real property, the former marital home, in a manner different from what they had agreed to in the settlement and what was ordered by the court as part of the dissolution.   Apparently, at some point after the dissolution was entered, the defendant asked the plaintiff to allow him the opportunity to keep the house and work out an arrangement with the first mortgage lender;  the plaintiff agreed to this and quitclaimed her interest in the property to him so he could negotiate with the lender.   It took some time, but the current status of the first mortgage is that the defendant has obtained a modification and is half-way through a six-month trial period.   According to his testimony, if the defendant remains current and makes timely payments during the trial period, the bank will agree to allow him to assume the mortgage in his name only and remove the plaintiff from the debt liability.   He also testified that while he was in the process of resolving this default with the lender, the principle debt on the first mortgage grew from the balance of $360,000 in September 2012 to a current balance of $426,000.   He claims, however, that none of that increased debt is a result of him taking any additional money on the loan but rather that all the added debt is from defaulting on related actions.   Further, the defendant testified that he was required to pay some of the escrow arrearage as part of his new arrangements with the first mortgage lender.

As for the second mortgage, both parties agree that no payments have been made on that debt for at least two years.   As of the date of the hearing, the evidence before the court was that the second mortgage lender has taken no action at all to collect on the loan.²

The issue concerning the mortgages has come to a head because the plaintiff is now attempting to purchase a home of her own.   She has the opportunity to purchase the condominium she is presently renting, but the existence of the marital home mortgages is preventing her from qualifying for financing on this new purchase.   It is her position that the defendant should agree to hold her harmless and indemnify her as to the marital home mortgages since he is now living in the former marital home.   The defendant is willing to do that if the plaintiff assigns to him her interests in the investment they made with the second mortgage loan proceeds.   His argument is that if he is to be responsible for the debt;  he should be entitled to the profit, if any, from the investment.   The plaintiff counters that the division of the investment was a separate and distinct provision of the judgment and not subject to a postjudgment modification.

On that specific issue, the court agrees with the plaintiff.  General Statutes § 46b–86(a) “deprives the Superior Court of continuing jurisdiction over that portion of a dissolution judgment providing for the assignment of property of one party to the other party under ․ § 46b–81.  Bunche v. Bunche, 180 Conn. 285, 289, 429 A.2d 874 (1980).   A court, therefore, does not have the authority to modify the division of property once the dissolution becomes final ․ Although the court does not have the authority to modify a property assignment, a court ․ does have the authority to issue postjudgment orders effectuating its judgment ․ Roos v. Roos [84 Conn.App. 415, 422, 853 A.2d 642, cert. denied, 271 Conn. 936, 861 A.2d 510 (2004) ].”  (Internal quotation marks omitted.)  Stechel v. Foster, 125 Conn.App. 441, 446–47, 8 A.3d 545 (2010), cert. denied, 300 Conn. 904, 12 a.3d 572 (2011).

In this matter, the court does have the equitable authority to fashion orders to effectuate its judgment regarding the marital home and the associated debt.   The investment issue, however, is a separate and distinct provision of the judgment.   No ambiguity, no confusion, and no problem with that order has arisen that requires any assistance with that provision being carried out and, accordingly, the court simply lacks subject matter jurisdiction to enter further orders as to that provision.³

The court, in this instant matter, must now fashion equitable orders to effectuate the final orders so as to make that judgment's provisions operate in a meaningful fashion without modifying the original division of property orders.  “It is within the equitable powers of the trial court to fashion whatever orders are required to protect the integrity of the original judgment.  Connecticut Pharmaceutical Ass'n, Inc. v. Milano, 191 Conn. 555, 563–64, [468 A.2d 1230] (1983).   The purpose of a property division pursuant to a dissolution proceeding is to unscramble existing marital property in order to give each spouse his or her equitable share at the time of the dissolution.   Smith v. Smith, 249 Conn. 265, 275, [752 A.2d 1023] (1999).”  (Internal quotation marks omitted.)   Croteau v. Croteau, Superior Court, judicial district of Fairfield, Docket No. FA06–401529–S (May 13, 2009, Marano, J.) (47 Conn. L. Rtpr. 719, 721).  “[A] court has authority to order additional measures not contained in the original order if they are necessary to effectuate the original judgment.”  Johnson v. Johnson, 111 Conn.App. 413, 425, 959 A.2d 637 (2008).

In Wasson v. Wasson, Superior Court, judicial district of Stamford–Norwalk, Docket No. FA–98–0165911–5 (December 30, 2004, Tierney, J.) (38 Conn. L. Rptr. 491, 492), affd, 91 Conn.App. 149, 881 A.2d 356, cert. denied, 276 Conn. 932, 890 A.2d 574 (2005), the court found the “following cases ․ instructive as to whether the relief requested is a modification of property division or an effectuation of the original judgment.  Clement v. Clement, 34 Conn.App. 641, 646, [643 A.2d 874] (1994) (nonpayment of mortgage by husband, causing wife to lose house, undermined integrity of court's judgment;  therefore, court properly ordered husband to pay wife value of loss);  Roberts v. Roberts, 32 Conn.App. 465, [629 A.2d 1160] (1993) (order to auction property effectuated original judgment despite fact that original judgment did not call for sale at auction);  Falkenstein v. Falkenstein, [supra ], 84 Conn.App. [496] (order to sell marital house at a set price not modified by postjudgment motion preventing either party from purchasing the house at that set price;  ‘[§ ] 46b–81 grants the court discretion to render such an order to carry the dissolution decree into [effect’] );  Roos v. Roos, [supra ], 84 Conn.App. 415 ․ (order that each party will hereafter not incur debt did not prevent court from finding one party in contempt for debt incurred after judgment and ordering the payment of that debt;  the court held that the contempt orders are not modifications but orders effectuating the original judgment);  Bunche v. Bunche, [supra, 180 Conn. 289] (original order giving plaintiff the option to buy the marital home by paying 40% of the fair market value less the outstanding mortgage, was held to have been improperly modified by postjudgment order providing for a specific purchase price in installment payments).”  (Citation omitted.)  Wasson v. Wasson, supra, 38 Conn. L. Rptr. 492.

The Wasson court concluded that an order authorizing the plaintiff-spouse to purchase the defendant's interest in the marital home was “necessary to preserve the marital home for the children” and prevent the loss of the home through a pending foreclosure sale “caused by the defendant's failure to keep the mortgage current” and constituted an effectuation of the original dissolution order of the trial court.  Wasson v. Wasson, supra, 38 Conn. L. Rptr. 493;  see also Fewtrell v. Fewtrell, 87 Conn.App. 526, 532, 865 A.2d 1240 (2005) (by requesting the court to order the plaintiff to make his payments directly to the defendant of one-half of the debt rather than simply to indemnify the defendant from creditors, the court held that the motion, although characterized by the movant as a motion to modify, was really a request to effectuate the judgment).

The equitable remedy in the instant matter is for the defendant to assume the liability of the second mortgage—he has already begun the process for assuming liability of the first mortgage—as he is in possession of the real property, the former marital home, and intends to keep possession of that property.   Since there is no evidence at this time of any present collection action regarding the second mortgage, the court need not deal with that, but only with the potential for such a legal action.   Equity demands that each party be left with what they bargained for regarding this house and its associated debt.   What they bargained for was a possible liability of approximately $32,500 apiece;  the shortfall between the estimated fair market value of the property and the debts encumbering that property as indicated on their respective financial affidavits.

Having considered carefully the testimony of the parties, their demeanor, the evidence offered and accepted as full exhibits, the criteria of the applicable statutes and the interpretation of such statutes by our case law, the court makes the following findings:

A.  The marriage of the parties was dissolved by the court, Adelman, J., on September 4, 2012;

B. The judgment of the court incorporated by reference the agreement of the parties;

C. The provisions of the judgment relating to the marital home required the parties to cooperate in giving up the property to the mortgagor by a deed in lieu of foreclosure;

D. The judgment also required the parties to share equally any liability arising out of such conveyance;

E.  Despite the provision of the judgment, the parties did not obey the orders of the court relating to the property;  instead, the plaintiff transferred to the defendant all of her right, title and interest on the agreement that he would assume the obligations of that property;

F. The defendant has taken appropriate actions to effectuate that informal postjudgment agreement of the parties as to the first mortgage, but not as to the second mortgage obligation;

G. The plaintiff's ability to obtain financing for the purchase of a new home has been negatively impacted by the existence of the second mortgage obligation;

H. The defendant's actions regarding the marital home do not constitute a wilful disobedience of the court's orders;

I.  The integrity of the court's judgment has been challenged by the actions of the parties and the court must enter further orders to effectuate its September 4, 2012 judgment;  and

J. No other provisions of the judgment of dissolution have been impacted by the actions of the parties postjudgment.

In consideration of the findings enumerated above and the various criteria previously discussed, the court hereby ORDERS:

I. The plaintiff's motion for contempt (docket item # 156.00) is denied, but in order to effectuate the Judgment of the court entered on September 4, 2012, the court enters the following:

A.  The defendant shall continue to complete his arrangements to assume the obligations of the first mortgage that he has previously entered into with the lender;

B. The defendant shall hold harmless and indemnify the plaintiff as to both the first and second mortgages from any liability arising from the ownership and possession of the real property located at 17 Horse Run Hill in Cromwell except;

1.  If the holder of either mortgage shall take action against the defendant relating to the notes secured by the mortgages, the plaintiff shall share that liability up to an amount not exceeding Thirty–Two Thousand Five Hundred ($32,500) Dollars;

2.  That amount shall be the absolute limit of the plaintiff's liability regardless of the specific nature of the liability for which compensation is being sought and shall include but not be limited to legal fees for the defense of a collection action, taxes, and insurance in addition to the original debt and its related interest and/or costs;

II. The plaintiff may use this Memorandum of Decision in her negotiations with future lenders as proof of her liability relating to the marital home;

III. Each party shall be solely liable for their legal fees and costs related to this proceeding;  and

IV. All other orders entered by the court on September 4, 2012, as part of the dissolution of marriage judgment not specifically altered above, remain in full force and effect and are unchanged in any way.

Adelman, J.

FOOTNOTES

FN1. The agreement between the parties referred only to the sharing of any tax liability that arose as a result of the deed in lieu of foreclosure.   The court raised the issue of other liability to the lender as a result of a proposed conveyance.   The parties said that they would share that equally if it should become a reality..  FN1. The agreement between the parties referred only to the sharing of any tax liability that arose as a result of the deed in lieu of foreclosure.   The court raised the issue of other liability to the lender as a result of a proposed conveyance.   The parties said that they would share that equally if it should become a reality.

FN2. The defendant filed proposed orders and a memorandum in support of such orders at the end of the hearing.   Attached to the memorandum were a number of exhibits that were not submitted as exhibits during the hearing.   Accordingly, the court did not have the ability to consider such documents in its decision..  FN2. The defendant filed proposed orders and a memorandum in support of such orders at the end of the hearing.   Attached to the memorandum were a number of exhibits that were not submitted as exhibits during the hearing.   Accordingly, the court did not have the ability to consider such documents in its decision.

FN3. Subject matter jurisdiction is the court's basic authority to act and it cannot be waived by agreement of the parties.   See In re Leeanna B., 142 Conn.App. 60, 65, 62 A.3d 1135 (2013).   The court's subject matter jurisdiction in dissolution of marriage actions is derived from General Statutes 46b–1 and Practice Book § 25–1 and the power to divide property as such an action is limited to the orders entered at the time of the final judgment only..  FN3. Subject matter jurisdiction is the court's basic authority to act and it cannot be waived by agreement of the parties.   See In re Leeanna B., 142 Conn.App. 60, 65, 62 A.3d 1135 (2013).   The court's subject matter jurisdiction in dissolution of marriage actions is derived from General Statutes 46b–1 and Practice Book § 25–1 and the power to divide property as such an action is limited to the orders entered at the time of the final judgment only.

Adelman, Gerard I., J.