Essex Savings Bank v. Hugh C. Scott et al. (2014)

MEMORANDUM OF DECISION RE MOTION FOR DEFICIENCY JUDGMENT (# 152)

In the above-entitled matter, the plaintiff moves for a deficiency judgment based upon a strict foreclosure that was rendered against the defendants, Hugh C. Scott and his ex-wife Donna A. Scott, on April 15, 2013.   This foreclosure action pertains to a piece of residential property with improvements thereon known as 121 Mount Archer Road, Lyme, Connecticut, consisting of 45.91 acres in an “RU–80” residential zone.   The amount of the debt found by the court at the time of judgment was $1,915,624.81.   The title to the subject property vested in the plaintiff on September 5, 2013.

“A deficiency proceeding has a very limited purpose.   In the hearing contemplated under General Statutes § 49–14 to obtain a deficiency judgment, the court, after hearing the party's appraisers, determines the value of the property and calculates any deficiency.”  (Emphasis added;  internal quotation marks omitted.)  Citicorp Mortgage, Inc. v. Weinstein, 52 Conn.App. 348, 352, 727 A.2d 720 (1999).   Appraiser testimony and other expert testimony in these proceedings serves a valuable purpose.  “The determination of [a property's] value by a court is the expression of the court's opinion aided ordinarily by the opinions of expert witnesses ․” (Internal quotation marks omitted.)  Eichman v. J & J Building Co., 216 Conn. 443, 451, 582 A.2d 182 (1990).  “As a necessary element for [the plaintiff's] claim for a deficiency judgment, the plaintiff was required to prove that the property was worth less than the amount of the debt on the date of the vesting of title.  [The plaintiff] therefore had the burden of presenting sufficient evidence for the trial court to determine the value of the property on that date.”

The plaintiff moved for a deficiency judgment on September 17, 2013, pursuant to § 49–14 seeking the difference between the accrued debt and the fair market of the mortgaged property.   Each party (the plaintiff and each Scott defendant) hired licensed appraisers who testified respectively as to the value of the subject property.

The property consists of a parcel of land (45.91 acres) situated on the north side of Mount Archer Road. It is improved by a two-story, single-family residence built in 1736 and substantially enlarged and renovated in 2005–2006.   The main dwelling has 5,956 square feet and nine rooms including four bedrooms, three full and two half baths.   There are numerous out buildings and site improvements including, among others, a horse riding ring, barns, swimming pool, fields, paddocks and is set up as a horse farm estate.

The property is further subject to two conservation easements limiting the use of the property.   A subdivision is possible as long as the divided residential properties are in common ownership, subject to zoning, building and other applied municipal codes and regulations.   The subject property is also surrounded by 1,000 acres of open space land with easements appurtenant to the subject property for horseback riding.   All of the appraisers' testimony results in the conclusion that the highest and best use of the property is the existing residential use subject to the restrictions of the conservation easements.

The court further concludes that the cost approach and the income approach to value are inapplicable to the present controversy.   The appraisers, while all are in agreement and use the market sales comparison approach, they differ as to the value the court should find as of the date title vested.   The court heard from the plaintiff's appraiser, Dennis Johnson, a recently licensed residential appraiser.   The court also heard from the defendants, Robert Flannagan for the defendant Hugh C. Scott and Chris Buckley for the defendant Donna A. Scott, both seasoned and licensed Connecticut appraisers.

The court also heard from both of the defendants who testified as to the improvements to the subject property since its purchase and the value they contend the court should find.   It is evident that the defendants unfortunately spent substantially more in renovations, expansions and construction of new structures than the subject property is worth.   The court also heard testimony that the plaintiff sold the property to a third party (a previous prospective buyer from the defendants) at a price substantially lower than its debt, which the court shall not consider as an indication of the fair market value on September 5, 2013.  Farmers Mechanics Savings Bank v. Durham Realty, Inc., 34 Conn.App. 204, 207 n.3, 640 A.2d 1017 (1994).

The court finds after review of the written appraisals and testimony of the experts that it is left with the task of valuating a unique horse farm estate with access to a substantial amount of conservation land by way of easement for horseback riding and personal enjoyment.   The record is also clear there has been no sales of residential property in Lyme for $2,000,000.00 or more in the recent past.   The court concludes that the comparable at 150 Joshuatown Road, Lyme, Connecticut used by all of the appraisers is the closest comparable property and shall be used in finding market value of the subject property.

The court further finds that the subject property, as of September 5, 2013, was in good condition with an adjustment in its favor for excess acreage (at $5,000.00 per acre), excess gross living area, better kitchen improvements and a further positive adjustment for the barns (540 square foot embankment barn with a workshop and six stalls and a new barn 1,920 square foot with a 1,500 square foot upper level).   The court also adjusts by way of a deduction in favor of the 150 Joshuatown Road comparable in the amount of $15,000.00 for the garage variations.

Based upon the above analysis, the court concludes that the value of the subject property on the date title vested is $1,875,500.00.   The deficiency judgment against the defendants is calculated as follows:

COMPUTATION OF DEFICIENCY

Judgment Debt $1,908,773.81

Attorneys Fees $ 5,905.00

Title Search Fee $ 146.00

Appraisal Fee $ 800.00

Interest from Judgment (7/8/13

to Vesting 9/5/13) 59 days @

$332.58 per diem @6.25% Note Rate $ 19,632.04

Tax Liens Prior in Right Paid

by Plaintiff + $ 78,781.90

Total Debt $2,014,038.75

Less Value of Property—$1,875,500.00

Deficiency Amount $ 138,538.75

Interest Deficiency Amount

from Date of Vesting (119

days to 1/2/14 @ $24.67

per diem @6.25%) $ 2,935.73

Attorneys Fee $ 5,500.00

Appraisal Fee $ 700.00

Total $ 147,674.48

It is hereby ordered judgment of deficiency in favor of the plaintiff against the defendants in the amount of $147,674.48.

Devine, J.

Devine, James J., J.