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U.S. Bank, N.A. v. 3060 Main Street Stratford, LLC
MEMORANDUM OF DECISION
The plaintiff, U.S. Bank National Association, as Trustee of the Lehman Brothers Small Balance Commercial Mortgage Pass Through Certificates, 2007–3, brings this action pursuant to General Statutes § 49–30 based on its failure in a prior foreclosure action to foreclose the interest of the defendant, 3060 Main Street Stratford, LLC, a junior mortgagee. Presently, the plaintiff moves for summary judgment on the issue of liability primarily claiming that 3060 Main Street Stratford, LLC's two special defenses are legally insufficient.
This case arises from a prior foreclosure action brought by the present plaintiff, U.S. Bank, against 3060 Main, LLC, 3060 Main Street Stratford, LLC and other defendants.1 In that action, the court (Hartmere, J.) rendered a judgment of strict foreclosure 2 for U.S. Bank and scheduled November 29, 2011 as the law day for the owner, 360 Main, LLC. In accordance with the court's judgment, title vested in U.S. Bank on December 1, 2011.
Thereafter, U.S. Bank became aware that a subsequent mortgagee, 3060 Main Street Stratford, LLC, was not provided with a law day. As a result of the procedural flaw, U.S. Bank initially brought an action against 3060 Main Street Stratford, LLC pursuant to General Statutes § 49–51 3 seeking to discharge the mortgage.4 The court (Hartmere, J.) filed on October 10, 2012 a memorandum of decision granting the bank's application to discharge the mortgage held by 3060 Main Street Stratford, LLC based on the court finding that the mortgage “clearly was the product of fraud and the underlying claim also clearly worthless.” 5
3060 Main Street Stratford, LLC appealed the ruling of the trial court. U.S. Bank filed on May 24, 2013 a motion to open and vacate the judgment for the reasons that it commenced the present action and it wanted to render moot the appeal. The court (Hartmere, J.) granted the motion on June 19, 2013. The plaintiff filed on August 12, 2013 a withdrawal of the action.
U.S. Bank commenced the present action under § 49–30,6 commonly referred to as an omitted party action, by service on April 4, 2013 of a writ of summon and complaint. In its complaint, U.S. Bank alleges that the sole defendant, 3060 Main Street Stratford, LLC, claims an interest in the property by virtue of a purported mortgage securing the amount of $140,000 and recorded on the Stratford land records in October 2008. U.S. Bank additionally alleges that 3060 Main Street Stratford, LLC was not assigned a law day in the underlying foreclosure action, and, therefore, is an omitted party within the meaning of § 49–30. The remedy that the plaintiff seeks is a foreclosure of that mortgage interest.
3060 Main Street Stratford, LLC filed a revised answer and special defenses on September 25, 2013. In its first special defense, 3060 Main Street Stratford, LLC alleges that it was cited in as a party defendant in the underlying foreclosure action and, as a result, it cannot be considered an “omitted party” under § 49–30. In its second special defense, 3060 Main Street Stratford, LLC alleges that the plaintiff failed to raise an omitted party claim in the prior action to discharge the mortgage pursuant to § 49–51, and, as a result, is collaterally estopped from maintaining the claim in the present action.7
The first special defense asserted by 3060 Main Street Stratford, LLC, raises an issue of statutory construction. More particularly, the issue is whether § 49–30 applies where U.S. Bank obtained a judgment of strict foreclosure and title to the property, and thereafter learned that a defendant, subsequent encumbrancer was not assigned a law day. In other words, is the failure to assign a law day to a party an “omission” within the meaning of the statute?
The “plain meaning rule” codified in General Statutes § 1–2z provides the framework for statutory interpretation. “The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.” General Statutes § 1–2z.
“The process of statutory interpretation involves the determination of the meaning of the statutory language as applied to the facts of the case, including the question of whether the language does so apply ․ In seeking to determine that meaning, General Statutes § 1–2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.” Doctor's Associates, Inc. v. Windham, 146 Conn.App. 768, 783–84, 81 A.3d 230 (2013). “In construing a statute, common sense must be used, and courts must assume that a reasonable and rational result was intended.” Norwich Land Co. v. Public Utilities Commission, 170 Conn. 1, 4, 363 A.2d 1386 (1975).
“The purpose of § 49–30 is to provide for a cure in the event that a party is omitted from foreclosure proceedings.” Federal Deposit Ins. Corp. v. Bombero, 37 Conn.App. 764, 777, 657 A.2d 668 (1995), cert. dismissed, 236 Conn. 744, 674 A.2d 1324 (1996). “[T]he statute's language unambiguously declares that it provides for a cure for the omission of an encumbrancer ․ We conclude that the legislature intended this statute to provide a means of restoring the title to the condition that would have existed had the encumbrancer not been omitted.” (Citations omitted; emphasis in original; internal quotation marks omitted.) Id., 771.
The language of the statute is clear and unambiguous, and the statute's application to the present action does not lead to absurd or unworkable results. The court need not, and legally cannot, proceed beyond the text to determine its meaning. The statute provides a remedy for the situation, as in the present case, where a mortgage has been foreclosed and a party holding a subsequent encumbrance on the real estate has not been foreclosed of that interest “because of improper service of process or for any other reason.” General Statutes § 49–30. The text is phrased in the disjunctive; meaning, the statute applies where a subsequent encumbrancer was not foreclosed due to some defect in service or for any reason other than improper service. The common and ordinary usage of the word “any” means “one or some indiscriminately of whatever kind.” Merriam–Webster's Collegiate Dictionary (11th Ed.2009).
The statute's broad language applies to the situation where a subsequent mortgagee is a defendant in a foreclosure action, but is not assigned a law day in furtherance of a judgment of strict foreclosure. The plain meaning of the statute shows that it not only cures the situation where a subsequent interest was not foreclosed because that party was omitted from a foreclosure action due to improper service, but it also cures the situation where a defendant has failed to have their subsequent interest foreclosed “for any reason,” including not being assigned a law day. The interpretation of the statute by 3060 Main St., Stratford, LLC is inconsistent with the plain meaning of the statute, unreasonably restrictive, contrary to the remedial nature of the law, and defies common sense.
For the foregoing reasons, U.S. Bank's motion for summary judgment (124.00) on the issue of liability is granted.
TYMA, J.
FOOTNOTES
FN1. The action is captioned U.S. Bank, N.A. v. 3060 Main, LLC, Docket No. FBT CV–08–5019806–S. Nicholas Owens is a principal of both 3060 Main, LLC and 3060 Main Street Stratford, LLC. The entities are associated with property located at 3060 Main Street, Stratford, Connecticut. The property is commercial in nature and is owned by 3060 Main, LLC. 3060 Main Street Stratford, LLC claims a mortgage against the property in the principal amount of $140,000.. FN1. The action is captioned U.S. Bank, N.A. v. 3060 Main, LLC, Docket No. FBT CV–08–5019806–S. Nicholas Owens is a principal of both 3060 Main, LLC and 3060 Main Street Stratford, LLC. The entities are associated with property located at 3060 Main Street, Stratford, Connecticut. The property is commercial in nature and is owned by 3060 Main, LLC. 3060 Main Street Stratford, LLC claims a mortgage against the property in the principal amount of $140,000.
FN2. The court found the fair market value of the property in the amount of $500,000 and the debt in the amount of $1,320,717.98.. FN2. The court found the fair market value of the property in the amount of $500,000 and the debt in the amount of $1,320,717.98.
FN3. That section provides, in pertinent part, as follows: “Any person having an interest in any real or personal property described in any certificate of lien, which lien is invalid but not discharged of record, may give written notice to the lienor sent to him at his last-known address by registered mail or by certified mail, postage prepaid, return receipt requested, to discharge the lien. Upon receipt of such notice, the lienor shall discharge the lien by sending a release sufficient under section 52–380d, by first class mail, postage prepaid, to the person requesting the discharge. If the lien is not discharged within thirty days of the notice, that person may apply to the Superior Court for such a discharge, and the court may adjudge the validity or invalidity of the lien and may award the plaintiff damages for the failure of the defendant to make discharge upon request.” General Statutes § 49–51.. FN3. That section provides, in pertinent part, as follows: “Any person having an interest in any real or personal property described in any certificate of lien, which lien is invalid but not discharged of record, may give written notice to the lienor sent to him at his last-known address by registered mail or by certified mail, postage prepaid, return receipt requested, to discharge the lien. Upon receipt of such notice, the lienor shall discharge the lien by sending a release sufficient under section 52–380d, by first class mail, postage prepaid, to the person requesting the discharge. If the lien is not discharged within thirty days of the notice, that person may apply to the Superior Court for such a discharge, and the court may adjudge the validity or invalidity of the lien and may award the plaintiff damages for the failure of the defendant to make discharge upon request.” General Statutes § 49–51.
FN4. The action is captioned U.S. Bank, N.A. v. 3060 Main Street Stratford, LLC, Docket No. FBT CV–12–6026957–S.. FN4. The action is captioned U.S. Bank, N.A. v. 3060 Main Street Stratford, LLC, Docket No. FBT CV–12–6026957–S.
FN5. Concerning the finding of worthlessness, U.S. Bank claimed that there was no equity in the property to satisfy junior lienholders such as 3060 Main Street Stratford, LLC, and that no reasonable lienholder would redeem. The court noted the testimony of Owens, the entity's principal, that it was unreasonable for him to redeem under the circumstances of a $500,000 fair market value and debt in excess of 1.3 million dollars.. FN5. Concerning the finding of worthlessness, U.S. Bank claimed that there was no equity in the property to satisfy junior lienholders such as 3060 Main Street Stratford, LLC, and that no reasonable lienholder would redeem. The court noted the testimony of Owens, the entity's principal, that it was unreasonable for him to redeem under the circumstances of a $500,000 fair market value and debt in excess of 1.3 million dollars.
FN6. That section, entitled “Omission of parties in foreclosure actions,” provides: “When a mortgage or lien on real estate has been foreclosed and one or more parties owning any interest in or holding an encumbrance on such real estate subsequent or subordinate to such mortgage or lien has been omitted or has not been foreclosed of such interest or encumbrance because of improper service of process or for any other reason, all other parties foreclosed by the foreclosure judgment shall be bound thereby as fully as if no such omission or defect had occurred and shall not retain any equity or right to redeem such foreclosed real estate. Such omission or failure to properly foreclose such party or parties may be completely cured and cleared by deed or foreclosure or other proper legal proceedings to which the only necessary parties shall be the party acquiring such foreclosure title, or his successor in title, and the party or parties thus not foreclosed, or their respective successors in title.” General Statutes § 49–30.. FN6. That section, entitled “Omission of parties in foreclosure actions,” provides: “When a mortgage or lien on real estate has been foreclosed and one or more parties owning any interest in or holding an encumbrance on such real estate subsequent or subordinate to such mortgage or lien has been omitted or has not been foreclosed of such interest or encumbrance because of improper service of process or for any other reason, all other parties foreclosed by the foreclosure judgment shall be bound thereby as fully as if no such omission or defect had occurred and shall not retain any equity or right to redeem such foreclosed real estate. Such omission or failure to properly foreclose such party or parties may be completely cured and cleared by deed or foreclosure or other proper legal proceedings to which the only necessary parties shall be the party acquiring such foreclosure title, or his successor in title, and the party or parties thus not foreclosed, or their respective successors in title.” General Statutes § 49–30.
FN7. The legal insufficiency of 3060 Main Street Stratford, LLC's second special defense merits little discussion. The claim of collateral estoppel is based on the prior action under § 49–51 to discharge an invalid mortgage. 3060 Main Street Stratford, LLC contends that U.S. Bank had the ability to assert its omitted party claim under § 49–30 in that action “but chose not to raise the claim.” It is undisputed, however, that the court granted U.S. Bank's motion to open and vacate the judgment rendered in its favor, apparently based in part on U.S. Bank's representation that it wanted to bring the present action pursuant to § 49–30. Therefore, the statutory mortgage invalidation action lacks a valid and final judgment that is an element of a legally sufficient collateral estoppel claim. “The fundamental principles underlying the doctrine of collateral estoppel are well established. The common-law doctrine of collateral estoppel, or issue preclusion, embodies a judicial policy in favor of judicial economy, the stability of former judgments and finality ․ Collateral estoppel means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit ․ Issue preclusion arises when an issue is actually litigated and determined by a valid and final judgment, and that determination is essential to the judgment ․ Collateral estoppel express[es] no more than the fundamental principle that once a matter has been fully and fairly litigated, and finally decided, it comes to rest.” (Internal quotation marks omitted.) Cumberland Farms, Inc. v. Groton, 262 Conn. 45, 58, 808 A.2d 1107 (2002).. FN7. The legal insufficiency of 3060 Main Street Stratford, LLC's second special defense merits little discussion. The claim of collateral estoppel is based on the prior action under § 49–51 to discharge an invalid mortgage. 3060 Main Street Stratford, LLC contends that U.S. Bank had the ability to assert its omitted party claim under § 49–30 in that action “but chose not to raise the claim.” It is undisputed, however, that the court granted U.S. Bank's motion to open and vacate the judgment rendered in its favor, apparently based in part on U.S. Bank's representation that it wanted to bring the present action pursuant to § 49–30. Therefore, the statutory mortgage invalidation action lacks a valid and final judgment that is an element of a legally sufficient collateral estoppel claim. “The fundamental principles underlying the doctrine of collateral estoppel are well established. The common-law doctrine of collateral estoppel, or issue preclusion, embodies a judicial policy in favor of judicial economy, the stability of former judgments and finality ․ Collateral estoppel means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit ․ Issue preclusion arises when an issue is actually litigated and determined by a valid and final judgment, and that determination is essential to the judgment ․ Collateral estoppel express[es] no more than the fundamental principle that once a matter has been fully and fairly litigated, and finally decided, it comes to rest.” (Internal quotation marks omitted.) Cumberland Farms, Inc. v. Groton, 262 Conn. 45, 58, 808 A.2d 1107 (2002).
Tyma, Theodore R., J.
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Docket No: CV136034494
Decided: March 12, 2014
Court: Superior Court of Connecticut.
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