J.E. ROBERT COMPANY, INC.
SIGNATURE PROPERTIES, LLC, ET AL
Argued October 8, 2015.
Action to foreclose a mortgage, and for other relief, brought to the Superior Court in the judicial district of New London, where Shaw's New London, LLC, was substituted as the plaintiff; thereafter, the case was transferred to the judicial district of Hartford, Complex Litigation Docket, where the court, Bright, J., rendered judgment of strict foreclosure, and the named defendant et al. filed separate appeals with the Appellate Court, which were consolidated and transferred to this court; subsequently, this court affirmed the trial court's judgment; thereafter, the trial court, Sheridan, J., granted the substitute plaintiff's motion for a deficiency judgment and rendered judgment thereon, from which the defendants Andrew J. Julian and Michael Murray appealed.
The plaintiff, J Co., sought to foreclose a mortgage on certain of the named defendant's commercial property and, thereafter, assigned its interest in the mortgage and a promissory note that was executed to secure the mortgage to S Co., which was substituted as the plaintiff. The note and the mortgage were guaranteed by, among others, the defendants A and M. After the trial court rendered a judgment of strict foreclosure, S Co. sought a deficiency judgment against the named defendant, A and M. At a hearing on the deficiency judgment, S Co. offered the testimony of B, an appraiser, and B's appraisal report. B testified, consistent with his report, that the market value of the leased fee interest in the subject property was $5.3 million as of the date title to the property vested in S Co., which occurred after the court rendered the judgment of strict foreclosure. B also testified that there would be no significant difference in the valuation of the leased fee interest and the fee simple interest because the contract rents for the leased space on the property were similar to the market rent for comparable commercial space. On the basis of B's testimony and his report, the court found that the fair market value of the property was $5.3 million when titled vested in S Co. and rendered a deficiency judgment in favor of S Co. A and M appealed, claiming that the trial court improperly relied on B's testimony and his appraisal report in determining fair market value because B valued the leased fee interest of the property rather than the fee simple interest. Held that the trial court properly relied on B's testimony and his appraisal report in determining fair market value, and this court could not conclude that the trial court's fair market value finding was erroneous or improper, or that S Co. did not satisfy its burden of establishing the value of the subject property; when contract rents for leased commercial space are at market rates for comparable commercial space, the value of the leased fee interest and the fee simple interest in the property is equal, and the trial court found that the contract rates for the subject property and the market rates were similar.
Richard J. Buturla, with whom was Brian A. Lema, for the appellants (defendants Andrew J. Julian and Michael Murray).
Eric S. Goldstein, with whom, on the brief, was Patrick M. Fahey, for the appellee (substitute plaintiff Shaw's New London, LLC).
Rogers, C. J., and Palmer, Zarella, Eveleigh, McDonald, Espinosa and Vertefeuille, Js. ZARELLA, J. In this opinion the other justices concurred.
[320 Conn. 92] ZARELLA, J.
In this appeal, we are asked to determine whether the trial court properly relied on the appraisal submitted by the substitute plaintiff, Shaw's New London, LLC (plaintiff), and the testimony of the plaintiff's appraiser in granting the plaintiff's motion for a deficiency judgment against the named defendant, Signature Properties, LLC (Signature), and the defendants Andrew J. Julian, Maureen Julian, and Michael Murray. The defendants Andrew J. Julian and Murray (defendants) [320 Conn. 93] appeal from the trial court's judgment and claim that it was improper to rely on the appraisal and the appraiser's testimony because they expressed an opinion on the value of the leased fee interest in the mortgaged property and the plaintiff was required to establish the value of the fee simple interest. The defendants further argue that the value of the leased fee interest and fee simple interest of the mortgaged property are not equivalent. The plaintiff responds that it was proper to appraise the value of the leased fee interest in the mortgaged property because the day title to the property vested in the plaintiff, it was encumbered by three leases. Alternatively, the plaintiff contends that the value of the leased fee and fee simple interests in the mortgaged property are equal because the leases were at market rates. We conclude that the trial court's reliance on the appraisal and the appraiser's testimony was proper and affirm its judgment.
On April 13, 2005, Signature executed a promissory note secured by a mortgage and security agreement on Signature's property at 6 Shaw's Cove in the city of New London. The note and mortgage were guaranteed by Andrew J. Julian, Maureen Julian, and Murray (guarantors). In August, 2007, an action was commenced to foreclose the mortgage, and, on February 3, 2010, the trial court, Shapiro, J., granted the plaintiff's motion for partial summary judgment. The court granted the plaintiff, among other things, the relief of foreclosure and an order permitting the plaintiff to seek a deficiency judgment against the guarantors. The trial court, Bright, J., rendered a judgment of strict foreclosure on October 20, 2011, which was affirmed by this court on July 16, [320 Conn. 94] 2013. See J.E. Robert Co. v. Signature Properties, LLC, 309 Conn. 307, 342, 71 A.3d 492 (2013). The trial court, Sheridan, J., then granted the plaintiff's motion to open the judgment of strict foreclosure and set new law days for Signature and the guarantors. Neither Signature nor the guarantors redeemed by their respective law days, and title to the foreclosed property vested in the plaintiff on September 27, 2013.
The plaintiff subsequently filed a timely motion seeking a deficiency judgment against Signature and the guarantors, and a hearing was scheduled. At the hearing, ...