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Rockstone Capital, LLC v. Sanzo

Court of Appeals of Connecticut

August 22, 2017

ROCKSTONE CAPITAL, LLC
v.
JOHN SANZO ET AL.

          Argued March 16 2017

          Houston P. Lowry, with whom, on the brief, were Craig S. Taschner and Dale M. Clayton, for the appellant-appellee (plaintiff).

          Matthew K. Beatman, with whom, on the brief, was John L. Cesaroni, for the appellees-appellants (named defendant et al.).

          DiPentima, C. J., and Beach and Bishop, Js.

         Syllabus

         Pursuant to statute (§ 52-352b [t]), a homestead, owner-occupied real property used as a primary residence, is exempt from the enforcement of a money judgment up to the value of $75, 000, less the amount of any consensual lien.

         The plaintiff, pursuant to a forbearance agreement executed by the parties that included a waiver of the homestead exemption in § 52-352b (t), sought to foreclose judgment liens on certain of the defendants' real property after the defendants had defaulted on their mortgage payments. The plaintiff thereafter amended its complaint to seek foreclosure of the defendants' mortgage instead of the judgment liens. Following a trial, the court issued a memorandum of decision concluding that the forbearance agreement was void as against public policy in that the defendants had a right as a matter of law to file a claim for a homestead exemption, and the plaintiff could not foreclose on the mortgage. The court then rendered judgment for the plaintiff on the judgment liens. The plaintiff appealed to this court claiming that the trial court improperly denied the foreclosure of its mortgage, which was a consensual lien, and allowed the defendants to assert the homestead exemption to its judgment liens that were no longer part of the mortgage foreclosure action. The defendants cross appealed, claiming that the court erred in rendering a judgment of foreclosure on the judgment liens because the plaintiff amended its complaint to seek foreclosure solely on the mortgage.

Held:

         1. The court's judgment denying the plaintiff's request for foreclosure on the mortgage constituted an appealable final judgment, giving the court jurisdiction over the plaintiff's appeal; although the court failed to determine the amount of debt and the method of foreclosing on the judgment liens, itdetermined that the forbearance agreement was void and refused to render judgment of foreclosure on the mortgage, thus denying the relief requested in the plaintiff's operative complaint.

         2. The trial court improperly denied the foreclosure of the plaintiff's mortgage: as the mortgage was a consensual lien in that the defendants provided it to secure their obligations under the forbearance agreement in exchange for the plaintiff's agreement to forbear collection activities on the judgment liens as long as the defendants complied, the homestead exemption did not apply pursuant to § 52-352b (t); furthermore, the trial court erred in relying on the homestead exemption waiver to determine that the mortgage was void as against public policy because the plaintiff was not relying on the waiver of the homestead exemption in the mortgage, but rather, § 52-352b (t) expressly provides that the homestead exemption is not applicable to consensual liens, which included the mortgage here.

         3. The court's judgment foreclosing on the judgment liens constituted an appealable final judgment, giving the court jurisdiction over the defendants' cross appeal; the claim raised in the cross appeal was inextricably intertwined with the claim raised in the plaintiff's appeal, as both parties contended that the court erred in rendering a judgment of foreclosure on the judgment liens since the operative complaint did not seek that relief.

         4. The trial court improperly rendered a judgment of foreclosure on the judgment liens in favor of the plaintiff because the plaintiff amended its complaint to seek to foreclosure solely on the mortgage and the judgment liens claim was no longer in the plaintiff's operative complaint; because an amended complaint operates as a withdrawal of an original complaint, neither party pleaded, briefed or argued that the trial court should render judgment of foreclosure on the judgment liens.

         Procedural History

         Action to foreclose judgment liens on certain real property owned by the named defendant et al., and for other relief, brought to the Superior Court in the judicial district of Fairfield, where the named defendant et al. were defaulted for failure to plead; thereafter, the defendant The Housatonic Lumber Company was defaulted for failure to plead; subsequently, the court, Hon. Michael Hartmere, judge trial referee, granted the plaintiff's request to file an amended complaint; thereafter, the matter was tried to the court, Hon. Richard P. Gilardi, judge trial referee; judgment in part for the plaintiff, from which the plaintiff appealed and the named defendant et al. cross appealed to this court; subsequently, the court, Hon. Richard P. Gilardi, judge trial referee, issued an articulation of its decision. Reversed; further proceedings.

          OPINION

          DiPENTIMA, C. J.

         The plaintiff, Rockstone Capital, LLC, appeals and the defendants, John Sanzo and Maria Sanzo, [1] cross appeal from the judgment of the trial court. On appeal, the plaintiff claims that the trial court erred in not foreclosing its mortgage on the defendants' property and in applying the homestead exemption to its judgment liens, for which foreclosure was not sought. In their cross appeal, in part agreeing with the plaintiff, the defendants claim that the trial court erred in entering a judgment of foreclosure in favor of the plaintiff as to the judgment liens. As to the plaintiff's appeal, we reverse the judgment of the trial court that determined that the mortgage was void as against public policy and remand the matter for further proceedings in accordance with law. We also reverse the judgment of the trial court with respect to the defendants' cross appeal.

         The trial court decided this case in part on the following stipulated facts. ‘‘The defendants are individuals with their primary residence located at 59 Crossbow Lane in Monroe . . . ([property]). On or about June 21, 2000, Fleet National Bank (Fleet) commenced an action against the defendants and, on August 9, 2000, Fleet obtained a judgment in the amount of $103, 535.57 plus costs of $274.40 and lawful interest. Thereafter, on April 19, 2001, Fleet recorded two judgment liens on the [property] against each of the defendants.

         ‘‘On October 23, 2007, the successor to Fleet, Bank of America, assigned all of its interest in the judgment to the plaintiff. Thus, the plaintiff is the current holder and owner of the judgment and of the liens against the [property].''

         On February 28, 2008, after the defendants had defaulted on their payments, the plaintiff commenced this action to foreclose the judgment liens on the property. Thereafter, on April 26, 2009, the parties entered into a forbearance agreement. The forbearance agreement provided that the defendants would pay additional interest and fees as well as the amount of the judgment liens over a period of time in exchange for the plaintiff's agreement to refrain from collection activities. The forbearance agreement also provided that a mortgage would be placed on the defendants' property, securing the defendants' obligations under the forbearance agreement. The agreement further provided that the plaintiff would refrain from continuing its action for foreclosure on the judgment liens as long as the defendants strictly complied with the modified payment schedule.[2]

         After the defendants failed to make certain payments under the forbearance agreement, the plaintiff proceeded with its foreclosure action on the judgment liens. Thereafter, the plaintiff requested permission to amend its complaint to foreclose on the mortgage instead of the judgment liens. On May 13, 2014, the ...


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