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Jenzack Partners, LLC v. Stoneridge Associates, LLC

Court of Appeals of Connecticut

July 3, 2018

JENZACK PARTNERS, LLC
v.
STONERIDGE ASSOCIATES, LLC, ET AL.

          Argued February 14, 2018

         Procedural History

         Action seeking, inter alia, to foreclose a mortgage on certain real property owned by the defendant Jennifer Tine et al., and for other relief, brought to the Superior Court in the judicial district of Middlesex, where the named defendant et al. were defaulted for failure to appear; thereafter, the action was withdrawn as to the defendant Joseph Tine; subsequently, the matter was tried to the court, Domnarski, J.; judgment for the plaintiff and of strict foreclosure, from which the defendant Jennifer Tine appealed to this court; thereafter, the court, Domnarski, J., granted the plaintiff's motion for attorney's fees, and the defendant Jennifer Tine filed an amended appeal. Reversed in part; new trial.

          Richard P. Weinstein, with whom, on the brief, was Sarah Black Lingenheld, for the appellant (defendant Jennifer Tine).

          Houston P. Lowry, with whom, on the brief, was Dale M. Clayton, for the appellee (plaintiff).

          DiPentima, C. J., and Lavine and Eveleigh, Js.

          OPINION

          EVELEIGH, J.

         The defendant Jennifer Tine[1] appeals from the judgment of strict foreclosure rendered by the trial court in favor of the plaintiff, Jenzack Partners, LLC. On appeal, the defendant claims that the trial court improperly: (1) held that Sovereign Bank had assigned the defendant's guarantee to the plaintiff and the plaintiff had standing to foreclose on the mortgage; (2) determined that the plaintiff had established the amount of debt due on the subject note; and (3) granted attorney's fees and costs to the plaintiff. We agree with the defendant's second claim and, accordingly, we reverse the judgment of the trial court only as to Jennifer Tine.

         The following facts and procedural history are relevant to our resolution of the issues on appeal. On July 13, 2006, the named defendant, Stoneridge Associates, LLC (Stoneridge), obtained a construction loan in the amount of $1, 650, 000 from a nonparty, Sovereign Bank (Sovereign). At that time, Stoneridge executed a promissory note (Stoneridge note) evidencing its promise to repay the loan. The note was secured by various personal guarantees; Premier, Gattinella, Snow and Joseph Tine each executed guarantees in favor of Sovereign guaranteeing repayment of the sums due under the note. See footnote 1 of this opinion. On December 23, 2008, the Stoneridge note was modified via a modification agreement. On the same date, the defendant executed a limited guarantee in favor of Sovereign guaranteeing repayment of the sum due under the Stoneridge note as modified. In order to secure their respective guarantees, the defendant and Joseph Tine executed a mortgage (Tine mortgage) in favor of Sovereign on their residential property located at 8 Black Birch Drive in Cromwell.[2] The defendant's nonrecourse guarantee limited her liability solely to her interest in the Cromwell property. On August 27, 2009, and May 6, 2010, the defendant executed reaffirmations of her guarantee in connection with subsequent modifications of the Stoneridge note.

         On March 22, 2012, Sovereign assigned its mortgage and interests in the Stoneridge note to the plaintiff.[3]In August, 2012, the plaintiff commenced this action, seeking, inter alia, to foreclose on the Tine mortgage. In the operative revised complaint dated April 2, 2013, the plaintiff alleged that, because Stoneridge had defaulted on the underlying Stoneridge note, the plaintiff was entitled to declare the entire balance of the note due and payable. The plaintiff alleged that Sovereign had assigned all of its interests in the Stoneridge note, including continuing guarantees executed by Premier, Gattinella, Snow and Joseph Tine, the limited guarantee executed by the defendant, and the Tine mortgage.[4] Because the plaintiff was the current holder of the Stoneridge note, the plaintiff claimed it was entitled collect on all underlying guarantees and foreclose on the mortgage.

         On April 26, 2013, the defendant filed an answer that denied the substance of the complaint and asserted as special defenses lack of consideration, unclean hands, and equitable estoppel. A bench trial was held on August 16, 2016. At trial, the plaintiff claimed that the assignment of the Stoneridge note necessarily carried with it an assignment of all underlying guarantees, including the defendant's limited guarantee secured by the Tine mortgage. The plaintiff also introduced into evidence exhibit 22, a computation of the current amount due on the note. In response, the defendant claimed that the court lacked subject matter jurisdiction to render a judgment of foreclosure against her because her guarantee was not specifically assigned to the plaintiff in the allonge. The defendant also claimed that the plaintiff failed to establish the amount of debt due on the note because evidence of the computation of debt, which included a starting balance provided to the plaintiff by Sovereign, was inadmissible hearsay. Following the trial, both parties filed posttrial briefs. On December 1, 2016, the trial court issued a memorandum of decision entering an order of strict foreclosure on the Tine mortgage. The court held that the plaintiff had standing to foreclose the mortgage that secured the defendant's guarantee and that the plaintiff had established the amount of debt due on the note through the testimony of William Buland, the plaintiff's authorized representative, and the computation of debt in exhibit 22. This appeal followed. Additional facts will be set forth as necessary.

         On appeal, the defendant argues that the trial court improperly (1) held that the plaintiff had standing to foreclose on the Tine mortgage; (2) determined that the plaintiff's exhibit 22 was sufficient to establish the amount due on the subject note; and (3) awarded the plaintiff attorney's fees and expenses. Although we agree with the defendant's second claim and, accordingly, reverse the trial court's judgment and remand the case for a new trial, we address both the defendant's first claim, which pertains to subject matter jurisdiction, and her third claim as an issue likely to arise on remand.

         I

         The defendant's first claim is that the court improperly found that the plaintiff had standing to bring an action to foreclose on the Tine mortgage. She argues that the plaintiff lacked standing because her limited guarantee was not specifically assigned from Sovereign to the plaintiff in the allonge. In response, the plaintiff argues that the court properly found that it had standing to foreclose the Tine mortgage because the assignment of the Stoneridge note operated as an assignment of the underlying guarantees securing it. We agree that the plaintiff has standing.

         We set forth our standard of review and applicable legal principles. ‘‘The issue of standing implicates the trial court's subject matter jurisdiction and therefore presents a threshold issue for our determination.'' (Internal quotation marks omitted.) D'Amato Investments, LLC v. Sutton, 117 Conn.App. 418, 421, 978 A.2d 1135 (2009). ‘‘Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he [or she] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy. . . . When standing is put in issue, the question is whether the person whose standing is challenged is a proper party to request an adjudication of the issue . . . . Because standing implicates the court's subject matter jurisdiction, the plaintiff ultimately bears the burden of establishing standing. . . . Because a determination regarding the trial court's subject matter jurisdiction raises a question of law, [the standard of] review is plenary.'' (Internal quotation marks omitted.) Valley National Bank v. Marcano, 174 Conn.App. 206, 210-11, 166 A.3d 80 (2017).

         ‘‘A guarantee, similar to a suretyship, is a contract, in which a party, sometimes referred to as a secondary obligor, contracts to fulfill an obligation upon the default of the principal obligor.'' (Internal quotation marks omitted.) One Country, LLC v.Johnson, 137 Conn.App. 810, 816, 49 A.3d 1030 (2012), aff'd, 314 Conn. 288, 101 A.3d 933 (2014). Our Supreme Court has recognized the general principle that ‘‘a guarantee agreement is a separate and distinct obligation from that of the note or other obligation.'' JP Morgan Chase Bank, N.A. v.Winthrop Properties, LLC, 312 Conn. 662, 675, 94 A.3d 622 (2014). As our Supreme Court stated, ‘‘a guarantor's liability does not arise from the debt or other obligation secured by the mortgage; rather, it flows from the separate and distinct obligation incurred under the guarantee ...


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