CONNECTICUT COMMUNITY BANK, N.A.
v.
JAMES T. KIERNAN, JR., ET AL.
Argued
November 29, 2018
Procedural
History
Action
to foreclose a mortgage on certain real property owned by the
named defendant et al., brought to the Superior Court in the
judicial district of Stamford-Norwalk, where the plaintiff
filed an amended complaint and withdrew the action as against
the defendant Elizabeth M. Kiernan et al.; thereafter, the
named defendant was defaulted for failure to plead;
subsequently, the court, Povodator, J., granted the
plaintiff's motion for summary judgment and granted in
part the plaintiff's motion for attorney's fees, and
the plaintiff appealed to this court.
Houston Putnam Lowry, with whom, on the brief, was Dale M.
Clayton, for the appellant (plaintiff).
Lavine, Sheldon and Elgo, Js.
OPINION
SHELDON, J.
The
plaintiff, Connecticut Community Bank, N.A., doing business
as the Greenwich Bank & Trust Company, appeals from the
judgment of the trial court awarding what it claims to be an
allegedly insufficient amount of attorney's fees after
finding the defendant James T. Kiernan, Jr., [1] liable pursuant
to a mortgage note that he executed in favor of the
plaintiff. The plaintiff claims on appeal that the trial
court erred by excluding from its award any attorney's
fees that it had incurred in protecting the priority of its
mortgage as to a subsequent encumbrancer, M&T Bank,
formerly known as Hudson City Savings Bank (M&T Bank),
which it had brought into this action as a defendant on its
claim of interpleader. We affirm the judgment of the trial
court.
The
following procedural history and undisputed facts are
relevant to this appeal. On October 7, 2005, the defendant
and his wife, Elizabeth M. Kiernan, executed a home equity
line of credit agreement and disclosure statement (HELOC) in
favor of the plaintiff in the original maximum principal
amount of one million dollars. The HELOC was secured by an
open-end mortgage deed encumbering certain real property
located at 25 The Ridgeway in Greenwich. At the time the
plaintiff issued the HELOC, the subject property, which had
been owned by Elizabeth Kiernan since 1992, was encumbered by
a mortgage in favor of Washington Mutual Bank, F.A.
(Washington Mutual), in the principal amount of $2, 500, 000.
The plaintiff's mortgage was recorded on the Greenwich
land records on February 5, 2008.
In
April, 2011, the Kiernans refinanced the mortgage on the
subject property with M&T Bank. As a result, Washington
Mutual's mortgage was released and a new mortgage was
recorded on the land records in favor of M&T Bank on the
principal amount of $2, 425, 000 on May 3, 2011.
At some
point in 2015, the Kiernans defaulted on the HELOC and,
consequently, the plaintiff brought this action to foreclose
its mortgage on the subject property. During the course of
litigation, a dispute arose between the plaintiff and M&T
Bank as to the priorities of their respective mortgages. By
agreement of all parties, the property was sold and all
proceeds from the sale were deposited in an escrow account
pending resolution of the priority dispute between the
plaintiff and M&T Bank.
On
April 6, 2017, the plaintiff amended its complaint,
converting its claim against the defendant from a mortgage
foreclosure claim to a claim for interpleader and a claimon a
note. The amended complaint thus contained two counts; the
first stating a claim for interpleader as against M&T
Bank and the second presenting a claim for damages on the
note as against the defendant. The defendant did not respond
to the amended complaint, and thus he was defaulted for
failure to plead.
On
April 12, 2017, the plaintiff filed a motion for summary
judgment as to the defendant on the second count of the
amended complaint. The defendant did not oppose the
plaintiff's motion. On August 11, 2017, the court granted
summary judgment on the note in favor of the plaintiff
‘‘in the principal amount of $999, 140.89 plus
interest in the amount of $68, 515.40 ($54, 515.40 as
calculated through 4/7/17), plus 126 days (through 8/11/17)
at $109.49, which comes to $13, 795.74 (plus interest
continuing to accrue at $109.49 per day).'' The court
also addressed the plaintiff's claim for attorney's
fees as follows: ‘‘The plaintiff has indicated an
intent to submit a claim for attorney's fees, as allowed
under the note. The court will entertain such a submission,
subject to the presumptive obligation of a party claiming the
right to attorney's fees to make an attempt to identify
fees directly or closely related to the claim for which such
fees are allowed, eliminating fees for matters unrelated to
the claim, to the extent possible/ practical. Total
Recycling Services of Connecticut, Inc. v.
Connecticut Oil Recycling Services, LLC, 308 Conn.
312, 63 A.3d 896 (2013) (Total Recycling). Thus,
subject to the plaintiff's possible argument to the
contrary, the plaintiff's fees incurred in connection
with its dispute as to priority to the proceeds of the sale
of the property, which, in turn, is a consequence of the
attempted mortgage foreclosure, at least facially would seem
unrelated to the ‘pure' note based claim against
this defendant. . . . Attorney's fees are to be
determined after a claim with supporting documentation is
submitted (allowing parties an opportunity to object or
otherwise challenge the claim, thereafter).''
On May
5, 2017, the plaintiff filed an affidavit in support of its
claim for attorney's fees against the defendant in the
amount of $46, 152 to recover for time spent by counsel on
its claim against the defendant through May, 2017. On August
24, 2017, the plaintiff filed an updated motion for
attorney's fees against the defendant in the amount of
$134, 462.82, seeking $102, 084 in fees for its current
counsel, $26, 672.60 in fees for its prior counsel, and
$5706.22 in costs. The plaintiff argued that it was entitled
to the full amount of $134, 462.82 pursuant to § 18 (c)
(ii) of the note signed by the defendant, which provided:
‘‘We can enforce our rights in court. This
includes, for example, foreclosing on the mortgage described
in section 11 above. If we enforce our rights in court, you
agree to pay our court costs and attorneys' fees, as
allowed by law and as set by the court.'' Pursuant to
the court's previous order to attempt to apportion the
fees incurred against the defendant and those incurred in
pursuit of its priority claim, the plaintiff alleged that it
had incurred attorney's feesin the amount of $41, 484.50
as to the defendant directly. The plaintiff argued, however,
that the defendant ‘‘is responsible for all
attorney's fees pursuant to his contract (the note) with
[the] plaintiff, including [the] plaintiff's
attorney's fees regarding the priority dispute with
[M&T Bank] (because such fees were incurred in connection
with his loan). If [the] plaintiff had not made this loan,
there would be no priority dispute with [M&T
Bank].''[2]
The
court heard argument on the plaintiff's motion for
attorney's fees on October 10, 2017. At the hearing,
counsel for the plaintiff reiterated his contention that his
client was entitled to attorney's fees from the defendant
not only for all fees it had incurred in obtaining the
summary judgment against him on the note, but also for all
fees it had incurred in protecting the priority of its
mortgage by prosecuting its interpleader claim. The defendant
objected to the plaintiff's argument that he was
responsible for all fees incurred by the plaintiff in
prosecuting its interpleader claim. He further argued that
the amount of fees requested was excessive because he did not
oppose the plaintiff's claim against him on the note and
the claimed 108.5 hours expended in obtaining judgment
against him on the note was unreasonable. He requested
instead that the court award the plaintiff fees for four
hours of work in the total amount of $1600. During rebuttal
argument by the plaintiff, the court commented as follows:
‘‘[A] hundred hours strike me as somewhat extreme
for a motion for summary judgment against a defaulting
party.'' Apparently agreeing, counsel for the
plaintiff replied, ‘‘It does, Your
Honor.'' Counsel for the plaintiff then agreed with
the court that one hundred hours did not seem to be a
‘‘defensible'' claim, and conceded
‘‘that some of these entries, especially early
on, relate to the M&T issues. I'm surprise[d] that
they weren't stricken from here.'' ...