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Connecticut Community Bank, N.A. v. Kiernan

Court of Appeals of Connecticut

February 19, 2019

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.'' ...


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