Argued
October 23, 2018
Procedural
History
Action
to foreclose a blight lien on certain of the named
defendant's real property, and for other relief, brought
to the Superior Court in the judicial district of
Stamford-Norwalk, where the named defendant et al. were
defaulted for failure to appear and the defendant Countrywide
Home Loans, Inc., et al. were defaulted for failure to plead;
thereafter, the court, Mintz, J., granted
the plaintiff's motion for a judgment of foreclosure by
sale and rendered judgment thereon; subsequently, Bank of
America, N.A., was substituted as a defendant; thereafter,
the court, Truglia, J., rejected the motion
for a supplemental judgment filed by the defendant Bank of
America, N.A.; subsequently, the court, Truglia,
J., granted the motion for reconsideration filed by
the defendant Bank of America, N.A., granted the motion for a
supplemental judgment and rendered a supplemental judgment
for the defendant Bank of America, N.A.; thereafter, the
court, Tierney, J., granted the motions to
open the supplemental judgment and for a supplemental
judgment filed by the defendant Wells Fargo Bank, National
Association, and rendered a supplemental judgment for the
defendant Wells Fargo Bank, National Association, from which
the defendant Bank of America, N.A., appealed to this court.
Reversed; judgment directed.
Gerald
L. Garlick, for the appellant (defendant Bank of America,
N.A.).
Patrick T. Uiterwyk, for the appellee (defendant Wells Fargo
Bank, National Association).
Alvord, Elgo and Bright, Js.
OPINION
ALVORD, J.
The
defendant Bank of America, N.A. (Bank of America), appeals
from the judgment of the trial court opening the supplemental
judgment that had been rendered in its favor and, thereafter,
rendering a supplemental judgment in favor of the defendant
Wells Fargo Bank, National Association (Wells Fargo), in the
amount of $348, 097.16.[1] On appeal, Bank of America claims that
the court erred in granting Wells Fargo's motion to open
the supplemental judgment more than four months after it was
rendered on the basis of fraud committed by a homeowner in
securing multiple mortgages years before this action to
foreclose a blight lien commenced. We agree that the court
erred and reverse the judgment of the trial
court.[2]
The
following facts, as found by the trial court or as stipulated
to by the parties, [3] and procedural history are relevant to
this appeal. On October 29, 2007, the defendant Ismat Rahman
acquired title to property located at 150 Doolittle Road in
Stamford for a purchase price of $780, 000. He executed a
promissory note in favor of World Savings Bank, in the
principal amount of $624, 000. To secure the note, Rahman
executed a mortgage in favor of World Savings Bank (Wells
Fargo mortgage), [4] which was recorded in the Stamford land
records in volume 9187 at page 347.
Approximately
six months later, on April 8, 2008, Rahman executed a
promissory note in favor of Countrywide Home Loans Servicing,
LP, in the principal amount of $417, 000, which note was
secured with a mortgage on the property (Bank of America
mortgage).[5]The Bank of America mortgage was recorded
in volume 9318 at page 259 of the Stamford land records. Less
than one month later, on May 2, 2008, Rahman executed a
promissory note in favor of Washington Mutual Bank in the
principal amount of $500, 000, which note was secured with a
mortgage on the property (JPMorgan Chase
mortgage).[6] The JPMorgan Chase mortgage was recorded
in volume 9346 at page 260 of the Stamford land records.
At the
closing of the Bank of America mortgage, Rahman presented a
document titled ‘‘Satisfaction of
Mortgage'' purportedly executed by Mortgage
Electronic Registrations System, Inc., as nominee for World
Savings Bank (satisfaction). The satisfaction was fraudulent
and was never recorded on the Stamford land records. Rahman
also presented the satisfaction at the closing of the
JPMorgan Chase mortgage.
The
defendant JPMorgan Chase Bank, National Association, filed a
claim against its title insurance policy issued by the
defendant Chicago Title Insurance Company, now known as
Fidelity National Title Group, arising out of Rahman's
presentation of the fraudulent satisfaction at the time of
acquiring the JPMorgan Chase mortgage. Chicago Title
Insurance Company, in turn, instituted a fraud action against
Rahman and, on March 17, 2011, obtained judgment in its favor
in the amount of $627, 730.67 plus 6 percent per annum
postjudgment interest. See Chicago Title Ins. Co. v.
Rahman, Superior Court, judicial district of
Stamford-Norwalk, Docket No. CV-10-5013365-S (March 17,
2011). A judgment lien was recorded in the Stamford land
records at volume 10193 at page 257 as to the property. Bank
of America was neither a party to, nor had any knowledge of,
the fraud action against Rahman.
Prior
to this foreclosure action, three other foreclosure actions
were commenced with respect to the property. The first was
commenced on November 4, 2008, by Wells Fargo's
predecessor, which withdrew the actiononMarch4, 2010. See
Wachovia Mortgage, FSB v. Rahman, Superior
Court, judicial district of Stamford-Norwalk, Docket No.
CV-08-5009298-S. The second was commenced on January 13,
2009, by JPMorgan Chase Bank, National Association, and was
dismissed by the court on October 8, 2010, pursuant to
Practice Book § 14-3, governing dismissal for lack of
diligence. See JPMorgan Chase Bank, National Assn.
v. Rahman, Superior Court, judicial district of
Stamford-Norwalk, Docket No. CV-09-5010015-S (October 8,
2010). Wells Fargo's predecessor also commenced a third
foreclosure action in 2009. Bank of America appeared in that
action and filed an answer and special defense, dated May 5,
2010, based on the satisfaction, which it attached to its
pleading.[7]
On
August 14, 2012, the plaintiff commenced the present action
by way of a one count complaint seeking foreclosure of a
blight lien held by the plaintiff and recorded in the
Stamford land records. The complaint also named other
defendants, including Wells Fargo, and alleged that these
defendants may claim an interest in the property. See
footnote 1 of this opinion. On October 23, 2012, the
plaintiff filed a motion for default against Wells Fargo for
failure to appear, which was granted by the clerk of the
court on November 7, 2012. On February 19, 2013, the court
rendered judgment of foreclosure by sale. The court found the
total debt and attorney's fees due the plaintiff to be
$28, 618.75 and the fair market value of the property to be
$410, 000. The court set a sale date for May 4, 2013, and the
property was sold for $400, 000. On July 29, 2013, the
plaintiff filed a motion for determination of priorities and
supplemental judgment and subsequently filed a revised
motion, which the court granted.[8] The remaining proceeds from
the sale, in the amount of $348, 097.16, were paid to the
clerk of the court.
On
February 6, 2014, Bank of America filed a motion for a
supplemental judgment in which it claimed that the amount
owed to it exceeded the remaining sale proceeds. It therefore
requested a supplemental judgment disbursing the remaining
sale proceeds to it. Bank of America argued that Wells Fargo
had been defaulted for failure to appear and had not filed an
affidavit of debt by which the court could determine what, if
any, amount remained owed to Wells Fargo. It further argued
that Wells Fargo had commenced a prior foreclosure
proceeding, in which Bank of America appeared and asserted a
special defense, that Wells Fargo had received payment in
full and that the Wells Fargo mortgage had been released by
the satisfaction. Bank of America argued that after it filed
a request for production seeking documents related to payment
and release of the Wells Fargo mortgage, Wells Fargo withdrew
its prior foreclosure complaint without having produced any
such documents.
The
court rejected Bank of America's motion for a
supplemental judgment, stating that it needed
‘‘verification of release of the Wells Fargo
mortgage that was filed on the land records prior to [the
Bank of America mortgage].'' On April 1, 2014, Bank
of America filed a motion for reconsideration, in which it
acknowledged that the satisfaction was never recorded on the
land records. It argued, however, that in the event the court
were to deny Bank of America's motion, ‘‘the
net proceeds from the sale of this property will be held
indefinitely by the court, without any indication that any
money is still owed under the Wells Fargo mortgage.''
On April 17, 2014, the court reconsidered its decision and
granted Bank of America's motion for a supplemental
judgment, ordering the clerk of the court, following the
expiration of the twenty day appeal period, to disburse to
Bank of America $348, 097.16, the amount of the sale proceeds
remaining with the clerk.
More
than three years later, on June 2, 2017, counsel for
Wells Fargo filed an appearance and a motion to open the
supplemental judgment, arguing that the judgment had been
procured by fraud or mutual mistake. Wells Fargo contended
that Rahman's fraud in forging the satisfaction provided
the court with authority to open the judgment after the four
month period set forth in General Statutes § 52-212a.
Wells Fargo did not contend that Bank of America, itself, had
engaged in fraud but, rather, claimed that Bank of America
had ‘‘unknowingly perpetuated [Rahman's]
conduct when seeking the supplemental judgment.''
Wells Fargo requested that the supplemental judgment be
opened and the remaining proceeds from the foreclosure sale
be paid to Wells Fargo. Bank of America filed an objection,
in which it argued, inter alia, that the supplemental
judgment had not been procured by fraud because the court had
been made aware that the satisfaction was never recorded and,
thus, that Wells Fargo's mortgage had not been released
from the land records.
On
August 30, 2017, Bank of America and Wells Fargo appeared
before the court for a hearing on the motion to
open.[9] The parties subsequently submitted
supplemental briefing concerning the legal standard
applicable to a motion to open a judgment on the basis of
fraud.[10] On September 22, 2017, the court issued
a memorandum of decision in which it granted Wells
Fargo's motion to open the supplemental judgment and its
motion for a supplemental judgment.
The
court first found that Wells Fargo sufficiently had
established fraud to invoke the exception to the four month
limitation on opening or setting aside a judgment pursuant to
§ 52-212a. Applying the factors set forth in Varley
v.Varley, 180 Conn. 1, 3-4, 428 A.2d 317
(1980); see footnote 10 of this opinion; the court found that
there was no laches or unreasonable delay on the part of
Wells Fargo. The court stated: ‘‘Due to the
massive and continuing fraud perpetrated on three separate
banks, that had the banks scrambling to protect their own
interests, it is understandable to this court that
considerable delay and confusion presented itself before
...