U.S. Bank Trust, N.A. v. Giblen

          Argued February 5, 2019

         Procedural History

         Action to foreclose a mortgage on certain real property of the named defendant et al., 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 JPMorgan Chase Bank et al. were defaulted for failure to plead; thereafter, the court, Mintz, J., rendered a judgment of foreclosure by sale; subsequently, the court, Hon. Kevin Tierney, judge trial referee, granted in part, the committee's motion for approval of sale, deed, fees and expenses, and the named defendant et al. appealed to this court. Affirmed.

          Christopher G. Brown, for the appellants (named defendant et al.).

          Christopher J. Picard, for the appellee (plaintiff).

          Sheldon, Moll and Seeley, Js. ^[*]

          OPINION

          SHELDON, J.

         In this foreclosure action, the defendant mortgagors, Gary M. Giblen, also known as Gary Giblen, and Anna-Marie L. Giblen, also known as Anna-Marie Giblen, ^[1] appeal from the judgment of the trial court approving the sale of their mortgaged property, on the motion of the committee of sale (committee), following the court's rendering of a judgment of foreclosure by sale in favor of the plaintiff mortgagee, U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust. On appeal, the defendants claim that (1) the trial court's approval of the sale of the subject property was void ab initio because it exceeded the scope of the Bankruptcy Court's order annulling the automatic stay that was triggered by the defendants' filing for chapter 7 bankruptcy protection, and (2) the trial court abused its discretion in approving the sale of the subject property because there were ‘‘irregularities with the motion to approve the foreclosure sale'' that were ‘‘injurious'' to them. We affirm the judgment of the trial court.

         The following procedural history is relevant to the defendants' claims on appeal. In March, 2016, the plaintiff commenced this action against the defendants to foreclose a mortgage on property owned by the defendants at 11 Top O'HiIl Road in Darien. On May 20, 2016, the defendants were defaulted for failure to appear in the action. On May 23, 2016, the court rendered a judgment of foreclosure by sale. The court found that, as of that date, the defendants owed the plaintiff $584, 801.05, and the fair market value of the subject property was $1, 750, 000. The court appointed a committee to sell the property at a public auction on June 30, 2016. On June 14, 2016, the defendants filed a motion to the open judgment and extend the sale date. The court granted the motion to open the judgment and set the new sale date as December 3, 2016. On November 22, 2016, the defendants filed a second motion to open the judgment and extend the sale date, which was denied. The foreclosure sale was held on December 3, 2016, with a winning bid of $1, 230, 000. On December 7, 2016, the committee filed a motion for approval of the sale.

         On December 18, 2016, prior to the hearing on the committee's motion for approval of the sale, the defendants filed for chapter 7 bankruptcy protection, triggering an automatic stay of the foreclosure proceedings pursuant to 11 U.S.C. § 362 (a) (2012). On March 7, 2017, the committee appeared before the Bankruptcy Court and informed it that a foreclosure sale of the subject property had been conducted on December 3, 2016. Because neither the foreclosure action nor the sale had been disclosed by the defendants, the Bankruptcy Court issued an order to appear and show cause to the defendants, their bankruptcy attorney, and the bankruptcy trustee. On March 23, 2017, an evidentiary hearing was held on the order to show cause to determine, inter alia, ‘‘why . . . [a]n order should not enter terminating, annulling, modifying, and/or conditioning relief from the automatic stay pursuant to 11 U.S.C. § 362 (d) (1), 11 U.S.C. § 362 (d) (2) and/or 11 U.S.C. 362 (d) (4), to allow the Committee to continue to prosecute and complete the Foreclosure Action, including to complete the pre-petition foreclosure sale conducted on December 3, 2016.'' Following the show cause hearing, the Bankruptcy Court annulled the stay, retroactive to December 18, 2016, the date on which the defendants filed for bankruptcy protection.

         On March 30, 2017, the committee filed a supplemental report with the trial court and reclaimed her motion for approval of the committee sale. On April 17, 2017, the defendants filed an objection to the motion for approval, arguing that (1) the appraised value of the subject property was substantially higher than the successful bid at the foreclosure auction because an interior appraisal of the property, which the court had ordered, had not been performed, (2) the committee had failed to advertise the sale in the newspaper two times, as the court had ordered, and (3) the committee had failed to ensure that the sign that she had posted on the property, pursuant to the court's order, remained there until the date of the sale. The defendants also challenged the amount of fees and expenses claimed by the committee.^[2]

         On May 9, 2017, the trial court ordered that a hearing on the motion for approval of the committee sale be held on July 6, 2017, to address the following limited issues: ‘‘(1) lack of interior inspection; (2) lack of a second sale advertisement; and (3) the intentional removal of the sale sign by the defendant[s].'' On July 7, 2017, the trial court granted the committee's motion for approval of the sale.^[3] This appeal followed. Additional facts will be set forth as necessary.

         I

         The defendants first claim that the trial court's approval of the committee sale of the subject property was void ab initio because it exceeded the scope of the Bankruptcy Court's order annulling the bankruptcy stay. Specifically, the defendants claim that the Bankruptcy Court's order annulling the stay was intended only to permit the committee ...