Argued
January 15, 2019
Procedural
History
Action
to foreclose judgment liens on certain real property owned by
the named defendant et al., and for other relief, brought to
the Superior Court in the judicial district of Fairfield and
tried to the court, Hon. Richard P. Gilardi, judge
trial referee, who, exercising the powers of the Superior
Court, rendered judgment in part for the plaintiff, from
which the plaintiff appealed and the named defendant et al.
cross appealed to the Appellate Court, DiPentima, C.
J., and Beach and Bishop,
Js., which reversed the trial court's judgment
and remanded the case for further proceedings; thereafter,
the named defendant et al., on the granting of certification,
appealed to this court. Affirmed in part; appeal
dismissed in part.
Matthew K. Beatman, with whom, on the brief, was John L.
Cesaroni, for the appellants (named defendant et al.).
Houston Putnam Lowry, with whom, on the brief, was Dale M.
Clayton, for the appellee (plaintiff).
David
Lavery and Loraine Martinez filed a brief for the Connecticut
Fair Housing Center as amicus curiae.
Robinson, C. J., and Palmer, McDonald, D'Auria, Mullins,
Kahn and Ecker, Js.
OPINION
D'AURIA, J.
If a
creditor forecloses on a debtor's home, the debtor might
be entitled to keep a portion of the home's value,
whatever the amount of the debt. This debtor protection,
known as the homestead exemption, is available when the
creditor forecloses on a judgment lien, but not on a
consensual lien. See General Statutes § 52-352b
(t).[1]
In this case, the plaintiff, Rockstone Capital, LLC
(Rockstone), held judgment liens against the defendants John
Sanzo and Maria Sanzo.[2] The parties later agreed to a consensual
lien in the form of a mortgage to secure the debt. Now, the
Sanzos have defaulted on the mortgage payments, and Rockstone
seeks to foreclose on the mortgage. The primary issue on
appeal is whether the Sanzos are entitled to the homestead
exemption. We conclude they are not.
The
trial court found the following facts, as stipulated by the
parties and contained in exhibits submitted to the court. The
Sanzos' primary residence is in Monroe and most recently
was valued at $500, 000. In 2000, Fleet National Bank (Fleet)
secured a judgment against them for about $100, 000. To
secure the debt, it recorded judgment liens on the Monroe
property. Fleet later assigned its interests in the judgment
and judgment liens to Rockstone.
In
2008, Rockstone initiated this action to foreclose on the
judgment liens because the Sanzos had defaulted. The parties,
however, entered into a forbearance agreement that halted the
action. Under the agreement, the Sanzos were to make regular
payments on the amount outstanding on the judgment liens and
additional interest, costs, and fees, and to grant Rockstone
a mortgage on the Monroe property securing these obligations.
In exchange, Rockstone agreed to refrain from pursuing this
foreclosure action for as long as the Sanzos made their
payments. The parties stipulated that they were represented
by counsel and that their agreement was a commercial
agreement.
The
record also reflects the following procedural history. In
2014, Rockstone resumed this action, filing a motion to
foreclose on the judgment liens because the Sanzos had
defaulted on their obligations under the forbearance
agreement. The Sanzos objected to the motion and invoked the
homestead exemption. In response, Rockstone amended its
complaint to seek foreclosure on the mortgage, instead of on
the judgment liens. The Sanzos filed an answer, including a
special defense that claimed the mortgage was a de facto
waiver of the homestead exemption, which was contrary to
public policy.
The
action was submitted to the trial court on stipulations and
exhibits submitted by the parties. Following an initial
decision that the parties agreed was improper, [3]the court issued a
corrected memorandum of decision. In it, the court
acknowledged that the Sanzos had ‘‘voluntarily
enabled [Rockstone] to seek recovery without the homestead
exemption's applicability'' and that
‘‘the homestead exemption would ordinarily not be
applicable to a mortgage created by a voluntary agreement
such as the one at hand.'' But based on the
‘‘unique procedural history'' of the
case, in which ‘‘the progression of this action
has been to get around the homestead exemption, ''
the court decided that the exemption should apply
nonetheless. It held that the forbearance agreement was void
as against public policy and therefore denied Rockstone's
claim to foreclose on the mortgage. It also rendered judgment
for Rockstone on the judgment liens, subject to the homestead
exemption, even though Rockstone had amended its complaint to
withdraw its claim regarding the judgment liens. The court
did not determine the amount of debt, manner of foreclosure
or law days for the judgment lien foreclosure.
Rockstone
appealed and the Sanzos cross appealed to the Appellate
Court. Rockstone appealed from the denial of its request to
foreclose on the mortgage, and the Sanzos cross appealed from
the judgment on the judgment liens. Because the trial court
had not determined the amount of debt, manner of foreclosure
or law days for the judgment lien foreclosure, the Appellate
Court ordered a hearing to determine whether it should
dismiss the appeals for lack of a final judgment. Following
that hearing, the Appellate Court ordered the trial court to
articulate its ruling and, after receiving the articulation,
ordered the parties to address the final judgment question in
their merits briefs to that court.
The
Appellate Court concluded thatit had jurisdiction over
Rockstone's appeal because the trial court's denial
of Rockstone's claim to foreclose on the mortgage
constituted a final judgment. Rockstone Capital, LLC
v. Sanzo, 175 Conn.App. 770, 778, 171 A.3d 77
(2017). It reversed the judgment of the trial court on the
merits of Rockstone's appeal, holding that the homestead
exemption did not apply to a consensual lien such as a
mortgage. Id., 784. The Appellate Court also
concluded that it had jurisdiction over the Sanzos' cross
appeal because, although it was not based on a final
judgment, it was inextricably intertwined with
Rockstone's appeal, which was based on a final judgment.
Id., 786. Finally, it reversed the judgment of the
trial court on the merits of the cross appeal because
Rockstone's operative complaint had not sought
foreclosure on the judgment liens. Id., 788-89.
The
Sanzos petitioned this court for certification to appeal,
which we granted, limited to the following issues:
‘‘1. Did the Appellate Court properly conclude
that the appeal and cross appeal were taken from a final
judgment of the trial court? 2. If the answer to the first
question is yes, did the Appellate Court properly conclude
that the plaintiff's post judgment mortgage encumbering
the same property and the same debt as the plaintiff's
judgment liens was a consensual lien, and not a de facto
waiver of the homestead exemption; see General Statutes
§ 52-352b (t); that would be void as a matter of public
policy?'' Rockstone Capital, LLC v. Sanzo,
327 Conn. 968, 173 A.3d 391 (2017). We affirm the judgment of
the Appellate Court with respect to its conclusions that the
appeal was taken from a final ...