Argued
January 15, 2019
Appeal
from the Superior Court, Judicial District of
Fairfield, Richard P. Gilardi, Judge Trial Referee.
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[Copyrighted Material Omitted]
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Matthew K. Beatman, Bridgeport, with whom, on the brief, was
John L. Cesaroni, Bridgeport, for the appellants (named
defendant et al.).
Houston
Putnam Lowry, Meriden, with whom, on the brief, was Dale M.
Clayton, Hartford, 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, DAuria, Mullins, Kahn and Ecker,
Js.
OPINION
DAURIA,
J.
[332
Conn. 308] If a creditor forecloses on a debtors home, the
debtor might be entitled to keep a portion of [332 Conn. 309]
the homes 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
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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 [332 Conn. 310] 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 [332 Conn.
311] enabled [Rockstone] to seek recovery without the
homestead exemptions 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
Rockstones 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.
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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 ...