Citicorp Mortg., Inc. v. Burgos, 14717

• Decision Date: 10 August 1993
• Docket Number: No. 14717,14717
• Citation: 629 A.2d 410,227 Conn. 116
• Court: Connecticut Supreme Court
• Parties: CITICORP MORTGAGE, INC. v. Felix BURGOS, Jr., et al.

Page 410

629 A.2d 410

227 Conn. 116

CITICORP MORTGAGE, INC. v. Felix BURGOS, Jr., et al.

No. 14717.

Supreme Court of Connecticut.

Argued April 29, 1993.

Decided Aug. 10, 1993.

Richard S. Scalo, with whom was Stephen E. Reck, Bridgeport, for appellant (defendant Investors Mortg. Co., Inc.).

Beth S. Becker, Hartford, with whom was Anne R. Hoyt, Plainfield, for appellee (plaintiff).

Before PETERS, C.J., and CALLAHAN, BORDEN, BERDON and NORCOTT, JJ.

BERDON, Associate Justice.

The defendant Investors Mortgage Company (Investors) appeals from the trial court's denial of its motion to set aside a confirmed foreclosure sale and for the return of its deposit. The principal issue in this case is whether a purchaser at a foreclosure sale may be released from its obligation to purchase and have its deposit returned after the sale has been confirmed by the court because the closing, which was scheduled to take place within thirty days of confirmation, was substantially delayed.

The following facts are undisputed. On October 25, 1985, the named defendant, Felix Burgos, Jr. (Burgos), and the defendant Luz Burgos, ¹ executed a promissory note in favor of the plaintiff Citicorp Person-to-Person Financial Center of Connecticut, Inc., now known as Citicorp Mortgage Inc., in the amount of $65,000. The note was secured by a mortgage on property located in Bridgeport. Investors held a second mortgage on the property in the amount of $20,000.

On August 13, 1990, the plaintiff obtained a judgment of strict foreclosure. On September 3, 1991, Investors filed a motion for foreclosure by sale. The trial court granted the motion and scheduled the sale for November 16, 1991. After successfully bidding the sum of $101,500 at the sale, Investors deposited the sum of $14,000 with the committee appointed by the trial court to conduct the sale. Various documents, including the notice of judgment of foreclosure by sale, the notice to bidders, and the bond for deed executed by the committee and Investors on the sale date, provided that the closing was to take place within thirty days from the court's approval of the sale. The court approved the bond for deed and confirmed the sale on December 5, 1991, but the closing did not follow within thirty days because Burgos had, in the meantime, appealed the trial court's decision to the Appellate Court, resulting in an automatic stay. ² See Practice Book § 4046. On February 25, 1992, the trial court granted the plaintiff's motion, filed on behalf of the committee, to terminate the stay to allow the closing to take place. Burgos subsequently filed in the Appellate Court a motion for review of the trial court's order terminating the automatic stay.

On March 9, 1992, ninety-five days after the approval of the sale and sixty-five days after the thirty day closing deadline, the closing still had not taken place and Investors moved to set aside the sale and for the return of its deposit. On March 26, the Appellate Court dismissed as moot both Burgos' appeal and his motion for review of the trial court's order terminating the automatic stay. It was not until April 20, 1992, 137 days after the approval of the sale and twenty-six days after the Appellate Court dismissed Burgos' appeal, that Investors received notice from the committee that it was prepared to close.

The trial court subsequently heard and denied Investors' motion to set aside the sale and for the return of its deposit on May 4, 1992. Investors then filed a motion for articulation and a motion for reargument. On June 22, 1992, after hearing both parties, the trial court reaffirmed its denial of the motion to set aside the sale and for return of deposit, articulating its reasons in open court. The trial court noted that Investors was a sophisticated bidder, familiar with Burgos, and therefore knew or should have known that delays in the closing were possible. Consequently, the trial court concluded that Investors must go forward with the sale. The court ordered, however, that if it did not go forward, it would not be required to forfeit its entire deposit of $14,000, but only the difference, if any, between the original sale and a new sale, if one was required. Investors appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199(c).

Relying on principles of equity and fairness, Investors argues that it was improper for the trial court to refuse to set aside the sale and return its deposit. Investors argues that it had relied on representations by the court and the committee that the closing would take place within thirty days of the court's approval of the sale and submits that it has been prejudiced by the delay because certain investors who were going to finance the purchase withdrew when the closing did not occur within a reasonable period of time.

"It is well established that a foreclosure action constitutes an equitable proceeding." Harbour Landing Development Corporation v. Herman, 27 Conn.App. 98, 101, 603 A.2d 779 (1992). "In an equitable proceeding, the trial court may examine all relevant factors to ensure that complete justice is done.... The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court." (Citations omitted; internal quotation marks omitted.) Id., at 101-102, 603 A.2d 779; see also Banca Commerciale Italiana Trust Co. v. Westchester Artistic Works, 109 Conn. 23, 26, 145 A. 20 (1929); Mariners Savings Banks v. Duca, 98 Conn. 147, 152, 118 A. 820 (1922). Although we make every reasonable presumption in favor of the trial court's action in determining whether the trial court abused its discretion, " '[s]uch discretion ... should be exercised in conformity with the spirit of the law and should not impede or defeat the ends of substantial justice.' " Red Rooster Construction Co. v. River Associates, Inc., 224 Conn. 563, 575, 620 A.2d 118 (1993); see also Society for Savings v. Stramaglia, 225 Conn. 105, 109-114, 621 A.2d 1317 (1993).

" 'A judicial sale is one made as a result of judicial proceedings by a [committee of sale] legally appointed by the court for [that] purpose.... The court is the vendor, and the [committee] appointed to make the sale is the mere agent of the court....' " Raymond v. Gilman, 111 Conn. 605, 613-14, 151 A. 248 (1930). Only after a sale has been confirmed and ratified by the court does it become complete. Hartford Federal Savings & Loan Assn. v. Tucker, 13 Conn.App. 239, 247, 536 A.2d 962, cert. denied, 207 Conn. 805, 540 A.2d 373 (1988). Following confirmation of the sale, a judicial sale generally will not be set aside in the absence of fraud, mistake or surprise. "The rule of caveat emptor is generally applicable to judicial sales.... When relaxation of this rule is granted ... it is on the theory that the purchaser bids on the assumption that there are no undisclosed defects." (Citations omitted.) Raymond v. Gilman, supra, 111 Conn. at 614, 151 A. 248. In the event of default by the purchaser, several alternatives are open to the trial court. The court may discharge the sale and order a resale; it may confirm the sale and order the purchaser to complete payment; or it may confirm the sale and order a resale, holding the purchaser liable for any deficiency arising out of the resale. Mariners Savings Banks v. Duca, supra, 98 Conn. 147 at 155-56, 118 A. 820.

Although the procedural mechanisms for setting aside a sale are established, their application has been infrequent in Connecticut. In ...