Federal Deposit Ins. Corp. v. Caldrello

• Decision Date: 25 January 2002
• Docket Number: (AC 20144)
• Court: Connecticut Court of Appeals
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, RECEIVER OF FIRST CONSTITUTION BANK v. JOSEPH M. CALDRELLO ET AL.

68 Conn. App. 68

789 A.2d 1005

FEDERAL DEPOSIT INSURANCE CORPORATION, RECEIVER OF FIRST CONSTITUTION BANK v. JOSEPH M. CALDRELLO ET AL.

(AC 20144)

Appellate Court of Connecticut.

Argued November 29, 2001.

Officially released January 25, 2002¹.

Foti, Flynn and O'Connell, Js.

Richard D. Haviland, for the appellants (named defendant et al.).

Donald E. Frechette, with whom was Joshua L. Milrad, for the appellee (plaintiff).

Opinion

FOTI, J.

The defendants Joseph M. Caldrello and Sandra V. Caldrello² appeal from the trial court's judgment of strict foreclosure. On appeal, the defendants argue that the court improperly (1) opened the judgment of nonsuit more than twenty months after it had been rendered, (2) allowed the plaintiff, the Federal Deposit Insurance Corporation (FDIC), to introduce certain evidence and the testimony of a witness, which had not been disclosed to the defendants until the eve of trial, and (3) failed to adjust the verdict for the undisputed unclean hands of the FDIC. We affirm the judgment of the trial court.

The following facts are undisputed. On November 22, 1988, the defendants executed a mortgage and note to First Constitution Bank (bank) in the amount of $2.2 million. In September, 1989, the bank commenced an action to foreclose the mortgage. The defendants filed an answer and counterclaim, denying that the note was in default and claiming an improper setoff by the bank against certain certificates of deposit owned by the defendants. On September 8, 1992, the court rendered a judgment of strict foreclosure in favor of the bank and against the defendants on the complaint and counterclaim. On October 2, 1992, the bank was declared insolvent, and the FDIC was appointed as receiver. By decision released April 11, 1995, this court reversed the judgment of strict foreclosure and remanded the case for a new trial. First Constitution Bank v. Caldrello, 37 Conn. App. 529, 656 A.2d 1053 (1995).

On June 23, 1995, a judgment of nonsuit was rendered against the FDIC for failure to appear at a pretrial conference. On January 21, 1997, the FDIC filed a motion to open the judgment of nonsuit, claiming, inter alia, that it never received notice of the pretrial conference. Following a hearing, the court granted the motion over the defendants' objection. The court subsequently rendered a judgment of strict foreclosure. The defendants then filed the present appeal.³

I

The defendants first argue that the court lacked the authority to open the judgment of nonsuit more than twenty months after it had been rendered.⁴ The defendants contend that the court found that the FDIC had received notice and, therefore, improperly granted the motion to open. We disagree.

General Statutes § 52-212 provides in relevant part that "[a]ny judgment rendered or decree passed upon a default or nonsuit in the Superior Court may be set aside, within four months following the date on which it was rendered or passed ... upon the complaint or written motion of any party or person prejudiced thereby, showing reasonable cause, or that a good cause of action or defense in whole or in part existed at the time of the rendition of the judgment or the passage of the decree, and that the plaintiff or defendant was prevented by mistake, accident or other reasonable cause from prosecuting the action or making the defense."

"[I]t is axiomatic that the right to move to open and vacate a judgment assumes that the party who is to exercise the right be given the opportunity to know that there is a judgment to open." (Internal quotation marks omitted.) Habura v. Kochanowicz, 40 Conn. App. 590, 593, 672 A.2d 512 (1996). "In Habura v. Kochanowicz, [supra, 592], this court stated: `Where the defendants have not received notice of the default judgment... the time within which they may move to set aside the judgment is extended by the delay in notification.'" (Emphasis in original.) Tyler E. Lyman, Inc. v. Lodrini, 63 Conn. App. 739, 746-47, 780 A.2d 932, cert. denied, 258 Conn. 902, 782 A.2d 137 (2001). The FDIC argues, and we agree, that the court was presented with sufficient evidence demonstrating that it did not receive notice of the entry of the nonsuit in a timely manner and that it filed its motion to open within four months of receiving notice.

The nonsuit was rendered against the FDIC on June 23, 1995, based on the failure of the FDIC to attend a pretrial conference scheduled for June 15, 1995. On January 21, 1997, the FDIC filed a motion to open the judgment of nonsuit. On March 10, 1997, the FDIC filed a brief in support of its motion. Attached to this brief was the affidavit of Penny Seaman, an attorney who represented the bank from the commencement of the action until after the initial judgment of strict foreclosure on September 8, 1992. Seaman stated in this affidavit that after the FDIC was named receiver of the bank on October 2, 1992, the FDIC obtained other counsel and that she requested permission to withdraw as counsel for the bank. Seaman further stated that she had received no communication from the Superior Court since the defendants filed their initial appeal with the Appellate Court and that she did not learn that the case had been remanded by this court until February 24, 1997, when she received a telephone call from counsel for the FDIC. Seaman specifically stated that she never received notice of the pretrial conference scheduled for June 23, 1995,⁵ or copies of any pleadings that might have been filed in the case since notification of the appeal. Seaman stated that it is her practice to notify new counsel of any pleadings or notices that she receives in connection with a case transferred to the FDIC and that if she had received notice of a pretrial conference or motions filed by the defendants, she would have notified counsel for the FDIC.

The FDIC also attached the affidavit of attorney Gale Kosto to the brief in support of its motion to open. Kosto attested that she had represented the FDIC as receiver from January 4, 1993, until April 11, 1995, in the appeal to this court and continued to represent the FDIC in this matter. This affidavit stated in pertinent part that she "had no notice of the assignment of pretrial, no notice of the entry of a nonsuit, and no notice of a motion to transfer, written or oral, from the court or anyone else, until January, 1997." In this affidavit, Kosto recounted her dealings with counsel for the defendants and how she had learned of the nonsuit in January, 1997, from an attorney representing the FDIC in a federal district court action.⁶ The FDIC further attached a letter from Kosto to counsel for the defendants dated September 15, 1995, suggesting that they schedule a conference call with the Superior Court case flow coordinator in New London to move the case along.⁷ The FDIC further attached a letter from counsel for the defendants dated January 13, 1997, stating that he had reviewed his file and could not find any documentation regarding the default.⁸ Finally, the FDIC attached the affidavit of attorney Ivan Rivera, FDIC's in-house counsel assigned to supervise this case. Rivera stated in the affidavit that he searched the FDIC's files and found no documentary evidence or notice of any kind to show that the FDIC had been notified of a pretrial conference on June 23, 1995, or any other date.

Following oral argument, the court granted the FDIC's motion to open.⁹ We conclude that the evidence submitted in support of the motion to open supports the conclusion that the FDIC did not receive notice of the nonsuit and that it timely filed its motion to open within four months of learning of the nonsuit.¹⁰ The court, therefore, had the authority and properly granted the motion to open the judgment of nonsuit. Id., 747-48; Habura v. Kochanowicz, supra, 40 Conn. App. 592-93.

II

The defendants next argue that the court improperly allowed the FDIC to introduce certain evidence and the testimony of a witness, which had not been disclosed to the defendants until the eve of trial. The FDIC counters that the court did not abuse its discretion in admitting evidence and testimony relating to certain records of the bank. We agree with the FDIC.

The following additional facts are necessary to our resolution of this claim. The contested evidence involved certain reductions in the defendants' loan balance. The defendants claimed at trial that payments had been made on the loan, resulting in the reduction in the balance. The FDIC countered that the reductions in the loan balance did not reflect payments, but were actually internal "write-downs," a practice used by the bank when the mortgage balance was not equal to the value of the mortgaged property.

The defendants filed a motion in limine dated April 27, 1999, arguing that certain documents that they received from the FDIC on April 15, 1999, regarding the loan balance should not be admitted into evidence. The defendants claimed that the trial was scheduled for April 27, 1999, and that disclosure of the documents at this late date amounted to "trial by ambush." During oral argument on the motion, counsel for the defendants argued that counsel for the FDIC had been in possession of the documents for almost one year and had not turned them over to him.

Counsel for the FDIC responded that the defendants had suffered no prejudice because the documents in question, certain debit and credit tickets, were backup documentation to five bank documents that had been supplied to the defendants prior to the May, 1998 trial date.¹¹ Counsel for the FDIC further stated that the individual who prepared the documents was present at trial and that counsel for the defendants would have a full opportunity for cross-examination.¹² The court inquired of counsel for the defendants whether a continuance would be helpful to examine the documents, and counsel responded that it would not.¹³ The court denied the motion in limine and allowed the introduction...