National Loan Investors Ltd. Partnership v. Heritage Square Associates, (AC 18074)

• Decision Date: 29 June 1999
• Docket Number: (AC 18074)
• Citation: 54 Conn. App. 67,733 A.2d 876
• Court: Connecticut Court of Appeals
• Parties: NATIONAL LOAN INVESTORS LIMITED PARTNERSHIP v. HERITAGE SQUARE ASSOCIATES ET AL.

54 Conn. App. 67

733 A.2d 876

NATIONAL LOAN INVESTORS LIMITED PARTNERSHIP v. HERITAGE SQUARE ASSOCIATES ET AL.

(AC 18074)

Appellate Court of Connecticut.

Argued February 23, 1999.

Officially Released June 29, 1999.

Landau, Schaller and Daly, JS.

Mark T. Kelly, for the appellant (defendant Anne M. Fox). Frederic S. Ury, with whom, on the brief, were Neal L. Moskow and Deborah M. Garskof, for the appellee (plaintiff).

SCHALLER, J.

The defendant Anne M. Fox, a former partner of the defendant Heritage Square Associates (Heritage), appeals from the judgment of the trial court in favor of the plaintiff, National Loan Investors Limited Partnership.¹ On appeal, Fox claims that the trial court improperly applied the federal statute of limitations provided in the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. § 1821 (d) (14) (FIRREA),² to conclude that the plaintiffs action was timely filed.³ We affirm the judgment of the trial court.

The following facts and procedural history are relevant to this appeal. On October 28, 1987, Heritage, acting by its three partners, Joseph P. Wagenseller, Virginia F. Wagenseller and Fox, executed and delivered a promissory note in favor of Mechanics & Farmers Savings Bank (Mechanics & Farmers) in the principal amount of $500,000. The note was secured by a second mortgage on real property located in Fairfield that was to be subdivided into a number of condominium units and sold separately. The partners individually guaranteed payment on the note, together with reasonable attorney's fees, through a separate written agreement. The note, which was payable on or before November 1, 1988, was not paid when due. Thereafter, Heritage made four partial payments after the due date of the note, the last being made on September 4, 1990.⁴ On June, 15 1990, Heritage executed a document, which by its terms discharged and released Fox from any and all liabilities incurred by Heritage, including the note, and indemnified her from any claims or debts against Heritage.

On August 9, 1991, Mechanics & Farmers was declared insolvent and taken over by the Federal Deposit Insurance Corporation (FDIC) as its receiver. On October 29, 1993, the plaintiff purchased the note from the FDIC's servicing agent, the Consolidated Asset Recovery Corporation (Consolidated). Thereafter, the first mortgagee foreclosed its mortgage, and Mechanics & Farmers, the FDIC and Consolidated were not able to recover any funds.

On August 10, 1995, the plaintiff began this action to recover the amount owed under the terms of the note. In count one of the complaint, the plaintiff sought recovery against Heritage for breach of contract. In count two, it sought recovery against the defendants Joseph Wagenseller, Virginia Wagenseller and Fox in their capacities as individual guarantors of the note. Among other defenses,⁵ the defendants claimed that the plaintiffs cause of action was barred by the six year statute of limitations provided for in General Statutes § 42a-3-118.—⁶ Fox also filed a cross complaint against Heritage and Joseph Wagenseller alleging that she withdrew from the partnership in June, 1990, at which time Heritage and Joseph Wagenseller, jointly and severally, agreed in writing to indemnify and to hold her harmless from any claims or debts that Heritage had previously incurred or might incur in the future.

In its memorandum of decision, the trial court adopted the attorney trial referee's recommendation and rendered judgment in favor of the plaintiff against Heritage and against the Wagensellers and Fox as guarantors of the note, jointly and severally, in the amount of $140,218.71.⁷ On the first count of the complaint, the trial court determined that Heritage was liable to the plaintiff for breach of contract. On the second count, the trial court determined that the individual defendants were liable to the plaintiff as guarantors of the note.

With regard to the defendants' statute of limitations special defense, the trial court concluded that the action was not barred by either the state or federal statutes of limitation. The trial court determined that the state statute of limitations was tolled by partial payments made after the due date on the note. Because the last payment was made on September 4, 1990, the plaintiffs claim, dated August 10, 1995, was timely filed within the state six year limitations period. The trial court also determined that even if the state statute of limitations had expired, the plaintiff was afforded a new six year period in which to bring a claim that commenced with the FDIC's appointment as receiver on August 9, 1991, pursuant to 12 U.S.C. § 1821 (d) (14). As an assignee of the FDIC, the plaintiff was afforded the benefit of the extended six year limitations period, which would allow the proper filing of a claim through August 9, 1998. The trial court therefore accepted the attorney trial referee's conclusion that the present action was not barred by the statutes of limitation found in either § 42a-3-118 or 12 U.S.C. § 1821 (d) (14) and rendered judgment in favor of the plaintiff. The trial court also rendered judgment in favor of Fox against Heritage and Joseph P. Wagenseller on her cross complaint seeking indemnification for any judgment against her. This appeal followed.

On appeal, Fox argues that the statute of limitations provided in 12 U.S.C. § 1821 (d) (14) does not apply to the plaintiff because it is "personal" to the FDIC by virtue of its status as receiver and, therefore, it is not capable of assignment to the plaintiff. The plaintiff argues conversely that by virtue of the assignment, it steps into the shoes of the assignor and, therefore, derives all the rights, remedies and benefits that are incidental to the note, including the extended limitations period provided in 12 U.S.C. § 1821 (d) (14). The dispositive issue for us, therefore, is whether the plaintiff, as an assignee of the FDIC, receives the benefit of the extended six year limitations period provided in 12 U.S.C. § 1821 (d) (14).

Statutory interpretation is a question of law, and, therefore, our review is plenary. North Haven v. Planning & Zoning Commission, 220 Conn. 556, 561, 600 A.2d 1004 (1991). When interpreting statutes, we rely on well established principles of statutory construction. "[O]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature.... In seeking to discern that intent, we look to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter." (Internal quotation marks omitted.) Castagno v. Wholean, 239 Conn. 336, 339, 684 A.2d 1181 (1996). It is axiomatic, however, that when the statutory language is clear and unambiguous, construction of the statute by reference to its history and purpose is unnecessary. See Winslow v. Lewis-Shepard, Inc., 216 Conn. 533, 538, 582 A.2d 1174 (1990).

Because the federal statute is silent as to whether the extended limitations period applies to assignees who purchase defaulted assets from the FDIC, a number of courts have turned to state law and common-law principles governing assignments to resolve the issue. See Federal Financial Co. v. Hall, 108 F.3d 46, 48 (4th Cir.), cert. denied, 522 U.S. 858, 118 S. Ct. 157, 139 L. Ed.2d 102 (1997); Remington Investments, Inc. v. Kadenacy, 930 F. Sup. 446, 449 (C.D. Cal. 1996); Federal Financial Co. v. Levine, 248 App. Div.2d 25, 28, 679 N.Y.S.2d 679, 681 (1998); Federal Financial Co. v. Gerard, 90 Wash. App. 169, 949 P.2d 412 (1998). Of those courts considering this issue, nearly all have extended the federal limitations period to assignees. See, e.g., United States v. Thornburg, 82 F.3d 886 (9th Cir. 1996); Federal Deposit Ins. Corp. v. Bledsoe, 989 F.2d 805 (5th Cir. 1993); Bruin Holdings v. Moderski, 960 F. Sup. 62 (M.D. Pa. 1996); Federal Financial Co. v. Levine, supra, 679 N.Y.S.2d 682. In Bledsoe, the United States Court of Appeals for the Fifth Circuit noted that "[i]t is an axiomatic principle of statutory construction that in effectuating Congress' intent courts are to fill the inevitable statutory gaps by reference to the principles of the common law." Federal Deposit Ins. Corp. v. Bledsoe, supra, 810. The Bledsoe court found support for the proposition of filling gaps within the federal statutes with state common-law principles in Justice Jackson's concurring opinion in D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S. Ct. 676, 86 L. Ed. 956 (1942) (Jackson, J., concurring), where he stated that "`[t]he Federal courts have no general common law ... [b]ut that is not to say that wherever we have occasion to decide a Federal question which cannot be answered from Federal statutes alone we may not resort to all of the source material of the common law....'"Federal Deposit Ins. Corp. v. Bledsoe, supra, 810, quoting D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., supra, 469-72.

In Connecticut, it is well established in the common law that an assignee stands in the shoes of the assignor. See Leonard v. Bailwitz, 148 Conn. 8, 13, 166 A.2d 451 (1960); Mall v. LaBow, 33 Conn. App. 359, 363, 635 A.2d 871 (1993), cert. denied, 229 Conn. 912, 642 A.2d 1208 (1994); Second Exeter Corp. v. Epstein, 5 Conn. App 427, 430, 499 A.2d 429 (1985). Because the note in the present case is a negotiable instrument; see General Statutes § 42a-3-104; we look to Connecticut's Uniform Commercial Code to determine the rights of an assignee of a note. The above common-law principle is codified by General Statutes § 42a-3-203 (b), which provides that the "[t]ransfer of an instrument ... vests in the transferee any right of the transferor to enforce the instrument...." Because the plaintiff stands in the shoes of the FDIC by...