OCI Mortg. Corp. v. Marchese

• Decision Date: 01 April 1998
• Docket Number: No. 18111,18111
• Citation: 712 A.2d 449,48 Conn.App. 750
• Parties: OCI MORTGAGE CORPORATION v. Carole N. MARCHESE et al. . Considered
• Court: Connecticut Court of Appeals

Page 449

712 A.2d 449

48 Conn.App. 750

OCI MORTGAGE CORPORATION v. Carole N. MARCHESE et al.

No. 18111.

Appellate Court of Connecticut.

Considered April 1, 1998.

Decided May 26, 1998.

Matthew B. Woods, Norwalk, in support of the motion.

Before FOTI, SPEAR and FRANCIS X. HENNESSY, JJ.

SPEAR, Judge.

The defendant property owners in this foreclosure action appeal from the trial court's order sustaining the plaintiff's objection to the acceptance of the attorney trial referee's report. The plaintiff has moved to dismiss the appeal on the ground that the trial court's order is not a final judgment. We agree and grant the motion.

The defendants Carole N. Marchese and Anthony Marchese (defendants) executed a promissory note in the amount of $220,000, payable to Community Federal Savings and Loan Association (CFSLA), and secured by a mortgage on property that the defendants owned in Southport. While the note was still outstanding, the defendant Carole N. Marchese lent CFSLA $900,000 pursuant to a subordinated debenture agreement. Thereafter, Carole N. Marchese and CFSLA agreed that the defendants' mortgage note would be paid by applying CFSLA's interest payments on the debenture to the defendants' monthly mortgage payments.

In October, 1989, CFSLA defaulted on its interest payments. Subsequently, the defendants formally demanded full payment on the debenture and informed CFSLA of their intention to exercise their right to set off the mortgage. By December, 1989, however, CFSLA was declared insolvent and the Resolution Trust Corporation (RTC) was appointed as its receiver in bankruptcy. The RTC assigned the defendants' mortgage and loan documents to Fairfield Affiliates, the original plaintiff here. Fairfield Affiliates then assigned the defendants' note and mortgage to OCI Mortgage Corporation (OCI) and OCI was substituted as the plaintiff.

The trial court referred the case to an attorney trial referee. After the trial concluded, the attorney trial referee filed her report, in which she recommended that judgment enter in favor of the defendants. Specifically, the attorney trial referee found that the RTC knew about the subsequent agreements between CFSLA and the defendants, and that "[a]ll subsequent assignees of the [defendants'] mortgage note ... including the plaintiff, OCI, accepted assignment of the note with notice of the $900,000 debt owed to the defendants, as well as the defendant's claim of set-off and payment."

The plaintiff moved to correct various portions of the attorney trial referee's report. The attorney trial referee, however, denied the majority of the plaintiff's requests. The plaintiff then filed exceptions to the attorney trial referee's report, as well as an objection to the acceptance of the report.

The trial court sustained the plaintiff's objection to the acceptance of the attorney trial referee's report. The court ruled that, pursuant to 12 U.S.C. § 1823(e), the RTC is entitled to the same protection as the Federal Deposit Insurance Corporation (FDIC). According to 12 U.S.C. § 1823(e), "[n]o agreement which tends to diminish or defeat the interest of the [FDIC] in any asset acquired by it ... as receiver of any depository institution, shall be valid against the [FDIC] unless such agreement ... is executed by the depository institution and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with acquisition of the asset by the depository institution." The court concluded that because the execution of the defendants' mortgage and the execution of the subordinated debenture agreement were not contemporaneous, the subordinated debenture agreement was not valid against the RTC, and, therefore, it was not valid against the RTC's assignees. The trial court remanded the case to the attorney trial referee, directing the referee to "proceed in a manner not inconsistent with" the trial court's memorandum of decision. This appeal followed. ¹

It is well established that consent of the parties is required to refer a case to an attorney trial referee. Seal Audio, Inc. v. Bozak, Inc., 199 Conn. 496, 515, 508 A.2d 415 (1986). Once the parties consent to the use of an attorney trial referee, however, it is implicit that the parties must then submit to the entire process set forth in Practice Book (1998 Rev.) §§ 19-1 through 19-18. A party cannot later opt out of the process should the attorney trial referee's report prove to be unfavorable. Only the trial court can abort the process by revoking the referral to the attorney trial referee. Practice Book (1998 Rev.) § 19-17(a); ² see Kolenberg v. Board of Education, 206 Conn. 113, 116, 536 A.2d 577 (1988).

Practice Book (1998 Rev.) §§ 19-12 through 19-14, however, allow a party to attack a trial referee's unfavorable report by filing (1) a motion to correct, (2) exceptions seeking corrections by the court and (3) an objection to the acceptance of a trial referee's report. The sole issue before us now is whether a trial court's order sustaining an objection to the acceptance of a trial referee's report is a final judgment from which the defendants may appeal.

In support of their claim that the rejection of an attorney trial referee's report is a final judgment, the defendants rely on In the Matter of the Application of the Oyster Ground Committee of the Town of Clinton, 52 Conn. 5 (1884). In that case, a committee was appointed to ascertain the boundaries of the natural oyster, clam and...