Saunders v. KDFBS, LLC

• Decision Date: 18 May 2020
• Docket Number: SC 20182
• Court: Connecticut Supreme Court
• Parties: Roger SAUNDERS, Trustee v. KDFBS, LLC, et al.

335 Conn. 586

239 A.3d 1162

Roger SAUNDERS, Trustee

v.KDFBS, LLC, et al.

SC 20182

Supreme Court of Connecticut.

Argued October 24, 2019

Officially released May 18, 2020^*

Alexander Copp, with whom were Neil R. Marcus, Danbury, and, on the brief, Barbara M. Schellenberg, Orange, for the appellants (defendant Karen Davis et al.).

Jessica M. Signor, Stamford, with whom were Michael J. Jones, Greenwich, and John J. Ribas, for the appellee (plaintiff).

Robinson, C. J., and Palmer, McDonald, D'Auria, Mullins, Kahn and Ecker, Js.

McDONALD, J.

The issue in this foreclosure action is whether a determination of the priority of mortgages can be challenged in an appeal from the judgment of foreclosure by sale, before the foreclosure sale has taken place, when the priority of the foreclosing plaintiff's mortgage is in dispute. The trial court rendered judgment in favor of the plaintiff, Roger Saunders, Trustee of Roger Saunders Money Purchase Plan, on his two count complaint seeking a judgment of foreclosure on certain real property and a declaratory judgment that his mortgage had priority over a purported mortgage on the property held by the defendants Karen Davis and Daniel Davis. The Appellate Court summarily dismissed the Davis defendants' appeal challenging the priority of the plaintiff's mortgage over their mortgage for want of a final judgment. We distinguish the present case from one in which there is a dispute among junior encumbrancers and reverse the Appellate Court's order summarily dismissing the appeal.

The following undisputed facts were found by the trial court or are otherwise reflected in the record. In March, 2008, the defendant KDFBS, LLC, purchased the subject property, a condominium in Ridgefield, by way of a deed that was recorded under its name in April, 2008. KDFBS is managed by its sole member, the defendant Brian Scanlon.¹

In June, 2008, KDFBS executed a mortgage deed on the property in favor of the Davis defendants in the principal amount of $565,000. Although the signature line and the acknowledgement clause of the deed reflected that Scanlon was executing the deed in his capacity as a member of KDFBS, his designation as a member was erroneously omitted in the grantor clause at the top of the mortgage deed. The Ridgefield town clerk's office indexed the deed under Scanlon's personal name as the grantor.

In October, 2009, KDFBS executed a second mortgage deed on the Ridgefield property in favor of the plaintiff as security for a joint loan in the amount of $110,000 to KDFBS and to Scanlon individually. Scanlon told the plaintiff that he would have a first mortgage on the property. To ensure his security for the loan, the plaintiff had a title search conducted. That search revealed no mortgages of record in KDFBS' chain of title. The plaintiff's mortgage deed was duly recorded in October, 2009.

In December, 2009, the Ridgefield town clerk's office changed the official index for the Davis mortgage after an unidentified person brought the indexing error to the town clerk's attention. A correction report was issued, and the Davis mortgage was changed from the grantor index for Scanlon to the index for KDFBS.²

KDFBS and Scanlon subsequently defaulted on their obligation to the plaintiff, which gave rise to the present action. In the first count of the complaint, the plaintiff sought foreclosure of his mortgage. In addition to asserting allegations regarding the default, this count alleged that there were encumbrances on the subject property that were subsequent and subordinate to the plaintiff's mortgage, among which was the purported Davis mortgage, which was recorded in 2008. In the second count, the plaintiff sought a declaratory judgment that the 2008 Davis mortgage was subordinate to the plaintiff's 2009 mortgage because the plaintiff had no notice of it due to it having been indexed under Scanlon's name.³

The Davis defendants filed an answer denying the allegation in each count that their mortgage was subordinate to the plaintiff's mortgage. They also asserted a special defense that KDFBS, acting through its duly authorized member, Scanlon, had mortgaged the subject property to them and that this mortgage was prior in right and title to the plaintiff's mortgage.

KDFBS was defaulted for failure to appear and Scanlon was defaulted for failure to plead. The plaintiff then filed a motion for a judgment of foreclosure by sale. The motion was supported by an affidavit of debt totaling $176,467.50, an affidavit of attorney's fees in the amount of $18,345, and an appraisal assessing the property's fair market value at $310,000.

Following a contested trial between the plaintiff and the Davis defendants, the court rendered judgment in favor of the plaintiff on both counts and ordered a foreclosure by sale.

Prior to the sale date set by the court, the Davis defendants appealed from the judgment. The plaintiff moved to dismiss the appeal, contending that the Appellate Court lacked subject matter jurisdiction because its case law established that priority of mortgages cannot be challenged until after the foreclosure sale has taken place. See, e.g., Moran v. Morneau , 129 Conn. App. 349, 357, 19 A.3d 268 (2011). The Appellate Court thereafter issued an order summarily dismissing the appeal for lack of a final judgment. The Davis defendants' certified appeal to this court followed.

The certified question is framed as whether the Appellate Court properly dismissed the appeal "for lack of a final judgment in accordance with State v. Curcio , 191 Conn. 27, 31, 463 A.2d 566 (1983)." Saunders v. KDFBS, LLC , 330 Conn. 915, 193 A.3d 559 (2018). Curcio sets forth two circumstances in which an interlocutory ruling is deemed to have the attributes of a final judgment so as to permit an immediate appeal.⁴ See State v. Curcio , supra, at 31, 463 A.2d 566. The Davis defendants contend that Curcio is inapplicable to the present case, however, because they are, in fact, appealing from a final judgment. Alternatively, the Davis defendants rely on the fact that a declaratory judgment is designated by statute to "have the force of a final judgment." General Statutes § 52-29 (a).

The plaintiff makes two arguments premised on the fact that the trial court has not yet approved a sale of the property or rendered the supplemental judgment that determines the priority of encumbrancers in distributing proceeds from the sale. First, he contends that these facts demonstrate that the underlying decision was an interlocutory order that was not appealable under either circumstance set forth in Curcio . Second, he contends that Appellate Court precedent demonstrates that the appeal is not ripe before these acts occur. We agree with the Davis defendants' principal argument and, therefore, do not separately consider the effect of the judgment rendered on the declaratory judgment count.

"It is axiomatic that, except insofar as the constitution bestows upon [an appellate court] jurisdiction to hear certain cases; see Fonfara v. Reapportionment Commission , 222 Conn. 166, 610 A.2d 153 (1992) ; the subject matter jurisdiction of the Appellate Court and of [the Supreme Court] is governed by statute. Grieco v. Zoning Commission , 226 Conn. 230, 231, 627 A.2d 432 (1993). It is equally axiomatic that, except insofar as the legislature has specifically provided for an interlocutory appeal or other form of interlocutory appellate review; see, e.g., General Statutes § 52-278l (prejudgment remedies); General Statutes § 54-63g (petition for review of bail); General Statutes § 51-164x (court closure orders); State v. Ayala , 222 Conn. 331, 340, 610 A.2d 1162 (1992) ; appellate jurisdiction is limited to final judgments of the trial court." (Internal quotation marks omitted.) Conetta v. Stamford , 246 Conn. 281, 289–90, 715 A.2d 756 (1998).

Both parties cite as controlling authority a line of Appellate Court cases holding that, in a foreclosure by sale, "there are typically three appealable determinations: the judgment ordering a foreclosure by sale, the approval of the sale by the court and the supplemental judgment [in which the proceeds from the sale are distributed]."⁵

Moran v. Morneau , supra, 129 Conn. App. at 355, 19 A.3d 268 ; see also Glenfed Mortgage Corp. v. Crowley , 61 Conn. App. 84, 88–89, 763 A.2d 19 (2000) (citing cases). The first determination is deemed final if the trial court has determined the method of foreclosure and the amount of the debt. Moran v. Morneau , supra, at 356, 19 A.3d 268 ; Danzig v. PDPA, Inc. , 125 Conn. App. 254, 261, 11 A.3d 153 (2010), cert. denied, 300 Conn. 920, 14 A.3d 1005, cert. denied sub nom. Dadi v. Danzig , 564 U.S. 1044, 131 S. Ct. 3077, 180 L. Ed. 2d 899 (2011) ; see, e.g., Benvenuto v. Mahajan , 245 Conn. 495, 501, 715 A.2d 743 (1998) (judgment of strict foreclosure was appealable even though recoverability or amount of attorney's fees for litigation remains to be determined); Willow Funding Co., L.P. v. Grencom Associates , 63 Conn. App. 832, 836–38, 779 A.2d 174 (2001) (judgment of foreclosure by sale is final judgment even if trial court has not set sale date).

Although not cited as supporting authority in these Appellate Court cases, their conclusion that a judgment of foreclosure by sale is a final judgment is in accord with the rule set forth in Practice Book § 61-2. That rule recognizes that "[w]hen judgment has been rendered on an entire complaint ... such judgment shall constitute a final judgment." Practice Book § 61-2. When this rule applies, there is no need to turn to the alternative, as set forth in Curcio , for establishing the finality of the judgment, even though some aspects of the case remain interlocutory. See Speckner v. Riebold , 86 N.M. 275, 277, 523 P.2d 10 (1974) (citing New York and New Mexico case law for proposition that judgment of foreclosure is "final in part and interlocutory in part" (internal quotation marks omitted)); see also Willow Funding Co., L.P. v. Grencom...