Society for Sav. v. Stramaglia

• Decision Date: 23 March 1993
• Docket Number: No. 14393,14393
• Citation: 621 A.2d 1317,225 Conn. 105
• Court: Connecticut Supreme Court
• Parties: SOCIETY FOR SAVINGS v. Carmine S. STRAMAGLIA et al.

Page 1317

621 A.2d 1317

225 Conn. 105

SOCIETY FOR SAVINGS v. Carmine S. STRAMAGLIA et al.

No. 14393.

Supreme Court of Connecticut.

Argued Feb. 8, 1992.

Decided March 23, 1993.

Robert L. Fisher, Jr., for appellant (named defendant).

Thomas Ackerson, pro se, with whom, on the brief, was Stephanie M. Weaver, for appellee (defendant Thomas Ackerson).

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

PETERS, Chief Justice.

The issue in this appeal is whether, in the circumstances of this case, the Appellate Court correctly concluded that the trial court had not abused its discretion by refusing to open a judgment of strict foreclosure despite the negotiation of a settlement agreement between the foreclosing creditor and the debtors. The plaintiff, Society for Savings, brought an action to foreclose a mortgage on real estate owned jointly by the defendants Carmine S. Stramaglia and Patricia R. Stramaglia. The trial court, Pickett, J., rendered a judgment of strict foreclosure. After various sets of law days had been established, superseded and then set again by the trial court, Moraghan, J., the trial court, Dranginis, J., denied the motion of the defendant Carmine S. Stramaglia to open the judgment because of objections raised by the defendant Thomas Ackerson, a creditor with a judgment lien against Carmine S. Stramaglia's one-half interest in the property. Carmine S. Stramaglia appealed to the Appellate Court, which affirmed the judgment of the trial court. Society for Savings v. Stramaglia, 25 Conn.App. 688, 596 A.2d 20 (1991). We granted his petition for certification to appeal and now reverse. ¹

The facts are undisputed. On November 14, 1980, the Stramaglias signed a promissory note evidencing their indebtedness to the plaintiff in the amount of $68,700. The note was secured by a properly recorded mortgage on certain real estate in Torrington. As a result of defaults on the mortgage note, the plaintiff commenced foreclosure proceedings against the Stramaglias on November 21, 1988.

In its foreclosure complaint, the plaintiff gave proper notice to Ackerson, who, on September 1, 1987, had recorded on the Torrington land records a judgment lien arising out of a default judgment against Carmine S. Stramaglia that Ackerson had obtained in New York in 1983. ² Ackerson's judgment lien, which attached to Carmine S. Stramaglia's undivided one-half interest in the property, is junior to the plaintiff's lien. In 1987, one year prior to the plaintiff's foreclosure action, Ackerson had initiated, but had not pursued, his own foreclosure proceedings against Carmine S. Stramaglia's interest in the property. See Ackerson v. Stramaglia, 225 Conn. 102, 621 A.2d 1315 (1993).

On March 20, 1989, the trial court, Pickett, J., granted the plaintiff's motion for a judgment of strict foreclosure after the Stramaglias, appearing pro se, had been defaulted for failure to plead. The court fixed the debt at $67,506.55 and set law days commencing April 17, 1989.

On April 15, 1989, two days before the first of the law days, the Stramaglias filed a chapter thirteen petition in bankruptcy in New Jersey, resulting in the automatic stay of the foreclosure proceedings. See 11 U.S.C. § 362(a). At the instance of the plaintiff, the bankruptcy court, on September 14, 1989, vacated the stay of the foreclosure proceedings involved in this case. Once the stay had been lifted, the plaintiff renewed its motion for a judgment of foreclosure, and, on October 16, 1989, the trial court, Moraghan, J., rendered a judgment of strict foreclosure that found that the Stramaglias owed an amended debt in the amount of $74,258.21 and set new law days to begin on November 7, 1989.

On November 3, 1989, Carmine S. Stramaglia, now represented by counsel, moved to open the judgment of strict foreclosure. At the trial court hearing on the motion, Carmine S. Stramaglia represented to the court that the plaintiff joined in his motion, that the plaintiff had agreed to reinstate the mortgage upon receiving certain payments that were in hand and that the plaintiff was therefore prepared to withdraw the action once the judgment had been opened. Without challenging the accuracy of this representation, Ackerson objected to the motion to open. He argued that Carmine S. Stramaglia had engaged in improper delaying tactics that had impaired Ackerson's ability to liquidate his lien interest in the Torrington property.

The trial court, Dranginis, J., denied the motion to open as well as a subsequent motion to reargue. Acceding to the objections raised by Ackerson, the court stated that "[Carmine S. Stramaglia] has already created great delay by not securing counsel until the eleventh hour and has engaged in an effort to delay this action by proceeding in Bankruptcy Court just prior to the April law days. Such dilatory tactics will not be rewarded by the court."

A divided Appellate Court held that the trial court had reasonably exercised its discretion to deny the motion to open the judgment of foreclosure in light of the substantial delays engendered by Carmine S. Stramaglia. Society for Savings v. Stramaglia upra, 25 Conn.App. at 691, 596 A.2d 20. Judge Cretella, in his dissent, concluded that the equitable considerations that govern foreclosure actions made it inappropriate, in the circumstances of this case, for the trial court to give greater weight to the interests of a junior judicial lien holder such as Ackerson than to the interests of the Stramaglias in a successful workout of their mortgage debt with the foreclosing mortgagee. Id. at 692-93, 596 A.2d 20.

Appellate review of a trial court's denial of a motion to open a foreclosure judgment under General Statutes § 49-15 ³ is governed by two principles. Because the statute vests discretion in the trial court to grant or to deny a motion to open such a judgment, the action of the trial court will not be disturbed on appeal unless it clearly appears that the trial court has abused its discretion. Melillo v. Spiro, 187 Conn. 333, 334, 445 A.2d 921 (1982); Hartford Federal Savings & Loan Assn. v. Stage Harbor Corporation, 181 Conn. 141, 143, 434 A.2d 341 (1980); Sebastiano v. Corde, 171 Conn. 324, 325-26, 370 A.2d 946 (1976); Freccia v. Martin, 163 Conn. 160, 165, 302 A.2d 280 (1972); Stocking v. Ives, 156 Conn. 70, 72, 238 A.2d 421 (1968). Because foreclosure proceedings are equitable and § 49-15 is remedial in nature, the trial court's refusal to modify a judgment of foreclosure must, however, be consistent with the authority conferred upon that court "to modify the terms of the judgment in order to achieve an outcome fairer to the parties than provided by the original judgment in light of conditions as they appear when the motion to open is decided.... [E]ither a forfeiture or a windfall should be avoided if possible." Farmers & Mechanics Savings Bank v. Sullivan, 216 Conn. 341, 352-54, 579 A.2d 1054 (1990); see Kilduff v. Adams, Inc., 219 Conn. 314, 321, 593 A.2d 478 (1991) (the purpose of a § 49-15 motion is to afford an opportunity to renegotiate with creditors with the view to reinstating a mortgage after default); cf. Fidelity Trust Co. v. Irick, 206 Conn. 484, 488-91, 538 A.2d 1027 (1988) (abuse of discretion to order strict foreclosure rather than foreclosure by sale). Balancing these two principles in the circumstances of this case, we conclude that the trial court abused its discretion.

In the cases in which we have affirmed the denial of a motion to open a foreclosure pursuant to § 49-15 as an appropriate exercise of the trial court's discretion, the reasons advanced in support of the motion differed significantly from the arguments advanced by Carmine S. Stramaglia in this case. We have found no abuse of discretion when the defendant sought to extend the time period for redemption but did not appear in court, or present evidence, in support of his motion. Maresca v. Allen, 181 Conn. 521, 523, 436 A.2d 14 (1980); Sebastiano v. Corde, supra, 171 Conn. at 325, 370 A.2d 946; see Centerbank v. Connell, 29 Conn.App. 508, 511, 616 A.2d 282 (1992); Pacific Mutual Life Ins. Co. v. Broad Associates Limited Partnership, 24 Conn.App. 42, 44, 585 A.2d 115 (1991) (no abuse of discretion in denying an extension when the defendant no longer had any equity in the property). We have similarly found no abuse of discretion when the defendant sought to raise a defense that, but for his own negligence, he could have discovered and presented at the time of the rendition of the foreclosure judgment. Hartford Federal Savings & Loan Assn. v. Stage Harbor Corporation, supra, 181 Conn. at 144, 434 A.2d 341; see Manchester State Bank v. Reale, 172 Conn. 520, 524, 375 A.2d 1009 (1977); Jaquith v. Revson, 159 Conn. 427, 431-32, 270 A.2d 559 (1970). In none of these cases did the defendant ask that the judgment be opened in order to permit the plaintiff to withdraw the foreclosure action and to reinstate the mortgage.

The trial court's denial of Carmine S. Stramaglia's motion did not question the plaintiff's acquiescence in the motion or the fact of the settlement between the plaintiff and the Stramaglias. The court focused, instead, on the injury allegedly caused to Ackerson as a judgment lien creditor by the failure to consummate the...