Webster Bank v. Zak

• Decision Date: 26 March 2002
• Docket Number: (SC 16489)
• Citation: 792 A.2d 66,259 Conn. 766
• Court: Connecticut Supreme Court
• Parties: WEBSTER BANK v. JOANNA V. ZAK ET AL.

259 Conn. 766

792 A.2d 66

WEBSTER BANK v. JOANNA V. ZAK ET AL.

(SC 16489)

Supreme Court of Connecticut.

Argued January 15, 2002.

Officially released March 26, 2002.

Borden, Norcott, Katz, Vertefeuille and West, JS. Kerry M. Wisser, with whom was Nathan A. Schatz, for the appellant (defendant MFR of East Hampton, LLC).

Jeffrey T. Beatty, with whom, on the brief, was Richard J. Beatty, for the appellee (substitute plaintiff EMC Mortgage Corporation).

Opinion

KATZ, J.

The sole issue in this certified appeal is whether the Appellate Court properly reversed the judgment of the trial court and remanded the case to that court for factual findings regarding the standing of the defendant MFR of East Hampton, LLC (MFR), as the successor in interest to certain real property that was the subject of a foreclosure action. We reverse the judgment of the Appellate Court.

The record reveals the following undisputed facts and procedural history. On July 16, 1997, the plaintiff, Webster Bank (bank), brought an action seeking to foreclose a mortgage on three parcels of land in Clinton, of which the named defendant, Joanna V. Zak (Zak), was the titleholder of record.¹ On November 24, 1997, the trial court, Arena, J., rendered a judgment of foreclosure by sale. After determining the amount of the debt due on the note and the costs associated with the foreclosure action, the court scheduled the sale date for July 18, 1998.

The bank subsequently assigned its interest in the note and mortgage to EMC Mortgage Corporation (EMC). Thereafter, EMC moved to substitute itself as the plaintiff in the foreclosure action and Zak moved to extend the foreclosure sale date. On July 13, 1998, the trial court granted both motions.² The court also opened the November 24, 1997 judgment and rendered a new judgment of foreclosure by sale with a sale date of September 19, 1998.

On September 17, 1998, Zak filed in the United States Bankruptcy Court for the District of Connecticut for protection under chapter 13 of the United States Bankruptcy Code, which was later converted to a chapter 7 bankruptcy. See 11 U.S.C. § 101 et seq. The filing of the bankruptcy petition stayed the trial court proceedings, and the foreclosure sale did not occur as scheduled.³ Thereafter, EMC filed in the Bankruptcy Court a motion for relief from the bankruptcy stay. On January 5, 1999, the Bankruptcy Court granted EMC's motion for relief from the stay on the condition that Tracy M. Saxe, the trustee of Zak's bankruptcy estate, be cited in as a party defendant in the foreclosure action. EMC subsequently moved in the trial court to open the judgment of foreclosure and to amend the complaint to cite in Saxe as a party defendant. On February 8, 1999, the trial court opened the judgment and granted EMC's motion to file an amended complaint. EMC subsequently filed an amended complaint naming Saxe as a party defendant.

On March 31, 1999, Zak conveyed all of her right, title and interest, including her equity of redemption, in the foreclosed property to MFR by quitclaim deed. Saxe was not a signatory to the deed. Thereafter, MFR moved to be cited in as a party defendant, pursuant to General Statutes § 52-107 and Practice Book § 9-6, claiming that it was "the record titleholder of the property that is the subject of the foreclosure, and any judgment of foreclosure will necessarily affect it by foreclosing out its interest as the titleholder...."⁴ MFR furnished a copy of the quitclaim deed in support of its motion. On May 4, 1999, without objection from EMC or Saxe, the trial court granted MFR's motion. EMC subsequently filed a second amended complaint in which it named MFR as a party defendant, stating: "By her Quitclaim Deed dated March 31, 1999, and recorded April 1, 1999 ... on the Clinton Land Records, [Zak] conveyed her interest in the mortgaged premises to [MFR]." MFR is the only defendant involved in this certified appeal.

MFR filed an answer and special defense to EMC's second amended complaint. In its special defense, MFR claimed that EMC's failure to provide the appropriate notice of default pursuant to the requirements of the mortgage agreement barred it from instituting foreclosure proceedings. No other party filed a pleading in response to EMC's second amended complaint. On October 8, 1999, EMC filed a motion for summary judgment. EMC claimed that MFR was bound by the trial court's November 24, 1997 judgment as Zak's successor in interest, and was precluded, therefore, from asserting new defenses to liability that Zak had not asserted prior to that judgment. Similarly, EMC contended that MFR was bound by the amount of the mortgage debt as determined by the trial court in connection with that judgment. MFR opposed the motion for summary judgment as to both the issue of liability and the amount of the debt. On February 8, 2000, the trial court granted summary judgment on the issue of liability, and scheduled a hearing on the amount of the debt for May 31, 2000.

At that hearing, EMC claimed that the trial court should calculate the amount by adding to the debt established at the November 24, 1997 judgment the per diem interest that had accrued on that debt since that date. MFR contended, in response, that EMC's second amended complaint citing in MFR opened the pleadings and, thereby allowed MFR to assert new defenses to liability, as well as to contest the amount of the debt established by the trial court's November 24, 1997 judgment. Therefore, MFR claimed, the court should hear evidence regarding the amount of the debt.

In its memorandum of decision, dated June 5, 2000, the trial court determined that "each opening of the original judgment of foreclosure, dated November [24], 1997, was for a limited purpose: on July 13, 1998, to substitute EMC as successor plaintiff to [the bank]; on July [13], 1998, to set a new sale date of September 19, 1998; on February 8, 199[9], to cite in [Saxe] as trustee of the bankruptcy estate of [Zak]." It further determined that "[n]othing in the record indicates that the judgment of foreclosure by sale was ever vacated." The court concluded "that the debt established by the judgment of November [24], 1997, is [therefore] the controlling debt in this [foreclosure] action."

Following its discussion of the merits, the trial court questioned MFR's standing in the action as the successor to Zak's interest. In particular, the court questioned whether Zak had the authority to convey any interest in the property to MFR by quitclaim deed in March, 1999, when the property had become part of Zak's bankruptcy estate following her petition for bankruptcy in September, 1998.⁵ Additionally, the court noted that, although Saxe, as the trustee of Zak's bankruptcy estate, had authority to convey the property to MFR, there was no evidence presented, nor any indication in the record, that Saxe had, in fact, done so. Despite its apparent concern regarding the legitimacy of MFR's title, the trial court rendered a judgment of foreclosure by sale, and calculated the amount of the debt using the amount of the debt established at the November 24, 1997 judgment and adding the per diem interest that had accrued since that date.

MFR appealed from the trial court's judgment of foreclosure to the Appellate Court, claiming that the trial court had improperly concluded that the amount of debt established in the November 24, 1997 judgment was the controlling debt in the foreclosure action. No party contested MFR's standing to appeal. On January 16, 2001, without reaching the merits of MFR's appeal, the Appellate Court, sua sponte, reversed and remanded the case to the trial court "for the purpose of making factual findings to determine whether the defendant [MFR] has standing to assert its claim to an interest in the property under foreclosure and to otherwise participate in the proceedings." Webster Bank v. Zak, 61 Conn. App. 402, 403, 763 A.2d 1090 (2001).

MFR subsequently filed a petition for certification to appeal to this court, which we granted, limited to the following issue: "Did the Appellate Court properly reverse the judgment of the trial court and remand the case for factual findings regarding the standing of the defendant MFR of East Hampton, LLC?" Webster Bank v. Zak, 255 Conn. 946, 769 A.2d 61 (2001). This appeal followed. We conclude that, although the Appellate Court was required to address any questions regarding the standing of the parties before it, its decision to reverse the judgment of the trial court and to remand the case to that court for further findings regarding MFR's standing was improper.

Before addressing the substantive issue in this appeal, we address briefly the scope of our review. The facts underlying MFR's appeal from the judgment of the trial court are undisputed. Therefore, the implicit conclusion of the Appellate Court that the record was insufficient for a determination that MFR had standing to participate in the foreclosure action involves a question of law, subject to plenary review. See AvalonBay Communities, Inc. v. Orange, 256 Conn. 557, 565, 775 A.2d 284 (2001) (conclusions based on undisputed facts are conclusions of law, over which our review is plenary); Olson v. Accessory Controls & Equipment Corp., 254 Conn. 145, 156, 757 A.2d 14 (2000) (recognizing that plenary review applies to questions of law). Thus, "[w]here the legal conclusions of the court are challenged, we must determine whether they are legally and logically correct"; (internal quotation marks omitted) In re David W., 254 Conn. 676, 686, 759 A.2d 89 (2000); and whether they "find support in the facts that appear in the record." (Internal quotation marks omitted.) Powers v. Olson, 252 Conn. 98, 105, 742 A.2d 799 (2000).

We begin our analysis by underscoring that a party must have standing to assert a claim in order for the court to have subject matter jurisdiction over the claim. Ramos v. Vernon, 254 Conn. 799, 808, 761 A.2d 705 (2000)....