Fin. of Am. Reverse v. Henry

307 A.3d 300

222 Conn.App. 810

FINANCE OF AMERICA REVERSE, LLC

v.Stephanie HENRY et al.

(AC 45836)

Appellate Court of Connecticut.

Argued October 11, 2023

Officially Released December 12, 2023

John A. Sodipo, Hartford, for the appellant (named defendant).

Jeffrey M. Knickerbocker, for the appellee (substitute plaintiff).

Elgo, Prescott and Keller, Js.

PRESCOTT, J.

₈₁₂The present appeal concerns the proper application of Practice Book § 61-11 (h),¹ which limits the effect of the automatic appellate stay that arises following the denial of a motion to open a foreclosure judgment if that denial occurs fewer than twenty days before a scheduled foreclosure auction. In particular, we address the interplay between Practice Book §§ 61-11 (h) and 63-1 (c) (1),² the latter of which governs ₈₁₃when and how a new appeal period is created that, by implication, also extends any existing appellate stay of execution. See Practice Book § 61-11 (a) (automatic appellate stay of action to enforce or carry out judgment exists until time to appeal judgment expires).³

The defendant Stephanie Henry⁴ appeals, following the court’s approval of a foreclosure sale, from the denial of her motion for an order "nullifying" that sale.⁵

The defendant claims that the foreclosure sale was conducted in violation of the automatic appellate stay that arose as a result of the denial of her motion to open and extend the sale date, and that the court improperly relied on Practice Book § 61-11 (h) as a basis for refusing to set aside the sale. In response, the substitute plaintiff, Wilmington Savings Fund Society, FSB, as Trustee of Finance of America Structured Securities ₈₁₄Acquisition Trust 2019-HBl,⁶ asserts that the sale was properly conducted as ordered by the court and that the court correctly denied the defendant’s motion for order and, subsequently, approved the sale. For the reasons that follow, we agree with the defendant that the property was auctioned in violation of the automatic stay. Accordingly, we reverse the judgment of the court and remand with direction to vacate the foreclosure sale and set a new sale date.

The record reveals the following relevant facts and procedural history. The original plaintiff, Finance of America Reverse, LLC, commenced the present residential mortgage foreclosure action in April, 2017. The defendant appeared as a self-represented party and later filed an answer to the complaint. The court rendered judgment of foreclosure by sale on July 24, 2017, setting a sale date of November 4, 2017. The defendant did not file an appeal challenging the merits of the foreclosure judgment.

The defendant successfully moved to open the judgment to extend the sale date on three separate occasions, with the court eventually setting a new sale date of October 13, 2018. The sale did not go forward, however, because the defendant filed a bankruptcy petition on October 10, 2018, which stayed the foreclosure proceedings. The United States Bankruptcy Court dismissed the petition on October 29, 2018.

The plaintiff subsequently filed a motion asking, the trial court to update the debt, award additional attorney’s fees, and set a new sale date. The court granted the plaintiff’s motion on July 22, 2019, updated the terms ₈₁₅of the judgment, and set a new sale date of November 9, 2019. One day before the November sale date, however, the defendant filed a second bankruptcy petition. That petition was dismissed on May 29, 2020. Because the sale date once again had passed, the plaintiff filed a motion asking the court to update the debt, award additional attorney’s fees, and set a new sale date. The court granted the motion on November 15, 2021, setting a new sale date of May 21, 2022.

On April 26, 2022, the defendant filed a motion to open asking the court to extend the sale date from May to October, 2022, because her daughters were graduating, one from high school and the other from college. The court granted the motion but extended the sale date only to June 25, 2022.

On May 10, 2022, the defendant filed the motion to open that is directly related to the issue raised in the present appeal. In that motion, the defendant stated, in relevant part, that "[m]y desire is to have [five] more months from the June [25, 2022] sale date. I still have equity left in the home and I have a buyer who is now willing and able to purchase the property who would let me and my children to continue living here." The plaintiff filed an objection to the motion to open. It argued in relevant part that the foreclosure action had been pending since 2017; that this was the defendant’s fifth motion to extend the sale date; and that allowing the defendant an additional five months to pursue a private sale, during which time the plaintiff would continue to incur further financial losses, would be inequitable to the plaintiff. Twenty-five days prior to the scheduled sale date, the court, Budzik, J., denied the motion to open, indicating in its order that the defendant had failed to appear for argument.

On June 7, 2022, the defendant filed a motion to reargue/reconsider the motion to open. Although she ₈₁₆did not address her failure to appear, she reasserted that she had a qualified buyer for the property and attached a copy of an executed real estate sale agreement dated June 6, 2022. The plaintiff filed an objection to the motion to reargue/reconsider arguing that the defendant had failed to state a proper basis for granting reargument. On June 22, 2022, three days before the sale date, the court denied the defendant’s motion without comment. The foreclosure sale went forward as scheduled on June 25, 2022, with the plaintiff as the highest bidder.

On July 14, 2022, the committee filed its report and a motion seeking acceptance of the report and approval of the sale and deed.⁷ That same day, the defendant, now represented by counsel,⁸ filed a motion for order asking the court to exercise its "supervisory powers at law and in equity to nullify the foreclosure sale in this matter …." In her motion, the defendant argued that an appellate stay was in effect on June 25, 2022, and therefore the sale violated Practice Book § 61-11 (a) and her right to due process under the state constitution. The defendant filed a memorandum of law in support of her motion for order. The plaintiff filed an objection to the defendant’s motion for order, arguing that "[t]here was no automatic stay/appeal period in place [and therefore] execution of the sale was not improper as alleged by the defendant." The defendant filed a reply memorandum.

Judge Budzik issued an order on August 5, 2022, denying the defendant’s motion for order without comment except for a citation to Practice Book § 61-11 (h) with the following parenthetical: "In any action for ₈₁₇foreclosure in which the owner of the equity has filed a motion to open or, other similar motion, which motion was denied fewer than twenty days prior to the scheduled auction date, the auction shall proceed as scheduled …." (Internal quotation marks omitted.) The defendant filed a motion to reargue her motion for order, which the court denied on September 2, 2022. In its order denying the motion to reargue, the court further explained its rationale for denying the motion for order. The court stated that it viewed the defendant’s motion for reconsideration of the denial of the motion to open and extend the sale date as an "other similar motion" under Practice Book § 61-11 (h) because it sought the same relief as the motion to open—to delay the sale. Because the court’s denial of the motion for reconsideration came three days prior to the, sale date, it concluded that Practice Book § 61-11 (h) applied and that the sale could proceed without violating the automatic stay.

On September 19, 2022, the court, Baio, J., accepted the committee’s report, approved the sale and deed, and allowed the fees and expenses of the committee and appraiser. This appeal followed.⁹

[1] The sole issue before us on appeal is whether the court improperly denied the motion for order and approved the sale because the sale was conducted in violation of an automatic appellate stay. The defendant argues that Practice Book § 61-11 (h) is inapplicable because her motion to open was denied more than twenty days before the foreclosure sale date and the ₈₁₈denial of her subsequent motion to reargue extended the existing appellate stay so as to bar the sale.

The plaintiff agrees that the denial of the motion to open did not trigger Practice Book § 61-11 (h) but argues that the motion to reargue the denial of the motion to open did not result in a new appeal period because it was defective in form and, regardless of its direct applicability, § 61-11 (h) should be broadly construed as providing that a foreclosure sale is not a proceeding to enforce or carry out a judgment and thus cannot violate the automatic stay. We agree with the defendant’s argument and find the counterarguments advanced by the plaintiff unpersuasive. Accordingly, we reverse the judgment of the court approving the sale and remand the case with direction to set a new sale date.

[2, 3] We begin by setting forth our standard of review, followed by a discussion of the relevant rules of practice and other legal principles that guide our review in this matter. "A foreclosure action is an equitable proceeding. … The determination of what equity requires is a matter for the discretion of the trial court." (Internal quotation marks omitted.) Federal Deposit Ins. Corp. v. Owen, 88 Conn. App. 806, 811, 873 A.2d 1003, cert. denied, 275 Conn. 902, 882 A.2d 670 (2005). Thus, ordinarily, we would review a court’s order regarding whether to grant an extension of a foreclosure sale date or to approve a completed sale under our abuse of discretion standard. See, e.g., U.S. Bank Trust, N.A. v. Giblen, 190 Conn. App. 221, 229, 209 A.3d 1266, cert. denied, 333 Conn. 903, 215 A.3d 159 (2019); Centerbank v. Connell, 29 Conn. App. 508,...