Lending Home Funding Corp. v. REI Holdings, LLC

214 Conn.App. 703

281 A.3d 1

LENDING HOME FUNDING CORPORATION

v.REI HOLDINGS, LLC, et al.

AC 44564

Appellate Court of Connecticut.

Submitted on briefs December 8, 2021

Officially released August 30, 2022

Elio Morgan filed a brief for the appellant (defendant Traditions Oil Group, LLC).

Elgo, Cradle and Suarez, Js.

CRADLE, J.

The defendant Traditions Oil Group, LLC,¹ appeals from the judgment of the trial court denying its motion to reargue/reconsider the court's denial of its motion to open the judgment of strict foreclosure rendered in favor of the plaintiff, Lending Home Funding Corporation. On appeal, the defendant claims that the court incorrectly determined that it lacked subject matter jurisdiction to open the judgment of strict foreclosure on the ground that title already had vested in the plaintiff, thereby rendering the defendant's motion to open moot. We agree with the defendant and, accordingly, reverse the judgment of the trial court and remand the matter for further proceedings.²

The following facts and procedural history are relevant to our resolution of this appeal. On August 11, 2016, the defendant REI Holdings, LLC (REI), executed a promissory note in favor of the plaintiff for the principal sum of $247,500, secured by a mortgage on a parcel of real property located at 88 Dawn Drive in South Windsor (property). The defendant Wayne Francis also executed a commercial guaranty in which he personally guaranteed the loan. The defendant, REI, and Francis subsequently defaulted on the note, and the plaintiff commenced the underlying foreclosure action on April 27, 2018.

On October 23, 2018, the plaintiff filed a motion for default against the defendant for failure to disclose a defense, which the court, Dubay, J ., granted. On January 28, 2019, the court rendered judgment of strict foreclosure in favor of the plaintiff and set the law day to run on May 20, 2019. REI subsequently filed a motion to open and vacate the judgment of strict foreclosure (first motion to open) on May 15, 2019, claiming, inter alia, that the appraised value of the property, as found by the court, was too low. On May 20, 2019, the court, Sheridan, J ., denied the first motion to open and assigned a new law day for June 24, 2019.

On June 10, 2019, pursuant to Practice Book § 11-11,³ REI filed a motion to reargue/reconsider the court's denial of the first motion to open (first motion to reargue/reconsider), again contending that the appraised value of the property was incorrect. The court, Dubay , J. , denied the first motion to reargue/reconsider on July 3, 2019, and notice of the court's ruling was sent to the parties on July 5, 2019.⁴ On July 17, 2019, the plaintiff filed a certificate of foreclosure on the South Windsor land records. The plaintiff subsequently executed a quitclaim deed transferring the property to CFAI Special Assets LLC, which was recorded on the South Windsor land records.

On December 7, 2020, the defendant filed a motion to open and vacate the judgment of strict foreclosure (second motion to open) pursuant to General Statutes § 49-15.⁵ In its memorandum of law in support of the second motion to open, the defendant argued that the court should open the judgment on the ground that title to the property never effectively passed to the plaintiff. Citing Practice Book § 63-1,⁶ as well as our Supreme Court's decision in Farmers & Mechanics Savings Bank v. Sullivan , 216 Conn. 341, 579 A.2d 1054 (1990), the defendant claimed, inter alia, that REI's filing of the first motion to reargue/reconsider within the twenty day appellate stay period following the court's denial of the first motion to open extended the appellate stay until the parties received notice of the court's ruling on that motion on July 5, 2019. Because the June 24, 2019 law day fell within the alleged appellate stay period, the defendant argued, the law day had no legal effect and, consequently, title could not have passed to the plaintiff. Accordingly, the defendant claimed that the court's failure to "sua sponte reassign a legally effective law day" and the plaintiff's failure to "move the court to set a new law day outside the appeal period prior to its attempt to enforce the judgment" constituted good cause to open the judgment.

On February 16, 2021, the court, M. Taylor, J ., denied the defendant's motion to open on the ground that the court was without subject matter jurisdiction to hear the motion.⁷ Specifically, the court determined that our Supreme Court in Sullivan had "relied upon the antiquated language of Practice Book [1978–97] § 4009, which stayed an appeal period until the issuance of notice of the decision upon the motion or the expiration of the time within which a remittitur is ordered filed. ... This section of the Practice Book regarding the time for an appeal has been amended and is now codified in Practice Book § 63-1, which no longer provides for a continuance of a stay, awaiting a decision on an intervening motion." (Internal quotation marks omitted.) Accordingly, the court concluded that REI's filing of the first motion to reargue/reconsider did not stay the June 24, 2019 law day until that motion was decided and that absolute title vested in the plaintiff upon the passing of the law day, thereby rendering the defendant's motion moot. The defendant subsequently filed a motion to reargue/reconsider (second motion to reargue/reconsider), again contending that the law day fell within the appellate stay period and, therefore, title never effectively passed to the plaintiff.⁸ The court denied the second motion to reargue/reconsider on February 16, 2021. This appeal followed.⁹

The dispositive issue on appeal is whether the court improperly concluded that it lacked subject matter jurisdiction to hear the second motion to open and vacate the judgment of strict foreclosure because absolute title had vested in the plaintiff following the June 24, 2019 law day. Specifically, we must determine whether REI's filing of the first motion to reargue/reconsider the court's denial of the first motion to open tolled the automatic stay, pursuant to Practice Book § 61-11 (a),¹⁰ until that motion was decided. We agree with the defendant that REI's filing of the first motion to reargue, pursuant to Practice Book §§ 11-11 and 63-1,¹¹ extended the appellate stay period until July 5, 2019, when the parties received notice of the court's ruling on that motion. See Practice Book 63-1 (b).¹² Because the June 24, 2019 law day fell within the extended appellate stay period, it had no legal effect and could not vest absolute title in the plaintiff. Accordingly, the court improperly determined that it did not have jurisdiction to hear the defendant's motion to open and vacate the judgment of strict foreclosure.

We begin by setting forth the standard of review and relevant legal principles that guide our resolution of the defendant's appeal. "Because the principal issue on appeal concerns questions of law, namely, subject matter jurisdiction and the scope of the appellate stay provisions in the rules of practice, our review is plenary." Wells Fargo Bank of Minnesota, N.A . v. Morgan , 98 Conn. App. 72, 78, 909 A.2d 526 (2006) ; see also Chamerda v. Opie , 185 Conn. App. 627, 637–38, 197 A.3d 982 ("A determination regarding a trial court's subject matter jurisdiction is a question of law. When ... the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record." (Internal quotation marks omitted.)), cert. denied, 330 Conn. 953, 197 A.3d 893 (2018) ; Zirinsky v. Zirinsky , 87 Conn. App. 257, 269, 865 A.2d 488 ("[w]e are required to interpret the scope of [the] rules of practice; accordingly, we are presented with a question of law over which our review is plenary"), cert. denied, 273 Conn. 916, 871 A.2d 372 (2005).

"The opening of judgments of strict foreclosure is governed by § 49-15, which provides in relevant part: Any judgment foreclosing the title to real estate by strict foreclosure may, at the discretion of the court rendering the judgment, upon the written motion of any person having an interest in the judgment and for cause shown, be opened and modified ... provided no such judgment shall be opened after the title has become absolute in any encumbrancer ...." (Emphasis in original; internal quotation marks omitted.) Deutsche Bank National Trust Co . v. Pardo , 170 Conn. App. 642, 651–52, 155 A.3d 764, cert. denied, 325 Conn. 912, 159 A.3d 231 (2017).

"In Connecticut, a mortgagee has legal title to the mortgaged property and the mortgagor has equitable title, also called the equity of redemption. ... The equity of redemption gives the mortgagor the right to redeem the legal title previously conveyed by performing whatever conditions are specified in the mortgage, the most important of which is usually the payment of money. ... Under our law, an action for strict foreclosure is brought by a mortgagee who, holding legal title, seeks not to enforce a forfeiture but rather to foreclose an equity of redemption unless the mortgagor satisfies the debt on or before his law day. ... Accordingly, [if] a foreclosure decree has become absolute by the passing of the law days, the outstanding rights of redemption have been cut off and the title has become unconditional in the plaintiff, with a consequent and accompanying right to possession." (Internal quotation marks omitted.) Seminole Realty, LLC v. Sekretaev , 192 Conn. App. 405, 414–15, 218 A.3d 198, cert. denied, 334 Conn. 905, 220 A.3d 35 (2019). "Thus, once the law day passes and title vests in the [plaintiff], no practical relief is available [p]rovided that this vesting has occurred pursuant to an authorized exercise of jurisdiction by the trial court ...." (Internal quotation marks omitted.) Deutsche Bank National Trust Co . v. Pardo , supra, 170 Conn. App. at 652, 155...