People's United Bank v. Sarno ( 2015 )

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PEOPLE’S UNITED BANK v. GREGORY J.
SARNO ET AL.
(AC 36962)
Keller, Prescott and West, Js.
Argued May 19—officially released October 27, 2015
(Appeal from Superior Court, judicial district of
Fairfield, Hartmere, J. [foreclosure judgment]; Hon.
Richard P. Gilardi, judge trial referee [motion for
approval of committee sale].)
Joseph J. Cessario, with whom, on the brief, was
Gregory J. Bennici, for the appellant (named
defendant).
Robert J. Piscitelli, for the appellee (plaintiff).
Opinion
WEST, J. The defendant Gregory J. Sarno1 appeals
from the judgment of the trial court approving a foreclo-
sure by sale in favor of the plaintiff, People’s United
Bank, of property composed of two separate parcels
owned by the defendant. On appeal, the defendant
claims that the court abused its discretion in approving
the foreclosure sale.2 We affirm the judgment of the
trial court.
The following facts and procedural history are rele-
vant. This appeal arises out of the plaintiff’s action to
foreclose on real property located at 2131 and 2136
Fairfield Beach Road in Fairfield. In February, 2012, the
plaintiff instituted a foreclosure action on the Fairfield
property, and its complaint alleged the following facts.
In January, 2005, the defendant, as the owner of the
Fairfield property, executed a note in favor of the plain-
tiff for a loan with an original principal sum of $900,000,
payable with interest thereon as provided in the note.
To secure the note, the defendant also executed a mort-
gage on the Fairfield property in favor of Mortgage
Electronic Registration, Inc., as nominee for the plain-
tiff. The mortgage was recorded in the Fairfield land
records and was then assigned to the plaintiff. When
the note was in default, the plaintiff elected to acceler-
ate the balance due on the note and to foreclose the
mortgage on the Fairfield property.
In May, 2012, the plaintiff filed a motion for judgment
by strict foreclosure. The plaintiff filed an appraisal
identifying the property as 2131 Fairfield Beach Road,
and listing the fair market value as $955,000. This
appraisal noted that the subject property consisted of
two lots: 2131 Fairfield Beach Road, a 0.13 acre parcel
with improvements, and 2136 Fairfield Beach Road,
a 0.02 acre vacant parcel. An accompanying oath of
appraiser denoted the appraised property as 2131 Fair-
field Beach Road, with a total value of $955,000. The
plaintiff filed another oath of appraiser which repre-
sented the property as 2131 and 2136 Fairfield Beach
Road, with a total value of $900,000. The attached
appraisal referenced the property as 2131 Fairfield
Beach Road. The appraisal report indicated the site to
be 0.15 acres. On July 16, 2012, the court rendered
a judgment of foreclosure by sale that described the
property as 2131 Fairfield Beach Road, and the sale
date was set. At that time, the court found the fair
market value of the property to be $900,000, and the
plaintiff’s debt to be $828,728.34.
In October, 2012, the residence on the main parcel
was severely damaged in tropical storm Sandy. The
residence was subsequently razed by the town of Fair-
field and a demolition lien in the amount of $12,000
was recorded on the land records. The defendant filed
a motion to open the judgment and extend the sale
date, which was later granted.
In March, 2013, the plaintiff filed a motion to reopen,
seeking to convert the foreclosure judgment to a judg-
ment of strict foreclosure and to set law days. The
motion stated that the committee had obtained an
updated appraisal indicating that the present value of
the property was $605,000, thus concluding that there
was no longer any equity in the property. The court
denied the motion to convert the foreclosure judgment
to a judgment of strict foreclosure, reopened the judg-
ment of foreclosure by sale, and set a new sale date.
In July, 2013, and again in October, 2013, the defendant
filed a motion to open and extend the sale date, both
of which were granted. In November, 2013, a return of
appraiser, oath of appraiser and appraisal were filed
by the committee, referencing the property appraised
as 2131 Fairfield Beach Road.
In January, 2014, the committee filed a return of
appraiser, oath of appraiser and appraisal, all of which
referred to the property as 2131 Fairfield Beach Road.
The appraisal indicated the property to be 0.13 acres
and estimated the market value of the property to be
$705,000. In February, 2014, the defendant filed another
motion to open and extend the sale date, which was
later granted.
The auction was posted on the judicial branch web-
site and the property was identified as 2131 and 2136
Fairfield Beach Road. The notice to bidders also identi-
fied the property as 2131 and 2136 Fairfield Beach Road,
and the property description attached to the notice
identified both of the parcels. The court appointed the
appraiser and the committee then filed the return of
appraiser and oath of appraiser relevant to this appeal
in April, 2014. The return of appraiser referred to the
property as 2131 and 2136 Fairfield Beach Road. The
oath of appraisal referenced the property as 2131 Fair-
field Beach Road, and represented the appraised value
to be $705,000. The appraisal itself listed the property
as 2131 Fairfield Beach Road and indicated that the
property was 0.13 acres, but also referred to page 30
of volume 2890 of the Fairfield land records, which
contained descriptions of both parcels. The appraisal
also included a ‘‘Subject Photo Page’’ which contained
three photographs: a photograph of 2131 Fairfield
Beach Road, labeled ‘‘Subject Front’’ and captioned
‘‘2131 Fairfield Beach Road’’; a photograph of 2136 Fair-
field Beach Road, labeled ‘‘Subject’’ and captioned
‘‘NORTH SIDE ACROSS THE STREET PARKING
ONLY’’; and a photograph of the street labeled ‘‘Sub-
ject Street.’’
The sale took place on April 12, 2014, after it was
duly advertised and a sign was posted on the property.
The plaintiff was the only bidder present at the sale,
and the plaintiff’s bid was $396,000. The plaintiff took
title subject to the demolition lien of approximately
$12,000 and taxes of approximately $22,786.48.
The committee filed a motion for approval of the
committee sale, referencing the property as 2131 and
2136 Fairfield Beach Road. The plaintiff filed a memo-
randum in support of the motion, indicating that the
plaintiff had its own appraisal done for both properties,
and that the appraised value was $460,000. The attached
appraisal identified the property as 2131 Fairfield Beach
Road and concluded that, as of October, 2013, the mar-
ket value of the property was $460,000. The defendant
later filed an objection to the plaintiff’s motion for
approval of the committee sale. In his objection, the
defendant argued that the court should deny the motion
for approval of the committee sale because the commit-
tee’s appraisal provided the value for only one of the
two properties and, therefore, did not accurately reflect
the full fair market value of the premises. The motion
for approval of the committee sale was later granted
in May, 2014. This appeal followed.
On appeal, the defendant claims that the court abused
its discretion in approving the foreclosure sale. The
defendant argues that the sale was commercially unrea-
sonable and inequitable because the appraisal was
defective in that it considered only one of the two prop-
erties. He argues that the omission of any reference
to 2136 Fairfield Beach Road or the 0.02 acres in the
appraisal discouraged parties from submitting bids, and
that the value of 2131 Fairfield Beach Road is markedly
decreased when it is not paired with 2136 Fairfield
Beach Road, which would allow for off-street parking
and/or the construction of an accessory structure. He
argues that this was fatal to the marketing and integrity
of the sale, and thus, the court should have ordered a
new sale or converted the sale to a strict foreclosure.
We first set forth the relevant standard of review and
legal principles that govern our analysis of the defen-
dant’s claim. The applicable standard of review in ana-
lyzing a court’s approval of a committee sale is the abuse
of discretion standard. First Connecticut Capital, LLC
v. Homes of Westport, LLC, 112 Conn. App. 750, 760,
966 A.2d 239 (2009). ‘‘[A] foreclosure action constitutes
an equitable proceeding. . . . In an equitable proceed-
ing, the trial court may examine all relevant factors to
ensure that complete justice is done. . . . The determi-
nation of what equity requires in a particular case, the
balancing of the equities, is a matter for the discretion
of the trial court. . . . This court must make every
reasonable presumption in favor of the trial court’s
decision when reviewing a claim of abuse of discretion.
. . . Our review of a trial court’s exercise of the legal
discretion vested in it is limited to the questions of
whether the trial court correctly applied the law and
could reasonably have reached the conclusion that it
did.’’ (Internal quotation marks omitted.) Id., 761.
‘‘[General Statutes §] 49-25 provides in relevant part
that in a foreclosure by sale ‘the court shall appoint
one disinterested appraiser who shall, under oath,
appraise the property to be sold . . . . Upon motion
of the owner of the equity of redemption, the court
shall appoint a second appraiser in its decree. . . .’
While an appraisal under the statute is not conclusive
as to the value of the property for purposes of fixing
the amount of a deficiency . . . it serves to assist the
court in determining whether to approve the sale as
one that fairly realized the value of the property. . . .
While the trial court is not bound to accept the
appraised value . . . it may assist the trial court in the
exercise of its discretion, in accepting or rejecting a
proposed sale. . . .
‘‘The trial court in a foreclosure matter acts as a court
of equity and has full authority to refuse to confirm a
sale on equitable grounds where an unfairness has taken
place or where the price bid was inadequate. . . . The
court must exercise its discretion and equitable powers
with fairness not only to the foreclosing mortgagee, but
also to subsequent encumbrancers and the owners.
. . . The appraisal procedure provided by § 49-25 per-
forms the function of giving the trial court guidance on
the question of whether to approve the sale.’’ (Citations
omitted; emphasis added.) Dime Savings Bank of New
York v. Grisel, 36 Conn. App. 313, 318–19, 650 A.2d
1246 (1994).
‘‘[I]n Connecticut, the law is well settled that whether
a mortgage is to be foreclosed by sale or by strict fore-
closure is a matter within the sound discretion of the
trial court. . . . The foreclosure of a mortgage by sale
is not a matter of right, but rests in the discretion of
the court before which the foreclosure proceedings are
pending.’’ (Citations omitted; internal quotation marks
omitted.) Fidelity Trust Co. v. Irick, 206 Conn. 484,
488, 538 A.2d 1027 (1988).
In the present case, the appraisal stated the address
of the property as 2131 Fairfield Beach Road, and indi-
cated that the property was 0.13 acres. The appraisal,
however, also referred to page 30 of volume 2890 of
the Fairfield land records, which contained descriptions
of both parcels, and included a ‘‘Subject Photo Page,’’
which contained photographs of both 2131 and 2136
Fairfield Beach Road. Furthermore, it is not clear from
an examination of the value of the committee’s
appraisal that only one parcel was considered in the
appraisal. When the court ordered the foreclosure, the
value of the property was found to be $900,000. The
committee’s appraisal valued the property at $705,000.
Given the surrounding circumstances, most notably
that the structure on the beachfront parcel was demol-
ished as a result of the damage done by the storm, it
is not unreasonable that the value of the property would
have decreased from the value it was appraised at when
the structure was on the property. Additionally, a review
of the record reveals that other relevant documents that
potential bidders would have looked to for information
regarding the sale, including the judicial branch web-
site, the notice to bidders, and the property description
attached to the notice, referenced both parcels as being
foreclosed. The defendant takes issue with the fact that
the plaintiff’s sole bid was for an amount less than the
fair market value of the property at the time of the sale,
however, ‘‘[i]t is not unusual for a foreclosure sale to
yield considerably less than the property’s appraised
fair market value.’’ National City Real Estate Services,
LLC v. Tuttle, 155 Conn App. 290, 295, 109 A.3d 932
(2015).3 We conclude, on the basis of our thorough
review of the record, that although the appraisal may
not have been a model of clarity, the court did not
abuse its discretion in approving the sale.
The judgment is affirmed.
In this opinion the other judges concurred.
1
The complaint named JPMorgan Chase Bank, N.A. (JPMorgan), as an
additional defendant by virtue of a second mortgage that it held on the
subject property that was subsequent in right to the plaintiff’s mortgage.
The plaintiff filed a motion for default against JPMorgan for failure to appear,
which was granted by the court. Because JPMorgan has not taken an active
role in the proceedings before the trial court or this court, all references
to the defendant in this opinion refer solely to Sarno.
2
Although the defendant argues that the court committed plain error by
approving the sale of the properties, we review this claim under the abuse
of discretion standard as the issue was preserved when the defendant raised
this argument in his objection to the motion for approval of the committee
sale, dated April 21, 2014.
3
‘‘No appellate case has established whether there is a certain percentage
of fair market value below which a sale would trigger a trial court’s obligation
to reject a foreclosure sale on the ground that the price was inadequate or
unfair as a matter of law.’’ National City Real Estate Services, LLC v. Tuttle,
supra, 155 Conn. App. 296. This court, however, has upheld the approval
of a foreclosure sale producing less than 43 percent of the property’s fair
market value. See id., 293. In the present case, the plaintiff’s $396,000 bid
constituted 56 percent of the fair market value of $705,000 reflected in the
committee’s appraisal. Additionally, we note that the plaintiff’s $396,000 bid
constituted 86 percent of the fair market value of $460,000 reflected in the
plaintiff’s appraisal.