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ASTORIA FEDERAL MORTGAGE CORPORATION

v. GENESIS HOLDINGS, LLC, ET AL.

(AC 36590)

Beach, Alvord and Mullins, Js.

Argued February 4—officially released August 4, 2015

(Appeal from Superior Court, judicial district of

Ansonia-Milford, Hon. John W. Moran, judge trial

referee.)

Jane I. Milas, for the appellant (defendant Professional Services Group, Inc.).

Frank B. Velardi, Jr., for the appellee (substitute

plaintiff).
Opinion

BEACH, J. In October, 2009, this action was commenced by the named plaintiff, Astoria Federal Mortgage Corporation (bank), to foreclose a mortgage on

property in Derby owned by the named defendant, Genesis Holdings, LLC (debtor). The defendant Professional

Services Group, Inc., was named as an additional defendant because it claimed an interest in the property by

virtue of a mechanic’s lien recorded in the Derby land

records.1 During the pendency of the action, the bank

assigned its interest in the property to Bellmore Partners, Inc., which was thereafter substituted as the plaintiff in this matter.2 On July 19, 2010, the debtor filed a

chapter 11 bankruptcy petition, which automatically

stayed the foreclosure action. See 11 U.S.C. § 362. On

April 12, 2012, the United States Bankruptcy Court for

the District of Connecticut entered an order granting

relief from the automatic stay for the ‘‘limited purpose

of determining the extent, validity and priority’’ of the

defendant’s mechanic’s lien. On June 10, 2013, the plaintiff filed a motion for summary judgment against the

defendant, which was granted by the court on February

4, 2014.

On appeal, the defendant claims that the court

improperly rendered summary judgment in favor of the

plaintiff because (1) a genuine issue of material fact

exists with respect to the validity of the defendant’s

mechanic’s lien, and (2)the court improperly concluded

that the defendant’s opportunity to foreclose its

mechanic’s lien had expired.3 The plaintiff claims, as

an alternative ground for affirmance of the court’s judgment, that the defendant’s claims are barred by the

doctrine of collateral estoppel. We conclude that the

court erroneously exceeded the terms of the order

granting relief from the stay as ordered by the Bankruptcy Court. We also conclude that the defendant was

not collaterally estopped from raising its claims before

the trial court. Accordingly, we reverse the judgment

of the trial court.

The following procedural history and undisputed

facts, as provided in the pleadings and the evidence

submitted by the parties in conjunction with the plaintiff’s motion for summary judgment and the defendant’s

opposition thereto, are relevant to the disposition of the

defendant’s appeal. On November 4, 2005, the debtor

executed an open-end mortgage in favor of the bank

on commercial property in Derby to secure the payment

of a promissory note in the principal amount of

$360,000. The bank instituted the present foreclosure

action in October, 2009, against the debtor, alleging

nonpayment of the debt. The defendant’s mechanic’s

lien, in the principal amount of $315,000, was recorded

in the Derby land records on September 8, 2009. The

complaint alleged that the defendant’s interest was subordinate in right to the interest of the bank.
On December 28, 2009, the defendant filed a disclosure of defense, stating that its mechanic’s lien was a

claim prior in right to that of the bank. The defendant

filed its answer and a special defense on January 7,

2010. In its special defense, the defendant similarly

alleged that its lien was a claim prior in right to that

of the bank. On July 19, 2010, the debtor filed a chapter

11 bankruptcy petition. On September 29, 2010, the

bank assigned its interest in the subject note, mortgage

and related loan documents to the plaintiff. On May 14,

2012, Bellmore Partners, Inc., was substituted as the

plaintiff in the foreclosure action. See footnote 2 of

this opinion.

The foreclosure action was automatically stayed by

the filing of the bankruptcy petition.4

In its petition, the

debtor listed several creditors, including the plaintiff

and the defendant. The only asset of the bankruptcy

estate was the Derby property and its rental income.

On February 13, 2012, the plaintiff moved for relief

from the automatic stay. The next day, Lawyers Title

Insurance Company (company), claiming to be a party

in interest by virtue of a title policy it had issued insuring

the priority of the plaintiff’s mortgage, filed a request

for a status conference to obtain guidance from the

Bankruptcy Court regarding the disputed priority of the

defendant’s mechanic’s lien over the plaintiff’s mortgage. In its request, the company asserted that the

defendant had not filed a proof of claim, and, therefore,

there was ‘‘confusion’’ as to whether an adversary proceeding could be scheduled to determine ‘‘the validity,

priority, or extent of a lien or other interest in [the]

property.’’5

(Internal quotation marks omitted.) A status

conference was held on February 22, 2012, at which

time the Bankruptcy Court scheduled a hearing for

March 20, 2012, to consider the plaintiff’s motion for

relief from the automatic stay.

On April 12, 2012, the Bankruptcy Court, Shiff, J.,

issued an ‘‘Order Regarding Limited Relief from the

Automatic Stay’’ (order). In that order, Judge Shiff

stated that ‘‘the parties [have] requested limited relief

. . . to allow the parties to move forward with proceedings in Connecticut Superior Court as to the extent,

validity and priority of the [defendant’s] mechanic’s

lien’’ and that ‘‘cause exist[ed] to grant limited relief

from stay as requested by the parties . . . .’’ Judge

Shiff entered the following order: ‘‘[R]elief from the

automatic stay is granted, for cause, pursuant to 11

U.S.C. § 362 (d)(1), to allow the parties to move forward

with proceedings in Connecticut Superior Court for the

limited purpose of determining the extent, validity and

priority of the [defendant’s] Mechanic’s Lien . . . .’’

Judge Shiff further ordered that ‘‘relief from the automatic stay is also granted to allow the parties to proceed

in Connecticut State Court with any appeals from any

decision of the Connecticut Superior Court as to the
extent, validity and priority of the Mechanic’s Lien

. . . .’’

The plaintiff then served interrogatories and requests

for production, dated June 27, 2012, on the defendant.

On June 10, 2013, the plaintiff filed a motion for summary judgment, claiming that the defendant’s mechanic’s lien had been extinguished as a matter of law

because the defendant did not commence an action to

foreclose that lien within thirty days of the April 12, 2012

Bankruptcy Court order granting limited relief from the

automatic stay. Referring to 11 U.S.C. § 108 (c),6

the

plaintiff argued that the defendant failed to comply with

the time limitation set forth in that provision, thereby

resulting in the expiration of the mechanic’s lien. In its

memorandum of law filed in support of its motion for

summary judgment, the plaintiff made the additional

argument that the defendant’s claims were barred by

the doctrine of collateral estoppel: ‘‘On September 20,

2012, in the companion case [of] Bellmore Partners,

LLC v. Genesis Ltd. Partnership & Professional Services Group, Inc., Superior Court, judicial district of

Ansonia-Milford, Docket No, CV-09-6001340S, Judge

Moran7

ruled that the defendant’s lien, also recorded

on September 8, 2009, was extinguished due to the

defendant’s failure to commence a foreclosure action

on its lien within thirty days of the lifting of the bankruptcy stay on April 12, 2012.’’

The defendant filed an objection to the plaintiff’s

motion for summary judgment on June 27, 2013, with

accompanying exhibits that included an affidavit by

Nicole Liguori Micklich, the defendant’s attorney in the

bankruptcy proceeding. In its objection, the defendant

argued that the order of the Bankruptcy Court granted

limited relieffrom the stay, and thatit did not terminate

the stay to allow the defendant to commence an action

to foreclose its mechanic’s lien. The defendant further

argued that the doctrine of collateral estoppel did not

apply because the alleged ‘‘companion case’’ addressed

‘‘a different mechanic’s lien, different mortgages, and

different property.’’8 The defendant also stated that the

decision in the other case did ‘‘not make any ruling with

respect to the arguments advanced by [the plaintiff] in

its present motion for summary judgment.’’

Micklich, in her affidavit, averred that the debtor’s

counsel had contacted her on March 20, 2012, to inform

her that the Bankruptcy Court had inquired if the ‘‘parties would stipulate that any question regarding the

priority of the Mechanic’s Lien should be resolved by

the Connecticut State Court and not by the Bankruptcy

Court.’’ Micklich also averred that after she conferred

with the defendant, she spoke again with the debtor’s

counsel and told him that the defendant ‘‘would stipulate that the State Court could determine the limited

issue of priority of the Mechanic’s Lien, as long as the

parties agreed that no party would seek an order of the
State Court distributing the property of the [bankruptcy] estate and that no party would seek to confirm

the [chapter 11] plan until after the State Court ruled

on the priority.’’

The trial court held a hearing on the plaintiff’s motion

for summary judgment on November 4, 2013, and counsel for the parties presented their arguments. On January 13, 2014, the trial court held a ‘‘status conference’’ on

the record, explaining that it had additional questions

regarding the matter. When the plaintiff’s counsel

repeated his argument that the defendant’s claims previously were determined in the alleged ‘‘companion

case,’’ the court responded: ‘‘It’s not a companion case.

It’s merely stare decisis. It’s [as] if you’re citing another

case to support your contention.’’

The conference proceeded and, during the discussion

as to the meaning of the Bankruptcy Court order, the

defendant’s counsel provided her interpretation and

claimed that the order allowed the parties to participate

in an evidentiary hearing with respect to the mechanic’s

lien: ‘‘Was it filed; was it served; is the amount correct?

All of those issues that go to the validity of a lien. That

is what would have gone on in the adversary proceedings.’’ According to the defendant’s counsel: ‘‘The argument is that the motion for relief from stay was for

the purpose of having the equivalent of the adversary

hearing, i.e., the evidentiary hearing in state courtrather

than in Bankruptcy Court . . . .’’ The defendant’s counsel claimed that after the evidentiary hearing in state

court, the matter would ‘‘[go] back to Bankruptcy Court

for further proceedings under the plan with respect to

this mechanic’s lien [that] now has been established

as being for X amount, X date, and then the planned

confirmation continues.’’

After confirming that the Derby property was the

only asset of the debtor in the bankruptcy estate, the

trial court asked: ‘‘How long would it take to get a

clarification from Judge Shiff regarding his order?’’ Following counsel’s response to that question, the court

stated to the defendant’s counsel: ‘‘If you’d like to file

a motion with Judge Shiff clarifying his order . . . I’ll

give you two weeks to do so. Otherwise, I’ll make a

ruling.’’ In concluding the hearing, the court advised

that if the defendant’s counsel did not file a motion for

clarification in the Bankruptcy Court within two weeks,

it would render judgment granting the plaintiff’s motion

for summary judgment.

On February 3, 2014, no motion for clarification having been filed in the Bankruptcy Court, the trial court

issued the following memorandum of decision: ‘‘The

plaintiff’s, Bellmore Partners, Inc., Motion for Summary

Judgment is granted. There is no genuine issue of fact.

It is unequivocal and unopposed that the defendant’s,

Professional Services Group, Inc., opportunity to foreclose on its mechanic’s lien has long since expired.’’
This appeal followed.9

‘‘Our review of the trial court’s decision to render

summary judgment is plenary, and in accordance with

the standards set forth in Practice Book § 17-49.’’10 Ventres v. Goodspeed Airport, LLC, 301 Conn. 194, 205, 21

A.3d 709 (2011). ‘‘[T]he applicability of . . . collateral

estoppel presents a question of law over which we

employ plenary review.’’ Weiss v. Weiss, 297 Conn. 446,

458, 998 A.2d 766 (2010).

We first address the plaintiff’s alternative ground for

affirmance of the court’s judgment because the doctrine

of collateral estoppel, if applicable, would barthe defendant’s claims. ‘‘Collateral estoppel, or issue preclusion,

is that aspect ofres judicata which prohibits the relitigation of an issue when that issue was actually litigated

and necessarily determined in a prior action between

the same parties upon a different claim. . . . Collateral

estoppel means simply that when an issue of ultimate

fact has once been determined by a valid and final

judgment, that issue cannot again be litigated between

the same parties in any future lawsuit. . . . Issue preclusion arises when an issue is actually litigated and

determined by a valid and final judgment, and that determination is essential to the judgment.’’ (Emphasis

added; internal quotation marks omitted.) Massey v.

Branford, 119 Conn. App. 453, 465, 988 A.2d 370, cert.

denied, 295 Conn. 921, 991 A.2d 565 (2010).

The trial court properly concluded that the doctrine

of collateral estoppel was not applicable in the present

case. The prior action involved a different debtor, different property, and different encumbrances. Moreover,

the court in the prior case never directly addressed the

issues raised in this case concerning the scope of the

relief from stay granted by the Bankruptcy Court.

Accordingly, the plaintiff’s claim fails.

We next address the defendant’s claim that the court

improperly rendered summary judgment. Central to this

appeal are the scope and the trial court’s interpretation

of the April 12, 2012 Bankruptcy Court order, which

expressly granted ‘‘limited relief . . . .’’ The automatic

stay is comprehensive and generally prohibits any

action taken to advance the proceedings in the underlying case subject to the stay. Section 362 (a) of title 11

of the United States Code provides in relevant part that

the filing of a bankruptcy petition with the Bankruptcy

Court ‘‘operates as a stay, applicable to all entities, of—

(1) the commencement . . . of a judicial, administrative, or other action or proceeding against the debtor

that was or could have been commenced before the

commencement of the [bankruptcy case], or to recover

a claim against the debtor that arose before the commencement of the [bankruptcy case] . . . (5) any act

to create, perfect, or enforce against property of the

debtor any lien to the extent that such lien secures

a claim that arose before the commencement of the
[bankruptcy case] . . . .’’ ‘‘The automatic stay provision in . . . § 362 . . . stays any and all postpetition

filing. Any filing constitutes a judicial act directed

toward the disposition of the case in violation of the

automatic stay. . . . The stay of section 362 is

extremely broad in scope and . . . should apply to

almost any type of formal or informal action against

the debtor or the [debtor’s] property . . . .’’ (Internal

quotation marks omitted.) Krondes v. O’Boy, 69 Conn.

App. 802, 808, 796 A.2d 625 (2002).

‘‘The Bankruptcy Court has the power to grant relief

from the automatic stay. See 11 U.S.C. § 362 (d) through

(g).’’ Equity One, Inc. v. Shivers, 150 Conn. App. 745,

751, 93 A.3d 1167 (2014). ‘‘The Bankruptcy Court . . .

is authorized to grant a creditor relief from the stay for

cause by terminating, annulling, modifying, or conditioning the stay. . . . The terms of an order modifying

an automatic stay must be strictly construed because

a stay under § 362 [of the Bankruptcy Code] freezes in

place all proceedings against the debtor and his property. . . . [B]ecause a section 362 stay freezes in place

all proceedings against the debtor, and because only

an order of the bankruptcy court can authorize any

further progress in the stayed proceedings, it follows

that the continuation of any proceeding can derive legitimacy only from the bankruptcy court order. The terms

of an order modifying the automatic stay must therefore

be strictly construed.’’ (Citation omitted; internal quotation marks omitted.) New Milford Savings Bank v.

Jajer, 52 Conn. App. 69, 74, 726 A.2d 604 (1999).

The order of the Bankruptcy Court was clear and

unambiguous:11 ‘‘[R]elief from the automatic stay is

granted, for cause . . . to allow the parties to move

forward with proceedings in Connecticut Superior

Court for the limited purpose of determining the

extent, validity and priority’’ of the defendant’s

claimed mechanic’s lien. (Emphasis added.) As noted

previously, orders releasing cases, wholly or partially,

from bankruptcy proceedings are to be construed narrowly, and there was no permission to allow any party

to foreclose its security interest. The order clearly contemplated the Superior Court’s deciding only the specifically referred issues; further disposition was to occur

in the Bankruptcy Court. Because no party, nor the

court, had the authority to proceed with foreclosure in

these circumstances, the defendant could not lawfully

have proceeded to foreclose its lien in any event.

Because the court could not proceed with foreclosure

at all, the time limitations provided in 11 U.S.C. § 108

(c) were inapplicable. We conclude, on the basis of

our plenary review of the proceedings, that the court

erroneously rendered summary judgment in favor of

the plaintiff.

The judgment is reversed and the case is remanded

with direction to deny the motion for summary judg-
ment and for further proceedings to determine the

extent, validity and priority of the mechanic’s lien.

In this opinion MULLINS, J., concurred.

1 The named defendant, Genesis Holdings, LLC, is not a party to this appeal.

We therefore refer to Professional Services Group, Inc., as the defendant in

this opinion.

2 The court granted the bank’s motion to substitute Bellmore Partners,

Inc., as the plaintiff in the foreclosure action on May 14, 2012. We therefore

refer in this opinion to Bellmore Partners, Inc., as the plaintiff.

3 Because these two claims are interrelated, we address them together in

this opinion.

4 See 11 U.S.C. § 362 (a).

5 Rule 7001 of the Federal Rules of Bankruptcy Procedure provides in

relevant part: ‘‘An adversary proceeding is governed by the rules of this

Part VII. The following are adversary proceedings . . . (2) a proceeding to

determine the validity, priority, or extent of a lien or other interest in

property . . . .’’

6 Section 108 (c) of title 11 of the United States Code provides: ‘‘Except

as provided in section 524 of this title, if applicable nonbankruptcy law, an

order entered in a nonbankruptcy proceeding, or an agreement fixes a

period for commencing or continuing a civil action in a court other than a

bankruptcy court on a claim against the debtor, or against an individual

with respect to which such individual is protected under section 1201 or

1301 of this title, and such period has not expired before the date of the

filing of the petition, then such period does not expire until the later of—

(1)the end of such period, including any suspension of such period occurring

on or after the commencement of the case; or (2) 30 days after notice of

the termination or expiration of the stay under section 362, 922, 1201, or

1301 of this title, as the case may be, with respect to such claim.’’

According to the plaintiff, the applicable nonbankruptcy law in this matter

was General Statutes § 49-39. Section 49-39 provides in relevant part: ‘‘A

mechanic’s lien shall not continue in force for a longer period than one

year after the lien has been perfected, unless the party claiming the lien

commences an action to foreclose it, by complaint, cross-complaint or counterclaim, and records a notice of lis pendens in evidence thereof on the

land records of the town in which the lien is recorded within one year from

the date the lien was recorded . . . . Each such lien, after the expiration

of the one-year period . . . without action commenced and notice thereof

filed as aforesaid, shall be invalid and discharged as a matter of law. . . .’’

It is undisputed that the defendant’s mechanic’s lien was recorded in the

Derby land records on September 8, 2009. The debtor filed its bankruptcy

petition on July 19, 2010, which was before the expiration of the one year

period required for the defendant to commence an action to foreclose the

lien. At that point, the defendant could not commence a foreclosure action

because of the automatic stay provisions of the Bankruptcy Code. The

plaintiff argued that the April 12, 2012 order of the Bankruptcy Court granted

relief from that stay and that the defendant had to commence its foreclosure

action within thirty days of that order, i.e., on or before May 12, 2012. The

defendant argues that 11 U.S.C. § 108 (c) is not applicable because the stay

was not terminated.

It is undisputed that the defendant did not bring an independent action

to foreclose its mechanic’s lien, file a motion to determine the priority of

its lien or ask the Bankruptcy Court for clarification of its order within that

thirty day period or at any relevant time thereafter.

7

Judge Moran was the presiding judge in the present action.

8 During oral argument before the trial court, the plaintiff’s counsel

acknowledged that the debtor in the prior action was Genesis Limited Partnership, whereas the debtorin the present action is a different entity, Genesis

Holdings, LLC.

9 The trial court’s ruling did not dispose of the foreclosure action. Nevertheless, the trial court, in determining that the defendant’s mechanic’s lien

was extinguished,fully disposed of all claims involving that defendant. Under

Practice Book § 61-3, a judgment that disposes of all causes of action brought

by or against a particular party is an appealable final judgment.

10 Practice Book § 17-49 provides: ‘‘The judgment sought shall be rendered

forthwith if the pleadings, affidavits and any other proof submitted show

that there is no genuine issue as to any material fact and that the moving

party is entitled to judgment as a matter of law.’’

11 Any language purporting to authorize action in the state court and
foreclosure case would have to be clear and unambiguous in order to be

effective.