Source: http://ri.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180629_0000148.RI.htm/qx
Timestamp: 2019-04-20 20:27:42+00:00

Document:
TIMOTHY G. FAY and DAVID N. PATRICK, Defendants.
For Plaintiff: Richard L. Gemma, Esq.
For Defendant: William K. O'Donnell, Esq.; Timothy J. Morgan, Esq.
Before the Court for decision is Plaintiff Bank of America, N.A.'s (Plaintiff or BOA) motion for partial summary judgment against Defendants Timothy G. Fay (Fay) and David N. Patrick (Patrick) (collectively, Defendants). Specifically, Plaintiff seeks an order dismissing Defendants' several Affirmative Defenses and finding that the Defendants are liable to BOA under the signed Guaranty. Plaintiff also seeks to establish the indebtedness of Defendants as of November 8, 2017-the date when title to the Connecticut Property vested in Plaintiff following foreclosure action in Connecticut. This Court exercises jurisdiction pursuant to G.L. 1956 § 8-2-13.
On May 15, 2008, Stonestreet Hospitality Realty Company, LLC (Stonestreet), a Connecticut Limited Liability Company, executed and delivered to Plaintiff a Promissory Note (the Note) evidencing a loan in the original principal amount of $21, 808, 000 in concert with the construction of a 176 room Hyatt Place Mohegan Sun Hotel in Montville, Connecticut (the Property). The Note was secured by a first position mortgage covering the Property. On May 15, 2008, Stonestreet also executed and delivered to BOA a Senior Construction and Interim Loan Agreement (Loan Agreement) associated with the Promissory Note. The same day, Defendants, in connection with the Original Loan Agreement, further executed and delivered a Guaranty of the loan. Both Fay and Patrick were principals of Stonestreet owning seventy percent and thirty percent of the membership interests, respectively; Defendants, however, executed the Guaranty in their individual capacities.
Per the Loan Agreement, payment of the Note in full was due on November 21, 2014 (the Maturity Date). Stonestreet failed to fulfill its obligation to make such payment. As a result, BOA demanded immediate payment from Stonestreet and Defendants, as Guarantors. Following Stonestreet's non-payment, the parties entered into a Loan Forbearance Agreement (Forbearance Agreement) on September 2, 2015. Under the Forbearance Agreement, Stonestreet and Defendants acknowledged Stonestreet's failure to pay the Note on the Maturity Date as required by the Loan Agreement. Moreover, the Forbearance Agreement provided that the Guaranty is enforceable and that the terms and conditions of the Loan Agreement remain in effect. The Forbearance Agreement further included a new Maturity Date of December 15, 2015. Stonestreet again failed to pay the Note by the December 15, 2015 deadline.
Plaintiff filed a foreclosure complaint on May 31, 2016 in Connecticut Superior Court (the Connecticut Court) seeking to foreclose its mortgage encumbering the Property. Pursuant to this action, the Connecticut Court granted BOA's motion for partial summary judgment and entered a Judgment of Strict Foreclosure finding the debt owed to BOA to be $23, 108, 768.17, as of September 25, 2017. On November 8, 2017 (the Ownership Transfer Date), following the Connecticut Court's Judgment, BOA recorded a Certificate of Foreclosure to memorialize the transfer of title. The Connecticut Court later conducted a two-day hearing on February 15 and 27, 2018 to determine the value of the Property on the date of the transfer of ownership from Stonestreet to BOA. In its April 20, 2018 decision, the Connecticut Court concluded that the value of the Property on the Ownership Transfer Date was $18, 400, 000.
Plaintiff filed the within Complaint on April 12, 2016 against Defendants. Both Defendants answered the Complaint on June 1, 2016. Plaintiff now moves for partial summary judgment against Defendants finding, inter alia, Defendants as Guarantors' with joint and several liability under the Guaranty, establishing the amount of the outstanding indebtedness due from Defendants as of the Ownership Transfer Date, and setting forth the appropriate mathematical equation for the entry of final judgment. BOA alleges in its motion that, as of the Ownership Transfer Date, the outstanding indebtedness consists of the unpaid principal in the amount of $21, 245, 589.14, plus unpaid, accrued default interest in the amount of $2, 194, 256.12. Plaintiff further asserts other costs such as late charges, costs and expenses including attorney's fees. In total, Plaintiff alleges the outstanding debt of Defendants as of the Ownership Transfer Date is $23, 439, 845.26, excluding attorney's fees and expenses. The parties have filed numerous memoranda in support of their respective positions.
"It is a fundamental principle that '[s]ummary judgment is a drastic remedy, and a motion for summary judgment should be dealt with cautiously.'" Takian v. Rafaelian, 53 A.3d 964, 970 (R.I. 2012) (alteration in original) (quoting Emp'rs Mut. Cas. Co. v. Arbella Prot. Ins. Co., 24 A.3d 544, 553 (R.I. 2011)). With that in mind, in ruling on a motion for summary judgment, the Court is instructed to "review the evidence and draw all reasonable inferences in the light most favorable to the nonmoving party," id. at 970 (citation omitted) (internal quotation marks omitted), and to "'look for factual issues, not determine them.'" Steinhof v. Murphy, 991 A.2d 1028, 1032-33 (R.I. 2010) (quoting Steinberg v. State, 427 A.2d 338, 340 (R.I. 1981)). However, summary judgment is appropriate "'if there exists no genuine issue of material fact and the moving party is entitled to judgement as a matter of law.'" Takian, 53 A.3d at 970 (quoting Classic Entm't & Sports, Inc. v. Pemberton, 988 A.2d 847, 849 (R.I. 2010) (internal citation omitted)); see Super. R. Civ. P. 56(c).
Defendants argue that C.G.S. § 49-1 bars collateral action for a deficiency against guarantors who were not named in the foreclosure action if they could have been made parties to that action and the guarantee was secured by the mortgage. Defendants assert that they clearly could have been made parties to the Connecticut Foreclosure action and because they were not, § 49-1 bars further recovery. They further contend that, at minimum, there is a genuine issue of material fact with regard to whether the Guaranty was secured by the Mortgage or if § 49-1 is applicable in the current matter. Conversely, Plaintiff contends that Defendants are not within the purview of § 49-1 because they (1) are not directly liable under the Mortgage or Note and (2) do not possess an interest in, and concomitant legal and equitable right to redeem the property. Additionally, BOA asserts that the Guaranty was not secured by a mortgage in this instance. BOA concedes, however, that the borrower-Stonestreet-pledged a mortgage to secure the promissory note, but contends that neither the Guarantors, nor either of them jointly or separately, mortgaged property to secure the Guaranty in this instance.

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