Court Opinion

ID: 4704544
Source: CourtListenerOpinion
Date Created: 2021-07-19 12:03:00.41965+00
Date Added: 2024-06-11T08:05:27.580010
License: Public Domain

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  LPP MORTGAGE LTD. v. UNDERWOOD TOWERS
        LIMITED PARTNERSHIP ET AL.
                 (AC 43542)
                 (AC 43575)
                     Cradle, Alexander and Lavine, Js.

                                  Syllabus

The substitute plaintiff sought to foreclose a commercial mortgage on certain
   real property of the defendant U Co., which had leased the property
   from the defendant city of Hartford to construct an apartment complex.
   After U Co. failed to make payments on the loan, it executed two more
   mortgages, each of which was secured by a separate note. When the
   notes and mortgages were thereafter sold to the substitute plaintiff, it
   was provided with an affidavit in which the seller averred that one of
   the original notes had been lost. U Co. and its management agent, the
   defendant C Co., claimed that the substitute plaintiff lacked standing
   to foreclose the mortgage because it could not produce the lost note
   and, thus, that the trial court lacked subject matter jurisdiction. The
   trial court determined that, pursuant to New England Savings Bank v.
   Bedford Realty Corp. (238 Conn. 745), the substitute plaintiff’s failure
   to produce the lost note did not deprive it of standing to foreclose the
   mortgage. The court thereafter rendered judgment of strict foreclosure.
   On appeal to this court, U Co. and C Co. claimed, inter alia, that the
   trial court erred in concluding that the plaintiff had standing to foreclose
   the mortgage, and the city claimed that, in making that determination,
   the trial court improperly relied on New England Savings Bank, which,
   the city contended, had been overruled sub silentio or improperly
   decided. Held that the judgment of the trial court was affirmed, and
   because that court aptly addressed the arguments raised by U Co. and
   C Co., this court adopted the trial court’s thorough and well reasoned
   decision as a proper statement of the facts and applicable law on the
   issues; moreover, the city’s unpreserved claim that the trial court improp-
   erly relied on New England Savings Bank or, in the alternative, that
   that case was wrongly decided, was unavailing, as this court declined
   to presume that our Supreme Court intended to overrule its long-standing
   precedent in the absence of any clear indication that it intended to do
   so, and, as an intermediate appellate court, this court could not overrule
   or reconsider the decisions of our Supreme Court.
             Argued April 6—officially released July 20, 2021

                             Procedural History

  Action to foreclose a mortgage on certain of the named
defendant’s real property, and for other relief, brought
to the Superior Court in the judicial district of Hartford
and transferred to the Complex Litigation Docket;
thereafter, LPP Mortgage, Inc., was substituted as the
plaintiff; subsequently, the case was tried to the court,
Miller, J.; thereafter, the court, Hon. Patty Jenkins
Pittman, judge trial referee, granted the motion for a
mistrial filed by the named defendant et al.; subse-
quently, the court, Schuman, J., denied the motion to
dismiss filed by the named defendant et al. as to the
defendant CDC Management Company; thereafter, the
court, Schuman, J., denied the motion to dismiss filed
by the named defendant et al., granted in part the substi-
tute plaintiff’s motion for summary judgment and
granted in part the motion for summary judgment filed
by the named defendant et al.; subsequently, the court,
Schuman, J., rendered judgment of strict foreclosure,
from which the named defendant et al. and the defen-
dant city of Hartford filed separate appeals with this
court. Affirmed.
 Richard P. Weinstein, for the appellants in Docket No.
AC 43542 (named defendant et al.).
  David S. Hoopes, with whom was Jay R. Lawlor, for
the appellant in Docket No. AC 43575 (defendant city
of Hartford).
  Wesley W. Horton, with whom were Thomas W. With-
erington and J. David Folds, pro hac vice, and, on the
brief, Nicholas P. Vegliante and John G. McJunkin, pro
hac vice, for the appellee in Docket Nos. AC 43542 and
AC 43575 (substitute plaintiff).
                          Opinion

   CRADLE, J. In these related appeals arising from a
commercial foreclosure action, the defendants Under-
wood Towers Limited Partnership (Underwood), CDC
Management Corporation (CDC), and the city of Hart-
ford (city),1 appeal from the judgment of the trial court,
rendered after a court trial, in favor of the substitute
plaintiff, LPP Mortgage, Inc.2 In Docket No. AC 43542,
Underwood and CDC claim that the trial court erred
in concluding that the plaintiff had standing to foreclose
the mortgage because it was not entitled to enforce
the promissory note; in relying on the provisions of
a regulatory agreement between Underwood and the
United States Department of Housing and Urban Devel-
opment (HUD) to conclude that Underwood had defaulted
on the mortgage, and in calculating the amount of the
debt owed to the plaintiff; in concluding that foreclo-
sure was an equitable remedy in this case; in awarding
monetary damages in addition to the judgment of strict
foreclosure; and in awarding damages to the plaintiff
under a theory of unjust enrichment. In Docket No. AC
43575, the city challenges the trial court’s conclusion
that the plaintiff had standing to foreclose on the ground
that New England Savings Bank v. Bedford Realty
Corp., 238 Conn. 745, 680 A.2d 301 (1996) (Bedford
Realty), the Supreme Court case on which the trial
court relied in so concluding, has been overruled sub
silentio, or, in the alternative, was improperly decided.
We affirm the judgment of the trial court.
   The following facts, set forth by the trial court in its
memorandum of decision, provide the relevant back-
ground to these appeals. In 1985, Underwood entered
into a ground lease with the city for approximately six
acres of property on which Underwood would construct
Park Place Towers, a high-rise apartment complex
(project). The project was financed by Underwood with
a $35 million mortgage that was insured by HUD. To
obtain that mortgage insurance, Underwood entered
into a regulatory agreement with HUD that governed
the management of the project and regulated the use
of its revenues. In 1990, after Underwood failed to make
payments on the loan, it executed a second mortgage
and a second mortgage note, Note A, in favor of HUD.
Underwood defaulted again in 1996 and executed an
additional mortgage note with HUD, Note B.
  In 2002, HUD sold the second mortgage to PAMI Mid-
Atlantic, LLC (PAMI). Instead of providing PAMI with
the original Note B, HUD provided an affidavit averring
that the note had been lost (lost note affidavit). In 2005,
PAMI assigned the second mortgage, along with the
lost note affidavit, back to HUD. Later in 2005, HUD
sold the mortgage and both notes to Beal Bank. Beal
Bank, in turn, sold the mortgage and both notes to the
plaintiff in 2006. Neither Beal Bank nor the plaintiff
possessed the original Note B; however, both of those
transfers were accompanied by lost note affidavits for
Note B.
  By letters to Underwood dated March 28 and May 2,
2006, the plaintiff declared defaults on Note B, and
demanded payment from Underwood in the amounts
of $419,246 and $1,146,245.98, respectively. On June 14,
2006, the plaintiff notified Underwood that, because the
defaults had not been cured, it had accelerated the debt,
and demanded payment of the entire principal amounts
due under Notes A and B—approximately $68 million.
   In December, 2006, the plaintiff commenced this action.
By way of its ten count, revised, second amended com-
plaint, dated November 29, 2018, the plaintiff sought a
judgment of strict foreclosure. Additionally, as to Under-
wood, the plaintiff sought damages for breach of con-
tract, breach of the covenant of good faith and fair dealing,
conversion, statutory theft pursuant to General Statutes
§ 52-564, and unjust enrichment. As to CDC, the plaintiff
sought damages for unjust enrichment and fraudulent
conveyance. As to both Underwood and CDC, the plain-
tiff sought damages for fraud and violation of the Con-
necticut Unfair Trade Practices Act, General Statutes
§ 42-110a et seq.
  On July 16, 2019, following a court trial that spanned
eighteen days, and the submission of posttrial briefs,
the court filed a memorandum of decision, in which it
rejected the defendants’ argument that the plaintiff did
not have standing to foreclose the mortgage and ren-
dered judgment of strict foreclosure. The court also
ordered Underwood to pay the plaintiff $1,766,057 in
damages for breach of contract and breach of the cove-
nant of good faith and fair dealing.3 The court ordered
CDC to pay the plaintiff $408,588 in damages for unjust
enrichment.4 The court thereafter awarded the plaintiff
postjudgment interest at the annual rate of 5 percent,
with law days to commence on December 2, 2019. These
appeals followed.
   On appeal, the defendants claim that the court erred
in concluding that the plaintiff had standing to commence
this action and, thus, that the court improperly exercised
subject matter jurisdiction over its claims. Underwood
and CDC also claim that the court improperly relied on
the provisions of the regulatory agreement to conclude
that Underwood had defaulted on the mortgage and in
calculating the amount of the debt owed to the plaintiff;
erred in concluding that foreclosure was an equitable
remedy in this case and in awarding monetary damages
in addition to the judgment of strict foreclosure; and
improperly awarded damages under a theory of unjust
enrichment.
  On the basis of our examination of the extensive record
on appeal, and the briefs and arguments of the parties,
we are persuaded that the judgment of the trial court
should be affirmed. Because the court’s memorandum
of decision aptly addresses the arguments raised by
Underwood and CDC in AC 43542, we adopt its thor-
ough and well reasoned decision as a proper statement
of the facts and applicable law on these issues. See LPP
Mortgage Ltd. v. Underwood Towers Ltd. Partnership,
Superior Court, judicial district of Hartford, Complex
Litigation Docket, Docket No. X03-CV-XX-XXXXXXX-S
(July 16, 2019) (reprinted at 205 Conn. App. 773,
A.3d      ). It would serve no useful purpose for us to
repeat the discussion contained therein. See Citizens
Against Overhead Power Line Construction v. Con-
necticut Siting Council, 311 Conn. 259, 262, 86 A.3d 463
(2014); Phadnis v. Great Expression Dental Centers
of Connecticut, P.C., 170 Conn. App. 79, 81, 153 A.3d
687 (2017).
  In AC 43575, the city asserts an additional argument in
challenging the trial court’s conclusion that the plaintiff
had standing to foreclose, which the city did not raise
before the trial court, and, thus, the court did not
address in its memorandum of decision.5 The city argues
that the case on which the trial court relied in conclud-
ing that the plaintiff had standing, Bedford Realty, has
been overruled sub silentio or, in the alternative, was
improperly decided. We are not persuaded.
   In challenging the plaintiff’s standing to foreclose the
mortgage, Underwood and CDC argued to the trial court
that the plaintiff was not entitled to enforce Note B,
pursuant to General Statutes § 42a-3-309, because it was
not in possession of the note when it was lost.6 The
trial court rejected that argument, relying on Bedford
Realty for the proposition that a mortgagee ‘‘is entitled
to pursue its remedy at law on the notes, or to pursue
its remedy in equity upon the mortgage, or to pursue
both. A note and a mortgage given to secure it are
separate instruments, executed for different purposes
and in this [s]tate [an] action for foreclosure of the
mortgage and upon the note are regarded and treated,
in practice, as separate and distinct causes of action,
although both may be pursued in a foreclosure suit.’’
(Internal quotation marks omitted.) New England Sav-
ings Bank v. Bedford Realty Corp., supra, 238 Conn.
759.
  In deciding Bedford Realty, our Supreme Court
observed that, because the plaintiff had chosen to pur-
sue the equitable action of foreclosure of the mortgage,
rather than a legal action on the note, the fact that the
plaintiff never possessed the lost promissory note was
not fatal to its foreclosure of the mortgage. Id., 759–60.
The court further held that, ‘‘whatever restrictions [Gen-
eral Statutes] §§ 42a-3-301 and 42a-3-309 might put upon
the enforcement of personal liability based solely upon
a lost note, they do not prohibit [a mortgagee] from
pursuing an action of foreclosure to enforce the terms
of the mortgage.’’ Id., 760. The court reasoned: ‘‘In pur-
suing the remedy of strict foreclosure, [the mortgagee]
or its assignee nevertheless will have to establish the
amount of the debt that [the mortgagor] owes. The loss
of the note, however, does not preclude proof of the
debt by other evidence [because a] note is not a debt;
it is only primary evidence of a debt; and where this is
lost, impaired or destroyed bona fide, it may be supplied
by secondary evidence. . . . [Accordingly] [t]he loss
of a . . . note alters not the rights of the owner, but
merely renders secondary evidence necessary and
proper. [The mortgagee] or its assignee is free to present
reliable evidence other than the original promissory
note to establish the amount of the debt.’’ (Citations
omitted; internal quotation marks omitted.) Id. On the
basis of the foregoing reasoning in Bedford Realty, the
trial court here concluded that the plaintiff’s failure to
produce the lost note did not deprive it of standing to
foreclose the mortgage.
   The city first argues that Bedford Realty has been over-
ruled sub silentio by two subsequent Supreme Court deci-
sions, J.E. Robert Co. v. Signature Properties, LLC, 309
Conn. 307, 71 A.3d 492 (2013), and Equity One, Inc. v.
Shivers, 310 Conn. 119, 74 A.3d 1225 (2013). The city
contends that those cases ‘‘held, contrary to Bedford
[Realty], that standing to foreclose a mortgage securing
a note is governed by the [Uniform Commercial Code
(UCC), General Statutes § 42a-1-101 et seq.].’’ (Empha-
sis in original.) The city argues: ‘‘Though neither deci-
sion mentioned Bedford [Realty], both are necessarily
inconsistent and irreconcilable with it.’’
   It is well settled that, ‘‘absent clear indications from
the Supreme Court itself, lower courts should not lightly
assume that a prior decision has been overruled sub
silentio merely because its reasoning and result appear
inconsistent with later cases.’’ (Internal quotation
marks omitted.) State v. Berrios, 320 Conn. 265, 286,
129 A.3d 696 (2016). This principle is founded on the
notion that ‘‘[w]e are not prepared to indulge in the
presumption that the Supreme Court would so cava-
lierly overrule . . . [its own] authority without even
acknowledging that it was doing so.’’ State v. Farrar,
7 Conn. App. 149, 154–55, 508 A.2d 49, cert. denied, 200
Conn. 805, 512 A.2d 229 (1986).
   Here, as the city acknowledges, neither of the cases
that it cites as having overruled our Supreme Court’s
decision in Bedford Realty—J.E. Robert Co. v. Signa-
ture Properties, LLC, supra, 309 Conn. 307, nor Equity
One, Inc. v. Shivers, supra, 310 Conn. 119—even men-
tions Bedford Realty.7 Indeed, neither case discusses
the dichotomy between a foreclosure action and an action
to enforce a note. In the absence of any clear indication
that our Supreme Court intended to overrule its long-
standing precedent in Bedford Realty with either of
those decisions, we decline to presume that it did so.8
 In the alternative, the city argues that Bedford Realty
was wrongly decided. ‘‘It is well established that this
court cannot overrule or reconsider the decisions of
our Supreme Court. See State v. Brown, 73 Conn. App.
751, 756, 809 A.2d 546 (2002) (‘Our Supreme Court is
the ultimate arbiter of the law in this state. We, as
an intermediate appellate court, cannot reconsider the
decisions of our highest court.’); State v. Fuller, 56
Conn. App. 592, 609, 744 A.2d 931 (‘[i]t is not within our
function as an intermediate appellate court to overrule
Supreme Court authority’), cert. denied, 252 Conn. 949,
748 A.2d 298, cert. denied, 531 U.S. 911, 121 S. Ct. 262,
148 L. Ed. 2d 190 (2000).’’ State v. Corver, 182 Conn.
App. 622, 638 n.9, 190 A.3d 941, cert. denied, 330 Conn.
916, 193 A.3d 1211 (2018). Accordingly, this argument
is unavailing.
  The judgment is affirmed and the case is remanded
for the purpose of setting new law days.
      In this opinion the other judges concurred.
  1
     Greystone Servicing Corporation, Inc., Mac-Gray Services, Inc., United
Way of the Capital Area, Inc., and Xerox-Hartford Associates also were
named as defendants. Because those defendants have not participated in
this appeal, any reference herein to the defendants refers only to Underwood,
CDC and the city, unless otherwise stated.
   2
     LPP Mortgage, Inc., was substituted as the plaintiff on October 24, 2017.
We therefore refer to it as the plaintiff in this opinion.
   3
     The court also found Underwood liable for conversion but did not add
those damages to the total award because they overlapped with the other
damages already awarded to the plaintiff.
   4
     The court previously had granted a motion for summary judgment filed
by Underwood and CDC as to the plaintiff’s claims for unjust enrichment
as to Underwood and fraudulent conveyance as to CDC.
   5
     Pursuant to the ground lease, Underwood was required to make certain
payments to the city in lieu of taxes. The trial court found that Underwood
was approximately $3.5 million in arrears on those payments, and that Note
B was senior in priority to the debt owed to the city. The city did not
participate in the trial and did not challenge the plaintiff’s standing at any
point prior to the court’s July 16, 2019 memorandum of decision. The city
first raised this issue in a motion for determination of priorities filed on
September 4, 2019. The court summarily denied that motion. Because stand-
ing implicates a court’s subject matter jurisdiction, which may be challenged
at any time, the city’s claim is properly before us and is subject to our
plenary review. See Saunders v. Briner, 334 Conn. 135, 156, 221 A.3d 1 (2019).
   6
     General Statutes § 42a-3-309 (a) provides: ‘‘A person not in possession
of an instrument is entitled to enforce the instrument if (i) the person was
in possession of the instrument and entitled to enforce it when loss of
possession occurred, (ii) the loss of possession was not the result of a
transfer by the person or a lawful seizure, and (iii) the person cannot
reasonably obtain possession of the instrument because the instrument was
destroyed, its whereabouts cannot be determined, or it is in the wrongful
possession of an unknown person or a person that cannot be found or is
not amenable to service of process.’’
   7
     In J.E. Robert Co. v. Signature Properties, LLC, supra, 309 Conn. 307,
the court determined that a loan servicer for the owner of legal title to a
note has standing in its own right, under the UCC, to foreclose on the real
property securing the note. Id., 311, 317. In Equity One, Inc. v. Shivers,
supra, 310 Conn. 119, the court held that the trial court’s determination
that the loan servicer had standing to bring an action for foreclosure was
presumptively valid on the basis of the servicer’s production of documents
showing that it was the holder of the note at the time the action was
commenced. Id., 130–31.
   8
     We note that Bedford Realty is not an anomaly. Our Supreme Court
repeatedly has recognized and abided by the distinction between a foreclo-
sure action and an action to enforce a note. See JPMorgan Chase Bank,
National Assn. v. Essaghof, 336 Conn. 633, 640, 249 A.3d 327 (2020); JP
Morgan Chase Bank, N.A. v. Winthrop Properties, LLC, 312 Conn. 662, 673,
94 A.3d 622 (2014); New Milford Savings Bank v. Jajer, 244 Conn. 251,
266–67, 708 A.2d 1378 (1998); Wendell Corp., Trustee v. Thurston, 239 Conn.
109, 116, 680 A.2d 1314 (1996); Hartford National Bank & Trust Co. v.
Kotkin, 185 Conn. 579, 581, 441 A.2d 593 (1981). This court likewise has
recently acknowledged that distinction. See Castle v. DiMugno, 199 Conn.
App. 734, 753, 237 A.3d 731 (2020), quoting Seven Oaks Enterprises, L.P.
v. DeVito, 185 Conn. App. 534, 547, 198 A.3d 88, cert. denied, 330 Conn.
953, 197 A.3d 893 (2018). Our Supreme Court’s explicit adherence to that
distinction in 2014 in JP Morgan Chase Bank, N.A. v. Winthrop Properties,
LLC, supra, 673, and again in 2020 in JPMorgan Chase Bank, National Assn.
v. Essaghof, supra, 640, which were decided after both cases on which the
city relies in arguing that Bedford Realty has been overruled sub silentio,
would seem to dispositively refute the city’s claim.