Court Opinion

ID: 4370890
Source: CourtListenerOpinion
Date Created: 2019-02-25 20:02:53.028919+00
Date Added: 2024-06-11T11:59:04.857196
License: Public Domain

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      CONNECTICUT COMMUNITY BANK, N.A. v.
          JAMES T. KIERNAN, JR., ET AL.
                   (AC 41378)
                        Lavine, Sheldon and Elgo, Js.

                                   Syllabus

The plaintiff bank sought to foreclose a mortgage on certain real property
   owned by the defendant K. At the time that the plaintiff commenced
   its foreclosure action, K’s property was encumbered by a first mortgage
   that subsequently was refinanced with another bank, M Co. After a
   dispute arose between the plaintiff and M Co. as to the priority of their
   mortgages, the parties agreed to sell the property and to escrow the
   sale proceeds pending a resolution of the dispute. The plaintiff then
   converted the foreclosure action to a claim for interpleader as against
   M Co. and a claim against K for damages pursuant to the language of
   the mortgage note. After K was defaulted for failure to plead, the trial
   court granted the plaintiff’s motion for summary judgment as against
   K. The plaintiff thereafter sought an award of $134,462.82 in attorney’s
   fees as against K, which included attorney’s fees it incurred in protecting
   the priority of its mortgage by prosecuting the interpleader claim. The
   trial court awarded the plaintiff $11,000 in attorney’s fees, and the plain-
   tiff appealed to this court. The plaintiff claimed that the trial court
   improperly excluded from its award any attorney’s fees that it had
   incurred in protecting the priority of its mortgage as against M Co. Held
   that the trial court properly excluded from its award of attorney’s fees
   against K any fees that the plaintiff incurred in asserting its priority
   claim as against M Co.; the plaintiff provided no legal or factual basis
   for extending certain language in its mortgage note, which permitted
   the recovery of attorney’s fees incurred to enforce the plaintiff’s rights
   in foreclosing its mortgage, to a separate claim asserting priority over
   M Co.’s lien, the mortgage note did not mention attorney’s fees incurred
   in protecting a priority claim, and the plaintiff did not have a priority
   claim against any other person or entity at the time that it issued its
   mortgage, as K’s property was encumbered by a first mortgage when
   the plaintiff issued its loan and the plaintiff’s lien would have remained
   subordinate to the first mortgage if that first mortgage had not been
   refinanced in favor of M Co., and the plaintiff’s claim that the trial court
   improperly applied Total Recycling Services of Connecticut, Inc. v.
   Connecticut Oil Recycling Services, LLC (308 Conn. 312) when it
   required the plaintiff to distinguish the fees it had incurred as against
   K from those it had incurred as against M Co., was not reviewable, as
   the plaintiff, at trial, did not in any meaningful way dispute the applicabil-
   ity of Total Recycling Services of Connecticut, Inc., to its claims for
   fees against K.
     Argued November 29, 2018—officially released February 19, 2019

                             Procedural History

  Action to foreclose a mortgage on certain real prop-
erty owned by the named defendant et al., brought to
the Superior Court in the judicial district of Stamford-
Norwalk, where the plaintiff filed an amended com-
plaint and withdrew the action as against the defendant
Elizabeth M. Kiernan et al.; thereafter, the named defen-
dant was defaulted for failure to plead; subsequently,
the court, Povodator, J., granted the plaintiff’s motion
for summary judgment and granted in part the plaintiff’s
motion for attorney’s fees, and the plaintiff appealed
to this court. Affirmed.
 Houston Putnam Lowry, with whom, on the brief,
was Dale M. Clayton, for the appellant (plaintiff).
                         Opinion

   SHELDON, J. The plaintiff, Connecticut Community
Bank, N.A., doing business as the Greenwich Bank &
Trust Company, appeals from the judgment of the trial
court awarding what it claims to be an allegedly insuffi-
cient amount of attorney’s fees after finding the defen-
dant James T. Kiernan, Jr.,1 liable pursuant to a
mortgage note that he executed in favor of the plaintiff.
The plaintiff claims on appeal that the trial court erred
by excluding from its award any attorney’s fees that it
had incurred in protecting the priority of its mortgage
as to a subsequent encumbrancer, M&T Bank, formerly
known as Hudson City Savings Bank (M&T Bank),
which it had brought into this action as a defendant on
its claim of interpleader. We affirm the judgment of the
trial court.
   The following procedural history and undisputed
facts are relevant to this appeal. On October 7, 2005,
the defendant and his wife, Elizabeth M. Kiernan, exe-
cuted a home equity line of credit agreement and disclo-
sure statement (HELOC) in favor of the plaintiff in the
original maximum principal amount of one million dol-
lars. The HELOC was secured by an open-end mortgage
deed encumbering certain real property located at 25
The Ridgeway in Greenwich. At the time the plaintiff
issued the HELOC, the subject property, which had
been owned by Elizabeth Kiernan since 1992, was
encumbered by a mortgage in favor of Washington
Mutual Bank, F.A. (Washington Mutual), in the principal
amount of $2,500,000. The plaintiff’s mortgage was
recorded on the Greenwich land records on February
5, 2008.
  In April, 2011, the Kiernans refinanced the mortgage
on the subject property with M&T Bank. As a result,
Washington Mutual’s mortgage was released and a new
mortgage was recorded on the land records in favor of
M&T Bank on the principal amount of $2,425,000 on
May 3, 2011.
  At some point in 2015, the Kiernans defaulted on the
HELOC and, consequently, the plaintiff brought this
action to foreclose its mortgage on the subject property.
During the course of litigation, a dispute arose between
the plaintiff and M&T Bank as to the priorities of their
respective mortgages. By agreement of all parties, the
property was sold and all proceeds from the sale were
deposited in an escrow account pending resolution of
the priority dispute between the plaintiff and M&T
Bank.
  On April 6, 2017, the plaintiff amended its complaint,
converting its claim against the defendant from a mort-
gage foreclosure claim to a claim for interpleader and a
claim on a note. The amended complaint thus contained
two counts; the first stating a claim for interpleader as
against M&T Bank and the second presenting a claim
for damages on the note as against the defendant. The
defendant did not respond to the amended complaint,
and thus he was defaulted for failure to plead.
   On April 12, 2017, the plaintiff filed a motion for
summary judgment as to the defendant on the second
count of the amended complaint. The defendant did
not oppose the plaintiff’s motion. On August 11, 2017,
the court granted summary judgment on the note in
favor of the plaintiff ‘‘in the principal amount of
$999,140.89 plus interest in the amount of $68,515.40
($54,515.40 as calculated through 4/7/17), plus 126 days
(through 8/11/17) at $109.49, which comes to $13,795.74
(plus interest continuing to accrue at $109.49 per day).’’
The court also addressed the plaintiff’s claim for attor-
ney’s fees as follows: ‘‘The plaintiff has indicated an
intent to submit a claim for attorney’s fees, as allowed
under the note. The court will entertain such a submis-
sion, subject to the presumptive obligation of a party
claiming the right to attorney’s fees to make an attempt
to identify fees directly or closely related to the claim
for which such fees are allowed, eliminating fees for
matters unrelated to the claim, to the extent possible/
practical. Total Recycling Services of Connecticut, Inc.
v. Connecticut Oil Recycling Services, LLC, 308 Conn.
312, 63 A.3d 896 (2013) (Total Recycling). Thus, subject
to the plaintiff’s possible argument to the contrary, the
plaintiff’s fees incurred in connection with its dispute
as to priority to the proceeds of the sale of the property,
which, in turn, is a consequence of the attempted mort-
gage foreclosure, at least facially would seem unrelated
to the ‘pure’ note based claim against this defendant.
. . . Attorney’s fees are to be determined after a claim
with supporting documentation is submitted (allowing
parties an opportunity to object or otherwise challenge
the claim, thereafter).’’
   On May 5, 2017, the plaintiff filed an affidavit in sup-
port of its claim for attorney’s fees against the defendant
in the amount of $46,152 to recover for time spent by
counsel on its claim against the defendant through May,
2017. On August 24, 2017, the plaintiff filed an updated
motion for attorney’s fees against the defendant in the
amount of $134,462.82, seeking $102,084 in fees for its
current counsel, $26,672.60 in fees for its prior counsel,
and $5706.22 in costs. The plaintiff argued that it was
entitled to the full amount of $134,462.82 pursuant to
§ 18 (c) (ii) of the note signed by the defendant, which
provided: ‘‘We can enforce our rights in court. This
includes, for example, foreclosing on the mortgage
described in section 11 above. If we enforce our rights
in court, you agree to pay our court costs and attorneys’
fees, as allowed by law and as set by the court.’’ Pursu-
ant to the court’s previous order to attempt to apportion
the fees incurred against the defendant and those
incurred in pursuit of its priority claim, the plaintiff
alleged that it had incurred attorney’s fees in the amount
of $41,484.50 as to the defendant directly. The plaintiff
argued, however, that the defendant ‘‘is responsible for
all attorney’s fees pursuant to his contract (the note)
with [the] plaintiff, including [the] plaintiff’s attorney’s
fees regarding the priority dispute with [M&T Bank]
(because such fees were incurred in connection with
his loan). If [the] plaintiff had not made this loan, there
would be no priority dispute with [M&T Bank].’’2
   The court heard argument on the plaintiff’s motion
for attorney’s fees on October 10, 2017. At the hearing,
counsel for the plaintiff reiterated his contention that
his client was entitled to attorney’s fees from the defen-
dant not only for all fees it had incurred in obtaining
the summary judgment against him on the note, but
also for all fees it had incurred in protecting the priority
of its mortgage by prosecuting its interpleader claim.
The defendant objected to the plaintiff’s argument that
he was responsible for all fees incurred by the plaintiff
in prosecuting its interpleader claim. He further argued
that the amount of fees requested was excessive
because he did not oppose the plaintiff’s claim against
him on the note and the claimed 108.5 hours expended
in obtaining judgment against him on the note was
unreasonable. He requested instead that the court
award the plaintiff fees for four hours of work in the
total amount of $1600. During rebuttal argument by the
plaintiff, the court commented as follows: ‘‘[A] hundred
hours strike me as somewhat extreme for a motion for
summary judgment against a defaulting party.’’ Appar-
ently agreeing, counsel for the plaintiff replied, ‘‘It does,
Your Honor.’’ Counsel for the plaintiff then agreed with
the court that one hundred hours did not seem to be
a ‘‘defensible’’ claim, and conceded ‘‘that some of these
entries, especially early on, relate to the M&T issues.
I’m surprise[d] that they weren’t stricken from here.’’
The court offered the plaintiff an opportunity to file a
revised affidavit, but the plaintiff declined the court’s
offer, noting: ‘‘I’m sure you’re more than capable of
reviewing what has been submitted and coming up with
what you believe is a fair amount of time for the work—
summary judgment—and . . . .’’ The court thereupon
took the papers on the plaintiff’s motion.
   On January 30, 2018, the court issued an order grant-
ing the plaintiff attorney’s fees in the total amount of
$11,000.3 The court explained that, pursuant to Total
Recycling, which it had previously referenced when
granting the plaintiff’s motion for summary judgment
as against the defendant, it was limiting the plaintiff’s
award of attorney’s fees to those incurred in prosecut-
ing its claim against the defendant on the note, not
those incurred in protecting the priority of its mortgage
against M&T Bank on its interpleader claim. The court
noted that the plaintiff had not objected to the applica-
tion of Total Recycling to this case, and, in fact, that
the plaintiff had withdrawn its claim for the full $102,084
when it argued its motion to the court. The court further
noted that it had considered all of the plaintiff’s claims
for fees against the defendant, and noted that the defen-
dant had not opposed any of the plaintiff’s claims
against him in its pursuit of judgment against him, and
thus that summary judgment had been rendered against
him on that claim upon his default. The court ultimately
concluded that upon weighing the ‘‘straightforward
nature of the claim as advanced’’ against the defendant
and the ‘‘magnitude of the debt’’ claimed by the plaintiff,
the defendant’s ‘‘contractual responsibility for reason-
able attorney’s fees related to collection efforts by cur-
rent counsel is $10,000.’’ Therefore, upon determining
that the plaintiff should also receive an additional $1000
in attorney’s fees for the limited efforts of prior counsel,
it awarded the plaintiff $11,000 in attorney’s fees against
the defendant under the note. This appeal followed.
    The plaintiff claims that the trial court erred in
excluding from its award of attorney’s fees against the
defendant the fees that it had incurred in protecting
the priority of its mortgage. In support of that claim,
the plaintiff argues that § 18 (c) (ii) of the note ‘‘is a
very broad contractual attorney’s fees provision. [The
defendant] agreed to reimburse [the] plaintiff for its
court costs and attorney’s fees to enforce [the] plain-
tiff’s rights. This not only includes [the] plaintiff’s rights
under the HELOC, but it also explicitly includes fore-
closing the HELOC mortgage. This means the reim-
bursed attorney’s fees will include not only the cost to
enforce the mortgage, but also [the] plaintiff’s costs
incurred to protect the HELOC mortgage’s priority.’’
The plaintiff has provided no legal or factual basis for
extending the explicit language relating to foreclosing
its mortgage to a separate claim against another party
asserting priority over that other party’s lien, nor are
we aware of any. The HELOC does not mention fees
incurred in ‘‘protecting’’ a priority claim; nor does any
other provision of the HELOC entitle the plaintiff to
such fees. In fact, the plaintiff did not have a priority
claim against any other person or entity at the time that
it issued the HELOC because the subject property was
then encumbered by the first mortgage from Washing-
ton Mutual, so it is difficult to understand how the
plaintiff reads into that contractual language the defen-
dant’s obligation to pay attorney’s fees to protect a right
that the plaintiff did not have when the parties signed
the note. The plaintiff argued in its motion for attorney’s
fees, consistent with its position before this court, that,
‘‘If [the] plaintiff had not made this loan, there would
be no priority dispute with [M&T Bank].’’ This argument
overlooks the fact that the property by which its mort-
gage was secured had been encumbered by a first mort-
gage when it extended its loan to the defendant. In so
arguing, the plaintiff ignores the fact that if the defen-
dant had not refinanced the first mortgage to Washing-
ton Mutual in favor of M&T Bank, there also would be
no priority dispute, for the plaintiff’s lien would have
remained subordinate to that of Washington Mutual.4
   The plaintiff also contends that the trial court ‘‘erred
in applying or misapplying Total Recycling . . . to this
case. [The] plaintiff made its objection known to the
court.’’ We disagree. In its decision granting the plain-
tiff’s motion for summary judgment, the court
announced its intention to rely on Total Recycling, in
which our Supreme Court held that ‘‘a party is . . .
entitled to a full recovery of reasonable attorney’s fees
if an apportionment is impracticable because the claims
arise from a common factual nucleus and are inter-
twined.’’ Total Recycling, supra, 308 Conn. 333. Pursu-
ant to Total Recycling, the court instructed the plaintiff
to attempt to distinguish the fees it had incurred against
the defendant in enforcing its claim on the note from
those incurred against M&T Bank in protecting the pri-
ority of its lien. Accordingly, when the plaintiff filed its
motion for attorney’s fees on August 24, 2017, it did
not, in any meaningful way, dispute the applicability
of Total Recycling to its claims for fees against the
defendant; nor did it do so at oral argument on its
motion for attorney’s fees. We thus decline to review
the plaintiff’s claim that the court improperly applied
Total Recycling to this case in ordering it to apportion
its fees between those that it had incurred as to the
defendant and those that it had incurred against M&T
Bank in its priority claim.5
   On the basis of the foregoing, we cannot conclude
that the court erred by excluding from its award of
attorney’s fees against the defendant any attorney’s fees
that the plaintiff incurred in asserting its priority claim
against M&T Bank.
      The judgment is affirmed.
      In this opinion the other judges concurred.
  1
    Although James T. Kiernan, Jr., is not the only defendant in this action,
we refer to him as the defendant because the order at issue in this appeal
was rendered against him.
  2
    Notably, also on May 5, 2017, the plaintiff filed a motion for attorney’s
fees against M&T Bank for fees incurred to obtain the judgment of inter-
pleader. Many of the claimed billable hours listed in the affidavit submitted
by the plaintiff in support of its motion were identical to those contained
in the affidavit that it submitted in support of its claim for fees against
the defendant.
  3
    Specifically, the court ruled, inter alia: ‘‘Having obtained summary judg-
ment as against this defendant, the plaintiff claims that it is entitled to
$100,000 as reasonable attorney’s fees. The defendant has objected to that
claim, and the court heard argument on October 10, 2017. (As a point of
reference, in [its ruling on the plaintiff’s motion for summary judgment],
the court had noted its obligation to apply [Total Recycling], supra, 308
Conn. 312, to the claim for attorney’s fees, requiring the claimant to make
an effort to allocate attorney’s fees to claims for which such fees are collecta-
ble to the extent reasonably possible. The plaintiff has not challenged [the]
applicability of that decision to this situation.) During the course of argu-
ment, the defendant accurately pointed out that he had never filed any
pleadings, filed no objection to the motion for summary judgment, and while
the motion for summary judgment was pending, when the plaintiff filed a
motion for default for failure to plead, nothing was done that might prevent
that motion from being granted. Somewhat simplistically, the defendant’s
position is that in connection with these proceedings, he has never actively
disputed any claim made by the plaintiff, yet is being asked to pay more
than $100,000 as ‘reasonable’ attorney’s fees in connection with his liability
under the note. The defendant also argued that an appropriate award would
be in the area of $1600. Somewhat conceding that $100,000 might be unrea-
sonable, during argument, the plaintiff suggested something substantially
greater would be reasonable, doing a rough calculation suggesting in excess
of twenty hours just for the motion for summary judgment. . . . Again,
although arguably withdrawn by virtue of the oral argument discussed above,
the plaintiff has claimed $102,084 in legal fees attributable to current counsel.
The court has attempted to identify each/every billing entry making mention
of summary judgment or some activity seemingly related to same (e.g.,
references to an affidavit of debt), and even if the court were to assume
that the full amount of time for each such entry was solely related to the
motion for summary judgment, the total would be less than $9500. (Entries
for April 5 [two entries], 11, 12 [two entries], 25, May 5, 10, 12, and 25, with
the motion for summary judgment being submitted for adjudication on May
30, 2017.) Most if not all of the entries for those dates contain activities
unrelated to summary judgment, and an especially extreme example is the
entry for May 12, totaling $1080, where the only apparent connection to
summary judgment was reclaiming the motion. (For clarity, the court is not
suggesting that the plaintiff is claiming that the full 2.7 hours on May 12 were
attributable to summary judgment, but rather is using this as an example
of the extent to which the maximal calculation set forth earlier in the
paragraph clearly exceeds any realistic allocation of time to the motion.)
Additional time undoubtedly was spent with respect to the preparation of
the request for admissions and the subsequent notice relating to the failure of
the defendant to respond (deny) those requests. Additional time undoubtedly
was spent with respect to the deposition, as reflected on submitted documen-
tation. Again, however, to the extent that the primary strategy appears to
have been summary judgment, the need for alternate avenues (e.g., the court
recalls seeing somewhere, in a pleading, a reference to the admissions
potentially being used in support of summary judgment—something that
does not appear to have happened) becomes less pressing, such that the
reasonableness of substantial fees for such alternate avenues is open to
question. (Alternatively, they may be subject to ‘discount’ for that reason.)
Even allowing for some amount of time attributable to ‘getting up to speed’
when the file was taken over, the claim against this defendant remained an
uncontested claim for money owed on a note/loan (amounts advanced on
a line of credit). Conversely, the court must recognize that substantial time
and effort went into the initial foreclosure aspect of the proceeding—
directed to a different defendant—which was transformed into an inter-
pleader proceeding in turn necessitated by the issue currently being litigated
quite actively relating to priority of liens. The court must draw a distinction
between covering all bases as a matter of due diligence, and reasonableness
in pursuing a claim in which there had been no identified or apparent indicia
of resistance. Thus, while it may have been appropriate diligence to prepare
and file a motion for summary judgment, while at the same time filing/
serving requests for admissions directed to him, while at the same time
preparing for and eventually taking his deposition, the question for the court
is what is reasonable with respect to allowance of attorney’s fees, given a
contractual entitlement to such an award and the absence of any ‘resistance’
from this defendant. Under the circumstances, taking into account the need
for litigation, the need to address claims against this defendant in the context
of a claim against the mortgagor, initial uncertainty as to whether there
would be active resistance/opposition to the motion for summary judgment
or any other approach that might be taken, the relatively straightforward
nature of the claim as advanced and presented via summary judgment, and
given the magnitude of the debt (recognizing that the substantial amount
in dispute would justify greater attention to detail), the court concludes
that an appropriate award of reasonable attorney’s fees, as against defendant
James Kiernan under his contractual responsibility for reasonable attorney’s
fees related to collection efforts by current counsel, is $10,000. Added to
the $1000 that the court has estimated to be reasonable fees for efforts
of prior counsel, the aggregate reasonable attorney’s fees attributable to
collection efforts directed to defendant James Kiernan total $11,000.’’
   4
     We note that the priority dispute is still pending, and it is not clear from
the record whether the priority claim that it seeks to have this defendant
fund is valid, a subject upon which we express no opinion. Although it is
not disputed that the plaintiff’s HELOC mortgage was recorded prior to M&
T Bank’s mortgage, ‘‘[t]here is . . . an exception to the ‘‘first in time, first
in right rule.’’ The Restatement (Third), Property, Mortgages § 7.6 (1997), on
the topic of subrogation, provides a thorough explanation of this complicated
doctrine. The Restatement provides in relevant part: ‘‘(a) One who fully
performs an obligation of another, secured by a mortgage, becomes by
subrogation the owner of the obligation and the mortgage to the extent
necessary to prevent unjust enrichment. Even though the performance would
otherwise discharge the obligation and the mortgage, they are preserved
and the mortgage retains its priority in the hands of the subrogee. . . .’’
Restatement (Third), supra, § 7.6.
  ‘‘The holders of intervening interests can hardly complain about this result,
for they are no worse off than before the senior obligation was discharged.’’
Id., comment (a), p. 510.
  Moreover, the plaintiff’s claim of priority does not arise from any interfer-
ence by the defendant with the plaintiff’s enforcement of its rights under
the note. As noted, the plaintiff chose to assert its priority over M&T Bank,
a right that it did not have when it issued the HELOC to the defendant.
That priority dispute is ongoing between the plaintiff and M&T Bank, and,
should the plaintiff prevail in its priority claim, it may seek attorney’s fees
under General Statutes § 52-484, which it has properly requested in its
interpleader complaint, and under which it has sought and received an
award of attorney’s fees for commencing the interpleader proceeding against
the defendant.
  5
    We note that any claim that it was impractical to so apportion those
fees is belied by the fact that the plaintiff did, in fact, present to the trial
court an affidavit apportioning them.