Skip to Content

March

2019

February Connecticut Appellate Update and Wrap Up – Banking and Financial Institution Services

News

Spring is right around the corner and with it comes more caselaw from the Connecticut Appellate Court which may have an impact on your business. Although it was a quieter month than some more recently, there are still multiple decisions that banks and financial institutions should be aware of. So, without further ado, let’s get into two of the cases which were released this month in the second part of GL’s monthly Connecticut Appellate Update and Wrap Up.

Connecticut Community Bank, N.A. v. Kiernan – This matter involved the Appellate Court’s review of a claim by the plaintiff-lender that the Superior Court had failed to award and appropriate and reasonable amount of attorneys’ fees pursuant to a note. The history of the action is rather complicated involving a foreclosure; priority dispute between the plaintiff and another mortgagee; conversion of the foreclosure to an action on the promissory note; and an interpleader action. However, the salient findings by the Appellate Court reinforce the requirements for both banks and their counsel to accurately record time expended for matters, especially when one matter turns into a hydra with multiple offshoot activities such as the underlying case. The Superior Court found that the time entries submitted by counsel for plaintiff related to proceedings other than the enforcement of the note for which there was no contractual right to claim the fees against the borrower of the note and, further, that the time entries were excessive in light of the proceedings to actually enforce the note itself. All told, the Superior Court cut the requested amount of legal fees by more than $100,000.00 and eventually awarded $11,000.00. The Appellate Court affirmed the award and reasoning employed by the Superior Court.

City of Stamford v. Rahman – The successful appeal on this matter was prosecuted by GL’s very own Jerry Garlick. The case revolved around a blight lien foreclosure commenced by the City of Stamford which resulted in a completed sale. After the sale, excess proceeds were deposited with the Superior Court and supplemental judgment was entered in favor of Bank of America, N.A. in the amount of $348,097.16 on April 17, 2014. Thereafter, on June 2, 2017, Wells Fargo Bank, N.A. filed a motion to open the supplemental judgment based on a claim that the borrower had committed fraud by providing a forged release of its mortgage interest in the foreclosed property during the closing of two subsequent liens, one of which was in favor of Bank of America, N.A. in whose favor supplemental judgment was entered. The Superior Court conducted a hearing regarding the claims of the parties and entered an order opening the previously granted supplemental judgment and requiring Bank of America to pay the funds received to Wells Fargo. The Appellate Court reversed the decision and remanded the action with instruction for the motion to open to be denied as a result of, among other factors discussed in the decision, that the Superior Court erred in finding that the fraud of the underlying borrower, Rahman, could be imputed to Bank of America and that the Superior Court’s position requiring service of a motion for supplemental judgment on a defaulted party was not supported by the rules of practice in CT.

A very important takeaway from the case is that a motion to open a judgment filed after the 4 month limitation set forth in Conn. Gen. Stat. § 52—212 (and 52—212a depending on the circumstances) even if based on fraud, must implicate the behavior of actions of the party in whose favor the judgment was entered.

For questions relative to these matters or to discuss how GL can assist in your business or litigation requirements, please feel free to contact any of the attorneys in the Banking and Financial Institution Services practice group:

Linda Hadley – lhadley@gllawgroup.com; 860-760-8428

Jerry Garlick – ggarlick@gllawgroup.com; 860-760-8427

Andrew Barsom – abarsom@gllawgroup.com; 860-760-8423