Limit Foreclosure with Equitable Discretion in Connecticut

Limit Foreclosure in a blanket mortgage in Connecticut

Case Law
AMRESCO NEW ENGLAND II, L.P., ET AL. v. DOMINIC COLOSSALE ET AL.
(AC 20259)

APPELLATE COURT OF CONNECTICUT
63 Conn. App. 49; 774 A.2d 1083; 2001 Conn. App. LEXIS 200
December 11, 2000, Argued
April 24, 2001, Officially Released

After debtor A defaulted, X brought an action for strict foreclosure on five separate and noncontiguous parcels of property on which it held a blanket mortgage that secured a note signed by A. Subsequently, A requested an order of strict foreclosure limited to parcels one and two, supplemented by a small cash contribution that they had submitted to the court. Finding the A’s request for a limited foreclosure to be fair and equitable, the court rendered judgment accordingly. The total fair market value of all five parcels was $ 1,374,500. The mortgage debt will be satisfied in full by strict foreclosure on the first and second parcels that jointly have a fair market value of $ 475,500, supplemented by the A’s submission to the court of ready funds equaling $ 1370.89. The mortgage foreclosure debt is valued at $476,870.89.

Issue: Whether mortgagee can insist in foreclosing all the five parcels of land notwithstanding the fact that a foreclosure on the two parcels of land would sufficiently extinguish the obligation.

Ruling: No. Full foreclosure would have given the lender a substantial and undeserved windfall. X failed to support its claims of abuse of discretion with proper authorities. No constitutional rights were violated because X failed to show any cognizable injury. In the absence of binding statutory directions or dispositive common-law precedents, courts view cases through the lens of the equitable discretion that governs mortgage foreclosure cases. A court of equity may devise the remedy that is appropriate for the enforcement of a lawful judicial lien. Because foreclosure is peculiarly an equitable action, a court may entertain such questions as are necessary to be determined in order that complete justice may be done. In a foreclosure proceeding, a trial court may examine all relevant factors to ensure that complete justice is done. The determination of what equity requires in a particular case, the balancing of the equities, is a matter for the discretion of the trial court.

Lesson Learned: Court views foreclosure action with equity and justice. If satisfaction of the debtor’s obligation is already consummated, creditor cannot run after the other properties serving as security because it would be an unjust windfall on his part.

Written by Kevin Levonas and Jerry L.