CT: Objections in a Deficiency Judgment Hearing

by Renee Bishop
Bendett & McHugh, PC - USFN Member (CT)

In Wells Fargo Bank, N.A., as Trustee for the registered holders of GMAC Commercial Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 2004-C1 v. Springtime #1 LLC, Docket No. CV 07 5010881 (Aug. 2008), the superior court ruled on whether certain objections could be asserted in a deficiency judgment.

The plaintiff sued the defendant, Spring Time #1 LLC, a maker of a certain note, leasehold mortgage, and security agreement and the other defendant, Jonathan W. Burke, the guarantor of the note. The defendants defaulted for failure to appear and the title vested in the plaintiff. The plaintiff timely moved for a deficiency judgment against the defendants.

Defendant Burke first appeared in this case through his attorney during the deficiency judgment hearing. He filed four objections to the deficiency judgment. The first objection was that he did not sign the guaranty so he could not be held liable under the guaranty. The court relied on Bank of Stamford v. Alaimo, 31 Conn.App.1, 9 (1993), and ruled that this objection was precluded. The defendant must assert defenses as to liability in the foreclosure action and cannot raise these defenses at the deficiency judgment hearing.

Defendant Burke’s second objection was that his obligation under the guaranty is of a limited nature, is conditional on misconduct other than default of payment of the mortgage note, and is not necessarily equal to the debt established in the foreclosure judgment. The court allowed this objection and ruled that Burke was not barred from contesting his obligation under the guaranty and the calculation of the deficiency.

The third objection raised by Burke was that he was not provided with notice of the action so the court lacked personal jurisdiction. The court ruled that the third objection was precluded. Lack of personal jurisdiction should have been challenged by filing a motion to dismiss within 30 days of the defendant filing his appearance, pursuant to Connecticut Practice Book Section 10-30. An objection to the deficiency judgment is not a proper way to raise the issue of lack of personal jurisdiction.

Finally, in his fourth objection the defendant raised issues relating to the valuation of the property. All parties agreed that the defendant has the right to contest valuation at the deficiency judgment hearing.

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