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USFN 25th Anniversary

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CT: Appellate Stays and Foreclosure Sales

by S. Bruce Fair
Hunt Leibert – USFN Member (CT)

The Connecticut Appellate Court recently held that the trial court improperly approved a foreclosure sale, which had taken place during an appellate stay. In First ConnecticutCapital, LLC v. Homes of Westport, LLC, the trial court rendered judgment of foreclosure by sale in favor of the plaintiff and scheduled the sale date for July 7, 2007. Two days prior to the sale, the defendant moved to open the judgment for the purpose of extending the sale date for more than seven months hence.

The underlying basis of the motion to open was the private sale negotiations between the defendant and a potential buyer. At the hearing on the motion, which was held on July 6, 2007, the defendant submitted as evidence a purported purchase agreement together with a personal check from the potential buyer presumably representing some sort of refundable deposit. The plaintiff objected to the relief sought in the motion claiming, among other things, that there was very little to suggest the existence of, or even the possibility of, a bona fide purchase and sale agreement between the defendant and the potential buyer.

In sum, the plaintiff asserted that the motion to open was merely dilatory in nature. The trial court agreed and denied the motion to open. At the same time, the plaintiff moved to terminate the prospective stay of execution, which stay is automatically imposed upon the filing of an appeal. The trial court granted that motion. Later the same day, the defendant filed an appeal from the trial court’s denial of the motion to open judgment. Apparently in light of the trial court’s granting of the motion to terminate stay, the sale took place as scheduled on July 7, 2007. A few days later the defendant filed with the appellate court a motion for review of the order terminating the stay. A few months after that the trial court approved the sale, which action the defendant also appealed.

The appellate court reversed the trial court and remanded the case for the scheduling of a new sale date. The court held that an appellate stay was in operation at the time of the July 7 sale pursuant to the applicable rules of practice and law which provide, essentially, that: (1) a twenty-day appeal period and the corresponding automatic stay attach to a decision on a motion to open; (2) an order concerning a termination of the stay is itself stayed for ten days, within which time the affected party may file a motion for review with the appellate court; and (3) this latter stay continues until such time as the motion for review is decided by the appellate court.

The court noted the potential for a defendant’s abuse of process and the general “no-win” situation facing a plaintiff; e.g., the denial of a motion to open filed within twenty days of the sale date would stay the sale, or the denial of a strategically filed motion to open and the granting of a motion to terminate appellate stay would still give rise to a stay that would continue through the sale date (even if the defendant did not appeal the denial of the motion to open). Nonetheless, until such time as the legislature deems fit to modify the law, the potential for virtually perpetual delay of foreclosure actions exists.

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