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Connecticut: A Default Judgment Against a Mortgagee Does Not Give Effect to a Plaintiff’s Erroneous Legal Conclusions

Posted By USFN, Monday, March 11, 2013
Updated: Monday, November 30, 2015

March 11, 2013

 

by William R. Dziedzic
Bendett & McHugh, P.C. – USFN Member (Connecticut, Maine, Vermont)

The Connecticut Appellate Court has ruled that a default judgment does not reify a plaintiff’s erroneous legal conclusions. [Moran v. Morneau, 140 Conn. App. 219 (Jan. 15, 2013)].

In Moran, the plaintiff commenced an action seeking to foreclose on a judgment lien. In addition to naming the property owner as a defendant, the plaintiff named a lender with a recorded mortgage on the property. It was the plaintiff’s position that, although the mortgage was recorded prior to the judgment lien, the judgment lien related back to a previously recorded notice of constructive trust, giving the plaintiff priority over the lender’s mortgage. The lender did not appear in the lien foreclosure action, and a judgment of strict foreclosure in favor of the plaintiff was entered.

The lender timely moved to open the default judgment, contending that, among other things, contrary to the allegations in the plaintiff’s complaint the mortgage had priority over the judgment lien because the notice of constructive trust had no enforceable effect on the priority of the lender’s mortgage. The plaintiff argued that as a result of the default judgment, the lender effectively admitted the priority order alleged in the complaint. The trial court refused to open the default judgment; however, it later issued an order that the lender’s mortgage was prior to the plaintiff’s lien, which the plaintiff appealed.

The plaintiff’s sole claim on appeal was that the default established the lien priorities as alleged in the complaint and that the court had no discretion, after the default, to review the plaintiff’s legal conclusions. The appellate court affirmed the trial court’s order of priority and held that a default does not obligate the court to accept an incorrect legal position in determining the priority order of the parties’ lien interests. Further, the court went on to note that, as a general rule, a default admits the material facts that constitute a cause of action. However, the pleader is only entitled to a grant of relief when the allegations in the filing are sufficient on their face to make out a valid claim for judgment or relief. In the court’s words: “A default may settle many issues, but it does not operate to insulate a mistaken legal proposition from judicial review.”

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