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Connecticut: Appellate Court Affirms Trial Court’s Order for Borrowers to Reimburse Future Tax & Insurance Advances by Lender

Posted By USFN, Tuesday, February 13, 2018
Updated: Monday, February 12, 2018

February 13, 2018

by James Pocklington
McCalla Raymer Leibert Pierce, LLC – USFN Member (Connecticut, Florida, Georgia, Illinois)

The Connecticut appellate decision in JPMorgan Chase Bank, N.A. v. Essaghof, 177 Conn. App. 144 (Oct. 10, 2017), as well as the strong language used in that decision, is extremely positive for foreclosing lenders — and may have application in other equitable judicial foreclosure jurisdictions. The Essaghof foreclosure action began in early 2009 and was heavily litigated through trial, concluding in July 2015, during which time the lender expended in excess of $330,000 for real estate taxes and homeowner’s insurance.

Trial Court Grants Equitable Relief
After losing at trial and in their attempts for a reversal at the trial court level, the borrowers took an appeal in December 2015. In response to the mounting costs caused by the borrowers’ delays, the lender brought a motion for equitable relief, requesting that the trial court order the borrowers to reimburse the lender for all future tax and insurance advances. In February 2016 the trial court granted that motion, ruling that the obligation to maintain taxes and insurance is not an issue of the foreclosure, and that it would not be affected by the trial court and appellate litigation. The borrowers amended their appeal to challenge the trial court’s authority to enter the equitable order.

Appellate Analysis
After a review of the authority granted trial courts to “examine all relevant factors to ensure that complete justice is done,” the appellate court upheld both the trial court’s authority to make the ruling and the ruling itself. In one of the strongest statements in recent years, the appellate court eviscerated the borrower’s claims and explicitly confirmed for other trial courts that they, too, are empowered to take such actions when they believe it is warranted. Specifically, the court stated:

“We cannot conceive of any abuse of discretion on the part of the trial court. The court understandably was concerned that, absent an order requiring the defendants to pay for their own property taxes and homeowner’s insurance, they would experience a windfall because they would be allowed to live on their property for free at the plaintiff’s expense until the conclusion of the foreclosure proceedings. Such a result is plainly within the realm of issues that the court’s equitable powers were designed to address. … The court did not abuse its discretion in determining that a balancing of the equities justified ordering the defendants to pay for expenses that they would have been required to pay no matter the outcome of this case.” Id. at 162.

The Takeaway
One of the larger concerns faced by foreclosing lenders during lengthy litigation is the expense incurred through continued advances. The Connecticut Appellate Court confirmed that a trial court may require that those costs be borne by a borrower. The borrowers have petitioned the Connecticut Supreme Court for certification.

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Note for consideration of the USFN Award of Excellence: This article is not a "Feature."


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