Citibank, N.A., Trustee v. Lindland
Purchaser Could Seek Return Of Funds In Supplemental Proceedings
Civil Procedure | Creditors’ and Debtors’ Rights
- Connecticut Supreme Court
- SC 18885
- Sep 17 2013 (Date Decided)
- Zarella, J.
In a foreclosure action, title vesting in the purchaser does not strip the court of its jurisdiction over the sale proceeds and, here, the purchaser could intervene in supplemental proceedings to seek a return of the purchase price after title to the property passed when cumulative errors caused the purchaser to buy property that, unbeknownst by him, but known by the second mortgagee, was subject to a first mortgage foreclosed shortly thereafter. Citibank, N.A., trustee of SACO 2007-2 brought this foreclosure action against Debra Lindland, an estate executrix, disclosing, in its complaint, IndyMac Federal Bank, FSB's prior mortgage. IndyMac, also represented by plaintiff's counsel, pursued a separate foreclosure action. Cumulative mistakes occurred, including a computational error in Citibank's motion for judgment of strict foreclosure. The court, citing a fair market value of $305,000 and debt of $82,615.45, rendered judgment of foreclosure by sale, not recognizing IndyMac's priority debt of $295,200. The committee omitted IndyMac's mortgage. The Judicial Branch website erroneously reported it as satisfied. Robert Olsen successfully bid $216,000. The court approved the sale. Days later, IndyMac obtained a judgment of strict foreclosure. Olsen closed and quitclaimed his interest to 17 Ridge Road, LLC, partly owned by him. The court granted Citibank, representing itself as first mortgage holder, and estate's motions for supplemental judgment, ordering $91,854.27 disbursed to Citibank. Olsen, locked out of the property, then learned of IndyMac's mortgage. The court permitted Olsen and his company to join this action as defendants and granted their motion to open the foreclosure and supplemental judgments, citing the equities. The Appellate Court reversed the judgment. The Supreme Court reversed the Appellate Court's judgment, in part. The Appellate Court incorrectly concluded that Olsen lacked standing to be joined as defendant, depriving the trial court of jurisdiction to consider Olsen's motion or to grant relief. Olsen, classically aggrieved, had standing to join the supplemental proceedings. Nothing about the nature of the supplemental judgment compelled the conclusion that the court is stripped of its jurisdiction over the sale proceeds once the purchaser takes title. The supplemental judgment process comfortably accommodated a limited role for the purchaser under these circumstances. The relief sought related to the sale proceeds, not the property, and could be addressed without regard to the property's status. Whether jurisdiction existed to open the foreclosure judgment went unresolved.