by Robert Wichowski, Esq.
Bendett & McHugh, P.C.
USFN Member (CT, MA, ME, NH, RI, VT)

In the case of Gibson v. Jefferson Woods Community, Inc., Et. Al., 206 Conn. App 303 (2021), the Connecticut Appellate Court affirmed an order of the trial court dismissing an underlying foreclosure action and, thereby ratifying a prior foreclosure done by a condominium association.

In the instant case, the condominium association Defendant (Jefferson Woods) began and completed a prior judicial foreclosure action in which it foreclosed on its nine-month super priority statutory amount due. One of the Defendants in the case was defaulted for failure to appear. This particular Defendant had an interest in the property by virtue of a mortgage executed in favor of him by the then property owner. After Jefferson Woods filed its Lis Pendens on the land records, and after the foreclosure had begun, this mortgagee assigned all of his right and title to the mortgage to Gibson. Gibson recorded the assignment on the land records after judgment entered in favor of Jefferson Woods, but just prior to the date title was set to vest in plaintiff by virtue of a judgment of strict foreclosure. Since none of the Defendants in the foreclosure redeemed the judgment debt on or before their deadline to do so, title to the property vested absolutely in Jefferson Woods. Gibson however, never appeared in the foreclosure nor did she redeem the debt. She likewise did not challenge the entry of judgment or the foreclosure in general, at any point.

Nearly three years after the completion of the foreclosure and the subsequent sale of the property to a bona fide third-party purchaser, Gibson began the instant foreclosure against Jefferson Woods claiming a foreclosure of the mortgage as well as unjust enrichment. Jefferson Woods filed a motion to dismiss the foreclosure claiming that Gibson lacked standing to pursue her foreclosure because the prior foreclosure extinguished the mortgage. The trial court granted the motion to dismiss, and Gibson appealed.

The Appellate Court affirmed the dismissal of the foreclosure, ruling that since the foreclosure was completed and title to the property had become absolute in Jefferson Woods by virtue of Connecticut’s strict foreclosure mechanism, any interest that was subsequent in right to the one being foreclosed was extinguished. Because the assignment of the mortgage occurred after the filing of the lis pendens on the land records, Gibson took title to the mortgage subject to the foreclosure by Jefferson Woods. Further, even though Gibson attempted to challenge the Jefferson Woods foreclosure in her separate suit by claiming that the statutory requirements of the foreclosure were not met, the Appellate Court held that collateral attacks on judgments are specifically disfavored in Connecticut unless it is obvious from the record that the judgment is “entirely invalid.” Since the claimed defect was not obvious from a review of the record, the appellate court affirmed the granting of the motion to dismiss.

Regarding Gibson’s claim of unjust enrichment, since she claimed unjust enrichment by virtue of her interest in the mortgage, when the mortgage was found to be extinguished, her ability to claim unjust enrichment also was extinguished.

This case illustrates two very important notes for foreclosure practice in Connecticut: 1) since Connecticut employs a strict foreclosure mechanism and condominium associations can avail themselves of a nine month super priority lien, it is not uncommon that mortgagees can find their mortgage extinguished unless these suits are quickly forwarded to local counsel for handling, and 2) If there is a case that has been completed, it is very difficult to unwind or undo that case absent an extreme showing from the record that the judgment in the case was “entirely invalid.”

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Fall 2021 USFN Report