Retained Realty, Inc. v. Kate McCabe

08-5269-cv(L), 09-2377-cv(CON), 09-3186-cv(CON)
Retained Realty, Inc. v. Kate McCabe et al.

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

SUMMARY ORDER

Rulings by summary order do not have precedential effect. Citation to a summary order filed on or
after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and
this Court’s Local Rule 32.1.1. When citing a summary order in a document filed with this Court, a
party must cite either the federal appendix or an electronic database (with the notation “summary
order”). A party citing a summary order must serve a copy of it on any party not represented by
counsel.

1 At a stated term of the United States Court of Appeals for the Second Circuit, held
2 at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of
3 New York, on the 5th day of May, two thousand ten.
4
5 PRESENT:
6 DEBRA ANN LIVINGSTON,
7 GERARD E. LYNCH,
8 Circuit Judges.
9 TIMOTHY C. STANCEU,
10 Judge. *
11 _______________________________________________
12
13 RETAINED REALTY, INC.,
14 Plaintiff-Appellant,
15
16 -v.- Nos. 08-5269-cv(L), 09-2377-cv(CON),
17 09-3186-cv(CON)
18
19 KATE McCABE, ESTATE OF JACK J. SPITZER, STATE OF CONNECTICUT,
20 WACHOVIA BANK, NATIONAL ASSOCIATION, JACK J. SPITZER, CHARLOTTE
21 B. SPITZER, ROBERT SPITZER, JIL SPITZER-FOX, STEVEN VASS,
22 Defendants-Appellees.
23 _______________________________________________
24
25 CRAIG S. HILLIARD, Stark & Stark P.C., Lawrenceville, NJ
26 (Robert A. Ziegler, Plainville, CT, of counsel), for Plaintiff-
27 Appellant.
28

*
The Honorable Timothy C. Stanceu, of the United States Court of International Trade,
sitting by designation.

1
 1 JAMES J. TANCREDI (David M. Bernard, on the brief) Day
2 Pitney, LLP, Hartford, CT, for Defendants-Appellees
3 Estate of Jack J. Spitzer, Charlotte B. Spitzer, Robert
4 Spitzer, and Jil Spitzer-Fox.
5
6
7 UPON DUE CONSIDERATION, it is hereby ORDERED, ADJUDGED, AND

8 DECREED that the judgment of the district court be AFFIRMED.

9 Plaintiff-Appellant Retained Realty, Inc. (“Plaintiff”) appeals from an order of the

10 United States District Court for the District of Connecticut (Hall, J.), entered September

11 30, 2008, denying its motion to amend a court ruling granting partial summary judgment

12 to Defendants-Appellees Estate of Jack J. Spitzer, Charlotte B. Spitzer, Jil Spitzer-Fox,

13 and Robert B. Spitzer (“Defendants” or “the Estate”). Plaintiff argues that it is entitled to

14 a deficiency judgment against the Estate following a Connecticut foreclosure proceeding

15 and that it is not responsible for Defendants’ attorneys’ fees. We assume the parties’

16 familiarity with the underlying facts, procedural history, and specification of the issues on

17 appeal.

18 We review a grant of summary judgment de novo, viewing the evidence in the

19 light most favorable to the non-movant and drawing all reasonable inferences in its favor.

20 See Sledge v. Kooi, 564 F.3d 105, 108 (2d Cir. 2009). Summary judgment is appropriate

21 when “there is no genuine issue as to any material fact and . . . the movant is entitled to

22 judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2).

23 Under Connecticut law, foreclosure on a mortgage is “an equitable action that

24 ‘precludes further proceedings on the underlying debt’ and requires an unsatisfied

25 mortgagee to pursue his rights through a deficiency judgment.” Stein v. Hillebrand, 688

26 A.2d 1317, 1322 n.7 (Conn. 1997) (quoting Fairfield Plumbing & Heating Supply Corp.

2
 1 v. Kosa, 600 A.2d 1, 3 (Conn. 1991)). Strict foreclosure, in contrast to the more

2 traditional foreclosure by sale, “vest[s] title to the real property absolutely in the

3 mortgagee . . . without any sale of the property. A judgment of strict foreclosure, when it

4 becomes absolute and all rights of redemption are cut off, constitutes an appropriation of

5 the mortgaged property to satisfy the mortgage debt.” Ocwen Fed. Bank, FSB v. Charles,

6 898 A.2d 197, 204 (Conn. App. Ct. 2006) (emphasis omitted). The opening of judgments

7 of strict foreclosure is governed by Connecticut General Statute § 49-15, which provides

8 in part as follows:

9 Any judgment foreclosing the title to real estate by strict foreclosure may,
10 at the discretion of the court rendering the judgment, upon the written
11 motion of any person having an interest in the judgment and for cause
12 shown, be opened and modified, . . . provided no such judgment shall be
13 opened after the title has become absolute in any encumbrancer . . . .
14
15 Conn. Gen. Stat. § 49-15(a)(1). Pursuant to § 49-14 of the Connecticut General Statutes,

16 a party to a strict foreclosure who believes the value of the foreclosed-upon property will

17 prove inadequate to satisfy the debt owed to it may thereafter file a motion seeking a

18 deficiency judgment:

19 [An evidentiary] hearing shall be held not less than fifteen days following
20 the filing of the motion, except as the court may otherwise order. At such
21 hearing the court shall hear the evidence, establish a valuation for the
22 mortgaged property and shall render judgment for the plaintiff for the
23 difference, if any, between such valuation and the plaintiff's claim.
24
25 Conn. Gen. Stat. § 49-14(a). In a deficiency judgment hearing, “the court, after hearing

26 the party’s appraisers, determines the value of the property and calculates any deficiency.

27 This deficiency judgment procedure presumes the amount of the debt as established by

28 the foreclosure judgment and merely provides for a hearing on the value of the property.”

29 First Bank v. Simpson, 507 A.2d 997, 999 (Conn. 1986).

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 1 While the Plaintiff’s motion for a deficiency judgment was pending, the district

2 court revisited its earlier ruling in the context of a strict foreclosure proceeding and

3 determined that it had erred in concluding that a deficiency judgment could be entered

4 against the Estate despite the Plaintiff’s failure to comply with a Washington State

5 nonclaim statute requiring an estate’s creditors to file a notice of claim within a specified

6 period of time. See Wash. Rev. Code. § 11.40.051. Plaintiff argues that the district court

7 improperly applied Federal Rule of Civil Procedure 54(b) to reopen the judgment of strict

8 foreclosure because the judgment could not be reopened under Connecticut law,

9 Plaintiff’s title to the mortgaged property having already become absolute. For the

10 following reasons, we disagree.

11 “Under the Erie doctrine, federal courts sitting in diversity apply state substantive

12 law and federal procedural law.” Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415,

13 427 (1996). Although it is often difficult to draw the line between substance and

14 procedure for this purpose, it is “usually unproblematic” to do so for issues encompassed

15 by the Federal Rules of Civil Procedure: “[i]t is settled that if the Rule in point is

16 consonant with the Rules Enabling Act, 28 U.S.C. § 2072, and the Constitution, the

17 Federal Rule applies regardless of contrary state law.” Id. at 427 n.7; see also Shady

18 Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431, 1437 (2010). 1 We

1
The Supreme Court’s recent decision in Shady Grove Orthopedic Assocs., P.A. v.
Allstate Ins. Co., 130 S. Ct. 1431 (2010), does not set forth a single test for whether a
Federal Rule is procedural and thus consonant with the Rules Enabling Act. In a portion
of the opinion joined by a plurality of the Court, it is stated that if the rule “governs only
‘the manner and the means’ by which the litigants’ rights are ‘enforced,’ it is valid; if it
alters ‘the rules of decision by which [the] court will adjudicate [those] rights,’ it is not.”
Id. at 1442 (plurality opinion) (quoting Miss. Publ’g Corp. v. Murphree, 326 U.S. 438,
445 (1946)) (alteration in original). Justice Stevens’s concurrence provides an exception
for situations “in which the rule would displace a state law that is procedural in the
ordinary use of the term but it so intertwined with a state right or remedy that it functions

4
 1 must therefore determine whether the Federal Rule and the state law “attempt[] to answer

2 the same question.” Shady Grove, 130 S. Ct. at 1437; see also Burlington N. R.R. Co. v.

3 Woods, 480 U.S. 1, 4-5 (1987) (requiring an analysis of whether the Federal Rule’s

4 “scope . . . is ‘sufficiently broad’ to cause a ‘direct collision’ with the state law, or,

5 implicitly, to ‘control the issue’ before the court, thereby leaving no room for the

6 operation of that law” (quoting Walker v. Armco Steel Corp., 446 U.S. 740, 749-50 & n.9

7 (1980))).

8 Rule 54(b) provides that, unless the court has expressly determined that there is

9 no reason for delay and directed entry of a final judgment for that reason,

10 any order or other decision, however designated, that adjudicates fewer
11 than all the claims or the rights and liabilities of fewer than all the parties
12 does not end the action as to any of the claims or parties and may be
13 revised at any time before the entry of a judgment adjudicating all the
14 claims and all the parties’ rights and liabilities.

15 Because C.G.S. § 49-15 specifies that the judgment of strict foreclosure is inalterable

16 after title becomes absolute, it conflicts with Rule 54(b) unless the foreclosure can be

17 considered a final judgment. But “[a]n order adjudging liability but leaving the quantum

18 of relief still to be determined has been a classic example of non-finality and non-

19 appealability from the time of Chief Justice Marshall to our own.” Taylor v. Bd. of

20 Educ., 288 F.2d 600, 602 (2d Cir. 1961); accord Henrietta D. v. Giuliani, 246 F.3d 176,

21 180-81 (2d Cir. 2001). C.G.S. § 49-14 reserves to the deficiency judgment proceeding,

22 which follows the judgment of strict foreclosure, the determination of the value of the

23 foreclosed-upon property and the amount of the deficiency judgment. Hence, the

to define the scope of the state-created right.” Id. at 1452 (Stevens, J., concurring in part
and concurring in the judgment). Under either of these tests, we find that Rule 54(b), like
every other Federal Rule of Civil Procedure ever examined by the Supreme Court, is
procedural.

5
 1 judgment of strict foreclosure cannot be considered a final judgment because the quantum

2 of relief is yet to be determined. The requirement that it be inalterable is therefore in

3 direct conflict with Rule 54(b). The district court was properly governed by the federal

4 procedural rule and correctly exercised its ability to reexamine its judgment of strict

5 foreclosure.

6 Although acknowledging that it failed to file a claim in Defendants’ probate

7 proceedings as required by Washington estate law and hence that this claim would be

8 barred were it litigated in Washington state courts, Plaintiff argues that its claim for a

9 deficiency judgment is governed by Connecticut law and that Connecticut law does not

10 give extraterritorial effect to foreign nonclaim statutes. We find that Washington law was

11 properly applied to the issue of whether Plaintiff may maintain a breach of contract claim

12 against the Estate and therefore need not address whether Connecticut law would

13 recognize a foreign nonclaim statute. Under the Restatement (Second) of Conflict of

14 Laws, which has been generally followed by Connecticut courts, see Reichhold Chems.,

15 Inc. v. Hartford Accident & Indem. Co., 703 A.2d 1132, 1137-38 (Conn. 1997),

16 foreclosure-related issues that do not specifically affect an interest in the land itself “are

17 determined . . . by the law which governs the debt for which the mortgage was given.

18 Examples of such . . . issues [include] the mortgagee’s right to hold the mortgagor liable

19 for any deficiency remaining after foreclosure . . . .” Restatement (Second) of Conflict of

20 Laws § 229 cmt. e. Because the debt here is pursuant to the mortgage note, we perform a

21 contracts choice of law analysis.

22 Connecticut has adopted the “most significant relationship” approach to contracts

23 choice of law, as advocated by the Restatement (Second). Reichhold Chems., 703 A.2d

6
 1 at 1138. There is a presumption that if the place of negotiation and place of performance

2 are in the same state, here Connecticut, that state’s local law will be applied. Am. States

3 Ins. Co. v. Allstate Ins. Co, 922 A.2d 1043, 1047 & n.6. This can be overcome if another

4 state has a sufficiently strong policy-based interest in having its own law applied, as

5 determined by the application of the principles in § 6 of the Restatement. Id. at 1047 n.6.

6 Those principles are:

7 (a) the needs of interstate and international systems, (b) the relevant
8 policies of the forum, (c) the relevant policies of other interested states and
9 the relative interests of those states in the determination of the particular
10 issue, (d) the protection of justified expectations, (e) the basic policies
11 underlying the field of law, (f) certainty, predictability and uniformity of
12 result, and (g) ease in the determination and application of the law to be
13 applied.
14
15 Restatement (Second) Conflicts of Laws § 6(2). Moreover, the choice of law analysis

16 may be performed separately for each issue in the litigation, taking into account the

17 states’ interests with respect to that issue in particular. See Restatement (Second)

18 Conflicts of Laws § 188 cmt. d; see also Reichhold Chems., Inc. v. Hartford Accident &

19 Indem. Co., 750 A.2d 1051, 1056 n.5 (Conn. 2000); Arrow Elecs., Inc. v. Fed. Ins. Co.,

20 No. X01CV000167080, 2002 WL 172662, at *5 (Conn. Super. Ct. Jan. 7, 2002);

21 Crockwell v. Gov’t Employees Ins. Co., No. CV990090777, 2001 WL 1268116, at *6

22 (Conn. Super. Ct. Oct. 9, 2001). The relevant issue for analysis here is whether Plaintiff

23 may maintain a breach of contract claim against the Estate.

24 As the district court noted, Washington has an undoubted and strong interest in

25 the timeliness and finality of the administration of its domiciliaries’ estates. Its nonclaim

26 statute, which provides timely filing requirements for claims against an estate, limits the

27 claims against the decedent’s estate, expedites closing the estate, and facilitates the

7
 1 distribution of the decedent’s property. See Nelson v. Schnautz, 170 P.3d 69, 73 (Wash.

2 Ct. App. 2007). On the other hand, because title to Connecticut property is not at issue

3 and because the deficiency judgment is not sought against Connecticut citizens,

4 Connecticut has little interest in having its law applied. Consistency and certainty, too,

5 suggest that we apply Washington law. As Plaintiff acknowledged at oral argument, if

6 we were to find that Plaintiff is entitled to a judgment in its favor, Plaintiff would then

7 have to proceed to Washington to enforce that judgment against the estate; Washington

8 would then be forced to determine whether to give credit to our judgment, raising

9 concerns under the Full Faith and Credit Clause as well as generating inefficiency for the

10 parties and the courts. See, e.g., In re Estate of Reynolds, 970 P.2d 537 (Kan. 1998)

11 (determining whether to give effect to a New York judgment against the estate of a

12 Kansas decedent pursuant to a Kansas nonclaim statute). We therefore find that

13 Washington law appropriately governs this issue. Plaintiff does not appeal the district

14 court’s determination that, under Washington law, its claim is barred; such an argument

15 is therefore forfeit. Norton v. Sam’s Club, 145 F.3d 114, 117 (2d Cir.1998).

16 Finally, Plaintiff appeals the district court’s award of attorneys’ fees to

17 Defendants under a Connecticut consumer fee-shifting provision. This provision requires

18 that, whenever a contract to which a consumer is a party “provides for the attorney’s fee

19 of the commercial party to be paid by the consumer, an attorney’s fee shall be awarded as

20 a matter of law to the consumer who successfully prosecutes or defends an action or a

21 counterclaim based upon the contract or lease.” The statute applies, however, “only to

22 contracts or leases in which the money, property or service which is the subject of the

23 transaction is primarily for personal, family or household purposes.” Conn. Gen. Stat.

8
 1 § 42-150bb. Plaintiff contests the district court’s finding that the mortgage at issue in this

2 litigation was primarily for personal, family, or household purposes. This determination

3 is one of fact and we therefore review for clear error. India.Com, Inc. v. Dalal, 412 F.3d

4 315, 320 (2d Cir. 2005); Tyler E. Lyman, Inc. v. Lodrini, 828 A.2d 676, 680 (Conn. App.

5 2003). The mortgage in question arose when decedent Jack Spitzer allowed his cousin

6 Kate McCabe to refinance a mortgage on her home in his name via a limited power of

7 attorney. Although Spitzer himself did not live on the mortgaged property and there was

8 some evidence suggesting that Spitzer and McCabe had a plan to subdivide the property

9 and sell a portion of it in order to pay off the mortgage, there is also substantial evidence,

10 including the undisputed testimony of McCabe’s attorney, suggesting that Spitzer’s goal

11 in engaging in these transactions was to help his cousin maintain her family home. We

12 therefore hold that the district court did not commit clear error in finding that the property

13 served a personal, family or household purpose.

14 All arguments not otherwise discussed in this summary order are found to be

15 moot or without merit.

16 For the foregoing reasons, the judgment of the district court is hereby affirmed.

17
18 FOR THE COURT:
19 Catherine O’Hagan Wolfe, Clerk
20
21

9