author: Katz, J.

text:
    Suffield Bank v. William W. Berman et al.
    (14779)
    Peters, C. J., Berdon, Norcott, Katz and Palmer, Js.
    Argued January 11—
    decision released March 22, 1994

      Richard P. Weinstein, for the appellants (named defendant et al.).

      William H. Narwold, with whom were Charles D. Ray and, on the brief, David D. Legere, for the appellee (Federal Deposit Insurance Corporation).
   Katz, J.

The defendants William W. Berman, James J. Luzzi and Thomas E. Kohanski appeal from the judgments for deficiency after strict foreclosure had been entered against them. The defendants argue that the trial court’s judgments must be reversed because the trial court improperly: (1) refused, at the hearing on the motions for deficiency judgment, to allow them to challenge, on a mitigation of damages theory, the accrual of interest on the affidavit of debt; (2) concluded that the Federal Deposit Insurance Corporation (for purposes of this opinion, referred to as the plaintiff), as receiver of the insolvent Suffield Bank (bank), could assert the attorney-client privilege that originally existed between the bank and its attorneys; and (3) accepted into evidence a missing page to the appraisal after the close of the evidence. We affirm the judgments of the trial court.

The following undisputed facts are pertinent to this appeal. In May, 1987, the bank made two commercial loans to the defendants, secured by two properties located on Farmington Avenue in Farmington. In connection with the loans, the defendants signed promissory notes obligating them to make monthly interest payments to the bank and ultimately to repay the principal. In October, 1989, the defendants defaulted on their monthly interest payments, and thereafter, in April, 1990, the bank filed two identical actions to foreclose the mortgages on the properties securing the notes.

On May 1, 1990, pursuant to Practice Book § 236, the bank filed a written demand for disclosure of defense in each case. Subsequently, when the defendants did not file any defenses, the bank filed written motions for default against the defendants in each case for their failure to disclose a defense. On August 28, 1990, after defaults had been entered, the bank filed motions for judgments of strict foreclosure.

On November 9, 1990, the trial court, Maloney, J., held a hearing on the motions. At the hearing, the bank submitted an affidavit as proof of the defendants’ debt, to which the defendants objected, claiming that their obligation to pay interest had been discharged in February, 1990, because the bank had failed at that time to accept their codefendant’s offer to convey the properties in satisfaction of the secured indebtedness. The trial court overruled the defendants’ objection to the affidavit of debt, rendered judgments of strict foreclosure in favor of the bank based on the affidavit of debt, and set law days for December 12, 1990.

The defendants appealed from the trial court’s judgments of strict foreclosure, claiming, inter alia, that the trial court improperly had prevented them from contesting the amount of the mortgage debt. On July 80, 1991, the Appellate Court affirmed the decision of the trial court and remanded the cases for the purpose of setting new law days. Suffield Bank v. Berman, 25 Conn. App. 369, 594 A.2d 493 (1991). The Appellate Court reasoned that the defendants’ proffered evidence contesting the amount of the debt went to the issue of their liability for interest, and, therefore, constituted a defense to the debt that was required to be disclosed under Practice Book § 236. Id., 373-74. In the absence of such disclosure, the Appellate Court held that the trial court had properly refused to hear the proffered evidence. Id., 374. We denied the defendants’ subsequent petition for certification to appeal the decision of the Appellate Court. Suffield Bank v. Berman, 220 Conn. 913, 597 A.2d 339-40 (1991).

On September 6, 1991, the trial court entered an order declaring the bank insolvent and appointing the plaintiff as its receiver. On January 6, 1992, the trial court, Satter, J., set new law days of March 6, 1992, and June 16, 1992, for the properties. The properties were not redeemed, the titles were transferred to the plaintiff on March 17, 1992, and June 17, 1992, and, thereafter, the plaintiff filed motions for deficiency judgment in both cases.

The trial court, Aurigemma, J., held a hearing on the motions for deficiency judgment. At the hearing, the defendants objected to the plaintiffs motions for deficiency judgment on the grounds that: (1) their rights to due process had been violated because they had had no opportunity to challenge the amount of the debt at a meaningful time; and (2) the doctrines of unjust enrichment and equitable estoppel required the trial court to deny the motions for deficiency judgment because the bank had acted in bad faith by attempting to influence the appraiser who had performed an appraisal of the mortgaged properties and by failing to take appropriate actions to minimize the amount of the deficiency.

In its memorandum of decision dated January 27, 1993, the trial court rejected the defendants’ arguments and thereafter rendered judgments for deficiency after strict foreclosure in the aggregate amount of approximately $2.3 million plus statutory interest. The defendants appealed from the judgments of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c). Additional facts will be set forth as necessary.

I

The defendants first claim that the trial court, in violation of their due process rights, improperly refused to allow them to challenge the accrual of interest on the affidavit of debt, based on the defense of mitigation of damages, at the hearing on the motions for deficiency judgment. A more detailed review of the procedural facts is necessary for the disposition of this claim. As previously stated, on November 9,1990, the trial court held a hearing on the bank’s motions for judgment of strict foreclosure. At that hearing, after noting that there had been no notice of defenses interposed, the bank offered into evidence, pursuant to Practice Book § 527, an affidavit of debt executed by an officer of the bank that set forth the amount of the defendants’ debt on the smaller of the two loans in question. The defendants objected to the bank’s proffered evidence, stating their intention to challenge the amount of the debt with respect to the accrual of interest. Specifically, the defendants sought to argue that their obligation to pay interest on the debt had been discharged in February, 1990, by virtue of the bank’s refusal at that time to accept the offer of one of the equity owners of the mortgaged properties to convey the properties to the bank in satisfaction of the debt.

The bank objected to the evidence proffered by the defendants in support of their proposed defense. The trial court sustained the bank’s objection, refused to admit the defendants’ proffered evidence and rendered judgments of strict foreclosure in favor of the bank, based on the affidavit of debt. The defendants thereafter appealed.

On appeal from the entry of the judgments of strict foreclosure to the Appellate Court, the defendants claimed that the trial court had improperly prevented them from contesting the amount of the mortgage debt at the hearing. Suffield Bank v. Berman, supra, 25 Conn. App. 370. In asserting their claim, the defendants relied on Burritt Mutual Savings Bank of New Britain v. Tucker, 183 Conn. 369, 439 A.2d 396 (1981). In Tucker, this court held that when the defendant had challenged the accuracy of the calculations of principal, interest, taxes and late charges shown on the affidavit of debt presented at a hearing on a motion for judgment of strict foreclosure, the trial court relied improperly on the affidavit of debt to establish the amount of the debt. Id., 374-75, 382. The Appellate Court in Berman distinguished Tucker by noting that the issue in Tucker involved the accuracy of the calculations in the affidavit of debt, whereas, in the case before it, the defendants contested their liability to pay a certain portion of the debt. Suffield Bank v. Berman, supra, 373-74. The Appellate Court stated: “In short, defenses relating to the mathematical calculation of the debt need not be disclosed but defenses that go to the issue of the defendant’s liability for the debt must be disclosed.” Id., 374. Accordingly, the Appellate Court affirmed the judgment of the trial court and held that the defendants’ failure to disclose a defense in a timely manner under Practice Book § 236, barred them from later contesting liability at the strict foreclosure hearing. We denied the defendants’ petition for certification to appeal.

Notwithstanding the ruling of the Appellate Court in Berman and our subsequent denial of certification to appeal the issue, at the hearing on the motions for deficiency judgment, the defendants asserted, inter alia, that the trial court should deny the motions because the defendants had been precluded from challenging the amount of the debt at the prior hearing on the motions for strict foreclosure. In its memoranda of decision on the motions, the trial court noted that the factual basis of the defendants’ argument was identical to their unsuccessful claim previously raised in their appeal of the judgments of strict foreclosure. Accordingly, the trial court stated that it was “bound by the holding of the Appellate Court on this issue.” We agree with the trial court and, consequently, refuse to reach the defendants’ argument.

“ ‘New pleadings intended to raise again a question of law which has been already presented on the record and determined adversely to the pleader are not to be favored. . . .’ Wiggin v. Federal Stock & Grain Co., 77 Conn. 507, 516, 59 A. 607 (1905).” Breen v. Phelps, 186 Conn. 86, 99, 439 A.2d 1066 (1982). Thus, “it is a well-recognized principle of law that the opinion of an appellate court, so far as it is applicable, establishes the law of the case upon a retrial, and is equally obligatory upon the parties to the action and upon the trial court. Laurel, Inc. v. Commissioner of Transportation, 173 Conn. 220, 222, 377 A.2d 296 (1977); Gray v. Mossman, 91 Conn. 430, 434, 99 A. 1062 (1917); 5 Am. Jur. 2d, Appeal and Error § 744.” Dacey v. Connecticut Bar Assn., 184 Conn. 21, 23, 441 A.2d 49 (1981). “The law of the case . . . expresses the practice of judges generally to refuse to reopen what has been decided and is not a limitation on their power. Messenger v. Anderson, 225 U.S. 436, 444, 32 S. Ct. 739, 56 L. Ed. 1152 (1912). . . . Where a matter has previously been ruled upon interlocutorily, the court in a subsequent proceeding in the case may treat that decision as the law of the case, if it is of the opinion that the issue was correctly decided, in the absence of some new or overriding circumstance. State v. Hoffler, 174 Conn. 452, 462-63, 389 A.2d 1257 (1978); State v. Mariano, 152 Conn. 85, 91-92, 203 A.2d 305 (1964), cert. denied, 380 U.S. 943, 85 S. Ct. 1025, 13 L. Ed. 2d 962 (1965).” (Citation omitted.) Breen v. Phelps, supra, 99.

On appeal to this court the defendants argue that the trial court, as a court of equity at the hearing on the motions for deficiency judgment, should have utilized its equitable powers to consider the issues of whether it was fair for the bank to have refused the tender of the properties as a compromise for the debt, and whether, thereafter, interest on the debt should have ceased to accrue. The defendants further assert that, until they had been presented with an affidavit of debt at the hearing on the motions for strict foreclosure, they could not have known with certainty whether interest had continued to accrue. Thus, the defendants contend, the only meaningful time at which the trial court could have permitted them to challenge the contents of the affidavit of debt was at that hearing, after they had seen the affidavit of debt.

The defendants’ argument on appeal to this court, is, in essence, a reargument of the issue of whether the trial court, at the hearing on the motions for strict foreclosure, had properly precluded them from contesting the amount of the debt. Because the Appellate Court in Berman had already decided that the trial court had properly precluded the defendants from challenging the amount of the debt, that determination, in the absence of any claim of new or overriding circumstances, became the law of the case upon its remand. On remand, at the hearing on the motions for deficiency judgment, it was the opinion of the trial court that that issue had been correctly decided in Berman. The trial court properly treated that decision as the law of the case, binding on both the parties and the trial court in the subsequent hearing on the motions for deficiency judgment. Thus, the issue that the defendants continued to argue in the trial court, and now pursue in this court, already has been conclusively determined against them and does not warrant further review.

II

The defendants’ second claim is that the trial court improperly concluded that the plaintiff, as receiver of the bank, could assert, on the bank’s behalf, the attorney-client privilege that originally existed between the bank and its attorneys. This claim stems from the following additional facts. At the hearing on the motions for deficiency judgment, the plaintiff presented the expert testimony of the bank’s appraiser, Edward Heberger, in an effort to meet its burden of proving the market values of the subject properties as of the date title vested in the bank. Heberger testified that in May, 1990, for purposes of strict foreclosure, he had originally estimated the larger subject property’s market value at $4.1 million. Heberger also testified that, shortly after having received his appraisal, the bank had asked him to review it to reflect the amount that the bank could actually get for the property at that time. In response to the bank’s request, Heberger testified that in July, 1990, he had estimated the property’s liquidation value at $3.3 million. Additionally, Heberger testified that the property’s market value as of March 17, 1992, the date that title vested, had been $1.9 million.

At the hearing on the motions for deficiency judgment, the defendants subpoenaed two of the bank’s former attorneys, Carol Fantozzi and Dean Baker, who had represented the bank in its litigation with the defendants. The defendants examined both attorneys for the express purpose of exposing the bank’s efforts to influence Heberger to lower his May, 1990 appraisal. Specifically, the defendants inquired as to what had transpired at a meeting between the bank and its attorneys held sometime after the bank had received Heberger’s May, 1990 appraisal, but before it had received his July, 1990 appraisal. At various times during the questioning, both attorneys invoked the attorney-client privilege, claiming that the privilege had survived the bank’s insolvency. The defendants objected to each assertion of the privilege, the trial court overruled the objections, and the defendants took exceptions.

The defendants also subpoenaed the plaintiff’s attorney, Penny Seaman, requesting “[a]ny and all notes regarding telephone conversations, memos of conferences and correspondence by and between [her] and the appraiser, Edward F. Heberger and Associates, Inc., and the bank in regard to the appraisals of the subject property.” Relying upon the attorney-client privilege, Seaman refused to turn over the documents. Once again, the trial court overruled the defendants’ objection, upheld Seaman’s assertion of the privilege and the defendants took an exception.

The defendants argue that the “weight of authority” precludes the plaintiff, as receiver for the bank, from properly claiming the protection of the attorney-client privilege. The defendants further argue that as a result of the plaintiffs assertion of the privilege, the defendants were “unable to fully develop the evidence of the bank’s misconduct regarding the appraisal process.” Accordingly, the defendants urge us to conclude that the trial court improperly permitted the plaintiff to assert the attorney-client privilege, thereby warranting reversal. Because we hold that the bank’s attorney-client privilege survives the plaintiff’s receivership of that failed institution, we reject the defendants’ claim.

“The [Federal Deposit Insurance Corporation (FDIC)] was established by Congress in order to promote stability and confidence in the nation’s banking systems. Gunter v. Hutcheson, 674 F.2d 862 (11th Cir. 1982), cert. denied, 459 U.S. 826, 103 S. Ct. 60, 74 L. Ed. 2d 63, reh. denied, 459 U.S. 1059,103 S. Ct. 477, 74 L. Ed. 2d 624 (1982); First State Bank of Hudson County v. United States, 599 F.2d 558 (3d Cir. 1979). This purpose is achieved in two ways, first by providing insurance for payment to depositors of banks in case of failure, and second by providing an alternate method for handling failed banks by keeping the bank’s assets and deposits in tact. In the first instance, the FDIC in its corporate capacity is authorized ... to act as insurer of the deposits of a bank. In the second instance, the FDIC . . . acts in a separate capacity as receiver of the insolvent bank.” (Emphasis added.) Federal Deposit Ins. Corp. v. Berry, 659 F. Sup. 1475, 1481 (E.D. Tenn. 1987).

The powers and duties of the FDIC are governed by the Federal Deposit Insurance Act, 12 U.S.C. § 1811 et seq., as amended by the Financial Institutions Reform Recovery and Enforcement Act of 1989, Pub. L. No. 101-73, § 101 et seq. Federal Deposit Ins. Corp. v. Cherry, Bekaert & Holland, 129 F.R.D. 188, 191 (M.D. Fla. 1989); Resolution Trust Corp. v. Plumlee, 745 F. Sup. 1462, 1464 (E.D. Ark. 1990). In particular, the powers and duties of the FDIC as a receiver of insured depository institutions are specified in 12 U.S.C. § 1821 (d). Section 1821 (d) (2) (A) provides that the FDIC “shall, as . . . receiver, and by operation of law, succeed to . . . all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution . . . .”

Although we have not previously addressed the issue of whether the FDIC as receiver has the right to assert the attorney-client privilege on behalf of the failed institution, federal district courts have consistently held that the “FDIC-Receiver [can] assert the attorney-client privilege of the failed institution . . . .” Federal Deposit Ins. Corp. v. Cherry, Bekaert & Holland, supra, 129 F.R.D. 191, 192-93; see also Federal Deposit Ins. Corp. v. Amundson, 682 F. Sup. 981, 986-87 (D. Minn. 1988); Federal Deposit Ins. Corp. v. McAtee, 124 F.R.D. 662, 664 (D. Kan. 1988); Odmark v. Westside Bankcorporation, Inc., 636 F. Sup. 552, 554 (W.D. Wash. 1986) (dealing with Federal Savings and Loan Insurance Corporation as receiver); Federal Deposit Ins. Corp. v. Berry, United States District Court, E.D. Tenn., Docket No. 1-85-62 (June 3,1985); Federal Deposit Ins. Corp. v. Ellis, United States District Court, N.D. Ala., Docket No. CY84-PT-2560-M (Dec. 19,1985). We conclude, therefore, that we should follow the federal precedents that allow the FDIC as receiver to assert the attorney-client privilege of the failed institution. Accordingly, the trial court properly permitted the plaintiff, as receiver of the failed bank, to assert the attorney-client privilege of that defunct entity.

Ill

The defendants’ final claim is that, after evidence at the hearing on the motions for deficiency judgment had concluded, the trial court improperly accepted into evidence a missing page to the appraisal. This claim stems from the fact that the copy of the appraisal originally filed by the plaintiff and admitted into evidence at the hearing omitted the certification page. The first time the defendants advised either the trial court or the plaintiff of the missing page was immediately following the close of evidence, when they asserted that the appraisal was “legally insufficient” because it failed to contain the certification page required by certain state regulations. Thereafter, the trial court permitted the plaintiff to supplement the exhibit with a copy of the missing page.

The defendants argue that the trial court’s admission of the missing page after the evidence had concluded, without requiring the plaintiff to show “inadvertence or mistake,” or without declaring the case “reopened,” was improper and requires reversal under our case law. We disagree.

“ ‘Whether or not a trial court will permit further evidence to be offered after the close of testimony in the case is a matter resting within its discretion. State v. Levy, 103 Conn. 138, 145, [130 A. 96 (1925)]; State v. Chapman, 103 Conn. 453, 479, [130 A. 899 (1925)]; King v. Spencer, 115 Conn. 201, 203, [161 A. 103 (1932)]; State v. Swift, 125 Conn. 399, 405, [6 A.2d 359 (1939)].’ Hauser v. Fairfield, 126 Conn. 240, 242, 10 A.2d 689 [1940]. In the ordinary situation where ‘a trial court feels that, by inadvertence or mistake, there has been a failure to introduce available evidence upon a material issue in the case of such a nature that in its absence there is a serious danger of a miscarriage of justice, it may properly permit that evidence to be introduced at any time before the case has been decided.’ ” (Emphasis added.) State v. Holmquist, 173 Conn. 140, 152, 376 A.2d 1111, cert. denied, 434 U.S. 906, 98 S. Ct. 306, 54 L. Ed. 2d 193 (1977).

Our review of the record reveals that, despite the defendants’ claim to the contrary, when the defendants raised the issue of the missing page, the plaintiff made a clear and uncontested showing of inadvertence or mistake to the trial court. “ ‘In determining whether there has been an abuse of discretion, every reasonable presumption should be given in favor of the correctness of the court’s ruling. DiPalma v. Wiesen, 163 Conn. 293, 298, 303 A.2d 709 [1972]. Reversal is required only where an abuse of discretion is manifest or where injustice appears to have been done.’ State v. Brown, 169 Conn. 692, 702, 364 A.2d 186 [1975].” State v. Holmquist, supra, 173 Conn. 152-53. It is reasonable to assume that, in deciding to admit the missing page after the close of evidence, the trial court accepted the plaintiff’s uncontested statement that it had omitted the page by mistake. Accordingly, we can conclude neither that the trial court abused its discretion, nor that any injustice has been done.

The defendants also assert that under Season-All Industries, Inc. v. R. J. Grosso, Inc., 213 Conn. 486, 493-94, 569 A.2d 32 (1990), the trial court improperly failed to reopen the case after accepting the missing page into evidence. We disagree. In Season-All Industries, Inc., we held that the trial court abused its discretion in permitting the plaintiff to offer testimony after the close of evidence and during its rebuttal of the defendants’ counterclaim, without reopening the case. Id., 491-92. In so holding, we declined to conclude that the trial court implicitly had reopened the case as to the individual defendant, because that defendant had received no “notice” that the trial court was admitting additional evidence concerning his individual liability. Id., 494. We stated that although “the trial court . . . has the discretion to permit additional evidence to be introduced before a case is decided ... to do so, it must reopen the case. This is especially important in an action involving multiple defendants to ensure that an individual defendant has notice that the trial court may utilize any new evidence against him [or her]. To hold otherwise would be effectively to deprive such a defendant of the opportunity to cross-examine the additional witness and/or to rebut the additional testimony.” (Citations omitted.) Id., 493-94.

Unlike Season-All Industries, Inc., the present case does not present the situation of a defendant who was not on notice of the need to rebut additional testimony. To the contrary, in light of the colloquy that occurred among all the parties in open court immediately following the close of evidence on October 5, 1992, the defendants in this case were on notice that the trial court intended to accept the missing page into evidence and that the trial court thereafter might use the evidence against them. Accordingly, we conclude that although the trial court did not explicitly reopen the case, it did so implicitly and therefore did not abuse its discretion in admitting the missing page.

The defendants assert that, without the certification page, the validity, authenticity and accuracy of Heberger’s appraisal is open to question. Thus, according to the defendants, the fact that the page was missing provided them with additional arguments that they were precluded from making regarding the insufficiency of the plaintiffs proof. For several reasons we view the defendants’ claim as disingenuous. First, the defendants themselves never expressly moved to reopen the case and never attempted to make an offer of proof regarding their asserted prejudice. They have similarly failed to support their claim of prejudice before this court. Moreover, the defendants have never disputed that the original appraisal document contained the missing page and, therefore, comprised a complete certification of the appraisal. Finally, the defendants had had four days of hearings, over the course of several months, during which to question Heberger about the missing page, but declined to do so. Rather, they chose to wait until after the close of evidence before deciding to alert the trial court of the omission. This court has expressly decried such “trial by ambush” techniques in the past; see, e.g., State v. Dennison, 220 Conn. 652, 657, 600 A.2d 1343 (1991); State v. King, 216 Conn. 585, 590, 583 A.2d 896 (1990); and we decline to permit them here. Accordingly, we reject the defendants’ argument that the trial court improperly accepted into evidence the missing page after the evidence had concluded.

The judgment is affirmed.

In this opinion the other justices concurred.

       A fourth defendant, William L. Wollenberg is not involved in this appeal.

       At oral argument, the defendants expressly waived their claim that the trial court improperly failed to find that the appraisal process had been tainted by the misconduct of bank officers who influenced the appraiser to decrease his original valuation of the mortgaged property by 25 percent, and that such misconduct was attributable to the plaintiff, thereby giving rise to the equitable defense of unclean hands.

       The properties were located at 1051-1055 Farmington Avenue and 1067 Farmington Avenue, and secured a $3.9 million loan and a $500,000 loan, respectively.

       Although the promissory notes originally obligated the defendants to repay the principal by May, 1989, the time for payment of the principal was extended, at the request of the defendants, to May 4, 1990.

       Practice Book § 236 provides: “disclosure of defense “In any action to foreclose or discharge any mortgage or lien or to quiet title, or in any action upon any written contract, in which there is an appearance by an attorney for any defendant, the plaintiff may at any time file and serve in accordance with Sec. 120 a written demand that such attorney present to the court, to become a part of the file in such case, a writing signed by him stating whether he has reason to believe and does believe that there exists a bona fide defense to the plaintiffs action and whether such defense will be made, together with a general statement of the nature or substance of such defense. If the defendant fails to disclose a defense within five days of the filing of such demand, the plaintiff may file a written motion that a default be entered against the defendant by reason of the failure of the defendant to disclose a defense. If no disclosure of defense has been filed, the court may order judgment upon default to be entered for the plaintiff at the time the motion is heard or thereafter, provided that in either event a separate motion for such judgment has been filed. The motions for default and for judgment upon default may be served and filed simultaneously but shall be separate motions.”

       The named defendant filed a motion to dismiss for lack of proper service, which he subsequently waived, and a disclosure of defense that the bank’s conduct offset its claim against him, which he ultimately withdrew.

       See footnote 5.

       Prior to the November 9, 1990 hearing, the trial court, O’Connor, J., had held a hearing on the motions for judgment of strict foreclosure, but a mistrial was declared.

       Practice Book § 527 provides: “proof of debt
      “In any action to foreclose a mortgage where no defense as to the amount of the mortgage debt is interposed, such debt may be proved by presenting to the court the original note and mortgage, together with the affidavit of the plaintiff or other person familiar with the indebtedness, stating what amount, including interest to the date of the hearing, is due, and that there is no setoff or counterclaim thereto.”

       The trial court found the debts on the loans to be $4,512,400.74 and $584,881.96.

       General Statutes § 49-14 provides: “deficiency judgment, (a) At any time within thirty days after the time limited for redemption has expired, any party to a mortgage foreclosure may file a motion seeking a deficiency judgment. Such motion shall be placed on the short calendar for an evidentiary hearing. Such hearing shall be held not less than fifteen days following the filing of the motion, except as the court may otherwise order. At such hearing the court shall hear the evidence, establish a valuation for the mortgaged property and shall render judgment for the plaintiff for the difference, if any, between such valuation and the plaintiffs claim. The plaintiff in any further action upon the debt, note or obligation, shall recover only the amount of such judgment.
      “(b) Upon the motion of any party and for good cause shown, the court may refer such motion to a state referee, who shall have and exercise the powers of the court with respect to trial, judgment and appeal in such case.
      “(c) Any party to a mortgage foreclosure who has moved for an appraisal of property for the purpose of obtaining a deficiency judgment, but has not been granted a deficiency judgment, or has not received full satisfaction of any deficiency judgment obtained subsequent to the filing of such motion, may make a motion to the court for a deficiency judgment as set forth in subsection (a) of this section. If such motion is made on or before November 1, 1979, such moving party shall be deemed to have complied with all of the requirements of subsection (a) of this section and shall be entitled to the benefit of any deficiency judgment rendered pursuant to said subsection (a).
      “(d) Any appeal pending in the supreme court with regard to any deficiency judgment or proceedings relating thereto shall be stayed until a hearing is held pursuant to subsection (a) of this section. Any appellant in such an appeal shall have the right for a period of thirty days after the rendering of judgment pursuant to subsection (a) of this section to amend his appeal. There shall be no stay of such an appeal if no motion has been filed pursuant to this section on or before November 1, 1979.”

       The hearing took place on four different days: July 10,1992, August 4, 1992, September 4,1992, and October 5,1992. On August 4,1992, the trial court formally consolidated the two proceedings on the motions for deficiency judgment.

       The trial court rendered judgments for deficiency after strict foreclosure in the amounts of $1,820,810.26 plus statutory interest for the larger debt, and $461,797.16 plus statutory interest for the smaller debt.

         See footnote 9.

       Heberger’s appraisal defined market value as “the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. . . .”

       Heberger testified that liquidation value reflects the price at which the property could sell in the market place at a particular point in time.

       The defendants objected to the assertion of the privilege on the ground that the privilege does not apply to the bank as a failed institution.

       There is, however, a split of authority in the lower federal courts concerning whether the FDIC, acting in its corporate capacity, has the right to assert the attorney-client privilege of a failed bank by virtue of its purchase of certain assets of the bank from the FDIC acting as receiver. Compare Federal Deposit Ins. Corp. v. Amundson, 682 F. Sup. 981, 986-87 (D. Minn. 1988), and Federal Deposit Ins. Corp. v. McAtee, 124 F.R.D. 662, 664 (D. Kan. 1988), with Federal Deposit Ins. Corp. v. Cherry, Bekaert & Holland, supra, 129 F.R.D. 191, 192-93, Federal Deposit Ins. Corp. v. Berry, United States District Court, E.D. Tenn., Docket No. 1-85-62 (June 3,1985), and Federal Deposit Ins. Corp. v. Ellis, United States District Court, N.D. Ala., Docket No. CV84-PT-2560-M (Dec. 19,1985). At least one lower federal court has held that the enactment of the Financial Institutions Reform Recovery and Enforcement Act of 1989, Pub. L. No. 101-73, § 101 et seq., amending, inter alia, the Federal Deposit Insurance Act, 12 U.S.C. § 1811 et seq., supports the position that the FDIC, acting in its corporate capacity, “is entitled to assert the ‘rights, titles, powers, and privileges’ of [the FDIC acting as receiver], including the attorney-client privilege. ” (Emphasis added.) Federal Deposit Ins. Corp. v. Cherry, Bekaert & Holland, supra, 191; see also Resolution Trust Corp. v. Miramon, United States District Court, E.D. La., Docket No. 92-2672 (Nov. 15, 1993).
      In support of their claim that, under the “weight of authority,” the FDIC, as receiver for the failed bank, cannot claim the attorney-client privilege, the defendants cite four cases: Federal Deposit Ins. Corp. v. Amundson,
        supra, 682 F. Sup. 987; Cadillac Ins. Co. v. American National Bank, United States District Court, N.D. Ill., Docket No. 89-C3267 (Nov. 27,1991); Bagdan v. Beck, 140 F.R.D. 660, 667 (D. N.J. 1991); and Federal Deposit Ins. Corp. v. McAtee, supra, 124 F.R.D. 664. Two of those cases, Amundson and McAtee, dealt with the FDIC in its corporate capacity as an assignee or purchaser of assets, not in its capacity as receiver. Those cases held that the FDIC, in its corporate capacity, did not control the attorney-client privilege for communications with the former bank’s attorneys. Federal Deposit Ins. Corp. v. McAtee, supra, 664; Federal Deposit Ins. Corp. v. Amundson, supra, 987. Furthermore, the cases support the proposition that the FDIC as receiver can assert the privilege. See Federal Deposit Ins. Corp. v. McAtee, supra, 664; Federal Deposit Ins. Corp. v. Amundson, supra, 987. The remaining two cases, Bogdan and Cadillac Ins. Co. did not involve the FDIC. Furthermore, to the extent that those two cases did discuss FDIC law, they relied on cases such as Amundson, dealing with the FDIC in its corporate capacity. Cadillac Ins. Co. v. American National Bank, supra; Bagdan v. Beck, supra, 667. Consequently, the cases are inapposite.

       The defendants deliberately waited for the close of the evidence to raise this claim, as is evidenced by the October 5, 1992 transcript:
      “[The Defendants’ Counsel]: I have no further evidence, Your Honor, but I do have a legal argument, one additional one; it’s brief. I’ll do it if all the evidence is complete. I don’t know.
      “The Court: Is all the evidence completed?
      “[The Plaintiffs Counsel]: We are complete with our witnesses, Your Honor. I don’t know if Mr. Reeve is.
      “Mr. Reeve: I don’t have any further evidence, Your Honor.”

       The defendants did not cite to a specific regulation at the hearing or in their brief to this court. The plaintiff, however, in its brief to this court made reference to Section 20-328-29 of the Regulations of Connecticut State Agencies, and, at oral argument, the defendants agreed that subsection (a) 11 of that regulation was applicable.
      Section § 20-328-29 provides: “CONTENTS OF APPRAISALS
      “(a) An appraisal shall include, but not be limited to, the following:
      “(1) the identity of the real estate being appraised;
      “(2) the identity of the real property interest being appraised;
      “(3) the purpose of the appraisal;
      “(4) the definition of the value to be estimated;
      “(5) the effective date of the appraisal and the date of the report;
      “(6) the scope of the appraisal;
      “(7) any assumptions or conditions that affect the analyses, opinions and conclusions of the appraisal;
      “(8) where applicable, the cost, income and comparable evaluation approaches, including adjustment sheets;
      “(9) the appraiser’s opinion of the highest and best use of the real estate when such opinion is necessary and applicable;
      “(10) the name, either printed or typed, and the type of license and license number for each appraiser signing the appraisal; and

        “(11) a signed certification meeting the requirements of subsection (b) of this section.
      “(b) Every written real estate appraisal shall contain a certification in substantially the following form: I (We) hereby certify that to the best of my (our) knowledge and belief:
      “(1) the statements of fact contained in this report are true and correct;
      “(2) the reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my (our) personal, unbiased professional analyses, opinions and conclusions;
      “(3) I (we) have no undisclosed present or prospective interest in the property that is the subject of this report, and I (we) have no undisclosed personal interest or bias with respect to the parties involved;
      “(4) my (our) compensation is not contingent on an action or event resulting from the analyses, opinions or conclusions in, or in the use of, this report;
      “(5) the preparation of the report and analyses, opinions and conclusions were developed in conformity with the Uniform Standards of Professional Appraisal Practice;
      “(6) I (we) have (or have not) made a personal inspection of the property that is the subject of this report; and
      “(7) no one, including a trainee, provided significant professional assistance to the person(s) signing this report unless stated.
      “(c) To the extent that it is both possible and appropriate, each oral real estate report (including expert testimony) shall address the substantive matters set forth in section 20-328-29 (a).
      “(d) When an appraisal is undertaken which departs from accepted appraisal criteria, the reasons for such departure and the manner in which it differs from such criteria shall be included in the appraisal.”

       The plaintiffs counsel stated: “I can only believe that there was an error in copying. I suspect it’san error on the part of my office. . . .What we’re missing is the first page [of the certification], which would indicate to me it’s a problem of copying.”


source: Caselaw Access Project

author: Palmer, J.

license: Public Domain

text:
    William R. Francini v. Zoning Board of Appeals of the Town of Old Lyme
    (14685)
    Peters, C. J., Callahan, Berdon, Katz and Palmer, Js.

      Argued October 28, 1993—
    decision released March 29, 1994

      Thomas F. McGarry, for the appellant (plaintiff).

      David M. Royston, for the appellee (defendant).
   Palmer, J.

This is a landowner’s appeal challenging the validity of the denial of his application for a variance. The plaintiff, William R. Francini, applied to the defendant, the zoning board of appeals of the town of Old Lyme, for a variance from the zoning regulations governing minimum lot area. After a hearing, the board denied the plaintiff’s application, and he appealed the board’s decision to the Superior Court pursuant to General Statutes § 8-8 (b). The trial court dismissed the plaintiff’s appeal, thus upholding the board’s denial of the variance. Upon the granting of certification by the Appellate Court, we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c). We affirm the trial court’s judgment.

The plaintiff is the owner of an 8000 square foot vacant lot at 28 Prospect Street, Old Lyme. The lot is located in an R-10 residential zone, where building lots must be a minimum of 10,000 square feet. On April 9,1991, the plaintiff submitted an application to the board seeking a variance from the zoning regulations in order to construct a year round single family dwelling on his lot. Following a hearing on May 21, 1991, the board denied the plaintiff’s application on the grounds that: (1) there are other uses for the property; (2) the claimed hardship is not unique; (3) the plaintiff created the hardship; (4) the plaintiff did not demonstrate a sufficient hardship; and (5) the requested variance would not be within the plan of zoning.

On appeal to the trial court, the plaintiff claimed, inter alia, that: (1) a variance is not required because his plan to build a year round dwelling on the property constitutes a valid nonconforming use; (2) the board improperly determined that the hardship was not unusual or unique; and (3) the denial of the variance amounted to a taking of his property without just compensation in violation of article first, § 11, of the Connecticut constitution. The trial court concluded that the plaintiff’s plan to construct a year round dwelling on the property did not constitute a nonconforming use, and upheld the board’s denial of the variance on the ground that the record of the proceedings before the board supported its conclusion that the hardship was not unusual or unique. The trial court also concluded that the denial of the application did not constitute a taking under article first, § 11, of the state constitution because the plaintiff had purchased the property at a “minimal price” with the knowledge that the town’s zoning regulations prohibited construction of a year round dwelling on the property.

On appeal to this court, the plaintiff claims that the trial court improperly concluded that: (1) the plaintiff’s plan to build a year round dwelling on the property does not constitute a nonconforming use; (2) the plaintiff’s hardship is not unusual or unique; and (3) the board’s denial of the variance did not result in an unconstitutional taking. We disagree.

I

The plaintiff first claims that his plan to construct a year round dwelling on the property constitutes a nonconforming use, for which a variance is not required, because such a dwelling could have been constructed on the property prior to the enactment of the zoning regulations. This claim is without merit.

“A non-conforming use is merely an ‘existing use’ the continuance of which is authorized by the zoning regulations.” Melody v. Zoning Board of Appeals, 158 Conn. 516, 519, 264 A.2d 572 (1969); Pleasant View Farms Development, Inc. v. Zoning Board of Appeals, 218 Conn. 265, 272, 588 A.2d 1372 (1991). Such a use is permitted because its existence predates the adoption of the zoning regulations. Adolphson v. Zoning Board of Appeals, 205 Conn. 703, 710, 535 A.2d 799 (1988). It is well established that “[t]o be a nonconforming use the use must be actual. It is not enough that it be a contemplated use [or] that the property was bought for the particular use. The property must be so utilized as to be irrevocably committed to that use.” (Internal quotation marks omitted.) Lebanon v. Woods, 153 Conn. 182, 197, 215 A.2d 112 (1965); see also Helicopter Associates, Inc. v. Stamford, 201 Conn. 700, 713, 519 A.2d 49 (1986); Corsino v. Grover, 148 Conn. 299, 308, 170 A.2d 267 (1961). The plaintiff bears the burden of proving the existence of a nonconforming use. Pleasant View Farms Development, Inc. v. Zoning Board of Appeals, supra, 218 Conn. 272.

It is conceded that the property has been maintained not as a year round dwelling, but, rather, as a vacant lot. Neither the fact that a year round dwelling might lawfully have been built on the property prior to the enactment of the town’s zoning regulations, nor the fact that the plaintiff may have purchased the lot with the intent to construct a year round home, makes the use of the property nonconforming. Because the use of the property as a year round dwelling was contemplated rather than actual, the trial court properly concluded that the plaintiff failed to demonstrate the existence of a nonconforming use.

II

The plaintiff next contends that the trial court improperly upheld the board’s determination that the hardship resulting from the application of the zoning regulations to his property was not unusual or unique. We disagree.

The authority of a zoning board of appeals to grant a variance under General Statutes § 8-6 (3) “requires the fulfillment of two conditions: ‘(1) the variance must be shown not to affect substantially the comprehensive zoning plan, and (2) adherence to the strict letter of the zoning ordinance must be shown to cause unusual hardship unnecessary to the carrying out of the general purpose of the zoning plan.’ Smith v. Zoning Board of Appeals, 174 Conn. 323, 326, 387 A.2d 542 (1978).” Grillo v. Zoning Board of Appeals, 206 Conn. 362, 368, 537 A.2d 1030 (1988). “It is well settled that the hardship must be different in kind from that generally affecting properties in the same zoning district . . . .” Smith v. Zoning Board of Appeals, supra, 327; Grillo v. Zoning Board of Appeals, supra, 373.

The only evidence that the plaintiff presented to the board concerning the unusual or unique nature of the alleged hardship was his statement that the property was the only undeveloped lot in the area. The board’s chairperson noted, however, that there were many other nonconforming lots in the area that were subject to the same zoning restrictions as the plaintiff’s property. Because “the members of the board are entitled to take into consideration whatever knowledge they acquire by personal observation”; Burnham v. Planning & Zoning Commission, 189 Conn. 261, 267, 455 A.2d 339 (1983); they were free to rely on the chairperson’s knowledge of other similarly nonconforming lots in the same area as the plaintiff’s property.

“In reviewing the actions of a zoning board of appeals we note that such a board is endowed with a liberal discretion, and its [actions are] subject to review by the courts only to determine whether [they were] unreasonable, arbitrary or illegal. . . . The burden of proof to demonstrate that the board acted improperly is upon the party seeking to overturn the board’s decision. ... In an appeal from the decision of a zoning board, we therefore review the record to determine whether there is factual support for the board’s decision, not for the contentions of the applicant.” (Citations omitted; internal quotation marks omitted.) Pleasant View Farms Development, Inc. v. Zoning Board of Appeals, supra, 218 Conn. 269-70; Schwartz v. Planning & Zoning Commission, 208 Conn. 146,152, 543 A.2d 1339 (1988); Adolphson v. Zoning Board of Appeals, supra, 205 Conn. 707. The record of the proceedings before the board supports its determination that the plaintiff failed to demonstrate an unusual or unique hardship. Therefore, the trial court properly upheld the board’s denial of the plaintiff’s application for a variance.

III

The plaintiffs final claim is that the board’s denial of the variance constitutes a taking of his property without just compensation in violation of article first, § 11, of the Connecticut constitution. The plaintiff contends that in rejecting the defendant’s claim that the plaintiff’s construction of a seasonal residence would constitute a possible alternative use for the property, the trial court properly concluded that the zoning regulations of the town of Old Lyme did not distinguish between seasonal and year round dwellings, and that the board therefore could not do so. Because the board could not lawfully authorize him to construct a seasonal residence, the plaintiff argues, the board’s denial of his application has deprived him of any reasonable use of his property in violation of the state constitution. We disagree.

The plaintiff may prevail on his claim of a constitutional deprivation if the board’s denial of the variance constituted a taking, either as a practical confiscation of his property or by application of a balancing test. Gil v. Inland Wetlands & Watercourses Agency, 219 Conn. 404, 415, 593 A.2d 1368 (1991); Chevron Oil Co. v. Zoning Board of Appeals, 170 Conn. 146, 151, 365 A.2d 387 (1976); Bartlett v. Zoning Commission, 161 Conn. 24, 31, 282 A.2d 907 (1971). “As we have recently reiterated, however, the plaintiff is not entitled to judicial review of the merits of his regulatory takings claim until he has met the requirement of establishing the finality of the ageney determination. . . . To demonstrate the requisite finality, a property owner asserting a regulatory takings claim bears the burden of proving that the relevant government entity will not allow any reasonable alternative use of his property.” (Citations omitted; emphasis in original.) Gil v. Inland Wetlands & Watercourses Agency, supra, 415; see also Smith v. Zoning Board of Appeals, 227 Conn. 71, 99, 629 A.2d 1089 (1993).

We are not persuaded that the board’s denial of the plaintiff’s application for a variance to build a year round dwelling rules out any reasonable use of his property. The board concluded only that construction of such a dwelling on the property would not be in harmony with the other, mostly seasonal, dwellings in the area, and that the plaintiff’s year round use of a septic system could pose a health hazard to his neighbors. The minutes of the meeting on the plaintiff’s application for a variance, however, reflect the board’s view that construction of a seasonal home on the property would constitute a reasonable alternative use of the lot in conformity with the existing development of the area. The plaintiff has not proven, therefore, that the board will not allow any reasonable use of his property.

We similarly do not agree that the town’s zoning regulations necessarily prohibit the board from granting a variance to the plaintiff for the construction of a seasonal dwelling on the property. Indeed, the board contends that the zoning regulations, which expressly define the terms “seasonal dwelling” and “seasonal use,” authorize the granting of a variance for the seasonal use of a dwelling, and that such a variance would be granted in appropriate circumstances. We need not resolve that issue, however, because the board’s authority to grant a variance for seasonal use is a matter to be decided by the board itself in the first instance. The requirement that the board first address this issue is consistent with the well settled principle of administrative law that mandates the exhaustion of administrative remedies, a doctrine “grounded in a policy of fostering an orderly process of administrative adjudication and judicial review in which a reviewing court will have the benefit of the agency’s findings and conclusions.” Concerned Citizens of Sterling v. Sterling, 204 Conn. 551, 557, 529 A.2d 666 (1987). Moreover, where, as here, there is a mechanism in place for adequate judicial review, the exhaustion doctrine requires that the government agency to which the administrative decision-making responsibility has been delegated be afforded the opportunity to determine whether it has jurisdiction or authority to act in a particular situation. Polymer Resources, Ltd. v. Keeney, 227 Conn. 545, 555-56, 630 A.2d 1304 (1993); Greater Bridgeport Transit District v. Local Union 1336, 211 Conn. 436, 439, 559 A.2d 1113 (1989). Because it may ultimately be determined that the board has authority under the Old Lyme zoning regulations to grant a variance for the construction of a seasonal dwelling, the plaintiff has not demonstrated that the board’s denial of his application for a variance to construct a year round dwelling has deprived him of any reasonable use of his property. We conclude, therefore, that the denial of the variance did not constitute a taking within the meaning of article first, § 11, of the Connecticut constitution.

The judgment is affirmed.

In this opinion the other justices concurred.

       General Statutes § 8-8 (b) provides in pertinent part: “[A]ny person aggrieved by any decision of a [zoning board of appeals] may take an appeal to the superior court for the judicial district in which the municipality is located. The appeal shall be commenced . . . within fifteen days from the date that notice of the decision was published as required by the general statutes. The appeal shall be returned to court in the same manner and within the same period of time as prescribed for civil actions brought to that court.”

       Article first, § 11, of the Connecticut constitution provides: “The property of no person shall be taken for public use, without just compensation therefor.”

       The trial court, however, rejected the board’s determination that the plaintiff had created the hardship, concluding that the plaintiff’s purchase of the property subsequent to the enactment of the zoning regulations prohibiting construction on lots under ten thousand square feet did not bar him from seeking a variance. See Johnny Cake, Inc. v. Zoning Board of Appeals, 180 Conn. 296, 300,429 A.2d 883 (1980). The trial court also concluded that because the zoning regulations did not distinguish between seasonal and year round dwellings, the board had improperly determined that the seasonal use of the property was an alternative use available to the plaintiff. See part III.

       The plaintiff had purchased the property in 1985 for $18,000.

       The zoning regulations of the town of Old Lyme were enacted in 1957.

       General Statutes § 8-6 provides in relevant part: “POWERS AND duties of board of appeals. The zoning board of appeals shall have the following powers and duties ... (3) to determine and vary the application of the zoning bylaws, ordinances or regulations in harmony with their general purpose and intent and with due consideration for conserving the public health, safety, convenience, welfare and property values solely with respect to a parcel of land where, owing to conditions especially affecting such parcel but not affecting generally the district in which it is situated, a literal enforcement of such bylaws, ordinances or regulations would result in exceptional difficulty or unusual hardship so that substantial justice will be done and the public safety and welfare secured, provided that the zoning regulations may specify the extent to which uses shall not be permitted by variance in districts in which such uses are not otherwise allowed.”

       In fact, we were informed at oral argument that the board has granted, with conditions, a subsequent application by the plaintiff for a variance to construct a seasonal dwelling on the property, and that the validity of that conditional variance is currently on appeal to the Superior Court.

       The zoning regulations of the town of Old Lyme define “seasonal dwelling” as “[a] dwelling unit, designed, used, or intended to be used for seasonal use.” The regulations define “seasonal use” as “[t]he use of a structure for dwelling purposes between April 1 and November 15, only.”

       See footnote 7.

       We have also noted that the doctrine of exhaustion “furthers the salutary goals of relieving the courts of the burden of deciding questions entrusted to an agency . . . in advance of possible judicial review”; (citations omitted; internal quotation marks omitted) Concerned Citizens of Sterling v. Sterling, supra, 204 Conn. 557; and that the resolution of the issues at the administrative level may render such judicial review unnecessary. Polymer Resources, Ltd. v. Keeney, supra, 227 Conn. 557 n.20.

       The trial court, therefore, should not have resolved the plaintiffs claim that the board lacked authority under the zoning regulations to grant a variance for seasonal use. We express no view as to the merits of that claim.

       In view of our resolution of this issue, we do not address the board’s claim, decided in its favor by the trial court, that the denial of the variance did not constitute a taking under article first, § 11, of the state constitution because the minimal purchase price paid for the property by the plaintiff reflected its nonconformity with the zoning regulations. See Chapman v. Zoning Board of Appeals, 23 Conn. App. 441, 443, 581 A.2d 745 (1990).