Fairlake Capital, LLC v. Lathouris

Citations

• 210 Conn. App. 801

Syllabus

The plaintiff sought to recover damages from the defendants for, inter alia, the alleged breach of a guaranty agreement. The plaintiff alleged that C Co. extended a loan to L Co., evidenced by a note executed on behalf of L Co. by the defendant L, acting as attorney-in-fact for the defendant S, the president of L Co. The note was secured by a mortgage on certain real property located in New York. Additionally, L, individually and as attorney-in-fact for S, executed a guaranty agreement, guaranteeing the debt under the note. L Co. defaulted on its payments, and C Co. com- menced an action in New York to foreclose on the property. Thereafter, L Co. filed for bankruptcy, and the Bankruptcy Court issued an order approving the sale of the property pursuant to an approved bankruptcy plan. C Co. assigned its claims against L Co. to the plaintiff, and the plaintiff alleged that the defendants were liable under the guaranty for all amounts remaining due under the note. The defendants filed a motion for summary judgment in which they argued that the plaintiff's claims were barred by the doctrine of res judicata and that, pursuant to New York statute (N.Y. Real Prop. Acts. Law § 1371), it was necessary for the plaintiff to move for a deficiency judgment in order to recover under the guaranty. The trial court denied the motion, concluding that § 1371 did not apply because the property was not sold in a foreclosure action, and the defendants appealed to this court. Held that the trial court did not err in denying the defendants' motion for summary judgment, as the plaintiff's claims were not barred by the doctrine of res judicata: by its terms, § 1371 applies only when a foreclosure sale occurs, and, because the property was sold pursuant to a bankruptcy plan, rather than a foreclosure sale, § 1371 did not require the plaintiff to seek a deficiency judgment, the defendants had not filed for bankruptcy and were not parties to L Co.'s bankruptcy proceedings, and, thus, there was n