Thompson v. Orcutt

800 A.2d 530, 70 Conn. App. 427, 2002 Conn. App. LEXIS 333
CourtConnecticut Appellate Court
DecidedJune 18, 2002
DocketAC 19769
StatusPublished
Cited by12 cases

This text of 800 A.2d 530 (Thompson v. Orcutt) is published on Counsel Stack Legal Research, covering Connecticut Appellate Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thompson v. Orcutt, 800 A.2d 530, 70 Conn. App. 427, 2002 Conn. App. LEXIS 333 (Colo. Ct. App. 2002).

Opinion

Opinion

PELLEGRINO, J.

This foreclosure action comes to us on remand from our Supreme Court. Thompson v. Orcutt, 257 Conn. 301, 777 A.2d 670 (2001). The plaintiff, George A. Thompson, trustee, previously appealed to this court from the judgment of the trial court determining that he had unclean hands, and ordering him to release a mortgage and the underlying note to the defendants, David Orcutt and Sandra Orcutt. We reversed the judgment on the ground that the doctrine of unclean hands did not apply as a defense to the plaintiffs foreclosure of the mortgage because the wrong committed by the plaintiff was not in connection with the matter before the court. Thompson v. Orcutt, 59 Conn. App. 201, 205-206, 756 A.2d 332 (2000). Our Supreme Court granted certification and upon review concluded that the clean hands doctrine is applicable to the plaintiff in the present action and that public policy considerations support application of the doctrine. Thompson v. Orcutt, supra, 257 Conn. 313-14, 316-18. The court directed us on remand to address the remaining issues raised by the plaintiff.

[429]*429On appeal, the plaintiffs remaining claims are that the trial court improperly (1) found his partner, Jack L. Rosenblit, had unclean hands, (2) ordered the plaintiff to release a mortgage and the underlying note to the defendants, (3) ordered the plaintiff to provide a valid release of a lien in favor of Northeast Financial Services, (4) found that there was no trust agreement between the plaintiff and Rosenblit, and (5) overlooked the appearance in the foreclosure action of the bankruptcy trustee, John J. O’Neil, Jr. We affirm, in part, and reverse, in part, the judgment of the trial court.1

The following factual and procedural history is relevant to our resolution of the plaintiffs appeal. “The plaintiff commenced this action against the defendants to foreclose on a mortgage that secured a note, the original balance of which was $25,000. The note was signed by the defendant David Orcutt as president of Alpha Equipment Sales and Rentals, Inc., and by the defendants individually and severally. The note was secured by a mortgage (Thompson mortgage) on property owned by the defendants known as 95 Greenwood Drive in Manchester, which mortgage was the subject of the foreclosure action. Although the plaintiff claimed that he was the trustee of that mortgage for himself and Jack L. Rosenblit, a business associate, no written trust agreement existed. . . .

“The mortgaged premises were subject to three encumbrances superior to the Thompson mortgage: A first mortgage to the New Haven Savings Bank in the amount of $60,000, a second mortgage in favor of the Connecticut Bank and Trust Company in the amount of $35,000 and a lien in favor of Northeast Financial Services (Northeast) [in the amount of $32,712], The principals of Northeast were the plaintiff and Rosenblit, [430]*430and [although] the debt securing the mortgage to Northeast [had been] paid prior to the creation of the Thompson mortgage, [the hen] had not been released.

“In January, 1992, the plaintiff filed a voluntary petition in [chapter 7] bankruptcy in the United States Bankruptcy Court for the District of Connecticut, listing as an asset a one-half interest in the Thompson mortgage. The [B]ankruptcy [C]ourt appointed [a bankruptcy trustee to administer the bankruptcy] estate.....

“During the pendency of the bankruptcy case, the plaintiff represented to the bankruptcy trustee that the property securing the Thompson mortgage was encumbered in excess of its value .... On the basis of that representation, the bankruptcy trustee abandoned the Thompson mortgage as an asset of the bankruptcy estate because it ‘[did] not justify further administration.’ See 11 U.S.C. § 554 (a) (bankruptcy trustee may abandon property of estate ‘that is burdensome to the estate or that is of inconsequential value and benefit to the estate’).

“In their answer to the foreclosure complaint, the defendants admitted the existence of the debt, and the execution of the loan agreement and mortgage deed, but filed a special defense asserting that the plaintiff was guilty of unclean hands insofar as he had induced the bankruptcy trustee to abandon the [Thompson mortgage]. . . . The trial court concluded that the plaintiff had committed misrepresentation or fraud in the bankruptcy case. The trial court determined that because the misrepresentation or fraud concerned the Thompson mortgage, and that mortgage was the subject of the plaintiffs foreclosure action, the clean hands doctrine could apply. Although the trial court recognized that the clean hands doctrine generally applies only where the wrong [has been] done to the party against whom [affirmative] relief is sought, and the [431]*431plaintiffs conduct in this case had occurred in the [B]ankruptcy [C]ourt, the trial court determined that the plaintiffs misrepresentation or fraud in the bankruptcy case involved an important public interest that justified a broader application of the doctrine. Accordingly, the trial court applied the clean hands doctrine, denied the relief sought by the plaintiff, and rendered judgment for the defendants. In addition, the trial court ordered the plaintiff to release the Northeast lien.” (Citations omitted; internal quotation marks omitted.) Thompson v. Orcutt, supra, 257 Conn. 303-305.

I

The plaintiff first claims that the court improperly found that Rosenblit had unclean hands. We agree.

“[Application of the doctrine of unclean hands rests within the sound discretion of the trial court. . . . The exercise of [such] equitable authority ... is subject only to limited review on appeal. . . . The only issue on appeal is whether the trial court has acted unreasonably and in clear abuse of its discretion. ... In determining whether the trial court abused its discretion, this court must make every reasonable presumption in favor of [the trial court’s] action.” (Citations omitted; internal quotation marks omitted.) Id., 308.

The trial court’s judgment was based on the plaintiffs fraudulent conduct during the administration of his bankruptcy estate. The doctrine of unclean hands permits a court of equity to deny relief to a party whose claim “grows out of or depends upon or is inseparably connected with his own prior fraud . . . .” (Emphasis added; internal quotation marks omitted.) Id., 312. The defendants asserted the defense of unclean hands against Rosenblit as a beneficiary of the plaintiffs fraud. The trial court found that Rosenblit had unclean hands “since he was and is the active partner with [the plain[432]*432tiff] concerning this mortgage.”2 The court did not directly address whether Rosenblit benefited from the plaintiffs fraud. In essence, therefore, the claim before this court requires us to address two separate possible justifications for applying the clean hands doctrine to Rosenblit. The first ground is the reason adopted by the trial court, i.e., the mere incidence of partnership between the plaintiff and Rosenblit. The second is the argument advanced by the defendants that Rosenblit benefited from the plaintiffs fraud.

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Cite This Page — Counsel Stack

Bluebook (online)
800 A.2d 530, 70 Conn. App. 427, 2002 Conn. App. LEXIS 333, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thompson-v-orcutt-connappct-2002.