ARS INVESTORS II 2012-1 HVB, LLC v. CRYSTAL, LLC, et al., SC 19660/19661

Judicial District of Stamford/Norwalk

Foreclosure; Whether Foreclosure Judgment Properly Rendered on Tracts Depicted on Subdivision Map that was Never Approved by Zoning Commission.  Defendant Crystal, LLC, is the owner of a thirty-one acre parcel in Norwalk.  In February, 2008, Crystal filed a map (revision map) on the Norwalk land records that purported to divide the parcel into three lots, designated as Revised Tracts I, II and III.  In April, 2008, Crystal executed a $6 million promissory note in favor of Hudson Valley Bank (HVB) that is secured by a mortgage on Revised Tracts I and III.  At the same time, defendant Mario DeVivo obtained a first priority mortgage interest in Revised Tract II.  Crystal, however, never obtained subdivision approval to divide the parcel into three lots, and Norwalk issued a cease and desist order requiring it to refile on the land records a 1995 map of the property for which site plan approval had been granted.  Crystal refiled the 1995 map on the land records in October, 2008.  The 1995 map divides the property into two parcels, Parcel B and Parcel 74A.  Parcel B includes all of Revised Tract II and also encompasses nearly all of Revised Tracts I and III.  The plaintiff owns the HVB note and mortgage, and it brought the this action seeking to foreclose the mortgage on Revised Tracts I and III.  The defendants argued that because the subdivision of the parcel into three lots had not been approved, the tracts depicted on the revision map were legally void and that the court could not render a judgment of foreclosure with respect to parcels that did not legally exist.  The trial court rejected that claim and rendered a judgment of foreclosure as to Revised Tracts I and III, ruling that the fact that the land described in the mortgage deed might not constitute a legal lot under the local zoning regulations did not prevent the plaintiff from pursuing its claim for foreclosure.  Defendants Crystal and DeVivo appeal, claiming that the trial court wrongly rendered a judgment of foreclosure on a mortgage on legally non-existent parcels and that, in ordering foreclosure of the mortgage on Revised Tracts I and III, the court rendered a judgment on property that was not encumbered by the plaintiff’s mortgage.  The defendants also contend that the trial court ignored DeVivo’s claim to a first priority interest in a portion of the foreclosed property and that the foreclosure judgment here cannot stand because it will cloud the title to the property and perpetuate confusion in the land records.