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CONNECTICUT NATIONAL BANK v. REHAB ASSOCIATES ET AL. (SC 18597) (SC 18598)
Rogers, C. J., and Norcott, Palmer, Zarella, McLachlan and Eveleigh, Js. Argued December 7, 2010--officially released March 8, 2011

Gregory M. Harris, for the appellant in Docket No. SC 18597 (defendant Steven D. Hallahan). Dominic Fulco III, for the appellant in Docket No. SC 18598 (defendant Richard Ermler). C. Donald Neville, for the appellee in both cases (plaintiff).

Opinion

EVELEIGH, J. These appeals arise from a foreclosure action and subsequent deficiency judgment against the defendants, Steven D. Hallahan and Richard Ermler, and their general partnership, Rehab Associates (Rehab), relating to a mortgage loan to Rehab that had been guaranteed by Hallahan and Ermler. The defendants1 now appeal2 from the judgment of the trial court denying Hallahan's motion to determine that the deficiency judgment was fully or, alternatively, partially satisfied as a result of a settlement agreement (agreement) between Ermler and Shawmut Bank Connecticut, N.A. (Shawmut), the successor in interest of the original plaintiff, Connecticut National Bank.3 On appeal, the defendants assert that the trial court improperly concluded that the agreement did not release Hallahan from his obligation to pay the balance of the deficiency judgment. We agree with the defendants and, accordingly, reverse the judgment of the trial court. The following facts and procedural history are relevant to these appeals. In 1989, Rehab executed a promissory note in the amount of $425,000. The note was secured by a mortgage in favor of Connecticut National Bank. The defendants personally guaranteed the note. Thereafter, Rehab defaulted on the loan. As a result, Connecticut National Bank instituted a foreclosure action to collect amounts due on the loan. In 1991, the trial court rendered a judgment of strict foreclosure. Thereafter, the trial court entered a deficiency judgment in the amount of $164,648.11 against Rehab and the defendants (deficiency judgment). Connecticut National Bank then became known as Shawmut. Subsequently, in 1993, Ermler and Jerry Brophy4 entered into a settlement agreement with Shawmut. The agreement provided in relevant part that Ermler and Brophy ``are indebted to [Shawmut] by virtue of loans in the aggregate principal amount of [$277,500], plus interest accrued and accruing thereon and all costs and expenses of collection (including, without limitation, attorneys' fees), as evidenced by promissory note(s) in favor of [Shawmut] (the `[i]ndebtedness') . . . .'' Pursuant to the agreement, Ermler and Brophy agreed to pay Shawmut $42,150 ``as payment in full of the [i]ndebtedness.'' Thereafter, in 1995, Shawmut assigned its rights, if any, in the deficiency judgment, to Cadle Company (plaintiff), who, in 1996, became the substitute plaintiff in this action. See footnote 3 of this opinion. In 2007, the plaintiff instituted proceedings to compel Hallahan to pay the full amount of the deficiency judgment. As a result, pursuant to Practice Book

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