Reopening Foreclosure Action In Wisconsin: The Deutsche Bank Case

A Wisconsin appeals court recently reviewed the issuance of a summary judgment, regarding a bank’s right to reopen a foreclosure action where terms of a previous stipulation agreement were not followed and a mortgage remained unsatisfied. In Deutsche Bank National Trust Company v. Brittany A. Buboltz and Alec M. Dishaw, the previous owner of the residential property, Alexander Groysman, financed a loan secured by a mortgage with Bank United, FSB. After ceasing all payments to the loan in February of 2008, the bank commenced a foreclosure action in July of 2009.

The Stipulation Agreement And Its Implications

The parties entered into a written stipulation and the foreclosure action was dismissed without prejudice, contingent on payoff of the loan. However, Groysman’s checks sent to the bank to satisfy the loan were either from a closed account or an account with insufficient funds, thus the loan was never actually satisfied. Groysman then sold the property to Brittany A. Buboltz and Alec M. Dishaw. Prior to buying the property, the purchasers acquired title insurance through Chicago Title Insurance Company. The title company discovered Bank United’s unsatisfied mortgage and requested Groysman to provide documentation evidencing the loans fulfillment. Subsequently, Groysman sent Chicago Title the stipulation agreement and an order dismissing the prior foreclosure action as proof of satisfaction. Neither Chicago Title nor the purchasers verified with the bank that the loan was paid off before closing on the property.

Chain Of Mortgage Assignments And Appeal

After failing to collect payments on the mortgage the Bank of United, FSB would assign the note to OneWest Bank, then eventually to Deutsche Bank in June of 2016. Deutsche Bank initiated this foreclosure action in May 2017, intending to foreclose the purchasers’ interest in the subject property. The trial court granted the purchasers’ motion for summary judgment, and the bank appealed.

Appeals Court Ruling And Implications

On appeal, Deutsche Bank argued that: (1) its mortgage was a prior, superior interest of record; (2) the stipulation did not discharge the mortgage; (3) WIS. STAT. § 806.07(2) does not apply where the prior foreclosure was dismissed without prejudice; (4) the purchasers were not good faith purchasers; and (5) the purchasers did not prove estoppel and/or laches. The appeals court agreed with the bank, finding the mortgage enforceable because the purchasers could not prove that the underlying note was paid off and the subject mortgage satisfied. The court further agreed with the bank that the stipulation agreement did not satisfy the mortgage. Also, WIS. STAT. § 806.07(2) does not apply in this case because a dismissal without prejudice is not a final judgment and may be reopened on the same cause of action. Finally, the court blamed the purchasers for choosing to not properly follow up with the bank to confirm the mortgage had been paid prior to purchasing the home.

Lessons From The Case

In this case we can see how contingencies of a stipulation agreement, when not fulfilled, may reopen a previously dismissed case. Specifically, the dismissal without prejudice allows the complainant to sue again based on the previous claim. This case highlights the importance of a buyer or title company to do their due diligence in ensuring the status of a loan payment, as verification directly with the institution is the best method of precaution. For more information regarding this case, or to contact a Wisconsin banking attorney, please contact Attorney Andrew Bosshard at Bosshard | Parke Ltd.