Bankers Trust Co. of California, NA v. Bregant
| Decision Date | 11 March 2003 |
| Docket Number | No. 02-2085.,02-2085. |
| Citation | 2003 WI App 86,661 N.W.2d 498,261 Wis.2d 855 |
| Parties | BANKERS TRUST COMPANY OF CALIFORNIA, N.A., Plaintiff-Respondent, v. Dan BREGANT a/k/a Daniel Bregant, Steven L. Ceasar, Rochelle Ceasar, ITT Hartford, Wisconsin Gas Company, Law Office of Rollie R. Hanson, S.C., East Capital Drive Foods, Inc. d/b/a East Side Pick N Save, Judith Herman, Randy J. Weyhrich, and Julie Weyhrich, Defendants, NORTH MEADOWS HOMES ASSOCIATION, INC., Defendant-Appellant. |
| Court | Wisconsin Court of Appeals |
On behalf of the defendant-appellant, the cause was submitted on the briefs of Gerald J. Mayhew of Trebon & Mayhew, Milwaukee.
On behalf of the plaintiff-respondent, the cause was submitted on the brief of Jay Pitner of Gray & End, L.L.P., Milwaukee.
Before Wedemeyer, P.J., Fine and Schudson, JJ.
¶ 1.
The Woodlands Condominium Homeowner's Association, Inc., f/k/a North Meadows Homes Association, Inc. (Woodlands) appeals from an order confirming the sale of a foreclosed residential condominium unit. Woodlands contends that the trial court erred as a matter of law in confirming the foreclosure sale because the confirmation violated a duly recorded ownership use limitation. Because WIS. STAT. § 703.10(6) (1999-2000)2 prohibits condominium bylaws from affecting the transfer of title to a condominium unit, we affirm.
¶ 2. On April 10, 1997, Dan Bregant executed a mortgage in favor of Bankers Trust Company of California, N.A. to finance the purchase of 9125-E West Allyn Street in Milwaukee, Wisconsin, a condominium at Woodlands. The mortgage was recorded in the register of deeds office on April 17, 1997. At that time, the bylaws of the Woodlands did not require that its units be owner-occupied. Effective May 1, 2001, however, the bylaws were amended, adopting an "Ownership Limitations of Use" amendment requiring that the sale of units on or after May 1, 2001, only be to owners "who will reside in the unit" purchased. The ownership limitation document was recorded in the register of deeds office on April 24, 2001.
¶ 3. On June 29, 2001, Bankers Trust filed a mortgage foreclosure action against Dan Bregant, Steven L. Ceasar, and Rochelle Ceasar, relating to a condominium unit held in their names located in the Woodlands complex. Subsequently, Woodlands was joined as a defendant because of its lien and interest in the condominium unit.
¶ 4. On March 14, 2002, the court granted Bankers Trust a judgment of foreclosure for $29,207.68. At the sheriff's sale, Bankers Trust submitted a bid of $8500. Steven Green, d/b/a Atlas Holding (Green), submitted a higher bid for $8600. Green's bid was accepted. Woodlands objected to the confirmation of the sale on the grounds that the sale to Green violated the "Ownership Limitations of Use" which prohibited the sale of any condominium unit at Woodlands to an owner who would not reside in the condominium unit. After a hearing on the objection, the trial court confirmed the sale. Woodlands now appeals.
¶ 5. Woodlands contends that the trial court erroneously exercised its discretion as a matter of law in confirming the sheriff's sale of the Bregant condominium to Green because he did not intend to be an owner-occupant as required by the "Ownership Limitations of Use" document. To begin our analysis, we first review the statutes that are relevant to our consideration.
¶ 6. WISCONSIN STAT. § 846.165(2) sets forth certain provisions for the application of confirmation of a foreclosure sale:
In case the mortgaged premises sell for less than the amount due and to become due on the mortgage debt and costs of sale, there shall be no presumption that such premises sold for their fair value and no sale shall be confirmed and judgment for deficiency rendered, until the court is satisfied that the fair value of the premises sold has been credited on the mortgage debt, interest and costs.
¶ 7. The current chapter 703, entitled the "Condominium Ownership Act" was created by Laws of 1977, ch. 407, § 2, effective August 1, 1978, to consist of §§ 703.01 to 703.38. As pertinent to this appeal, WIS. STAT. § 703.10(1), entitled "Bylaws," reads:
BYLAWS TO GOVERN ADMINISTRATION. The administration of every condominium shall be governed by bylaws. Every unit owner shall comply strictly with the bylaws and with the rules adopted under the bylaws, as the bylaws or rules are amended from time to time, and with the covenants, conditions and restrictions set forth in the declaration or in the deed to the unit. Failure to comply with any of the bylaws, rules, covenants, conditions or restrictions is grounds for action to recover sums due, for damages or injunctive relief or both maintainable by the association or, in a proper case, by an aggrieved unit owner.
¶ 8. WISCONSIN STAT. § 703.10(3), entitled "PERMISSIBLE ADDITIONAL PROVISIONS," reads:
The bylaws also may contain any other provision regarding the management and operation of the condominium, including any restriction on or requirement respecting the use and maintenance of the units and the common elements.
¶ 9. Lastly, WIS. STAT. § 703.10(6), entitled "TITLE TO CONDOMINIUM UNITS UNAFFECTED BY BYLAWS," reads:
Title to a condominium unit is not rendered unmarketable or otherwise affected by any provision of the bylaws or by reason of any failure of the bylaws to comply with the provisions of this chapter.
[1-4]
¶ 10. When reviewing a trial court's decision to confirm a judicial sale following a judgment of foreclosure, we consider whether the court properly exercised its discretion. First Wis. Nat'l Bank of Oshkosh v. KSW Inv., Inc., 71 Wis. 2d 359, 363, 238 N.W.2d 123 (1976). Confirmation may be rejected "if there is an apparent inadequacy in the price which was caused by mistake, misapprehension or inadvertence on the part of the interested parties or possible bidders." Id. (citation omitted). In addition, confirmation "may be denied in the discretion of the trial court if the bid price was so inadequate so as to shock the conscience of the court." Id. (citation omitted). Furthermore, if a trial court bases its exercise of discretion upon an error of law, its action is beyond the limits of discretion and it is deemed to have erroneously exercised that power. State v. Hutnik, 39 Wis. 2d 754, 763, 159 N.W.2d 733 (1968).
[5]
¶ 11. Here there is no claim that the price bid by Green did not represent "fair value" or was an inadequate price due to "mistake, misapprehension, inadvertence" or because the accepted bidding price "shocks the conscience of the court." Rather, Woodlands claims the trial court erroneously exercised its discretion by confirming a foreclosure sale where title would pass to a person who would not be an owner-occupant, contrary to the bylaws. Because the effect of a duly recorded deed restriction on condominium properties sold at a sheriff's sale has not been directly addressed before, this is a case of first impression.
¶ 12. The basis for Woodlands's objection to the confirmation of sale is an amendment to its bylaws. The amended bylaw, Article XVII, entitled "Ownership Limitations of Use," states in pertinent part:
¶ 13. Woodlands, referring to the above bylaw restriction, contends that the trial court committed an error of law when it confirmed the sheriff's sale to Green in clear violation of the provision. It argues: "At the hearing, it was not disputed that the Ownership Limitations of Use was enforceable and would be violated by the confirmation of the sheriff's sale." It further claimed: "Mr. Green cannot buy that unit because he's not going to live there, and this court would be confirming a sheriff's sale contrary to law." We are not persuaded for two reasons.
¶ 14. First, the trial court found that, under the circumstances, the price bid by Green was a "fair and reasonable value." It further held:
¶ 15. This excerpt and the entire record of the hearing demonstrate that there is no basis to claim it was "undisputed" that the confirmation of the sheriff's sale would be a violation of the "Ownership Limitations of Use" amendment. That was the precise cynosure of this dispute. It is uncontroverted that all the parties recognized the bylaw restriction of owner-occupancy was enforceable if Green did not...
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