Carolina Builders Corp. v. Dietzman
| Decision Date | 12 July 2007 |
| Docket Number | No. 2006AP3180.,2006AP3180. |
| Citation | 739 N.W.2d 53,2007 WI App 201 |
| Court | Wisconsin Court of Appeals |
| Parties | CAROLINA BUILDERS CORPORATION, Plaintiff, v. Scott DIETZMAN a/k/a Scott A. Dietzman d/b/a New Age Construction & Design, Amcore Bank, N.A., Anchor-Bank SSB, ABC Supply Co., Inc., City Wide Insulation, RA Heating & Air, State of Wisconsin and United States of America, Defendants, Water Wells, Inc., Defendant-Respondent, Wisconsin Department of Workforce Development and Wisconsin Department of Revenue, Interested Parties, 170 Brickson Road, LLC and Capitol Bank, Intervening Defendants-Appellants. |
On behalf of the intervenor-appellants, the cause was submitted on the briefs of Penny G. Gentges and Arthur M. Moglowsky of Bass & Moglowsky, S.C., Milwaukee. There was oral argument by Arthur M. Moglowsky.
On behalf of the defendant-respondent, the cause was submitted on the brief of Francis J. Eustice and Rebecca R. DeMarb of Eustice, Laffey, Sebranek & Auby, S.C., Sun Prairie. There was oral argument by Francis J. Eustice.
Before DYKMAN, VERGERONT and BRIDGE, JJ.
This appeal concerns the rights of a construction lienholder in relation to the purchaser of the property from the mortgagee, the superior lienholder. The issues arise because of the timing and circumstances of two separate actions that affect the property—this construction lien foreclosure action in which construction lienholder Water Wells, Inc., is a defendant and a subsequent action to foreclose the mortgage in which Water Wells was not made a party. A judgment of foreclosure and order for a sheriff's sale was entered in this action first, but no sale had occurred when the property was sold in the mortgagee's foreclosure action. Upon Water Wells' motions in this action, the court concluded that Water Wells still had a valid lien and ordered another sale of the property. The purchaser and present owner, Brickson Road, LLC, and its lender, Capitol Bank, appeal.
¶ 2 We agree with the circuit court that Water Wells' lien remains valid. Like the circuit court, we conclude: Water Wells did not need to file its own lis pendens in this action because the plaintiff construction lienholder did so; Water Wells had a valid lien at the time of the sale in the mortgage foreclosure action; and its lien was not extinguished in that action because it was not a party to it. However, we also conclude the remedy for Water Wells at this point in time is not another sale of the property. Instead, following the analysis in Buchner v. Gether Trust, 241 Wis. 148, 5 N.W.2d 806 (1942), Water Wells should have the opportunity to purchase the property at a price and within a time period to be established by the circuit court; and if it does not do so, its lien will be extinguished. We therefore affirm in part, reverse in part, and remand for further proceedings.
¶ 3 This action began in January 2003 when Carolina Builders Corporation filed a complaint in Dane County Circuit Court seeking to foreclose its construction lien against property located in Dane County and owned by Scott Dietzman. Carolina Builders named as defendants a number of entities that allegedly had an interest in or lien against the property, one of which was Water Wells. In the complaint, Carolina Builders sought a determination of the amount it was owed, a foreclosure and sale of the property in order to satisfy its lien, and a determination of the interest or liens of the defendants.
¶ 4 Water Wells answered the complaint and filed a cross-claim alleging that it had properly filed a claim for a construction lien against the property, it was owed $8,268.87 plus interest and attorney fees by Dietzman, and it was entitled to a judgment of foreclosure and sale with a deficiency judgment if the proceeds were insufficient.1 Shortly thereafter Carolina Builders recorded with the Dane County Register of Deeds a lis pendens giving notice of the filing of the action.
¶ 5 Carolina Builders moved for a default judgment because Dietzman failed to answer. The court entered a judgment in March 2004 ordering a sheriff's sale of the property any time after June 15, 2004; the judgment directed that the sale proceeds be deposited with the clerk until the court entered an order on their disposition, with the court to decide any issues regarding the priority of liens attaching to the proceeds. The judgment did, however, find that defendant AnchorBank SSB had a recorded mortgage from Dietzman, which was "a first and paramount lien" on the property.
¶ 6 On June 21, 2004, AnchorBank filed an action to foreclose its mortgage of $288,059.81 in Dane County Circuit Court. It named as defendants other lienholders in this action, but not Water Wells, Inc. The AnchorBank action was assigned to a different judge, who entered a judgment for foreclosure in favor of AnchorBank and against Dietzman and the other defendants and a sale of the property. In May 2005, an order was entered in the AnchorBank action confirming the sale of the property to 170 Brickson Road, LLC (Brickson) for $272,100. Brickson thereafter obtained a loan from Capitol Bank secured by a purchase money mortgage. Both the sheriff's deed conveying the property to Brickson and the mortgage were recorded with the Dane County Register of Deeds in June 2005.
¶ 7 In this action nothing took place from the court's March 2004 judgment until February 27, 2006, when Water Wells filed a notice of application for confirmation of a sheriff's sale of the property that took place on February 7, 2006. This notice stated that the sale was pursuant to the court's March 2004 judgment and that Water Wells, who bid $6,783.55, was the successful bidder at this sale.
¶ 8 Before the court acted on Water Wells' application for confirmation of the February 7, 2006 sale, Brickson and Capitol Bank moved to intervene in this action to oppose the confirmation and file a cross-claim asking the court to declare Water Wells' lien invalid as to them because they were bona fide purchasers for value. An accompanying affidavit averred that Water Wells was not joined in the AnchorBank action because its lien claim was filed on March 19, 2001, more than two years before the AnchorBank action was filed.2 Water Wells did not oppose the intervention and filed its own motion asking the court to dismiss those parties whose interests were foreclosed in the AnchorBank action and determine its own interest with respect to the property—specifically, to determine either that it was entitled to confirmation of the February 7, 2006 sale under the court's March 2004 judgment or entitled to relief on its cross-claim.
¶ 9 The court decided the issues raised in Water Wells' motion based on the parties' factual submissions, which, the court concluded, showed that the facts were undisputed. The court agreed with Water Wells that the entities who were parties in the AnchorBank action no longer had a claim of interest against the property and should be dismissed. The court rejected the arguments of Brickson and Capitol Bank that Water Wells could not initiate a sale pursuant to the March 2004 judgment and concluded that Water Wells did not need to file its own lis pendens since Carolina Builders had filed one. Because Water Wells' lien was not extinguished in the AnchorBank action, the court held, its lien was "ahead" of Brickson and Capitol Bank, and they held the property subject to that lien.3
¶ 10 The court scheduled a hearing on Water Wells' application for confirmation of the February 7, 2006 sale. Shortly before the hearing, Brickson and Capitol Bank tendered to Water Wells a check in the amount of $7,213.41 as satisfaction for its construction lien plus reimbursement for the costs of the sale. Brickson and Capitol Bank asked the court to order Water Wells to execute and deliver a satisfaction of the construction lien. The court denied this request because it determined there is no right of redemption in a construction lien foreclosure proceeding and, if there were, "the amount tendered was not in full satisfaction. . . ." The court also denied Water Wells' application for confirmation of the sale because it concluded that the bid price of $6,783.55 for property that Brickson had purchased for $272,100 was "so inadequate as to shock the conscience of the court," and it ordered a resale of the property.
¶ 11 On appeal, Brickson and Capitol Bank (appellants) challenge each of the court's rulings except its decision to deny confirmation of the February 2006 sale.4 Their primary argument is that, because Water Wells did not file its own lis pendens at least twenty days before the March 2004 order, that judgment was invalid as to Water Wells5 and its lien did not survive the judgment entered in the AnchorBank action. They also argue that Water Wells could not initiate a sale under the March 2004 judgment because only Carolina Builders, as plaintiff, could do so. In the alternative, they argue, even if Water Wells still has a valid lien, it is not entitled to a sale with its lien paramount; at most it is entitled to the right to purchase the property, as in Buchner, 241 Wis. 148, 5 N.W.2d 806.
¶ 12 We conclude that Water Wells did not need to file its own lis pendens because Carolina Builders filed a proper and timely lis pendens. Water Wells had a valid lien at the time of the AnchorBank action and, because it was not a party to that action, its lien was not foreclosed in that action. We agree with Water Wells that it could initiate a sale under the March 2004 judgment when Carolina Builders did not. However, we agree with appellants that Buchner provides the proper analysis for the remedy to which Water Wells is entitled at this point in time.
¶ 13 A resolution of the issues presented on this appeal requires that we construe and apply statutes and analyze case law, all of which involve questions of law, which we review de novo....
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