Cmty. First Credit Union v. Bogenschneider, 2014AP637.

• Decision Date: 29 October 2014
• Docket Number: No. 2014AP637.,2014AP637.
• Parties: COMMUNITY FIRST CREDIT UNION, Plaintiff–Respondent, v. Bret N. BOGENSCHNEIDER, Defendant–Appellant.
• Court: Wisconsin Court of Appeals

358 Wis.2d 712

856 N.W.2d 347 (Table)

COMMUNITY FIRST CREDIT UNION, Plaintiff–Respondent

v.Bret N. BOGENSCHNEIDER, Defendant–Appellant.

No. 2014AP637.

Court of Appeals of Wisconsin.

Oct. 29, 2014.

Opinion

¶ 1 PER CURIAM.

Bret Bogenschneider appeals a judgment of foreclosure entered by the circuit court upon summary judgment relating to a note and mortgage securing commercial real property he owned in Winnebago county, Wisconsin. He also appeals the denial of his motion to dismiss alleging the complaint was “unripe” and the dismissal of his counterclaims against Community First Credit Union (CFCU).¹ We affirm.

Background

¶ 2 The following facts are of record and undisputed. Bogenschneider borrowed $300,000 from CFCU in 2007 pursuant to a mortgage and promissory note for the purchase of and secured by commercial real estate property. In 2011, Bogenschneider executed a Renewal Note which provided for interest-only payments to be made once a year, with a maturity date of December 31, 2012, upon which the entire amount owing on the loan was due. The Renewal Note contained the following language: “I waive protest, presentment for payment, demand, notice of acceleration, notice of intent to accelerate and notice of dishonor.” Under the mortgage, as well as a separate Agreement to Provide Insurance, both executed as part of the original 2007 loan documents, Bogenschneider was obligated to maintain insurance on the property.

¶ 3 On October 8, 2012, Bogenschneider, through counsel, informed CFCU in writing that Bogenschneider had lost his employment and had incurred significant liabilities rendering him “unable to service or otherwise pay off the secured loans” on the property. Bogenschneider indicated a willingness to “negotiate a structured resolution by deeding the properties to the respective creditors without the need for protracted litigation [but was] prepared to seek bankruptcy protection if no structured resolution [was] possible prior to the end of the year 2012.” In response, CFCU requested in writing that Bogenschneider provide financial information to CFCU by October 25. Bogenschneider did not timely respond.

¶ 4 On October 30, 2012, the insurance company insuring the property informed CFCU that the insurance had lapsed effective October 17. After receiving no response from Bogenschneider to its written and voicemail inquiries relating to both the requested financial information and the insurance cancellation, CFCU reinstated the insurance by paying the necessary $440 premium.

¶ 5 On November 15, 2012, CFCU commenced this foreclosure action, alleging defaults under the loan documents due to abandonment of the property and failure to keep it insured. CFCU also recorded a lis pendens relating to the property. Bogenschneider answered and counterclaimed against CFCU alleging fraud under Wis. Stat. §§ 224.80 and 844.01 (2011–12)² and the Dodd Frank Act, tortious interference with real estate and professional business “causing damages pursuant to Wis. Stat. § 134.01,” and fraud in the inducement.

¶ 6 On December 31, 2012, the Renewal Note matured, and after Bogenschneider failed to make the required payment in full, CFCU issued a notice of default related to the nonpayment on January 15, 2013. On March 15, 2013, CFCU filed an Amended Complaint seeking foreclosure on the basis of Bogenschneider's inability to service or otherwise pay off his loan, his failure to maintain insurance on the property, and his failure to make the required payment upon maturation of the Renewal Note. Thereafter, Bogenschneider filed an answer to the Amended Complaint, reasserting his counterclaims. Both parties filed motions to dismiss and the circuit court denied both motions. CFCU moved for summary judgment and for reconsideration of the denial of its motion to dismiss Bogenschneider's Wis. Stat. ch. 224 claim. Bogenschneider moved for partial summary judgment, arguing that CFCU's action was not “ripe” because Bogenschneider did not receive notice of acceleration of the debt. Prior to the hearing on the summary judgment motions and remaining counterclaims, the circuit court granted CFCU's motion for reconsideration and dismissed Bogenschneider's ch. 224 claim. After briefing and a hearing, the court granted CFCU's motion for summary judgment based on Bogenschneider's default due to nonpayment, denied Bogenschneider's motion for partial summary judgment, and dismissed all of Bogenschneider's counterclaims. Bogenschneider appeals.

Discussion

¶ 7 We independently review a grant of summary judgment, applying the same methodology as the circuit court. Fabco Equip., Inc. v. Kreilkamp Trucking, Inc., 2013 WI App 141, ¶ 5, 352 Wis.2d 106, 841 N.W.2d 542. “Summary judgment is proper when the relevant facts are undisputed and only a question of law remains.” Id. We similarly independently review a circuit court's grant of a motion to dismiss counterclaims for a failure to state a claim. Rainbow Springs Golf Co. v. Town of Mukwonago, 2005 WI App 163, ¶ 8, 284 Wis.2d 519, 702 N.W.2d 40. “[W]e accept the truth of all alleged facts and all inferences one might reasonably draw from those facts.” Id. We review de novo all legal conclusions, including whether the facts alleged state a claim upon which relief can be granted. Id. When a motion to dismiss for failure to state a claim upon which relief can be granted includes matters outside the pleadings, we treat it as a motion for summary judgment. Wis. Stat. § 802.06(2).

¶ 8 Bogenschneider contends the circuit court erred in denying his motion to dismiss because at the time CFCU filed the original complaint this action was not ripe. He argues that CFCU failed to provide him a notice of acceleration regarding his failure to make payment when due. We note, however, that such failure to make any required payment was not a basis for default identified in the original complaint. That pleading alleged that Bogenschneider was in default based on abandonment of the property and failure to maintain insurance on it. We also observe that in denying Bogenschneider's motion to dismiss, the circuit court noted that Bogenschneider was attempting to improperly bring in matters outside the pleadings. Looking strictly to the pleadings, the court noted that CFCU had properly stated a cause of action. We note that the original complaint properly stated as a ground for default that Bogenschneider failed to maintain insurance on the property as required under the terms of the mortgage attached to the complaint. We also note that by the express terms of paragraph 12 of the Renewal Note, which the mortgage explicitly incorporated, Bogenschneider waived his right to notice of acceleration. See Grootemaat v. Bertrand, 192 Wis. 519, 522, 213 N.W. 294 (1927) (“[T]here is no room for requiring ... notice [where] it is expressly provided that no such notice shall nor need be given.”). Based on the above, the circuit court properly denied Bogenschneider's motion to dismiss.

¶ 9 Bogenschneider's “ripeness” challenge also fails in relation to the entire action because there is no dispute that the Renewal Note matured on December 31, 2012, and therefore under the Amended Complaint, no acceleration of the debt in fact occurred. See, e.g., Beal Bank v. Crystal Props., Ltd., 268 F.3d 743, 754 (9th Cir.2001) (“[O]n maturity there is no debt left to accelerate.”). The circuit court ultimately, and properly, granted judgment of foreclosure based on the payment default raised in the Amended Complaint, the operative complaint in this action. See Holman v. Family Health Plan, 227 Wis.2d 478, 484, 487, 596 N.W.2d 358 (1999) (holding that where an amended complaint does not expressly incorporate by reference the prior complaint, the operative complaint is the amended complaint).

¶ 10 In seeking a reversal of the summary judgment, Bogenschneider attempts to create a question of fact regarding the existence of a document referenced in the Renewal Note—a Commercial Loan Agreement (CLA). He points out that the Renewal Note states that the CLA “further govern[s]” the Note, “including the terms and conditions under which the maturity of this Note may be accelerated.” He then asserts that because he averred in an affidavit that the CLA in fact had been executed and it “provided that Notice of Acceleration was required before any full acceleration of the loan balance,” a material question of fact exists and therefore this court should reverse the circuit court's grant of summary judgment to CFCU. Bogenschneider is incorrect.

¶ 11 While Bogenschneider submitted an affidavit averring that the CLA was executed and requires notice of acceleration, he also acknowledged at the summary judgment hearing that neither he nor CFCU has a copy of this document. In their affidavits, senior CFCU officials averred that all documents executed in a mortgage closing are provided to customers, that all documents relating to each mortgage and note are maintained in CFCU files, and in reviewing the mortgage loan file for Bogenschneider, there existed neither a CLA nor any request to prepare such a document relating to the Renewal Note. We recognize that if such an agreement in fact was executed and contained a provision requiring notice of acceleration, such a clause could potentially negate paragraph 12 of the Renewal Note in which Bogenschneider expressly waived notice of acceleration. Ultimately, however, any discrepancy between the affidavits does not represent a material fact in dispute because, as noted, the operative complaint is the Amended Complaint, and that complaint provides as a basis for foreclosure Bogenschneider's default due to his failure to pay the note upon maturity. Bogenschneider did receive a notice of default related to this failure to pay, and as previously stated, because the note had matured, there was no acceleration of the debt and thus no need for a notice of acceleration. The judgment was granted based upon Bogenschneider's default created when he failed...