Jp Morgan Chase Bank, Na v. Green

• Decision Date: 03 April 2008
• Docket Number: No. 2007AP1753.,2007AP1753.
• Citation: 2008 WI App 78,753 N.W.2d 536
• Parties: JP MORGAN CHASE BANK, NA, Plaintiff-Appellant<SMALL><SUP>&#x2020;</SUP></SMALL> v. Linda G. GREEN, Community Action, Inc. of Rock and Walworth Counties and Bank One, Na, n/k/a JP Morgan Chase Bank, NA, Defendants, Hare Investments, LLC, Intervenor-Respondent. JP Morgan Chase Bank, Na, Plaintiff-Appellant, v. Linda G. Green and David M. Lyon, Defendants, Hare Investments, LLC, Intervenor-Respondent.
• Court: Wisconsin Court of Appeals

753 N.W.2d 536

2008 WI App 78

JP MORGAN CHASE BANK, NA, Plaintiff-Appellant^† v. Linda G. GREEN, Community Action, Inc. of Rock and Walworth Counties and Bank One, Na, n/k/a JP Morgan Chase Bank, NA, Defendants Hare Investments, LLC, Intervenor-Respondent JP Morgan Chase Bank, Na, Plaintiff-Appellant, v. Linda G. Green and David M. Lyon, Defendants Hare Investments, LLC, Intervenor-Respondent.

No. 2007AP1753.

Court of Appeals of Wisconsin.

Submitted on Briefs January 14, 2008.

Opinion Filed April 3, 2008.

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Shawn R. Hillmann of Bass & Moglowsky, S.C., Milwaukee.

On behalf of the intervenor-respondent, the cause was submitted on the brief of Harry C. O'Leary of O'Leary Law Office, Janesville.

Before VERGERONT, LUNDSTEN and BRIDGE, JJ.

¶ 1 VERGERONT, J

This appeal arises from two separate actions to foreclose mortgages on the same property: the first initiated by the first mortgagee and the second initiated by the second mortgagee, JP Morgan Chase Bank, who had been joined in the first action but had not participated. JP Morgan appeals the circuit court order that confirmed a sheriff's sale in the first action to Hare Investments, LLC, and vacated an order confirming a sheriff's sale in the second action.

¶ 2 We conclude: (1) Hare Investments was entitled to apply for confirmation of the sale in the first action even though the first mortgagee's request for confirmation was withdrawn; (2) the circuit court properly exercised its discretion in concluding that the price Hare Investments paid met the applicable standards; and (3) after being served and failing to respond in the first action, JP Morgan was not entitled to obtain an order for a second sale and confirmation of that sale by filing a second action. Accordingly, we affirm the circuit court.

BACKGROUND

¶ 3 Marshall and Isley Bank (M & I) held a first mortgage on the property, located in Rock County, in the amount of $67,000. JP Morgan Chase Bank¹ held a second mortgage for $44,000. M & I filed the first action in November 2005 in Rock County Circuit Court seeking to foreclose its mortgage because of the mortgagor's default; it waived a judgment for any deficiency remaining after the sale. M & I named JP Morgan as a defendant because of its junior lien. Although the record shows that JP Morgan was served, it did not file an appearance or otherwise respond or appear. M & I moved for a default judgment on the ground that none of the defendants had answered and the mortgagor had abandoned the property. On January 24, 2006, the court entered a judgment of foreclosure and determined that M & I was owed $66,359; it also ordered a sheriff's sale under WIS. STAT § 846.10(2) (2005-06)² at any time after two months from the date of entry of judgment, unless sooner redeemed.

¶ 4 M & I set a sheriff's sale for March 29, 2006, at which Hare Investments was the high bidder, with a bid of $68,680.

¶ 5 Meanwhile, on January 19, 2006, JP Morgan filed an action in Rock County Circuit Court seeking foreclosure of its second mortgage and sale of the same property, waiving a deficiency judgment. This action was assigned to the same judge who presided in the first action. This complaint did not mention M & I's action and did not name M & I as a party; however, the complaint did assert that JP Morgan's mortgage was subject to a prior mortgage held by M & I. Unaware that this action concerned the same property as that in the M & I action, the court on March 13, 2006, entered a judgment of foreclosure. The judgment determined that JP Morgan was due $48,760.58 from the mortgagor. The court also ordered a sheriff's sale at any time after three months from the date of judgment unless sooner redeemed.

¶ 6 According to the affidavit of JP Morgan's attorney, counsel first learned of the March 29, 2006 sale in M & I's action "on or about March 30, 2006." On March 30, JP Morgan offered to pay M & I the balance due on its mortgage and M & I accepted and assigned to JP Morgan all rights to its judgment of foreclosure.

¶ 7 Apparently before M & I had been contacted by JP Morgan, M & I sent to the court in the first action a notice of application to confirm the March 29 sale.³ This notice was filed by the clerk of court on April 3, 2006, and a hearing was scheduled for April 18. According to an affidavit of mailing, a copy of the notice was sent to Hare Investments. A few days before the scheduled confirmation hearing, JP Morgan sent a letter to the clerk of court, which showed a copy to Hare Investments, advising the court that JP Morgan had purchased an assignment of judgment from M & I, that a document would soon be filed with the court, and that as M & I's assignee it was withdrawing M & I's motion to confirm the sale.

¶ 8 The sheriff's sale in the second action, held on June 14, 2006, produced a higher successful bid—$99,001. JP Morgan moved to confirm this sale. At the scheduled hearing, JP Morgan appeared by their pleadings and the only appearances in person were the principals of Hare Investments, who objected to the confirmation. Now, realizing that the same property was involved in both actions, the court stated that it was going to consolidate the actions and was not going to confirm the second sale at that time. However, the court inadvertently signed the order confirming the second sale, which had been forwarded to it prior to the hearing.

¶ 9 The motions ultimately before the circuit court in the consolidated actions that are the subject of this appeal are: (1) JP Morgan's motion to set aside the first sale; and (2) Hare Investments' motion to intervene, set aside confirmation of the second sale and confirm the first sale or award equitable damages. The court permitted Hare Investments to intervene. The court agreed with Hare Investments that, because JP Morgan defaulted in the first action, its interest as a junior lienholder was extinguished by the judgment in the first action and it had no right to initiate a foreclosure of its mortgage and a sale in the second action. The court concluded that JP Morgan's explanation that it did not know about the first sale until after it occurred did not entitle JP Morgan to start its own foreclosure action and to have a second sale because JP Morgan was properly served with the summons and complaint in the first action and there was the requisite public notice of the first sale. The court rejected JP Morgan's argument that it should not confirm the first sale because the amount received was grossly inadequate. The court rejected JP Morgan's alternative argument that the price was inadequate and there was a mistake in the process. The court concluded that JP Morgan had established no other equitable basis for not confirming the first sale. Accordingly, the court vacated the order confirming the second sale, which it had inadvertently signed, and entered an order confirming the first sale and voiding transfer of title to the purchaser at the second sale.

DISCUSSION

¶ 10 On appeal, JP Morgan contends the circuit court erred in confirming the first sale and in vacating confirmation of the second sale for the following reasons: (1) Hare Investments did not have the right to apply for confirmation of the first sale after JP Morgan, as M & I's assignee, withdrew the application for confirmation; (2) the court erroneously exercised its discretion in determining that Hare Investments paid fair value for the property; and (3) JP Morgan had the right to bring a second foreclosure action as junior lienholder and conduct a sale pursuant to that judgment, and the equities favor confirmation of the second sale.

¶ 11 Generally, mortgage foreclosure proceedings are equitable in nature. Security State Bank v. Sechen, 2005 WI App 253, ¶ 5, 288 Wis.2d 168, 707 N.W.2d 576. However, to the extent resolution of the issues on this appeal require the construction of statutes as applied to undisputed facts, they present questions of law, which we review de novo. Lincoln State Bank v. Carrillo, 2006 WI App 237, ¶ 7, 297 Wis.2d 30, 725 N.W.2d 634. The decision whether to confirm a sale is committed to the circuit court's discretion. Sechen, 288 Wis.2d 168, ¶ 5, 707 N.W.2d 576. We affirm discretionary decisions if the circuit court applies the correct legal standard to the relevant facts and reaches a reasonable outcome. See Republic Bank of Chicago v. Lichosyt, 2007 WI App 150, ¶ 31, 303 Wis.2d 474, 736 N.W.2d 153.

I. Hare Investments' Application for Confirmation of First Sale

A. Wisconsin Stat. § 846.13 — Mortgagor's Right to Redeem

¶ 12 JP Morgan first argues that it had the right to redeem the property under WIS. STAT. § 846.13 any time before confirmation of the first sale, and, once it did so, the court could not proceed with confirmation of that sale. Section 846.13 provides:

Redemption from and satisfaction of judgment. The mortgagor, the mortgagor's heirs, personal representatives or assigns may redeem the mortgaged premises at any time before the sale by paying to the clerk of the court in which the judgment was rendered, or to the plaintiff, or any assignee thereof, the amount of such judgment, interest thereon and costs, and any costs subsequent to such judgment, and any taxes paid by the plaintiff subsequent to the judgment upon the mortgaged premises, with interest thereon from the date of payment, at the same rate. On payment to such clerk or on filing the receipt of the plaintiff or the plaintiff's assigns for such payment in the office of said clerk the clerk shall thereupon discharge such judgment, and a certificate of such discharge, duly recorded in the office of the register of deeds, shall discharge such mortgage of record to the extent of the sum so paid.

JP Morgan points out that case law has construed § 846.13, when read together with WIS. STAT. § 846.17,⁴ to "establish a mortgagor's right to redeem foreclosed property any time prior...