Bank of N.Y. Mellon v. Bronson

384 Wis.2d 272

921 N.W.2d 17 (Table)

2018 WI App 62

The BANK OF NEW YORK MELLON p/k/a Bank of New York, Plaintiff-Respondent,

v.Gloria J. BRONSON and Scott E. Bronson, Sr. a/k/a Scott Evans Bronson, Sr., Defendants-Appellants,Unknown Spouse of Gloria J. Bronson, Unknown Spouse of Scott E. Bronson, Sr. and Dane County Credit Union, Defendants.

Appeal No. 2017AP2301

Court of Appeals of Wisconsin.

DATED AND FILED August 2, 2018

KLOPPENBURG, J.

¶ 1 This is a foreclosure action initiated by Bank of New York Mellon against Gloria Bronson and Scott Bronson. The circuit court granted the Bank’s motion for summary judgment of foreclosure on a note and mortgage executed by the Bronsons in 2007, and the Bank’s motion to dismiss the Bronsons’ counterclaims relating to two loan modification denials in 2009 and 2010. The Bronsons appeal, challenging the entry of summary judgment of foreclosure and the dismissal of two of their counterclaims.

¶ 2 As to the summary judgment of foreclosure, we conclude that: (1) the Bank’s complaint states a claim upon which relief may be granted in terms of the Bank’s standing to enforce the note; but (2) the Bank’s submissions do not establish a prima facie case for foreclosure because (a) the Bank’s submissions do not establish that the Bank possesses the original note, and (b) the Bank’s submissions fail to establish the total amount owed on the loan.

¶ 3 As to the dismissal of the Bronsons’ two counterclaims, we assume, without deciding, that the counterclaims were properly before the circuit court and conclude that: (1) the summary judgment record establishes no factual basis for the counterclaims that the Bank violated WIS. STAT. § 224.77 (2015-16)¹ or breached its contract with the Bronsons when the then servicer, Bank of America, N.A., denied them a permanent loan modification in 2009; (2) the summary judgment record establishes a genuine dispute of material fact as to whether the Bank, through its servicer Bank of America, denied the Bronsons a permanent loan modification in 2010 in violation of WIS. STAT. § 224.77 because the stated reason for that denial was allegedly false.

¶ 4 Accordingly, we conclude that the Bank’s failure to establish as undisputed both its possession of the original note and the total amount due on the loan preclude granting summary judgment of foreclosure to the Bank; that the circuit court properly dismissed the Bronsons’ counterclaims relating to the 2009 loan modification denial; and that a genuine dispute of material fact precludes dismissal on summary judgment of the Bronsons’ WIS. STAT. § 224.77 counterclaim relating to the 2010 loan modification denial. Thus, we affirm in part, reverse in part and remand the case for further proceedings consistent with this opinion.

BACKGROUND

¶ 5 The following facts are undisputed for purposes of summary judgment, and are related in some detail to provide necessary context.²

¶ 6 In 2007, the Bronsons executed a note secured by a mortgage. In 2008, the Bronsons "were unable to stay current on [their] payments." In January 2009, Countrywide Home Loans Servicing L.P., the servicer of the Bronsons’ loan at the time, offered the Bronsons a loan modification agreement, and the Bronsons returned a signed copy of the agreement in February 2009. The Bronsons made the required monthly payments through May 2009. In June 2009, the new servicer of the Bronsons’ loan, Bank of America, N.A., as successor by merger to BAC Home Loan Servicing L.P. f/k/a Countrywide Home Loans Servicing L.P., advised the Bronsons that the modification would not continue because of missing "documentation evidencing income" and that they should apply for a new modification.

¶ 7 In January 2010, Bank of America offered the Bronsons a new loan modification referred to as a three-month "Trial Period Plan," which the Bronsons signed and returned to Bank of America in February 2010. The Bronsons paid the total due for the three months in one payment in February 2010, and made an additional payment in July 2010. In July 2010, Bank of America informed the Bronsons that their loan was not eligible for permanent modification because they "did not provide [Bank of America] with the documents [Bank of America] requested." Bank of America sent the Bronsons a Notice of Intent to Accelerate in February 2011.

¶ 8 The Bank of New York Mellon filed this action in 2012, alleging that the Bronsons failed to comply with the terms of the note and mortgage executed by the Bronsons in 2007 "by failing to pay past due monthly installments payments" as of February 2009, and seeking a judgment of foreclosure. The Bank alleged that it was "the current holder" of the note and attached to its complaint a copy of the note and mortgage. The Bronsons filed an answer along with affirmative defenses and counterclaims.

¶ 9 In October 2012, the Bank filed a motion for summary judgment of foreclosure and a motion to dismiss the Bronsons’ counterclaims. In June 2013, the circuit court denied the Bank’s motion for summary judgment and granted the Bank’s motion to dismiss five of the Bronsons’ counterclaims, "for the reasons given orally" at a hearing. The parties neither state those reasons nor produce a transcript of that hearing on appeal.

¶ 10 In December 2013, servicing of the loan transferred from Bank of America to Green Tree Servicing LLC.

¶ 11 In July 2014, the Bank and the Bronsons stipulated to the dismissal of this action without prejudice and with the right to reopen. Green Tree Servicing subsequently offered the Bronsons two trial loan modifications in 2014 and 2015 with different terms from either the 2009 or the 2010 loan modifications. The Bronsons did not submit payments in acceptance of either modification. In August 2015, Green Tree Servicing merged with Ditech Financial, LLC, the current servicer of the Bronsons’ loan. This action was reopened on the Bank’s motion in August 2016.

¶ 12 In March 2017, the Bank filed a motion for summary judgment of foreclosure and a motion to dismiss the Bronsons’ affirmative defenses and counterclaims; the circuit court converted the motion to dismiss to a motion for summary judgment based on the parties’ submission of affidavits. The circuit court granted both of the Bank’s motions, ruling that the Bank established a prima facie case for summary judgment and dismissing the Bronsons’ affirmative defenses and counterclaims because they "do not raise a genuine issue of material fact barring summary judgment." This appeal follows.

¶ 13 We will relate additional facts, particularly as to the averments in the affidavits submitted in support of and opposition to the Bank’s motions, in the discussion that follows.

DISCUSSION

¶ 14 The Bronsons challenge the circuit court’s decision granting summary judgment of foreclosure and dismissing two of their counterclaims. As to the grant of summary judgment, the Bronsons contend that the Bank fails to make a prima facie case for summary judgment of foreclosure for three reasons. First, the Bronsons contend that the Bank’s complaint fails to state a claim upon which relief may be granted in relation to the Bank’s standing to enforce the note. Second, the Bronsons contend that the Bank’s submissions do not establish that the Bank possesses the original note. Third, the Bronsons contend that the Bank’s summary judgment submissions fail to establish the amount due on the loan.³

¶ 15 As to the dismissal of their two counterclaims, the Bronsons contend that the parties’ submissions create genuine issues of material fact as to whether, as they assert, "the Bank of New York Mellon’s conduct" (1) violated WIS. STAT. § 224.77 and/or breached its contract with the Bronsons when the Bank of America denied them a permanent loan modification in 2009, and (2) violated WIS. STAT. § 224.77 when the Bank of America denied them a permanent loan modification in 2010.

¶ 16 As we explain, we reject the Bronsons’ first summary judgment argument based on failure to state a claim, but we conclude that the Bank has not made a prima facie case for a summary judgment of foreclosure because its submissions fail to establish both that the Bank possesses the original note and the total amount due on the loan. As to the Bronsons’ counterclaims, we conclude that the Bronsons fail to present any facts supporting their counterclaims relating to the 2009 loan modification denial, and that a genuine dispute of material fact precludes dismissal of their WIS. STAT. § 224.77 counterclaim relating to the 2010 loan modification denial.⁴

¶ 17 We review a grant of summary judgment de novo, employing the same methodology as the circuit court. Palisades Collection LLC v. Kalal , 2010 WI App 38, ¶ 9, 324 Wis. 2d 180, 781 N.W.2d 503. First we determine whether the pleadings set forth a claim for relief. Baumeister v. Automated Products, Inc. , 2004 WI 148, ¶ 12, 277 Wis. 2d 21, 690 N.W.2d 1. If they do, we next examine the moving party’s submissions to determine whether they constitute a prima facie case for summary judgment. Palisades , 324 Wis. 2d 180, ¶ 9. If they do, we then examine the opposing party’s submissions to determine whether material facts are in dispute entitling the opposing party to a trial. Id. A party is entitled to summary judgment if there is no genuine issue of material fact and that party is entitled to judgment as a matter of law. WIS. STAT. § 802.08(2).

I. Summary Judgment of Foreclosure

¶ 18 As stated, the Bronsons contend that the Bank fails to make a prima facie case for summary judgment for foreclosure, for three reasons. First, the Bronsons contend that the Bank’s complaint fails to state a claim upon which relief may be granted in terms of the Bank’s standing to enforce the note. Second, the Bronsons contend that the Bank’s summary judgment submissions do not establish that the Bank possesses the original note. Third, the Bronsons contend that the Bank’s summary judgment submissions fail to establish the amount due on the loan. As we e...